E.R. Hawthorne & Co., Inc. v. U.S.

• Decision Date: 28 March 1984
• Docket Number: No. 83-1379,83-1379
• Citation: 730 F.2d 1490
• Parties: , 2 Fed. Cir. (T) 53 E.R. HAWTHORNE & CO., INC., A/C Veped Traffic Controls, Inc., Appellee, v. The UNITED STATES, Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1490

730 F.2d 1490

5 ITRD 2009, 2 Fed. Cir. (T) 53

E.R. HAWTHORNE & CO., INC., A/C Veped Traffic Controls, Inc., Appellee, v. The UNITED STATES, Appellant.

No. 83-1379.

United States Court of Appeals Federal Circuit.

March 28, 1984.

Deborah E. Rand, New York City, for appellant; With her J. Paul McGrath, Asst. Atty. Gen., David M. Cohen, Director and Joseph I. Liebman, Washington, D.C., Attorney in Charge International Trade Field Office, on brief.

John S. Rode, New York City, for appellee; R. Brian Burke, New York City, on brief.

Before BALDWIN, Circuit Judge, NICHOLS, Senior Circuit Judge, and KASHIWA, Circuit Judge.

NICHOLS, Senior Circuit Judge.

Statement of the Case

This case involves the proper tariff classification of tapered or conical steel poles 20 to 39 feet long and chiefly used after finishing to support street or highway or other outdoor lights. The District Director of Customs at Houston, Texas, classified them as "Illuminating Articles and parts thereof, of base metal, Other * * *," Tariff Schedules of the United States (TSUS), Item 653.39, at 17.6% ad valorem. By virtue of 28 U.S.C. Sec. 2639(a)(1), this classification is presumed to be correct and the burden of proving otherwise rests upon the party challenging the decision. The Court of International Trade (CIT) sustained the importer's protest, holding that the proper classification was "Pipes and tubes and blanks therefor * * * steel," TSUS Item 610.32, at .03cents per pound, 572 F.Supp. 1279 (Ct. Int'l Trade 1983). The importer claims other classifications as alternatives, but we need not consider them. We hold that it failed to sustain its burden of showing that the district director's classification was incorrect. The CIT decision was therefore erroneous as a matter of law and cannot be sustained.

The competing classifications are more fully set out in that decision with a fuller description of the merchandise and how it is produced. It is only necessary to add here the fact the CIT relied on, namely, that the imported merchandise receives further processing and advancement in the United States before it can be incorporated as a finished part into the complete lighting fixture as installed. A base plate is often welded on the bottom of the pole after importation, clamps to support a mast arm are welded at the top, the pole is, if necessary, cut at the top to the exact length specified, the ends are squared, provision is made at times for a handhole ring to be made and attached for connection of the wires, the pole is painted or galvanized, and, if necessary, a transformer base is attached. About half the cost and one-third of the time required for a complete finished part is thereby incurred after importation; however, the pole as imported is in its shape and dimensions made to conform to the user's specifications and drawings and would not be accepted by anyone else. There is no dispute in the evidence that subject to random other uses, articles of the class or kind of those imported have a use as stated above exceeding all other uses and if chief use controls the tariff classification, by General Headnote 10(e), chief use is as unfinished parts of lighting fixtures.

Various other relevant headnote provisions of TSUS remain to be noticed.

By General Headnote 10(c) an imported article "described in two or more provisions of the schedule," is classifiable in the provision which most specifically describes it.

By General Headnote 10(h) a tariff description of an article covers the article "whether finished or not finished."

By General Headnote 10(ij)--

A provision for "parts" of an article covers a product wholly or chiefly used as a part of such article, but does not prevail over a specific provision for such part.

However, Item 610.32, the classification of the imported items as held by the CIT, falls within Part 2 of Schedule 6 of the TSUS, and a headnote applicable to items in that part provides--

1. * * * This part does not include

* * *

* * *

(iv) Other articles specially provided for elsewhere in the tariff schedules, or parts of articles.

Opinion

Looking at the issue on the basis of the headnotes, apart from the case law, the correctness of the district director's choice of classification seems manifest. The headnote to Part 2 of Schedule 6, the last cited above, and which the CIT judge never mentions, conflicts with the last part of General Headnote 10(ij) and prevails, because it is more specific, dealing with respect to items only in Part 2, of which Item 610.32 is one. Parts of illuminating articles are themselves classed as illuminating articles by virtue of an express provision, 653.39 TSUS. (The reader will have to be patient with the two distinct meanings of the word "Part;" that are inherent in the TSUS and makes a little extra concentration necessary on--heaven forgive us!--the reader's part.)

The trial court, by ignoring the headnote to Part 2 of Schedule 6, concluded the merchandise could not be classified as a part, because it was otherwise specifically provided for in the tariff schedule--an application of the Headnote 10(ij) "specificity test." The effect of Headnote 1(iv) of Part 2, Schedule 6, is to render the Headnote 10(ij) "specificity test" inapplicable to Schedule 6, Part 2. The result is that since the items in issue are parts of illuminating articles, they must be classified as such, even if they are tubes or pipes. The poles are not excluded from the category of "parts" because of being unfinished, since by General Headnote 10(h) they are covered as unfinished articles, provided they are chiefly used as parts as is the case here.

Under the TSUS, applicability of a "parts" classification is controlled by chief use, not actual use. United States v. John V. Carr & Son, Inc., 495 F.2d 771, 61 CCPA 41 (1974). However, the CIT judge held that an unfinished part was not a part for tariff...