E.M. Chemicals v. U.S., 90-1141

• Decision Date: 28 November 1990
• Docket Number: No. 90-1141,90-1141
• Citation: 920 F.2d 910
• Parties: E.M. CHEMICALS, Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 910

920 F.2d 910

12 ITRD 2153

E.M. CHEMICALS, Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant.

No. 90-1141.

United States Court of Appeals, Federal Circuit.

Nov. 28, 1990.

Jerry P. Wiskin, Freeman, Wasserman & Schneider, New York City, argued, for plaintiff-appellee. With him on the brief were Louis Schneider and Philip Yale Simons, New York City.

Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Dept. of Justice, New York City, argued, for defendant-appellant. With him on the brief were Stuart M. Gerson, Asst. Atty. Gen. and David M. Cohen, Director, Washington, D.C. Also on the brief was Karen P. Binder, Attorney, U.S. Customs Service, New York City, of counsel.

Before PLAGER, Circuit Judge, BENNETT, Senior Circuit Judge, and LOURIE, Circuit Judge.

LOURIE, Circuit Judge.

In this customs case, the initial classification by the United States Customs Service of certain liquid crystals as chemical mixtures was reversed on summary judgment by the United States Court of International Trade, which held that the liquid crystals should be classified as parts of indicator panels. E.M. Chemicals v. United States, 728 F.Supp. 723 (1989). The government appeals this judgment. We affirm.

BACKGROUND

Liquid crystals are compounds or mixtures which combine the properties of liquids and crystals, i.e., they have fluidity, but at the same time have optical properties associated with crystal structures, permitting their molecules to segregate so as to produce visual effects in response to heat or an electric field. E.M. Chemicals (E.M.) imported the liquid crystals at issue from Germany and Great Britain during the years 1982 and 1983. The imported liquid crystals all had benzenoid, quinoid, or modified benzenoid structures produced by a multistage synthetic chemical process.

During the relevant period, E.M.'s imported liquid crystals were used only in liquid crystal displays (LCDs). LCDs are devices for conveying numerical, alphanumerical, or graphical information. Widely known uses of LCDs included watches, clock radios, calculators, computers, gas pumps, meters, various medical and scientific instrumentation, toys, and automobile dashboards.

In 1982 and 1983 these imported liquid crystals were classified as "chemicals ... mixtures ... other," by Customs under Item 407.16 of the Tariff Schedules of the United States (TSUS), repealed by the Harmonized Tariff Schedule of 1988, Pub.L. No. 100-418 (codified at 19 U.S.C. Sec. 1202 (1988)) ^*:

E.M. challenged Customs' classification, claiming that the liquid crystals are properly classified as parts of "indicator panels ... [or] other ... visual signalling apparatus" under Item 685.70 of TSUS:

Schedule 6. Metals and Metal Products

Part 5.Electrical Machinery and Equipment

685.70 Bells, sirens, indicator panels, burglar and fire alarms, and other

sound or visual signalling apparatus, all the foregoing which are

electrical and parts thereof ................ 3.4% ad valorem

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The Court of International Trade held, on summary judgment, that E.M. had overcome the presumption of correctness of the Customs Service's classification of the liquid

crystals, and that the crystals are better classified as parts of indicator panels than as chemical mixtures.

ISSUE

The issue before us is whether the Court of International Trade erred in rejecting Customs' classification and in holding that the liquid crystals, as imported, are classifiable under Item 685.70, TSUS, as parts of "indicator panels ... [or] other ... visual signalling apparatus," rather than under Item 407.16, TSUS, as other chemical mixtures.

DISCUSSION

It is well-settled that the meaning of tariff terms is a question of law, while the determination whether a particular item fits within that meaning is a question of fact. See Stewart-Warner Corp. v. United States, 748 F.2d 663, 664-65 (Fed.Cir.1984); Daw Industries, Inc. v. United States, 714 F.2d 1140, 1141-42 (Fed.Cir.1983). In this case, the Court of International Trade granted summary judgment, and we review that grant for legal correctness. The government argues that Item 685.70 does not include LCDs and, alternatively, that liquid crystals are not "parts" of LCDs, but are mere materials, and thus are not classifiable under Item 685.70. Additionally, the government argues that the Court of International Trade erred in precluding classification under the chemical schedule. We consider each of these arguments in turn.

A. Indicator Panels or Visual Signalling Apparatus Under Item 685.70

1. Liquid Crystal Displays

In order to determine whether the imported liquid crystals are properly classifiable under Item 685.70, we first determine, as a matter of law, the proper scope of the classification "indicator panels ... [or] other ... visual signalling apparatus," and then determine whether the court properly granted summary judgment that LCDs come within this category. Although it is undisputed that liquid crystals are not indicator panels themselves, we need to determine if they are parts of LCDs, which may be indicator panels.

The trial court, in finding that LCDs are indicator panels or visual signalling apparatus, relied on Texas Instruments Inc. v. United States, 475 F.Supp. 1193 (Cust.Ct.1979), aff'd, 620 F.2d 272, 67 CCPA 57 (1980). That case held that visual light-emitting diodes (LEDs) were indicator panels:

From the entire record in this proceeding, the court is satisfied that the merchandise in issue [LEDs] is properly classified ... as an indicator panel or a visual signalling apparatus provided by item 685.70, TSUS. Logical reasoning dictates that this device receive the same classification as possessed by all other light emitting diodes, similarly constructed and performing the identical function of visual display in connection with the respective requirements of the specific article in which they must have been incorporated.

Id. at 1197.

In relying on Texas Instruments, the Court of International Trade found that LCDs perform a function similar to that of LEDs, and that the main difference between them was that LEDs are self-illuminating, while LCDs are not. It concluded that LCDs should fall within the ambit of Item 685.70. We agree. It is uncontested that LCDs are devices which display information generally in alphanumeric, color, or graphic form and that LCDs function similarly to LEDs. Additionally, the trial court's conclusion is bolstered by the Summary of Trade and Tariff Information, Schedule 6, Control No. 6-5-23 (USITC July 1982), which describes LCDs and LEDs as "two major kinds of indicator panels." Id. at 2; Cf. Hawaiian Motor Co. v. United States, 617 F.2d 286, 289, 67 CCPA 42 (1980) (Summary of Trade and Tariff Information helpful to determine administrative practice, even though not suitable for use as evidence of Congressional intent). Clearly, LCDs should be classified under the same item as LEDs.

The government argues that LCDs are more than signalling devices or indicator Second, the government also relies on NEC to support its asserted limitation of Item 685.70 to the effect that a visual signalling device must "call attention to temporary or abnormal conditions." See NEC, 596 F.Supp. at 471 (citing Oxford Int'l Corp. v. United States, 75 Cust.Ct. 58, 68 (1978)). However, in a more thorough explanation of the "temporary or abnormal" limitation in the Oxford decision, the Court of International Trade later indicated that an indicator panel is properly classified under Item 685.70 if it merely conveys information. A & A Int'l, Inc. v. United States, 5 CIT 183, 187-89, 1983 WL 5002 (1983). We agree with this interpretation of Item 685.70. An LCD, as a signalling device or an indicator panel, may simply convey information or notify the user of a specific event. An LCD may operate in this manner in normal or abnormal circumstances. We do not think that LCDs fall outside Item 685.70 merely because they indicate or signal normal conditions.

panels because they are installed in articles that do not signal abnormal or unusual circumstances and because that classification is limited to articles that function in such circumstances. First, we note that we are concerned with the function of LCDs, wherever installed, and not with the many functions of articles in which LCDs are installed. For this reason alone, the government's reliance on NEC America, Inc. v. United States, 8 CIT 184, 596 F.Supp. 466 (1984), aff'd, 760 F.2d 1295 (Fed.Cir.1985), is misplaced. The trial court correctly held that NEC America did not deal with LCDs themselves, but with the radio pagers at issue, which were the ultimate products into which the LCDs were incorporated.

Additionally, unlike Carling Electric Co. v. United States, 757 F.2d 1285, 1287 (Fed.Cir.1985), where this court held that a light is not classifiable under Item 685.70 because it does not always perform as a signalling device, LCDs normally perform as part of a signalling device or an indicating panel. We have not been referred to an example of an article containing an LCD where the LCD did not function as an indicating panel or a visual signalling device. During the relevant period of importation, LCDs incorporated into articles covering the spectrum from a child's toy to a physician's instrument have functioned as indicator panels or visual signalling devices.

Finally, tariff terms are to be construed in accordance with their common and popular meaning, in the absence of a contrary legislative intent. See Nippon Kogaku (USA), Inc. v. United States, 673 F.2d 380, 382, 69 CCPA 89 (1982); Ozen Sound Devices v. United States, 620 F.2d 880, 882, 67 CCPA 67 (1980). The terms "indicator panels" or "signalling devices" simply denote objects that "indicate" or "signal"; they do not denote objects which only indicate or signal in abnormal or unusual circumstances. See Webster's Third New International Dictionary (1986) at 2115, 1150 (defining...