Camelbak Products v. United States

• Decision Date: 16 June 2011
• Docket Number: No. 2010–1420.,2010–1420.
• Citation: 33 ITRD 1065,649 F.3d 1361
• Parties: CAMELBAK PRODUCTS, LLC (Successor–in–Interest to CamelBak Products, Inc.), Plaintiff–Appellant,v.UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

649 F.3d 1361

33 ITRD 1065

CAMELBAK PRODUCTS, LLC (Successor–in–Interest to CamelBak Products, Inc.), Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee.

No. 2010–1420.

United States Court of Appeals, Federal Circuit.

June 16, 2011.

Arthur K. Purcell, Sandler, Travis & Rosenberg, P.A., of New York, NY, argued for plaintiff-appellant. With him on the brief was Larry T. Ordet.Jason M. Kenner, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, NY, argued for defendant-appellee. With him on the brief were Barbara S. Williams, Attorney in Charge; and Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, of Washington, DC.Before BRYSON, CLEVENGER, and PROST, Circuit Judges.Opinion for the court filed by Circuit Judge CLEVENGER. Dissenting opinion filed by Circuit Judge BRYSON.CLEVENGER, Circuit Judge.

This customs case concerns the proper classification of ten styles of CamelBak Products, LLC's (“CamelBak”) back-mounted packs (“subject articles”). ¹ CamelBak appeals the judgment and decision of the United States Court of International Trade denying CamelBak's motion for summary judgment, granting the United States' (the “government”) cross-motion for summary judgment, and holding that the merchandise at issue was properly classified as “travel, sports, and similar bags” under subheading 4202.92.30 of the Harmonized Tariff Schedule of the United States (“HTSUS”).² CamelBak Prods., LLC v. United States, 704 F.Supp.2d 1335 (Ct. Int'l Trade 2010) (“ CamelBak”). For the reasons set forth below, we reverse and remand the case for further proceedings.

I

The subject articles are imported back-mounted packs used for outdoor activities and athletics, including cycling, running, hiking and skiing, and are designed to deliver water to the user in a “hands-free” fashion, allowing the user to consume water on-the-go without having to interrupt activity. Each of the subject articles is a textile bag with padded adjustable shoulder straps and features: (a) a polyurethane reservoir or bladder surrounded by a closed-cell polyethylene foam compartment designed to carry and maintain the temperature of water or another beverage; (b) a hydration delivery system composed of flexible tubing attached to the reservoir, a bite valve and a shutoff valve; and (c) a cargo compartment designed to hold food, clothing, gear and supplies. Each reservoir has a capacity of between 35 and 100 ounces of liquid, and each cargo compartment can accommodate between 300 and 1680 cubic inches, depending on the style of pack.

Between August 6, 2004 and August 27, 2004, U.S. Customs and Border Protection (“Customs”) liquidated and classified the merchandise at issue under subheading 4202.92.30, HTSUS, as “Trunks, ... traveling bags, insulated food or beverage bags, ... knapsacks and backpacks, ... sports bags ... and similar containers ... of textile materials: ... With outer surface of sheeting of plastic or of textile materials: ... travel, sports and similar bags” at a rate of duty of 17.8% ad valorem, based on a prior Customs ruling.³ After liquidation, CamelBak filed a protest. Customs denied the protest and this action commenced, pursuant to 28 U.S.C. § 1581(a), in the Court of International Trade.

The parties filed cross-motions for summary judgment at the trial court addressing the proper classification of the subject articles. In its motion for summary judgment, CamelBak argued that the subject articles constituted “composite goods” made up of two components-the cargo component, which was prima facie classifiable as a “travel, sports, [or] similar bag[ ]” and the hydration component, which was prima facie classifiable as an “insulated beverage bag.” CamelBak contended that the subject articles had to be classified pursuant to General Rule of Interpretation (“GRI”) 3(b)'s essential character test because the two applicable subheadings refer to part only of the subject articles. Specifically, CamelBak argued that the following portions of HTSUS heading 4202 were relevant to the analysis:

4202 Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food and beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper:

Other:

4202.92 With outer surface of sheeting of plastic or of textile materials:

4202.92 Insulated food or beverage bags: With outer surface of textile materials

4202.92.04 Beverage bags whose interior incorporates only a flexible plastic container of a kind for storing and dispensing potable beverages through attached flexible tubing 7%

4292.92.08 Other 7%

4292.92.30 Travel, sports and similar bags: Other 17.8% Applying the essential character test, CamelBak argued that the hydration component (i.e., the insulated beverage bag component) gave the subject articles their essential character and that the subject articles were properly classified as either “insulated food and beverage bags ... whose interior incorporates only a flexible plastic container of a kind for storing and dispensing potable beverages through attached flexible tubing” under subheading 4202.92.04 or, alternatively, “insulated food and beverage bags ... other” under subheading 4202.92.08, both dutiable at a rate of 7% ad valorem.

The government argued that the subject articles were not composite goods, but rather that a single tariff provision—the “travel, sports, and similar bags” provision—applied to the articles in their entirety. Thus, the government contended that Customs properly classified the subject articles as a whole as “travel, sports, and similar bags” under subheading 4202.92.30, HTSUS, through a straightforward application of GRI 1.

The Court of International Trade upheld Customs' classification decision concerning the subject articles and granted judgment for the government. CamelBak appeals, and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

II

We review the grant of summary judgment by the Court of International Trade without deference. See, e.g., Structural Indus., Inc. v. United States, 356 F.3d 1366, 1368 (Fed.Cir.2004). We review questions of law de novo, including the interpretation of the terms of the HTSUS, whereas factual findings of the Court of International Trade, including which heading the merchandise falls within, are reviewed for clear error. Home Depot U.S.A., Inc. v. United States, 491 F.3d 1334, 1335 (Fed.Cir.2007). “A finding is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a ‘definite and firm conviction that a mistake has been committed.’ ” Timber Prods. Co. v. United States, 515 F.3d 1213, 1220 (Fed.Cir.2008) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)).

III

A classification decision involves two underlying steps: (1) ascertaining the proper meaning of the tariff provisions, which is a question of law; and (2) determining which heading the particular merchandise falls within, which is a question of fact. Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed.Cir.2006). The GRIs govern classifications of imported goods under HTSUS and we apply them in numerical order. BASF Corp. v. United States, 482 F.3d 1324, 1325–26 (Fed.Cir.2007).

“Under GRI 1, the court must determine the appropriate classification ‘according to the terms of the headings and any relative section of chapter notes' with all terms construed to their common commercial meaning.” Millenium Lumber Distrib., Ltd. v. United States, 558 F.3d 1326, 1328–29 (Fed.Cir.2009). We apply GRI 1 as a substantive rule of interpretation, such that when an imported article is described in whole by a single classification heading or subheading, then that single classification applies, and the succeeding GRIs are inoperative. See Mita Copystar Am. v. United States, 160 F.3d 710, 712 (Fed.Cir.1998). With regard to assessing an imported article pursuant to GRI 1, we consider a HTSUS heading or subheading an eo nomine provision when it describes an article by a specific name. Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed.Cir.1999). Absent limitation or contrary legislative intent, an eo nomine provision “include[s] all forms of the named article[,]” even improved forms. Id.

However, as we held in Casio, Inc. v. United States, 73 F.3d 1095 (Fed.Cir.1996), when an article “ ‘is in character or function something other than as described by a specific statutory provision—either more limited or more diversified—and the difference is significant,’ ” it is not properly classified within an eo nomine provision. 73 F.3d at 1097 (quoting Robert Bosch Corp. v. United States, 63 Cust.Ct. 96, 103–04, 1969 WL 13787 (1969)). In order to determine whether the subject article is classifiable within an eo nomine provision, we look to whether the subject article is merely an improvement over or whether it is, instead, a change in identity of the article described by the statute. See United Carr Fastener Corp. v. United States, 54 C.C.P.A. 89, 91, 1967 WL 8910, *2–*3 (CCPA 1967). “The criterion is whether the item possess[es] features substantially in excess of those within the common meaning of the term.” Casio, 73 F.3d at 1098 (quotation marks and citation omitted) (emphasis in original).

When goods are prima facie classifiable under two or more headings or subheadings of HTSUS, we apply GRI 3 to resolve the classification. Home Depot, 491...