Court Opinion

ID: 819310
Source: CourtListenerOpinion
Date Created: 2013-02-05 02:37:15.701893+00
Date Added: 2024-06-11T09:02:56.970768
License: Public Domain

Slip Op. 01 - 85

           UNITED STATES COURT OF INTERNATIONAL TRADE

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NORTH AMERICAN FOREIGN TRADING CORP.,:

                           Plaintiff,   :

                     v.                 :   Court Nos. 81-09-01205-S-1
                                                       82-04-00531-S
                                        :              85-04-00470
THE UNITED STATES,                                     88-02-00074
                                        :
                           Defendant.
                                     :
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                             Memorandum

[Upon cross-motions, summary judgment
 in part for the defendant.]

                                            Decided:   July 10, 2001

     Fitch, King & Caffentzis (Richard C. King) for the plaintiff.

     Stuart E. Schiffer, Acting Assistant Attorney General, Joseph
I. Liebman, Attorney in Charge, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice (James A. Curley); and Office
of the Assistant Chief Counsel, U.S. Customs Service (Karen P.
Binder and Edward N. Maurer), of counsel, for the defendant.

          AQUILINO, Judge: By stipulation dated December 2000, the

parties agreed (with the consent of the court) to add action No.

82-04-00531-S to the above-numbered matters encompassing issues

left over from a generation of protest and litigation involving

sundry timepieces designed to track Earth's rotation into this 21st

century, if not diminish or avoid the reach of the Tariff Act of

1930, as amended.    E.g., Texas Instruments Inc. v. United States,
Court No. 81-09-01205-S-1 etc.                                                Page 2

82 Cust.Ct. 272, C.D. 4810, 475 F.Supp. 1183 (1979), aff'd, 67 CCPA

59, C.A.D. 1244, 620 F.2d 269 (1980); Texas Instruments Inc. v.

United States, 82 Cust.Ct. 287, C.D. 4811, 475 F.Supp. 1193 (1979),

aff'd,   67    CCPA    57,   C.A.D.    1243,   620    F.2d    272   (1980);    Texas

Instruments Inc. v. United States, 1 CIT 236, 518 F.Supp. 1341

(1981), aff'd, 69 CCPA 136, 673 F.2d 1375 (1982); Belfont Sales

Corp. v. United States, 11 CIT 541, 666 F.Supp. 1568 (1987), reh'g

denied, 12 CIT 916, 698 F.Supp. 916 (1988), aff'd, 878 F.2d 1413

(Fed.Cir. 1989); Marcel Watch Co. v. United States, 16 CIT 474, 795

F.Supp. 1199 (1992), aff'd, 11 F.3d 1054 (Fed.Cir. 1993); World

Forum Watch, Ltd. v. United States, 20 CIT 890, reh'g denied, 20

CIT    1205     (1996),      rev'd,    121     F.3d     727   (Fed.Cir.       1997).

Horologically, the goods at bar in these four actions, which remain

predicated upon entries into the United States many moons ago, are

"clocks" rather than "watches".

                                         I

              Plaintiff's complaint in the first-numbered action, for

example, was that all of its merchandise was properly classified

under item 688.45 of the Tariff Schedules of the United States

("TSUS") ("Electrical articles and electrical parts of articles,

not specially provided for . . . Other . . . . . . 5.3% ad val.")

as opposed to the classification by the U.S. Customs Service under

TSUS   Schedule       7,   including   item    715.15    ("Clocks:    With     watch

movements; or with clock movements measuring less than 1.77 inches

in width"), with the rates of duty 12.7 percent ad valorem on the
Court No. 81-09-01205-S-1 etc.                                         Page 3

casing plus 36 cents on the movements.         In addition to standing by

this       Customs   classification,    defendant's   answer     asserts   four

"contingent counterclaims" and a "fifth contingent claim" under

TSUS items 715.15, 720.06 and 720.34; 715.15, 720.14 and 720.34;

715.31; or 715.51; or 678.50 "[i]f the Court finds that the

imported merchandise was not correctly classified under items

760.05, 774.55 and 715.15, TSUS"1.

               Subsequent   to   the   commencement   of   the   above-listed

actions and to such joinder of issue, the courts in Marcel Watch

Co. v. United States, supra, resolved the electric/tronic-clocks-

classification controversy essentially in the government's favor --

in contrast with their decisions in the protracted controversy over

imported electronic wristwatches at issue, for example, in Belfont

Sales Corp. v. United States, supra.           In fact, that watch action

was pleaded as a predicate to plaintiff's complaints herein.2              That

judicial settlement of issues has brought forth a motion by the

defendant for summary judgment, praying that plaintiff's complaints

be dismissed; that its second contingent counterclaim be granted3;

       1
       Defendant's Answer in Court No. 81-09-01205-S-1, p. 2. The
effect of grant of one or more of these alternative, contingent
counterclaims would be to increase the duties owed by the
plaintiff.
       2
      See, e.g., plaintiff's complaint in Court No. 81-09-01205-S-
1, paras. 15, 16.
       3
       The "United States concedes that the movement should not be
classified under item 720.02, but rather . . . under 720.14, TSUS,
the second alternative classification asserted in the counterclaim
in its answer." Defendant's Brief, p. 4.
Court No. 81-09-01205-S-1 etc.                              Page 4

that the subject clocks, including their movements and cases be

reliquidated under TSUS items 715.15, 720.14 and 720.34; and that

     plaintiff pay to the defendant the increase in duty
     assessed upon reliquidation of the imported merchandise
     which is subject to the counterclaim, including interest
     in accordance with 28 U.S.C. § 1961(a) and (b), from the
     dates the answers asserting the counterclaims were filed
     until the date the duties are paid . . ..

The motion is accompanied by an obligatory statement of facts as to

which the movant contends there is no genuine issue to be tried.

It represents, in pertinent part:

          1. The imported merchandise . . . . consists of a
     quartz analog clock, two ball-point pens, and a stand
     that has holders for the pens and a slot into which the
     clock may be inserted. The clock may be removed from the
     holder and used separately.

          2. Each of these three elements of the merchandise
     retains its separate name, use, and character in the
     imported merchandise and is not subordinated to the
     identity of the combination.

          3. Each of these three elements is classifiable
     separately.

                             *   *   *

          9. Only the clock portion of the imported mer-
     chandise is in issue in this case.

          10. The clock portion of the merchandise contains a
     movement measuring less than 1.77 inches in width and
     more than one-half (0.5) inch in thickness. The movement
     is a clock movement for tariff purposes.

          11. The value of the movement is over $2.25 but not
     over $5 each.

          12. The movement is neither "Constructed or designed
     to operate for over 47 hours without rewinding" nor "Not
     constructed or designed to operate for over 47 hours
     without rewinding," within the meaning of the superior
     headings to items 720.06 through 720.09 and 720.02
     through 720.04, TSUS, respectively.
Court No. 81-09-01205-S-1 etc.                                      Page 5

           13. If imported separately, the movement would be
      properly classifiable as other clock movements, valued
      over $2.25 but not over $5, under item 720.14, TSUS,
      dutiable at 34 cents each plus 14.8% ad val., plus 5.7
      cents for each jewel, if any.

           14. The case is a clock case and, if imported
      separately, would be properly classifiable as "Clock
      cases . . . Other . . . Other" under item 720.34, TSUS,
      dutiable at 12.7% ad val.

           15. The clock portion of the merchandise (including
      the case) is dutiable at 34 cents each plus 14.8% ad
      val., plus 5.7 cents for each jewel, in the movement,
      plus 12.7% ad val. for the case.

            The plaintiff responds with a cross-motion for summary

judgment,

      dismissing Court No. 85-04-00470, and overruling
      defendant's claims for pre-judgment interest as to all
      entries; and further ordering that entries 80-135546, 80-
      135693, 80-135929, and 81-782106 . . . be reliquidated
      . . . with duties on the "movements" under Item 720.14,
      TSUS, at 34¢ each plus 14.8% ad val., as claimed by
      defendant.

The   plaintiff   admits   paragraphs   1   through   14   of   Defendant's

Statement of Facts Not in Dispute, quoted in part above, and offers

the following factual averments of its own:

           15. Entry 81-179819, dated 4/16/81, was liquidated
      on 6/11/82, more than one year after entry, and timely
      protested under protest 1001-2-009191.

           16. The same entry was subsequently protested under
      protest 1001-2-009820, which also covered the same
      category of merchandise (pens) as was covered by the
      first protest, 1001-2-009191.

           17. Protest 1001-2-009191 was approved, and the
      entry was reliquidated on 4/25/83.

           18. No further protest was filed subsequent to the
      reliquidation.
Court No. 81-09-01205-S-1 etc.                                 Page 6

          19. Summons No. 85-04-00470 was filed against the
     second protest.

Plaintiff's Statement of Material Facts Not in Dispute. Paragraphs

18 and 19 are admitted by the defendant without reservation;

paragraph 17 is admitted, subject to the claim that the only

category of merchandise covered by the specified protest was pens,

while defendant's admission of paragraph 16 is conditioned upon an

averment that the second numbered protest covered categories in

addition to pens, including quartz clocks, movements and cases.4

Finally, the defendant denies that entry 81-179819 was liquidated

more than one year after entry5, and it proffers more facts.         See

generally Defendant's Additional Statement of Material Facts Not in

Dispute.

                                  A

            This court has perused the foregoing submissions and the

written legal arguments presented in conjunction therewith and

concurs in the parties' fundamental position that the above-listed

actions are now susceptible to disposition by summary judgment.

That is, there are no material facts as to which there exists a

genuine issue to be tried within the meaning of CIT Rule 56(h), as

amended January 25, 2000.

            The court's jurisdiction to decide the cross-motions is

pursuant to 28 U.S.C. §§ 1581(a) and 2631(a).

     4
       See Defendant's Response       to   Plaintiff's   Statement   of
Material Facts Not in Dispute.
     5
         See id., para. 15.
Court No. 81-09-01205-S-1 etc.                              Page 7

                                 II

          To address plaintiff's motion first, in the light of

Marcel Watch Co. v. United States, supra, the court concurs that
entries 80-135546, 80-135693, 80-135929, 80-711255, 81-179819 and

81-782106, which form the basis of three of the numbered actions

herein, can be reliquidated under items 715.15, 720.14 and 720.34

of the TSUS in effect on their respective dates.

          As for the fourth-numbered action, the plaintiff takes

the position that this court "has no jurisdiction over Court No.

85-04-00470, covering protest 1001-2-009820"6 since it claims to

have filed two protests for entry no. 81-179819 for the same

category of merchandise. Its first protest was approved and led to

a refund of duties paid on pens.      Plaintiff's second protest,

concerning the classification of the imported articles in their

entirety, was denied.   The plaintiff now argues that the second

protest was invalid because it involved the same merchandise as the

first. See Plaintiff's Memorandum, pp. 2-3. The governing statute

provided that only

     one protest may be filed for each entry of merchandise,
     except that where the entry covers merchandise of
     different categories, a separate protest may be filed for
     each category.

     6
       Plaintiff's Memorandum, p. 2.        Plaintiff's complaint
requested reliquidation of any movements at 5.3 percent ad valorem,
a lower rate than that liquidated initially (36¢ each). However,
the holding in Marcel Watch Co. v. United States, 16 CIT 474, 795
F.Supp. 1199 (1992), aff'd, 11 F.3d 1054 (Fed.Cir. 1993), favors
reliquidation at 34 cents each plus 14.8 percent ad valorem -- or
more than that already paid. If the court's jurisdiction has not
attached to the entry in question, of course it could not direct
Customs to reliquidate at the higher rate.
Court No. 81-09-01205-S-1 etc.                                        Page 8

19 U.S.C. §1514(c)(1).        See also Webcor Electronics v. United

States, 79 Cust.Ct. 137, 442 F.Supp. 95 (1977).           Hence, while two

protests may not be filed for the same category of merchandise, "it

is clear that [the statute] permits importers to file separate

protests     where   the   entry   covers   merchandise     of     different

categories".     Minox Corp. d/o Berkey Photo, Inc. v. United States,

77 Cust.Ct. 110, 111 (1976).

            The defendant points out that the approved first protest

was only for the "refund of duty paid on pens . . . manufactured in

the U.S.A.".      Defendant's Additional Statement of Material Facts

Not in Dispute, para. 18, quoting Protest No. 1001-2-009191 (Aug.

24, 1982).      The protest referred to in Court No. 85-04-00470 does

not involve duties levied on those American pens.                Instead, it

states:

          Protest is hereby made against your classification
     and assessment of duties on quartz clocks under item
     715.15, TSUS, with duty on the "movements" at the rate of
     34¢ each under item 720.02, TSUS, or on "cases" at the
     rate of 11% ad val. under item 720.34, TSUS, or on pens
     at the rate of 1.7¢ each + 11.5% ad val.

Protest No. 1001-82-009820 (Sept. 9, 1982).       While the second pro-

test does refer to the pens, it is evident from the complaint in

Court     No.   85-04-00470   that   the    controversy     is    over   the

classification of the clocks.         That is, the court cannot and

therefore does not find that the second protest duplicated the

first one.       Accordingly, the court concludes that the second

protest was properly filed, and jurisdiction pursuant to 28 U.S.C.

§§ 1581(a) and 2631(a) has therefore attached.
Court No. 81-09-01205-S-1 etc.                                                         Page 9

                                           III

             The    plaintiff      argues    that      the    award       of    prejudgment

interest to the government upon reliquidation would be improper

since statutory amendments providing for such interest were not

enacted until after the entries had been filed, liquidated and

protested. It also claims that it has not incurred any contractual

liability which would necessitate an award of such interest.

             The defendant responds that an award of prejudgment

interest would be appropriate for two reasons:                        (a) although the

plaintiff was notified of defendant's expectation of additional

duties   and       interest   on     the    clocks      when        the    answers       with

counterclaims        were     served       and     filed       and        their      correct

classification       was    decided    by    Marcel         Watch    Co.,       supra,    the

plaintiff did not timely acquiesce under those circumstances; and

(b), in the absence of an award, the plaintiff will have enjoyed an

interest-free loan on the difference in duties due on its entries.

See   Defendant's      Opposition      to    the       Cross-Motion            for   Summary

Judgment, and Reply Brief in Support of Its Motion for Summary

Judgment, p. 5.

           It is well-settled that, in the absence of statutory

authority,     prejudgment      interest         may   be    awarded       in    the    sound

discretion of the court.             E.g., United States v. Imperial Food

Imports, 834 F.2d 1013, 1016 (Fed.Cir. 1987); Rheem Metalurgica

S.A. v. United States, 21 CIT 963, 966, 978 F.Supp. 333, 336

(1997), aff'd, 160 F.3d 1357 (Fed.Cir. 1998).                         Typically, such
Court No. 81-09-01205-S-1 etc.                              Page 10

awards have been governed by considerations of equity and fairness.

See, e.g., United States v. Imperial Food Imports, 834 F.2d at

1016, quoting United States v. Goodman, 6 CIT 132, 140, 572 F.Supp.

1284, 1289 (1983).   When the amount of damages has been uncertain,

however, courts have denied that kind of an award.       See, e.g.,

Eastern Air Lines, Inc. v. Atlantic Richfield Co., 712 F.2d 1402,

1410 (Temp.Emer.Ct.App.), cert. denied, 464 U.S. 915 (1983).

           The classification of the kind of clocks herein remained

genuinely controverted at least until the final appeal in the

linchpin case Marcel.   And the plaintiff did alter its approach to

focus on its procedural stance unrelated to its classification

claim once the court of appeals had concluded that substantive

matter.   And the defendant now admits to having misclassified the

movement(s). In short, in the interest of laying this potentially-

eternal litigation equitably to rest, given the shortcomings of

record on all sides the court declines to exercise its prerogative

of awarding any prejudgment interest at this time.

                                  IV

           In light of the foregoing, defendant's motion for summary

judgment should be granted to the extent that all of the entries at

issue herein be reliquidated under TSUS items 715.15, 720.14 and

720.34.   Judgments will enter accordingly.

Decided: New York, New York
         July 10, 2001

                                 ________________________________
                                                Judge
                        Slip Op. 01-85 Errata

North American Foreign Trading Corp. v. United States
Court No. 81-09-01205-S-1 etc.

            The word "classified" at the end of line 17 on page 2

should better be "classifiable".

            Delete "81-179819" from line 3 on page 7.

            Change the protest number in line 21 on page 8 to 1001-

2-009820.

Dated:   New York, New York
         July 11, 2001