Whirlpool Corp. v. U.S.

• Decision Date: 18 July 2007
• Docket Number: Slip Op. 07-111, Court No. 03-00526.
• Citation: 505 F.Supp.2d 1358
• Parties: WHIRLPOOL CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

505 F.Supp.2d 1358

WHIRLPOOL CORPORATION, Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 07-111, Court No. 03-00526.

United States Court of International Trade.

July 18, 2007.

COPYRIGHT MATERIAL OMITTED

Baker & McKenzie LLP, (Lynn S. Preece, Bart M. McMillan and, Louisa V. Carney) for Plaintiff Whirlpool Corporation.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Bruce N. Stratvert); and Chi S. Choy, Office of Assistant Chief Counsel, U.S. Customs and Border Protection, of Counsel; for Defendant United States.

OPINION

WALLACH, Judge.

I INTRODUCTION

Plaintiff Whirlpool Corporation ("Whirlpool") challenges the decision of the United States Customs and Border Protection ("Customs") to classify its imported merchandise (entry number 327-0126404-9) under Heading 9032 of the Harmonized Tariff Schedule of the United States ("HTSUS") 1999 as an "[a]utomatic regulating or controlling instrument[] and apparatus" at a duty rate of 1.7% ad valorem.¹ This court has jurisdiction pursuant to 28 U.S.C. 1581(a), and jurisdiction is uncontested by, the parties. Because the subject merchandise is classified under an eo nomine designation as an automatically controlling apparatus in HTSUS Heading 9032, Customs' classification of the refrigerator control box subassembly in subheading 9032.89.60 was proper. Accordingly, Plaintiff's Motion, for Summary Judgment is Denied and Defendant's Motion for Summary Judgment is Granted.

II BACKGROUND

Plaintiff Whirlpool is the importer of record for entry number 327-0126404-9, consisting of refrigerator control box subassemblies-1 knob, identified as part number 2204604. Amended Complaint ("Complaint") ¶ 2; Answer to Amended Complaint ("Answer") ¶ 2; Composite Statement of Uncontested Facts ¶ 8. The subject merchandise was exported from Mexico by Whirlpool de Reynosa, S.A. de C.V., and entered the United States through the port of Hidalgo, Texas' on March 30, 1999. In its imported condition the merchandise consisted of a thermostat, defrost timer, light socket, and wire harness, all of which were contained inside, a plastic housing.² Complaint ¶ 2-3, 5; Answer ¶ 2-3, 5. Customs classified part number 2204604 under HTSUS Subheading 9032.89.60³ and liquidated on March 8, 2002, assessing duties at the rate of 1.7% ad valorem and disallowed duty-free treatment under the North American Free Trade Agreement ("NAFTA"). Complaint ¶ 6-8; Answer ¶ 6-8. Plaintiff timely paid all additional duties and fees assessed on liquidation, and on June 5, 2002, filed a protest against Customs' classification and liquidation decision and its denial of NAFTA benefits for the entry.⁴ Complaint ¶ 9, 10; Answer ¶ 9, 10. Customs denied the protest on February 13, 2003, and Plaintiff timely filed a summons with this court on July 30, 2003. Whirlpool argues that the subject merchandise was improperly classified in HTSUS subheading 9032.89.60, and should instead have been classified in HTSUS subheading 8537.10.90,⁵ or alternatively in HTSUS subheading 8418.99.80.⁶ Complaint ¶ 13, 15, 23. Both parties submitted motions for summary judgment before this court. Oral Argument on those motions was held on April 3, 2007.

III STANDARD OF REVIEW

A motion for summary judgment is granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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). In classification cases, "the proper classification under which [an article] falls has always been treated as a question of law," thus, summary judgment will be appropriate when there is no underlying factual issue regarding the nature of the merchandise remaining in dispute. Bausch & Lomb Inc. v. United States, 148 F.3d 1363, 1366 (Fed. Cir.1998).

The court reviews classification cases de novo in accordance with 28 U.S.C. § 2640(a). When deciding classification cases, the court employs a two step analysis in which the first step "concerns the proper meaning of the tariff provisions at hand," and the second step "concerns whether the subject imports properly fall within the scope of the possible headings." Universal Elecs. Inc. v. United States, 112 F.3d 488, 491 (Fed.Cir.1997). Additionally, the factual determinations made by the agency are presumed to be correct, therefore "the party challenging the classification ... bears the burden of proof." Totes, Inc. v. United States, 69 F.3d 495, 498 (Fed.Cir.1995) (citing 28 U.S.C. § 2639(a)(1)).

IV DISCUSSION

The HTSUS General Rules of Interpretation ("GRI") govern the classification of merchandise entering the United States. See Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.Cir.1998). GRI 1 states, in pertinent part, that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes." Harmonized Tariff Schedule of the United States, General Rule of Interpretation ("GRI") 1. An eo nomine provision describes goods according to their "common and commercial meaning." Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed.Cir.1999). A court may "rely upon its own understanding of the terms used" or consult lexicographic authority or other reliable sources to define a term. Id. If classification is not resolved by application of GRI 1, the court will refer to the succeeding GRIs in numerical order. See, e.g., Conair v. United States, Slip Op. 05-95, 2005 WL 1941649, *1, 2005 Ct. Int'l Trade LEXIS 104, at *7 (CIT August 12, 2005).⁷

A

Part Number 2204604 was Properly Classified in HTSUS Heading 9032

Apparatus

Plaintiff first argues that the subject merchandise is not an apparatus as termed by Heading 9032 because "it has several and not a single given purpose." Plaintiffs. Memorandum in Support of Motion for Summary Judgment ("Plaintiff's Brief") at 14. In support of this assertion, Whirlpool cites ITT Thompson Industries v. United States, 3 CIT 36, 44, 537 F.Supp. 1272, 1277-78 (1982), aff'd, 703 F.2d 585 (Fed.Cir.1982), which defines an apparatus as "a group of devices, or a collection or set of materials, instruments or appliances to be used for a particular purpose or a given end." Id. at 13.

Plaintiff is incorrect in its assertion that the subject merchandise cannot be an apparatus because all of its components do not share the same purpose. In General Electric Co. v. United States, 247 F.3d 1231 (Fed.Cir.2001), amended on limited grant of rehearing, 273 F.3d 1070 (Fed. Cir.2001), the Court of Appeals for the Federal Circuit found an item to be a "combination apparatus" when it contained two components that needed to "independently perform their nonsubordinate functions if the [item] is to operate properly." General Elec., 247 F.3d at 1235. The refrigerator control box subassembly is similarly a combination apparatus, including several components that have independent and non-subordinate functions.

Plaintiff next argues that, if the subject merchandise is an apparatus, it is not an apparatus under Heading 9032. Plaintiff's Brief at 14. Plaintiff agrees that the thermostat located within part number 2204604 constitutes an apparatus for automatically controlling temperature as specified in Heading 9032, but argues that the control box in its entirety does not meet the requirements to be classified as such. Id. According to Plaintiff, since the given purpose of the apparatus is to act as a user interface and not only to control temperature, classification in Heading 9032 is precluded. Plaintiff's Brief at 14-15 (citing General Elec., 247 F.3d at 1235 for the proposition that a tariff heading that describes one component of a combination apparatus is not sufficiently specific to mandate classification in that heading).

Defendant counters that the refrigerator control box subassembly can be classified in Heading 9032 by reference to HTSUS GRI 1.⁸ Defendant's Reply Brief in Support of Our Motion for Summary Judgment and in Opposition to Plaintiff's Response ("Defendant's Reply") at 9. According to Defendant, the defrost timer and the thermostat both fall within the definition of "automatic regulating or controlling instruments or apparatus" when viewed in conjunction with Note 3⁹ (which applies Note 4 of Section XVI to Chapter 90) and Note 6¹⁰ of Chapter 90. Id. at 9-10. Defendant asserts that once the principles of Note 4 of Section XVI are applied the merchandise in issue meets the qualifications of Heading 9032, as it is a machine¹¹ consisting of individual components which, with the exception of the light socket, contribute together to the function of temperature control. Id. at 10.

Instruments

As noted above, analysis of classification within the headings of the HTSUS begins with HTSUS GRI 1, which states that "classification shall be determined according to the terms of the headings and any relative section or chapter notes." HTSUS Heading 9032 provides for "[a]utomatic regulating or controlling instruments or apparatus; parts and accessories thereof," which are further described in Chapter 90, Note 6, as instruments and apparatus "for automatically controlling temperature." Note 2(a) to Chapter 90 states, "[p]arts and accessories which are goods included in any of the headings of this chapter or of chapter 84, 85, or 91 ... are in all cases to be classified in their respective headings."

The parties are in agreement that the thermostat located in part number 2204604 automatically controls temperature,¹² and that the light socket and wire harness (as individual units) do not automatically control or regulate temperature, but the nature of the role of the defrost timer remains in dispute. Plaintiffs Composite Statement of Uncontested Facts ("Uncontested Facts") ¶ 33; Complaint ...