Porsche Motorsport N. Am., Inc. v. United States

Decision Date30 December 2021
Docket NumberSlip Op. No. 21-176,Court No. 16-00182
Citation554 F.Supp.3d 1365
Parties PORSCHE MOTORSPORT NORTH AMERICA, INC., Plaintiff, v. UNITED STATES, Defendant.
CourtU.S. Court of International Trade

George R. Tuttle, III, Law Offices of George R. Tuttle of San Rafael, CA, for Plaintiff.

Beverly A. Farrell, Senior Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant United States. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General; Jeanne E. Davidson, Director, Commercial Litigation Branch; Justin R. Miller, Attorney-in-Charge, International Trade Field Office; and Valerie A. Sorensen-Clark, Office of Assistant Chief Counsel, U.S. Customs and Border Protection.

OPINION

Vaden, Judge:

As the curtain rises on Act III of Georges Bizet's masterpiece Carmen , Don José has joined with his lover and a band of smugglers as they seek to secrete goods across the frontier without paying the applicable duties. Nearly 150 years later, another European seeks to achieve that same goal — this time legally — by bringing a series of novel interpretations of American customs law before the Court. With recourse to a duty-free provision, the protagonist here, like the eponymous operatic character, has repeatedly tried to reshuffle the deck dealt to it to avoid an outcome foretold. As with Carmen ’s final denouement, however, it cannot escape fate.

BACKGROUND

Following the submission of an Amended Joint Statement of Uncontested Material Facts (AJSUMF), Plaintiff and Defendant submitted a second set of cross-motions for summary judgment regarding the repeated exportation and return of a trailer stocked with automotive parts. The three entries at issue pertain to approximately 10,000 articles brought by Plaintiff Porsche Motorsport North America, Inc. (PMNA) across the border to Canada and re-imported to the United States in 2014. Plaintiff contends the articles should be classified under subheading 9801.00.85.00 of the Harmonized Tariff Schedule of the United States (HTSUS), which provides for duty-free treatment of "[p]rofessional books, implements, instruments, and tools of trade, occupation, or employment, when returned to the United States after having been exported for use temporarily abroad, if imported by or for the account of the person who exported such items." Finding this provision inapplicable, U.S. Customs and Border Protection (CBP) instead classified the articles under multiple dutiable tariff provisions of the HTSUS. Compl. ¶ 15, ECF No. 6. At oral argument, PMNA dropped Count Two of its Amended Complaint regarding non-receipt of notices of extension for liquidation sent by CBP. The present briefings dispose of the remainder of the case. For the reasons set forth below, the Court finds that CBP's determinations regarding classification of PMNA's "inventory" items were correct, and the Court GRANTS Defendant's Cross Motion for Summary Judgment on that issue and DENIES Plaintiff's Motion.

I. Facts

PMNA claims its exportation and return of a trailer containing parts and tools allowed it to "promote the Porsche brand" through the provision of "emergency" support at racing events in Canada. AJSUMF ¶ 6, Ex. 5 ¶ 5, ECF No. 81. Plaintiff further attests that providing trackside access to parts and tools constituted a form of assistance for teams at 2014 Porsche GT3 Cup Challenge races that took place in Canada. Access to these articles allowed the competitors to repair their Porsche automobiles in the event of accidents or unexpected breakdowns. See, e.g. , Pl.’s Resp. at 10, ECF No. 85; Pl.’s Mot. Summ. J. (Pl.’s Br.) at Ex. 17 (Declaration of Robert Resetar), ¶¶ 11-14, ECF No. 83-2. The 2014 races addressed in this Complaint were the (1) 2014 Porsche GT3 Cup Challenge Race at Canadian Tire Motorsport Park in Bowmanville, Ontario (Entry KB5-5376882-5 dated 05/30/2014); (2) 2014 Porsche GT3 Cup at Calabogie Motorsports Park in Calabogie, Ontario (Entry KB5-5378599-3 dated 06/23/2014); and (3) 2014 Porsche GT3 Cup Challenge Canada, in Bowmanville, Ontario (Entry KB5 5381385-2 dated 09/01/2014). While providing access to purchasable parts at these GT3 Cup races, the trailer was open for business solely with racing teams. PMNA did not sell parts to the general public during the races. Parts sold to the racing teams were not returned to PMNA. AJSUMF ¶ 15, ECF No. 81.

PMNA's trailer functioned as a roving emporium. Representatives from Porsche racing teams visited the trailer to obtain parts. PMNA's employees kept track of parts purchased through a system of order sheets for each racing team. AJSUMF ¶¶ 26-27, ECF No. 81. After the race, when the trailer had reentered the United States, the record of transactions from these sheets was transmitted to PMNA's accounting system. PMNA's office in Carson, California, then sent invoices to race teams for the car parts they had purchased. AJSUMF ¶ 29, ECF No. 81.

For each exportation to Canada and entry into the United States, PMNA filed "Certificates of Registration" (CBP Form 4455) with CBP. On each submission, PMNA indicated its intention to provide support for a particular GT3 race. See, e.g. , Pl.’s Br. at 32, ECF No. 83. It further provided manifests listing quantities, descriptions, and values of each of the various automotive and non-automotive parts in the trailer. The forms also listed the total respective values and quantities exported for each race, and they were later appended as declarations of the automotive parts re-entered into the United States. See KB5-5376882-5 dated 05/22/2014, KB5-5378599-3 dated 06/23/2014, and KB5-5381385-2 dated 09/01/2014.

At each entry, PMNA's broker classified the tools and automotive repair parts under subheading 9801.00.85 of the HTSUS. Under this provision, they would be duty-free. In its filings to CBP, PMNA did not make any adjustments to the quantities it returned to the United States. Compl., Entry Papers in Court File, Exs. 1, 2, and 3, ECF No. 6. For 2014's first race, the Porsche GT3 Cup Challenge Race at the Canadian Tire Motorsport Park in Bowmanville, the trailer's inventory report at the time of export identified 1,562 unique items in its inventory, a total parts count of 9,921 with a total value of $1,442,775. AJSUMF ¶ 37, ECF No. 81. Seventy-one other items with an approximated value of $13,140 were classified as "[n]on-inventory items PMNA support truck" on the submitted Form 4455 and the export manifest of parts. AJSUMF ¶ 38, Ex. 19, ECF No. 81. Although these items were included in the trailer in the subsequent two exports and entries, they were not reported on the relevant forms by PMNA. AJSUMF ¶¶ 60, 70, ECF No. 81. For the second race that year, the Porsche GT3 Cup at Calabogie Motorsports Park, the inventory report at the time of export for trailer 4HH42354 identified 1,576 unique items in inventory, a quantity parts count of 10,322 with a total value of $1,483,795.32. AJSUMF ¶ 51, ECF No. 81. For the third and final race, the Porsche GT3 Cup Challenge Canada in Bowmanville, the inventory report at the time of export for trailer 4HH42354 identified 1,605 unique items in inventory and a quantity parts count of 10,426 with a total value of $1,518,553.74. AJSUMF ¶ 64, ECF No. 81.

The sale of parts at the three races resulted in differences between the total number of automotive repair parts exported to Canada in the trailer and the total returned to the United States on each trip. Following the first and second races in 2014, PMNA also replenished the inventory while in Canada, resulting in further changes to the inventory of reimported parts. At the first race, teams purchased 146 parts, netting PMNA $34,009.61. While still in Canada, PMNA acquired additional inventory of 537 parts, valued at $11,507.09. AJSUMF ¶ 41, ECF No. 81. Less than half of the total number of replenished parts, 207 individual items, were exported from the United States. The other 330 originated in Germany. AJSUMF ¶ 41, ECF No. 81. At re-entry, PMNA's customs broker failed to declare any changes in the export manifest, attesting that the total remained identical to the inventory initially exported to Canada. AJSUMF ¶ 44, ECF No. 81. The replenished parts received from Germany while the trailer was in Canada were declared and entered into the United States under a separate customs entry. AJSUMF ¶ 45, ECF No. 81. The additional replenished parts from the United States acquired while the trailer was in Canada were separately reported to CBP via a Prior Disclosure. AJSUMF ¶ 46, ECF No. 81.

At the second race (Entry KB5-5378599-3), PMNA sold 106 parts with a total sales price of $31,850.37. AJSUMF ¶ 52, ECF No. 81. PMNA then replenished the trailer's inventory in Canada with 148 parts with a value of $14,853.18. AJSUMF ¶ 53, ECF No. 81. Sixty-five of these parts were exported to Canada from Germany, and the other eighty-three were exported from the United States. AJSUMF ¶ 54, ECF No. 81. As in the first re-entry, the replenished parts from Germany were declared and entered under a separate customs entry, and the replenished parts from the United States were separately reported to CBP via a Prior Disclosure. AJSUMF ¶ 58, ECF No. 81.

For the third race (Entry KB5-5381385-2), Porsche race car teams purchased 206 parts with a sales value of $69,069.93. AJSUMF ¶ 65, ECF No. 81. The trailer's stock was not replenished while the trailer was in Canada for the third race. AJSUMF ¶ 66, ECF No. 81.

After classifying the merchandise under various HTSUS provisions, CBP assessed duties, fees, and interest. For the first entry, PMNA faced a total duty of $36,930.40, plus interest and fees of $2,592.65, for a total payment of $39,523.05. For the second entry, PMNA faced a total duty of $40,488.92, plus interest and fees of $2,629.78, for a total payment of $43,118.70. For the third and final entry in question, PMNA faced a total duty of $38,675.28, plus interest and fees of $1,288.09,...

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