Wilton Indus., Inc. v. United States

• Decision Date: 27 September 2012
• Citation: 887 F.Supp.2d 1293
• Parties: WILTON INDUSTRIES, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

887 F.Supp.2d 1293

WILTON INDUSTRIES, INC., Plaintiff,

v.UNITED STATES, Defendant.

United States Court of International Trade.

Slip Op. 12–125.

Court No. 10–00066.

Sept. 27, 2012.

Maria E. Celis, John M. Peterson, and Richard F. O'Neill, Neville Peterson LLP, of New York, NY, for Plaintiff.

Beverly A. Farrell, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for Defendant. On the briefs were Tony West, Assistant Attorney General, Barbara S. Williams, Attorney in Charge, International Trade Field Office, United States Department of Justice, and Yelena Slepak, Of Counsel, Office of the Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection.

Opinion

CARMAN, Judge:

This matter is before the Court on a Motion for Summary Judgment by PlaintiffWilton Industries, Inc. (“Plaintiff” or “Wilton”) and a Cross Motion for Summary Judgment by Defendant United States (“Defendant” or “Customs”). The parties dispute the correct tariff classification of decorative punches, imported by Plaintiff. For the reasons set forth below, Plaintiff's motion is denied, and Defendant's cross motion is granted.

Factual Background

Plaintiff is an importer of the subject merchandise, decorative punches from Taiwan. Pl.'s Statement of Material Facts as to Which No Genuine Issue Exists (“Pl.'s Facts”) ¶¶ 1–3; Def.'s Resp. to Pl.'s Statement of Material Facts as to Which No Genuine Issue Exists (“Def.'s Resp. Facts”) ¶ 1; Def.'s Statement of Material Facts as to Which No Genuine Issue Exists (“Def.'s Facts”) ¶ 5; Pl.'s Resp. to Def.'s Statement of Material Facts as to Which No Genuine Issue Exists (“Pl.'s Resp. Facts”) ¶ 5. The subject merchandise was imported into the Port of Los Angeles, California, between July 7 and October 25, 2008. Pl.'s Facts ¶ 3; Def.'s Resp. Facts ¶ 3; Def.'s Facts ¶ 4; Pl.s' Resp. Facts ¶ 4.

The parties do not dispute the nature and identity of the imported articles, which are all the brand “Stampin' Up!” punches that cut shapes or designs out of or in paper and that come in a variety of shapes and sizes. Def.'s Facts ¶ 5; Pl.'s Resp. Facts ¶ 5; Def.'s Mem. of Law in Opp'n to Pl.'s Mot. for Summ. J. and in Supp. of Def.'s Cross–Mot. for Summ. J. (“Def.'s Cross Mot.”) at 3. Each of the punches is capable of making a hole of an intended shape or trimming the edge or corner of the paper with a decorative design. Pl.'s Facts ¶ 2; Def.'s Resp. Facts ¶ 2. Subject punches are used in scrap booking and craft projects involving the creation or decoration of invitations, cards, and other decorative items. Pl.'s Facts ¶ 1; Def.'s Resp. Facts ¶ 1. There are twelve entries that encompass thirty-nine models of punches at issue in this case. Def.'s Cross Mot., Attach. A.

After filing this action, Plaintiff provided Customs twenty representative samples of punches, referred to as “Twenty Punches” by the parties, to reconsider the classification of the subject merchandise. Def.'s Cross Mot. at 2. These Twenty Punches, however, are not the imported articles in this case. Def.'s Facts at ¶¶ 6–7; Decl. of Kathy Campanelli, National Import Specialist, Customs (“NIS Decl.”) at ¶ 5. Nevertheless, Customs used the Twenty Punches and compared them with images of the imported articles to determination classification. NIS Decl. at ¶ 11; Def.'s Cross Mot. at 11–12. Customs agreed to classify twenty-three models of the punches under Plaintiff's proposed classification of Subheading 8441.10.00, HTSUS, which is duty free, ¹ “in an effort to resolve this action.” Def.'s Supplemental Mem. of Law in Further Supp. of Def.'s Cross–Mot. for Summ. J. (“Def.'s Suppl. Br.”) at 2. For the remaining sixteen punches, however, Customs maintained that the proper classification is under Subheading 8203.40.60, HTSUS, with 3.3% duty margin ² because these remaining punches “are intended for use when held in the hand.” Def.'s Cross Mot. at 3.

Because it was unclear exactly how many of the subject punches were actually in dispute and how the parties came to agreement for those not in dispute, the Court requested an in-person conference, held on July 19, 2012, to clarify the subject merchandise in this case. The Court also requested that the parties file physical samples of all the subject merchandise. In response, the parties explained that there are thirty-nine punches at issue but that there are only sixteen punches in dispute for the Court to decide.³ Plaintiff stated that Defendant requested physical “samples or items similar to the merchandise” for only nine of the subject punches. Resp. Letter to Ct. from Pl., ECF No. 46. Plaintiff managed to produce thirty-seven of the thirty-nine subject punches,⁴ despite the fact that many of the models have been discontinued. The two missing punches are one corner punch (# 11) that is in dispute and one large punch that is not in dispute (# 16). Plaintiff provided images and a narrative description for the missing punches which the Court deems sufficient to determination classification. The parties broke down the subject punches according to size: small, medium and large.⁵ The following table provides the breakdown of the different sizes of punches plus the two that do not fit into the size breakdown, a corner punch and a scallop-edged punch:

The parties have also jointly submitted a narrative description of each of the subject punches, along with component and base plate breakdowns, as requested by the Court. Parties Joint Submission of Spreadsheets of Disputed and Non–Disputed Paper Punches, ECF Nos. 62–1, 62–2. For all the subject punches, regardless of size or shape, the component breakdown is essentially the same: the die components comprise approximately 75% of the total weight of each subject punch, while the housing, bottom, handle and springs comprise the balance of the weight. Because the weight and materials ratio are substantially similar for all the punches, the Court analyzes the various punches as one subject merchandise.

Jurisdiction and Standard of Review

The Court has jurisdiction pursuant to 28 U.S.C. § 1581(a) (2006). Summary judgmentis appropriate when the record shows that “there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” USCIT R. 56(c).

Although Customs usually enjoys a statutory presumption of correctness in its classification decisions, this does not apply to pure issues of law in a summary judgment motion before this Court. Universal Elec. Inc. v. United States, 112 F.3d 488, 492 (Fed.Cir.1997). This Court “does not defer to Customs' decisions because it has been tasked by Congress to conduct a de novo review, and to determine the correct classification based on the record made before it.” Universal Elec., 112 F.3d at 493;see28 U.S.C. § 2640(a). Ultimately, this Court's “duty is to find the correct result, by whatever procedure is best suited to the case at hand.” Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed.Cir.1984) (emphasis in original).

Resolution of a disputed classification entails a two-step process: (1) ascertaining the proper meaning of specific terms in the relevant tariff provisions; and (2) determining whether the merchandise at issue comes within the description of such terms as properly construed. Pillowtex Corp. v. United States, 171 F.3d 1370, 1373 (Fed.Cir.1999). When “the nature of the merchandise is undisputed, ... the classification issue collapses entirely into a question of law.” Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed.Cir.2006) (citations omitted).

Discussion

The Court acknowledges the parties' good faith attempt to come to agreement regarding the classification of the subject merchandise. However, under Jarvis Clark, supra, the Court is charged with the duty to find the correct classification for all the entries in the case. Therefore, the Court looks at all of the subject merchandise before it, including the punches that the parties present as not in dispute.⁶

I. Proposed Classifications

Plaintiff contended that Customs “has repeatedly misclassified its paper punching product as a matter of law. [Plaintiff] submits that the punches are properly classified as ‘cutting machines' under HTS 8441.10.00 and entitled to receive [sic] dutyfree treatment.” Pl.'s Mem. of Points and Authorities in Supp. of Pl.'s Mot. for Summ. J. (Pl.'s Mot.) at 2. Plaintiff asserted that the subject punches are machines because “they transfer energy from the user to the device wherein a set of dies forms a cutting edge.” Id. at 12. In support of its contention that subject punches are machines, Plaintiff submitted the testimony of mechanical engineer, Dr. P.R. Frise, as an expert. Id. at 12; Affirm. of Dr. Peter R. Frise; Ex. A–D to Pl.'s Mot. After reviewing the Twenty Punches provided by Plaintiff, Dr. Frise advised that those punches are indeed machines because they “utilize a lever, an inclined plane, and an axle to transmit forces and perform work.” Id. at 12. However, Plaintiff's proffered testimony from its expert is inapposite for two reasons: (1) Dr. Frise advised on punches that are not at issue in this case, Def.'s Facts ¶ 6; and (2) Defendant conceded that based on its common meaning, a punch itself is a machine,” Def.'s Cross Mot. at 4. Further, Defendant stated that the “articles of [its proposed] Heading 8203” are “also machines, if only simple machines.” Def.'s Reply Mem. of Law in Opp'n to Pl.'s Mot. for Summ. J. and in Further Supp. of Def.'s Cross–Mot. for Summ. J. (“Def.'s Opp'n”) at 6.

Defendant contended, however, that the subject punches “are properly classifiable in subheading 8203.40.60 because they are described eo nomine ⁷ by this subheading and are excluded by Exclusionary Note 1(k) to Section XVI ⁸ from classification in subheading 8441.10.00.” Def.'s Cross Mot. at 8.

II. GRI Analysis

Classification of merchandise is governed by the General Rules of...