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HQ 225412





June 1, 1995

LIQ-9-01-R:C:E 225412 CC

CATEGORY: LIQUIDATION PROTEST

District Director
U.S. Customs Service
33 New Montgomery Street
San Francisco, CA 94105

RE: Application for further review of Protest No. 2809-93- 101232; 19 U.S.C. 1520(c)(1); mistake of fact; laser diode modules

Dear Sir:

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

FACTS:

This protest has been filed against your denial of a request for reliquidation of the subject entries, pursuant to 19 U.S.C.

The protest concerns 39 entries of laser diode modules, entered between October 18, 1991 and February 5, 1992. These entries were liquidated between April 10, 1992 and May 29, 1992 under subheading 8541.40.95 of the Harmonized Tariff Schedule of the United States (HTSUS), which provided for other photosensitive semiconductor devices, dutiable at 4.2 percent ad valorem. The basis for this classification was Headquarters Ruling Letter (HRL) 088628 (first ruling) of August 20, 1991.

On June 2, 1992 Customs issued HRL 088724 (second ruling) in which laser diode modules were classified under subheading 8541.40.20, HTSUS, which provides for light-emitting diodes, dutiable at 2 percent ad valorem. Following that ruling, the San Francisco District reliquidated under subheading 8541.40.20, HTSUS, all entries of laser diode modules, which had been liquidated prior to June 2, 1992 and timely protested in accordance with 19 U.S.C. 1514. In addition, those entries liquidated after June 2, 1992 and protested under 19 U.S.C. 1514 or 19 U.S.C. 1520(c)(1) were reliquidated under subheading 8514.40.20, HTSUS.

On January 20, 1993 the protestant filed a petition for reliquidation of 64 entries of laser diode modules pursuant to 19 U.S.C. 1520(c)(1). On April 12, 1993, the district approved the petition for the 25 entries liquidated after June 2, 1992; the district denied the petition for the remaining 39 entries, liquidated prior to June 2, 1992. The protestant filed the protest on the denial of the section 520(c)(1) claim on July 9, 1993 for the subject 39 entries.

ISSUE:

Whether Customs properly denied the protestant's request to reliquidate the subject entries under 19 U.S.C. 1520(c)(1)?

LAW AND ANALYSIS:

Initially, we note that both the request for reliquidation under 19 U.S.C. 1520(c)(1) and the protest of the denial of that request under 19 U.S.C. 1514(a)(7) were timely filed.

Under 19 U.S.C. 1520(c)(1), an entry may be reliquidated to correct a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of the law. The error must be manifest from the record or established by documentary evidence and brought to the attention of the appropriate Customs officer within one year from the date of liquidation.

A mistake of fact occurs when a person understands the facts to be other than what they really are and takes some action based on that erroneous belief, whereas a mistake of law occurs when a person knows the true facts of the case but has a mistaken belief as to the legal consequences of those facts. See, e.g., C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, 21, C.D. 4327, 336 F. Supp. 1395 (1972), aff'd, 61 CCPA 90, C.A.D. 1129, 499 F.2d 1277 (1974); Hambro Automotive Corp. v. United States, 81 Cust. Ct. 29, 458 F.Supp. 1220 (1978), aff'd, 66 CCPA 113, 603 F.2d. 850 (1979); and PPG Industries, Inc. v. United States, 7 CIT 118 (1984).

The protest concerns Customs denial to reliquidate the subject entries under subheading 8541.40.20, HTSUS, in accordance with HRL 088724. Thus, according to the protestant, the failure of Customs to apply the correct classification to the subject merchandise constitutes a mistake of fact.

The courts have taken the position that generally an error in the classification of merchandise is not a clerical error, mistake of fact, or inadvertence within the meaning of 19 U.S.C. 1520(c)(1), but is an error in the construction of the law. See, e.g., Cavazos v. United States, 9 CIT 628 (1985); Mattel, Inc. v. United States, 72 Cust. Ct. 257, C.D. 4547, 377 F.Supp. 955 (1974); and Fibrous Glass Products v. United States, 63 Cust. Ct. 62, C.D. 3874 (1969), appeal dismissed, 57 CCPA 141 (1970). In this instance, there is no basis for relief under 19 U.S.C. 1520(c)(1) based solely on an alleged error in the classification of the subject merchandise.

In two recent court cases in which a tariff classification ruling was subsequently modified or revoked, the courts have found that the erroneous classification in the prior ruling is not a basis for claiming mistake of fact. See Boast, Inc. v. United States, Slip Op. 93-20 (Ct. Int'l Trade Feb. 10, 1993) and Fabrene, Inc. v. United States, Slip Op. 93-164 (Ct. Int'l Trade Aug. 16, 1993). In both of those cases a headquarters ruling (first ruling) was modified or revoked by a subsequent ruling (second ruling), resulting in the change in the tariff classification of merchandise. In each of those cases, the plaintiff argued that the error in the classification of entries, liquidated after issuance of the first ruling but prior to issuance of the second ruling, was a mistake of fact and sought reliquidation of its entries under 19 U.S.C. 1520(c)(1) based on the classification in the second ruling. The courts found that an error in judgement on the part of Customs in classifying the merchandise was a mistake of law.

Those two cases are similar to the facts of this protest. A position of Customs concerning the classification of laser diode modules, contained in the first ruling, was changed by a second ruling, HRL 088724, issued on June 2, 1992. As in Fabrene and Boast, the error in classification of the subject entries based on the first ruling was a mistake of law. Therefore, no relief is permissible under 19 U.S.C. 1520(c)(1).

Counsel for the protestant argues, more specifically, that under 19 U.S.C. 1514 liquidation of the subject entries did not become final until 90 days after posting of the bulletin board notice of liquidation. Since the subject entries were liquidated within a month of the second ruling, the liquidations did not become final until after the date of issuance of the second ruling, June 2, 1992. Counsel contends that under 19 U.S.C. 1501 the district had the responsibility to correct the proposed liquidation.

Therefore, counsel for the protestant argues that "a failure to apply a ruling to transactions that are not final is an inadvertent error or a mistake of fact and not a mistake of law." Specifically, the mistake of fact or inadvertence alleged by the protestant was the lack of awareness of or the overlooking of the headquarters decision which resulted in: 1) allowing the bulletin board notice to be posted without applying the headquarters ruling, and 2) allowing the liquidation to become final without applying the headquarters ruling.

As stated above, generally an error in the classification of merchandise is not a clerical error, mistake of fact, or inadvertence within the meaning of 19 U.S.C. 1520(c)(1), but is an error in the construction of the law. Customs has found that an exception exists and reliquidation is proper when a Customs officer is not aware of a classification ruling. ORR Ruling 75-0026, dated January 24, 1975. That ruling also states, however, that if an import specialist takes note of a Headquarters ruling, and decides it is not applicable to the merchandise, that decision is an error in the construction of the law, excluded from relief under section 520(c)(1).

ORR Ruling 75-0026 is a limited exception to the principle that an error in the classification of merchandise is a mistake of law. ORR Ruling 75-0026 applied to a situation in which liquidation occurred after a headquarters classification ruling was issued. For the entries the subject of this protest, liquidation occurred prior to the issuance of the headquarters ruling. Consequently, the limited exception provided for by ORR Ruling 75-0026 cannot apply to the subject entries.

Such a conclusion is consistent with HQ 222895, dated March 12, 1992. In that decision, entries were liquidated within three months of the issuance of a headquarters ruling which changed the classification of similar merchandise. In HQ 222895 the following was stated:

Of significant note is the date of the ruling; it was issued almost three months after the liquidation date .... Obviously, [the ruling] was not in effect at the time of liquidation. Therefore, the ruling could not possibly have any bearing on the importer's (or broker's) classification decision in this case. See, e.g., Customs ruling HQ 722299 (June 24, 1983).

Consequently, no mistake of fact is present here. Since ORR Ruling 75-0026 does not apply to this factual situation, counsel's arguments that the responsible import specialist was unaware of the second headquarters ruling are irrelevant. In fact, at the time of liquidation of the subject entries, clearly the responsible import specialist could not have been aware of a ruling that did not exist. Thus, any error in the classification of the subject entries was not a mistake of fact, but an error in the construction of the law.

In fact, counsel has acknowledged that any error in this factual situation was a mistake of law. Counsel states the district acknowledged a mistake of fact in allowing liquidation under 19 U.S.C. 1500 for those entries liquidated after the date of the ruling, June 2, 1992, but failed to exercise the same authority under 19 U.S.C. 1501 for those entries liquidated prior to the date of the ruling. Counsel states that the district's "misinterpretation of its authority to correct errors under section 1520(c)(1)" is a mistake of law. Counsel then argues that this mistake of law occurred when the district denied the mistake of fact petition for the subject entries on April 12, 1993, and that the protestant timely protested the denial under 19 U.S.C. 1514.

The protest was made on the denial of the section 520(c)(1) claim; therefore it was made pursuant to 19 U.S.C. 1514(a)(7). In any case, it was filed well after 90 days after the date of liquidation of the subject entries. The alleged mistake of law concerns the misclassification of the subject entries. A mistake of law can only be corrected by filing a 19 U.S.C. 1514 protest within 90 days after liquidation. See, e.g., Computime, Inc. Unites States, 9 CIT 553, 622 F.Supp. 1083 (1985) and B.S. Livingston & Co., Inc. v. United States, 13 CIT 889 (1989). No mistake of law claim pursuant to 19 U.S.C. 1514 was made within 90 days of liquidation. Since the protestant failed to file a timely protest under 19 U.S.C. 1514, there is no basis for granting the relief requested.

The protestant chose to seek relief pursuant to 19 U.S.C. 1520(c)(1) rather than 19 U.S.C. 1514. The courts have found that the relief provided for in 19 U.S.C. 1520(c)(1) is not an alternative to the relief provided for in the form of protests under 19 U.S.C. 1514; 19 U.S.C. 1520(c)(1) only offers "limited relief in the situations defined therein" (Phillips Petroleum Company v. United States, 54 CCPA 7, 1, C.A.D. 893 (1966), quoted in Godchaux-Henderson Sugar Co., Inc., v. United States, 85 Cust. Ct. 68, 69, C.D. 4874 (1980); see also, Computime, Inc. v. United States, 9 CIT 553, 555, 622 F. Supp. 1083 (1985), and Concentric Pumps, Ltd. v. United States, 10 CIT 505, 508, 643 F. Supp. 623 (1986)). There would have been no burden on the protestant to file timely protests for the subject entries. In fact, the record shows that the protestant did file timely protests pursuant to 19 U.S.C. 1514 for certain entries of laser diode modules liquidated prior to June 2, 1992, and relief was granted. Based on the above-cited cases, since the protestant failed to seek similar relief for the subject entries and attempted to use section 520(c)(1) as an alternative, the relief sought cannot be granted.

The protestant seeks to rely on George Weintraub & Sons, Inc. v. United States, 12 CIT 643, 691 F.Supp. 1449 (1988), rehearing denied, 12 CIT 1107, 703 F.Supp. 1107 (1988) in support of its claim for relief. That decision was vacated on August 22, 1989 by an unpublished order, which was published on June 24, 1994, 855 F. Supp. 401 (CIT 1994), Slip Op. 94-102. Thus any reliance on the Weintraub decision is misplaced.

HOLDING:

No mistake of fact was present under 19 U.S.C. 1520(c)(1) in an alleged error in the tariff classification of the subject entries. Consequently, the protest should be denied in full.

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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