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HQ 954219

April 25, 1994

LIQ-11-CO:R:C:E 954219


District Director
U.S. Customs Service
#1 La Puntilla Street
Room 203
San Juan, PR 00901

RE: Protest and Application for Further Review No. 4909-93- 100010; Deemed liquidation of entry; 19 U.S.C. 1504; improper extension of liquidation

Dear Sir:

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


An entry of athletic shoes bearing the "Converse" brand was made on January 10, 1989 by protestant. Protestant provided a sample shoe from the entry to Customs. A laboratory analysis of the shoe was made on November 15, 1989.

There was a question of admissibility, however. The record shows that the protestant in 1987 was investigated for importations of shoes that involved possible violations of the Converse trademark. Those shoes apparently were permitted to be exported in order to avoid seizure. During the period from March 21, 1990 to August 9, 1991, San Juan Customs officers were informed of criminal proceedings against protestant at another district that also involved shoes imported in violation of the Jordache trademark. In that case, the protestant pleaded guilty to violations of 18 U.S.C. 2, 542 and 1956 which resulted in a forfeiture of those shoes. That conviction was reported on an investigative report dated August 9, 1991.

Although the date is uncertain, the responsible Customs officer was informed by the Converse trademark owner that the trademark owner had never authorized the protestant to import Converse brand shoes. Consequently, these shoes should have been inadmissible. Nevertheless, by liquidating the entry on November 6, 1992, Customs decided the question of admissibility in the protestant's favor.

Customs records show that extension notices were issued three times, the last extension notice being issued on October 12, 1991. The entry was liquidated on November 6, 1992. The four-year period set in 19 U.S.C. 1504(d) would expire on January 10, 1993.

The protestant claims that it never received any extension notice. It does admit that it received the Notice of Action (CF 29) on the rate increase on October 20, 1992.


Did the subject entry deem liquidate at the rate of duty asserted at the time of entry?


The entry was liquidated on November 6, 1992. The protest was filed on January 25, 1992. The protest is timely and a protest challenging the legality of a liquidation, as here, is authorized under 19 U.S.C. 1514(a)(5).

The protestant's primary claim is that the entry was deemed liquidated on January 10, 1990, by virtue of 19 U.S.C. 1504(a). It alleges that liquidation was never extended. The protestant alleges that it received no extension notice. With respect to that allegation, the protestant provided no evidence. In the absence of any evidence there is nothing to rebut the presumption of correctness by the involved Customs officers. See Enron Oil Trading and Transportation Co. v. U.S., 988 F.2d 130 (CAFC App. 92-1089, 1993); International Cargo & Surety Insurance Co. v. U.S., 15 CIT 541 (1991); Star Sales & Distributing Corp. v. U.S., 10 CIT 709, 663 F. Supp. 1127 (1986); Bar Bea Truck Leasing Co. v. U.S., 5 CIT 124 (1983) and HQ 224397.

Protestant claims that it "heard nothing concerning this entry from Customs until October 20, 1992 when a CF 29 Notice of Action was issued announcing a rate increase." There is a presumption that government officials perform their duties in the manner required by law. Star Sales, 10 CIT at 710, 663 F. Supp. at 1129 (1986). And, proof of mailing raises a presumption of delivery. F.W. Myers & Co. v. United States, 6 CIT 215, 216, 574 F. Supp. 1064, 1065 (1983). Once those presumptions are established, the importer has the burden of rebutting those presumptions. In the instant case, Customs Automated Commercial System ("ACS") record indicates that there were three extension notices issued with the final extension notice being dated October 12, 1991. Regarding the subject protest, the protestant has failed to present evidence negating the presumption of receipt of the notice. Therefore, the protestant's claim that entry was deemed liquidated by virtue of a failure to extend properly must fail.

The protestant, in its application for further review, alleges that there were no grounds or reason to extend liquidation of the entry. Under 19 U.S.C. 1504(b), Customs may extend the one-year liquidation period, by providing notice to the importer, on any of the following three grounds: (1) if "information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer"; (2) if "liquidation is suspended as required by statute or court order"; or (3) if "the importer of record requests such extension and shows goods cause therefor." Section 159.12(e), Customs Regulations, states that extensions may be granted by the district director for a total not to exceed 3 years. Therefore, liquidation of an entry must take place within 4 years from the time of entry unless liquidation continues to be suspended by court order or if required by statute.

In order to determine whether the subject entry deemed liquidated we must look at two questions: (1) did Customs have grounds on which to extend liquidation; and (2) were the subsequent one-year extensions invalid?

First, did Customs have grounds on which to extend liquidation? It appears that Customs had justification for delaying liquidation of the subject entry. The record indicates that at the time of entry a sample shoe was forwarded to the Office of Laboratory Services to determine the components of the shoe. In the meantime, the protestant became the subject of an investigation for importing counterfeit athletic shoes. Previously, the protestant had been investigated for shoes imported in violation of the trademark laws with the same brand as involved here. Therefore, Customs had grounds to extend liquidation of the subject entry. There were questions concerning the admissibility, classification and appraisement of the subject merchandise. The courts have concluded that Customs decision to extend liquidation will be upheld if it is proper under the statute, and is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. See International Cargo & Surety Ins. Co. v. United States, 15 CIT 541, 779 F. Supp. 174 (1991); Detroit Zoological Society, supra, 10 CIT at 137-138. We, accordingly, conclude that the extensions issued under 19 U.S.C. 1504(b)(1) were a proper exercise of the district director's discretion. See Detroit Zoological Society, supra, 10 CIT at 138; 19 CFR 159.12(e).

Having concluded that there were valid grounds to extend the entry and that protestant has failed to substantiate its claim that it did not receive any notice of extensions, there remains the question of whether protestant has demonstrated that the subsequent one-year extensions were invalid? The Court of Appeals for the Federal Circuit recently held that: "Customs may, for statutory purposes and with the requisite notice, employ up to four years to effect liquidation so long as the extensions it grants are not abusive of its discretionary authority." St. Paul Fire & Marine Ins. Co. v. U.S., 6 F.3d 763, 768 (Fed. Cir. 1993). In St. Paul, the court upheld Customs periodic extensions of liquidation, made, in accordance with 19 U.S.C. 1504(b)(1) and Customs regulations. In the instant case, Customs record indicates that three extension notices were properly issued, with the final extension dated October 12, 1991. Liquidation occurred on November 6, 1992 (within the four year period).

The St. Paul case settled the issue of whether Customs broad discretion to extend up to the four year limit to obtain needed information can be abused. Specifically, the court held: "Such an abuse of discretionary authority may arise only when an extension is granted even following elimination of all possible grounds for such an extension. There is, in sum, a narrow limit on Customs' discretion to extend the period of liquidation." Id. (emph. added). This case further held: "[W]e must accept the fact that Congress has directed the [court] to presume that Customs decisions are correct and that it is St. Paul's [the plaintiff's] burden to prove otherwise." Id., citing, 28 U.S.C. 2639(a)(1). The St. Paul case also held that the quantum of proof required is the "preponderance of the evidence." Id. Thus, not only does Customs possess broad discretion to extend up to the full four year period, but also anyone challenging a particular extension decision will be required to prove, by a preponderance of the evidence, that all possible grounds for such an extension were eliminated, but Customs extended anyway. Protestant does not make such a showing.

In 1987, the protestant was investigated in connection with shoes imported in violation of the trademark laws. The San Juan Customs officials were aware of an investigation of the protestant involving trademark violations of other similar shoes at another district. The San Juan Customs officials were informed that investigation resulted in a criminal conviction of the protestant. The San Juan Customs officials were informed by the trademark owner that it never authorized the protestant to import such shoes. However, that latter information may have been received after the entry was liquidated. In any event, by liquidating that importation the question of admissibility, perhaps erroneously, was decided in the protestant's favor.

While there appears to have been sufficient information acquired by the import specialist with regard to the proper classification with the laboratory report of November 15, 1989, admissibility remained open. The report of the criminal conviction by a guilty plea, of the protestant on a different shipment would not decide the issue of admissibility on the shoes in the protested entry. While the suspected violation was the same, the shoes here involved a different trademark than the shoes in the criminal proceedings. Moreover, the trademark here was the same as the trademark violation for which the importer was investigated in 1987. It was proper for the import specialist to delay liquidation to get all of the evidence to make a determination on admissibility. Given those circumstances, there is no evidence to show that the issuance of the second and third extension notices was without any basis. Until liquidation, the question of admissibility remained an open issue.

The protestant does not prove that all grounds for an extension decision at issue were eliminated. The protestant provides no evidence, but instead only states the following bare argument: "Customs has had a sample of the merchandise under protest since 1989 and may not issue a rate increase nearly four years after the date of entry." The protestant's Application for Further Review reiterates the substance of this argument, but again produces no evidence.

This argument is unsubstantiated and, moreover, largely irrelevant. The need for a merchandise sample was not the only ground underlying the appropriate Customs officer's decisions to extend. The appropriate Customs officer's decisions to extend are also presumed regular and correct. St. Paul, 6 F.3d at 768-769. The protestant has left these facts and presumptions totally unrebutted and has not carried its civil burden of proof. On the contrary, even Customs own review of its records indicates that the subsequent one-year extensions were entirely appropriate given the protestant's history of importing shoes that may have been inadmissible.


The subject entry did not deem liquidate. Therefore, you should DENY this protest in full for the reasons stated above.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office 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 the mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.


John Durant, Director

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