Genesco Inc. v. U.S., 92-02-00084.
| Decision Date | 23 May 2000 |
| Docket Number | No. 92-02-00084.,SLIP OP. 00-57.,92-02-00084. |
| Citation | 102 F.Supp.2d 478 |
| Parties | GENESCO INC., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
v.
UNITED STATES, Defendant.
Ross & Hardies, New York City (John B. Pellegrini) for plaintiff.
David W. Ogden, Acting Assistant Attorney General; Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Barbara M. Epstein); Chi S. Choy, Office of the Assist. Chief Counsel,
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International Trade Litigation, U.S. Customs Service, of Counsel, for defendant.
WATSON, Senior Judge.
In this action, the court revisits the hotly contested and somewhat esoteric issue of whether imported footwear has a "foxing-like band," and consequently, subject to a higher rate of duty than would otherwise be assessed on the footwear. Currently before the court is plaintiff's challenge to the classification by the United States Customs Service ("Customs") of six styles of men's and boy's athletic shoes imported by plaintiff that Customs determined have a "foxing-like band." The court's jurisdiction is predicated on 28 U.S.C. § 1581(a).
Upon liquidation of the entries, Customs classified plaintiff's merchandise under the provisions for footwear with outer soles and uppers of rubber or plastics under subheadings 6402.19.50, 6402.19.70, or 6402.99.80 of the Harmonized Tariff Schedule of the United States ("HTSUS"). Plaintiff claims that the subject footwear is properly dutiable under the HTSUS subheadings 6402.19.10 or 6402.99.15 (depending on the model) for footwear with outer soles and uppers of rubber or plastics, which subheadings except footwear having a "foxing-like band applied or molded at the sole and overlapping the upper." Hence, the parties agree that the footwear at issue is properly classifiable under Heading 6402, HTSUS, and the issues in this case revolve around whether plaintiff's footwear has a "foxing-like band" within the meaning of the exception under the subheadings claimed by plaintiff.
The parties seek judgment on the basis of the following stipulated facts in lieu of trial, pursuant to the court's order of June 29, 1999, which stipulation references as an exhibit a half-pair of the imports.1
The subject footwear comprises six different styles of men's and boy's athletic footwear with rubber/plastic uppers and outer soles. The sole of the footwear consists of an outer sole and mid-sole cemented together. The outer sole overlaps the upper by more than ¼ inch in the toe area extending toward the back of the shoe (approximately ¼ of the length of the shoe) where the ball of the foot would be located. The area overlapped by the sole covers approximately 37.5 percent of the perimeter of the shoe upper. The mid-sole of the shoes begins just forward of the instep and extends to the rear of the shoe and does not overlap the upper. The imported shoes have a separate rubber/plastic piece in the rear or heel area, known as a "heel stabilizer," which is separately cemented to the mid-sole and overlaps the upper by more than ¼ inch. The heel stabilizer feature alone covers approximately 23.1 percent of the perimeter of the shoe. The combined areas of overlap of the outer sole and heel stabilizer cover slightly less than 65 percent of the perimeter of the shoe.
Citing Customs' ruling in T.D. 83-116, 17 Cust. Bull. 229 (1983), at 248, which, inter alia, sets forth the characteristics of a "foxing-like band," plaintiff agrees that a "foxing-like band" must resemble the foxing of traditional sneakers and tennis shoes and must encircle or substantially encircle the perimeter of the shoe. Plaintiff argues that in the subject footwear the combination of the outer sole and separate heel stabilizer that overlap the upper does not "substantially encircle" the footwear or have the "visual impact" of the foxing of traditional sneakers and tennis shoes. Plaintiff also posits that the overlap of the upper by the outer sole should not be counted as part of a "foxing-like band,"
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and the heel stabilizer (which encircles only 23.1 percent of the perimeter of the shoe) alone does not constitute a "foxing-like band."
Defendant agrees that, as reflected in Customs rulings T.D. 83-116 and also a later ruling, T.D. 92-108, a "foxing-like band" must resemble the foxing of the traditional sneaker or tennis shoe and must encircle or substantially encircle the perimeter of the footwear. However, seeking judicial deference to T.D. 92-108 and Customs' so-called "40-60" rule, which is used to determine whether footwear is "substantially encircled," defendant contends that the combination of the overlap of the upper by the sole and heel stabilizer encircles nearly 65 percent of the perimeter of the shoe, and therefore, "substantially encircles" the shoe. Defendant argues that the court should defer to T.D. 92-108, because unlike ordinary Customs rulings, T.D. 92-108 was issued after notice-and-comment procedures. Finally, defendant argues there is no support in the statute or its legislative history that an outer sole which overlaps the upper should not be included in the term "foxing-like band."
The issues are: (1) whether the alleged foxing-like band found by Customs in the subject footwear "substantially encircles" the perimeter of the shoes; and in making that determination, whether the court may properly defer to Customs' ruling T.D. 92-108; (2) whether an overlap of the upper by the outer sole should be counted in determining whether an alleged "foxing-like band" substantially encircles the perimeter of the shoe; and (3) whether the gaps in the overlap of the upper between the toe and heel on both sides of the shoe preclude a "foxing-like band."
The meaning of the terms "foxing" and "foxing-like band" as used in the footwear subheadings of the HTSUS is, of course, a question of law. Both parties call attention to Nissho Iwai American Corp. and Nike, Inc. v. United States, 143 F.3d 1470 (Fed.Cir.1998), aff'g, 967 F.Supp. 517 (CIT 1997) ("Nike"), in which the Federal Circuit interpreted the statutory terms "foxing" and "foxing-like band." The Federal Circuit described "foxing" as "a band of material, such as rubber, applied to the shoe or boot, as in a Converse All Star®, that overlaps and bonds the sole to the upper." 143 F.3d at 1471-72. As in Nike, in the current case it is undisputed that the subject footwear does not have "foxing." Rather Customs posits that the footwear has "foxing-like bands," and therefore, falls within the exception in the subheadings claimed by Genesco.
Further, in Nike the court found that, unlike the term "foxing," the term "foxing-like" has no statutory definition, no common meaning, no commercial understanding or designation, and no relevant industry practice on which to rely. Nike, 143 F.3d at 1472. Finding the term ambiguous, the appellate court resorted to the Tariff Classification Study, Explanatory and Background Materials, Schedule 7 (Nov. 15, 1960) ("TCS") and Customs' ruling in T.D. 83-116. Nike, 143 F.3d at 1472, 1474. From the foregoing, the Federal Circuit concluded that this court "did not err in interpreting the tariff term `foxing-like band' as applying to athletic shoes having an externally visible band applied or molded at the sole and overlapping the upper, whether or not those shoes are constructed with a mid-sole." 143 F.3d at 1471.
The Federal Circuit went on to observe that the legislative history of the TSUS indicates the term "foxing-like band" was intended to apply to the broad range of rubber-soled footwear manufactured by the domestic industry, i.e., "sneakers, tennis shoes, basketball shoes, and similar footwear having a visible band formed by the sole overlapping the upper, i.e., having
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a resemblance to the foxing of the traditional sneaker or tennis shoe." Id. 143 F.3d at 1474 ("if the athletic footwear has a visible band formed by the sole overlapping the upper (such that it resembles the traditional sneaker or tennis shoe), it falls within the exclusion.").
Nike's analysis of the legislative history as to the Congressional intent underlying the "foxing-like band" exception is helpful here, but Nike did not present the issues raised by plaintiff in the current case, as outlined above.
For support of its position that a "foxing-like band" must encircle or substantially encircle the perimeter of the shoe, plaintiff heavily relies on Customs ruling T.D. 83-116, which was also referred to by the Federal Circuit in Nike. There is no dispute in this case that a foxing-like band must encircle or substantially encircle the perimeter of the shoe, but the parties sharply disagree as to whether the subject footwear possesses that characteristic.
Defendant insists that the alleged foxing-like band, which encircles nearly 65 percent of the perimeter of the shoe, "substantially encircles" the subject shoes, citing Customs ruling T.D. 92-108, issued after notice-and-comment procedures. That ruling makes clear that even though the TSUS was superceded by the HTSUS, effective January 1, 1989, the guidelines of T.D. 83-116 are still followed by Customs with regard to the classification of footwear under the HTSUS. 26 Customs Bulletin 362, at 363 (1992).
The so-called "40-60" rule outlined in, and continued by, T.D. 92-108, 26 Cust. Bull., at 364, is a measurement used by Customs import specialists to assist them in making a determination pertaining to the issue of whether there is a "substantial" encirclement within the purview of T.D. 83-116 and T.D. 92-108. Generally, under the "40-60" rule, an encirclement of less than 40 percent of the perimeter of the shoe by the band does not constitute a "substantial" encirclement, and thus indicates there is no foxing or a foxing-like band. Encirclements of between 40 and...
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