Court Opinion

ID: 2641229
Source: CourtListenerOpinion
Date Created: 2013-11-06 01:01:59.501861+00
Date Added: 2024-06-11T09:00:47.220964
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

            WILTON INDUSTRIES, INC.,
                Plaintiff-Appellant,

                           v.

                  UNITED STATES,
                  Defendant-Appellee.
                ______________________

                      2013-1028
                ______________________

   Appeal from the United States Court of International
Trade in No. 10-CV-0066, Judge Gregory W. Carman.
                 ______________________

              Decided: November 5, 2013
               ______________________

    MARIA E. CELIS, Neville Peterson LLP, of New York,
New York, argued for plaintiff-appellant. With her on the
brief were JOHN M. PETERSON and RICHARD F. O’NEILL.

    BEVERLY A. FARRELL, Attorney, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, of New York, New York, argued for defendant-
appellee. With her on the brief were STUART F. DELERY,
Acting Assistant Attorney General, and JEANNE E.
DAVIDSON, Director, of Washington, DC, and BARBARA S.
WILLIAMS, Attorney in Charge, International Trade Field
Office, of New York, New York.
                 ______________________
2                                 WILTON INDUSTRIES   v. US

    Before LOURIE, PROST, and TARANTO, Circuit Judges.
LOURIE, Circuit Judge.
     Wilton Industries, Inc. (“Wilton”) appeals from the
decision of the United States Court of International Trade
(the “trade court”) on summary judgment classifying
decorative paper punches from Taiwan as “perforating
punches and similar handtools” under subheading
8203.40.60 of the Harmonized Tariff Schedule of the
United States (“HTSUS”). Wilton Indus., Inc. v. United
States, 887 F. Supp. 2d 1293 (Ct. Int’l Trade 2012).
Because the imported articles are described eo nomine by
HTSUS Heading 8203.40 and the trade court did not err
in granting summary judgment as a matter of law, we
affirm.
                      BACKGROUND
    Wilton imported paper punches from Taiwan under
the brand name “Stampin’ Up!” for use in scrapbooking
and other craft projects. The punches are used to cut
shapes or designs out of or in paper and come in a variety
of shapes and sizes—between about 2–8 inches long by
about 1–2.65 inches wide—encompassing thirty-nine
models. Punches of each model are capable of making a
hole of an intended shape or style or trimming the edge or
corner of the paper with a decorative design. Each punch
is actuated by hand to achieve the intended cut. The die
components for each model are made of zinc alloy com-
prising about 75% of the total product weight and the
housing, bottom, handle, and springs comprise the bal-
ance of the weight.
    Except for one model, the United States Customs and
Border Protection (“Customs”) initially liquidated the
punches under HTSUS subheading 8203.40.60 as “perfo-
rating punches and similar handtools” with a duty margin
of 3.3% and denied Wilton’s protests to classify them
WILTON INDUSTRIES   v. US                                  3

under the duty free HTSUS subheading 8441.10.00 as
“cutting machines of all kinds.” Wilton then filed suit in
the trade court.
    In an effort to resolve the case, the parties subse-
quently entered into a stipulation agreement to classify
twenty-three of the thirty-nine models at issue under
subheading 8441.10.00 because they were too large to use
in the hand. Wilton, 887 F. Supp. 2d at 1295. However,
Customs maintained that subheading 8203.40.60 was the
proper classification for the sixteen models that remained
in dispute because they were “intended for use when held
in the hand.” Id. Both parties then moved for summary
judgment.
     The trade court denied Wilton’s motion for summary
judgment and granted the government’s cross-motion for
summary judgment. Id. at 1301. The court analyzed
each party’s proposed tariff headings pursuant to Rule 1
of the General Rules of Interpretation (“GRIs”) by review-
ing the terms of the headings and the legal notes and by
consulting dictionaries to determine the common meaning
of the relevant terms. Id. at 1298–1301. The court con-
sidered all the various models as the same subject mer-
chandise and determined that the punches “prima facie
fall under Heading 8203 as a perforating punch.” Id. at
1299. In setting aside the parties’ stipulation, the court
also noted its ultimate duty “‘to find the correct result, by
whatever procedure is best suited to the case at hand.”’
Id. at 1297 (quoting Jarvis Clark Co. v. United States, 733
F.2d 873, 878 (Fed. Cir. 1984)) (emphasis in original).
    Wilton timely appealed. We have jurisdiction pursu-
ant to 28 U.S.C. § 1295(a)(5).
                            DISCUSSION
    We review the trade court’s grant of summary judg-
ment without deference, CamelBak Prods., LLC v. United
States, 649 F.3d 1361, 1364 (Fed. Cir. 2011), and “decide
4                                   WILTON INDUSTRIES   v. US

de novo the proper interpretation of the tariff provisions
as well as whether there are genuine issues of fact to
preclude summary judgment,” Millenium Lumber Dis-
trib. Ltd v. United States, 558 F.3d 1326, 1328 (Fed. Cir.
2009). While we accord deference to a classification ruling
by Customs relative to its “power to persuade,” United
States v. Mead Corp., 533 U.S. 281, 235 (2001), we have
“an independent responsibility to decide the legal issue of
the proper meaning and scope of HTSUS terms,” Warner-
Lambert Co. v. United States, 407 F.3d 1207, 1209 (Fed.
Cir. 2005). We thus review the interpretation of the
governing statutory provisions without deference. Lynteq,
Inc. v. United States, 976 F.2d 693, 696 (Fed. Cir. 1992).
     Wilton argues that the punches are machines for cut-
ting paper and are therefore classifiable in subheading
8441.10.00 because they are described eo nomine as
“[c]utting machines.” Wilton maintains that heading
8441 covers “cutting machines of all kinds” and is intend-
ed, inter alia, to include machines for making finished
paper into articles such as bags, envelopes, cartons, and
boxes. Wilton contends that the commercial meaning of
“perforating punch” as that term is recited in heading
8203 is an article used only to make holes in heavy-duty
materials such as metal, not paper. Wilton further as-
serts that even if the subject punches were described by
both 8441 and 8203, the rule of relative specificity (GRI
3(a)) compels classification under heading 8441. Wilton
concedes that “[t]here are no disputed issues of fact.”
Appellant Br. 7.
    The government maintains, and the trade court so
held, that the subject punches are classifiable under
heading 8203 because they are described eo nomine under
that heading by the qualifiers (i) “perforating,” viz., makes
a hole through something, and (ii) “handtools,” viz., used
or worked by hand. We agree with the government and
the trade court that the proper classification is under
heading 8203.
WILTON INDUSTRIES   v. US                                5

     Merchandise imported into the United States is clas-
sified under the HTSUS. The HTSUS scheme is orga-
nized by headings, each of which has one or more
subheadings; the headings set forth general categories of
merchandise, and the subheadings provide a more partic-
ularized segregation of the goods within each category.
    The classification of merchandise under the HTSUS is
governed by the principles set forth in the GRIs and the
Additional U.S. Rules of Interpretation. See Orlando
Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.
Cir. 1998). The GRIs are applied in numerical order and
a court may only turn to subsequent GRIs if the proper
classification of the imported goods cannot be accom-
plished by reference to a preceding GRI. Carl Zeiss, Inc.
v. United States, 195 F.3d 1375, 1379 (Fed. Cir. 1999);
Mita Copystar Am. v. United States, 160 F.3d 710, 712
(Fed. Cir. 1998). GRI 1 provides that “for legal purposes,
classification shall be determined according to the terms
of the headings and any relative Section or Chapter Notes
and, provided such headings or Notes do not otherwise
require, according to the [remaining GRIs.]” GRI 1.
    The proper classification of merchandise under the
HTSUS is a two-step process. Orlando Food, 140 F.3d at
1439. First, we ascertain the meaning of the specific
terms in the tariff provision, which is a question of law
that we review without deference. Id. HTSUS terms are
construed in accordance with their common and commer-
cial meaning, which are presumed to be the same. Carl
Zeiss, 195 F.3d at 1379. Second, we determine whether
the goods come within the description of those terms,
which is a factual inquiry that we review for clear error.
Orlando Food, 140 F.3d at 1439. However, when there is
no dispute as to the nature of the merchandise, then the
two-step classification analysis “collapses entirely into a
question of law.” Cummins Inc. v. United States, 454 F.3d
1361, 1363 (Fed. Cir. 2006).
6                                        WILTON INDUSTRIES       v. US

    The identity of the imported articles here is not in
dispute; they are marked and sold as punches that are
worked by hand to make holes through paper and to cut
shapes in or from paper. The only issue in this case is
how to classify the subject punches. Accordingly, there
are no genuine issues of fact precluding summary judg-
ment.
    The resolution of this case thus turns on the interpre-
tation of two headings of the HTSUS and their accompa-
nying subheadings, which read in relevant part as follows:

Section XV   Base Metals and Articles of Base Metal

Chapter 82   Tools, implements, cutlery, spoons and forks, of base
             metal; parts thereof of base metal

8203         Files, rasps, pliers (including cutting pliers), pincers,
             tweezers, metal cutting shears, pipe cutters, bolt
             cutters, perforating punches and similar handtools,
             and base metal parts thereof:

8203.40      Pipe cutters, bolt cutters, perforating punches and
             similar tools, and parts thereof:

8203.40.60   Other (including parts)

Note 1       [T]his chapter covers only articles with a blade,
             working edge, working surface or other working parts
             of: (a) Base metal; . . . .

Note 2       Parts of base metal of the articles of this chapter are
             to be classified with the articles of which they are
             parts

Section      Machinery and Mechanical Appliances; Electrical
XVI          Equipment; Parts Thereof; Sound Recorders and
WILTON INDUSTRIES    v. US                                               7

             Reproducers, Television Image and Sound Recorders
             and Reproducers, and Parts and Accessories of such
             articles

Chapter 84   Nuclear reactors, boilers, machinery and mechanical
             appliances; parts thereof

8441         Other machinery for making up paper pulp, paper or
             paperboard, including cutting machines of all kinds,
             and parts thereof:

8441.10.00   Cutting machines

Note 1(k)    This section does not cover: Articles of chapter 82 . . .

HTSUS (Rev. 2, April 16, 2008) (emphasis added).
    Preliminarily, we note that the trade court was cor-
rect that no analysis beyond GRI 1 is necessary here. The
imported merchandise is described eo nomine by heading
8203.40 as perforating punches. Both the trade court and
Customs have understood the reference in heading 8203
to “perforating punches and similar handtools” to limit
the category to punches that are “handtools.” There is no
dispute that all of the punches at issue are operated by
hand and can be operated without being set on a surface,
even if some might best be operated on a surface. That is
enough for the language of the heading to apply. The
heading is not ambiguous and wholly encompasses the
subject articles.
    Furthermore, contrary to Wilton’s contention, heading
8203 does not limit the recited punches to those that are
used in commerce to perforate only certain heavy-duty
materials such as metal.       The common meaning of
“punch” recognizes paper as a medium through which to
make a hole. The Explanatory Notes for HTSUS Chapter
82 identify that examples of perforating punches covered
by heading 8203 include ticket punches for making holes
8                                    WILTON INDUSTRIES   v. US

in paper and saddlers’ or mattress punches for making
holes in materials such as leather or felt. Id.
     The plain language of subheading 8441, on the other
hand, covers cutting machines “for making up paper pulp,
paper or paperboard” (emphasis added). Wilton’s asser-
tion that the subject punches are described eo nomine as
“cutting machines of all kinds” ignores the importance of
the preceding language “for making up.” In arguing
essentially that “paper ‘cutting machines of all kinds,’”—
including the subject punches—are properly classified in
subheading 8441.10.00, Wilton confuses paper cutting
with making up paper. In context, the machinery de-
scribed in Chapter 84 is unambiguously directed to the
industrial manufacture of paper and paper products. For
example, heading 8439 expressly covers machinery for
making paper, and the plain language of 8441 recites
“[o]ther machinery for making up paper . . . .” Id. The
subject punches, which are undisputedly used for craft
projects such as decorative scrapbooking, not “making up”
paper, are clearly not the type of “cutting machines”
included in the “[o]ther machinery” contemplated by
heading 8441.
    Moreover, the Explanatory Notes state that Chapter
82 “covers tools which can be used independently in the
hand, whether or not they incorporate simple mechanisms
such as gearing, crank-handles, plungers, screw mecha-
nisms or levers.” Id. In contrast, the Notes specify that
items are “generally classified in Chapter 84 if they are
designed for fixing to a bench, a well, etc., or if, by reason
of their weight or size or the degree of force required for
their use, they are fitted with base plates, stands, sup-
porting frames, etc., for standing on the floor, bench, etc.”
Id. Therefore, even if the subject punches were prima
facie classifiable under both 8203 and 8441, they are more
specifically described by heading 8203. GRI 3(a). Finally,
even if the subject punches could not be classified in
accordance with GRI 1–3, they would correctly be classi-
WILTON INDUSTRIES   v. US                              9

fied under heading 8203 because that is the “heading
appropriate to the goods to which they are most akin”
pursuant to GRI 4, i.e., hand tools such as pipe cutters
and bolt cutters, not machinery and mechanical applianc-
es such as nuclear reactors and boilers.
                        CONCLUSION
    For the foregoing reasons, we conclude that the trade
court did not err in granting summary judgment in favor
of the government as a matter of law because the import-
ed articles are provided for eo nomine as “perforating
punches” in HTSUS subheading 8203.40. Accordingly,
the judgment of the trade court is affirmed.
                        AFFIRMED