United States Court of Appeals for the Federal Circuit
2006-1459
HOME DEPOT U.S.A., INC.,
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant-Appellant.
Christopher Dove, Locke Liddell & Sapp LLP, of Houston, Texas, argued for
plaintiff-appellee. On the brief were Adam J. Thurston, Eisenberg Raizman Thurston &
Wong LLP, of Los Angeles, California; David Stepp, Bryan Cave, LLP, of Santa Monica,
California; and Kelly A. Slater, of Washington, DC. Of counsel was Joseph H.
Heckendorn, Knechtel, Demeur & Samlan, of Chicago, Illinois.
Edward F. Kenny, Attorney, International Trade Field Office, Commercial
Litigation Branch, Civil Division, United States Department of Justice, of New York, New
York, argued for defendant-appellant. On the brief was Peter D. Keisler, Assistant
Attorney General, of Washington, DC; Barbara S. Williams, Attorney in Charge; and
Jack S. Rockafellow, Attorney, of New York, New York. Of counsel on the brief was
Beth C. Brotman, Office of Assistant Chief Counsel, International Trade Litigation,
United States Customs and Border Protection, of New York, New York.
Appealed from: United States Court of International Trade
Judge Gregory W. Carman
UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
2006-1459
HOME DEPOT U.S.A., INC.,
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant-Appellant.
______________________
DECIDED: June 21, 2007
_______________________
Before MAYER, RADER, and PROST, Circuit Judges.
MAYER, Circuit Judge.
The United States Customs and Border Protection (“Customs”) appeals the
judgment of the United States Court of International Trade reclassifying 105 models of
light fixtures under subheading 9405.10.80 of the Harmonized Tariff Schedule of the
United States (“HTSUS”). Home Depot, U.S.A., Inc. v. United States, 427 F. Supp. 2d
1278 (Ct. Int’l Trade 2006). We affirm.
Background
This case initially involved the tariff classification of 124 models of light fixtures
imported by The Home Depot, U.S.A., Inc. (“Home Depot”). Customs classified these
light fixtures under HTSUS subheading 9405.10.60, which is reserved for light fixtures
made of a base metal other than brass and imposes a 7.6 percent duty. Home Depot
protested the classifications, claiming that the subject goods should be classified under
HTSUS subheading 9405.10.80 as light fixtures made of something other than base
metal, and should thus only be subject to a 3.9 percent duty.
After Customs denied its protests, Home Depot filed a series of actions in the
Court of International Trade that were eventually consolidated into the single case now
before us. Following trial, the court determined that Customs incorrectly classified most
of the light fixtures at issue. Specifically, it found that 105 of the models at issue should
be reclassified under HTSUS subheading 9405.10.80 because they derived their
essential character from their glass components. Home Depot, 427 F. Supp. 2d at
1293-1358. Customs appealed with respect to the reclassified goods. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).
Discussion
We apply de novo review to questions of law, including the interpretation of
HTSUS terms. Rollerblade, Inc. v. United States, 282 F.3d 1349, 1352 (Fed. Cir. 2002);
Better Home Plastics Corp. v. United States, 119 F.3d 969, 971 (Fed. Cir. 1997).
Conversely, the ultimate classification of the subject goods is the result of a factual
inquiry and is reviewed for clear error. Pillsbury Co. v. United States, 431 F.3d 1377,
1379 (Fed. Cir. 2005). Although the trial court was required to give deference to
Customs’ classification decisions, see Bauer Nike Hockey U.S.A., Inc. v. United States,
393 F.3d 1246, 1249-50 (Fed. Cir. 2004), it is nonetheless ultimately “charged with the
duty to ‘reach the correct [classification] decision.’” Better Home Plastics, 119 F.3d at
971 (quoting Rollerblade, 112 F.3d at 484).
2006-1459 2
The HTSUS is organized by headings, each of which covers a general category
of merchandise. Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed. Cir.
1998). Each heading has one or more subheadings that “provide a more particularized
segregation of the goods within each category.” Id. The relevant HTSUS headings and
subheadings are as follows:
9405 Lamps and lighting fittings including searchlights and spotlights and
parts thereof, not elsewhere specified or included; illuminated
signs, illuminated nameplates and the like, having a permanently
fixed light source, and parts thereof not elsewhere specified or
included:
9405.10 Chandeliers and other electric ceiling or wall lighting fittings,
excluding those of a kind used for lighting public open
spaces or thoroughfares:
Of base metal:
9405.10.40 Of brass ……………………… 3.9% ad valorem
9405.10.60 Other …………………………. 7.6% ad valorem
9405.10.80 Other …………………………………. 3.9% ad valorem
There is no dispute that the proper first-level subheading for the subject goods is
9405.10. See Home Depot, 427 F. Supp. 2d at 1283. At issue here is which of two
potential second-level subheadings covers the imported light fixtures. Customs
originally liquidated the goods under subheading 9405.10.60 as fixtures made of a base
metal other than brass; the Court of International Trade reclassified the 105 models at
issue under 9405.10.80 as fixtures made of something other than base metal.
To resolve this dispute, we turn to the General Rules of Interpretation (“GRI”) to
the HTSUS because they govern the classification of imported goods within the HTSUS.
Pillsbury, 431 F.3d at 1379. GRI 2(b) instructs that “[t]he classification of goods
2006-1459 3
consisting of more than one material or substance shall be [determined] according to
the principles of rule 3.” GRI 3 instructs that if goods can be classified on their face
under more than one heading, as is the case here, then classification shall be based
upon the following:
(a) The heading which provides the most specific description shall be
preferred to headings providing a more general description.
However, when two or more headings each refer to part only of the
materials or substances contained in mixed or composite goods or
to part only of the items in a set put up for retail sale, those
headings are to be regarded as equally specific in relation to those
goods, even if one of them gives a more complete or precise
description of the goods.
(b) Mixtures, composite goods consisting of different materials or made
up of different components, and goods put up in sets for retail sale,
which cannot be classified by reference to 3(a), shall be classified
as if they consisted of the material or component which gives them
their essential character, insofar as this criterion is applicable.
(c) When goods cannot be classified by reference to 3(a) or 3(b), they
shall be classified under the heading which occurs last in numerical
order among those which equally merit consideration.
GRI 3(a)-(c) (1999).
The two subheadings at issue “each refer to part only of the materials” contained
in the subject goods, so they must be “regarded as equally specific” pursuant to GRI
3(a). We must therefore apply GRI 3(b), which instructs that the goods should be
classified “as if they consisted of the material or component which gives them their
essential character.” Although the GRI’s do not provide a definition of “essential
character,” the Explanatory Note (VIII) to GRI 3(b) * provides guidance: “The factor
which determines essential character will vary as between different kinds of goods. It
*
Although the Explanatory Notes “do not constitute controlling legislative history,”
they are nonetheless intended to offer guidance in clarifying the scope of HTSUS
subheadings. Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994).
2006-1459 4
may, for example, be determined by the nature of the material or component, its bulk,
quantity, weight or value, or by the role of a constituent material in relation to the use of
the goods.” This is known as the “essential character test,” see Better Home Plastics,
119 F.3d at 970-71, and the application of this test requires a fact-intensive analysis,
see Rollerblade, 112 F.3d at 483.
Customs argues that a light fixture’s essential character must be derived from the
material that forms its structural framework. A light fixture does not necessarily derive
its essential character from its structural framework any more than an office building
derives its essential character from the metal beams that hold it erect. Rather, many
factors should be considered when determining the essential character of a light fixture,
specifically including but not limited to those factors enumerated in Explanatory Note
(VIII) to GRI 3(b). Thus, the trial court was correct to look at all of the structural
components in determining the essential character of the light fixtures, rather than just
focusing on the frame of the imported goods. Having carefully reviewed its
comprehensive factual analysis, see Home Depot, 427 F. Supp. 2d at 1293-1359, we
find no clear error in its classification determinations, and conclude that it correctly
reclassified the 105 models in question as non-metallic light-fixtures under HTSUS
subheading 9405.10.80.
Conclusion
Accordingly, the judgment of the United States Court of International Trade is
affirmed.
AFFIRMED
2006-1459 5