General Motors Corp. v. United States, 77-11-04746.
| Decision Date | 20 August 1986 |
| Docket Number | No. 77-11-04746.,77-11-04746. |
| Citation | 10 CIT 569,643 F. Supp. 1139 |
| Parties | GENERAL MOTORS CORPORATION, Plaintiff, v. The UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Barnes, Richardson & Colburn (James S. O'Kelly, New York City, on motion), for plaintiff.
Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office (Saul Davis, New York City, on motion), for defendant.
In this action, plaintiff, General Motors Corporation, challenges the imposition of "diversion" duties upon certain merchandise imported from Canada, and described as "dealer radio packs." The "dealer radio packs" consist of fabricated radio components which, after importation, are assembled into automotive radios.
Upon entry into the United States, since plaintiff claimed that the radios were "intended for use as original equipment in the manufacture in the United States of a motor vehicle," the Customs Service classified the merchandise under item 685.55 of the Tariff Schedules of the United States (TSUS), as original motor vehicle equipment from Canada. Consequently, it was entered and liquidated free of duty.
After importation, plaintiff notified the Customs Service that the "dealer radio packs" were not being installed during the factory assembly of the automobiles. Instead, the radio packs were installed at the retail level by dealers. Accordingly, the Customs Service, by letter ruling, determined that the imported merchandise was "diverted" from its intended use "in the manufacture in the United States of motor vehicles." Therefore, pursuant to Headnote 2(d)(ii) of Schedule 6, Part 6B, TSUS, the Customs Service assessed "diversion" duties, and required plaintiff to pay "an amount equal to the duty which would have been payable at the time of entry if the Canadian article had not been entered as original motor-vehicle equipment."
Plaintiff protests the assessment and seeks to recover its payment. It contends that, although the radio packs were not installed during the factory assembly of the automobiles, but at the retail level by dealers, they are nevertheless properly classifiable as "original motor-vehicle equipment," free of duty, under item 685.55 of the tariff schedules.
Defendant contends that the Court lacks subject-matter jurisdiction over this action under 28 U.S.C. § 1582 (1976). In the alternative, defendant contends that diversion duty was properly imposed on the merchandise, and that summary judgment should be granted in its favor. Since the question presented pertains to the proper classification of the imported merchandise, it is the determination of this Court that defendant's motion to dismiss for lack of jurisdiction is denied. See John V. Carr & Son, Inc. v. United States, 76 Cust.Ct. 162, 163-64, C.D. 4652, 414 F.Supp. 620, 622 (1976). Plaintiff's motion for summary judgment is denied, and defendant's crossmotion for summary judgment is granted.
The pertinent statutory provisions of the Tariff Schedules are as follows:
685.55 Any article described in the foregoing
items 685.11 to 685.50, inclusive, if Canadian
article and original motor-vehicle
equipment (see headnote 2, Part 6B
Schedule 6) ......................... Free
Schedule 6, Part 6, Subpart B, Headnote 2 (emphasis
added)
2. Motor Vehicles and Original
Equipment Therefor of Canadian Origin
(a) The term "original motor-vehicle
equipment", as used in the schedules
with reference to a Canadian article
. . . means such a Canadian article
which has been obtained from a supplier
in Canada under or pursuant to a written
order, contract, or letter of intent of
a bona fide motor-vehicle manufacturer
in the United States, and which is a
fabricated component intended for use
as original equipment in the manufacture
in the United States of a motor
vehicle . . .
. . . .
(d) If any Canadian article accorded
the status of original motor-vehicle
equipment is not so used in the manufacture
in the United States of motor
vehicles, such Canadian article or its
value . . . shall be subject to forfeiture,
unless at the time of the diversion
of the Canadian article the United
States Customs Service is notified in
writing, and, pursuant to arrangements
made with the Service—
(i) the Canadian article is, under customs
supervision, destroyed or exported,
or
(ii) duty is paid to the United States
Government in an amount equal to
the duty which would have been payable
at the time of entry if the Canadian
article had not been entered as
original motor-vehicle equipment.
The following facts are not in dispute. Plaintiff is a "bona fide motor vehicle manufacturer in the United States," and is the importer of record of merchandise that was entered and liquidated duty-free under item 685.55, TSUS. The imported merchandise consists of various fabricated radio components which, after importation, are assembled into automotive or "dealer" radio packs. A radio pack is a fully assembled, individually packaged radio, which is designed to be installed at the retail level by the dealer, rather than at the factory.
After liquidation of the merchandise, plaintiff notified the Customs Service that the radio packs were to be installed by plaintiff's franchised retail dealers as original equipment in new cars, and requested a ruling on the status of the radio packs. The Customs Service, in a letter ruling issued by the Director of the Classification and Value Division, ruled that the radio packs were not used as original motor-vehicle equipment, but had been "diverted" within the meaning of Schedule 6, Part 6B, Headnote 2(d), TSUS, which codifies section 404(d) of the Automotive Products Trade Act of 1965 (APTA), Pub.L. 89-283, 79 Stat. 1016, 1022-23. Hence, plaintiff paid an amount equal to the duty which would have been payable at the time of entry if the Canadian articles had not been entered as original motor-vehicle equipment. Plaintiff protested the payment and, by this action, seeks to recover the diversion duties.
Plaintiff contends that this Court has jurisdiction under 28 U.S.C. § 1582(a)(2) and (3) (1976). It also maintains that the decision of Customs, which held that the merchandise was diverted within the meaning of Schedule 6, Part 6B, Headnote 2(d)(ii), is erroneous.
Two questions are presented. The first, a question of first impression for the Court of International Trade, is whether the Court has jurisdiction over plaintiff's protest of the imposition of "diversion" duty. The second is whether, within the meaning of the relevant tariff schedules, the dealer-installed radios fall within the statutory definition of original motor-vehicle equipment.
This action was originally filed in the United States Customs Court, predecessor of the United States Court of International Trade. The jurisdictional provisions applicable at the time the action was commenced provided:
exclusive jurisdiction of civil actions instituted by any person whose protest pursuant to the Tariff Act of 1930, as amended, has been denied, in whole or in part, by the appropriate customs officer, where the administrative decision ... involves: ... (2) the classification and rate and amount of duties chargeable; (3) all charges or exactions of whatever character within the jurisdiction of the Secretary of the Treasury.
Customs Court Act of 1970 § 110, 28 U.S.C. § 1582(a) (1976) (amended 1980 & 1984). A protest of a decision, order, or finding must be filed within 90 days after, but not before, notice of liquidation or the date of the decision to which protest is made. Tariff Act of 1930 § 514, 19 U.S.C. § 1514(c)(2) (1982).
In its complaint, plaintiff alleges that a challenge to the validity of diversion duties is within the jurisdiction of this Court pursuant to 28 U.S.C. § 1582(a)(2) and (3). Defendant, however, contends that this Court lacks jurisdiction over the present case because: (1) the payment of diversion duties is not a cognizable cause of action under either section 1582 or section 1514, (2) the payment of diversion duties by the plaintiff is not a charge or exaction, (3) the action protested by plaintiff was the result of a settlement between plaintiff and defendant, (4) plaintiff failed to file a timely protest, and (5) plaintiff failed to notify Customs in writing at the time of the diversion as required under Headnote 2 to Section 6, Part 6B.
It is established that, when a jurisdictional issue is raised, plaintiff has the burden to prove that jurisdiction exists. See, e.g., Lowa, Ltd. v. United States, 5 CIT 81, 83, 561 F.Supp. 441, 443 (1983), aff'd, 724 F.2d 121 (Fed.Cir.1984). It is also established that there is a "strong presumption that Congress intends judicial review of administrative action." Bowen v. Michigan Academy of Family Physicians, ___ U.S. ___, 106 S.Ct. 2133, 2135, 90 L.Ed.2d 623 (1986); Abbott Laboratories v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967); see also Suwannee Steamship Co. v. United States, 70 Cust.Ct. 327, 329, 354 F.Supp. 1361, 1363 (1973). Indeed, it may be said that judicial review of administrative action "is the rule, and nonreviewability an exception which must be demonstrated." Barlow v. Collins, 397 U.S. 159, 166-67, 90 S.Ct. 832, 838, 25 L.Ed.2d 192 (1970).
Defendant contends that plaintiff's payment of diversion duties does not give rise to a cognizable cause of action within the jurisdiction of this Court because the payment of duties is not a protestable "decision of the appropriate customs officer," within the...
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