HQ 229504 - Application for Further Review of Protest number 0901-01-100473; Allin Rae Bridal Accessories; 19 USC § 1520(c); 19 USC § 1514; bridal gowns; NAFTA eligible; Tariff Preference Level Quota; TPL Certificates Of Eligibility; T.D. 95-98 - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 2002 HQ Rulings > HQ 229414 - HQ 547435 > HQ 229504

Previous Ruling Next Ruling
HQ 229504

September 4, 2002

LIQ-9-01 RR:CR:DR
229504 RDC

CATEGORY: PROTEST

U.S. Customs Service
111 W. Huron Street, Room 603
Buffalo, New York 14202
Att: Protest Review Officer, Arthur J. Lipp

RE: Application for Further Review of Protest number 0901-01-100473; Allin Rae Bridal Accessories; 19 USC § 1520(c); 19 USC § 1514; bridal gowns; NAFTA eligible; Tariff Preference Level Quota; TPL Certificates Of Eligibility; T.D. 95-98

Dear Mr. Lipp:

On March 29, 2002, Protest number 0901-01-100473 was forwarded to this office for further review. We have considered the evidence provided and the points raised by your office and the Protestant. Our decision follows.

FACTS:

The Protestant, Allin Rae Bridal Accessories (“Allin Rae”) is the importer of record for the protested entries. Allin Rae protests the denial of its Petition for Reliquidation of approximately 175 entries. According to the Protestant, the entries at issue consisted of bridal gowns, the outer shell of which was from Japan and the support fabrics (including the lining, crinoline and canvas) were from Canada and the US. The bridal gowns were entered between March and December, 1998, with a claim for preferential tariff treatment as originating goods under the NAFTA (North American Free Trade Agreement).

The CF 7501 for protested entry numbers 110-xxxx483-1, 110-xxxx737-0, 110-xxxx440-1, 110-xxxx430-1 and 110-xxxx484-1 are included as evidence. These entry summaries (CF 7501s) show the stated merchandise, namely “shawls, etc.,” or “dress, synthetic fiber” or “other headgear” and a corresponding tariff number. In each case the designation “CA” immediately precedes the tariff number in column 28. The tariff rate for each of these line items is listed as “free.” These entry summaries for the example protested entries show that a claim for preferential tariff treatment as originating goods under the NAFTA was made at the time of entry for each of these entries per 19 CFR § 181.21, by including the “symbol ‘CA’ for a good of Canada, as a prefix to the subheading of the HTSUS under which each qualifying good is classified.” The Port has also supplied a copy of the CF 7501 for entry number 110-xxxx430-1 as liquidated. The rate of duty for the “dress, synthetic fiber” apparel has been changed from free to 16.6 percent.

Also provided are five copies of Certificates of Eligibility for the NAFTA tariff rate issued by the Canadian Government. It is unclear how the certificates are related to the entries. Certificate number 9034708 was issued March 30, 2000; Certificate number 9034713 was issued April 10, 2000; Certificate number 9034719 was issued April 10, 2000; Certificate number 9034731 was issued April 10, 2000; and Certificate number 9034746 was issued April 12, 2000.

Other documents are included in the file as evidence. A “Declaration of Manufacturer / Producer, Exporter or Importer of Textiles and Textile Products” executed by the President of Allin Rae certifies that the merchandise imported with entry number 110-xxxx430-1 was subjected to manufacturing or processing operations in, and / or incorporate materials originating in USA, Japan, Canada, Taiwan and China. The goods on the declaration are described as hats; artificial flowers and hair ornaments; veils; and wedding gowns. This declaration appears to be dated July 7, 1997. An invoice from Allin Rae as the seller / exporter describes goods as: hair ornaments, hats, veils, gowns and states that the country of origin is Canada. Also included are numerous poor quality, thus barely legible copies of invoices from Allin Rae to, apparently, retailers.

The Port has supplied a narrative of events and documents concerning Allin Rae and its entries of wedding gowns which claimed preferential tariff treatment as originating goods under the NAFTA upon entry. The communications between the Port and the Protestant began in December, 1998, and involved numerous entries of wedding apparel claiming preferential tariff treatment as originating goods under the NAFTA at entry. Some of the entries which are the subject of these communications are not included in the instant Protest but the goods and issues are identical to those at issue here. The narrative supplied by the Port states that the TPL certificates were received in December, 1999.

Since the TPL certificates were not issued until March and April, 2000 the import specialist was contacted to resolve the apparent discrepancy between the time the certificates were received and the time that they were issued. The import specialist stated that the December, 1999 date was based on the Protestant's assertion rather than any independent evidence possessed by Customs. The import specialist also stated that he focused on the effective dates, the tariff description and the permit numbers on the certificates rather than the issue date or date of receipt. The import specialist also stated that there was nothing on the certificates which would indicate to which entry it applied and that a cross reference between the certificates and the entries had to be provided to Customs by the importer's broker.

By letter dated December 10, 1998, the Port advised Allin Rae that, regarding entry number 110-xxxx910-3 (not included in this Protest), it did not have enough information to grant NAFTA origin. A copy of the NAFTA Certificate of Origin and an explanation of how the imported textiles qualified as NAFTA originating was requested and supplied. On January 22, 1999, Allin Rae was sent a CF 29 advising it that the wedding dresses entered did not qualify as NAFTA originating because the fabric was imported from Japan. This entry was thus denied the preferential tariff treatment under NAFTA claimed at entry and the duty rate on these wedding gowns was advanced from free to 16.6 percent. In February 1999 Allin Rae indicated to the Port that it was endeavoring to obtain Certificates of Eligibility for tariff preference level (TPL) quota from the Canadian government for the entries for which NAFTA originating preferential tariff treatment was denied.

On June 17, 1999, by Notice of Action, Allin Rae was informed that the subject protested entries, among others, were denied the NAFTA originating preferential duty rate because the blanket Certificate of Origin for 1998 could not be verified. In fact, the wedding dresses did not qualify as originating under the NAFTA requirements – some of the fabric used was the product of Japan – and therefore were not eligible for a NAFTA Certificate of Origin. The Protestant states,
as soon as it was determined that these gowns were NAFTA eligible, as opposed to NAFTA originating, Allin Rae contacted its broker, Starbor / Fritz, which agreed to obtain the necessary TPL Certificates of Eligibility from the Canadian government and submit them to Customs.

However, “through some clerical error or other inadvertence on the part of the broker, the TPL Certificates were obtained, but were not submitted to Customs prior to liquidation.” On December 10, 1999, by letter, the president of Allin Rae informed the Port that it was aware some of the TPL certificates had been delivered to Customs and that Allin Rae was working with its broker to obtain the remaining required certificates. Also in that letter Allin Rae stated that it would submit payment for the entries for which Customs had no certificates.

According to Customs automated data collection system (ACS) the protested entries were extended once on January 26, 1999, and liquidated on August 27, 1999, without the granting of the preferential tariff treatment on the goods because the required TPL Certificates of Eligibility were not filed with Customs. After liquidation “a second clerical error or other inadvertence occurred on the part of the broker in failing to file the TPL Certificates within 90 days of liquidation.” According to the Protestant the required Certificates were provided to Customs in December, 1999.

On April 9, 2001, Customs received a Petition for Reliquidation per 19 USC § 1520(c)(1) from Allin Rae’s counsel. The Protestant states that this Petition was denied on August 10, 2001. On November 7, 2001, Allin Rae filed this Protest number 0901-01-100473 which protests the denial of its Petition for Reliquidation per 19 USC § 1520(c). The Protestant’s Petition for Reliquidation per 19 USC § 1520(c) requested the re-liquidation of these entries - which were denied NAFTA preferential tariff treatment - to correct the clerical error or other inadvertence on the part of its broker in failing to submit the required TPL Certificates.

ISSUE:

Does the broker’s untimely filing of the Certificates of Eligibility for Tariff Preference Level quota constitute a clerical error, mistake of fact, or other inadvertence within the meaning of 19 USC §1520(c)?

LAW AND ANALYSIS:

We note initially that the issue protested, “the refusal to reliquidate an entry under § 1520(c)” is protestable per 19 USC § 1514(a)(7). Further, the instant Protest was timely filed, i.e., within 90 days of the decision to deny the § 1520(c) Petition (19 USC § 1514(c)(3)). The Protestant states that the subject § 1520(c) Petition was denied on August 10, 2001, and this Protest was filed on November 7, 2001. However, it appears that the Protestant’s original Petition for Reliquidation per 19 USC § 1520(c)(1) was untimely.

The subject entries liquidated on August 27, 1999, but the Petition was not received by Customs until April 9, 2001. Section 1520(c)(1) requires that the “error, mistake, or inadvertence [be] brought to the attention of the Customs Service within one year after the date of liquidation . . . .” Therefore, the Protestant had until August 27, 2000, to bring the error, mistake or inadvertence to the attention of Customs per § 1520(c)(1). Allin Rae argues that
as evidenced by the submission of the original TPL Certificates in connection with these entries in December 1999, as well as other communications with Customs, regarding the error on the part of the broker, within the one-year limitation

“this claim was properly brought to the attention of the appropriate Customs officer within one year after the date of liquidation.” However, we are not convinced that the Protestant supplied the required certificates in December, 1999. The five certificates included as evidence were not issued by the Canadian government until March and April 2000. These certificates could not have been submitted to US Customs months before they were issued. Therefore, it is unclear when the certificates were actually submitted.

Moreover, the Protestant is required to assert the existence of a clerical error, mistake of fact or other inadvertence to Customs" within the proper time and with sufficient particularity to allow remedial action" (ITT Corporation v. United States, 24 F.3d 1384, 1387 (Fed. Cir. 1994) quoting Hambro Automotive Corp. v. United States, 458 F. Supp. 1220, 1222 (Cust. Ct. 1978)). Under ITT then, in the Protestant’s case, the broker’s filing of the TPL certificates – whenever that occurred – in no way provided Customs notice that a “clerical error, mistake of fact, or other inadvertence” had occurred during the entering of these goods. The late filing of the TPL Certificates gave Customs notice that the TPL Certificates were filed late – nothing more. And in fact since the late filing appears to be due to the Protestant’s misapplication of the law regarding NAFTA origin could have determined, correctly, that 19 USC § 1520(c)(1) did not apply.

Moreover, the Protestant never alleges that it asserted the existence of a clerical error, mistake of fact or other inadvertence to Customs within the proper time and with sufficient particularity to allow remedial action. Allin Rae merely states that “other communications with Customs” occurred. Such a statement does not constitute asserting the existence of a “clerical error, mistake of fact, or other inadvertence” with sufficient particularity to allow remedial action. See also HQ 226437 (March 24, 1997) (the Customs Service is without discretionary authority to waive the 19 USC § 1520(c) statutory time requirement); and HQ 224385 (May 24, 1993) (the petition filed under 19 USC § 1520(c)(1) is untimely in this case because it was filed beyond one year from the date of liquidation”). It is clear then, because Allin Rae did not bring the asserted error or mistake or inadvertence to Customs’ attention within one year of liquidation that its Petition was untimely and thus does not meet the statutory requirements. Customs is thus without authority to reliquidate the disputed entries.

Notwithstanding that Customs lacks the authority to reliquidate the disputed entries, it is the opinion of the Port that this Protest warrants further review; we disagree that further review is warranted. Under 19 USC § 1515, “[u]pon the request of the protesting party . . . a protest may be subject to further review by another appropriate customs officer, under the circumstances and in the form and manner that may be prescribed . . . in regulations." 19 CFR § 174.24 provides for further review of a protest when, inter alia, “the decision against which the protest was filed” is included in this section. The Protestant seeks further review per 19 CFR § 174.24(c) which provides for further review when the decision against which the protest was filed,

(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;

(§ 174.24(c)). Thus in order to warrant further review per § 174.24(c) a protestant must identify the matters previously ruled upon by the Commissioner of Customs, his designee or the courts and further, explain what facts or legal arguments the protestant contends were not presented at the time of the decision. Allin Rae supplies neither the decisions nor the new facts or legal arguments it contends were not considered when such decisions were made. Therefore, the subject Application for Further Review is fatally flawed and this Protest does not qualify for further review per § 174.24(c).

In the alternative the Protestant seeks further review per 19 CFR § 174.24(d) which states,

(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

(19 CFR § 174.24(d)). We have no evidence that an internal advice on this issue was ever requested but denied as required by § 174.24(d). Consequently, the criteria for further review as set out in 19 CFR § 174.24 have not been met by the subject Application. Since this Protest does not warrant further review we will treat this application as a request for internal advice per 19 CFR § 177.11.

The Protestant’s entries were denied NAFTA preferential tariff treatment because the required Certificates of Eligibility for the Tariff Preference Level (TPL) were not submitted to Customs within the requisite time. 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 (T.D. 95-98).

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). Further, in HQ 228897 (March 7, 2001) we held that an importer had until liquidation to supply the Certificate of Eligibility, and the opportunity to request delay of liquidation if necessary. Thus, an importer whose entries are eligible for TPL treatment but does not file the certificates at entry may 1) submit the certificates any time before final liquidation; 2) file a protest within 90 days of liquidation; 3) request extension of liquidation. The Protestant failed to act on any of these options. Instead Allin Rae requests reliquidation of the protested entries per 19 USC § 1520(c)(1).

The Protestant alleges that the TPL certificates were submitted to Customs in December, 1999, but the protested entries were liquidated on August 27, 1999. Thus, there appears to have been no mistake in the liquidation. Customs liquidated the entries properly without TPL rates of duty because it had no TPL certificates at that time. Allin Rae’s remedy then was to file a protest within 90 days of liquidation or request extension of liquidation. The protestant’s failure to avail itself of the proper remedies in this situation is not correctable per 19 USC § 1520(c)(1). See Occidental Oil & Gas Co. v. United States, (13 C.I.T. 244; Ct. Intl. Trade (1989)).

Section 520(c) of the Tariff Act of 1930 as codified at 19 USC § 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 the protested entries if the Protestant’s failure to timely submit the TPL certificates was due to a clerical error, mistake of fact, or other inadvertence which does not amount to an error in the construction of a law, is adverse to Allin Rae and manifest from the record or established by documentary evidence (19 USC § 1520(c)(1)).

The Protestant states, “the broker’s delay in filing the TPL certificates with Customs, was the result of a clerical error and an inadvertence.” Further, Allin Rae claims “through some clerical error or other inadvertence on the part of the broker, the TPL certificates were obtained but were not submitted to Customs prior to liquidation.” And finally, the Protestant submits that, after liquidation “a second clerical error or other inadvertence occurred on the part of the broker in failing to file the TPL certificates within 90 days of liquidation.” The Protestant does not explain the nature of the clerical error or inadvertence nor the facts or circumstances surrounding the error or inadvertence.

First the Protestant does not even describe the clerical error or inadvertence which caused its failure to file the TPL certificates. Further, Allin Rae provides no documentary evidence whatsoever of the clerical error or other inadvertence committed by its broker; nor is the clerical error or other inadvertence “manifest from the record” as required by the statute. In this regard, Allin Rae’s assertions do not meet the requirement of § 1520(c) that the error be “manifest from the record or established by documentary evidence” (19 USC §1520(c)(1)) (see also Bar Bea Truck Leasing Co. Inc. v. U.S., 5 CIT 124, 126 (Ct. Int’l Trade 1983)).

In Executone Information Systems v. United States, in which an importer failed to provide the required documentation to Customs necessary to obtain duty free treatment for its goods (19 C.I.T. 960; 896 F. Supp. 1235 (Ct. Intl. Trade 1995)) the Court of International Trade denied the importer relief and stated,
in order to protect the viability of protests under 19 USC §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, Allin Rae has not done that which the CIT called the very least: “prove that, but for a mistake of fact or other inadvertence, proper documentation would have been filed at the time required by law.” Allin Rae was unable to supply the Certificate of Eligibility before liquidation became final on August 27, 1999, because its right to the preference does not appear to have existed until the TPL certificates were issued in March and April 2000.

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 time of entry. In contrast, the wedding apparel at issue here could not have been entered at the NAFTA TPL rate on the entry dates because Allin Rae had no right to the TPL at the time of entry.

Moreover, the Protestant provides no evidence whatsoever to support its claim of “some error or inadvertence.” See also Executone, supra, 96 F. 3d at 1388, in which the Court also found 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)." Therefore, without evidence the Protestant’s § 1520(c)(1) Petition must fail.

Additionally, it is evident that if any error was made by the Protestant it as an error in the construction of a law. The protested entries were entered between March and December, 1998, with a claim for preferential tariff treatment as originating goods under the NAFTA. It is clear from the Declaration of Manufacturer / Producer, Exporter or Importer of Textiles and Textile Products” executed by the President of Allin Rae, certifying that the merchandise imported was subjected to manufacturing or processing operations in, and / or incorporate materials originating in USA, Japan, Canada, Taiwan and China, that Allin Rae was aware of the nature of the goods and still thought they were eligible for preferential tariff treatment as originating goods under NAFTA. In fact, the Protestant states that “as soon as it was determined that these gowns were NAFTA eligible, as opposed to NAFTA originating” it began to secure the TPL certificates. Therefore it is evident that the Protestant misapplied the law regarding eligibility for originating goods under the NAFTA and it was this error in the construction of the law that caused the delay in supplying the TPL certificates. Such an error in the construction of a law is not remedial by § 1520(c)(1).

Further, the wedding apparel at issue was entered between March and December, 1998; these entries were not liquidated until August 27, 1999. It is evident from the correspondence between the Port and the Protestant that no error or inadvertence kept Allin Rae from submitting the certificates during this time – Allin Rae was endeavoring to obtain the certificates from the Canadian government. As is evidence by Allin Rae’s president’s letter dated December 10, 1999, the Protestant was still trying to obtain some of the required TPL certificates at least one year after the apparel was entered. Further, the TPL certificates included as evidence were issued in March and April of 2000. Clearly, the evidence supports the conclusion that no clerical error or inadvertence prevented the Protestant either from filing the TPL certificates at entry or submitting the certificates any time before final liquidation or filing a protest within 90 days of liquidation or requesting an extension of liquidation.

HOLDING:

The Petition for Reliquidation per 19 USC § 1520(c)(1) was not filed within one year of liquidation therefore Customs has no authority under 19 USC § 1520(c)(1) to reliquidate the disputed entries; further review per 19 CFR § 174.24 is not warranted; no evidence to support its Petition for Reliquidation is present as required by § 1520(c)(1). Therefore the Protest should be DENIED IN FULL.

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,

Myles Harmon, Acting Director

Previous Ruling Next Ruling