USR Optonix, Inc. v. United States , 2005 CIT 27 ( 2005 )

Slip Op. 05-27
UNITED STATES COURT OF INTERNATIONAL TRADE
USR OPTONIX, INC.,
Plaintiff,
v. Court No. 98-08-02723
UNITED STATES, Before: Judge Timothy C. Stanceu
Defendant.
[Plaintiff’s motion for summary judgment denied; defendant’s cross-motion
for summary judgment granted in part and denied in part]
Decided: February 18, 2005
Neville Peterson LLP (John M. Peterson and Curtis W. Knauss) for plaintiff.
Peter D. Keisler, Assistant Attorney General, Barbara S. Williams, Attorney in Charge,
International Trade Field Office, and James A. Curley, Trial Attorney, Commercial Litigation
Branch, Civil Division, United States Department of Justice; Beth C. Brotman, Office of
Assistant Chief Counsel, United States Bureau of Customs and Border Protection, of Counsel,
for defendant.
OPINION AND ORDER
STANCEU, Judge:
Plaintiff USR Optonix, Inc. (“Optonix”) challenges the determinations of tariff
classification that the United States Customs Service (“Customs”) applied to two products
imported during a period beginning in November 1994 and concluding in May 1997.1 Optonix
moves for summary judgment with respect to the classification of both products; defendant
1
The U.S. Customs Service now is renamed as the Bureau of Customs and Border
Protection. See Homeland Security Act of 2002, Pub. L. 107-296, § 1502, 116 Stat. 2135 (2002);
Reorg. Plan for the Dep’t of Homeland Security, H.R. Doc. No. 108-32 (2003).
Court No. 98-08-02723 Page 2
United States cross-moves for summary judgment in its favor, also with respect to both products.
The court exercises jurisdiction pursuant to 28 U.S.C. § 1581(a) (2000).
The first product at issue, designated as “P22-RE1,” is a white powder consisting by
weight of at least 99 percent yttrium oxide (Y2O3). The remaining 1 percent or less of the
product consists of europium oxide. The product is represented by the formula “Y2O3:Eu” and
also is identified as “Yttrium Oxide: Europium Doped.” The second product, “P22-HCR2,” is a
red powder comprised by weight of at least 90 percent yttrium oxygen sulfide (Y2O2S),
10 percent or less europium oxygen sulfide (Eu2O2S), and 1 percent or less ferrous oxide (Fe2O3).
Each product is used as a material in the production of phosphorescent coatings that are applied
in the manufacturing of cathode ray tubes.
The court awards summary judgment to defendant on the issue of the tariff classification
of P22-RE1. The court concludes that there are no genuine issues of fact material to that tariff
classification and that the tariff classification determined by Customs was correct, entitling
defendant to judgment as a matter of law. The motions of both parties for summary judgment on
the tariff classification of P22-HCR2 are denied because of the existence of one or more genuine
issues of material fact.
I. BACKGROUND
Upon liquidation, Customs classified the entries of P22-RE1 that were made prior to
1995 in subheading 2846.90.50, Harmonized Tariff Schedule of the United States (“HTSUS”),
subject to duty at 3.7 percent ad valorem. The version of the provision that was in effect at the
time of the pre-1995 entries of P22-RE1 read as follows:
Court No. 98-08-02723 Page 3
2846 Compounds, inorganic or organic, of rare-earth metals, of yttrium or of
scandium, or of mixtures of these metals:
* * *
2846.90 Other:
* * *
2846.90.50 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7%.
Customs classified entries of P22-RE1 made in 1995 and thereafter in subheading
2846.90.80, HTSUS, the provision that superceded the former subheading 2846.90.50, HTSUS.
The article description for heading 2846 and the duty applicable to the subheading at issue,
3.7 percent ad valorem, remained unchanged.
Upon liquidation, Customs classified entries of P22-HCR2 in subheading 3206.50.00,
HTSUS. At the time the entries were made, this tariff provision read, in relevant part, as
follows:
3206 . . . inorganic products of a kind used as luminophores, whether or not
chemically defined:
* * *
3206.50.00 Inorganic products of a kind used as luminophores. . . . . . . .10.0%
HTSUS, 1994.2
Plaintiff protested the classification determinations that Customs made upon liquidation.
Following denial of the protests, plaintiff commenced this action.
2
During the time plaintiff imported the subject entries, the duty rate was reduced in
stages, as follows: 1995, 9.3%; 1996, 8.6%; 1997, 7.9%.
Court No. 98-08-02723 Page 4
A. Contentions of the Parties on the Classification of P22-RE1
Defendant maintains that Customs was correct in determining upon liquidation to classify
P22-RE1 in subheading 2846.90.50, HTSUS, and subsequently in subheading 2846.90.80,
HTSUS. In challenging that determination, plaintiff’s principal argument is that P22-RE1 is
excluded from the scope of heading 2846 because it is a mixture of two compounds (i.e., yttrium
oxide and europium oxide) and therefore is not itself a “compound” within the meaning of the
article description for the heading (“Compounds, inorganic or organic, of rare-earth metals, of
yttrium or of scandium, or of mixtures of these metals”). On the basis of this assertion, plaintiff
advocates classification in subheading 3824.90.39, HTSUS, free of duty. That provision pertains
to “mixtures of two or more inorganic compounds”; the superior heading (heading 3824,
HTSUS) is a “basket” heading that includes, inter alia, “chemical products and preparations of
the chemical or allied industries . . . not elsewhere specified or included.”
Plaintiff claims an alternative classification in subheading 2846.90.20, HTSUS, the
article description for which is “[m]ixtures of rare-earth oxides or of rare-earth chlorides.”
Plaintiff argues that, should the court determine that P22-RE1 falls within the scope of heading
2846, the court should rule that P22-RE1 is classified in subheading 2846.90.20 based on its
assertion that both yttrium oxide and europium oxide are rare-earth oxides.
Defendant argues that P22-RE1 is correctly classified in subheading 2846.90.80, HTSUS,
(and in the predecessor subheading 2846.90.50, HTSUS, prior to 1995) because heading 2846, in
defendant’s view, includes mixtures of oxides of yttrium and europium. As confirmation that the
scope of the heading includes mixtures as well as compounds, defendant points to the article
description for another eight-digit subheading within the heading, subheading 2846.90.20,
Court No. 98-08-02723 Page 5
HTSUS, which, as noted above, reads “[m]ixtures of rare-earth oxides or of rare-earth
chlorides.” Defendant also directs the court’s attention to Explanatory Note 32.06, which
contains a reference identifying headings 2843 to 2846 as appropriate for the classification of a
mixture of yttrium oxide and europium oxide. Further, defendant points to the first paragraph of
Explanatory Note 28.46 in support of its contention that heading 2846 includes mixtures of
oxides of the metals mentioned in the article description for the heading; plaintiff relies on this
same paragraph to support its argument that mixtures such as P22-RE1 are excluded from
heading 2846 because they are not “compounds of mixtures” but instead are mixtures of
compounds made intentionally for special purposes.
Concerning plaintiff’s alternative classification of subheading 2846.90.20, HTSUS,
which pertains to “mixtures of rare-earth oxides,” defendant contends that yttrium is not a rare-
earth metal for tariff classification purposes and, consequently, that yttrium oxide is not a rare-
earth oxide within the meaning of subheading 2846.90.20, HTSUS.
B. Contentions of the Parties on the Classification of P22-HCR2
Plaintiff argues that P22-HCR2 is not classifiable in subheading 3206.50.00, HTSUS,
(“Inorganic products of a kind used as luminophores”) because it is not a finished product
capable of use as a luminophore in the condition in which it is imported. Plaintiff asserts that the
product requires further processing consisting of reduction of particle size and blending with
other products to obtain the characteristics desired by the manufacturer of the cathode ray tube.
Plaintiff submits that the correct classification is subheading 3824.90.39, HTSUS, which is free
of duty. As noted previously, that subheading pertains to “mixtures of two or more inorganic
compounds,” with the superior heading pertaining to “chemical products and preparations of the
Court No. 98-08-02723 Page 6
chemical or allied industries . . . not elsewhere specified or included.” At an early point in this
litigation, plaintiff argued in the alternative that P22-HCR2 should be classified in subheading
2846.90.20, HTSUS (“mixtures of rare-earth oxides. . .”).
Defendant responds that P22-HCR2 falls within the definition of “inorganic products of a
kind used as luminophores” despite the further processing alleged by plaintiff to be required. In
rebuttal of plaintiff’s argument for alternative classification in subheading 2846.90.20, HTSUS
(“mixtures of rare-earth oxides”), defendant maintains that the product is excluded from that
provision because it is not comprised of a mixture of oxides of rare-earth metals.
II. APPLICABLE LEGAL STANDARDS
A. Standard of Review
The court proceeds de novo in actions brought to contest the denial of a protest under
section 515 of the Tariff Act of 1930. See 28 U.S.C. § 2640(a)(1). In a classification action,
plaintiff has the burden of establishing that the government’s classification of the product was
incorrect but does not bear a burden of establishing the correct tariff classification; instead, the
correct tariff classification is to be determined by the court. See Jarvis Clark Co. v. United
States, 733 F.2d 873, 878, reh’g denied, 739 F.2d 628 (Fed. Cir. 1984).
Customs classification decisions are entitled to a presumption of correctness by 28
U.S.C. § 2639(a)(1), but the presumption does not apply if the court is presented with a question
of law by a proper motion for summary judgment. See Universal Elecs., Inc. v. United States,
112 F.3d 488, 492 (Fed. Cir. 1997). The court affords deference to a classification decision by
Customs to the extent that the decision has the power to persuade. See United States v. Mead
Corp., 533 U.S. 218, 235 (2001); Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).
Court No. 98-08-02723 Page 7
B. The General Rules of Interpretation and the Explanatory Notes
The General Rules of Interpretation, HTSUS, govern the determination of tariff
classification. See N. Am. Processing Co. v. United States, 236 F.3d 695, 698 (Fed. Cir. 2001).
General Rule of Interpretation (“GRI”) 1, HTSUS, requires that tariff classification, in the first
instance, “be determined according to the terms of the headings and any relative section or
chapter notes.” GRI 1, HTSUS. GRIs 2 through 5 apply “provided such headings or notes do
not otherwise require.” Id.For guidance as to the scope and meaning of tariff terms, the court may resort to the
Explanatory Notes, which, although not part of U.S. law, are “indicative of [the] proper
interpretation” of the tariff schedule. Lynteq, Inc. v. United States, 976 F.2d 693, 699 (Fed. Cir.
1992), quoting H.R. Conf. Rep. No. 100-576, 100th Cong., 2d Sess. 549 (1988), reprinted in
1988 U.S.C.C.A.N. 1547, 1582.
III. DISCUSSION
A. Absence of a Genuine Issue of Material Fact Concerning the Tariff Classification
of P22-RE1
Under USCIT Rule 56, summary judgment is appropriate when the parties’ submissions
“show that there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” USCIT Rule 56(c). The parties agree that P22-RE1 consists
by weight of at least 99 percent yttrium oxide (Y2O3), a fact corroborated by the Material Safety
Data Sheet (“MSDS”) prepared by the manufacturer, Kasei Optonix, Ltd. of Tokyo, Japan. As
specified by the MSDS and as stated in an affidavit by plaintiff’s Technical Director, Mr.
Susumu Omatoi, P22-RE1 is represented by the formula “Y2O3:Eu.” According to that affidavit,
P22-RE1 is identified by the name “Yttrium Oxide: Europium Doped.”
Court No. 98-08-02723 Page 8
In its Rule 56 Statement of Material Facts Not in Dispute, plaintiff asserted that P22-RE1
is a mixture of yttrium oxide and europium oxide, manufactured by separately producing the
yttrium oxide and europium oxide components, intentionally blending them in specific
quantities, and mixing them by heating in a kiln at high temperatures. See Pl.’s Statement of
Material Facts Not in Dispute ¶ 8. In the pleadings, defendant denied this assertion but did not
allege facts to the contrary. In its Statement in Response to Plaintiff’s Statement of Material
Facts, defendant admitted “that P22-RE1 consists of a mixture of yttrium oxide with smaller
amounts of europium oxide.” Def.’s Resp. to Pl.’s Statement of Material Facts ¶ 7. In the
Statement of Material Facts Not in Dispute that it filed in support of its cross-motion for
summary judgment, defendant stated that “P22-RE1 consists, by weight, of 99 percent or more
yttrium oxide, and 1 percent or less europium oxide.” Def.’s Statement of Material Facts Not in
Dispute ¶ 1.
Although defendant initially agreed with plaintiff that P22-RE1 is a “mixture of
compounds” and not a “compound of mixtures,” defendant in its post-argument brief advanced
an alternative argument in favor of its classification position; in this alternative argument
defendant departed in two respects from its earlier admissions concerning the composition of
P22-RE1. In presenting this alternative argument, defendant regarded P22-RE1 as a
“compound” instead of a “mixture.” Further, defendant asserted that the product consists of
yttrium oxide and europium, rather than consisting of yttrium oxide and europium oxide.
Despite defendant’s conflicting viewpoints, and the apparent disagreement with plaintiff,
on the composition of P22-RE1, the court finds that there is no genuine issue of fact material to
the tariff classification of P22-RE1, for two reasons. First, much of the apparent factual
Court No. 98-08-02723 Page 9
disagreement, to the extent it is relevant to the classification issue presented, is resolved by
assigning the proper meaning to the term “compounds” as used in the article description for
heading 2846. That meaning is a question of law, not of fact. See David W. Shenk & Co. v.
United States, 21 CIT 284, 286, 960 F. Supp. 363, 365 (1997). As discussed in the next section,
the court concludes that in using the term “compounds” in the heading, Congress did not intend
this term and the term “mixtures,” which is used in a subheading of the heading, to be read as
mutually exclusive. Instead, the term “compounds,” as used in the heading, is properly
understood to be broader than such terms as “chemical compounds” or “separate chemically
defined compounds” and to include some products that also are described by the term
“mixtures.” 3 Second, the parties agree that P22-RE1 consists by weight of at least 99 percent
yttrium oxide. The remainder, which is one percent or less by weight, either consists of
europium oxide, as plaintiff contends and as defendant initially admitted, or, as defendant
subsequently asserted based on its interpretation of the MSDS for P22-REI, consists of
europium. This factual distinction is not material to the issue of classification of P22-RE1,
because, in either case, the correct classification for P22-RE1 is subheading 2846.90.80, HTSUS
(or, for entries prior to 1995, subheading 2846.90.50, HTSUS), for the reasons discussed later in
this opinion.
The court notes, in passing, that defendant has not asserted new facts to establish either
that P22-RE1 is a “compound,” however defined, or that the product contains europium rather
than europium oxide. Instead, these two contentions by defendant appear to be based on
3
The term “chemical compound” usually refers to “a substance composed chemically of
two or more elements in definite proportions (as opposed to a mixture).” Oxford English
Dictionary, 629, vol. III (2d ed. 1989).
Court No. 98-08-02723 Page 10
inferences it draws from information already on the record, specifically, information presented in
the MSDS for P22-RE1. Defendant draws these inferences from its submissions of affidavits by
Mr. Larry D. Fluty, a Senior Science Officer in the Office of Laboratory and Scientific Services,
Bureau of Customs and Border Protection, particularly a statement by Mr. Fluty that products
similar to P22-RE1 (but not necessarily P22-RE1 itself) consist of “compounds” in which
europium atoms are bound to oxygen atoms, replacing yttrium atoms in a yttrium oxide crystal
lattice.
Defendant presented two affidavits of Mr. Fluty that address P22-RE1. In the first
affidavit, Mr. Fluty had stated that “[t]his combination of yttrium oxide and europium oxide is a
mixture described by the Explanatory Notes to Heading 2846.” First Fluty Decl. ¶ 9 (Sep. 11,
2002). In that same affidavit, Mr. Fluty, in referring to the term “compounds . . . of mixtures of
these metals” as used in heading 2846, stated that “it is possible to have mixtures of compounds
but not compounds of mixtures.” Id. ¶ 6. Citing to that statement by Mr. Fluty, defendant in its
brief supporting its cross-motion for summary judgment argued that “[t]he language of heading
2846, ‘compounds . . . of mixtures,’ moreover, is meaningless from a technical point of view. . . .
To make sense out of the language, it must be understood, insofar as relevant here, as providing
for mixtures that have as ingredients the compounds named in the heading, i.e., compounds of
rare earth metals and compounds of yttrium.” Def.’s Br. in Opp’n to Pl.’s Mot. for Summ. J., &
Cross-Mot. for Summ. J. at 7 n.2. In short, defendant argued at that time that “compounds of
mixtures” is the equivalent, in the context of the heading, of “mixtures of compounds.”
In his second affidavit on P22-RE1, Mr. Fluty described products similar to P22-RE1 as
products in which a europium atom replaces a yttrium atom in a crystal lattice consisting of the
Court No. 98-08-02723 Page 11
yttrium oxide. Mr. Fluty pointed out that the MSDS for P22-RE1 states as follows:
“Classification if single or mixed: Single Product.” He further stated in his affidavit his opinion
that the chemical formula stated in the MSDS, Y2O3:Eu, “means yttrium oxide containing an
indeterminate amount of europium” and that this formula “indicates that the product should be
considered a single chemical compound.” Second Fluty Decl. ¶ 13 (Mar. 17, 2004). In its post-
argument brief, defendant maintained its position that heading 2846 encompasses mixtures
within its scope but, on the basis of the second affidavit of Mr. Fluty, contended in the
alternative “that if the Court determines that Heading 2846 covers only compounds, and not
mixtures of compounds, then P22-RE1 was correctly classified there because it is a single
compound consisting of yttrium oxide and europium.” Def.’s Br. in Reply to Pl.’s Post-
Argument. Br. at 6.
In stating that the remainder is “europium,” defendant has not disputed that the remaining
europium may exist in the product in the form of europium oxide and has not offered to prove
any facts relevant to this question. Defendant has not attempted to show how europium, which is
regarded as having an extremely high affinity for oxygen, could exist in its metallic form, i.e., as
a separate element, within a powdered mixture rather than being present in the mixture in the
form of europium oxide. Rather, defendant’s reference to the remainder being “europium”
appears to be related to its argument that “if the Court determines that Heading 2846 covers only
compounds, and not mixtures of compounds, then P22-RE1 was correctly classified there
because it is a single compound consisting of yttrium oxide and europium.” Defendant’s
contention apparently refers in part to the aforementioned statement, set forth in paragraph 14 of
Mr. Fluty’s second affidavit on P22-RE1, to the effect that products such as P22-RE1 typically
Court No. 98-08-02723 Page 12
have a “single phase” chemical structure consisting of yttrium oxide and europium bound
together in a crystal lattice, in which europium atoms replace yttrium atoms in the crystal lattice.
Mr. Fluty’s statement, however, appears to avoid making any direct statement that P22-RE1
actually consists of such a crystal lattice.
As discussed infra, the uncontested facts are sufficient to establish that P22-RE1 does not
conform with established definitions of the terms “chemical compound” or “separate chemically
defined compound” but also are sufficient to establish that P22-RE1 is a “compound” within the
scope of the term “compounds” as used in heading 2846. It is immaterial to this conclusion
whether the portion of the product not consisting of yttrium oxide consists of europium or
europium oxide. Nor does the classification within heading 2846 depend on whether europium
atoms are bound to oxygen atoms, replacing an indefinite number of yttrium atoms within a
yttrium oxide crystal lattice. Because there is no genuine issue of fact that is material to the
classification of P22-RE1, the court concludes that summary judgment is the appropriate
disposition of the classification issue plaintiff has raised with respect to this product.
B. P22-RE1 Is Classified under Heading 2846, HTSUS
In the various pleadings, the parties have identified two headings as relevant to the
classification issue presented by P22-RE1. They are heading 2846, HTSUS, (“Compounds,
inorganic or organic, of rare-earth metals, of yttrium or of scandium, or of mixtures of these
metals”) and heading 3824, HTSUS (“chemical products and preparations of the chemical and
allied industries . . . not elsewhere specified or included”). The court has considered both of
these headings and heading 3206, HTSUS, to which the parties also have referred in this case.
The latter heading includes within its scope “inorganic products of a kind used as luminophores,
Court No. 98-08-02723 Page 13
whether or not chemically defined.” Neither the court nor the parties have identified any other
heading of the HTSUS that merits consideration.
The court concludes that, by application of GRI 1, P22-RE1 is correctly classified under
heading 2846, HTSUS. The court reaches this conclusion for the following reasons: (1)
Heading 3824 is excluded from consideration if P22-RE1 is elsewhere specified or included or if
it answers to descriptions in heading 2843 or 2846; (2) Heading 3206 is excluded from
consideration by the terms of that heading, as construed according to guidance in the relevant
Explanatory Note; and (3) P22-RE1 answers to a description in, and is included in, heading
2846, because it is described by a term of that heading, “compounds . . . of mixtures of these
metals,” with “these metals” referring to rare-earth metals, yttrium, and scandium. In the
discussion below, the court discusses in further detail the reasoning underlying its conclusions
concerning the tariff classification of P22-RE1.
1. Heading 3824 Applies Only if P22-RE1 Is Not Elsewhere Specified or Included
Because heading 3824, HTSUS, contains the qualifying term “not elsewhere specified or
included,” GRI 1 precludes classification of P22-RE1 under heading 3824 if P22-RE1 is
described by heading 2846 or heading 3206. The same conclusion emerges from the application
of Note 1(b) to Section VI, HTSUS, which provides in relevant part that “goods answering to a
description in heading 2843 or 2846 are to be classified in those headings and in no other
heading of this section.” Headings 3824 and 3206, like heading 2846, are in Section VI of the
HTSUS. Accordingly, the issue presented is whether P22-RE1 falls within the scope of either
heading 2846 or heading 3206, HTSUS.
Court No. 98-08-02723 Page 14
2. Heading 3206 Does Not Include Mixtures of Yttrium Oxide and Europium Oxide
The court concludes that P22-RE1 is not properly classified under heading 3206. The
Explanatory Notes offer relevant guidance on the intended scope of heading 3206 and its
relationship to the intended scope of heading 2846. Explanatory Note 32.06 states that “[t]he
heading [i.e., 3206] does not cover products answering to descriptions in headings 28.43 to
28.46 (e.g., a mixture of yttrium oxide and europium oxide), however put up and whatever their
intended use.” EN 32.06 (emphasis in original). The parenthetical example used to identify the
group of products excluded from heading 3206 and falling within headings 2843 to 2846
describes by composition a product identical or highly similar to P22-RE1. Thus, Explanatory
Note 32.06 clarifies that a class of products to which P22-RE1 appears to belong, i.e., those
products consisting of a mixture of yttrium oxide and europium oxide, should not be classified
under heading 3206, regardless whether they are of a kind used as luminophores.
3. P22-RE1 Answers to a Description in Heading 2846 and Is Included Therein
Explanatory Note 32.06 also provides guidance on whether P22-RE1 may be classified
under heading 2846. The “mixture of yttrium oxide and europium oxide” chosen as an example
by Explanatory Note 32.06 is intended not only to direct the reader away from heading 3206, but
also to refer the reader to classification under heading 2846. Implicit in the Note is that a
mixture of yttrium oxide and europium oxide answers to a description in the group of headings
consisting of headings 2843, 2844, 2845, and 2846. However, headings 2843 through 2845 refer
to classes of goods that differ considerably from mixtures of yttrium oxide and europium oxide.
Heading 2843 pertains generally to precious metals, heading 2844 addresses radioactive
elements and compounds, and heading 2845 is confined to isotopes and compounds thereof.
Court No. 98-08-02723 Page 15
Explanatory Note 32.06, therefore, lends strong support to defendant’s position that P22-RE1 is
properly classified under heading 2846. However, the terms of that heading, as interpreted
according to their plain meaning and according to guidance contained elsewhere in the
Explanatory Notes and specifically in Explanatory Note 28.46, raise an additional issue requiring
the court to consider the matter further. That issue is whether, as plaintiff contends, P22-RE1 is
excluded from heading 2846 because the heading contains terms that, in pertinent part, confine
the scope to “[c]ompounds . . . of rare-earth metals, of yttrium . . . , or of mixtures of these
metals.” Plaintiff argues, inter alia, that P22-RE1 is not a compound within the meaning of the
heading.
The threshold issue presented is the meaning of the term “compounds” as used in heading
2846. The term “separate chemically defined compounds” is used elsewhere in the HTSUS,
which in note 1(a) to chapter 28 expresses the general rule that chapter 28 is confined to
“separate chemical elements” and “separate chemically defined compounds.” 4 Under note 1(a)
to chapter 28, HTSUS, this general rule applies “[e]xcept where the context otherwise requires.”
The General Explanatory Note to Chapter 28 defines the term “separate chemically defined
compound” as follows: “A separate chemically defined compound is a substance which consists
of one molecular species (e.g., covalent or ionic) whose composition is defined by a constant
ratio of elements and can be represented by a definitive structural diagram. In a crystal lattice,
the molecular species corresponds to the repeating unit cell.” The Note further explains that
“[t]he elements of a separate chemically defined compound combine in a specific characteristic
4
Note 1(a) to ch. 28, HTSUS (“Except where the context otherwise requires, the
headings of this chapter apply only to: . . . separate chemical elements and separate chemically
defined compounds, whether or not containing impurities.”).
Court No. 98-08-02723 Page 16
proportion determined by the valency and the bonding requirements of the individual atoms.
The proportion of each element is constant and specific to each compound and it is therefore said
to be stoichiometric.”
P22-RE1 does not conform to the Explanatory Note definition of a “separate chemically
defined compound.” As defendant acknowledges in citing Mr. Fluty’s second affidavit, the
chemical formula for P22-RE1, Y2O3:Eu, “means yttrium oxide containing an indeterminate
amount of europium.” As demonstrated by the chemical formula, the europium or europium
oxide is not present within P22-RE1 in a specific or characteristic proportion that is determined
by the valency and bonding requirements of the individual atoms of yttrium and oxygen that
comprise the portion of the product that consists of yttrium oxide, which itself is a separate
chemically defined compound. P22-RE1, therefore, is not stoichiometric. The proportion of
europium or europium oxide is not chemically defined by molecular structure and instead is
described as being present in the overall product only according to a range, i.e., at a level of one
percent or less by weight. Even if, as defendant suggests, P22-RE1 is a single-phase product
consisting of a yttrium oxide crystal lattice, with an indeterminate but small number of europium
atoms replacing yttrium atoms within that lattice, the product still would fall outside the
Explanatory Note definition of the term “separate chemically defined compound.” In the latter,
“the molecular species corresponds to the repeating unit cell.” General Explanatory Note to
Chapter 28. The HTSUS also uses the term “compounds, whether or not chemically defined.” 5
Heading 2846 refers to “compounds” without specifying whether the term is intended to refer to
5
E.g., Note 6(c) to chapter 28, HTSUS, uses the term “compounds . . . whether or not
chemically defined” (“Heading 2844 applies only to: . . . Compounds, inorganic or organic, of
these elements or isotopes, whether or not chemically defined.”).
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“separate chemically defined compounds” or, alternatively, to “compounds, whether or not
chemically defined.”
The court concludes that the term “compounds” as used in heading 2846 is intended to
have a broader meaning than the more specific term “separate chemically defined compounds”
and is intended to include certain products that also could be described as “mixtures,” which
term commonly would include within its scope products consisting of two or more separate
chemically defined compounds.6 One indication of this intent is the General Explanatory Note to
Chapter 28, which instructs that heading 2846 is one of the specified exceptions to the general
rule that Chapter 28 is confined to chemical elements and separate chemically defined
compounds.7 Another indication of this intent is the inclusion within the heading of subheading
2846.90.20, HTSUS, the article description for which is “[m]ixtures of rare-earth oxides or of
rare-earth chlorides.” A third indication is the first paragraph of Explanatory Note 28.46, which
indicates that the heading includes at least some products that can be described as “mixtures of
oxides or hydroxides of these elements,” with “these elements” referring to yttrium, scandium,
and the rare-earth metals. Therefore, the term “compounds” as used in heading 2846 cannot
6
The term “mixture” is defined as “[a]n aggregate composed of two or more distinct
chemical components which retain their identities regardless of the degree to which they have
become mingled.” McGraw-Hill Encyclopedia of Chemistry, 607 (5th ed. 1983).
7
The General Explanatory Note states that “[t]here are certain exceptions to the rule that
this Chapter is limited to separate chemical elements and separate chemically defined
compounds.” The Note then lists specific products falling within the exception, including:
“Heading 28.46 - Compounds, inorganic or organic, of rare-earth metals, of yttrium or of
scandium or of mixtures of these metals.”
Court No. 98-08-02723 Page 18
properly be interpreted to mean “separate chemically defined compounds,” and it must be read to
encompass some products that also may be described as “mixtures.” 8
Plaintiff has pointed to this same provision of the Explanatory Notes, i.e., the first
paragraph of Explanatory Note 28.46, in contending that the scope of heading 2846 is too narrow
to encompass P22-RE1. Optonix relies on this paragraph and on the term “compounds” in the
heading for its argument that “mixtures consisting of two or more compounds, made
intentionally for special purposes, are expressly excluded from Heading 2846,” and that P22-
RE1 is such a mixture. Pl.’s Post-Argument Br. at 3. The paragraph at issue reads as follows:
This heading [i.e., heading 28.46] covers the inorganic or organic
compounds of yttrium, of scandium or of the rare-earth metals of heading
28.05 (lanthanum, cerium, praseodymium, neodymium, samarium,
europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium,
ytterbium, lutetium). The heading also covers compounds derived directly
by chemical treatment from mixtures of the elements. This means that the
heading will include mixtures of oxides or hydroxides of these elements or
mixtures of salts having the same anion (e.g., rare-earth metal chlorides),
but not mixtures of salts having different anions, whether or not the cation
is the same. The heading will not therefore, for example, cover a mixture
of europium and samarium nitrates with the oxalates nor a mixture of
cerium chloride and cerium sulphate since these examples are not
compounds derived directly from mixtures of elements, but are mixtures
of compounds which could be conceived as having been made
intentionally for special purposes and which, accordingly, fall in heading
38.24.
8
A broader definition of the word “compounds” is consistent with a common meaning of
the term found among dictionary definitions. The Merriam-Webster Collegiate Dictionary, 236
(10th ed. 2002), defines “compound” as “something formed by a union of elements or parts.”
The Oxford English Dictionary, 629, vol. III (2d ed. 1989), in the relevant part, defines
“compound” as “[a] union, combination, or mixture of elements.” In turn, the Oxford English
Dictionary includes a definition of “element” as “[a] component part of a complex whole,” a
definition broader in scope than the chemical definition of the term “element.” Id. at 130, vol. V.
Court No. 98-08-02723 Page 19
EN 28.46 (emphasis in original). Under the interpretation of the paragraph advanced by
plaintiff, the clause “the heading will include mixtures of oxides . . . of these elements” is
qualified by the preceding sentence such that the only mixtures of yttrium oxide and europium
oxide that fall within the scope of heading 2846 are those that are “derived directly by chemical
treatment from mixtures of these elements.” Plaintiff construes the latter phrase, when read
together with the later reference in the paragraph to “mixtures of compounds which could be
conceived as having been made intentionally for special purposes,” to mean that a product
obtained by intentionally mixing yttrium oxide and europium oxide for a special purpose is
excluded from the scope of the heading and is not described by the term in the heading,
“compounds . . . of mixtures of these metals.” Plaintiff’s interpretation of Explanatory
Note 28.46 is that P22-RE1 is described by the term “mixtures of compounds” as used in the last
sentence of the above-quoted paragraph from Explanatory Note 28.46 and thus is to be
distinguished from what plaintiff views as the relevant term in heading 2846, which is
“compounds . . . of mixtures of these metals.”
The court does not agree with the meaning plaintiff ascribes to the first paragraph of
Explanatory Note 28.46. Under plaintiff’s construction of the paragraph, mixtures of oxides of
the metals of heading 2805 (which metals include yttrium and the rare-earth metals) would be
excluded from heading 2846 if two such oxides were produced separately and blended
intentionally for a special purpose. The reference in the second sentence, “compounds derived
directly by chemical treatment from mixtures of these elements,” may be susceptible to more
than one meaning when viewed standing alone, but its meaning, to the extent it is relevant to the
issue presented by P22-RE1, is clarified by the following sentence. That third sentence, which is
Court No. 98-08-02723 Page 20
introduced with the words “[t]his means that,” directly states that mixtures of oxides of the
metals in question fall within heading 2846. Plaintiff’s interpretation would require the court to
interpret the third sentence to mean that some, but not all, mixtures of oxides of the subject
metals are within the heading, an interpretation that appears to be at odds with the plain meaning
of that sentence. Moreover, it would be incongruous to ascribe to the word “compounds,” as
used in the second sentence of the paragraph, a narrow meaning such as “separate chemically
defined compounds” and at the same time ascribe to the term “compounds” as used in the
heading the broader meaning that is required by the context and is clarified by other provisions
of the Explanatory Notes.
Plaintiff’s interpretation of the first paragraph of Explanatory Note 28.46 would seek to
introduce ambiguity into the third sentence of the paragraph by resort to the last sentence in the
paragraph, which contains a reference to “mixtures of compounds which could be conceived as
having been made intentionally for special purposes.” The context of the last sentence, however,
is the issue of which mixtures of salts fall within the heading and which do not; the last sentence,
therefore, addresses an issue not relevant to the classification of P22-RE1, which is a mixture of
oxides, not a mixture of salts. Even if considered relevant to the issue of classification of
P22-RE1, the last sentence would present a problem when viewed against plaintiff’s premise that
any mixture of compounds made intentionally for a special purpose is excluded from the
heading. That problem is the contradiction that would arise in the instance of a mixture of salts,
made intentionally for a special purpose, in which each salt has the same anion but a different
cation. The contradiction does not arise when the paragraph is construed to establish a clear
dividing line that would place such a mixture within the heading and exclude another mixture of
Court No. 98-08-02723 Page 21
salts, each of which had different anions, whether or not made intentionally for a special
purpose.
For these several reasons, plaintiff’s interpretation of the first paragraph of Explanatory
Note 28.46 creates difficulties and internal conflicts that it is unable to resolve. Plaintiff’s
interpretation of that paragraph also would appear to create a conflict with the express language
of Explanatory Note 32.06, which directs the reader to heading 2846 to ascertain the
classification of “a mixture of yttrium oxide and europium oxide” and does so without making an
exception for the case of a mixture of yttrium oxide and europium oxide that is made by
combining the two oxides intentionally for a special purpose.
Plaintiff’s Technical Director, in his affidavit, described P22-RE1 as “Yttrium Oxide:
Europium Doped.” 9 That the parties have not established whether the europium is bound in the
structure of the crystal lattice of the yttrium oxide or is in the form of europium oxide mixed
together with yttrium oxide is not a material fact because P22-RE1 would be classified under
heading 2846 in either case. As discussed previously, the term “compounds” as used in heading
9
The use of the term “Yttrium Oxide: Europium Doped” in the affidavit of plaintiff’s
Technical Director, Mr. Omatoi, to describe P22-RE1 suggests that the product could be shown
to be identified in commerce as a “compound” (broadly defined) of yttrium (in this case, yttrium
oxide), such that it would fall squarely within the terms of heading 2846. Under such an
argument, regardless of whether the europium is present in the P22-RE1 as europium oxide that
is mixed with yttrium oxide, or is present as europium atoms bound to oxygen atoms within the
structure of a crystal lattice, that presence in a small quantity by weight would not prevent the
product from conforming to a commercial definition of the term “yttrium oxide.” See Rohm &
Haas Co. v. United States, 5 CIT 218, 225, 568 F. Supp. 751, 756 (1983) (“Congress is
presumed to know the language of commerce, and to have framed tariff acts so as to classify
commodities according to the general usage and denomination of the trade.”). Defendant did not
develop this argument or support it with additional evidence of such a commercial designation;
therefore, the court does not have before it evidence sufficient to establish that the product is
considered to be a form of yttrium oxide for commercial purposes.
Court No. 98-08-02723 Page 22
2846 is not limited to “chemical compounds,” “stoichiometric compounds,” or “separate
chemically defined compounds.” Various provisions of the Explanatory Notes, as well as the
article description for subheading 2846.90.20 (“Mixtures of rare-earth oxides or of rare-earth
chlorides”) clarify that the term “compounds” as used in heading 2846 includes some products
that also fall within definitions of the term “mixtures.” If the europium is bound in the crystal
lattice of the yttrium oxide compound, albeit in a non-stoichiometric proportion, P22-RE1 would
be considered a “compound” of yttrium under some definitions of “non-stoichiometric
compounds.” 10
If P22-RE1 is actually a mixture of two separate chemically-defined compounds, yttrium
oxide and europium oxide (as the parties initially appeared to agree), it nevertheless would fall
within the scope of heading 2846, because the proper interpretation of the term “compounds” as
used in the heading is sufficiently broad to include this product. Explanatory Note 28.46 states
that P22-RE1 is covered by heading 2846 because this “heading also covers compounds derived
directly by chemical treatment from mixtures of these elements. This means that the heading
will include mixtures of oxides or hydroxides of these elements . . . .” Yttrium oxide and
europium oxide in mixture form plainly would be described as “mixtures of oxides . . . of these
10
P22-RE1, if consisting of a single “crystal lattice” structure as described by defendant,
possibly could conform to definitions of “non-stoichiometric compounds” as found in scientific
references. For example, McGraw-Hill Encyclopedia of Chemistry defines “nonstoichiometric
compounds” as “[c]hemical compounds in which the relative number of atoms is not expressible
as the ratio of small whole numbers . . . . Nonstoichiometry is a property of the solid state and
arises because a fraction of the atoms of a given kind may be (1) missing from the regular
structure . . . (2) present in excess over the requirements of the structure . . . or (3) substituted by
atoms of another kind . . . .” McGraw-Hill Encyclopedia of Chemistry at 665. The McGraw-Hill
Encyclopedia of Chemistry further states that nonstoichiometry “is also well represented in the
so-called insertion or intercalation compounds, in which a metallic element or neutral molecule
has been inserted in a stoichiometric host.”
Court No. 98-08-02723 Page 23
elements.” As noted above, Explanatory Note 32.06 also indicates that a mixture of yttrium
oxide and europium oxide should be classified under heading 2846.
For these reasons, the court concludes that the terms of heading 2846, considered in the
proper context of related provisions of the HTSUS and as informed by the guidance in the
Explanatory Notes, encompass P22-RE1. Those terms describe P22-RE1 whether europium
exists in the product as atoms of europium metal bound into a crystal lattice formed by yttrium
oxide or whether the product contains, within a mixture, the separate chemically defined
compound europium oxide.
C. P22-RE1 Is Classified in Subheading 2846.90.80, HTSUS
The court concludes that Customs was correct in classifying P22-RE1 in subheading
2846.90.80, HTSUS (and, prior to 1995, in the predecessor provision, subheading 2846.90.50,
HTSUS). Plaintiff’s alternative classification of subheading 2846.90.20, HTSUS, which pertains
to “mixtures of rare earth oxides . . . ,” is incorrect because yttrium oxide is not a “rare-earth
oxide” within the meaning of that term as used in subheading 2846.90.20, HTSUS.
As plaintiff has pointed out, some technical references list yttrium among the rare-earth
elements or otherwise indicate that yttrium oxide is a rare-earth oxide. Plaintiff has identified
two such authorities, the CRC Handbook of Chemistry and Physics and The Phosphor
Handbook.11 However, the court disagrees with plaintiff’s contention that the term “rare-earth
oxides” as used in subheading 2846.90.20, HTSUS, includes yttrium oxide.
11
CRC Handbook of Chemistry and Physics, §§ 4-114, 4-115 (77th ed. 1996-97); The
Phosphor Handbook at 178, 179 (Shingeo Shinionoya & William M. Yen eds., 1999).
Court No. 98-08-02723 Page 24
Various dictionaries and technical references are in general agreement that the oxides of
the elements with the atomic numbers 58 (cerium) through 71 (lutetium) comprise the “rare
earths” and that the elements themselves are known as the “rare-earth elements” or “rare-earth
metals.” Many, but not all, of the dictionaries and technical references consulted by the court
consider atomic number 57 (lanthanum) to be a rare-earth element. The court has found that
there is no general agreement as to whether atomic number 39 (yttrium) and atomic number 21
(scandium) are rare-earth metals. Accordingly, there is no general agreement on whether the
oxide of yttrium is one of the so-called “rare earths” or “rare-earth oxides.”
For these reasons, each of the terms “rare-earth metals,” “rare earths,” and “rare-earth
oxides,” when considered outside of any context, are ambiguous. The salient point, however, is
that the article description for heading 2846, HTSUS, refers to yttrium and scandium in a context
indicating that, for purposes of the heading, these two metals are not considered to be among the
rare-earth elements. The heading identifies “[c]ompounds, inorganic and organic, of rare-earth
metals, of yttrium or of scandium, or of mixtures of these metals.” The plain meaning of the
words indicates an intent to regard yttrium and scandium as separate from the rare-earth metals.
The same intent is apparent from the wording of the article description for the heading in which
the rare-earth metals are classified. Heading 2805 provides for “[a]lkali or alkaline-earth metals;
rare-earth metals, scandium and yttrium, whether or not intermixed or interalloyed; mercury.”
Here also, the language indicates an intent to treat yttrium and scandium as separate from the
rare-earth metals.
Plaintiff states in its memorandum in support of its summary judgment motion that “[t]he
Explanatory Notes to the HTSUS indicate that the definition of ‘rare earth’ metals includes not
Court No. 98-08-02723 Page 25
only those falling within the ‘Lanthanide Series’ of the periodic table of the elements (atomic
numbers 58 through 71) but also the rare earth elements Lanthanum (atomic number 57),
Yttrium (atomic number 39) and Scandium (atomic number 21).” Mem. of P. & A. in Supp. of
Pl.’s R. 56 Mot. for Summ. J. at 21. Plaintiff has misinterpreted the Explanatory Notes. The
Explanatory Notes, consistent with the terms of headings 2805 and 2846, instruct that scandium
and yttrium are not to be considered rare-earth metals for purposes of the Harmonized System
nomenclature. “Rare-earth metals (the term ‘rare-earth’ applies to their oxides) or lanthanons
comprise the elements with atomic numbers from 57 to 71 in the periodic system . . . .” EN
28.05(C). “This heading [i.e., heading 28.05] also covers scandium and yttrium which
resemble the rare-earth metals quite closely . . . .” Id. (emphasis in original).
Because yttrium oxide is not a rare-earth oxide for purposes of heading 2846, P22-RE1 is
not described by the term “mixtures of rare-earth oxides” as used in the article description for
subheading 2846.90.20, HTSUS. The high (99 percent or higher) yttrium oxide content excludes
P22-RE1 from subheading 2846.90.40, HTSUS (“Other: Yttrium bearing materials and
compounds containing by weight more than 19 percent but less than 85 percent yttrium oxide
equivalent”), which was in effect beginning in 1995. Therefore, the correct classification for
P22-RE1 is subheading 2846.90.80, HTSUS (prior to 1995, subheading 2846.90.50, HTSUS),
subject to duty at 3.7 percent ad valorem. Because this is the classification determined by
Customs upon liquidation, plaintiff’s classification claim, and its alternate classification claim,
for P22-RE1 must be dismissed. Plaintiff has not met its burden of establishing that the
government’s classification of this product is incorrect, and defendant is entitled to summary
judgment on the issue of the tariff classification of P22-RE1.
Court No. 98-08-02723 Page 26
D. Issues of Fact Material to the Tariff Classification of P22-HCR2
The parties agree that P22-HCR2 consists by weight of approximately 90 percent Y2O2S,
which is known as yttrium oxygen sulfide or “yttrium oxysulfide,” approximately 10 percent
Eu2O2S, which is europium oxygen sulfide or “europium oxysulfide,” and less than 1 percent
Fe2O3, iron (“ferrous”) oxide. Also, it is undisputed that P22-HCR2 is used as a material in the
production of phosphorescent coatings that are applied in the manufacturing of cathode ray
tubes. The court concludes from the submissions of the parties, however, that at least one issue
of fact material to the classification of this product otherwise exists that requires the court to
deny the motions of both parties for summary judgment.
In seeking summary judgment, plaintiff’s principal claim for classification of P22-HCR2
is subheading 3824.90.39, HTSUS, which pertains to “mixtures of two or more inorganic
compounds.” Plaintiff presented an alternative claim for classification of P22-HCR2 in
subheading 2846.90.20, HTSUS, which provides for “[m]ixtures of rare-earth oxides or of rare-
earth chlorides.” This alternative claim was not included in the complaint, nor has plaintiff
sought to amend its complaint to include this claim.12 In its brief in support of summary
judgment, plaintiff also asserted that “P22-HCR2 is also susceptible to classification under
HTSUS subheading 2846.90.40, HTSUS.” That subheading applies to “[y]ttrium-bearing
materials and compounds containing by weight more than 19 percent but less than 85 percent of
yttrium-oxide equivalent.” Here also, plaintiff did not seek to amend its complaint to include
12
Were plaintiff to do so, the court would find this alternative claim to be meritless.
P22-HCR2 differs from the goods of subheading 2846.90.20, HTSUS, in several respects. It
contains a compound, yttrium oxysulfide, that is not a rare-earth oxide for tariff classification
purposes. It also contains a small amount of iron oxide, which is not a rare-earth oxide.
Court No. 98-08-02723 Page 27
this claim.13 In its post-argument brief, plaintiff addressed only its principal claim for
classification of P22-HCR2 in subheading 3824.90.39, HTSUS.
With respect to plaintiff’s principal classification claim, subheading 3824.90.39, HTSUS,
(“Mixtures of two or more inorganic compounds: Other”) describes P22-HCR2 by composition;
however, the pertinent term of the superior heading is “chemical products and preparations of the
chemical or allied industries (including those consisting of mixtures of natural products) not
elsewhere specified or included.” Heading 3824, HTSUS (emphasis added). By application of
GRI 1, heading 3824 is excluded from consideration if P22-HCR2 is specified or included by the
terms of another heading.
In its cross-motion for summary judgment, defendant claims that Customs was correct in
classifying P22-HCR2 in subheading 3206.50.00, HTSUS, the article description for which is
“[i]norganic products of a kind used as luminophores.” The pertinent language of the article
description for the superior heading, heading 3206, HTSUS, is also “[i]norganic products of a
kind used as luminophores.”
The phrase “of a kind used as luminophores,” as used in heading 3206 and subheading
3206.50, HTSUS, identifies a tariff provision controlled by principal use. See Primal Lite, Inc.
v. United States, 182 F.3d 1362, 1363-64 (Fed. Cir. 1999) (holding that a heading with the
phrase “of a kind used” is a principal use provision). “The purpose of ‘principal use’ provisions
in the HTSUS is to classify particular merchandise according to the ordinary use of such
13
Plaintiff has not developed its argument for this second alternative claim. The court
notes, however, that the presence of iron oxide, which is not a compound of yttrium, scandium or
the rare-earth metals, would appear to exclude the product from heading 2846, even if plaintiff
could show that the article description for subheading 2846.90.40, HTSUS, describes
P22-HCR2.
Court No. 98-08-02723 Page 28
merchandise, even though particular imported goods may be put to some atypical use.” Id. at
1364 (citing Clarendon Mktg. v. United States, 144 F.3d 1464, 1467 (Fed. Cir. 1998)); see also
E.M. Chems. v. United States, 20 CIT 382, 387, 923 F. Supp. 202, 208 (1996) (“the principal use
of the class . . . is controlling, not the principal use of the specific import”). “Principal use” is
defined as the use “which exceeds any other single use.” See Minnetonka Brands, Inc. v. United
States, 24 CIT 645, 651, 110 F. Supp. 2d 1020, 1027 (2000) (citing Conversion of the Tariff
Schedules of the United States Annotated Into the Nomenclature Structure of the Harmonized
System: Submitting Report at 34-35 (USITC Pub. No. 1400) (June 1983)).
Additional U.S. Rules of Interpretation 1(a), HTSUS, provides that “[i]n the absence of
special language or context which otherwise requires–a tariff classification controlled by use
(other than actual use)14 is to be determined in accordance with the use in the United States at, or
immediately prior to, the date of importation, of goods of that class or kind to which the
imported goods belong, and the controlling use is the principal use.”
The Court of Appeals for the Federal Circuit has held that delimiting the class or kind of
goods to which the imported goods belong “[c]all[s] for a determination as to the group of goods
that are commercially fungible with the imported goods.” Primal Lite, 182 F.3d at 1365.
Moreover, the taxonomy of the group should be narrowly drawn to encompass only “the
particular species of which the [subject] merchandise is a member.” Id. at 1364. The court may
examine factors such as: (1) the general physical characteristics of the merchandise; (2) the
14
The court concludes that heading 3206 and specifically, subheading 3206.50, HTSUS,
do not establish an “actual use” provision so as to invoke the operation of Additional U.S. Rule
of Interpretation 1(b). The language of the provision does not require establishing “the actual
use made of the imports in the United States” as would a provision controlled by actual use. See
Clarendon Mktg., 144 F.3d at 1468.
Court No. 98-08-02723 Page 29
expectation of the ultimate purchasers; (3) the channels of trade in which the merchandise
moves; (4) the environment of the sale (e.g., the manner in which the merchandise is advertised
and displayed or the accompanying accessories); (5) the usage of the subject merchandise and
whether that use corresponds to the use of class-defining merchandise; (6) the economic
practicality of using the import in that manner; and (7) the recognition in the trade of this use.
See United States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, 377 (1976) (citations
omitted); see also Lenox Collections v. United States, 20 C.I.T. 194, 196 (1996). “Susceptibility,
capability, adequacy, or adaptability of the import to the common use of the class is not
controlling.” Carborundum, 63 C.C.P.A. at 102, 536 F.2d at 377 (citations omitted).
In moving for summary judgment on the classification of P22-HCR2, Optonix challenges
the Customs classification of P22-HCR2 under heading 3206 as a “product of a kind used as a
luminophore,” contending that “[p]roducts that are commercially fungible with P22-HCR2 are
not used as luminophores because of the need to further process these items in order to make
them commercially usable.” Pl.’s Reply in Opp’n to Def.’s Cross-Mot. for Summ. J. at 15. In an
affidavit by Mr. Richard Castello, a sales engineer for Optonix, plaintiff identified additional
processing that P22-HCR2 is said to undergo before it is supplied to Optonix’s customer for use
in manufacturing television picture tubes.
To support its cross-motion for summary judgment, defendant relies, in part, on
plaintiff’s statement in the protest that P22-HCR2 is used in the manufacture of phosphors for
television screens. Defendant also relies on the second affidavit of Mr. Fluty on P22-RE1, which
states that “‘P22’ is the name from the Electronics Industries Association (EIA) for a family of
phosphors used in color cathode ray tubes and elsewhere.” Second Fluty Decl. ¶ 14. Some
Court No. 98-08-02723 Page 30
dictionary definitions identify “phosphors” as a subset, along with “fluorophores,” of
“luminophores.” See Oxford English Dictionary, 1105, vol. V (2d ed. 1989) (“Other terms
sometimes used synonymously with phosphor are luminophor . . . or fluorophor.”).15 Also
relevant to the “principal use” issues are statements in another affidavit of Mr. Fluty, submitted
by defendant, that identify the chemical mixture comprising P22-HCR2 as a “red luminescent
phosphor” and a “pigment coated phosphor.” These statements were supported by reference to a
process patent for producing pigment-coated phosphors, the documentation for which, attached
to the affidavit, lists as an assignee Kasai Optonix, Ltd., the manufacturer of P22-HCR2.
The court’s examination of the pleadings, admissions, and affidavits reveals at least one
issue of fact material to the tariff classification of P22-HCR2. The principal issue of fact to be
resolved is whether the class or kind of goods to which P22-HCR2 belongs were, at or
immediately prior to the time of importation, principally used in the United States as
“luminophores.” The relevant Explanatory Note contains the following definition: “Inorganic
products of a kind used as luminophores are products which, under the action of visible or
invisible radiations (solar rays, ultra-violet rays, cathode rays, X-rays, etc.), produce a
luminescent effect (flourescent or phosphorescent).” EN 32.06(B). Based on this guidance, on
Additional U.S. Rule of Interpretation 1(a), and on dictionary definitions of “luminophore” and
“phosphor,” the court concludes that determination of the correct classification of P22-HCR2
requires a factual determination whether the class or kind of goods to which P22-HCR2 belongs
15
A luminophor is defined therein as “[a] luminescent substance. . . . The generic term
luminophor is subclassified into fluorophors . . . and phosphors. . . .” Id. at 99, vol. IX. A
phosphor is “[a]nything that phosphoresces, or emits light without sensible heat” or in modern
use “any substance exhibiting phosphorescence or fluorescence, esp. one that is an artificially
prepared solid.” Id. at 708, vol. XI.
Court No. 98-08-02723 Page 31
were, at or immediately preceding importation, principally used in the United States for their
luminescent property. The court’s consideration of this issue is confined to the pleadings,
admissions and supporting affidavits of the parties, which are not sufficient to resolve the issue.
In summary, plaintiff alleges the existence of a class or kind of products not used as
luminophores because of the need to further process these items in order to make them
commercially usable. Defendant does not directly address the issues raised by the application of
Additional U.S. Rule of Interpretation 1(a), HTSUS, but contends that “[t]he fact that the
P22-HCR2 undergoes further processing after importation in the form of blending to meet a
customer’s specification does not prevent it from being a kind of product (i.e., a phosphor) used
as a luminophore, as the plaintiff argues.” Def.’s Br. in Reply to Pl.’s Post-Argument Br. at 9-10.
In addition, the parties appear to be in disagreement on a physical characteristic of
P22-HCR2. Defendant’s argument is premised in part on its contention that the product, as
imported, is of a kind used as a luminophore, based on its characteristics and its use in the
manufacturing of color cathode ray tubes. Plaintiff indicated that P22-HCR2, in the condition in
which it is imported, i.e., before the processing plaintiff identifies as necessary to commercial
use, does not luminesce or does so only crudely.
Because the court has identified facts that are material to the proper application of
Additional U.S. Rule of Interpretation 1(a), HTSUS, to the determination of the tariff
classification of P22-HCR2, and because these facts remain in controversy, the motion and
cross-motion for summary judgment of plaintiff and defendant, respectively, must be denied with
respect to the classification of P22-HCR2.
Court No. 98-08-02723 Page 32
IV. CONCLUSION
The court awards to defendant partial summary judgment based on its determination that
there is no genuine issue of fact material to the classification of P22-RE1 and its conclusion that
Customs was correct in classifying in subheading 2846.90.50, HTSUS, the entries of P22-RE1
made prior to 1995 and in classifying in subheading 2846.90.80, HTSUS, the entries of P22-RE1
made in 1995 and thereafter. The court concludes that summary judgment is not appropriate to
resolve the dispute between the parties concerning the classification of P22-HCR2 because of the
existence of at least one issue of fact material to the classification of this product. That issue, as
discussed above, is whether the class or kind of goods to which P22-HCR2 belongs were, at or
immediately preceding the time of importation, principally used in the United States for their
luminescent property.
V. ORDER
This action having been duly submitted for decision, and this court, after due
deliberation, having rendered a decision herein; now, in conformity with that decision, it is
hereby
ORDERED that plaintiff’s motion for summary judgment be, and hereby is, denied; and
it is further
ORDERED that defendant’s cross-motion for summary judgment be, and hereby is,
granted with respect to the determination of the tariff classification of plaintiff’s entries of
P22-RE1 at issue in this case; and it is further
Court No. 98-08-02723 Page 33
ORDERED that defendant’s cross-motion for summary judgment be, and hereby is,
denied with respect to the determination of tariff classification of plaintiff’s entries of P22-HCR2
at issue in this case; and it is further
ORDERED, pursuant to USCIT R. 56(d), that the following facts material to the tariff
classification of P22-HCR2 are specified to exist without substantial controversy: (1) P22-
HCR2 consists of a red powder comprised by weight of at least 90 percent yttrium oxygen
sulfide (Y2O2S), 10 percent or less europium oxygen sulfide (Eu2O2S), and 1 percent or less
ferrous oxide (Fe2O3); and (2) P22-HCR2 is used as a material in the production of
phosphorescent coatings that are applied in the manufacturing of cathode ray tubes; and it is
further
ORDERED, pursuant to USCIT R. 56(d), that at least one fact material to the tariff
classification of P22-HCR2 is specified as remaining in controversy, that fact being whether the
class or kind of goods to which P22-HCR2 belongs were, at or immediately preceding the time
of importation, principally used in the United States for their luminescent property; and it is
further
ORDERED, pursuant to USCIT R. 56(d) and R. 16, that the parties shall consult with the
objective of developing for submission to the court an agreed-upon draft scheduling order to
govern such further proceedings as are necessary to resolve the factual issue or issues material to
the determination of the tariff classification of P22-HCR2 and to govern other proceedings as are
necessary in this case, including dates for discovery, if any, the filing of dispositive motions, if
any, and tentative dates for trial; and it is further
Court No. 98-08-02723 Page 34
ORDERED that the parties shall file with the court on or before March 18, 2005 an
agreed-upon draft amended scheduling order, except that, in the event the parties are unable to
agree upon a draft amended scheduling order, each party shall file with the court by that date its
own proposed draft amended scheduling order.
_________________________________
Timothy C. Stanceu
Judge
Dated: February 18, 2005
New York, New York