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HQ 225026

April 30, 1996

LIQ-9-01-RR:IT:EC 225026 SLR/SAJ


Port Director of Customs
P.O. Box 3130
Laredo, TX 78044-3130

RE: AFR Protest No. 2304-93-100355; Mistake of Fact; Substitution of TIB Entry for Consumption Entry; American Goods Returned; 19 C.F.R. 10.31(g); 19 U.S.C. 1520(c)(1)

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We note that the recent case of Aviall of Texas, Inc. v. United States, 70 F.3d 1248 (1995), aff'g in part, 861 F. Supp. 100 (CIT 1994), regarding the applicability of 19 U.S.C. 1520(c)(1) to the plaintiff's "inadvertent" late filing of the blanket certification for preferential tariff treatment under the Agreement on Trade in Civil Aircraft (CAA) has no application on the facts of this case. We have examined the arguments and our decision follows.


The subject protest involves the importation of a Pratt & Whitney gas turbine aircraft engine entered by Border Brokerage Inc. (protestant) for the account of Sorta, S.A. de C.V. The pro forma invoice indicates that the aircraft was imported from Mexico for repair by Ryder Aviall, Inc. in Dallas, Texas. The Customs Form (CF) 7501 lists protestant as the importer of record for the merchandise.

The subject aircraft engine was entered on May 23, 1991, under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS). That provision provides for the conditionally free entry of "American Goods Returned" after having been exported, without requiring advancement in value or improvement in condition, other than articles returned temporarily for repair, alteration, processing or the like, for subsequent re-exportation.

After entry, it was discovered on June 26, 1991, that the engine was Canadian and not eligible for duty-free treatment. On July 31, 1991, protestant wrote Customs Laredo, informing that office that the subject article was incorrectly entered as U.S. goods returned. Protestant indicated that it was in the process of obtaining a certificate of origin from Pratt & Whitney Canada and that it would enter the turbine under the CAA and provide a corrected CF 7501 once the certificate was received. In the alternative, it would seek entry under the Canadian Free Trade Agreement.

On September 10, 1991, protestant wrote Customs Laredo again, requesting that pursuant to 19 C.F.R. 10.31(g), it be allowed to substitute a temporary importation bond (TIB) entry (subheading 9813.00.05, HTSUS) for the original consumption entry. Subheading 9813.00.05, HTSUS, provides for the temporary importation, under bond, of merchandise to be repaired, altered, or processed and re-exported within one year. On April 28, 1993, Customs Laredo determined that the circumstances which led to the substitution request did not constitute a "mistake of fact" within the meaning of 19 U.S.C. 1520(c)(1), and denied relief. The subject entry was liquidated under subheading 8411.21.4000, HTSUS, at 5 percent ad valorem on May 21, 1993. Protestant has filed this protest on August 19, 1993 against the liquidation.

Protestant alleges that prior to release, the turbine was examined by its personnel to determine which type of entry would be filed, TIB or consumption. Attached to the turbine was a metal Pratt & Whitney dataplate which read, in pertinent part, as follows:



Protestant claims that based on this observation, the decision to file a consumption entry was made. Protestant maintains that: (1) this decision was based on the mistaken belief that the turbine was of U.S. origin; and (2) had it been known that Canada was the true origin, a TIB entry would have been filed. According to protestant, it was not until more than a month after the entry was filed, when a manufacturer's affidavit had been requested on a CF 28, that it learned that the turbine was of Canadian origin.

Protestant claims that the liquidation of the subject merchandise under subheading 8411.21.4000, HTSUS, was erroneous in that 19 C.F.R. 10.31(g) allows for the substitution of a TIB entry for consumption entry where there has been a mistake of fact within the meaning of section 520(c)(1) of the Tariff Act of 1930, as amended (19 U.S.C. 1520(c)(1)).


Whether Customs Laredo was correct in denying protestant's 19 C.F.R. 10.31(g) claim for relief.


Initially, we note that the protest was timely filed within 90 days of the liquidation under the statutory and regulatory provisions for protests (see 19 U.S.C. 1514 and 19 C.F.R. Part 174) and that liquidation of an entry is a protestable issue pursuant to 19 U.S.C. 1514(a)(5).

Section 10.31(g) of the Customs Regulations (19 C.F.R. 10.31(g)), provides that an entry may be amended to claim TIB free-entry even though the articles have been released from Customs custody, if it is established that the original entry was made as a result of a clerical error, mistake of fact, or other inadvertence within the meaning of 19 U.S.C. 1520(c)(1), and was brought to the attention of Customs within the limits of that section.

Section 10.31(g) was amended to provide for application of 19 U.S.C. 1520(c)(1) by T.D. 55850 (1963). The amendment required the importer to establish that the failure to enter the article under the temporary importation provision was due to an error within the meaning of 19 U.S.C. 1520(c)(1) and to bring it to the attention of Customs within the time limits of the statute. There has been no change of substance to the regulation provision since that amendment. The statute requires that the error be brought to the attention of Customs within one year after the date of liquidation or exaction. Compare with Article 435, Customs Regulations of 1943 and 19 C.F.R. 10.31 (1959 ed.).

In order to be entitled to the reliquidation of a consumption entry under this section, the language of the statute and regulation require the importer show that the importer made the consumption entry as a result of a clerical error, mistake of fact, or other inadvertence, and that the error was brought to Customs' attention within one year after liquidation of the erroneously made consumption entry.

Section 520(c)(1) of the Tariff Act of 1930, as amended (19 U.S.C. 1520(c)(1)), allows for the reliquidation of an entry to correct a clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of the law. The error must be manifest from the record or established by documentary evidence and brought to the attention of the appropriate Customs officer within one year from the date of liquidation. (Emphasis added.) A notice before liquidation does not meet this statutory requirement (J.S. Sareussen Marine Supplies, Inc. v. United States, 62 Cust. Ct. 449, C.D. 3799 (1969)), and therefore, does not meet the regulatory provision of 19 C.F.R. 10.31(g). In the case at hand, protestant's claim for relief was made prior to liquidation of the subject entry. Consequently, Customs Laredo was correct in denying protestant's claim for 19 C.F.R. 10.31(g) relief. The issue of whether protestant is entitled for relief under 19 C.F.R. 10.31(g) is properly before us since the entry has been liquidated. We now focus on the question of whether a mistake of fact occurred based on the evidence in the record.

Under 19 U.S.C. 1520(c)(1), a "mistake of fact" is any mistake except a mistake of law. See Jordan v. Brady Transfer & Storage Co., 225 Iowa 137, 284 N.W. 73, 77 (1939). It has been defined as a mistake which takes place when some fact which indeed exists is unknown, or a fact which is thought to exist, in reality, does not exist. See Savings Bank of Rockville v. Wilcox, 117 Conn. 196, 197, 167 A. 713, 714 (1933). The seminal case on mistake of fact is C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, C.D. 4327, 336 F. Supp. 1395 (1972), aff'd, 61 CCPA 90, C.A.D. 1129, 499 F.2d 1277 (1974), in which the following test was articulated:

[M]istakes of fact occur in instances where either (1) the facts exist, but are unknown, or (2) the facts do not exist as they are believed to. Mistakes of law, on the other hand, occur where the facts are known, but their legal consequences are not known or are believed to be different than they really are. C.J. Tower 603 F.2d at 855.

In Headquarters (HQ) 723750, dated November 29, 1983, Customs considered the substitution of a TIB for an "American goods returned" consumption entry under 19 U.S.C. 1520(c)(1). In that case, the broker entered the merchandise under item 800, Tariff Schedules of the United States (TSUS), after being informed by its client that the merchandise was of U.S. origin and would be re-exported after a short period of time after repair, testing, etc. The merchandise, however, was not of U.S. origin. It was held that when a broker selects among alternative types of entries which are available he is not precluded from obtaining relief under 19 U.S.C. 1520(c)(1), provided the original entry was filed as a result of a mistake of fact, inadvertence, or clerical error, not amounting to an error in the construction of the law.

Customs distinguished HQ 301863, dated November 14, 1974, wherein entry substitution was not allowed. In that case, the importer intended to and did file a consumption entry, but because the imported truck did not meet the emission or safety requirements, the importer attempted to subsequently substitute a TIB entry. No mistake of fact was alleged.

There are two data plates involved. The first data plate, a copy of which was provided with the protestant's letter of October 12, 1993, was discussed in the Facts above. The second data plate was provided as attachment D to the protest. That second data plate states that the PT6 Turboprop engine was manufactured expressly for Beechcraft. The manufacturer is shown as Pratt & Whitney Aircraft of Canada, Ltd., having a Canadian address. While the Pratt & Whitney Canada letter dated August 20, 1993 to the protestant speculates that the bottom lines of the first data plate may have mislead the protestant's employees as to the origin, it is merely a supposition.

The Court in PPG Industries, Inc. v. United States, 4 CIT 143 at 147-48 (1982), quoting, in part from the lower court in Hambro Automotive Corp. v. United States, 81 Cust. Ct. 29, 31, C.D. 4761, 458 F. Supp. 1220 (1978) stated that the burden and the duty is on the plaintiff to inform the appropriate Customs official of the alleged mistake of fact with "sufficient particularity to allow remedial action." See also United States v. Lineiro, 37 CCPA 5, 10, C.A.D. 410 (1949) (holding that "[d]etermination of issues in customs litigation may not be based on supposition." At most protestant's assertion merely explains why there was an erroneous claim for the "American Goods Returned" duty exemption; it does not show that the protestant intended to enter the engine as a temporary importation under bond or that it made a consumption entry as the result of that error.

Protestant provided no evidence that the merchandise was imported on a temporary basis and that the importer intended that the merchandise be re-exported after repair. Rather, the facts indicate that protestant intended to file a consumption entry. The Entry Summary (CF 7501), indicates that the merchandise was being imported for repairs, and the merchandise was entered under the subheading 9801.00.1035, HTSUS, for "American Goods Returned" after being exported without being improved in condition, other than the articles being returned temporarily for repair, alteration and the like, to be subsequently re-exported.

When protestant discovered that the turbine was of Canadian origin and not U.S., protestant wrote Customs Laredo informing that office that it intended to file an amended CF 7501, claiming free-entry under either the CAA or the Canadian Free Trade Agreement. This fact supports a conclusion that a consumption entry was originally intended, and there is a complete lack of evidence indicating that there was an intent to export the articles after the repairs were made.

Mexican import documents indicate that the turbine engine was returned to Sortra, S.A. de C.V., six months after importation. One of these documents contains the words "EXP. TEMPORALMENTE." Furthermore, in the file, there is an import activity sheet prepared by Consultores Aduanales Del Norte, S.C., on behalf of Sortra, S.A. de C.V. The summary sheet lists the subject entry and reads "EXPORTACION TEMPORAL" "T.I.B. IMPORTATION 5/23/91" and "IMPORTACION DEFINITIVA" "RETURN OF T.I.B. TO MEXICO PERMANENTLY." These documents are dated after the subject consumption entry was made and are not evidence of protestant's intent to file a temporary bond at the time of entry.

Protestant submitted documents to our office to supplement the "pedimento de exportacion" in order to substantiate its claim that there was an intent to enter the turbine for repairs and return it to Mexico at the time of entry. One of these documents is the Mexican export document "PEDIMENTO DE EXPORTACION" which appears to cover the exportation of the subject turbine engine from Mexico. The statement "Exportacion temporal para su reparacion . . .", which means, "Temporary export for repair." According to protestant, this was to advise Mexican Customs the reason for filing the temporary exportation. Protestant claims that the very nature of the "temporary exportation" means that the merchandise will be returned within a specified time.

Protestant has also forwarded a copy of the pro forma invoice for the merchandise. That document is dated May 21, 1991, and states, in part: "The motor is being exported from Mexico in order to undergo repairs at Aviall." The handwritten phrase, "No Commercial Sale -- For Customs Purposes Only" was added by protestant. Protestant explained that this was written at the time of entry because "it was our understanding that the turbine was being imported for repairs and would be returned to Mexico."

We remain unconvinced that protestant intended to file a TIB at the time of entry. In a court case similar to the subject protest, plaintiff filed a consumption entry for its merchandise and subsequently requested the substitution of a TIB. The pro forma invoice stated: "Experimental," "No charge" and "Value for Customs purposes only." The court denied plaintiff's motion for summary judgment, indicating, among other things, that these notations were insufficient to establish that at the time of entry plaintiff intended to and was capable of meeting the requirements of TIB duty-free entry. PPG Industries, Inc. v. United States, 7 CIT 118, 126 (1984); see also PPG Industries, Inc. v. United States, 4 CIT 143 (1982). As for the "pedimento de exportacion," protestant admits that it did not review this document before making entry.

Protestant has forwarded a copy of a letter, dated April 22, 1991, from the Mexican shipper's U.S. office to Aviall notifying them of the shipment of the turbine to Dallas for repairs. The letter reads, in pertinent part: "As per our telephone conversation please inspect and repair as necessary as to reinstall on engine in Mexico so we can ferry aircraft back for necessary overhaul at your shop." The letter is dated one month prior to the entry of the subject merchandise. Protestant admits that this letter was not in its possession at the time of entry. Therefore, it has no evidentiary value on whether protestant intended a TIB when the entry was filed.

It is possible that the exporter in this case intended to file a TIB at entry. Customs has allowed for entry substitution in cases where the broker either misunderstood or failed to follow the importer's instructions. See Legal Determination 79-0392 (November 6, 1979); Headquarters Ruling Letter 723375 (August 27, 1984). In the case at hand, however, the CF 7501 lists protestant as the importer of record and these cases do not apply.


The protest should be denied in full. The request of September 10, 1991 was not made in accordance with section 10.31(g) since it was made before liquidation of the consumption entry. While the assertion that either data plate was misread as to the origin might explain that the erroneous claim for duty-free entry as "American Goods Returned", it fails to show that there was any intent to file a temporary importation under bond instead of a consumption entry.

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, with the Customs Form 19, 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 this 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, Freedom of Information Act and other public access channels.



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