Russell Stadelman & Co. v. U.S.

Citation242 F.3d 1044
Decision Date12 March 2001
Docket NumberNo. 00-1157,00-1157
Parties(Fed. Cir. 2001) RUSSELL STADELMAN & CO., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Beth C. Ring, Sandler, Travis & Rosenberg, P.A., of Miami, Florida, argued for plaintiff-appellant. With her on the brief was Edward M. Joffee. Of counsel was Gerson M. Joseph.

Mikki Graves Walser, Attorney, International Trade Field Office, Department of Justice, of New York, New York, argued for defendant-appellee. With her on the brief were David M. Cohen, Director, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC; and Joseph I. Liebman, Attorney in Charge, International Trade Field Office.

Before LOURIE, RADER, and GAJARSA, Circuit Judges.

GAJARSA, Circuit Judge.

DECISION

Russell Stadelman & Co. ("Stadelman") appeals the December 21, 1999 decision of the United States Court of International Trade ("Court of International Trade"), Russell Stadelman Co. v. United States, 83 F. Supp. 2d 1356 (Ct. Int'l Trade 1999), which determined that the United States Customs Service ("Customs") correctly classified the plywood at issue imported by Stadelman between October 1992 and February 1995 under subheading 4412.12.20, Harmonized Tariff Schedule of the United States ("HTSUS") (1992-1995) and consequently denied Stadelman's motion for summary judgment and granted the United States' cross-motion for summary judgment. We affirm.

BACKGROUND

During the 1960s and 1970s, Brunzeel, a Dutch company, owned a large mill in Surinam.1 The Brunzeel mill manufactured plywood known locally as "Baboen."2 In Surinam, "Baboen" described all mixed species of tropical hardwood plywood manufactured at the Brunzeel mill.

In the early 1970s, Brunzeel purchased a mill in Brazil known as Brumasa. Brumasa sold its plywood under the trade name VIROLA.3 This plywood included plies of various species of wood in the Virola genus as well as other woods including Sumauma (Ceiba pentandra), Faveira (Parkia spp.), and Mangue (T. rhoisoia), which are indisputably not species in the Virola genus.4 In the mid-1970s, Brunzeel closed its mills in both Brazil and Surinam. Since the 1980s, plywood traders in Brazil and the United States have used the term "Virola" as a trade term to refer to plywood manufactured from approximately 35 species of wood, including species in the Virola genus as well as Sumauma, Faveira, and Mangue.

The plywood at issue in this case was imported into the United States from Brazil by Stadelman from October 1992 through February 1995. This plywood consists of at least one outer ply of Sumauma, Faveira, or Mangue.

Stadelman asserts that the plywood at issue was classifiable during the relevant time period under subheading 4412.11.20, HTSUS (1992-1995).5 This subheading provided:

4412 Plywood, veneered panels and similar laminated wood: Plywood consisting solely of sheets of wood, each ply not exceeding 6 mm in thickness:

4412.11 With at least one outer ply of the following tropical woods: . . . Baboen . . . .

. . . .

4412.11.20 Other

(emphasis added). Plywood imported from Brazil and classifiable under subheading 4412.11.20, HTSUS (1992-1995) was eligible for duty-free treatment under the Generalized System of Preferences ("GSP").

Customs classified Stadelman's merchandise under a residual provision, subheading 4412.12.20, HTSUS (1992-1995), which provided:

4412 Plywood, veneered panels and similar laminated wood: Plywood consisting solely of sheets of wood, each ply not exceeding 6 mm in thickness:

4412.12 Other . . . .

. . . .

4412.12.20 Other

Brazilian imports classified under subheading 4412.12.20, HTSUS (1992-1995) were not eligible for GSP treatment. Therefore, in accordance with subheading 4412.12.20, HTSUS (1992-1995), Customs assessed the subject merchandise an eight percent duty.

After Customs denied Stadelman's protests filed in accordance with section 514 of the Tariff Act of 1930, as amended, 19 U.S.C. 1514 (1994), Stadelman appealed to the Court of International Trade. Subsequently, the parties filed cross-motions for summary judgment.

The Court of International Trade initially determined there was no dispute of fact--that is, it recognized that the parties agreed to the description of the merchandise at issue and only disagreed as to its proper classification. Turning to the issue of classification, the court first noted that the merchandise at issue literally fell within the scope of subheading 4412.12.20, HTSUS (1992-1995), which is a residual provision that covers plywood without an outer ply of "Baboen" or any other tropical wood enumerated in subheading 4412.11, HTSUS (1992-1995). Yet, the court indicated that it needed to determine whether the plywood at issue was covered by subheading 4412.11.20, HTSUS (1992-1995), because "classification of imported merchandise in a residual, or 'basket,' provision is only appropriate when there is no tariff category that covers the merchandise more specifically." Stadelman, 83 F. Supp. 2d at 1359.

Because the term "Baboen" is not defined in either the HTSUS or its legislative history, the court looked to the term's common meaning for its definition. Recognizing that both parties acknowledged that "Baboen" is not used commercially in the United States, the court consulted standard lexicographic and scientific authorities to decipher the term's common meaning. It determined that lexicographic and scientific authorities indicate that the common meaning of the term "Baboen" is wood of the species Virola surinamensis, which is a species within the Virola genus.

The court then discussed the Explanatory Notes to the Harmonized Commodity Description and Coding System ("Explanatory Notes"), which "provide a commentary on the scope of each heading of the Harmonized [Tariff] System and are thus useful in ascertaining the classification of merchandise under the system." H.R. Rep. No. 100-576, at 549 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 1582. The Explanatory Notes include a note pertaining to Chapter 44, HTSUS that states: "For the purposes of classification in subheadings of headings . . . 44.12, certain tropical woods are designated according to the pilot-name recommended by the International Technical Association for Tropical Timber . . . . The pilot-name is based on the popular name employed in the principal country of production or consumption." Explanatory Notes (1st ed. 1986) at 623.

The Annex to the Explanatory Notes ("Annex") provides a list of pilot-names as well as "scientific names" and "local names" that correspond to each pilot-name. Explanatory Notes at 643. In the Annex, six "scientific names" correspond to the pilot-name "Baboen." Id. Each scientific name corresponding to the pilot-name "Baboen" is a member of the Virola genus and one of these scientific names is "Virola surinamensis." Id. The Annex also demarcates eight "local names" that correspond to the pilot-name "Baboen;" one local name corresponding to the pilot-name "Baboen" is "Baboen" in Surinam. Id. Notably, the Annex provides no local name in the United States that corresponds to the pilot-name "Baboen." Id.

The court recognized that, "although the lexicographic and [Explanatory Notes] definitions of 'Baboen' differ slightly, both appear to limit the scope of the term to species of the genus Virola." Stadelman, 83 F. Supp. 2d at 1361. Because none of the outer plies of the plywood at issue consisted of a species of wood within the Virola genus, the court determined that Customs correctly classified the merchandise at issue because it was not plywood with "at least one outer ply of . . . Baboen [or any other enumerated wood]," as required for classification under subheading 4412.11.20, HTSUS (1992-1995). Therefore, the Court of International Trade denied Stadelman's motion for summary judgment and granted the United States' cross-motion for summary judgment.

DISCUSSION
A. Standard of Review

The grant and denial of summary judgment by the Court of International Trade are matters of law that we review de novo. See Jay v. Secretary of the Dep't of Health and Human Servs., 998 F.2d 979, 982 (Fed. Cir. 1993) (reviewing grant and denial of summary judgment by the United States Court of Federal Claims de novo); Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994) (reviewing grant of summary judgment by the Court of International Trade de novo). A classification of goods by Customs is presumed to be correct. 28 U.S.C. 2639(a)(1) (1994). Therefore, the party challenging Customs' classification, Stadelman in this case, bears the burden of proving that Customs' classification was incorrect. Id. The ultimate question of the proper interpretation of a tariff term is a question of law that we review de novo. Mita Copystar, 21 F.3d at 1082.

Proof of commercial designation is a question of fact reviewed under the clearly erroneous standard. Rohm & Haas Co. v. United States, 727 F.2d 1095, 1097 (Fed. Cir. 1984). "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395, 92 L. Ed. 746, 68 S. Ct. 525 (1948).

B. The Proper Meaning of "Baboen"

To determine the meaning of a tariff classification term, only the term used in the tariff classification may be analyzed. Cf. Neuman & Schiers Co., Inc. v. United States, 24 CCPA 127, 132 (1936) ("Courts have never broadened the rule [of determining commercial designation] so far as to permit proof of commercial designation of terms other than the precise terms used in the statute."). "Baboen" is the term designated in the relevant portion of subheading 4412.11.20, HTSUS (1992-1995). VIROLA is not an HTSUS term at issue in this case. Consequently, this court will only assess...

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