Slip Op. 03-153
United States Court of International Trade
FILMTEC CORPORATION,
Plaintiff,
v. Before: Pogue, Judge
UNITED STATES, Court No. 99-00100
Defendant
[Plaintiff’s motion for summary judgment granted. Defendant’s
cross-motion for summary judgment denied. Judgment entered for
Plaintiff.]
Decided: November 25, 2003
McGuireWoods LLP1 (Joseph S. Kaplan, Holly M. Travis) for
Plaintiff.
Robert D. McCallum, Jr., Assistant Attorney General, John J. Mahon,
Acting Attorney-in-Charge, International Trade Field Office, Jack
S. Rockafellow, Attorney, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, Sheryl A. French, Attorney,
Of Counsel, Office of Assistant Chief Counsel, International Trade
Litigation, U.S. Bureau of Customs and Border Protection, for
Defendant.
OPINION
Pogue, Judge: At issue in this proceeding is the proper
classification, under 19 U.S.C. § 1202 (1994), of Plaintiff’s
1
The record reflects that counsel for Plaintiff underwent a
change of name during this litigation. Formerly, they were known
as Ross & Hardies.
Court No. 99-00100 Page 2
importation of certain nonwoven fabric sheets described as AWA No.
10. Plaintiff FilmTec Corporation (“FilmTec” or “Plaintiff”)
challenges a decision of the United States Bureau of Customs and
Border Protection (“Customs” or “Defendant”), denying FilmTec’s
protest filed in accordance with section 514 of the Tariff Act of
1930, as amended, 19 U.S.C. § 1514 (1994). FilmTec’s protest
challenges Customs’ classification of the subject merchandise under
subheading 5911.40.00 of the Harmonized Tariff Schedule of the
United States (“HTSUS”), thereby imposing a duty of 12.5 percent ad
valorem. Subheading 5911.40.00, HTSUS (1995). Before the Court are
cross motions for summary judgment in accordance with USCIT Rule
56. The Court has exclusive jurisdiction over this case under 28
U.S.C. § 1581(a)(1994).
Background
The parties agree that there is no genuine dispute as to any
material fact. Pl.’s Mem. Supp. Mot. Summ. J. at 7; Def.’s Mem.
Supp. Mot. Summ. J. at 9. The imported merchandise, AWA No. 10, is
“a nonwoven textile fabric sheet consisting of 100 [percent]
polyester fibers.” Jt. Stmt. Undisputed Mat. Facts para. 13 (“Jt.
Stmt”). Plaintiff FilmTec imported this merchandise in rolls
approximately 40.5 inches wide and 2000 meters long,2 as
2
AWA No. 10 sheets are produced from “a highly uniform and random
array of polyester staple fibers thermally bonded and calendered
into a tactually and visually smooth surface web.” Jt. Stmt
para. 15. AWA purchases polyester fibers from a supplier. Id.
Court No. 99-00100 Page 3
manufactured by the AWA Paper Mfg. Co., Ltd. (“AWA”), a Japanese
company. Jt. Stmt paras. 8, 17. AWA sold 100 percent of its
production of AWA No. 10 to FilmTec, following technical
specifications furnished by FilmTec.3 Id. paras. 12, 19. As
imported, AWA No. 10 was solely used (as intended) as a support web
for a product manufactured by FilmTec in the United States, the
FILMTEC FT 30 Reverse Osmosis Membrane (“RO Membrane”).4 Id. para.
para. 16. The fibers are “mixed with water to make a homogenous
water-based solution containing suspended polyester fibers.” Id.
This solution is applied to a “forming wire”; “the majority of
the water is drained through the wire and the polyester fibers
coagulate on the forming wire to make a wet, non-woven fabric.”
Id. The fabric is then removed from the forming wire, “pressed
and dried to remove the remaining water, and passed through
heated calender rolls to increase smoothness and to cause thermal
bonding which increases mechanical strength.” Id.
3
FilmTec had the following specifications for AWA No. 10:
a) a thickness of 3.9 ± 0.3 mils, i.e., .0039" (3.9
thousandths of an inch) plus or minus a tolerance of
.0003 (0.3 thousandths of an inch);
b) a basis weight of 85 ± 4 g/m2, i.e., 85 grams per
square meter, plus or minus a tolerance of 4 grams per
square meter;
c) a Frazier air permeability of 1.0 ± 0.5 cfm/foot2,
i.e., one cubic foot per minute per square foot, plus
or minus ½ cubic foot per minute per square foot.
d) a minimum machine tensile strength of 29.8
lbs/inch2, i.e., a minimum of 29.8 pounds per square
inch;
e) a minimum cross-directional tensile strength of 9.3
lbs/inch2, i.e., a minimum of 9.3 pounds per square
inch.
Jt. Stmt para. 20.
4
Currently, AWA supplies FilmTec with a similar polyester sheet,
AWA No. 51, for use in producing RO Membrane. Bando Dep. at 12.
Reverse osmosis filtration is used to separate salt from
seawater. In simple terms, reverse osmosis results when a high
pressure pump forces saline feed water to be pumped into a vessel
with RO Membrane. FilmTec Membranes: Principle of Reverse
Court No. 99-00100 Page 4
22.
After its importation into the United States, FilmTec coats
AWA No. 10 with two layers of certain polymer material to produce
RO Membrane. Id. para. 26. First, “a microporous polysulfone
interlayer coating approximately .002 [inches] thick,” is cast onto
the AWA No. 10 sheet. Id. para. 29. The surface pores of this
coating have a diameter of approximately 150 angstroms;5 this layer
serves as a substrate support for the second polymer coating. See
id. Second, an ultra-thin barrier coating, about 2000 angstroms
thick, is applied to the polysulfone surface. See id. paras. 26,
30. Importantly, this final layer furnishes the necessary filter
characteristics of RO Membrane.6 Id. paras. 28, 31. RO Membrane
may be used to filter salt in “low-pressure tapwater use, single-
pass seawater and brackish water desalination, chemical processing,
and waste treatment.” FilmTec Membranes: FT30 Membrane
Osmosis, in Tech Manual Excerpts, Jt. Stmt, Attach. B. Reverse
flow of the feed water produces purified water from the salt
solution because the RO Membrane is not permeable to salt. Id.
5
An angstrom is a “unit of length, 10-10 meter[s].” McGraw-Hill
Dictionary of Scientific and Technical Terms 102 (6th ed. 2003).
6
The description of RO Membrane by FilmTec in its Product
Information states:
The major structural support is provided by the
nonwoven web, which has been calendered to produce a
hard, smooth surface free of loose fibers. Since the
polyester web is too irregular and porous to provide a
proper substrate for the salt barrier layer, a
microporous layer of engineering plastic (polysulfone)
is cast onto the surface of the web.
Membrane Description, Jt. Stmt, Attach. C.
Court No. 99-00100 Page 5
Description, in Product Information, Jt. Stmt, Attach. C at 1
(“Membrane Description”).
The parties agree that while AWA No. 10 is not itself a filter
medium, it is a necessary part of RO Membrane. Jt. Stmt para. 28;
see also Membrane Description, Jt. Stmt, Attach. C (containing a
three-dimensional schematic drawing of the RO Membrane). According
to the General Manager of the Membrane Filtration Sector of AWA,
there is no known use of AWA No. 10 or any like product as a
filter. Bando Decl. paras. 1, 21-23. Defendant also submits that
in its imported condition AWA No. 10 cannot function as a
commercially practical filter medium, although it is a “critical
component” of the RO Membrane. Def.’s Mem. Mot. Summ. J. at 3.
In 1995, Customs liquidated AWA No. 10 under subheading
5603.00.9030 of the HTSUS, which the agency described as including
“[n]onwovens, whether or not impregnated, coated, covered or
laminated: Other: Other: Other nonwovens, whether or not
impregnated, coated or covered: thermal bonded, of staple fibers.”
Pl.’s Ex. 1, Headquarters Ruling (“HQ”) 958415 at 2 (Mar. 26,
1996). The duty rate for this subheading was ten percent ad
valorem. Id. FilmTec timely protested, seeking to reclassify AWA
No. 10 under subheading 4805.40.00, HTSUS, which covers “filter
paper and paperboard.” Id.; see also subheading 4805.40.00, HTSUS.
Customs denied FilmTec’s protest, deciding that the merchandise was
properly classifiable under subheading 5911.40.0000, HTSUS:
Court No. 99-00100 Page 6
“[t]extile products and articles, for technical uses, specified in
note 7 to Chapter 59: straining cloth of a kind used in oil presses
or the like, including that of human hair” at a duty rate of twelve
and a half percent ad valorem. Pl.’s Ex. 1, HQ 958415 at 4 (Mar.
26, 1996); see also subheading 5911.40.0000, HTSUS.
In this action, FilmTec claims that the imported merchandise
is classifiable under subheading 9907.56.01, HTSUS as “nonwoven
fiber sheet (provided for in heading 5603),” arguing that AWA No.
10 meets the requirements of Chapter 99, Subchapter VII, U.S. Note
2 of the HTSUS.7 Pl.’s Mem. Supp. Mot. Summ. J. at 6.
Standard of Review
Customs’ classification is subject to de novo review pursuant
to 28 U.S.C. § 2640. The Court analyzes a Customs classification
issue in two steps: “first, [it] construe[s] the relevant
classification headings; and second, [it] determine[s] under which
of the properly construed tariff terms the merchandise at issue
falls.” Rollerblade, Inc. v. United States, 24 CIT 812, 813, 116
F. Supp. 2d 1247, 1250 (2000) (quoting Bausch & Lomb v. United
States, 148 F.3d 1363, 1365 (Fed. Cir. 1998) (citation omitted)).
“The proper classification of merchandise entering the United
States is directed by the General Rules of Interpretation (“GRI[]”)
of the HTSUS and the Additional United States Rules of
7
For U.S. Note 2’s specifications, see note 12, infra.
Court No. 99-00100 Page 7
Interpretation.” Toy Biz, Inc. v. United States, 27 CIT __, __,
248 F. Supp. 2d 1234, 1242 (2003) (citing Orlando Food Corp. v.
United States, 140 F.3d 1437, 1439 (Fed. Cir. 1998)). GRI 1
provides that “for legal purposes, classification shall be
determined according to the terms of the headings and any relative
section or chapter notes . . ., provided such headings or notes do
not otherwise require.” GRI 1, HTSUS. Thus, “[a] classification
analysis begins, as it must, with the language of the headings.”
Orlando Food Corp., 140 F.3d at 1440 (citation omitted).
Under 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(c); see
also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). This
Court decides “whether there are factual issues that are material
to resolution of the action.” Ero Indus., Inc. v. United States,
24 CIT 1175, 1179, 118 F. Supp. 2d 1356, 1359 (2000) (citing
Celotex Corp., 477 U.S. at 322; Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)). In classification actions, summary
judgment is appropriate when no genuine dispute exists “‘as to . .
. what the merchandise is . . . or as to its use.’” Toy Biz, Inc.
27 CIT at __, 248 F. Supp 2d at 1241 (quoting Ero Indus., Inc., 24
CIT at 1179, 118 F. Supp. 2d at 1360). In the absence of genuine
Court No. 99-00100 Page 8
factual issues, the “‘propriety of the summary judgment turns on
the proper construction of the HTSUS, which is a question of law.’
“ Toy Biz, Inc. v. United States, 27 CIT at __, 248 F. Supp. 2d
1234, 1241 (2003) (quoting Clarendon Mktg., Inc. v. United States,
144 F.3d 1464, 1466 (Fed. Cir. 1998); Nat’l Advanced Sys. v. United
States, 26 F.3d 1107, 1109 (Fed. Cir. 1994)).
Discussion
GRI 1 directs the Court to classify merchandise by construing
the headings of the tariff schedule. GRI 1, HTSUS. The parties
disagree as to the heading under which the merchandise should be
classified. Plaintiff argues that the most accurate heading for
the subject merchandise is heading 5603, covering “[n]onwovens,
whether or not impregnated, coated, covered or laminated.” Heading
5603, HTSUS. The parties have stipulated that the subject
merchandise is a nonwoven. Jt. Stmt para. 13. Despite this
stipulation, Defendant avers that the most accurate heading is
heading 5911, covering “[t]extile products and articles, for
technical uses, specified in note 7 to this chapter.” Heading
5911, HTSUS. The parties have stipulated that Awa No. 10 is a
textile. Id. Both provisions, then, appear capable of describing
the goods at issue. This being the case, GRI 3(a) directs the Court
to consider which heading provides the most specific description.
GRI 3(a), HTSUS. Heading 5911, covering all textiles, rather than
Court No. 99-00100 Page 9
only nonwovens, appears less specific than heading 5603. However,
it is a “use” provision – only those textiles for “technical uses,
specified in note 7 to this chapter” fall within its bounds. Id.
Use provisions are generally considered more specific than eo
nomine provisions such as heading 5603, and the most specific
heading controls under GRI 3(a). Orlando Food Corp., 140 F.3d at
1441; GRI 3(a), HTSUS. However, in order to decide whether heading
5911 describes the subject merchandise more specifically than
heading 5603, reference must be had to Note 7 to Chapter 59, which
outlines the technical uses that fall under heading 5911's rubric.
Note 7 to Chapter 59 states that “[h]eading 5911 applies to
the following goods, which do not fall in any other heading of
section XI: (a) [t]extile products in the piece . . . the following
only: . . . (iii) [s]training cloth of a kind used in oil presses
or the like, of textile material or of human hair.”8 Chapter 59,
8
In its entirety, Note 7 to Chapter 59 reads as follows:
7. Heading 5911 applies to the following goods, which do not fall
in any other heading of section XI:
(a) Textile products in the piece, cut to length or simply
cut to rectangular (including square) shape (other than
those having the character of the products of headings 5908
to 5910), the following only:
(i) Textile fabrics, felt and felt-lined woven fabrics,
coated, covered or laminated with rubber, leather or
other material, of a kind used for card clothing, and
similar fabrics of a kind used for other technical
purposes;
(ii) Bolting cloth;
Court No. 99-00100 Page 10
Note 7, HTSUS. The meaning of “straining cloth . . . used in oil
presses or the like” was explored by the Court in GKD-USA, Inc. v.
United States, 20 CIT 749, 931 F. Supp. 875 (1996).
In GKD-USA, Inc., the Court found that there is no clearly
stated Congressional intent as to the meaning of the phrase
“straining cloth” as used in the tariff schedule, and construed it
in accordance with its current common and commercial meaning. GKD-
USA, Inc., 20 CIT at 754-55, 931 F. Supp. at 879-80. The Court
determined that “straining cloth” is generally referred to as
“filter cloth,” being “fabric used as a medium for filtration.”
GKD-USA, Inc., 20 CIT at 755, 931 F. Supp. at 880 (quoting McGraw-
Hill Dictionary of Scientific and Technical Terms 715 (4th ed.
(iii) Straining cloth of a kind used in oil presses or
the like, of textile material or of human hair;
(iv) Flat woven textile fabrics with multiple warp or
weft, whether or not felted, impregnated or coated, of
a kind used in machinery or for other technical
purposes;
(v) Textile fabric reinforced with metal, of a kind
used for technical purposes;
(vi) Cords, braids and the like, whether or not coated,
impregnated or reinforced with metal, of a kind used in
industry as packing or lubricating materials;
(b) Textile articles (other than those of headings 5908 to
5910) of a kind used for technical purposes (for example,
textile fabrics and felts, endless or fitted with linking
devices, of a kind used in papermaking or similar machines
(for example, for pulp or asbestos-cement), gaskets,
washers, polishing discs and other machinery parts).
Chapter 59, Note 7, HTSUS.
Court No. 99-00100 Page 11
1989)). A medium for filtration “offers a single barrier in which
the openings are smaller than the particles to be removed from the
fluid.” GKD-USA, Inc. v. United States, 20 CIT at 755, 931 F.
Supp. at 880 (citation omitted).
In the instant case, both parties agree that AWA No. 10 is, as
imported, not a filter medium. Jt. Stmt para. 28. Rather, AWA No.
10 has been engineered as a support layer for the RO Membrane. Id.
paras. 27-28. By itself, the subject merchandise lacks the
commercially useful application of the final RO Membrane, namely,
the ability to filter salt from seawater. See id. paras. 30-31;
Def.’s Mem. Mot. Summ. J. at 3.
Defendant argues, however, that AWA No. 10 falls within the
rubric of heading 5911, HTSUS, as unfinished straining cloth,
pursuant to GRI 2(a). GRI 2(a) states:
[a]ny reference in a heading to an article
shall be taken to include a reference to that
article incomplete or unfinished, provided
that, as entered, the incomplete or finished
article has the essential character of the
complete or finished article.
GRI 2(a), HTSUS. Defendant contends that while AWA No. 10 is not
itself a filter medium, in its imported condition it is
commercially fit only for incorporation into a filter medium.
Def.’s Mem. Mot. Summ. J. at 29. Defendant argues that because AWA
No. 10 is “dedicated” to filtration, its “essential character” is
fixed as being that of a straining cloth, and should thus be
Court No. 99-00100 Page 12
classified under heading 5911, HTSUS. Id.
While it appears that AWA No. 10, which was made to FilmTec’s
own specifications, has no ultimate purpose except to be
incorporated into RO Membrane, it remains that whatever straining
ability inheres in RO Membrane is not imparted by the AWA No. 10
support web, but by the chemical layers which FilmTec casts onto
the support web after its importation. Jt. Stmt paras. 28, 31.
While AWA No. 10 on its own may be capable of straining certain
solids from certain liquids, this is true of many articles that
would not thereby be classified as straining cloth under Note 7 to
Chapter 59 (i.e., a pair of pants, writing paper). Without further
processing, AWA No. 10 does not have the essential character of
“the complete or finished article” –- the ability to strain salt
from water. Id.; Hallan Supp. Aff., para. 4; GRI 2(a), HTSUS.
Because AWA No. 10 does not have the essential character of
straining cloth under Note 7 to Chapter 59, it cannot fall within
heading 5911, HTSUS, under a GRI 2(a) analysis, and therefore
appears to be appropriately classified under heading 5603, HTSUS,
pursuant to a GRI 1 analysis. Despite this, Defendant argues that
the subject merchandise is excluded from heading 5603, HTSUS, by
operation of the Explanatory Notes to Chapter 56. Def.’s Mem. Mot.
Summ. J. at 20-21. While the Explanatory Notes are not legally
binding, they do furnish a helpful guide to the interpretation of
the HTSUS. Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1378
Court No. 99-00100 Page 13
n.1 (Fed. Cir. 1999) (citation omitted). However, a perusal of the
Explanatory Notes for Chapter 56 shows that they do not exclude AWA
No. 10 from classification within the chapter.
Defendant argues that the Explanatory Note (“EN”) to 56.03
excludes the subject merchandise because it states, in subpart
(ij), that heading 5603 excludes “[n]onwovens for technical uses,
of heading 59.11.” Def.’s Mem. Mot. Summ. J. at 20-21 (emphasis
supplied); see also Harmonized Commodity Description and Coding
System, EN 56.03(ij) (1st ed. 1986) at 776.9 As discussed already,
however, nonwovens for technical uses may only fall into heading
5911 if they comport with the limitations of Note 7 to Chapter 59.
Because the subject merchandise is not straining cloth, nor
unfinished straining cloth, it is not a textile for technical use
within the meaning of heading 5911. Therefore, EN 56.03(ij) cannot
operate to exclude the subject merchandise from heading 5603.10 As
9
EN 5603 reads, in part:
The heading also excludes: . . .
(ij) Nonwovens for technical uses, of heading 5911.
EN 56.03 at 776 (emphasis supplied).
10
Defendant also has urged the Court to accord deference, under
Skidmore v. Swift & Co., to two ruling letters made by Customs.
Def.’s Mem. Mot. Summ. J. at 10-12. Under Skidmore, this Court
will apply deference to a ruling letter according to its
persuasiveness. United States v. Mead Corp, 533 U.S. 218, 221
(2001); Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). In
both HQ 958415 (Mar. 26, 1996) and HQ 958248 (June 4, 1996),
Customs stated that EN 56.03 operates to exclude the merchandise
from Chapter 56. As already discussed above, that Note does not
in fact exclude the subject merchandise. Founded, as they were,
Court No. 99-00100 Page 14
Plaintiff’s merchandise is a nonwoven excluded from heading 5911,
but not from heading 5603, the Court must conclude that it falls
under heading 5603 under a GRI 1 analysis.
Having determined the correct subheading for the merchandise,
the Court moves on to the subheadings. Heading 5603, HTSUS, has a
number of subheadings, but the only one in which the subject
merchandise is arguably classifiable is subheading 5603.00.90
(“Other”), with a duty rate of ten percent ad valorem at the time
of liquidation. Subheading 5603.00.90, HTSUS.11 However, a
footnote to subheading 5603.00.90, HTSUS, directs our attention to
subheading 9907.56.01, HTSUS, which authorizes duty-free treatment
for “[n]onwoven fiber sheet (provided for in subheading
5603.00.90).” Subheading 9907.56.01, HTSUS. To qualify as a
nonwoven fiber sheet for purposes of subheading 9907.56.01, HTSUS,
on an incorrect reading of EN 56.03(ij) and heading 5911, both HQ
958415 and HQ 958248 lack the persuasive authority that would
bring us to apply Skidmore deference. Because the subject
merchandise does not satisfy the limitations of Note 7 to Chapter
59 and therefore is not a textile “for technical uses, of heading
5911,” it would be appropriately classified under heading 5603.
11
At the time of liquidation, the subheadings to heading 5603
were as follows:
5603.00 Nonwovens, whether or not impregnated,
coated, covered or laminated:
5603.00.10 Floor covering underlays . . .
Other:
5603.00.30 00 Laminated fabrics.............(223)
5603.00.90 Other..............................
Subheading 5603.00.90, HTSUS (1995).
Court No. 99-00100 Page 15
merchandise must satisfy certain technical specifications laid out
in U.S. Note 2 to Subchapter VII of Chapter 99.12
Plaintiff’s product satisfies these requirements with certain
small deviations.13 Because these deviations are not commercially
12
The specifications are as follows:
2. For the purposes of heading 9907.56.01, the term “non-woven
fiber sheet” means sheet comprising a highly uniform and
random array of polyester fibers 1.5 to 3.0 denier, thermally
bonded and calendered into a smooth surface web having–
(a) a thickness of 3.7 to 4.0 mils;
(b) a basis weight of 2.5 oz. per sq. yd.;
(c) a machine tensile strength of 30 lb [sic] per sq. in. or
greater;
(d) a low cross-direction tensile (approximately 1/3 of MD
tensile strength; and
(e) a Frazier air permeability of 1.0 to 1.5 cfm per sq. ft.
Chapter 99, Subchapter VII, U.S. Note 2, HTSUS (1995) (emphasis
supplied). Denier is “[a] unit of weight used to estimate the
fineness of silk, rayon, or nylon yarn.” IV Oxford English
Dictionary, 457 (2d ed. 1989).
13
The specifications for AWA No. 10 are outlined supra, note 3.
The parties stipulate that AWA No. 10 comprises “a highly uniform
and random array of polyester staple fibers” “thermally bonded
and calendared into a . . . smooth surface web.” Jt. Stmt para.
15. The basis weight of AWA No. 10, converted from metric to
English measurement, is 2.4-2.6 oz. per sq. yd. To perform this
conversion, the following formula should be applied. First,
multiply 81 grams (the lower limit of FilmTec’s basis weight) by
.03527396. This calculation produces the number of ounces per
sq. meter. That figure must then be transformed so as to
represent oz. per sq. yd. To do so, multiply the figure by
(1/1.195990). Repeat with 89 grams (the upper limit of FilmTec’s
basis weight). The results should indicate a range of 2.4-2.6 oz.
per sq. yd. McGraw-Hill Dictionary of Scientific and Technical
Terms 2330 (6th ed. 2003).
Court No. 99-00100 Page 16
significant, Plaintiff argues that the rule of de minimis permits
AWA No. 10 to fall within the constraints of the Note to Subchapter
VII of Chapter 99 and qualify, therefore, for duty-free status.
Pl.’s Mem. Mot. Summ. J. at 24. Defendant argues that the highly
detailed nature of the Subchapter VII specifications militates
against the application of the rule of de minimis, in that Congress
wished the subheading to apply only to products meeting its precise
requirements. Def.’s Reply to Pl.’s Mem. Mot. Summ. J. at 10-11.
The rule of de minimis is a general rule of legal construction
and forms part of the background against which all statutes are
construed. Wis. Dep’t of Revenue v. Wrigley, 505 U.S. 214, 231
(1992). However, the rule is applied only where it will promote
“the statutory purpose” -- the intent of the framers of the law.
Alcan Aluminum Corp. v. United States, 165 F.3d 898, 903 (Fed. Cir.
1999); see Ciba-Geigy Corp. v. United States, 25 CIT __, __, 178 F.
Supp. 2d 1336, 1352 (2001). Therefore, in order to decide whether
the rule should be applied in Plaintiff’s favor, it is necessary to
understand the background and history of subheading 9907.56.01,
HTSUS.
The subheading was first proposed in identical bills by
Representative Frenzel and Senator Durenberger of Minnesota,
Plaintiff’s home state, in March and May, 1989, respectively. H.R.
1428, 101st Cong. (1989); S. 1015, 101st Cong. (1989). In his
remarks to the Senate on introducing the bill, Senator Durenberger
Court No. 99-00100 Page 17
alluded to a constituent producer of reverse osmosis modules who
would benefit from duty free status for AWA paper, which was
described in the bill as “plastic web sheeting.”14 135 Cong. Rec.
9,542 (1989). The constituent producer would appear to be
Plaintiff, as no other producer of reverse osmosis modules operated
in Minnesota at the time. Mem. from Int’l Trade Comm’n to The
Comm. on Ways and Means of the United States House of
Representatives, H.R. 1428, 101st Cong., A Bill to Suspend
Temporarily the Duty on Certain Plastic Web Sheeting, Def.’s Reply
to Pl.’s Mot. Summ. J., Attach. C at 4 (July 13, 1989) (“July 13,
1989 Memo”); Mem. from Int’l Trade Comm’n. to the Comm. on Finance
of the United States Senate, S. 1015, 101st Cong., A Bill to
Suspend Temporarily the Duty on Certain Plastic Web Sheeting,
Def.’s Reply to Pl.’s Mot. Summ. J., Attach. C at 5 (Sept. 21,
1989) (“September 21, 1989 Memo”). The bills were passed as part
of the Customs and Trade Act of 1990, creating subheading
9902.56.03, HTSUS, (certain nonwoven fiber sheets). Customs and
Trade Act 1990, § 425, 1990 U.S.C.C.A.N. (104 Stat.) 688.
Expiration was set for the end of 1992. The subheading’s technical
provisions were identical to those appearing at U.S. Note 2,
Subchapter VII, Chapter 99, HTSUS, at the time of liquidation. Cf.
id. with subheading U.S. Note 2, Subchapter VII, Chapter 99, HTSUS.
14
AWA No. 10 would be correctly described as a “plastic” as it is
made from polyester fibers. 21 The New Encyclopedia Britannica
291 (15th ed. 1986).
Court No. 99-00100 Page 18
Prior to the subheading’s expiration, Representative Ramstad
of Minnesota proposed extending the duty-free treatment throughout
1995, but replacing the technical specifications to the heading
with a new, slightly modified set of technical specifications
exactly tracking FilmTec’s then specifications for AWA No. 10.
H.R. 4102, 102d Cong. (1992). The bill was referred to the House
Ways and Means Committee and apparently never resurfaced. 138
Cong. Rec. 746 (1992). Congress, therefore, would seem to have
made clear its intent as to subheading 9902.56.03 -– its intent
that the provision expire and, therefore, no longer be part of the
tariff schedule.
However, in December 1994, former President Clinton deleted
subheading 9902.56.03, HTSUS, and its accompanying technical
specifications by proclamation. Proclamation No. 6763, 60 Fed.
Reg. 1,007, 1,297 (Jan. 4, 1995). He then created a new heading,
9907.56.01, HTSUS, that was identical to 9902.56.03, HTSUS, and
created new, identical technical specifications to be laid out in
an accompanying note. Proclamation No. 6763, 60 Fed. Reg. at 1,336-
37. In the Proclamation, the President stated that he was making
changes to the Tariff Schedule in accordance with Section 111(a) of
the Uruguay Round Amendments Act and Sections 1102(a) and (e) of
the Omnibus Trade and Competitiveness Act of 1988, which delegated
to him authority to proclaim necessary modifications to conform the
HTSUS to the Uruguay Round Agreements. Proclamation No. 6763, 60
Court No. 99-00100 Page 19
Fed. Reg. at 1,007; see also 19 U.S.C. § 2902 (1988); Uruguay Round
Agreement Act, Pub. L. No. 103-465, § 111(a), 1994 U.S.C.C.A.N (108
Stat.) 4809, 4819.15
It appears that the expired subheading was placed back into
law pursuant to a policy under which the U.S. undertook to “bind at
free” goods that had previously been duty suspended under Chapter
99, Subchapter II, HTSUS, and for which there was no domestic
producer who would be harmed by permanent duty-free treatment.
Summers Decl., Def’s First Supp. Br. Letter (Oct. 9, 2003), Ex. 1
at 2.; see Letter from Joseph S. Kaplan, McGuireWoods LLP, to Hon.
Donald C. Pogue, U.S. Ct. of Int’l Trade (Oct. 9, 2003). This does
not shed any light, however, on whether the President intended de
minimis to apply in construing subheading 9907.56.01, HTSUS.
15
It should be noted that within a year of issuing Proclamation
No. 6763, “reinstating” subheading 9902.56.03, HTSUS as
subheading 9907.56.01, HTSUS, former President Clinton issued a
second presidential proclamation, which transformed the
subheadings of heading 5603, HTSUS. Proclamation No. 6857, 60
Fed. Reg. 64,817, 64,900 (Dec. 15, 1995). Whereas the subheadings
of that heading had previously been based on use and physical
characteristics, the new proclamation replaced those subheadings
with subheadings based on the weight of the nonwoven merchandise.
Proclamation No. 6857, 60 Fed. Reg. at 64,900. The entries which
formed the basis of this dispute were liquidated on April 21, May
5, and June 9, 1995, so that this later presidential proclamation
does not apply to their classification. HQ 958415 (Mar 26,
1996). Although we do not so decide, it does not appear that the
later proclamation would substantively change the classification
of the goods at issue here, as they fall within the purview of
one of the new weight-based subheadings, namely 5603.13.00,
HTSUS, covering nonwovens “weighing more than 70 g/m2 but not
more than 150 g/m2." Subheading 5603.13.00, HTSUS (1996); see
Def.’s Second Supp. Br. Letter at 2 (Oct. 29, 2003); FilmTec’s
specifications for AWA No. 10, supra note 3.
Court No. 99-00100 Page 20
Nevertheless, the Court believes that the rule of de minimis
should be applied in this case. The rule of de minimis is a
generally accepted maxim of construction. See Alcan Aluminum Corp.
165 F.3d at 902 (citing Wis. Dep’t of Revenue v. Wrigley, 505 U.S.
at 214). With this principle in mind, the arguments advanced by
Defendant lead to a manifestly perverse result. Customs argues
that because Congress imposed such specific requirements when it
drafted the original terms of subheading 9907.56.01, HTSUS, the
provision should be read against the application of de minimis.
Def.’s Reply to Pl.’s Mem. Mot. Summ. J. at 10-11. However,
Customs has failed to provide the Court with any other object in
production at the time of liquidation which fits squarely within
the parameters of the note to Subchapter VII. See Def.’s Second
Supp. Br. Letter (Oct. 29, 2003). Indeed, Customs admits to its
own belief that no such goods existed at the time of liquidation.
Id.
While Defendant states that it has classified certain goods
under subheading 9907.56.01, HTSUS, in the past, it admits that
most, if not all, of those goods were wrongly classified, as the
goods did not fit within the parameters. Id. The necessary
implication of the apparent non-existence of any good conforming to
subheading 9907.56.01, HTSUS, is that the provision is superfluous.
One of the first principles of statutory construction is that a
statute must be construed so as to give meaning to all its parts.
Court No. 99-00100 Page 21
Duncan v. Walker, 533 U.S. 167, 174 (2001) (citations and
quotations omitted). The Court will not hold that a tariff
provision exists entirely speculatively, lying dormant until some
future time at which a good that fits may be produced. It is
illogical to suggest that both Congress and the President placed
this provision into law knowing that it described no actual good.
When this incongruous result is combined with legislative history
suggesting that the provision was originally proposed primarily as
a means of benefitting Plaintiff,16 the Court sees no barrier to
applying a de minimis standard.
Moreover, Plaintiff’s product by and large fits within the
requirements of U.S. Note 2 to Subchapter VII of Chapter 99. The
deviations of Plaintiff’s product from the specifications laid out
in that Note are small. For instance, the specifications lay out
a thickness of 3.7 mils to 4 mils.17 See supra note 12.
Plaintiff’s product runs from 3.6 mils to 4.2 mils. The basis
weight in the note’s specifications is 2.5 oz. per sq. yd. See
supra note 3. FilmTec’s basis weight is 2.4-2.6 per sq. yd. See
supra notes 12 & 13. The note specifies Frazier air permeability
of 1.0 to 1.5 cfm per sq. ft.; FilmTec’s required air permeability
16
See Statement of Sen. Durenberger, 135 Cong. Rec. 9,542 (1989);
July 13, 1989 Memo at 4; Sept. 21, 1989 Memo at 5.
17
A “mil” is “a unit of length, equal to .001 inch,” or one one-
thousandth of an inch. McGraw Hill Dictionary of Scientific and
Technical Terms 1342 (6th ed. 2003).
Court No. 99-00100 Page 22
is 1.0 ± 0.5 cfm per sq. ft. See supra notes 3 & 12. FilmTec’s
product specifications fit within the note’s specifications for
cross-directional tensile strength and machine tensile strength.
Id. Finally, while the denier of FilmTec’s product was stipulated
as unknown, there is some evidence in the record to suggest that it
falls within the boundaries of the note. Custom’s Laboratory
Report, Def.’s Reply to Pl.’s Mem. Mot. Summ. J., Attach. A (July
2, 1991) (indicating denier of 2.8).
Even were the deviations somewhat greater, classifying AWA No.
10 as fitting within subheading 9907.56.01, HTSUS, through an
application of de minimis is certainly more acceptable than the
alternative proposed by Defendant which, in its strict adherence to
the provisions of U.S. Note 2 to Subchapter VII, would force us to
hold that there is, apparently, no product which is described by
the provision. Moreover, as described above, it appears that the
subheading was originally proposed for the sole purpose of helping
Plaintiff’s business of creating RO Membrane.18 See Statement of
18
The Court notes that Defendant submitted advisory letters
prepared by the International Trade Commission for the benefit of
Congress while they were considering H.R. 1428, 101st Cong.
(1989), S. 1015, 101st Cong. (1989) and H.R. 4102, 102nd Cong.
(1992). These letters express the concern that any support web
being imported for use in the production of reverse osmosis
filtration membranes should be such that salt particles as small
as .003 micrometers could be filtered out by the finished
product. July 13, 1989 Memo at 2; Sept. 21, 1989 Memo at 2; Mem.
from Int’l Trade Comm’n to Comm. on Ways and Means of the U.S.
House of Representatives, H.R. 4102, 102nd Cong. A Bill to Extend
Until January 1, 1995, the Existing Suspension on Certain Plastic
Web Sheeting, and to Correct the Description of Such Sheeting,
Def.’s Reply to Pl.’s Mot. Summ. J., Attach. C at 2 (undated).
Court No. 99-00100 Page 23
Sen. Durenberger, 135 Cong. Rec. 9,542 (1989); S. Rep. No. 101-252,
at 18-19 (1990), reprinted in 1990 U.S.C.C.A.N 928, 945-46. While
Congress chose not to renew the provision after its expiration, and
it was resurrected by the executive as part of trade negotiations
rather than by direct Congressional choice, the provision’s
original intent may still help to inform us in the absence of any
statement on the issue by the President.
The Court is therefore persuaded that the merchandise at issue
here is classifiable under heading 5603, HTSUS, covering
“[n]onwovens, whether or not impregnated, coated, covered or
laminated.” Heading 5603, HTSUS. Furthermore, the merchandise is
classifiable under subheading 9907.56.01, HTSUS, (“[n]onwoven fiber
sheets”) by virtue of the application of the footnote to subheading
5603.00.90 (“Other”) of heading 5603 and the rule of de minimis.
While there is some information in the record to suggest that
FilmTec’s RO Membrane is capable of straining such small
particles, it is not a stipulated fact. Hallan Supp. Aff. para.
4; see also Jt. Stmt. However, the fact that the International
Trade Commission was concerned about salt particle size does not
necessarily translate to the concern or intent of Congress or the
President. Nowhere in U.S. Note 2 to Subchapter VII is the size
of salt particles to be filtered mentioned; nor was it mentioned
by Senator Durenberger in his remarks on proposing the original
bill, by the Senate Report explaining the intent behind the
provisions of the Customs and Trade Act 1990, of which the
establishment of subheading 9902.56.03, HTSUS (the identically
worded predecessor to subheading 9907.56.01, HTSUS) forms a part,
or by the House Report on the same issue. Statement of Sen.
Durenberger, 135 Cong. Rec. 9542 (1989); S. Rep. No. 101-252, at
18-19 (1990), reprinted in 1990 U.S.C.C.A.N 928, 945-46; H. R.
Conf. Rep. No. 101-650 at 185-86 (1990), reprinted in 1990
U.S.C.C.A.N. 989, 1075-76. Consequently, any differences between
the parties on this issue do not create a dispute as to a
material fact, and do not preclude summary judgment.
Court No. 99-00100 Page 24
Accordingly, Plaintiff’s motion for summary judgment will be
granted and Defendant’s motion for summary judgment denied.
Donald C. Pogue
Judge
Dated: November 25, 2003
New York, New York