United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1998 HQ Rulings > HQ 114538 - HQ 227385 > HQ 227308

Previous Ruling Next Ruling
HQ 227308




September 3, 1997

LIQ-9-01-RR:IT:EC 227308 LTO

CATEGORY: LIQUIDATION

Port Director
Port of New York c/o Chief, Residual Liquidation and Protest Branch 6 World Trade Center, Room 761
New York, New York 10048-0945

RE: Protest 1001-96-105799; 19 U.S.C. 1520(c)(1); mistake of fact; para-amino benzamide; subheadings 2924.29.75, 9817.29.01; Computime, Inc. v. United States; C.J. Tower & Sons of Buffalo, Inc. v. United States; Boast, Inc. v. United States; Fabrene, Inc. v. United States; George Weintraub & Sons, Inc. v. United States; Aviall of Texas,Inc., v. United States; Taban Co. v. United States; ZakiCorp. v. United States; HQs 225412, 226395; ORR Ruling 75-0026

Dear Port Director:

This is in reference to Protest 1001-96-105799, which was filed on behalf of Aceto Corporation, concerning the denial of relief under 19 U.S.C. 1520(c)(1). The merchandise under consideration was entered on January 9, 1995, and the entry was liquidated on April 28, 1995. By letter dated August 28, 1995, Aceto timely filed a request for reliquidation under section 1520(c)(1), which was denied on May 1, 1996. This protest was then timely filed on July 29, 1996.

FACTS:

The imported chemical, para-amino benzamide, was entered under subheading 2924.29.75, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other aromatic, cyclic amides (including cyclic carbamates) and their derivatives. According to the protestant, the chemical had been imported for use by Eastman Chemical Company in the production of photographic color couplers. Accordingly, the protestant contends that the chemical was, therefore, entitled to duty-free treatment under subheading 9817.29.01, HTSUS, which provides for:

Cyclic organic chemical products in any physical form having an aromatic or modified aromatic structure, however provided for in chapter 29 . . ., to be used in the manufacture of photographic color couplers; photographic color couplers . . . (all of the foregoing goods however provided for in chapter 29 . . .) (emphasis added).

Subheading 9817.29.01, HTSUS, became effective on January 1, 1995, eight days before the subject entry. The protestant contends that it failed to enter the chemicals under this subheading because the HTSUS "contained no footnotes indicating that certain chemicals classifiable under 2924.29.75 were eligible for special tariff treatment under 9817.29.01." The protestant had made entries under the predecessor to subheading 9817.29.01, HTSUS, which expired at the end of 1992. At that time, there were footnotes in the HTSUS indicating special treatment under chapter 98.

ISSUE:

Whether the failure to enter merchandise under a duty-free provision because the tariff schedule did not contain footnotes indicating that the merchandise was eligible for special tariff treatment under chapter 98 constitutes a mistake of fact, correctable under 19 U.S.C. 1520(c)(1).

LAW AND ANALYSIS:

19 U.S.C. 1514 sets forth the proper procedure for an importer to protest the classification and appraisal 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 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 alleged "error" in the instant case was brought to the attention of your office, within one year from the date of liquidation, by letter dated August, 28 1995). 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. See, e.g., Computime, Inc. v. United States, 9 CIT 553, 555, 622 F.Supp. 1083 (1985).

For section 1520(c)(1) purposes, a mistake 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." C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, 21, C.D. 4327, 336 F.Supp. 1395, 1398 (1972), aff'd, 61 CCPA 90, C.A.D. 1129, 499 F.2d 1277 (1974). Inadvertence, on the other hand, has been defined as "an oversight or involuntary accident, or the result of inattention or carelessness, and even as a type of mistake." Id.

Generally, an error in the classification of merchandise is not a clerical error, mistake of fact or inadvertence within the meaning of section 1520(c)(1), but an error in the construction of law. Customs has found that an exception exists and reliquidation is proper when a Customs officer is not aware of a classification ruling issued prior to liquidation. See ORR Ruling 75-0026, dated January 24, 1975. This ruling also states, however, that if an import specialist takes note of a Headquarters ruling and decides it is not applicable to the merchandise, that decision is an error in the construction of the law and is excluded from relief under section 1520(c)(1). The limited exception described in ORR Ruling 75-0026 does not apply to the subject entries.

There have also been several court decisions regarding the application of section 1520(c)(1) and errors in classification. In C.J. Tower, the U.S. Court of Customs and Patent Appeals found a mistake of fact existed where neither the importer nor Customs was aware that the merchandise under consideration was emergency war materials entitled to duty-free entry under a separate item of the tariff schedule until after liquidation. The court found that this mistake of fact was correctable under section 1520(c)(1) because it was a mistake that went to the nature of the merchandise and was the underlying cause for its incorrect classification. See Taban Co. v. United States, 960 F.Supp. 326 (CIT 1997) and Zaki Corp. v. United States, 960 F.Supp. 350 (CIT 1997) (wherein 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"); HQ 223524, dated February 13, 1992 (wherein we found a mistake of fact where merchandise was classified as a wool fabric, because it had been
identified on an invoice as "chief value wool" when in fact it was "chief value silk").

On the other hand, in Boast, Inc. v. United States, 17 CIT 114 (1993) and Fabrene, Inc. v. United States, 17 CIT 911 (1993), the CIT considered situations where a Headquarters ruling (first ruling) had been modified or revoked by a subsequent ruling (second ruling), resulting in the change in the tariff classification of merchandise. In each case, the plaintiff argued that the error in the classification of entries, liquidated after issuance of the first ruling but prior to issuance of the second ruling, was a mistake of fact and sought reliquidation of its entries under 19 U.S.C. 1520(c)(1) based on the classification in the second ruling. The court found that, unlike the error in C.J. Tower, the errors in judgement on the part of Customs in classifying the merchandise were mistakes of law.

In the present case, as in Boast and Fabrene, and unlike C.J. Tower, Taban and Zaki, Aceto makes no reference to a mistake in the nature of the merchandise. In Boast, "the only inadvertence or mistake alleged therein goes to Customs' application of the Explanatory Notes to the subject merchandise." In the present case, the only inadvertence or mistake alleged is the failure of the importer (and Customs) to classify the merchandise in the correct tariff provision. Aceto does not contend that it was unaware, at any time, that the merchandise, an aromatic cyclic amide, was to be used in the manufacture of photographic color couplers. Aceto, admittedly, knew the "nature and use" and "exact physical properties" of the imported merchandise (the protestant states, for example, that it had made entries of the chemical under the predecessor to subheading 9817.29.01, HTSUS, which expired at the end of 1992). See Taban at pg. 334 (court decisions have found a "distinction between cases involving a mistake of law and those involving a mistake of fact based on whether the importer had actual knowledge of the nature and use of the good at issue").

That there was no footnote indicating that some of the merchandise of subheading 2924.29.75, HTSUS, was eligible for special tariff treatment under subheading 9817.29.01, HTSUS, is irrelevant to Aceto's 1520(c)(1) claim. In fact, this situation is no different than classifying the merchandise in a dutiable provision of chapter 29, rather than a duty-free provision somewhere else in the tariff schedule--for example, chapter 31 (the chapter 29 notes indicate that the chapter does not include certain articles of heading 3102, HTSUS, a duty-free provision). Such a mistake is a mistake in the construction of law. It is
not manifest from the entry records that Aceto's failure to classify the merchandise under subheading 9817.29.01, HTSUS, was anything other than negligent inaction. As such, there is no basis for relief under section 1520(c)(1). For other rulings where we found a classification error to be a mistake of law, see, e.g., HQ 225412, dated June 1, 1995; HQ 226391, dated April 5, 1996.

Finally, with regard to the cases cited by Aceto, we note that the protestant's reliance on George Weintraub & Sons, Inc. v. United States, 12 CIT 643, 691 F.Supp. 1449 (1988), rehearing denied, 12 CIT 1107, 703 F.Supp. 1107 (1988), and Aviall of Texas, Inc., v. United States, 70 F.3d 1248 (CAFC 1995), in support of its claim for relief is misplaced. The Weintraub decision was vacated on August 22, 1989 (see 855 F.Supp. 401 (CIT 1994)), and therefore has no precedential value, while the Aviall decision is distinguishable from the case at hand.

In Aviall, the broker had filed a blanket certificate for aircraft parts under the Civil Aircraft Agreement. The certificate was valid for one year. The broker failed to renew the certificate, and when Customs failed to grant duty-free treatment for the imported merchandise, Aviall protested, claiming that its failure to renew was a "clerical error." Customs denied the protest, contending that there was no proof of clerical error. The U.S. Court of Appeals for the Federal Circuit found that because (1) Aviall regularly renewed its blanket certificate, (2) the certificate on file was accurate, though out-dated, and (3) Customs had notice of the error (entry summaries were marked with a "C" indicating Civil Aircraft Agreement), Aviall was entitled to relief under section 1520(c)(1) for its "inadvertent" failure to timely renew its certificate. As the Aviall decision was tied to the filing of civil aircraft documentation, did not involve the classification of the merchandise in question and, in the present case, Customs had no notice of Aceto's error (no reference to duty-free treatment on entry documentation), it is not relevant to the case at hand.

HOLDING:

For the above-stated reasons, 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

Previous Ruling Next Ruling

See also: