19 Ct. Int'l Trade 960 | Ct. Intl. Trade | 1995
This action is before the court on cross-motions for summary judgment pursuant to USCIT Rule 56. Plaintiff Executone Information Systems (“Executone”) challenges the United States Customs Service’s (“Customs”) denial of reliquidation of two entries pursuant to 19 U.S.C. § 1520(c)(1) (1988).
Factual Background
This action arises from two entries of telephone handsets, Entry Nos. 336-1795821-1 and 336-1795902-9, that were imported from the Dominican Republic by Executone under Item 8517.10.00, HTSUS, with the rate of duty symbol, E, denoting duty-free entry of the merchandise. The entries were made on October 23 and November 4,1991. Entry papers filed with the merchandise, however, did not include the necessary Form A’s nor any substitute documentation needed to support Executone’s claim for special tariff treatment under the CBERA.
On December 4 and December 10, 1991, Customs issued notices informing Executone that the necessary documentation to support duty-free entry of its merchandise was missing. The notices also indicated that the entries were in the process of being liquidated under Item 8517.10.00, HTSUS, at an ad valorem duty rate. As Executone failed to provide the necessary Form A’s or to seek an extension of time for liquidation, Customs denied Executone’s claim for special tariff treatment and liquidated the entries with duty advances on December 20 and December 27,1991. Upon learning of the duty advances, Executone had its supplier in the Dominican Republic transmit Form A’s by facsimile to Radix. Executone then instructed Radix to file the facsimile Form A’s in support of its claim for duty-free treatment. Radix, however, did not file
Executone instructed Radix to prepare a formal protest on its behalf accompanied by the facsimile Form A’s on February 3,1992. The protest was not filed with Customs and on February 17 and March 3, 1992, Executone again communicated with Radix by facsimile and requested that a formal protest be filed. In June 1992, Executone finally received a set of new Form A’s for the entries, containing different information,
Standard of Review
Summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. USCIT Rule 56(d).
Discussion
Executone contests Customs’ denial to reliquidate two entries of telephone handsets under 19 U.S.C. § 1520(c) (1). Executone asserts that the entries were eligible for special tariff treatment pursuant to the CBERA, and but for the inadvertence of Radix in failing to submit the necessary Form A’s upon receipt of Customs’ notices, the subject merchandise was entitled to duty-free entry. According to Executone, as no issue of law is implicated by Radix’s inadvertent failure to file the Form A’s, Customs erred in refusing to reliquidate its entries.
Defendant counters that as a result of Executone’s failure to file the applicable Form A’s, Customs made a legal determination as to the classification of the merchandise based upon all of the information submitted with the entries. Defendant argues that relevant statutory provisions and court precedent establish that determinations by Customs as to the classification of merchandise are final and conclusive upon all persons unless a protest is filed within 90 days from the date of liquidation. See supra note 4; see also Occidental Oil & Gas Co. v. United
Executone agrees with defendant, in that, had this cáse entailed a classification dispute, the legal tariff description of the merchandise would plainly involve a conclusion of law. Pl.’s Mem. in Opp’n to Def.’s Cross-Mot. Summ. J. at 4. Executone claims, however, that this case does not involve a classification dispute, but instead a dispute over the applicable rate of duty arising from its failure to submit the necessary Form A’s. See id. at 4-5. One issue before the court then is whether or not a determination as to the rate of duty to be assessed by Customs on certain merchandise is to be considered a classification of such merchandise.
When Customs engages in the process of classifying imported merchandise, reference is made to the HTSUS, a detailed goods nomenclature. The HTSUS is divided into many parts, one of which, the General Rules of Interpretation, guides in the classification of merchandise. Rule 1 specifically provides that “classification shall be determined according to the terms of the headings and any relative, section or chapter notes.” HTSUS, Gen. Rule of Interpretation 1, at 31.
A “Heading” refers to the article descriptions and tariff provisions appearing in the schedule at the first hierarchical level. Id., Gen. Note 7(f), at 29. A Heading reference also encompasses Subheadings,
Hence, the classification of an item within a Heading or Subheading encompasses more than just the Heading or Subheading number and corresponding article description. Customs must examine the many
In the present case, as Executone failed to provide the necessary Form A’s or any other proof of origin, Customs removed the merchandise from the “Special” rate of duty sub-column, as originally entered, and placed it within the “General” sub-column, assessing an ad valorem duty rate. Customs’ determination to categorize the merchandise within the “General” sub-column and remove special treatment, amounted to a classification of such merchandise as dutiable instead of duty-free. Customs consequently made a correct “legal determination as to the classification of the merchandise on the basis of the facts presented, and in light of [Executone’s] claimed classification.” See Cavazos, 9 CIT at 631.
The next issue is whether Customs’ apparently correct legal classification itself resulted from a mistake of fact or inadvertence for which relief should be provided under 19 U.S.C. § 1520(c)(1). In this regard, missing documentation cases present special problems. Executone asserts that this case is analogous to George Weintraub & Sons, Inc. v. United States, 12 CIT 643, 691 F. Supp. 1449 (1988), vacated as moot, 855 F. Supp. 401 (Ct. Int’l Trade 1994),
The court does not find Weintraub to be persuasive in this regard.
Nonetheless, the court cannot simply apply the reasoning of Cavazos or Occidental, or find that the errors in proof before Customs obviate applicability of 19 U.S.C. § 1520(c)(1). The Federal Circuit’s decision in ITT Corp., has intervened. In that case, the Federal Circuit effectively eliminated the requirement of § 1520(c)(1) that the alleged mistake of fact be manifest in the record before Customs. See 24 F.3d at 1389.
Plaintiff does not allege it can meet the burden described here. It had ample opportunity to demonstrate proof of origin in a timely manner, and it does not claim that proper documentation existed at the time of entry and would have been filed but for an inadvertence. Plaintiffs attempts to jury rig the proper documentation do not suffice.
Conclusion
In summary, the court concludes that Customs is not required to reliq-uidate Executone’s entries of the subject merchandise. Customs’ determination to liquidate the merchandise at an ad valorem duty rate resulted from a conclusion of law based upon documentary requirements. Furthermore, plaintiff has failed to allege any mistake of fact or inadvertence entitling it to a remedy under 19 U.S.C. § 1520(c)(1). Accordingly, plaintiffs motion for summary judgment is denied and defendant’s cross-motion for summary judgment is granted.
The relevant statutory provision provides:
Notwithstanding a valid protest was not filed, [Customs! may * * " reliquidate an entry * * * to correct—
(1) a clerical error, mistake of fact, or other inadvertence * * * not amountingto 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 [Customs! within one year after the date of liquidation or exaction.
19 U.S.C. § 1520(c)(1).
Upon entry, Executone classified its merchandise eligible for special tariff treatment under the designation symbol, E. This designation symbol represents the Caribbean Basin Economic Recovery Act (“CBERA”), which permits duty-free entry of certain merchandise from, inter aha, the Dominican Republic. HTSUS, Gen. Note 3(c)(i)(A) at 2, (v)(AMC) at 9-10.
According to defendant, certain information in the Form A’s provided to Executone in June 1992 [hereinafter “Form A2”] did not match the information in the initial facsimile Form A’s. For example, the Form A2 for Entry No. 336-1795902-9, compared to the corresponding facsimile Form A, contained either a different shipment weight or quantity. Pl.’s Mem. in Supp. Mot. Summ. J., Exs. C, E Similarly, the Form A2 for Entry No. 336-1796821-1 contained three additional product models than were found in the corresponding facsimile Form A. Id.
Pursuant to 19 U.S.C. § 1514, the liquidation of an entry
shall be final and conclusive upon all persons (including the United States and any officer thereof) unless a protest is filed * * * within ninety days after * * * notice of liquidation.
19 U.S.C. § 1514(a), (c)(3)(A) (1988).
Under the HTSUS, “the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the [other HTSUS] rules, on the understanding that only subheadings at the same level are comparable.” HTSUS, Gen. Rule of Interpretation 6, at 31. “For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.” Id.
Sub-column one is further divided into the sub-columns designated "General” and "Special.” The “General” sub-column sets forth the general most-favored-nation (MFN) duty rates applicable to products of those countries that are not entitled to special tariff treatment under one or more tariff treatment programs. HTSUS, Gen. Note 3(a)(ii), at 1. The "Special” sub-column sets forth duty rates arising under one or more special tariff treatment programs listed in the General Notes. Id, Gen. Note 3(a)(iii), at 1. Letter designations of the various tariff treatment programs eligible for certain merchandise are identified in parentheses immediately following the duty rate specified in the sub-column. Id.
The court’s order vacating its earlier decision was originally entered as an unpublished order on August 22,1989. Weintraub, 855 F Supp. at 401 n.*.
As the judgment in Weintraub was vacated and set aside, it is of limited precedential value. See Weintraub, 855 F. Supp. at 401.
In Aviall of Tex., Inc. v. United States, 861 F. Supp. 100 (Ct. Int’l Trade 1994), appeal docketed, No. 95-1019 (Fed. Cir. Oct. 24, 1994), the court took pains to explain exactly what inadvertence had occurred and why proper documentation was available.
“[Section] 1520(c)(1) requires the importer to establish the asserted inadvertence through documentary evidence submitted to the appropriate customs officer, unless the inadvertence is manifest from the record.” ITT Corp., 24 F.3d at 1387. The Federal Circuit found this burden was not met. Id. The court also held, however, that even though the error is not adequately demonstrated to Customs, it may be demonstrated at trial by introduction of evidence that explains that which was unsatisfactorily explained to Customs. Id. at 1389. Thus, the error may be made manifest at trial. The Federal Circuit kept intact the requirements that Customs must be notified of the mistake of fact or inadvertence within one year of liquidation. See id. at 1387.
It has been held, however, that this provision is “not remedial for every conceivable form of mistake or inadvertence adverse to an importer, but rather * * * offers ‘limited relief in the situations defined therein’”. Godchau-Henderson Sugar Co. v. United States, 496 F. Supp. 1326, 1331 (Cust. Ct. 1980) (emphasis added) (quoting Phillips Petroleum Co. v. United States, 54 CCPA 7, 11, C.A.D. 893 (1966)).
Thus, the court need not reach the issue of whether the reasoning of Occidental and Cavazos would be approved by the Federal Circuit post-771?1.