Int'l Custom Prods., Inc. v. United States

• Decision Date: 20 November 2012
• Citation: 878 F.Supp.2d 1329
• Parties: INTERNATIONAL CUSTOM PRODUCTS, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

878 F.Supp.2d 1329

INTERNATIONAL CUSTOM PRODUCTS, INC., Plaintiff,

v.UNITED STATES, Defendant.

United States Court of

International Trade.

Slip Op. 12–140.

Court No. 07–00318.

Nov. 20, 2012.

Eckert Seamans Cherin & Mellott, LLC (Gregory H. Teufel and Jeremy L.S. Samek), Pittsburgh, PA, for Plaintiff.

Stuart F. Delery, Assistant Attorney General; Jeanne E. Davidson, Director, Washington, DC; Barbara S. Williams, Attorney–in–Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Edward F. Kenny, New York, NY, and Jason M. Kenner); Yelena Slepak, Office of the Assistant Chief Counsel, Int'l Trade Litigation, U.S. Customs and Border Protection, of counsel, for Defendant.

Opinion & Order

CARMAN, Judge:

Following a bench trial held from February 6, 2012 to February 10, 2012, this matter is now before the Court for findings of facts, conclusions of law, and entry of judgment. Upon considering and weighing the evidence on the trial record, the Court finds that Plaintiff, International Custom Products, Inc. (“ICP”), has proven that the product it imported in the entry underlying this case, called “white sauce,” conformed to a properly obtained binding ruling letter, D86228 (the “Ruling Letter”), issued by the New York office of the Bureau of Customs and Border Protection (“CBP” or “Customs”) on January 20, 1999. Because the Ruling Letter, which had not been properly revoked, controlled the tariff classification of ICP's white sauce, the Court finds that CBP acted contrary to law in liquidating the entry under a different tariff classification associated with a much higher tariff rate. As a consequence, the Court will issue a partial final judgment pursuant to USCIT Rule 54(b),¹ requiring Customs to reliquidate the single entry of Plaintiff's merchandise underlying this suit at the rate established by the Ruling Letter and to refund to Plaintiff any overpayment with interest as provided by law.

I. Procedural Background of Case

Litigation between Plaintiff and the government over the liquidation rate of entries of Plaintiff's white sauce has been ongoing since 2005. It was on April 18, 2005 that Customs issued a Notice of Action which had as its result that 100 entries (the “Affected Entries”) of ICP's white sauce were reclassified under 0405.20.3000, HTSUS, for “[b]utter and ... dairy spreads,” rather than as “[s]auces and preparations therefor” under 2103.90.9091, HTSUS (the 2005 analog of 2103.90.9060, HTSUS, which was the subheading provided for in the 1999 Ruling Letter). The Notice of Action stated that “action has been taken” to rate-advance the Affected Entries, and that in the future, “all shipments of this product must be classified” under 0405.20.3000, HTSUS. The consequence of the reclassification was an increase of approximately 2400% in the duties owed by ICP. Since 2005, ICP has sought relief in various forms from the Notice of Action.

A. Overview of ICP Cases

Customs's reclassification of ICP's white sauce has spawned a number of lawsuits. A brief overview of that litigation is appropriate here to provide the context within which the current case arises.

1. The 2005 Case

Challenges to tariff classification are typically brought before this court under 28 U.S.C. § 1581(a). However, in its 2005 suit (Court No. 05–00341), ICP asserted jurisdiction under the Court's residual jurisdictional statute, 28 U.S.C. § 1581(i)(4). The Court may not exercise § 1581(i) jurisdiction when the plaintiff can access the court “by traditional means, such as under § 1581(a),” unless “the remedy provided under [subsection (a) ] would be manifestly inadequate.” Thyssen Steel Co. v. United States, 13 CIT 323, 328, 712 F.Supp. 202, 206 (1989). This Court determined that a suit brought pursuant to § 1581(a) would be manifestly inadequate because ICP was challenging not the “classification of its white sauce as enunciated in the Notice of Action,” but rather “the Notice of Action itself and Customs's authority to issue it.” International Custom Products, Inc. v. United States, 29 CIT 617, 622, 374 F.Supp.2d 1311, 1320 (2005) (“ICP I ”). This Court also found that ICP's remedy under § 1581(a) would be manifestly inadequate because the company would likely cease to exist due to the financial effects of the Notice of Action before any § 1581(a) remedy could be obtained. Id. at 1322.

Having determined that jurisdiction under § 1581(i) was proper, this Court proceeded to grant a motion by ICP for judgment on the agency record, declaring that the Notice of Action was null and void because it was a “decision” that revoked the Ruling Letter without following the notice-and-comment requirements for revocation of ruling letters set forth in 19 U.S.C. § 1625(c). Id. at 1325–30. This Court found that Customs must reliquidate the Affected Entries consistent with the Ruling Letter, which this Court declared was still in force at the time the entries had been rate-advanced. Id. at 1333.

The Court of Appeals for the Federal Circuit (“CAFC”) reversed this Court regarding jurisdiction, holding that “the remedy provided by subsection 1581(a) is not manifestly inadequate, and that therefore the Court of International Trade lacked jurisdiction under subsection 1581(i)(4).” International Custom Products, Inc. v. United States, 467 F.3d 1324, 1327 (Fed.Cir.2006) ( “ICP II ”). Due to the jurisdictional defect, the CAFC vacated this Court's decision regarding the merits of ICP's arguments and remanded the case for dismissal. Id. at 1328. Accordingly, this Court dismissed ICP's 2005 case. International Custom Products, Inc. v. United States, 31 CIT 266, 2007 WL 624052 (2007) (Judgment Order).

2. The 2007 Case (the Current Case)

In 2007, ICP timely filed this lawsuit, seeking, in essence, to raise the same challenges to the Notice of Action that were raised in Court No. 05–00341, but on § 1581(a) jurisdictional grounds. A plaintiff must protest before Customs the duties imposed, have Customs deny that protest, then pay all imposed duties before bringing suit in the Court of International Trade (“CIT”) under § 1581(a). Apparently because Plaintiff could not afford to pay the 2400% increase in duties on the scores of Affected Entries, Plaintiff protested and paid duties on a single entry, entry 180–0590029–7 (“the Entry”), upon which it bases this suit. The Entry was part of a group of 11 entries brought into the United States in 2005 after the Notice of Action was issued. Customs liquidated the Entry at the higher rate provided in the Notice of Action on June 29, 2007 and ICP protested the liquidation on July 26, 2007 with a request for expedited treatment. The protest was deemed denied. ICP paid the assessed duties by August 27, 2007 and filed this suit on August 28, 2007.

3. The 2008 Cases

Two other lawsuits filed by Plaintiff in 2008 are stayed pending the resolution of the current case. The first of these suits, assigned Court No. 08–00055, challenges as unlawful certain actions Customs took after importation of the Entry in the instant case. The precise content of that suit is immaterial here.²See Compl., Court No. 08–00055, ECF No. 4. The second 2008 suit, assigned Court No. 08–00189, also addresses events postdating the Customs actions challenged in the instant case and is immaterial here.³See Compl., Court No. 08–00189, ECF No. 2.

The Court stayed all proceedings in Court No. 08–00055 and Court No. 08–00189 on October 29, 2008 and August 5, 2009, respectively. ⁴

B. Prior Proceedings in the Current Case

It will be useful to summarize here the prior opinions and proceedings of the Court with regard to the current case, leading up to the trial.

On November 30, 2007, the government responded to the complaint with a motion to dismiss for failure to state a claim upon which relief can be granted. See Motion to Dismiss, Court No. 07–00318, ECF No. 23. The Court granted the government's motion to dismiss as to two of ICP's claims.⁵See International Custom Products, Inc. v. United States, 32 CIT 302, 549 F.Supp.2d 1384 (2008) (“ ICP III ”). However, the Court denied the motion to dismiss as to three of ICP's claims: (a) Count I, alleging that the 2005 Notice of Action was unlawful because it revoked the binding Ruling Letter without going through the notice-and-comment revocation procedures required by 19 U.S.C. § 1625(c)(1), and applied that revocation retroactively; (b) Count II, making a similar allegation that Customs revoked a prior treatment of ICP's white sauce in violation of notice-and-comment requirements provided by 19 U.S.C. § 1625(c)(2); and (c) Count V, alleging that Customs violated ICP's constitutional due process rights when it revoked the Ruling Letter, depriving ICP of a property interest in continued classification of its white sauce entries under the Ruling Letter absent notice and an opportunity to comment pursuant to 19 U.S.C. § 1625(c). Id. In the course of determining that Count I was not subject to dismissal for failure to state a claim upon which relief could be granted, the Court held that the Notice of Action was an “interpretive ruling or decision” within the meaning of 19 U.S.C. § 1625(c)(1) and “that, if the actions alleged of Customs are proven, Customs effectively revoked ICP's classification ruling by its conduct in connection with the white sauce importations.” ICP III, 549 F.Supp.2d at 1393–94. After the Court issued its decision on the motion to dismiss, the government filed an answer to the complaint on April 14, 2008. Answer, Court No. 07–00318, ECF No. 44.

Plaintiff filed a motion for summary judgment on January 4, 2008 (Court No. 07–00318, ECF No. 27), and the government filed a cross-motion for summary judgment on September 26, 2008 (Court No. 07–00318, ECF No. 67). The Court denied those motions on January 29, 2009, finding that genuine issues of material fact precluded resolving the case without a trial. International Custom...