U. S. Court of Appeals for the Federal Circuit, ADC TELECOMMUNICATIONS, INC. v. United States, Docket No. 2018-1316, Circuit Judge Wallach

Customs

Export

HTSUS

Tariff Classification

GRI

GRI 6 Analysis

ARI

Eo Nomine Classification v. Use Provision

Appellant ADC Telecommunications, Inc. (“ADC”) sued Appellee United States (“the Government”) in the U.S. Court of International Trade (“CIT”), challenging U.S. Cus- toms and Border Protection’s (“Customs”) classification of imported Value Added Modules (“VAM”) consisting of fiber optic telecommunications network equipment under Harmonized Tariff Schedule of the United States (“HTSUS”) Subheading 9013.80.90, which bears a duty rate of 4.5% ad valorem. ADC and the Government filed cross-motions for summary judgment, with ADC arguing that the subject merchandise should be classified under HTSUS Subheading 8517.62.00, which bears a duty-free rate. The CIT denied ADC’s Cross-Motion, and granted the Government’s Cross-Motion, holding that Customs properly classified the subject merchandise under HTSUS Subheading 9013.80.90.

ADC appeals. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5) (2012). We affirm.

(…) All citations to the HTSUS refer to the 2012 version, as determined by the date of importation of the merchandise.

(…) The CIT determined that HTSUS Heading 9013, which covers “other optical appliances and instruments, not specified or included elsewhere in this chapter,” is “an apt description of ADC’s VAMs . . . because such appliances and instruments, used in conjunction with the ‘optical fibers’ of HTSUS Heading 9001 . . . are plainly covered by Chapter 90.” The CIT explained that HTSUS Heading 8517, which covers “other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network),” “would appear apt insofar as it describes the sole purpose of the VAMs.” However, the CIT concluded that the subject merchandise “are prima facie classifiable” in HTSUS Heading 9013, and because they are included in Chapter 90, they are “therefore excluded from Chapter 85 pursuant to Section XVI Note 1(m).”

(…) The classification of merchandise involves a two-step inquiry. See LeMans, 660 F.3d at 1315. First, we ascertain the meaning of the terms within the relevant tariff provision, which is a question of law, and, second, we determine whether the subject merchandise fits within those terms, which is a question of fact. See Sigma-Tau HealthSci., Inc. v. United States, 838 F.3d 1272, 1276 (Fed. Cir. 2016). Where, as here, no genuine dispute exists as to the nature of the subject merchandise, the two-step inquiry “collapses into a question of law we review de novo.” LeMans, 660 F.3d at 1315.

(…) The HTSUS governs the classification of merchandise imported into the United States. See Wilton Indus., Inc. v. United States, 741 F.3d 1263, 1266 (Fed. Cir. 2013). The HTSUS “shall be considered . . . statutory provisions of law for all purposes.” 19 U.S.C. §3004(c)(1) (2012); see Chemtall, Inc. v. United States, 878 F.3d 1012, 1026 (Fed. Cir. 2017) (explaining that “the tenth-digit statistical suffixes . . . are not statutory,” as those suffixes are not incorporated in the HTSUS’s legal text).

“The HTSUS scheme is organized by headings, each of which has one or more subheadings; the headings set forth general categories of merchandise, and the subheadings provide a more particularized segregation of the goods within each category.” Wilton Indus., 741 F.3d at 1266. “The first four digits of an HTSUS provision constitute the heading, whereas the remaining digits reflect subheadings.” Schlumberger, 845 F.3d at 1163 n.4. “The headings and subheadings . . . are enumerated in chapters 1 through 99 of the HTSUS (each of which has its own sec- tion and chapter notes) . . . .” R.T. Foods, Inc. v. United States, 757 F.3d 1349, 1353 (Fed. Cir. 2014). The HTSUS “also contains the ‘General Notes,’ the ‘General Rules of Interpretation’ (‘GRI’), the ‘Additional [U.S.] Rules of Interpretation’ (‘ARI’), and various appendices for particular categories of goods.” Id.

The GRI and the ARI govern the classification of goods within the HTSUS. See Otter Prods., 834 F.3d at 1375. “The GRI apply in numerical order, meaning that subse- quent rules are inapplicable if a preceding rule provides proper classification.” Schlumberger, 845 F.3d at 1163. GRI 1 provides, in relevant part, that “classification shall be determined according to the terms of the headings and any relative section or chapter notes.” GRI 1. “Under GRI 1, we first construe the language of the heading, and any section or chapter notes in question, to determine whether the product at issue is classifiable under the heading.” Schlumberger, 845 F.3d at 1163.

The ARI contain, inter alia, specific rules for interpreting use and textile provisions in the HTSUS. See ARI 1(a)–(d). “Because this appeal involves eo nomine provi- sions,” as discussed below, “we find the ARI inapplicable.” Schlumberger, 845 F.3d at 1163 n.5; see infra Section II.B. “An eo nomine classification provision is one which describes a commodity by a specific name,” rather than by use, Clarendon Mktg., Inc. v. United States, 144 F.3d 1464, 1467 (Fed. Cir. 1998), and, “absent limitation or contrary legislative intent, an eo nomine provision includes all forms of the named article, even improved forms,” CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364–65 (Fed. Cir. 2011).

(…) “We first must assess whether the subject heading constitutes an eo nomine or use provision because different rules and analysis will apply depending upon the heading type.” Schlumberger, 845 F.3d at 1164 (first citing Kahrs, 713 F.3d at 645–46 (defining eo nomine provision); then citing Aromont USA, Inc. v. United States, 671 F.3d 1310, 1312–16 (Fed. Cir. 2012) (defining principal use provision)).

(…) It “is unquestionably eo nomine because it describes the articles it covers by name,” and, therefore, “our analysis starts with its terms.” Schlumberger, 845 F.3d at 1164.

(…) Having determined that the subject merchandise is properly classified under HTSUS Heading 9013, we apply GRI 6, which is employed in a classification analysis to determine the appropriate subheading. See GRI 6 (applying to “the classification of goods in the subheadings” and explaining that “only subheadings at the same level are comparable”); see also Orlando Food, 140 F.3d at 1442 (conducting a GRI 6 analysis to determine the appropriate subheading). At the six-digit subheading level, the subject merchandise does not fall within the terms of HTSUS Subheading 9013.10.

Secondary sources: McGraw-Hill Dictionary of Scientific and Technical Terms (4th ed. 1989); The Oxford English Dictionary (2d ed. 1989); Webster’s Third New International Dictionary (1986).

(U. S. Court of Appeals for the Federal Circuit, February 19, 2019, ADC TELECOMMUNICATIONS, INC. v. United States, Docket No. 2018-1316, Circuit Judge Wallach)