Texas Apparel Co. v. US, Court No. 82-05-00618.

• Decision Date: 25 October 1988
• Docket Number: Court No. 82-05-00618.
• Citation: 12 CIT 1002,698 F. Supp. 932
• Parties: TEXAS APPAREL CO., Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

698 F. Supp. 932

12 CIT 1002

TEXAS APPAREL CO., Plaintiff, v. The UNITED STATES, Defendant.

Court No. 82-05-00618.

United States Court of International Trade.

October 25, 1988.

Stein Shostak Shostak & O'Hara (S. Richard Shostak, at oral argument and on the brief and Robert Glenn White, Los Angeles, Cal., on the brief), for plaintiff.

John R. Bolton, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Branch (Kenneth N. Wolf, New York City, at oral argument and on the brief), for defendant.

MEMORANDUM OPINION AND ORDER

RE, Chief Judge:

The question presented in this case pertains to the proper appraisement or valuation, for customs purposes, of 266 entries of certain wearing apparel imported from Mexico between July 1, 1980 and May 29, 1981. The Customs Service appraised the merchandise on the basis of computed value, pursuant to section 402(e) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979, Pub.L. No. 96-39, § 201(a), 93 Stat. 194 (codified as amended at 19 U.S.C. § 1401a (1982)). The appraised value of the wearing apparel included an addition for the cost or value of sewing machines, including their repair parts and the cost of repairs, as an "assist" under 19 U.S.C. § 1401a(h)(1)(A)(ii).

Plaintiff contests the inclusion in the appraised value of the cost or value of the sewing machines as dutiable assists, and contends that 19 U.S.C. § 1401a(h)(1)(A)(ii) does not include general purpose machinery as assists. It maintains that "the only production equipment included as assists are the `tools, dies, molds, and similar items ...' which are special purpose equipment having the dedicated and exclusive function of producing the discrete article in question." Specifically, plaintiff claims that the sewing machines are "general purpose equipment," and are not "tools, dies, molds, and similar items used in the production of the imported merchandise." Hence, plaintiff contends that the appraisement of the imported merchandise should not have included an addition for the cost or value of the sewing machines, and seeks a refund of the excessive duties paid, with interest.

Computed value is defined in 19 U.S.C. § 1401a(e) as follows:

(1) The computed value of imported merchandise is the sum of —

(A) the cost or value of the materials and the fabrication and other processing of any kind employed in the production of the imported merchandise;

(B) an amount for profit and general expenses equal to that usually reflected in sales of merchandise of the same class or kind as the imported merchandise that are made by the producers in the country of exportation for export to the United States;

(C) any assist, if its value is not included under subparagraph (A) or (B); and

(D) the packing costs.

Id.

An "assist" is defined in 19 U.S.C. § 1401a(h)(1)(A) as follows:

As used in this section —

(1)(A) The term "assist" means any of the following if supplied directly or indirectly, and free of charge or at reduced cost, by the buyer of imported merchandise for use in connection with the production or the sale for export to the United States of the merchandise:

(i) Materials, components, parts, and similar items incorporated in the imported merchandise.

(ii) Tools, dies, molds, and similar items used in the production of the imported merchandise.

(iii) Merchandise consumed in the production of the imported merchandise.

(iv) Engineering, development, artwork, design work, and plans and sketches that are undertaken elsewhere than in the United States and are necessary for the production of the imported merchandise.

Id. (emphasis added).

The question presented is whether the cost or value of the sewing machines, repair parts, and the cost of repairs were properly included by the Customs Service in the computed value of the imported merchandise as an "assist" under 19 U.S.C. § 1401a(h)(1)(A)(ii).

Pursuant to 28 U.S.C. § 2639(a)(1) (1982), the decision of the Customs Service is presumed to be correct, and the burden of proof is upon the party challenging the decision.

Contending that there are no material issues of fact in dispute, both parties moved for summary judgment pursuant to Rule 56 of the Rules of the United States Court of International Trade. Upon examining the relevant statutes and supporting papers, the court concludes that there are no material issues of fact in dispute, and that plaintiff has not overcome the presumption of correctness that attaches to the Customs Services' determination. Consequently, plaintiff's motion for summary judgment is denied, and defendant's cross-motion for summary judgment is granted.

On a motion for summary judgment, it is the function of the court to determine whether there are any factual disputes that are material to the resolution of the action. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). The court may not resolve or try factual issues on a motion for summary judgment; it may only "determine whether there is a genuine issue for trial." Id. at 249, 106 S.Ct. at 2511; Yamaha Int'l Corp. v. United States, 3 CIT 108, 109 (1982) available on WEST-LAW, 1982 WL 2221. In ruling on cross-motions for summary judgment, if no genuine issues of material fact exist, the court must determine whether either party is "entitled to judgment as a matter of law." See U.S.C.I.T.R. 56(d); United States v. B.B.S. Elecs. Int'l Inc., 9 CIT 561, 566, 622 F.Supp. 1089, 1094 (1985).

Plaintiff contends that the term "assist," defined in 19 U.S.C. § 1401a(h)(1)(A)(ii), as "tools, dies, molds, and similar items used in the production of the imported merchandise," should be construed strictly to encompass only equipment of a specialized nature that is used to produce the particular merchandise. According to plaintiff, the sewing machines in issue are capable of serving diverse functions for the manufacture of a wide variety of articles, and, therefore, are general purpose equipment that cannot be equated with "tools, dies, molds, and similar items." Hence, plaintiff maintains that it "was error to include the value of such general purpose machinery, sewing machines, in calculating the computed value of the wearing apparel...."

Defendant disagrees, and maintains that including an amount for the cost or value of "sewing machines in the appraised computed value of the merchandise is correct as a matter of law, regardless of whether the `sewing machines' are within the statutory definition of `assists.'" Defendant contends that, under the provisions of 19 U.S.C. § 1401a(e), the sewing machines are includable in computed value because they are an integral part of the "processing ... employed in the production of the imported merchandise...." See 19 U.S.C. § 1401a(e)(1)(A). In the alternative, defendant maintains that pursuant to 19 U.S.C. § 1401a(e)(1)(B), the cost or value of the sewing machines must be part of the "profit and general expenses" of the wearing apparel. Furthermore, defendant submits that the legislative history of the Trade Agreements Act demonstrates that the term "assist," as defined in 19 U.S.C. § 1401a(h)(1)(A)(ii), has a broad and expansive meaning which encompasses the sewing machines in issue.

It is evident from the submissions that there is no material issue of fact in dispute, but rather, only an issue of law. Namely, the parties are in disagreement as to whether the cost or value of the sewing machines, including their repair parts and costs of repairs, was properly included in the computed value of the imported merchandise as an "assist" pursuant to 19 U.S. C. § 1401a(e)(1)(C) and § 1401a(h)(1)(A)(ii). More specifically, the parties disagree as to whether the sewing machines, repair parts, and the costs of repairs constitute an "assist," which, in 19 U.S.C. § 1401a(h)(1)(A)(ii), is defined as "tools, dies, molds, and similar items used in the production of the imported merchandise."

On judicial review, the fundamental question presented is whether, based upon the statutory language and the legislative intent which underlies the pertinent statutory provision, the interpretation of the statute by the Customs Service was reasonable.

It is axiomatic that statutes are to be interpreted so as to carry out the underlying legislative policy and intent. See Chevron U.S.A. Inc. v. National Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). It is also clear that "the starting point for interpreting a statute is the language of the statute itself." Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980). If a statute is silent or ambiguous on a particular question, it is appropriate for the court to accord deference to the agency's interpretation of the statute if the interpretation is reasonable and consistent with the legislative intent. See Japan Whaling Ass'n v. American Cetacean Soc'y, 478 U.S. 221, 233, 106 S.Ct. 2860, 2867, 92 L.Ed.2d 166 (1986).

Plaintiff maintains that "the intent of the legislature to limit the definition of assists to specialized items ... is evident from the history of the Trade Agreements Act of 1979, from the adoption and usage of the phrase `tools, dies, molds,' and from the demonstrated concept and scheme of the new value code." It contends that the goal of the code is to value goods based on "actual foreign expenditures," rather than "all costs expended" in producing the merchandise, and, therefore, adjustments made under computed value must be "strictly limited to those set out in the code." According to plaintiff, the "only equipment `used in the production of the imported merchandise' the cost or value of which is dutiable as an assist consists of `tools, dies, molds' and items `similar' thereto." (emphasis in original). Hence, plaintiff submits that it does not include general purpose...