Slip Op. 11-84
UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
:
NATIONAL PRESTO INDUSTRIES, :
INC., :
: Before: Nicholas Tsoucalas,
Plaintiff, : Senior Judge
:
v. :
:
UNITED STATES, :
: Court No. 07-00245
Defendant. :
______________________________:
[Granting Plaintiff’s Motion for Summary Judgment. Denying
Defendant’s Cross Motion for Summary Judgment.]
Dated: July 18, 2011
Stein Shostak Shostak Pollack & O’Hara, LLP, (S. Richard
Shostak and Mandy A. Edwards), for National Presto Industries,
Inc., Plaintiff.
Tony West, Assistant Attorney General; Barbara S. Williams,
Attorney-in-Charge, International Trade Field Office, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice,
(Alexander J. Vanderweide); Office of the Assistant Chief Counsel,
International Trade Litigation, U.S. Customs and Border Protection,
Beth Brotman, Of Counsel, for United States, Defendant.
OPINION
Tsoucalas, Senior Judge: Plaintiff, National Presto
Industries, Inc. (“Presto”) brings this action to contest the
classification of its merchandise under the Harmonized Tariff
Schedule of the United States (“HTSUS”) 8479 arguing that the goods
Court No. 07-00245 Page 2
should be classified under HTSUS 8441. The United States Bureau of
Customs and Border Protection (the “Government” or “CBP”), however,
contends that the subject goods were correctly classified under
HTSUS 8479. This action is currently before the Court on cross
motions for summary judgment pursuant to Unites States Court of
International Trade (“USCIT”) Rule 56. Jurisdiction is pursuant to
28 U.S.C. § 1581(a) (2006). For the reasons set forth below, the
Court finds that no genuine issues of material fact remain and
Presto is entitled to judgment as a matter of law.
BACKGROUND
The Subject Goods and Procedural History
The merchandise, a diaper making machine, was imported into
the United States on or about May 13, 2005 at Newark, NJ with Entry
No. 112-9650819-5. Statement of Material Facts as to Which the
Moving Party Contends There is No Genuine Issue to be Tried
(“Uncontested Facts”) at 1.1 Upon liquidation on July 7, 2006, CBP
classified the merchandise under HTSUS 8479.89.9897 which provides
as follows:
8479 Machines and mechanical appliances having individual
functions, not specified or included elsewhere in this
1
All references to Uncontested Facts are facts to which
both parties agree.
Court No. 07-00245 Page 3
chapter; parts thereof (con.):
Other machines and mechanical appliances (con.):
* * *
8479.89 Other (con.):
* * *
8479.89.98 Other...............................2.5%
* * *
8479.89.9897 Other
In October, 2006 Presto filed a protest asserting that the
proper classification of the merchandise is HTSUS 8441.80.0000,
which provides:
8441 Other machinery for making up paper pulp,
paper or paperboard, including cutting
machines of all kinds, and parts thereof:
* * *
8441.80.0000 Other machinery ....................Free
After their protest was denied on January 12, 2007, Presto
filed a timely summons and complaint. All liquidated duties,
charges and exactions for the subject entry were paid prior to the
commencement of this action. See Uncontested Facts at 2.
Court No. 07-00245 Page 4
LEGAL STANDARD
Pursuant to USCIT Rule 56, summary judgment is appropriate
when there is no genuine issue as to any material fact and the
moving party is entitled to judgment as a matter of law. See
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In classification
cases, summary judgment is appropriate when “there is no genuine
dispute as to the underlying factual issue of exactly what the
merchandise is.” Ero Indus., Inc. v. United States, 24 CIT 1175,
1179, 118 F. Supp. 2d 1356, 1359 (2000).
The Court reviews classification cases de novo, pursuant to 28
U.S.C. § 2640(a). It is ultimately the Court’s duty to determine
the correct classification. See Jarvis Clark Co. v. United States,
733 F.2d 873, 876 (Fed. Cir. 1984). In order to do so, the Court
applies a two-step analysis whereby it (1) ascertains the proper
meaning of the specific terms in the tariff provisions; and then
(2) determines whether the merchandise comes within the description
of such terms as construed. See Global Sourcing Group v. United
States, 33 CIT __, __, 611 F. Supp. 2d 1367, 1371 (2009); Pillowtex
Corp. v. United States, 171 F.3d 1370, 1373 (Fed. Cir. 1999). The
first step of the analysis is a question of law and the second is
a question of fact. See Pillowtex Corp., 171 F.3d at 1373.
Court No. 07-00245 Page 5
“It is a general rule of statutory construction that where
Congress has clearly stated its intent in the language of a
statute, a court should not inquire further into the meaning of the
statute.” Id. “Absent contrary legislative intent, HTSUS terms
are construed according to their common and commercial meanings,
which are presumed to be the same.” Phototenetics, Inc. v. United
States, 33 CIT __, __, 659 F. Supp. 2d 1317, 1322 (2009) (quoting
Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed. Cir.
1989)). The Court may also rely on its “own understanding of the
terms used” and “consult lexicographic and scientific authorities,
dictionaries, and other reliable information sources.”
Phototenetics, 33 CIT at __, 659 F. Supp. 2d at 1322 (quoting
Baxter Healthcare Corp. v. United States, 182 F.3d 1333, 1337–38
(Fed. Cir. 1999)).
Here, the parties have agreed that the merchandise is an adult
diaper making machine, Model AT-300. See Uncontested Facts at 2.
Therefore, the only remaining question is the proper scope of the
relevant classification provisions of the HTSUS, which is a
question of law. Accordingly, a grant of summary judgment for
either side, based on the pleadings and supporting documents, is
appropriate.
Court No. 07-00245 Page 6
ANALYSIS
A classification analysis utilizes the General Rules of
Interpretation (“GRI”) and commences with GRI 1. Len-Ron
Manufacturing Co., Inc. v. United States, 334 F. 3d 1304, 1308
(Fed. Cir. 2003). GRI 1 provides that classification shall be
“according to the terms of the headings and any relative section or
chapter notes . . . .” Gen. R. Interp. 1, HTSUS. As such, the
terms of the headings and any relative section or chapter notes are
paramount. This classification analysis necessarily begins by
examining the separate language of the headings of HTSUS 8441 and
HTSUS 8479 to determine whether the subject goods are prima facie
classified under either.
Presto contends that the subject merchandise is classifiable
under HTSUS 8441 because it produces articles of paper pulp and
that the Government has previously determined that diapers are
classified as a paper pulp article. As such, relying on what the
diaper machine produces, Presto argues that HTSUS 8441 specifically
describes the subject merchandise. Presto also notes that HTSUS
8479 is a basket provision and since HTSUS 8441 more accurately
describes the subject merchandise, there is no reason to resort to
the basket provision. See Plaintiff’s Memorandum of Points and
Authorities in Support of Plaintiff’s Motion for Summary Judgment
at 7-8.
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The Government, however, contends that the classification of
the diapers should not determine the classification of the machine
itself. The Court agrees with Presto that there is utility in
scrutinizing what kind of articles the subject merchandise produces
because the heading of HTSUS 8441 specifically instructs the reader
to inquire. That provision identifies machinery falling under that
heading as machinery “for making up paper pulp, paper or paperboard
. . . .” HTSUS 8441.
Moreover, the Explanatory Notes (“ENs”) of HTSUS 8441
specifically state that “[t]his heading covers all machinery used
for cutting, and . . . those for the manufacture of various made up
articles.” Explanatory Notes, Section XVI, Chapter 84.41. Since
the diapers could be “made up articles” within the meaning of this
EN, inquiry into whether or not these diapers are paper pulp
products is not unreasonable.
Presto cites custom decisions where diapers were classified as
paper pulp products because it was the paper pulp which gave the
diapers their essential character despite their containing
materials other than paper pulp. “The role of the paper pulp, in
contrast to the other components, . . . is fundamental to the
functioning of the merchandise. . . . [T]he diaper/training pants
cannot function without the paper pulp.” HQ 965891 (Nov. 6, 2002).
Court No. 07-00245 Page 8
In addition, Presto also refers to the North American Industry
Classification System where disposable diapers are defined within
the paper manufacturing chapter stating that there are U.S.
industries who are “primarily engaged in converting purchased
sanitary paper stock . . . into sanitary paper products, such as .
. . disposable diapers . . . .” Executive Office of the President,
Office of Mgmt. & Budget, North American Industry Classification
System, United States, 2002 p. 293 (2002).
Lastly, the ENs of HTSUS 8441 make clear that the machines
classified thereunder include machines for making up paper pulp for
“various made up articles.” Explanatory Notes, Section XVI,
Chapter 84.41. “Although the ENs are not legally binding or
dispositive, they may be consulted for guidance and are generally
indicative of the proper interpretation of the various HTSUS
provisions.” Avenues In Leather, Inc. v. United States, 423 F.3d
1326, 1334 (Fed. Cir 2005). It is appropriate to rely on this EN,
especially since the text is unambiguous and there are no
persuasive reasons to disregard it. Drygel, Inc. v. United States,
541 F.3d 1129, 1134 (Fed. Cir. 2008). Since the subject
merchandise produces articles made up of paper pulp, it follows
that the subject merchandise is prima facie classifiable under
HTSUS 8441.80.0000.
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The Government contends the subject merchandise is more aptly
classified under HTSUS 8479 because no other heading covers it by
reference. They suggest that paper pulp is only part of the diaper
composition and, therefore, not controlling of the subject
merchandise’ classification. In support of its position, the
Government cites a 1995 customs ruling on the classification of a
sanitary napkin making machine which classified the merchandise
under HTSUS 8479.89.95. For the following reasons, that ruling is
not applicable here. First, the ruling summarily dismisses,
without any legal analysis, the prima facie classification of the
merchandise under HTSUS stating that “machines which make up
plastic and nonwovens, in addition to pulp, paper or paperboard,
are not classifiable under heading 8441, HTSUS.” HQ 957161 (April
24, 1995). Second, the ruling ignores the fact that HTSUS 8441
specifically requires an inquiry into the type of product being
manufactured. Third, unlike here where the parties agree that the
principal function of the subject merchandise is to produce adult
diapers, this ruling stated “[they] are unable to determine the
function which is considered the principal function of the
machine.” Id. Lastly, the ENs to HTSUS 8479 require
classification therein be limited to merchandise which can’t be
classified under any other heading which references their use,
their method of functioning or the industry in which it operates.
See Explanatory Notes, Section XVI, Chapter 84.79. That is not the
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case herein where HTSUS 8441 does reference use and the industry in
which it is employed.
HTSUS 8441.80.0000 more specifically provides for the subject
merchandise classification than the basket provision of HTSUS
8479.89.9897. The Government’s position does not take into account
that: “A machine which is used for more than one purpose is, for
the purposes of classification, to be treated as if its principal
purpose were its sole purpose.” HTSUS, Chapter 84, Note 7; see
also Fuji America Corp. v. United States, 519 F.3d 1355, 1358 (Fed.
Cir. 2008).
Since both parties agree that the product produced by the
subject merchandise is an adult diaper and diapers have been
consistently found to be paper pulp products, it follows that the
subject merchandise, which makes this article, is other machinery
for the “manufacture of various made up articles.” As such, under
a GRI 1 analysis, the subject merchandise is prima facie
classifiable under HTSUS 8441.80.0000. The Government’s contention
that the subject merchandise should be classified under the basket
provision of HTSUS 8479.89.9897 is not persuasive. Those
provisions are “intended as a broad catch-all to encompass the
classification of articles for which there is no more specifically
applicable subheading.” EM Industries, Inc. v. United States, 22
Court No. 07-00245 Page 11
CIT 156, 165, 999 F. Supp. 1473, 1480 (1998). HTSUS 8479,
specifically states that merchandise can only be classified within
that basket provision if “not specified or included elsewhere in
this chapter.” Since the subject merchandise is prima facie
classifiable under HTSUS 8441, it cannot be simultaneously
classifiable under HTSUS 8479.
CONCLUSION
Therefore, HTSUS 8441.80.0000 prevails over HTSUS 8479.89.9897
and is the appropriate classification for the subject goods. For
the foregoing reasons, Presto’s Motion for Summary Judgment is
granted and the Government’s Cross Motion for Summary Judgment is
denied. The merchandise at issue is properly classified under
HTSUS 8441.80.0000. Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: July 18, 2011
New York, New York