F. W. Myers & Co. v. United States

DISSENTING OPINION

Donlon, Judge:

This case was before me initially for preparation of the prevailing opinion. Differences between my colleagues and myself, as to the law that is applicable to the facts here of record, have resulted in return of the case to me for preparation of an opinion expressing my dissenting views.

The first issue for decision is whether there have been shown to be two tariff entities which, in the merchandise as imported, were commingled, but which were capable of segregation and which, in fact, were segregated into such separate tariff entities prior to liquidation.

If the answer to that question is yes, then the second issue is whether the appraisement as an entirety was void, as plaintiff contends, for failure to appraise the two entities separately.

The protest, as amended, presents both these issues.

Cases discussed in the majority opinion, in which the issue litigated and decided was whether an importer claiming allowance under section 507 of the Tariff Act of 1930 is entitled to such allowance for tare or other impurities, are not relevant to this decision. Plaintiff has made no claim for allowance under section 507. That issue is not before us. That there were impurities in the merchandise, as imported, is clear beyond shadow of a doubt; but since plaintiff makes no claim for any allowance therefor, it is idle to speculate whether the impurities were or were not excessive. Plaintiff had no burden of proof in that respect.

What plaintiff claims is that merchandise, commingled at the time of importation but which before liquidation had been segregated into two different tariff entities, for each of which Congress has provided a separate duty rate, should be classified as such separate entities for duty purposes and liquidated at the rates appropriate to each such classification. This is a claim under section 508.

The distinction, in the case of “impurities,” between the two statutory provisions (now sections 507 and 508) was pointed out, as to the related provisions of an earlier act, by our appeals court in Consolidated Elevator Co. v. United States, 8 Ct. Cust. Appls. 267, T.D. 37536. The Board of General Appraisers, in that case, had overruled the protest claim for segregation of “screenings” from flaxseed, *203as the basis for establishing two separate tariff classifications for merchandise that had been commingled at the time of importation. The board’s decision included a finding that “screenings” are impurities, for which Congress has said “allowance” may not be made. Reversing the decision of the board, our appeals court said, as to that issue:

* * * we think it may well be said that the importers are not here seeking an allowance. The word “allowance” has come to mean either an allowance for draft or tare or some abatement from the full weight of imported merchandise. That is not what is being sought here. Potential separation of the two commodities mingled together of necessity for the purpose of importation is all that is asked, and this is for the purpose of enabling the importer to pay a tariff upon each of the commodities which in use will have a separate existence. [Oonsolidated, Elevator Oo., supra, at page 273; emphasis added.]

As to what Congress means by the word “impurity,” our appeals court said, in the Consolidated Elevator case:

It would appear that the word “impurity” as used in this tariff act is open to two constructions. It may and often does mean any matter not of the character of the principal matter. It may be given a narrower meaning, as signifying some substance inherently impure or unsalable.
This precise question has not before engaged our attention. The question of allowance for wantage or deductions from full weight on account of impurities has been considered in various cases in this court, which eases have dealt with importations as to which allowance was claimed on account of the presence of nondutiable extraneous matter. * * * Undoubtedly such a provision as that we are considering would require denial of any allowance whatever for impurities, which, within the rule of ejusdem generis, were of like kind with those specially enumerated. We are impressed, however, that this rule calls for a limitation of the impurities, allowance for which is proscribed, to such as correspond with the one named, at least in the essential particular of having no separate tariff status for dutiable purposes, and that the proviso should not be so construed as to abrogate the rule that where two or more articles subject to different tariff rates are present in an importation they may be separately assessed at the several rates provided for each, * * *. [Pages 269, 270; emphasis added.]

There have been decisions in which claims made for separate classification, pursuant to section 508, were overruled either because commingling of the imported merchandise was permanent and segregation, therefore, impossible; or because, in fact, no segregation was ever made. These authorities are not pertinent here, since the record before us shows that there actually was segregation into different classifications, including 601,151 pounds of peanuts admissible as such; 30,544 pounds of peanuts rejected as contaminated and denied admission ; and the segregated lot of 31,167 pounds described, not as peanuts, but as chaff, hearts, and sweepings, which were not admissible as peanuts but which the Government caused to be made unsuitable for human consumption as a condition of admission, and which were admitted and sold commercially as such, to be used for animal feed. *204Hence, segregation here not only was possible; there actually was segregation into merchandise which was sold commercially as different goods and for different uses.

Cases construing section 508, or comparable earlier tariff provisions involving segregation, include the following, which are cited in the opinion of the majority:

Consolidated Elevator, supra.
United States v. Amendola, 5 Ct. Cust. Appls. 516, T.D. 35156.
J. M. McCulloughs Sons Co. v. United States, 65 Treas. Dec. 595, T.D. 46985.
I. C. Harris v. United States, 71 Treas. Dec. 678, T.D. 48936.
Pacific Vegetable Oil Corp. v. United States, 15 Cust. Ct. 161, C.D. 964.
Peppard Seed Company v. United States, 29 Cust. Ct. 307, C.D. 1485.

In the Consolidated Elevator, Arriendola, McCulloughs Sons, and Peppard Seed cases, the protest claims for separate duty classification were sustained. In the I. C. Harris and Pacific Vegetable Oil cases, the like claims were overruled. It does not appear that this difference in result is related to a change in the views either of this court or of our appeals court as to the congressional intent in enacting section 508 or in the scope of its applicability. Rather, the overruling of certain claims to separate classification rested, in the I. C. Harris and Pacific Vegetable Oil cases, on the facts in those cases.

In both those cases, the holding was that there were not, in fact, two commercial entities each having a distinct value and particular use; and since it was found that there were not two separate but commingled commercial entities in the imported merchandise, it was rightly held that no case had been made for application of the segregation relief which Congress intended in section 508.

In the other cases, supra, the holding was that there were, in fact, two commercial entities and, hence, relief under section 508 (or its predecessor sections) was proper.

The record here shows that, after segregation, 601,151 pounds of the imported merchandise were sold as peanuts, and duty has been levied on them as such. Plaintiff accepts that action as correct. The record also shows that 31,167 pounds were admitted for sale for animal feed, and were described by the Government as chaff, hearts, and sweepings, but not as peanuts. These, too, were subjected to the duty rate on peanuts. Plaintiff claims error in that classification, contending that these 31,167 pounds were not the commercial, or tariff entity, known as peanuts; but they were, in fact, the tariff entity known as waste, and were actually sold as such.

In my view, the record before us supports this claim, under the statute and precedents. There is shown such a difference in commer*205cial use as our appeals court made the rationale of its decision in the Consolidated Elevator case, supra.

This being so, appraisement of the merchandise as an entirety was erroneous. Congress has provided the procedure appropriate in such a case. Under section 2636 (28 U.S.C. § 2636) the remedy provided is reference to a single judge for separate appraisement of the two tariff entities.

Order should issue declaring the appraisement of this merchandise as an entirety null and void and remanding the case to a single judge, sitting in reappraisement, to determine the separate values of the respective tariff entities.