Filmtec Corp. v. U.S.

• Decision Date: 25 November 2003
• Docket Number: SLIP OP. 03-153.,No. 99-00100.,99-00100.
• Citation: 293 F.Supp.2d 1364
• Parties: FILMTEC CORPORATION, Plaintiff, v. UNITED STATES, Defendant
• Court: U.S. Court of International Trade

293 F.Supp.2d 1364

FILMTEC CORPORATION, Plaintiff, v. UNITED STATES, Defendant

SLIP OP. 03-153.

No. 99-00100.

United States Court of International Trade.

November 25, 2003.

McGuireWoods LLP¹ (Joseph S. Kaplan, Holly M. Travis), for Plaintiff.

Robert D. McCallum, Jr., Assistant Attorney General, John J. Mahon, Acting Attorney-in-Charge, International Trade Field Office, Jack S. Rockafellow, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Sheryl A. French, Attorney, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Bureau of Customs and Border Protection, for Defendant, of counsel.

OPINION

POGUE, Judge.

At issue in this proceeding is the proper classification, under 19 U.S.C. § 1202 (1994), of Plaintiff's importation of certain nonwoven fabric sheets described as AWA No. 10. Plaintiff FilmTec Corporation ("FilmTec" or "Plaintiff") challenges a decision of the United States Bureau of Customs and Border Protection ("Customs" or "Defendant"), denying FilmTec's protest filed in accordance with section 514 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1514 (1994). FilmTec's protest challenges Customs' classification of the subject merchandise under subheading 5911.40.00 of the Harmonized Tariff Schedule of the United States ("HTSUS"), thereby imposing a duty of 12.5 percent ad valorem. Subheading 5911.40.00, HTSUS (1995). Before the Court are cross motions for summary judgment in accordance with USCIT Rule 56. The Court has exclusive jurisdiction over this case under 28 U.S.C. § 1581(a)(1994).

Background

The parties agree that there is no genuine dispute as to any material fact. Pl.'s Mem. Supp. Mot. Summ. J. at 7; Def.'s Mem. Supp. Mot. Summ. J. at 9. The imported merchandise, AWA No. 10, is "a nonwoven textile fabric sheet consisting of 100 [percent] polyester fibers." Jt. Stmt. Undisputed Mat. Facts para. 13 ("Jt.Stmt"). Plaintiff FilmTec imported this merchandise in rolls approximately 40.5 inches wide and 2000 meters long,² as manufactured by the AWA Paper Mfg. Co., Ltd. ("AWA"), a Japanese company. Jt. Stmt paras. 8, 17. AWA sold 100 percent of its production of AWA No. 10 to FilmTec, following technical specifications furnished by FilmTec.³ Id. paras. 12, 19. As imported, AWA No. 10 was solely used (as intended) as a support web for a product manufactured by FilmTec in the United States, the FILMTEC FT 30 Reverse Osmosis Membrane ("RO Membrane").⁴ Id. para. 22.

After its importation into the United States, FilmTec coats AWA No. 10 with two layers of certain polymer material to produce RO Membrane. Id. para. 26. First, "a microporous polysulfone interlayer coating approximately .002 [inches] thick," is cast onto the AWA No. 10 sheet. Id. para. 29. The surface pores of this coating have a diameter of approximately 150 angstroms;⁵ this layer serves as a substrate support for the second polymer coating. See id. Second, an ultra-thin barrier coating, about 2000 angstroms thick, is applied to the polysulfone surface. See id. paras. 26, 30. Importantly, this final layer furnishes the necessary filter characteristics of RO Membrane.⁶ Id. paras. 28, 31. RO Membrane may be used to filter salt in "low-pressure tapwater use, single-pass seawater and brackish water desalination, chemical processing, and waste treatment." FilmTec Membranes: FT30 Membrane Description, in Product Information, Jt. Stmt, Attach. C at 1 ("Membrane Description").

The parties agree that while AWA No. 10 is not itself a filter medium, it is a necessary part of RO Membrane. Jt. Stmt para. 28; see also Membrane Description, Jt. Stmt, Attach. C (containing a three-dimensional schematic drawing of the RO Membrane). According to the General Manager of the Membrane Filtration Sector of AWA, there is no known use of AWA No. 10 or any like product as a filter. Bando Decl. paras. 1, 21-23. Defendant also submits that in its imported condition AWA No. 10 cannot function as a commercially practical filter medium, although it is a "critical component" of the RO Membrane. Def.'s Mem. Mot. Summ. J. at 3.

In 1995, Customs liquidated AWA No. 10 under subheading 5603.00.9030 of the HTSUS, which the agency described as including "[n]onwovens, whether or not impregnated, coated, covered or laminated: Other: Other: Other nonwovens, whether or not impregnated, coated or covered: thermal bonded, of staple fibers." Pl.'s Ex. 1, Headquarters Ruling ("HQ") 958415 at 2 (Mar. 26, 1996). The duty rate for this subheading was ten percent ad valorem. Id. FilmTec timely protested, seeking to reclassify AWA No. 10 under subheading 4805.40.00, HTSUS, which covers "filter paper and paperboard." Id.; see also subheading 4805.40.00, HTSUS. Customs denied FilmTec's protest, deciding that the merchandise was properly classifiable under subheading 5911.40.0000, HTSUS: "[t]extile products and articles for technical uses, specified in note 7 to Chapter 59: straining cloth of a kind used in oil presses or the like, including that of human hair" at a duty rate of twelve and a half percent ad valorem. Pl.'s Ex. 1, HQ 958415 at 4 (Mar. 26, 1996); see also sub-heading 5911.40.0000, HTSUS.

In this action, FilmTec claims that the imported merchandise is classifiable under subheading 9907.56.01, HTSUS as "nonwoven fiber sheet (provided for in heading 5603)," arguing that AWA No. 10 meets the requirements of Chapter 99, Subchapter VII, U.S. Note 2 of the HTSUS.⁷ Pl.'s Mem. Supp. Mot. Summ. J. at 6.

Standard of Review

Customs' classification is subject to de novo review pursuant to 28 U.S.C. § 2640. The Court analyzes a Customs classification issue in two steps: "first, [it] construe[s] the relevant classification headings; and second, [it] determine[s] under which of the properly construed tariff terms the merchandise at issue falls." Rollerblade, Inc. v. United States, 24 CIT 812, 813, 116 F.Supp.2d 1247, 1250 (2000) (quoting Bausch & Lomb v. United States, 148 F.3d 1363, 1365 (Fed.Cir.1998) (citation omitted)). "The proper classification of merchandise entering the United States is directed by the General Rules of Interpretation (`GRI[]') of the HTSUS and the Additional United States Rules of Interpretation." Toy Biz, Inc. v. United States, 27 CIT ___, ___, 248 F.Supp.2d 1234, 1242 (2003) (citing Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed. Cir.1998)). GRI 1 provides that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes ..., provided such headings or notes do not otherwise require." GRI 1, HTSUS. Thus, "[a] classification analysis begins, as it must, with the language of the headings." Orlando Food Corp., 140 F.3d at 1440 (citation omitted).

Under USCIT Rule 56, summary judgment is 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); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). This Court decides "whether there are factual issues that are material to resolution of the action." Ero Indus., Inc. v. United States, 24 CIT 1175, 1179, 118 F.Supp.2d 1356, 1359 (2000) (citing Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In classification actions, summary judgment is appropriate when no genuine dispute exists "`as to ... what the merchandise is ... or as to its use.'" Toy Biz, Inc. 27 CIT at ___, 248 F. Supp 2d at 1241 (quoting Ero Indus., Inc., 24 CIT at 1179, 118 F.Supp.2d at 1360). In the absence of genuine factual issues, the "`propriety of the summary judgment turns on the proper construction of the HTSUS, which is a question of law.'" Toy Biz, Inc. v. United States, 27 CIT at ___, 248 F.Supp.2d 1234, 1241 (2003) (quoting Clarendon Mktg., Inc. v. United States, 144 F.3d 1464, 1466 (Fed.Cir.1998); Nat'l Advanced Sys. v. United States, 26 F.3d 1107, 1109 (Fed.Cir.1994)).

Discussion

GRI 1 directs the Court to classify merchandise by construing the headings of the tariff schedule. GRI 1, HTSUS. The parties disagree as to the heading under which the merchandise should be classified. Plaintiff argues that the most accurate heading for the subject merchandise is heading 5603, covering "[n]onwovens, whether or not impregnated, coated, covered or laminated." Heading 5603, HTSUS. The parties have stipulated that the subject merchandise is a nonwoven. Jt. Stmt para. 13. Despite this stipulation, Defendant avers that the most accurate heading is heading 5911, covering "[t]extile products and articles, for technical uses, specified in note 7 to this chapter." Heading 5911, HTSUS. The parties have stipulated that Awa No. 10 is a textile. Id. Both provisions, then, appear capable of describing the goods at issue. This being the case, GRI 3(a) directs the Court to consider which heading provides the most specific description. GRI 3(a), HTSUS. Heading 5911, covering all textiles, rather than only nonwovens, appears less specific than heading 5603. However, it is a "use" provision—only those textiles for "technical uses, specified in note 7 to this chapter" fall within its bounds. Id. Use provisions are generally considered more specific than eo nomine provisions such as heading 5603, and the most specific heading controls under GRI 3(a). Orlando Food Corp., 140 F.3d at 1441; GRI 3(a), HTSUS. However, in order to decide whether heading 5911 describes the subject merchandise more specifically than heading 5603, reference must be had to Note 7 to Chapter 59, which outlines the technical uses that fall under heading 5911's rubric.

Note 7 to Chapter 59 states that "[h]eading 5911 applies to the following goods, which do not fall in any other heading of section XI: (a) ...