Case Computer Dell
Dell products lp v. u.s
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This case requires us to interpret the phrase “goods put up in sets for retail sale” as used in General Rule of Interpretation 3(b) of the Harmonized Tariff Schedule of the United States. The Court of International Trade upheld a ruling of U.S. Customs and Border Protection that spare laptop batteries that were offered for sale individually but were packaged with laptop computers for shipment were not “put up in sets for retail sale” with those computers. We affirm.
Dell Products LP manufactures and sells secondary batteries for use with laptop computers. A secondary battery provides an additional power source that allows extended operation of the computer without access to an external power supply. Two batteries cannot be used at the same time; once the primary battery dies, it is removed and replaced with a secondary battery such as Dell Inspiron 7000 Battery.
The secondary batteries at issue in this case were admitted separately from the laptop computers into Dell’s Foreign Trade Sub-Zone (“FTZ”) in Nashville, Tennessee. At the time of their admission to Dell’s FTZ, the secondary batteries had “non-privileged foreign status,” meaning that they had not been cleared by Customs and would be appraised for tariff purposes at the time of their formal entry into the United States.
Laptop computers were offered for sale by Dell together with a primary battery, a power cord and adapter, and operational manuals. Secondary batteries were offered for sale separately along with other optional accessories. If a particular customer chose to purchase a secondary battery at the time of purchasing a laptop computer, Dell would package all of the items for that customer together and would then ship the package from the FTZ to the buyer. A small box containing the laptop computer and the primary battery would be placed into a larger box containing the operational manuals and the computer’s cord and adapter. If the customer chose to purchase a secondary battery or any other optional accessories, those items would also be placed in the larger box for shipping to the customer.
Dell proposed to classify secondary batteries that were packaged with laptop computers as duty-free “portable digital automatic data processing ["ADP"] machines,” the ordinary classification for laptop computers. Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 8471.30.00, codified at 19 U.S.C. § 1202. Customs disagreed and classified the secondary batteries as “other storage batteries,” HTSUS subheading 8507.80.80. Under that subheading, the secondary batteries were assigned a duty rate of 3.4 percent. Customs explained its classification decision in a formal ruling letter. U.S. Customs Serv., HRL 967364 (Dec. 23, 2004). It determined that the secondary batteries were not “put up in sets for retail sale” with the laptop computers under General Rule of Interpretation 3(b) (“GRI 3(b)”) and that the secondary batteries therefore should be classified separately from the laptop computers.
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