Michael Simon Design, Inc. v. U.S., Slip Op. 06-128. Court No. 04-00537.

• Citation: 452 F.Supp.2d 1316
• Decision Date: 24 August 2006
• Docket Number: Slip Op. 06-128. Court No. 04-00537.
• Parties: MICHAEL SIMON DESIGN, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

452 F.Supp.2d 1316

MICHAEL SIMON DESIGN, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 06-128. Court No. 04-00537.

United States Court of International Trade.

August 24, 2006.

COPYRIGHT MATERIAL OMITTED

Barnes, Richardson & Colburn (Alan Goggins), New York City, for Plaintiff.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Amy M. Rubin); Sheryl A. French, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of counsel, for the defendant.

Before: Judge Judith M. Barzilay.

OPINION

BARZILAY, Judge.

In this case, the plaintiff importer challenges a classification decision by the Bureau of Customs and Border Protection of the United States Department of Homeland Security ("Customs" or "Government") classifying certain articles of apparel as either "[s]weaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted" under heading 6110 or "women's or girls' blouses, shirts and shirt-blouses" under heading 6206 of the Harmonized Tariff Schedule of the United States 2003 ("HTSUS"), 19 U.S.C. § 1202. Compl. ¶¶ 6,8. Plaintiff contests Customs' position that heading 9505 excludes all utilitarian items in light of the recently amended Explanatory Notes to heading 9505, HTSUS, and claims that the items at issue should have been correctly classified under heading 9505 as festive articles. For the reasons discussed below, the court grants summary judgment for Plaintiff with respect to some items and summary judgment for Defendant with respect to others.

BACKGROUND

Plaintiff Michael Simon Design, Inc. ("Michael Simon"), designs and imports knitwear into the United States for resale. In July 2003, Michael Simon imported apparel identified on commercial invoices as "knitted cardigans," "knitted blouses," and "woven ladies shirts." Joint Statement of Material Facts Not in Dispute ("JS") ¶¶ 4-5. The imported shipment contained sixteen different styles of sweaters. JS 116. Customs classified thirteen styles under subheading 6110.90.90, HTSUS, subject to a 6.0% ad valorem duty, and classified one style under subheading 620630.3040, HTSUS, subject to a 15.5% ad valorem duty. JS ¶¶ 11, 15, 24, 30, 38, 44, 49, 53, 54, 62, 66; see Protest, June 1, 2004. Two other styles were subject to ad valorem duties, but their classifications are not in dispute. JS ¶ 7.

Michael Simon filed a timely protest with Customs pursuant to 19 U.S.C. § 1514 to contest fourteen of the HTSUS classifications. JS ¶ 2. Specifically, Plaintiff maintained that the merchandise at issue should have been classified as "festive articles" under heading 9505, subject to duty-free treatment, and not under headings in Chapters 61 and 62 of the HTSUS. See Protest, June 1, 2004. Customs denied the protest providing the following short explanation: "Articles of fancy dress in HTSUS Chapters [sic] 61 & 62 are excluded from classification as festive, as per chapt. [sic] 95, note 1(e)." See Protest, June 1, 2004.

In May 2003, the World Customs Organization ("WCO"), in which the United States is a participating member, amended the Explanatory Note to heading 9505. See Amendment of the Explanatory Note to Heading 95.05, Annex M/10, May 31, 2003, http://hotdocs.usitc.gov/tata/N_xxx/Ncxxx/NC0730B2PartÏI.pdf (last visited Aug. 23, 2006). The amended Explanatory Note to heading 9505, HTSUS, ("amended EN 95.05") explicitly excludes apparel from "festive articles:"¹ See Amendment of the Explanatory Note to Heading 95.05. The amendments became effective on August 1, 2003, after the date of the merchandise's entry in this case. See World Customs Organization, International Convention on the Harmonized and Commodity Description and Coding System, art. 8, sec. 2, June 14, 1983, available at www. wcoomd.org/ie/EN/Topics_Issues/HarmonizedSystem/Hsconve2.pdf (last visited Aug. 23, 2006).

On this appeal, Michael Simon claims that all, the apparel at issue should be classified as "festive articles" under HTSUS heading 9505. Pl.'s Br. 16-19. Plaintiff argues that the application of the amended EN 95.05 to exclude articles containing festive motifs from heading 9505 would contravene a body of case law that explicitly includes "utilitarian" articles within the scope of "festive articles." Pl.'s Br. 24-26. Customs, on the other hand, argues that heading 9505 was never meant to encompass the apparel at issue, as illuminated by the amended EN 95.05. Def.'s Br. 5. Alternatively, Customs claims that if heading 9505 does encompass the apparel at issue, six of the sweaters fail to satisfy the test for "festive articles." Def.'s Br. 21.

Michael Simon timely filed suit in this Court pursuant to 19 U.S.C. § 1515(a) (2000) and 28 U.S.C. §§ 2632(b) and 2636(a) (2000). See JS ¶ 2. This Court has exclusive jurisdiction over this case pursuant to 28 U.S.C. § 1581(a); see Park B. Smith v. United States, 347 F.3d 922, 924 (Fed.Cir.2003).

SUMMARY JUDGMENT AND STANDARD OF REVIEW

In this case, both parties have filed for summary judgment. "The fact that both parties have moved for summary judgment does not mean that the court must grant judgment as a matter of law for one side or the other; summary judgment in favor of either party is not proper if disputes remain as to material facts." Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed.Cir.1987) (citation omitted). 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 a judgment as a matter of law." USCIT R. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In classification cases, "summary judgment is appropriate when there is no genuine dispute as to . . . what the merchandise is . . . or as to its use." Ero Indus., Inc. v. United States, 24 CIT 1175, 1179, 118 F.Supp.2d. 1356, 1359-60 (2000).

"Determining whether merchandise comes within a particular tariff provision, as properly interpreted, is a question of fact." Totes, Inc. v. United States, 69 F.3d 495, 498 (Fed.Cir.1995) (citation omitted). By statute, Customs' factual determination is presumed to be correct. Id. (citing 28 U.S.C. § 2639(a)(1) (1988)).² Consequently, "the party challenging the classification . . . bears the burden of proof." Id. (citations omitted); see Avia Group Int'l, Inc. v. L.A. Gear Cal., Inc., 853 F.2d 1557, 1560 (Fed.Cir.1988) (holding that parties moving for summary judgment bear burden of demonstrating that there are no genuine issues of material fact in dispute). The court's task is to "`determine whether there are any factual disputes that are material to the resolution of the action.'" Sea-Land Serv., Inc. v. United States, 23 CIT 679, 684, 69 F.Supp,2d 1371, 1375 (1999) (quoting Phone-Mate, Inc., v. United States, 12 CIT, 575, 577, 690 F.Supp. 1048, 1050 (1988)), aff'd, 239 F.3d 1366 (Fed.Cir.2001).

The Court reviews classification cases de novo pursuant to 28 U.S.C. § 2640(a) (2000). Filmtec Corp. v. United States, 27 CIT ___, ___, 293 F.Supp.2d 1364., 1367 (2003). The analysis of a Customs classification involves two steps: "first, [the court] construe[s] the relevant classification headings; and second, [it] determine[s] under which of the properly construed tariff terms the merchandise at issue falls." Id. (citations omitted) (second, third, & fourth brackets in original); see Midwest of Cannon Falls, Inc. v. United States, 122 F.3d 1423, 1425-26 (Fed.Cir. 1997). Thus, when there are no contested factual issues, the "propriety of the summary judgment turns on the proper construction of the HTSUS, which is a question of law" subject to de novo review. Clarendon Mktg., Inc. v. United States, 144 F.3d 1464, 1466 (Fed.Cir.1998) (citation omitted).

Customs argues that its long-held position that heading 9505, HTSUS, excludes items whose primary function is utilitarian is entitled to deference in light of the amended EN 95.05. Def.'s Br. 16-17 (citing HQ 955239 (Feb. 28, 1994)). Indeed, agencies charged with applying a statute "necessarily make all sorts of interpretive choices, and . . . `well-reasoned views of the agencies implementing a statute "constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance."'" United States v. Mead Corp., 533 U.S. 218, 227, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (quoting Bragdon v. Abbott, 524 U.S. 624, 642, 118 S.Ct. 2196, 141 L.Ed.2d 540 (1998) (citing Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944))). As the Supreme Court in Skidmore stated that:

while not controlling upon the courts by reason of their authority, . . . . [t]he weight of [the agency rulings] . . . in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.

Skidmore, 323 U.S. at 140, 65 S.Ct. 161. Based on this principle, the Federal Circuit and this Court have afforded Skidmore deference to Customs' position in classification cases where Customs has issued rulings. See, e.g., Rubie's Costume Co. v. United States, 337 F.3d 1350, 1354-55 (Fed.Cir.2003) (affording Skidmore deference to Customs' ruling); Hartog Foods Intl, Inc. v. United States, 291 F.3d 789, 791 (Fed.Cir.2002) (extending no Skidmore deference to Customs' position "because Customs denied [the] protest without an official ruling"); Dolly, Inc. v. United States, 27 CIT ___, ___, 293 F.Supp.2d. 1340, 1342 (2003) (same). But see ...