Before Mayer, Chief Judge, Michel and Lourie, Circuit Judges.
The opinion of the court was delivered by: Michel, Circuit Judge.
Appealed from: United States Court of International Trade Judge Richard W. Goldberg
Samsung Electronics America, Inc. ("Samsung") appeals from the summary judgment of the United States Court of International Trade in Samsung Electronics America, Inc. v. United States, No. 91-04-00288, slip op. 99-3 (Jan. 6, 1999), holding Samsung not entitled to an allowance in the appraised values and refund of duties on entries liquidated by the United States Customs Service ("Customs") from December 1987 through October 1990. Samsung alleged that the entered merchandise contained latent defects covered by its consumer warranties, and it sought allowances for the repair costs and losses of unrepairable goods sold at discount during the years of the entries, arguing that these goods were "partially damaged" upon importation, under 19 C.F.R. § 158.12. The Court of International Trade held that Samsung failed to establish with the legally required specificity the value of the defects in each entry so as to entitle it to an allowance and refund of duties pursuant to reliquidation and reappraisal. The appeal was submitted for our decision following oral argument on October 6, 1999. Because the Court of International Trade correctly interpreted and applied the regulation, we affirm the summary judgment. We hold that under section 158.12, in order to qualify for an allowance in appraised values, the importer's proof must relate the allowance sought to each particular entry. Samsung's proofs did not even purport to do so, reflecting only annual repair costs, and not the diminution in value of individual entries. The repair costs and losses covered the same years as those in which the protested entries occurred, but were not limited to equipment entered in those years and could have included considerable costs for equipment imported in earlier, non-protested entries. Thus, these costs were not proven to be related with adequate specificity to particular entries as required by section 158.12. Therefore, we must affirm the judgment.
Samsung imported various types of electronic equipment manufactured by its parent company, Samsung Electronics Co., Ltd. ("manufacturer"), in Korea between December 1987 and October 1990. Samsung then resold the equipment bearing both companies' brand name SAMSUNG to consumers in America.
Customs assessed duties on each entry protested here based on the "transaction value" of the imported equipment, which is only one of several methods of appraisal used by Customs. This transaction value was determined using the price actually paid by Samsung when it purchased the equipment from the manufacturer, as provided in 19 U.S.C. § 1401a (1994).
As part of the sales contracts, Samsung and the manufacturer entered into Servicing Agent Agreements ("service agreements"), which acknowledged that "the Products exported to the United States are occasionally in need of the inspection, repair, refurbishing, and such other customer requested services." The service agreements obligated the manufacturer to reimburse Samsung up to 5% of the total purchase price per year for the cost of these inspections, repairs and refurbishings.
During the time covered by these sales contracts and service agreements, but after liquidation of the entries, certain electronic equipment like that imported in the subject entries was found to contain latent defects. Samsung either sold the equipment containing such manufacturing defects at a discount and with the SAMSUNG label removed, or repaired it in the United States, either before sale or under the consumer warranties covering defective equipment, when consumers returned the equipment to Samsung as defective. Samsung's cost accounting system kept track of these losses and repair costs on an annual basis. When consumers asserted their rights under their consumer warranties with Samsung, if the defects were determined to have not been caused by the consumer and to be covered by the warranty, the defects were repaired and the expenditures were considered repair costs in Samsung's accounting system. Samsung (in America) asserted its rights under the service agreements and the manufacturer (Samsung in Korea) reimbursed Samsung (in America) for its losses incurred in the discounted sales and the costs incurred to repair the defects. This reimbursement was equal to 4.7% of the total purchase price for the period in question.
Samsung filed claims with Customs under what are now 19 C.F.R. § 158.12 and 19 U.S.C. § 1401a(b)(3)(A)(i) for the valuation of the defective merchandise and, consequently, the duties assessed, to be reduced by a reasonable allowance for the diminished value due to the latent manufacturing defects. Customs rejected both Samsung's claims and its subsequent protests. See Samsung Elecs. Am., Inc. v. United States, 106 F.3d 376, 378 (Fed. Cir. 1997). Samsung then brought the instant action in the Court of International Trade. The court granted the government's first motion for summary judgment, denying Samsung's claims for duty refunds. The Court of International Trade determined that the regulation applies only to unexpectedly defective merchandise, i.e., merchandise different from that which was ordered, and that Samsung had ordered merchandise expecting a certain level of defects and therefore the merchandise received, defects and all, was what they ordered. On appeal, we held, however, that "Samsung ordered only defect-free merchandise and . . . these sales contracts call for only defect-free merchandise." Samsung, 106 F.3d at 379. This court, therefore, reversed the Court of International Trade's summary judgment that 19 C.F.R. § 158.12 cannot apply to the subject entries and remanded the case for a determination of the "allowance [to be] made in the value to the extent of the damage." 19 C.F.R. § 158.12. This court noted that only those defects proven to have been in existence at the time of importation qualified for an "allowance" in value. See Samsung, 106 F.3d at 380 n.4.
The Court of International Trade, on remand, found that Samsung could not "establish either the existence of latent defects in the subject entries with any specificity or the value of such claimed defects," and again granted summary judgment to the government. Samsung, slip op. at 3. Samsung again appealed.
We have jurisdiction over this appeal under 28 U.S.C. § 1295(a)(5) (1994).
Samsung seeks a partial refund in duties under 19 U.S.C. § 1401a *fn1 via a belated allowance under 19 C.F.R. § 158.12, *fn2 which requires an appraisal of the partially damaged merchandise that reflects the value of the defects. The Court of International Trade held that an importer is entitled to this allowance in dutiable value only when the particular entry for which the allowance is sought and the diminution in value of the merchandise so entered can be established with specificity. See Samsung, slip op. at 23. The trial court further held that Samsung's evidence utterly failed to correlate the diminution in value of the damaged goods to the specific entries for which the allowances were sought. See id. Samsung argues on appeal that its proof of repair costs was legally sufficient to prove that the latent defects at issue here existed at the time of importation, ...