HQ 950804 - Application for Further Review Protest No. 5501-91-100323; "Proper" Request for Reliquidation of entries for artificial foliage of man-made fibers; Section 479C of the Customs and Trade Act of 1990 (Pub. L. No. 101-382) - United States International Trade Commision Rulings

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HQ 950804

November 2, 1994

LIQ-9-01-CO:R:C:E 950804 JRS

CATEGORY: LIQUIDATION ENTRY

District Director of Customs
U.S. Customs Service
Dallas/Ft. Worth District
P.O. Box 619050
DFW Airport, Texas 75261-0950

RE: Application for Further Review Protest No. 5501-91-100323; "Proper" Request for Reliquidation of entries for artificial foliage of man-made fibers; Section 479C of the Customs and Trade Act of 1990 (Pub. L. No. 101-382)

Dear Sir:

This is in response to your request for further review of the above-referenced protest. We have considered the arguments presented and our decision follows.

FACTS:

Designer Accents made 7 entries of artificial foliage, of man-made fiber, under subheading 6702.90.40, HTSUS, at the duty rate of 9% ad valorem, during the period from April 19, 1989 to June 16, 1989. On January 10, 1991, Customs issued a Customs Form 29, Notice of Action, to the importer indicating a rate advance and, at the same time, informing the importer that the Customs and Trade Act of 1990 provides for the retroactive application for certain liquidations and reliquidations if a valid claim for liquidation or reliquidation is made after September 30, 1990 and before April 1, 1991, attaching Fact Sheet #2 dated September 7, 1990, containing detailed instructions. The CF 29 also listed the specific 7 entries under protest. There is no evidence in the file that the importer via his broker followed up the referenced January 10, 1991, notice with a written request. Subsequently, these entries were liquidated on May 10, 1991, under subheading 6702.90.60, HTSUS, at the duty rate of 17% ad valorem. The importer timely filed a protest under 19 U.S.C. 1514 on July 18, 1991, challenging the classification at the 17% rate since a Headquarters Ruling Letter dated December 12, 1990 (HQ 087127) held that the proper classification of artificial foliage of man-made fibers under the HTS was under subheading 6702.90.40, HTSUS, as a result of the Customs and Trade Act of 1990.

The attorney for the importer claims that the instructions contained in the fact sheets are ambiguous and confusing. The importer's attorney states that the broker did not include the 7 protested entries, which had been entered by the broker at the 9% rate, in its written requests for reliquidation during October and November, 1990, for all its entries entered at the 17% rate (section 485(b)(1) of the Customs and Trade Act of 1990) as these specific entries were unliquidated at the 9% rate. The broker, by affidavit dated July 2, 1992, states that it was her opinion that the term "liquidation" found in the fact sheets referred to unliquidated or liquidated entries made at the 17% rate, and that she believed that notification to Customs was not required for entries made after December 31, 1988 and prior to October 1, 1990, and correctly entered at the 9% rate because a "refund of duties deposited" was not due for artificial foliage correctly entered at the 9% rate under subheading 6702.90.40, HTS. The broker assumed that Customs would liquidate at the 9% rate based upon her interpretation of the fact sheets' instructions and on an alleged oral statement of a Dallas Customs commodity team employee.

As proof of its allegation that the instructions are ambiguous and confusing, the protestant points to inconsistent treatment it received in other Customs field offices regarding its other entries of artificial foliage: Customs at San Francisco, New Orleans and Seattle did not rate advance to 17% unliquidated entries made at 9% but simply liquidated them at 9%. The broker states immediately after the passage of the Trade Act of 1990, Los Angeles automatically liquidated entries entered at the 17% rate and refunded this duty even before the broker made a written request. Also, the broker states that Los Angeles Customs never sent a notice of a rate advance for the entries entered at the 9% rate and Customs liquidated those entries at the correct 9% rate.

ISSUE:

Whether the phrase ". . . upon proper request filed with the appropriate Customs officer. . ." applies to unliquidated entries for retroactive treatment under section 485(b) of the Customs and Trade Act of 1990?

LAW ANDANALYSIS:

In protest 5501-91-100323, the protestant entered merchandise that was described in the relevant entry invoices as polyester artificial plants. Those same invoices further described the plants in the following various terms: mini maple bush, mini needle ivy, mini ivy garland, mini Holland
ivy garland, tropical grape, ivy bush, and wax begonia. The protestant entered the merchandise as "artificial flowers, man-nd fib" under subheading 6702.90.40, HTSUS. and dutiable at 9 percent ad valorem. The seven entries in the protest were made during the period from April 19, 1989 to June 16, 1989. At the time of entry, subheading 6702.90.40, HTSUS, covered artificial flowers, of man made fibers. Subheading 6702.90.60, HTSUS, then covered artificial flowers, foliage and fruits and parts and articles made from artificial flowers, foliage or fruit not of plastics, feathers and other than artificial flowers covered by subheading 6702.90.40, HTSUS. Apparently, because the types of plants, with the possible exception of the begonia, did hot have flowers, Customs proposed to classify the merchandise under subheading 6702.90.60, HTSUS.

The Customs and Trade Act of 1990 amended subheading 6702.90.40, HTSUS, to eliminate the qualifying words "artificial flowers". Section 479C, Act of August 20, 1990, Pub. L. 101-382. Without the qualifying words then all of the articles described in heading 6702 HTSUS, that were of manmade materials, other than of plastics, would be classifiable in subheading 6702.90.40, HTSUS, rather than in subheading 6702.90.60, HTSUS.

As to effective dates, Section 485(a) provided that the amendments, in general, would apply to articles entered on or after October 1, 1990. Section 485(b)(1) of the Act provided for retroactive application for certain liquidations and reliquidations. The relevant language of Section 485(b) provides with respect to the application of Section 479C:

Notwithstanding section 514 of the Tariff Act of 1930 any other provision of law, upon proper request filed with the appropriate Customs officer after September 30, 1990 and before April 1, 1991, any entry which was made after [December 31, 1988] and before October 1, 1990, and with respect to which there would have been. . . a lesser duty, if any amendment made be section. . . 479C. . . applied such entry, shall be liquidated. . . as though such amendment applied to such entry.

There is some dispute as to whether the protestant's broker was told by Customs whether any request was needed for merchandise that was entered between December 31, 1988 and October 1, 1990 under subheading 6702.90.40, HTSUS. There is no dispute that a timely written request was not delivered to a Customs officer.

The common meaning of the verb "to file" is the delivery of a document. Websters Third International provides:

3(a)(1) to deliver (as a legal paper or instrument) after complying with any condition precedent (as the payment of a fee) to the proper officer for keeping or file among the records of his office. . .

(b) to place (as a paper or instrument) on file among the legal or official records of an office.

Black's Law Dictionary, Fifth Ed.(1979) provides:

. . . To deposit in the custody or among the records of a court. To deliver an instrument or other paper to the proper officer for the purpose of being kept on file by him in the proper place.

The customs cases treat filing as referring to a physical deposit of an item.

The case of U.S. v. Thompson-Starrett, 12 Ct. Cust. Appls. 28, 31 (1923) said that Congress intended an actual physical filing of applications for review in the office of the clerk with applications to challenge a decision of the Board of General Appraisers.

The case of U.S. v. Richard & Co. et. al., 12 Ct. Cust. Appls. 288, 289 (1924) also discussed the common meaning of the word "file" The court found that "file" could mean either to deposit a paper or document in the court or office authorized to receive it or to endorse thereon the date of such presentation or deposit.

There are recent State decisions which construe the term "file" in the same manner. In City of Overland Park v. Nikius, 498 P2nd 56, 59, 209 Kan 643 (1972) the defendant, after having been convicted in a municipal court, attempted to appeal the conviction to a county court. The relevant statute required an appeal to be perfected by filing a notice of appeal in the court where the judgment was rendered. The defendant argued that the statute did not require a written notice. The court disagreed. It found that the word "file" contemplates the deposit of a writing with the proper official.

In Blake v. R.M.S. Holding Co., 341 So. 2d. 795, 799 (Fla App 1977) the court had to construe a statute which required an application for an agricultural assessment to be filed by April

1. The court, in quoting Black's Law Dictionary, 4th Ed. construed that in order to be filed a document or paper must be delivered to and received in the office of the assessor.

In Capital Serv. v. Dahlinger Pontiac-Cadillac, 657 P. 2d. 36, 38-39 (Sup. Ct. Kan. 1983) the court citing the Overland Park case supra , found that the term was not vague and that "filing" contemplates the deposit of an writing with the proper official.

In Weinberg v. Stein, 555 So. 2d 379, 380 (Fla. App. 1989) the issue was whether the rendition of a final judgment could be postponed for appeal purposes by an oral motion. The court held that the word "filed" quite obviously connotes and requires the existence of an identified document as opposed to a mere statement of counsel. It found that it was simply hard to imagine one's verbally "filing" anything.

It could be argued that without a retroactive application of the amendment made by section 479C, only merchandise that consisted of artificial flowers of manmade materials which was entered before October 1, 1990 would have been entitled to be liquidated under subheading 6702.90.40, HTSUS, at 9 percent ad valorem. All other articles of manmade materials in heading 6702 would have been liquidated under subheading 6702.90.60, HTSUS; regardless of the importer's asserted classification on entry. The invoice descriptions of the plant, such as the ivy, maple, and grape, do not indicate whether flowers or buds were present. Under Customs interpretation of subheading 6702.90.40, HTSUS, before the removal of the qualifying words by the amendment, such plants would not have been classifiable in that subheading. Under the statutory scheme of 19 U.S.C. 1500 it was not the importer's classification asserted at entry that determined whether there would have been duty or lesser duty applied to such entry, but the act of liquidation by the appropriate Customs officer. The legislative history confirms that the Customs practice of classification was correct with respect to the statutory language and, that to change that practice, a statutory amendment was needed to restore the pre-HTSUS tariff treatment. 5 U.S. Code Congressional and Administrative News, pg. 935 (1990).

With respect to retroactive application of section 479C, section 485(b) covers any entry that needs to be liquidated. That language in section 485(b) can only refer to an unliquidated entry because once liquidated, the statutory scheme of 19 U.S.C. 1500, 1501, 1514, and 1520 provides only for a reliquidation following a liquidation. Ambassador Division of Florsheim Shoe v. U.S., 3 Fed. Cir. 28, 30 (1984), U.S.v. Fensterer & Ruhe, 12 Ct. Cust. Appls. 410 (1924). With respect to establishment of eligibility for retroactivity, section 485(b) does not provide a
different procedure for unliquidated entries and liquidated entries. The plain language requires a liquidation or reliquidation as though the amendment of Section 479C applied to the entry upon a proper request filed with the appropriate Customs officer in a specific, express time period.

However, it is not clear that an interpretation requiring a literal application of the statutory language of section 485(b) would be the correct interpretation. It is clear that the first introductory phrase of section 485(b), which states - "Notwithstanding section 514 of the Tariff Act of 1930 and any other provision of law" - has no application whatsoever to an unliquidated entry. Section 514 provides that liquidation of an entry becomes final on all parties unless protested timely. By its very provisions, it cannot apply if the entry in issue is unliquidated.

The words "and any other provision of law" in that context are equally inapplicable to an entry that Customs has not liquidated. There is no provision of law that prohibits or prevents a Customs officer from liquidating properly an unliquidated entry. There is no logic under which that introductory phrase can have been intended by Congress as necessary in order to give Customs authority to retroactive treatment to an unliquidated entry.

The second introductory phrase of section 485(b) "upon proper request filed with the appropriate Customs officer" may also be equally inapplicable to an unliquidated entry. Neither the statute nor the legislative history on section 485(b) state the purpose of filing such a request. Section 483(a)(2) of the Customs and Trade Act of 1990 with respect to the reliquidation of certain entries provided for that reliquidation if a request therefore was filed which contained sufficient information to enable the Customs Service to locate the entry or to reconstruct the entry if it could not be located. If a similar purpose was the basis for the second introductory phrase of section 485(b), it is clear that purpose has no application to an unliquidated entry. An unliquidated entry remains in the possession of the Customs officer who is responsible for appraising and classifying the entered merchandise pursuant to 19 U.S.C. 1500. Such an entry does not have to be located or reconstructed. A liquidated entry does not remain with the liquidating Customs officer. The Customs Service, pursuant to 44 U.S.C. 2901-3322, established the Records Control Handbook in order to manage Customs records. Under that Handbook, Schedule 141/3 requires entry records to be stored at the district office for one year after liquidation. Thereafter, those records are transferred to the appropriate Federal Records Center for storage. Those records are destroyed
when six years old. Given the absence of a stated purpose for requiring a request to be filed with respect to an entry that was unliquidated with respect to section 485(b) and the only apparent guidance provided in other similar provisions of the same law is to assist Customs in locating or reconstructing an entry, a literal interpretation of section 485(b) for unliquidated entries is not justified.

In view of our decision to grant the protest on the ground that the protestant's merchandise was classified correctly as a result of section 479C of the Customs and Trade Act of 1990 and that section 485(b) did not require a request for entries that were unliquidated on the act's effective date, there is no reason to address the other issues.

HOLDING:

The protest is granted.

In accordance with Section 3A(ll)(b) of Customs Directire 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, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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