Shah Brothers, Inc. v. United States

Slip Op. 10-115

UNITED STATES COURT OF INTERNATIONAL TRADE

SHAH BROTHERS, INC.,

Plaintiff,
Before: Pogue, Judge
v.
Court No. 09-00180
UNITED STATES,

Defendant.

OPINION

[Motion to dismiss Plaintiff’s Amended Complaint granted.]

Dated: October 6, 2010

Stein Shostak Shostak Pollack & O’Hara (Elon A. Pollack, Bruce
N. Shulman, and Juli C. Schwartz) for the Plaintiff.

Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director; Barbara S. Williams, Attorney-in-Charge, International
Trade Field Office, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Claudia Burke and Edward F.
Kenny) for the Defendant.

Pogue, Judge: In this action, Plaintiff Shah Bros. challenges

the Defendant’s classification of its imported merchandise, and the

resulting tariff duties and excise taxes imposed. Plaintiff seeks

reclassification of its goods, a return of said duties and taxes,

with interest thereon, and further declaratory relief. In response

to Plaintiff’s Complaint, the Defendant confessed judgment to

Plaintiff’s classification claim, agreeing to refund, with

interest, the contested duties and excise taxes. See USCIT R.

54(b). The court then dismissed, subject to a right to amend,
Court No. 09-00180 Page 2

Plaintiff’s claim for further declaratory relief.

Plaintiff has now filed an amended complaint, alleging a

continuing dispute, based on the Alcohol and Tobacco Tax and Trade

Bureau’s (“TTB”) classification of Plaintiff’s merchandise, prior

to the Defendant’s confession of judgment, and U. S. Customs and

Border Protection’s (“Customs”) implementation thereof. In further

response, the Defendant now moves to dismiss Plaintiff’s amended

complaint for lack of subject jurisdiction, claiming that its

confession of judgment has rendered Plaintiff’s complaint moot.

As explained below, the court concludes that the

responsibility for the administration and enforcement of the duties

and taxes at issue lies with Customs – not TTB. Therefore, it is

Customs’ decisions that are at issue. As Plaintiff has not

established that the statutory protest procedure, and the special

provisions for judicial review thereof, provide an inadequate

remedy for these Customs’ decisions, the court dismisses

Plaintiff’s Amended Complaint.

I. Background

Five entries1 of Plaintiff’s merchandise (imported through the

port of Memphis) are at issue.2 Specifically, in 2007, Plaintiff

1
The five entries listed in the Summons, are: D52-8900504-
8, D52-8900489-2, D52-0899860-4, D52-0899773-9, and D52-0899179-
9. (Def.’s Mot. for Entry of Confession of J. in Pl.’s Favor 1;
Pl.’s Summons 1, 3.)
2
Plaintiff imports and sells “authentic, traditional
foodstuffs and related products from India.”
Court No. 09-00180 Page 3

began importing “gutkha”, a tobacco product that “include[s]

crushed betel nuts, aromatic spices (viz., lime, saffron and

cardamom), menthol and/or catechu additives (optional) and crushed

tobacco leaf.” (Pl.’s First Am. Compl. (“Am. Compl.”) ¶¶ 26, 27.)

The specific gutkha product, contained in the five entries, “is a

grayish/beige substance consisting of dry rough chunks of betel nut

pieces and bits of tobacco leaf, coated with a powdered blend of

the spices.” (Id. ¶ 27.) According to Plaintiff, “[t]he tobacco

leaf is not finely cut, ground or powdered” and “[w]hen the gutkha

is rinsed in a fine mesh strainer, the spice coating is washed off,

and the remaining components, i.e. crushed betel nut and tobacco

leaf, are plainly visible and identifiable as such.” (Id.)

As a “smokeless tobacco,” Gutkha is subject both to import

tariffs in accordance with the Harmonized Tariff Schedule of the

United States (“HTSUS”) and to federal Internal Revenue excise

taxes in accordance with 26 U.S.C. § 5701(e)(2006). Title 26

defines “smokeless tobacco” as “any snuff or chewing tobacco.” 26

U.S.C. § 5702(m)(1).3 Although the tariff rate for either snuff or

chewing tobacco is the same, the excise tax for snuff is higher

than that for chewing tobacco. Customs is responsible for

collecting both the tariffs and the excise taxes. See 6 U.S.C. §

3
Title 26 also defines “chewing tobacco” as “any leaf
tobacco that is not intended to be smoked.” 26 U.S.C. §
5702(m)(3).
Court No. 09-00180 Page 4

215(1); 27 C.F.R. § 41.62; Treas. Order 100-16 (May 15, 2003).

Upon entry, Shah Bros. classified the subject gutkha as

“chewing tobacco” under HTSUS Subheading 2403.99.2030.4 (Am. Compl.

¶ 32.) According to the amended complaint, in November 2007, a TTB

investigator collected samples of the gutkha from Shah Bros.’

premises. The investigator then submitted these samples to the TTB

Regulations and Rulings division (“RRD”). (Id. ¶ 33.) In January

2008, Customs, in a CF 29 Notice of Action, changed the gutkha

tariff classification to HTSUS 2403.99.3070 “tobacco ... other.”5

(Id. ¶ 34.) It appears that this classification ultimately

resulted from a typographical error, as Customs in fact liquidated

the merchandise as “snuff,”6 under HTSUS 2403.99.2040.(Id. ¶ 34.)7

4
Classification as “chewing tobacco” under HTSUS Subheading
2403.99.2030 results in a tariff rate of $0.247 per kilogram in
addition to an Internal Revenue tax of $0.195 per pound.
See HTSUS 2403.99.20; 26 U.S.C. § 5701(e)(2).
According to the Defendant, Shah Bros. classified its gutkha
as “spice mixtures” as per HTSUS 0910.91.00. (Def.’s Mot. to
Dismiss 2.) As the court has not received any documentation or
rulings from the Defendant as to this matter, and as the
Defendant has not placed in dispute the content thereof, the
court assumes Plaintiff’s non-jurisdictional allegation to be
true for the purposes of this motion.
5
The Defendant asserts that Customs originally classified
the gutkha as “chewing tobacco.” (Def.’s Mot. to Dismiss 2.)
However, again, as the court has been unable to obtain any
documentation or rulings from the Defendant as to this matter,
the court assumes Plaintiff’s non-jurisdictional allegation to be
true for the purposes of this motion.
6
Classification as “snuff” under HTSUS Subheading
2403.99.2040 results in an identical tariff rate to chewing
tobacco; however, the Internal Revenue tax rises to $0.585 per
pound. See HTSUS 2403.99.20; 26 U.S.C. § 5701(e)(1). Title 26
Court No. 09-00180 Page 5

Subsequently, as a result of the reclassification and liquidation,

Customs issued a bill to Shah Bros. for $4,706.30. (Id. ¶ 35) Shah

Bros. protested this classification and assessment in Protest Nos.

2006-08-1005098 and 2006-08-1005169; in November 2008, Customs

denied Plaintiff’s Protests and Application for Further Review.

(Id. ¶¶ 40-41.)

Concurrent with Shah Bros.’ dispute with Customs, in February

2008, Shah Bros. also requested a ruling from RRD on the tax

classification of the subject merchandise. (Id. ¶ 36.) RRD issued

Priv. Ltr. Rul. 5200:2008R-122P,10 which classified Shah Bros.’

gutkha as “snuff.” (Id.) According to RRD, “upon visual

inspection,” the gutkha contained “no discernible leaf tobacco.”

(Id.) In its January/February reclassification mentioned above,

defines “snuff” as “any finely cut, ground, or powdered tobacco
that is not intended to be smoked.” 26 U.S.C. § 5702(m)(2).
7
Fifteen days later, Customs corrected its error and
reclassified the merchandise under HTSUS 2403.99.2040, although
the corrected CF 29 was not issued until July 9. (Am. Compl. ¶¶
35, 39.)
8
Protest No. 2006-08-100509 covered entry D52-8900504-8.
(See Pl.’s Summons 1.)
9
Protest No. 2006-08-100516 covered entries D52-8900489-2,
D52-0899860-4, D52-0899773-9, and D52-0899179-9. (See Pl.’s
Summons 3.)
10
Neither party has presented the court with a copy of this
document, nor has the court been able to obtain this document
from TTB. Thus, for the purposes of this motion, the court will
rely upon Plaintiff’s Amended Complaint as to the contents of
this ruling.
Court No. 09-00180 Page 6

Customs relied upon this RRD ruling. (Id. ¶ 41.)

Plaintiff then moved for reconsideration, requesting that TTB

perform the Alcohol Tobacco and Firearms (“ATF”) Procedure 87-4

(“ATF Proc. 87-4”) sieve test11 “in order to ascertain an objective

result” because (1) “certain products like gutkha can be difficult

to classify” and (2) “gutkha is universally marketed and consumed

as chewing tobacco” (Id. ¶ 37.) TTB denied Shah Bros.’ petition on

the ground that “no ‘fibrous’ leaf material was visible.” (Id. ¶

42.) According to the Plaintiff, TTB did not, either in its

rulings or in other communications, provide Plaintiff the results

of any sieve test on the subject gutkha, if such test was even

performed at all. (Id. ¶¶ 38, 42.)12

11
ATF Proc. 87-4 serves to “advise of the testing method
used by [ATF] in determining whether smokeless tobacco products
are chewing tobacco or snuff under 26 U.S.C. Secs. 5701 and
5702.” ATF Proc. 87-4 Sec. 1. Because “the statutory definitions
do not provide a clear delineation between what is a leaf tobacco
(chewing tobacco) and what is a finely cut tobacco (snuff),” ATF
instituted a sieve test to provide “object information” in order
to distinguish between the two. Id. Secs. 2.02, 2.04, 2.06.
However, the sieve test “is employed only when it is not readily
apparent from other available information (visual appearance,
method of manufacture, etc.) whether the product is chewing
tobacco or is snuff.” Id. Sec. 2.06.
12
In an about-face, on January 27, 2009, Customs issued
interpretive ruling HQ HO43318,therein holding that “gutkha is
‘chewing tobacco’ and is classified under HTS[US] 2403.99.2030.”
(Id. ¶ 44.) Further, Customs stated that “the definitions set
forth in the TTB regulations are for purposes of implementing
statutes other than the Customs laws and are not definitive as to
the classification of the merchandise.” (Id. (quotation marks
omitted).) But Customs revoked the ruling approximately sixty
days later. (Id. ¶ 45.) Informal communications with Customs,
according to Plaintiff, indicated that the ruling was revoked due
Court No. 09-00180 Page 7

In addition, other of Plaintiff’s gutkha entries, entered at

the same time as those at issue here, are currently subject to

seizure and judicial forfeiture, as well as a (recently dissolved)

criminal investigation by U.S. Immigration and Customs

Enforcement.13 14
(Am. Compl. ¶¶ 46-47.) Plaintiff alleges that

these entries are (a) identical to those at issue in this case and

(b) “aris[e] out of the same series of...transactions occurring

during the same time frame.” (Pl.’s Br. in Opp’n to Def.’s Mot. to

Dismiss (“Pl.’s Br.”) 12.) The Defendant has not challenged the

veracity of either of these two factual assertions.

Having paid all duties and taxes, Shah Bros. filed its Summons

and initial Complaint on April 29, 2009. As noted above, the

Defendant moved to confess judgment as to the entries at issue,

i.e., to reclassify the goods under HTSUS Subheading 2403.99.2030

as “chewing tobacco” and to reliquidate the entries accordingly,

refunding the excess Internal Revenue tax paid, together with

to the Shah Bros. dispute with TTB. (Id.)
13
Plaintiff claims only that the seizure and investigation
are both results of the erroneous classification of gutkha as
snuff. See Am. Compl. ¶¶ 46, 47. The court has no details
before it concerning the precise nature of the seizure and the
criminal investigation; however, this information is not
necessary for the court’s determination, except that the court
will assume as true Plaintiff’s allegation that Customs relied
upon the TTB classification of the imported goods when seizing
those goods and investigating Plaintiff.
14
Defendant has recently informed the court that the
criminal investigation has been dissolved. (Def.’s Resp. to Cts.’
Questions at 3.)
Court No. 09-00180 Page 8

interest. Plaintiff objected to this motion. Ultimately, the

court granted the Defendant’s motion and partial judgment was

issued for Shah Bros.

Remaining before the court is Plaintiff’s First Amended

Complaint with the court, asserting jurisdiction under 28 U.S.C. §

1581(a), (i)(1) and (i)(4) (2006). The amended complaint makes two

allegations. First, Shah Bros. challenges TTB’s “erroneous

administration and enforcement of the relevant statutes,

regulations and test procedures in determining the classification

of imported gutkha for tax assessment and revenue collection

purposes.” (Am. Compl. ¶ 5.) In this charge, Plaintiff claims that

“TTB and [Customs] have treated gutkha inconsistently in the past,”

(id. ¶ 50,) and have acted arbitrarily and contrary to law in

imposing “discernable leaf tobacco” and “fibrous leaf material”

requirements. (Id. ¶¶ 51, 54.) Again according to the complaint,

as a result of TTB’s actions, Shah Bros. “has [been] adversely

affected . . . because [TTB’s] decision has resulted in the

imposition of a higher excise tax, a seizure and a criminal

investigation.” (Id. ¶ 53.)

Second, Shah Bros. alleges that Customs “improperly performed

its . . . role[15] with respect to the determination of the tax

15
Plaintiff originally referred to Customs’ role here as
“ministerial.” (Id. ¶ 55.) However, in its opposition brief to
Defendant’s motion, Plaintiff states that “[t]o the extent
Defendant is troubled by the use of the word ‘ministerial’ in the
First Amended Complaint, with leave of the Court, Shah Bros. is
Court No. 09-00180 Page 9

status of gutkha and the exaction of additional tax because it

erroneously relied on TTB’s arbitrary classification of gutkha as

‘snuff.’” (Id. ¶ 55.) Plaintiff also references a more recent

summons and complaint that address Customs’ classification of other

“identical” entries. (Pl.’s Br. 12; Notice of Errata to Pl.’s Opp’n

to Def.’s Mot. to Dismiss 1-2 (informing the court that it has

filed a summons and complaint for Court. No. 10-00205 which covers

Protest No. 1601-10-100051).) Shah Bros. seeks declaratory and

equitable relief.

The Defendant asserts, that because of its confession of

judgment, Plaintiff has received complete relief in the form of

reclassification of the gutkha imports at issue. As a consequence,

the Defendant argues, Shah Bros. cannot assert any claim under

either section 1581(a) or section 1581(i). Further, because the

Defendant confessed judgment as to Plaintiff’s classification

claim, the Defendant argues that no case or controversy exists, and

therefore this matter is not justiciable under Article III of the

Constitution.

II. Analysis

Whether jurisdiction exists is a question of law. Sky Techs. LLC

v. SAP AG, 576 F.3d 1374, 1378 (Fed. Cir. 2009). Because the

Defendant has moved to dismiss Plaintiff’s action for lack of

jurisdiction, the court accepts as true all factual allegations

amenable to deleting this word.” (Pl.’s Br. 9 n.3.)
Court No. 09-00180 Page 10

asserted in Shah Bros.’ Amended Complaint. Warth v. Seldin, 422 U.S.

490, 501 (1975); Ritchie v. Simpson, 170 F.3d 1092, 1097 (Fed. Cir.

1999). Nonetheless, Plaintiff, “[the] party seeking the exercise of

jurisdiction in its favor[,] has the burden of establishing that []

jurisdiction exists.” Rocovich v. United States, 933 F.2d 991, 993

(Fed. Cir. 1991) (citing KVOS, Inc. v. Associated Press, 299 U.S.

269, 278 (1936)).16

Proper categorization of Plaintiff’s claims within the framework

of this Court’s statutory jurisdiction provides context, and is thus

“logically antecedent,” to discussion of Article III justiciability.

Cf. Ortiz v. Fibreboard Corp., 527 U.S. 815, 831 (1999) (addressing

class certification questions before turning to Article III

considerations, as “the class certification issues are[] . . .

‘logically antecedent’ to Article III concerns, and themselves

pertain to statutory standing, which may properly be treated before

16
As a consequence, “[i]f a motion to dismiss for lack of
subject matter jurisdiction[] . . . challenges the truth of the
jurisdictional facts alleged in the complaint, the [] court may
consider relevant evidence in order to resolve the factual
dispute.” Reynolds v. Army & Air Force Exchange Service, 846 F.2d
746, 747 (Fed. Cir. 1988). However it remains Plaintiff’s burden
to present evidence to establish jurisdiction. Thomson v.
Gaskill, 315 U.S. 442, 446 (1942) (“if a plaintiff’s allegations
of jurisdictional facts are challenged by the defendant, the
plaintiff bears the burden of supporting the allegations by
competent proof.” (citation omitted)); Ritchie, 170 F.3d at 1099
(“a [plaintiff’s] allegations alone do not conclusively establish
standing. If challenged, the facts alleged which establish
standing are part of the [plaintiff’s] case, and[] . . . must be
affirmatively proved.” (citation omitted)).
Court No. 09-00180 Page 11

Article III standing” (citations omitted)).

A. Direct Review of TTB’s Actions is Precluded in this Court

As explained below, the court does not have jurisdiction over

Plaintiff’s direct challenge seeking declaratory relief from TTB’s

actions.

i. Direct Review of TTB’s Alleged Decision Pursuant to
Section 1581(a) is Unavailable

Section 1581(a) applies only to protests of Customs’ decisions.

See 28 U.S.C. § 1581(a) (“The Court of International Trade shall have

exclusive jurisdiction of any civil action commenced to contest the

denial of a protest, in whole or in part, under [19 U.S.C. §

1515].”); 19 U.S.C. § 1515(a) (noting the protesting party may file

a civil action contesting the denial of protests under 19 U.S.C. §

1514); id. § 1514 (providing for protests of “decisions of the

Customs Service”). As such, TTB’s alleged decision is not directly

reviewable under this subsection.17

17
The court notes that Plaintiff’s challenges to Customs’
actions regarding the protests before the court were
appropriately brought under 28 U.S.C. § 1581(a), a valid protest
having been filed pursuant to 19 U.S.C. § 1514. As we explain
below, because Customs was not bound to follow TTB and, indeed,
TTB has no statutory or regulatory authority over imports of
tobacco products, see supra, Plaintiff was challenging Customs’
decision to classify the gutkha consistent with TTB’s analysis
and recommendations. Thus, Plaintiff contested “decisions” by
Customs, namely, Customs’ classification of, and the subsequent
tax rate assigned to, the subject merchandise. See Norsk Hydro
Can., Inc. v. United States, 472 F.3d 1347, 1355 (Fed. Cir. 2006)
(noting that courts must therefore “look to the true nature of
the action” in determining jurisdiction (quoting Williams v.
Court No. 09-00180 Page 12

ii. Direct Review Pursuant to Section 1581(i) is Unavailable

In addition to 1581(a), in seeking review of TTB’s actions,

Plaintiff attempts to invoke the court’s “residual” jurisdiction

under 28 U.S.C. § 1581(i)(4). 1581(i) provides:

In addition to the jurisdiction conferred upon the
Court of International Trade by subsections (a)-(h) of this
section and subject to the exception set forth in
subsection (j) of this section, the Court of International
Trade shall have exclusive jurisdiction of any civil action
commenced against the United States, its agencies, or its
officers, that arises out of any law of the United States
providing for--

(1) revenue from imports or tonnage;

(2) tariffs, duties, fees, or other taxes on the
importation of merchandise for reasons other than the
raising of revenue;

(3) embargoes or other quantitative restrictions on
the importation of merchandise for reasons other than the
protection of the public health or safety; or

(4) administration and enforcement with respect to the
matters referred to in paragraphs (1)-(3) of this
subsection and subsections (a)-(h) of this section.

Id. Plaintiff asserts that its action challenging TTB’s

Sec’y of Navy, 787 F.2d 552, 557 (Fed. Cir. 1986)))(quotation
marks omitted).
The court also notes that Customs’ process in classifying
merchandise is challenged in a protest, and reviewed here under
subsection 1581(a). See Autoalliance Int’l, Inc. v. United
States, 29 CIT 1082, 1093, 398 F. Supp. 2d 1326, 1336 (2005).
Cf. Luxury Int’l, Inc. v. United States, 23 CIT 694, 697, 69 F.
Supp. 2d 1364, 1368 (1999) (“the gravamen of the allegations
before the Court and the relief sought by [Plaintiff] concern
‘the regulations promulgated by Customs and their administration
and enforcement by that agency.’ The Court is empowered to
determine whether Customs acted properly in enforcing the
regulations pertaining to the exclusion of the LCD games. See 28
U.S.C. § 1581(a)”) (citations omitted).
Court No. 09-00180 Page 13

classification of Plaintiff’s merchandise “arises out of” a law that

provides for TTB’s “administration and enforcement” of a law that

involves “revenue from imports,” i.e., 26 U.S.C. §§ 5701, 5702.18

The Defendant states that the court cannot review actions taken

by TTB, because “regardless of TTB’s ruling policy, CBP is the entity

ultimately responsible for classifying merchandise and assessing

excise tax, although [CBP] may consider TTB’s rulings in those

determinations.” (Def.’s Mot. to Dismiss 7.) As such, “CBP’s

reliance upon TTB’s rulings would naturally be a part of the inquiry

in a typical protest case arising under section 1581(a), and

therefore unreviewable under section 1581(i).” (Id. 7-8.)19

Plaintiff responds that, because the excise taxes at issue “are

internal revenue [] taxes[,] TTB is the agency charged with

administering the statute” and “shares responsibility with Customs

for assessing and collecting the higher tax rate on gutkha.” (Pl’s

Br. 9 (citing Ammex, Inc. v. United States, 419 F.3d 1342, 1346 (Fed.

Cir. 2005)).20

18
Although “district courts have original jurisdiction of
any civil action arising under any Act of Congress providing for
internal revenue, or revenue from imports and tonnage,” such
jurisdiction “except[s] matters within the jurisdiction of the
Court of International Trade”, 28 U.S.C. § 1340, as will be
discussed below.
19
The court reads the Defendant’s statements as arguing that
TTB’s decision does not qualify as “administration or
enforcement.”
20
Plaintiff also insists that its reading of TTB’s
involvement in assessment of the instant excise taxes “does not
Court No. 09-00180 Page 14

As a matter of law, however, the court cannot agree with

Plaintiff’s characterization of the current relationship between

Customs and TTB in the administration of the excise tax on tobacco

imports. Rather, it is Customs, not TTB, that both “administers” and

“enforces” the excise taxes imposed on tobacco imports. This is

because authority as to assessment of excise taxes, and the

classification associated with this assessment, lies with Customs and

no longer with the Treasury Department. Specifically, Treasury

Department Order 100-16 provides:

Consistent with the transfer of the functions,
personnel, assets, and liabilities of the United States
Customs Service to the Department of Homeland Security[21]
as set forth in [6 U.S.C. § 203(1)], there is hereby
delegated to the Secretary of Homeland Security the
authority related to the Customs revenue functions vested
in the Secretary of the Treasury as set forth in [6 U.S.C.
§§ 212, 215] . . . .

Treas. Dep’t Order No. 100-16 ¶ 1, 68 Fed. Reg. 28,322 (May 23, 2003

(emphasis added)). This delegation is not limited in any way that

is relevant here.22 Section 212 does provide that, notwithstanding

run afoul of the Homeland Security Act, 6 U.S.C. [§ 215].” (Pl.’s
Br. 9).

21
CBP -- formerly the U.S. Customs service, a part of the
Treasury Department -- is now organized as a component of the
Department of Homeland Security pursuant to the Homeland Security
Act of 2002, Pub. L. No. 107-296, § 403(1), 2002 U.S.C.C.A.N.
(116 Stat.) 2137, 2178, and the Reorganization Plan Modification
for the Department of Homeland Security, H.R. Doc. No. 108-32,
p.4 (Feb. 4, 2003).
22
Moreover:
Court No. 09-00180 Page 15

the broad statutory delegation of Treasury Department authority to

the Department of Homeland Security provided in section 203:

authority related to Customs revenue functions that was
vested in the Secretary of the Treasury by law before the
effective date of this chapter under those provisions of
law set forth in paragraph (2)[23] shall not be transferred
to the Secretary [of Homeland Security] by reason of this
chapter . . . .

6 U.S.C. § 212(a)(1). However, important to the case at hand, “on

and after the effective date of this chapter, the Secretary of the

Treasury may delegate any such authority to the Secretary [of

Homeland Security] at the discretion of the Secretary of the

Treasury.” Id. As previously mentioned, the Treasury Department

delegated authority to Customs as to “Customs revenue functions.”

Section 215 defines “Customs revenue functions” as, among other

things, “[a]ssessing and collecting customs duties[,] . . . excise

To the extent this Delegation of Authority requires any
revocation of any [] prior Order or Directive of the
Secretary of the Treasury, such prior Order or
Directive is hereby revoked.

Id. ¶ 4.

The delegation is subject to certain exceptions that are not
relevant here. Treas. Dep’t Order No. 100-16 ¶ 1(a)(i)-(ii), 68
Fed. Reg. 28,322 (May 23, 2003). Express exceptions listed in
the Order imply that the delegation to Customs, of the “authority
related to the Customs revenue functions vested in the Secretary
of the Treasury,” is otherwise comprehensive. See Andrus v.
Glover Constr. Co., 446 U.S. 608, 616-617 (1980); 2A Norman J.
Singer, Sutherland Statutory Construction § 47:11 (7th ed. 2010).
23
Provisions referred to in paragraph (2) include “any []
provision of law vesting customs revenue functions in the
Secretary of the Treasury.” 6 U.S.C. § 212(a)(2).
Court No. 09-00180 Page 16
taxes, fees, and penalties due on imported merchandise, including

classifying and valuing merchandise for purposes of such assessment.”

Id. § 215(1) (emphasis added). Thus, as a Bureau under the Treasury

Department, TTB no longer has authority as to these Customs revenue

functions involving imported goods. Rather, that authority lies

directly with Customs.

Plaintiff provides no support for its position that TTB “is

charged with administering” the excise tax and has not pointed to a

single “law” that provides for TTB’s administration of the excise tax

as to imports. Nor could it. As part of the Treasury Department,

TTB originally was granted authority to administer 26 U.S.C. §§ 5701

and 5702. See 6 U.S.C. § 212(a)(1); id. § 531(c)(2), (d). See

generally 27 C.F.R. §§ 40.1-46.274. See also Treas. Dep’t Order 120-

01 ¶ 4 [full cite - IRS bulletin] (Jan. 24, 2003). However, TTB’s

authority extends only as far as the “duties of the [Treasury]

Secretary.” See Treas. Dep’t Order 120-01 ¶ 3; TTB Order O 1135.41A

¶ 3 (Dec. 3, 2008). As noted above, the Treasury Secretary’s

authority as to excise taxes on imported goods is delegable, and,

indeed, has been delegated to Customs. Consequently, TTB’s

“administration” of 26 U.S.C. §§ 5701 and 5702 is limited to

domestically-manufactured tobacco products. Plaintiff’s assertion

that Customs and TTB “share[] responsibility . . . for assessing and

collecting the higher tax rate on gutkha” (Pl.’s Br. 9) is therefore

without statutory or regulatory support. Only Customs now
Court No. 09-00180 Page 17
“administers” laws associated with such taxes. Treas. Dep’t Order No.

100-16 ¶ 1; 6 U.S.C. § 215(1).24

Plaintiff also attempts to argue that TTB administers the tax

because it “assesses” the tax. In support, Plaintiff references

Ammex as “noting that the [Internal Revenue Service (“IRS”)] assesses

import taxes on fuels.” (Pl.’s Br. 9 (emphasis omitted);) Ammex, 419

F.3d at 1346. Plaintiff analogizes Ammex’s conclusion to the excise

taxes in this case. But the cause of action in Ammex occurred in

1994, previous to the Treasury Department’s delegation to Customs.

Moreover, “assessment,” in the context of taxation and customs, is

defined as “the official recording of liability that triggers levy

and collection efforts” Ammex, 419 F.3d at 1345 (quoting Hibbs v.

Winn, 542 U.S. 88, 89 (2004), or the “recordation of the calculated

amount of liability.” Id. That is, “assessment determines the

specific amount of liability,” id., and involves a calculation of the

actual tax amount owed by the payee. See id. As the entity with full

“authority” over Customs revenue functions, Customs “assesses” excise

taxes on imports and “classif[ies] and valu[es] merchandise for

purposes of . . . assessment.” 6 U.S.C. § 215(1). Customs,

24
For the same reasons, Plaintiff’s statement -- that its
reading of the relationship between Customs and TTB in
administering the excise tax at issue “does not run afoul of
Homeland Security Act” (Pl.’s Br. 9) -- is unpersuasive. Perhaps
Plaintiff’s reading would be consistent with the original,
unaltered language of the Act, but, again, pursuant to and in the
context of the same Act, authority over assessment and collection
of the excise tax on imported tobacco has been delegated to
Customs.
Court No. 09-00180 Page 18
therefore, as the lone “assessor,” calculates and records the amount

of excise taxes due on imported goods and, accordingly, “triggers”

collection of the excise tax at issue; these actions analogize to

“administration” of the tax. Thus Ammex does not support Plaintiff’s

position, and Shah Bros. cannot assert jurisdiction under

1581(i)(4).25

Plaintiff also asserts jurisdiction pursuant to 1581(i)(1),

claiming that its on-going dispute with Customs and TTB arises out

of a law providing for revenue from imports, i.e., the imposition of

excise taxes on Shah Bros.’ goods. Further, Plaintiff complains that

it must continually contest each classification made by Customs for

each of its entries, and must expend monetary and other resources

thereon. Plaintiff argues that subsection 1581(i) is available

because other sections of the jurisdictional statute -- here,

subsection 1581(a)-- are “manifestly inadequate.” See Hartford Fire

Ins. Co. v. United States, 544 F.3d 1289, 1292 (Fed. Cir. 2008)

However, because Customs has the authority to classify the goods at

issue, protest of the classification before Customs and review here

25
Plaintiff also points to the language of the Protest
decision noting that Customs, in denying Plaintiff’s protest,
gave the explanation that the “classification [was] based on
[the] ruling issued by the TTB,” the “governing” entity involved.
(Ex. B to Pl.’s Br. at 1.) However, given the plain language of
the statute and Treasury regulation, the appropriate issue is
whether Customs properly followed a TTB decision in light of the
delegation. (Accord Def.’s Reply in Supp. of Its Mot. to Dismiss
(“Def.’s Reply”) 7.) The reviewable action is Customs’, not
TTB’s.
Court No. 09-00180 Page 19
is not an inadequate remedy, as demonstrated by Defendant’s

confession of judgment.26 27

The fact that there may be some delay associated with the

protest scheme does not justify application of subsection 1581(i).

Int’l Customs Products, Inc. v. United States, 467 F.3d 1324, 1327

(Fed. Cir. 2006)(“[D]elays inherent in the statutory process do not

render it manifestly inadequate” (citing Am. Air Parcel Forwarding

Co. v. United States, 718 F.2d 1546, 1551 (Fed. Cir. 1983)

(“[Customs’] regulations have not built unconscionable delay into the

protest procedure”)). But see United States Cane Sugar Refiners

Assoc. v. Block, 69 C.C.P.A. 172, 175 (1982) (Special circumstances

of the subsection 1581(a) review warranted subsection 1581(i)

jurisdiction: “We are persuaded that in this case, involving the

potential for immediate injury and irreparable harm to an industry

and a substantial impact on the national economy, the delay inherent

26
See Shinyei Corp. of America v. United States, 355 F.3d
1297, 1304-1305 (Fed. Cir. 2004). See also Norcal/Crosetti Foods,
Inc. v. United States, 963 F.2d 356, 359 (Fed. Cir. 1992).
27
Compare United States v. United States Shoe Corp., 523
U.S. 360, 363, 365 (1998) (although petitioner filed a protest,
jurisdiction was available under section 1581(i) because Customs
“protests are not pivotal” when “Customs performs no active role,
[but] merely passively collects HMT payments.”); Gilda Indus. v.
United States, 446 F.3d 1271, 1276 (Fed. Cir. 2006) (“Gilda does
not challenge any decision by Customs. The duty to which Gilda
objects was imposed pursuant to a decision of the Trade
Representative. Because Customs has no authority to overturn or
disregard the Trade Representative's decision, Customs would have
no authority to grant relief in a protest action challenging the
imposition of the duty.”).
Court No. 09-00180 Page 20
in proceeding under § 1581(a) makes relief under that provision

manifestly inadequate and, accordingly, the court has jurisdiction

in this case under § 1581(i).”); Am. Ass’n of Exps. & Imps. v. United

States, 751 F.2d 1239, 1245 (Fed. Cir. 1985) (“The objective of the

addition of § 1581(i) was to make it clear that . . . prospective

importers challenging Customs Service regulations imposing import

restrictions need not attempt to import merchandise, file a protest

and then contest the administrative denial of the protest in the CIT

under § 1581(a).”)

Moreover, as issue preclusion does not apply to customs

classification cases, and each entry or set of entries contained in

a summons is treated de novo in the ensuing litigation before the

court as to those entries, any declaration by the court would have

limited effect as to future entries. See United States v. Stone &

Downer Co., 274 U.S. 225, 233-34 (1927) (“[T]he finding of fact and

the construction of the statute and classification thereunder as

against an importer [is] not res judicata in respect of a subsequent

importation involving the same issue of fact and the same question

of law.”); Avenues in Leather, Inc. v. United States, 317 F.3d 1399,

1403 (Fed. Cir. 2003) (“Under the public policy adopted by the

Supreme Court in Stone & Downer, each new entry is a new

classification cause of action, giving the importer a new day in

court.”); Schott Optical Glass v. United States, 750 F.2d 62, 64

(Fed. Cir. 1984) (“The opportunity to relitigate applies to questions
Court No. 09-00180 Page 21
of construction of the classifying statute as well as to questions

of fact as to the merchandise.” (citation omitted)).28

Plaintiff also alleges that the court has jurisdiction to review

what Plaintiff characterizes as TTB’s “final agency action” Priv.

Ltr. Rul. 5200:2008R-122P “because Plaintiff otherwise would be

deprived of a remedy for the unlawful actions against it,” (Am.

Compl. ¶¶ 8, 56,) and “because it has been adversely affected and

suffered economic injury as a direct result of the actions of TTB and

[Customs] within the meaning of the Administrative Procedures Act,

5 U.S.C. § 702.” (Id. ¶ 11.)

The court disagrees. The Plaintiff can use neither 1581(i), nor

the APA, to circumvent the appropriate statutory channels for

bringing its claim. See e.g., Bowen v. Mass., 487 U.S. 879, 903

(1988) (“Congress did not intend the general grant of review in the

APA to duplicate existing procedures for review of agency action[,]

[and] . . . § 704 does not provide additional judicial remedies in

situations where the Congress has provided special and adequate

review procedures.” (quotation marks, footnotes and citations

omitted)); Abitibi-Consol. Inc. v. United States, 30 CIT 714, 718,

437 F. Supp. 2d 1352, 1357 (2006) (noting that Section 704 of the APA

28
Though stare decisis does apply in classification actions,
see Avenues in Leather, Inc. v. United States, 423 F.3d 1330
(Fed. Cir. 2005); DaimlerChrysler Corp. v. United States, 442
F.3d 1313, 1321 (Fed. Cir. 2006), this does not alter the fact
that “each new entry is a new classification cause of action.”
Avenues in Leather, 317 F.3d at 1403.
Court No. 09-00180 Page 22
“is mirrored in the court’s residual jurisdiction case law, which

. . . prescribes that section 1581(i) supplies jurisdiction only if

a remedy under another section of 1581 is unavailable or manifestly

inadequate”).29

Plaintiff notes, correctly, that this Court does not have

jurisdiction over seizures and forfeitures themselves, even when

performed by Customs. 28 U.S.C. §§ 1356 (“The district courts shall

have original jurisdiction, exclusive of the courts of the States,

of any seizure under any law of the United States on land or upon

waters not within admiralty and maritime jurisdiction, except matters

within the jurisdiction of the Court of International Trade under [28

U.S.C. § 158230]”), 1355 (“ The district courts shall have original

jurisdiction, exclusive of the courts of the States, of any action

or proceeding for the recovery or enforcement of any fine, penalty,

or forfeiture, pecuniary or otherwise, incurred under any Act of

Congress, except matters within the jurisdiction of the Court of

International Trade under [28 U.S.C. § 1582]”). See also Hansen v.

United States, 1 Cust. Ct. 752 (1938); Sheldon & Co. v. United

States, 8 Ct. Cust. 215 (1917); In re Chichester, 48 F. 281 (1891).

29
Plaintiff also raises the specter of Customs’ evasion of
review of its own improper administration and enforcement of its
classification and testing procedures by a repeated confession of
judgment in Court. No. 10-00205. It is sufficient to note that
this scenario is not presently before the court.
30
28 U.S.C. § 1582 involves certain actions commenced by the
United States to recover civil penalties, bond, or customs
duties. As such, section 1582 is not applicable here.
Court No. 09-00180 Page 23
Nor does the Court have jurisdiction over criminal prosecutions. 18

U.S.C. § 3231 (“The district courts of the United States shall have

original jurisdiction, exclusive of the courts of the States, of all

offenses against the laws of the United States.”).

However, any actual Customs “decision” underlying such

seizure, forfeiture, or criminal prosecution is protestable.31 The

fact that Customs, seizes and forfeits the classified imports

31
Said protest “shall be filed with [Customs] within 180
days after but not before . . . (A) date of liquidation or
reliquidation, or . . . (B) in circumstances where subparagraph
(A) is inapplicable, the date of the decision as to which protest
is made.” 19 U.S.C. § 1514(c)(3)(A)-(B)).
Case law indicates that review of some classifications may
only be had following the denial of a protest and liquidation and
payment of duties. See United States v. Boe, 64 CCPA 11, C.A.D.
1177, 543 F.2d 151, 156 (1976) (“[T]he dispute between the
parties concerns classification of the merchandise.
Classification is but one step in the liquidation process,
appraisement being another. Hence the subject civil action
directly involves the liquidation procedure. Such actions are
governed by § 1514(b)(2)(A) [(now 19 U.S.C. § 1514(c)(3)(A))].
Liquidation not having occurred, importer’s protests were
premature.”). See also 28 U.S.C. § 2637(a) (“A civil action
contesting the denial of a protest under [19 U.S.C. § 1515] may
be commenced in the Court of International Trade only if all
liquidated duties, charges, or exactions have been paid at the
time the action is commenced, except that a surety's obligation
to pay such liquidated duties, charges, or exactions is limited
to the sum of any bond related to each entry included in the
denied protest.”). The Boe court refused to apply 19 U.S.C. §
1514(b)(2)(B) - the predecessor to the current 19 U.S.C. §
1514(c)(3)(B) - in a classification action. However,
significantly, in Boe, the plaintiff was seeking “prompt and
specific liquidation” under its claimed classification. Boe, 64
CCPA at 156. In the case before the court, Plaintiff is seeking
to avoid criminal prosecution and judicial forfeiture. In
addition, Plaintiff has already filed another complaint
concerning additional entries it believes were classified
incorrectly. Def’s Resp. to Questions at 6.
Court No. 09-00180 Page 24
neither deprives a plaintiff of the protest procedure under 19

U.S.C. § 1514(a)(2) nor divests this Court of jurisdiction over

the protest pursuant to 28 U.S.C. § 1581(a). Further, Cf. Campus

Sportswear Co. v. United States, 621 F. Supp. 365 (E.D. Mo. 1985)

(Court of International Trade maintains jurisdiction to evaluate

Customs’ classification of goods prior to imposition of penalty,

though the imposition of the penalty itself falls under the

jurisdiction of the district court). Thus, regardless of the

seizure action, Plaintiff’s remedy is still to protest any

Customs’ decision.

The special statutory procedures for protest and review

specifically contemplate this relationship. Under 19 U.S.C. §

1499, Customs may detain, seize and forfeit merchandise. See 19

U.S.C. § 1499(c)(1),(4). However, if Customs fails “to make a

final determination with respect to the admissibility of detained

merchandise within 30 days after the merchandise has been presented

for customs examination, or such longer period if specifically

authorized by law, [it] shall be treated as a decision of the

Customs Service to exclude the merchandise for purposes of sections

1514(a)(4) of this title [and thus subject to protest and judicial

review].” See 19 U.S.C. § 1499(c)(5)(A). Moreover, as may be

relevant to the dispute between the parties here, notice of testing

procedures and results are specifically required. See 19 U.S.C. §

1499(c)(3)(A).
Court No. 09-00180 Page 25
Consequently, when considered in light of the full array of

remedies available under 28 U.S.C. § 1581(a), the court cannot find

the protest review procedures inadequate here.

III. Conclusion

For the foregoing reasons, the court hereby ORDERS that

Defendant’s motion to dismiss for lack of jurisdiction is GRANTED.

Judgment will be entered accordingly.

/s/ Donald C. Pogue
Donald C. Pogue, Judge

Dated: October 6, 2010
New York, New York