HQ 958398 - Protest No. 3801-95-101340; Untimely Protest under 19 U.S.C. Sugar - United States International Trade Commision Rulings

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HQ 958398

March 11, 1998

CLA-2 RR:CR:GC 958398 JGB

CATEGORY: CLASSIFICATION

TARIFF NO.: 1806.10.42

Port Director
U.S. Customs Service
Rm 200
477 Michigan Avenue
Detroit, MI 48226

RE: Protest No. 3801-95-101340; Untimely Protest under 19 U.S.C. Sugar

Dear Sir:

This is a decision on protest 3801-95-101340, filed February 24, 1995 against your decision in the classification of merchandise entered between February 24, 1994 and June 26, 1994. All but one of the entries was liquidated between November 25, 1994 and January 26, 1995. Entry 112-6690726-7, listed on the attachment to the Customs Form 19 as being protested, was liquidated on July 7, 1995, and, therefore, was not liquidated at the time this protest was filed.

FACTS:

The merchandise consists of 94 percent sugar and 6 percent cocoa powder in a blend.

The protestant entered the merchandise under subheading 1806.10.41, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), the provision for "Chocolate and other food preparations containing cocoa: Cocoa powder, containing added sugar or other sweetening matter: Other: Described in paragraphs (a) and (b) of additional U.S. note 3 to chapter 17 and entered pursuant to its provisions," dutiable under a claim as a Canadian originating good and therefore dutiable "on total sugars at the rate applicable under subheading 1701.11.01, namely, 0.5842 cents/kg less 0.008267 cents/kg for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 0.377541 cents/kg.

You maintain that the merchandise is classified under subheading 1806.10.42 (HTSUSA), the provision for "Chocolate and other food preparations containing cocoa: Cocoa powder, containing added sugar or other sweetening matter: Other: Other" dutiable on total sugars at the rate applicable under 1701.11.03, namely, at a column one general duty rate of 37.386 cents/kg less 0.529 cents/kg for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 24.161 cents/kg.

Material to the protest and treatment of the entries is the fact that the claim of Canadian origin is based on a blanket declaration of origin, but was not accompanied by Certificates of Quota Eligibility (CQE). The protestant does claim, however, that the goods are entitled to a duty preference under the North American Free Trade Agreement (NAFTA) as set forth in General Note 12, HTSUSA, in particular pursuant to General Note 12(b)(ii)(A) as the result of a tariff shift.

ISSUE:

First: Whether a protest will be entertained against the classification of an entry, prior to liquidation of that entry, where there is no bar to entry.

Second: Whether a Canadian sugar-cocoa blend is properly classified in subheading 1806.10.41, HTSUSA, in the absence of a reference to Canada in the chapter note under which it was sought to be entered.

LAW AND ANALYSIS:

First Issue: Protest Timeliness

Title 19, United States Code, ?1514(c)(3) provides, in pertinent part, that a "protest of a decision, order, or finding described in subsection (a) of this section [here, "(a)(2) the classification and rate and amount of duty chargeable"] shall be filed with the Customs Service within ninety days after but not before--(A) notice of liquidation or reliquidation...." Emphasis supplied. With this limitation in mind, we must note the time of filing of the protest against the classification of the merchandise in entry 112-6690726-7, in comparison to the liquidation date. These records show that the protest was filed February 24, 1995, some four months prior to the date of liquidation on July 7, 1995. Consequently, inasmuch as the protest was filed before the entry was liquidated,that entry was not validly or timely protested, the liquidation is final, and cannot be considered here.

Second Issue:

The General Rules of Interpretation (GRIs) taken in their appropriate order provide a framework for classification of merchandise under the HTSUS. Most imported goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied. There is no dispute here as to the heading or the subheading up to the six-digit level. The proper classification is either in subheading 1806.10.41 or 1806.10.42, HTSUS. Subheading 1806.10.41 provides for, in particular, goods "Described in paragraphs (a) and (b) of additional U.S. note 3 to chapter 17 and entered pursuant to its provisions." Emphasis added. The protestant entered the blend in 1806.10.41; however, reference to additional U.S. note 3 to chapter 17 discloses that Canada is not listed in paragraph (a) or in paragraph (b) where the allocation of sugar base amounts are listed according to supplying countries. Therefore, sugar blends of this sort from Canada could not be entered in this subheading.
U.S. Note 3 to Chapter 17 also notifies the public of the quantitative limitations or restraints placed upon goods claimed to be classified in subheading 1806.10.41, among others. The Secretary of Agriculture is given broad authority to determine the amounts of sugar containing products that may be imported and to make any changes as may be necessary in the limitations. During the time period when these entries were made, the applicable regulations were found in 15 CFR ?2011.103 ("Allocation of Tariff-Rate Quota on Imported Sugars, Syrups and Molasses" and "Entry into the United States.") 15 CFR Ch. XX (1-1-94 edition). Section 2011.103(a), indicates "Except as otherwise provided herein..., no sugar described in subheadings ...1806.10.41...of the HTS, which is the product of a foreign country or areas, may be entered or withdrawn from warehouse for consumption...unless at the time of entry the person entering such sugar presents to the appropriate customs official a valid and properly executed certificate of quota eligibility for such sugar. Except as otherwise provided here..., no sugar described in subheadings...1806.10.42...of the HTS, which is the product of Canada, may be entered or withdrawn from warehouse for consumption...unless at the time of entry the person entering such sugar presents to the appropriate customs official a valid and properly executed certificate of quota eligibility for such sugar."

The quoted sections supra indicate that the tariff, itself, through the chapter notes, creates standards for entry of sugar along with accompanying regulations and those restrictions, including such requirements as the presentation of a certificate of quota eligibility, are in addition to the preference provisions contained in the NAFTA. Therefore, even if the product proposed to be entered meets the NAFTA requirements for preferential treatment as an originating good, the sugar restrictions set forth in the Chapter 17, HTSUS, as well as notes and accompanying regulations, must also be satisfied. Even if the blend were entered correctly as a Canadian product under subheading 1806.10.42, it would not qualify for a preferential rate as a Canadian good unless the CQE were included with the entry. Your tariff treatment of these entries was correct. You advanced the rate by liquidating the goods in subheading 1806.10.42, HTSUS, at the high rate as not qualifying for Canadian treatment. This action appears to be consistent with the standing quota bulletins providing instructions from Customs Headquarters that originated with the U.S. Department of Agriculture.

The protestant in his attachment to the Customs Form 19 requests that Customs grant a waiver to the requirement that CQE's accompany any shipments claiming preferential duty treatment under the specified subheadings. It should be noted that any waivers to this requirement would be granted not by Customs, but by the Secretary of Agriculture who would, in turn, notify the Secretary of the Treasury of the action. See 15 CFR 2011.104. Although the regulations make clear that it is the importer/protestant who would request a waiver, as a courtesy, this office explored the possibility of a waiver with the appropriate office in the U.S. Department of Agriculture. The Department informally declined to consider a waiver because none of the usual conditions was present in this case. Moreover, Customs Quota Circulars made available to brokers and importers made clear the CQE requirement for Canadian goods entered under subheadings 1806.10.4100 and 1806.10.4200. See "QBT 93-505 - SUGAR - CERTIFICATES" issued February 19, 1993 and "QBT-93-521 - SUGAR - CANADA" issued September 23, 1993. These circulars were still in effect at the time the protested entries were made, thus vitiating the protestant's claim of surprise.

HOLDING:

The classification of the merchandise in entry 112-6690726-7 was not validly protested. You are instructed to deny the protest with respect to this entry due to lack of timeliness.

The sugar and cocoa blend is classified in subheading 1806.10.42 (HTSUSA), the provision for "Chocolate and other food preparations containing cocoa: Cocoa powder, containing added sugar or other sweetening matter: Other: Other" dutiable on total sugars at the rate applicable under subheading 1701.11.03, namely, at a column one general duty rate of 37.386 cents/kg less 0.529 cents/kg for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 24.161 cents/kg. You are instructed to deny the protest for the entries where classification was at issue.

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, together with the Customs Form 19, 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,
Commercial Rulings Division

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