Court Opinion

ID: 4554161
Source: CourtListenerOpinion
Date Created: 2020-08-07 22:01:19.775925+00
Date Added: 2024-06-11T13:16:22.217277
License: Public Domain

Slip Op. 20-113

                UNITED STATES COURT OF INTERNATIONAL TRADE

 SGS SPORTS, INC.,

         Plaintiff,
                                                   Before: Jennifer Choe-Groves, Judge
 v.
                                                   Court No. 18-00128
 UNITED STATES,

         Defendant.

                                            OPINION

[The court finds that U.S. Customs and Border Protection correctly classified the subject imports,
and that Plaintiff’s subject imports are not entitled to duty-free treatment. Accordingly, the court
denies Plaintiff’s motion for summary judgment and grants Defendant’s cross-motion for
summary judgment.]

                                                                     Dated: August 7, 2020

John M. Peterson and Patrick B. Klein, Neville Peterson, LLP, of New York, N.Y., for Plaintiff
SGS Sports, Inc. With them on the briefs was Richard F. O’Neill.

Monica P. Triana, Trial Attorney, International Trade Field Office, Commercial Litigation
Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., for Defendant United
States. With her on the briefs were Joseph H. Hunt, Assistant Attorney General, Jeanne E.
Davidson, Director, Justin R. Miller, Attorney-in-Charge, International Trade Field Office, and
Aimee Lee, Assistant Director. Of counsel on the briefs was Sheryl French, Office of the
Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of
New York, N.Y.

       Choe-Groves, Judge: This action addresses whether swimwear and related accessories

are reimported articles that were “exported under lease or similar use agreements” and are

therefore entitled to duty-free treatment under subheading 9801.00.20 of the Harmonized Tariff

Schedule of the United States (“HTSUS”). Before the court are cross-motions for summary

judgment. Pl.’s Mot. for Summ. J., ECF No. 26; Mem. Of Points and Authorities In Supp. Of
Court No. 18-00128                                                                             Page 2

Pl.’s Mot. for Summ. J. (“Pl.’s Mem.”), ECF No. 26-2; Def.’s Cross-Mot. for Summ. J., ECF

No. 30 at 2–3; Def.’s Mem. Of Law In Opp’n to Pl.’s Mot. for Summ. J. and in Supp. Of Its

Cross-Mot. for Summ. J. (“Def.’s Mem.”), ECF No. 30 at 4–36; Pl.’s Opp’n to Def.’s Cross-

Mot. for Summ. J. and Reply in Supp. Of Its Mot. for Summ. J. (“Pl.’s Opp’n and Reply”), ECF

No. 32; Def.’s Reply Mem. in Further Supp. Of Gov.’s Cross-Mot. for Summ. J. (“Def.’s

Reply”), ECF Nos. 33, 34. SGS Sports, Inc. (“SGS” or “Plaintiff”) brings this action to contest

the denial of its administrative protest by U.S. Customs and Border Protection (“Customs”).

       The court examines in this opinion whether Plaintiff’s subject merchandise meet the

requirements for duty-free treatment under HTSUS subheading 9801.00.20, which states:

       9801.00.20.00           Articles, previously imported, with respect to which the duty
       was paid upon such previous importation . . . , if (1) reimported, without having
       been advanced in value or improved in condition by any process of manufacture or
       other means while abroad, after having been exported under lease or similar use
       agreements, and (2) reimported by or for the account of the person who imported it
       into, and exported it from, the United States.

HTSUS subheading 9801.00.20.

       For the reasons discussed below, the court denies Plaintiff’s motion for summary

judgment and grants Defendant’s cross-motion for summary judgment.

                                        BACKGROUND

   A. Material Facts Not in Dispute

       The party moving for summary judgment must show that “there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.” United States

Court of International Trade (“USCIT”) Rule 56(a). The parties filed cross-motions for

summary judgment and submitted separate statements of undisputed material facts with their

respective motions and responses to the opposing party’s statements. See Pl.’s R. 56.3 Statement

of Material Facts Not in Dispute, ECF No. 26-3 (“Pl.’s SMF”); Def.’s Resp. to Pl. SGS Sports,
Court No. 18-00128                                                                          Page 3

Inc.’s R. 56.3 Statement of Material Facts, ECF No. 30-3 (“Def.’s Resp. to Pl.’s SMF”); Def.’s

Statement of Undisputed Material Facts, ECF No. 30-2 (“Def.’s SMF”); Pl.’s Resp. to Def.’s R.

56.3 Statement of Material Facts Not in Dispute, ECF No. 32-2 (“Pl.’s Resp. to Def.’s SMF”).

Upon review of the parties’ statements of material facts and supporting exhibits, the court finds

the following undisputed material facts.

       SGS was incorporated in 1988 and is a Canada-based importer of swimwear. Pl.’s SMF

¶ 1; Def.’s Resp. to Pl.’s SMF ¶ 1. 147483 Canada Inc. (“147483”) is a company wholly-owned

by Steven Gellis (“Gellis”) and was incorporated in 1985. Pl.’s SMF ¶ 2; Def.’s Resp. to Pl.’s

SMF ¶ 2. Gellis serves as President of both SGS and 147483. Pl.’s SMF ¶ 1–2; Def.’s Resp. to

Pl.’s SMF ¶ 1–2. Gellis is the owner and sole officer of 147483. Def.’s SMF ¶ 3; Pl.’s Resp. to

Def.’s SMF ¶ 3. Gellis is the sole officer of SGS. Def.’s SMF ¶ 8; Pl.’s Resp. to Def.’s SMF

¶ 8. Gellis possessed ultimate control of SGS as of 2013, and all officer-assigned decisions vest

in Gellis. Pl.’s SMF ¶ 1; Def.’s SMF ¶¶ 8, 9, 104–15; Def.’s Resp. to Pl.’s SMF ¶ 1; Pl.’s Resp.

to Def.’s SMF ¶¶ 8, 9, 104–15.

       In 2005, SGS and 147483 executed a Warehousing Agreement setting forth specific

responsibilities to be performed by 147483, including managing inventory. Pl.’s SMF ¶ 10;

Def.’s SMF ¶ 42; Def.’s Resp. to Pl.’s SMF ¶ 10; Pl.’s Resp. to Def.’s SMF ¶ 42. Gellis signed

the Warehousing Agreement on behalf of both SGS and 147483. Def.’s SMF ¶¶ 42, 47; Pl.’s

Resp. to Def.’s SMF ¶¶ 42, 47. SGS and 147483 are co-located in the same building. Pl.’s SMF

¶¶ 9–10; Def.’s Resp. to Pl.’s SMF ¶¶ 9–10. Before 2005, SGS imported merchandise directly

from foreign manufacturers to SGS’ premises in Canada. Def.’s SMF ¶ 30; Pl.’s Resp. to Def.’s

SMF ¶ 30. SGS shifted its business model to import foreign-supplied merchandise to the United

States, which were exported immediately, unaltered, to SGS’ warehouse in Canada. Def.’s SMF
Court No. 18-00128                                                                           Page 4

¶ 37; Pl.’s Resp. to Def.’s SMF ¶ 37. The Duty Relief Ledger contains an internal shipment

number, a corresponding U.S. entry number, the B3 consumption entry number, and the quantity

of each item (by style and color). Def.’s SMF ¶ 88; Pl.’s Resp. to Def.’s SMF ¶ 88.

    B. Procedural History

         SGS entered the subject merchandise pursuant to HTSUS subheading 9801.00.20. Pl.’s

SMF ¶ 7; Def.’s Resp. to Pl.’s SMF ¶ 7. Customs liquidated the entries, reclassified the

merchandise, and denied Plaintiff’s claim for duty-free treatment under HTSUS subheading

9801.00.20. Pl.’s SMF ¶ 8; Def.’s Resp. to Pl.’s SMF ¶ 8. Thereafter, SGS filed a timely protest

challenging Customs’ classification determination. Pl.’s SMF ¶ 8; Def.’s Resp. to Pl.’s SMF

¶ 8. When denying SGS’ protest, Customs stated that the subject merchandise had not been

properly exported under a lease or similar use agreement as required under the duty-free HTSUS

subheading 9801.00.20. See HQ H276403 (Dec. 12, 2017). SGS filed suit challenging the

denial of its protest.

                         JURISDICTION AND STANDARD OF REVIEW

         The court has jurisdiction pursuant to 28 U.S.C. § 1581(a).

         The court shall grant summary judgment if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law. USCIT

R. 56(a). To raise a genuine issue of material fact, a party cannot rest upon mere allegations or

denials and must point to sufficient supporting evidence for the claimed factual dispute to require

resolution of the differing versions of the truth at trial. Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 248–49 (1986); Processed Plastics Co. v. United States, 473 F.3d 1164, 1170 (Fed. Cir.

2006).
Court No. 18-00128                                                                           Page 5

        A two-step process guides the court in determining the correct classification of

merchandise. First, the court ascertains the proper meaning of the terms in the tariff provision.

See Schlumberger Tech. Corp. v. United States, 845 F.3d 1158, 1162 (Fed. Cir. 2017) (citing

Sigma-Tau HealthScience, Inc. v. United States, 838 F.3d 1272, 1276 (Fed. Cir. 2016)). Second,

the court determines whether the subject merchandise fall within the parameters of the tariff

provision. See id. The former is a question of law and the latter is a question of fact. See id.

“[W]hen there is no dispute as to the nature of the merchandise, then the two-step classification

analysis ‘collapses entirely into a question of law.’” Link Snacks, Inc. v. United States, 742 F.3d

962, 965–66 (Fed. Cir. 2014) (quoting Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed.

Cir. 2006)).

        The court reviews classification cases de novo. See 28 U.S.C. § 2640(a)(1). The court

has “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)

(citation omitted). Thus, the court must determine “whether the government’s classification is

correct, both independently and in comparison with the importer’s alternative.” Jarvis Clark Co.

v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984).

                                               ANALYSIS

   I.      Legal Framework

        In construing the terms of the HTSUS headings, “[a] court may rely upon its own

understanding of the terms used and may consult lexicographic and scientific authorities,

dictionaries, and other reliable information sources.” Carl Zeiss, Inc. v. United States, 195 F.3d

1375, 1379 (Fed. Cir. 1999) (citing Baxter Healthcare Corp. v. United States, 182 F.3d 1333,

1337–38 (Fed. Cir. 1999). The court may also consult the Harmonized Commodity Description
Court No. 18-00128                                                                              Page 6

and Coding System’s Explanatory Notes (“Explanatory Notes”), which “are not legally binding

or dispositive,” Kahrs Int’l., Inc. v. United States, 713 F.3d 640, 645 (Fed. Cir. 2013), but

“provide a commentary on the scope of each heading of the Harmonized System” and are

“generally indicative of proper interpretation of the various provisions.” H.R. Rep. No. 100–

576, 549 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 1582; see also E.T. Horn Co. v. United

States, 367 F.3d 1326, 1329 (Fed. Cir. 2004). Tariff terms are defined according to the language

of the headings, the relevant section and chapter notes, the Explanatory Notes, available

lexicographic sources, and other reliable sources of information.

   II.      Analysis of The Terms of HTSUS Subheading 9801.00.20

         The court first ascertains the proper meaning and scope of HTSUS subheading

9801.00.20. See Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1365 (Fed. Cir. 1998).

HTSUS subheading 9801.00.20 covers reimported merchandise: (1) upon which duty was paid at

the time of previous importation; (2) that has not been advanced in value or improved in

condition by any process of manufacture or other means while abroad; (3) that was exported

under a lease or similar use agreement; and (4) that is reimported by or for the account of the

person who imported the merchandise into, and exported it from, the United States. HTSUS

subheading 9801.00.20; Skaraborg Invest USA, Inc. v. United States, 22 CIT 413, 417 (1998).

         Generally, an importer must pay a duty on previously imported merchandise that were

exported and then re-imported into the United States. 19 C.F.R. § 141.2. HTSUS subheading

9801.00.20 provides an exception to this general rule by allowing duty-free treatment if articles

were originally imported into the United States and duties were paid, the articles were exported

outside the United States, and then reimported back into the United States while meeting certain

conditions related to a lease or similar use agreement. The purpose of this provision is to prevent
Court No. 18-00128                                                                            Page 7

the imposition of double duties for articles that meet the specific requirements of HTSUS

subheading 9801.00.20. Customs shall determine whether to allow for duty-free treatment under

HTSUS subheading 9801.00.20, as set forth in the relevant implementing regulation as follows:

       Entry of reimported articles exported under lease.
       Free entry shall be accorded under subheading 9801.00.20, Harmonized Tariff
       Schedule of the United States (HTSUS), whenever it is established to the
       satisfaction of the Center director that the article for which free entry is claimed
       was duty paid on a previous importation . . . , is being re-imported without having
       been advanced in value or improved in condition by any process of manufacture or
       other means, was exported from the United States under a lease or similar use
       agreement, and is being reimported by or for the account of the person who
       imported it into, and exported it from, the United States.

19 C.F.R. § 10.108.

           a. Reimported merchandise with duties paid upon previous importation

       The court examines each requirement of HTSUS subheading 9801.00.20 in turn. First,

an importer must show that the subject merchandise are “[a]rticles, previously imported, with

respect to which the duty was paid upon such previous importation.” HTSUS subheading

9801.00.20. The court construes the term “[a]rticles” within the ordinary, plain usage of the

term. The terms “previously imported” and “duty . . . paid upon such previous importation” are

construed by the court according to the relevant dictionary definitions. “[P]reviously imported”

means “to bring from a foreign or external source” and “going before in time or order.”

Previously, Merriam-Webster’s Collegiate Dictionary 984 (11th ed. 2020); imported, id. at 625.

“Duty paid” means “a tax on imports” and “a disposal or transfer of (money).” Duty, id. at 388;

paid, id. at 910. The court concludes that the tariff terms “[a]rticles, previously imported, with

respect to which the duty was paid upon such previous importation” mean that the subject

merchandise must have been imported into the United States from a foreign country and the
Court No. 18-00128                                                                               Page 8

importer paid a duty to Customs when the merchandise were first imported into the United

States.

          Plaintiff SGS asserts that the entries at issue in this case were previously imported from

China into the United States and duties were paid upon first importation. Pl.’s SMF ¶ 4. To

support its claim, SGS cites inventory records that purport to establish the date and place of entry

into the United States, as well as the quantity, style, size, and color of the goods being re-

imported. Pl.’s Mem. at 8–9 (citing Pl.’s SMF, Exhs. K, P). The Government disputes that the

subject merchandise were previously imported and that duties were paid upon first importation

into the United States. Def.’s Resp. to Pl.’s SMF ¶ 4. The Government argues also that the

exhibits cited by Plaintiff fail to “make a connection between the two U.S. entries” (i.e. the first

importation and the re-importation into the United States), noting omissions of relevant

information in the exhibits such as the date and place of entry into the United States of the

original shipments, the quantity, style, size, and color of the goods being re-imported into the

United States, whether the merchandise originally imported were eventually sold to customers in

the United States, or whether duties were originally paid on the re-imported entries at issue.

Def.’s Mem. at 34–35. Upon examining Exhibits K and P provided by Plaintiff, the court notes

that both documents consist of voluminous print outs of tables containing numbers and codes.

The court observes that the numbers and codes in Exhibits K and P do not clearly show that the

merchandise listed therein were imported to the United States, that duties were paid upon that

first importation, that the merchandise were exported from the United States to Canada, that the

merchandise were re-imported into the United States, or that the merchandise listed therein are

the same articles as the subject entries in this case.
Court No. 18-00128                                                                            Page 9

        The court concludes that Plaintiff has failed to meet its burden to provide a sufficient

showing to establish the existence of an element essential to Plaintiff’s case, namely the first

factor under HTSUS subheading 9801.00.20 requiring that the subject merchandise were

previously imported into the United States and that duties were paid on the subject merchandise

at first importation. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (“Celotex”) (Summary

judgment should be granted against a party “who fails to make a showing sufficient to establish

the existence of an element essential to that party’s case, and on which that party will bear the

burden of proof at trial.”); XY, LLC v. Trans Ova Genetics, 890 F.3d 1282, 1292 (Fed. Cir.

2018) (citing Celotex).

            b. Reimported articles have not been advanced in value

        Second, an importer must show that the subject merchandise are articles that have not

been “advanced in value or improved in condition . . . while abroad.” HTSUS subheading

9801.00.20. The court construes the terms “advanced in value or improved in condition . . .

while abroad” by examining dictionary definitions of the relevant terms. “Advanced” means

“greatly developed beyond an initial stage.” Advanced, Merriam-Webster’s Collegiate

Dictionary 18 (11th ed. 2020). “Value” means “the monetary worth of something.” Value, id. at

1382. “Improved” means “to enhance in value or quality.” Improved, id. at 626. “Condition”

means “a state of being.” Condition, id. at 259. “Abroad” means “beyond the boundaries of

one’s country.” Abroad, id. at 4. The court confirms that the tariff terms “advanced in value or

improved in condition . . . while abroad” mean that the subject merchandise have not developed

their monetary worth or enhanced their state of being while in the exported country (i.e. Canada

in this case).
Court No. 18-00128                                                                          Page 10

       Plaintiff SGS asserts that the subject merchandise were neither advanced in value nor

improved in condition while abroad. Pl.’s SMF ¶ 20. To support its claim, SGS alleges that the

subject merchandise were stored in a warehouse and sometimes repackaged. Pl.’s Mem. at 9–11.

Defendant disputes Plaintiff’s assertion that the subject merchandise were neither advanced in

value nor improved in condition while abroad. Def.’s Resp. to Pl.’s SMF ¶ 20. Defendant

contends that Plaintiff failed to provide any evidence to prove that SGS exported the

merchandise to Canada and that the subject merchandise were not advanced in value or improved

in condition. Def.’s Mem. at 35–36; Def.’s Reply at 13. Defendant notes also that because

Plaintiff failed to connect the subject entries to show that the first imported merchandise were the

same as the reimported subject merchandise, Plaintiff failed to establish that the previously

imported merchandise were not advanced in value or improved in condition while in Canada.

Def.’s Reply at 13. The court observes that Plaintiff failed to cite any evidence to support its

contention that the subject merchandise were not advanced in value or improved in condition

while in Canada.

       A party moving for summary judgment must make a sufficient showing to establish the

existence of an element essential to that party’s case. Celotex, 477 U.S. at 322; XY, LLC, 890

F.3d at 1292. Here, Plaintiff failed to provide any proof that the subject merchandise were not

advanced in value or improved in condition while in Canada, which is an essential element to

proving that Plaintiff’s merchandise were entitled to duty-free treatment under HTSUS

subheading 9801.00.20. The court concludes, therefore, that Plaintiff has failed to meet its

burden on the second requirement of HTSUS subheading 9801.00.20.
Court No. 18-00128                                                                           Page 11

           c.   Exported under a lease or similar use agreement

        Third, the importer must show that the subject merchandise were “exported under [a]

lease or similar use agreement[].” HTSUS subheading 9801.00.20. SGS does not argue that its

arrangement with 147483 is a lease. See Pl.’s Mem. at 11–12. SGS argues, rather, that its

arrangement with 147483 is a bailment agreement that is equivalent to a “similar use

agreement.” Id.

       In construing the tariff terms “exported under [a] . . . similar use agreement[],” the court

looks to dictionary definitions to construe the term “similar use agreement.” “Similar” is defined

as “alike in substance or essentials.” Similar, Merriam-Webster’s Collegiate Dictionary 1161

(11th ed. 2020). “Use” is defined as “to carry out a purpose or action.” Use, id. at 1378.

“Agreement” is defined by Black’s Law Dictionary as a “mutual understanding between two or

more persons about their relative rights and duties regarding past or future performances; a

manifestation of mutual assent by two or more persons.” Agreement, Black’s Law Dictionary

(7th ed. 1999). Accordingly, the court construes the term “similar use agreement” under HTSUS

subheading 9801.00.20 to mean an understanding between two or more parties expressing a

mutual assent to carry out a purpose or action that is alike in substance.

       SGS argues that its arrangement is a bailment agreement that equates to a “similar use

agreement.” See Pl.’s Mem. at 11–12. The court notes at the outset that Plaintiff’s

characterization of SGS’ arrangement with 147483 as a “bailment agreement” presupposes a

legal conclusion, and the court does not entertain an analysis of whether there is a bailment

agreement in this case. Rather, the court examines whether the undisputed material facts alleged

by the movant support a showing of a similar use agreement within the court’s understanding of

the meaning of the tariff terms.
Court No. 18-00128                                                                          Page 12

       Under the court’s construction of “similar use agreement,” Plaintiff must show an

understanding between two or more parties expressing a mutual assent to carry out a purpose or

action that is alike in substance. Plaintiff contends that SGS maintains an arrangement with

147483 that acts as a similar use agreement, citing to a Warehousing Agreement executed

between SGS and 147483. SGS asserts that this Warehousing Agreement demonstrates use of

the subject merchandise for the purpose of warehousing by more than one party. Pl.’s SMF

¶¶ 9–15. The parties agree on several facts with respect to whether there is use of the subject

merchandise by more than one party. For example:

   x   The parties agree that SGS and 147483 are co-located in the same building, though

       Plaintiff and Defendant dispute whether SGS and 147483 act as separate companies.

       Pl.’s SMF ¶¶ 9–10; Def.’s Resp. to Pl.’s SMF ¶¶ 9–10.

   x   The parties agree that Gellis is the owner and sole officer of 147483. Def.’s SMF ¶ 3;

       Pl.’s Resp. to Def.’s SMF ¶ 3.

   x   The parties agree that Gellis is the sole officer of SGS. Def.’s SMF ¶ 8; Pl.’s Resp. to

       Def.’s SMF ¶ 8. The parties further agree that Gellis possessed ultimate control of SGS

       as of 2013, and do not dispute that all officer-assigned decisions vest in Gellis. Pl.’s

       SMF ¶ 1; Def.’s SMF ¶¶ 8, 9, 104–15; Def.’s Resp. to Pl.’s SMF ¶ 1; Pl.’s Resp. to Def.’s

       SMF ¶¶ 8, 9, 104–15.

   x   The parties agree that Gellis signed the Warehousing Agreement on behalf of both SGS

       and 147483. Def.’s SMF ¶¶ 42, 47; Pl.’s Resp. to Def.’s SMF ¶¶ 42, 47.

The parties dispute numerous material aspects, however, of whether the subject merchandise are

used by more than one party. For example:
Court No. 18-00128                                                                         Page 13

    x   Defendant disputes Plaintiff’s characterization of the arrangement between SGS and

        147483, arguing that the Warehousing Agreement cannot be a similar use agreement

        because the activities covered under the Warehousing Agreement do not involve the use

        of merchandise, and because SGS and 147483 are the same entity. Def.’s Resp. to Pl.’s

        SMF ¶¶ 9–15; Def. Br. at 23–33.

    x   Plaintiff and Defendant dispute whether SGS and 147483 are the same or separate

        entities. Pl.’s SMF ¶¶ 3, 10; Def.’s Resp. to Pl.’s SMF ¶¶ 3, 10.

    x   The parties dispute whether the 147483 company was formed to conduct warehousing

        operations. Pl.’s SMF ¶ 2; Def.’s Resp. to Pl.’s SMF ¶ 2.

    x   The parties dispute whether the Warehousing Agreement demonstrates use of the subject

        merchandise by more than one party. Pl.’s SMF ¶¶ 9–15; Def.’s Resp. to Pl.’s SMF

        ¶¶ 9–15.

        Relevant to the court’s consideration of the parties’ cross-motions for summary

judgment, the court concludes that disputes over genuine issues of material fact exist with

respect to questions of whether the subject merchandise were exported to Canada under a similar

use agreement, and whether the agreement between SGS and 147483 was between two parties.

In any event, because Plaintiff has failed to make a sufficient showing on the first and second

factors under HTSUS subheading 9801.00.20 (whether the subject merchandise were reimported

with duties paid, and whether the subject merchandise did not advance in value or improve in

condition), any genuine issues of material fact with respect to a lease or similar use agreement do

not warrant resolution at trial.
Court No. 18-00128                                                                          Page 14

           d. Reimported by or for the account of the person who imported it into and
              exported it from the United States.
       The fourth issue is whether the subject merchandise were reimported “by or for the

account of the person who imported it into, and exported it from, the United States.” HTSUS

subheading 9801.00.20. The court construes the terms in the fourth factor to mean that a

showing must be made that the subject merchandise were brought back into the United States by

the original importer, or for the original importer. In other words, SGS must show that the

subject merchandise were originally imported into the United States, exported to another

country, and reimported into the United States either by SGS or for SGS.

       Plaintiff alleges that “all of the goods in question were imported by SGS, exported by

SGS and reimported by SGS.” Pl.’s SMF ¶ 19. Defendant disputes this statement, stating that

SGS has provided no evidence to support the allegation made in ¶ 19 of Plaintiff’s statement of

material facts. Def.’s Resp. to Pl.’s SMF ¶ 19. The evidence before the court shows generally

that SGS imported goods and subsequently reimported some goods under the terms of the

Warehousing Agreement. See Pl.’s SMF Ex. K (“Receiving Journal”); Pl.’s SMF Ex. P (“Duty

Relief Ledger”). Defendant asserts that there is no evidence to track the goods leaving the

Canadian warehouse back to the original consumption entry number. Def. Br. at 34; Def. Reply

at 13. The court observes that Plaintiff’s cited evidence does not detail whether the entries at

issue in this case are the same merchandise originally imported and exported.

       HTSUS requires a showing that “[a]rticles, previously imported,” are the subject

merchandise at issue. HTSUS subheading 9801.00.20. It is not enough to show that generally

SGS’ business plan provides for import, export, and reimport of swimwear. A showing must be

made that the entries identified in the protest were imported, duties were paid, were exported,

and reimported. This interpretation is consistent with the implementing regulations, which state
Court No. 18-00128                                                                          Page 15

that “[f]ree entry shall be accorded under [HTSUS] subheading 9801.00.20, . . . . [upon a

showing] that the article for which free entry is claimed was duty paid on a previous importation

. . . .” 19 C.F.R. § 10.108. Similarly, the court in Skaraborg found that the importer failed to

qualify for duty free treatment under HTSUS subheading 9801.00.20 when “Skaraborg ha[d] not

presented one iota of evidence that duty was paid on the subject merchandise at the time of

previous importation.” Skaraborg, 22 CIT at 417. Plaintiff argues that the Receiving Journal

documents (Exhibit K) “are self-authenticating and show the date and place of original

importation.” Pl.’s Opp’n and Reply at 25. The court has examined this Receiving Journal

document and observes that the document fails to show clearly the date of first importation, that

duties were paid upon first importation, that the goods were exported to Canada, were held in a

warehouse without increasing in value or changing condition, and reimported back to the United

States for or by SGS. The Receiving Journal appears to be a lengthy printed spreadsheet

containing codes and numbers, with headings such as, “Receiving Number, Shipment No, PO

No, Style/Color, Whse, Bin, Receiving Date, LC No, UM, Qty To Receive, Qty Received,

Cancel B/O, Price, Extension.” See generally Receiving Journal. Plaintiff’s evidence fails to

demonstrate to the court that the subject merchandise meet the requirements of HTSUS

subheading 9801.00.20.

       As noted earlier, a party moving for summary judgment must make a sufficient showing

to establish the existence of an element essential to that party’s case. Celotex, 477 U.S. at 322;

XY, LLC, 890 F.3d at 1292. Here, Plaintiff failed to provide sufficient proof that the subject

merchandise had been imported, exported, and reimported by or for SGS. The court concludes

that Plaintiff failed to prove the fourth essential element required under HTSUS subheading

9801.00.20.
Court No. 18-00128                                                                              Page 16

          In summary, Plaintiff has not proven any of the necessary requirements for duty-free

treatment under HTSUS subheading 9801.00.20. Plaintiff failed to make a sufficient showing to

establish that three of the essential elements of HTSUS subheading 9801.00.20 have been

satisfied, and at best there are genuine issues of disputed material fact with respect to the

essential element of export under a similar use agreement. A party’s failure to make a sufficient

showing on even one essential element is cause for the granting of summary judgment against

the movant. Celotex, 477 U.S. at 322–23; XY, LLC, 890 F.3d at 1292. The court recognizes, in

addition, that “one of the principal purposes of the summary judgment rule is to isolate and

dispose of factually unsupported claims or defenses,” Celotex, 477 U.S. at 323–24; Minkin v.

Gibbons, P.C., 680 F.3d 1341, 1351 (Fed. Cir. 2012) (citing Celotex). Because Plaintiff has

proven none of the essential elements of HTSUS subheading 9801.00.20, the court holds that

Plaintiff’s subject merchandise are not entitled to duty-free treatment and denies Plaintiff’s

motion for summary judgment.

   III.      HTSUS Chapters 61 to 63

          The next inquiry concerns whether Customs classified Plaintiff’s merchandise correctly.

Jarvis Clark Co., 733 F.2d at 878. According to Plaintiff, SGS’ merchandise were classified

“under various HTSUS provisions of Chapters 61 through 63 and assessed duties thereon at the

Column 1 rates.” Pl.’s Mem. at 1. Plaintiff indicated to the court that it does not challenge

Customs’ classification other than the denial of duty-free treatment under HTSUS subheading

9801.00.20. Conference Call with the Court, held by the Court of International Trade (July

20, 2020). The court concludes, therefore, that Customs classified Plaintiff’s imported

swimwear correctly under HTSUS Chapters 61 to 63.
Court No. 18-00128                                                                          Page 17

                                          CONCLUSION

         For the foregoing reasons, the court holds that Customs correctly classified the subject

merchandise under Chapters 61 to 63, and that Plaintiff’s subject merchandise are not entitled to

duty-free treatment as a matter of law under HTSUS subheading 9801.00.20. The court denies

Plaintiff’s motion for summary judgment. The court sustains Customs’ decision to deny duty-

free treatment to Plaintiff under HTSUS subheading 9801.00.20 and grants Defendant’s

cross-motion for summary judgment. Judgment will be entered accordingly.

                                                                         /s/ Jennifer Choe-Groves
                                                                       Jennifer Choe-Groves, Judge

Dated:     August 7, 2020
         New York, New York