HQ 547086 - Application for Further Review of Protest No. 2304-97-100113; Gramercy Insurance Co.; Intercargo Insurance Co.; Sugar; Laboratory Sampling and Averaging - United States International Trade Commision Rulings

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 > 2000 HQ Rulings > HQ 546588 - HQ 561395 > HQ 547086

Previous Ruling Next Ruling
HQ 547086

November 1, 1999

RR:IT:VA 547086 MBR

CATEGORY: VALUATION

Port Director
U.S. Customs
P.O. Box 3130
Lincoln-Juarez Bridge II
Laredo, Texas 78044-3130

RE: Application for Further Review of Protest No. 2304-97-100113; Gramercy Insurance Co.; Intercargo Insurance Co.; Sugar; Laboratory Sampling and Averaging

Dear Port Director,

This is in response to the Memorandum dated May 7, 1998, wherein you forwarded the Application for Further Review of Protest Number 230497100113, dated April 10, 1997, from Pharr/Los Indios, Texas, and a Memorandum submitted by the Intercargo Insurance Company (‘Protestant’).

This protest concerns several issues pertaining to a total of three entries. Firstly, the protestant objects to the perceived untimely liquidation or reliquidation and/or unlawful suspension or extension of liquidation of the subject entries. Secondly, the protestant argues that the rate advance and/or reclassification of the subject merchandise is incorrect. Thirdly, the protestant argues that they are the incorrect surety, and should not be subject to any liability associated with the subject entries. We regret the delay in responding.

Facts

Two of the entries in question pertain to the importation of ‘prickly pears’ from Mexico. The first importation was entered on October 5, 1995, and liquidated on October 18, 1996. The second importation was entered on October 6, 1995, and liquidated on October 18, 1996. The prickly pear entries at issue were entered at a valuation of 7 cents per kilo and 13 cents per kilo, respectively. However, pursuant to a notice issued to ‘Brokers and Importers,’ dated October 16, 1995, Customs advised the public that
in circumstances wherein no transaction value can be established, prickly pear should be valued at 29 cents per pound (63 cents per kilo).

Issues

What is the appropriate valuation method for ‘Prickly Pear’ in circumstances wherein transaction value cannot be established, and other values cannot be determined or used?

Law and Analysis

Prickly Pear

In the absence of any documentation to establish the stated valuation of the prickly pear entries, Customs issued a CF 29 ‘Notice of Action,’ dated November 9, 1995, wherein the importer and broker were informed that the entered value of these entries would be changed to reflect Customs valuation wherein other values cannot be determined or used (see 19 U.S.C. 1401a(f)), i.e., in the absence of: (1) transaction value, (2) transaction value of identical or similar merchandise, (3) deductive value, and (4) computed value. Furthermore, we concur that the port appropriately utilized this method of valuation in the absence of the availability of any of the above enumerated valuation methods (see 19 U.S.C. 1401a, precedential order of valuation).

Protestant further argues that there an untimely liquidation or reliquidation and/or unlawful suspension or extension of liquidation of the subject entries. However, this rate advance was accomplished within approximately thirty days of entry, and considerably before the final liquidation of the entries in 1996. Thus, we are satisfied that the merchandise was appropriately valued, and that the valuation in question was fixed lawfully prior to final liquidation.

Issue

Was the reclassification of the subject sugar entries correct, and is averaging of laboratory samples appropriate?

Facts

The third entry at issue in this protest pertains to raw sugar, which is classifiable and dutiable based upon the ‘degree’ of polarization (purity) as established by a polarimetric test performed in accordance with the procedures recognized by the International Commission for Uniform Methods of Sugar Analysis (ICUMSA). This entry, was entered on May 18, 1995, and finally liquidated, after extensions, on October 11, 1996.

The raw sugar at issue was declared by the importer to be dutiable based upon a polarization degree of 40 degrees (extremely unrefined). Two separate samples were taken from the shipment and sent to the Customs Laboratory for testing (received 5/31/95 by the lab).

Law and Analysis

Raw Sugar

The laboratory issued their report on June 6, 1995, stating that the first sample tested resulted in a finding of 82.28 polarization degrees. The second sample taken resulted in a finding of 78.56 degrees. Consequently, an average of 80 degrees was found to be the appropriate dutiable basis for the sugar. This entry was lawfully extended and held open by the port until final liquidated on October 11, 1996, at 80 degrees of polarization.

It is our conclusion that an averaging of the samples in question is appropriate, and has been similarly used to arrive at other dutiable constituent analyses, in the absence of a showing of extremely disparate results signifying testing or sampling anomalies.

Issue

Is the protestant the correct party to be named in these actions?

The Protest by Intercargo, on its own behalf, states that they are protesting the formal demand on surety of January 2, 1997. However, Customs records show that the formal demand dated January 2, 1997, is addressed to Gramercy Insurance Company c/o Intercargo Insurance Co. The Customs Accounting Services Division provided copies of letters dated July 18, 1998, in which Intercargo Insurance Company stated that it represented several sureties, including Gramercy Insurance Co., and asked that correspondence for those companies be sent to Intercargo Insurance Company. The Customs ACS Bond records reflect that request. The formal demand on surety to Gramercy identifies the protested entries and is addressed as requested to Intercargo as Gramercy’s representative.

However, only the Gramercy Insurance Company (or its designated agent) would have the right to protest under 19 USC 1514(c), which allows, in pertinent part: ‘A protest by a surety which has an unsatisfied legal claim under its bond....’ Consequently, since Intercargo has presented no evidence that they are in fact Gramercy’s authorized agent, Intercargo’s protest should be denied for failure to come within the scope of eligible parties under 19 U.S.C. 1514(c). Similarly, we agree that Intercargo is not the surety for these entries and should not be subject to any liability arising out of them.

HOLDING

The valuation of the prickly pears by Customs based upon 19 U.S.C. 1401a(f) is appropriate insofar as none of the prior hierarchical statutory valuation methods are available. The change in valuation was timely accomplished prior to final liquidation, and the protestant is held to be the properly named party.

Regarding the raw sugar, the averaging of the degrees in multiple samples is appropriate to arrive at the dutiable composition of the sugar. The merchandise was timely rate advanced and liquidated after lawful extension of the liquidation period.

The protest should be denied in full. 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 this decision.

Sixty days from the date of the decision, the Office of Regulations and Rulings will 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,
Thomas L. Lobred, Chief
Value Branch

Previous Ruling Next Ruling