CSMS Message: 01-000167

TO: ALL ABI BROKERS.
FROM: CHERI B ZZ-PARSONS

SUBJECT: HAGGAR/STRAUSS AMENDED

DATE: 02/05/2001

AMENDED AMENDED AMENDED AMENDED AMENDED

FEBRUARY 2, 2001

TO: ALL DIRECTORS, FIELD OPERATIONS
ALL PORT DIRECTORS

FROM: DIRECTOR, TRADE PROGRAMS

PASS TO: ASSISTANT PORT DIRECTORS, TRADE, NATIONAL IMPORT
SPECIALISTS, IMPORT SPECIALISTS, ENTRY OFFICERS,
FINES AND PENALTY OFFICERS, IMPORTERS, BROKERS AND
OTHER INTERESTED PARTIES

SUBJECT: TBT-00-019-01 COURT DECISIONS CONCERNING THE
APPLICABILITY OF 9802.0080 FOR GARMENTS SUBJECT TO PROCESSES
IDENTIFIED IN 19 CFR 10.16(C)

PURPOSE:

THE PURPOSE OF THIS NOTICE IS TO INFORM CUSTOMS PORTS OF
DECISIONS MADE BY THE UNITED STATES COURT OF APPEALS FOR THE
FEDERAL CIRCUIT WHICH REVERSED LOWER COURT DECISIONS ON WHETHER
IMPORTED ARTICLES QUALIFIED FOR A PARTIAL EXEMPTION OF DUTIES
UNDER SUBHEADING 9802.00.80.

BACKGROUND:

THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT HAS
CONCLUDED THAT SPECIFIED OPERATIONS IDENTIFIED IN 19 CFR
10.16(C), I.E., PERMAPRESSING AND BLEACHING OPERATIONS CONDUCTED
ON PARTS, ARE NOT INCIDENTAL TO ASSEMBLY AND THAT THE POSITION
TAKEN BY CUSTOMS IS A REASONABLE INTERPRETATION OF THE STATUTE
AND THEREFORE IS ENTITLED TO DEFERENCE. CUSTOMS DETERMINATION
THAT THE PARTS AT ISSUE DO NOT QUALIFY FOR THE PARTIAL EXEMPTION
FROM DUTY ALLOWED BY HTS. 9202.00.80 WAS SUSTAINED. UPON REMAND
FROM THE SUPREME COURT, HAGGAR APPAREL CO. V. UNITED STATES,
526 U.S. 380 (1999), THE FEDERAL CIRCUIT COURT FOUND CUSTOMS
REGULATION REASONABLE AND ENTITLED TO JUDICIAL DEFERENCE AND
ALSO FOUND THAT CUSTOMS PROPERLY APPLIED THE REGULATION TO THE
PERMAPRESSING AT ISSUE IN HAGGAR. CONSEQUENTLY, ON JULY 27,
2000, THE FEDERAL CIRCUIT REVERSED THE COURT OF INTERNATIONAL
TRADE AND REMANDED THE CASE TO THAT COURT WITH INSTRUCTIONS TO
ENTER JUDGMENT FOR THE UNITED STATES, HAGGAR APPAREL CO. V.
UNITED STATES, 222 F.3D 1337 (FED. CIR. 2000). WHEN HAGGAR
PETITIONED THE FEDERAL CIRCUIT FOR A REHEARING, THE PETITION WAS
DENIED. HAGGAR APPAREL CO. V. UNITED STATES,2000 U.S. APP.
LEXIS 27448 (OCTOBER 19, 2000). IN A COMPANION CASE,
LEVI STRAUSS & COMPANY V. UNITED STATES, 222 F.3D 1344
(FED. CIR. 2000), THE FEDERAL CIRCUIT UPHELD CUSTOMS APPLICATION
OF 19 CFR 10.16(C)(4) TO THE STONEWASHING OR ENZYME WASHING
OPERATION OF THE DENIM AT ISSUE IN THAT CASE. JUST AS IN
HAGGAR, THE FEDERAL CIRCUIT COURT REVERSED THE COURT OF
INTERNATIONAL TRADE AND REMANDED THE CASE TO THAT COURT WITH
INSTRUCTIONS TO ENTER JUDGMENT FOR THE GOVERNMENT. THE FEDERAL
CIRCUIT COURT LATER DENIED LEVI'S PETITION FOR REHEARING. LEVI
STRAUSS & COMPANY V. UNITED STATES 2000 U.S. APP. LEXIS 27448
(OCTOBER 19, 2000). HAGGAR AND LEVI STRAUSS HAVE UNTIL THE END
OF JANUARY TO APPEAL THE FEDERAL CIRCUIT'S DECISION TO THE
SUPREME COURT. ABSENT SUCH AN APPEAL OR IF THE SUPREME COURT
REFUSES TO HEAR AN APPEAL, THE CASES WILL RETURN TO THE COURT OF
INTERNATIONAL TRADE FOR ACTION IN ACCORDANCE WITH THE FEDERAL
CIRCUIT'S INSTRUCTIONS.

ACTION:

ALL PORTS ARE INSTRUCTED NOT TO LIQUIDATE CLAIMS OF 9802.00.80
FOR COMPONENTS THAT HAVE UNDERGONE TREATMENT IDENTIFIED IN
19 CFR 10.16(C) FOR THOSE ENTRIES ASSOCIATED WITH EITHER COURT CASE
UNTIL THE FINAL APPEAL PROCESS IS EXHAUSTED. ENTRIES NOT ASSOCIATED
WITH EITHER COURT CASE SHOULD UNDERGO NORMAL LIQUIDATION PROCEDURES,
INCLUDING CURRENT ENTRIES FROM HAGGAR APPAREL CO. AND LEVI STRAUSS
& COMPANY.

INFORMATION:

IF YOU HAVE FURTHER QUESTIONS CONCERNING THIS MATTER YOU MAY
CONTACT CHERIE PARSONS AT (202) 927-7002 OR BOB ABELS AT
(202) 927-1959.

\S\
ELIZABETH G. DURANT

CC: EXECUTIVE DIRECTOR, FIELD OPERATIONS