Chevron Chemical Co. v. United States

Slip Op. 99-72

UNITED STATES COURT OF INTERNATIONAL TRADE

CHEVRON CHEMICAL COMPANY,

Plaintiff, Before: Pogue, Judge

v. Court No. 95-09-01141

UNITED STATES,

Defendant.

[Plaintiff’s motion for summary judgment denied. Defendant’s
motion for summary judgment granted.]

Decided: July 29, 1999

Phelan & Mitri (Michael F. Mitri) for Plaintiff.

David W. Ogden, Acting Assistant Attorney General, Joseph I.
Liebman, Attorney-in-Charge, International Trade Field Office,
Bruce N. Stratvert, Attorney, Commercial Litigation Branch, Civil
Division, United States Department of Justice; Chi S. Choy, Of
Counsel, Office of the Assistant Chief Counsel, International Trade
Litigation, United States Customs Service, for Defendant.

OPINION and ORDER

POGUE, Judge.

I. Introduction

Plaintiff, Chevron Chemical Co., challenges a decision of the

U.S. Customs Service ("Customs") denying Plaintiff’s protest filed

in accordance with section 514 of the Tariff Act of 1930, as

amended, 19 U.S.C. § 1514 (1994). The action involves the proper

classification for customs duty purposes of Plaintiff’s petroleum
Court No. 95-09-01141 Page 2

derivative, AL-304, under the Harmonized Tariff Schedule of the

United States ("HTSUS").1 Jurisdiction is predicated on 28 U.S.C.

1
The provisions under consideration are as follows:

Chapter 38, Section VI:

Heading/Subheading Article Description

3817 Mixed alkylbenzenes and mixed
alkylnaphthalenes, other than those of
heading 2707 or 2902:

3817.10 Mixed alkylbenzenes:

3817.10.10 Mixed linear alkylbenzenes

3817.10.50 Other

* * * *

3823 Prepared binders for foundry molds or
cores; chemical products and
preparations of the chemical or allied
industries (including those consisting
of mixtures of natural products), not
elsewhere specified or included;
residual products of the chemical or
allied industries, not elsewhere
specified or included:

3823.90 Other:

Other:

* * * *
3823.90.45 Other:

Mixtures that are in
whole or in part of
hydrocarbons derived
in whole or in part
from petroleum,
shale oil or natural
gas
Court No. 95-09-01141 Page 3

§ 1581(a)(1994), and, therefore, Customs’ classification is subject

to de novo review pursuant to 28 U.S.C. § 2640 (1994). This action

is before the Court on the summary judgment motions made by

Plaintiff and Defendant pursuant to USCIT Rule 56.

Upon liquidation Customs classified the subject AL-304 as a

"mixed linear alkylbenzene" under subheading 3817.10.10, HTSUS

(1993), and assessed a 17.3% ad valorem duty. Plaintiff claims

that the merchandise is properly classifiable under the residual

provision, subheading 3823.90.45, HTSUS, which describes a broad

category of chemical products not specified or included elsewhere,

Chapter 98, Section XXII

U.S. Notes

1. The provisions of this chapter are not subject to the
rule 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.

Heading/Subheading Article Description

Articles returned to the United States
after having been exported to be
advanced in value or improved in
condition by any process of manufacture
or other means:

Articles exported for repairs or
alterations:

9802.00.40 Repairs or alterations made
pursuant to a warranty

9802.00.50 Other
Court No. 95-09-01141 Page 4
and is assessed a 7% ad valorem duty. Alternatively, Plaintiff

maintains that the merchandise is classifiable as articles returned

to the United States, after being exported for alterations, and

thus classifiable under subheading 9802.00.50, HTSUS. Under this

proposed classification, the merchandise is dutiable at the rate

otherwise applicable to the article, assessed only on the cost or

value of the foreign alterations.

II. Undisputed Facts

Even though there are differences in the factual positions

advanced by each party, summary judgment is appropriate in this

action because there is no genuine issues of material fact in

dispute.

Plaintiff’s imported AL-304, is a mixed linear alkylbenzene.

See Defendant’s Statement of Additional Material Facts As to Which

There is No Genuine Issue to Be Tried ("Def.’s Additional Facts")

¶ 1; Plaintiff’s Response to Defendant’s Statement of Additional

Material Facts ("Pl.’s Response") ¶ 1. Specifically, AL-304 is a

mixture of long carbon side-chain mono-linear alkylbenzenes and di-

linear alkylbenzenes. See Plaintiff’s Complaint ("Pl.’s

Complaint") ¶ 9; Defendant’s Answer ("Def.’s Answer") ¶ 9.

The term "alkylbenzene" describes a compound with two major

structural components: the "alkyl" component and the "benzene"

component. See Def.’s Additional Facts ¶ 4; Pl.’s Response ¶ 4.

The "alkyl" component of the AL-304 is a saturated acyclic

hydrocarbon2 group that has between 20 and 24 carbon atoms.3 See

2
A hydrocarbon is a chemical compound composed only of
carbon and hydrogen; the largest source of hydrocarbons is from
Court No. 95-09-01141 Page 5
Def.’s Additional Facts ¶ 7; Pl.’s Response ¶ 7. The "benzene"

component consists of six carbon atoms and six hydrogen atoms

forming a benzene ring.4 See Def.’s Additional Facts ¶ 5; Pl.’s

Response ¶ 5.

The AL-304 is manufactured for Plaintiff in France from an

alpha olefin5 fraction that Plaintiff produces in the United

States. See Def.’s Additional Facts ¶ 9; Pl.’s Response ¶ 9. The

production process undertaken in France involves the reaction of

benzene with the alpha olefin with the aid of a catalyst

(hydrofluoric acid).6 See id. There is a chemical reaction that

joins a carbon atom of the olefin to a carbon atom of benzene. See

id. The result is the subject AL-304.

petroleum crude oil. See MCGRAW-HILL DICTIONARY OF CHEMISTRY 304
(1984).
3
Plaintiff avers "that the alkyl component of substantially
all (95% or more) of the linear alkylbenzene molecules contained
in AL-304 is a saturated acyclic hydrocarbon that contains
between 20 and 24 carbon atoms, and the alkyl component of a
relatively small portion (5% or less) of the linear alkylbenzene
molecules contained in AL-304 is a saturated acyclic hydrocarbon
that contains approximately 18 or 26 carbon atoms." Pl.’s
Response ¶ 7.
4
Plaintiff alleges "that this statement describes linear
(acyclic) alkylbenzene molecules, as opposed to cyclic
alkylbenzene molecules." Pl.’s Response ¶ 5.
5
Alpha olefins are open chain hydrocarbons consisting of
carbon and hydrogen atoms containing at least one double bond in
the alpha position. See Def.’s Additional Facts ¶ 8; Pl.’s
Response ¶ 8.
6
Plaintiff claims that "the statements set forth in this
paragraph constitute an oversimplification of the AL-304
production process and omit certain elements and variables of
that process." Pl.’s Response ¶ 9.
Court No. 95-09-01141 Page 6

The AL-304 is used to produce alkylbenzene sulfonic acids

that, in turn, are used to produce alkylbenzene sulfonates, i.e.,

detergent additives in lubricating oils for gasolines and other

fuels. See Pl.’s Statement Of Material Facts As To Which There Is

No Genuine Issue To Be Tried ¶ 24; Def.’s Additional Facts ¶¶ 18,

19; Pl.’s Response ¶¶ 18, 19; Def.’s Response to Questions Posed by

the Court at 1.

III. Standard and Scope of Review

Pursuant to USCIT Rule 56, summary judgment is appropriate "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 judgment as a matter of law." USCIT R.

56(d); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

As noted above, there is no dispute concerning the basic

characteristics of the subject AL-304. Both parties agree that the

AL-304 (1) is a mixed linear alkylbenzene (2) consisting of carbon

side-chain mono-linear alkylbenzenes and di-linear alkylbenzenes

(3) with the "alkyl" component containing a carbon group of

approximately between 20-24 carbon atoms and (4) the "benzene"

component consisting of six carbon atoms and six hydrogen atoms

forming a benzene ring and (5) used to produce alkylbenzene

sulfonic acids that, in turn, are used to produce alkylbenzene

sulfonates. Accordingly, summary judgment is appropriate here

because the material facts as to what constitutes the merchandise
Court No. 95-09-01141 Page 7
are not at issue. See Bausch & Lomb, Inc. v. United States, 148

F.3d 1363, 1365-66 (Fed. Cir. 1998). The Court is then left with

the purely legal question involving the meaning and scope of the

relevant tariff provisions.7 See Baxter Healthcare Corp., No. 98-

1343, at 5 (citing Totes, Inc. v. United States, 69 F.3d 495, 498

(Fed. Cir. 1995)); see also Sports Graphics, Inc. v. United States,

24 F.3d 1390, 1391 (Fed. Cir. 1994)(resolving the question of law

as to whether particular imported merchandise has been classified

under an appropriate tariff provision entails a two step process:

(1) ascertaining the proper meaning of the specific terms in the

tariff provision; and (2) determining whether the merchandise at

issue comes within the description of such terms as properly

construed).

7
In United States v. Haggar Apparel Co., 119 S. Ct. 1392
(1999), the Supreme Court held that Customs’ interpretation of
the HTSUS, as manifested in issued regulations, is entitled to
deference under the framework of Chevron U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984). "Although
this case is distinct from Haggar in that no Customs regulations
are at issue, we recognize that the Supreme Court’s pronouncement
may nonetheless raise questions regarding the proper standard of
review of Customs’ interpretation of the HTSUS." Avenues In
Leather, Inc. v. United States, No. 98-1511, at 2 (Fed. Cir. May
20, 1999); see also Baxter Healthcare Corp. of Puerto Rico v.
United States, No. 98-1343, at 6 (Fed. Cir. July 2, 1999)(finding
when structure of import not in dispute and Customs had not
promulgated any interpretive regulations concerning the
particular headings and subheadings, proper classification "only
requires a determination of the proper meaning and scope of the
relevant provisions and a determination of the ultimate
classification"). Because we reject Plaintiff’s interpretive
position with respect to heading 3817, HTSUS, see discussion
infra pp. 8-13, and uphold Customs’ classification, based on a
review of the proper meaning and scope of the relevant
provisions, the Court does not further address the standard of
review issue here.
Court No. 95-09-01141 Page 8

IV. Discussion

General Rule of Interpretation ("GRI") 1 for the HTSUS

provides that "for legal purposes, classification shall be

determined according to the terms of the headings and any relative

section or chapter notes . . . ." Gen. R. Interp. 1, HTSUS; see

Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed. Cir.

1998); Gen. R. Interp. 6 (providing that the classification of

goods in the subheadings of a heading shall be determined according

to the terms of those subheadings and any related subheading,

section, and chapter notes); Explanatory Notes for the GRI at 1

("the terms of the headings and any relative Section or Chapter

Notes are paramount, i.e., they are the first consideration in

determining classification").

A. The Subject Merchandise Is Properly Classifiable
Under Heading 3817, HTSUS

Heading 3817, HTSUS, covers "[m]ixed alkylbenzenes and mixed

alkylnaphthalenes, other than those of heading 2707 or 2902."

Additional U.S. Note 2(c) states that "[f]or purposes of headings

2902, 2907 and 3817, the term ‘alkyl’ describes any saturated

acyclic hydrocarbon group having six or more carbon atoms or,

subject to note 1 to Chapter 29, any mixtures of such groups

averaging six or more carbon atoms."8 As noted, the subject AL-304

8
"The section or chapter Notes form an integral part of the
Harmonized Tariff System and have the same legal force as the
text of the headings." Trans-Border Customs Services, Inc. v.
United States, 18 CIT 22, 25, 843 F. Supp. 1482, 1486 (1994),
aff’d, 76 F.3d 354 (Fed. Cir. 1996). "The function of the Notes
is to define the precise scope of each heading, subheading,
Court No. 95-09-01141 Page 9

is a mixed linear alkylbenzene with a saturated acyclic hydrocarbon

"alkyl" component that has between 20 and 24 carbon atoms. It is

undisputed that the AL-304 is not a mixture of alkylnaphthalenes,

or a mixture of alkylbenzenes described under HTSUS heading 2707

(weight of aromatic constituents must exceed weight of nonaromatic

constituents) or heading 2902 (cyclic hydrocarbons, allowing

mixtures of isomers of same organic compound only). See Mem. Supp.

Pl.’s Mot. Summary J. ("Pl.’s Mem.") at 21-22, 30; Def.’s

Additional Facts ¶ 16. Accordingly, the Court finds that the

subject AL-304 is expressly provided for under the plain language

of subheading 3817.10.10.

Even when merchandise falls within the literal language of the

statute, however, such literal interpretation should be rejected if

it produces a result contrary to the apparent legislative intent.

See Procter & Gamble Mfg. Co. v. United States, 19 CCPA 415, 419

T.D. 45578 (1932), cert denied, 287 U.S. 629 (1932); see also EM

Indus., Inc. v. United States, 22 CIT __, __, 999 F. Supp. 1473,

1478-79 (1998)("While construing a statute so as to carry out the

legislative intent requires that the court first look to the

statutory language itself, that does not mean, however, the court

is foreclosed from also considering readily available guidance from

the Explanatory Notes as to the intended scope of

chapter, subchapter, and section." Id. at 26, 843 F. Supp. at
1486.
Court No. 95-09-01141 Page 10

subheadings.")(citation omitted).9

The Explanatory Notes to heading 3817, provide, as follows,

This heading covers mixed alkylbenzenes and mixed
alkylnaphthalenes obtained by alkylation of benzene and
naphthalene. They have fairly long side-chains and are
not of the kind mentioned in the second part of the text
of heading 27.07. Mixed alkylbenzenes are used, inter
alia, as solvents, and in the manufacture of surface-
active agents, lubricants and insulating oils. Mixed
alkylnaphthalenes are mainly used for the manufacture of
alkylnaphthalene sulphonic acids and their salts.

Harmonized Commodity Description and Coding System, Explanatory

Notes (1st ed. 1986)("Explanatory Notes") at 538.

Plaintiff challenges Customs’ classification, arguing that the

language of heading 3817, when read together with its Explanatory

Notes mandates that the subject AL-304 be classified elsewhere.

See Pl.’s Mem. at 20. Thus, Plaintiff maintains, "heading 3817 was

not intended to cover mixtures of the type comprising the subject

merchandise . . . ." Id. Specifically, Plaintiff contends that

the chemical industry separates alkylbenzenes into short chain,

medium chain, long chain and very long chain alkylbenzenes.10 Id.

9
The Explanatory Notes constitute the Customs Co-operation
Council’s official interpretation of the Harmonized Tariff
System. The Council was established in 1952 by convention in
Brussels. The Customs Co-operation Council is now known as the
World Customs Organization which publishes the Harmonized
Commodity Description and Coding System. It has long been
settled that "[w]hile the Explanatory Notes do not constitute
controlling legislative history, they do offer guidance in
interpreting HTS[US] subheadings." Lonza, Inc. v. United States,
46 F.3d 1098, 1109 (Fed. Cir. 1995).
10
Plaintiff asserts that "[i]n the chemical family of
commercial alkylbenzenes the entire range of carbon side-chain
lengths runs from C1 to approximately C30 . . . there are
established industrial uses for three main categories of
alkylbenzenes, depending primarily upon the lengths of their
Court No. 95-09-01141 Page 11

at 11-14. Plaintiff further maintains that the subject AL-304, a

mixture of linear alkylbenzenes in the C20 to C24 carbon side-chain

range, falls under the "long chain" side-chain category. Id. at

25. Therefore, Plaintiff argues that the subject AL-304 is not a

mixture of "fairly long" linear alkylbenzenes as described in the

Explanatory Notes for heading 3817. Id. at 27.

When a tariff term is not defined in either the HTSUS or its

legislative history, the term’s correct meaning is the common and

commercial meaning, Mita Copystar America v. United States, 21 F.3d

1079, 1082 (Fed. Cir. 1994), which is presumed to be the same. See

Nippon Kogaku (USA), Inc. v. United States, 69 CCPA 89, 92, 673

F.2d 380, 382 (1982); see also Permagrain Products, Inc. v. United

States, 9 CIT 426, 429, 623 F. Supp. 1246, 1248 (1985), aff’d, 791

F.2d 914 (Fed. Cir. 1986).

Here, however, Plaintiff has provided no evidence or authority

for its assertion that the chemical industry distinguishes "fairly

long" side-chains from long side-chains. Rather, Plaintiff directs

the Court’s attention to the use of the modifier "fairly" in the

side-chains. There are ‘short chain’ compounds, with carbon
side-chains in the C1 to C3 range, ‘medium chain’ compounds, with
side-chains in the C11 to C13 range, and ‘long chain’ compounds,
with side-chains in the C16 to C24 range. The side-chains can be
linear or branched, and, for the ‘medium chain’ and ‘long-chain’
compounds, there can be one side-chain (‘mono-alkyl’) or two
(‘di-alkyl’). There is no significant commercial production of,
and there are no established industrial uses for, alkylbenzenes
with carbon side-chains in the ranges of C4 to C10 and C14 to
C15. There is limited production of certain ‘very long chain’
compounds, in the side-chain range of C25-C30 and above, and
these compounds typically are used industrially as alternatives
to paraffin waxes." Pl.’s Mem. at 10-11.
Court No. 95-09-01141 Page 12
Explanatory Notes. From the mere presence of the term "fairly

long," and with no other support, Plaintiff contends that "the

tariff recognizes the existence of ‘longer’ chain compounds that

are not properly classified under HTSUS heading 3817." Pl.’s Mem.
at 26. Essentially, Plaintiff apparently attempts to rely on the

Explanatory Notes as evidentiary support for its asserted industry

practice and attempts to invoke such industry practice to support

its interpretation of the Explanatory Notes. This circular
reasoning, on its own and absent some grounding in fact or

authority, does not provide factual support for Plaintiff’s

position.

Plaintiff also argues that the AL-304 cannot be classified

under HTSUS subheading 3817.10.10 because it has properties and

characteristics different from other alkylbenzenes covered by

heading 3817. See Pl.’s Mem. at 28. Specifically, Plaintiff

maintains that the AL-304 possesses only one of the four exemplar

uses enumerated under the Explanatory Notes for alkylbenzene

mixtures that are classified under heading 3817. Id. Plaintiff

reads the accompanying Explanatory Notes too narrowly.

First, it is irrelevant whether or not AL-304 has side-chain

characteristics different from other alkylbenzenes because heading

3817 and subheading 3817.10.10, HTSUS, are eo nomine provisions in
that they describe goods by "specific names" and ones "known to

commerce." See United States v. Bruckmann, 65 CCPA 90, 94 n.8,

C.A.D. 1211, 582 F.2d 622, 625 (1978). An eo nomine provision that
Court No. 95-09-01141 Page 13
names an article without terms of limitation, absent evidence of a

contrary legislative intent, is deemed to include all forms of the

article. See Nootka Packing Co. v. United States, 22 CCPA 464,

469-70, T.D. 47,464 (1935). Although the Explanatory Notes relied

on by Plaintiff describe the alkylbenzenes falling under heading

3817, HTSUS, as having "fairly-long" side chains, there is no

evidence of Plaintiff’s asserted industry nomenclature

differentiating the categories of "short, medium, long and very

long" chain alkylbenzenes.11 Moreover, there is nothing in the

language of the Explanatory Notes itself to support a distinction

between long and "fairly long" side-chain alkylbenzenes. Nor is it

otherwise apparent that Congress intended to limit the heading as

Plaintiff argues. The Court will not read restrictive language

into heading 3817, HTSUS, or accept Plaintiff’s interpretation

where it is not supported by the evidentiary record or the

statutory language, and it does not appear that such limitation was

intended. See, e.g., American Bayridge Corp. v. United States, 22

CIT __, __, 35 F. Supp. 2d 922, 930 (1998)("Had Congress intended

to limit 44.07, Congress would have chosen ‘more forceful words to

express that intent’."), judgment, 22 CIT __, 35 F. Supp. 2d 942

(1999), appeal docketed, No. 99-1228 (Fed. Cir. Jan. 28, 1999).

11
As noted, the only restriction as to the application of
heading 3817 is found in Additional U.S. Note 2(c) to Section VI,
which defines the term "alkyl" to include hydrocarbon groups that
have six or more carbon atoms. See discussion supra pp. 8-9.
Court No. 95-09-01141 Page 14

Second, AL-304 is used exclusively in the manufacture of

surface-active agents,12 one of the uses explicitly enumerated under

the Explanatory Notes for heading 3817. Moreover, the list of uses

is prefaced with the term "inter alia," which means "among other

things." WEBSTER’S II NEW RIVERSIDE UNIVERSITY DICTIONARY 635 (1984). By

itself, the term "inter alia" demonstrates that the exemplars of

the Explanatory Notes were not intended to be exhaustive. The

Explanatory Notes simply list examples of the possible applications

of mixed alkylbenzenes. Plaintiff’s interpretation of the

accompanying Explanatory Notes ignores the term "inter alia."

In conclusion, the Court finds that the plain language of

subheading 3817.10.10, HTSUS expressly covers the subject AL-304.

B. The Subject Merchandise Is Not More Specifically
Provided For In Heading 3823, HTSUS

Plaintiff also argues that the subject AL-304 is covered by

heading 3823, HTSUS, which describes a broad category of chemical

products not specified or included elsewhere. See Pl.’s Mem. at

29. Specifically, Plaintiff claims that its merchandise is

properly classifiable under subheading 3823.90.45, HTSUS, as a

mixture made up "in whole or in part of hydrocarbons derived in

whole or in part from petroleum, shale oil or natural gas."

Plaintiff directs the Court’s attention to the accompanying

Explanatory Notes, which provide for the classification of chemical

products "whose composition is not chemically defined, whether they

are obtained as by-products of the manufacture of other substances

12
See Def.’s Additional Facts ¶ 18; Pl.’s Response ¶; Pl.’s
Mem. at 28; Def.’s Mem. at 10.
Court No. 95-09-01141 Page 15
. . . or prepared directly." Id. at 29 (quoting Explanatory Notes

at 541). Plaintiff maintains the AL-304 is an "incomplete or

unfinished" sulfonate having the "essential character" of a

"complete or finished" sulfonate, which is classifiable under HTSUS

subheading 3823.90.45.13 Id. at 31.

Heading 3823 is a residual basket provision that describes a

broad category of chemical products not included elsewhere in the

HTSUS. Classification of imported merchandise in a basket

provision, however, is appropriate only when there is no tariff

category that covers the merchandise more specifically. See, e.g.,
EM Indus., 22 CIT at __, 999 F. Supp. at 1480 ("‘Basket’ or

residual provisions of HTSUS Headings, such as subheading

3206.49.50, are intended as a broad catch-all to encompass the

classification of articles for which there is no more specifically

applicable subheading."); E.M. Chemicals v. United States, 20 CIT

__, __, 923 F. Supp. 202, 206 (1996)(finding that subheading

3823.90.29 is a "basket provision" that cannot be applied until

other provisions of the HTSUS are examined to determine if the

subject merchandise is more appropriately classified elsewhere).

13
The Explanatory Notes direct the classification of
petroleum sulfonates under heading 3823, HTSUS, as follows:

[T]he preparations and chemical products falling here
include:

(8) Petroleum sulphonates, not water-soluble, obtained
from petroleum or petroleum fractions by sulphonation,
for example, with sulphuric acid, oleum or sulphur
trioxide dissolved in liquid sulphur dioxide, this
process usually being followed by neutralisation.

Explanatory Notes at 542.
Court No. 95-09-01141 Page 16
As discussed above, AL-304 literally satisfies subheading

3817.10.10, HTSUS. Thus, by the express terms of heading 3823, AL-

304 is not described by the heading.

C. The Subject Merchandise Is Not Covered
Under Heading 9802, HTSUS

The HTSUS allows a duty benefit for imported articles that

were previously exported from the United States to be advanced in

value or improved in condition while abroad. Specifically,

subheading 9802.00.50, HTSUS, describes "[a]rticles returned to the
United States after having been exported to be advanced in value or

improved in condition by any process of manufacture or other means:

Articles exported for repairs or alterations made: Repairs or

alterations made pursuant to a warranty: Other . . . ."14 The duty

rate applicable to imported articles qualifying under subheading

9802.00.50, HTSUS, is calculated according to the rate that would

14
Chapter 98 also requires that "any applicable regulations"
be met in order to be covered by it. Defendant argued in its
memorandum in support of its motion for summary judgment that,
"there is no evidence that Chevron ever filed a Certificate of
Registration, Customs Form 4455, for the alpha olefins alleged to
have undergone merely an alteration abroad." Def.’s Mem. at 15.
Defendant added, "[t]his requirement set forth in Customs
Regulations, 19 C.F.R. § 10.8, is mandatory." Id. (citing Export
Packers Co., Ltd. v. United States, 16 CIT 394 (1992)).
Plaintiff responded that the 1993 regulatory requirement of
filing a Certificate of Registration at the time of export and
subsequent entry, set forth at 19 C.F.R. § 10.8, expressly
applied only to merchandise to be classified in accordance with
subheading 9802.00.40, HTSUS, which in 1993, covered articles
exported for repairs or alterations "made pursuant to a
warranty". Pl.’s Reply at 15. "It did not expressly apply to
articles to be classified in accordance with HTSUS subheading
9802.00.50, which covered articles exported for repairs or
alterations not made pursuant to any warranty." Id. In
response, Defendant agreed that 19 C.F.R. § 10.8 is not
applicable in this case. See Def.’s Reply at 2.
Court No. 95-09-01141 Page 17
apply to the articles if imported outside this provision. The

assessment, however, is based only upon the value of the foreign

repairs or alterations.15 Plaintiff argues that its merchandise is

classifiable pursuant to subheading 9802.00.50, HTSUS, as alpha

olefins returned to the United States after having been exported to

be advanced in value or improved in condition by a process of

alteration.16 See Pl.’s Mem. at 44-47. Plaintiff maintains the AL-

304 starting material alpha olefins would be classifiable under

subheading 3823.90.45, HTSUS. Id. at 45.
Defendant does not dispute the fact that the subject alpha

olefins are both "advanced in value" and "improved in condition" by

the foreign processes undertaken in France. Mem. Supp. Def.’s Mot.

Summary J. ("Def.’s Mem.") at 13. Rather, Defendant argues that

there was no alteration here. See id. at 14.

Changes and additions to an article constitute alterations so

long as the article has not lost its identity or has not been

converted into something else. See, e.g., LeGran Mfg. Co. v.

United States, 59 Cust. Ct. 58, 62, C.D. 3070 (1967)(finding a new

article was created where pattern pieces, labels, thread, and

zippers were exported abroad and sewn into unfinished dresses);

15
The value of the foreign repairs or alterations is either
the cost to the importer of such change or if no charge is made,
the value of such change, as set out in the invoice and entry
papers, as long as Customs determines that the amount set out
represents a reasonable cost or value. See Chapter 98,
Subchapter II U.S. Note 3(a).
16
"This tariff classification position is alternative to the
position set forth above for classification of imported AL-304
under HTSUS (1993) subheading 3823.90.4500." Pl.’s Mem. at 45.
Court No. 95-09-01141 Page 18
Amity Fabrics, Inc. v. United States, 43 Cust. Ct. 64, 68, C.D.

2104 (1959)(holding that dyeing merchandise sent abroad constitutes

an alteration because there was no change in the character, quality

or texture of the merchandise).

The term "alteration" as it was used in the predecessor to

subheading 9802.00.50, HTSUS, Item 806.20, TSUS, was analyzed by

the Customs Court in Dolliff & Company, Inc. v. United States, 81

Cust. Ct. 1, C.D. 4755, 455 F. Supp. 618 (1978). There, the

domestic loom products made in the United States were exported to

Canada as greige17 goods for further processing and imported back
into the United States. The Customs Court denied Item 806.20

treatment to the merchandise because the exported unfinished goods

were returned as finished fabrics. Id. at 3-4, 455 F. Supp. at

620-21. The Court of Customs and Patent Appeals affirmed the lower

court, 66 CCPA 77, 82, C.A.D. 1225, 599 F.2d 1015, 1019 (1979),

holding that "repairs and alterations are made to completed

articles and do not include intermediate processing operations

which are performed as a matter of course in the preparation or the

manufacture of finished articles." Thus, alterations can only be

made to finished articles.18

17
Greige is defined as not bleached or dyed; unfinished. See
THE AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE 795 (3rd ed.
1992).
18
This view is also consistent with the court’s previous
interpretation of the term "alteration" as it was used in the
predecessor to Item 806.20, TSUS. In United States v. J.D.
Richardson Co., 36 CCPA 15, 16-18, C.A.D. 390 (1948), cert.
denied, 336 U.S. 936 (1949), the Court of Customs and Patent
Appeals held that unflanged rims were in an "unfinished
condition" because they were unsuitable for their intended use as
Court No. 95-09-01141 Page 19
Plaintiff argues "the alpha olefins exported to France are

‘completed goods’ for tariff purposes . . . . They are finished

alpha olefins, which are discrete chemical compounds of established

structure and known properties." Pl.’s Mem. at 49. Plaintiff

maintains that the foreign processing does not constitute

"intermediate processing," as the olefin starting mixture is no

more or less "finished" or "complete" than the resulting

alkylbenzenes. Id. at 50. The Court does not agree.

The Court finds that the process undertaken in France is

intermediate processing because the exported olefin fraction is

"unfinished." Plaintiff mistakenly defines "finished" too

narrowly. The question is not whether the alpha olefin fraction is

finished for purposes of being manufactured into AL-304

alkylbenzenes. Rather, the issue is whether or not the exported

olefin fraction is a finished product for tariff purposes. The

Customs Court has described finished in terms of how far an item

has been processed toward its ultimate use. See Strickland

Enterprises, Inc. v. United States, 64 Cust. Ct. 406, 409, C.D.

4009 (1970)(noting that an item estimated to be fifteen to twenty

percent completed is a partly finished article); see also United
States v. J.D. Richardson Co., 36 CCPA at 18 (finding that exported

articles that are not yet suitable for their intended use are

unfinished). Thus, in order for an article to be "finished" it

exported. Id. at 18. Further, the court found that Congress
intended only those articles exported in a "finished" condition
to be eligible for preferential tariff treatment accorded
articles exported for alteration. Id.
Court No. 95-09-01141 Page 20
must be suitable for its ultimate intended use. See, e.g., Peg

Bandage, Inc. v. United States, 17 CIT 1337, 1346 (1993)(finding

that because the exported unsewn bandages are unsuitable for their

intended use as reusable bandages, the sewing operations performed

in Haiti are not alterations), appeal dismissed, 22 F.3d 1106 (Fed.

Cir. 1994). Here, Plaintiff’s olefin fraction is "unfinished" for

purposes of the production of alkylbenzene sulfonates. Indeed,

Plaintiff concedes that "[t]he alpha olefins do not contain the

benzene rings that are contained in the alkylbenzene sulfonic acids

and, as such, they first must be processed into AL-304 before they

can be further manufactured into alkylbenzene sulfonic acids."19
Pl.’s Statement Resp. to Questions Posed by the Court (June 9,

1999) at 2. Because the processing undertaken in France is

performed as a matter of course in the preparation of the

alkylbenzene sulfonates it constitutes intermediate processing and

thus, is not an alteration. Accordingly, the subject AL-304 is not

covered under subheading 9802.00.50, HTSUS, and thus, should be

assessed with duty at its full value under heading 3817.

Conclusion

For the foregoing reasons, the Court finds that U.S. Customs

correctly classified Plaintiff’s imported AL-304 under subheading

3817.10.10, HTSUS. Accordingly, Plaintiff’s Motion for Summary

19
Moreover, Plaintiff’s argument concerning classification of
the AL-304 under subheading 3823.90.45, HTSUS, see discussion
infra pp. 14-15, rests upon the proposition that the AL-304 is an
"incomplete or unfinished" sulfonate.

20
Court No. 95-09-01141 Page 21
Judgment is denied. In turn, Defendant’s Motion for Summary

judgment is granted and judgment is entered for Defendant.

______________________

Donald C. Pogue
Judge

Dated: July 29, 1999
New York, New York

21