Home Depot U.S.A., Inc. v. United States

Decision Date21 September 2017
Docket NumberCourt No. 14–00061,Slip Op. 17–129
Citation269 F.Supp.3d 1306
Parties HOME DEPOT U.S.A., INC., Plaintiff, v. The UNITED STATES, Defendant.
CourtU.S. Court of International Trade

William Randolph Rucker, Drinker Biddle & Reath LLP, of Chicago, IL, for Plaintiff Home Depot U.S.A., Inc.

Amy M. Rubin, Assistant Director, International Trade Field Office, U.S. Department of Justice, of New York, NY, for Defendant. With her on the brief were Edward F. Kenny, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, and Chad A. Readler, Acting Assistant Attorney General. Of Counsel on the brief was Beth C. Brotman, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection.

OPINION

Richard W. Goldberg, Senior Judge

BACKGROUND

This case arises from the classification of merchandise under the Harmonized Tariff Schedule of the United States ("HTSUS") by U.S. Customs and Border Protection ("Customs"). Plaintiff Home Depot U.S.A., Inc. ("Home Depot") is an importer and retailer of home improvement merchandise. Home Depot challenges Customs' classification of certain key-operated locking hardware articles ("entry locks" or "entry door knobs" or "subject articles").

The subject articles were entered between July and December of 2012 and liquidated by Customs between May and November 2013. See Summons, ECF No. 1. Customs liquidated the subject articles under HTSUS subheading 8301.40.6030, at a duty rate of 5.7% ad valorem . See Complaint ¶ 17, ECF No. 5. Home Depot insists that Customs should instead classify the subject articles under HTSUS subheading 8302.41.6045, at a duty rate of 3.9% ad valorem . See Complaint ¶¶ 24, 28, ECF No. 5.

Home Depot timely protested Customs' classification of its merchandise. Customs denied Home Depot's protest. Home Depot timely filed suit in this court to contest the denial of its protest. Home Depot and Defendant, the United States ("Defendant"), each filed a motion for summary judgment.

Because Customs' appropriately classified the subject articles within HTSUS heading 8301, the court denies Home Depot's motion for summary judgment and grants Defendant's cross-motion for summary judgment.

JURISDICTION AND STANDARD OF REVIEW

This Court has jurisdiction over this action under 28 U.S.C. § 1581(a).

"The court shall grant summary judgment if the movant shows 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). Summary judgment in a classification case is appropriate only if "the material facts of what the merchandise is and what it does are not at issue." BASF Corp. v. United States , 35 CIT ––––, ––––, 798 F.Supp.2d 1353, 1356–57 (2011) (citation omitted).

DISCUSSION

"In a classification case, 'the court construes the relevant (competing) classification headings, a question of law; determines what the merchandise at issue is, a question of fact; and then' determines 'the proper classification under which [the merchandise] falls, the ultimate question in every classification case and one that has always been treated as a question of law.' " BASF Corp. , 35 CIT at ––––, 798 F.Supp.2d at 1357 (quoting Bausch & Lomb, Inc. v. United States , 148 F.3d 1363, 1366 (Fed. Cir. 1998) ).

Merchandise is classified in accordance with the General Rules of Interpretation ("GRIs"). The GRIs are applied in numerical order. If the proper classification is achieved through a particular GRI, the remaining successive GRIs should not be considered. See Mita Copystar Am. v. United States , 160 F.3d 710, 712–13 (Fed. Cir. 1998).

Under GRI 1, the court must determine the appropriate classification "according to the terms of the headings and any relative section or chapter notes," HTSUS GRI 1, according all terms their "common commercial meaning," Millenium Lumber Distrib., Ltd. v. United States , 558 F.3d 1326, 1328–29 (Fed. Cir. 2009) (citation omitted). In construing tariff provisions, "[a] court may rely upon its own understanding of the terms used and may consult lexicographic and scientific authorities, dictionaries, and other reliable information sources." Carl Zeiss, Inc. v. United States , 195 F.3d 1375, 1379 (Fed. Cir. 1999) (citation omitted).

An article is classifiable under GRI 1 if it "is described in whole by a single classification heading or subheading" of the HTSUS. La Crosse Tech., Ltd. v. United States , 723 F.3d 1353, 1358 (Fed. Cir. 2013) (quoting CamelBak Prods., LLC v. United States , 649 F.3d 1361, 1364 (Fed. Cir. 2011) ). "With regard to assessing an imported article pursuant to GRI 1, we consider a HTSUS heading or subheading an eo nomine provision when it describes an article by a specific name." CamelBak Prods. , 649 F.3d at 1364 (citation omitted). "Absent limitation or contrary legislative intent, an eo nomine provision 'include[s] all forms of the named article[,]' even improved forms." Id. at 1364–65 (citation omitted). However, "[w]hen goods are in character or function something other than as described by a specific statutory provision—either more limited or more diversified—and the difference is significant, then the goods cannot be classified under an eo nomine provision pursuant to GRI 1." See La Crosse Tech. , 723 F.3d at 1358 (citation and internal quotation marks omitted).

"In order to determine whether the subject article is classifiable within an eo nomine provision, we look to whether the subject article is merely an improvement over or whether it is, instead, a change in identity of the article described by the statute." CamelBak Prods. , 649 F.3d at 1365 (citation omitted). "The criterion is whether the item possesses features substantially in excess of those within the common meaning of the term." Id. (quoting Casio, Inc. v. United States , 73 F.3d 1095, 1098 (Fed. Cir. 1996) ).

"Several commercial factors also guide the court's assessment of whether articles fall within the scope of an eo nomine provision, including how the subject articles are regarded in commerce" and "how the subject articles are described in sales and marketing literature." Id. at 1368 (citations omitted).

For the reasons discussed below, the court holds that the subject articles are classifiable under heading 8301, and only heading 8301, pursuant to a GRI 1 analysis.

a. The Parties' Competing Tariff Provisions

The court begins by construing the parties' competing tariff provisions. Customs classified the subject articles under HTSUS subheading 8301.40.6030.1 The Government argues that "[a]ll of the keyed entry locksets at issue are covered by Heading 8301 pursuant to GRI 1 in that they are '... locks (key, combination or electrically operated).' " Def.'s Mem. in Opp'n to Pl.'s Mot. for Summ. J. and in Supp. of Def.'s Cross–Mot. for Summ. J. 11, ECF No. 47 ("Def. MSJ"). Home Depot disagrees, insisting that "the subject entry door knobs are properly classified under Heading 8302 using a GRI 1 analysis." Pl.'s Mem. in Supp. of Mot. for Summ. J. 10, ECF No. 35 ("Home Depot MSJ"). The relevant portions of each HTSUS provision are excerpted below:

                Heading/Subheading Article Description
                8301                   Padlocks and locks (key, combination or electrically operated), of
                                       base metal; clasps and frames with clasps, incorporating locks, of
                                       base metal; keys and parts of any of the foregoing articles, of base
                                       metal
                8301.40                     Other locks
                8301.40.60                        Other
                8301.40.6030                           Door locks, locksets and other locks suitable for use
                                                       with interior or exterior doors (except garage, overhead
                                                       or sliding doors)
                Heading/Subheading Article Description
                8302                   Base metal mountings, fittings and similar articles suitable for
                                       furniture, doors, staircases, windows, blinds, coachwork, saddlery
                                       trunks, chests, caskets or the like; base metal hat racks, hat-pegs
                                       brackets and similar fixtures; castors with mountings of base metal
                                       automatic door closers of base metal; and base metal parts thereof:
                                       Other mountings, fittings and similar articles, and parts thereof:
                8302.41                    Suitable for buildings:
                                           Other:
                8302.41.60                      Of iron or steel, of aluminum or of zinc:
                                                Suitable for interior and exterior doors (except garage,
                                                overhead or sliding doors):
                8302.41.6045                        Other.
                

See HTSUS § XV, Ch. 83, headings 8301, 8302.

i. HTSUS 8301

HTSUS heading 8301, an eo nomine provision, covers "[p]adlocks and locks (key, combination or electrically operated), of base metal."

Heading 8301 is found in § XV, Chapter 83 of the HTSUS. The Section Notes define "base metals" as:

[I]ron and steel, copper

, nickel, aluminum, lead, zinc, tin, tungsten (wolfram), molybdenum, tantalum, magnesium, cobalt, bismuth, cadmium, titanium, zirconium, antimony, manganese, beryllium, chromium, germanium, vanadium, gallium, hafnium, indium, niobium (columbium), rhenium and thallium.

HTSUS § XV, Note 3.

A "lock" is "a device for securing a door, gate, lid, drawer, or the like in position when closed, consisting of a bolt or system of bolts propelled and withdrawn by a mechanism operated by a key, dial, etc." See Dictionary.com, http://www.dictionary.com/browse/lock?s=t (last visited Sept. 14, 2017). And the Explanatory Notes ("ENs") for heading 8301 explain that the heading covers "[l]ocks for doors ...." 8301 EN (B).2

"Operated" means "to perform a function" or "to produce an appropriate effect." Merriam–Webster Dictionary, https://www.merriam-webster.com/dictionary/operate (last visited Sept. 12, 2017). Therefore, a "key-operated" lock indicates that a key...

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