HQ 0224954 - Internal Advice; 19 U.S.C. 1520(c)(1); mistake of fact; HQ 223206; Godchaux-Henderson Sugar Co., Inc. v. U.S.; T.D. 54848. - United States International Trade Commision Rulings

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HQ 224954

January 12, 1994

LIQ-9-01-CO:R:C:E 224954 AJS

CATEGORY: LIQUIDATION

District Director
U.S. Customs Service
9 North Grand Avenue
Nogales AZ 85621

RE: Internal Advice; 19 U.S.C. 1520(c)(1); mistake of fact; HQ 223206; Godchaux-Henderson Sugar Co., Inc. v. U.S.; T.D. 54848.

Dear Sir:

This is in reply to your internal advice request of September 10, 1993, concerning 19 U.S.C. 1520(c)(1) and William F Joffroy, Inc. (i.e., the broker).

FACTS:

The broker entered copper anodes for the importer at the Nogales District on an Entry Summary, Customs Form (CF) 7501. The broker paid $20,451.65 in duty and $400 in merchandise processing fee. The CF 7501 was liquidated on March 12, 1993. The broker claims that the importer had no intention of entering and paying duty on the anodes at Nogales, but rather intended to enter the anodes on a CF 7512, Immediate Transportation Entry, for transportation under bond to a Class 7 bonded warehouse. It is claimed that the anodes then were to be smelted into a different product and entered at a lower duty rate or exported with no duty due. No evidence, other than the broker's assertion, is offered to establish these facts.

The broker claims that the entry was a mistake of fact because they did not recognize the intent of the importer. Your request states that it is not clear if the importer failed to disclose their plans to the broker, or if the broker's employees mistakenly ignored these plans. Your request additionally states that there were no errors in the entry release, and the filing or liquidation of the entry summary.

ISSUE:

Whether the broker's claimed failure to enter the merchandise as intended by the importer is a mistake of fact correctable pursuant to 19 U.S.C. 1520(c)(1).

LAW AND ANALYSIS:

Initially, we note that the broker's request for reliquidation of the subject entry pursuant to 19 U.S.C. 1520(c)(1) was timely filed. The entry was liquidated on March 12, 1993, and the request for reliquidation is dated March 19, 1993.

19 U.S.C. 1520(c)(1) provides that Customs may reliquidate an entry to correct "a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law, adverse to the importer and manifest from the record or established by documentary evidence, in any entry, liquidation, or other customs transaction, when the error, mistake, or inadvertence is brought to the attention of the appropriate customs officer within one year after the date of liquidation or exaction."

In HQ 223206 (September 24, 1991), Customs addressed a case similar to this request. In that case, the importer filed a consumption entry summary which was liquidated. However, the importer claimed that they intended to make entry as a theoretical transfer to a warehouse. The importer offered a memorandum sent to the broker and a statement of a recorded telephone conversation as evidence that a mistake of fact occurred in the entry. Customs ruled that the record did not establish that a mistake of fact was made by Customs or the importer, but merely that the importer alleges that it intended to enter the merchandise one way and instead mistakenly entered it another way. Therefore, Customs did not find that a mistake of fact occurred.

We note that HQ 223206 also stated that the issue of changing a consumption entry to a theoretical transfer was not protestable under 19 U.S.C. 1514 because neither the regulations nor statute made provision for theoretical transfer of goods from commerce to a bonded warehouse. In this case, the broker is making a similar request that Customs change a consumption entry to an immediate transportation entry under bond to a bonded warehouse. This issue is also not protestable under section 1514 because neither the regulations nor statute allows for the transfer of goods from commerce to a bonded warehouse under bond by an immediate transportation entry.

In this instance, the broker claims that they filed a consumption entry when their client intended for them to file an immediate transportation entry. The broker has provided no specific documentary evidence to support their claim that this error was a mistake of fact. In HQ 223206, the importer at least provided some evidence to support their claim. As stated previously, Customs rejected this evidence as insufficient. Based on the decision in HQ 223206, we do not think it proper to conclude otherwise when a party provides no evidence to support a claim of mistake of fact. This conclusion is supported by the statutory language of
1520(c)(1) itself, which requires a mistake of fact to be "manifest from the record or established by documentary evidence".

In Godchaux-Henderson Sugar Co., Inc. v. United States, 85 Cust. Ct. 68, C.D. 4874 (1980), the Customs Court discussed the applicability of section 1520(c)(1). In that case, the plaintiff imported sugar under an immediate delivery permit but did not file a consumption entry until a later time. At the time of importation, the sugar was eligible for duty-free treatment under the Generalized System of Preferences. However, after importation and before entry, the duty-free status of the sugar was terminated. The plaintiff sought relief pursuant to section 1520(c)(1) for their failure to file the entry before the duty- free status was terminated.

The Customs Court held in Godchaux that plaintiff's failure to file a duty-free entry by the deadline prescribed by law was not within the scope of section 1520(c)(1). The court stated that by the express terms of section 1520(c)(1), plaintiff was required to establish a "clerical error, mistake of fact, or other inadvertence . . . in an entry, liquidation, or other customs transaction . . ." ( emphasis in original). Godchaux at 74. The court further stated that plaintiff's mistake or inadvertence was not in an entry, but rather in failing to make an entry prior to a certain date. Godchaux at 74. The court added that had plaintiff, through mistake of fact or inadvertence, filed a dutiable entry prior to the termination date for duty-free status and the entry was liquidated accordingly, the entry could be reliquidated duty free pursuant to section 1520(c)(1). Godchaux at 74.

In this case, the broker's mistake or inadvertence was not in an entry, but rather in failing to make a certain type of entry. The broker made no mistake in the entry which they filed. As in Godchaux, had the broker filed an incorrect entry through mistake of fact or inadvertence, the entry could be reliquidated pursuant to section 1520(c)(1). Therefore, we find the rationale of Godchaux instructive for
determining that the broker's failure to file the type of entry intended by their client is also not within the scope of section

The broker cites to T.D. 54848, 94 Treas. Dec. 244 (1959), in support of its claim. This decision was an amendment to the Customs Regulations and states that:

Mistake of fact occurs when a person believes the facts to be other than they really are and takes some action based on that erroneous belief. The reason for the belief may be that a fact exists but is unknown to the person or he may be convinced that something is a fact when in reality it is not. For example, an importer's agent may be convinced that the importer wishes him to make a consumption entry for goods and he does so. The true fact is that the importer desired an in bond entry to be made in the particular case. If the true facts had been known to the agent, an in bond entry would have been filed.

The example in this decision appears to be on point with your request. As stated previously, however, no evidence other than the broker's assertion has been submitted to establish a mistake of fact. Furthermore, the more recent court decision in Godchaux supports a contrary conclusion for the reasons discussed beforehand. More deference is required to be accorded Godchaux as a court decision than to T.D. 58848 as an amendment to the Customs Regulations. Therefore, we do not find the example of a mistake of fact cited in T.D. 58848 instructive for the resolution of this case.

HOLDING:

The broker's claimed failure to enter the merchandise as intended by the importer is not a mistake of fact correctable pursuant to 19 U.S.C. 1520(c)(1).

The Office of Regulations and Rulings will take steps to make this decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels 60 days from the date of this decision.

Sincerely,

John Durant, Director
Commercial Rulings Division

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