Trans-Border Customs Service, Inc. v. U.S., TRANS-BORDER
| Decision Date | 02 February 1996 |
| Docket Number | No. 94-1230,TRANS-BORDER,94-1230 |
| Citation | 76 F.3d 354 |
| Parties | CUSTOMS SERVICE, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Federal Circuit |
Gerald B. Horn and Margaret Hardy Sachter, Soller, Shayne & Horn, New York City, argued for the plaintiff-appellant. Of counsel was Clarence J. Erickson.
Mikki Graves-Walser, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, D.C., argued for defendant-appellee. With her on the brief were Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, and Joseph I. Liebman, Attorney in charge, International Trade Field Office. Of counsel was Sheryl A. French, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs Service.
Before PLAGER, LOURIE, and SCHALL, Circuit Judges.
The Customs Service classified certain fabric sample books imported from Canada into the United States by Trans-Border Customs Service, Inc. ("Trans-Border") as "other made-up articles of textile" under Harmonized Tariff Schedule of the United States ("HTSUS") subheading 6307.90.9050 (1993), thus requiring Trans-Border to pay a duty, rather than as "samples solely for use in taking orders for merchandise" under HTSUS subheading 9813.00.20, entitled to duty-free admission. Trans-Border claimed it was entitled to the duty-free classification as a consequence of certain changes made to the tariff schedules resulting from the implementation of the U.S.-Canada Free-Trade Agreement. The Court of International Trade upheld Customs' decision. Trans-Border Customs Services, Inc. v. United States, 843 F.Supp. 1482, 16 I.T.R.D. 1039 (Ct. Int'l Trade 1994). We conclude that the Customs Service's classification is correct; we affirm the decision of the Court of International Trade.
Trans-Border imports fabric sample books from National Sample Card Co., Ltd. ("National"), a Canadian manufacturer. The books, which are considered Canadian goods for Customs purposes, comprise American fabric swatches bound in Canada with Canadian materials. The books are imported into America for use in taking orders for American textiles from American customers. The books themselves are not sold or consumed in the United States.
Trans-Border sought classification of the sample books as "samples solely for use in taking orders for merchandise" under subheading 9813.00.20 of Chapter 98, subchapter XIII of the Harmonized Tariff Schedule of the United States ("HTSUS"). This would permit the books to be imported duty-free. Customs originally classified the sample books as "other made-up articles of textile" under HTSUS subheading 6307.90.9050. Upon National's request, Customs reclassified them under HTSUS subheading 9813.00.20, noting that National would have to meet "applicable entry requirements set forth in [19 C.F.R. § 10.31 et seq.]." Trans-Border Customs Services, Inc., 843 F.Supp. at 1484, 16 I.T.R.D. at 1040 (Ct. Int'l Trade 1994).
Accordingly, Customs told Trans-Border that it was entitled "to temporary importation under bond" of the books, and that it would advise Trans-Border by separate letter "of the re-exportation requirement as it Trans-Border appealed to the Court of International Trade, arguing that the exportation requirement did not apply to Canadian goods entered under 9813.00.20. Trans-Border argued that Presidential Proclamation 5923, which amended the HTSUS to implement the terms of the FTA, had eliminated the bond requirement; and that because the exportation requirement was solely a condition of the bond, Proclamation 5923 necessarily eliminated the exportation requirement as well. The Court of International Trade rejected the argument, and held for Customs. This appeal followed.
applies to Canadian goods." Customs subsequently concluded that, notwithstanding the changes in the tariff schedules resulting from the FTA, the applicable requirements continued to mandate exportation of the books from the United States within one year of entry. Trans-Border disputed this conclusion, and the books were not exported within the time required. Customs levied duty
Subchapter XIII of the HTSUS covers "Articles Admitted Temporarily Free of Duty Under Bond," and permits certain items, which are not themselves sold in the U.S. but are instead used to facilitate other business transactions, to be admitted without duty, because they "are not in reality an importation for consumption." S.Rep. No. 1081, 88th Cong., 2d Sess. (June 16, 1964). Subchapter XIII contains a number of notes which apply to the interpretation and application of the various subheadings and provisions. Note 1 provides in relevant part that "[t]he articles described in the provisions of this subchapter, when not imported for sale or for sale on approval, may be admitted into the United States without the payment of duty, under bond for their exportation within 1 year from the date of importation...."
Subheading 9813.00.20 appears in the HTSUS as follows:
Rates of Duty
Heading/ Article Column 1" Column 1" Column 2
Subheading Description General Special
---------------------------------------------------------------------
9800.00.20 Samples Free, under Free(CA) Free, under
solely for use bond, as bond, as
in taking prescribed in prescribed in
orders for U.S. note 1 to U.S. note 1 to
merchandise this this
subchapter subchapter
----------
As shown, the HTSUS contains three "Rate of Duty" columns. Column 1-General indicates the tariff treatment for goods imported under subheading 9813.00.20 from countries with Most-Favored Nation (MFN) status. Column 1-Special indicates the tariff treatment for goods imported from MFN countries with additional trade agreements with the United States. Column 2 concerns tariff treatment of goods imported from countries without MFN status. Because the sample books in this case are Canadian imports, they are governed by the U.S.-Canada Free Trade Agreement (FTA). United States-Canada Free-Trade Agreement, 27 I.L.M. 281 (1988); United States-Canada Free-Trade Agreement Implementation Act of 1988, Pub.L. No. 100-449, 102 Stat. 1851 (Sept. 29, 1988). This is reflected in Column 1-Special, which states that Canadian imports are admitted free through the designation "Free (CA)."
On January 2, 1988, the President signed the United States-Canada Free Trade Agreement. In implementing the FTA, Congress authorized the President to modify or change the HTSUS as he determines is necessary or appropriate to carry out the provisions of Article 401 of the FTA. United States-Canada Free Trade Agreement Implementation Act of 1988, Pub.L. No. 100-49, § 201(a), 102 Stat. 1851, 1855-56 (Sept. 28, 1988) ("Implementation Act of 1988"). Pursuant to this authorization, the President issued...
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