181 F.Supp.3d 1308 (CIT. 2016), 13-00291, Ford Motor Co. v. United States

Docket Nº:13-00291
Citation:181 F.Supp.3d 1308
Opinion Judge:Barnett, Judge:
Party Name:FORD MOTOR COMPANY, Plaintiff, v. UNITED STATES, Defendant
Attorney:No. 13-00291 Gordon D. Todd, Sidley Austin LLP, of Washington, DC, argued for plaintiff. With him on the brief were Richard M. Belanger and Mark D. Hopson. Beverly A. Farrell, Trial Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justic...
Judge Panel:Before: Mark A. Barnett, Judge.
Case Date:October 05, 2016
Court:United States District Court, Federal Circuit
 
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Page 1308

181 F.Supp.3d 1308 (CIT. 2016)

FORD MOTOR COMPANY, Plaintiff,

v.

UNITED STATES, Defendant

No. 13-00291

United States Court of International Trade

October 5, 2016

Page 1309

Plaintiff's Motion for Summary Judgment is denied. Defendant's Cross-Motion for Summary Judgment is denied.

Gordon D. Todd, Sidley Austin LLP, of Washington, DC, argued for plaintiff. With him on the brief were Richard M. Belanger and Mark D. Hopson.

Beverly A. Farrell, Trial Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendant. With her on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Amy M. Rubin, Assistant Director, and Jason M. Kenner, Trial Attorney.

Before: Mark A. Barnett, Judge.

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OPINION AND ORDER

Barnett, Judge:

Before the Court are cross motions for summary judgment. Confidential Pl.'s Mot. for Summ. J. and Confidential Mem. of P. & A. in Supp. of Pl.'s Mot. for Summ. J. (" Pl.'s MSJ" ), ECF No. 96; Def.'s Mot. for Summ. J. and Def.'s Mem. of Law in Opp'n to Pl.'s Mot. for Summ. J. and in Supp. of Def.'s Cross-Mot. for Summ. J. (" Def.'s XMSJ" ), ECF No. 91-1.1 Plaintiff Ford Motor Company (" Plaintiff" or " Ford" ) contests the denial of protest number 1303-13-100060 challenging U.S. Customs and Border Protection's (" Customs" ) liquidation of the subject imports, Model Year (" MY" ) 2012 Ford Transit Connect vehicles with vehicle identification numbers (" VINs" ) containing either a number 6 or 7 in the sixth digit (hereinafter " Transit Connect 6/7" ),2 under subheading 8704.31.00 of the Harmonized Tariff Schedule of the United States (" HTSUS" ), as " motor vehicles for the transport of goods." Compl. ¶ ¶ 7, 10-11, 25, ECF No. 6 (alteration omitted); Def.'s XMSJ at 5. There is only one entry at issue, Entry Number 300-8620018-3, which entered at the Port of Baltimore on December 26, 2011 and which Customs liquidated on May 3, 2013. Summons at 1, ECF No. 1.

Background

I. OVERVIEW

In the 1960s, the United States and Europe were involved in a " trade war." Def.'s XMSJ at 2 n.1 (citing Def.'s Ex. 5). Europe increased the duty on chicken imported from the United States and the United States responded by placing a twenty-five percent tariff on trucks imported from Europe. Id. This retaliatory duty on trucks, colloquially referred to as the " chicken tax," was still in place when Ford began importing the subject merchandise into the United States from its factory in Turkey in 2009. Id. ; Confidential Def.'s Statement of Material Facts as to Which There Are No Genuine Issues to Be Tried (" Def.'s Facts" ) ¶ 13, ECF No. 92-7; Confidential Pl. Ford Motor Co.'s Resp. to Def.'s R. 56.3 Statement of Material Facts (" Pl.'s Resp. to Def.'s Facts" ) ¶ 13, ECF No. 97-12. By contrast, the duty on imports of passenger vehicles is 2.5 percent. HTSUS Heading 8703; see also Summons at 2.

As detailed below,3 Ford manufactures the Transit Connect 6/7s in Turkey and imports them into the United States. While these vehicles are made to order and are ordered as cargo vans, Ford manufactures and imports them with a second row seat, declaring the vehicles as

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passenger vehicles subject to HTSUS 8703.23.00 and a 2.5 percent duty.4 After clearing customs but before leaving the port, Ford (via a subcontractor) removes the second row seat and makes other changes, delivering the vehicle as a cargo van. Defendant United States (" Defendant," " Customs," or " CBP" ) determined that the inclusion of the second row seat is an improper artifice or disguise masking the true nature of the vehicle at importation and that such vehicle is properly classified as 8704.31.00 and subject to a twenty-five percent duty.5 Ford contends that this is legitimate tariff engineering. See Pl.'s MSJ at 21.

II. PROCEDURAL HISTORY

The sole entry at issue is Entry Number 300-86200183 which entered at the Port of Baltimore on December 26, 2011 and Customs liquidated under tariff classification 8704.31.00.20, HTSUS, with a twenty-five percent duty rate on May 3, 2013. Summons at 1. Ford timely and properly protested and claimed that the subject merchandise should have been liquidated under tariff classification 8703.23.00.52, HTSUS, with a duty rate of 2.5 percent, asserting that " CBP did not follow 19 U.S.C. § 1315(d) or 1625 procedures in changing the classification." Id. at 2. Ford timely commenced this case. Id. Parties filed cross-motions for summary judgment and the Court held oral argument in this case on June 8, 2016. See Oral Argument, ECF No. 104.

III. MATERIAL FACTS NOT IN DISPUTE6

The court's rule regarding summary judgment requires the moving party to show that " there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." USCIT R. 56(a). Movants should present material facts as short and concise statements, in numbered paragraphs and cite to " particular parts of materials in the record" as support. USCIT R. 56(c)(1)(A). Parties submitted separate facts, which contained mixtures of disputed and undisputed phrases or sentences within a numbered paragraph. Upon review of Parties' voluminous facts, the Court finds the following undisputed and material facts.7

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A. Facts Regarding Jurisdiction

As noted above, CBP liquidated Entry Number 300-8620018-3 under tariff classification 8704.31.00, HTSUS, with a twenty-five percent duty rate on May 3, 2013. Summons at 1; Compl. ¶ ¶ 4, 6-7; Answer ¶ ¶ 4, 6-7, ECF No. 19; Def.'s Facts ¶ 8; Pl.'s Resp. to Def.'s Facts ¶ 8. Ford timely and properly protested, claiming that the subject merchandise should have been liquidated under tariff classification 8703.23.00, HTSUS, with a duty rate of 2.5 percent. Summons at 2; Def.'s Facts ¶ ¶ 3-5; Pl.'s Resp. to Def.'s Facts ¶ ¶ 3-5. Jurisdiction is uncontroverted in this case. Compl. ¶ 3; Answer ¶ 3; Pl.'s Facts ¶ 244-49; Def.'s Resp. to Pl.'s Facts ¶ 244-49; Def.'s Facts ¶ 2; Pl.'s Resp. to Def.'s Facts ¶ 2. The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1581(a). Compl. ¶ 3; Answer ¶ 3.

B. Facts Regarding Subject Merchandise

1. Description of Subject Merchandise

The subject merchandise consists of Transit Connect 6/7s.8 Def.'s Facts at 1; Pl.'s Resp. to Def.'s Facts ¶ 1. The Transit Connect 6/7 " was a multipurpose vehicle manufactured in Turkey and imported into the United States from 2009-2013." Pl.'s Facts ¶ 1; Def.'s Resp. to Pl.'s Facts ¶ 1. The subject imports are " part of Ford's U.S. Transit Connect vehicle line." Def.'s Facts ¶ 11; Pl.'s Resp. to Def.'s Facts ¶ 11. Transit Connect 6/7s were " designated within Ford as the V227N." Pl.'s Facts ¶ 1; Def.'s Resp. to Pl.'s Facts ¶ 1. " The V227N vehicles [were]9 LWB (long wheel base)." Def.'s Facts ¶ 62; Pl.'s Resp. to Def.'s Facts ¶ 62. The V227N line " included a van model (Transit Connect Van) in two trim levels and a Wagon model (Transit Connect Wagon) in two trim levels," but " only the Transit Connect Vans are at issue in this action." 10 Def.'s Facts ¶ ¶ 15, 16; Pl.'s Resp. to Def.'s Facts ¶ ¶ 15, 16. All Transit

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Connects are imported with second row seats, but the Transit Connect Vans are delivered to the customer as a two seat cargo van. Def.'s Facts ¶ 17; Pl.'s Resp. to Def.'s Facts ¶ 17.

As imported into the United States, the subject merchandise had a Gross Vehicle Weight Rating (" GVWR" ) of 5005 pounds. Def.'s Facts ¶ 45; Pl.'s Resp. to Def.'s Facts ¶ 45. The Transit Connect 6/7s contained a Duratec 2.0L, four cylinder gasoline engine, which is a spark-ignition internal combustion reciprocating piston engine with a cylinder capacity of 1999 cc. Pl.'s Facts ¶ 36; Def.'s Resp. to Pl.'s Facts ¶ 36. In its condition as imported into the United States, the Transit Connect 6/7s included: a steel unibody construction with an interior volume of approximately 200 cubic feet, which translates to just under 6m3; front-wheel drive; rear passenger seats with seat anchors; and underbody bracing. Pl.'s Facts ¶ ¶ 38-39, 43, 45; Def.'s Resp. to Pl.'s Facts ¶ ¶ 38-39, 43, 45. The Transit Connect 6/7s had Macpherson strut front suspension, ground clearance of 8.2 inches, and over 50 inches of space from floor to ceiling in the rear. Pl.'s Facts ¶ ¶ 41, 54-55; Def.'s Resp. to Pl.'s Facts ¶ ¶ 41, 54-55.

At the time of importation into the United States, subject imports had " swing-out front doors with windows, second-row sliding doors with windows, and swing-out rear doors, some of which had windows." Pl.'s Facts ¶ 49; Def.'s Resp. to Pl.'s Facts ¶ 49. The sliding side doors met federal safety standards for passenger vehicles. Pl.'s Facts ¶ 50...

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