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HQ 223625


May 4, 1992

LIQ-9-01 CO:R:C:E 223625 C

CATEGORY: ENTRY LIQUIDATION

John H. Heinrich
District Director of Customs
United States Customs Service
Los Angeles, CA

RE: Protest and application for further review no. 2704-91- 101785; reliquidation to correct a mistake of fact, clerical error, or inadvertence; mistake must be manifest from the record or established by documentary evidence at the time the reliquidation request is made; burden of proof; 19 U.S.C.

Dear Mr. Heinrich:

This responds to the referenced protest. The protest record has been reviewed and our decision follows.

FACTS:

The facts as we understand them are as follows: The importer in this case, the PROTESTANT (hereinafter referred to as the importer), is a company that imported bicycle chain. The importer, through its broker, classified the imported merchandise on the entry documents under subheading 7315.12.00207, HTSUS (Harmonized Tariff Schedule of the United States): "Chain and parts thereof, of iron or steel: Articulated link chain and parts thereof: Other chain . . . Of not over 50 mm pitch and containing more than 3 parts per pitch . . ." The entries were liquidated without a change in that classification, and duty was paid. Subsequently, upon review of its records, the broker decided that the merchandise had been misclassified. This discovery occurred after expiration of the period within which a protest could have been filed. Consequently, the importer, through its broker, filed a request for reliquidation under 19 U.S.C. 1520(c)(1), requesting a refund of overpaid duties. The request for reliquidation stated the following:

During post-entry review; (sic) we realize that the goods were not classified correctly.

The correct classification for bicycle chains should be 7315.11.00100, Thus (sic) making sub-heading 9902.73.15 applicable. Therefore, we have overpaid duty in the amount of $1,389.15.

We therefore, respectfully request re-liquidation pursuant to Sec. 520 (c)(1) of the tariff act of 1930 as amended and Sec. 173.4 of the customs regulations.

Customs denied this request for reliquidation on the grounds that a misclassification is an error in the construction of a law not correctable under the statute. The importer filed a timely protest of this denial under 19 U.S.C. 1514(a)(7) and made application for further review in accordance with section 174.23 of the Customs Regulations (CR)(19 C.F.R. 174.23). In accordance with that regulation, and section 174.26(b), CR, you submitted the protest to this office for our determination (19 C.F.R. 174.26(b)).

ISSUE:

Was Customs denial of the importer's request for reliquidation under 19 U.S.C. 1520(c)(1) erroneous, such that this protest under 19 U.S.C. 1514(a)(7) should be approved?

LAW AND ANALYSIS:

The entry process includes a procedure for the correction of errors made in the entry of merchandise. Under the protest procedure of 19 U.S.C. 1514, errors in the classification, valuation, etc., of merchandise can be corrected, and reliquidation obtained with refund of overpaid duties, if the error is brought to the attention of the appropriate Customs officer within 90 days of the liquidation. Failure to file a protest within the prescribed period renders the liquidation final and binding on the importer and the government.

After expiration of the 90 day period, an importer can obtain a reliquidation of the entry, and a refund of overpaid duties, in only limited circumstances. Under 19 U.S.C. 1520(c)(1), an entry can be reliquidated to correct a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law. The error must be adverse to the importer and brought to the attention of the appropriate Customs officer within one year from the date of liquidation. The error must be manifest from the record or established by documentary evidence. This means that the nature of the error must be observable upon review of the record or upon submission of documentary evidence. In either event, the burden is on the petitioner to establish the nature of the error claimed and to demonstrate that it falls within the ambit of the statute.

In determining a protest filed under 19 U.S.C. 1514(a)(7), the issue to be decided is as set forth above: Did Customs err in denying the section 1520(c)(1) request for reliquidation? If Customs erred by failing to recognize the error as one correctable under the statute, the protest can be approved where the evidence reviewed on the protest record indicates that such an error was, at the time the reliquidation request was considered, either manifest from the record reviewed at that time or established by documentary evidence submitted at that time. If, however, the claimed error, even if later concluded by the protest reviewer to be of the kind that is correctable under the statute, was not manifest from the record, or made apparent by documentary evidence submitted by the petitioner, at the time the section 1520(c)(1) determination was made, the denial of the 1520(c)(1) request cannot be said to be erroneous. The alleged mistake must be set forth with sufficient particularity to allow remedial action. PPG Industries, Inc. v. United States, 4 CIT 143 (1982); Hambro Automotive Corp. v. United States, 81 Cust. Ct. 29, C.D. 4761, 458 F. Supp. 1220 (1978).

The burden of proof requirement imposed under section 1520(c)(1) is one that must be met by the petitioner during the section 1520(c)(1) petition and review process. It is not a burden of proof that can be blithely ignored at the 1520(c)(1) reliquidation stage and, instead, be addressed for the first time at the protest stage. It is the affirmative burden of the petitioner to establish, from the record or by documents submitted, the nature of the error and to demonstrate, thereby, that the error is in fact correctable under the statute.

On the record of this protest, it appears that the denial of the reliquidation request was not erroneous for the reason that the petitioner failed to bring the claimed error to the attention of the Customs officer with sufficient particularity to allow such officer to recognize a correctable error. In fact, the petitioner, in its request for reliquidation, failed to specify an error of any kind, stating rather that the "goods were not classified correctly" and adding nothing more except the request for reliquidation and refund of duties. Where the error is manifest from the record, such that the petitioner does not have to submit additional documentation to show the error, it is still the petitioner's burden to bring the error to the attention of the Customs officer with sufficient particularity to demonstrate the nature of the error. Where the petitioner simply reports to Customs that the classification was incorrectly made, without explanation of the error that caused the misclassification, the petitioner has failed to meet the burden imposed by the statute. This appears to be what happened in this case, and Customs denial of the request for reliquidation under this circumstance cannot be said to be erroneous.

It is not enough for the importer to notify Customs that the classification was wrong, that the correct classification for bicycle chains is 7315.11.00100, HTSUS, and that, therefore, subheading 9902.73.15, HTSUS, is the applicable provision for duty-free entry. This does not identify and explain the correctable error. It fails to demonstrate that the error was other than a mistake in legal construction. Where a misclassification can be explained by either a legal error or a correctable mistake of fact or clerical error, the importer's burden is to show, on the record or by documentary evidence, how correctable error was responsible. Failure to rule out legal error by proving correctable error will result in denial of the petition for want of evidence. Bald assertion and supposition of correctable error is not enough to gain reliquidation under the statute. Bar Bea Truck Leasing Co. v. United States, 5 CIT 124 (1983); United States v. Lineiro, 37 CCPA 5, C.A.D. 410 (1949).

We conclude that the unspecified error was not manifest from the record reviewed at the time of the 1520(c)(1) determination and that the petitioner failed to establish the error - either by specifying information in the record or by submitting additional documentary evidence - with the requisite sufficient particularity to meet the burden of proof imposed under the statute. For this reason alone the protest should be denied, inasmuch as it demonstrates that Customs did not err in denying the reliquidation request.

Moreover, considering this matter on the record of this protest, it is not clear that the error occurring in this case was not a legal error. Your December 10, 1991, memorandum requesting further review asserts that there was no way for the broker classifying the merchandise to know that the chains were bicycle chains. Yet, the information contained in the protest record clearly indicates that the merchandise is bicycle chain. For example, the CF 3461 (Entry/Immediate Delivery) relating to one of the entries protested indicates "BICYCLE CHAIN" in block 20 for description of the merchandise. The invoice, dated January 6, 1990, and bearing number TPC-1A-8016, also clearly identifies the merchandise as bicycle chain. In addition, "bicycle chain" is clearly indicated on the packing list, the bill of lading, and the "Certificate of Origin" contained in the file. Thus, the assertion that the classifier could not have known that the merchandise was bicycle chain appears questionable. This doubt is furthered by what you state on page three of the memorandum: "1) The invoices clearly stated all of the technical information necessary for the responsible import specialist to make a correct classification." If this is true, it is a mystery why the broker could not know that the merchandise was bicycle chain.

The protest, executed by the importer's broker, indicates the following: "It is our contention that said Entry-Summaries (sic) were inadvertently handled by our staffmember. The invoice is clear as to the product with applicable dimensions. We content (sic) that instead of seeking information from the client; (sic) the wrong classification was used."

This explanation seems to suggest that the invoice was sufficiently clear and that the problem had to do with the employee's mishandling of the assignment. The invoices reviewed in this protest record are clear enough to indicate that the merchandise was bicycle chain. Given the information available to the broker's employee, he/she should have made a correct classification. If there was some confusion and the employee failed to responsibly seek information from the importer, such failure is more in the nature of negligence. Moreover, since the tariff subheading applicable to bicycle chain and the subheading chosen by the employee carried the same duty rate, perhaps a judgment was made that choosing one or the other did not matter. This would imply ignorance of subheading 9902.73.15, HTSUS. This kind of error is an error in the construction of a law. Concentric Pumps, Ltd. v. United States, 10 CIT 505, 643 F. Supp. 623 (1986). We cannot conclude that the foregoing is what happened, but it is suggested as a reasonable possibility on the information contained in this protest record. Speculation aside, the protest itself does not allege facts from which a correctable error can be discerned.

In short, we are unconvinced that the record of this protest establishes that a correctable error was responsible for the misclassification. This conclusion is academic, however, in view of our prior conclusion that this protest cannot be approved for the reason that Customs did not err in denying the request for reliquidation. Nonetheless, we note that had we undertaken a de novo review of the reliquidation request, our conclusion would be that correctable error has not been established.

You asked that we consider several additional issues. First, the instant case is distinguishable on its facts from Customs Service Decision (C.S.D.) 89-87, which was cited in support of the proposition that the protest should be approved. There, an employee of the importer failed to take notice of pertinent documents relative to the imported merchandise. Consequently, the employee gave erroneous instructions to the broker respecting the classification of the merchandise. On the facts here, this is not the case. It has not been alleged that an employee of the importer or the broker failed to take notice of pertinent documents or that the broker received erroneous instructions. Here, the broker misclassified the merchandise, but it is not entirely clear why. As above, the record fails to show that the misclassification was due to correctable error.

On the issue of the broker's conduct, however, C.S.D. 89-87 is applicable to the instant case. In part, the ruling held the following: "The broker had all documentation necessary to file a correct entry. Notwithstanding the erroneous instructions it received from the importer, the record does not establish that the broker made a mistake of fact, inadvertence or clerical error in filing the entry under the wrong classification, rather than a mistake of law by improperly classifying the merchandise." This holding is applicable to the instant case in that the protest record (which contains more information than the record considered at the time the reliquidation request was considered) does not demonstrate that correctable error, rather than legal error, was responsible for the misclassification. The rule is that the misclassification of merchandise is an error in the construction of a law unless it can be shown that a correctable error was in fact responsible for the misclassification. Mattel Inc. v. United States, 377 F. Supp. 955, 72 Cust. Ct. 257, C.D. 4547 (1974). On the record of this protest, we are constrained to conclude that the misclassification was an error of law.

Second, you inquired as to the affect automated entry processing would have on questions under section 1520(c)(1). Customs decision to liquidate merchandise automatically is based on its determination that the merchandise is of low risk with respect to the merchandise itself, as well as with the information it receives regarding that merchandise from the importer or broker. This determination is based on pre- importation knowledge about the merchandise, the importer, the ultimate consignee, etc. The relevant part of the statute that governs liquidation, 19 U.S.C. 1500, requires only that the appropriate Customs officer classify the entered merchandise, liquidate the entry, and give notice of that liquidation. No particular procedure is required to accomplish these tasks. Consequently, the method selected is irrelevant to the issue of whether or not there was an error in the entry correctable under 19 U.S.C. 1520(c)(1).

In summary, reliquidation under section 1520(c)(1) is not a remedy for broad application. It is not intended to provide a simple alternative resolution to classification problems in those instances where the importer fails to file a timely protest. Rather, it is intended to apply in limited circumstances (Phillips Petroleum Co. v. United States, 54 CCPA 7, C.A.D. 893 (1966); Godchaux-Henderson Sugar Co. Inc. v. United States, 85 Cust. Ct. 68, C.D. 4874 (1980)) and only when a correctable error is established on the record or by submitted documentation. This burden of proof has two purposes that, in a sense, are two sides of the same coin; one to establish the correctable error and the other to thereby demonstrate that an error of legal construction did not occur. This burden must be met at the time the section 1520(c)(1) petition is considered.

HOLDING:

On the facts of this case, as above, it does not appear that Customs erred in denying PROTESTANT's request for reliquidation under 19 U.S.C. 1520(c)(1). The record of this protest fails to demonstrate that a correctable error was established by the importer - either by reference to the record or by documentary evidence - upon the record of the reliquidation request. Consequently, this protest must be denied.

You are instructed to deny the protest. A copy of this decision should be attached to the Form 19, Notice of Action, to be sent to the PROTESTANT.

Sincerely,

John Durant, Director

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