[00:00:00] Speaker 03:
Here are the Ford case first.

[00:00:22] Speaker 03:
Number 18-1018, Ford Motor Company versus United States.

[00:00:34] Speaker 01:
Morning, your honor.

[00:00:35] Speaker 01:
May it please the court?

[00:00:36] Speaker 01:
Mike Shee for the government.

[00:00:38] Speaker 01:
My colleague Bev Farrell is with me at council table.

[00:00:41] Speaker 01:
And I'd like to reserve five minutes if I would for rebuttal.

[00:00:44] Speaker 01:
To evade hundreds of millions of dollars.

[00:00:46] Speaker 04:
Mr. Shee.

[00:00:47] Speaker 04:
Yes.

[00:00:48] Speaker 04:
Let me ask you this.

[00:00:50] Speaker 04:
What's the government's position on what type of provision 8703 is?

[00:00:56] Speaker 04:
And let me tell you what I'm thinking.

[00:00:59] Speaker 04:
Is it EO nominee?

[00:01:01] Speaker 04:
Is it EO nominee that inherently suggests use?

[00:01:05] Speaker 04:
Is it principal use or actual use among those four?

[00:01:09] Speaker 01:
In our view, the provision is best understood like 8703 is understood as a principal use provision, Your Honor.

[00:01:15] Speaker 01:
But for the reasons stated in the brief, the court doesn't need to take a position on how precisely heading 8703 is denominated.

[00:01:23] Speaker 01:
That's true for a couple of reasons.

[00:01:24] Speaker 01:
It's true, principally, because of this choice decision in the Meribani case.

[00:01:29] Speaker 04:
So if we do EO nominee with a provision that's inherently suggesting use, you believe it comes out the same way?

[00:01:37] Speaker 01:
Yes, sir.

[00:01:38] Speaker 04:
And, you know, the reason we want to take a position to clarify what we think Meribani

[00:01:48] Speaker 01:
So the best answer to the government's view is that heading 8703 is a principal use provision.

[00:01:55] Speaker 01:
But it's a special principal use provision because it doesn't just talk about how the vehicles are used.

[00:02:01] Speaker 01:
It talks about the vehicle's principal design.

[00:02:03] Speaker 04:
Are you aware of other provisions that use principally designed formulation?

[00:02:07] Speaker 01:
There's not that many, Your Honor.

[00:02:09] Speaker 01:
And I think this Court recognized as much in the Western States case.

[00:02:12] Speaker 01:
You know, the Western States case itself called out heading 8703 as being quite unique.

[00:02:17] Speaker 01:
And it's, I think, in virtue of the uniqueness of the text that Meru Beni prescribed the very precise holistic inquiry.

[00:02:27] Speaker 04:
89-03-99.

[00:02:28] Speaker 04:
It deals with rowboats and canoes, which are not of a type designed to be principally used with motors or sails.

[00:02:37] Speaker 04:
In that instance, the statute employs the word use when discussing what an article is designed to do.

[00:02:45] Speaker 04:
For 87-03,

[00:02:46] Speaker 04:
What should we make of the fact that the heading doesn't say principally designed for the use of transporting persons?

[00:02:55] Speaker 01:
Not very much, Your Honor, because the court doesn't require Congress to specifically use the magic word use to call out a principal use provision.

[00:03:04] Speaker 01:
And so, you know, this wasn't in the briefs, but this court has said in various cases, such as the Aramond case,

[00:03:10] Speaker 01:
that even the use of the word for, preparations for super stock for example, that is sufficient to denominate a principal use provision.

[00:03:19] Speaker 01:
So I wouldn't accord very much significance to the absence of the word use.

[00:03:22] Speaker 04:
What would you say if Ford sold its product to a dealer intact but with instructions on how to convert the vans into cargo vans and the dealer then sold cargo vans to the consumers?

[00:03:39] Speaker 04:
Where would you fall on that?

[00:03:44] Speaker 04:
I want to give two answers to that question.

[00:03:46] Speaker 04:
Let me throw in another thought.

[00:03:48] Speaker 04:
Supposing the dealer sold

[00:03:50] Speaker 04:
some as cargo management, and some as ski.

[00:03:53] Speaker 01:
And so the reason that hypothetical is hard, and I don't want to get out in front of customs proverbial skis, as it were, is because Mayor Rubeni makes quite clear we need to look at all of the evidence here.

[00:04:02] Speaker 01:
There's not a lot of evidence other than, I guess, a couple of sentences in the hyper for me to really evaluate how that would come out.

[00:04:10] Speaker 01:
But in that hypothetical, it's hard, Your Honor, as I think you know, because all of the evidence is pointing in different directions.

[00:04:16] Speaker 02:
Can I ask you that hypothetical a little bit more tied to the facts of this case?

[00:04:21] Speaker 02:
So instead of selling nines and sixes and sevens, all Ford sells is nines, which I think you agree are passenger vans, or they're at least properly classifiable.

[00:04:30] Speaker 02:
Well, let's just assume they're properly classifiable as passenger vans.

[00:04:34] Speaker 02:
They're sold as passenger vans.

[00:04:36] Speaker 02:
The sixes and the sevens are the ones that you think are sold as, that are sold as cargo vans.

[00:04:40] Speaker 02:
That's what the contracts sell.

[00:04:42] Speaker 02:
So suppose Ford only sold nines.

[00:04:47] Speaker 02:
presumed that they're passenger vans, but for people that wanted it to be a cargo van, they sold an additional post-importation service of stripping out all the seats and everything else that made it a passenger van.

[00:05:02] Speaker 02:
But all that was done post-importation.

[00:05:04] Speaker 02:
And would customs make a difference between those that were sold as passenger vans and those that were sold with

[00:05:15] Speaker 02:
the post importation service of stripping it out or would they all be classified as passenger vans because they were at the time they came across the border passenger vans.

[00:05:25] Speaker 02:
So a couple of things you're on.

[00:05:26] Speaker 01:
So first again, assuming that the connect nine is properly classified as a passenger van.

[00:05:32] Speaker 01:
My understanding based on my conversations with customs is that other auto manufacturers do in fact do that and customs does in fact treat

[00:05:40] Speaker 01:
those importations of those vehicles as, you know, vehicles principally designed for the transport of persons.

[00:05:46] Speaker 02:
Even though, however they're doing the selling and the contract, the contract documents distinguish between them as passenger and then passenger, but with post importation services to transform them to cargo vehicles.

[00:06:01] Speaker 01:
And the critical difference, I think, between that hypothetical in this case,

[00:06:05] Speaker 01:
is that in that hypothetical, the vehicles are actually offered to consumers as passenger vans, and some of them can actually be used by consumers as passenger vans.

[00:06:15] Speaker 01:
So again, as I was saying to Judge Wallach, the evidence in that circumstance points in many different directions.

[00:06:20] Speaker 01:
The evidence in this case does not, and perhaps it would help if I could review.

[00:06:26] Speaker 02:
Just one more question on that point.

[00:06:27] Speaker 02:
What would happen here then, and I understand Ford doesn't sell the sixes and sevens as passenger vans,

[00:06:33] Speaker 02:
Assuming that, for some reason, the six and sevens are substantially cheaper than the nines, if somebody went on, again, contracted with Ford and said, I want to buy this as a passenger van, don't do the post importation stripping out because it's, even though it's lower level seating, it's good enough for me.

[00:06:54] Speaker 02:
And the contract document showed they're buying it as a passenger van.

[00:06:57] Speaker 02:
There's no post importation processing.

[00:07:00] Speaker 02:
Would that be a passenger van?

[00:07:01] Speaker 01:
Again, Your Honor, it's hard to say.

[00:07:03] Speaker 01:
And the reason it's hard to say is we need to see what percentage of the vehicles are purchased for use as passenger vans, what percentage are purchased not.

[00:07:13] Speaker 01:
In that hypothetical, it seems as if only some people might be using the vehicle as cargo vans, and the vast majority of people might be using it as a passenger van.

[00:07:21] Speaker 01:
And so that would be quite relevant in figuring out how to classify that vehicle.

[00:07:26] Speaker 02:
But it was principally designed for.

[00:07:28] Speaker 02:
Yes, absolutely.

[00:07:29] Speaker 01:
And that's because...

[00:07:31] Speaker 03:
right that you look to the percentage of consumers who are using it one way or the other.

[00:07:36] Speaker 03:
That seems to me to be a bit odd where we have a situation here in which the design is that it's always going to be stripped out.

[00:07:48] Speaker 03:
There are not going to be any vans that are sold as passenger vans.

[00:07:55] Speaker 03:
To make it

[00:07:58] Speaker 03:
a determination turn on whether it's 51 percent one way or the other.

[00:08:03] Speaker 03:
I guess that's another case, but that seems to me that the actual preferences by the consumers may not be cranked into determining what it's principally designed for.

[00:08:15] Speaker 01:
So I agree, Your Honor, that there isn't a precise numerical inquiry, but Mayor Benny makes clear

[00:08:21] Speaker 01:
that how the vehicle is used by consumers and the expectations of consumers is quite relevant to the inquiry.

[00:08:27] Speaker 01:
And that's because the court held that the Court of International Trade in Maribene, quote, carefully applied the proper standards to determine how to classify the vehicle as the Nissan Pathfinder.

[00:08:38] Speaker 01:
And there, the Court of International Trade took testimony from three principal design engineers

[00:08:42] Speaker 01:
about how Nissan wanted to appeal to ordinary buyers.

[00:08:45] Speaker 01:
They looked at evidence of off-road use, market studies indicating what buyers used the vehicle to do and wanted the vehicle to do.

[00:08:53] Speaker 01:
And indeed, the judge even took the vehicle on test drives.

[00:08:56] Speaker 01:
And so when Ford says that Marabini requires customs and courts to blinker themselves to all of that evidence, that reading of Marabini simply cannot be reconciled with what the court actually held, which is,

[00:09:10] Speaker 01:
all of the evidence is quite relevant.

[00:09:12] Speaker 01:
And it's true, Your Honor, that on the margins, it sometimes is difficult to figure out, you know, what a vehicle's principally designed to do.

[00:09:19] Speaker 01:
And, you know, as to that, I can only say that the test is whether the intended purpose of transporting persons outweighs unintended purpose of transport.

[00:09:28] Speaker 04:
Well, let me throw this at you.

[00:09:30] Speaker 04:
In the red brief, it's 70.

[00:09:33] Speaker 04:
Ford says, importantly, ellipsis, customs

[00:09:40] Speaker 04:
adduced no evidence calling into question that the CRSV2 is a seat and offered no expert opinion regarding the nature of a seat.

[00:09:49] Speaker 04:
And then they say Ford, in contrast, introduced evidence that it was designed, I'm paraphrasing, through physical testing and engineering judgment to be a safe and usable seat.

[00:10:01] Speaker 04:
They cite 15 and 16 of their brief for that underlying purpose.

[00:10:07] Speaker 04:
That cites Appendix 4856.

[00:10:11] Speaker 01:
Yep.

[00:10:12] Speaker 01:
So all that means is that Ford made the internal self-certification that the cost-produced seats version two were safe under the NHTSA standards.

[00:10:21] Speaker 01:
And in this litigation, the government hasn't challenged whether the seats are or are not safe.

[00:10:25] Speaker 01:
But customs did point to a lot of evidence indicating that the cost-produced seats version two were not designed for passenger use, not least because

[00:10:34] Speaker 01:
There was an email from a Ford design engineer saying, you may be wondering why we took all of the things out of this seat.

[00:10:40] Speaker 01:
Don't worry.

[00:10:41] Speaker 01:
The seat is designed to be scrapped.

[00:10:43] Speaker 01:
It will not be used.

[00:10:44] Speaker 01:
And that's quoted in the court of international trade opinion, your honor.

[00:10:47] Speaker 01:
And moreover, customs have used evidence that, for example, they took out four of seven seat back wires, which are necessary for comfort.

[00:10:53] Speaker 04:
I'm interested.

[00:10:54] Speaker 04:
I'm interested you say you're not contesting that because when I go to the appendix, which is customs responses,

[00:11:03] Speaker 04:
It sure sort of looks like you're not accepting it.

[00:11:06] Speaker 01:
So the answer, Your Honor, is, you know, I don't know whether or not the seats are NHTSA compliant.

[00:11:11] Speaker 01:
As far as I know, nobody has actually tested the seats other than Ford to figure out whether they're NHTSA compliant.

[00:11:17] Speaker 01:
But whether the seats are or are not capable of safely transporting persons is not the end of the Maryland inquiry.

[00:11:24] Speaker 01:
With the panel's permission, I'd like to reserve my remaining time.

[00:11:27] Speaker 03:
I have one more question, and that is, is it your position that even if the

[00:11:32] Speaker 03:
tariff classification here didn't have the principally designed language and is that this case will come out the same way because of the artifice theory?

[00:11:43] Speaker 01:
Yes, Your Honor, because again, this is a principal use provision and in assessing... Let's say that we said that that's a nominate provision.

[00:11:54] Speaker 03:
Would it come out the same way?

[00:11:57] Speaker 01:
That's harder, Your Honor, but I think it still would.

[00:12:00] Speaker 01:
And the reason it still would is because

[00:12:02] Speaker 01:
you know, as Mary Betty makes clear, in assessing this air nominee provision, again, the entire battery of evidence needs to be considered.

[00:12:10] Speaker 03:
Yeah, but I don't think that's really answering my question.

[00:12:12] Speaker 03:
I'm giving you a hypothetical that the tariff provision is written differently, and it doesn't have the principally design for the transport of persons language, and it just said passenger vans.

[00:12:27] Speaker 03:
And then the same process here.

[00:12:32] Speaker 03:
they strip out the seats in all the vans before they sell them to the customers.

[00:12:36] Speaker 03:
Would then that still be classified as vehicles for transport of goods?

[00:12:45] Speaker 01:
Probably, Your Honor, because passenger van is still a principal use provision just as the actual tariff is.

[00:12:52] Speaker 03:
But I suppose we say it's not a principal use provision.

[00:12:54] Speaker 03:
We say it's an eonominy provision.

[00:12:59] Speaker 03:
In other words, is your artifice theory

[00:13:01] Speaker 03:
would it extend to a tariff classification written that way?

[00:13:06] Speaker 01:
Oh, it doesn't need to, Your Honor.

[00:13:08] Speaker 01:
Perhaps this answer might help with a different hypothetical.

[00:13:12] Speaker 01:
Suppose 8703 did not say, principally designed for the transport of persons.

[00:13:16] Speaker 01:
It just said, vehicle with four seats, right?

[00:13:19] Speaker 01:
And so Ford enters the Connect 6-7 with the cost-reduced seat in the back, right?

[00:13:24] Speaker 01:
In that circumstance, it would be a lot harder for customs to say that this is not a vehicle with four seats.

[00:13:30] Speaker 01:
in the condition as imported, whether or not the seats are taken out at the end.

[00:13:34] Speaker 03:
I'm sorry, you're not answering my question.

[00:13:36] Speaker 03:
Let me try again.

[00:13:37] Speaker 03:
The tariff classification doesn't have principally designed language in it.

[00:13:42] Speaker 03:
It just says vehicles for transport of persons.

[00:13:50] Speaker 03:
But they still do the stripping out immediately after the importation.

[00:13:57] Speaker 03:
None of them is sold to a customer.

[00:14:00] Speaker 03:
with the passenger configuration of the van.

[00:14:02] Speaker 03:
Would that still fall into your theory that this is an artifice and that it would be in the cargo classification?

[00:14:14] Speaker 01:
Yes, Your Honor.

[00:14:15] Speaker 01:
So assuming that hypothetical, you know, exact same facts as here, except the only difference, instead of principally designed for the transport of persons, the tariff text says passenger, right?

[00:14:26] Speaker 01:
Assuming that the tariff text

[00:14:28] Speaker 01:
you know, a passenger should be interpreted in the same way where evidence of use can be considered, evidence of marketing intent can be considered.

[00:14:36] Speaker 01:
If that doesn't make a difference, the outcome would be the same.

[00:14:39] Speaker 01:
Okay, all right.

[00:14:40] Speaker 01:
We'll give you a couple minutes for the models.

[00:14:41] Speaker 01:
Thank you.

[00:14:42] Speaker 05:
Mr. Keisler.

[00:14:47] Speaker 05:
Thank you, Your Honor, and may it please the Court.

[00:14:49] Speaker 05:
I'd like to begin if I may.

[00:14:50] Speaker 04:
Well, I'd like to start with page 16 of your brief.

[00:14:56] Speaker 04:
and your reference to 4856, which is where I worked backwards when I was asking the government.

[00:15:05] Speaker 04:
Because in that, you say, in addition to satisfying the HDSUS, your safety standards, seatbelt and so on, thus ensure the Transit Connect 6-7s would be street legal in case one was sold and its condition is imported.

[00:15:24] Speaker 04:
And you cite me to

[00:15:25] Speaker 04:
to 4856, which appears to be the government's responses.

[00:15:33] Speaker 05:
Am I correct?

[00:15:35] Speaker 05:
That was probably the government's responses to our statements of undisputed facts.

[00:15:39] Speaker 04:
Okay.

[00:15:40] Speaker 04:
And in it, they say that they aver that the cost, I mean, looking at 71 and 72,

[00:15:51] Speaker 04:
Avert that the cost-reduced second seat incorporated into the merchant tank was not tested either by Ford or the United States to comply, to determine whether to comply with U.S.

[00:16:02] Speaker 04:
safety standards.

[00:16:03] Speaker 04:
And then in 72, averse that if the cost-reduced second row seats were not removed, not only would the VINs be incorrect, but so too would the vehicle weight calculations on the safety certifications.

[00:16:17] Speaker 04:
Now how does that provide

[00:16:20] Speaker 04:
the material to support what you said.

[00:16:24] Speaker 05:
Let me separate out two things with that, Your Honor.

[00:16:26] Speaker 05:
One is the safety of the seat, and the other is the certifications.

[00:16:30] Speaker 05:
But in terms of the process that Judge Barnett followed here with respect to these undisputed facts, he took both sides' statements and responses, and he prepared a draft statement of undisputed facts, which he then submitted to the parties.

[00:16:44] Speaker 05:
And the parties then said, yes, that's good to go, because he gave them the chance to refute them.

[00:16:50] Speaker 05:
His extensive factual findings, based on that undisputed record, were essentially signed off by both sides.

[00:16:55] Speaker 05:
And to explain them why there is no inconsistency... No, Drew, then explain why do you cite 4856 instead of that?

[00:17:04] Speaker 05:
Well, we probably should have cited that instead, Your Honor, but in terms of the judge's findings, the seat was safety-tested by Ford using both engineering judgment and physical testing.

[00:17:15] Speaker 05:
There's something called H-point testing, which made sure that

[00:17:19] Speaker 05:
where the person sits in the seat hasn't changed as a result of any of the cost reductions that were made.

[00:17:25] Speaker 05:
And so through both engineering judgment and physical testing, Ford established that the seat complies with all federal safety standards.

[00:17:33] Speaker 05:
And this was summary judgment.

[00:17:34] Speaker 05:
The government never produced any evidence to the contrary.

[00:17:38] Speaker 05:
So yes, when we stated it, they refused to concede it, but they never produced any evidence controverting it either.

[00:17:45] Speaker 05:
And if I could, I'd like to also address the first question that your honor raised about what kind of classification this is, because although Council of the United States... I have that question for you.

[00:17:55] Speaker 05:
It's a principal use provision.

[00:17:57] Speaker 03:
That is inconsistent with the position that... Well, let's assume it's a new nominee provision, okay?

[00:18:02] Speaker 03:
We still have cases that say that use could be relevant, including particularly the Kwon Kwon case.

[00:18:10] Speaker 03:
And you say this is legitimate tariff engineering.

[00:18:14] Speaker 03:
But none of the cases that you cite involve tariff provisions with language similar to this, with a principally designed feature to them.

[00:18:26] Speaker 03:
Why shouldn't we just simply say principally designed means what you intended to be for, and that Ford intended these vans to be for cargo and not passengers?

[00:18:38] Speaker 03:
And why isn't it that simple?

[00:18:41] Speaker 05:
Because, Your Honor, design and use

[00:18:43] Speaker 05:
are different concepts, and Maribene construed them to be different concepts.

[00:18:48] Speaker 05:
In particular, Maribene did refer to the vehicles intended for us in the language of the government science.

[00:18:55] Speaker 05:
But in the very next sentence, Maribene said, to make this determination, we look at the objective, structural and auxiliary

[00:19:04] Speaker 03:
physical features.

[00:19:05] Speaker 03:
That case didn't involve this situation at all.

[00:19:08] Speaker 03:
I wasn't speaking to this situation.

[00:19:10] Speaker 03:
It didn't, but it could have used, it could have looked to the objective attempt of the manufacturer.

[00:19:14] Speaker 03:
It could have, but that doesn't mean it's a holding that informs us here as to what we should be doing.

[00:19:21] Speaker 03:
It's just not addressing whether principally designed

[00:19:25] Speaker 03:
for passengers means that if you intend to strip out the passenger features that that's not going to be relevant to the tariff classification.

[00:19:33] Speaker 05:
I think there are two lines of cases that are relevant here.

[00:19:36] Speaker 05:
One is Maravany which construed the principally designed language to specifically focus on the objective physical features at import.

[00:19:43] Speaker 05:
And the other are the cases like Citron and Worthington and the other Supreme Court cases which establish that you look at the condition as imported

[00:19:53] Speaker 05:
to assess the proper classification.

[00:19:55] Speaker 05:
So there are really two questions.

[00:19:57] Speaker 05:
One is, what do you think?

[00:19:58] Speaker 05:
They are not mutually exclusive in the slightest.

[00:20:01] Speaker 05:
They are not.

[00:20:01] Speaker 05:
But in the cases in which this court has looked to use to inform classification of an AO nominate provision, it has always been to look to use to understand the nature of the article as imported in its condition as important.

[00:20:17] Speaker 05:
There is no case.

[00:20:19] Speaker 03:
There is no case.

[00:20:20] Speaker 03:
What case do you have where principally designed language has been held to exclude a consideration of the importer's intent with respect to the use of the item?

[00:20:33] Speaker 05:
The Western States import case would be that case, Your Honor.

[00:20:36] Speaker 05:
It was subsequent to Maribany, and it involved classifications that distinguished between road bikes and mountain bikes.

[00:20:43] Speaker 05:
That also used, it didn't use the word principally designed, but the tariff classification used the word design.

[00:20:49] Speaker 05:
and the court in that case looked to Maribany to understand what the word designed mean and specifically said that Maribany required a balancing of design features to determine what is principal and then it rejected the importer's argument that the court should instead look to the importer's intent as to the subsequent use by the consumer.

[00:21:11] Speaker 05:
Okay, let's assume that I don't agree with you that that case helps you.

[00:21:15] Speaker 03:
What other cases do you have?

[00:21:17] Speaker 05:
Well, there's no other case that we're aware of that construes a principally designed tariff heading.

[00:21:22] Speaker 05:
There aren't other principally designed tariff headings to our knowledge.

[00:21:26] Speaker 04:
So in the blue break of 23, the government argues Ford did not give consumers the option to purchase the six or seven, the six-seven, the next six-seven, with rear seats, let alone the option to purchase with the temporary cost-reduced seat.

[00:21:44] Speaker 04:
Is that correct?

[00:21:46] Speaker 04:
That's correct.

[00:21:47] Speaker 04:
Is the Transit Connect 9 marketed alongside the 6-7 so that the consumer sees both products together and chooses?

[00:21:58] Speaker 05:
In the case of the entries at issue here, they were ordered in advance.

[00:22:01] Speaker 05:
So when they came off the lot and went to the United States, they were already designated for a particular customer.

[00:22:07] Speaker 04:
And in fact, Ford has a contract with a processor to undertake post-important

[00:22:12] Speaker 04:
import processing for all the 6 and 7.

[00:22:17] Speaker 04:
That's correct, Your Honor.

[00:22:19] Speaker 04:
If that's so, then isn't it true that Ford could never sell a Transit Connect 6-7 with rear seats?

[00:22:25] Speaker 05:
Well, we haven't sold a Transit Connect 6-7 with rear seats, but we could.

[00:22:29] Speaker 05:
They were built with the intent that they would be passenger vehicles that could later be converted for cargo use.

[00:22:35] Speaker 05:
If nobody's going to ride in it, why does it have seat belts?

[00:22:41] Speaker 05:
Well, because we were seeking to build a passenger vehicle that could be completely street legal and driven as a passenger vehicle.

[00:22:48] Speaker 05:
We were seeking to build a vehicle that in its condition as imported would be a passenger vehicle and would meet each of the requirements of the explanatory notes which included... What evidence in the record do we have that the seats actually met U.S.

[00:23:03] Speaker 04:
safety standards other than your conclusions, internal conclusions?

[00:23:07] Speaker 04:
You know, the uncontested

[00:23:09] Speaker 05:
evidence from Ford that its engineers engaged in physical testing and engineering judgment to so certify it and the absence of any contrary evidence by the United States.

[00:23:20] Speaker 03:
What is all this evidence about putting seats in there and perhaps making them compliant with safety standards have to do with principally design when the whole purpose is that this is going to be ripped out, it's never going to be used?

[00:23:35] Speaker 05:
I mean, I think that turns, Your Honor, on the understanding of what principally design means, whether it means the intent as to how the vehicle will ultimately be used or whether it refers to the physical design features.

[00:23:45] Speaker 05:
And if I may just go back to how Maribene has been construed, it's not only the Western States import case, Your Honor.

[00:23:52] Speaker 05:
It's the explanatory notes that the United States proposed and negotiated to the World Customs Organization to capture the holding of Maribene.

[00:23:59] Speaker 05:
which speaks exclusively in terms of physical design.

[00:24:02] Speaker 03:
But it's not dealing with this kind of situation where there's an intent to rip out the seats.

[00:24:08] Speaker 03:
And, Your Honor, we... Right?

[00:24:09] Speaker 03:
I mean, and none of the constructions of Maribene involved that kind of situation.

[00:24:14] Speaker 03:
That's right.

[00:24:15] Speaker 03:
And for that... Nobody foresaw that this might happen at the time of Maribene or until this case came up, right?

[00:24:21] Speaker 05:
And for that circumstance, Your Honor, we looked at cases like Citroen and Worthington, which established that even when there is an intent

[00:24:28] Speaker 05:
after importation to convert the article into something else.

[00:24:32] Speaker 05:
That intent is irrelevant because the condition is irrelevant.

[00:24:35] Speaker 03:
Well, it's irrelevant, perhaps, in those cases, because there wasn't any principally designed language.

[00:24:42] Speaker 02:
Isn't it a better understanding?

[00:24:44] Speaker 02:
I know you're going to disagree with this, but it seems to me the better understanding, even though you go through and cite all these structural features that mean it could be a passenger vehicle, is that these were specifically designed for

[00:24:59] Speaker 02:
stripping out.

[00:25:00] Speaker 02:
These are cheap seats.

[00:25:01] Speaker 02:
You went through and reduced them to what you thought were the bare minimum to meet the Marabini requirements and the explanatory notes.

[00:25:08] Speaker 02:
But they were never designed to be passenger seats.

[00:25:12] Speaker 02:
In actuality, they were designed to be stripped out and

[00:25:15] Speaker 02:
at the lowest possible cost.

[00:25:17] Speaker 05:
Well, Your Honor, you're right that I would disagree with that.

[00:25:19] Speaker 05:
They were designed to be passenger seats so that the vehicle at importation would be a passenger vehicle, fully able to function as a passenger vehicle.

[00:25:26] Speaker 02:
Right, but the question isn't whether the tariff provision doesn't talk about whether the seats are designed to be passenger seats.

[00:25:34] Speaker 02:
It's whether the vehicles are principally designed for the transport of persons.

[00:25:40] Speaker 02:
And when you have seats that were done even though they meet the passenger requirements,

[00:25:45] Speaker 02:
The vans were designed not for the transported persons because the seats put in were intended to be stripped out.

[00:25:54] Speaker 02:
It's not a post-importation decision.

[00:25:58] Speaker 02:
everything about this fan was designed to be a cargo van.

[00:26:01] Speaker 05:
Your honor, I very much disagree with that because the government has described this as if we simply took some seats and bolted it into a cargo van.

[00:26:09] Speaker 05:
Everything about the structure of this vehicle is a passenger wagon.

[00:26:13] Speaker 03:
But wait a moment, but isn't Judge Hughes correct that at the time

[00:26:17] Speaker 03:
that these were produced and designed, that the intent always existed to strip out the seats, that they were just there to be tempered.

[00:26:24] Speaker 05:
And we've always been open about that, that the intent of this was to import a vehicle that met all the standards for a passenger vehicle and then use labor and facilities in the United States after importation to convert it for cargo.

[00:26:37] Speaker 04:
Your conversion facilities strip out those seats and destroy them, isn't that correct?

[00:26:41] Speaker 04:
I'm not sure whether they're destroyed or recycled.

[00:26:44] Speaker 04:
My recollection of the record is they're destroyed.

[00:26:46] Speaker 04:
Supposing Ford simply wired a bale of hay into the back and its engineer said, nope, that meets the safety standards because we've got a seatbelt in there and it's solid enough.

[00:27:02] Speaker 04:
But then the engineer would have perjured himself or herself and the government would... Oh, I don't know that.

[00:27:06] Speaker 05:
That a bale of hay would meet the federal safety standards.

[00:27:09] Speaker 04:
I used to ride around on a bale of hay when I was a kid.

[00:27:13] Speaker 05:
The government would not allow us to sell you a vehicle with a bale of hay today.

[00:27:17] Speaker 05:
That's right.

[00:27:18] Speaker 04:
I mean, this seat is a... I mean, I understand that there's... Supposing Chevy advertised and said, hey, don't buy this mongrel vehicle.

[00:27:28] Speaker 04:
It was designed as a passenger vehicle and it's not really a cargo vehicle.

[00:27:31] Speaker 04:
Would you have any beef?

[00:27:34] Speaker 05:
Well, we're not selling the vehicle as a passenger vehicle, so those kinds of advertisements wouldn't arrive.

[00:27:39] Speaker 05:
I mean, I think the question is,

[00:27:41] Speaker 05:
First of all, is this a vehicle that you examine in its condition as imported, or do you look to the intent?

[00:27:46] Speaker 05:
We've always acknowledged that the intent was to convert the vehicle later, and we've always acknowledged the reason for that, which is to obtain the lower duty.

[00:27:54] Speaker 05:
We did that on reliance on the decisions that say that condition as imported is the touchstone for classification analysis.

[00:28:01] Speaker 02:
I guess the real question is, is condition at importation confined

[00:28:05] Speaker 02:
to just the physical characteristics, or do you look at the structure of the sale and the marketing and all of that other ancillary stuff, not on a post-importation look, but on a pre-importation look?

[00:28:22] Speaker 05:
Well, and I think that depends on what kind of heading this is.

[00:28:25] Speaker 05:
And this is not a used provision.

[00:28:26] Speaker 05:
This is an AO-nominated provision that uses the language principally designed.

[00:28:31] Speaker 02:
But why does AO-nominate

[00:28:33] Speaker 02:
Why is it only limited to physical characteristics?

[00:28:37] Speaker 02:
Is there case law that says that?

[00:28:39] Speaker 02:
Because I get, I mean we're looking at the time of importation.

[00:28:43] Speaker 02:
And if we were just looking at physical characteristics, you have a really strong case.

[00:28:48] Speaker 02:
But I still don't understand why, particularly when we're looking at this unique provision that has principally designed for, I mean I think if this just said passenger vehicles, you'd have a slam dunk case because these are

[00:29:03] Speaker 02:
you know, then it doesn't have any of this principally designed for.

[00:29:07] Speaker 02:
But with that language, don't you look at, in fact, aren't you compelled to look at the pre-importation record of what they were designed for?

[00:29:16] Speaker 05:
No, I don't think so, Your Honor, because the way the court in Maribene and Western states import, the way the explanatory notes are written

[00:29:24] Speaker 05:
And the way Customs has construed it in every instance other than this case is that what design refers to is not the intended business plan or ultimate sale of the importer.

[00:29:34] Speaker 05:
It is what is the physical design of the vehicle?

[00:29:37] Speaker 05:
What functions does that physical design perform?

[00:29:40] Speaker 05:
And what capability and suitability does the vehicle have as a result of those functions?

[00:29:45] Speaker 05:
And that is why not only in Western states import did this court reject any looking at subjective intent of the manufacturer or subsequent use.

[00:29:53] Speaker 05:
The explanatory notes are purely in terms of physical design characteristics, no reference to ultimate use or subjective intent.

[00:30:01] Speaker 05:
And the customs decisions entailed this case likewise.

[00:30:04] Speaker 05:
And the most telling, I think, is the customs decision in the Dodge Sprinter case, because that was the photographic negative of this case.

[00:30:11] Speaker 05:
Dodge imported something in the condition.

[00:30:13] Speaker 03:
What does it matter that there may be customs rulings that support you?

[00:30:17] Speaker 03:
I mean, under me, those aren't entitled to Chevron deference.

[00:30:23] Speaker 05:
We're not suggesting that anything is entitled to deference here, Your Honor, but in terms of how the Maribene decision and this tariff language has been consistently construed prior to this case.

[00:30:35] Speaker 05:
The example I was going to mention was the Dodge Sprinter, which came in as a cargo van.

[00:30:40] Speaker 05:
But the Dodge company said to customs, we intend to put seats in it.

[00:30:44] Speaker 05:
We intend to put windows in it.

[00:30:45] Speaker 05:
We're going to make it to a shuttle van.

[00:30:47] Speaker 05:
Therefore, you should classify it as 8703.

[00:30:50] Speaker 05:
And Customs said, no, none of that matters.

[00:30:53] Speaker 05:
The only thing that matters is condition as imported, because this is an AO nominate provision.

[00:30:58] Speaker 05:
So even though you intend to turn it into a passenger van, and that was uncontested, this is classified as 8704 for the transport of goods.

[00:31:07] Speaker 04:
In the red brief at 19, you talked about the importation in the port of Baltimore.

[00:31:13] Speaker 04:
And how eventually the assistant court director said that, quote, I'm quoting from you, because the conversion was being done after release, it was, quote, okay.

[00:31:26] Speaker 04:
Tell us about that assistant court director.

[00:31:28] Speaker 04:
Was that a trained classification person?

[00:31:31] Speaker 05:
I'm not sure whether that assistant court director was, but trained classification analysts have looked at this throughout the two years prior.

[00:31:39] Speaker 05:
to the decision here when the Wall Street Journal first came out in the article that... Whether you're citing to that and I ask you that question.

[00:31:46] Speaker 05:
Right.

[00:31:46] Speaker 05:
And I believe the assistant court director at least supervised the classification people.

[00:31:53] Speaker 05:
I'm not sure whether the assistant court director was himself or herself a classification person.

[00:31:58] Speaker 03:
Okay.

[00:31:58] Speaker 03:
Thank you, Mr. President.

[00:32:00] Speaker 05:
Thank you.

[00:32:07] Speaker 02:
Mr. Shee.

[00:32:10] Speaker 02:
Can you respond to the Dodge example he just cited?

[00:32:15] Speaker 02:
I mean, it does seem like the flip side of this, that it was they were importing them and intended to make them passenger vans and maybe were sold as that.

[00:32:26] Speaker 02:
But at the time of importation, they were cargo vans.

[00:32:30] Speaker 01:
So the Dodge Sprinter case is completely consistent with what Customs did here.

[00:32:34] Speaker 01:
And that's true for a couple of reasons.

[00:32:36] Speaker 01:
Number one, Customs did take

[00:32:38] Speaker 01:
the intent of the importer into account.

[00:32:41] Speaker 01:
Number two, customs assessed the vehicle in its condition as imported, and in its condition as imported, there weren't any spaces for passengers.

[00:32:49] Speaker 01:
And so notwithstanding the fact that there might have been some intent to convert a couple of these printers into passenger vans, or a lot of these printers into passenger vans, customs came to the conclusion that that intent did not outweigh the fact that the structural and design features of the vehicle- So was that the case where some of them were sold

[00:33:08] Speaker 02:
it was one model and some of them came through and were converted and some of them were still sold as cargo vans.

[00:33:14] Speaker 01:
So I don't know that, Your Honor, and the reason I don't is because the Sprinter decision, if you take a look at it, it's about a paragraph long.

[00:33:20] Speaker 01:
And so it's really hard to determine what exactly Customs was basing its decision upon.

[00:33:26] Speaker 01:
But one thing we can know from the Sprinter decision is Customs did not say intent is irrelevant.

[00:33:31] Speaker 01:
Customs just said that

[00:33:33] Speaker 01:
intent in many circumstances or, you know, in that circumstance cannot override given the other.

[00:33:40] Speaker 02:
That's why if these were all nines coming across and some of them were intended to be stripped out, customs might have a hard time classifying the ones that were intended to be stripped out as cargo vans because despite the intent, they would be passenger vans, assuming they met all the other characteristics.

[00:34:03] Speaker 02:
But, you know, the spring of Ford.

[00:34:06] Speaker 02:
If for some reason you prevail today and Ford goes back to marketing one type of van and then offering post-importation processing to turn it into a cargo van, customs may have a much harder way of capturing that.

[00:34:21] Speaker 01:
Yes, Your Honor.

[00:34:22] Speaker 01:
And as I said in my initial presentation, it's my understanding that at least some auto manufacturers do that.

[00:34:29] Speaker 01:
But to be emphatically clear, that is not what Ford did here.

[00:34:33] Speaker 01:
I see my red light is on, Your Honor.

[00:34:36] Speaker 01:
Okay, all right.

[00:34:37] Speaker 03:
Thank you, Mr. Shea.

[00:34:38] Speaker 03:
Thank you.

[00:34:40] Speaker 03:
I thank both counsels.

[00:34:41] Speaker 03:
The case is submitted.