Dolliff & Co., Inc. v. United States

• Decision Date: 07 July 1978
• Docket Number: C.D. 4755,Court No. 73-5-01217.
• Citation: 455 F. Supp. 618
• Parties: DOLLIFF & COMPANY, INC. v. UNITED STATES.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

455 F. Supp. 618

DOLLIFF & COMPANY, INC. v. UNITED STATES.

C.D. 4755; Court No. 73-5-01217.

United States Customs Court.

July 7, 1978.

Doherty & Melahn, Boston, Mass. (William E. Melahn, Boston, Mass., of counsel), for plaintiff.

Barbara Allen Babcock, Asst. Atty. Gen., Washington, D.C. (Laura D. Millman, Trial Atty.), for defendant.

RICHARDSON, Judge:

The merchandise in this case consists of dacron polyester fabric which was exported from Canada in 1970 and 1971 and classified in liquidation upon entry at New Bedford, Massachusetts under TSUS item 338.30, as modified by T.D. 68-9, as woven fabrics, of man-made fibers, other, at various rates of duty which were assessed upon the full value of the merchandise. It is claimed by the plaintiff-importer that the merchandise should be classified under TSUS item 806.20 as articles exported for repairs or alterations, with duty assessed only upon the value of the processing outside the United States, in this case, Canada. The issue in the case is whether the processing of the fabric in Canada constituted a mere "alteration," or resulted in "the creation of a new and different article."

The essential facts concerning the processing operation in Canada are not in dispute. The domestic loom product is exported as greige goods in rolls of approximately 800 to 1,000 yards in length and approximately 118 to 119½ inches in width. It is returned as finished fabric suitable for manufacture into curtains, folded over double, widthwise, and cut in lengths of approximately 60 to 80 yards. In Canada the greige goods are subjected to a number of operations, consisting of heat-setting, chemical-scouring, dyeing¹ and heat-setting a second time during which finishing chemicals consisting of melamine resin for anti-creasing characteristics, an antistatic chemical, and a softener chemical are applied to the fabric in this final stage. The initial heat-setting treatment serves to stabilize the fabric through the elimination of shrinkage.² Scouring removes sizing and impurities from the fabric. And the second heat-setting treatment induces a permanent adherence of the finishing chemicals to the fabric during the drying stage of the processing. The finished fabric is then inspected, folded and shipped back to the United States.

Although the foreign processing to which the greige goods in this case were subjected, and which was viewed by the court and counsel, was designed to prepare these goods for manufacture into curtains, it was brought out that a modification of the finishing operations could be made which would render the finished fabric suitable for use in apparel industries in the manufacture of undergarments and blouses. In comparing the greige goods with the finished fabric in this case, Roger Normandin, plant manager for Consolidated Textiles, Ltd. of Drummondville, Quebec, Canada, the foreign finisher in this case, testified on recross-examination (R. 162):

Q. Do you see any difference in quality as far as use in the home between the finished goods and the greige goods? — A. Well, the finished goods are more attractive.

Q. Are they more attractive? Are they useful? Do they wrinkle as easily as the greige? — A. I would say that the performance of the finished goods, in certain respects, is slightly better or, like for the creasing, it is going to perform better. I would say, yes, but with reservation.

Q. And what about the hand, is the greige as soft as the finished good? — A. The finished good is softer.

Q. What about the ability to resist static and dirt, is the greige as good as the finished goods in that respect? — A. No.

Q. What about the ability to be draped, the drapability of each, is the greige one that would hang as well as the finished? — A. Probably not, no.

And on the matter of usage of the greige goods vis-à-vis the finished fabric, Kenneth V. Chace, president of Berkshire Hathaway, Inc. of New Bedford, Massachusetts, the manufacturer of the greige goods herein, testified on recross-examination (R. 111-12):

Q. When you sold the greige goods, at the time you sold them, to whom did you sell them? — A. We would sell the greige goods to a converter.

Q. Would he turn them into curtains without finishing? — A. No, no.

Q. When you sell the finished goods, to whom do you sell them? — A. To a decorator-jobber.

Q. And would he, consequently, either hire out or cut them into curtains? — A. His customer would.

Q. So that the use of the greige goods, by the buyer of the greige goods, and the use of the finished goods by the buyer of the finished goods, is different? — A. Yes.

Earlier, the witness testified on cross-examination that the price at which his company sold the greige goods to converters was less than the $1.50 to $1.60 a yard price at which it sold the finished fabric to jobbers (R. 83-85).

Plaintiff argues that the changes made in the greige goods as a result of the finishing operations performed on them did not change the classification of the goods as woven fabrics of man-made fiber, and as such, the changes were within the ambit of the term "alterations" as provided for in item 806.20, that the Canadian processing did not change the use of this product, and that the finished goods are not a new and significantly different article from the greige goods. The Government argues that the foreign processing created a new article of commerce and did not result in a mere "alteration" of the old article.

The court is of the opinion that the imported finished fabric is not the same article as the greige goods exported to Canada.

The merchandise exported to Canada is known in the trade as greige goods, while the imported product is known as finished fabric. The greige goods are cheaper than the finished fabric. Samples of the greige goods and finished fabric before the court readily disclose that the former are somewhat coarse to...