«[On classification of screening product used in greenhouses, summary judgment for the Plaintiff.] Decided: August 17, 1999 Simons & Wiskin (Philip ...»
III. Discussion This case is before the Court on the parties’ cross motions for summary judgment. Under USCIT R. 56(d), summary judgment is appropriate if, “the pleadings, depositions, answers to
genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Both parties posit that this case is ripe for adjudication by means of summary judgment. The Court agrees. Even though there are differences in the factual positions advanced by each party, summary judgment is appropriate in this action because there are no genuine issues of material fact in dispute. The parties agree on the physical characteristics and details of the imported merchandise, but dispute the classification. Thus, the material facts as to what constitutes the merchandise are not at issue. See Bausch & Lomb, Inc. v. United States, 21 CIT ___, 957 F. Supp. 281, 284 (1997), aff’d, 148 F.3d 1363 (Fed. Cir. 1998). The Court is then left with the purely legal question involving the meaning and scope of the tariff provision and whether it includes the imported merchandise. See National Advance Systems v. United States, 26 F.3d 1107, 1109 (Fed. Cir. 1994). Although there is a statutory presumption of correctness for Customs decisions, 28 U.S.C. § 2639(a)(1) (1994), when the Court is presented with a question of law in a proper motion for summary judgment, that presumption does not apply. Blakley Corp. v. United States, ___ CIT ___, 15 F. Supp.2d 865, 869 (1998), (quoting Universal Electronics, Inc. v. United States, 112 F.3d 488, 492 (Fed. Cir. 1997) (“[b]ecause there was no factual dispute between the parties, the presumption of correctness is not relevant.”)); see also Goodman Manufacturing L.P. v. United States, 69 F.3d 505, 508 (Fed. Cir.
1995). It is necessary, however, to address the issue of what deference reviewing courts show to agency determinations pursuant to a Chevron analysis. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-845 (1984).
548779 (July 28, 1999) addressed questions raised by the Supreme Court in United States v. Haggar Apparel Co., ___ U.S. ___, 119 S. Ct. 1392 (1999), regarding the proper standard of review applicable to determinations by Customs of the meaning and scope of tariff terms.
In Mead, the court discussed the procedural differences between properly promulgated regulations such as the one at issue in Haggar and typical Customs classification rulings which were at issue in Mead and in this case. The court concluded that “significant differences... convince this court that Haggar’s reach does not extend to standard Customs rulings.” Mead Corp., 1999 WL 548779, at * 3. Here, as in Mead, there are no agency regulations at issue. Because the parties agree on the structure and use of the imported product, the only dispute concerns the competing tariff provisions proffered by each party. Following Mead, the Court will not afford deference to Customs classification decisions in this case. The Court must examine both parties’ claimed classifications and independently determine which of them is correct, or, if neither, take further measures to determine the correct classification. 19 U.S.C. § 2643(b) (1994).
The heading for agricultural equipment is intended to cover “machinery... which is of the type used on farms (including agricultural schools, co-operatives or testing stations), in forestry, market gardens, or poultry-keeping or bee-keeping farms or the like.” Harmonized Commodity Description and Coding System, Explanatory Notes at 1317 (1996). Moreover, “Congress has traditionally accorded agricultural equipment preferential treatment. It has long been established that ‘the tariff provisions for agricultural implements should be liberally construed so that the evident intent of Congress to benefit agriculture [can] be effected.’” Allis-Chalmers Corp. v. United States, 7 CIT 108, 111 (1984) (quoting F.W. Myers & Co. v. United States, 59 Cust. Ct. 445, 450 (1967)).
systems, which incorporate some of the imported screens, the remaining retractable greenhouse roof screens, and insect screens all are used to regulate and control the environment within a greenhouse.
This case, then, turns on how advanced are the screens in their condition as imported. If they are sufficiently advanced so as to be considered parts of agricultural equipment, they will properly be classified as such, according to Congressional intent.
Rule 1(c) of the Additional United States Rules of Interpretation provides:
The Court finds Bauerhin Technologies Ltd. Partnership v. United States, 110 F.3d 744 (Fed. Cir.
1997) to be instructive in identifying what is a “part” for tariff purposes. In Bauerhin the court considered an appeal from this court regarding the classification of imported canopies. Id. at 775.
In that case, the importer argued that the canopies should have been classified as parts of car seats, “notwithstanding the fact that [the canopies] are not necessary to the operation of the car seats to which they are attached,” and were imported separately. Id. at 776. In holding that the canopies were part of the car seats, the court articulated a two part test to differentiate parts from other articles.
First, the court must determine whether the imported item is “an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article.” Id. at 778. (quoting United States v. Willoughby Camera Stores, 21 C.C.P.A. 322, 324 (1933)). Second, the court must establish whether the imported item is dedicated solely for use with the article in question. Id. at 778. (following the holding in United States v. Pompeo, 43 C.C.P.A.
In the case at bar, the environmental screens and the plastic laminated screens used as greenhouse roofs are an integral part of shade and heat retention systems and of the greenhouses themselves. Insect screens are also an integral part of the greenhouses themselves, even though they do not play a part in shade and heat retention systems. The screens permit greenhouse operators to control temperature and humidity by regulating the amounts of shade and heat retention, and to control the presence or absence of insects in the greenhouse, all for the effective cultivation and protection of plants. Without the screens, the walls in commercial greenhouses would be bare, adorned only by the skeleton of shade and heat retention systems, i.e. drive motors, cables, aluminum and steel supports, brackets, pulleys, fasteners, and support wires; there would be no control of temperature and humidity and no shade and heat retention system; and there would be no way to control the insect population within a greenhouse. Moreover, both parties agree that shade and heat retention systems are agricultural machinery or equipment. Pl.’s Response at 37. Def.’s Response at 37. Thus, the first prong of the test is satisfied by virtue of the nature and function of the product itself.
The second prong of the test is also satisfied. The screens are in an advanced state of manufacture, and have no other commercial uses. Def.’s Response at 12, 23-25. All environmental screens and all plastic laminated screens used as greenhouse roofs are manufactured by a specially designed and patented machine. Pl.’s Response at 9. The number of backed aluminum foil strips varies according to the amount of shade and heat which a greenhouse operator may need. Id. at 14.
There are six types of insect screens each manufactured with one of six different openings to take into account various insect populations. Id. at 15. Moreover, Customs admits that the screens have
quickly adds that the screens are “not sufficiently processed to be identified as an individual part of another product,” due to the fact that they are imported on rolls and are subjected to post- importation processing. Def.’s Br. at 14.
The Court disagrees. An examination of relevant case law shows that a material may be classified as an unfinished article when the fabric in its imported condition has been so far advanced beyond the stage of materials so as to be dedicated to and commercially fit for use as that article and incapable of being made into more than one article or class of articles. See Doherty-Barrow of TX, Inc. v. United States, 3 CIT 228 (1982) (holding that steel strips were so far advanced in manufacture as to be dedicated for use in making steel cotton bale ties even though not cut to length, but having only one commercial use); Heraeus-Amersil, Inc. v. United States, 10 CIT 258, 640 F.Supp. 1331 (1986) (holding that precious metal contact tape was advanced beyond the state of a material and was part of telephone relays even though the tape was not welded to contacts). Cf. Avins Industrial Products Co. v. United States, 72 Cust. Ct. 43, 376 F.Supp. 879 (1974); Bendix Mouldings, Inc. v.
United States, 73 Cust. Ct. 204, 388 F.Supp. 1193 (1974).
In Avins, the court determined that certain imported stainless steel wire did not constitute parts of antennas for automobiles because the wire had to be further manipulated for use as a radio antenna. Id. at 886. The parties had stipulated that the wire could be used in other applications with some modifications. Id. Moreover, the court explained that determining whether merchandise is a material or an unfinished article depends on the degree of processing it has undergone. Id. In that case, the wire was cut to length and was in certain dimensions, making it particularly adaptable for use as a radio antenna. Id. The court found there was not sufficient processing to take the product
classification of treated wood moldings commercially used as picture or mirror frames. Id. at 204.
The court held that the frames should fall under the provision for wood moldings because they were not dedicated to use as any particular frame. Bendix, 73 Cust. Ct. at 207.
Here, unlike the products in Avins and Bendix, the screens are in an advanced state of manufacture, are dedicated to use and their identity is fixed upon importation. The screens are the product of high technology, design and planning and are not simple products; they are complex screens incorporating several different types of materials, manufactured for the specific goal of controlling the various aspects of a greenhouse environment. Moreover, each type of screen may only be used for the purpose for which it was manufactured and the function and purpose of each screen is clearly identifiable upon importation.2 In determining that the screens are in an advanced state of manufacture upon importation and that the post-importation processing does not negate that advanced state, the Court relies upon E.M.
Chemicals v. United States, 13 CIT 849, 728 F. Supp. 723 (1989), aff’d 920 F.2d 910 (Fed. Cir.
1990). In that case, this court examined the tariff classification of liquid crystals to be used in liquid crystal displays (“LCDs”). The merchandise was classified as chemical mixtures, but plaintiff contended that it should have been classified as “parts of indicator panels or other visual signalling apparatus.” Id. at 850.
By its own examination of the samples, the Court confirms that the product is so far advanced in manufacturing as to no longer be a material, but a distinct article. In customs classification cases samples of the merchandise are often the most potent witnesses. See Marshall Field & Co. v. United States, 45 C.C.P.A. 72, 81 (1958); Avenues in Leather, Inc. v. United States, ___ CIT ___, 11 F. Supp. 2d 719, 726 (1998), aff’d No. 98-1511, 1999 U.S. App. LEXIS 9710 (Fed.
Cir. 1999); Charles Jacquin et Cie., Inc. v. United States, 16 CIT 49 (1992); Permagrain Prods., Inc.
v. United States, 9 CIT 426, 429, 623 F.Supp. 1246, 1249 (1985), aff’d, 791 F.2d 914 (Fed. Cir.
Court No. 97-03-00475 Page 16 The court held that liquid crystals should have been classified as parts as proposed by the plaintiff. Id. at 849. The court found that liquid crystals were formed through a complex chemical process which yielded a discrete, identifiable product utilized, in varying proportions and combinations, exclusively for LCDs. Id. at 851, 853. The court also noted that neither party disputed that the only use of liquid crystals was in LCDs and that they had no other commercial uses.
Id. at 852.
In concluding for the plaintiff, the court noted that the liquid crystals were dedicated exclusively for use in one product at the time of importation, even though the size of the display may not have been known. Id. at 857. In addition, the court noted that the character of the liquid crystals was fixed with certainty due to the advanced state of manufacture and that even the addition, after importation, of a chemical stabilizer known as a “twist” agent, did not preclude the liquid crystals from being considered parts. Id. Moreover, the court stated that the addition of the twist agent was nothing more than an assembly operation and that it did not resemble further manufacturing. Id. at 857-58. In its affirmance of the trial court, the Federal Circuit agreed that there was insufficient subsequent processing to preclude the liquid crystals from being classified as parts of indicator panels. E.M. Chemicals v. United States, 920 F.2d 910, 914 (Fed. Cir. 1990).
The Court takes further instruction from Heraeus-Amersil, Inc. v. United States, 10 CIT 258, 640 F.Supp. 1331 (1986). In that case, the court found that precious metal contact tape imported on reels had been so advanced in manufacture as to be considered parts of telephone relays rather than semi-manufactured rolled precious metal, even though the tape required cutting and welding after importation. Id. at 263, 640 F. Supp. at 1334.