Trans-Border Customs Services, Inc. v. US
| Decision Date | 20 January 1994 |
| Docket Number | Slip Op. 94-10. Court No. 92-02-00085. |
| Citation | 843 F. Supp. 1482,18 CIT 22 |
| Parties | TRANS-BORDER CUSTOMS SERVICES, INC., as agent for National Sample Card Co., Ltd., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Soller, Shayne & Horn, Gerald B. Horn (Paulsen K. Vandevert, Margaret Hardy Sachter, of counsel), for plaintiff.
Frank W. Hunger, Asst. Atty. Gen., Joseph I. Liebman, Attorney-in-Charge, Intern. Trade Field Office, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Edith Sanchez Shea, U.S. Customs Service (Sheryl French, of counsel), for defendant.
This action comes before the court on plaintiff's Motion for Summary Judgment and defendant's Cross-Motion for Summary Judgment pursuant to Rule 56 of the rules of this court. Plaintiff, Trans-Border Customs Services, Inc. ("Trans-Border"), challenges the United States Customs Service's ("Customs'") classification of imported sample books of fabric from Canada. The court exercises jurisdiction under 28 U.S.C. § 1581(a) (1988).
Trans-Border is the importer of record and the customs broker acting as agent for National Sample Card Co., Ltd. ("National Sample"), the Canadian manufacturer of the sample books at issue. American manufacturers supply fabric swatches of U.S. origin to National Sample, which incorporates them into its sample books. All other materials used to produce the sample books are of Canadian origin. National Sample manufactures the sample books in Canada. The parties agree that the sample books are products of Canada, pursuant to General Note 3(c)(vii) of the Harmonized Tariff Schedule of the United States ("HTSUS") and Annex 401 of the United States-Canada Free Trade Agreement Implementation Act of 1988, ("FTA").
Customs issued a ruling letter classifying sample books made by National Sample as "other made-up articles of textile" under subheading 6307.90.50, HTSUS. Headquarters Ruling Letter ("HRL") 085564, December 14, 1989. Upon National Sample's request, Customs reconsidered its prior classification decision, ultimately changing its position by ruling that "the sample books do qualify as `samples' within the context of subheading 9813.00.20." HRL 086354, April 17, 1990. Customs further stated that "the sample books may enter the United States as `samples solely for ... use in taking orders for merchandise' under subheading 9813.00.20, HTSUSA." Id. The ruling letter also noted that "applicable entry requirements set forth in 19 C.F.R. section 10.31 et seq ., ... must be met." Id.
Subsequently, however, Customs refused entry of the sample books under 9813.00.20, HTSUS, because plaintiff failed to comply with the applicable temporary importation requirements set forth in Note 1(a) to subchapter XIII of Chapter 98, HTSUS.1 The entry summary for the sample books did not include a statement of intended use, nor a declaration that the articles were not imported for sale or sale-on-approval. The sample books were not exported within one year after importation, and have not yet been exported from the United States. Customs reclassified the sample books at issue under heading 6307.90.9050 HTSUS, as other made-up articles of textiles, liquidated the entry, and assessed duty on the merchandise at the reduced FTA rate of 5.6% ad valorem. Trans-Border paid all liquidated duties as required by law. Trans-Border then filed a timely protest to the reclassification, which Customs denied on December 3, 1991.
Trans-Border brings this action contesting the denial of its protest. Trans-Border asserts in its motion for summary judgment that the subject merchandise is properly classified under subheading 9813.00.20, HTSUS, Column 1, Special, and is thus unconditionally free of duty as a product of Canada. Defendant has filed a cross-motion for summary judgment, arguing that Customs' denial of classification under subheading 9813.00.20, HTSUS, was correct because Trans-Border failed to satisfy the requirements of Note 1(a) to subchapter XIII, Chapter 98, HTSUS.
TARIFF PROVISIONS
Chapter 98, subchapter XIII, HTSUS (1990), provides in pertinent part
Rates of Duty
_______________________________________________
Heading/ Article 1 2
_____________________________
Subheading Description General Special
_______________________________________________________________________________________
9813.00.20 Samples solely Free, under Free (CA) Free, under
for use in taking bond, as bond, as
orders for prescribed prescribed
merchandise in U.S. in U.S. note
note 1 to 1 to this
this subchapter subchapter
Summary judgment is appropriate upon a showing "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(d). As the parties note, no genuine issues of material fact remain in dispute in this case. There is no dispute over the descriptive portion of heading 9813.00.20, HTSUS, as the parties agree the imported sample books at issue are "samples" for purposes of this heading. The sole issue to be decided is whether, as a matter of law, samples from Canada are subject to the requirements of Note 1(a) to subchapter XIII, Chapter 98, HTSUS.
Note 1(a) provides that all merchandise listed under subchapter XIII is eligible for temporary duty-free treatment upon compliance with three requirements. First, the merchandise must not be imported for sale or sale-on-approval. Second, the merchandise must be imported under bond. Third, the merchandise must be exported within one year from the date of importation, subject to extensions of up to three years granted at the Secretary of the Treasury's discretion, upon application. Customs regulations further require that the importer declare upon entry the intended use of the merchandise, and state its intent not to sell the merchandise in the United States. 19 C.F.R. § 10.31 (1990).
Both parties recognize that, pursuant to Presidential Proclamation No. 5923, 53 Fed. Reg. 50,638 (December 14, 1988), which was issued to implement the FTA, a bond is no longer required for importations of merchandise of Canadian origin under heading 9813.00.20, HTSUS. The parties disagree, however, as to whether the remaining terms of Note 1(a) are still applicable in order for samples from Canada to receive duty-free treatment. The court's analysis begins with an examination of how Note 1(a) fits within the statutory framework of the relevant tariff provisions. The court will then examine how the FTA affected Note 1(a) requirements as applied to merchandise from Canada.
Customs' decision to deny entry of the merchandise in issue under 9813.00.20 is presumptively correct, and the importer has the burden of proving otherwise. 28 U.S.C. § 2639(a)(1) (1988); see Jarvis Clark Co. v. United States, 2 Fed.Cir. (T) 70, 75, 733 F.2d 873, 878 (1984). The meaning of a tariff term is a question of law. Digital Equip. Corp. v. United States, 8 Fed.Cir. (T) 5, 6, 889 F.2d 267, 268 (1989). As with any statute, construction of a tariff provision must begin with a consideration of the statutory language itself. See Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980). The court begins its analysis with the fundamental rule that where a statute is clear and unambiguous, "that is the end of the matter, for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984).
Trans-Border argues that the language "Free (CA)" in Column 1, Special, is plain, clear, and unambiguous, indicating that samples from Canada are entitled to unconditional duty-free treatment. Memorandum of Law in Support of Plaintiff's Motion for Summary Judgment ("Pl.Br.") at 11. Trans-Border contends that absent ambiguity in the statutory language of Column 1, Special, neither the court nor Customs is at liberty to conjure up conditions allowing for interpretive construction of the statute. Trans-Border argues that because Column 1, Special, in 9813.00.20, HTSUS, makes no reference to Note 1(a), samples from Canada cannot be subject to any of the Note's conditions. Trans-Border further argues that neither the title of subchapter XIII ("Articles Admitted Temporarily Free of Duty Under Bond"), nor the references to Note 1 in the neighboring duty columns, i.e., Column 1, General, and Column 2, can be the basis for application of Note 1(a) requirements to Column 1, Special. Pl. Br. at 13-14.
In determining the plain meaning of the statute, "the court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole." K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 108 S.Ct. 1811, 1818, 100 L.Ed.2d 313 (1988) (emphasis added); United States v. Heirs of Boisdore, 49 U.S. (8 How.) 113, 122, 12 L.Ed. 1009 (1850). The section or chapter Notes form an integral part of the Harmonized Tariff System and have the same legal force as the text of the headings. See Spradling International, Inc. v. United States, 17 CIT ___, ___, 811 F.Supp. 687, 690-691 (1993) (...
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