Dependable Packaging Solutions, Inc. v. United States

• Decision Date: 09 July 2014
• Docket Number: No. 2013–1300.,2013–1300.
• Citation: 757 F.3d 1374
• Parties: DEPENDABLE PACKAGING SOLUTIONS, INC., Plaintiff–Appellant, v. UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

757 F.3d 1374

DEPENDABLE PACKAGING SOLUTIONS, INC., Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee.

No. 2013–1300.

United States Court of Appeals,Federal Circuit.

July 9, 2014.

Peter S. Herrick, Peter S. Herrick, P.A., of Miami, FL, argued for plaintiff-appellant.

Edward F. Kenny, Trial Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, NY, argued for defendant-appellee. With him on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Amy M. Rubin, Acting Assistant Director, International Trade Field Office. Of counsel on the brief was Sheryl A. French, Office of Assistant Chief Counsel, United States Customs and Border Protection, of New York, NY.

Before WALLACH, MAYER, and CHEN, Circuit Judges.

WALLACH, Circuit Judge.

Before the court is Dependable Packaging Solutions, Inc.'s (“Dependable”) appeal regarding the classification of certain types of glass merchandise. For the reasons set forth below, the holding of the Court of International Trade (“CIT”) is affirmed.

Background

Dependable imports and distributes packing, janitorial, floral, and office supplies, and certain glass items. On May 29, 2010, Dependable imported certain glass items from the People's Republic of China and identified them on their respective commercial invoices as “Generic Bud Vases” for the smaller (“bud vases”) and “Generic Trumpet Vases” (“trumpet vases”) for the larger (collectively, “the vases” or “the merchandise”). Both types of vases have an inexpensive look and visible seams. When imported, the bud vases were valued at $0.30 or less and the trumpet vases at more than $0.30 but no greater than $3.00.

After importing the vases, Dependable sells them to mass-market flower-packing houses that fill them with water and flowers. The packing houses then ship the flower-packed vases to supermarkets or similar retailers, where the vase and flower combinations are displayed and sold as a single unit. Similar vases are sold empty at retail. Dependable's vases are not sold empty at retail, though they can be reused.

When the vases were imported, Dependable classified them under the Harmonized Tariff Schedule of the United States (“HTSUS”) ¹ 7018.90.50.² At liquidation, U.S. Customs and Border Protection (“Customs”) classified the bud vases under HTSUS 7013.99.404 and the trumpet vases under HTSUS 7013.99.50.5. The vases were thus classified under heading 7013, which provides for “Glassware of a kind used for ... indoor decoration ... (other than that of heading 7010 or 7018).” Specifically, heading 7013 provides, in relevant part:

7013

Glassware of a kind used for table, kitchen, toilet, office, indoor decoration or similar purposes (other than that of heading 7010 or 7018):

Other glassware

7013.99

Other. . .

7013.99.40

Other:

Valued not over $0.30

each. . .38%

7013.99.50

Valued over $0.30 but not over

each. . .30%

(emphasis added).

Dependable timely protested but Customs failed to act within thirty days, resulting in a deemed denial. After the assessed duties were paid, Dependable filed this action in the CIT, abandoning its entered classification under heading 7018.90.50 and asserting both vases should be classified under HTSUS heading 7010, which includes “containers, of glass, of a kind used for the conveyance or packing of goods.” In particular, heading 7010 states, in relevant part:

7010

Carboys, bottles, flasks, jars, pots, vials, ampules and other containers, of glass, of a kind used for the conveyance or packing of goods; preserving jars of glass; stoppers,

lids and other closures, of glass:. . .

7010.90

Other. . .

7010.90.30

Other. . .5.2%.

Dependable contended its vases should be classified under HTSUS 7010.90.30.

After reviewing both competing headings and conducting a Carborundum analysis,³ the CIT determined “a reasonable jury could only conclude that the vases here are commercially fungible with other inexpensive clear glass vases whose principal use is decorative, rather than with glass packing containers.” Dependable Packaging Solutions, Inc. v. United States, No. 10–0330, 2013 WL 646328, at *9 (Ct. Int'l Trade Feb. 20, 2013). The CIT accordingly held Customs' classification was correct and granted summary judgment in favor of the Government. Dependable timely appeals. This court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(5) (2012).

Discussion

I. Standard of Review

This court reviews the CIT's grant of summary judgment on tariff classifications de novo. Lemans Corp. v. United States, 660 F.3d 1311, 1315 (Fed.Cir.2011); Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed.Cir.2006). In assessing Customs' classification determinations, this court employs the two-step analysis used by the CIT: (1) ascertaining “the proper meaning of the tariff provisions, which is a question of law reviewed de novo”; and (2) determining “whether merchandise falls within a particular heading, which is a question of fact we review only for clear error.” Lemans, 660 F.3d at 1315 (citing Cummins, 454 F.3d at 1363). However, “[w]here ... the nature of the merchandise is undisputed, the inquiry collapses into a question of law we review de novo.” Id. “Here, there is no genuine dispute as to ‘exactly what the merchandise is' or as to its actual use.” Dependable Packaging,2013 WL 646328, at *2 (citing Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1365 (Fed.Cir.1998)). Although the parties disagreed as “to the ‘principal use’ of the vases,” the CIT held this was “not a material dispute precluding summary judgment.” Id.

II. Legal Framework

A. Classification Pursuant to the HTSUS

The HTSUS is composed of classification headings, each of which has one or more subheadings. Deckers Outdoor Corp. v. United States, 714 F.3d 1363, 1366 (Fed.Cir.2013). “The headings contain ‘general categories of merchandise,’ whereas ‘the subheadings provide a more particularized segregation of the goods within each category.’ ” Id. (quoting Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.Cir.1998)). Along with the headings and subheadings, which are enumerated in chapters 1 through 99 of the HTSUS (each of which has its own section and chapter notes), the HTSUS statute also contains the “General Notes,” the “General Rules of Interpretation” (“GRI”), the “Additional United States Rules of Interpretation” (“ARI”), and various appendices for particular categories of goods. See Baxter Healthcare Corp. of P.R. v. United States, 182 F.3d 1333, 1337 (Fed.Cir.1999) (citing 19 U.S.C. § 3004(a) (1994)). The classification of merchandise is governed by the GRIs and the ARIs, which are applied in numerical order. BenQ Am. Corp. v. United States, 646 F.3d 1371, 1376 (Fed.Cir.2011). The World Customs Organization's “Explanatory Notes,” which accompany each chapter of the HTSUS, are “not legally binding, are ‘persuasive [,]’ and are ‘generally indicative’ of the proper interpretation of the tariff provision.” Lemans, 660 F.3d at 1316 (quoting Drygel, Inc. v. United States, 541 F.3d 1129, 1134 (Fed.Cir.2008)).

The classification analysis always begins with GRI 1, which directs that “classification shall be determined according to the terms of the headings and any relative section or chapter notes.” HTSUS GRI 1 (emphasis added); see Orlando Food, 140 F.3d at 1440 (“[A] court first construes the language of the heading, and any section or chapter notes in question, to determine whether the product at issue is classifiable under the heading.”). “Absent contrary legislative intent, HTSUS terms are to be construed according to their common and commercial meanings, which are presumed to be the same.” Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed.Cir.1999) (citing Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed.Cir.1989)). Pursuant to GRI 1, the possible headings are to be evaluated without reference to their subheadings, which cannot be used to expand the scope of their respective headings. Orlando Food, 140 F.3d at 1440 (“Only after determining that a product is classifiable under the heading should the court look to the subheadings to find the correct classification for the merchandise.... [W]hen determining which heading is ... more appropriate for classification, a court should compare only the language of the headings and not the language of the subheadings.”); EOS of N. Am., Inc. v. United States, 911 F.Supp.2d 1311, 1327–28 (Ct. Int'l Trade 2013). Finally, if the proper heading can be determined under GRI 1, the court is not to look to the subsequent GRIs. See CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364 (Fed.Cir.2011) (citing Mita Copystar Am. v. United States, 160 F.3d 710, 712 (Fed.Cir.1998)) (“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.”).

All the relevant HTSUS headings in this case are principal use provisions, ⁴ which are governed by ARI 1(a). “[A] tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.” ARI 1(a); see also Primal Lite, Inc. v. United States, 182 F.3d 1362, 1363 (Fed.Cir.1999). This court has explained that the purpose of “principal use” provisions “is to classify particular merchandise according to the ordinary use of such merchandise, even though particular imported goods may be put to some atypical use.” Primal Lite, Inc., 182 F.3d at 1364. Thus, for example, “a classification covering vehicles principally used for automobile racing would cover a race car, even if the particular imported car was actually used solely in an...