**Slip Op. 12 -**
**UNITED STATES COURT OF INTERNATIONAL TRADE**

**- - - - - - - - - - - - - - - - - -x DEL MONTE CORPORATION, :**  **Plaintiff,: v. : Court No. 07-00109**  **UNITED STATES, : Defendant.:**  **- - - - - - - - - - - - - - - - - -x Opinion & Order**  **[Upon classification and valuation of pouched tunafish products, summary**  **judgment for the defendant.] Decided: October 12, 2012** 

**Baker & McKenzie LLP (William D. Outman, II**  **) for the plaintiff.**  **Stuart F. Delery , Acting Assistant Attorney General; Barbara**  **S. Williams , Attorney in Charge, International Trade Field Office,**  **Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Alexander Vanderweide**  **); and Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border**  **Protection (Yelena Slepak ), of counsel, for the defendant.** 
**AQUILINO, Senior Judge: Plaintiff’s two-count complaint contests classification by U.S. Customs and Border Protection**  **(“CBP”) of fillets or strips of tunafish handpacked in Thailand in microwaveable pouches to which “flavorant media or ‘sauces’” were**  **added before sealing for export to the United States** sub nom. Albacore Lemon & Cracked Pepper **,** Yellowfin Lightly Seasoned **, and Court No. 07-00109 Page 2** 
Teriyaki **. The second count complains that CBP incorrectly valued the entries underlying this action.** 
**I Defendant’s answer, while admitting the court’s subject**  **matter jurisdiction pursuant to 28 U.S.C. §1581(a), takes issue as to each count. Indeed, the defendant has now interposed a motion**  **for summary judgment on both. And, consistent with the mandate of USCIT Rule 56(h)(1), annexed to its motion is a separate, short and**  **concise statement of the material facts as to which it contends there is no genuine issue to be tried, to wit:** 
**1. The imported merchandise . . . is identified on the invoices as “light meat tuna fillets - lightly**  **seasoned (pouch) ‘Starkist’ brand” (lightly seasoned tuna pouch) and “albacore tuna fillets - lemon & cracked**  **pepper (pouch) ‘Starkist’ brand” (lemon and pepper tuna pouch). . . .**  **2. The albacore lemon and pepper tuna pouch “consists of large strips or fillets of tuna in a yellow**  **colored sauce consisting of water, sunflower oil, distilled white vinegar, modified food starch, sugar,**  **salt, citric acid, guar gum, cracked black pepper and flavorants including lemon pepper seasoning and lemon**  **flavor.” . . . 3. The yellowfin lightly seasoned tuna pouch**  **“consists of tuna strips or fillets in a sauce consisting of water, sunflower oil, fresh garlic, salt, xantham gum,**  **vegetable broth and parsley.” . . . 4. In the lemon and pepper tuna pouch, the**  **albacore tuna accounts for 80% of the weight of the pouch contents, the sunflower oil 2.48% of the weight. In the** **Court No. 07-00109 Page 3**
**lightly seasoned tuna pouch, the yellowfin tuna accounts for 80% of the weight of the pouch contents, the**  **sunflower oil .62% of the weight. . . . 5. In the lemon and pepper tuna pouch, the**  **sunflower oil acts as a dispersant for the lemon flavoring, so that the flavoring is filtered evenly**  **throughout the pouch. In the lightly seasoned tuna pouch, the sunflower oil acts as an emulsification, a**  **flavor-enhancer, and as mouth-feel or coating. . . . 6. In both tuna pouch varieties, the tuna is**  **placed in the pouch, then the sauce is added. The tuna is not prepared or cooked in oil, but is processed**  **separately from the sauce. Only the sauce contains oil.**

**. . . 7. Prior to importation, Del Monte Foods Corp.**  **(Del Monte) and Chotiwat Manufacturing Co. Ltd. (Chotiwat), the manufacturer and packer of the tuna**  **pouches, agreed upon the following terms: (1) $1.67 conversion cost per case of the finished product and (2)**  **Chotiwat would re cover 40% of the**  **total tuna for use.**

**. . . 8. Between March and June, 2005, Chotiwat**  **submitted invoices to Del Monte, unilaterally changing the agreed-upon terms to the following: (1) approximately**  **$3-$3.50 conversion cost per case and (2) Chotiwat could only recover 10% of the total tuna for use. . . .**  **9. After importation and following nearly ten (10) months of negotiations with Chotiwat over the conversion**  **cost price and tuna recovery percentage, Del Monte and Chotiwat agreed to the following terms: (1) approximately**  **$1.85 or $1.87 conversion cost per case and (2) 40% recovery of the amount of the tuna. . . .**  **10. Chotiwat reimbursed Del**  **Monte approximately $1.5 million.** 

**Citations omitted. Court No. 07-00109 Page 4** 
**Plaintiff’s response to this statement admits paragraphs 1, 2, 3, and 6. It further:**  **4. Admits, but wishes to clarify that the Lemon and Pepper pouches include a sauce or marinade that is**  **64.7% water and 2.48% sunflower oil and the Lightly Seasoned Tuna FilletsTM pouches include a sauce or**  **marinade that is 90.6% water and 0.62% sunflower oil. 5. Admits, but avers that the primary purpose for**  **the addition of sunflower oil to the water-based sauces or marinades included in both varieties of Tuna FilletsTM**  **is to serve as a dispersant.**
*** * *** **7. Admits in part, but disagrees with the defendant’s charactization that the plaintiff and**  **Chotiwat . . . agreed on specific “terms,” and avers that (i) the plaintiff and Chotiwat agreed to utilize Cost**  **Sheets that included all elements to be factored into the establishment of transaction values for the Tuna**  **FilletsTM; (ii) the $1.67 conversion cost represented Chotiwat’s estimate of the per case Processing Fee to be**  **incurred by plaintiff; (iii) the parties jointly agreed that Chotiwat would be able to recover 40% of purchased**  **tuna, either in the production of the Tuna FilletsTM or otherwise; and (iv) in submitting commercial invoices to**  **plaintiff, Chotiwat unilaterally increased the estimated processing fees above actual costs and allocated all fish**  **costs to the Tuna FilletsTM project rather than charging for fish recovery actually used, both actions being**  **contrary to those required under the Cost Sheets. . . . 8. Denies, based on deposition testimony . . .**  **that Chotiwat’s unilateral action changed what the defendant has characterized as the “agreed-upon terms”**  **but, rather, grossly inflated its estimated Processing Fee and incorrectly computed the estimated fish costs**  **allocable to the Tuna FilletsTM in issue. 9. Denies that Chotiwat unilaterally changed the**  **“agreed-upon terms” . . . and avers that, after Court No. 07-00109 Page 5** 
**importation and following nearly ten (10) months of negotiations, Chotiwat acknowledged that it (i) had**  **grossly overstated its estimated Processing Costs, as based on the Cost Sheets; (ii) had thus overcharged the**  **plaintiff in contravention of the Cost Sheets; and (iii) was contractually obligated to make restitution to the**  **plaintiff of the monies incorrectly assessed in contravention of the Cost Sheets.**  **10. Admits that Chotiwat restored . . . the $1,544,104.17 in monies it had overcharged plaintiff**  **through its incorrect and highly inflated use of fish cost estimates, denies that this was a “reimbursement”**  **since this restitution was in no sense of the term a “repayment for expense or loss incurred” by the plaintiff**  **and avers . . . that the actions taken by Chotiwat were in complete derogation of the Cost Sheets and a flagrant**  **attempt to restructure the underlying transactions contrary to the Cost[] Sheets which had been agreed upon**  **as controlling and were in effect prior to exportation. Citations omitted.** 
**A If the foregoing are the salient facts of this matter,**  **after due deliberation engendered by the parties’ papers filed in support of and opposition to its disposition via summary judgment,**  **this court cannot and therefore does not conclude that a trial within the meaning of USCIT Rule 56 and teaching of Celotex Corp.** 
**v. Catrett , 477 U.S. 317 (1986), and Anderson v. Liberty Lobby,** 
**Inc ., 477 U.S. 242 (1986), and**  **their progeny is necessary. The**  **evidence already part of the record herein is sufficient basis to resolve the two counts of plaintiff’s complaint as a matter of law.**  **With regard to classification, its counsel state that the Court No. 07-00109 Page 6** 
**packing medium in the . . . Tuna FilletsTM is**  **predominately water . The sole question before the Court**  **is whether the addition of any amount of oil to water in the formulation of an added sauce or flavoring mandates**  **that the product be classified in oil. The addition of sunflower oil, broth and flavorings to water serves a**  **utilitarian function unrelated to packing. Thus, it is a stretch beyond**  **reason to treat the Tuna FilletsTM as though “packed in oil.” When properly understood, the**  **U.S. Note should not be interpreted as transforming the Tuna FilletsTM products in issue into a fish packed “in**  **oil.” Plaintiff’s Brief in Opposition to Defendant’s Motion for Summary**  **Judgment, pp. 10-11 (emphasis in original).**
**As for its second count, the plaintiff represents that understanding the Cost Sheet is the key to understanding**  **how and why value is an issue in this case. In this regard, the Court need only focus on the two line items**  **on the Cost Sheet that represented the parties’ best “estimates” as to likely cost.** 

**Id . at 27. And the plaintiff confirms that much of what it would**  **establish through the testimony of three witnesses in open court is already part of defendant’s motion via transcripts of their**  **depositions labelled exhibits C, J, and K. See id**  **. at 20.**

**II Also attached to that**  **motion as exhibit F is a copy of**  **CBP ruling letter HQ 967515 (March 21, 2005), which issued in Court No. 07-00109 Page 7** 
**response to a request that plaintiff’s merchandise be classified under subheading 1604.14.22 of the Harmonized Tariff Schedule of**  **the United States (“HTSUS”) (“Tunas . . . In airtight containers: . . . Not in oil: . . . 6%”) or subheading 1604.14.30 (“Tunas . . .**  **In airtight containers . . . Not in oil . . . Other . . . 12.5%”).**
**To the extent plaintiff’s pouches contain any oil, CBP denied its request.**  **1 The ruling recited Additional U.S. Note 1 to**  **HTSUS Chapter 16: . . . [T]he term “in oil**  **” means packed in oil or fat, or in added oil or fat and other substances, whether such**  **oil or fat was introduced at the time of packing or prior thereto.**  **Underscoring in original. And it gave heed to the decision of the U.S. Court of Customs Appeals**  **in Strohmeyer & Arpe Co. v. United** 
**States , 5 Ct.Cust.App. 527 (1915), T.D. 35175, affirming the Board**  **of U.S. General Appraisers with regard to fish prepared by boiling in oil, after which the oil**  **was drained off before packing with tomato sauce in tin cans.**  **Governing paragraph 216 of the Tariff**  **Act of 1913 referred to “Fish . . . packed in oil or in oil and other substances”, with the evidence in that matter showing some** 

**1 The agency did rule that, since plaintiff’s packing of its**  Teriyaki **tunafish contains no oil, those pouches could enter at the preferred**  ad valorem **duty rate(s), the statutory difference depending upon fulfillment of the applicable tariff rate quota.**  **See Defendant’s Exhibit F, p. 4.** **Court No. 07-00109 Page 8**
**5.7 percent residual oil in the sealed sauce. Whereupon the Board held it**  **immaterial how the vegetable oil became present in the tins; that if, as a matter of fact, the substance in**  **which the fish were found in the tins as packed consisted of oil and other substances, this is sufficient to bring**  **it within the first provision of the paragraph.**
**5 Ct.Cust.App. at 528. In affirming, the court of appeals stated that the tariff was not**  **directed at the method of application of the oil, rather at “any case in which oil is part of the substance**  **in which the fish is found packed when offered for importation.” Id**  **. While recognizing that the percentages of oil in the goods now at bar are less than that in Strohmeyer**  **, CBP does not find that case distinguishable:**  **. . . [I]t is not rele vant whether the oil is added**  **solely for packing purposes or**  **added for flavoring purposes. The presence of oil in the medium in which the**  **fish is found packed[] is sufficient to describe the fish as “packed in oil.”**  **Defendant’s Exhibit F, p. 3.**
**Not satisfied with this ruling, the importer requested and received CBP reconsideration. See** **Defendant’s Exhibit G (HQ 967742 (Nov. 22, 2005)). Specified as reasons therefor were that**  **(1) CBP’s interpretation of Additional U.S. Note 1 to HTSUS Chapter 16 failed to consider the legislative history involved, (2) HQ** **Court No. 07-00109 Page 9**
**967515 disregarded regulations of the U.S. Food and Drug Administration (“USFDA”), and (3) HQ 967515 is “wholly lacking in**  **meaningful purpose”. Id . at 2. None of these arguments caused**  **Headquarters to reverse or revise that ruling letter.**
**With regard to the first point, the agency considers the language of Additional U.S. Note 1, supra**  **, to be clear, thereby forestalling any resort to legislative history, citing C.J. Tower**  **& Sons v. United States , 41 CCPA 195,**  **C.A.D. 550 (1954), and Continental Mfg. Co. v. United States**  **, 82 Cust.Ct. 187 (1979). See id**  **. at 2-3. Secondly, HQ 967742 cites the opinion of this court in Bestfoods v. United States**  **, 28 CIT 1053, 1058, 342 F.Supp.2d 1312, 1316 (2004), to the effect that USFDA standards of identity are not**  **controlling for tariff classification purposes and also points out that the arguably apposite regulations of that agency developed**  **well after the tariff standard controlling herein. See id**  **. at 4. Finally, that ruling letter of reconsideration states that the**  **importer’s concerns regarding “meaningful purpose” are best remedied through legislation. CBP is not**  **empowered to set duty rates, only to apply them according to the law.** 

**Id . HQ 967515 was thereupon affirmed.** **Court No. 07-00109 Page 10**

**A Of course, the posture of the court is no different than**  **that of CBP** vis-à-vis**an act of Congress. When legislation is clear on its face, neither an administrative agency nor the**  **judiciary is at liberty to rewrite it, or to construe it in a manner arguably more desirable.** 

**The nature of the merchandise at bar is evident: none of plaintiff’s tunafish is genuinely packed in oil as a matter of**  **either simple sense or scientific analysis. Indeed, the defendant admits as much with regard to the**  Teriyaki **pouches. But the other brands do contain some oil, and the defendant points to a century**  **of tariff enforcement to the effect that “in oil” signifies any amount of such substance. And no amount of cogent, contrary**  **reasoning of the kind plaintiff’s counsel now present 2**  **dispells this phenomenon judicially. While the quantum of residual**  **“visible” oil apparently found in Strohmeyer (5.7 percent) was**  **greater than in any of plaintiff’s goods herein, there is no indication that particular amount was of moment to any of the three**  **U.S. General Appraisers or to any of the five judges revisiting the matter in the court of appeals. Nor do plaintiff’s papers point to**  **a contrary case in court since then.**

**2 The plaintiff has interposed a motion for leave to file a**  **sur-reply in this action that can be, and it hereby is, granted. Court No. 07-00109 Page 11** 
**With regard to regulations of the USFDA, this court is not persuaded to digress now from its opinion in Bestfoods v.**  **United States , supra**  **, and the cases relied on therein. Ergo, CBP’s classification of certain of plaintiff’s pouches of tunafish under**  **HTSUS subheading 1604.14.10 (2005) at a duty rate of 35 percent** ad valorem **should stand. 3** 

**3 Counsel for the plaintiff have attached to their thorough**  **papers in opposition to defendant’s motion for summary judgment a copy of U.S. Customs Service ruling letter NY H88884 (March 26,**  **2002) that four pouched**  Tuna Creations**would be classified upon entry under either HTSUS subheading 1604.14.2040 or subheading**  **1604.14.3040. According to that letter, plaintiff’s exhibit 15, absorbed within the tuna flesh in two of the pouches was 5 percent**  **sunflower oil, with that in a third possessed of 2 percent of that substance. The letter proceeded to state:**  **. . . Samples of these products were found to consist of small chunks and flakes of flavored tuna fish meat. The**  **pouches contained only tuna meat pieces, colored slightly by the marinade, but with no apparent packing medium,--**  **i.e., the pouches contained only pieces of tuna, which had absorbed any marinade, and which were not packed in**  **any accompanying medium, such as, for example, in water, in oil or in sauce.**  **Plaintiff’s Exhibit 15, first page. Even if this court were to** **accept plaintiff’s premise that NY H88884 is at odds with HQ 967515 now at issue herein, it could**  **not and therefore would not conclude that the first ruling trumps the latter. Moreover, as just recited, the former did not find its**  **fish “packed in” any medium. As for the argument posited at page 12 of plaintiff’s brief in**  **opposition to summary judgment that, (footnote continued)** **Court No. 07-00109 Page 12**

**III The Tariff Act of**  **1930, as amended, 19 U.S.C. §1401a-**  **(b)(1), provides that the transaction value of imported merchandise is the price actually paid or payable when sold for exportation to**  **the United States. The statute further provides: Any rebate of, or other decrease in, the price**  **actually paid or payable that is made or otherwise effected between the buyer and seller after the date of**  **the importation of the merchandise into the United States shall be disregarded in determining the transaction value**  **under paragraph (1). 19 U.S.C. §1401a(b)(4)(B).** 
**The plaintiff would have CBP (and now the court) ignore this mandate based upon the**  post **-importation dealings between it and Chotiwat Manufacturing Co. Ltd. outlined above.**  **4 Suffice it to** 

**[i]nasmuch as the sunflower oil included in the StarKist® Tuna CreationsTM pouched tuna serves the same purpose as,**  **albeit in greater quantities than, the sunflower oil present in any of the Tuna FilletsTM products, it is**  **important that the Court hear first hand from the Customs attorneys**  **involved in the issuance of the Rulings involving the Tuna FilletsTM products before the Court on**  **exactly how this strange result can occur[,] the court hardly requires a trial for such purpose.** 

**4 Part of plaintiff’s opposition to summary judgment as a**  **matter of procedure is that its three putative witnesses to those dealings could at trial somehow add to**  **that already part of the papers before the court via defendant’s deposition transcripts**  **labelled exhibits C, J, and K and pages 19-30 of discussion thereon in plaintiff’s brief.** **Court No. 07-00109 Page 13**
**state that the papers filed herein adequately describe those dealings, but they do not cite a single court opinion that would**  **persuade the undersigned to conclude that CBP acted contrary to the foregoing statute in this matter of valuation.** 

**IV In view of the foregoing, defendant’s motion must be**  **granted, with summary judgment entered accordingly. So ordered.**  **Decided: New York, New York October 12, 2012** 

**/s/ Thomas J. Aquilino, Jr. Senior Judge**