CIT Affirms CBP Classification of Tuna Packed 'In Oil'; Relies on 100 Year-Old Precedent
The Court of International Trade affirmed CBP’s Harmonized Tariff Schedule tariff classification of tuna imported by Del Monte from Thailand as packaged ‘in oil,’ despite containing at most 2.48 percent oil in the packaging, based on nearly hundred year-old appeals court precedent. CIT also affirmed CBP’s assessment of duties based on the invoice price for the tuna. Del Monte had argued that its Thai supplier did not comply with the terms of the purchase agreement, and later repaid the difference after importation, but CIT said the regulations are clear in requiring CBP to disregard any rebate of the price paid or payable after importation of merchandise.
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Del Monte imported its “starkist”-brand yellowfin and albacore tuna fillets already packaged in marinade from its Thai supplier. The albacore tuna’s marinade included 64.7 percent water and 2.48 percent sunflower oil, and the yellowfin tuna’s marinade included 90.6 percent water and 2.48 percent sunflower oil. DelMonte said the primary purpose of the oil was to act as a dispersant. CBP classified the merchandise under the 2005 edition of the HTS’ subheading 1604.14.10 (“Tunas and skipjack: in airtight containers: in oil”), dutiable at 35 percent. Del Monte said it should instead be classified under HTS subheading 1604.14.22 (“Tunas…In airtight containers:…Not in oil”), dutiable at 6 percent, or “Tunas…In airtight containers: …Not in oil:…Other”), dutiable at 12.5 percent.
CBP argued that U.S. Note 1 to HTS Chapter 16 is clear in saying that “the term ‘in oil’ means packed in oil or fat, or in added oil or fat and other substances.” CIT agreed, finding no merit in Del Monte’s argument that CBP didn’t consider the legislative history of the provision. The provision was clear on its face, and CBP didn’t need to do so, CIT said.
CIT also relied on the precedent of the now-defunct Customs Court of Appeals’ 1915 ruling in Strohmeyer & Arpe Co. v. United States. In Strohmeyer, the appeals court had ruled that imported fish packed in a substance containing 5.7 percent oil fell under a tariff provision for “Fish … packed in oil or in oil and other substances.” CBP pointed to a century of tariff enforcement to the effect that “in oil” means any amount of oil, said CIT, and “no amount of cogent, contrary reasoning of the kind plaintiff’s counsel now present dispels this phenomenon judicially.” While Strohmeyer involved a higher percentage of oil, the ruling did not indicate any threshold for oil amount. Del Monte failed to point to a relevant case since Strohmeyer, CIT said.
Finally, Del Monte argued that Food and Drug Administration regulations run contrary to CBP’s interpretation of the tuna as packed “in oil.” CIT cited its recent ruling in Bestfoods v. United States, ruling that FDA standards of identity are not controlling for tariff classification purposes.
(Del Monte Corporation v. United States, Slip Op. 12-131, dated 10/12/12, Judge Aquilino)
(Attorneys: William Outman of Baker & McKenzie for plaintiff Del Monte; Stuary Delery for defendant U.S. government)