Digital Equipment Corp. v. U.S., 89-1438
| Decision Date | 14 November 1989 |
| Docket Number | No. 89-1438,89-1438 |
| Citation | 889 F.2d 267 |
| Parties | DIGITAL EQUIPMENT CORPORATION, Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Federal Circuit |
William D. Outman, II, Baker & McKenzie, Washington, D.C., argued for plaintiff-appellee. With him on the brief was Thomas Peele. Also on the brief was Edward F. Juliano, Jr., Corporate Customs Atty., Digital Equipment Corp., of counsel.
Saul Davis, Commercial Litigation Branch, Dept. of Justice, New York City, argued for defendant-appellant. With him on the brief were Stuart E. Schiffer, Acting Asst. Atty. Gen., David M. Cohen, Director and Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office.
Frederick L. Ikenson and Larry Hampel, of Frederick L. Ikenson, P.C., Washington, D.C., were on the brief, for amicus curiae, Zenith Electronics Corp.
Before BISSELL and MICHEL, Circuit Judges, and COWEN, Senior Circuit Judge.
The United States appeals from a decision of the United States Court of International Trade which found that the Customs Service had improperly classified merchandise as "rectifiers and rectifying apparatus" under Item 682.60 of the Tariff Schedules of the United States (TSUS). Digital Equip. Corp. v. United States, 710 F.Supp. 1381 (Ct.Int'l Trade 1988). We affirm.
The subject imported merchandise, which can generally be described as power supplies for computers, has been stipulated for the purpose of this action to be represented by the DEC Model H 7862-C Computer Power Supply.
The Customs Service classified this merchandise as "rectifiers and rectifying apparatus" under Item 682.60 of the TSUS. Schedule 6, part 5 of the TSUS includes:
Generators, motors, motor-generators, converters (rotary or static), transformers, rectifiers and rectifying apparatus, and inductors; all of the foregoing which are electrical goods, and parts thereof:
The appellee contended and the Court of International Trade agreed that these articles are properly classifiable under a provision which recognizes their use as parts of computers, namely, as parts of automatic data-processing machines and units thereof under Item 676.52 (now Item 676.54) of the TSUS. Schedule 6, Part 4, Subpart G of the TSUS encompasses:
Calculating machines; accounting machines, cash registers, postage-franking machines, ticket-issuing machines, and similar machines, all the foregoing incorporating a calculating mechanism:
* * *
* * *
Parts of automatic data-processing machines and units thereof.
In his opinion, the trial judge described the functions of the imported article in nine detailed categories, and then found that the article contains four "elements which have an importance of their own vis-a-vis a computer, and a role which it would be unreasonable to treat as merely incidental or ancillary to rectification."
The trial judge considered authoritative reference works and found that they did not support the government's interpretation of the term "rectifying apparatus".
Having found that the imported merchandise contained an abundance of important additional functions, the court concluded that the functional aspects of the imported article are not encompassed "by even the most generous interpretation of the tariff provision for rectifiers and rectifying apparatus." Accordingly, the court held that under the "more than" doctrine, TSUS 682.60 is an inadequate and improper classification for the merchandise at issue, and that it should be properly classified under Item 676.52 of the TSUS as parts of computers.
"While the meaning of a classification term is a question of law, the issue of whether particular imported articles come within the definition of a classification term is a question of fact, subject to the clearly erroneous standard of review." Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed.Civ.1989) (citations omitted).
The basic factual issue in this case is whether the imported articles come within the definition of "rectifiers or rectifying apparatus" under Item 682.60 of the TSUS, as the Government contends, or whether the articles come within the definition of parts of computers, i.e., "parts of automatic data processing machines and items thereof" under Item 657.52 as the appellee contends. On this factual issue, there was conflicting testimony by the parties' expert witnesses and the trial judge resolved the conflict in favor of the appellee.
The Government has not attempted to establish and has not established that the trial court's findings of fact are clearly erroneous. 1 Instead, the Government contends that the issue involved in this case is a question of law on which the Government is entitled to a de novo review. In support of this position the Government relies on Hasbro Indus. Inc. v. United States, 879 F.2d 838 (Fed.Civ.1989). However, in that case we also held, as we had held in Simod Am., that whether an item comes within the definition of a classification term is a question of fact. Hasbro Indus., 879 F.2d at 840.
The courts have uniformly held that merchandise which constitutes more than a particular article or which has additional nonsubordinate or coequal functions is not classifiable as that article. See, e.g., United States v. Flex Track Equip. Ltd., 59 CCPA 97, 458 F.2d 148 (1972); E. Green & Son v. United States, 59 CCPA 31, 450 F.2d 1396 (1971); Servo-Tek Prods. Co. v. United States, 57 CCPA 13, 416 F.2d 1398 (1969).
As stated, supra, the trial judge made the factual findings that the imported merchandise has four additional functions which are not incidental or ancillary to "rectifiers or rectifying apparatus". The Government has made no effort to show that these findings are clearly erroneous, and since we find that there are two permissible views of the evidence in this case, we cannot find that the trial court's findings of fact are clearly erroneous, whether the findings are based on credibility determinations, on documentary evidence, or on inferences from other facts....
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