Drygel, Inc. v. U.S.

• Decision Date: 04 September 2007
• Docket Number: Slip. Op. 07-134.,Court No. 03-00832.
• Parties: DRYGEL, INC., Plaintiff v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

507 F.Supp.2d 1371

DRYGEL, INC., Plaintiff v. UNITED STATES, Defendant.

Slip. Op. 07-134.

Court No. 03-00832.

United States Court of International Trade.

September 4, 2007.

Neville Peterson, LLP (John M. Peterson, Curtis W. Knauss and Maria E. Celis), for Drygel, Inc., Plaintiff.

Peter P. Keisler, Assistant Attorney General; Barbara S Williams, Attorneyin-Charge, International Trade Field Office, Bruce N. Stratvert, Civil Division, Commercial Litigation Branch, United States Department of Justice, Defendant.

OPINION

TSOUCALAS, Senior Judge.

Plaintiff Drygel, Inc. ("Plaintiff' or "Drygel") challenges the classification of Gel-A-Mint® MagikStrips® ("MagikStrips®") by the United States Bureau of Customs and Border Protection¹ ("Defendant" or "Customs")under Subheading 2106.90.99 of the Harmonized Tariff Schedule of the United States ("HTSUS") covering "[f]ood preparations not elsewhere specified or included[.]" Plaintiff maintains that the merchandise at issue is properly classified under Subheading 3306.90.00, HTSUS, as "preparation for oral or dental hygiene." This matter is before the court on cross-motions for summary judgment pursuant to USCIT R. 56.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581 (2000).

STANDARD OF REVIEW

On a motion for summary judgment, the Court must determine whether there are any genuine issues of fact that are material to the resolution of the action. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is genuine if it might affect the outcome of the suit under the governing law. See id. Accordingly, the Court may not decide or try factual issues upon a motion for summary judgment. See Phone-Mate, Inc. v. United States, 12 CIT 575, 577, 690 F.Supp. 1048, 1050 (1988). When genuine issues of material fact are not in dispute, summary judgment is appropriate if a moving party is entitled to judgment as a matter of law. See USCIT R. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

DISCUSSION

I. Background

MagikStrips® are thin, sugar-free breath strips that dissolve when placed on the tongue, releasing their ingredients. See Mem. Supp. Pl.'s Mot. Sum. J. ("Drygel's Brief') at 1-2; Pl.'s Statement Material Facts Not Dispute ("Drygel's Facts") ¶ 2. Magikstrips® are manufactured in Japan and are packaged in small plastic containers for individual sale at retail stores. See Drygel's Brief at 2; Drygel's Facts ¶¶, 8; Def.'s Resp. Pl.'s Statement of Material Facts Not Dispute ("Customs' Facts") ¶¶ 1, 8.

Plaintiff Drygel imported MagikStrips® under Subheading 3306.90.00, HTSUS.² See Drygel's Facts ¶ 2; Customs' Facts ¶ 2. Customs liquidated the subject merchandise under Subheading 2106.90.99, HTSUS.³ See Drygel's Facts 112; Custom's Facts ¶ 2. Plaintiff timely filed protests claiming that the correct classification of the subject merchandise is under Subheading 3306.90.00, HTSUS, contesting Customs' classification under Subheading 2106.90.99, HTSUS. See Drygel's Facts ¶ 3; Customs' Facts ¶ 3. Plaintiff timely commenced the instant action. See Drygel's Facts ¶ 3; Customs' Facts ¶ 4. All liquidated damages, charges and exactions with respect to the subject entries were paid prior to the commencement of this action. See Drygel's Facts ¶ 5; Customs' Facts ¶ 5.

II. Parties' Contentions

A. Plaintiff's Contentions

Plaintiff maintains that Customs erred when it classified MagikStrips® under Heading 2106, HTSUS, because MagikStrips® are specifically provided for in Heading 3306, HTSUS. See Drygel's Brief at 7-13. According to Plaintiff, Customs failed to follow the General Rules of Interpretation of the HTSUS ("GRIs") and failed to employ the common commercial meaning of the tariff terms when classifying MagikStrips.® See Drygel's Brief at 7-9. Plaintiff submits that the term hygiene encompasses health and cleanliness and concludes that "reduction of volatile compounds in the mouth" and the "masking of malodor or perfuming of the mouth" would promote oral hygiene. Drygel's Brief at 8.

Plaintiff claims that menthol represents 5% of Magikstrips® dry weight with an error margin of 3%.⁴ See Drygel's Brief at 8; Affirmation Issac Zaksenberg Supp. Pl.'s Mot. Sum. J. ("Zaksenberg I Affirmation") ¶ 5. According to Plaintiff, menthol at this concentration has antimicrobial properties and acts as a deodorizer that perfumes the mouth. See id. Plaintiff also claims that MagikStrips® contain sucrose palmitate or sucrose esters of fatty acid, which also has antimicrobial properties. See Pl.'s Resp. Def.'s Rule 56 Statement ¶ 1; Second Affirmation Issac Zaksenberg Supp. Pl.'s Mot. Sum. J. ("Zaksenberg II Affirmation") ¶ 5.

In support of its claim. Plaintiff cites the patent for a similar competing product named Listerine® "fast dissolving orally consumable films" ("Listerine® Patent"). See Drygel's Brief at 8-9, Exhibit C. The Listerine® Patent provides, inter alia, that Listerine® "achieves its antimicrobial effect through a combination of essential oils that penetrate and kill the microorganisms." Drygel's Brief, Exhibit C. Plaintiff notes that menthol is one of the essential oils listed in the Listerine® Patent. See Drygel's Brief at 8. Arguing that MagikStrips® contain a high concentration of menthol, Plaintiff concludes that MagikStrips® have antimicrobial properties and promote oral hygiene. See id. Plaintiff also relies on several websites to support its proposition that MagikStrips'® ingredients, menthol and sucrose palmitate or sucrose esters of fatty acid, have antimicrobial properties. See Drygel's Brief at 9, Exhibits D, E; Pl.'s Resp. Def.'s Mot. Sum. J. ("Drygel's Response") at 4; Zaksenberg II Affirmation ¶ 5.

In addition. Plaintiff contends that the Explanatory Notes ("ENs") specifying mouth washes and oral perfumes provide strong support for classifying MagikStrips® under Heading 3306, HTSUS. See Drygel's Brief at 9-10. Plaintiff states that MagikStrips® perform the same function as a traditional mouth wash by reducing the number of bacteria and volatile compounds. See id. at 10. Plaintiff also states that, by stimulating saliva production in the mouth, MagikStrips® act as an effective oral perfume that masks malodor and imparts mint fragrance. See id. Plaintiff thus concludes that MagikStrips® are an effective mouth wash and oral perfume as contemplated in the ENs for Heading 3306, and argues that MagikStrips® should be classified under that heading. See id. at 3, 10-11.

Plaintiff argues that the United States Court of Appeals for the Federal Circuit ("CAFC") would, pursuant to its decision in Warner-Lambert Co. v. United States ("Warner-Lambert CAFC"), 407 F.3d 1207 (Fed.Cir.2005), classify MagikStrips® under Heading 3306, HTSUS. See Drygel's Brief at 11. Plaintiff contends that Customs, when citing to Warner-Lambert CAFC for the proposition that Heading 3306 requires "breakdown and absorption of unwanted substances in the mouth" and "a cleansing effect by purging activity," mischaracterizes the CAFC's holding. Drygel's Response at 1-4. According to Plaintiff, Warner-Lambert CAFC stands for the proposition that a product may be properly classified under Heading 3306 if: (1) it is an oral perfume; (2) it breaks down or removes volatile compounds in the mouth; or (3) it mechanically purges odorcausing compound in the mouth. See Drygel's Brief at 12. Plaintiff argues that MagikStrips® meet the criteria set forth in Warner-Lambert CAFC because menthol and sucrose palmitate remove bacteria and perfume the mouth. See Drygel's Brief at 12-13; Drygel's Response at 4.

In response to Customs' assertion, discussed supra, that Heading 3306 is a "use provision" requiring determination of the principal use of the "class or kind" of goods to which MagikStrips® belong, Plaintiff argues that Customs' analysis is flawed due to its erroneous interpretation of Warner-Lambert CAFC. Drygel's Response at 8-9. Plaintiff contends that Customs'"class or kind" analysis is too narrow and contrary to the holding in Warner-Lambert CAFC. See id.

With respect to classification of MagikStrips® under Heading 2106, HTSUS, as urged by Customs, Plaintiff responds that the terms of the Heading, when read in accordance with GRI 1, excludes products that are covered under other headings in the tariff schedule. See Drygel's Brief at 13-14. Since Heading 2106 covers "food preparations not elsewhere specified or included," Plaintiff argues that the Heading specifically excludes MagikStrips® which are classifiable under Heading 3306. See id. at 14. In the event that MagikStrips® are classifiable under both Headings 2106 and 3306, Plaintiff argues that, pursuant to GRI 3, Heading 3306 is the proper classification because it provides a more specific description in comparison to Heading 2106, a catch-all provision. See id.

Based on the foregoing arguments, Plaintiff seeks a judgment in its favor and an order directing the Port Director of Customs at the Port of Entry to reliquidate the subject entries under HTSUS subheading 3306.90.00, duty free, and refunding to Plaintiff all excess duties, plus interest as provided by law.

B. Customs' Contentions

Customs contends that MagikStrips® are properly classified under Subheading 2106.90.99, HTSUS, the provision for "[f]ood preparations not elsewhere specified or included[.]" See Def.'s Mem. Supp Mot. Summ. J. and Opp. Pl.'s Mot. Summ. J. ("Customs' Brief') at 2.

Customs argues that the applicable portion of Heading 3306, "preparation for oral and dental hygiene," is controlled by use, and thus, is a "use provision." Id. at 5-6. Accordingly, Customs states that the terms of the heading must read to mean "preparation for use in oral and dental hygiene." Id. at 6. In addition, Customs argues that GRI 1 must be applied together with rule 1(a) of the Additional U.S. Rules of Interpretation⁵ ("ARIs"), which govern tariff...