Recent Court Decisions Affecting International Trade
Customs failure to reliquidate entries does not constitute a 'mistake of fact.' In Fujitsu Compound Semiconductor, Inc. v. U.S., the Court of Appeals for the Federal Circuit (CAFC) affirmed the Court of International Trade's (CIT's) earlier determination that Customs' failure to reliquidate certain entries of laser diode modules on its own initiative does not constitute a mistake of fact correctable under 19 USC 1520(c).
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According to the CAFC, from October 1991 to February 1992 Fujitsu imported these items at a duty rate of 4.2%, which liquidated in April and May 1992 at that same rate. However, in June 2, 1992 ruling to Toshiba, Customs changed the classification of laser diode modules, resulting in a duty rate of 2%.
The CAFC states that Fujitsu filed a 1520(c) mistake of fact petition in January 1993 contending that Customs had the obligation to reliquidate Fujitsu's entries because at the time the classification of laser diode modules was changed, the entries were still within the 90-day protest period and therefore were not final. The CIT ruled, and the CAFC now concurs, that Customs was not required upon issuance of the ruling to Toshiba to reliquidate Fujitsu's entries at the 2% duty rate. The CAFC states that Customs' failure to do so was not a mistake of fact. Rather, the burden is on the importer and absent a timely protest the liquidation is not subject to adjustment. (See ITT's Online Archives or 01/14/03 news, 03011425 for BP summary of CIT decision.)(Court No. 03-1293, decided 03/26/04, available at http://www.fedcir.gov/opinions/03-1293.doc)
CIT rules against Customs' classification of certain wall tiles. In Dal-Tile Corporation v. U.S., the CIT ruled in favor of Dal-Tile that certain wall tiles imported from Mexico were properly classified under TSUS 523.94 (GSP-eligible) as "other articles of stone or of other mineral substances not elsewhere specified" rather than under Customs' classification of TSUS 532.24 as "ceramic articles."
According to the CIT, Dal-Tile contested the classification of its merchandise as ceramic articles because Headnote 2(a) to Part 2 of TSUS Chapter 5 provides, among other things, that when a ceramic article is reheated to pyrometric cone 020, it does not become more dense, harder, or less porous. However, Dal-Tile's testing showed that when so reheated, the wall tiles became less absorptive, more dense, and less porous.
The CIT also states that the results of "double-soak" testing performed by Customs' laboratories on the wall tiles were incoherent. For this reason, among others, the CIT determined that the subject wall tiles were properly classified under TSUS 523.94. The CIT also determined that the wall tiles meet the eligibility requirements for duty-free treatment under the Generalized System of Preferences (GSP). (Slip Op. 04-24, decided 03/16/04, available at http://www.cit.uscourts.gov/slip_op/Slip_op04/04-24.pdf)