HQ 228249 - Further Review of Protest #2402-98-100035 by Rudolph Miles & Sons, Inc.; Ultimate Consignees: Featherlite Corporation, E.F. Building Material Inc., Harkey Brick, Company, Carlsbad Block & Supply; countervailing duty; bricks from Mexico; 19 U.S.C. 1504(d); Rheem Metalurgica v. United States, 160 F.3d 1357 (Fed. Cir. 1998); liquidation; suspension; Ceramica Regiomontana, S.A., Ceramicas y Pisos Industriales De Culiacan. S.A. De C.V., and Industrias Intercontinental, S.A., v. The United States, 64 F.3d 1579 (Fed. Cir.1995); Wolff Shoe Co., v. United States, 141 F.3d 1116 (Fed. Cir.1998); Final Affirmative Countervailing Duty Determination and Countervailing Duty Order, International Trade Administration (ITA), C-201-017-000, 49 Fed. Reg. 19564, (May 8, 1984); Amended Revocation of the Countervailing Duty Order and Amended Final Results of Countervailing Duty Administrative Review, ITA, C-201-017-000, 61 Fed. Reg. 26162 (May 24, 1996); U.S. Customs Service, Message No. 6145111. - United States International Trade Commision Rulings

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HQ 228249

August 23, 1999

LIQ-4-01/02 RR:CR:DR 228249 BJB

CATEGORY: LIQUIDATION

Port Director of Customs
U.S. Customs Service
797 South Zaragosa Road
El Paso, TX 79907

RE: Further Review of Protest #2402-98-100035 by Rudolph Miles & Sons, Inc.; Ultimate Consignees: Featherlite Corporation, E.F. Building Material Inc., Harkey Brick, Company, Carlsbad Block & Supply; countervailing duty; bricks from Mexico; 19 U.S.C. 1504(d); Rheem Metalurgica v. United States, 160 F.3d 1357 (Fed. Cir. 1998); liquidation; suspension; Ceramica Regiomontana, S.A., Ceramicas y Pisos Industriales De Culiacan. S.A. De C.V., and Industrias Intercontinental, S.A., v. The United States, 64 F.3d 1579 (Fed. Cir.1995); Wolff Shoe Co., v. United States, 141 F.3d 1116 (Fed. Cir.1998); Final Affirmative Countervailing Duty Determination and Countervailing Duty Order, International Trade Administration (ITA), C-201-017-000, 49 Fed. Reg. 19564, (May 8, 1984); Amended Revocation of the Countervailing Duty Order and Amended Final Results of Countervailing Duty Administrative Review, ITA, C-201-017-000, 61 Fed. Reg. 26162 (May 24, 1996); U.S. Customs Service, Message No. 6145111.

Dear Sir or Madam:

This office has received the above-referenced application for further review of the protest as provided for under Customs regulations. We have considered the request and have made the following decision.

FACTS:

Rudolph Miles & Sons, Inc. ("the protestant"), imported 234 entries of bricks from Mexico ("the entries"). The merchandise was entered into the United States and entry summaries were filed inter alia on August 5, 1986, August 12, 1986, August 20, 1986, August 27, 1986, and September 11, 1985. Bricks from Mexico became subject to a Department of Commerce countervailing duty order (Case C-201-017-000) on May 8, 1984. Countervailing duty, paid at the rate of 3.51%, was deposited with the entries (see CF 7501s and C-201-017-000, 49 FR 19564 (May 8, 1984)). Liquidation was suspended for all entries covering shipments of Mexican bricks exported after December 31, 1985. The “Final Results” regarding countervailing duties on bricks from Mexico, covered by the Department of Commerce order C-201-017-000, was published in a further notice by the Department of Commerce in the Federal Register on September 30, 1988 (53 FR 38314). The review now included the periods dating from July 1, 1984 through December 31, 1984, and January 1, 1985 through December 31, 1985. On December 27, 1989, the Department of Commerce announced the revocation of the countervailing duty order on bricks from Mexico (C-201-017-000) for entries made on or after August 24, 1986. Rudolph Miles & Sons, Inc., imported 234 shipments of hollow and solid ceramic bricks from Mexico, during the period dating from April 23, 1985 through August 22, 1986. Rudolph Miles & Sons, Inc., imported these shipments of bricks on behalf of its customers and ultimate consignees: Featherlite Corporation, E.F. Building Material Inc., Harkey Brick Company, and Carlsbad Block & Supply.

At the time of import entry, Rudolph Miles & Sons, Inc., was ordered to deposit payment of countervailing duties assessed. The solid ceramic bricks, classified under item 532.1120 TSUS, and the hollow bricks, classified under item 532.1140 TSUS, would have been duty free, but for the countervailing duties imposed by the Department of Commerce pursuant to C-201-017-000. All of the protested entries were subject to countervailing duty order C-201-017-000 ("Countervailing Duty Order"). The order (C-201-017-000), imposed countervailing duty at a rate of 3.51% (ITA C-201-017-000, 49 Fed. Reg. 19564, (May 8, 1984)).

Pursuant to a decision of the Court of Appeals for the Federal Circuit, Ceramica Regiomontana, S.A., v. United States, 64 F.3d 1579, (Fed. Cir. 1995), the Court of International Trade remanded to the Department of Commerce, the case Productos de Barro Industrializados. S.A. de C.V., (Court No. 88-10000808), 31 Cust. B. & Dec., No. 51, (December 17,1997), This case had been stayed pending the Ceramica decision. In response to the CAFC decision, the Department of Commerce amended its revocation of the countervailing duty order on bricks from Mexico to be effective as of April 23, 1985. April 23, 1985 was the date Mexico became "a country of the Agreement," (i.e., the GATT or General Agreement on Tariffs and Trade), instead of August 24, 1986. This determination expanded the scope of the import entries found no longer covered by Commerce' s countervailing duty order C-201-017-000. Customs, in implementation of the Department of Commerce's instructions issued its "Message 6145111" by Customs Director of Technical Programs, on May 24, 1996. Message 6145111 was addressed to all CMC Directors and Port Directors. "Message 6145111" instructed all port directors, "to liquidate all outstanding entries of bricks from Mexico entered on or after April 23, 1985, and assess countervailing duties at zero percent (emphasis added)."

Customs liquidated the 234 entries on July 17, 1998. According to the file, Rudolph Miles & Sons, Inc., timely filed a Protest and Application for Further Review within 90 days, on September 17, 1998. Approximately twenty-five months passed from the date of the Department of Commerce' s issuance of instructions to Customs and Customs’ issuance of its "Message 6145111," until the 234 entries were liquidated on July 17, 1998. Customs' delay in liquidating the entries caused a liquidation by operation of law pursuant to 19 U.S.C. §1504(d). This liquidation by operation of law, 6 months from the date of Commerce's instructions to Customs (instruction issued to Customs on May 23, 1996), statutorily imposed the assessment of duty at the rate asserted by the importer of record at the time of entry, at the end of 6 months.

It is Customs position that, based upon 19 U.S.C. '1504(d), as amended on December 8, 1993, (Pub. L. No. 103-182, sec. 641,107 Stat. 2057), the entries were liquidated by operation of law because, "any entry whose liquidation is suspended and such suspension is subsequently removed but the entry is not liquidated within six months after Customs receives notice of the removal is deemed liquidated at that time." The delay between the time Customs Message 6145111, which lifted suspension of liquidation and the time import entries were actually liquidated, was greater than six months.

ISSUE:

1. Whether the 234 entries were liquidated by operation of law; and

2. Whether Customs accurately applied 19 U.S.C. § 1504(d) in determining the duty rate "asserted at the time of entry by the importer of record."

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed (i.e., within 90 days of July 17, 1998, the date of final liquidation of the entries) under 19 U.S.C. § 1514(c)(3)) and the matter protested is protestable under 19 U.S.C. § 1514 (a)(5).

Issue One:

Under 19 U.S.C. § 1504, as amended (see section 641, Public Law 103-182; 107 Stat. 2204), an entry not liquidated within one year from the date of entry (as pertinent in this case) shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record, unless liquidation is extended, as provided in that section, or suspended as required by statute or Court order. Under section 1504(c), "[i]f the liquidation of any entry is suspended, the Secretary shall, by regulation [see 19 C.F.R. §159.12], require that notice of the suspension be provided, in such manner as the Secretary considers appropriate, to the importer of record and to any authorized agent and surety of such importer of record."

Protestant argues that each of its 234 entries of bricks were all entered on or after April 23, 1985, and should be reliquidated with a full refund of the countervailing deposits with interest, "because the final assessment of the Countervailing Duty was determined to be Zero percent (CF 19 Protest and Application for Further Review Attachment)." Further, the Protestant argues that Customs action on these 234 entries, "represents a failure to follow liquidation instructions issued by the U.S. Customs Service Director, Technical Programs via Message Number 6145111," and should therefore be reversed.

In this protest, the dates of entry ranged from April 23, 1985 through August 22, 1986 (CF 19- Exhibit A). As required under current statutes and caselaw the liquidation of the entries was properly suspended within one year of the dates of entry (See International Cargo & Surety Insurance Co. Data Memory Corp., v. United States, 15 CIT 541, 779 F. Supp. 174 (1991) and Enron Oil Trading and Transportation Co., v. United States, 15 CIT 511 (1991), vacated 988 F. 2d 130 (Fed. Cir. 1993), and rulings HQ 224792 and 224397). Suspension of liquidation in the countervailing duty case was lifted on May 24, 1996.

The Court of Appeals for the Federal Circuit issued a decision in Ceramica Regiomontana v. United States, 64 F.3d 1579 (Fed. Cir. 1995), requiring the Department of Commerce rescind its countervailing duty order against bricks imported from Mexico and permit their importation duty-free into the United States. On May 23, 1996, Commerce issued its "Amended Revocation of the Countervailing Duty Order and Amended Final Results of Countervailing Duty Administrative Review ("Commerce Instructions") related to C-201-017, (61 Fed. Reg. 26162). These "Instructions" required Customs to assess the duty on the import entries at zero duty rate. On May 24, 1996, Customs received liquidation instructions from Commerce and issued its "Message 6145111" to all Port Directors and CMCs ordering liquidation of all suspended import entries of Mexican bricks at zero duty.

Since liquidation occurred after the effective date of the amendments to 19 U.S.C. § 1504(d) (December 8, 1993; section 692, Public Law 103-182), the amended statute is controlling with respect to deadlines for liquidation. Thus, within 6 months after Customs received notice of the removal of the suspension of liquidation, as required by the amended section 1504(d), Customs was obligated, by operation of law, to liquidate at the rate of duty, value, quantity, and amount of duty asserted at the time of entry by the importer of record, in accordance with 19 U.S.C. § 1504(d).

Issue Two:

The protestant’s 234 import entries of Mexican bricks were liquidated by operation of law pursuant to 19 U.S.C. § 1504(d). Under 19 U.S.C. §1504(d):

“(d) Removal of suspension -- Except as provided in section 1675(a)(3)of this title, when a suspension required by statute or court order is removed, the Customs Service shall liquidate the entry, unless liquidation is extended under subsection (b) of this section, within 6 months after receiving notice of the removal from the Department of Commerce, other agency, or a court with jurisdiction over the entry. Any entry (other than an entry with respect to which liquidation has been extended under subsection (b) of this section) not liquidated by the Customs Service within 6 months after receiving such notice shall be treated as having been liquidated at the rate of duty, value, quantity, and amount of duty asserted at the time of entry by the importer of record."

The protestant thus argues, that the above provision should be read pursuant to its “plain meaning.” Protestant claims that it, “asserted” that its imported merchandise was in fact “duty-free” at the time of entry into the United States. For evidence of this claim, protestant points to each of the entry summaries (“CF7501") it has submitted and which show two sets of notations. The first set of notations is for “solid ceramic brcks NT CTD, [Duty] FREE, None” (under amount of duty to be paid), and the same for “HOLLOW BRCKS NT CTD ETC, [Duty] FREE, None (under amount of duty to be paid),” and the second set of notations reads, “C-201-017-000 3.5100% . . ..”

Protestant maintains that it was forced to pay the 3.51% countervailing duty on its imported bricks solely because of the Department of Commerce’s countervailing duty order. But for the Department of Commerce’s order imposing a 3.51% countervailing duty on bricks from Mexico, the protestant would never have had to pay the deposit of 3.51% in countervailing duty.

Pursuant to the Ceramica decision, the Court of International Trade remanded the case of Productos De Barro Industrializados, S.A. de C.V., v. United States, (Court No. 88-10-00808), 31 Cust. B. & Dec., No. 51, (December 17, 1997), (a case stayed pending the decision), back to the Department of Commerce. In that remand, the Court of International Trade ordered the Department to: (1) revoke the countervailing duty order on bricks from Mexico effective April 23, 1985, the date Mexico was designated as a "country under the Agreement;" and (2) instruct the U.S. Customs Service to refund any estimated countervailing duties at issue in [the] case that were deposited during the period April 23, 1985 through December 31, 1986."

Based on the Department of Commerce (the Department) apparent lack of statutory authority to impose countervailing duties on dutiable goods imported by Mexico after April 23, 1985, (absent an injury determination), protestant argues there was no authority for the imposition of any duty on these 234 entries. Therefore, the protestant maintains, the language in 19 U.S.C. §1504(d), “amount of duty asserted at the time of entry by the importer of record,” means the amount of duty the protestant asserted at the time of entry. In this case, where the protestant asserted the amount of duty for its imported bricks at zero, and the courts have held that the Department of Commerce lacked the authority to impose any countervailing duty, the deposit paid and interest accrued, should be returned.

However, Customs interpretation of the 19 U.S.C. § 1504(d) language, diverges from that claimed by the protestant. Customs has held, and continues to affirm here, "that entries subject to countervailing duties which [were] liquidated by operation of law, [are] liquidated with countervailing duties due at the rate at which the importer was required to post a bond or deposit cash, upon entry." Customs interpretation has been upheld both in HQ Ruling 227793, and by the Court of Appeals for Federal Claims, in Rheem Metalurgica S/A v. United States, 951 F. Supp. 241 (CIT 1996), aff’d Rheem, 160 F. 3d 1357, (Fed. Cir.1998). In Rheem, the CAFC held, "[t]he meaning of ‘asserted’ in §1504(d) . . . means that which is claimed and indicated by the importer, his consignee or agent on the entry summary or warehouse withdrawal." (citing Customs Regulations, Relating to the Entry of Merchandise, Liquidation of Entries, Warehousing Periods, and Marking of Bulk Containers of Alcoholic Beverages, Amended, 44 Fed. Reg. 46,794, 46,809 (Dep't. Treasury 1979)).

In Wolff Shoe Co., v. The United States, 936 F. Supp. 1084, (Ct. Int'l Trade 1996), reversed in part and upheld in part, 141 F.3d 1116 (Fed. Cir. 1998), the Court also ruled on this issue. In both Rheem and in Wolff, the plaintiffs argued the language of 19 U.S.C. §1504(d) should be interpreted to provide "a refund of all countervailing duties that had been deposited." (Wolff Shoe Co., 141 F. 3d 1116, 1123, (Fed. Cir. 1998). However, as pointed out, both courts in Wolff, and in Rheem, upheld Customs statutory interpretation of 19 U.S.C. § 1504(d). The courts instructed that, "duty asserted at the time of entry by the importer," means "all of the duties claimed on the entry papers, including countervailing duties. (citing also American Permac Inc., v. United States, 10 Ct. Int'l Trade 535, 642 F. Supp. 1187, 1195, n.12 (CIT, 1986), the Court of Appeals for the Federal Circuit upheld the Court of International Trade' s interpretation in Wolff, stating that "[t]he amount of duties 'asserted at the time of entry by the importer,' within the meaning of § 1504(a) and (d), is not what the importer desires to assert upon entry, but what the importer is required by Customs officers to assert when filing the entry summary."

Therefore, it is determined that the 234 entries in question were liquidated by operation of law with countervailing duties at the rate the importer was required to post its bond or cash deposit upon entry of its merchandise in accordance with Rheem, supra., and Wolff, supra.

HOLDING:

The protest is DENIED in accordance with the analysis set forth above. While the entries were liquidated by operation of law, the port’s liquidation was consistent with 19 U.S.C. § 1504(d).

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing 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, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John Durant, Director
Commercial Rulings Division

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