Clarendon Marketing, Inc. v. United States

Clarendon Marketing, Inc. (Clarendon) (plaintiff) imported petroleum products that fell under the definition of naphthas but that were also able to be used and regularly used as motor-fuel blending stock. The United States Customs Service (customs) (defendant) classified the petroleum products as motor fuel under subheading 2710.00.15 of the Harmonized Tariff Schedule of the United States (HTSUS). Clarendon challenged customs’ classification, arguing that the petroleum products should be qualified under subheading 2710.00.25, “Naphthas (except for motor fuel or motor fuel blending stock).” The United States Court of International Trade ruled in favor of Clarendon, holding that subheading 2710.00.25 was the correct classification for Clarendon’s products. Customs appealed. On appeal, both parties agreed that the petroleum products were naphthas and that the primary use for products such as these was motor-fuel blending stock. However, neither party introduced proof of the actual use of the products. Customs filed a motion for summary judgment, arguing that subheading 2710.00.25 did not apply unless Clarendon proved that the product was not a motor fuel—a product classified under its own principal-use classification—or motor-fuel blending stock—a product classified under a separate actual-use classification. Customs argued that because motor fuel and motor-fuel blending stock were subject to higher duties than naphthas, Clarendon should have to prove that the petroleum products did not fall under the exceptions listed in subheading 2170.00.25.