Autolliance Intern., Inc. v. U.S.

• Decision Date: 22 November 2002
• Docket Number: Slip Op. 02-137.,Court No. 01-01070.
• Citation: 240 F.Supp.2d 1315
• Parties: AUTOALLIANCE INTERNATIONAL, INC. Plaintiff, v. UNITED STATES OF AMERICA, Defendant.
• Court: U.S. Court of International Trade

240 F.Supp.2d 1315

AUTOALLIANCE INTERNATIONAL, INC. Plaintiff, v. UNITED STATES OF AMERICA, Defendant.

Slip Op. 02-137.

Court No. 01-01070.

United States Court of International Trade.

November 22, 2002.

Baker & Hostetler, LLP (Shelby F. Mitchell), Washington, DC, for Plaintiff.

Robert D. McCallum, Jr., Assistant Attorney General, John J. Mahon, Acting Attorney in Charge, International Trade Field Office, Harry A. Valetk, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Yalena Slepak, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs Service, for Defendant, of counsel.

OPINION

CARMAN, Chief Judge.

Pursuant to U.S. CIT R. 12(b)(1), the defendant, the United States, moves to dismiss this action for lack of subject matter jurisdiction. Defendant argues that because the plaintiff, AutoAlliance International, Inc. ("AAI"), failed to file a summons in this Court challenging the partial denial of the protests to the original liquidation, the original liquidation of the subject merchandise has become final and conclusive. Plaintiff opposes Defendant's motion asserting that this Court has subject matter jurisdiction under 28 U.S.C. § 1581(a) (2000). This Court has jurisdiction to resolve this question under 28 U.S.C. § 1581(a). For the following reasons, Plaintiffs valuation claim is severed and dismissed and Plaintiffs classification claim is limited to review of the United States Customs Service's ("Customs") choices to classify the subject merchandise as functional units. Plaintiffs Motion for Oral Argument or in the Alternative, Leave to File a Sur Reply is denied.

BACKGROUND

In September and October 1991, AAI imported nine shipments of automobile production machinery consisting of welding machines and related equipment. (PL's Summons, Form 1-1.) After extending the time for liquidation, Customs finally liquidated the subject entries on August 11, 1995. (Def.'s Mem. in Supp. of Mot. to Dismiss at 1 ("Def.'s Br."); PL's Opp. to Def.'s Mot. to Dismiss at 3 ("Pls' Br.").) At liquidation, Customs classified the various pieces of imported equipment as separate items of equipment. (Pl's Summons, Form 1-2.) Additionally, in accordance with a 1995 Headquarters Ruling,¹ Customs applied a value advance for "design and development" costs ("Value Advance") in the calculation of the dutiable value of items classified under Subheading 8428.90 of the Harmonized Tariff Schedule of the United States ("HTSUS") and Subheading 7308.90 of the HTSUS. (Id.)

Following the liquidation, AAI filed two protests, Protest Nos. 1101/95-100680 and 1101/95-100704 ("Initial Protests") (Pl's Compl. Ex. C and D.) The Initial Protests challenged the original liquidation on two separate grounds. First, AAI challenged Customs' classification and presented two alternative classification approaches: 1) that all of the merchandise should have been classified as a single "macro" functional unit of welding equipment; or 2) that the merchandise should be classified by job numbers as multiple functional units of welding equipment or functional units of material handling equipment. (Attachment B in Support of Initial Protest No. 1101/95/100704, Pl's Compl. Ex. D at 2-4.) Second, AAI challenged the application of the Value Advance to the subject merchandise. (Id. at 12-16.) Specifically, AAI argued that the research and development costs associated with automobile parts, the subject of the 1995 Headquarters Ruling, did not apply to the production machinery at issue. (Id.)

In response to the Initial Protests, Customs formally issued Headquarters Ruling Letter No. 960755 ("HQ 960755") on October 10, 2000. (Pl's Compl. Ex. E.) Customs ruled that AAFs classification arguments were:

"ALLOWED in PART and DENIED in PART; consistent with this ruling (liquidated classification of article properly classifiable in another provision will result in reliquidation only if the proper classification is at a rate lower of duty than the liquidated classification; if the proper classification is at the same or higher rate of duty than the liquidated classification, the liquidation rate of duty may not be changed (19 U.S.C. 1515(a)). (HQ 960755, Pl's Compl. Ex. E at 15.)

Customs further ruled that,

Pursuant to [the 1995 Headquarters Ruling], the value advance for research and development cost is proper. With regard to this issue, the protest is denied. (Id.)

As to the classification issue, Customs rejected AAI's claim that all of the merchandise constituted one "macro" functional unit. (Id. at 6-7.) Customs agreed that most of the merchandise was classifiable as functional units of welding equipment or functional units of material handling equipment under HTSUS headings 8515 or 8428. (Id. at 7-14.) However, Customs held that certain items, such as safety fences, material handling jigs, and gauges, did not constitute parts of any functional unit and reaffirmed the original classification of these separate items. (Id.) Customs rejected AAI's entire argument as to the Value Advance issue and stated that the 1995 Headquarters Ruling controlled. (Id. at 3-4.)

Accordingly, Customs reliquidated the entries on October 27, 2000. (Pl's Summons, Form 1-1.) At reliquidation, Customs changed the classification of most of the subject merchandise in accordance with AAI's proposed multiple functional units classification approach which resulted in a recalculation of the total duties owing. (Def.'s Br. at 4; Pl's Br. at 6.) However, Customs did not change the classification of certain items, such as the safety fences, material handling jigs, and gauges. (Def.'s Br. at 5; Pl's Br. at 5.) Further, Customs applied the Value Advance as it had in the original liquidation. (Id.)

AAI filed a protest to the reliquidation ("Reliquidation Protest") on January 25, 2001. (Pl's Compl. Ex. F.) AAI argued in the Reliquidation Protest that Customs should have classified all of the merchandise as a single functional unit or that Customs should have included the safety fences, gauges, material handling jigs, etc. in the classification as parts of functional units of welding equipment or material handling equipment. (Attachment B in Support of Reliquidation Protest No. 1101-01-100053 at 2-3, Pl's Compl. Ex. F at 8-9.) Further, AAI reasserted its argument that Customs improperly applied the Value Advance to the entries. (Id. at 4-8, Pl's Compl. Ex. F at 10-14.)

Customs denied AAFs Reliquidation Protest on June 12, 2001. (Pl's Summons, Form 1-1.) Although filed within the requisite 90 days after reliquidation, Customs did not address the merits of AAI's Reliquidation Protest; rather, Customs denied the protest as "Untimely Filed." (Pl's Summons, Form 1-2.) AAI then filed a summons in this Court on December 6, 2001 challenging the denial of the Reliquidation Protests. The summons was filed within 180 days of the denial of the Reliquidation Protests and almost 14 months after Customs issued its decision on the Initial Protests.

STANDARD of Review

The burden of establishing jurisdiction lies with the party seeking to invoke this Court's jurisdiction. Old Republic Ins. Co. v. United States, 741 F.Supp. 1570, 1573 (CIT 1990) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936)). In this case, AAI bears the burden of establishing jurisdiction. If a Rule 12(b)(1) motion to dismiss challenges subject matter jurisdiction based on the sufficiency of a party's pleadings, then those pleadings are construed in a light most favorable to that party. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). However, if the Rule 12(b)(1) motion challenges the factual allegations of jurisdiction in the party's pleadings, the movant is deemed to be questioning the factual basis for the court's subject matter jurisdiction. Trentacosta v. Frontier Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1558-59 (9th Cir.1987) (referencing CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1563, at 653-54 (1969)). In such a case, the allegations in the complaint are not controlling and only the uncontroverted facts are accepted as true. Id.; see also Power-One, Inc. v. United States, 83 F.Supp.2d 1300, 1303 (CIT 1999) (quoting Cedars-Sinai Med. Center v. Watkins, 11 F.3d 1573, 1583-84 (Fed.Cir.1993)). All other facts underlying the controverted jurisdiction are in dispute and are subject to fact-finding by this Court. Power-One, Inc., 83 F.Supp.2d at 1307.

In the present case, Defendant's Rule 12(b)(1) motion to dismiss challenges the basis of AAI's allegations of jurisdiction. Specifically, Customs is questioning AAI's assertion that this action is timely and properly before this Court. Only the uncontroverted facts will be accepted as true.

If, after a review of the pleadings and extrinsic evidence, any doubt remains whether this Court has jurisdiction to hear this action, the Court will refrain from granting Defendant's motion to dismiss. See Hamlet v. United States, 873 F.2d 1414, 1416 (Fed.Cir.1989) (stating that a complaint should only be dismissed if the plaintiff cannot prove any set of facts that would entitle the plaintiff to relief (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957))).

PARTIES' Contentions

A. Defendant's Contentions

Defendant argues that this Court lacks subject matter jurisdiction under 28 U.S.C. § 1581(a) because AAI's claim is untimely. (Def.'s Br. at 5.) Defendant asserts that this Court lacks jurisdiction because AAI failed to commence an action within 180 days after Customs partially denied the Initial Protests in HQ 960755. (Id.) Defendant emphasizes the language in 28 U.S.C. § 2636(a)(1) which states that "[a] civil action contesting the denial, in whole or in part, of a protest under section 515 of the Tariff Act of 1930" must be "commenced within one hundred and eighty days after the date of mailing of...