998 F.Supp. 1123 (CIT. 1998), 93-12-00808, Sabritas v. United States

Docket Nº:Court No. 93-12-00808.
Citation:998 F.Supp. 1123
Party Name:SABRITAS, S.A. de C.V. and Frito-Lay, Inc., Plaintiffs, v. UNITED STATES, Defendant. Slip Op. 98-14.
Case Date:February 20, 1998
Court:Court of International Trade
 
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Page 1123

998 F.Supp. 1123 (CIT. 1998)

SABRITAS, S.A. de C.V. and Frito-Lay, Inc., Plaintiffs,

v.

UNITED STATES, Defendant.

Slip Op. 98-14.

Court No. 93-12-00808.

United States Court of International Trade.

Feb. 20, 1998

Page 1124

[Copyrighted Material Omitted]

Page 1125

Neville, Peterson & Williams (John M. Peterson, George W. Thompson, Margaret R. Polito and Arthur K. Purcell ) for plaintiffs.

Frank W. Hunger, Assistant Attorney General; Joseph I. Liebman, Attorney-in-Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Aimee Lee ); of counsel: Mitra Hormozi, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service, for defendant.

OPINION

TSOUCALAS, Senior Judge:

This is a consolidated action concerning the proper tariff classification of two edible consumer items: (1) taco shells; and (2) Munchos potato crisps. Both the taco shells and Munchos were imported in their final form from Mexico into the United States through California.

Plaintiffs, Sabritas, S.A. de C.V. and Frito-Lay, Inc. (collectively "Frito-Lay"), 1 challenge the United States Customs Service's ("Customs") classification of its import taco shells and Munchos potato crisps as "other bakers' wares: other: other" under section 1905.90.90 of the Harmonized Tariff Schedule of the United States ("HTSUS") (1992) at a duty rate of 10% ad valorem. Frito-Lay contends its import taco shells are properly classified as "bread, pastry, cakes, biscuits and similar baked products" under HTSUS 1905.90.10, which carries duty-free status. Plaintiff further claims its Munchos are properly classified as "potato chips" under HTSUS A2005.20.20 or, alternatively, as "Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen: potatoes: other" under HTSUS A2005.20.70. According to Frito-Lay, its Munchos meet the requirements of the Generalized System of Preferences ("GSP") and, therefore, are entitled to duty-free treatment.

Frito-Lay timely protested the liquidation of the subject entries under HTSUS 1905.90.90. Customs denied the protests and the two actions involving the taco shells and Munchos were consolidated for trial. Trial was held on the classification of both articles on December 9, 1997. The Court has jurisdiction over this matter under 28 U.S.C. § 1581(a) (1994).

Background

The taco shells at issue are produced by a process that first involves the creation of "masa," a mixture of coarse corn flour and water. The masa is hydrated to a level of approximately 50% water content, plus or minus one percent. Hydration is a process whereby moisture thoroughly penetrates each flour particle causing it to swell. Following hydration, the masa is transported by conveyer to a sheeter device, which forms the masa into a thin sheet. A roll cutter then cuts the sheet into the circular shape of a tortilla. The wet circular pieces are subsequently moved to a second conveyor, which brings them to an oven where they are baked at 560 degrees Fahrenheit for approximately 34 seconds. During baking, starch gellatinization occurs, making the still-pliable taco shells edible and decreasing their moisture to 30%. Upon leaving the oven, the taco shells are bent into a "U" shape, ensuring a mouth opening at the top of the shell of between one inch and one and a quarter inch. Finally, the shells are fried in vegetable oil for approximately 24 seconds at 360 degrees Fahrenheit, decreasing their moisture level to 5% and increasing their oil content to 30%. This process results in the creation of a hardened shell. See Tr. 33-41; 125-28; Processing Guide for Taco Bell Products, Pl.'s Conf. Ex.

Page 1126

2; Textbook Flowchart and Graphics, Def.'s Ex. D (description of taco shell commercial production process). The finished taco shells are then primarily sold to Taco Bell chain and other Mexican restaurants, where they are filled with meats, cheeses and vegetables, creating an item known in its entirety as a "hard taco." See Tr. 45; 133.

Munchos potato crisps are a fabricated potato snack primarily produced from dehydrated potato flakes, rather than from whole sliced potatoes. Frito-Lay combines several ingredients in the United States in the following approximate proportions to create the batter for a uniform circular article known as a "pellet": 65% dehydrated potato flakes; 25 1/2% corn meal; 8% potato starch; one percent yeast; and a half percent salt. This batter is comprised of up to 25% re-ground dough from previously broken Munchos crisps. Once the batter is mixed, the resulting dough is sheeted, cut into pellets and baked at low temperature to dry. The baking process reduces the moisture content to 10-15%. See Tr. 70-77; Applied Technical Training, Munchos Crispy Potato Snacks: Module I--Pellet Preparation Raw Materials (" Pellet Preparation "), Pl.'s Conf. Ex. 8.

Following baking, the pellets are exported to Mexico, where they are fried for between 11 and 13 seconds at approximately 380 degrees Fahrenheit in a mixture consisting of hydrogenated cottonseed oil, non-winterized direct process soybean oil and partially hydrogenated cottonseed/soybean oil. The frying process causes the pellets to absorb the cooking oil, thereby swelling in size and decreasing in moisture content to 2%. The final result is the creation of potato crisps that are largely uniform in size, color, shape and texture. Munchos potato crisps are packaged in foil bags and sold in supermarkets, convenience stores and other similar retail outlets across the United States. See Tr. 77-78; Applied Technical Training, Munchos Crispy Potato Snacks: Module VII--Pellet Frying (" Pellet Frying "), Pl.'s Conf. Ex. 9.

The HTSUS sections relevant to the Court's discussion are set forth below:
1905 Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa; communion wafers, empty capsules of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products:
* * *
1905.90 Other:
1905.90.10 Bread, pastry, cakes, biscuits and similar baked products, .................... Free
1905.90.90 Other....................... 10% ad valorem
* * *
2005 Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen:
* * *
2005.20 Potatoes:
2005.20.20 Potato Chips ......................................................... ....................10% ad valorem [GSP Free]
2005.20.60 Other .. 10% ad valorem [GSP Free]

Discussion The issue of whether an imported article has been classified under an appropriate tariff provision entails a two-step process: (1) ascertaining the proper meaning of specific terms in the tariff provision; and (2) determining whether the article comes within the description of such terms as properly construed. Sports Graphics, Inc. v. United States, 24 F.3d 1390, 1391 (Fed.Cir.1994). The first step is a question of law, whereas the second is a question of fact. See Universal Elecs., Inc. v. United States, 112 F.3d 488, 491 (Fed.Cir.1997). Customs' classification is assumed by statute to be correct and plaintiffs bear the burden of showing otherwise. Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed.Cir.1994) (citing 28 U.S.C. § 2639(a)(1)). However, this presumption extends only to Customs' factual findings, and not its interpretation of relevant law. See Rollerblade, Inc. v. United States, 112 F.3d 481, 484 (Fed.Cir.1997); Goodman Mfg., L.P. v. United States, 69 F.3d 505, 508 (Fed.Cir.1995). Pursuant to 28 U.S.C. § 2640(a), Customs' classification decision is subject to de novo review. The Court must determine "whether the government's classification is correct, both independently and in comparison with the importer's alternative." Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed.Cir.1984). The definition and scope of terms in a provision of the HTSUS is to be determined by the wording of the statute and any relative section or chapter notes. Gen. Page 1127 R. Interp. 1, HTSUS; Amity Leather Co. v. United States, 20 CIT 1049, ----, 939 F.Supp. 891, 895 (1996). The language of a statute is determinative unless legislative intent is clearly in contrast. See Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 64 L.Ed.2d 766 (1980); Lynteq, Inc. v. United States, 976 F.2d 693, 696 (Fed.Cir.1992). However, if a tariff term is not clearly defined by the HTSUS, and if legislative history is not determinative of its meaning, its correct meaning is resolved by ascertaining its common and commercial meaning. Mita Copystar, 21 F.3d at 1082; see also Amity Leather, 20 CIT at ----, 939 F.Supp. at 894. To determine the common meaning of a tariff term, the Court may utilize standard dictionaries and scientific authorities, as well as its own understanding of the term. Lynteq, 976 F.2d at 697. The...

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