Hambro Automotive Corporation v. United States

• Decision Date: 23 August 1979
• Docket Number: Appeal No. 79-3.
• Citation: 603 F.2d 850
• Parties: HAMBRO AUTOMOTIVE CORPORATION, Appellant, v. UNITED STATES, Appellee.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

603 F.2d 850

HAMBRO AUTOMOTIVE CORPORATION, Appellant, v. UNITED STATES, Appellee.

Appeal No. 79-3.

United States Court of Customs and Patent Appeals.

August 23, 1979.

Paul, Weiss, Rifkind, Wharton & Garrison, New York City, attorneys of record, for appellant, Alan S. Hays, Steven B. Rosenfeld, Mark C. Morril, New York City, of counsel.

Barbara Allen Babcock, Asst. Atty. Gen., Washington, D. C., David M. Cohen, Acting Director, Velta A. Melnbrencis, New York City, for the U. S.

Before MARKEY, Chief Judge, RICH, BALDWIN and MILLER, Associate Judges, and NEWMAN,^* Judge.

RICH, Judge.

This appeal is from the judgment of the United States Customs Court, 81 Cust.Ct. 29, C.D. 4761, 458 F.Supp. 1220 (1978), dismissing the importer's action challenging the denial of protests filed after refusals of its requests for reliquidation of the involved entries under Section 520(c)(1) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1520(c)(1) (1964)¹ (hereinafter § 520(c)(1)). We affirm.

The subject merchandise consists of automobiles and optional extras manufactured by British Motor Corporation Limited (BMC)² and exported from the United Kingdom during 1959-1961. Appellant Hambro Automotive Corporation (Hambro) entered the merchandise under eighty-four separate entries at the ports of Chicago, Houston, and San Francisco. The Bureau of Customs (now the Customs Service) appraised the merchandise during 1959-1962 on the basis of cost of production as defined in Section 402a(f) of the Tariff Act of 1930, as amended by the Customs Simplification Act of 1956, Pub.L.No.927, 70 Stat. 943, current version of 19 U.S.C. § 1402(f) (1976)³ (hereinafter § 402a(f)).

Concerning fifty-two of the entries alleged by appellant to be the subject of errors in appraised value, customs officials at the aforementioned ports initially refused to reliquidate via letters to appellant in 1964, 1965, and 1968.⁴ To vindicate its claims after these refusals, Hambro approached the Bureau of Customs in Washington, D. C. When the Bureau refused to recognize the claims, in May 1970 appellant requested refusals to reliquidate its entries under § 520(c)(1) from the respective District Directors of Customs at the involved ports. Subsequently, appellant filed protests during June to September 1970 to these refusals and commenced this action in September 1970.

Though not the subject of previous refusals to reliquidate, the remaining thirty-two entries in question were also alleged to be encompassed by § 520(c)(1) because of asserted mistakes of fact and/or inadvertences identical to those ascribed to the above fifty-two entries.

The error common to all the entries in this action involved the determination by BMC of the statutory cost of production under § 402a(f) of its automobiles and optional extras. To put the error in proper perspective, pursuant to a 1960 Customs ruling and a corresponding appraiser's letter enclosing a sample format, BMC accountants began the task of attributing its costs and expenses to the statutory categories defined in § 402a(f). In attempting to do so, personnel at BMC used general expenses and profits in the home market rather than general expenses and profits in the export market in determining the statutory value upon which duties were assessed.

Pursuant to Cust.Ct.Rule 4.7(b)(2),⁵ the Government moved to Customs Court to dismiss the action, arguing that because appellant's claims were not within the purview of § 520(c)(1) and were not initiated as prescribed by § 514 of the Tariff Act of 1930, 19 U.S.C. § 1514, appellant had failed to invoke the jurisdiction of the Customs Court under 28 U.S.C. § 1582.⁶ The Government insisted that BMC's error fell within the exclusionary language of § 520(c)(1), i. e., "not amounting to an error in the construction of a law." Appellant opposed the motion for reasons set forth in its pleadings and exhibits. The Government replied that the limited facts pertaining only to the issue of jurisdiction were not in dispute.

The Customs Court held that the refusals of 1964, 1965, and 1968 to reliquidate the fifty-two entries became final and unassailable pursuant to 19 U.S.C. § 1514. Concerning the other thirty-two entries, the court said:

However it is expressed the mistakes which were made must be considered as being, in essence, misunderstandings of the law * * *. The mistakes were interpretational and decisional. * * *.

* * * * * *

* * * the mistakes sought to be corrected * * * are not in dispute. They require a finding that the protests underlying this action were brought to protest decisions regarding matters which could not be protested * * * because of * * * the inappropriateness of section 520(c)(1) to the accomplishment of the change in value sought by plaintiff * * *. Not being valid protests, their denial is not a matter within the jurisdiction of the court.

We take the last statement to mean that the court was without jurisdiction to consider the protests and, therefore, could neither sustain nor deny them.

Hambro now contends before this court that the refusals to reliquidate the fifty-two entries were not final. It argues that administrative communications with customs officials in Washington, D.C., constituted a continuing protest that did not result in final rejections until denials of appellant's requests for reliquidation by district directors in Chicago, Houston, and San Francisco in 1970.

Regarding the remaining thirty-two entries, appellant contends that "the error was simply the failure to perform a purely ministerial act," i. e., to subtract costs of export divisions of BMC (Austin Motor Export Ltd. and Nuffield Export Ltd.) rather than add them to home market costs figures. Additionally, appellant complains that the Customs Court abused its discretion by denying appellant the opportunity to present testimony from the involved BMC employees as to the nature of the errors.

OPINION

The Government having challenged the subject matter jurisdiction of the Customs Court, the burden of proof fell on appellant Hambro, the party asserting jurisdiction, to show that jurisdiction existed. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 188-89, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); KVOS, Inc. v. Associated Press, 299 U.S. 269, 278, 57 S.Ct. 197, 81 L.Ed. 183 (1936); Gibbs v. Buck, 307 U.S. 66, 72, 59 S.Ct. 725, 83 L.Ed. 1111 (1939).

Concerning the fifty-two entries, we agree with the Customs Court that refusals by customs officials in 1964, 1965, and 1968 to reliquidate became final and conclusive under 19 U.S.C. § 1514 for failure to file protests with the respective collectors within sixty days after the refusals. By its own admission, appellant chose to vindicate its claims subsequent to these refusals with customs officials in Washington, D.C., rather than preserve its judicial remedies. Only after March 1970 when appellant received adverse results from its administrative approach did it initiate procedures required to invoke the jurisdiction of the Customs Court. Not having filed timely protests as prescribed by § 1514, appellant relinquished its access to the court.

Concerning the remaining thirty-two entries, we again agree with the Customs Court. Unless the provision of § 520(c)(1) limiting the finality of § 1514 was available to Hambro, appellant's access to the jurisdiction of the Customs Court was precluded by its failure to avail itself of the statutory relief from the finality of the collectors' decisions under § 1514. The protests having been filed seven to eight years after the liquidations and/or reliquidations, the latter became final and conclusive upon appellant.⁷

Appellant has correctly stated the distinction between mistakes of law and mistakes of fact that § 520(c)(1) requires us to observe (emphasis ours):

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. * * * Pomeroy, Equity Jurisprudence § 839 (1941). 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." 58 C.J.S. Mistake p. 832.

Inadvertence, on the other hand, is a word of broad meaning. * * * It has been defined variously as an oversight or involuntary accident, or the result of inattention or carelessness, and even as a type of mistake. 42 C.J.S. Inadvertence p. 495. It is thus language broader in scope than mistake. C. J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust.Ct. 17, 22, C.D. 4327, 336 F.Supp. 1395, 1399 (1972), aff'd, 499 F.2d 1277, 61 CCPA 90, C.A.D. 1129 (1974) (citations omitted).

Other than appellant's argument, we find nothing to substantiate that BMC's errors in compiling statutory cost of production value were anything other than a mistake of law, expressly excluded by § 520(c)(1). We agree with the Customs Court that facts disputed by the parties are irrelevant to the jurisdictional issue.

Appellant's own admissions and the pertinent facts it adduced substantiate our position. In answer to the Government's Interrogatory 11a requiring a statement of the exact nature of the errors committed, appellant responded (emphasis ours):

These mistakes and inadvertences came about because, among other things, the accounting terms and expressions contained in the above mentioned Customs letter briefly summarizing Section 402a(f) and suggesting a possible format for presenting cost figures and conversations meant, not what Customs intended, but different things to the British accountants and other representatives.

* * * * * *

The exact nature of the errors committed lay in the fact that BMC applied the American accounting terms and expressions as they understood them, believing them to be used the same way

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