HQ 950806 - Application for Further Review Protest No. 5501-91-100317; "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 950806

November 2, 1994

LIQ-9-01-CO:R:C:E 950806 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. 5501-91-100317; "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:

Designers Collection, Inc. made an entry of artificial foliage, of man-made fiber, under subheading 6702.90.40, HTSUS, at the duty rate of 9% ad valorem, during the period on May 4, 1989. We assume that a "Notice of Action" (CF 29) regarding a rate advance was issued to the importer and broker which attached Customs Fact Sheet #2 before liquidation.(although a copy does not exist in the case file) since the protestant's argument is based upon its broker's interpretation of the fact sheets. Subsequently, the entry was liquidated on May 3, 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 importer claims that the instructions contained in the fact sheets are ambiguous and confusing. The importer's broker believed that any entries made at the 9% rate between January 1, 1989 and September 30, 1990, would benefit from the retroactive reduction in the duty rate from 17% to 9% without notification to Customs. 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 so that notification to Customs was required for unliquidated or liquidated entries made at the 17% rate after December 31, 1988, and prior to October 1, 1990. Based on the broker's interpretation of the fact sheets that notice was required for any "refund of duties deposited," the broker asserts that no notice was required for artificial foliage properly entered at the 9% rate under subheading 6702.90.40, HTSUS. 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 another importer received in other Customs field offices regarding its 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 section 485(b) of the Customs and Trade Act of 1990 requires any request to be filed in order to apply section 479C of that act to entries that remained unliquidated on that act's effective date?

LAW AND ANALYSIS:

The merchandise is described on the commercial invoice as a quantity of shiny small holly with berries made of polyester. 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 type of plant did not have flowers, Customs proposed to classify the merchandise under subheading 6702.90.60, HTSUS.

The Customs and Trade Act of 1990 (Pub. L. No. 101-382) (hereinafter referred to as the "Act") which was signed into law on August 20, 1990, with an effective date of October 1, 1990, returned the duty rate of artificial foliage of man-made fibers applicable under the Harmonized Tariff Schedule of the United States (HTSUS) to the rate applicable under the prior Tariff Schedules of the United States (TSUS). See section 479C of Pub. L. No. 101-382, which provides "[s]ubheading 6702.90.40 is amended by striking out 'Artificial flowers, of' in the article description and inserting in lieu thereof 'Of'." The legislative history (S. Rep. No. 252, 101st Cong., 2d Sess. 8, reprinted in 1990 U.S. Code. Cong. & Admin. News 935) makes clear that because of an inadvertent change in the conversion from TSUS to the HTS, Customs is now classifying imports of artificial foliage under an HTS subheading subject to a duty of 17 percent. Section 1108 clarifies that artificial foliage is classifiable under HTS subheading 6702.90.40 and thereby restores the previous duty treatment. S. Rep. No. 252. Under the TSUS, artificial foliage of man-made fibers was classified in TSUS item 389.61, subject to the duty rate of 9% ad valorem.

Section 485(a) of the Act generally provided for the applicability of the amendment of the tariff to articles entered for consumption on or after October 1, 1990. Section 485(b)(1) of the Act provided for the retroactive effect of section 479C on entries made after December 31, 1988 and before October 1, 1990, if a proper request was filed with Customs after September 30, 1990 and before April 1, 1991. The Act did not define the contents of a proper request.

Customs issued notices to the public regarding the procedures to follow with regard to Customs administering the retroactive effect of the law through the publication of Customs Fact Sheet #2 on September 7, 1990 (also referred to as "Customs Directive 9250011" by the protestant). Customs in Dallas routinely mailed "Notices of Action" to the broker before liquidation of entries involving artificial foliage informing it that the entries were going to be rate advanced to 17% and also informing the importer that a valid claim for liquidation under the Act must be made referencing the attached Fact Sheet #2. In Fact Sheet #2, it specifically states that:

"[a] request for liquidation or reliquidation will need to be submitted for any refund of duties deposited, whether or not entries have been liquidated, and for entries which qualify for the retroactive reduction."

In Fact Sheet #6 (referred to as "Customs Directive 9249032" by the protestant) dated September 6, 1990, it, in pertinent part, provides:

Until October 1, 1990 classification of artificial foliage will continue as described in Headquarters Ruling Letter 086692 of April 19 [sic], 1990. On October 1, 1990 and thereafter both flowers and foliage, of man-made fibers, will be classifiable in 6702.90.40 . . . Accordingly, until October 1, 1990, classified in agreement with HQ Ruling 086692 [which held the correct classification to be subheading 6702.90.60] and duties deposited but liquidation will be withheld. Beginning October 1, 1990 proper written claims for liquidation or reliquidation of entries will be accepted and processed . . . Claims for liquidation or reliquidation in HTS 6702.90.40 must list the entry numbers of those entries claimed and provide adequate descriptions of the merchandise in order that the claims may be determined to be proper.

It is clear that the Fact Sheets follow a literal reading of Section 485(b). The question is whether a literal reading results is a proper interpretation of the law. Neither the statutory language nor the legislative history provides any guidance as to the underlying Congressional purpose for such a requirement. Where the language of a statute and its meaning is clear, then there is no basis for interpretation. Sandoz Chemical Works v. U.S., 50 CCPA 31 (1963); Lewis, Trustee v. U.S,, 92 U.S. 618 (1876).

As noted above, there is a dispute as to whether there was an oral communication between the protestant's agent and the Customs Service. The protestant's agent has stated that she spoke to a member of the appropriate commodity team at Dallas. In the same affidavit she acknowledged that the named Customs officer disputed the occurrence of the conversation. There is no dispute that no timely request in the form of a paper or document was ever delivered to any 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. Holdinq 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. Dahlinqer 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 a 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.

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 description of the plant, a holly with berries does 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 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 for 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 unliguidated 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(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, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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