Marcel Watch Co. v. U.S.
| Decision Date | 08 December 1993 |
| Docket Number | No. 93-1194,93-1194 |
| Citation | 11 F.3d 1054 |
| Parties | MARCEL WATCH COMPANY, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Federal Circuit |
Patrick C. Reed, Freeman, Wasserman & Schneider, New York City, argued for plaintiff-appellant. With him on the brief was Bernard J. Babb.
James A. Curley, Atty., Commercial Litigation Branch, Dept. of Justice, New York City, argued for defendant-appellee. With him on the brief were Stuart E. Schiffer, Acting Asst. Atty. Gen., David M. Cohen, Director and Joseph I. Liebman, Atty. in charge, Intern. Trade Field Office. Also on the brief was Edward N. Maurer, Office of Asst. Chief Counsel, U.S. Customs Service, of counsel.
Before ARCHER, LOURIE, and CLEVENGER, Circuit Judges.
Marcel Watch Company appeals from the judgment of the United States Court of International Trade granting in part and denying in part cross-motions for summary judgment on Marcel's challenge of the United States Customs Service's classification determination and duty assessment of merchandise imported by Marcel in 1982. Marcel Watch Co. v. United States, 795 F.Supp. 1199 (Ct.Int'l Trade 1992) (opinion and order). The trial court held that the merchandise at issue, consisting of quartz analog clocks with clock movements measuring less than 1.77 inches in width, is classifiable under Item 715.15 of the Tariff Schedules of the United States (TSUS) (1982) and dutiable at a combined rate consisting of the rate applicable to the clock movements as set forth in Item 720.14, TSUS, plus the rate applicable to the clock cases as set forth in Item 720.34, TSUS. We affirm.
The merchandise at issue, described as "quartz wall clocks" having a quartz analog movement measuring over 0.50 inches in thickness and less than 1.77 inches in width, entered the United States on September 24, 1982. Customs classified the merchandise as "Clocks: With watch movements; or with clock movements measuring less than 1.77 inches in width" under Item 715.15, dutiable at "[t]he column 1 rate applicable to the cases, plus the column 1 rate applicable to the movements." Thus, the movements and cases of the imported clocks were constructively separated and the duties for those components were separately determined. Customs assessed a rate of 34 cents each for the clock movements under Item 720.02 and a rate of 11% ad valorem for the clock cases under Item 720.34. The entry was liquidated by Customs on November 5, 1982.
Marcel subsequently filed a protest with Customs challenging the classification of the imported merchandise. The protest was denied and Marcel paid the liquidated duties assessed. On November 1, 1983, Marcel commenced an action in the United States Court of International Trade contesting the denial of its protest. 1 19 U.S.C. Sec. 1514(a), 28 U.S.C. Sec. 1581(a) (1988). Marcel claimed that the imported clocks were properly classifiable as "Electrical articles and electrical parts of articles, not specifically provided for: ... Other" under Item 688.43, TSUS (as added by Exec. Order No. 12371, 3 C.F.R. 196 (1982)), dutiable at a rate of 4.9% ad valorem, or in the alternative, as "Machines not specially provided for, and parts thereof" under Item 678.50, TSUS, dutiable at a rate of 5% ad valorem.
On cross-motions for summary judgment, the trial court affirmed the classification of the merchandise under Item 715.15, rejecting Marcel's argument that the imported clocks were not classifiable under the provisions of Schedule 7. In reviewing the applicable duties assessed pursuant to that provision, the trial court affirmed Customs' determination that the rate of duty on the clock cases derived from Item 720.34. However, it disagreed with Customs' determination that the duty rate on the clock movements derived from Item 720.02. Instead, the court concluded that the clock movements should have been liquidated under Item 720.14, the provision covering "Other clock movements: ... Valued over $2.25 but not over $5 each."
Marcel now appeals from the judgment of the trial court affirming Customs' decision to classify the imported clocks under Item 715.15 and assessing duties thereunder at the rates set forth in Items 720.14 and 720.34. We have jurisdiction under 28 U.S.C. Sec. 1295(a)(5) (1988).
Our standards of appellate review regarding classification determinations are well settled. We review the trial court's grant of summary judgment for correctness as a matter of law. See Lynteg, Inc. v. United States, 976 F.2d 693, 696 (Fed.Cir.1992). The ultimate issue as to whether particular imported merchandise has been classified under an appropriate tariff provision is a question of law subject to de novo review. W.R. Filbin & Co., Inc. v. United States, 945 F.2d 390, 392 (Fed.Cir.1991). Resolution of that issue generally entails a two-step process of (1) ascertaining the proper meaning of specific terms within the tariff provision and (2) determining whether the merchandise at issue comes within the description of such terms as properly construed. The first step is a question of law which we review de novo and the second is a question of fact which we review for clear error. Stewart-Warner Corp. v. United States, 748 F.2d 663, 664-65, 3 Fed.Cir. (T) 20, 22 (1984). In reviewing classification determinations, Customs' classification of imported merchandise is presumed to be correct and the burden is on a party challenging the classification to overcome that presumption. See Hasbro Indus., Inc. v. United States, 879 F.2d 838, 840, 7 Fed.Cir. (T) 110, 112 (1989).
The clock movement provisions of TSUS, Schedule 7, Part 2, Subpart E (1982) ("Watches, Clocks, and Timing Apparatus"), read as follows:
Clock movements, assembled, without dials or hands, or with dials or
hands whether or not assembled thereon
Measuring less than 1.77 inches in width
Not constructed or designed to operate for over 47 hours
without rewinding
720.02 Having no jewels or only 1 jewel
720.04 Having over 1 jewel
Constructed or designed to operate for over 47 hours
without rewinding
720.06 Having no jewels or only 1 jewel
720.08 Having over 1 jewel
720.09 If certified for use
in civil aircraft
Other clock movements:
720.10 Valued over $1.10 each
720.12 Valued over $1.10 but not over $2.25 each
720.14 Valued over $2.25 but not over $5 each
720.16 Valued over $5 but not over $10 each
720.18 Valued over $10 each
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Marcel maintains that the clocks do not fall within Schedule 7 as a matter of law because their movements are not classifiable under either Item 720.02, as found by Customs, or Item 720.14, as found by the trial court. Specifically, Marcel claims that the clock movements are not classifiable under Item 720.02 because that provision requires movements less than 1.77 inches in width to be capable of being wound and rewound. It is undisputed that the clock movements of the merchandise at issue here do not involve winding and rewinding. Marcel argues that neither are the clock movements classifiable under Item 720.14 because that provision only covers clock movements greater than or equal to 1.77 inches in width. It is undisputed that the clock movements are less than 1.77 inches in width.
In support of its contention that the clock movements at issue are not classifiable under Schedule 7, Marcel relies on the decision of the Court of International Trade in Belfont Sales Corp. v. United States, 11 CIT 541, 666 F.Supp. 1568 (1987), which held that quartz analog wrist watches were not classifiable under the provisions of Schedule 7. Marcel argues that because the movements of the imported clocks are similar to the movements of the watches at issue in Belfont in all material respects except for size, Belfont precludes classification of the quartz analog clocks under Item 715.15.
The imported merchandise at issue in Belfont was collectively referred to as "quartz analog watch[es]." Customs classified the merchandise under Item 715.05, TSUS (1980) ("Watches"), which provides that duties are to be assessed on cases and movements separately. Accordingly, duties were assessed on the watch movements under Items 716.27 or 716.29, TSUS, depending on their width, and on the watch cases under Items 720.24 or 720.28, TSUS, depending on their composition. The importer in Belfont challenged Customs' classification determination, arguing that the watches were classifiable as "electrical articles" under Item 688.45, TSUS.
The court in Belfont first addressed the threshold issue whether the imported quartz analog watches contained "watch movements" according to Schedule 7. Upon concluding that they did, the court then addressed whether the watches were properly classified under Item 715.05 as determined by Customs. That issue turned on whether the movements of the watches could be classified under Schedule 7, because if they could not, then the watches themselves could not. See 11 CIT at 546, 666 F.Supp. at 1571-72.
The watch movement provisions of Schedule 7 (1980) consisted of Items 716.04-716.06, 716.10-716.44, and 719. The heading that governed Items 716.10-716.44 required that the movements be:
Not adjusted, not self-winding (or if a self-winding device cannot be incorporated therein), and not constructed or designed to operate for a period in excess of 47 hours without rewinding. [Emphasis added.]
Item 719 contained a similar limitation that the movements be "constructed ... in excess of 47 hours without rewinding."
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