HQ 225842 - Protest No. 3901-94-101850; Clerical Error, Mistake of Fact, or other Inadvertence; 19 U.S.C. 1514; 19 U.S.C. 1520(c)(1) - United States International Trade Commision Rulings

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HQ 225842

March 19, 1998

LIQ-9-01-RR:CR:DR 225482 ph/cb

CATEGORY: LIQUIDATION

Port Director of Customs
Chicago, Illinois 60607

RE: Protest No. 3901-94-101850; Clerical Error, Mistake of Fact, or other Inadvertence; 19 U.S.C. 1514; 19 U.S.C. 1520(c)(1)

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 August 3, 1993, the protestant entered certain merchandise. According to an invoice (dated July 16, 1993, and referred to by number in the entry summary for the merchandise under consideration), the merchandise consisted of 3,668 kilograms of "CAB-O-SIL MS". According to this invoice, the merchandise was shipped in "10 lbs[.] bags". According to the invoice, the "Brussels Tariff Number" for the merchandise was 28.11.2200.000.0.

According to the entry summary for this merchandise, the merchandise was entered as "synthetic silica gel" under subheading 2811.22.10007, HTSUS, with duty at the rate of 3.7%. According to Customs records, the entry was liquidated on November 19, 1993. The entry was liquidated as entered, with duty of $475.75.

On June 10, 1994, the representative of the importer filed a June 9, 1994, letter requesting that the entry be reliquidated under 19 U.S.C. 1520(c)(1) "to correct the classification of this merchandise due to a mistake of fact." According to this letter:

At the time of entry, it was assumed based on invoice description that the merchandise was a synthetic silica gel. Information now available indicates the merchandise is actually silicon dioxide in granular form, which is properly classified under [subheading] 2811.22.5000 [HTSUS], Free.

This request for reliquidation was denied by letter of July 6, 1994. According to the letter of denial, the reason for denial was: "Denied not eligible for 520(c)(1)[.] This is an error in the construction of the law". The protestant filed the protest now under consideration on August 5, 1994. Further review was requested and granted.

The protestant has provided two affidavits by a person stating that he is the "Import Manager" for the customs broker for the protestant-importer of record in the entry under consideration. This person states that he is familiar with the facts and circumstances surrounding the importer's request for reliquidation under 19 U.S.C. 1520(c)(1) and that he could competently testify under oath to the information set forth in the affidavit if called to testify as a witness. The broker provided different explanations as to why he entered the merchandise erroneously.

First, in his letter of June 6, 1994, the broker stated: At the time of entry, it was assumed based on invoice description that the merchandise was a synthetic silica gel. (emphasis added). Second, in an affidavit dated October 14, 1994, the broker stated:

That at the time I initially set up the account, I was under the mistaken belief that the imported product was in gel form and based on that mistaken belief established the classification of the imported product as synthetic silica gel under HTS 2811.22.10000.

That it was not until the importer, Cabot Corporation, brought to my attention that the form of the product was powder that I became aware that the product was not in gel form.

Finally, in an affidavit dated June 17, 1997, the broker stated:

1. That Diane Pohlig of Cabot Corporation informed me that the silica was in powder form on May 24, 1994.

2. That the product was new for the importer and it was my mistaken belief that the product was in gel form when I asked to classify the product at the time the account was set up. That belief, however erroneous, was further supported when I paged through the cabot catalog and saw the large glossy picture of gel.

The attorney for the protestant was given the opportunity to provide a more complete explanation. However, no further information was submitted. Consequently, we are deciding the protest on the record before us.

The protestant also provided a copy of a granted protest (3901-94-101592) stated to concern entries of the same merchandise with the same arguments (the protest purports to be a "petition under sec. 520(c)(1)", but since it was filed within 90 days of liquidation, it was properly treated as a protest under 19 U.S.C. 1514 (see, e.g., Mattel, Inc. v. United States, 72 Cust. Ct. 257, C.D. 4547, 377 F. Supp. 955 (1974), and Labay International, Inc., v. United States, 83 Cust. Ct. 152, C.D. 4834 (1979)).

A sample of the merchandise was also provided by protestant. The sample consists of a dry white powdery substance. This office forwarded the sample to the Customs Laboratories and Scientific Service and sought the advice of that office on the nature of the merchandise under consideration. According to that office:

... [T]he submitted information shows that CAB-O-SIL products are fumed silicas and not "silica gels". ... Fumed silicas are commercially and technically different than what the trade knows as silica gels.

As to the statement of the broker of the protestant (see above) that he mistakenly believed the imported product was in gel form and, based on that belief, classified the merchandise as "synthetic silica gel" under subheading 2811.22.10, HTSUS (i.e., indicating that whether the form of the merchandise was gel or powder controlled the classification), the Customs Laboratories and Scientific Service advised:

The protestant states that in order to be classified in subheading 2811.22.10, as "silica gel", it only needs to be determined as to whether or not the product is in gel form. This statement is, in our opinion, incorrect. ... The fact is that silica gel as well as other forms of synthetic amorphous silica are produced in powder, beads and granular form as well as other forms.

Customs Laboratories and Scientific Service concluded:

It is technically incorrect to categorize fumed silica products including CAB-O-SIL as a type of silica gel. Based on the above statements, we are of the opinion that fumed silica products are distinct from silica gels and, therefore, should not be referred, grouped or classified under silica gels.

Based on the Customs Laboratories and Scientific Service findings, the merchandise would appear to fall under subheading 2811.22.50, HTSUS, which provides for other inorganic oxygen compounds of nonmetals: Silicon dioxide: Other.

ISSUE:

May relief 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, were timely filed. The refusal to reliquidate an entry under section 1520(c) is a protestable decision under section 1514 (19 U.S.C. 1514(a)(7)).

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, 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, 1250 (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, 10 CIT 505, 508, 643 F. Supp. 623 (1986)).

Basically, the protestant in this case claims that the entry should have been reliquidated because the broker who made the entry "was under the mistaken belief that the imported product was in gel form and based upon that mistaken belief [classified] the imported product as synthetic silica gel, under [subheading] 2811.22.1000 [HTSUS]." That is, the protestant claims relief under 19 U.S.C. ?1520(c)(1) on the basis of 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, ITT Corp. v. United States, 812 F. Supp. 213 (CIT 1993), reversed, 24 F. 3d 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 1388))).

According to Customs technical review of the merchandise under consideration, the classification of the merchandise, as stated by the importer and as liquidated, was incorrect. The merchandise under consideration is not a silica gel, classifiable under subheading 2811.22.00, HTSUS. However, also according to Customs technical review, protestant's broker's belief that the imported merchandise was in gel form instead of powder form would not necessarily result in classification as synthetic silica gel under subheading 2811.22.00 (because, according to Customs technical review, silica gel as well as other forms of synthetic amorphous silica are produced in powder, beads and granular form as well as other forms).

The broker's differing explanations on the errors are confusing. The failure of the protestant to identify Diane Pohlig, her position within the protestant's organization, and the circumstances under which she informed the broker of his errors make it difficult to determine how the error occurred. As pointed out above, the broker first claimed that he was mislead by the invoice description. Then, a few months later, he claimed that he formed a mistaken belief about the substance when he set up the account. Finally, he claimed that the product was new to the importer and that he formed his mistaken belief when asked to classify the product. There is no evidence to corroborate the broker's statements. Since the entry papers show that the foreign supplier was related to the importer, it is difficult to believe that, even if new, the importer in placing the order for the product was unaware of what it was ordering. It is clear that whether the broker made the error when he reviewed the entry invoice, when he set up the account, or when he was asked to classify the product, he was mistaken about the nature of the imported good. As the ITT, supra, court found, mere bumbling, as here, by the broker, does not become a mistake of law.

We note that the entry under protest was not reviewed by Customs. In Taban Co. v. U.S., 960 F. Supp. 326 (CIT 1997) and Zaki Corp. v. U.S., 960 F.Supp. 350 (CIT 1997) the court noted that the involved commodity team had not reviewed the entry documentation. Thus, there was no classification determination by Customs which would result in a conclusion of law. Likewise, in the instant protest, the erroneous classification resulted from a misunderstanding of the nature of the merchandise and the misclassification is remediable under 19 U.S.C. ?1520(c)(1).

There is no evidence to determine whether there was any participation in the error by the protestant or whether the broker merely bumbled on his own. Based on the evidence and the different explanations for the error given by the broker, it appears that the broker at least failed to exercise responsible supervision as required by 19 U.S.C. ?1641(b)(4). Appropriate action should be taken against the broker.

In summary, in the instant case, "the facts [did] not exist as they [were] believed to" (the broker states that he believed the merchandise was in gel form) (part of the definition of mistake of fact, quoted from Executone, supra). Apparently, if the facts had been known, the importer (and its broker) would not have known the legal consequences or would have believed them to be different than they really are (see definition of mistake of law, from Executone, supra). Nonetheless, the evidence in the file (the October 14, 1994, and June 17, 1997 affidavits described in the FACTS portion of this ruling) is that "the exact physical properties of [the] merchandise and all other pertinent facts for classification" (PPG Industries, Inc. v. United States, 7 CIT 118, 123-124 (1984), quoted in Zaki Corp. v. United States, CIT Slip Op. 97-30 (printed in April 2, 1997, Customs Bulletin and Decisions, vol. 31, no. 14, p. 84, 94), and Taban Co. v. United States, CIT Slip Op. 97-27 (printed in March 19, 1997, Customs Bulletin and Decisions, vol. 31, no. 12, p. 43, 53)) "were not known to the broker or to Customs in this case" (Zaki and Taban, id.). We note that, according to the evidence in the file, the broker and Customs did not become aware of the physical properties of the merchandise until more than 90 days after liquidation of the entry under consideration (see Zaki and Taban, supra, at 95-96 and 54).

Accordingly, on the basis of the above, we conclude that there was a mistake of fact not amounting to an error in the construction of a law in the entry under consideration. The statute also requires that the clerical error, mistake of fact, or other inadvertence be adverse to the importer and manifest from the record or established by documentary evidence. The mistake of fact in this case was adverse to the importer (had the broker not made the mistake of fact, classification would have been under subheading 2822.22.50, HTSUS, and free of duty; classification as liquidated was under subheading 2811.22.10, HTSUS, with a rate of duty of 3.7%, resulting in duty of $475.75) (see discussion of this requirement in Zaki and Taban, supra, at 96-97 and 55-56).

HOLDING:

Relief MAY be granted under 19 U.S.C. 1520(c)(1) for the reasons given in the LAW AND ANALYSIS portion of this ruling. The protest is GRANTED.

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,

John Durant, Director
Commercial Rulings Division

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