Ford Motor Co. v. United States
2017 Ct. Intl. Trade LEXIS 105
Ct. Intl. Trade2017Background
- Ford imported MY2012 Transit Connect "6/7" vehicles from Turkey that were manufactured and entered the U.S. with a second‑row seat (declared as passenger vehicles under HTSUS 8703.23.00, 2.5% duty) but then had that seat and related restraints removed at a port processor before delivery to customers as two‑seat cargo vans.
- CBP investigated and issued HQ H220856, concluding the imports were motor vehicles for the transport of goods (HTSUS 8704.31.00, 25% duty), finding the passenger features an artifice to avoid the higher duty.
- The sole entry at issue was liquidated by CBP under 8704.31.00; Ford protested and sued in the Court of International Trade. Parties filed cross‑motions for summary judgment; supplemental undisputed facts about the cost‑reduced rear seat (CRSV‑2) were provided.
- The CRSV‑2 present at importation lacked headrests and some wiring/components, used cheaper cover fabric, retained seat frames, foam, three seatback wires, seat belts and LATCH anchors, and passed H‑Point engineering review for FMVSS compliance per Ford/Otosan engineering judgment.
- The court reconsidered a prior opinion in light of the Joint Supplemental Rule 56.3 facts and concluded CBP’s ruling lacked persuasive force, holding the Transit Connect 6/7s are classifiable under HTSUS 8703.23.00 (passenger vehicles) rather than 8704.31.00 (goods vehicles).
Issues
| Issue | Plaintiff's Argument (Ford) | Defendant's Argument (United States / CBP) | Held |
|---|---|---|---|
| Proper tariff classification (8703 v. 8704) | Vehicles are classifiable under 8703.23.00 based on physical condition at importation (seat present) and structural/auxiliary features indicating passenger design | Vehicles are cargo vans "from birth"; the second‑row seat and related features were mere artifices to obtain lower duty, so classify under 8704.31.00 | Held for Ford: vehicle condition at importation (including CRSV‑2 and other features) supports classification under 8703.23.00 |
| Relevance of post‑importation removal / importer intent | Post‑importation removal or Ford’s intent to remove seats is legally immaterial; classification is based on condition at importation (legitimate tariff engineering permitted) | Removal and premeditated scheme show disguise or artifice; CBP may consider post‑importation practices and intent to avoid duty | Held: intent/post‑importation removal immaterial; disguise/artifice doctrine not proven—classification based on imported condition |
| How to apply Marubeni test (structural and auxiliary features) | Marubeni requires examination of structural and auxiliary design features present at importation; CRSV‑2 and vehicle features indicate principal design to transport persons | Marubeni allows considering intended/actual use; ephemeral features designed to fool CBP should be disregarded | Held: apply Marubeni by examining structural and auxiliary features at importation; features present point to passenger design |
| Role of use/principal use analysis (Carborundum/ARI) | Heading 8703 is an eo nomine provision judged by Marubeni (design/features), not a use‑controlled heading requiring Carborundum factors | CBP can and should consider use, marketing, VIN and GVWR and post‑importation use to determine principal design | Held: Not necessary to apply principal/actual use or Carborundum here; heading 8703 interpreted via Marubeni (physical/design features) and those features favor 8703 |
Key Cases Cited
- Marubeni Am. Corp. v. United States, 35 F.3d 530 (Fed. Cir. 1994) (establishes test for distinguishing vehicles "principally designed for the transport of persons" by examining structural and auxiliary features)
- United States v. Citroen, 223 U.S. 407 (U.S. 1912) (classification depends on article's condition at importation; disguise or artifice doctrine discussed)
- Merritt v. Welsh, 104 U.S. 694 (U.S. 1881) (manufacturer may fashion goods to obtain lowest duty absent deception)
- Heartland By-Products, Inc. v. United States, 264 F.3d 1126 (Fed. Cir. 2001) (Customs' interpretation of "foreign substances" in sugar syrup tariff and discussion of post‑importation processing; court analyzed deference and disguise/artifice issues)
- United States v. Mead Corp., 533 U.S. 218 (U.S. 2001) (agency rulings receive Skidmore "power to persuade" deference)
- GRK Can., Ltd. v. United States, 761 F.3d 1354 (Fed. Cir. 2014) (use may inform eo nomine interpretation in some contexts; court discussed when principal/actual use analysis is appropriate)
- Sigma-Tau HealthScience, Inc. v. United States, 838 F.3d 1272 (Fed. Cir. 2016) (limits on using Carborundum factors for eo nomine headings)