HQ 227036 - Protest No. 2304-96-100016; Clerical Error, Mistake of Fact, or other Inadvertence; Claim for Preferential Tariff Treatment under NAFTA; 19 U.S.C. 1514; 19 U.S.C. 1520(c)(1); 19 U.S.C. 1520(d) - United States International Trade Commision Rulings

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HQ 227036

January 23, 1997

LIQ-9-01-RR:IT:EC 227036 PH

CATEGORY: LIQUIDATION

Port Director of Customs
819 Water Street, Building # 6
Laredo, Texas 78040
ATTN: Protest Section

RE: Protest No. 2304-96-100016; Clerical Error, Mistake of Fact, or other Inadvertence; Claim for Preferential Tariff Treatment under NAFTA; 19 U.S.C. 1514; 19 U.S.C. 1520(c)(1); 19 U.S.C. 1520(d)

Dear Sir or Madam:

The above-referenced protest was forwarded to this office for further review. We have considered the evidence provided and the arguments made by the protestant, as well as Customs records relating to this matter. Our decision follows.

FACTS:

According to the file and Customs records, on April 6 and 12, 1994, the protestant entered certain merchandise (entry numbers 22...532 and 22...650, respectively). According to the protestant, the merchandise was entered without a claim for NAFTA treatment (the protestant states "the MX indicator was not applied to this entry" (we assume the protestant means "these entries", as two entries are protested)).

The entries were liquidated on May 5, 1995 (according to Customs records, liquidation was extended once for each entry, with Code 01 given as the reason for liquidation (information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer) and timely notice of extension of liquidation was issued).

On October 20, 1995, the protestant filed requests for reliquidation of the entries under 19 U.S.C. 1520(c)(1). On December 21, 1995, these requests for reliquidation of the entries were denied. The reason given for the denial, in the notices of denial, was:

The situation described in your request has been carefully reviewed and, in the opinion of this office, does not meet the criteria of Section 520(c)(1) as constituting a "clerical error, inadvertence, or mistake of fact."

On January 23, 1996, the protestant filed the protest under consideration. The arguments made in the protest are:

We requested reliquidation of the above referenced entries under [19 U.S.C. 1520(c)] to correct a mistake of fact. The mistake of fact was based on the complexity of the bill of materials the facts that the articles qualified under the provisions in GN 12(a) - 12(t) of the HTS and NAFTA agreement was unknown. Therefore the MX indicator was not applied to this entry. [Emphasis in original.]

The protestant quotes from CIT Slip Opinion 85-115 (Computime, Inc. v. United States, 9 CIT 553, 622 F. Supp. 1083 (1985)), as follows:

[M]istake of fact has been defined as "a mistake which takes place when some fact which indeed exists is unknown, or a fact which is thought to exist, in reality does not exist" [emphasis added by protestant].

The protestant concludes by stating:

Therefore, the facts that the merchandise was qualifiable for NAFTA treatment did not exist at the time of entry.

The protestant encloses with the protest "Entry Correction Reports" and NAFTA Certificates of Origin.

The "Entry Correction Reports" list identifying information for certain articles (identified by "CPC number") and the original and corrected classification, value, duty rate, duty amount, MPF amount, HMF amount, and over or under-payment for each article. There are substantial changes in the value, and corresponding changes where necessary, for articles in both entries. In entry 22...532, for two articles (CPC numbers A0359063 and A0375319) the original classification is stated to have been without a "MX" prefix and the correction is to add the "MX" prefix, resulting in a total decrease in duty of $380.60 as a result of the proposed correction. In entry 22...650, for five articles (CPC numbers A0337624, A0337625, A0370485, A0402944, and B0234494) the original classification is stated to have been without a "MX" prefix and the correction is to add the "MX" prefix, resulting in a total decrease in duty of $1,641.91 as a result of the proposed corrections (according to pen-and-ink notations, some adjustments have already been made to this amount, leaving a balance of $1,498.35 claimed by the protestant).

The NAFTA Certificates of Origin submitted by the protestant are "blanket" Certificates for the year 1994. The Certificates list many articles, by CPC numbers, most not involved in this case. Neither of the two CPC numbers for which the "corrected" classification added the prefix "MX" in entry 22...532 is listed in any of the Certificates of Origin. For entry 22...650, CPC numbers A0337624, A0337625, A0370485, A0402944, and B0234494 are listed in the Certificates of Origin.

Further review was requested and granted.

ISSUE:

May relief may be granted under 19 U.S.C. 1520(c)(1) in this protest?

LAW AND ANALYSIS:

Initially, we note that both the request for reliquidation under 19 U.S.C. 1520(c)(1) and the protest of the denial of that request, under 19 U.S.C. 1514(a), were timely filed.

For the information of the protestant, we are briefly describing the applicability of 19 U.S.C. 1520(d) to this case because a timely claim under that section would have been the most effec-tive method of remedying the errors alleged by the protestant in this case. Under 19 U.S.C. 1520(d), notwithstanding that a valid protest was not filed, Customs may reliquidate an entry to refund any excess duties paid on a good qualifying under the NAFTA rules of origin for which no claim for preferential tariff treatment was made at the time of importation if the importer, within 1 year after the date of importation, files a claim meeting certain conditions. The conditions required to be met for a claim filed under section 1520(d) are that the claim must include a written declaration that the good qualified under the NAFTA rules of origin at the time of importation, copies of all applicable NAFTA Certificates of Origin, and such other documentation relating to the importation of the goods as is required by Customs. The Customs Regulations promulgated under this provision are found in 19 CFR 181.31 through 181.33. Because no claim, as authorized by section 1520(d) and the above-referenced Customs Regulations, was filed within one year of the date of importation, relief under section 1520(d) is unavailable. However, in future, the protestant should be aware that relief could be granted under this provision if a claim is timely filed and meets the statutory and regulatory requirements (see, in particular, 19 CFR 181.32(b)(1) through (5)).

Under 19 U.S.C. 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 and adverse to the importer, when certain conditions are met. Section 1520(c)(1) has frequently been interpreted by the Courts. It has been stated that "[a] clerical error is a mistake made by a clerk or other subordinate, upon whom devolves no duty to exercise judgement, in writing or copying the figures or in exercising his intention" (see PPG Industries, Inc., v. United States, 7 CIT 118, 124 (1984), and cases cited therein). It has been stated that: "[M]istakes of fact occur in instances where either (1) the facts exist, but are unknown, or (2) the facts do not exist as they are believed to [and] [m]istakes of law, on the other hand, occur where the facts are known, but their legal consequences are not known or are believed to be different than they really are" (Executone Information Systems v. United States, 96 F. 3d 1383, 1386 (Fed. Cir. 1996) (emphasis in original), citing Hambro Automotive Corporation v. United States, 66 CCPA 113, 118, C.A.D. 1231, 603 F. 2d 850 (1979); see also, Degussa Canada Ltd. v. United States, 87 F. 3d 1301 (Fed. Cir. 1996)). Inadvertence has been defined as "an oversight or involuntary accident, or the result of inattention or carelessness, and even as a type of mistake" (Aviall of Texas, Inc. v. United States, 70 F. 3d 1248, 1249 (Fed. Cir. 1995), citing Hambro, supra).

The conditions required to be met under 19 U.S.C. 1520(c)(1) are that the clerical error, mistake of fact, or other inadvertence must be adverse to the importer, manifest from the record or established by documentary evidence, and brought to the attention of Customs within one year after the date of liquidation of the entry. 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) (cited by the protestant, see above), and Concentric Pumps, Ltd. v. United States, supra).

Basically, the protestant in this case claims that the entries should have been reliquidated because the bill of materials for the merchandise was so complex that it was not known that the articles qualified for preferential tariff treatment under NAFTA and, therefore, the merchandise was classified without the "MX" prefix. The protestant claims that the alleged error was due to a mistake of fact, (i.e., "... where either (1) the facts exist, but are unknown, or (2) the facts do not exist as they are believed to ..." (Executone, supra); see also, IIT Corp. v. United States, 812 F. Supp. 213 (CIT 1993), reversed, 24 F. 3rd 1384 (Fed. Cir. 1994) ("... the document preparer simply understood the nature of the merchandise to be other than what it was [and] [t]hus, a mistake of fact occurred" (812 F. Supp. at 216); although the Court of Appeals reversed, it stated about the CIT finding of a mistake of fact: "[the finding] is amply supported by the record and not clearly erroneous" (24 F. 3d at

Under 19 U.S.C. 1520(c)(1), the clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law must be "manifest from the record or established by documentary evidence." The alleged error in this case is not manifest from the record (see ITT, 24 F. 3d at 1387 "... manifest from the record [means] apparent to Customs from a facial examination of the entry and the entry papers alone, and thus requir[ing] no further substantiation"). In IIT, the Court stated that "[m]istakes of fact that are not manifest from [the] record ... must be established by documentary evidence" (24 F. 3d at 1387).

In this case the only explanation given as to how or why the alleged error occurred is that the bill of materials was "complex." There is no evidence (e.g., by the person making the allegedly erroneous classification as to what he or she believed the origin of the merchandise to be and the basis for that belief) establishing that the alleged error was mistake of fact and not a mistake of law. In fact, the explanation given could just as well be that because of the complexity of the bill of materials the importer could not correctly apply the law (under NAFTA and the NAFTA Customs Regulations) to the merchandise, as that the importer did not know the factual origin of the merchandise. In other words, the alleged mistake could just as well have been a mistake of law as a mistake of fact (see Computime, supra, 9 CIT at 555-556, and Degussa, supra, 87 F. 3d at 1304).

Even if the mistake alleged were one of fact, the evidence in this case is not sufficient to demonstrate or establish a mistake of fact remediable under 19 U.S.C. 1520(c)(1). See Executone, supra, 96 F. 3d at 1388, in which the Court found that a mistake of fact within section 1520(c)(1) had been alleged, but that relief under section 1520(c)(1) was unavailable because "Executone [had not] sufficiently demonstrated, rather than merely alleged, a clerical error, mistake of fact, or other inadvertence' as those terms are used in section 1520(c)(1)" (emphasis added). Further, we note that although Certificates of Origin are provided for the pertinent articles in entry 22...650, Certificates of Origin are not provided for the pertinent articles in the other protested entry, entry 22...532.

For examples of evidence in 19 U.S.C. 1520(c)(1) requests, see, e.g., HQ ruling 224118, July 26, 1993; note also the description of the evidence required in the CIT IIT decision (812 F. Supp. at 217) and note, in particular, that evidence to "[make] clear to Customs that a mistake of fact, rather than one of law, actually occurred" is necessary (812 F. Supp. at 217). See also, in this regard, Andy Mohan, Inc. v. United States, 74 Cust. Ct. 105, C.D. 4593, 396 F. Supp. 1280 (1975), aff'd 63 CCPA 104, C.A.D. 1173, 537 F. 2d 516 (1976); United States v. Lineiro, 37 CCPA 5, 10, C.A.D. 410 (1949), in which the Court stated "[d]etermination of issues in customs litigation may not be based on supposition"; and Bar Bea Truck Leasing Co., Inc., v. United States, 5 CIT 124, 126 (1983), with regard to the sufficiency of evidence when there is "no affidavit or other evidence in support of [plaintiff's] counsel's bald assertion ...".

In the absence of sufficient evidence to establish a mistake of fact remediable under 19 U.S.C. 1520(c)(1), we are guided by the Court of Appeals IIT decision according to which--

... [A] prudent importer would submit all its supporting documentary evidence along with its timely notice alleging a mistake of fact before Customs consideration in order to facilitate a prompt and favorable decision [and as] [t]he [CIT] correctly notes ... "a party who waits past the time of filing its ... [section] 1520(c)(1) request to file supporting documentation risks an adverse decision by Customs in the interim" [24 F. 3d at 1388.]

HOLDING:

The mistake of fact alleged in this case is not manifest from the record or established by documentary evidence, as required by 19 U.S.C. 1520(c)(1). The protest is DENIED.

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, with the Customs Form 19, 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, International

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