HQ 228936 - Application for Further Review of Protest number 2304-00-10076; Nortel Networks; NAFTA; Certificate of Origin; 19 C.F.R. § 174.24; 19 C.F.R. § 181.21; 19 C.F.R. § 181.22; Post-Importation Duty Refund Claim; 19 U.S.C. §1520(d). - United States International Trade Commision Rulings

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HQ 228936

August 29, 2001

LIQ-9; PRO-2-01 RR:CR:DR
228936 RND

CATEGORY: PROTEST

Port Director
Juarez / Lincoln Bridge
Administrative Building #2
Laredo, TX 78040
Attn: Alfredo A. Perez

RE: Application for Further Review of Protest number 2304-00-10076; Nortel Networks; NAFTA; Certificate of Origin; 19 C.F.R. § 174.24; 19 C.F.R. § 181.21; 19 C.F.R. § 181.22; Post-Importation Duty Refund Claim; 19 U.S.C. §1520(d).

Dear Mr. Perez:

This letter is in response to your memorandum of August 28, 2000, requesting a Further Review of Protest number 2304-00-10076. We have considered the evidence provided and the arguments made on behalf of the importer, as well as Customs records relating to this matter. Our decision follows.

FACTS:

According to the file and Customs records, on November 29, 1999, the Protestant, Nortel Networks, Inc. (“NORTEL”), entered multiline telephone sets (entry number XXXXX20-1), under subheading 8517.19.8080 (Harmonized Tariff Schedule of the United States (HTSUS)). The letters “MX” preceded the HTSUS subheading. The rate of duty stated on the Entry Summary (CF 7501) was “free.” The CF 7501, dated December 2, 1999, and date-stamped as received by U.S. Customs on December 13, 1999, states the country of origin for the entry as Mexico. The accompanying export invoice, labeled “U.S. Customs Export Invoice,” describes the goods as “basic set black phone” and states that the part numbers assigned to the phones are “NAFTA Certified Part Numbers.”

On December 16, 1999, Customs sent the Protestant at its Amherst, New York address a Request for Information, which stated, “in order to accept your NAFTA claim, please submit a NAFTA Certificate of Origin” for the subject entry. The notice requested a response within 30 days. According to Customs’ records no response was received.

On January 24, 2000, Customs sent the Protestant a Notice of Action, informing Nortel that since no NAFTA Certificate of Origin was received for entry number XXXXX20-1, its claim for NAFTA preference on the telephone sets was denied. The protested entry was liquidated on March 3, 2000, at a duty rate of 2.1 per cent.

Nortel Networks, Inc. filed the instant Protest on April 3, 2000. Nortel states, “we are protesting the liquidation of [entry number XXXXX20-1] denying the NAFTA qualifications of the telephone sets imported with this entry.” The Protestant requests reliquidation of the entry and a refund of the duty and fees paid on behalf of Nortel by its broker, Fritz Companies, Inc. A NAFTA Certificate of Origin was attached to the Protest. The certificate is executed by the exporter, Nortel Networks de Mexico, S.A. de C.V., for the subject merchandise, is dated December 14, 1999, and date-stamped received by U.S. Customs on April 3, 2000. On August 17, 2000, the Protest was forwarded to this office for Further Review because “it involved questions of law or fact that have not been ruled upon by the Commissioner of Customs or his designee.”

ISSUE:

Did the Protestant possess a valid NAFTA Certificate of Origin as required by 19 CFR § 181.21(a) when it made the subject claim for preferential tariff treatment under the NAFTA?

LAW AND ANALYSIS:

We note initially that the instant Protest was timely filed, i.e., within 90 days of the liquidation of the entries (19 U.S.C. § 1514(c)(3)(B)). Under 19 U.S.C. § 1514(a) “decisions of the Customs Service, including the legality of all orders and findings entering into the same, as to . . . the liquidation or reliquidation of an entry . . . are final unless a protest of that decision is filed within 90 days of the decision (19 U.S.C. §1514(c)(3)(B)). The subject entry was liquidated on March 3, 2000, and this Protest filed on April 3, 2000.

The criteria required for granting a Request for Further Review are set forth in 19 C.F.R. § 174.24, which states, inter alia,

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:

(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;

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 criteria in § 174.24. It is the opinion of your office that this Protest warrants further review because it meets the criteria of §174.25 and involves questions of law or fact that have not been ruled upon by the Commissioner of Customs or his designee” per 19 C.F.R. § 174.24(b). Further, we are unaware of any decisions by the Customs courts addressing this issue. Therefore, further review of this Protest was granted.

The North American Free Trade Agreement (NAFTA) provides, in Article 502, that,
each Party shall require an importer in its territory that claims preferential tariff treatment for a good imported into its territory from the territory of another Party to:
a) make a written declaration, based on a valid Certificate of Origin, that the good qualifies as an originating good;
b) have the Certificate in its possession at the time the declaration is made;
c) provide, on the request of that Party's customs administration, a copy of the Certificate; . . . .

Title 19, Part 181, subpart B of the Code of Federal Regulations implements the U.S. obligations under Article 502 of the NAFTA. Per 19 C.F.R. § 181.21(a) in order to make a claim for preferential treatment under the NAFTA, an importer must make a written declaration that the good in question qualifies for such treatment. 19 C.F.R. § 181.21(a), further provides,

[t]he written declaration may be made by including on the entry summary, . . . the symbol “MX” for a good of Mexico, as a prefix to the subheading of the HTSUS under which each qualifying good is classified.

The Protestant in this case made the claim for preferential treatment under the NAFTA, and the written declaration was made as provided by 19 C.F.R. § 181.21(a) by including the designation “MX” before the HTSUS number for the phones on the Entry Summary. Hence, the declaration in this case was made on December 2, 1999, the date of the Entry Summary.

Further, Customs Regulation § 181.22(b) (19 C.F.R. § 181.22(b)) states in pertinent part that:

An importer who claims preferential tariff treatment on a good under § 181.21 of this part shall provide, at the request of the port director, a copy of each Certificate of Origin pertaining to the good which is in the possession of the importer.

In addition, the declaration must be based on a properly executed Certificate of Origin which is in the possession of the importer and which covers the good being imported. (19 C.F.R. § 181.21(a)).

Pursuant to Customs Regulation § 181.23(a), the port director may deny preferential treatment if the importer fails to comply with the request for the Certificate of Origin. Therefore, per § 181.22(b), the Port Director, Laredo, Texas, had the right to request a copy of the Certificate of Origin from the Protestant for the subject entry, as was done in the December 16, 1999, Request for Information. Moreover, the Protestant had a duty to provide such certificate to the port under § 181.22(b), but did not provide any Certificate of Origin at that time.

In Headquarters Ruling Letter (“HR”) 228506, Customs stated that “[t]he failure to supply promptly, within the 30-day period set in CF 28, a Certificate of Origin creates a rebuttable presumption that the importer did not have such a certificate of origin in its possession at the time of importation.” However, this presumption can be rebutted if the importer provides credible and sufficient evidence that the party had a valid Certificate of Origin in is possession at the time of the claim. See, for example HRL 561991, dated March 29, 2001.

The Protestant did supply a Certificate of Origin with the Protest three and a half months after the Certificate was requested by Customs; however, that Certificate of Origin is dated December 14, 1999. The declaration in this case was made on December 2, 1999, the date of the Entry Summary. Therefore, the declaration here cannot be based on a “properly executed Certificate of Origin which is in the possession of the importer,” because the Certificate is dated twelve days after the declaration and did not exist on the date the declaration was made on the Entry Summary. Therefore, Protestant has not overcome the presumption that it did not have the certificate of origin in its possession when it made the NAFTA claim.

Furthermore, even if the protest were treated as a post-importation duty refund claim for preferential NAFTA treatment, per 19 U.S.C. §1520 (d), the Protest still fails. 19 U.S.C. §1520 (d) provides in part,
the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to refund any excess duties paid on a good qualifying under the rules of origin set out in section 202 of the North American Free Trade Agreement Implementation Act for which no claim for preferential tariff treatment was made at the time of importation . . . .

The Customs Regulations promulgated under this provision are found in 19 C.F.R. §181.31 through 181.33 (see also General Notice on Post-Importation Duty Refund Claims Under the NAFTA, January 29, 1997, Customs Bulletin and Decisions, vol. 31, no. 5, page 1). Among the conditions required by the statute and the regulations for a claim filed under section 1520(d) is that no claim for preferential tariff treatment was made at the time of importation.

In this case the above condition precedent to relief under 19 U.S.C. §1520(d) is not met. A claim for preferential tariff treatment was made at the time of importation. Therefore, even if the April 3, 2000, Protest is treated as a post-importation duty refund claim under section 1520(d), it was properly denied. We note that this decision is consistent with the General Notice on Post-Importation Duty Refund Claims Under the NAFTA, published in the January 29, 1997, Customs Bulletin and Decisions, vol. 31, no. 5, page 1, and Office of Trade Operations FACT SHEET 38, May 23, 1995 (5143071).

HOLDING:

Based on the record before us, Customs finds that the Protestant did not possess a valid NAFTA certificate of Origin when it made the NAFTA claim. The Protest is therefore DENIED.

In accordance with Section 3A (11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with this decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make this decision available to Customs personnel, and to the public via the Customs Home Page on the World Wide Web, the Freedom of Information Act, and other public distribution channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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See also:

Tariff No.: 8517.19.80 - Telephone sets, nesoi