Arko Foods International, Inc. v. United States
2011 U.S. App. LEXIS 16545
| Fed. Cir. | 2011Background
- Mellorine is a frozen dessert imported by Arko Foods International, Inc. in six flavors (purple yam, fruit salad, mango, macapuno, durian, Quezo Royale).
- The parties agree mellorine falls under HTSUS Chapter 21, Heading 2105, but dispute the subheading (whether it is an article of milk).
- Customs liquidated under 2105.00.40 (dairy products described in Additional Note 1 to Chapter 4) on the theory it is an article of milk.
- Arko argued under GRI 3(b) that mellorine is a composite good and prima facie classifiable under 0811 or 2106, with the proper subheading to be determined by the essential-ingredient test and related factors.
- The trial court concluded mellorine is classifiable under 2105 as edible ice, but not under 2105.00.40 as an article of milk; it classified mellorine under 2105.00.50 (other) after applying the essential-character analysis.
- The government appeals, arguing that mellorine is an article of milk under Additional Note 1 and should be under 2105.00.40.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether mellorine is an article of milk under Additional Note 1 | Arko: not an article of milk; essential-character analysis required | U.S.: mellorine is an article of milk under Additional Note 1 | No; not an article of milk; classified as 2105.00.50 (other) |
| Whether the essential-character test applies to determine article of milk | Arko: the essential-character test favors not milk | U.S.: essential character governs classification under GRI 3(b) | Yes; mellorine lacks essential character of milk |
| Whether the court correctly applied GRIs and Pillowtex framework | Arko: should apply GRI 2/3 with essential character | U.S.: consistent with Pillowtex framework to assess essential character | Trial court properly applied essential-character approach; upheld 2105.00.50 |
Key Cases Cited
- Pillowtex Corp. v. United States, 171 F.3d 1370 (Fed. Cir. 1999) (essential character test governs misclassification when determining article of milk)
- Home Depot U.S.A., Inc. v. United States, 491 F.3d 1334 (Fed. Cir. 2007) (expository guidance on essential character and GRI 3(b))
- Millenium Lumber Distrib., Ltd. v. United States, 558 F.3d 1326 (Fed. Cir. 2009) (interpretation of HTSUS headings; statutorily binding notes; analytical framework)
- Pillowtex Corp. v. United States, 171 F.3d 1370 (Fed. Cir. 1999) (article of milk analysis and essential character in context of 2105/2106)
- Drygel, Inc. v. United States, 541 F.3d 1129 (Fed. Cir. 2008) (standard of de novo review for tariff classification)