ARKO INTERN., INC. v. US, Slip Op. 09-149. Court No. 07-00274.

• Decision Date: 22 December 2009
• Docket Number: Slip Op. 09-149. Court No. 07-00274.
• Citation: 679 F. Supp.2d 1369
• Parties: ARKO FOODS INTERNATIONAL, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

679 F.Supp.2d 1369

ARKO FOODS INTERNATIONAL, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 09-149. Court No. 07-00274.

United States Court of International Trade.

December 22, 2009.

Law Offices of Michael R. Doram (Michael R. Doram) for Plaintiff.

Tony West, Assistant Attorney General; Barbara S. Williams, Attorney-in-Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Jason Matthew Kenner, Mikki Cottet); Michael Heydrich, Office of Assistant Chief Counsel, Int'l Trade Litigation, U.S. Customs and Border Protection, of counsel, for Defendant.

OPINION

CARMAN, Judge.

This matter is before the Court on a Motion for Partial Summary Judgment by Plaintiff Arko Foods and a Cross Motion for Summary Judgment by Defendant United States. The parties are in dispute over the correct tariff classification of a frozen dessert known as mellorine, imported by Plaintiff. For the reasons set forth below, Plaintiff's motion is granted in part and denied in part, and Defendant's motion is granted in part and denied in part.

FACTUAL BACKGROUND

Plaintiff is an importer of mellorine from the Philippines.¹ The parties are not in dispute as to the nature of mellorine: it is marketed and sold as a frozen dessert, with a consistency and manner of consumption similar to ice cream; it is eaten in a frozen state in bowls, ice cream cones and sundaes.² The six specific varieties of mellorine involved in this lawsuit are Ube Royale (made with purple yam), Quezo Royale (also known as Quezo Real) (made with cheese), Fruit Salad, Mango, Macapuno (made with coconut preserve), and Durian.³ Mellorine is manufactured from a variety of ingredients, including water, refined sugar, vegetable oil, fruit puree or preserve, corn syrup, skim milk powder, whey, stabilizers, emulsifiers, artificial food flavors, and maltodextrin.⁴ Depending on variety, mellorine may also contain cheese, whole milk powder, purple yam or pieces of fruit.⁵ Mellorine is manufactured by adding fruit or vegetable purees and artificial colors and flavors to a base mixture and then partially freezing the result.⁶ Once partially frozen, distinguishing fruit preserves, vegetable pieces or cheese are then added, before the product is completely frozen, packaged and ready for sale.⁷

Customs and Border Protection ("Customs") classified Plaintiff's mellorine under HTSUS heading 2105 for "Ice cream and other edible ice, whether or not containing cocoa."⁸ Specifically, Customs classified mellorine under HTSUS subheading 2105.00.40,⁹ which applies to "dairy products described in additional U.S. note 1 to chapter 4."¹⁰ Additional U.S. note 1 to chapter 4 encompasses three categories of dairy products, separated by semicolons.¹¹ Customs classified Plaintiff's product under HTSUS subheading 2105.00.40 because it regards mellorine as falling within the first of these three categories as an "article of milk or cream."

PROCEDURAL BACKGROUND

Plaintiff moves the Court for partial summary judgment, asking the Court "to issue an order determining that General Rule of Interpretation GRI 3(b) controls the proper tariff classification of mellorine and to construe the term `articles of milk' in additional U.S. note 1 to Chapter 4 to exclude merchandise in which milk constitutes a minor ingredient, compared to the predominant ingredients."¹² Defendant moves the Court for summary judgment in favor of its proffered classification, asserting that mellorine is properly classified as "ice cream and other edible ice" and as a "dairy product described in additional U.S. note 1 to Chapter 4."¹³

JURISDICTION AND STANDARD OF REVIEW

This Court has jurisdiction pursuant to 28 U.S.C. § 1581(a). "Partial summary judgment is appropriate when it appears that some aspects of a claim are not genuinely controvertible and genuine issues remain regarding the rest of the claim." Ugg Int'l, Inc. v. United States, 17 CIT 79, 83, 813 F.Supp. 848, 852 (1993) (quotations and citations omitted). Summary judgment is appropriate when "there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." USCIT R. 56(c).

Under 28 U.S.C. § 2639(a)(1),¹⁴ "a classification of merchandise by Customs is presumed to be correct ... so the burden of proof is upon the party challenging the classification." Rollerblade, Inc. v. United States, 282 F.3d 1349, 1352 (Fed. Cir.2002) (internal quotations and citations omitted). A party challenging Customs' preferred classification may satisfy its burden of proof simply by demonstrating that Customs' classification is incorrect, without necessarily providing the correct classification. See Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed.Cir.1984). Ultimately, it is "the court's duty ... to find the correct result, by whatever procedure is best suited to the case at hand." Id. The Court of International Trade reviews Customs' protest decisions "upon the basis of the record made before the court." 28 U.S.C. § 2640(a)(1).

When there is a dispute over classification, the court first undertakes the legal question to "construe the relevant classification headings" and then undertakes the factual question to "determine under which of the properly construed tariff terms the merchandise at issue falls." Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1365 (Fed.Cir.1998). When "the nature of the merchandise is undisputed,... the classification issue collapses entirely into a question of law." Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed.Cir.2006) (citations omitted).

DISCUSSION

I. Mellorine Is Properly Classifiable Under HTSUS Heading 2105

A. Parties' Contentions as to HTSUS Heading

The first challenge Plaintiff brings in its motion for partial summary judgment is to the appropriate tariff heading of the HTSUS for mellorine. Plaintiff contends that mellorine is a "composite good" and therefore should be classified according to GRI 3(b).¹⁵ Plaintiff asserts that if GRI 3(b) controls classification, mellorine would either fall under heading 0811, which covers "fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen whether or not containing added sugar or other sweetening matter," or heading 2106, which covers "food preparations not elsewhere specified or included."¹⁶ Plaintiff argues for heading 0811 on the basis of the large quantity, by weight, of fruit in each of the varieties of mellorine.¹⁷

Defendant responds by asserting that only products with "small quantities of sugar" may be classified in heading 0811, and that products such as mellorine, which contain "significant levels of sugar and syrups" cannot be so classified.¹⁸ Defendant also asserts that the small quantities of sugar permitted in frozen fruit and nuts under heading 0811 may only be added in order to "inhibit oxidation and thus prevent the change of colour which would otherwise occur, generally on thawing out," and that sugar is not added to Plaintiff's mellorine for that purpose.¹⁹ Last, Defendant argues that the presence of multiple additional ingredients including "vegetable oil, skim milk powders, corn syrup, stabilizers, emulsifiers, artificial flavors, artificial colors, and maltodextrin" means that mellorine is not prima facie classifiable under heading 0811.²⁰

Defendant also advances arguments in support of its own preferred tariff classification, heading 2105. Defendant asserts that the heading for "Ice cream and other edible ices" is an eo nomine provision, and that products described by the specific name of the heading are therefore appropriately classified in that heading.²¹ For a definition of what constitutes an "edible ice," Defendant points to a food science textbook which states

The broad term, frozen desserts, refers to ice cream and related products. Specific products include ice cream and its lower fat varieties, frozen custard, frozen yogurt, mellorine (vegetable fat frozen dessert), sherbet, water ice and frozen confections. Some of these desserts are served either soft frozen or hard frozen.... The broader category, frozen desserts, also called edible ice, includes products that contain no milk-derived ingredients, e.g., water ices.

(Def.'s MSJ 10 (quoting Ice Cream 1 (2003 6th edition) (emphasis added)).) Defendant also cites to the explanatory notes for heading 2105 which state "this heading covers ice cream, which is usually prepared with a basis of milk or cream, and other edible ice (e.g. sherbet and iced lollipops) whether or not containing cocoa in any proportion."²² Finally, Defendant points to regulations issued by the Food and Drug Administration (FDA) which indicate that ice cream, mellorine and sherbet are all members of a broader category of "frozen desserts."²³

B. Analysis of HTSUS Heading

HTSUS GRIs direct the proper classification of all merchandise and are "applied in numerical order." Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed.Cir.1999). The court may not consult any subsequent GRI unless the proper classification cannot be determined by reference to GRI 1. Conair Corp. v. United States, 29 CIT 888, 891 (2005) (citing Mita Copystar Am. v. United States, 160 F.3d 710, 712 (Fed.Cir.1998)). According to GRI 1, "classification shall be determined according to the terms of the headings and any relative section or chapter notes." HTSUS GRI 1.

The heading under which Customs classified mellorine is HTSUS 2105, "Ice cream and other edible ice, whether or not containing cocoa." HTSUS heading 2105. Mellorine is not ice cream, nor do the parties contend that it is, so the first issue for the Court to decide is whether mellorine is an "other edible ice" within the meaning of this heading.²⁴ The term "other edible ice" is not explicitly defined within the HTSUS, and the Court of Appeals for the Federal Circuit has explained that in such circumstances, the court

may rely upon its own understanding of

...