Slip Op. 07-62
UNITED STATES COURT OF INTERNATIONAL TRADE
:
TRADEWIND FARMS, INC., :
:
Plaintiff, :
: Before: Richard K. Eaton, Judge
v. :
: Court No. 04-00642
UNITED STATES, :
:
Defendant. :
:
OPINION
[Plaintiff’s motion for summary judgment denied. Defendant’s
cross-motion for summary judgment granted. Case dismissed.]
Dated: April 30, 2007
Hume & Associates, PC (Robert T. Hume and Akil A. Vohra), for
plaintiff.
Peter D. Keisler, Assistant Attorney General; Barbara S.
Williams, Attorney-in-Charge, International Trade Field Office,
Commercial Litigation Branch, Civil Division, United States
Department of Justice (Edward F. Kenny); Beth C. Brotman, Office
of the Assistant Chief Counsel, International Trade Litigation,
United States Customs and Border Protection, of counsel, for
defendant.
Eaton, Judge: This matter is before the court on plaintiff
Tradewind Farms, Inc.’s (“Tradewind”) motion for summary judgment
and the cross-motion for summary judgment of defendant the United
States on behalf of the Bureau of Customs and Border Protection
(“Customs”). Each motion is made pursuant to USCIT Rule 56.
Court No. 04-00642 Page 2
By its motion, plaintiff seeks judgment, as a matter of law,
that Customs has erroneously classified its merchandise under
subheading 3923.10.00 of the Harmonized Tariff Schedule of the
United States (“HTSUS”)1 as “[a]rticles for the conveyance or
packing of goods, of plastics; stoppers, lids, caps and other
closures, of plastics: [b]oxes, cases, crates and similar
articles,” subject to a 3% tariff ad valorem. Plaintiff asserts
that classification of its merchandise is proper under the duty-
free HTSUS actual use subheading 9817.00.50 as “implements to be
used for agricultural or horticultural purposes.”2 See Mem. P. &
A. Supp. Pl.’s Mot. Summ. J. 1 (“Pl.’s Mem.”).
By its cross-motion, the United States seeks a judgment
sustaining Customs’s classification of the merchandise. See
Def.’s Mem. Opp’n Pl.’s Mot. Summ. J. & Supp. Def.’s Cross-Mot.
Summ. J. 8 (“Def.’s Mem.”).
1
All citations to the HTSUS refer to the 2003 version.
2
Plaintiff’s complaint initially sought the review of
two denied protests, numbers 2704-04-100587 and 2704-04-102812.
At oral argument, counsel for plaintiff represented that it would
no longer pursue the challenge to protest number 2704-04-100587
for merchandise entered between March 18, 2003, and April 15,
2003. See Pl.’s Mem. Resp. Ct.’s Order (Dec. 5, 2006)
(confirming, in writing, that plaintiff no longer sought review
of Customs’s denial of protest number 2704-04-100587). Thus, all
that remains to be decided is plaintiff’s challenge to the denial
of its September 29, 2004, protest number 2704-04-102812.
Court No. 04-00642 Page 3
Jurisdiction lies pursuant to 28 U.S.C. § 1581(a) (2000).
Because the court finds that plaintiff failed to satisfy the
notice of intended use requirements found in HTSUS Chapter 98 and
Customs’s regulations, it denies plaintiff’s motion for summary
judgment. Additionally, the court finds that the KIT 2000 is
properly classified under HTSUS 3923.10.00; grants defendant’s
cross-motion for summary judgment; and dismisses this case.
BACKGROUND
The following facts are not in dispute. Plaintiff is an
importer of the “Model Kit 2000” (“KIT 2000”), which is a “clear
polyethylene teraphalate . . . clamshell container manufactured
with strategically placed vents, weighing 78 grams and measuring
280mm x 184mm x 130mm” imported from Italy. Pl.’s Mem. 2; see
also Def.’s Resp. Pl.’s Statement Material Facts Not in Issue 2
(“DRPF”). A clamshell container “is a container whose top or lid
is attached on one side so that the user can fill the device and
when completed, can flip the top to seal the device.” Pl.’s
Statement Material Facts Not in Dispute 1 (“PSMF”); DRPF 2.
In April and July of 2001, plaintiff self-classified and
entered shipments of the KIT 2000 under HTSUS 9817.00.50 as
implements used for an agricultural or horticultural purpose.
See Pl.’s Mem. 17; Def.’s Mem. 24 n.12. These entries are not
Court No. 04-00642 Page 4
the subject of this action. Customs disputed plaintiff’s 2001
self-classification and found that the KIT 2000 was properly
classified as an article for the conveyance or packing of goods
under HTSUS 3923.10.00. See NY Ruling I89645 (Jan. 6, 2003).
Plaintiff then filed requests with Customs, seeking
reconsideration of its ruling. Each request resulted in a
written denial. See NY Ruling J83824 (May 7, 2003); see also HQ
966955 (Sept. 15, 2004).
Plaintiff continued to import the KIT 2000, with the subject
entries being made at the port of Los Angeles, California on
September 29, 2003. See Summons of Dec. 14, 2004. The entry
documents reveal that plaintiff self-classified the September 29,
2003, entries as articles for the conveyance or packing of goods
under HTSUS 3923.10.00. See Def.’s Mem., Ex. 8. In keeping with
plaintiff’s self-classification, Customs, on August 13, 2004,
liquidated the merchandise at the 3% ad valorem tariff rate. See
Summons of Dec. 14, 2004.
Plaintiff timely filed a protest pursuant to 19 U.S.C.
§ 1514(a) (2000) on September 29, 2004. See Summons of Dec. 14,
2004. Customs denied plaintiff’s protest on November 16, 2004.
See id.
The sole substantive dispute in this case is whether the KIT
2000 is actually used for an agricultural or horticultural
Court No. 04-00642 Page 5
purpose and thus may be classified under HTSUS 9817.00.50. The
primary procedural question is whether plaintiff has demonstrated
that it complied with the law and regulations relating to notice
of the intended use of the merchandise.
STANDARD OF REVIEW
Under USCIT Rule 56(c), granting summary judgment is proper
“if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.”
USCIT R. 56(c). “Once it is clear there are no material facts in
dispute, a case is proper for summary adjudication.” AMKO Int’l,
Inc. v. United States, 22 CIT 1094, 1096, 33 F. Supp. 2d 1104,
1107 (1998). As this cases hinges on a pure question of law,
summary judgment is appropriate.
DISCUSSION
I. Agricultural Actual Use Provision - HTSUS 9817.00.50
A. Relevant Law
“The proper classification of merchandise entering the
United States is directed by the General Rules of Interpretation
(“GRIs”) of the HTSUS and the Additional United States Rules of
Court No. 04-00642 Page 6
Interpretation [(“AUSRI”)].”3 Orlando Food Corp. v. United
States, 140 F.3d 1437, 1439 (Fed. Cir. 1998). Under the GRIs:
Classification of goods in the tariff
schedule shall be governed by the following
principles:
1. The table of contents, alphabetical
index, and titles of sections, chapters
and sub-chapters are provided for ease
of reference only; for legal purposes,
classification shall be determined
according to the terms of the headings
and any relative section or chapter
notes . . . .
GRI 1. In other words, GRI 1 requires the court to “first
construe[] the language of the heading, and any section or
chapter notes in question, to determine whether the product at
issue is classifiable under the heading.” Orlando Food Corp.,
140 F.3d at 1440.
Plaintiff’s proposed HTSUS subheading is an actual use
provision, as it contains the phrase “to be used for.” See
Clarendon Mktg., Inc. v. United States, 144 F.3d 1464, 1467 (Fed.
Cir. 1998) (“The inclusion in this definition of the words ‘to be
used for’ makes classification under the . . . subheading
dependent upon the actual use of the merchandise . . . .”)
(citation omitted). This subheading is listed under Chapter 98
3
The Preface to the 15th Edition of the HTSUS states
that the GRIs and the AUSRIs are part of the schedule’s legal
text.
Court No. 04-00642 Page 7
of the HTSUS entitled “Special Classification Provisions.”
Pursuant to U.S. Note 1 of HTSUS Chapter 98:
1. The provisions of this chapter are not
subject to the rules of relative
specificity in general rule of
interpretation 3(a). Any article which
is described in any provision in this
chapter is classifiable in said
provision if the conditions and
requirements thereof and of any
applicable regulations are met.
HTSUS Ch. 98, U.S. Note 1 (emphasis added). In other words, if
merchandise is actually used for one of the enumerated purposes,
it will be classified under Chapter 98 no matter what its
classification would otherwise be, provided that certain
procedural requirements are met.
Because plaintiff’s desired classification is controlled by
the actual use of its merchandise, reference is made to AUSRI
1(b). This rule governs the interpretation of HTSUS subheadings
controlled by actual use, and states:
1. In the absence of special language or
context which otherwise requires . . .
(b) a tariff classification
controlled by the actual use to
which the imported goods are
put in the United States is
satisfied only if such use is
intended at the time of
importation, the goods are so
used and proof thereof is
furnished within 3 years after
the date the goods are entered.
Court No. 04-00642 Page 8
AUSRI 1(b) (emphasis added). Thus, if it hopes to succeed,
plaintiff must establish that it has satisfied the additional
requirements articulated in AUSRI 1(b), particularly the
requirement that the actual use is intended at the time of
importation.
By its regulations, Customs, in accordance with AUSRI 1(b),
provides for a three-part test:
When the tariff classification of any article
is controlled by its actual use in the United
States, three conditions must be met in order
to qualify for free entry or a lower rate of
duty unless the language of the particular
subheading of the [HTSUS] applicable to the
merchandise specifies other conditions. The
conditions are that:
(a) Such use is intended at the
time of importation.
(b) The article is so used.
(c) Proof of use is furnished
within 3 years after the date the
article is entered or withdrawn
from warehouse for consumption.
19 C.F.R. § 10.133 (2003). Again, of importance here is the
requirement that the intention to use the merchandise for a
particular purpose be present at the time of entry.
By regulation, Customs has set out the procedures with which
an importer must comply in order to demonstrate the intended use
of its merchandise. Pursuant to the regulation, an importer
Court No. 04-00642 Page 9
must, at the time of entry:
fil[e] with the entry for consumption or for
warehouse a declaration as to the intended
use of the merchandise, or . . . enter[]4 the
proper subheading of an actual use provision
of the [HTSUS] and the reduced or free rate
of duty on the entry form. Entry made under
an actual use provision of the HTSUS may be
construed as a declaration that the
merchandise is entered to be used for the
purpose stated in the HTSUS, provided that
the port director is satisfied the
merchandise will be so used. However, the
port director shall require a written
declaration to be filed if he is not
satisfied that merchandise entered under an
actual use provision will be used for the
purposes stated in the HTSUS.
19 C.F.R. § 10.134. Thus, under this regulation it is not
sufficient that an importer intend a particular use for its
merchandise, it must demonstrate that intention at the time of
entry by following specific procedures.
B. Compliance with Actual Use Regulations
Plaintiff contends that its protest of Customs’s
classification decision regarding the KIT 2000 satisfied the
requirements of the actual use regulations set forth in 19 C.F.R.
4
It is worth noting that the regulation is in the
alternative. Thus, if plaintiff believed that, because of
Customs’s ruling letter, it was required to self-classify its
merchandise under HTSUS 3923.10.00, it could still have complied
with the regulation by filing a declaration of intended use at
the time of importation.
Court No. 04-00642 Page 10
§§ 10.131–.138. See Pl.’s Mem. Resp. Def.’s Cross-Mot. Summ. J.
8 (“Tradewind Farms has always intended that the entries should
properly be entered under 9817.00.50 and has demonstrated this
through its protests . . . .”). Tradewind takes this position
even though it is undisputed that: (1) it did not file a
declaration of intended use when it entered the subject
merchandise under HTSUS 3923.10.00 as “[a]rticles for the
conveyance or packing of goods, of plastics; stoppers, lids, caps
and other closures, of plastics: [b]oxes, cases, crates and
similar articles”; and (2) it did not enter the KIT 2000 under an
actual use provision. See Pl.’s Mem. 17–18; Def.’s Mem. 23–24.
In other words, plaintiff insists that, while it neither
filed a declaration of intended use nor entered its merchandise
under an actual use provision, its protest of Customs’s
classification of its merchandise evidenced its intention to
actually use the KIT 2000 for an agricultural or horticultural
purpose. Therefore, plaintiff appears to ask the court to find
that Customs erred by refusing to acknowledge the protest as
satisfying the declaration of intended use requirement contained
within 19 C.F.R. § 10.134.5
5
Plaintiff, however, makes no claim that the regulations
are an invalid interpretation of the HTSUS.
Court No. 04-00642 Page 11
Defendant maintains that plaintiff failed to satisfy 19
C.F.R. § 10.134 because it “classified the merchandise comprising
the entries listed in the summons for this matter, under HTSUS
Chapter 39 (Plastics and Articles Thereof) and not pursuant to
any actual use provision.” Def.’s Mem. 23–24 (footnote &
emphasis omitted). As a result, Customs argues that plaintiff
was required to file “with each entry at issue in this case a
declaration of intended use of the merchandise,” and did not do
so. Def.’s Mem. 24. Put another way, Customs claims that
plaintiff’s failure to file a declaration of intended use or to
enter its merchandise under the agricultural actual use provision
“is clearly fatal to its claim.” Def.’s Mem. 12.
When faced with a challenge to the interpretation of a
regulation, “[a]s a general rule, [the court] must defer to an
agency’s interpretations of the regulations it promulgates, as
long as . . . the agency’s interpretation is neither plainly
erroneous nor inconsistent with the regulation.” Gose v. U.S.
Postal Serv., 451 F.3d 831, 836 (Fed. Cir. 2006); see also Auer
v. Robbins, 519 U.S. 452, 461 (1997). That is, the court “must
defer to [Customs’s] interpretation unless an ‘alternative
reading is compelled by the regulation’s plain language or by
other indications of [Customs’s] intent at the time of the
regulation’s promulgation.’” Thomas Jefferson Univ. v. Shalala,
Court No. 04-00642 Page 12
512 U.S. 504, 512 (1994) (quoting Gardebring v. Jenkins, 485 U.S.
415, 430 (1988)).
The court cannot find in the language of the regulations any
indication that Customs intended that the filing of a protest
could be substituted for the specific notice procedures contained
therein. Nor can it elsewhere find any indication that such was
Customs’s intent. Under the regulations, an importer may satisfy
the requirement of notice of intended use in one of two ways:
first, by filing a separate declaration of intent with the agency
at the time it imports its merchandise; or second, the importer
may enter its merchandise pursuant to the actual provision.6
6
Even the second option, however, may result in the port
director requesting a written declaration. See J.E. Bernard &
Co., Inc. v. United States, 80 Cust. Ct. 111, 122 (1978). The
Customs Court in J.E. Bernard & Co. held than an importer may be
required to provide a written declaration of intended use even
absent a port director’s request. See J.E. Bernard & Co., 80
Cust. Ct. at 122. In that case, the importer entered its goods
under an actual use provision of the Tariff Schedule of the
United States (“TSUS”), the predecessor statute to the HTSUS.
Customs denied entry to the goods under the importer’s proposed
provision. The importer presented its entry documents containing
Customs’s denial of entry as evidence that it made known its
intent of actual use at the time the merchandise was entered.
Finding that evidence insufficient, the Customs Court stated:
[T]he entry . . . does have a rejected entry
attached to the entry papers indicating
plaintiff’s intent to have the merchandise
entered duty free . . . . However,
regulation 10.134 explicitly states that the
district director shall require a written
(continued...)
Court No. 04-00642 Page 13
Whichever option an importer chooses, the action must be made at
the time of entry. Thus, it is clear from the text of the
regulations that: (1) Customs intended that there be two forms of
notice of the intention to use merchandise for the purpose set
forth in plaintiff’s proffered HTSUS subheading; and (2) that
this actual notice be given at the time of importation.
It therefore cannot be found that plaintiff’s protest
satisfied the regulations. Here, the importer did not enter the
KIT 2000 under an actual use provision or make a written
declaration. Thus, plaintiff performed neither of the specific
acts set out in the regulation. In addition, the law and the
regulations make clear that the importer must have the intention
6
(...continued)
declaration of intent to be filed if he is
not satisfied that merchandise entered under
an actual provision will be used for the
purposes stated in the tariff schedules.
Since the district director apparently
rejected the entry under [the actual use
provision], it was incumbent upon plaintiff
to file a written declaration of intent
pursuant to regulation 10.134. And since
plaintiff failed to file such a declaration,
Customs again was not required to suspend
liquidation.
Id. The Customs Court analyzed the sufficiency of the importer’s
notice in accordance with the 1971 version of 19 C.F.R. § 10.134.
See id. at 121. The 1971 regulation is virtually identical to
the 2003 version, the only difference being Customs’s reference
to the then-in-force tariff schedule.
Court No. 04-00642 Page 14
to use its merchandise for a particular actual use at the time of
entry. A protest filed one year after entry is simply not
evidence of the presence of the necessary intention at the time
of entry.
As a result, because plaintiff has failed to satisfy the
threshold procedural requirement for classification of its
merchandise under HTSUS 9817.00.50, the court denies its motion
for summary judgment.7
II. Proper Classification Under HTSUS 3923.10.00
Having found that plaintiff did not follow the procedures
that would allow classification of its merchandise under HTSUS
9817.00.50., the court now turns to Customs’s classification of
the merchandise under HTSUS 3923.10.00 as “[a]rticles for the
conveyance or packing of goods, of plastics . . .: [b]oxes,
cases, crates and similar articles.” Customs’s classification is
entitled to a statutory presumption of correctness. See 28
U.S.C. § 2639(a)(1). As a result, for the court to grant an
importer’s request to classify its merchandise under a different
HTSUS subheading than that prescribed by Customs, the importer
7
Because plaintiff failed to comply with the actual use
regulations, the court declines to address the question of
whether the KIT 2000 serves an agricultural or horticultural
purpose.
Court No. 04-00642 Page 15
must satisfy its “burden of proving that the [government’s]
classification is incorrect.” Jarvis Clark Co. v. United States,
733 F.2d 873, 876 (Fed. Cir. 1984). Here, plaintiff has not
satisfied that burden of proof. In addition, Tradewind does not
dispute that, if its merchandise is not entitled to
classification under the actual use provision, HTSUS 3923.10.00
is the proper classification for the KIT 2000. See Pl.’s Resp.
DRPF 3 (“Admits that the primary classification for the imported
clamshell merchandise also known as the KIT 2000 is 3923.10.00
HTSUS . . . .”). As a result, the court sustains Customs’s
classification and grants defendant’s cross-motion for summary
judgment.
CONCLUSION
Based on the foregoing, the court denies plaintiff’s motion
for summary judgment; grants defendant’s cross-motion for summary
judgment; and dismisses this case. Judgment shall be entered
accordingly.
/s/Richard K. Eaton
Richard K. Eaton
Dated: April 30, 2007
New York, New York
UNITED STATES COURT OF INTERNATIONAL TRADE
:
TRADEWIND FARMS, INC., :
:
Plaintiff, :
: Before: Richard K. Eaton, Judge
v. :
: Court No. 04-00642
UNITED STATES, :
:
Defendant. :
:
JUDGMENT
This case having been duly submitted for decision; and the
court, after due deliberation, having rendered a decision herein;
Now therefore, in conformity with said decision, it is hereby
ORDERED that plaintiff’s motion for summary judgment is
denied;
ORDERED that defendant’s motion for summary judgment is
granted; and it is further hereby
ORDERED that this case is dismissed.
/s/Richard K. Eaton
Richard K. Eaton
Dated: April 30, 2007
New York, New York