Dell Products Lp v. United States

Slip Op. 10 - 66

UNITED STATES COURT OF INTERNATIONAL TRADE

DELL PRODUCTS LP,
Before: Richard W. Goldberg,
Plaintiff, Senior Judge

v. Court No.06-00306

UNITED STATES,

Defendant.

OPINION

[Upon classification of secondary batteries, judgment for the
defendant.]

Dated: June 10, 2010

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP (David
M. Murphy, Ned H. Marshak and Joseph M. Spraragen) for Plaintiff.

Tony West, Assistant Attorney General; Barbara S. Williams,
Attorney-in-Charge, International Trade Field Office, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice
(Amy M. Rubin); Beth C. Brotman, Office of the Assistant Chief
Counsel, International Trade Litigation, Bureau of Customs and
Border Protection, U.S. Department of Homeland Security, Of
Counsel; for Defendant.

Goldberg, Senior Judge: This matter comes before the

Court on Plaintiff Dell Products LP’s (“Dell” or “Plaintiff”)

Motion for Summary Judgment and Defendant United States’

(“Defendant” or “Government”) Cross-Motion for Summary Judgment.

Dell contends that the subject batteries should be classified as

“automatic data processing machines” under heading 8471 of the
Court No. 06-00306 Page 2

Harmonized Tariff Schedule of the United States (“HTSUS”)1,

duty-free, the same classification as the notebook computers with

which the batteries were packaged.2 The Government maintains

that United States Customs & Border Protection (“Customs”)

properly classified the subject secondary batteries as “other

storage batteries” under heading 8507, HTSUS, at the scheduled

duty rate of 3.4% ad valorem.3 See HQ 967364 (Dec. 23, 2004).

As discussed below, Customs properly classified the

subject batteries as “other storage batteries” under heading

8507, HTSUS. Accordingly, Dell’s motion for summary judgment is

denied, and the Government’s cross-motion is granted.

I. STATEMENT OF THE FACTS

At issue are Dell secondary batteries manufactured for

use with Dell notebook computers. The batteries can only be used

with specific Dell computer models and are compatible with

multiple computer models. The secondary battery is an additional

power source that enables longer unplugged operation of the

notebook computer than would be possible with the primary battery

1
All citations to the HTSUS herein are to the 2002 edition.
The pertinent text remains unchanged.
2
“Automatic data processing machines and units thereof . .
.: Portable automatic data processing machines, weighing not more
than 10 kg, consisting of at least a central processing unit, a
keyboard and a display.” Subheading 8471.30.00, HTSUS.
3
“Electric storage batteries, including separators, thereof
[sic], whether or not rectangular, (including square); parts
thereof: Other storage batteries: Other.” Subheading 8507.80.80,
HTSUS.
Court No. 06-00306 Page 3

included with, and encased in, the computer. The primary and

secondary battery cannot be used simultaneously by the same

computer.

The batteries at issue were initially “admitted”4 into

a Foreign Trade Zone (“FTZ”) as non-privileged foreign (“NPF”)

merchandise.5 The Dell notebook computers were first imported

into the United States and entered for consumption6 under

subheading 8471.30.00, HTSUS, as “portable digital automatic data

processing machines,” then later were admitted into the FTZ in

“domestic status.”7

4
The Foreign Trade Zone Resource Center Customs Manual
Glossary of Foreign-Trade Zone Terminology defines “Admission” as
“[t]he physical arrival of goods into a zone in a specified zone
status . . . . The word ‘admission’ is used instead of ‘entry’
to avoid confusion with Customs entry processes . . . .”
Foreign-Trade-Zone Customs Manual, 200, available at
http://www.foreign-trade-zone.com/customs_manual.htm (last
visited June 9, 2010)(“FTZ Manual”).
5
“Non-Privileged [sic] Foreign Status” is defined by the
FTZ Manual as “[s]tatus of zone merchandise not previously
cleared by Customs which is appraised in the condition of the
merchandise at the time it enters the Customs territory upon
exiting the zone . . . . While in the zone, NPF status
merchandise can be manipulated or manufactured into another
commercial item with a different tariff classification. NPF
status allows zone users to pay duty at the rate of the finished
product produced in the zone.” FTZ Manual at 203.
6
“Entry” is defined by the FTZ Manual as “[n]otification to
Customs of the arrival of imported goods in the Customs territory
of the U.S. Merchandise withdrawn from a zone for consumption in
the U.S. is entered when it is removed from the zone. Goods
brought into a zone are admitted.” FTZ Manual at 201.
7
“Domestic Status” is defined as “status of zone
merchandise grown, produced or manufactured in the U.S. on which
all internal revenue taxes have been paid or the status of zone
merchandise previously imported on which all applicable duties
and internal revenue taxes have been paid.” FTZ Manual at 201.
Court No. 06-00306 Page 4

Through websites and other means, Dell offered retail

customers the option of purchasing a notebook computer, including

a primary battery and power adapter, with or without other

merchandise. This other merchandise option included the subject

secondary batteries. Dell then filled the individual orders by

packaging the items ordered by each customer in the FTZ. Dell

placed a box containing a notebook computer that already encased

a primary battery, into a larger box, along with operational

manuals, a power adapter, and any additional items, such as a

secondary battery, that the customer opted to purchase. The

price that a customer paid consisted of the cost of the notebook

computer, which included the primary battery and power cord, plus

the cost of any optional items ordered. Dell customers could

also purchase secondary batteries independent from a Dell

computer. This action consists of Dell secondary batteries

purchased and packaged together with notebook computers.

Both parties agree that the subject batteries entered

into the commerce of the United States when they were withdrawn

from the FTZ and delivered to Dell’s U.S. customers and are to be

classified based on their condition at this time. Upon entry,

Dell classified the secondary batteries with the Dell notebook

computers as “automatic data processing machines” under

subheading 8471.30.00, HTSUS, duty-free. Customs disagreed and,

upon liquidation, classified the subject batteries as “other

storage batteries” under subheading 8507.80.80, HTSUS, at the
Court No. 06-00306 Page 5

duty rate of 3.4% ad valorem. Customs classified the computer,

primary battery, and power cord together under subheading

8471.30.00, HTSUS. Dell then filed this action challenging

Customs’ classification of the subject batteries.

II. JURISDICTION AND STANDARD OF REVIEW

This Court has jurisdiction pursuant to 28 U.S.C. §

1581(a) (2006). Summary judgment is appropriate if “there is no

genuine issue as to any material fact” and “the movant is

entitled to judgment as a matter of law.” USCIT R. 56(c).

Because the nature of the merchandise at issue is not in

question, there are no disputed material facts in this case. The

propriety of summary judgment, therefore, turns on the proper

construction of the HTSUS. See E.T. Horn Co. v. United States,
27 CIT 328, 331 (2003)(quoting Clarendon Marketing, Inc. v.

United States, 144 F.3d 1464, 1466 (Fed. Cir. 1998)).

The Court employs a two-step process in analyzing a
Customs classification. Bausch & Lomb, Inc. v. United States,
148 F.3d 1363, 1365 (Fed. Cir. 1998). “[F]irst, [it] construe[s]

the relevant classification headings; and second, [it]

determine[s] under which of the properly construed tariff terms

the merchandise at issue falls.” Id.; see also Universal Elecs.,

Inc. v. United States, 112 F.3d 488, 491 (Fed. Cir. 1997). The

proper scope and meaning of a tariff classification term is a

question of law; whether the subject merchandise falls within a
Court No. 06-00306 Page 6

particular tariff term as properly construed is a question of

fact. Franklin v. United States, 289 F.3d 753, 757 (Fed. Cir.

2002). Where the nature of the merchandise is undisputed, as in

this case, “‘the classification issue collapses entirely into a

question of law,’ and the court reviews Customs' classification

decision de novo.” Id. (quoting Cummins Inc. v. United States,

454 F.3d 1361, 1363 (Fed. Cir. 2006)).8

A Customs classification ruling receives deference

proportional to its “power to persuade” under the principles of

Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).9 See United

States v. Mead Corp., 533 U.S. 218, 234-35 (2001); Mead Corp. v.

United States, 283 F.3d 1342, 1345-46 (Fed. Cir. 2002) (citations

omitted). Customs' “relative expertise in administering the

tariff statute often lends further persuasiveness to a

classification ruling, entitling the ruling to a greater measure

of deference.” Mead Corp. v. United States, 283 F.3d at 1346.

Nevertheless, Customs’ classifications are not
controlling by reason of their authority and this Court “has an

8
Customs' decisions are entitled to a presumption of
correctness under 28 U.S.C. § 2639(a)(1) (2006). However, where
“a question of law is before the Court on a motion for summary
judgment, the statutory presumption of correctness is
irrelevant.” Blakley Corp. v. United States, 22 CIT 635, 639, 15
F. Supp. 2d 865, 869 (1998) (citing Universal Elecs., Inc. 112
F.3d at 492)).
9
“Skidmore deference” refers to the following: “The weight
of [a Customs judgment] in a particular case will depend upon the
thoroughness evident in its consideration, the validity of its
reasoning, its consistency with earlier and later pronouncements,
and all those factors which give it power to persuade, if lacking
power to control.” Skidmore v. Swift & Co., 323 U.S. at 140.
Court No. 06-00306 Page 7

independent responsibility to decide the legal issue of the

proper meaning and scope of HTSUS terms.” Warner-Lambert Co. v.

United States, 407 F.3d 1207, 1209 (Fed. Cir. 2005). In

determining whether imported merchandise has been properly

classified by Customs, this Court must consider whether Customs’

classification was correct, “both independently, and in

comparison with the importer’s alternative.” ABB Power
Transmission v. United States, 19 CIT 1044, 1046, 896 F. Supp.

1279, 1281 (1995) (quoting Jarvis Clark Co. v. United States, 733

F.2d 873, 878 (Fed. Cir. 1984)).

III. DISCUSSION

At issue in the present case is the correct tariff

classification of Dell secondary batteries when withdrawn from an

FTZ in packages with Dell notebook computers and entered for

consumption into the United States.

When interpreting a tariff classification, this Court
looks first to the General Rules of Interpretation (“GRIs”)

governing the classification of imported goods in the HTSUS.

Home Depot U.S.A., Inc. v. United States, 491 F.3d 1334, 1336
(Fed. Cir. 2007).10 This Court begins its analysis with GRI 1.

10
The HTSUS consists of the General Notes, the GRIs, the
Additional U.S. Rules of Interpretation, and Sections I to XXII
of the HTSUS (including Chapters 1 to 99, together with all
Section Notes and Chapter Notes, article provisions, and tariff
and other treatment accorded thereto), as well as the Chemical
Appendix. BASF Corp. v. United States, 482 F.3d 1324, 1325-26
(Fed. Cir. 2007).
Court No. 06-00306 Page 8

See Conair Corp. v. United States, 29 CIT 888, 891 (2005). GRI 1

states “for legal purposes, classification shall be determined

according to the terms of the headings and any relative section

or chapter notes . . . .” GRI 1, HTSUS.

If a tariff term is not clearly defined in either the

HTSUS or its legislative history, it may be construed according

to its common meaning. W.Y. Moberly, Inc. v. United States, 924

F.2d 232, 235 (Fed. Cir. 1991). In order to determine the common

meaning of a tariff term, the court may rely on its own
understanding of the term, as well as consult dictionaries,

lexicons, the testimony in the record, and other reliable sources

of information. Ciba-Geigy Corp. v. United States, 25 CIT 1252,

1259, 1265, 178 F. Supp. 2d 1336, 1343, 1349 (2001). If the

proper classification cannot be determined by reference to GRI 1,

this Court must consider the succeeding GRIs in numerical order.

Conair Corp., 29 CIT at 891.

Although not binding, the Harmonized Commodity
Description and Coding System Explanatory Notes (“ENs”) are the

official interpretation of the HTSUS set forth by the World

Customs Organization and offer guidance in interpreting the HTSUS

provisions. Id.; see also Bauer Nike Hockey USA, Inc. v. United
States, 393 F.3d 1246, 1250 (Fed. Cir. 2004) (explaining that

“[courts] may look to the Explanatory Notes accompanying a tariff
Court No. 06-00306 Page 9

subheading as a persuasive, but not binding, interpretative

guide”).11

Dell asserts that the subject batteries were properly

classifiable, together with the Dell notebook computers with

which they were packaged, under heading 8471, HTSUS, based on two

alternative legal theories. First, Dell argues that the

secondary batteries are “functional units” of the notebook

computers, pursuant to GRI 1. In the alternative, Dell asserts

that the batteries should be classified as a component of a

“retail set” under GRI 3(b). Customs responds that the Dell

secondary batteries are neither “functional units” nor “retail

set” components, as these terms are used for tariff purposes, and

that the batteries must be classified separately from the

notebook computers. This court examines Dell’s “functional unit”

and “retail set” arguments in turn.
A. Whether the subject batteries qualify as
“functional units”

To determine the correct classification of the subject

batteries, this Court will first consider GRI 1. See Conair
Corp., 29 CIT at 891. Dell relies primarily on Section XVI,

Section Note 4, HTSUS (“Section Note 4, HTSUS”) which states in

relevant part: “[w]here a machine . . . consists of individual

components . . . intended to contribute together to a clearly

defined function covered by one of the headings in Chapter 84 or

11
All citations to the ENs herein are to the 2002 edition.
The pertinent text remains unchanged.
Court No. 06-00306 Page 10

Chapter 85, then the whole falls to be classified in the heading

appropriate to that function.”12 Section Note 4, HTSUS. The ENs

explain that:

For the purpose of this Note, the expression “intended
to contribute together to a clearly defined function”
covers only machines and combinations of machines
essential to the performance of the function specific
to the functional unit as a whole, and thus excludes
machines or appliances fulfilling auxiliary functions
and which do not contribute to the function of the
whole.

ENs, Section XVI, (VII) Functional Units, Section Note

4, HTSUS (“ENs, Section Note 4, HTSUS”)(emphasis added).

Dell claims that the subject secondary battery

contributes to the notebook computer’s clearly defined function

covered by heading 8471, HTSUS, which is to automatically process

data. See Heading 8471, HTSUS. According to Dell, the secondary

battery is essential for the intended use of the notebook

computer for purchasers for whom plugged-in computing will not be

available for extended periods of time, and therefore, the
batteries are “functional units” pursuant to GRI 1.

The parties agree that the “clearly defined function”

of the notebook computer is “automatic data processing,” as

evidenced by the fact that the computers are classifiable in the

tariff provision for “automatic data processing machines.” See
Subheading 8471.30.00, HTSUS. An important benefit of a notebook

computer is its portable computing function. The Government does

12
Both Chapter 84 and Chapter 85 (and, thus, both heading
8471 and heading 8507) are within Section XVI of the HTSUS.
Court No. 06-00306 Page 11

not dispute that components that permit the choice between

plugged-in computing (a power cord) and stand-alone computing (a

battery) are essential to the function specific to the notebook

computer, portable computing.

Dell’s argument fails because the secondary batteries

are not essential to the performance of the function specific to

the notebook computer. See ENs, Section Note 4, HTSUS. The

portable computing function is completely served by the

combination of the primary battery encased in the computer and

the power adapter. This court is not convinced that extended

unplugged computing, beyond the capabilities of the primary

battery, is essential to the performance of the computer’s

specific function as a notebook computer. Because the notebook

computers are “whole” and can perform the portable computing

function before being packaged with a secondary battery, the

batteries at issue are not “essential” to the computer’s portable

computing function. See Section Note 4, HTSUS; ENs, Section Note
4, HTSUS.

Moreover, none of the examples in the ENs to Section

Note 4 suggest that secondary power sources are classifiable as

functional units. See ENs, Section Note 4, HTSUS. The ENs list

examples of functional units within the meaning of Section Note

4. Dell points out two examples in particular: “[w]elding

equipment consisting of the welding head or tongs, with a

transformer, generator or rectifier to supply the current” and
Court No. 06-00306 Page 12

“[r]adar apparatus with the associated power packs, amplifiers,

etc.” ENs, Section Note 4, HTSUS. However, in these examples,

it is the article’s primary power source that is the component

classified under the heading appropriate to the function of the

machine. Similarly, in this case, Customs classified the primary

battery and power cord, along with the notebook computer, under

heading 8471, HTSUS. In contrast, the batteries at issue do not

serve as a primary power source. The secondary batteries cannot

be used at the same time as the primary battery and are not the

type of component covered by Section Note 4, which, together,
contribute to a clearly defined function essential to the

performance of the notebook computer as a whole. Section Note 4,

HTSUS; ENs, Section Note 4, HTSUS.

Ultimately, Dell’s position requires an unduly narrow

“clearly defined function” of the notebook computer of extended

unplugged automatic data processing that ignores the fact that

the computer can fully perform the function of portable computing
without the subject secondary battery. See Section Note 4,
HTSUS. Additionally, the ENs as well as previous Customs rulings

do not suggest that secondary power sources are classified as

“functional units” for tariff purposes.13 Thus, the subject

13
Dell refers to NY 872117 (Mar. 13, 1991) where Customs
held that a notebook computer, imported with a detachable power
cord, two Ni-Cad batteries, and an AC/DC adapter, were
classifiable together under heading 8471. Although Dell stresses
that the notebook computer in that ruling similarly contained two
batteries, it is unclear whether or not the computer required
(footnote continued)
Court No. 06-00306 Page 13

secondary batteries are not “functional units” and are not

classifiable under heading 8471, HTSUS pursuant to GRI 1 and

Section Note 4 because they are not essential to the portable

computing function of the notebook computer.
B. Whether the secondary batteries qualify
as a component of a “retail set”

In the alternative, Dell proposes that the subject

batteries are classifiable under heading 8471, HTSUS, pursuant to

GRI 3(b) as components of “retail sets.” GRI 3(b) provides that

“goods put up in sets for retail sale” shall be classified in the

HTSUS heading applicable to the material or component which

imparts the “essential character” to the set, in this case, the

notebook computer. GRI 3(b), HTSUS. The ENs to GRI 3(b) provide

that:

(X) For purposes of this Rule, the term “goods put up
in sets for retail sale” shall be taken to mean goods
which:

(a)consist of at least two different
articles, which are, prima facie,
classifiable in different headings. . . .;

(b)consist of products or articles put up
together to meet a particular need or
carry out a specific activity; and

(c)are put up in a manner suitable for sale
directly to users without repacking (e.g.,
in boxes or cases or on boards).

both batteries to function nor is there any indication that one
of the two Ni-Cad batteries was an optional purchase. See id.
None of the other cases cited by Dell suggest that Customs
classifies secondary power sources serving the same function as a
primary power source as a “functional unit.”
Court No. 06-00306 Page 14

ENs, GRI 3(b), HTSUS. The parties do not dispute that the

notebook computers and the secondary batteries are prima facie

classifiable in different headings. Consequently, there is no

dispute regarding Criterion (a) of the ENs to GRI 3(b).

Therefore, this court must consider whether the subject batteries

satisfy Criteria (b) and (c).
i. Whether the packages containing the
secondary batteries consisted of products
“put up together to meet a particular need or
carry out a specific activity.”

Under Criterion (b), goods put up in sets for retail

sale consist of products or articles “put up together to meet a

particular need or carry out a specific activity.” ENs, GRI

3(b), (X)(b), HTSUS (“Criterion (b)”).

The parties dispute whether the subject batteries meet

a “particular need” or “specific activity” under Criterion (b).

Dell argues that the “particular need” or “specific activity” met

by the inclusion of the second battery is longer, unplugged

operation of the computer than would be possible with only the

primary battery. Alternatively, Dell argues that even if the

secondary battery is characterized as being merely a redundant or

replacement part, it should still be considered part of the

retail set because the secondary battery nevertheless enhances

the fulfillment of the particular need of unplugged computing.

The Government responds by arguing that there is only one

“particular need” satisfied by a notebook computer/battery
Court No. 06-00306 Page 15

combination – the ability to portably compute – and that this is

fully met by the computer, the power cord, and the primary

battery which are prepackaged together. According to the

Government, the inclusion of the secondary battery exceeds the

reasonably intended purpose of the notebook, which was already

satisfied by the inclusion of the primary battery and power cord.

The plain language of Criterion (b) supports Dell’s

position that the inclusion of the secondary battery with the

notebook computer meets a “particular need” or carries out a

“specific activity.” Even though the Government argues that the

reasonably intended purpose of the computer is already met;

Criterion (b) does not require a retail set component to satisfy

a different need than those met by other components. Criterion

(b) only requires that the component satisfies a “particular”

need. See Criterion (b). Furthermore, the Government does not

dispute Dell’s argument that a component of a “retail set” need

not be essential to the use of the primary article for its
intended purpose. See, e.g., HQ 078445 (Apr. 18, 1989) (ruling
that a camera and multiple lenses were components of a retail

set). Here, the secondary battery exists as a supplemental

component that meets the particular need of prolonged unplugged

computing by extending the time a computer can function without a

power adapter.

In addition, the ENs do not require that all components

of a retail set can be used simultaneously or that replacements
Court No. 06-00306 Page 16

parts are de jure excluded from consideration as components of

retail sets. Thus, the subject batteries are not precluded from

classification as a component of a retail set even if the need

they fulfill is considered redundant with the need fulfilled by

the primary battery. Dell’s position that the secondary battery

meets a “particular need” or carries out a “specific activity,”

thus, appears to be sustainable. There are, however, further

considerations in order to satisfy Criterion (b).

Under Criterion (b), the subject merchandise must be

put up together with the other components of the set in order to
meet a particular need or carry out a specific activity. The

dictionary definition of “put up” includes “to offer for public

sale.” Webster’s Third New International Dictionary of the

English Language Unabridged 1851 (Philip Babcock Grove, Ph. D.

ed., Merriam-Webster Inc., Publishers 2002)(1961)(“Webster’s

Dictionary”).14 As Customs notes in HQ 967364, “put up” also is

defined as to “construct” or “erect” and to “display” or “show.”
HQ 967364 (Dec. 23, 2004); see also Webster’s Dictionary at 1851.
Criterion (b) in the ENs is meant to assist in interpreting GRI

3(b) which refers to goods “put up in sets for retail sale.” GRI

3(b), HTSUS (emphasis added). It is therefore reasonable to

interpret “put up,” in the context of Criterion (b) and GRI 3

14
The Government also argues for this definition of “put
up” in its interpretation of EN Criterion (c) to GRI 3(b).
Court No. 06-00306 Page 17

(b), to mean offered together for retail sale or displayed or

shown together for retail sale.

The subject batteries are not offered or displayed

together for retail sale with the computer – the computer is

offered together with a power cord and primary battery, and the

secondary batteries are offered individually. The subject

batteries are simply one of many optional, complementary items

that may be purchased at the same time as a notebook computer.15
Although Dell may offer, or even suggest additional items to a

customer, it does not necessarily follow that the items selected

by a customer are “put up together.” GRI 3(b), HTSUS.16

Therefore, while the language of Criterion (b) supports

Dell’s position that the inclusion of the secondary battery with

the notebook computer meets a “particular need” or carries out a

“specific activity;” the subject batteries nevertheless fail to

satisfy Criterion (b) because they were not “put up together”

15
See HQ 964209 (Sept. 14, 2001)(determining that Dell
speakers fail to meet Criterion (b) “because the components are
not ‘put up together.’ Each grouping is made to order so that no
identifiable specific activity is met for all groupings . . .
Therefore, the speakers may not be considered part of a ‘set’
pursuant to GRI 3(b).”
16
Dell points out rulings where multiple identical goods or
replacement parts used with the same primary good were together
classified as a “set.” See, e.g., NY N027960 (June 5, 2008)
(extra erasers and extra lead packaged together for resale with
the primary good, propelling pencils, in a plastic box); NY
G83666 (Nov. 17, 2000) (yo-yo and replacement yo-yo string
packaged and classified together); HQ 085487 (Sept. 27, 1989)
(athletic shoes and three pairs of shoe lacings in the same
packing container). However, in these rulings, each specific
collection of goods was offered and sold together as a single,
fixed unit.
Court No. 06-00306 Page 18

with other components of the retail set, as the terms are used

for tariff purposes. See GRI 3(b), HTSUS; Criterion (b). Dell

fails to show that the computer, with a power cord and a primary

battery encased, and the secondary battery were put up together

to meet the particular need or carry out the specific activity of

extended unplugged computing.
ii. Whether the packages containing the
secondary batteries are “put up in a manner
suitable for sale directly to users without
repacking.”

Based in part on similar reasoning, the secondary

batteries fail to satisfy Criterion (c) which describes a retail

set as goods “put up in a manner suitable for sale directly to

users without repacking (e.g., in boxes or cases or on boards).”

ENs, GRI 3(b), (X)(c), HTSUS (“Criterion (c)”).

Dell’s position focuses on the fact that the subject

batteries were “put up” or “packaged” with the notebook computer

in the FTZ before entering into the commerce of the United States

and delivered to retail customers. Dell argues that merchandise
does not need to be packaged together before offered for sale in

order to satisfy Criterion (c), noting that Customs has

consistently classified goods as GRI 3(b) retail sets without

inquiring into the sequence of ordering and packaging. True, the

chronology of packaging the secondary battery and the computer

together after a customer places an order does not in itself

negate classification as a GRI 3(b) retail set. However, Dell’s
Court No. 06-00306 Page 19

argument overlooks other relevant requirements for merchandise

exiting a FTZ to comprise a GRI 3(b) retail set.

Even if the phrase “put up,” as used in Criterion (c),

is defined as “placed in a container or receptacle,” as Dell

contends, Criterion (c) must be read in reference to GRI 3(b)

since the purpose of the ENs is to aid in the interpretation of

the GRIs. See Webster’s Dictionary at 1851. As previously

discussed, GRI 3(b) refers to “goods put up in sets for retail
sale.” GRI 3(b), HTSUS. The language of GRI 3(b) indicates that

there is an identifiable collection of goods comprising a set

that is put up for the purpose of a potential retail sale. See

id. The requirement that a set be “put up” or “placed in a

container,” in a manner suitable for sale without repacking does

not nullify the language of GRI 3(b) which indicates that there

is an express set of goods comprising a set prior to the

potential retail sale. See Criterion (c).

In this case, the batteries at issue were never put up
for sale as part of a fixed grouping of goods by Dell or its

suppliers – they were simply offered for sale individually. A

customer could purchase one or more secondary batteries, along

with various other supplemental items, when simultaneously

purchasing a notebook computer. Dell then packaged the

additional optional items into a shipping box that already

contained the notebook computer, a primary battery, and a power

cord. Despite the fact that the subject batteries were packaged
Court No. 06-00306 Page 20

together with notebook computers, the shipments to Dell’s

customers were never put up by Dell as sets prior to a potential

retail sale. See GRI 3(b), HTSUS.

Dell’s position would permit goods packaged together to

be classified a “set” for tariff purposes even if the grouping of

goods was not fixed when offered for sale. This result would

nullify the language of GRI 3(b) which anticipates a set as a

defined unit that is offered for sale to retail consumers. Here,

the contents of a customized order are determined by an

individual customer; Dell did not designate which merchandise

constituted a set for retail sale.

This is not to suggest that simply marketing or

offering items together inherently creates a “retail set” for

tariff purposes. Rather, this court is stating that a consumer’s

customized order of individual, complementary items, (i.e. items

that were never put up together as a pre-determined combination),

is not transformed into a GRI 3(b) “retail set” upon entry merely

by virtue of being ordered at the same time and subsequently

packaged together in an FTZ.

Furthermore, it is not clear that the subject batteries

satisfy the Criterion (c) requirement that the collection of

goods, in its condition as shipped, is “suitable for retail sale

without repacking.” See Criterion (c). One definition of

“suitable” is “adapted to a use or purpose.” See Webster’s

Dictionary at 2286. The purpose here is a potential retail sale.
Court No. 06-00306 Page 21

See Criterion (c). Criterion (c) therefore describes a set of

goods that is put up in a manner that would allow for retail sale

without repacking.

Dell acknowledges that other optional items

simultaneously ordered by a customer may leave the FTZ in the

same package as the computer and subject battery. Thus, the

collections of goods in each package vary according to each

customer’s specifications. The customization of each order

undermines the conclusion that each package, when it exits the

FTZ, is “suitable for retail sale without repacking.” See
Criterion (c).

Accordingly, the subject secondary batteries are

neither classifiable as part of a GRI 3(b) retail set nor as a

functional unit of the notebook computer pursuant to GRI 1.

Classifying the subject batteries separately from the computer

also is consistent with previous Customs rulings classifying

secondary or redundant power sources separately from the primary
article entered for consumption. See, e.g., NY N052216 (Apr. 2,
2009) (classifying a heating vest, a removable battery, and a

power charger with a cord together under the subheading for the

heating vest, the article imparting the essential character,

while optional spare batteries and chargers purchased

simultaneously were classified separately under subheading

8507.80.80, HTSUS, as “electric storage batteries: other”); NY

L857508 (Oct. 6, 2005) (classifying an additional battery under
Court No. 06-00306 Page 22

subheading 8507.80.80, HTSUS, as “electric storage batteries,”

separate from the classification of the other four components in

a RAID500-RK (Redundant Array of Independent Disks) subsystem);

NY J89374 (Oct. 8, 2003)(classifying a cordless drill, the

battery housed in its base, and other drill components together

as a GRI 3(b) set under the subheading for the drill while the

extra rechargeable battery imported in the same retail packaging

as the drill was classified separately under subheading

8507.30.8010, HTSUS as “other electric storage batteries”).17

IV. CONCLUSION

For the foregoing reasons, the Court upholds Customs’

classification of the subject merchandise under subheading

8507.80.80, HTSUS. Plaintiff’s motion for summary judgment is

denied and Defendant’s cross-motion is granted.

/s/ Richard W. Goldberg
________________________
Richard W. Goldberg
Senior Judge

Date: June 10, 2010
New York, New York

17
Dell errs in arguing that this final Customs ruling, NY
J89374 (Oct. 8, 2003), has no precedence because at issue was a
radio charger kit, not the extra battery. Customs’ ruling that
the radio kit was not classifiable as part of the set did not
preclude Customs from ruling that other components, such as the
power cord and the primary battery, were part of a set with the
drill.