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Best Key Textiles Co., Ltd. v. United States

United States Court of Appeals, Federal Circuit

February 3, 2015

BEST KEY TEXTILES CO. LTD., Plaintiff-Appellant,
v.
UNITED STATES, Defendant-Appellee

Appeal from the United States Court of International Trade in No. 1:13-cv-00367-RKM, Senior Judge R. Kenton Musgrave.

JOHN M. PETERSON, Neville Peterson LLP, of New York, New York, argued for plaintiff-appellant. With him on the brief were MARIA E. CELIS, RICHARD F. O'NEILL, and RUSSELL A. SEMMEL.

BEVERLY A. FARRELL, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were STUART F. DELERY, Assistant Attorney General, JEANNE E. DAVIDSON, Director, and MARCELLA POWELL, Trial Attorney, of Washington, DC, and AMY M. RUBIN, Assistant Director, International Trade Field Office, of New York, New York. Of counsel on the brief were CLAUDIA BURKE, Assistant Director, United States Department of Justice, of Washington, DC, and PAULA S. SMITH, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, of Washington, DC.

PHILIP YALE SIMONS, Simons & Wiskin, of South Amboy, New Jersey, for amicus curiae. With him on the brief was JERRY P. WISKIN.

Before DYK, O'MALLEY, and WALLACH, Circuit Judges.

OPINION

Page 1357

Wallach, Circuit Judge.

Appellant Best Key Textiles Co., Ltd. (" Best Key" ) appeals the decision of the United States Court of International Trade (" CIT" ) denying its Motion for Judgment on the Agency Record. Best Key Textiles Co. v. United States ( Best Key II ), No. 13-00367, slip op. 14-22, (Ct. Int'l Trade Feb. 25, 2014) (Appellant's App. (" App." ) 1-27). Because the CIT did not have jurisdiction over the case, this court vacates and remands with instructions to dismiss for lack of jurisdiction.

Page 1358

Background

Best Key, a Hong Kong-based textile manufacturer, produces " Best Key Metalized Yarn" (" Best Key's yarn" ), which is produced from " polyester chips melted into a slurry to which" metal nanopowders (usually zinc or aluminum) and titanium dioxide are added. " The slurry is then 'fired' through a spinneret," forming monofilament yarns.[1] Id. The metal nanopowders " are permanently and inseparably combined with the polyester . . . at the moment of yarn formation." Appellant's Br. 4.

On October 3, 2011, Appellant sought a pre-importation ruling from United States Customs and Border Protection (" Customs" ) pursuant to 19 C.F.R. § 177.2 (2011) concerning the proper tariff classification in the Harmonized Tariff Schedule of the United States (" HTSUS" ) of Best Key's yarn. With the request, Best Key included a laboratory report describing the yarn as having a fiber content of 100% polyester, with one type containing 0.7% metal by weight and a second type containing 0.74% metal by weight.

In Customs New York Ruling N187601 (Oct. 25, 2011) (App. 41-42) (the " Yarn Ruling" ), Customs classified Best Key's yarn as metalized yarn of HTSUS 5605.00.90 (2011), dutiable at 13.2% ad valorum, based on Best Key's laboratory reports and samples of the yarn submitted to Customs. HTSUS 5605.00.90 covers: " Metalized yarn, whether or not gimped, being textile yarn, or strip or the like of heading 5404 or 5405, combined with metal in the form of thread, strip or powder or covered with metal: Other." HTSUS 5404 and 5405, referenced by HTSUS 5605.00.90, cover " synthetic and artificial monofilament[, respectively,] of 67 decitex[2] or more and of which no cross-sectional dimension exceeds 1 mm; strip and the like (for example, artificial straw) of [synthetic or artificial, respectively] textile materials of an apparent width not exceeding 5 mm." In the Yarn Ruling, Customs stated " [f]or tariff purposes, a yarn combined with metal in the form of powder is considered a metalized yarn." App. 41. While metalized yarns of heading 5605 carry a higher duty rate than non-metalized yarns, metalized yarns can be used to make apparel products that carry a much lower duty rate than garments made from non-metalized yarns.

On December 5, 2011, Best Key requested a Customs Ruling regarding the proper classification of a sample " Johnny Collar" men's knit pullover garment made of Best Key's yarn. Citing the Yarn Ruling, Appellant asserted the pullover was classifiable under HTSUS 6105.90.8030 as a men's shirt of other textile materials with a duty rate of 5.6% ad valorem, as opposed to HTSUS 6110.30.3053 for men's shirts made of polyester, which carries a duty rate of 32% ad valorem. Customs conducted its own laboratory report, finding trace amounts of metal in the shirt. Based on this small amount of metal and the sample's label that stated " 100% polyester," Customs classified the sample as a pullover of man-made non-metalized fibers under HTSUS 6110.30.3053 in Customs New York Ruling N196161 (Apr. 13, 2012) (" the Johnny Collar Ruling" ) (App. 94-95).

Appellant requested a reconsideration of the Johnny Collar Ruling. In response, Customs Headquarters reviewed both the Yarn Ruling and the Johnny Collar Ruling, along with additional submissions from Best Key. On April 24, 2013, Customs

Page 1359

published notices of proposed revocation of both rulings, providing for a thirty-day period for public comment. Proposed Revocation of Ruling Letter & Proposed Revocation of Treatment Relating to the Tariff Classification of a " Johnny Collar" Pullover Garment, 47 Cust. B. & Dec. No. 18, at 26 (Apr. 24, 2013) (App. 126-28); Proposed Revocation of Ruling Letter & Proposed Revocation of Treatment Relating to the Tariff Classification of a Polyester Monofilament Yarn, 47 Cust. B. & Dec. No. 18, at 33 (Apr. 24, 2013) (App. 129-31). Customs received comments from Best Key ...


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