Ciba-Geigy Corp. v. U.S.

Decision Date29 December 1998
Docket NumberCourt No. 95-09-01128.,Slip Op. 98-168.
Citation44 F.Supp.2d 207
PartiesCIBA-GEIGY CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
CourtU.S. Court of International Trade

Ross & Hardies (Joseph S. Kaplan), for Plaintiff.

Frank W. Hunger, Assistant Attorney General; Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (John J. Mahon); Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service (Chi S. Choy), of counsel, for Defendant.

OPINION

WALLACH, Judge.

I INTRODUCTION

This dispute concerns the classification by the U.S. Customs Service ("Customs") of five related products — Pergascript Black I-R, Pergascript Blue I-2G, Pergascript Blue I-2R, Pergascript Green I-2GN and Pergascript Olive I-G ("the Pergascripts") — imported by Plaintiff, Ciba-Geigy Corporation ("Ciba-Geigy"), in 1992 and 1993.1 Plaintiff's Complaint ("Complaint") at ¶ 5; Memorandum In Support of Defendant's Motion For Summary Judgment ("Defendant's Motion") at 1. Customs classified the Pergascripts under Harmonized Tariff Schedule of the United States ("HTSUS") Subheadings 3204.19.40 and 3204.19.50, with respective duty rates of 15% and 20% ad valorem.2 Complaint at ¶ 7; Answer at ¶ 7. Heading 3204 covers, inter alia, "[s]ynthetic organic coloring matter, whether or not chemically defined" and "preparations as specified in note 3 to this chapter based on synthetic organic coloring matter ...."

Ciba-Geigy challenges Customs' determination, arguing that the Pergascripts are more properly classified as "inks," other than printing or drawing inks, under Subheading 3215.90.50. Complaint at ¶ 10. Imports under this tariff subheading are subject to a duty rate of 1.8% ad valorem. This Court exercises its jurisdiction pursuant to 28 U.S.C. § 1581(a).

Currently before the Court is Defendant's Motion for Summary Judgment. The Court finds that as there is no genuine issue of material fact relevant to the question of whether the Pergascripts may be classified in Heading 3215, this case is ripe for summary disposition pursuant to USCIT R. 56. Further, the Court finds that by operation of Note 1(a) to Chapter 32, HTSUS ("Note 1(a)"), the Pergascripts were properly classified by Customs under Heading 3204. Accordingly, the Court grants Defendant's Motion For Summary Judgment.

II BACKGROUND

There is no dispute between the parties concerning the basic characteristics of the imported merchandise in question. Both parties agree that the Pergascripts are synthetic organic coloring matter used in the manufacture of carbonless paper. See Complaint at ¶ 15; Defendant's Statement of Undisputed Material Facts ("DSUMF") at ¶ 7; Defendant's Motion at 1 & n. 3; Memorandum In Opposition To Defendant's Motion For Summary Judgment ("Plaintiffs Response") at 1, 8; Plaintiff's Answers to Defendant's Second Request for Admissions, Admission No. 1 (Exhibit A to Defendant's Motion). Carbonless paper is used in various business forms which require copies and replaces the sheets of carbon paper previously used. Defendant's Motion at 1 n. 3. To produce carbonless paper, Pergascript powders are dissolved in, and mixed with, other ingredients to form a dispersion that is coated on one side of a sheet of paper, the back side of which will be the top sheet of the form. Id. The top side of the second sheet is coated with an activator. When written on, the pressure causes the two coated surfaces to react in such a way that color is produced. Id.

Both parties also agree that Pergascripts are used in making thermographic paper. See id. at 1 & n. 3; Answer at ¶ 15, Plaintiff's Response at 8; Complaint at ¶ 15. Thermographic paper is used for fax paper and similar products where the application of heat to paper that has been coated with a dispersion of Pergascripts and other materials results in the formation of an image. Defendant's Motion at 1 n. 3. In producing both products, the Pergascripts constitute the sole coloring agent. See id. (generally describing how the Pergascripts are used in the manufacture of carbonless and thermographic paper).3

In addition to agreeing on the end-uses of the Pergascripts, both parties agree that the Pergascripts are separate chemically defined elements or compounds. See DSUMF at ¶ 4; Plaintiff's Response at 1.4 In fact, both parties even agree that, based on these characteristics, the Pergascripts are properly classified in Chapter 32 HTSUS, and that the Pergascripts are described in HTSUS Heading 3204. Plaintiff's Response at 1.

Notwithstanding these areas of agreement, Plaintiff argues that the Pergascripts are more properly classified as "inks" under Heading 3215, for the reasons discussed below. In response, Defendant argues that Note 1(a) to Chapter 32 precludes classification of separate chemically defined compounds (such as the Pergascripts) under Heading 3215. It is on this ground that Defendant has moved for summary judgment.

III ANALYSIS
A. Summary Judgment Is Appropriate Because There Is No Genuine Issue As To Any Material Fact

Under USCIT R. 56(d), summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

In resolving disputes concerning tariff classification, courts have generally referred to their analysis as a two-step process: first, construe the relevant tariff classifications; and second, determine under which of the properly construed tariff headings the merchandise at issue falls. Bausch & Lomb Inc. v. United States, 148 F.3d 1363, 1364 (Fed.Cir.1998). The first step in this process is a question of law, while the second step is generally referred to as a factual inquiry. Id. As the Court of Appeals for the Federal Circuit recently noted in Bausch & Lomb, however, where there is no genuine dispute as to the underlying factual issue of exactly what the merchandise is, summary judgment is appropriate because the ultimate issue of classification is then entirely a legal question. Id. at 1365. As the Court stated:

there is nothing inherently incompatible with the summary judgment process if 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, if there is no genuine dispute over the nature of the merchandise, adjudges on summary judgment the proper classification under which it falls, the ultimate question in every classification case and one that has always been treated as a question of law.

Id.

As noted above, there is no dispute concerning the basic characteristics of the Pergascripts. Both partes agree that the Pergascripts are (a) separate chemically defined compounds and (b) synthetic organic coloring matter. Further, there also appears to be no dispute concerning the end-uses of the Pergascripts.

Despite these areas of agreement, Plaintiff argues that summary judgment is not appropriate, since three "factual" issues remain as to which there is a genuine issue requiring a trial:

1. Is Pergascript a type of ink?

2. Does Pergascript embody the essential character of ink?

3. Is Pergascript an unfinished or incomplete ink?

Plaintiff's Statement of Material Facts as to Which There Is a Genuine Issue to Be Tried.

None of these questions, which Plaintiff describes as "factual," relate to the basic nature and characteristics of the Pergascripts (which are not in dispute). As discussed below, the undisputed fact that the Pergascripts constitute separate chemically defined compounds establishes, as a matter of law, that the Pergascripts cannot be classified in Heading 3215. Accordingly, the questions concerning whether the Pergascripts are "a type of ink," "embody the essential character of ink" or are "unfinished or incomplete ink[s]" are simply irrelevant (non-material) to the case at hand.

B. The Pergascripts Are Properly Classified Under Heading 3204
1. The Pergascripts Are Described By Heading 3204

Because there are no issues of genuine material fact in dispute between the parties, the issue in this case is one of statutory construction. Accordingly, no presumption of correctness attaches to Customs' classification decision, even though both parties agree that the Pergascripts are described by tariff Heading 3204. Rather, this Court must independently decide the meaning of tariff terms, pursuant to its statutory mandate to "reach the correct decision" regarding classification of merchandise. Rollerblade, Inc. v. United States, 112 F.3d 481, 484 (Fed.Cir.1997) ("The [CIT's] charter to `reach the correct decision' [quoting 28 U.S.C. § 2643(b)] in classification cases would be subverted if Customs' interpretation of a classification term was given deference. Thus, the court must independently decide legal issues ....")

As with any statute, tariff provisions must carry out the intent of the legislature, which is determined initially by looking at the language of the statute itself. See Nippon Kogaku (USA), Inc. v. United States, 69 C.C.P.A. 89, 673 F.2d 380, 382 (C.C.P.A.1982). Moreover, "the entire context of the statute must be considered and every effort made to give full force and effect to all language contained therein." Dart Export Corp. v. United States, 43 C.C.P.A. 64, 74, cert. denied 352 U.S. 824, 77 S.Ct. 33, 1 L.Ed.2d 48 (1956); See also Philipp Overseas, Inc. v. United States, 84 Cust. Ct. 200, 203, 84 Cust.Ct. 200, 496 F.Supp. 273, 276 (1980), aff'd, 68 C.C.P.A. 43, 651 F.2d 747 (1981). Consistent with these principles, General Rule of Interpretation ("GRI") 1 for the HTSUS provides that "for legal purposes, classification shall be determined according to the terms of the headings...

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  • North American Processing Co. v. U.S.
    • United States
    • U.S. Court of International Trade
    • 25 June 1999
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  • Agfa Corp. v. U.S.
    • United States
    • U.S. Court of International Trade
    • 21 May 2007
    ...the Chapter Notes, which are part of the statute, to determine the meaning of tariff headings. See Ciba-Geigy Corp. v. United States, 22 CIT 1155, 1162-13, 44 F.Supp.2d 207, 213-14 (1999) (adhering to the definition provided in a Chapter Note and rejecting arguments that application of the ......
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    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • 11 August 2000
    ...coloring matter" under Heading 3204 of the Harmonized Tariff Schedule of the United States ("HTSUS"). See Ciba-Geigy Corp. v. United States, 44 F. Supp. 2d 207 (Ct. Int'l Trade 1998). Ciba filed suit challenging the Customs decision to classify its products under HTSUS Heading 3204 rather t......

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