Witex, U.S.A., Inc. v. U.S.

• Decision Date: 15 November 2004
• Docket Number: Court No. 98-00360.,SLIP OP. 04-144.
• Citation: 353 F.Supp.2d 1310
• Parties: WITEX, U.S.A., INC., et al., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

353 F.Supp.2d 1310 WITEX, U.S.A., INC., et al., Plaintiff,
v.
UNITED STATES, Defendant. SLIP OP. 04-144. Court No. 98-00360. United States Court of International Trade. November 15, 2004.

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Aitken Irvin Berlin & Vrooman, LLP (Bruce Aitken, Bruce de Grazia, and Virginie Lecaillon (consultant)) for the Plaintiff.

Neville Peterson LLP (Maria E. Celis and John M. Peterson) for the Amicus Curiae in support of Witex U.S.A, Inc., et al., Congoleum Corporation.

Peter D. Keisler, Assistant Attorney General, Barbara S. Williams, Attorney in Charge, International Trade Field Office, Amy M. Rubin, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Yelena Slepak, Attorney, Office of Assistant Chief Counsel, U.S. Customs and Border Protection, for Defendant.

OPINION

POGUE, Judge.

This case involves the proper meaning of the term "tileboard" as used in subheading 4411.19.30 of the Harmonized Tariff Schedule of the United States (1997) ("HTSUS"). Plaintiffs Witex, U.S.A., Inc. and Mannington Mills ("Witex") challenge the United States Customs Service's¹ ("Customs" or "Government") liquidation of its laminated flooring panels ("merchandise" or "flooring panels"), claiming that the merchandise should be liquidated as "tileboard" under heading 4411.19.30, HTSUS, and therefore duty free.² The Government avers that Witex's product is not "tileboard" and therefore should be classified under a basket provision for fiberboard with a density greater than 0.8 g/cm,3 and Witex's merchandise should be assessed a duty of 6% ad valorem. See subheading 4411.19.40, HTSUS. Before the Court are cross motions for summary judgment pursuant to USCIT Rule 56. The Court has exclusive jurisdiction over this case. See 28 U.S.C. § 1581(a) (2000). Finding material issues in dispute, the Court denies both motions for summary judgment.

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BACKGROUND

Witex, U.S.A., Inc. is an importer of laminate panels from its parent, Witex GmbH, a German Corporation. Pl.'s Consol. Compl. ("Compli.") at para. 4(a). Mannington Mills, Inc. is a U.S. company which also imports laminate panels from Witex, GmbH. Pl.'s Consol. Compli. at para. 4(b). This case involves a protest by Witex from 1995 covering one entry,³ and two protests by Mannington Mills from 1996 covering ten entries.⁴

Despite the requirements of USCIT Rule 56, the parties have agreed to few relevant facts. The panels at issue consist of a fiberboard core with a density 0.891 g/cm³, Mem. from Nick Zerebecki, Mannington Mills, to Hao Chen, Mannington Mills, Witex Laminate Products, Ex. 2 to Pl.'s Mem (February 14, 1997) ("Mannington Mem."), Def.'s Statement Additional Material Facts ("Def.'s Statement") at para. 3, and are tongue-and-grooved along their edges and ends.⁵ Def.'s Resp. Pl.'s Statement Material Facts at para 1. The tops of the panels are coated with melamine and aluminum oxide, Mannington Mem. at 1, Def.'s Statement at para. 3, and the panels may be used on floors.⁶ Pl.'s Mem. at 7 para. 19, Def.'s Statement at para. 1.

SUMMARY OF ARGUMENTS

Witex argues that its flooring panels are not fiberboard products and therefore cannot be classified under heading 4411, HTSUS. More specifically, Witex argues that fiberboard, by definition, is limited to unfinished products, whereas its merchandise is finished. Pl.'s Mem. at 11-14, Pl.'s Resp. at 4, Pl.'s Reply in Supp. of Mot. for Summ. J. ("Pl.'s Reply") at 4. Alternatively,

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Witex asks the Court to consider the arguments made in a companion case, Faus Group, Inc. v. United States, slip op. 04-143 (CIT Nov. 15, 2004), that the flooring panels are properly classified under heading 4418, HTSUS, covering "[b]uilders' joinery and carpentry of wood." Pl.'s Mem. at 25, Pl.'s Resp. at 19-20, Pl.'s Reply at 14-15.⁷

If the merchandise is properly classified in heading 4411, HTSUS, Witex claims that it should be classified under subheading 4411.19.30, HTSUS, which covers "[t]ileboard which has been continuously worked along any of its edges and is dedicated for use in the construction of walls, ceilings or other parts of buildings." Pl.'s Mem. at 14-24, Pl.'s Resp. at 6-18, Pl.'s Reply at 1-13. Witex maintains that Customs unduly restricted the scope of subheading 4411.19.30, HTSUS, by requiring that the panels be used on walls. Pl.'s Mem. at 16, Pl.'s Resp. at 7, Pl.'s Reply at 2-3.

The Government argues that the merchandise is classifiable under heading 4411, HTSUS. The Government asserts that Witex relies on a commercial definition of fiberboard used in Europe to support its contention that fiberboard can only be unfinished. Def.'s Mem. at 25-26. That European commercial definition, the Government contends, is irrelevant to the classification of products under the HTSUS. Id. In defining "tileboard," the Government points to the legislative history of the "tileboard" provision which includes a letter from J.J. Barker Co. to the Trade Policy Staff Committee seeking a provision for its imports. Def.'s Mem. at 11-13, 18, 20, Def.'s Reply at 8. According to the Government, J.J. Barker Co. had been importing its "tileboard" product duty free under the Tariff Schedule of the United States ("TSUS"), but was facing a 6% ad valorem duty with the transition to the HTSUS. Def.'s Mem. at 11-13; see also subheading 4411.19.40, HTSUS. Therefore, in order to ensure that J.J. Barker's "tileboard" imports did not face an increase in duty, the "tileboard" provision was added. Id. As the Government argues, because Witex's merchandise is not similar to J.J. Barker's "tileboard," Witex's merchandise cannot be considered "tileboard" within the meaning of subheading 4411.19.30, HTSUS. Id. The Government further argues that based on a dictionary definition of "tileboard," Def.'s Mem. at 16, 18, evidence from industry practice, Def.'s Mem. 17, 22, Def.'s Reply at 8-9, and the Government's expert witness, Def.'s Mem. at 21, Witex's panels are not "tileboard" because "tileboard: (i) is not laminated, (ii) is usually embossed with a pattern, and (iii) is coated with an epoxy or other [liquid] finish to resemble ceramic tile," Def.'s Mem. at 20-21 (brackets around "liquid" in original), (iv) is water-resistant, Def.'s Mem. at 17, 19-20, and (v) is only used on walls, Def.'s Mem. at 21.

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Accordingly, the Government claims that because Witex's merchandise is laminated, is not embossed, does not look like ceramic tile, Def.'s Mem. at 20, is not water-resistant, Def.'s Mem. at 19-20, and is used as flooring, not wallboard, Def.'s Mem. 14 n. 14, 22, it cannot be "tileboard." Therefore, the Government argues, Witex's product is excluded from subheading 4411.19.30, HTSUS, rendering it classifiable under 4411.19.40, HTSUS, covering "[o]ther" forms of fiberboard with a density of greater than 0.8 g/cm³ which are surfaced coated by more than oil.

STANDARD OF REVIEW

"The proper scope and meaning of a tariff classification term is a question of law ... while determining whether the goods at issue fall within a particular tariff term as properly construed is a question of fact." Franklin v. United States, 289 F.3d 753, 757 (Fed.Cir.2002) (citations omitted). A Customs' classification ruling is subject to de novo review⁸ as to the meaning of the tariff provision, pursuant to 28 U.S.C. § 2640, but may be accorded a "respect proportional to its `power to persuade.'" United States v. Mead, 533 U.S. 218, 235, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944)).

Both parties have moved for summary judgment pursuant to USCIT Rule 56. Summary judgment is only appropriate "if 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 judgment as a matter of law." USCIT R. 56(c) (emphasis added). Material issues only arise concerning "facts that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Consequently, in classification cases, genuine issues of material fact only arise when there is a dispute over the use, characteristics, or properties of the merchandise being classified, Brother Int'l Corp. v. United States, 26 CIT ___, ___, 248 F.Supp.2d 1224, 1226 (2002), or where commercial meaning is in question. Russell Stadelman & Co. v. United States, 242 F.3d 1044, 1048 (Fed.Cir.2001). For the reasons set forth below, summary judgment for either party at this point is not warranted.

DISCUSSION

"The proper classification of merchandise entering the United States is directed by the General Rules of Interpretation (`GRIs') of the HTSUS and the Additional United States Rules of Interpretation." Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.Cir.1998). The HTSUS is organized by headings setting forth general categories of merchandise; below each heading are listed subheadings (and then further subdivisions) that more specifically describe products within each heading. Id. According to the GRIs, a Court must choose the most appropriate heading, and then, "[o]nly after determining that a product is classifiable under the heading should the court look to the subheadings to find the correct classification for the merchandise." Id. at 1440 (citing GRI 1, 6, HTSUS). Once the Court chooses the proper heading, the Court is limited to choosing a subheading only from within

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the proper heading, i.e., the subheadings appearing under other headings become irrelevant for the classification of the merchandise at issue. Id.

Because there is a dispute as to the proper heading, the Court will first determine whether the flooring panels are properly classified under heading 4411, HTSUS. After finding that the merchandise is properly classifiable...