Rollerblade, Inc. v. U.S., 96-1397

• Citation: 112 F.3d 481
• Decision Date: 24 April 1997
• Docket Number: No. 96-1397,96-1397
• Parties: ROLLERBLADE, INC., Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 481

112 F.3d 481

19 ITRD 1097

ROLLERBLADE, INC., Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellant.

No. 96-1397.

United States Court of Appeals Federal Circuit.

April 24, 1997.

Amy M. Rubin, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, International Trade Field Office, New York City, argued, for defendant-appellant. With her on the brief was Joseph I. Liebman, Attorney in Charge. Also with her on the brief were Frank W. Hunger, Assistant Attorney General, and David M. Cohen, Director, Department of Justice, Washington, D.C. Of counsel on the brief was Mark G. Nackman, International Trade Field Office, of New York City.

Robert Torresen, Jr., Powell, Goldstein, Frazer & Murphy, Washington, D.C., argued, for plaintiff-appellee. With him on the brief were Richard M. Belanger and Todd J. Friedbacher.

Before RICH, CLEVENGER, and BRYSON, Circuit Judges.

CLEVENGER, Circuit Judge.

The United States appeals from the judgment of the United States Court of International Trade holding that the Customs Service (Customs) incorrectly classified the imported items at issue and ordering Customs to refund excess duties with interest to the importer, Rollerblade, Inc. (Rollerblade). We reverse because the items are properly classified as footwear and are not classifiable as parts of roller skates as the Court of International Trade held.

I

Rollerblade filed this lawsuit challenging Customs' classification of certain merchandise imported from August 3, 1988 to November 27, 1990. The imported items are referred to as "polyurethane shells" by Rollerblade and as "roller skate boots" by Customs. As discussed below, whether the items are roller skate boots (and thus are footwear) is critical to the outcome of this case.

Before January 1, 1989, Customs classified imported merchandise using the Tariff Schedules of the United States (TSUS). Customs classified the merchandise entered before January 1, 1989, as footwear under item 700.56, TSUS. The rate of duty for this classification was 6 percent ad valorem. Effective January 1, 1989, Customs began applying the Harmonized Tariff Schedule of the United States (HTSUS) instead. Customs classified the merchandise entered after January 1, 1989, as sports footwear under subheading 6402.19.10, HTSUS. The rate of duty for this classification was also 6 percent ad valorem.

Rollerblade claims that the proper classification for the merchandise entered before January 1, 1989, is under item 734.90, TSUS, which covers roller skates and parts thereof. Merchandise classified under this provision is free of duty. For the merchandise entered after January 1, 1989, Rollerblade asserts that the proper classification is roller skates and parts and accessories thereof under subheading 9506.70.20, HTSUS. Merchandise classified under this provision is also free of duty.

As the Court of International Trade noted, the merchandise at issue "consists of rigid, molded plastic (polyurethane) boots which include a removable, padded vinyl liner. The bottom portion of each boot is molded to accommodate the permanent attachment of wheel frames and wheels." Both parties agree that the merchandise is not imported with wheel frames or wheels. Instead, wheel frames and wheels are attached to the bottom of the boots after the boots are imported, resulting in the end product of in-line roller skate outfits. The merchandise cannot be used for any purpose other than as the boot component of in-line skates.

The parties agreed that there are no disputed issues of material fact and filed cross-motions for summary judgment. The Court of International Trade held that although the imported items prima facie fall under both provisions--"footwear" and "parts of roller skates"--the items must be classified as "parts of roller skates" because that provision more specifically describes the merchandise. The court also noted the "anomaly" that would result if the court held otherwise--that a party importing a finished product with wheels, boots and all, incurs no duty liability, whereas a party assembling the wheels and boots in the United States, thereby creating domestic jobs, must pay duties.

II

We review the grant of summary judgment for correctness as a matter of law. Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed.Cir.1994). The meaning of a tariff classification term, being a question of law, is also reviewed de novo. Totes, Inc. v. United States, 69 F.3d 495, 497-98 (Fed.Cir.1995). Determining whether the items at issue come within a particular tariff provision, as properly interpreted, is a question of fact. Id. at 498. Here, the parties filed cross-motions for summary judgment and agree that there are no disputed issues of material fact. They agree that none of the pertinent characteristics of the merchandise is in dispute, and thus the sole issue is a matter of properly interpreting the classification term at issue--footwear--to determine whether the scope of that term is broad enough to encompass the items with the particular characteristics.

This step of interpreting the relevant classification term, as noted above, is a question of law to be decided independently by this court, without deference to Customs' interpretation. Customs, however, argues that its classification decisions should be entitled to deference based on either the statutory presumption of correctness under 28 U.S.C. § 2639(a)(1) (1994) or the Chevron doctrine, Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). We do not find either argument meritorious here, where the sole issue concerns the proper scope of a classification term.

First, as for the statutory presumption, § 2639(a)(1) states (emphasis added):

(a)(1) 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.

Customs cites a Court of International Trade decision, Commercial Aluminum Cookware Co. v. United States, 938 F.Supp. 875, 880-81 (Ct. Int'l Trade 1996), and argues that Customs' classification decision is presumed to be correct as a whole, including purely legal portions of the decision. Customs' and the Court of International Trade's (in Commercial Aluminum ) interpretation of § 2639 is inconsistent with our precedent in Goodman Manufacturing, L.P. v. United States, 69 F.3d 505 (Fed.Cir.1995). There, we squarely held that the statutory presumption of correctness under § 2639 is irrelevant where there is no factual dispute between the parties. Id. at 508.

Moreover, the court's duty to decide independently the meaning of a classification term is statutorily mandated. Section 2643(b), title 28, provides (emphasis added):

§ 2643 Relief

....

(b) If the Court of International Trade is unable to determine the correct decision on the basis of the evidence presented in any civil action, the court may order a retrial or rehearing for all purposes, or may order such further administrative or adjudicative procedures as the court considers necessary to enable it to reach the correct decision.

Congress mandated the Court of International Trade to determine the scope of the classification. The Court of International Trade's charter to "reach the correct decision" in classification cases would be subverted if Customs' interpretation of a classification term was given deference. Thus, the court must independently decide legal issues; the court cannot shirk its responsibility of deciding what a classification term means by simply saying the challenger failed to persuade the court that its interpretation is more "correct" than that of Customs. It would indeed be anomalous if two entries of identical merchandise imported by two separate importers were to be classified differently because the first importer made a "poor" legal argument, and the second importer made a "good" legal argument.

Customs' argument for deference based on Chevron similarly fails. We have specifically held that Chevron deference does not apply to routine classification cases. Crystal Clear Indus. v. United States, 44 F.3d 1001, 1003 n. * (Fed.Cir.1995). We also agree with the line of cases from the Court of International Trade that hold that the Court of International Trade's statutory mandate to find the correct result in a classification case is logically incompatible with Chevron deference. See, e.g., Anval Nyby Powder AB v. United States, 927 F.Supp. 463, 469 (Ct. Int'l Trade 1996); Semperit Indus. Prods., Inc. v. United States, 855 F.Supp. 1292, 1299-1300 (Ct. Int'l Trade 1994). We reiterate here that no Chevron deference applies to classification decisions by Customs.

In sum, no deference attaches to Customs' classification decisions either under 28 U.S.C. § 2639 or under Chevron, where there are no disputed issues of material fact.

III

The sole dispositive issue in this case concerns whether the imported items--whose pertinent characteristics are not disputed--are footwear within the meaning of item 700.56, TSUS and subheading 6402.19.10, HTSUS. Of the 108 entries at issue, seven entered before January 1, 1989, and thus are subject to the TSUS, and 101 entered pursuant to the HTSUS. If the scope of the term footwear is prima facie broad enough to encompass the items at issue, then as discussed below in section IV, the TSUS, the HTSUS, and the accompanying notes mandate the items be classified as such and not as "parts of roller skates."

We begin with the language of the pertinent classification sections (emphasis added):

700.56, TSUS

Footwear (whether or not described elsewhere in this subpart) which is over 50 percent by...