Basf Corp. v. U.S.
| Decision Date | 28 February 2006 |
| Docket Number | Court No. 02-00260.,Slip Op. 06-28. |
| Citation | 427 F.Supp.2d 1200 |
| Parties | BASF CORPORATION, Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Barnes, Richardson & Colburn (James S. O'Kelly, Frederic D. Van Arnam, Jr., Kevin Sullivan), New York City, for Plaintiffs.
Peter D. Keisler, Assistant Attorney General, Barbara S. Williams, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Bruce N. Stratvert), Michael W. Heydrich Office of General Counsel, United States Customs Service, of counsel, for Defendant.
This opinion and judgment follow a bench trial. The issue before the Court is the tariff classification of Plaintiff's, BASF Corporation ("BASF" or "Plaintiff'), trademarked polyisobutylene amine ("PIBA") in a solution of hydrocarbon solvent. The trade name of Plaintiff's PIBA in solvent is PURADD® FD-100. In the United States, PURADD® FD-100 is used in the production of gasoline detergent additive packages. At importation, the United States Customs Service1 ("Customs" or "Defendant") classified PURADD® FD-100 in tariff subheading 3811.19.00 of the Harmonized Tariff Schedule of the United States ("HTSUS").2 Customs now claims that the correct classification of PURADD® FD-100 is in HTSUS subheading 3811.90.00. Plaintiff submits that PURADD® FD-100 is properly classifiable in HTSUS tariff subheading 3902.20.50. Upon due consideration of the evidence presented at trial, post-trial briefs, and other papers presented herein, this Court enters judgment for Defendant.
The facts of this case were also set forth in this Court's opinion denying Defendant's motion for summary judgment. BASF Corp. v. United States, 28 CIT ___, 341 F.Supp.2d 1298 (2004). For ease of reference, certain pertinent facts are reiterated here. Additional Court-found facts will be set forth herein.
This case involves seven entries of PURADD® FD-100 that BASF made between January and July 2000. Based upon a 1995 tariff classification ruling, Customs classified the relevant entries of PURADD® FD-100 at importation under tariff subheading 3811.19.00, which covers "antiknock preparations . . . for mineral oils (including gasoline)" that are not based upon lead compounds. HQ 956585 (Apr. 10, 1995).3 After the entries in question were made, Customs revoked HQ 956585 and reclassified PURADD® FD-100 in tariff subheading 3811.90.00, as a gasoline detergent additive. HQ 964310 (June 26, 2001.) Because the revocation of HQ 956585 occurred after the seven entries at issue were made, the entries before this Court were entered in reliance on HQ 956585 in tariff subheading 3811.19.00. (See Pl.'s Summons (Mar. 26, 2002); Pl.'s Compl. ¶ 5.) Plaintiff filed timely protests on the seven entries claiming that PURADD® FD-100 was properly classifiable under tariff subheading 3902.20.50. Customs denied BASF's protests. Thereafter, Plaintiff filed a timely appeal of the denied classification protests to this Court. (See Pl.'s Summons.)
During trial, this Court heard and received evidence from both parties, and the Court found both Plaintiff's and Defendant's witnesses to be credible.
PURADD® FD-100 is Plaintiff's trade name for polyisobutylene-amine diluted in a saturated hydrocarbon solvent. (Trial Tr. 43.) Plaintiff's parent corporation, BASF AG, manufactures PURADD® FD-100 in Ludwigshafen, Germany. PURADD® FD-100 is manufactured in a three-step process. First, BASF AG, manufactures the base polymer GLISSOPAL® 1000 in Belgium. GLISSOPAL® 1000 is a highly reactive polyisobutene ("PIB"). (Id. at 44.) In Ludwigshafen, BASF AG dilutes the highly reactive PIB with forty-seven percent (47%) by weight of an inert saturated hydrocarbon solvent. The solvent reduces the viscosity of the PIB and ensures that it can be pumped safely. (Id.) Second, BASF AG creates a reaction between the PIB-hydrocarbon solvent solution and carbon monoxide and hydrogen. The result of this reaction is a polyisobuteneoxo product. (Id.) After this reaction occurs, BASF AG removes the catalyst. The last step in the manufacture of PURADD® FD-100 is "a reaction between the polyisobuteneoxo product and ammonia at elevated temperature and pressure in the presence of hydrogen and a fixed bed transition metal catalyst." (Id. at 44-45.) "The resulting product is a solution of the PIBA in the saturated hydrocarbon solvent." (Id. at 45.) According to Plaintiff's witness, "more than 97 percent by weight of the PIBA is PIB." (Id. at 43.) At this point, BASF AG considers PURADD® FD-100 a saleable, finished, specialty chemical. (Id. at 46, 97, 148.)
Both PIB and PIBA are "sticky" substances. (Id. at 47.) BASF AG adds the saturated hydrocarbon solvent to the PIB to reduce viscosity and to safely pump, process, and store the PIB and PIBA. (Id.) The saturated hydrocarbon solvent is present throughout the manufacturing process. (Id.) Although the ratio of PIB to saturated hydrocarbon solvent has changed over time, "[t]he solvent has never exceeded 50 percent by weight of the imported product." (Id.) Plaintiff's witness testified that the solvent "has no impact on the PIBA's chemical structure or its performance as a detergent[-]active component in prepared additive packages for gasoline." (Id.)
BASF is the sole importer of PURADD® FD-100 into the United States. (Id. at 256.) Nearly all of the imported PURADD® FD-100 is used by BASF as a component of the detergent additive packages BASF sells. (Id. at 257.) However, BASF has sold small quantities of PURADD® FD-100 for non-fuel additive applications. (Id.)
At the time of importation, the Environmental Protection Agency ("EPA") required that all gasoline transferred or sold to an ultimate consumer contain a certified detergent additive that was effective at controlling port fuel injector deposits and intake valve deposits in gasoline engines. 40 C.F.R. 80.161(a)(2) (2000). In its imported condition, PURADD® FD-100 is not an EPA certified detergent additive package.4 (Trial Tr. 284; 397-98). After importation, PURADD® FD-100 is blended with other items (i.e., synthetic carrier, solvents, etc.) to formulate certified deposit control additive ("DCA") packages. (Id. at 259.) PURADD® FD-100 is the "detergent-active component"5 of a formulated DCA package. (Id. at 61, 185.) BASF sells the blended DCA package to gasoline retailers who add it to gasoline before it is sold to consumers at the pump.
In advance of trial, the parties agreed to the following facts:
1. The imported merchandise is currently sold under the trade name PURADD® FD-100.
2. PURADD® FD-100 is a registered trademark of BASF Corporation.
3. PURADD® FD-100 was previously known as PLURADYNE® FD-100.
4. PURADD® FD-100 is a clear, colorless liquid.
5. The PURADD® FD-100 at issue in this case contains 53% PIBA and 47% saturated hydrocarbon solvent.
6. PURADD® FD-100 is in primary form.
7. The saturated hydrocarbon solvent in PURADD® FD-100 constitutes less than 50 percent of PURADD® FD-100 by weight.
8. PURADD® FD-100 is commonly used as a component of prepared additive detergent packages, which are known in the industry as deposit control additive packages ("DCA package") or detergent additive packages.
9. After importation into the United States, PURADD® FD-100 is blended together with a synthetic carrier oil, and anti-corrosive and other ingredients to produce a fully formulated DCA package, which is then ready for sale to, and use by, gasoline marketers and retailers.
10. Only after PURADD® FD-100 is manufactured into a fully formulated DCA package is there a product that meets the performance specifications of gasoline marketers and retailers.
11. PURADD® FD-100 does not meet the performance specifications of gasoline marketers and retailers.
12. VW Wasserboxer Inlet Valve Sticking Tests performed using a Volkswagen engine showed that PURADD® FD-100 caused inlet valve sticking.
13. Fully formulated DCA packages containing PURADD® FD-100 as the detergent[-]active component are certified by the U.S. Environmental Protection Agency ("EPA") for use in the United States as detergent additive packages.
14. PURADD® FD-100 is not sold or used in the United States as an antiknock preparation.
15. PURADD® FD-100 is not sold or used in the United States as an oxidation inhibitor.
16. PURADD® FD-100 is not sold or used in the United States as an anti-icing preparation.
17. PURADD® FD-100 is not sold or used in the United States as a gum inhibitor.
(Pretrial Order ("PTO"), Schedule C.)
Whether PURADD® FD-100 is properly classifiable in HTSUS tariff subheading 3811.90.00 or under tariff subheading 3902.20.50.
The two HTSUS tariff subheadings at issue provide in relevant part:
Chapter 38
3811 Antiknock preparations, oxidation inhibitors, gum inhibitors, viscosity improvers
anti-corrosive preparations and other prepared additives, for mineral oils
(including gasoline) or for other liquids used for the same purposes as mineral
oils
3811.90.00 Other ............................................................1.5¢/kg + 9.3%
Chapter 39
3902 Polymers of propylene or of other olefins, in primary forms
3902.20 Polyisobutylene
...
3902.20.50 Other ............................................................ 6.5%
...
PARTIES' CONTENTIONS
At the Court's request, the parties submitted post-trial briefs. The positions of the parties as set forth in their respective briefs are summarized below.
Plaintiff's position is that PURADD® FD-100 is properly classifiable only in tariff subheading 3902.20.50. Plaintiff identifies three requirements that must be met in order for PURADD® FD-100 to be classifiable in HTSUS heading 3902: the imported article must be "(A) a polymer, (B) of...
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