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HQ 222597

October 11, 1990

LIQ-9-CO:R:C:E 222597 CB


Regional Commissioner
U.S. Customs Service
300 N. Los Angeles Street
Suite 7401
Los Angeles, CA 90012

RE: Application for further review of Protest No. 2809-88- 002589 under 19 U.S.C. 1520(d)

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the points raised and our decision follows.


Protestant is alleging that the Customs Service has failed to properly calculate the interest due on the refunded overpayment of duties.

According to the facts statement provided by protestant, in March of 1982 an Import Specialist in the Port of Philadelphia issued protestant a CF29 proposing a change in the classification of a part on a liquid chromatograph. The proposed rate advance resulted in a dispute over classification that was resolved five years later in a stipulated judgment on agreed statement of facts that was favorable to protestant. The stipulated judgment provided for reliquidation at a lower duty rate along with interest from July 22, 1985, the date of filing the summons. The Customs Service reliquidated the entries and paid interest on the refunds.

Entries made prior to February 14, 1984, were entered under item 712.49, TSUS. The entries were liquidated at a higher rate under item 712.05, TSUS, and additional duties were paid. According to protestant, the entries subject to this protest were made after February 14, 1984, and they were made at the higher rate as instructed by the Import Specialist. No additional duties were paid at liquidation because the higher rate had been paid at the time of entry. The entries were protested and ultimately reliquidated as instructed by the Court of International Trade. The Customs Service has not paid interest on the entries from the time of entry to the time of summons.

Protestant claims that it is entitled to a refund of duties and interest. The interest is to run from the date of payment to the date of the filing of the summons. Additionally, protestant is entitled to interest on excess duties tendered from the time of the filing of the summons to the date of the refund as provided for in the court order. The Customs Service has refunded interest in those cases where protestant entered the merchandise at a lower rate but paid a higher rate upon liquidation.


Whether protestant is entitled to the payment of interest under 19 U.S.C. 1520(d) on excess duties paid covering the time between the depositing of those duties and the filing of the summons?


The payment of interest on excess duties paid to Customs is provided for in section 520(d), Tariff Act of 1930, as amended (19 U.S.C. 1520(d)). The statute provides, in part, that if an entry is reliquidated "...interest shall be allowed on any amount paid as increased or additional duties under section 1505(c) of this title...." Therefore, we must look at section 505(c), Tariff Act of 1930, as amended (19 U.S.C. 1505(c)) to determine which duties are subject to the payment of interest. Section 1505(c) provides that final determination of duties owed is made at the time of liquidation or reliquidation. These two statutes have been interpreted as providing that interest may be paid only on duties found to be owed at liquidation.

The Customs Service has previously addressed the issue of the payment of interest on duties deposited at the time of entry. As stated in HRL 220810, issued January 11, 1989, there is no statutory authority for the payment of interest on excess duties deposited at the time of entry. As previously stated by Customs, under 19 U.S.C. 1313a, appropriations are limited to such amounts as may be necessary for refunds authorized by law. Customs is not authorized by law to pay interest on excess duties deposited under 19 U.S.C. 1505(a). We still adhere to that conclusion. Protestant's reliance on Syva Co. v. United States, ___ CIT ___, Slip. Op. No. 88-29 (March 8, 1988), is unfounded. In Syva, the court merely acknowledges that Customs is obligated to pay interest on overpayment of duties. The court did not address the issue of when that obligation arises. In the instant case, Customs is not denying that it must pay interest on overpayment
of duties paid under 19 U.S.C. 1505(c). It is Customs position that the deposit of estimated duties does not arise under that provision. Estimated duties are required under paragraph (a) of 19 U.S.C. 1505.

Protestant argues that Customs has failed to recognize the clear intent of Congress in enacting the 1984 amendment to 19 U.S.C. 1505. However, Customs position with regard to the payment of interest on liquidations for refund was made clear at the time of the Congressional hearings. As stated at the time, "[T]he bill in no way affects overpayment or underpayments of estimated duties.... Customs neither pays interest on liquidations for refund nor requires interest to be paid on underpayments of estimated duties which were accepted by a customs officer." See Miscellaneous Tariff and Trade Bills: Hearings and Written Comments Before the Subcommittee on Trade of the House Comm. on Ways and Means, 98th Cong., 1st and 2nd Sess. 18, 627-628 (1984)(statement of Arthur I. Rettinger, General Attorney, U.S. Customs Service).

It is protestant's contention that it paid the additional duties only because it was instructed to do so by the import specialist who was relying on an administrative ruling adverse to protestant. Therefore, according to protestant, the higher rate was a taking or an exaction and interest should be paid on the estimated duties deposited at the time of entry. However, under 19 U.S.C. 1505(a), Customs has the authority to require estimated duties to be deposited in an amount deemed necessary to cover the prospective duties on the entry. See also, 19 C.F.R. 141.103. Protestant's monies were fully refunded at the time of liquidation. Hence, there was no taking of protestant's monies.


Contrary to protestant's contention, protestant is not entitled to the payment of interest on the amount of duties deposited at the time of entry, pursuant to 19 U.S.C. 1520(d). This protest should be denied.


John Durant, Director

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