HQ 222519: Application for further review of protest 4115-0-000047,protesting for reliquidation of several entries under 19 U.S.C. 1520(c)(1).

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 222519

                       September 10, 1991


FOR-2-04-CO:R:C:E  222519  TLS

CATEGORY: Entry

District Director
U.S. Customs Service
Plaza Nine Building  6th Floor
55 Erieview Plaza
Cleveland, Ohio  44114

RE: Application for further review of protest 4115-0-000047,
protesting for reliquidation of several entries under 19 
U.S.C. 1520(c)(1).

Dear Sir:

     We have received the request for further review of the
above-referenced protest dated February 22, 1990.  Our reply is
discussed in detail below.

FACTS:

     This protest involves 11 entries of truck engines and/or
transmissions into a foreign trade subzone in Louisville,
Kentucky.  The dates of entry range from December 30, 1985, to
February 7, 1986.  These entries were liquidated on December 1,
1989 with rate advances.  Customs maintains that one-year
extensions on liquidation were granted for three consecutive
years for each entry.  Customs further maintains that it notified
Ford Motor Company (FMC or Ford) of the extensions as required by
statute.  Ford is the importer of record as noted on each of the
entries.  FMC maintains that the dates of liquidation on these
entries is actually one year after the dates of entry by action
of law.  The protestant contends that it did not receive a
Customs Form 4333-A notifying it of each extension. 
Consequently, the importer considers the entries to be deemed
liquidated one year after date of entry, pursuant to Customs
Regulations section 159.11.

     Customs sent the protestant a Form 29, Notice of Action on
January 9, 1990, notifying it that the bills from the rate
advances should have totaled $5,275,336.77 instead of
$5,421,350.61 as originally calculated.  As a result, two of the
entries were reliquidated on February 2, 1990 to correct this
error.  Documents filed by the importer in accordance with entry
procedures for the FTZ show that the protestant originally did
not elect privileged foreign (PF) status for the subject entries. 
As a result, the standard non-privileged foreign (NPF) status
rate was applied by Customs officials instead of the rate
applicable under PF status.  In failing to elect PF status for
the entries, the protestant claims to have made an inadvertent
error correctable under 19 U.S.C. 1520(c)(1).

ISSUES:

     Whether or not protestant's decision to elect non-privileged
foreign (NPF) status rather than privileged foreign (PF) status
for merchandise admitted to a foreign trade subzone is a mistake
of fact or an inadvertent error correctable under 19 U.S.C.
1520(c)(1).

     Whether or not a notice of extension on liquidation is valid
under 19 U.S.C. 1504 and 19 CFR 174 when the importer was
notified of the reliquidation but the surety(s) involved were not
notified.

LAW AND ANALYSIS:

     With regard to the protestant's claim of mistake of fact in
electing NPF status for the subject entries, the remedy is
provided for under statute.  The relevant statute states:

     (c) Notwithstanding a valid protest was not filed, the
     appropriate customs officer may, in accordance with
     regulations prescribed by the Secretary, reliquidate an
     entry to correct-
          (1) a clerical error, mistake of fact, or other
          inadvertence not amounting to an error in the
          construction of a law, adverse to the importer and
          manifest from the record or established by
          documentary evidence, in any entry, liquidation,
          or other customs transaction, when the error,
          mistake, or inadvertence is brought to the
          attention of the appropriate customs officer
          within one year after the date of liquidation or
          exaction....  19 U.S.C. 1520(c)(1); Tariff Act of
          1930 section 520(c)(1). (emphasis added.)

We concern ourselves only with the election of status of the
merchandise admitted to the zone as an "other customs
transaction" to determine whether an error correctable under
520(c) was made.  FMC claims that the election of non-privileged
foreign status for the subject entries was a mistake of fact or
an inadvertence covered under section 520(c) of the Tariff Act of
1930.  Specifically, the importer contends that it is a mistake
of fact that its employee elected non-privileged foreign status
instead of privileged foreign status, as the importer intended to
have done.  Ford recounts that the employee charged with the
responsibility of electing the status did not have extensive
experience in Customs matters.  The importer also claims that the
lack of "experienced" Customs officials at the foreign trade
subzone was a contributing factor to the mistake.

     Correctable errors under section 520(c)(1) have been defined
in a previous Customs ruling (HQ 221473).  A clerical error is
when a person intends to do one thing but does something else,
such as write "213" instead of "312."  A mistake of fact is when
a person believes the facts to be other than what they really are
and takes action based on that erroneous belief.  An inadvertence
is inattention, oversight, negligence, or lack of care to a
particular task.  It is worthy to note that these are not
mutually exclusive; an error may be characterized as both a
clerical error and an inadvertence.  These are distinguished from
errors in the construction of law, when a person knows the true
facts of a case but has a mistaken belief of the legal
consequences of those facts and acts on that mistaken belief.  94
Treas. Dec. 244, 245-46 (1959).

     In the present case, the importer did not elect the status
it intended to for its entries into the foreign trade subzone. 
The election of non-privileged foreign status was made by an
employee charged with the responsibility to do so.  The importer
acknowledges that the error was committed due to the inexperience
of its employees, but also claims that Customs contributed to the
error by having officials without extensive experience in these
matters handle the transaction.  The error in this case was made
not by someone in a clerical capacity, but by an employee who had
the authority to make the decision, right or wrong.  See PPG
Industries, Inc. v. United States, 7 CIT 118, 124 (1984).  To the
extent that Ford's employee in this case had the authority to
choose whatever status was favored, it was more than just the
recording of a decision that had already been made.  Thus,
because the employee's actions amounted to a business decision he
was authorized to make, we cannot find a clerical error in this
case.

     We also find the protestant's argument that Customs is
partly responsible for the error in electing the less-desirable
status to be without merit.  The experience of the Customs
officials involved in the entry transactions at issue has no
bearing on the election of non-privileged foreign status in this
case.  There is no evidence showing that the officials had any
influence over the decision.  Furthermore, Customs officials are
not responsible for the importer's election of such status,
whether it be favorable or unfavorable.  It also outside of the
scope of Customs duties to review the business decisions of
importers in transactions such as the present one, when the
decision is solely discretionary.  Therefore, the alleged
inexperience of the Customs officials involved in the subject
entries cannot be deemed a contributing factor to the
protestant's error.

     The evidence as presented does not show a mistake of fact
correctable under section 520(c)(1) to exist in this case.  The
facts show that the importer's employee responsible for electing
the status knew the result his company wished to obtain but did
not know how such a result could be achieved.  His lack of
awareness amounted to a lack of knowledge of the relevant legal
procedures to be applied here, not any misinformation regarding
the facts.  The protestant acknowledges the employee's
thoroughness and awareness of the facts surrounding the subject
entries; the evidence does not show that he misunderstood them. 
The protestant cites to C.J. Tower & Sons of Buffalo, Inc. v.
United States, 68 Cust. Ct. 17, aff'd, 61 C.C.P.A. 90, 499 F.2d
1277 (1974), to support its contention that a mistake of fact was
made here.  We find reason to distinguish C.J. Tower from the
present case, however.  In the former case, the importer was not
aware of how the merchandise would be used once entered, a
material fact.  Here, the importer knew how the merchandise would
be utilized in the FTZ but apparently did not know how to apply
the relevant law to its advantage.

     The protestant also cites to S. Yamada v. United States, 26
C.C.P.A. 89 (1938), claiming that its employee was merely acting
in a clerical capacity when he made the incorrect status
designation.  In Yamada, an employee was instructed to file a
certificate with certain information contained therein.  The
employee, however, filed the certificate with incorrect
information.  While the trial court had found that the employee's
"carelessness" did not constitute a clerical error, the appeals
court reversed, finding carelessness was indeed clerical error in
that case.  Of particular note is the court's finding that who
made the decision was of as much importance as what decision was
made.  The Yamada court found a distinction between its case
where a person was following the instructions of someone else and
situations where the person making the alleged error was
responsible for making the decision.  In this case, FMC presents
no evidence supporting the claim that its employee had no
independent authority to designate a status.  In fact, Ford had
admitted on several occasions in meetings and telephone
conversations with Customs officials that the employee was in
charge of making that decision at the time it was made.  Such
authority goes beyond the responsibility of someone in a clerical
capacity; the decision-making power suggests that all the
information needed to make the decision was at his disposal and
he was in fact to do so.  Thus, we find distinction between
Yamada and the present case.

     In T.D. 54848 (1959), an error in the construction of law is
found to occur when a person knows the true facts of a case but
has a mistaken belief of the legal consequences of those facts
and acts on that mistaken belief.  The importer's mistaken belief
was that the status chosen would achieve the results hoped for. 
Therefore, we must find that there was an error in the
construction of law, rather than a mistake of fact.

     Inadvertence cannot be said to exist in this case.  The
facts reflect that the importer knowingly elected non-privileged
foreign status after much consideration and attention was given
to the problem.  There is no evidence in the record indicating
that the importer's employee was less than careful in making the
decision.  The protestant points out that extensive deliberations
preceded the filing of the subject entries.  In fact, Ford notes
that several meetings were held with Customs officials before the
zone was put into operation.  During those meetings, the
intentions of FMC were discussed with regard to the zone's
purpose.  Ford knew of the results it wished to reach before the
FTZ was opened.  While the effect of the employee's decision may
be inconsistent with the importer's goal, nothing in the record
shows that the making of the decision itself was contrary to the
importer's wishes.  In fact, Ford officials acknowledge that the
employee was expected to make such decisions.  As noted before,
inadvertence has been held to connote inattention, oversight,
negligence, or lack of care.  None of those kinds of mistakes are
in evidence here and thus we cannot find inadvertence in this
case.

     The protestant also claims that the rate advanced
liquidations are inconsistent with the holding in C.S.D. 83-96
(June 1, 1983).  We find reason to distinguish the ruling from
the present case, however.  In that case, the FTZ user's
Automated Inventory Control System (AICS) did not reflect what
was actually being manufactured in the zone.  As a result, errors
in entry were sometimes made which were not detected until after
entry was completed and duty paid.  The importer wished to change
the status of the merchandise to accurately reflect the updated
inventory records.  Customs agreed.  The ruling held that
allowing the change of status in this case when the merchandise
was not removed from the zone beforehand allowed for practical
inventory and accounting procedures and did not interfere with
the protection of revenue.  Thus, the status of merchandise in an
FTZ was changed to privileged foreign, duty paid, and the
merchandise was not removed from the zone.

     In the present case, the foreign merchandise, engines and
transmissions, is used to manufacture vehicles which are then
removed from the subzone.  This is the normal operation for the
FTZ in this case and there is no need for a correction of records
here.  On the contrary, the importer here has made a decision
which it now finds adverse to its interests and as a result
wishes to change.  Without a finding of mistake of fact, however,
Customs cannot change a decision made by an importer concerning
the status of merchandise in an FTZ.  Once duty is paid it
becomes the revenue of the United States Treasury to be protected
under Customs laws.  To allow the importer to in effect change
its mind after realizing the adverse impact of its decision would
be to interfere with that objective.  Therefore, we do not find
C.S.D. 83-96 to be applicable to the facts in this case.

     The foreign merchandise admitted into the subzone is used in
the manufacturing of domestic vehicles, an activity that would
obviously produce foreign vehicles if done so outside the United
States.  The fact that the importer chose non-privileged foreign
status for merchandise that could have been classified as
privileged foreign does not alter the general purpose of the FTZ
in this case.  In fact, there is no dispute that the subzone
would be used to produce domestic vehicles with parts that would
otherwise be classified as foreign if not admitted into the
subzone and designated as privileged foreign merchandise.  The
importer, for whatever reason chose not to do this.  While such a
decision might be questioned for merit, it is not outside the
realm of everyday decision-making.  Ford may have other reasons
for making such a choice that are not apparent to those outside
the decision-making process.  Thus, we find no reason to allow
the importer to correct what is essentially a business decision
made in the normal course of business.

     There is a dispute as to when the original liquidation of
entries took place.  Protestant claims that the dates of
liquidation were between December 30, 1986 and February 7, 1987,
citing 19 U.S.C. 1504(a), which provides that if an entry is not
liquidated within one year of the date of entry, then it is
deemed liquidated by operation of law.  Customs maintains that
the liquidations were suspended for three consecutive years in
1986, 1987, and 1988, and notices were sent to the importer of
record as listed on the entry documents.  FMC claims that it did
not receive these notices through its Louisville office, where
the foreign trade zone is operated, nor did its sureties receive
any notice.

     That the sureties were not notified of the liquidation
extensions in this case is not relevant to the validity of the
notices.  The statute expressly states that notice of extension
should be given to the importer of record.  19 U.S.C. 1504(b)
(1982 and Supp II 1984).  The importer of record is considered to
be the party named on the documents of entry, to whom Customs
claims to have sent the notices.  To the extent that Customs
records show the importer of record was in fact notified, the
notices of extension are valid under law, as there is no
requirement that the sureties be notified.  The protestant cites
to 19 CFR 159.12(b), which, if read literally, seems to require
that the importer of record and surety be notified of the
extension.  Specifically, section 159.12(b) requires that notice
of extension be given to the importer or the consignee and his
agent and surety on Customs Form 4333-A.  This language
contradicts the statute, which requires that notice be given to
the importer of record or the surety.  The Court of International
Trade has recently addressed the issue of apparent conflict
between the subject statute and regulation.  The court held that
since the reading of the regulation must be consistent with the
statute, it cannot be read to effect a deemed liquidation in
cases where, as here, the importer of record was properly
notified but the surety was not notified at all.  Old Republic
Insurance Co. v. United States, 10 CIT 589, 596 (1986).  See also
Detroit Zoological Society v. United States, 10 CIT 133 (1986). 
Thus, we cannot find the notices of extension in this case
invalid simply because the sureties did not receive the notices.

     The protestant has cited to case law to support its claim
that it never received notices of extension in this case.  Of
particular note are the citations to Intra-mar Shipping Corp. v.
U.S., 66 Cust. Ct. 3 (1971), and F.W. Myers & Co. v. U.S., 574 F.
Supp. 1064, 6 CIT 215 (1983).  In Intra-mar, the court held that
once an entity has proven that it did not receive notice, the
burden falls on the Government to prove that it was mailed.  Such
proof should be "to the level of specificity where the Government
must now produce the precise person who mailed the subject
notices."  Intra-mar at 6.  The Myers decision, following Intra-
mar, established that an affidavit from an importer's agent
charged with the responsibility of receiving the notice stating
that he did not actually receive such notice is sufficient
evidence to shift the burden of production from the importer back
to the Government.  The protestant has produced such an affidavit
from its employee, Donald Cohen, which is contained in its
February 14, 1991 submission as "exhibit 14."

     Customs officials in Cleveland have stated on several
occasions that the subject notices were generated from their
office.  In 1985, Customs adopted an electronic system of
providing notice to importers whose liquidations were being
withheld for more information.  When such a notice is necessary,
the appropriate Customs official at the office where the records
are being kept (in this case Cleveland) will input the necessary
data into Customs nationwide computer network.  Those data are
then electronically transferred to a Customs information
clearinghouse (in this case Indianapolis) where the notices are
automatically printed and immediately sent to the importer's
designated address.  As noted above, FMC's designated address
according to the importer number given in this case is in fact
its headquarters address in Dearborn.  Without producing any
tangible evidence beyond the employee's affidavit stating non-
receipt, Ford attempts to discredit Customs records showing
notice was indeed sent in this case at every appropriate
occasion.

     We do not find such an attempt to be sufficient to allow us
to ignore the fact that the records do show the notices were
sent.  Moreover, the dispute between Ford and Customs about where
the notices should have been sent at the very least gives rise to
questions about Ford's claim of non-receipt.  If they were
expecting notices to be sent to Louisville while they were in
fact sent to Dearborn, the Ford officials in Dearborn might have
been inclined to ignore the notices.  At any rate, we are not in
a position to question what the importer might have done with the
notices once they were received, but we do know from the evidence
submitted that they were in fact sent to the appropriate address.

     Customs has maintained that the extensions were necessary to
obtain additional information on how the merchandise was to be
used in the foreign trade zone.  In fact, there is an ongoing
dispute as to the precise nature of how the engines and
transmissions were admitted to the FTZ.  Customs extended the
liquidations to give itself more time to gather facts on this
particular matter.  Thus, Customs properly made the extensions
pursuant to section 504(b)(1).

     In summation, we find that the importer of record as listed
on the entry documents to be Ford Motor Company headquarters in
Dearborn, Michigan, not Louisville, Kentucky, as the protestant
argued.  Customs records show that notices of extension of
liquidation were mailed to that address for three successive
years on each of the 11 entries at issue.  We also find no reason
to allow for "correction" of a business decision made by the
importer solely on the basis that the decision is adverse to its
interests.  The relevant statute does not authorize Customs to
allow reliquidation for such a reason.


HOLDING:

     The protestant's decision to designate certain articles
admitted into its foreign trade subzone as non-privileged foreign
merchandise is not a mistake of fact or inadvertent error
correctable under 19 U.S.C. 1520(c)(1).  The subject entries
cannot be reliquidated under that statute as a result.  Inasmuch
as this was a business decision made by the protestant, it is
outside the scope of Customs duties to review such; consequently,
Customs did not contribute to any errors made in the present case
by not reviewing the decision.

     The notices of extension of liquidation of the 11 above-
referenced entries are valid because the importer of record as
listed on the entry documents was notified as required under 19
U.S.C. 1504.  There is no requirement under statute that the
surety be notified as well.







     You are advised to deny the protest in full.  Form 19,
Notice of Action, should be attached to this ruling.

                              Sincerely,




                              John Durant, Director