Ford Motor Company v. United States
926 F.3d 741
Fed. Cir.2019Background
- Ford imported model year 2012 Transit Connect 6/7 vans from Turkey; the vehicles were built on the Ford Focus platform and imported with second‑row seats and seat belts but were processed at the port to remove the second‑row seats, seat belts, and sometimes windows, and to install cargo flooring before delivery to customers.
- Customs classified the Transit Connect 6/7s as "motor vehicles for the transport of goods" under HTSUS Heading 8704, subheading 8704.31.00 (25% duty). Ford sued, arguing the vehicles are "motor vehicles principally designed for the transport of persons" under HTSUS Heading 8703, subheading 8703.23.00 (2.5% duty).
- The U.S. Court of International Trade granted summary judgment to Ford, finding the vehicles principally designed for passengers based on structural and auxiliary features; Customs’ post‑importation processing was not treated as a disguise.
- On appeal, the Federal Circuit reviewed de novo, addressed whether HTSUS Heading 8703 (an eo nomine heading) inherently requires consideration of intended use, and examined structural features, auxiliary features (notably cost‑reduced rear seats designed for removal), and commercial use/marketing.
- The Federal Circuit reversed the CIT: it held that although Heading 8703 is eo nomine, its phrase "principally designed for the transport of persons" inherently invites consideration of intended use and related pre‑ and post‑importation design/marketing; applying those factors, the Transit Connect 6/7s are principally designed for transporting goods and are classifiable under Heading 8704 and subheading 8704.31.00.
Issues
| Issue | Plaintiff's Argument (Ford) | Defendant's Argument (U.S.) | Held |
|---|---|---|---|
| Whether HTSUS Heading 8703 ("motor vehicles principally designed for the transport of persons") is an eo nomine heading that permits consideration of intended/principal use | Heading 8703 is eo nomine; classification should be based on the vehicle's physical condition as imported without weighing intended use | Heading 8703's wording ("principally designed for") allows consideration of intended use, marketing, and design objectives | Held that Heading 8703 is eo nomine but its "principally designed for" language inherently suggests consideration of intended/principal use; the CIT erred by refusing to consider use |
| Whether the Transit Connect 6/7s, in their condition as imported and considering design intent, are principally designed for passenger transport (8703) | The vehicles’ structural similarities to Transit Connect passenger models and presence of seats/seat belts show they are principally designed for persons | The vehicles’ auxiliary features (cost‑reduced removable rear seats, exposed metal cargo floor, absence of passenger comforts), marketing, and port processing show they are designed principally for goods | Held that auxiliary features and use/marketing considerations show the vehicles are not principally designed for passengers; CIT erred in classifying under 8703 |
| Whether Customs permissibly considered pre‑ and post‑importation design intent and immediate port processing when assessing classification | Ford argued post‑importation removal of seats is irrelevant; classification must rest on the imported condition alone | Government argued pre‑importation design and immediate post‑entry processing that converts imports to cargo vans reflect intended/principal use | Held that pre‑importation design intent and immediate post‑entry processing are relevant to the inquiry into what the vehicle is principally designed for; Customs’ consideration was proper here |
| Proper classification/subheading if not 8703 | Ford urged 8703 classification (lower duty) and contended alternate arguments about Customs practice | Government maintained the vehicles fall under Heading 8704 (motor vehicles for transport of goods) and, given GVWR, under subheading 8704.31.00 | Held vehicles are classifiable under Heading 8704 and subheading 8704.31.00 (spark‑ignition engine and GVWR not exceeding five metric tons) |
Key Cases Cited
- Marubeni Am. Corp. v. United States, 35 F.3d 530 (Fed. Cir.) ("principally designed" language requires weighing structural/auxiliary features and design/marketing to assess intended passenger use)
- Carl Zeiss, Inc. v. United States, 195 F.3d 1375 (Fed. Cir.) (generally do not read a use limitation into an eo nomine provision unless the name implies use)
- GRK Can., Ltd. v. United States, 761 F.3d 1354 (Fed. Cir.) (eo nomine headings may require consideration of intended use where the article’s identity depends on use)
- BenQ Am. Corp. v. United States, 646 F.3d 1371 (Fed. Cir.) (principal‑use analysis and Carborundum factors for commercial fungibility and purchaser expectations)
- United States v. Carborundum Co., 536 F.2d 373 (CCPA) (factors for assessing principal use: physical characteristics, manner of use, purchaser expectations, advertising/market environment)
- United States v. Citroen, 223 U.S. 407 (U.S. 1912) (classification must generally be based on the article in the condition imported)