 HQ 224397 |
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March 8, 1994
LIQ-4-01/LIQ-11-CO:R:C:E 224397 PH
CATEGORY: Liquidation
District Director of Customs 1000 Second Avenue Suite 2200 Seattle, Washington 98104-1049
RE: Application for Further Review of Protest No. 3001-89-000059; Antidumping Duties; Notice of Suspension or Extension of Liquidation; 19 CFR 159.12; 19 U.S.C. 1504; 19 U.S.C. 1514 Dear Sir:
The above-referenced protest was forwarded to this office for further review. For your information, the protestant was granted two meetings on this matter, on April 9, 1993, and on February 4, 1994. The protestant also submitted a number of supplemental submissions to the original protest. Seven affidavits were submitted with the supplemental submissions. Copies of the supplemental submissions and affidavits submitted by the protestant are enclosed for inclusion in the protest file.
We have considered the points raised by your office and the protestant. Our decision follows.
FACTS:
According to the file, on November 29, 1980, the importer entered certain merchandise (transformers and accessories, etc.) from Italy. The protestant issued, as surety, an Immediate Delivery and Consumption Entry Bond (single entry) on November 25, 1980, for the merchandise in the amount of $358,000.
The merchandise under consideration was the subject of an antidumping finding (Treasury Decision (T.D.) 72-161). No cash deposit of antidumping duties was required or collected. The protestant surety states that it received no notice of suspension of liquidation with regard to the entry under consideration.
Customs sent a "Request for Information" to the importer on February 4, 1981, and the importer responded by letter of February 9, 1981. A second "Request for Information" was sent to the importer on April 27, 1981, to which the importer finally responded on May 28, 1981, with an explanation of "escalation" clauses in the contract for the merchandise under consideration. By a "Request for Information" form dated July 9, 1981, Customs asked that the importer declare the remaining escalation on the assembly when it was effected. The importer did so on August 17, 1981, and by Notice of Action dated August 25, 1981, Customs advised the importer of the net value at which the merchandise would be appraised and that liquidation was delayed pending an antidumping determination by the Department of Commerce and Customs Headquarters.
By Notice of Action dated March 31, 1988, the importer was advised that the entry was in the liquidation process and that dumping duties in the amount of $292,638.12 were being assessed. This was pursuant to C.I.E. N-169/70 (Supplement 13), dated February 2, 1988, and the notice of Final Results of Antidumping Administration Review published in the Federal Register on December 10, 1987 (52 FR 46806). The entry was liquidated on June 10, 1988, with antidumping duties in the amount of $292,638.12 and interest on the antidumping duties from December 12, 1980 (stated to be the "date of payment"), to the date of liquidation. On September 8, 1988, a protest of the liquidation was filed by the broker on behalf of the importer (this protest, not under consideration in the instant protest, was denied on July 23, 1992). On November 4, 1988, demand was made on the protestant surety.
The protestant states that the party (stated to have held title in the merchandise at the time of entry) for whom the importer acted as agent in importing the merchandise under consideration was placed under "Extraordinary Administration" in Italy in June of 1981. According to the protestant, this is an insolvency proceeding under Italian law in which the assets of the party holding title in the merchandise are transferred to a successor company and the predecessor is left with only the liabilities. Therefore, according to the protestant, "after the transfer of assets pursuant to the Italian Extraordinary Administration, there was neither an entity nor assets with which the surety could pursue its rights to subrogation in the event it was held liable for antidumping duties under its bond."
On January 23, 1989, the protestant filed the protest under consideration. The grounds for the protest were: (1) two different bills for different amounts, dated June 10, 1988, and July 22, 1988, were issued to the protestant; (2) the surety claimed that it did not issue a bond for the payment of antidumping duties covering this entry; (3) dumping duties were assessed in excess of the amount reflected in the assessment instructions of the International Trade Administration (ITA), Department of Commerce, and interest was calculated from an incorrect principal; (4) the entry should have been deemed liquidated as entered because no notice of suspension of liquidation was provided to the surety; (5) because no notice of suspension of liquidation was provided to the surety, the bond was breached to the prejudice of the surety, which discharged the surety's liability under the bond; (6) failure to liquidate the entry within 90 days after the suspension of liquidation was terminated should have resulted in a deemed liquidation of the entry; and (7) no deduction was made for the value of United States fabricated components under item 807.00 or 800.00, Tariff Schedules of the United States (TSUS). Further review for the protest was requested and granted.
With regard to the second ground for protest above, we consulted with the ITA. That Agency recommended denial of the part of the protest contending that dumping duties were assessed in excess of the amount reflected in the assessment instructions, stating that "... the correct amount of dumping duties [was] assessed on [the entry]." With regard to the issue of interest charged on the antidumping duties, that Agency stated that interest on overpayments and underpayments of antidumping duty assessed under 19 U.S.C. 1677g is not applicable to entries subject to the instructions of the applicable CIE notice and recommended that Customs grant this part of the protest.
The protestant filed a memorandum, dated June 30, 1992, in support of its protest in which it expanded on the "deemed liquidation" issues in the protest.
After meeting on April 9, 1993, with Customs Headquarters personnel, the protestant submitted additional arguments and materials with an April 12, 1993, letter. Subsequently, the protestant requested the opportunity to submit additional information regarding this matter. With its letter of August 27, 1993, the protestant did provide such additional information, consisting of two affidavits, along with supporting arguments.
The first of these affidavits, dated August 25, 1993, is by an attorney who states that he is currently employed by the protestant as "Bond Claim Manager" and has been so employed since 1991. This affiant states that he has conferred with the protestant's personnel responsible for Customs matters since 1980 and was advised that at all times relevant to this matter it was the regular business practice of the protestant to forward to the headquarters office of a Rouses Point, New York, company any documentation that the protestant received from Customs in connection with "the Government's extending and/or suspending the period for liquidating entries." The affiant states that he is familiar with and can identify Customs Form 4333-A, Notice of Suspension of Liquidation, and is aware that this form, as modified, is used to place sureties on notice that liquidation will be delayed. The affiant states that he has undertaken "an extensive and diligent search of any and all files, maintained by [his] office as well as other departments which are in the possession of [the protestant], and pertain to or correspond with [the protested entry]." The affiant states that this search revealed no trace of any Notice of Suspension of Liquidation for the protested entry and no record of the protestant's ever forwarding any Notice of Suspension to the Rouses Point company referred to above. The affiant states that he has no recollection of ever receiving or viewing any document from Customs which recorded or advised the protestant that the protested entry would not be liquidated within one year from the date of entry. The affiant "concludes" that the protestant never received Notices of Suspension of Liquidation from Customs for the protested entry.
The second affidavit, dated August 26, 1993, is by a person who states that she has been employed by the above-referenced Rouses Point company, stated to be a Customs Broker. The affiant states that she has worked continuously for the company at its headquarters location in Rouses Point since 1968. The affiant states that "[u]pon information and belief, at all times relevant to this matter, it had been the regular business practice of [the protestant] to forward to [the Rouses Point company] any documentation [the protestant] received from ... Customs ... in connection with the Government's extending and/or suspending the period for liquidating entries." The affiant states that she is familiar with and can identify Customs Form 4333-A, Notice of Suspension of Liquidation, and is aware that this form, as modified, is used to place sureties on notice that liquidation will be delayed. The affiant states that her department has maintained a file by Port of Entry and importer for each transaction that has been the subject of a Notice of Suspension of Liquidation forwarded to the Rouses Point company by the protestant. The affiant states that "[i]t has been the regular business practice of [her] department to file each and every document [they] receive pertaining to a particular importation in the appropriate file." The affiant states that she has undertaken "an extensive and diligent search of any and all files maintained by [her] department that pertain to or correspond with [the protested entry]." The affiant states that this search revealed no trace of any Notice of Suspension of Liquidation for the protested entry. The affiant states that she has no recollection of ever receiving or viewing any Notice of Suspension which recorded or advised the protestant that the protested entry would not be liquidated within one year from the dates of entry.
By letter of February 1, 1994, after Customs had, by letter of January 10, 1994, granted the protestant the opportunity to submit additional evidence in regard to the protest and offered the protestant the opportunity to meet again on this matter, the protestant submitted two additional affidavits, with supporting arguments.
The first of these two additional affidavits, dated January 31, 1994, is by a person who states that between 1975 and 1991 he was employed by the protestant and that he was employed by the protestant as National Underwriting Manager "at all times relevant to this matter." He states that his duties included review of all materials, including Notices of Suspension, that the protestant received from Customs. He states that after his review, the protestant's practice was to forward all notices to the Rouses Point company referred to above, to the attention of the person who provided the August 26, 1993, affidavit (described above), for further handling. The affiant states that he is familiar with and can identify Customs Form 4333-A, Notice of Suspension of Liquidation, and is aware that this form, as modified, is used to place sureties on notice that liquidation will be delayed. He states that he has no recollection of ever receiving a Notice of Suspension for the protested entry and, to the best of his knowledge and belief, the protestant never received such notice.
The second of these two additional affidavits, dated February 1, 1994, is by a person who states that she was an employee of the protestant between 1969 and 1985 and that she was employed by the protestant as "Clerical Supervisor" "at all times relevant to this matter." She states that her job responsibilities included the processing of all mail received by the protestant from Customs. She states that at the relevant times it was the protestant's practice to have the person who provided the January 31, 1994, affidavit (described above) review all materials from Customs and, after his review, it was her responsibility to forward all materials to the Rouses Point company referred to above, to the attention of the person who provided the August 26, 1993, affidavit (described above), for further handling. The affiant states that she is familiar with and can identify Customs Form 4333-A, Notice of Suspension of Liquidation, and is aware that this form, as modified, is used to place sureties on notice that liquidation will be delayed. She states that she has no recollection of ever receiving or viewing a Notice of Suspension for the protested entry and, to the best of her knowledge and belief, the protestant never received such notice.
On February 8, 1994, after the representatives of the protestant met on February 4, 1994, with Customs about this matter, the protestant submitted three additional affidavits (originals of the affidavits were submitted by letter of February 17, 1994, and one affidavit is dated February 16, 1994). The protestant made the additional argument at this time that, according to the codes on the Customs record of extension/suspension of liquidation for the entry under consideration, the notice which was allegedly provided was a notice of extension, not suspension, and since, according to the protestant, there was no basis to extend (rather than suspend) liquidation, the allegedly mailed notices were invalid. Further, the protestant argued in this letter, even if the alleged notices were valid, since, according to the protestant, they were notices of extension, the entry would have been deemed liquidated as entered four years after entry under 19 U.S.C. 1504(d). The three additional affidavits are described below.
By affidavit dated February 8, 1994, the person who provided the January 31, 1994, affidavit (described above) states (in addition to what he stated in the earlier affidavit) that it was the protestant's regular business practice and procedure to receive monthly printouts from the Rouses Point company referred to above reflecting each of the bonds and amounts which had been issued by the protestant through the Rouses Point company for that month. The affiant states that from these monthly printouts he selected a sample of accounts for review in an annual audit which he conducted of the Rouses Point bond issuing activities for the protestant. The criteria for selection of the sample of accounts, according to the affiant, were nature of importation, size of bond, frequency of unliquidated entries, claims, or compliance with the Rouses Point bond authority limitations and established practices. The affiant states that he would request copies from the Rouses Point company of those bonds which were the subject of his audit. The affiant states that the bond for the protested entry "is one which [he] could have identified for audit based on its amount and the fact that it was issued by the Seattle branch of [the Rouses point company]." The affiant states that "[h]ad it [i.e., the bond for the protested entry] been selected for [his] annual audit, it would be one of the bonds for which [he] would have received a copy from [the Rouses Point company]."
The affiant states that the bonds which he received as a result of his audit would be maintained by the protestant in an audit file for at least a year and then usually discarded. In addition, the affiant states, open claims from Customs, notices of suspension or extension, records on principals in financial difficulty would be recorded on an accounting worksheet and placed into a master file, kept alphabetically, which would be monitored on a regular basis until favorably resolved. If the protestant did not receive a notice of extension or suspension, the affiant states, the entry would be treated as liquidated and any established files would be discarded. The affiant states that copies of any notices of suspension received by the protestant would be placed in the master file and the original of such notices would be mailed to the Rouses Point company, to the attention of the person who provided the August 26, 1993, affidavit (described above), for further handling.
The affiant states that when the protestant received a demand on the surety in 1988 for the protested entry, "to the best of [his] recollection" he searched the master file to determine whether the protestant had a copy of a notice of suspension for the protested entry and could not find one. In addition, the affiant states, in describing his search of the master file, "there would not have been a file at that point for this bond, since it would have been discarded approximately one year after completion of [his] audit on the understanding that the entry had been liquidated because it had not been extended or suspended."
By affidavit of February 8, 1994, the person who provided the August 25, 1993, affidavit (described above) states (in addition to what he stated in the earlier affidavit) that he undertook a search of all of the protestant's files relating to Customs bonds, "and specifically the audit and the master files maintained by [the person who provided the January 31 and February 8, 1994, affidavits described above] and referred to in his affidavit." The affiant states that "[he] was unable to locate an audit file or a master file for the bond for the [protested entry]."
By affidavit of February 16, 1994, the person who provided the August 26, 1993, affidavit (described above) states (in addition to what she stated in the earlier affidavit) that it was the regular business practice of her employee (the Rouses Point company referred to above), upon receipt of a notice of suspension or extension of liquidation, to request a copy of the entry file from the branch office of the Rouses Point company which issued the bond. The affiant states that upon receipt of the file, her department would set up a file and place the notice of suspension or extension in that file and that such files were maintained until the underlying issues of the suspension or extension of liquidation were resolved. The affiant states that if the Rouses Point company did not receive a notice of suspension or extension from the protestant, then a file for that matter would not be established. The affiant states that the Rouses Point company still maintains open files for entries made "around the same time" as the protested entry. The affiant states that she has undertaken a search of "all open and closed files involving [the protestant's] customs bonds [and] [has] been unable to locate a Notice of Suspension of liquidation for [the protested entry]."
ISSUE:
May the protest in this case be granted?
LAW AND ANALYSIS:
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)). With regard to the requirement in 19 U.S.C.
1514(c)(2) for a certification that the protest is not being filed collusively to extend another authorized person's time to protest, we note that a timely protest was filed on behalf of the importer. The decisions protested are protestable under 19 U.S.C. 1514 (the exception in 19 U.S.C. 1514(b) (see, Nichimen America, Inc. v.
United States, 938 F.2d 1286 (1991 Fed. Cir.)) is not applicable because Customs implementation of the ITA instructions for assessing antidumping duties is protested, not the antidumping determination itself).
In regard to the contention that two different bills were issued to the protestant and one should be voided, you indicate that the second bill included interest which you state the Department of Commerce has advised should not be collected on this entry. Therefore, you state that the bill will be recalculated. The protest is GRANTED in this regard (see discussion of interest below).
In regard to the contention that the protestant surety did not issue a bond for the payment of antidumping duties covering the entry, the protestant did issue an Immediate Delivery and Consumption Entry Bond (Single Entry) for the entry under consideration. This bond binds the principal and surety, "in consideration of the release of [the covered shipment] before the full amount of duties and taxes imposed upon or by reason of importation has been finally determined ... to pay any and all such duties and taxes found to be due on the shipment". If the contention is that antidumping duties are not included in the meaning of "duties and taxes", as used in the bond, see C.J. Tower & Sons v. United States, 21 CCPA 417, 71 F.2d 438 (1934), and Imbert Imports, Inc. v. United States, 67 Cust. Ct. 569, 576, 331 F. Supp. 1400 (1971); aff'd 60 CCPA 123, 475 F.2d 1189 (1973). The protest is DENIED in this regard.
In regard to the contention that the dumping duties were assessed in excess of the amount reflected in the assessment instructions of the ITA, the antidumping duties in this entry are in accordance with the assessment instructions in C.I.E. N-169/70. As stated in the FACTS portion of this ruling, we consulted with the ITA in this regard and that Agency confirmed that "... the correct amount of dumping duties [was] assessed on [the entry]." The protest is DENIED in this regard.
As for the interest charged on this entry, although the protestant's contention that the interest was calculated from an incorrect principal must fail (on the basis of the determination in the immediately preceding paragraph), the ITA advised that no interest on the antidumping duties should have been charged in this case. There was no requirement for a cash deposit of antidumping duties for the entry under consideration, nor was any such deposit actually made. Therefore, pursuant to the applicable statute (19 U.S.C. 1677g) and Timken Co. v. United States, 15 CIT 526, 777 F.
Supp. 20 (1991) (see also, Canadian Fur Trappers Corp. v. United States, 12 CIT 612, 691 F. Supp. 364 (1988); aff'd, 7 Fed. Cir. (T) 136, 884 F.2d 563 (1989)), the protest is GRANTED in regard to the interest charged on the antidumping duties on the entry under consideration (see discus- sion, above, of the issue of two different bills for the entry).
In regard to the contention that the entry should have been deemed liquidated as entered because, it is alleged, no notice of suspension of liquidation was provided to the surety, we note that the "deemed liquidated" provisions upon which the protestant relies in this regard (in 19 U.S.C. 1504) are applicable to the entry under consideration (i.e., see section 209(b), Pub. L. 95-410). Under section 1504, an entry not liquidated within 1 year from the date of entry of the merchandise shall be deemed liquidated as entered, except that liquidation may be extended by the giving of notice to the importer or consignee concerned and to any authorized agent and surety if, among other things, liquidation is suspended as required by statute or court order. The Courts have held that "[f]ailure to provide proper notice results in liquidation by operation of law" (International Cargo & Surety Insurance Co. (Data Memory Corp.) v. United States, 15 CIT 541, 543, 779 F. Supp. 174 (1991), and cases cited therein).
The protestant claims that it received no notice of suspension with regard to this entry. We have examined our computer records with regard to this entry and found that notices of suspension were sent to the importer and to the surety protestant suspending the liquidation for the entry. Notices were sent to the importer and the surety (i.e., according to Customs records, notices were sent to Hanover Insurance Company, 440 Lincoln Street, Worcester, Massachusetts 01605, the address given by the surety on the bonds under consideration) in the 44th week of 1981, the 43 week of 1982, and the 43 week of 1983. The code given for these notices was "Code 3" which, at that time, was the code for indefinite extension (i.e., suspension as required by statute or court order).
The protestant argues, in its February 8, 1994, supplemental submission, that the fact that three notices were allegedly provided and that the code for the reason for the notices was code 3 establishes that the alleged notices were notices of extension, not suspension, and that, therefore, either the alleged notices were invalid because there was no basis to extend or, if the notices were valid, the entry should have been deemed liquidated as entered under 19 U.S.C. 1504(d). We disagree. The fact that three no...
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