Marcor Development Corp. v. US

• Decision Date: 03 May 1996
• Docket Number: Slip Op. 96-71. Court No. 94-08-00456.
• Citation: 926 F. Supp. 1124
• Parties: MARCOR DEVELOPMENT CORPORATION, Plaintiff, v. UNITED STATES, Defendants.
• Court: U.S. Court of International Trade

926 F. Supp. 1124

MARCOR DEVELOPMENT CORPORATION, Plaintiff, v. UNITED STATES, Defendants.

Slip Op. 96-71. Court No. 94-08-00456.

United States Court of International Trade.

May 3, 1996.

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COPYRIGHT MATERIAL OMITTED

Sidney N. Weiss, New York City, for plaintiff.

Frank W. Hunger, Assistant Attorney General; Joseph I. Liebman, Attorney-in-Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Mikki Graves Walser, Esq.); Karen P. Binder, Office of Assistant Chief Counsel, United States Customs Service, of counsel, for defendant.

Opinion and Order

NEWMAN, Senior Judge.

The issue presented concerns the proper tariff classification and rate of duty to be assessed by the United States Customs Service ("Customs") on merchandise described by plaintiff as "Shark Cartilage Protein Food Grade," imported during 1993. Jurisdiction is predicated on 28 U.S.C. § 1581(a), and therefore Customs' classification is subject to de novo review by this court in accordance with 28 U.S.C. § 2636. Currently before the court are cross-motions for summary judgment.

The merchandise in question was classified by Customs under subheading 2106.90.65 of the Harmonized Tariff Schedule of the United States ("HTSUS"), which applies to "food preparations not elsewhere specified or included," and duty was assessed at the rate of 10 per centum ad valorem. Plaintiff, the importer of record, maintains that the shark cartilage contained in its product should be considered to be "fish." Therefore, plaintiff reasons, the classification by Customs under subheading 2106.90.65, HTSUS is precluded by virtue of Chapter 21 Note 1(e) which specifically states that the chapter does not apply to food preparations containing more than 20 percent by weight of "fish."

Plaintiff suggests four alternative classifications. First, plaintiff asserts that its product should be classified under subheading 1603.00.90, HTSUS, which provides for "extracts and juices of meat, fish or crustaceans, molluscs or other aquatic invertebrates." In the alternative, plaintiff claims that its merchandise can be classified under either subheading 0305.10.20 or subheading 0305.59.20, HTSUS. Subheading 0305.10.10 applies to "Flours, meals and pellets of fish, fit for human consumption: In bulk or in immediate containers weighing with their contents over 6.8 kg each." Subheading 0305.59.20 describes "dried fish, whether or not salted but not smoked: Other: Shark fins." Finally, plaintiff argues that at the very least the merchandise should be classified under subheading 0410.00.00, HTSUS, a basket provision for "edible products of animal origin, not elsewhere specified or included."

In its cross-motion for summary judgment, defendant insists that shark cartilage, in the form imported by plaintiff is not "fish," and therefore, the exclusion found in Chapter 21, Note 1(e) is inapplicable. Defendant further responds that plaintiff's alternative classifications are incorrect as a matter of law since the product cannot be properly classified under the various "fish" subheading advanced by plaintiff. Lastly, defendant argues that plaintiff's product cannot properly be classified under the proposed basket provision because the product is properly described by Customs' proposed classification.

UNDISPUTED FACTS

The parties agree that there is no genuine dispute as to any material fact. Plaintiff's Memorandum of Law in Support of Summary Judgement, p. 9; Defendant's Response and Cross-Motion for Summary Judgment, p. 7. Plaintiff imports merchandise consisting of between 52% and 60% by weight shark fin cartilage, and between 40% and 48% dextrin. The product is then processed by shredding the shark fin cartilage and subjecting it to a protease which removes impurities such as ash, thereby yielding purified and soluble shark cartilage. An enzyme is added to the cartilage in order to extract and concentrate the mucopolysaccharides. The cartilage is deodorized, decolored, and filtered. Dextrin, which serves as a drying agent, is subsequently added and the resulting product is sterilized and dried. After it is shredded, the cartilage is put through a spray dryer. The sole purpose for the addition of dextrin is to avoid any clogging of the spray dryer by the cartilage. After this process is completed the mixture is exported to the United States in 40 kilogram drums. The product is then sold by Marcor to third parties who repackage the merchandise in bottles and in capsules and sell it, otherwise unchanged, as a nutritional supplement.

DISCUSSION

Under the rules of this Court, summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." USCIT R. 56(d). The court agrees with the parties that there are no genuine material factual issues in dispute, and that the issues of law raised may appropriately be resolved by summary judgment. Lynteq, Inc. v. United States, 976 F.2d 693 (Fed.Cir.1992); Mingus Constructors Inc. v. United States, 812 F.2d 1387 (Fed.Cir.1987); Totes Inc. v. United States, 18 CIT ___, 865 F.Supp. 867, 870 (CIT 1994), aff'd, 69 F.3d 495 (Fed.Cir.1995). In making the determination as to where plaintiff's product is properly classified under the HTSUS, the Court must consider whether "the government's classification is correct, both independently and in comparison with the importer's alternative." Jarvis Clark Co. v. United States, 733 F.2d 873, 878, reh'g denied, 739 F.2d 628 (Fed.Cir.1984).

With respect to the classification, defendant seeks reliance on the statutory presumption of correctness. See, 28 U.S.C. § 2639(a)(1). The Federal Circuit, however, has expressly stated that when there is "no factual dispute between the parties, the presumption of correctness is not relevant." Goodman Manufacturing, L.P., v. United States, 69 F.3d 505, 508 (Fed.Cir.1995) (stating that "the statutory presumption, found in 28 U.S.C. § 2639(a)(1), that Customs' decisions have a proper factual basis unless the opposing party proves otherwise" was not applicable in a summary judgment context) (emphasis added). Since this matter is before the court on summary judgment cross-motions, the only questions to be resolved are legal in nature, and there are no genuine issues of material facts before the court. Thus, the presumption of correctness plays no role with respect to the claims raised in this case.

A.

For the following reasons, the court finds Customs' classification assigned to plaintiff's product to be incorrect. This determination turns on the meaning of the term "fish." Customs classified the shark cartilage product under Heading 2106, HTSUS, which includes "Food preparations not elsewhere specified or included." However, Chapter 21, Note 1(e), provides that the chapter does not include:

(e) Food preparations, other than the products described in heading 2103 or 2104 containing more than 20 percent by weight of sausage, meat, meat offal, blood, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (chapter 16).

Under Rule 1 of the General Rules of Interpretation ("GRI") of the HTSUS, "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes." Since the GRI's are part of the HTSUS and are considered to be statutory provisions for all purposes, the court must first consider the heading and chapter notes of Chapter 21. See 19 U.S.C. §§ 1204(a) and 1204(c). Hence, if plaintiff's product contains 20% or more of "fish," then necessarily Customs' classification fails as a matter of law.

Plaintiff maintains that the term "fish," as used in Note 1(e) to Chapter 21 includes the shark cartilage product it imports. While both parties agree that the shark is a fish, defendant responds that "although the imported merchandise may contain more than 20 percent of material derived from shark fin cartilage, it does not contain over 20 percent fish." Defendant's Memorandum in Opposition to Plaintiff's Motion for Summary Judgment, p. 11. The term "fish" as used in Note 1(e) is itself statutorily undefined. "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." E.M. Chemicals v. United States, 920 F.2d 910 (Fed.Cir.1990); Stewart-Warner Corp. v. United States, 748 F.2d 663 (Fed Cir.1984); Marubeni v. United States, 19 CIT ___, 905 F.Supp. 1101, 1105 (CIT 1995). Thus, the determination of what "fish" means in the context of Note 1(e) is a question of law for this court to determine. Hafele America Co. Ltd. v. United States, 18 CIT ___, 870 F.Supp. 352, 354 (CIT 1994) (meaning of a tariff term is appropriate for summary judgment resolution).

Tariff terms that are statutorily undefined are construed in accordance with their common and popular meaning, in the absence of a proven commercial meaning different from the common meaning or contrary legislative intent. Lynteq, Inc. v. United States, 976 F.2d 693, 697 (Fed.Cir.1992). Here, each party offers a different common meaning for the term "fish." Defendant alleges that the definition of "fish" is limited to "flesh of fishes." Defendant's Memorandum in Opposition, p. 12. Clearly, cartilage is not "flesh," and therefore, if defendant's definition is accepted as the common meaning of "fish," plaintiff's product would not fall under the exclusion articulated in Note 1(e). On the other hand, plaintiff contends that defendant's definition is far more limited than was intended by the HTSUS. While agreeing, that "flesh of fish" properly falls within the common meaning of the term "fish," plaintiff argues that the definition...