Bestfoods v. U.S.

• Decision Date: 09 July 2004
• Docket Number: SLIP OP. 04-82.,Court No. 98-12-03230.
• Parties: BESTFOODS, Plaintiff, v. THE UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

342 F.Supp.2d 1312

BESTFOODS, Plaintiff, v. THE UNITED STATES, Defendant.

SLIP OP. 04-82.

Court No. 98-12-03230.

United States Court of International Trade.

July 9, 2004.

Neville Peterson LLP, New York City (John M. Peterson, George W. Thompson and Maria E. Celis) for the plaintiff.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney-in-Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Amy

M. Rubin); and Office of Assistant Chief Counsel, International Trade Litigation, U.S. Bureau of Customs and Border Protection (Yelena Slepak), for the defendant, of counsel.

Opinion

AQUILINO, Judge.

Notwithstanding provision for peanut butter and paste eo nomine by a subheading (2008.11.02 et seq. (1997)) of the Harmonized Tariff Schedule of the United States ("HTSUS") and dictum in Bestfoods v. United States, 260 F.3d 1320, 1322 (Fed.Cir.2001), that "[p]eanut slurry and peanut butter are classified under the same tariff classification, HTSUS 2008.11[ ]", comes the plaintiff in this action with a motion for summary judgment, praying that its merchandise which it describes as "Skippy® brand reduced fat peanut butter spread, a peanut-flavored food preparation imported from Canada",¹ be classified as a nut puree or paste under HTSUS subheading 2007.99.65 or, alternatively, as a condiment per subheading 2103.90.90.

I

Plaintiff's motion, which is made pursuant to USCIT Rule 56, is accompanied by a requisite Statement of Material Facts As To Which No Genuine Issue Exists, to wit:

1. The subject merchandise in its condition as imported is Skippy® reduced fat peanut butter spread, a peanut-flavored food preparation imported from Canada....

2. The United States Food and Drug Administration (FDA) regulations, 21 C.F.R. § 164.150, provide the standard of identity for "peanut butter", and require that, to be labeled and marketed as peanut butter, a product must have no more than 10% other ingredients in addition to its peanut material.

3. The peanut spread contains approximately 40% additional ingredients, including hydrogenated vegetable oil, corn syrup solids, salt, sugar, and a protein/vitamins/mineral mix. This product is not "peanut butter" according to the FDA standard of identity, 21 C.F.R. § 164.150.

4. The FDA permits Bestfoods to market and label the subject merchandise as a "reduced fat peanut butter spread."

5.... [E]ntry number 551-5501565-8 ... was liquidated on April 10, 1998, and Customs classified the subject spread under... HTS[ ] subheading 2008.11.05 as peanut butter.

6. Plaintiff timely protested the classification of the subject merchandise, asserting that it was classified under HTS subheading 2106.90.99, as other food preparations. Upon denial of its protest, plaintiff timely filed this action.

7. Plaintiff[ ] subsequently amended its claim, adding HTS subheading 2007.99.65,² which provides for nut purees and pastes, as an appropriate heading for the classification of the subject spread.

In its response to this statement, the defendant admits paragraphs 4-6 and paragraph 7, save the "validity of the amended claim." As for the first three averments, the defendant:

1. Admits that the subject merchandise is Skippy® reduced fat peanut butter spread. Denies that the subject merchandise is a peanut-flavored food preparation. Avers that the subject merchandise is peanut butter or paste....

2. Admits that the ... FDA[ ] regulations, 21 C.F.R. § 164.150, provide the standard of identity for "peanut butter." Denies that the regulation requires that, "to be labeled and marketed as peanut butter, a product must have no more than 10% other ingredients in addition to its peanut material." Avers that the regulation provides that "seasoning and stabilizing ingredients do not in the aggregate exceed 10 percent of the weight of the finished food." Avers further that 21 C.F.R. § 130.10(a) permits the use of a name of a standardized food to label a substitute food that does not comply with the standard of identity for the standardized food. Avers further that Customs does not have to follow the FDA regulations for purposes of classifying the imported merchandise under the HTSUS.

3. Admits, except denies that the product contains approximately 40% of additional ingredients. Avers that the peanut butter spread contains approximately 34-40% of additional ingredients.... Avers further that the subject merchandise qualifies and may be labeled as a substitute peanut butter.

This response has been served and filed in conjunction with a cross-motion by the defendant for summary judgment that contains its own Statement Of Additional Material Facts As To Which There Are No Genuine Issues To Be Tried, namely:

1. The imported product was invoiced as Skippy Reduced Fat Peanut Butter.

2. The imported product is a peanut paste made primarily of peanuts with the addition of some other ingredients.

3. The imported product looks, tastes and has the consistency of peanut butter.

4. The imported product is advertised, marketed, sold, intended for use and used in the same manner as peanut butter.

5. Dictionary definitions of the term "peanut butter" do not require that it contain more than 90 percent peanuts by weight. Peanut butter is defined in the Oxford English Dictionary (Second Edition) ... as "paste made with ground roasted peanuts," and in the Random House Dictionary for the English Language, (the Unabridged Edition 1969), p. 1060, as "smooth paste made from finely ground roasted peanuts, used as a spread or in cookery." Peanut butter is also described in the Encyclopedia of Food Technology at 683 ... (1974)[ ] as "a cohesive, comminuted food product prepared by dry roasted, clean, sound, mature peanuts from which the seed coat and `hearts' are removed, and to which salt, hydrogenated fat and (optional) sugars, antioxidants and flavors are added."

6. The imported product is peanut butter pursuant to the common meaning of that term found in dictionaries.

7. Peanuts (also known as ground-nuts) are legumes.

8. Peanuts are not nuts botanically.

9. The imported product is not made of nuts.

10. The imported product is not a nut puree, nor a nut paste.

11. The imported product is not a condiment.

The plaintiff denies defendant's foregoing paragraphs 6 and 9-11. As for the others, it responds as follows:

1. Admits that the imported product was invoiced as "reduced fat peanut butter." However, avers that the product is labeled "reduced fat peanut butter spread" and cannot be sold in the United States as "peanut butter." Further avers that the entry for which the invoice was prepared was a related party transaction designed solely to invoke this Court's protest jurisdiction, and thus did not reflect the usual commercial practice.

2. Admits that the importe[d] product is a peanut paste made primarily from peanuts. Avers that the imported product also may be classified as a puree under the H[TSUS]. Further avers[] that approximately 60% of the imported product is made from peanuts and that the remaining 40% of the product consists of hydrogenated vegetable oil, corn syrup, salt, sugar, and other sweeteners.

3. Admits that the imported product resembles peanut butter. Avers that even though the imported product looks like peanut butter, it may not be sold in the United States as peanut butter.

4. Denies. Avers that the subject merchandise is marketed and labeled as a "reduced fat peanut butter spread."

5. Admits that the dictionary terms of peanut butter do not require that peanut butter contain more than 90 percent peanuts by weight. Avers that the peanut butter industry is required to label products "peanut butter" only if they contain 90 percent or more of peanuts pursuant to the F[DA] standard of identity for peanut butter.

* * * * * *

7. Admits. Avers that even though peanuts are legumes in their botanical definition they are considered nuts in the United States.

8. Admits. Avers that even though peanuts are not nuts in their botanical definition they are considered nuts in the United States.

Despite the foregoing differences between the parties over the facts, each side is of the view that summary judgment on its behalf would be appropriate as no genuine issue that requires a trial is joined. See, e.g., Defendant's Cross-Motion for Summary Judgment, p. 1; Plaintiff's Reply Memorandum, p. 4. Having reviewed and considered all their motion papers and exhibits, and as discussed hereinafter, the court concurs that trial is not necessary. The dispositive issues at bar are matters of law.

II

Jurisdiction over this action is pursuant to 28 U.S.C. §§ 1581(a), 2631(a). It stems from rulings requested and received from the U.S. Customs Service by plaintiff's corporate predecessor, in particular HQ 959816 (Feb. 25, 1997), holding that plaintiff's product is classified ... in subheading 2008.11.0500, HTSUS, if imported in quantities that fall within the limits described in additional U.S. note 5 to chapter 20, and dutiable at the 1996 general rate of duty of 1.3 cents per kilogram. If the quantitative limits of additional U.S. note 5 to chapter 20 have been reached, the product will be classified in subheading 2008.11.1500, HTSUS, and dutiable at the 1996 general rate of 147 percent ad valorem. In addition, products classified in subheading 2008.11.1500, HTSUS, will be subject to additional duties based on their value, as described in subheadings 9904.20.01-9904.20.10, HTSUS (1996).

Defendant's Exhibit A, p. 5.

The core of the controversy then as now is that the product "may not meet the standard of identity of the ... FDA[ ] for peanut butter". Id. at 2. To summarize plaintiff's argument renewed at bar, it is that the merchandise is not "peanut butter" in the commercial sense of that term. That foodstuff fails to meet the FDA's standard of identity for peanut butter and cannot be labelled or marketed as such in the United...