Schott Optical Glass, Inc. v. US

• Decision Date: 07 December 1987
• Docket Number: Court No. 81-01-00030.
• Citation: 11 CIT 899,678 F. Supp. 882
• Parties: SCHOTT OPTICAL GLASS, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

678 F. Supp. 882

11 CIT 899

SCHOTT OPTICAL GLASS, INC., Plaintiff, v. UNITED STATES, Defendant.

Court No. 81-01-00030.

United States Court of International Trade.

December 7, 1987.

Fitch, King & Caffentzis (Richard C. King and Peter Fitch, New York City, at trial, and on the briefs), for plaintiff.

Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., Dept. of Justice, Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office (John J. Mahon, New York City, at trial, and on the brief), for defendant.

MEMORANDUM OPINION

CARMAN, Judge:

This case is before the Court pursuant to a remand ordered by the United States Court of Appeals for the Federal Circuit. See Schott Optical Glass, Inc. v. United States, 7 CIT 36, 587 F.Supp. 69 (1984), rev'd and remanded, 750 F.2d 62 (Fed.Cir. 1984). (Schott II). At issue is the proper tariff classification of seven types of glass which were described in invoices of entry papers for the merchandise as follows: KG 4, WG 345, UG 1, UG 5, UG 11, RG 9, and RG 830. All of the entered goods were classified, by the United States Customs Service (Customs), as "other optical glass" under item 540.67 of the 1980 Tariff Schedules of the United States (TSUS). Customs assessed the duty at the rate of 23.1% ad valorem.

Plaintiff, Schott Optical Glass, Inc., (Schott) contends the glass type WG 345 should have been classified under item 542.42 as ordinary glass and assessed a duty rate of 0.5 cents per pound. Schott also urges glass types UG 1, UG 5, UG 11, RG 9, RG 830, and KG 4 should have been classified under item 542.92 as "colored or special glass" and assessed a duty rate of 0.6 cents per pound plus 2.4% ad valorem.

Defendant United States (Government) argues if the merchandise is not classified as "other optical glass" under item 540.67 TSUS, it should be classified as claimed by Schott. As an affirmative defense, however, the Government contends that the merchandise did not meet the packing requirements of headnote 4¹ and therefore should have been denied entry and returned to Custom's custody pursuant to 19 C.F.R. § 141.113(b) (1980).²

The Government also asserts a counterclaim the applicability of which would arise in the event the merchandise is found to be properly classified under either of the claimed provisions of plaintiff. The Government essentially argues that since the entries occurred several years ago, Schott might be unable to return the merchandise to the custody of Customs as required by the regulations. The Government therefore requests liquidated damages in the sum of $23,117.25, the value of the merchandise. The Government asserts it is also entitled to liquidated damages in the amount of the estimated duties under the claimed provisions.

On May 10, 1982, the trial court in Schott II issued an order denying, without prejudice, Schott's motion to dismiss the Government's counterclaim as premature. The trial court ruled the issue would be moot if the court sustained the Government's classification. In Schott II, the trial court indeed dismissed the counterclaim as moot. See 7 CIT at 42, 587 F.Supp. at 73. In light of the Court's holding to follow, the Court does not reach these issues.

The Court now turns its attention to the relevant tariff provisions contained in Schedule 5, Part 3, TSUS (1980). These provisions are set forth as follows:

                      Classified          Subpart A
                      under:                 * * * *
                                              Optical glass in any form, including blanks for spectacle
                                              lenses and for other optical elements; non-optical-glass
                                              blanks for corrective spectacle lenses; synthetic optical
                                              crystals in the form of ingots, segments of ingots, sheets, or
                                              blanks for optical elements; all the foregoing not optically
                                              worked; polarizing material, in plates or sheets, not cut to
                                              shape or mounted for use as polarizing optical elements
                                                * * * *
                                                  540.67 Other optical glass and synthetic optical crystals
                                                  polarizing material ......................23.1% ad val
                

                      Claimed         Subpart B
                      under:             * * * *
                                              Glass (whether or not containing wire netting), in rectangles,
                                              not ground, not polished and not otherwise
                                              processed, weighing over 4 oz. per sq. ft.:
                                                * * * *
                                                  Other, including blown or drawn glass, but excluding
                                                  pressed or molded glass:
                                                Ordinary glass:
                                       Weighing over 28 oz. per sq. ft.:
                          542.42        Not over 2-2/3 sq. ft. in area ............... 0.5¢ per lb.
                      And Claimed    Colored or special glass:
                      under:
                                                * * * *
                                      Weighing over 28 oz. per sq. ft.:
                          542.92       Not over 2-2/3 sq. ft. in area ............... 0.6¢ per lb.
                                                                                      2.4% ad val.
                

The trial court, in Schott II, ruled the common meaning of the term "optical glass" had already been ascertained in Schott Optical Glass, Inc. v. United States, 82 Cust.Ct. 11, C.D. 4783, 468 F.Supp. 1318 (1979), aff'd and reh'g denied, 67 CCPA 32, C.A.D. 1239, 612 F.2d 1283 (1979) (Schott I). In Schott I, the court of appeals held the term "optical glass," as used in item 540.67, encompassed glass which was: "(a) Very high quality, (b) used for optical instruments, and (c) capable of performing an optical function...." 67 CCPA at 33, 612 F.2d at 1285. Thus, since Schott I had ascertained the common meaning of "optical glass" as used in the statute, the trial court in Schott II ruled the definition of "optical glass" in Schott I was stare decisis. The trial court in Schott II also concluded this definition was controlling until a change in the statute necessitated a change in meaning or until it was shown the prior decision was clearly erroneous. Schott II, 7 CIT at 38-39, 587 F.Supp. at 71. Accordingly, the plaintiff in Schott II was precluded from relitigating or offering any evidence as to that issue. The classification of the merchandise under item 540.67 TSUS was sustained, and the action was dismissed.

Plaintiff Schott then appealed from the trial court's judgment in Schott II which sustained the Government's classification. In remanding, the Court of Appeals for the Federal Circuit held Schott should have been permitted to introduce evidence showing the prior decision of the Court of International Trade in Schott I, which upheld the classification of similar glass, was clearly erroneous. Schott II, 750 F.2d at 65.

The court of appeals in Schott II, citing United States v. Stone & Downer Co., 274 U.S. 225, 47 S.Ct. 616, 71 L.Ed. 1013 (1927), pointed out in a Customs classification case that a determination of fact or law, with respect to one importation, is not res judicata as to another importation of the same merchandise by the same party. The court indicated the opportunity to relitigate applies to both questions of construction of the classification statute as well as to questions of fact regarding the merchandise. The court stated that "under Stone & Downer the doctrine of res judicata— which bars litigation by the same parties of the same issue previously adjudicated ... would not bar Schott from relitigating the meaning of `optical glass' or the classification of its filters in this case within that category."³Schott II, 750 F.2d at 64 (citation omitted).

While the court of appeals in Schott II rejected the trial court's conclusion that stare decisis precluded Schott from offering further evidence, the court alluded to the well-recognized exception to stare decisis which permits a court to reexamine and overrule a prior decision that is clearly erroneous. The court asserted the issue was "not whether the arguments are the same but whether the new evidence would show that the rejection of those arguments in the prior case was clearly erroneous." Schott II, 750 F.2d at 64. Thus, while concluding Schott should have been allowed to offer additional evidence to undermine the prior decision in Schott I, the court of appeals in Schott II indicated the Court of International Trade should determine what evidence should be admitted, in the instant case, based upon the usual criteria of relevance, probative force, authenticity, accuracy, etc.

In the spirit of affording Schott a full opportunity to be heard and present its evidence, the Court presided over a lengthy trial which lasted eleven days. The parties have also presented extensive pretrial and post-trial briefs as well as a statement of supplemental authorities to support their respective positions.

In Schott I, Chief Judge Re, after an examination of the legislative history of TSUS 540.67 and the applicable case law, determined color filtered glass which was (a) very high quality; (b) used for optical instruments; and (c) capable of performing an optical function, met the definition of optical glass for tariff purposes. See 82 Cust.Ct. at 16, 468 F.Supp. at 1321 (citing Semon Bache & Co. v. United States, 25 CCPA 239, T.D. 49339 (1937); G.A.F. Corp. v. United States, 67 Cust.Ct. 167, C.D. 4269 (1971); and Ednal Co., Inc. v. United States, 6 Cust.Ct. 552, Abs. 45423 (1941)). The court determined, on the basis of the presumption of correctness which attaches to a classification by Customs, the foregoing indicia were presumed to have been met with regard to the entries involved. Chief Judge Re noted that while Schott did not disagree with these indicia, Schott urged an additional factor...