Heraeus-Amersil, Inc. v. United States

• Decision Date: 13 December 1984
• Docket Number: Court No. 81-1-00100.
• Citation: 8 CIT 329,600 F. Supp. 221
• Parties: HERAEUS-AMERSIL, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

600 F. Supp. 221

8 CIT 329

HERAEUS-AMERSIL, INC., Plaintiff, v. UNITED STATES, Defendant.

Court No. 81-1-00100.

United States Court of International Trade.

December 13, 1984.

Fitch, King & Caffentzis, New York City (Richard C. King, New York City, on the motion), for plaintiff.

Richard K. Willard, Acting Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Attorney in Charge, Commercial Litigation Branch, New York City (John J. Mahon, New York City, on the cross-motion), for defendant.

Memorandum Opinion and Order on Plaintiff's Motion to Strike and Defendant's Cross-Motion to Dismiss in Part.

CARMAN, Judge:

Plaintiff moves pursuant to Rules 8(c) and 12(f) of the Rules of the United States Court of International Trade¹ for an order striking certain denials from the defendant's answer. Defendant opposes the motion and cross-moves to dismiss in part for failure to state a claim upon which relief can be granted pursuant to rule 12(b)(5).

The underlying dispute pertains to the proper classification of certain imported merchandise known as "fused quartz" or "fused silica." The United States Customs Service (Customs) classified the merchandise under item 540.67 of the Tariff Schedules of the United States (TSUS), as modified by T.D. 68-9.² Plaintiff claims that classification is proper under items 540.11 and 540.41 of the TSUS.³ Plaintiff, in supporting its proposed classification, claims that at the relevant times "an established and uniform practice" existed within the meaning of 19 U.S.C. § 1315(d) (1982) with respect to the classification of fused quartz and fused silica.⁴ Under plaintiff's theory, Customs could not deviate from that practice until 30 days after publication of a notice in the Federal Register.

Defendant denies that an established and uniform practice existed. Defendant maintains that absent a "finding" that such a practice exists by the Secretary of the Treasury, or a ruling published by Customs pursuant to 19 C.F.R. § 177.10(b) (1983),⁵ no established and uniform practice can arise. Defendant therefore concludes that plaintiff's claims as to a uniform practice fail as a matter of law and must be dismissed.

As is evident from paragraph 37 of the complaint, plaintiff believes that because similar merchandise at various ports has been uniformly classified under items 540.11 and 540.41 since 1963, that this practice constitutes an "established and uniform practice" within section 1315(d).

Defendant's answer at paragraph 40 offers a simple "Denied" in response to the established and uniform practice claim and further avers that no section 1315(d) "finding" has ever been made. Plaintiff moves to strike this denial, as well as the similar denial in paragraph 42 of the answer, on the ground that the responses constitute defenses that are insufficient as a matter of law.

In response, defendant claims simply that the responses in paragraphs 40 and 42 are sufficient as a matter of law. Defendant also cross-moves to dismiss that part of the complaint relating to an established and uniform practice, paragraphs 35 through 42.

The Court first addresses defendant's motion to dismiss in part because resolution of this issue impacts largely upon plaintiff's motion to strike.

I. AN ESTABLISHED AND UNIFORM PRACTICE

Underlying defendant's motion to dismiss in part is the assumption that "an established and uniform practice" under section 1315(d) can only arise from a formal "finding" by the Secretary or by a "ruling" published pursuant to 19 C.F.R. § 177.10(b) (1983). Plaintiff, on the other hand, asserts that such a practice can be established by actual liquidations over a period of time at many ports.

Subsection (d) of section 1315 was added to the Tariff Act of 1930 by the Customs Administrative Act of 1938, ch. 679, § 6, 52 Stat. 1077, 1081 (codified as amended at 19 U.S.C. § 1315(d) (1982)). Legislative history pertaining to the 1938 Act is sparse, but reveals Congress' desire "to facilitate efficient administration of the customs laws." S.Rep. No. 1465, 75th Cong., 3d Sess. 6 (1938). The proposed enactment was termed neither "an importers' bill nor ... a domestic manufacturers' bill." Id. Nevertheless, it would appear that Congress, in subsection (d), by codifying a then-existing administrative practice, was attempting to lend certainty to the importing process. The importing community is thus aided by the provision's remonstrance that an established and uniform practice not be changed absent public notice. See Customs Administrative Bill: Hearings on H.R. 6738 Before the House Comm. on Ways and Means, 75th Cong., 1st Sess. 132 (1937) (analysis submitted by Treasury Department).

Earlier cases suggest that a section 1315(d) "established and uniform practice" can be predicated on uniform classifications and liquidations at various ports over a period of time. See, e.g., Asiatic Petroleum Corp. v. United States, 59 CCPA 20, 23, 449 F.2d 1309, 1312 (1971) (adopting Asiatic Petroleum Corp. v. United States, 64 Cust.Ct. 47, 58, 309 F.Supp. 1006, 1009 (1970) (Richardson, J., dissenting)); Biddle Sawyer Corp. v. United States, 50 CCPA 85, 92, 320 F.2d 416, 422 (1963); B.R. Anderson & Co. v. United States, 47 Cust.Ct. 215, 226-28, 201 F.Supp. 319, 327-28 (1961). In Biddle Sawyer, the Court of Customs and Patent Appeals expressly considered the issue of whether uniform classification of a certain chemical, in fact, existed. The court concluded:

We find nothing in the testimony or in the exhibits which supports appellant's contention that there was an established and uniform practice of classifying merchandise of the quality of the imported merchandise under paragraph 5. Therefore it was not necessary that a notice be published pursuant to sections 315(d) or 16.10(a).

Biddle Sawyer, 50 CCPA at 92, 320 F.2d at 422. In fact, many cases have passed on the question of whether an actual uniform practice existed at the relevant times.⁶ One must therefore conclude that the issue was meaningful to the determination. Otherwise, it would seem that the courts were engaging in useless formulations.

In addition, a predecessor regulation to 19 C.F.R. § 177.10(b), provided that "if there is an established and uniform practice at the various ports," no higher duty rate could be assessed without public notice. Customs Regulations of 1943, § 16.10(a) (emphasis added); see B.R. Anderson & Co. v. United States, 47 Cust.Ct. at 227, 201 F.Supp. at 327 ("it is clear that this regulation was issued pursuant to section 315(d) of the Tariff Act of 1930"). Thus, it was Customs' understanding, originally at least, that section 1315(d) envisioned an "actual" established and uniform practice.

Further, the hearings before the House Ways and Means Committee reflect a general understanding of section 1315(d) in accord with that outlined above.

We recognize that this section is legislation to legalize that which has been the practice of the Department for a number of years, namely, where there has existed a uniform practice, sanctioned by the customs authorities for a number of years, before a change of rate or classification is made by the Department, the Department will allow before placing the same in effect 30 days' notice after publication of such change. While we recognize the existence of this practice, it has been carried on, we may say, as a matter of executive leniency, but there has been no sanction of law.

Hearings, supra, at 212-13 (statement of American Tariff League).

Defendant's opposition to the motion of an actual established and uniform practice stems from its blurring of cases where the existence of a section 1315(d) finding was in issue.⁷ To be sure, when the Secretary makes a finding that an established and uniform practice either exists or does not exist, that determination is within the Secretary's congressionally designated discretion. See Washington Handle Co. v. United States, 34 CCPA 80, 86 (1946). Such a determination cannot be disturbed by a court, except, perhaps, for an abuse of that discretion. See Rank Precision Industries, Inc. v. United States, 68 CCPA 78, 84, 660 F.2d 476, 480 (1981). In the absence of an affirmative or negative finding, however, the Court, when properly presented with the issue, may resolve it. In this connection, I well heed Chief Judge Markey's stern admonition in the Ditbro Pearl case that to hold otherwise "would render § 315(d) a nullity in the hands of a Secretary choosing to refrain from ever making a finding." Ditbro Pearl Co. v. United States, 62 CCPA 95, 97, 515 F.2d 1157, 1159 (Markey, C.J., concurring).⁸

Defendant objects to the Court making such determinations, contending that "there is no law to apply." "There are no criteria by which to gauge how long a practice must exist or how uniform it must be." Defendant's Memorandum In Opposition, at 24. This view is obviously unfounded since courts have long considered such issues both under section 1315(d), Biddle Sawyer Corp. v. United States, 50 CCPA 85, 92, 320 F.2d 416, 422 (1963), and under the interpretive principle that a "long-established administrative practice," if found to exist, will bear upon an interpretation of tariff laws, Commonwealth Oil Refining Co. v. United States, 60 CCPA 162, 174, 480 F.2d 1352, 1361 (1973). Indeed, courts have long been guided in this area by inquiring whether the practice was "known, long continued, uniform and general." Rapken & Co., Ltd. v. United States, 25 CCPA 268, 274 (1938).

In accordance with the above, defendant's motion to dismiss that part of the complaint relating to an established and uniform practice must be denied, since although no finding or published ruling is alleged, plaintiff may show an established and uniform practice under section 1315(d) by actual uniform liquidations at the various ports over a period of time.

II. MOTION TO STRIKE CERTAIN DEFENSES

Having determined that plaintiff may be allowed to demonstrate whether an actual section 1315(d)...