Alcan Aluminum Corp. v. U.S.

• Decision Date: 21 November 1997
• Docket Number: Court No. 94-09-00539.,Slip Op. 97-156.
• Citation: 986 F.Supp. 1436
• Parties: ALCAN ALUMINUM CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

986 F.Supp. 1436

ALCAN ALUMINUM CORPORATION, Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 97-156.

Court No. 94-09-00539.

United States Court of International Trade.

November 21, 1997.

Barnes, Richardson & Colburn (Rufus E. Jarman, Jr. and Frederic D. Van Arnam, Jr.), New York City, for plaintiff.

Frank W. Hunger, Assistant Attorney General, Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Amy M. Rubin); and Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs Service (Mark G. Nackman), of counsel, Washington, DC, for defendant.

Opinion & Order

AQUILINO, Judge.

This action, which has been designated a test case within the meaning of CIT Rule 84(b), contests imposition of merchandise-processing fees on imports from Canada at a rate allegedly at odds with the Free Trade Agreement in effect between that country and the United States on the dates of entry. The fees collected by the U.S. Customs Service were 0.19 percent ad valorem pursuant to 19 U.S.C. § 58c(a) (1993), while the plaintiff relies on the mandate of subsection 58c(b)(10) that such a fee be in accordance with article 403 of the Agreement, ergo 0.038 percent ad valorem.

I

The salient facts have either been stipulated by the parties in the pretrial order or adduced at trial. They include:

4. The imported items at issue are unwrought aluminum ingots imported directly from Canada.

5. The[y] ... are classifiable under subheading 7601.10.60, HTSUS, if not alloyed[,] and under subheading 7601.20.90, HTSUS, if alloyed.

6. The primary purpose of the imported merchandise is to ... be further processed ... into wrought aluminum articles.

* * * * * *

9. The ... Customs Service required the imported merchandise to be entered as goods not originating in the territory of Canada.

10. The[y] ... contain an additive comprised of aluminum, titanium and boron (the "Additive").

11. The Additive is the product of a country not ... Canada or the United States[].

12. At least one percent of the weight of the Additive is attributable to the titanium and boron, with the remainder consisting of pure unwrought aluminum.

* * * * * *

14. If the Additive were not present in the imported merchandise, it would have been treated by Customs as goods originating in ... Canada.

* * * * * *

16. The aluminum in the Additive acts only as a carrier for the Active Ingredients.

17. Because titanium and boron have low solubility in molten aluminum, the(y) ... can not be added directly to the melt from which the imported ingots are cast. Therefore, to achieve the uniform dispersion of the[m] ... throughout the imported merchandise during its manufacture, the titanium and boron are first dissolved in a small amount of pure aluminum and the combination of aluminum carrier and titanium and boron are then added to the melt.

* * * * * *

19. The Additive constitutes less than one percent, by weight and value, of the imported merchandise.

* * * * * *

27. Aluminum producers add grain refiners during ... casting ... to control crystal formation during solidification, reduce ingot cracking, promote the flow of the molten metal, reduce porosity, create better homogeneity of the finished product, promote better mechanical deformation characteristics, improve the mechanical properties of the aluminum, and reduce cost by increasing yields.[¹]

28. Titanium (Ti) and boron (B) ... are added to the aluminum in order to refine the as-cast grain size.... TiAl₃ and TiB₂ [] are micron sized particles present in the additive. TiAl₃ particles partially dissolve in the aluminum, and also react with TiB₂, which does not dissolve, to form very potent nuclei for grain nucleation.

29. In general, fine-grained aluminum is stronger than coarse-grained aluminum....

Pretrial Order, Schedule C.

All liquidated duties and the fees relating to the foregoing merchandise having been paid, and the administrative protest process having run its course, this court is now properly possessed of jurisdiction pursuant to 28 U.S.C. § 1581(a).

II

The dispositive issues, as posited by the plaintiff, are whether the principle de minimis non curat lex counsels disregard of the grain refiner in determining that the aluminum qualified for a reduced processing fee under the Free Trade Agreement with Canada² or whether either a tariff shift or substantial transformation made that additive a good originating there. See id., Schedule F-1; Plaintiff's Pretrial Brief, p. 8.

A

The plaintiff has conceded from the beginning that neither CFTA and the official records of its negotiation nor the United States-Canada Free-Trade Agreement Implementation Act of 1988, Pub.L. No. 100-449, 102 Stat. 1851, and its legislative history "contain[] any reference to the de minimis principle." Complaint, paras. 31, 32. See also Pretrial Order, Schedule C, para. 32. It is also true, as the plaintiff points out, that this principle that the law does not concern itself about trifles³ has found application in court and also in legislation, administrative regulation and even international accord. See, e.g., Seeberger v. Schlesinger, 152 U.S. 581, 14 S.Ct. 729, 38 L.Ed. 560 (1894); Wisconsin Dep't of Revenue v. Wm. Wrigley, Jr. Co., 505 U.S. 214, 112 S.Ct. 2447, 120 L.Ed.2d 174 (1992); Overton & Co. v. United States, 5 U.S.Cust.App. 183, T.D. 34322 (1914); United States v. Cavalier Shipping Co., 60 CCPA 152, C.A.D. 1103, 478 F.2d 1256 (1973); Washington Red Raspberry Comm'n v. United States, 859 F.2d 898 (Fed. Cir.1988); Canada Dry Ginger Ale, Inc. v. United States, 43 Cust.Ct. 1, C.D.2094, 1959 WL 8882 (1959); Carlisle Tire & Rubber Co. v. United States, 10 CIT 301, 634 F.Supp. 419 (1986); 19 C.F.R. § 353.6, § 355.7 (1993). Indeed, the principle is embedded in the North American Free Trade Agreement ("NAFTA")⁴ which supplanted CFTA effective January 1, 1994⁵, and in the statute which the U.S. Congress enacted to effectuate this accord. See North American Free Trade Agreement Implementation Act, Pub.L. No. 103-182, § 202(e), 107 Stat. 2057, 2076-78 (1993).

The threshold issue raised by the plaintiff thus requires the court to first consider the language of CFTA and its related legislation and, only if ambiguity exists, then any reported intent of those who negotiated or drafted the controlling provisions. Paragraph 1 of article 301 of the Agreement set forth the general rule that "Goods originate in the territory of a Party if they are wholly obtained or produced in the territory of either Party or both Parties." Section 202(a)(1) of the implementation act provided, in part:

For purposes of implementing the tariff treatment contemplated under the Agreement, goods originate in the territory of a Party if—

(A) they are wholly obtained or produced in the territory of either Party or both Parties;....

102 Stat. at 1856, 19 U.S.C. § 2112 note (1993). Section 104 of the act tied CFTA to the Harmonized System of classification of merchandise, and a general note of the Harmonized Tariff Schedule of the United States ("HTSUS") governing products for special tariff treatment thereunder, in referring to the act, stated, again in pertinent part, that

goods imported into the customs territory of the United States are eligible for treatment as "goods originating in the territory of Canada" only if—

(1) they are goods wholly obtained or produced in the territory of Canada and/or the United States....⁶

In Xerox Corporation v. United States, 41 F.3d 647, 652 (Fed.Cir.1994), cert. denied, 516 U.S. 817, 116 S.Ct. 72, 133 L.Ed.2d 32 (1995), the court explained that, in

construing a treaty, the terms thereof are given their ordinary meaning in the context of the treaty and are interpreted, in accordance with that meaning, in the way that best fulfills the purposes of the treaty. See United States v. Stuart, 489 U.S. 353, 365-66, 109 S.Ct. 1183, 1190-91, 103 L.Ed.2d 388 (1989) (interpreting a treaty to carry out the intent or expectations of the signatories); Kolovrat v. Oregon, 366 U.S. 187, 193-94, 81 S.Ct. 922, 925-26, 6 L.Ed.2d 218 (1961) (a treaty should be interpreted to carry out its purpose). As discussed in Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176, 102 S.Ct. 2374, 72 L.Ed.2d 765 (1982), the court's role is "limited to giving effect to the intent of the Treaty parties." See generally Restatement (Third) of Foreign Relations Law of the United States, Part III, Introductory Note at 144-145 (1987). The judicial obligation is to satisfy the intention of both of the signatory parties, in construing the terms of a treaty. Valentine v. United States, 299 U.S. 5, 11, 57 S.Ct. 100, 103, 81 L.Ed. 5 (1936) ("it is our duty to interpret [the treaty] according to its terms. These must be fairly construed, but we cannot add or detract from them.")

Unless the treaty terms are unclear on their face, or unclear as applied to the situation that has arisen, it should rarely be necessary to rely on extrinsic evidence in order to construe a treaty, for it is rarely possible to reconstruct all of the considerations and compromises that led the signatories to the final document....

The same, of course, can and has been said for judicial review of domestic enactments. Hence, the "normal source for determining legislative intent is the statutory language itself, `which is presumed to be used in its normal sense, in the absence of proof of a special meaning in the trade.'" Holford USA Ltd. v. United States, 19 CIT ____, ____, 912 F.Supp. 555, 561 (1995), quoting United States v. Esso Standard Oil Co., 42 CCPA 144, 151, 1955 WL 6827 (1955). If a particular word is not defined, a court will "normally construe it in accord with its ordinary or natural meaning." Smith v. United States, 508 U.S. 223, 228, 113 S.Ct. 2050, 2054, 124 L.Ed.2d 138, reh'g denied, 509 U.S. 940, 114 S.Ct. 13, 125 L.Ed.2d 765 (1993), citing Perrin v. United...