HQ 221273: Further review of protest no. 2002-7-000204; application ofthe duty refund provision of 19 U.S.C. 1558(a)(2) and 19 C.F.R.158.41; finality of liquidation which precedes notice ofinadmissibility issued by Food and Drug Administration

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 221273

                          March 1, 1991

LIQ-8-CO:R:C:E 221273 C

CATEGORY:  Entry/Liquidation

District Director of Customs
U.S. Customs Service
Suite 244
423 Canal Street
New Orleans, Louisiana 70130-2341

RE:  Further review of protest no. 2002-7-000204; application of
the duty refund provision of 19 U.S.C. 1558(a)(2) and 19 C.F.R.
158.41; finality of liquidation which precedes notice of
inadmissibility issued by Food and Drug Administration

Dear Sir/Madam:

     This responds to the referenced protest submitted to Customs
Headquarters for further review.

FACTS:

     PROTESTANT imported 2000 cases of sardines on September 28,
1984.  The merchandise was entered on October 11, 1984, at New
Orleans (entry no. 85-XXXXXX-X), duty paid.  The entry was
liquidated on December 14, 1984.  Although it does not appear in
the record, it is clear that upon entry, or about that time,
samples of the merchandise were submitted to the Food and Drug
Administration (FDA) for testing.  On June 4, 1986, eighteen
months after liquidation, the FDA determined that the merchandise
was inadmissible.  There is no appearance in the record that
Customs issued a demand for redelivery.  On November 14, 1986,
PROTESTANT requested a refund of duty.  According to an October
1, 1987, letter to Customs from PROTESTANT's counsel, this
request was made under 19 U.S.C. 1558 and 19 C.F.R. 158.41. 
Customs treated this request as a request for reliquidation under
19 U.S.C. 1520(c)(1).  The request was denied on November 19,
1986.  PROTESTANT filed a timely protest of the denial on January
20, 1987, under 19 U.S.C. 1514, and requested further review
under 19 U.S.C. 1515(a) and 19 C.F.R. 174.23.
     The relevant provisions are as follows:

          19 U.S.C. 1558(a)(2): No remission,
          abatement, or drawback of estimated or
          liquidated duty shall be allowed because of
          the exportation or destruction of any
          merchandise after its release from the
          custody of the Government, except in the
          following cases: . . . (2) When prohibited
          articles have been regularly entered in good
          faith and are subsequently exported or
          destroyed pursuant to a law of the United
          States and under such regulations as the
          Secretary of the Treasury may prescribe . . .
           

          19 C.F.R. 158.41: Merchandise regularly
          entered or withdrawn for consumption in good
          faith and denied admission into the United
          States by any Government agency after its
          release from Customs custody, pursuant to a
          law or regulation in force on the date of
          entry or withdrawal . . . , may be destroyed
          under Government supervision. In such case,
          the destroyed merchandise is exempt from duty
          and any duties collected thereon shall be
          refunded. In lieu of destruction, the
          merchandise may be exported under Customs
          supervision in accordance with section
          158.45(c).

ISSUES:

     1.)  Was PROTESTANT's request for reliquidation under 19
U.S.C. 1520(c)(1) properly denied?

     2.)  What are the time limitations on petitions for duty
refunds made under 19 U.S.C. 1558(a)(2) and 19 C.F.R. 158.41?

LAW AND ANALYSIS:

Issue 1

     In the case of merchandise that is to be tested for
admissibility by the FDA, Customs routinely suspends liquidation
under 19 C.F.R. 159.55(a) until the FDA makes its determination. 
If merchandise is determined to be inadmissible, Customs issues a
notice and demand for redelivery and liquidates the entry
accordingly.  The liquidation, and therein the admissibility
question, can be protested under proper procedures, specifically
19 U.S.C. 1514(a)(4).

     In the instant case, Customs did not follow routine
procedure.  The entry was liquidated eighteen months prior to the
FDA determination.  Consequently, by the time PROTESTANT learned
of the FDA decision, the time period for filing a protest had
expired.  The legal significance of this is that the liquidation
became final, which means that it became binding on all parties
including the government.

     Under 19 U.S.C. 1520(c)(1), the finality of a liquidation
can be disturbed after the period for filing a protest has
passed.  Thereunder, a liquidated entry can be reliquidated to
correct a clerical error, mistake of fact, or other inadvertence
in, inter alia, the liquidation of an entry.  The request under
1520(c)(1) must be filed within one year of the liquidation.  If
a request for reliquidation is denied, that denial can be
protested under 19 U.S.C. 1514(a)(7).  Such a protest is limited
to consideration of the 1520(c)(1) denial.

     In the instant case, PROTESTANT filed a request for refund
of duties on November 14, 1986, such request having been treated
by Customs as a 1520(c)(1) request.  Customs denied the request
on November 19, 1986, presumably, because it was not timely filed
- within one year of the date of liquidation.  (Neither the
request nor the denial is in the file.)  PROTESTANT now protests
this denial, presumably, under 19 U.S.C. 1514(a)(7).

     Customs denial of PROTESTANT's 1520(c)(1) request was
proper.  The request was filed nearly two years after
liquidation, the only Customs decision/act subject to 1520(c)(1)
review on the known facts of this case.  The request therefore
was untimely.

     PROTESTANT urges that the request was timely because it was
made within one year of the FDA's inadmissibility determination. 
On this point, the Court of International Trade's opinion in
United States v. Utex International, Inc., 857 F. 2d 1408 (Fed.
Cir. 1988), is applicable.  There, merchandise was entered on
February 1, 1980, the entry was liquidated on February 29, 1980,
and the FDA inadmissibility determination was issued on March 12,
1980.  As in the instant case, the liquidation was not protested
(nor was a 1520(c)(1) request timely filed).  The court
recognized the impropriety of Customs premature liquidation under
the statutory and regulatory scheme, but stated that "absent
timely reliquidation [1520(c)(1)] or protest [1514] it [the
liquidation] was final as to all aspects of the entry.  The
importer, the surety, and the government are bound by and have
the right to rely on the finality of liquidation."  Id. at 1412. 
The court also stated that an "erroneous liquidation could be
corrected only by following the statutory procedures [1514 and/or
1520(c)(1)], and . . . failure to do so within the period set by
statute leaves the liquidation final."  Id. at 1411 (citing Omni
U.S.A. v. United States, 840 F. 2d 912 (Fed. Cir. 1988), reh'g
denied 109 S. Ct. 405 (1988), and United States v. A.N. Deringer,
593 F. 2d 1015, 66 CCPA 50 (1979)).

     On the facts of the instant case, the liquidation had become
final long before PROTESTANT filed its request for refund. 
Whether the request, treated as a 1520(c)(1) request, was meant
to be tethered to the liquidation on December 14, 1984, or to the
FDA inadmissibility determination of June 4, 1986 - or even to a
redelivery notice issued by Customs proximate to the FDA
determination - the request was untimely because the finality of
liquidation, on the facts here, had become inviolable.

     An importer in a situation similar to that presented here
should protest an improper liquidation in a timely manner.  Where
Customs liquidates an entry covering merchandise subject to an
FDA determination yet to be made, that liquidation should be
protested, within 90 days, as not in conformance with the
regulatory scheme which calls for a suspension of liquidation (19
C.F.R. 159.55).  If a correctable error under 1520(c)(1) can be
identified as responsible for the improper liquidation, an
importer would have a year from the date of liquidation to act. 
Failure to follow these procedures will leave the liquidation
final and binding.

Issue 2

     PROTESTANT appears to urge that its request for a refund of
duty under 19 U.S.C. 1558(a)(2) and 19 C.F.R. 158.41 should be
granted since the requirements of those provisions have been
complied with; specifically, the merchandise in question was
determined to be inadmissible under a law of the United States
and it was destroyed under government supervision.  We conclude
that this proposition misapplies the pertinent law and
regulations.

     Customs position has been that the provision for duty refund
under 1558(a)(2) must be construed within the broader statutory
scheme governing liquidation and the finality of liquidation, as
above (Issue 1).  In short, refund of duty under 1558(a)(2) is
possible only if such request is filed in conjunction with a
timely protest or request for reliquidation under 19 U.S.C. 1514
and 1520(c)(1), respectively.  (If a request under 1558 is filed
without specifying that it is a protest or a request for
reliquidation, Customs should nonetheless treat it as one or the
other according to its timeliness.)  (See Customs Headquarters
determinations, attached: 305419, dated January 25, 1978, and
222443, dated July 30, 1990.)  If filed in conjunction with a
timely protest, or in time to be considered a timely protest,
recovery of duty is a likely result.  If filed with a 1520(c)(1)
request, or in time to be so considered, a petitioner must
identify an error correctable under the statute.  This is a more
difficult burden.  (It is noted that Customs could voluntarily
reliquidate under 19 U.S.C. 1501 on the basis of 19 U.S.C. 1558
in appropriate circumstances.)

     Consequently, since PROTESTANT failed to file its request
for refund under 1558(a)(2) in a timely manner, as above, it must
be denied.  The duty refund provision of section 1558 is not a
limitless option, nor should it be, considering the appropriate,
and indeed necessary, emphasis on strict timeliness evident in
the statutory liquidation scheme and the court interpretations.

HOLDING:

     1.)  PROTESTANT's request for reliquidation under 19 U.S.C.
1520(c)(1) was properly denied as untimely.

     2.)  A request for a refund under 19 U.S.C. 1558(a)(2) and
19 C.F.R 158.41 must be filed within the statutory time frame
governing liquidation and the finality of liquidation, 19 U.S.C.
1514 and 1520(c)(1).  PROTESTANT's request for refund under 19
U.S.C. 1558(a)(2) and 19 C.F.R. 158.41 was untimely.

     Based on the foregoing, you are directed to deny the protest
and furnish a copy, with attachments, to PROTESTANT.  Also,
provide notification of the right to appeal in accordance with 19
U.S.C. 1515(a) and 19 C.F.R 174.31.

                               Sincerely,




                               John Durant, Director
                               Commercial Rulings Division