Franklin v. U.S.

• Citation: 289 F.3d 753
• Decision Date: 26 April 2002
• Docket Number: No. 01-1340.,01-1340.
• Parties: Arthur L. FRANKLIN (doing business as Health Technologies Network), Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

289 F.3d 753

Arthur L. FRANKLIN (doing business as Health Technologies Network), Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 01-1340.

United States Court of Appeals, Federal Circuit.

April 26, 2002.

COPYRIGHT MATERIAL OMITTED

Mark T. Coberly, Vanderventer Black LLP, of Norfolk, VA, argued for plaintiff-appellant.

Arthur J. Gribbin, Attorney, International Trade Field Office, Department of Justice, of New York, NY, argued for defendant-appellee. With him on the brief were Robert D. McCallum, Jr., Assistant Attorney General; David M. Cohen, Commercial Litigation Branch, Department of Justice, of Washington, DC; and Joseph I. Liebman, former Attorney in Charge, International Trade Field Office; and Aimee Lee, Attorney, Civil Division, Commercial Litigation Branch, Department of Justice, of New York, NY. Of counsel on the brief was Beth C. Brotman, Attorney, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service, of New York, NY. Of counsel was John J. Mahon, International Trade Field Office.

Before LOURIE, GAJARSA, and PROST, Circuit Judges.

PROST, Circuit Judge.

Arthur L. Franklin d/b/a Health Technologies Network ("Franklin") appeals from the decision of the United States Court of International Trade denying Franklin's motion for summary judgment and granting the government's cross-motion for summary judgment that the United States Customs Service ("Customs") properly classified Franklin's imported coral sand packets under subheading 2106.90.99 of the Harmonized Tariff Schedule of the United States, 19 U.S.C. § 1202 ("HTSUS"). Franklin v. United States, 135 F.Supp.2d 1336 (Ct. Int'l Trade 2001). We conclude that the imported goods are properly classified under subheading 8421.21.00 of the HTSUS and therefore reverse.

BACKGROUND

The imported goods at issue in this case are coral sand packets that were imported by Franklin in 1995, 1996, and 1997. Franklin, 135 F.Supp.2d at 1337. This coral sand, otherwise known as coral calcium, is mined from fossilized coral reefs in Okinawa, Japan. After harvesting, the coral is washed, dried, treated with Lascorbic acid, and packaged in one-gram fiber bags. Id. at 1344. When the consumer places one of these fiber bags in a specified amount of water, the coral adds calcium and magnesium ions to the water. This increases the water's pH, rendering it more alkaline or "hardening" it. Id. at 1339. The alkaline environment produced by this process kills bacteria in the water. Id. Additionally, the L-ascorbic acid reacts with and neutralizes chlorine in the water. Id. Less than 5% of the product goes into solution, and the majority of the coral sand is not ingested with the water but instead remains in the fiber bag at the bottom of the glass.

Customs classified the coral sand under subheading 2106.90.99 of the HTSUS, id. at 1338, which is a residual, or "basket," provision of heading 2106 that covers "[f]ood preparations not elsewhere specified or included ... [o]ther," HTSUS, subheading 2106.90.99.¹ Imports classifiable under this subheading were dutiable at a rate of 9.4% (1995), 8.8% (1996), and 8.2% (1997) ad valorem. Franklin, 135 F.Supp.2d at 1338. Franklin protested this classification and subsequently challenged it in the Court of International Trade. Id. According to Appellant, its coral packets were properly classifiable under subheading 8421.21.00 of the HTSUS, id. at 1337, which covers:

                8421  Centrifuges, including centrifugal
                      dryers; filtering or purifying machinery
                      and apparatus, for liquids
                      or gasses; parts thereof
                8421.21  Filtering or purifying machinery
                         and apparatus for liquids
                8421.21.00  For filtering or purifying
                            water
                

HTSUS, heading 8421. Goods classified under subheading 8421.21.00 were subject to duty rates of 3.1% (1995), 2.3% (1996), and 1.6% (1997) ad valorem. Franklin, 135 F.Supp.2d at 1337.²

Both parties moved for summary judgment. Id. at 1338. The Court of International Trade denied Franklin's motion and granted the government's corresponding cross-motion, holding that Customs had correctly classified Appellant's imported goods as a "[f]ood preparatio[n] ... [o]ther" under subheading 2106.90.99. Id. at 1345.

As a preliminary matter, the court concluded that Franklin's coral sand was not a filtering or purifying device within the meaning of heading 8421. Id. at 1341. The court based this conclusion upon its finding that the coral sand had two distinct uses: (1) reduction of bacteria and neutralization of chlorine in the water, id. at 1340-41; and (2) addition of "hardness," or water alkalinity, which, according to Franklin's marketing materials, made the water healthier, id. at 1341.³ According to the court, the first use qualified as purification or filtration under 8421, but the second did not. As the court stated, "[i]nsofar as the addition of hardness raises the alkalinity level of water, and thereby benefits the health of the consumers in ways other than those associated with the reduction of bacteria, ... the merchandise does not purify or filter in the sense required under heading 8421." Id. The court noted that because 8421 is a "use" provision, Franklin's coral sand must have been "chiefly used" to filter or purify in order to fall under the heading. Id. After examining Appellant's marketing materials, the court determined that Franklin had failed to provide any evidence from which one could infer that the coral sand's chief use was to purify. Id. As such, the court concluded that the coral sand was not properly classifiable under subheading 8421.21.00.

The court further analyzed the coral sand under heading 2106. It concluded that because the sand was added to and affected the properties of water that was ultimately ingested, it qualified as a food preparation. Id. at 1344. The court found that the coral sand steeped in the water in a manner similar to the dissolving process described in Explanatory Note 21.06(A) and therefore fell within the heading. Id. The court also based its holding upon its finding that Franklin's coral qualified as an "infusion" within the meaning of Explanatory Note 21.06(14). Id. at 1344 n. 13. Within heading 2106, the court found that the coral sand was properly classified under subheading 2106.90.99 because no other subheading covered Appellant's goods more specifically. Id. at 1345. Because the court found that the subject merchandise was classifiable under only one of the suggested headings, it concluded that the case presented no relative specificity issue under General Rule of Interpretation ("GRI") 3. Id. at 1340.

Franklin timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

DISCUSSION

We review the Court of International Trade's grant of summary judgment without deference. Mead Corp. v. United States, 283 F.3d 1342, 1345 (Fed.Cir. Mar. 8, 2002). The proper scope and meaning of a tariff classification term is a question of law to be reviewed de novo, Rollerblade, Inc. v. United States, 112 F.3d 481, 483 (Fed.Cir.1997), while determining whether the goods at issue fall within a particular tariff term as properly construed is a question of fact, N. Am. Processing Co. v. United States, 236 F.3d 695, 697 (Fed.Cir.2001). We afford Customs' classification rulings deference in accordance with the principles set forth in Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944). United States v. Mead Corp., 533 U.S. 218, 234-35, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001); Mead, 283 F.3d at 1346. Under Skidmore, a classification decision receives a measure of deference proportional to its power to persuade. Skidmore, 323 U.S. at 140, 65 S.Ct. 161. Despite this deference, however, the court continues to "recogniz[e] its independent responsibility to decide the legal issue regarding the proper meaning and scope of the HTSUS terms." Mead, 283 F.3d at 1346 (citing Rocknel Fastener, Inc. v. United States, 267 F.3d 1354, 1358 (Fed. Cir.2001)).

The GRIs of the HTSUS and the Additional United States Rules of Interpretation guide the court's classification of goods imported into the United States. JVC Co. of Am. v. United States, 234 F.3d 1348, 1352 (Fed.Cir.2000). According to GRI 1, "classification shall be determined according to the terms of the headings and any relevant section or chapter notes...." Franklin, 135 F.Supp.2d at 1340 n. 3. "Only after determining that a product is classifiable under the heading should the court look to the subheadings to find the correct classification for the merchandise." Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed.Cir.1998). Under GRI 3(a), when goods are prima facie classifiable under two or more headings, the merchandise should be classified under the heading that provides the most specific description.

Absent legislative intent to the contrary, we construe HTSUS terms according to their common and commercial meanings, which are presumed to be the same. N. Am. Processing, 236 F.3d at 698. In construing a tariff term's common meaning, the court may rely on its own understanding of the term as well as upon lexicographic and scientific authorities. Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed.Cir.1994). The court may also refer to the Explanatory Notes accompanying a tariff subheading. Id. Although these notes do not constitute controlling legislative history, they are nonetheless intended to clarify the scope of the HTSUS subheadings and to offer guidance in their interpretation. Id.

A SUBHEADING 8421.21.00

Franklin argues that the Court of International Trade erred when it concluded that Customs properly classified its coral sand under subheading 2106.90.99. Appellant asserts that its coral sand purifies within the meaning of heading 8421 because it removes unwanted constituents from water and therefore falls under the definition of "purify" set forth in Noss Co. v. United States, 588...