1 Now known as the Bureau of Customs and Border Protection per

the Homeland Security Act of 2002, §1502, Pub. L. No. 107-296, 116

Stat. 2135, 2308-09 (Nov. 25, 2002), and the Reorganization Plan

Modification for the Department of Homeland Security, H.R. Doc.

108-32, p. 4 (Feb. 4, 2003).

 Slip Op. 03 - 148

UNITED STATES COURT OF INTERNATIONAL TRADE

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KYOCERA INDUSTRIAL CERAMICS CORPORA- :

TION, 

 :

 Plaintiff, 

 : 

v. Court No. 02-00705

 :

 

UNITED STATES, :

 Defendant. :

 

- - - - - - - - - - - - - - - - - - - -x

 Memorandum & Order

[Defendant's motion for summary judgment 

 denied.]

 Dated: November 7, 2003

DeKieffer & Horgan (J. Kevin Horgan and A. David Lafer) for 

the plaintiff.

Peter D. Keisler, Assistant Attorney General; Barbara S.

Williams, Acting Attorney in Charge, International Trade Field

Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Jack S. Rockafellow); and Office of Assistant

Chief Counsel, International Trade Litigation, U.S. Bureau of

Customs and Border Protection (Michael W. Heydrich), of counsel, 

for the defendant.

AQUILINO, Judge: The amended complaint filed herein on

behalf of the above-encaptioned plaintiff, the corporate name of

which its counsel have compressed to "KICC", contests denial by the

U.S. Customs Service1 of classification of certain ceramic sub-
Court No. 02-00705 Page 2

 

2 Subsection (h) of that Rule 56 mandates annexation to 

such a motion of

a separate, short and concise statement of the material

facts as to which the moving party contends there is no

genuine issue to be tried.

This the defendant has not done. Rather, it has filed a motion to

stay discovery pending resolution of its motion for judgment of

dismissal. According to this subsidiary motion, discovery has

commenced in accordance with the court's amended scheduling order

of August 27, 2003, but government counsel now take the position

that the filing of the "dispositive motion to dismiss . . . [makes]

discovery by either party . . . not required." Declaration of Jack

S. Rockafellow, para. 10.

The plaintiff opposes this motion for a stay on both

procedural and substantive grounds, including that defendant's

(footnote continued)

strates for integrated circuits ("IC substrates") under subheading

8542.90.00 of the Harmonized Tariff Schedule of the United States

("HTSUS") ("Electronic integrated circuits and microassemblies;

parts thereof: . . . Parts"). The defendant interposed an answer

thereto, and its counsel have now filed a Motion to Dismiss

Plaintiff's Action for Lack of Subject Matter Jurisdiction

"[p]ursuant to Rule 12(b)(1) of the Rules of the United States

Court of International Trade".

I

Of course, those Rules do not contemplate such a motion

subsequent to joinder of issue. Rather, USCIT Rule 12(c) provides:

After the pleadings are closed but within such time

as not to delay the trial, any party may move for

judgment on the pleadings. If, on a motion for judgment

on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall

be treated as one for summary judgment and disposed of as

provided in Rule 56, and all parties shall be given

reasonable opportunity to present all material made

pertinent to such a motion by Rule 56.2
Court No. 02-00705 Page 3

responses to certain interrogatories may be relevant to the issue

of subject-matter jurisdiction. See, e.g., Plaintiff's Opposition

to Defendant's Motion to Stay Discovery, fourth, unnumbered page.

Both sides have also filed a consent motion for oral argument

on the issue of authority to order continuation of discovery in an

action not subject to the court's statutory jurisdiction.

Suffice it to state, as discussed hereinabove and after, that

the court's conclusion that it does indeed have such jurisdiction

over this action obviates the need to grant either oral argument or

a stay of discovery in connection therewith other than to extend

the deadlines for discovery set forth in the August scheduling

order by the number of days defendant's motion for judgment may

have interrupted that pretrial process, and they hereby are.

 

3 See, e.g., Memorandum in Support of Defendant's Motion to

Stay Discovery, Attachment B. KICC's entries were of both IC substrates and those

produced from alumina combined with titanium carbide that

is harder than 9 on the Mohs scale and is used as a

substrate for a magnetic head slider in the manufacture

of disc drives for automatic data processing machines

("MH substrates").

Id., first numbered page. Customs had classified the ICs under

HTSUS subheading 6914.10.80 and the MHs under subheading

6914.90.80. 

While KICC protested both classifications, the court does not

read plaintiff's amended complaint as contesting now the classification of the MH substrates.

Here, defendant's motion for such judgment has engendered

submissions outside the pleadings on both sides. Appended to

plaintiff's amended complaint is a schedule "A" of 21 enumerated

protests to Customs, encompassing many more, individual, listed

entries. The parties have produced copies of KICC's lengthy,

written entreaty to the Service Port Director in San Francisco in

support of its protests to the effect that the IC substrates are

classifiable under HTSUS subheading 8542.90.00 -- or, in the

alternative, under subheading 6909.11.40.3 In HQ 964811 (May 1,
Court No. 02-00705 Page 4

 

4 Memorandum in Support of Defendant's Motion to Stay

Discovery, Attachment C, p. 7 (capitalization in original).

2002), the Service issued the following holding (as to KICC protest

280900-100735):

The protest should be GRANTED as to the alternative

classification claimed. The blank ceramic substrates

referred to as IC substrates are classified in subheading

6909.11.40, which provides for, "Ceramic wares for laboratory, chemical, or other uses . . .: ceramic wares for

laboratory, chemical or other uses: of porcelain or

china: other.". . .4

Whereupon the first affirmative defense pleaded by the government

is that this court 

lacks jurisdiction over . . . this action[] because the

alternative relief sought in the protests which are the

subject of this action was granted.

Defendant's Answer to Complaint, p. 3. And it moves for judgment

on this ground.

A

The plaintiff pleads jurisdiction pursuant to 28 U.S.C.

§1581(a), which states:

The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to contest

the denial of a protest, in whole or in part, under

section 515 of the Tariff Act of 1930.

This statute further provides:

A civil action contesting the denial of a protest,

in whole or in part, under section 515 of the Tariff Act

of 1930 may be commenced in the Court of International

Trade by the person who filed the protest pursuant to

section 514 of such Act . . ..
Court No. 02-00705 Page 5

28 U.S.C. §2631(a). On its face, this enactment reflects the

intent of Congress that a partial denial of a protest by Customs be

subject to judicial review. Nonetheless, the defendant denies that

this action can sustain such review. It refers to Sanyo Electric,

Inc. v. United States, 81 Cust.Ct. 114, 115, C.D. 4775 (1978),

which held that 

the proper measure of the extent to which a protest has

been denied or granted is the extent to which the protest

has resulted in a change of the protested decision. When

the decision is entirely changed to conform to a decision

sought by the protest, that protest has been completely

granted. The only logically consistent way to determine

whether a protest has been denied in part is to see

whether any part of the protested decision remains in

effect.

In that matter, the importer had protested Customs classification of its goods under one item (685.50) of the Tariff

Schedules of the United States as opposed to preceding item 685.30

in the same tariff schedule 6 and part thereof or, in the alternative, under an item (678.50) in the preceding part (4) of that same

schedule. The Service granted the protest and reliquidated the

merchandise under the first-claimed item 685.30. The importer

brought suit, which was dismissed upon the court's conclusion that

the

proper procedure would be for the party to advance its

preferred alternative claim in a new protest against the

revised decision following reliquidation of the entry.

81 Cust.Ct. at 115.
Court No. 02-00705 Page 6

 

5 The court reads defendant's answer to this averment as a

denial, but there is, as yet, no substantiation thereof developed

on the record.

Assuming, as the defendant urges, that KICC could have so

proceeded with this matter, the question remains whether it was required to do so. See, e.g., Bd. of Trustees of Leland Stanford

Junior Univ. v. United States, 20 CIT 1422, 1424, 948 F.Supp. 1072,

1074 (1996) ("The court must look to what Customs actually did").

Taking such a look herein, this court cannot conclude that the

plaintiff was so required. The complaint in Sanyo apparently prayed for a further, modest shift from item 685.30, the basis of the

reliquidation, to the second, proposed alternative classification

(item 678.50). Here, the gravamen of the controversy is an

allegedly-precipitous switch by Customs from one distinct chapter

of the HTSUS, 85 (Electrical Machinery and Equipment and Parts

Thereof), to another, 69 (Ceramic Products). Paragraph 7 of the

amended complaint avers:

Prior to March 10, 1999, blank IC substrates imported by KICC were classified under HTSUS subheading

8542.90, as parts of integrated circuits, based on HQ

088157 (July 2, 1992), i.e., the "Diacon Ruling," which

classified ceramic pieces used as bases for integrated

circuits under HTSUS 8542.90, a duty-free classification.

The classification determination made in the Diacon

Ruling was followed by KICC and Customs until Customs

issued NY D88010 (March 10, 1999), which classified blank

IC substrates of porcelain under HTSUS 6914.10.8000 as

"Other ceramic articles: Of porcelain or china: . . .

Other," dutiable at 9% ad valorem.

5

The first two, numbered protests covered by this pleading encompass entries prior to that day in 1999. Moreover, the plaintiff
Court No. 02-00705 Page 7

 

6 Plaintiff's Opposition to Defendant's Motion to Dismiss,

Exhibit C. The acronym "USCS" refers to the Customs Service.

has produced a copy of the following declaration to the Customs

Service sworn to soon thereafter by KICC's erstwhile import/export

specialist:

2. In 1992, I became aware of a new ruling, HQ

088157 (July 2, 1992) (i.e., the "Diacon Ruling"), which

affected the tariff classification of blank ceramic substrates imported by KICC. The Diacon Ruling held that

"ceramic pieces" used as mounting bases for electronic

integrated circuits were properly classified under subheading 8542.90 of the . . . HTSUS[] as parts of integrated circuits.

3. Upon learning of the Diacon Ruling, I transmitted a copy . . . to all of KICC's customs brokers in the

ports then being used by KICC to import ceramic substrates. I instructed the brokers to classify all of

KICC's ceramic substrates for integrated circuits in

accordance with the Diacon Ruling.

4. At the same time I advised KICC's customs

brokers to attach a copy of the Diacon Ruling to each

ceramic substrates entry packet submitted to USCS.

5. When KICC underwent a National Customs Survey

Audit by the USCS in 1993-95, the auditors reviewed the

tariff classification of KICC's imports, including the

tariff classification of blank ceramic substrates. The

auditors did not object to any of KICC's classifications.

6. On several occasions during my tenure with

KICC, I discussed with employees of USCS the implications

of the Diacon Ruling for the tariff classification of

ceramic substrates imported by KICC. During these conversations, the USCS employees never objected to the

classification of ceramic substrates in accordance with

the Diacon Ruling.6

Given this background of entry of KICC merchandise under

HTSUS subheading 8542.90, it is understandable that the primary

thrust of its protest of the Bureau's shift to subheading
Court No. 02-00705 Page 8

6914.10.80 was reversion to the antecedent classification. Of

course, it is also understandable that, as an alternative prong and

within the realm of HTSUS chapter 69, that protest would propose

more correct classification. But the grant by Customs of that

proposed alternative did not affirmatively satisfy the Sanyo test

of whether the KICC protest "has been completely granted." 81

Cust.Ct. at 115. To repeat,

[t]he only logically consistent way to determine whether

a protest has been denied in part is to see whether any

part of the protested decision remains in effect.

Id. Here, half of the duties of the protested decision remain in

effect (under HTSUS chapter 69) in lieu of chapter 85, "a classification necessarily rejected by Customs when it granted Kyocera's

alternative classification claims." Defendant's Reply to Plaintiff's Opposition to Defendant's Motion to Dismiss, p. 4. See also

id. at 5. Ergo, this action contests the denial of a protest in

part within the meaning of 28 U.S.C. §§ 1581(a), 2631(a), supra.

Cf. Atari Caribe, Inc. v. United States, 16 CIT 588, 591-92, 799

F.Supp. 99, 104 (1992).

II

In view of the foregoing, defendant's motion for summary

judgment, dismissing this action for lack of subject-matter jurisdiction, must be, and it hereby is, denied.

So ordered.

Dated: New York, New York

 November 7, 2003

________________________________

 Judge