Kahrs Int'l, Inc. v. United States

• Decision Date: 19 June 2013
• Docket Number: No. 2012–1034.,2012–1034.
• Citation: 713 F.3d 640
• Parties: KAHRS INTERNATIONAL, INC., Plaintiff–Appellant, v. UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

713 F.3d 640

KAHRS INTERNATIONAL, INC., Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee.

No. 2012–1034.

United States Court of Appeals,Federal Circuit.

April 3, 2013.

Rehearing and Rehearing En Banc Denied June 19, 2013.

Carl D. Cammarata, Law Offices of George R. Tuttle, of Madison, Wisconsin, argued for the plaintiff-appellant. With him on the brief were Stephen S. Spraitzar, Michael J. Tonsing and George R. Tuttle.

Mikki Cottet, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for defendant-appellee. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, and Jeanne E. Davidson, Director; Barbara S. Williams, Attorney in Charge, of New York, New York. Of counsel on the brief was Yelena Slepak, Senior Trial Attorney, Office of the Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, of New York, New York. Of counsel was Beverly A. Farrell, Trial Attorney.

Before LOURIE and REYNA, Circuit Judges, and KRIEGER, Chief Judge. ^*

REYNA, Circuit Judge.

Kahrs International Inc. (“Kahrs”) appeals from a final judgment of the United States Court of International Trade upholding a tariff classification determination by U.S. Customs and Border Protection (“Customs”) that Kahrs' imported engineered wood flooring (“EWF”) is properly classified as “plywood” under heading 4412 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Because Kahrs' flooring panels are properly classified as “plywood” under heading 4412, we affirm.

Background

Kahrs imports engineered wood flooring panels into the United States for distribution to flooring wholesalers. Kahrs' flooring panels are composed of multiple layers (that is, “plies”) of wood that are glued together and laminated to resemble solid hardwood flooring. The panels have specially milled edges that allow them to be joined together in their final installation over a structural subfloor.

At issue in this appeal are two types of flooring panels imported by Kahrs: (1) panels that are 14 millimeters thick and composed of seven plies, and (2) panels that are 15 millimeters thick panels and have three plies. All of the imported flooring panels are composed of an odd number of plies, bonded together so that grains of adjacent layers are at right angles. The panels are laminated and are designed to simulate solid wood strip or plank flooring.

Kahrs classified its engineered wood flooring imports as “assembled parquet panels” under HTSUS subheading 4418.30.00, a duty-free provision for “Builders' joinery and carpentry of wood, including cellular wood panels and assembled parquet panels; shingles and shakes: parquet panels.” HTSUS, subheading 4418.30.00 (2006). Kahrs identified the imported merchandise on its entry summaries as “PARQUET PANELS BUILDERS' JOINE[RY].” CF–7501, Entry Papers, USCIT Court File (Ct. No. 07–000343). Customs subsequently liquidated Kahrs' merchandise under HTSUS 4412, which covers “plywood, veneered panels and similar laminated wood,” at a duty rate of 8% ad valorem. Customs explained that the merchandise was not parquet panels, but specifically engineered flooring of plywood construction with a nonconiferous face ply and no ply exceeding 6 millimeters in thickness.¹

Kahrs protested Customs' classification, and Customs denied the protest. Kahrs subsequently filed a complaint before the Court of International Trade challenging the protest denial. The Court of International Trade found that Customs correctly classified Kahrs' merchandise as plywood under heading 4412. Kahrs Int'l, Inc. v. United States, 645 F.Supp.2d 1251 (C.I.T.2009). In its analysis, the court considered the plain language of the HTSUS, a dictionary definition of “plywood,” and the definition of plywood adopted by this court in Boen Hardwood Flooring, Inc. v. United States, 357 F.3d 1262 (Fed.Cir.2004). Kahrs, 645 F.Supp.2d at 1276–78. The Court of International Trade entered summary judgment affirming Customs' classification.

Kahrs appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(5).

Standard Of Review

We review de novo a grant of summary judgment by the Court of InternationalTrade. Drygel, Inc. v. United States, 541 F.3d 1129, 1133 (Fed.Cir.2008).

Proper classification of goods under the HTSUS is a two-step process. First, we ascertain the meaning of the specific terms in the tariff provision. Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.Cir.1998). This step is a question of law which we review without deference. Id. Second, we determine whether the goods come within the description of those terms. Id. This step is a factual inquiry which we review for clear error. Id.

While we accord deference to a classification ruling by Customs relative to its “power to persuade,” United States v. Mead Corp., 533 U.S. 218, 235, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001), we have “an independent responsibility to decide the legal issue of the proper meaning and scope of HTSUS terms,” Warner–Lambert Co. v. United States, 407 F.3d 1207, 1209 (Fed.Cir.2005).

Discussion

On appeal, Kahrs argues that its engineered wood flooring panels are not classifiable as plywood under heading 4412. In support of its position, Kahrs makes two alternative arguments: First, Kahrs argues that Customs' classification of the EWF panels is inconsistent with the commercial meaning of “plywood.” Instead, Kahrs asserts that its flooring panels should be classified under heading 4418 as “builders' joinery” or “assembled parquet panels.” Second, Kahrs argues that, even if its flooring panels are prima facie classifiable under heading 4412, they are also properly classified under heading 4418. Kahrs argues that, because heading 4418 is more specific than heading 4412, its merchandise should be classified under heading 4418.

HTSUS Classification

An HTSUS classification determination involves two steps. Orlando Food, 140 F.3d at 1439. First, we address the proper meaning of the relevant tariff provisions. Id. Second, we determine whether the merchandise at issue falls within a particular tariff provision as construed. Id. When there is no factual dispute regarding the nature, structure, and use of imported merchandise, the proper classification turns on the first step. Faus Group, Inc. v. United States, 581 F.3d 1369, 1372 (Fed.Cir.2009).

To determine a product's proper tariff classification, we apply the General Rules of Interpretation (GRI), which are part of the HTSUS, in numerical order. BASF Corp. v. United States, 482 F.3d 1324, 1325–26 (Fed.Cir.2007). According to GRI 1, the HTSUS headings and relative section or chapter notes govern the classification of a product. Orlando Food, 140 F.3d at 1440. Absent contrary legislative intent, we construe HTSUS terms according to their common and commercial meanings, which we presume to be the same. Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed.Cir.1999). To discern the common meaning of a tariff term, we may consult dictionaries, scientific authorities, and other reliable information sources. Mead Corp. v. United States, 283 F.3d 1342, 1346 (Fed.Cir.2002). After consulting the headings and relevant section or chapter notes, we may also consult the Explanatory Notes of the relevant chapters. ²Fuji Am. Corp. v. United States, 519 F.3d 1355, 1357 (Fed.Cir.2008). Although the Explanatory Notes are not legally binding or dispositive, we may consult them for guidance and they are generally indicative of the proper interpretation of the various HTSUS provisions. JVC Co. of Am. v. United States, 234 F.3d 1348, 1352 (Fed.Cir.2000). See also BenQ Am. Corp. v. United States, 646 F.3d 1371, 1376 (Fed.Cir.2011); N. Am. Processing Co. v. United States, 236 F.3d 695, 698 (Fed.Cir.2001); Carl Zeiss, 195 F.3d at 1378 n. 1.

Here, there is no factual dispute regarding the structure and use of Kahrs' engineered wood flooring panels. We therefore decide the proper classification of Kahrs' merchandise by determining the proper meaning and scope of the relevant provisions of the HTSUS. See Carl Zeiss, 195 F.3d at 1375.

Heading 4412—Plywood

Kahrs argues that its engineered wood flooring panels are not prima facie classifiable under heading 4412, which covers “Plywood, veneered panels, and similar laminated wood.” HTSUS, heading 4412. Specifically, Kahrs argues that its flooring panels are not “plywood” according to the commercial meaning of the term.

We have previously considered the meaning of “plywood” in the context of the HTSUS. In Russell Stadelman & Co. v. United States, 242 F.3d 1044 (Fed.Cir.2001), we said, “Plywood consists of a panel composed of layers of wood glued together, usually with the grains of adjoining layers at right angles to each other.” 242 F.3d at 1046 n. 2 (citing The American Heritage Dictionary 1352 (4th ed. 2000)). We confirmed this basic definition in Timber Products Co. v. United States, 515 F.3d 1213 (Fed.Cir.2008), where we explained, “Plywood consists of three or more wooden sheets pressed together, with each sheet referred to as a ‘ply.’ ” 515 F.3d at 1217. Both of these definitions are consistent with the dictionary definition on which the Court of International Trade relied in this case. See Kahrs, 645 F.Supp.2d at 1277. That definition is found in Webster's International Dictionary, which defines plywood as “a structural material consisting of sheets of wood glued or cemented together with the grains of adjacent layers arranged at right angles or at a wide angle and being made up (1) wholly of uniformly thin veneer sheets [all-veneer plywood] or (2) of usually equal numbers of veneer sheets on either side of a thicker central layer [lumber-core plywood].” Id. (citing Webster's Third New Int'l Dictionary 1746 (1986)).

Perhaps our most thorough review of the term “plywood,” however, is our opinion in Boen Hardwood Flooring, Inc. v. United States, 357 F.3d 1262 (Fed.Cir...