H326779

H326779 JHS CATEGORY: ENTRY Center Director Agriculture and Prepared Products Center of Excellence and Expertise 909 S.E. 1st Avenue, Suite 980 Miami,?FL?33131 RE: Application for Further Review of Protest No. 2704-19-106346; United Foods; Tariff- Rate Quota Dear Center Director: The purpose of this decision is to address the Application for Further Review (AFR) of Protest Number 2704-19-106346, filed by Navigators Insurance Company (Navigators) on November 27, 2019 , regarding the assessment of duties at the over-quota rate for entries of peanut butter from India. Our decision is set forth below. FACTS: In 2017, United Foods filed two entries for shipments of peanut butter from India: entry numbers XXX-XXXX035-2 and XXX-XXXX036-0. At that time, peanut butter from India was subject to a tariff-rate quota pursuant to Additional U.S. Note 6 of Chapter 20 of the Harmonized Tariff Schedule of the United States (HTSUS) (2017). The entries were initially filed as type 02, which delineates entries that contain quota-class merchandise, but the entry summaries were not accompanied by estimated payments of duties, taxes, and fees. United Foods classified the peanut butter in both entries under subheading 2008.11.0500, HTSUSA, in order to receive the in-quota duty rate of 0%. U.S. Customs and Border Protection (CBP) determined that quota for peanut butter from India oversubscribed on the weekend preceding May 1, 2017, and that quota had filled on May 1, 2017. Pursuant to CBP’s Automated Commercial Environment (ACE), for entry number XXX- XXXX035-2, United Foods filed an entry (CBP Form 3461) and entry summary (CBP Form 7501) on April 28, 2017. The cargo arrived on April 30, 2017, and was released on the same day. Due to the quota filling, the entry was subject to proration — meaning the total entered quantity of peanut butter was not granted the in-quota duty rate. As a result of this proration, CBP rejected the entry summary on May 1, 2017, and returned it to the importer to account for the quantity entered in excess of the annual quota limit that was subject to a higher duty rate. CBP requested that the entry summary be resubmitted by May 15, 2017. The entry summary was not resubmitted by May 15, 2017, leading CBP to reject the in-quota entry summary on May 16, 2017. For entry number XXX-XXXX036-0, United Foods filed an entry and entry summary on May 1, 2017. The cargo arrived on May 3, 2017, and was released on the same day. Due to quota filling on May 1, 2017, the in-quota entry summary was rejected by CBP on May 3, 2017. On February 20, 2019, CBP corrected the classification for both entries to subheading 2008.11.1500, HTSUSA, which corresponded to an over-quota duty rate of 131.8%. CBP liquidated entry number XXX-XXXX035-2 on March 29, 2019, and entry number XXX- XXXX036-0 was liquidated on June 7, 2019. CBP issued a bill to United Foods for the duties, taxes, and fees owed, which was not paid. CBP then mailed a formal demand for payment to Navigators, as the surety guaranteeing payment on the entries, for the delinquent amounts. For entry number XXX-XXXX035-2, CBP mailed Navigators a demand on June 1, 2019. For entry number XXX-XXXX036-0, CBP mailed Navigators a demand on September 1, 2019. Navigators filed protest number 2704-19-106346 on November 27, 2019, protesting CBP’s liquidation of the entries at the over-quota duty rate. Navigators makes two arguments: first, Navigators argues that the subject entries deemed liquidated; second, Navigators asserts that if we deny the deemed liquidation argument, CBP still erroneously assessed an over-quota duty rate for entry number XXX-XXXX035-2 because the date of entry occurred prior to the quota filling on May 1, 2017. ISSUE: Whether CBP properly liquidated the subject entries. LAW AND ANALYSIS: As an initial matter, we find that, pursuant to 19 U.S.C. § 1514(c)(3), this protest was timely filed on November 27, 2019, “within 180 days from the date of mailing of notice of demand for payment” for both entries. We also find that, pursuant to 19 U.S.C. §§ 1514(a)(2) and 1514(a)(5), a protestable issue was raised by challenging CBP’s decision regarding “the classification and rate and amount of duties chargeable” for the peanut butter and the timeliness of CBP’s liquidation. Finally, pursuant to 19 C.F.R. § 174.24(b), we find that further review of this protest is warranted because it involves a question of fact which has not previously been ruled upon – specifically, whether both entries were properly liquidated at the higher over-quota duty rate. Navigators asserts that entry numbers XXX-XXXX035-2 and XXX-XXXX036-0 deemed liquidated because CBP failed to liquidate within one year of their respective dates of entry. Pursuant to 19 U.S.C. § 1504(a)(1): Unless an entry of merchandise for consumption is extended under subsection (b) of this section or suspended as required by statute or court order . . . an entry of merchandise for consumption not liquidated within 1 year from– (A) the date of entry of such merchandise . . . 2 shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted by the importer of record. This statutory deemed liquidation provision was adopted to “increase certainty in the customs process for importers, surety companies, and other third parties with a potential liability relating to a customs transaction.” Headquarters Ruling Letter (HQ) 224162 (May 5, 1992) (quoting S. Rep. No. 95-788, at 832 (1978)). Accordingly, any entry which is not liquidated by CBP within a year from the date of the entry is deemed liquidated unless liquidation is suspended pursuant to statute or court order, or CBP extends the timeframe for liquidation. We must thus determine the legal dates of entry for both of the quota-class merchandise entries to determine whether their liquidation was timely. The time of entry for merchandise that is entered for consumption is established in accordance with 19 C.F.R. § 141.68. Pursuant to 19 C.F.R. § 141.68(d), the time of entry for quota-class merchandise “will be the time of presentation of the entry summary or withdrawal for consumption in proper form, with estimated duties attached, or if the entry/entry summary information and a valid scheduled statement date . . . have been successfully received by CBP via the Automated Broker Interface.” The time of entry provision for quota-class merchandise does not contemplate a situation where a presentation “in proper form” never occurs. Presentation is a key step for quota-class merchandise because it establishes quota priority and quota status if made in proper form. See 19 C.F.R. § 132.11(a). Quota priority is the precedence granted to an entry of quota-class merchandise over other entries of merchandise subject to the same quota. 19 C.F.R. § 132.1(f). Quota status is the standing which entitles quota- class merchandise to admission under an absolute quota, or to a reduced rate of duty under a tariff-rate quota, or to any other quota benefit. 19 C.F.R. § 132.1(g). In order to prevent circumvention of quota, importers must comply with strict presentation requirements in order to obtain quota priority and status. See HQ 229188 (Mar. 4, 2002) (“quota priority and status are determined as of the time of presentation of the entry summary for consumption, or withdrawal for consumption, in proper form, and in strict compliance with the applicable Customs regulations”). A quota entry will not be deemed presented “for purposes of quota priority and . . . quota status” if not in proper form. 19 C.F.R. § 132.11(b); see also 19 C.F.R. §§ 132.1(d); 132.11a. The requirements to establish “proper form” of presentation are for purposes of quota priority and status are stringent. See generally DMV USA, Inc. v. United States, 25 C.I.T. 970, 979 (2003) (“[w]hile plaintiff’s entry summary might have been sufficient solely for purposes of classification, it was not in proper form for purposes of gaining the benefit 

As an initial matter, we find that, pursuant to 19 U.S.C. § 1514(c)(3), this protest was timely filed on November 27, 2019, “within 180 days from the date of mailing of notice of demand for payment” for both entries. We also find that, pursuant to 19 U.S.C. §§ 1514(a)(2) and 1514(a)(5), a protestable issue was raised by challenging CBP’s decision regarding “the classification and rate and amount of duties chargeable” for the peanut butter and the timeliness of CBP’s liquidation. Finally, pursuant to 19 C.F.R. § 174.24(b), we find that further review of this protest is warranted because it involves a question of fact which has not previously been ruled upon – specifically, whether both entries were properly liquidated at the higher over-quota duty rate. Navigators asserts that entry numbers XXX-XXXX035-2 and XXX-XXXX036-0 deemed liquidated because CBP failed to liquidate within one year of their respective dates of entry. Pursuant to 19 U.S.C. § 1504(a)(1): Unless an entry of merchandise for consumption is extended under subsection (b) of this section or suspended as required by statute or court order . . . an entry of merchandise for consumption not liquidated within 1 year from– (A) the date of entry of such merchandise . . . 2 

 shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted by the importer of record. This statutory deemed liquidation provision was adopted to “increase certainty in the customs process for importers, surety companies, and other third parties with a potential liability relating to a customs transaction.” Headquarters Ruling Letter (HQ) 224162 (May 5, 1992) (quoting S. Rep. No. 95-788, at 832 (1978)). Accordingly, any entry which is not liquidated by CBP within a year from the date of the entry is deemed liquidated unless liquidation is suspended pursuant to statute or court order, or CBP extends the timeframe for liquidation. We must thus determine the legal dates of entry for both of the quota-class