Allen Sugar Co., H & R Brokerage Div. v. Brady

• Decision Date: 09 February 1989
• Docket Number: Court No. 89-01-00020,89-01-00021.
• Citation: 706 F. Supp. 49,13 CIT 107
• Parties: ALLEN SUGAR COMPANY, H & R BROKERAGE DIVISION, Plaintiff, v. Nicholas F. BRADY, Secretary, United States Department of the Treasury; William Von Raab, Commissioner, United States Customs Service; United States Customs Service; and United States of America, Defendants, United States Cane Sugar Refiners' Association, Defendant-Intervenor. CANADIAN SUGAR INSTITUTE, Redpath Industries, Ltd., Lantic Sugar, Ltd., Plaintiffs, v. Nicholas F. BRADY, Secretary, United States Department of the Treasury; William Von Raab, Commissioner, United States Customs Service; United States Customs Service; and United States of America, Defendants.
• Court: U.S. Court of International Trade

706 F. Supp. 49

13 CIT 107

ALLEN SUGAR COMPANY, H & R BROKERAGE DIVISION, Plaintiff, v. Nicholas F. BRADY, Secretary, United States Department of the Treasury; William Von Raab, Commissioner, United States Customs Service; United States Customs Service; and United States of America, Defendants, United States Cane Sugar Refiners' Association, Defendant-Intervenor.

CANADIAN SUGAR INSTITUTE, Redpath Industries, Ltd., Lantic Sugar, Ltd., Plaintiffs, v. Nicholas F. BRADY, Secretary, United States Department of the Treasury; William Von Raab, Commissioner, United States Customs Service; United States Customs Service; and United States of America, Defendants.

Court Nos. 89-01-00020, 89-01-00021.

United States Court of International Trade.

Decided February 9, 1989.

Miller & Chevalier, Homer E. Moyer, Jr., Washington, D.C., Catherine Curtiss, New York City, and William M. McGlone, Washington, D.C., for Allen Sugar Co., plaintiff.

Steptoe & Johnson, W. George Grandison, Stephen D. Ramsey, Jay H. Reiziss and Anthony LaRocca, Washington, D.C., for Canadian Sugar Inst., Redpath Industries, Ltd., Lantic Sugar, Ltd., plaintiffs.

John R. Bolton, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, John J. Mahon, for defendants.

Wilmer, Cutler & Pickering, Daniel K. Mayers, Washington, D.C., for defendant-intervenor.

OPINION

TSOUCALAS, Judge:

The present action is before the Court on defendants' motion to dismiss for lack of jurisdiction. Plaintiffs¹ challenge the United States Customs Service's (Customs) classification of certain sucrose/dextrose blended sweetener products under item 1701.99.00² of the Harmonized Tariff Schedule of the United States (HTSUS). Plaintiffs claim the Court has jurisdiction under the Court's residual jurisdiction provision, 28 U.S.C. § 1581(i)(3) and (i)(4). Defendants assert that the Court lacks jurisdiction because plaintiffs have failed to exhaust their administrative remedies.

Background

In April of 1988, domestic sugar producers filed a petition pursuant to section 516 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516 (1982 & Supp. IV 1986) and 19 C.F.R. § 175.11, asking Customs to reclassify blended sweetener products from edible preparations containing sugar, item 183.05, Tariff Schedules of the United States (TSUS) and item 958.18, TSUS, to sugar subject to the limited and country specific quotas for pure sugar, item 155.20, TSUS, and item 155.60, TSUS. In the alternative, the petitioners asked Customs to reclassify the product as edible preparations under item 183.05, TSUS, and item 958.15, TSUS, so as to remove them from item 958.18, TSUS, which was under different "global" quota on imports of sugar-containing food products.³

Customs neither acted on the petition nor published notice in the Federal Register, as required by 19 C.F.R. § 175.21(a),⁴ that the petition had been filed and that interested persons could submit comments within a specified time period.

Plaintiff Allen Sugar attempted to import shipments of sucrose/dextrose blends on January 4, 1989, but the merchandise was excluded at the port of Buffalo because it had been reclassified under item 1701.99.00, HTSUS, the corresponding provision for item 155.20, TSUS, which required a different quota certificate before entry.

On January 12, 1989, Customs issued a ruling letter reclassifying the sucrose/dextrose blends under the section for cane or beet sugar, item 1701.99.00, HTSUS, on the grounds that "mixtures consisting of different materials shall be classified as if they consisted of the material which imparts the essential character." Letter Ruling 082230 (Jan. 12, 1989) (emphasis added).

Plaintiffs did not protest the classification pursuant to § 1514, but seek a preliminary injunction restraining Customs from denying entry to blended sweeteners corresponding to item 958.18, TSUS, and from classifying these products under the allegedly comparable category, item 1701, HTSUS, pending resolution of the section 516 petition. Plaintiffs claim jurisdiction is proper under 28 U.S.C. § 1581(i),⁵ since under the circumstances of this case, the filing of a protest is inappropriate and manifestly inadequate. Plaintiffs' Canadian Sugar Memorandum in Opposition to Defendants' Motion to Dismiss at 2.

The Government claims that the section 516 petition is moot as the TSUS was repealed on January 1, 1989, and that jurisdiction under § 1581(i) is not proper because plaintiffs must first exhaust their administrative remedies by filing an administrative protest under § 1514(a). The sole issue to be determined is whether this Court has jurisdiction under § 1581(i).

Discussion

It is incumbent upon a party, when challenging a classification by Customs, to first exhaust its administrative remedies. Nat'l Corn Growers Ass'n v. Baker, 840 F.2d 1547, 1551 (Fed.Cir.1988). Exhaustion of administrative remedies is required in order to "limit judicial review of strictly administrative judgments." Id. A party may bypass the administrative process, however, through invocation of § 1581(i), which "grants the court residual jurisdiction of any civil action arising out of the enforcement or administration of the customs laws." Lowa, Ltd. v. United States, 5 CIT 81, 87, 561 F.Supp. 441, 446 (1983), aff'd, 2 Fed.Cir. (T) 27, 724 F.2d 121 (1984). As plaintiffs attempt to avoid this process, "fairness dictates that only the most extraordinary of circumstances would permit the invocation of jurisdiction under section 1581(i)...." Nat'l Corn Growers, 840 F.2d at 1557.

Section 1581(i) "may not be invoked when jurisdiction under another subsection of § 1581 is or could have been available, unless the remedy provided under that other subsection would be manifestly inadequate." Miller & Co. v. United States, 824 F.2d 961, 963 (Fed.Cir.1987), cert. denied, ___ U.S. ___, 108 S.Ct. 773, 98 L.Ed. 2d 859 (1988) (citing United States v. Uniroyal, Inc., 69 CCPA 179, 186-87, 687 F.2d 467, 475 (1982) (Nies, J., concurring)); Lowa, 5 CIT at 87-88, 561 F.Supp. at 446-47. The party asserting § 1581(i) jurisdiction has the burden to demonstrate the manifest inadequacy of the remedy under 1581(a). Miller, 824 F.2d at 963.

Plaintiffs had the opportunity to protest the exclusion of the subject merchandise and utilize the accelerated disposition procedure provided in § 1515 and 19 C.F.R. §§ 174.21-22. Section 1515(b) provides, in pertinent part, that

a protest which has not been allowed or denied in whole or in part within thirty days following the date of mailing by certified or registered mail of a request for accelerated disposition shall be deemed denied on the thirtieth day following mailing of such request. Emphasis added.)

See also 19 C.F.R. § 174.22(d). Under this procedure, the protest would have been acted upon no more than thirty days after filing, and plaintiffs could then have sought review in this Court through § 1581(a). Plaintiffs' allegations of irreparable injury and severe harm if forced to resort to § 1581(a) are not persuasive.⁶ The Court finds that implementation of the accelerated procedure would have adequately protected plaintiffs' interest. No § 1581(i) jurisdiction is found where importers could have taken steps to qualify under § 1581(a), and the remedy under that subsection would have been adequate. Miller, 824 F.2d at 963 (citing American Air Parcel, 2 Fed.Cir. (T) at 4-7, 718 F.2d at 1549-51). The remedy available to plaintiffs was not manifestly inadequate; it was simply not sought. Consequently, plaintiffs have not met their burden.

Plaintiffs also claim that jurisdiction exists under § 1581(i) because of Customs' nonperformance of the statutory procedures and safeguards outlined in the regulations regarding the domestic sugar industry's section 516 petition. Specifically, that Customs never acted on the petition and never published notice in the Federal Register stating that the petition was filed, and inviting interested parties to comment. 19 C.F.R. § 175.21(a). The conversion from the TSUS to the HTSUS, plaintiffs continue, does not subvert the section 516 process that began on April 22, 1988.

While the Court cannot condone Customs' treatment of the section 516 petition, it remains that the petition involved TSUS classification of blended sweetener products. HTSUS classification of the same products implicates an entirely different law, The Omnibus Trade and Competitiveness Act of 1988, Pub.L. No. 100-418, 102 Stat. 1107 (1988), and whether the goods are correctly classified under the HTSUS entails a proper challenge through the administrative process, as outlined by the relevant statutes. It is, therefore, irrelevant whether Customs appropriately executed its duties regarding the section 516 petition, since the question of classification under the TSUS is not germane to the question of classification under the HTSUS in this circumstance.

Moreover, item 1701.99.00, HTSUS, is under the auspices of different guidelines which employ a different means of characterizing the merchandise. The present guideline, General Rule of Interpretation 3(b), states that the "essential character" of a blend will be the basis of its classification, rather than the product's "chief use," which was the basis under the headnote to repealed item 183.05, Schedule 1, Part 15, Subpart B, Headnote 3, TSUS. Any challenge with respect to the classification, therefore, must be effectuated within the parameters of the present statutory framework.

Plaintiffs are not saved by § 1211(d)(1)(A)(ii), Pub.L. No. 100-418, 102 Stat. 1107, 1154 (1988), which states that the new law does not divest the court of jurisdiction of any petition under section 516 covering articles entered before the effective date of the HTSUS. The section 516 petition here is not a viable section 516 claim since it involves a provision no longer in effect, item 183.05,...