Abb, Inc. v. U.S.
| Decision Date | 02 September 2004 |
| Docket Number | Slip op. 04-112.,Court No. 03-00183. |
| Citation | 346 F.Supp.2d 1357 |
| Parties | ABB, INC., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Simons & Wiskin (Philip Yale Simons and Jerry P. Wiskin), for plaintiff.
Peter D. Keisler, Assistant Attorney General, Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Mikki Graves Walser), Michael W. Heydrich, Attorney, Office of the Assistant Chief Counsel, International Trade Litigation, United States Customs Service, of counsel, for defendant.
Plaintiff ABB, Inc. imported three underwater cables into the United States in connection with the Cross Sound Project, which links the New England power grid with the Long Island power grid along the bottom of the Long Island Sound. The United States Customs Service1 classified two of the cables, both high voltage electrical cables, under subheading 8544.60.40 of the Harmonized Tariff Schedule of the United States ("HTSUS"), 19 U.S.C. § 1201 (2000), and classified the other, a fiber optic cable, under subheading 8544.70.00. ABB challenges these classifications on the grounds that, because the three cables were bound together with steel straps after importation, the cables were imported as unassembled parts of a single fiber optic cable "assembled with electrical conductors." Such a cable would be classified under 8544.70.00, duty free.
ABB's administrative protest was denied pursuant to 19 U.S.C. § 1515(a). The court has jurisdiction over this civil action pursuant to 28 U.S.C. § 1581(a). Both ABB and the Government move for summary judgment. Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. CIT R. 56. The court finds that no genuine issues of material fact remain. Because the three fully-manufactured, functioning cables were fastened together after importation through a project-specific bundling process, they cannot be classified as the unassembled parts of a single fiber optic cable or composite machine. Accordingly, the Government's motion for summary judgment is granted and ABB's motion is denied.
I. THE HARMONIZED TARIFF SCHEDULE PROVISIONS IN ISSUE
The relevant HTSUS provisions are Heading 8544 and certain of its subheadings:
8544 Insulated (including enameled or
anodized) wire, cable (including
coaxial cable) and other insulated
electric conductors, whether or not
fitted with connectors; optical fiber
cables, made up of individually
sheathed fibers, whether or not
assembled with electric conductors
or fitted with connectors
8544.60 Other electric conductors, for
a voltage exceeding 1,000 V
8544.60.40 Other
Of copper
8544.70.00 Optical fiber cables
Heading 8544, HTSUS
II. THE MERCHANDISE IN ISSUE
The three articles in issue consist of two high voltage direct current ("HVDC") submarine cables and one fiber optic submarine cable. ABB entered the cables as three separate articles, with each HVDC cable entering under subheading 8544.60.40 at a duty rate of 3.5% of the cable's value and the fiber optic cable entering under subheading 8544.70.00, duty free. Customs classified the articles as entered. After final liquidation, ABB protested the classification, alleging that the three cables were unassembled parts of a single article properly classified under 8544.70.00. Customs denied this protest on April 14, 2003.
The HVDC cables are manufactured by ABB High Voltage Cables AB, in Karlskrona, Sweden. Def.'s Stmt. of Facts at ¶ 2; Pl.'s Resp. to Def.'s Stmt. of Facts at ¶ 11. Each HVDC cable consists of a copper conductor surrounded, in succeeding order, by plastic insulation, water sealing tape, a metallic shield, an inner jacket, tensile armoring, and an outer jacket. Def.'s Stmt. of Facts at ¶ 9; Pl.'s Resp. to Def.'s Stmt. of Facts at ¶ 9; Aff. of Jan Lindhe, ABB Project Installation Manager for the Cross Sound Project, at ¶ 8 [hereinafter Lindhe Aff.]. The HVDC cables have no other use except to transmit direct current electricity. Lindhe Aff. at ¶ 10. The HVDC cables were entered and classified under HTSUS subheading 8544.60.40 at duty rate of 3.5% of their value. Pl.'s Stmt. of Facts at ¶ 6; Def.'s Stmt. of Facts at ¶ 26.
The fiber optic cable was manufactured by Ericsson Network Technologies AB, Hudiksvall, Sweden. Lindhe Aff. at ¶ 9. At the center of the cable are optical fibers individually sheathed with acrylate and arranged around a slotted polyethylene core. Id.; Ericsson Fiber Optic Cable Product and Order Information, Def.'s Resp. Br., Ex. C [hereinafter Ericsson Fiber Optic Cable Information]. The arrangement of optical fibers is protected by an inner polyethylene jacket, a water-proof copper tube, a double layer of steel wire armor, and an outer polyethylene jacket. Def.'s Stmt. of Facts at ¶ 16; Pl.'s Resp. to Def.'s Stmt. of Facts at ¶ 16; Ericsson Fiber Optic Cable Information, Def.'s Resp. Br., Ex. C. The fiber optic cable was classified under subheading 8544.70.00, HTSUS, duty free. Pl.'s Stmt. of Facts at ¶ 5; Def.'s Stmt. of Facts at ¶ 27.
The submarine cables were imported for the Cross Sound Project, which links the New England power grid with the Long Island power grid to provide electricity to Long Island and improve the reliability of the power supply in Connecticut and New England. Def.'s Stmt. of Facts at ¶ 4. The cables connect HVDC substations in New Haven, Connecticut and Brookhaven, New York.
1. The State of the Cables Upon Entry
Each cable was fully-manufactured and functional upon leaving its manufacturing plant. Pl.'s Resp. to Def.'s Stmt. of Facts at ¶¶ 12, 13, & 15 (HVDC cables); id., at ¶¶ 18, 19, 20, 21 (fiber optic cable). After manufacture, the three cables were loaded in Sweden onto a special cable laying vessel, the Sea Spider. Def.'s Stmt. of Facts at ¶ 23; Pl.'s Resp. to Def.'s Stmt. of Facts at ¶ 23. The two HVDC cables were loaded simultaneously in individual compartments in a rotating turntable on the deck of the ship. Lindhe Aff. at ¶ 7. The fiber optic cable was then loaded onto the ship into a circular container known as a "static coil." Id.; VDS Cable bv Project Quality Manual, Sec. 6.4.3.6, Pl.'s Op. Br., Ex. 1. The cables did not undergo further processing prior to the arrival of Sea Spider in the Long Island Sound. Lindhe Aff. at ¶ 14. The Sea Spider crossed the Atlantic Ocean and made its first port of call in New Haven, where the United States Coast Guard inspected the vessel and Customs cleared the cargo. After the ship received clearance from Customs, the Cross Sound Project's installation team arrived on the vessel and made preparations to lay the cables.
3. The Bundling and Laying of the Cables
As the cables were laid in the Long Island Sound, they were bundled together with metal straps. Def.'s Stmt. of Facts at ¶ 33; Pl.'s Resp. to Def.'s Stmt. of Facts at ¶ 33. Laying the cables in a bundle was more efficient and convenient than laying each separately, and the bundle also provided a more accurate means of laying the cables along a predetermined route. Lindhe Aff. at ¶ 17. The size of the three cables would have made it difficult to combine their contents within a single cable at the time of manufacture. Id. The use of separate electrical cables also allows them to cool more efficiently. Id.
The bundling operation was a continuous operation consisting of three stages. Id. First, the two HVDC cables were removed from the turntables on which they were stored during transit. Id. Next, the fiber optic cable was taken from its static coil position. Id. The three cables were then secured together with metal straps at the bundling station on the deck of the ship. Id. Each strap was approximately 10 millimeters wide. The straps were manually placed and tightened around the three cables at intervals ranging from two to five meters. Id.; Def.'s Stmt. of Facts at ¶ 33; Pl.'s Resp. to Def.'s Stmt. of Facts at ¶ 33; see also VDS Cable bv Project Quality Manual, Sec. 6.6.1 (). This spacing interval between the steel bands was specific to the Cross Sound Project, and depended on various factors such as the speed of the cable laying vessel, the use of chafing gear to protect the cables, the depth of the water, and whether the cables were "floated" as they approached the shoreline. Def.'s Stmt. of Facts at ¶ 34; Pl.'s Resp. to Def.'s Stmt. of Facts at ¶ 34. The strapping interval was monitored visually and subject to alteration. The bound portions of the cables descended through the water into a trench dug along a predetermined route by a remote operating vehicle.
The issue before the court is whether a finished fiber optic cable and two finished high-voltage, direct current copper cables are properly classified as a single article if, after importation, they are bound together with steel bands before they are laid on the sea floor. Customs refused to classify the cables in such a manner, treating them as three separate articles. ABB challenges the classification on the ground that HTSUS subheading 8544.70.00, which Customs applied to the fiber optic cable only, instead should have covered all three cables as unassembled pieces of a single fiber optic cable "assembled with electric conductors." In the alternative, ABB contends that the cable bundle is a composite machine...
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