Gulfstream Aerospace Corp. v. U.S.

• Decision Date: 19 September 1997
• Docket Number: No. 94-02-00103.,Slip Op. 97-137.,94-02-00103.
• Parties: GULFSTREAM AEROSPACE CORP., Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

Page 654

981 F.Supp. 654

GULFSTREAM AEROSPACE CORP., Plaintiff, v. The UNITED STATES, Defendant.

Slip Op. 97-137.

No. 94-02-00103.

United States Court of International Trade.

September 19, 1997.

COPYRIGHT MATERIAL OMITTED

Grunfeld, Desiderio, Lebowitz & Silverman (Jonathan M. Fee, Atlanta, GA, David M. Murphy, New York City), for plaintiff.

Frank W. Hunger, Assistant Attorney General; Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Saul Davis); of counsel: Beth C. Brotman, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service, Washington, DC, for defendant.

OPINION

MUSGRAVE, Senior Judge.

This action is before the Court on cross-motions for summary judgment pursuant to USCIT Rule 56. Plaintiff Gulfstream Aerospace Corporation ("Gulfstream") contests the denial by the United States Customs Service ("Customs") of protests seeking duty-free entry of civil aircraft parts.

Background

The subject of this dispute is whether civil aircraft parts, imported by Gulfstream between November 1990 and August 1991, qualify for duty-free entry under the Agreement on Trade in Civil Aircraft ("ATCA"). When the parts in this case were entered, Gulfstream originally classified them under tariff headings which were not eligible for ATCA duty-free treatment. Customs reviewed Gulfstream's entered classifications and determined that Gulfstream's original classifications were incorrect on all but four entries,¹ and re-classified the incorrect entries. The re-classification placed the parts under tariff headings which were eligible for duty-free treatment pursuant to the ATCA.

Duty-free treatment does not apply automatically to ATCA-eligible merchandise, however. Customs regulations require that an importer file documents certifying that the parts are in fact intended for use in civil aircraft and approved by the Federal Aviation Administration ("FAA") for such use. Further, the regulations require that these certifications be filed at the same time that entry summaries for the parts are filed. The regulation language states:

At the time of filing the entry summary, the importer of civil aircraft parts shall submit a certificate [attesting to ATCA-eligibility].... Failure to provide the certification at the time of filing the entry summary or to have an approved blanket certification on file with the district director in the district where the entry summary is filed shall result in a dutiable entry.

19 C.F.R. § 10.183(c)(2) (1990). The regulations permit an importer to file the ATCA certifications either with each entry ("entry-by-entry") or to have on file a "blanket" certification covering all entries for up to one year. 19 C.F.R. § 10.183(c)(2), (d)(1)-(2) (1990).

Gulfstream had a blanket certification on file with Customs until just prior to the entry of the parts in this case. Gulfstream was prevented from maintaining its blanket certification by a Customs headquarter ruling, later overruled, and all the parts in this case were entered during the time when Customs improperly refused Gulfstream the use of a blanket certification. Thus, at the time of Customs' re-classification of the entered parts, there were no operative certifications on file with Customs; Gulfstream filed the required certifications entry-by-entry once Customs re-classified the merchandise.

Gulfstream's entry-by-entry ATCA certifications were not filed simultaneously with the entry summaries because the imported civil aircraft parts only became ATCA-eligible upon Customs' re-classification of them, which occurred after the entry summaries had been filed. Customs refused the certifications for lateness and denied duty-free treatment of Gulfstream's merchandise. Gulfstream protested under 19 U.S.C. § 1514, claiming that the parts should have been liquidated duty-free because Customs had denied Gulfstream the use of a blanket certification and re-classified the merchandise after entry summaries had been filed; thus Customs, not Gulfstream, had made it impossible to comply with § 10.183(c)(2). There is no dispute that Gulfstream's merchandise qualifies for ATCA duty-free treatment, but for Customs' application of the regulatory language. § 10.183(c)(2) stated: "Failure to comply [with the simultaneous filing requirement] ... shall result in a dutiable entry," which Customs held to mean that an importer who fails to file certifications and entry summaries simultaneously is barred from remedying the mistake. Customs invoked § 10.183(c)(2) and ruled that Gulfstream was precluded from any relief which would remedy the late filing and provide Gulfstream with duty-free treatment for its merchandise.

Gulfstream challenges the enforcement of the § 10.183(c)(2) language which precludes an importer from seeking relief for late filing. Gulfstream contends that the reliefpreclusive language of the regulation had been invalidated by an earlier decision of this Court and that Customs is collaterally estopped from enforcing it. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(a), and finds that Customs is estopped from enforcing the invalid portion of Customs Regulation 10.183(c)(2). The Court further finds that Gulfstream is entitled to relief, and Gulfstream's motion for summary judgment is granted.

Standard of Review

Decisions of the Customs Service are presumed to be correct, 28 U.S.C. § 2639(a)(1) (1994), but the presumption of correctness applies solely to factual questions and it is the duty of this Court to find the correct result.² The classification decision entails a three-step process including a factual and a legal inquiry, and an ultimate mixed question involving both factual and legal components. The factual inquiry is subject to the "clearly erroneous" standard while the purely legal and ultimate mixed questions are reviewed de novo. Bausch & Lomb, Inc. v. United States, 21 CIT ___, ___, 957 F.Supp. 281, 284 (1997).

Both parties have moved for summary judgment. Summary judgment is appropriate if "there is no genuine issue as to any material fact ... and the moving party is entitled to judgment as a matter of law." CIT R. 56(d); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "The party opposing summary judgment may not rest on its pleadings, but must respond with specific facts showing the existence of a genuine issue for trial." Pfaff American Sales Corp. v. United States, 16 CIT 1073, 1075 (1992) (citations omitted).

The Court of Appeals for the Federal Circuit considers the use of summary judgment as an efficient mechanism for the resolution of disputes.

The recent trilogy of Supreme Court cases establishes that "[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'"

Avia Group Int'l, Inc. v. L.A. Gear California, Inc., 853 F.2d 1557 (Fed.Cir.1988) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986); citing Anderson v. Liberty Lobby, 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 and Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1349, 89 L.Ed.2d 538 (1986)). The Court finds that no genuine issue as to any material fact exists in this case.

Discussion

I. The Customs Service is estopped from enforcing the invalidated language of 19 C.F.R. § 10.183(c)(2).

Customs denied Gulfstream's protest in this case because Gulfstream did not file documents, certifying its merchandise as civil aircraft parts, at the same time as it filed the entry summary documents for that merchandise. The requirement that the certifying documents and entry summaries be filed simultaneously is found in the language of Customs Regulation 10.183(c)(2) (1990). The regulation also precludes an importer from remedying a failure to file simultaneously. Gulfstream argues that Customs is collaterally estopped from enforcing the relief-preclusive portion of the regulation because that language was declared invalid by a previous decision of this Court. Customs argues that collateral estoppel does not apply against the government, or in the alternative, that collateral estoppel does not apply in classification cases. For the following reasons, the Court finds that Customs is collaterally estopped from enforcing the invalidated language of Customs Regulation 10.183(c)(2).

The issue which Gulfstream seeks to prevent Customs from re-litigating was adjudged in Aviall of Texas, Inc. v. United States, 18 CIT 727, 861 F.Supp. 100 (1994), aff'd, Aviall of Texas, Inc. v. United States, 14 Fed. Cir (T) ___, 70 F.3d 1248 (1995). In Aviall, this Court found that Customs failed to comply with the Administrative Procedure Act ("APA") in promulgating 19 C.F.R. § 10.183. Aviall of Texas, Inc. v. United States, 18 CIT 727, 861 F.Supp. 100. Specifically, Customs did not make a portion of § 10.183(c)(2) available for public comment as required by the APA, and that portion, which first appeared in the final rule, was ruled invalid and unenforceable. Id. The invalidated portion reads as follows:

The certification may not be treated as a missing document for which a bond may be posted. Failure to provide the certification at the time of filing the entry summary or to have an approved blanket certification on file with the district director where the entry summary is filed shall result in a dutiable entry.

19 C.F.R. § 10.183(c)(2) (1990); Aviall of Texas, Inc. v. United States, 18 CIT at 731, 861 F.Supp. at 104. The valid portions of § 10.183(c)(2) still require an importer to file the ATCA certifications simultaneously with the entry summary,³ but Aviall held that Customs cannot preclude an importer from...