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HQ 226010




March 21, 1997

LIQ-9-01-RR:IT:EC 226010 CC

CATEGORY: LIQUIDATION

Port Director
U.S. Customs Service
300 S. Ferry Street
Terminal Island
San Pedro, CA 90731

RE: Protest No. 2720-94-100839; TIB; 19 CFR 10.31(g); mistake of fact; subheading 9813.00.35, HTSUS

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 protests 10 entries, which consist of racing engines. Customs computer records for the subject entries list the dates of entry ranging from March 29, 1994 to April 27, 1994. The dates these entries were liquidated range from July 15, 1994 to September 2, 1994. The entries were liquidated under subheading 8407.34.45 of the Harmonized Tariff Schedule of the United States (HTSUS), which provides for spark-ignition reciprocating or rotary internal combustion piston engines at the heading level.

The protestant claims that the subject entries are eligible for duty-free treatment as temporary importations under bond (TIB) under subheading 9813.00.35, HTSUS. The protestant argues that the subject entries should be changed from consumption entries to TIBs in accordance with section 10.31(g) of the Customs Regulations (19 CFR 10.31(g)).

Protest, with application for further review (AFR), was filed on September 20, 1994. Submitted with this protest is a memorandum dated August 15, 1994.

The protest and AFR were denied on September 30, 1994. The protestant requested in a letter dated November 25, 1994 that denial of AFR be set aside in accordance with 19 U.S.C. 1515(c). In HQ 225833 of January 6, 1995, we set aside denial of the AFR, and this protest was forwarded to Headquarters.

The protest listed 11 entries as being protested. In a letter dated September 21, 1994, the protestant requested that one of the entries (X0X-XXXX733-7) be excluded from consideration. Therefore, 10 entries are being protested.

ISSUE:

Whether the subject entries may be changed from consumption entries to TIBs pursuant to 19 CFR 10.31(g)?

LAW AND ANALYSIS:

Initially, we note that one of the protested entries, XX4-XXXX724-1, was entered under a TIB. Since the protestant is requesting that the subject entries be changed to TIB entries, there is nothing to protest concerning this particular entry. Consequently, we will consider the protestant's claims for the remaining 9 entries.

Customs has the authority to grant or deny protestable decisions. According to 19 U.S.C. 1514(a), these include, "decisions of the Customs Service, including the legality of all orders and findings entering into the same, as to ...(5) the liquidation or reliquidation of an entry, or reconciliation as to the issues contained therein, or any modification thereof."

The matter protested in the submission of September 20, 1994 concerned the liquidation of certain entries as consumption entries under subheading 8407.34.45, HTSUS. Consequently, the matter protested was protestable in accordance with 19 U.S.C.

The subject entries were liquidated from July 15, 1994 to September 2, 1994. The protest on the liquidation of these entries was filed on September 20, 1994. Consequently, the protest was timely filed for all of the subject entries.

Through the protest the protestant is seeking to change the subject entries from consumption entries to TIBs. In order to effect this change, the protestant relies on 19 CFR 10.31(g), which states the following:

Claim for free entry under Chapter 98, Subchapter XIII, HTSUS may be made for articles of any character described therein which have been previously entered under any other provision of law and the entry amended accordingly upon compliance with the requirements of this section, provided the articles have not been released from Customs custody, or even though released from Customs custody if it is established that the original entry was made on the basis of a clerical error, mistake of fact, or other inadvertence within the meaning of section 520(c)(1), Tariff Act of 1930, as amended, and was brought to the attention of the Customs Service within the time limits of that section. If an entry is so amended, the period of time during which the merchandise may remain in the Customs territory of the United States under bond shall be computed from the date of importation....

To enter merchandise temporarily under bond, the importer must provide the HTSUS subheading number under which entry is claimed. 19 CFR 10.31(a). Consequently, in order for the protestant to change the subject entries from consumption entries to TIBs, the protestant must show that the entries are classifiable under a subheading providing for temporary importation under bond.

The protestant claims that the subject entries are classifiable under subheading 9813.00.35, HTSUS, which provides for automobiles, motorcycles, bicycles, airplanes, airships, balloons, boats, racing shells and similar vehicles and craft, and the usual equipment of the foregoing; all the foregoing which are brought temporarily into the United States by nonresidents for the purpose of taking part in races or other specific contests.

The subject entries consisted of racing engines for use in Indy-style racing cars. Clearly, the racing engines would be considered the usual equipment of automobiles. In addition, the protestant has provided evidence that the racing engines were used in cars for Indy-style races. Thus, the remaining issue for meeting the terms of subheading 9813.00.35, HTSUS, is whether the racing engines were brought temporarily into the United States by nonresidents.

The protestant states that the subject engines were imported after its parent company, a Japanese corporation, decided to participate in Indy-style racing in the U.S. A new corporation was formed, the protestant, to coordinate technical operations for participation in the Indy-style races. The protestant was formed as a subsidiary corporation and is an American corporation. The protestant was listed as the importer of record for the subject entries.

Concerning the issue of what Customs considers a nonresident for purposes of subheading 9813.00.35, HTSUS, Customs has found, under that subheading's predecessor, 864.35, Tariff Schedules of the United States (TSUS), that nonresident refers to only nonresident individuals or persons and not to a foreign firm or corporation. DB 542.11 (1959). The protestant acknowledges this position in its protest.

The protestant claims that the engines were brought into the U.S. temporarily, which is evidenced by the fact that many had already been shipped back to Japan at the time the protest was filed. Concerning the issue of whether the engines were brought in by a nonresident, the protest was denied because the importer of record was a corporation rather than an individual. The protestant does not dispute Customs position that for purposes of subheading 9813.00.35, nonresident refers to individuals. Instead, the protestant claims nonresident individuals had direct and specific responsibility for coordinating, testing and utilizing the subject engines. The protestant states that approximately 20 individuals received visas to travel to the U.S. from Japan in connection with the importation of these engines. The protestant has provided statements from some of these individuals concerning their activity and responsibility in relation to the imported engines.

In a supplemental submission, the protestant explained its position further on this matter. The protestant claims that certain TIB provisions use the language "imported by," whereas 9813.00.35, HTSUS, uses the language "brought temporarily into." The protestant claims that the difference in language shows an intent that 9813.00.35 does not require that the merchandise be imported by nonresidents. The protestant also argues that the difference in language of these various TIB provisions was originally enacted by Congress at the same time in the early 1900's, indicating that if a particular party were required to be the "importer" Congress used the term "imported by."

To accept the protestant's argument one must conclude that there is a distinction between the language "imported by" and "brought temporarily into." We see no such distinction in the plain meaning of the language, nor has the protestant offered any evidence of an intent by Congress that the language mean something other than the plain meaning.

We see no difference between the language "imported" and "brought into." There are numerous court cases in which importation is defined as bringing in. For example, the court in United States v. Estate of Boshell, 14 Ct. Cust. App. 273, T.D. 41884 (1922) stated the following:

The common ordinary meaning of the word "import" is to bring in. Imported merchandise is merchandise that has been brought within the limits of a port of entry from a foreign country with intention to unlade, and the word "importation" as used in tariff statutes, unless otherwise limited, means merchandise to which that condition or status has attached.

In United States v. Field & Co., 14 Cust. Appls. 406, T.D. 42052 (1927) the court, quoting Cunard S.S. Co. v. Mellon, 262 U.S. 100, at p. 122, stated the following:

Importation, in a like sense, consists in bringing an article into a country from the outside. If there be an actual bringing in, it is importation regardless of the mode in which it is effected.

The protestant claims that because the language "brought into by nonresidents" for the purpose of taking part in races, the precursor to the current 9813.00.35, was enacted at the same time as other TIB provisions in which the language "imported by" is used, Congress intended that when "brought into" was used the identity of the actual importer does not effect eligibility for TIB treatment, whereas when the language "imported by" is utilized the identity of the importer must be established to qualify for TIB. The statute that the protestant cites was Section IV, subsection J, subsection 4, Tariff Act of 1913, which provided for the free importation under bond for:
machinery or other articles to be altered or repaired, molder's patterns for use in the manufacture of castings..., models of women's apparel imported by manufacturers for use as models..., and automobiles, motor cycles, bicycles, aeroplanes, airships, balloons, motor boats, racing shells, teams, and saddle horses, and similar vehicles and craft brought temporarily into the United States by nonresidents for touring purposes or for the purpose of taking part in races or other specific contests.

As stated above, we see nothing in the plain meaning of the language of this provision to differentiate importation from bringing in. In addition, the protestant has provided no evidence that Congress intended anything other than the plain meaning of the language; all that the protestant has done is make claims concerning what Congress intended. Finally, we are not aware of any cases in which it was decided that there are different requirements for those articles for which the language is "imported by" as opposed to those articles that are "brought into by" under this statute or those following it.

Finally, the protestant argues that the racing engines were brought in by nonresidents since nonresidents were directing the protestant's efforts in installation and use of the engines in races. The language of 9813.00.35, HTSUS, is brought in by nonresidents. As stated above "bringing in" is the definition of "importation." Thus a plain reading of the provision is that a nonresident must import the merchandise. The protestant, the importer of record, is a domestic corporation, thus it clearly is not a nonresident.

The protestant argues that since it was nonresidents who directed the use of the racing engines, it was nonresidents who brought in the engines. There is no evidence that these nonresident individuals were the importers. Just as it is the importer who is liable for duties, 19 CFR 141.1(b), it is the importer who is liable for failure to export a temporary importation under bond in the required time period. Clearly, we cannot agree that these individuals were importers of the engines when there is no evidence of such and Customs would have no ability to hold them liable for duties due on a consumption entry or for failure to export on a TIB.

Even if we were to find that the racing engines were eligible under subheading 9813.00.35, HTSUS, as TIBs, we do not believe that the protestant has established there was a mistake of fact. The protestant claims that the reason it entered the racing engines as consumption entries rather than TIBs was that it was the first time it was participating in Indy-style races and the protestant was unaware that the engines would be shipped back to Japan and therefore would be in the U.S. temporarily.

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).

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."

In support of its claim the protestant has submitted a letter dated September 21, 1994, from the protestant's Customs Department to Customs-L.A., with an engine shipping schedule attached. The protestant states in the letter that the engine shipping schedule was prepared by its parent company and was received by fax the day before the date of the letter. The engine shipping schedule, which is dated January 21, 1994, indicates that when it was prepared there was an intention to ship many of the engines back to Japan after they were used in races. The protestant argues that since its Customs Department was not aware of this information, consumption entries were made for the racing engines.

We do not find that the documentary evidence supports the protestant's claim. The purported faxed copy of the engine shipping schedule has no date showing when it was faxed. In addition, the protestant first brought to Customs attention the purported mistake of fact in a memorandum dated on August 15, 1994. This indicates that the protestant was aware that the engines would be shipped back to Japan prior to the date the engine shipping schedule was faxed to the protestant.

Finally, as stated earlier, one of the entries which the protestant is protesting was actually a TIB. This indicates that the protestant was aware of the information concerning the racing engines but made a decision that the remaining entries were not eligible for TIB. In Universal Cooperatives, Inc., v. United States, 13 CIT 516, 715 F. Supp. 1113 (1989), the court distinguishes between decisional mistakes, "in which a party may make the wrong choice between two known alternative set[s] of facts" (a mistake of law), and ignorant mistakes, "in which a party is unaware of the existence of the correct alternative set of facts" (a mistake of fact). Based on the foregoing, the protestant appeared to choose the alternative of entering the engines as consumption entries, rather than as TIBs, a decision made not on ignorance of the facts. Such a decision would be a mistake of law and not a mistake of fact. Consequently, even if the subject merchandise were eligible for TIB, we would find no mistake of fact was present.

HOLDING:

The protest to change consumption entries to TIBs under 19 CFR 10.31(g) is DENIED, since the subject entries are not eligible for TIB treatment under 9813.00.35, HTSUS.

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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