International Cargo & Sur. Ins. Co. v. US, Court No. 90-01-00042.

• Decision Date: 15 November 1991
• Docket Number: Court No. 90-01-00042.
• Citation: 779 F. Supp. 174,15 CIT 541
• Parties: INTERNATIONAL CARGO & SURETY INSURANCE COMPANY (Insurer for Data Memory Corporation), Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

779 F. Supp. 174

15 CIT 541

INTERNATIONAL CARGO & SURETY INSURANCE COMPANY (Insurer for Data Memory Corporation), Plaintiff, v. The UNITED STATES, Defendant.

Court No. 90-01-00042.

United States Court of International Trade.

November 15, 1991.

Glad & Ferguson, Edward N. Glad, Los Angeles, Cal., for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., Joseph I. Liebman, Attorney in Charge, Intern. Trade Field Office, Mark S. Sochaczewsky, U.S. Dept. of Justice, Civ. Div., and Edward N. Maurer, U.S. Customs Service, Washington, D.C., of counsel, for defendant.

OPINION

RESTANI, Judge:

Plaintiff, International Cargo and Surety Insurance Company ("International") brought this action pursuant to 28 U.S.C. § 1581(a) (1988), contesting denial by the United States Customs Service ("Customs") of its protest concerning liquidation of an entry of merchandise. International contends that the merchandise was liquidated by operation of law at the rate of duty assessed at the time of entry. Defendant contends that it extended the time for liquidation and additional duties were properly assessed. The case is before the court on cross motions for summary judgment.

BACKGROUND

International is the surety for Data Memory Corporation, the importer of computer disk drives¹ that entered Los Angeles, California on September 2, 1987. At the time of entry, the Treasury Department and Customs Service Headquarters ("Headquarters") were reconsidering classification of data-processing peripheral devices in light of a July 1987 Customs ruling. On August 14, 1987, Headquarters directed all district directors to withhold liquidation of entries of data-processing peripheral devices until further notice. Customs claims that notices extending the time for liquidation were printed on February 6, 1988, and mailed to Data Memory Corporation and International on approximately February 9, 1988.² International denies that it received notice of the extension.

On March 18, 1988, Headquarters notified the Los Angeles district to resume liquidation of data-processing peripheral devices, and provided guidelines for classification. The guidelines state that classification depends on design and use. Disk drives designed for incorporation into data processing units are classified as automatic data-processing parts under item 676.54 of the Tariff Schedules of the United States ("TSUS"), whereas "stand-alone devices" are classified as office machines under item 676.30, TSUS.

To classify the disk drives in this case in accordance with the guidelines, the Los Angeles district needed information about design and use. On June 20, 1988, Customs issued a Request for Information (Form CF 28) to the importer. The importer failed to respond. On October 4, 1988, Customs issued a Notice of Action (Form CF 29), stating that as the importer had failed to provide the requested information the disk drives would be classified as office machines, dutiable at 3.7 percent ad valorem.³ The entry was liquidated on October 21, 1988.

Both International and the government move for summary judgment. International has not responded to the government's motion.

STANDARD OF REVIEW

A decision to extend the time to liquidate an entry will be upheld if it is proper under the statute, and is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A); see Detroit Zoological Society v. United States, 10 CIT 133, 137-38, 630 F.Supp. 1350, 1356 (1986) (decisions to extend liquidation reviewed for arbitrariness and abuse of discretion); Bar Bea Truck Leasing Co. v. United States, 4 CIT 138, 140, 1982 WL 2238 (1982) (citations omitted) (when agency action is discretionary but a law applies, standard of review is arbitrary, capricious or not in accordance with law).

Summary judgment is appropriate when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Rule 56(d), Rules of the Court of International Trade. The party opposing summary judgment must "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file', designate `specific facts showing that there is genuine issue for trial.'" Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986) (citing Fed.R.Civ.P. 56(e)).

DISCUSSION

1. Legislative Scheme

Imported merchandise which is not liquidated within one year of its entry date is deemed liquidated at the rate asserted at the time of entry. 19 U.S.C. § 1504(a).⁴ Customs may extend the period in which to liquidate an entry under three specific circumstances, including when "information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer." 19 U.S.C. § 1504(b)(1); see 19 C.F.R. § 159.12(a)(1)(i).⁵ To extend the time to liquidate, Customs must give notice of the extension to the importer of record in the form and manner prescribed in the regulations. 19 U.S.C. § 1504(b). The regulations provide that Customs shall give notice on Customs Form 4333-A, and the notice shall state the reason for the extension. 19 C.F.R. § 159.12(b). Failure to provide proper notice results in liquidation by operation of law. Enron Oil Trading and Transportation Co. v. United States, 15 CIT ___, Slip Op. 91-91 at 3, 1991 WL 200141 (Sept. 27, 1991) (citing Pagoda Trading Co. v. United States, 9 CIT 407, 411, 617 F.Supp. 96, 99 (1985), aff'd, 804 F.2d 665 (Fed.Cir.1986)).

Prior to the enactment in 1978 of 19 U.S.C. § 1504, Customs could delay liquidation as long as it pleased, with or without giving notice. Ambassador Div. of Florsheim Shoe v. United States, 748 F.2d 1560, 1562 (Fed.Cir.1984); see S.Rep. No. 95-778, 95th Cong., 2d Sess. 1, 32 (1978), reprinted in, 1978 U.S.Code Cong. and Adm.News 2211, 2243. Section 1504 was enacted to "increase certainty in the customs process for importers, surety companies, and other third parties with a potential liability relating to a customs transaction." S.Rep. No. 95-778, 95th Cong., 2d Sess. at 32, reprinted in, 1978 U.S.Code Cong. and Adm.News at 2243; see Ambassador, 748 F.2d at 1562-63. It was also enacted to accommodate requests from trade partners that the government establish a time limit within which liquidation must occur. Id.

2. Extension of Time to Liquidate

In support of its assertion that proper notice was given, Customs has submitted declarations from two Customs' computer analysts. See Declaration of William G. Hines ("Hines Declaration") and Declaration of Raymond Fouch ("Fouch Declaration"). These declarations state that Customs does not maintain paper copies of extension notices, but information concerning entries is stored on a computer data-base called Automated Commercial System ("ACS"). Hines Declaration, paras. 2, 4; Fouch Declaration, para. 5. Information relating to extension notices is stored within ACS in the "extension/suspension history file"; it is also stored in another ACS file known as the "entry summary header file." Hines Declaration, paras. 4-6. When an issue arises concerning notice, Customs usually produces a printout from the extension/suspension history file. Hines Declaration, para. 8. In this case, due to a computer error, the extension/suspension history files for the day in question were "lost"; as a substitute, Customs has produced the entry summary header file. Hines Declaration, paras. 8-9. This printout contains encoded data, which, according to the declaration, establishes that notices to Data Memory Corporation and International were printed on February 6, 1988; the notices stated that an extension was required because Customs needed to obtain information. Hines Declaration, para. 7. As a routine matter, notices are printed at the Customs Data Center in Springfield, Virginia on a Saturday or Sunday and mailed the following Tuesday; therefore, a notice printed on February 6, 1988, a Saturday, would have been mailed on about Tuesday, February 9, 1988. Fouch Declaration, paras. 4, 6. Between April 1979 and May 1989, Customs mailed approximately 28,000 notices each week. Fouch Declaration, para. 2.

Government officials are entitled to a presumption that their duties are performed in the manner required by law. Star Sales & Distributing Corp. v. United States, 10 CIT 709, 710, 663 F.Supp. 1127, 1129 (1986); see Enron, 15 CIT at ___, Slip Op. 91-91 at 4. In this case, therefore, a presumption arises that proper notice was given. The presumption is not conclusive, and may be rebutted by a declaration or other evidence indicating that notice was not received. Recently, in Enron, this court found that an affidavit from the importer's recordkeeper, stating that an extension notice had not been received, was sufficient to rebut the presumption and defeat summary judgment. 15 CIT at ___, Slip op. 91-91 at 9-10. No such evidence was produced in this case. International makes the naked assertion in its "Statement to Accompany Motion for Summary Judgment" that Customs failed to give notice. International did not provide any evidence to support its assertion, nor did it submit an opposition to the government's motion for summary judgment. As International has failed to rebut the presumption that notice was given, the only issue to be decided is whether the extension was permissible under the statute.

Customs claims the extension was necessary because the Los Angeles district needed information from Headquarters in order to classify the disk drives.⁶ The question, therefore, is whether these circumstances fall within 19 U.S.C. § 1504(b)(1), which permits an extension when "information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer." 19 U.S.C. § 1504(b)(1); see 19 C.F.R. § 159.12(a)(1)(i). The "appropriate" customs officer is the officer making the decision to liquidate—in this case,...