Am. Fiber & Finishing, Inc. v. United States

• Decision Date: 21 October 2015
• Docket Number: Court No. 12–00138.,Slip Op. 15–117.
• Citation: 121 F.Supp.3d 1273
• Parties: AMERICAN FIBER & FINISHING, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

121 F.Supp.3d 1273

AMERICAN FIBER & FINISHING, INC., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 15–117.

Court No. 12–00138.

United States Court of International Trade.

Oct. 21, 2015.

Arthur K. Purcell, Sandler, Travis & Rosenberg, P.A., of New York, NY, for the Plaintiff.

Jason M. Kenner, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, for the Defendant. Also on the brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Amy M. Rubin, Assistant Director. Of counsel was Beth Brotman, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of New York, NY.

OPINION and ORDER

POGUE, Senior Judge:

In this action, Plaintiff, American Fiber & Finishing, Inc. ("AFF"), challenges the denial of its protests made pursuant to § 514 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1514 (2012),¹ and 19 C.F.R. § 174.11 (2012), by the Bureau of Customs and Border Protection ("CBP" or "Customs"). In those protests, and now before the court, Plaintiff claims that Customs incorrectly assessed the rate and amount of duties chargeable in liquidating² sixteen of Plaintiff's imports of cotton gauze fabric. Summons, ECF No. 1, at Form 1–3 (listing the sixteen entries); 2d Am. Compl., ECF No. 11–1, at ¶ 1. Plaintiff asserts that Customs violated 19 U.S.C. § 1625(c)(2) by making an interpretive ruling or decision modifying or revoking a previously accorded treatment of AFF's goods, reclassifying and rate-advancing them, without the statutorily required notice and comment. 2d Am. Compl., ECF No. 11–1, at ¶¶ 17–32. The court has jurisdiction over Plaintiff's claim pursuant to 28 U.S.C. § 1581(a).³

Defendant and Plaintiff now cross-move for partial summary judgment.⁴ Because Plaintiff has alleged an appropriate interpretive ruling or decision within the meaning of 19 U.S.C. § 1625(c) and claim of treatment, as discussed below, Defendant's motion is denied, while Plaintiff's cross-motion is granted in part and denied in part.

BACKGROUND

Plaintiff claims that it has, for some time, imported cotton gauze fabric under subheading 5803.00.10, Harmonized Tariff Schedule of the United States ("HTSUS"), a duty free provision.⁵ 2d Am. Compl., ECF No. 11–1, at ¶¶ 9–13. Among these importations was an entry made on July 11, 2009. Following laboratory testing,⁶ on January 14, 2010, Customs issued a CF–29 notice of action⁷ to Plaintiff indicating that this entry and all such entries "scheduled to liquidate" should be reclassified under subheading 5208.21.4090, HTSUS,⁸ at a duty rate of 10.2 percent ad valorem. Notice of Action (Jan. 14, 2010), reproduced in Pl.'s Br., ECF No. 39–1 at Ex. A ("Jan. 2010 Notice of Action"); 2d Am. Compl., ECF No. 11–1, at ¶ 14.⁹ Subsequently, in September through November 2010, Customs issued a series of similar notices of action reclassifying and rate advancing a number of Plaintiff's entries that had been made between September 2009 and April 2010.¹⁰

As instructed by these notices of action, from October 2010 through January 2011, Plaintiff made sixteen entries of cotton gauze fabric under one of two HTSUS provisions—either subheading 5208.11.40, HTSUS,¹¹ at a duty rate of 9 percent ad valorem, or subheading 5208.21.40, HTSUS,¹² at a duty rate of 10.2 percent ad valorem —rather than the duty-free 5803, HTSUS provision Plaintiff had previously used. Summons, ECF No. 1, at Form 1–3; 2d Am. Compl., ECF No. 11–1, at ¶¶ 8–9. Customs then liquidated the merchandise as entered through "bypass" procedures.¹³

Decl. of Stephanie Allen, Senior Import Specialist, CBP, reproduced in Attach. to Def.'s Mem. in Supp. of its Partial Mot. for Summ. J. ("Attach. to Def.'s Br."), ECF No. 36–1 at Ex. 1 ("Allen Decl."), at ¶ 3. On March 8 and 12, 2012, Plaintiff timely filed protests of these liquidations. 2d Am. Compl., ECF No. 11–1, at ¶ 15. Customs denied the protests. Id. Plaintiff now contests Customs' denials, id., at ¶ 5, claiming, as it did in its protests, that Customs violated 19 U.S.C. § 1625(c) when it liquidated the sixteen entries, because Customs made an "interpretive ruling or decision" that modified or revoked a "treatment previously accorded" Plaintiff's "substantially identical transactions" without the statutorily prescribed notice and comment. 19 U.S.C. § 1625(c)(2) ; 2d Am. Compl., ECF No. 11–1, at ¶¶ 17–32.¹⁴

Currently before the court is Defendant's motion for partial summary judgment, Def.'s Mot., ECF No. 36, and Plaintiff's cross-motion for partial summary judgment, Pl.'s Mot., ECF No. 39. In their motions, Defendant and Plaintiff raise two issues: First, they argue whether Plaintiff's claim fails as a matter of law because it cannot identify an "interpretive ruling or decision" through which Customs revoked or modified the alleged treatment, for the purposes of 19 U.S.C. § 1625(c).¹⁵ Second, if Plaintiff's claim does not fail as a matter of law, the parties seek a ruling on an issue of regulatory interpretation. Specifically, in order to establish the existence of a "treatment previously accorded" by Customs under 19 U.S.C. § 1625(c), Plaintiff must provide, inter alia, evidence of that treatment "[o]ver a 2–year period immediately preceding the claim of treatment." 19 C.F.R. § 177.12(c)(1)(i)(C). The parties dispute the meaning of "claim of treatment" to determine the relevant 2–year evidentiary period.¹⁶

STANDARD OF REVIEW

Because the court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(a), questions of both fact and law presented here are reviewed de novo. 28 U.S.C. § 2640(a)(1).¹⁷

The court will grant summary judgment when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." USCIT Rule 56(a). A dispute is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party"; a fact is material when it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[T]he plain language of [the rule] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where, as here, parties cross-move for summary judgment, "each party carries the burden on its own motion to show entitlement to judgment as a matter of law after demonstrating the absence of any genuine disputes over material facts." Massey v. Del Labs., Inc., 118 F.3d 1568, 1573 (Fed.Cir.1997).

DISCUSSION

I. Whether Plaintiff can identify an "interpretive ruling or decision" for the purposes of 19 U.S.C. § 1625(c)

Under 19 U.S.C. § 1625(c)(2), Customs must follow notice and comment procedures before it issues an "interpretive ruling or decision which would ... have the effect of modifying [a] treatment previously accorded by [Customs] to substantially identical transactions."¹⁸ Defendant argues that Plaintiff's claim fails as a matter of law because Plaintiff has not identified "a proposed interpretive ruling or decision" within the meaning of 19 U.S.C. § 1625(c). Def.'s Br., ECF No. 36, at 4–6; Def.'s Resp., ECF No. 47, at 4–12. Plaintiff counters, arguing that Customs' January 2010 Notice of Action, see Jan. 2010 Notice of Action, ECF No. 39–1 at Ex. A, may constitute an "interpretive ruling or decision" within the meaning of 19 U.S.C. § 1625(c). Pl.'s Br., ECF No. 39–1, at 6–12; Pl.'s Reply, ECF No. 50, at 2–9; see also 2d Am. Compl., ECF No. 11–1, at ¶ 14. Plaintiff also cross-moves for an affirmative finding that the January 2010 notice of action is an interpretive ruling or decision within the meaning of 19 U.S.C. § 1625(c). Pl.'s Mot., ECF No. 39; Pl.'s Br., ECF No. 39–1, at 7–9; Pl.'s Reply, ECF No. 50, at 5.

While 19 U.S.C. § 1625 does not define an "interpretive ruling or decision", it does provide examples.¹⁹ An interpretive ruling "include[s] any ruling letter, or internal advice memorandum," 19 U.S.C. § 1625(a), and a "decision" may be, but is not limited to, a protest review decision.²⁰

Whether a determination falls within the ambit of 19 U.S.C. § 1625(c) depends on its substance, not its form. Int'l Custom Products, 748 F.3d at 1187–88. If a determination is the result of considered deliberations,²¹ if it "interprets and applies the provisions of the Customs and related laws to a specific set of facts,"²² if it has the effect of "unilaterally chang [ing] the rules" upon which importers have come to rely,²³ if it is otherwise "the functional equivalent of interpretive rulings or decisions,"²⁴ then it may be an interpretive ruling or decision and thereby may trigger 19 U.S.C. § 1625 notice and comment requirements.²⁵ Therefore, as the Federal Circuit has recently held, a notice of action may be an interpretive ruling or decision within the meaning of 19 U.S.C. § 1625(c), depending on the substance of the determination contained therein. Int'l Custom Products, 748 F.3d at 1188 ("The [Court of International Trade] did not err in holding that the Notice of Action in this case amounts to an interpretive ruling or decision subject to § 1625(c)'s notice and comment procedures.").

Accordingly, because a notice of action may be an interpretive ruling or decision, by offering the January 2010 notice of action as a possible interpretive ruling or decision, Plaintiff has "establish[ed] a genuine issue of material fact" through evidence, a document, in the record, sufficient to survive summary judgment on this issue. See USCIT Rule 56(c)(1)(A) ("A party asserting that a fact ... is genuinely disputed must support the assertion by ... citing to particular parts of materials in the record, including ... documents[.]...