Anderson Organization v. United States

O’Connell, Acting Chief Judge,

delivered the opinion of the court:

This is an appeal from the judgment of the United States Customs Court, Third Division, C.D. 1885, overruling a protest by the importer, while disapproving the collector’s classification. More specifically, the court found that appellant’s proof had overcome the presumption of correctness attached to the collector’s classification, but had failed to establish the validity of its own claim as defined in the protest, citing United States v. Silk Association of America, 16 Ct. Cust. Appls, 566, T.D. 43296. See also Mattoon & Co., Inc. v. United States, 42 CCPA 19, C.A.D. 563; United States v. E. B. Miller Associates, et al., 43 CCPA 14, C.A.D. 603.

The merchandise consists of beef and gravy packed in air-tight containers, and was held by the collector to be dutiable as beef packed in air-tight containers at 3 cents per pound but not less than 20 per cent ad valorem under the provisions of paragraph 706 of the Tariff Act of 1930 as modified by the Trade Agreement with the Republic of Paraguay, T.D. 51649. Appellant claimed that the merchandise is dutiable under the same paragraph 706, as modified by the General Agreement on Tariffs and Trade, T.D. 51802, but as meats, prepared or preserved at 3 cents per pound but not less than 10 per cent ad valorem.

The pertinent tariff provisions thus involved are as follows:

As shown by the record the merchandise consists of beef with a gravy prepared from vegetable ingredients, packed in air-tight containers. The exact proportions vary considerably but it appears that, on the average, the gravy constitutes from 15 to 18 per cent of the product. Witnesses called by.both parties testified as to the relative importance of the beef and gravy in the sale and use of the *49merchandise, and the testimony thus elicited on those matters is conflicting.

The Customs Court, after expressing certain considerations, found that the gravy was such an important part of the merchandise as to produce a new article, which was not merely beef. The collector’s classification was accordingly disapproved. However, the court found that the same factors which precluded classification of the merchandise as beef also precluded its classification as meat, and hence that the classification contended for by the importer was not correct and the importer had thus failed to sustain its burden of establishing that the merchandise was dutiable as claimed in the protest. Accordingly, the protest was overruled.

We are unable to agree with the Customs Court that the gravy added to the beef here involved caused it to become a new article in the customs sense. The question as to whether the addition of a second food element to a first results in a new article is one which has been frequently considered by the courts, and a number of cases involving such additions were cited and discussed in the decision of the Customs Court and in the briefs of the parties here. None of the cases is squarely in point, and we consider it unnecessary to discuss them individually. Considering them as a whole, it is clear that the question as to the creation of a new product is one which must be determined largely on the basis of the particular facts of each case.

The inclusion of gravy with various kinds of meat, including beef, is a conventional practice, and meats are commonly supplied with a certain amount of gravy, even though no mention of gravy is made when they are ordered. It seems unlikely, therefore, that beef with a small amount of gravy would be regarded as being anything other than beef. The situation is different from that of a stew, in which, pieces of vegetables are included and a food product having a distinct status is produced. Obviously, if gravy continues to be added, so that it becomes the major portion of the food, the product cannot properly be regarded as beef, but the exact point at which the change takes place may be difficult to determine. We are of the opinion, however, that the limited amount of gravy included in the instant merchandise does not alter its essential character as beef, and that the collector’s classification was therefore proper.

On the other hand, if the gravy is such an important ingredient that the merchandise cannot be classified as beef, then for the same reason a classification as meat would be improper. The only meat contained in the merchandise is beef and accordingly the merchandise is beef to exactly the-same extent as it is meat. We find no indication that “meat” is to be given any greater latitude than “beef” so far as the inclusion of vegetable components such as gravy is concerned. *50If, as found by the Customs Court, beef and gravy is an article distinct from beef, then meat and gravy is an article distinct from meat. It follows that if the merchandise can be ■ classified under paragraph 706 at all, it must be as beef packed in air-tight containers. From the foregoing, it will be seen that the importer has not sustained either part of its dual burden of establishing not only that the collector’s classification is incorrect but also what the correct classification should be. If the merchandise is beef packed in airtight containers it falls within the exception contained in the GATT provision, supra, where it was placed by the collector, and if it is a new article, then 706 is not applicable in any event. Therefore, since the importer’s proposed classification that the merchandise should be classified in 706 as amended by GATT is not acceptable it has not fulfilled its obligation to offer the proper classification. The above conclusion is not affected by the appellant’s contention advanced in its oral argument and brief that if the merchandise is not classifiable under paragraph 706 it is dutiable at 10 per cent ad valorem under the “similitude” clause of paragraph 1559 of the Tariff Act of 1930. While that contention was advanced in the protest it was-not argued before or decided by the Customs Court and is not included in the assignment of errors here. We, therefore, agree with the position of the Government that it is not before this court.

It may be noted, moreover, that paragraph 1559 provides that “on articles not enumerated, manufactured of two or more materials, the duty shall be assessed at the highest rate at which the same would be chargeable if composed wholly of the component material thereof of chief value.” Since the component material of chief value of the instant merchandise is beef packed in air-tight containers, it would appear that the application of paragraph 1559 would lead to the assessment of the same duty as was actually assessed by the collector.

For the reasons given, the judgment of the United States Customs Court is affirmed.