6 F.3d 763 (Fed. Cir. 1993), 93-1029, St. Paul Fire & Marine Ins. Co. v. United States

Docket Nº:93-1029.
Citation:6 F.3d 763
Party Name:ST. PAUL FIRE & MARINE INSURANCE CO. (Surety for Carreon, Inc.), Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant.
Case Date:October 01, 1993
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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6 F.3d 763 (Fed. Cir. 1993)


Inc.), Plaintiff-Appellee,


The UNITED STATES, Defendant-Appellant.

No. 93-1029.

United States Court of Appeals, Federal Circuit

October 1, 1993

Rehearing Denied Nov. 30, 1993.

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T. Randolph Ferguson, Glad & Ferguson, San Francisco, CA, argued for plaintiff-appellee. With him on the brief was John M. Daley, Law Office of John M. Daley, of San Francisco, CA, of counsel.

Barbara M. Epstein, Attorney, Commercial Litigation Branch, Dept. of Justice, New York City, argued for defendant-appellant. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Joseph I. Liebman, Attorney in Charge, Intern. Trade Field Office. Also on the brief was Edward N. Maurer, Office of Asst. Chief Counsel, U.S. Customs Service, of counsel.

Before ARCHER, CLEVENGER and SCHALL, Circuit Judges.

CLEVENGER, Circuit Judge.

The United States, on behalf of its Customs Service (Customs), appeals from the summary judgment of the United States Court of International Trade in favor of St. Paul Fire & Marine Insurance Co. St. Paul Fire & Marine Ins. Co. v. United States, 799 F.Supp. 120 (Ct.Int'l Trade 1992). The judgment appealed holds that 41 entries of merchandise with respect to which St. Paul stands as surety must be liquidated duty-free as entered by operation of law under 19 U.S.C. Sec. 1504(a) (1988). In so holding, the Court of International Trade decided that Customs unlawfully extended the time period for liquidation of the entries in question. Because the court erred in so holding, we reverse and remand.


Carreon Management Services, Inc. made 41 entries of merchandise at El Paso, Texas between July 14, 1981 and August 24, 1982. Carreon asserted duty-free treatment for the merchandise under Item 807.00 of the Tariff Schedules of the United States, which accords duty-free treatment to articles assembled abroad from components produced in the United States. In order to obtain such duty-free treatment, however, the importer must supply Customs with detailed documentation including, inter alia, invoices, certificates of origin, foreign assemblers' declarations and actual cost data.

Section 1504(a) of Title 19 provides that if an entry of merchandise is not liquidated by Customs within one year from the date of entry, the entry will be "deemed liquidated" at the rate of duty, value, quantity and amount of duties asserted by the importer at the time of entry. 19 U.S.C. Sec. 1504(a). Subsection (b) of section 1504, however, provides that the one-year period for liquidation may be extended, among other reasons, if Customs needs additional information for the proper appraisement or classification of the merchandise, provided that Customs gives "notice of such extension to the importer, his consignee or agent in such form and manner as [Customs] shall prescribe in regulations." 19 U.S.C. Sec. 1504(b) (1982), amended by 19 U.S.C. Sec. 1504(b) (Supp. IV 1986). Subsection (d) of section 1504 expressly limits Customs' subsection (b) authority to extend the one-year period for liquidation set forth in subsection (a), by stating that any entry not liquidated within four years from entry shall be "deemed liquidated" as specified above. The only exception to this absolute four-year time period relates to further extensions of liquidation times that are compelled either by statute or court order, neither of which are present in this case. 19 U.S.C. Sec. 1504(d) (1988).


As to each of the 41 entries at issue, Carreon asserted duty-free treatment under

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Item 807.00 and supplied Customs at entry certain of the information required to support the treatment asserted, including estimated costs, invoices and foreign assemblers' certificates. Carreon did not submit the required actual cost data and country of origin certificates, and without them Customs could not accept Carreon's duty-free assertions. Rather than liquidate the entries on some other basis, Customs withheld liquidation and released the merchandise to Carreon, who with its surety St. Paul, executed a bond promising that they would be jointly and severally liable for any additional duties subsequently found due upon liquidation.

Customs extended the time for liquidation of the 41 entries two or three times because "information [was] needed for the proper appraisement or classification of the merchandise [which was] not available to the appropriate customs officer." 19 U.S.C. Sec. 1504(b)(1) (1988). No individual extension exceeded one year and the total time of extensions for each of the entries did not exceed four years from the date of each entry. Although Customs did not retain copies of the extension notices, Customs produced a computer printout with codes at trial indicating the issuance of and the reasons for the extensions. For seven of the entries, the printout fails to show an extension of the first anniversary of the dates of entry, but notes extensions for such entries on their second and third anniversaries. For three other entries the printout shows extensions on the first and where applicable the third anniversaries, but no extension on the second anniversary. Customs has no written record or oral evidence to prove that discussions occurred between Customs officials and Carreon personnel concerning the reasons why Carreon failed to produce the required information. Customs did present evidence, however, establishing that it is customary for Customs officials to have verbal communications with importers about the submission of cost data although such communications might not be reflected in the written records.

On April 4 and October 10, 1984, Customs issued to Carreon formal requests for information on Customs Form 28 seeking the required missing documentary information. Carreon did not respond to those requests and Customs, on January 4, 1985, liquidated the 41 entries. In so doing, Customs denied Carreon's request for duty-free treatment and instead assessed additional duties of $273,944.44 based on the full invoice value of the merchandise. On March 3, 1985, Customs issued a demand for payment of the additional duties to St. Paul. At that time, the surety discovered that Carreon had discontinued its business and would not pay the duties. 1 On...

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