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HQ 545578




September 13, 1994

VAL CO:R:C:V 545578 LPF

CATEGORY: VALUATION ENTRY

District Director
U.S. Customs Service
P.O. Box 025280
6601 NW 25th Street
Miami, FL 33102-5280

RE: Internal Advice Request 7/94; Reduction of current duty liability to account for prior overpayments

Dear Director:

This in response to Internal Advice Request No. 7/94, filed on behalf of Farah USA on January 24, 1994, concerning the appraisement of wearing apparel.

FACTS:

From 1988 to 1991 all wearing apparel entered by Farah USA was appraised under transaction value pursuant to 19 U.S.C. 1401a(b). The appraising officer determined that the relationship between Farah USA and its foreign subsidiary, Corparacion Farah, did not preclude appraisement based on transaction value. Although Farah USA's annual cost reconciliations (from estimated to actual costs) submitted from 1988 to 1991 reflected a net overpayment of duties, the entries filed during these years were liquidated as entered and were neither petitioned nor protested by Farah USA.

In 1992, after a Farah representative contacted the Miami district office, it was determined that the circumstances of the sales between Farah USA and Corporacion Farah indicated that the relationship between the companies influenced the price actually paid or payable for the merchandise. Since the merchandise could not be appraised under transaction value under 1401a(b) or 1401a(c) and the importer requested appraisement under computed value, the merchandise was appraised based on computed value.

The liquidation of the 1992 entries filed by Farah were withheld pending the receipt of computed value information. This information resulted in an increase, as compared to prior years, in the value of the merchandise.

Farah has requested that the 1992 duty liability be reduced to account for prior overpayments of duties reflected through the cost reconciliations submitted from 1988 to 1991.

ISSUE:

Whether Customs has the legal authority to reduce an importer's current duty liability to account for prior overpayments of duties which were neither petitioned nor protested by the importer.

LAW AND ANALYSIS:

19 U.S.C. 1514 explains, in pertinent part, that the legality of all orders and findings regarding the appraised value of merchandise and the liquidation or reliquidation of an entry, or modification thereof, is final and conclusive unless a protest is filed within ninety days after notice of liquidation or reliquidation.

In addition, 19 U.S.C. 1520 states that, "the Secretary of the Treasury is authorized to refund duties . . . whenever it is ascertained on liquidation or reliquidation of an entry that more money has been deposited or paid as duties than was required by law to be so deposited or paid. . . ."

However, with regard to reliquidation of an entry, section 1520 adds that, ". . . the appropriate customs officer 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 . . . brought to the attention of the appropriate customs officer within one year after the date of liquidation or exaction. . . ."

In this case, the inquirer did not file a protest. Accordingly, pursuant to section 1514, the liquidation of the merchandise entered between 1988 to 1991 is deemed final and conclusive.

Moreover, based on the facts provided, because it appears that the alleged error or mistake made in appraising the merchandise amounts to an error in the construction of a law, that is 19 U.S.C. 1401a, Customs apparently would have been unable to afford redress in accordance with section 1520. We note that if Customs would have refused to reliquidate the entries under section 1520(c), the importer's proper recourse would have been to protest such a decision pursuant to section 1514.

HOLDING:

In accordance with 19 U.S.C. 1514 and 1520, Customs is without legal authority to reduce the importer's 1992 duty liability to account for overpayments of duties reflected through the cost reconciliations submitted from 1988 to 1991.

Sixty days from the date of this letter 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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