United States v. A. Johnson & Co., Inc., Appeal No. 78-11

• Citation: 588 F.2d 297
• Decision Date: 07 December 1978
• Docket Number: C.A.D. No. 1218.,Appeal No. 78-11
• Parties: The UNITED STATES, Appellant, v. A. JOHNSON & CO., INC., Appellee.
• Court: United States Court of Customs and Patent Appeals

588 F.2d 297

The UNITED STATES, Appellant, v. A. JOHNSON & CO., INC., Appellee.

Appeal No. 78-11; C.A.D. No. 1218.

United States Court of Customs and Patent Appeals.

December 7, 1978.

Barbara Allen Babcock, Asst. Atty. Gen., David M. Cohen, Chief, Customs Section, Washington, D. C., Joseph I. Liebman, New York City, for the United States.

Rivkin, Sherman & Levy, New York City, attorneys of record, for appellee; Joseph S. Kaplan, Dorothy P. Watson, New York City, of counsel.

Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.

RICH, Judge.

This appeal by the United States is from the judgment of the United States Customs Court, 450 F.Supp. 247, 80 Cust.Ct. ___, C.D. 4737 (1978), upon remand from our prior decision reported at 559 F.2d 16, 64 CCPA 164, C.A.D. 1196 (1977), sustaining the importer's alternative classification. We reverse.

The merchandise in issue is described in our earlier opinion, 559 F.2d at 17, 64 CCPA at 165:

The imported merchandise is invoiced, inter alia, as "Mairon Electrolytic Iron Flake," "Mairon" being a proprietary name by which we shall hereinafter identify the merchandise imported. Mairon is produced from a solid, zinc-ore residue by reducing the iron content thereof to molten pig iron, casting the pig iron to form an iron anode, and electrolyzing the anode in an electrolytic cell having a stainless steel cathode. During electrolysis, the relatively impure iron anode is dissolved and its iron content is plated out in highly pure form on the cathode. The pure iron plating is removed from the cathode and physically broken up to produce Mairon, an iron product of more than 99.9% purity in the form of flat, irregular fragments generally less than two inches across and about one-fifth of an inch thick. Mairon's high purity makes it particularly useful in alloying applications employing vacuum or other melting techniques which do not permit further purification.

The "Mairon" flake was exported from Japan in 1969 and 1970 and was classified in liquidation under item 657.20 of the Tariff Schedules of the United States (TSUS), as modified by T.D. 68-9, as other articles of iron dutiable, depending on date of entry, at either 13 or 15 percent ad valorem. On remand below, Johnson successfully contended that the "Mairon" is classifiable under the TSUS ultimate basket provision, item 799.00, and not under item 657.20 as contended by the Government.

Statutory Provisions The relevant statutory provisions read Tariff Schedules of the United States SCHEDULE 6. — METALS AND METAL PRODUCTS * * * * * * * * PART 2. — METALS, THEIR ALLOYS, AND THEIR BASIC SHAPES AND FORMS * * * * * * * * Subpart B. — Iron or Steel Subpart B headnotes 1. This subpart covers iron and steel, their alloys, and their so-called basic shapes and forms * * *. * * * * * * * * Classified and urged by the United States PART 3. — METAL PRODUCTS * * * * * * * Subpart G. — Metal Products Not Specifically Provided For Subpart G headnotes 1. This subpart covers only articles of metal which are not more specifically provided for elsewhere in the tariff schedules. * * * * * * * * Articles of iron or steel, not coated or plated with precious metal: * * * * * * * * Other articles: * * * * * * * * 657.20 Other................. 15% ad val. (for merchandise imported in 1969); 13% ad val. (for merchandise imported in 1970). Claimed and held below: SCHEDULE 7. — SPECIFIED PRODUCTS: MISCELLANEOUS AND OTHER NONENUMERATED PRODUCTS * * * * * * * * PART 14. — NONENUMERATED PRODUCTS Any article, not provided for elsewhere in these schedules: * * * * * * * * 799.00 Other................. 8% ad val. (for merchandise imported in 1969); 7% ad val. (for merchandise imported in 1970).

Proceedings Below

This appeal brings these same parties before us for the second time concerning the issue of proper classification for the subject merchandise. On the first occasion, United States v. A. Johnson & Co., 559 F.2d 16, 64 CCPA 164, C.A.D. 1196 (1977), we reversed the decision of the Customs Court, 417 F.Supp. 1026, 76 Cust.Ct. 155, C.D. 4650 (1976), which had held the merchandise classifiable under the chemicals schedule of TSUS in item 415.50, as modified by T.D. 68-9, and remanded the case for determination of the merits of any unadjudicated claimed classification. In the original action before the Customs Court, the importer had alternatively argued for classification under the ultimate basket provision of TSUS, item 799.00. Without permitting the parties to provide additional briefing on the issue,¹ the Customs Court considered that claim upon remand and decided in favor of the importer, holding the merchandise properly classifiable under item 799.00.

In explanation of its holding, the court relied on the findings in the earlier action, stating that:

In C.D. 4650 this court rejected classification of the imported merchandise under item 657.20 because the imported iron fragments are not articles of iron as they of necessity would have to be in order to be classifiable in Part 3 of Schedule 6 of the TSUS. The court found the merchandise to be iron in a primary form although not provided for in that particular form in Part 2 of Schedule 6 of the TSUS. In this court's view neither of these findings was disturbed by the holding of our appellate court in C.A.D. 1196. * * *

* * * * * *

The court continues to believe in the soundness of its previous findings in C.D. 4650 concerning the primary nature of the imported iron fragments. Moreover, if Congress had intended to deal specifically with electrolytic iron in the TSUS there is persuasive evidence in the legislative history of the TSUS of Congress' awareness (1) of the commercial existence of electrolytic iron, and (2) of the treatment of that material as a primary form of metal under a tariff classification system said to have been relied upon by the framers of the TSUS in the "arrangement of the proposed revised schedules". See Explanatory Notes to the Brussels Nomenclature (1955), page 662, where, under the heading 73.06 dealing, among other things, with blocks, lumps and similar forms of iron or steel, it is stated, "This includes electrolytic iron produced in any form and broken into pieces and imported as such"; and compare this with the definition of "unwrought" contained in Headnote 3(a) of Part 2 of Schedule 6 of the TSUS wherein that term is defined as "the term `unwrought' refers to metal, whether or not refined, in the form of * * * blocks, lumps * * and similar primary forms * * *".

Thus, since the iron fragments at bar are unquestionably a primary form of iron which does not respond to the tariff concept of articles of iron, and cannot, under the law of this case, be classified under the chemicals schedule, it follows that this merchandise is classifiable as alternatively claimed by the plaintiff under the residual provision in item 799.00 for articles not provided for elsewhere in these schedules, and the court so holds. 450 F.Supp. at 248, 80 Cust.Ct. at ___, footnote omitted, emphasis in original.

Appellant's Arguments

The Government argues that the Customs Court erred in finding that "Mairon" is insufficiently advanced in form to qualify as an "article of iron" within the meaning of item 657.20. The assertion is that the word "article," as used in that provision, is broad enough to include basic materials and no clear evidence of a legislative intent exists to limit its scope. Appellant also calls attention to the presumption of correctness of the Government's original classification, and in this respect, appears to question whether the Customs Court gave any weight to the presumption.²

OPINION

The resolution of this case depends on the meaning of the word "article" as it appears in TSUS item 657.20. This word is used extensively throughout TSUS. In some instances it is used as a synonym for "thing" and embraces any importation,³ and in other contexts it takes on a narrower meaning such as that urged here by appellee, namely, a manufactured thing or product.⁴ Part 14 of Schedule 7, containing the claimed classification, provides for "any article, not provided for elsewhere in these schedules." (Emphasis ours.) Part 3, Subpart G, of Schedule 6, containing the classification assigned upon liquidation, and urged here by appellant, provides for "articles of iron" (emphasis ours). Unless the meanings of the word "articles," as it is used in the above quotations, are different, the claim of appellee, successful below, must fail. See Lussky, White & Coolidge, Inc. v. United States, 21 CCPA 201, T.D. 46727 (1933). If "article" has the same meaning in items 657.20 and 799.00, the importation is most specifically described by the former, which identifies its component material. TSUS General Headnote 10(c) would then be controlling. It reads in pertinent part:

10. General Interpretative Rules — For the purposes of these schedules —

* * * * * *

(c) an imported article which is described in two or more provisions of the schedules is classifiable in the provision which most specifically describes it * * *. Emphasis ours.

The burden of proof in classification cases is on the importer. 28 U.S.C. § 2635 (1977). It is a dual burden of proving that the assigned classification was erroneous and that the claimed classification is correct. Hayes-Sammons Chemical Co. v. United States, 55 CCPA 69, C.A.D. 935 (1968); Atlantic Aluminum & Metal Distributers, Inc. v. United States, 47 CCPA 88, C.A.D. 735 (1960). Here the burden is on appellee to show that Congress intended a narrow meaning to apply to the use of the word "articles" in TSUS item 657.20. This burden has not been met.

The argument of appellee is based almost entirely on its analysis of Schedule 6, the metals schedule of TSUS. Its contention is that Congress organized Schedule 6 in an orderly manner, evidenced by its division into parts according to the degree of advancement of the metal.⁵ Appellee's...