SPRADLING INTERN., INC. v. US, Court No. 90-06-00264.

• Decision Date: 26 January 1993
• Docket Number: Court No. 90-06-00264.
• Citation: 811 F. Supp. 687,17 CIT 40
• Parties: SPRADLING INTERNATIONAL, INC., a/k/a C.G. Spradling & Company, Inc., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

811 F. Supp. 687

17 CIT 40

SPRADLING INTERNATIONAL, INC., a/k/a C.G. Spradling & Company, Inc., Plaintiff, v. UNITED STATES, Defendant.

Court No. 90-06-00264.

United States Court of International Trade.

January 26, 1993.

Willkie Farr & Gallagher, Christopher Dunn, Vincent Bowen, Washington, DC, for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice, Barbara M. Epstein, Jack Diamond, General Atty., U.S. Customs Service, Intern. Trade Litigation, Washington, DC, of counsel, for defendant.

MEMORANDUM OPINION

DiCARLO, Chief Judge:

Plaintiff, Spradling International, Inc., challenges the United States Customs Service's reclassification of merchandise, resulting in the change of duties from zero to 5.3 percent. Plaintiff and defendant both move for summary judgment pursuant to Rule 56 of the rules of this court. The court has jurisdiction under 28 U.S.C. § 1581(a) (1988).

Background

Plaintiff imported from Colombia merchandise consisting of knitted man-made fibers laminated with sheets of plastic made from polyvinyl chloride. It is designed to be used as coverings in various applications, including interior automotive linings and upholstery, marine use, furniture upholstery, and imitation leather handbags and luggage.

The merchandise was first liquidated in October 1988 under item 355.81, Tariff Schedules of the United States (TSUS), free of duty under the Generalized System of Preferences. Subsequently, Customs reclassified the merchandise under item 355.85, TSUS, at a duty rate of 5.3 percent. The reclassification stems from an internal Customs decision that such action was required by the decision of Elbe Products Corp. v. United States, 6 Fed.Cir. (T) 133, 846 F.2d 743 (1988) (Elbe II). Prior to the internal decision, merchandise identical in all material respects to the merchandise in issue was classified according to Customs Ruling 072650 (September 16, 1983) under items 355.81 and 355.82, depending on whether the plastic component constituted more than 70% of the weight of the entire article.

There is no issue of material facts in this action. The dispute is over whether the merchandise should be properly classified under item 355.81, TSUS, as of man-made fibers over 70% by weight of plastic, or item 355.85, TSUS, as other textile fabrics laminated with plastics not specifically provided for. The court rules that the proper classification of the merchandise is item 355.81.

Discussion

The primary issue presented to the court is whether non-textile components should be disregarded in determining the chief value of the merchandise classifiable under item 355.81. The pertinent provisions of the TSUS are as follows:

                SCHEDULE 3. — TEXTILE FIBERS AND TEXTILE PRODUCTS
                Part 4
                Subpart C headnotes
                    2. For the purposes of the tariff schedules —
                    
                    (c) the provisions in this subpart for fabrics, coated or filled with rubber or plastics
                material, or laminated with sheet rubber or plastics (items 355.65-.85), cover products
                weighing not over 44 ounces per square yard without regard to the relative quantities or
                value of the textile fibers and the rubber or plastics material, but do not cover products
                weighing over 44 ounces per square yard unless they contain more than 50 percent by
                weight of textile fibers
                    
                    Woven or knit fabrics (except pile or tufted fabrics), of textile materials, coated or
                    filled with rubber or plastics material, or laminated with sheet rubber or plastics
                355.65   Of vegetable fibers
                            Of cotton
                            Of vegetable fibers, except cotton
                355.70   Of wool
                355.75   Of silk
                         Of man-made fibers:
                355.81      Over 70 percent by weight of rubber or plastics
                355.82      Other
                                Of strips
                                Other
                355.85   Other
                

Pursuant to the General Headnotes and Rules of Interpretation of the TSUS, the term "of," as used between the description of an article and a material, means "the article is wholly or in chief value of the named material." General Headnote 9(i). And "an article is in chief value of a material if such material exceeds in value each other single component material of the article." General Headnote 10(f).

The merchandise in question consists of knit polyester laminated with sheets of plastic. The plastic component accounts for more than 50% of the value, and more than 70% of the weight, of the entire article. Thus, there is no question that the merchandise is in chief value of plastic.

The question is whether the product in chief value of plastic is classifiable under item 355.81. Prior to the decision of Elbe II, defendant was in agreement with plaintiff that the non-textile component should be disregarded in determining the chief value component under item 355.81; as a result the merchandise at issue was classified under item 355.81. Defendant contends, however, that Elbe II has overruled its previous position and mandates application of the chief value test to the whole article without disregarding any component thereof; accordingly, the merchandise at issue is properly classified under item 355.85.

I. Whether Elbe II is applicable

The merchandise involved in Elbe II, Viledon heel grips, consists of non-woven man-made fibers and rubber, with rubber as the component of chief value. Customs classified the merchandise under item 355.25 as non-woven fabrics "of man-made fibers." In making such determination, Customs disregarded the rubber portion relying on Headnote 4(b) to Schedule 3, which provides: "In determining the component fibers of chief value in coated or filled, or laminated, fabrics and articles wholly or in part thereof, the coating or filling, or the nontextile laminating substances, shall be disregarded in the absence of context to the contrary." The Elbe II court disagreed and stated that Headnote 4(b) applies only "where it is necessary to decide whether vegetable fiber, wool, silk, or man-made fiber is the fiber in chief value" and "the headnote is no indication that the coating, filling or laminating substance should be disregarded for other purposes." 6 Fed. Cir. (T) at 135, 846 F.2d at 745 (quoting United States v. Elbe Products Corp., 68 CCPA 72, 77, C.A.D. 1267, 655 F.2d 1107, 1111 (1981) (Elbe I)). The Elbe II court held that, since the merchandise thereof contained only one class of fiber, Headnote 4(b) was not applicable and that the merchandise should be classified under item 359.60 as "other" textile fabrics not specially provided for.

Defendant contends that the principle of the Elbe II decision is applicable to the present case because the merchandise at issue is similar to that in Elbe II except that one contains woven fabric and the other non-woven fabric. Defendant further contends that while Customs in the past had resisted following a number of court decisions that applied the chief value test to the whole article of similar products, Elbe II is the first case where the two competing items were both under Schedule 3 and the court mandated application of the chief value test to the whole article. In the previous cases the competing items were between Schedule 3 (textile products) and Schedule 7 (rubber and plastics). See Elbe I; Canadian Vinyl Indus., Inc. v. United States, 76 Cust.Ct. 1, C.D. 4626, 408 F.Supp. 1377 (1976), aff'd on other grounds, 64 CCPA 97, C.A.D. 1189, 555 F.2d 806 (1977); Briarcliff Clothes, Ltd. v. United States, 66 Cust.Ct. 228, C.D. 4194 (1971).

Plaintiff argues that Elbe II is not applicable to the instant case because Elbe II does not concern the same TSUS items and headnote as the instant case. Items 355.81 and 355.85, and their controlling Headnote 2(c) of Part 4, Subpart C, of Schedule 3, have distinct provisions and legislative history, and are not at all discussed in Elbe II. Moreover, the decision of Elbe II is based on court's construction of Headnote 4(b) to Schedule 3, which has no application to this case since the merchandise at issue contains only one class of fiber (man-made fiber).

The court finds plaintiff's argument convincing. Based on the following analysis, the court holds that Elbe II is not applicable to the instant case.

II. Item 355.81 versus Item 355.85

1. Statutory Provisions

Items 355.81 and 355.85 both cover woven or knit fabrics of textile materials, coated, filled or laminated with rubber or plastics. Item 355.81 provides for such products "of man-made fibers over 70 percent by weight of rubber or plastics," whereas item 355.85 covers "other" of such products, not specially provided for as of vegetable fibers, silk, wool or man-made fibers under items 355.65-.82.

Items 355.81 and 355.85 are both governed by Headnote 2(c) of Part 4, Subpart C, of Schedule 3, which provides: "items 355.65-.85 cover products weighing not over 44 ounces per square yard without regard to the relative quantities or value of the textile fibers and the rubber or plastics material...." Plaintiff and defendant, however, disagree as to what this provision of Headnote 2(c) means.

According to plaintiff, the phrase "without regard to the relative quantities or value of the textile fibers and the rubber or plastics material" clearly indicates that, in determining whether a product is in chief value "of" vegetable fibers, silk, wool, man-made fibers or other materials under items 355.65-.85, the rubber and plastic components are to be disregarded. Plaintiff further contends that this interpretation is consistent with the description of item 355.81 providing for products "of man-made fibers over 70% by weight of rubber or plastics," since most of the products with such weight qualification are in chief value of rubber or plastics. If the chief value test were to be applied to the entire article without disregarding the rubber or plastic components, the coverage of item 355.81 would be limited...