RKW Klerks Inc. v. United States
| Decision Date | 04 October 2022 |
| Docket Number | Slip Op. 22-115,Court No. 20-00001 |
| Citation | 592 F.Supp.3d 1349 |
| Parties | RKW KLERKS INC., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Philip Yale Simons and Jerry P. Wiskin, Simons & Wiskin, of Manalapan, NJ, for Plaintiff RKW Klerks Inc.
Aimee Lee, Assistant Director, and Elisa S. Solomon, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, for Defendant United States. With them on the briefs were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Justin R. Miller, Attorney-In-Charge, International Trade Field Office. Of counsel on the briefs was Fariha Kabir, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection.
This case involves the classification of two particular types of net wrap, both of which are synthetic fabrics used to wrap round bales of harvested crops (such as hay, straw, or silage), so that when the bales are released from the baling machine they maintain their compressed, round structure and are easier to transport. Specifically, this action addresses whether Plaintiff's net wraps, TopNet and Rondotex (together, the "Netwraps"), constitute synthetic "warp knit fabrics" and U.S. Customs and Border Protection ("CBP" or "the agency") properly classified the Netwraps under subheading 6005.39.00 of the Harmonized Tariff Schedule of the United States ("HTSUS").1 Before the court are cross-motions for summary judgment. Pl.’s Mot. for Summ. J., ECF No. 27; Pl.’s Br. in Supp. of its Mot. for Summ. J. ("Pl.’s Mem."), ECF No. 27–2; Def.’s Cross-Mot. for Summ. J. and Resp. in Opp'n to Pl.’s Mot. for Summ. J. and Def.’s Mem. of Law in Opp'n to Pl.’s Mot. for Summ. J. and in Supp. of Def.’s Cross-Mot. for Summ. J. ("Def.’s Cross-Mem."), ECF No. 32; Pl.’s Reply Br. to Def.’s Opp'n to Pl.’s Mot. for Summ. J. and in Opp'n to Def.’s Cross-Mot. for Summ. J. ("Pl.’s Resp. & Reply"), ECF No. 35-2; Def.’s Reply Br. in Further Supp. of its Cross-Mot. for Summ. J. ("Def.’s Reply"), ECF No. 38. RKW Klerks Inc. ("Plaintiff" or "RKW") contends that the Netwraps are properly classified under HTSUS subheading 8433.90.50 because the Netwraps qualify as "parts" of harvesting machinery, see Pl.’s Mem. at 3–4, or, alternatively, under subheading 8436.99.002 as "parts" of agricultural machinery, see Pl.’s Mem. at 4. The United States ("Defendant" or "the Government") maintains that the Netwraps are not "parts" of harvesting or agricultural machinery classifiable under HTSUS subheadings 8433.90.50 or 8436.99.00, respectively. See, e.g. , Def.’s Cross-Mem. at 8. The Government contends that CBP correctly classified the Netwraps under HTSUS subheading 6005.39.00. Id. at 12–14. For the reasons discussed below, the court denies Plaintiff's motion for summary judgment and grants Defendant's cross-motion for summary judgment.
The party moving for summary judgment must show "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." United States Court of International Trade ("USCIT") Rule 56(a). Parties filed cross-motions for summary judgment and submitted separate statements of undisputed material facts with their respective motions and responses to the opposing party's statements. See Pl.’s Statement of Material Facts Not in Dispute ("Pl.’s SOF"), ECF No. 27–1; Def.’s Resp. to Pl.’s SOF; Def.’s SOF; Pl.’s Resp. to Def.’s SOF. Upon review of the parties’ statements of facts and supporting exhibits, the court finds the following undisputed and material facts.3
RKW is an importer of two types of net wrap, TopNet and Rondotex. See Def.’s SOF ¶ 11; Pl.'s Resp. to Def.’s SOF ¶ 11. RKW is a subsidiary of RKW SE, a film producer that manufactures nonwoven fabrics and nettings, including shrink bottle wrap, pallet stretch hoods, gardening and greenhouse films, trash bags, and other packaging solutions, as well as raw materials. Def.’s SOF ¶ 9; Pl.’s Resp. to Def.’s SOF ¶ 9. The Netwraps are manufactured in Germany by several entities and plants owned by RKW SE. Def.’s SOF ¶ 10; Pl.’s Resp. to Def.’s SOF ¶ 10. Neither RKW SE nor any of its subsidiaries sell or produce machinery, including round balers or other harvesting machinery. Def.’s SOF ¶ 10; Pl.’s Resp. to Def.’s SOF ¶ 10.
Both TopNet and Rondotex are comprised of the same materials, are manufactured in the same manner, and serve the same function—to bind and secure crops in round bales. Def.’s SOF ¶¶ 5, 8; Pl.’s Resp. to Def.’s SOF ¶¶ 5, 8. Manufacture of the Netwraps involves a two-step process. Def.’s SOF ¶ 15; Pl.’s Resp. to Def.’s SOF ¶ 15. First, film layers are produced—one for chains and one for connecting threads. Def.’s SOF ¶ 15; Pl.’s Resp. to Def.’s SOF ¶ 15. The film layers are then cut into strips, stretched, heated, elongated, and knitted in Raschel machines, a type of knitting machine designed for making net wraps, but which could also be used to make pallet nets, another warp knit. Def.’s SOF ¶¶ 15, 17; Pl.’s Resp. to Def.’s SOF ¶¶ 15, 17. These layers of film are made up of high-density polyethylene ("HDPE"), a resin that is exclusively used for net wrap. Def.’s SOF ¶ 16; Pl.’s Resp. to Def.’s SOF ¶ 16. HDPE is a synthetic material. Def.’s SOF ¶ 16; Pl.'s Resp. to Def.’s SOF ¶ 16.
RKW developed the Netwraps as a substitute for baler twine for use in round baling machines. Def.’s SOF ¶ 23; Pl.’s Resp. to Def.’s SOF ¶ 23. Round baling machines collect harvested crops, such as grass, hay, or straw, then cut the crops into pieces, compact the pieces, and form the pieces into bale form. Def.’s SOF ¶ 21; Pl.’s Resp. to Def.’s SOF ¶ 21. After compressing the crops into bale form, round baling machines can wrap the bales with net wrap. See Def.’s SOF ¶ 22; Pl.’s Resp. to Def.’s SOF ¶ 22. Some round baling machines can use either net wrap or twine to wrap round bales. See Def.’s SOF ¶ 24; Pl.’s Resp. to Def.’s SOF ¶ 24.
RKW entered the Netwraps in question as a single entry, Entry No. 322-1912652-5, at the Port of Charleston, South Carolina on August 15, 2018. Def.’s SOF ¶ 1; Pl.’s Resp. to Def.’s SOF ¶ 1. CBP classified the merchandise under HTSUS subheading 6005.39.00, dutiable at ten percent ad valorem, and liquidated the entry on July 12, 2019. Def.’s SOF ¶ 1–2; Pl.’s Resp. to Def.’s SOF ¶ 1–2.
RKW protested the liquidation on November 12, 2019, requesting accelerated disposition. Def.’s SOF ¶ 3; Pl.’s Resp. to Def.’s SOF ¶ 3; Pl.’s SOF ¶ 2; Def.’s Resp. to Pl.’s SOF ¶ 2. CBP did not respond to the protest and, on December 12, 2019, the protest was denied by operation of law. Def.’s SOF ¶ 3; Pl.’s Resp. to Def.’s SOF ¶ 3.
The court has subject matter jurisdiction pursuant to 28 U.S.C. § 1581(a).
The court may grant summary judgment when "there is no genuine issue as to any material fact," and "the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The court's review of a classification decision involves two steps. First, it must determine the meaning of the relevant tariff provisions, which is a question of law. See Bausch & Lomb, Inc. v. United States , 148 F.3d 1363, 1365 (Fed. Cir. 1998) (citation omitted). Second, it must determine whether the merchandise at issue falls within a particular tariff provision, as construed, which is a question of fact. Id. (citation omitted). When no factual dispute exists regarding the merchandise, resolution of the classification turns solely on the first step. See id. at 1365–66 ; see also Sigma-Tau HealthScience, Inc. v. United States , 838 F.3d 1272, 1276 (Fed. Cir. 2016) (citations omitted).
The court reviews classification cases de novo. See 28 U.S.C. § 2640(a).
While the court affords deference to CBP's classification rulings relative to their "power to persuade," United States v. Mead Corp. , 533 U.S. 218, 235, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (quoting Skidmore v. Swift & Co. , 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) ), it has "an independent responsibility to decide the legal issue of the proper meaning and scope of HTSUS terms," Warner-Lambert Co. v. United States , 407 F.3d 1207, 1209 (Fed. Cir. 2005). It is "the court's duty to find the correct result, by whatever procedure is best suited to the case at hand." Jarvis Clark Co. v. United States , 733 F.2d 873, 878 (Fed. Cir. 1984).
The General Rules of Interpretation ("GRI(s)") provide the analytical framework for the court's classification of goods. See N. Am. Processing Co. v. United States , 236 F.3d 695, 698 (Fed. Cir. 2001). "The HTSUS is designed so that most classification questions can be answered by GRI 1." Telebrands Corp. v. United States , 36 C.I.T. 1231, 1235, 865 F. Supp. 2d 1277, 1280 (2012), aff'd 522 Fed. Appx. 915 (Fed. Cir. 2013). GRI 1 states that, "for legal purposes, classification shall be determined according to the terms of the headings and any [relevant] section or chapter notes." GRI 1, HTSUS; Degussa Corp. v. United States , 508 F.3d 1044, 1047 (Fed. Cir. 2007) (). "The first four digits of an HTSUS provision constitute the heading, whereas the remaining digits reflect subheadings." Schlumberger Tech. Corp. v. United States , 845 F.3d 1158, 1163 n.4 (Fed. Cir. 2017). Relevant here, "the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above [GRIs] on the understanding that only subheadings at the same level are comparable." GRI 6, HTSUS; see also WWRD US, LLC v. United States , 886...
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