HQ 227609 - Application for further review of protest no. 5301-95-100027; antidumping duty; certificate of reimbursement; interest; 19 U.S.C. ?1520(c)(1); 19 CFR 353.26; 19 U.S.C. 1677g; mistake of law - United States International Trade Commision Rulings

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HQ 227609

February 24, 1998

LIQ-4-01-LIQ-9-01-RR:IT:EC 227609 IOR

CATEGORY: LIQUIDATION

Port Director
U.S. Customs Service
2350 N. Sam Houston Parkway East
Suite 1000
Houston, TX 77032

RE: Application for further review of protest no. 5301-95-100027; antidumping duty; certificate of reimbursement; interest; 19 U.S.C. ?1520(c)(1); 19 CFR 353.26; 19 U.S.C. 1677g; mistake of law

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the facts and issues raised, and our decision follows.

FACTS:

This protest concerns entry no. 201-xxxx481-2, filed on March 12, 1990, for nitrocellulose imported from Japan on February 21, 1990, by Biachem USA, Inc. (Biachem). The protestant acted as surety for the entry.

The imported merchandise was the subject of an antidumping investigation (A-588-812) (Federal Register of October 17, 1989 (54 FR 42536)). In a notice of preliminary determination (Federal Register of March 5, 1990 (55 FR 7762)), Customs was directed to suspend liquidation of all entries of such merchandise that are entered, or withdrawn from warehouse, for consumption, on or after the date of publication, March 5, 1990. Customs was also directed to require a cash deposit or posting of a bond equal to the estimated preliminary dumping margin of 66%. A final determination was published in the Federal Register on May 22, 1990 (55 FR 21054), pursuant to which Customs was directed to continue to suspend liquidation of entries of the merchandise. On July 10, 1990, in an Antidumping Duty Order, the International Trade Administration (ITA) published a determination in the Federal Register (55 FR 28268) that importations of the merchandise materially injure a U.S. industry and Customs was directed to require a cash deposit equal to the estimated weighted-average antidumping duty margin of 66%.

There were two Customs bonds posted for the subject entry, an entry bond in the amount of the declared value of the imported merchandise, and an antidumping bond in the amount of 66% of the declared value. The protestant was the surety. The file contains an Entry/Immediate Delivery form (CF 3461) dated February 28, 1990, with respect to the subject entry . The applicant on the form is indicated to be the importer of record of the entry, however, the importer and importer number identified on the CF 3461, is the party identified as the Customs broker on the CF 7501.

On August 20, 1991, upon receiving instructions from the Department of Commerce, the instructions were issued by Customs telex (No. 1232111, Subject: Antidumping Duties) advising that the Department of Commerce had not received a request for an administrative review of the antidumping duty finding/order for certain periods on merchandise listed in the telex. Customs officers were directed to assess antidumping duties on merchandise entered, or withdrawn from warehouse, for consumption during the periods listed in the telex at the cash deposit or bonding rate required at the time of entry. The instructions for the merchandise under consideration were to "liquidate all entries for all firms [for the] period [of] 03\05\90 - 06\30\91."

The August 20, 1991 telex also states that assessment of dumping duties requires of the importer the reimbursement statement described in 19 CFR 353.26 and that prior to appraisement and liquidation such a statement must accompany each entry on which duty is to be assessed. With respect to interest, the telex states that "no interest should be collected on entries, filed prior to publication of the antidumping duty order, for which only bonds, and no cash deposits, were posted."

By letter dated May 18, 1992, to Biachem, addressed to the address that appears on the CF 7501 for Biachem, and which is in Customs Automated Commercial System (ACS) records for Biachem, Customs requested Biachem to complete and return a reimbursement certificate. The letter included a copy of the regulations requiring the reimbursement, and information to include in such certification. The information includes the "date of publication" as 3/5/90, and the "date of final determination" as 5/22/90. The letter requested that the reimbursement certificate be returned to Customs within five working days of the receipt of the request.

On July 27, 1992, Customs sent a Notice of Action (CF 29) to Biachem. The notice stated that the subject entry is in the liquidation process and will be liquidated at the 66% cash deposit/bond rate in effect at the time of entry. In addition, the notice stated:

On 5/18/92 we sent you a request for an antidumping reimbursement statement. To this date we have received no response. Your failure to file the certificate leads us to presume that reimbursement of dumping duties has taken place. As a result an additional assessment in the amount of the antidumping duties has been assessed.

The subject entry was liquidated on September 4, 1992, with an increase in the antidumping duties in the total amount of $44,173.00 (representing the additional assessment equal to the total dumping duties deposited, on the basis that the reimbursement notice was not returned to Customs, as provided for in the above-referenced notices from Customs) for the protested entry. Demand for payment of the increased antidumping duty (the $44,173.00, plus $15,158.40 in interest) was made on the protestant surety on December 12, 1992. According to the protestant, the increase in antidumping duty was paid by the surety on April 13, 1993. According to Customs records, payment was made on the antidumping bond posted with the entry summary. No separate payment for the increased antidumping duty assessment has been made.

On June 18, 1993, the protestant filed with Customs a petition for reliquidation under 19 U.S.C. ?1520(c)(1), claiming mistakes of fact. As grounds for the petition, the protestant claims that 1) the reimbursement presumption is rebutted by virtue of a reimbursement certification from the importer attached to the petition, 2) the reimbursement presumption is not applicable to the subject entry because the merchandise was purchased before the date of publication suspending liquidation and exported before the date of final determination, and 3) interest was improperly assessed because the importer did not make a cash deposit to secure the antidumping duties, but posted a bond to secure payment. The only allegation of any mistake is that "Customs made a mistake of fact as to the type of security deposited by the importer for estimated dumping duties." Accompanying the petition is an undated certificate of reimbursement purported to be signed by a Biachem company officer. The only date appearing on the document is the facsimile produced date of June 15, 1993. According to the supervisory import specialist handling the file, the reimbursement certificate had not been submitted to Customs prior to the filing of the 1520(c)(1) petition.

An addendum to the June 18, 1993 petition, dated June 22, 1993 was submitted to Customs. The addendum further describes the mistakes of fact alleged:

Surety respectfully submits that this case clearly involves two mistakes of facts and one instance of other inadvertence by the United States Customs Service. As is described in surety's original petition, the Customs Service was mistaken as to the fact that the importer was not reimbursed by any party for antidumping duties. The fact is that the importer has submitted a reimbursement statement certifying that no reimbursement occurred. Consequently, the entry should be reliquidated without the imposition of double the antidumping duties for failure to submit a reimbursement statement. (Emphasis supplied).

The second mistake of fact concerned the type of security posted by the importer to secure the estimated antidumping duties. Surety submits that Customs mistakenly believed a cash deposit was made otherwise it would not have charged interest. It is unlawful to charge interest on a bond. Since the importer posted a bond to secure antidumping duties, reliquidation of this entry without the imposition of interest would correct this error.

Finally, inadvertence by the Customs service, namely failing to provide notice to the actual importer that a reimbursement statement was required in this case, detrimentally affected the importer.

The addendum goes on to describe that the CF 7501 has notations that a phone number for Biachem could not be located, that Biachem has a telephone listing in a town other than the one shown on the CF 7501 and Customs records, and that the name of the ultimate purchaser noted on the CF 7501, is for someone with no knowledge of the import transaction.

The petition for reliquidation was denied on October 24, 1994 on the grounds that no clerical error or other inadvertence correctable under 19 U.S.C. ?1520(c)(1) has occurred. A section 520(c) routing and recommendation sheet completed by the concerned import specialist, apparently completed on June 24, 1993, includes a handwritten note of May 2, 1994, that with respect to the allegation of mistake of fact regarding the interest:

I read interest statement in item 6 of liquidation instructions - "publication of the antidumping duty order" to correspond to "date of publication - 3/5/90" appearing on letter to Biachem of 5/18/92. Since entry date is 3/12/90 interest would apply.

A protest of the denial of the 1520(c) petition was filed by the protestant surety on January 13, 1995. The additional allegations of mistake of fact, are that there was a mistake of fact as to the date of exportation of the subject merchandise and the date of final determination, and that the presumption of reimbursement is not applicable to the facts.

Further review for the protest was requested and granted.

ISSUE:

Whether the petition under 19 U.S.C. ?1520(c)(1) should be granted?

LAW AND ANALYSIS:

Initially we note that this protest was timely filed pursuant to 19 U.S.C. ?1514(c)(3). The date of decision to deny reliquidation under 19 U.S.C. ?1520(c)(1), was October 24, 1994 and the protest was filed on January 13, 1995. 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).

Under 19 U.S.C. ?1514(c)(2), a decision of a Customs officer as to charges or exactions on imported merchandise is conclusive against, among others, a surety on an import bond unless the affected surety files a protest of that decision within 90 days from the mailing by Customs of a "notice of demand for payment." See e.g., American Motorists Insurance Co., v. United States, 14 CIT 298, 737 F. Supp. 648 (1990). As the entry was liquidated on September 4, 1992, and the notice of demand for payment was mailed to the surety on December 12, 1992, the protestant surety's right to protest the liquidation of the entry, expired 90 days from the mailing of the notice of demand. The surety failed to file a timely protest of the liquidation, under 19 U.S.C. ?1514, therefore the liquidation of the subject entry is final.

19 U.S.C. ?1520(c)(1) is an exception to the finality of ?1514. Under ?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 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)).

The protestant essentially alleges that customs made mistakes of fact and inadvertences in requiring a reimbursement certificate, relying on the presumption of reimbursement, failing to notify the importer about the need for a reimbursement certificate, and in assessing interest when a bond was deposited in lieu of cash.

A "clerical error" has been stated by the courts to be "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." PPG Industries, Inc. v. United States, 7 CIT 118, 124 (1984). A "mistake of fact" has been described 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, 22; C.D. 4327, 336 F. Supp. 1395, 1399 (1972), aff'd 61 CCPA 90, C.A.D. 1129, 499 F.2d 1277 (1974). A mistake of fact has also been defined as any mistake except a mistake of law. A mistake of law exists where a person knows the facts as they really are but has a mistaken belief as to the legal consequences of those facts. Inadvertence is a somewhat broader term, and has been defined as "an oversight or involuntary accident, or the result of inattention or carelessness, and even as a type of mistake." Id.

In order to qualify for relief under ?1520(c)(1), it must be established that there was an error or mistake (i.e., in this case it must be established that the assessment of double antidumping duty and assessment of interest at liquidation was incorrect). The protestant must also establish that the alleged errors were 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.

With respect to the assessment of double antidumping duties pursuant to Commerce Regulations 353.26 (19 CFR 353.26), we do not believe that an error or mistake has been established. The regulation provides as follows with respect to the reimbursement certificate:

(a) In general.(1) In calculating the United States price, the Secretary will deduct the amount of any antidumping duty which the producer or reseller: (i) Paid directly on behalf of the importer; or
(ii) Reimbursed to the importer.

(2) The Secretary will not deduct the amount of the antidumping duty paid or reimbursed if the producer or reseller granted to the importer before initiation of the investigation a warranty of nonapplicability of antidumping duties with respect to the merchandise which was:
(i) Sold before the date of publication of the Secretary's order suspending liquidation; and
(ii) Exported before the date of publication of the Secretary's final determination.

Ordinarily, the Secretary will deduct for reimbursement of antidumping duties only once in the calculation of the United States price.

(b) Certificate. The importer shall file prior to liquidation a certificate in the following form with the appropriate District Director of Customs:

I hereby certify that I (have) (have not) entered into any agreement or understanding for the payment or for the refunding to me, by the manufacturer, producer, seller, or exporter, of all or any part of the antidumping duties assessed upon the following importations of G7T2XXXX
(commodity) from G7T2XXXX (country): (List entry numbers) which have been purchased on or after G7T2XXXX (date of publication of notice suspending liquidation in the Federal Register) or purchased before G7T2XXXX (same date) but exported on or after G7T2XXXX (date of final determination of sales at less than fair value).

(c) Presumption. The Secretary may presume from an importer's failure to file the certificate required in paragraph (b) that the producer or reseller paid or reimbursed the antidumping duties.

The regulations provide that the Secretary of Commerce may presume from the importer's failure to file the reimbursement certificate, that payment or reimbursement of the antidumping duties occurred, and thus the Secretary is required to deduct the amount of payment or reimbursement from the United States price (this amounts to a doubling of the antidumping duty). Paragraph (b) above specifically requires the reimbursement certificate to be filed prior to liquidation. In this case, a reimbursement certificate was not filed with Customs prior to liquidation. Therefore, Customs was correct in deducting the amount of presumed reimbursement from the United States price which resulted in a doubled antidumping duty.

The protestant has not presented any support for the position that the presumption should not be applied in this case. The mere assertion that ultimately a reimbursement certificate was completed is insufficient to defeat the presumption in the regulation. Even if Customs were to take the position that the presumption should not have been applied, the protestant has not established that the application of the presumption was due to a mistake of fact, clerical error or inadvertence. Unlike in Aviall of Texas v. United States, 70 F.3d 1248 (Fed. Cir. 1995), cited by protestant, there is no allegation in this case that the importer believed that a reimbursement certificate had been filed. The only allegation here is that Customs was mistaken because the importer was not reimbursed for antidumping duties. The cause of the assessment of double antidumping duties was not Customs belief, but the lack of a timely filed reimbursement certificate.

Protestant cites HQ 220397, dated March 12, 1991 in support of its position. In HQ 220397, Customs found a mistake of fact existed when a Customs officer had been unaware at the time of liquidation that a license requirement to substantiate a duty free entry had been waived by Presidential Proclamation. Customs found that:

The Customs official's belief concerning the existence of an Energy license is a mistake of fact; but for the missing import license, the entry would have been liquidated by Customs as free of duty. The impossibility of obtaining such a license is the very reason for the importer's noncompliance with the headnote and regulations.

The same cannot be said in the instant case. In this case, belief about reimbursement did not cause Customs to apply 19 CFR 353.26(c). The double antidumping duties were correctly assessed because of the importer's failure to timely file a reimbursement certificate. Protestant also cites HQ 223160, dated September 13, 1991. In HQ 223160, a mistake of fact was found where a Customs officer was unaware of the existence of an outstanding countervailing duty case, and that mistake caused the error in liquidation. In the instant case, as stated above, the alleged mistake as to the lack of reimbursement was not the cause of the alleged error in liquidation.

The protestant makes an alternative argument that the requirement of a reimbursement certificate was erroneously applied in this case, as the subject merchandise was purchased before the date of notification of suspension of liquidation and was exported before the date of final determination. While the date of purchase by the importer is not clear from the documents, the invoices show that the merchandise was purchased by the ultimate consignee on February 5, 1990 (before the suspension of liquidation on March 5, 1990), and the CF 7501 shows the export date of the merchandise as February 8, 1990, and the import date as February 21, 1990 (before the final determination date of May 22, 1990). The above quoted regulations, 19 CFR 353.26(a)(2), specifically provide for the instance in which merchandise is purchased prior to the date of the order suspending liquidation, and is exported before the date of publication of the final determination. The regulations specify that the amount of the antidumping duty paid or reimbursed will not be deducted, if a warranty of nonapplicability of antidumping duties with respect to the merchandise is granted by the producer or reseller to the importer. No such warranty is alleged to have been granted in this case. Therefore, the fact that the dates of purchase and exportation of the merchandise may have occurred outside of the dates specified in the reimbursement certificate does not make the deduction of reimbursed or paid antidumping duties erroneous. Further, as the export and import dates are included on the CF 7501, and there is no allegation that Customs made any mistake as to the dates, no mistake of fact is manifest from the record.

Protestant alleges an inadvertence with respect to the reimbursement certificate, by Customs failure to locate a telephone number for Biachem. This argument ignores the fact that the address to which Customs wrote requesting a reimbursement certificate was the same one that was shown on the CF 7501 and in Customs ACS records. The protestant has not presented any evidence that the address was wrong, which would support an allegation that Customs believed in the existence of an address which in reality did not exist. Instead it is alleged that Customs believed that Biachem had a telephone number in Atlanta, when it did not, but had a telephone number in Norcross, Georgia. This allegation does constitute a mistake of fact, however, it is not a mistake of fact that caused the assessment of double antidumping duties. There is no requirement that Customs notify the importer about the need for a reimbursement certificate. The notification provided by Customs is a courtesy and attempt to reduce protests on the issue. In a June 5, 1991 letter from the Department of Commerce, to Customs, it was stated:

When the deadline for filing the reimbursement certificate has not yet passed (e.g....liquidation), I would propose that Customs attempt to notify the importer that a certificate has not been filed prior to assessing double antidumping duties on such entries. While notification is not required by the regulations, I believe it would ensure greater cooperation with the reimbursement certificate requirement and reduce protests in this area....

A mistake of fact as to the location of the importer may have caused the failure to notify or inability to notify the importer of the reimbursement certificate, however it did not directly cause the assessment of double antidumping duties. The filing of the reimbursement certificate is a requirement imposed upon the importer and is the importer's responsibility, whether or not the importer received a notice or reminder from Customs. It was the failure to timely file such certificate that directly caused the assessment of double antidumping duties, not the alleged mistake with regard to the location of the importer's place of business.

Finally, the protestant alleges that Customs made a mistake as to the type of antidumping duty security deposited by the importer, stating that since a bond was posted, no interest should have been assessed under Timken Co. v. U.S., 37 F.3d 1470 (Fed. Cir. 1994). The provision under which interest was assessed is 19 U.S.C. ?1677g:

(a) General rule
Interest shall be payable on overpayments and underpayments of amounts deposited on merchandise entered, or withdrawn from warehouse, for consumption on and after--

(1) the date of publication of a countervailing or antidumping duty order under this title or section 303 [19 U.S.C. ? 1303],...

We agree that interest should not have been assessed on the antidumping duties, as the entry was made prior to the date of publication of the antidumping duty order. See, Timken, supra. The import specialist liquidating the entry, specifically followed the liquidation instructions in the August 20, 1991 telex. In applying the instructions, the import specialist referred to the dates he had written on the May 18, 1992 letter to the importer requesting the reimbursement certificate. The import specialist interpreted the instruction phrase "publication of the antidumping duty order" to mean the date of publication of the notice to suspend liquidation, March 5, 1990. As this date was prior to the date of entry, March 12, 1990, and the instructions were that "no interest should be collected on entries filed prior to publication of the antidumping duty order, for which only bonds, and no cash deposits, were posted", the import specialist believed that interest should be collected on entries filed after March 5, 1990 (the date of publication the import specialist believed the instructions referred to). The import specialist knew that a bond had been posted. The mistake here, is that the import specialist confused the date of publication of the notice of suspension of liquidation (March 5, 1990) and the date of publication of the antidumping duty order (July 10, 1990). Had he applied the July 10, 1990 publication date, no interest would have been assessed. The issue is whether the import specialist's mistake as to the applicable date is a mistake of fact correctable under 19 U.S.C. ?1520(c)(1).

We conclude that the mistake as to the consequences of the date is a mistake of law. The import specialist had before him the date of publication of the notice to suspend liquidation, the date of publication of the antidumping duty order and the date of entry. In applying the liquidation instructions, the import specialist had a mistaken belief as to the legal consequences of each date and the distinction between the two dates. In other words, he had the facts of the dates of publication and the date of entry, but was unaware of their legal consequences with respect to the assessment of interest. Any error in the liquidation instructions is a mistake of law, as they incorrectly apply the law. There is no evidence that any clerical error occurred in the typing of the telex, and we do not believe that any error in the telex directly resulted in the assessment of interest, given the mistake made by the import specialist.

In support of the petition for reliquidation, the protestant cites HQ 224118, dated July 26, 1993, in which a computer data error, which caused cost data submitted to Customs to be incorrect. The computer data error was determined to be a clerical error, mistake of fact or other inadvertence. Unlike in HQ 224118, there is no evidence of any erroneous data in this case. Similarly, in HQ 221080, dated February 4, 1991, a clerical error or other inadvertence were found when the evidence presented showed the intent of the importer to include an entry number in a statement required for duty free treatment. In this case, no such evidence has been presented.

In ITT Corp. v. United States, 24 F.3d 1384, 1387 (Fed. Cir. 1994), the court found that reliquidation under 19 U.S.C. 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 this case, the protestant has failed to meet the notice requirement, as no mistake of fact or inadvertence which directly caused the incorrect liquidation has been asserted. Consequently, there has been no basis presented for reliquidating the subject entry pursuant to 19 U.S.C. denied.

Finally, in C.J. Tower, supra, 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. In C.J. Tower, neither the importer nor Customs was aware that the merchandise was emergency war materials entitled to duty-free entry, until after the liquidations became final. In this case, there is no allegation or evidence that the surety was unable to protest the liquidation of the entries within 90 days of the mailing of the notice of demand for payment.

HOLDING:

The protestant has not established a mistake of fact in the liquidation of the subject entry, and reliquidation of the entry is not permissible pursuant to 19 U.S.C. ?1520(c)(1).

Consistent with the decision set forth above, you are hereby directed to deny the subject protest. 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 the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

Director,
Commercial Rulings
Division

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