International Custom Products, Inc. v. United States

NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2006-1531
INTERNATIONAL CUSTOM PRODUCTS, INC.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
Simeon M. Kriesberg, Mayer, Brown, Rowe & Maw LLP, of Washington, DC, for
plaintiff-appellant. With him on the brief were Andrew A. Nicely and Priti Seksaria
Agrawal.
Edward F. Kenny, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of New York, New York, for defendant-appellee.
With him on the brief were Peter D. Keisler, Assistant Attorney General and David M.
Cohen, Director, of Washington, DC, Also on the brief was Barbara S. Williams,
Attorney in charge, International Trade Field Office, United States Department of
Justice, of New York, New York. Of counsel on the brief was Yelena Slepak, Attorney,
Office of Assistant Chief Counsel, United States Customs and Border Protection, of
New York, New York.
Appealed from: United States Court of International Trade
Judge Richard K. Eaton
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2006-1531
INTERNATIONAL CUSTOM PRODUCTS, INC.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
DECIDED: January 25, 2007
__________________________
Before MICHEL, Chief Judge, DYK and PROST, Circuit Judges.
MICHEL, Chief Judge.
International Custom Products, Inc. (“ICP”) appeals from a final judgment of the
Court of International Trade (“CIT”) dismissing Count I of its complaint under 28 U.S.C.
§ 1581(i) for lack of subject matter jurisdiction. Int’l Custom Prods., Inc. v. United
States, No. 05-00615 (Ct. Int’l Trade July 18, 2006). In an unpublished order, the CIT
held that it did not have subject matter jurisdiction over Count I of ICP’s complaint
because the case should have been brought under 28 U.S.C. § 1581(a) instead. Int’l
Custom Prods., Inc. v. United States, No. 05-00615 (Ct. Int’l Trade June 20, 2006)
(“Order”). Because the appellant’s arguments in support of reversal of the CIT’s
judgment are foreclosed by this court’s decision in Int’l Custom Prods., Inc. v. United
States, 467 F.3d 1324 (Fed. Cir. 2006), we affirm the CIT’s finding of no jurisdiction
under 28 U.S.C. § 1581(i).
I
ICP is an importer and distributor of a milk-fat based product that is used as an
ingredient in sauces, salad dressings, dips, and other food products. Prior to importing
its product, ICP requested that the United States Bureau of Customs and Boarder
Protection (“Customs”) issue an advance classification letter classifying ICP’s product
as a “sauce and preparation therefor” under the Harmonized Tariff Schedule of the
United States (“HTSUS”). Customs granted the request and issued an advance
classification letter in January 1999, classifying ICP’s product as a “white sauce” under
HTSUS 2103.90.9091. In April 1999, ICP commenced importation of its product.
In April 2005, Customs issued a Notice of Action notifying ICP that Customs was
reclassifying its product under HTSUS 0405.20.3000 as a “dairy spread.” On May 6,
2005, ICP commenced an action under 28 U.S.C. § 1581(i) against Customs
challenging the validity of the Notice of Action. In June 2005, the CIT found the Notice
of Action to be null and void for failure of the agency to follow the prescribed statutory
and regulatory procedures for lawfully revoking an advance ruling. Int’l Custom Prods.,
Inc. v. United States, 374 F. Supp. 2d 1311, 1326 (Ct. Int’l Trade 2005). The CIT also
held that the advance classification letter remained “in full force and effect” until
modified or revoked in compliance with Customs’ own regulations and procedures. Id.
at 1333.
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The government appealed and on October 17, 2006, this court reversed the
CIT’s holding of jurisdiction, vacated its judgment on the merits, and remanded for
dismissal of the complaint. Int’l Custom Prods., 467 F.3d at 1326. We held that the
remedy provided by 28 U.S.C. § 1581(a) was not manifestly inadequate, and
accordingly, the CIT lacked jurisdiction under § 1581(i) to determine the validity of the
Notice of Action. Id. at 1327. This court rejected ICP’s allegations of financial hardship
and lack of prospective relief under 28 U.S.C. § 1581(a), as well as ICP’s contention
that delays inherent in proceeding under § 1581(a) would render any available relief
manifestly inadequate due to its financial distress. With regard to the latter, we held that
“delays inherent in the statutory process do not render it manifestly inadequate,” and
that Congress provided for an accelerated protest disposition process which was
available to ICP for some of its entries. Id. at 1327-28. Finally, since the CIT lacked
jurisdiction, this court held that it did not have jurisdiction to reach the merits of ICP’s
complaint, i.e., whether Customs’ Notice of Action violated 19 U.S.C. § 1625(c). Id. at
1328.
In the interim between the government’s notice of appeal and this court’s
decision in International Custom Products, Customs published a Proposed Revocation
notice in the Customs Bulletin in August 2005 in accordance with the procedures set
forth in 19 U.S.C. § 1625(c). Customs subsequently issued a Revocation letter on
November 2, 2005 reclassifying ICP’s product as a “diary spread” under HTSUS
0405.20.3000. The Revocation became effective on January 2, 2006.
On November 14, 2005, ICP filed another complaint against Customs before the
CIT. In Count I of the complaint, ICP asserted that as a matter of law, the 1999
2006-1531 3
classification of its product as a “white sauce” was correct and the 2005 reclassification
thereof as a “dairy spread” was incorrect and violated U.S. tariff classification law. The
CIT ordered briefing on the issue of jurisdiction, and the government filed a motion to
dismiss all counts of the complaint for lack of subject matter jurisdiction. ICP argued
that the court had jurisdiction under 28 U.S.C. § 1581(i) to entertain Count I.
When the CIT issued its Order on June 20, 2006, it did not have the benefit of
this court’s decision in International Custom Products. Nevertheless, the CIT granted
the government’s motion to dismiss Count I of ICP’s complaint for lack of subject matter
jurisdiction under 28 U.S.C. § 1581(i). The CIT held that it did not have subject matter
jurisdiction over Count I of ICP’s complaint because ICP failed to exhaust its protest
administrative remedies under 15 U.S.C. §§ 1514 and 1515 prior to filing with the CIT.
Order at 10. The CIT rejected ICP’s arguments that following administrative protest
procedures and bringing an action against the government under 28 U.S.C. § 1581(a)
would result in an unacceptable delay. Order at 11-12. In doing so, the CIT stated that
while those procedures may be “time consuming and vexing, they are nonetheless
plaintiff’s route to relief.” Order at 11.
ICP voluntarily dismissed the remaining counts of its complaint pursuant to Fed.
R. Civ. P. 41(a)(1), and final judgment was entered. This appeal followed. This court
has jurisdiction under 28 U.S.C. § 1295(a)(5).
II
As in this court’s earlier opinion in International Custom Products, the sole issue
on appeal is whether the CIT possesses subject matter jurisdiction—here over Count I
of ICP’s complaint—under 28 U.S.C. § 1581(i). We review jurisdictional determinations
2006-1531 4
of the Court of International Trade without deference. DaimlerChrysler Corp. v. United
States, 442 F.3d 1313, 1316 (Fed. Cir. 2006). Jurisdiction under 28 U.S.C. § 1581(i)
may not be invoked unless jurisdiction under another subsection of § 1581 is either
unavailable or manifestly inadequate. Int’l Custom Prods., 467 F.3d at 1327 (citing
Norcal/Crosetti Foods, Inc. v. United States, 963 F.2d 356, 359 (Fed. Cir. 1992)).
ICP presents five arguments as to why § 1581(a) jurisdiction is manifestly
inadequate: (1) § 1581(a) jurisdiction “fundamentally alters the legal framework of the
adjudication” because it requires that the court determine the correct classification of
ICP’s product de novo; (2) § 1581(a) jurisdiction is incapable of holding Customs
accountable for its failure to comply with the notice and comment process mandated by
19 U.S.C. § 1625(c); (3) § 1581(a) would lead to a more prolonged adjudication which is
incompatible with ICP’s “need for urgent relief;” (4) § 1581(a) cannot assure ICP of
prospective relief so that it may resume its business; and (5) § 1581(a) does not bind
Customs to classify future entries in accordance with the court’s classification
determination.
We reject ICP’s latter three arguments for the same reasons stated in this court’s
earlier opinion. See Int’l Custom Prods., 467 F.3d at 1327-28. We will now address
ICP’s remaining assertions.
First, ICP contends that § 1581(a) jurisdiction is manifestly inadequate because it
requires a de novo classification determination by the CIT, and does not allow for review
based on the administrative record. Specifically, ICP alleges that it is not seeking a de
novo tariff classification of its product, but rather is seeking judicial review of Customs’
decision to revoke its advance classification ruling. The fatal flaw in ICP’s argument is
2006-1531 5
that it cannot by Count I seek judicial review of Customs’ decision to revoke its advance
classification ruling because it has failed to follow the express statutory scheme for
doing so. That is, ICP failed to file a protest of Custom’s actions and avail itself of
jurisdiction under § 1581(a). As this court held in its earlier opinion, the protest
procedure is available to ICP such that § 1581(a) is not manifestly inadequate. Int’l
Custom Prods., 467 F.3d at 1327. ICP cannot avoid the protest procedure by artfully
recharacterizing the issue on appeal.
Second, ICP argues that § 1581(a) jurisdiction is manifestly inadequate because,
by failing to hold Customs accountable for its administrative determinations, the integrity
of 19 U.S.C. § 1625(c) is undermined and ICP’s legal rights obtained by virtue of
Customs’ advance ruling are effectively nullified. ICP argues that, because CIT
classification determinations are not limited to the agency record, Customs will be
allowed to introduce new evidence justifying its revocation decision during a de novo
trial held by the CIT. Under this scenario, ICP argues, § 1625(c) would have no
purpose because Customs could simply revoke an advance classification ruling at will
and avoid the consequences of its unlawful conduct by presenting new evidence to
support its decision during the ensuing trial under Section 1581(a).
ICP’s arguments with regard to 19 U.S.C. § 1625(c) are effectively rebutted by
the government, which correctly points out that § 1581(a) is an adequate remedy, and
that, even if it were not, jurisdiction under § 1581(h) would be the only remedy available
to challenge the validity of Customs’ Notice of Action without requiring prior importation
2006-1531 6
of goods.∗ The government also points out that Count I is not related to violations of 19
U.S.C. § 1625(c), but challenges the classification of ICP’s goods as a matter of law.
Finally, ICP contends that the fact that there were no prior entries of its product
distinguishes the instant appeal from our earlier decision in International Custom
Products. Specifically, ICP argues that the protest and review scheme contemplated
under § 1581(a) is unavailable because it did not import any product prior to filing this
action and has not imported any product since. However, ICP’s decision to halt
importation of its product is its own doing. The government indicated that it was willing
to allow ICP to import a test shipment, which would be liquidated on the same day. ICP
could have filed a protest on that day, which Customs was willing to deny on the same
day. ICP cannot manufacture jurisdiction under § 1581(i) by willfully avoiding the
prerequisites of § 1581(a).
Therefore, for the reasons set forth above, the final judgment of the Court of
International Trade dismissing Count I of ICP’s complaint for lack of subject matter
jurisdiction is affirmed.
∗
Under 28 U.S.C. § 1581(h), the CIT has exclusive jurisdiction over an
action seeking a pre-importation review of a classification ruling issued by the Secretary
of the Treasury, or a refusal to issue or change such a ruling, so long as the party
commencing the civil action demonstrates irreparable harm unless given an opportunity
to obtain judicial review prior to importation. 28 U.S.C. § 1581(h).
2006-1531 7