Export Packers Co., Ltd. v. US
| Decision Date | 20 May 1992 |
| Docket Number | Court No. 87-05-00659 (BN). |
| Citation | 16 CIT 394,795 F. Supp. 422 |
| Parties | EXPORT PACKERS CO., LTD., Plaintiff, v. The UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Brownstein Zeidman and Schomer, Steven P. Kersner and Claudia G. Pasche, Washington, D.C., for plaintiff.
Stuart M. Gerson, Asst. Atty. Gen., Joseph I. Liebman, Atty. in Charge, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Saul Davis, Washington, D.C., for defendant.
Export Packers Co., Ltd. ("Export Packers") brings this action pursuant to 28 U.S.C. § 1581(a) to contest denial of protests by the United States Customs Service ("Customs") under 19 U.S.C. § 1515, pertaining to Export Packers' importation of frozen, salted liquid egg yolks and dried egg yolks sourced from whole shell eggs and liquid egg yolks of United States and Canadian origin, from its Canadian plant during the period of December 21, 1984 through January 22, 1987.
Before the court for determination are cross-motions for summary judgment, predicated upon a stipulation of facts. The litigants' dispute concerns whether 67.5% of the subject imported frozen, salted liquid and dried egg yolks entering the United States through the port at Pembina, North Dakota were properly classifiable by Customs in accordance with TSUS Items 119.65 and 119.70 as "whole eggs not in the shell, egg yolks, and egg albumen: Dried and Other," dutiable at 27 and 5.5 cents per pound, respectively, rather than under TSUS Item 806.20 as "articles exported for repairs or alterations" abroad and returned to the United States, with corresponding duty only as to the value of the repairs or alterations. In connection therewith, Export Packers seeks a refund for purported excess liquidated duties amounting to $182,573.72, plus interest.
Similarly at issue is defendant's counterclaim, under 28 U.S.C. § 1583, challenging the liquidation of 32.5% of the imported frozen liquid egg yolks allegedly accorded erroneous duty-free treatment by Customs under TSUS Item 800.00, and demanding return of the accompanying refund received by Export Packers in the sum of $29,100.00.
1. Export Packers, a corporation organized under the laws of Canada with a manufacturing facility located in Winnipeg, Ontario, Canada is engaged, inter alia, in the manufacture and exportation of frozen liquid egg yolks and dried egg yolks. These products are manufactured from whole eggs in the shell and from liquid egg yolks which are derived from Canadian and United States sources.
2. Frozen liquid egg yolks and dried egg yolks manufactured from shell eggs are processed in the following manner at the Winnipeg plant:
a. Bulk quantities of ungraded whole eggs in the shell of Canadian and United States origin are placed in cold storage until 24-30 hours prior to the time that the whites and yolks are to be separated. At that time they are placed in a temperature-controlled room to bring the temperature of the eggs to 13 degrees Celsius.
b. The eggs are transported along a moving processing line for sanitization in a chlorine rinse and candling prior to breaking by an automatic breaking machine. Separation of yolks and whites is performed utilizing gravity and a filtration system. Storage tanks house the separated egg products for purposes of inspection.
c. Refrigerated holding tanks are then filled with commingled liquid egg yolks derived from both U.S. and Canadian shell eggs and liquid egg yolk. The yolks are mixed together with either salt or sugar, depending upon their ultimate use, to ensure that after being frozen the yolks will pour as a liquid. The mixed product is pasteurized to destroy salmonella and other harmful microorganisms. After mixing, the liquid yolk product is frozen, packaged and palletized for shipment to customers in Canada, Japan and the United States. "Frozen ... Salt Yolk," as it is then categorized in the industry, is destined for the manufacture of salad dressing or mayonnaise.
d. If the liquid yolk product is designated for production as dried yolks, it is forced through atomizers (nozzles) under high pressure into a heated chamber. The heated chamber dries the resulting spray through heat into a powder. The powder is removed from the drier with a sifter and packaged for sale in Canada, Japan and the United States as "Solids ... Dried ... Plain (or Free Flowing) ... Yolk."
3. Export Packers, during this period, also imported unpasteurized liquid egg yolks from the United States which were processed using the same techniques described, supra, for shell eggs prior to distribution.
4. All entries of frozen, salted liquid egg yolks made between September 3, 1985 through January 22, 1987 by Export Packers were liquidated by Customs allowing 32.5% of each entry duty free treatment under TSUS Item 800.00. These liquidations occurred in accordance with the instructions and procedures announced by the local import specialist in Pembina, who observed the foregoing process as it occurred at Export Packer's Winnipeg manufacturing facility.
5. Entries made by Export Packers prior to September 3, 1985 were liquidated by Customs under TSUS Item 119.70 without any allowance for liquid egg yolk exported from the United States. In conformance with the recommendations of the Pembina import specialist, all subsequent Item 800.00 reliquidations and corresponding refunds for excess duties paid by Export Packers, where applicable to the subject entries, occurred on April 13 and May 8, 1987, respectively.
6. Three entries dated January 16, 1985, October 15, 1986 and November 2, 1986 of dried egg yolk were liquidated pursuant to TSUS Item 119.65 with no allowance for U.S. liquid egg yolks.
7. On July 5, 1985 Export Packers filed Protest No. 3401-5-00013 and an Application for Further Review with the District Director, U.S. Customs Service, Port of Pembina, North Dakota ("District Director") concerning the liquidation of certain entries of frozen salted egg yolk and dried egg yolk derived from shell eggs under TSUS Items 119.70 and 119.65 rather than Item 806.20. Between October 31, 1985 and March 30, 1987 Export Packers filed ten additional protests based on the same dispute1.
8. Customs Headquarters Letter 543869, issued by the Director, Classification and Value Division, U.S. Customs Service, Washington D.C., on January 19, 1987 in response to plaintiff's protests and requests for further review, disagreed with Export Packers' claims. On the basis of Customs Headquarters Letter 543869 the District Director, between March 4 and April 16, 1987, denied the entire series of protests filed by Export Packers.
9. On May 7, 1987 Export Packers filed a summons challenging the refusal of Customs to classify frozen liquid egg yolk derived from shell eggs under TSUS Item 806.20. A complaint was filed on June 22, 1987 requesting a refund of alleged excess duties paid in the amount of $182,573.72.
10. On October 7, 1987 a new Pembina import specialist conducted a premises inspection at Export Packers' Winnipeg facility. Following his inspection, the new import specialist sent a report to the National Import Specialist in New York expressing his disagreement with the TSUS Item 800.00 classification made by his predecessor whereby 32.5% of each container of imported yolk entered between September 3, 1985 and January 22, 1987 had been liquidated with a 100% duty free allowance.
11. On October 26, 1987 the defendant filed its answer to the complaint. Defendant's answer interposed a counterclaim disputing the refund to plaintiff of $29,100.00 relating to the classification under TSUS Item 800.00 of 32.5% of the subject entries which were determined by Customs to be sourced from liquid yolk exported from the United States.
12. On December 14, 1987 the National import specialist in New York forwarded a report agreeing with the new Pembina import specialist's conclusions. The new Pembina import specialist then orally informed Export Packers' brokers that future entries would not be acceptable unless the entire shipment was classified under TSUS Item 119.70.
The United States contests this Court's jurisdiction over fourteen entries currently in dispute covered by Export Packers' Protest No. 3401-5-000020, on the basis that this protest was allegedly filed in excess of 90 days subsequent to liquidation. See 19 U.S.C. § 1514(c)(2)(A).
The question of subject matter jurisdiction regarding thirteen of these entries was rendered moot following an Order issued by the Honorable Gregory Carman of this Court granting Export Packers' request to amend its complaint by withdrawing entries XX-XXXXXX-X, XX-XXXXXX-X, XX-XXXXXX-X, XX-XXXXXX-X, XX-XXXXXX-X, XX-XXXXXX-X, XX-XXXXXX-X, XX-XXXXXX-X, XX-XXXXXX-X (sic)2, XX-XXXXXX-X, XX-XXXXXX-X, XX-XXXXXX-X and XX-XXXXXX-X, from paragraph 5 of the complaint.
In addition, this action is dismissed with respect to Entry No. 85-145288-1 covered by Protest No. 3401-5-000020 since the court agrees that the protest regarding this particular entry was also filed in excess of the 90 day statutory limit. See Schering Corp. v. United States, 67 CCPA 83, 86-88, 626 F.2d 162 (1980); Noury Chemical Corp. v. United States, 4 CIT 68 (1982).
Defendant's counterclaim asserts that Customs erroneously granted TSUS Item 800.00 treatment to the imported entries of frozen salted liquid egg yolk derived from liquid egg yolk. Consequently, the defendant seeks $29,100.00 representing the amount refunded by Customs due to the reliquidation of Export Packers' frozen salted liquid egg yolk under TSUS Item 800.00, in accordance with the recommendations of the initial Pembina import specialist.
Export Packers objects to this Court's exercise of jurisdiction over defendant's counterclaim...
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