Cont'l Auto. Sys., Inc. v. United States, Slip Op. 22-94
| Docket Number | Slip Op. 22-94,Court No. 18-00026 |
| Decision Date | 12 August 2022 |
| Citation | 589 F.Supp.3d 1215 |
| Parties | CONTINENTAL AUTOMOTIVE SYSTEMS, INC., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Anastasia P. Cordova, McGuireWoods, LLP, of Washington, D.C. for Plaintiff, Continental Automotive Systems, Inc.
Guy R. Eddon, U.S. Department of Justice, International Trade Field Office, and Brandon A. Kennedy, U.S. Department of Justice, International Trade Field Office, of Washington, D.C., for the Defendant.
Plaintiff Continental Automotive Systems, Inc. ("Continental") brought this action contesting U.S. Customs and Border Protection's ("Customs") tariff classification of the subject merchandise. The merchandise at issue is the probe elements of a nitric oxide ("NOx") sensor ("NOx Sensor Probe"). The NOx Sensor Probe determines the concentration of NOx in the exhaust gases of passenger vehicles and trucks. In cross-motions for summary judgment, Plaintiff argues that the NOx Sensor Probes are properly classified under Heading 9026 of the Harmonized Tariff Schedule of the United States ("HTSUS") and the government argues that Customs properly classified the NOx Sensor Probes under Heading 9027, HTSUS. For the reasons stated below, the government's cross-motion for summary judgment is granted and the Plaintiff's motion is denied.
This case involves NOx Sensor Probes imported in January and February 2017 into the Houston Airport port of entry. Summons, ECF No. 1 (Feb. 22, 2022) ("Summons"). At liquidation, Customs classified the subject merchandise under subheading 9027.10.20, HTSUS,1 which covers "[i]nstruments and apparatus for physical or chemical analysis (for example, ... gas or smoke analysis apparatus) ...: Gas or smoke analysis apparatus: ...: Electrical." 9027.10.20, HTSUS; Pl.’s Statement of Material Facts Not in Dispute ¶ 2, ECF No. 54 (Oct. 13, 2021) ("Pl. Facts"); Def.’s Resp. to Pl.’s Statement of Material Facts ¶ 2, ECF No. 63-2 (Dec. 22, 2021) ( ). Continental timely protested on February 8, 2018, averring that the NOx Sensor Probes were properly classified under subheading 9026.80.20, HTSUS, as "[i]nstruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases ...: Other instruments and apparatus: Electrical." 9026.80.20, HTSUS; Summons at 1–2. Customs relied on the reasoning from a previously issued ruling, HQ H262310,2 and held that the NOx Sensor Probe was classifiable under subheading 9027.10.20, HTSUS—denying Continental's 2017 protest. Summons at 1; Pl. Facts ¶¶ 4, 21; Def. Resp. Facts ¶¶ 2, 4, 21. Continental filed a complaint challenging Customs’ classification. See Am. Compl., ECF No. 30-1 (Oct. 19, 2021). Continental moved for summary judgment with accompanying brief. See Pl.’s Memo. of L. in Supp. of its Mot. for Summ. J., ECF No. 55 (Oct. 13, 2021) ("Pl. Br."); Pl.’s Mot. for Summ. J., ECF No. 51 (Oct. 13, 2021). The Defendant filed a cross-motion for summary judgment and accompanying brief. Def.’s Mem. of L. in Opp'n to Pl.’s Mot. For Summ. J. and in Supp. Of Def.’s Cross-Mot. for Summ. J., ECF No. 64 (Dec. 22, 2021) ("Def. Br.").
The following facts are undisputed. The subject merchandise of this action consists of the probe elements for the NOx sensor. Def.’s Statement of Material Facts ¶ 1, ECF No. 63-1 (Dec. 22, 2021) ("Def. Facts"); Pl.’s Resp. to Def.’s Statement of Material Facts ¶ 1, ECF No. 66 (Jan. 31, 2022) ( ). The NOx sensor consists of three elements: the probe, a wiring harness, and a sensor control unit ("SCU"). Def. Facts ¶¶ 1, 3; Pl. Resp. Facts ¶¶ 1, 3. The most common application for the NOx sensor is in a selective catalytic reduction system, which conditions a vehicle's exhaust gas to remove pollutants before it is emitted. Pl. Facts ¶ 4; Def. Resp. Facts ¶ 4.
Exhaust gas contains many elements including O2, NOx, nitrogen, water vapor, carbon dioxide, carbon monoxide and hydrocarbons. Def. Facts. ¶¶ 10, 12. The NOx Sensor Probe determines the concentration of NOx in exhaust gas by means of a cermet electrode. Def. Resp. Facts ¶ 10; Pl. Facts ¶ 10. When the electrode comes in contact with NOx, an electrochemical reaction occurs which disassociates oxygen from nitrogen and generates an electrical signal that correlates to the concentration of NOx present in the exhaust. Pl. Facts ¶ 10; Def. Resp. Facts. ¶ 10. The electrical signal from the NOx Sensor Probe is then sent to the SCU, translated, enhanced, and sent to the Engine Control Unit ("ECU"). Pl. Resp. Facts ¶ 14; Def. Facts ¶ 14. The ECU uses the information from the NOx sensors, in conjunction with information from other components, to calculate the amount of ammonia that must be injected, in the form of a urea solution, into the selective catalyst reduction system. Pl. Facts ¶ 13; Def. Resp. Facts ¶ 13. The ammonia reacts chemically with NOx molecules to create water and carbon dioxide, thus reducing the concentration of pollutant NOx in the exhaust gas. Pl. Facts ¶ 13; Def. Resp. Facts ¶ 13.
The selective catalyst reduction system requires two NOx sensors to operate properly. Def. Facts ¶ 5; Pl. Resp. Facts ¶ 5. One NOx sensor is placed at the entrance of the system to determine the initial NOx concentration in the exhaust gas, and a second NOx sensor is placed at the exit to ensure that the NOx concentration has been reduced and that the selective catalyst reduction system is operating properly. Def. Facts ¶ 5; Pl. Resp. Facts ¶ 5.
The court has jurisdiction under 28 U.S.C. § 1581(a). The court will grant summary judgment if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." USCIT R. 56(a). Summary judgment is appropriate in tariff classification cases where "there is no genuine dispute as to the nature of the merchandise and the classification turns on the proper meaning and scope of the relevant tariff provisions." Deckers Outdoor Corp. v. United States, 714 F.3d 1363, 1371 (Fed. Cir. 2013). The court decides classification de novo. See 28 U.S.C. § 2640(a)(1) ; Telebrands Corp. v. United States, 865 F. Supp. 2d 1277, 1279–80 (CIT 2012).
The Plaintiff has the burden of demonstrating that the government's classification is incorrect but does not bear the burden of establishing the correct classification; instead the court has an independent duty to determine the "correct result, by whatever procedure is best suited to the case at hand." See Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984) (emphasis in original). The meaning of a tariff term is a question of law and whether subject merchandise falls under a given tariff term is a question of fact. Wilton Indus. v. United States, 741 F.3d 1263, 1265–6 (Fed. Cir. 2013) (citations omitted). The General Rules of Interpretation ("GRIs") and, if applicable, the Additional U.S. Rules of Interpretation, guide classification decisions under the HTSUS. Id. at 1266. The court applies the GRIs in numerical order and only continues to a subsequent GRI if "proper classification of the imported goods cannot be accomplished by reference to a preceding GRI."
Id. GRI 1 requires classification to "be determined according to the terms of the headings and any relative section or chapter notes." GRI 1, HTSUS.3 The HTSUS chapter and section notes are considered binding statutory law. See BenQ Am. Corp. v. United States, 646 F.3d 1371, 1376 (Fed. Cir. 2011). Unlike the section and chapter notes, the Explanatory Notes ("ENs") to the Harmonized Commodity Description and Coding System are not legally binding or dispositive, but they may be consulted for guidance and are generally indicative of the proper interpretation of the various HTSUS provisions. Id. Once the correct heading is identified, the court determines which subheading correctly identifies the merchandise in question. Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed. Cir. 1998) (citing GRI 1). The primary dispute here is at the heading (GRI 1) level.
Customs classified the NOx Sensor Probe under subheading 9027.10.20, HTSUS. The relevant portions of Chapter 90 of the HTSUS read:
| Heading 9027 | Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas or smoke analysis apparatus); instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light (including exposure meters); microtomes ; parts and accessories thereof: |
| 9027.10 | Gas or smoke analysis apparatus: |
| 9027.10.20 | Electrical |
Continental contends that the NOx Sensor Probe should enter free of charge under subheading 9026.80.20, HTSUS, as:
| Heading 9026 | Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases (for example, flow meters, level gauges, manometers, heat meters), excluding instruments and apparatus of heading 9014, 9015, 9028 or 9032; parts and accessories thereof: |
| 9026.80 | Other instruments and apparatus: |
| 9026.80.20 | Electrical |
The controlling issue in this case is whether the NOx Sensor Probe is properly classified under Heading 9027, HTSUS, as "[i]instruments and apparatus for physical or chemical analysis" or under Heading 9026, HTSUS, as "instruments and apparatus for measuring or checking."4 The government asserts that the NOx Sensor Probe was properly classified under Heading 9027, HTSUS, because the subject merchandise is an instrument or apparatus that performs the functions of "chemical analysis." Def. Br. at 23. The parties argue that...
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