Structure Industries, Inc. v. U.S.

• Citation: 240 F.Supp.2d 1327
• Decision Date: 04 December 2002
• Docket Number: Court No. 00-05-00203.,SLIP OP. 02-141.
• Parties: STRUCTURAL INDUSTRIES, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

240 F.Supp.2d 1327

STRUCTURAL INDUSTRIES, INC., Plaintiff, v. UNITED STATES, Defendant.

SLIP OP. 02-141.

Court No. 00-05-00203.

United States Court of International Trade.

December 4, 2002.

Fitch, King and Caffentzis (James Caffentzis), New York, New York, for Plaintiff.

Robert D. McCallum, Jr., Assistant Attorney General; John J. Mahon, Acting Attorney-in-Charge, International Trade Field Office; Jack S. Rockafellow, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice; Beth C. Brotman, Attorney, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service, of counsel, for Defendant.

OPINION

CARMAN, Chief Judge.

Plaintiff Structural Industries, Inc. ("Plaintiff) moves for summary judgment and Defendant United States ("Defendant") cross-moves for summary judgment. Plaintiff challenges the Customs Service's ("Customs") classification of frames consisting of a flat glass cover, a masonite board, and a set of four metal clips. This Court has jurisdiction to review this matter under 28 U.S.C. § 1581(a)(2000). The Court denies Plaintiffs motion for summary judgment and grants Defendant's cross-motion for summary judgment based on the reasons set forth below.

BACKGROUND

The subject merchandise is frames comprised of three components: a flat glass cover, a masonite board, and four metal clips. (Pl's Statement of Undisputed Facts ¶¶ 2-3; Def.'s Resp. to Pl's Statement of Undisputed Facts ¶¶ 2-3.) The picture or other document to be displayed is placed between the glass cover and masonite board, while the metal clips hold the document glass, and masonite together. Plaintiff markets some or all of the subject merchandise under the name "Euro Clip." (Def.'s Statement of Undisputed Facts ¶ 2; Pl's Resp. to Def.'s Statement of Undisputed Facts ¶ 2.) Plaintiffs catalog advertises the merchandise as follows: "Smooth, polished edge glass, hardboard back, and chrome clips provide a clean and unobtrusive setting for photos and artwork." (Structural Indus. Euro Clip Catalog, Def.'s Cross-Mot. for Summ. J. Attach. A (Jun. 7, 2002).) For convenience, the Court will refer to the subject merchandise as the Euro Clip.

In 1999, Customs classified and liquidated the Euro Clips under subheading 7013.99.40 of the Harmonized Tariff Schedule of the United States ("HTSUS"), if valued not over $0.30 each, and 7013.99.50, HTSUS, if valued over $0.30 each but not over $3.00 each. (Pl's Mot. for Summ. J. at 1; Def.'s Cross-Mot. for Summ. J. at 4.) The duty rates were 38 percent ad valorem and 30 percent ad valorem, respectively. (Id.) Heading 7013 covers "glassware of a kind used for ... indoor decoration." Plaintiff filed a protest, which was denied. (Pl's Summons at 1.) Plaintiff then commenced this action on May 3, 2000 after paying all the liquidated duties.

STANDARD of Review

This Court reviews Customs' determinations de novo. See 28 U.S.C. § 2640(a)(1) (stating that in cases contesting the denial of a protest, the Court makes "its determinations upon the basis of the record before the court"). A party's summary judgment motion should be granted if the record before the Court shows that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." USCIT R. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When determining under which of two possible classifications the merchandise falls, the Court must construe the relevant classification headings, and determine what the merchandise is. See Bausch & Lomb Inc. v. United States, 148 F.3d 1363, 1364-65 (Fed.Cir.1998). The first step is an issue of law while the second is an issue of fact. See id. at 1365; Rollerblade, Inc. v. United States, 112 F.3d 481, 483 (Fed.Cir. 1997). The Court then decides the ultimate issue of which classification the merchandise properly falls, which is a question of law. See Bausch & Lomb Inc., 148 F.3d at 1365-66. In the present case, the parties agree as to what the merchandise is. This Court may grant summary judgment "when there is no genuine dispute as to the underlying factual issue of exactly what the merchandise is." Id. at 1365; see also Brother Int'l Corp. v. United States, No. 00-01-00007, 2002 WL 1768912, *3, 2002 Ct. Intl. Trade LEXIS 74, at *5-6 (CIT July 31, 2002). Therefore the Court's task is to construe the relevant classification headings and decide on summary judgment the proper classification under which the merchandise falls. See Bausch & Lomb Inc., 148 F.3d at 1366.

PARTIES' Contentions

I. Plaintiffs Contentions

Plaintiff disagrees with Customs' classification of the subject merchandise under heading 7013, HTSUS. Plaintiff argues that the merchandise is properly classified under either heading 7006, 7020, or 4421, HTSUS. (Pl's M. for Summ. J. at 4.) Heading 7006 covers "glass ... bent, edgeworked, engraved, drilled, enameled or otherwise worked, but not framed or fitted with other materials." Heading 7020 covers "other articles of glass." Heading 4421 covers "other articles of wood." In support of its position, Plaintiff advances two arguments.

First, Plaintiff contends that if the Court finds that the glass component provides the Euro Clip with its essential character, then the subject merchandise should be classified under heading 7006 or 7020. (Id.) Relying upon the General Rules of Interpretation ("GRI") accompanying the HTSUS, Plaintiff maintains that the merchandise should be classified on the basis of the component that gives the Euro Clip its essential character. (Id. at 5.) Assuming arguendo that the glass component provides the essential character, Plaintiff asserts that heading 7013 is not the proper glass classification for the subject merchandise. Plaintiff states that the glass is merely a part of the frame and heading 7013 does not encompass parts of glass articles. (Id.) Additionally, Plaintiff argues that Customs mistakenly classified the subject merchandise under a subheading that covers certain other goods made of the same material, as the glass component rather than classifying them based on the component providing the essential character. (Id. at 6.) Plaintiff cites the Harmonized Commodity Description and Coding System, Explanatory Notes (2^nd ed. 1996) ("Explanatory Notes" or "EN"),¹ EN 70.13 for support, arguing that the glass does not give the whole Euro Clip the character of glass articles as required by the EN. (Id. at 7.) Plaintiff further contends that the glass merely protects the image and does not give the Euro Clip the character of a "decorative glass article" as Plaintiff says is required by EN 70.13. (Id. at 8.) Plaintiff cites the language of EN 70.06 which covers "glass for photograph frames" and which states that if the glass is set in wood and designed for framing photographs, pictures, etc., then the article is classified under heading 44.14.² (Id.) Plaintiff reasons that but for the absence of a border, the Euro Clip would be classified under heading 4414 according to EN 70.06, instead of being considered "decorative" glass. If the glass is not considered "decorative" when it has a border, Plaintiff continues, then it would not become "decorative" when the metal clips are substituted for the border. (Id. at 9.) According to Plaintiff, the Euro Clip does not have the character of glass articles because only the masonite and metal clips are absolutely necessary to display the image or document. (Id.)

Plaintiffs second argument is that the masonite backing of the Euro Clip gives the product its essential character and therefore the proper classification is under subheading 4421.90.98 as "other articles of wood: other: other." (Id. at 9-10.) Plaintiff states that the design of the masonite makes the product what it is; the masonite is cut to accept the metal clips and join all the components together. (Id. at 10.) The masonite is the component that allows the image to be displayed, which can be done without the protective glass cover. (Id.) Plaintiff refers to Customs Headquarters Ruling ("HQ") 076998 (Oct. 23, 1985), Pl's M. for Summ. J. Attach. 1, in which a frame with a glass cover, hardboard backing, and metal clips was classified under the Tariff Schedule of the United States ("TSUS") equivalent to subheading 4421.90.98. (Id.)

In conclusion, Plaintiff argues that if the Court finds that the essential character is derived from the glass component, then the proper classification of the subject merchandise is either subheading 7006.00.40, HTSUS, or 7020.00.60, HTSUS. Alternatively, if the Court finds that the masonite component provides the essential character, then Plaintiff contends the proper classification is subheading 4421.90.98, HTSUS. (Id. at 11.)

II. Defendant's Contentions

Defendant maintains that Customs properly classified the Euro Clip under subheading 7013.99 and argues that the glass component provides the essential character to the merchandise. (Def.'s Cross Mot for Summ. J. at 7.) Defendant presents four arguments in support of its contention that the Euro Clip is properly classified under subheading 7013.99.

First, Defendant refers this Court to Customs' ruling in HQ 962903, Doc. No. CLA-2 RR.CR.GC 962903 BJB, 2000 U.S. Customs HQ LEXIS 192 (Apr. 18, 2000), Pl's Resp. To Def.'s Cross-M. For Summ. J. Attach. A, which involved merchandise that is essentially the same as the merchandise in this case. (Id. at 9.) In that ruling, Customs classified that merchandise under subheading 7013.99. (Id. at 9-10.) Defendant states that HQ 962903 is entitled to deference under Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944). (Id. (citing United States v. Mead Corp., 533 U.S. 218, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001)).) Defendant then extensively discusses Customs' rationale and concludes that the ruling should be accorded respect and deference by the Court. (...