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HQ 229254

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March 13, 2002

LIQ-9-01-RR:CR:DR

229254 RDJ

CATEGORY: LIQUIDATION

Port Director of Customs
Mr. John Quealy
1901 Cross Beam Dr.
Charlotte, NC 28217

RE: Application for further review of Protest No. 1512-01-100037 Importer of Record Michael Weinig, Inc.; 19 U.S.C. 1520(c)(1); mistake of fact; reliquidation; 19 U.S.C. 1514 mistake of law.

Dear Mr. Quealy:

This is in reference to Protest No. 1512-01-100037 received in OR&R on August 3, 2001. It concerns 43 entries submitted by the importer of record, Michael Weinig, Inc.

Entry numbers GF5-XXXX8192 and GF5-925-8 were not listed in 1512-01-100037.The protest was filed by its broker, American Emo Trans. (AET) on June 1, 2001.

FACTS:

Protest no. 1512-01-100037 was filed by American Emo Trans. (AET) as a Request for Further Review at the Port of Charlotte on June 1, 2001. It involves 43 entries of machinery described as woodworking machines,“moulders & grinders”. The merchandise was entered between November 5, 1998 and October 8, 1999. Upon entry, the importer classified the merchandise as “moulders” under subheading 8465.92.0003, HTSUS, at 3% ad valorem. The classification for moulders is specifically provided (“eo nomine”) under the stated subheading of the HTSUS.

AET submits this protest claiming that the port erred in denying three 1520(c) claims filed on these 43 entries. AET claims that it misclassified and incorrectly valued the merchandise due to a “mistake in fact”. AET claims that, at the time of entry, they acted under the belief that the merchandise was “used” machinery and classified it incorrectly under subheading 8465.92.0003, HTSUS, at 3% ad valorem. AET stated that “since the moulders are, in reality, “ new equipment”, the merchandise should have been classified under subheading 8465.10.0045, HTSUS at a rate of 2.5% ad valorem. AET argues the items being “new” is a distinction that merits its reclassification and that they “mistakenly” believed the moulders to be “used” machinery. They alleged that a “mistake in fact” resulted in the misclassification of the moulders and the overpayment of duties”. AET alleged that they also “mistakenly believed that the value of the machine tools was not included in the value of the machine when, in fact, it was included” (see, letter titled “520 with Attachments, Detailed Reasons for 520c”dated January 30, 2001).

In support of their arguments AET submits the entry documents, a letter from Mr. Peter Fritsch (Michael Weinig, Inc.) stating that Michael Weinig, Inc. has never imported “used” machinery from their parent company in Germany. In its petition AET explains that “due to a mistake in fact” AET “mistakenly believed the moulders to be used machinery..this mistake in fact resulted in the misclassification of the moulders and the overpayment of duties..AET mistakenly believed that the value of the tools was not included in the value of the machine, when in fact, it was included”the transaction value of the merchandise was overstated resulting in the overpayment of duty..”( as per document titled “520C with Attachments, Reasons for 520c”signed by Cristy King, American Emo Trans. Inc). In the affidavit dated May 5, 2001 also by Ms. Cristy King, the affiant states “ AET Inc. as the customs broker for Michael Weinig Inc. believed that all the woodworking machinery imported from Germany was “used” machinerydue to this mistake in fact..the importeroverpaid duties”(P)lease reconsider your decision.as this was a mistake of fact and AET, Inc. believed that the goods were imported as used machinery and was never told anything to the contraryAET classified the machines as what we believed the machines to be and the result was a gross overpayment of dutiesOn letter dated June 1, 2001, the AET states “ please reconsider your denial of the protests and 520(c)’s on the basis of classification and value errors(A)s the broker and forwarder for Michael Weinig Inc., we believed the machinery (moulders and grinders) were used when we imported them..”.We are the bonded warehouse for the importer and on several occasions, the import department would need to physically look at the freight. It was on these occasions that we thought the freight looked used and we were classifying them correctly.”

This protest consists of a Request for Further Review of THREE separate claims under 1520(c)(1) which the Port of Charlotte denied on separate occasions. Our analysis follows.

Claim number 1512-01-200010, request for reliquidation under 1520(c) was submitted to the Port of Charlotte on January 30, 2001. The claim was denied on March 5, 2001for “it being a claim not correctable under 1520(c). The claim contained the following 24 entries:

ENTRY: LIQUIDATION DATE:

1) GF5- XXXX0728 2/25/00
2) GF5-XXXX0041 2/11/00
3) GF5-XXXX1254 3/03/00
4) GF5-XXXX6006 3/03/00
5) GF5-XXXX0678 3/03/00
6) GF5-XXXX1775 3/10/00
7) GF5-XXXX2302 3/17/00
8) GF5-XXXX2807 3/24/00
9) GF5-XXXX3227 3/31/00
10) GF5-XXXX3714 4/07/00
11) GF5-XXXX4076 4/14/00
12) GF5-XXXX4498 4/21/00
13) GF5-XXXX4597 4/28/00
14) GF5-XXXX4605 4/28/00
15) GF5-XXXX6444 5/19/00
16) GF5-XXXX7269 6/02/00
17) GF5-XXXX7715 6/09/00
18) GF5-XXXX5495 6/16/00
19) GF5-XXXX8598 6/23/00
20) GF5-XXXX8929 6/30/00
21) GF5-XXXX9711 7/14/00
22) GF5-XXXX1105 8/04/00
23) GF5-XXXX1519 8/18/00
24) GF5-XXXX9803 02/04/00

Claim # 1512-01-200009, request for reliquidation under 1520(c) was submitted to the Port of Charlotte on January 30, 2001. It was denied on March 2, 2001. It involved the following 4 entries:

ENTRY # LIQUIDATION DATE

25) GF5-XXXX6098 12/27/99
26) GF5-XXXX4432 11/03/99
27) GF5-XXXX6213 11/26/99
28) GF5-XXXX7484 12/27/99

Claim # 1512-00-200025 was submitted on August 16, 2000 and denied on October 11, 2000. It involved the following 8 entries:

ENTRY # LIQUIDATION DATE

29) GF5-XXXX259-2 07/30/99
30) GF5-XXXX280-8 08/06/99
31) GF5-XXXX318-6 08/20/99
32) GF5-XXXX343-4 08/27/99
33) GF5-XXXX361-6 09/03/99
34) GF5-XXXX386-3 09/10/99
35) GF5-XXXX387-1 09/10/99
36) GF5-XXXX416-8 03/12/99

PROTEST NUMBER 1512-01-100037 involves all of the above entries PLUS the following 6 entries:

ENTRY # LIQUIDATION DATE

37) GF5-XXXX825-0 01/14/00
38) GF5-XXXX944-9 01/28/00
39) GF5-XXXX759-1 01/03/00
40) GF5-XXXX878-9 01/21/00
41) GF5-XXXX297-2 08/13/99
42) GF5-XXXX862-3 01/07/00
43) GFS-XXXX684-0 05/26/00

ANALYSIS:

Were the claims made under 1520(c)(1) properly denied by the Port?

A) ENTRIES COVERED UNDER CLAIM # 1512-01-200010:

For entries contained in claim 1512-01- 200010 the PROTEST was submitted TIMELY on June 1, 2001, that is, within 90 days from the decision by the port (March 5, 2001) denying the re-liquidation of the stated entries under 1520(c). We now review these entries under the provisions of 19 U.S.C. 1514 (a)(7).

Michael Weinig, Inc. importer of record, entered certain merchandise which was classified upon entry as “moulders and grinders”. These items were classified by the broker, AET, upon entry under subheading 8465.92.0003 HTSUS at 3% ad valorem. The classification for moulders is specifically provided (“eo nomine”) under the stated subheading of the tariff schedule. These entries liquidated “as entered” on or before August 18, 2000.

On January 30, 2001, American Emo Trans. (“AET”) submitted a timely claim under section 1520(c)(1) requesting the reliquidation of the 24 entries listed due to an alleged “mistake in fact” in the classification of the items imported. Section 1520(c)(1) requires that any request to reliquidate be made within one year of the liquidation. In order for an importer to obtain relief under section 1520(c)(1), the request must be filed timely and is required to fulfil the criteria set by the statute. On March 5, 2001, the port denied the reliquidation alleging that “this claim is not correctable under section 520(c)(1)”.

Under section 1520(c), Customs may reliquidate an entry to correct a clerical error, mistake in fact or other inadvertence, not amounting to an error in the construction of law. Section 1520(c)(1) was designed to permit importers to correct mistakes of fact or inadvertence which have caused an error in liquidation.

Section 1520 (c)(1) provides:

(c) Notwithstanding a valid protest was not filed, the appropriate customs officer may * * * reliquidate an entry to correct—
a clerical error mistake of fact or other inadvertence not amounting to an error in the construction of law, adverse to the importer and manifest from the record or established by documentary evidence, in any entry, liquidation, or other Customs transaction, when the error, mistake or inadvertence is brought to the attention of the appropriate Customs officer within one year from the date of liquidation or exaction.

A mistake in 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 U.S. 68 Cust. Ct. 17, 22, C. D. 4327, 336 F. Supp. 1395 (1972), 490 F.2d. 1277 (1977). The courts have consistently held that section 1520(c)(1) may only be used to correct mistakes of fact or inadvertence such as clerical or ministerial errors and may not be used to rectify incorrect interpretations of the law (Hambro Automotive Corp. v .U.S. 66 CCA 113, 120 C.A.D. 1231, 603 F.2d 850, 855 (1979); PPG Industries, Inc. v. U.S. 7 CIT 118, Slip Op. 84-27; Mattel Inc. v. U.S. 72 Cust Ct. 257, 262 , 377 F.Supp. 955, 960 (1974). Section 1520 (c)(1) is not an alternative to the normal liquidation protest method of obtaining review” but rather affords “limited relief” where an unnoticed or unintentional error has been committed (Computime Inc. v. U.S. 9 CIT 553 (1985) citing. C.J. Tower & Sons, 336 F. Supp. p.1398). The relief provided under 1520(c)(1) is not an “alternative” to the relief provided for in the form of protests under 19 U.S.C. 1514. In order to qualify for relief under 1520(c)(1), the claimant must prove that there is a mistake in fact which establishes that the entry and liquidation were incorrectly made. 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. The conditions required to be met under 1520(c)(1) are that the clerical error, mistake of fact, or other inadvertence must be adverse to the importer, manifest from the record or established by documentary evidence and brought to the attention of Customs within one year after the date of liquidation. It is imperative that documentary evidence be presented to support the allegation of the existence of a mistake in fact.

When AET submitted its timely request for relief under section 1520(c)(1) on January 30, 2001, AET stated that, at the time of entry, they acted under the belief that the merchandise was “used” machinery and as such, classifiable under suheading 8465.92.0003, HTSUS, at 3% ad valorem. AET stated that “since the moulders are, in reality, “new” equipment”, the merchandise should have been classified under subheading 8465.10.0045, HTSUS at a rate of 2.5% ad valorem. They alleged that a “mistake in fact” resulted in the misclassification of the moulders and the overpayment of duties”. AET also alleged that the value of the machine tools was not included in the value of the machine when, in fact, it was included” (see, letter titled “520 with Attachments, Detailed Reasons for 520c”dated January 30, 2001).

Upon review of these arguments, the port correctly denied the 1520(c ) claim because these allegations involved which involved the construction of law involving the correct classification and value. Arguments involving the construction of law must be filed under section 1514. AET failed to submit a timely 1514 protest within 90 days of the date of liquidation in order to address these particular issues.

As initially classified, the merchandise consisted of “moulders”. The stated classification is the one provided for that specific item, eo nomine. Therefore, it was Customs’ position that the merchandise was correctly classified by AET at the time of entry. When the entries liquidated, Customs accepted the importer’s classification. Customs determined that “moulders” are only classifiable under the stated subheading and, as such, concluded that the classification and value were correctly assessed. Having failed to submit a timely 1514 protest, AET attempted to address these issues by submitting a claim under 1520(c)(1) alleging that the classification was a result of a “mistake in fact”. However, even if we conclude that there was no “mistake in law” (that should have been resolved by means of a protest under 1514 filed within 90 days of the liquidation), the evidence in file is insufficient to prove that a “mistake in fact” occurred under section 1520(c)(1).

It has generally been established that mistakes in classification of merchandise are considered mistakes in the construction of law and not correctable under 1520(c)(1) (Mattel, Inc. v. U.S. 377 F. Supp. 955 (1974). Under section 1514, errors in classification, valuation, etc., of merchandise can be corrected and refund of duties be granted if the protest is submitted within 90 days of the liquidation of the entry. Failure to file a protest within the specified period of time, will render the liquidation final and binding to both the government and the importer. However, Congress has established a limited relief under which certain mistakes can be corrected by applying the precepts established in section 1520(c)(1) (Phillips Petroleum Co. v. US. 54 CCPA 7, 11 (1966)). Under this section , an entry can be reliquidated to correct a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of law (Computime Inc. v. U.S. 9 CIT 554, 555 citing Hambro Automotive Corp. v. U.S. 66CCPA113, 120, C.A.D.1231, 603 F.2d. 850, 855(1979); PPG Industries, Inc. v U.S. 72 Cust. Ct 257, 262-263; Fibrous Glass Products v U.S. 63 Cust. Ct. 62, 63-64 C.D. 3874 (1969) appeal dismissed 57 CCPA 141(1970) . The error must be adverse to the importer and brought to the attention of the appropriate Customs officer within one year from the date of liquidation . The error must be manifest or established by documentary evidence. It is the affirmative burden of the protestant to establish the nature of the error and demonstrate that it falls within the scope of the statute. It is understood that a claim under section 1520(c)(1) should not be construed “as an alternative to the normal liquidation protest method of obtaining review”(Computime Inc, v U.S. 9 CIT 553, 556(1985)). It is not the purpose of section 1520(c)(1) to extend the period for filling objections to issues which are redressable under section 1514.

In the present case, if the question was whether the distinction between “new” and “used” resulted in a change of classification for “moulders”, then the issue becomes a question of interpretation of law which should have been addressed under section 1514 within 90 days of the liquidation. In other words, in order for Customs to accept a reliquidation of these entries, Customs would have had to, first, determine if “moulders” could be classified in any other manner other than as “moulders” and secondly, whether “new or used” criteria affected the classification. The scope of this analysis would have definitively encompassed a legal interpretation of the tariff schedule. A legal interpretation would have also been necessary had AET alleged the appraisement of this merchandise was incorrect. If Customs would have been required to make such an analysis, the only legal procedure available for the importer, would have been the submission of a 19 U.S.C. 1514 protest. Since the entries liquidated and no 1514 protests were timely filed, the legal interpretation of the HTSUS is final and conclusive.

Putting aside the issue as to whether the request for classification was a mistake of law redressable only under section 1514 , we turn our analysis as to whether a mistake in the classification could be redressable as a “mistake in fact” under section 1520(c)(1). We have stated that the conditions to be met under 1520(c)(1) are that the liquidation was incorrect and that it was caused by a clerical error, mistake in fact or other inadvertence. The inadvertence, mistake in fact or clerical error must be adverse to the importer, manifest from the record, or established by documentary evidence. In this case, AET filed a timely claim under 1520(c)(1 on January 30, 2001. AET contends that they believed that the “moulders” were “used” instead of “new”. AET had initially classified the “moulders” as “moulders” under subheading 8465.92.0003 HTSUS at 3% ad valorem. As part of the allegations under 1520(c)(1) AET argued that there is a distinction between “new” and “used” in terms of the classification and the “moulders” should have been classified as “new” equipment under subheading 8465.10.00045, HTUS, at a rate of 2.5% ad valorem. They describe their “mistake in fact” as an erroneous belief that the merchandise entered was “used” instead of “new”.

In analyzing the evidence presented, we conclude the following. First, we find that AET correctly classified the merchandise at the time of entry. The “moulders” are “specifically provided” under subheading 8465.920003, HTSUS no other classification would have been correct for the merchandise described. A machine can only be classified under subheading 8465.10.0045 if it can carry out different types of machinery operations without a tool change between operations. The documents provided give no indication that the imported machines were capable of carrying out the machinery operations as described under subheading 8465.10.0045. Moulders are not considered that type of machine. Secondly, AET has failed to provide sufficient evidence of the existence of a “mistake in fact” that would be manifest from the record or established by documentary evidence. Upon an assertion that a certain merchandise has been wrongly classified due to a “mistake in fact” , it is incumbent on the plaintiff to show by sufficient evidence the nature of the mistake in fact (PPG Industries, Inc. v. U.S. 4 CIT 143, 147 (1982) citing Hambro Automotive Corp v U.S. 81 Cust. Ct. 29, 31, 458 F. Supp 1220, 1222 (1978) aff’d 66 CCPA 113, C.A.D. 1231, 603 F. 2d. 850 (1979). Mere assertion without supporting evidence will not be regarded as sufficient to overturn a Customs decision (Bar Bea Truck Leasing Co. Inc. v. U.S. 5 CIT 124, 126 (1983). In ITT Corp. v. U.S. 24 F.3rd 1384, 1387 (Fed. Cir 1994), the court stated that a request for reliquidation under 1520(c)(1) requires both notice and substantiation. In ITT v U.S. at p.1387, the court stated that mistakes in fact that are not manifest, must be established by documentary evidence and by citing the Hambro case, “with sufficient particularity to allow remedial action”. The mistake in fact must be described in detail in order to prove that a factual error rather than a legal error existed.

We find that no documentary evidence has been presented to support the assertion of a mistake in fact. It is the claimant who bears the burden of establishing the underlying facts needed to prove the allegation of a mistake in fact. We find that the statements made by Ms. King (cited above) comprise of mere assertions which do not sustain the allegations presented. We find that the affidavit is insufficiently supported by the record and, at best, contradictory. See Andy Mohan, Inc.. American Customs Brokg.Co. Inc. v. U.S. (63 C.C.P.A 104, 537 F.2d. 516) where it is noted that affidavits are entitled to little weight if determined to be incomplete or based on unproduced records. The invoices contained in the file from Michael Weinig, Inc. (Germany) do not contain any information that would substantiate AET’s belief that this company was importing “used machinery” from the parent company in Germany. Neither the entries or the invoices contain any distinction as to the nature of the items imported. As a matter of fact, a letter addressed to Customs dated July 24, 2001 by Mr. Peter Fritsch, states that “Michael Weinig, Inc. does not and has never, imported “used” machinery from our parent company, Weinig, Inc in Germany”. This assertion is contrary to AET’s allegation in the affidavit stating that “AET believed that all the woodworking machinery imported from Germany was “used”.

We do not find that the invoices were misleading in any way nor did these supplied erroneous or confusing information which would have enabled the broker to misunderstand the nature of the merchandise. Most importantly, the distinction between “new” or “used” is irrelevant to the classification. Mr. Fritsch is incorrect in believing that the merchandise was entered as “used” because it is not a distinction that appears in the Customs entry document, the CF7501 nor it affected the classification. In the Harmonized Tariff Schedule, the ‘used” or “new” are simply designations (at the 10-digit level) which are used domestically for statistical purposes. Since the tariff rate is determined at the 8-digit level, the stated designation does not affect classification or value. We conclude that the broker CORRECTLY classified the merchandise at the time of entry. AET was never under a mistaken impression of a “fact” or even “law”, because the classification and value were correctly determined at the time of entry. In terms of the value, we find no evidence of the broker’s allegation that the transaction value was overstated. According to the CF7501 the machinery was listed as a separate line distinct from whatever tools were entered at the time. If the importer was interested in challenging the stated value, the importer only needed to file a 1514 protest within 90 days of the liquidation as a mistake in the construction of the law. Since AET failed to file a 1514 protest timely, the legal determination concerning the classification and valuation is now final and conclusive. As in Computime v. U.S. (9 CIT 555, 556 (1985), the plaintiff did not avail itself to the appropriate statutory remedy.

B) Claim # 1512-01-200009:

A claim under 1520(c)(1) was filed untimely on January 30, 2001. These five entries liquidated and more than a year passed before the broker filed the 1520(c)(1) claim. The port denied relief on March 2, 2001. The PROTEST was submitted on June 1, 2001. We deny review of these entries because the claim under 1520(c)(1) was filed untimely at the port since it was filed more than a year after the entries had liquidated.

C) Claim # 1512-01-200025:

The section 1520(c)(1) claim #1512-00-200025 involved 8 entries and the port denied relief on October 11, 2000. The PROTEST (1512-01-10037) was filed untimely on June 1, 2001, more than 90 days from the date of the decision by the port to deny the 1520(c)(1) request. We deny review of this claim for it being filed untimely.

SIX ENTRIES INCLUDED IN PROTEST 1512-01-100037:

We deny review of these entries. These entries liquidated between August 13, 1999 and January 28, 2000 and no protest under section 1514 was filed within 90 days of the liquidation and no petition under 1520(c)(1) claim was timely filed within one year of the liquidation. Protest is denied for lack of jurisdiction.

HOLDING:

The PROTEST 1512-01-100037 is DENIED and relief may not be granted under 19 U.S.C. 1514(a)(7) for the reasons stated in our analysis.

Consistent with the decision set forth above, you are hereby directed to deny the subject protest. In accordance with Section 3(A)(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 to with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision available to customs personnel via the Customs Ruling Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

John Durant
Director, Commercial Ruling Division

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See also:

• Tariff No.: 8465.10.00 - Machines for working certain hard materials which can carry out different types of machining operations w/o tool change between operations
• Tariff No.: 8465.92.00 - Planing, milling or molding (by cutting) machines for working wood, cork, bone, hard rubber, hard plastics or similar hard materials