Slip Op. 09-3
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
_____________________________________
:
OUTER CIRCLE PRODUCTS, :
:
Plaintiff, :
:
v. : Court No.: 05-00678
:
UNITED STATES OF AMERICA, :
:
Defendant. :
_____________________________________ :
Held: Plaintiff’s motion for summary judgment is denied. Summary
judgment is granted in favor of the Defendant.
Dated: January 9, 2009
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, (Curtis W.
Knauss, Robert B. Silverman, Robert F. Seely, Edward B. Ackerman,
and Steven P. Florsheim) for Outer Circle Products, Plaintiff.
Gregory G. Katsas, Assistant Attorney General; Barbara S. Williams,
Attorney-in-Charge, International Trade Field Office (Aimee Lee and
Marcella Powell); Alexander Vanderweide, Civil Division, Commercial
Litigation Branch, United States Department of Justice; Of counsel:
Yelena Slepak, Office of Assistant Chief Counsel, International
Trade Litigation, United States Customs and Border Protection, for
the United States, Defendant.
OPINION
TSOUCALAS, Senior Judge: This matter is before the Court on
cross-motions for summary judgment pursuant to USCIT R. 56.
Plaintiff Outer Circle Products (“Plaintiff” or “Outer Circle”)
challenges the classification of its merchandise by the United
Court No. 05-00678 Page 2
States Bureau of Customs and Border Protection (“Customs”) under
the 1997 Harmonized Tariff Schedule of the United States
(“HTSUS”).1 Plaintiff maintains that the merchandise is properly
classified under subheading 3924.10.50, HTSUS, as “Tableware,
Kitchenware . . . of plastics: Other.” Customs cross-moves for
summary judgment stating that the Court should sustain its
classification under HTSUS subheading 4202.92.90 as “bottle cases
. . . [w]ith outer surface of sheeting of plastic or of textile
materials: Other.”
JURISDICTION
The Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1581(a) (1994), which provides the Court “shall have
exclusive jurisdiction of any civil action commenced to contest the
denial of a protest, in whole or in part, under section 515 of the
Tariff Act of 1930.” Section 515 of the Tariff Act, 19 U.S.C. §
1515 (1994), details the process by which Customs modifies and
performs administrative review of its decisions and “provides for
the allowance or denial of protests filed pursuant to section 514
of the Tariff Act of 1930.” Lowa, Ltd. v. United States, 5 CIT 81,
1
The United States Customs Service was renamed the Bureau
of Customs and Border Protection of the Department of Homeland
Security, effective March 1, 2003. See Homeland Security Act of
2002, Pub. L. No. 107-296, § 403, 116 Stat. 2178 (2002);
Reorganization Plan for the Department of Homeland Security, H.R.
Doc. No. 108-32 (2003).
Court No. 05-00678 Page 3
84, 561 F. Supp. 441, 444 (1983) (citations omitted).
STANDARD OF REVIEW
On a motion for summary judgment, the Court must determine
whether there are any genuine issues of fact that are material to
the resolution of the action. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A factual dispute is material if it
might affect the outcome of the suit under the governing law. See
id. Accordingly, the Court may not decide or try factual issues
upon a motion for summary judgment. See Phone-Mate, Inc. v. United
States, 12 CIT 575, 577, 690 F. Supp. 1048, 1050 (1988). When
genuine issues of material fact are not in dispute, summary
judgment is appropriate if a moving party is entitled to judgment
as a matter of law. See USCIT R. 56(c); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986).
DISCUSSION
I. Background
This dispute is ripe for summary judgment and the relevant
facts are outlined below. At issue is the proper classification of
the subject merchandise, which was imported through the Port of
Chicago, Illinois in June 1997. Plaintiff purports the merchandise
to be bottle and jug wraps “designed, manufactured and marketed for
Court No. 05-00678 Page 4
the primary purpose to contain beverages and keep them cool.”
Mem. Supp. Pl.’s Mot. for Summ. J. (“Pl.’s Brief”) at 3. Each of
the items was imported in finished condition without the bottles or
jugs attached. See Pl.’s Statement of Material Facts Not in Issue
¶ 7. The containers were designed to accommodate either a one
liter, half gallon, or two gallon plastic bottle or jug, and were
fitted to the size and shape of the bottle or jug they were
designed to carry. See Pl.’s Brief at 2. Zippers placed on either
the side or top allowed for greater plasticity of container to
bottle or jug. See id. at 3. The subject merchandise was
constructed of a foam portion measuring approximately three
millimeters in thickness covered on both sides by a plastic
sheeting, or in the alternate, covered on the inside by a plastic
coated textile fabric and the outside by plastic sheeting. See
Complaint ¶ 5; Def.’s Statement of Undisputed Material Facts ¶ 5.
Sewn on to each container was a fabric strap designed to promote
the product’s portability. See Pl.’s Brief at 3. After
importation but prior to resale, the appropriate plastic bottle or
jug was inserted into each container. See id. at 3. The finished
product was then marketed as possessing insulative properties, and
sold to large retail franchises under the trademark label “Arctic
Zone.” Id. at 3,5.
Upon liquidation of the entries, the merchandise was
classified by Customs under subheading 4202.92.90, HTSUS, and
Court No. 05-00678 Page 5
assessed the schedule duty rate of 19.3% ad valorem. The relevant
portions of Heading 4202 are as follows:
4202 Trunks, suitcases, vanity cases, attache cases,
briefcases, school satchels, spectacle cases,
binocular cases, camera cases, musical instrument
cases, gun cases, holsters and similar containers;
traveling bags, toiletry bags, knapsacks and
backpacks, handbags, shopping bags, wallets,
purses, map cases, cigarette cases, tobacco
pouches, tool bags, sports bags, bottle cases,
jewelry boxes, powder cases, cutlery cases and
similar containers, of leather or of composition
leather, of sheeting of plastics, of textile
materials, of vulcanized fiber or of paperboard, or
wholly or mainly covered with such materials or
with paper:
Other:
4202.92 With outer surface of sheeting of plastic or of
textile materials:
4202.92.90 Other 19.3%
Outer Circle protested Customs’ classification of the subject
merchandise, asserting that Customs should have classified the
imports under subheading 3924.10.50, HTSUS with a dutiable rate of
3.4% ad valorem. The pertinent parts of Heading 3924 are as
follows:
3924 Tableware, kitchenware, other household articles
and toilet articles, of plastics:
3924.10 Tableware and kitchenware:
3924.10.50 Other 3.4%
Court No. 05-00678 Page 6
Customs denied Plaintiff’s protest and a timely summons was filed
with this Court. All liquidated duties, charges and exactions for
the subject entries were paid prior to the commencement of this
action. Outer Circle seeks reliquidation of the subject imports
and a full refund of duties paid together with interest, as
provided by law. See id. at 11.
Defendant argues that the entries were properly classified
under subheading 4202.92.90, HTSUS “because the merchandise is
identified eo nomine under heading 4202, HTSUS.” Mem. in Opp’n to
Pl.’s Mot. for Summ. J. & in Supp. of Def.’s Cross-Mot. for Summ.
J. (“Def.’s Brief”) at 4. Customs further argues that the imported
merchandise does not fall within the scope of Chapter 39, HTSUS as
a container for food or beverages because “Outer Circle’s bottle
and jug cases clearly do not store food or beverages.” Id. at 13.
II. Arguments of the Parties
A. Plaintiff’s Arguments
Outer Circle maintains that Custom’s wrongly liquidated the
subject merchandise under subheading 4202.92.90 as other items
similar to those described by name in Heading 4202, HTSUS rather
than its appropriate classification as other household articles of
plastics under Heading 3924, HTSUS. See Pl.’s Brief at 6.
Plaintiff premises its argument on two prior decisions of this
Court and the United States Court of Appeals for the Federal
Court No. 05-00678 Page 7
Circuit (“CAFC”). Outer Circle contends that because the subject
imports are substantially similar to the products examined in SGI,
Inc. v. United States, 122 F.3d 1468 (Fed. Cir. 1997) and Dolly,
Inc. v. United States, 27 CIT 1597, 293 F. Supp. 2d 1340 (2003),
this Court is bound by these previous legal determinations. See
id. at 2-4. In both cases, the Courts reviewed the scope of HTSUS
Headings 4202 and 3924, and concluded that the correct
classification for the merchandise at issue was HTSUS Heading 3924.
Outer Circle maintains that because its merchandise was “designed
to contain and transport beverages like the products in SGI, they
should also be classified under Heading 3924, HTSUS.” Id. at 3.
Plaintiff also points to the rule of ejusdem generis which was
employed by both the SGI and Dolly Courts to determine the scope of
the two competing provisions.2 Outer Circle argues that when
applying the rule of ejusdem generis to “the products in this case,
it is clear that the wraps also have the essential characteristics
of the exemplars for Heading 3924, HTSUS - they preserve and store
beverages.” Id. at 4.
Plaintiff cites to the HTSUS General Rules of Interpretation
2
Under the rule of ejusdem generis, which means “of the
same kind,” where the enumeration of specific things is followed
by a general word or phrase, the general word or phrase will be
interpreted to include things of the same kind as those
specified. See Totes, Inc. v. United States, 69 F.3d 495, 498
(Fed. Cir. 1995) (citing Sports Graphics, Inc. v. United States,
24 F.3d 1390, 1392 (Fed. Cir. 1994).
Court No. 05-00678 Page 8
(“GRI”)3 and the Harmonized Commodity Description and Coding System
Explanatory Notes (“Explanatory Notes”),4 as additional support for
its position. More specifically, GRI 1 states in part that for
legal purposes, classification shall be determined according to the
terms of the headings and any relative section or chapter notes.
See id. at 4-5. Outer Circle contends that the subject imports are
correctly classified under HTSUS Heading 3924 because they are used
for the storage and preservation of beverages as contemplated by
such heading. See id. at 5. According to Plaintiff, the
Explanatory Notes for Heading 3924 specifically provide for “food
storage containers” which is “exactly the use for which the bottle
and jug wraps were designed and manufactured.”5 Id. at 7.
Moreover, Plaintiff suggests that the inclusion of the term
“luncheon boxes” in the Explanatory Notes of Heading 3924 “reflects
the likelihood that such boxes would be capable of keeping the
3
Classification of goods under the HTSUS is governed by the
General Rules of Interpretation and the Additional Rules of
Interpretation (“ARI”). See Orlando Food Corp. v. United States,
140 F.3d 1437, 1439 (Fed. Cir. 1998).
4
The Explanatory Notes constitute the official
interpretation of the Harmonized Commodity Description and Coding
System. While neither legally binding nor dispositive, they
provide a commentary on the scope of each heading of the HTSUS
and are generally indicative of its proper interpretation. See
Van Dale Indus. v. United States, 18 CIT 247, 251 n.2 (1994).
5
The Court notes that the term “food storage containers”
was not included in the Harmonized Commodity Description and
Coding System Explanatory Notes until January 2000, almost three
years after the subject imports were entered.
Court No. 05-00678 Page 9
contents warm or cool.” Id. (citing SGI, 122 F.3d at 1473). Outer
Circle posits that because the subject entries also maintain a
desired temperature for beverages, they fall within the scope of
Heading 3924. See id.
Next, Plaintiff argues that the subject imports are improperly
classified under HTSUS Heading 4202 because they do not share any
“common physical characteristics or a unifying purpose” with the
articles identified eo nomine therein. Id. at 8. Namely, the
exemplars listed under Heading 4202 do not contemplate the storage
or preservation of food or beverages. See id. Plaintiff relies on
the CAFC’s holding in SGI which determined that the scope of
Heading 4202 did not “include containers that organize, store,
protect, or carry food or beverages.” 122 F.3d at 1472. Outer
Circle further notes that the term “insulated food or beverage
bags” was not added to HTSUS Heading 4202 until several years after
the subject merchandise was entered.6 This, according to
Plaintiff, is recognition of the fact that, prior to the change,
such items were excluded from the scope of Heading 4202. See Pl.’s
Brief at 9. Therefore, classification of the subject imports under
Heading 4202 is inconsistent with the essential characteristics of
the exemplars listed therein which is to organize, store, protect
and carry various items. See id. at 8.
6
HTSUS Heading 4202 was expanded to include “insulated food
or beverage bags” in December 2001. See Proclamation No. 7515, 66
Fed. Reg. 66549, 66,619 (Dec. 18, 2001).
Court No. 05-00678 Page 10
B. Defendant’s Arguments
In response, Customs argues that the subject merchandise is
properly classified under HTSUS Heading 4202 because “bottle cases”
are specifically enumerated therein, and that goods classified as
such eo nomine fall within the scope of such heading.7 See Def.’s
Brief at 9. Defendant also relies on GRI 1 and its general mandate
that classification be determined according to the terms of the
headings, section and chapter notes. See id. at 7. Because Note
2(ij) of Chapter 39 precludes “containers of heading 4202” from its
coverage, Defendant claims that the subject imports are
“specifically excluded from classification under heading 3924,
HTSUS.” Id. at 8. As evidence of the scope and meaning of the
term “bottle cases,” Defendant points to the language of the
statute itself, and contends that the specific identification of
the items enumerated in Heading 4202 is a clear indication that its
coverage extends to “containers or cases which are designed to hold
specific items which give them their names.” Id. (quoting DRI
Indus., Inc. v. United States, 11 CIT 97, 102, 657 F. Supp. 528,
533 (1987)). While acknowledging that none of the provisions of
the HTSUS define the term “bottle cases,” Defendant relies on
7
Absent contrary legislative intent, an eo nomine
classification provision is one which describes a commodity by a
specific name, usually one that is well known in the trade or to
commerce. See Nidec Corp. v. United States, 68 F.3d 1333, 1336
(Fed. Cir. 1995); Clarendon Marketing Inc. v. United States, 144
F.3d 1464, 1467 (Fed. Cir. 1998).
Court No. 05-00678 Page 11
established case law for the proposition that where a tariff term
is not statutorily defined, such terms are construed in accordance
with their common and popular meaning. See id. at 9-10.
Therefore, Defendant looks to the term’s dictionary meaning as “a
covering or receptacle for holding bottles.” Id. at 10.
Customs disputes Plaintiff’s categorization of the subject
imports as insulated food or storage containers, and asserts that
“Outer Circle’s entire argument hinges on the incorrect premise
that its bottle and jug wraps preserve and store food or
beverages.” Id. at 13. Inasmuch as merchandise is classified
according to its condition when imported, the subject containers
were entered without the plastic bottles or jugs. Defendant claims
that because the containers are incapable of storing food or
beverages in the absence of the related bottles or jugs,
Plaintiff’s classification scheme is ill-conceived. See id. at 22.
The imports are merely conduits for the encasement and transport of
the associated bottles or jugs, which further contain the actual
food or beverages. See id. at 13.
In addition, Customs performed its own tests of the insulative
properties of the subject merchandise, and presents findings that
call into question the efficacy of the goods’ insulative
capabilities. See id. According to Defendant, the results of
these laboratory tests demonstrate that “Outer Circle’s imported
articles have no material insulative properties, and therefore
Court No. 05-00678 Page 12
cannot properly preserve or store food or beverages.”8 See id. at
16. Since they cannot be considered insulated food or beverage
bags, any attempt at classification of the subject merchandise
under HTSUS Heading 3924 is misplaced. See id. at 23.
In response to Outer Circle’s argument that the term
“insulated food or beverage bags” was not added to HTSUS Heading
4202 until years after its merchandise was imported, Defendant
points out that while this may be true, the term “bottle cases” has
always been an eo nomine provision in Heading 4202. See id. at 15.
This fact notwithstanding, Customs maintains that the legislative
history of Heading 4202 demonstrates that “insulated food or
beverage bags” were always meant to fall within the heading’s
8
Customs tested the one liter and half liter cases by
measuring the temperature of liquids within bottles placed into
the cases against liquids within bottles placed into a brown
paper bag and liquids within bottles not placed into any
container, i.e. exposed to open air. At the end of a four hour
period the difference in the temperature of a liquid insulated by
the half liter container and that of a liquid insulated by the
brown paper bag was 0.4°F. Likewise, the difference in the
temperature of the liquid insulated by the one liter case and
that of the brown paper bag over the same four hour period was
1.1°F. The differences recorded for the open air containers were
similarly minimal. See Def.’s Brief, Exhibit A.
Plaintiff tested the subject merchandise on two separate
occasions. The first test, performed in January 2008, compared
the temperature of a liquid contained within a bottle left
exposed to open air against a liquid within a bottle placed into
one of the subject containers. The second test, conducted in
August 2008, measured the temperature of a bottled beverage in
three states: 1) wrapped in a subject wrap; 2) unwrapped; and 3)
wrapped in a paper bag. Plaintiff argues that these tests
demonstrate as incorrect, the conclusions drawn by Customs in its
laboratory tests. See Pl.’s Brief, Exhibit 8; Pl.’s Resp. to
Def.’s Cross-Mot. for Summ. J. (“Pl.’s Resp.”), Exhibit 1.
Court No. 05-00678 Page 13
coverage. See id. In adopting the amendments to the text of
Heading 4202, which included the addition of the term “insulated
food or beverage bags,” the Harmonized System Committee of the
World Customs Organization stated that the “new texts involved no
change in scope.” Id.
Customs refutes Outer Circle’s contention that judicial
precedent is controlling with regard to this classification.
Defendant maintains that the circumstances in the cases on which
Plaintiff relies are distinguishable from those present here. See
id. at 17. In particular, the CAFC’s holding in SGI is predicated
on the application of the subject merchandise as one for the
storage of food or beverages. Moreover, the physical
characteristics of Plaintiff’s bottle and jug containers differ
markedly from the merchandise at issue in SGI. See id. For
example, whereas the imports in SGI were capable of storing both
food and beverages, Plaintiff’s merchandise is designed to store a
single bottle or jug. See id. Defendant concludes, that because
the Plaintiff has “failed to produce any competent evidence that
its merchandise involves food or beverage storage,” the holding of
SGI is not controlling for purposes of this proceeding. Id. at 18.
Defendant further contests, as inapplicable to the underlying
action, the CAFC’s holding in Dolly. Customs alleges that, as was
the case in SGI, the physical composition of subject merchandise
differs considerably from Outer Circle’s bottle and jug
Court No. 05-00678 Page 14
containers.9 See id. at 19. The merchandise at issue in Dolly was
found to have a specific primary purpose of “transporting and
storing infant and toddler food and beverages at a desired
temperature over a period of time.” Id. (quoting Dolly, 27 CIT at
1605, 293 F. Supp. 2d at 1346). Defendant claims that because the
subject imports at issue here are “bottle cases,” they are not
adequately comparable to the articles examined in Dolly. See id.
Furthermore, the Court in Dolly relied on the rule of ejusdem
generis to determine the appropriate tariff classification, which
was contingent upon an examination of dissimilar merchandise,
namely food and beverage containers. See id. at 19-20. Therefore,
the conclusions the Court reached in Dolly are not relevant to the
proper classification of the items in the present action. See id.
at 21.
Finally, Customs argues that the subject imports are not
specifically described by the exemplars listed under HTSUS
subheading 3924.10, nor are they similar in any material way. See
id. at 22. More to the point, each of the exemplars in subheading
3924.10 are themselves used for the containment of food or
beverages whereas Outer Circle’s products merely secure bottles and
9
Customs observes that the insulative foam layer in the
merchandise in both SGI and Dolly were significantly more dense
than Plaintiff’s imports. It is Defendant’s contention that the
degree to which these items differ make the articles in SGI and
Dolly inappropriate for comparison to Outer Circle’s bottle and
jug containers. See Def.’s Brief at 19.
Court No. 05-00678 Page 15
jugs. See id. at 22-23.
III. Analysis
A. Motion for Summary Judgment
Determining whether imported merchandise was classified under
the appropriate tariff provision entails a two-step process. See
Bausch & Lomb, Inc., v. United States, 148 F.3d 1363, 1365 (Fed.
Cir. 1998). First, the proper meaning of specific terms in the
tariff provision must be ascertained. See id. Second, determine
under which of the properly construed tariff terms the subject
merchandise falls. See id. Interpreting the proper meaning of
terms is a question of law, while determining whether the item fits
within such meaning is a question of fact. See Avenues In Leather,
Inc. v. United States, 423 F.3d 1326, 1330 (Fed. Cir. 2005)
(“Avenues III”). While the second step, viewed as focusing on the
particular merchandise and where it fits into the statutory scheme,
is deemed a question of fact, a conceptual dilemma arises in its
application. If the second step in the analysis is adjudged a
question of fact, no party would ever stipulate to their
adversary’s classification as being factually correct, “since ‘to
do so would be to stipulate oneself out of court.’” Bausch & Lomb,
Inc., 148 F.3d at 1365 (quoting Bausch & Lomb, Inc. v. United
States, 21 CIT 166, 167, 957 F. Supp. 281, 282 (1997)). This
quandary becomes especially acute in decisions on summary judgment.
Court No. 05-00678 Page 16
Because the inquiry on such motions is whether a “genuine issue as
to any material fact” exists, USCIT R. 56(c), a court would be
precluded from rendering summary judgment in such instances.
Presently, the parties offer differing characterizations of the
subject merchandise. Yet, they both agree that there are no
material facts in dispute, and that the matter is ripe for summary
judgment. Therefore, the question before the Court is whether the
facts on which the parties disagree rise to the level of material
facts so essential to a claim or defense embodied in the summary
judgment motion. The Court finds that they do not.
In the event there is a real dispute as to the facts, it
initially must be determined whether the facts at issue are
material. A dispute as to an immaterial fact does not preclude
summary judgment. See Houston North Hosp. Properties v. Telco
Leasing, Inc., 688 F.2d 408, 410 (5th Cir. 1982). While there is
no established standard which governs the question of what
constitutes a material fact, the courts have held that a fact is
material “if it tends to resolve any of the issues that have been
properly raised by the parties.” Allied Int’l v. United States, 16
CIT 545, 548, 795 F. Supp. 449, 451 (1992) (quoting 10 Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and
Procedure § 2725 at 93-95 (2d ed. 1983)). Summary judgment thus
may be appropriate in a Customs classification case “when there is
no genuine dispute as to the underlying factual issue of exactly
Court No. 05-00678 Page 17
what the merchandise is.” Bausch & Lomb, 148 F.3d at 1365.
Whereas Outer Circle categorizes its imports as “insulated food or
beverage containers,” see Pl.’s Brief passim, Customs applies the
designation “bottle cases” to those same items. See Def.’s Brief
passim. The disagreement over the subject imports’ proper
nomenclature, however, is more a byproduct of the parties’
preferred classification schemes. Both parties agree on the basic
physical composition of the imported merchandise. See Pl.’s
Statement of Material Facts Not in Issue ¶¶ 4-6; Pl.’s Resp. to
Deft.’s Statement of Undisputed Material Facts ¶ 1; Def.’s
Statement of Undisputed Material Facts ¶ 5; Def.’s Resp. to Pl.’s
Statement of Material Facts Not in Issue ¶¶ 4-6. What remains in
dispute is the significance of the items’ purported insulative
capabilities. This, however, is not relevant to the Court’s
inquiry. In determining under what tariff provision the subject
imports should properly fall, the Court’s focus must be on “whether
food or beverage is involved.” SGI, 122 F.3d at 1472. While the
insulative properties of the subject merchandise may be indicative
of an ability to store beverages at a desired temperature, it is
not legally dispositive of the products’ ability to store or
transport beverages in general. Thus, the insulative nature of the
imports is not a fact that tends to resolve any of the issues
properly raised by the parties, i.e., whether food or beverages are
being stored or transported. Therefore, the Court agrees with the
Court No. 05-00678 Page 18
parties, that there are no disputed material issues of fact to be
resolved by trial in the instant matter and disposition by summary
judgment is appropriate. See Pl.’s Brief at 7; Def.’s Brief at 4-5.
B. Presumption of Correctness
Relying on section 2639(a)(1) of title 28 of the United States
Code, Customs argues that the agency’s classification decision is
presumed to be correct with the burden of overcoming this
presumption resting with Plaintiff.10 See Def.’s Brief at 5.
Customs cites to a Court of Customs and Patent Appeals decision,
United States v. New York Merchandise Co., Inc., 58 CCPA 53, 435
F.2d 1315 (1970), for the proposition that this presumption extends
to its decision as a whole, including purely legal portions of the
determination. See id. at 6. The Court finds this argument
unavailing. Although the presumption of correctness carries force
on any factual components of a classification decision, the
situation is quite different with respect to pure questions of law.
See Universal Electronics, Inc. v. United States, 112 F.3d 488, 492
(Fed. Cir. 1997). Questions of law, such as the proper
10
The relevant portions of the statute read as follows:
Except as provided in paragraph (2) of this
subsection, in any civil action commenced in the Court
of International Trade under section 515, 516, or 516A
of the Tariff Act of 1930, the decision of the
Secretary of the Treasury, the administering
authority, or the International Trade Commission is
presumed to be correct. The burden of proving
otherwise shall rest upon the party challenging such
decision. 28 U.S.C. 2639(a)(1).
Court No. 05-00678 Page 19
interpretation of a particular tariff provision, “lie within the
domain of the courts.” Id. Moreover, Customs’ understanding of
section 2639(a)(1) is inconsistent with established judicial
precedent. The statutory presumption of correctness is irrelevant
where there is no factual dispute between the parties. See Goodman
Mfg., L.P. v. United States, 69 F.3d 505, 508 (Fed. Cir. 1995);
Rollerblade, Inc. v. United States, 112 F.3d 481, 484 (Fed. Cir.
1997). Here, the parties filed cross-motions for summary judgment
and agree that there are no disputed issues of material fact. As
noted above, none of the pertinent characteristics of the
merchandise are in dispute, and thus the sole issue is a matter of
properly construing the relevant tariff provisions to determine
whether the scope of those provisions are broad enough to encompass
the subject imports. Therefore, the presumption of correctness
does not apply.
C. Stare Decisis
Outer Circle urges this Court to find in its favor, in part,
on the doctrine of stare decisis. Plaintiff points out that the
same two provisions of the HTSUS at issue here were examined by the
Federal Circuit in SGI. See Pl.’s Brief at 2. Specifically, the
scope of Heading 4202 was determined not to include the soft-sided
cooler bags at issue in SGI, and that the proper classification for
these products was under Heading 3924. The Court further held that
the common characteristics or unifying purpose of the exemplars
Court No. 05-00678 Page 20
listed in Heading 3924, was their capacity to store food and
beverages. See SGI, 122 F.3d at 1472. Thus, according to
Plaintiff, if the Court agrees with the facts alleged by Outer
Circle, i.e., that the subject wraps were designed to carry
beverages, then it is bound by the holding in SGI. See Pl.’s Brief
at 2 n. 1.
Stare decisis essentially “makes each judgment a statement of
the law, or precedent, binding in future cases before the same
court or another court owing obedience to its decision.” Avenues
III, 423 F.3d at 1331 (quoting Mendenhall v. Cedarapids, Inc., 5
F.3d 1557, 1570 (Fed. Cir. 1993)). Plaintiff is correct in its
assessment of the effects of this previous CAFC holding, as this
determination relates to the scope of HTSUS Headings 3924 and 4202
- questions of law. Because the doctrine of stare decisis applies
only to legal issues and not issues of fact, this Court is burdened
by the previous holding in SGI only to the extent that such issues
apply. The determination of whether the merchandise at issue comes
within the description of either HTSUS Heading 3924 or 4202,
however, is a question of fact. Therefore, the classification of
soft-sided cooler bags in SGI is not stare decisis to the
classification of the subject imports in this case.
D. HTSUS Classification
The parties’ remaining arguments are directed to the issue of
whether the properly interpreted scope of HTSUS Heading 4202 or
Court No. 05-00678 Page 21
3924 encompasses Outer Circle’s imported bottle containers.
As previously noted, the determination as to the proper
classification of imported merchandise, is directed by the GRI and
ARI of the HTSUS. See Orlando Food Corp., 140 F.3d at 1439. The
HTSUS is organized by headings, each of which has one or more
subheadings. Whereas the headings set forth general categories of
merchandise, the subheadings provide a more particularized taxonomy
of the goods within each category. Under GRI 1, the HTSUS
headings, as well as relative section or chapter notes, govern the
classification of a product. See GRI 1. Only after a court
determines that a product is classifiable under the heading should
it look to the subheadings to find the correct classification for
the merchandise. See Orlando Food Corp., 140 F.3d at 1440. As
Customs points out, Note 2(ij) to Chapter 39 provides that the
chapter “does not cover . . . trunks, suitcases, handbags or other
containers of heading 4202.” Note 2(ij), Chapter 39, HTSUS (1997
ed.). Thus, the Court must first determine whether the containers
are prima facie classifiable under Heading 4202. If the Court so
concludes, the bags are precluded from classification under Heading
3924.
Heading 4202 is structured as a list of exemplars followed by
the general term “similar containers.” Customs argues that the
subject imports are classifiable under Heading 4202 because they
are encompassed by the listed exemplar “bottle cases.” See Def.’s
Court No. 05-00678 Page 22
Brief at 9. The tariff term “bottle cases” is an eo nomine
provision under Heading 4202, as it describes the merchandise by
name. An eo nomine designation, without limitation or contrary
legislative intent, is construed according to its common and
commercial meanings, which are presumed to be the same. See Carl
Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed. Cir. 1999).
As the term “bottle cases” is not specifically defined in the HTSUS
or in the relevant legislative history, it is necessary for the
Court to determine, as a matter of law, the common and commercial
meaning of the term to decide whether Outer Circle’s merchandise
can be classified as such. In so doing, the Court may rely upon
its own understanding of the term, and may consult lexicographic
and scientific authorities, dictionaries, and other reliable
information sources. See id. (citing Baxter Healthcare Corp. of
P.R. v. United States, 182 F.3d 1333, 1337-1338 (Fed. Cir. 1999).
A party who argues that a tariff term should not be given its
common or dictionary meaning must prove that it has a different
commercial meaning that is definite, uniform, and general
throughout the trade. See Rohm & Haas Co. v. United States, 727
F.2d 1095, 1097 (Fed. Cir. 1984).
It is well established that an eo nomine provision, such as
4202.92.90, HTSUS, includes all forms of the named article. See
National Advanced Systems v. United States, 26 F.3d 1107, 1111
(Fed. Cir. 1994); Hasbro Indus., Inc. v. United States, 879 F.2d
Court No. 05-00678 Page 23
838, 840 (Fed. Cir. 1989); Nootka Packing Co. v. United States, 22
CCPA 464, 470 (1935); Sabritas v. United States, 22 CIT 59, 63, 998
F. Supp. 1123, 1127 (1998). By any measure, application of this
principle to the term “bottle cases” would cast a wide net, and
thus would appear to encompass Outer Circle’s imports. However,
the Court is not writing on a clean slate here. The CAFC has
already determined that the scope of Heading 4202 does not include
containers that organize, store, protect or carry food or
beverages. See SGI, 122 F.3d at 1472. Therefore, the Court’s
focus is further limited to whether or not Outer Circle’s products
are designed to contain, organize store, protect or carry food or
beverages.
While not specifically framed as such, Outer Circle presents
an argument based upon the subject merchandise’s “principal use.”
“Principal use” is defined as the use “which exceeds any other
single use” of the article. Lenox Collections v. United States, 20
CIT 194, 196 (1996) (citation omitted). To the extent that a
classification is controlled by use other than actual use, HTSUS
ARI 1(a) provides that:
[A] tariff classification controlled by use (other than
actual use) is to be determined in accordance with the
use in the United States at, or immediately prior to, the
date of importation of goods of that class or kind to
which the imported goods belong, and the controlling use
is the principal use.
Plaintiff claims that “the primary purpose of the goods is to store
and transport beverages.” Pl.’s Resp. at 16. In support, Outer
Court No. 05-00678 Page 24
Circle submits an affidavit and deposition from its founder and
former president of the company, Thomas Melk. See Pl.’s Brief,
Exhibit 1 (Melk Affidavit), Exhibits 2, 3, 4, 6, 7 (Melk
Deposition). Melk’s affidavit and deposition testimony focus on
the factors a court considers in determining the principal use of
a subject import.11 The Court finds it unnecessary to comment on
the sufficiency of each individual factor except to note that each
is predicated on the marriage of Outer Circle’s containers to their
respective bottles or jugs. For example, Melk states that the
“primary purpose of the subject merchandise is to help retain the
cool temperature of the water or other beverage contained within it
(in the bottle or jug) for the period of hours expected.” Pl.’s
Brief, Exhibit 1 (Melk Affidavit ¶ 7). It is fundamental in
Customs cases that merchandise subject to classification “must be
evaluated for tariff purposes in its condition as imported.”
Rollerblade, Inc., 112 F.3d at 487 (citing Simod Am. Corp. v.
United States, 872 F.2d 1572, 1577 (Fed. Cir. 1989). Thus, in
order to produce uniformity in the imposition of duties, “the
11
These factors are outlined in United States v.
Carborundum Co., and include: (1) the general physical
characteristics of the merchandise; (2) the expectation of the
ultimate purchasers; (3) the channel of trade in which the
merchandise moves; (4) the environment of the sale (i.e., the
manner in which the merchandise is advertised and displayed); (5)
the usage of the compared to the use if any, in the same manner
as merchandise which defines the class, and adds to additional
factors of consideration; (6) the economic practicality of so
using the import; and (7) the recognition in the trade of this
usage. 536 F.2d 373, 377 (CCPA 1976).
Court No. 05-00678 Page 25
dutiable classification of articles imported must be ascertained by
an examination of the imported article itself, in the condition in
which it is imported.” KMW Johnson, Inc. v. United States, 13 CIT
1079, 1082, 728 F. Supp 754, 755-56 (1989) (quoting Worthington v.
Robbins, 139 U.S. 337, 341 (1891).
Presently, the subject containers are imported without the
plastic bottles or jugs. Far from being mere accoutrements, the
bottles and jugs are basic to the accomplishment of the articles’
purported design and purpose, which is the maintenance and storage
of beverages at a desired temperature. Thus, Plaintiff’s argument
that the subject imports are designed to contain and transport
beverages is flawed. The bottle wraps, as imported, cannot make
this claim. Their utility as insulated beverage containers arises
only after the containers are mated to the requisite bottle or jug.
Plaintiff claims that the wraps were designed to store and
transport beverages and not the bottles which “merely act as
vessels for the beverages.” Pl.’s Resp. at 9. Outer Circle points
to the articles examined in SGI and argues that the same analysis
applies in the instant matter. Because of the subject imports’
similarity to the merchandise at issue in SGI, “they should also be
classified under Heading 3924, HTSUS.” Pl.’s Brief at 3. The
Court disagrees.
First, neither the Court in SGI nor Dolly conducted an
analysis of the tariff term “bottle cases.” While holding that the
Court No. 05-00678 Page 26
scope of Heading 4202 does “not include containers that organize,
store, protect, or carry food or beverages,” SGI, 122 F.3d at 1472,
this finding is inter-reliant with and contingent upon the
principal use of the subject merchandise. The Court’s
determination, in SGI, was based on an examination of merchandise
fully capable of storing food and/or beverages without further
compilation. Outer Circle’s products, on the other hand, require
the additional assemblage of bottle or jug to achieve this end.
Second, in both SGI and Dolly the Court undertook an analysis
based on the rule of ejusdem generis,12 the fulcrum of which, once
again, turned on the products’ ability to store food or beverages.
In both cases, the merchandise at issue was found to have retained
the essential characteristics of being able to transport and store
food and beverages in an insulated environment. The Court
therefore concluded that the proper classification was under
Heading 3924. Here, the Court has already determined that the
subject merchandise, as imported, are incapable of storing food or
beverages. Therefore, neither of these decisions is apposite for
purposes of the case at bar. Regardless, an ejusdem generis
analysis is ill-suited for the tariff term at issue here. The rule
of ejusdem generis is a rule of statutory construction appropriate
12
In classification cases, the rule of ejusdem generis
requires that the subject merchandise must possess the same
essential characteristics or purposes that unite the listed
exemplars preceding the general term. See Totes, Inc. v. United
States, 69 F.3d 495, 498 (Fed. Cir. 1995).
Court No. 05-00678 Page 27
where the statutory language is unclear. It is “applicable
whenever a doubt arises as to whether a given article not
specifically named in the statute is to be placed in a class of
which some of the individual subjects are named.”13 DRI Indus.,
Inc., 11 CIT at 101, 657 F. Supp. at 532 (1987) (quoting United
States v. Damrak Trading Co., Inc., 43 CCPA 77, 79 (1956). It may
not be resorted to when there is no doubt as to the meaning of a
term. See John V. Carr & Son, Inc. v. United States, 77 Cust. Ct.
103, 108 (1976). The term “bottle cases” in this context is not a
general word or phrase, and is specifically named. Thus, the
statutory language is clear. As with all principles of statutory
interpretation, “ejusdem generis is ‘used only as an
instrumentality for determining the legislative intent in cases
where it is in doubt.’” Airflow Technology, Inc. v. United States,
31 CIT __, 483 F. Supp. 2d 1337, 1346 n.11 (2007) (citations
omitted). Because Outer Circle has failed to establish any
ambiguity in the statutory term “bottle cases,” the principle of
ejusdem generis is not implicated.
13
Plaintiff’s statement that its bottle and jug wraps are
correctly classifiable under Heading 3924 “because that provision
specifically describes them” is inconsistent with its reliance on
the doctrine of ejusdem generis. Pl.’s Brief at 5.
Court No. 05-00678 Page 28
CONCLUSION
As the merchandise is prima facie classifiable under Heading
4202, HTSUS, Chapter 39, Note 2(ij) precludes classification of the
imports under that chapter. Therefore, Plaintiff’s proposed
alternative classification under subheading 3924.10.50, HTSUS
cannot stand. In addition, the Court finds that the tariff term
“bottle cases” is broad enough to encompass the subject containers.
Accordingly, the Court finds that Customs properly classified the
subject merchandise under Heading 4202.92.90, HTSUS.
Based on the foregoing, Outer Circle’s motion for summary
judgment is denied and Customs’ motion for summary judgment is
granted. Judgment to be entered accordingly.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: January 9, 2009
New York, New York
Outer Circle Products v. United States
Court: United States Court of International Trade
Date filed: 2009-01-09
Citations: 602 F. Supp. 2d 1294, 33 Ct. Int'l Trade 9
Copy CitationsCombined Opinion