ITT Corp. v. U.S., 93-1313

• Decision Date: 03 May 1994
• Docket Number: No. 93-1313,93-1313
• Citation: 24 F.3d 1384
• Parties: ITT CORPORATION, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1384

24 F.3d 1384

16 ITRD 1097

ITT CORPORATION, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.

No. 93-1313.

United States Court of Appeals Federal Circuit.

May 3, 1994.

Rufus E. Jarman, Jr., Barnes, Richardson & Colburn, of New York City, argued, for plaintiff-appellant. With him on the brief, was Frederic D. Van Arnam, Jr.

Carla Garcia-Benitez, Dept. of Justice, of New York City, argued, for defendant-appellee. With her on the brief were Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director and Joseph I. Liebman, Atty. in Charge Intern. Trade Field Office. Of counsel was Karen P. Binder, Office of the Asst. Chief Counsel Intern. Trade Litigation U.S. Customs Service.

Before NIES, ¹ LOURIE and CLEVENGER, Circuit Judges.

CLEVENGER, Circuit Judge.

ITT Corporation appeals the January 19, 1993 judgment of the United States Court of International Trade affirming the refusal by the U.S. Customs Service to reliquidate imported cast-iron automobile parts under a different tariff classification than originally assigned. The Court of International Trade held that even though ITT proved at trial de novo that a mistake of fact had occurred in classification, ITT was not entitled to reliquidation under 19 U.S.C. Sec. 1520(c)(1) (1988) because the documentary evidence submitted by ITT to Customs was insufficient to establish the mistake of fact to Customs. ITT Corp. v. United States, 812 F.Supp. 213, 216 (Ct.Int'l Trade 1993). We reverse.

I

ITT imported cast-iron automobile parts. Customs liquidated the entries under item 692.32 of the Tariff Schedules of the United States (TSUS) ² at a duty rate of 3.1 percent ad valorem. Within one year after the liquidations, ITT's customs broker filed claims with Customs pursuant to 19 U.S.C. Sec. 1520(c)(1), seeking reliquidation of each entry under TSUS item 692.24, which specifies duty-free treatment, and thus the refund of duties paid at the time of entry. ³ The claims stated:

We now have evidence in the form of samples of both castings which substantiate that the castings are more correctly classified under TSUS 692.2400.

It is contended that the reclassification of these castings is correctable under Section [1520(c) ]. A mistake of fact occurred in the initial creation of the broker's records which resulted in the subsequent misclassification of the entries covered by this claim.... A mistake of fact has been ruled to exist wherein an individual understands the facts to be other than they are, which is the case in this instance. The understanding was that these castings were actually brake parts classifiable under TSUS 692.32. The product was understood to be other than it actually was. (citations omitted).

On December 13, 1989 and April 19, 1990, Customs denied ITT's respective requests for reliquidation, both times stating that the "[e]rror involve[d] the construction of law." ITT filed timely protests under 19 U.S.C. Sec. 1514 (1988) of Customs' refusals to reliquidate. Customs denied these protests, and ITT consequently filed a complaint with the Court of International Trade under 28 U.S.C. Sec. 1581(a) (1988).

II

The Court of International Trade held a trial de novo pursuant to 28 U.S.C. Sec. 2640(a) (1988). Despite its determination that the correct classification of ITT's merchandise was TSUS item 692.24 and not 692.32, the court affirmed Customs' refusal to reliquidate under 19 U.S.C. Sec. 1520(c)(1). The court, however, disagreed with the basis for Customs' decision. Whereas Customs had rejected ITT's claims for asserting a mistake of law rather than a mistake of fact as required under Sec. 1520(c)(1), the Court of International Trade instead found that ITT's letters actually had timely notified Customs of a mistake of fact. ITT, 812 F.Supp. at 216. The court, however, held that in addition to timely notice, Sec. 1520(c)(1) requires an importer to substantiate its allegation by demonstrating that the mistake of fact is manifest from the record or established by documentary evidence. Moreover, the Court of International Trade interpreted Sec. 1520(c)(1) as requiring that such a substantiation be made to Customs before the reliquidation decision, rather than at a later time such as at a trial de novo before the court. The court concluded that while ITT established the mistake of fact at trial, ITT had failed to establish the mistake of fact to Customs prior to the reliquidation decision. Id. at 217. The Court of International Trade thus granted judgment for the Government.

III

In reviewing a judgment of the Court of International Trade, this court decides de novo the proper interpretation of the governing statute and regulations. St. Paul Fire & Marine Ins. Co. v. United States, 6 F.3d 763 767 (Fed.Cir.1993). The relevant statute here, 19 U.S.C. Sec. 1520(c)(1), provides that:

[T]he appropriate customs officer may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to correct--

(1) a clerical error, mistake of fact, or other inadvertence 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 any entry, liquidation, or other customs transaction, when the error, mistake, or inadvertence is brought to the attention of the appropriate customs officer within one year after the date of liquidation....

Furthermore, the regulation implementing Sec. 1520(c)(1) sets forth that:

Correction pursuant to ... 19 U.S.C. Sec. 1520(c)(1), may be made in any entry, liquidation, or other Customs transaction if the clerical error, mistake of fact, or other inadvertence:

(1) Does not amount to an error in the construction of a law;

(2) Is adverse to the importer; and

(3) Is manifest from the record or established by documentary evidence.

19 C.F.R. Sec. 173.4(b) (1993). Reliquidation under Sec. 1520(c)(1) thus requires both notice and substantiation.

With regard to notice, the importer must assert the existence of an inadvertence to Customs "within the proper time and with sufficient particularity to allow remedial action." Hambro Automotive Corp. v. United States, 458 F.Supp. 1220, 1222 (Cust.Ct.1978); see Omni U.S.A., Inc. v. United States, 840 F.2d 912, 916 (Fed.Cir.1988) (affirming Court of International Trade's dismissal of untimely reliquidation request under Sec. 1520(c)(1)). In this case, ITT brought to the attention of Customs within one year after liquidation that "[a] mistake of fact occurred in the initial creation of the broker's records which resulted in the subsequent misclassification of the entries covered by this claim." Moreover, ITT's statement that "[t]he product was understood to be other than it actually was" timely informed Customs that ITT sought reliquidation based on a mistake of fact and not a mistake of law. ITT thus satisfied the Sec. 1520(c)(1) requirement of a timely notification to Customs. ⁴

With regard to substantiation, Sec. 1520(c)(1) requires the importer to establish the asserted inadvertence through documentary evidence submitted to the appropriate customs officer, unless the inadvertence is manifest from the record. Inadvertences manifest from the record are those apparent to Customs from a facial examination of the entry and the entry papers alone, and thus require no further substantiation. While clerical errors likely compose the majority of such inadvertences, mistakes of fact nonetheless also can be manifest from the record that the entry and the entry papers constitute. Mistakes of fact that are not manifest from such record, however, must be established by documentary evidence.

In this case, nothing in the entry papers alone substantiated ITT's assertion that a mistake of fact had occurred. Furthermore, testimony at the trial de novo before the Court of International Trade revealed that the proper tariff classification would not be apparent from a visual examination of the samples of ITT's entries submitted to Customs. We therefore hold that the Court of International Trade was correct to the extent that it concluded ITT's mistake of fact was not manifest from the record or established by documentary evidence prior to Customs' reliquidation decision. For the following reasons, however, we hold that the Court of International Trade erred by interpreting Sec. 1520(c)(1) as precluding the court's consideration at trial de novo of additional evidence, documentary or otherwise, which further substantiates the alleged mistake of fact, where the documentary evidence before Customs was insufficient to establish the mistake of fact to Customs.

IV

Based on documentary evidence submitted by ITT to Customs and testimony before the Court of International Trade at trial de novo, the court found that a mistake of fact had indeed occurred in ITT's liquidation. ITT, 812 F.Supp. at 216. Customs does not challenge this finding, which is amply supported by the record and not clearly erroneous. The court nonetheless held that ITT was not entitled to reliquidation under 19 U.S.C. Sec. 1520(c)(1) because a mistake of fact was not established from the documentary evidence ITT submitted to Customs before the reliquidation decision. Id. at 216-17.

The Court of International Trade correctly recognized that the one-year provision of Sec. 1520(c)(1) applies only to the notification to Customs of an alleged mistake of fact, and "not ... to efforts to document the error." Id. at 216 (citing George Weintraub & Sons, Inc. v. United States, 691 F.Supp. 1449, 1451 (Ct.Int'l Trade 1988) ("The one year provision of Sec. 1520(c) requires only that the mistake be brought to the attention of the Customs Service."); C.J. Tower & Sons of Buffalo, Inc. v. United States, 336 F.Supp. 1395, 1400 (Cust.Ct.1972), aff'd on other grounds, 499 F.2d 1277 (CCPA 1974)). The court further noted that unlike the importer in C.J. Tower, where "the appropriate data was filed after the one-year limit, but before Customs had...