Nissho Iwai American Corp. v. U.S.

• Decision Date: 12 May 1998
• Docket Number: No. 97-1489,97-1489
• Citation: 143 F.3d 1470
• Parties: NISSHO IWAI AMERICAN CORPORATION and Nike, Inc., Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1470

143 F.3d 1470

NISSHO IWAI AMERICAN CORPORATION and Nike, Inc., Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

No. 97-1489.

United States Court of Appeals, Federal Circuit.

May 12, 1998.

Michael Maxwell, Gruenfeld, Desiderio, Lebowitz & Silverman LLP, Los Angeles, CA, argued for plaintiffs-appellants. With him on the brief was James F. O'Hara, Stein, Shostak, Shostak, & O'Hara, Los Angeles CA.

Barbara M. Epstein, Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, New York City, argued for defendant-appellee. With her on the brief were Frank W. Hunger, Assistant Attorney General and David M. Cohen, Director, Commercial Litigation Branch, Civil Division, Washington, DC. Also on the brief was Joseph I. Liebman, Attorney-in-Charge, International Field Office, New York City. Of counsel on the brief was Chi Choy, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service, New York City.

Stephen S. Spraitzar, Law Offices of George R. Tuttle, and George R. Tuttle, III, San Francisco, CA, amicus curiae for Asics Tiger Corporation.

Before MICHEL, LOURIE, and SCHALL, Circuit Judges.

LOURIE, Circuit Judge.

Nissho Iwai American Corporation and Nike, Inc. (collectively "Nike") appeal from the judgment of the United States Court of International Trade sustaining the classification of certain athletic footwear under the basket provision subheadings 6402.91.80, 6402.91.90, and 6402.99.90 of the Harmonized Tariff Schedule of the United States ("HTSUS"), dutiable at 20% or at 90 cents per pair plus 20%. In rejecting the importers' arguments, the court determined that the footwear at issue could not be classified under subheadings 6402.91.40 or 6402.99.15, dutiable at 6%, which expressly exclude footwear containing "a foxing or foxing-like band." Because the Court of International Trade did not err in interpreting the tariff term "foxing-like band" as applying to athletic shoes having an externally visible band applied or molded at the sole and overlapping the upper, whether or not those shoes are constructed with a mid-sole, we affirm.

BACKGROUND

The athletic footwear at issue, imported in the late 1980s and early 1990s, are constructed with a "foot frame mid-sole" sandwiched between the outer sole and the upper of the shoes. At various points around the perimeter of the shoes, portions of the outer sole and the mid-sole overlap the upper to create a "wavy" band that substantially encircles the shoes. The outer sole overlaps the upper at the toe and arch of the shoes. The remaining overlap originates at the mid-sole.

Nike claims that the footwear should have been classified under either of two subheadings, 6402.91.40 and 6402.99.15, both of which expressly exclude "footwear having a foxing or a foxing-like band applied or molded at the sole and overlapping the upper." ^* A In the Court of International Trade, Nike again argued that its shoes did not have a "foxing-like band" within the meaning of the tariff provisions, asserting that only shoes resembling the "traditional sneaker or tennis shoe" could have a "foxing-like band." Nike argued that the term does not apply to athletic shoes, such as the imports in question, that contain a visible mid-sole. The Court of International Trade was unpersuaded and held that the existence or non-existence of a mid-sole was irrelevant to the "foxing-like band" issue. On summary judgment, the court concluded that the wavy overlap created by the combined overlapping portions of the outer sole and mid-sole constituted a "foxing-like band" within the meaning of the tariff provisions. Nike appealed to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5) (1994).

"foxing" is a band of material, such as rubber, applied to the shoe or boot, as in a Converse All Star TM, that overlaps and bonds the sole to the upper. It is undisputed that the athletic shoes at issue do not have a "foxing"; however, the United States Customs Service found that they had bands which were "foxing-like." Accordingly, it found each shoe to be within the exception and thus classifiable only in one of the three basket provisions (depending on the features of the particular shoe), each encompassing a variation of "footwear with outer soles and uppers of rubber or plastics" not otherwise classified.

DISCUSSION

We review the Court of International Trade's grant of summary judgment "for correctness as a matter of law, deciding de novo the proper interpretation of the governing statute and regulations as well as whether genuine issues of material fact exist." Guess? Inc. v. United States, 944 F.2d 855, 857, 9 Fed. Cir. (T) 111, 113 (Fed.Cir.1991). Determining the proper scope of a classification in the HTSUS is an issue of statutory interpretation and thus a question of law. See Marcel Watch Co. v. United States, 11 F.3d 1054, 1056 (Fed.Cir.1993). Determining whether a particular imported item falls within the scope of the various classifications as properly construed is a question of fact. Id. Because the nature and use of the imported athletic shoes are not in dispute in this case, the resolution of this appeal turns on the determination of the proper scope of the relevant classifications. The specific issue before us is whether the "foxing-like band" exclusion in the tariff provisions applies to athletic shoes in which part of the "band" overlapping the upper is formed by a mid-sole rather than exclusively by the outer sole. We hold that it does.

Nike asserts once again that the term "foxing-like band" is applicable only to shoes resembling the traditional sneaker or tennis shoe and thus argues that the exception cannot apply to the modern day athletic shoe containing a mid-sole. According to Nike, athletic shoes that do not closely resemble the traditional sneaker cannot have a "foxing-like" band. Nike has not argued that the wavy band on its shoes is visually dissimilar to the band formed by a traditional foxing so as to be outside the exception.

The tariff provisions in question do not expressly identify the type of shoe that possess a foxing-like band. Subheading 6402.91.40, for example, encompasses "footwear with outer soles and uppers of rubber or plastics" and having "uppers of which over 90 percent of the external surface area ... is rubber or plastics except (1) footwear having a foxing or foxing-like band applied or molded at the sole and overlapping the upper" (emphasis added). On its face, the exception applies to any footwear otherwise within the subheading that has a foxing or foxing-like band so applied or molded. The applicability of the exception thus depends on undefined language. All that is clear is that the exception is not expressly limited to footwear resembling a traditional sneaker having a foxing or foxing-like band. It is undisputed that the term "foxing-like," unlike the term "foxing," has no common and commercial meaning. Thus, there is no relevant industry practice on which to rely. Instead, congressional intent must be gleaned from the statutory language itself and, given its ambiguity, the legislative history.

Seeking support from the legislative history, Nike relies on the following single paragraph of the Tariff Classification Study (TCS), published by the United States Tariff The parenthetical exception "except footwear having foxing or a foxing-like band applied or molded at the upper" in item 700.55 is designed to insure classification in item 700.60 [the basket provision] of a style of imported shoes with plastic coated uppers having the general outward appearance of the traditional "sneaker" or tennis shoe.

Commission in 1960, which discusses the origins of the "foxing-like band" language in the Tariff Schedules of the United States (TSUS), the predecessor to the HTSUS:

Tariff Classification Study, Explanatory and Background Materials, Schedule 7 (Nov. 15, 1960). Nike argues that this statement in the TCS clearly limits the exception to shoes bearing a close resemblance to the traditional sneaker that existed in the early 1960s and does not apply to modern day athletic shoes. Specifically, Nike asserts that the term "foxing-like" was meant to encompass only an injection molded shoe prevalent in the 1960s that did not...