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HQ 559609




October 3, 1996

CLA-2 RR:TC:SM 559609 KKV

CATEGORY: CLASSIFICATION

Port Director
U.S. Customs Service
San Diego, CA 92173

RE: Application for Further Review of Protest No. 2501-95-100010; 9808.00.3000; Purchases of emergency war materials by U.S. military department; untimely certification; 19 CFR 10.112

Dear Sir:

The above-referenced protest, filed on behalf of Offshore Factories, Inc. concerns the eligibility of certain electronic conductors, harnesses, etc., for duty-free treatment under subheading 9808.00.30, Harmonized Tariff Schedule of the United States (HTSUS). Protestant contends that excessive duties were assessed, asserting that the articles at issue are eligible for a complete duty exemption under this provision as purchases of emergency war materials by a U.S. military department.

FACTS:

Customs records indicate that, from February 2, 1993 through January 21, 1994, Offshore Factories filed 25 entries consisting of conductors, harnesses, etc., for which duty-free treatment was sought pursuant to 9808.00.3000, Harmonized Tariff Schedule of the United States, (HTSUS), which provides for duty free entry of articles for military departments, materials certified to the Commissioner of Customs by the authorized procuring agencies to be emergency war material purchased abroad. Upon entry, the required certifications from the Department of Defense (DOD) were not submitted.

When the certificates were not submitted within six months of the date of entry, Customs issued a Notice of Action (Advance) (CF 29) on September 14, 1994, which indicated that the failure to provide the required certificates was the reason for the rate advance. When the protestant failed to respond to the Notices of Action (Advance) and the certifications were not provided, the entries were liquidated without benefit of the duty-free provisions of subheading 9808.00.30, HTSUS. On December 2, 1994, eighteen of the subject entries were liquidated under subheading 8544.51.80, HTSUS, dutiable at a rate of 5.3 percent. On December 9, 1994, the remaining seven entries were also liquidated under this same subheading.

On March 1, 1995, the subject protest was timely filed, requesting an additional 90 days in which to submit the required certifications. Subsequent to the filing of the protest, certifications for the 25 entries were submitted to Customs.

ISSUE:

Whether certifications necessary for the support of a claim for duty-free treatment under subheading 9808.00.30, HTSUS, may be submitted by an importer subsequent to the filing of a timely protest.

LAW AND ANALYSIS:

Title 19, United States Code, section 1514, provides, in pertinent part, that decisions concerning "classification and rate and amount of duties chargeable" shall become final and conclusive upon all persons (including the United States and any officer thereof) unless a protest is filed in accordance with this section, or unless a civil action contesting the denial of a protest, in whole or in part, is commenced in the United States Court of International Trade in accordance with chapter 169 of Title 28 of the United States Code (28 U.S.C. 2631 et seq.) within the time prescribed by section 2636 (28 U.S.C. 2636) of that title. The subject protest concerns a dispute involving the classification and rate and amount of duties chargeable; accordingly, this protest involves a protestable matter.

Subheading 9808.00.30, HTSUS, provides for the duty-free treatment of materials certified to the Commissioner of Customs by the authorized procuring agencies to be emergency war materials purchased abroad. This provision is applicable only when a certificate executed by a duly authorized officer or official of the applicable military department is presented in accordance with section 10.102, Customs Regulations (19 CFR 10.102).

Customs San Diego District Notice 93-062, dated July 7, 1993, in addressing the procedure to be followed in connection with importations for Defense Contract

Management Command International (DCMCI) provides, in pertinent part, that "[t]he original duty free certificate, furnished by DCMCI, to an importer or authorized agent, should be submitted to Customs within 6 months from the date of entry or release under the immediate delivery procedure." Cognizant of the constraints placed upon an importer required to submit a document whose production is within the control of a third party, Customs provides procedures to be followed by an importer seeking an extension of the time period for filing such certificates. District Notice 93-062 states:

If an importer or authorized agent does not receive a duty free entry certificate within the 6 month period for submission to Customs, he may, according to
113.43(a) C.R., request an extension of 2 months. As an alternative procedure, an importer or authorized agent may request an extension of liquidation in order to have sufficient time to resolve certification problems

Section 10.112 of the Customs Regulations (19 CFR 10.112), provides, in pertinent part:

Whenever a free entry or a reduced duty document, form, or statement required to be filed in connection with the entry is not filed at the time of the entry or within the period for which a bond was filed for its production, but failure to file it was not due to willful negligence or fraudulent intent, such document, form, or statement may be filed at any time prior to liquidation of the entry or, if the entry was liquidated, before the liquidation becomes final.

Willful negligence implies that there was a deliberate determination not to perform a known duty, or a reckless disregard of the safety or the rights of others, as manifested by the conscious and intentional omission of the care proper under the circumstances. In Mattel, Inc. v. United States, 67 CCPA 74, C.A.D. 1248 (1980), it was held that the intentional failure to file documents required by the Customs Regulations is not the legal equivalent of "willful negligence," as these words are used in 19 CFR 10.112. The court stated that one of the elements included in the term "willful negligence" is "the reckless disregard of the consequences of the act done or failure to act by the party."

Based upon the information before us, we find no evidence which demonstrates that the delay in filing was a result of willful negligence or fraudulent intent. Absent
specific proof showing that the failure to file the documents at the time of entry was deliberate, Customs may not conclude that the protestant's failure was due to willful negligence.

Because there is no evidence that either fraudulent intent or willful negligence caused the filing delay, the protestant had the option under 19 CFR 10.112 of submitting the documents required to substantiate eligibility under subheading 9808.00.30, HTSUS, at any time before the liquidations of the entries became final. Generally, a liquidation becomes final 90 days after the date of liquidation unless a timely protest is filed. See 19 U.S.C. 1514; 19 CFR 159.9(c)(2)(iii); Occidental Oil & Gas Co. v. United States, 13 CIT 244 (1989). However, a liquidation cannot become final during the pendency of a timely and properly filed protest of the liquidation (See United States v. New Drinks, 14 Ct. Cust. App.16, T.D. 41530 (1926); see also, C.S.D. 86-21, dated May 16, 1986), for a discussion of the finality of liquidation). In Headquarters Ruling Letter (HRL) 555269, dated December 20, 1990, Customs recognized that if liquidation was timely protested, the protestant should be afforded an opportunity to submit documentation establishing free or reduced duty entry where there is no evidence of willful negligence or fraudulent intent.

Because the subject protest was timely filed and the required certifications were submitted before the liquidation of the entries became final, it is our determination that the subject merchandise is entitled to the complete duty exemption provided by subheading 9808.00.30, HTSUS. Accordingly, the subject protest should be granted in full.

HOLDING:

In the absence of a specific showing of willful negligence or fraudulent intent, certifications necessary to support a claim for duty-free treatment may be submitted where a timely protest was filed and the submission of the certificates under subheading 9808.00.30, HTSUS, occurs before the liquidation of the underlying entries becomes final. This protest should be granted in full.

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 to the public via the Diskette Subscription Service, the Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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