HQ 228897 - Application for Further Review of Protest number 0901-00-100132; Request for Re-Liquidation; 19 U.S.C. §1520(c); 19 C.F.R. §174.12; 19 C.F.R. §174.24; 19 C.F.R. §174.25. - United States International Trade Commision Rulings

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HQ 228897

March 7, 2001

RR:CR:DR
228897 RND

CATEGORY: PROTEST

Port Director of Customs
111 West Huron Street
Buffalo, New York 14202

Attn: Mr. Arthur J. Lipp
Protest Review Officer

RE: Application for Further Review of Protest number 0901-00-100132; Request for Re-Liquidation; 19 U.S.C. §1520(c); 19 C.F.R. §174.12; 19 C.F.R. §174.24; 19 C.F.R. §174.25.

Dear Mr. Lipp:

This letter is in response to your memorandum received in this office June 27, 2000 regarding an Application for Further Review of Protest number 0901-00-100132. The subject Protest was filed April 14, 2000 on CF 6445A by the purchaser and, according to the CF 7501, importer and ultimate consignee of the imported goods, Moores the Suit People (“Moores”), of Brooklyn, Ohio. Moores protests the denial of a petition for reliquidation under 19 U.S.C. §1520(c).

It is the opinion of your office that the Protestant’s Request for Further Review meets the requirements of 19 C.F.R. §174.24 and is therefore entitled to review by this office. However, the Protestant makes no argument to support its position that the protest is entitled to further review as required by Customs Regulations. The criteria for granting a request for further review are set forth in 19 C.F.R. §174.24 which states,

Further review of a protest which would otherwise be denied by the port director shall be accorded a party filing an application for further review which meets the requirements of §174.25 when the decision against which the protest was filed:
a) Is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise; (b) Is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts;

(c) Involves matters previously ruled upon by the Commissioner of Customs or his designee or by the Customs courts but facts are alleged or legal arguments presented which were not considered at the time of the original ruling; or (d) Is alleged to involve questions which the Headquarters Office, United States Customs Service, refused to consider in the form of a request for internal advice pursuant to §177.11(b)(5) of this chapter.

Therefore, further review will be accorded to the party filing an application for further review which meets the requirements of §174.25 and at least one of the criterion in §174.24. In the subject protest, the Protestant alleges none of the conditions required in §174.24 of the decision protested. Consequently, we note at the outset that the criteria for further review as set out in 19 CFR §174.24 have not been met by the subject Application, and will treat this application as a request for internal advice per 19 C.F.R. §177.11.

FACTS:

Moores’ broker, A.N. Deringer, Inc. (“Deringer”), submitted the petition for reliquidation, under 19 U.S.C. §1520(c), on August 11, 1999. The protested entry, number XXXX418-0, was entered on April 8, 1998, by Moores, and consisted of items of men’s wearing apparel from Canada. Some of the men’s clothing was entered duty-free under NAFTA or the Tariff Preference Level (TPL) quota allocated to Golden Brand Clothing (‘Golden”) of Canada. The Protest describes Golden as the manufacturer, seller and shipper of the wool clothing at issue. The disputed portion of this entry, lines 7 and 8 of the CF 7501, men's trousers and jackets respectively, entered with the Normal Trade Relations (NTR) rate of duty. A total of $846.85 in duty was paid and it is this paid duty that is the subject of Moores’ protest.

On August 11, 1999, Moores’ broker, Deringer, submitted a petition, pursuant to 19 U.S.C. §1520(c), requesting that lines 7 and 8 of entry number XXXX418-0 “be reviewed and corrected under §520(c) of the Tariff Act of 1930” due to a mistake of fact. Section 520(c) of the Tariff Act of 1930 is codified at 19 U.S.C. §1520(c) and permits reliquidation of an entry to correct an “error, mistake or inadvertence” if such is “brought to the attention of the Customs Service within one year after the date of liquidation.” The subject entry liquidated on February 5, 1999 and this petition was filed on August 11, 1999; we note therefore that the request for reliquidation was timely per §1520(c) because it was filed within one year of the liquidation.

In support of the request for re-liquidation under §1520(c), Deringer states that “due to a mistake of fact” the men’s wool trousers and blazers at issue were entered with the Normal Trade Relations rate of duty, instead of duty-free, because Golden “mistakenly believed that its TPL allocations for wool were filled,” and therefore no Certificate of Eligibility for TPL was presented with the entry. Certificates of Eligibility are used to monitor and identify export shipments eligible for preferential tariff treatment pursuant to the TPL provisions of Appendix 6.B. to Annex 300-B of the NAFTA. A Certificate of Eligibility, signed by an authorized official of the Canadian or Mexican government, is issued to the Canadian or Mexican exporter for transmittal to the importer of the goods who then is able to make a claim for preferential tariff treatment based on the Certificate of Eligibility (TD 95-98).

Deringer explains that the Canadian government allocates the amount of garments entitled to duty-free treatment under its TPL quota. At the end of 1998 the Canadian government reviewed the amount of garments entered duty-free under the TPL and discovered that there was unused quota for wool garments remaining. The Canadian Department of Foreign Affairs notified Golden on February 26, 1999 that “wool apparel Tariff Preference Level quota was available to certain allocation holders . . . for qualifying shipments to the U.S.A. during 1998” and enumerated the steps required to qualify for the “special TPL.” Golden complied with these instructions and on April 22,1999 the Canadian government advised Golden that it had “met the conditions outlined” and, as a result, had qualified to “receive some of the available TPL.” Golden then received an additional allocation for wool apparel TPL for 1998. Since Golden was then entitled to an additional allocation for wool apparel TPL, Deringer contends that the original entry under the NTR rate of duty was “due to the mistake of fact that Golden mistakenly believed they were not eligible for preferential duty treatment.”

Consequently, Deringer sought to have lines 7 and 8 of entry number XXXX418-0 reliquidated under 19 U.S.C. §1520 to refund the duty paid on the apparel under the NTR rate and enter the apparel under the special TPL quota duty-free. The Buffalo Port first approved Golden’s request for reliquidation on December 9, 1999 and then, on January 18, 2000 the Port denied Golden’s request. According to the Port, and not disputed by the Protestant, Golden’s request was in fact denied on January 18, 2000. As basis for this denial the Port cites Occidental Oil & Gas Co., v. United States (13 CIT 246 (CIT 1989), which the Port states, held that an importer’s delay in forwarding additional information is not an inadvertence or mistake within the scope of §1520(c). Ostensibly the Port’s position is that the Certificate of Eligibility for the TPL from the Canadian government is additional information, the delay in submitting of which does not constitute a mistake of fact within the meaning of §1520(c).

ISSUES:

Does the exporter’s qualifying for a Certificate of Eligibility for Tariff Preference Level quota, after final liquidation of the entry, constitute a clerical error, mistake of fact, or other inadvertence within the meaning of 19 U.S.C. §1520(c)?

LAW AND ANALYSIS:

Moores protested the Port’s denial of the §1520(c) petition by filing Protest number 0901-00-100132 and Application for Further Review on April 14, 2000. Customs Regulations provide that a protesting party may seek further review of a protest in lieu of review by the District Director by filing an application for further review (19 CFR §174.23), but that such a request must be filed within 90 days from the date of liquidation or the date of the decision which is being protested (19 CFR §174.12(e)). Moores filed this Protest and Request for Further Review (per 19 C.F.R. §174.25) on April 14, 2000; the petition for reliquidation was denied on January 18, 2000. Therefore, this Protest and Request for Further Review was timely filed (19 C.F.R. §174.12(e)). Further, per 19 C.F.R. §174.11 protests may be filed by the importer or consignee shown on the entry papers, and hence this Protest was correctly filed by Moores. In addition, the refusal to reliquidate an entry under 19 U.S.C. §1520(c) is a decision subject to review per 19 C.F.R. §174.11.

Moores’ protest focuses on a defense of the untimely submission of a Certificate of Eligibility for the Tariff Preference Level (TPL) quota rate of duty on the men’s wool clothing entered on lines 7 and 8 of the CF 7501. Moores contends that “the delay in submitting the required Certificate of Eligibility [TPL] . . . did not result from any inaction or negligence by the importer,” but was the result of the “normal course of business of the Canadian Department of Foreign Affairs.” The Port contends that the Protestant filed the §1520(c) request because the time allowed (90 days) for a protest per 19 U.S.C. §1514 had expired and the Protestant had no alternative means of relief. Moreover, the Port states that the Protestant “had filed numerous TPL entries before this [instant entry] and was well aware of the procedure and time frames.”

The submission to Customs of a Certificate of Eligibility for TPL is addressed in 19 C.F.R. §12.132(b):

In connection with a claim for NAFTA preferential tariff treatment . . . the importer shall submit to Customs a Certificate of Eligibility covering the goods.

The presentation of Certificates of Eligibility for TPL under Nafta is further discussed in the following excerpt from Treasury Decision 95-98:

The United States, Canada and Mexico agreed that presentation of a properly completed and executed Certificate of Eligibility for Canadian and Mexican exports is a prerequisite to the granting of a claim for preferential tariff treatment under the TPL provisions, and failure to present such a Certificate of Eligibility will result in assessment of duty at the most-favored-nation (that is, non-NAFTA) rate.

Moreover, clarification of the relief available to importers who do not present the Certificate of Eligibility at the time of entry is found in the Discussion of Public Comments received in response to the interim regulation set forth in T.D. 94-52.

Three comments were received in response to the interim regulation set forth in T.D. 94-52. Two of these commenters were primarily concerned with the ability to file a claim after importation and whether or not there would be a sufficient time period to make such a claim, particularly when the U.S. importer is unable to obtain and provide a Certificate of Eligibility at the time of entry.

While a failure to supply the required Certificate of Eligibility will preclude the filing of a claim for preferential tariff treatment and will result in liquidation of the entry at the non-preferential duty rate, Customs believes that importers in most cases will have adequate opportunity, following the date of entry, to submit the Certificate and make the claim when the Certificate is not available at the time of entry. Customs notes in this regard that the importer may supply the necessary documentation and make the claim either at any time prior to final liquidation or in connection with the filing of a protest within 90 days following final liquidation. Moreover, under existing procedures, liquidation is delayed for a minimum of 90 days following the date of entry. Thus, an importer has at least 180 days from the date of entry in which to file a claim through submission of the required Certificate of Eligibility. In addition, on a case-by-case basis, Customs may grant an importer's request for a delay in liquidation so as to afford the importer additional time to submit the Certificate and make the claim if the request explains the reason for the delay in providing the Certificate

(T.D. 95-98). Therefore, Moores had until final liquidation to supply the Certificate of Eligibility, and the opportunity to request delay of liquidation if necessary. However, the Protestant in this case was unable to supply the Certificate of Eligibility before final liquidation on February 5, 1999, because the exporter’s right to the additional TPL did not even exist until April 22, 1999. Further, it is clear that the Customs Service contemplated only limited relief when a Certificate of Eligibility is not presented before final liquidation: filing of a protest under 19 U.S.C. §1514 within 90 days of the liquidation. Though the Protestant had the opportunity to file a protest within the 90-day post-liquidation period, (the entry liquidated on February 5, 1999, the exporter was advised of the additional TPL on April 22, 1999), Moores’ broker instead filed a petition to reliquidate the entry under 19 U.S.C. §1520(c) on August 11, 1999. Though Treasury Decision 95-98 appears dispositive on the question of whether Moores is entitled to relief under these facts, the merits of its protest are addressed next.

19 U.S.C. §1514(a)(7), states in pertinent part, decisions of the Customs Service, including the legality of a refusal to reliquidate an entry under §1520(c), inter alia, shall be final and conclusive upon all persons unless a protest is filed within the allotted 90 days. Section 520(c) of the Tariff Act of 1930 as codified at 19 U.S.C. §1520(c) is an exception to the finality of §1514. Section 1520(c) states,

(c) Reliquidation of entry or reconciliation: Notwithstanding a valid protest was not filed, 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, whether or not resulting from or contained in electronic transmission, not amounting to an error in the construction of a law, adverse to the importer and manifest from the record or established by documentary evidence, in any entry, liquidation, or other customs transaction, . . . .

Therefore, per §1520(c)(1) Customs may reliquidate an entry to correct “a clerical error, mistake of fact, or other inadvertence,” not amounting to an error in the construction of a law. The error must be adverse to the importer and manifest from the record or established by documentary evidence (19 U.S.C. §1520(c)(1)). However, the relief provided by §1520(c)(1) is not an alternative to the relief provided in the form of protests under 19 U.S.C. §1514. Section 1520(c)(1) only affords “limited relief in the situations defined therein” (Phillips Petroleum Company v. United States, 54 CCPA 7, 11, C.A.D. 893 (1966), quoted in Godchaux-Henderson Sugar Co., Inc., v. United States, 85 Cust. Ct. 68, 69, C.D. 4874, 496 F. Supp. 1326 (1980); see also, Computime, Inc. v. United States, 9 CIT 553, 555, 622 F. Supp. 1083 (1985), and Concentric Pumps, Ltd. v. United States, 10 CIT 505, 508, 643 F. Supp. 623 (1986)). For section 1520(c)(1) purposes, a mistake of fact has been defined as "a mistake which takes place when some fact which indeed exists is unknown, or a fact which is thought to exist, in reality does not exist" (C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, 21, C.D. 4327, 336 F. Supp. 1395, 1398 (1972), aff'd, 61 CCPA 90, C.A.D. 1129, 499 F.2d 1277 (1974)).

In this case, the Protestant’s failure to present the TPL Certificate of Eligibility at the time of entry or within such time as to protest the rate of duty under §1514(a)(2) is not due to a clerical error, mistake of fact, or other inadvertence within the meaning of §1520(c)(1). It has been held that a mistake of fact exists where a person understands the facts to be other than they are and takes action based on that erroneous belief. The reason for the belief may be that a fact exists but is unknown to the person or he may believe that something is a fact when in reality it is not. Here, the Protestant did not understand the facts to be other than they were or take action on an erroneous belief; nor were there facts unknown to the Protestant. The Protestant had no right to enter the wool apparel duty free when the goods were entered nor when the goods were liquidated, hence a clerical error, mistake of fact, or other inadvertence is an impossibility in this case. It is Customs’ position that because the right to the preference did not exist until Canada informed the Canadian exporter of the entitlement to the additional TPL on April 22, 1999, there could not have been an error in either the entry of April 8, 1998, or the liquidation of that entry on February 5, 1999.

Essentially, the Protestant contends that Golden “mistakenly believed that its TPL allocations for wool were filled.” However, it is clear from the evidence submitted, especially the correspondence from the Canadian Department of Foreign Affairs and International Trade, that the Protestant was not mistaken as to the availability of wool apparel TPL. In fact, Golden was not even entitled to the additional TPL quota until it satisfied certain requirements of the Canadian government. Further, the Canadian government characterizes the additional TPL as “special wool apparel TPL” and states that “qualified companies will be advised” of their allocation. Therefore, when the subject merchandise was entered on April 8, 1998 and liquidated on February 5, 1999, Golden’s right to the “special wool apparel TPL” did not exist. Instead, Golden was merely afforded subsequent opportunity to qualify for additional TPL. Consequently, there was no mistake of fact, correctable under §1520(c); at the time the apparel was entered Golden was not entitled to any additional TPL quota.

In C.J. Tower & Sons of Buffalo, Inc. v. United States, (68 Cust. Ct. 17; 336 F. Supp. 1395; 1972 Cust. Ct.) the plaintiff sought reliquidation of four entries under §1520(c) because duty was paid on the imported articles though they were entitled to duty-free entry as emergency war material. After the liquidations plaintiff supplied the necessary certifications to demonstrate the goods were entitled to duty free entry. The Customs Court permitted the reliquidation of the entries. However, the situation in C.J. Tower is different than the one at issue here. In C.J. Tower, at the time of the entries the goods could have been entered duty-free, that is, from the time of entry to the time the certificate was presented to Customs, none of the circumstances entitling the goods to duty free entry had changed. The importer had the right to enter the merchandise duty-free at the times of entry. In contrast, the men's woolen trousers and jackets at issue here could not have entered duty-free on the entry date, April 8, 1998. The exporter, Golden had no right to the additional TPL until April 22, 1999.

Similarly, in Aviall of Texas, Inc. v. The United States, (70 F.3d 1248 (Fed. Cir. 1995)) the plaintiff’s right to duty-free treatment existed at the time of importation. The plaintiff, Aviall, imported articles for use in civil aircraft which were entitled to duty-free treatment if a blanket certification was on file with Customs. The blanket certifications had to be renewed each year. However, for the entry at issue in that case, the broker did not renew the certification until notified by Customs that the certification had expired. Customs liquidated the subject entries and denied Aviall duty-free treatment because Aviall had not timely renewed its blanket certification. Aviall filed a petition to reliquidate under 19 U.S.C. §1520(c) stating that “its failure to renew was simply a clerical error” (Id. at 1249). The Court of Appeals for the Federal Circuit agreed with the International Court of Trade and granted Aviall relief under §1520(c). Unlike the wool apparel in the instant case, these goods were entitled to duty free treatment at the time they were entered and only an oversight by the broker kept them from being entered duty-free.

Finally, Executone Information Systems v. The United States is another case where an importer failed to provide the required documentation to Customs to obtain duty free treatment for its goods (19 C.I.T. 960; 896 F. Supp. 1235 (Ct. Intl. Trade 1995)). Customs liquidated the entry then denied the importer's petition under §1520(c). The United States Court of International Trade denied the importer relief and stated,
in order to protect the viability of protests under 19 U.S.C. §1514 and whatever documentary requirements that exist in the statute and regulations, the court concludes that in the case of missing documentation required by statute or regulation, the importer must prove more than that it can produce documentation at the time of trial. At the very least, the importer must prove that, but for a mistake of fact or other inadvertence, proper documentation would have been filed at the time required by law.

(Id. at 1239). Clearly, Moores was unable to do that which the CIT called “the very least.” Moores could not have filed the TPL certificate at the time required by law, that is before final liquidation because, Golden was not entitled to the TPL until April 22, 1999. Moreover, even if the mistake alleged were one of fact, the evidence in this case is not sufficient to demonstrate or establish a mistake of fact remediable under 19 U.S.C. §1520(c)(1). See Executone, supra, 96 F. 3d at 1388, in which the Court found that a mistake of fact within section 1520(c)(1) had been alleged, but that relief under section 1520(c)(1) was unavailable because "Executone [had not] sufficiently demonstrated, rather than merely alleged, ‘a clerical error, mistake of fact, or other inadvertence’ as those terms are used in section 1520(c)(1)." To the contrary, Moores’ evidence demonstrates that no mistake was possible here; no Certificate of Eligibility for TPL could have been presented at entry or before final liquidation, because the exporter did not qualify for the additional TPL until after final liquidation.

Finally, we note that no NAFTA post-importation duty refund relief under 19 U.S.C. §1520(d) was available to the Protestant. Under 19 U.S.C. §1520(d), notwithstanding that a valid protest was not filed, Customs may reliquidate an entry to refund any excess duties paid on a good qualifying under the NAFTA rules of origin (emphasis added). Certificates of Eligibility, as Moores attempts to present here, are for the entry of non-originating textile and apparel goods from Canada or Mexico for which preferential tariff treatment is claimed under the tariff preference level provisions of the North American Free Trade Agreement (NAFTA). Customs published its position on certain issues regarding NAFTA post-importation duty refund claims under 19 U.S.C. §1520(d) in General Notice on Post-Importation Duty Refund Claims Under the NAFTA, (January 29, 1997, Customs Bulletin and Decisions, vol. 31, no. 5, page 1). In this notice, Customs stated:

[A] post-importation duty refund claim may be granted where the claim involves classification, valuation or other issues that bear directly on the issue of whether the good would have qualified as an originating good.

Therefore, the NAFTA rules of origin cannot be in issue, since Moores’ claim is based on Certificates of Eligibility for tariff preference level quota, and the two are mutually exclusive; that is, if TPL applies, the NAFTA rules of origin cannot, no relief is available per §1520.

HOLDING:

The exporter’s qualifying for a Certificate of Eligibility for Tariff Preference Level quota, after final liquidation of the entry, cannot constitute a clerical error, mistake of fact, or other inadvertence within the meaning of 19 U.S.C. §1520(c). The Protest should be denied.

You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. On that date, 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.treas.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John Durant, Director

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