Slip Op. 01-148

UNITED STATES COURT OF I NTERNATIONAL

TRADE

: PRECISION SPECI

ALTY METAL S, INC., : : Plaintiff, : : Before: WALLACH, J udge v. : Court No.: 98-02-00291 : : UNITED STATES OF AMERICA, : : PUBLIC V

ERSION Defend ant. :

: : [Plaintiff’s motion for summary judgment GRANTED. Defendant’s cross-motion for summary judgment DENIED] Decided: December 14, 2001 Co ll ier Sh ann on S cot t, PLLC , Washing ton, DC ( Mark Austrian , Laurence J. L asoff , Robin H. Gilbert , John M. Herrmann ); Howrey , Simon, Ar

nold & White , Washing

ton, DC ( Jeffr

ey W. Brennan ), for Plaintiff. Stuart E. Schiffer , Assistan t Attorne y G eneral ; Joseph I. Liebman , Attorney in Charg e, Inte rnationa l Trade F ield Off

ice; John J. Mahon , Commercial Litigation Bra nch, Civil Division, Department of Justic e, New Y ork, New York; Chi S. Choy , Office of the Assistant Chief Counsel, International Trade L itigation, United States Customs Service, New York, New York, of counsel, for Defendant. OPINION WALLACH, Judge.2 I PRELIMINARY STATEMENT On September 20, 2000, this court in Precision Specialty Metals, I nc. v. United States , 116 F. Supp. 2d. 1350 (CIT 2000) (“ Precision I ”), denied a motion by Plaintiff Pre cision Specialty Metals, I

nc. (“Precision”) for summary judgment, and ordered that the case be set for trial. Familiarity with that dec ision is presumed. The parties submitted pretrial memoranda during February

2001. After reviewing those memoranda, the court concluded that the issues presented were almost entirely legal, and thus susceptible to resolution or narrowing by motion, rendering trial premature or unne cessary . Transcript of Pretrial Conference date d February 20, 2001 (“Tr.”) at 3-4 . By orde r dated February

21, 2001, the court vacated its earlier order f or a trial, and directed the parties to submit the case for resolution on motion or motions for summary judgment. This case now comes before the c ourt on Plaintiff’s Motion for Summary Judgment Pursuant to United States Court of International Trade Rule 56 (“Plaintiff’s Motion for Summary Judgment” ) and De fendant ’s Cross- Motion for Summary

Judgment ( “Defe

ndant’s Cr

ossMotion”). In its Motion for Summary Judgment, Plaintiff Precision contests Customs’ denial of drawba ck on ce rtain en tries of s tainless s teel trim a nd scrap . Plaintiff

argue s that the f

acts stipulated by the parties re quire a finding that Customs violated 19 U.S.C. § 1625(c)(2), by failing to engage in a

notice-and-comment process prior to issuing a ruling which reversed Customs’ e arlier t

reatmen t of 69 simil ar entr

ies as eli gible f

or draw back. Cus toms base d its denial on a determination that the subject merchandise is “waste” or “valuable waste”, and thus3

is not an “article manufactured or produce d” within the meaning of the drawback statute, 19 U.S.C. § 1313(b) (1994). Plaintiff also contends that, as a matter of fact and of law, the merchandise at issue is not waste, and that Plaintiff is entitled to drawback thereon. In its Cross-Motion, Defendant seeks summary judgment upholding the decision of the Customs Service that the substitution manufacturing drawback claims filed by Precision on entries of stainless steel scrap are not eligible f or drawback, and dismissing Precision’s action. For the reasons stated below, the court g rants summary judg

ment in favor of Precision, and denies Defendant’s Cross-Motion.

II BACKGROUND

This case involves 3 8 claims f

or substitu

tion manuf

acturin g draw back mad e pursua nt to 19 U.S.C. § 1313(b), and Treasury Decision (“T.D.”) 81-74. T.D. 81-74 is a g eneral drawback contract for articles manufacture d using steel, and provides, in pertinent part, for the allowanc e of drawback on imported “[s]teel of one genera l class, e.g. an ingot”, where the “merchandise . . . which will be used in the manufacture of the exported products” is “[s]teel of the same g eneral class, specification and grade a s the [subject imported] steel[.]” The steel used in the manufacture of the exporte d produc ts on which drawba ck is soug ht must be “

used to manufacture new and differe nt articles, having distinctive names, character s and uses.” T.D. 81- 74 further provides that “no drawback is pay able on any waste which results from the manufacturing operation.”1 On July 26, 1993, Pr

ecision n otified Cu stoms of a c

hange in the ter ms of its authority to operate

under T.D. 81-74 concerning the na mes of officers of the company who would sig n drawba ck docume

nts on the c ompany

's beha lf. App. A -5 (L etter fr

om Precis ion to Customs, dated July 26, 1993). Customs approved this amendment by letter of September 7, 1993 witho

ut prejud ice to an y existing dra

wback c laims on fi le. App. A -6 (L etter fr om Customs to Precision, dated September 7, 1993). 4 On Octobe

r 23, 1991 , Precisi on submitte d a letter to Customs expressing

its intention to adhere to and comply

with the terms of T.D. 81-74. See Appendix Accompanying the Memorandum of Law in Support of Plaintiff’s Motion for Summary Judgment March 31, 2000 (“App.” ) A-1. I

n that lett er, Prec ision desc

ribed the various s teel pro ducts on w hich it wou

ld claim drawback. Those products included “stainless steel coils, shee ts and trim” of various chemistries identified by industry standards. Id. at 1. Custom s grant ed Preci sion's r

equest to claim drawback under T.D. 81-74. 1 App. A-4 (Letter fr om Customs to Precision, dated January 10, 1991 [sic -- 1992]). Precision filed 116 drawback entries under T.D. 81-74 be tween December 11, 1991 and May 13, 1996. R

ule 56(i)Statemen

t, ¶ 5. Customs liquidat

ed 69 of these entr

ies with f ull benefit of drawback, in which Precision had claimed e xports of stainless steel trim, stainless steel strip, stainless steel scrap and stainless steel coils, [resulting in Precision’s receipt of a sig nificant sum of duty draw back .] Id. at ¶ 6. Over that period, Customs routinely r equested clarify

ing information concerning Precision's dra wback entries. Id. at ¶ 7. Pri or to Janua ry 1996, Customs never questioned the eligibility of that merchandise for drawback. Id. at ¶ 7. Documentation submitted in connection with the remaining entries, which contained the merchandise at issue, described the mercha ndise by various terms such a s “stainless steel,”2 Customs translated this term as “stainless steel waste”. App. B (Customs HQ

Ruling 227373, dated Oct. 10, 1997) at 2. Plaintiff has not submitted any evidence to contradict this translation.

3 When requ

ired to sta te the “c omplete f

actual b asis supporting th e U.S. Customs Service's determination that entries filed by or on behalf of the Plaintiff claiming drawbac k on the merchandise at issue are not eligible for drawback”, Customs responded that “[t]he merchandise in issue is either waste or valuable waste. N either waste nor valuable waste are manufactured or produced. Acc ordingly, the e xportation of the merchandise in issue is not 5 “metal scrap,” “scrap steel for remelting purposes only ,” “steel scrap sabot,” “stainless steel scrap,” and “desperdicio de ac ero inoxidable.” 2 Id. at ¶ 18. See App. B at 2. During 1992 and 1993, when conducting “pr e-liquidation reviews” of three drawbac k claims tha

t involved

exports of

“[s]tainles s [s]teel co il ends an d side trim

(scrap )”, Custom s asked Precision for additional information and documentation on the exports involved. App. A-8 (Letter from Customs to Pa t Revoir da

ted July 10, 1992) ; App. A-1 1 (Le tter fro m Gary

Appel to Customs dated July 22, 1992). In r esponse, Precision furnished Customs with additional information and documentation, showing that the exported material was stainless steel scra p. Customs liquidated each of those three drawback entries f or the full amount of drawback claimed. See App. A-14 (Notice of Liquidation); Rule 56(i) Stateme nt, ¶¶ 8-10. In January

1996, Customs first questioned the eligibility of Precision' s claims involving stainless steel trim for drawback. See Rule 56(i) Statement, ¶ 7; App. A-7 (January 10, 1996 notice from Customs to Appel-Revoir). In June 1996, Precision rece ived a Notice of Action informing it that 38 of its drawback entries were be ing liquidated without the benefit of drawback in full or part, on the basis that “scrap was shown on the export bill(s) of lading” a nd that “[d]rawback is not available upon exports of valuable waste.” 3 App. A-20. The entries at issueeligible for drawback.” See App. C (Plaintiff's First Set of Inter rogatories and First Request for Production of Docu

ments (I nterrog atory

No. 15) a nd Defe ndant' s Response s thereto (respon se to Interroga tory No. 15)). 6 were liquidated on June 14, 1996. Rule 56(i) Statement, ¶ 14.

III ANALYSIS A Standard of Review
The court subjects this motion for summary judg ment to the usual standard on summary judgmen t. “Summar

y ju dgment i s warra

nted whe n, based upon the ‘ pleading s, deposit ions, answers to interrogatories, . . . admissions on file, . . . [and] affidavits, if any ,’ the court concludes that there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law.” Peg Bandage, I nc. v. United States , 17 CIT 1337, 1339 (1993) (quot ing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247-48 (1986) (citing Rule 56(d) Rules of the Court of International Tra de (1993)). On a motion for summary judg ment, the movant bears the burden of demonstrating that there is no genuine issue of material fact. United States v. F. H. Henderson, I nc. , 10 CIT 758, 760 (1 986) ( citi ng SRI Int’l v. Matsushita Elec . Corp. of America , 775 F.2d 1107, 1116 (Fed. Cir. 1985)). If that burden is not met, there c an be no grant of summary judgment. In re viewing this motion, the cour

t review s Customs’ d

enial of Plaintiff ’s prote st de

novo . See Rheem Metalurgica S/A v. United States , 20 CIT 1450, 1456, 951 F. Supp. 241, 2464 Where a s tatute is a mbiguous or silent on a speci fic issue , and it is apparent from the age ncy ’s gene

rally confer red authority

and other statutory circumst ances that Congr

ess expects the agency

to be able to speak with the force of law when it addr esses ambiguity in the statute or fills a space in the enacted law, a re viewing court “is obliged to acce pt the agency ’s position if Congress has not previously spoke n to the point at issue and the agency ’s interpretation is reasonable.” Mead ,121 S.Ct. a t 2172 The

necessa ry corolla ry to this prin

ciple is that, whe re it is notapparent that Congress expects the age ncy to be able

to speak with the force of law, the agency ’s position is not entitled to deference. 7 (1996), aff’d

160 F.3d 1 357 (Fe d. Cir. 199 8). Althou gh the d ecision o f the Custo ms Servic e is presumed correct and “[t]he burden of proving othe rwise shall rest upon the party challenging such decision,” the court's role in reviewing the decision is to reach the correct result. 28 U.S.C. § 2639(a )(1) (1 994); see also Jarvis Clark Co. v. United States , 733 F.2d 873, 878 (Fed. Cir. 1984). If th e gove

rning st atute is c lear on i

ts face , the cour

t must follo w Congr

essional intent, regardless of the existence of an interpr etation by Customs to the contrary

. Chevron U.S.A., Inc. v. Natural Resources Defense Council, I nc. , 467 U.S. 837, 842-43 (1984). “[T]he fair measure of defere nce to an agenc y a dminister ing its ow n statute has been u

nderstoo d to vary

with ci rc um st an ce s, an d c ou rt s h av e l oo ke d t o t he de gr ee of th e a ge nc y’s ca re , i ts co ns is te nc y, formality, and re lative expertness, and to the persuasiveness of the age ncy’s position.” United States v. Mead , 121 S.Ct. 2164, 2171 (2001) (footnotes omitted); 4 see also Chevron , 467 U.S. at 842-43. Agenc

y in terpretations wh

ich lack the forc e of law a

re "en titled to r espect . . . but only to the ext ent that th ose interpre tations h ave the 'power to persuade'." Christens en v. Har ris County , 529 U .S. 5 76, 58 7 (200 0) (ci ting Skidmore v. Swift & Co. , 323 U.S. 134, 140 (1944)); Mead , 121 S.Ct. at 2168.5 This statu te provid es as fol lows: § 1625. Interpretive ruling s and decisions; public information (a) Publication. Within 90 days after the date of issuance of any

interpretive ruling (including any ruling letter, or internal advice memorandum) or protest review decision under this Act with respect to any c ustoms transaction, the Secretary shall have such ruling or decision published in the Customs Bulletin or shall otherwise make such ruling or decision available for public inspection. * * * (c) Modi fication and r evocati on. A proposed

interpre tive rulin g or decis ion which would- (1) modify (other than to cor rect a clerical error)

or revoke a prior interpre tive rulin g or de cision whi ch has be en in eff ect for at least 60 days; or (2) have the effect of modifying the treatment previously accorded by the Customs Service to substantially identical transactions; shall be published in the Customs Bulletin. The Secretary shall give interes ted parti es an opport unity to subm

it, during no t less tha n the 30-day per

iod after the date of suc h publication, comm ents on the correctness of the proposed ruling or decision. After consideration of any comments received, the Secretary shall publish a final ruling or decision in the Custom s Bulletin wit hin 30 days afte r the clo sing of the comment period. The final ruling or decision shall become effective 60 days afte r the date

of its publicat

ion. 8 B Customs’ Denial of Plaintiff’s Protest Did Not Conform to the Requirements of 19 U.S.C. § 1625(c) In Precision I , the court considered Plaintiff’s argument that Customs’ determination that
Pr ec is io n’ s s ta in le ss st ee l s cr ap is no t e li gi bl e f or dr aw ba ck ca n o nl y be ap pl ie d p ro sp ec ti ve ly, under 19 U.S.C. § 1625(c)(2) (1994). 5 The cour t held tha t, to prev ail on its § 1 625(c)(2) claim,19 U.S.C. § 1625 (Emphasis supplied indicates portions on which Plaintiff relies).

6 Specifically, the c ourt sought a detailed description of the merchandise on w hich drawback was denied, togethe r with information regarding the date s, ports, and exact nature of each of the ear lier tra nsaction s. Precision I , 116 F. Supp. 2d. at 1378. 9 Plaintiff was required to show that Customs’ October 10, 1997 denial of Precision’s protest was a ruling , and that

it chang ed a “tr

eatment” previous ly a

ccorde d by

Customs to su

bstantial ly identical transactions, and that Customs failed to follow the notice-and-comment procedur e outlined in § 1625(c)(2). Precision I , 116 F. Supp. 2d. at 1377. Based on these criteria, the cour t concluded in Precision I

that Plaintiff had not presented the court with sufficient record e vidence to conclude that all five elements of § 1625 are satisfied. Id. at 1377-78. The court found that the payment of dr

awback on 69 previous entries of stainless steel scrap wa s a “treatment” under § 1625(c) (contingent on a showing by Plaintiff that more than one of these entries was “substantially identical” to the mer chandise at issue), because those prior entries c onstituted more than a single transaction. Id. at 1377. T he court determined, howe

ver, tha t Plaintiff had fail ed to provide the court with evidence documenting its claim that Customs approved dra wback on substantia lly i dentica

l transac tions. 6 Id. at 1377-78. The court also found that Plaintiff had failed to present the court with anyevidence to indicate whether or not Customs followed the noticeand-comment procedure prior to the issuing the October 10 decision. Id. at 1378. The court conclude d that the

absence of record evide

nce on the se points b arred s ummary judgmen t in Plaintiff’s favor in Precision I

. Id. Plaintiff now claims that the facts stipulated by the parties since the issuance of Precision
Iestablish that Customs approved drawback on substantially identical transactions, and that10

Customs fa

iled to fol low the no tice-an d-comme nt proce dure pri or to issuin g its Oct ober 10th decision . Plaintiff

contends that these

stipulations remove

any issue of d

isputed f act, and entitle it to summary judgment as a ma tter of law. Specifically , the parties stipulated that “[t]he transactions described in the export bills of lading for the 69 drawbac k entries liquidated by Customs between October 15, 1993 and July 7, 1995 with the bene fit of drawback were substantially identical to the transactions described in the export bills of lading for the 38 entries for [sic] wh

ich Customs

liquidate d without the benef it of draw back and which a

re at issu e in this litigati on.” Anne

x Pursuant to

USCIT R. 56(h): P laintiff

’s Stateme

nt of Mate

rial Fa cts Not in Dispute (“Plaintiff’s 56(h) Statement”), ¶ 71. The parties also stipulated that, prior to issuing the October 10th decision, “Customs did not publish this ruling in the Customs Bu lletin as a proposed ruling or decision, nor did C ustoms gi ve inter ested pa rties an o pportunit y to submit – during a period of at least 30 day s afterward – comments on the correctne ss of that ruling. Nor did Customs consider any comments on that ruling, or subsequently publish a final ruling thereafter.” Plaintiff’s 56(h) Statement, ¶ 78. These facts are sufficient to resolve the fac tual issues which the court identified in Precision I as prec luding su

mmary judgmen t. 1 The Defendant’s Arguments Regarding 19 U.S.C. § 1625(c)(2) Are Cognizable At This Stage In the Litigation
Despite the government’s stipulation of these facts, it interposes leg al arguments that challenge the court’s construction of § 1625(c )(2), as set forth in Precision I . These a rgumen ts represent, in essence, a reque st to reargue the issues raised in Precision I , in which the court7 Defendant points to the transcript of the Februar y 20, 2001 pretrial c onference, at which the court stated, “Does the fact that [Defenda nt’s opposition to Precision’s first summary judgment motion] was stricken prohibit the government from raising those a rguments now?” Tr. at 7, “I ’m not sure

it [ Precision I ] still does [st and].” Tr . at 21. De fendant takes the se statements as an invitation for it to relitigate the arguments containe d in its stricken brief. Defendant’s Memorandum of Law I

n Support of Its Cross Motion for Summary Judgment at 4. In the pretrial confer ence, c ounsel for Precis ion arg uably conced ed that it would be ap

propria te for the court to review the arguments in question: “[I ]t would be my view that the Court ought to rea ch the correct result . . . such tha t from the practic al point of

view I am perf ectly happy to have th

is Court take another look at its opinion and see if it changes any thing.” Tr. at 17-18. Defendant also argues that it should not be prec luded from raising, at this stage of the litigation, the same arguments contained in its stricken brief in Precision I . Defen dant sug gests, without citation to any authority, that the court’s earlier decision to impose a sanction does not bar the court from considering arg uments which could have been raised at that stag e of the litigation but were stricken. 11 struck th e gove

rnment’s briefs. 7 Although, on its face, USCIT R. 59 provides only for “[a] new trial or rehearing . . . in an action tried without a jury or in a n action finally deter

mined,” it has been well-recognized that the concept of a new trial under [this Rule] is broad enough to include a re hearing of any

matter decided by the

Court[.]” Nat'l Corn Growers Ass'n v. B aker , 9 CIT 571, 584, 623 F. Supp. 1262, 1274 (1985), rev'd

on other g

rounds, 840 F. 2d 154 7 (Fed. Cir. 1988) (quot ing Timken Co. v. United States , 6 CIT

76, 76, 569F. Supp. 6 5, 67 (198 3), (quot ing 11 Cha

rles Ala n Wright & Arthur R. Miller, Federal Practice and Proce dure § 2804 at 35 (1973))). According ly, the court will consider Defendant’s arguments in light of USCIT R. 59. As this court has previously noted, the g rant of a motion for reconsideration is within the sound discretion of the court. Union Camp v. United States , 963 F. Supp. 1212, 1213 (1997) (citi ng Kerr-McGee Chem. Corp. v. United States , 14 CIT 582, 583 (1990)). “The pur pose of a rehearing is not to relitigate a c ase,” but to rectify a significant flaw in the conduct of the original8 Defendant implicitly asks the c ourt to disregard the law of the case doctrine. “The law of the case doc trine hold s that 'a

decision on an issue

of law ma

de at one stage o f a case becomes a binding precedent to be followe d in successive stages of the same litigation.’ ” Chung Ling Co., L

td. v. United States , 17 CIT 829, 836, 829 F. Supp. 1353, 1360 (1993) (citing 1b James W. Moore et al., Moore' s Feder al Pract ice ¶¶ 0 .404[1] (2d e d.1992)) . In o ther wor ds, it is “the practice of courts ge

nerally to ‘re fuse to reopen what has been decided.’ ” Koyo Seiko Co., Ltd. v. United States , 19 C IT 873, 8 80, 89 3 F. Su pp. 52 , 57 (1 995) ( quot ing Messenger v. Anderson , 225 U.S. 436, 444 (1912)). “Under this doctrine, a court will gene rally not reope

n an issue already

decided unless (1) the evidence in a subsequent trial wa s substantially different, (2) controlling authority ha s since made a contrary decision of law applicable to such issues, or (3) the decision was clearly

erroneous and would work a substantial injustice.” Id. , 19 CIT at 880, 893 F. Sup

p. at 57 (c itations om

itted). D efenda

nt has not presente d the cour t with any of these three factors, nor any

other factor, to persuade the court that it should disturb its previous decision. Nevertheless, as Defendant notes, this court is obliga ted under Jarvis Clark Co. , 733 F.2d 873 (Fed. Cir. 1984) to reach the cor rect decision.

9 Defend

ant also a rgues t hat the ma

tter shou ld be remanded to C

ustoms to al low it to determine the proper amount of drawback, if a ny, on the subject entrie s. Defendant’s Mem. at 27 (“Since only a sma

ll portion of the imported merchandise resulted in the exported scrap, the amount of duties refundable as drawback for the exported scrap must be properly apportioned.”) Plaintiff contests this assertion, noting that “[b]ecause Precision’s drawback claims involving 12 proceedings. Kerr-McGee , 14 CIT at 583 (citations omitted). Although specific grounds upon which a court may

grant such a motion are not listed in the Rule, it is well established that the court will not disturb its decision unless it is “manifestly erroneous.” United Sta tes v. Gold Mountain Coffee, Ltd. , 8 CIT 33 6, 337 , 601 F . Sup p. 212 , 214 ( 1984) (quot ing Qu ig le y & Mannard, Inc. v. United States , 61 CCPA 65 (1974)). 8 As set forth below, Defendant has failed to dem onst rate m anifes t erro r in th e court ’s earl ier ru ling. 2 There Are No Gr ound s For a R emand t o All ow Cu stoms to Address Plaintiff’s Arguments Regarding 19 U.S.C. § 1625(c)(2)
Defendant argues 9 that remand is necessary , because Precision failed to raise its § 1625stainless steel scrap were filed on the basis of the amount of stainless stee l ‘appearing in’ the

exported scrap, there is no need or rationale for r emanding the claims to Customs for a determination of whether Precision’s claims apportioned drawba ck between stainless steel sheet and strip and stain less stee l scrap. ” Plaintif f’s Response in Opp osition to D efenda nt’s Cross

Motion for Summary Judgment and Reply in Support of Its Motion for Summary Judgment at 5. Precision corre ctly

notes, however, that Defe ndant has failed to include a request for rema nd in its motion, although its briefs devote several pages to the issue.

10 Precision does not dispute that it did not raise this argument before Customs. Defendant also argues that Prec ision failed to identify § 1625 in its summons or complaint as the basis of a claim, thus depriving Defendant of fa ir notice of the claim. Defendant arg ues, without citation, that the court should thus decline to consider the § 1625 claim. To the extent that Defendant seeks to dismiss this claim, the court declines to do so. 13 argume nt befor e Customs. 10 Specifically, the government argues that Customs should be permitted to determine “if the granting of the 68 [sic] drawback claims involving stainless steel scrap constituted a ‘treatment’ for purposes of 19 U .S.C. § 1625(c)(2).” Defendant’s Memorandum of Law in Support of I ts Cross-Motion for Summary Judgment (“Def endant’s Mem.”) at 26. Defendant does not offer a ny leg al theory or a

uthority to support its remand request, nor does Plaintiff direct the court’s attention to any authority supporting its position. Implicit in Defendant’s remand c laim is reliance upon the doctrine of primary jurisdict ion. The c ommon law d

octrine of primar y ju risdiction is “desi gned to

guide a court in determining whether and when it should refra in from or postpone the exercise of its own jurisdiction so that an agency may first answe

r some question presented.” Borlem S.A. - Empreedimentos Industriais v. United States , 13 CIT 231, 234, 710 F. Supp. 797, 800 (1989). The purpose of the doctrine is “to give eff ect to legislative intent underly ing the established regula tory scheme by r

eferr ing matte rs involvin

g age ncy expertise back to th e age

ncy so that it may, in the first instance, pa ss upon the issue from its unique administrative perspective.” Id.14

The central concern is the “promotion of uniformity in agency

decisions and respect for the deference due the ‘expert and spec ialized knowledge of the agencie s.’ ” Id. (citi ng United States v. W. Pac. R.R. Co. , 352 U.S. 5 9, 64 (195 6)). The “ ‘doctr ine requ ires judic ial abste

ntion in cases where protection of the integ rity of a re gulatory

scheme dictates preliminary resort to the
agency which administers the scheme.’ ” Id. , 13 C IT at 235 , 710 F . Sup p. at 8 00 (qu otin g United States v. Philadelphia Nat. Bank , 374 U.S. 321, 353 (1963)). Two fac tors ge nerall y guide app licat ion o f the d octri ne: “ ‘[ I]n case s rais ing issues of fact not within the conventional experience of judges or cases r equiring the exercise of administrative discretion , agencies created by Congress for regulating

the subject matter should not be passed over.’ ” Western Pa

cific , 352 U .S. at 64 (em phasi s adde d) (qu otin g Far East Conference v. United States , 342 U.S. 570, 574 -75 (1952)). “[W]here the question is simply one of construction the courts may pass on it as an issue ‘solely of la w.’ But where words in a tariff a re used in a p eculiar

or techn ical sen se, and w

here extr insic evid ence is necessa

ry to deter mine their meaning or prope r applic ation, so t

hat ‘the enquiry is essenti ally

one of fa ct and of discreti on in technical matters,’ then the issue of tariff application must first g o to the [agency ].” Id. (quoting Great N. Ry. Co. v. Mer

ch. Elevator Co. , 259 U.S. 2 85, 291 (1 922)); see also Borlem , 13 CIT at 237, 710 F. Supp. at 802 (it is “inappropriate to invoke the doctrine of primary jurisdiction [where] the question before [the] Court [is] entirely one of statutory interpretation.”). Here, the facts re lating to

Plaintiff ’s “trea tment” cl aim have

all been stipulate d. The que stion pre sented is one of pure statutory

interpretation, and the relevant statute does not involve the tariff provisions. The doctrine of primary

jurisdiction does not support remand in this case.15 3 19 U.S.C. § 1625(c) (2) Gov erns the F acts of This C ase
Defendant next argues that § 1625(c)(2) is not applicable to these facts, arguing tha t the court erred in its earlier construction of the term “ treatment.” After careful conside ration, the court is u npersua ded by Defend ant’s ar gument.

a The Actions of Customs’ Officers Give Rise to a “Treatment”, Without A Sho wing of Knowledg e or Inte nt

Defend ant conte nds that “ in order

to qualify

as [a] ‘tre atment pr

eviously accord ed to substantially similar transactions,’ Customs must have customarily acted in a particular manner which [sic] respect to prior transactions to which it either agree d or determined to be suitable and proper.” Defendant’s Mem. at 28. Def endant bases its argument on the use of the word “accord” in 19 U.S.C. § 1625(c)(2), which re quires the use of the notice and comment procedure where a “proposed interpretive ruling or decision . . . would . . . have the effect of modify ing the treatment previously a

ccorded by

the Customs Service to substantially identical transactions.” Defend ant cites the follow

ing def inition of t

he term “ accord

”: “1: to bring int

o agre ement: RECONCILE 2a : to grant as suitable or proper b: to allow as concession . . . .” Webster’s New Collegiate Dictionary

(1977). See Defend

ant’s Me m. At 28. “

Accord ” is elsew here de fined as : 1: to bring into agreement : RECONCI LE, H ARMONI

ZE <the scientist s’ conclusions seem contradictory but can be ~ ed

by calm rea soning> 2a: to grant as suitable or proper : to rende r as due < parents have rig hts which a

re not ~ ed

to strang ers or ne ighbors

– A.I . Melden>

<forme rly , historia

ns ~ ed to “justic e” less than its due place – J.G. Edwards> b: ALL OW, CONCEDE <the law ~ s them16

favored stat us> <he decided to ~ himse lf the deli ght of breaking t he news – P.B. Kyne> c: AWARD <the

Presiden t ~ ed him an honorary title> d: ALLOT <in spite of the injustic es ~ ed him> . . . . Webster’ s Third Ne

w Int ernatio nal Dicti onary

at 12 (198 6). Def

endant th us argu es that, to constitute a treatment under § 1625(c)(2), Customs must have determined the pre decessor

tr an sa ct io ns to be “s ui ta bl e o r p ro pe r” . D ef en da nt ’s Me m. at 28 -2 9. Ex pa nd in g o n t hi s t he or y, Defendant argues that Prec ision must establish, in addition to the elements identified by the court in Precision I , that Customs “knowingly” g ranted Precision’s claims for drawback on the 69 entries, in order

to preva il on its “tr

eatment” theory . Defen

dant’s Re ply to Plaintif

f’s Response in Oppositi on to Def

endant’ s Cross-Mo tion For Su mmary Judgment a

nd Reply in Support o f Its Motion for

Summary

Judgment ( “Defe

ndant’s Re

ply Mem.”) a

t 5. The question the

n arises as to who at Customs must deem the subject transactions “suitable or proper,” or “knowingly” g rant drawback. On this issue, Defendant cites 19 C.F.R. § 191.10(a), arg uing that there can be no “treatment” where Customs has not performed the ver ification authorized under this regulation. Notably absent fr

om Defendant’s brief is any quotation of the text of this regulation, a reading of which compels the rejection of Defendant’s c laim. Although subject to slight variants during the
ye ars 1991 t

hrough 1996, dur

ing whic h Customs g

ranted d rawbac k on the 69 entries c laimed to constitute the pred icate “treatme

nt,” the f ollowing iteration is ty

pical in a ll materia l respects: § 191.10 Ve

rificat ion of dra wback c laims. (a) Claims . A drawback claim filed under a dra wback contract shall be subject to verification by the

regional Regulatory

Audit Division under the jurisdiction of the regional commissioner in whose region the c laim is filed when the factory covered by

the claim also is located in the same region.11 The gov ernment claims tha

t the “pr eliquida tion revie w” perf ormed by Customs’ agents was “cu rsory in nature and did no t cover a

ny i nterpre tive aspe ct of dra

wback e ligibility pursuant to either the statut e or cust oms reg ulations. ” Defe

ndant’s M em. at 30. Customs, however, was presented with numerous opportunities to review Pre cision’s claim for drawback on scrap, starting with Precision’s submission of its initial intention to adhere letter, which referenced “trim”, another term for scrap. The first of the 69 drawba ck claims granted by Customs specifically stated that the exported g oods included “scrap”. See, e .g. , Plaintiff ’s Exs. 44, 44a, 45, 45a, 46, 46a, 47, 47a, 55, 55a, 57, 57a, 73 and 73a (dra wback entry

forms and liquidation notices

thereon ). Customs g

ranted d rawbac k on this, a

nd 68 othe

r entrie s similarly denominated. Indeed, there is nothing in the provisions of 19 C.F.R. § 191.10(a) which requires any g reater scrutiny

by Customs than that given by those officials who granted Precision’s 69 claims. Similarly, Customs’ claims that “the nature of the mer chandise which Precision manufactured and exported was far fr om clear,” Defendant’s Mem. at 30, is irrele vant under the “treatment” provisions. Ev en if it we re rele vant, the Court find s those cl aims dising enuous, in light of the consi stent tra

il of corr esponde nce and submissions

in which Pr

ecision a nd its ag ents describe the entries on which drawback was granted as “scrap”

. See, e .g. , Plaintiff’s Exs. 1a (letter dated July 22, 1992 from G. Appe l to V. Golloday of Customs), 1j, 1k, 1l (including copies of “scrap tickets”), 71, 71a (letter dated Oct. 1, 1993 from G. Appel to R. Ficek of Customs). 17 19 C.F.R. § 191.10(a) (1992) (emphasis added). The empha sized term, “subject to”, indicates that, whil e any

drawba ck claim may

be verified, such verification is not performed for every claim. Th

is readin g is rei nforce d by

the follow

ing subse ction, wh

ich state s that “[i]f t

he claim selected for verification is filed in one region and on e or more factor ies cove red by the claim is located in another region, the reg ional commissioner

select ing the cla

im for verification . . . may forward copies of the claim and the draw back contract, and request for ver fication to the regional commissioners in whose regions the other factories ar e located.” 19 C.F.R. § 191.10(b) (1992) (emphasis added). Claims are selected for verification; verification is not a necessary or inherent part of the drawback process. As with Prec ision’s entries, drawback may be granted on entries made over a period of y

ears, and never be subjected to any verification whatsoever. 11 This fact18

precludes the adoption of Defendant’s arg ument. If the court wer

e to hold that verification is an essential prerequisite for the creation of a “ treatment” under § 1625(c)(2), the provisions of that section would be ev

iscera ted; wher e there is no assur

ance tha t the entr ies are subject to verification, there is no assurance of “tre atment.” The government also argue s that Customs “never articulated a position that stainless steel scrap was eligible for drawba ck which could constitute a ‘treatment’ within the intended meaning of § 1625(c)(2).” Defendant’s Me m. at 32 (citations omitted). This argument equates “position” with “tre atment”, a link tha t must be re

jected, based on

the fac e of § 162 5(c)(2 ) and on it s legislative history. As this cour t noted in Precision I , “the use of the word ‘treatment’, rather than ‘position’, represents a Congressional depar ture from the language of the apparent source text of [19 CF R] § 177.10. T he court can only assume th at this cha

nge wa s made in a

n effor t to
move away

from the strict judicially-cr eated definition of the term ‘position’”, Precision I , 116 F. Supp. 2d at 1377, particularly a s the requirements of § 1625 “already appeared, in more detailed and discretionary

form,” id. at 1374, in § 177.10, and since “Congress . . . is presumed to know the existing law pertinent to legislation it enacts,” id. at 1375. Precision argues that Customs’ reading would “c ompletely eliminate the statute’s cle ar bifurca tion of Cust

oms’ trea tment of ‘ substantia

lly i dentica

l transac tions’ und

er § 1625 (c)(2) , in contrast to the consideration of Customs’ ‘policies’ or ‘positions’ under § 1625(c)(1) .” Plaintiff’s Reply Mem. at 9. The g overnment replies, correctly, that “the terms ‘policy’ and position’ do not appear in either subsections (c)(1) or (c) (2),” and argues (without citation) that “[a]ll of § 1 625 rela

tes to Custo ms policie s and posit ions,” contending

that “(c )(1) re lates to19

Customs policies and positions as revealed in written form, i.e. , ‘prior interpretive ruling or decision,’ while subsection (c)(2) covers the situation wher e Customs policy was not written up but was manifested in Customs Service action.” Defendant’s Reply Mem. at 6. The government attempts to buttress its argument, arguing that the cour t erred in finding that the use of the term “treatment” constituted a departure from the use of the term “position” in the apparent source text of 19 CFR § 177.10. Rather, contends the government, the statutory language “trea

tment previous ly a

ccorde d by

the Customs

Service to substan

tially identica l transac tions” “w as likely adopted from 19 CFR § 177.9, not § 177.10.” Defendant’s Reply Mem. at 6. 19 C.F.R. § 177.9, the subsection which uses the cited languag e, makes no mention of “positions,” “policies” or “practices.” This section (Customs’ own regulation) is the apparent source text from which the term “treatment” was g rafted onto § 177.10. A review of this section further reinfor ces the d istinction drawn be tween the terms “tr eatment” and “pos ition” in Precision I . 19 C.F.R. § 177.9 describes in detail the type s of proof needed to establish a “treatment” under the regula tory scheme w

hich Congress adopted in § 1625(c)(2): In apply ing to the Customs Service for a delay in the effective date of a ruling letter [which has the effect of modify ing a treatment previously accorded by Customs to su

bstantial ly id

entical t ransac tions], an affecte d party must demonstrate . . . that the treatment previously accorded by

Customs to the substantially identical transactions was sufficiently consistent and c ontinuous that such party re asonably re lied thereon in arranging f or future transactions. The evidence of past treatment by the Customs Service shall cover the 2-y ear period immediately prior to the date of the ruling letter, listing all substantially identical transactions by

entry number ( or other

Customs ass igned n

umber), the quant

ity and value of merchandise covere d by eac h such transaction (where applicable), the ports of entry, a

nd the dates of final action by the Customs Service. The evidenc e of rel iance shall includ e contra cts, purc hase ord ers, or o ther mate

rials tending to establish that the future transactions were a rranged based on the20

treatment previously a

ccorded by

the Customs Service. 19 C.F.R. § 177.9(e)(2) (2000). The only proof needed to establish a treatment is a description of the transactions; the only intent re ferenced by the regulation is that of the importer , in arranging its affairs in reliance on the treatment. This rea ding is f urther r einforc ed by

a revie w of the notice pr

oposing the amen dments that added the relevant languag e to § 177.9. Defendant argues that this ref lects Congress’ intent in later enacting 19 U.S.C. § 1625(c)(2), and that this notice demonstra tes that there was no “intent to broaden the scope of § 1625(c)(2) to ac tions that did not reflect the policies and positions of the Customs Service even though they had not been expressed in written rulings or decisions.” Defendant’s Reply Mem. at 7. While Customs’ notice may or may not be probative of Congr ess’ inte nt, the not

ice dire ctly

contrad icts the g overnme

nt’s asse rtion. I t reads, in pertine nt part, a s follows: Uniformity of Customs Officers' Decisions Section 73 61(c) of

the Anti- Drug A

buse Ame

ndments Ac

t of 1988 ( Title VI, Pu b. L. 1 00-690) r

equires the Secr etary of the Tr easury to promulg ate regulati ons to prov

ide for nati onwide uniformity of cer tain decis ions made by U.S. Customs Service officers and to est ablish pr ocedure s by

which ce rtain parties affected by

the lack of such uniformity may have the

alleged inconsistencies resolved. The number of Customs Service personnel charged with decision-making responsibilities affecting the importation of merchandise at the vario us ports of e ntry in the United Sta

tes is subst antial. Notwithstanding the existence of a variety

of programs and procedure s designed to foster uniformity in the decisions it makes, Customs recog nizes that inconsistent decisions occur and will inevitably continue to occur. * * * Although nationwide inspection/examination guidelines are issued from time to time, the effect

ive enforc ement

by the Customs Service of the tar iff and other21

laws i t is ch arged wi th enf orcin g requires that these guidelines be applied with local discretion and be augmented by random examinations in order that no importation ever be assured beforehand that it will be exempt from phy sical examination. Never

theless, the Customs

Service realizes that the d

ecision to examine merchandise at one port while entry of identical merchandise is permitted at an ot he r p or t w it ho ut ex am in at io n m ay b e p er ce iv ed as an in co ns is te nc y. The Customs Service recognizes that eve n the small number of real or apparent inconsistencies that occur may pose imm ediate and grave consequenc es to the

parties di rectly

involved, a s well as to the businesse s and enterprises whose livelihood depends on the utilization of the particular import facilities and services at the port where the inconsistencies are alleged to exist. Moreover, insofar as the assessment of Customs duties is concerned, uniformity is mandated by Article 1, Section 8 of the Constitution of the United States. The Customs Service therefore proposes to establish a procedur e whereby alleged inconsistencies in decisionmaking may be brought directly

to the attention of Customs Headquarters by affected parties for expedited resolution. *** The petit ioning pa rty will be re quired to

furnish information suffic ient to document that appa rent inc onsistenc ies exist. I n the cas e of entr

ies of mer chandise alleged to have been treate d inconsistently, the competing e ntries must be identified as to port of entry , date, and entry number and the merchandise must be fully described ( including brand names, when present and samples, if possible)

. . . . In the case of other

alleged inconsistencies, the competing entr ies or other transactions or e

vents must b e descr

ibed in suf

ficient d etail tha t the Custom s Service may quickly verify with the Cu stoms fiel d officia ls involve d that the

facts are as alleged. *** The Customs Service also proposes to add a new paragraph, (e) to §§ 177.9 , Cu st om s R eg ul at io ns (1 9 C FR 17 7. 9( e) ), to pr ov id e f or a s im il ar de la y in the event the Customs Service issues a ruling which, although the matter is not covered by an earlier ruling, modifies the treatme nt previously accorded to substantially identical transactions by the Customs Service . Affected parties must request that su

ch a dela y be grante d and must i

nclude with that re quest information identifying the past transactions claimed to have been relied on as well as e vidence of that re liance. As with the request s for a de layed effe ctive da te made under proposed §§ 177.9(d)(3), Customs Regulations (19 CFR 177.9(d)( 3)), the Customs Service will respond to all such requests individually or by a general notice published in the Customs Bulletin. Proposed Rules: Certain Administrative Procedures , 54 Fed. Reg. 8208, 8209-10 (Feb. 27, 1989)22

(emphasis added). The last quoted parag raph belies Defendant’s assertion. Subsection 177.9(e) is designed to provide rights to importers agg rieved by a

new ruling where “the matter is not covered by

an earlier ruling” and the new ruling “modifies the treatment previously accorded substantia lly s imilar tra

nsaction s.” This notice rec ognizes t he fact that indivi dual Custom s officers may

formulate disparate “treatments”. As noted in Precision I , this term is distinct from the officially for

mulated “ruling”, “position” or “policy ”. The government has failed to point to any thing in the language or the le gislative history of, or the regulatory

scheme surrounding, § 1625(c)(2) whic h persuades the court that its earlier holding -- that “[t]he term ‘treatment’ looks to the actions of Customs, rather than its ‘position’ or policy” – is err

oneous. Precision I , 116 F. Supp. 2d at 1377 (emphasis in original). Accordingly , the court finds no legal basis for a review of Customs’ factual arguments that “the nature of the merchandise which Precision manufa ctured and exported was far from clear .” Defendant’s Mem. at 30. This reading of § 1625(c)(2) is consistent with, and furthe rs, the legislative history underlying

the Customs Modernization Act, which was passed as part of the North American Free T rade Ag reemen t Act, Pub. L. 103 -182 § 623 (1993), a nd substan

tially amended 19 U.S.C. § 1625: The guiding principle in our discussions with the trade community is that of “shared responsibility” . Customs must do a better job of informing the trade community of how Customs does business; and the trade community must do a better jo b to assur e complia nce with U .S. trade

rules.

. . . As a general statement, Customs supports the JIG conc ept of “informed compliance.” Importer

s have the right to be informed about Customs rules and regulations, and its interpretive rulings and direc tives, and to expect certainty tha t23

the ground rules would not be unilaterally changed by

Customs without the proper notice and an opportunity to re spond. Customs Mode

rnization a

nd In formed Co

mpliance Act: Hea ring on H .R. 3935 B efore t he House Comm. on Ways and Means, Subcomm. on Trade , 102d Cong. 91 (1992) (statement of Commissioner Carol Hallett, United States Customs Service). See alsoS. Rep. No. 103-189 at 64 (1993) (“Title VI also implements the conc ept of ‘informed compliance,’ which is premised on the belief that importers have a right to be informed a bout customs rules and regulations, as well as in terpretive rulin

gs, and to expect c ertainty

that the Cu stoms Service will not unilate rally change the rules without providing importers prope r notice and opportunity for comment.”). The
go ve rn me nt ha s f

ai le d t o p oi nt to an y co nt ra ve ni ng le gi sl at iv e h is to ry o r o th er au th or it y. b Precision Complied With the Conditions for Drawback
Defendant then argues that a f inding that the 69 earlier entries constituted a “trea tment”, which requires a notice and comment process to cha nge, “would impermissibly r eward plaintiff’s failure to comply with the statute, r egulations and contract.” Defe ndant’s Mem. at 32, (citing Guess?, Inc. v. United States , 944 F.2d 855, 858 (1991) (Drawback involves an exemption from duty, and is thus “a statutory privilege due only

when enumerated conditions are met.”); 19 U.S.C. § 131 3(l) (“A

llowance of the pr ivilege s provide d for in th is section shall be s ubject to compliance with such rules and regulations as the Sec retary of the Treasury

shall prescribe . . . .” )). Defend

ant claim s that Pre cision fa iled to co mply

with the te

rms of the

drawba ck statute12 Defendant claims that the court concluded in Precision I that Prec ision’s sc

rap is not a manufactured or produced article under 19 U.S.C. § 1313(b). The court made no such finding in Precision I . Rather, it found that Precision had not met its burden on summary judgment, leaving the court with insufficient evidenc e to issue a finding as to whether or not scrap is waste. Precision I , 116 F. Su pp. 2d. at 1371. Nota

bly absent f rom Precision I

is any finding that scrap is waste or valuable waste. 24 because , accor

ding to D efenda

nt, 12 Precision claimed drawback on waste, rather than articles that had been manufactured or produce d. Defendant’s Mem. at 34. The court must reject this argument. Defenda nt asks the court to hold Precision to a standard that Customs itself did not follow, insofar as Customs accepted Precision’s initial letter of intent to adhere, and approved 69 entries there after. Defendant has pointed to nothing in the regula tions or Cus toms laws that Preci sion has c ontrave ned. I n short, th e eligi

bility of stainle ss steel scrap for drawback wa s a gray area. If the

court finds the provisions of § 1625(c) inapplicable where Customs changes its treatment in a g ray ar ea of the drawback law, then § 1625(c) will have no applicability in any situation. The court lea ves for another day

the question of whether § 1625(c) is vitiated when the alleg ed “treatment” by Customs is the approval of drawback against the explicit regulator y or statutory

denial of drawback on the goods at issue.

c § 1625 Is Not Equitable Estoppel
Defendant cites the long-established tenet that “ a party c annot claim estoppel against the Government based upon the actions of an ag ency e mployee.” Id. at 32. Defendant, however, abbreviates the oft-cited rule, which applies to equitable estoppel . "Estopp el is an e quitable doctrine invoked to avoid injustice in particular cases . . . . [T]he party claiming the estoppel25

must have relied on its adversary 's conduct in such a manner as to chang e his position for the worse." Heckler v. Comm. Health Serv. of Crawford County, Inc. , 467 U.S. 51, 58 (1984). Precision’s claims rest not in equity but in the law, throug h which Congress has selectively and explicitly waived assertion of any rights it might otherwise have in this regard. In any event, application of the rule set forth in § 1625(c)(2) doe s not estop the government; it merely

requires the government to comply with a statutorily mandated notice- andcomment process b efore i mplementi

ng a ru ling or d ecision that chang es an ea rlier tr eatment. So long as C ustoms cho oses not to

follow thi s proces s, it is bound by its earli er trea

tment; Customs may , howeve

r, at any time compl

y with the noti ce and c omment pro cedure set forth in 19 U.S.C. § 1625, and thus impose a new ruling or decision, consistent with the statute, deny ing drawback on stainless steel scrap or trim. This process, as Congress and Customs alike evidently intended, provides importers with some predictability in structur ing their business, while retaining for Cu st om s f

le xi bi li ty i n t he ex er ci se of it s a dm in is tr at iv e a ut ho ri ty. In light of this holding, it is unnecessary for the court to reach the issue of whether stainless steel scrap is an article manufactured or produced, under 19 U.S.C. § 1313(b), or waste. Until Custom s follows t

he notice -and-c omment pro cedure set forth in 19 U.S.C. § 1625(c ), it is bound by, and all entries in this case are subject to, its earlier treatment of stainless steel scra p as eligible for drawback.26 IV CONCLUSION
For the foregoing r

easons, Plaintiff’s Motion for Summary Judgment is g ranted. Defendant’s Cross-Motion for Summary Judgment is denied.

__________________________ Evan J . Wal lach, Judge

Dated: December 14, 2001 New York, New York