HQ 954219

April 25, 1994

LIQ-11-CO:R:C:E 954219

CATEGORY: Liquidation

District Director

U.S. Customs Service

#1 La Puntilla Street

Room 203

San Juan, PR 00901

RE: Protest and Application for Further Review No. 4909-93-

100010; Deemed liquidation of entry; 19 U.S.C. 1504;

improper extension of liquidation

Dear Sir:

The above-referenced protest and application for further

review was forwarded to this office for further review. We have

considered the points raised and our decision follows.

FACTS:

An entry of athletic shoes bearing the \"Converse\" brand was

made on January 10, 1989 by protestant. Protestant provided a

sample shoe from the entry to Customs. A laboratory analysis of

the shoe was made on November 15, 1989.

There was a question of admissibility, however. The record

shows that the protestant in 1987 was investigated for importations

of shoes that involved possible violations of the Converse

trademark. Those shoes apparently were permitted to be exported

in order to avoid seizure. During the period from March 21, 1990

to August 9, 1991, San Juan Customs officers were informed of

criminal proceedings against protestant at another district that

also involved shoes imported in violation of the Jordache

trademark. In that case, the protestant pleaded guilty to

violations of 18 U.S.C. 2, 542 and 1956 which resulted in a

forfeiture of those shoes. That conviction was reported on an

investigative report dated August 9, 1991.

Although the date is uncertain, the responsible Customs

officer was informed by the Converse trademark owner that the

trademark owner had never authorized the protestant to import

Converse brand shoes. Consequently, these shoes should have been

inadmissible. Nevertheless, by liquidating the entry on November

6, 1992, Customs decided the question of admissibility in the

protestant\'s favor.

Customs records show that extension notices were issued three

times, the last extension notice being issued on October 12, 1991.

The entry was liquidated on November 6, 1992. The four-year period

set in 19 U.S.C. 1504(d) would expire on January 10, 1993.

The protestant claims that it never received any extension

notice. It does admit that it received the Notice of Action (CF

29\) on the rate increase on October 20, 1992.

ISSUE:

Did the subject entry deem liquidate at the rate of duty

asserted at the time of entry?

LAW AND ANALYSIS:

The entry was liquidated on November 6, 1992. The protest

was filed on January 25, 1992. The protest is timely and a protest

challenging the legality of a liquidation, as here, is authorized

under 19 U.S.C. 1514(a)(5).

The protestant\'s primary claim is that the entry was deemed

liquidated on January 10, 1990, by virtue of 19 U.S.C. 1504(a).

It alleges that liquidation was never extended. The protestant

alleges that it received no extension notice. With respect to that

allegation, the protestant provided no evidence. In the absence

of any evidence there is nothing to rebut the presumption of

correctness by the involved Customs officers. See Enron Oil

Trading and Transportation Co. v. U.S., 988 F.2d 130 (CAFC App.

92-1089, 1993); International Cargo & Surety Insurance Co. v. U.S.,

15 CIT 541 (1991); Star Sales & Distributing Corp. v. U.S., 10 CIT

709, 663 F. Supp. 1127 (1986); Bar Bea Truck Leasing Co. v. U.S.,

5 CIT 124 (1983) and HQ 224397.

Protestant claims that it \"heard nothing concerning this entry

from Customs until October 20, 1992 when a CF 29 Notice of Action

was issued announcing a rate increase.\" There is a presumption

that government officials perform their duties in the manner

required by law. Star Sales, 10 CIT at 710, 663 F. Supp. at 1129

(1986). And, proof of mailing raises a presumption of delivery.

F.W. Myers & Co. v. United States, 6 CIT 215, 216, 574 F. Supp.

1064, 1065 (1983). Once those presumptions are established, the

importer has the burden of rebutting those presumptions. In the

instant case, Customs Automated Commercial System (\"ACS\") record

indicates that there were three extension notices issued with the

final extension notice being dated October 12, 1991. Regarding

the subject protest, the protestant has failed to present evidence

negating the presumption of receipt of the notice. Therefore, the

protestant\'s claim that entry was deemed liquidated by virtue of

a failure to extend properly must fail.

The protestant, in its application for further review, alleges

that there were no grounds or reason to extend liquidation of the

entry. Under 19 U.S.C. 1504(b), Customs may extend the one-year

liquidation period, by providing notice to the importer, on any of

the following three grounds: (1) if \"information needed for the

proper appraisement or classification of the merchandise is not

available to the appropriate customs officer\"; (2) if \"liquidation

is suspended as required by statute or court order\"; or (3) if \"the

importer of record requests such extension and shows goods cause

therefor.\" Section 159.12(e), Customs Regulations, states that

extensions may be granted by the district director for a total not

to exceed 3 years. Therefore, liquidation of an entry must take

place within 4 years from the time of entry unless liquidation

continues to be suspended by court order or if required by statute.

In order to determine whether the subject entry deemed

liquidated we must look at two questions: (1) did Customs have

grounds on which to extend liquidation; and (2) were the subsequent

one-year extensions invalid?

First, did Customs have grounds on which to extend

liquidation? It appears that Customs had justification for

delaying liquidation of the subject entry. The record indicates

that at the time of entry a sample shoe was forwarded to the Office

of Laboratory Services to determine the components of the shoe.

In the meantime, the protestant became the subject of an

investigation for importing counterfeit athletic shoes.

Previously, the protestant had been investigated for shoes imported

in violation of the trademark laws with the same brand as involved

here. Therefore, Customs had grounds to extend liquidation of the

subject entry. There were questions concerning the admissibility,

classification and appraisement of the subject merchandise. The

courts have concluded that Customs decision to extend liquidation

will be upheld if it is proper under the statute, and is not

arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law. See International Cargo & Surety Ins. Co. v.

United States, 15 CIT 541, 779 F. Supp. 174 (1991); Detroit

Zoological Society, supra, 10 CIT at 137-138. We, accordingly,

conclude that the extensions issued under 19 U.S.C. 1504(b)(1)

were a proper exercise of the district director\'s discretion. See

Detroit Zoological Society, supra, 10 CIT at 138; 19 CFR 159.12(e).

Having concluded that there were valid grounds to extend the

entry and that protestant has failed to substantiate its claim that

it did not receive any notice of extensions, there remains the

question of whether protestant has demonstrated that the subsequent

one-year extensions were invalid? The Court of Appeals for the

Federal Circuit recently held that: \"Customs may, for statutory

purposes and with the requisite notice, employ up to four years to

effect liquidation so long as the extensions it grants are not

abusive of its discretionary authority.\" St. Paul Fire & Marine

Ins. Co. v. U.S., 6 F.3d 763, 768 (Fed. Cir. 1993). In St. Paul,

the court upheld Customs periodic extensions of liquidation, made,

in accordance with 19 U.S.C. 1504(b)(1) and Customs regulations.

In the instant case, Customs record indicates that three extension

notices were properly issued, with the final extension dated

October 12, 1991. Liquidation occurred on November 6, 1992 (within

the four year period).

The St. Paul case settled the issue of whether Customs broad

discretion to extend up to the four year limit to obtain needed

information can be abused. Specifically, the court held: \"Such

an abuse of discretionary authority may arise only when an

extension is granted even following elimination of all possible

grounds for such an extension. There is, in sum, a narrow limit

on Customs\' discretion to extend the period of liquidation.\" Id.

(emph. added). This case further held: \"\[W\]e must accept the fact

that Congress has directed the \[court\] to presume that Customs

decisions are correct and that it is St. Paul\'s \[the plaintiff\'s\]

burden to prove otherwise.\" Id., citing, 28 U.S.C. 2639(a)(1).

The St. Paul case also held that the quantum of proof required is

the \"preponderance of the evidence.\" Id. Thus, not only does

Customs possess broad discretion to extend up to the full four year

period, but also anyone challenging a particular extension decision

will be required to prove, by a preponderance of the evidence, that

all possible grounds for such an extension were eliminated, but

Customs extended anyway. Protestant does not make such a showing.

In 1987, the protestant was investigated in connection with

shoes imported in violation of the trademark laws. The San Juan

Customs officials were aware of an investigation of the protestant

involving trademark violations of other similar shoes at another

district. The San Juan Customs officials were informed that

investigation resulted in a criminal conviction of the protestant.

The San Juan Customs officials were informed by the trademark owner

that it never authorized the protestant to import such shoes.

However, that latter information may have been received after the

entry was liquidated. In any event, by liquidating that

importation the question of admissibility, perhaps erroneously, was

decided in the protestant\'s favor.

While there appears to have been sufficient information

acquired by the import specialist with regard to the proper

classification with the laboratory report of November 15, 1989,

admissibility remained open. The report of the criminal conviction

by a guilty plea, of the protestant on a different shipment would

not decide the issue of admissibility on the shoes in the protested

entry. While the suspected violation was the same, the shoes here

involved a different trademark than the shoes in the criminal

proceedings. Moreover, the trademark here was the same as the

trademark violation for which the importer was investigated in

1987\. It was proper for the import specialist to delay liquidation

to get all of the evidence to make a determination on

admissibility. Given those circumstances, there is no evidence to

show that the issuance of the second and third extension notices

was without any basis. Until liquidation, the question of

admissibility remained an open issue.

The protestant does not prove that all grounds for an

extension decision at issue were eliminated. The protestant

provides no evidence, but instead only states the following bare

argument: \"Customs has had a sample of the merchandise under

protest since 1989 and may not issue a rate increase nearly four

years after the date of entry.\" The protestant\'s Application for

Further Review reiterates the substance of this argument, but again

produces no evidence.

This argument is unsubstantiated and, moreover, largely

irrelevant. The need for a merchandise sample was not the only

ground underlying the appropriate Customs officer\'s decisions to

extend. The appropriate Customs officer\'s decisions to extend are

also presumed regular and correct. St. Paul, 6 F.3d at 768-769.

The protestant has left these facts and presumptions totally

unrebutted and has not carried its civil burden of proof. On the

contrary, even Customs own review of its records indicates that the

subsequent one-year extensions were entirely appropriate given the

protestant\'s history of importing shoes that may have been

inadmissible.

HOLDING:

The subject entry did not deem liquidate. Therefore, you

should DENY this protest in full for the reasons stated above.

In accordance with Section 3A(11)(b) of Customs Directive 099

3550-065, dated August 4, 1993, Subject: Revised Protest

Directive, this decision should be mailed by your office to the

protestant no later than 60 days from the date of this letter.

Any reliquidation of the entry in accordance with the decision must

be accomplished prior to the mailing of the decision. Sixty days

from the date of the decision the Office of Regulations and Rulings

will take steps to make the decision available to Customs personnel

via the Customs Rulings Module in ACS and the public via the

Diskette Subscription Service, Lexis, Freedom of Information Act

and other public access channels.

Sincerely,

John Durant, Director