Heartland By-Products v. U.S.
| Decision Date | 30 August 2001 |
| Docket Number | BY-PRODUCT,Nos. 00-1287,00-1289,INC,s. 00-1287 |
| Parties | (Fed. Cir. 2001) HEARTLAND, Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellant, and UNITED STATES BEET SUGAR ASSOCIATION, Defendant-Appellant |
| Court | U.S. Court of Appeals — Federal Circuit |
Simeon M. Kriesberg, Mayer, Brown & Platt, of Washington, DC, argued for plaintiff-appellee. With him on the brief were Kathryn Schaefer and Andrew A. Nicely. Of counsel on the brief were David Serko, Daniel J. Gluck, and Jerome L. Hanifin, Serko & Simon LLP, of New York, New York.
Aimee Lee, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of New York, New York, argued for defendant-appellant United States. With her on the brief were David M. Cohen, Director, Department of Justice, of Washington, DC; and Joseph I. Liebman, Attorney in Charge, International Trade Field Office, of New York, New York. Of counsel on the brief were Karen P. Binder, Assistant Chief Counsel; International Trade Litigation; and Yelena Slepak, Office of Assistant Chief Counsel, U.S. Customs Service, of New York, New York. Also of counsel on the brief were Allan Martin, Associate Chief Counsel; and Ellen Daly, Office of Chief Counsel, U.S. Customs Service, of Washington, DC.
Lewis J. Liman, Wilmer, Cutler & Pickering, of New York, New York, argued for defendant-appellant United States Beet Sugar Association. Of counsel on the brief were Amber L. Cottle, and Deirdre A. McDonnell, Wilmer, Cutler & Pickering, of Washington, DC.
Barry Nemmers, Member of the Board of Directors, American Association of Exporters and Importers, for amicus curiae American Association of Exporters and Importers.
Daniel J. Plaine, Gibson, Dunn & Crutcher LLP, of Washington, DC, for amici curiae Florida Crystals Corporation, et al.
Robert W. Johnson II, Johnson, Rogers & Clifton, L.L.P., of Washington, DC, for amicus curiae International Sugar Policy Coordinating Commission of the Dominican Republic.
Peter Buck Feller, McKenna & Cuneo, L.L.P., of Washington, DC, for amicus curiae Sweetner Users Association. With him on the brief was Kurt J. Hamrock.
Before NEWMAN, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and SCHALL, Circuit Judge.
The United States and the United States Beet Sugar Association (collectively, "Appellants") appeal the decision of the United States Court of International Trade in favor of Heartland By-Products, Inc. ("Heartland") that declared that the classification of Heartland's sugar syrup by the United States Customs Service ("Customs") under subheadings 1702.90.10/20 of the Harmonized Tariff Schedule of the United States ("HTSUS") was unlawful and that held that the syrup is properly classified under subheading 1702.90.40 of the HTSUS. Heartland By-Prods., Inc. v. United States, 74 F. Supp. 2d 1324 (Ct. Int'l Trade 1999). Because we conclude that Customs' classification ruling has power to persuade under Skidmore v. Swift & Co., 323 U.S. 134 (1944), we reverse.
Under the HTSUS, the volume of sugar imported into the United States is controlled by a Tariff Rate Quota ("TRQ"). See Additional U.S. Notes, 17 HTSUS (2000). Sugar entered under the quota is subject to a lower rate of duty than sugar entered above the quota. Id. Sugar syrups are classified under heading 1702:
1702
Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavoring or coloring matter; artificial honey, whether or not mixed with natural honey; caramel:
* * *
1702.90
Other, including invert sugar:
Derived from sugar cane or sugar beets:
Containing soluble non-sugar solids (excluding any foreign substances that may have been added or developed in the product) equal to 6 percent or less by weight of the total soluble solids:
1702.90.05
Described in general note 15 of the tariff schedule and entered pursuant to its provisions.1
Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions.2
Other:
1702.90.35
Invert molasses.
HTSUS (2000). Syrups classified under 1702.90.10 HTSUS and 1702.90.20 HTSUS are subject to the TRQ, whereas syrups classified under 1702.90.40 HTSUS are not.
Heartland was established in 1995 in Taylor, Michigan. Shortly after being established, Heartland sought an advance ruling from Customs regarding the classification of a sugar syrup it was considering importing from Canada. See 19 C.F.R. 177.1 (1995) (). Heartland described the sugar syrup as consisting of sugar, water, and soluble non-sugar solids consisting of approximately 70 percent by weight of dissolved solids and approximately 30 percent by weight of water. Heartland indicated that the syrup meets the following analysis, by weight, on a dry solid basis:
approximately 93.5% but not equal to more than 94% of sugar cane and/or beet origin of which unintentionally created reducing sugars (invert) make up less than 5%
and
approximately 6.5% but not equal to or less than 6.0% of soluble non-sugar solids of cane and/or beet origin.
Heartland stated that it believed that the syrup should be classified under 1702.90.40 HTSUS. Heartland explained that the syrup falls under 1702.90 HTSUS because it is not a syrup of lactose, maple, glucose or fructose and, therefore, does not fall under the prior subheadings of 1702. Heartland asserted that the syrup falls under 1702.90.40 HTSUS because it contains more than 6% by weight of soluble, non-sugar solids with no foreign substances, and is not a molasses.
In response to Customs' request for information on how the syrup is made, Heartland described the manufacturing process as follows:
1. Granular raw sugar would be combined with molasses, of cane or beet origin, in the correct proportions to produce a brown sugar of approximately 93 percent polarity. To ensure adequate mixing, the granular raw sugar would be sprayed with the molasses and run through a blending screw.
2. The 93 percent polarity brown sugar would then be dissolved in hot water within an agitated and heated vessel to produce a simple syrup of approximately 70% by weight dissolved solids.
Customs agreed with Heartland's proposed classification, and issued a ruling letter classifying the syrup under 1702.90.40 HTSUS. N.Y. Ruling Letter 810329 (May 15, 1995) ("New York Ruling Letter"). With this classification, Heartland's sugar syrup was not subject to the TRQ.
Relying on this ruling, Heartland established a business around the manufacture and importation of the sugar syrup. Heartland began its refining operations in mid-1997. In September of 1997, Customs investigated Heartland's operations in response to information from an industry source that Heartland might be importing sugar syrup in an attempt to avoid the TRQ. Customs could not substantiate the allegations; it therefore closed its investigation in October of 1997 without taking any action against Heartland.
On January 14, 1998, the United States Cane Sugar Refiners' Association, the United States Beet Sugar Association, and their member companies (collectively, the "Associations") filed a petition under 19 U.S.C. 1516 and/or 19 U.S.C. 1625, seeking reclassification of Heartland's sugar syrup under either 1702.90.20 HTSUS or 1702.90.58/54 HTSUS.3 The Associations argued that the classification of Heartland's sugar syrup under 1702.90.40 HTSUS defeated the purpose of the 6% solids content provision of 1702.90.20 HTSUS. The Associations argued that the provision was adopted to ensure that sugar syrups containing less than 6% non-sugar solids would be subject to the TRQ because such syrups compete directly with sugar. The Associations argued that Heartland's sugar syrup should be classified under 1702.90.20 HTSUS because it is derived from sugar cane or sugar beets and contains less than six percent soluble non-sugar solids. Alternatively, the Associations argued that Heartland's sugar syrup should be classified under 1702.90.54/58 HTSUS, which encompasses certain "Blended syrups described in additional U.S. note 4 to chapter 17," because it meets the description in Additional U.S. note 4 of a syrup that contains "sugars derived from sugar cane or sugar beets, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported."
On June 9, 1999, Customs published notice of its intent to revoke the New York Ruling Letter and to reclassify Heartland's sugar syrup under 1702.90.10 HTSUS or 1702.90.20 HTSUS, depending on whether the quantitative limitations of the TRQ had been met. Proposed Revocation of Ruling Letter & Treatment Relating to Tariff Classification of Certain Sugar Syrups, 33 Cust. Bull. No. 22/23, at 52 (June 9, 1999). In the proposed ruling letter, Customs determined that "there are no commercial identities or commercial uses for the syrups as imported other than the extraction of the molasses after importation, and the subsequent use of the syrups in the same manner as other syrups classified in provisions of the tariff that are subject to [the TRQ]." Id. at 57. Customs reasoned that, as a matter of law, it could consider the product's uses when determining its proper classification. Id. Customs stated that "it was the intent of the Presidential Proclamations which established the quotas to include the sugar syrups in question [in the TRQ.]" Id. at 59. Customs determined that Heartland's sugar syrup would have been subject to a quota under the Tariff Schedules of the United States ("TSUS"), which were in effect prior to the adoption of the HTSUS, and that conversion to the HTSUS was not intended to change the applicability of the sugar quotas to...
To continue reading
Request your trial
-
Heartland by-Products, Inc. v. U.S.
...of the disposition by the Court of Appeals for the Federal Circuit of an earlier decision by this court. Heartland By-Products, Inc. v. United States, 264 F.3d 1126 (Fed.Cir.2001). The original complaint challenged a revocation ruling by the Customs Service which would have increased the ta......
-
Heartland by-Products, Inc. v. U.S.
...1126 (Fed. Cir.2001) ("Heartland II") must be treated by the Court of International Trade as retroactive as to entries made before our Heartland II decision. We hold that the Court of International Trade erred in holding that our Heartland II decision was not retroactive, and we However, ......
-
Ford Motor Co. v. United States
...See Heartland By–Products, Inc. v. United States ("Heartland I "), 23 CIT 754, 74 F.Supp.2d 1324 (1999), rev'd , 264 F.3d 1126 (Fed. Cir. 2001) (" Heartland II "). Heartland I concerned the correct classification of sugar syrup to which molasses was added during manufacturing and then extra......
-
Jewelpak Corp. v. U.S., 01-1300.
...292 (2001) (citing Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944)); see also Heartland By-Products, Inc. v. United States, 264 F.3d 1126, 1133 (Fed.Cir.2001). As Customs' classifications are presumed correct under 28 U.S.C. § 2639(a)(1), the burden of proving that ......