CLASSIFICATION DETERMINATIONS IN THE
UNITED STATES COURT OF INTERNATIONAL
TRADE BROUGHT UNDER 28 U.S.C. § 1581(a)
MICHAEL G. HODES* AND NINA C. MOHSENI†
ABSTRACT
This Article discusses a number of decisions by the United States Court of
International Trade in 2013, where litigants invoked the court’s jurisdiction
pursuant to 28 U.S.C. § 1581(a). The decisions discussed herein are intended
to illustrate the judicial decision-making process and to demonstrate the diversity
of imported articles that come before the court for classification under the
Harmonized Tariff Schedule of the United States.
I. INTRODUCTION: A JOURNEY DOWN THE RABBIT HOLE . . . . . . . .
II. THE COURT’S JURISDICTION UNDER 28 U.S.C. § 1581(a):
FINDING WONDERLAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Breakdown of 2013 in the CIT: How Big Is Wonderland? . .
B. Protests Under 19 U.S.C. § 1514 and Denials Under
19 U.S.C. § 1515: Buying a Ticket to Wonderland . . . . . . .
III. TARIFF CLASSIFICATION DECISIONS: VISITING WONDERLAND . . . .
A. The General Rules of Interpretation: Defining the
Boundaries of Wonderland . . . . . . . . . . . . . . . . . . . . . . . .
B. How the CIT Applies the Principles of Classification:
Exploring Wonderland . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. Q: What is the Difference Between a “Wood
Screw” and a “Self-tapping Screw”?
A: Approximately 6%! . . . . . . . . . . . . . . . . . . . . . .
2. Do These Glass Containers Just Look Pretty or
Are They Actually Useful? . . . . . . . . . . . . . . . . . . .
3. An Un-trick Question: Is Apparel for Football
Considered Articles for Football or Articles of
Apparel? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. It’s Just a 3D Printer, Isn’t It? . . . . . . . . . . . . . . . . .
5. To Obtain Jurisdiction, You Still Have to Pay to
Play: The Price of Admission to Wonderland . . . .
28
28
28
29
30
30
33
33
37
41
46
51
* Michael G. Hodes is a partner with the customs and international trade law firm of Hodes
Keating & Pilon, Chicago, Illinois. © 2014, Michael G. Hodes and Nina C. Mohseni.
† Nina C. Mohseni is an associate with Hodes Keating & Pilon.
27
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
6. It’s Time to Leave Wonderland When “Up!”
Becomes “Down!”: A Gift of Smokeless Tobacco
That Refuses to Leave . . . . . . . . . . . . . . . . . . . . . .
IV. CONCLUSION: NEXT TIME THROUGH THE LOOKING GLASS? . . . .
I.
54
55
INTRODUCTION: A JOURNEY DOWN THE RABBIT HOLE
“Well, I’ve often seen a cat without a grin” thought Alice; “but a grin
without a cat! It’s the most curious thing I ever saw in all my life.” 1
This Article will review a number of decisions by the United States
Court of International Trade (CIT) in 2013, adjudicated under the
CIT’s grant of exclusive jurisdiction pursuant to 28 U.S.C. § 1581(a).2
Although different types of customs decisions may be the subject of an
administrative protest, the vast majority of the § 1581(a) cases were
brought by litigants to contest protests denied by the United States
Customs and Border Protection (Customs) involving tariff classification determinations.3 Because the tariff classification of a good determines how much customs duty an importer will pay, classification
determinations are of critical importance. In 2013, many of the imported products that came before the CIT for classification determinations were as odd or as unusual as the characters encountered by Alice
in her journey down the rabbit hole in pursuit of the White Rabbit.
Other products were simple and mundane. To the uninitiated, the
principles of tariff classification employed by the court to reach its
decisions may seem as strange as the scientific laws which Alice encountered in Wonderland, where she floated down the rabbit hole and
consumed substances that made her as large as a giant, or as small as a
mouse.
II.
THE COURT’S JURISDICTION UNDER 28 U.S.C. § 1581(a):
FINDING WONDERLAND
A. Breakdown of 2013 in the CIT: How Big is Wonderland?
Of the 156 cases adjudicated by the CIT in 2013, twenty-five of those
cases based jurisdiction on 28 U.S.C. § 1581(a). These twenty-five cases
1. LEWIS CARROLL, ALICE’S ADVENTURES IN WONDERLAND 101 (Richard Kelly, ed., Broadview
Press 2000) (1865). Familiarity with Carroll’s fantasy adventure, to which further references will be
made herein, is presumed.
2. 28 U.S.C. § 1581(a) (2012) (“The Court of International Trade shall have exclusive
jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part,
under section 515 of the Tariff Act of 1930.”).
3. See 19 U.S.C. § 1514(a)(2) (2012).
28
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
sought exclusive CIT jurisdiction by virtue of administrative protests
filed by the plaintiff that were subsequently denied by Customs under
section 515 of the Tariff Act of 1930, 19 U.S.C. § 1515.4 The remaining
cases premised jurisdiction on other sections of 28 U.S.C. § 1581 or
pursuant to 28 U.S.C. §§ 1582-1583.
B. Protests Under 19 U.S.C. § 1514 and Denials Under 19 U.S.C. § 1515:
Buying a Ticket to Wonderland
In order to reach the CIT on a case premised on § 1581(a) jurisdiction, an importer must timely file, and have denied, in whole or in part,
an administrative protest filed pursuant to 19 U.S.C. § 1514.5 There are
seven different subject-matter areas for which an importer may protest
an administrative decision by Customs. Section 514(a) of the Tariff Act
of 1930, 19 U.S.C. § 1514(a), enumerates the following protestable
subject matters: (1) the appraised value of the merchandise; (2) the
tariff classification (including the duty rate and amount of duties
chargeable) of the merchandise; (3) all charges or exactions of whatever character, including the accrual of interest; (4) the exclusion of
merchandise from entry or a demand for redelivery to Customs custody; (5) the liquidation, reliquidation, or any modification of an entry;
(6) the refusal to pay a claim for drawback; or (7) the refusal to
reliquidate an entry for goods qualifying under free trade agreement
rules of origin.6 Unless a protest is timely filed,7 the protestable
decision shall be final and conclusive.8
In general, Customs is required to allow or deny a protest within two
4. 19 U.S.C. § 1515 (2012) (“Unless a request for an accelerated disposition of a protest is
filed in accordance with subsection (b) of this section the appropriate customs officer, within two
years from the date a protest was filed in accordance with section 1514 of this title, shall review the
protest and shall allow or deny such protest in whole or in part. Thereafter, any duties, charge, or
exaction found to have been assessed or collected in excess shall be remitted or refunded and any
drawback found due shall be paid . . . Notice of the denial of any protest shall be mailed in the
form and manner prescribed by the Secretary. Such notice shall include a statement of the reason
for the denial, as well a statement informing the protesting party of his right to file a civil action
contesting the denial of a protest under section 1514 of this title.”).
5. 28 U.S.C. § 1581(a) (2012).
6. 19 U.S.C. § 1514(a) (2012).
7. 19 U.S.C. § 1514(c)(3) (2012) (“A protest of a decision, order or finding described in
subsection (a) of this section shall be filed with the Customs Service within 180 days after but not
before—(A) date of liquidation or reliquidation, or (B) in circumstances where subparagraph (A)
is inapplicable, the date of the decision as to which protest is made.”).
8. 19 U.S.C. § 1514(a) (2012).
2014]
29
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
years of its filing.9 The importer then has 180 days from the date of the
mailing of the notice of denial to commence a civil action in the CIT
contesting such denial.10 The importer is required to pay all liquidated
duties, charges, or exactions as a condition precedent to invoking the
CIT’s jurisdiction.11
Of the seven possible subject-matter areas provided for in the protest
provisions of § 1514(a), one of them accounted for twenty-one of
the twenty-five cases adjudicated by the CIT in 2013 under its grant of
§ 1581(a) jurisdiction: the tariff classification of the imported merchandise under the Harmonized Tariff Schedule of the United States
(HTSUS).12 In classification cases, the dispute frequently devolves into
a thorough analysis of the product itself, requiring an almost existential
understanding of what the product “is.” This means that the parties and
the court are called upon to evaluate and grasp the product, its specific
characteristics, material composition, functions, and/or applications,
depending on what aspect of the product happens to be relevant to any
particular set of competing HTSUS classifications.
III.
TARIFF CLASSIFICATION DECISIONS: VISITING WONDERLAND
A.
The General Rules of Interpretation: Defining the
Boundaries of Wonderland
Just as Wonderland has a unique set of governing rules, the customs
tariff also has its own set of rules for correctly classifying imported
goods. To enhance an understanding of the particular cases discussed
below, it would be appropriate to briefly review those rules.
The harmonized tariff is divided into sections, chapters, headings,
and subheadings. Preceding the first chapter are a series of general
notes that provide guidance in applying various trade preference
programs and in interpreting various tariff terms.13 The various sections and chapters within each section also have section and chapter
notes to aid in the interpretation of the tariff provisions within each
9. 19 U.S.C. § 1515(a) (2012). However the instruction to decide the protest within two years
is apparently directory, not mandatory. See Hitachi Home Elec. (America), Inc. v. United States,
661 F.3d. 1343 (Fed. Cir. 2011) (holding that failure of Customs to decide a protest in two years is
not a “deemed denial” for jurisdictional purposes).
10. 28 U.S.C. § 2636(a) (2012); see also § 1581(a).
11. 28 U.S.C. § 2637(a) (2012).
12. See 19 U.S.C. § 1514(a)(2) (2012).
13. U.S. INT’L TRADE COMM’N, USITC PUB. NO. 4299, HTSUS GENERAL NOTES (2014), available
at http://www.usitc.gov/tata/hts/bychapter/index.htm.
30
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
section and chapter. The classification of goods in the HTSUS is
governed primarily by the General Rules of Interpretation (GRIs) and
the Additional U.S. Rules of Interpretation (ARIs) that appear at
the very front of the tariff. GRI 1 provides that classification shall be
determined according to the terms of the headings and any relative
section or chapter notes, provided such headings or notes do not
require otherwise, according to GRIs 2-6.14 The GRIs are to be applied
in sequential order and if the classification can be determined solely
pursuant to GRI 1 (i.e., pursuant to the terms of the headings or
relevant section and chapter notes), then reference to the other GRIs is
not necessary.15 When classification cannot be resolved by GRI 1, then
the analysis proceeds to the subsequent GRIs.16
GRI 2(a) states that a reference to an article includes a reference to
an incomplete or unfinished article if the article has the essential
character of the complete or finished article.17 A reference to an article
also includes a reference to a complete or finished article imported
either unassembled or disassembled. GRI 2(b) provides that a reference to a material or substance includes a reference to a mixture or
combination of materials or substances. A reference to a good of a
given material or substance includes a reference to a good consisting
wholly or partly of such material or substance.18 The GRI then directs
that a good consisting of more than one material or substance shall be
classified pursuant to GRI 3.19
Since it is possible for a good to be described in more than one
heading of the HTSUS, GRI 3 provides for rules to determine which
heading ought to govern the classification of the good. GRI 3(a) articulates that the heading providing the more specific description
trumps the heading providing a more general description.20 However,
when headings each refer to only part of the materials or substances
contained in mixed or composite goods or to only part of the items in a
set put up for retail sale, the headings are to be regarded as equally
specific. In that event, GRI 3(b) states that mixtures, composite goods,
14. U.S. INT’L TRADE COMM’N, HSTUS REV. 1: GENERAL RULES OF INTERPRETATION 1 (2014)
[hereinafter GENERAL RULES OF INTERPRETATION], available at http://www.usitc.gov/publications/
docs/tata/hts/bychapter/1401gn.pdf.
15. Pomeroy Collection, Ltd. v. United States, 893 F. Supp. 2d 1269, 1278-79 (Ct. Int’l Trade
2013).
16. Id.
17. GENERAL RULES OF INTERPRETATION, supra note 14, at 1.
18. Id.
19. Id.
20. GENERAL RULES OF INTERPRETATION, supra note 14, at 1.
2014]
31
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
and goods put up in sets for retail sale, which cannot be classified
pursuant to GRI 3(a), are to be classified as if they consisted of the
material which gives them their essential character.21 Finally, as though
the drafters of the HTSUS threw up their hands and cried, “If GRIs
1-3(b) cannot get the job done, we give up,” GRI 3(c) provides that if
goods cannot be classified under GRIs 3(a) or 3(b), they are to be
classified under the heading that appears last in numerical order in the
tariff among those headings meriting equal consideration.22
In the event a good cannot be classified pursuant to GRI 1-3, GRI 4
states that the good is classified under the heading appropriate to the
good to which it is most akin.23 Further, in accordance with GRI 5(a),
cases specially shaped or fitted to contain a specific article (e.g., camera
cases), if suitable for long-term use and entered with the article, are
classified with the article when of a kind normally sold therewith.24 This
rule does not apply if the container gives the whole its essential
character.25 GRI 5(b) provides that subject to GRI 5(a), packing
materials and packing containers entered with goods are similarly
classified with the goods if they are of a kind normally used for packing
such goods, unless the packing materials are clearly suitable for repetitive use.26 Finally, GRI 6 instructs that goods in the subheadings of a
heading are to be classified according to the terms of the subheading
and any related subheading notes and, mutatis mutandi, to the above
rules, provided that only subheadings at the same level are comparable.27
The foregoing GRIs are incorporated into the HTSUS at the international level. In addition, the United States has added a number of ARIs.
ARI 1(a) provides that a tariff classification controlled by use, other
than “actual use,” is to be determined in accordance with the principal
use in the United States of goods of that class or kind, at or immediately
prior to, importation.28 For articles classified by actual use, ARI 1(b)
states that such use is satisfied only if the use is intended at the time of
importation, the goods are so used as intended, and proof of actual use
21.
22.
23.
24.
25.
26.
27.
28.
32
Id.
Id.
Id.
Id.
Id.
Id.
Id.
Id.
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
is furnished within three years of importation.29 ARI 1(c) clarifies that
a provision for parts of an article covers goods solely or principally
used as a part of such article but does not prevail over a specific
provision for such a part.30 Finally, ARI 1(d) states that the principles of
HTSUS section XI regarding mixtures of two or more textile materials
shall apply to the classification of any provision in which a textile
material is named.31
B.
How the CIT Applies the Principles of Classification:
Exploring Wonderland
The HTSUS is a statute that, of necessity, must be imbued with
two unique properties. It must be able to (1) identify virtually everything that exists in the world that is capable of being an article of
commerce and (2) must be forward-looking enough to permit the
classification of those articles that did not exist at the time of the
drafting of the HTSUS but are nevertheless capable of being imagined
and, therefore, might exist in the future. These concepts are reflected
in the diversity of articles found in the CIT’s 2013 classification decisions. They range from simple metal fasteners to incredibly complex
laser sintering systems and include, inter alia, garments, glassware, food
products, and a tobacco product.
1.
Q: What is the Difference Between a “Wood Screw” and a
“Self-tapping Screw”?
A: Approximately 6%!
The classification of the simplest of articles—metal fasteners—
presented “a challenging case” and required a lengthy analysis by the
court. In GRK Canada, Ltd. v. United States,32 the CIT was required to
decide which of two competing eo nomine tariff provisions applied to
the importer’s merchandise. An eo nomine tariff provision is one that
describes an article by a specific name, not by use.33
29. Id.
30. Id.
31. U.S. INT’L TRADE COMM’N, HSTUS REV. 1: ADDITIONAL U.S. RULES OF INTERPRETATION 2
(2014) [hereinafter ADDITIONAL RULES OF INTERPRETATION], available at http://www.usitc.gov/
publications/docs/tata/hts/bychapter/1401gn.pdf.
32. GRK Canada, Ltd. v. United States, 884 F. Supp. 2d 1340 (Ct. Int’l Trade 2013), vacated
and remanded, No. 2013-1255, 2014 U.S. App. LEXIS 14904 (Fed. Cir. Aug. 4, 2014).
33. Kahrs Int’l, Inc. v. United States, 713 F.3d 640, 645-46 (Fed. Cir. 2013).
2014]
33
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
The importer protested the decision by Customs to classify its metal
fasteners as “other wood screws” under subheading HTSUS 7318.12.00,
dutiable at 12.5% ad valorem.34 GRK claimed the fasteners should be
classified as “self-tapping screws” under subheading HTSUS 7318.14.10,
dutiable at 6.2% ad valorem. The parties agreed on the material factual
characteristics of the fasteners: they were made of corrosion-resistant
case-hardened steel and possessed heads, shanks, threads, and points
of various lengths and dimensions.35 The government advanced an
unusual argument that the use of the article is relevant to interpretation of the competing headings as well as the classification itself.36 This
would require classification under the subheading for “other wood
screws,” HTSUS 7318.12.00, because the fasteners were designed primarily for use in wood applications. The government sought to buttress its
argument with reliance on cases decided under the predecessor Tariff
Schedule of the United States (TSUS), which relied on the use of the
article in the classification under an eo nomine provision. However, the
case presented a challenge for the court because the HTSUS does not
define “other wood screw” or “self-tapping screw.”37
The CIT’s analysis provides an excellent template for making a tariff
classification analysis employing the GRIs. The court first determined
the meaning of the relevant tariff provisions. This is a question of law.38
The court then determined the nature of the merchandise. This is a
question of fact.39 Because the parties agreed on the nature of the
merchandise, there were no factual determinations requiring a decision by the trier of fact, and the court proceeded to dispose of the case
on summary judgment, pursuant to USCIT Rule 56. The court understood its obligation to accord Mead deference to Customs’ classification
decision relative to its power to persuade,40 but also recognized its
well-established responsibility to independently decide the proper
34. GRK, 884 F. Supp. 2d at 1342.
35. Id. at 1343.
36. In general, articles are classified in tariff provisions that describe them either as eo nomine
or by use as specified in Rule 1(a)-(d) in ADDITIONAL U.S. RULES OF INTERPRETATION. See id. at 1345.
37. Id. at 1345.
38. Id. at 1343.
39. Id.
40. See United States v. Mead Corp., 533 U.S. 218, 235 (2001). “The weight [accorded to an
administrative] judgment in a particular case will depend upon the thoroughness evident in its
consideration, the validity of its reasoning, its consistency with earlier and later pronouncements,
and all those factors which give it power to persuade, if lacking power to control.” Id. at 228 (citing
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)).
34
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
meaning and scope of the HTSUS terms.41 The CIT began its analysis
with GRI 1. Because the HTSUS did not specifically define either of the
key terms—“other wood screws” and “self-tapping screws”—in the two
competing tariff provisions, the court consulted lexicographic sources,
industry sources, expert testimony, and the explanatory notes (ENs),42
all in an attempt to fathom the meaning of the tariff terms and
delineate the scope of what is covered within each heading.
The court eventually defined a “wood screw” as “having (1) a flat,
recessed, oval, round, or slotted head, (2) partially unthreaded shank,
(3) coarse pitch spaced threads, and (4) a sharp gimlet point, and may
also have (5) potential modifications to these criteria (such as sharper
point angles or case hardening) so long as the modified screw retains
an essential resemblance to a standard wood screw.”43 On the other
hand, the court defined “self-tapping screws” as “(1) . . . made of case
hardened steel, (2) [that] have passed certain performance requirements, and (3) do not require a separate tapping operation.”44 However, once it compared the actual characteristics of the importer’s
particular fasteners to these definitions, it concluded that because the
fasteners could reasonably be determined to be both wood screws and
self-tapping screws (because they possessed features of both), GRI 1 did
not apply.45 The court rejected the government’s claim that the classification depended on use and declined to consider any aspects of the
fasteners’ use in its determination. It reasoned that reliance on cases
decided under the predecessor TSUS was misplaced; the HTSUS was
organized differently and with far greater specificity, continuity, and
completeness than the TSUS.46 While acknowledging that generally a
“use limitation should not be read into an eo nomine provision unless
the name itself inherently suggests a type of use,”47 the court nonethe-
41. GRK, 884 F. Supp. 2d at 1343. While the importer has the burden of proving that the
government’s classification is incorrect, 28 U.S.C. § 2639(a)(1), the court nevertheless has an
obligation to reach a correct result. Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed. Cir.
1984). Thus, once the importer meets its burden of establishing the government’s classification is
not correct, the court will proceed to determine the correct classification based upon the
importer’s claims as well as its own independent review.
42. GRK, 884 F. Supp. 2d at 1345 (“The court may also refer to the Harmonized Description
and Coding System’s Explanatory Notes (Explanatory Notes) accompanying a tariff subheading,
which—although not controlling—provide interpretive guidance.” (citation omitted)).
43. Id. at 1348.
44. Id. at 1352.
45. Id. at 1355-56.
46. Id. at 1353.
47. Id.
2014]
35
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
less declined to convert an eo nomine provision into a “use” provision.48
As a consequence, the court declined to consider any aspects of use and
instead focused on the design characteristics of the fasteners.49
The length of the court’s GRI 1 analysis demonstrates the weight to
be accorded to GRI 1. There was a strong preference to resolve the
classification of the article solely by reference to GRI 1. The subsequent
classification of the fasteners flowed easily once GRI 1 was eliminated.
GRI 2 did not apply on its face. GRI 3(a) was inapplicable because the
provisions for wood screws and self-tapping screws were equally specific. GRI 3(b) was inapplicable because the fasteners consisted of
only a single component. The court was left with GRI 3(c). Although
the court noted that GRI 3(c) was rarely used, it was appropriate in this
case. Moreover, because the provision for self-tapping screws, HTSUS
7318.14.10, appears after the provision for other wood screws, HTSUS
7318.12.00, in the tariff, under GRI 3(c), the former classification
prevailed.50 The method of deciding the correct classification in this
case may seem a bit odd, if not illogical. However, in Wonderland,
“odd” is normal.
Ironically, the journey through Wonderland was not complete. The
government filed an appeal and the Court of Appeals for the Federal
Circuit, in a 2-1 decision,51 vacated and remanded the case back to the
CIT. It instructed the trial court to consider whether the common
commercial meaning of the eo nomine provisions included reference
to the materials with which the fasteners were intended and designed
for use (i.e., wood and/or metal).52 The majority rejected the CIT’s
“inference” that “use” has no relevance in the classification of an article
described eo nomine.53 According to the court, “use,” whether “intended
use,” “primary use,” or “principal use,” could be relevant in guiding
towards a proper commercial meaning of the term as well as in
determining whether an article fits within the classification’s scope.54
However, despite the majority’s repeated reference to “intended use”
and “primary use,” terms that are foreign to the use analysis provided in
ARI 1, it failed to define them or to suggest any method of analysis to
48. Id. at 1354.
49. Id.
50. Id. at 1356.
51. Dissents in appellate decisions involving tariff classification cases are themselves a bit
unusual.
52. GRK Canada, Ltd., 2014 U.S. App. LEXIS 14904.
53. Id. at *9.
54. Id. at *9-10.
36
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
either align the terms with or distinguish them from the ARIs’ “principal use” and “actual use” concepts.55 In fact, the majority may have
muddied the water with a reference to the ARIs. During the discussion
of the role of “use” in defining eo nomine provisions, the majority
dropped a footnote referencing the ARIs,56 which apply when classifications are controlled by principal or actual use. To the extent “use” is
relevant in eo nomine provisions when either the name of an article
inherently suggests a type of use or it defines an article’s identity when
determining the scope of a tariff provision, the reference to the ARIs is
not appropriate. The dissent pointed out this conflict and suggested it
was contrary to existing precedent.57
Absent articulable standards of intended use or primary use, it
remains to be seen how the CIT will incorporate a use analysis into its
decision-making process on remand. Will it borrow from existing use
analysis? Will it look at any minimal use? Will it flesh out the “primary
use” or “intended use” concepts mentioned by the court of appeals?58
In Wonderland it is not always easy to find answers to basic questions.
2.
Do These Glass Containers Just Look Pretty or Are They
Actually Useful?
Sometimes the tariff classification of an article implicates ARI 1(a)
by requiring the court to determine the principal use of a good. Two
such cases came before the CIT in 2013, involving somewhat different
goods but the same competing tariff provisions. In Dependable Packaging
Solutions, Inc. v. United States,59 the plaintiff was importing relatively
inexpensive empty generic glass vases that were sold to mass-market
flower packing houses that redistributed them filled with flowers,
water, and sometimes nutrient. The packing houses sold them to
retailers, where the flowers and vases were displayed and sold as a
unit. Customs liquidated the vases under HTSUS 7013.99.40 or HTSUS
7013.99.50 (depending on the unit value) as “glassware of a kind
used for table, kitchen, toilet, office, indoor decoration or similar
purposes (other than of heading 7010 or 7018); Other.” The importer
claimed that the vases should be classified under HTSUS 7010.90.30 as
55. See, e.g., id. at *10-11 (mentioning “intended use”), *14 (mentioning “primary use”).
56. See id. at *9 n.2.
57. Id. at *19, *23-24.
58. See id. at *12-14.
59. Dependable Packaging Solutions, Inc. v. United States, No. 10-00330, 2013 WL 646328
(Ct. Int’l Trade 2013), aff’d, 757 F.3d 1374 (Fed. Cir. 2014).
2014]
37
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
“carboys, bottles, flasks, jars, pots, vials, ampoules, and other containers
of glass, of a kind used for the conveyance or packing of goods.”
The parties agreed that the articles were classified within Chapter 70
(“Glass and glassware”) but strenuously differed on the principal use of
the articles. The plaintiff claimed they were principally used for the wet
transportation of flowers while the United States argued they were
principally used for decoration. And so the table was set, in a manner of
speaking, for a very interesting tea party. The competing principal uses
required the court to determine under ARI 1(a) whether the articles
were commercially fungible with glass packing containers or glass vases
primarily used for decorative purposes.60
The court first examined the competing headings, HTSUS 7010 and
HTSUS 7013. With regard to HTSUS 7010, it reviewed the ENs and
relevant case law. In evaluating the plaintiff’s claim, the court was
clearly troubled by the inability of the subject merchandise to accept a
closure (necessary to practically and successfully “transport goods”),
which it believed was an impediment to classification within HTSUS
7010. By contrast, when the court examined the language of HTSUS
7013, it was favorably inclined to include the article within the heading
because the ENs used “vases” as an exemplar of items considered to
be indoor decorative glassware in HTSUS 7013. Although the plaintiff
(for obvious strategic reasons) declined to refer to the merchandise
as “vases” in its motion and briefs, it did so in its entry papers, its
advertising, its interrogatory responses, and its depositions. The court
found there was no genuine factual dispute that the articles in question
were vases.61
Determining that the glass articles were vases however, did not
resolve the classification dispute because the court was still required to
ascertain whether the goods were principally used as containers for the
packing or conveyance of goods or as indoor decorative glassware. This
required the CIT to analyze the goods in light of the Carborundum
factors to ascertain with which class of goods the imported goods were
fungible.62 Relying heavily on the factual record developed by the
60. Id. at *12.
61. Id. at *17.
62. In United States v. Carborundum Co., 536 F.2d 373 (CCPA 1976), the Court of Customs
and Patent Appeals summarized the factors to be considered when determining whether a group
of goods is commercially fungible with the imported goods in order to identify the use which
exceeds any other single use of the same class or kind of goods. These factors are: the general
physical characteristics of the merchandise; the expectation of the ultimate purchasers; the
channels, class, or kind of trade in which the merchandise moves; the environment of the sale
38
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
litigants, the court determined that the Carborundum factors overwhelmingly indicated that the imported vases were commercially fungible with other inexpensive clear vases whose principal use was decorative, rather than fungible with glass packing containers of the same
kind used for the conveyance of goods.63 Accordingly, it held that the
vases should be classified in HTSUS 7013.99.40 or HTSUS 7013.99.50,
depending on value.64
Later in the year, a second case to consider the principal use of a
similar article came to the court. Latitudes International Fragrance, Inc. v.
United States65 involved the classification of machine-blown diffuser
bottles. Like the vases in Dependable Packaging, the diffuser bottles were
imported empty and without closures. After importation, the plaintiff
made diffuser kits by filling the bottles with fragranced diffuser oil and
inserting a stopper affixed with shrink-wrapped plastic. The filled
bottles were packaged together with diffuser reeds and instructions and
sold to retailers as kits.
Customs liquidated the merchandise under HTSUS 7013.99.50 as
glassware for indoor decoration because it believed the diffuser bottles
were designed to be displayed in the home, were designed to hold
material, may remain open as they display their contents, and were
intended to lend decoration to the items they display. The importer
claimed the bottles were intended for the conveyance of oils and
classified under HTSUS 7010.90.50.
As in the Dependable Packaging Solutions case, the parties agreed that
two principal use provisions were involved and the merchandise needed
to be evaluated in light of the Carborundum factors. However, unlike
the former case, the Latitudes court reached the opposite conclusion
and held that the principal use of the diffuser bottles was for the
commercial conveyance of goods. Unlike Dependable Packaging, where
the determinative feature of the vase was lacking, the court found
the diffuser bottle was designed to accept a stopper, and this feature
was particularly probative on the principal use as a container for the
(i.e., accompanying accessories and the manner in which the merchandise is advertised and
displayed); the use, if any, in the same manner as merchandise which defines the class; the
economic practicality of so using the import; and the recognition in the trade of this use.
Carborundum, 536 F.2d at 377. These factors have come to be known as simply the Carborundum
factors.
63. Dependable Packaging Solutions, Inc., 2013 WL 646328, at *28-29.
64. Id.
65. Latitudes International Fragrance, Inc. v. United States, 931 F. Supp. 2d 1247 (Ct. Int’l
Trade 2013).
2014]
39
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
conveyance or packing of goods.66 The court was not particularly
persuaded by either party’s evidence at trial of purchaser expectations,
finding none of the witnesses probative on this point.67 However, it
did examine the cost of the diffuser bottle relative to the retail cost
of the diffuser kit, and noting that the plaintiff did not sell oil refills,
found that the retail purchaser expects to buy the bottles as part of
the finished product with the intention to consume the oil, discard the bottle when empty, and not display the bottle as decoration
afterwards.68 With regard to channels of trade, the court noted that,
unlike the vases in Dependable Packaging (which were of the class or kind
sold both with flowers and empty), the diffuser bottles were never
sold empty to the retail purchaser but rather, only after being processed into kits and filled with oil. As such, they were used for the
conveyance of oils.69 The court found the remaining Carborundum
factors (i.e., environment of sale, use in the manner which defines
the class, economic practicality, recognition in the trade of principal
use) probative of principal use to convey oil.70 This case also illustrates
the importance of creating a solid factual record, as a “principal use”
analysis under Carborundum is heavily fact-based.71
There are two additional aspects of the court’s Latitudes decision that
are worth noting. First, the court availed itself of the important judicial
prerogative of examining actual samples of the merchandise at bar,
noting the familiar adage that the goods themselves are “often a potent
witness in classification cases.”72 Physical examination revealed the
bottles fit the description in the ENs for the kind of glassware included
within HTSUS 7010. Namely, they were made of ordinary glass and
were designed for some type of closure.73 Second, the court addressed
a difficult argument to overcome regarding the deference to be given
66. Id. at 1254.
67. Id. at 1254-55.
68. Id.
69. Id. at 1255-56.
70. The Court found the evidence of recognition in the trade of principal use equally split
and hence did not accord this factor significant weight. There was testimony they were designed
for single use and the importer did not sell refills. However, there was some record evidence that
refills were sold by others in the marketplace. The court noted, however, that there was no
evidence of industry studies or consumer surveys reflecting principal use. Id. at 1257.
71. Proof that the Carborundum factors weigh in favor of a litigant can be accomplished like
any other factual matter, by means of lay or expert testimony and through consumer or market
studies properly admitted into evidence.
72. Id. at 1257 (citation omitted).
73. Id.
40
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
to a Customs ruling under United States v. Mead Corp.74 and Skidmore v.
Swift Co.75 Ordinarily, a court must give deference to an agency determination that is thorough and persuasive.76 The case at bar reached
the CIT as a result of a written protest decision made by Customs
Headquarters pursuant to an application for further review.77 The
court reviewed the protest decision and determined it was neither
thorough nor logical; hence it would not be accorded deference.78
The court found the analysis by Customs at the protest stage to be
flawed because the agency compared the imported article to a jar
imported without a lid.79 However, the imported article was a bottle,
not a jar. The fragranced oil did not fall within the general category
of goods conveyed in jars, which typically hold a class of goods
such as foodstuffs or cosmetics.80 The court also objected to the fact
that Customs relied on previous rulings classifying other bottle diffusers under HTSUS 7013. The articles in those other rulings had distinctly different physical characteristics than the diffusers before the
court. Finally, the protest decision did not address why the prior rulings
should apply to a bottle diffuser with different physical characteristics.81
Of particular interest is the different result obtained for similar
inexpensive glass containers in Dependable Packaging and Latitudes.
As is evident here, the HTSUS is capable of making classification
distinctions between articles based upon subtle differences in design
and the manner in which the article is intended to be used. One
can only speculate as to how the CIT would have classified the glass
bottle containing the potion that shrunk Alice during her visit to
Wonderland!
3.
An Un-trick Question: Is Apparel for Football Considered Articles
for Football or Articles of Apparel?
In another 2013 case, a designer and developer of protective sports
equipment was unable to convince the court that its imported football
pants, football jerseys, and football girdles were classifiable as “Articles
74.
75.
76.
77.
78.
79.
80.
81.
2014]
See Mead Corp., 533 U.S. at 218.
See Skidmore, 323 U.S. at 134.
See Latitudes International Fragrance, 931 F. Supp. 2d at 1257.
See 19 C.F.R. § 174.25 (1978).
See Latitudes International Fragrance, 931 F. Supp. 2d at 1258.
Id. at 1257-58.
Id.
Id.
41
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
and equipment for . . . athletics” under HTSUS 9506.82 Customs rejected the importer’s proposed classification and instead classified
the merchandise as “Articles of apparel” under HTSUS 6114 (“Other
garments . . .” i.e., the “residual” provision for certain garments not
more specifically provided for), HTSUS 6110 (“Sweaters, pullovers . . .”),
and HTSUS 6207 (“Mens’ or boys’ singlets or other undershirts,
underpants . . .”).83 How the court arrived at its decision may make the
reader feel a little like Alice when the Cheshire Cat told her, “We’re all
mad here. I’m mad. You’re mad.”84
In Riddell v. United States, the subject merchandise included football
pants with four interior sleeves designed to hold two thigh pads and two
knee pads.85 The pants were also designed to hold in place two hip pads
and one tail pad. Moreover, the pants had an open crotch (laced closed
with heavy strings), prominent inside stitching, and were cut larger to
accommodate padding and an athletic cup.86 The jerseys were designed with extra room in the shoulders, chest, and back for shoulder
pads, which the jerseys should hold tight to the upper body. The jerseys
also had substantial stitching and extra material at the shoulders to
maintain the integrity of each jersey during full-contact organized
football.87 However, upon importation, neither the pants nor the
jerseys included the shoulder pads or any other padding. Additionally,
the girdles contained several internal sleeves for hip and tail pads, but,
upon importation, they too did not include the pads. The girdles fit
snugly around the pelvic area and were worn underneath football
pants.88
Riddell asserted that its merchandise should be classified under
HTSUS 9506 as “Articles and equipment for . . . athletics” or as “parts
and accessories thereof,” duty free. The United States asserted that
the merchandise should instead be classified under various provisions
of HTSUS Chapters 61 and 62 providing for “Articles of apparel”
(specifically, HTSUS 6110, 6114, and 6212), with duty rates ranging
from 14.9% to 32%.89 Riddell reasoned that its merchandise was more
82. Riddell, Inc. v. United States, 906 F. Supp. 2d 1355 (Ct. Int’l Trade 2013), aff’d in part and
rev’d in part, 2014 U.S. App. Lexis 11608 (Fed. Cir. June 20, 2014).
83. Riddell, 906 F. Supp. 2d at 1357.
84. CARROLL, supra note 1, at 100.
85. See Riddell, 906 F. Supp. 2d at 1358.
86. Id.
87. Id.
88. Id. at 1358-59.
89. Id. at 1357.
42
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
like the hockey pants with removable and non-removable padding in
Bauer Nike Hockey USA, Inc. v. United States90 than the minimally padded
motorcycle jackets and pants in LeMans Corp. v. United States.91 In Bauer,
the Federal Circuit concluded that padded hockey pants were classifiable as sports equipment under HTSUS 9506, but seven years later, in
LeMans, the Federal Circuit concluded that minimally padded motorcycle jackets and pants were not sports equipment but, instead, articles
of apparel (HTSUS 6110, 6210, and 6201).92
The court accepted the government’s position instead of Riddell’s,
relying on the “definitional authority” of LeMans. The LeMans court, in
reaching its conclusion that the motorcycle jackets and pants were not
HTSUS 9506 “sports equipment,” discussed the examples of “protective sports equipment” listed in the ENs, “e.g., fencing masks and breast
plates, elbow and knee pads, cricket pads, shin-guards.”93 It stated that
the ENs “indicate that, to the extent ‘sports equipment’ encompasses
articles worn by a user, those articles are not apparel-like and are almost
exclusively protective in nature . . . [A]ll of the listed examples in [EN
95.06(B)(13)] center on non-clothing articles and do not describe apparel like the subject merchandise [i.e., motorcycle jackets and pants].”94
Stating that the CIT properly referred to the ENs to assist in interpreting HTSUS 9506, the LeMans court further explained that the examples listed in EN 95.06(B)(13) “are almost exclusively used for
protection and would complement, or be worn in addition to, apparel worn
for a particular sport.”95 Quoting this discussion, the Riddell court then
stated:
Therefore, the Federal Circuit determined that “sports equipment” is defined as non-apparel like merchandise that is necessary,
useful or appropriate for a sport, and if the merchandise is
worn by a user, those articles are almost exclusively protective in
90. Bauer Nike Hockey USA, Inc. v. United States, 393 F.3d 1246, 1248 (Fed. Cir. 2004). In
Bauer, the internal guards, pads, and belt collectively comprised about 80% of the total weight of
the hockey pants. Id.
91. LeMans Corp. v. United States, 660 F.3d 1311, 1317 (Fed. Cir. 2011). In LeMans Corp., the
padding was less than 50% of the total weight and did not have the “protective or specialized
features.” Id.
92. See Riddell, 906 F. Supp. 2d at 1360 (citing Bauer, 393 F.3d 1246 and Lemans, 660 F.3d
1311).
93. Id. at 1362 (quoting Lemans, 660 F.3d at 1320 (quoting EN 95.06(B)(13))).
94. Id. (emphasis added) (quoting Lemans, 600 F.3d at 1320-21).
95. Id. at 1363 (emphasis added) (quoting Lemans, 600 F.3d at 1322).
2014]
43
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
nature and would complement, or be worn in addition to, apparel
worn for a particular sport.96
Applying the definition it extracted from the Federal Circuit in
LeMans, and distinguishing Bauer’s hockey pants, which “contained
significant padding,” the court had to go no further than GRI 1 to
find that the merchandise was classifiable as “articles of apparel.”97
The court reasoned that “[f]or articles worn by the user (like football
pants, jerseys, and girdles) to be classifiable as ‘sports equipment,’ they
must be protective in nature”98 and that “[i]t is only after the pads are
inserted into the pants and girdles . . . that the subject merchandise
could be said to offer any real protection.”99
Riddell also unsuccessfully argued before the court that the merchandise constituted “parts [or] accessories” of sports equipment (namely,
the protective pads, which were not imported) also classifiable under
HTSUS 9506.100 While it might seem counterintuitive to argue that
the pants are parts or accessories for the pads, it was a creative effort to
try to have the “tail wag the dog.” The court responded that “[g]enerally speaking, ‘parts and accessories’ ‘must have a direct relationship
to the primary article, rather than to the general activity in which
the primary article is used’” and further, “‘part’ is defined as an
‘essential element or constituent; integral portion which can be separated, replaced, etc.’”101 Moreover, the merchandise was not an “accessory” (i.e., a “thing of secondary or subordinate importance (as in
achieving a purpose or an effect) . . . an object or device that is not
essential in itself but that adds to the beauty, convenience, or effectiveness of something else . . .”102) because the clothing and the pads each
served “a separate function and neither is secondary or subordinate to
the other.”103
96. Id. (emphasis added) (citing Lemans, 660 F.3d at 1318-21).
97. Id. at 1368-69 (finding the jerseys classifiable under subheading 6110.30.30 for “sweaters,
pullovers . . . and similar articles . . .” 32%; the pants under 6114.30.30 for “Other garments . . .”
14.9%; and the girdles under 6212.20.00 for “brassieres, girdles, corsets . . .” 20%.); but see Riddell,
2014 U.S. App. Lexis 11608 (reversing in part, finding the girdles instead classifiable under
6114.30.30, 14.9%).
98. Riddell, 906 F. Supp. 2d at 1367.
99. Id. at 1369.
100. Id. at 1367-38.
101. Id. (quoting Rollerblade, Inc. v. United States, 282 F.3d 1349, 1353 (Fed. Cir. 2002)).
102. Id. (citing WEBSTER’S THIRD INTERNATIONAL DICTIONARY 11 (1993)).
103. Id.
44
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
While Bauer represented one extreme and Lemans the other, Riddell
fell in the middle. In light of the ENs and Federal Circuit precedent,
the court probably arrived at the correct decision.104 Still, the court
may have gone a little too far when it articulated an absolute definition
of “sports equipment.”105 Consider the result if the Riddell definition—
(1) non-apparel-like merchandise that is (2) necessary, useful, or appropriate for a sport and, where worn by a user, is (3) almost exclusively
protective in nature and (4) would complement, or be worn in addition to,
apparel worn for a particular sport106—were applied to the padded
hockey pants in the Federal Circuit’s 2004 case, Bauer. Bauer concluded
that the padded hockey pants qualified as sports equipment, but if
Riddell’s definition, which precludes “apparel-like merchandise,” were
applied, the padded hockey pants would not qualify as sports equipment. Therefore, the restrictive definition from Riddell appears to be
contrary to the Federal Circuit’s decision in Bauer. More troublesome though, would be the potential future case of an importer
importing football pants and girdles, complete with padding, as sports
equipment under HTSUS 9506 (duty free) in reliance on Bauer. If
Customs (or a court) were to apply the Riddell definition excluding
“apparel-like merchandise,” the importer could be dealt an unexpected blow—namely, the steep duties that come with an “articles of
apparel” designation.
Interestingly, the list of EN 95.06(B)(13) examples of protective
sports equipment, which Lemans and Riddell found so persuasive,107
includes one additional example that was left out of Lemans: “. . . and
ice-hockey pants with built-in guards and pads.”108 So, by including
ice-hockey pants, which presumably constitute “apparel-like” merchandise, EN 95.06 actually seems clearer and more consistent with Bauer
than with the Riddell definition. However, unlike authoritative case law,
the ENs are merely persuasive.
On appeal, the Federal Circuit agreed that Riddell’s merchandise
was not sports equipment, and instead of stating (or restating) a
definition, it referred to a “strong general rule” that “sports equipment
104. This view is bolstered by the Federal Circuit’s decision, on appeal, that the merchandise
is not sports equipment under HTSUS 9506. See Riddell, Inc., 2014 U.S. App. Lexis 11608.
105. See Dependable Packaging Solutions, 2013 WL 646328, at *28-29.
106. See Riddell, 906 F. Supp. 2d at 1363, 1365-66 (emphasis added).
107. See Riddell, 908 F. Supp. 2d at 1362 (holding “protective sports equipment” includes
“fencing masks and breast plates, elbow and knee pads, cricket pads, shin-guards”).
108. See id. at 1366 (emphasis added) (quoting EN 95.06(B)(13) (2012) and EN 95.06(B)(13)
(2010)).
2014]
45
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
does not include an article that, as imported, would be understood
as clothing, as a garment, based on the predominance of textile material and the usual predominant function of covering portions of the
body.”109 Unfortunately for the potential future importer, even with
this new “strong general rule,” it remains unclear whether football
pants and girdles, if imported with all the intended padding, would
constitute “sports equipment” under HTSUS 9506.
In Riddell, the court had the opportunity to succumb to the broadness of the heading title and the yet more inclusive heading tag, “parts
and accessories thereof.” However, it resisted any such temptation and
interpreted the language narrowly, adhering to Federal Circuit precedent and conservative applications of the vague definitions of “parts”
and “accessories.”
4.
It’s Just a 3D Printer, Isn’t It?
Sometimes, the court is asked to determine the tariff classification
of a highly complex technological article. This requires mastery of
both the fundamental technology employed by the article as well as a
thorough understanding of how the article itself performs its function.
The subtle brilliance of the tariff to account for complex technology
and advances in that technology is embodied in the notion that “tariff
schedules are written for the future as well as for present application
and may embrace merchandise unknown at the time of their enactment as long as such merchandise possesses an essential resemblance
to the characteristics as described by the applicable tariff provision.”110
This means that the technology and function of some articles may be
such that neither the importer nor the government may be entirely
certain of the correct classification.
These concepts are aptly illustrated in a 2013 case involving the
classification of two models of machines described as “laser sintering
systems.”111 In EOS of North America Inc. v. United States,112 two different
models were imported. The M270 worked with metal powder and
the P390 worked with thermoplastic powder. Each model built threedimensional solid objects using either metal or plastic powder. The
109. See Riddell, 2014 U.S. App. LEXIS 11608 at *11.
110. Texas Instruments Inc. v. United States, 518 F. Supp. 1341, 1346 (Ct. Int’l Trade 1981),
aff’d, 673 F.2d 1375 (CCPA 1982).
111. “Sintering” is the process of “forming a coherent bonded mass by heating . . . powders
without melting.” MCGRAW-HILL DICTIONARY OF SCIENTIFIC AND TECHNICAL TERMS (5th ed. 1994).
112. EOS of North America, Inc. v. United States, 911 F. Supp 2d. 1311, 1314 (Ct. Int’l Trade
2013).
46
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
machines included the following components: a machine housing
for the gas-tight “build” chamber, an optical system with a solid state
laser and a digital high-speed scanner, a recoating system, an elevator
system for a building platform, heating modules, nitrogen generators,
a process computer with control software, a compressed air connection, an electrical power connection, and other additional accessories.
Neither machine included any part-specific die, jig, or mold.
Each model worked in essentially the same manner. A threedimensional shape of the article to be built is created on the process
computer using computer-assisted design software. Once the design is
created, a laser selectively melts the material (metal or plastic powder)
one layer at a time. As the laser moves away from the spot being heated,
the melted material cools and solidifies such that it becomes attached
to the surface below it. The platform on which the articles are built
then drops and the recoating arm spreads a fresh layer of powdered
material across the top of the incomplete articles. This process repeats
one layer at a time until the articles are complete.
The classification treatment of the models at the administrative level
from the time of entry suggested that the parties themselves may not
have been entirely certain as to the applicable tariff provision. Customs
liquidated both models in HTSUS 8477.80.00 as “[m]achinery for
working rubber or plastics or for the manufacture of products from
these materials, not specified or included elsewhere in this chapter . . .
other machinery.”113 In one protest involving the M270, the importer
asserted classification under HTSUS 8479.89.98 (“[m]achines and
mechanical appliances having individual functions, not specified or
included elsewhere in this chapter; Other”). On a second protest for
the M270, it claimed classification under HTSUS 8515.80.00 (“Electric . . . laser or other light or photon beam . . . soldering, brazing or
welding machines and apparatus, whether or not capable of cutting . . .
Other machines and apparatus.”). Customs denied one protest, concluding that the M270 was classified as a machine tool in HTSUS 8463.90.00
(“Other machine tools for working metal or cermets, without removing
material; Other.”). Inexplicably, Customs denied the second protest,
affirming the liquidated classification in HTSUS 8477.80.00 despite
the fact that it did not work with plastic. With regard to the P390 (which
Customs liquidated under HTSUS 8477.80.00 as “[m]achinery for
working rubber or plastics . . . other machinery”), the importer claimed
113. This appears to be a clearly incorrect classification with respect to the M270, which only
worked with powdered metal. See id. at 1313.
2014]
47
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
in its protest that it was classified under HTSUS 8515.80.00 as a
“laser . . . beam . . . welding machine.”
Once the consolidated cases reached the CIT, the plaintiff asserted
classification of both models in HTSUS 8515.80.00, as laser beam
welding machines, or in the alternative HTSUS 8479.89.98, as other
machines having individual functions not specified or elsewhere included in HTSUS Chapter 84. The United States asserted before the
CIT that the M270 was a machine tool in HTSUS 8463.90.00, or in
the alternative an article of HTSUS 8479.89.98, whose function is not
specified or elsewhere included in Chapter 84. For the P390, the
United States advocated classification in HTSUS 8477.80.00, as machinery for working rubber or plastics.
The court ultimately determined that the M270 should be classified
according to the parties’ alternate claim, in HTSUS 8479.89.98, as a
machine whose function is not specified or included elsewhere in
Chapter 84. For the P390, the court determined that the correct
classification was in HTSUS 8477.80.00, as a machine for manufacturing products from plastics. The journey to this conclusion illustrates
the challenges presented to the court to understand the technology
and function of a complex machine and to evaluate new and developing technology that probably did not exist when the tariff was first
written.
To properly classify the M270, the court needed to define the scope
of the machine tool heading and then determine whether the article
was a “machine tool.” The court observed that neither the HTSUS
nor the ENs defined a “machine tool.”114 In furtherance of its obligation to determine the definition of the tariff term as a matter of law,
the court consulted various lexicographic and scientific authorities
to conclude that “machine tools” (1) act upon a solid work piece to
modify its shape by removing material or deforming its shape,115 (2) do
not build articles out of powders,116 and that therefore (3) the M270 is
not a machine tool. Interestingly, the United States argued that machine tools under HTSUS 8463 encompass “‘non-traditional’ technically advanced methods of machining” intended to “reflect the evolution of the industry.”117 The defendant further pointed out that the
M270 is similar to modern machine tools that incorporate the technology of computer-aided design and computer-aided manufacturing to
114.
115.
116.
117.
48
Id. at 1324.
Id.
Id.
Id. at 1325.
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
produce the final work product.118 The defendant finally sought safe
harbor in the argument that because the appropriate subheading,
HTSUS 8463.90.00, was “Other,” the heading contemplates classification to allow for the evolution of the machine tool industry, thereby
permitting classification of the M270 within HTSUS 8463.119 The
court addressed this argument by noting that the argument conflicts
with GRI 1 because the defendant was asking for an expansion of the
heading (“machine tool”) based upon a subheading. The court reminded the parties that the process of classification requires a determination first that the article belongs in the heading before the subheadings are considered.120 If the court could not define the M270 as a type
of machine tool, then it could not classify it within a “machine tool”
subheading.
The court next addressed the plaintiff’s claimed classification under
HTSUS 8515 as an electric laser welding machine. The court understood that the M270 employed a laser, but after closely examining the
definitional range of “welding,” it concluded that laser sintering was
not described by the majority of the definitions of “welding” because
the powder material lost its identity in the manufacturing process and
the laser did not cause a joining of materials by creating welded joints.
The court did not believe that “welding” encompassed the creation of
entirely new three-dimensional objects starting with spherical particles
that melt and coalesce.121 The court determined that the M270 was
most properly classified in the residual provision of HTSUS 8479.89.98
as “[m]achines and mechanical appliances having individual functions,
not specified or included elsewhere in this chapter.”122
118. Id.
119. The defendant got to this HTSUS subheading because the metal working machine tool
headings in the HTSUS classify machine tools according to the manner in which they work
material. See HTSUS Headings 8459-8462. The laser sintering systems did not function in the same
manner as “traditional” machine tools of HTSUS 8459-8462. Hence the defendant sought
classification in the non-specific provision for “other machine tools for working metal or cermets
without removing material” in HTSUS 8463, and within that as “other machine tools” in HTSUS
8463.90.00. Id. at 1327.
120. Id. at 1327-28 (citing Orlando Food Corp v. United States, 140 F.3d 1437, 1440 (Fed. Cir.
1998)).
121. In arguing that the laser sintering machine was classified as a laser welding machine, the
plaintiff also invoked the concept that the tariff was “written for the future.” The court addressed
this argument by noting there was no evidence that had the laser sintering process existed at the
time the HTS was implemented, it would have been considered a “welding” process. Id. at 1331.
122. The court also explained why it was rejecting classification in the residual provision of
Heading 8543, HTSUS as an electrical machine having an individual function not specified
elsewhere in Chapter 85. It relied principally on the Explanatory Notes, which indicated Chapter
2014]
49
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
Having engaged in an exhaustive analysis of the classification of the
M270, the court then set upon the task of classifying the P390, which
the court acknowledged used a manufacturing process that is “analogous to that of the M270 in all respects material to classification, except
that the starting material was thermoplastic powder instead of metal
powder.”123 The court, however, did not take an “off with his head”
kind of approach, as did the Red Queen in Wonderland, and classify
the P390 in the same residual provision of HTSUS 8479. Chapter 84
includes HTSUS 8477, a provision for machinery for the manufacture
of products from rubber or plastics not elsewhere specified or included
in Chapter 84. The court quickly determined that by operation of GRI
1, HTSUS 8479 was not applicable because a preceding heading in
Chapter 84, namely HTSUS 8477, described the function of the P390
(“a machine for the manufacture of products from plastic”). By virtue
of GRIs 1 and 6, the court classified the P390 in HTSUS 8477 and
within the subheading 8477.80.00.
To an observer unfamiliar with the structure of the HTSUS, the
results in EOS may very well seem as curious as the “grin without a cat”
that Alice saw sitting on a tree while in Wonderland; two nearly
identical machines were classified in different tariff provisions. In fact,
these results reflect subtle nuances of the HTSUS, distinguishing
classification based upon the material used by nearly identical machines, as well as the ingenuity and flexibility of the HTSUS and its
ability to look to the future and account for technological developments yet to be perfected. Equally instructive is the limitation on the
forward-looking nature of the tariff, when, for example, the United
States attempted to convince the court that the laser sintering process
was a nontraditional advancement of machining, reflective of an evolutionary advancement in the machine tool industry. The court reminded the defendant that the legal definitions of the scope of the
headings had not evolved to the point where they included articles that
did not function in the same manner as the enumerated articles in the
headings and that GRI 1 trumped advances in technology.124
84 covers articles not more specifically covered by Chapter 85. The M270 did not perform any
function described in Chapter 85. Also, the EN’s indicated that Chapter 85 covers electrical
machinery other than machinery covered in Chapter 84 even if they are electric. Because of the
substantial mechanical function of the M270 (i.e., the recoating arm, the elevator for the building
platform and the compressed air system), the Court could not conclude that the mechanical
features are subsidiary to the “electrical function.” Id. at 1333-34.
123. Id. at 1337.
124. Id. at 1325-27.
50
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
5.
To Obtain Jurisdiction, You Still Have to Pay to Play: The Price of
Admission to Wonderland
In order to invoke the court’s § 1581(a) jurisdiction, a prospective
litigant must comply with 28 U.S.C. § 2637(a), which requires that an
importer pay all contested liquidated duties, charges, and exactions at
the time the action is commenced. This statutory provision has been
construed as a waiver of the government’s sovereign immunity, the
conditions of which must be strictly construed.125 If a litigant fails to
comply with the terms of consent, the court lacks jurisdiction over
the claim.126 As described below, litigants are sometimes unable to, or
do not, always fully comply with the “pay to play” requirements of
§ 2637(a). At times, the rules of Wonderland can seem unduly harsh.
In International Customs Products, Inc. v. United States,127 the importer
was faced with the prospect of having to pay an astounding $28,000,000
in liquidated duties on thirteen entries in order to contest the classification of its “white sauce.”128 The plaintiff alleged that it had obtained a
binding ruling imposing a rate of 6.4% ad valorem on its white sauce,
but Customs later issued a notice of action that reclassified the product
and resulted in an effective rate increase of 2,400%.129 The plaintiff
filed a nine-count complaint, eight counts of which addressed issues
relating to the classification of its merchandise and the denial of the
protests. However, the plaintiff did not pay the contested $28,000,000
in duties prior to filing suit. Anticipating the obvious jurisdictional
deficiency, the plaintiff claimed jurisdiction under both § 1581(a) and
§ 1581(i)(4), the court’s so-called “residual jurisdiction.”130 The court
dismissed counts one through eight in rather summary fashion, noting
that the law did not permit a litigant to accomplish indirectly what it
125. AutoAlliance Int’l, Inc. v. United States, 357 F.3d 1290, 1293 (Fed. Cir. 2004).
126. Georgetown Steel Corp. v. United States, 801 F.2d 1308, 1312 (Fed. Cir. 1986).
127. Int’l Custom Prods., Inc. v. United States, 931 F. Supp. 2d 1338 (Ct. Int’l Trade 2013),
mot. for recons. denied, 991 F. Supp. 2d 1335 (Ct. Int’l Trade 2014).
128. Id. at 1339.
129. Id. at 1340.
130. 28 U.S.C. § 1581(i) (2012) (“In addition to the jurisdiction conferred upon the Court of
International Trade by subsections (a)-(h) of this section . . . the Court of International Trade
shall have exclusive jurisdiction of any civil action commenced against the United States . . .
that arises out of any law of the United States providing for—(1) revenue from imports or
tonnage; (2) tariffs, duties, fees, or other taxes on the importation of merchandise for reasons
other than the raising of revenue; (3) embargoes or other quantitative restrictions on the
importation of merchandise for reason other than the protection of the public health or safety; or
(4) administration and enforcement with respect to the matters referred to in paragraphs (1)-(3)
of this subsection and subsections (a)-(h) of this section.”).
2014]
51
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
cannot do directly.131 If a litigant has access to the CIT through the
traditional jurisdictional avenue of § 1581(a), then § 1581(i)(4) jurisdiction is not available.132 The fact that the plaintiff lacked the financial
ability to obtain § 1581(a) jurisdiction by complying with § 2637(a) did
not permit it to bootstrap § 1581(i) jurisdiction.
Of particular interest is the assertion by the plaintiff in count nine
that 28 U.S.C. § 2637(a) was an unconstitutional deprivation of its
rights under the First and Fifth Amendments of the United States
Constitution.133 The government did not contest, and the court
agreed, that there was jurisdiction pursuant to § 1581(i)(4) of the
constitutional claim in count nine.134 The court characterized the
claim as “unprecedented and startling.”135 It noted that there was
either a statutory or common law requirement to pay duties in advance
of litigation dating back to 1774, and no court had so far held the
requirement to be unconstitutional.136 However, the court was sympathetic to the plaintiff and was clearly disturbed by both the percentage
increase in duties, 2,400%, and the absolute amount of the increase,
$28,000,000. The court was frustrated by the facts of the case and was
troubled by the potential consequences implicit in Customs being able
to disregard a binding ruling, to impose a crushing rate advance, and to
create an insurmountable burden in liquidated duties, making it
effectively impossible for a litigant to obtain judicial review through
§ 1581(a) jurisdiction.137 Despite the acknowledged harshness and
unfairness, the court was ultimately unwilling to hold the prepayment
requirement unconstitutional.138 The court upheld the fundamental
principles of sovereign immunity and yielded to the prerogative of the
sovereign to define the terms of its consent to be sued.139 It dismissed
count nine pursuant to USCIT Rule 12(b)(5) on the basis that it failed
to state a claim upon which relief can be granted.140
Shortly after the decision in International Customs Products, the CIT
was again requested to accept jurisdiction over a denied protest without
131. Int’l Custom Prods., 931 F. Supp. 2d at 1342.
132. Id.
133. Id. at 1341.
134. Id. at 1341-42.
135. Id. at 1343.
136. Id.
137. The court’s frustration is even more apparent in its opinion on the motion for
reconsideration. Id. at 1344.
138. Id.
139. Id. at 1344-45.
140. Id. at 1346.
52
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
requiring the litigant to comply with the pre-payment requirement
of 28 U.S.C. § 2637(a). In E&S Express Inc. v. United States,141 the plaintiff protested the assessment of supplemental antidumping duties on its
merchandise. While the protest was pending, Customs made a demand
on the importer’s surety for payment that was not satisfied. After
the protest was denied, the plaintiff filed a summons to commence the
action in the CIT but failed to pay the contested duties. After the
summons was filed, Customs issued a second demand on the surety for
payment. No sums were ever tendered by the surety. The amount of
the surety bond would have been adequate to cover the supplemental
duties assessed against six of the nine entries.142
The plaintiff sought jurisdiction under §§ 1581(a) and 1581(i)(4)
but abandoned the latter claim after the government filed a motion to
dismiss. The jurisdictional claim under § 1581(a) was tenuous at best.
The plaintiff attempted to rely on a narrow exception carved out by a
few cases holding that the court could equitably apportion less than
full payment of the duties due, apply the payment to some entries in full
(thereby obtaining jurisdiction over those entries), and sever and
dismiss those which were not fully paid by the apportionment.143
However, for equitable apportionment to occur, there must be at least
a partial payment of the disputed duties. In what must have been a
“Mad Hatter” moment, the plaintiff asserted an argument based upon
what should have occurred. It argued that Customs should have made an
earlier demand on surety and the surety should have paid. Unfortunately for the plaintiff, the court pointed out that the exception upon
which it relied only applied to payments made prior to the commencement of the suit.144 The court did not linger long in Wonderland. It
observed that plaintiff’s argument required two “ifs” to even get to the
consideration of equitable apportionment. The argument might hold
water if Customs had made an earlier demand on surety and if the
surety had paid. These were, in the court’s words, “several ‘ifs’ too
far.”145 The court concluded by reaffirming that it had absolutely no
discretion to waive 28 U.S.C. § 2637(a) based upon any equitable
principles.146
141. E&S Express Inc. v. United States, 938 F. Supp. 2d 1316 (Ct. Int’l Trade 2013).
142. Id. at 1319-20.
143. Technically, this is not an exception but merely an equitable apportionment. See, e.g.,
Mercado Juarez/Dos Gringos v. United States, 796 F. Supp. 531 (Ct. Int’l Trade 1992).
144. E & S Express, 938 F. Supp. 2d at 1322.
145. Id. at 1323.
146. Id.
2014]
53
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
The principle that a litigant invoking the court’s § 1581(a) jurisdiction must pay any disputed duties, charges, or other exactions as a
condition of bringing its claim is deeply embedded and firmly entrenched in both the statutory law and the court’s jurisprudence. If a
$28,000,000 injustice cannot find a remedy in the CIT, then Congress,
and not the court, will have to right the wrong.
6.
It’s Time to Leave Wonderland When “Up” Becomes “Down!”:
A Gift of Smokeless Tobacco That Refuses To Leave
The last decision by the CIT in 2013 involving a case brought
under § 1581(a) jurisdiction is probably one of the most curious, not
because of the product before the court (smokeless tobacco) or the
complexity of the classification issue, but because the United States
conceded the plaintiff was correct yet the plaintiff still sought to keep
litigation alive.
In Shah Bros. Inc. v. United States,147 the importer challenged the
tariff classification of a smokeless tobacco product from India called
“gutkha.” Customs classified the product as “snuff” in HTSUS
2403.99.2040. In its protest, the importer claimed it was classified as
“chewing tobacco” under HTSUS 2403.99.2030.148 By the time the case
reached the CIT, the United States reversed its position and agreed
with the importer as to the classification. It filed a motion for entry of
confession of judgment that the plaintiff opposed. The plaintiff, like
Alice who flaunted the King of Hearts’ Rule 42 (“all persons more than
a mile high to leave the court”149), refused to leave! The plaintiff feared
Customs would employ the same “flawed” process it used in the case at
bar to arrive at an incorrect tariff classification on future importations
of the same merchandise. Part of the relief sought was to implement a
particular test on gutkha to ensure it was properly classified,150 but
because the government confessed judgment, the court found there
was no longer a justiciable case or controversy before the court.
The government’s concession ended the concrete controversy
surrounding the correct tariff classification of the gutkha and provided the plaintiff with complete relief through a refund of all disputed duties, taxes, and other charges paid, plus interest.151 In the
147.
148.
149.
150.
151.
54
Shah Bros. Inc. v. United States, 953 F. Supp. 2d 1328 (Ct. Int’l Trade 2013).
Id. at 1330.
CARROLL, supra note 1, at 150.
Pl.’s Opp’n to Def.’s Mot. for Entry of Confess. of J. in Pl.’s Favor at 2, ECF No. 89.
See Shah Bros., 953 F. Supp. 2d at 1331-32.
[Vol. 46
28 U.S.C. § 1581(a) CLASSIFICATION DETERMINATIONS
event another controversy arises involving the same merchandise, the
plaintiff would be free to bring its case before the court to obtain all
redress to which it is entitled.152
This illustrates a rather unique aspect of litigation under the CIT’s
§ 1581(a) jurisdiction. Issue preclusion does not operate to prevent
an importer from re-litigating a classification case on a different import transaction involving the same merchandise.153 However, to avoid
endless re-litigation of the same issues, the doctrine of stare decisis does
apply, subject to the caveat that stare decisis does not prevent a court
from reexamining a clearly erroneous legal decision.154 However, it
would then seem that the plaintiff in Shah Bros. would never be able to
have its claim of improper testing redressed through invocation of the
CIT’s § 1581(a) jurisdiction until the United States actively disputes the
classification of supposedly identical merchandise. Perhaps only then,
when there is a justiciable controversy, would it get its day in court.
Whether it could ever invoke jurisdiction under another subsection of
§ 1581 without an active classification dispute remains to be seen.
IV.
CONCLUSION: NEXT TIME THROUGH THE LOOKING GLASS?
The laws of Wonderland, embodied in the HTSUS General Rules of
Interpretation and the Additional U.S. Rules of Interpretation may
seem strange and unusual to the uninitiated. However, their reasoned
application guides the court to the correct classification of the articles
presented for consideration.
A diversity of products reached the CIT for decision in 2013. The
court examined the tariff classifications of a metal fastener that was
both a wood screw and a self-tapping screw, glass containers that could
be used to transport goods or merely to decorate the home, athletic
articles that could either be garments or sports articles, and complex
manufacturing equipment that “prints” the goods it is making. Regardless of how simple or how complex the article itself, the CIT follows
the same process for adjudication. It first defines the meaning and
scope of a tariff term as a matter of law and subsequently defines the
nature of the product as a question of fact. The court relies heavily on
152. The court noted that “[E]ach new entry is a new classification cause of action, giving the
importer a new day in court.” Id. at 1331 n.11 (quoting Avenues in Leather, Inc. v. United States,
317 F.3d 1399, 1403 (Fed Cir. 2003)); id. at 1332. Indeed, collateral estoppel does not apply to
classification cases. See, e.g., DaimlerChrysler Corp. v. United States, 442 F.3d 1313, 1321 (Fed. Cir.
2006).
153. Avenues in Leather, 317 F.3d at 1403.
154. Schott Optical Glass, Inc. v. United States, 750 F.2d 62, 64-65 (Fed. Cir. 1984).
2014]
55
GEORGETOWN JOURNAL OF INTERNATIONAL LAW
the GRIs and the ARIs, attempting always to fully decide the issue using
GRI 1.
The court also revisited and reaffirmed the long-standing principle
embedded in its § 1581(a) jurisdiction that all contested duties, charges,
and exactions must be paid as a condition of obtaining jurisdiction.
The CIT recognizes that it is a court of limited jurisdiction and can
only accept a case when the conditions of consent to be sued set by the
sovereign have been satisfied.
Finally, the CIT can only entertain a justiciable controversy. In a
case brought under § 1581(a), when the government agrees to classify
the goods as requested and refund any excess duties paid, there simply
remains nothing more to litigate.
Perhaps Alice’s next journey to Wonderland will be through the
looking glass?
56
[Vol. 46