HQ 226722 - Application for further review of Protest No. 1401-95-100287; 19 U.S.C. 1520(c)(1); Mistake of fact; Classification of counterweights; Classification ruling - 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 > 1997 HQ Rulings > HQ 226417 - HQ 227026 > HQ 226722

Previous Ruling Next Ruling
HQ 226722

November 12, 1996

LIQ-9-01-RR:IT:EC 226722 IOR

CATEGORY: LIQUIDATION

Port Director
U.S. Customs Service
200 Granby Street
Norfolk, Virginia 23510

RE: Application for further review of Protest No. 1401-95-100287; 19 U.S.C. 1520(c)(1); Mistake of fact; Classification of counterweights; Classification ruling

Dear Sir:

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 protest has been filed against your denial of a request for reliquidation of the subject entries pursuant to 19 U.S.C.

This protest concerns ten entries filed by the protestant from December 25, 1994 through February 27, 1995, covering cast counterweights. Two representative entries (CF 7501s), entry no. 100-01xxx61-6, made on February 19, 1995, and entry no. 100-01xxx59-6, made on February 27, 1996, each describe the imported merchandise as "CAST ARTICLES OF STEEL." The accompanying invoice for each representative entry describes the merchandise as "CSTING-CTWT." In both entries, the merchandise is classified under subheading 7325.99.5000 of the Harmonized Tariff Schedule of the United States (HTSUS). Subheading 7325.99.5000, HTSUS, provides for "Other cast articles of iron or steel: Other: Other: Other" dutiable at a rate of 5.1%. The subject entries were liquidated from April 14, 1995 through June 16, 1995 under subheading 7325.99.5000, HTSUS.

The file includes NY Ruling 810668, dated June 9, 1995, which responds to a May 18, 1996 tariff classification ruling request from the protestant. NY Ruling 810668 states that the counterweights consisting of a grey iron casting, made to specification established by the protestant to fit certain models of fork-lift trucks are classified under subheading 8431.20.0000, HTSUS. Subheading 8431.20.0000, HTSUS, provides for "Parts suitable for use solely or principally with the machinery of headings 8425 to 8430: Of machinery of heading 8427" dutiable at a free rate of duty.

By letter dated September 19, 1995, on behalf of the protestant, the broker for the protestant requested that the subject entries be reliquidated under 19 U.S.C. ?1520(c)(1). The request for reliquidation states the following as grounds for reliquidation:

We originally classified counterweights as articles of metal. At suggestion of inspector, we requested a binding ruling, attached with classification determination of 8431.20.0000 (parts of forklift). Corrected 7501's attached along with original next step entries.

The file contains a representative copy of a corrected CF 7501. On that CF 7501, the entered merchandise is described as "MACH PARTS UNDER 8427", and is classified under 8431.20.0000, HTSUS. The request for reliquidation was denied on December 7, 1995, stating that "errors in classification are considered errors in the construction of the law and cannot be addressed under 19 U.S.C. 1520(c)(1)."

The protestant filed the subject protest on December 11, 1995 against the refusal to reliquidate the ten entries of counterweights under 19 U.S.C. ?1520(c)(1). The protestant incorporates the documentation submitted with its ?1520(c)(1) claim, and as additional grounds for the protest states:

As per attached copy of Court of Appeals decision [ITT Corporation v. United States, 24 F.3d 1384 (Fed. Cir. 1994)], "the trial court and the appellate court both upheld the importer's claim that where the true nature of the merchandise was not understood by the broker at the time of entry, a mistake of fact had occured [sic].["] (Emphasis supplied).

The protestant cites to a summary of the ITT decision published in an International Trade & Transportation Law Bulletin, published by Sonnenberg, Anderson & Rodriguez.

ISSUE:

Whether relief may be granted under 19 U.S.C. ?1520(c)(1) to correct an alleged mistake of fact in the classification of merchandise?

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 December 7, 1995, and the protest was filed on December 11, 1995. In addition, the refusal to reliquidate an entry under ?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 classification and appraisal of merchandise 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 tariff treatment of merchandise is final and conclusive.
19 U.S.C. ?1520(c)(1) is an exception to the finality of 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. 1520(c)(1) is not an alternative to the relief provided for in 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)).

Essentially the protestant's claim is that the subject merchandise was classified under the wrong HTSUS provision. The mistake alleged by the protestant appears to be that either the protestant or the broker did not understand the nature of the merchandise, and that a binding Customs ruling either was not known to, or was overlooked by, the appropriate Customs officials with respect to these subject entries. The protestant has failed to provide any evidence that the subject imported merchandise was the same merchandise as that for which the June 9, 1995 ruling was issued. Therefore, the protestant has failed to establish that any error has occurred, as is required under 19 U.S.C.

However, assuming that a classification error was made, we will address the alleged mistakes of fact. The courts have consistently taken the position that an erroneous classification of merchandise is not a clerical error, mistake of fact, or other inadvertence within the meaning of 19 U.S.C. 1520(c)(1), but is an error in the construction of a law. See, Mattel Inc. v. United States, 377 F. Supp. 955, 72 Cust. Ct. 257, C.D. 4547 (1974); and C.J. Tower & Sons of Buffalo, Inc. v. United States, 336 F.Supp. 1395, 68 Cust. Ct. 17, C.D. 4327, aff'd. 499 F.2d 1277, 61 CCPA 90 (1972). In Degussa Canada Ltd. v. United States, 87 F.3d 1301 (Fed. Cir. 1996), where the District Director was unaware, when he liquidated certain entries, that the classification of other entries of the same merchandise by another district was under review by Customs headquarters, the court found that there was no factual misapprehension about the nature of the merchandise. Instead, the court found that "the only misapprehension was about the proper classification of the merchandise and that..., is a question of law, not a fact." Id., at 1304.

Here, the only error set forth by the protestant is one involving the classification of the imported merchandise. Customs has found that an exception exists and reliquidation is proper when a Customs officer is not aware of a classification ruling. ORR Ruling 75-0026, dated January 24, 1975. That ruling also states, however, that if an import specialist takes note of a Headquarters ruling, and decides it is not applicable to the merchandise, that decision is an error in the construction of the law, excluded from relief under 19 U.S.C. ?1520(c)(1).

As stated above, a mistake of fact must be manifest from the record or established by documentary evidence. The CIT has ruled that mere assertions by a complainant without supporting evidence will not be regarded as sufficient to overturn a Customs official's decision. Bar Bea Truck Leasing Co., Inc. V. United States, 5 CIT 124, 126 (1983). Further, upon an assertion that merchandise has been wrongly classified due to a mistake of fact, "it is incumbent on the plaintiff to show by sufficient evidence the nature of the mistake of fact." PPG Industries, Inc. v. United States, 4 CIT 143, 147-148 (1982), citing Hambro Automotive Corp. v. United States, 81Cust. Ct. 29, 31, 458 F. Supp. 1220,1222(1978) aff'd 66 CCPA 113, C.A.D. 1231, 603 F.2d 850 (1979).

For seven of the ten entries, liquidation occurred prior to the issuance of the NY Ruling. Consequently, the limited exception provided for by ORR Ruling 75-0026 cannot apply to the seven entries liquidated before June 9, 1995. Such a conclusion is consistent with HQ 222895, dated March 12, 1992. In that decision, entries were liquidated within three months of the issuance of a headquarters ruling which changed the classification of similar merchandise. In HQ 222895 the following was stated:

Of significant note is the date of the ruling; it was issued almost three months after the liquidation date .... Obviously, [the ruling] was not in effect at the time of liquidation. Therefore, the ruling could not possibly have any bearing on the importer's (or broker's) classification decision in this case. See, e.g., Customs ruling HQ 722299 (June 24, 1983).

Consequently, no mistake of fact, arising out of the issuance of the NY ruling, is present here, with respect to seven of the ten entries. With respect to the three entries liquidated on and after June 9, 1995, the protestant has provided no documentary evidence to show that the responsible import specialist was unaware of the NY ruling letter. Thus, with respect to the allegation that the issuance of the NY ruling letter is evidence of a mistake of fact, we find there is no evidence presented to establish that any error in the classification of the subject entries was a mistake of fact, and not an error in the construction of the law.

Relief may be granted under 19 U.S.C. ?1520(c)(1) when it is established by sufficient evidence that merchandise has been wrongly classified due to a mistake of fact. See PPG Industries, Inc.v. United States, 4 CIT 143, 147-148; see also Fabrene, Inc. v. United States, 17 CIT 911, Vol. 27, Customs Bulletin, No. 36, p. 9,11 (1993) ("A mistake sufficient to invoke the relief provided for by ?1520(c)(1), is one which goes to the nature of the merchandise and is the underlying cause for its incorrect classification'.") (citing Boast, Inc. v. United States, 17 CIT 114 (1993)). In Degussa Canada Ltd. v. United States, 87 F.3d 1301 (Fed. Cir. 1996), where the District Director was unaware, when he liquidated certain entries, that the classification of other entries of the same merchandise by another district was under review by Customs headquarters, the court found that there was no factual misapprehension about the nature of the merchandise. Instead, the court found that "the only misapprehension was about the proper classification of the merchandise and that..., is a question of law, not a fact." Id., at 1304. Under the foregoing cases, a mistake in the tariff classification of merchandise may only be corrected under 19 U.S.C. ?1520(c)(1), if the mistake goes to the factual nature of the goods (e.g., if the importer thought the goods were watches with a mechanical display when they were actually watches with an opto-electric display) and if that mistake is satisfactorily established (i.e. not only the mistake, but also that the mistake was factual in nature, must be established). For an example of such an application of 19 U.S.C. ?1520(c)(1), see, HQ Ruling 225399, dated March 8, 1994 (which discusses carelessness by a broker in classifying merchandise even though the broker had a clear and correct invoice description of the merchandise).

As stated above, a mistake of fact must be manifest from the record or established by documentary evidence. The CIT has ruled that mere assertions by a complainant without supporting evidence will not be regarded as sufficient to overturn a Customs official's decision. Bar Bea Truck Leasing Co., Inc. V. United States, 5 CIT 124, 126 (1983). Further, upon an assertion that merchandise has been wrongly classified due to a mistake of fact, "it is incumbent on the plaintiff to show by sufficient evidence the nature of the mistake of fact." PPG Industries, Inc. v. United States, supra, 4 CIT at 147-148 (citing Hambro Automotive Corp. v. United States, 81Cust. Ct. 29, 31, 458 F. Supp. 1220,1222(1978) aff'd 66 CCPA 113, C.A.D. 1231, 603 F.2d 850 (1979)). In ITT Corp. v. United States, 24 F.3d 1384, 1387 (Fed. Cir. 1994), the court found that reliquidation under 19 U.S.C. clerical error, mistake of fact, or other inadvertence includes asserting the existence of a clerical error, mistake of fact, or other inadvertence "with sufficient particularity to allow remedial action."

With respect to the allegation that the protestant or its broker was unaware of the nature of the subject merchandise, it appears that the protestant's claim for relief under 19 U.S.C. 2) the protestant's broker believed the merchandise to be articles of metal, and 3) ITT Corp. v. United States, supra, supports the protestant's claim. The protestant appears to conclude that the subject entries should be reliquidated with the subject merchandise classified under subheadings 8431.20.0000, HTSUS.

The protestant has failed to meet either the notice or substantiation requirements for relief pursuant to 19 U.S.C. classification of counterweights and virtually no assertions about the broker's belief regarding the nature of the merchandise. The nature of the protestant's claim is unclear and no assertion of the purported mistake has been presented in sufficient particularity to allow relief.

Even if we were to find the protestant had met the notice requirement, clearly the substantiation requirement has not been met. A mistake of fact must be manifest from the record or established by documentary evidence. See, ITT Corp. v. United States, supra, ("Mistakes of fact that are not manifest from [the] record ... must be established by documentary evidence." 24 F.3d at 1387. Clearly, there is no mistake of fact manifest from the record. Although the protestant has submitted corrected CF 7501's and some invoices, the protestant has failed to explain in any way how the documents support any claim for relief under 19 U.S.C. ?1520(c)(1). For example, the protestant has not demonstrated how the submitted documents show that the protestant or broker was unaware as to the nature of the merchandise, or any other purported mistake, and how any such mistake was a mistake of fact rather than a mistake of law. The protestant has failed to explain how ITT Corp. v. United States, supra, is analogous to its protest and supports its claim for relief.

Consequently, there has been absolutely no basis presented for reliquidating the subject entries pursuant to 19 U.S.C.

Finally, we note that the protest does not meet the requirements for the contents of a protest, section 174.13 of the Customs Regulations (19 CFR 174.13), which provides the following:

(a) A protest shall contain the following information:

(6) The nature of, and justification for the objection set forth distinctly and specifically with respect to each category, payment, claim, decision, or refusal.

Clearly, as discussed above, the protest does not contain a clear explanation of the nature of or justification for the matter protested. Consequently, the protest does not meet the requirements of 19 CFR 174.13.

HOLDING:

The protestant has not established a mistake of fact 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,

Previous Ruling Next Ruling

See also: