Sony Electronics, Inc. v. United States, 122313 USCIT, 09-00043

Docket Nº:09-00043
Opinion Judge:RICHARD K. EATON JUDGE
Party Name:SONY ELECTRONICS, INC., Plaintiff, v. UNITED STATES, Defendant. Slip Op. 13- 153
Attorney:Jack D. Mlawski, Galvin & Mlawski, of New York, N.Y., for plaintiff AmyM. Rubin, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, D.C., for defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General; B...
Judge Panel:Before: Richard K. Eaton, Judge
Case Date:December 23, 2013
Court:Court of Appeals of International Trade
 
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SONY ELECTRONICS, INC., Plaintiff,

v.

UNITED STATES, Defendant.

No. 09-00043

Slip Op. 13- 153

Court of Appeals of International Trade

December 23, 2013

[In this classification case, plaintiffs motion for summary judgment is granted and defendant's cross-motion for summary judgment is denied.]

Jack D. Mlawski, Galvin & Mlawski, of New York, N.Y., for plaintiff

AmyM. Rubin, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, D.C., for defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office; Karen V. Goff, Commercial Litigation Branch, Civil Division, United States Department of Justice. Of counsel on the brief was Chi S. Choy, Office of the Assistant Chief Counsel for Import Administration, United States Customs & Border Protection.

Before: Richard K. Eaton, Judge

OPINION

RICHARD K. EATON JUDGE

At issue is the proper classification of Sony Electronics, Inc.'s ("Sony" or "plaintiff) Sony NSC-GC1 Net-Sharing Cam ("the merchandise" or "NSC-GC1"). Before the court are the cross-motions for summary judgment of plaintiff and of the United States ("defendant") on behalf of United States Customs and Border Protection ("Customs"). Pl.'s Mot. for Summ. J. (ECF Dkt. No. 27); Def's Cross-Mot. for Summ. J. (ECF Dkt. No. 34). The court has jurisdiction pursuant to 28 U.S.C. § 1581(a) (2006).

For the reasons set forth below, plaintiff's motion for summary judgment is granted, defendant's cross-motion for summary judgment is denied, and the court finds that the NSC-GC1 is properly classified as a "digital still image video camera" under Harmonized Tariff Schedule of the United States ("HTSUS") subheading 8525.80.40 because that provision encompasses digital cameras capable of recording both still and moving images. HTSUS 8525.80.40 (2007).

BACKGROUND

The facts described below have been taken from the parties' stipulated facts, their statements of material facts not in dispute, the court's independent examination of the merchandise, and the record. The NSC-GC1 is an electronic device that is capable of digitally capturing and recording still images and moving images. The merchandise is imprinted with the words "NET-SHARING CAM." The merchandise weighs approximately five ounces, has an LCD1 monitor display, a built-in microphone, and uses a rechargeable lithium ion battery.

The merchandise is capable of capturing still images at five different resolutions. It also captures moving images at two resolutions and several different frames per second rates. The NSC-GC1 has only 2MB of user accessible internal memory and is designed to incorporate a removable flash memory stick, which is sold separately, for the storage of more than small numbers of still images or short durations of moving images. The camera records images digitally, saving still images in .jpg2 format and moving images in .mp43 format.

In May of 2007, Sony requested a ruling as to the proper classification of the merchandise, arguing that it should be classified as a "digital still image video camera" under HTSUS 8525.80.40, which carries a duty rate of "free."4 On August 31, 2007, Customs issued Headquarters Ruling ("HQ") H012688. There, it took the position that the NSC-GC1 should be classified as "Television cameras, digital cameras and video camera recorders: Other" under HTSUS 8525.80.50, which carries a duty rate of 2.1% ad valorem.5 In its ruling, Customs described the merchandise as a "digital camera" and opined that "the term 'cam'" which is imprinted on the merchandise "is associated with video as opposed to still images." HQ H012688 (Aug. 31, 2007).

Sony imported the merchandise on November 26, 2007. On entry, Customs classified the merchandise under HTSUS 8525.80.50. Sony timely protested and, after paying all required duties, commenced this action.

STANDARD OF REVIEW

Summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." USCIT R. 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986).

The court reviews Customs' classification decisions de novo, applying the HTSUS General Rules of Interpretation ("GRIs") and the HTSUS Additional U.S. Rules of Interpretation ("ARIs").6 CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364 (Fed. Cir. 2011). A Customs classification determination is entitled to deference "proportional to its 'power to persuade.'" United States v. Mead Corp., 533 U.S. 218, 235 (2001) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)).

DISCUSSION

I. Legal Framework

Classification determinations involve a two-step process by which the court first "ascertain[s] the meaning of the specific terms in the tariff provision" and then "determine[s] whether the goods come within the description of those terms." Kahrs Int'l, Inc. v. United States, 713 F.3d 640, 644 (Fed. Cir. 2013) (citation omitted). The first step is a question of law; the second is a question of fact. Id. If there is no factual dispute regarding what the merchandise is, "the resolution of the classification issue turns on the first step, determining the proper meaning and scope of the relevant tariff provisions." Faus Group, Inc. v. United States, 581 F.3d 1369, 1372 (Fed. Cir. 2009) (citing Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1378 (Fed. Cir. 1999), and Bausch & Lomb, Inc., 148 F.3d 1363, 1365–66 (Fed. Cir. 1998)).

As with any statute, "[w]hen interpreting HTSUS provisions, [courts] must strive to give effect to every word in the statutory text." Deckers Outdoor Corp. v. United States, 714 F.3d 1363, 1371 (Fed. Cir. 2013) (citing Marx v. Gen. Revenue Corp., 133 S.Ct. 1166, 1178 (2013), and Corley v. United States, 556 U.S. 303, 314 (2009)). An interpretation of a tariff provision will be disfavored if it "render[s] other language in [the relevant subheading] superfluous." Id. In other words, courts should construe the provisions of the tariff code in a way that avoids rendering terms redundant, meaningless, or inoperative.

GRI 1 directs that tariff classification initially "be determined according to the terms of the headings and any relative section or chapter notes." Unless there is evidence of a "contrary legislative intent, HTSUS terms are to be construed according to their common and commercial meanings." La Crosse Tech., Ltd. v. United States, 723 F.3d 1353, 1358 (Fed. Cir. 2013) (quoting Carl Zeiss, 195 F.3d at 1379).

After the proper HTSUS heading is determined, the court must determine the appropriate subheading. "At the subheading level, [GRI] 6 controls and gives priority to the terms of those subheadings and any related subheading notes as well as the relevant section, chapter, and subchapter notes" and applies GRIs 1–5 as appropriate. Del Monte Corp. v. United States, 730 F.3d 1352, 1352 (Fed. Cir. 2013) (citations and internal quotation marks omitted); GRI 6 ("Classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules.").

Ultimately, the court has "an independent responsibility to decide the legal issue of the proper meaning and scope of HTSUS terms." Warner-Lambert Co. v. United States, 407 F.3d 1207, 1209 (Fed. Cir. 2005) (citation omitted). The court "is required to decide the correctness not only of the importer's proposed classification but of the Government's classification as well." Jarvis Clark Co. v. United States, 733 F.2d 873, 874 (Fed. Cir. 1984).

II. Summary Judgment is Appropriate

The parties do not dispute the nature or function of the NSC-GC1. They agree that it is a camera capable of digitally capturing still images and moving images. As has been noted, summary judgment is appropriate where, as here, there is no "factual dispute regarding the nature, structure, and use of imported merchandise." Kahrs, 713 F.3d at 644 (citation omitted). Because there is no factual dispute as to the nature of the merchandise, the inquiry here "collapses entirely into a question of law about the meaning and scope of the relevant tariff provisions." Del Monte Corp., 730 F.3d at 1352 (citations and internal quotation marks omitted).

The parties agree, and the court finds, that the merchandise should be classified under Heading 8525 and six-digit subheading HTSUS 8525.80. Heading 8525 is an eo nomine provision, which "includes all forms of the named article." JVC Co. of Am., Div. of U.S. JVC Corp. v. United States, 234 F.3d 1348, 1352 (Fed. Cir. 2000) (citing Carl Zeiss, 195 F.3d at 1379). HTSUS subheading 8525.80 covers "Television cameras, digital cameras and video camera recorders." The Explanatory Note to subheading 8525.80 states that "[t]his group covers cameras that capture images and convert them into an electronic signal." The Explanatory Notes to the Harmonized Commodity Description and Coding System, 4th ed., 85.25 (2007) ("Explanatory Notes"). Because classification to the six-digit subheading is clear, the court's task is to determine the correct eight-digit subheading level, applying GRI 6.

III. The Construction of HTSUS Subheading 8525.80.40

The parties' dispute centers around the scope of HTSUS 8525.80.40. In particular, they argue for different interpretations of the phrase "digital still image video cameras" in HTSUS subheading 8525.80.40. Customs' position is that the phrase "digital still image video cameras" references a single function article capable only of capturing still pictures and recording...

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