1. Case: Nissan Motor Mfg. Corp., USA v. United States
4/26/ :47 AM
International Business Law April 09, 2014
Professor Jasper S. Kim
Case: Nissan Motor Mfg. Corp., USA v. United States
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MALIN Justine - ID: 132SIS49 1

2. Agenda Facts Issue Rule Application Conclusion Opinion
Discussion/questions 2

3. Nissan Motor Mfg. Corp., U.S.A.
Facts V.
Plaintiff:
Nissan Motor Mfg. Corp., U.S.A.
Defendant:
The United States

4. Nissan’s Smyrna plant
Facts
A Foreign trade zone subzone was established at Nissan’s motor vehicle manufacturing and assembly plant in Smyrna, Tenessee, U.S.A.
Nissan imported production machinery for use of production of motor vehicles in the subzone.

5. Facts Requested a ruling Filed a protest
* The equipment is estimated at appr. $116,314,883 with over $3,000,000 in assessed duties! 1
Requested a ruling
The production equipment was dutiable*
U.S. Customs Service 2
Appealed from the judgment of the Court of International Trade
Nissan requested a ruling from the United States Customs Service to enquire of its obligation for duties.
Nissan noted that the machinery needed to be assembled, installed and tested to know if it would be capable of full-scale production of motor vehicles. If not, a part or all of the machinery might be returned to the foreign manufacturer.
Customs estimated that the production equipment was dutiable.
However, Customs deferred assessment of duties until the machinery was completely installed and tested in full-scale production.
After installation and testing, formal duty-paid entries were asked. Nissan entered the merchandise as required by Customs and, upon liquidation, filed a protest.
3rd stage: Nissan commenced the proceeding!
Filed a protest 3
Denied the protest
United States Court of International Trade
United States Court of Appeals 5

6. Issue
Whether the machinery imported by Nissan from Japan into a U.S. subzone for use in the production of motor vehicles is subject to duty

7. Arguments Nissan United States
The equipment imported into the U.S. subzone is not subject to duty. In accordance with the Foreign Trade Zones Act, merchandise entered into a zone becomes dutiable only if it is thereafter sent ‘’into the customs territory of the United States’’.
The equipment imported by Nissan is subject to duty. Within the meaning of the Foreign Trade Zone Act, the equipment can’t be treated as‘merchandise’ because it was installed, used and consumed in the FTZ. Therefore, it is not covered by the activites enumerated in the Act.

8. Rule The general rule of Statutory construction stated that:
‘’the expression of one thing is the exclusion of the alternative, expressio unius est exclusio alterius’’.

9. Application The U.S. Court of Appeals reviewed:
The 1950 amendment to the Foreign Trade Zones Act of 1934, Section 3, which provides that:
‘’Foreign and Domestic merchandise […], may, without being subject to the customs laws of the United states […], be brought into a zone and may be stored, sold, exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed with foreign or domestic merchandise, or otherwise manipulated or be manufactured…’’

10. Application The Court applied the rule of statutory construction.
The list of activities adressed by the Congress in section 81c of the United States Code, title 19, (1982) is very exhaustive and does not permit to imply any alternative activities.
’the expression of one thing is the exclusion of the alternative, expressio unius est exclusio alterius’’. 10

11. Application
Indeed, in accordance with section 81c, the Act does not say that imported equipment may be ‘’installed’’, ‘’used ‘’, ‘’operated’’ or ‘’consumed’’ in the subzone!

12. Application
Therefore, the activities performed by Nissan with its production equipment are not covered by the activities enumerated in the Act.

13. In addition,

14. Application The Court of Appeals reviewed:
The Customs’s published decision interpretating the Act as amended.
In this decision relating to other production machinery from Japan, it was similarly ruled that ‘’the list of activities does not permit an article to be brought into a zone, free of duty, to be used as production equipment to make other articles’’.

15. Conclusion
Yes,
the machinery imported by Nissan from Japan into a U.S subzone for use in the production of motor vehicles is subject to duty.

16. The Judgment of the Court of International Trade is affirmed.
Court decision
The Judgment of the Court of International Trade is affirmed.

17. Opinion
Although the attitute of Nissan is to my point of view deloyal by consideration of the facts (they entered the equipment after duties notification and upon liquidation, filed a protest), I think that the Foreign Trade Zones Act should be clearer on certain notions, especially on the restriction of the activities covered by the Act. 17

18. Discussion/Questions
Do you think that the attitude of Nissan by filing a protest to the Court of Appeals was legitimate regarding the situation?
Is the Foreign Trade Zones Act not clear on some points?
And if so, what should be done to prevent this kind of dispute?

19. Thank you! 19