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HQ 225246





August 11, 1994

LIQ-11-CO:R:C:E 225246 AJS

CATEGORY: LIQUIDATION

District Director of Customs
U.S. Customs Service
1 East Bay Street
Savannah GA 31401

RE: Protest 1704-93-100223; 19 U.S.C. 1504; 19 CFR 159.12; HQ 225162; HQ 224294; St. Paul Fire & Marine Insurance Co. v. U.S.

Dear Sir or Madame:

This is our decision in protest 1704-93-100223, dated May 6, 1993, concerning the liquidation of various entries.

FACTS:

The subject entries involved sprayer parts. The merchandise was entered under subheading 9817.00.50, Harmonized Tariff Schedule of the United States (HTSUS), which provides for machinery, equipment and implements to be used for agricultural or horticultural purposes. The merchandise was liquidated under subheading 8424.90.90, HTSUS, as sprayers parts.

Entry number one was entered on March 22, 1989, and liquidated on February 5, 1993. A search of Customs computer records indicates that liquidation of this entry was extended three times with the last extension made on December 10, 1991. Notice of this extension was mailed on December 12, 1991. On January 21, 1993, a Customs Form (CF) 29, Notice of Action, was issued to the protestant stating that the merchandise had been misclassified and undervalued.

Entry number two was entered on April 7, 1989, and liquidated on February 5, 1993. A search of Customs computer records indicates that liquidation of this entry was extended three times with the last extension made on January 15, 1992. Notice of this extension was mailed on January 18, 1992. The same type of CF 29 as that issued in entry one was also issued.

Entry number three was entered on April 26, 1989, and liquidated on February 5, 1993. A search of Customs computer records indicates that liquidation of this entry was extended three times with the last extension made January 15, 1992. Notice of this extension was mailed on January 18, 1992. The same type of CF 29 as that issued in entry one was also issued.

Entry number four was entered on June 20, 1989, and liquidated on March 5, 1993. A search of Customs computer records indicates that liquidation of this entry was extended three times with the last extension made on March 4, 1992. Notice of this extension was mailed on March 7, 1992. On February 2, 1993, a similar CF 29 as that issued in entry one was also issued.

All four entries were extended because additional information was needed for the proper appraisement and classification of the merchandise.

ISSUE:

Whether liquidation of the subject entries was properly extended pursuant to 19 U.S.C. 1504(b), or were they deemed liquidated by operation of law.

LAW AND ANALYSIS:

Initially, we note that this protest was timely filed pursuant to 19 U.S.C. 1514(c)(3)(A). The subject entries were liquidated on either February 5 or March 5, 1993, and the protest was filed on May 6, 1993. We also note that the liquidation of an entry is a protestable matter pursuant to 19 U.S.C. 1514(a)(5).

19 U.S.C. 1504(a)(1) provides that except as provided in subsection (b) of this section, an entry of merchandise not liquidated within one year from the date of entry of such merchandise shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record. The subject entries were liquidated more than one year after the date of entry.

19 U.S.C. 1504(b), however, provides that the Secretary of the Treasury may extend the period in which to liquidate an entry by giving notice of such extension to the importer of record 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. 19 CFR 159.12(a)(1) provides that the district director may extend the 1- year statutory period for liquidation for an additional period not to exceed 1 year if information needed by Customs for the proper appraisement or classification of the merchandise is not available. Customs previously stated that this additional 1-year period expires 1 year from the expiration of the 1-year statutory period for liquidation, which in this instance expires 1 year from the date of entry. HQ 224294 (January 10, 1994), and HQ 225162 (May 20, 1994).
A search of Customs computer records indicates that liquidation of the subject entries was timely extended three times and that notice of these extensions were also issued. Liquidation of the subject entries was extended because information was required for the proper classification and appraisement of the merchandise. The protestant does not dispute that these extensions were received nor that they were proper.

19 CFR 159.12(d) provides that if an extension has been granted because Customs needs more information and the district director thereafter determines that more time is needed, he may extend the time for liquidation for an additional period not to exceed 1 year provided he issues the notice required by paragraph (b) of this section before termination of the prior extension period. Customs previously stated that this additional period will expire 1 year from the expiration of the initial extension, or in other words it will expire on the third year anniversary of the entry date. See supra HQ 224294 & HQ 225162. Section 159.12(e) provides that total time for which extensions may be granted may not exceed 3 years (i.e., up to four years from the date of entry). Therefore, if a third extension is issued it will expire on the fourth year anniversary of the date of entry. In this instance, Customs extended liquidation of the subject entries for two additional periods not exceeding one year because more information was needed. The total time for which extensions were granted did not exceed three years. Therefore, Customs satisfied the regulatory requirements of section 159.12.

19 U.S.C. 1504(d) formerly provided, in part, that any entry of merchandise not liquidated at the expiration of four years from the applicable date specified in subsection (a) of this section, shall be deemed liquidated at the rate of duty, value, quantity, and amount of duty asserted at the time of entry by the importer of record. The applicable dates specified in subsection (a) in this case are the dates of
entry (i.e., March 22, April 7, April 26 and June 20 of 1989). Customs liquidated the subject entries on either February 5 or March 5 of 1993, which precedes the expiration of four years from the applicable date of entry. As stated previously, a proper basis also existed for extension of liquidation. Therefore, Customs satisfied the four year liquidation requirement of section 1504(d). Consequently, the subject entries were not deemed liquidated by operation of law, but by the actions of Customs on the relevant liquidation dates.

The protestant claims that it did not receive notice of any subsequent extensions after receipt of its third notice of extension for each entry, and that Customs also had no basis to further extend liquidation after these last extensions. Customs was not required nor even permitted to issue any additional notices after the third notice. As discussed previously, the three extensions issued allowed Customs up to four years from the date of entry to liquidate the subject entries. Therefore, the protestant's claim regarding subsequent extensions is without merit. Inasmuch as Customs did not issue any of the claimed subsequent extensions, the issue of the basis for these extensions is moot.

The protestant cited to the recent decision of the Court of Appeals for the Federal Circuit (CAFC) in St. Paul Fire & Marine Insurance Co. v. United States, 799 F. Supp. 120 (Ct. Int'l Trade 1992), rev'd, Slip-Op 93-1029 (October 1, 1993). The issue in St. Paul was whether the Court of International Trade (CIT) erred in determining that the second and third extensions of liquidation granted by Customs were unlawful. Customs had extended liquidation while awaiting information needed for the proper appraisement and classification of the merchandise. The CAFC concluded that:

Congress has given Customs authority to employ up to four years to liquidate entries when properly noticed extensions are granted for statutory reasons. When seeking information needed for the proper appraisement or classification of the merchandise, Customs has no duty to inquire whether the required information will be forthcoming, and Customs may employ the full four-year period unless it has actual knowledge that the required information will not be submitted. Only if Customs has such knowledge . . . can it abuse its discretion by granting further extensions.

In this case, Customs employed less than four years to liquidate the subject entries. In addition, notices of extension were issued and they were issued for proper
reasons. Customs also possessed no knowledge to indicate that the required information would not be forthcoming. Therefore, we find the cited language from St. Paul supportive for the conclusion that liquidation of the subject entries was properly extended.

HOLDING:

The protest is denied. Liquidation of the subject entries was properly extended and completed by the actions of Customs on either February 5 or March 5, 1993.

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, with the Customs Form 19, 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 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, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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