Storewall Llc v. United States

• Decision Date: 31 March 2011
• Docket Number: No. 2010–1193.,2010–1193.
• Citation: 644 F.3d 1358,32 ITRD 2064
• Parties: STOREWALL, LLC, Plaintiff–Appellant,v.UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

644 F.3d 1358

32 ITRD 2064

STOREWALL, LLC, Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee.

No. 2010–1193.

United States Court of Appeals, Federal Circuit.

March 31, 2011.

Jessica R. Rifkin, Rodriguez, O'Donnell, Gonzalez & Williams, P.C., of Chicago, IL, argued for plaintiff-appellant. With her on the brief were R. Kevin Williams, and Thomas J. O'Donnell.Edward F. Kenny, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, NY, argued for defendant-appellee. With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, of Washington, DC; and Barbara S. Williams, Attorney in Charge, of New York, NY. Of counsel on the brief was Paula S. Smith, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, of New York, NY.Before DYK, PROST, and MOORE, Circuit Judges.Opinion for the court filed by Circuit Judge MOORE. Circuit Judge DYK concurs in the result.

MOORE, Circuit Judge.

StoreWALL, LLC (storeWALL) appeals the United States Court of International Trade's decision upholding the U.S. Customs and Border Protection's (Customs) classification of storeWALL's wall panels and HangUp locator tabs under Subheading 3926.90.98 of the Harmonized Tariff Schedule of the United States (HTSUS). storeWALL, LLC v. United States, 675 F.Supp.2d 1200, 1201–02 (Ct. Int'l Trade 2009). Because the wall panels and HangUp locator tabs are parts of furniture under Subheading 9403.90.50, HTSUS, we reverse and remand.

Background

StoreWALL imports wall panels and locator tabs manufactured in Taiwan that are used in conjunction with home organization and storage systems. The HangUp locator tabs, which are made of acrylonitrile butadiene styrene (ABS) plastic, are specially designed mounting hooks for the wall panels—the end user attaches the locator tabs to the wall and the wall panels rest upon the locator tabs. StoreWALL constructs the wall panels from rigid extruded polyvinyl chloride (PVC) plastic. The panels contain “L” shaped grooves in which the end user may place shelves, cupboards, baskets, hooks and other attachments to create a customized storage or display unit. StoreWALL imports both the wall panels and the locator tabs separately from other components.

Between April and September 2004, Customs liquidated the wall panels under Subheading 3916.20.00, HTSUS, a provision covering “Monofilament of which any cross-sectional dimension exceeds 1 mm, rods, sticks and profile shapes, whether or not surfaced-worked but not otherwise worked, of plastics: Of polymers of vinyl chloride.” During the same time period, Customs liquidated the HangUp locator tabs under Subheading 3926.90.98, HTSUS, a provision for “Other articles of plastics and articles of other materials of headings 3901 to 3914: Other: Other.”

After liquidation, storeWALL filed three protests with the ports of Los Angeles and Chicago requesting that Customs reclassify both the wall panels and the HangUp locator tabs under duty free provisions. StoreWALL requested that Customs reclassify the wall panels under Subheading 9403.70.80, a provision for “Other furniture and parts thereof: Furniture of plastics: Other,” and the locator tabs under Subheading 9403.90.50, a provision for “Other furniture and parts thereof: Parts: Others: Of rubber or plastics: Other.” Customs denied all three of storeWALL's protests.

StoreWALL commenced this action in 2005. During the course of the proceedings, Customs discovered that the wall panels were in fact “otherwise worked” within the meaning of Subheading 3916.20.00, HTSUS, and reclassified the wall panels (like the locator tabs) under Subheading 3926.90.98. After the completion of discovery, the parties filed cross-motions for summary judgment.

In its motion for summary judgment, storeWALL argued to the Court of International Trade that its wall panels and locator tabs are either “unit furniture” or “parts” of “unit furniture” covered under Heading 9403. storeWALL, 675 F.Supp.2d at 1204. The Court of International Trade denied storeWALL's motion for summary judgment and granted the government's cross-motion. Id. at 1201–02. The Court of International Trade began by analyzing whether the wall panels and locator tabs are properly classifiable as “other furniture and parts thereof” under Heading 9403. Id. at 1203. The Court of International Trade noted that although the HTSUS does not explicitly define the term “furniture,” the Chapter Notes clarify that items which are designed “to be hung, to be fixed to the wall or to stand one on the other” such as “cupboards, bookcases, other shelved furniture, and unit furniture” are classifiable under Heading 9403. Id. at 1203–04 (citing Chapter 94 Notes, Note 2, HTSUS).

The Court of International Trade noted that the Explanatory Notes attempt to clarify what is included within the scope of unit furniture:

The Explanatory Notes do not define “unit furniture” either, but add a caveat that “unit furniture” must be “designed to be hung, to be fixed to the wall or to stand one on the other or side by side, for holding various objects or articles (books, crockery, kitchen utensils, glassware, linen, medicaments, toilet articles, radio or television receivers, ornaments, etc.).” The Explanatory Notes also include within the definition of furniture “separately presented elements of unit furniture,” but expressly exclude from coverage under Heading 9403 “other wall fixtures such as coat, hat and similar racks, key racks, clothes brush hangers and newspaper racks....”

Id. (internal citations omitted). The Court of International Trade also reviewed the 1971 Brussels Nomenclature Committee Report, which emphasizes that “unit furniture” is “arranged to suit the tastes and needs of their users and the shape and size of the rooms to be furnished.” Id. The Court of International Trade reviewed dictionary definitions of the term “unit” and ultimately defined “unit furniture” as:

[A]n item

(a) fitted with other pieces to form a larger system or which is itself composed of smaller complementary items,

(b) designed to be hung, to be fixed to the wall, or to stand one on the other or side by side, and

(c) assembled together in various ways to suit the consumer's individual needs to hold various objects or articles, but

(d) excludes other wall fixtures such as coat, hat and similar racks, key racks, clothes brush hangers, and newspaper racks.

Id.

The Court of International Trade determined that under this definition of “unit furniture,” a completed storeWALL system may be classifiable as unit furniture. Id. at 1204–05. However, if an end user decided to accessorize the wall panels “only with hooks, as opposed to shelves or baskets,” then the completed storeWALL system is “merely a rack, which is expressly excluded from coverage....” Id. at 1205. The Court of International Trade concluded that because a completed storeWALL system is not always “unit furniture,” the wall panels and locator tabs are not prima facie classifiable under Heading 9403 because imported parts must be dedicated solely or principally for use with the classified item. Id.

Having concluded that the wall panels and locator tabs are not classifiable under Heading 9403, the Court of International Trade determined that Customs properly classified both articles under Subheading 3926.90.98, HTSUS as “Other articles of plastics ...: Other: Other.” Id. at 1206. StoreWALL appeals and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

Discussion

We review the Court of International Trade's ruling on summary judgment de novo. See, e.g., Drygel, Inc. v. United States, 541 F.3d 1129, 1133 (Fed.Cir.2008). Proper classification of goods under the HTSUS entails a two step process: First, ascertaining the meaning of specific terms in the tariff provision; and second, determining whether the goods come within the description of those terms. See, e.g., Millenium Lumber Distrib., Ltd. v. United States, 558 F.3d 1326, 1328 (Fed.Cir.2009). “The interpretation of the headings and subheadings of the HTSUS is a question of law reviewed without deference.” Drygel, 541 F.3d at 1133. Whether the goods fall within the scope of the headings and subheadings is a question of fact and storeWALL bears the burden of proving the classification is erroneous because Customs' classification decisions are presumed correct. Millenium Lumber, 558 F.3d at 1328. We review the factual findings of the Court of International Trade for clear error. Deckers Corp. v. United States, 532 F.3d 1312, 1315 (Fed.Cir.2008).

The General Rules of Interpretation (GRI) govern classifications under HTSUS. Millenium Lumber, 558 F.3d at 1328. “Under GRI 1, the court must determine the appropriate classification ‘according to the terms of the headings and any relative section or chapter notes' with all terms construed to their common commercial meaning.” Id. at 1328–29. Unlike Chapter Notes, Explanatory Notes are not legally binding. Id. at 1329. However, the Explanatory Notes “may be consulted for guidance and are generally indicative of the proper interpretation of the various HTSUS provisions.” Id. (quoting N. Am. Processing Co. v. United States, 236 F.3d 695, 698 (Fed.Cir.2001)).

A. The Court of International Trade's Definition of “Unit Furniture”

StoreWALL argues that the Court of International Trade erred by defining “unit furniture” to exclude “other wall fixtures such as coat, hat and similar racks, key racks, clothes brush hangers, and newspaper racks.” For ease of reference, we will refer to this express language in part (d) of the Court of International Trade's definition of “unit furniture” as “the rack exclusion.” StoreWALL proposes the following definition of “unit furniture”:

[A]n article or articles of convenience or decoration, used to furnish living quarters or other spaces, composed of more or less repetitive sections...