- Improper revocation of prior rulings via a CF-29
- Acts in opposition to an established and uniform practice
- Proposed alternative classifications
- A commercial designation claim
- A claim for declaratory relief
Tuesday, September 29, 2009
Kahrs III: What Have I Done Wrong?
Here I sit, painfully aware of my promise to my loyal readers to digest and summarize this Court of International Trade decision in a way that is both accurate and entertaining (well, entertaining to customs lawyers). The opinion is a dry 88 pages long. My task is daunting. I feel like I am standing at the base of some reasonably tall mountain with too little food and without an experienced Sherpa. I wonder whether there is any meaningful principle of customs law to be taken from this case. In other words, why am I bothering?
[Pause for much time spent staring into space waiting for some sort of sign from heaven telling me what to do. None arrives, I continue reading.]
Kahrs imports wood flooring which it classified in 4418 as builders' joinery. Customs and Border Protection classified the merchandise in 4412 as plywood. Kahrs filed suit and asserted as its causes of action:
Before the Court could get to the merits of these claims, it had to deal with the government's motion to dismiss the declaratory judgment claim for lack of jurisdiction and for failing to state a claim. The court also had to deal with a motion to strike certain allegations. On top of that, each side filed multiple motions for summary judgment on the individual claims. Poor Judge Carman explicitly complained about this in footnote 6.
The declaratory judgment action was brought under the Court's residual jurisdiction (28 USC 1581(i)) in an effort by the plaintiff to have the Court pass on the classification and exercise of reasonable care by Kahrs. This would provide a defense in any subsequent penalty case brought by the United States. The Court dismissed this claim on the grounds that the only entries properly before the Court were those covered by the denied protests and the summonses. Rather, the proper venue for raising those issues is as a defense in a penalty action. Thus, the Court dismissed that claim in its entirety.
Next, the government moved to strike some statements from Kahrs' complaint. The motion to strike was untimely and, therefore, the Court denied it.
That takes us to summary judgment, which goes to the merits. There were several motions and cross-motions for summary judgment addressing various claims brought by Kahrs. Happily, the Court first addressed the proper classification of the merchandise.
Customs treated the merchandise as plywood (4412) while Kahrs wanted it classified at assembled parquet panels (4418). Kahrs also provided as alternatives other edge-glued lumber and builders' joiner (both in 4418).
Heading 4412 covers "[p]lywood, veneered panels and similar laminated wood." Plywood is a structural material comprised of sheets of wood glued together with the grain of adjacent panels at right angles. Plywood is made up of veneer panels, which are thin sheets of wood. Finally, laminating is uniting layers of material by adhesive. The Explanatory Notes state that 4412 covers plywood used as flooring panels sometimes referred to as "parquet." Looking at samples and industry standards, the Court found that Kahrs' products are classifiable in 4412.29.
Turning to 4418, the Court had to determine whether the merchandise was also described as "parquet panels." Parquet is joinery consisting of an inlay of geometric or other patterns usually of different colors. Celtics fans know parquet when they see it. The Court held that the primary feature of parquet is that it involves a geometric pattern or mosaic. Kahrs' flooring, on the other hand, simulated solid wood planking. In the absence of a geometric pattern, the product is not classifiable in 4418.30. The fact that the flooring produces a striped pattern or a pattern simulating natural wood did not help.
Next, the Court addressed whether the merchandise can be classified as edge-glued lumber in 4418.90.20. The Court concluded that this term encompasses only single-layer products cut by the mill and glued only on the edges. Thus, the merchandise was excluded. On the last alternative classification as other builders' joinery of 4418.90.45, the Court quickly rejected the argument based on the CIT decision in Faus. But, since the goods in that case were fiberboard, not wood, the Court's ultimately reversed Faus analysis, was inapplicable.
The next set of issues relate to whether Customs improperly revoked certain rulings and decisions. Since I have a job and actual work to do, let's leave that for Kahrs IV: The Phantom Revocation.