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HQ W563043
October 18, 2006
CLA-02 RR:CTF:VS W563043 EAC
CATEGORY: NAFTA Certificate of Origin
Director, Port of Tecate U.S. Customs and Border Protection P.O. Box 189 Tecate, CA 91980
RE:     Protest and Application for Further Review 2506-03-100073; NAFTA Eligibility; NAFTA Certificate of Origin; Deemed Liquidation; Subheading 9802.00.50, HTSUS.
Dear Port Director:

The above-referenced protest was forwarded to this office for further review. We have considered the evidence provided with the protest, as well as the points raised by your office and the protestant.
FACTS:

The protest under consideration pertains to 35 entries of t-shirts entered into the United States between November 1, 1999, and December 23, 1999, at the Port of Tecate in California. The 35 entries were liquidated on July 11, 2003, and the above-referenced protest was timely filed on behalf of JEM Sportswear Incorporated (hereinafter, the “protestant”) on October 8, 2003.
The protestant claims that it sourced and imported into the United States only t-shirt blanks that were considered “originating” under the provisions of the North American Free Trade Agreement (“NAFTA”). The protestant exported the t-shirt blanks to their facility in Ensenada Mexico (identified as “JEM Equipment S.A. de C.V.”) where the blanks were embellished through a silk screening process. Thereafter, the embellished t-shirts were returned to the United States.
In this case, from January through December 1999, the protestant imported t-shirts into the United States under a blanket NAFTA Certificate of Origin dated January 1, 1999. However, the protestant alleges that in a single incident one of the protestant’s suppliers erroneously shipped an order of Jamaican-origin t-shirt blanks from Mexico to the United States. It is further alleged that the protestant was unaware that the shirts were of Jamaican origin and, as such, sent the t-shirt blanks from the United States to Mexico for processing. It is stated that employees at the facility in Mexico discovered the true origin of the t-shirts when “Made in Jamaica” labels were found in the t-shirts. Thereafter, the protestant claims that all Jamaican-origin t-shirts were immediately pulled from production and placed into permanent storage in Mexico. However, according to the protestant, some of the Jamaican-origin t-shirts were inadvertently shipped back to the United States with NAFTA preference claims in 1999. We note that on June 3, 1999, U.S. Customs and Border Protection (“CBP”) discovered an entry of t-shirts with sewn in labels marked “Made in Jamaica” that were entered into the United States by the protestant with NAFTA preference claims.
After further investigation and a visit to the Mexican plant, CBP found that Jamaican- and Mexican-origin t-shirts had routinely been intermingled for shipment to the United States with NAFTA preference claims. As such, CBP issued a CF 29 “Notice of Action” on June 6, 2003, to the protestant stating that the NAFTA claim would be denied because (1) the certificate of origin was false because some of the t-shirts covered by it were of Jamaican and not Mexican origin and (2) the evidence indicated that the original labels had been removed from some of the Jamaican-origin t-shirts and were replaced with labels that indicated “Made in Mexico.”
The protestant claims to have stopped all remaining shipments of the Jamaican-origin t-shirts after June 3, 1999, and posits that all remaining shipments to the United States from this date forward were NAFTA originating. The protestant further argues that CBP did not consider the specific entries that are the subject of this protest. In this regard, the protestant maintains that the t-shirts included in the 35 subject entries were indeed eligible to receive preferential treatment under the NAFTA. Various records, such as purchase orders and invoices, were submitted in support of this claim. Alternatively, the protestant asserts that: (1) the subject entries were deemed liquidated by operation of law one year after the date of entry, and (2) that the subject entries were eligible for duty-free treatment under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”).
ISSUES:

Whether CBP properly denied NAFTA preferential treatment to the 35 entries.
Whether the 35 entries liquidated by operation of law.

Whether the 35 entries were eligible for duty-free treatment under subheading 9802.00.50, HTSUS.
LAW AND ANALYSIS:

NAFTA Claim
Under the NAFTA, goods imported into the United States from Canada and Mexico may receive preferential duty treatment if certain rules are satisfied. The statutory requirements for obtaining preferential duty treatment under the NAFTA are set forth in General Note 12, HTSUS. The corresponding regulations are set forth in Part 181 of the Customs and Border Protection Regulations (19 C.F.R. Part 181).
The protestant in this case submitted a blanket NAFTA Certificate of Origin covering the entries at issue. The requirements governing the execution and validity of NAFTA Certificates of Origin are provided in Article 501 of the NAFTA and section 181.21 et seq., Customs and Border Protection Regulations (19 CFR §§181.21-23). Section 181.21(a) provides that an importer claiming preferential duty treatment is required to make declaration of that claim, and the declaration must be based on a complete and properly executed original Certificate of Origin, or copy thereof, which is in the possession of the importer and covers the goods being imported.
Section 181.22(b) provides, in part, that the Certificate of Origin shall be on Customs Form (“CF”) 434 (or other approved format) and signed by the exporter or authorized agent having knowledge of the relevant facts. Section 181.22(b) further provides that the Certificate of Origin may be applicable to: (1) a single importation of a good into the United States, including a single shipment that results in the filing of one or more entries and a series of shipments that results in the filing of one entry, or (2) multiple importations of identical goods into the United States that occur within a specified period, not exceeding twelve months, set out therein by the exporter or producer.

Pursuant to section 181.22(c), a NAFTA Certificate of Origin may be corrected if CBP determines that it is illegible, defective, or incomplete. It should be noted that this possibility is not available for documents that differ substantially from the format and content of the CF 434, and which are “invalid and not merely illegible or bear some defect of execution in the nature of clerical error or inadvertent omission.” See, Headquarters Ruling Letter (“HRL”) 562188 dated July 30, 2002.

As applied, the port determined that the Certificate of Origin of origin in this case was false after an investigation and visit to the Mexican plant. Based on the information in the record before us, it is our opinion that the evidence in this case suggests that Jamaican- and Mexican-origin t-shirts had routinely been intermingled for shipment to the United States with NAFTA preference claims during the relevant time period. As such, the port properly concluded that the blanket Certificate of Origin covering the thirty-five entries subject to this protest was false and, consequently, invalid. As a result, the submitted certificate was not amenable to correction or cure of defects as provided in section 181.22(c) and cannot benefit from the opportunity embodied in section 181.22(c) to make amends for errors or omissions resulting from clerical errors or bona fide errors of fact. See, for example, HRL 562097 dated July 17, 2002. Therefore, as the evidence shows that the merchandise was not NAFTA originating and that the Certificate of Origin was false, it is our opinion that the port director properly denied preferential treatment under the NAFTA for the 35 entries. Deemed Liquidation
The protestant has presented three arguments in support of its assertion that the foregoing entries liquidated by operation of law or “deemed liquidated.” Specifically, the protestant argues that: (1) the notices of extension were not properly sent or received; (2) liquidation of the entries were extended over the three-year period; and (3) the extensions were unreasonable. We will consider each of these arguments below.

Whether the notices of extension were sent by CBP and received by the protestant.

The protestant argues that the notices of extension were not properly sent and that they were not received. In pertinent part, 19 U.S.C. §1504(b) provides:

If the liquidation of any entry is suspended, the Secretary shall by regulation require that notice of the suspension be provided, in such manner as the Secretary considers appropriate, the importer of record and to any authorized agent and surety of such importer of record.

The regulations promulgated under the authority of §1504(b), provide:

If the port director extends the time for liquidation, as provided in paragraph (a)(1) of this section, the port director promptly shall notify the importer or the consignee and his agent and surety on Customs Form 4333-A, appropriately modified, that the time has been extended and the reasons for doing so.

See, 19 C.F.R. §159.12(b). Further, the Court of International Trade (“CIT”) has held that:

In cases turning on the alleged giving of notice and lack of receipt thereof, there is a presumption that letters or other communications, properly addressed, stamped, and deposited in the mail, are received by the addressee in due course… That presumption is rebuttable by proof of non-receipt …
Where a notice is required to be given by Customs officials, the burden of going forward with the evidence initially falls upon the plaintiff because the notice is deemed to have been given by virtue of the presumption of regularity which attaches to official acts. However, the burden of proof is then on the Government because it is the Government’s statutory responsibility to provide the notice. The proofs offered by a plaintiff at this point are directed toward negating the presumed deliver by way of evidence of non-receipt, non-issuance, or non-delivery of the notice. When the plaintiff has met this initial requirement, the burden of going forward shifts to the Government to establish that notice was given…
Hanover Insurance Co. v. United States, (23 Int’l Trade Rep. (BNA) 1495 (CIT 2001)). Thus, when CBP is required to give notice, as in 19 U.S.C. §1504(b), a rebuttable presumption arises that notice was provided. It is then incumbent upon the entity asserting that it did not receive the notice to rebut this presumption with evidence that notice was not provided. If such evidence is offered, CBP must then provide evidence that notice was given.

In the instant case, the protestant states that it did not receive the notices of extension for the subject entries, and thus, the entries were deemed liquidated at the rate and amount of duties assessed at the time of entry under 19 U.S.C. §1504. According to Automated Commercial System (“ACS”), notices of extension were sent to the protestant and its surety to advise liquidation of the protested entries had been extended. Per the reasoning in Hanover Insurance, because CBP is required by §1504(c) to provide notice of the suspension of liquidation, and CBP’s computer system shows that notice was sent to the protestant, there is a rebuttable presumption that CBP provided the protestant and its surety with notice of the suspension of liquidation. See also, A.N. Deringer, Inc. v. United States, 20 CIT 978, 993 (1996)(holding that “the onus upon the government is to establish proper mailing of the requisite notices; it then falls to the plaintiff to establish non-receipt.”).
Therefore, the protestant here has the burden of proving non-receipt of the notices of extension. However, other than counsel’s assertion that the protestant did not receive the notices, the protestant has not provided any evidence that it did not receive the notices. See, Bar Bea Truck Leasing Co., Inc. v. United States, 5 CIT 124, 126 (1983)(holding that mere assertions made by counsel are not evidence). Therefore, insofar as protestant has not provided any evidence that it did not receive the notices of extension for the subject entries, it has not successfully rebutted the presumption that CBP provided it with the notices of extension for the subject entries.
Whether the liquidation of the entries were extended beyond a period of three years.

Pursuant to 19 U.S.C. §1504: “Unless an entry is extended…, an entry of merchandise not liquidated within one year from… the date of entry of such merchandise shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record…”. The foregoing period may be extended for an additional one-year period, if CBP requires additional information to appraise, classify, or “insure compliance with applicable law” or if the importer shows good cause therefore. See, 19 U.S.C. §1504(b); 19 C.F.R. §159.12(a). CBP may request additional one-year extension periods, not to exceed three years total, if it determines additional information is needed. See, 19 C.F.R. §159.12(d)(1) & (e).

The protestant asserts that the entries were extended beyond the three-year period but has failed to provide information to support this conclusion. In this regard we note that the first 25 entries listed in the “Schedule of Entries” attachment were made between November 1st and 30th, 1999. The first notices of extension for these entries, which were issued on August 19, 2000, extended the liquidation period to November 1, 2001, through November 30, 2001, respectively. The second notices of extension, which were issued on September 15, 2001, and before the first extension period expired, extended the liquidation period to November 1, 2002, through November 2002, respectively. The third notices of extension, which were issued on September 7, 2002, and before the second extension period expired, extended the liquidation period to November 1, 2003, through November 30, 2003, respectively.
The 26th listed entry was made on December 8, 1999. The first notice of extension, which was issued December 2, 2000, extended the liquidation period to December 8, 2001. The second notice of extension, which was issued on November 17, 2001, and before the first extension period expired, extended the liquidation period to December 8, 2002. The third notice of extension, which was issued on October 5, 2002, and before the second extension period expired, extended the liquidation period ...[more information - please download the word document to see the complete ruling]

 
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