Value Vinyls, Inc. v. United States , 31 Ct. Int'l Trade 173 ( 2007 )

Slip Op. 07 - 17
UNITED STATES COURT OF INTERNATIONAL TRADE
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VALUE VINYLS, INC., :
Plaintiff, :
v. : Court No. 01-00896
UNITED STATES, :
Defendant. :
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Opinion
[Upon cross-motions as to classification
of certain plastic-coated textiles,
summary judgment for the plaintiff.]
Decided: January 30, 2007
Givens & Johnston PLLC (Robert T. Givens and Rayburn Berry)
for the plaintiff.
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 (James A. Curley); and Office of Assistant Chief Counsel,
International Trade Litigation, U.S. Bureau of Customs and Border
Protection (Beth C. Brotman), of counsel, for the defendant.
AQUILINO, Senior Judge: Courts are to interpret the
language of statutes so as to give effect to the intent of
Congress. E.g., Minor v. Mechanics Bank of Alexandria, 26 U.S. 46,
64 (1828); United States v. American Trucking Ass'ns, Inc., 310
Court No. 01-00896 Page 2
U.S. 534, 542 (1940). Sometimes they yield to the legislative
intent even when "it appears that a literal interpretation of the
statute involved would produce a result contrary to the apparent
legislative intent". Procter & Gamble Mfg. Co. v. United States,
19 CCPA 415, 419, T.D. 45578 (1932).
. . . All rules of construction must yield if the
legislative intent is shown to be counter to the apparent
intent indicated by such rule. The master rule in the
construction of statutes is to so interpret them as to
carry out the legislative intent.
Brecht Corp. v. United States, 25 CCPA 9, 13, T.D. 48977
(1937)(citations omitted), quoting from United States v. Clay Adams
Co., 20 CCPA 285, 288, T.D. 46078 (1932).
The "starting point for interpreting a statute is the
language of the statute itself." Consumer Prod. Safety Comm'n v.
GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). And "where Congress
has clearly stated its intent in the language of a statute, a court
should not inquire further into the meaning of the statute."
Pillowtex Corp. v. United States, 171 F.3d 1370, 1373 (Fed.Cir.
1999). However, when that is not the case, courts resort to
legislative history for assistance in interpreting the meaning.
See, e.g., Cherokee Nation of Oklahoma v. Leavitt, 543 U.S. 631(2005).
Court No. 01-00896 Page 3
I
The parties to this action, which was commenced pursuant
to 28 U.S.C. §1581(a) and has been designated a test case pursuant
to USCIT Rule 84(b), have called these principles of the law into
account via cross-motions for summary judgment as to the correct
classification of imported goods that are described in plaintiff's
complaint, paragraph 1, as
in sheet form of woven textile fabric, of a single
polyester man-made fiber, coated or laminated such that
it is completely encased or covered on both sides with
compact polyvinyl chloride (PVC) non-cellular plastic
(vinyl coated or laminated articles of such textile
composition are commonly known as "supported" vinyls).
The complaint contests their classification by the U.S. Customs
Service, as it was still known during the times of their entry,
under subheading 3921.90.1950 of the Harmonized Tariff Schedule of
the United States ("HTSUS").
Protests of this approach (in lieu of plaintiff's
preferred classification under subheading 3921.90.11) precipitated
Service denial thereof per ruling HQ 963747 (June 25, 2001)1, which
concluded that the decision in Semperit Indus. Prods., Inc. v.
United States, 18 CIT 578, 855 F.Supp. 1292 (1994),
1
Plaintiff's Memorandum of Law, Exhibit 1 and Defendant's
Brief, Exhibit A.
Court No. 01-00896 Page 4
is applicable to the subject products. The court
interpreted the statement "predominate by weight over any
other single textile fiber" in regard to the HTSUS. The
court determined that "the term 'predominate' . . .
clearly refers to man-made fibers which, in terms of
weight and relative to any other single textile fiber,
constitute the stronger, main, or leading element, or
hold advantage in numbers or quantity." . . . 18 CIT at
585; 855 F.Supp. at 1298. Thus, pursuant to Semperit, in
order for subheading 3921.90.11, HTSUS, to be applicable,
the subject merchandise would have to be comprised of
man-made fiber and another textile fiber. Because the
products at issue are made up of only man-made fiber,
subheading 3921.90.11, HTSUS, is not the correct tariff
provision.2
The court had rendered its decision after determining that there
was no clear legislative intent.
HQ 963747 refers, among other things, to findings by
Customs that plaintiff's merchandise weighed less than 1.492
kilograms per square meter, was 82 percent plastic and 18 percent
textile by weight, and consisted of "tarpaulin type material"3 used
in making truck covers and similar barrier coverings, dividers,
upholstery and signs and barriers.
A
There is no controversy over these findings of fact — or
over any other fact material to resolution of this case save the
2
Id. at 5.
3
Id. at 1.
Court No. 01-00896 Page 5
genesis and meaning of the competing tariff provisions, which, of
course, are fundamentally issues of law. Compare Plaintiff's
Statement of Material Facts as to Which There are No Genuine Issues
to be Tried with Defendant's Response to Plaintiff's Statement of
Material Facts and Defendant's Statement of Material Facts Not in
Dispute. In short, this matter is ripe for adjudication via
summary judgment. Cf. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 247-49 (1986).
The parties agree that plaintiff's entries at issue
landed under HTSUS heading 3921 ("Other plates, sheets, film, foil
and strip, of plastics"). Their dispute focuses on subheading
.90.11 versus .90.19 which were set forth in the HTSUS (1998), for
example, as follows:
3921.90 Other:
Combined with textile materials and
weighing not more than 1.492 kg/m2:
Products with textile components
in which man-made fibers predomi-
nate by weight over any other
single textile fiber:
3921.90.11 Over 70 percent by weight
of plastics................ m2... 4.2%
kg
3921.90.15 Other ................ m2... 6.9%
kg
3921.90.19 Other................................. 5.3%
Plaintiff's position herein, however, draws upon the Tariff
Schedules of the United States ("TSUS") that preceded the adoption
Court No. 01-00896 Page 6
of the HTSUS, in particular item 355.81 located in Schedule 3
("Textile Fibers and Textile Products"), Part 4 ("Fabrics of
Special Construction or For Special Purposes . . .") (1988), to
wit:
Woven or knit fabrics (except pile or tufted fabrics),
of textile materials, coated or filled with rubber
or plastics material, or laminated with sheet rubber
or plastics:
* * *
Of man-made fibers:
355.81 Over 70 percent by weight of rubber or
plastics........................ Sq. yd. 4.2% ad val.
355.82 Other................................... 8.5% ad val.
* * *
355.85 Other................................ Sq. yd. 5.3% ad val.
See Plaintiff's Brief in Reply, Exhibit B. The court does not read
the parties' cross-motion papers as in disagreement that this TSUS
item is the predecessor of HTSUS subheading 3921.90.11, supra.
See, e.g., Plaintiff's Memorandum of Law, Exhibit 2, second page
(Conversion of the Tariff Schedules of the Unites States Annotated
Into the Nomenclature Structure of the Harmonized System, Annex
III: Cross-Reference From Converted Tariff Schedule to Present
TSUSA, p. 288, USITC Pub. 1400 (June 1983)). And the court could
conclude that, were TSUS item 355.81 still in effect4, plaintiff's
merchandise would be correctly classifiable thereunder. See
4
TSUS General Headnote and Rule of Interpretation 9(f)(i)
(1988) defined "of" when used between the description of an article
and a material to mean the "article is wholly or in chief value of
the named material".
Court No. 01-00896 Page 7
Spradling Int'l, Inc. v. United States, 17 CIT 40, 811 F.Supp. 687(1993).
To be sure, such a conclusion would not directly govern
this case, although the plaintiff points back to that item in
vigorously pressing that "there is in fact very considerable
legislative history demonstrating that Congress did intend [HTSUS
3921.90.11] to include plastic coated textiles consisting of a
single man-made fiber." Motion for Summary Judgment, p. 3.
(boldface and underscoring deleted). That history includes a
presidential request that the U.S. International Trade Commission
("USITC"), in preparing for the conversion of the TSUS into HTSUS,
"avoid, to the extent practicable and consonant with sound
nomenclature principles, changes in rates of duty on individual
products." USITC, Institution of Investigation for the Conversion
of the Tariff Schedules of the United States into the Nomenclature
Structure of the Harmonized System, 46 Fed.Reg. 47,897 (Sept. 30,
1981). And, at the time of adoption of the HTSUS, a congressional
report stated that the "conferees believe that the HTS fairly
reflects existing tariff and quota treatment and that the
conversion is essentially revenue-neutral." H.R. Rep. No. 100-576,
p. 548 (1988). See generally Omnibus Trade and Competitiveness Act
of 1988, Pub. L. No. 100-418, 102 Stat. 1107.
Court No. 01-00896 Page 8
Annex I to USITC Publication 1400, page 39-10 (June
1983), contained a version of subheading 3921.90.11 with the
language "in which the textile material is in chief value of man-
made fibers". Chief-value is defined by General Legal Note 8(e) to
that publication to mean when "such material exceeds in value each
other single component material of the article". That deviation
from the defined term "of", meaning "wholly or in chief value" in
TSUS 355.81, to direct use of "chief value", and in omitting the
words "wholly or" in that 1983 possible conversion, could be of
concern but for Annex III to USITC Publication 1400, which reflects
the precise intent of the conversion.
Annex III served the purpose of equating items in the
TSUS to subheadings in the new HTSUS in the planned conversion. As
evidenced by the schedules, HTSUS subheading 3921.90.11 is clearly
the successor to TSUS item 355.81 while HTSUS 3921.90.19 has its
own, multiple predecessors, ranging from items 355.15 to 355.85,
non-inclusive and, notably, excluding 355.81. Although the
differing language of the provisions could indicate change in
meaning, given the demonstrated executive and legislative intent to
leave the tariff provisions intact to the extent possible, this
court can conclude that the U.S. government intended that HTSUS
subheading 3921.90.11 apply to supported textiles of the kind now
at bar, supplanting precedent TSUS item 355.81.
Court No. 01-00896 Page 9
The Trade and Tariff Act of 1984, Pub. L. No. 98-573, 98
Stat. 2948, altered Schedule 3 of the TSUS with the intent that
such amendment provide for imports to be included in items 355.65
to 355.85 "regardless of the relative value of the contained
textile fibers, rubber, and plastics" and, additionally, restored
the classification of "many products previously classified in
schedule 3".5 Following Congress's corrective elimination of
relative value as a determinative element in the TSUS, the Office
of the U.S. Trade Representative published the Proposed United
States Tariff Schedule Annotated in the Harmonized System
Nomenclature (July 1987), replacing the 1983 language of proposed
HTSUS subheading 3921.90.11, "textile material is in chief value of
man-made fibers", with "textile components in which man-made fibers
5
S. Rep. No. 98-308, p. 6 (1983). See also H.R. Conf. Rep.
No. 98-1156, p. 5 (1984). That Senate Report states:
As a result of two recent decisions . . . [in]
United States v. Canadian Vinyl Industries, 64 CC.P.A. 97
(1977), and United States v. Elbe Products Corp., [68
CCPA 72] (1981), that ruled against the government's
position on classification, many products previously
classified in schedule 3 are now entering lower duty
rates under schedule 7. The committee is convinced that
the court erred in interpreting the law and Congressional
intent with respect to the proper classification of these
coated fabrics. The purpose of section 111 is to reverse
the court's decisions and to restore the proper
classification of these fabrics to that understood by the
Customs Service and Congress prior to the decisions.
Court No. 01-00896 Page 10
predominate by weight over any other single textile fiber", the
latter being the language now under consideration herein. On its
face, that change eliminated the previously-defined term "chief
value" and replaced it with similar albeit undefined, comparative
language with respect to weight rather than value.
B
Whatever the precise presidential and congressional
intent, defendant's position now is that "the operative language of
3921.90.11 . . . brought about a change in meaning in that
provision when compared to item 355.81, TSUS." Defendant's Brief,
p. 4. It prays for this court's deference to HQ 963747, which is
"eligible to claim respect" per United States v. Mead Corp., 533
U.S. 218, 221 (2001), to the extent of
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.
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).
In acknowledging that it is a "primary function of the
courts to determine legislative intent"6, HQ 963747 merely states
6
Supra n. 1, p. 3.
Court No. 01-00896 Page 11
that, in regard to the applicability of Semperit, supra, "[n]o
contrary legislative intent was found" and that the "protestant's
argument and exhaustive presentation of the legislative history of
tariff treatment of man-made textile articles [are] not
persua[sive]."7
As indicated, this court is not so unconvinced, but it
clearly understands defendant's adherence to and reliance on
Semperit Indus. Prods., Inc. v. United States, 18 CIT 578, 855
F.Supp. 1292 (1994). In fact, in that case the defendant had urged
the court to follow its interpretation of "[w]ith textile
components in which man-made fibers predominate by weight over any
other single textile fiber" that it
does not require the presence of more than one "class of"
textile fiber in order for man-made fibers "to
predominate by weight over any other single textile
fiber."
Defendant maintains "the common meaning of the term
'predominates' does not require the physical presence of
another entity for comparison." . . . In addition,
defendant asserts "[e]ven if a comparison is indicated by
definition or use [of the term 'predominate,'] neither
the definitions or use of the term in the HTSUS require
the actual physical presence of another entity (e.g.,
textile fibers other than man-made fibers), rather than
the complete absence of any other entity, for
comparison." . . . Defendant also claims the use of the
7
Id. at 4.
Court No. 01-00896 Page 12
term "predominate" in subheading 4010.91.15 "merely
requires that man-made fibers be superior in weight * * *
or dominate over 'any other single textile fiber.'" . . .
In sum, according to defendant, "[t]he fact that the
statute provides instructions for situations where other
textile fibers may be present with man-made fibers does
not mean that articles in which only man-made fibers are
present are precluded from classification under HTSUS
subheading 4010.91.15."
18 CIT at 582-83, 855 F.Supp. at 1296 (emphasis in original;
citations omitted). That language was found in a different chapter
of the HTSUS, 40, and under a different heading, 4010, encompassing
much different merchandise than that at bar, namely, industrial
conveyor belts produced from a combination of vulcanized rubber and
textile material. Be those differences as they were, the plaintiff
in Semperit, much like Value Vinyls, Inc. now, asserted that
Customs' classification d[id] not accord with cross-
reference tables found in the ITC Report which correlate
former TSUS items with HTSUS subheadings. . . .
18 CIT at 582, 855 F.Supp. at 1296 (citations omitted). The court
concurred.
The court disagreed not only with the defendant's
interpretation of the meaning of "predominate"8, it held a
differing view9 of the USITC's cross-reference tables:
8
See 18 CIT at 585-86, 855 F.Supp. at 1298-99.
9
Cf. 18 CIT at 583-84, 855 F.Supp. at 1300.
Court No. 01-00896 Page 13
The ITC Report cited by plaintiff further supports
the Court's conclusions in this case. As noted above,
the Report correlates the TSUS provision under which
Customs formerly classified the belts, item 358.16, to
HTSUS subheading 4010.91.19, the provision upon which
plaintiff relies, and to two other subheadings that are
immaterial to this action. . . . Notably, the Report
does not pair the former TSUS provision with the HTSUS
subheading upon which defendant relies, 4010.91.15.
Similarly, the Report matches defendant's claimed
provision, subheading 4010.91.15, to item 358.14, TSUS,
a provision that Customs did not apply to the subject
merchandise. . . . Although the ITC Report is not
entitled to "great weight," it is nevertheless "clearly
relevant to the Court's inquiry" as it provides some
indication of the intended relationship between the
former provisions under the TSUS and the new provisions
under the HTSUS. Beloit Corp. v. United States, 18 CIT
67, 81, 843 F.Supp. 1489, 1499, 1500 (1994). As a
result, the Court finds the ITC Report supplies
additional support for the conclusion that Customs
incorrectly classified the subject merchandise under
subheading 4010.91.15 rather than under subheading
4010.91.19.
18 CIT at 588, 855 F.Supp. at 1300 (USITC citations omitted). Cf.
Anhydrides & Chemicals, Inc. v. United States, 130 F.3d 1481, 1483-
84 (Fed.Cir. 1997).
Given the legislative history, including the expectation
that the conversion from TSUS to HTSUS be revenue neutral, this
court need not have inquired further into the meaning of the
statute. Cf. Pillowtex Corp. v. United States, supra.
Court No. 01-00896 Page 14
II
In view of the foregoing, plaintiff's motion for summary
judgment should be granted and defendant's cross-motion denied.
Final judgment will enter accordingly.
Decided: New York, New York
January 30, 2007
/s/Thomas J. Aquilino, Jr.
Senior Judge
J U D G M E N T
UNITED STATES COURT OF INTERNATIONAL TRADE
Thomas J. Aquilino, Jr., Senior Judge
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VALUE VINYLS, INC.,
:
Plaintiff,
:
v. Court No. 01-00896
UNITED STATES, :
Defendant. :
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This case having been duly submitted for decision; and
the court, after due deliberation, having rendered a decision
herein; Now therefore, in conformity with said decision, it is
ORDERED, ADJUDGED and DECREED that plaintiff’s motion
for summary judgment be, and it hereby is, granted; and it is
further hereby
ORDERED, ADJUDGED and DECREED that the merchandise that
underlies this case is correctly classifiable under subheading
3921.90.11 of the Harmonized Tariff Schedule of the United
States; and it is further hereby
ORDERED that Customs and Border Protection, United
States Department of Homeland Security, reliquidate any entries
Court No. 01-00896 Page 2
of said merchandise that have not been liquidated under the
aforesaid HTSUS subheading and refund to the plaintiff any
excess duties paid, together with interest thereon as provided
by law.
Decided: New York, New York
January 30, 2007
/s/ Thomas J. Aquilino, Jr.
Senior Judge