Nature's Touch Frozen Foods (West) Inc. v. United States
| Docket Number | 1:20-cv-00131,Slip. Op. 23-82 |
| Decision Date | 26 May 2023 |
| Parties | NATURE'S TOUCH FROZEN FOODS (WEST) INC., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Granting in-part and denying in-part Defendant's Cross-Motion for Summary Judgment and denying Plaintiff's Motion for Summary Judgment.
John M. Peterson, Neville Peterson LLP, of New York, NY for Plaintiff. With him on the brief were Richard F. O'Neill and Patrick B. Klein.
Jamie L. Shookman, Trial Attorney, Commercial Litigation Branch Civil Division, U.S. Department of Justice, of Washington DC, for Defendant United States. With her on the brief were Justin R. Miller, Attorney-in-Charge, International Trade Field Office; Brian M. Boynton, Principal Deputy Assistant Attorney General; and Patricia M. McCarthy, Director Commercial Litigation Branch. Of counsel on the brief was Fariha B. Kabir, Office of the Assistant Chief Counsel International Trade Litigation, U.S. Customs and Border Protection.
Before: Stephen Alexander Vaden, Judge
Plaintiff Nature's Touch Frozen Foods (West) Inc. (Plaintiff or Nature's Touch) brought this action contesting U.S. Customs and Border Protection's (Customs) tariff classification of the subject merchandise, which are mixtures of frozen fruit, some of which contain frozen vegetable ingredients. In cross- motions for summary judgment, Nature's Touch argues that the merchandise should be classified under Harmonized Tariff Schedule of the United States (HTSUS) subheading 2106.90.98 as "[f]ood preparations not otherwise specified or included: Other: Other; Other; Other; Other; Other," while the United States (Defendant or the Government) argues for classification under various eight-digit provisions within HTSUS heading 0811 as "Fruit . . . frozen[.]" For the reasons stated below, Nature's Touch's Motion for Summary Judgment is DENIED and the Government's Cross-Motion for Summary Judgment is GRANTED IN-PART.
This case concerns various frozen fruit mixture products that Nature's Touch imported into the United States from Canada between June 6, 2018, and November 21, 2018. Summons at 3-4, ECF No. 1. At liquidation, Customs classified the subject merchandise under heading 0811, HTSUS, which covers "Fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen, whether or not containing added sugar or other sweetening matter." 0811, HTSUS; Pl.'s Statement of Undisputed Material Facts (Pl.'s Facts) ¶¶ 11-24, ECF No. 28. Depending on the ingredients of the mixture, Customs classified the merchandise in liquidation under the following HTSUS subheadings: 0811.90.10 ("Bananas and plantains"), 0811.90.20 ("Blueberries"), 0811.90.52 ("Mangoes"), and 0811.90.80 ("Other").[1] Pl.'s Facts ¶¶ 11- 24, ECF No. 28; Def.'s Resp. to Pl.'s Statement of Undisputed Material Facts ¶¶ 11-24, ECF No. 36. The relevant provisions and duty rates of HTSUS Chapter 8, which covers "Edible Fruit and Nuts; Peel of Citrus Fruit or Melons," read:
Nature's Touch timely protested on October 30, 2019, claiming that the frozen fruit mixtures should instead be classified under subheading 2106.90.98, HTSUS, as "Food preparations not elsewhere specified or included: Other: Other; Other; Other; Other; Other." 2106.90.98, HTSUS; Summons at 1-2, ECF No. 1. The relevant provisions and duty rates of HTSUS Chapter 21, which covers "Miscellaneous Edible Preparations," read:
Nature's Touch's protest further claimed that the merchandise was eligible for duty-free treatment under the North American Free Trade Agreement (NAFTA). Summons at 2, ECF No. 1.
That protest was deemed denied on July 4, 2020, and Nature's Touch filed a summons and complaint challenging Customs' classification on July 15, 2020. Id. at 1-2; Compl., ECF No. 5. Nature's Touch later moved for summary judgment with an accompanying brief. See Pl.'s Memo in Supp. of Its Mot. for Summ. J. (Pl.'s Br.), ECF No. 28. The Government filed a cross-motion for summary judgment. Def.'s Memo in Opp'n to Pl.'s Mot. for Summ. J. and in Supp. of Def.'s Cross-Mot. for Summ. J. (Def.'s Br.), ECF No. 36. Thereafter, Nature's Touch and the Government filed reply briefs in support of their Motions. See Pl.'s Reply Br. in Supp. of Its Mot. for Summ. J. (Pl.'s Reply), ECF No. 30; Def.'s Reply Memo in Furth. Supp. of Def.'s Cross-Mot. for Summ. J. (Def.'s Reply), ECF No. 31.
The classification at issue was not the first time Customs had classified Nature's Touch's mixture products. In a prior ruling, HQ H307154, dated February 7, 2020, Customs classified two such products, one consisting of 25% strawberry, 25% blueberry, 25% blackberry, and 25% raspberry and the other of 34% mango, 33% raspberry, and 33% cherry. See HQ H307154 at 4; see also Def.'s Br. at 24, ECF No. 36. There, Customs determined that both mixtures were described by HTSUS 0811.90.80, as "Fruit . . . frozen: Other: Other" applying HTSUS General Rule of Interpretation 1, which requires that "classification shall be determined according to the terms of the headings[.]" See HQ H307154 at 4; GRI 1, HTSUS.
However, for the merchandise at issue here, Customs changed its position. Rather than classify all of the merchandise as "Fruit . . . frozen: Other: Other," Customs employed an alternative methodology and classified the mixtures into different subheadings depending on the ingredients in each mixture. See Def.'s Br. at 1-2, ECF No. 36; see also Def.'s Resp. Facts ¶¶ 11-24, ECF No. 36. In defending Customs' classification, the Government explained that none of heading 0811's subheadings described mixture products, including subheading 0811.90.80, HTSUS ("Fruit . . . frozen: Other: Other"). See Def.'s Br. at 18, 26, ECF No. 36. The Government instead argues that each mixture should be classified by considering the subheadings that cover the mixture's specific fruit ingredients and choosing the subheading that comes last in numerical order, applying HTSUS General Rule of Interpretation 3(c).[2] See id. at 20-21, 27. The Government disavowed its prior classification methodology and wrote that HQ H307154 "employed an incorrect reasoning" when it determined that frozen fruit mixtures could be classified under HTSUS 0811.90.80 as "Fruit . . . frozen: Other: Other." Def.'s Br. at 24, ECF No. 36. Nature's Touch rejected both of these methodologies and instead argues that all the mixtures are described by the terms of 2106.90.98, HTSUS, covering "Food preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Other." Pl.'s Br. at 2-3, ECF No. 28.
On February 16, 2023, the Court held a status conference and issued an Order requiring the parties to submit supplemental briefing. See Order, ECF No. 42. The Supplemental Briefing Order asked the parties to address whether all of the merchandise at issue could be classified under 0811.90.80, HTSUS ("Fruit . . . frozen: Other: Other"). The parties filed supplemental briefs in support of their positions, and both Nature's Touch and the Government continue to argue that subheading 0811.90.80, HTSUS, does not describe the mixtures. See Def.'s Supplemental Brief, ECF No. 44; Pl.'s Supplemental Brief, ECF No. 46.
The following facts are taken from the parties' Statements of Undisputed Material Facts or are otherwise on the record and undisputed. The subject merchandise consists of fourteen frozen fruit mixture products, five of which also contain frozen vegetable ingredients. Pl.'s Facts ¶¶ 10-24, ECF No. 28; Def.'s Resp. Facts ¶¶ 10-24, ECF No. 36. Nature's Touch produces the mixtures by importing fruits and vegetables from around the world to its Abbotsford, Canada facility, where they are cleaned, combined, and packaged for export to the United States. Pl.'s Facts ¶¶ 4-6, ECF No. 28; Def.'s Resp. Facts ¶¶ 4-6, ECF No. 36. With the exception of certain blueberries, all of the fruit and vegetables in the subject mixtures arrive at Nature's Touch's facility already cut and frozen. Defendant's Statement of Additional Undisputed Material Facts ¶ 6, ECF No. 36; Plaintiff's Response to Defendant's 56.3 Statement (Pl.'s Resp. to Def.'s 56.3 Statement) ¶ 6, ECF No. 30. Consumers use the mixtures for a variety of purposes, such as to make smoothies, sauces, chutneys, punches, dips, baked goods, and fruit salads; or they may thaw and eat the mixtures directly. Pl.'s Facts ¶¶ 34, 45, ECF No. 28; Def.'s Resp. Facts ¶¶ 34, 45, ECF No. 36. However, "[n]ew applications for the products at issue may be developed based on customer usage," and Nature's Touch "does not know how a customer will ultimately use the products at issue." Pl.'s Resp. to Def.'s 56.3 Statement, ¶¶ 12-13, ECF No. 30.
The mixtures contain no ingredients other than frozen fruit and vegetables, and the specific combinations of fruit and vegetables within each product are as follows:[3] All-Fruit Mixtures:
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