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HQ 226614




May 15, 1998

LIQ-1-09 RR:CR:DR 226614 SAJ

CATEGORY: ENTRY LIQUIDATION

Port Director of Customs
United States Customs Service
300 South Ferry Street
Terminal Island, California 90731

RE: Protest and Application for Further Review No. 2704-95-102813; Reliquidation to Correct a Mistake of Fact, Clerical Error, or Inadvertence; Mistake Must be Manifest from the Record or Established by Documentary Evidence; Burden of Proof; 19 U.S.C. 1520(c)(1); Taban Co. v. United States; Zaki Corp. v. United States

Dear Sir:

We received your memorandum dated November 5, 1996 regarding a factual inaccuracy issued under Headquarters Ruling (HQ) 226614, dated July 19, 1996. We also received your memorandum dated May 14, 1997 on the same matter. We appreciate the clarification of the facts of the case with respect to the role of the import specialist in the classification of the imported merchandise. Since you have not denied the protest and are still withholding it from publication, this ruling will replace the subject protest. The protest record and the original decision dated July 19, 1996 has been reviewed based upon that clarification and our decision follows.

FACTS:

This case involves two entries of telephone answering machines (merchandise) imported by Conair Corporation (protestant). Entry number 220-xxxx02-3 (02-3) has an entry date of February 5, 1994. Entry number 220-xxxx87-3 (87-3) has an entry date of July 1, 1994.

Entry 02-3 has two invoices; Telefield invoices TLIN93164 and TLIN93165. The words "MODEL TA 1200 ANSWERING MACHINE" appear on the invoice dated January 10, 1994, for entry 02-3 in the column "Description of Goods". Another description, "CONAIR PHONE TELEPHONE ANSWERING MACHINE MODEL NBR: TAD1200" (TAD1200), appears in the "Marks & Nos." column of the same invoice. Based upon the annotations on the invoices and the number of pieces (5500 and 2000), the invoices correspond to line items 12 and 13 of the entry on the Customs Form (CF) 7501. Both entry line items describe the merchandise as "SINGLE LINE PHONES W/AUTO ANSW."

On the other invoice dated June 17, 1994 for entry 87-3, the words "MODEL FA 935G ANSWERING MACHINE" appear under the "DESCRIPTION" heading. Entry 87-3 concerns merchandise described on Primatronix invoice L94/444. The invoice describes the merchandise as "MODEL FA935G ANSWERING MACHINE". The CF 7501 describes the merchandise for entry 87-3 as, "SINGLE LINE PHONES W/AUTO ANSW."

Protestant's broker, upon presentation of the entry documents, classified the merchandise as telephones and not answering machines. Protestant's broker classified the imported merchandise on the entry documents under subheading 8517.10.00, of the Harmonized Tariff Schedule of the United States (HTSUS). Subheading 8517.10.00, HTSUS, describes the merchandise as "Electrical apparatus for line telephony or telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones; parts thereof". Customs reviewed the entries and accepted the classifications as entered. Entry 02-3 was liquidated on May 20, 1994, and entry 87-3 was liquidated on October 28, 1994, without a change in that classification, and duty was paid.

Subsequently, upon review of its records and after the expiration of the period within which a protest could have been filed, protestant determined that the merchandise had been misclassified. The merchandise is properly classifiable under subheading 8520.20.00, HTSUS, which describes the merchandise as "Answering machines".

In its original petition, dated May 10, 1995, protestant contended that the errors in classification were caused by misleading invoice descriptions and sought relief under section 1520(c)(1). The description revealed on the invoices are stated in the first paragraph of this ruling. There is also descriptive literature that was submitted with the subject protest reflecting that the imported merchandise was an answering machine. The literature included for the model TAD 1200 answering machine describes the item as a "digital answering system". The literature for the model FA 935G answering machine describes the merchandise as "Telephone Answering Machine".

On August 18, 1995, Customs denied protestant's petition under section 1520(c)(1) based on the conclusion that the error in classification at issue relates to the construction of law and not from a mistake of fact, clerical error, or other inadvertence not amounting to an error in the construction of law.

Protestant protested that denial and applied for further review on September 13, 1995. In protestant's attachment to the subject protest dated September 8, 1995, the protestant argues that: (1) the subject merchandise was "properly and accurately described and invoiced as telephone answering machines"; (2) "there exists a long standing uniform and established practice of classifying the [subject] merchandise... as telephone answering machines", which are classifiable under 8520.20.00, HTSUS; and (3) "as a consequence... [of] a clerical error on the part of the shipper and/or the customhouse broker, the merchandise in issue was inadvertently entered for duty as something other than what it was at the time of importation."

We agree with protestant that the subject merchandise was described clearly on the invoices. We note that protestant has changed its position from that of its original petition dated May 10, 1995. To reiterate, in the May 10, 1995 petition, protestant argued that the mistake in the classification of the imported subject merchandise was caused by misleading invoices. In protestant's application for further review dated September 13, 1995, the protestant identified the mistake in classification as a clerical error by the broker or the shipper.

We also agree that the classification of telephone answering machines are classifiable under 8520.20.00, HTSUS. However, the subject protest is not challenging the legal conclusion of a classification by Customs. The discovery of the misclassification occurred after expiration of the period within which a protest could have been filed. Consequently, the importer filed two requests for reliquidation of entries under 19 U.S.C. 1520(c)(1), requesting a refund of overpaid duties. The requests for reliquidation were identically worded except with reference to specifics identifying the two entries.

Customs denied the requests for reliquidation on the grounds that the misclassification was an error in the construction of a law not correctable under the statute. The importer filed a timely protest of this denial under 19 U.S.C. 1514(a)(7) and made application for further review in accordance with section 174.23 of the Customs Regulations (19 CFR 174.23). In accordance with that regulation, and section 174.26(b), you submitted the protest to this office for our determination (19 C.F.R. 174.26(b)).

In your memorandum of November 29, 1995, you informed us that the entries were reviewed by Customs import specialists who placed their check marks on the entry summary with their initials. Because the copies of the entry invoices contain corresponding annotations, we believe that those annotations were also made by Customs import specialists who reviewed the entries, before they were approved for liquidation as entered.

In your memorandum of November 5, 1996, you pointed out that the annotations on the invoices were not made by any Customs officer. You also pointed out that the import specialists who reviewed the entries have stated that they did not read the pertinent invoices when they did their review.

On September 17, 1997, this office sent protestant's counsel a questionnaire to facilitate a determination with respect to this AFR. The questionnaire requests 10 items of information. Among the items requested were the purchase orders and an explanation as to why protestant/broker failed to review the imported goods against these orders. On March 23, 1998, this office sent a follow-up letter requesting complete answers to the questionnaire sent on September 17, 1997 and advised that we would proceed to make our determination on the subject protest without the requested information if not received within 30 days from March 23, 1998. We note that no response or contact was made with our office with respect to these requests.

ISSUE:

Whether Customs denial of the importer's request for reliquidation under 19 U.S.C. 1520(c)(1) was erroneous, such that this protest under 19 U.S.C. 1514(a)(7) should be approved.

LAW AND ANALYSIS:

The entry process includes a procedure for the correction of errors made in the entry of merchandise. Under the protest procedure of 19 U.S.C. 1514, errors in the classification, valuation, etc., of merchandise can be corrected, and reliquidation obtained with refund of overpaid duties, if the error is brought to the attention of the appropriate Customs officer within 90 days of the liquidation. Failure to file a protest within the prescribed period renders the liquidation final and binding on the importer and the government. In the instant case, entry 02-3 was liquidated on May 20, 1994, and entry 87-3 was liquidated on October 28, 1994. In a letter dated May 10, 1995, protestant sought relief under section 1520(c)(1).

However, after expiration of the 90 day period, an importer can obtain a reliquidation of the entry, and a refund of overpaid duties, in only limited circumstances. Under 19 U.S.C. 1520(c)(1), an entry can be reliquidated to correct a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law. The error must be adverse to the importer and brought to the attention of the appropriate Customs officer within one year from the date of liquidation. The error must be manifest from the record or established by documentary evidence.

In order to qualify for relief under section 1520(c)(1), it must be established that there was an error or mistake. In this case, the protestant must establish that the liquidation was incorrect and that the alleged error was due to clerical error, mistake of fact, or other inadvertence, not amounting to an error in the construction of a law, adverse to the importer and manifest from the record or established by documentary evidence.

It is the affirmative burden of the protestant to establish the nature of the error claimed and to demonstrate that it falls within the ambit of the statute. It is not enough for the importer to notify Customs that the classification was wrong and that the correct classification for answering machines is 8520.20.00, HTSUS. This does not identify and explain the correctable error. It fails to demonstrate that the error was other than a mistake in legal construction. It is protestant's burden, therefore, to show that the misclassification of the subject entries were due to a correctable mistake of fact and not due to a legal error. See, Bar Bea Truck Leasing Co. v. United States, 5 CIT 124 (1983); United States v. Lineiro, 37 CCPA 5, C.A.D. 410 (1949).

The protestant argues that there is a uniform and established practice in classifying the subject merchandise under subheading 8520.20.0040, HTSUS. That argument may be appropriate for a protest challenging the legal conclusion of Customs that the merchandise was classifiable in subheading 8517.10.0050, HTSUS. That argument does not show that the alleged error was due to a mistake of fact. See, Computime, Inc. v. United States, 622 F. Supp. 1083, 9 CIT 553, 556 (1985). The protestant also argues that the the description "Conair phone telephone answering machines", may have caused the misclassification. The protestant confirms that the invoice descriptions themselves accurately describe the machines, as noted above. However, this argument simply does not show anything more than a possible classification error. There is no evidence to show in fact that anyone, Customs or the protestant, was confused by the descriptions of the subject merchandise.

Since the protestant argues that the invoice descriptions are accurate, the principles in the case of ITT Corp. v. United States, 812 F.Supp. 213 (CIT 1993), reversed, 24 F.3d. 1384 (1994),do not appear to be applicable. In ITT Corp., the importer claimed that it understood the merchandise to have been brake parts rather than other cast iron parts described in item 692.24, TSUS. The court found that the sample submitted to Customs did not show whether the part was machined beyond that allowed by the tariff provision. It found that the visual examination of the sample simply did not answer the classification issue. The appellate court found, as it did in C.J. Tower v. United States, 499 F.2d. 1277 (CCPA 1974), that the product was understood by the importer to be other than it actually was. Here, the protestant confirms that the invoices correctly identified the articles.

As in the case of Executone Information Services v. United States, CIT Slip Op. 95-129 (1995), app. pend. (1995), which concerned telephone equipment, the instant case appears to be a dispute as to the correct classification. In Executone Information Services, the court observed:

Executone agrees with defendant, in that, had this case entailed a classification dispute the legal tariff description of the merchandise would plainly involve a conclusion of law.

The protestant has not shown by any evidence, let alone the required evidence manifest in the entry papers or by documentary evidence under 19 U.S.C. 1520(c)(1), that the descriptions for the subject merchandise resulted in an erroneous liquidation. At best, the protestant asserts that the words "telephone answering machines" made Customs think that they were telephones with answering capability. There simply is no showing that such an event occurred. The error alleged is one of classification rather than a showing that the words made anyone think that merchandise described as a telephone answering machine was a telephone.

In Taban Co. v. United States, 960 F. Supp. 326 (CIT 1997)(reprinted in Customs Bulletin, March 19, 1997, p. 43) and Zaki Corp. v. United States, 960 F. Supp. 350 (CIT 1997)(reprinted in Customs Bulletin, April 2, 1997, p. 84), the U.S. Court of International Trade (CIT) found that there was a mistake of fact, rather than one of law, because "the 'exact physical properties' of the merchandise were not known to the broker or to Customs in this case"). Taban, Customs Bulletin at p. 53; Zaki at 95-96.

In this case, unlike Taban, Zaki, and HQ 2235243, the subject entries were denied because the entry documents did not contain misleading language. The invoices contained the correct description of the imported merchandise. Moreover, there is no evidentiary indication that the importer of the merchandise or the broker was unaware of the nature of the merchandise. No where in the protest is it asserted that the broker did not review the entry documents. The court in Taban and Zaki also concluded that the "broker and Customs were unaware [of the exact physical properties of the merchandise] until more than ninety days after their liquidation and therefore plaintiff's broker could not have relayed the information to Customs for its consideration in classifying and liquidating the merchandise at issue." Id., Taban at 54; Zaki at 95-96.

Taban and Zaki are distinguishable from the case at hand since in both court cases, the evidentiary documents were unclear as to the nature of the merchandise which caused the incorrect classification. For instance in Taban and Zaki, the documents provided a "limited description of the imports," Zaki, Id. At 47; Taban Id. at 88). In the case at hand, the entry documents in the subject entries contain a clear description of the merchandise.

Reliquidation under section 1520(c)(1) is not a remedy for broad application. It is not intended to provide a simple alternative resolution to classification problems in those instances where the importer fails to file a timely protest. Rather, it is intended to apply in limited circumstances and only when a correctable error is established on the record or by submitted documentation. See, Phillips Petroleum Co. v. United States, 54 CCPA 7, C.A.D. 893 (1966); Godchaux-Henderson Sugar Co., Inc. v. United States, 85 Cust. Ct. 68, C.D. 4874 (1980). The purposes of the procedure are to establish a correctable error and to demonstrate that an error in legal construction did not occur.

It is well settled that the only notice of liquidation that is statutorily mandated is a bulletin notice. See, Goldhofer Fahrzeugwerk GmbH & Co. v. United States, 13 CIT 54, 706 F. Supp. 892 (1989), aff'd, 885 F.2d 858 (Fed. Cir. 1989); Tropicana Products, Inc. v. United States, 13 CIT 390, 395, 713 F. Supp 415 (1989). The Court of International Trade has held that the importer has the burden to check for posted notices of liquidation and to protest in a timely manner. See, Juice Farms, Inc. v. United States, 18 CIT 1037, 1040 (1994)(stating that although Customs erroneously liquidated entries, protestant had no relief to protest after the running of the 90 day period after the posting of the bulletin notices of liquidation); Penrod Drilling Co. v. United States, 13 CIT 1005, 1009, 727 F. Supp. 1463 (1989), reh'g denied, 14 CIT 281, 740 F. Supp. 858 (1990), aff'd. 925 F.2d 406 (Fed. Cir. 1991).

In the instant case, the protestant's failure to check for the posted notices of liquidation caused the failure to file a protest of the liquidation, resulting in an incorrect liquidation. The protestant has presented no evidence on why the posted notices of liquidation were not checked.

Upon an assertion that merchandise has been wrongly classified due to a mistake of fact, "it is incumbent on the plaintiff to show by sufficient evidence the nature of the mistake of fact." PPG Industries, Inc. v. United States, supra, 4 CIT at 147-148 (citing Hambro Automotive Corp. v. United States, 81 Cust. Ct. 29, 31, 458 F. Supp. 1220, 1222 (1978) aff'd 66 CCPA 113, C.A.D. 1231, 603 F.2d 850 (1979)). In ITT Corp. v. United States, 24 F.3d 1384, 1387 (Fed. Cir. 1994), the court found that reliquidation under 19 U.S.C. 1520(c) requires both notice and substantiation. Notice of a clerical error, mistake of fact, or other inadvertence includes asserting the existence of a clerical error, mistake of fact, or other inadvertence "with sufficient particularity to allow remedial action."

In short, we are unconvinced that the record of this protest establishes that a correctable error was responsible for the misclassification. This conclusion is academic, however, in view of our conclusion that this protest cannot be approved for the reason that Customs did not err in denying the request for reliquidation. Nonetheless, we note that had we undertaken a de novo review of the reliquidation request, our conclusion would be that correctable error has not been established.

In this case, the protestant has failed to meet the notice requirement, as no mistake of fact which directly caused the incorrect liquidation has been properly substantiated. Consequently, there has been no basis presented for reliquidating the subject entries pursuant to 19 U.S.C. 1520(c)(1). The protestant's claim was therefore correctly denied.

HOLDING:

On the facts of this case, as above, Customs did not err in denying protestant's requests for reliquidation under 19 U.S.C. 1520(c)(1). The protestant has not established a mistake of fact in the liquidation of the subject entries. Reliquidation of the subject entries is therefore not permissible pursuant to 19 U.S.C. 1520(c)(1).

You are instructed to deny the protest. A copy of this decision should be attached to the Form 19, Notice of Action, to be sent to the protestant.

Sincerely,
John Durant, Director,
Commercial Rulings Division

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