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HQ 226007





April 1, 1996

LIQ-9-01-RR:IT:EC 226007 CC

CATEGORY: LIQUIDATION

Port Director
U.S. Customs Service
111 W. Huron Street
Buffalo, NY 14202

RE: Application for further review of Protest No. 0901-94- 100806; 19 U.S.C. 1520(c)(1); mistake of fact; mistake of law claim when request for reliquidation made within 90 days of liquidation; 19 U.S.C. 1514

Dear Sir or Madam:

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 protestant seeks to protest 77 entries, which are claimed to consist of yeast donuts. Customs computer records for the subject entries list the dates of entry ranging from January 29, 1993 to June 4, 1993. The dates these entries were liquidated range from May 21, 1993 to September 17, 1993. The entries were liquidated under subheading 1901.20.00 of the Harmonized Tariff Schedule of the United States (HTSUS), which includes mixes and doughs.

On November 5, 1993 the protestant requested, in accordance with 19 U.S.C. 1520(c)(1), that you reliquidate the entries under subheading 1905.90.10, HTSUS, which includes bread, pastry, cakes, and biscuits.

Therefore, the protestant's claim is that there was a mistake of fact in classifying the merchandise. The protestant claims that the broker who filed the entries believed that the subject merchandise was frozen dough when it was yeast donuts, classifiable under subheading 1905.90.10, HTSUS.

On March 3, 1994 the section 1520(c)(1) claim was denied. Protest, with application for further review (AFR), on the denial of the section 1520(c)(1) claim was filed on May 27, 1994.

The protest and AFR were denied on September 14, 1994. The protestant requested in a letter dated September 27, 1994 that denial of AFR be set aside in accordance with 19 U.S.C. 1515(c). In HQ 225719 of November 23, 1994, we set aside denial of the AFR, and this protest was forwarded to Headquarters.

ISSUE:

Whether a mistake of fact claim made pursuant to 19 U.S.C. 1520(c)(1) may be treated as a mistake of law claim pursuant to 19 U.S.C. 1514 when the request for reliquidation is made within 90 days of liquidation of the subject entries?

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

LAW AND ANALYSIS:

Timeliness and Procedural Issues

Initially, we note that 77 entries were requested to be reliquidated pursuant to 19 U.S.C. 1520(c)(1). The protest of the denial of this request consisted of 77 entries. One of the entries listed in the section 1520(c) claim (3X0-024XXXX8, entered on May 11, 1993 and liquidated on August 27, 1993) is not listed in the protest. One of the entries listed in the protest (3X0-0242XXX4, entered on February 19, 1993 and liquidated on June 4, 1993) is not contained in the list of entries in the section 1520 claim. The same 76 entries are listed in both the section 1520 claim and the protest. Therefore, we will consider that this protest consists of those 76 entries.

Under 19 U.S.C. 1514, a protest must be made within 90 days after the notice of liquidation or reliquidation of an entry. Under 19 U.S.C. 1520(c)(1), a request for reliquidation due to a mistake of fact must be made within one year of the date of liquidation.

The request for reliquidation of the subject entries, made pursuant to 19 U.S.C. 1520(c)(1), was filed with Customs on November 5, 1993. In that request, the broker, on behalf of the protestant, stated the following:

Petitioner respectfully admonishes the Customs Service that no authority exist granting the the (sic) right or option to treat this claim under the purview of Section 514 of the T.H. of 1930 as amended. This is not a protest and is not to be treated as such.

Despite the broker's efforts to preclude relief pursuant to 19 U.S.C. 1514, the courts have found that a request for reliquidation made pursuant to section 1520(c)(1) may be treated as a protest, if it is received within 90 days of the date of liquidation of the entry. Concerning this issue we stated in HQ 224431, dated February 16, 1996, the following:

[T]he Courts have held that a request for reliquidation under 19 U.S.C. 1520(c)(1) is sufficient as a protest under 19 U.S.C. 1514 if it is timely under the latter (i.e., filed with Customs within 90 days of notice of liquidation or reliquidation or of the date of the decision protested) and if it conveys enough information to apprise Customs of the importer's intent and the relief sought and if it is timely (see Mattel, Inc. v. United States, 72 Cust. Ct. 257 C.D. 4547, 377 F. Supp. 955 (1974), and Labay International, Inc., v. United States, 83 Cust. Ct. 152, C.D. 4834 (1979)).

In both of the above cases (Mattel and Labay International), the Court explicitly stated that the request for reliquidation under 19 U.S.C. 1520(c)(1) included the entry numbers, dates of entry and dates of liquidation. The Customs Regulations have long required that a protest contain this information (see 19 CFR 174.13(a)(3) and (4) in the current Customs Regulations, see also, e.g., 19 CFR 17.1(b), 1961 Customs Regulations, Article 849(a), 1937 Customs Regulations, and Article 1070, 1908 Customs Regulations). Consistent with the requirement in the Customs Regulations for this information, the Courts have held that "[t]he entry number, dates of entry and dates of liquidation are among other information required to be set forth in a protest", Grover Piston Ring Co. v. United States, 7 CIT 286 (1984), affirmed, 3 Fed. Cir. (T) 57, 752 F. 2d 626 (1985), citing Noury Chemical Corp. v. United States, 4 CIT 68 (1982) (emphasis added).

The request for reliquidation contained a list of entry numbers, dates of entry, and dates of liquidation. Consequently, any entries liquidated within 90 days of the receipt of the reliquidation request may be treated as a protest pursuant to section 1514. As stated above, the request for reliquidation was received on November 5, 1993. Therefore, any entry liquidated on or after August 7, 1993 may be treated as a protestable matter under section 1514. Of the subject entries, 21 were liquidated on or after August 7, 1993.

On March 3, 1994 the section 1520(c)(1) claim was denied. If the request for reliquidation for the 21 entries is treated as a section 1514 protest, then it becomes important to determine if the denial of March 3, 1994 is a valid denial of the protest for those entries. If so, then the only recourse open to the protestant for those 21 entries would have been to file a civil action in the Court of International Trade in accordance with 28 U.S.C. 2632 within 180 days. See 19 CFR 174.31.

The court in Labay International, supra, decided December 21, 1979, discussed the issue of what constitutes a valid denial of a protest. In that case, the court treated the plaintiff's request for reliquidation pursuant to section 1520(c) as a valid protest when the request was made within 90 days of liquidation. In addition, the court found that the denial of the 1520(c) request served as a valid denial of the protest. The denial was a notation made on the request for reliquidation, which was returned to the proper party. The court stated that denial unequivocally conveyed to the plaintiff that the request was denied. Since the regulations at the time (19 CFR 174.30) did not require anything more as far as form, the notation returned to the plaintiff served as a valid denial of the protest.

In T.D. 80-271, dated October 7, 1980, the regulations to 19 CFR 174.30 were amended concerning denial of a protest. The amended 19 CFR 174.30 required that notice of denial of the protest include a statement of the reasons for denial and a statement informing the protesting party of the right to file a civil action contesting the denial.

The court in F.W. Myers & Co., Inc. v. United States, 6 CIT 299 (1983), discussed the issue of what constitutes a valid denial of a protest under the amended law and regulations. In that case, the court stated, in pertinent part, the following at pages 300, 301:

The requirements for the denial of a protest are specifically provided for in 19 U.S.C. ? 1515(a) and 19 CFR 174.30. Section 1515(a) provides "Notice of the denial shall be mailed in the form and manner prescribed by the Secretary. Such notice shall include a statement of reasons for the denial, as well as a statement informing the protesting party of his right to file a civil action contesting the denial of a protest under section 514 of the Tariff Act of 1930." ... While the statutory provision controlling at the time of Labay required notice to be in the style and manner prescribed by the Secretary, it did not require notice of the right to institute a civil action. Similarly, the regulations, 19 CFR 174.30 (1974), did not require notice of the right to institute a civil action. The Labay case, therefore, is not controlling under the present law.

In F.W. Myers the court also treated the plaintiff's request for reliquidation pursuant to section 1520(c) as a valid protest when the request was made within 90 days of liquidation. The court found that denial of the section 1520(c) request was not a valid denial of the protest when it did not contain a statement to the plaintiff of the right to institute a civil action. The only valid denial was in response to the plaintiff's protest of the denial of the request for reliquidation.

In the present case, the first denial was contained on a copy of protestant's letter of November 5, 1993, requesting reliquidation pursuant to section 1520(c). The denial is stamped with the statement "Returned to Broker, March 3, 1994." In addition, the denial contains the notation, "We do not believe 520 c applicable because it amounts to an error in the construction of law." This denial does not contain notice of the protestant's right to file civil action. Consequently, following F.W. Myers and in accordance with 19 U.S.C. 1515(a) and 19 CFR 174.30, this denial was not a valid denial of a protest.

The first valid denial of a protest occurred on September 14, 1994, the date on which the protest and the AFR on the denial of the request for reliquidation occurred. Since denial of the AFR was ultimately set aside and the protest voided, and the protest is validly before us for review, any entry liquidated within 90 days of the date of the reliquidation request will be treated as a validly protested pursuant to 19 U.S.C. 1514.

As stated above, of the subject entries, 21 were liquidated on or after August 7, 1993, and may be treated as validly protested. Consequently, if a mistake of law concerning classification exists pursuant to section 1514 for these entries, the protest will be granted.

For the remaining 55 entries, liquidated prior to August 7, 1993, the mistake of fact claim will be considered. For those entries the request for reliquidation was made within a year of the dates of liquidation. The protest of the denial of this request was made within 90 days of the date of denial of the section 1520 request. Therefore, 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.

Section 1514 Claim

Section 514 of the Tariff Act of 1930, 19 U.S.C. ? 1514, sets forth the proper procedure for an importer to protest the classification when the importer believes that the Customs Service has misinterpreted the applicable law, and has improperly classified the imported merchandise. Cavazos v. United States, 9 CIT 628 (1985). Pursuant to 28 U.S.C. ? 2639(a)(1), tariff classifications made by Customs are presumed to be correct and the burden of proving that the assigned classification is erroneous is upon the challenging party. See, e.g., Nippon Kogaku (USA), Inc. v. United States, 69 C.C.P.A. 89, 92, 673 F.2d 380, 382 (1982). To determine whether the party challenging Customs classification has overcome the statutory presumption of correctness, the courts have considered whether the government's classification is correct, both independently and in comparison with the importer's alternative. Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984).

The classification of the subject entries was under subheading 1901.20.00, HTSUS, which provided for mixes and doughs for the preparation of bakers' wares of Heading 1905. The protestant claims that the merchandise the subject of this protest is Long John Donuts, Cinnamon Bun Donuts and Premium Ring Donuts, which are not classifiable as dough of subheading 1901.20.00, HTSUS. Instead, the protestant argues, these goods are yeast donuts, classifiable under subheading 1905.90.10, HTSUS, which provided for bread, pastry, cakes, biscuits and similar baked products, and puddings, whether or not containing chocolate, fruit, nuts or confectionery.

Consequently, to overcome the presumption of correctness attached to the classification of the subject merchandise, the protestant must show two things: 1) Long John Donuts, Cinnamon Bun Donuts, and Premium Ring Donuts are classifiable under subheading 1905.90.10, HTSUS; and 2) the subject entries consisted of Long John Donuts, Cinnamon Bun Donuts, and Premium Ring Donuts.

In support of its claim, the protestant has submitted pertinent pages from its Operator's Guide. This guide shows that the protestant's yeast donuts, which include Long John Donuts, Cinnamon Bun Donuts, and Premium Ring Donuts, are ready to finish donuts, which have already been fried before they are shipped. In addition, the protestant submitted a list of the different types of donuts with the corresponding product numbers. Finally, invoices from the company and its broker were included with the file.

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.

To meet the terms of subheading 1901.20.00, HTSUS, the subject merchandise would have to be considered a mix or dough. The evidence produced by the protestant shows that Long John Donuts, Cinnamon Bun Donuts, and Premium Ring Donuts, are frozen, ready-to-finish, yeast donuts, which have already been fried before they are shipped. All that is required to serve them is thawing, warming, and applying icing. Clearly, this merchandise is not dough, but instead is best described under the tariff schedule as a cake or pastry of Heading 1905, HTSUS. Consequently, the Long John Donuts, Cinnamon Bun Donuts, and Premium Ring Donuts are classifiable under subheading 1905.90.10, HTSUS.

All the protestant must now show to rebut the presumption of correctness in the classification of the subject entries is that these entries consisted of Long John Donuts, Cinnamon Bun Donuts, and Premium Ring Donuts. The entry summaries (CF 7501) list the entered merchandise as "mixes/dough, other, oth." All of the invoices before us (both the protestant's and the broker's), purported to be the invoices for the subject entries, list "Long John Donuts," "Cinnamon Bun Donuts," "Premium Ring Donuts," or some combination thereof, along with the corresponding product numbers. Although, there is no invoice number, shipper's reference number, etc. that appears on both the invoices and the entry summaries (CF 7501), there is evidence that strongly suggests that the invoices before us do match the subject entries. For example, there are invoices in which the listed value of the merchandise matches the value contained in the purported corresponding entry summary. In addition, we have before us broker records which list the entry numbers with corresponding merchandise, shipper's reference codes, and value of the entered merchandise. Assuming that these invoices do indeed match the entry summaries, then the subject entries consist of Long John Donuts, Cinnamon Bun Donuts, and Premium Ring Donuts. Consequently, the presumption of correctness in the classification of the subject merchandise would be rebutted, and the protestant will have demonstrated that the subject merchandise is classified under subheading 1905.90.10, HTSUS. Thus, the protest could be granted for these 21 entries (those liquidated on or after August 7, 1993).

Section 1520(c)(1) Claim

The remaining 55 entries (liquidated prior to August 7, 1993), can be considered for the mistake of fact claim. 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.

The protestant states the following concerning the alleged mistake in classifying the subject goods:

The broker understood that the products being imported were frozen dough, when in fact, some of them, which are the articles which are the subject of this protest, were baked goods. Those articles are: Long John Donuts, Cinnamon Bun Donuts and Premium Ring Donuts. Had the broker and had Customs known the true facts, i.e., that these goods were baked goods and not frozen dough, the goods would have been entered and liquidated under the provision of HTSUS No. 1905.90.1050 rather than under HTSUS No. 1901.20.0095. 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 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).

As stated above, assuming the invoices represent the subject entries, both the company's and the broker's invoices describe some of the merchandise as being yeast donuts. For example, all of the invoices before us list "Long John Donuts," "Cinnamon Bun Donuts," "Premium Ring Donuts," or some combination thereof, along with the corresponding product numbers. Therefore, contrary to the protestant's claims, the entry invoices show the true nature of the merchandise. As stated above, a mistake of fact must be manifest from the record or established by documentary evidence. See, ITT Corp. v. United States, 24 F. 3d 1384, 1387 (Fed. Cir. 1994), Mistakes of fact that are not manifest from [the] record ... must be established by documentary evidence." Since the invoices show that the merchandise consisted of yeast donuts, there could be no mistake as to the nature of the merchandise. Instead, the invoice descriptions in the very entry documents indicate that the decision to enter the merchandise as dough was a mistake in the application of the law, only correctable under 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)). Consequently, relief under 19 U.S.C. 1520(c)(1) is not warranted for the 55 entries liquidated prior to August 7, 1993.

Finally, counsel for the protestant has sought to rely on ITT Corp. v. United States, 24 F. 3d 1384 (Fed. Cir. 1994) in support of its claim, stating that the court found in that case that a mistake of fact occurred "in the initial creation of the broker's records." As stated above, however, the invoices show that there was no mistake as to the nature of the merchandise. Consequently, ITT Corp. v. United States, does not support the protestant's claim.

The more analogous case is B.S. Livingston & Co., Inc. v. United States, 13 CIT 889 (1989). The court found in that case that where a correct invoice description existed but the merchandise was improperly classified, no mistake of fact existed.

HOLDING:

The 21 entries liquidated on or after August 7, 1993 were timely protested pursuant to 19 U.S.C. 1514 as a mistake of law claim. Assuming that the invoices do indeed match the entry summaries, the subject merchandise was misclassified, and should be classified, instead, under subheading 1905.90.10, HTSUS. Therefore, the protest could be GRANTED for those 21 entries.

For the remaining 55 entries (those liquidated prior to August 7, 1993), no mistake of fact was present under 19 U.S.C. 1520(c)(1) in an error in the tariff classification of the subject merchandise. Consequently, the protest should be DENIED for those 55 entries.

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,

Director, International Trade

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