Chevron Chemical Co. v. U.S., Slip. Op. 99-72.

Citation59 F.Supp.2d 1361
Decision Date29 July 1999
Docket NumberCourt No. 95-09-01141.,Slip. Op. 99-72.
PartiesCHEVRON CHEMICAL COMPANY, Plaintiff, v. UNITED STATES, Defendant.
CourtU.S. Court of International Trade

Phelan & Mitri (Michael F. Mitri), Stamford, CT, for Plaintiff.

David W. Ogden, Acting Assistant Attorney General, Joseph I. Liebman, Attorney-in-Charge, International Trade Field Office, Bruce N. Stratvert, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, New York City; Chi S. Choy, Office of the Assistant Chief Counsel, International Trade Litigation, United States Customs Service, New York City, of counsel, for Defendant.

OPINION and ORDER

POGUE, Judge.

I. Introduction

Plaintiff, Chevron Chemical Co., challenges a decision of the U.S. Customs Service ("Customs") denying Plaintiff's protest filed in accordance with section 514 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1514 (1994). The action involves the proper classification for customs duty purposes of Plaintiff's petroleum derivative, AL-304, under the Harmonized Tariff Schedule of the United States ("HTSUS").1 Jurisdiction is predicated on 28 U.S.C § 1581(a)(1994), and, therefore, Customs' classification is subject to de novo review pursuant to 28 U.S.C. § 2640 (1994). This action is before the Court on the summary judgment motions made by Plaintiff and Defendant pursuant to USCIT Rule 56.

Upon liquidation Customs classified the subject AL-304 as a "mixed linear alkylbenzene" under subheading 3817.10.10, HTSUS (1993), and assessed a 17.3% ad valorem duty. Plaintiff claims that the merchandise is properly classifiable under the residual provision, subheading 3823.90.45, HTSUS, which describes a broad category of chemical products not specified or included elsewhere, and is assessed a 7% ad valorem duty. Alternatively, Plaintiff maintains that the merchandise is classifiable as articles returned to the United States, after being exported for alterations, and thus classifiable under subheading 9802.00.50, HTSUS. Under this proposed classification, the merchandise is dutiable at the rate otherwise applicable to the article, assessed only on the cost or value of the foreign alterations.

II. Undisputed Facts

Even though there are differences in the factual positions advanced by each party, summary judgment is appropriate in this action because there is no genuine issues of material fact in dispute.

Plaintiff's imported AL-304, is a mixed linear alkylbenzene. See Defendant's Statement of Additional Material Facts As to Which There is No Genuine Issue to Be Tried ("Def.'s Additional Facts") ¶ 1; Plaintiff's Response to Defendant's Statement of Additional Material Facts ("Pl.'s Response") ¶ 1. Specifically, AL-304 is a mixture of long carbon side-chain monolinear alkylbenzenes and dilinear alkylbenzenes. See Plaintiff's Complaint ("Pl.'s Complaint") ¶ 9; Defendant's Answer ("Def.'s Answer") ¶ 9.

The term "alkylbenzene" describes a compound with two major structural components: the "alkyl" component and the "benzene" component. See Def.'s Additional Facts ¶ 4; Pl.'s Response ¶ 4. The "alkyl" component of the AL-304 is a saturated acyclic hydrocarbon2 group that has between 20 and 24 carbon atoms.3 See Def.'s Additional Facts ¶ 7; Pl.'s Response ¶ 7. The "benzene" component consists of six carbon atoms and six hydrogen atoms forming a benzene ring.4 See Def.'s Additional Facts ¶ 5; Pl.'s Response ¶ 5.

The AL-304 is manufactured for Plaintiff in France from an alpha olefin5 fraction that Plaintiff produces in the United States. See Def.'s Additional Facts ¶ 9; Pl.'s Response ¶ 9. The production process undertaken in France involves the reaction of benzene with the alpha olefin with the aid of a catalyst (hydrofluoric acid).6 See id. There is a chemical reaction that joins a carbon atom of the olefin to a carbon atom of benzene. See id. The result is the subject AL-304.

The AL-304 is used to produce alkylbenzene sulfonic acids that, in turn, are used to produce alkylbenzene sulfonates, i.e., detergent additives in lubricating oils for gasolines and other fuels. See Pl.'s Statement Of Material Facts As To Which There Is No Genuine Issue To Be Tried ¶ 24; Def.'s Additional Facts ¶¶ 18, 19; Pl.'s Response ¶¶ 18, 19; Def.'s Response to Questions Posed by the Court at 1.

III. Standard and Scope of Review

Pursuant to USCIT Rule 56, summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." USCIT R. 56(d); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

As noted above, there is no dispute concerning the basic characteristics of the subject AL-304. Both parties agree that the AL-304 (1) is a mixed linear alkylbenzene (2) consisting of carbon side-chain mono-linear alkylbenzenes and di-linear alkylbenzenes (3) with the "alkyl" component containing a carbon group of approximately between 20-24 carbon atoms and (4) the "benzene" component consisting of six carbon atoms and six hydrogen atoms forming a benzene ring and (5) used to produce alkylbenzene sulfonic acids that, in turn, are used to produce alkylbenzene sulfonates. Accordingly, summary judgment is appropriate here because the material facts as to what constitutes the merchandise are not at issue. See Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1365-66 (Fed.Cir.1998). The Court is then left with the purely legal question involving the meaning and scope of the relevant tariff provisions.7 See Baxter Healthcare Corp., at 1337 (citing Totes, Inc. v. United States, 69 F.3d 495, 498 (Fed.Cir.1995)); see also Sports Graphics Inc. v. United States, 24 F.3d 1390, 1391 (Fed.Cir.1994) (resolving the question of law as to whether particular imported merchandise has been classified under an appropriate tariff provision entails a two step process: (1) ascertaining the proper meaning of the specific terms in the tariff provision; and (2) determining whether the merchandise at issue comes within the description of such terms as properly construed).

IV. Discussion

General Rule of Interpretation ("GRI") 1 for the HTSUS provides that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes...." Gen. R. Interp. 1, HTSUS; see Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed.Cir.1998); Gen. R. Interp. 6 (providing that the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading, section, and chapter notes); Explanatory Notes for the GRI at 1 ("the terms of the headings and any relative Section or Chapter Notes are paramount, i.e., they are the first consideration in determining classification").

A. The Subject Merchandise Is Properly Classifiable Under Heading 3817, HTSUS

Heading 3817, HTSUS, covers "[m]ixed alkylbenzenes and mixed alkylnaphthalenes, other than those of heading 2707 or 2902." Additional U.S. Note 2(c) states that "[f]or purposes of headings 2902, 2907 and 3817, the term `alkyl' describes any saturated acyclic hydrocarbon group having six or more carbon atoms or, subject to note 1 to Chapter 29, any mixtures of such groups averaging six or more carbon atoms."8 As noted, the subject AL-304 is a mixed linear alkylbenzene with a saturated acyclic hydrocarbon "alkyl" component that has between 20 and 24 carbon atoms. It is undisputed that the AL-304 is not a mixture of alkylnaphthalenes, or a mixture of alkylbenzenes described under HTSUS heading 2707 (weight of aromatic constituents must exceed weight of nonaromatic constituents) or heading 2902 (cyclic hydrocarbons, allowing mixtures of isomers of same organic compound only). See Mem. Supp. Pl.'s Mot. Summary J. ("Pl.'s Mem.") at 21-22, 30; Def.'s Additional Facts ¶ 16. Accordingly, the Court finds that the subject AL-304 is expressly provided for under the plain language of subheading 3817.10.10.

Even when merchandise falls within the literal language of the statute, however, such literal interpretation should be rejected if it produces a result contrary to the apparent legislative intent. See Procter & Gamble Mfg. Co. v. United States, 19 C.C.P.A. 415, 419, T.D. 45578, 1932 WL 2122 (1932), cert denied, 287 U.S. 629, 53 S.Ct. 82, 77 L.Ed. 546 (1932); see also EM Indus., Inc. v. United States, 22 CIT ___, ___, 999 F.Supp. 1473, 1478-79 (1998) ("While construing a statute so as to carry out the legislative intent requires that the court first look to the statutory language itself, that does not mean, however, the court is foreclosed from also considering readily available guidance from the Explanatory Notes as to the intended scope of subheadings.") (citation omitted).9

The Explanatory Notes to heading 3817, provide, as follows,

This heading covers mixed alkylbenzenes and mixed alkylnaphthalenes obtained by alkylation of benzene and naphthalene. They have fairly long side-chains and are not of the kind mentioned in the second part of the text of heading 27.07. Mixed alkylbenzenes are used, inter alia, as solvents, and in the manufacture of surface-active agents, lubricants and insulating oils. Mixed alkylnaphthalenes are mainly used for the manufacture of alkylnaphthalene sulphonic acids and their salts.

Harmonized Commodity Description and Coding System, Explanatory Notes (1st ed. 1986) ("Explanatory Notes") at 538.

Plaintiff challenges Customs' classification, arguing that the language of heading 3817, when read together with its Explanatory Notes mandates that the subject AL-304 be classified elsewhere. See Pl.'s Mem. at 20. Thus, Plaintiff maintains, "heading 3817 was not...

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