Sears Roebuck & Co. v. U.S., 93-1061

• Decision Date: 08 April 1994
• Docket Number: No. 93-1061,93-1061
• Citation: 22 F.3d 1082
• Parties: SEARS ROEBUCK & CO., Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1082

22 F.3d 1082

16 ITRD 1004

SEARS ROEBUCK & CO., Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant.

No. 93-1061.

United States Court of Appeals, Federal Circuit.

April 8, 1994.

Rehearing Denied June 1, 1994.

Donald J. Unger, Barnes, Richardson & Colburn, Chicago, IL, argued for plaintiff-appellee. With him on the brief was Brian F. Walsh.

Nancy M. Frieden, Atty., Commercial Litigation Branch, Dept. of Justice, New York City, argued for defendant-appellant. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen., Stuart E. Schiffer, Acting Asst. Atty. Gen., David M. Cohen, Director and Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office. Also on the brief was Steven Berke, Office of Asst. Chief Counsel, Intern. Trade Litigation, U.S. Customs Service, of counsel.

Before NIES, ^* NEWMAN, and SCHALL, Circuit Judges.

NIES, Circuit Judge.

The United States appeals from the judgment of the Court of International Trade holding that the merchandise imported by Sears Roebuck and Company, invoiced as "color video sound camera[s] (video camera & recorder)" and commonly known as "camcorders," is properly classified under item 685.40 of the Tariff Schedules of the United States (TSUS), covering "tape recorders." The government argues that the merchandise is properly classified under item 685.49 TSUS as a combination article consisting of a television camera and tape recorder. We agree and, accordingly, we reverse.

I.

Sears is an importer of camcorders, versatile, portable cameras which are able to record scenes and sound on video tape cassettes. The United States Customs Service (Customs) initially classified the camcorders under item 685.49 of the TSUS as a combination article consisting of a television camera and tape recorder. ¹ Sears challenged this classification before the Court of International Trade on the grounds that the devices contained neither a television camera nor a tape recorder as those tariff items were commonly known at the time TSUS 685.49 was enacted in 1962. ² In its initial decision, Sears Roebuck and Co. v. United States, 790 F.Supp. 299 (Ct. Int'l Trade 1992), the court held that the camera in the camcorder was not a "television" camera. The court reasoned that television cameras must be used in connection with television broadcast transmission apparatus for transmitting electrical waves over a distance. Because the court concluded that camcorders were not designed for this purpose, but instead to replace home movie cameras, it held that Customs erred in classifying the goods under TSUS 685.49. The matter was remanded to Customs for a second determination. Id. at 302.

On remand, Customs classified the camcorders under TSUS 685.40 as "tape recorders." ³ On return of the matter to the trial court, neither party supported that classification. Sears advised the court, however, it would not challenge the classification because the tariff rate was no higher than its preferred classification, as an "electrical article not specifically provided for" under TSUS 688.42. The government continued to urge its original classification and insisted that camcorders were more than "tape recorders."

In its second decision concerning this dispute, the court upheld the classification of camcorders as "tape recorders." Sears Roebuck and Co. v. United States, No. 92-148, slip op. at 3, 1992 WL 220838 (Ct. Int'l Trade Aug. 28, 1992). The court reasoned that the existence of TSUS 724.12, a provision specifically recognizing "magnetic video tape," indicated congressional awareness that images could be recorded on tape. The court also held that classification was governed by the camcorder's primary purpose--"to produce a tape of what appears before the lens"--and not by its subordinate capabilities, such as live monitoring without recording. Based on these conclusions, the court held that Congress intended camcorders to fall under the "tape recorders" provision. Id. at 4. The government appeals.

II.

We initially note Sears' contention that the United States may not assert in this appeal that the classification of camcorders as "tape recorders" is improper. According to Sears, because Customs submitted the tape recorder classification to the trial court following remand, the United States should not now be permitted to attack this classification before this Court. We disagree.

A party may challenge an interlocutory decision of a trial court on appeal from the final judgment. Flanagan v. United States, 465 U.S. 259, 263, 104 S.Ct. 1051, 1053-54, 79 L.Ed.2d 288 (1984). As explained below, the prior decision of the trial court remanding the case was interlocutory and not appealable. Thus, this appeal provides the government's first opportunity to challenge an initial decision which rejected the TSUS 685.49 classification.

Under 28 U.S.C. Sec. 1295(a)(5), an appeal may be taken only from "a final decision of the United States Court of International Trade." ⁴ Except in unusual circumstances a remand to Customs does not meet the requirement of finality and thus is not appealable. See Cabot Corp. v. United States, 788 F.2d 1539, 1542 (Fed.Cir.1986). To determine "whether an order is final enough to be appealable," Heat & Control, Inc. v. Hester Indus., Inc., 785 F.2d 1017, 1020 (Fed.Cir.1986), we must examine the standard set forth in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). As later described in Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2457-58, 57 L.Ed.2d 351 (1978), the Cohen test requires that an appealable order meet three conditions:

[T]he order must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment.

See also Sullivan v. Finkelstein, 496 U.S. 617, 110 S.Ct. 2658, 110 L.Ed.2d 563 (1990); Travelstead v. Derwinski, 978 F.2d 1244 (Fed.Cir.1992).

These standards were not met by the remand order of the trial court in this case. The remand order effectively left the camcorders unclassified, an issue which goes to the heart of the merits of this action. As the United States could not have mounted an appeal from the remand order of the trial court, its arguments are properly addressed by this Court on this appeal.

Such a holding comports with 28 U.S.C. Sec. 2643(b), which empowers the Court of International Trade to employ a number of different mechanisms when determining the proper classification of merchandise under the customs laws, including examining the law on its own initiative, remanding the matter to Customs, and scheduling a retrial. See Jarvis Clark Co. v. United States, 733 F.2d 873 (Fed.Cir.1984). The trial court's choice of procedure does not constrain the ability of Customs to continue to assert that the agency's initial classification was correct. Having been instructed by the trial court that a camcorder was not properly classified as a combination television camera and tape recorder, Customs adopted the tape recorder classification as a fallback position. Although Sears argues that it was misled by this "litigation tactic," the record is to the contrary. Even as Customs proposed its "tape recorder" classification on remand in a June 11, 1992, letter to the Court of International Trade, it clearly stated its reservation of a right to appeal the court's decision:

Finally, we note for purposes of appeal (should an appeal be taken from a final judgment of this Court), the Government continues to assert the original classification is correct. By submission of this proposed alternative classification, the Government does not waive its right of appeal.

Sears acknowledged the Government's position in a June 25, 1992, letter to the trial court, stating that:

Sears reserves its right to defend the Court's entry of a final judgment under either of the provisions discussed above in the case before the Court of Appeals for the Federal Circuit should an appeal be pursued by the defendant.

We can only conclude from these exchanges that Sears was not led to believe that Customs abandoned or waived its original classification. This Court has held, in analogous circumstances concerning judicial review of a Customs decision, that the acknowledged reservation of a party's right to appeal mitigates against a holding of estoppel. See Trayco, Inc. v. United States, 994 F.2d 832, 839 (Fed.Cir.1993). We now turn to the merits of this appeal.

III.

A.

A determination of the meaning of a tariff term is a question of law, reviewed de novo. Digital Equip. Corp. v. United States, 889 F.2d 267, 268 (Fed.Cir.1989). Because no clearly stated congressional intent provides the meaning of the tariff terms at issue in this appeal, we may construe the terms according to their common meaning. Brookside Veneers, Ltd. v. United States, 847 F.2d 786, 789 (Fed.Cir.), cert. denied, 488 U.S. 943, 109 S.Ct. 369, 102 L.Ed.2d 358 (1988). This meaning may be based upon our "own understanding of the terms used," assisted by consideration of "lexicographic and scientific authorities dictionaries, and other reliable information sources." Id. The determination of whether an article falls within the definition is a question of fact. Daw Indus. v. United States, 714 F.2d 1140, 1142 (Fed.Cir.1983). In this case, however, it is undisputed that the definition of a television camera urged by Customs ipso facto covers the camera portion of a camcorder.

The government urges that a television camera requires simply a lens, a pickup device and electronic circuitry which converts the images into electric signals. There is no dispute that camcorders meet this definition. The trial court, however, held that a television camera requires more than the above described capabilities and structure. According to the trial court, a television camera must also be used with "television transmission apparatus for...