Park B. Smith, Ltd. v. United Statese

Slip Op. 01-63
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: RICHARD W. GOLDBERG, SENIOR JUDGE
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PARK B. SMITH, LTD., *
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Plaintiff, *
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v. *
* Court No. 96-02-00344
UNITED STATES, *
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Defendant. *
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[Judgment in part for Plaintiff, judgment in part for Defendant.]
Dated: May 29, 2001
Coudert Brothers (Steven H. Becker, Chris E. Pey, and Scott D.
Shauf), for plaintiff.
Stuart E. Schiffer, Acting Assistant Attorney General; Joseph
I. Liebman, Attorney-in-Charge, International Trade Field Office,
Commercial Litigation Branch, Civil Division, United States
Department of Justice (Mikki Graves Walser); Office of the
Assistant Chief Counsel, International Trade Litigation, United
States Customs Service (Edward N. Maurer), of Counsel, for
defendant.
O P I N I O N
GOLDBERG, Senior Judge: This matter is before the Court
following trial de novo. It involves the proper classification
of approximately sixty-three items typically considered holiday
table linens in the textile trade. The case requires the Court
to interpret the scope of the term "festive articles" as it
Court No. 96-02-00344 Page 2
appears in heading 9505 of the Harmonized Tariff Schedules of the
United States ("HTSUS"). Upon review of the evidence presented
at trial, the Court finds in favor of the plaintiff in part, and
in favor of the defendant in part. The Court exercises
jurisdiction pursuant to 28 U.S.C. § 1581(a) (1994).
BACKGROUND
Park B Smith, Ltd., ("PBS") imports hand woven cotton
textile merchandise from India and then resells the merchandise
to retailers. The merchandise at issue here includes dhurries,
placemats, napkins and table runners. Generally, these items are
advertised and sold only to consumers prior to the particular
holiday with which they are associated. The majority of the
items were sold during the Christmas season.
The merchandise at issue was entered in 1994 and 1995. The
United States Customs Service ("Customs") classified the dhurries
under subheading 5702.99.1010, HTSUS (dutiable at 7.7% or 7.6% ad
valorem, depending on which year the entry was made); the
placemats and tablerunners under subheading 6302.51.40 HTSUS
(dutiable at 5.5% or 5.4% ad valorem); and the napkins under
subheading 6302.51.20 (dutiable at 5.5% or 5.4% ad valorem).
PBS claims that all of the merchandise at issue should have
been classified as festive articles, and thus duty free, under
subheading 9505 of the HTSUS.
DISCUSSION
I. STANDARD OF REVIEW
Customs's tariff classification decisions are presumed to be
Court No. 96-02-00344 Page 3
correct, and the importer has the burden of proving otherwise.
See 28 U.S.C. § 2639(a)(1)(1994). To determine whether the
importer has overcome this presumption, the Court must consider
whether Customs's classification is correct. This evaluation is
conducted both independently and in comparison with the
importer's proposed alternative. See Jarvis Clark Co. v. United
States, 2 Fed. Cir. (T)70, 75, 733 F.2d 873, 878, reh'g denied, 2
Fed. Cir. (T) 97, 739 F.2d 628 (1984).
II. CUSTOMS’S CLASSIFICATION
At trial, Customs argued that the merchandise at issue was
properly classified under subheadings 5702.99.1010, 6302.51.40,
6302.51.20, HTSUS. PBS argued that even if the merchandise was
prima facie classifiable under the aforementioned subheadings, it
was also prima facie classifiable under the festive articles
provision of the HTSUS B heading 9505. PBS further claimed that
Section XI Note 1(t), HTSUS, excludes all articles of chapter 95
from being classified under Section XI. See Midwest of Cannon
Falls, Inc. v. United States, 20 CIT 123 (CIT, 1996), aff’d in
part, rev’d in part, 122 F.3d 1423, 1429 (Fed. Cir. 1997).
Section XI, HTSUS includes chapters 50 - 63. Thus, PBS argued,
the merchandise was properly classifiable only under heading
9505.
Both parties agree that the merchandise was prima facie
classifiable under subheadings 5702.99.1010, 6302.51.40, and
6302.51.20, HTSUS. See Pl.’s Pretrial Mem. of Law, at 6; Def.’s
Pretrial Mem. of Law, at 10-15. Thus, the questions before the
Court No. 96-02-00344 Page 4
Court are whether PBS has overcome Customs’s presumption of
correctness and proven that the merchandise is also classifiable
under heading 9505, and if so, whether Section XI Note 1(t)
operates to compel a classification under heading 9505, HTSUS.
III. PRIMA FACIE CLASSIFICATION AS "FESTIVE ARTICLE"
UNDER 9505, HTSUS.
At trial, Customs argued that the merchandise at issue was
not prima facie classifiable as festive articles because the
general scope and explanatory notes of Heading 9505 indicate that
"Congress did not intend to extend the scope of this provision to
include all manner of possibly festive articles, i.e., rugs,
placemats, napkins, and table runners." See Def.’s Pretrial Mem.
of Law, at 17. Further, Customs claimed that the Federal
Circuit’s opinion in Midwest should be constrained to three-
dimensional objects, and thus not apply to any of the two-
dimensional objects at issue here.1
PBS, on the other hand, argued that the merchandise was
prima facie classifiable as festive articles because, as the
merchandise in Midwest, the merchandise at issue was designed,
1
Customs even went as far as to publish and make available
to the public an Advanced Level Informed Compliance Publication
of the U.S. Customs Service entitled "What Every Member of the
Trade Community Should Know About: CLASSIFICATION OF FESTIVE
ARTICLES as a result of the Midwest of Cannon Falls Court Case
(November 1997)." at
http://www.customs.ustreas.gov/impoexpo/impoexpo.html. This
article, in the Court’s opinion, is an inexcusably irresponsible
attempt by Customs to present to the public its two-
dimensional/three-dimensional distinction theory as the current
state of the law after Midwest. The Court reminds Customs that
it is the purview of the courts, not executive branch agencies,
to interpret the law.
Court No. 96-02-00344 Page 5
marketed and used by consumers in conjunction with festive
occasions. See Midwest, 122 F.3d at 1429.
The meaning of a tariff term is a question of law.
Brookside Veneers, Ltd. v. United States, 6 Fed. Cir. (T) 121,
124, 847 F.2d 786, 788, cert. denied, 488 U.S. 943 (1988).
Courts interpret the tariff acts in order to carry out
legislative intent. Nippon Kogaku (USA), Inc. v. United States,
69 CCPA 89, 92, 673 F.2d 380 (1982). The first source for
determining legislative intent is the statutory language. United
States v. Esso Standard Oil Co., 42 CCPA 144, 155 (1955). In
ascertaining the plain meaning of a particular statutory term,
the Court presumes that Congress frames tariff acts using the
language of commerce. Nylos Trading Co. v. United States, 37
CCPA 71, 73 (1949). The Court also presumes that the commercial
meaning of a tariff term coincides with its common meaning, in
the absence of evidence to the contrary. United States v. C.J.
Tower & Sons, 48 CCPA 87, 89 (1961). The Court may rely on its
own understanding to determine the common meaning of a tariff
term. See Brookside Veneers, 6 Fed. Cir. (T) at 125, 847 F.2d at
789.
Here, the Court relies on all of these factors, as well as
the Federal Circuit’s direct guidance. See Midwest, 122 F.3d at
1429. As a threshold matter, Customs’s attempt to limit the
Federal Circuit’s holding in Midwest to only three dimensional
object is without merit. Nothing in the Federal Circuit’s
opinion even hints that such a distinction is warranted. See id.Court No. 96-02-00344 Page 6
at 1423-29. Rather, in Midwest the Federal Circuit sets out two
requirements for festive articles classification: (1) such
articles must be "closely associated" with a festive occasion and
(2) such articles must be displayed and used by the consumer only
during the festive occasion. See Midwest, 122 F.3d at 1429. The
Federal Circuit did not define "closely associated." See id.The Court, however, considers the meaning of the term to be self
evident. See Brookside Veneers, 6 Fed. Cir.(T) 125, 847 F.2d at
789. If the physical appearance of an article is so
intrinsically linked to a festive occasion that its use during
other time periods would be aberrant, it is "closely associated"
to the festive occasion. See id.A. Merchandise Incorporating Festive Symbols and Color
Schemes.
PBS’s attempt to establish that the merchandise at issue is
prima facie classifiable as festive articles is successful in
part. The merchandise at issue which incorporates festive
symbols and color schemes2 is "closely associated" with a festive
2
The design styles which incorporate festive symbols or
color schemes include: At Home, Autumn Day, Autumn Decor, Autumn
Welcome, Bats & Ghosts, Bunnies & Tulips, Bunny Hop, Candles &
Bells, Celebration, Christmas Cottage, Christmas Deer, Christmas
Garden, Christmas Garland, Christmas Highland, Christmas Holly,
Christmas Ornaments, Christmas Pines, Christmas Presents,
Christmas Sampler, Christmas Santa, Christmas Trees, Christmas
Village, Christmas Wreath, Cornucopia, Country Quilt, Decorated
Eggs, Duck Parade, Eagles Galore, Easter Basket & Eggs, Easter
Bouquet, Easter Tulips, Fall Gathering, Gingham Hearts, Harvest
Decor, Harvest Rows, Holiday Blossom/Holly Blossom, Holiday Town,
Holly Border, Holly Leaves, Houses & Hearts, Jingle Bells,
October Day, Poinsettia, Poinsettia Plaid, Pumpkins Galore,
Rabbit Run, Ringing Bells, Rocking Horse, Santa’s Plaid, Seasons
Trimmings, Sensation, Star Light, Stardom, Stars & Stripes,
Tartan, Trumpets & Hearts, Tulip Garden, Turkey Day, and White
Court No. 96-02-00344 Page 7
occasion and, as the evidence adduced at trial indicated, the
merchandise is likely to be "displayed and used by the consumer
only during" a festive occasion. See Midwest, 122 F.3d at 1429.
Thus, such articles are "festive articles" and prima facie
classifiable under heading 9505.
The Court finds it illustrative to review a representative
sampling of the design styles which incorporate festive symbols
and color schemes. For example, the design style Autumn Welcome
is closely associated with the festive occasion of Halloween.
Autumn Welcome’s design incorporates colors associated with the
Fall season (browns and oranges), jack-o-lantern pumpkins and
images of ghosts. Because the colors and symbols are
intrinsically linked to the celebration of Halloween the Court
finds that Autumn Welcome would likely only be used by a consumer
in relation to the festive occasion of Halloween.
The design style Cornucopia also bears mention.
Cornucopia’s design incorporates colors associated with the Fall
season (browns and oranges), five images of cornucopias
overflowing with fruits and gourds interspersed with deciduous
tree branches bearing leaves. This design style is closely
associated with the festive occasion of the Fall or harvest
season. Cornucopia’s colors are associated with the Fall season
and the cornucopia itself is a symbol strongly affiliated with
harvest and abundance. Because of this association, this design
style would likely only be used by a consumer during the Fall or
Christmas. See Pl.’s. Exh. 40.
Court No. 96-02-00344 Page 8
harvest season.
Still other merchandise at issue incorporate no symbols, but
incorporate color combinations and patterns associated with a
festive occasion. For example, Christmas Highland is a red and
green plaid. The Court finds that Christmas Highland is prima
facie classifiable as a festive article because the design and
the colors are so closely associated with the festive occasion of
Christmas that the design would likely not be used by a consumer
during any other time of the year. See Midwest, 122 F.3d at
1429. The color combination of red and green is so often and
closely linked to Christmas in American culture that the Court
considers the color combination to be "closely associated" to the
festive occasion of Christmas.
At trial, merchandise incorporating festive symbols, color
schemes and patterns was also shown to have been designed,
marketed and sold for use during festive occasions and was in
fact displayed and used by consumers only during festive
occasions. Specifically, PBS offered testimony from its
president, from a member of its design department, from a PBS
employee with extensive retail experience, and from a consumer of
representative samples of the articles at issue. The Court finds
this testimony to be both credible and persuasive on the issue of
whether the merchandise bearing festive symbols, color schemes
and patterns was designed, marketed and sold for use during
festive occasions and was displayed and used by consumers only
during festive occasions. See Midwest, 122 F.3d at 1429.
Court No. 96-02-00344 Page 9
B. Articles Incorporating Single Color Schemes.
There are, however, three design styles that the Court finds
are not prima facie classifiable as festive articles: Savannah,
Serendipity, and Squaredance.3 Savannah and Serendipity are
solid color design styles.4 Although both Savannah and
Serendipity may have been designed and marketed by PBS to be used
during the Christmas holiday, the designs are not closely
associated with Christmas. To the contrary, the Court finds that
a solid color design is likely to be used by a consumer at any
time of the year and thus cannot be classified as a festive
article under the HTSUS. Likewise, Squaredance, a green, red and
blue plaid, is not closely associated with a festive occasion.
As stated infra, the colors green and red in combination are
closely associated with the festive occasion of Christmas. Here,
however, the addition of blue to the green and red plaid design
prevents the design style from being closely associated with
Christmas. The color blue has no independent association with
Christmas and its combination with the colors red and green also
has no significance. Therefore, the Court holds that merchandise
incorporating the design style Squaredance cannot be classified
as festive articles under the HTSUS.
3
In addition, PBS initially sought judgment in regard to
merchandise incorporating the design style Harvest Time. PBS,
however, failed to supply any evidence of Harvest Time.
Therefore, the Court will not consider Customs’s classification
of any merchandise at issue bearing the design style Harvest Time
and Customs’s classification of such items will be affirmed.
4
Savannah and Serendipity were designed to be produced as
either solid red or solid green.
Court No. 96-02-00344 Page 10
IV. OPERATION OF SECTION XI NOTE 1(t), HTSUS.
The Court has held that Customs’s classification of the
merchandise at issue was prima facie correct and that PBS’s
proposed classification as to some of the merchandise at issue is
also prima facie correct. Thus, there is a conflict as to the
correct classification of that merchandise. In a circumstance
such as this, the Court normally must decide which classification
provides the most specific description. See General Rules of
Interpretation (GRI)3(a), HTSUS. Here, however, a section note
renders such an analysis unnecessary.
At trial, Customs argued that even if the merchandise at
issue was prima facie classifiable as festive articles it was
properly classified by Customs. First, Customs claimed that
Section XI, Note 1(t) did not operate to prohibit Customs’s
classifications because Note 1(t) contained a list of exemplars
that should be interpreted to be exclusive. Thus, Customs
argued, because dhurries, placemats, napkins, and table runners
do not appear in the parenthetical to Note 1(t), these types of
articles are excluded from the operation of Note 1(t). Customs
then argued, again assuming a prima facie festive article
classification, that the merchandise at issue was properly
classified because the provisions chosen by Customs more
specifically identified the merchandise.
PBS argued that Section XI, Note 1(t) operates to exclude
all articles classifiable under Chapter 95, HTSUS, from
classification under any chapter in Section XI. Section XI,
Court No. 96-02-00344 Page 11
contains Chapter 57 and Chapter 63, the two sections under which
all the merchandise at issue was classified by Customs.
The Court finds that Note 1(t) of Section XI excludes all of
the merchandise that is prima facie classifiable as festive
articles under heading 9505 from classification as carpets and
other textile floor coverings under chapter 57, HSTUS, or as
other made up textile articles; needlecraft sets; worn clothing
and worn textile articles; rags under chapter 63, HSTUS. Thus,
for the merchandise at issue that the Court found to be prima
facie classifiable as festive articles, Customs’s classification
of these articles under chapter 57 and 63 was in error.
GRI 1, HTSUS, provides that classification shall be
determined "according to the terms of the headings and any
relative section or chapter notes...." Section XI of Note 1(t)
of Section XI is quite clear: "1. This section does not cover:
(t)Articles of chapter 95 (for example, toys, games, sports
requisites and nets)." Customs’s assertion that the list of
exemplars is exclusive is without merit. The clear meaning of
this note is to exclude all articles classifiable under chapter
95 from classification anywhere in Section XI. The parenthetical
examples are just that B examples.5
CONCLUSION
Therefore, although Customs’s classification of all the
5
This Court’s determination in regard to the operation of
Note 1(t) Section XI parallels the CFAC’s analysis of the
operation of note 2ij, chapter 69, in Midwest. See 122 F.3d at
1429.
Court No. 96-02-00344 Page 12
merchandise at issue was prima facie correct, Customs erred in
its classification of the merchandise incorporating festive
symbols, color schemes and patterns because Section XI Note 1(t)
HTSUS compels Customs to classify these items as festive
articles.
JUDGMENT
This case having been heard at trial and submitted for
decision, and the Court, after due deliberation, having rendered
a decision herein; now, in conformity with said decision, it is
hereby
ORDERED, ADJUDGED, and DECREED: that the classification of
the Christmas dhurries, excluding merchandise incorporating
design styles Harvest Time, Savannah, Serendipity, and
Squaredance, by the United States Customs Service ("Customs")
under subheading 5702.99.10 of the Harmonized Tarrif Schedule of
the United States ("HTSUS") is reversed; and it is further
ORDERED, ADJUDGED, and DECREED: that Customs shall
reliquidate the immediately aforementioned subject merchandise
under subheading A9505.10.50 of the HTSUS, dutiable at the rate
of free. Customs shall refund all excess duties paid with
interest as provided by law. Judgment is hereby entered for
plaintiff; and it is further
ORDERED, ADJUDGED, and DECREED: that the classification of
the Christmas dhurries incorporating design styles Harvest Time,
Savannah, Serendipity, and Squaredance, by Customs under
subheading 5702.99.10 of HTSUS is affirmed. Judgment is hereby
entered for defendant; and it is further
ORDERED, ADJUDGED, and DECREED: that the classification of
the Christmas placemats and table runners, excluding merchandise
incorporating design styles Harvest Time, Savannah, Serendipity,
and Squaredance, by Customs under subheading 6302.51.40 of the
HTSUS is reversed; and it is further
ORDERED, ADJUDGED, and DECREED: that Customs shall
reliquidate the immediately aforementioned subject merchandise
under subheading A9505.10.50 of the HTSUS, dutiable at the rate
of free. Customs shall refund all excess duties paid with
interest as provided by law. Judgment is hereby entered for
plaintiff; and it is further
ORDERED, ADJUDGED, and DECREED: that the classification of
the Christmas placemats and table runners incorporating design
Court No. 96-02-00344 Page 13
styles Harvest Time, Savannah, Serendipity, and Squaredance, by
Customs under subheading 6302.51.40 of the HTSUS is affirmed.
Judgment is hereby entered for defendant; and it is further
ORDERED, ADJUDGED, AND DECREED: that the classification of
Christmas napkins, excluding merchandise incorporating design
styles Harvest Time, Savannah, Serendipity, and Squaredance, by
Customs under subheading 6302.51.20 of the HTSUS is reversed; and
it is further
ORDERED, ADJUDGED, AND DECREED: that Customs shall
reliquidate the immediately aforementioned subject merchandise
under subheading A9505.10.50 of the HTSUS, dutiable at the rate
of free. Customs shall refund all excess duties paid with
interest as provided by law. Judgment is hereby entered for
plaintiff, and it is further
ORDERED, ADJUDGED, AND DECREED: that the classification of
Christmas napkins incorporating design styles Harvest Time,
Savannah, Serendipity, and Squaredance, by Customs under
subheading 6302.51.20 of the HTSUS is affirmed. Judgment is
hereby entered for defendant; and it is further
ORDERED, ADJUDGED, AND DECREED: that the classification of
4th of July, Easter and Halloween dhurries, excluding merchandise
incorporating design styles Harvest Time, Savannah, Serendipity,
and Squaredance, by Customs under subheading 5702.99.10 of the
HTSUS is reversed; and it is further
ORDERED, ADJUDGED, AND DECREED: that Customs shall
reliquidate the immediately aforementioned subject merchandise
under subheading A9505.90.60 of the HTSUS, dutiable at the rate
of free. Customs shall refund all excess duties paid with
interest as provided by law. Judgment is hereby entered for
plaintiff; and it is further
ORDERED, ADJUDGED, AND DECREED: that the classification of
4th of July, Easter and Halloween dhurries incorporating design
styles Harvest Time, Savannah, Serendipity, and Squaredance by
Customs under subheading 5702.99.10 of the HTSUS is affirmed.
Judgment is hereby entered for defendant; and it is further
ORDERED, ADJUDGED, and DECREED: that the classification of
4th of July, Easter and Halloween placemats and table runners,
excluding merchandise incorporating design styles Harvest Time,
Savannah, Serendipity, and Squaredance, by Customs under
subheading 6302.51.40 of the HTSUS is reversed; and it is further
ORDERED, ADJUDGED, and DECREED: that Customs shall
reliquidate the immediately aforementioned subject merchandise
under subheading A9505.90.60 of the HTSUS, dutiable at the rate
of free. Customs shall refund all excess duties paid with
Court No. 96-02-00344 Page 14
interest as provided by law. Judgment is hereby entered for
plaintiff; and it is further
ORDERED, ADJUDGED, and DECREED: that the classification of
4th of July, Easter and Halloween placemats and table runners
incorporating design styles Harvest Time, Savannah, Serendipity,
and Squaredance by Customs under subheading 6302.51.40 of the
HTSUS is affirmed; and it is further
ORDERED, ADJUDGED, and DECREED: that the classification of
the 4th of July, Easter and Halloween napkins, excluding
merchandise incorporating design styles Harvest Time, Savannah,
Serendipity, and Squaredance, by Customs under subheading
6302.51.20 of the HTSUS is reversed; and it is further
ORDERED, ADJUDGED, and DECREED: that Customs shall
reliquidate the immediately aforementioned subject merchandise
under subheading A9505.90.60 of the HTSUS, dutiable at the rate
of free. Customs shall refund all excess duties paid with
interest as provided by law. Judgment is hereby entered for
plaintiff; and it is further
ORDERED, ADJUDGED, and DECREED: that the classification of
the 4th of July, Easter and Halloween napkins incorporating
design styles Harvest Time, Savannah, Serendipity, and
Squaredance by Customs under subheading 6302.51.20 of the HTSUS
is affirmed. Judgment is hereby entered for defendant.
_________________________________
JUDGE
Dated: May 29, 2001
New York, New York
ERRATA
Park B. Smith, Ltd., v. United States, Court No. 96-02-00344, Slip-Op. 01-63, dated May 29,
2001.
On page 1 delete the name “Edward N. Maurer” and insert the name “Sheryl A. French.”
May 31, 2001