ME Glob., Inc. v. United States
| Docket Number | Slip Op. 23-68,Court No. 19-00179 |
| Decision Date | 02 May 2023 |
| Citation | 633 F.Supp.3d 1349 |
| Parties | ME GLOBAL, INC., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
John M. Peterson, Neville Peterson, LLP, of New York, NY, argued for Plaintiff ME Global, Inc. With him on the brief were Richard F. O'Neill and Patrick B. Klein.
Alexander J. Vanderweide, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for Defendant United States. With him on the brief were Brian M. Boynton, Acting Assistant Attorney General, Patricia M. McCarthy, Director, and Justin R. Miller, Attorney-In-Charge, International Trade Field Office. Of counsel on the brief was Valerie Sorensen-Clark, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection.
Before the court are the cross-motions for summary judgment of plaintiff ME Global, Inc.1 ("Plaintiff") and defendant the United States, on behalf of the U.S. Customs and Border Protection ("Customs"). See Pl.'s Mem. Supp. Mot. Summ. J. ("Pl.'s Br."), ECF No. 20-2; Pl.'s Reply Supp. Mot. Summ. J. Opp'n Def.'s Cross-Mot. Summ. J. ("Pl.'s Reply"), ECF No. 27; see also Def.'s Mem. Supp. Cross-Mot. Summ. J. and Resp. Opp'n Pl.'s Mot. Summ. J. ("Def.'s Br."), ECF No. 23; Def.'s Reply Pl.'s Opp'n Def.'s Cross-Mot. Summ. J. (Def.'s Reply"), ECF No. 30. At issue is the proper classification of heat-treated forged steel rods from the People's Republic of China ("China"), entered by Plaintiff on August 4, 2018. See Entry Summary, ECF No. 7-1.
For the reasons set forth below, Customs' cross-motion for summary judgment is granted, Plaintiff's motion for summary judgment is denied, and the court finds that Plaintiff's heat-treated forged steel rods are properly classified under the Harmonized Tariff Schedule of the United States ("HTSUS") (2018)2 subheading 7228.40.00 as "[o]ther bars and rods, not further worked than forged."
The facts described below have been taken from the admitted portions of the parties' USCIT Rule 56.3 statements and supporting exhibits, and findings based on record evidence on which no reasonable fact-finder could come to an opposite conclusion. See Pl.'s Statement of Material Facts Not in Dispute ("Pl.'s SOF"), ECF No. 20-3; Pl.'s Resp. to Def.'s Statement of Material Facts Not in Dispute ( ), ECF No. 27-1; Def.'s Statement of Material Facts Not in Dispute ("Def.'s SOF"), ECF No. 23; Def.'s Resp. to Pl.'s Statement of Material Facts Not in Dispute ( ), ECF No. 23.
At issue are heat-treated forged steel rods, which are used to crush ore in mining and mineral extraction operations. Pl.'s SOF ¶ 6. When in use, the subject rods lie in parallel alignment in a large rotating cylinder or "mill." Id. ¶ 21. Ore is fed into the mill and, as it rotates, the ore is crushed between the rods. Id. This pulverizes the ore into a finer composition, allowing for the recovery of metals such as gold, copper, silver, and iron. Id. ¶¶ 20-21.
The rods are produced in China by Plaintiff's joint venture called ME Global Long Teng Grinding Media (Changshu) Co. Ltd. ("ME Long Teng"). Id. ¶ 6. To manufacture the imported rods, steel blooms3 are first heated, hot-rolled into bars, and then cooled. Def.'s SOF ¶ 2. The steel bars are then sent to ME Long Teng's plant where they are cut to the customer's desired length, heated in a series of Inductoforge4 devices, and then processed by a series of forging dies and passed through a water quenching system. Id.
The result of this process is a steel rod comprised of a hard outer surface of martensite and a softer inner core of pearlite. Pl.'s SOF ¶ 16. The hardness of the outer martensite layer makes the rods suitable for breaking down ore and mineral structures, while the softness of the inner pearlite core provides ductility, which prevents the bars from breaking while being used in the mill. Id. ¶ 17.
The subject rods, as imported, have a chromium content between 0.3% and 0.39% by weight. See Def.'s SOF ¶ 3; see also Pl.'s Resp. SOF ¶ 3.
Plaintiff ME Global, Inc., the importer of record of the rods, entered them as a single entry at the Port of Minneapolis, Minnesota on August 4, 2018, Entry No. 791-1880870-3. See Entry Summary. Customs classified the rods under HTSUS subheading 7228.30.80 ("Other bars and rods, not further worked than hot-rolled, hot-drawn or extruded . . . Other"). Def.'s SOF ¶ 1.
When Plaintiff entered the rods, goods classified under HTSUS subheading 7228.30.80 were subject to a national security tariff of 25% ad valorem imposed under HTSUS subheading 9903.80.01 (establishing 25% ad valorem duties for, inter alia, Chinese products of iron or steel classified under HTSUS heading 7228), pursuant to Section 232 of the Trade Expansion Act of 1962.5 See 19 U.S.C. § 1862 (2018); see also Subheading 9903.80.01, HTSUS (referencing HTSUS subheading 7228.30.80).
On March 22, 2019, Plaintiff filed a timely protest of Customs' classification of its steel rods. See Mem. Supp. Protest (Mar. 22, 2019), ECF No. 7-1; see also Compl. ¶ 31, ECF No. 9. On May 13, 2019, Customs denied Plaintiff's protest. Compl. ¶ 32. On May 21, 2020, Plaintiff then filed its timely complaint with the court contesting Customs' denial of its protest.
The court has subject matter jurisdiction under 28 U.S.C. § 1581(a) and reviews Customs' classification determination de novo. See 28 U.S.C. § 1581(a) (2018); see also id. § 2640(a)(1); Telebrands Corp. v. United States, 36 C.I.T. 1231, 1234, 865 F. Supp. 2d 1277, 1279-80 (2012), aff'd, 522 F. App'x 915 (Fed. Cir. 2013).
Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." USCIT R. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "When both parties move for summary judgment, the court must evaluate each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration." JVC Co. of Am. v. United States, 234 F.3d 1348, 1351 (Fed. Cir. 2000) (citing McKay v. United States, 199 F.3d 1376, 1380 (Fed. Cir. 1999)). In the context of a Customs classification case, summary judgment is appropriate when there is no factual dispute as to the nature of the merchandise in question. See Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed. Cir. 2006).
The objective in a classification case is to determine the correct tariff provision for the subject merchandise. See Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984). While the court affords deference to Customs' classification rulings relative to their "power to persuade," it has "an independent responsibility to decide the legal issue of the proper meaning and scope of the HTSUS terms." See United States v. Mead Corp., 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)); see also Warner-Lambert Co. v. United States, 407 F.3d 1207, 1209 (Fed. Cir. 2005). As such, it is "the court's duty to find the correct result, by whatever procedure is best suited to the case at hand." Jarvis Clark, 733 F.2d at 878 (emphasis in original).
The court's review of a classification determination involves two steps. See Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1365 (Fed. Cir. 1998) (citation omitted). First, it must construe the relevant classification headings—a question of law. See id. Second, it must determine which of the properly construed tariff provisions the merchandise at issue falls under—a question of fact. See id. When the nature of the merchandise is undisputed, as is the case here, the issue collapses entirely into a question of law ripe for summary judgment. See Cummins Inc., 454 F.3d at 1363.
The General Rules of Interpretation ("GRI")6 "govern classifications of imported goods under [the] HTSUS and [are] appl[ied] in numerical order." CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364 (Fed. Cir. 2011) (citing BASF Corp. v. United States, 482 F.3d 1324, 1325-26 (Fed. Cir. 2007)). Most classification disputes are resolved by the application of GRI 1. See Telebrands Corp., 36 C.I.T. at 1235, 865 F. Supp. 2d at 1280. If a good is not classifiable under GRI 1, and if the headings and notes do not require otherwise, then the other GRIs will be considered in numerical order. See Schlumberger Tech. Corp. v. United States, 845 F.3d 1158, 1163 (Fed. Cir. 2017) (citation omitted) ("The GRI apply in numerical order, meaning that subsequent rules are inapplicable if a preceding rule provides proper classification."). Under GRI 1, the court determines the appropriate classification of merchandise "according to the terms of the headings[7] and any relative section or chapter notes." GRI 1, HTSUS.8 The HTSUS section and chapter notes "are not optional interpretive rules," but instead have the force of statutory law. Aves. in Leather, Inc. v. United States, 423 F.3d 1326, 1333 (Fed. Cir. 2005) (quoting Park B. Smith, Ltd. v. United States, 347 F.3d 922, 926 (Fed. Cir. 2003)).
"Only after determining that a product is classifiable under [a specific] heading should the court look to the subheadings . . . ." Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed. Cir. 1998). Moreover, "the possible [tariff] headings are to be evaluated without reference to their subheadings, which cannot be used to expand the scope of their respective headings." R.T. Foods, Inc. v. United States, 757 F.3d 1349, 1353 (Fed. Cir. 2014) (citing Orlando Food Corp., 140 F.3d at 1440).
"[T]he court also may consider the Explanatory Notes to the Harmonized Commodity Description and Coding System [(the "Explanatory Notes")], developed by the World Customs Organization." See ...
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