Well Luck Co. v. United States
2017 CIT 16
| Ct. Intl. Trade | 2017Background
- Well Luck imported three varieties of whole sunflower seeds in-shell (All Natural, Spiced, Coconut) that were machine/hand-selected, heat-processed (wet-cooked for some varieties and oven-heated to ~302°F), salted, cooled, and packaged for human consumption.
- Ingredients vary by variety (e.g., salt, spices, artificial sweeteners/flavors, MSG); all seeds are Helianthus annuus and intended as snacks, not for oil extraction.
- Customs classified the imports under HTSUS 2008.19.90 (prepared/preserved nuts & seeds; 17.9% duty). Well Luck protested, arguing classification under HTSUS 1206.00.00 (sunflower seeds; duty-free).
- The parties filed cross-motions for summary judgment; the court reviewed classification de novo under the HTSUS General Rules of Interpretation and Explanatory Notes (ENs).
- The court found the operative facts undisputed (processing temperatures/times, salt added, seeds not fungible with raw seeds, seeds rendered unviable for sowing by the heating process).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper tariff classification (1206 vs 2008) | Seeds are "sunflower seeds" under Heading 1206 and thus duty-free | Seeds are "prepared/preserved" and fall under 2008.19.90 (prepared snacks) | 2008.19.90 governs; summary judgment for U.S. Customs granted |
| Scope of "sunflower seeds" in Heading 1206 | Common/commercial meaning includes roasted/salted/flavored seeds | ENs and HTSUS structure limit 1206 to minimally processed seeds suitable for general uses (sowing, oil extraction) | "Sunflower seeds" in 1206 limited to seeds not processed so as to preclude general uses |
| Effect of processing on classification | Processing for snack use does not remove seeds from 1206 because term is eo nomine and lacks express exclusions | High-heat roasting/wet-cooking and salting render seeds unsuitable for sowing/oil extraction, so excluded from 1206 | Processing here (oven 302°F; wet-cook at 120°C; added salt/flavoring) makes seeds unsuitable for general use and thus outside 1206 |
| Application of Explanatory Notes and HTSUS structure | ENs cannot override plain statutory language; 1206 covers all forms absent explicit exclusion | ENs and tariff structure (Chapter 12 vs Chapter 20) inform meaning and support treating heavily processed seeds as Chapter 20 goods | ENs and HTSUS structure are persuasive; they support classifying heavily processed sunflower seeds under Chapter 20 (2008.19.90) |
Key Cases Cited
- Link Snacks, Inc. v. United States, 742 F.3d 962 (Fed. Cir. 2014) (two-step classification analysis; meaning of tariff terms is question of law)
- BenQ Am. Corp. v. United States, 646 F.3d 1371 (Fed. Cir. 2011) (HTSUS terms construed by common commercial meaning)
- StoreWALL, LLC v. United States, 644 F.3d 1358 (Fed. Cir. 2011) (ENs are persuasive absent contradiction with commercial meaning)
- GRK Canada, Ltd. v. United States, 761 F.3d 1354 (Fed. Cir. 2014) (courts should not consider actual/intended use when defining eo nomine terms unless relevant)