Guess? Inc. v. US
| Decision Date | 26 November 1990 |
| Docket Number | Court No. 88-09-00707. |
| Citation | 752 F. Supp. 463 |
| Parties | GUESS? INCORPORATED, Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Dickstein, Shapiro & Morin, Joel Davidow, Washington, D.C., for plaintiff.
Stuart M. Gerson, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Office, Nancy M. Frieden, New York City, for defendant.
This case is before the court on cross motions for summary judgment, on which the Court heard oral argument. The sole question is whether or not the United States Customs Service was correct to deny a refund of Customs duty otherwise known as "drawback" to Guess, Inc. Guess applied for drawback when it exported certain cotton denim wearing apparel from the United States. This dispute involves a 1984 amendment to the law governing drawback which, for the first time, provided drawback upon the exportation of merchandise which was not the self-same merchandise upon which duty had been paid. The main issue in this case is whether the merchandise exported by plaintiff Guess satisfied the statutory conditions for merchandise seeking the benefits of this new form of drawback. In terms of the relevant statute, which will shortly be discussed, the issue is whether the exported merchandise and the imported merchandise were fungible.
The controversy centers on the fact that although the merchandise exported from the United States was, in almost all respects, identical to that which was imported, the labels identifying the country of manufacture were different. Those garments exported from the United States bore labels identifying them as made in the United States and the court must explore the legal consequences of that labeling in the circumstances of this case.
Between December 1, 1986 and December 30, 1987, plaintiff Guess exported various cotton denim wearing apparel through the port of Los Angeles, California. Thereafter, Guess filed 24 drawback entries seeking drawback under 19 U.S.C. § 1313(j)(2), § 202 of the Trade and Tariff Act of 1984, Pub.L. 98-573. The Customs Service liquidated the entries and denied the drawback claims on the ground that the merchandise involved did not qualify for such treatment under the law. The government relied on the fact that plaintiff's foreign customers demanded garments which showed that they were made in the United States. This state of affairs was brought to the attention of the Customs Service in a letter from the import manager of plaintiff Guess which stated that "... domestically produced garments are the only one shipped overseas as our foreign customers demand the Made in U.S. Label...."
Plaintiff Guess argues that labeling should not have a controlling effect on the question of whether or not the U.S. made goods met the statutory requirements. According to Guess, the fungibility of the goods in a general commercial or contractual sense should suffice to bring them within the coverage of the statute. The government takes the position that the existence of a customer preference for garments with a "Made in the U.S." label destroys the fungibility between those garments and garments bearing labels indicating that they were manufactured elsewhere, even though all other physical elements of the garments may be identical.
The Court begins by examining the plain language of § 313(j) of the Tariff Act of 1930 as amended in 1984 by Pl. 98-573, § 201 (19 U.S.C. § 1313(j)(2)). The text of that law reads in part as follows:
The Court notes first that the provision under consideration is a recent refinement of a provision for remission of duties which has been in effect, one way or another, since 1789. Section 2 of the Act of July 4, 1789, ch. II, 1 Stat. 24 provided that if merchandise was exported within twelve months after importation, all but 1% of the duties paid were to be returned. Various forms of drawback have remained in the tariff laws to the present day. The original form of the section under consideration here, when it was first included in the Tariff Act of 1930, 46 Stat. 693, limited the benefits of drawback to merchandise which, after importation, had been manufactured in some way in the United States. In 1980, Congress removed that limitation by amending the Tariff Act of 1930 to authorize "same condition drawback," namely, the drawback of duty paid upon imported merchandise which was subsequently exported without being manufactured. P.L. 96-609, § 201(a), 94 Stat. 3560, adding subsection (j) to § 313 of the Act, 19 U.S.C. § 1313(j). Finally, in 1984, Congress allowed drawback for the exportation of merchandise which was not the actual merchandise upon which duty had been paid. This new concept is called "substitution same condition drawback" and is now encompassed in 19 U.S.C. § 1313(j)(2). The law states that the exported merchandise must be "fungible" with the imported merchandise on which duty was paid and for which drawback is sought.
Pursuant to the authority granted to him in 19 U.S.C. § 1313(j)(1) the Secretary of Treasury has issued regulations governing the operation of the provisions for same conditions substitution drawback which define fungible merchandise as "merchandise which for commercial purposes is identical and interchangeable in all situations." 19 C.F.R. § 191.2(b)(1).
The Court undertakes its interpretation of this statute with a number of basic factors in mind. First is the desirability of looking directly to the language of the statute in order to ascertain the meaning of words in dispute. North Dakota v. United States, 460 U.S. 300, 312, 103 S.Ct. 1095, 1102, 75 L.Ed.2d 77 (1983); United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246...
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