Specialty Commodities Inc. v. United States

• Decision Date: 02 December 2016
• Docket Number: Court No. 11–00091,Slip Op. 16–114
• Citation: 190 F.Supp.3d 1277
• Parties: Specialty Commodities Inc., Plaintiff, v. United States, Defendant.
• Court: U.S. Court of International Trade

190 F.Supp.3d 1277

Specialty Commodities Inc., Plaintiff,
v.
United States, Defendant.

Slip Op. 16–114
Court No. 11–00091

United States Court of International Trade.

December 2, 2016

190 F.Supp.3d 1280

J. Christopher Jensen, Cowan, Liebowitz & Latman, P.C., of New York, NY, argued for plaintiff. With him on the brief were Clarence J. Erickson and Sara J. Herchenroder.

Monica P. Triana, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendant. With her on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General and Amy M. Rubin, Assistant Director, International Trade Field Office. Of counsel on the brief was Sheryl A. French, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection of New York, NY.

OPINION

EATON, Judge:

At issue is the proper classification of Specialty Commodities Inc.'s ("plaintiff") merchandise, the seeds of the Pinus koraiensis tree. Before the court is plaintiff's motion for summary judgment and the cross-motion for summary judgment of the United States on behalf of U.S. Customs and Border Protection ("the Government" or "defendant"). See Mem. of Law in Supp. of Pl.'s Mot. for Summ. J. (ECF Dkt. No. 39) ("Pl.'s Br."); Def.'s Mem. of Law in Opp'n to Pl.'s Mot. for Summ. J. & in Supp. of Cross–Mot. for Summ. J. (ECF Dkt. No. 44) ("Def.'s Br."). Plaintiff challenges Customs' classification of its entries of seeds of the Pinus koraiensis tree under subheading 0802.90.97 of the Harmonized Tariff Schedule of the United States ("HTSUS"),¹ providing for classification of "Other nuts, fresh or dried, whether or not

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shelled or peeled: Other: Other: Shelled : Other ." Pl.'s Br. 3; HTSUS 0802.90.97 (2009) (emphasis added). Plaintiff asserts Customs misclassified the seeds because they are properly classified under HTSUS subheading 0802.90.25, which provides for classification of "Other nuts, fresh or dried, whether or not shelled or peeled: Other: Pignolia : Shelled. " Pl.'s Br. 3; HTSUS 0802.90.25 (emphasis added). Plaintiff seeks a reliquidation of the merchandise under HTSUS 0802.90.25 and a refund with interest for overpayments of duties. Pl.'s Br. 1. The Government maintains that its classification was correct, and the seeds are properly classifiable under HTSUS 0802.90.97.

The court has jurisdiction pursuant to 28 U.S.C. § 1581(a) (2006). For the reasons discussed below, plaintiff's motion for summary judgment is denied and defendant's cross-motion for summary judgment is granted. The court finds that the proper classification for the seeds is HTSUS 0802.90.97.

BACKGROUND

Plaintiff is a U.S. importer of raw, shelled pine nuts, the edible seeds of the Pinus koraiensis , a pine tree indigenous to northeast Asia. Joint Statement of Undisputed Facts ¶¶ 1–6 (ECF Dkt. No. 33) ("Statement of Facts"). The seeds are processed in, and exported from, China. Statement of Facts ¶ 4. On June 28, 2009, and July 12, 2009, the subject merchandise entered the United States through the Port of Minneapolis as entry numbers BHV–0004055–6 and BHV–0004113–3. Statement of Facts ¶¶ 3, 9. Upon entry, the merchandise was described on plaintiff's entry documents as "Chinese Pinenut Kernels" and classified by plaintiff under HTSUS 0802.90.25 (i.e., "Other nuts, fresh or dried, whether or not shelled or peeled: Other: Pignolia: Shelled."), subject to a $0.01 per kilogram duty rate. Statement of Facts ¶¶ 4, 7, 8.

On August 19, 2009, Customs rejected plaintiff's claimed classification. Customs' rejection relied on Explanatory Note 08.02, which reads: "[t]he principal nuts of this heading are almonds (sweet or bitter), hazelnuts or filberts, walnuts, chestnuts (Castanea spp. ), pistachios, pecans and pignolia nuts (seeds of the Pinus pinea )."² Statement of Facts ¶ 9; See Explanatory Notes to the Harmonized Commodity Description & Coding Sys., 08.02 (1st ed. 1986) ("Explanatory Note"), Def.'s Br. Ex. A, at 9 (ECF Dkt. No. 44–1). Based on this Explanatory Note, and because plaintiff's invoices stated the nuts were "Chinese Pinenut Kernels," Customs concluded the merchandise did not fit within HTSUS 0802.90.25. Statement of Facts ¶ 9. Specifically, Customs found that "the explanatory notes define pignolia as Pinus pinea [and plaintiff's] invoice doesn't indicate this information." Statement of Facts ¶ 9. Customs determined the merchandise was properly classified under HTSUS 0802.90.97, a basket provision that carries a $0.05 per kilogram duty rate. Statement of Facts ¶¶ 13, 15; see HTSUS 0802.90.97. Thus, for Customs, only seeds of the Pinus pinea tree are properly classified under HTSUS subheading 0802.90.25. See Statement of Facts ¶ 9. Customs therefore concluded that seeds produced by the Pinus koraiensis species are properly classifiable as "Other" under HTSUS subheading 0802.90.97. Statement of Facts ¶ 15. As a result, the entries were liquidated under HTSUS subheading 0802.90.97 on October 30, 2009. Statement of Facts ¶ 15.

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On April 22, 2010, plaintiff timely protested Customs' liquidation of the seeds. Statement of Facts ¶ 17. In its protest, plaintiff insisted that they were properly classified as "Pignolia." Statement of Facts ¶ 17. On October 15, 2010, Customs denied the protest in Headquarters Ruling Letter HQ H114758, concluding the seeds were properly classified under the basket provision, HTSUS 0802.90.97. Statement of Facts ¶ 19 & Ex. B (ECF Dkt. No. 33–2) ("Headquarters Ruling Letter HQ H114758"). This lawsuit followed.

STANDARD OF REVIEW

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." USCIT R. 56(a) ; Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "When both parties move for summary judgment, the court must evaluate each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration." JVC Co. of Am., Div. of U.S. JVC Corp. v. United States , 234 F.3d 1348, 1351 (Fed. Cir. 2000).

This court employs a two-step analysis when reviewing Customs' classification determinations. First, it must ascertain "the proper meaning of the tariff provisions," a question of law reviewed de novo, and second, determine "whether merchandise falls within a particular heading," a question of fact reviewed for clear error. LeMans Corp. v. United States , 660 F.3d 1311, 1315 (Fed. Cir. 2011) (citing Cummins Inc. v. United States , 454 F.3d 1361, 1363 (Fed. Cir. 2006) ). In the context of a classification action, "summary judgment is appropriate when there is no genuine dispute as to the underlying factual issue of exactly what the merchandise is." Bausch & Lomb, Inc. v. United States , 148 F.3d 1363, 1365 (Fed. Cir. 1998). That is, where "the nature of the merchandise is undisputed, the inquiry collapses into a question of law we review de novo." LeMans , 660 F.3d at 1315.

As for agency deference, "[o]n questions of law, a classification decision of Customs may be accorded a 'respect proportional to its "power to persuade." ' " Lerner N.Y., Inc. v. United States , 37 CIT ––––, 908 F.Supp.2d 1313, 1318 (2013), aff'd sub nom. Victoria's Secret Direct, LLC v. United States , 769 F.3d 1102 (Fed. Cir. 2014) (quoting United States v. Mead Corp. , 533 U.S. 218, 235, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (citation omitted)). Further, while Customs enjoys a statutory presumption of correctness as to its factual interpretations, the Federal Circuit has "squarely held that the statutory presumption of correctness under § 2639 is irrelevant where there is no factual dispute between the parties." Rollerblade, Inc. v. United States , 112 F.3d 481, 483–84 (Fed. Cir. 1997) ; Universal Elecs., Inc. v. United States , 112 F.3d 488, 492–93 (Fed. Cir. 1997).

In addition, while the plaintiff "has the burden of establishing that the [G]overnment's classification is wrong," the court must determine whether Customs' "classification is correct, both independently and in comparison with the importer's alternative." G.G. Marck & Assocs., Inc. v. United States , No. 08–00306, 2015 WL 3757040, at *3 (CIT June 17, 2015) (quoting Jarvis Clark Co. v. United States , 733 F.2d 873, 878 (Fed. Cir. 1984) ).

DISCUSSION

I. LEGAL FRAMEWORK

The tariff classification of imported merchandise is governed by the "General Rules of Interpretation" ("GRI") and the

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"Additional United States Rules of Interpretation" ("ARI"), which are applied in numerical order. R.T. Foods, Inc. v. United States , 757 F.3d 1349, 1353 (Fed. Cir. 2014). Accordingly, the classification analysis begins with GRI 1, under which "classification shall be determined according to the terms of the headings and any relative section or chapter notes." HTSUS GRI 1; see R.T. Foods , 757 F.3d at 1353 ("[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." (internal quotation marks and citation omitted)). Next,...