United States Court of Appeals 

for the Federal Circuit ______________________ 

PLEASURE-WAY INDUSTRIES, INC.,

Plaintiff-Appellant

v.

UNITED STATES,

Defendant-Appellee

______________________ 

2017-1190

______________________ 

Appeal from the United States Court of International 

Trade in No. 1:10-cv-00173-RKM, Senior Judge R. Kenton 

Musgrave.

______________________ 

Decided: January 5, 2018 

______________________ 

 JOHN MICHAEL PETERSON, Neville Peterson LLP, New 

York, NY, argued for plaintiff-appellant. Also represented by RICHARD F. O’NEILL. 

 MARCELLA POWELL, International Trade Field Office, 

Commercial Litigation Branch, Civil Division, United 

States Department of Justice, New York, NY, argued for 

defendant-appellee. Also represented by CHAD A.

READLER, JEANNE E. DAVIDSON, AMY M. RUBIN; MICHAEL 

W. HEYDRICH, Office of the Assistant Chief Counsel, 

United States Bureau of Customs and Border Protection, 
2 PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES

United States Department of Homeland Security, New 

York, NY.

______________________ 

Before TARANTO, CLEVENGER, and STOLL, Circuit Judges.

TARANTO, Circuit Judge.

Pleasure-Way Industries, Inc., is a manufacturer and 

seller of Class B motorhomes, which it sells at dealerships 

in the United States and Canada. Between January 2008 

and September 2009, having bought 144 DaimlerChrysler AG “Sprinter” vans in the United States, Pleasure-Way exported them to its manufacturing facility in 

Canada, where it converted them into its Plateau TS and 

Ascent TS model motorhomes. The conversion included 

installation of interior features such as fully plumbed

kitchen and bathroom fixtures with freshwater and

sewage tanks, water heaters, sleeping quarters, countertops with propane burners, microwave ovens, wallmounted televisions, and refrigerators. The conversion 

also included installation of exterior features such as 

large picture windows and porch lights, awnings, running 

boards, and exterior showers. 

When Pleasure-Way imported the resulting motorhomes into the United States, it sought to avoid their 

being treated, for purposes of import duties, under the 

facially applicable provision of the Harmonized Tariff 

Schedule of the United States (HTSUS), namely, subheading 8703.33.00. It requested a ruling from the United States Bureau of Customs and Border Protection that 

the motorhomes should instead be classified under

HTSUS subheading 9802.00.50, which provides favorable 

import-duty treatment to certain articles that, as relevant 

here, meet the requirements set forth in 19 C.F.R. 

§ 181.64 (2017) for favorable treatment of imported articles that qualify as “[g]oods re-entered after repair or 

alteration in Canada or Mexico” (emphasis added). Cus-
PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES 3

toms initially granted Pleasure-Way’s request, but it then 

changed its position. Customs determined that the regulation does not apply to the motorhomes that resulted 

from Pleasure-Way’s conversion in Canada of the vans it 

acquired in the United States. Customs therefore assessed a 2.5% ad valorem import duty in accordance with 

HTSUS subheading 8703.33.00. 

The parties agree that the only issue before us is the 

applicability of the regulation. When Customs denied 

Pleasure-Way’s protest, Pleasure-Way sued the United 

States in the United States Court of International Trade

pursuant to 28 U.S.C. § 1581(a). The court held that the 

regulation is inapplicable and on that basis granted 

summary judgment against Pleasure-Way. Pleasure-Way 

Indus., Inc. v. United States, 38 I.T.R.D. (BNA) 1889, 

2016 WL 6081818, at *6 (Ct. Int’l Trade Oct. 18, 2016). 

Pleasure-Way appeals. We have jurisdiction under 28 

U.S.C. § 1295(a)(5). Pleasure-Way agrees that “there are 

no material facts in dispute as to the nature of the merchandise.” Appellant’s Br. 10. We review the interpretation of the regulation and its application to the 

undisputed facts on summary judgment de novo. Millenium Lumber Distr. Ltd. v. United States, 558 F.3d 1326, 

1328 (Fed. Cir. 2009); Lynteq, Inc. v. United States, 976 

F.2d 693, 696 (Fed. Cir. 1992). We affirm. 

I 

The first two subsections of the regulation at issue, 19 

C.F.R. § 181.64, provide:

§ 181.64 Goods re-entered after repair or alteration in Canada or Mexico. 

(a) General. This section sets forth the rules 

which apply for purposes of obtaining duty-free or 

reduced-duty treatment on goods returned after 

repair or alteration in Canada or Mexico as provided for in subheadings 9802.00.40 and 
4 PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES

9802.00.50, HTSUS. Goods returned after having 

been repaired or altered in Mexico, whether or not 

pursuant to a warranty, and goods returned after 

having been repaired or altered in Canada pursuant to a warranty, are eligible for duty-free treatment, provided that the requirements of this 

section are met. Goods returned after having been 

repaired or altered in Canada other than pursuant to a warranty are subject to duty upon the 

value of the repairs or alterations using the applicable duty rate under the United States-Canada 

Free-Trade Agreement (see § 10.301 of this chapter), provided that the requirements of this section are met. For purposes of this section, “repairs 

or alterations” means restoration, addition, renovation, redyeing, cleaning, resterilizing, or other 

treatment which does not destroy the essential 

characteristics of, or create a new or commercially 

different good from, the good exported from the 

United States. 

Example. Glass mugs produced in the United 

States are exported to Canada for etching and 

tempering operations, after which they are returned to the United States for sale. The foreign 

operations exceed the scope of an alteration because they are manufacturing processes which 

create commercially different products with distinct new characteristics.

(b) Goods not eligible for duty-free or reducedduty treatment after repair or alteration. The duty-free or reduced-duty treatment referred to in 

paragraph (a) of this section shall not apply to 

goods which, in their condition as exported from 

the United States to Canada or Mexico, are incomplete for their intended use and for which the 

processing operation performed in Canada or 
PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES 5

Mexico constitutes an operation that is performed 

as a matter of course in the preparation or manufacture of finished goods. 

Example. Unflanged metal wheel rims are exported to Canada for a flanging operation to 

strengthen them so as to conform to U.S. Army 

specifications for wheel rims; although the goods 

when exported from the United States are dedicated for use in the making of wheel rims, they 

cannot be used for that purpose until flanged. The 

flanging operation does not constitute a repair or 

alteration because that operation is necessary for 

the completion of the wheel rims.

19 C.F.R. § 181.64(a)–(b). Subsection (c) specifies requirements of documentation and duty deposits upon 

entry.

The language and structure of this regulation make 

clear several things of relevance here. Subsection (a) 

establishes necessary requirements for eligibility for the 

favorable duty treatment—either duty-free treatment or 

imposition of duties only on the value of the foreign improvements (rather than the overall value of the imported 

good). The provision makes the favorable treatment 

depend on whether the foreign activities constitute “repairs or alterations” as defined. Id. § 181.64(a) (“‘repairs 

or alterations’ means . . .”). The definition itemizes examples (“restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment”), id., and then 

states two necessary requirements. One is that the 

foreign activities “not . . . create a new or commercially 

different good from[] the good exported from the United 

States.” Id. The other is that the foreign activities “not 

destroy the essential characteristics of . . . the good exported from the United States.” Id. These requirements 

are stated separately, but they obviously are related.
6 PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES

The two necessary requirements must apply to all 

items in the full phrase—“restoration, addition, . . . or 

other treatment”—not just to the last phrase, “other 

treatment.” Because the full phrase is an integrated 

series of parallel terms, and the two requirements are 

“applicable as much to the first and other words as to the 

last,” Paroline v. United States, 134 S. Ct. 1710, 1721 

(2014), this reading is “the natural construction,” id., and 

also is supported by the general principle that “a ‘postpositive modifier’—that is, one ‘positioned after’ multiple 

phrases or clauses . . . —modifies all the preceding clauses, unless a ‘determiner’ is repeated earlier in the sentence.” Disney Enters., Inc. v. VidAngel, Inc., 869 F.3d 

848, 858 (9th Cir. 2017) (quoting Antonin Scalia & Bryan 

Garner, Reading Law: The Interpretation of Legal Texts

148–49 (2012)). And the language at issue here compels 

this reading for a particular reason: the presence of the 

item “addition” in the list. That item is so broad that the 

evident limiting function of the definition would be effectively negated if any “addition” gained the favorable duty 

treatment under subsection (a), even one that created a 

new or commercially different good or destroyed the 

essential characteristics of the good exported from the 

United States. We note, too, that a predecessor version of 

this regulation, quoted in Press Wireless, Inc. v. United 

States, 6 Cust. Ct. 102, 104 (1941), made clear that the 

language, “does not destroy the identity of the article 

exported or create a new or different article,” applied to 

the entirety of the covered “repairs.”1 We have no reason 

1 Press Wireless quotes the Tariff Act of 1930, para. 

1615, as providing that “articles exported from the United 

States for repairs may be returned upon payment of a 

duty upon the value of the repairs at the rate at which the 

article itself would be subject if imported, under conditions and regulations to be prescribed.” Press Wireless, 6 

Cust. Ct. at 104. It then quotes a Customs regulation as 

 
PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES 7

to think that Customs was changing the rule in this 

critical respect through the rewording embodied in 19 

C.F.R. § 181.64(a).

Subsection (b) states an additional limitation on eligibility for the favorable duty treatment authorized in 

subsection (a). It declares certain “[g]oods not eligible for 

duty-free or reduced-duty treatment after repair or alteration.” 19 C.F.R. § 181.64(b) (subsection title). The goods 

removed from eligibility, i.e., to which the favorable 

treatment of subsection (a) “shall not apply,” are those 

“which, in their condition as exported from the United 

States to Canada or Mexico, are incomplete for their 

intended use and for which the processing operation 

performed in Canada or Mexico constitutes an operation 

that is performed as a matter of course in the preparation 

or manufacture of finished goods.” Id. 

This subsection focuses on the goods “in their condition as exported” (before the foreign processing) and on 

whether they are “incomplete for their intended use” in 

that condition and whether the foreign processing operation is “performed as a matter of course in the preparation 

or manufacture of finished goods.” Id. The provision has 

roots in United States v. J.D. Richardson Co., 36 CCPA 15 

(1948), which involved the flange situation now given as 

an example in subsection (b). The court in J.D. Richardson held that favorable treatment of alterations (under 

regulatory language similar to what is now in 19 C.F.R. 

§ 181.64(a)) was unavailable where a U.S. manufacturer 

providing that “‘repairs’ as used in paragraph 1615 is 

hereby defined to mean any change, renovation, cleaning, 

redyeing, etc., which is necessary to restore an article to 

its original condition after decay, injury, deterioration, or 

partial destruction, when such change, renovation, etc., 

does not destroy the identity of the article exported or 

create a new or different article.” Id. 

 
8 PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES

exported its “uncompleted articles,” which “could not be 

used in their condition as exported,” to be “manufactured 

into completed articles” that were then returned to the 

U.S. manufacturer to be used as parts. J.D. Richardson, 

36 CCPA at 16–17. The same basis for exclusion was also 

relied on in Dolliff & Co. v. United States, 599 F.2d 1015, 

1019 (CCPA 1979) (“[R]epairs and alterations are made to 

completed articles and do not include intermediate processing operations which are performed as a matter of 

course in the preparation or the manufacture of finished 

articles.”). 

II

A 

The parties in this case have discussed three issues 

bearing on possible exclusion from favorable duty treatment under the regulation: (1) whether Pleasure-Way’s 

conversion activities in Canada “create[d] a new or commercially different good from” the exported vans; 

(2) whether the conversion activities “destroy[ed] the 

essential characteristics” of the exported vans; and (3) 

whether the vans, “in their condition as exported from the 

United States to Canada,” were “incomplete for their 

intended use.” 19 C.F.R. § 181.64(a), (b). The Court of 

International Trade resolved all three of those issues 

against Pleasure-Way. Pleasure-Way, 2016 WL 6081818, 

at *3–6. We think it preferable, and here it suffices, to 

decide only the first issue—more precisely, whether 

Pleasure-Way, in changing the vans into motorhomes, 

created a commercially different good. 

That issue calls for a focus on relatively familiar considerations concerning differentiation in the marketplace. 

That differentiation may be reflected in various kinds of 

evidence. Some kinds of evidence directly focus on what 

happens in the marketplace—such as consumer uses and 

how products are marketed and sold. Some kinds of 

evidence are more indirect—such as legal treatment, as in 
PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES 9

HTSUS, that is substantively related to commercial 

differences. 

The other two inquiries discussed by the parties in 

this case present greater challenges: at least in this case, 

they are less tractable than the “commercially different 

good” inquiry. The inquiry into “the essential characteristics,” if taken on its own terms and not translated into a 

marketplace inquiry, requires the assessment of different 

characteristics of a vehicle for their essentiality. Here, for 

example, the parties argue about the comparative essentiality of the ability to move down the road and the vehicle parts enabling that function versus the functions made 

possible by those interior spaces not used for controlling 

vehicle motion—spaces for carrying cargo from place to 

place for use when off-loaded or, instead, for providing 

comforts for use as a residence inside the vehicle. The 

guides for resolving that debate to determine “the essential characteristics” in this context are not bright.

The “intended use” inquiry presents its own challenges—even aside from uncertainties in the regulatory text. 

Whose intent counts? At what time? In this case, the 

participants in the cycle may include a van manufacturer, 

one or more van sellers in the U.S., one or more van 

buyers in the U.S., the exporter from the U.S., one or 

more buyers in Canada, the Canadian van alterer, the

importer of the altered vehicle, and the U.S. buyer of the 

altered vehicle. The van maker at issue advertises the 

vans to potential customers both as suitable for use as 

sold (e.g., as a familiar cargo hauler) and as suitable for 

modification for another use (e.g., as a motorhome). A 

U.S. firm might buy a group of vans and export them with 

the plan to sell some of them for use as is and others for 

modification (and re-import), but not knowing which 

possibility will ripen into reality for any particular van. 

We do not say that there exist no sound ways to meet 

the challenges seemingly presented by the “intended use” 
10 PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES

inquiry, even in complicated situations. Certainly there 

are simple situations, like the one involved in J.D. Richardson (quite unlike the present case), where, as already 

noted, a U.S. manufacturer exported its “uncompleted 

articles,” which “could not be used in their condition as 

exported,” to be “manufactured into completed articles”

for return to the U.S. manufacturer to be used as parts. 

36 CCPA at 16, 17 (emphasis added). But the apparent 

challenges presented by the “intended use” language of 

subsection (b) are on their face greater for a case like this 

one—where the exported article is in fact a completed 

article for consumer use for some purposes (traditional 

cargo carrying)—than those presented by the “commercially different” inquiry. 

B 

In this case, the undisputed facts make the answer to 

the “commercially different” question straightforward. 

The Court of International Trade, in concluding that the 

imported motorhomes were commercially different from 

the exported Sprinter vans, relied on “changes to the 

pricing, the applicable tariff heading, the use, and the 

name of the vans.” Pleasure-Way, 2016 WL 6081818, at 

*5. It determined that the motorhomes “no longer resembled the exported cargo vans,” were “no longer classifiable 

as motor vehicles for the transport of goods,” and were 

sold at “different price points than the exported vehicles.” 

Id. Those determinations were proper on this summaryjudgment record, and so was the conclusion that the 

Pleasure-Way motorhomes were commercially different 

from the Sprinter vans.

Pleasure-Way gave the converted motorhomes new 

names—the Ascent TS or Plateau TS. It sold them at a 

price significantly higher than—even double or triple—

the market price for Sprinter vans. It marketed the 

motorhomes as upscale leisure vehicles to be used for 

vacationing and recreation, while the Sprinter vans were 
PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES 

11

marketed primarily as cargo vans, with the potential for 

other uses if they were modified by purchasers. Overall, 

then, the likely use and consumer base for the Sprinter 

vans as exported were broadly different from those for the 

motorhomes imported into the U.S. after leaving Pleasure-Way’s Canadian conversion facility. Not surprisingly, 

the applicable HTSUS tariff classifications are also different for the motorhomes and the Sprinter vans—the motorhomes come under subheading 8703 as vehicles 

designed for the transport of persons, while the Sprinter

vans come under subheading 8704 as vehicles for the 

transport of goods or cargo. These differences, taken in 

combination, make the imported motorhomes commercially different goods from the exported Sprinter vans. 

Pleasure-Way argues against this conclusion by contending that what constitutes a “commercially different

good” should depend on whether the altered good is 

“identifiable” as the pre-alteration good and that a motorhome is identifiable as the van from which it emerged 

because the vehicle identification number (VIN) remains. 

Appellant’s Br. at 43–47 (relying on Press Wireless). We 

reject this view. It does not fit the regulation, and it is 

not supported by Press Wireless. 

The regulation addresses a universe of situations in 

which an exported good has been modified to become the 

later imported good, and it distinguishes some such 

modifications from others based (as relevant here) on 

whether the resulting good is commercially different from 

the original. If so, the favorable duty treatment is unavailable. The basis of distinction—whether the resulting 

good is “commercially” different from the original—has 

very little to do with whether it is possible to recognize 

the original embedded in the altered good. And such 

identifiability certainly is not a decisive fact, as PleasureWay urges—even in the specific situation where there 

happens to be an unrelated regulatory regime that ena-
12 PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES

bles recognition of origins through assigned informationencoding numbers, such as VINs. 

The conclusion that identifiability of the exported 

good in the re-imported good does not equate to lack of 

commercial difference is confirmed by the regulation’s 

illustrative example—involving glass mugs tempered and 

etched abroad that thereby became “commercially different products with distinct new characteristics.” 19 C.F.R. 

§ 181.64(a). There is no mention of whether or not the 

exported mugs could be readily identified in the reimported products. The example focuses solely on whether the “distinct new characteristics” conferred by tempering and etching changed the commercial nature of the 

good, id., which depends on the commercial characteristics of the original and resulting goods, not whether one is 

still discernible in the other.

Press Wireless, which involved radio tubes exported 

for repairs and then reimported into the United States,

does not support Pleasure-Way’s position. The Customs 

Court in Press Wireless did observe that, while the reimported tubes had a new marking (“T.X. 10-3000”), the 

original markings of the exported tubes (“S. W.7”) could 

be discerned on the reimported tubes. 6 Cust. Ct. at 104. 

But the Customs Court hardly stopped at that fact, which 

merely rebutted the Government’s contention that the 

imported tubes were not the same tubes as the exported 

ones. The court held that the tubes qualified for favorable 

duty treatment under the precursor to current subsection 

(a) because of the limited nature of the foreign processing: 

“[w]hile abroad the worn-out tubes were restored to a 

condition which prolonged the use for which they were 

originally designed,” no more, except for some greater 

efficiency from an improved material for the filament. Id.

at 105. For the reasons indicated, the change at issue in 

the present case is quite different as a commercial matter.
PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES 

13

Pleasure-Way further suggests that this court’s predecessor, in the Dolliff case, held that changes in name, 

price, and classification may not be taken into account 

when determining whether an imported good is commercially different from its exported precursor. We reject 

that suggestion. It overstates what Dolliff stands for. 

As relevant to Pleasure-Way’s point, the furthest Dolliff goes is one statement that some changes in the “name, 

appearance, size, shape and use” of a good could be “alterations” within the meaning of a regulation similar to 19 

C.F.R. § 181.64(a). Dolliff, 599 F.2d at 1018.2 That 

statement hardly precludes reliance on the totality of 

circumstances relevant to commercial differences, including those mentioned in Dolliff. Moreover, even the limited statement in Dolliff was unnecessary to the court’s 

holding there, which was that the changes at issue were 

not “alterations.” Id. at 1021. And the court drew that

conclusion, as we have noted, on the ground now embodied in 19 C.F.R. § 181.64(b), based on J.D. Richardson: 

the foreign processing at issue in Dolliff, the court held, 

2 Dolliff quotes a regulation, which defined “repairs 

or alterations” in Tariff Schedules of the United States 

(TSUS) item 806.20, as follows: “The term ‘repairs or 

alterations’ shall be held to mean restoration, change, 

addition, renovation, cleaning, or other treatment which 

does not destroy the identity of the article exported or 

create a new or different article.” See 599 F.2d at 1018. 

The court in Dolliff then said the following about TSUS 

item 806.20: “Appellant correctly contends that simply 

because intermediate foreign processing of articles of U.S. 

origin that are subsequently reimported into the United 

States results in differences in name, value, appearance, 

size, shape and use for the articles does not require a 

conclusion that the foreign processing does not comprise 

‘alterations’ under TSUS item 806.20.” Id.

 
14 PLEASURE-WAY INDUSTRIES, INC. v. UNITED STATES

was processing “performed on unfinished goods” and led 

“to completed articles,” so “the processing cannot be 

considered alterations.” Id. at 1019. The actual decision 

in Dolliff, rejecting the “alteration” characterization, could 

not aid Pleasure-Way even if it applied to the exported 

Sprinter vans.

We conclude that Pleasure-Way’s motorhomes flunk a 

necessary requirement for favorable duty treatment 

under 19 C.F.R. § 181.64 and, therefore, are not properly 

classifiable under subheading 9802.00.50 of the HTSUS.

III

For the foregoing reasons, we affirm the judgment of 

the Court of International Trade. 

AFFIRMED