Protest and Application for Further Review No. 2720-98-100130; 19 U.S.C. §1521; 19 CFR §173.6; 19 CFR §152.13; reliquidation of entry

HQ 228125 January 11, 1999 LIQ-9 RR:CR:DR 228125 CB CATEGORY: Liquidation Port Director U.S. Customs Service 11099 South La Cienega Blvd. Los Angeles, CA 90045 RE: Protest and Application for Further Review No. 2720-98-100130; 19 U.S.C. §1521; 19 CFR §173.6; 19 CFR §152.13; reliquidation of entry Dear Sir/Madam: The above-referenced protest was forwarded to this office for a determination. We have considered the points raised and a decision follows. FACTS: The subject protest involves thirty seven (37) consumption entries. The entries were liquidated between October 15, 1993 and January 31, 1997. On November 15, 1996, a routine cargo exam was conducted for an entry which is not subject to the instant protest. During the examination, apparent unit value discrepancies were discovered. Subsequently, numerous interviews were held between Customs and the importer. As a result of these subsequent meetings and written communications, a Customs Summons was issued to formally request all transaction invoices for the imported merchandise. The importer responded that the original documents were not available. Thereafter, the entries were reliquidated and Customs Forms (CF) 29 were sent out notifying protestant that pursuant to 19 C.F.R. §§152.13(b) and 173.6 the entries were being reliquidated and reclassified under a commingled rate. ISSUE: Was reliquidation of the subject entries proper? LAW AND ANALYSIS: Initially, we note that the protest was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. §1514 and 19 CFR Part 174). The protest was filed on May 14, 1998. The subject entries were reliquidated on March 5, 1998. The action at issue here, i.e., the reclassification and reliquidation of the entries, was taken pursuant to 19 C.F.R. §173.6 which provides that a port director may review any entry in which fraud is suspected and reliquidate the entry within 2 years after the date of liquidation or last reliquidation. The statutory basis for this regulation was found at 19 U.S.C. §1521 which provided that if the appropriate customs officer found probable cause that there is fraud, an entry may be reliquidated within two years after the date of liquidation or last reliquidation. Said statutory provision, 19 U.S.C. §1521, was repealed by Pub. L. 103-182, Title VI, §618, 107 Stat. 2180. The effective date of repeal was December 8, 1993. The legislative history indicates that the reason for repealing the statute was it was no longer necessary because Customs may use 19 U.S.C. §1592(d) to recover such duties. See H. Rep. No. 103-361, 103d Cong., 1st Sess. §618. Once the underlying statute was repealed, the regulation lost all enforceability. As stated by the Court of Appeals, “[w]hen a statute has been repealed, the regulations based on that statute automatically lose their vitality. Regulations do not maintain an independent life, defeating the statutory change.” See Aerolineas Argentinas v. United States, 77 F.3d 1564, 1575 (Fed. Cir. 1996) (airlines were entitled to recover sums for which payment was illegally exacted by the government once the Immigration and Naturalization Act (INA) which was the basis for collection of the fee was repealed). As stated above, 19 U.S.C. §1521 was repealed effective December 8, 1993. As of that date, 19 C.F.R. §173.6 lost its statutory basis. Given the fact that there was no statutory or regulatory basis to reliquidate the subject entries, we conclude that the entries were incorrectly reliquidated pursuant to 19 C.F.R. §173.6 and, thus, the subject protest must be granted. HOLDING: The subject protest should be GRANTED. There was no statutory authority for the action taken by the Customs Service. In accordance with Section 3A(11)(b) of Customs Directive 099 3550065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, John A. Durant, Director Commercial Rulings Division