Faus Group, Inc. v. U.S.

• Decision Date: 15 November 2004
• Docket Number: Slip Op. 04-143.,Court No. 03-00313.
• Citation: 358 F.Supp.2d 1244
• Parties: FAUS GROUP, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

358 F.Supp.2d 1244

FAUS GROUP, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 04-143.

Court No. 03-00313.

United States Court of International Trade.

November 15, 2004.

COPYRIGHT MATERIAL OMITTED

McKenna Long & Aldridge LLP (Peter Buck Feller, Daniel G. Jarcho, Washington, DC, and Brett Ian Harris, New York City), for Plaintiff.

Peter D. Keisler, Assistant Attorney General, Barbara S. Williams, Attorney in Charge, International Trade Field Office, Amy M. Rubin, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Yelena Slepak, Attorney, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, for Defendant, of Counsel.

OPINION

POGUE, Judge.

Plaintiff, Faus Group, Inc. ("Faus"), challenges the denial of its protest of the liquidation of its laminated flooring panels ("merchandise" or "flooring panels"). The United States Customs Service ("Customs" or "Government")¹ classified the merchandise under heading 4411 of the Harmonized Tariff Schedule of the of the United States ("HTSUS") (2001) which covers "[f]iberboard of wood or other ligneous materials, whether or not bonded with resins or other organic substances." Faus avers that its merchandise should be classified under heading 4418, HTSUS, as "[b]uilders' joinery and carpentry of wood, including cellular wood panels and assembled parquet panels; shingles and shakes." Before the Court are cross-motions for summary judgment pursuant to USCIT Rule 56. The Court has exclusive jurisdiction over this case under 28 U.S.C. § 1581(a) (2000). Because the Court finds that Customs properly classified the merchandise under heading 4411, HTSUS, but the proper subheading cannot be determined, both parties' motions for summary judgment are denied.

UNDISPUTED FACTS

Faus is an importer of laminated flooring panels manufactured from its parent, Industrias Auxiliares Faus S.L., in Spain. Decl. Juan B. Flores ("Flores Decl.") at para. 3 (Mar. 23, 2004).² The flooring panels are made with a core of fiberboard with a density of between 0.85-.95 g/cm3. Id. at para. 5. Across the width of the panels a color photograph of three parallel wood strips is overlayed, with the ends of the parallel strips offset from each other. Id. at para. 7, Product Sample, Pl.'s Ex. 1. The overlay is embossed to further simulate the appearance of a natural wood product.³ Flores Decl. at para. 5. The fiberboard core is backed by a reinforced melamine layer. Id. The panels are non-structural finished articles ready for installation by end-users. Id. at para. 10. Eight panels are packaged together, id. at para. 24, and each panel is tongue-and-grooved along all of it edges and ends such that it can be joined with other boards and permanently affixed with the aid of adhesives, id. at para. 11. Overall, the product is designed to have a "look, price and performance comparable to traditional wood flooring." Id. at para. 9.

SUMMARY OF PARTIES' ARGUMENTS

Faus argues that the imported laminated flooring panels in question should be classified under heading 4418, HTSUS, covering "[b]uilders' joinery and carpentry of wood, including cellular wood panels and assembled parquet panels; shingles and shakes."⁴ Pl.'s Mem. Supp. Mot. Summ. J. at 7-24 ("Pl.'s Mem."), Pl.'s Reply Supp. Mot. Summ. J. ("Pl.'s Reply") at 1-5. Faus contends that the subject merchandises is properly classifiable under heading 4418, HTSUS, because builders' joinery, a term adopted from the Brussels Nomenclature, covers flooring panels prepared with joints for assembly. Pl.'s Mem. at 9-12, Pl.'s Reply at 1. Moreover, it asserts that the plain language of heading 4418, HTSUS, and the Explanatory Notes confirm this conclusion. Pl.'s Mem. at 13-14, Pl.'s Reply at 1-2.⁵ Faus denies that the flooring panels can be classified under heading 4411, HTSUS, which covers "[f]iberboard of wood or other ligneous materials, whether or not bonded with resins or other organic substances,"⁶ because Note 4 to Chapter 44 provides that "[p]roducts of heading 4410, 4411 or 4412 may be worked to form the shapes provided for in respect of the articles of heading 4409 [which includes tonguing and grooving] ... or submitted to any other operation provided it does not give them the character of articles of other headings." Pl.'s Mem. at 24-27, Pl.'s Reply at 5-8. Faus claims that because its merchandise has been tongue-and-grooved and surface coated, and these operations give the merchandise the character of builders' joinery, the merchandise cannot be classified under heading 4411, HTSUS. See Id. Last, Faus asserts that even if the merchandise is classified under heading 4411, HTSUS, it should be classified under subheading 4411.19.30, HTSUS, which covers "[t]ileboard which has been continuously worked along any of its edges and is dedicated for use in the construction of wall, ceilings or other parts of buildings."⁷ Pl.'s Mem. at 27 n. 12.

The Government avers that the merchandise is not classifiable under heading 4418, HTSUS, because heading 4418, HTSUS, covers only products specifically mentioned in the heading and other builders' products not covered by other tariff provisions. Def.'s Mem. at 17-19, Def.'s Reply Pl.'s Resp. Def.'s Cross-Mot. Summ. J. at 4-5 ("Def.'s Reply"), Def.'s Resp. Ct.'s Questions Prior Oral Argument Parties' Cross-Mot. Summ. J. at 2-3 ("Def.'s Resp."). The Government claims that Faus' reading of heading 4418, HTSUS, creates conflicts with other headings. Id. Moreover, the Government asserts that an interpretation of heading 4418, HTSUS, by a Canadian customs tribunal supports its reading. Def.'s Mem. at 23 n. 12.

The Government further asserts that even if the merchandise can be classified under heading 4418, HTSUS, heading 4411, HTSUS, is the more specific and accurate heading for the merchandise. Def.'s Mem. at 29-30. The Government challenges Faus' interpretation of Note 4 to Chapter 44, asserting that the language, "[p]roducts of heading 4410, 4411 or 4412 may be worked to form the shapes provided for in respect of the articles of heading 4409 [which includes tonguing and grooving] ... or submitted to any other operation provided it does not give them the character of articles of other headings" supports the classification of the merchandise under heading 4411, HTSUS. Id. at 9-16, Def.'s Reply at 9-12. More specifically, the Government claims that Faus misconstrues the antecedent to the word "it," which only refers to "any other operation." Def.'s Mem. at 11-12. Therefore, the Government argues, when properly construed, Note 4 indicates that products may be tongue-and-grooved and still remain in heading 4411, HTSUS. Id. Last, the Government argues that the merchandise is not tileboard and therefore should be classified under subheading 4411.19.40, HTSUS, the basket provision for "[f]iberboard of a density exceeding 0.8 g/cm3." Def.'s Mem. at 2.

STANDARD OF REVIEW

"The proper scope and meaning of a tariff classification term is a question of law ... while determining whether the goods at issue fall within a particular tariff term as properly construed is a question of fact." Franklin v. United States, 289 F.3d 753, 757 (Fed.Cir.2002) (citations omitted). A Customs classification ruling is subject to de novo review as to the meaning of the tariff provision but may be accorded a "respect proportional to its `power to persuade.'" United States v. Mead, 533 U.S. 218, 235, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944)).

Both parties have moved for summary judgment pursuant to USCIT Rule 56. Summary judgment is only appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." USCIT R. 56(c) (emphases added). Material issues only arise concerning "facts that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Consequently, in classification cases, genuine issues of material fact only arise when there is a dispute over the use, characteristics, or properties of the merchandise being classified, Brother Int'l Corp. v. United States, 26 CIT ___, ___, 248 F.Supp.2d 1224, 1226 (2002), or where commercial meaning is in question. Russell Stadelman & Co. v. United States, 242 F.3d 1044, 1048 (Fed.Cir.2001). For the reasons set forth below, summary judgment for either party at this point is not warranted.

DISCUSSION

"The proper classification of merchandise entering the United States is directed by the General Rules of Interpretation (`GRIs') of the HTSUS and the Additional United States Rules of Interpretation." Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.Cir.1998). According to the GRIs, a Court must choose the most appropriate heading and then, "[o]nly 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." Id. at 1440 (citing GRI 1, 6, HTSUS). As it is possible that goods may be, "prima facie, classifiable under two or more headings," GRI 3, HTSUS, provides additional guidance in choosing between the relevant headings. According to this framework, the Court must first determine the proper heading for the flooring panels.

In this case, the parties have submitted two possible headings under which the merchandise may fall: headings 4411, HTSUS and 4418, HTSUS. Because the applicability of heading 4411, HTSUS, is dependent on the meaning of heading 4418, HTSUS, by virtue of Note 4 to Chapter 44, the Court will first construe heading 4418, HTSUS, and then heading 4411, HTSUS. Because the Court finds that the flooring panels appear to be prima...