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Clarendon Marketing Inc. v. United States

May 22, 1998

CLARENDON MARKETING, INC., PLAINTIFF-APPELLEE,
v.
THE UNITED STATES, DEFENDANT-APPELLANT.



Before Plager, Rader, and Bryson, Circuit Judges.

The opinion of the court was delivered by: Plager, Circuit Judge.

Appealed from: United States Court of International Trade

Judge R. Kenton Musgrave

This case presents us with a sticky question of statutory construction, one of first impression, regarding the tariff classification of imports of certain petroleum products. The merchandise falls within the accepted definition of "naphthas," but is also suitable and commonly used as a motor fuel blending stock. The constructional question is whether the merchandise should be classified under the tariff subheading "Naphthas (except motor fuel or motor fuel blending stock)," or under the subheading "Motor fuel blending stock," the latter carrying a substantially higher duty. The parties presented the question to the United States Court of International Trade by way of cross-motions for summary judgment. As could be expected, the Government favored classification under the higher duty subheading, i.e., the blending stock subheading, arguing that that is the sensible reading of the statute, whereas the importer, Clarendon Marketing, Inc. ("Clarendon"), argued for classification under the naphthas subheading, on the ground that that is what the statute clearly says. The Court of International Trade agreed with Clarendon's reading of the statute, and accordingly granted summary judgment in Clarendon's favor, setting forth its analysis in a thorough opinion. Clarendon Mktg., Inc. v. United States, 955 F. Supp. 1501 (Ct. Int'l Trade 1997). The Government appeals the judgment. Because the plain meaning of the relevant legislation mandates the Conclusion reached by the Court of International Trade, we affirm.

BACKGROUND

Only a few background facts remain beyond the introduction already given. The petroleum products at issue (specifically, refined liquid hydrocarbon mixtures) were imported by Clarendon in 1989. Clarendon entered the merchandise as naphthas, under subheading 2710.00.25, "Naphthas (except motor fuel or motor fuel blending stock)," of the Harmonized Tariff Schedule of the United States ("HTSUS") (herein the "naphthas subheading"). The naphthas subheading imposes a duty of 10.5 cents per barrel.

However, the District Director of the U.S. Customs Service liquidated the merchandise as motor fuel, under HTSUS subheading 2710.00.15, "Motor fuel" (herein the "motor fuel subheading"), which imposes a duty of 52.5 cents per barrel. Clarendon protested, and in response, the U.S. Customs Service Headquarters ruled that the correct classification of the merchandise was motor fuel blending stock, under HTSUS subheading 2710.00.18, "Motor fuel blending stock" (herein the "blending stock subheading"), which also imposes a duty of 52.5 cents per barrel. Clarendon then filed suit in the Court of International Trade and promptly moved for summary judgment. The Government in turn cross-moved for summary judgment. As already noted, the Court of International Trade ruled in Clarendon's favor, holding that Customs had erred in liquidating the merchandise under the blending stock subheading and that the merchandise instead had to be classified under the naphthas subheading.

The parties have stipulated that the imported merchandise is accurately referred to as "naphtha," as that term is known and used chemically and commercially. The HTSUS uses the plural form of that term, i.e., "naphthas," and the parties agree that the merchandise fits within the meaning of "naphthas" as used in the naphthas subheading; the parties however disagree as to the effect of the subheading's parenthetical exception, "except motor fuel or motor fuel blending stock." On the other hand, the parties also agree that the primary use for naphthas such as the merchandise at issue here is as a motor fuel blending stock. It is also undisputed that neither party has established (or attempted to establish) the actual use made of the imported merchandise; thus, the actual use is unknown.

Discussion

1.

There are no factual issues in this case. The propriety of the summary judgment turns on the proper construction of the HTSUS, which is a question of law. See Bauerhin Techs. Ltd. v. United States, 110 F.3d 774, 776 (Fed. Cir. 1997). On questions of law, we defer to neither the Court of International Trade nor Customs. See Universal Elecs. Inc. v. United States, 112 F.3d 488, 493 (Fed. Cir. 1997). Therefore, our review of the purely legal issue is plenary. See id.

2.

Subheading 2710.00.25, the naphthas subheading, literally contains three types of tariff classification provisions: an eo nomine provision, an actual use provision, and a principal use provision. An eo nomine classification provision is one which describes a commodity by a specific name. See Nidec Corp. v. United States, 68 F.3d 1333, 1336 (Fed. Cir. 1995). In contrast, as their names suggest, actual use and principal use provisions classify commodities by use. See 2 Ruth F. Sturm, Customs Law & Administration § 53.3, at 15 (3d ed. 1995). The naphthas subheading, "Naphthas (except motor fuel or motor fuel blending stock)," contains elements of each of these three types.

The parties agree that the term "naphthas" in the subheading is an eo nomine provision, and they agree that the term "naphthas" describes the merchandise by name. However, as the Government points out, this eo nomine term is limited by the ...


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