Brother Intern. Corp. v. U.S.

• Citation: 464 F.3d 1319
• Decision Date: 18 September 2006
• Docket Number: No. 06-1068.,06-1068.
• Parties: BROTHER INTERNATIONAL CORP., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

464 F.3d 1319

BROTHER INTERNATIONAL CORP., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 06-1068.

United States Court of Appeals, Federal Circuit.

September 18, 2006.

Sandra Liss Friedman, Barnes, Richardson & Colburn, of New York, New York, argued for plaintiff-appellant. With her on the brief was Helena Dorothy Sullivan.

Bruce N. Stratvert, Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, New York, argued for defendant-appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General, and David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, and Barbara S. Williams, Attorney in Charge, International Trade Field Office, United States Department of Justice, of New York, New York. Of counsel on the brief was Yelena Slepak, Attorney, Office of Assistant Chief Counsel, United States Customs and Border Protection, of New York, New York.

Before NEWMAN, SCHALL, and DYK, Circuit Judges.

SCHALL, Circuit Judge.

Brother International Corp. ("Brother") appeals the decision of the United States Court of International Trade in Brother International Corp. v. United States, 368 F.Supp.2d 1345 (Ct. Int'l Trade 2005). In its decision, the Court of International Trade sustained the denial by the United States Customs Service, now organized as the United States Bureau of Customs and Border Protection ("Customs"), of two protests by Brother. In its protests, Brother sought relief under section 520 of the Tariff Act of 1930, 19 U.S.C. § 1520(c)(1), for a misclassification, based on an alleged mistake of fact, of goods previously entered into the United States by Brother. Section 1520(c)(1) allows the reliquidation of goods previously entered into the United States that were misclassified based upon a mistake of fact. The court determined that Brother was not entitled to relief under section 1520(c)(1) because, although the misclassification at issue did arise from a mistake of fact, it also involved a mistake of law. We hold, however, that the court erred in its determination that the misclassification of Brother's goods involved a mistake of law, as well as a mistake of fact. We therefore reverse the Court of International Trade's decision and remand the case to the court for a further remand to Customs, so that Customs may reliquidate the goods at the correct duty and refund to Brother the excess duties previously paid as a result of the misclassification.

BACKGROUND

I.

When an importer imports merchandise into the United States, it makes an "entry" by filing documentation with Customs, which allows Customs to assess the duties due on the merchandise. See 19 U.S.C. § 1484 (2000). At the time of entry, the importer must deposit the estimated duties with Customs. See id. § 1505(a). Customs later reviews the entry and makes its determination about whether the amount of duty deposited is correct — that is, Customs "liquidates" the entry. See 19 C.F.R. §§ 159.0.12 (2006). Liquidation of an entry is "final and conclusive . . . unless a protest is filed . . . or unless a civil action contesting the denial of a protest . . . is commenced in the United States Court of International Trade . . . ." 19 U.S.C. § 1514(a) (2000). Entries that are not liquidated within one year of entry are "deemed liquidated," unless one of several exceptions applies. See id. § 1504(a), (b).

Once an entry has been liquidated, an importer may lodge a protest with Customs. See 19 U.S.C. § 1515 (2000). If Customs denies a protest, an importer may appeal to the Court of International Trade. See id.; 19 C.F.R. § 174.31 (2006). However, even if a valid protest is not filed, pursuant to 19 U.S.C. § 1520(c)(1),¹ Customs may reliquidate an entry to correct a mistake of fact. See 19 U.S.C. § 1520(c)(1) (2000). Section 1520(c)(1) provides in relevant part as follows:

(c) Reliquidation of entry . . . .

Notwithstanding a valid protest was not filed the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry . . . to correct —

(1) a . . . mistake of fact . . . not amounting to an error in the construction of a law, adverse to the importer and manifest from the record or established by documentary evidence, in an entry, liquidation, or other customs transaction, when the . . . mistake . . . is brought to the attention of the Customs Service within one year after the date of the liquidation or exaction. . . .

Id.

This court has recognized that a mistake of fact under 19 U.S.C. § 1520(c)(1) occurs when a person misunderstands the facts:

A mistake of fact is any mistake except a mistake of law. It has been defined as a mistake which takes place when some fact which indeed exists is unknown, or a fact which is thought to exist, in reality does not exist. A mistake of fact exists where a person understands the facts to be other than they are, whereas a mistake of law exists where a person knows the facts as they really are but has a mistaken belief as to the legal consequences of those facts.

Ford Motor Co. v. United States, 157 F.3d 849, 859 (Fed.Cir.1998) (citing Hambro Auto. Corp. v. United States, 66 C.C.P.A. 113, 603 F.2d 850, 853-54 (1979)); see also Executone Info. Sys. v. United States, 96 F.3d 1383, 1386 (Fed.Cir.1996). In G & R Produce Co. v. United States, we recognized that a mistake of fact that results in a misapprehension of a classification does not amount to a mistake in law. 381 F.3d 1328, 1333 (Fed.Cir.2004) ("This mistake of fact does not amount to an error in the construction of a law because it resulted in the misapprehension of subheading 0805.30.40, HTSUS, and the erroneous classification of Persian limes. If that were the case, section 1520(c)(1) would be meaningless because all mistakes of fact covered by section 1520(c)(1) result in an erroneous liquidation."); see also Degussa Can. Ltd. v. United States, 87 F.3d 1301, 1304 (Fed.Cir.1996) (stating that a mistake of fact "is a factual error that, if the correct fact had been known, would have resulted in a different classification").

II.

Brother's multifunction centers ("MFCs"), which are office equipment, entered the United States between June 24, 1996, and February 5, 1997; they were liquidated between October 11, 1996, and May 23, 1997. The MFCs at issue in this case are model numbers MFC-4550, MFC-4550DS, MFC-6550MC, and MFC-7550MC, which all "employ a printing mechanism that uses laser technology." Prior to importation, Mitchell von Poederoyen, a national account manager for Brother's customs broker, FedEx Trade Networks, classified the MFCs under subheading 9009.12.0000 of the Harmonized Tariff Schedule of the United States ("HTSUS"), the category for a photocopying apparatus. As a result, Customs liquidated the entries at 3.7% ad valorem, the correct amount for that classification.

In July of 1997, Brother requested a tariff classification ruling for the MFC-4550 machine. See Brother Int'l Corp., 368 F.Supp.2d at 1346. In its ruling in response to the request, Customs described the MFC-4550 as "a multi-function machine in one common housing that can perform, printing, copying, scanning, fax and PC fax functions" and found that "the printing function ... dictates the principal function of [the] machine." See id. Based upon this finding, Customs concluded that the MFC-4550 should be classified under subheading 8471.60 6200, HTSUS, "which provides for other laser printer units" and is a duty free provision. See id. Brother then requested reliquidation of the rest of the MFCs pursuant to 19 U.S.C. § 1520(c)(1). See id. After Customs denied the request, Brother timely protested. See id. Customs denied the protest on the ground that Brother was not entitled to relief under section 1520(c)(1) because the original misclassification was due to a mistake of law. See id. at 1346-47.

Brother timely filed its summons in the Court of International Trade challenging Customs's decision. See id. at 1347.

III.

The Court of International Trade held a bench trial on February 9, 2005, on the issue of whether Brother's misclassification of the MFCs at issue was due to a mistake of fact or a mistake of law. Id.² Following the trial, the court rendered its decision sustaining Customs's denial of Brother's protest.

The Court of International Trade first explained that "a mistake of fact occurs in instances where either (1) the facts exist, but are unknown, or (2) the facts do not exist as believed. A mistake of law occurs when the facts are known but the legal significance of those facts is not appreciated." Id. (citations omitted) (citing G & R Produce, 381 F.3d at 1333). The court recognized that "[w]hen a mistake of fact occurs, courts have recognized that 19 U.S.C. § 1520(c)(1) provides a liberal scope of correction for the aggrieved party." Id. (citing G & R Produce, 381 F.3d at 1332-33). It concluded that "if a mistake is a mix of fact and law, then statutory relief is precluded." Id. (citing Ford Motor, 157 F.3d at 857).

Next, the Court of International Trade found that MFC-4550 and MFC-4550DS units were "five-in-one" MFCs consisting of a laser printer, copier, facsimile, scanner and PC fax and that the MFC-6550MC and MFC-7550MC were "six-in-one" MFCs consisting of a laser printer, copier, facsimile, scanner, PC fax, and answering machine. Id. at 1348. The court also found that the invoice description for the entries reads "multifunctional copier/printer/fax." Id. The court accepted Brother's argument that the printer was the essential character of the MFCs and that Brother's broker, Mr. von Poederoyen, was not aware of that fact at the time of importation. Id. at 1348-49. Instead, he thought that they were three-functions-in-one machines (copier, printer, and fax). Id. The court reasoned that, as far as the MFC units were concerned, Mr. von...