998 F.Supp. 1133 (CIT. 1998), 95-05-00637, Baxter Healthcare Corp. of Puerto Rico v. United States

Docket Nº:Court No. 95-05-00637.
Citation:998 F.Supp. 1133
Party Name:BAXTER HEALTHCARE CORPORATION OF PUERTO RICO, Plaintiff, v. UNITED STATES, Defendant. Slip Op. 98-16.
Case Date:February 24, 1998
Court:Court of International Trade
 
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Page 1133

998 F.Supp. 1133 (CIT. 1998)

BAXTER HEALTHCARE CORPORATION OF PUERTO RICO, Plaintiff,

v.

UNITED STATES, Defendant.

Slip Op. 98-16.

Court No. 95-05-00637.

United States Court of International Trade.

Feb. 24, 1998

Page 1134

[Copyrighted Material Omitted]

Page 1135

Katten Muchin & Zavis (Mark S. Zolno, Michael E. Roll), New York City, for Plaintiff.

Frank W. Hunger, Asst. U.S. Atty. General of U.S.; Joseph I. Liebman, Attorney-in-Charge, International Trade Office, Commercial Litigation Branch, Civil Division, U.S. Dept. of Justice (Barbara Silver Williams), Sheryl A. French, Office of Asst. Chief Counsel, U.S. Customs Service, for Defendant.

OPINION

CARMAN, Chief Judge.

This case is before this Court on cross-motions for summary judgment pursuant to U.S. CIT R. 56. Plaintiff, Baxter Healthcare Corporation of Puerto Rico ("Baxter"), challenges the United States Customs Service's ("Customs") classification of the merchandise at issue under subheading 5404.10.8080 of the Harmonized Tariff Schedule of the United States ("HTSUS") 1 , at a duty rate of 7.8% ad valorem as a "synthetic monofilament of 67 decitex or more and of which no cross-sectional dimension exceeds 1 mm". Plaintiff argues the merchandise at issue is neither synthetic nor a monofilament, but is classified properly in subheading 9019.20.0000, HTSUS, as part of an "artificial respiration apparatus" because it is a part of plaintiff's UNIVOX blood oxygenator. Alternatively, plaintiff argues blood oxygenators and their parts are classified properly in subheading 9018.90.7080, HTSUS, as part of an "electro-medical apparatus". Plaintiff requests this Court order Customs to reliquidate plaintiff's entries under subheading 9019.20.0000, HTSUS, dutiable at 4.2% ad valorem, or alternatively under subheading 9018.90.7080, HTSUS, dutiable at 3.8% ad valorem, and refund all excess duties with interest as provided by law. Plaintiff also moves for oral argument on its Motion for Summary Judgment and defendant's Cross-Motion for Summary Judgment, contending oral argument on the issues raised in the pending motions will aid the Court in reaching its decision.

Defendant cross moves for summary judgment, requesting this Court deny plaintiff's motion and dismiss this action. Defendant argues the merchandise at issue falls within the definition of a synthetic monofilament set forth in the HTSUS, the Explanatory Notes and all lexicographic sources. Alternatively, defendant argues even if the merchandise at issue were classifiable as a part of an oxygenator, it is not classifiable as an artificial respiration apparatus, nor as part of an electro-medical apparatus, but rather as an "electro-surgical apparatus" under subheading 9018.90.60, HTSUS, dutiable at a rate of 7.9% ad valorem.

This Court has jurisdiction under 28 U.S.C. § 1581(a) (1988) and this action is before the Court for de novo review under 28 U.S.C. § 2640(a)(1) (1988). For the reasons which follow, this Court denies plaintiff's Motion for Summary Judgment and grants defendant's Cross-Motion for Summary Judgment. The Court denies plaintiff's Motion for Oral Argument.

BACKGROUND

A. Subject Merchandise

Plaintiff, the importer of the merchandise at issue in this case, described the merchandise on its commercial invoices as the "Oxyphan (R) Capillary Membrane for Oxygenation." (Pl.'s Stmt of Mater. Facts at 1.) The trademarked name of the merchandise sold to plaintiff is OXYPHAN. Plaintiff imports the merchandise at issue from Germany and purchases the OXYPHAN capillary membrane from Akzo Nobel Faser AG.

The merchandise at issue is produced using a thermally induced phase separation process. During this process, a polymer (polypropylene) is melted and mixed with two natural seed oils (soy and castor oil), and the mixture is extruded through a spinneret. During the cooling phase, the oils are separated and removed from the polymer, creating pores in the membrane. Once the cooling phase is complete, the membrane is dried and wound on spools. Baxter purchased the merchandise on spools that contained approximately ten kilometers of finished membrane.

Page 1136

The merchandise at issue was always sold to Baxter by the length of the capillary membrane contained on a spool (in kilometers) and never by decitex. 2 The membrane was not subject to a drawing process 3 during manufacture. Baxter used the merchandise at issue solely in the production of its UNIVOX oxygenators, which are utilized almost exclusively to oxygenate blood in connection with surgical procedures.

The merchandise at issue was liquidated by Customs under subheading 5404.10.8080, HTSUS, at a duty rate of 7.8% ad valorem as "synthetic monofilament of 67 decitex or more and of which no cross-sectional dimension exceeds 1 mm".

Plaintiff protested Customs' classification of the merchandise within the time provided by law. Customs subsequently denied plaintiff's protest on December 3, 1991, in Headquarters Ruling ("HQ") 950047. In HQ 950047, Customs concluded "[a]ll the specifications of the subject merchandise meet the prerequisites of Heading 5404, HTSUS[ ], and classification is therefore proper within this provision of the Nomenclature." HQ 950047 (December 3, 1991). After having paid all liquidated duties, plaintiff timely commenced this action.

B. Statutory Provisions at Issue

The parties rely on the following provisions of the HTSUS:
(1) Plaintiff's Proposed Subheading
9019 Mechano-therapy appliances; massage apparatus; psychological aptitude-testing apparatus; ozone therapy, oxygen therapy, aerosol therapy, artificial 5respiration or other therapeutic respiration apparatus; parts and accessories thereof:
....
9019.20.000 Ozone therapy, oxygen therapy, aerosol therapy, artificial respiration or other therapeutic respiration apparatus; parts and accessories thereof .............................................. 3.7%
(emphasis added).
(2) Plaintiff's Alternative Subheading
9018 Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electro-medical apparatus and sight-testing instruments; parts and accessories thereof:
....
9018.90 Other instruments and appliances and parts and accessories thereof:
....
9018.90.70 Other:
....
9018.90.7080 Electro-medical instruments and appliances and parts and accessories thereof:
....
Other
....
Other ............. 4.2%
(emphasis added).
(3) Subheading Used by Customs in Classifying and Liquidating the Merchandise at Issue
5404 Synthetic monofilament of 67 decitex or more and of which no cross-sectional dimension exceeds 1 mm; strip and the like (for example, artificial straw) of synthetic textile materials of an apparent width not exceeding 5 mm:
5404.10 Monofilament:
....
Other:
....
Other ................. 7.8%
(emphasis added).
(4) Defendant's Proposed Alternative Subheading
9018.90.60 Electro-surgical instruments and appliances, other than extracorporeal shock wave lithotripters; all the foregoing and parts and accessories thereof .................. 7.9%

Page 1137 CONTENTIONS OF THE PARTIES Plaintiff argues Customs erred in classifying the merchandise at issue as a synthetic monofilament in subheading 5404.10.8080, HTSUS, "because the OXYPHAN TM)) capillary membrane does not meet the definition of a 'synthetic monofilament.' It is neither synthetic, nor is it a 'monofilament.' " (Pl.'s Mem. in Supp. of Mot. for Summ. J. ("Pl.'s Br.") at 7-8.) Plaintiff argues the merchandise is a part of a blood oxygenator which is classified properly as an "artificial respiration apparatus" in subheading 9019.20.0000, HTSUS, or alternatively, as an "eletromedical apparatus" in subheading 9018.90.7080, HTSUS. Based on these arguments, plaintiff requests this Court order Customs to reliquidate the entries of the merchandise at issue under subheading 9019.20.0000, HTSUS, dutiable at 4.2% ad valorem, with interest as provided for by law, or alternatively under subheading 9018.90.7080, HTSUS, dutiable at 3.8% ad valorem, with interest as provided for by law. Defendant argues the merchandise at issue fits the definition of a synthetic monofilament set forth in the HTSUS, the Explanatory Notes and all lexicographic sources and thus was properly classified under subheading 5404.10.8080, HTSUS, as a "synthetic monofilament of 67 decitex or more and of which no cross-sectional dimension exceeds 1 mm". Defendant maintains that according to the HTSUS, Explanatory Notes, and lexicographic authorities, the merchandise at issue Page 1138 is not part of another article but "is simply a material." (Def.'s Mem. in Supp. of Def.'s Cross-Mot. for Summ. J. and in Opp'n to Pl.'s Mot. for Summ. J. ("Def.'s Br.") at 5.) Defendant further argues even if the merchandise at issue were classifiable as part of an oxygenator, it is not classifiable under subheading 9019, HTSUS, as an artificial respiration apparatus because "[t]he imported monofilament does not perform the same functions as articles ejusdem generis with artificial respiration apparatus." ( Id.) Defendant additionally contends because the imported monofilament meets the description for electro-surgical apparatus, "it would not be classified[, as plaintiff contends,] in the basket provision for electro-medical apparatus, heading 9018.90.70", but would rather "be classifiable as an electro-surgical apparatus...

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