Heraeus-Amersil, Inc. v. U.S.

• Decision Date: 08 July 1986
• Docket Number: HERAEUS-AMERSI,INC,Nos. 86-602,86-650,s. 86-602
• Citation: 795 F.2d 1575
• Parties: , 4 Fed. Cir. (T) 95 , Appellee/Cross-Appellant, v. The UNITED STATES, Appellant/Cross-Appellee. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1575

795 F.2d 1575

7 ITRD 2553, 4 Fed. Cir. (T) 95

HERAEUS-AMERSIL, INC., Appellee/Cross-Appellant, v. The UNITED STATES, Appellant/Cross-Appellee.

Appeal Nos. 86-602, 86-650.

United States Court of Appeals Federal Circuit.

July 8, 1986.

John J. Mahon, Commercial Litigation Branch, Dept. of Justice, New York City, argued for appellant. With him on brief were Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Washington, D.C. and Joseph I. Liebman, Atty. in Charge Intern. Trade Field Office, New York City.

Richard C. King, Fitch, King & Caffentzis, of New York City, argued for appellee. With him on brief was James Caffentzis, New York City.

Before RICH and DAVIS, Circuit Judges, and MILLER, Senior Circuit Judge.

DAVIS, Circuit Judge.

This is a consolidated appeal brought by the United States and Heraeus-Amersil, Inc. (Heraeus) from the memorandum opinion and order of the United States Court of International Trade, ¹ holding that an established and uniform practice existed with respect to merchandise imported by Heraeus and also that the established and uniform practice was properly discontinued by the United States Customs Service (Customs) (notwithstanding the absence of publication in the Federal Register) because Heraeus had actual notice of the change in classification of the merchandise. ² We affirm.

I.

Heraeus imports merchandise known as fused quartz or fused silica in various shapes and sizes. From 1968 through November 1977, 300 entries were documented at the ports of Newark and John F. Kennedy International Airport (JFK). There is nothing in the record to suggest that identical or similar merchandise was imported at any port other than Newark or JFK. At least five import specialists were responsible for advisory classification of Heraeus' merchandise during that ten-year period. These import specialists uniformly classified the merchandise (depending upon shape) under item 540.11 of the Tariff Schedules of the United States (TSUS) ³ at 7.5% ad val., or item 540.41, TSUS, ⁴ at 7% ad val.

There is no evidence that the merchandise was ever classified differently prior to December 30, 1977. In 1977, however, a new Customs import specialist was placed at JFK. This import specialist made a new advisory classification resulting in the change in classification of Heraeus' merchandise to item 540.67, TSUS, ⁵ at 25% ad val.

The merchandise now at issue was imported from Germany during March through December 1976, and in April 1981, and was liquidated under item 540.67. Heraeus timely filed protests challenging the classification of the merchandise under that item, and claiming the existence of an established and uniform practice to classify such merchandise under item 540.11 or item 540.41. These protests were denied.

Heraeus then brought suit in the Court of International Trade contesting the classification of its merchandise under item 540.67, and arguing that, in the absence of a finding by the Secretary of the Treasury (Secretary), the court itself could find that an established and uniform practice existed to classify the merchandise under item 540.11 or item 540.41 within the meaning of Sec. 315(d) of the Tariff Act of 1930, as amended, 19 U.S.C. Sec. 1315(d) (1982), ⁶ and that this established and uniform practice precluded classification at the higher rate of duty until Customs complied with the notice provision of Sec. 1315(d), supra. The United States argued that the matter should be remanded back to the Secretary to make the necessary findings because the trial court lacked the authority to determine whether such a practice in fact existed. In the alternative, the Government contended that the new classification was valid because the Sec. 1315(d) notice requirement is predicated upon a finding (absent here) by the Secretary of an established and uniform practice.

On cross-motions for summary judgment, the court first restated its earlier holding in Heraeus-Amersil, Inc. v. United States, 600 F.Supp. 221, 8 CIT ---- (1984) (denying Heraeus' motion to dismiss in part), that an established and uniform practice could be shown, in the absence of a finding by the Secretary, by actual uniform liquidations. In that earlier opinion, the court had noted that "[e]arlier 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." Id. at 223. The court reasoned that the question whether an established and uniform practice existed would not have been considered in prior cases if the issue was not relevant to those courts' ultimate determinations. Also supporting the court's holding was a predecessor regulation to 19 C.F.R. Sec. 177.10(b) (1985) which evidenced Customs' understanding at one time "that section 1315(d) envisioned an 'actual' established and uniform practice." Id. at 224. Hearings before the House Ways and Means Committee likewise manifested the belief that the de facto existence of a uniform practice was of major importance to Customs. Id. For these reasons, the court denied the motion to dismiss in part and concluded that, in the absence of a finding by the Secretary, it could decide whether an actual uniform practice existed.

In the decision now under review the court also held that an actual established and uniform practice classifying Heraeus' merchandise under item 540.11 and item 540.41 existed despite the fact that the Secretary had not made a finding to that effect. Heraeus-Amersil, 617 F.Supp. at 93. The basis of the court's holding was "the classification [by Customs] of fused quartz/fused silica under items 540.11 and 540.41 span[ning] a period of at least 10 years. Over 300 liquidations at two ports under these item numbers have been documented. The parties have been unable to find any evidence of variant liquidations during the 10-year period or earlier." Id. The court distinguished, however, a classification based on an actual practice from one based upon a finding by the Secretary, and held that the former could be extinguished by the discontinuance of such a practice if known to the importer. Id. at 94-95. Here, such knowledge existed as of December 30, 1977.

Both sides have appealed to this court. The Government filed its appeal (No. 86-602) under 28 U.S.C. Sec. 1295(a)(5) (1982) from the final decision of the trial court denying the higher duties for the items imported in 1976. Heraeus cross-appeals (in No. 86-650) under 28 U.S.C. Sec. 1292(d)(1) (1982) from Judge Carman's certification of the question whether the established and unfair practice was changed by Customs, so far as Heraeus is concerned, on December 30, 1977. This court has accepted the cross-appeal by order of November 6, 1985.

Heraeus contends before us that (1) the actual existence of an established and uniform practice under Sec. 1315(d) does not depend upon a determination by the Secretary; (2) the trial court properly found that such a practice in fact existed here; and (3) the trial court erred in holding that the established and uniform practice could be extinguished other than by compliance with the Tariff Act's publication requirement (Sec. 1315(d)). The Government argues that (1) the Act requires a finding by the Secretary, and in the absence of a finding, the trial court is powerless to make the determination itself, (2) assuming the court could make an established and uniform practice determination, Heraeus failed to demonstrate that one existed in this instance, and (3) assuming the court properly found that an established and uniform practice existed, it correctly held that the practice ended when the merchandise was initially liquidated at the higher rates.

II.

The first issue is whether a court can find that an established and uniform practice exists in the absence of a finding by the Secretary to that effect. The United States both in its brief and at oral argument refuses to acknowledge that an established and uniform practice recognized by Sec. 315(d) of the Tariff Act of 1930, as amended at 19 U.S.C. Sec. 1315(d), supra, can exist pursuant either to a finding by the Secretary that such a practice exists or (when the Secretary fails to act on a request for such a finding) upon a judicial finding of an actual practice of liquidating a significant number of entries of particular merchandise at the same rates over an extended period of time. The latter is the situation we have here.

In its protest dated August 10, 1978, Heraeus in effect requested the Secretary to make a finding that an established and uniform practice existed with respect to the then imported optical grade glass. The protest noted expressly that the change in classification of the merchandise was unwarranted because of the existence of "[a]n established and uniform practice ... to classify such merchandise under items other than item 540.67." The United States urges that this specific content of the protest did not amount to an official request upon the Secretary and was not sufficient to trigger the obligation of the Secretary to make a determination. The answer is that, in the absence of any language in the applicable regulations providing other procedures that importers should follow in requesting a finding by the Secretary, Heraeus' request constituted as specific a request and was as inherently reasonable as the law may properly demand. Under the present regulations, nothing more is required. See Commonwealth Oil Refining Co. v. United States, 332 F.Supp. 203, 209, 67 Cust.Ct. 155, 163 (1971), aff'd on other grounds, 480 F.2d 1352 (CCPA 1973). It is also reasonable to interpret the simple denial of that protest, not as a denial on the merits as to whether an established and uniform practice existed, but rather as the failure of the Secretary to act on the subject in any respect. If there had been a denial of the existence of such practice, it is most likely that something...