John v. CARR & SON, INC. v. UNITED STATES

• Decision Date: 18 September 1972
• Docket Number: C.D. 4377,Protest No. 69/30840.
• Citation: 69 Cust. Ct. 78,347 F. Supp. 1390
• Parties: JOHN V. CARR & SON, INC. v. UNITED STATES.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

347 F. Supp. 1390

69 Cust. Ct. 78

JOHN V. CARR & SON, INC. v. UNITED STATES.

C.D. 4377; Protest No. 69/30840.

United States Customs Court, Third Division.

September 18, 1972.

Howard & Howard, Barnes, Richardson & Colburn, New York City (E. Thomas Honey and Irving Levine, New York City, of counsel), associate counsel, for plaintiff.

E. Grey Lewis, Acting Asst. Atty. Gen. (Robert E. Burke, and Joseph I. Liebman, New York City, trial attorneys), for defendant.

Before RICHARDSON, LANDIS and RE, Judges.

RE, Judge:^*

The substantive legal question presented in this case pertains to the lawful and proper import duty to be levied upon certain merchandise imported from Hong Kong.

The merchandise, invoiced as "Pflueger Hande-Pak", consists of lithographed tin containers with forty assorted-sized fish hooks. The fish hooks and the tin sheets were manufactured in the United States and were shipped to Hong Kong. In Hong Kong the tin sheets were cut and shaped into containers. The fish hooks, which were sorted as to size prior to being shipped to Hong Kong, were then packaged into the tin containers. The containers, together with the fish hooks, were reimported into the United States, and consist of the merchandise under protest.

The containers and fish hooks were classified and assessed for duty under item 731.06 of the Tariff Schedules of the United States as "Fish hooks * * Other" at the rate of 27 per centum ad valorem.

Plaintiff does not contest the classification, the assessment of duty on the cost of manufacturing the sheets into containers, or the other listed invoiced costs ("sorting and packaging, labour, packing material and labour"). It does, however, contend that the value of the fish hooks should have been deducted from the total dutiable value of the merchandise since they are entitled to entry free of duty under either of two provisions of the tariff schedules. The first is item 800.00 of the tariff schedules which provides for duty-free status for products of the United States, having been returned after exportation, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. Alternatively, plaintiff urges that the fish hooks should be duty-free under item 807.00 of the tariff schedules as articles assembled abroad in whole or in part of fabricated components, the products of the United States.

The case presents a threshold question that will be dealt with before considering the merits of plaintiff's claims. The merchandise, the subject of this action, was appraised on March 12, 1969, and was liquidated on April 18, 1969, thus raising what has come to be called the "Pistorino" issue. Specifically, this question pertains to the validity of a liquidation which takes place prior to the expiration of the 60-day period allowed under section 501(a) of the Tariff Act of 1930, as amended prior to the Customs Courts Act of 1970,¹ which provides for the filing by the collector of an appeal for reappraisement.

The question, long considered settled, was revived by the Third Division of this court in Pistorino & Co., Inc. v. United States, 65 Cust.Ct. 387, C.D. 4110 (1970). In the Pistorino case, the court, sua sponte, remanded the case to a single judge pursuant to 28 U.S.C. § 2636(d) to determine the value of the merchandise.² It stated the basis for the remand as follows:

"It is noted that liquidation of the involved entry occurred on November 22, 1965, or just 32 days after the merchandise was appraised. As such, appraisement never became final, the time within which the collector might appeal therefrom not having expired at the time of liquidation. Under 19 U.S.C.A., section 1503(a) the collector has but one value upon which he can lawfully assess duty, and that is the final appraised value of the merchandise which does not become final until the expiration of 60 days after the appraisement. Liquidation of an entry prior to the expiration of the time for appeal to reappraisement is null and void. United States v. Boston Paper Board Co., 23 CCPA 372, T.D. 48233 (1936). And the effect of such premature liquidation is to void the appraisement as there was no official act of the collector accepting the appraisement. United States v. Boston Paper Board Co., supra. Consequently, the matter must be remanded to a single judge of this court, pursuant to 28 U.S.C.A., section 2636(d) to determine the value of the merchandise herein in the manner provided by law."

Defendant subsequently moved for rehearing, and the motion was granted on June 11, 1971.³ Pending the Third Division's consideration of the motion, Judge Rao, writing for the Second Division of this court, decided John V. Carr & Son, Inc. v. United States, 66 Cust.Ct. 316, C.D. 4209, 326 F.Supp. 973 (1971). The holding in the Carr case, which dealt with the same issue presented in Pistorino, may be gleaned from the following quotation from the court's opinion:

"Obviously, if a timely appeal for reappraisement had been filed, the liquidation herein would have been rendered void. That is the situation which existed in a number of cases where the court has stated that the liquidation is void or that the collector has no power to liquidate while an appeal for reappraisement is pending. Stubbs v. United States, 7 Ct.Cust. Appls. 399, T.D. 36967 (1917); United States v. Boston Paper Board Co., supra; Lawrence Groom & Co. v. United States, supra; The New Home Sewing Machine Co. v. United States, 62 Cust.Ct. 895, R.D. 11655 (1969). See also United States v. European Trading Co., 26 CCPA 103, C.A.D. 1 (1938), where liquidation took place before the time to appeal from a decision of the Customs Court to the Court of Customs and Patent Appeals had expired.

While the word `void' has been applied to the liquidations in some of the decisions, that term is often used to signify various shades of infirmity from absolutely void for all purposes to merely voidable. Joseph Fischer v. United States, 38 CCPA 143, 150, C.A.D. 452 (1951). In that case the court found it significant that prior decisions had held that insufficient designation of packages to be examined rendered an appraisement null and void rather than void ab initio. It concluded that the action of the collector in failing to designate the prescribed number of packages `may be characterized as an act which he was empowered to perform but which he performed in an improper manner.' It was held that such act, not being void in an absolute sense, did not vitiate the jurisdiction of the court in a reappraisement case.

In the instant case the district director was empowered to liquidate the entry on the basis of the appraised value (absent a timely appeal for reappraisement or a finding of value by the Customs Court or the Court of Customs and Patent Appeals). This he did — the only alleged infirmity being that he did it prior to the expiration of the time during which an appeal might have been filed. The liquidation could have been voided by the filing of a timely appeal by either party. Since in this case none was filed, and the rights of neither party have been prejudiced, the liquidation remains valid." 66 Cust.Ct. at 319-320, 326 F.Supp. at 976.

Shortly thereafter, the First Division of this court, which included this member of the court, decided Bradlow, Inc. v. United States, 66 Cust.Ct. 333, C.D. 4211 (1971). In the Bradlow case the court noted the issue presented in the Carr and Pistorino cases, and unanimously followed the Carr case. The First Division also followed the Carr case in its later decision in First American Artificial Flowers, Inc. v. United States, 67 Cust. Ct. 164, C.D. 4268 (1971).⁴

On the motion for rehearing in Pistorino, Judge Landis reviewed the history of the issue and stated (Judge Ford concurring, Judge Richardson dissenting):

"Persuaded that the Carr and Bradlow cases are correct upon this issue, we further note that `at the present time, under the Tariff Act of 1930, there is still no provision in the statute setting forth a time limit for the collector to make the liquidation', cf. Dart Export Corp., et al. v. United States, 43 CCPA 64, 75, C.A.D. 610 (1956), certiorari denied 352 U.S. 824, 77 S.Ct. 33, 1 L.Ed.2d 48 (1956). On the strength of the foregoing authorities, we now hold that the collector was empowered to liquidate the entry on the basis of the appraised value (absent a timely appeal for reappraisement or a finding of value by the Customs Court or the Court of Customs and Patent Appeals). We further hold that the liquidation being voidable rather than absolutely void, said liquidation could have been voided by the filing of a timely appeal by either party. Since none was filed and neither party has been prejudiced, the liquidation remains valid." 67 Cust.Ct. 245, 251, C.D. 4281, 333 F.Supp. 541, 546 (1971).⁵

In the case at bar the two members of the court comprising the Third Division⁶ were unable to agree on the determination of the "Pistorino" issue. Consequently, by order of the Chief Judge, this member of the court was assigned to the Third Division for "the special and express purpose only of considering and determining the above entitled action." As in the Bradlow case, this member of the court holds the challenged liquidation to be merely voidable. In the case at bar, therefore, since no appeal for reappraisement was filed and since neither party has been prejudiced, the court finds the liquidation to be valid.

The legal question presented has been treated at length in the cases cited. It may be well to add, however, that there is still another ground upon which the validity of the action by the liquidating officer may be sustained. This ground, founded upon broad and general principles of administrative law, is deemed worthy of consideration and treatment.

Judge Rao, in the Carr case, noted the reasons for the changes in administrative procedures regarding appraisement and liquidation of...