HQ 226554: Protest No. 3501-94-100228; Classification of Stokbord;Subheading 3920.10.00, HTSUSA; DeemedLiquidation; 19 U.S.C. 1504

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 226554

                          August 5, 1996

LIQ-11-RR:IT:EC 226554 GEV

CATEGORY: Liquidation

Port Director
U.S. Customs Service
110 South 4th Street
Minneapolis, Minnesota 55401

RE:  Protest No. 3501-94-100228; Classification of Stokbord;
Subheading 3920.10.00,                          HTSUSA; Deemed
Liquidation; 19 U.S.C.  1504

Dear Sir:

     This is in response to your memorandum of November 6, 1995,
forwarding the above-referenced protest to this office for
further review.  Our ruling on this matter is set forth below.

FACTS:

     According to the file and Customs records, Hammer's Inc.
(the "protestant") was the importer of record of "Stokbord", a
particle-board like product made from 100% recycled low density
polyethylene plastic with an embossed surface texture plastic
film heat-welded to the upper and lower faces.  It is used by hog
farmers as a floor covering, matting, padding, and wall liner in
hog buildings and livestock pens.  The Stokbord which is the
subject of this protest was imported in 4' x 8' sheets, in 1/4"
or «" thicknesses, and weighs approximately 38 lbs. (1/4"
thickness) or 70 lbs. («" thickness) per board.  It was imported
on the following entries:

                 Entry No.              Date of Entry            Date of Liquidation
     336-1900680-3          04/04/90                     03/11/94
     336-1900686-0          03/30/90                     03/11/94
     336-1900748-8          04/20/90                     03/11/94
     336-1900879-1          05/29/90                     03/11/94
     336-1901033-4          07/23/90                     03/11/94
     336-1901272-8          09/12/90                     03/11/94
     336-1901308-0          09/28/90                     03/11/94
     336-1901319-7          09/20/90                     03/11/94

                              - 2 -

     336-1901341-1          10/01/90                     03/11/94
     336-1901399-9          10/22/90                     03/11/94
     336-1901426-0          10/30/90                     03/11/94
     336-1901481-5          11/23/90                     03/11/94

     Customs records indicate that the liquidation of each of the
above-listed entries was extended three times.  The code for the
extension was "01".  The subject merchandise was liquidated with
a classification under subheading 3920.10.00, Harmonized Tariff
Schedule of the United States Annotated (HTSUSA), dutiable at the
rate of 4.2%.  The protestant contends that Customs extensions of
the dates of liquidation were invalid and therefore the subject
entries should have been liquidated duty-free after 1 year from
the respective entry dates by operation of law (i.e., a "deemed"
liquidation) under the entered classification of  subheading
9817.00.5000, HTSUSA.  The grounds stated for the protest were,
inter alia, that:  (1) the notices of extension were defective on
their faces because they failed to properly state an authorized
reason for extension; and (2) the extensions were for an
unreasonable period of time and constituted an abuse of
discretion by Customs.

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 date of liquidation; see 19 U.S.C. 
1514(c)(3)), and the matter protested is protestable (see 19
U.S.C. 
 1514(a)(5)).

       Under 19 U.S.C.  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, unless this one-year period for
liquidation is extended.  The statute authorizes reasons for
which liquidation may be extended, including that information
needed for the proper appraisement or classification of the
merchandise is not available (i.e., code "01" mentioned above). 
Authority is provided for regulations prescribing the procedures
for such extensions of liquidation.

     The Customs Regulations issued under this statute are found
in 19 CFR  159.12.  Under 
 159.12(a)(1)(i), the port 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  159.12(b), if the port 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.


                              - 3 -

     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)).  The record is devoid of probative evidence
substantiating the protestant's contention of unreasonableness on
the part of the U.S. Customs Service.  In such a case, when the
protestant fails to rebut the aforementioned  presumption, "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 addressed by the Court of Appeals for the Federal Circuit
(CAFC) 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, 779 F.Supp. 120 (1992)), wherein 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.  There
is no evidence in the file, submitted by the protestant or
otherwise, proving that Customs decision was unreasonable, that
all possible grounds for extension of liquidation may be
eliminated.  That is, the merchandise under consideration was
claimed to be classifiable under subheading 9817.00.50, HTSUSA,
and was ultimately classified under subheading 3920.10.00,
HTSUSA.  There is affirmative evidence of the need to extend the
period for liquidation in order for Customs to ensure the
correctness of 
the claimed classification of the subject merchandise (i.e., the
CF 6445A indicates that Customs 
liquidation of the subject merchandise was based on a pending
application for further review of a protest regarding the
classification of the same merchandise, ultimately decided by
Customs Headquarters in ruling 952796, dated January 29, 1993
(affirmed in Headquarters ruling 955597, dated May 31, 1994)).

     It should be further noted that the presumption of legality
accorded Customs decisions to extend liquidation discussed in St.
Paul, supra, was further bolstered by the CAFC in Intercargo
Insurance Company f/k/a International Cargo & Surety Co., (Surety
for M. Genauer) v. United States, 83 F.3d 391(Fed. Cir. 1996)
(reversing the CIT decision (879 F.Supp. 1338)).  In that case
the liquidation extension notices in question, which were
verbatim of the ones at issue in this protest, read as follows:

                              - 4 -

                    THIS IS A COURTESY NOTICE.
          THE LIQUIDATION OF THIS ENTRY HAS BEEN EXTENDED;
          ADDITIONAL TIME IS REQUIRED BY CUSTOMS TO PROCESS 
          THIS TRANSACTION.  NO ACTION IS NECESSARY ON YOUR 
          PART UNLESS INFORMATION IS SPECIFICALLY REQUESTED
          BY CUSTOMS.

     The plaintiff claimed that the liquidation extensions were
invalid, and the subject entries therefore deemed liquidated by
operation of law, because the extension notices did not recite
one of the statutory reasons for obtaining additional time for
liquidations set forth in 19 U.S.C. 
 1504.  Notwithstanding the defective notices, the CAFC
determined that fact alone did not render the extended
liquidations invalid so long as Customs error in this regard had
no prejudicial impact on the plaintiff.  In determining that no
such prejudicial impact existed in that case, the court stated
that the purpose of the notice ("to increase certainty in the
customs process by apprising the importer and its surety of the
precise period within which final action would be taken on the
liquidation") was met.  Moreover, the court stated that if the
plaintiff believed that Customs did not have a valid statutory
reason for the extensions, the plaintiff could seek to have them
judicially invalidated on that ground.  

     Using the analysis of the CAFC in Intercargo, supra, we
reach the same conclusion with respect to the protest under
consideration.  Since the protestant was advised of the subject
extensions, and it was not deprived of its opportunity to
challenge the extensions in court on the ground that they were
not obtained for a statutorily valid reason, it suffered no
prejudicial impact justifying an invalidation of the liquidation
extensions in question.

     Parenthetically, we note that in regard to the protestant's
arguments with respect to the classification of the subject
merchandise, Customs position in this matter as set forth in
rulings 952796 and 955597 remains unchanged.

     Accordingly, the protest must be denied.  

HOLDING:

     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, nor did
the protestant suffer prejudicial impact resulting from the
liquidation extension notices.
                              - 5 -

     In accordance with  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 no later
than 60 days from the date of this letter.  Any reliquidation of
the entry in accordance with this
decision must be accomplished prior to mailing 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
Ruling Module in ACS and the public via the Diskette Subscription
Service, Freedom of Information Act and other public access
channels.  

                              Sincerely,




                              Director
                              International Trade Compliance
Division