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HQ 226132





October 24, 1996

LIQ-9-01-RR:IT:EC 226132 IOR

CATEGORY: LIQUIDATION

Port Director
U.S. Customs Service
35 West Service Rd.
Champlain, NY 12919

RE: Application for further review of protest No. 0712-94-101078; 19 U.S.C. 1520(c)(1); Mistake of fact; Internal Revenue tax; Drawback; Cigarettes

Dear Sir:

The above-referenced protest was forwarded to this office for review by the former Assistant District Director, Commercial Operations. We have considered the facts and issues raised, and our decision follows.

FACTS:

This protest has been filed against the denial of a request for reliquidation of the subject drawback entry pursuant to 19 U.S.C. ?1520(c)(1). The protestant imported 200 cases of cigarettes on July 27, 1993, and exported 100 cases of cigarettes on August 20, 1993. The subject protest concerns a drawback entry filed by the protestant on August 26, 1993, under which drawback was claimed based on the 100 cases of cigarettes exported on August 20, 1993 (the protest refers to the exportation of 300 cases of cigarettes however the documents indicate that 100 cases were exported). The drawback claim is for Internal Revenue tax paid on the imported cigarettes. A Notice of Action dated December 22, 1993, states that the taxes on cigarettes are not refundable and that the drawback claim is reduced from the amount of tax paid to the duties paid. The drawback claim was denied on January 14, 1994.

By letter dated August 10, 1994, the protestant requested that the drawback entry be reliquidated pursuant to 19 U.S.C. provision for refunding internal revenue taxes paid on cigarettes was overlooked." The protestant cited 19 CFR 24.36(d)(2) as authority for the refund of Internal Revenue taxes previously paid. The 1520(c)(1) petition was denied September 21, 1994, on the grounds that the refund of cigarette tax is not allowed under 19 CFR 191.3, and that drawback of the tax should be requested in accordance with Bureau of Alcohol, Tobacco and Firearms ("ATF") regulations. This protest on the denial of the 1520(c)(1) claim was filed on September 30, 1994. The protest states:

Review of Section 24.36(d)(2) of the Customs Regulations specifically authorizes Customs to refund Internal Revenue Taxes, previously paid on tobacco products.

Customs denial of the 520(c) claim is without merit. Section of the Customs Regulations referred to in the denial (191.3C.R.) is not pertinent to taxes paid but addresses duties that are refundable. Reference is called herein to 191.2 which describes "drawback" indicating same to cover refund of duty, tax or fee.

(Emphasis supplied).

ISSUE:

Whether relief may be granted under 19 U.S.C. ?1520(c)(1) to correct an alleged inadvertence of failure to allow drawback for Internal Revenue tax paid on imported cigarettes?

LAW AND ANALYSIS:

Initially we note that this protest was timely filed pursuant to 19 U.S.C. 1514(c)(2)(B). The date of decision protested was September 21, 1994, and the protest was filed on September 30, 1994. In addition, the refusal to reliquidate an entry under section 1520(c)(1) is a protestable matter pursuant to 19 U.S.C. ?1514(a)(7).

19 U.S.C. ?1514 sets forth the proper procedure for an importer to protest the refusal to pay a claim for drawback when it believes the Customs Service has misinterpreted the applicable law. A protest must be filed within ninety days after notice of liquidation or reliquidation. Otherwise, the denial of a drawback claim is final and conclusive.

19 U.S.C. ?1520(c)(1) is an exception to the finality of section 1514. Under 1520(c)(1) Customs may reliquidate an entry to correct a clerical error, mistake of fact, or other inadvertence, not amounting to an error in the construction of a law. The error must be adverse to the importer and manifest from the record or established by documentary evidence and brought to the attention of the Customs Service within one year after the date of liquidation. The relief provided for in 19 U.S.C. the form of protests under 19 U.S.C. ?1514; section 1520(c)(1) only affords "limited relief in the situations defined therein" (Phillips Petroleum Company v. United States, 54 CCPA 7, 11, C.A.D. 893 (1966), quoted in Godchaux-Henderson Sugar Co., Inc., v. United States, 85 Cust. Ct. 68, 69, C.D. 4874, 496 F. Supp. 1326 (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)). Assuming that a drawback claim can involve an error adverse to the importer, as required by the plain language of 19 U.S.C. Customs misinterpreted the relevant regulation. The protestant alleges that an inadvertence occurred. An inadvertence has been defined as "an oversight or involuntary accident, or the result of inattention or carelessness, and even as a type of mistake." PPG Industries, Inc. v. United States, 7 CIT 118, 124 (1984), citing C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, 336 F. Supp. 1395 (1972), aff'd, 61 CCPA 90, 499 F.2d 1277 (1974) and Hambro Automotive Corp. v. United States, 66 CCPA 113, 603 F.2d 850 (1979). In PPG Industries, at 124, the court was of the opinion that finding anything more than "mere carelessness, a slip of the pen or an accidental failure to attach a document" to be an inadvertence, would require an overly broad reading of that term. A clerical error has been defined as "a mistake made by a clerk or other subordinate upon whom devolves no duty to exercise judgment, in writing or copying the figures or exercising his intention." Id., citing S. Yamada v. United States, 26 CCPA 89 (1938); Geo. Wm. Rueff, Inc. v. United States, 41 Cust. Ct. 399, Abs. No. 62433 (1958); Import Export Service of N.J. v. United States, 38 Cust. Ct. 235, C.D. 1869 (1957).

A mistake of fact occurs when a facts exist, but are unknown, or 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, supra; Hambro Automotive Corp. v. United States, supra; PPG Industries Inc., supra.

The protestant alleges that an inadvertence occurred when a provision for refunding Internal Revenue taxes paid on imported cigarettes was "overlooked." It is clear the present case does not involve an inadvertence, clerical error or mistake of fact. There is no allegation that any documents, figures or facts were unknown, out of order or missing. No occurrence of a clerical error, mistake of fact or other inadvertence is manifest from the record. What is alleged, is that Customs took the position that the Customs Regulations do not allow the refund of Internal Revenue tax on cigarettes, and that such a position is inconsistent with Customs Regulations. The regulation relied upon by the protestant is Customs Regulation 24.36(d)(2), which provides:

(d) The authority of port directors to make refunds pursuant to paragraphs (a), (b), and (c) of this section of excessive deposits of alcohol or tobacco taxes, as defined in section 6423(e)(1), Internal Revenue Code of 1954 (26 U.S.C. 6423(e)(1)), is confined to cases of the types which are excepted from the application of section 6423, Internal Revenue Code of 1954 (26 U.S.C. 6423). The excepted types of cases and, therefore, the types in which the port director is authorized to make refunds of such taxes are those in which:

(2) The refund is made pursuant to provisions of laws and regulations for drawback;

The cited provision provides authority to refund taxes if a refund is made pursuant to the drawback laws. In order to determine whether the drawback laws support the protestant, Customs relied on Subpart K of Title 27 CFR Part 290, which provides for drawback of tax by application to ATF.

It is clear that the protestant's allegation of an "inadvertence" is actually a challenge to a legal conclusion of the Customs Service. As such, it must have been raised by a timely protest pursuant to 19 U.S.C. ?1514(a), as a mistake of law can only be corrected by filing a 1514(a) protest within 90 days after liquidation. See e.g. Computime, Inc. v. United States, supra; B.S. Livingston & Co., Inc. v. United States, 13 CIT 889 (1989). No mistake of law claim pursuant to 1514(a) was made within 90 days of liquidation. Since the protestant failed to file a timely protest under 19 U.S.C. ?1514(a), there is no basis for granting the relief requested.

HOLDING:

The protestant has not established a clerical error, mistake of fact or other inadvertence in the liquidation of the subject entries, and reliquidation of the entries is not permissible pursuant to 19 U.S.C. ?1520(c)(1).

Consistent with the decision set forth above, you are hereby directed to deny the subject protest. 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,

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