HQ 561993 - Petition Nos. 1801-00-20024 and 20020; request for reliquidation; clerical error, mistake of fact, or other inadvertence; 19 U.S.C. 1520(c)(1); 19 CFR 134.25 - United States International Trade Commision Rulings

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HQ 561993

July 9, 2002

MAR-2 RR:CR:SM 561993 KSG

CATEGORY: MARKING

Port Director
U.S. Customs Service
4430 E. Adams Drive
Tampa, FL 33605

RE: Petition Nos. 1801-00-20024 and 20020; request for reliquidation; clerical error, mistake of fact, or other inadvertence; 19 U.S.C. 1520(c)(1); 19 CFR 134.25

Dear Director:

The above-referenced requests for reliquidation were forwarded to this office for further review. At the request of counsel, who filed a petition on behalf of Jugos del Sur SA and Sower SA, a conference was held on this matter on February 28, 2001.

FACTS:

This case involves bulk concentrated fruit juice from Argentina entered at the Port of Tampa, Florida. The protests in this case contest the assessment of marking duties. The first entry, made by Jugos del Sur SA ("Jugos"), on April 5, 1999, was for bulk concentrated pear juice. The second entry, made by Sower SA ("Sower"), on May 10, 1999, was for bulk concentrated apple juice. The juice involved in this case was sold or transferred. The major customers of the fruit juice are Nestle, Minute Maid, Tropicana and Mott.

Requests for Information (CF 28's) were sent to Jugos and Sower by Customs on June 9, 1999, stating: "A repackaging certificate, signed by a company official, may be required pursuant to 19 CFR 134.25/26. A negative response is required. A certificate must be port specific." Your office stated that no responses were received within 30 days. Second CF 28's were issued to both importers on August 12, 1999. Your office stated that no responses were received from the importers following the second CF 28's.

Since the petitioner failed to submit a repackaging certificate to Customs, a penalty was issued by means of a CF-5955A pursuant to 19 U.S.C. 1509 for failure to comply with 19 CFR 134.25/26. Marking duties were issued in a rate advance on the entries. Both entries were liquidated on May 12, 2000. A demand on the surety for the Juegos entry was issued on August 27, 2000, and for the Sower entry on October 22, 2000.

In response to the penalty notice, Sower and Jugos each submitted two separate letters to Customs. Sower submitted a letter to Customs dated March 20, 2000, stating that it did not repackage the juice, that the juice was imported in properly marked bulk containers and that the invoices and packaging provided to the purchaser or repacker at the time of sale or transfer indicated the country of origin of the juice. The second letter submitted, also dated March 20, 2000, was addressed to the purchaser of the juice and informed the purchaser of the country of origin of the juice, as stated on the invoices and packaging, and informed the purchaser that they were required to properly mark the container of the juices with the country of origin.

Jugos submitted a letter to Customs dated March 21, 2000, stating that it did not repackage the juice, that the juice was imported in properly marked bulk containers and that the invoices and packaging provided to the purchaser or repacker at the time of sale or transfer indicated the country of origin of the juice. The second letter submitted, also dated March 21, 2000, was addressed to the purchaser of the juice and informed the purchaser of the country of origin of the juice, as stated on the invoice and packaging, and informed the purchaser that they were required to properly mark the container of the juices with the country of origin.

No protest was filed within the 90-day time limit provided for in 19 U.S.C. 1514(c)(3)(B). Counsel seeks cancellation of the marking duties under 19 U.S.C. 1520(c)(1). This request for reliquidation was filed by counsel on October 11, 2000.

ISSUE:

Whether relief may be granted under 19 U.S.C. 1520(c)(1).

LAW AND ANALYSIS:

I. Assessment of Marking Duties

Section 304 of the Tariff Act of 1930 (19 U.S.C. 1304), as amended, provides that unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Section 1304(h) provides:

If at the time of importation any article (or its container, as provided in subsection (b) of this section) is not marked in accordance with the requirements of this section, and if such article is not exported or destroyed or the article (or its container, as provided in subsection (b) of this section) marked after importation in accordance with the requirements of this section (such exportation, destruction, or marking to be accomplished under customs supervision prior to the liquidation of the entry covering the article, and to be allowed whether or not the article has remained in continuous customs custody), there shall be levied, collected, and paid upon such article a duty of 10 per centum ad valorem, which shall be deemed to have accrued at the time of importation, shall not be construed to be penal, and shall not be remitted wholly or in part nor shall payment thereof be avoidable for any cause.

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements of 19 U.S.C. 1304. Section 134.33, Customs Regulations (19 CFR 134.33), lists particular articles (known as the J-list) which are excepted from individual country of origin marking. Fruit juice is a J-list article (a natural product) and therefore, the marking of the containers of fruit juice are set forth in 19 CFR 134.25 and not section 134.26, which governs non-J list articles.

The relevant provision, 19 CFR 134.25(a), provides, in relevant part, as follows:

Certification requirements. If an article subject to these requirements is intended to be repacked in new containers for sale to an ultimate purchaser after its release from Customs custody, or if the port director having custody of the article, has reason to believe such article will be repacked after its release, the importer shall certify to the port director that: 2) if the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall notify such purchaser or transferee, in writing at the time of sale or transfer, that any repacking of the article must conform to these requirements. The importer, or his authorized agent, shall sign the following statement.

CERTIFICIATE OF MARKING-REPACKED J-LIST ARTICLES AND ARTICLES INCAPABLE OF BEING MARKED

(Port of entry)___________ I, _________ of ________ certify that if the article(s) covered by this entry (entry no.(s) dated ), is (are) repacked in a new container(s), while still in my possession, the new containers, unless excepted, shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the container(s) will permit, in such manner as to indicate the country of origin of the article(s) to the ultimate purchaser(s) in accordance with the requirements of 19 U.S.C. 1304 and 19 CFR part 134. I further certify that if the article(s) is (are) intended to be sold or transferred by me to a subsequent purchaser or repacker, I will notify such purchaser or transferee, in writing, at the time of sale or transfer, of the marking requirements.

The certification statement may appear as a typed or stamped statement on an appropriate entry document or commercial invoice, or on a preprinted attachment to such entry or invoice; or it may be submitted in blanket form to cover all importations of a particular product for a given period (e.g., calendar year). If the blanket procedure is used, a certification must be filed at each port where the article is entered.

Section 134.25(c) provides that the certification statement shall be filed with the port director at the time of entry summary. Section 134.25(d) sets forth the notice to be provided to the subsequent purchaser or repacker:

NOTICE TO SUBSEQUENT PURCHASER OR REPACKER

These articles are imported. The requirements of 19 U.S.C. 1304 and 19 CFR Part 134 provide that the articles or their containers must be marked in a conspicuous place as legibly, indelibly and permanently as the nature of article or container will permit, in a such a manner as to indicate to an ultimate purchaser in the United States, the English name of the country of origin of the article.

Section 134.25(e) provides that failure to comply with the certification requirements in paragraph (a) may subject the importer to a demand for liquidated damages under 134.54(a) and for the additional duty under 19 U.S.C. 1304.

The purpose behind the certification requirement is to certify as to a future event, i.e., the repacking, sale or transfer of imported merchandise. Your office contends that a repackaging certificate in accordance with 19 CFR 134.25/26 was required in this case and the CF-28 was issued to request that the importer produce a certificate or demonstrate why one was not required.

Counsel for the protestant contends that Customs did not give the importers appropriate notice that certification was required. Counsel states that no CF 4647 was issued in this case and argues that such form is required. Counsel also argues that the March 20, 2000, and March 21, 2000, letters submitted to Customs prior to liquidation satisfy the requirements of 19 CFR 134.25.

The first issue presented in this case is whether a CF 4647 is required prior to the imposition of marking duties. The United States Customs Court ruled on this issue in A.N. Deringer, Inc. v. United States, 51 Cust. Ct. 21 (1963). The plaintiff argued that there was no liability for special marking duties unless and until the collector issued notice on Customs Form 4647. The court held that the notice provided by a CF 4647 is not a condition precedent to marking duty liability. The court stated that if "imported merchandise of foreign origin isnot marked, and not exempted, and if in such case the merchandise is not destroyed or exported under customs supervision, the marking duties may not be remitted or avoided for any cause. That is the law as Congress enacted it." Customs has also addressed this question and followed Deringer in HRL 734103, dated April 13, 1992, and HRL 559717, dated December 22, 1997. Based on the above court case, we find that a CF 4647 is not required prior to the imposition of marking duties.

In this case, bulk concentrated juice was imported which likely was not received by the ultimate purchaser in bulk form. See National Juice Products Association v. United States, 628 F. Supp 978 (CIT 1986), in which the court held that imported orange juice concentrate did not undergo a substantial transformation when converted into reconstituted orange juice and therefore, the retail packages had to be marked with the origin of the imported concentrate. Based on National Juice, it is likely that the repackagers were not the ultimate purchasers and the certificate was required to ensure that the packages received by the ultimate purchasers were properly marked with the origin of the juice concentrate. Therefore, the port director had reason to believe that the bulk fruit juice was going to be repackaged after importation. Pursuant to 19 CFR 134.25(a), the port director had the authority to require a repackaging certificate. Accordingly, it was proper for the port director to request a repackaging certification in this case.

By regulation, the importer must notify the purchaser or transferee at the time of sale or transfer in writing, using the notice language set forth in 19 CFR 134.25(d), of the country of origin marking requirements and pursuant to 19 CFR 134.25(a), must also certify to Customs that the importer will advise the purchaser or transferee of the marking requirement. In this case, the importer submitted copies of two letters from Jugos and from Sower, a letter addressed to Customs (dated March 20, 2000, and March 21, 2000) enclosing a copy of a letter addressed to the subsequent purchasers (dated March 20, 2000, and March 21, 2000).

The first issue to be addressed is whether the letter to Customs satisfies the certification requirements of 19 CFR 134.25. The letter addressed to Customs stated: 1) that the imported juice was not repackaged in new containers by Jugos or Sower; 2) that the juice was imported in properly marked containers; 3) that the invoices and imported bulk packaging furnished to the purchaser or transferee indicated that the country of origin of the juice was Argentina. Customs does not assert that Jugos or Sower repackaged the juice in question or that the juice was improperly marked when imported in bulk. While the record shows that the purchaser was notified of the country of origin marking requirement with respect to the goods, the certification to Customs did not include that fact as required pursuant to 19 CFR 134.25. Therefore, the certification to Customs was lacking in this respect.

Secondly, the issue of whether the letter to the purchaser or transferee satisfies the requirements of 19 CFR 134.25(d) must be addressed. The timeliness of the notice given to the purchaser or transferee is of critical importance. The purchaser or transferee must receive the required notice at the time of sale or transfer. If the purchaser or transferee receives this information after the sale or transfer, the information is of no value; the imported merchandise is not available to be correctly marked. While the March 20, 2000, and March 21, 2000 letters, which were addressed to the subsequent purchasers, provide the required notice set forth in 19 CFR 134.25(d), they were not timely sent. The date of sale or transfer of the juice was not cited in the March 20, 2000, and March 21, 2000, letters but it is apparent from the letters that the sale or transfer had already taken place. Providing this information to the subsequent purchaser after the sale or transfer to the re-packer does not comply with the regulation which requires the notice to be given at or before the sale or transfer. No evidence was submitted to show that the proper notification was provided to the subsequent purchaser at the time of sale or transfer.

Since neither the letters to the purchasers nor the letters to Customs satisfy the requirements set forth in 19 CFR 134.25, we find that marking duties were properly assessed in this case.
ll. Mistake of fact

The request for reliquidation under 19 U.S.C. 1520(c)(1) was timely filed.

Under 19 U.S.C. 1520(c)(1), Customs may reliquidate an entry to correct a clerical error, mistake of fact, or other inadvertence, not amounting to an error in the construction of a law and adverse to the importer, when certain conditions are met. Section 520(c)(1) has frequently been interpreted by the courts. It has been stated that "[a] clerical error is a mistake made by a clerk or other subordinate, upon whom devolves no duty to exercise judgement, in writing or copying the figures or in exercising his intention." See PPG Industries, Inc. v. United States, 7 CIT 118, 124 (1984). It has been stated that: "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 [and] [m]istakes of law, on the other hand, occur where the facts are known, but their legal consequences are not known or are believed to be different than they really are." Executone Information Systems v. United States, 96 F.3d 1383, 1386 (Fed Cir. 1996), citing Hambro Automotive Corporation v. United States, 66 CCPA 113, 118, 603 F.2d 850 (1979); see also, Degussa Canada Ltd. v. United States, 87 F.3d 1301 (Fed. Cir. 1996). Inadvertence has been defined as "an oversight or involuntary accident, or the result of inattention or carelessness, and even as a type of mistake." Aviall of Texas, Inc. v. United States, 70 F.3d 1248, 1249 (Fed. Cir. 1995), citing Hambro, supra.

The conditions required to be met under 19 U.S.C. 1520(c)(1) are that the clerical error, mistake or 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 of the entry. The relief provided for in 19 U.S.C. 1520(c)(1) is not an alternative to the relief provided for in 19 U.S.C. 1514; section 520(c)(1) only affords "limited relief in the situations defined therein." Phillips Petroleum Company v. United States, 54 CCPA 7, 11, C.A.D. 893 (1966), quoted in Godchaux-Henderson Sugar Co. v. United States, 85 Cust. Ct. 68, 496 F. Supp. 1326 (1980); See also, Computime Inc. v. United States, 9 CIT 553, 555, 622 F. Supp. 1083 (1985).

Counsel contends that Customs was not aware of the March 20, 2000, and March 21, 2000, letters when it liquidated the entries with marking duties on May 12, 2000, and that this is a mistake of fact under 19 U.S.C. 1520(c)(1). Counsel's argument is based on the assumption that the submission of these letters satisfies the requirements of 19 CFR 134.25.

As discussed above, Customs was aware of the March 20, 2000, and March 21, 2000, letters. However, as discussed above, the submission of these letters does not satisfy the requirements of 19 CFR 134.25. The certification requirements of section 134.25(a) require that the importer certify to Custom that if the goods are intended to be sold or transferred, the importer will notify the purchaser or transferee of the marking requirements. This certification would have no meaning if it is submitted to Customs long after the imported goods have been sold or transferred. Counsel's contention that the submission of the March 20 and March 21 letters would satisfy the regulation is incorrect; this argument involves the proper interpretation of the regulation and is outside the scope of 19 U.S.C. 1520(c)(1). There is no mistake of fact in this case.

The Court of International Trade stated in Computime, Inc. v. United States, supra, 9 CIT at 555 :

The courts, in cases interpreting section 520(c)(1), have consistently held that this section may only be used to correct mistakes of fact or inadvertence, such as clerical error or ministerial errors, and may not be used to rectify allegedly incorrect interpretations of the law.

In Hambro Automotive Corporation, supra, the court concluded that the failure to correctly appraise imported articles was a mistake of law and not properly brought under 19 U.S.C. 1520(c)(1). The court held in Fabrene, Inc. v. United States, 17 CIT 911 (CIT 1993), that Customs error in the classification of imported merchandise resulted from an error in the construction of the applicable law and that the importer could not seek to rectify Customs error in the construction of law under 1520(c)(1). See also, Boast, Inc. v. United States, 17 CIT 114 (CIT 1993), B.S. Livingston & Co., Inc. v. United States, 13 CIT 889 (CIT 1986); SCA International, Inc. v. United States, 14 CIT 59 (CIT 1990); and NEC Electronics U.S.A. Inc. Electronics Arrays, Div. v. United States, 709 F. Supp. 1171 (CIT 1989).

The petitioner in this case has not demonstrated that any factual or clerical error was made with respect to the entries involved in this case. The letters, having been written in the past tense with respect to the sale, don't show that there was compliance with 19 CFR 134.25(a) or (d). Therefore, the liquidation with imposition of marking duties was not in error. In order to invoke action under 19 USC 1520(c)(1), the claimant must show that there was an error in the liquidation and the protestant failed to do so. This question is properly raised by a timely protest filed pursuant to 19 U.S.C. 1514. In addition, if the protestant believes that the interpretation of the regulation as to the time when the notice had to be given is in error, an error of that nature is outside the plain language of 19 USC 1520(c)(1) which provides that a correctable error not amount to an error in the construction of law.

HOLDING:

The petitioner has not demonstrated that any factual or clerical error was made with respect to the two entries involved in this case. Relief may not be granted under 19 U.S.C. 1520(c)(1) in the instant case.

You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. Sixty days from the date of this decision, the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and to the public via the Diskette Subscription Service, the Freedom of Information Act, and other public access channels.

Sincerely,

Myles B. Harmon, Acting Director
Commercial Rulings Division

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