HQ 226410 - Protest 4909-95-100088; Extension of Time for Liquidation; Deemed Liquidation; 19 U.S.C. 1504; 19 U.S.C. 1514 - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1996 HQ Rulings > HQ 226089 - HQ 226535 > HQ 226410

Previous Ruling Next Ruling
HQ 226410

April 29, 1996

LIQ-11-RR:IT:EC 226410 PH

CATEGORY: LIQUIDATION

Area Port Director
U.S. Customs Service
No. 1 La Puntilla
San Juan, Puerto Rico 00901

RE: Protest 4909-95-100088; Extension of Time for Liquidation; Deemed Liquidation; 19 U.S.C. 1504; 19 U.S.C. 1514

Dear Sir:

The above-referenced protest was forwarded to this office for further review. Our decision follows.

FACTS:

According to the file and Customs records, on April 4, 1992, the importer entered certain merchandise ("PLYWD, TROPICAL WD, N/EXC6MM, N/F", according to the entry summary; "SHEETS OF WHITE VIROLA, BABOEN SURINAMENSE, PLYWOOD", according to the invoice) from Brazil. The classification stated by the importer was under subheading 4412.11.20604, duty-free (at the time under consideration, merchandise classified under this subheading could qualify for duty-free Generalized System of Preferences (GSP) treatment when imported from Brazil (see General Note 3, HTSUS

According to Customs records, liquidation of the entry was extended two times. The code for the extension was "01". The date of the first extension notice was February 13, 1993, and that of the second was February 19, 1994. Notices of the extensions were sent to the importer of record and to the surety-protestant.

According to Customs records, at the time of the extensions of liquidations in this case, there was an on-going investigation of the mis-classification of Virola plywood. This investigation was concluded on September 29, 1994.

On January 11, 1995, a Notice of Action (CF 29) was sent to the importer, giving notice of a rate advance as ultimately liquidated (see below).

The entry was liquidated on January 27, 1995. The entry was liquidated with a classification under subheading 4412.12.2060, HTSUS, dutiable at the rate of 8%, with duty in the amount of $2,472.08 (at the time under consideration, merchandise classified under this subheading could not qualify for duty-free GSP treatment when imported from Brazil (see General Note 3, HTSUS (1994))).

Demand on the surety for this duty, with interest, was made on April 30, 1995. The surety filed the protest under consideration on July 20, 1995. The grounds stated for the protest were that: (1) liquidation of the protested entry was extended without proper notice (citing Intercargo Insurance Co. (Genauer) v. United States, CIT Slip Op. 95-37 (printed in the March 29, 1995, Customs Bulletin and Decisions, vol. 29, no. 13, p. 54)); and (2) liquidation of the protested entry was null and void because it was after the 1-year limitation on liquidation and since "all information needed to properly appraise, classify, and assess duties on the subject entry was available ... prior to the one year anniversary date ... the decision to extend the period for liquidation was void ... and each entry liquidated As Entered' by operation of law."

Further review was requested and granted.

ISSUE:

May the protest in this case be granted?

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed (i.e., within 90 days of the demand upon the protestant surety; see 19 U.S.C. 1514(c)(2)) and the matter protested is protestable (see 19 U.S.C. 1514(a)(5)). The certification that the protest is not being filed collusively to extend another authorized person's time to protest, as required for a protest by a surety (see 19 U.S.C. 1514(c)(2)), was provided.

The ground asserted by the protestant for relief is that the entry should have been deemed liquidated as entered. Under 19 U.S.C. 1504, an entry of merchandise not liquidated within 1 year from the date of entry of such merchandise shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record, unless this one-year period for liquidation is extended. The statute authorizes reasons for which liquidation may be extended, including that information needed for the proper appraisement or classification of the merchandise is not available. Authority is provided for regulations prescribing the procedures for such extensions of liquidation.

The Customs Regulations issued under this statute are found in 19 CFR 159.12. Under section 159.12(a)(1), the district director may extend the 1-year statutory period for liquidation for an additional period not to exceed 1 year if information needed by Customs for the proper appraisement or classification of the merchandise is not available. Under section 159.12(b), if the district director extends the time for liquidation as provided above, he is required to promptly notify the importer or the consignee and his agent and surety that the time has been extended and the reasons for doing so.

In this case, the evidence in the file is sufficient to create the presumption that proper notice of extension was given (see, e.g., International Cargo & Surety Insurance Co. (Data Memory Corp.) v. United States, 15 CIT 541, 779 F. Supp. 174 (1991)). In such a case, when the protestant fails to rebut that presumption (there is no evidence in the file alleged to do so), "the only issue to be decided is whether the extension was permissible under the statute" (15 CIT at 545). (As for the Court case cited by the protestant in regard to this issue (Intercargo Insurance Co. (Genauer) v. United States, 979 F. Supp. 1338 (CIT 1995)), we note that this case is under appeal (CAFC No. 95-1334).)

The issue of the permissibility of extension of liquidation was recently addressed by the Court of Appeals for the Federal Circuit. In St. Paul Fire & Marine Ins. Co. [Carreon] v. United States, 6 F. 3d 763 (Fed. Cir. 1993) (reversing the CIT decision (16 CIT 663, 799 F. Supp. 120 (1992)), the Court concluded:

... Customs may, for statutory purposes and with the requisite notice, employ up to four years to effect liquidation so long as the extensions it grants are not abusive of its discretionary authority. Such an abuse of discretionary authority may arise only when an extension is granted even following elimination of all possible grounds for such an extension. There is, in sum, a narrow limitation on Customs discretion to extend the period of liquidation. [6 F. 3d at 768]

The Court went on to state that "Customs decisions to extend are entitled to a presumption of legality unless [the plaintiff] can prove that these decisions were unreasonable" (6 F. 3d at 768).

The protestant has not met its burden in this regard. It has not "prove[d]" that Customs decision was unreasonable, that all possible grounds for extension of liquidation may be eliminated. That is, the merchandise under consideration was claimed to be classifiable under subheading 4412.11.20604, HTSUS, and ultimately classified under subheading 4412.12.2060, HTSUS (we note that the protestant does not contest the correctness of this classification). At the time of the extensions of liquidation, there was an on-going investigation of the mis-classification of Virola plywood (we note that the invoice for the merchandise is for "SHEETS OF WHITE VIROLA, BABOEN SURINAMENSE, PLYWOOD"). The extensions of liquidation were issued before conclusion of this investigation and the one-year periods for which liquidation were extended commenced before conclusion of this investigation. (After the pertinent times in this case, the issue of the proper classification of plywood claimed to be of the genus Virola and imported was addressed by Customs (HQ ruling 957770, March 25, 1995, copy enclosed). According to this ruling, for classification of such merchandise under subheading 4412.11.2060, HTSUS, the importer must establish that at least one outer ply of the plywood is of the wood species of the genus Virola.)

Thus, the protestant has clearly failed to establish the elimination of all possible grounds for extension of liquidation in this case. That is, there is affirmative evidence of the need to extend the period for liquidation to ensure the correctness of the claimed classification of the merchandise (i.e., the referenced investigation of the mis-classification of plywood such as that under consideration). Furthermore, other possible grounds for extension of liquidation include that of obtaining the evidence ruled in HQ ruling 957770 (see above) to be necessary for classification in the claimed classification, as well as evidence pertaining to qualification for GSP treatment (see 19 U.S.C. 2461-2465; 19 CFR 10.171-10.78)) and evidence pertaining to the proper appraisement of the merchandise. The protestant has provided no evidence to establish the elimination of any of these grounds for extension, nor has the protestant "prove[d] that the decision [was] unreasonable" (St. Paul Fire & Marine Ins. Co., supra).

The protest must be DENIED.

HOLDING:

The protest in this case may not be granted because the protestant has not met its burden of proving that Customs extension of liquidation was unreasonable, that all possible grounds for extension of liquidation may be eliminated.

The protest is DENIED. 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, with the Customs Form 19, 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

Previous Ruling Next Ruling