Plexus Corp. v. United States

• Decision Date: 22 December 2020
• Docket Number: Slip Op. 20-188,Court No. 13-00343
• Parties: PLEXUS CORP., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

489 F.Supp.3d 1379

PLEXUS CORP., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 20-188

Court No. 13-00343

United States Court of International Trade.

December 22, 2020

Myron P. Barlow, Barlow & Company, LLC, of Washington, DC, argued for plaintiff Plexus Corp.

Beverly A. Farrell, Trial Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of New York, NY argued for defendant United States. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, Commercial Litigation Branch and Offices of Foreign Litigation and International Legal Assistance, and Justin R. Miller, Attorney-in-Charge, International Trade Field Office. Of Counsel was Michael W. Heydrich, Office of the Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection.

OPINION

Reif, Judge:

At issue in this case is the correct classification of printed circuit board assemblies ("PCBAs") and chassis imported into the United States by plaintiff Plexus Corp. ("Plexus" or "plaintiff"). Before the court are cross-motions for summary judgment and defendant's motion to dismiss as to one entry for lack of subject matter jurisdiction. See Pl.’s Mot. for Summ. J., ECF No. 42 ("PI. Br."); Def.’s Cross-Mot. for Summ. J. and Mot. to Diss., ECF No. 53 ("Def. Br."); see also Pl.’s Reply & Resp. to Def. Cross-Mot. for Summ. J. & Resp. Consent, to Def.’s Mot. to Diss., ECF No. 61 ("PI. Rep. Br."); Def.’s Reply in Supp. of Cross-Mot. for Summ. J., ECF No. 66 ("Def. Rep. Br."). Plaintiff challenges a decision by United States Customs and Border Protection ("Customs" or "defendant") to classify the PCBAs and chassis under subheadings 8529.90.13 and 8529.90.83, respectively, of the Harmonized Tariff Schedule of the United States ("HTSUS").¹ Subheading 8529.90.13 covers "Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528: Other: Printed Circuit assemblies: Of television apparatus: Other: Other" and carries a 2.9% ad valorem duty. Subheading 8529.90.83 covers "Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528: Other: Other parts of articles of headings 8525 and 8527: Of television apparatus: Other" and carries a 2.9% ad valorem duty. In reaching this classification, Customs first determined that the subject merchandise is used as constituent parts in the finished merchandise described in Heading 8525, which includes "transmission apparatus for radio-broadcasting or television." See Customs’ Headquarters Ruling Letter ("HQ") H193879 (Jun. 5, 2013) (Def. Ex.1) at 11.

Plaintiff argues that the correct classification of the products is under subheading 8517.70.00, which covers "Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528; parts thereof: Parts" and is duty free.

The question presented is whether the imported items are "[p]arts" under Heading 8529 "suitable for use solely or principally with" "[t]ransmission apparatus for radio-broadcasting or television" under Heading 8525, or parts for "other apparatus for the transmission ... of voice, images or other data ..." under Heading 8517.

The court determines, as elaborated below, that factual issues regarding the principal use of the subject merchandise remain unresolved. Consequently, the court does not reach a conclusion as to whether the proper classification of the subject merchandise is Heading 8529, which is comprised of parts suitable for use solely or principally with the apparatus of Heading 8525, or Heading 8517. Accordingly, plaintiff's motion for summary judgment and defendant's cross-motion for summary judgment must be denied. Rather, the court grants partial summary judgment in favor of defendant on issues relating to the proper meaning of the terms in Heading 8517, and Headings 8525 and 8529. Partial summary judgment is denied for defendant in all other respects.

Defendant also moves to dismiss all claims relating to Entry No. UPS-8221052-5, alleging that the claims are based on an untimely, and, therefore, invalid, protest. For the reasons set out below, the court grants defendant's motion to dismiss as to Entry No. UPS-8221052-5.

BACKGROUND

I. The Imported Merchandise

USCIT Rule 56(a) requires that the court grant summary judgment if a moving party can show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Movants should present material facts as short and concise statements, in numbered paragraphs and cite to "particular parts of materials in the record" as support. USCIT Rule 56(c)(1)(A). The opponent must, in response, "include correspondingly numbered paragraphs responding to the numbered paragraphs in the statement of the movant." USCIT Rule 56.3(b).

The parties submitted separate statements of facts with their respective summary judgment motions. See generally Pl.’s Statement of Material Facts as to Which There Are No Genuine Issues to be Tried, ECF No. 54-1 ("PI. Stmt. Facts"); Def.’s Statement of Material Facts as to Which There Are No Genuine Issues to be Tried, ECF No. 53-14 ("Def. Stmt. Facts"). The majority of the responses to plaintiff's and defendant's statements, respectively, were admissions, but many responses included additional claims. See generally Def.’s Response to Pl.’s Statement of Material Facts, ECF No. 57 ("Def. Resp. PI. Stmt. Facts"); Pl.’s Response to Def.’s Statement of Material Facts, ECF No. 61-3 ("PI. Resp. Def. Stmt. Facts"). Upon the court's review of the parties’ respective statements of facts and supporting documents, the court determines that the following material facts regarding the subject merchandise and the Harmonic EMRs are undisputed.

From 2010 to 2012, plaintiff imported the subject merchandise into the United States through ports in California, Washington, Ohio and Kentucky. PI. Br. at 6; Def. Br. at 1-2. There were 392 entries covered by 32 protests. Def. Br. at 1. The subject articles are printed circuit board assemblies (PCBAs) and chassis, used in encoders, multiplexers and remultiplexers designed and marketed by Harmonic, Inc. ("Harmonic EMRs"). Joint Stmt. Facts ¶¶ 1, 2, 5, 6. Harmonic, Inc. ("Harmonic") and Plexus entered into a contract under which Plexus manufactured products designed and marketed by Harmonic. Id. ¶ 1. Based on Section XVI, Note 2(b) of the HTSUS, discussed infra, proper classification of the PCBAs and chassis depends on the classification of the machines with which they are used.

The subject PCBAs and chassis are used in Harmonic EMRs that are identified by the following model names and numbers: Audio Encoder (encoder), DiviCom Electra 1000 (encoder), DiviCom Electra 5000 (encoder), DiviCom Electra 5400 (encoder), DiviCom Electra 7000 (encoder), DiviCom Electra 8000 (encoder), DiviCom Ion (encoder), ProStream 1000 (multiplexer), ProStream 1000 with ACE (remultiplexer). Id. ¶ 10. The function of encoders is to compress audio and video digital data representing images and sound, including voice. Id. ¶ 11. Encoders are used so that the data that are compressed by the encoder occupy less space in storage and less bandwidth during transmission. Id. ¶ 12. The data output from the Harmonic encoders goes to switches and routers and/or to multiplexers. Id. ¶ 13. Multiplexers take output data from multiple encoders and combine them into a single stream so that more data can be transmitted with the available bandwidth. Id. ¶ 14. Remultiplexers fulfill an identical purpose for data from multiple multiplexers. Id. ¶ 15.

Harmonic EMRs are not necessary for the transmission of a data signal. PI. Stmt. Facts ¶ 20; Def. Resp. PI. Stmt. Facts ¶ 20. However, Harmonic customers could not provide data signals in a cost-effective manner without the use of Harmonic EMRs. Transcript of Oral Argument ("Tr. Oral Arg.") at 72-73. The Harmonic EMRs do not themselves send signals to reception devices for listening and viewing by people; however, they are used in the networks that send signals out to viewing devices for listening and viewing. PI. Stmt. Facts ¶ 19; Def. Resp. PI. Stmt. Facts ¶ 19.A DICTIONARY OF COMPUTER SCIENCE (7th ed. 2016) defines "network" as a "system that consists of terminals, nodes, and interconnection media that can include lines or trunks, satellites, microwave, medium- and long-wave radio, etc. In general, a network is a collection of resources used to establish and switch communication paths between its terminals."

Harmonic EMRs are used in communication networks and networks that may be configured as public switched telephone networks, local area networks, metropolitan area networks and wide area networks. PI. Stmt. Facts ¶ 18; Def. Resp. PI. Stmt. Facts ¶ 18. Data compressed by Harmonic EMRs may be heard through and viewed on smartphones, personal computers and other devices in addition to television screens. PI. Stmt. Facts ¶ 21; Def. Resp. PI. Stmt. Facts ¶ 21. The data that are compressed and multiplexed by Harmonic EMRs may consist of video conferencing and audio-video content other than television or radio programming. PI. Stmt. Facts ¶ 21; Def. Resp. PI. Stmt. Facts ¶ 21.

The compression that Harmonic EMRs perform is "[p]rimarily about reducing the bandwidth of video, the amount of space it would occupy on a storage device or the amount of bandwidth it would occupy as the video is transmitted for a T.V. service." Def. Stmt. Facts ¶ 20 (citing Def. Ex. 3 (Deposition of Eric Armstrong) ("Armstrong Dep.") at 18). Plaintiff notes that the data compression function of Harmonic EMRs may be used also in the transmission of data for non-television and non-radio content. PI. Resp. Def....