Sarne Handbags Corp. v. U.S., Slip No. 00-51.

• Decision Date: 05 May 2000
• Docket Number: Court No. 97-06-00959-S.,Slip No. 00-51.
• Citation: 100 F.Supp.2d 1126
• Parties: SARNE HANDBAGS CORP., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

100 F.Supp.2d 1126

SARNE HANDBAGS CORP., Plaintiff, v. UNITED STATES, Defendant.

Slip No. 00-51.

Court No. 97-06-00959-S.

United States Court of International Trade.

May 5, 2000.

Serko & Simon LLP (Joel K. Simon and Jerome L. Hanifin), New York City, for plaintiff.

David W. Ogden, Acting Assistant Attorney General of the United States, Washington, DC; Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, New York City (Barbara M. Epstein); Beth C. Brotman, Office of the Assistant Chief Counsel, International Trade Litigation, United States Customs Service, of Counsel, for defendant.

OPINION

CARMAN, Chief Judge.

Defendant, United States, moves for summary judgment pursuant to U.S. CIT R. 56(b), contending it is entitled to judgment as a matter of law because the United States Customs Service (Customs) properly classified the merchandise at issue under subheading 4202.22.15, Harmonized Tariff Schedule of the United States (HTSUS)¹, as "Handbags ... With outer surface of sheeting of plastic," dutiable at a rate of 19.2% ad valorem. Plaintiff, Sarne Handbags Corp. (Sarne), opposes defendant's motion and cross-moves for summary judgment pursuant to U.S. CIT R. 56(a), contending it is entitled to judgment as a matter of law because Customs improperly classified the merchandise at issue under subheading 4202.22.15, HTSUS. Plaintiff argues the imported merchandise should have been classified under subheading 3926.90.98, HTSUS², as "Other articles of plastics ... Other: ... Other," dutiable at a rate of 5.3% ad valorem. The Court has jurisdiction pursuant to 28 U.S.C. § 1581(a) (1994).

BACKGROUND

Plaintiff is the importer of the merchandise at issue in this case. Plaintiff exported the merchandise from Hong Kong on August 3, 1996, and entered it at the Port of Long Beach on August 19, 1996.

The following material facts are not in dispute: The merchandise at issue consists of "handbags, style no. S/2061T-BR, invoiced as `100% PVC handbag,' represented by Defendant's Exhibit [] A." (Defendant's Statement of Material Facts Not In Issue at ¶ 2.) "The material comprising the outer surface of the handbag consists of a plastic material [`PVC'] which covers a textile material," (id. at ¶ 7), and the "outer surface of the handbag is that part of the surface of the bag which is seen by the user/consumer." (Id. at ¶ 17.) Furthermore, "[t]he plastic/textile material [] is in the form of a `sheet' and/or `sheeting' in the handbag at issue." (Id. at ¶ 9.) This plastic/textile material (Material) is a "broad, relatively thin surface layer or covering" with "a thickness greater than 10 mil." (Id. at ¶¶ 12, 13.) "For the purposes of this action, the parties agree ... the terms, `sheeting of plastic,' and `plastic sheeting' may be used interchangeably," and "the terms `plastic' and `plastics' may be used interchangeably." (Id. at ¶¶ 10, 11.)

Customs classified the merchandise at issue under subheading 4202.22.15, HTSUS, as "Handbags ... With an outer surface of sheeting of plastic." Plaintiff timely protested Customs' classification of the merchandise and after paying all liquidated duties due, timely commenced this action.

CONTENTIONS OF THE PARTIES

A. Plaintiff

Plaintiff, Sarne, contends no genuine issues of material fact exist, and it is entitled to judgment as a matter of law. Plaintiff argues Customs improperly classified the merchandise under subheading 4202.22.15, HTSUS, as "Handbags ... With an outer surface of sheeting of plastic." Plaintiff asserts this classification is improper because the merchandise is not prima facie classifiable under heading 4202, HTSUS, as "handbags ... of sheeting of plastics ... wholly or mainly covered with such materials," because the meaning of "sheeting of plastics" precludes such a finding.

Plaintiff argues that because neither the statute, nor the Harmonized Commodity Description and Coding System Explanatory Notes, nor the legislative history of the statute defines the phrase "sheeting of plastics," the Court must turn to the common meaning of the phrase. Plaintiff states the common meaning is "plastic in the form of continuous film (10 mils or greater in thickness)." (Plaintiff's Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment and in Support of Plaintiff's Cross-Motion for Summary Judgment (PSJ) at 12.) Because the Material is more than mere plastic and the plastic component was never a sheeting, plaintiff contends the common meaning of "sheeting of plastics" excludes the merchandise at issue.

Plaintiff argues the Material is not "sheeting of plastics," but rather is "synthetic leather" which is a composite material of plastic coated to a textile substrate. Plaintiff contends the plastics, synthetic leather and handbag industries recognized the Material as "synthetic leather" in 1988, the year the HTSUS was enacted.³ The Material, according to plaintiff, is "a unique, unitary material which provides functionality beyond that which is achievable by the combination of a plastic sheet with a textile." (Plaintiff's Reply to Defendant's Opposition to Plaintiff's Cross-Motion for Summary Judgment at 13.) Furthermore, "[t]he composite plastic/textile material at issue in this case will not separate into a plastic sheet and a textile as will often happen with a laminated plastic sheet and textiles." (Id.)

Plaintiff also contends the processes for manufacturing "sheeting of plastics" and "synthetic leather" are recognized in the industry as being significantly different. Plaintiff claims when manufacturing "synthetic leather" the plastic component, known as a "melt," is heated to 170-180C until it is a viscous, thick liquid which is then applied to the textile component. According to plaintiff, the "melt" takes the shape of the vessel in or on which it is placed, and if not coated onto fabric, it becomes a plastic sheet. The process for manufacturing "sheeting of plastics," according to plaintiff, is different from the one described above.

Because the Material comprising the merchandise at issue is not, and never was, a "sheeting of plastics," plaintiff argues the merchandise cannot be classified under heading 4202, HTSUS. Contrary to defendant's arguments, plaintiff contends Chapter 42, Additional United States Note 2 (U.S. Note 2)⁴ is inapplicable because U.S. Note 2 only addresses subheadings within heading 4202, HTSUS, and the General Rules of Interpretation (GRI) require classification to be determined according to heading first, then subheading.⁵ Even if U.S. Note 2 were applicable, however, plaintiff claims it still would not help defendant because U.S. Note 2 does not define "sheeting of plastics."

Plaintiff argues the Government's alternative method for achieving prima facie classifiability under heading 4202, HTSUS, by characterizing the merchandise at issue as "handbags ... with outer surface of textile materials" is also incorrect because the outer surface of the merchandise is plastic. Furthermore, plaintiff contends defendant's arguments for classification under heading 4202, HTSUS, based on the Tariff Schedule of the United States' (TSUS) prior treatment of handbags is mistaken because the classification of handbags changed significantly in the HTSUS.⁶ Finally, plaintiff argues summary judgment for defendant is precluded because the Court "must make a factual determination as to whether the common meaning of `sheeting of plastics' is different from its commercial meaning. In addition, the Court must determine if the material of which the handbags are constructed is composed of, or contains, sheeting of plastics."⁷ (PSJ at 29.)

Plaintiff argues the merchandise at issue should be classified under the basket provision for plastics, subheading 3926.90.98, HTSUS, as "articles of plastics." Subheading 3926.90.98, HTSUS, is appropriate, Sarne argues, because the merchandise at issue is composed of plastics, and it is not classifiable under any other eo nomine provision providing for the classification of handbags.⁸ Therefore, classification in a basket provision for articles of plastic would be correct.

B. Defendant

Defendant, United States, moves for summary judgment arguing there are no genuine issues of material fact in this matter, and Customs properly classified the merchandise at issue under subheading 4202.22.15, HTSUS, as "Handbags ... With outer surface of sheeting of plastic." The Court need not go beyond the plain meaning of the statute, according to defendant, because the phrase "sheeting of plastic," as explained by U.S. Note 2, includes the merchandise at issue. According to defendant, U.S. Note 2 requires all handbags made with an outer surface of "textile fabric impregnated, coated, covered or laminated with plastics (whether compact or cellular)" to be classified under subheading 4202.22, HTSUS, as handbags with an outer surface of "sheeting of plastic." Defendant contends plaintiff's claim that U.S. Note 2 is inapplicable is erroneous because to assert U.S. Note 2 refers to the definition of "sheeting of plastic" in the subheadings and not in the heading would be to fix a broader definition of a phrase in the subheading than in the heading. Such a result would be in conflict with Congressional intent that headings encompass subheadings in the statute. The definition of "sheeting of plastics" in heading 4202, HTSUS, therefore, must encompass textile materials covered by plastics in order to give effect to the subheading which is undisputably subject to U.S. Note 2.

Defendant further argues while no analysis of legislative history is necessary, the legislative history supports its contention that Congress intended the duty rate for handbags to remain the same after the conversion from the TSUS to the HTSUS. Defendant cites to the debate among members on the Harmonized System Committee⁹ and the International Trade Commission...