HQ 561870 - Protests Nos. 2608-97-100007 and 2608-97-100014; timeliness of protests; validity of claim under 19 USC §1520(d); protest of denial of claim under 19 U.S.C. §1520(d) - United States International Trade Commision Rulings

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HQ 561870

September 4, 2002

CLA-2 RR:CR:SM 561870 JLV

CATEGORY: NAFTA CERTIFICATE OF ORIGIN

TARIFF NO.:

Director, Port of Nogales
U.S. Customs Service
Nogales, Arizona 85621

RE: Protests Nos. 2608-97-100007 and 2608-97-100014; timeliness of protests; validity of claim under 19 USC §1520(d); protest of denial of claim under 19 U.S.C. §1520(d)

Dear Port Director:

You have forwarded protests Nos. 2608-97-100007 and 2608-97-100014 which were filed on September 15,1997, against your decision to deny a claim for tariff preferences under the North American Free Trade Agreement (NAFTA). The protests cover the same entries and issues. The only difference between the protests is the name of the protesting party. In No. 2608-97-100007 the protestant is the importer of record, Power-One, Inc. In No. 2608-97-100014 the protestant is the exporter, Poder Uno de Mexico, S.A. de CV. Our decision follows.

FACTS:

Protests Nos. 2608-97-100007 and 2608-97-100014 were filed on September 15,1997, and concern the same 14 entries. The factual information and arguments presented in these two protests are identical. In No. 2608-97-100007 the protestant is Power-One, Inc., the importer of record. In No. 2608-97-100014 the protestant is Poder Uno de Mexico, S.A. de CV., the exporter.

1. Entries: dates of entry, extension of liquidation and liquidation

The protests cover 14 entries. In an attachment to the protest, these entries are identified by the information in the first three columns of the table that follows. The fourth column indicates the information taken from the electronic data collection system (ACS) of the Customs Service.

Entry No.

Date of Entry
Liquidation Date (as indicated by Protestant) Liquidation Date (as indicated by ACS records) xxxxx953
06/07/94
06/15/97
10/10/97 xxxxx134
06/08/94
06/15/97
10/10/97 xxxxx373
06/09/94
06/15/97
10/10/97 xxxxx738
06/13/94
06/22/97
10/10/97 xxxxx803
06/13/94
06/22/97
10/10/97 xxxxx977
06/14/94
06/22/97
10/10/97 xxxxx207
06/15/94
06/22/97
10/10/97 xxxxx447
06/16/94
06/22/97
10/10/97 xxxxx637
06/17/94
06/22/97
10/10/97 xxxxx975
06/20/94
06/29/97
10/10/97 xxxxx221
06/21/94
06/29/97
10/10/97 xxxxx437
06/22/94
06/29/97
10/10/97 xxxxx726
06/24/94
06/29/97
10/10/97 xxxxx647
06/24/94
06/29/97
10/10/97

The protestant claims that the entries were liquidated during the dates of June 15, 1997, through June 29, 1997. The entries concern various wire harnesses, power supplies and transformers imported from Mexico. At the time of each entry, no claim for NAFTA tariff preference was made. Subsequently, in a letter dated December 20, 1994, but not received by Customs until January 18, 1994, the importer filed a claim under 19 U.S.C. §1520(d) for preferential tariff treatment under NAFTA for all entries of wire harnesses, power supplies and transformers during 1994. The claim for NAFTA preference was ultimately denied by Customs and the entries were liquidated at the rate of duty in the column “General” in Column 1 of the Harmonized Tariff Schedule (HTS).

As indicated by the protestant, liquidation of the entries was extended by Customs. The protestant has identified two extensions. Specifically, protestant alleges that the first extension of the entries took place between June 17, 1995 and August 19, 1995, arguably after the entries would have been liquidated by operation of law. The protestant then identifies a second extension which is alleged to have taken place between June 15, 1996 and June 29, 1996, and by which liquidation of the entries would have been extended to June 15 through June 29, 1997, thereby making the protest timely. However, the alleged factual information appears to be contrary to information maintained by Customs in the ACS database.

Even if we were to assume that there were only two extensions, as alleged by protestant, the dates of liquidation after the alleged second extension would occur between June 7 and June 24, 1997, depending on the original date of entry. However, based on the information taken from ACS, there appear to have been three extensions. The following table indicates the dates on which liquidation was extended for each of these entries:

The information taken from ACS also indicates that these entries were liquidated on October 10, 1997.

Issues: validity of extension, denial of §1520(d) claim, NAFTA eligibility

The protestant submits three arguments as the basis for allowing the protest. First, as a procedural matter, the protestant argues that, based on the schedule of dates submitted with the protest, the protest is timely filed because the entries would have liquidated by operation of law at the end of the second extension (according to the dates submitted by the protestant) and the protest was filed after those dates by which liquidation was deemed to have occurred by law.

Second, the protestant argues that Customs denied the post-entry claim for NAFTA preference without complying with the regulatory requirements of 19 CFR §§181.75 and 181.76, i.e., the CF 29 notice of February 18, 1997, did not satisfy the regulatory requirements for a valid negative determination of NAFTA eligibility for the following reasons:

The notice fails to provide specificity as to the RVC The notice fails to state fully the findings of fact and the legal basis for the determination (no reference to RVC) The notice fails to provide the producer to make further submissions regarding the post-entry claim The notice fails to give the importer or exporter notice of the right to protest the negative determination

Finally, protestant offers additional information on which the protestant argues that the goods satisfy the NAFTA rule of origin and, accordingly, are originating goods. Specifically, the protestant argues that, based on newly prepared information which corrects previous irregularities alleged by Customs, the wire harnesses, power supplies and transformers satisfy the applicable RVC requirements. No new Certificate of Origin has been submitted because the protestant affirms the Certificate of Origin presented to Customs at the time of the verification by Customs.

The Port Director submits additional information and documents with respect to several requests by Customs for information subsequent to the on-site visit and verification. The agreed on-site visit took place on December 12 and 13, 1995. After the visit, Customs issued a Form 28, dated December 19, 1995, in which Customs requested specific RVC information on the wire harnesses because it was apparent, based on information obtained during the visit, that the goods would not qualify under the change-in-tariff rule as apparently claimed by the producer. The following events, which took place after the issuance of the Form 28 on December 19, are briefly summarized as follows:

January 18, 1996: Customs issues reminder regarding the request for specific information; gave exporter 20 days to submit information

February 20, 1996: Customs issues CF 29 on proposed action and intent to issue negative determination on wire harness and gives exporter 30 days to provide additional information

February 22, 1996: exporter indicates that additional information will be submitted within 30 days

March 5, 1996: Customs outlines the problems and makes request for specific information on RVC calculations with regard to power supplies and transformers because the goods do not qualify under change in tariff rule; gives 30 days to provide information

November 21, 1996: Customs issues CF 29 on proposed action and intent to issue negative determination on power supplies and transformers because RVC information not submitted; gives 30 days to provide information

February 18, 1997: Customs issues CF 29s on action to be taken and denial of all NAFTA claims made during 1994 and 1995

April 11, 1997: Customs issues CF 29, denial of NAFTA claim based on negative determinations (see Feb 20, 1996, for harnesses; see Nov 21, 1996 for transformers and power supplies

May 5, 1997: Exporter submits information on products

The Port Director has forwarded these protests for further review and decision.

ISSUES:

Are Protests Nos. 2608-97-100007 and 2608-97-100014 timely filed?

If the protests are timely filed, is the claim for NAFTA tariff preference under 19 U.S.C. §1520(d) timely filed?

If so, is the denial of the NAFTA claim sufficient under the standards set out in Customs Regulations at 19 CFR §§181.75 and 181.76?

LAW AND ANALYSIS:

First, the two protests concern the same entries and argue the same issues. They were filed on the same day by counsel for the two protestants, one of whom is the importer and the other of whom is the exporter. 19 U.S.C. § 1514(c)(1) provides, in pertinent part, as follows:

Only one protest may be filed for each entry of merchandise * * * separate protests filed by different authorized persons with respect to any one category of merchandise, or with respect to a determination of origin under section 3332 of this title, that is the subject of a protest are deemed to be part of a single protest.

Therefore, these protests will be considered as one protest.

Under 19 U.S.C. §1514(c)(3) a protest of a decision, order or finding described in subsection (a) of that section
shall be filed with the Customs Service within ninety days after but not before— (A) notice of liquidation or reliquidation, or (B) in circumstances where subparagraph (A) is inapplicable, the date of the decision as to which protest is made.

This provision is implemented in §174.12(e) of the Customs Regulations.

The protests were filed on September 15, 1997. There is agreement on this fact. The date of liquidation of the entries is claimed by the protestant to be a date on which the entries would have liquidated by operation of law after a second extension of liquidation by Customs. However, the facts alleged by the protestants are controverted by the dates recorded in ACS, the electronic database maintained by the Customs Service.

The ACS data indicates that there were three extensions of liquidation, the first of which were filed over several weeks during June 1994. The dates for the extended liquidation were in June 1996, one year after the statutory period for liquidation. The second extension was filed in 1995 and extended the liquidation dates to June 1997. The third extension was filed in 1996 and extended the dates of liquidation to June 1998.

Section 504(a) of the Tariff Act, as amended, (19 U.S.C. §1504(a)) provides, in pertinent part, that an entry of merchandise not liquidated within one year from the date of entry of such merchandise shall be deemed liquidated. Subsection (b)(1) of §1504 provides an exception by which the period for liquidation may be extended by giving notice of such extension to the importer, if,

(1) the information needed for the proper appraisement or classification of the merchandise * * * is not available to the Customs Service; * * *

Furthermore, in accordance with 19 U.S.C. §1504(b) and with the Customs regulations issued pursuant to §1504 (19 CFR §159.12), the Port Director may extend the dates of liquidation for successive one-year periods, not to exceed three years. Under 19 CFR §159.12(d) and (e), the dates for liquidation of the entries had been timely and successively extended to June 1998.

Based on the facts determined by the information maintained on ACS, the date of liquidation for each of these entries is October 10, 1997. Since the protests were filed on September 15, 1997, they are premature and not timely filed as required under 19 U.S.C. §1514(c)(3)(A) as implemented by 19 CFR §174.12(e)(1).

In view of the fact that the protests are untimely and, therefore, the protests are to be denied, we do not address the other questions raised in the protests. We do note, however, that the importer and exporter seemed to have been made fully aware of the specific information requested by Customs, as well as the reasons for requesting for the information. Were it necessary to address the legal sufficiency of Customs actions under the regulatory requirements of 19 CFR §§181.75 and 181.76, we are not convinced that (1) the notice given by Customs, (2) the specificity as to the reasons for requesting the information, (3) the notice of intent to deny claim if information is not submitted, and (4) the attempt to give every opportunity to provide the information prior to issuing (5) a written notice of denial, would not satisfy the regulatory requirements. It would appear that Customs did give the exporter and importer proper notice and provided ample opportunity for compliance with the requests prior to issuance of the written denial on February 18, 1997 and April 11, 1997.

HOLDING:

The protests are untimely because they were not filed within the time periods required under 19 U.S.C. §1514(c)(3) and 19 CFR §174.12(e). The protests should be 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.

Sixty days from the date of the decision, 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.gov and by means of the Freedom of Information Act and other methods of public distribution.

Sincerely,

Myles B. Harmon

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