UNITED STATES v. HAGGAR APPAREL CO.
| Decision Date | 21 April 1999 |
| Citation | 526 U.S. 380 |
| Court | U.S. Supreme Court |
UNITED STATES v. HAGGAR APPAREL CO.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
No. 97-2044. Argued January 11, 1999-Decided April 21, 1999
Respondent sought a refund for customs duties imposed on garments it shipped to this country from an assembly plant it controlled in Mexico. If there were mere assembly in Mexico without other steps, the garments would have been eligible for a partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), 19 U. S. C. § 1202, which applies to articles assembled abroad and not otherwise improved except by an "operatio[n] incidental to the assembly process." Respondent, however, also sought to permapress the garments in order to maintain their creases and avoid wrinkles. To accomplish this, respondent baked the chemically pretreated garments at the Mexican plant. Claiming the baking was an added process in addition to assembly, the Customs Service denied a duty exemption under 19 CFR § 10.16(c)(4), its regulation deeming all permapressing operations to be an additional step in manufacture, not part of or incidental to the assembly process. Respondent brought this suit in the Court of International Trade, which declined to treat the regulation as controlling and ruled in respondent's favor. The Court of Appeals for the Federal Circuit affirmed, declining to analyze the regulation under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837.
Held:
1. The regulation in question is subject to Chevron analysis.
(a) The statutes authorizing customs classification regulations are consistent with the usual rule that regulations of an administering agency warrant judicial deference; and nothing in the regulation in question persuades the Court that the agency intended the regulation to have some lesser force and effect. The statutory scheme does not support respondent's contention that the regulation is limited in application to customs officers themselves and is not intended to govern the adjudication of importers' refund suits in the Court of International Trade. The Customs Service (which is within the Treasury Department) is charged with fixing duties applicable to imported goods under regulations prescribed by the Secretary of the Treasury. See 19 U. S. C.
§ 1500(b). Respondent argues in vain that § 1502(a), which directs the Secretary to make classification rules for "the various ports of entry," authorizes regulations that have no bearing on the importer's rights, but simply ensure that customs officers around the country classify goods according to a similar and consistent scheme. Like other regulations which help to define the legal relations between the Government and regulated entities, customs regulations were authorized by Congress at least in part to clarify the rights and obligations of importers. This conclusion is not altered by the circumstance that the United States Trade Representative and the International Trade Commission have certain responsibilities for recommending and proclaiming changes in the HTSUS. These powers pertain to changing or amending the tariff schedules themselves; the Treasury Department and the Customs Service are charged with administering the adopted schedules applicable on the date of importation. Language respondent cites in 19 CFR § 10. 11 (a) does not suffice to displace the usual Chevron deference. Particularly in light of the fact that the agency utilized the notice-andcomment rulemaking process before issuing the regulations, the argument that they were not intended to be entitled to judicial deference implies a sufficient departure from conventional contemporary administrative practice that this Court ought not to adopt it absent a different statutory structure and more express language to this effect in the regulations themselves. pp. 385-390.
(b) The Court also rejects respondent's argument that even if the Treasury Department did intend the regulation to bear on the determination ofrefund suits, 28 U. S. C. §§2643, 2640(a), and 2638 empower the Court of International Trade to interpret the tariff statute without giving Chevron deference to regulations issued by the administering agency. A central theme in respondent's argument is that such deference is not owed because the trial court proceedings may be, as they were below, de novo. The conclusion does not follow from the premise. De novo proceedings presume a foundation of law. The question here is whether the regulations are part of that controlling law. Deference can be given to the regulations without impairing the court's authority to make factual determinations, and to apply those determinations to the law, de novo. Under Chevron, if the agency's statutory interpretation clarifies an ambiguity in a way that is reasonable in light of the legislature's revealed design, the Court gives that judgment controlling weight. NationsBank of N. C., N. A. v. Variable Annuity Life Ins. Co., 513 U. S. 251, 257. Although the statute under which respondent claims an exemption gives direction not only by stating a general policy (to grant the partial exemption where only assembly and incidental opera-
tions were abroad) but also by determining some specifics of the policy ( that painting, for example, is incidental to assembly), the statute is ambiguous nonetheless in that the agency must use its discretion to determine how best to implement the policy in those cases not covered by the statute's specific terms. Finally, contrary to respondent's contention, the historical practice in customs cases is not so uniform and clear as to convince the Court that judicial deference would thwart congressional intent. See, e. g., United States v. Vowell, 5 Cranch 368. pp. 390-393.
2. If the regulation in question is a reasonable interpretation and implementation of an ambiguous statutory provision, it must be given judicial deference. pp. 394-395.
(a) The customs regulations may not be disregarded. Application of the Chevron framework is the beginning of the legal analysis, and the Court of International Trade must, when appropriate, give regulations Chevron deference. Cf. Atlantic Mut. Ins. Co. v. Commissioner, 523 U. S. 382, 389. That court's expertise guides it in making complex determinations in a specialized area of the law; it is well positioned to evaluate customs regulations and their operation in light of the statutory mandate to determine if the preconditions for Chevron deference are present. P. 394.
(b) This Court declines to reach the question whether 19 CFR § 1O.16(c) meets the preconditions for Chevron deference as a reasonable interpretation of the statutory phrase "operations incidental to the assembly process." Because the Federal Circuit determined the Chevron framework was not applicable, it did not go on to consider whether the regulation ultimately warrants deference under that framework. Respondent's various arguments turning on the details and facts of its manufacturing process are best addressed in the first instance to the courts below. Pp. 394-395.
127 F. 3d 1460, vacated and remanded.
KENNEDY, J., delivered the opinion for a unanimous Court with respect to Parts I, II, and III, and the opinion of the Court with respect to Part IV, in which REHNQUIST, C. J., and O'CONNOR, SCALIA, SOUTER, THOMAS, and BREYER, JJ., joined. STEVENS, J., filed an opinion concurring in part and dissenting in part, in which GINSBURG, J., joined, post, p. 395.
Kent L. Jones argued the cause for the United States.
With him on the briefs were Solicitor General Waxman, Assistant Attorney General Hunger, Deputy Solicitor General Wallace, William Kanter, and Bruce G. Forrest.
Carter G. Phillips argued the cause for respondent. With him on the briefs were Mark E. Haddad, Ronald W Gerdes, Gilbert Lee Sandler, Edward M. Joffe, and Marc W Joseph. *
JUSTICE KENNEDY delivered the opinion of the Court. This case concerns regulations relating to the customs classification of certain imported goods. The regulations
were issued by the United States Customs Service with approval of the Secretary of the Treasury. The question is whether these regulations, deemed controlling by the Treasury, are entitled to judicial deference in a refund suit brought in the Court of International Trade. Contrary to the position of that court and the Court of Appeals for the Federal Circuit, we hold the regulation in question is subject to the analysis required by Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), and that if it is a reasonable interpretation and implementation of an ambiguous statutory provision, it must be given judicial deference.
Respondent Haggar Apparel Co. designs, manufactures, and markets apparel for men. This matter arises from a refund proceeding for duties imposed on men's trousers shipped by respondent to this country from an assembly plant it controlled in Mexico. The fabric had been cut in the United States and then shipped to Mexico, along with the thread, buttons, and zippers necessary to complete the garments. App. 37-38. There the trousers were sewn and reshipped to the United States. If that had been the full extent of it, there would be no dispute, for if there were
*Briefs of amici curiae urging affirmance were filed for Anhydrides & Chemicals, Inc., et al. by Richard C. King; and for the Customs and International Trade Bar Association by Terence P. Stewart, Bernard J. Babb, Munford Paige Hall II, Rufus E. Jarman, Jr., William D. Outman II, Christopher E. Pey, Melvin Schwechter, David Serko, Sidney N. Weiss, and Sandra Liss Friedman.
mere assembly without other steps, all agree the imported garments would have been eligible for the duty exemption which respondent claims.
Respondent, however, in the Government's view, added one other step at the Mexican plant: permapressing. Permapressing is designed to maintain a...
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