Court Opinion

ID: 9494343
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:36:01.993931+00
Date Added: 2024-06-11T17:52:11.878084
License: Public Domain

FRIEDMAN, Senior Circuit Judge,
concurring.
I reach the same result the Court does the judgment of the Court of International Trade is reversed but get there by a different route.
The syrup Heartland imported from Canada had molasses added to it before importation. Upon receiving the syrup in the United States, Heartland first removed the molasses and then refined the remaining syrup. The removed molasses was returned to Canada but was again used the same way by adding it to other sugar syrup. As far as appears, this chain continued indefinitely.
Heartland makes no claim that the presence of the molasses in the sugar during the syrup’s journey from Canada to the United States in any way aided, improved or facilitated the refining of the sugar syrup after the molasses had been removed. It does not state, or even suggest, that if the sugar syrup it had imported had not contained the molasses, it would temporarily have added molasses in the United States and then removed it prior to processing.
*1138Since the addition and removal of the molasses from the sugar served no manufacturing or commercial purpose, the conclusion is irresistible that the only purpose of this strange arrangement was to create a fictitious product that, because of the temporary presence of the molasses, qualified for the lower rate of duty on sugar imports containing specified amounts of non-sugar solids.
Almost ninety years ago, the Supreme Court, speaking through then Justice Hughes, pointed out that although “the dutiable classification of articles imported must be ascertained by an examination of the imported article itself, in the condition in which it is imported[,] [t]his, of course, does not mean that a prescribed rate of duty can be escaped by resort to disguise or artifice.” United States v. Citroen, 223 U.S. 407, 414-15, 32 S.Ct. 259, 56 L.Ed. 486 (1912) (internal quotation marks and citations omitted). The Court further recognized that “when the article imported is not the article described as dutiable at a specified rate, it does not become dutiable under the description because it has been manufactured or prepared for the express purpose of being imported at a lower rate.” Id. at 415, 32 S.Ct. 259.
In revoking the New York Ruling Letter, Customs stated that “the importer has engaged in a process which is not a genuine step in manufacturing or production of an article.” 33 Cust. B. & Dec. 41, 44 (1999). It concluded that “the processing in this case is not legitimate tariff engineering. But rather, it is merely ‘disguise or artifice’ intended to escape a higher rate of duty such as a quota tariff rate.” 33 Cust. B. & Dec. at 45. As Customs explained:
Sugar and molasses are mixed in Canada. Water is then added to the mixture to make a sugar syrup. Subheading 1702.90.10, HTSUS, provides for sugar syrups derived from cane or sugar beets, containing soluble non-sugar solids (excluding any foreign substances that may have been added or developed in the product) equal to 6 percent or less by weight of the total soluble solids, subject to tariff rate quotas. The molasses with its impurities added to the sugar is sufficient to assure that the syrup exceeds the 6 percent limitation so that the syrup is classified in a provision not subject to quota. If the syrup was further used in its condition as imported, in the next step in producing an article of commerce, this may satisfy the tariff engineering concept. However, after importation, the molasses is removed and the sugar is used in the same manner as sugar subject to quota. In its condition as imported, we conclude that there is no commercial use for the syrup as imported....
The recipient of the ruling claims that “[i]n the production of sugar products, both liquid and granular, molasses is frequently used as an ingredient to achieve desired polarities.” However, the molasses is added to the sugar in this case to achieve a desired level of soluble non-sugar solids for the avoidance of quota. After importation, the molasses is removed. According to comments from a domestic sugar refiner, it makes no financial sense, absent a desire to avoid the sugar tariff, for a conventional sugar operation to either enrich a liquid (syrup or molasses) stream with sugar or to add molasses to such a stream. Sugar operations separate sugar from the liquid or molasses phase, they do not separate the sugar and then introduce molasses to the sugar, effectively nullifying the refining operation. Consequently, Customs has concluded that this operation is not legitimate tariff engineering.
33 Cust. B. & Dec. at 44-45.
The record supports Customs’ foregoing factual statements, and they fully justify *1139its legal conclusion that Moreland s importation of the sugar syrup with molasses “is merely ‘disguise or artifice’ intended to escape a higher rate of duty such as a quota tariff rate .” Customs, therefore, was fully justified in revoking the New York Ruling Letter that applied the lower tariff rate based upon such “disguise or artifice.” See 19 U.S.C. § 1625(c) (prescribing procedures for Customs to modify or revoke a “prior interpretive ruling”).
Of course, Heartland built its business in reliance upon the New York Ruling Letter that its imported sugar syrup was entitled to the lower duty. In obtaining that ruling, however, Heartland did not disclose to Customs the true and precise nature of the practice it proposed to follow with regard to the imported syrup. It merely described the composition of the import. If Heartland had fully informed Customs of how it intended to deal with the imported sugar syrup, we now know that Customs would not have ruled the import was subject to the lower duty.
In sum, whatever financial or other problems Heartland now faces because of the revocation of the New York Ruling Letter are the result of its own actions, for which it must bear full responsibility.