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HQ 226554




August 5, 1996

LIQ-11-RR:IT:EC 226554 GEV

CATEGORY: LIQUIDATION

Port Director
U.S. Customs Service
110 South 4th Street
Minneapolis, Minnesota 55401

RE: Protest No. 3501-94-100228; Classification of Stokbord; Subheading 3920.10.00, HTSUSA; Deemed
Liquidation; 19 U.S.C. ? 1504

Dear Sir:

This is in response to your memorandum of November 6, 1995, forwarding the above-referenced protest to this office for further review. Our ruling on this matter is set forth below.

FACTS:

According to the file and Customs records, Hammer's Inc. (the "protestant") was the importer of record of "Stokbord", a particle-board like product made from 100% recycled low density polyethylene plastic with an embossed surface texture plastic film heat-welded to the upper and lower faces. It is used by hog farmers as a floor covering, matting, padding, and wall liner in hog buildings and livestock pens. The Stokbord which is the subject of this protest was imported in 4' x 8' sheets, in 1/4" or «" thicknesses, and weighs approximately 38 lbs. (1/4" thickness) or 70 lbs. («" thickness) per board. It was imported on the following entries:

Entry No. Date of Entry Date of Liquidation 336-1900680-3 04/04/90 03/11/94
336-1900686-0 03/30/90 03/11/94
336-1900748-8 04/20/90 03/11/94
336-1900879-1 05/29/90 03/11/94
336-1901033-4 07/23/90 03/11/94
336-1901272-8 09/12/90 03/11/94
336-1901308-0 09/28/90 03/11/94
336-1901319-7 09/20/90 03/11/94

336-1901341-1 10/01/90 03/11/94
336-1901399-9 10/22/90 03/11/94
336-1901426-0 10/30/90 03/11/94
336-1901481-5 11/23/90 03/11/94

Customs records indicate that the liquidation of each of the above-listed entries was extended three times. The code for the extension was "01". The subject merchandise was liquidated with a classification under subheading 3920.10.00, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), dutiable at the rate of 4.2%. The protestant contends that Customs extensions of the dates of liquidation were invalid and therefore the subject entries should have been liquidated duty-free after 1 year from the respective entry dates by operation of law (i.e., a "deemed" liquidation) under the entered classification of subheading 9817.00.5000, HTSUSA. The grounds stated for the protest were, inter alia, that: (1) the notices of extension were defective on their faces because they failed to properly state an authorized reason for extension; and (2) the extensions were for an unreasonable period of time and constituted an abuse of discretion by Customs.

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 date of liquidation; see 19 U.S.C. ? 1514(c)(3)), and the matter protested is protestable (see 19 U.S.C.

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 (i.e., code "01" mentioned above). 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 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 ? 159.12(b), if the port 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)). The record is devoid of probative evidence substantiating the protestant's contention of unreasonableness on the part of the U.S. Customs Service. In such a case, when the protestant fails to rebut the aforementioned presumption, "the only issue to be decided is whether the extension was permissible under the statute." (15 CIT at 545)

The issue of the permissibility of extension of liquidation was addressed by the Court of Appeals for the Federal Circuit (CAFC) 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, 779 F.Supp. 120 (1992)), wherein 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. There is no evidence in the file, submitted by the protestant or otherwise, proving 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 9817.00.50, HTSUSA, and was ultimately classified under subheading 3920.10.00, HTSUSA. There is affirmative evidence of the need to extend the period for liquidation in order for Customs to ensure the correctness of the claimed classification of the subject merchandise (i.e., the CF 6445A indicates that Customs liquidation of the subject merchandise was based on a pending application for further review of a protest regarding the classification of the same merchandise, ultimately decided by Customs Headquarters in ruling 952796, dated January 29, 1993 (affirmed in Headquarters ruling 955597, dated May 31, 1994)).

It should be further noted that the presumption of legality accorded Customs decisions to extend liquidation discussed in St. Paul, supra, was further bolstered by the CAFC in Intercargo Insurance Company f/k/a International Cargo & Surety Co., (Surety for M. Genauer) v. United States, 83 F.3d 391(Fed. Cir. 1996) (reversing the CIT decision (879 F.Supp. 1338)). In that case the liquidation extension notices in question, which were verbatim of the ones at issue in this protest, read as follows:

THIS IS A COURTESY NOTICE.
THE LIQUIDATION OF THIS ENTRY HAS BEEN EXTENDED; ADDITIONAL TIME IS REQUIRED BY CUSTOMS TO PROCESS THIS TRANSACTION. NO ACTION IS NECESSARY ON YOUR PART UNLESS INFORMATION IS SPECIFICALLY REQUESTED BY CUSTOMS.

The plaintiff claimed that the liquidation extensions were invalid, and the subject entries therefore deemed liquidated by operation of law, because the extension notices did not recite one of the statutory reasons for obtaining additional time for liquidations set forth in 19 U.S.C. determined that fact alone did not render the extended liquidations invalid so long as Customs error in this regard had no prejudicial impact on the plaintiff. In determining that no such prejudicial impact existed in that case, the court stated that the purpose of the notice ("to increase certainty in the customs process by apprising the importer and its surety of the precise period within which final action would be taken on the liquidation") was met. Moreover, the court stated that if the plaintiff believed that Customs did not have a valid statutory reason for the extensions, the plaintiff could seek to have them judicially invalidated on that ground.

Using the analysis of the CAFC in Intercargo, supra, we reach the same conclusion with respect to the protest under consideration. Since the protestant was advised of the subject extensions, and it was not deprived of its opportunity to challenge the extensions in court on the ground that they were not obtained for a statutorily valid reason, it suffered no prejudicial impact justifying an invalidation of the liquidation extensions in question.

Parenthetically, we note that in regard to the protestant's arguments with respect to the classification of the subject merchandise, Customs position in this matter as set forth in rulings 952796 and 955597 remains unchanged.

Accordingly, 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, nor did the protestant suffer prejudicial impact resulting from the liquidation extension notices.

In accordance with ? 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 no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to mailing 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 Ruling 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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