Marubeni America Corp. v. US

• Citation: 821 F. Supp. 1521
• Decision Date: 14 May 1993
• Docket Number: Court No. 90-04-00210.
• Parties: MARUBENI AMERICA CORP., Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

821 F. Supp. 1521

MARUBENI AMERICA CORP., Plaintiff, v. The UNITED STATES, Defendant.

Court No. 90-04-00210.

United States Court of International Trade.

May 14, 1993.

Sharretts, Paley, Carter & Blauvelt, P.C. Gail T. Cumins, Ned H. Marshak, Peter Jay Baskin and Michele R. Markowitz, New York City, for plaintiff.

Stuart E. Schiffer, Acting Asst. Atty. Gen., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Branch, Civil Div. U.S. Dept. of Justice, Saul Davis, Carla Garcia-Benitez and Edith Sanchez Shea, Karen P. Binder, Office of the Asst. Chief Counsel, Intern. Trade Litigation, U.S. Customs Service, Washington, DC., of counsel, for defendant.

OPINION

RESTANI, Judge:

This matter is before the court for decision following a trial de novo. The issue before the court is whether Model Year 1989 and 1990 two-wheel and four-wheel drive Nissan Pathfinders are properly classified under the Harmonized Tariff Schedule of the United States ("HTS"), heading 8704, "Motor vehicles for the transport of goods," or under heading 8703, "Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702 public transport passenger vehicles), including station wagons and racing cars." There is no dispute as to the placement of the merchandise under the appropriate subheadings. If defendant prevails, classification will remain under item 8704.31.00, HTS, based on weight. If plaintiff prevails, classification will be under item 8703.23.00, HTS, based on engine size.

Background

The merchandise at issue is a two door multipurpose passenger vehicle ("MPV"), also known as a sports utility vehicle. The vehicle uses the same frame side rails as Nissan's "Hardbody" compact pick-up truck, and its front end is largely identical to the Hardbody's cab portion. The Pathfinder, however, does not have a cargo box, which is the hallmark of any pick-up truck. Instead, its body consists of one unit and the inside is configured like an ordinary station wagon, with a rear seat or seats that fold down for extra cargo space. The Pathfinder would be a station wagon, except that it is designed for off-road use, whereas station wagons are designed for on-road use.

At this point, it may be appropriate to mention the Explanatory Notes to the Harmonized Commodity Description and Coding System, published by the Customs Co-Operation Council. The Pathfinder literally fits the Explanatory Note definition of a station wagon, which is a very broad definition.¹ The definition, however, likely would encompass some vans which are to be classified under heading 8704.² Most likely the station wagon definition was not meant to cover vans that do not have tailgates. A tailgate is one of the hallmarks of a "voiture du type "break"," which is the French term for "station wagon" as used in the Explanatory Note. Harmonized Commodity Description and Coding System, Heading No. 87.03 (1st ed. 1987). On the other hand, as indicated, traditional station wagons are not off-road vehicles. Thus, the Explanatory Note defining station wagons should not be read too literally. In any case, the note is not binding, although such notes are "generally indicative of proper interpretation of the various provisions of the Harmonized Tariff System." Lynteq, Inc. v. United States, 976 F.2d 693, 699 (Fed.Cir.1992) (quoting H.R. Conf.Rep. No. 576, 100th Cong., 2d Sess. 549 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 1582). Also instructive, but nonbinding, is the decision of the Customs Co-Operation Council to classify the Pathfinder under heading 87.03. Report to the Customs Co-Operation Council on the Fifth Session of the Harmonized System Committee, Annex G/4 to Doc. 35.960E (HSC/5/Apr. 90) (G/4/2/Rev.) (Apr. 12, 1990); Report to the Customs Co-Operation Council on the Sixth Session of the Harmonized System Committee, Annex L/9 to Doc. 36.300E (HSC/6/Nov. 90) (Nov. 6, 1990). Excessive reliance on such a decision, however, may be in conflict with the court's duty to make de novo factual findings. The court deems it more useful to set aside these matters and to proceed to a factual assessment of the merchandise.

In exercising its factfinding function, the court does not rely on the classification of two Pathfinder models not before the court. One is the E-Model, a little sold, bare-bones vehicle with no back seat, which was classified under heading 8704, HTS, and the four door model which is classified under heading 8703, HTS. The classification of either of these vehicles may be in error and is subject to de novo challenge. See Toyota Motor Sales, USA, Inc. v. United States, 7 CIT 178, 194-95, 585 F.Supp. 649, 662-63 (1984) (disparate treatment of similar merchandise is not controlling), aff'd, 3 Fed.Cir. (T) 93, 753 F.2d 1061 (1985). Accordingly, the court, for most purposes, excluded evidence on either vehicle. The court limited evidence to the vehicle models in the entries currently being considered, except for evidence providing a comparison with vehicles readily accepted as "trucks" or "passenger cars."

The trial in this matter occupied three weeks, including test drives, videotape viewing, document review and opening and closing arguments. Thus, it is impossible to discuss anything other than a few highlights of the evidence.

Discussion

The issue in this case is whether the Pathfinder is principally designed for the transport of persons. Although defendant's classification of the Pathfinder as a vehicle for the transport of goods carries a presumption of correctness and plaintiff has the burden of proof, defendant's task was difficult from the outset. That is, one of the first steps was a viewing of a sample of the subject merchandise, which was available to the court throughout the trial. The sample virtually shouts to the consumer, "I am a car, not a truck."³ Defendant's counsel, however, put on a good deal of evidence to show that certain segments of the automotive manufacturing industry, including persons within Nissan, view the subject merchandise as a "truck," at least for some purposes. See, e.g., Defendant's Exhibit 131, at 48-49 (Deposition of J.P. Felix). Therefore, defendant's approach to the case, and probably the only sensible approach from its point of view, was to try to establish that the Pathfinder fits the common industry meaning of the term "truck." As trucks are by definition vehicles designed for the "transport of goods," classification under heading 8704, HTS, would follow.

Defendant went about its task in several ways. First, it emphasized all the similarities to the Hardbody compact pick-up truck and the dissimilarities to the Nissan Maxima, Nissan's top of the line sedan, which has the same size engine as the standard Pathfinder. The selection of the Nissan Maxima as the comparison vehicle was ostensibly made on an objective basis, after survey of the automotive market. Defendant's witness admitted, however, that he used numerous subjective and, to the court's mind, suspect criteria to select the Maxima.⁴ Defendant's counsel's remark that the witness had to select a Nissan product to make a parts comparison is probably closer to the mark. In any case, it is clear that few Maxima parts are used in the Pathfinder, although there are numerous functional analogues. Apparently, there was no Nissan station wagon to use for comparison. The court doubts any other sedan would be more comparable, so from that standpoint the comparison is acceptable. Overall, the court sees little use, however, in comparing the Pathfinder to a sedan, as opposed to a station wagon.

A. Comparison of the Pathfinder and the Hardbody Pick-Up Truck reveals significant differences.

1. Numerous design changes were made to accommodate passengers in the Pathfinder.

At trial, both parties embarked upon a comparison of the Hardbody and the Pathfinder. This is an area worth some consideration because the Pathfinder is a Hardbody derivative. The extent to which it differs from the Hardbody and the reasons for the differences are probative. The Hardbody is Nissan's compact pick-up truck. It has many features intended to give it passenger-car élan. It also has the open cargo box that is characteristic of a pick-up truck. Although the Hardbody is used principally as a general transportation vehicle, it is accepted as a "truck," albeit a compact pick-up truck with correspondingly inherent limits on cargo capacity.

Mr. Noguchi, Nissan's principal design engineer in the 1983 development period, testified that Nissan, a late entrant to the field, wanted to build an MPV to compete with the Ford Bronco II and similar vehicles. These vehicles have great flexibility, are suitable for people and cargo, and can travel through mud, snow, and other off-road terrain. The court would call these vehicles "compact" MPV's. This is in contrast to full size MPV's, which are not the subject of this action. Nissan's idea seemed to be to grab some portion of the compact pick-up truck market that might be switching to MPV's. It is not clear to what extent the designer foresaw that ordinary passenger car buyers would eventually switch to MPV's, but design documents indicate that this market was considered. Wanting to achieve this goal economically, and to avoid building a new plant, Mr. Noguchi decided to use as much of the Hardbody, which had some off-road capability, as possible. A decision was made to use the Hardbody frame side rails, which were expensive parts to manufacture.⁵

To keep the vehicle short, with appropriate departure angles for unlevel terrain, Mr. Noguchi designed a short rear bumper into which the frame was inserted. The Hardbody bumper was wider and outside the frame. Because of the rear passenger seats, the gas tank was moved to the rear and the spare tire position was changed. Of great concern to the designer was passenger ride, so a new rear suspension was developed. The court credits Mr....