KMW Johnson, Inc. v. US

• Decision Date: 28 December 1989
• Docket Number: Court No. 81-10-01421.
• Citation: 728 F. Supp. 754,13 CIT 1079
• Parties: KMW JOHNSON, INC., Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

728 F. Supp. 754

13 CIT 1079

KMW JOHNSON, INC., Plaintiff, v. The UNITED STATES, Defendant.

Court No. 81-10-01421.

United States Court of International Trade.

December 28, 1989.

Ross & Hardies, (Joseph S. Kaplan on the briefs, and Michelle F. Forte, of counsel), for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Branch, New York City, (M. Susan Burnett, Washington, D.C., and Edward N. Maurer, U.S. Customs Service, of counsel), for defendant.

RE, Chief Judge:

The question presented in this case pertains to the proper classification, for customs duty purposes, of certain merchandise imported from Sweden and described on the customs invoice as "remaining parts for dryer section" of a papermaking machine.

The merchandise entered at the port of Chicago in 1977, and was classified by the Customs Service as "industrial machinery ... for the treatment of materials by a process involving a change of temperature, ... and parts thereof," under item 661.70 of the Tariff Schedules of the United States (TSUS), with duty at the rate of 6 per centum ad valorem. Plaintiff protests the classification, and contends that the imported merchandise should properly be classified as an "entirety" as "machines for making cellulosic pulp, paper, or paperboard," under item 668.00, TSUS, with duty at the rate of 3.5 per centum ad valorem.

The pertinent statutory provisions of the tariff schedules are as follows:

                Classified Under
                  Schedule 6, Part 4, Subpart A
                    Industrial machinery, plant, and similar laboratory
                    equipment, whether or not electrically heated, for
                    the treatment of materials by a process involving a
                    change of temperature, such as heating, cooking
                    roasting, distilling, rectifying, sterilizing, pasteurizing
                    steaming, drying, evaporating, vaporizing, condensing
                    or cooling; instantaneous or storage water
                
                

                    heaters, non-electrical; all the foregoing (except
                    agricultural implements, sugar machinery, shoe
                    machinery, and machinery or equipment for the
                    heat-treatment of textile yarns, fabrics, or made-up
                    textile articles) and parts thereof:
                       .  .   .   .
                661.70 Other .......................... 6% ad val.
                Claimed Under:
                  Schedule 6, Part 4, Subpart D:
                    Machines for making cellulosic pulp, paper, or paperboard;
                    machines for processing or finishing
                    pulp, paper, or paperboard, or making them up into
                    articles:
                668.00   Machines for making cellulosic
                           pulp, paper, or paperboard ...... 3.5% ad val.
                

The question presented is whether the imported merchandise has been properly classified by Customs as "industrial machinery ... for the treatment of materials by a process involving a change of temperature, ... and parts thereof," under item 661.70, TSUS, or is properly classifiable as an "entirety" as "machines for making cellulosic pulp, paper, or paperboard," under item 668.00, TSUS, as maintained by plaintiff.

In order to decide the question presented, the court must consider "whether the government's classification is correct, both independently and in comparison with the importer's alternative." Jarvis Clark Co. v. United States, 733 F.2d 873, 878, reh'g denied, 739 F.2d 628 (Fed.Cir.1984). Pursuant to 28 U.S.C. § 2639(a)(1) (1982), the government's classification is presumed to be correct, and the burden of proof is upon the party challenging the classification.

After an examination of the pertinent tariff provisions, relevant case law, and supporting papers, it is the determination of the court that the imported merchandise was properly classified by the Customs Service, as "industrial machinery ... for the treatment of materials by a process involving a change of temperature, ... and parts thereof," under item 661.70, TSUS.

The parties have stipulated to the facts in this case. The imported merchandise, which entered at the port of Chicago in 1977, consists of parts of a papermaking machine known as the Owens-Illinois Tomahawk machine (O-I Tomahawk). The O-I Tomahawk "was purchased at a single multi-million dollar price pursuant to the terms of a contract for the purchase of an entire papermaking machine and auxiliary equipment." In approximately 16 other entries in 1977 and 1978, at various ports, plaintiff imported other parts of the O-I Tomahawk. Together, the imported parts "constitute an almost complete papermaking machine." The various parts of the O-I Tomahawk "were imported in several entries because it is impossible to import an entire machine in a single shipment." Relying on their stipulation, the parties have submitted this action for decision in lieu of trial.

Plaintiff contends that the imported merchandise, together with all the other imported parts of the O-I Tomahawk, should be classified as an "entirety" as "machines for making cellulosic pulp, paper, or paperboard," under item 661.70, TSUS, because "where Congress has provided a specific tariff classification for merchandise which due to its physical characteristics cannot be imported in a single shipment, the merchandise is nevertheless a single tariff entity and must be classified as such to effectuate the will of Congress." According to plaintiff, "the size, complexity, cost, manufacturing and erection time of the machine rendered it physically impossible and economically unfeasible to import all the components in a single shipment."

Defendant contends that plaintiff raises the customs doctrine of "entireties" by asserting that the imported parts of the O-I Tomahawk, which were imported at various ports between 1977 and 1978, are classifiable together as "machines for making cellulosic pulp, paper, or paperboard," under item 668.00, TSUS. According to defendant, plaintiff's argument "contravenes the well established principle that articles which are not imported together are precluded from being classified as an entirety." Defendant contends that a close reading of the TSUS "evidences the Congressional intent that the imported components in this case be separately classified in the specific provision found correct by the Customs Service."

It is fundamental in customs cases that "the dutiable classification of articles imported must be ascertained by an examination of the imported article itself, in the condition in which it is imported." Worthington v. Robbins, 139 U.S. 337, 341, 11 S.Ct. 581, 583, 35 L.Ed. 181 (1891) (Blatchford, J.). Similarly, in cases in which it is contended that imported articles constitute an "entirety," "classification is determined by the condition of the articles at the time of importation." Miniature Fashions, Inc. v. United States, 54 CCPA 11, 17, C.A.D. 894 (1966).

This court has described or defined the customs doctrine of "entireties" by stating that:

"if there are imported in one importation separate entities, which by their nature are obviously intended to be used as a unit, or to be joined together by mere assembly, and in such use or joining the individual identities of the separate entities are subordinated to the identity of the combined entity, duty will be imposed upon the entity they represent."

Karoware, Inc. v. United States, 77 Cust.Ct. 112, 125, C.D. 4681, 427 F.Supp. 402, 411 (1976) (emphasis added) (quoting Donalds Ltd. v. United States, 32 Cust. Ct. 310, 315, C.D. 1619 (1954)), aff'd, 65 CCPA 1, C.A.D. 1197, 564 F.2d 77 (1977). Hence, in customs cases, "articles that may constitute an `entirety' cannot be classified as an `entirety' if they are imported in more than one importation." Sears, Roebuck & Co. v. United States, 13 CIT ___, 723 F.Supp. 805, 810 (1989) (citing United States v. Baldt Anchor, Chain & Forge Div. of the Boston Metals Co., 59 CCPA 122, 126, C.A.D. 1051, 459 F.2d 1403, 1406-07 (1972); Franklin Indus., Inc. v. United States, 1 CIT 349, 350-51, 1981 WL 2457 (1981)).

In Baldt Anchor, the Court of Customs and Patent Appeals reversed a decision of the Customs Court that had held that the importation of five of the six machines necessary to make steel anchor chains for vessels was classifiable as an "entirety." The plaintiff, in Baldt Anchor, Chain & Forge Div. of the Boston Metals Co. v. United States, 64 Cust.Ct. 268, C.D. 3989 (1970), imported, in two importations, the machinery for the manufacture of steel anchor chains for vessels. The merchandise in the first importation consisted of a single machine, and was classified by Customs as "articles having as an essential feature an electrical element or device, ..." under paragraph 353 of the Tariff Act of 1930, as modified by T.D. 52739. The merchandise in the second importation consisted of five machines, and was classified by Customs under various provisions of the Tariff Act of 1930.

Before the Customs Court, the plaintiff, in Baldt Anchor, protested the classification of the merchandise in the second importation, and contended that the merchandise should have been classified as an "entirety," as "electrical ... welding ... apparatus, ... finished or unfinished, ..." under paragraph 353 of the Tariff Act of 1930, as modified by T.D. 54108. The Customs Court concluded that:

the language of paragraph 353 specifically provides for unfinished electrical welding apparatus and there is no question that the five machines imported in the second shipment come squarely within this provision as an entirety rather than under the parts provision of paragraph 353 or the eo nomine provisions for the individual components.

64 Cust.Ct. at 274. Hence, the Customs Court held that "the five machines imported in the second shipment constitute an entirety for tariff purposes, i.e., an unfinished electrical welding apparatus...." Id.

On appeal, the Court of Customs and Patent Appeals, reversed, and upheld Customs' classification of the merchandise in the second importation, under various provisions of the Tariff Act of 1930. The appellate court stated that:

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