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HQ 223111

July 24, 1992

LIQ-4-02-CO:R:C:E 223111 GG/JRS


District Director of Customs
423 Canal Street
New Orleans, LA 70130
ATTN: Protest Office, Room 200

RE: Application for further review of Protest No. 2002-91- 000225; protest untimely; 19 U.S.C. 1514; 19 U.S.C. 1504; protest of bill for supplemental countervailing duties issued more than 90 days after liquidation

Dear Sir:

This is in response to the protest referenced above, which was forwarded to us by your office for further review. Our decision follows.


On April 14, 1984, the protestant imported 218 packages of cold rolled steel sheet from Brazil, classified under item number 607.8360 of the Tariff Schedules of the United States. It filed an entry summary on April 17, 1984, and deposited estimated duties of $20,677.80. The entry summary contains five "Special Summary Steel Invoices" (Customs Form 5520) which lists "Rheem Metalurgica, S.A." as the seller (exporter) and "Rheem Manufacturing Company" in either New Orleans, LA or Chicago, IL as the buyer. We note that on two out of the five CF 5520s, one producer is listed as "CIA. Siderurgica Paulista-COSIPA" (Invoice No. Exp-054) and the other as "Usinas Siderurgicas de Minas Gerais" (Invoice No. Exp-052); and the three other invoices list "Rheem Metalurgica, S.A." as the producer.

The protestant indicated awareness of the fact that its merchandise might be subject to countervailing duties ("CVDs") by typing in CVD case number C351-021-000 on the last page of the entry summary directly below the words "total duty". It also took out a single entry bond to cover any CVDs which might eventually be found to be due.

The protestant took these actions in response to a Preliminary Affirmative Countervailing Duty Determination published by the U.S. Department of Commerce ("Commerce") on February 10, 1984 (49 Fed. Reg. 5,157 (1984)), which stated that imports from Brazil of certain carbon steel products may have received subsidies from the Brazilian government within the meaning of the CVD laws. Commerce instructed Customs to suspend liquidation of all affected entries, including that of the protestant. 19 U.S.C. 1671b(d)(1). On April 26, 1984, Commerce issued a notice of Final Affirmative Countervailing Duty Determination (49 Fed. Reg. 17,988 (1984)), followed on June 22, 1984 by a notice of Countervailing Duty Order (49 Fed. Reg. 25,655 (1984)). The CVD order confirmed that Brazilian steel had been subsidized.

Commerce conducted administrative reviews of the CVD order, and on January 9, 1987, published a notice of Final Results of Countervailing Duty Administrative Review (52 Fed. Reg. 829 (1987)). The review established that the following companies had received the following subsidies: Companhia Siderurgica Paulista ("COSIPA") - 9.14 percent ad valorem; Companhia Siderurgica Nacional ("CSN") - 39.38 percent ad valorem; Usinas Siderurgicas de Minas Gerais, S.A. ("USIMINAS") - zero percent ad valorem; Maxitrade - 38.45 percent; and all other firms - 21.13 percent ad valorem. Commerce in its January 9, 1987 notice instructed Customs to assess these listed CVDs on all shipments of affected merchandise entered, or withdrawn from warehouse, for consumption on or after February 10, 1984 and on or before September 30, 1984.

In response to Commerce's instruction, Customs initially directed its field offices to withhold liquidation of the entries because of pending litigation. See CIE N-132/84, Supp. 2 of March 3, 1987 (a reproduction of Customs Telex 001999 dated 02- 18-87). However, on July 23, 1987, Customs issued CIE N-132/84, Supp. 3 (a reproduction of Customs Telex 08432 of 06-23-87 (UNCLAS 8432)), which corrected the March instructions by stating that the suspension applied only to entries of certain carbon steel products exported by COSIPA or CSN. The field was to proceed with the liquidation of all entries of affected merchandise exported by USIMINAS, Maxitrade, and "all other manufacturers/producers/exporters" (but not by COSIPA and CSN).

Customs continued to suspend the liquidation of the entry that is the subject of this protest. On November 9, 1988, the Court of International Trade lifted its preliminary injunction of February 18, 1987, which suspended liquidation of the exports of COSIPA and CSN. See Companhia Siderurgica Paulista, S.A. v. United States, 12 CIT 1098, 700 F. Supp. 38 (November 9, 1988).

On July 14, 1989, the steel was appraised and it was determined that the total amount of duties due was $62,746.28. The difference between the appraised and deposited amounts, $42,068.48, was for CVDs. This increase was stamped on the entry summary. On August 25, 1989, the entry was liquidated "no change" and a bulletin notice was posted. This liquidation was recorded by Customs as a "deemed liquidation". Customs issued a bill for "supplemental duties" in the amount of $42,068.48 on December 14, 1990. The protestant protested that issuance on March 14, 1991.


Whether Customs may bill an importer for countervailing duties accruing on an entry of merchandise which was liquidated "no change" more than 90 days before Customs issued the bill for supplemental duties?


Liquidation of an entry of merchandise means the final computation or ascertainment by Customs of all duties accruing on that entry. 19 CFR 159.1. In most instances, liquidation occurs under the direction of a Customs officer shortly after merchandise has been entered, pursuant to Section 500, Tariff Act of 1930, as amended (19 U.S.C. 1500 (1991)). Sometimes, however, an entry of merchandise will be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record. The two circumstances under which an entry is deemed liquidated (or "liquidated by operation of law") are outlined in 19 U.S.C. 1504: where Customs fails to liquidate an entry within one year from the date of entry or final withdrawal from warehouse (19 U.S.C. 1504(a)), and where an entry which had been under suspension but whose suspension has been lifted has not been liquidated at the expiration of four years from the date of entry or warehouse withdrawal (19 U.S.C. 1504(d)). The liquidation date will be either the first or fourth anniversary date of entry or withdrawal from warehouse.

When the entries were initially filed, Customs properly withheld liquidating the entries of Brazilian steel because the entries were subject to an outstanding countervailing duty determination of February 10, 1984 in accordance with 19 U.S.C. 1671b(d)(1). On the entry's first year anniversary date, liquidation continued to be properly suspended under 19 U.S.C. 1504(b)(2) as required by statute. See 19 U.S.C. 1671b(d)(1); see Pagoda Trading Corp. v. United States, 804 F.2d 665 (Fed. Cir. 1986). However, on the entry's fourth year anniversary date, the statutory basis for suspending liquidation had expired due to Commerce's issuance of its final results of its administrative review on January 9, 1987. Additionally, the court-ordered suspension of liquidation, while still outstanding on April 17, 1988, did not enjoin the liquidation of steel entries exported by Rheem Metalurgica. Rheem Metalurgica was the exporter on the entry summary and was also listed as such on each CF 5520. Thus, since these entries were not subject to any statutory or court-ordered suspension of liquidation prior to the fourth anniversary of its entry, 19 U.S.C. 1504(d) controls.

The Court of International Trade recently addressed the "deemed liquidation" issue of 19 U.S.C. 1504(d). Paraphrasing the court's holding slightly, the court stated in Nunn Bush Shoe Co. v. United States, 16 CIT ___, Slip Op. 92-9, 26 Cust. B. & Dec., No. 7 at p. 19 (February 12, 1992), that pursuant to 19 U.S.C. 1504, entries are deemed liquidated by operation of law when they become four years old if the liquidation is not further suspended by court order or statute as provided for in 19 U.S.C. 1504(b)(1)-(3), and that any subsequent liquidations by Customs after four years is invalid. The court stated that Canadian Fur Trappers Corp. v. United States, 12 CIT 612, 691 F. Supp. 364 (1988), aff'd, 884 F.2d 563 (Fed. Cir. 1989) applies only to entries that remain suspended beyond the four year statutory period (Canadian Fur Trappers involved a CVD order which was lifted after four years had expired; court held that entries were not deemed liquidated at rate asserted by importer at time of entry when Customs failed to liquidate the entries within 90 days after the suspension of liquidation was terminated).

Nunn Bush is dispositive in this case. We find that the entry was initially liquidated by operation of law on April 17, 1988, which was the fourth anniversary date of its entry, by virtue of the fact that prior to that time the suspension of its liquidation had been lifted. See CIE N-132/84, Supp. 3, July 23, 1987 (UNCLAS 8432). It appears from the case file that Customs withheld the liquidation on this entry because COSIPA was listed as the manufacturer on one of the five CF 5520s attached to the entry summary; however, the injunction applied only to entries where COSIPA itself was the exporter, rather than the manufacturer. Rheem was listed as the exporter on all five steel invoices and on the entry summary covering the five entries. Customs erroneously held these entries open on the fourth anniversary date because the injuction did not cover exports by Rheem. We note that on April 17, 1990, Customs clarified the confusion regarding the instructions of CIE N-132/84, Supp. 3 of July 23, 1987, that all entries exported by DUFERCO, DUFER or RHEEM, regardless of manufacturer, should be liquidated at the "all other" exporter rate of 21.13 percent ad valorem because the subsidies on the merchandise purchased from the manufacturers (COSIPA, CSN and USIMINAS) were calculated into the "all other" rate by Commerce.

Customs has no record of a deemed liquidation occurring on April 17, 1988, because it was under the mistaken impression that the entry was still suspended. An inadvertent failure to record a liquidation that occurred by operation of law will not serve to invalidate that liquidation.

Customs can voluntarily reliquidate a 19 U.S.C. 1500 liquidation within 90 days of the notice of the original liquidation, but cannot on its own accord reliquidate an entry which has been deemed liquidated pursuant to 19 U.S.C. 1504. See 19 U.S.C. 1501. As a consequence, the August 25, 1989 "deemed liquidation" was actually an unauthorized 19 U.S.C. 1501 reliquidation of the April 17, 1988 deemed liquidation of the protestant's entry. The illegality of this later reliquidation made it voidable. However, the protestant's failure to timely protest the unlawful reliquidation of August 25, 1989 also made it the final liquidation of the entry in question. See United States v. A.N. Deringer, Inc., 593 F.2d 1015, 1021, 66 CCPA 50 (1979); Omni U.S.A., Inc. v. United States, 840 F.2d 912 (Fed. Cir. 1988); United States v. Utex Int'l Inc., 659 F. Supp. 250 (CIT 1987), rev'd, 857 F.2d 1408 (Fed. Cir. 1988). An erroneous liquidation can be corrected only by following the statutory procedures. Deringer, supra.

The entry was reliquidated on August 25, 1989, albeit unintentionally, as "no change". This in effect (and notwithstanding the fact that the appraiser had earmarked the entry for an increase) meant that Customs had determined that the amount of duties deposited by the protestant at the time of entry was correct, and that therefore no increase would be in order. Since this was a liquidation under 19 U.S.C. 1500, not under 19 U.S.C. 1504, Customs could have corrected the August 25, 1989 reliquidation by billing the protestant for the CVDs within 90 days of that date. The December 14, 1990 billing, however, was beyond the 90 day period and therefore was an untimely attempt by Customs to reliquidate the entry. The protestant's protest, filed within 90 days of the billing, was a timely protest of a decision by Customs to reliquidate an entry. That decision was without authority, and accordingly the position of the protestant must be sustained.


Customs cannot bill an importer for countervailing duties accruing on an entry of merchandise which was liquidated "no change" more than 90 days before Customs issued the bill for the supplemental duties.

You are directed to ALLOW the protest in full. A copy of this decision should be attached to the CF 19, Notice of Action, and sent to the protestant to satisfy the notice requirement of section 174.30(a) of the Customs Regulations.


John Durant, Director

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