HQ 225341 - Further Review of Protest No. 2704-91-102696; liquidation after four years from entry date; deemed liquidated; 19 U.S.C. 1504; antidumping duties (ADD); countervailing duties (CVD); Nunn Bush Shoe Co. and Weyco Group Inc. v. United States; Gissel v. United States - United States International Trade Commision Rulings

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HQ 225341

September 9, 1994

LIQ-4-CO:R:C:E 225341 SR

CATEGORY: LIQUIDATION

District Director
U.S. Customs Service
300 S. Ferry Street
Terminal Island
San Pedro, California 90731

RE: Further Review of Protest No. 2704-91-102696; liquidation after four years from entry date; deemed liquidated; 19 U.S.C. 1504; antidumping duties (ADD); countervailing duties (CVD); Nunn Bush Shoe Co. and Weyco Group Inc. v. United States; Gissel v. United States

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the facts and the issue raised. Our decision follows.

FACTS:

Hansa World Cargo Service, Inc. (Hansa) imported carbon steel wire rod from Nueva Montana Quijano (NMQ) of Spain. This protest was filed by Old Republic Insurance Co. (Old Republic), the surety for Hansa. The merchandise was entered on July 17, 1984. The merchandise was subject to an antidumping investigation (ADD) (antidumping duty order A-469-008) and a countervailing duty review (CVD).

On December 23, 1986, a memorandum was sent from the Office of Compliance, Department of Commerce, to Commercial Compliance Division, U.S. Customs Service, authorizing Customs to proceed with liquidation of entries covered by the countervailing duty review. For all firms not specifically named, Customs was directed to assess countervailing duties at the rate of 24.04% of the F.O.B. invoice price on the shipments entered for consumption between July 5, 1984 and exported on or before September 30, 1984.

The memorandum also stated that, under the provisions of Section 778 of the Tariff Act, interest must be paid on overpayments or underpayments of amounts deposited as estimated countervailing duties. Pursuant to section 355.24 of Commerce's
regulations, Customs will collect interest on the difference between the cash deposit of estimated countervailing duties and the assessed countervailing duties. In this case the cash deposit was 0.0 percent, and the assessed duties were 24.04 percent. Therefore, interest should be assessed on 24.04 percent, the full amount of the countervailing duty. Thus, Customs correctly calculated the amount of interest owed on the countervailing duties.

On November 14, 1986, a notice from the Department of Commerce instructed Customs to liquidate the entries of carbon steel wire rod from Spain that were suspended during the antidumping investigation. Antidumping duties were assessed at the rate of 17.13 percent. However, the merchandise at issue was entered between the time of the publication of the preliminary and final antidumping duty determinations and is therefore, subject to the provisional cap as provided for in section 353.23 of Commerce's Regulations (19 CFR 353.23). The regulation states that entries made during this time period will not be assessed a rate which exceeds that of the preliminary determination, in this case 13.7 percent.

After this merchandise was entered an investigation of fraud was also initiated. The fraud investigation was not closed until November 9, 1988, when the Justice Department declined to prosecute. The import specialist was not aware that the fraud investigation was closed until October 26, 1990. The entries were liquidated on December 14, 1990. Your office concedes that no extension notices were sent out after the antidumping and countervailing suspensions were lifted.

ISSUE:

Whether the merchandise at issue was properly liquidated.

LAW AND ANALYSIS:

Liquidation has been defined as "the final computation by the Customs Service of all duties (including any antidumping or countervailing duties) accruing on that entry." American Permac, Inc. v. United States, 10 CIT 535, 537 ((1986). Customs is bound by certain time limits during which liquidation must occur under 19 U.S.C. 1504.

Generally, an entry of merchandise not liquidated within one year "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." 19 U.S.C. 1504(a). Liquidation may be
extended under 19 U.S.C. 1504(b) for the following reasons:

Extension of liquidation is provided for under 19 U.S.C. 1504 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;
(2) liquidation is suspended as required by statute or court order; or
(3) the importer, consignee, or his agent requests such extension and shows good cause therefor.

(d) Limitation.--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, his consignee, or agent, unless liquidation continues to be suspended as required by statute or court order. * * *

The controlling precedent for the liquidation issue in this case is Nunn Bush Shoe Co. and Weyco Group Inc. v. United States (Nunn Bush), Slip Op. 92-9, Customs Bulletin and Decisions, vol. 26, no. 7, p. 19 (February 12, 1992), 784 F. Supp. 892. Nunn Bush dealt with entries which had been suspended pending the results of a countervailing duty investigation and later pursuant to a court injunction. The injunctions were dissolved before the entries were four years old, but in this case Customs did not liquidate certain of these entries until after four years from the date of entry. The Nunn Bush court held that entries not subject to a statutory or court ordered suspension of liquidation when they turned four years old were deemed liquidated by operation of law.

Under Nunn Bush and 19 U.S.C. 1504(a) and (d) merchandise is deemed liquidated by operation of law four years from the date of entry unless liquidation continues to be suspended by statute or court order. In this case the merchandise was entered on July 17, 1984. The suspension for the antidumping investigation was lifted by the notification from Commerce to Customs on November 14, 1986, and the suspension for the countervailing duty investigation was lifted on December 23, 1986. The merchandise
was not liquidated until December 14, 1990. The liquidation occurred approximately 6 years after the merchandise was entered. Therefore, the entry is deemed liquidated on its four year anniversary at the rates of duty asserted when entered.

The entry was made with 17.13 percent asserted as the countervailing duty. The antidumping duty margin applicable at the time of entry was 13.7 percent pursuant to the Department of Commerce's May 8, 1984 Federal Register notice. Because the entry was deemed liquidated at the duty rate asserted at the time of entry, no interest can be collected on either the ADD or CVD.

The protestant also contends that since an ADD/CVD bond was not posted on this entry pursuant to T.D. 82-56, it is not liable for any ADD or CVD. We find this argument to be without merit. The clear and explicit language of the CF 7595 General Term Bond posted with this entry states in section (8), "...the above- bounden principal shall pay to the district director of customs, when demanded, all duties, taxes, and charges found legally due and unpaid..." A Federal District court held that notwithstanding the fact that a particular bond was not posted on an entry, a surety remains liable under a general bond which calls for payment on demand of all duties, however they arise. Gissel v. United States, 353 F. Supp. 768, 777 (S.D. Tex. 1973), aff'd, 493 F.2d 332 (5th Cir. 1974) cert. denied, 419 U.S. 1012 (1975). Such is true with the general bond posted in this case. Therefore, the surety remains liable for the ADD and CVD in this case under the general term bond posted.

For your information, the Act of December 8, 1993 (Pub. L. No. 103-182 sec. 641, 107 Stat. 2057) amended 19 U.S.C. 1504 to deem liquidated on its fourth-year anniversary any entry whose liquidation is extended that is not liquidated within four years; any entry whose liquidation is suspended and such suspension is subsequently removed but the entry is not liquidated within six months after Customs receives notice of the removal is deemed liquidated at that time. The present entry is not subject to this amendment because the suspension of liquidation was lifted before the effective date of the amendment. Further, the amendments made in section 641 of the North American Free Trade Agreement Implementation Act (Act of December 8, 1993, 107 Stat 2057, Pub. L. 103-182) do not apply since the entries here were made before the effective date of the act.

HOLDING:

The subject entry is deemed liquidated pursuant to 19 U.S.C. 1504 and Nunn Bush, on the fourth-year anniversary of the entry date, July 17, 1988. The duty rates applicable to this entry
are 17.13 percent for countervailing duties and 13.7 percent for antidumping duties. Interest cannot be charged on either the ADD or CVD.

The protestant is liable for the amounts of ADD and CVD assessed at the time of entry under its general term bond. The fact that an ADD/CVD bond was not posted on the subject entry does not reduce or eliminate its liability under the posted entry bond.

The protest should be ALLOWED with respect to the deemed liquidation and DENIED with respect to the protestant's liability under the general term bond.

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 this decision must be accomplished prior to the mailing of the decision. Sixty days from the date of this 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 to the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant

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