Travenol Laboratories, Inc. v. US, Court No. 89-08-00469.

• Decision Date: 03 February 1993
• Docket Number: Court No. 89-08-00469.
• Citation: 813 F. Supp. 840
• Parties: TRAVENOL LABORATORIES, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

813 F. Supp. 840

TRAVENOL LABORATORIES, INC., Plaintiff, v. UNITED STATES, Defendant.

Court No. 89-08-00469.

United States Court of International Trade.

February 3, 1993.

Katten Muchin & Zavis, Mark S. Zolno, Lynn S. Baker and Jeremy R. Page, Chicago, IL, for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., Joseph I. Liebman, Atty. in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice, Mark S. Sochaczewsky, Office of Asst. Chief Counsel, U.S. Customs Service, Washington, DC, Chi S. Choy, New York City, of counsel, for defendant.

Opinion

AQUILINO, Judge:

In this action, which has been designated a test case pursuant to CIT Rule 84, the plaintiff recites Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177, 2 L.Ed. 60 (1803), that it is "emphatically the province and duty of the judicial department to say what the law is" but also takes the position that that has already occurred in a matter like this.

I

The origin of this case can be found in subtitle B of Title I of Public Law No. 97-446, 96 Stat. 2329, 2346, known as the Educational, Scientific, and Cultural Materials Importation Act of 1982 and which had as its purpose "enabling the United States to give effect to the Nairobi Protocol to the Florence Agreement on the Importation of Educational, Scientific, and Cultural Materials ... with a view to contributing to the cause of peace through freer exchange of ideas and knowledge across national boundaries." The referenced Agreement on the Importation of Educational, Scientific, and Cultural Materials, opened for signature November 22, 1950, T.I.A.S. No. 6129, 17 U.S.T. 1835, 131 U.N.T.S. 25, provided that contracting states undertake not to apply customs duties or other charges on books, publications and documents or on educational, scientific and cultural materials. The materials contemplated by the latter grouping were listed in annexes B ("Works of Art and Collectors' Pieces of an Educational, Scientific or Cultural Character"), C ("Visual and Auditory Materials of an Educational, Scientific or Cultural Character"), D ("Scientific Instruments or Apparatus") and E ("Articles for the Blind"). According to U.S. Senate Report No. 564, 97th Cong., 2d Sess. 16-17 (1982), U.S.Code Cong. & Admin.News, 1982, 4078, 4093-4094, the Nairobi Protocol, which went into effect January 2, 1982, 1259 U.N.T.S. 2, broadened the scope of the Florence Agreement by embracing technologically-new articles and previously-uncovered works of art, films etc. That report issued in conjunction with the 1982 congressional enactment, supra, section 165 of which eliminated duties on articles for the blind or other handicapped persons by amending the Tariff Schedules of the United States ("TSUS") to provide:

                          Articles specially designed or adapted for
                          the use or benefit of the blind or other
                          physically or mentally handicapped persons
                                          Articles for the blind
                     870.50                   Books, music, and pamphlets, in
                                               raised print, used exclusively
                                               by or for them .............      Free    Free
                     870.55                Braille tablets, cubarithms, and
                                               special apparatus, machines
                                               presses, and types for their
                                               use or benefit exclusively ...    Free    Free
                    870.60                 Other .........................       Free    Free
                

96 Stat. 2347. In addition, section 165 set forth the following new headnote:

(a) The term "physically or mentally handicapped persons" includes any person suffering from a permanent or chronic physical or mental impairment which substantially limits one or more major life activities, such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.

(b) These items do not cover —

(i) articles for acute or transient disability;

(ii) spectacles, dentures, and cosmetic articles for individuals not substantially disabled;

(iii) therapeutic and diagnostic articles; or

(iv) medicine or drugs.

96 Stat. 2348. Depending on the year, these provisions were placed in the Appendix to the TSUS at page 9-49 for 1985 and 1986, for example, or, as contemplated above, in TSUS Schedule 8, Part 7 in 1988¹.

II

During those particular years, namely, 1985, 1986 and 1988, the plaintiff imported the merchandise at issue herein. From Japan came cellulose acetate hollow fiber dialyzers and arteriovenous fistula cannulation sets, while arterial-venous blood tubing sets were imported from Spain. As presented at trial, these items connect to each other as well as to blood vessels in the human body, usually in an arm or leg, and an electric dialysis machine, which, when so connected, engage in extracorporeal hemodialysis as the

machine pumps a small amount of ... blood out of the body and through a dialyzer containing a synthetic semipermeable membrane. The machine continually moves the blood through the dialyzer, constantly filtering out wastes and excess fluid, and continually returns the cleansed blood to the patient through a second needle in the same blood vessel. The hemodialysis machine produces the dialysis solution that removes the waste products and excess water.

Plaintiff's Exhibit 2.

Also imported from Spain were four-prong cycler sets with universal connectors for use in peritoneal dialysis. That approach entails use of the human body's peritoneal membrane, rather than the external, artificial dialyzer, as a filter. Connected to a dialysis machine, the cycler set conveys liquid dialysate through the abdominal cavity, where it collects waste filtered from the blood by the peritoneal membrane.

Either way, the imported goods were classified by the U.S. Customs Service under TSUS item 709.17 ("Electro-medical apparatus, and parts thereof: ... Other"), and duties ranging from 4.2 to 4.7 percent were assessed ad valorem, depending on the time of entry.

Travenol protested that classification and now appeals to this court from the Service's denial(s) of its protest(s).² The plaintiff takes the position that the merchandise was entitled to entry duty-free as articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons, as set forth above. In support of this position, the plaintiff relies on the following stipulations, among others, as well as on evidence adduced at trial:

11. Hollow Fiber Dialyzers, AVF Sets, Miniprime Sets and CCPD Sets are specially designed to be used in artificial kidney dialysis for the benefit of individuals suffering from renal failure, i.e. the lack of kidney function.

12. End Stage Renal Failure is when kidney function has completely and permanently stopped.

* * * * * *

18. Dialysis does not treat the kidney.

19. Dialysis removes the impurities of the blood.

20. One factor involved in determining whether a particular individual with chronic kidney failure can resume working once he is on dialysis is the particular work involved.

* * * * * *

22. Dialysis does not restore kidney function of a person with End Stage Renal Failure.

23. Persons suffering from end-stage renal failure are physically or mentally handicapped, as defined by the headnote to TSUS item 960.15 and 870.67, depending upon the time of entry.³

III

The statute governing a case such as this provides that the decision of Customs is presumed to be correct and the burden of proving otherwise rests upon the party challenging that decision. 28 U.S.C. § 2639(a). Moreover, the court finds that the goods at bar clearly are for an electro-medical apparatus. Nonetheless, the plaintiff ably presents argument in support of duty-free treatment, which has reduced defendant's post-trial position to the following point:

... But for the fact that the imported merchandise is therapeutic, defendant would agree that it should be classified under item 960.15, TSUS, which, if applicable, prevails over other provisions in schedules 1-8, pursuant to Headnote 1 of Part 4, Schedule 9 of the TSUS.⁴

A

The parties have stipulated that persons with end-stage renal disease are handicapped within the meaning of the TSUS headnote quoted above, and testimony at trial established that the imported merchandise is used all but exclusively for that malady. On the issue of whether or not those goods are therapeutic, the plaintiff relies heavily on Richards Medical Company v. United States, 13 CIT 519, 720 F.Supp. 998 (1989), aff'd, 910 F.2d 828 (Fed. Cir.1990). Challenged in that case was Customs classification under TSUS item 709.27 of medical instruments for implantation of human hip prostheses. The plaintiff importer took the position that those instruments were not therapeutic and thus entitled to duty-free entry. The Court of International Trade agreed, upon a rationale that a

distinct common feature of therapeutic medicine is its purpose of complete or partial elimination of the disease. It is, therefore, necessary to establish a healing and curative purpose of a particular medical procedure in order to qualify it as therapeutic.

Notwithstanding the ideal goal of medicine to cure all diseases, not every medical procedure is therapeutic, or intended to heal or cure the disease. Unfortunately, there are permanent or chronic diseases affecting major life activities, which are not curable. The medical procedures which are designed to relieve the discomfort caused by the disease, rather than to cure it, are not therapeutic.

13 CIT at 521, 720 F.Supp. at 1000. The court held that, while implantation of a hip prosthesis alleviates the pain and discomfort associated with the underlying affliction, that operation does not cure it and thus is not therapeutic for the purposes of the TSUS. The court of appeals affirmed this decision, pointing out that "the word `therapeutic' has many...