No Job Name

U.S. Customs and Border Protection

◆

Slip Op. 12–1

STEE LAUDER,INC., Plaintiff, v. UNITED STATES, Defendant.

Before: R. Kenton Musgrave, Senior Judge

Court No. 07–00217

[On cross motions for summary judgment of classification of cosmetic sets, judg-

ment for the plaintiff.]

Dated: Decided: January 3, 2012

Pisani & Roll, LLP (Michael E. Roll, Robert J. Pisani and Brett Ian Harris), for the

plaintiff.

Tony West, Assistant Attorney General; Barbara S. Williams, Attorney-In-Charge,

International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S.

Department of Justice (Marcella Powell), Office of the Assistant Chief Counsel, Inter-

national Trade Litigation, U.S. Customs and Border Protection (Yelena Slepak), of

counsel, for the defendant.

OPINION

Musgrave, Senior Judge:

Plaintiff Estée Lauder, Inc. challenges U.S. Customs and Border

Protection’s (“Customs”) classification of its “Blockbuster” cosmetic

sets. Proper administrative protest procedure having been under-

taken and all liquidated duties, taxes and fees having been paid, see

19 U.S.C. §§ 1514, 1515, jurisdiction is proper pursuant to 28 U.S.C.

§1581(a).

I. Facts

Plaintiff Estée Lauder is “well known for being a makeup, skin care

and fragrance company”.

Estée Lauder chose the makeup colors in

the set at issue herein so as to have an appealing assortment of

makeup shades that work well together and to allow a consumer to

create different makeup looks. Pl’s Material Facts ¶¶ 23–4. The

target customer of the “Blockbuster” cosmetic set is the Estée Lauder

customer who uses makeup. Id. ¶ 16. The sets contain makeup that

is designed to be put on by the consumer. Id. ¶ 22.

Plaintiff’s Statement of Material Facts not in Dispute (“Pl’s Material Facts”), ¶ 13. Unless

otherwise noted, all facts cited in this opinion are undisputed.

The Blockbuster sets are imported and sold in a glossy metallic

gold-colored carton dotted with snowflakes. The sets contain lipstick,

lip pencil, lip gloss, eye pencil, mascara, eye shadow, nail lacquer,

blush, a cosmetic case

, a makeup brush case, cosmetic brushes and

an applicator. The cosmetic case contains the items listed above

except the brushes, which are packed separately in the makeup brush

case. Both cases are packed in the gold carton. The cosmetics are

either promotional sizes or are contained in promotional packaging.

Defendant’s Statement of Undisputed Material Facts (“Def ’s Material

Facts”), ¶ 38.

The cosmetic case contains a “vacform” plastic insert into which the

makeup products are fitted to protect the goods during shipment, as

well as to allow the items to be self-displayed at retail. Pl’s Material

Facts ¶ 42. The cosmetic case is significantly larger than the cosmet-

ics contained therein, and conceivably could carry anything that is

smaller than the case itself. Def ’s Material Facts ¶¶ 8, 40. The

cosmetic case is suited for use on a flat surface, such as a table, vanity,

etc. Pl’s Material Facts ¶ 54. The case is constructed without gussets

and thus is unsuited to be opened like a handbag. Id. ¶ 56. The

cosmetic case is not a piece of luggage. Def’s Material Facts ¶ 39. The

case facilitates the storage and use of the cosmetics stored within the

case.

The makeup brush case contains three brushes, and is de-

signed to be placed in the cosmetic case after purchase. Pl’s Material

Facts ¶ 50. The makeup brush case is approximately the same size as

the brushes contained therein. Id. ¶ 64.

The sets were sold as part of the Estée Lauder Blockbuster promo-

tional effort. The sets were displayed in the cosmetic section of de-

partment stores. Id. ¶ 45. The sets were sold as a “purchase with

purchase” promotion, meaning that the consumer must purchase an

Estée Lauder full-price fragrance in order to qualify to purchase the

Blockbuster set. Id. ¶¶ 10–11. The items’ packaging all complement

each other visually as part of the Estée Lauder “Pure Color” line of

products. For example, there are gold accents on each of the items. Id.

¶¶ 28–32. None of the items comprising the set were sold separately.

The parties disagree what to call the zippered case which at the time of importation

contained most of the makeup articles. In this court’s opinion on the government’s motion

to dismiss the cases were referred to as “train cases” or “vanity cases”. Estée Lauder, Inc. v.

United States, 35 CIT ___ (2011), Slip Op. 11–23 at 2. Plaintiff contends the cases are

“cosmetic” cases. Defendant argues they should be denoted “travel” cases, even though it

avers that the cases are “not suitable for the transportation of the imported cosmetic

articles”. Def’s Resp. to Pl’s Material Facts ¶ 47. The name applied to the cases is not

material. However, for the sake of consistency, the court denotes the cases “cosmetic cases”

in this opinion.

Pl’s Material Facts ¶ 48. The government’s denial of this paragraph falls flat because the

sources cited were inapposite and their objections conclusory.

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

Id. ¶ 8. The set was advertised as the “Makeup Artist Professional

Color Collection.” Id. ¶ 14, Def ’s Exh. F (Estée Lauder Advertise-

ment). The cost of the makeup components that comprise the set is

more than 50% of the material cost of the set. Pl’s Material Facts ¶ 68.

II. Applicable Legal Standards

Proper tariff classification is determined by the General Rules of

Interpretation (“GRIs”) of the Harmonized Tariff System of the U.S.

(“HTSUS”) and the Additional U.S. Rules of Interpretation. Orlando

Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed. Cir. 1998). The

GRIs are applied in numerical order. BASF Corp. v. United States,

482 F.3d 1324, 1326 (Fed. Cir. 2007). Classification is a question of

law requiring ascertainment of proper meaning in relevant tariff

provisions and determining whether the merchandise comes within

the description of such terms. Pillowtex Corp. v. United States, 171

F.3d 1370, 1373 (Fed. Cir. 1999). Interpretation of the HTSUS begins

with the language of the tariff headings and subheadings of the

HTSUS and their section and chapter notes, and may also be aided by

the Explanatory Notes published by the World Customs Organiza-

tion. Trumpf Med. Sys., Inc. v. United States, 34 CIT ___, ____, 753 F.

Supp. 2d 1297, 1305–1306 n. 20 (2010).

Both parties move for judgment pursuant to USCIT Rule 56, which

is appropriate “if the pleadings, depositions, answers to interrogato-

ries, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the

moving party is entitled to judgment as a matter of law.” USCIT R.

56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The

court will grant a motion for summary judgment “if the pleadings,

discovery and disclosure materials on file, and any affidavits show

that there is no genuine issue as to any material fact and that the

movant is entitled to judgment as a matter of law.” USCIT R. 56(c);

see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986).

At the summary judgment stage, facts must be viewed in the

light most favorable to the nonmoving party only if there is a

“genuine” dispute as to those facts. Fed. Rule Civ. Proc. 56(c). As

we have emphasized, “[w]hen the moving party has carried its

burden under Rule 56(c), its opponent must do more than simply

show that there is some metaphysical doubt as to the material

facts....Where the record taken as a whole could not lead a

rational trier of fact to find for the nonmoving party, there is no

‘genuine issue for trial.’” Matsushita Elec. Industrial Co. v. Ze-

nith Radio Corp., 475 U.S. 574, 586–587 (1986) (footnote omit-

ted).

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

Scott v. Harris, 550 U.S. 372, 380 (2007).

Customs’ presumption of correctness, 28 U.S.C. § 2639(a)(1), at-

taches only to Customs’ factual determinations. Universal Elecs. Inc.

v. United States, 112 F.3d 488, 492 (Fed. Cir. 1997). The proper scope

and meaning of a tariff classification term is a question of law, while

whether the subject merchandise falls within a particular tariff term

as properly construed is a question of fact. Franklin v. United States,

289 F.3d 753, 757 (Fed. Cir. 2002) (citations omitted). However, where

the nature of the merchandise is undisputed, “‘the classification issue

collapses entirely into a question of law,’ and the court reviews Cus-

toms’ classification decision de novo.” Dell Prods. LP v. United States,

34 CIT ___, 714 F. Supp. 2d 1252, 1256 (CIT 2010), aff’d 642 F.3d 1055

(Fed. Cir. 2011) (quoting Cummins Inc. v. United States, 454 F.3d

1361, 1363 (Fed. Cir. 2006)). Customs’ statutory presumption of cor-

rectness is irrelevant with regard to classification decisions on sum-

mary judgment. Blakley Corp. v. United States, 22 CIT 635, 639, 15 F.

Supp. 2d 865, 869 (1998).

III. Competing Tariff Provisions

As entered, the items were classified separately under several sub-

headings.

Plaintiff contends the cosmetics should be classified as

sets, under subheading 3304.20, HTSUS because the eye makeup

gives the cosmetic set its essential character. The government con-

tends that the goods should remain classified separately, or if the

goods are classifiable as a set, the cosmetic case gives them their

essential character and so the sets should be classified under sub-

heading 4202.12.20, HTSUS.

The primary subheadings at issue are as follows:

3304: Beauty or make-up preparations and preparations for the care of the

skin (other than medicaments), including sunscreen or sun tan prepara-

tions; manicure or pedicure preparations:

3304.10: Lip make-up preparations ................................ Free

3304.20: Eye make-up preparations ............................... Free

3304.30: Manicure or pedicure preparations ................. Free

3304.91: Other

3304.91.00 Powders, whether or not compressed .... Free

The various components of the sets were classified upon entry in the following HTSUS

subheadings: 3304.10 (lipstick, lip pencil, lip gloss), 3304.20 (eye pencil, mascara, eye

shadow), 3304.30 (nail lacquer), 3304.91 (blush), 4202.12.20 (cosmetic case), 4202.92.45

(makeup brush case), 9603.30.60 (cosmetic brush) and 9616.20 (applicator).

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

4202: Trunks, suitcases, vanity cases, attache cases, briefcases, school satch-

els, spectacle cases, binocular cases, camera cases, musical instrument

cases, gun cases, holsters and similar containers; traveling bags, insu-

lated food or beverage bags, toiletry bags, knapsacks and backpacks,

handbags, shopping bags, wallets, purses, map cases, cigarette cases,

tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, pow-

der cases, cutlery cases and similar containers, of leather or of composi-

tion leather, of sheeting of plastics, of textile materials, of vulcanized

fiber or of paperboard, or wholly or mainly covered with such materials

or with paper:

Trunks, suitcases, vanity cases, attache cases, briefcases,

school satchels and similar containers:

***

4201.12: With outer surface of plastics or of textile materials:

4202.12.20: With outer surface of plastics .................. 20% ad valorem

***

Other [than trunks, suitcases, etc. or articles of a kind normally carried

in the pocket or handbag]:

4202.92: With outer surface of sheeting of plastic or of textile materials:

Travel, sports and similar bags:

4202.92.45: Other .......................................................... 20% ad valorem

IV. Analysis

After considering the parties’ motions, the court finds that there are

no material facts in dispute and that the matter may be resolved

summarily.

The imported merchandise is properly classified as a

cosmetics set in subheading 3304.20, for the reasons set forth below.

The government argues unpersuasively that the sets should be

classified as entered, according to the classification of each individual

component. “[B]ecause the merchandise at issue is classifiable pur-

suant to GRI 1, the classification inquiry ends and there is no need to

resort to the remaining successive GRI’s [sic ] to classify the mer-

chandise at issue.” Def’s Mem. in Supp. of Cross-Mot. for S.J. (“Def’s

Br.”) at 7. The government’s facile reading of the GRIs would make

the terms of GRI 3(b)’s “retail sets” language inapplicable under any

situation. If the government’s argument prevailed, the court cannot

think of any situation where a group of goods put up as a set for retail

The parties’ motions for oral argument and reconsideration are therefore denied.

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

sale could not be required to be classified separately “pursuant to GRI

1”. In this case the cosmetic sets cannot be classified pursuant to GRI

1 without doing a GRI 3 analysis because no single heading describes

all the products in the cosmetic set. Review of the other GRIs in order

reveals that the sets must be analyzed under GRI 3(b). Only should

such classification fail would they be classifiable individually.

The GRI 3(b) retail sets rule recognizes that imported retail sets are

packaged and sold as a unit but contain multiple components. The

rule allows customs authorities and importers to classify such sets as

one item rather than as individual components. GRI 3(b) provides:

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:

***

(b)...[G]oods 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.

The first issue to be decided is whether the cosmetics, brushes and

associated cases together qualify as “goods put up in sets for retail

sale”. The Explanatory Notes to GRI 3(b) explain:

(X) For the purposes of this Rule, the term “goods put up in sets

for retail sale” shall be taken to mean goods which:

(a) consist of at least two different articles which are, prima

facie, classifiable in different headings. Therefore, for example,

six fondue forks cannot be regarded as a set within the meaning

of this Rule;

(b) consist of products or articles put up together to meet a

particular need or carry out a specific activity; and

without repacking (e.g., in boxes or cases or on boards).

Explanatory Note (X) to GRI 3(b) (2007). The parties agree that the

merchandise satisfies criteria (a) and (c). The court must therefore

determine whether the goods “meet a particular need or carry out a

specific activity.” That task is aided by the following illustrative

examples of sets among the Explanatory Notes:

Examples of sets which can be classified by reference to Rule 3 (b)

are:

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

(1) (a) Sets consisting of a sandwich made of beef, with or

without cheese, in a bun (heading 16.02), packaged with

potato chips (French fries) (heading 20.04):

Classification in heading 16.02.

(b) Sets, the components of which are intended to be used

together in the preparation of a spaghetti meal, consisting

of a packet of uncooked spaghetti (heading 19.02), a sachet

of grated cheese (heading 04.06) and a small tin of tomato

sauce (heading 21.03), put up in a carton:

Classification in heading 19.02.

The Rule does not, however, cover selections of products put

up together and consisting, for example, of:

- a can of shrimps (heading 16.05), a can of paté de foie (head-

ing 16.02), a can of cocktail sausages (heading 16.01); or

- a bottle of spirits of heading 22.08 and a bottle of wine of

heading 22.04.

In the case of these two examples and similar selections of

products, each item is to be classified separately in its own

appropriate heading.

(2) Hairdressing sets consisting of a pair of electric hair clippers

(heading 85.10), a comb (heading 96.15), a pair of scissors (head-

ing 82.13), a brush (heading 96.03) and a towel of textile mate-

rial (heading 63.02), put up in a leather case (heading 42.02):

Classification in heading 85.10.

(3) Drawing kits comprising a ruler (heading 90.17), a disc

calculator (heading 90.17), a drawing compass (heading 90.17),

a pencil (heading 96.09) and a pencil-sharpener (heading 82.14),

put up in a case of plastic sheeting (heading 42.02):

Classification in heading 90.17.

For the sets mentioned above, the classification is made accord-

ing to the component, or components taken together, which can

be regarded as conferring on the set as a whole its essential

character.

Id.

For its part, Customs has summarized the particular need/specific

activity requirement as requiring “a relationship between the articles

contained in a group, and such relationship must establish that the

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

articles are clearly intended for use together for a single purpose or

activity to comprise a set under GRI 3(b).” CBP Informed Compliance

Publication, Classification of Sets (2004) (“Sets ICP”), at 12. Customs

found common themes in the Explanatory Notes examples showing

what constitutes a particular need or a specific activity.

In (1) [EN 3(b)(X)(1), the sandwich in bun packaged with

potato chips, and the spaghetti meal] and (2) [EN 3(b)(X)(2), the

hairdressing set], the examples referred to as “sets” share a

common trait. The individual components in each example are

used together or in conjunction with another for a single purpose

or activity. In the “spaghetti meal” example, each component

may be sold separately and used in a variety of recipes. How-

ever, sold together they are clearly intended to be used together

for the specific purpose of preparing a single dish. Similarly, the

“hairdressing set” is comprised of various articles that may be

sold individually for many purposes. However, taken together

they are designed to be used together for a single activity.

On the other hand, (1) [EN 3(b)(X)(1)] contains two examples

where articles put up together are not regarded as ‘sets,’ despite

the fact that they are related to one another and can be used at

the same time. In the ‘canned goods’ example, each can is related

by the fact that they all contain food. In addition, it is possible to

serve them on the same occasion. One could argue that they

meet the specific need of ‘eating a meal.’ However, they do not

interact with one another so as to comprise a single dish. There-

fore, they do not comprise a set.

In the ‘spirits’ example, the two articles are related as they

both contain alcohol. Moreover, the wine and liquor may be

served together at dinner or at a party. It is possible to argue

that they have been packaged together for the specific activity of

‘social drinking.’ However, they are not used in conjunction with

one another so as to be suitable for a single drink or for use on

a specific occasion. Hence, they are not classified as a set.

Sets ICP, at 11–12, citing, HQ 953472, dated March 21, 1994 (empha-

sis added). The Sets ICP summarizes the rule as follows: “for goods

put up together to meet the ‘particular need’ or ‘specific activity’

requirement and thereby be deemed a set, they must be so related as

to be clearly intended for use together or in conjunction with one

another for a single purpose or activity.” Sets ICP, at 12. This analysis

expounds on the meaning of the terms “particular need” or “specific

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

activity” for purposes of GRI 3(b) based upon inferences drawn from

the examples given in the Explanatory Notes and is persuasive.

Indeed, the Explanatory Notes examples and Customs’ Sets ICP are

helpful and convincing. The parties agree that the components of the

Blockbuster set were put together to be sold to customers who would

use the makeup in the sets to create different makeup looks. The

particular need or specific activity the set is designed for is that of

putting on makeup, and the included items are either makeup, tools

for applying makeup, or their containers. They are intended for use

together or in conjunction with one another for the single purpose or

activity of putting on makeup. Each item by itself has an identifiable

individual use like the items in the hairdressing and drawing kit

examples given in the Explanatory Notes. They are intended to work

together to meet the particular need or specific activity of applying

makeup. The cosmetic sets are therefore “retail sets” pursuant to GRI

3(b).

Having found the merchandise constitutes retail sets covered by

GRI 3(b), the court must next determine which item gives the set its

essential character. The Explanatory Notes state “[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 ma-

terial or component, its bulk, quantity, weight or value, or by the role

of a constituent material in relation to the use of the goods.” Explana-

tory Note (VIII) to GRI 3(b) (2007).

Once again, the Explanatory Notes examples provide helpful guid-

ance. “[T]he classification is made according to the...components

taken together, which can be regarded as conferring on the set as a

whole its essential character.” Explanatory Note (X) to GRI 3(b). The

EN’s hairdressing and drawing kit examples each contained a variety

of goods which performed the particular need the set was designed to

address. The hairdressing kit was classified under the heading ap-

propriate for the included electric hair clippers, while the drawing kit

was classified under the heading appropriate to three of the included

drawing tools.

Here, it is obvious that the essential character of the Blockbuster

cosmetic set derives from the makeup components of the set, no fewer

than eight of which are classified in Heading 3304, HTSUS. The role

of the makeup components is essential to the use of the goods. With-

out makeup, a purchaser could not meet the particular need of put-

ting on makeup. The makeup components comprise more than 50% of

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

the value of the sets, and their nature as well as their role in relation

to the overall use of the set confer the essential character of the

cosmetic sets.

The court must next consider which of the set’s makeup items

classifiable within Heading 3304 should provide the subheading clas-

sification for the entire cosmetic set. Per GRI 6, classification at the

subheading level uses the same rules, mutatis mutandis, as classifi-

cation at the heading level. Therefore, we come again to GRI 3(b) to

determine which one of the makeup items provides the essential

character of the group of makeup items included in the cosmetic sets.

Each of the various makeup types (eye, lip, face and nail) could

conceivably provide the essential character to the makeup collection.

Among those, the eye and lip makeup predominate by number, and as

between the two, although there was conflicting evidence on the

actual cost of the makeup items, the entry papers show that the eye

makeups cost significantly more than the lip makeups. The other cost

evidence in the record corroborated this relationship. Therefore, the

court concludes that the set should be classified according to the

subheading for eye makeup.

The parties disagree whether the carrying case, and to a lesser

extent the brush case, should affect the classification of the cosmetic

set. Plaintiff contends that the cases should not impact the classifi-

cation of the set because the cosmetic case is suitable for the storage,

protection and transportation of the cosmetic components under nor-

mal use. “Because the Blockbuster cosmetic case facilitates the trans-

portation, storage and use of the cosmetics and other components

contained within and for which it was designed, marketed and sold, it

helps carry out the specific activity of applying make-up together

with its contents.” Pl’s Memo in Opp. To Def’s Br., at 30–31 (citations

omitted).

The government argues against GRI 3(b) sets classification because

the items in the set, especially the cosmetic case, do not meet the

“particular need or carry out a specific activity” criterion cited in the

Explanatory Notes to GRI 3(b). Def’s Br. at 10. Assuming arguendo

that the set is classifiable pursuant to GRI Rule 3(b), defendant

argues strenuously that the “travel case” should control the classifi-

cation, because it gives the set its essential character.

The travel case predominates in bulk and weight over all other

imported components. The travel case is also the largest com-

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

ponent and its cost is the component that has the highest cost.

The travel case is also the most visual component of the Block-

buster and due to its size, the travel case provides a means for

the articles to be self-merchandising. Consequently, the travel

case imparts the essential character of the Blockbuster.

Once again, the examples given in the Explanatory Note to GRI 3(b)

provide guidance. In the hairdressing example, the set was packaged

in a leather case. In the drawing example, the kit was packaged in a

case of plastic sheeting. There, as here, the cases were classifiable

separately in Heading 4202. But the essential character of the sets

were given by the functional items included in the sets. Thus, where

the essential character of the cosmetic set is given by the makeup

components, the fact that the set is imported in a container that could

be separately classifiable does not prevent the classification of the set

as such. The cosmetic case’s relative weight, bulk, or size does not

overcome the fact that its purpose is to facilitate the storage and use

of the items that enable the set to fulfill the specific activity (applying

makeup) that makes it a set. See infra.

The government argues that the cosmetic case in this instance

“lacks the physical characteristics necessary to allow it to interact

with the cosmetic components to carryout the specific activity of

applying makeup” and that the goods are not a set because “there are

no loops or compartments to hold and organize the items, nor a

built-in mirror to use for the purpose of applying makeup.” Def’s Br.

at 11. Further, the government argues, “Customs’ interpretation and

application of GRI 3(b) and the criteria set forth in Explanatory Note

(X) to the merchandise at issue should be accorded weight as they are

entirely consistent with Customs’ views as expressed in its body of

prior rulings.” Id. at 15.

Customs’ position on the issue must be evaluated according to

Skidmore v. Swift & Co., 323 U.S. 134 (1944):

The weight [accorded to an administrative] judgment in a par-

ticular 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.

Def’s Br. at 26. The costs alleged in the government’s argument are not undisputed and

the source cited by the government contradicts the values declared upon entry. That source

stated that the makeup components together cost 60% more than the case. Id., citing

Goulding Decl., ¶ 31 (confidential). The parties agree that the makeup components com-

prise more than half the overall cost of the set. Pl’s Material Facts ¶ 68.

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

United States v. Mead Corp., 533 US 218, 228 (2001), quoting Skid-

more, 323 U.S. at 140. Review of the statute in question, along with

the Explanatory Notes, reveals fundamental flaws in Customs’ analy-

sis of this issue and inconsistent application of it, thus eliminating its

persuasiveness. For the reasons set forth below, the court declines the

government’s invitation to follow Customs’ views and accords the

Customs rulings on this issue no weight.

Customs’ analysis conflates the GRI 3(b) requirements for compos-

ite goods (i.e., whether the items are “mutually complementary” or

“adapted to one another”), with the requirements for the GRI 3(b)

retail sets analysis (do the goods “meet a particular need” or “carry

out a specific activity”?). See Explanatory Notes (IX) and (X) to GRI

3(b). In HQ 957707, Customs stated that “[t]he case and cosmetic

components are not mutually complementary, not adapted to one

another, and are not put up to meet a particular need or carry out a

specific activity[; t]hus, the goods do not comprise a set.” HQ 957707,

dated June 26, 1995, cited in Def’s Br. at 15. Requiring set goods to be

mutually complementary or adapted to one another effectively joins

the Explanatory Notes requirements for composite goods to the Ex-

planatory Notes describing retail sets. This conflation of require-

ments is unsupported in the statute or the Explanatory Notes. Al-

though it is true that courts may follow the “well-reasoned views of

the agencies implementing a statute,” Mead, 533 U.S. at 227, citing

Bragdon v. Abbott, 524 U.S. 624, 642 (1998), the above rationale is not

well reasoned.

This flawed analysis has been bootstrapped into a line of rulings

that rely largely on Customs’ own reasoning but little on the statute

or Explanatory Notes. For example, HQ 966719, dated June 9, 2004,

classified a cosmetic set imported in a briefcase made of PVC sheet-

ing. In determining whether the goods constituted a set for purposes

of GRI 3(b), Customs stated categorically that “cosmetic products

imported in substantial, reusable cosmetics bags, do not form com-

posite goods[;]...thecosmetic products and container were not

mutually complementary and not adapted to [be] used together.” HQ

966719, citing HQ 963593, dated October 15, 2001. The court cannot

fathom why an entire line of products should be categorically pre-

vented from being classified as sets simply because their container is

reusable.

There are two different classes of GRI 3(b) merchandise, with two

separate and distinct requirements. Cf., EN Rule 3(b)(VI)(ii) and (iii)

(composite goods consisting of different materials or components)

with EN Rule 3(b)(VI)(iv) (goods put up in sets for retail sale). GRI

3(b) retail sets are defined as those that “meet a particular need” or

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

“carry out a specific activity.” EN (X) to GRI 3(b). Composite goods are

not retail sets, although both are classified according to their essen-

tial character. Customs has routinely rejected the GRI 3(b) classifi-

cation of cosmetic sets like those at issue here based upon a fatally

flawed analysis. The government’s argument relying on the same

flawed “conflation” analysis is rejected.

The government argues that the Blockbuster cosmetics set cannot

be classified as a GRI 3(b) set because the included case is too large

to closely carry all the items in the set. Def’s Br. at 11. There is

nothing in the statute, however, that requires a set container to be

closely fitted to its contents.

Strictly speaking, the statute simply requires that sets be classified

according to the heading of the good that gives them their essential

character. The Explanatory Notes to GRI 3(b) provide three require-

ments for sets, described supra. The only Explanatory Note require-

ment that could justify Customs’ position on the relative size of set

containers requires that a set’s contents “meet a particular need” or

“carry out a specific activity.” Yet, the Sets ICP summarizes Customs’

rulings in this area as follows:

If Customs determines that a holder or container included with

other articles is specifically designed to hold or contain

those articles, such a determination will support the further

conclusion that the articles and the holder or container are

intended to be used together, or in conjunction with one

another, to meet a particular need or carry out a specific activity.

Characteristics used in determining whether a holder or con-

tainer is specifically designed to hold or contain the other ar-

ticles of a claimed set include a comparison between the articles

and their holder or container of size, shape, construction, color

combination, use, etc. The burden will be on the importer to

provide evidence of design characteristics which link the articles

to the holder or container. The holder or container need not be

form-fitted or otherwise dedicated specifically to holding or car-

rying the articles imported with it, but it must be a particularly

appropriate container and its capacity not appreciably larger

than that required to hold or carry the accompanying articles.

CBP, Sets ICP, at 15 (emphasis in original). The Sets ICP thus con-

cludes that a container must be “specifically designed to hold” and

“intended to be used together” to form a GRI 3(b) set. These require-

ments are not based on the statutory text, but appear to be derived

from Customs rulings relying on the flawed “conflation” analysis

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

described above. See Explanatory Note (IX) to GRI 3(b) (composite

goods must be “adapted to one another” and “mutually complemen-

tary”).

Customs’ restriction of the size of set containers to only those that

are “not appreciably larger” than their contents also lacks a rational

basis in the language of the statute or the Explanatory Notes. More

precisely, Customs’ position that a container’s sizecannot be “appre-

ciably larger” than its contents has no foundation in the GRI 3(b)

requirement, as illuminated by the Explanatory Notes, that sets meet

a particular need or carryout a specific activity. Further, Customs’

disapproval of containers that are “appreciably” larger than the set

items they are intended to hold provides no practical guidance. “Ap-

preciable” is defined as something that is “capable of being estimated,

weighed, judged of, or recognized by the mind,” or “capable of being

recognized by the senses, perceptible, sensible.” Oxford English Dic-

tionary (2nd ed. 1989). It is something that is “possible to estimate,

measure, or perceive.” American Heritage Dictionary of the English

Language (4th ed. 2000). Any container may be found “appreciably”

larger than its contents otherwise the contents would not fit. Thus the

persuasiveness of Customs’ position that there should be a per se size

restriction on set containers is eliminated.

The statute itself provides the reasonable solution to the set-

container conundrum. GRI 3(b) provides that a set is classified ac-

cording to the heading of the good that provides its essential charac-

ter. If a set container provides the set with its essential character,

then the entire set should be classified under the heading for the

container. If not, then the set should be classified according to that

other item that provides the essential character. Employing the tra-

ditional essential character analysis, i.e., reviewing “the nature of the

[good], its bulk, quantity, weight or value, or by the role of a constitu-

ent [good] in relation to the use of the goods,” resolves the issue. See

Explanatory Note (VIII) to GRI 3(b). For example, in the instant

action the essential character of the set is given by the makeup

components rather than the cosmetic case.

This analysis is supported by a review of the Explanatory Notes to

GRI 3(b). Explanatory Note (X) provides two illustrative examples

that include containers classifiable in Heading 4202. One container is

described as a leather case, the other is a case of plastic sheeting.

There is no indication from the examples that the size of the container

The opposite result could hypothetically occur should a high-value cosmetic case be

imported with only one or two inexpensive makeup items. In that case, the set could have

the purpose of putting on makeup but the case would provide the essential character of the

set.

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

relative to its contents should be a determining factor in determining

whether a set exists. The Note simply explains that the sets should be

classified according to the component that provides the essential

character to the set.

Customs’ restrictive interpretation has resulted in the arbitrary

application of what could (or should) be a relatively simple rule. Two

examples cited in the Sets ICP demonstrate the inconsistency of

Customs’ analysis. In HQ 084717, dated September 13, 1989, Cus-

toms found that assorted tools and electrical items imported in a steel

tool box formed a set under GRI 3(b), even where the tool box included

additional space for storage of tools not included with the set. Cus-

toms stated:

The tool box/cabinet provides convenient storage for the

electrician/mechanic. The latching feature and the handle[ ]

allow an individual to carry the tool box anywhere he or she may

require the use of its contents, whether it be within the home or

elsewhere. It is apparent that the subject articles are put up

together to meet a particular need and carry out a specific

activity. That activity consists of electrical/mechanical work.

However, shortly thereafter in HQ 082213, dated February 13,

1990, Customs held that a drain cleaning system stored in a tool box

was not classifiable as a set. Customs reasoned:

The components packed inside the tool box are put together to

carry out a specific activity, i.e., to use water pressure from the

faucet to clear sink drains that are blocked. However, the tool

box does not contribute to this activity. While the tool box func-

tions as a container for the drain cleaning system, it can also be

used for holding other items. This is so because the size of the

tool box is larger than would be necessary to serve only as a

holder for the drain cleaning system.

Customs’ Sets ICP fails to explain why the extra room in the

electrical tool box was not excessive but the extra room in the drain

cleaning tool box was. The arbitrary application of Customs’ size

rationale to what are apparently similar items without explanation

detracts from the rulings’ and the Sets ICP’s power to persuade. It

certainly does appear however, as plaintiff contends, that “Customs’

analysis of GRI 3(b) sets has hardly been a model of consistency or

clarity.” Pl’s Memo in Opposition to Def ’s Br., at 25.

The court therefore declines to adopt Customs’ position that the size

of a set container can by itself negate a set’s qualification under GRI

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

3(b), especially where that position arises from a flawed analysis and

application of the “rule” therefrom has been inconsistent and arbi-

trary.

V. Conclusion

By application of GRI 1 and 3, the court finds that the Blockbuster

cosmetic set is “put up...forretail sale” as those terms are used in

GRI 3(b) because the items packaged in the set meet the particular

need of putting on makeup. The court finds that the makeup con-

tained in the set gives it its essential character. Under GRIs 1, 3(b)

and 6, the court concludes that classification of the entire set is proper

under subheading 3304.20.00.

Judgment will therefore enter in favor of the plaintiff.

Dated: January 3, 2012

New York, New York

/s/ R. Kenton Musgrave,

R. K

ENTON MUSGRAVE,SENIOR JUDGE

◆

Slip Op. 12–2

EW HAMPSHIRE BALL BEARING,INC., Plaintiff, v. UNITED STATES,UNITED

STATES CUSTOMS AND BORDER PROTECTION, AND UNITED STATES

INTERNATIONAL TRADE COMMISSION, Defendants, and THE TIMKEN

COMPANY AND MPB CORPORATION, Defendant-Intervenors.

Before: Gregory W. Carman, Judge

Timothy C. Stanceu, Judge

Leo M. Gordon, Judge

Court No. 08–00398

[Dismissing the action for failure to state a claim upon which relief can be granted]

Dated: January 3, 2012

Frank H. Morgan, White & Case, LLP, of Washington, DC, for Plaintiff.

David S. Silverbrand, and Courtney S. McNamara, Trial Attorneys, Commercial

Litigation Branch, Civil Division, United States Department of Justice, of Washington,

DC, for Defendant United States Customs and Border Protection. With them on the

briefs were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director,

Franklin E. White, Jr., Assistant Director.

Patrick V. Gallagher, Jr., Attorney Advisor, Office of the General Counsel, U.S.

International Trade Commission, of Washington, DC, for Defendant U.S. International

Trade Commission. With him on the briefs were James M. Lyons, General Counsel, and

Neal J. Reynolds, Assistant General Counsel.

Geert De Prest, Stewart and Stewart, of Washington, DC, for defendant-intervenors.

With him on the briefs were Terrence P. Stewart, Amy S. Dwyer, and Patrick J.

McDonough.

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

OPINION

CARMAN, JUDGE:

Plaintiff New Hampshire Ball Bearing, Inc. (“NHBB”) challenges

the constitutionality of the Continued Dumping and Subsidy Offset

Act of 2000

(“CDSOA” or“Byrd Amendment”) and the administration

of the statute by Defendants. Plaintiff claims that it unlawfully was

denied “affected domestic producer” (“ADP”) status, which would

have qualified it to receive distributions under the CDSOA. The case

is now before the court on dispositive motions. Defendants United

States Customs and Border Protection (“Customs” or “CBP”) and the

United States International Trade Commission (the “ITC”) each

moved pursuant to USCIT Rule 12(b)(5) to dismiss Plaintiff ’s com-

plaint for failure to state a claim upon which relief can be granted.

(Def.’s, United States Customs and Border Protection’s Mot. To Dis-

miss (“CBP Mot.”), ECF No. 47); (Def. United States International

Trade Commission’s Mot. to Dismiss (“ITC Mot.”), ECF No. 46).

Defendant-Intervenors Timken Company and MBP Corp. (collec-

tively, “Timken”) moved under USCIT Rule 12(c) for judgment on the

pleadings. (Timken’s Mot. For J. on the Pleadings (“Timken Mot.”),

ECF No. 49). For the reasons set forth below, this action will be

dismissed for failure to state a claim upon which relief can be

granted.

Background

Plaintiff, a U.S. producer of ball bearings and spherical plain bear-

ings, participated in a 1988 investigation conducted by the ITC that

culminated in the issuance of antidumping duty orders on ball bear-

ings and spherical plain bearings from Germany, France, Italy, Ja-

pan, Singapore, Sweden, and the United Kingdom. (First Am. Compl.

¶¶ 1, 8 (Feb. 11, 2011), ECF No. 27); Antidumping Duty Orders: Ball

Bearings,,...,54Fed. Reg. 20,900, 20,900–20,910 (May 15, 1989).

During those proceedings, NHBB responded to the ITC’s question-

naires but declined to indicate to the ITC that it supported the

antidumping petition. (First Am. Compl. ¶ 8). Consequently, the ITC

has never included NHBB on a published list of ADPs, and, as a

result, NHBB has never received a CDSOA distribution from CBP.

(Id. ¶ 18).

Plaintiff brought this case in November 2008 to challenge the gov-

ernment’s refusal to provide it CDSOA distributions for fiscal years

Pub. L. No. 106–387, §§ 1001–03, 114 Stat. 1549, 1549A-72–75 (codified at 19 U.S.C. §

1675c (2000)), repealed by Deficit Reduction Act of 2005, Pub. L. 109–171, § 7601(a), 120

Stat. 4, 154 (Feb. 8, 2006, effective Oct. 1, 2007).

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

2006 through 2008. (Compl. ¶ 26 (Nov. 13, 2008), ECF No. 4). Shortly

thereafter, the court stayed this action pending a final resolution of

other litigation raising the same or similar issues.

Following the

decision of the U.S. Court of Appeals for the Federal Circuit (“Court

of Appeals”) in SKF USA Inc. v. United States, 556 F.3d 1337 (2009)

(“SKF USA II”), the court ordered Plaintiff to show cause why this

action should not be dismissed. (Order (Jan. 3, 2011), ECF No. 21).

After Plaintiff responded to the court’s order, the court lifted its stay

on this action for all purposes. (Order (Feb. 9, 2011), ECF No. 25); (Pl.

NHBB’s Resp. to the Court’s Jan. 3, 2011 Order to Show Cause (Feb.

1, 2011), ECF No. 22).

Plaintiff filed a notice of an amended com-

plaint under USCIT Rule 15(a) on February 11, 2011 (Notice of First

Am. Compl., First Am. Compl., ECF No. 27), and on the same day

Timken filed an unopposed moved to intervene and answer (Unop-

posed Mot. to Intervene, Answer of the Timken Co. and MPB Corp.,

ECF No. 28). The instant motions to dismiss and motion for judgment

on the pleadings were filed on May 2, 2011. (ITC Mot., ECF No. 46;

CBP Mot., ECF No. 47; Timken Mot., ECF No. 49).

Jurisdiction

The court exercises subject matter jurisdiction over this action

pursuant to section 201 of the Customs Courts Act of 1980, 28 U.S.C.

§ 1581(i)(4), which grants the Court of International Trade exclusive

jurisdiction of any civil action commenced against the United States

that arises out of any law providing for administration and enforce-

ment with respect to, inter alia, the matters referred to in § 1581(i)(2),

which are “tariffs, duties, fees, or other taxes on the importation of

merchandise for reasons other than the raising of revenue.” The

CDSOA, under which this action arises, is such a law. See Furniture

Brands Int’l, Inc. v. United States, 35 CIT __, Ct. No. 07–00026, Slip

Op. 11–132 at 9–15.

The court’s order stayed the action “until final resolution of Pat Huval Restaurant &

Oyster Bar, Inc. v. United States, Consol. Ct. No. 06–0290, that is, when all appeals have

been exhausted.” Order (Dec. 24, 2008), ECF No. 15.

CBP has not made any CDSOA distributions affecting this case and indicates that it will

refrain from doing so until January 31, 2012 at the earliest. (Def. U.S. Customs & Border

Protection’s Resp. to the Ct.’s Feb. 14, 2011 Request (Feb. 28, 2011), ECF No. 36).

Defendant-intervenors’ motion under USCIT Rule 12(c) for judgment on the pleadings was

filed without answers having been filed by the government defendants. (Timken’s Mot. For

J. on the Pleadings, ECF No. 49). Defendant-intervenors filed an answer on February 11,

2011 (Answer of the Timken Co. and MPB Corp., ECF No. 28 (“Timken’s Answer”)) and an

amended answer on March 4, 2011 (Am. Answer of the Timken Co. And MPB Corp., ECF

No. 40 (“Timken’s Amended Answer”).

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

Discussion

The CDSOA amended the Tariff Act of 1930 to provide for an annual

distribution (a “continuing dumping and subsidy offset”) of duties

assessed pursuant to an antidumping duty or countervailing duty

order to affected domestic producers as reimbursements for qualify-

ing expenditures.

19 U.S.C. § 1675c(a)-(d). ADP status is limited to

petitioners, and interested parties in support of petitions, with re-

spect to which antidumping duty and countervailing duty orders are

entered, and who remain in operation. Id. § 1675c(b)(1). The CDSOA

directed the ITC to forward to Customs, within sixty days after an

antidumping or countervailing duty order is issued, lists of persons

with ADP status, i.e., “petitioners and persons with respect to each

order and finding and a list of persons that indicate support of the

petition by letter or through questionnaire response.” Id. §

1675c(d)(1). The CDSOA also provided for distributions of antidump-

ing and countervailing duties assessed pursuant to existing anti-

dumping duty and countervailing duty orders and for this purpose

directed the ITC to forward to CBP a list identifying ADPs “within 60

days after the effective date of this section in the case of orders or

findings in effect on January 1, 1999 or thereafter....”Id. The

CDSOA directed CBP to publish in the Federal Register, prior to each

distribution, lists of ADPs potentially eligible for distributions based

on the lists obtained from the ITC, id. § 1675c(d)(2), and to distribute

annually all funds, including accrued interest, from antidumping and

countervailing duties received in the preceding fiscal year. Id. §

1675c(d)(3), (e).

After this case was brought, the Court of Appeals, in SKF USA II,

upheld the CDSOA against constitutional challenges brought on First

Amendment and equal protection grounds. 556 F.3d at 1360 (“[T]he

Byrd Amendment is within the constitutional power of Congress to

enact, furthers the government’s substantial interest in enforcing the

trade laws, and is not overly broad. We hold that the Byrd Amend-

ment is valid under the First Amendment.”); id. (“Because it serves a

substantial government interest, the Byrd Amendment is also clearly

not violative of equal protection under the rational basis standard.”).

Congress repealed the CDSOA in 2006, but the repealing legislation provided that “[a]ll

duties on entries of goods made and filed before October 1, 2007, that would [but for the

legislation repealing the CDSOA], be distributed under [the CDSOA]...shall be distrib-

uted as if [the CDSOA]...hadnotbeen repealed....”Deficit Reduction Act of 2005, Pub.

L. No. 109–171, § 7601(b), 120 Stat. 4, 154 (2006). In 2010, Congress further limited CDSOA

distributions by prohibiting payments with respect to entries of goods that as of December

8, 2010 were “(1) unliquidated; and (2)(A) not in litigation; or (B) not under an order of

liquidation from the Department of Commerce.” Claims Resolution Act of 2010, Pub. L. No.

111–291, § 822, 124 Stat. 3064, 3163 (2010).

SKF USA Inc. v. United States, 556 F.3d 1337 (2009) (“SKF USA II”) reversed the decision

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

We address below the four claims that are stated in Plaintiff’s First

Amended Complaint.

In Claims one and two, Plaintiff challenges the

“in support of the petition” requirement of the CDSOA (“petition

support requirement”), both facially and as applied to NHBB, on

constitutional First Amendment (First Am. Compl. ¶¶ 20–22) and

Fifth Amendment equal protection grounds (Id. ¶¶ 23–25). In Claim

three, Plaintiff claims that the petition support requirement violates

the Fifth Amendment due process clause, both facially and as applied,

in basing NHBB’s eligibility for disbursements on past conduct, i.e.,

support for a petition. (Id. ¶¶ 26–28). Finally, Plaintiff claims that

Defendants’ actions violate the Administrative Procedure Act, 5

U.S.C. §§ 701–706 (“APA”) (Id. ¶¶ 29–31).

I. Plaintiff’s Facial and As Applied Challenges under the First

Amendment and the Equal Protection Clause Are Foreclosed

by Binding Precedent

Plaintiff’s claims facially challenging the constitutionality of the

CDSOA’s petition support requirement under the First Amendment

(First Am. Compl. ¶¶ 20–22) and the Due Process clause of the Fifth

Amendment (Id. ¶¶ 23–25) are precluded by the holding in SKF USA

II. A claim that a statute is facially unconstitutional is rebutted by

even a single constitutional application of the statute. See Wash.

State Grange v. Wash. State Republican Party, 552 U.S. 442, 449

(2008) (citing United States v. Salerno, 481 U.S. 739, 475 (1987)) (“a

Plaintiff can only succeed in a facial challenge by ‘establish[ing] that

no set of circumstances exists under which the Act would be valid,’

i.e., that the law is unconstitutional in all of its applications.”). In

SKF USA II, the Court of Appeals held that the CDSOA did not

violate constitutional First Amendment or equal protection principles

of the Court of International Trade in SKF USA Inc. v. United States, 20 CIT 1433, 451 F.

Supp. 2d 1355 (2006) (“SKF USA I”), which held the petition support requirement of the

CDSOA unconstitutional on Fifth Amendment equal protection grounds.

In filing its notice of an amended complaint on February 11, 2011, Plaintiff asserted a

right to amend as of course because “a responsive pleading has not yet been served.” (Notice

of First Am. Compl., ECF. No. 27). However, a December 7, 2010 amendment to the Rules

of this Court, effective as of January 1, 2011, altered the rules for amending pleadings as a

matter of course. As amended, USCIT Rule 15(a) provides that one amendment to a

pleading may be made as a matter of course: “within: (A) 21 days after serving [the

pleading], or (B) if the pleading is one to which a responsive pleading is required, 21 days

after service of a responsive pleading or 21 days after service of a motion under Rule 12(b),

(e), or (f), whichever is earlier.” (USCIT R. 15(a)). We consider it appropriate to apply the

amended Rule 15(a) to Plaintiff’s February 11, 2011 notice of an amended complaint. Doing

so is not infeasible and would not work an injustice. See USCIT R. 89. Applying the

amended rule, we consider the First Amended Complaint to be before us, noting that

Plaintiff filed its notice of an amended complaint on the same day that Timken Company

and MBP Corp. served its answer. (See Notice of First Am. Compl.; Unopposed Mot. to

Intervene, Timken’s Answer, ECF No. 28.)

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

as applied to Plaintiff SKF USA, Inc. (“SKF”). This ruling forecloses

any possibility that the statute is facially unconstitutional on the

First Amendment and Equal Protection grounds asserted by SKF in

SKF USA II. Plaintiff ’s claims to the same effect therefore must be

dismissed pursuant to USCIT Rule 12(b)(5) for failure to state a claim

upon which relief can be granted.

Plaintiff fails to plead facts allowing the court to conclude that the

as-applied First Amendment and equal protection challenges to the

CDSOA are distinguishable from claims brought, and rejected, in

SKF USA II. The Complaint contains no assertions that the CDSOA

was applied to NHBB in a different manner than the statute was

applied to other parties who did not support a petition. NHBB “par-

ticipated in the underlying ITC investigation...andwasincluded

within the domestic industry.” (First Am. Compl. ¶ 8). NHBB filled

out an ITC questionnaire but did not support the petition. (Id.). The

facts as pled place Plaintiff on the same footing as other potential

claimants who did not support the petition, such as SKF. See SKF

USA II, 556 F.3d at 1343 (“Since it was a domestic producer, SKF also

responded to the ITC’s questionnaire, but stated that it opposed the

antidumping petition.”). Consequently, Plaintiff’s as-applied First

Amendment and equal protection challenges are also foreclosed by

the holding in SKF USA II and must be dismissed pursuant to USCIT

Rule 12(b)(5) for failure to state a claim upon which relief can be

granted.

II. The Petition Support Requirement Does Not Violate the Due

Process Clause Due to Retroactivity

Plaintiff claims that the petition support requirement “violates the

Due Process Clause of the United States Constitution, both facially

and as applied to NHBB, because it impermissibly bases NHBB’s

eligibility for disbursements on past conduct” and because “[t]he Due

Process Clause disfavors retroactive legislation.” (First Am. Compl. ¶

27). We do not find merit in this claim.

The CDSOA’s petition support requirement has a retroactive aspect

in that it conditions the receipt of distributions on support decisions

including support decisions that were made before the statute was

passed. See Landgraf v. USI Film Prods., 511 U.S. 244, 270 (a retro-

active statute attaches “new legal consequences to events completed

before its enactment.”). Plaintiff objects on constitutionality grounds

to the retroactive reach of the CDSOA. According to the facts stated

in the complaint, NHBB was denied ADP status and distributions

because of its decision, made nearly twelve years before the enact-

ment of the CDSOA, not to support the petition in the ball bearing

antidumping investigation. (First Am. Compl. ¶¶ 16–18).

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

A statute that benefits or prejudices competing interests according

to pre-enactment conduct is not, on that basis alone, violative of

constitutionally-protected due process rights. In addressing generally

the subject of due process challenges to retrospective legislation, the

Supreme Court summarized an established principle, stating that

“[i]t is by now well established that legislative Acts adjusting the

burdens and benefits of economic life come to the Court with a pre-

sumption of constitutionality, and that the burden is on one complain-

ing of a due process violation to establish that the legislature has

acted in an arbitrary and irrational way.” Usery v. Turner Elkhorn

Mining Co., 428 U.S. 1, 15 (1976) (citations omitted). The Supreme

Court further instructed in Turner Elkhorn that “our cases are clear

that legislation readjusting rights and burdens is not unlawful solely

because it upsets otherwise settled expectations.” Id. at 16 (citations

omitted).

Later referring to its decision in Turner Elkhorn, the Supreme

Court stated that “the strong deference accorded legislation in the

field of national economic policy is no less applicable when that

legislation is applied retroactively.” Pension Benefit Guaranty Corp. v.

R.A. Gray & Co., 467 U.S. 717, 729 (1984). The Supreme Court added

that “[t]o be sure, we went on to recognize [in Turner Elkhorn] that

retroactive legislation does have to meet a burden not faced by leg-

islation that has only future effects” and that, as to due process, this

“burden is met simply by showing that the retroactive application of

the legislation is itself justified by a rational legislative purpose.” Id.

at 730. Pension Benefit further explained that “[p]rovided that the

retroactive application of a statute is supported by a legitimate leg-

islative purpose furthered by rational means, judgments about the

wisdom of such legislation remain within the exclusive province of

the legislative and executive branches.” Id. at 729 (quotation omit-

ted).

In Turner Elkhorn, the Supreme Court upheld an act of Congress

requiring that a coal mine operator provide compensation for a former

employee’s death or disability due to pneumoconiosis (black lung

disease) “arising out of employment in its mines, even if the former

employee terminated his employment in its mines before the act was

passed.” Turner Elkhorn, 428 U.S. at 20. The Supreme Court rea-

soned that “the imposition of liability for the effects of disabilities

bred in the past is justified as a rational measure to spread the costs

of the employees’ disabilities to those who have profited from the

fruits of their labor the operators and the coal consumers.” Id. at 18.

In Pension Benefit, 467 U.S. at 730–31, the Supreme Court found no

constitutional due process infirmity in a September 26, 1980 enact-

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

ment of an amendment to the Employee Retirement Income Security

Act (ERISA) that required an employer withdrawing from a multi-

employer pension plan to pay a fixed sum to the pension plan if the

employer withdrew from the plan on or after April 29, 1980. The

Supreme Court concluded that it was “eminently rational” for Con-

gress to conclude that correction of a problem that had emerged under

the then-existing ERISA, the encouragement of employer withdraw-

als from multiemployer plans, would be “more fully effectuated” if the

withdrawal liability provision contained in the amendment were im-

posed retroactively. Id. at 730. As the Supreme Court stated, “Con-

gress was properly concerned that employers would have an even

greater incentive to withdraw if they knew that legislation to impose

more burdensome liability on withdrawing employers was being con-

sidered.” Id. at 730–31.

The Court of Appeals applied the test articulated in Turner Elkhorn

and Pension Benefit in rejecting a due process retroactivity challenge

to a statute imposing a portion of the costs of decontaminating

government-operated uranium enrichment facilities on electric utili-

ties who operated nuclear power plants. Commonwealth Edison Co. v.

United States, 271 F.3d 1327, 1338–57 (Fed. Cir. 2001) (en banc). The

Court of Appeals viewed the statute, which burdened a utility with a

portion of decontamination costs based on the utility’s consumption of

enriched uranium over a long period prior to enactment, as “severely

retroactive and costly.” Id. at 1345–46. Considering the length of the

retroactivity period and the extent of the burden to be appropriate

factors in its analysis, the Court of Appeals still found the retroactiv-

ity of the statute to be rational, concluding that a utility subjected to

the obligation to pay compensation for acts prior to enactment “ben-

efited from activity that contributed to a societal problem,” that the

“liability is not disproportionately imposed on that party,” and that

“imposition of retroactive liability would not be contrary that party’s

reasonable expectations.” Id. at 1346.

As a threshold consideration, we consider it relevant to our analysis

that the CDSOA, even though retroactive with respect to an extended

period of time, does not directly “burden” a domestic producer such as

NHBB, who, long prior to enactment, decided not to support a certain

antidumping petition. A domestic producer failing to qualify as an

ADP because of its past decision not to support a petition does not

incur a direct cost or a regulatory burden as a result of the CDSOA.

Still, the CDSOA can be described generally, in terms the Supreme

Court used in Turner Elkhorn, as a statute that adjusts “rights and

burdens” of “economic life” and “upsets otherwise settled expecta-

tions.” 428 U.S. at 15–16 (citations omitted). When NHBB and simi-

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

larly situated domestic bearing producers decided not to support the

petition, they presumably had expectations as to the consequences of

their decisions that were grounded in then-existing antidumping law.

Yet, upon enactment of the CDSOA in 2000, they were placed at a

competitive disadvantage by the CDSOA’s retrospective reach in be-

ing denied distributions that directly benefit their domestic competi-

tors, i.e., the domestic producers who supported the petition. Plaintiff

understandably objects that the CDSOA unexpectedly attached an

adverse consequence (albeit not a direct monetary or regulatory bur-

den) to a choice it made long before enactment of the statute. (See Pl.’s

Mem. in Opp. to Defs’ Mots. to Dismiss and Def.-Int.’s Mot. for J. on

the Pleadings (“Pl.’s Resp.”) 6.)

Nevertheless, as stated in Turner Elkhorn, 428 U.S. at 16, “legis-

lation readjusting rights and burdens is not unlawful solely because

it upsets otherwise settled expectations.” Plaintiff cannot meet the

burden of showing that Congress acted arbitrarily and without a

rational legislative purpose in retroactively applying the petition

support requirement in the CDSOA. When viewed in the context of

how Congress, in enacting the CDSOA, treated the competing eco-

nomic interests of those who supported past petitions and those who

did not, that objection falls short of showing “that the legislature has

acted in an arbitrary and irrational way.” Id. at 15.

The Court of Appeals previously concluded that “the purpose of the

Byrd Amendment’s limitation of eligible recipients was to reward

injured parties who assisted government enforcement of the anti-

dumping laws by initiating or supporting antidumping proceedings,”

SKF USA II, 556 F.3d at 1352, and that “the Byrd Amendment is

rationally related to the government’s legitimate purpose of reward-

ing parties who promote the government’s policy against dumping,”

id. at 1360. SKF USA II, which involved a challenge to the CDSOA on

First Amendment and equal protection grounds, did not address

separately the issue of retroactivity, even though the CDSOA was

applied retroactively in that case. See id., 556 F.3d at 1342–43 (de-

scribing SKF’s pre-enactment opposition to the 1988 petition). Be-

cause Plaintiff specifically attacks the CDSOA on due process retro-

activity grounds, we consider whether “the retroactive application of

the legislation is itself justified by a rational legislative purpose.”

Pension Benefit, 467 U.S. at 730. We conclude that it is.

It was not arbitrary or irrational for Congress to conclude that the

legislative purpose of rewarding domestic producers who supported

antidumping petitions, i.e., the very legislative purpose the Court of

Appeals recognized, would be “more fully effectuated” if the petition

support requirement were applied both prospectively and retroac-

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

tively. See Pension Benefit, 467 U.S. at 730–31. By doing so, Congress

provided monetary rewards, in the form of reimbursed expenses, not

only to domestic producers expressing support for petitions in future

antidumping investigations but also to those domestic producers who

supported past antidumping petitions that ripened into antidumping

duty orders and who continue to produce goods competing with im-

ported merchandise subject to those orders. By applying the CDSOA

to the approximately 350 antidumping and countervailing duty or-

ders in effect before CDSOA enactment, rather than only to those

orders issued afterwards, Congress provided a reward mechanism

that was considerably more comprehensive than one based only on a

prospective scheme. See SKF USA II at 1350 n.21 (citing Huaiyin

Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1380 (Fed-

.Cir. 2003) (“noting that under the Byrd Amendment antidumping

duties ‘bear less resemblance to a fine payable to the government, and

look more like compensation to victims of anticompetitive behav-

iors.’”).

The court concludes that the retroactive reach of the petition sup-

port requirement in the CDSOA is justified by a rational legislative

purpose and therefore is not vulnerable to attack on constitutional

due process grounds. In light of this conclusion, we are unable to

agree with the argument that Plaintiff’s due process retroactivity

claim raises “novel questions that should not be resolved on the basis

of a motion to dismiss or for judgment on the pleadings.” (Pl.’s Resp.

9). We conclude that no relief can be granted on this claim, which the

court will dismiss.

III. Defendants’ Actions Were Not Unlawful Under the APA

Plaintiff claims that the actions of the ITC, which refused to include

NHBB on the list of affected domestic producers, and of CBP, which

refused to pay CDSOA distributions to NHBB, must be set aside as

unlawful under the APA. (First Am. Compl. ¶¶ 29–31). Plaintiff ar-

gues that “by treating similarly situated domestic producers differ-

ently, Defendants act[ed] in a manner that is arbitrary, capricious, an

abuse of agency discretion, not supported by substantial evidence,

and contrary to law.” (Id.).

Plaintiff’s complaint alleges no facts from which we could conclude

that the ITC acted inconsistently with the CDSOA in denying NHBB

status as an affected domestic producer or that CBP unlawfully re-

fused to pay CDSOA distributions to NHBB. Instead, the complaint

admits facts from which the court must conclude that it would have

been unlawful for these agencies to have done otherwise in their

administration of the CDSOA. Plaintiff states that it “participated in

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

the underlying ITC investigation from the outset” (Id. ¶ 8), but this

allegation does not satisfy the petition support requirement in the

CDSOA. Plaintiff candidly acknowledges that “because NHBB did

not support the petition, NHBB was not on the list of affected domes-

tic producers” and recognizes that the ITC refused to add NHBB to

the list of ADPs “because there is no evidence [i]n the record of the

original investigations that [NHBB] supported the petition.” (Id. ¶¶

16, 18). Under these facts, the CDSOA required that Plaintiff be

treated differently than domestic producers that supported the peti-

tion.

Thus, Plaintiff ’s APA claim is premised on an incorrect CDSOA

construction under which a domestic producer who did not express

support for the petition still could qualify for ADP status. Acceptance

of Plaintiff ’s construction erroneously would equate participation in

an ITC investigation with support for an antidumping petition. Be-

cause of this error of law, and in the absence of any factual allegation

from which we otherwise could conclude that either agency’s actions

were violative of the APA, we conclude that Plaintiff ’s APA claim must

be dismissed. As to this claim, the complaint does not “contain suffi-

cient factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)

(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

Conclusion

The First Amended Complaint fails to state a claim upon which

relief can be granted. Plaintiff already has taken the opportunity to

amend its original complaint. Judgment dismissing this action shall

be entered accordingly.

Dated: January 3, 2012

New York, New York

/s/ Gregory W. Carman

REGORY W. CARMAN,JUDGE

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

Slip Op. 12–3

POCH DESIGN LLC, Plaintiff, v. UNITED STATES, Defendant.

Court No. 09–00463

[Defendant’s Motion to Dismiss granted]

Dated: January 3, 2012

Saul Davis, Senior Trial Counsel, International Trade Field Office, Commercial

Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, for

defendant. With him on the brief were Tony West, Assistant Attorney General, and

Barbara S. Williams, Attorney in Charge. Of counsel on the brief was Beth C. Brotman,

Office of the Assistant Chief Counsel, International Trade Litigation, Bureau of Cus-

toms and Border Protection, U.S. Department of Homeland Security, of New York, NY.

OPINION

RIDGWAY, Judge:

Plaintiff Epoch Design LLC commenced this action to challenge the

Bureau of Customs and Border Protection’s liquidation of one entry of

wooden bedroom furniture from the People’s Republic of China

(“PRC”), on which Customs assessed antidumping duties at the rate

of 198.08% ad valorem. Complaint ¶¶ 13–14.

Epoch does not dispute

that the merchandise at issue is subject to antidumping duties pur-

suant to Antidumping Duty Order A-570–890. Id. ¶ 3. However,

Epoch contends that such duties should have been assessed at the

rate of 6.65% ad valorem, and requests that the subject entry of

merchandise be reliquidated at that rate. Id. ¶¶ 11–12.

Pending before the Court is the Government’s Motion to Dismiss, in

which the Government argues that “[the] Court lacks jurisdiction

over plaintiff’s claims, and plaintiff’s claims and allegations fail to

state a claim upon which relief may be granted.” Defendant’s Motion

to Dismiss for Lack of Jurisdiction; see also Defendant’s Memoran-

dum in Support of Defendant’s Motion to Dismiss for Lack of Juris-

diction (“Def.’s Brief”).

As set forth more fully below, Defendant’s motion must be granted,

and this action must be dismissed.

The Bureau of Customs and Border Protection – part of the U.S. Department of Homeland

Security – is commonly known as U.S. Customs and Border Protection. The agency is

referred to as “Customs” herein.

Epoch has filed no response to the Government’s Motion to Dismiss.

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

I. Background

At issue in this action is Customs’ liquidation of a single July 2004

entry of wooden bedroom furniture from the People’s Republic of

China, exported by Changshu HTC Import & Export Co., Ltd.

(“Changshu HTC”), and imported by plaintiff Epoch Design LLC. See

Complaint ¶¶ 3, 9; Summons (listing only one entry, Entry No.

NV5–0106299–0, and specifying July 2, 2004 as “Date of Entry”);

Def.’s Brief at 1.

The U.S. Department of Commerce’s Preliminary Determination in

the underlying antidumping duty investigation mistakenly failed to

list Changshu HTC. See Notice of Preliminary Determination of Sales

at Less Than Fair Value and Postponement of Final Determination:

Wooden Bedroom Furniture From the People’s Republic of China, 69

Fed. Reg. 35,312, 35,327–28 (June 24, 2004); Complaint ¶ 9. Com-

merce corrected that error in the agency’s Second Amended Prelimi-

nary Determination, which specified that Changshu HTC’s exports of

wooden bedroom furniture were subject to an antidumping duty de-

posit rate of 12.91% ad valorem. See Notice of Amended Preliminary

Antidumping Duty Determination of Sales at Less Than Fair Value

and Amendment to the Scope: Wooden Bedroom Furniture From the

People’s Republic of China, 69 Fed. Reg. 54,643, 54,645 (Sept. 9, 2004)

(“Second Amended Preliminary Determination”); Complaint ¶ 10.

At the Final Determination stage, Commerce concluded in its

Amended Final Determination that Changshu HTC’s exports were

subject to antidumping duties at the rate of 6.65%. See Final Deter-

mination of Sales at Less Than Fair Value: Wooden Bedroom Furni-

ture From the People’s Republic of China, 69 Fed. Reg. 67,313, 67,317

(Nov. 17, 2004) (“Final Determination”) (indicating that Changshu

HTC’s exports were subject to antidumping duties at rate of 8.64%),

as amended by Notice of Amended Final Determination of Sales at

Less Than Fair Value and Antidumping Duty Order: Wooden Bed-

room Furniture From the People’s Republic of China, 70 Fed. Reg.

329, 330 (Jan. 4, 2005) (“Amended Final Determination”) (correcting

Changshu HTC’s antidumping duty rate to 6.65%); Complaint ¶ 11.

Although Epoch states that it is not privy to the liquidation instruc-

tions that Commerce provided to Customs, the Government notes

that “corrected and amended liquidation instructions” were issued.

See Def.’s Brief at 7; Complaint ¶ 12. In any event, when Customs

liquidated the subject entry of merchandise on March 28, 2008, Cus-

toms assessed antidumping duties at the “PRC-Wide” rate of

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

198.08%, rather than at the 6.65% rate. See Complaint ¶¶ 13–14;

Summons (specifying March 28, 2008 as “Date of Liquidation”);

Amended Final Determination, 70 Fed. Reg. at 330; Def.’s Brief at 5.

Epoch asserts that its protest, filed on September 24, 2008, was

“timely filed.” See Complaint ¶ 7; Protest No. 2704–08–103278; Sum-

mons (specifying September 24, 2008 as “Date Protest Filed”); Def.’s

Brief at 5. Customs subsequently denied the protest. See Summons

(specifying May 7, 2009 as “Date Protest Denied”); Complaint ¶¶ 1–2,

4. Epoch commenced this action on October 29, 2009, with the filing

of its Summons and Complaint. See Summons (Oct. 29, 2009); Def.’s

Brief at 6; see also Complaint (Oct. 29, 2009). Thereafter, Epoch paid

the assessed antidumping duties, together with the interest that had

accrued due to late payment – although its Complaint asserts that

the duties were paid before this action was commenced. See Com-

plaint ¶ 5. Epoch made partial payment of the duties and accrued

interest on February 5, 2010, and paid the remaining balance on

March 3, 2010. See Def.’s Brief at 6.

In its Complaint, Epoch asserts that it is “contest[ing] the denial of

a protest by Customs” and that Customs “incorrectly implemented a

final decision by the Department of Commerce.” See Complaint ¶ 1.

The Complaint further states that jurisdiction lies “under 28 U.S.C.

§§ 1581(a) or 1581(i) because [the case] involves the denial of a protest

and the improper administration and enforcement of the antidump-

ing law.” See Complaint ¶ 2; see also id. ¶ 4. Among other things,

Epoch requests that this matter “be remanded for...appropriate

action by Customs and Border Protection to reliquidate the entry in

accordance with law and implement the determination of the Com-

merce Department...whereby...exports of Changshu HTC...are

to be liquidated at the rate of 6.65%.” See Complaint, Prayer for

Relief.

II. Analysis

The existence of subject matter jurisdiction is a threshold inquiry.

See, e.g., Steel Co. v. Citizens for a Better Environment, 523 U.S. 83,

94–95 (1998). Where subject matter jurisdiction is challenged, “‘the

burden rests on plaintiff to prove that jurisdiction exists.’” Pentax

Corp. v. Robison, 125 F.3d 1457, 1462 (Fed. Cir. 1997) (quoting Lowa,

Ltd. v. United States, 5 CIT 81, 83, 561 F. Supp. 441, 443 (1983), aff’d,

In determining antidumping duty rates in its investigation of Wooden Bedroom Furniture,

Commerce assigned individual rates to mandatory respondents, an all-others separate rate

to companies that demonstrated both de facto and de jure independence from government

control, and a “PRC-Wide” rate of 198.08% to companies that did not demonstrate sufficient

independence from the government of the PRC. See Final Determination, 69 Fed. Reg. at

67,317–19, as amended by Amended Final Determination, 70 Fed. Reg. at 330–32.

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

724 F.2d 121 (Fed. Cir. 1984)), modified in part, 135 F.3d 760 (1998);

see also McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189

(1936); Norsk Hydro Canada, Inc. v. United States, 472 F.3d 1347,

1355 (Fed. Cir. 2006).

Moreover, where – as here – a waiver of sovereign immunity is at

issue, the language of the statute must be strictly construed, and any

ambiguities resolved in favor of immunity. See United States v. Wil-

liams, 514 U.S. 527, 531 (1995); Blueport Co., LLC v. United States,

533 F.3d 1374, 1378 (Fed. Cir. 2008) (“‘[A] waiver of the Government’s

sovereign immunity will be strictly construed, in terms of its scope, in

favor of the sovereign.’”) (quoting Lane v. Pena, 518 U.S. 187, 192

(1996)). The limits of a waiver of sovereign immunity define a court’s

jurisdiction to entertain suit. See Hercules, Inc. v. United States, 516

U.S. 417, 422–23 (1996); United States v. Boe, 543 F.2d 151, 154–55

(C.C.P.A. 1976).

Pursuant to 19 U.S.C. §§ 1514(a) and (c) (2000),

the enumerated

Customs determinations (including decisions such as the one at issue

here) are deemed “final and conclusive” if they are not properly

protested within 90 days, and if denied protests are not challenged in

accordance with the terms of 28 U.S.C. §§ 2636 and 2637. See 19

U.S.C. § 1514(a) (providing that Customs decisions are “final and

conclusive” absent properly filed protest, or properly filed civil action

contesting denial of protest); 19 U.S.C. § 1514(c)(3) (specifying 90-day

period for filing of protests); 28 U.S.C. § 2636(a) (requiring civil action

challenging denial of protest to be filed within 180 days); 28 U.S.C. §

2637(a) (requiring payment of “all liquidated duties, charges, or ex-

actions” prior to filing civil action challenging denial of protest); see

also United States v. Boe, 543 F.2d at 154–55 (explaining that juris-

diction over an action challenging a denied protest lies only where a

proper protest has been timely filed, the protest has been denied, and

all required payments have been made, and emphasizing the “man-

datory” nature of “[t]hose jurisdiction-conferring terms”).

The proper, timely filing of a protest is thus a jurisdictional require-

ment; and, further, the denial, in whole or in part, of a protest is a

precondition to the commencement of an action under 28 U.S.C. §

1581(a). See DaimlerChrysler Corp. v. United States, 442 F.3d 1313,

1319 (Fed. Cir. 2006). Similarly, “[a] civil action contesting the denial

of a protest...maybecommenced...only if all liquidated duties,

charges, or exactions have been paid at the time the action is com-

Except as otherwise indicated, all statutory citations herein are to the 2000 edition of the

United States Code.

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

menced.” See 28 U.S.C. § 2637(a). As such, like the timely filing of a

protest, a plaintiff’s payment in full of all duties and other charges

and exactions is also a precondition to jurisdiction under 28 U.S.C. §

1581(a). See Heartland By-Products, Inc. v. United States, 568 F.3d

1360, 1363 n.3 (Fed. Cir. 2009); United States v. Boe, 543 F.2d at 155.

A. Jurisdiction Under 28 U.S.C. § 1581(a)

In the case at bar, a review of the underlying protest and the

Summons indicates that Epoch filed its protest on September 24,

2008 – approximately six months after Customs liquidated the entry

at issue, on March 28, 2008. Because the protest was not filed within

the 90-day period following liquidation (as 19 U.S.C. § 1514(c)(3) then

required),

Epoch’s protest was not timely. As discussed above, the

timely filing of a protest is a prerequisite for jurisdiction under 28

U.S.C. § 1581(a). Accordingly, jurisdiction under that provision of the

statute does not lie here.

Moreover, even if Epoch had timely filed its protest (which it did

not), jurisdiction under 28 U.S.C. § 1581(a) nevertheless still would

not lie, for a second, wholly independent reason. As explained above,

28 U.S.C. § 2637(a) authorizes the filing of a civil action contesting

the denial of a protest “only if all liquidated duties, charges, or

exactions have been paid at the time the action is commenced.” See 28

U.S.C. § 2637(a). In the instant case, however, Epoch did not pay the

assessed antidumping duties and accrued interest until March 3,

2010 – more than four months after instituting this action. Payment

in full was a mandatory condition precedent to suit. Epoch’s failure to

make such payment prior to filing this action therefore precludes

jurisdiction.

B. Jurisdiction Under 28 U.S.C. § 1581(i)

Finally, a review of Epoch’s Complaint indicates that Epoch is

challenging the actual liquidation of the subject entry – specifically,

Customs’ alleged failure to liquidate the entry at issue in accordance

with Commerce’s Amended Final Determination and “the corrected

and amended liquidation instructions” that Commerce issued. See

Complaint ¶¶ 1, 13–14; Def.’s Brief at 7.

The right to contest the

correctness of a liquidation is governed by the terms of 19 U.S.C. §

In 2004, 19 U.S.C. § 1514(c)(3) was amended to extend the protest period from 90 days to

180 days as to entries filed on or after December 18, 2004. See 19 U.S.C. § 1514(c)(3) (Supp.

IV 2004). However, the entry at issue in this action was filed in July 2004. The 90-day

protest period therefore applies here.

Significantly, Epoch’s Complaint does not allege that Commerce’s liquidation instructions

were erroneous. Instead, the Complaint contests Customs’ denial of Epoch’s protest, and

contends that Customs “incorrectly implemented” Commerce’s Amended Final

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

1514(a) and 1514(c). As discussed above, those provisions state, inter

alia, that Customs decisions – including decisions concerning the

liquidation of entries of merchandise (see 19 U.S.C. § 1514(a)(5)) –

“shall be final and conclusive upon all persons” unless a protest is

filed within 90 days after the notice of liquidation. See 19 U.S.C. §§

1514(a) & (c)(3).

As set forth above, however, Epoch failed to comply with the man-

datory requirement of 19 U.S.C. § 1514(c)(3), governing the time for

filing of its protest. Nor did Epoch comply with other jurisdictional

requirements for instituting an action in this court. See 28 U.S.C. §§

1581(a), 2636(a), & 2637(a). Although Epoch could have timely pro-

tested Customs’ liquidation, paid the assessed duties and accrued

interest in a timely fashion, and then commenced its action in this

court to contest the denial of its protest, Epoch failed to do so. Because

Epoch failed to take the actions necessary in order to preserve its

rights, Customs’ liquidation became “final and conclusive upon all

persons,” including both Epoch and the Government, by virtue of the

plain and unambiguous language of 19 U.S.C. §§ 1514(a).

Thus, because the gravamen of Epoch’s Complaint is the correct-

ness of Customs’ liquidation of the entry at issue, jurisdiction also

cannot lie under the other statutory provision that Epoch cites – 28

U.S.C. § 1581(i), the provision governing the court’s “residual juris-

diction.” See Miller & Co. v. United States, 824 F.2d 961, 963 (Fed. Cir.

1987). It is well-established that jurisdiction under § 1581(i) is

“strictly limited.” See Norcal/Crosetti Foods, Inc. v. United States,

963 F.2d 356, 359 (Fed. Cir. 1992). A plaintiff may not invoke § 1581(i)

as a basis for jurisdiction where – as here – an adequate remedy was

(or could have been) available under the straightforward protest and

judicial review procedures established by Congress and set forth in 19

Determination. See Complaint ¶ 1; see also id. ¶ 14 (asserting that “the collection of

antidumping duties by Customs at the rate of 198.08% was contrary to the preliminary and

final determinations by Commerce”). Thus, this case is readily distinguishable from cases

in which the U.S. Court of Appeals for the Federal Circuit has held that jurisdiction under

28 U.S.C. § 1581(i) may be available to challenge Commerce’s liquidation instructions, and

that such challenges may not be brought under 28 U.S.C. § 1581(a) or (c). See, e.g., Shinyei

Corp. of Am. v. United States, 355 F.3d 1297 (Fed. Cir. 2004) (finding jurisdiction under §

1581(i) appropriate when the liquidation instructions issued by Commerce were alleged to

be non-conforming with the final results of administrative review); Consol. Bearings Co. v.

United States, 348 F.3d 997 (Fed. Cir. 2003) (finding that, because plaintiff did not challenge

Commerce’s final determination, § 1581(c) was not, and could not have been, a source of

jurisdiction in that case); Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973 (Fed. Cir.

1994) (finding that challenge to Commerce’s automatic assessment policies was properly

brought under § 1581(i), when a party failed to avail itself of the opportunity for adminis-

trative review, but concluding that action was barred under two-year statute of limitations).

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012

U.S.C. § 1514(a) and 28 U.S.C. § 1581(a). See, e.g., International

Customs Prods., Inc. v. United States, 467 F.3d 1324, 1327 (Fed. Cir.

2006) (and cases cited there).

In this case, Epoch has not even attempted to argue that the typical

avenue leading to review in this forum was in any sense “‘manifestly

inadequate.’” See Norcal/Crosetti Foods, 963 F.2d at 359 (quoting

Miller & Co., 824 F.2d at 963; citing Nat’l Corn Growers Ass’n v.

Baker, 840 F.2d 1547, 1557 (Fed. Cir. 1988)). Nor could Epoch rea-

sonably have done so. Simply stated, Epoch may not rely on § 1581(i)

to “circumvent” the established, otherwise applicable prerequisites to

the commencement of an action in this court. See Am. Air Parcel

Forwarding Co. v. United States, 718 F.2d 1546, 1549 (Fed. Cir. 1983).

III. Conclusion

For all the foregoing reasons, jurisdiction over this challenge to

Customs’ denial of Epoch’s protest and Customs’ liquidation of the

subject entry of merchandise will not lie under either 28 U.S.C. §

1581(a) or 28 U.S.C. § 1581(i). The Government’s Motion to Dismiss

therefore must be granted, and this action dismissed for lack of

subject matter jurisdiction.

A separate order will enter accordingly.

Dated: January 3, 2012

New York, New York

/s/ Delissa A. Ridgway

ELISSA A. RIDGWAY

JUDGE

CUSTOMS BULLETIN AND DECISIONS, VOL. 46, NO.4,JANUARY 18, 2012