Gerson Company v. United States
Opinion
The Gerson Company appeals a decision of the United States Court of International Trade ("Trade Court") granting summary judgment in favor of the government.
See
Gerson Co. v. United States
,
I. BACKGROUND
A. The Subject Merchandise
Gerson's imported merchandise consists of finished decorative candle and tea light lamps made of plastic and/or wax. The lamps are designed to resemble ordinary candles, such as votive, pillar, taper, or tea light candles. Unlike ordinary candles, however-which generate light by using a wick to vaporize wax-Gerson's candles use battery-operated LEDs. Gerson does not dispute that its candles serve both decorative and illuminative functions. See Oral Arg. at 1:10-25, Gerson Co. v. United States (No. 2018-1011), http://oralarguments.cafc.uscourts.gov/default.aspx?fl=2018-1011.mp3.
Between January and October 2009, Gerson imported twenty-seven entries of its candles through the Port of Kansas City, Missouri. U.S. Customs and Border Protection ("Customs") liquidated the merchandise under HTSUS subheading 9405.40.80, which imposes a duty rate of 3.9% ad valorem . That provision reads 1 :
9405 Lamps and lighting fittings including searchlights and spotlights and parts thereof, not elsewhere specified or included; illuminated signs, illuminated nameplates and the like, having a permanently fixed light source, and parts thereof not elsewhere specified or included:
40 Other electric lamps and lighting fittings:
80 Other .......... 3.9%
Gerson objected to Customs' classification in four administrative protests, arguing that its candles should have been classified under subheading 8543.70.70, which imposes a duty rate of 2% ad valorem . That provision reads:
8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:
70 Other machines and apparatus:
70 Electric luminescent lamps .......... 2%
Customs denied each of Gerson's protests, leading Gerson to file suit in the Trade Court.
B. Procedural History
Presented with cross-motions for summary judgment, the Trade Court granted judgment in favor of the government, finding that Customs properly classified Gerson's candles under subheading 9405.40.80 (certain "[l]amps ... not elsewhere specified or included") rather than 8543.70.70 ("[e]lectrical machines and apparatus," including "[e]lectric luminescent lamps").
Gerson
,
The court observed that it is at least "plausible" to read heading 8543 as covering Gerson's candles to the extent they qualify as "electrical machines and apparatus."
Gerson timely appealed. We have jurisdiction under
II. DISCUSSION
"We review a grant of summary judgment by the Court of International Trade for correctness as a matter of law and decide de novo the proper interpretation of the tariff provisions as well as whether there are genuine issues of material fact to preclude summary judgment."
Otter Prods., LLC v. United States
,
Classifying articles under the HTSUS is a two-step process. A court first determines the proper meaning of specific terms in the tariff provisions, which is a question of law that we review without deference.
Otter Prods.
,
For the reasons stated below, we agree with the Trade Court that Gerson's candles fall within heading 9405 rather than heading 8543. We also agree with the court that Gerson cannot use subheading 8543.70.70 to expand the scope of heading 8543.
A. The Trade Court Correctly Classified Gerson's Candles Under Heading 9405 Rather than Heading 8543
"The HTSUS scheme is organized by headings, each of which has one or more subheadings; the headings set forth general categories of merchandise, and the subheadings provide a more particularized segregation of the goods within each category."
We apply the GRIs in numerical order, beginning with GRI 1, which provides that "classification shall be determined according to the terms of the headings and any relative section or chapter notes."
La Crosse Tech., Ltd. v. United States
,
*1236
We therefore begin, as we must, "with the language of the headings."
Orlando Food Corp. v. United States
,
Heading 8543 covers "[e]lectrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter." As an initial matter, the heading does not refer to "lamps," which both parties agree Gerson's candles are.
3
And, as the Trade Court observed, the term "electrical machines and apparatus" recited in heading 8543 "is not free of ambiguity" standing alone.
Gerson
,
Heading 8543's scope becomes clearer, however, when read in context of the HTSUS as a whole. The provision does not exist in a vacuum, and we must read it in conjunction with other relevant provisions to discern its meaning.
See
When so read, the HTSUS makes clear that Gerson's candles belong in heading 9405 rather than in heading 8543. If one were to read heading 8543 as covering Gerson's candles, it would cover
every
electric lamp, because all such lamps use electricity to generate light. And, by operation of Note 1(f), such lamps could not be classified under heading 9405. In other words, heading 9405 would be constrained to only
non
-electric lamps. That reading, as the Trade Court noted, "would impose a specific, and drastic, limitation on the scope of heading 9405, HTSUS that the article description for that heading does not express or suggest."
Gerson
,
The ENs to the relevant chapters further support the Trade Court's ruling.
5
See
Otter Prods.
,
Chapter 85's ENs, by contrast, state that chapter 85 includes "[c]ertain electrical goods
not generally used independently
, but designed to play a particular role as components, in electrical equipment," including "[e]lectrical filament or discharge
*1238
lamps." EN 85(A)(6) (emphasis added); HS Hdg. 85.39. These ENs therefore suggest that chapter 85 was intended to include at least unfinished lamps that are used in conjunction with other electrical equipment. As the Trade Court found, Gerson's candles more closely resemble the lamps described in chapter 94 than they do the lamps described in chapter 85.
Gerson
,
Gerson challenges the Trade Court's ruling on several grounds. Gerson first argues that, by acknowledging that the candles "plausibly" fall within heading 8543, the Trade Court found that the candles are prima facie classifiable in that heading, which should have ended the inquiry. Gerson reads too much into the Trade Court's choice of words. While the court did say that it was "plausible" to read heading 8543 as covering Gerson's candles insofar as the candles, like all electrical lamps ever in existence, qualify in the abstract as electrical machines or apparatus, the court correctly and emphatically rejected that reading as nonsensical. The court noted that such a reading would impermissibly expand the scope of heading 8543 and diminish the scope of heading 9405. Thus, far from finding that the candles are classifiable under heading 8543, the court found that reading implausible.
Gerson next argues that the Trade Court erred by allegedly using the ENs to displace the plain language of heading 8543. Gerson relies heavily on our decision in
Midwest of Cannon Falls, Inc. v. United States
,
The Trade Court committed no such error here. First, unlike in
Midwest
, the language of heading 8543
is
ambiguous standing alone, as described above. Second, the court here construed heading 8543 in view of heading 9405 to conclude that it does not cover Gerson's candles. Only after having done that did the court note that the ENs supported its construction. In other words, the Trade Court did not begin its analysis by applying limiting characteristics gleaned from the ENs to heading 8543, as in
Midwest
. Third, the court here did not use the ENs to limit the scope of the headings. Rather, the court used the ENs merely to "clarify the scope" of the language in heading 8534, which is "entirely proper."
See
LeMans Corp. v. United States
,
Finally, Gerson argues that the Trade Court erred to the extent it employed a "class or kind" analysis. Gerson pounces on the Trade Court's statement that its candles "are within a class or kind of electric lamps that are self-contained, i.e., independently used," and therefore fall within chapter 94 rather than chapter 85.
Gerson
,
Regardless of whether these provisions are use or
eo nomine
provisions, the Trade Court did not perform a "class or kind" analysis, as evidenced by the fact that the court did not reference the factors that govern that analysis.
See
BenQ
,
In sum, the Trade Court did not err in determining that Gerson's candles fall within heading 9405 rather than heading 8543. Gerson does not dispute that, if its candles fall within heading 9405, the appropriate subheading is 9405.40.80, which covers "other" electric lamps not made of a "base metal."
That conclusion alone precludes classification under subheading 8543.70.70. We nevertheless address below Gerson's and its amici's 7 subheading-specific arguments to clarify the role that subheadings play in the classification analysis.
B. The Trade Court Correctly Found that Gerson's Candles Are Not Classifiable Under Subheading 8543.70.70
Gerson and its amici ask us to look past heading 8543 and to focus instead on subheading 8543.70.70, which covers "electric *1240 luminescent lamps." They assert that Gerson's candles use LEDs to produce light and therefore indisputably qualify as "electric luminescent lamps." They argue, moreover, that the placement of subheading 8543.70.70 within heading 8543 evidences Congress's intent for all "electric luminescent lamps" to qualify as "electrical machines and apparatus." We disagree on all counts.
Gerson's and its amici's "bottom-up" analysis-which begins with a subheading and proceeds upward through the headings-is backwards. Classification under the GRIs must take a "top-down" approach, beginning, "as it must, with the language of the headings," and ending with the language of the subheadings.
Orlando Food
,
The reason for this analytic approach is simple-it ensures that the more specific subheading characterizations are informed by the more general headings in which they appear. Beginning the analysis with the subheading, as Gerson urges, would effectively divorce the analysis from the necessary context provided by the higher-level headings.
See
Orlando Food
,
Gerson and its amici next suggest that, under the Trade Court's logic, no electric luminescent lamp would ever be classifiable under subheading 8543.70.70 because such lamps would not be considered "electrical machines and apparatus" as contemplated by heading 8543. They assert that subheading 8543.70.70 "becomes a nullity, into which no product can ever fall." Amici Br. 11. We find this argument both exaggerated and unpersuasive. While those products that would fall within subheading 8543.70.70 are not before us, we are satisfied that the Trade Court's holding leaves ample room in that subheading for certain electric luminescent devices that fall within the scope of heading 8543. See EN 85.43(16) (listing as examples "[e]lectro-luminescent devices, generally in strips, plates, or panels, and based on electro-luminescent *1241 substances (e.g., zinc sulphide) placed between two layers of conductive material").
We therefore reject Gerson's and its amici's subheading-specific arguments.
III. CONCLUSION
We have considered Gerson's and its amici's remaining arguments and find them unpersuasive. The Trade Court correctly determined that Gerson's candles are classifiable under subheading 9405.40.80, subject to a duty rate of 3.9% ad valorem .
AFFIRMED
We cite here to the 2009 version of the HTSUS in effect when Gerson imported the merchandise at issue.
The Additional United States Rules of Interpretation are not relevant here because they govern particular use and textile provisions not at issue in this case.
See
ARI 1(a)-(d);
see also
Schlumberger
,
Given that heading 8543 does not refer to "lamps," it is questionable whether the plain language of heading 9405 and chapter 94's Note 1(f)-which each exclude from chapter 94's scope only " lamps " specified elsewhere-preclude classification of Gerson's lamps in heading 9405. In contrast to heading 8543, headings 8513 (certain "[p]ortable electric lamps designed to function by their own source of energy") and 8539 ("[e]lectrical filament or discharge lamps, including sealed beam lamp units and ultraviolet or infrared lamps ; arc lamps") do refer to "lamps." Gerson does not argue on appeal that its candles are classifiable under either of these headings, however.
The parties do not proffer dictionary definitions for the terms "machine" or "apparatus." We nevertheless take judicial notice of the common dictionary definitions of those terms.
See
Stewart-Warner Corp. v. United States
,
Unlike the HTSUS section and chapter notes-such as chapter 94's Note 1(f)-the ENs "are not legally binding or dispositive, but they may be consulted for guidance and are generally indicative of the proper interpretation of the various HTSUS provisions."
BenQ Am. Corp. v. United States
,
Despite stating in its opening brief that heading 9405 is
eo nomine
, Gerson argues in reply that the heading is in fact a "basket" provision insofar as it contains the qualifying phrase "not otherwise specified or included." Reply Br. 2;
see
R.T. Foods, Inc. v. United States
,
Target General Merchandise Inc. and twelve other companies whose imported LED devices were classified by Customs under heading 9405 filed an amicus brief in support of Gerson.
Reference
- Full Case Name
- The GERSON COMPANY, Plaintiff-Appellant v. UNITED STATES, Defendant-Appellee
- Cited By
- 10 cases
- Status
- Published