Before Michel, Plager, and Bryson, Circuit Judges.
The opinion of the court was delivered by: Bryson, Circuit Judge.
Appealed from: United States Court of International Trade
Judge Richard W. Goldberg
This customs classification case involves imported toner cartridges that are shaped to fit into specific electrostatic photocopiers. Between 1990 and 1992, the Customs Service classified the cartridges under subheading 3707.90.30 of the Harmonized Tariff Schedule of the United States (HTSUS). That subheading is termed "chemical preparations for photographic uses," and at the time it carried a duty of 8.5% ad valorem. Appellant Mita Copystar America challenged the classification in the Court of International Trade, arguing that the toner cartridges should have been classified as "parts and accessories of electrostatic photocopying apparatus" under subheading 9009.90.00 of the HTSUS. Goods in that subheading entered duty free during the time period at issue in this case. See HTSUS subheading 9902.90.90 (1992). The Court of International Trade held that the goods were properly classified as "chemical preparations for photographic uses." We hold that they should have been classified as "parts and accessories of electrostatic photocopying apparatus," and we therefore reverse.
In analyzing the classification issue in this case, the trial court properly began with Rule 1 of the General Rules of Interpretation (GRI) of the HTSUS, which directs that merchandise shall be classified "according to the terms of the headings and any [relevant] section or chapter notes." The court ruled that the toner cartridges could be classified either under subheading 3707.90.30, as "chemical preparations for photographic uses," or under subheading 9009.90.00, as "parts and accessories of electrostatic photocopying apparatus." Because subheading 3707.90.30 does not address how the merchandise is packaged, the court found that subheading 3707.90.30 was broad enough to cover cartridges containing toner. In addition, because it was undisputed that the photocopiers that used the toner cartridges could not function without them and that the cartridges were dedicated for use solely with certain types of photocopiers, the court held that the cartridges could properly be characterized as either "parts" or "accessories" of those photocopiers under subheading 9009.90.00
The court then pointed out that note 2 in section VI of the HTSUS, which contains heading 3707, provides that goods classifiable in heading 3707 "by reason of being put up in measured doses or for retail sale" are to be classified in that heading "and in no other heading of the tariff schedule." That note, according to the court, seemed to require the toner cartridges to be classified under heading 3707. On the other hand, the court pointed out, note 2(b) of chapter 90, which contains heading 9009 provides that "[o]ther parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus" are to be classified with those machines, instruments or apparatus. Because the toner cartridges at issue in this case fit within that description, the court observed that note 2(b) of chapter 90 appeared to require the cartridges to be classified under heading 9009.
Finding the two notes in conflict, the court concluded that GRI 1 did not resolve the classification dispute, and it therefore looked to the succeeding provisions of the GRI. Turning to GRI 3(b), which directs that composite goods made up of different components should be classified as though they consisted of the material or component that gives them their "essential character," the court concluded that toner gives the toner cartridges their essential character, and that the toner cartridges were therefore properly classified as "chemical preparations for photographic uses" under subheading 3707.90.30.
The parties have previously litigated the proper classification of photocopy toner. In Mita Copystar America v. United States, 21 F.3d 1079 (Fed. Cir. 1994) (Mita I), the parties disputed whether toners and developers are "chemical preparations for photographic uses" or "unmixed products for photographic uses" within the meaning of competing subheadings of heading 3707 of the HTSUS. This court affirmed the judgment of the Court of International Trade upholding the classification of the toner as a chemical preparation for photographic use under subheading 3707.90.30. The trial court held, and the parties agree, that the decision in Mita I does not govern the classification dispute in this case, because Mita I did not present the question whether toner cartridges should be classified as parts of photocopy machines under chapter 90 of the HTSUS.
The government contends that the classification decision in this case is governed by various provisions of the GRI, including GRI 1, GRI 2(b), GRI 3(b), and GRI 5(b). The structure of the GRI controls the point at which each rule comes into play. The first step in analyzing the classification issue is to determine the applicable subheadings, if possible, under GRI 1. As GRI 1 expressly provides, the other GRI provisions may be consulted only if the headings and notes "do not otherwise require" a particular classification. We agree with Mita that the headings and notes resolve the classification dispute in this case. Thus, there is no need to address the government's arguments with respect to the other GRI provisions.
With respect to the inquiry under GRI 1, the government argues that the trial court was incorrect in ruling that the toner cartridges at issue in this case constitute "parts and accessories of electrostatic photocopying apparatus" within the meaning of subheading 9009.90.00. According to the government, the toner cartridges can only be classified under heading 3707 as chemical preparations for photographic use. We disagree.
This court addressed the scope of a tariff subheading for parts in Amersham v. United States, 728 F.2d 1453 (Fed. Cir. 1984). That case concerned the classification of radioactive substances contained in foil disks. The disks were designed for use in smoke detectors. The court held that the disks should be classified as parts of smoke detectors rather than as radioactive substances in containers. See id. at 1456. In so ruling, the court adopted the analysis of an earlier case, Bruce Duncan Co. v. United States, 63 Cust. Ct. 412 (1969), in which the Customs Court had held that butane fuel ...