HQ 221385 - Request for further review of protest #3001-6-000170 concerning the extension of liquidation of several entries under 19 U.S.C. 1504(b)(1). - United States International Trade Commision Rulings

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HQ 221385

September 23, 1994

LIQ-11 CO:R:C:E 221385

CATEGORY: ENTRY LIQUIDATION

District Director
U.S. Customs Service
1000 Second Avenue Room 2200
Seattle, Washington 98104

RE: Request for further review of protest #3001-6-000170 concerning the extension of liquidation of several entries under 19 U.S.C. 1504(b)(1).

Dear Sir:

We have received your memorandum of August 25, 1986, forwarded to us from the Pacific regional office requesting further review of the above-referenced protest. Upon review of your position and the protestant's arguments, we have reached a decision that is discussed in detail below.

FACTS:

The four subject entries were made between October 12 and October 30, 1984. The merchandise entered was clip-on dolls from Korea. On November 6, 1984, Customs issued a redelivery notice to Bill Monson Trading Co. [hereafter "importer" or "Monson"] based on a belief that the dolls' entry constituted a copyright infringement under 17 U.S.C. 602 and 603 and 19 CFR 141.113. The importer filed a protest to this action on December 5, 1984, which was denied in full in a Customs decision dated April 26, 1985. Customs soon after initiated a penalty claim on the importer because of the continued non-redelivery of the entry requested in the 11-6-84 notice. Customs and the importer reached a settlement of the penalty issue on November 25, 1985, in which the importer agreed to pay liquidated damages of $644.00.

Customs shortly thereafter issued a CF 29 to the importer, dated December 12, 1985, informing it that liquidation on the entries had been extended but they now were being forwarded to be liquidated. The importer responded to the CF 29 by writing a letter to Seattle Customs which questioned why the entries had not been liquidated 12 months after the date of entry. Monson specifically cited Pagoda Trading Corp. v. United States, 804 F.2d 665 (1986), to support its claim that the entries should have been liquidated by operation of law. Customs wrote back to the importer on February 7, 1986, notifying it that the entries had indeed been forwarded and stated that Monson could file a protest if it believed the liquidations were incorrect. The entries were liquidated on February 21 and March 21, 1986. The importer subsequently filed this timely protest with Seattle Customs on May 13, 1986.

Customs records show that each of the four entries was extended and that the notices of extension were issued on August 24, 1985. The entries had been made on October 12, 22, 29, and 30, 1984. Customs records show that the extensions were made because Customs believed that it needed more information in order to correctly appraise and classify the merchandise.

ISSUE:

Whether the protestant has shown that the extensions were the result of an abuse of discretion by Customs.

LAW AND ANALYSIS:

The protestant does not contest the demand for redelivery or the copyright infringement findings that led to the demand. The sole issue of this protest is whether or not the extensions of the subject liquidations were valid. The relevant law is found under 19 U.S.C. 1504(b), which reads in part as follows:

(b) Extension-- The Secretary may extend the period in which to liquidate an entry by giving notice of such extension to the importer, his consignee, or agent in such form and manner as the Secretary shall prescribe in regulations, if--

(1) information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer;...

Under 19 U.S.C. 1504(a), it is provided that entries not liquidated within one year from either the date of entry, the date of final withdrawal of all such merchandise covered by warehouse entry, or the date of withdrawal of merchandise from warehouse for consumption, shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted by the importer at the time of entry.

The protestant asserts that the subject entries were deemed liquidated one year from the dates of entry, because it received no notice of the extensions and Customs had no valid reason to extend the liquidations.

The protestant cites to Pagoda Trading Corp. v. United States, supra, for the proposition that entries are deemed liquidated under section 504(a) when there exists no reason for suspending or extending liquidation. In Pagoda Trading, the trial court had held that the suspensions of liquidation of the entries in that case were to be lifted once the reason for such suspensions ceased to exist. The entries in Pagoda were originally suspended pursuant to a countervailing duty order issued by the Department of Commerce. Commerce had revoked the order with directions to Customs to proceed with liquidations. At this point Customs had several months to proceed with the liquidations but instead sent a notice of to the importer. The trial court subsequently found that there was no valid reason for continuing on the liquidations and therefore the entries were deemed liquidated by operation of law. The Federal Circuit affirmed, holding that Customs had failed to demonstrate why the entries should not have been deemed liquidated or why suspensions were continued after the revocation of the order that it was predicated upon.

The issue is whether there was any valid basis for Customs to issue the four notices of extensions on August 24, 1985. The entry documents show that Customs determined that the classifications asserted by the protestant were not correct. The protestant, on this protest and in its answer to the Notice of Action on the CF 29, did not dispute Customs determination on the correct classification.

The protestant asserted on the first entry that the goods were classifiable under item 737.3500, Tariff Schedules of the United States (TSUS), which covered toy figures of animate objects, except dolls, not having a spring mechanism, not stuffed and wholly or almost wholly of metal. The protestant also claimed the benefit of temporary legislation provided by item 912.20, TSUS. The protestant asserted classification under item 737.3500, TSUS, for the other three entries, but did not claim the benefit of item 912.20, TSUS, on those entries.

Customs determined that the goods were classifiable under item 737.2425, TSUS, as dolls not over 13 inches in height and were not entitled to the benefit provided in item 912.20, TSUS. In order to reach that result, Customs had to determine that the protestant's goods were not stuffed, were not wholly or almost wholly of metal and were dolls rather that just a figure of an animate object other than a doll. It seems clear that several factual and legal considerations had to be made by Customs in order to properly classify the goods. It is significant that the protestant does not challenge Customs determination on the change in classification.

The case of Detroit Zoological Society v. United States, 10 CIT 133 (1980) discusses the scope to "information" within 19 U.S.C. 1504(b)(1). There, as here, the plaintiff argued that Customs did not need any further information in order to classify the goods properly. As here, there was a difference between the classification asserted by the importer and the classification determined by Customs.

In order to prevail, the protestant must show that all reasonable bases for making an extension were eliminated. St. Paul Fire & Marine Insurance Co. v. United States, 6 F.3d 763, 768 (Fed. Cir. 1993). That court concluded that for statutory purposes and with the requisite notices, Customs may employ up to four years to liquidate so long as the extensions are not abusive of its discretionary authority. The protestant here has not met that burden.

The St. Paul Fire & Marine Insurance Co. court also made it clear that the period of extension runs from the end of one-year period beginning with the date of entry. Op. Cit. at 767. The one-year period in 19 U.S.C. 1504(a) ended for the four entries here on October 12, 22, 29, and 30, 1985. The extension periods run from those dates and would end on October 12, 22, 29, and 30, 1986, respectively. The liquidations on February 21, 1986 and March 21, 1986 were within those periods.

The protestant asserts that ..."there is no evidence that any suspension or extension was issued or received by either importer or importer's customs broker..." Customs records show that extensions notices were issued on August 24, 1985 for the four entries. It seems clear that the protestant's assertion of non-receipt does not even meet the test approved by the lower court in the St. Paul Fire & Marine Insurance Co. case. Since the appellate court vacated the lower court's decision there, we find that the protestant here has failed to rebut the presumption established by the Customs records of issuance.

HOLDING:

The protestant has failed to show that the extensions were improper under 19 U.S.C. 1504(b) and has failed to rebut the evidence that shows that the extension notices were issued timely. The protest is denied.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the 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.

Sincerely,

John Durant, Director

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