Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01327/USCOURTS-ca13-14-01327-0/pdf.json

Parties Involved:
Best Key Textiles Co. Ltd.
Appellant
United States
Appellee

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

BEST KEY TEXTILES CO. LTD.,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

______________________ 

2014-1327

______________________ 

Appeal from the United States Court of International 

Trade in No. 1:13-cv-00367-RKM, Senior Judge R. Kenton 

Musgrave.

______________________ 

Decided: February 3, 2015

______________________ 

JOHN M. PETERSON, Neville Peterson LLP, of New 

York, New York, argued for plaintiff-appellant. With him 

on the brief were MARIA E. CELIS, RICHARD F. O’NEILL, 

and RUSSELL A. SEMMEL. 

BEVERLY A. FARRELL, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department 

of Justice, of Washington, DC, argued for defendantappellee. With her on the brief were STUART F. DELERY, 

Assistant Attorney General, JEANNE E. DAVIDSON, Director, and MARCELLA POWELL, Trial Attorney, of Washington, DC, and AMY M. RUBIN, Assistant Director, 

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2 BEST KEY TEXTILES CO. v. US

International Trade Field Office, of New York, New York. 

Of counsel on the brief were CLAUDIA BURKE, Assistant 

Director, United States Department of Justice, of Washington, DC, and PAULA S. SMITH, Office of Assistant Chief 

Counsel, International Trade Litigation, United States 

Customs and Border Protection, of Washington, DC.

PHILIP YALE SIMONS, Simons & Wiskin, of South Amboy, New Jersey, for amicus curiae. With him on the brief 

was JERRY P. WISKIN. 

______________________ 

Before DYK, O’MALLEY, and WALLACH, Circuit Judges. 

WALLACH, Circuit Judge.

Appellant Best Key Textiles Co., Ltd. (“Best Key”) appeals the decision of the United States Court of International Trade (“CIT”) denying its Motion for Judgment on 

the Agency Record. Best Key Textiles Co. v. United States 

(Best Key II), No. 13-00367, slip op. 14-22 (Ct. Int’l Trade 

Feb. 25, 2014) (Appellant’s App. (“App.”) 1–27). Because 

the CIT did not have jurisdiction over the case, this court 

vacates and remands with instructions to dismiss for lack 

of jurisdiction.

BACKGROUND

Best Key, a Hong Kong-based textile manufacturer, 

produces “Best Key Metalized Yarn” (“Best Key’s yarn”), 

which is produced from “polyester chips melted into a 

slurry to which” metal nanopowders (usually zinc or 

aluminum) and titanium dioxide are added. Id. at 7. 

“The slurry is then ‘fired’ through a spinneret,” forming 

monofilament yarns.1 Id. The metal nanopowders “are 

1 “A ‘monofilament’ is a single-stranded polymer filament whose dimension is determined at the time of 

extrusion.” Appellant’s Br. 25–26.

 

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BEST KEY TEXTILES CO. v. US 3

permanently and inseparably combined with the polyester 

. . . at the moment of yarn formation.” Appellant’s Br. 4. 

On October 3, 2011, Appellant sought a preimportation ruling from United States Customs and 

Border Protection (“Customs”) pursuant to 19 C.F.R. 

§ 177.2 (2011) concerning the proper tariff classification in 

the Harmonized Tariff Schedule of the United States 

(“HTSUS”) of Best Key’s yarn. With the request, Best 

Key included a laboratory report describing the yarn as 

having a fiber content of 100% polyester, with one type 

containing 0.7% metal by weight and a second type containing 0.74% metal by weight. 

In Customs New York Ruling N187601 (Oct. 25, 2011) 

(App. 41–42) (the “Yarn Ruling”), Customs classified Best 

Key’s yarn as metalized yarn of HTSUS 5605.00.90 

(2011), dutiable at 13.2% ad valorum, based on Best Key’s 

laboratory reports and samples of the yarn submitted to 

Customs. HTSUS 5605.00.90 covers: “Metalized yarn, 

whether or not gimped, being textile yarn, or strip or the 

like of heading 5404 or 5405, combined with metal in the 

form of thread, strip or powder or covered with metal: 

Other.” HTSUS 5404 and 5405, referenced by HTSUS 

5605.00.90, cover “synthetic and artificial monofilament[, 

respectively,] of 67 decitex[2] or more and of which no 

cross-sectional dimension exceeds 1 mm; strip and the 

like (for example, artificial straw) of [synthetic or artificial, respectively] textile materials of an apparent width 

not exceeding 5 mm.” In the Yarn Ruling, Customs stated 

“[f]or tariff purposes, a yarn combined with metal in the 

form of powder is considered a metalized yarn.” App. 41. 

While metalized yarns of heading 5605 carry a higher 

duty rate than non-metalized yarns, metalized yarns can 

2 “Decitex refers to the articles’ linear mass density, 

or fineness.” Best Key II, at 7.

 

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4 BEST KEY TEXTILES CO. v. US

be used to make apparel products that carry a much lower 

duty rate than garments made from non-metalized yarns. 

On December 5, 2011, Best Key requested a Customs 

Ruling regarding the proper classification of a sample 

“Johnny Collar” men’s knit pullover garment made of 

Best Key’s yarn. Citing the Yarn Ruling, Appellant 

asserted the pullover was classifiable under HTSUS 

6105.90.8030 as a men’s shirt of other textile materials 

with a duty rate of 5.6% ad valorem, as opposed to 

HTSUS 6110.30.3053 for men’s shirts made of polyester, 

which carries a duty rate of 32% ad valorem. Customs 

conducted its own laboratory report, finding trace 

amounts of metal in the shirt. Based on this small

amount of metal and the sample’s label that stated “100% 

polyester,” Customs classified the sample as a pullover of 

man-made non-metalized fibers under HTSUS 

6110.30.3053 in Customs New York Ruling N196161 (Apr. 

13, 2012) (“the Johnny Collar Ruling”) (App. 94–95).

Appellant requested a reconsideration of the Johnny 

Collar Ruling. In response, Customs Headquarters reviewed both the Yarn Ruling and the Johnny Collar 

Ruling, along with additional submissions from Best Key. 

On April 24, 2013, Customs published notices of proposed 

revocation of both rulings, providing for a thirty-day 

period for public comment. Proposed Revocation of Ruling 

Letter & Proposed Revocation of Treatment Relating to the 

Tariff Classification of a “Johnny Collar” Pullover Garment, 47 Cust. B. & Dec. No. 18, at 26 (Apr. 24, 2013) 

(App. 126–28); Proposed Revocation of Ruling Letter & 

Proposed Revocation of Treatment Relating to the Tariff 

Classification of a Polyester Monofilament Yarn, 47 Cust. 

B. & Dec. No. 18, at 33 (Apr. 24, 2013) (App. 129–31). 

Customs received comments from Best Key and one other 

commenter on the proposed Yarn Ruling Revocation, but 

received no comments on the proposed Johnny Collar 

Ruling Revocation.

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BEST KEY TEXTILES CO. v. US 5

Subsequently, pursuant to 19 U.S.C. § 1625(c) (2006), 

Customs revoked the Yarn Ruling, replacing it with 

Customs Headquarters Ruling H202560 (Sept. 17, 2013). 

Revocation of Ruling Letter & Revocation of Treatment 

Relating to the Tariff Classification of a Polyester Monofilament Yarn, 47 Cust. B. & Dec. No. 41, at 20 (Oct. 2, 

2013) (App. 48–59) (the “Revocation”). In the Revocation, 

Customs reclassified Best Key’s yarn as a polyester yarn 

(instead of a metalized yarn) under HTSUS 5402.47.90 

with a duty rate of 8% ad valorum, which is lower than 

the 13.2% ad valorem duty rate that applies to HTSUS 

5605. Id. HTSUS 5402.47.90 covers “Synthetic filament 

yarn (other than sewing thread), not put up for retail sale, 

including synthetic monofilament of less than 67 decitex: 

Other, of polyester: Other.”

Customs also revoked the Johnny Collar Ruling because it conflicted with the Yarn Ruling and replaced it 

with Customs Headquarters Ruling H226262 (Sept. 17, 

2013), which continued to classify the Johnny Collar 

pullover under HTSUS 6110.30.30 (men’s shirts made of 

polyester). Revocation of Ruling Letter & Revocation of 

Treatment Relating to the Tariff Classification of a “Johnny Collar” Pullover Garment, 47 Cust. B. & Dec. No. 41, 

at 15 (Oct. 2, 2013) (App. 43–48).

Appellant challenged the Yarn Ruling Revocation, but 

not the revocation of the Johnny Collar Ruling, before the 

CIT, but the court dismissed the action for lack of subject 

matter jurisdiction. Best Key Textiles Co. v. United States

(Best Key I), No. 13-00367, slip op. 13-148, at 1 (Ct. Int’l 

Trade Dec. 13, 2013) (Appellee’s App. 81–88). The CIT 

subsequently granted Best Key’s Motion for Reconsideration, and reversed its prior jurisdictional holding, finding 

jurisdiction existed under 28 U.S.C. § 1581(i)(4) (2012). 

Best Key II, at 2. On the merits, however, the CIT denied 

Best Key’s Motion for Judgment on the Agency Record, 

thereby sustaining the Revocation. Id. at 27.

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6 BEST KEY TEXTILES CO. v. US

Best Key appeals. This court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

DISCUSSION

The Government claims the CIT lacked jurisdiction 

over Best Key’s claim, and therefore this action should be 

dismissed. The CIT’s limited jurisdiction is articulated in 

28 U.S.C. § 1581(a) through (i). While subsection (a) vests 

the CIT with “exclusive jurisdiction of any civil action 

commenced to contest the denial of a protest [by Customs],” subsections (b) through (h) delineate other specific 

grants of jurisdiction. Under § 1581(h), the CIT has

exclusive jurisdiction of any civil action commenced to review, prior to the importation of the 

goods involved, a ruling issued by the Secretary of 

the Treasury, or a refusal to issue or change such 

a ruling, relating to classification, valuation, rate 

of duty, marking, restricted merchandise, entry 

requirements, drawbacks, vessel repairs, or similar matters, but only if the party commencing the 

civil action demonstrates to the court that he 

would be irreparably harmed unless given an opportunity to obtain judicial review prior to such 

importation.

28 U.S.C. § 1581(h). In addition, an action under 

§ 1581(h) may only be commenced “by the person who 

would have standing to bring a civil action under 

[§] 1581(a) . . . if he imported the goods involved and filed 

a protest which was denied.” Id. § 2631(h). Accordingly, 

this court has articulated four requirements to invoke 

jurisdiction under § 1581(h): 

(1) judicial review must be sought prior to importation of goods;

(2) review must be sought of a ruling, a refusal to 

issue a ruling or a refusal to change such ruling;

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BEST KEY TEXTILES CO. v. US 7

(3) the ruling must relate to certain subject matter; and 

(4) irreparable harm must be shown unless judicial review is obtained prior to importation.

Am. Air Parcel Forwarding Co. v. United States, 718 F.2d 

1546, 1551–52 (Fed. Cir. 1983). 

The statute also contains a “residual jurisdiction” provision under § 1581(i), which provides:

(i) In addition to the jurisdiction conferred upon 

the [CIT] by subsections (a)–(h) of this section 

. . . , the [CIT] shall have exclusive jurisdiction of 

any civil action commenced against the United 

States, its agencies, or its officers, that arises out 

of any law of the United States providing for— 

(1) revenue from imports or tonnage;

(2) tariffs, duties, fees, or other taxes on 

the importation of merchandise for reasons other than the raising of revenue;

(3) embargoes or other quantitative restrictions on the importation of merchandise for reasons other than the protection 

of the public health or safety; or

(4) administration and enforcement with 

respect to the matters referred to in paragraphs (1)–(3) of this subsection and subsections (a)–(h) of this section.

28 U.S.C. § 1581(i) (emphasis added).

As this court has noted, “[w]hile the residual jurisdiction provision is a ‘catch all provision,’ ‘[a]n overly broad 

interpretation of this provision . . . would threaten to 

swallow the specific grants of jurisdiction contained 

within the other subsections and their corresponding 

requirements.’” Chemsol, LLC v. United States, 755 F.3d 

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8 BEST KEY TEXTILES CO. v. US

1345, 1349 (Fed. Cir. 2014) (quoting Norman G. Jensen, 

Inc. v. United States, 687 F.3d 1325, 1329 (Fed. Cir. 

2012)). For this reason, “this court has repeatedly held 

that subsection (i) ‘may not be invoked when jurisdiction 

under another subsection of § 1581 is or could have been 

available, unless the remedy provided under that other 

subsection would be manifestly inadequate.’” Id. (quoting 

Ford Motor Co. v. United States, 688 F.3d 1319, 1323 

(Fed. Cir. 2012) (internal quotation marks omitted)). In 

other words, if a litigant has access to the CIT under

subsections (a) through (h), “‘it must avail itself of this 

avenue of approach by complying with all the relevant 

prerequisites thereto’” unless the remedy available under 

another subsection is “manifestly inadequate.” Hartford 

Fire Ins. Co. v. United States, 544 F.3d 1289, 1292 (Fed. 

Cir. 2008) (quoting Am. Air Parcel, 718 F.2d at 1549).

In Best Key I, the CIT “conclude[d] there is no Article 

III case or controversy over this matter as contemplated 

under 28 U.S.C. § 1581(h), nor does jurisdiction alternatively lie in 28 U.S.C. § 1581(i)(4).” Best Key I, at 8. As to 

jurisdiction under § 1581(h), the CIT stated that Best Key 

satisfied requirements (1) and (2) for (h) jurisdiction, “but 

with regard to (3), [Best Key] conflates the Johnny Collar 

ruling with the Yarn Ruling when it avers, with respect to 

(4), that it suffered irreparable harm as a result of the 

Johnny Collar ruling by experiencing an immediate and 

negative impact upon its business.” Id. at 4. The CIT 

explained, “[u]nder the current status quo resulting from 

the Revocation Ruling, if [Best Key] were to import the 

yarn into the United States, the yarn would benefit from 

the lower duty rate resulting from the Revocation Ruling,” 

and “[i]t is therefore plain that the importance to [Best 

Key] here is not the U.S. duty rate on the yarn, but the 

duty rate on garments made of it.” Id. at 6. Therefore, 

the CIT concluded, Best Key “implies that an Article Ill 

‘case or controversy’ exists over the classification of the 

yarn, but the harm that it pleads is not the type of cogCase: 14-1327 Document: 69-2 Page: 8 Filed: 02/03/2015
BEST KEY TEXTILES CO. v. US 9

nizable injury that relief pursuant to [§] 1581(h) was 

intended to address.” Id.; see also id. at 5 (Best Key 

“contends that the Revocation Ruling, which resulted in a 

lower tariff for the yarn at issue in this action, has caused 

it harm because strangers to this action—garment manufacturers—may no longer purchase its yarn unless the 

garments they make from it can be imported under the 

‘favorable’ duty rate accorded to importations of garments 

made of ‘metalized’ yarn by other strangers to this action—garment importers.”).

As to jurisdiction under § 1581(i)(4), the residual jurisdiction section’s “administration and enforcement” 

provision, the CIT first noted that “typically, ‘if jurisdiction does not lie under § 1581(h), a plaintiff must import 

the merchandise in question, file a protest with Customs 

regarding the classification decision, and fully exhaust its 

administrative remedies.’” Id. at 7 (quoting Connor v. 

United States, 24 CIT 195, 200 (2000)). The CIT found 

Best Key failed to show that the “traditional approach” 

under § 1581(a) would provide a manifestly inadequate 

remedy, and that Best Key’s actual injury amounts to 

garment makers not buying its yarn “because importers of 

those garments will not get a more favorable duty rate for 

items made of [Best Key’s] yarn. But the duty rate 

charged to those importers is beyond any of [Best Key’s] 

interests that the provisions of [§] 1581 are meant to 

protect.” Id. at 8. Accordingly, the CIT concluded, “[t]he 

essence of the argument [Best Key] attempts to put forth 

amounts to a request for the protection of others’ interests, namely those of importers of garments manufactured 

by purchasers of [Best Key’s] yarn.” Id. The court also 

found, “[e]ven if [Best Key] is protecting its own financial 

interests by extension, it has no authority or standing to 

assert the claims of those remote parties under [§] 1581(i) 

in its action here, as that statute [is] to be strictly construed.” Id.

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10 BEST KEY TEXTILES CO. v. US

On rehearing, however, the CIT reversed its jurisdictional holding. In Best Key II, the CIT stated “it is highly 

questionable whether a Customs’ ruling that lowers the 

rate of duty on a product the plaintiff has no expressed 

intention of importing can result in aggrievement or 

adverse effect to the plaintiff.” Best Key II, at 2 (internal 

quotation marks and citation omitted). Nevertheless, the 

CIT concluded, without further explanation:

While the court stands by its prior ruling in general, it is, nonetheless, [Best Key’s] product that is 

the subject of the ruling at issue, and the court 

has undoubted exclusive jurisdiction over the general administration and enforcement of this type 

of matter in 28 U.S.C. § 1581(i)(4). The court will 

therefore presume Customs’ ruling “reviewable,” 

and the complaint’s allegation of “aggrievement” 

sufficient to invoke jurisdiction under 

[§] 1581(i)(4).

Id. (citation omitted) (emphasis added). The CIT therefore proceeded to the merits under the presumption it had 

jurisdiction under § 1581(i)(4).

On appeal, the Government argues the CIT improperly proceeded under § 1581(i) and that its original jurisdictional holding in Best Key I was correct. In support, the 

Government notes “Best Key does not import its yarn and 

the Revocation Ruling actually lowered the duty rate on 

that product.” Appellee’s Br. 13. Therefore, “the true 

nature of Best Key’s action is not the classification of the 

yarn in the Revocation Ruling but the classification of 

garments made of its yarn that would be imported into 

the United States by others.” Id. In addition, the Government argues that another jurisdictional avenue exists 

under § 1581(a) for those injured by the Revocation, 

thereby rendering jurisdiction under the residual provision inappropriate. In particular, the Government points 

out “Best Key could import another Johnny Collar pulloCase: 14-1327 Document: 69-2 Page: 10 Filed: 02/03/2015
BEST KEY TEXTILES CO. v. US 11

ver made of its yarn, wait for the entry to be liquidated, 

protest the classification of the garment, and, if the protest is denied, bring a [§] 1581(a) action in the [CIT] to 

obtain the classification it seeks.” Id. at 14 n.5. Using 

this approach, Best Key could even seek accelerated 

disposition of its protest under § 1515(b). Id. Further, 

the Government argues, § 1581(i) “was not intended to 

create new causes of action, nor was it meant to supersede 

more specific jurisdictional provisions . . . , [and] should 

not be used to hear issues such as a business harm occurring exclusively overseas which flows from a Customs 

decision.” Id. at 14 (citations omitted).

In response, Best Key says the protest remedy under 

§ 1581(a) is neither available nor adequate. As an initial 

matter, Best Key concedes it “does not import its yarn and 

the Revocation lowered the duty thereon, meaning a 

protest remedy involving the yarn is not available.” Reply 

Br. 4 (citation omitted). At the same time, Best Key 

continues to argue the remedy it seeks is a reversal of the 

Revocation of the Yarn Ruling, even though this would 

result in a higher duty rate on Best Key’s yarn, because 

the Revocation “caused Best Key’s customers to cancel 

orders en masse.” Id. Thus, to Best Key, “a § 1581(a) 

action that does not directly challenge the Revocation is 

‘manifestly inadequate’ to vindicate the status that Best 

Key enjoyed as a ruling holder.” Id. at 7. Allowing a 

challenge to the Revocation is the only way, according to 

Best Key, to remedy the harm it has suffered: “harm via 

curtailment of contemplated orders for [Best Key’s] yarn.” 

Id. (internal quotation marks and citation omitted) (emphasis added).

The CIT erred in reversing itself and “presum[ing]” 

jurisdiction under § 1581(i)(4). See Best Key II, at 2. The 

CIT itself did not appear fully convinced jurisdiction was 

proper because Best Key is attempting to litigate on 

behalf of its customers who might be injured by the revocation of the Johnny Collar Ruling in an action challengCase: 14-1327 Document: 69-2 Page: 11 Filed: 02/03/2015
12 BEST KEY TEXTILES CO. v. US

ing the Revocation of the Yarn Ruling. Best Key 

acknowledges the remedy it seeks is a reversal of the 

Yarn Ruling Revocation, which resulted in a more favorable duty rate for Best Key. Indeed, Best Key concedes it 

is attempting to vindicate its “entitlement to maintenance 

of the Yarn Ruling, which was revoked.” Reply Br. 5. 

However, the harm caused by the Yarn Ruling Revocation 

flowed to potential customers of Best Key who produce 

Johnny Collar pullovers, which might be subject to a 

lower duty rate if the Yarn Ruling had remained in effect. 

It is worth noting, however, that Customs classified the 

Johnny Collar pullover under HTSUS 6110.30.30 for 

men’s shirts made of polyester in both the Johnny Collar 

Ruling and the subsequent revocation of that ruling. 

The proper “avenue of approach” to redress this harm 

is a challenge under § 1581(a). See Hartford Fire, 544 

F.3d at 1292. That is, any producer who imports items 

made from Best Key’s yarn and believes the merchandise 

should be subject to a lower duty rate should protest the 

classification and challenge any denial of its protest 

before the CIT. The present action, where Best Key seeks 

to undo an administrative decision made in its favor so 

that its customers might benefit from a lower duty rate, 

contemplates the creation of a new cause of action under 

§ 1581(i), but § 1581(i) “was not intended to create new 

causes of action nor was it meant to supersede more 

specific jurisdictional provisions.” Asociacion Colombiana 

de Exportadores de Flores (Asocoflores) v. United States, 

717 F. Supp. 847, 849 (Ct. Int’l Trade 1989) (internal 

quotation marks omitted), aff’d, 903 F.2d 1555 (Fed. Cir. 

1990) (quoting H. Rep. No. 1235, 96th Cong., 2d Sess. 47, 

reprinted in 1980 U.S.C.C.A.N. 3729, 3759).

Here, Best Key sought to have the CIT reverse the 

Revocation, favorable to Best Key, the effect of which 

would be to increase Best Key’s own duty rate while 

benefiting manufacturers of products made from Best 

Key’s yarn. The statute does not provide jurisdiction over 

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BEST KEY TEXTILES CO. v. US 13

such requests. Indeed, as the CIT observed, it was “unaware of any other suit brought against the government on 

the claim that the plaintiff or its property should be 

assessed a higher rate of tax or duty,” Best Key II, at 2

n.1, and Best Key points to none.

Accordingly, the CIT erred in exercising jurisdiction 

over this case and should have upheld its initial ruling 

that jurisdiction did not exist over this action.

CONCLUSION

For the foregoing reasons, the decision of the United 

States Court of International Trade is

VACATED AND REMANDED

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