Heston v. United States , 23 Cust. Ct. 86 ( 1949 )

Cole, Judge:

This classification case was assigned to me, to hear or to hear and determine while on circuit, by the chief judge, pursuant to the authority vested in him under the statute governing this court, 28 U. S. C. (1948 revision) §254 (formerly section 518 of the Tariff Act of 1930, 28 U. S. C. 1946 ed. §296). My views set forth in Geo. S. Bush & Co., Inc., et al. v. United States, 22 Cust. Ct. 158, C. D. 1175, questioning the jurisdiction of the division to decide a case somewhat similar to these proceedings, continue as the minority expression from the division. Under the practice and procedure of the court and the rules applicable thereto, much litigation before the court is dependent upon my participation in a decision of the same. Adhering, however, to my views expressed in the Bush case, supra, but for the purpose of expediting the work of the court, I am preparing this opinion and participating in the decision and the judgment accompanying the same.

Plaintiff imported at the port of Philadelphia one hundred bales of wool,' described on the invoice as “Greasy New Zealand Combing Wool.” It was classified under paragraph 1102 (b) of the Tariff Act of 1930 (19 U. S. C. §1001, par. 1102 (b)), as wool in the grease, not specially provided for, and assessed with duty at 34 cents per pound of clean content.

Before liquidation, and while the merchandise was in- bonded warehouse, the importer, acting, under authority of section 562 of the Tariff Act of 1930, as amended by the Customs Administrative Act of 1938 (19 U. S. C. §1562), had the merchandise graded under customs supervision by a commercial grader, who repacked the wool, after manipulation, into 128 bags. He reported their contents as follows:

15 bags (Nos. 46001-46015)_46s or finer than 44s

112 bags (Nos. 44001-44112)_not finer than 44s

1 bag (No. 40001)_not finer than 40s

Following receipt of this report, the customs officials made further examination of the wool. Seventeen bags were ordered to the public stores where an examination by the customs examiner resulted in this report:

Respectfully returned with report that the one bag, #40001, which was marked as 40s. after manipulation, was found upon examination to contain more than 40% of fleeces grade 44s. and would be advisorily classified as wool not finer than 44s. at 170 per lb. of clean content under paragraph 1102 (a) on the original laboratory report of 74.0% oc. The balance of the bales were found to contain more than 10% of wools of 46s. grade and finer which are properly dutiable under paragraph 1102 (b). [Exhibit 3.]

In liquidation, tbe original classification was adhered to and all of tbe merchandise was assessed with duty under paragraph 1102 (b), swpra, on the basis of 74 per centum clean content.

Plaintiff urges that the finding of the commercial grader should be accepted as the proper basis for tariff classification. In doing so, the protest has been abandoned so far as it relates to the 15 bags (Nos. 46001-46015) found to contain wool finer than 44s, but pressed as to 113 bags out of the 128 that were compiled, the contention being that 112 bags (Nos. 44001-44112) should be classified as not finer than 44s, dutiable at 17 cents per pound of clean content under paragraph 1102 (a) of the Tariff Act of 1930 (19 U. S. C. § 1001, par. 1102 (a)), as modified by the trade agreements with Argentina and Uruguay, 77 Treas. Dec. 138, T. D. 50504, and 78 Treas. Dec. 169, T. D. 50786, respectively, and one bag (No. 40001) as not finer than 40s, dutiable under paragraph 1101 (a), as modified, supra, at 13 cents per pound of clean content.

The paragraphs referred to read as follows:

Par. 1102. (a) Wools, not specially provided for, not finer than 44s, in the grease or washed, * * *: Provided, That a tolerance of not more than 10 per centum of wools not finer than 46s may be allowed in each bale or package of wools imported as not finer than 44s.

Par. 1101. (a) * * * wools of whatever blood or origin not finer than 40s; * * * Provided, That a tolerance of not more than 10 per centum of wools not finer than 44s may be allowed in each bale or package of wools imported as not finer than 40s.

The issue presented is primarily one of grading, the particular question being which of the two methods, the Government's or the commercial grader’s, shall prevail. We shall determine this and furnish our reasons therefor.

Paragraph 1101 (5) of the Tariff Act of 1930 (19 U. S. C. § 1001, par. 1101 (5)) provides that “the Official Standards of the United States for grades of wool as established by the Secretary of Agriculture on June 18, 1926, pursuant to law, shall be the standards for determining the grade of wools.”

Under statutory authority, the Secretary of Agriculture was also directed to acquire and diffuse among the people of the United States “useful information relative to the standardization, grading, preparation for market, marketing, utilization, transportation, handling, and distribution of wool, and of approved methods and practices relative thereto,” and permitted promulgation of “such rules and regulations as he deems advisable for carrying out any of the provisions of this Act,” 45 Stat. 593-594, entitled “An Act to authorize the appropriation for use by tbe Secretary of Agriculture of certain funds for wool standards, and for other purposes.”

There is in evidence “Service and Regulatory Announcements No. 135,” issued September 1932, and Amendment No. 2 thereof, issued in November 1942, defendant’s collective exhibit 4, being the public notices promulgated by the Department of Agriculture under statutory authority, supra, setting forth the official United States wool standards and instructions for determining the grade of wool. Said regulations, as they relate to the present issues, are:

OFFICIAL STANDARDS OF THE UNITED STATES FOR GRADES OF WOOL AND WOOL TOP

‡ í[í ;Ji ‡ ‡

Sec. 9. Grade 46’s, or low one-fourth blood.

(a) 46’s shall be wool which in diameter of fiber is greater than the sample marked “48’s” but not greater than the sample marked “46’s” of a series of samples in the custody of the United States Department of Agriculture in the District of Columbia in a container marked “Original official standards of the United States for grades of wool.”

‡ ‡ ‡ ‡ ‡ ‡ ‡

Sec. 10. Grade 44’s, or common.

(a) 44’s shall be wool which in diameter of fiber is greater than the sample marked “46’s” but not greater than the sample marked “44’s” of a series of samples in the custody of the United States Department of Agriculture in the District of Columbia in a container marked “Original official standards of the United States for grades of wool.”

* * * * * * *

Sec. 11. Grade 40’s, or braid.

(a) 40’s shall be wool which in diameter of fiber is greater than the sample marked “44’s” but not greater than the sample marked “40’s” of a series of samples in the custody of the United States Department of Agriculture in the District of Columbia in a container marked “Original official standards of the United States for grades of wool.”

“Practical forms of the official standards of the United States for grades of wool * * * certified under the seal of the United States Department of Agriculture and under the signature of the Secretary of Agriculture, * * * will be furnished to any person requesting the same,” subject to conditions set forth in the “Service and Regulatory Announcements No. 135,” supra.

Determination of grades “40’s,” “44’s,” and “46’s” shall be by the “Inspection Method,” which “shall be by visual comparison with practical forms of the Official Standards of the United States for Grades of Wool; Provided, that for any individual fleece the grade shall be determined by comparison of the fibers of predominant fineness found therein with said practical forms of the Official Standards.” Amendment No. 2 to Service and Regulatory Announcements No. 135, supra.

All of the testimony in the record was offered by Government officials and commercial witnesses, two of whom were employees of the commercial grader whose action is claimed to be the proper basis for classification. All of tbe witnesses were called by tbe plaintiff. The writer of this opinion personally presided over most of this trial and had an opportunity, therefore, to see and observe the witnesses. Their qualifications and the testimony given are easily accepted as sufficient for us to feel that the issues herein have been clearly and ably presented by witnesses long associated with and well qualified to discuss the subject before us.

We review, first, the testimony of witnesses associated with the Department of Agriculture, who explained the origin and preparation of the official standards, and the so-called “practical forms.”

Frank Grayson testified that he has been a wool grader for approximately 50 years, and that he was employed by the Department of Agriculture from 1920 to 1942, except for a short period during 1925 and 1926 when he was associated with Texas A & M College, educating students and wool growers in the matter of preparing and marketing wool. He, as the only wool specialist connected with said Department, assisted in the preparation of the specimens selected from domestic wools submitted by wool growers and manufacturers, as type samples, and established as the United States official standards for grading wool, plaintiff’s exhibit 8.

From 1930 to 1942, he prepared sets of “practical forms,” exhibit 7, which are replicas of the official standards. An examination of said exhibit discloses that it consists of swatches of wool, varying in size and ranging in grade from 36s to 80s. They are mounted on velvet-covered boards, approximately 18 inches long and 12 inches wide. Three grades, properly identified, are displayed on a board, the entire set comprising four boards.

The “practical forms” are prepared by matching, for character (feel and softness) and fineness of fibers, the comparable domestic wool with the official standards. Grade determination is based upon the spinning properties of fibers. All fibers within a definite grade are not of the same fineness. A grade designation is indicative of fibers within a certain range. In other words, there is a spread of fineness in each particular grade. For example, grade 44s displayed on exhibit 7, supra, shows the lowest fineness permissible in the grade which would extend to the low edge of the next grade above, i. e., 46s. The difference in grade number implies a difference in the fibers of predominant fineness; the lower the grade number, the coarser and longer the fibers of predominant fineness.

The “practical forms” were prepared with knowledge they would be used largely in grading operations dealing with foreign wool. Although New Zealand wool is superior to domestic wool, both in length of staple and uniformity of character, the same types of fibers exist in the respective grades of both, so in a grading operation there would be no difference between tbe foreign and domestic. The “practical forms” are sent, upon request, to customs officials for their official use, and to other interested individuals and organizations, including wool growers and various colleges.

Every fleece of wool contains various grades and, in stapling for grade, the staples are drawn “from the side behind the shoulder” where the fibers of predominent fineness are to be found. No two wool graders will grade wool alike, and it is quite possible when a fleece “gets so close on the line of a grade,” one might call it 44s and another 46s. The distinction between the two grades of wool is found in the general characteristics, particular attention being directed to the uniformity of crimpness, length of staple, and fineness of fibers.

Referring generally to the grading of wool, the witness testified that practical experience is essential and that visual examination is important in determining the general characteristics of wool. In fact, the witness was of the definite opinion that it is not possible for customs officials to use the “practical forms” unless they have had considerable experience in grading, because “An inexperienced person hasn’t had knowledge of the actual grading itself, would have an awful difficult job and it would be an extended time in using the government standards.” The job would not be satisfactory “unless he was an expert.” Although the witness later testified that the only knowledge needed to make a physical comparison between any staple of wool and the official standards was “decent eye sight,” his testimony, read as a whole, shows that in making such statement he had' reference to an individual sample and not to a practical grading operation.

The supervisor of standardization work in the wool division of the Department of Agriculture testified that the official standards are maintained under his supervision and are kept under seal at all times. They consist of swatches of wool mounted on a black board, enclosed in a case, with a glass front. The case is approximately 5 feet long, 3 feet wide, by 3 or 4 inches thick. The swatches vary in size, depending upon the grade of wool that is represented, the finer wool being approximately 2 inches in length and the coarser extending to about 1 foot. The width in each instance is about 2 inches.

The “practical forms” are duplicates of the official standards, made up of domestic wool that is not part of the batch from which the standards are prepared. Sets of “practical forms” are arranged by a qualified wool grader who determines the grades used therein by comparing them with the official standards.

A market specialist, employed in the wool section of the livestock branch of the Department of Agriculture, offered no testimony, but merely produced copies of the regulations, collective exhibit 4, supra.

Counsel for plaintiff, in their brief, attack the use of the “practical forms” as duplicates of tbe official standards. It is argued, from testimony in tbe record, that tbe wools used in eacb display of grades do not come from tbe same source, that no attempt is made to get identical micrometer count, and tbat tbe “practical forms,” compared only by visual comparison tbrougb a sealed glass case, “contain only wbat tbe grader in tbe Department of Agriculture personally believes tbrougb bis wool grading experience is a fair representation of tbe original.” Tbe contention is answered in United States v. American Express Co. et al., 177 Fed. 735, a case wbicb arose under tbe Tariff Act of 1897. There, tbe collector bad classified certain wool in accordance witb an official sample, established pursuant to statutory authority. Tbe importer claimed tbat tbe sample, used as tbe guide by customs officials, was not truly representative of tbe wool it purported to be, but tbat it was of an inferior class. In upholding tbe validity of tbe official sample, tbe court said:

' Congress having delegated to the executive department of the government full authority to establish standards under the broad terms of the statute expressive of merino wool, immediate or remote, coupled with an express statutory declaration that such standards shall be the standards for classification, the question whether a regulation standard operates unjustly, oppressively, or disproportionately with reference to other classifications and values, and whether relief should be granted, are questions addressing themselves to that branch of the government to which the authority was fully delegated, rather than to the courts.

Tbe “practical forms” of wool were used not only by the customs officials, but also were referred to by tbe commercial grader, in examining tbe wool under consideration. They are issued under tbe seal and signature of tbe official designated by statute and are distributed ■under regulations promulgated pursuant to law. Until tbe Secretary of Agriculture declares otherwise, tbe “practical forms” have tbe same value in grading wool as tbe official standards, and they are so considered herein.

Tbe assistant chief of tariff classification in tbe Bureau of Customs, whose duties include consideration of matters relating to tbe tariff classification of wool and who was instrumental in having tbe “practical forms” distributed to customs officials, produced two Treasury Department circulars that' were sent to all customs officers, for their guidance in tbe examination of wool for grade, Bureau of Customs Circular Letter No. 2451, dated April 25, 1944, plaintiff’s exhibit 5, and Customs Information Exchange circular 347/44 of July 17, 1944, plaintiff’s exhibit 6. Both communications carried instructions to tbe effect tbat in grading wool tbe fleece shall be regarded as tbe unit, and tbat grade determination shall be based on tbe bulle or predominant fineness of tbe fibers in tbe fleece. A paragraph from exhibit 6, supra, is quoted:

The term “the bulk or predominant fineness” in the light of the facts outlined, can only refer to the predominant combination of fibers, according to the proportion within each diameter range, contained in the major part of the fleece, in most instances, in the whole fleece. In those instances where a fleece contains two or more grades of wool in such quantities, or of such character, as to preclude the blending of the fleece into one standard grade, as in the case of some cross-breds, the grade of the larger part of the fleece will control the grade of the fleece.

Following receipt of exhibits 5 and 6, supra,' counsel for plaintiff made the following concession:

At this point, I would like to state and go on record as making no claim that certain regulations currently in force by the Bureau of Customs are unwarranted. In other words, we concede the validity of the regulations insofar as they relate to the method for determining the percentage of a different grade of wool in a bale of wool in the fleece. In other words, the regulations currently in effect, and I will attempt to establish this by my witness, the regulations currently in effect, hold that if one has a balé of grade 44 fleeces, and there is contained in that bale less than ten percent of grade 46 fleeces, the whole bale should be classified as 44’s. Now, in that respect, we do not challenge in any way the existing customs regulations and we concede that those are quite appropriate and proper.

Official examination of the shipment in question was made by a customs examiner, Philip W. Kerley, whose 12 years’ experience in grading wool has been confined to his capacity as a customs official, he never having graded wool as a commercial proposition. The following comes from his testimony.

New Zealand wool, the product under consideration, is rather loosely packed in bales weighing approximately 300 pounds, each bale containing between 55 and 60 fleeces. The grades of wool in different fleeces are never the same. Coarser fibers appear at the britch or lower end and on the belly. Finer fibers are through the center and on the shoulders and neck. Determination of the grade of a fleece is based upon the predominant fineness of the fibers therein.

Seven bales of the importation were sent to the appraiser’s stores where the original official examination, prior to the manipulation by the commercial grader, was made. To get the best light, which is important for examining wool, the bales were lined up along the windows, where the “opener and packer cuts three sides of the top of the bales so he can leave the fleeces out and the fleeces are laid on the work benches.’’ All the fleeces in each of the bales were examined. Staples of wool were drawn from all parts of the fleece, i. e., “shoulders, britch, belly, sides, and down the back — all around.” Each staple was laid beside “the official standards just the same as the official standards lay in the box keeping it the same where the tip is in the box down to the flesh side.” The center portion of the staple was accepted as giving the average diameter of the staple, with about 1}( inches from each end being disregarded in the grade determination. He explained his procedure as follows:

* * * So that we get a representative staple from all parts of the fleece — take 15 staples, maybe 20 — no certain amount you draw. You figure when you got a representative number of staples which we lay besides the boards, for the official standards for grades of wool as furnished by the Department of Agriculture. In this case, the wool was entered as grade 44’s. If we lay a staple besides a 44, and we find it is not better than 44, we throw it in the 44’s. If we find it is better than the 44, then we put it in the 46’s. If, when we are finished, if we have 8 staples on the 46’s and 4 on the 44 side, we consider a predominant finding of that fleece is 46’s, so we go on and continue with each fleece. If, when we get finished we have more than 10 percent of the fleeces on the 46 pile, we consider the bale as a unit 46.

The conclusion reached in grading a fleece is based entirely upon a visual comparison of the extracted staples with the official standards, without any technical knowledge of fiber construction. The procedure followed in this case is the same as that always pursued throughout the witness’ experience.

The manipulation by the commercial grader of the wool under consideration was done in a bonded warehouse, under customs supervision, and in accordance with prevailing regulations. The witness, however, was not present during any part of the grading operation. Following receipt of the commercial grader’s report, 17 bags were ordered to the public stores and examined by the same method as that followed with the 7 bales in the original examination, except that every fleece in all the bags was not graded. When it was found that a bag exceeded the 10 per centum tolerance allowed for grade 44s classification, no further examination was made. It will be observed that of the 17 bags, the grade determination of 1 bag was different from that found on the original examination, as stated in the examiner’s report (exhibit 3), sufra.

The customs employee, John E. Sullivan, who assisted in the official grading operations of the wool in question, testified that he had approximately 1% years’ experience in examining wool, all of it in his official capacity. Government counsel admitted “He is not a grader; he just grades,” and conceded “he is no expert.” The witness stated that he selected staples from the fleeces and put them alongside the standards, and 'compared them, without disregarding any part of the staples, but concentrating on the central portion as most representative. The explanation reveals some inconsistency in the procedure followed by the two customs officials; one gave no consideration to approximately inches from each end of the extracted staple, and the other disregarded no part of them.

The witness was present part of the time while the commercial grader made his examination. It was “either the first or the second day” of the grading operation. His purpose was “to show them how the fleeces would be graded in the customhouse here by the Government and to see if they were making any real mistakes so we could get them set on the real path.” He had with him a set of the “practical forms” and noticed that the commercial grader also had a set. As the fleeces were graded, they were thrown into three piles, representative of grades 40s, 44s, and 46s.

No records were kept by the customs officials to show the number of fleeces contained in each bale or bag, the amount actually examined, or any other details concerning their official grading operations. The examination was considered sufficient when the contents of a unit (bale or bag) exceeded the 10 per centum allowance,which would be “Nine or ten in a bale, at least.”

The commercial grader who actually graded the wool in question testified to 27 years’ experience as a wool grader and sorter, having started as an apprentice boy and worked continuously in the wool trade. Wool grading is largely a matter of practical experience through which -“the eye becomes accustomed to the different grades you have to take out.” For an accurate grade determination, wool should be graded from the tip, or the weather side, which always contains the lower grade of a fleece. The procedure was followed in examining the present merchandise and if it was possible to determine at a glance that the grade was finer than either 44s or 40s, no stapling was done. If, however, there was doubt about its grade, the fleece was opened and staples withdrawn, usually from the sides and back where the fibers of predominant fineness are to be found. The staples were examined throughout “from the tip to the end,” and the conclusion formed the basis for determining the bulk of the fleeces. Each of the fleeces contained different grades. Hence, classification of a fleece does not mean that every fiber therein is of the grade within which the whole is graded, but rather that the fibers of predominant fineness are of the designated category.

In the particular job under consideration, which extended as has been said, over a period of 5 or 6 days, a customs official was present during the first day of the grading operation. “He came in at that time to examine some of the fleeces. There was not much said about it. He didn’t tell me what I had to do when he went there so I went on with my job and finished the job.” When the work was begun, and in the presence of the customs official, comparison was made between several of the imported fleeces and the “practical forms,” “so we were sure we started off right.” Thereafter, the witness relied on his mental picture of the various grades, except for an occasional reference to them “toward the end of the day or beginning of the day, I would take a look at them to refresh my mind a little bit.”

• The New Zealand wool in question is a low grade, cross-bred wool. It was not tightly packed so it was possible to get an idea about the grade as the fleeces were thrown upon the grading board, which was placed against the window to get the benefit of plenty of natural light. As the wool was bundled or rolled, the flesh side or better grade of wool was exposed. It was rolled in different ways. Some fleeces started with the britch, or coarsest end, and were rolled to the neck, where the finest fibers are located. Others were rolled from the neck down and a few were rolled on tbe sides. In some instances, it was necessary to give tbe fleece a couple of turns to get an over-all picture of it. Examination was made of every fleece in all of tbe 100 imported bales, eacb one consisting of approximately 35 fleeces, individually weighing 8 or 9 pounds. Tbe result, set forth in plaintiff’s exhibit 1, shows 112 bags to be 44s, 15 bags to be 46s, and 1 bag to be 40s.

Tbe supervisor of tbe commercial grading of this wool testified that tbe method followed is tbe same as that consistently used throughout bis 50 years’ experience as a wool sorter and grader. Tbe important phase of bis testimony is tbe emphasis on tbe fact that fibers of predominant fineness control grade classification of wool, and that tbe weather side is determinative of tbe grade.

Two additional commercial witnesses offered testimony that was directed entirely to a general practice for grading wool. Neither of them bad anything to do with any of tbe grading operations of tbe present merchandise.

Tbe record has been reviewed in considerable detail because it has developed tbe question before us to be purely one of fact.

Government counsel, in their brief, stress tbe failure of tbe commercial grader to use tbe official standards for eacb and every fleece be examined, and argue that tbe work be did was “at best * * * a poor job.” Tbe record, however, does not support such a characterization.

It is clear from tbe proof adduced herein that tbe commercial grader recognized tbe official “practical forms” as guides for bis grading operation, and so employed them. When be began bis work, be used them in comparison with several of tbe imported fleeces in tbe presence of tbe customs official who was there to observe and to see that tbe Government’s method was followed. Then, too, be referred to tbe official standards throughout tbe course of bis grading operation to refresh himself on the various grades.- The sufficiency of such an examination is supported by testimony of the commercial grader, as well as by tbe Department of Agriculture’s expert grader, who assisted in formulating tbe official standards and was responsible for tbe preparation of tbe “practical forms.” Both witnesses emphasized tbe great importance, if not indispensability, of practical experience, particularly in ascertaining tbe fibers of predominant fineness, and tbe value of tbe “trained eye” in grading wool. Both factors are most essential in making grade determination.

Tbe weight of tbe evidence herein is favorable to plaintiff’s contention and establishes that tbe grades of wool included in tbe importation in question are those as claimed. Accordingly, tbe different grades, and their proportionate amounts, as found by tbe commercial grader are beld to prevail for tariff purposes. We therefore hold that bag No. 40001 contains wool not finer than 40s, classifiable under paragraph 1101 (a), as modified, sufra, and dutiable at 13 cents per pound of clean content, and that bags 44001 to 44112, inclusive, contain wool not finer than 44s, classifiable under paragraph 1102 (a), as modified, supra, dutiable at 17 cents per pound of clean content; all of said merchandise to be assessed on a basis of 74 per centum clean content, as found by the collector and conceded to be correct by plaintiff.

The protest, having been abandoned as it relates to the wool contained in bags 46001 to 46015, inclusive, is dismissed so far as it concerns that merchandise.

To the extent indicated, the protest is sustained and judgment will be rendered accordingly.