[00:00:28] Speaker 04: We will hear argument next in Pleasure Way Industries versus United States, number 17-1190. [00:00:51] Speaker 02: Mr. Peterson. [00:00:55] Speaker 03: Good morning. [00:00:56] Speaker 03: We are pleased to court. [00:00:57] Speaker 03: I'm John Peterson and with my co-counsel Richard O'Neill we represent Pleasure Way Industries. [00:01:03] Speaker 03: Question in this case is whether the merchandise that Pleasure Way re-imported into the United States qualified for entry under the repair or alteration provision of the tariff. [00:01:15] Speaker 03: Now Pleasure Way buys finished Daimler-Chrysler Sprinter vans from dealers in the United States. [00:01:23] Speaker 03: These vans are ready to go. [00:01:24] Speaker 03: They're warrantied. [00:01:26] Speaker 03: They have a vehicle identification number that identifies them as finished vehicles. [00:01:32] Speaker 03: Pleasure Way then takes these into Canada, where it upfits the cargo compartment of the vans, and it turns them into Class B motorhomes. [00:01:43] Speaker 03: Now, if you see one of these things driving on the road, and we've all seen a Sprinter van, the Class B motorhome won't look any different from the outside. [00:01:51] Speaker 03: From the inside, it will have things in the cargo bag. [00:01:55] Speaker 03: that will be fitted there. [00:01:56] Speaker 03: There'll be a bed, perhaps a television, a rudimentary sink. [00:02:00] Speaker 04: There were windows and things in the original car? [00:02:03] Speaker 04: Pardon? [00:02:04] Speaker 04: There were windows and stuff like that in the original car? [00:02:08] Speaker 03: Pretty much the same. [00:02:09] Speaker 03: They may put some windows on it, but the body, the wheelbase, everything is maintained. [00:02:14] Speaker 04: When you said you wouldn't see any difference if you saw the two going down the street, one had a bunch of windows and the other was a flat pan that would look different. [00:02:21] Speaker 03: Right. [00:02:21] Speaker 03: You would see some windows on the van, but these are sort of relatively minor changes. [00:02:27] Speaker 03: How big are the windows? [00:02:28] Speaker 03: Pardon? [00:02:28] Speaker 03: How big are the windows? [00:02:30] Speaker 03: I think they put windows on the side. [00:02:32] Speaker 03: I think two. [00:02:35] Speaker 04: Petri windows? [00:02:36] Speaker 04: Pardon? [00:02:36] Speaker 04: Petri windows and dry witches. [00:02:39] Speaker 03: You think they're wide windows. [00:02:42] Speaker 03: They run most of the length of the van, as I recall. [00:02:49] Speaker 03: They're depicted in the appendix on page 284, so they're relatively [00:02:56] Speaker 03: Maybe windows going along. [00:02:58] Speaker 04: That's what I thought. [00:02:59] Speaker 04: Yeah. [00:03:00] Speaker 04: And the van window was added in Canada. [00:03:04] Speaker 03: Yeah. [00:03:05] Speaker 03: And various accoutrements were put into the cargo bed so that people use these vans. [00:03:11] Speaker 04: That would be a question of fact, whether or not they look the same. [00:03:14] Speaker 03: Yeah. [00:03:15] Speaker 03: Well, I mean, people use cargo vans to take various things around with them. [00:03:19] Speaker 03: You can use it for loose packages. [00:03:20] Speaker 03: You can put a tool rack in there and use it as your professional carpentry or electrician van. [00:03:26] Speaker 03: And in this case, people put sleeping and living accommodations, and that's the cargo, if you will, that they drag around with them or travel around with. [00:03:35] Speaker 03: Now, the Court of International Trade denied us repair and alteration treatment for two reasons, and we think they were both in error. [00:03:42] Speaker 02: First, the court said... Can you focus on the commercially different good element requirement? [00:03:52] Speaker 03: Which element? [00:03:53] Speaker 02: The commercially different good. [00:03:55] Speaker 02: It seems to me that putting completely to one side this intended use and essential characteristics debate that let me, I guess, present the challenge. [00:04:08] Speaker 02: Why isn't it a quite straightforward conclusion that the Class B motorhome is a commercially different good from the cargo carrier? [00:04:17] Speaker 03: For a couple of reasons, Your Honor. [00:04:19] Speaker 02: First of all... See, if it's twice the price, people are basically using it for [00:04:24] Speaker 02: commercially different purposes, et cetera. [00:04:31] Speaker 03: Well, they're not really even using them for commercial purposes. [00:04:34] Speaker 03: They're using them for personal purposes. [00:04:36] Speaker 02: So that would be commercially different from the cargo van use in the sense of cargo that's not going to be used inside the van, but going to be carried around for use taking in and out. [00:04:52] Speaker 03: Well, the question is, there, have we created a new and different article of commerce? [00:04:56] Speaker 03: And the answer is no. [00:04:58] Speaker 03: Because the important thing to understand about the Repair and Alteration Statute, it's not really a classification statute. [00:05:04] Speaker 03: It's an identification statute. [00:05:07] Speaker 03: And a good part of its purpose is to avoid double taxation. [00:05:11] Speaker 03: So that if we have a finished article that we export from the United States, and we upgrade it overseas, and we bring it back, the question that this statute asks is, [00:05:21] Speaker 03: Is this product coming back recognizable as the thing that left? [00:05:26] Speaker 03: And if it is, we will assess duty on the value of the upgrades overseas, but not on the value of the original thing that left. [00:05:36] Speaker 03: And it's a presumption that the article that left the US. [00:05:39] Speaker 04: That's glass things. [00:05:40] Speaker 04: They go abroad as a glass. [00:05:41] Speaker 04: They come back as a glass. [00:05:44] Speaker 04: Well, that's a different. [00:05:45] Speaker 04: It depends on how granular. [00:05:47] Speaker 04: Are you really throwing your eyes completely out of focus? [00:05:51] Speaker 04: If you throw your eyes sort of similarly out of focus, these two vans kind of look the same, don't they? [00:05:56] Speaker 04: Right? [00:05:57] Speaker 03: OK. [00:05:58] Speaker 04: But if you drill down and look at them, like, for example, in the degree of viewing for a commercially different vehicle, as the presiding judge has pointed out, the key facts are very different. [00:06:12] Speaker 03: Yeah. [00:06:12] Speaker 03: I think what Your Honor is getting at is a little bit more to the question of is it identifiable as a finished article when it leaves, and from what perspective do you determine that. [00:06:21] Speaker 03: Now in the case of the annealed glass, the company that exported that product to Canada was looking to make annealed glass, so their intention was to make annealed glass [00:06:32] Speaker 03: the article leaving the United States was not a meal, so it was not a finished article. [00:06:37] Speaker 02: Let me interrupt. [00:06:38] Speaker 02: The example that is given about the glass mugs specifically says that the foreign operations here, it's the etching and tempering operations, exceed the scope of an alteration because they are manufacturing processes which create commercially different products. [00:06:54] Speaker 02: So I don't actually view that as maybe having anything to do with, but certainly as not limited [00:07:01] Speaker 02: to the intended use concept, a concept that presents a perfect ambiguity about whose intent counts. [00:07:10] Speaker 02: That's why it seems to me pretty straightforward to focus on the commercially different goods element of, I guess it's actually subsection A, not subsection B. If the etching and tempering create a commercially different good, why doesn't what [00:07:29] Speaker 03: Well, I think in the case taken from the regulation, the really important operation was the tempering operation, because the tempering operation is what created a finished mug, not so much the etching. [00:07:42] Speaker 03: So that really puts it in line with the Guardian Industries case, which I think Judge Clevinger was referring to. [00:07:48] Speaker 03: The mere etching or something like that into a finished product doesn't change it. [00:07:53] Speaker 03: And in our brief, we discussed this transport case. [00:07:56] Speaker 03: which involved t-shirts that were exported from the United States to be embroidered and returned. [00:08:02] Speaker 03: Now, Customs said, well, the embroidered t-shirt is a new and different article made in Mexico. [00:08:07] Speaker 03: The shirt leaving for Mexico was not a finished article. [00:08:11] Speaker 03: But then Customs, on reconsideration, take a look at the Jansport catalog and said, oh, you can purchase both the non-embroidered and the embroidered shirt. [00:08:20] Speaker 03: So what they concluded was that the embroidered shirt wasn't a commercially different article. [00:08:25] Speaker 03: It qualified for repair and alteration. [00:08:28] Speaker 03: And they also concluded that the shirts, as exported, were finished goods because they were sold in the United States. [00:08:36] Speaker 03: The transport people alienated them. [00:08:38] Speaker 03: They would sell them that way. [00:08:40] Speaker 03: And the same thing is true here. [00:08:41] Speaker 03: We have a Daimler-Chrysler van that is sold that way. [00:08:45] Speaker 03: What comes back, in terms of, you say, a commercially different good, [00:08:50] Speaker 03: What comes back is simply a Daimler Chrysler van that's been upgraded, sort of like a car that's been hot-rodded. [00:08:57] Speaker 03: Now, if you go out and you hot-rod a car, very often the original manufacturer will say, I'm not honoring the warranty. [00:09:05] Speaker 03: But in this case, what tells you that what's coming back is not a commercially different good is a couple of facts in the record. [00:09:13] Speaker 03: Number one, vehicle identification number is the same. [00:09:18] Speaker 03: recognizes this return van as the same panel van it left. [00:09:23] Speaker 03: Yes, it's improved. [00:09:24] Speaker 02: Do hot rods change their VINs? [00:09:27] Speaker 03: Hot rods may not change their VIN, but they may be manufactured in such a way that the manufacturer will disclaim the warranty. [00:09:34] Speaker 03: Now, in this case, all of the repairs and alterations done in Canada were done according to a Sprinter body book which Daimler Chrysler issued. [00:09:46] Speaker 03: And what they said was, [00:09:47] Speaker 03: If you do the repairs this way, and you're just changing, these are just repairs to the body. [00:09:53] Speaker 03: The drive train, the electronics, the transmission. [00:09:56] Speaker 04: Is Chrysler supply a warranty on the toilet and the work when it comes back from Canada? [00:10:02] Speaker 04: I'm sorry? [00:10:03] Speaker 04: Well, I mean, you're talking about the warranty, aren't you? [00:10:05] Speaker 04: When it comes back, there's all sorts of new things in there that aren't warranted. [00:10:10] Speaker 03: Well, there's new things in there. [00:10:12] Speaker 04: Are they warranted by anybody? [00:10:14] Speaker 03: Well, they're not. [00:10:14] Speaker 04: See, they're not covered. [00:10:16] Speaker 04: Are you a client? [00:10:18] Speaker 04: Seats are good and all that sort of thing? [00:10:21] Speaker 03: Well, Pleasure Way has a separate warranty on whatever they put into the van. [00:10:26] Speaker 03: Daimler Chrysler warrants the article that was exported from the United States. [00:10:31] Speaker 03: Now, the fact here is sure, this product comes back in troops. [00:10:36] Speaker 04: You suggest that the vehicles aren't the same coming back. [00:10:39] Speaker 03: No, no, no, not at all. [00:10:40] Speaker 03: It's almost as if you said, okay, I have a car and there's a warranty on the car. [00:10:45] Speaker 03: I am now putting something in the back of the car or the truck as it were. [00:10:49] Speaker 03: I'm going to put a refrigerator in there. [00:10:51] Speaker 03: And a refrigerator has a separate warranty that comes from its manufacturer. [00:10:56] Speaker 03: So now, when the truck returns to the United States, there's two warranties there. [00:11:01] Speaker 03: One is a warranty on the truck issued by Diamond Chrysler in this case. [00:11:05] Speaker 03: The other might be a warranty from the refrigerator either issued by the refrigerator manufacturer or the person who installed it. [00:11:12] Speaker 03: So I don't think that meets a different product. [00:11:15] Speaker 04: I noticed in the record that all the duties that were charged to you in Canada were refunded. [00:11:21] Speaker 04: This is at page 39 in the record. [00:11:24] Speaker 04: And it says refunded either through drawback claims or reclassification refunds. [00:11:29] Speaker 04: Were the goods reclassified by Canada? [00:11:32] Speaker 03: I don't recall, Your Honor. [00:11:34] Speaker 03: I do know that they were. [00:11:38] Speaker 03: I don't believe they were reclassified. [00:11:40] Speaker 03: I believe they may have qualified for what they call a Chapter 99 duty exemption in Canada. [00:11:47] Speaker 04: But that is not... What are reclassification refunds? [00:11:53] Speaker 03: Canadian refunds, and they don't have anything to do... As a result of reclassification, the goods that were classified going into Canada, right, as sort of as more... I believe Canada provides a duty abatement for articles that are used in manufacturing operations. [00:12:08] Speaker 03: And so I think when some of these vans initially entered Canada, they were assessed with Canadian duties. [00:12:14] Speaker 03: Those duties were subsequently remitted because the operations Pleasure Way were doing were considered to be manufacturing operations under that statute, but totally irrelevant to the United States statute. [00:12:27] Speaker 03: What the United States statute provides is that if you export the van with benefit of drawback, you don't get repair and alteration treatment on the way back. [00:12:36] Speaker 04: Yeah, what I was getting at is my understanding in the record was that the vans going into Canada were considered by Canada to be motor vehicles designed for the transport of persons. [00:12:47] Speaker 03: Right. [00:12:48] Speaker 04: And what I'm trying to get at is whether or not there was a reclassification coming back. [00:12:52] Speaker 03: I think coming back, they were classified by the United States as articles for the transport of persons, I believe, or perhaps transport of goods. [00:13:04] Speaker 03: But here's the thing about the four factors that the Court of International Trade ruled on. [00:13:08] Speaker 03: The Court of International Trade said the essential characteristics of these vans were destroyed in four ways. [00:13:15] Speaker 03: Price, tariff classification, use and name. [00:13:19] Speaker 03: They disregarded every physical aspect of these vehicles. [00:13:22] Speaker 03: They didn't look at identification. [00:13:24] Speaker 03: They didn't look at whether they were the same vehicle. [00:13:26] Speaker 03: Now, those four factors are not identifying characteristics. [00:13:33] Speaker 03: They're not essential characteristics. [00:13:36] Speaker 02: Why don't they define the commercially different or same nature of the good? [00:13:41] Speaker 03: Take them one at a time. [00:13:42] Speaker 03: Price makes no difference. [00:13:43] Speaker 03: Let me just focus on this. [00:13:45] Speaker 02: I think I have an intuition about what commercially different means. [00:13:49] Speaker 02: It has something to do with the market in which it is being sold, and who's buying it, and for what purposes. [00:13:55] Speaker 02: As soon as you say the words essential characteristic, you get into something that is rather abstract. [00:14:03] Speaker 02: As soon as you say intended use, you have to say, well, intent is a mental thing. [00:14:07] Speaker 02: Whose intent is it? [00:14:09] Speaker 02: Daimler-Chrysler's intent, your intent, whose intent. [00:14:12] Speaker 02: Those are problematic. [00:14:14] Speaker 02: Commercially different is a pretty familiar notion about what's happening in the marketplace. [00:14:20] Speaker 03: Well, I think what it is, Your Honor, I think it's a question of identification. [00:14:25] Speaker 03: The case I think this Court needs to look at, its precedent is the Doleff case. [00:14:30] Speaker 03: And in the Doleff case, this Court rejected every one of the factors that the lower court looked at as disqualifying something for repair and alteration. [00:14:38] Speaker 03: And from the Doleff case, this court said, to hold that alterations cannot change the name, character, size, shape, and use of an article unreasonably restricts this provision. [00:14:50] Speaker 03: And in Doleff, they also spoke of the irrelevance of common classification. [00:14:57] Speaker 03: I think part of the problem here, Your Honor, is that I think people are thinking too hard here. [00:15:03] Speaker 03: This is not a question of abstractly classifying a good. [00:15:07] Speaker 03: This is not even a question of whether we have manufactured a good because manufacturing is expressly allowed under 9802. [00:15:15] Speaker 03: The only question here is whether we can identify the motor homes coming back in the United States as being or incorporating the articles that were exported from the United States. [00:15:29] Speaker 03: And if so, then the value of the article exported from the United States is not subject to tax [00:15:37] Speaker 03: And the value of all those improvements is whether you think the improvements give the product a new use, an enhanced value, or other characteristics, obviously a higher price. [00:15:51] Speaker 03: This court in the Dolliff case said all of that is irrelevant. [00:15:54] Speaker 04: So in the question of- Can you ask me a legal question? [00:15:58] Speaker 04: The presiding judge has pointed out that there are more than one test in [00:16:04] Speaker 04: Section 181-64. [00:16:07] Speaker 04: So you have a plurality of tests to decide whether or not the duty-free treatment will be granted. [00:16:15] Speaker 04: In order to flunk, to lose the duty-free, do you have to flunk all the tests, or is just one enough? [00:16:22] Speaker 03: I think you have to flunk all the tests. [00:16:25] Speaker 03: Why is that? [00:16:27] Speaker 03: Because I think, as I said, it's a matter of identification. [00:16:30] Speaker 04: In order to assess... I mean, sort of, and say, for example, that I agree with, say that if the question was simply whether commercially different was met, and I say no, no, it is commercially different. [00:16:42] Speaker 04: So you flunk that test. [00:16:44] Speaker 04: But what happens if I, do I have to then go on and decide the intended use? [00:16:50] Speaker 04: Any other issues? [00:16:52] Speaker 04: Well, and that's... The question coming from the bench suggested that flunking one would be enough. [00:16:59] Speaker 03: Well, no, I think you have to flunk them all. [00:17:01] Speaker 03: If you look at the Dolliff case, it talked about five different characteristics to go with what Judge Tomoko said. [00:17:07] Speaker 01: What about the language of the regulation itself, you know, like it talks about it must not destroy the essential commercially different good from the goods, it must not destroy the essential characteristics of the good from the United States or [00:17:21] Speaker 01: or create a new commercially different. [00:17:24] Speaker 01: Why aren't those two different requirements, either one of which if not satisfied doesn't allow the imported good to fall into the repair or alteration statute? [00:17:36] Speaker 03: Once again, I think it's an identification test. [00:17:38] Speaker 03: And the question is, what are you going to use to say something's commercially different? [00:17:43] Speaker 03: Judge Toronto said, if somebody is going to use this to carry around their possessions instead of other type of cargo, [00:17:50] Speaker 03: That would be, in his view, a new and commercially different use. [00:17:54] Speaker 03: However, this Court in Duluth said a change in use doesn't disqualify. [00:17:58] Speaker 03: And the test from Duluth is no different from the test today. [00:18:01] Speaker 01: I don't think you're answering the question. [00:18:04] Speaker 01: Pardon? [00:18:05] Speaker 01: I don't think you're answering my question. [00:18:07] Speaker 01: No, I thought that you were saying that, you know, in the regulations, there's Part A that talks about destroy the essential characteristics of the good. [00:18:16] Speaker 03: Right. [00:18:17] Speaker 01: And then there's another part of that same regulation that says create a new or commercially different good. [00:18:23] Speaker 01: Those are two different requirements, right? [00:18:27] Speaker 01: If you could conclude if the goods don't satisfy either one of those, then they're not satisfying the repair or alteration statute, right? [00:18:37] Speaker 03: Well, correct. [00:18:39] Speaker 03: But in terms of commercial difference, the court has to say what constitutes a commercial difference. [00:18:45] Speaker 03: And if it's just a difference in the use, if you're saying, well, I used this to carry loose packages, now I'm using it to carry a bed, that's not, I think, an appropriate test to say that's a new and commercially different article of commerce. [00:19:01] Speaker 03: Because if you say that, then you could probably take any even minor alteration and say, oh, that makes it for different use. [00:19:08] Speaker 03: OK, I have a truck to carry stuff around in. [00:19:11] Speaker 03: I put in some racks to put my tools on. [00:19:14] Speaker 03: Now it's a tool truck. [00:19:15] Speaker 03: Is that a new and commercially different use? [00:19:17] Speaker 03: No, it's still a truck. [00:19:19] Speaker 03: Truck can be used for multiple things. [00:19:21] Speaker 02: You've gone over even your rebuttal time. [00:19:24] Speaker 02: We'll restore two minutes for the rebuttal. [00:19:38] Speaker 00: Good morning. [00:19:39] Speaker 00: May it please the court? [00:19:40] Speaker 00: The trial court's decision should be affirmed because, as this court pointed out, exported cargo vans and the imported motor homes are commercially different goods. [00:19:50] Speaker 02: And just to be clear, my understanding, and tell me if you agree or disagree, under the regulation 181.64A says, here are a variety of things that you cannot be in order to get the benefit of this. [00:20:06] Speaker 02: One of them that you cannot be is a commercially different [00:20:10] Speaker 02: Good. [00:20:11] Speaker 02: B says there's a further exclusion. [00:20:15] Speaker 02: A further exclusion. [00:20:16] Speaker 02: It's not an alternative. [00:20:18] Speaker 02: It doesn't add back something in that was already removed by A. Yes. [00:20:24] Speaker 02: OK. [00:20:25] Speaker 02: And of the various determinations made by the Court of International Trade, which ones are factual and therefore subject to clear error review here, and which [00:20:40] Speaker 02: ones are subject to de novo review. [00:20:44] Speaker 00: In this case, in terms of applying the statute and applying the ultimate classification, our position is everything is subject to de novo review. [00:20:53] Speaker 00: There were no facts at issue. [00:20:55] Speaker 00: So the court can actually look at the facts that everyone agreed to and determine whether the motor homes meet subsection A. And I would agree with the court. [00:21:06] Speaker 00: I'm not sure we even have to [00:21:07] Speaker 01: go to subsection B if we are stopped at subsection A. Is it, just to make sure I understand what you're saying, is it because there's no dispute about what the goods were like when they were exported into Canada and then what they were like when they were imported back into the US, because there's no dispute about what those goods were, the issue collapses into one of law? [00:21:31] Speaker 00: Yes. [00:21:32] Speaker 00: The only dispute now is just whether [00:21:34] Speaker 00: The motor homes satisfy the Section 18164A. [00:21:38] Speaker 00: And we say A, but A or NB. [00:21:44] Speaker 00: So it's a question of law. [00:21:50] Speaker 04: So the judge gets to decide if they're commercially different goods? [00:21:55] Speaker 00: Yes, the judge. [00:21:56] Speaker 04: As a matter of law? [00:21:57] Speaker 00: Yes, absolutely. [00:21:59] Speaker 04: Yes, it's- But don't facts have to drive that decision? [00:22:03] Speaker 00: Yes. [00:22:04] Speaker 00: In the classification area of the law, we generally do have cases where we do agree on all the facts, and the classification collapses into a question of law. [00:22:16] Speaker 00: This is really no different. [00:22:17] Speaker 00: It's just one step further as we're applying it. [00:22:20] Speaker 04: So here you say they all agree, for example, that the price is different between these two products. [00:22:25] Speaker 00: Yes, it's in the record. [00:22:27] Speaker 04: And they would all agree that the use is different. [00:22:30] Speaker 00: Yes, the use is different. [00:22:32] Speaker 00: between the cargo vans and the, well, we contend the use is different. [00:22:36] Speaker 00: But if you actually look in the record, the use is different. [00:22:39] Speaker 00: There's evidence in the record that the motor homes are used for sleeping accommodations. [00:22:44] Speaker 00: That's undisputed. [00:22:46] Speaker 00: And it's undisputed because it's actually in the deposition testimony that they sell the motor homes for temporary residential accommodations. [00:22:54] Speaker 00: The cargo vans are cargo vans. [00:22:56] Speaker 00: They're meant to transport cargo. [00:22:58] Speaker 04: So nobody can put a mattress in there and sleep. [00:23:02] Speaker 00: Yes, absolutely. [00:23:03] Speaker 04: The hippies are happy to go around, right? [00:23:05] Speaker 00: You can put a mattress in there and sleep, but this was more than just putting a mattress in and sleeping. [00:23:10] Speaker 00: This was actually putting in a kitchen. [00:23:16] Speaker 00: Putting in a kitchen, recliner beds, television, bathroom with a shower, outside awning, outside shower. [00:23:25] Speaker 04: So the hippies have a sound, they've got a boombox and a few other things in there? [00:23:29] Speaker 00: Yeah, they could, but this is, again, [00:23:31] Speaker 00: This is, plus those items actually are, those items are actually removable. [00:23:37] Speaker 00: If you take your boom box. [00:23:39] Speaker 04: Seems like we're getting pretty factual. [00:23:41] Speaker 00: Now if you take your boom box out and you take your mattress out, you still have a cargo van. [00:23:46] Speaker 00: These are permanently placed inside the motor homes and they can't be removed. [00:23:50] Speaker 00: They're meant to be, they stay in. [00:23:52] Speaker 00: So we no longer have a cargo van. [00:23:55] Speaker 00: So it's a bit different than the boom box and the mattress. [00:24:02] Speaker 00: The other thing we wanted to address was that this is not a case of identification. [00:24:08] Speaker 00: There's no dispute that the chassis on the motorhomes are the same as the chassis from the cargo vans. [00:24:14] Speaker 00: So that's not a dispute. [00:24:16] Speaker 04: You seem to say that subsection A has the main test and B is an additional test, so you don't have to meet B if you flunk under A. A has two tests. [00:24:28] Speaker 04: One is destroy the essential characteristics, and the other is create a new or commercially different good. [00:24:34] Speaker 04: Now, those two tests are stated separately, so they're not the same, right? [00:24:39] Speaker 00: Yes, A does have two tests. [00:24:41] Speaker 04: And are they different? [00:24:45] Speaker 00: The way they're stated, they're different. [00:24:47] Speaker 00: But I think when you're actually going to determine whether something's commercially different, you can actually look at the characteristics. [00:24:52] Speaker 04: It's a matter of interpreting the regulation. [00:24:54] Speaker 04: Yes. [00:24:55] Speaker 04: My question is, does A have one test or two? [00:24:59] Speaker 00: The way it's written, it has two tests, the way it's written. [00:25:01] Speaker 04: And should I presume they're different because they are stated as two different tests? [00:25:08] Speaker 00: Yes, you can presume that they're different. [00:25:10] Speaker 04: Okay, so what happens if it passes one test and flunks the other? [00:25:15] Speaker 00: whatever processes are done. [00:25:17] Speaker 04: For example, let's say for example I decided that this was a new and commercially different good as a matter of law, but as a matter of law I decided that the essential characteristics were not destroyed. [00:25:32] Speaker 04: Then what's the answer? [00:25:33] Speaker 04: Duty free or not? [00:25:35] Speaker 00: If it's a new and commercially different good, it doesn't get duty free treatment. [00:25:39] Speaker 04: No, but if I say it [00:25:40] Speaker 04: What I'm trying to decide the regulation is giving us a really sort of fun But rather ambiguous or odd way of deciding whether something has either been repaired or altered Right. [00:25:52] Speaker 04: Yes, that's the question So what happens if you take a particular good and you say yep, it was altered and then you say no it wasn't Then how do you know how to do it? [00:26:05] Speaker 04: Because you say, well, yes, its essential characteristics were not destroyed, so it was altered. [00:26:13] Speaker 04: But it's a new article, altered. [00:26:17] Speaker 00: If it's a new commercial good, it doesn't qualify. [00:26:21] Speaker 04: Even though its essential characteristics were not destroyed? [00:26:25] Speaker 00: Yes. [00:26:26] Speaker 04: How can that be? [00:26:29] Speaker 00: I can't think of a good in my mind that would satisfy that, but I'm looking at the language. [00:26:34] Speaker 04: Well, you told me it's a question of loss, for the judge to decide. [00:26:38] Speaker 00: Right. [00:26:39] Speaker 00: The way the statute reads, it states processes which essentially does not destroy. [00:26:44] Speaker 04: The essential sort of goes to the essence, the essence. [00:26:47] Speaker 04: And the essence of this thing is a vehicle that goes around on four wheels and is capable of carrying things. [00:26:55] Speaker 04: And the fact that you go granular and say, well, it's carrying a family and children as opposed to a bunch of boxes. [00:27:02] Speaker 04: But is that essential? [00:27:04] Speaker 00: I would respectfully disagree if that's granular. [00:27:07] Speaker 00: I would think that, in my opinion or in the governor's opinion, that that's actually not granular. [00:27:12] Speaker 00: It's essential. [00:27:13] Speaker 00: Because in terms of looking at vehicles, the use of the vehicle, we don't look at the drive train or the way it drives things around. [00:27:21] Speaker 00: We look at what's the [00:27:22] Speaker 00: use of the vehicle. [00:27:24] Speaker 00: And that's granular. [00:27:25] Speaker 00: That's essential. [00:27:26] Speaker 00: Here, the use of the vehicle is a cargo van before and after the use of the vehicle is a motorhome. [00:27:32] Speaker 00: So from our perspective, that's essential. [00:27:37] Speaker 02: And just on the textual point, I gather your point is this says that this cannot either destroy the essential characteristic or create a new commercially different good. [00:27:49] Speaker 02: So if it does either one of those, it flunks. [00:27:52] Speaker 00: Yes, that's what I was trying to get at. [00:27:54] Speaker 00: Yes, thank you. [00:27:58] Speaker 00: And in this case, as the court pointed out, the motor homes actually are new and commercial different goods, but they also flunk the other part of the test where the essential characteristics were destroyed. [00:28:16] Speaker 00: The cargo van, the ability of the van to carry the cargo is now gone. [00:28:21] Speaker 00: It's nothing in there but now living accommodations. [00:28:25] Speaker 00: The other thing I wanted to mention was that the warranty issue. [00:28:31] Speaker 00: The warranty is solely on the chassis. [00:28:34] Speaker 00: It's not on the actual motorhome. [00:28:36] Speaker 00: The actual thing that changed in Canada, an actual thing that gives that motorhome its character. [00:28:42] Speaker 00: It defines what it is. [00:28:44] Speaker 00: That actually has a separate warranty, and that's a warranty from Pleasure Way. [00:28:48] Speaker 00: And I want to note that Pleasure Way actually treats the motor homes as different commercial vehicles. [00:28:53] Speaker 00: They don't call it a Sprinter. [00:28:55] Speaker 00: Pleasure Way calls it the Motor Homes Plateaus in a sense. [00:28:58] Speaker 00: Its marketing material refers to it as Motor Homes. [00:29:01] Speaker 00: The documentation refers to it as Motor Homes. [00:29:04] Speaker 00: It doesn't refer to it as cargo vans. [00:29:07] Speaker 00: And they also give a Coach VIN to it. [00:29:09] Speaker 00: So it's not just [00:29:12] Speaker 00: cold record, Pleasure Way itself considers the motor homes different from cargo vans. [00:29:17] Speaker 02: Can I ask you this question? [00:29:19] Speaker 02: Your brief, I think it is fair to say, Tony, if I'm wrong, concentrates on the intended use element. [00:29:30] Speaker 02: And is there some practical real world difference in effect of deciding the case [00:29:42] Speaker 02: on that basis compared to deciding it on the commercially different good basis? [00:29:48] Speaker 02: Or was that just, as you were writing the brief, you thought that seemed like a good place to start or something? [00:29:57] Speaker 02: Is there? [00:29:58] Speaker 00: Okay. [00:30:00] Speaker 00: Two points here. [00:30:01] Speaker 00: Yes, our brief focuses a lot on the attendant use, and that's just not that we stress that that's the main test, it's that's just the way the litigation [00:30:09] Speaker 00: sort of came about. [00:30:10] Speaker 00: And we thought that that was the point that the other side, Plagiaro, was going to make. [00:30:15] Speaker 00: So if our brief focus is a lot on intended use, it doesn't mean to elevate that test above others. [00:30:20] Speaker 00: It's just that that's the way we thought we were going to litigate this case. [00:30:24] Speaker 04: Is your greatest desire here to win the case or to have the law clarified? [00:30:30] Speaker 00: Well, from the government's view. [00:30:32] Speaker 04: The intended use is unclear, because we don't know from whose perspective is the intended use measured. [00:30:38] Speaker 04: And it makes a world of difference, right? [00:30:41] Speaker 04: And your view is that the intended use is as the goods come back, what was the intent to use them when they come back across the border, right? [00:30:49] Speaker 00: Our view, our position is that the intended use is the ultimate intended use. [00:30:54] Speaker 00: Yes, in essence, yes. [00:30:56] Speaker 04: And the appellant's view is the intended use is the original manufacturer that's made the thing, and that's the difference, right? [00:31:04] Speaker 00: That is their position. [00:31:05] Speaker 04: And if we agree with them that their intended use was just something that transports, it's the same going and coming from their perspective. [00:31:14] Speaker 04: From their perspective. [00:31:15] Speaker 04: So should the court leave unanswered the intended use question? [00:31:20] Speaker 00: It can. [00:31:21] Speaker 00: It can leave the intended use question unanswered, because if we stick with 181-64A, I don't think you necessarily need to reach the intended use issue, because we don't even [00:31:33] Speaker 00: get to whether something is complete or not, because you would have already decided that the motor homes are new and commercially different goods, or the processes destroyed the essential characteristic. [00:31:46] Speaker 00: So I'm not sure this court has to reach intended use. [00:31:50] Speaker 04: So you think you only get to be if you've actually passed the goods through and said, [00:31:54] Speaker 04: B is only used to catch things that were not having their essential characteristics destroyed or were not a new article. [00:32:07] Speaker 04: What's the purpose of B? [00:32:09] Speaker 04: The suggestion was that the purpose of B was exactly what I said as well. [00:32:14] Speaker 04: You're going to get through duty free under A, but whoops, we can grab you on B. [00:32:20] Speaker 00: I think the purpose of... If that's the case, then if we decided in your favor on A, we couldn't reach B. The purpose of B is to make, to ensure that it captures all sorts of products, because from the cases that Pleasure Incited... I'm sure I'm answering my question to my satisfaction. [00:32:38] Speaker 00: Well, the purpose of B is to make sure that, in the commercial world you'll have, or just in the classification world, you'll have unfinished goods all the way to what you have here, [00:32:47] Speaker 00: as a cargo van. [00:32:48] Speaker 00: I just wanted to make sure, I mean, purpose of B is to make sure that when merchandise is imported into Canada, it's not being imported to essentially finish the product, to make something that was totally unfinished in the United States. [00:33:03] Speaker 02: I guess at least one way that I was trying to understand the relationship between these two things is that A says, you know, you can't be a different good. [00:33:12] Speaker 02: And B says, look, even if you are the same good, [00:33:17] Speaker 02: We really don't mean to capture, let's call them intermediate goods, things that are not really consumer end use products. [00:33:27] Speaker 02: And that that's what this incomplete is about. [00:33:31] Speaker 02: It's taking out a category of true intermediate components where there's not yet a commercial use of the thing aside from putting it into something else before it gets to whoever is the consumer. [00:33:47] Speaker 02: Um, right. [00:33:49] Speaker 02: It's sort of full stop. [00:33:51] Speaker 02: But, but then what I don't really understand is, um, and this is one reason that I, it seems to me at least much easier to get a grip on the commercially different good. [00:34:04] Speaker 02: If, if Pleasure Way were not the exporter, but I was the exporter and I got 1000 sprinter fans and I [00:34:14] Speaker 02: took them into Canada, and then I had an auction. [00:34:16] Speaker 02: Pleasure Way bought 300 of them, and the Sprinter Van of Canada reseller bought another, and both of them imported back into the U.S. [00:34:30] Speaker 02: the vehicles, one of them having changed them and one of them not having changed them. [00:34:36] Speaker 02: Then I [00:34:37] Speaker 02: have no particular intent with respect to what the end product is. [00:34:42] Speaker 02: Whoever I'm going to sell them to is going to make the thing. [00:34:46] Speaker 02: Daimler-Chrysler intends both things, because they sell them as ready-to-use cargo vans. [00:34:53] Speaker 02: And they also say, by the way, you can really upfit them and make them into something else. [00:34:58] Speaker 02: So their intent, that is Daimler-Chrysler's intent, covers both bases. [00:35:04] Speaker 02: The intermediary may have no particular intent, at which point I [00:35:07] Speaker 02: kind of get lost in how to get a grip on unintended use in a way that I don't when I look at commercially different goods. [00:35:16] Speaker 00: I think the problem that you're having with intended use is because we're trying to put a viewpoint on it. [00:35:25] Speaker 00: If you put a viewpoint, it makes it impractical. [00:35:27] Speaker 00: Do we look at the original OEM? [00:35:30] Speaker 04: Don't you have to put a viewpoint on it? [00:35:32] Speaker 00: I don't think there has to be a viewpoint. [00:35:34] Speaker 00: In the case law, there's not a single case that [00:35:37] Speaker 00: states we have to look from this viewpoint or that viewpoint. [00:35:40] Speaker 00: It's just a basic comparison of the goods, looking at is this good the same as this good, looking at the name, the uses, the value. [00:35:49] Speaker 00: There's nothing about intent in the cases. [00:35:53] Speaker 00: And if you look at the Chevron case, which actually discusses intent, [00:35:56] Speaker 04: It just looks at the product. [00:35:59] Speaker 04: Maybe the other cases haven't dealt with this thorny little problem, but this case may present that thorny little problem. [00:36:04] Speaker 04: We have a regulation made by Notice and Comment rulemaking that governing law, and it has embedded in it the intended use. [00:36:12] Speaker 00: Yes. [00:36:13] Speaker 04: And so how does a court, how does an agency use this tool? [00:36:20] Speaker 04: Period. [00:36:21] Speaker 04: I mean, even if it's a fallback use, as the presiding judge has suggested, [00:36:26] Speaker 04: to catch something that otherwise passed. [00:36:29] Speaker 00: Right. [00:36:29] Speaker 00: I would agree with that interpretation. [00:36:31] Speaker 00: But also, I think in general, we tend to look at... Well, it wasn't an interpretation. [00:36:35] Speaker 04: It was a lament. [00:36:37] Speaker 01: A lament. [00:36:39] Speaker 01: I agree with the lament. [00:36:40] Speaker 01: I was going to point out, you have just said something that surprised me when you said you don't think the point of view matters. [00:36:46] Speaker 01: Because I think the point of view, you're taking a point of view in your position in your brief by saying it's the ultimate [00:36:52] Speaker 01: intended use that matters. [00:36:54] Speaker 01: So you are taking a point of view, the point of view of the party that's importing back into the US. [00:37:04] Speaker 01: It's the same thing. [00:37:05] Speaker 00: I understand what you're saying. [00:37:06] Speaker 00: It's sort of the same thing. [00:37:08] Speaker 00: I understand what you're saying. [00:37:09] Speaker 00: But the case law doesn't speak to view. [00:37:11] Speaker 00: The case law, again, the Chevron case is a perfect example. [00:37:15] Speaker 00: It just looks at the goods. [00:37:16] Speaker 00: It doesn't look at. [00:37:18] Speaker 02: What do you do with the hypothetical that I tried to describe? [00:37:21] Speaker 02: I'm the exporter from the US. [00:37:24] Speaker 02: And I have a whole bunch of these things. [00:37:26] Speaker 02: And I know that some of them are going to come back into the US upfitted, and some of them are going to come back with a new paint job or something. [00:37:35] Speaker 02: But they're still painters or electricians vans. [00:37:40] Speaker 02: And the people that I sell it to in Canada [00:37:45] Speaker 02: don't have any intent at all at the time specified in B, which is in their condition as exported. [00:37:51] Speaker 02: They weren't around at the time of that. [00:37:59] Speaker 00: Again, I understand the court's point is that, again, if you sell the vans in Canada, and some upfit, some don't, [00:38:13] Speaker 00: the ones that upfit and they import them back into the United States, then the regulation would apply. [00:38:19] Speaker 00: And again, I understand from your point that- The regulation would apply because of A. Yes. [00:38:26] Speaker 04: But then you say, well, what does B do? [00:38:30] Speaker 00: And then again, I'm not sure, and we didn't brief any of this, but a lot of times when we're looking at regulations, we want to look at something as a checklist. [00:38:36] Speaker 04: We're going to come back to the presiding judge's question. [00:38:39] Speaker 04: You briefed this as an intended use case. [00:38:42] Speaker 00: Right. [00:38:42] Speaker 00: Yes, we did brief it. [00:38:44] Speaker 04: You shot yourself in the foot? [00:38:46] Speaker 04: I mean, what was? [00:38:47] Speaker 00: No, we didn't shot shoot ourselves. [00:38:48] Speaker 00: When we briefed, we were actually responding to their point. [00:38:51] Speaker 00: Like, the whole thing of the pleasure waste point was intended use. [00:38:54] Speaker 00: The vans were complete before they were exported to the United States. [00:38:59] Speaker 00: I mean, to Canada. [00:39:00] Speaker 00: So we had to respond. [00:39:01] Speaker 00: There was no way not to respond. [00:39:02] Speaker 04: Well, the way to respond to me say their argument is irrelevant because they lose on essential characteristics or the new article. [00:39:10] Speaker 04: And once they lose on that, game's over. [00:39:12] Speaker 00: Right. [00:39:13] Speaker 04: But that's not how you briefed it. [00:39:15] Speaker 00: No. [00:39:15] Speaker 00: And that's a great way to do it. [00:39:17] Speaker 00: But we would never be able to do that. [00:39:20] Speaker 00: If another party addresses a point, we have to address it substantively. [00:39:24] Speaker 00: We can't dismiss it with one sentence. [00:39:26] Speaker 02: I mean, you did say that. [00:39:28] Speaker 02: It's just that that was the latter part rather than the front part of it. [00:39:31] Speaker 00: Right. [00:39:33] Speaker 00: No. [00:39:34] Speaker 00: In our office, that's not, trust me. [00:39:36] Speaker 00: We can't do that. [00:39:37] Speaker 00: If we could, we would. [00:39:39] Speaker 00: We have to address it substantively for purposes of, [00:39:42] Speaker 00: you know, CIT, and for purposes of preserving arguments on appeal. [00:39:45] Speaker 00: So I'm sorry. [00:39:49] Speaker 02: Well, we will thank you for your argument. [00:39:51] Speaker 02: And Mr. Peterson, will you give us five minutes? [00:40:08] Speaker 03: Well, my learned colleague was speaking. [00:40:10] Speaker 03: I took a look at Judge Musgrave's opinion. [00:40:13] Speaker 03: Now, Judge Musgrave said that these were new and different commercial articles. [00:40:18] Speaker 03: But you look at his opinion, he didn't distinguish them from the essential identity factors. [00:40:23] Speaker 03: He said they were new and different commercial articles because he felt that those essential identity factors of price, tariff, classification, use, and name had been changed. [00:40:36] Speaker 01: What page in the opinion are you looking at? [00:40:38] Speaker 03: Page 10 and page 12. [00:40:41] Speaker 03: which is Appendix 11 and Appendix 13 in our main brief. [00:40:46] Speaker 03: He says, these changes created a new commercial vehicle as evidenced by changes to the pricing, the applicable tariff, adding the use, and the name of the vans. [00:40:56] Speaker 01: Now, that Doleff case you were talking about earlier, that only says that those things like changes in use, value, and et cetera, that they're not dispositive. [00:41:05] Speaker 01: But it doesn't say that [00:41:06] Speaker 01: It's improper to rely on them, right? [00:41:09] Speaker 01: And they're still irrelevant. [00:41:11] Speaker 03: No, I think the question that's being asked by the panel today about this idea of a new and different commercial article, and as the court's pointed out, if you look in the regulation, it's or. [00:41:23] Speaker 03: It does not change the essential characteristics of an article or create a new and different article. [00:41:29] Speaker 03: Now, Judge Musgrave in the court below, he used the essential characteristic factors [00:41:35] Speaker 03: as his springboard for deciding there's a new and different commercial article. [00:41:40] Speaker 03: But Judge Toronto's right. [00:41:42] Speaker 03: There is an or in the regulation. [00:41:44] Speaker 03: Say, or create a new and different commercial article. [00:41:46] Speaker 03: Now, I think the question is, what would the court do if you said, you know what, plaintiff, you're right. [00:41:52] Speaker 03: These factors that the judge cited are not the essential identity factors. [00:41:58] Speaker 03: And these operations do not change the essential identity of the goods. [00:42:04] Speaker 03: So we are now going to proceed to the second part of the regulation and ask, is it a new and commercially different article? [00:42:10] Speaker 03: Now, you could say, what parameters are you going to use for that? [00:42:15] Speaker 03: And frankly, Your Honors, based on the cases, that we would be in terra incognita. [00:42:20] Speaker 03: There has been no decision on that. [00:42:22] Speaker 03: There is no precedent on that, which says we didn't destroy the essential characteristics of the article. [00:42:30] Speaker 03: But because we have a new and different commercial article, [00:42:33] Speaker 03: Now, you could say, well, sure, all of the essential elements of these vans are intact, the wheelbase, the engine, the name, the VIN number, the warranty. [00:42:43] Speaker 03: And then what's being suggested here is you could say, but it's a new and different commercial article. [00:42:49] Speaker 03: Okay. [00:42:51] Speaker 03: What's the test for that? [00:42:52] Speaker 01: I understand what you're saying. [00:42:53] Speaker 03: And there is no test. [00:42:54] Speaker 01: Can I ask you something a little bit slightly different, though? [00:42:57] Speaker 01: I mean, what would prevent the court below from having said, [00:43:01] Speaker 01: You know, there's three different things that we're being asked to consider here. [00:43:05] Speaker 01: And we are just going to rest on one of them. [00:43:08] Speaker 01: And we're going to say, we conclude, as a matter of law, that you have created a new commercial vehicle, period. [00:43:17] Speaker 01: We're not going to address the other requirements set forth in this statute, because we don't have to, because there are alternatives. [00:43:25] Speaker 03: Well, I think then what would have to happen is the court would have to create some sort of an interpretive tool. [00:43:31] Speaker 03: to say one something becomes a new and different article. [00:43:35] Speaker 03: And standing here, I have a new and different commercial article. [00:43:37] Speaker 03: You know, if you say the essential identity characteristic. [00:43:40] Speaker 04: Well, you would simply start by defining new. [00:43:42] Speaker 04: Yeah. [00:43:42] Speaker 04: And you say, is it new if it's a cargo van one way and then it's a passenger van the next? [00:43:50] Speaker 04: Does that make it new? [00:43:52] Speaker 03: That would be a change in use. [00:43:54] Speaker 03: And again, I go back to the development. [00:43:56] Speaker 04: That would be defining the term new. [00:43:57] Speaker 03: Well, you could say use. [00:43:59] Speaker 03: You could say it's a change in classification. [00:44:01] Speaker 03: But again, that's fine, and that may be factors this Court says we will put into that test. [00:44:08] Speaker 03: All I would say is go back to the Dolliff test. [00:44:12] Speaker 03: And the Dolliff test says, changes in name, changes in character, changes in size, changes in shape, and changes of use in the article, as well as classification, do not remove it from the scope of the repair and alteration test. [00:44:26] Speaker 01: They say they don't necessarily remove it. [00:44:29] Speaker 01: They don't... Again, it's... They don't remove it... It does not say that those are not relevant things to consider. [00:44:37] Speaker 01: It just says that those changes are not dispositive, right? [00:44:42] Speaker 03: They're not... Well, they're not... They don't remove it from the scope of the provision. [00:44:46] Speaker 01: I mean, it doesn't say that they can't remove it. [00:44:48] Speaker 03: I mean, they said it doesn't remove it from the scope of the provision is... Or does not... Would unreasonably restrict the scope of the provision. [00:44:56] Speaker 03: And I think what the court's really saying, as I said before, this is a statute that's aimed at avoiding double taxation. [00:45:03] Speaker 03: The Supreme Court has said that you interpret these statutes to avoid double taxation wherever possible. [00:45:11] Speaker 03: This is not a statute just to be given a strict construction. [00:45:14] Speaker 03: It's to be given a relatively liberal construction, I would put it to you. [00:45:18] Speaker 01: Where is your basis for that? [00:45:21] Speaker 03: The basis for that would be the Supreme Court decision [00:45:24] Speaker 03: in Tennessee versus Whitworth at 171 U.S. [00:45:27] Speaker 03: 129 from 1885. [00:45:33] Speaker 03: And as applied to tariff provisions, I would quote the case of Atlas Copco versus United States. [00:45:40] Speaker 03: That's a Court of International Trade case at 10 CIT 790. [00:45:45] Speaker 03: And they said, double taxation is not, if so fact, a defective or unconstitutional exercise of power. [00:45:52] Speaker 03: It is not a preferred result. [00:45:54] Speaker 03: What the government's done here is they've essentially double-taxed the vans. [00:45:58] Speaker 03: The vans, you know, had paid all their U.S. [00:46:00] Speaker 03: taxes, their U.S. [00:46:01] Speaker 03: items exported. [00:46:02] Speaker 03: Now they're coming back in. [00:46:04] Speaker 03: They're being assessed with tax, the value of the Sprinter vans. [00:46:07] Speaker 03: I've got no problem with assessing a tax on all the improvements. [00:46:11] Speaker 03: That's baked in the cake. [00:46:12] Speaker 03: The more dollars on improvements, the more dollars are subject to assessment. [00:46:18] Speaker 03: So the question here is, if the Court's going to say, look, the essential characteristics are intact, [00:46:24] Speaker 03: But we want to deal with this new and commercial article provision in the regulation. [00:46:29] Speaker 04: The problem we have is to define term alterations, right? [00:46:33] Speaker 04: That's what the case is all about. [00:46:35] Speaker 04: It's all about were the goods altered. [00:46:37] Speaker 04: That's what the regulation keys to. [00:46:39] Speaker 03: Well, the regulation defines repair and alterations, and it includes various operations like addition, rediming. [00:46:45] Speaker 03: I understand that. [00:46:46] Speaker 04: I mean, the reason why there is the no duty is these goods were sent abroad, they were altered. [00:46:51] Speaker 04: What do you do with the definition of alterations that we have in Richardson? [00:46:58] Speaker 04: Richardson binds this case, court, right? [00:47:02] Speaker 04: Richardson says what was intended by the word alterations, that we are of the opinion that it was not intended by the word alterations to say that was alter if it goes out under one classification and comes back under another. [00:47:19] Speaker 03: Well, again, those dollars. [00:47:22] Speaker 04: That's what Richardson says. [00:47:23] Speaker 03: Well, the problem with classification is classification is not a good identifier. [00:47:28] Speaker 04: Why isn't this a nice, simple way to resolve these cases? [00:47:33] Speaker 04: Because Richardson told us back in when was it, a long, long time ago, when they were dealing with the same, 1948, with the same problem, were these goods altered? [00:47:41] Speaker 04: Because if they were altered, they'd come back duty free. [00:47:44] Speaker 03: Well. [00:47:45] Speaker 04: And they said, alterations [00:47:46] Speaker 04: It has not been altered, right? [00:47:49] Speaker 03: Right. [00:47:50] Speaker 04: Not been altered. [00:47:51] Speaker 04: If the duty of classification is different coming back from what it was knowing that. [00:47:57] Speaker 04: And in this case, you agree the classification is different. [00:48:01] Speaker 03: You know, the problem is the inforce, Your Honor. [00:48:04] Speaker 04: What's wrong with the problem? [00:48:05] Speaker 04: We're looking here for a simple way to decide these cases. [00:48:09] Speaker 04: Tarrus then takes subjective intent and all those things. [00:48:14] Speaker 03: But, Your Honor, tariff classification is not going to be where you want to go, because... I mean, what do I do with the precedent that binds us? [00:48:22] Speaker 03: Well, in the case of motor vehicles, this Court's decision in the Marabini case says the distinction between... I'm dealing with the high-read Richardson to define the term alterations. [00:48:33] Speaker 03: Right. [00:48:34] Speaker 03: Well, in Richardson, what they said was alterations did not include a step in the initial production [00:48:43] Speaker 03: of an article. [00:48:43] Speaker 03: You can't alter an article before it's been made. [00:48:46] Speaker 03: And what that was, that was finishing. [00:48:49] Speaker 03: That was, we had an unflanged wheel rim because it wasn't good for anything. [00:48:52] Speaker 04: You're not reading through the same part of the opinion I am. [00:48:54] Speaker 04: The part of the opinion I'm reading from talks about the classifications coming in and going out. [00:48:59] Speaker 03: And that's something the courts have noted. [00:49:01] Speaker 03: But again, in the Doleff case, this court said that's not dispositive. [00:49:05] Speaker 03: For example, if you took the example of like silicones, all silicones are in one tariff provision. [00:49:11] Speaker 03: I could send the silicone to Canada, chemically transform it into something completely new, bring it back into the country, and it would have the same tariff classification as it went out. [00:49:22] Speaker 03: Now, that wouldn't be an alteration. [00:49:23] Speaker 03: That might be a totally new chemical, but it would be in the same tariff classification. [00:49:28] Speaker 03: So all I'm saying, Your Honor, is if you're going to form a test for new and commercially different article that goes beyond the things enumerated in the regulation, if you're going to say the essential identity factors here are here, [00:49:41] Speaker 03: But it's a new and different commercial article. [00:49:45] Speaker 03: You're on terra incognita. [00:49:47] Speaker 03: You're going to have to make... I mean, there's two things you can do. [00:49:49] Speaker 03: You can either send the case back to the CIT and ask them for findings on it. [00:49:54] Speaker 04: Or we could decide the case on intended use by agreeing with the government on whose perspective you look at for the intended use. [00:50:01] Speaker 04: Correct. [00:50:02] Speaker 04: If you say that... If we agree with them on their view of the intended... Then nothing will ever qualify for... But you lose, right? [00:50:08] Speaker 03: Yeah, and everyone loses. [00:50:10] Speaker 03: No product would ever qualify for repair and alteration, because if you measure it as they do, and as the court below did, from the intention of the person who's performing the repairs, then nothing ever qualifies. [00:50:25] Speaker 03: What they're saying is if two people go into a Daimler-Chrysler dealer and buy an identical Dodge Sprinter van on one day, [00:50:31] Speaker 03: One guy drives it off the lot and uses it as is, the other one sends it up the pleasure way to be altered. [00:50:38] Speaker 03: What they're saying is the guy who drove his off as is bought a finished good, but the guy who bought the identical good and sent it to Canada didn't buy a finished good. [00:50:49] Speaker 03: And that's a real problem because if you view that from the subjective intent of the person performing the repair, and if you say the intended use is the use as repaired or altered, [00:51:00] Speaker 03: Well, then nothing will ever get into this provision. [00:51:02] Speaker 04: When you look at what it's going to be used for when it crosses the border. [00:51:08] Speaker 03: When it crosses the border, it can be used for carrying them. [00:51:11] Speaker 03: It's still a finished article. [00:51:13] Speaker 03: I mean, it's an article that Daimler Chrysler was the manufacturer. [00:51:17] Speaker 03: They made it. [00:51:17] Speaker 03: They finished it. [00:51:18] Speaker 03: They sold it. [00:51:19] Speaker 04: They're done with it. [00:51:19] Speaker 04: It wasn't a finished article for carrying people when it went across the border. [00:51:25] Speaker 04: When it came back across the border, it was finished for carrying people. [00:51:29] Speaker 03: You know, this court noted in the Marabini case that that's not a good distinction because any car will always carry people, even if it's a cargo car. [00:51:37] Speaker 03: And most vans carrying passengers will also have some cargo in it. [00:51:42] Speaker 03: Again, if you're coming up with a new test, I don't think tariff classification is the test. [00:51:47] Speaker 03: I don't think the subjective intent of the person doing the alteration is the test. [00:51:52] Speaker 02: Thank you very much. [00:51:52] Speaker 03: Thank you. [00:51:53] Speaker 03: Here. [00:51:54] Speaker 02: Case is submitted.