HQ 230116 - Protest/AFR # 2506-03-100016; 19 U.S.C. §§ 1504(b); 1520(c)(1) & 1484(b)(1); notice of extension; reconciliation of entries; mistake of fact - United States International Trade Commision Rulings

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HQ 230116

January 29, 2004

LIQ-9-01 RR:CR:DR 230116 LLB

Category: LIQUIDATION

Port Director
Customs and Border Protection
9777 Via De La Amistad
San Diego, CA 92713
Attn: Nancy Toennies

RE: Protest/AFR # 2506-03-100016; 19 U.S.C. §§ 1504(b); 1520(c)(1) & 1484(b)(1); notice of extension; reconciliation of entries; mistake of fact

Dear Ms. Toennies:

The above-referenced protest has been forwarded to our office for further review. We have considered the points raised by the protestant, A & E Products Group, and your office. Our decision follows.

Facts

The subject entry is a reconciliation entry, which consists of about 1,955 underlying entries, the summaries for which, according to the Automated Commercial System (ACS), were filed between April 13, 2000 and January 9, 2001. The reconciliation entry was dated July 17, 2001; however, according to the port’s date stamp and ACS, it was not received until August 3, 2001. In addition, the protestant filed a letter dated July 17, 2001, which the port also received on August 3, 2001, requesting that the port “withhold liquidation” on the subject reconciliation entry.

On December 21, 2001, the port liquidated the entry as entered. On July 1, 2002, the protestant filed a request for reliquidation pursuant to 19 U.S.C. § 1520(c)(1), which was denied on November 3, 2002. A protest was filed thereto on January 22, 2003, in which the protestant argued that the port, due to mistake of fact or inadvertence, liquidated the entry despite the protestant’s request to “withhold liquidation”, and therefore, the entries should be reliquidated under 19 U.S.C. § 1520(c)(1).

We note that the request for reliquidation was timely filed insofar as it was filed within 1 year of the December 21, 2001, liquidation date. See 19 U.S.C. § 1520(c)(1). Additionally, the protest was timely filed insofar as it was filed within 90 days of the November 3, 2002, denial of the protestant’s request for reliquidation and the matter is protestable. See 19 U.S.C. § 1514(c)(3)(B) & (a)(7).

Issue

Whether relief is available to the protestant pursuant to 19 U.S.C. § 1520(c)(1)

Law and Analysis

The protestant argues that the Bureau of Customs and Border Protection (CBP) through clerical error or other inadvertence, liquidated the entry despite the protestant’s request to “withhold liquidation”, and therefore, the entries should be reliquidated pursuant to 19 U.S.C. § 1520(c)(1) which provides:

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 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 Customs Service within one year after the date of liquidation . . .

[M]istakes 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)(emphasis in original) citing Hambro Automotive Corporation v. United States, 66 CCPA 113, 118, C.A.D. 1231, 603 F. 2d 850 (1979); see also, Degussa Canada Ltd. v. United States, 87 F. 3d 1301 (Fed. Cir. 1996). A “clerical error” has been stated by the courts to be “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 C.I.T. 118, 124 (1984). “Inadvertence connotes inattention, oversight, negligence, or lack of care.” 94 Treas. Dec. 244, 245-6, T.D. 54848 (1959). “It should be noted that ‘clerical error, mistake of fact, or other inadvertence’ are not necessarily mutually exclusive terms. In other words some "mistakes of facts" also might be clerical errors or other inadvertence; or some "clerical errors" also might be mistakes of fact or other inadvertence, and so on.” Id.

The reason the port denied the petition is not apparent from the denial. The denial consists of a date stamp on a copy of the petition indicating that the petition is denied with a signature and a date. However, the summons submitted with the protest states that CBP’s “oversight of not adhering to a request does not constitute a mistake of fact on the part of Customs and Border Protection.” Whether the port’s liquidation of the entry constituted a mistake of fact depends on if the liquidation of the reconciliation entry had been validly extended.

Subtitle B of Title VI of the North American Free Trade Agreement Implementation Act (the Act), Pub.L. 103-182, 107 Stat. 2057, 2170 (December 8, 1993). established the National Customs Automation Program (NCAP)-an automated and electronic system for the processing of commercial importations. The implementation of the components of NCAP are described in 19 U.S.C. §§ 1411-1414. Section 637 of the Act amended Section 484 of the Tariff Act of 1930 established new subsection (b), entitled "Reconciliation", a planned component of the NCAP. The Customs Regulations provides for the testing of NCAP components. See 19 C.F.R. § 101.9(b). The test procedures, promulgated under the authority 19 U.S.C. §§ 1411-1414 and 19 C.F.R.§ 101.9, may be found in the Federal Register, discussed infra, and is referred to as the ACS Reconciliation Prototype (hereinafter the Prototype). The two-year prototype testing period commenced on October 1, 1998, and was extended indefinitely on October 1, 2000. See Extension of the ACS Reconciliation Prototype, 65 Fed. Reg. 55326, (September 13, 2000).

The importer of record may file a reconciliation entry pursuant to 19 U.S.C. § 1484(b)(1), which provides:

A party may elect to file a reconciliation with regard to such entry elements as are identified by the party pursuant to regulations prescribed by the Secretary. If the party so elects, the party shall declare that a reconciliation will be filed. The declaration shall be made in such manner as the Secretary shall prescribe and at the time the documentation or information required by subsection (a)(1)(B) of this section or the import activity summary statement is filed with, or transmitted to, the Customs Service, or at such later time as the Customs Service may, in its discretion, permit. The reconciliation shall be filed by the importer of record at such time and in such manner as the Secretary prescribes but not later than 15 months after the date the importer declares his intent to file the reconciliation.

Any party that elects to reconcile entries pursuant to § 1484(b), must do so through the Protype. See Revised National Customs Automation Program Testing Regarding Reconciliation, 63 Fed. Reg. 6257 (Feb. 6, 1998). The Protype allows an importer to identify or “flag” certain underlying entries and notify CBP of its intention to reconcile certain information not determinable at the time of the submission of the entry summary at a later date. Id. If the importer flags the underlying entries at the time filing via an ABI indicator, that filing serves as the Notice of Intent. Id. The reconciliation adjustments are limited to value aspects of entries filed under heading 9802, HTSUS, classification value (on a limited basis) and eligibility under NAFTA. Id. A reconciliation of value, HTSUS heading 9802 and/or classification shall be filed within 15 months of the date of the oldest (or earliest) entry summary flagged for or grouped on that reconciliation. Id.

According to the reconciliation entry header filed by the protestant, the issue to be reconciled was value. Thus, pursuant to the Prototype, the protestant had 15 months from the date of its oldest entry summary date to file its reconciliation. The oldest entry date according to the cover letter on the reconciliation is April 1, 2000. According to the reconciliation header provided by the protestant, the oldest entry date is April 17, 1999; however, the list of entries attached to the reconciliation header show that the oldest entry summary, entry number 748-xxxxx-870, was filed on April 17, 2000. According to ACS, the earliest summary was filed April 13, 2000.

Whether any of the foregoing entry dates are used in determining whether the reconciliation was timely, the reconciliation was nevertheless untimely. “The general current of the modern authorities on the interpretation of contracts, and also statutes, where time is be computed from a particular day or particular event, as when an act is to be performed within a specified period from or after a day named, is to exclude the day thus designated, and to include the last day of the specified period.” United States v. Hurlburt and Sons, 11 Ct. Cust. App. 24 (1921) citing Sheets v. Sheldon, 69 U.S. 177, 190)(emphasis in original). Therefore, taking the latest of the oldest entry, April 17, 2000, the first day of the computation would start on April 18, 2000. A calendar month is “a month as designated in the calendar, without regard to the number of days it may contain.” See 74 AmJur 2d § 9. Hence, the reconciliation entry was due 15 months from April 18, 2000, which would be July 18, 2001. Insofar as the CBP date stamp and ACS records show that the reconciliation was not filed until August 3, 2001, The protestant also asserts in its § 1520(c)(1) petition and its protest thereto, that the date of the reconciliation entry was August 3, 2001. the reconciliation was untimely filed.

Since a reconciliation is treated as an entry for purposes of liquidation, see 63 Fed. Reg. 6257, its liquidation may be withheld or extended under 19 U.S.C. § 1504(b) provides, in pertinent part,

The Secretary may extend the period in which to liquidate an entry if—

(1) the information needed for proper appraisement or classification of merchandise, or for insuring compliance with applicable law, is not available to the Customs Service; or

(2) the importer of record requests such an extension and shows good cause therefor.

The Secretary shall give notice of an extension under this subsection to the importer of record and the surety of such importer or record. Notice shall be in such form and manner (which may include electronic transmittal) as the Secretary by regulation shall prescribe.

Under the regulations promulgated under the authority of § 1504, in order for an importer to request an extension, it must make its request in writing before the statutory period expires and show good cause therefor. See 19 C.F.R. § 159.12(a)(1)(ii).

Although the protestant requested the port to withhold liquidation, in writing, when it filed its reconciliation entry, the request was not received by Customs until August 3, 2001, which, as discussed above, was beyond the 15-month statutory period to file its reconciliation entry. Therefore, the protestant’s request for extension was untimely. We note that the protestant does not discuss in its petition nor its protest whether its request for extension was timely. However, the protestant asserts that in addition to its written request for extension, its operations manager requested the port to withhold liquidation in a telephone conversation, on or after August 13, 2001. Clearly, the oral request for extension, being later than the written request, is also untimely.

Notwithstanding the fact that the request for extension was untimely, the extension was invalid because a notice of extension was not issued. Pursuant to 19 U.S.C. § 1504(b), as implemented by 19 C.F.R. 159.12(b), “if the port director extends the time for liquidation, as provided in paragraph (a)(1) of this section, he promptly shall notify the importer or the consignee and his agent and surety on Customs Form 4333-A, appropriately modified, that the time has been extended and the reasons for doing so.” The protestant asserts that the senior import specialist handling the case agreed to withhold liquidation during its August 13, 2001, telephone conversation. According to our conversations with the senior import specialist, he does not recall agreeing to the extension; however, since he had been working closely with the importer’s broker, it is highly probable that he did agree to an extension. The senior import specialist did note, however, that he did not see the written request for extension because another employee at the port processed the reconciliation entry. The ACS records do not show that an extension notice was issued. Based on the foregoing, we determine that liquidation of the reconciliation entry was not validly extended.

The protestant argues that CBP mistakenly failed to withhold liquidation. “For Customs to make a mistake in failing to take an action Plaintiff must show that Customs was obliged to take that action.” See Fujitsu Compound Semiconductor v. United States, 246 F.Supp. 2d 1334 (Ct. Int’l Trade 2003)(holding that insofar as Customs was not required to reliquidate entries by statute, failure to do so was not a mistake). There is no statute or regulation that allows CBP to extend liquidation once the statutory period expires. Further, there is no statute or regulation that allows CBP to extend liquidation without notifying the importer and its surety on a CF 4333-A. Therefore, Customs failure to withhold liquidation was not a mistake insofar as there is no statute or regulation that required CBP to extend liquidation under the present circumstances. Even if the protestant could establish a mistake by CBP, the protestant has not established, with documentary evidence, how liquidating the entry, prior to receiving all the value information, was adverse to the importer. The protestant argues that had Customs waited for the correct value information, the entry would have liquidated with a duty refund. Our review of the reconciliation entry shows that it was filed as a no change “aggregate reconciliation.” The ACS records show that the entry was liquidated “no change”. Since the protestant filed an "aggregate reconciliation", it is considered to have waived his right to refunds due to downward adjustments. See Modification of National Customs Automation Program Test Regarding Reconciliation, 64 Fed. Reg. 39187 (July 21, 1999). Aggregate reconciliations are permitted to be filed showing absolute increases or decreases in "duties, taxes and fees otherwise due". Id. However, a showing of a decrease in duties, would not result in the refund or reduction of "duties, taxes, and fees otherwise due", since participants to the Prototype waive all claims for refunds due to downward adjustments. Id.

Thus, whether CBP liquidated the entry prior to receiving the value information or after receiving the value information, the protestant would not have received a duty refund because under the Prototype the protestant was considered to have waived its right to a refund when it filed an aggregate reconciliation. Therefore, the protestant has not established by documentary evidence that CBP’s alleged premature liquidation of its reconciliation entry was adverse to the importer.

Holding

The protestant has not shown with documentary evidence, nor is it manifest from the record that a clerical error, mistake of fact, or other inadvertence occurred in the entry, liquidation, or other transaction or that the alleged mistake was adverse to the importer; therefore relief is unavailable under 19 U.S.C. § 1520(c)(1). The protest 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 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 make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles Harmon, Director
Commercial Rulings Division

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