Meyer Corp. v. United States

• Decision Date: 23 August 2017
• Docket Number: Slip Op. 17-110 Court No. 13-00154.
• Parties: MEYER CORPORATION, U.S., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

255 F.Supp.3d 1348

MEYER CORPORATION, U.S., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 17-110 Court No. 13-00154.

United States Court of International Trade.

Dated: August 23, 2017

John P. Donohue and Rachel B. Weil, Reed Smith, LLP, of Philadelphia, PA, and Joseph M. Donley and Christopher M. Brubaker, Clark Hill, PLC, of Philadelphia, PA, for the plaintiff.

Beverly A. Farrell, Trial Attorney, U.S. Department of Justice, Civil Division, Commercial Litigation Branch, of Washington, DC, for the defendant. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, and Amy M. Rubin, Assistant Director; Of Counsel on the brief was Paula S. Smith, Attorney, Office of Assistant Chief Counsel. International Trade litigation, U.S. Customs and Border Protection, of Washington, DC.

OPINION AND ORDER

Musgrave, Senior Judge:

This test case¹ concerns protests to and denial thereof by U.S. Customs and Border Protection ("Customs") with respect to the plaintiff's claims on certain sets of cookware imported into the United States for preferential treatment under the Generalized System of Preferences ("GSP"), 19 U.S.C. § 2461, et seq uentes . Exported from Thailand, a GSP-designated "beneficiary developing country" ("BDC"), the imports were declared on entry to consist of sets of pot(s) and/or pan(s) made in that country that had been packaged together with one or more glass lids imported into Thailand from the non-BDC country of their manufacture, the People's Republic of China ("PRC"). The goods were denied preferential treatment in part due to the presence of the lids among the sets.

Now before the court are the parties' cross-motions for partial summary judgment on two of the three issues raised by the plaintiff's complaint, to wit: (1) whether the sets are disqualified from GSP preferential treatment by reason of the presence of the non-BDC component and (2) whether the sets are properly appraised on the basis of "first sale" transaction value.² The defendant also moves to dismiss Entry No. 304–0214721–6 from the case. Jurisdiction here being properly invoked per 28 U.S.C. § 1581(a) and the material facts³ not being in dispute, summary disposition of the two issues presented via partial cross-motions for judgment, see USCIT R. 56, as well as the defendant's further rule 12(b)(1) motion is appropriate. Further, the quality of the parties' able briefing to this point obviates the need for oral argument; therefore, the plaintiff's motion therefor can be, and hereby is, denied as moot.

The following explains denial of the defendant's rule 12(b)(1) motion and rulings on the issues of substance.

Discussion

I

The defendant argues Entry No. 304–0214721–6 should be dismissed because the plaintiff's amended complaint avers that this action covers only entries made at the Port of San Francisco, California, whereas Entry No. 304–0214721–6 was entered at the Port of Los Angeles, California, and is the subject of another action, CIT Court No. 13–00226. The plaintiff opposes, arguing that such a factual discrepancy is inconsequential, that the motion does not argue a jurisdictional challenge (e.g. , that the protest was not timely summoned before the court), and that to the extent the discrepancy requires resolution it requests that it be permitted to amend its complaint a second time (with a formal second amended filing, if form is to be exalted over substance)⁴ —to which the defendant responds that the plaintiff should be held to its explicit statement that this action "contests the denial of certain protests filed by the Plaintiff with the Port Director of Customs at San Francisco, California." Def's Mem. of Law in Reply to Pl's Opp. to Def's Cross–Motion for Partial Summ. J. ("Def's Reply") at 16, quoting Am. Compl. ¶ 1.

The arguments on the substance of the case do not concern the particular port(s) through which the plaintiff made its entries, but the defendant's more significant point is that the plaintiff has not justified bringing two actions concerning the same protest and entry. At any rate, jurisdiction over Entry No. 304–0214721–6 commenced with the filing of this case. E.g. , Heraeus–Amersil, Inc. v. United States , 1 CIT 249, 515 F.Supp. 770 (1981). On that basis, the instant motion to dismiss will be, and hereby is, denied, and the summons and amended complaint of the matter at bar will be, and they hereby are, construed without the need for formal amendment as encompassing Entry No. 304–0214721–6 of protest 2704–12–103427. Whether jurisdiction over that same entry could attach subsequently via Court No. 13–00226 is a question for that case, in which issue has not been joined, and which is not technically sub judice . See USCIT R. 84(a). Any further comment here with respect thereto would amount to mere dicta .

II

A

The parties do not dispute the propriety of classifying the imported cookware under subheading 7323.93.0045 of the Harmonized Tariff Schedule of the United States ("HTSUS"), the tariff provision for "table, kitchen or household articles ... Of stainless steel." See , e.g. , Pl's Rule 56.3 Statement of Undisputed Facts ("Pl's SUF") ¶ 24. Also undisputed is that the cookware were classifiable as "sets." Some were classified pursuant to Rule 1 of the General Rules of Interpretation ("GRI"), HTSUS, and the remainder apparently classified pursuant to GRI 3(b).⁵ But whether classified pursuant to GRI 1 or GRI 3(b), if an import is properly considered to be a "set," then the set obtains a single customs classification for the entirety rather than separate classifications for the set's constituent parts, which is indeed how the parties approached the issue of classification.

Considering the imports to be sets as such, Customs proceeded accordingly. Relying on Treasury Decision ("T.D.") 91–7, 25 Cust. B. & Dec. 7 (Jan. 8, 1991), Customs denied the plaintiff's protests on the sets' preferential tariff treatment, due, in part as indicated, to the presence of the non-BDC component glass lid(s) at the time of entry. Cf . 19 C.F.R. § 102.11 (country of origin). T.D. 91–7 came into being after the "product of" requirement was added to the GSP statute in the wake of Madison Galleries, Ltd. v. United States , 12 CIT 485, 688 F.Supp. 1544 (1988), aff'd , 870 F.2d 627 (Fed. Cir. 1989).⁶ T.D. 91–7 sets forth: (1) that, based on General Note 3(a)(iii), HTSUS, the first step to determining whether GSP may be applicable to an imported article is to identify the proper classification under the HTSUS for it and determine if a special rate is available for that subheading; (2) that if such a rate is available, then the next step is to confirm that the article satisfies all of the requirements for eligibility; (3) that for sets that are classifiable through the use of GRI 3(b) rather than GRI 1, classification of the set as a whole is determined by the item that imparts the essential character of the set⁷ ; (4) that, in order to be considered the growth, product, or manufacture of a BDC, goods imported into the BDC from a non-BDC country must undergo a "substantial transformation" in the BDC⁸ ; and (5) that under the GSP, an article must satisfy the 35 percent value/content requirement⁹ .

The papers argue over T.D. 91–7, over how to interpret the GSP statute for purposes of sets classification, and also over the applicability of Uniden Corp. v. United States , 24 CIT 1191, 120 F.Supp.2d 1091 (2000), a case that considered a GSP claim on a cordless phone imported as a set with a detachable component (an A/C adapter) of PRC origin. That decision concluded, albeit in a footnote, that the "35 percent" test is used to determine what proportion of "an article" qualifies as the product of a BDC, which means the substantial transformation test is applied to "fractions" of the article rather than to the article as a whole, in order to determine "which components" may be considered for GSP purposes as originating in the BDC, whereas the "product of" test considers the article as a whole to determine if it is "wholly" the product of the BDC or has been substantially transformed therein. "[T]he mere fact that one detachable component is not a BDC product does not automatically disqualify the entire article from GSP eligibility." Uniden , 24 CIT at 1196 n.5, 120 F.Supp.2d at 1096 n.5.

The defendant argues Uniden was decided incorrectly and that a significant degree of deference should be afforded to T.D. 91–7, per the following: (1) in 19 U.S.C. § 2463(a), Congress sought to induce trade from "least-developed beneficiary developing countries" directly to the United States, and Customs, understandably, did not want those countries abused as mere "pass-through" facilities; (2) Congress, for whatever reason, "left a gap" for the agency to "fill" and T.D. 91–7 filled that gap as an interpretative rule of general applicability,¹⁰ and unlike a ruling limited to a particular import transaction it was published in the Customs Bulletin and was issued with a degree of formality greater than the ruling at issue in Mead¹¹ and more proximate to the level of formality expected for Chevron¹² deference despite not having been subject to notice-and-comment; (4) the statutory and regulatory scheme surrounding the administration of tariff preference programs, tariff classification and other like issues is highly detailed and complex, and Customs brings the benefit of specialized experience to bear on the subtle questions addressed in T.D. 91–7; (5) T.D. 91–7 creates consistency in treatment of GRI 3(b) goods for GSP, Caribbean Basin Initiative, the Automotive Products Trade Act, the Agreement on Trade in Civil Aircraft, and other similar trade preference programs as well as treating GRI 3(b) goods in the same manner as GRI 1 goods; (6) T.D. 91–7 as a whole establishes consistent treatment of sets and composite goods on three key issues that can intersect, i.e. , marking, preferential tariff programs, and American Goods returned; and (7) T.D. 91–7 has been...