Precision Specialty Metals, Inc. v. U.S.
| Decision Date | 14 December 2001 |
| Docket Number | No. 98-02-00291.,Slip Op. 01-148.,98-02-00291. |
| Citation | 182 F.Supp.2d 1314 |
| Parties | PRECISION SPECIALTY METALS, INC., Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. Court of International Trade |
Collier Shannon Scott, PLLC, Washington, DC (Mark Austrian, Laurence J. Lasoff, Robin H. Gilbert, John M. Herrmann); Howrey, Simon, Arnold & White, Washington, DC (Jeffrey W. Brennan), for Plaintiff.
Stuart E. Schiffer, Assistant Attorney General; Joseph I. Liebman, Attorney in Charge, International Trade Field Office; John J. Mahon, Commercial Litigation Branch, Civil Division, Department of Justice, New York City; Chi S. Choy, Office of the Assistant Chief Counsel, International Trade Litigation, United States Customs Service, New York City, of counsel, for Defendant.
On September 20, 2000, this court in Precision Specialty Metals, Inc. v. United States, 116 F.Supp.2d. 1350 (CIT 2000) ("Precision I"), denied a motion by Plaintiff Precision Specialty Metals, Inc. ("Precision") for summary judgment, and ordered that the case be set for trial. Familiarity with that decision is presumed. The parties submitted pretrial memoranda during February 2001. After reviewing those memoranda, the court concluded that the issues presented were almost entirely legal, and thus susceptible to resolution or narrowing by motion, rendering trial premature or unnecessary. Transcript of Pretrial Conference dated February 20, 2001 ("Tr.") at 3-4. By order dated February 21, 2001, the court vacated its earlier order for a trial, and directed the parties to submit the case for resolution on motion or motions for summary judgment. This case now comes before the court on Plaintiff's Motion for Summary Judgment Pursuant to United States Court of International Trade Rule 56 ("Plaintiff's Motion for Summary Judgment") and Defendant's Cross-Motion for Summary Judgment ("Defendant's Cross-Motion").
In its Motion for Summary Judgment, Plaintiff Precision contests Customs' denial of drawback on certain entries of stainless steel trim and scrap. Plaintiff argues that the facts stipulated by the parties require a finding that Customs violated 19 U.S.C. § 1625(c)(2), by failing to engage in a notice-and-comment process prior to issuing a ruling which reversed Customs' earlier treatment of 69 similar entries as eligible for drawback. Customs based its denial on a determination that the subject merchandise is "waste" or "valuable waste", and thus is not an "article manufactured or produced" within the meaning of the drawback statute, 19 U.S.C. § 1313(b) (1994). Plaintiff also contends that, as a matter of fact and of law, the merchandise at issue is not waste, and that Plaintiff is entitled to drawback thereon.
In its Cross-Motion, Defendant seeks summary judgment upholding the decision of the Customs Service that the substitution manufacturing drawback claims filed by Precision on entries of stainless steel scrap are not eligible for drawback, and dismissing Precision's action.
For the reasons stated below, the court grants summary judgment in favor of Precision, and denies Defendant's Cross-Motion.
This case involves 38 claims for substitution manufacturing drawback made pursuant to 19 U.S.C. § 1313(b), and Treasury Decision ("T.D.") 81-74. T.D. 81-74 is a general drawback contract for articles manufactured using steel, and provides, in pertinent part, for the allowance of drawback on imported "[s]teel of one general class, e.g. an ingot", where the "merchandise ... which will be used in the manufacture of the exported products" is "[s]teel of the same general class, specification and grade as the [subject imported] steel[.]" The steel used in the manufacture of the exported products on which drawback is sought must be "used to manufacture new and different articles, having distinctive names, characters and uses." T.D. 81-74 further provides that "no drawback is payable on any waste which results from the manufacturing operation."
On October 23, 1991, Precision submitted a letter to Customs expressing its intention to adhere to and comply with the terms of T.D. 81-74. See Appendix Accompanying the Memorandum of Law in Support of Plaintiff's Motion for Summary Judgment March 31, 2000 ("App.") A-1. In that letter, Precision described the various steel products on which it would claim drawback. Those products included "stainless steel coils, sheets and trim" of various chemistries identified by industry standards. Id. at 1. Customs granted Precision's request to claim drawback under T.D. 81-74.1 App. A-4 (Letter from Customs to Precision, dated January 10, 1991 [sic—1992]).
Precision filed 116 drawback entries under T.D. 81-74 between December 11, 1991 and May 13, 1996. Rule 56(i) Statement, ¶ 5. Customs liquidated 69 of these entries with full benefit of drawback, in which Precision had claimed exports of stainless steel trim, stainless steel strip, stainless steel scrap and stainless steel coils, [resulting in Precision's receipt of a significant sum of duty drawback.] Id. at ¶ 6. Over that period, Customs routinely requested clarifying information concerning Precision's drawback entries. Id. at ¶ 7. Prior to January 1996, Customs never questioned the eligibility of that merchandise for drawback. Id. at ¶ 7.
Documentation submitted in connection with the remaining entries, which contained the merchandise at issue, described the merchandise by various terms such as "stainless steel," "metal scrap," "scrap steel for remelting purposes only," "steel scrap sabot," "stainless steel scrap," and "desperdicio de acero inoxidable."2 Id. at ¶ 18. See App. B at 2.
During 1992 and 1993, when conducting "pre-liquidation reviews" of three drawback claims that involved exports of "[s]tainless [s]teel coil ends and side trim (scrap)", Customs asked Precision for additional information and documentation on the exports involved. App. A-8 (Letter from Customs to Pat Revoir dated July 10, 1992); App. A-11 (). In response, Precision furnished Customs with additional information and documentation, showing that the exported material was stainless steel scrap. Customs liquidated each of those three drawback entries for the full amount of drawback claimed. See App. A-14 (Notice of Liquidation); Rule 56(i) Statement, ¶¶ 8-10.
In January 1996, Customs first questioned the eligibility of Precision's claims involving stainless steel trim for drawback. See Rule 56(i) Statement, ¶ 7; App. A-7 (January 10, 1996 notice from Customs to Appel-Revoir). In June 1996, Precision received a Notice of Action informing it that 38 of its drawback entries were being liquidated without the benefit of drawback in full or part, on the basis that "scrap was shown on the export bill(s) of lading" and that "[d]rawback is not available upon exports of valuable waste."3 App. A-20. The entries at issue were liquidated on June 14, 1996. Rule 56(i) Statement, ¶ 14.
The court subjects this motion for summary judgment to the usual standard on summary judgment. "Summary judgment is warranted when, based upon the `pleadings, depositions, answers to interrogatories, ... admissions on file, ... [and] affidavits, if any,' the court concludes that there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law." Peg Bandage, Inc. v. United States, 17 CIT 1337, 1339 (1993) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)) (citing Rule 56(d) Rules of the Court of International Trade (1993)).
On a motion for summary judgment, the movant bears the burden of demonstrating that there is no genuine issue of material fact. United States v. F.H. Fenderson, Inc., 10 CIT 758, 760 (1986) (citing SRI Int'l v. Matsushita Elec. Corp. of America, 775 F.2d 1107, 1116 (Fed.Cir.1985)). If that burden is not met, there can be no grant of summary judgment.
In reviewing this motion, the court reviews Customs' denial of Plaintiff's protest de novo. See Rheem Metalurgica S/A v. United States, 20 CIT 1450, 1456, 951 F.Supp. 241, 246 (1996), aff'd 160 F.3d 1357 (Fed.Cir.1998). Although the decision of the Customs Service is presumed correct and "[t]he burden of proving otherwise shall rest upon the party challenging such decision," the court's role in reviewing the decision is to reach the correct result. 28 U.S.C. § 2639(a)(1) (1994); see also Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed.Cir.1984).
If the governing statute is clear on its face, the court must follow Congressional intent, regardless of the existence of an interpretation by Customs to the contrary. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). "[T]he fair measure of deference to an agency administering its own statute has been understood to vary with circumstances, and courts have looked to the degree of the agency's care, its consistency, formality, and relative expertness, and to the persuasiveness of the agency's position." United States v. Mead, 533 U.S. 218, 121 S.Ct. 2164, 2171, 150 L.Ed.2d 292 (2001) (footnotes omitted);4 see also Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778. Agency interpretations which lack the force of law are "entitled to respect ... but only to the extent that those interpretations have the `power to persuade'." Christensen v. Harris County, 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000) (citing Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944)); Mead, 121 S.Ct. at 2168.
Customs' Denial of Plaintiff's Protest Did Not Conform to the Requirements of 19 U.S.C. § 1625(c)
In Precision I, the court considered Plaintiff's argument that Customs' determination that Precision's stainless steel scrap is not eligible for...
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