Conair Corp. v. United States , 29 Ct. Int'l Trade 888 ( 2005 )

Slip Op. 05-95
United States Court of International Trade
______________________________
:
CONAIR CORPORATION, :
: Before: Richard K. Eaton,
PLAINTIFF, : Judge
:
v. : Court No. 02-00383
:
UNITED STATES, :
:
DEFENDANT :
______________________________:
OPINION
[Plaintiff’s motion for summary judgment granted; Defendant’s
cross-motion for summary judgment denied]
August 12, 2005
Neville Peterson LLP (Michael K. Tomenga, Catherine Chess
Chen, George W. Thompson and Lawrence J. Bogard) for Plaintiff
Conair Corporation.
Peter D. Keisler, Assistant Attorney General; Barbara S.
Williams, Attorney in Charge, International Trade Field Office
(James A. Curley); Yelena Slepak, of counsel, Office of Assistant
Chief Counsel for United States Bureau of Customs and Border
Protection, for Defendant United States.
Eaton, Judge: Before the court are cross-motions for
summary judgment pursuant to USCIT R. 56. By its motion,
plaintiff Conair Corporation (“Conair”) challenges the
classification of its tabletop fountains by the United States
Customs Service (“Customs”)1 under the Harmonized Tariff Schedule
1
Effective March 1, 2003, the United States Customs
Service was renamed the United States Bureau of Customs and
Border Protection. See Reorganization Plan Modification for the
Dep’t of Homeland Security, H.R. Doc. 108-32 at 4 (2003).
COURT NO. 02-00383 Page 2
of the United States (2000) (“HTSUS”). Customs classified the
tabletop fountains (“Serenity Ponds”) under HTSUS subheading
3926.40.00 as “Other articles of plastics and articles of other
materials of headings 3901 to 3914 . . . Statuettes and other
ornamental articles,” subject to a tariff rate of 5.3 percent ad
valorem. Conair argues that the merchandise is properly
classifiable under HTSUS subheading 8413.70.20042 as “Pumps for
liquids, whether or not fitted with a measuring device; liquid
elevators; part thereof; . . . Other centrifugal pumps . . .
Other . . . Submersible pumps,” subject to no tariff. By its
cross-motion, defendant, the United States (“Government”), on
behalf of Customs, maintains that the merchandise is properly
classified pursuant to HTSUS subheading 3926.40.00 and asks the
court to deny Conair’s motion and dismiss this action. The court
has jurisdiction pursuant to 28 U.S.C. § 1581(a) (2000). For the
reasons set forth below, the court grants Conair’s motion for
summary judgment and denies that of the United States.
2
Conair, in its briefs, claims the Serenity Ponds are
properly classified under HTSUS subheading 8413.70.2040. The
court, however, believes that Conair intended to cite to
subheading 8413.70.2004, which encompasses “[s]ubmersible pumps.”
See Conair Corp. v. United States, Court No. 02-00383 at 2 (May
27, 2002) (summons identifying “protest claim” as
“8413.70.2004.”); Conair Corp. v. United States, Court No. 02-
00383 at 7–8 (Aug. 12, 2002) (complaint stating “Plaintiff
requests [that] . . . the U.S. Customs Service . . . reliquidate
the subject entries under subheading 8413.70.2004 of the
HTSUS . . . .”).
COURT NO. 02-00383 Page 3
BACKGROUND
Plaintiff is an importer of seven different models of
Serenity Ponds. On November 4, 1999, it submitted a letter to
the Customs National Commodity Specialist Division (“NCSD”) in
New York requesting a tariff classification ruling for a specific
model of these tabletop fountains. Ultimately the NCSD
classified the merchandise under HTSUS subheading 3926.40.00.
See generally New York Letter NY F83276 (March 15, 2000).
On July 10, 2000, Conair filed a Request for Reconsideration
of Customs’ classification, asserting that the Serenity Ponds
were properly classifiable under HTSUS subheading 8413.70.20.
Customs denied this request. See Headquarters Ruling Letter HQ
964361 (August 6, 2001) (“HQ 964361”); see also id. at 5 (“After
a careful consideration of this issue, we determine that the
calming pond is essentially a plastic decorative article.
Accordingly, based upon our determination that the essential
character of the calming pond is as a [sic] article of plastic,
we find that it is provided for in heading 3926 . . . .”).
Thereafter, Conair timely filed protests challenging Customs’
classification of the subject merchandise. Customs denied each
of the protests and Conair commenced the present action.
COURT NO. 02-00383 Page 4
STANDARD OF REVIEW
This court may resolve a classification issue by means of
summary judgment. See Bausch & Lomb, Inc. v. United States, 148
F.3d 1363, 1365 (Fed. Cir. 1998). Summary judgment is
appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact . . . .” USCIT R. 56(c). Summary judgment of a
classification issue “is appropriate when there is no genuine
dispute as to the underlying factual issue of exactly what the
merchandise is.” Bausch & Lomb, 148 F.3d at 1365 (citing Nissho
Iwai Am. Corp. v. United States, 143 F.3d 1470, 1472 (Fed. Cir.
1998); IKO Indus., Ltd. v. United States, 105 F.3d 624, 626–27
(Fed. Cir. 1997); Rollerblade, Inc. v. United States, 112 F.3d
481, 483 (Fed. Cir. 1997); Sports Graphics, Inc. v. United
States, 24 F.3d 1390, 1391 (Fed. Cir. 1994)). Where jurisdiction
is predicated on 28 U.S.C. § 1581(a), Customs’ interpretation of
an HTSUS tariff term, a question of law, is subject to de novo
review. See 28 U.S.C. § 2640(a); see also E.T. Horn Co. v.
United States, 27 CIT __, __, Slip Op. 03-20 at 4 (Feb. 27, 2003)
(quoting Clarendon Mktg., Inc. v. United States, 144 F.3d 1464,
1466–67 (Fed. Cir. 1998)). The court employs a two-step process
when analyzing a classification issue: “first, construe the
relevant classification headings; and second, determine under
COURT NO. 02-00383 Page 5
which of the properly construed tariff terms the merchandise at
issue falls.” Bausch & Lomb, 148 F.3d at 1365 (citing Universal
Elecs. Inc. v. United States, 112 F.3d 488, 491 (Fed. Cir.
1997)).
DISCUSSION
Here, “there is no genuine dispute as to the underlying
factual issue of exactly what the merchandise is.” Bausch &
Lomb, 148 F.3d at 1365. The parties agree that the Serenity
Ponds: (A) “are designed to ‘create a tranquil atmosphere at home
or in the office,’” Def.’s Resp. to Pl.’s Statement of Material
Facts (“Def.’s Resp. Facts”) para. 1; (B) are intended to appeal
to the consumer’s visual and auditory senses, Def.’s Statement of
Material Facts Not in Dispute (“Def.’s Mat. Facts”) para. 2;
Pl.’s Resp. to Def.’s Statement of Material Facts Not in Dispute
(“Pl.’s Resp. Facts”) para. 2; and (C) are “comprised of: (1) a
water reservoir or base; (2) an electric, submersible,
centrifugal pump that sits in the base; (3) plastic tubing; (4) a
power cord; and (5) various objects, such as simulated rocks,
simulated bamboo, natural polished stones, through which and/or
over which pumped water flows.”3 Statement of Material Facts Not
3
The parties also agree that the “bowl-shaped base” for
each of the fountains is made out of plastic. See Statement of
Material Facts Not in Dispute (“Pl.’s Mat. Facts”) para. 2;
Def.’s Resp. Facts para. 2 (stating that the Government “[a]dmits
(continued...)
COURT NO. 02-00383 Page 6
in Dispute (“Pl.’s Mat. Facts”) para. 1; Def.’s Resp. Facts para.
1.
Merchandise entering the United States is classified under
the HTSUS by Customs. “The legal text of the [HTSUS] consists of
the General Rules of Interpretation; the Additional U.S. Rules of
Interpretation; the General Notes; Sections I through XXII,
inclusive (encompassing chapters 1–99, through the 8-digit level,
article descriptions and tariff and other treatment accorded
thereto); the Chemical Appendix; the Pharmaceutical Appendix; and
the Intermediate Chemicals for Dyes Appendix.” United States
International Trade Commission, Preface to the 12th Edition
HTSUS, 2 (2000). Classification under the HTSUS is governed by
the General Rules of Interpretation (“GRI”). See Carl Zeiss,
Inc. v. United States, 195 F.3d 1375, 1379 (Fed. Cir. 1999);
Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed.
Cir. 1998).
3
(...continued)
the remaining allegations of this paragraph to the extent
supported by the product literature in Plaintiff’s Exhibit 1.”);
see also Memo of Points and Authorities in Supp. of Pl.’s Rule 56
Mot. For Summ. J. (“Pl.’s Memo.”), Ex. 1 (containing Serenity
Pond Advertising Literature and Instruction Booklet). The
parties further agree that, with the exception of the wind chime
assembly, the various sculptures—such as the simulated rocks and
the simulated bamboo—are made of plastic. See Pl.’s Mat. Facts;
Pl.’s Memo., Ex. 1; Def.’s Resp. Facts.
COURT NO. 02-00383 Page 7
In a classification dispute, the court begins its analysis
with GRI 1.4 If the proper classification cannot be determined
by reference to GRI 1, it becomes necessary to refer to the
succeeding GRIs in numerical order. See N. Am. Processing Co. v.
United States, 236 F.3d 695, 698 (Fed. Cir. 2001) (citation
omitted); Carl Zeiss, 195 F.3d at 1379 (citing Baxter Healthcare
Corp. of P.R. v. United States, 182 F.3d 1333, 1337 (Fed. Cir.
1999)). If, however, the proper classification is determined by
reference to GRI 1, the court may not consider any subsequent
GRI. Mita Copystar Am. v. United States, 160 F.3d 710, 712 (Fed.
Cir. 1998).
In determining the proper classification, “[t]he Court may
also refer to the Explanatory Notes, which constitute the World
Customs Organization’s official interpretation of the HTSUS.”
Bauer Nike Hockey USA, Inc. v. United States, 27 CIT __, __, 305
F. Supp. 2d 1345, 1351 (2003) (citing Baxter Healthcare Corp. of
P.R. v. United States, 22 CIT 82, 89 n.4, 998 F. Supp. 1133, 1140
n.4 (1998)). The Explanatory Notes, although not legally
binding, are “intended to clarify the scope of HTSUS subheadings
and to offer guidance in interpreting [the] subheadings.”
4
GRI 1 states: “The table of contents, alphabetical
index, and titles of sections, chapters and sub-chapters are
provided for ease of reference only; for legal purposes,
classification shall be determined according to the terms of the
headings and any relative section or chapter notes . . . .” Id.COURT NO. 02-00383 Page 8
Rollerblade, Inc., 112 F.3d at 486 n.3 (citation omitted).
Therefore, “close textual analysis of the language of the
headings and the accompanying explanatory notes” is required in
order to determine the proper classification of merchandise.
Bauer Nike Hockey, 27 CIT at __, 305 F. Supp. 2d at 1351.
A. Application of the General Rules of Interpretation
1. General Rule of Interpretation 1
Conair argues that the “subject tabletop fountains operate
by pumping liquid water, which produces the sound of flowing
water.” Memo. of Points and Authorities in Supp. of Pl.’s Rule
56 Mot. for Summ. J. (“Pl.’s Memo.”) at 16. This movement of
water is made possible “solely by means of a pump for liquids.”
Id. at 17. Based on these statements, Conair contends that the
Serenity Ponds are “prima facie classifiable within HTSUS Heading
8413 by application of GRI 1 . . . .” Id. at 16. Heading 8413
encompasses “Pumps for liquids, whether or not fitted with a
measuring device; liquid elevators; part thereof.” In making its
claim, Conair insists that HTSUS Heading 8413 is an eo nomine5
5
An eo nomine designation is “one which describes [a]
commodity by a specific name, usually one well known to
commerce.” Casio, Inc. v United States, 73 F.3d 1095, 1097 (Fed.
Cir. 1996) (alteration in original) (quoting Black’s Law
Dictionary 535 (6th ed. 1990)); see also Chevron Chem. Co. v.
United States, 23 CIT 500, 505, 59 F. Supp. 2d 1361, 1367 (1999)
(stating that “[a]n eo nomine provision that names an article
without terms of limitation, absent evidence of a contrary
(continued...)
COURT NO. 02-00383 Page 9
provision that “covers an article in all its forms.” Pl.’s Memo.
at 17 (citations omitted). Thus, for Conair, even though the
Serenity Ponds consist of more parts than merely the pump, “the
subject merchandise answers only to the terms of Heading 8413 and
is prima facie, described therein.” Id. at 18.
Conair further maintains that since the Serenity Ponds are
prima facie classifiable under HTSUS Heading 8413, the Chapter
Notes preclude them from being classified under Customs’ chosen
Heading 3926. This is because note 2(p) to Chapter 39 HTSUS
states that Chapter 39 “does not cover: . . . Articles of Section
XVI (machines and mechanical or electrical appliances).” Id.
Section XVI includes Chapter 84. Therefore, Conair urges the
conclusion that, since the Serenity Ponds are prima facie
classifiable under Chapter 84, the Chapter Notes provide that the
Serenity Ponds may not be classified under Chapter 39.
The Government faults Conair’s assertion that classification
of the Serenity Ponds is possible under GRI 1. “The pump, which
is a component of the tabletop fountain, is prima facie
classifiable under heading 8413. . . . The plastic articles
(i.e., simulated plastic rock) and polished stones, which also
5
(...continued)
legislative intent, is deemed to include all forms of the
article.”) (citation omitted).
COURT NO. 02-00383 Page 10
are components of the fountain, are not ‘pumps for
liquids . . . ,’ do not function as pumps for liquids, and thus
are not described in heading 8413.” Def.’s Br. in Rep. to Pl.’s
Opp’n to Def.’s Mot. for Summ. J. (“Def.’s Rep.”) at 2.
Therefore, according to the Government, because each of the
components is not prima facie classifiable under Heading 8413,
classification cannot be determined pursuant to GRI 1. See id.
at 2–3.
The court finds that, although Conair is correct in its
assertion that the pumps are prima facie classifiable under HTSUS
Heading 8413, it is incorrect in claiming that classification may
be resolved by reliance upon GRI 1. Each Serenity Pond consists
of a pump, a decorative sculpture made of plastic (e.g. simulated
rocks or bamboo),6 and natural stones.7 While the pumps
themselves are properly classified under Heading 8413, the
6
It should be noted that one of the Serenity Pond models
features a wind chime display made of metal and plastic parts.
7
The parties, in their briefs, assert contradictory
characterizations of the stones included with the Serenity Ponds.
The plaintiff characterizes the stones as accessories that are
not necessary to the operation of the pond. The Government,
however, asserts that the stones are adapted to the ponds and
are, therefore, not accessories, but rather additional components
of the fountains. In the alternative, the Government asserts
that the stones are put up for sale as a “set” as that term is
provided for in GRI 3(a) and (b). Because the court finds that
the Serenity Ponds are composite articles whose essential
character is established by their pumps, a discussion of the
parties’ characterizations of the stones is not warranted.
COURT NO. 02-00383 Page 11
remaining parts of the Serenity Ponds are appropriately
classified elsewhere. Because each component, when considered
individually, is prima facie classifiable under a different HTSUS
heading, reliance on GRI 1 is inappropriate. Therefore, it
becomes necessary to refer to the succeeding GRIs in numerical
order. See Pillowtex Corp. v. United States, 171 F.3d 1370, 1375
(1999) (“Having exhausted the headings and the notes, pursuant to
GRI 1, we may now consider the next GRI provision, GRI 2.”).8
2. General Rules of Interpretation 2 and 3
The Government argues that, upon reference to the GRIs in
numerical order, the court should conclude that the Serenity
Ponds must be classified under GRI 3. The Government further
contends that “[s]ince [the] fountains therefore are composite
8
Plaintiff’s reliance on JVC Co. of America, Division of
U.S. JVC Corp v. United States, 23 CIT 523, 62 F. Supp. 2d 1132(1999), aff’d 234 F.3d 1348 (Fed. Cir. 2000) as support for its
contention that GRI 1 may be used to classify composite goods is
misplaced. In JVC, the Court of Appeals for the Federal Circuit
held that the term “television cameras” was broad enough to allow
for classification of camcorders, which consisted of a camera and
a video cassette recorder. The situation in JVC is
distinguishable from the present case because the definition of
television cameras referenced by the Court stated that “[t]he
units often have built-in . . . video cassette recorders . . .
for completely self-contained operation . . . .” JVC Co. of Am.,
Div. of U.S. JVC Corp., v. United States, 234 F.3d 1348, 1353
(Fed. Cir. 2000) (citing 18 McGraw-Hill Encyclopedia of Science
and Technology 216 (8th Ed. 1997)). The Court also noted that
the Explanatory Notes included cameras with built in video
recorders. Id. at 1352. The plaintiff in the present case has
not produced a definition of a pump that includes sculptural
plastic components.
COURT NO. 02-00383 Page 12
goods, and each component is classifiable under a different
heading, the imported fountains cannot be classified according to
GRI 1, and it is necessary to look to GRI 2 and 3 to determine
classification.” Def.’s Br. in Opp’n to Pl.’s Mot. for Summ. J.
and in Supp. of Its Cross-Mot. for Summ. J. (“Def.’s Memo.”) at
4–5; see GRI 2,9 3.10 Finally, the Government states that “GRI 2,
9
GRI 2 provides that:
(a) Any reference in a heading to an article shall be
taken to include a reference to that article incomplete
or unfinished provided that, as entered, the incomplete
or unfinished article has the essential character of
the complete or finished article. It shall also
include a reference to that article complete or
finished (or falling to be classified as complete or
finished by virtue of this rule), entered unassembled
or disassembled [; and] (b) Any reference in a heading
to a material or substance shall be taken to include a
reference to mixtures or combinations of that material
or substance with other materials or substances. Any
reference to goods of a given material or substance
shall be taken to include a reference to goods
consisting wholly or partly of such material or
substance. The classification of goods consisting of
more than one material or substance shall be according
to the principles of rule 3.
10
GRI 3 provides that:
When, by application of rule 2(b) or for any other
reason, goods are, prima facie, classifiable under two
or more headings, classification shall be effected as
follows: (a) The heading which provides the most
specific description shall be preferred to headings
providing a more general description. However, when
two or more headings each refer to part only of the
materials or substances contained in mixed or composite
goods or to part only of the items in a set put up for
retail sale, those headings are to be regarded as
equally specific in relation to those goods, even if
(continued...)
COURT NO. 02-00383 Page 13
insofar as relevant here, provides in subsection (b) that
classification of goods consisting of more than one material or
substance must be determined according to the principles of GRI
3.” Id. at 5. The court agrees with this analysis.
The Government is also correct in its contention that,
contrary to one of Conair’s alternative arguments, reference to
the first sentence of GRI 3(a) does not end the inquiry. That
sentence, incorporating the concept of “relative specificity,” is
inapplicable in the present case because it comes into play when
a good, as a whole, is prima facie classifiable under two or more
headings. Bauer Nike Hockey USA, Inc. v. United States, 393 F.3d
1246, 1252 (Fed. Cir. 2004). Here, the Serenity Ponds are made
up of parts or components each of which is prima facie
classifiable under a different heading. The second sentence of
GRI 3(a) provides that where “two or more headings each refer to
part only of the materials or substances contained in mixed or
10
(...continued)
one of them gives a more complete or precise
description of the goods[;] (b) Mixtures, composite
goods consisting of different materials or made up of
different components, and goods put up in sets for
retail sale, which cannot be classified by reference to
3(a), shall be classified as if they consisted of the
material or component which gives them their essential
character, insofar as this criterion is applicable[;
and] (c) When goods cannot be classified by reference
to 3(a) or 3(b), they shall be classified under the
heading which occurs last in numerical order among
those which equally merit consideration.
COURT NO. 02-00383 Page 14
composite goods . . . those headings are to be regarded as
equally specific in relation to those goods, even if one of them
gives a more complete or precise description of the goods.”
Thus, the second sentence of GRI 3(a) leads to GRI 3(b).
In cases such as the present one, where classification
pursuant to GRI 3(a) is not possible, the concept of “essential
character” found in GRI 3(b) may direct the court to the proper
resolution. See Better Home Plastics Corp. v. United States, 119
F.3d 969, 970–71 (Fed. Cir. 1997) (stating that “[p]ursuant to
GRI 3(b), goods not classifiable under GRI 3(a) are classified by
the ‘component which gives them their essential character.’”).
As there remain few cases addressing the meaning of essential
character under the HTSUS, this Court continues to rely on cases
decided under its predecessor, the Tariff Schedule of the United
States (“TSUS”). See Better Home Plastics Corp. v. United
States, 20 CIT 221, 224, 916 F. Supp. 1265, 1267 (1996) (stating
that the TSUS “did utilize” the concept of essential character.
Furthermore, in light of the absence of reported cases defining
essential character under the HTSUS, courts may “look to case law
under the TSUS for guidance.”); see also Structural Indus., Inc.
v. United States, 29 CIT __, __ , n.6, 360 F. Supp. 2d 1330,
1336, n.6 (2005) (stating that the definition of essential
character under the TSUS has provided guidance to courts
COURT NO. 02-00383 Page 15
interpreting tariff terms under the HTSUS.). Thus, in order to
determine the essential character of composite merchandise under
the TSUS, this Court has sought to determine which component is
indispensable to the merchandise. See Oak Laminates Div. of Oak
Materials Group v. United States, 8 CIT 175, 180, 628 F. Supp.
1577, 1581 (1984) (stating that “[i]ts essential character is
that which is indispensable to the structure, core or condition
of the article, i.e., what it is.” (citation omitted)). This
inquiry is “factual in nature” and therefore will depend
significantly on the circumstances of each individual case. See
Structural Indus., Inc. v. United States, 356 F.3d 1366, 1370
(Fed. Cir. 2004); see also Can. Vinyl Indus., Inc. v. United
States, 76 Cust. Ct. 1, 2, 408 F. Supp. 1377, 1378 (1976)
(stating that determination of essential character is not an
“exact science.”), aff’d 64 C.C.P.A. 97, 555 F.2d 806 (1977). In
weighing the multiple factors that may be present in any one
case, the court must also be cognizant that
[t]he factor which determines essential character will
vary as between different kinds of goods. It may, for
example, be determined by the nature of the material or
component, its bulk, quantity, weight or value, or by
the role of a constituent material in relation to the
use of the goods.
World Customs Organization, Harmonized Commodity Description and
Coding System 4, Explanatory Note, Rule 3(b) (VIII) (2d ed. 1996)
(emphasis added) (“Explanatory Note”).
COURT NO. 02-00383 Page 16
The parties disagree as to which component imparts the
essential character of the Serenity Ponds. The Government
contends that the plastic decorative sculpture, i.e., the
simulated rocks or the plastic bamboo, is the component which
imparts the essential character. In support of this conclusion,
the Government observes that “[e]ach style of fountain is named
separately and can be distinguished from the others based on
differences in the design of the plastic components.” Def.’s
Resp. at 14. In other words, for the Government, the essential
nature of each Serenity Pond results from the individual plastic
sculpture that differentiates each style of the merchandise from
the other models. Next, the Government points out that the pump
is not visible to the consumer and, therefore, plays no
significant part in creating the “visual or decorative value of
the article.” Def.’s Memo. at 9. Instead, “it is the plastic
components of the article that are visible and aesthetically
appealing to a consumer.” Id. at 7. Finally the Government
states that, “[a] view of the imported fountain can be enjoyed by
an observer even when the pump is not in operation.” Id. at 8.
Thus, in making its arguments, the Government relies on the
visual aspect of the merchandise to make its case.
Conair disputes the Government’s contention and asserts that
the essential character of the Serenity Ponds is imparted by the
COURT NO. 02-00383 Page 17
pump:
While the appearance of the fountain’s contoured
plastic may be one factor in a consumer’s determination
as to which model of Serenity Pond to buy, the decision
to buy a Serenity Pond in the first place is based
entirely on the presence of the submersible pump and
its ability to generate the sound of flowing water.
Indeed, it is difficult to imagine that a consumer
would buy an article advertised as a “fountain,” . . .
if the article could not produce flowing water.
Pl.’s Opp’n to Def.’s Cross-Mot. for Summ. J. and Resp. to Def.’s
Opp’n to Pl.’s Mot. for Summ. J. at 20.
As previously noted, here “there is no genuine dispute as to
the underlying factual issue of exactly what the merchandise is.”
Bausch & Lomb, 148 F.3d at 1365. “[I]f there is no genuine
dispute over the nature of the merchandise, [the Court] adjudges
on summary judgment the proper classification under which it
falls, the ultimate question in every classification case and one
that has always been treated as a question of law.” Id. at 1366.
That being the case, the court turns to the proper
classification of the Serenity Ponds. In reaching the ultimate
question, the court finds that the Serenity Ponds’ essential
character is imparted by the pump. The parties agree that the
Serenity Ponds are “designed to ‘create a tranquil atmosphere at
home or in the office,’” Pl.’s Mat. Facts para. 1; Def.’s Resp.
Facts para. 1, and that they are “intended to appeal to the
COURT NO. 02-00383 Page 18
visual and auditory senses” of the consumer. Def.’s Mat. Facts
para. 2; Pl.’s Resp. Facts para. 2. To the extent that the
Serenity Ponds succeed in creating this tranquil atmosphere, it
is necessarily the water flowing over the simulated landscape
that stimulates the visual and auditory senses. Indeed, any
appeal to the auditory senses is present only when the pump is
transporting water to the top of the Serenity Pond, thus allowing
it to flow over the simulated rocks.
This conclusion is borne out by an examination of the
Serenity Ponds themselves.11 In Customs classification cases,
“the merchandise itself is often a potent witness.” Simod Am.
Corp. v. United States, 872 F.2d 1572, 1578 (Fed. Cir. 1989)
(citing Marshall Field & Co. v. United States, 45 C.C.P.A. 72, 81
(1958)). This examination leads to the conclusion that consumers
would not purchase the Serenity Ponds for the purpose of enjoying
the visual aspects of the plastic sculpture. It is only when the
pump is running and the water is flowing that the Serenity Ponds
could be said to have any “visual or auditory” appeal or create
anything approaching “a tranquil atmosphere.” That is, the water
flowing over the sculptured plastic rocks gives them a more
11
The court has also engaged in an examination of the
Serenity Pond samples provided by Conair. Included among these
samples are six models of the Serenity Ponds. The models
provided as samples are: (1) CP1, (2) CP1R, (3) CP2, (4) CP4, (5)
CP5, and (6) CP7.
COURT NO. 02-00383 Page 19
attractive look and also produces the sound of flowing water.
Although the pump may not be visible, it is nonetheless
indispensable to making the merchandise “what it is.” Oak
Laminates, 8 CIT at 180, 628 F. Supp. at 1581.
The direction given in the Explanatory Note to GRI 3(b)
favors the court’s conclusion. “The factor which determines
essential character will vary as between different kinds of
goods. It may, for example, be determined by . . . the role of a
constituent material in relation to the use of the goods.”
Explanatory Note, Rule 3(b) (VIII) (emphasis added). The pump’s
role in relation to the use of the Serenity Ponds is essential.12
While the plastic component contributes to the manner in which
12
In response to the court’s request, each party has made
a submission with respect to the value of the various components
that make up the Serenity Ponds. Conair Corporation v. United
States, Court No. 02-00383 (May 2, 2005), (order requesting
additional information about the value of the pumps in relation
to the goods); Plaintiffs Declaration on the Cost of Components
of Serenity Pond Models (“Cost Declaration”) at 1–4; Defendant’s
Submission in Accordance With the Court’s Order of May 2, 2005
(“Def.’s Submission”). The essential character of goods may “be
determined by the nature of the material or component, its bulk,
quantity, weight or value, or by the role of a constituent
material in relation to the use of the goods.” Explanatory Note,
Rule 3(b) (VIII) (emphasis added). While there may be some doubt
as to the accuracy of the plaintiff’s submission, see Def.’s
Submission at 2, it appears that with respect to each fountain
model, the pump is the most valuable single component, and in
each case the value of the pump exceeded the value of the plastic
simulated rocks or similar decorative feature. Cost Declaration
paras. 3 & 4. Thus, the value of the pump would tend to confirm
it as the component giving the Serenity Ponds their essential
character.
COURT NO. 02-00383 Page 20
the water flows, and thus to the Serenity Ponds’ auditory and
visual appeal, without the pump the water doesn’t flow at all.
Therefore, it is the pump that is essential to the use of the
goods. Thus, as it is the pump that imparts each Serenity Pond
its essential character, in accordance with GRI 3(b) the Serenity
Ponds are properly classified as if they consisted of that
component.
B. HQ 964361 Entitled to No Deference
The Government contends that HQ 964361, denying the
plaintiff’s request for reconsideration, is entitled to judicial
deference because of its power to persuade in accordance with
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) (“The weight of
such a judgment in a particular case will depend upon the
thoroughness evident in its consideration, the validity of its
reasoning, its consistency with earlier and later pronouncements,
and all those factors which give it power to persuade, if lacking
power to control.”). Specifically, the Government states that
[i]n HQ 964361, Customs considered the competing claims
to classification of the plaintiff’s calming pond and
serenity pond, and the applicable GRIs, tariff
provisions, chapter notes and Explanatory Notes.
Customs found that the imported ponds could not be
classified under GRI 1 because the tariff provisions
covering the various parts of the pond were “equally
specific in relation to the good.” Customs then
considered the essential character of the ponds in
light of the plaintiff’s arguments that the ponds
should be classified as pumps. Customs determined that
the essential character of the ponds was not
COURT NO. 02-00383 Page 21
attributable to the pump but to the plastic articles.
Def.’s Opp’n at 15 (citations omitted).
In order to determine whether a particular ruling qualifies
for Skidmore deference, the court engages in a four-factor
analysis that weighs the “thoroughness evident in [the ruling’s]
consideration, the validity of [the ruling’s] reasoning, [the
ruling’s] consistency with earlier and later pronouncements, and
all those factors which give [the ruling] power to
persuade . . . .” Skidmore, 323 U.S. at 140; see also United
States v. Mead Corp., 533 U.S. 218, 235 (2001) (restating the
Skidmore factors as “its writer’s thoroughness, logic, and
expertness, its fit with prior interpretations, and any other
sources of weight.”).
The court finds that the HQ 964361 is not entitled to
deference because it lacks those qualities that would give it the
power to persuade. First, HQ 964361, although presenting a
thorough analysis of the relevant law, fails to demonstrate how
that law applies to the facts of the present case. Instead,
Customs relies on conclusory statements. For example, Customs
states that “[e]ssential character has frequently been construed
to mean the attribute which strongly marks or serves to
distinguish what an article is. After a careful consideration of
COURT NO. 02-00383 Page 22
this issue, we determine that the calming pond is essentially a
plastic decorative article.” HQ 964361 at 5. Lacking from this
conclusion, however, is any mention of the factors relied upon
during the “careful consideration” in which Customs purportedly
engaged. Customs later reiterates its conclusion with no further
analysis: “As stated above, it is our position that the calming
pond is essentially a plastic decorative article.” Id. Finally,
in reaching its ultimate conclusion, Customs provides no analysis
whatsoever: “The calming pond serves a decorative function
without the pump, e.g., when the pump is not on.” Id. At no
point does Customs offer reasons for arriving at this conclusion.
Thus, a review based on the four part test does not support the
conclusion that the HQ 964361 deserves Skidmore deference.
First, Customs’ brief and conclusory statements demonstrate
little showing of thoroughness in the ruling’s consideration.
Second, while the ruling contains a valid consideration of the
proper law, rules and Explanatory Notes, it is lacking in any
valid application of those matters to the facts. Third, although
an attempt is made to demonstrate consistency with earlier
rulings, there is nothing to indicate that those rulings were the
result of analyses any more thorough than the one at issue here.
Finally, HQ 964361 offers no further factors that would lend any
additional power to persuade to the ruling. Thus, the
Headquarters Ruling Letter is akin to the “dismissive analysis”
COURT NO. 02-00383 Page 23
found wanting in Warner-Lambert Co. v. United States, 407 F.3d
1207, 1210 (Fed. Cir. 2005). In light of Customs’ failure to
engage in a thorough and well reasoned analysis, the court finds
that HQ 964361 is not entitled to deference under Skidmore.
CONCLUSION
The court finds that because the essential character of the
Serenity Ponds is imparted by the pump component, they are
properly classified under subheading 8413.70.2004 of the HTSUS as
“Pumps for liquids, whether or not fitted with a measuring
device; liquid elevators; part thereof; . . . Other centrifugal
pumps . . . Other . . . Submersible pumps.” Therefore, the court
grants Conair’s motion for summary judgment and denies that of
defendant United States. Judgment shall be entered accordingly.
/s/
Richard K. Eaton
Dated: August 12, 2005
New York, New York