Pima Western, Inc. v. US, Slip Op. 96-17. Court No. 92-04-00285.

• Decision Date: 16 January 1996
• Docket Number: Slip Op. 96-17. Court No. 92-04-00285.
• Citation: 20 CIT 110,915 F. Supp. 399
• Parties: PIMA WESTERN, INC., Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

915 F. Supp. 399

20 CIT 110

PIMA WESTERN, INC., Plaintiff, v. The UNITED STATES, Defendant.

Slip Op. 96-17. Court No. 92-04-00285.

United States Court of International Trade.

January 16, 1996.

Stein Shostak Shostak & O'Hara, Washington, DC, Steven B. Zisser, Los Angeles, CA, Bruce N. Shulman, and Scott Rosenow, Washington, DC, for Plaintiff.

Frank W. Hunger, Assistant Attorney General; Joseph I. Liebman, Attorney-In-Charge, and Susan Mansfield, International Trade Field Office, Civil Division, Dept. of Justice, Commercial Litigation Branch, for Defendant.

OPINION

WALLACH, Judge.

I INTRODUCTION

Plaintiff, Pima Western, challenges the classification of oleoresin of paprika formulated for use as a food coloring and imported into the United States from Mexico. The Customs Service classified the product under the Harmonized Tariff Schedule of the United States ("HTSUS") as "Coloring matter of vegetable or animal origin (including dyeing extracts but excluding animal black), whether or not chemically defined; preparations as specified in note 3 to this chapter based on coloring matter of vegetable or animal origin heading 3203.00: ... Other" This subheading, 3203.00.50, carries a tariff of 3.1% ad valorem.

Pima Western asserts that the classification is incorrect. It claims that the product should be classified as "Essential oils (terpeneless or not), including concretes and absolutes; resinoids; concentrates of essential oils in fats, in fixed oils, in waxes or the like, obtained by enfleurage or maceration; terpenic by-products of the deterpenation of essential oils; aqueous distillates and aqueous solutions of essential oils heading 3301: ... Resinoids: ... Prepared oleoresins consisting essentially of nonvolatile components of the natural raw plant subheading 3301.30"¹. Pima Western points out that this subheading has a statistical suffix for "Paprika" 3301.30.10.10. Such goods, if imported from Mexico, are free of duty.

The parties have submitted competing motions for summary judgment based on stipulated facts. For the reasons that follow, the Court denies Pima Western's motion, grants the government's motion and enters a final judgment in favor of the United States.

A

JURISDICTION LIES PURSUANT TO 28 U.S.C. § 1581(a)

The Customs Service liquidated the products at issue on January 25, 1991. Pima Western filed a timely protest on February 19, 1991. 19 U.S.C. § 1514(c)(3) (1994). The Customs Service denied the protest on October 30, 1991. Pima Western filed its summons timely on April 24, 1992. 28 U.S.C. § 2636(a) (1988). These jurisdictional prerequisites having been satisfied, this Court has jurisdiction pursuant to 28 U.S.C. § 1581(a) (1988).

B SUMMARY JUDGMENT IS APPROPRIATE BECAUSE THERE IS NO GENUINE ISSUE OF MATERIAL FACT

The Court may grant a motion for summary judgment "if the pleadings ... and admissions on file ... 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." USCITR 56(d). Here, the parties have stipulated to the material facts.

The meaning of tariff terms is a question of law, while their application to a particular product is a question of fact. E.M. Chem. v. United States, 9 Fed.Cir. (T) 33, 35, 920 F.2d 910, 912 (1990).

Pursuant to 28 U.S.C. § 2639(a)(1), the Customs Service classification in this case is entitled to a presumption of correctness, and the burden of proof that it is not correct lies with Pima Western. E.g., Lynteq, Inc. v. United States, 10 Fed.Cir. (T) ___, 976 F.2d 693, 696 (Fed.Cir.1992). The Court "must consider whether the government's classification is correct, both independently and in comparison with the importer's alternative." Jarvis Clark Co. v. United States, 2 Fed.Cir. (T) 70, 75, 733 F.2d 873, 878, reh'g denied, 2 Fed.Cir. (T) 97, 739 F.2d 628(1984).

II MATERIAL FACTS

The parties' Stipulation of Facts In Lieu of Trial states that Pima Western's imported prepared oleoresin of paprika consists essentially of nonvolatile components chemically extracted from dried, ground pods of red ripe chili peppers (capsicum annum). Stipulation ¶¶ 5, 6. Oleoresins of paprika can be formulated for coloring or flavoring purposes. Stipulation ¶¶ 7-10, Plaintiff's Memorandum In Support of Motion for Summary Judgment at 6. The oleoresin at issue is used primarily for coloring food, e.g., to make otherwise unappetizing raw beef look red and fresh. Stipulation ¶ 10. Indeed, the sample bottle that Pima Western placed in evidence at oral argument of these motions is labeled "PAPRIKA OLEORESIN, 40,000 Color Units". Plaintiff's Exhibit 1 (emphasis added). The oleoresin was grown and processed in Mexico. Stipulation ¶ 11.

III DISCUSSION

A OLEORESIN OF PAPRIKA FORMULATED AS COLORING MATTER IS PROPERLY CLASSIFIED UNDER HTSUS 3203.00.50

Rule 1 of the General Rules of Interpretation GRI of the HTSUS is the starting point for analysis of classification under the HTSUS. It provides:

The ... titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the following provisions indicating GRI 2, 3, et seq..

When the plain language of the heading selected by Customs and that suggested by Pima Western is compared to the parties' agreed description of the product as an oleoresin coloring substance derived from a plant, both headings appear to describe Pima Western's product. It is both a "preparation ... based on coloring matter of vegetable ... origin", HTSUS 3203, and a "resinoid", HTSUS 3301. Were that the extent of the Court's initial review, it would conclude that they are both applicable prima facie and resort to the General Rules of Interpretation that come after GRI 1.

GRI 1, however, requires the Court to review section and chapter notes to determine fully the headings' meanings. Note 3 to Chapter 32 provides in relevant part as follows:

Heading 3203 ... appl(ies) also to preparations based on coloring matter ... of a kind used for coloring any material or used as ingredients in the manufacture of coloring preparations....

In determining the entire scope of Heading 3203 indicated by this Chapter Note, the Court may examine relevant Explanatory Notes.

The Explanatory Notes generally are indicative of the proper interpretation of the HTSUS, although they are not legally binding on the United States. E.g., Lynteq, 976 F.2d at 699. They were prepared by the Customs Cooperation Council ("CCC") to set forth its official interpretation of the Harmonized Tariff System, which the HTSUS embodies. Report of the Joint Committee on the Omnibus Trade and Competitiveness Act of 1988, H.Conf.R. No. 576, 100th Cong., 2d Sess. at 549; Ugg Int'l, Inc. v. United States, 17 CIT 79, 83-84, 813 F.Supp. 848, 853 (1993). "They provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the system." Report of the Joint Committee on the Omnibus Trade and Competitiveness Act of 1988, H.Conf.R. No. 576 at 549.²

Where the United States has adopted headings, subheadings, and related chapter notes verbatim from the CCC's version, the CCC's Explanatory Notes are especially helpful in interpreting the HTSUS, albeit not dispositive. See Ugg Int'l, Inc., 813 F.Supp. at 853 ("In this case, the fact that Congress adopted the essential terms of Chapter 43, Explanatory Note 1 in Chapter 43, Note 1 suggests that Congress intended to adopt the CCC's interpretation...."). That is the case with the headings, subheadings and chapter notes of Chapters 32 and 33 relevant here. See Explanatory Notes to Harmonized Nomenclature Ch. 32, 33. Therefore, the Court refers to the Explanatory Notes to Chapters 32 and 33 to aid its understanding of the analogous Chapter Notes and headings in the United States schedule.

Explanatory Note 33.01(A) sets forth the products that are intended to come under the rubric "Resinoids":

Resinoids are products used mainly as fixatives in the perfume, cosmetic, soap or surfactant industries.... Certain products obtained by organic solvent extraction or extraction by gas under pressure and marketed as "prepared oleoresins" or spice oleoresins, consisting essentially of the non-volatile components (resins) of the natural raw plant materials (e.g., spices and herbs), also fall in this heading. These products are used principally as flavouring agents in the food industry.

The Explanatory Note thus contemplates that oleoresins of paprika formulated for use as flavoring agents are classifiable under heading 33.01. It treats oleoresins used as coloring agents, however, quite differently:

The heading 33.01 also excludes:

(a) Natural oleoresins (heading 13.01).

(b) Prepared oleoresins used as colouring matter (heading 32.03).

Explanatory Note 33.01(A)(a)(b) (emphasis in original and added).

Pima Western's product is a prepared oleoresin used as a food coloring. Stipulation ¶¶ 4-10, Plaintiff's Exhibit 1. Therefore, the Court concludes that the HTSUS headings and Chapter Notes call for classification of this oleoresin of paprika under heading 3203, and that classification under HTSUS heading 3301 would be incorrect.

B BECAUSE CLASSIFICATION IS COMPLETE UNDER GRI 1, THE COURT DOES NOT UNDERTAKE A SPECIFICITY ANALYSIS

Pima Western's primary argument is that HTSUS 3301.30.10 is more specific than HTSUS 3203.00.50.³ Pursuant to GRI 3(a), the more specific heading is preferred. Pima Western's argument is flawed, but it need not be reached in any event. When, as here, the Headings and Chapter Notes themselves are dispositive, GRI 1 governs, the Court does not reach GRI 3(a), and it does not undertake a specificity analysis.

By its terms, GRI 1 refers the Court to the analytical methods...