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Apparel | Newsletter |
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A Broker's Reliance on Faulty Import Documents Can Be a 1520(c) "Mistake of Fact" |
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September 24, 2004 As a general rule, most errors in an entry that are adverse to the importer can only be corrected within 90 days of the date of liquidation by using a protest. 19 U.S.C. §1514. But what happens if the error is discovered after that? Can the importer get its money back? Yes, if the error is of a type that falls within the scope of 19 U.S.C. §1520(c), which provides that factual mistakes can be corrected within one year of the date of liquidation of the entry. (Liquidation typically occurs within 314 days from the date of entry; however, liquidation can occur both before and after this date.) A "mistake" that can be remedied under §1520(c) must be one that is:
If the importer or broker uses the incorrect tariff classification, however, Customs & Border Protection will often reject the claim on the basis that the error was not the result of a mistake of fact, but one of law. The Court of International Trade, however, on numerous occasions, held that incorrect tariff classifications can and are the result of mistakes of fact, and has ordered the refund of the overpaid duties. Most recently, in Xerox Corporation v. United States (http://www.cit.uscourts.gov/slip_op/Slip_op04/slipop%2004-113.pdf) the Court of International Trade affirmed the principle that the §1520(c) mistake of fact provisions should be interpreted liberally, including a situation in which a customs broker entered merchandise under a higher tariff classification based on an incorrect invoice description. In Xerox, the Customhouse broker was not aware that the merchandise was capable of acting as a laser printer, but instead relied on an invoice description that inaccurately described the merchandise as "photocopying apparatus", not multifunction printers. In holding for the importer, the court expressed its finding that the mistake was "as to the nature of the merchandise and not as to whether the merchandise fell under a specific provision of the HTSUS." CIT Slip Op.04-113, pg. 15. Brokers and importers should be encouraged by Xerox and other recent decisions by courts in holding that incorrect tariff classifications can be remedied under the provisions of §1520(c). However, because of Customs' outright hostility towards approving 1520(c) claims for classification errors, importers should have qualified legal counsel assist in the review and preparation of any claims for refunds due to classification mistakes before submission. If you would like to know more about 1520(c) claims, please go to: www.tuttlelaw.com/newsletters/1520c_entry_corrections.html or www.tuttlelaw.com/publications/custom_notes/520c.PDF. If you have questions on any of the issues raised in this newsletter, please contact George R. Tuttle, III at (415) 288-0428 or via email at geo@tuttlelaw.com. George R. Tuttle, III is an attorney with the Law Offices of George R. Tuttle in San Francisco. The information in this article is general in nature and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such. Copyright © 2005 by Tuttle Law Offices. All rights reserved. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.
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