Motorola, Inc. v. United States

Slip Op. 04-102

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
:
MOTOROLA, INC., :
:
Plaintiff, :
:
v. : Court No.
: 01-00126
UNITED STATES, :
:
Defendant. :
________________________________________:

Plaintiff, Motorola, Inc., moves pursuant to USCIT R. 56 for
summary judgment on the ground that there is no genuine issue as to
any material facts. Defendant cross-moves for summary judgment
seeking an order dismissing the case.

Held: Plaintiffs’ motion for summary judgment granted in part
and denied in part. Defendant’s cross-motion for summary judgment
granted in part and denied in part.

August 13, 2004

Katten Muchin Zavis Rosenman (Michael E. Roll, Kathleen M.
Murphy, James L. Sawyer and John P. Smirnow) for Motorola, Inc.,
plaintiff.

Peter D. Keisler, Assistant Attorney General; Barbara S.
Williams, Attorney-in-Charge, International Trade Field Office, Amy
M. Rubin, Commercial Litigation Branch, Civil Division, United
States Department of Justice; of counsel, Chi S. Choy, Office of
the Assistant Chief Counsel, International Trade Litigation, United
States Bureau of Customs and Border Protection, for the United
States, defendant.

OPINION

TSOUCALAS, Senior Judge: Plaintiff, Motorola, Inc.

(“Motorola”), moves pursuant to USCIT R. 56 for summary judgment on

the ground that there is no genuine issue as to any material facts.
Court No. 01-00126 Page 2

Motorola contends that the merchandise at issue are classifiable as

hybrid integrated circuits as a matter of law. Defendant cross-

moves for summary judgment seeking an order dismissing the case.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 28

U.S.C. § 1581(a) (2000).

STANDARD OF REVIEW

On a motion for summary judgment, the Court must determine

whether there are any genuine issues of fact that are material to

the resolution of the action. See Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986). A factual dispute is genuine if it might

affect the outcome of the suit under the governing law. See id.

Accordingly, the Court may not decide or try factual issues upon a

motion for summary judgment. See Phone-Mate, Inc. v. United

States, 12 CIT 575, 577, 690 F. Supp. 1048, 1050 (1988). When

genuine issues of material fact are not in dispute, summary

judgment is appropriate if a moving party is entitled to judgment

as a matter of law. See USCIT R. 56; see also Celotex Corp. v.

Catrett, 477 U.S. 317, 322-23 (1986).
Court No. 01-00126 Page 3

DISCUSSION

I. Background

The merchandise subject to this action (“subject merchandise”)

was entered through the port of Chicago between January and June of

1998. See Compl. ¶ 2. The subject merchandise are circuits used

in cell phone battery packs for Motorola cell phones. See Mem.

Supp. Pl.’s Mot. Summ. J. (“Motorola’s Mem.”) at 3. The United

States Customs Service1 (“Customs”) liquidated the subject

merchandise under subheading 8536.30.80 of the United States

Harmonized Tariff Schedule (“HTSUS”) subject to a duty rate of 3.2

percent ad valorem. See Compl. ¶ 22. The subject merchandise are

used in either nickel or lithium chemistry battery packs. See

Motorola’s Mem. at 3. Plaintiff filed a timely protest and

application for further review with Customs challenging the

classification of the subject merchandise under HTSUS 8536.30.80.

See Compl. ¶ 4. Customs issued Head Quarter Ruling (“HQ”) 961050

on May 1, 2000, and found that the subject merchandise are

classifiable under subheading 8536.30.80 of the HTSUS, as other

electrical apparatus for protecting electrical circuits. See

Motorola’s Mem. Ex. 4 at 6. In reaching its decision, Customs

noted that the subject merchandise are not classifiable under

1
The United States Customs service was renamed the Bureau
of Customs and Border Protection of the Department of Homeland
Security, effective March 1, 2003. See H.R. Doc. No. 108-32
(2003).
Court No. 01-00126 Page 4

subheading 8542.40.00 because Motorola’s “flex circuits are not

constructed with a film layer directly on the substrate and in the

mass.”2 See id. at 5. On March 29, 2001, Customs denied

Motorola’s protest in full. See Compl. ¶ 5.

The HTSUS sections relevant to the Court’s discussion are set

forth below:

8536 Electrical apparatus for switching or protecting
electrical circuits, or for making connections to
or in electrical circuits (for example, switches,
relays, fuses, surge suppressors, plugs, sockets,
lamp-holders, junction boxes), for a voltage not
exceeding 1,000 V (con.):

. . . .

8536.30 Other apparatus for protecting electrical
circuits:

8536.30.40 Motor overload protectors . . .3.2%

8536.30.80 Other . . . . . . . . . . . . .3.2%

. . . .

8542 Electrical integrated circuits and microassemblies;
parts thereof:

. . . .

8542.40.00 Hybrid integrated circuits . . . . . free

2
A substrate is “the physical material on which a
microcircuit is fabricated; used primarily for mechanical support
and insulating purposes, as with ceramic, plastic, and glass
substrates.” McGraw-Hill Dictionary of Scientific and Technical
Terms 2061 (6th ed. 2003).
Court No. 01-00126 Page 5

II. Customs Properly Classified Subject Merchandise Under Heading
8536

A. Contentions of the Parties

1. Motorola’s Contentions

Motorola contends that Customs improperly classified the

subject merchandise under HTSUS heading 8536. See Motorola’s Mem.

at 28. Specifically, Motorola argues that the subject merchandise

should have been classified under heading 8542. See id. Under

rule one of the General Rules of Interpretation (“GRI 1”),

“classification is determined according to the terms of the

headings and any relative section or chapter notes.” Id. Motorola

points out that “headings 8541 and 8542 shall take precedence over

any other heading in the tariff schedule which might cover them by

reference to, in particular, their function.” Id. (quoting

Harmonized Commodity Description and Coding System, Explanatory

Note, 85.42 (3rd ed. 2002) (“Explanatory Note”) at 1,700) (emphasis

omitted). Accordingly, “if the [subject merchandise] are

classifiable in HTSUS heading 8542, they cannot be classified in

heading 8536.” Id.

Motorola contends that the subject merchandise are defined in

Note 5 of the HTSUS as “electronic integrated circuits and

microassemblies.” See id. at 29. Motorola asserts that the

Explanatory Note set out the following four elements for
Court No. 01-00126 Page 6

classifying an article as a “hybrid integrated circuit”: (1) an

active element obtained by semiconductor technology; (2) a passive

element obtained by thin or thick film technology; (3) a single

insulating substrate; and (4) the active and passive elements must

be indivisibly combined on the substrate. See id. (citing

Explanatory Note at 1,700). Although Motorola concedes that the

components theoretically can be removed from the substrate,

Motorola maintains that it does not remove the components from the

substrate once they are attached. See id. at 30. Customs’ expert

did not contradict evidence that Motorola intends for the elements

to be permanently attached to the substrate. See id. at 30-31.

Based on this intention, Motorola asserts that Customs “needs more

than speculation or hypotheticals to create an issue of fact.” Id.

at 31.

Motorola also argues that Customs’ HQ 916050 is not entitled

to judicial deference because courts “retain an independent

responsibility to decide the legal issue regarding the proper

meaning and scope of tariff terms.” Id. at 7. Motorola asserts

that judicial deference is only appropriate “if a statute is

ambiguous and Congress has left it to the agency to determine the

meaning of the ambiguity.” Pl.’s Opp’n Def.’s Cross-Mot. Summ. J.

& Reply Def.’s Opp’n Pl.’s Mot. Summ. J. (“Motorola’s Reply”) at 1.

Motorola argues that the plain language of the statutes at issue is
Court No. 01-00126 Page 7

clear and unambiguous and, therefore, no judicial deference is

warranted. See id. at 1-2. In addition, Motorola asserts that

when classification rulings, such as HQ 916050, are at issue the

Court “need only defer to them if it finds them persuasive.”

Motorola’s Mem. at 8 (citing Skidmore v. Swift & Co., 323 U.S. 134

(1944)).

2. Customs’ Contentions

Customs replies that the subject merchandise does not fall

within the definition of hybrid integrated circuits and, therefore,

was properly classified under heading 8536 of the HTSUS. See

Def.’s Mem Sup. Cross-Mot. Summ. J. & Opp’n Pl.’s Mot. Summ. J.

(“Customs’ Mem.”) at 13-22. The parties agree that the subject

merchandise contain three of the four elements set forth in the

definition of hybrid integrated circuits in Note 5(b)(ii) of

Chapter 85. See id. at 16. The Explanatory Note provides that

“indivisible” means that “though some of the elements could

theoretically be removed and replaced, this would be a long and

delicate task which would be uneconomical under normal

manufacturing conditions.” Id. at 18 (quoting Explanatory Note).

Here, the evidence indicates that separating the elements from the

substrate is economical and not a long and delicate task. See id.

Accordingly, Customs maintains that classification under heading

8542 is not appropriate.
Court No. 01-00126 Page 8

Customs additionally argues that to meet the definition of

hybrid integrated circuits the subject merchandise must contain

passive elements that are produced at the same time as the

substrate. See id. Customs asserts that “[i]t is incontestable

that none of the components on the [subject merchandise] in issue

were produced at the same time as the substrate.” Id. Rather, the

substrate was purchased by Motorola from an unrelated supplier and

then the components were soldered onto the substrate by Motorola.

See id. at 18-19. Motorola’s expert stated that elements on the

subject merchandise were indivisibly combined on the substrate,

even though commercially available machinery exists that could

remove and replace defective components. See id. at 19. Motorola,

however, discards defective subject merchandise because it is more

economical than incurring the time and expense to fix such

merchandise. See id. Customs contends that “[w]hile Motorola may

have made a business decision not to remove and replace components

that are found to be defective on these particular assemblies, that

does not render them ‘indivisibly combined’ for purposes of tariff

classification.” Id. at 20. Customs maintains that the test for

whether components are “indivisibly combined” is objective and “not

subject to the whims of an individual importer or manufacturer.”

Id. The test for whether the indivisible element has been met “is

whether removing and replacing elements on the circuit would be a

long and delicate task that would render the procedure uneconomical
Court No. 01-00126 Page 9

under normal manufacturing conditions.” Id. at 21. Motorola did

not establish that the procedure to replace defective components on

the subject merchandise would be a long and delicate process. See

id. Consequently, the subject merchandise do not satisfy the

tariff definition of hybrid integrated circuits and were properly

classified under heading 8536. See id at 21-22.

Customs also argues that HQ 961050 is entitled to Skidmore

respect. See id. at 10-13. Customs’ notes that Congress “dictated

that, in an action in which an importer is challenging the denial

of a protest on an issue such as [the one] raised here, Customs’

decision is presumed to be correct.” Id. at 12 (citing 28 U.S.C.

§ 2639(a)(1) (1994)). Customs argues that the Court should

recognize Customs’ expertise in administering and interpreting the

tariff statute. See id. Based on its thorough and reasoned

analysis, and the formality related to the issuing of its decision,

Customs contends that HQ 961050 is entitled to Skidmore deference.

B. Analysis

1. Motion for Summary Judgment

Determining whether imported merchandise was classified under

the appropriate tariff provision entails a two-step process. See

Sabritas, S.A. de C.V. v. United States, 22 CIT 59, 61, 998 F. Supp

1123, 1126 (1998). First, the proper meaning of specific terms in
Court No. 01-00126 Page 10

the tariff provision must be ascertained. Second, whether the

imported merchandise falls within the scope of such term, as

properly construed, must be determined. See Sports Graphics, Inc.

v. United States, 24 F.3d 1390, 1391 (Fed. Cir. 1994). The first

step is a question of law and the second is a question of fact.

See id.; see also Universal Elecs., Inc. v. United States, 112 F.3d

488, 491 (Fed. Cir. 1997). Pursuant to 28 U.S.C. § 2639(a)(1),

Customs’ classification is presumed correct and the party

challenging the classification bears the burden of proving

otherwise. See Universal Elecs., 112 F.3d at 491. This

presumption, however, applies only to Customs’ factual findings,

such as whether the subject merchandise falls within the scope of

the tariff provision, and not to questions of law, such as Customs’

interpretation of a particular tariff provision. See Sabritas, 22

CIT at 61, 998 F. Supp. at 1126; see also Universal Elecs., 112

F.3d at 491; Goodman Mfg., L.P. v. United States, 69 F.3d 505, 508

(Fed. Cir. 1995). When there are no material issues of fact in

dispute, as is admitted by both parties in the present case, the

statutory presumption of correctness is irrelevant. Goodman Mfg.,

69 F.3d at 508.

The ultimate question in every tariff classification is one of

law: “whether the merchandise is properly classified under one or

another classification heading.” Bausch & Lomb, Inc. v. United
Court No. 01-00126 Page 11

States, 148 F.3d 1363, 1365 (Fed. Cir. 1998). Where, as in the

instant case, there is no disputed material issue of fact to be

resolved by trial, disposition by summary judgment is appropriate.

Pursuant to 28 U.S.C. § 2640(a) (1994), Customs’ classification

decision is subject to de novo review based upon the record before

the Court. Accordingly, the Court must determine “whether the

government’s classification is correct, both independently and in

comparison with the importer’s alternative.” Jarvis Clark Co. v.

United States, 733 F.2d 873, 878 (Fed. Cir. 1984).

2. Skidmore Respect

As a preliminary matter, the Court finds that HQ 961050 is

entitled Skidmore respect. In Skidmore, 323 U.S. at 140, the

Supreme Court set forth the factors a reviewing court is to

consider in determining how much weight an agency’s decision is to

be afforded. The amount of respect a court affords an agency’s

decision “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 the power to persuade, if lacking power to control.” Id. A

Customs classification ruling’s power to persuade may vary

depending on the Skidmore factors articulated in United States v.

Mead, 533 U.S. 218 (2001). See Structural Indus., Inc. v. United

States, 356 F.3d 1366, 1370 (Fed. Cir. 2004). Customs has
Court No. 01-00126 Page 12

specialized experience which can aide the Court in its review of

the questions at issue in this case. See Mead, 533 U.S. at 234.

Accordingly, Customs classification rulings are entitled to “a

respect proportional to [their] ‘power to persuade.’” Mead, 533

U.S. at 235 (quoting Skidmore, 323 U.S. at 140).

Motorola argues that deference is not warranted because the

statutory language defining hybrid integrated circuits is plain and

unambiguous. See Motorola’s Reply at 1-2. The central issue,

however, is the meaning of the indivisible requirement contained in

the statutory definition of hybrid integrated circuit. The Court

has an “independent responsibility to decide the legal issue

regarding the proper meaning and scope of the HTSUS terms.” Mead

Corp. v. United States, 283 F.3d 1342, 1346 (Fed. Cir. 2002)

(citing Rocknel Fastener, Inc. v. United States, 267 F.3d 1354,

1358 (Fed. Cir. 2001)). Here, Skidmore deference may be warranted

if HQ 961050 contains “all those factors which give it the power to

persuade, if lacking power to control.” Skidmore, 323 U.S. at 140.

For the reasons set forth below, the Court finds that the

thoroughness and valid reasoning of HQ 961050 is entitled Skidmore

respect.

3. Classification Under Heading 8536

Pursuant to GRI 1, the definition and scope of terms of a

particular provision is to be determined by the wording of the
Court No. 01-00126 Page 13

statute and any relevant section or chapter notes. See Sabritas,

22 CIT at 62, 998 F. Supp. at 1126-27. GRI 1 states that

“classification shall be determined according to the terms of the

headings and any relative section or chapter notes . . . .” If a

tariff term is not statutorily defined in the HTSUS and its

intended meaning cannot be discerned from legislative history, then

the definition is determined by ascertaining its common and

commercial meaning. See Lynteq, 976 F.2d at 697-98; see also Mita

Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994).

To ascertain a tariff term’s common meaning, the Court may consult

dictionaries and scientific authorities, as well as its own

understanding of the term. See Brookside Veneers, Ltd. v. United

States, 847 F.2d 786, 789 (Fed. Cir. 1998), cert. denied, 488 U.S.

943 (1988). The Court, in determining the definition of tariff

terms, may also use the explanatory notes to the HTSUS, which

provide guidance in interpreting the language of the statute. See

Bausch & Lomb, Inc. v. United States, 21 CIT 166, 174, 957 F. Supp.

281, 288 (1997), aff’d, 148 F.3d at 1363.3

3
The explanatory notes are not legally binding on the
United States, yet they “generally indicate the ‘proper
interpretation’ of provisions within the HTSUS . . . [and] are
persuasive authority for the Court when they specifically include
or exclude an item from a tariff heading.” Sabritas, 22 CIT at 62,
998 F. Supp at 1127.
Court No. 01-00126 Page 14

Note 5(b)(ii) to Chapter 85 sets forth the definition for

items classified under heading 8542 as “electronic integrated

circuits and microassemblies.” Such items include “hybrid

integrated circuits in which passive elements . . . obtained by

thin- or thick-film technology and active elements . . . obtained

by semiconductor technology, are combined to all intents and

purposes indivisibly, on a single insulating substrate . . . .”

HTSUS Ch. 85 Note 5(b)(ii). The Explanatory Note further

elaborates and states that hybrid integrated circuits “are

microcircuits built up on an insulating substrate on which a thin

or thick film circuit has been formed.” The Explanatory Note

further provides that “the components forming a hybrid integrated

circuit must be combined to all intents and purposes indivisibly,

i.e., though some of the elements could theoretically be removed

and replaced, this would be along and delicate task which would be

uneconomic under normal manufacturing conditions.” Id. (emphasis

in original).

The statute and accompanying Explanatory Note set forth the

scope of heading 8542 and the definition of hybrid integrated

circuits. Here, whether or not Motorola actually removes or

replaces some of the components forming the subject merchandise is

irrelevant. The definition of hybrid integrated circuits does not

contemplate the actions of a single manufacturer or importer.
Court No. 01-00126 Page 15

Rather, the statute requires that the components of the item be

combined to all intents and purposes indivisibly, on a single

substrate. The Explanatory Note indicates that the indivisibility

element is measured by whether it is uneconomical or impractical to

remove or replace the components from the substrate. In the

present case, Motorola has failed to present evidence indicating

that the subject merchandise meet this requirement. While Motorola

does not remove or replace the components from the substrate or

have the intention to do so, the subject merchandise fail to meet

the definition of hybrid integrated circuits.4 See Motorola’s Mem.

at 30. Motorola’s decision to keep the components on the substrate

intact does not render the subject merchandise indivisible.

Consequently, Customs properly determined that the subject

merchandise do not satisfy the definition of hybrid integrated

circuits and are not classifiable under heading 8542 of the HTSUS.

Consequently, Customs properly classified the subject merchandise

under heading 8536 of the HTSUS, and the decision set forth in HQ

961050 is entitled Skidmore respect.

4
Motorola does not dispute Customs’ expert who stated that
there is commercially available equipment that can be used to
remove the components from the substrate. See Motorola’s Reply at
4. Motorola also “concedes that theoretically the components can
be removed and that other companies making different articles may
remove the elements.” Motorola’s Mem. at 30.
Court No. 01-00126 Page 16

III. Customs’ Failure to Publish HQ 961050 in the Customs Bulletin
Did Not Violate 19 U.S.C. § 1625(c)

A. Statutory Background

Section 1625 of Title 19 of the United States Code sets forth

certain measures Customs must take with respect to interpretive

rulings and decisions. Customs must publish in the Customs

Bulletin or make available for public inspection “any interpretive

ruling (including any ruling letter, or internal advice memorandum)

. . . .” 19 U.S.C. § 1625(a) (1994). Section 1625(c)(1) of Title

19 of the United States Code directs Customs to publish in the

Customs Bulletin a decision that modifies or revokes interpretive

rulings or decisions that have been in effect for at least 60 days.

Customs is also directed to publish decisions that modify Customs’

previous “treatment” of “substantially identical transactions.”

See 19 U.S.C. § 1625(c)(2). The statute states, in pertinent part:

(c) Modification and revocation
A proposed interpretive ruling or decision which
would—
(1) modify (other than to correct a clerical
error) or revoke a prior interpretive ruling or
decision which has been in effect for at least 60
days; or

(2) have the effect of modifying the treatment
previously accorded by the Customs Service to
substantially identical transactions;

shall be published in the Customs Bulletin. The
Secretary shall give interested parties an opportunity
to submit, during not less than the 30-day period
after the date of such publication, comments on the
correctness of the proposed ruling or decision.
Court No. 01-00126 Page 17

19 U.S.C. § 1625(c).

Customs’ regulations define a ruling as “a written statement

issued by the Headquarters Office . . . that interprets and applies

the provisions of the Customs and related laws to a specific set of

facts.” See 19 C.F.R. § 177.1(d)(1) (1998). A ruling letter is

defined as “a ruling issued in response to a written request

therefor and set forth in a letter addressed to the person making

the request or his designee.” Id. With respect to the effect of

ruling letters, Customs’ regulations state that a ruling letter

“represents the official position of the Customs Service with

respect to the particular transaction or issue described therein

and is binding on all Customs Service personnel . . . until

modified or revoked.” 19 C.F.R. § 177.9(a)(1998). Furthermore,

“[i]n the absence of a change of practice or other modification or

revocation which affects the principle of the ruling set forth in

the ruling letter, that principle may be cited as authority in the

disposition of transactions involving the same circumstances.” Id.

Ruling letters indicating the proper classification of merchandise

under the HTSUS “will be applied only with respect to transactions

involving articles identical to the sample submitted with the

ruling request or to articles whose description is identical to the

description set forth in the ruling letter.” 19 C.F.R. §

177.9(b)(2).
Court No. 01-00126 Page 18

B. HQ 961050 Does Not Modify or Revoke a Prior Interpretive
Ruling Letter

1. Contentions of the Parties

a. Motorola’s Contentions

Motorola complains that Customs’ liquidation of the subject

merchandise pursuant to HQ 961050 violated 19 U.S.C. § 1625(c)(1).

See Motorola’s Mem. at 12-20. Specifically, Motorola contends that

the classification of the subject merchandise modifies or revokes

the two pre-classification ruling letters obtained by Motorola in

1992 and 1994 (“PRLs”).5 See id. at 12-13. Consequently, by

liquidating the subject merchandise under heading 8536 without

first publishing HQ 961050 in the Customs Bulletin, Customs

violated 19 U.S.C. § 1625(c)(1). See id. at 13.

Motorola argues that the PRLs meet the definition of the term

“interpretive ruling” because 19 U.S.C. § 1625(a) includes “any

ruling letter, or internal advice memorandum[] or protest review

decision under this chapter with respect to any customs transaction

5
In 1992, Motorola sought and obtained Customs’ opinion as
to the classification of six models of nickel-chemistry battery
hybrid integrated circuits. See Motorola’s Mem. at 11. In PRL
878763, Customs classified the six models under subheading
8542.20.00, the 1992 version of subheading 8542.40.00, of the
HTSUS. See id. Similarly, Motorola obtained Customs’ opinion as
to the classification of other models of nickel-chemistry battery
hybrid integrated circuits in 1994. See id. In PRL 894316,
Customs’ classified the six models under subheading 8542.40.00 of
the HTSUS and again classified three of the hybrid integrated
circuits previously classified in PRL 878763 under subheading
8542.40.00 of the HTSUS. See id.
Court No. 01-00126 Page 19

. . . .” Id. at 14 (quoting 19 U.S.C. § 1625(a)). If Congress

intended to exclude PRLs from the definition, then it would have

explicitly done so. See id. Furthermore, Congress did not

provide Customs with the discretionary power to interpret the

statute because the language therein “indicates that Congress

intended for Customs to follow the procedural requirements of

Section 1625(c) when it issues an interpretive ruling or decision.”

Id. at 15. In American Bayridge Corp. v. United States, 22 CIT

1129, 35 F. Supp. 2d 922 (1998), vacated on other grounds, 217 F.

3d 857 (Fed. Cir. 1999), the Court reviewed the legislative history

of the statute and rejected Customs narrow interpretation of 19

U.S.C. § 1625(c). See Motorola’s Mem. at 14-16. The Court opined

that the legislative history of the statute indicates that Congress

did not intend to grant Customs discretion. See id. The Court

should rely on American Bayridge and reject Customs’ narrow

interpretation of the statute because Customs in this case “has

read an unwarranted exception into the statue to limit the scope of

Section 1625(c).” Id. at 16.

Motorola also notes that Customs’ literature explaining PRLs

indicates that they are binding classification rulings, which stay

in effect until modified or revoked by Customs. See id. at 18.

The characterization of the PRLs as anything other than rulings is

contrary to Customs’ description of the Pre-Importation Review
Court No. 01-00126 Page 20

Program (“Program”).6 See id. Motorola asks the Court to give the

term “ruling” in 19 U.S.C. § 1625(c) the same definition provided

for purposes of 28 U.S.C. § 1581(h), as a determination as to the

treatment for the contemplated transaction. See id. at 19 (citing

Holford USA Ltd., Inc. v. United States, 19 CIT 1486, 1489-90, 912

F. Supp. 555, 558 (1995)). Motorola argues that “[i]f Congress had

intended the word ‘ruling’ in [19 U.S.C. § 1625(c)] to be different

from that applied elsewhere in Customs law, it would have

express[ed] such an intent.” Id. at 19. Consequently, Motorola

deduces that Customs’ interpretation of the statute “is

inconsistent with (1) the express terms of PRLs 878763 and 984316

[;] (2) the objectives of the Pre-Importation Review Program[;] and

(3) prior judicial and regulatory definitions of the phrase

‘ruling.’” Id. at 17.

Motorola asserts that HQ 961050 modifies or revokes the PRLs,

even though it involved merchandise with different part numbers.

See Motorola’s Reply at 14-15. Motorola notes that there are no

published guidelines indicating whether Motorola should have

contacted Customs for a new PRL if a part number changed. See id.

Motorola further asserts that four of the items at issue “are

6
Motorola’s PRLs were issued pursuant to the Program, a
cooperative, voluntary program between Customs and importers. See
Customs’ Mem. at 25. Under the Program guidelines, Customs issues
PRLs to importers indicating how merchandise specified therein will
be classified upon entry. See Motorola’s Mem. Ex. 4.
Court No. 01-00126 Page 21

substantially identical to the items that were listed on the PRLs

[which] confirms that Motorola did not have to report back to

Customs because the nature of its merchandise had not changed.”

Id. at 15. The method Motorola used to indivisibly combine the

four remaining items and the use of those items also remained the

same. See id. Consequently, Motorola contends that its decision

not to seek a new PRL was reasonable because it had obtained “two

PRLs that both classified this type of merchandise in HTSUS Heading

8542.” Id.

b. Customs’ Contentions

Customs replies that Motorola has failed to establish the

required elements of 19 U.S.C. § 1625(c)(1). See Customs’ Mem. at

22-28. Motorola has failed to demonstrate that HQ 961050 either

modifies or revokes a prior interpretive ruling or decision which

has been in effect for at least 60 days. See id. at 22. Customs

argues that, although the definition of “interpretive ruling”

encompasses HQ 961050, it does not encompass either of the PRLs.

See id. at 24. The PRLs are not interpretive rulings because “the

common meaning of the term ‘interpretive’ involves something that

provides an explanation.” Id. To be considered interpretive

rulings, the PRLs must explain a statute or provide an explanation

of Customs’ interpretation of the statute. See id. Interpretive

rulings, Customs notes, are “publically available complex written
Court No. 01-00126 Page 22

analyses by Customs interpreting and applying the facts and law.”

Id. The PRLs do not meet the requirements of interpretive rulings

because they lack detail and analysis, and do not include an

interpretation of how Customs law applies to the specific set of

facts. See id. at 26. Moreover, the PRLs are not interpretive

rulings because they are “‘bare-bones,’ consisting only of a list

of article identifiers, brief descriptions and tariff numbers.”

Id. Customs relied on the characteristics of each item provided by

Motorola and did not review or analyze every item identified in the

PRLs. See id.

Customs also notes that pursuant to 19 U.S.C. § 1625(a), an

interpretive ruling, ruling letter, internal advice memorandum or

protest review decision must be published in the Customs Bulletin

or otherwise made publically available. See id. at 24. Customs

argues that 19 U.S.C. § 1625(a) must be read in pari materia with

subsection 1625(c). See id. Customs’ argues that the PRLs are not

encompassed by 19 U.S.C. § 1625(c) because they were not published

in the Customs Bulletin or otherwise made publically available.

See id. The PRLs were only given to Motorola and apply exclusively

to Motorola’s import transactions, as defined by the article

identifiers and tariff numbers. See id. at 26. Consequently,

Customs’ decision in HQ 961050 does not modify or revoke a prior

interpretive ruling or decision because the PRLs do not meet the
Court No. 01-00126 Page 23

definition of “interpretive ruling.”

Customs alternatively argues that even if the PRLs are

interpretive rulings, HQ 961050 did not modify or revoke them. See

id. at 28. Rather, HQ 961050 did not involve “articles bearing

part numbers which appear on either of the preclassification

rulings . . . .” Id. Customs asserts that “Motorola confuses the

‘substantially identical transactions’ language of section

1625(c)(2), which involves the modification of a treatment, with

the language of 1625(c)(1) dealing with the modification or

revocation of a prior interpretive ruling.” Def.’s Reply Pl.’s

Resp. Def.’s Cross-Mot. Summ. J. (“Customs’ Reply”) at 12. Customs

maintains that the PRLs apply only to the merchandise they identify

therein. See id. Consequently, HQ 961050 and the PRLs are

unrelated rulings and the former does not revoke or modify any

determination rendered in either of the PRLs. See Customs’ Mem. at

28.

2. Analysis

Both parties assert that the central issue is whether the PRLs

are “interpretive rulings” within the scope of the statute. It is

uncontested that HQ 961050 is an interpretive ruling. See Customs’

Mem. at 24; Motorola’s Mem. at 13. Consequently, the Court must

determine (1) whether the PRLs are interpretive rulings under 19

U.S.C. § 1625(c)(1), and (2) if the PRLs are interpretive rulings,
Court No. 01-00126 Page 24

whether HQ 961050 modifies or revokes them. For the reasons set

forth below, the Court finds that the PRLs meet the definition of

interpretive rulings, and that HQ 961050 does not modify or revoke

a prior interpretive ruling. Accordingly, Customs failure to

publish HQ 961050 in the Customs Bulletin did not violate 19 U.S.C.

§ 1625(c)(1).

First, the Court agrees with Motorola’s assertion that the

PRLs are “interpretive rulings.” The statute defines “interpretive

ruling” as any ruling letter, internal advice memorandum or protest

review decision. See 19 U.S.C. § 1625(a). The statute directs

Customs to publish such interpretive ruling in the Customs Bulletin

within 90 days after the date of issuance. See id. Customs notes

that the PRLs do not meet the definition of an interpretive ruling

because neither was published in the Customs Bulletin; the PRLs

were made available only to Motorola. See Customs’ Mem. at 26.

Customs’ logic, however, is unconvincing. The statute does not

state that to be considered an interpretive ruling the letter must

be published in the Customs Bulletin. Rather, the statute directs

Customs to publish interpretive rulings, which includes any ruling

letter or internal advice memorandum, in the Customs Bulletin. See

19 U.S.C. § 1625(a). A letter may be an interpretive ruling even

if Customs fails to publish such a ruling letter.
Court No. 01-00126 Page 25

Contrary to Customs contention, the PRLs do interpret and

apply Customs law to a particular set of facts. Customs notes that

its regulation define a “ruling” as a written statement “that

interprets and applies the provisions of the Customs and related

laws to a specific set of facts.” Customs’ Mem. at 25 (quoting 19

C.F.R. § 177.1(d)(1)). Customs argues that the PRLs do not fulfill

either one of these requirements because they fail to give an

interpretation of the law or analyze how the law applies to a

specific set of facts. See id. at 26. The Court, however,

disagrees with Customs’ assertions. Under the Program, Customs’

“classification rulings [are] based on an item-by-item review of

the importers product inventory.” Motorola’s Mem. Ex. 3 at 3. In

determining the classification of an item, Customs implicitly

analyzes each item. Otherwise, Customs could not properly classify

the merchandise identified in the PRLs. Moreover, the PRLs

implicitly provide an interpretation of Customs law that is applied

to a specific set of facts.

The purpose of the Program, according to Customs’ literature,

is “to resolve classification, valuation, and admissibility issues

prior to importation thereby expediting import processing.” Id. at

1. Customs’ list of items and their respective classification in

the PRLS binds Customs. See id. at 3. In making a binding ruling,

Customs must interpret and apply the HTSUS to the merchandise at
Court No. 01-00126 Page 26

issue. Failure to do so would lead to classifications that are

arbitrary and not in accordance with law. Although the PRLs are

“bare-bones,” they contain a list of identifiers, brief description

and tariff numbers indicating Customs’ classification

determination.7 See Motorola’s Mem. Ex. 1 & 2. The review process

Customs undertakes when preparing a PRL requires an interpretation

and application of the relevant HTSUS heading. Based on the

definition of “interpretive rulings” offered by Customs, the Court

finds that, for the purposes of 19 U.S.C. § 1625(c)(1), the PRLs

are prior interpretive rulings.

Second, although the PRLs are interpretive rulings, HQ 961050

does not modify or revoke them. Customs is required to publish in

the Customs Bulletin any interpretive ruling or decision, if and

only if, it modifies or revokes a prior interpretive ruling. See

19 U.S.C. § 1625(c)(1). Each PRL applies “only to shipments of the

merchandise actually reviewed and covered under the specific ruling

decision.” Motorola’s Mem. Ex. 3 at 4. In its description of the

Program, Customs states that PRLs will be made available only “in

those instances where the importer’s product inventory lends itself

to an item-by-item review . . . .” Id. at 3. Consequently,

7
Although the PRLs do not contain a detailed explanation
of Customs’ determination, the PRLs announce Customs’ decision
based on an interpretation of the statute. In order to be
“interpretive rulings,” the PRLs do not have to contain a detailed
description of Customs’ reasoning.
Court No. 01-00126 Page 27

Customs pre-classification ruling binds Customs only with respect

to the items identified in the PRLs and not any other merchandise,

even if it is substantially identical.

In the case at bar, Motorola does not argue that the subject

merchandise is covered by the PRLs. Rather, Motorola argues that

the PRLs identify certain items that are substantially identical to

some of the subject merchandise. See Motorola’s Reply at 15. For

the remaining subject merchandise, Motorola argues that they were

made the same way and have the same use as the articles listed in

the PRLs. See id. Based on the similarities of the merchandise

identified in the PRLs and the subject merchandise, Motorola argues

that HQ 961050 modifies or revokes a prior interpretive ruling.

See id. Motorola’s arguments, however, are untenable. The

merchandise covered by HQ 961050 is different than that covered by

the PRLs. HQ 961050 is an interpretive ruling or decision that has

no bearing whatsoever on the merchandise identified in the two

prior PRLs. Accordingly, the Court finds that Customs failure to

publish HQ 961050 is not a violation of 19 U.S.C. § 1625(c)(1)

because it is an interpretive ruling or decision that does not

modify or revoke a prior interpretive ruling.
Court No. 01-00126 Page 28

C. HQ 961050 Modifies the Treatment Previously Accorded to
Certain Substantially Identical Transactions

1. Contentions of the Parties

a. Motorola’s Contentions

Motorola alternatively argues that Customs violated 19 U.S.C.

§ 1625(c)(2). See Motorola’s Mem. at 20. Motorola contends that

HQ 961050 effectively modified the treatment Customs afforded to

substantially identical merchandise and, therefore, it should have

been published in the Customs Bulletin. See id. Motorola argues

that the disposition of merchandise prior to the issuance of HQ

961050 constitutes a “treatment.” Furthermore, the merchandise

Motorola imported prior to Customs’ classification of the subject

merchandise under HTSUS heading 8536 (the “earlier merchandise”) is

“substantially identical” to the subject merchandise.

Consequently, the classification of the subject merchandise under

heading 8536, modified the “treatment” of “substantially identical

transactions,” and Customs was required to publish its decision in

the Customs Bulletin.

First, Motorola argues that classification of the subject

merchandise under heading 8536 of the HTSUS modifies the treatment

afforded to merchandise imported pursuant to the PRLs. See id.

Such classification also modified the treatment afforded to over

900 entries of substantially identical merchandise imported by

Motorola between May 1995, and May 1997. See id. Customs concedes
Court No. 01-00126 Page 29

that its liquidation of ten models of hybrid integrated circuits in

over 900 entries can constitute a “treatment” for purposes of 19

U.S.C. § 1625(c)(2). See id. Customs maintains, however, that

since the 900 entries were on bypass status they could not receive

a “treatment.” See id. Motorola asserts that this narrow

interpretation of the term “treatment” does not comport with the

Court’s broad interpretation, in Precision Specialty Metals, Inc.

v. United States, 24 CIT 1016, 1040-44, 116 F. Supp. 2d 1350, 1373-

78 (2000). The Court held that the payment of 69 drawbacks during

a four-and-a-half year period constituted a “treatment.” See id.

Motorola further asserts that even if the subject merchandise is on

“bypass status,” Customs remains responsible for the classification

of the imported items. See Motorola’s Reply at 17. Consequently,

Motorola maintains that the consistent classification of over 900

entries during a two-year period, as well as the classification of

merchandise pursuant to the PRLs, also constitutes a “treatment.”

See Motorola’s Mem. at 22.

Second, Motorola argues that the subject merchandise and the

earlier merchandise are “substantially identical.” See id. at 23-

28. Both were made using the same method of construction and their

functions are the same: (1) they connect the charging device and

the battery cells; (2) they connect the cell phone or two way radio

and the battery cells; (3) they identify the battery pack to the
Court No. 01-00126 Page 30

charging device; (4) they sense battery cell temperature; and (5)

they provide a safety mechanism. See id. at 23. Motorola notes

that there are differences between the earlier and subject

merchandise. See id. at 25. Yet, Motorola argues that the test is

based on “substantial” and not “exact” identity, and even “Customs’

expert considers them substantially identical.” Id. at 25.

Furthermore, Customs’ expert agreed that four of the subject

merchandise, the nickel-chemistry assemblies, are substantially

identical to the hybrid integrated circuits covered by the PRLs and

the merchandise imported between May 1995, and May 1997. See id.

The criteria used to determined substantial identity should be (1)

the function and use of the item; (2) the presence of at least one

active and one passive element, and (3) the use of one substrate

and the method of attaching the active and passive elements to the

substrate. See id. at 27-28. Based on these criteria, Motorola

contends that the subject merchandise are substantially identical

to the earlier merchandise. See id. at 28.

b. Customs’ Contentions

Customs replies that Motorola has failed to demonstrate that

the application of the PRLs “creates a ‘treatment’ that would

trigger [19 U.S.C. § 1625(c)(2)] for any articles not specifically

identified therein.” Customs’ Mem. at 28. The guidelines of the

Program provide that each PRL applies specifically to the shipments
Court No. 01-00126 Page 31

of merchandise actually reviewed and encompassed within. See id.

The PRLs encompass only the part numbers identified, and “Motorola

was obligated to update the information it submitted to Customs if

it wanted to have any additional articles treated in the same

manner.” Id. at 29. The PRLs do not demonstrate a “treatment” by

Customs because they apply to specific items identified therein.

See id.

Customs also argues that the liquidation of over 900 entries

of merchandise does not establish a “treatment” under the statute.

See id. at 29-32. Customs concedes that, in some instances, the

liquidation of so many entries under a provision may constitute a

“treatment.” See id. at 29. The facts in this case, however, do

not establish such a finding. See id. The entries liquidated

between May 1995, and May 1997, were on “bypass status” and did not

involve any action by a Customs official. See id. at 30. Customs

also notes that the facts of this case are different from those in

Precision, 24 CIT at 1039-44, 116 F. Supp. at 1373-78, which

Motorola cites in support of its argument. Customs points out that

in Precision, 24 CIT at 1039-44, 116 F. Supp. at 1373-78, 69

drawback claims were granted because of actions performed by

Customs. See Customs’ Mem. at 30. In the case at bar, however,

Customs did not take any action because over 900 entries were on

“bypass status” and not reviewed prior to liquidation. See id.
Court No. 01-00126 Page 32

Customs further contends that the regulations for the

implementation of 19 U.S.C. § 1625(c) were recently amended to

exclude the consideration of bypass entries for section 1625(c)(2)

purposes. See id. Under the new regulation, “Customs will give no

weight whatsoever to informal entries and to other entries or

transactions which Customs, in the interest of commercial

facilitation and accommodation, processes expeditiously and without

examination or Customs officer review.” Id. (quoting 19 C.F.R. §

177.12(c)(ii) (2003)). Customs acknowledges that the subject

merchandise was entered prior to the amendment, yet Customs argues

that “the Court should accord the highest degree of deference to

this amendment.” Id. Customs maintains that the regulation is

entitled to Chevron deference, and notes that in Smiley v. Citibank

(South Dakota), N.A., 517 U.S. 735 (1995), a regulation was

entitled to Chevron deference even though it had been enacted after

the initiation of the lawsuit. See Customs’ Mem. at 31.

Consequently, Customs asserts that the Court should not consider

the 900 entries, which were on “bypass status,” in determining

“whether Motorola has established a ‘treatment’ of its merchandise

as hybrid integrated circuits.” Id. at 32.

Customs concedes that if there was a “treatment” pursuant to

19 U.S.C. § 1625(c)(2), then “four of the eight articles in issue

are ‘substantially identical’ to at least some of the articles
Court No. 01-00126 Page 33

provided by Motorola to [Customs] for comparison purposes.” Id. at

33. Citing the dictionary, Customs argues that the remaining four

articles are not “substantially identical” to the merchandise

submitted for comparison, unless they “have almost the same

essential characters or features.” Id. at 34. Customs maintains

that the four articles at issue do not pass this test and notes

that “Motorola wants the Court to take the most expansive view

possible when comparing the imported circuit assemblies and ignore

the significant differences in technology, construction and

function among these articles.” Id. at 35. Customs urges the

Court to reject Motorola’s interpretation because of the

differences between the four articles at issue, which are used with

lithium-ion battery cells (the “Lithium-ion Assemblies”), and those

submitted by Motorola for comparison, which are used with nickel

based batteries (the “Nickel Assemblies”). See id. at 35-37.

Based on these differences, Customs requests the Court “follow the

opinion of [Customs’] expert and find that the importations of four

of the eight articles in issue are not ‘substantially identical

transactions’ to importations of any other flexible circuit

assemblies relied on by Motorola for purposes of establishing a

‘treatment’” under 19 U.S.C. § 1625(c)(2). Id. at 37-38.

2. Analysis

To demonstrate a violation of 19 U.S.C. § 1625(c)(2), Motorola
Court No. 01-00126 Page 34

must show that HQ 961050 was an interpretive ruling or decision

which modified a “treatment” previously accorded by Customs to

“substantially identical transactions.” Motorola must show that

Customs failed to follow the notice and comment process outlined in

the statute. It is uncontested that HQ 961050 is an interpretive

ruling or decision and that it was not published in the Customs

Bulletin. Consequently, the Court must determine whether Customs

afforded a “treatment” to “substantially identical transactions.”

First, the Court finds that Motorola has successfully

demonstrated that Customs’ liquidation of over 900 entries was a

“treatment” under the statute. In determining the meaning of a

term that is undefined in a statute, the Court normally gives such

term its ordinary, contemporary, common meaning. See Perrin v.

United States, 444 U.S. 37, 42 (1979); see also Precision, 24 CIT

at 1042, 116 F. Supp. at 1376. The Court has previously noted that

the ordinary definition of the term “treatment” includes “words

such as ‘often’, ‘customarily’ and ‘pattern’ — all terms which

necessitate multiple occurrences.” Precision, 24 CIT at 1042, 116

F. Supp. 2d at 1376. The term “treatment” signifies a pattern or

some form of customary practice. See id. The statute uses the

term “treatment” with reference to “substantially identical

transactions,” which indicates that a single antecedent transaction

is not enough to trigger the statute. See Precision, 24 CIT at
Court No. 01-00126 Page 35

1043, 116 F. Supp. 2d at 1376-77. Moreover, “[t]he term

‘treatment’ looks to the actions of Customs, rather than its

‘position’ or policy.”8 Id. (emphasis in original).

In the case at bar, Customs concedes that “so many

liquidations under a claimed provision might, in some cases, create

a ‘treatment’” for 19 U.S.C. § 1625(c)(2) purposes. Customs’ Mem.

at 29. Customs argues, however, that “the circumstances presented

here do not warrant such a finding.” Id. Customs notes that the

over 900 entries liquidated between May 1995, and May 1997, were on

“bypass status” and, therefore, did not involve any action

performed by Customs. See id. at 30. The Court, however,

disagrees. As the Court has previously noted, “Customs uses its

bypass procedures to manage its workload,” and reviews the entries’

tariff classification for accuracy. G&R Produce Company v. United

States, 27 CIT ___, ___, 281 F. Supp. 2d 1323, 1333 (2003).

Moreover, although the entries are on “bypass status,” Customs

8
The term “position” is defined as a practice or policy
which entails a conscious decision by Customs. Precision, 24 CIT
at 1043, 116 F. Supp. 2d at 1377. The “treatment” afforded an item
is not related to the “position” taken by Customs, but rather is
just an indicia of how the item was treated or afforded in the past
by Customs. See id. Accordingly, “a treatment [or action] may be
found where a ‘position’ [or policy might not — [] the definition
of ‘treatment’ does not require publication or liquidation among
many ports over many years.” Id.
Court No. 01-00126 Page 36

continues to randomly sample and review them for accuracy.9 See

id. Accordingly, the Court finds that the liquidation of over 900

entries of merchandise, which are on “bypass status,” require

Customs to act and constitute a “treatment” for purposes of the

statute.

Although 19 C.F.R. § 177.12(c)(ii) was promulgated after the

commencement of the current litigation, Customs argues that the

Court may still consider it in deciding the case at bar. See

Customs’ Mem. at 30-32. Moreover, Customs asserts that the

relevant regulation is entitled to Chevron deference because the

statute is silent or ambiguous with respect to the specific issue,

and Customs’ interpretation is a permissible construction of the

statute. See id. (citing Chevron, 467 U.S. at 842). The Court,

however, does not agree with Customs. The regulation does not

deserve Chevron deference because the statute directly speaks to

9
Customs mischaracterizes what “bypass status” means in
stating that “the vast majority of the entries [in G&R Produce, 27
CIT ___, 281 F. Supp. 2d 1323 (2003),] were ‘bypass’ entries,
meaning that the entries were filed electronically and no Customs
official had actually reviewed them prior to liquidation.”
Customs’ Reply at 13-14 (emphasis added). The Court points out
that “[i]n order to place entries on bypass, Customs reviews the
entries’ tariff classification for accuracy.” G&R Produce, 27 CIT
at ___, 281 F. Supp. 2d at 1333. To place an entry on “bypass
status” requires Customs to perform some action in reviewing an
entry’s tariff classification.
Court No. 01-00126 Page 37

the precise question at issue.10

In Chevron, 467 U.S. at 842, the United States Supreme Court

set forth a two-prong analysis that governs the degree of judicial

deference for agency interpretations of statutes, which the agency

is charged with administering. Under Chevron, the first question

for the Court is “whether Congress has directly spoken to the

precise question at issue.” 467 U.S. at 842. If the Court finds

that “the intent of Congress is clear, that is the end of the

matter; for the court, as well as the agency, must give effect to

the unambiguously expressed intent of Congress.” Id. at 842-43.

With respect to 19 U.S.C. § 1625(c)(2), the Court finds that the

intent of Congress is clear on its face and that the statute is not

silent or ambiguous. See Precision, 24 CIT at 1040, 116 F. Supp.

2d at 1374 (stating that “[t]he lack of any specific legislative

history [for 19 U.S.C. § 1625(c)], however, does not eliminate this

court’s duty to employ the plain meaning of the language that the

Congress adopted”). Congress has neither explicitly nor implicitly

left a gap to be filled by Customs because the meaning of the term

“treatment” is not ambiguous. See Chevron, 467 U.S. at 842.

Accordingly, Customs’ statutory interpretation in 19 C.F.R. §

10
Customs’ regulation interprets the term “treatment” used
in 19 U.S.C. § 1625(c)(2). Because such interpretation is not
permissible under Chevron, the Court will not address whether a new
regulation should have an effect on the outcome of litigation
initiated prior to the issuance of such regulation.
Court No. 01-00126 Page 38

177.12(c)(ii) is not based on a permissible construction of the

statute and, therefore, the regulation is not entitled to Chevron

deference.

Second, although the liquidation of over 900 entries

constitutes a “treatment” for purposes of 19 U.S.C. § 1625(c)(2),

Motorola has failed to fully demonstrate that such treatment was

accorded by Customs to “substantially identical transactions.”

Customs concedes that four of the eight subject merchandise11 are

“substantially identical” to the articles submitted by Motorola for

comparison purposes. See Customs Mem. at 33. The Court agrees

with Motorola that “there is no dispute that the nickel-chemistry

based [subject merchandise] are substantially identical to the

nickel-chemistry based [hybrid integrated circuits] in the PRLs and

the [hybrid integrated circuits] imported between May 1995 to May

1997.” Motorola’s Mem. at 25. Customs violated the statute with

respect to the four Nickel Assemblies by failing to publish HQ

961050 because it was an interpretive ruling or decision that

modified or revoked a treatment Customs previously accorded to

substantially identical transactions.

With respect to the remaining four Lithium-ion Chemistry

Assemblies, the Court finds that Customs did not violate the

11
These are part numbers 5108189Z16, 5180569A02, 5104035T03
and 5180569A03. See Customs’ Mem. Ex. 4.
Court No. 01-00126 Page 39

statute. Motorola correctly asserts that to determine whether

“substantially identical transactions” exist, the “test is

‘substantial’ and not ‘exact.’” Motorola’s Mem. at 25. The plain

meaning of the phrase “substantially identical” can be discerned

from the dictionary definitions of each term. See Perrin, 444 U.S.

at 42. The term “substantial” is defined as “[b]eing of

considerable importance, value, degree, amount, or extent.”

Webster’s II New Riverside University Dictionary 1155 (1988). The

term “identical” is defined as “[b]eing the same[,] exactly equal

and alike[,] [h]aving such similarity or near resemblance as to be

fundamentally equal or interchangeable.” Id. at 607. Motorola

asserts that the criteria for determining substantial identity is

(1) the use and function of an item; (2) the presence of at least

one active and one passive element; (3) the use of one substrate;

and, (4) the method of attaching the active and passive elements to

the substrate. See Motorola’s Mem. at 27-28. The Court does not

agree because such criteria do not meet the definitions of the

terms “substantially identical.”

Although the Litium-ion Chemistry Assemblies and the Nickel

Assemblies may be made in much the same manner and serve similar

purposes, the two sets of assemblies fall short of being identical.

The definition of the term “identical” requires the two assemblies

to “have such similarity or near resemblance as to be fundamentally
Court No. 01-00126 Page 40

equal or interchangeable.” Webster’s II at 607. The record

indicates that the Lithium-ion Chemistry Assemblies and the Nickel

Assemblies are not “fundamentally equal” because they have

significant differences. Principally, one set of assemblies are

used with litium-ion battery cells while the others are used with

nickel-based batteries. Consequently, Customs did not violate 19

U.S.C § 1625(c)(2) with respect to the Lithium-ion Chemistry

Assemblies.

CONCLUSION

The Court finds that Customs’ properly classified the subject

merchandise under heading 8536 of the HTSUS. Moreover, Customs’

failure to publish HQ 916050 did not violate 19 U.S.C. §

1625(c)(1). Although the PRLs are interpretive rulings or

decisions, HQ 916050 deals with merchandise that is not identified

in the PRLs. Accordingly, HQ 916050 did not modify or revoke a

prior interpretive ruling or decision. The Court, however, finds

that Customs violated 19 U.S.C. § 1625(c)(2) with respect to the

Nickel Assemblies but not the Lithium-ion Chemistry Assemblies.

Accordingly, Motorola’s motion for summary judgment is granted in

part and denied in part, and Customs’ cross-motion for summary
Court No. 01-00126 Page 41

judgment is granted in part and denied in part. Judgment shall be

entered accordingly.

/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: August 13, 2004
New York, New York