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HQ 226154

September 19, 1995

LIQ-7/LIQ-11-R:C:E 226154 PH


District Director
U.S. Customs Service
200 East Bay Street
Room 121
Charleston, South Carolina 29401

RE: Protest 1601-95-100016; Extension of Time for Liquidation; Deemed Liquidation; Marking Duties; 19 CFR 159.12; 19 U.S.C. 1304(f); 19 U.S.C. 1504; 19 U.S.C. 1514

Dear Madame:

The above-referenced protest was forwarded to this office for further review. Our decision follows.


According to the file and Customs records, on May 27, 1993, the importer entered certain merchandise (woven area rugs). On the same date (May 27, 1993), Customs issued a Notice to Mark and/or Notice to Redeliver to the importer in which it was stated (in the Remarks/Instructions/Other Action Required of Importer block) that "Country of Origin Marking ‘The Pride of Turkisch Industries' is not acceptable. Rugs need proper C/O marking. Marking must be on rugs and not just packaging." In the Action Required of Importer block, it was indicated that "Customs supervision of marking or other corrective action not required. After all merchandise has been brought into conformity with cited statute(s)/regulation(s), complete the certification below and return to Customs ... WARNING: All merchandise must be retained until you are notified by Customs that corrective action is acceptable."

According to the file, by letter of September 8, 1993, the importer sent Customs a copy of a police report "as promised." The police report indicates that the importer stated he had been evicted from a warehouse and that the importer's oriental rugs were dumped outside of the warehouse and that his rugs may have been stolen. The importer suggested that "a case can be made by the US Customs against the landlord ... and the ... Sheriff [regarding the rugs]." The importer provided identifying data regarding the alleged eviction.

There is an October 7, 1993, letter in the file from a person identified as an employee of the protestant to Customs "respectfully request[ing] an extension of time to get this importer to pay their duties." In this letter it is also stated "[a]s you can see from the attached documents, this case will take some time to unravel ... [the importer] is willing to pay the duties, but needs more time, as his receivables are just beginning to come in." Attached to this letter is an October 6, 1993, letter from the importer to the employee of the protestant stating that copies of the Customs marking notice, the September 8, 1993, letter, and the police report are provided and also stating that the importer "trust[s] that the above information is sufficient for you to make a decision as to the proper arrangement that can be worked out on the outstanding amount owed by [the importer]."

According to the file, the entry under consideration was not liquidated until August 12, 1994. Liquidation had been extended on April 21, 1994, and the notice of extension was issued on April 23, 1994. The reason given for extension of liquidation was "Code 1". The liquidated entry included $5,540.10 in additional marking duties under 19 U.S.C. 1304(f). On November 2, 1994, demand for payment of the increased duties (i.e., the additional marking duties), with interest ($77.17) was made on the surety for the entry.

On January 17, 1995, the surety filed the protest under consideration. In the protest, the protestant certified that it filed the protest on its own behalf and that it was not collusively filing to extend any other authorized person's time to protest. The grounds stated by the protestant in the protest were that, according to the protestant, the liquidation was null and void "having been made after the expiration of the one year limitation on liquidation" and that "the extension of liquidation for the subject entry was not based in law or in fact upon any one of the statutory grounds for extending liquidation." The protestant cited 19 U.S.C. 1504 in regard to these grounds for protest. The protestant contended that all information needed to properly appraise, classify, and assess duties on the subject entry was available to the appropriate Customs officer within the one year period prior to the anniversary date of the entry.

Further review for the protest was requested and granted.


May the protest in this case be granted?

Initially, we note that the protest was timely filed (i.e., within 90 days of the demand upon the protestant surety; see 19 U.S.C. 1514(c)(2)) and the matter protested is protestable (see 19 U.S.C. 1514(a)(5); in specific regard to the protestability of marking duties, see Lewis & Conger et al. v. United States, 13 CCPA 22, T.D. 40862 (1925), see also Sesquicentennial Exhibition Association v. United States, 19 CCPA 288, T.D. 45466 (1932)). The certification that the protest is not being filed collusively to extend another authorized person's time to protest, as required for a protest by a surety (see 19 U.S.C. 1514(c)(2)), was provided.

The requirements relating to country of origin marking are found in 19 U.S.C. 1304. Under 19 U.S.C. 1304(f)--

If at the time of importation any article ... is not marked in accordance with the requirements of this section, and if such article is not exported or destroyed or the article ... marked after importation in accordance with the requirements of this section (such exportation, destruction, or marking to be accomplished under customs supervision prior to the liquidation of the entry covering the article, and to be allowed whether or not the article has remained in continuous customs custody), there shall be levied, collected, and paid upon such article a duty of 10 per centum ad valorem, which shall be deemed to have accrued at the time of importation, shall not be construed to be penal, and shall not be remitted wholly or in part nor shall payment thereof be avoidable for any cause. ...

The Customs Regulations pertaining to country of origin marking requirements are found in 19 CFR Part 134. Section 134.2 provides for the 10 percent marking duties under the conditions set forth in 19 U.S.C. 1304 (see above).

The grounds asserted by the protestant for relief are that the entry should have been deemed liquidated as entered. Under 19 U.S.C. 1504, at the time under consideration, "[e]xcept as provided in subsection (b) [of section 1504], an entry of merchandise not liquidated within 1 year from ... the date of entry of such merchandise ... shall 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." Under subsection (b), the period in which to liquidate an entry may be extended by giving notice of such extension to the importer of record in such form and manner as prescribed by regulations if, among other things, "information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer."

The Customs Regulations issued under this statute are found in 19 CFR 159.12. Under section 159.12(a)(1), the district director may extend the 1-year statutory period for liquidation for an additional period not to exceed 1 year if information needed by Customs for the proper appraisement or classification of the merchandise is not available. Under section 159.12(b), if the district director extends the time for liquidation as provided above, he is required to promptly notify the importer or the consignee and his agent and surety that the time has been extended and the reasons for doing so.

In this case, the evidence in the file is sufficient to create the presumption that proper notice of extension was given (see, e.g., International Cargo & Surety Insurance Co. (Data Memory Corp.) v. United States, 15 CIT 541, 779 F. Supp. 174 (1991)). In such a case, when the protestant fails to rebut that presumption (there is no evidence in the file alleged to do so), "the only issue to be decided is whether the extension was permissible under the statute" (15 CIT at 545).

The issue of the permissibility of extension of liquidation was recently addressed by the Court of Appeals for the Federal Circuit. In St. Paul Fire & Marine Ins. Co. [Carreon] v. United States, 6 F. 3d 763 (Fed. Cir. 1993) (reversing the CIT decision (16 CIT 663, 799 F. Supp. 120 (1992)), the Court concluded:

... 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. 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 limitation on Customs discretion to extend the period of liquidation. [6 F. 3d at 768]

The Court went on to state that "Customs decisions to extend are entitled to a presumption of legality unless [the plaintiff] can prove that these decisions were unreasonable" (6 F. 3d at 768).

The protestant has not met its burden in this regard. It has not "prove[d]" that Customs decision was unreasonable, that all possible grounds for extension of liquidation may be eliminated. That is, the conditions precedent to the assessment of marking duties are that the merchandise was not marked at the time of importation in accordance with the statutory requirements and that the merchandise was not so marked, exported, or destroyed under Customs supervision prior to liquidation (see above, see also Customs Service Decision (C.S.D.) 92-32, in which relief from marking duties was granted when merchandise was properly marked under Customs supervision with the country of origin prior to liquidation of the entry). Since a possible ground for extension of liquidation was to give the importer the opportunity to properly mark the merchandise, or to export or destroy it (as noted above, there is evidence that the importer requested a delay in liquidation for this very reason, and that the protestant was given notice of this request) and such action before liquidation would have relieved the importer of marking duties, the protestant clearly has not eliminated that possible reason, nor has the protestant "prove[d] that the decision [was] unreasonable" (supra).

We note that the St. Paul Fire & Marine Ins. Co. case involved the extension of liquidation because of certain missing cost data and that the Court stated "[i]n order for [plaintiff] to prevail in this case, it would have had to prove that [the importer], or someone else, notified Customs that the required cost data would not be submitted" (6 F. 3d at 769; emphasis in original). Analogously, to prevail in this case, the protestant would have had to prove that the importer, or someone else, had notified Customs that the merchandise was not going to be properly marked, exported, or destroyed. There is no such evidence in the file.

The protest must be DENIED.


The protest in this case may not be granted because the protestant has not met its burden of proving that Customs extension of liquidation was unreasonable, that all possible grounds for extension of liquidation may be eliminated.

The protest is DENIED. 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 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, Freedom of Information Act, and other public access channels.


John Durant, Director

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