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HQ 228785




May 17, 2002

LIQ-9-01 RR:CR:DR 228785 EAB

CATEGORY: RELIQUIDATION

Port Director
U.S. Customs Service
Miami Airport
6601 W. 25th Street
Miami, Florida 33102

ATTN: Protest Section

RE: Protest and Application for Further Review No. 5201-99-100239; Nine West Distribution Corp.

Dear Port Director:

The referenced protest was forwarded to this Office for further review. We have considered the evidence provided, the arguments made by the protestant and Customs records. Our decision follows.

FACTS:

Protest No. 5201-99-100239 is filed by Miami International Forwarders on behalf of Nine West Distribution Corp. against your decision to refuse to reliquidate the following seventeen entries:

Entry No. Entry Date Liquidation Date

179NNNN8009 November 12, 1996 March 14, 1997 179NNNN2597 November 19, 1996 March 14, 1997 179NNNN8552 November 27, 1996 April 11, 1997 179NNNN4857 December 4, 1996 April 11, 1997 179NNNN6695 December 16, 1996 April 11, 1997 179NNNN9152 December 12, 1996 April 11, 1997 179NNNN4764 December 26, 1996 April 18, 1997 179NNNN2346 January 10, 1997 May 2, 1997
179NNNN3104 January 14, 1997 May 23, 1997 179NNNN2806 January 27, 1997 June 6, 1997 179NNNN5460 January 28, 1997 June 6, 1997 179NNNN0429 February 3, 1997 June 6, 1997 179NNNN0630 February 14, 1997 June 6, 1997 179NNNN6850 February 18, 1997 June 20, 1997 179NNNN4144 February 25, 1997 June 20, 1997 179NNNN0752 March 4, 1997 July 7, 1997
179NNNN6593 March 11, 1997 June 27, 1997

Attached to and submitted with the CF19 as documentation in support of the claim is "Exhibit A", what appears to be a copy of a printout of an electronic message from Paul Francis at "Nine-West-Cin-2S" to James Wagner at "Nine-West-DR" and Sue Reichert at "Nine-West-Cin-FS2" on October 10, 1996, to-wit:

Jim, until we receive a final ruling from Customs we will play it safe and ship any of the below styles as indicated.

Oslow
Holland
Finland Ship all under TUSA 5606.10.1000 at 10 %

Trina II
Dale Ship all under TUSA 6406-10-9040 [sic] at 8.1 %

I would rather error [sic] on the side of paying and apply for refund than to have to make a voluntary disclosure later on.

For purposes of clarification, we note at this point that in 1996 and 1997 there was no subheading 5606.10.1000 in the Harmonized Tariff Schedule of the United States (HTSUS). Taken in the context of this protest and in comparison with other documentation submitted, it seems clear to us that the intent of Mr. Francis was to note subheading 6406.10.l000, for which the general rate of duty for merchandise entered in 1996 was 10 %. Merchandise entered in 1996 in subheading 6406.10.9040, HTSUS, was subject to the general rate of duty of 8.1 %

"Exhibit B" is a copy of what appears to be a printout of an electronic message from Mr. Wagner ("James E. Wagner, G.M. Conca Del Sol Int., Dominican Republic") to Mr. Francis, on October 11, 1996, to-wit:

I am in receipt of your cc:mail regarding duty classifications on the Oslow, Holland, Finland, Trina II, and Dale.

Accordingly, until we receive a final ruling from Customs we will add the following amounts as duty:

Oslow, Holland, Finland 10 %

Trina II, Dale 8.1 %

"Exhibit C" appears to be a copy of correspondence dated October 21, 1996, from Attorney Eric Smithweiss to Customs "Binding Rulings Clerk" at 6 World Trade Center, NY, NY, on "behalf of our client, Nine West Group, and pursuant to Section 177.1 of the Customs Regulations . . ." regarding "two unformed leather footwear uppers, identified as styles "Holland" and "Finland." Therein it was stated in part that "styles Holland and Finland are not formed uppers under U.S. Note 4, and should be classified as other uppers in subheading 6404.10.65. We respectfully request that you confirm this classification." Additionally, Mr. Smithweiss sought confirmation "that, as a result of the processing in the DR, the value of the non-DR origin leather may be counted toward the 35 % DR content requirement."

"Exhibit D" is Customs response:

The applicable subheading for both uppers [Holland and Finland] will be 6406.10.6500 (EN), Harmonized Tariff Schedule of the United States (HTS), which provides for, inter alia, shoe uppers which are less than formed uppers and in which the upper's external surface is predominately [sic] leather. The duty rate will be 2.2 percent. Articles classifiable under subheading 6406.10.6500 (EN), HTS, which are products of the Dominican Republic are entitled to duty free treatment under the Caribbean Basin Economic Recovery Act (CBERA), HTS General Note 7, upon compliance with all applicable regulations.

You specifically asked whether the cost of the leather will be counted for the purposes of the 35 percent rule in HTS General Note 7-b-i-B.

We agree that NYRL 806444, dated 3-1-95, which did count the cost of the leather in a similar upper is controlling. We note that the third example in CR 10.196 indicates that a leather hide tanned, cut to shape and then assembled to other components counts towards the 35 percent. However, the example does not state that those steps are all necessary for that conclusion, and the cutting to shape of sheet materials and assembling them into an upper is sufficient, noting HRL 555113, 10-26-89.

Since the cost of the leather is included along with the DO [i.e., Dominican] labor, etc., we agree that the 35 percent test is easily met even without going into the status of the buckle and velcro in each upper. .
.
.
.

Ruling Letter NY A88483 dated November 14, 1996.

All entries, but one, underlying this protest were made after the issuance of NY A88483 and all entries underlying this protest were liquidated after the issuance of NY A88483. Notwithstanding these circumstances, all merchandise was liquidated as entered in either subheading 6406.10.1000 or 6406.10.9040, HTSUS, the former provision being for certain leather or composition leather parts of footwear for persons other than men, youths and boys and the latter provision being a residual provision for certain parts of footwear "of man-made fibers". In both cases, if qualified, merchandise so entered would have been entitled to preferential duty treatment pursuant to General Note 7, HTSUS, "Product of Countries Designated as Beneficiary Countries for Purposes of the Caribbean Basin Economic Recovery Act".

None of the liquidations of the aforesaid entries was protested under 19 U.S.C. 1514. A petition for reliquidation was filed on or about March 12, 1998. That petition was denied:

Miguel Ruiz
Miami International Forwarders
1801 N.W. 82 Ave.
Miami, Fl. 33126-1013

Dear Mr. Ruiz:

This is in reply to your letter dated March 12, 1998 requesting reliquidation . . . . The importer is Nine West Distributing Corp. Your request is denied.

In this case, the Customs Service issued a binding ruling of these styles on 11/14/96. The seventeen (17) entries subject to this protest were liquidated on various dates from 03/14/97 to 07/07/97.

Although the importer was aware of the proper classification of these items, they continued to file incorrectly classified entries. They also had ample opportunity to file timely protests pursuant to 19 U.S.C. 1514. The fact that the merging companies failed to communicate with each other is unfortunate but does not relieve the importer of record of their obligations.

You may elect to protest this denial . . . .

Director, Trade Compliance, Miami Service Port, US Customs PRO-2-06 PD:A:TC:II LV 5201-98-2000016 dated January 25, 1999.

The denial of reliquidation is the subject of this protest filed on April 14, 1999. It is claimed that the denial was incorrect because the failure to classify, enter and liquidate the subject merchandise in subheading 6406.10.65, HTSUS, free of duty pursuant to General Note 7, was an inadvertence correctable under 19 U.S.C. 1520(c)(1):

. . . A textbook case where Mr. Francis believed that Ms. Reichert would notify Mr. Wagner but she believed that Mr. Francis would. The importer, due to inadvertence failed to notify the factory in the Dominican Republic of the binding ruling. . . .

"Addendum to Protest", CF19. According, further, to the "Addendum to Protest", other liquidations of other entries of apparently identical merchandise were protested under protest No. 5201-98-100129, which "US Customs in Miami approved . . . and refunded the duties."

ISSUE:

Whether classification, entry and liquidation of the subject merchandise other than as held in Customs ruling letter NY A88483 and adverse to the importer is a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law and correctable under 19 U.S.C. 1520(c)(1).

LAW AND ANALYSIS:

The refusal to reliquidate under 19 U.S.C. § 1520(c) is a protestable issue under 19 U.S.C. § 1514(a)(7), provided that the protest is filed within 90 days of the denial of the reliquidation. Here, Protestant filed this protest on April 14, 1999, which was within 90 days of January 29, 1999, the date of denial of the 1520(c) claim. This protest is proper and timely filed.

Section 1520 of Title 19, United States Code, provides in part as follows:

. . . the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry or reconciliation to correct-

(1) a clerical error, mistake of fact, or other inadvertence . . . when the error mistake or inadvertence is brought to the attention of the Customs Service within one year after the date of liquidation or exaction [emphasis supplied.]

19 U.S.C. 1520(c)(1). Here the earliest liquidation of any entry at issue occurred on March 14, 1997 and the latest liquidation of any entry at issue occurred on June 27, 1997. The petition for reliquidation was filed March 12, 1998, within one year of the latest of any of the liquidations, but more than 90 days from the date of every liquidation. The petition for reliquidation under 19 U.S.C. 1520(c)(1) was timely filed and time had expired for the filing of a protest of any of the liquidations.

In concert with the foregoing statute, Customs Regulations provide that

. . . the port director, upon timely application, may correct pursuant to . . . 19 U.S.C. 1520 (c)(1), a clerical error, mistake of fact, or other inadvertence . . . brought to the attention of the director of the port of entry within 1 year after the date of liquidation . . .

19 C.F.R 173.4 (a), (c).

This application for further review is before us because the port director found the "error not correctable under 520(c) as stated. See attachments. Letter of denial. Ruling # NYA 88483." See Block 29, CF6445. Again we quote from the denial:

In this case, the Customs Service issued a binding ruling of these styles on 11/14/96. The seventeen (17) entries subject to this protest were liquidated on various dates from 03/14/97 to 07/07/97.

Although the importer was aware of the proper classification of these items, they continued to file incorrectly classified entries. They also had ample opportunity to file timely protests pursuant to 19 U.S.C. 1514. The fact that the merging companies failed to communicate with each other is unfortunate but does not relieve the importer of record of their obligations.

19 U.S.C. § 1520(c) allows for reliquidation to correct "a clerical error, mistake of fact, or other inadvertence . . . not amounting to an error in the construction of a law." Protestant has not raised alternative claims in this matter; rather, the only claim is that there occurred an "inadvertence" not amounting to an error in the construction of a law. Since the statute is more hierarchical than optional with respect to the separate bases for relief, we will review the statute element by element.

Although not specifically defined by statute or regulation, the distinction between a mistake of fact and an error in the construction of a law for purposes of § 1520(c) has evolved in case law:

Mistakes of fact occur in instances where either (1) the facts exist, but are unknown, or (2) the facts do not exist as they are believed to. Mistakes of law, on the other hand, occur where the facts are known, but their legal consequences are not known or are believed to be different than they really are.

Executone Information Systems v. United States, 96 F.3d 1383, 1386 (Fed. Cir. 1996) (quoting Hambro Automotive Corp. v. United States, 66 C.C.P.A. 113, 119, 603 F.2d 850, 855 (1979)); C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, 22, 336 F. Supp. 1395, 1399 (1972), aff'd 61 C.C.P.A. 90, 499 F.2d 1277 (1974) ("A mistake of fact exists where a person understands the facts to be other than they are, whereas 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.") (citation and internal quotations omitted).

A "clerical error" has been defined as "a mistake made by a clerk or other subordinate, upon whom devolves no duty to exercise judgment, in writing or copying the figures or in exercising his intention," PPG Industries, Inc. v. United States, 7 C.I.T. 118, 123 (1984). The Court of Appeals for the Federal Circuit has made clear that in order to demonstrate a "clerical error," a plaintiff must show that the party having committed the alleged error "was 'one upon whom no duty devolved to exercise original thought or judgment'" Ford Motor Co., 157 F.3d 849, 860 (Fed. Cir. 1998) (quoting Yamada v. United States, 26 C.C.P.A. 89, 94 (1938)). In so doing, the plaintiff must prove that the party in error was given "complete, binding, non-discretionary instructions." 157 F.3d, supra at 861. Once a plaintiff has made such a showing, Customs may nevertheless "show that the error is not correctable by showing that a noncorrectable error of those who did have discretion in the matter contributed to the mistake." Id. at 860.

An "inadvertence" has been described as an oversight or involuntary accident, or the result of inattention or carelessness. Ford Motor Co., 157 F.3d 849, 860; see also id. at 857 ("For an error to be correctable, it must simultaneously qualify as at least one of the three enumerated types and not qualify as an 'error in the construction of a law.'").

We stress at this point that even proven or provable mistakes of fact, clerical errors, or other inadvertences adverse to the importer may not be avenues of relief under § 1520(c)(1) where such mistake, error, or inadvertence is also an error in the construction of the law.

Upon review, we find that the pertinent facts are that the merchandise consisted of shoe "uppers". This is manifest from the record (see, e.g., the CF) and was known to both the protestant and Customs at the time of entry of the merchandise and upon liquidation. Were there pertinent facts unknown? None have been alleged. The existence of NY A88483, obtained through the efforts of counsel, was not unknown to "Nine West" since, as a general rule, the knowledge of or notice to an agent received while acting as such within the scope of his authority and in reference to a matter over which his authority extends is imputed to and binds his principal, Restatement, Second, Agency § 272. See also 3 Am Jur 2d, Agency, §§ 287 et seq. This general rule of agency finds long-standing application where the principal is a corporation, 18B Am Jur 2d, Corporations §§ 1671 et seq., and the protestant, Nine West Distribution Corp., is a corporation. Furthermore and regardless of knowledge of the existence of Customs ruling letter NY A 88483, the letter itself is a statement of the law with respect to the facts presented for consideration of the legal issue/s therein: the classification and duty treatment of the "Holland" and "Finland" product lines. We are of the opinion that no mistake of fact that would be the basis for relief under 19 U.S.C. 1520(c)(1) occurred.

If it was "clerical error" to indicate on various entry documents the product classifiable elsewhere than as entered and liquidated and qualified for special duty treatment pursuant to General Note 7, HTSUS, then that clerical error had to have been made by "'one upon whom no duty devolved to exercise original thought or judgment'" Ford Motor Co., supra, an individual who was given "complete, binding, non-discretionary instructions." Id. In this case, there is no evidence presented by Mr. Ruiz going to which one individual had the complete, binding, non-discretionary instructions to classify and enter the goods. At best it is alleged that Ms. Reichert and Mr. Franklin expected each other to send Mr. Wagner a copy of "a final ruling from Customs" or otherwise advise Mr. Wagner of the preferred classification and entry of the "Holland" and "Finland" product lines, but that is the extent of what is before us and it clearly does not identify who was the individual at Glukstad, Inc., the declarant on the CF7501s filed in this matter, who was the "one upon whom no duty devolved to exercise original thought or judgment". We find that there is no evidence before us of a clerical error that would be the basis for relief under 19 U.S.C. 1520(c)(1).

An "inadvertence" is an oversight, or the result of inattention or carelessness manifest from the record or proven by supporting documentation that is remediable under section 520 if it is not an error in the construction of the law. The allegation without the proof is inconsequential to relief under the statute. As was stated by the Court in Executone, "while the proper documentation need not have existed at the time of entry, the importer must prove, either before Customs or the CIT, that the proper documentation did or would have existed at the time of entry and would have been filed, but for some mistake of fact or inadvertence at the time of entry [emphasis supplied]." Executone Information Systems, 93 F.3d 1383, 1389. In this case, protestant has alleged inadvertence but has failed to provide Customs with evidence of it.

HOLDING:

The protest is denied for lack of documentary evidence in support of the claim that an inadvertence other than a clerical error or mistake of fact not amounting to an error in the interpretation of a law occurred.

In accordance with section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1992, 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.

Sixty days from the date of this 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 authority of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

William G. Rosoff, for

John A. Durant, Director
Commercial Rulings Division

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