Dessy Enterprises, Inc. v. United States

BISSENTING OPINION

Oliver, Chief Judge:

This opinion was originally prepared as the opinion of the court, but, in view of the position taken by my learned colleagues, my views, with certain modifications and comments, are now filed as a dissenting opinion.

At the outset, I want to emphasize that, in my opinion, the appraiser’s action, referred to in the majority opinion, is not pertinent *278to the issue herein. Plaintiff’s contention, as stated in counsel’s brief, is as follows:

Plaintiff contends that the merchandise the subject of the consolidated protests herein was not of East German or Czechoslovakian origin; and that in any event, said merchandise consisted of old, secondhand, or used articles manufactured more than forty years prior to importation, which had become a part of the commerce of West Germany; and that said articles were purchased by the plaintiff in the Western Zone of Germany and imported into the United States directly from West Germany. Plaintiff does not question the propriety of the classification of the merchandise at bar under the paragraphs under which returned, but claims that said merchandise was improperly assessed with the full rates of duty applicable to imports from Soviet-dominated territory; that said importation is neither a direct nor an indirect importation from East Germany or Czechoslovakia within the meaning of Sec. 5 of the Trade Agreements Extension Act of 1951 and the President’s Proclamation and Letters of Notification to the Secretary of the Treasury issued thereunder; and that the articles at bar were accordingly entitled to the benefit of the reduced rates of duty fixed by the General Agreement on Tariffs and Trade and supplemental reciprocal trade agreements. [Italics quoted.]

In disposing of the issue as it is presented herein, I adhere to the reasoning followed and the statutory construction invoked by our appellate court in United States v. Hercules Antiques, The Danwill Company, 44 C. C. P. A. (Customs) 209, C. A. D. 662, which involved questions substantially the same as those now before us. Accordingly, I quote at length from different parts of the cited case as it construed various phases of the Presidential proclamation (86 Treas. Dec. 300, T. D. 52788), issued pursuant to section 5 of the Trade Agreements Extension Act of 1951 (86 Treas. Dec. 277, T. D. 52772), set forth in the majority opinion, and which gave rise to the present case.

In the Hercules Antiques et at. case, supra, the merchandise consisted of secondhand or antique glass articles, such as decanters, covered compotes, and covered dishes that had been purchased in Holland by the importers’ representative and shipped to the United States from that country. The goods were not manufactured in Holland, but originated in Bohemia, a part of Czechoslovakia, con-cededly a part of the so-called Iron Curtain country dominated by Soviet Russia. The majority of the appellate court overruled the importers’ claim that the merchandise had been imported directly from Holland and held the articles to be indirect importations from Czechoslovakia, as claimed by the Government. In doing so, the statutory provisions involved were strictly construed. Emphasizing that the importer, in an issue such as that under discussion, has the burden to establish “by appropriate evidence that the merchandise has actually become a bona fide part of the commerce of the intermediate country,” the majority of the court in the cited case stated:

If the goods of such countries [Communist-dominated countries] could be imported into the United States at reduced rates of duty merely because (instead of *279being brought in directly) they were purchased from dealers in other countries, it seems clear that such dealers could well make a practice of buying goods of that type with a view to reselling them to American importers. It is equally clear that such a practice would increase the commerce of the Communist-dominated country in which the goods were produced and would thus inure to the benefit of that country. Whether the sale in the intermediate country was made privately or in the open market, by auction or otherwise, is not, of and by itself, controlling. The ultimate effect of such sales, however made, would be to permit the goods of Communist-dominated countries to reach the American market at a reduced rate of duty, and thus to compete on more favorable terms with the goods of countries which are not so dominated.
In our opinion a holding that the fact that the goods of a Communist-dominated country were merely purchased in another country was sufficient to permit them to be imported into the United States at reduced rates of duty would defeat the clear purpose of the Presidential proclamation, since it would permit the Communist-dominated countries to obtain the benefit of the reduced rates merely by dealing through agents in other countries. * * * We are dealing here with a specific proclamation designed to accomplish a definite purpose. Under such circumstances it is clearly our duty to supply the interpretation which will best give effect to the intent of the proclamation. [Italics supplied.]

Expressing the “definite purpose” of the specific proclamation under discussion, the majority of the court stated that:

* * * in view of the evident objective of the Presidential proclamation, and its broad reference to “articles imported directly or indirectly” from Communist-dominated nations, it seems clear that the proclamation looks to the substance rather than the manner of importation, and that its purpose is to deny reduced rates of duty to all imports which are so closely related to a Communist-dominated nation that such nation may derive benefit from the reduction in duty.

Construing the words “articles imported directly or indirectly into the United States,” the decision of the majority, in the cited case, reads as follows:

There also appears to have been no prior decision as to the meaning of the expression “imported indirectly,” but in United States v. United Cigar Stores Co., 1 Ct. Cust. Appls. 450, T. D. 31505, decided long prior to the instant proclamation, it was held that merchandise originally destined for the United States remained a direct importation from the country in which it originated, even though it was transshipped in an intermediate country, if it had not become a part of the commerce of that country. It is reasonable to assume, therefore, that the words “imported indirectly” in the proclamation were intended to include merchandise which had been separated from the country in which it originated by something more than mere passage through or transshipment in an intermediate country. [Italics quoted.]
It would be difficult, if not impossible, to define exact standards for determining the duration of stay of merchandise in an intermediate country, the nature of the transactions to which it is subjected there, and other circumstances necessary to divest it of its status as an import, direct or indirect, from the Communist-dominated country in which it originated. However, we are of the opinion it must be established by appropriate evidence that the merchandise has actually become a bona fide part of the commerce of the intermediate country. That *280responsibility which, of course, rests upon the importer has not been satisfactorily discharged here.

Under the pronouncements of the majority of our appellate court in the Hercules Antiques et al. case, as hereinabove set forth, plaintiff, in this case, has not sustained its burden of proof. The principal witness was the president of the plaintiff corporation, who stated that he began importing glassware, chinaware, and earthenware, in July 1951, and that prior thereto he was “always sort of a hobbyist on these things.” He stated that he bought the articles in question in the Western Zone of Germany from a dealer who had acquired them by advertising in local German papers, buying the things from homes and from the people. Although his testimony is generally to the effect that this merchandise consists of used articles, 40 to 50 years old, the witness admitted, in referring to certain glass items, that “they are even produced today.” The witness testified further that part of the merchandise originated in the Western Zone of Germany and' part of it originated in Bohemia, which is in the Eastern Sector of Germany and “included behind the Iron Curtain,” but there is no showing what quantity or quantities of the merchandise originated in each of the separate divisions of Germany.

In the Hercules Antiques et al. case, the majority of the court, finding the evidence to be insufficient, stated as follows:

Again, there is no evidence whatever as to the history of the specific articles before they were purchased from dealers in Holland. There is nothing to show when, where, how, why, or from whom they were purchased by the dealers, nor when they entered Holland. So far as appears from the record they might have been exported to Holland from Czechoslovakia for the purpose of immediate re-sale on the very day they were purchased by the importers’ representative. On this record we cannot properly conclude from the fact that they were sold in Holland by antique dealers that they had entered Holland long before their sale. There is no apparent reason why antiques from Czechoslovakia cannot be bought directly from there and resold by dealers in Holland. Similarly, the dealers in Holland from whom the merchandise was purchased might well have been acting as agents for persons in Czechoslovakia.

What is stated in the foregoing quotation has equal application, with the same force and effect, herein concerning plaintiff’s proof in this case. There is no showing herein as to “when, where, how, why, or from whom” the articles in question were obtained by the German dealer from whom plaintiff purchased them, nor when they entered the Western Zone of Germany. So far as appears from the record, all of the merchandise in question might have been received by the German dealer (the foreign exporter) from the Eastern Sector of Germany or from communist-dominated territory, for the purpose of *281re-sale on tbe very day purchase thereof was made by plaintiff’s representative. It cannot be concluded from this record that. the particular articles under consideration entered the Western Zone of Germany long before their sale by the German dealer to the plaintiff.

There is a presumption, under the collector’s classification, that the merchandise in question was “imported directly or indirectly” from the Soviet Zone of Germany, or the Soviet Sector of Berlin, or other communist-dominated territory. To overcome such presumption, it was incumbent upon plaintiff to show, by proper evidence that the connection between the specific articles involved herein and a communist-dominated country or territory “had been so effectively broken that they could no longer be regarded as imports from that country,” the Hercules Antiques et al. case, supra.

On the basis of the record herein and consistent with the statutory construction invoked in the Hercules Antiques et al. case, the merchandise in question is properly dutiable at the rates assessed by the collector. The protests should be overruled.