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HQ 227394

December 9, 1999

LIQ-9-01-RR:CR:DR 227394 IOR


Port Director
U.S. Customs Service
11099 South La Cienega Boulevard
Los Angeles CA 90045
Attn: Mitch Clow, FNIS

RE: Protest and Application for Further Review No. 2720-96-101187; clerical error, mistake of fact or other inadvertence; 19 U.S.C. '1520(c)(1); 19 U.S.C. '1514; sufficiency of evidence; GSP renewal

Dear Sir:

The above-referenced protest was forwarded to this office for further review. Our review follows protestant=s responses to our requests for additional information, and an October 21, 1998 meeting with counsel for protestant. We have considered the evidence provided, the arguments made by the protestant, and Customs records.


The subject protest covers eight entries of two different models of telephone answering machines, imported from Indonesia, one with a telephone handset (model 9370) and one without (model 9300), made from September 11, 1995 through October 23, 1995. The entries were classified under subheadings 8520.20.0040 and 8517.10.0050, Harmonized Tariff Schedule of the United States (HTSUS). The entries were liquidated on December 29, 1995, January 12, 1996, January 19, 1996, January 26, 1996, February 2, 1996, February 9, 1996 (two entries), and February 23, 1996. This office has been advised by the Supervisory Import Specialist that included as part of the imported items is a Chinese-origin static converter (or adapter) which is merely packaged with each answering machine.

By letters dated August 15, 1996, the protestant=s broker filed petitions for reliquidation under 19 U.S.C. '1520(c)(1), on August 22, 1996 and one on August 28, 1996. As grounds for the petition for reliquidation, the broker claimed that information provided by the supplier upon importation indicated that the merchandise was not eligible for Generalized System of Preferences (GSP) duty-free treatment, and the entries were made accordingly, however, in January, 1996, the protestant notified the broker of a change in the production of the merchandise which, as of August, 1995, made the merchandise eligible for GSP duty-free treatment. The petition states Aall entries...were erroneously entered as dutiable due to a mistake of fact unknown to the broker personnel and to Customs at time of entry and liquidation.@ Each petition included the Entry summary, CF 7501, an invoice from the foreign supplier, an air waybill, a December 27, 1995 letter from the supplier to the protestant regarding GSP, a signed GSP declaration for each model from the supplier dated December 22, 1995, and supporting component cost breakdowns for each model dated December 18, 1995. There are also signed GSP declarations for the subject models dated July 12, 1996. The petitions also request "suspension on reliquidation pending passage of GSP renewal with retroactivity by the U.S. Congress." Seven of the petitions were denied on September 4, 1996 and one was denied on September 23, 1996. The denials stated that the claim is not correctable under 19 U.S.C. '1520(c)(1) and:

Your claim clearly indicates that prior to, or shortly after, the time of liquidation of the entry, both the importer and your office had possession of documents to support that the merchandise was eligible for duty-free treatment under GSP. ....

We find negligent inaction on the part of both the importer and broker in failing to file with Customs the GSP-supporting documents both parties possessed at or around the time of liquidation. The correct form of relief would have been a protest under 19 U.S.C. 1514.

The denials cited to HQ 224047, HQ 222989 and HQ 221603.

A protest of the denial of the petitions was filed on December 3, 1996. In the protest, the protestant takes the position that based on Customs precedent, there was no Anegligent inaction@ on the part of the protestant because there was no request from Customs for any information or documents, prior to the expiration of the 90-day protest period. Further, the protestant takes the position that at the time of liquidation of the subject entries, and during the 90-day period following the liquidation, the documentation necessary to establish the GSP eligibility was not available to the importer/protestant. According to the protestant, Athe properly signed and certified GSP Declarations and Cost Statements were not received until July 1996.@ As to the alleged mistake of fact, the protestant states as follows:

At the time these entries were filed, the importer and its broker mistakenly believed that these articles were not eligible for GSP treatment. It was not until January 1996 that the issue was raised, and it was not until July 1996 that the GSP documentation was received to establish that a mistake of fact had occurred. As soon as it was established by documentary proof that a mistake of fact had occurred, it was brought to the attention of Customs and Section 520(c)(1) claims were filed.

By letter dated April 18, 1997, the protestant was requested to provide responses to a set of questions pertaining to the alleged mistake of fact. Responses were provided by letter dated June 12, 1997, and the responses were signed by David Reed, the protestant=s vice-president of operations, as true and accurate, on July 30, 1997. According to the responses provided, the December 27, 1995 letter from the supplier to the protestant regarding GSP, was received by Mr. Reed "shortly after its December 27, 1995 date." The December 27, 1995 letter states:

The production of Model 9300 and 9370 were produced with parts and labour that qualify for 35% local content since first production lot in August 1995.

There were delays in obtaining total confirmation from our many suppliers, so we were not able to send you these GSP Declarations until December 1995.

In the June 12, 1997 response regarding the December 27 letter, it is stated that "there was no cost analysis in support of the GSP Declarations enclosed." In a different response, it is stated that Mr. Reed "received the cost analysis in support of the GSP Declarations in July or August of 1996" and the "documentation was faxed to Mr. Reed on or about July 12, 1996."

At the October 21, 1998 meeting at Customs Headquarters between counsel for the protestant and members of my staff from the Duty and Refund Determination Branch, the protestant was requested to provide documentary evidence that the component cost breakdowns were not received until on or about July 12, 1996. In response, by letter dated June 25, 1999, the protestant submitted documentation intended to show that the protestant did not make any claim for GSP treatment for the subject entries until eligibility for GSP could be proven by documentary evidence. The documents submitted consist of a January 4, 1996 internal memorandum to Mr. Reed stating that the protestant would like to obtain duty refunds for the subject entries; a May 30, 1996 facsimile message from the broker to Mr. Reed stating that claims for refunds for the subject models are being filed, however that there will be no refund of duties until the GSP law is enacted with retroactivity; a May 30, 1996 memorandum from the broker to David Reed stating that protests or 1520(c) claims are being filed for the subject entries, however no refunds will be made until GSP is renewed; and a July 19, 1996 letter from the protestant to the broker forwarding copies of the GSP declarations for the subject models.


Whether the protestant=s failure to enter the merchandise under GSP provisions is a mistake of fact correctable under 19 U.S.C. '1520(c)(1)?


Initially we note that this protest was timely filed pursuant to 19 U.S.C. '1514(c)(2)(B). The dates of the decisions protested are September 4, 1996 and September 23, 1996, and the protest was filed on December 3, 1996. In addition, the refusal to reliquidate an entry under section 1520(c)(1) is a protestable matter pursuant to 19 U.S.C. '1514(a)(7).

The GSP is a renewable preferential trade program that allows the eligible products of designated developing countries to directly enter the United States free of duty. The provisions of the GSP program expired at midnight on July 31, 1995 and were renewed beginning October 1, 1996, with retroactive effect to August 1, 1995. See, e.g. General Notice, 61 Fed. Reg. 49528 (September 20, 1996). At the time the subject merchandise was entered, the GSP provisions were expired and had not yet been renewed. The GSP provisions were reinstated by Title I, Subtitle J, the Act of August 20, 1996, Pub. L. No. 104-188 (110 Stat. 1755). Section 1953, Effective Date, provides:

(a) In general. The amendments made by this subtitle [affected provisions omitted] apply to articles entered on or after October 1, 1996.

(b) Retroactive application.
(1) General rule. Notwithstanding section 514 of the Tariff Act of 1930 or any other provision of law and subject to subsection (c) (A) any article that was entered
(i) after July 31, 1995, and
(ii) before January 1, 1996, and to which dutyfree treatment under title V of the Trade Act of 1974 would have applied if the entry had been made on July 31, 1995, shall be liquidated or reliquidated as free of duty, and the Secretary of the Treasury shall refund any duty paid with respect to such entry, and (B) any article that was entered
(i) after December 31, 1995, and
(ii) before October 1, 1996, and to which dutyfree treatment under title V of the Trade Act of 1974 (as amended by this subtitle) would have applied if the entry had been made on or after October 1, 1996, shall be liquidated or reliquidated as free of duty, and the Secretary of the Treasury shall refund any duty paid with respect to such entry.

(2) Limitation on refunds. No refund shall be made pursuant to this subsection before October 1, 1996. (3) Entry. As used in this subsection, the term "entry" includes a withdrawal from warehouse for consumption.

(c) Requests. Liquidation or reliquidation may be made under subsection (b) with respect to an entry only if a request therefor is filed with the Customs Service, within 180 days after the date of the enactment of this Act, that contains sufficient information to enable the Customs Service (1) to locate the entry; or
(2) to reconstruct the entry if it cannot be located.

The protestant=s petitions were filed after August 20, 1996, the enactment date of the Act. Although the petitions are dated August 15, 1996, they are not recorded as having been filed until after August 20, 1996. Therefore, the petitions were not filed prematurely for purposes of section 1953 of the Act, and the request that action on the reliquidation be suspended pending passage of GSP renewal is moot. The Act had retroactive effect for any article entered after July 31, 1995 and before January 1, 1996. The entries which are the subject of this protest were made from September 11, 1995, through October 23, 1995, thus the Act was retroactively applicable to the subject entries. The protestant was within the time frame to apply for a refund under section 1953(b)(1)(A). Therefore, according to the retroactive refund provision, the protestant could apply for a refund within 180 days from the date of enactment of the Act, August 20, 1996. The last day to apply for a refund was February 16, 1997.

The liquidations of the subject entries in December 1995 and January and February, 1996 were correct, as paragraph (a) of section 1953 applied only to merchandise entered on or after October 1, 1996. At the time the subject entries were liquidated, GSP had not been reinstated. Paragraph (b) of section 1953 provided the exclusive remedy and set a procedure for its application. Therefore we must determine whether the petitions filed were entitled to treatment under section 1953. In HQ 228136, dated May 11, 1999, we did not allow reliquidation under section 1953 for a petition that had also been filed under section 1520(c), because the petition was filed on October 29, 1997, eight months after the expiration of the 180-day period in which a claim was required to have been filed.

The Federal Register notice of September 20, 1996, simply requires that a request for a refund be made in writing by February 16, 1997 to the Port Director at the port of entry. The notice further recommends that in order to expedite refunds, certain information be included in each letter requesting a refund, however no other mandatory requirements are set forth. In this case, the section 1520(c) petitions were sent to the Port Director of the port of entry, and identified the entries with respect to which GSP is being claimed. We conclude that the section 1520(c) petitions should have been treated as section 1953 refund requests.

This office has determined that the imported article is not eligible for GSP treatment. In HQ 560050, dated October 29, 1997, Customs found that a Chinese-origin plug-in regulator/AC adapter was not substantially transformed into a “product of” the Philippines as a result of merely being packaged with a cordless telephone set. Because the entire imported UAC cordless telephone set was not a “product of” the Philippines, as required by the GSP statute, we held that neither the cordless telephone set nor any part thereof was entitled to duty-free treatment under this program. See also HQ 559010, dated March 14, 1996; HQ 559453, dated July 16, 1996; and T.D. 91-7.

As the Chinese-origin static converter in this case is merely packaged with the telephone answering machine, it is not substantially transformed into a product of Indonesia. Therefore, because the entire imported telephone machine is not a “product of’ Indonesia, no part of the article is eligible for GSP treatment. Therefore the protest should be denied, as the protestant is not entitled to reliquidation under section 1953 of the Act of August 20, 1996.

With respect to the petition under section 1520(c), under section 1520(c)(1) Customs may reliquidate an entry 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 manifest from the record or established by documentary evidence and brought to the attention of the Customs Service within one year after the date of liquidation. The relief provided for in 19 U.S.C. '1520(c)(1) is not an alternative to the relief provided for in the form of protests under 19 U.S.C. '1514; section 1520(c)(1) only affords Alimited relief in the situations defined therein@ (Phillips Petroleum Company v. United States, 54 CCPA 7, 11, C.A.D. 893 (1966), quoted in GodchauxHenderson Sugar Co., Inc., v. United States, 85 Cust. Ct. 68, 69, C.D. 4874, 496 F. Supp. 1326 (1980); see also, Computime, Inc. v. United States, 9 CIT 553, 555, 622 F. Supp. 1083 (1985), and Concentric Pumps, Ltd. v. United States, 10 CIT 505, 508, 643 F. Supp. 623 (1986)). For section 1520(c)(1) purposes, a mistake of fact has been defined as Aa 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.@ C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust. Ct. 17, 21, C.D. 4327, 336 F. Supp. 1395, 1398 (1972), aff=d, 61 CCPA 90, C.A.D. 1129, 499 F.2d 1277 (1974).

In Executone Information Systems v. United States, 96 F.3d 1383 (Fed. Cir. 1996), the court made an initial inquiry of whether the plaintiff therein, Executone, had alleged a mistake of law or a mistake of fact. Id. 1385. In Executone, the importer had failed to file, upon entry, the forms required for duty-free treatment under the Caribbean Basin Economic Recovery Act (CBERA). The court found that the importer had alleged a mistake of fact, that the importer believed, at the time of importation, that the required forms under CBERA had been filed when, in fact, they had not. Id. at 1386. Secondly, the court determined whether the importer had Asufficiently demonstrated rather than merely alleged, >a clerical error, mistake of fact, or other inadvertence= as those terms are used in section 1520(c)(1).@ Id. at 1388. The court found that it was not manifest from the record and the importer failed to establish that the importer=s failure to submit the required forms was due to a mistake of fact or inadvertence.

Essentially the protestant=s claim is that the subject merchandise was incorrectly entered under a dutiable provision as opposed to the GSP provisions. We find that even assuming the subject merchandise would have been eligible for GSP treatment, had the GSP provision been in effect at the time of entry, the protestant was not entitled to claim the preference, because the GSP had expired at the time of the entries, and was not in effect. As we stated in HQ 228136, supra:

If there was no law in effect at the time of entry allowing duty free treatment under the [GSP], then it was not possible for protestant to claim duty free treatment.

In this case, both the entries and liquidations occurred when the GSP was not available. In HQ 228136, supra, we stated that "[t]he failure to claim preference when the entry was filed was the only legally correct option available at that time." Furthermore, as stated above, it has been determined that the subject merchandise was not entitled to GSP treatment. The protestant has thus failed to establish that any error has occurred with respect to the entry, as is required under 19 U.S.C. '1520(c)(1). Any mistake of fact alleged therefore did not cause an error in the subject entries or liquidations.


The petition was timely filed for a refund under section 1953 of the Act of August 20, 1996, and pursuant to a review as a request under section 1953 to determine if a refund is appropriate, it has been determined that the merchandise was not eligible for GSP treatment and therefore the protestant is not entitled to a reliquidation and refund. As to the section 1520(c)(1) petition, because no error was made in the entry or liquidation, the protestant could not have made a mistake of fact by not claiming GSP upon entry.

The protest should be 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 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 make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.


John Durant
Commercial Rulings Division

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