HQ 228570 - Protest Application for Further Review No. 2704-91-102840; 19 U.S.C. 1501; 19 U.S.C. 1504; 19 U.S.C. 1514; Antidumping duties; liquidation; suspension of liquidation; reliquidation; LG Electronics U.S.A., Inc. v United States - 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 > 2002 HQ Rulings > HQ 228209 - HQ 228897 > HQ 228570

Previous Ruling Next Ruling
HQ 228570

December 10, 2001

LIQ-4-01-LIQ-11-PRO-2-01 228570 IOR

CATEGORY: LIQUIDATION

Port Director
U.S. Customs Service
300 S. Ferry St.
Terminal Island CA 90731

Attn: Gerald Rankin

RE: Protest Application for Further Review No. 2704-91-102840; 19 U.S.C. 1501; 19 U.S.C. 1504; 19 U.S.C. 1514; Antidumping duties; liquidation; suspension of liquidation; reliquidation; LG Electronics U.S.A., Inc. v United States

Dear Madam:

The above-referenced protest, along with protest no. 2704-90-004096, was forwarded to this office for further review by memorandum dated August 18, 1999, from your office. Protest no. 2704-90-004096 is decided in HQ 228571, of this same date. Our decision follows.

FACTS:

The protest pertains to 38 entries of ball bearings and parts of ball bearings from Japan, subject to antidumping duties (ADD) in cases A-588-054, A-588-604, and A-588-804. The entries were made from March 11, 1988 through April 19, 1989. Liquidation of entries made from March 9, 1988 through April 19, 1989, subject to the foregoing antidumping cases was to be suspended at the time the merchandise was entered, according to published Federal Register notices. See Appendix for chart showing entry dates and applicable ADD case numbers.

Case A-588-054 concerns tapered roller bearings, four inches or less in outside diameter, and certain components thereof, from Japan. The manufacturer specific Customs case number is A-588-054-036, however for reference purposes in this decision, only the general number is used. In a withholding of appraisement notice (Federal Register of June 5, 1974 (39 FR 19969)), Customs was directed to withhold appraisement of such merchandise. According to the import specialist handling the subject entries, instructions received by Customs indicate the bonding rate for the subject merchandise was 2.93%, effective as of April 14, 1980.

Case A-588-604 concerns tapered roller bearings and parts thereof, finished and unfinished, from Japan. In a notice of preliminary determination (Federal Register of March 27, 1987 (52 FR 9905)), 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 27, 1987. Customs was also directed to require a cash deposit or posting of a bond equal to the estimated preliminary dumping margin of 16.09%. On October 6, 1987, in an Antidumping Duty Order, a determination was published in the Federal Register (52 FR 37352) 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 47.57%.

Case A-588-804 is the Commerce identification number for the case concerning antifriction bearings (other than tapered roller bearings) and parts thereof from Japan. The Customs identification numbers pertinent to this case are A-588-201 (ball bearings and parts) and A-588-203 (cylindrical roller bearings and parts). The manufacturer specific Customs case numbers are A-588-201-008 and A-588-203-008, respectively, however for reference purposes in this decision, only the general numbers are used. In a notice of preliminary determination (Federal Register of November 9, 1988 (53 FR 45343)), 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, November 9, 1988. Customs was also directed to require a cash deposit or a bond equal to the estimated preliminary dumping margin of 56.32% for A-588-201, and 10.69% for A-588-203. On May 15, 1989, in an Antidumping Duty Order, published in the Federal Register (54 FR 20904), Customs was directed to require a cash deposit equal to the estimated weighted-average dumping margins of 42.99% for A-588-201, and 12.28% for A-588-203.

For some of the entries, bonds in the amounts of estimated antidumping duties were posted and for some entries, which included merchandise subject to antidumping order, cash deposits were made. Of the entries, 17 were entered into the Automated Commercial System (ACS) as “03” type (or ADD consumption entries), and 21 were entered as “01” type (free and dutiable consumption entries). For the 17 “03” type entries, notices of suspension were issued within about three weeks of the entry date. From March 3, 1989 through April 13, 1990, the 21 entries entered in ACS as type “01” were automatically liquidated, and the 17 entries entered in ACS as type “03” were deemed liquidated. The type “03” deemed liquidations all occurred on November 13, 1989. The liquidations were for ordinary duties and did not include the amounts asserted for ADD. See Appendix for specific dates and entries.

A memorandum dated June 29, 1990 was sent from the Assistant Commissioner of Commercial Operations to all Regional Commissioners, notifying them that entries subject to antidumping duties have been liquidated prematurely, and requesting research and reports pertaining to the entries at issue. The memorandum states that the “reprogramming needed to preclude future erroneous liquidations is now in place; the system should now properly suspend entries subject to antidumping/countervailing duties.” Attachment A to the memorandum provided instructions as to the entries at issue.

For entries not within the 90-day reliquidation period, the instructions were as follows:

1) For those entries for which a bond was posted, the list of entries was to be so annotated and the entries held pending further instructions;

2) For those entries for which cash deposits were made, and final liquidation instructions had been issued by the Department of Commerce since the liquidation occurred: a) If the amount deposited is the same as in the final liquidation instructions, the list of entries was to be so annotated and the entry filed; b) If the amount deposited was not the same as that in the final liquidation instructions, the list of entries was to be so annotated and an information notice was to be issued to the importer and the entry held pending further instructions.

3) For those entries for which cash deposits were made and no final liquidation instructions have been issued by Commerce, the list of entries was to be so annotated and an information notice was to be issued to the importer and the entry held pending further instructions.

The “Notice to Importers” attached to the memorandum, stated that Customs, “due to a programming flawinadvertently posted bulletin notices of liquidation for certain entries subject to countervailing and/or antidumping duties when those entries should have remained suspended”; “Customs will shortly reliquidate many of these entries pursuant to 19 U.S.C. 1501 or generate bills in the amount of unpaid duties asserted at the time of entry by the importer of record;” and “[a]ffected importers are reminded of their right to file protests pursuant to 19 U.S.C. 1514, Customs Form 19, or petitions for reliquidation pursuant to 19 U.S.C. 1520(c), in accordance with those statutes and within the appropriate time periods.” The June 29, 1990 instructions were supplemented with a November 14, 1990 electronic memorandum no. 1299071. Electronic memorandum no. 1299071 specifically instructed that for those entries for which a bond had been posted but had gone beyond the reliquidation period:

You should immediately proceed to issue bills using ACS function code DSCA for those entries for which a bond was posted to cover the antidumping/countervailing duties and which were beyond the reliquidation period provided for by 19 U.S.C. 1501. The bills should be for the amount of antidumping/countervailing duties asserted by the importer on the entry summary plus, to the extent not deposited, any other duties or charges asserted.

By electronic message dated August 6, 1990, instructions were issued to the field offices that all protests and requests for reliquidation be submitted to headquarters before any action is to be taken. Electronic memorandum no. 1302071, dated November 14, 1990, instructed that Chief Counsel recommended that the protests not be decided until the Department of Commerce issued final liquidation instructions. A November 19, 1990 electronic message regarding the premature liquidations and instructions in electronic memorandum no. 1299071, passes on information that in the future, entries that automatically liquidate prior to a final order should be reliquidated and billed for the amount of ADD asserted on the entry summary.

The file contains two complete representative entries, nos. 442-xxxx564-6 and 442-xxxx564-9, including documentation showing action taken with respect to those entries.

Entry no. 442-xxxx564-6 is illustrative of the 21 entries identified as “01” in ACS which automatically liquidated. The pertinent documents included for entry no. 442-xxxx564-6 are described as follows:

1) ENXI (entry archive file query) ACS screen dated August 4, 1990 indicating that the entry was liquidated on November 13, 1989 with duty in the amount of $13,926.39. The duty does not include any of the asserted ADD. The screen indicates that the entry is a type “01”;

2) a sheet headed “Auto Liquidated” that indicates “beyond 90-day period cannot be reliquidated”. There are four boxes that can be checked as to the reason for the automatic liquidation, as follows:

1. Wrong entry type in ACS, not auto suspended, 7501 shows 03, system shows 01; 2. System failed to auto suspend type 03; 3. Team failed to suspend;
4. Other/unknown.

The box checked on September 28, 1990 is the first box, and the loss of revenue is shown to be $73,004.49. According to the concerned import specialist, this document was used to identify the entries which had automatically liquidated due to human error as opposed to a system error. It is believed that a person keying the information into ACS keyed in an “01” although the documents contained an “03”;

3) a copy of the CF 7501 annotated in the duty column with the amount of ADD calculated to be owed for each line item, in accordance with the ADD rate asserted on the CF 7501. The entry type is indicated as “03”. The CF 7501 is stamped “liquidated” on March 15, 1991;

4) a “Prematurely Liquidated AD Entries” worksheet dated January 30, 1991, indicating the ascertained ADD/CVD duties in the amount of $73,004.49, in addition to ordinary duties of $13,926.39. The worksheet indicates bill number 90082893 is to be issued in the amount of $73,004.49; and

5) a copy of a March 15, 1991 Bulletin of Entries Liquidated which is a manually produced list which includes the subject entries and is headed “ADD/CVD Increases”.

The twenty-one “01” entries all appear in ACS as “01”. For nine of the entries, the CF 3461 for each was incorrectly prepared identifying the entry as “01”. For eight of these nine entries, the entries were rejected for correction and corrected CF 7501’s were filed with Customs identifying the entries as “03”. Customs did not change the type from “01” to “03” in ACS. For the ninth entry there is no record of the entry having been rejected. These nine entries were prepared by two different brokers. For the remaining eleven entries, the CF 3461 is missing from one package, and the other CF 3461’s and CF 7501’s identified the entries as type “03”. All of the CF 7501’s for the twenty-one entries identify the entry as type “03”. Notices of suspension were not issued for any of these entries. See Appendix. Based on a review of the ACS records it appears that the entry type information was originally input by Customs and was not changed.

In addition, with respect to the 21 “01” entries, ACS does not indicate that liquidation of the entries was suspended, and there is no evidence in the entry files that liquidation of the entries was manually suspended. There is also no evidence that any of the 21 “01” entries was redlined after the first liquidation.

Entry no. 442-xxxx564-9 is illustrative of the 17 entries identified as “03” in ACS which were deemed liquidated. The pertinent documents included for entry no. 442-xxxx564-9 are described as follows:

1) ENXI (entry archive file query) ACS screen dated June 14, 1990 indicating that the entry was liquidated on November 13, 1989 with duty in the amount of $23,010.48. The duty does not include any of the asserted ADD. The screen indicates that the entry is a type “03”, and that the extension notice date is September 3, 1988;

2) ASHS (extension suspension history query) ACS screens show that on September 3, 1988, notices of suspension for the entry were processed for the protestant, and the protestant’s surety;

3) a copy of the CF 7501 annotated in the duty column with the amount of ADD calculated to be owed for the one line item subject to ADD, in accordance with the ADD rate asserted on the CF 7501. The entry type is indicated as “03”. The CF 7501 is stamped “liquidated” on March 15, 1991;

4) a “Prematurely Liquidated AD Entries” worksheet dated January 26, 1991, indicating the ascertained ADD/CVD duties in the amount of $156.52, in addition to ordinary duties of $22,853.56. The worksheet indicates bill number 90082796 is to be issued in the amount of $156.52;

5) a copy of a March 15, 1991 Bulletin of Entries Liquidated which is a manually produced list which includes the subject entries and is headed “ADD/CVD Increases”; and

6) a completed liquidation/reliquidation worksheet for the entry. The worksheet indicates that the liquidation is original and indicates the amounts due in ordinary duties and ADD, and indicates the instructions lifting the suspension of liquidation and the applicable duty rate for each ADD case. This worksheet was completed after the last applicable instruction lifting the suspension of liquidation was issued as it has the date of such instructions (August 3, 1999).

The CF 3461 and CF 7501 for each of the seventeen type “03” entries identified the entry as a type”03”. A notice of suspension was issued for each of these entries. See Appendix.

According to ACS, each protested entry was liquidated again on December 3, 1999. The 1999 liquidations followed Customs issuance of the following instructions regarding liquidation and margins from Commerce:

Message #5143111 dated May 23, 1995 for A-588-054 (16.28%) covering entries made from 8/1/87 through 7/31/88;

Message #9215111 dated August 3, 1999 for A-588-054 (6.01%) covering entries made from 8/1/88 through 7/31/89;

Message #002870 issued March, 1989 for A-588-604 (rate at time of entry) covering entries made from March 27, 1987 through September 30, 1988;

Message # 7213111 dated August 1, 1997 for A-588-201 (9.56%) and A-588-203 (58.99%) covering entries made from November 9, 1988 through April 30, 1990.

Some of the December 3, 1999 liquidations occurred more than 6 months after the date of the liquidation instructions. According to the import specialist that liquidated the entries, the liquidations were only done after all instructions for all protested entries had been received, even if some entries concerned only one ADD case and the liquidation instructions had been received. For example, entry 442-xxxx496-5, made March 11, 1988, only involved case A-588-054, for which the instructions were received on May 23, 1995. Accordingly, for that entry, for which all necessary instructions had been received more than 6 months prior to December 3, 1999, the liquidation was in accordance with Rheem Metalurgica v. United States, 21 C.I.T. 963, 951 F. Supp. 241 (1996), aff’d., Lexis 28110, 20 Int’l Trade Rep. (BNA) 1705 (Fed. Cir. 1998) (entries subject to CVD which liquidate by operation of law, liquidate at the rate at which a cash deposit or bond was required upon entry). However, if separate line items were subject to different ADD cases, the entry could not be liquidated until all of the instructions relevant to that entry were issued. For example, in entry 442-xxxx564-6, line items 1,2,3,5, and 7 were subject to cases A-588-201, and A-588-203, for which instructions were issued August 1, 1997, however the entry could not be liquidated until instructions were issued on August 3, 1999 in case A-588-054, which pertained to the merchandise on line items 4 and 6. In such a case the line items were liquidated in accordance with the liquidation instructions.

The instant protest was filed by the importer on June 7, 1991. The protest is of the reliquidation of the entries asserted to have occurred on March 15, 1991. The protestant takes the position that the asserted reliquidations made on March 15, 1991 are outside of the 90 day time limit allowed by 19 U.S.C. §1501, and are therefore unlawful and void.

The protested actions of Customs are summarized in the protest as follows:

Based upon the foregoing, it is clear that: (1) Customs’ reliquidations of the NSK entries in question were undertaken in contravention of 19 U.S.C. §1501 and thus, are unlawful; (2) the unlawful liquidations are voidable under the authority of Omni, Utex, Philip Morris and the other cited authorities; (3) because NSK has challenged the legality of the reliquidations by filing a timely protest, they must be canceled as void, along with the assessments of antidumping duties made pursuant to the unlawful liquidations; and (4) the original liquidations of NSK’s entries without assessment of antidumping duties, are final and conclusive on the government and NSK.

The protest asserts that the initial liquidations were “no change”.

According to a November 28, 1994 memorandum to Customs from Commerce, commenting on the subject protest, entries of merchandise made during the period starting 90 days before November 9, 1988 through April 30, 1990 were enjoined from liquidation by the Court of International trade as of August 9, 1991. The memo further stated that based on the ITC’s finding of injury, and Commerce’s finding of critical circumstances, in accordance with the regulations in 19 CFR part 353, the suspension of liquidation of entries of the subject merchandise made up to 90 days before November 9, 1988 is proper, and suspension of liquidation of entries before this 90-day period was unwarranted. As the memorandum refers to a preliminary determination published November 9, 1988, it appears that the memorandum is referring to suspensions in case A-588-804 only. None of the entries protested under case A-588-804 (shown as “201” and “203” in the Appendix) were made prior to November 9, 1988, therefore, any suspension of entries made from November 9, 1988 until the lifting of the suspension is warranted.

At the time the protest was filed the March 15, 1991 bills issued by Customs had not been paid. According to ACS, the March 15, 1991 bills were cancelled in conjunction with the December 3, 1999 liquidations and billing. According to ACS, the bills issued in association with the December 3, 1999 liquidations have been paid. No protests were filed subsequent to the December 3, 1999 liquidations.

The Port Director takes the position that no reliquidation occurred on March 15, 1991, and that the protest is premature as it was filed prior to a liquidation of the entries. According to the Port Director, the March 15, 1991 action was simply a billing for the bonded antidumping duties asserted on the entries. The import specialist asserts in the Protest Report that on March 15, 1991, the entries were processed in accordance with the instructions for entries not within the 90 day reliquidation period.

ISSUE:

Whether the liquidations of March 15, 1991, were illegal and voidable.

LAW AND ANALYSIS:

The actions protested in this case are the asserted reliquidations of March 15, 1991. Reliquidation and liquidation is protestable under section 1514(a)(5). In order to determine whether the March 15, 1991 liquidations were legal, and protestable, we must also determine whether liquidations took place prior to March 15, 1991, and on March 15, 1991.

The issue of whether liquidations had occurred was analyzed in LG Electronics U.S.A., Inc. v. United States, 21 C.I.T. 1421, 991 F.Supp. 668 (1997). The liquidations addressed in LG Electronics were “no change”, “automatic” and “deemed” liquidations. The facts giving rise to the issue in LG Electronics were similar to those in the instant case. In LG Electronics, liquidation of entries was suspended pending the determination of the applicable antidumping duty rates. During the suspension period, “no change”, “automatic” and “deemed” liquidations occurred. Subsequently, LG Electronics filed an action for the C.I.T. to order the government to liquidate the entries at a rate of dumping duties as determined by the Department of Commerce, and to refund excess duties paid by LG Electronics. Customs asked the court to rule instead that the entries had already been liquidated and that the court lacked jurisdiction with respect to those entries. The issue was whether liquidation of the entries had occurred to trigger the 90 day protest period. If the 90 day protest period had been triggered by the liquidations, then the court had no jurisdiction, as no protests had been filed and the liquidations were therefore final. The parties had agreed that computer-generated notices of liquidation were posted.

The court found a distinction between the “no change” liquidations and the “automatic” and “deemed” liquidations. The “no change” liquidations involved a protestable decision of an appropriate customs officer, whereas the “automatic” and “deemed” liquidations did not. A “no change” liquidation is when an entry is liquidated with the same duties due as was asserted on the entry. The court described the “no change” liquidation as follows:

The erroneous "no change liquidations" were protestable decisions as defined by statute. 19 U.S.C. §1514(a) (1988). Customs decisions are "substantive determinations involving the application of pertinent law and precedent to a set of facts, such as tariff classification and applicable rate of duty." United States Shoe Corp. v. United States, 114 F.3d 1564, 1569-70 (Fed. Cir. 1997) (collecting harbor maintenance tax a purely "ministerial task" not requiring a decision by Customs), cert. granted, 118 S. Ct. 361, 139 L. Ed. 2d 281, 1997 WL 561769 (1997). A passive activity is not a decision. Id.; see also Dart Export Corp. v. United States, 43 C.C.P.A. 64, 69-70, 74 (1956) (accepting duty deposits falls short of decision-making). Where Customs only collects antidumping duties and does not determine the rate or amount of duties, Customs has not made a protestable decision. Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973, 976-77 (Fed. Cir. 1994). By contrast, calculation of antidumping duties by Commerce is a decision. Id. In the instant case, Customs has more than merely received duties. The actions here were more than merely ministerial. Relatively soon after entry, Customs decided for each "no change" entry that the rate of duty imposed at the time of deposit was correct and that the entry should be liquidated at that rate. By ordering the liquidations, Customs went beyond ministerial acts; Customs determined the amount of duty imposed.

Plaintiff fails to persuade the court that Customs' failure to stamp some files "liquidated" indicates a lack of decision to liquidate. Stamping the files is not required, although a stamped file is prima facie evidence of liquidation. Tropicana Prods., Inc. v. United States, 909 F.2d 504, 506 (Fed. Cir. 1990). Stamping "simply provides the importer with a form of documentary proof that liquidation has taken place." Id.

As the statute requires, the decisions to liquidate the "no change" entries were made by the "appropriate customs officer." 19 U.S.C.§1500 (1988). Customs designates who is the appropriate customs officer. This court has found the appropriate customs officer to be "the officer making the decision to liquidate." International Cargo & Surety Ins. Co. v. United States, 15 C.I.T. 541, 545, 779 F. Supp. 174, 178 (1991). Because there is no evidence to contradict the presumption that the individuals who entered the "no change liquidations" had authority to do so, the court considers they were "appropriate customs officers" within the meaning of the statute.

In addition to a decision to liquidate, for effective liquidation, appropriate notice of an ordered liquidation must be given. Juice Farms v. United States, 68 F.3d at 1346. Notices of liquidation posted at the Customs' Office at the port of entry (bulletin notice of liquidation) are sufficient notice, 19 C.F.R. §159.9 (1997) and Goldhofer Fahrzeugwerk GmbH & Co. v. United States, 885 F.2d 858, 862 (Fed. Cir. 1989), satisfying the importer's due process rights and providing evidence that the liquidation has occurred. Tropicana, 909 F.2d at 506.

Proper notice of liquidation was given for the "no change" entries. There is no dispute that computer generated notices were posted. Consistent with its view that the entries had not actually been liquidated, LG questions the validity of the notice given as not the "notices of liquidation" required by 19 C.F.R. §159.9. As the court finds there to have been decisions to liquidate the "no change" entries, the notices were valid under any reading of the requirements of 19 C.F.R. §159.9.

Customs' actions satisfy the test for liquidation. The liquidations were illegal, however, because there were suspensions of liquidation in place at the time. As indicated, whether legal or illegal, a liquidation not protested within 90 days becomes final as to all parties. 19 U.S.C. §1514; Juice Farms v. United States, 18 C.I.T. 1037, 1040 (1994) ("An importer cannot treat an illegal liquidation as void; rather, the importer must remain vigilant and protest the legality of such a liquidation within 90 days of notice."), aff'd, 68 F.3d 1344, 1346 (Fed. Cir. 1995); see also Omni U.S.A., Inc. v. United States, 840 F.2d 912, 914-15 (Fed. Cir. 1988). The court in Deringer noted that 19 U.S.C. §1514(a)
contemplates that both the legality and correctness of a liquidation be determined, at least initially, via the protest procedure. The wording of this statute [ 19 U.S.C. §1514] makes it clear that any challenge to the propriety of a liquidation ... must be through this statute. [Emphasis supplied]

593 F.2d at 1020. Accordingly, summary judgment is granted defendant as to the "no change" entries, because of plaintiff's failure to timely protest the liquidations and the resulting lack of jurisdiction under 28 U.S.C. §1581(a).

The statute on the limitation of liquidation, 19 U.S.C. §1504, applicable to the subject entries and those in LG Electronics, provided for an extension of liquidation on the grounds of suspension. The statute provided that liquidation could be suspended as required by statute or court order. An ADD order of suspension is grounds for suspension under 19 U.S.C. §1504. See Pagoda Trading Corporation v. United States, 804 F.2d 665 (Fed. Cir. 1986).

In this case, suspension notices were issued only with respect to the 17 entries entered as type "03” in ACS. ACS shows no evidence of suspensions or extensions for the remaining 21, type “01” entries. The two sets of entries require different analyses and are discussed separately below.

The 17 Type “03” Deemed Liquidations

In LG Electronics, the court found that automatic and deemed liquidations, which occurred due to a programming error, “without any individualized decision of any Customs officer to act on the entries” are not liquidations under the statute in effect at the time. Id., 991 F.Supp. at 674-75. The liquidation statute in effect in 1988 and 1989 was the same as that in LG Electronics. Further, with respect to deemed liquidations, the court held that a deemed liquidation can only occur by operation of law, and as a matter of law could not occur during a suspension of the entries. In LG Electronics, as in the instant case, the “liquidations” were reflected in ACS, however that did not make them liquidations. In LG Electronics, the court held that the erroneous computer-generated notices of deemed and automatic liquidation did not “create” liquidations. Following LG Electronics, the court in US JVC Corp., v. United States, 15 F. Supp. 2d 906, 909 (Ct Int’l Trade 1998), aff’d 184 F.3d 1362 (Fed. Cir. 1999), held that “no change” liquidations made during a suspension period, were protestable and if not protested, they were final and conclusive.

According to LG Electronics, the 17 November 13, 1989 deemed liquidations which occurred due to the system failure to properly suspend entries subject to ADD suspensions, were not liquidations under the statute. The deemed liquidations could not occur during a suspension of the entries as a matter of law. Thus the asserted March 15, 1991 action, with respect to the 17 type “03” entries would have been a liquidation as opposed to a reliquidation. There was no error in the entry type put into the system. They were correctly entered as type “03” entries in the system.

The decision in Omni U.S., Inc. v. United States, 840 F.2d 912 (Fed. Cir. 1988), cited by protestant in support of the erroneous “liquidations” having become final and conclusive, is not dispositive in light of the analysis in LG Electronics, which distinguishes between “no change”, “deemed” and “automatic” liquidations, and is distinguishable on the basis of the facts in LG Electronics and in the instant case. In Omni, the error consisted of a failure by the Department of Commerce to list the relevant countervailing duty order covering the imported merchandise which would have suspended the liquidation of the entries of that merchandise. That error is discussed in the CIT decision at 11 CIT 480 and repeated in the appellate decision at 840 F.2d 912. The discussion of the events in Omni shows that the liquidation, as to the computation of the duties and the publication of the notice, was an intended act by an authorized Customs officer. In contrast, the court, in LG Electronics, found that the automatic and deemed liquidations there, which occurred as the result of a programming error without an individualized decision by a Customs officer authorized to act on the entries, were not liquidations, and further, that the posting of those notices did not turn them into liquidations, as noted in the above discussion of that court decision. The instant case also concerns a programming or system error, as opposed to an individualized decision by a Customs officer. The protestant also cites United States v. Utex Int’l. Inc., 857 F.2d 1408 (Fed. Cir. 1988) and HQ 221591, dated February 13, 1990 in support of the erroneous liquidation having become final and conclusive. As in Omni, and unlike LG Electronics, the court in Utex, did not find that the initial liquidation did not actually occur. HQ 221591 was decided before LG Electronics, and does not include the analysis of whether the premature liquidation was an actual liquidation, and in light of the LG Electronics decision and underlying analysis, HQ 221591 is not dispositive in this case. The protestant refers to the erroneous liquidations of the entries as “no change” liquidations, whereas Customs records indicate that in the instant case the erroneous liquidations were “deemed” and no evidence to the contrary has been submitted. In fact, unlike a “no change” liquidation, the erroneous liquidations did not liquidate the entries with the antidumping duties asserted on the entries.

We can compare the “no change” liquidations in LG Electronics to the alleged March 15, 1991 liquidations of the subject 17 entries for which notices of suspension were issued, vice reliquidation as asserted in the protest. It is asserted by the Port that Customs was not attempting to liquidate or reliquidate the entries, but was attempting to bill the importer for the amount believed to be due on the basis of the initial liquidation that was reflected in ACS. For purposes of determining the intent of the responsible Customs officers in their actions of March 15, 1991, the instructions of November 14, 1990 are particularly relevant as they gave the latest instructions for entries which had gone beyond 90 days from the erroneous liquidations. The June 29, 1990 instructions had specified that for entries beyond the 90-day reliquidation period and for which a bond was posted, the entries were to be held pending further instructions. The subsequent instructions dated November 14, 1990, instructed the field to issue bills for the amount of ADD asserted on the entry summary along with any other duties or charges asserted but not deposited (no. 1299071), and that protests of the entries should be held until Commerce issues liquidation instructions, at which time the bills for ADD will be cancelled, the entries will be reliquidated and new bills issued accordingly (no. 1302071). In the August 18, 1999 memorandum from the Port Director, forwarding the AFR, it is confirmed that the March 15, 1990 actions were taken to comply with both sets of the November 14, 1990 instructions, and the June 29, 1990 instructions. The Port Director characterizes the instructions as instructions to bill without reliquidating, and characterizes the March 15, 1990 actions as “billing.”

There is no authority to issue bills for duties such as those of March 15, 1991 outside of a liquidation or reliquidation. While the instructions were only to bill, they could not be carried out without the actions that amount to a liquidation, as described in LG Electronics. According to the evidence, the “billing” entailed calculation of the duties due, marking the file as liquidated and posting a bulletin notice of entries “liquidated”. The stamping of the entry with “liquidated” is prima facie evidence of liquidation. Tropicana Products, Inc. v United States, 909 F.2d 504, 506 (Fed. Circ. 1990); American Distilling Co. v. United States, 32 Cust. Ct. 168, 171, CD 1598 (1954). Because the March 15, 1991 actions were done manually, or “off-line”, they were not reflected in ACS.

Based on the foregoing, we conclude that on March 15, 1991, Customs liquidated the 17 subject entries for which notices of suspension had been issued. As no liquidation had previously occurred, there was no 90-day time limitation within which the liquidation would have had to occur. Thus we do not need to address the protestant’s position that the March 15, 1991 liquidation was untimely in relation to the November 13, 1989 liquidations under 19 U.S.C. §1501. The 17 subject March 15 liquidations were also protestable. According to LG Electronics, and US JVC Corp., liquidations occurring while suspensions are in place are illegal, and voidable as opposed to illegal and void. LG Electronics, 21 C.I.T. at 1426, 991 F. Supp. at 674, US JVC Corp., 15 F. Supp. 2d at 909.

Under 19 U.S.C. §1514(a), the liquidation of an entry is final and conclusive, unless a protest is filed in accordance with that section. Therefore, the filing of the subject protest prevented the March 15, 1991 liquidations from becoming final. The subject protest, not previously acted upon, can now be decided, in full. The two-year period in which a protest is to be decided, set forth in 19 U.S.C. §1514(a) is directory rather than mandatory. See Canadian Fur Trappers Corp. v. United States, 884 F.2d 563 (Fed. Cir. 1989); Knickerbocker Liquors Corp. v. United States, 78 Cust. Ct. 192, 432 F. Supp. 1347 (1977).

This protest was in effect already granted by the cancellation of the March 15, 1991 bills. The relief requested by the protestant, that the November 13, 1989 liquidations without assessment of ADD be final and conclusive, was not and cannot be granted, as no liquidations occurred on November 13, 1989.

With respect to the 1999 liquidations, Customs did not have authority to reliquidate an entry that had already been liquidated and which was the subject of a protest. The 1999 liquidations are outside of the authority of 19 U.S.C. §1501, and are inconsistent with 19 U.S.C. §1515(a). However, in this case, as a result of the 1999 liquidation attempts, the ADD amounts on the basis of the Commerce liquidation instructions have already been calculated, and the ADD payments were made by the protestant, in accordance with bills issued for the 1999 liquidations.

Because the 1999 actions were illegal liquidations the subsequent billings were untimely demands for duties, and as such were outside the scope of Customs authority, and were unlawful. See American Motorists, Ins. Co. v. United States, 8 F. Supp. 2d 874, 876 (Ct. Intl. Trade, 1998). In American Motorists, an “exaction” was described as a “wrongful demand for payment under color of official authority, where no payment is due.” Id. An exaction is protestable under 19 U.S.C. §1514(a)(3). The protestant paid the amounts billed in 1999, and failed to protest the exactions, thereby making them final and effective as reliquidations of the subject entries. Therefore, there is no basis for Customs to reliquidate the entries under the subject protest, whether or not the amounts paid in 1999 were correct. The unprotested 1999 bills effectively reliquidated the entries.

Under 19 U.S.C. §1515(a), Customs is not authorized to assess a higher amount of duties than that assessed in the protested liquidation. For example, in the representative entry, no. 422-xxxx564-9, the ADD assessed was lower at the following amounts and margins on March 15, 1991 as compared to the subsequent company specific Commerce instruction margins:

Case No. March 15, 1991 margin Final instructions

A-588-054-036 2.93% $ 156.52 6.01% $ 321.05

Ordinary duties $23010.48 $23010.48
Total $23167.00 $23331.53

With respect to entry no. 422-xxxx564-9, pursuant to the final instructions, the total amount due in ordinary duties and ADD is more than the liquidated amount in 1991. The amount paid in ordinary duties and ADD is $23,331.53 which is equal to the correct amount due based on the liquidation instructions. The protest should be denied with respect to this entry, despite the increase in duties due between the 1991 liquidation and the Commerce liquidation instructions. Because the 1991 liquidation had been protested and was therefore not final, under United States v. Cherry Hill Textiles, Inc., 112 F.3d 1550 (Fed. Cir. 1997), in order to challenge its liability for the amount billed, the protestant would have had to file a protest against the 1999 exaction.

With respect to the remaining entries, the port has already determined the amounts due in accordance with the Commerce liquidation instructions, and has in fact billed those amounts, in 1999, and the billed amounts have been paid. Therefore, whether the amount of ADD billed and paid under the Commerce liquidation instructions is less than or more than the liquidated amount in 1991, the protest should be denied, as the entries were effectively finally reliquidated in 1999.

The 21 Type “01” Automatic Liquidations

The remaining 21 entries, for which no suspension notices were issued were liquidated in 1989 and 1990 because the liquidation of the entries was not suspended. There is no evidence of a suspension of liquidation in ACS, nor is there any evidence in the entry files of manual suspensions that may not be reflected in ACS. It is not clear from LG Electronics whether in that case suspension notices had been issued with respect to all of the entries. According to ACS, for a number of the automatically liquidated entries in LG Electronics, suspension notices had not been issued, and the court nevertheless determined that the liquidation did not occur, as the suspension/extension information was not in the system due to a programming error. The court did not address notices of suspension. The language of the applicable statute in LG Electronics, 19 U.S.C. §1504, prior to amendment in 1993, required notice of suspension of liquidation due to suspension at the time the erroneous liquidations occurred. The same statute was applicable at the time these subject entries were liquidated in 1989 and 1990. In LG Electronics, with respect to the automatically liquidated entries, the court said “[i]t appears, however, that a programming error led to the suspension information either not being entered into the computer data base or being entered improperly.” 21 C.I.T. at 1427, 991 F.Supp. at 674.

However, we find that the facts in LG Electronics are distinct from those in the instant case with respect to the issue of whether the automatic liquidations constitute actual liquidations. The court in LG Electronics required a decision of a Customs officer in order for there to be an actual liquidation. With respect to automatic liquidations, Customs decision to liquidate was that:

[T]hrough the use of automation, Customs could identify those entries nearing the 1 year [sic] to allow for abeyance of liquidation. If not suspended or extended, the automated system would automatically liquidate the entries on the 50th week thus allowing for the possibility of reliquidation.

LG Electronics, 21 C.I.T. at 1427, 991 F.Supp. at 674. The court determined that a programming error resulting in a notice of liquidation was not Customs decision to liquidate and did not constitute liquidation. The court stated that the decision of Customs and the Customs officer was “not to liquidate” an entry when a suspension was in place. Id. The court did not address human errors in entering information into ACS. In this case, it appears that the system worked as it was designed to work, and therefore carried out Customs decision to automatically liquidate, unless a suspension or extension is in place. In this case there had been no extension or suspension of the entries. There is no evidence in this case that the lack of suspension or extension notices was due to a programming error. To the contrary, the entry files contain the sheet indicating that the failure to suspend was due to the wrong entry type in ACS, and is acknowledged by the import specialist to be a human error as opposed to a system error. The entry types were entered into ACS as “01”, which indicates a free or dutiable consumption entry, despite the fact that the entry documentation either initially identified the entries as “03” (subject to ADD/CVD), or was rejected by Customs and subsequently changed to “03”. The evidence indicates that Customs failed to change the entry type in ACS. Had the entry type been changed from “01” to “03”, the entries would have become suspended and notices would have been issued. We have no authority to find that a liquidation did not occur, as there was no suspension or extension of the entries in accordance with 19 U.S.C. §1504, and there is no authority to state that a premature liquidation caused by human error does not amount to a liquidation under the statute.

To the contrary, in a similar fact situation, in Omni U.S., Inc. v. United States, supra, it was determined that a liquidation occurring in error is a valid liquidation, and becomes binding if no timely protest or 19 U.S.C. §1520(c) petition is filed. In Omni, entries were liquidated by Customs at the bonded rate, including Countervailing duties (CVD), while they were under review by Commerce and liquidation was to be suspended. By inadvertence, in publication of the orders of cases which were under review, the particular case was left off of the list and Customs liquidated the entries with CVD as entered. Subsequently Commerce determined that no CVD was owed, and the importer filed an untimely petition for reliquidation under 19 U.S.C. §1520(c). The court determined that although the liquidation occurred erroneously, because the section 1520(c) petition was untimely filed, Customs authority to correct the error had lapsed. The court noted that while the importer could have been protected under section 1520(c), “there is no correlative provision for increase of duties in case the error was adverse to the government.” 840 F.2d at 914. The court specifically rejected the notion of a void liquidation under the facts presented. Id. at 915. As in Omni, the premature liquidation in the instant case appears to have occurred due to human error.

There is no evidence that the entries were redlined after the automatic liquidation. We conclude that the automatic liquidations were liquidations under the statute, and are therefore binding on the importer and Customs.

With respect to the nine CF 3461’s which initially identified the entries as type “01”, we recommend that the matter be referred to your Fines Penalties and Forfeitures Office for determination of whether the brokers’ use of an incorrect entry type on the entry documentation, was in violation of 19 U.S.C. §1592(a)(1).

We also conclude that, as with regard to the other 17 entries above, the 21 entries were liquidated on March 15, 1991, and the reliquidations were protestable. Clearly the reliquidations occurred more than 90 days after the prior liquidations, and were outside of the authority of 19 U.S.C. §1501. Beyond the statutory time period to reliquidate, Customs is without authority to reliquidate entries previously liquidated. See e.g. Omni U.S., Inc. v. United States, supra and Phillip Morris U.S.A. v. United States, 716 F. Supp. 1479 (Ct. Int’l Trade 1989). Therefore the March 15, 1991 reliquidations are voidable, and because they were timely protested, they can be voided. In any event, even if the entries initially had not automatically liquidated, because there were no suspensions of liquidation, within a matter of days, the entries would have deemed liquidated. Pagoda Trading Corporation v. United States, 804 F.2d 665 (Fed. Cir. 1986). In Pagoda Trading Corporation, the court held that under 19 U.S.C. §1504, with no extension or suspension of liquidation, the entries deemed liquidated one year after entry.

We find that the original liquidations of 1989 and 1990 of the 21 entries automatically liquidated, were final as they were not reliquidated under 19 U.S.C. §1501, and were not protested under 19 U.S.C. §1514. As with the 17 entries above, the 1999 cancellation of the March 15, 1991 bills effectively granted the protest. However, as discussed below, there is no basis on which to reliquidate the entries, therefore upon this review the protest should be denied with respect to those entries.

In addition to the March 15, 1991 liquidation, the entries were subsequently liquidated again by Customs on December 3, 1999, and billed in accordance with those liquidations. The bills were paid by the protestant. Because the 1999 actions were illegal liquidations, as discussed above, the subsequent billings were untimely demands for duties, and as such were outside the scope of Customs authority, and were unlawful. See American Motorists, Ins. Co. v. United States, 8 F. Supp. 2d 874, 876 (Ct. Intl. Trade, 1998). In American Motorists, an “exaction” was described as a “wrongful demand for payment under color of official authority, where no payment is due.” Id. An exaction is protestable under 19 U.S.C. §1514(a)(3). The protestant paid the amounts billed in 1999, and failed to protest the exactions, thereby making them final. There is no basis for Customs to reliquidate these entries under the subject protest. Under United States v. Cherry Hill Textiles, Inc., 112 F.3d 1550 (Fed. Cir. 1997), the protestant would have had an effective defense against any enforcement action of the 1999 liquidation, had the protestant not paid the billed amounts.

In Cherry Hill Textiles, an entry was deemed liquidated on or about September 19, 1988, one year after the entry. One month later, the government made a new liquidation of the same entry, and treated the new liquidation as the operative liquidation, although no protest had been filed of the first liquidation, nor had any other action taken place. The court found that there was no ground for the
reliquidation:

The government has not suggested the presence of fraud in this case, which might have justified a reliquidation under former 19 U.S.C. §1521 (1988); reliquidation would not be available under 19 U.S.C. §1520(c), since that authority is limited to errors “adverse to the importer”; and reliquidation under 19 U.S.C. §1501 would not be permitted because that provision applies only to liquidations made in accordance with 19 U.S.C. §1500, and not to “deemed liquidations” under 19 U.S.C. §1504. The “deemed liquidation” must therefore be regarded as final.

In cases in which a liquidation has become final, the government cannot seek to recover additional duties simply by making a new liquidation of the original entry. Regardless of the accuracy or procedural correctness of the new liquidation, it would have no legal effect, because it would be barred by principles of res judicata. In that and other analogous settings, the liquidation simply does not have the capacity to give rise to liability.

Regarding the injunction, no liquidation occurred after August 9, 1991, the date of the injunction.

HOLDING:

The March 15, 1991 liquidations of the 17 deemed liquidated entries were illegal and voidable because they took place while the entries were suspended. The March 15, 1991 liquidations of the 21 automatically liquidated entries were illegal and voidable because the entries had already been finally liquidated more than 90 days prior to March 15, 1991.

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 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 make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Previous Ruling Next Ruling