Pleasure-Way Indus., Inc. v. United States
2016 CIT 100
| Ct. Intl. Trade | 2016Background
- Pleasure-Way imported 144 Daimler Chrysler Sprinter cargo vans exported to Canada, where they were upfitted into Class B motorhomes (kitchenette, wet bath, cabinetry, plumbing, sleeping areas, electronics, etc.) and re-entered the U.S. between 2008–2009.
- Customs liquidated the entries under HTSUS 8703.33.00 (motor vehicles principally designed for the transport of persons) with a 2.5% duty; Pleasure‑Way protested and claimed duty‑free treatment under HTSUS 9802.00.50 (articles returned after being exported for repairs/alterations) and NAFTA.
- Pleasure‑Way had sought a prior Customs ruling that initially granted 9802 treatment, but Customs revoked that ruling as void ab initio for procedural reasons; Customs later denied the protests and classified the goods under 8703.33.00.
- The parties stipulated the physical facts of the conversions; the sole legal dispute is tariff classification (a legal question) because the merchandise description is undisputed.
- Customs and Pleasure‑Way disputed whether the exported vans were “finished” for their ultimate intended use (motorhomes) and whether Canadian processing destroyed essential characteristics or created a new commercial article.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether van conversions qualify for duty‑free treatment under HTSUS 9802.00.50 as "repairs or alterations" | Vans were "finished" as exported for DCAG's intended use (drivable or upfittable); Canadian work were alterations that advanced value without creating a new article, so 9802 applies and NAFTA duty‑free treatment follows | Exported vans were unfinished for the ultimate intended use (motorhomes); Canadian processing went beyond permissible alterations, destroyed essential characteristics and produced a new commercial product, so 9802 does not apply | Court held for the U.S.: vans were not "finished" for the intended use as motorhomes and the Canadian work created a new, commercially different article; classification under 8703.33.00 is correct |
Key Cases Cited
- Orlando Food Corp. v. United States, 140 F.3d 1437 (Fed. Cir.) (classification two‑step framework)
- Cummins Inc. v. United States, 454 F.3d 1361 (Fed. Cir.) (when facts undisputed classification is question of law)
- Bausch & Lomb, Inc. v. United States, 148 F.3d 1363 (Fed. Cir.) (summary judgment appropriate where classification collapses to law)
- United States v. Mead Corp., 533 U.S. 218 (Sup. Ct.) (deference governed by Skidmore/Mead framework)
- Warner‑Lambert Co. v. United States, 407 F.3d 1207 (Fed. Cir.) (court's independent responsibility to construe HTSUS terms)
- Rocknel Fastener, Inc. v. United States, 267 F.3d 1354 (Fed. Cir.) (construction of tariff terms)
- May Food v. United States, 616 F. Supp. 2d 1349 (Ct. Int'l Trade) (exported goods unsuitable for ultimate intended use are unfinished)
- Marubeni Am. Corp. v. United States, 821 F. Supp. 1521 (Ct. Int'l Trade) (distinguishing vehicles by commercial use)