Holford USA Ltd. Inc. v. US, Slip Op. No. 95-209. Court No. 95-10-01298.

• Decision Date: 29 December 1995
• Docket Number: Slip Op. No. 95-209. Court No. 95-10-01298.
• Citation: 19 CIT 1486,912 F. Supp. 555
• Parties: HOLFORD USA LTD. INC., Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

912 F. Supp. 555

19 CIT 1486

HOLFORD USA LTD. INC., Plaintiff, v. The UNITED STATES, Defendant.

Slip Op. No. 95-209. Court No. 95-10-01298.

United States Court of International Trade.

December 29, 1995.

Neville, Peterson & Williams (Margaret R. Polito, John M. Peterson, David C. Williams, New York City, and James A. Marino), for plaintiff.

Frank W. Hunger, Assistant Attorney General, Washington, DC, Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, Amy M. Rubin, Karen P. Binder, Senior Attorney, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service, of counsel, New York City, for defendant.

OPINION

RESTANI, Judge:

This matter is before the court on a motion for judgment upon the agency record pursuant to USCIT Rule 56.1(a) by plaintiff Holford USA Ltd. Inc. ("Holford") and on a cross-motion to dismiss for lack of jurisdiction pursuant to USCIT Rule 12(b)(1). Plaintiff contests a determination denying reconsideration of a ruling by the United States Customs Service ("Customs") that denied application of the "grandfather" clause of section 334(c) of the Uruguay Round Agreements Act to a pre-existing, long-term contract between Holford and Yiu Fat Company Ltd. ("Yiu Fat"). Plaintiff bases jurisdiction upon 28 U.S.C. § 1581(h) (1988) or, alternatively, 28 U.S.C. § 1581(i) (1988 & Supp. V 1993).

BACKGROUND

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act, Pub.L. No. 103-465, 108 Stat. 4809 (1994) ("URAA"). Section 334(a) of the URAA directs the Secretary of the Treasury to "prescribe rules implementing the principles contained in section 334(b) for determining the origin of textiles and apparel products." 19 U.S.C. § 3592(a) (1994). The principles set out in section 334(b) provide, in relevant part:

(1) In General. — Except as otherwise provided for by statute, a textile or apparel product, for purposes of the customs laws and the administration of quantitative restrictions, originates in a country, ... and is the growth, product, or manufacture of that country ..., if—

(A) the product is wholly obtained or produced in that country ...; or

....

(D) the product is any other textile or apparel product that is wholly assembled in that country ... from its component pieces.

19 U.S.C. § 3592(b) (1994). The effective date for Treasury's regulations is set forth in section 334(c), which provides:

(c) Effective date.—This section shall apply to goods entered, or withdrawn from warehouse, for consumption on or after July 1, 1996, except that this section shall not apply to goods if —

(1) the contract for the sale of such goods to the United States is entered into before July 20, 1994;

(2) all of the material terms of sale in such contract, including the price and quantity of the goods, are fixed and determinable before July 20, 1994;

(3) a copy of the contract is filed with the Commissioner of Customs within 60 days after December 8, 1994, together with a certification that the contract meets the requirements of paragraphs (1) and (2); and

(4) the goods are entered, or withdrawn from warehouse, for consumption on or before January 1, 1998.

The origin of goods to which this section does not apply shall be determined in accordance with the applicable rules in effect on July 20, 1994.

19 U.S.C. § 3592(c) (1994) (emphasis added).

Holford, an importer and wholesaler of women's and men's garments, filed a copy of the Holford-Yiu Fat contract with Customs on February 6, 1995. An accompanying letter certified that the document was a true and accurate copy of the contract. Customs, however, determined that Holford's certification was deficient. Accordingly, on April 21, 1995, Customs granted Holford 30 days in which to submit a certification that complied with section 334(c)(3) of the URAA. Customs also requested that Holford articulate the basis for the company's certification that the material terms of the contract were fixed and determinable.

On May 9, 1995, Holford submitted a revised certification and an explanation as to why, in its opinion, the contract terms were fixed and determinable. Holford generally noted in its submission that Customs had not defined the statutory terms "fixed and determinable." The company expressed a reluctance to certify that the contractual terms were fixed and determinable without first understanding how Customs interpreted these words.

On May 18, 1995, Customs wrote Holford assuring it that a good-faith certification would not give rise to any penalty. Customs, however, did not provide a definition of the statutory terms "fixed and determinable." Holford filed a certification in accordance with Customs' instructions that same day.

On June 7, 1995, Customs issued a letter to Holford stating that the Holford-Yiu Fat contract did not satisfy the requirements of section 334(c) of the URAA because the terms of the contract were not fixed and determinable. Holford requested reconsideration of Customs' decision on July 26, 1995. In a letter dated October 4, 1995, Customs reaffirmed its original determination that the exception provided for in section 334(c) is not applicable to goods imported under the Holford-Yiu Fat contract. Suit in this court subsequently followed.

STANDARD OF REVIEW

Section 2640(e), Title 28, United States Code, provides that, "in any civil action not specified in this section, the court shall review the matter as provided in 5 U.S.C. § 706." 28 U.S.C. § 2640(e) (1988 & Supp. V 1993) (28 U.S.C. § 1581(h) is not specified therein). Section 706(2)(A), Title 5, United States Code, provides, in relevant part, that "the reviewing court shall ... hold unlawful and set aside agency action, findings, and conclusions found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A) (1994).

DISCUSSION

I. Motion to Dismiss for Lack of Jurisdiction

Plaintiff bases jurisdiction for this action under 28 U.S.C. § 1581(h) or, alternatively, on 28 U.S.C. § 1581(i). Section 1581(h), Title 28, United States Code, provides that,

The court shall have exclusive jurisdiction of any civil action commenced to review, prior to the importation of the goods involved, a ruling issued by the Secretary of the Treasury, or a refusal to issue or change such a ruling, relating to classification, valuation, rate of duty, marking, restricted merchandise, entry requirements, drawbacks, ... or similar matters, but only if the party commencing the civil action demonstrates to the court that he would be irreparably harmed unless given an opportunity to obtain judicial review prior to such importation.

28 U.S.C. § 1581(h) (1988).

In order for the court to exercise jurisdiction under section 1581(h), four requirements must be fulfilled: 1) judicial review must be sought prior to importation of goods; 2) review must be sought of a ruling or a refusal to change such ruling; 3) the ruling must relate to certain subject matter; and 4) it must be shown that irreparable harm will occur unless judicial review is obtained prior to importation. National Juice Prods. Ass'n v. United States, 10 CIT 48, 51, 628 F.Supp. 978, 982 (1986). Plaintiff has the burden of demonstrating that jurisdiction exists by clear and convincing evidence.¹ See id.

Applying the foregoing, it is clear that the first three requirements have been met. Specifically, although the contract at issue is dated March 29, 1993, the contract has a seven-year duration and importation is ongoing. Furthermore, only importation after the July 1, 1996 effective date is at issue. Thus, the review sought is prior to importation.

Defendant contends that Customs' letters to plaintiff are not "rulings" within the meaning of section 1581(h). The court does not agree. The legislative history of section 1581(h) defines "ruling" as "a determination by the Secretary of the Treasury as to the manner in which it will treat the contemplated transaction." H.R.Rep. No. 1235, 96th Cong., 2d Sess. 46 (1980), reprinted in 1980 U.S.C.C.A.N. 3729, 3758. This court has interpreted the legislative history "as speaking to specific contemplated import transactions which contain identifiable merchandise and which will feel the impact of the ruling with virtual certainty." Pagoda Trading Co. v. United States, 6 CIT 296, 298, 577 F.Supp. 22, 24 (1983). Customs' determination that the "grandfather" clause of section 334(c) will not apply to plaintiff's contract is clear, as is the result of that determination— namely, that Holford's goods purchased pursuant to the contract will be affected by the change in country of origin rules as of July 1, 1996. Accordingly, the court finds that Customs' determination qualifies as the type of "ruling" contemplated by section 1581(h).

Defendant also argues that Customs' determination did not involve the required subject matter of section 1581(h), as the decision addressed only whether section 334(c) of the URAA applied to plaintiff's contract. The court notes, however, that although Customs' determination does not directly decide classification, duties, or marking requirements, the determination does affect how plaintiff's goods will be classified, what duties will be assessed, and how the goods will be marked. Consequently, the ruling relates to the appropriate subject matter and the first three requirements of section 1581(h) are met.

In regards to the fourth requirement, defendant claims that plaintiff has failed to show that it will suffer irreparable harm as the result of Customs' determination. The essence of "irreparable injury" is that "it is harm that `cannot receive reasonable redress in a court of law.'" National Juice Prods, 10 CIT at 53, 628 F.Supp. at 984 (quoting Manufacture De Machines Du Haut-Rhin v. Von Raab, 6 CIT 60, 64, 569 F.Supp. 877, 881 (1983)). In making this...