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Carl Zeiss, Inc. v. United States
Citations: 195 F.3d 1375; 21 I.T.R.D. (BNA) 1641; 1999 U.S. App. LEXIS 29536; 1999 WL 1018041Docket: 98-1546
Court: Court of Appeals for the Federal Circuit; November 10, 1999; Federal Appellate Court
Carl Zeiss, Inc. appealed a decision from the United States Court of International Trade that denied its motion for summary judgment and granted the United States' cross-motion regarding the classification of its imported ZMS 319 product. The U.S. Customs Service classified the ZMS 319, which includes a microscope and accessories tailored for neurosurgery, under subheadings 9011.10.40 and 9011.90.00 of the Harmonized Tariff Schedule of the United States (HTSUS). Zeiss contested this classification, arguing for a duty-free classification under subheading 9018.90.20. The court upheld Customs' classification, finding that heading 9011 more specifically described the ZMS 319 than heading 9018, emphasizing that 9011 is an eo nomine provision while 9018 is a use provision. The court dismissed Zeiss's reliance on prior case law, concluding that Zeiss failed to demonstrate that "compound optical microscope" held a distinct commercial meaning. Additionally, the court noted that the HTSUS Explanatory Notes supported Customs' decision. Ultimately, the classification under heading 9011 was affirmed, and the appeal was denied. Zeiss filed a timely appeal to the court, which has jurisdiction under 28 U.S.C. 1295(a)(5). The standard of review for the Court of International Trade's summary judgment in trade classification cases is de novo, focusing on the existence of genuine issues of material fact and the legal entitlement of the moving party to judgment. Determining the meaning of tariff terms is a legal question, where Chevron deference is applied to Customs' regulatory interpretations, but not to its rulings. The classification of imported items involves factual determinations, but in this case, the structure and use of the ZMS 319 are undisputed, meaning the analysis revolves around legal interpretations of relevant provisions and preferred headings. Zeiss contests Customs' classification of the ZMS 319 under heading 9011, which pertains to 'compound optical microscopes.' Zeiss argues that this classification is inappropriate as the term is commonly associated with microscopes for laboratory, industrial, and research uses, excluding surgical applications. While acknowledging that the ZMS 319 meets the dictionary definition of a compound optical microscope, Zeiss asserts that its specific surgical use and distinct commercial identity warrant a different classification. The government counters that the common meaning aligns with the dictionary definition, asserting that the ZMS 319's usage is irrelevant to its classification. The HTSUS General Rules of Interpretation (GRI) dictate classification, requiring adherence to the headings and relevant notes in a sequential manner. Under GRI 1, terms are interpreted based on their common and commercial meanings, unless legislative intent suggests otherwise. Courts may utilize their understanding and consult reliable sources for definitions. A party claiming that a tariff term should not be interpreted according to its common meaning must demonstrate a different, consistent, and widely accepted commercial meaning. The merchandise in question is classified under heading 9011 as a "compound optical microscope." Definitions from various dictionaries clarify that an optical microscope allows direct observation of light rays, distinguishing it from electron microscopes, while a compound microscope consists of an objective and an eyepiece mounted in a drawtube. The ZMS 319 OPMI microscope conforms to these definitions, exhibiting a second stage of magnification for observing already magnified images. Heading 9011 is characterized as an eo nomine classification, which describes goods by name rather than by use, meaning it should not be limited to industrial or research applications while excluding surgical uses. The exclusive surgical use of the ZMS 319 does not affect its classification under this provision. The court determined that Zeiss failed to prove a distinct commercial meaning for "compound optical microscope," thereby validating the common interpretation of the term. While agreeing that the ZMS 319 is classifiable under heading 9011, the court also acknowledges it qualifies under heading 9018 for instruments used in medical and surgical sciences. The next step is to determine which of the two classifications is preferred. A product that can be classified under multiple headings should be classified under the heading that provides the most specific description, as established by GRI 3(a). In this context, the rule of 'relative specificity' prioritizes provisions with more stringent requirements that accurately describe the product. Zeiss contends that heading 9018 should apply as it is a use provision, arguing it takes precedence over heading 9011, which is an eo nomine provision. The government counters that heading 9011's description of "compound optical microscopes" is more specific than the broader category of "instruments used in medical or surgical sciences," thus making it the appropriate classification. The government also asserts that a prior case, Nippon Kogaku, only classified slit-lamp microscopes under heading 9018, not all medical microscopes, and that the Explanatory Notes support this distinction. The conclusion aligns with the government's stance that the ZMS 319 should be classified under heading 9011 due to its more precise description. The term "compound optical microscopes" indicates specific structural requirements and is more narrowly defined than the broader term used in heading 9018. The general principle that a product described by both a use provision and an eo nomine provision is typically classified under the use provision is not mandatory and is only a guideline when provisions are equally descriptive. In this case, since they are not, the guideline does not apply. The court also clarifies that the Nippon Kogaku case did not establish a blanket classification for all medical microscopes under heading 9018, as its ruling was specifically limited to slit-lamp microscopes and supported by legislative history and explanatory notes. The Explanatory Notes to the Harmonized Tariff Schedule of the United States (HTSUS) clarify that surgical microscopes do not fall under heading 9018. Specifically, only 'ophthalmic binocular type microscopes' are mentioned as being excluded from heading 9011 and included under heading 9018. The Notes to heading 9018 indicate that microscopes classified under heading 9011 are excluded from heading 9018, emphasizing that only slit-lamp microscopes are categorized under heading 9018. Consequently, the classification of the ZMS 319 as a Compound Optical Microscope under heading 9011 is deemed appropriate. The Court of International Trade's decision affirming Customs' classification is upheld. The Explanatory Notes serve as guidance but are not legally binding. Additionally, Zeiss acknowledges that the OPMI meets the criteria of a 'stereoscopic microscope provided with a means for photographing the image' under subheading 9011.10.40. The document refrains from commenting on the exclusion of the term 'microscope' beyond its application to the slit-lamp microscope in question.