North American Processing Co. v. U.S.
| Citation | 56 F.Supp.2d 1174 |
| Decision Date | 25 June 1999 |
| Docket Number | Slip Op. 99-54.,Court No. 93-11-00769. |
| Parties | NORTH AMERICAN PROCESSING CO., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Barnes, Richardson & Colburn (Rufus E. Jarman, Jr. and Christopher E. Pey), New York City, for plaintiff.
David W. Ogden, Acting Assistant Attorney General of the United States, Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, Barbara S. Williams, Washington, DC, for Defendant.
Plaintiff, North American Processing Company (North American), is the importer of the subject merchandise. The merchandise at issue consists of bovine fat trimmings1 containing 35% chemical lean2 and 65% fat. Plaintiff challenges the United States Customs Service's (Customs) classification of the imported merchandise under subheading 0202.30.60, Harmonized Tariff Schedule of the United States (HTSUS), as "meat of bovine animals, frozen, boneless, other."3 Plaintiff contends the merchandise at issue is properly classified under subheading 1502.00.00, HTSUS, as "fats of bovine animals...."4 The Court has jurisdiction pursuant to 28 U.S.C. § 1581(a) (1994) and, for the reasons that follow, enters judgment for the defendant.
On October 14, 1992, North American entered the merchandise at issue through the port of San Francisco. The merchandise at issue consists of bovine fat trimmings packaged in such a manner that the entire package consists of 35% "lean" and 65% "fat." The entry at issue was classified under subheading 1502.00.00, HTSUS, as "fats of bovine animals ...," dutiable at a rate of 0.95¢/kg. The merchandise was liquidated as "no change" under this subheading on February 5, 1993 but was later reliquidated by Customs on February 26, 1993, under subheading 0202.30.60, HTSUS, as "meat of bovine animals, frozen, boneless, other," dutiable at a rate of 4.4¢/kg.
On May 26, 1993, plaintiff filed a protest, pursuant to 19 U.S.C. § 1514(c) (1988), challenging Customs' reliquidation of the merchandise under subheading 0202.30.60, HTSUS. Customs denied this protest on August 4, 1993, and plaintiff timely filed this action. On March 24, 1997, defendant filed a motion for summary judgment. Defendant's motion was denied in February 1998 because "[t]he parties do not agree on the degree to which the fat adheres to the meat, and this issue will require a factual finding by the Court." North American Processing Co. v. United States, 1998 WL 72811, at *2 (C.I.T. February 19, 1998) (footnote omitted). This Court further determined a dispute remained regarding how the packaging in which the merchandise was imported was labeled. Defendant subsequently moved for rehearing, modification, and/or reconsideration of this Court's order denying summary judgment. In the alternative, defendant moved in limine to exclude certain evidence. Defendant's motions were denied. A bench trial followed.
Plaintiff makes three main arguments in advancing its contention that the subject merchandise is properly classified under subheading 1502.00.00, HTSUS, "fats of bovine animals...." First, plaintiff claims the imported merchandise is prima facie classifiable as "fats of bovine animals ...," under subheading 1502.00.00, HTSUS, as the imported merchandise consists of fat by its nature, is bought and used for its fat content, is described as "fat trimmings" in commercial documents, and fits within the common meaning of fat. Second, plaintiff asserts the imported merchandise should not be classified as "meat of bovine animals, frozen, boneless, other," as provided under subheading 0202.30.60, HTSUS, and as defined by the Chapter Notes for Chapter 2, HTSUS (Chapter Notes), and the Harmonized Commodity Description and Coding System Explanatory Notes for Chapter 2, HTSUS (Explanatory Notes),5 because "fat" is excluded from the chapter,6 the imported merchandise is not suitable for human consumption at importation,7 and the "fat" does not necessarily "adhere[] to [the] meat."8 Third, plaintiff contends, if, arguendo, the imported merchandise is prima facie classifiable as both "meat" and "fat," the "essential character" of the imported merchandise is contributed by the fat component, in accordance with Rule 3 of the General Rules of Interpretation (GRI).9
Defendant makes three contentions in maintaining Customs properly classified the subject merchandise as "meat of bovine animals, frozen, boneless, other" under subheading 0202.30.60, HTSUS. First, defendant argues the imported merchandise is classifiable pursuant to the plain meaning of the statute. According to defendant, the definition of "meat" includes both "lean" and "fat."10 As the parties agree that the merchandise at issue is 35% "lean" and 65% "fat," it is, according to defendant, indisputable that the imported merchandise consists of "lean" with "fat" and is therefore "meat" classifiable under subheading 0202.30.60, HTSUS.
Second, defendant contends the Chapter Notes and the Explanatory Notes to Chapter 2 of the HTSUS support a definition of "meat" which includes "lean" and "fat," and, thus, the merchandise falls within the classification of "meat" under 0202.30.60, HTSUS. According to defendant, the Chapter Notes and Explanatory Notes direct that "the only type of fat not covered by the provision for bovine meat is fat presented alone." (Def.'s Post-Trial Mem. of Law at 6 (Def.'s Mem.).) Thus, where, as here, fat is not presented alone but rather imported attached to the lean, the merchandise is properly classifiable as bovine meat. This is true "even if the percentage of fat in the product surpasses the percentage of [lean] component[.]" (Def.'s Mem. at 6.) Defendant contends its position is supported further because the merchandise at issue is fit and suitable for human consumption as considered by the Chapter Notes.11
Defendant also argues the imported merchandise is not classifiable as "fat" under subheading 1502.00.00, HTSUS, as the imported merchandise is "fat trimmings," a product distinct from "beef fat." Defendant sites testimony of Rod McNally, Vice President of Industrial Sales, South American Meat Products Company, indicating "beef fat" and "fat trimmings" are different products and not interchangeable. According to Mr. McNally, "beef fat" is fat and must be so labeled on the finished product; "fat trimmings," however, are meat and would therefore be labeled "beef" as an ingredient in a product which contained the imported merchandise. Moreover, defendant contends, the United States Department of Agriculture's (USDA) standards consider "fat trimmings" which are more than twelve percent "lean" to be "meat" rather than "fat."
Finally, defendant asserts, in the alternative, if GRI 3 were examined, the "essential character" of the imported merchandise is "lean" not "fat." Defendant initially argues GRI 3 is inapplicable because the Chapter Notes and Explanatory Notes are sufficient to classify the imported merchandise pursuant to GRI 1. Defendant also contends the merchandise is not prima facie classifiable under two or more headings, a prerequisite for applying GRI 3. Even if, however, GRI 3 were examined, defendant argues the merchandise would still be classifiable as bovine meat as the critical component of the imported merchandise is the lean component since it is the percentage of lean which determines the price of the merchandise. Also, defendant argues, a purchaser buys the imported merchandise based on the percentage of lean, not fat. Accordingly, the lean portion constitutes the "essential character" of the product.
Determining whether imported merchandise has been classified under an appropriate tariff provision involves a two step process: (1) ascertaining the proper meaning of terms in the tariff provision; and (2) determining whether the merchandise at issue comes within the description of such terms. See Universal Elecs., Inc. v. United States, 112 F.3d 488, 491 (Fed. Cir.1997) (citing Intel Singapore, Ltd. v. United States, 83 F.3d 1416, 1417-18 (Fed. Cir.1996)). The first step is a question of law; the second, a question of fact. See id.; see also Medline Indus., Inc. v. United States, 62 F.3d 1407, 1409 (Fed.Cir. 1995).
By statute, Customs' classification decisions are presumed to be correct, and the party challenging the classification has the burden of proving otherwise. See 28 U.S.C. § 2639(a)(1) (1994). While the statute provides Customs' decisions with a presumption of correctness, the presumption "is a procedural device that is designed to allocate, between the two litigants to a lawsuit, the burden of producing evidence in sufficient quantity." Universal Elecs., Inc., 112 F.3d at 492 (emphasis omitted). While the presumption of correctness "carries force on any factual components of a classification decision," it "carries no force as to questions of law," which this Court reviews de novo. Id.
The Court reviews Customs' classification decisions de novo under 28 U.S.C. § 2640(a)(1) (1994) and is required to reach the correct result. See 28 U.S.C. § 2643(b) (1994); see also Jarvis Clark Co. v. United States, 733 F.2d 873, 880 (Fed. Cir.1984) (). In determining whether the importer has overcome the statutory presumption of correctness, the court must consider whether "the government's classification is correct, both independently and in comparison with the importer's alternative." Jarvis Clark Co., 733 F.2d at 878.
After hearing the evidence offered de novo at trial and reviewing the papers of the parties, the Court makes the following...
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