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HQ 226751




April 23, 1997

LIQ-4-02/LIQ-11-RR:IT:EC 226751 LTO

CATEGORY: LIQUIDATION

Port Director
U.S. Customs Service
423 Canal Street
New Orleans, Louisiana 70130
Attn: Protest Office, Room 200

RE: Protest 2002-95-100560; countervailing duties; men's woven cotton shirts; interest; 19 U.S.C. 1514; 19 U.S.C. 1673e; 19 U.S.C. 1677g; HQs 225382, 225597, 225650; Mitsubishi Electronics America, Inc. v. U.S.; Timken Co. v. U.S.; Fujitsu Ten Corp. v. U.S.; Sandvik Steel Co. v. U.S.; 59 FR 25609

Dear Port Director:

This is in reference to Protest 2002-95-100560, which concerns the imposition of interest on countervailing duties assessed at liquidation. The merchandise, men's woven cotton shirts, was entered between June 26, 1992 and September 10, 1993, and the entries were liquidated on February 10 and February 17, 1995. This protest was timely filed, pursuant to 19 U.S.C. 1514(c), on April 11, 1995.

FACTS:

In 1985, Commerce issued a countervailing duty order on Certain Apparel from Thailand (C-549-401) (50 FR 9818; March 12, 1985). The scope of this order was originally defined solely in terms of the Tariff Schedules of the United States (TSUS) item numbers; no narrative product description was provided. On January 1, 1989, the United States fully converted from the TSUS to the Harmonized Tariff Schedule of the United States (HTSUS).

On May 17, 1994, Commerce, after several attempts at publishing an accurate conversion from the TSUS to the HTSUS to reflect the scope of the original order, published an amended conversion ("Amended 1989 Conversion") (59 FR 25609). The - 2 -
previous amended conversions can be found in 54 FR 993, dated January 11, 1989, and 58 FR 4151, dated January 13, 1993.

In the instant case, countervailing duties were not deposited at the time of entry. The protestant states that because "it was aware that other districts were requiring the deposit of countervailing duties on this merchandise [men's woven cotton shirts], entered the merchandise as subject to countervailing duties and attempted to deposit estimated countervailing duties." The entries were not accepted and the protestant was required to resubmit them without the deposit. However, at liquidation, countervailing duties were assessed along with interest for the period between the date of entry and date of liquidation.

ISSUE:

Whether interest for the period between the date of entry and date of liquidation should have been collected along with the countervailing duties.

LAW AND ANALYSIS:

The protestant protests the assessment of countervailing duties with interest for the period between the date of entry and date of liquidation. The first issue is whether this matter is protestable under 19 U.S.C. 1514.

Under the applicable statutes, the Department of Commerce, not Customs, has the authority to calculate and determine antidumping and countervailing duties. In Mitsubishi Electronics America, Inc. v. United States, 44 F.3d 973 (Fed. Cir. 1994), the court stated:

Commerce, not Customs, calculates antidumping duties. The Trade Agreements Act of 1979 (1979 Act) transferred administration of the antidumping laws from the United States Treasury Department to Commerce. Pub.L. No. 96-39, section 101, 93 Stat. 144, 169-70 (1979). Under the present antidumping law, Commerce calculates and determines antidumping rates. 19 U.S.C. 1675 (1988 & Supp. V 1993). Commerce conducts the antidumping duty investigation, calculates the antidumping margin, and issues the antidumping duty order. Commerce then directs Customs to collect the estimated duties. See 19 U.S.C. 1673e(a)(1)(1990).

Since the Trade Agreements Act of 1979 also transferred administration of the countervailing duty laws from the Treasury Department to Commerce, the above principle of Commerce determining antidumping duties would also apply to countervailing duties.

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." Concerning the role of Customs in liquidating antidumping duties, which would also apply to the liquidation of countervailing duties, the court stated in Mitsubishi Electronics, at page 977:

Further, Customs has a merely ministerial role in liquidating antidumping duties under 19 U.S.C. 1514(a)(5). Customs cannot 'modify . . . [Commerce's] determinations, their underlying facts, or their enforcement.' Royal Business Machs., Inc. v. United States, 507 F.Supp. 1007, 1014 n.18 (Ct. Int'l Trade 1980), aff'd, 669 F.2d 692 (CCPA 1982).

In Fujitsu Ten Corp. v. United States, CIT Slip Op. 97-11 (January 29, 1997), and Sandvik Steel Co. v. United States, CIT Slip Op. 97-13 (February 13, 1997), appeal docketed, the CIT recently held that it was without jurisdiction to consider plaintiffs' complaints alleging that Customs improperly applied antidumping duty orders to their merchandise because such complaints necessarily concern the scope of the antidumping duty orders and do not, therefore, fall within the purview of 19 U.S.C. 1514(a). Consequently, the court dismissed the importers' attempts to pursue antidumping or countervailing duty scope matters through Customs protest procedures. Fujitsu Ten and Sandvik specifically rule that a protest cannot be used to attempt to remedy an importer's failure to protect its rights by following proper procedures with Commerce. See 19 CFR 353.29.

Similarly, the assessment of interest on overpayments or underpayments of countervailing duties pursuant to section 778 of the Tariff Act of 1930, as amended (19 U.S.C. 1677g(a)), when assessed according to instructions from Commerce, is not challengeable by protest under 19 U.S.C. 1514. See ABC International Traders, Inc. v. United States, CIT Slip Op. 95-97 (May 23, 1995); Mitsubishi Electronics; Nichimen America v. United States, 938 F.2d 1286 (Fed. Cir. 1991); HQ 225382, dated - 4 -

July 3, 1995. It is therefore necessary to consider Commerce's liquidation instructions in the instant case.

In 1985, Commerce issued a countervailing duty order on Certain Apparel from Thailand (C-549-401) (50 FR 9818; March 12, 1985). This order was subsequently amended several times in an effort to account for the transition from the TSUS to the HTSUS. The Amended 1989 Conversion included subheading 6205.20.20, HTSUS, which covers the merchandise in question. Customs was instructed by Commerce to liquidate, without regard to countervailing duties, all unliquidated entries of the subject merchandise not covered in the Amended 1989 Conversion that were exported on or after January 1, 1989. Customs was also instructed to liquidate at the appropriate rate all unliquidated entries of the subject merchandise covered in the Amended 1989 Conversion "that were exported on or after January 1, 1989, but not after December 31, 1993, except for entries made between January 1, 1991 and December 31, 1991." The merchandise in question was entered between June 26, 1992 and September 10, 1993, and was therefore covered by the Amended 1989 Conversion.

Based on the Amended 1989 Conversion, Customs transmitted scope clarification and liquidation instructions, pursuant to Commerce instructions, on September 1, 1994 (Message 4244115, Paragraph 4), which instructed the appropriate Customs officials as follows:

The provisions of Section 778 of the Tariff Act [19 U.S.C. 1677g] require that interest be paid on overpayments or underpayments of amounts deposited as estimated countervailing duties. Such interest is payable at the rate in effect under section 6621 of the Internal Revenue Code of 1954 for such period. The interest shall be calculated at that rate from the date of payment of estimated duties through the date of liquidation.

The term "amounts deposited" found in 19 U.S.C. 1677g(a) refers only to cash deposits of estimated countervailing or antidumping duties upon entry is required and not when Commerce permits other kinds of security such as a bond. See Timken Co. v. United States, 777 F.Supp. 20 (CIT 1991), aff'd, 37 F.3d 1470 (Fed. Cir. 1994); see also 19 CFR 355.24. The protestant contends that the applicability of the interest provision is predicated on the existence of such deposits, and that Customs failed to follow Commerce's instructions by attempting to collect interest where there was no duty deposited. We addressed a similar contention in HQ 225382. - 5 -

In HQ 225382, we held that "an importer who posts a bond rather than making the required cash deposit is liable for the assessment of interest on antidumping duties. The fact that Customs mistakenly accepted a bond in lieu of a cash deposit does not relieve the importer of the statutory obligation to make a cash deposit." See 19 U.S.C. 1673e. Customs cannot waive the statutory requirement of 19 U.S.C. 1673e. See, generally, Romar Trading Co., Inc. v. United States, 27 Cust. Ct. 34, C.D. 1344 (1951); Swan Tricot Mills Corp. v. United States, 63 Cust. Ct. 530, C.D. 3948 (1969).

In the instant case, Customs was instructed by Commerce to collect interest pursuant to 19 U.S.C. 1677g "from the date of payment of estimated duties through the date of liquidation." Therefore, Customs correctly liquidated the entry with interest based on "the difference between countervailing duty deposited on this merchandise ($0.00) and the final amount determined to be due." See American Hi-Fi International, Inc., v. United States, CIT Slip Op. 96-121 (August 2, 1996) ("If the importer pays too little [interest], or nothing at all, it must pay interest on the shortfall").

Accordingly, the protestant has not alleged any error on the part of Customs that could form the basis of a valid protest. Instead, the protestant challenges the determination of whether interest should be applied to its entries. As stated above, once Commerce instructs Customs to assess interest, this determination cannot be challenged under 19 U.S.C. 1514.

HOLDING:

Based on Commerce's instructions, Customs correctly collected interest based on the difference between countervailing duty deposited on the merchandise in question ($0.00) and the final amount determined to be due. The protest should be DENIED, as the issue was not one subject to protest.

In accordance with section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, 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 the 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 - 6 -

Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

Director, International Trade
Compliance Division

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