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HQ 229480




June 21, 2002

LIQ-9-01: RR:CR:DR
229480 RDJ

U.S. Customs Service
2350 North Sam Houston
Parkway East, Suite 1000
Houston TX 77032

Attn: Mr. James K. Place

RE: Protest No. 5301-01100198; quota; 19 USC 1520(c )(1); section 1514, mistake of fact, mistake of law

Dear Mr. Place:

Reference is made to Protest number 5301-01-100198 whereby a request for further review was submitted by Goya Foods of Texas. We have considered the issues raised and our reply follows.

FACTS:

On November 12, 1999 Goya Foods of Texas (Goya) submitted entry # 240-XXXX795-4, importing raw sugar cane from Colombia, entered under consumption entry type code #2, thus subject to quota. Goya classified the sugar under the low duty rate, subheading 1701.11.10, HTSUS, at $0.0094385/kg. Goya included a Certificate of Quota Eligibility No 99-CO-162 for the quota period “1998/1999 Tariff-Rate Quota Period”. The certificate was dated October 29, 1999 and it covered 18.060 short tons of raw sugar.

On July 18, 2000, Customs issued a CF 29 notifying Goya that the subject merchandise would be rate advanced and reclassified under subheading 1701.11.5000, HTSUS, at $0.3487/kg because the Certificate for Quota Eligibility submitted with the entry was determined to be invalid since it did not cover the quota period for which the subject entry was eligible.

On November 17, 2000, Customs liquidated the entry with the duty advance. No action under 19 U.S.C. 1514 was initiated by the importer.

Documents on file show that on April 19, 2000 Goya requested the U.S. Department of Agriculture that a Fiscal Year 2000 Certificate of Quota Eligibility be issued for the subject entry. On May 30, 2001, the U.S. Department of Agriculture informed Goya that, in accordance with the provisions of 15 C.F.R. 2011.104(a), Goya could obtain a corrected Certificate of Quota Eligibility for the year 2000 provided that Colombia’s sugar allocation can accommodate Goya’s shipment and contingent upon Customs’ decision regarding the status of the subject entry.

On March 9, 2001, Goya Foods submitted a Request for Reliquidation under 19 U.S.C. section 1520(c)(1) claiming that a mistake in fact was committed when the importer’s clerk incorrectly believed that the 1998-1999 Certificate for Quota Eligibility submitted validly covered the subject entry. The port denied the request for reliquidation on June 7, 2001 on the basis that it did not meet the criteria for relief under section 1520(c). A Request for Further Review was submitted which we now proceed to review.

ISSUE:

Whether the importer has shown that the submission of an invalid Certificate of Quota Eligibility was correctable under section 19 U.S.C. 1520(c)(1)?

LAW & ANALYSIS:

Initially, we note that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests, 19 U.S.C. 1514 and 19 C.F.R. 174. We note that the refusal to reliquidate an entry under section 1520(c)(1) is a protestable action under section 1514(a)(7). The U.S. Customs Service liquidated this entry on November 17, 2000. The protestant filed a request for reliquidation under 19 U.S.C. 1520(c)(1) on March 9, 2001. Customs denied the request for liquidation on June 7, 2001. A protest to this denial was filed timely on June 18, 2001.

We note that the protestant did not protest the liquidation of the subject entry within the statutory time frame of section 1514 (that is, within 90 days of the liquidation of the entry). The subject protest is a request for further review of a denial of a 1520(c)(1) claim by Goya for the subject merchandise to be reliquidated to the low duty rate as prescribed by the QBT-99-635, Raw Sugar cane 1999-2000 Quota Allocation.

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 if the request is submitted within one year of the liquidation of the entry. Section 1520 is an exception to the finality of section 1514. Section 1520(c)(1) was designed to permit importers to correct mistakes of fact or inadvertence which have caused an error in liquidation. However, section 1520(c )(1) cannot be used to correct all mistakes, it only offers limited relied in certain situation. 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.

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. Under no circumstances may the provisions of 1520(c)(1) be employed to satisfy the requirements of section 1514 (ITT Corp. v. U.S. 24 F3d. 1384, 1387). Section 1520(c )(1) is not intended to be an alternative for importers who fail to timely file protests, as such, negligent inaction is not within the scope of section 1520(c)(1).

In this case, Goya submitted an incorrectly dated Certificate of Quota Eligibility which caused it to be invalid for the shipment of the subject entry. The incorrect submission was adverse to the importer because it resulted in the assessment of a higher duty rate for the imported raw sugar. The importer did not submit a protest under section 1514 within 90 days of the liquidation of the subject entry. Goya did submit a request for reliquidation under section 1520 (c)(1) alleging that a mistake in fact occurred as a result of the incorrect belief from part of a clerk who incorrectly believed that the 1998-1999 Certificate of Quota Eligibility covered the subject shipment of raw sugar.

The submission, in proper form of a valid Certificate of Quota Eligibility is necessary in order to determine whether a certain merchandise is entitled to quota status. It entails a legal determination in terms of the status that a certain merchandise will be accorded at the time of entry.

A quota allows a certain amount of goods to be imported during a certain period of time. A tariff rate quota allows for a pre-determined amount to be imported and entered at a reduced rate during a specified period. Once the quota has been filled the product can still be imported but the importer must pay the higher rate of duty. U.S. Note 5 to Chapter 17, HTSUS (1999) sets forth the allotment and duty rate for aggregate sugar entered. Title 15 C.F.R. Part 2011 – Allocation of Tariff-Rate Quota on Imported Sugars, Syrups and Molasses, 15 C.F.R. 2011. 101 states that Subpart A sets forth the terms and conditions under which certificates of quota eligibility will be issued to foreign countries that have been allocated a share of the U.S. sugar tariff-rate quota. It states that, except as otherwise provided, sugar imported from a foreign country may not be entered unless such sugar is accompanied by a certificate of quota eligibility. In 15 C.F.R. 2011.103, it states that a “valid and properly executed certificate of quota eligibility” must be presented to the appropriate customs official. Goya’s submission of an incorrectly dated certificate resulted in Custom’s denial of quota privileges on the subject entry. Under section 2011.105, the certificate of quota eligibility “shall only be applicable to the shipment of sugar for which it was executed and issued by the certifying authority”.

The importer asserts that an unidentified clerk submitted a 1998-1999 Certificate of Quota Eligibility believing that it would cover the quota period of 1999-2000. The protest states that their clerk “assumed the entry to be in order including the Certificate of Quota Eligibility (CQE)the quantity on the CQE matched the invoice quantity and the 1998/99 TARIFF RATE QUOTA PERIOD appeared to match the entry date.(T)he fact of the CQE indicating 1998/99 to be the entire calendar years of 1998 through the end of 1999 was indeed not correct.we were informed after liquidation that the CQE dates in fact reflect fiscal years and this CQE included only up to 30 Sept. 1999. As the document was signed 29 OCT 1999, covering fiscal year 1999, it appears that the document was invalid the moment it was signed.It is our contention the clerk believed the CQE to be valid by the dates on the face of the document and the wording therein, when in fact the dates and the very document itself was not valid. No evidence was submitted to support that assertion.

We note that Customs issued the CF 29 Notice of Rate Advance on July 18, 2000. It notified the importer that the referenced shipment was to be rate advanced because the Certificate of Quota Eligibility covered the wrong quota period. The CF 29 clearly put the protestant on notice that the certificate was invalid.

In discussing quota requirements, DMV USA, Inc. v. U.S. (2001 Ct. Int’l Trade LEXIS 105, Ct. Int’l Trade No. 2001-99, Slip. Op. 2001-99 23 Int’l. Trade Rep. (BNA) 1951 (August 10, 2001) appeal pending) examined the issue that, in order to qualify for quotas class priority and status, entry summaries must be presented in “proper form” to the appropriate Customs officer. Title 19 C.F.R. Part 132 pertains the administration of quotas. Section 132.1(b) of the Customs regulations states that for “tariff-rate quotas” permit a specified quantity of merchandise to be entered or withdrawn for consumption at a reduced rate during a specified period. “Presentation” means the “delivery in proper form to the appropriate Customs officer”. The phrase “in proper form” is not defined by any statute; however, there is ample guidance within the regulations in order to establish what is meant by “in proper form”. Specifically, “quota priority and status are determined as of the time of presentation of the entry summary for consumption, or withdrawal for consumption in the proper form (19 C.F.R. 132.11(a)). The DMV case specifically addressed the need for accuracy at the time the entry summary is presented with a claim for quota treatment. That is, because, at the time of entry, Customs has to make a legal determination as to whether certain merchandise is to be accorded quota-class priority and status upon the date and time an entry summary is presented in proper form. In the DMV case, the court found that the Plaintiff’s submission of documents was “not in proper form” because it failed to classify the merchandise under a subheading eligible for quota, failed to claim the appropriate rate of duty for quota class and failed to attach the proper estimated duties. In Goya’s case, the entry summary contained an invalid Certificate of Quota Eligibility . The DMV USA, Inc. case also mentions Fleshman v West 138 F.3d. 1429 (Fed Cir 1998) which relates specifically to a veteran’s denial of disability benefits simply because he had submitted an incomplete application. The Fleshman court found that the omission of certain “critical components” such as the applicant’s signature and address made the submission “not in proper form”. Like in the Fleshman case, the submission of a correctly dated quota certificate is a critical component of entry and it is “reasonably regarded as necessary” in order for Customs to determine whether its merchandise is entitled to quota-class priority and status.

HOLDING: The protest is hereby denied for failure to produce evidence to show that the error was correctable under 1520(c)(1).

Protest is hereby denied.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065 dated August 3, 1993, Subject Revised Protest Directive, this decision should be mailed by your office with Customs Form#19, to he protestant no later than 60 days from the date of this letter. Any reliquidation must be made prior to mailing this decision. Sixty days from the date of the decision, the Office of Rulings and Regulations will take steps to make the decision available to Customs personnel via the Customs Ruling Module in ACS and the public via Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant

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