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HQ 231072





September 30, 2005

LIQ-9-01
RR:CR:DR 231072 EMS

U.S. Customs and Border Protection
Area Director, New York/Newark Area
1100 Raymond Blvd.
Newark, NJ 07102
ATTN: Kathleen M. Haage-Gaynor

RE: Internal advice; importer of record; 19 U.S.C. § 1484(a)(2)(B); entry substitution; 19 U.S.C.§ 1520(c)(1); unliquidated consumption entry, ignorance of antidumping duty order

Dear Ms. Haage-Gaynor:

This letter is in reply to correspondence from Donohue and Donohue, dated June 28, 2005, which was submitted to the Customs and Border Protection (CBP) New York/Newark Service Port (the port) on behalf of B&G Plastics, Inc. and Masterbrush LLC. Pursuant to 19 C.F.R. § 177.11, they are requesting internal advice concerning the substitution of a consumption entry for a bonded warehouse entry. The port forwarded this request to our office, accompanied by a memorandum dated August 4, 2005. Our decision follows.

FACTS:

B&G Plastics, Inc. (B&G) imported natural bristle paintbrushes manufactured in the People’s Republic of China (PRC), allegedly for the benefit of Masterbrush LLC, which is a separate legal entity formed for the purpose of selling paintbrushes in and outside of the United States. The commercial invoice identifies Masterbrush as the purchaser of the subject merchandise. In contrast, the bill of lading shows that the consignee is “B & G C/O MASTERBRUSH LLC.” According to the parties, the two principals of B&G also constitute two of Masterbrush’s three partners. An affidavit provided by Chet Kolton, a principal of B&G and a partner in Masterbrush, states that B&G made entry because, unlike Masterbrush, B&G had the required power of attorney with the customs broker who filed the entry.

The subject merchandise was covered by a single consumption entry and the Entry Summary (CBP Form 7501) identifies B&G as the importer. According to the Automated Commercial System (ACS), the subject merchandise was entered and released on February 19, 2004. The Entry Summary did not reflect that the subject merchandise was covered by an antidumping duty order, A-570-501. See Notice: Antidumping Duty Order; Natural Bristle Paint Brushes and Brush Heads From the People’s Republic of China (PRC), 51 Fed. Reg. 5580 (Dept. of Commerce Feb. 14, 1986).

The port visited the importer’s warehouse and collected samples of the subject merchandise on March 23, 2004 and, CBP’s Laboratory and Scientific Services later determined that the subject merchandise consisted of natural bristle paintbrushes from the PRC. On June 21, 2004, the port issued a Notice of Action (CBP Form 29), informing the importer that the entry was in the liquidation process and that the subject merchandise was dutiable at a rate of 351.92 percent. See 68 Fed. Reg. 31683, 31684, Notice of Final Results of Administrative Review: Natural Bristle Paintbrushes and Brush Heads From the People’s Republic of China (Dep’t of Commerce May 28, 2003). B&G and Masterbrush (the parties) do not dispute that the subject merchandise is within the scope of the antidumping duty order, but rather the parties seek to avoid the payment of the antidumping duties assessed on the consumption entry by substituting it for a bonded warehouse entry that would be either exported or destroyed, per 19 U.S.C. § 1557. The port’s position is that the proposed entry substitution is not allowable, and the subject entry has not yet been liquidated.

The importer claims that CBP should allow the entry substitution because the filing of a consumption entry was the result of a mistake of fact or other inadvertence on the part of the importer’s broker, specifically “not knowing that the Department of Commerce had published a[n] [anti]dumping [duty] order on natural bristle paintbrushes [from the PRC] and in failing to advise B&G and Masterbrush accordingly.” The affidavit submitted by Mr. Kolton alleges that the parties were unaware that an antidumping order covered the subject merchandise, and an affidavit provided by the freight forwarder/logistics company claims that the broker must also have been unaware of the antidumping duty order when filing the Entry Summary without identifying the relevant antidumping duty order and the corresponding amount antidumping duties owed. The affidavit submitted by Mr. Kolton also alleges that the decision of B&G to make a consumption entry resulted from the lack of knowledge of the existence of the antidumping duty order and, had B&G known that the subject merchandise covered by the relevant antidumping duty order, it would have made a bonded warehouse entry. Further, in the request for internal advice, the parties claim that “ [h]ad Masterbrush been advised of the possible applicability of a 351.92 percent antidumping duty, it would not have engaged in the transaction” for the purpose of importing and selling the subject merchandise in the United States.

ISSUES:

1. Whether CBP may substitute the importer of record identified on the entry summary for the actual owner or purchaser of the imported merchandise, per 19 U.S.C. § 1484(a)(2)(B)?

2. Whether CBP may substitute an unliquidated consumption entry for a bonded warehouse entry on the basis of 19 U.S.C. § 1520(c)(1)? 3. Whether the importation of merchandise subject to antidumping duties may constitute a mistake of fact, clerical error, or other inadvertence remediable under 19 U.S.C. § 1520(c)(1)?

LAW AND ANALYSIS:

Identification of Importer of Record Ineligible to Make Entry

Initially, we note that B&G does not appear to have been the purchaser or owner of the subject merchandise, despite the fact that it was identified as the importer on the Entry Summary. The filing of the Entry Summary was for the purpose of ensuring that the information needed by CBP to properly assess duties was available. The broker’s filing of the Entry Summary constituted a declaration that the importer it identified was the owner or purchaser of the subject merchandise, and CBP accepted this declaration without liability, as authorized by 19 U.S.C. § 1484(a)(2)(B). See H.R. Rep. No. 103-361, pt. 1, at 136 (1993) (“The requirement that importers use reasonable care in making entry establishes a “shared responsibility” between Customs and the trade community, and allows Customs to rely on the accuracy of the information submitted by importers and, in turn, streamline entry procedures.”).

Pursuant to 19 U.S.C. § 1484(a)(2)(B), the importer of record must be one of the parties who is eligible to file the entry documentation, meaning either “the owner or purchaser of the merchandise or, when appropriately designated by the owner, purchaser, or consignee of the merchandise, a person holding a valid license under section 641.” While B&G may have been under common ownership with Masterbrush, this status did not create a right for B&G to make entry on behalf of another separate legal entity that was the actual owner or purchaser of the subject merchandise. Based on the commercial invoice and the facts alleged in the affidavit submitted by Mr. Kolton, the identification of B&G as the importer appears to be inconsistent with 19 U.S.C. § 1484(a)(2)(B).

B&G may have lacked the legal capacity to be the importer for the subject merchandise under the statute, but B&G failed to timely seek relief from liability to pay the duties owed on the subject merchandise prior to liquidation. The remedy for misidentification of the importer was available pursuant to 19 U.S.C. § 1485(d), which provides, in relevant part, that the consignee in whose name an entry summary is filed shall not be liable for any additional or increased duties if

(1) he declares at the time of entry that he is not the actual owner of the merchandise, (2) he furnishes the name and address of such owner, and (3) within ninety days from the date of entry he produces a declaration of such owner conditioned that he will pay all additional and increased duties.

The CBP regulations parrot these three requirements and set forth the procedure for obtaining relief under the statute, 19 C.F.R. § 141.20. Under the regulations, the onus would have been on B&G, as the importer, to comply with the regulations and there is no evidence to suggest that a change was requested, despite the fact that B&G and its broker appear to have known prior to importation that Masterbrush was the actual owner or purchaser of the subject merchandise.

Substitution of an Unliquidated Entry Under 19 U.S.C. § 1502(c)(1)

Section 520(c)(1) of the Tariff Act of 1930, as codified at 19 U.S.C. § 1520(c)(1), is an exception to the finality of liquidation under 19 U.S.C. § 1514. Per 19 U.S.C. § 1520(c):
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, when the error, mistake, or inadvertence is brought to the attention of the Customs Service within one year after the date of liquidation or exaction.

Therefore, CBP may reliquidate the protested entries to correct a clerical error, mistake of fact, or other inadvertence if three requirements are satisfied: (1) the error is adverse to the importer's interest; (2) the error is manifest from the record or established by documentary evidence; and (3) the error is brought to CBP's attention within one year of the date of liquidation.

In this case, as in HQ 115253 dated January 9, 2002, the importer has not established that the entry substitution is permissible under 19 U.S.C. § 1520(c)(1) because the subject entry has not yet been liquidated. There is no legal basis for entry substitution pursuant to 19 U.S.C. § 1520(c)(1) in this case because there has not been a liquidation of the subject entry. See e.g. J.S. Sareussen Marine Supplies, Inc. v. United States, 62 Cust. Ct. 449, 451, 304 F. Supp. 1185, 1186 (1969).

Importation of Merchandise Subject to Antidumping Duties

If the subject entry had been liquidated prior to submission of the request for internal advice, this case would likely turn on whether the entry of the merchandise as a consumption entry constituted a mistake of fact, clerical error, or other inadvertence. A mistake of fact is "a mistake which takes place when some fact which indeed exists is unknown, or a fact which is thought to exist, in reality does not exist." C.J. Tower & Sons of Buffalo, Inc. v United States, 68 Cust. Ct. 17, 22 (1972) (citations omitted), aff'd by 499 F.2d 1277 (C.C.P.A. 1974) (citations omitted). A clerical error is "mistake by a subordinate, who does not have any duty to exercise judgment with regard to classification." Xerox Corp. v. United States, 219 F. Supp. 2d 1345, 1348 (Ct. Int'l Trade 2002) (citations omitted), enforced by No. 99-02-00086, slip op. 2004-113 (Ct. Int'l Trade Dec. 8, 2004). An "inadvertence" is even broader in scope, encompassing oversights or involuntary accidents, even mistakes resulting from inattention and carelessness. Hambro Automotive Corp. v. United States, 603 F.2d 850, 854 (C.C.P.A. 1979).

In contrast, a mistake in the construction of law exists when "the facts are known, but their legal consequences are not known or believed to be different than they really are." Hambro, 603 F.2d at 855. A mistake in the construction of law is not remediable under 19 U.S.C. § 1520(c)(1), given that the statute provides for limited relief from the finality of liquidation under 19 U.S.C. § 1514. See e.g. Computine, Inc. v. United States, 622 F. Supp. 1083, 1085. For example, in Concentric Pumps, Ltd. v. United States, 643 F. Supp. 623, 624-25 (Ct. Int’l Trade 1986), the Court of International Trade (CIT) reviewed the legislative history of this statutory provision and found that “there is nothing to suggest that Congress intended § 520(c)(1) to remedy an importer’s mistaken or inadvertent lack of knowledge of the Tariff Schedule items.” In that case, the CIT rejected the importer’s claim for relief under 19 U.S.C. § 1520(c)(1), which was that it misclassified the imported merchandise because of its ignorance of the existence of a specific tariff classification under the Tariff Schedule of the United States (TSUS). Similarly, B&G’s decision to import merchandise subject to an antidumping duty order is not remediable under 19 U.S.C. § 1502(c)(1) simply because of ignorance of the existence of an antidumping duty order, which is a mistake of law.

Further, we note that alleging ignorance of the existence of an antidumping order is not a valid argument. The parties claim that “[t]he fact of the order indeed existed, but was unknown.” However, the public has notice of the existence of an antidumping duty order by virtue of its publication in the Federal Register. Under the Federal Register Act, “unless otherwise specifically provided by statute, filing of a document, required or authorized to be published by section 1505 of this title is sufficient to give notice of the contents to a person subject to or affected by it.” 44 U.S.C. § 1507. The antidumping order covering natural bristle paintbrushes from the PRC was published in the Federal Register in 1986, 51 Fed. Reg. 5580, and the applicable antidumping duty rate for the subject merchandise was published in the Federal Register in 2003, 68 Fed. Reg. 31683, 31684.

The parties rely on two cases in support of their claim that merchandise entered as a consumption entry may be substituted when such entry results from an error remediable under 19 U.S.C. § 1520(c)(1). CBP’s decisions in HQ 725570 (dated March 18, 1986) and HQ 230327 (dated April 14, 1987) do indeed support this general proposition, but the facts of these cases are readily distinguishable from the instant case. In HQ 725520, the commercial documentation supported the broker’s claim that the merchandise at issue was never intended for importation as a consumption entry, but rather, as a transportation and exportation entry. The evidence also showed that an employee of the shipper made a clerical error, which resulted in the entry of the merchandise as a consumption entry. In HQ 730327, the commercial documentation showed that the merchandise was part of a lot that was intended to be sent to a bonded warehouse for storage and eventual exportation to Canada, and was never intended to be entered for consumption. The evidence also showed that the shipper erred by failing to indicate that the merchandise was to be sent in-bond for entry into the warehouse, and thus the merchandise was entered as a consumption entry. In both of these cases, CBP determined that the entry of the merchandise as a consumption entry was unintended, based on the documentary evidence.

In the instant case, the entry of the subject merchandise as a consumption entry was deliberate, given that the paintbrushes were intended for resale in the United States. The documentary evidence proffered by the parties shows that they are seeking entry substitution on the tenuous basis of the consequences of their ignorance of the antidumping duty order that covered the subject merchandise. That ignorance constitutes a mistake of law, for the reasons set forth above, and thus entry substitution on the basis thereof would not be appropriate under 19 U.S.C. § 1520(c)(1).

DECISION:

1. Per 19 U.S.C. § 1484(a)(2)(B), the importer of record identified on the Entry Summary is liable for payment of the duties owed on the imported merchandise.

2. Entry substitution is not allowable under 19 U.S.C. § 1520(c)(1) for an entry that has not been liquidated.

3. Ignorance of the applicability of antidumping duty order to an importation constitutes a mistake of law, which is not remediable under 19 U.S.C. § 1520(c)(1).

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.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

William G. Rosoff, Chief
Entry Process and Duty Refunds Branch

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