Lynteq, Inc. v. U.S.

• Decision Date: 23 September 1992
• Docket Number: No. 92-1064,92-1064
• Citation: 976 F.2d 693
• Parties: LYNTEQ, INC., Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 693

976 F.2d 693

14 ITRD 1521

LYNTEQ, INC., Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant.

No. 92-1064.

United States Court of Appeals Federal Circuit.

Sept. 23, 1992.

Rehearing Denied Oct. 28, 1992.

Paul A. Lenzini, Wilkinson, Barker, Knauer & Quinn, Washington, D.C., argued, for plaintiff-appellee.

Carla Garcia-Benitez, Commercial Litigation Branch, Dept. of Justice, New York City, argued, for defendant-appellant. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office.

Patrick D. Gill, Rode & Qualey, New York City, was on the brief, for amicus curiae, Kemin Industries, Inc., of counsel was Eleanore Kelly-Kobayashi.

Before MICHEL, LOURIE, and CLEVENGER, Circuit Judges.

LOURIE, Circuit Judge.

The United States appeals from the judgment of the United States Court of International Trade granting summary judgment in favor of Lynteq, Inc., on Lynteq's challenge of a classification decision by the United States Customs Service. Lynteq, Inc. v. United States, 768 F.Supp. 350 (Ct. Int'l Trade 1991). The trial court held that the imported merchandise is a preparation of marigold meal that is properly classified under subheading 3203.00.10, Harmonized Tariff Schedules of the United States (HTSUS), and is thus entitled to duty-free treatment. We reverse and hold that the imported merchandise is properly classified under subheading 3203.00.50, HTSUS, dutiable at 3.1% ad valorem.

BACKGROUND

The merchandise at issue, known by its trade name "Cromophyl-L," was imported into the United States and sold by Lynteq to poultry feedmills for incorporation into poultry feed for the purpose of enhancing the yellow color of chicken skin and egg yolks. Cromophyl-L is an aqueous extract of the dried ground flower petals of Aztec marigold flowers which are a naturally rich source of xanthophyll pigment, an active coloring agent. ¹ The petals are pressed, dried, and ground to obtain marigold meal. The marigold meal then undergoes a solvent extraction process that separates xanthophyll esters from the meal and produces marigold oleoresin, a semi-liquid substance comprised of xanthophyll esters, vegetable fats, and other oil-soluble materials. The solvent extraction process does not change the chemical structure of the xanthophyll esters.

Chromophyl-L is derived from the marigold oleoresin through a process known as "saponification." The saponification process releases the xanthophyll free alcohol by separating it from the fatty acids to The applicable provisions of the Harmonized Tariff Schedule of the United States are as follows:

                which it was originally attached.   The liberated xanthophyll can then be formulated into a stable, water-based solution, known commercially as Cromophyl-L.   Although marigold meal may be used as a color-enhancing poultry feed additive, Cromophyl-L is preferred because it is, among other things, more stable than marigold meal, easier to incorporate into the poultry feed, and more readily absorbed by the poultry
                

Heading Coloring matter of vegetable or animal origin (including

3203.00 dyeing extracts but excluding animal black), whether or

not chemically defined; preparations as specified in

note 3 to this chapter based on coloring matter of

vegetable or animal origin:

Subheading Annato, archil, cochineal, cudbear, litmus, logwood and

3203.00.10 marigold meal........................................... Free

Subheading Other .................................................... 3.1%

3203.00.50

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(codified at 19 U.S.C. § 1202 (1988)) (emphasis added).

On July 7, 1989, the imported merchandise was liquidated by Customs at a duty of 3.1% ad valorem under subheading 3203.00.50, HTSUS, a residual provision covering "other" coloring matter of vegetable or animal origin. Lynteq filed a timely protest under 19 U.S.C. § 1514 (1988) challenging Customs' classification decision. Upon denial of the protest, Lynteq commenced an action before the Court of International Trade pursuant to 28 U.S.C. § 2631(a) (1988). Lynteq alleged that the imported merchandise was improperly classified by Customs under subheading 3203.00.50 because the merchandise is specifically provided for under subheading 3203.00.10, HTSUS, as a form of one of the enumerated coloring matters of vegetable or animal origin, viz., marigold meal, and thus should have been liquidated free of duty. Alternatively, Lynteq claimed that the merchandise is properly classified under subheading 3203.00.10 as a "preparation" based on marigold meal.

Before the trial court, Lynteq and the Government agreed that there were no genuine issues of material fact in dispute and the parties filed cross motions for summary judgment. The trial court rejected Lynteq's contention that Cromophyl-L was merely a refined form of the enumerated colorant marigold meal. The court determined that in deriving Cromophyl-L from the marigold meal, the raw material "undergoes a substantial chemical transformation which significantly alters the character as well as the molecular structure of the resulting product from that of marigold meal." 768 F.Supp. at 353. Further, the court found that Cromophyl-L "possesses qualities so altogether different from those present in the raw material from which it is derived, that it can no longer be deemed to be marigold meal for classification purposes." Id. at 353.

However, the trial court concluded that the scope of subheadings 3203.00.10 and 3203.00.50 encompasses not only the enumerated coloring matter, but also preparations based on those colorants as well:

Heading 3203.00, HTSUS, read in conjunction with Note 3 to Chapter 32, provides that subheadings 3203.00.10 and 3203.00.50, HTSUS, encompass not only coloring matter of animal or vegetable origin, but also preparations based thereon of a kind used for coloring any material or used as ingredients in the manufacture of coloring preparations.

768 F.Supp. at 353. The trial court then determined that the imported merchandise constitutes a "preparation" based on marigold meal and as such is properly classified under subheading 3203.00.10 and entitled to duty-free treatment. Consequently, the trial court granted Lynteq's motion for summary judgment. On appeal, the Government claims that the trial court erred as

a matter of law in holding that the imported merchandise was classifiable under subheading 3203.00.10, entering duty-free, and not under subheading 3203.00.50, dutiable at 3.1% ad valorem.

DISCUSSION

We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1295(a)(5) (1988). We review the Court of International Trade's grant of summary judgment for correctness as a matter of law, deciding de novo the proper interpretation of the governing statutory provisions. Guess? Inc. v. United States, 944 F.2d 855, 857 (Fed.Cir.1991). The ultimate issue as to whether particular merchandise has been classified under an appropriate tariff provision necessarily depends on the meaning of the terms of that provision, which is a question of law subject to de novo review. See W.R. Filbin & Co. v. United States, 945 F.2d 390, 392 (Fed.Cir.1991). Thus, we need not afford deference to the trial court's decision regarding the proper scope of subheading 3203.00.10. See Suramerica de Aleaciones Laminadas, C.A. v. United States, 966 F.2d 660, 663 (Fed.Cir.1992). Customs' classification of imported merchandise is presumed to be correct, 28 U.S.C. § 2639(a)(1) (1988), and the burden of proof is upon the party challenging the classification. Simod America Corp. v. United States, 872 F.2d 1572, 1576, 7 Fed.Cir. (T) 82, 86 (Fed.Cir.1989).

I. Preparations

Neither party disputes that Cromophyl-L is properly classified under heading 3203.00. Heading 3203.00 covers coloring matter of vegetable or animal origin and preparations as specified in Note 3 to Chapter 32 of the HTSUS based on coloring matter of vegetable or animal origin. Heading 3203.00 is further subdivided into subheading 3203.00.10, an eo nomine provision which covers certain forms of coloring matter by name, and subheading 3203.00.50, a residual or basket provision which covers the balance of merchandise within the scope of the heading. We must thus decide which of the two subdivisions of heading 3203.00 is applicable to Cromophyl-L. Resolution of that issue necessarily entails deciding whether subheading 3203.00.10 encompasses not only the enumerated coloring matter, but preparations based on that coloring matter as well.

The trial court determined that subheadings 3203.00.10 and 3203.00.50 encompass "not only coloring matter of animal or vegetable origin, but also preparations based thereon of a kind used for coloring any material or used as ingredients in the manufacture of coloring preparations." 768 F.Supp. at 353. The trial court, however, failed to articulate any reasoning supporting that conclusion other than that it was based on the court's reading of the language of heading 3203.00 in conjunction with Note 3 to Chapter 32. ² We conclude that the trial court's broad interpretation of the scope of subheading 3203.00.10 was erroneous.

"In determining the scope of a statute, we look first to its language. If the statutory language is unambiguous, in the absence of a 'clearly expressed legislative intent to the contrary, that language must ordinarily be regarded as conclusive.' " United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981) (quoting Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980)). The language of subheading 3203.00.10 is clear and unambiguous. That eo nomine subheading, by its very terms, covers only coloring matter which comes within the common meaning of the items that are specifically enumerated therein: annato, archil, cochineal, cudbear, litmus, logwood, and marigold meal. See Rule 6,...