HQ 226310 - Application for Further Review of Protest No. 2720/95-100748; Immediate delivery; 19 U.S.C. 1448(b); 19 CFR 142.21(g) - United States International Trade Commision Rulings

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HQ 226310

August 2, 1996

ENT-1-03/ENT-1-07/ENT-5-01-R:IT:EC 226310 GOB

CATEGORY: ENTRY

Port Director of Customs
300 South Ferry Street
Terminal Island, CA 90731

RE: Application for Further Review of Protest No. 2720/95-100748; Immediate delivery; 19 U.S.C. 1448(b); 19 CFR 142.21(g)

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the issues raised by your office and Sony Electronics, Inc. ("the protestant"). Our decision follows.

FACTS:

The protestant protests the following four entries: xxx-xxxxx90-6 dated January 9, 1995; xxx-xxxxx76-8 dated January 11, 1995; xxx-xxxxx24-3 dated January 3, 1995; and xxx-xxxxx69-9 dated January 5, 1995. The protest was timely filed.

The protestant makes the following statements and claims.

The protest relates to entries released on or after December 16, 1994 through December 31, 1994. Protest is made against the liquidation of these entries at 1994 rates of duty rather than the 1995 rates of duty implemented by the Uruguay Round Agreements Act.

The protestant cites the notices issued by the Director, Office of Trade Operations of the Customs Service on December 15, 1994 and December 28, 1994.

The December 15, 1994 notice stated as follows:

The Office of Trade Operations is issuing a blanket authorization for the release of merchandise under the immediate delivery (ID) procedures in accordance with 19 CFR 142.21(g) for those filers that want to take advantage of reduced tariff rates or special programs at the end of the calendar year.

In those instances where the CF3461/CF3461(ALT) is used as the entry and importers wish to change to ID, those documents (CF3461/ALT) must be marked to reflect the change to immediate delivery. This will allow filers to elect a date of entry in order to take advantage of tariff changes or special programs.

The December 28, 1994 notice states as follows:

There has been much confusion due to the late passage of GATT legislation and the resulting delays in ACS programming of both the 1995 tariff and merchandise processing fee rates. Also, instructions issued allowing the filing of immediate delivery's (I.D.) for most importations were not generally understood. This resulted in shipments entitled to I.D. privilege being filed under normal entry procedures. In addition, many electronically filed entries were processed by the system as "entries", not I.D.'s.

Therefore, to ensure equitable and uniform treatment for all filers, the use of the 1995 entry summary date as the entry date for those shipments released on or after December 16, 1994, until December 31, 1994, will be allowed. This will apply exclusively to those shipments that are entitled to the immediate delivery procedure.

The protestant states that it was unable to use the 1995 rates for the following reasons. Customs had not reprogrammed its system with 1995 rates and new classification breakouts. Similarly, the Uruguay Round Agreements Act was passed too late in 1994 for the protestant to reprogram its system for the use of 1995 rates. Customs' system would not accept the alternative of identifying the entries as immediate delivery ("ID") entries by assigning a 1995 entry date, even though 1994 rates had to be used by default.

In a letter dated December 29, 1994, to the District Director, Los Angeles, the protestant's customs broker, Tower Group International, stated:

This letter is to advise Customs that our client, Sony Electronics, Inc., intends to take advantage of the Immediate Delivery Procedure for entries released during the above period for which the duty rates for 1995 are lower than for 1994.

Due to the short notice of GATT, the merchandise processing fee changes, and the late transmission of the modified HTS, we are unable to make timely and accurate changes to transmit 1995 duty rates for Sony's shipments in the time period allowed. Sony uses sophisticated EDI transmissions and internal checks and balances in processing its import shipments. The GATT changes create a considerable amount of work in making adjustments in the enormous database (there are hundreds of thousands of active product codes), and Sony's internal computer audits.

Therefore, we will transmit these "ID" entries using the 1994 duty rates and file protests to recover the excess duties paid. We will clearly mark the CF-3461 and CF-7501 to indicate that the Immediate Delivery Procedure is being requested. A copy of this letter will be attached to the CF-7501 submitted with the ACH statement as well as those held in our office under the paperless electronic summary procedures. Customs computer and ours will not take a transmission with 1994 rates and a 1995 entry date, so we will manually correct this date on the forms.

The protestant states that this procedure was followed for each 1994 entry released on or after December 16, 1994. It asks that it be permitted to use the lower 1995 rates for the merchandise on these entries.

At oral conference the protestant stated that there are "several of dozens of entries" to which this factual situation applies and that there are "thousands of merchandise line items" at issue in these entries. The protestant stated that the four entries protested herein are representative of the "several dozens of entries."

In a submission dated November 9, 1995, the protestant states as follows:

There is no restriction relating to the circumstances in which headquarters may authorize use of the ID. The only limitation or parameter circumscribing the use of the ID is that a bond must be on file, a condition met by SEL. In general then, use of the ID is permissible in all circumstances authorized by Headquarters under 19 C.F.R. ?142.21(g)... ...
Fundamental principles of fairness require that Customs not require the impossible of filers like SEL. The Customs system was insufficiently flexible to accept the only possible means of ID designation at time of electronic filing. To require SEL to overcome this systems flaw in any way other than handled in this case would be fundamentally unfair. SEL should be entitled to rely on Customs to implement its electronic filing regulations in a meaningful way. We should not suffer adverse consequences for Customs failure to accept an electronic ID entry date designation or for the failure to provide 1995 tariff data on a timely basis...

In conclusion, we respectfully request that Customs grant our protest on either of two bases. First, Customs' lawfully provided the ID option without restriction as to when the option had to be selected. Therefore, SEL is entitled to have all eligible entries treated as ID's. Second, SEL expressly availed itself of the ID option by indicating its intent to Customs, notwithstanding the fact that customs system did not accept or treat the filings as ID's. (Emphasis in original.)

ISSUE:

Whether the protestant may use the 1995 duty rates for the merchandise on the protested entries.

LAW AND ANALYSIS:

19 U.S.C. 1448(b) provides as follows:

(b) The Secretary of the Treasury is authorized to provide by regulations for the issuing of special permits, prior to formal entry therefor, of perishable articles and other articles, the immediate delivery of which is necessary.

19 CFR 142.21(g) provides as follows:

(g) When authorized by Headquarters. Headquarters may authorize the release of merchandise under the immediate delivery procedure in circumstances other than those described in paragraphs (a), (b), (c), (d), (e), and (f) of this section provided a bond on Customs Form 301, containing the bond conditions set forth in ?113.62 of this chapter is on file.

19 CFR 141.68(c) provides as follows:

(c) When merchandise is released under the immediate delivery procedure. The time of entry of merchandise released under the immediate delivery procedure shall be the time the entry summary is filed in proper form, with estimated duties attached.

As indicated supra, by Administrative Message 94-1271 of December 15, 1994, the Office of Trade Operations issued a blanket authorization for the release of merchandise under the immediate delivery procedure in accordance with 19 CFR 142.21(g) for filers who wished to take advantage of reduced rates at the end of 1994. Also as indicated supra, by Administrative Message 94-1380 of December 28, 1994, the Office of Trade Operations stated that, with respect to shipments entitled to the immediate delivery procedure, the use of the 1995 entry summary date as the entry date for those shipments released between December 16, 1994 and December 31, 1994 would be allowed. By Administrative Message 94-1380, the Office of Trade Operations acknowledged that there had been "much confusion due to the late passage of GATT legislation and the resulting delays in ACS programming..." That message spoke of ensuring "equitable and uniform treatment for all filers..."

The Customs field office reports that two of the four entries at issue were paperless entries and were not marked as immediate delivery. The protestant states that it was unable to indicate on the electronic filing documents that it wished the immediate delivery procedure. The Customs import specialist has advised this office that, as far as he is aware, there is no way to indicate on the electronic 3461 whether an entry or an ID is being filed.

The words "immediate delivery" were written on the top of the CF 7501's for the other two entries at issue ("the paper entries"). The Customs field office states that the protestant (or its broker) filed the above-referenced letter of December 29, 1994 with the two paper entries.

After a consideration of the record in this protest, we make the following findings.
The actions of the Office of Trade Operations in issuing the Administrative Messages of December 15, 1994 and December 28, 1994 were authorized pursuant to 19 U.S.C. 1448(b) and 19 CFR 142.21(g).

The letter of December 29, 1994 from the protestant's customs broker to the District Director, as excerpted supra, was clear with respect to the intentions of the protestant and the protestant's desire to use the ID procedures which were described in the Administrative Messages, supra. What the protestant was attempting to do was within the scope of what was permitted by the Administrative Messages. With respect to the two paper entries, the protestant filed the letter of December 29, 1994 from its customs broker with each entry, and wrote the words "Immediate Delivery" in hand on the top of the CF 7501's. With respect to the two paperless entries, the protestant states that it was not able to indicate on the electronic filing documents that it desired the immediate delivery procedure.

The factual statements made by the protestant with respect to its inability "to make timely and accurate changes to transmit 1995 duty rates for Sony's shipments in the time period allowed" are not controverted by the record.

Based upon these findings, we determine that the protest should be granted. Under the facts of the subject entries, the protestant should be permitted to use the ID procedure so that it may use the 1995 duty rates. The Office of Trade Operations acted within its authority in permitting the ID procedure via its Administrative Messages. The protestant acted appropriately in trying to avail itself of the ID procedure.

HOLDING:

As detailed supra, the protest is granted.

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, the Freedom of Information Act and other public access channels.

Sincerely,

Director,
International Trade Compliance

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