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HQ 227148





December 12, 1996

LIQ-9-01-RR:IT:EC 227148 LTO

CATEGORY: ENTRY LIQUIDATION

Port Director
U.S. Customs Service
110 South 4th Street
Room 154
Minneapolis, Minnesota 55401

RE: Protest 3501-96-100245; 19 U.S.C. 1520(c)(1); mistake of fact; disk drives; disk drive cases; HQ 223524; ITT Corp. v. United States; B.S. Livingston & Co., Inc. v. United States; Executone Information Systems v. United States; United States v. C.J. Tower & Sons of Buffalo, Inc.

Dear Port Director:

This is in reference to Protest 3501-96-100245, which concerns the denial of petition 3501-96-200004, filed by Micron Electronics, Inc. ("Micron"), which requested that Customs reliquidate certain entries under 19 U.S.C. 1520(c)(1).

FACTS:

On March 7, 1996, Micron filed a petition under 19 U.S.C. 520(c)(1) requesting that Customs reliquidate certain entries (entry numbers 791xxx9895-6, 791xxx0098-4, 791xxx0245-1, 791xxx0848-2, 791xxx0934-0 and 791xxx0941-5) to correct a clerical error, inadvertence or mistake of fact. Customs denied Micron's petition on March 15, 1996, and this protest followed.

Micron alleges that its customhouse broker, Meyer Customs Brokers ("broker"), entered the merchandise in question under subheading 8471.91.8085, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other digital processing units, because the broker mistakenly believed the merchandise to be computer disk drives. In fact, the imported merchandise consisted of cases for disk drives, which are classifiable under - 2 -
subheading 8473.30.5000, HTSUS, which provides for other parts and accessories of the machines of heading 8471, HTSUS.

The protestant has submitted commercial invoices corresponding with entry 791xxx9895-6, the first in the series of disputed entries, which contain the broker's handwritten notations next to the descriptions of the goods, identifying them as "disk drives." The invoice describes the subject goods as either "TOWER CASE W/ FAN ... INCLUDE 3PCS I/O CABLE" or "BABY AT CASE W/ FAN ... INCLUDES 3PCS I/O CABLE," with unit prices of $6x.xx and $4x.xx, respectively. The protestant argues that the handwritten notations show that the broker did not know "the exact physical properties" of the merchandise. A letter dated June 12, 1996, from the broker to the protestant provides as follows: "our data entry person was not familiar with the industry language used on the invoice . . . [and] incorrectly concluded . . . that the Tower Cases were Disk Drives and hand wrote that on the commercial invoice."

ISSUE:

Whether the failure of protestant's customhouse broker to correctly classify the merchandise at issue amounts to a clerical error, inadvertence or mistake of fact, not amounting to an error in the construction of a law.

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 the decision protested was March 15, 1996, and the protest was filed on June 13, 1996. In addition, the refusal to reliquidate an entry under 19 U.S.C. 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 appraised value 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 section 1514. Under section 1520(c)(1), Customs may reliquidate an entry to correct a clerical error, mistake of fact, or other - 3 -
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).

In ITT Corp. v. United States, 24 F.3d 1384 (Fed. Cir. 1994) ("ITT II"), the Court found that reliquidation under 19 U.S.C. 1520(c)(1) requires both notice and substantiation. Notice requires the assertion of the existence of the clerical error, mistake of fact, or other inadvertence, "with sufficient particularity to allow remedial action." "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." Further, "[m]istakes of fact that are not manifest from [the] record . . . must be established by documentary evidence."

In the instant case, an invoice for entry 791xxx9895-6 describes the subject goods as either "TOWER CASE W/ FAN ... INCLUDE 3PCS I/O CABLE" or "BABY AT CASE W/ FAN ... INCLUDES 3PCS I/O CABLE." The invoice contains the broker's handwritten notations next to the descriptions of the goods, identifying them as "disk drives." The protestant argues that these notations show that the broker did not know "the exact physical properties" of the merchandise. A letter dated June 12, 1996, from the broker to the protestant confirms this contention: "our data entry person was not familiar with the industry language used on the invoice . . . [and] incorrectly concluded . . . that the Tower Cases were Disk Drives and hand wrote that on the commercial invoice." Accordingly, the protestant argues, the merchandise was incorrectly classified under subheading 8471.91.8085, HTSUS, which provides for other digital processing units. The imported merchandise, cases for disk drives, should have been classified under subheading 8473.30.5000, HTSUS, which provides for other parts and accessories of the machines of heading 8471, HTSUS.

An examination of the entry and entry papers reveals that the merchandise was correctly, though perhaps not completely, described on the appropriate invoice. The invoice description for both models of disk drive cases refers to a "case" and includes a part number referencing the merchandise in question. The same information is repeated on the entry packing list and bill of lading, and each document references the importer's purchase order. Thus, this is not a case where the invoice incorrectly described the merchandise, thereby leading to an incorrect classification. See HQ 223524, dated February 13, 1992 (scenario number one, described below).

In HQ 223524, the protestant contended that certain merchandise was misclassified as "chief value wool" because either (1) the invoices expressly indicated that the merchandise was in "chief value wool" when the merchandise was in fact "chief value silk," or (2) while the invoices did not specify "chief value wool," the broker failed to recognize that the merchandise was "chief value silk," even though certain entry documents provided composition breakdowns of wool and silk indicating that it was "chief value silk."

In the first scenario, we found that there was sufficient evidence to indicate a mistake of fact. The invoice reasonably caused the broker to misunderstand the nature of the entered merchandise and reasonably and directly led to the classification of the merchandise in the incorrect provision. However, in the second scenario, we determined that there was insufficient evidence of a mistake of fact. We stated that "there is no way of knowing that the entered classifications were not the result of a decisional mistake rather than an ignorant mistake, the former being correctable only under the protest procedure of 19 U.S.C. 1514 and the latter being correctable under 19 U.S.C. 1520(c)(1)." See Universal Cooperatives, Inc. v. United States, 13 CIT 516 (1989).

In B.S. Livingston & Co., Inc. v. United States, 13 CIT 889 (1989), the Court sustained Customs denial of a request for reliquidation where the plaintiff/importer was fully aware of the nature of the imported merchandise, but claimed that the broker had carelessly placed the incorrect tariff classification number on the entry documents, and the merchandise was liquidated under that number. The Court found that the plaintiff could not state that it was unaware or mistaken as to any facts pertaining to the merchandise and that the plaintiff was fully aware of the nature of the merchandise. The Court held that if the plaintiff was of the opinion that the Customs - 5 -
classification was incorrect, the appropriate procedure or remedy was to file a timely protest pursuant to 19 U.S.C. 1514(a). Id. at 894.

The present situation is similar to that considered in scenario two in HQ 223524. Both involve invoices that accurately describe the merchandise in question, and both involve a broker who incorrectly used that information in misclassifying that merchandise. Moreover, the words themselves ("disk drives") do not show that the author, who has not been identified, believed that the words "AT CASE" or "TOWER CASE" identified a disk drive. We note that disk drives are not digital processing units and are not classifiable under subheading 8471.91.80, HTSUS, but under subheadings 8471.93.10 through 8471.93.40, HTSUS, which provide for magnetic disk drive units for automatic data processing machines. Thus, it is not readily apparent from the documentary evidence whether the broker believed the merchandise to be disk drives or simply misclassified the disk drive cases.

It is our opinion that the holding for this portion of HQ 223524 and the Court's decision in B.S. Livingston apply to the present case. It appears that the protestant "was fully aware of the nature of the merchandise" and the failure to classify it correctly was, apparently, an error in the construction of law. The importer therefore had 90 days from the date of liquidation in which to determine that a classification error had been made and to file a protest (see 19 U.S.C. 1514). The importer's failure to act timely is unexplained. This situation is in contrast to that described in United States v. C.J. Tower & Sons of Buffalo, Inc., 499 F.2d 1277, 61 CCPA 90 (1974). In C.J. Tower, the Court found that there was no dispute that the importer did not have knowledge that the goods were emergency war materials until after the (then) 60 day protest period expired. Here, the importer has not even attempted to explain, let alone furnish supporting evidence, that it did not know the merchandise it ordered. Accordingly, reliquidation under 19 U.S.C. 1520(c)(1) is inappropriate.

Finally, the protestant cites Executone Information Systems v. United States, 896 F.Supp. 1235 (Fed. Cir. 1996), in support of its claim. In Executone, the alleged mistake was that Executone believed that a valid Form A had been filed at importation, when, in fact, they had not. No such assertion has been made in the instant case. The alleged mistake is the lack of knowledge of an unidentified employee of the broker. There is no allegation that the protestant believed it had ordered disk
drives and then did not learn it had received cases until after the protest period expired.

Similarly, in ITT II, the mistake of fact occurred in the initial creation of the broker's records which caused the error in the liquidation. 24 F.3d 1384, 1387. The broker, in filling out the entry, used the importer's records applicable to parts which were machined to a greater degree than the parts at issue. See ITT I, 812 F.Supp. 213, 216 (CIT 1993). Here, the entry invoices which described the merchandise correctly were used by the broker. As such, the nature of the alleged error in the instant case is distinguishable from those found in Executone and ITT I/II.

HOLDING:

Because there was insufficient evidence presented to show that the erroneous liquidation was due to a mistake of fact or other inadvertence not amounting to an error in the construction of law, reliquidation under 19 U.S.C. 1520(c)(1) is inappropriate. Accordingly, the protest should be DENIED.

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

Sincerely,

Director, International Trade

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