Amcor Flexibles Kreuzlingen AG v. United States

560 F.Supp.3d 1326

AMCOR FLEXIBLES KREUZLINGEN AG, Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 22-15

Court No. 16-00193

United States Court of International Trade.

February 22, 2022

Wm. Randolph Rucker, Faegre Drinker, Biddle & Reath LLP, of Chicago, IL, argued for Plaintiff Amcor Flexibles Kreuzlingen AG.

Edward F. Kenny, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., argued for Defendant United States. With him on the brief were Brian M. Boynton, Acting Assistant Attorney General, Patricia M. McCarthy, Director, and Justin R. Miller, Attorney-in-Charge. Of counsel on the brief was Paula S. Smith, Office of Assistant Chief Counsel, U.S. International Trade Litigation, U.S. Customs and Protection, of New York, N.Y.

OPINION

Katzmann, Judge:

This case involves the tariff classification of Formpack, a flexible packaging material imported by Plaintiff, Amcor Flexibles Kreuzlingen AG ("Amcor"), and ultimately intended for use in pharmaceutical product and medical device packaging. Formpack consists of thin, soft-tempered aluminum foil with a heat-sealable coating on one side and plastic film lamination featuring product, brand, weight and usage instructions on the reverse. It was classified by U.S. Customs and Border Protection ("CBP") under Subheading 7607.20.10 of the Harmonized Tariff Schedule of the United States ("HTSUS")¹ as backed aluminum foil "covered or decorated with a character, design, fancy effect or pattern." Amcor now seeks review of CBP's classification decision, and argues that Formpack is properly classified under Subheading 4911.99.80 as "other printed matter, including printed pictures and photographs" or alternatively under Subheading 7607.20.50 as "other" backed aluminum foil. Mem. of Law in Supp. of Pl.’s Mot. for Summ. J. at 2–3, Jan. 4, 2021, ECF No. 56 ("Pl.’s Br."). The Government opposes Plaintiff's motion and argues that the printed Formpack was properly classified by CBP. Def.’s Mem. in Opp'n to Pl's. Mot. for Summ. J. and in Supp. of Def.’s Cross-Mot. for Summ. J. at 1, Apr. 1, 2021, ECF No. 63 ("Def.’s Br."). The court concludes that Formpack is properly classified within Subheading 7607.20.50 as "other" backed aluminum foil, and accordingly grants Plaintiff's motion for summary judgment and denies the Government's cross-motion.

BACKGROUND

I. Legal and Regulatory Framework for Customs Classification

Merchandise imported into the United States is classified under the HTSUS, which sets out the tariff rates and statistical categories using a series of nested chapters, headings, and subheadings. In general, the HTSUS's primary headings describe broad categories of merchandise, while its subheadings provide a particularized division of the goods within each category. Proper classification is governed by the General Rules of Interpretation ("GRIs") of the HTSUS as well as the Additional U.S. Rules of Interpretation. See Roche Vitamins, Inc. v. United States, 772 F.3d 728, 730 (Fed. Cir. 2014) (citing Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed. Cir. 1998) ).

Goods imported into the customs territory of the U.S. must first be "entered," or in other words declared to CBP. What Every Member of the Trade Community Should Know About: Tariff Classification 8, U.S. Customs and Border Protection (May 2014) https://www.cbp.gov/sites/default/files/documents/icp017r2_3.pdf (last visited February 18, 2022). At entry, the importer is obliged to use "reasonable care" to propose an accurate classification and valuation of the goods. Id. CBP is then responsible for determining the final classification and valuation of the goods through a process called "liquidation of the entry." Id. After liquidation of the entry, an importer may seek administrative review of a classification decision by protesting the decision to CBP, which results in an internal review of the decision by a higher level of authority. Id. at 39. If the importer is unsatisfied with the decision resulting from its protest, it may then, as here, seek judicial review. Id.

Judicial review of classification decisions involves two steps. First, the court determines the proper meaning of the terms used in the HTSUS provision, which is a question of law. See Link Snacks, Inc. v. United States, 742 F.3d 962, 965 (Fed. Cir. 2014) (citing Warner-Lambert Co. v. United States, 407 F.3d 1207, 1209 (Fed. Cir. 2005) ). Second, the court determines whether the subject merchandise falls within the description of those terms, which is a question of fact. Id. (citing Orlando Food Corp., 140 F.3d at 1439 ). Where, as here, there is no dispute regarding the nature of the merchandise, "the two-step classification analysis ‘collapses entirely into a question of law.’ " Id. at 965–66 (quoting Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed. Cir. 2006) ). In reviewing a classification decision, the court must "consider whether the government's classification is correct, both independently and in comparison with the importer's alternative." Jarvis Clark Co. v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984).

To determine the meaning of an HTSUS provision, the court applies the GRIs in numerical order, beginning with GRI 1 and reaching subsequent GRIs if analysis under the preceding GRI does not yield proper classification of the subject merchandise. See Link Snacks, Inc., 742 F.3d at 965 ; Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed. Cir. 1999). "The HTSUS is designed so that most classification questions can be answered by GRI 1." Telebrands Corp. v. United States, 36 CIT 1231, 1235, 865 F. Supp. 2d 1277, 1280 (2012), aff'd 522 Fed. Appx. 915 (Fed. Cir. 2013). Under GRI 1, "classification shall be determined according to the terms of the headings and any relative section or chapter notes." GRI 1. Therefore, "a court first construes the language of the heading, and any section or chapter notes in question." Orlando Food Corp., 140 F.3d at 1440.

In practice, the terms employed by the HTSUS are "construed according to their common and commercial meanings, which are presumed to be the same." Carl Zeiss, Inc., 195 F.3d at 1379 (citing Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed. Cir. 1989) ). The court therefore defines HTSUS terms by relying on its own understanding and, if necessary, by "consult[ing] lexicographic and scientific authorities, dictionaries, and other reliable information sources." Id. at 1379 (citation omitted). If more information is needed, the court may also consult the Harmonized Commodity Description and Coding System's Explanatory Notes ("Explanatory Notes" or "ENs"). See StoreWALL, LLC v. United States, 644 F.3d 1358, 1362–63 (Fed. Cir. 2011). Although the "Explanatory Notes are not legally binding, [they] may be consulted for guidance and are generally indicative of the proper interpretation of a tariff provision." Roche Vitamins, Inc., 772 F.3d at 731 (citing Motorola, Inc. v. United States, 436 F.3d 1357, 1362 (Fed. Cir. 2006) ).

II. Factual and Procedural History

The merchandise at issue here entered the United States from June 2011 to December 2013 and was liquidated as entered from April 2012 to October 2014 under Subheading 3921.90.40. Def.’s Br. at Ex. 1. Between August 2012 and February 2015, Plaintiff timely filed seven protests challenging this classification and arguing that Formpack should instead be classified as "backed foil" under Subheading 7607.20.50. Am. Compl. ¶ 4, ECF No. 34, July 9, 2019; Am. Ans. ¶ 4, ECF No. 35, July 23, 2019. After the decision of the Court of Appeals for the Federal Circuit in Alcan Food Packaging v. United States, 771 F.3d 1364 (Fed. Cir. 2014), upholding the CIT's ruling that flexible food packaging materials consisting of aluminum foil sandwiched between either three or four layers of plastic were properly classified as plastics under Subheading 3921.90.40, Plaintiff submitted additional letters to CBP arguing that Formpack was distinguishable from the packaging materials in Alcan Food Packaging. Id.; Def.’s Br. at 3, Ex. 1; see also Alcan Food Packaging, 771 F.3d at 1364. However, in April 2016, CBP denied Amcor's protests on the basis of the Federal Circuit's decision. Def.’s Br. at 3.

On September 27, 2016, Plaintiff commenced this suit to challenge the denial of its protests. Summons, ECF No. 1. After learning during discovery that the Formpack at issue consisted of foil with a layer of plastic film printed using a rotogravure machine, CBP revised its classification to Subheading 7607.20.10, which encompasses backed aluminum foil, "whether or not printed," and "covered or decorated with a character, design, fancy effect or pattern." Def.’s Br. at 3–4. Plaintiff again disagreed, and following this court's decision in Aero Rubber Company, Inc. v. United States, 43 CIT ––––, 389 F. Supp. 3d 1296 (2019) in May 2019 -- which classified silicone bands printed with text as "printed matter" rather than "articles of plastic" -- amended its complaint to include a claim for classification as "other printed matter" under Subheading 4911.99.80. Am. Compl. at 3–4. On January 4, 2021, Plaintiff filed its motion for summary judgment. Pl.’s Br. The Government filed its cross-motion for summary judgment on April 1, 2021. Def.’s Br. Plaintiff responded in opposition to the Government's cross-motion on June 7, 2021, and the Government replied on July 12, 2021. Pl.’s Resp. to Mot. for Summ. J., ECF No. 68 ("Pl.’s Resp."); Def.’s Reply Mem. in Further Supp. of Def.’s Cross-Mot. for Summ. J., ECF No. 71 ("Def.’s Reply"). On November 1, 2021, the court issued a letter providing questions for oral argument. Ct.’s Letter re Questions for Oral Arg., ECF No. 75. The parties filed responses on November 12, 2021 in anticipation of argument. Def.’s Resp. to the Ct.’s Written Qs. Directed to the Gov't for Oral Arg., ECF No. 76; Pl.’s Resp. to the Ct.’s Qs. for Oral Arg. Directed to Amcor Flexibles...