Simod America Corp. v. United States

• Decision Date: 16 July 1986
• Docket Number: Slip Op. 86-70.
• Citation: 641 F. Supp. 817,10 CIT 466
• Parties: SIMOD AMERICA CORP., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

641 F. Supp. 817

10 CIT 466

SIMOD AMERICA CORP., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 86-70.

United States Court of International Trade.

July 16, 1986.

Rode & Qualey, Michael S. O'Rourke, New York City, for plaintiff.

Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Barbara M. Epstein, New York City, for defendant.

Memorandum Opinion and Order

RE, Chief Judge:

The question presented in this case pertains to the proper classification, for customs duty purposes, of certain merchandise imported from Italy, and described on the customs invoices as shoe "uppers."

The merchandise was classified by the Customs Service as unfinished footwear under TSUS item 700.67 or 700.35, depending upon the amount of leather on the exterior surface.

Plaintiff has protested the classification, and contends that the merchandise is properly classifiable as shoe "uppers" under TSUS items 386.07, 386.50, or 386.04, or under TSUS items 791.90 or 791.27, depending on the leather content. Although the duties assessed and claimed varied depending on the amount of leather on the exterior surface, the duties on unfinished footwear are considerably higher than those assessed for parts or components of shoes.

Plaintiff contends that the Customs Service erred in determining that the imported shoe "uppers," which contained an underfoot or midsole, were substantially complete, and thus were classifiable as unfinished footwear. Rather, plaintiff submits that the imported merchandise required substantial additional manufacturing processes in the United States before it could be sold as footwear. Relying upon Daisy-Heddon, Div. Victor Comptometer Corp. v. United States, 66 CCPA 97, C.A.D. 1228, 600 F.2d 799 (1979), plaintiff urges that the nature, extent, and relative value of these additional manufacturing processes, in the United States, prevent classification as unfinished footware, and require that the merchandise as imported be classified as parts or components of shoes or shoe "uppers." See also Authentic Furniture Prod., Inc. v. United States, 68 Cust.Ct. 204, 343 F.Supp. 1372 (1972), aff'd, 61 CCPA 5, C.A.D. 1109, 486 F.2d 1062 (1973).

Pursuant to 28 U.S.C. § 256(b) (1982), and USCIT R. 77(c)(3), plaintiff has made a motion that the chief judge of the United States Court of International Trade authorize a judge of this Court to preside at an evidentiary hearing in Padova, Italy. Plaintiff maintains that the hearing in Padova will afford the court an opportunity "to view the manufacturing process in issue ... and to receive testimony relating to the diverse and complex manufacturing processes associated with the creation of finished footwear." In essence, plaintiff contends that an on-site view of these manufacturing processes is critical in carrying its burden of proof that the merchandise as imported could not be classified as unfinished footwear.

Plaintiff states that it operated a factory in Middletown, Rhode Island, and, utilizing a Desma twenty-four station bi-density polyurethane injection molding machine, manufactured sneakers and tennis shoes from the shoe "uppers" imported from Italy. Plaintiff further states that the decision by Customs to classify the shoe "uppers" in issue as unfinished footwear, made it uneconomical for it to continue to manufacture athletic footwear at the Middletown factory. The resulting economic hardship caused the factory to close.

According to plaintiff, only one other manufacturer in the United States uses the Desma injection molding technique, and that manufacturer is unwilling to allow competitors or other outside parties to view its factory. Although other American manufacturers use the injection molding process, their equipment is incompatible with the Desma injection molding technique.

Plaintiff maintains that the layout and manufacturing processes at the Middletown factory were identical in all respects to those at the factory of plaintiff's parent company in Padova, Italy. In addition, several of plaintiff's principal witnesses are presently employed at the Padova factory, and to require that they travel to the United States to testify at trial would impose an economic hardship upon the plaintiff. Therefore, plaintiff urges that Padova is the only place where the court may observe the manufacturing processes to which the imported shoe "uppers" were subjected at the Middletown factory, and also obtain the testimony of key witnesses.

Defendant acknowledges that the chief judge has the statutory authority to order an evidentiary hearing in Padova, but contends that the facts and circumstances of this case do not warrant such a hearing at this time. Defendant opposes plaintiff's motion on several grounds. Initially, defendant maintains that the motion is premature because the parties have not completed discovery.

Assuming arguendo that plaintiff's motion is timely, defendant contends that plaintiff has failed to make the requisite showing that "the interests of economy, efficiency and justice" will be served by holding a hearing in Padova. The defendant submits that plaintiff has not demonstrated that its manufacturing processes are "so special" that they require that the chief judge exercise the statutory authority under 28 U.S.C. § 256(b) to authorize a hearing abroad. Moreover, defendant maintains that plaintiff has not established that the processes and machinery in Padova are identical to those at plaintiff's Middletown factory, and thus relevant to the issues in this case.

Defendant also alleges that plaintiff has not substantiated its assertions that the witnesses who are "critical" to its case could not be present at a trial in the United States to testify about the manufacture of athletic footwear utilizing the Desma injection molding technique on the shoe "uppers" in issue. Defendant submits that one of plaintiff's primary contentions is that it would be costly for plaintiff to bring its witnesses to the United States to testify at a trial. For the chief judge to authorize the holding of a hearing in Padova, on this basis, would, in defendant's view, serve to transfer the cost and inconvenience from the plaintiff to the defendant and the court. In addition, the defendant states that plaintiff has not provided the court with any evidence that Italy has no objection to an evidentiary hearing of the type contemplated by section 256(b). Nevertheless, the defendant requests that, if the plaintiff's motion is granted, the court should order plaintiff to bear a portion of the additional expenses incurred by defendant in traveling to Padova.

When a trial or hearing before this Court is sought to be held outside New York City, 28 U.S.C. § 256 authorizes the chief judge to designate a judge of the court to preside at any place within the jurisdiction of the United States, or at an evidentiary hearing in a foreign country. Section 256(b), in particular, provides that:

Upon application of a party or upon his own initiative, and upon a showing that the interests of economy, efficiency, and justice will be served, the chief judge may issue an order authorizing a judge of the court to preside in an evidentiary hearing in a foreign country whose laws do not prohibit such a hearing: Provided, however, That an interlocutory appeal may be from such an order pursuant to the provisions of section 1292(d)(1) of this title, and the United States Court of Appeals for the Federal Circuit may, in its discretion, consider the appeal.

28 U.S.C. § 256(b) (1982).

A motion for an evidentiary hearing in a foreign country under 28 U.S.C. § 256(b) is comparable to a request, pursuant to 28 U.S.C. § 256(a), for a trial or hearing at a place within the United States other than New York City. It is obvious that a party cannot, as a matter of right, select the venue for a trial or hearing before the court. See Shannon Luminous Material Co. v. United States, 69 Cust.Ct. 317, 319, 349 F.Supp. 1000, 1003 (1972). To the contrary, it is clear that, pursuant to the statutory authority, the granting of a request for a trial or hearing outside New York City lies within the sound discretion of the chief judge. 69 Cust.Ct. at 320, 349 F.Supp. at 1004. The courts have long recognized this principle or policy of customs jurisprudence. In United States v. Sanchez, 15 Ct.Cust.Apps. 443, T.D. 42642 (1928), the Court of Customs Appeals stated that;

The business of the ... Court is so extensive that disorder and inefficiency would quickly result if

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