Roche Vitamins, Inc. v. United States

• Decision Date: 14 June 2013
• Docket Number: Court No. 04–00175.,Slip Op. 13–73.
• Citation: 922 F.Supp.2d 1353
• Parties: ROCHE VITAMINS, INC., Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. Court of International Trade

922 F.Supp.2d 1353

ROCHE VITAMINS, INC., Plaintiff,

v.UNITED STATES of America, Defendant.

Slip Op. 13–73.

Court No. 04–00175.

United States Court of

International Trade.

June 14, 2013.

Erik D. Smithweiss, Los Angeles, CA, Robert B. Silverman, and Joseph M. Spraragen, New York, NY, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, for plaintiff.

Saul Davis, Civil Division, Department of Justice, New York, NY; Stuart F. Delery, Acting Assistant Attorney General, and Barbara S. Williams, Attorney in Charge; International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, for defendant.

OPINION

EATON, Judge:

Before the court is Roche Vitamins, Inc.'s (“plaintiff” or “Roche”) challenge to the classification by United States Customs and Border Protection (“Customs”) of Roche's product “BetaTab 20%” (“the merchandise” or “BetaTab”). The court exercises jurisdiction pursuant to 28 U.S.C. § 1581(a) (2000). The case was tried on July 17 through 19, 2012 and post-trial briefing was completed on November 28, 2012. Based on the findings of fact and conclusions of law set forth below, the court enters judgment for plaintiff, pursuant to USCIT R. 52(a) and 58.

BACKGROUND

Plaintiff challenges Customs' classification of the merchandise, entered on December 16, 2002, under the 2002 Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 2106.90.97 as “[f]ood preparations not elsewhere specified or included: [o]ther: [o]ther.” Joint Proposed Pretrial Order, Sched. C ¶ 4 (ECF Dkt. No. 93) (“PTO”). Plaintiff, the importer of record, timely filed a protest to the liquidation of the merchandise and, after paying all assessed duties and fees, commenced this action when its protest was denied. PTO ¶¶ 1, 5–6. Plaintiff argues that the “merchandise is properly classifiable as a synthetic organic coloring matter and/or preparations based thereon. [B]eta-carotene, under [HTSUS] subheading [3204.19.35].” Pl.'s Compl. ¶ 13 (ECF Dkt. No. 4). In the alternative, Roche also claims that the merchandise is classifiable under subheading K3204.19.35 of the Pharmaceutical Appendix and under HTSUS subheadings 2936.10.00 and 2936.90.00 as “provitamins.” ¹ Pl.'s Compl. ¶¶ 16, 19.

On December 23, 2010, this Court denied Roche's motion for summary judgment. Roche Vitamins, Inc. v. United States, 34 CIT ––––, ––––, 750 F.Supp.2d 1367, 1382 (2010) (Wallach, J.) (“Roche I ”). There, the Court held that genuine issues of fact as to the principal use of the merchandise and the functionality of the merchandise's ingredients other than beta-carotene precluded summary judgment. Id. at ––––, 750 F.Supp.2d at 1378, 1382.

During the course of the trial, the court heard testimony from three witnesses called by the plaintiff and one witness called by the United States. Plaintiff's witnesses were Dr. Jean–Claude Tritsch, Roche's technical director at the time of importation, Dr. Steven Schwartz, an expert on the bioavailability of carotenoids, and Lynda Doyle, a former employee of Roche's marketing department with knowledge of Roche's marketing strategy for the merchandise. The Government's sole witness was Dr. Robert Russell, a physician specializing in gastroenterology. Following trial, the parties submitted proposed findings of fact and conclusions of law.

LEGAL FRAMEWORK

I. Standard of Review

The court makes its conclusions of law and findings of fact following a trial de novo. See28 U.S.C. § 2640(a)(1) (2006) (“The Court of International Trade shall make its determinations upon the basis of the record made before [it].”); see also United States v. Mead Corp., 533 U.S. 218, 233 n. 16, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (“The [Court of International Trade] ‘may consider any new ground’ even if not raised below ... and ‘shall make its determinations upon the basis of the record made before the court,’ rather than that developed by Customs.” (citations omitted)).

When reviewing Customs' classification decisions, the court applies the HTSUS General Rules of Interpretation (“GRIs”) and the HTSUS Additional U.S. Rules of Interpretation (“ARIs”) in numericalorder.²CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364 (Fed.Cir.2011). GRI 1 mandates that tariff classification initially “be determined according to the terms of the headings and any relative section or chapter notes.” “ ‘[A] court first construes the language of the heading, and any section or chapter notes in question, to determine whether the product at issue is classifiable under the heading.’... [T]ariff headings are construed without reference to their subheadings [which cannot] either limit or broaden the scope of a heading.” Dependable Packaging Solutions, Inc. v. United States, 37 CIT ––––, ––––, Slip Op. 13–23, at 7, 2013 WL 646328 (2013) (quoting Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed.Cir.1998)). “Absent contrary legislative intent, HTSUS terms are to be construed according to their common and commercial meanings, which are presumed to be the same.” Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed.Cir.1999) (citing Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed.Cir.1989)). The court “is required to decide the correctness not only of the importer's proposed classification but of the government's classification as well.” See Jarvis Clark Co. v. United States, 733 F.2d 873, 874 (Fed.Cir.1984).

Customs' factual determinations are entitled to a presumption of correctness. See28 U.S.C. § 2639(a)(1). “The presumption is a procedural device that allocates the burden of producing evidence ..., placing the burden on [the plaintiff] to show that there was insufficient evidence for the factual components of [Customs'] decision.” Chrysler Corp. v. United States, 592 F.3d 1330, 1337 (Fed.Cir.2010) (citations omitted).

II. The Competing Headings

Here, Customs classified the BetaTab under HTSUS heading 2106: “Food preparations not elsewhere specified or included.” This provision “is an expansive basket heading that only applies in the absence of another applicable heading.” R.T. Foods, Inc. v. United States, 36 CIT ––––, ––––, 887 F.Supp.2d 1351, 1358 (2012). “To prima facie fall under [this] heading ... two criteria must be met: the product[ ] must be (1) a food preparation, which is (2) not elsewhere specified or included.” Id. Thus, to overcome the presumption of correctness, Roche must demonstrate either that the evidence does not support classification of the merchandise as a “food preparation,” or that the evidence supports classification of the merchandise under a different heading. See Orlando Food, 140 F.3d at 1441 (“Inherent in the term ‘preparation’ is the notion that the object involved is destined for a specific use.”); see also Aromont USA, Inc. v. United States, 671 F.3d 1310, 1316 (Fed.Cir.2012); Arbor Foods, Inc. v. United States, 30 CIT 670, 677, 2006 WL 1359965 (2006).

Plaintiff claims the BetaTab is alternatively classifiable as a “coloring matter” under HTSUS heading 3204 (and K3204 by the inclusion of beta-carotene in the Pharmaceutical Appendix) or as a provitamin ³ under HTSUS heading 2936. In Roche I, this Court interpreted heading 3204's term “coloring matter” to be a principal use provision. Roche I, 34 CIT at ––––, 750 F.Supp.2d at 1375–1377. Because note 2(f) to Chapter 29 (the chapter pertaining to provitamins) excludes “synthetic organic coloring matter” from that chapter, whether classification under heading 2936 is appropriate here also hinges, in part, on whether or not the merchandise is principally used as a “coloring matter.” Id. at ––––, 750 F.Supp.2d at 1375 (“Note 2(f) ... cross-references the term ‘coloring matter.’ ”). In other words, if the class or kind of goods commercially fungible with the merchandise is principally used as a “coloring matter,” the merchandise will be classifiable under heading 3204 and excluded from 2936 by application of Chapter 29 note 2(f).

Principal use provisions “ ‘call for a [factual] determination as to the group of goods that are commercially fungible with the imported goods' ” so as to identify “the ‘use which exceeds any other single use.’ ” Aromont, 671 F.3d at 1312 (quoting Primal Lite, Inc. v. United States, 182 F.3d 1362, 1365 (Fed.Cir.1999); Lenox Collections v. United States, 20 CIT 194, 196, 1996 WL 47155 (1996)). This Court customarily uses several factors, commonly referred to as the “Carborundum Factors,” to inform its determination as to which goods are “commercially fungible with the imported goods.” Id. (quoting Primal Lite, 182 F.3d at 1365) (internal quotation marks omitted).

These factors include: use in the same manner as merchandise which defines the class; the general physical characteristics of the merchandise; the economic practicality of so using the import; the expectation of the ultimate purchasers; the channels of trade in which the merchandise moves; the environment of the sale, such as accompanying accessories and the manner in which the merchandise is advertised and displayed; and the recognition in the trade of this use.

Id. at 1313 (citing United States v. Carborundum Co., 63 CCPA 98, 536 F.2d 373, 377 (1976)). The actual use of the goods “is evidence of the principal use” but is still only “one of a number of factors.” Id.

Even if the merchandise is not principally used as a colorant, it is not necessarily classifiable as a provitamin under HTSUS heading 2936. Here, for instance, the BetaTab is not the provitamin beta-carotene in its pure form. Additional stabilizers were added to beta-carotene crystalline during the BetaTab's manufacturing process. Chapter 29 note 1(f) only permits the addition of a stabilizer to provitamins where “necessary for their preservation or transport.” See also Explanatory Notes to the Harmonized Commodity Description and Coding System, 29.362 (3d ed. 2002) (“Explanatory Notes”) (“The products of this heading may be stabilised for the...