Mita Copystar America v. United States

Citations: 160 F.3d 710; 20 I.T.R.D. (BNA) 1707; 1998 U.S. App. LEXIS 28195; 1998 WL 771335Docket: 98-1203

Court: Court of Appeals for the Federal Circuit; November 6, 1998; Federal Appellate Court

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In the case of Mita Copystar America v. United States, the Federal Circuit examined the customs classification of imported toner cartridges used in electrostatic photocopiers. The Customs Service had classified the cartridges under the Harmonized Tariff Schedule of the United States (HTSUS) subheading 3707.90.30, which pertains to "chemical preparations for photographic uses" and carries an 8.5% duty. Mita Copystar argued for classification under subheading 9009.90.00, which covers "parts and accessories of electrostatic photocopying apparatus" and is duty-free.

The Court of International Trade upheld the Customs Service's classification, but the Federal Circuit reversed this decision. It determined that the toner cartridges should be classified as "parts and accessories" under subheading 9009.90.00, based on their essential role in the operation of photocopiers. The court referenced Rule 1 of the General Rules of Interpretation (GRI) of the HTSUS, indicating that classification should follow the specific terms of the headings and relevant notes.

The trial court acknowledged that both classifications were applicable, noting that the toner cartridges were essential for photocopier function and dedicated to specific models. However, it also highlighted conflicting notes within the HTSUS: note 2 of section VI, which suggested the cartridges should fall under heading 3707 due to their retail packaging, versus note 2(b) of chapter 90, which indicated that items meant solely for particular machines should be classified with those machines. The Federal Circuit’s conclusion favored the latter, justifying the classification of the toner cartridges as "parts and accessories" under subheading 9009.

The court determined that the classification dispute regarding toner cartridges was not resolved by GRI 1 and proceeded to apply GRI 3(b), which states that composite goods should be classified based on the component that imparts their essential character. The court found that toner provides this essential character, leading to the classification of toner cartridges as "chemical preparations for photographic uses" under subheading 3707.90.30. The case referenced prior litigation (Mita Copystar America v. United States), where the classification of photocopy toner was affirmed as a chemical preparation, but noted that it did not address whether toner cartridges should be classified as parts of photocopy machines under Chapter 90 of the HTSUS. 

The government argued for classification under heading 3707 solely as chemical preparations, contesting the trial court's ruling that toner cartridges qualify as "parts and accessories of electrostatic photocopying apparatus" under subheading 9009.90.00. However, the court disagreed, referencing the Amersham v. United States case, which established that items designed for use within a device can be classified as parts of that device rather than their individual components. The analysis from earlier cases supported the conclusion that the toner cartridges, which are sold with toner and are integral to the photocopier's function, should similarly be classified as parts.

The government attempts to differentiate the cases of Amersham and Duncan by noting their reliance on a previous tariff statute, arguing that the definition of "part" may differ under the HTSUS. However, the government fails to provide evidence indicating that the definition of "part" changed under the HTSUS. The argument based on GRI 3(b), which pertains to composite articles, is deemed irrelevant by the trial court since GRI 1 governs the classification. If toner cartridges qualify as "parts" of a photocopy machine, classification under GRI 1 is sufficient.

The government also argues against classifying toner cartridges as parts by referencing American Express v. United States, which ruled that exposed film is not a part of a camera. However, the reasoning in that case does not support the government's position, as the court differentiated between integral parts and mere materials. The toner cartridge, akin to a typewriter's ribbon spool, functions as an essential component of the photocopy machine, while the paper is merely a medium for operation.

Additionally, the trial court found toner cartridges classified under both subheading 9009.90.00 and subheading 3707.90.30 as "chemical preparations for photographic uses." While the parties dispute this classification on appeal, it is assumed for argument's sake that both subheadings apply. Nonetheless, note 2(b) of chapter 90 mandates classification under subheading 9009.90.00. The trial court did not find note 2(b) decisive, interpreting note 2 of Section VI as conflicting and requiring classification under heading 3707. Mita contends this interpretation is erroneous, and the agreement is that the trial court misapplied note 2 of Section VI regarding toner cartridges.

Section VI of the tariff schedule, titled "Products of the Chemical or Allied Industries," includes Note 2, which mandates that goods classified under heading 3707, when packaged for retail sale, must be classified in that heading exclusively. Mita argues that its toner, classified as a mixed product under subheading 3707.90.30, does not fall under the restriction of Note 2 because it is not classified "by reason of" being packaged for retail. Instead, Note 2 applies only to unmixed products specified under subheading 3707.90.60, which do require such packaging for classification in heading 3707. The government does not contest Mita's position, which the court finds persuasive. Consequently, Note 2 does not prevent toner cartridges from being classified under other headings. The trial court's determination that the toner cartridges qualify as "parts" of photocopy machines under subheading 9009.90.00 stands, as Note 2(b) of chapter 90 states that parts should be classified with their respective machines, resolving any conflict between subheading 3707.90.60 and subheading 9009.90.00. The court's earlier decision is reversed.