HQ 966937 - Application for Further Review 1303-03-100219; 19 U.S.C. § 1520(c)(1); mistake of fact, clerical error, or other inadvertence - United States International Trade Commision Rulings

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HQ 966937

April 21, 2006

CLA-2 RR:CTF:TCM 966937 KSH

CATEGORY: CLASSIFICATION

TARIFF NO.: 1605.10.2090

Port Director
Bureau of Customs and Border Protection
40 South Gay Street
Baltimore, MD 21202

RE: Application for Further Review 1303-03-100219; 19 U.S.C. § 1520(c)(1); mistake of fact, clerical error, or other inadvertence

Dear Port Director:

This is in reply to your correspondence forwarding Application for Further Review (AFR) of protest no. 1303-03-100219 filed by Ian International on behalf of M & I Seafood. Protestant is currently represented by Sandler, Travis & Rosenberg, P.A.

The protest is against Customs and Border Protection’s (CBP) denial of fourteen petitions for reliquidation pursuant to 19 U.S.C. 1520(c). Protestant entered the merchandise subject to this protest between September 19, 2000 and April 4, 2001, in subheading 0306.14.2000, of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “Crustaceans, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in brine; crustaceans, in shell, cooked by steaming or boiling in water, whether or not chilled, frozen, dried, salted or in brine; flours, meals and pellets of crustaceans, fit for human consumption: Frozen: Crabs: Crabmeat” with a duty rate of 7.5 percent ad valorem. The merchandise was liquidated in subheading 0306.14.2000, HTSUSA, between August 3, 2001 and February 5, 2002.

Beginning on June 13, 2002 and ending on October 10, 2002, protestant filed fourteen letters identified as “RE: 520(C) [sic] (1) Claim” requesting a refund of excess duties paid and filed a revised entry summary classifying the entries in subheading 1605.10.20, HTSUSA. On June 20, 2002 and September 30, 2002, a Request for Information was issued for the original entry package including the original rated invoices and packing list. Among the information submitted by protestant was the entry summary which identified the merchandise as “crabmeat, frozen”, an invoice identifying the merchandise as “frozen crab meat, jumbo lump backfin”, a certificate of origin identifying the merchandise, in part, as “frozen crab meat- jumbo lump, backfin” and an entry-exit inspection certificate identifying the merchandise as “frozen crab meat.”

Subsequent to the filing of the AFR, protestant’s counsel filed a supplemental letter in which it was stated that the broker relied on “misdescribed” invoices which referred only to frozen crabmeat and did not further identify the crabmeat as “prepared or preserved in airtight containers.” Not knowing all of the pertinent facts, counsel maintains that the broker misclassified the merchandise. By letters dated May 7, 2003 and July 16, 2003, protestant’s requests were denied.

Protestant filed the instant protest with an AFR on August 7, 2003, claiming a mistake of fact and requesting reliquidation in subheading 1605.10.20. 19 U.S.C. section 1514, states that decisions of the appropriate customs officer as to the liquidation of an entry shall be final and conclusive upon all persons unless a protest is filed with such customs officer within ninety days after but not before the notice of liquidation. As the instant protest was filed more than 90 days after the first denial on May 7, 2003, the protest is untimely as it pertains to the six entries denied reliquidation on May 7, 2003. The importer’s request for AFR was approved.

Protestant alleges its broker relied on invoices which referred to the merchandise as “frozen” but did not further state that it was “prepared or preserved in airtight containers.” Protestant maintains that the broker’s reliance on the incomplete invoices caused the broker to misclassify the merchandise. Protestant claims that the decision against which the protest is filed is inconsistent with Headquarters Ruling (HQ) 952685, dated January 11, 1993, which classified crabmeat and crab claws in heading 1605, HTSUSA. It is argued that this ruling supports that a mistake of fact occurred inasmuch as frozen crabmeat which has been prepared or preserved in airtight containers is classified in heading 1605, HTSUSA. Further review is warranted pursuant to 19 CFR §§174.24(a) and 174.25.

FACTS:

The merchandise at issue is wild crab which is caught at sea. Once caught and hauled onto the fishing vessel, the crabs are immediately covered in ice. They are then taken to a factory in either China or Vietnam where they are cleaned and steamed. The meat is picked by hand and placed in airtight vacuum sealed one pound bags. It is then pasteurized to kill bacteria. Twenty one pound bags are packed in a master carton which is fast frozen. The crabmeat is held in storage until exported to the United States.

ISSUE:

Whether the alleged fact that protestant’s broker was unaware of the condition of the crabmeat constitutes a clerical error, mistake of fact, or other inadvertence that resulted in CBP's liquidation of the subject merchandise in heading 0306, HTSUSA.

LAW AND ANALYSIS:

Section 520(c) of the Tariff Act of 1930, as codified at 19 U.S.C. § 1520(c), is an exception to the finality of the liquidation of an entry under 19 U.S.C. § 1514. Per 19 U.S.C. § 1520(c)(1):
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 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 interests; (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.

Initially, we note that protestant timely filed its request for reliquidation on June 13, 2002, which was within one year of August 3, 2001, the earliest date of liquidation among the subject entries. The liquidation of the subject merchandise at the rates of dutiability asserted on the entry summaries is clearly adverse to protestant's interests given that it is seeking reliquidation of the subject merchandise as duty-free under heading 1605, HTSUSA. In this case, the only requirement of 19 U.S.C. § 1520(c)(1) which is at issue is whether the liquidation of the subject entries without duty-free treatment under heading 1605, HTSUSA, is a mistake of fact, clerical error, or other inadvertence that is either manifest from the record or established by the documentary evidence.

An importer's unawareness of a fact that would make imported merchandise eligible for duty-free entry at the time of entry may be remediable under 19 U.S.C. § 1520(c)(1), United States v. C.J. Tower & Sons of Buffalo, 499 F.2d 1277 (C.C.P.A. 1974), but the importer must demonstrate its unawareness of that fact. In Xerox Corporation v. United States, Slip. Op. 2004-113, dated September 8, 2004, the U.S. Court of International Trade determined that where an entry writer employed by the broker mistakenly relied on an inaccurate description on certain invoices to classify merchandise, there was a mistake of fact because at the time the employee classified the merchandise he never saw the merchandise and relied on the invoice descriptions. The court also determined that where another entry writer misclassified merchandise it was the result of a mistake of fact because there was no evidence that the broker contacted the importer regarding the true nature of the entries. Id. at 16-21.

We have completed a thorough review of the protestant’s submitted evidence, which includes, but is not limited to, affidavits verifying that the crabmeat is boiled, removed from its shell, packed in airtight bags, pasteurized and frozen. Oral evidence was presented during a conference with members of my staff regarding processing procedures and the broker’s mistaken reliance on the invoices without visually inspecting the goods or contacting the importer regarding their true nature.

Based on the totality of the evidence, the instant protest has merit as it pertains to the eight entries denied reliquidation on July 16, 2003 as protestant has provided sufficient additional information to establish that a mistake of fact occurred.

HOLDING:

With respect to the eight entries denied reliquidation on July 16, 2003, protestant has provided sufficient evidence to support its allegation that it failed to classify the crabmeat in heading 1605, HTSUSA, at the time of entry because of a mistake of fact, clerical error, or other inadvertence and that the subject entries are eligible for reliquidation pursuant to 19 U.S.C. § 1520(c)(1). The remaining six entries denied reliquidation on May 7, 2003, were not timely protested and cannot be considered.

The protest should be ALLOWED IN PART AND DENIED IN PART. In accordance with the Protest/Petition Processing Handbook, (CIS HB, June 2002, pp 18 and 21), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. No later than sixty days from the date of this letter, 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 WideWeb at www.cbp.gov, by means of the Freedom of Information Act, and by other methods of public distribution.

Sincerely,

Myles B. Harmon, Director

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