Slip Op. 01 - 85
UNITED STATES COURT OF INTERNATIONAL TRADE
- - - - - - - - - - - - - - - - - - -x
NORTH AMERICAN FOREIGN TRADING CORP.,:
Plaintiff, :
v. : Court Nos. 81-09-01205-S-1
82-04-00531-S
: 85-04-00470
THE UNITED STATES, 88-02-00074
:
Defendant.
:
- - - - - - - - - - - - - - - - - - -x
Memorandum
[Upon cross-motions, summary judgment
in part for the defendant.]
Decided: July 10, 2001
Fitch, King & Caffentzis (Richard C. King) for the plaintiff.
Stuart E. Schiffer, Acting Assistant Attorney General, Joseph
I. Liebman, Attorney in Charge, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice (James A. Curley); and Office
of the Assistant Chief Counsel, U.S. Customs Service (Karen P.
Binder and Edward N. Maurer), of counsel, for the defendant.
AQUILINO, Judge: By stipulation dated December 2000, the
parties agreed (with the consent of the court) to add action No.
82-04-00531-S to the above-numbered matters encompassing issues
left over from a generation of protest and litigation involving
sundry timepieces designed to track Earth's rotation into this 21st
century, if not diminish or avoid the reach of the Tariff Act of
1930, as amended. E.g., Texas Instruments Inc. v. United States,
Court No. 81-09-01205-S-1 etc. Page 2
82 Cust.Ct. 272, C.D. 4810, 475 F.Supp. 1183 (1979), aff'd, 67 CCPA
59, C.A.D. 1244, 620 F.2d 269 (1980); Texas Instruments Inc. v.
United States, 82 Cust.Ct. 287, C.D. 4811, 475 F.Supp. 1193 (1979),
aff'd, 67 CCPA 57, C.A.D. 1243, 620 F.2d 272 (1980); Texas
Instruments Inc. v. United States, 1 CIT 236, 518 F.Supp. 1341
(1981), aff'd, 69 CCPA 136, 673 F.2d 1375 (1982); Belfont Sales
Corp. v. United States, 11 CIT 541, 666 F.Supp. 1568 (1987), reh'g
denied, 12 CIT 916, 698 F.Supp. 916 (1988), aff'd, 878 F.2d 1413
(Fed.Cir. 1989); Marcel Watch Co. v. United States, 16 CIT 474, 795
F.Supp. 1199 (1992), aff'd, 11 F.3d 1054 (Fed.Cir. 1993); World
Forum Watch, Ltd. v. United States, 20 CIT 890, reh'g denied, 20
CIT 1205 (1996), rev'd, 121 F.3d 727 (Fed.Cir. 1997).
Horologically, the goods at bar in these four actions, which remain
predicated upon entries into the United States many moons ago, are
"clocks" rather than "watches".
I
Plaintiff's complaint in the first-numbered action, for
example, was that all of its merchandise was properly classified
under item 688.45 of the Tariff Schedules of the United States
("TSUS") ("Electrical articles and electrical parts of articles,
not specially provided for . . . Other . . . . . . 5.3% ad val.")
as opposed to the classification by the U.S. Customs Service under
TSUS Schedule 7, including item 715.15 ("Clocks: With watch
movements; or with clock movements measuring less than 1.77 inches
in width"), with the rates of duty 12.7 percent ad valorem on the
Court No. 81-09-01205-S-1 etc. Page 3
casing plus 36 cents on the movements. In addition to standing by
this Customs classification, defendant's answer asserts four
"contingent counterclaims" and a "fifth contingent claim" under
TSUS items 715.15, 720.06 and 720.34; 715.15, 720.14 and 720.34;
715.31; or 715.51; or 678.50 "[i]f the Court finds that the
imported merchandise was not correctly classified under items
760.05, 774.55 and 715.15, TSUS"1.
Subsequent to the commencement of the above-listed
actions and to such joinder of issue, the courts in Marcel Watch
Co. v. United States, supra, resolved the electric/tronic-clocks-
classification controversy essentially in the government's favor --
in contrast with their decisions in the protracted controversy over
imported electronic wristwatches at issue, for example, in Belfont
Sales Corp. v. United States, supra. In fact, that watch action
was pleaded as a predicate to plaintiff's complaints herein.2 That
judicial settlement of issues has brought forth a motion by the
defendant for summary judgment, praying that plaintiff's complaints
be dismissed; that its second contingent counterclaim be granted3;
1
Defendant's Answer in Court No. 81-09-01205-S-1, p. 2. The
effect of grant of one or more of these alternative, contingent
counterclaims would be to increase the duties owed by the
plaintiff.
2
See, e.g., plaintiff's complaint in Court No. 81-09-01205-S-
1, paras. 15, 16.
3
The "United States concedes that the movement should not be
classified under item 720.02, but rather . . . under 720.14, TSUS,
the second alternative classification asserted in the counterclaim
in its answer." Defendant's Brief, p. 4.
Court No. 81-09-01205-S-1 etc. Page 4
that the subject clocks, including their movements and cases be
reliquidated under TSUS items 715.15, 720.14 and 720.34; and that
plaintiff pay to the defendant the increase in duty
assessed upon reliquidation of the imported merchandise
which is subject to the counterclaim, including interest
in accordance with 28 U.S.C. § 1961(a) and (b), from the
dates the answers asserting the counterclaims were filed
until the date the duties are paid . . ..
The motion is accompanied by an obligatory statement of facts as to
which the movant contends there is no genuine issue to be tried.
It represents, in pertinent part:
1. The imported merchandise . . . . consists of a
quartz analog clock, two ball-point pens, and a stand
that has holders for the pens and a slot into which the
clock may be inserted. The clock may be removed from the
holder and used separately.
2. Each of these three elements of the merchandise
retains its separate name, use, and character in the
imported merchandise and is not subordinated to the
identity of the combination.
3. Each of these three elements is classifiable
separately.
* * *
9. Only the clock portion of the imported mer-
chandise is in issue in this case.
10. The clock portion of the merchandise contains a
movement measuring less than 1.77 inches in width and
more than one-half (0.5) inch in thickness. The movement
is a clock movement for tariff purposes.
11. The value of the movement is over $2.25 but not
over $5 each.
12. The movement is neither "Constructed or designed
to operate for over 47 hours without rewinding" nor "Not
constructed or designed to operate for over 47 hours
without rewinding," within the meaning of the superior
headings to items 720.06 through 720.09 and 720.02
through 720.04, TSUS, respectively.
Court No. 81-09-01205-S-1 etc. Page 5
13. If imported separately, the movement would be
properly classifiable as other clock movements, valued
over $2.25 but not over $5, under item 720.14, TSUS,
dutiable at 34 cents each plus 14.8% ad val., plus 5.7
cents for each jewel, if any.
14. The case is a clock case and, if imported
separately, would be properly classifiable as "Clock
cases . . . Other . . . Other" under item 720.34, TSUS,
dutiable at 12.7% ad val.
15. The clock portion of the merchandise (including
the case) is dutiable at 34 cents each plus 14.8% ad
val., plus 5.7 cents for each jewel, in the movement,
plus 12.7% ad val. for the case.
The plaintiff responds with a cross-motion for summary
judgment,
dismissing Court No. 85-04-00470, and overruling
defendant's claims for pre-judgment interest as to all
entries; and further ordering that entries 80-135546, 80-
135693, 80-135929, and 81-782106 . . . be reliquidated
. . . with duties on the "movements" under Item 720.14,
TSUS, at 34¢ each plus 14.8% ad val., as claimed by
defendant.
The plaintiff admits paragraphs 1 through 14 of Defendant's
Statement of Facts Not in Dispute, quoted in part above, and offers
the following factual averments of its own:
15. Entry 81-179819, dated 4/16/81, was liquidated
on 6/11/82, more than one year after entry, and timely
protested under protest 1001-2-009191.
16. The same entry was subsequently protested under
protest 1001-2-009820, which also covered the same
category of merchandise (pens) as was covered by the
first protest, 1001-2-009191.
17. Protest 1001-2-009191 was approved, and the
entry was reliquidated on 4/25/83.
18. No further protest was filed subsequent to the
reliquidation.
Court No. 81-09-01205-S-1 etc. Page 6
19. Summons No. 85-04-00470 was filed against the
second protest.
Plaintiff's Statement of Material Facts Not in Dispute. Paragraphs
18 and 19 are admitted by the defendant without reservation;
paragraph 17 is admitted, subject to the claim that the only
category of merchandise covered by the specified protest was pens,
while defendant's admission of paragraph 16 is conditioned upon an
averment that the second numbered protest covered categories in
addition to pens, including quartz clocks, movements and cases.4
Finally, the defendant denies that entry 81-179819 was liquidated
more than one year after entry5, and it proffers more facts. See
generally Defendant's Additional Statement of Material Facts Not in
Dispute.
A
This court has perused the foregoing submissions and the
written legal arguments presented in conjunction therewith and
concurs in the parties' fundamental position that the above-listed
actions are now susceptible to disposition by summary judgment.
That is, there are no material facts as to which there exists a
genuine issue to be tried within the meaning of CIT Rule 56(h), as
amended January 25, 2000.
The court's jurisdiction to decide the cross-motions is
pursuant to 28 U.S.C. §§ 1581(a) and 2631(a).
4
See Defendant's Response to Plaintiff's Statement of
Material Facts Not in Dispute.
5
See id., para. 15.
Court No. 81-09-01205-S-1 etc. Page 7
II
To address plaintiff's motion first, in the light of
Marcel Watch Co. v. United States, supra, the court concurs that
entries 80-135546, 80-135693, 80-135929, 80-711255, 81-179819 and
81-782106, which form the basis of three of the numbered actions
herein, can be reliquidated under items 715.15, 720.14 and 720.34
of the TSUS in effect on their respective dates.
As for the fourth-numbered action, the plaintiff takes
the position that this court "has no jurisdiction over Court No.
85-04-00470, covering protest 1001-2-009820"6 since it claims to
have filed two protests for entry no. 81-179819 for the same
category of merchandise. Its first protest was approved and led to
a refund of duties paid on pens. Plaintiff's second protest,
concerning the classification of the imported articles in their
entirety, was denied. The plaintiff now argues that the second
protest was invalid because it involved the same merchandise as the
first. See Plaintiff's Memorandum, pp. 2-3. The governing statute
provided that only
one protest may be filed for each entry of merchandise,
except that where the entry covers merchandise of
different categories, a separate protest may be filed for
each category.
6
Plaintiff's Memorandum, p. 2. Plaintiff's complaint
requested reliquidation of any movements at 5.3 percent ad valorem,
a lower rate than that liquidated initially (36¢ each). However,
the holding in Marcel Watch Co. v. United States, 16 CIT 474, 795
F.Supp. 1199 (1992), aff'd, 11 F.3d 1054 (Fed.Cir. 1993), favors
reliquidation at 34 cents each plus 14.8 percent ad valorem -- or
more than that already paid. If the court's jurisdiction has not
attached to the entry in question, of course it could not direct
Customs to reliquidate at the higher rate.
Court No. 81-09-01205-S-1 etc. Page 8
19 U.S.C. §1514(c)(1). See also Webcor Electronics v. United
States, 79 Cust.Ct. 137, 442 F.Supp. 95 (1977). Hence, while two
protests may not be filed for the same category of merchandise, "it
is clear that [the statute] permits importers to file separate
protests where the entry covers merchandise of different
categories". Minox Corp. d/o Berkey Photo, Inc. v. United States,
77 Cust.Ct. 110, 111 (1976).
The defendant points out that the approved first protest
was only for the "refund of duty paid on pens . . . manufactured in
the U.S.A.". Defendant's Additional Statement of Material Facts
Not in Dispute, para. 18, quoting Protest No. 1001-2-009191 (Aug.
24, 1982). The protest referred to in Court No. 85-04-00470 does
not involve duties levied on those American pens. Instead, it
states:
Protest is hereby made against your classification
and assessment of duties on quartz clocks under item
715.15, TSUS, with duty on the "movements" at the rate of
34¢ each under item 720.02, TSUS, or on "cases" at the
rate of 11% ad val. under item 720.34, TSUS, or on pens
at the rate of 1.7¢ each + 11.5% ad val.
Protest No. 1001-82-009820 (Sept. 9, 1982). While the second pro-
test does refer to the pens, it is evident from the complaint in
Court No. 85-04-00470 that the controversy is over the
classification of the clocks. That is, the court cannot and
therefore does not find that the second protest duplicated the
first one. Accordingly, the court concludes that the second
protest was properly filed, and jurisdiction pursuant to 28 U.S.C.
§§ 1581(a) and 2631(a) has therefore attached.
Court No. 81-09-01205-S-1 etc. Page 9
III
The plaintiff argues that the award of prejudgment
interest to the government upon reliquidation would be improper
since statutory amendments providing for such interest were not
enacted until after the entries had been filed, liquidated and
protested. It also claims that it has not incurred any contractual
liability which would necessitate an award of such interest.
The defendant responds that an award of prejudgment
interest would be appropriate for two reasons: (a) although the
plaintiff was notified of defendant's expectation of additional
duties and interest on the clocks when the answers with
counterclaims were served and filed and their correct
classification was decided by Marcel Watch Co., supra, the
plaintiff did not timely acquiesce under those circumstances; and
(b), in the absence of an award, the plaintiff will have enjoyed an
interest-free loan on the difference in duties due on its entries.
See Defendant's Opposition to the Cross-Motion for Summary
Judgment, and Reply Brief in Support of Its Motion for Summary
Judgment, p. 5.
It is well-settled that, in the absence of statutory
authority, prejudgment interest may be awarded in the sound
discretion of the court. E.g., United States v. Imperial Food
Imports, 834 F.2d 1013, 1016 (Fed.Cir. 1987); Rheem Metalurgica
S.A. v. United States, 21 CIT 963, 966, 978 F.Supp. 333, 336
(1997), aff'd, 160 F.3d 1357 (Fed.Cir. 1998). Typically, such
Court No. 81-09-01205-S-1 etc. Page 10
awards have been governed by considerations of equity and fairness.
See, e.g., United States v. Imperial Food Imports, 834 F.2d at
1016, quoting United States v. Goodman, 6 CIT 132, 140, 572 F.Supp.
1284, 1289 (1983). When the amount of damages has been uncertain,
however, courts have denied that kind of an award. See, e.g.,
Eastern Air Lines, Inc. v. Atlantic Richfield Co., 712 F.2d 1402,
1410 (Temp.Emer.Ct.App.), cert. denied, 464 U.S. 915 (1983).
The classification of the kind of clocks herein remained
genuinely controverted at least until the final appeal in the
linchpin case Marcel. And the plaintiff did alter its approach to
focus on its procedural stance unrelated to its classification
claim once the court of appeals had concluded that substantive
matter. And the defendant now admits to having misclassified the
movement(s). In short, in the interest of laying this potentially-
eternal litigation equitably to rest, given the shortcomings of
record on all sides the court declines to exercise its prerogative
of awarding any prejudgment interest at this time.
IV
In light of the foregoing, defendant's motion for summary
judgment should be granted to the extent that all of the entries at
issue herein be reliquidated under TSUS items 715.15, 720.14 and
720.34. Judgments will enter accordingly.
Decided: New York, New York
July 10, 2001
________________________________
Judge
Slip Op. 01-85 Errata
North American Foreign Trading Corp. v. United States
Court No. 81-09-01205-S-1 etc.
The word "classified" at the end of line 17 on page 2
should better be "classifiable".
Delete "81-179819" from line 3 on page 7.
Change the protest number in line 21 on page 8 to 1001-
2-009820.
Dated: New York, New York
July 11, 2001