Universal Electronics Inc. v. U.S.

• Decision Date: 24 April 1997
• Docket Number: No. 96-1345,96-1345
• Citation: 112 F.3d 488
• Parties: UNIVERSAL ELECTRONICS INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 488

112 F.3d 488

19 ITRD 1102

UNIVERSAL ELECTRONICS INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.

No. 96-1345.

United States Court of Appeals, Federal Circuit.

April 24, 1997.

Timothy B. Dyk, Jones, Day, Reavis & Pogue, Washington, D.C., argued, for plaintiff-appellant. With him on the brief was Sharon K. Mollman.

Saul Davis, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, Department of Justice, International Trade Field Office, New York City, argued, for defendant-appellee. With him on the brief was Joseph I. Liebman, Attorney in Charge. Also with him on the brief were Frank W. Hunger, Assistant Attorney General, and David M. Cohen, Director, Department of Justice, Washington, D.C. Of counsel on the brief was Sheryl A. French, International Trade Field Office, New York City.

Before LOURIE, CLEVENGER, and RADER, Circuit Judges.

CLEVENGER, Circuit Judge.

This classification dispute asks whether the hand-held remote-control units imported by Universal Electronics, Inc. (Universal) were properly classified under the 1993 version of the Harmonized Tariff Schedule of the United States (HTSUS). The United States Customs Service (Customs) determined, and the Court of International Trade agreed, that the subject imports should be classified under subheading 8537.10.00, HTSUS, which includes bases for electric control. We affirm.

I

Universal imports hand-held remote-control units that are used to control televisions, stereos, and other home appliances equipped with an infrared receiver. These units contain a microprocessor, infrared light-emitting diodes (LEDs), and a software database that includes the infrared command codes for various brands and types of home appliances.

After purchase of the remote control, the consumer configures it to govern a specific home appliance by entering a code corresponding to the appliance's brand and type. When the consumer later presses a key on the remote control, e.g., "volume up," the microprocessor is electrically activated to search the software database for the appropriate command code sequence. Once this command code sequence is located, electricity provided by a battery in the unit drives the LEDs to emit infrared light pulses in the requisite pattern.

When the target appliance receives these infrared pulses, it typically translates the pulses into an electrical signal and electrically conveys that signal to its microprocessor. Using electricity, the microprocessor decodes this signal, and, if the code is recognized as a proper one, the microprocessor employs electricity to perform the requested function, e.g., increasing the volume level.

Before enactment of the HTSUS, Customs ordinarily classified remote controls as television apparatus under item 685.19 of the Tariff Schedules of the United States (TSUS). In so doing, Customs expressly declined to classify the remote controls under heading 685.90 of the TSUS because the imports were not "control panels." ¹

After the HTSUS was enacted, Customs began classifying the subject imports under subheading 8537.10.00 (HTSUS), which was the successor to Item 685.90 of the TSUS. Customs did so because 8537.10.00 was broadened to include not only control panels, but also "[b]oards, panels ... and other bases ... for electric control or the distribution of electricity."

Universal appealed Customs' classification decision to the Court of International Trade arguing, primarily, that the subject imports are not devices "for electric control." Universal argued that the subject imports should instead be classified as either: (i) "[e]lectrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter" under subheading 8543.80.90 of the HTSUS, or (ii) "[e]lectric sound or visual signaling apparatus" under subheading 8531.80.00 of the HTSUS.

The Court of International Trade determined that:

HTSUS subheading 8537.10.00 refers to a very broad range of items. The subheading covers, among other things, foundations, which may be flat, upon which two or more electrical devices listed in heading 8536, such as switches and terminals ... are mounted. In addition, these foundations ... must be a part of a system in which information is input, and as a consequence, electricity causes the desired result to occur.

The court then applied this interpretation to the subject imports and determined that they fell within the subheading. The court also considered, but rejected, Universal's argument that the subject imports were better described by the other classification provisions.

Universal appeals from the decision of the Court of International Trade, which we review pursuant to 28 U.S.C. § 1295(a)(5) (1994).

II

As we have often explained, a classification decision, ultimately, is a question of law based on two underlying steps. The first step concerns the proper meaning of the tariff provisions at hand; this is a question of law, which we review de novo. Intel Singapore, Ltd. v. United States, 83 F.3d 1416, 1417-18 (Fed.Cir.1996). The second step concerns whether the subject imports properly fall within the scope of the possible headings; this is a question of fact, which we review for clear error. Id.

By statute, Customs' classification decision "is presumed to be correct." 28 U.S.C. § 2639(a)(1) (1994). Universal argues, however, that the presumption of correctness applies only when a factual dispute exists. In situations where only a legal dispute exists, Universal argues, the presumption does not apply. In support, Universal cites to our precedent, Goodman Manufacturing, L.P. v. United States, 69 F.3d 505, 508 (Fed.Cir.1995), which states: "Because there was no factual dispute between the parties, the presumption of correctness is not relevant."

Customs responds that long-standing precedent of this court and its predecessor court makes clear that the statutory presumption of correctness applies to the ultimate classification "decision," and not merely to the underlying factual issue. See, e.g., Marubeni Am. Corp. v. United States, 35 F.3d 530, 536 (Fed.Cir.1994); United States v. New York Merchandise Co., 58 C.C.P.A. 53, 435 F.2d 1315, 1318 (1970). Therefore, Customs argues, the presumption of correctness is always at play.

Customs is correct in noting that our precedent has long and continuously stated that the decision of Customs is presumed to be correct. Before our decision in Goodman, however, our precedent had not clarified the aspects of Customs' decision to which the presumption applied.

The presumption of correctness is a procedural device that is designed to allocate, between the two litigants to a lawsuit, the burden of producing evidence in sufficient quantity. ² Specifically, the importer must produce evidence (the burden of production portion of the burden of proof) that demonstrates by a preponderance (the burden of persuasion portion of the burden of proof) that Customs' classification decision is incorrect. The presumption of correctness certainly carries force on any factual components of a classification decision, such as whether the subject imports fall within the scope of the tariff provision, because facts must be proven via evidence.

The situation is quite different, however, with respect to pure questions of law, such as the proper interpretation of a particular tariff provision or term. Questions of law such as these lie within the domain of the courts, for "[i]t is emphatically the province and duty of the judicial department to say what the law is." Marbury v. Madison, 1 Cranch 137, 5 U.S. 137, 177, 2 L.Ed. 60 (1803). In such a context, the importer has no duty to produce evidence as to what the law means because evidence is irrelevant to that legal inquiry. ³ Therefore, we conclude that although the presumption of correctness applies to the ultimate classification decision, Universal properly interprets Goodman as standing for the proposition that, as a practical matter, the presumption carries no force as to questions of law. ⁴

It appears that as to questions of law, Customs seeks to apply the presumption of correctness not as a procedural device governing evidence, but rather as a means of affording deference to Customs' interpretation of the law. As we explained in Goodman, however, much of the confusion in this area of the law arises from commingling the notion of a presumption of correctness with the notion of deference--two notions that are designed to serve separate functions. See Goodman, 69 F.3d at 508.

Unlike the burden of production and burden of persuasion, each of which allocates roles between the two parties to a litigation, deference is a legal concept that allocates roles between one adjudicating tribunal and another. For example, because an agency or a trial court may be better suited to make factual findings, a reviewing tribunal may sustain those factual findings unless they are clearly erroneous, unsupported by substantial evidence, or the like. Alternatively, reviewing tribunals generally decide questions of law de novo because they are equally well suited to make such decisions. Notions of deference are governed by standards of review and should not be confused with presumptions and other like procedural devices.

When viewed from the perspective of standards of review, it becomes evident that in classification disputes neither this court nor the Court of International Trade defers to Customs' decisions, whether factual or legal. The Court of International Trade does not defer to Customs' decisions because it has been tasked by Congress to conduct a de novo review, and to determine the correct classification based on the record made before it. ⁵ See 28 U.S.C. §§ 2640(a), 2643(b). On appeal, we review the Court of International Trade's factual findings--not those of Customs, unless they coincide--for clear error. See Intel, 83 F.3d at 1418. On questions of law, we defer to neither...