Slip Op - 12- 1

UNITED STATES COURT OF INTERNATIONAL TRADE

____________________________________

:

ESTEE LAUDER, INC., :

:

Plaintiff, :

:

v. : Before: R. Kenton Musgrave, Senior Judge

: Court No. 07-00217

plaintiff.]

Decided: January 3, 2012

Pisani & Roll, LLP (Michael E. Roll, Robert J. Pisani and Brett Ian Harris), for the 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 (Marcella Powell), Office of the Assistant Chief Counsel, International Trade Litigation,

U.S. Customs and Border Protection (Yelena Slepak), of counsel, for the defendant.

Musgrave, Senior Judge: Plaintiff Estée Lauder, Inc. challenges U.S. Customs and

Border Protection’s (“Customs”) classification of its “Blockbuster” cosmetic sets. Proper

administrative protest procedure having been undertaken and all liquidated duties, taxes and fees

Court No. 07-00217 Page 2

appealing assortment of makeup shades that work well together and to allow a consumer to create

different makeup looks. Pl’s Material Facts ¶¶ 23-4. The target customer of the “Blockbuster”

cosmetic set is the Estée Lauder customer who uses makeup. Id. ¶ 16. The sets contain makeup that

is designed to be put on by the consumer. Id. ¶ 22.

The Blockbuster sets are imported and sold in a glossy metallic gold-colored carton

dotted with snowflakes. The sets contain lipstick, lip pencil, lip gloss, eye pencil, mascara, eye

shadow, nail lacquer, blush, a cosmetic case , a makeup brush case, cosmetic brushes and an

applicator. The cosmetic case contains the items listed above except the brushes, which are packed

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contained most of the makeup articles. In this court’s opinion on the government’s motion to

dismiss the cases were referred to as “train cases” or “vanity cases”. Estée Lauder, Inc. v. United

States, 35 CIT ___ (2011), Slip Op. 11-23 at 2. Plaintiff contends the cases are “cosmetic” cases.

Defendant argues they should be denoted “travel” cases, even though it avers that the cases are “not

suitable for the transportation of the imported cosmetic articles”. Def’s Resp. to Pl’s Material Facts

¶ 47. The name applied to the cases is not material. However, for the sake of consistency, the court

denotes the cases “cosmetic cases” in this opinion.

Court No. 07-00217 Page 3

contained therein, and conceivably could carry anything that is smaller than the case itself. Def’s

Material Facts ¶¶ 8, 40. The cosmetic case is suited for use on a flat surface, such as a table, vanity,

etc. Pl’s Material Facts ¶ 54. The case is constructed without gussets and thus is unsuited to be

opened like a handbag. Id. ¶ 56. The cosmetic case is not a piece of luggage. Def’s Material Facts

¶ 39. The case facilitates the storage and use of the cosmetics stored within the case. The makeup

brush case contains three brushes, and is designed to be placed in the cosmetic case after purchase.

Pl’s Material Facts ¶ 50. The makeup brush case is approximately the same size as the brushes

contained therein. Id. ¶ 64.

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sources cited were inapposite and their objections conclusory.

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the makeup components that comprise the set is more than 50% of the material cost of the set. Pl’s

Material Facts ¶ 68.

Proper tariff classification is determined by the General Rules of Interpretation

(“GRIs”) of the Harmonized Tariff System of the U.S. (“HTSUS”) and the Additional U.S. Rules

of Interpretation. Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed. Cir. 1998). The

GRIs are applied in numerical order. BASF Corp. v. United States, 482 F.3d 1324, 1326 (Fed. Cir.

2007). Classification is a question of law requiring ascertainment of proper meaning in relevant

tariff provisions and determining whether the merchandise comes within the description of such

the pleadings, depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party

is entitled to judgment as a matter of law.” USCIT R. 56(c); see also Celotex Corp. v. Catrett, 477

U.S. 317, 322 (1986). The court will grant a motion for summary judgment “if the pleadings,

discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as

Court No. 07-00217 Page 5

to any material fact and that the movant is entitled to judgment as a matter of law.” USCIT R. 56(c);

see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

At the summary judgment stage, facts must be viewed in the light most favorable to

the nonmoving party only if there is a “genuine” dispute as to those facts. Fed. Rule

Civ. Proc. 56(c). As we have emphasized, “[w]hen the moving party has carried its

burden under Rule 56(c), its opponent must do more than simply show that there is

some metaphysical doubt as to the material facts . . . . Where the record taken as a

whole could not lead a rational trier of fact to find for the nonmoving party, there is

no ‘genuine issue for trial.’” Matsushita Elec. Industrial Co. v. Zenith Radio Corp.,

475 U.S. 574, 586-587 (1986) (footnote omitted).

Scott v. Harris, 550 U.S. 372, 380 (2007).

entirely into a question of law,’ and the court reviews Customs’ classification decision de novo.”

Dell Prods. LP v. United States, 34 CIT ___, 714 F. Supp. 2d 1252, 1256 (CIT 2010), aff’d 642 F.3d

1055 (Fed. Cir. 2011) (quoting Cummins Inc. v. United States, 454 F.3d 1361, 1363 (Fed. Cir.

2006)). Customs’ statutory presumption of correctness is irrelevant with regard to classification

decisions on summary judgment. Blakley Corp. v. United States, 22 CIT 635, 639, 15 F. Supp. 2d

865, 869 (1998).

Court No. 07-00217 Page 6

As entered, the items were classified separately under several subheadings. Plaintiff

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contends the cosmetics should be classified as sets, under subheading 3304.20, HTSUS because the

eye makeup gives the cosmetic set its essential character. The government contends that the goods

should remain classified separately, or if the goods are classifiable as a set, the cosmetic case gives

them their essential character and so the sets should be classified under subheading 4202.12.20,

HTSUS.

The primary subheadings at issue are as follows:

3304: Beauty or make-up preparations and preparations for the care of the skin

cases, holsters and similar containers; traveling bags, insulated food or

bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags,

sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and

similar containers, of leather or of composition leather, of sheeting of

plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly

or mainly covered with such materials or with paper:

Trunks, suitcases, vanity cases, attache cases,

briefcases, school satchels and similar containers:

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subheadings: 3304.10 (lipstick, lip pencil, lip gloss), 3304.20 (eye pencil, mascara, eye shadow),

3304.30 (nail lacquer), 3304.91 (blush), 4202.12.20 (cosmetic case), 4202.92.45 (makeup brush

case), 9603.30.60 (cosmetic brush) and 9616.20 (applicator).

Court No. 07-00217 Page 7

4201.12: With outer surface of plastics or of textile materials:

or handbag]:

4202.92: With outer surface of sheeting of plastic or of textile materials:

Travel, sports and similar bags:

4202.92.45: Other. . . . . . . . . . . . . . . . . . . . . . . . 20% ad valorem

IV. Analysis

After considering the parties’ motions, the court finds that there are no material facts

in dispute and that the matter may be resolved summarily. The imported merchandise is properly

classified as a cosmetics set in subheading 3304.20, for the reasons set forth below.

terms of GRI 3(b)’s “retail sets” language inapplicable under any situation. If the government’s

argument prevailed, the court cannot think of any situation where a group of goods put up as a set

for retail sale could not be required to be classified separately “pursuant to GRI 1”. In this case the

cosmetic sets cannot be classified pursuant to GRI 1 without doing a GRI 3 analysis because no

single heading describes all the products in the cosmetic set. Review of the other GRIs in order

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reveals that the sets must be analyzed under GRI 3(b). Only should such classification fail would

they be classifiable individually.

The GRI 3(b) retail sets rule recognizes that imported retail sets are packaged and sold

as a unit but contain multiple components. The rule allows customs authorities and importers to

classify such sets as one item rather than as individual components. GRI 3(b) provides:

When, by application of rule 2(b) or for any other reason, goods are, prima facie,

classifiable under two or more headings, classification shall be effected as follows:

(b) . . . [G]oods put up in sets for retail sale, which cannot be classified by

reference to 3(a), shall be classified as if they consisted of the material or component

as a set within the meaning of this Rule;

(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).

Explanatory Note (X) to GRI 3(b) (2007). The parties agree that the merchandise satisfies criteria

(a) and (c). The court must therefore determine whether the goods “meet a particular need or carry

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Examples of sets which can be classified by reference to Rule 3 (b) are:

(1) (a) Sets consisting of a sandwich made of beef, with or without cheese, in a bun

Classification in heading 16.02.

(b) Sets, the components of which are intended to be used together in the

preparation of a spaghetti meal, consisting of a packet of uncooked spaghetti

(heading 19.02), a sachet of grated cheese (heading 04.06) and a small tin of

tomato sauce (heading 21.03), put up in a carton:

Classification in heading 19.02.

The Rule does not, however, cover selections of products put up together and

consisting, for example, of:

of cocktail sausages (heading 16.01); or

(3) Drawing kits comprising a ruler (heading 90.17), a disc calculator (heading

pencil-sharpener (heading 82.14), put up in a case of plastic sheeting (heading 42.02):

Classification in heading 90.17.

For the sets mentioned above, the classification is made according to the component,

or components taken together, which can be regarded as conferring on the set as a

whole its essential character.

Id.

For its part, Customs has summarized the particular need/specific activity requirement

as requiring “a relationship between the articles contained in a group, and such relationship must

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may follow the “well-reasoned views of the agencies implementing a statute,” Mead, 533 U.S. at

227, citing Bragdon v. Abbott, 524 U.S. 624, 642 (1998), the above rationale is not well reasoned.

This flawed analysis has been bootstrapped into a line of rulings that rely largely on

Customs’ own reasoning but little on the statute or Explanatory Notes. For example, HQ 966719,

dated June 9, 2004, classified a cosmetic set imported in a briefcase made of PVC sheeting. In

determining whether the goods constituted a set for purposes of GRI 3(b), Customs stated

categorically that “cosmetic products imported in substantial, reusable cosmetics bags, do not form

composite goods[;] . . . the cosmetic products and container were not mutually complementary and

not adapted to [be] used together.” HQ 966719, citing HQ 963593, dated October 15, 2001. The

to GRI 3(b). Composite goods are not retail sets, although both are classified according to their

essential character. Customs has routinely rejected the GRI 3(b) classification of cosmetic sets like

those at issue here based upon a fatally flawed analysis. The government’s argument relying on the

same flawed “conflation” analysis is rejected.

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F

The government argues that the Blockbuster cosmetics set cannot be classified as a

GRI 3(b) set because the included case is too large to closely carry all the items in the set. Def’s Br.

at 11. There is nothing in the statute, however, that requires a set container to be closely fitted to its

contents.

Strictly speaking, the statute simply requires that sets be classified according to the

heading of the good that gives them their essential character. The Explanatory Notes to GRI 3(b)

provide three requirements for sets, described supra. The only Explanatory Note requirement that

could justify Customs’ position on the relative size of set containers requires that a set’s contents

specifically designed to hold or contain those articles, such a determination will

support the further conclusion that the articles and the holder or container are

intended to be used together, or in conjunction with one another, to meet a

particular need or carry out a specific activity. Characteristics used in determining

whether a holder or container is specifically designed to hold or contain the other

articles of a claimed set include a comparison between the articles and their holder

CBP, Sets ICP, at 15 (emphasis in original). The Sets ICP thus concludes that a container must be

“specifically designed to hold” and “intended to be used together” to form a GRI 3(b) set. These

requirements are not based on the statutory text, but appear to be derived from Customs rulings

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relying on the flawed “conflation” analysis described above. See Explanatory Note (IX) to GRI

3(b) (composite goods must be “adapted to one another” and “mutually complementary”).

Customs’ restriction of the size of set containers to only those that are “not

appreciably larger” than their contents also lacks a rational basis in the language of the statute or the

Explanatory Notes. More precisely, Customs’ position that a container’s size cannot be “appreciably

larger” than its contents has no foundation in the GRI 3(b) requirement, as illuminated by the

Explanatory Notes, that sets meet a particular need or carry out a specific activity. Further, Customs’

disapproval of containers that are “appreciably” larger than the set items they are intended to hold

provides no practical guidance. “Appreciable” is defined as something that is “capable of being

The statute itself provides the reasonable solution to the set-container conundrum.

GRI 3(b) provides that a set is classified according to the heading of the good that provides its

essential character. If a set container provides the set with its essential character, then the entire set

should be classified under the heading for the container. If not, then the set should be classified

according to that other item that provides the essential character. Employing the traditional essential

character analysis, i.e., reviewing “the nature of the [good], its bulk, quantity, weight or value, or by

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the role of a constituent [good] in relation to the use of the goods,” resolves the issue. See

Explanatory Note (VIII) to GRI 3(b). For example, in the instant action the essential character of

the set is given by the makeup components rather than the cosmetic case.

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This analysis is supported by a review of the Explanatory Notes to GRI 3(b).

Explanatory Note (X) provides two illustrative examples that include containers classifiable in

Heading 4202. One container is described as a leather case, the other is a case of plastic sheeting.

There is no indication from the examples that the size of the container relative to its contents should

be a determining factor in determining whether a set exists. The Note simply explains that the sets

should be classified according to the component that provides the essential character to the set.

The tool box/cabinet provides convenient storage for the electrician/mechanic. The

latching feature and the handle[ ] allow an individual to carry the tool box anywhere

he or she may require the use of its contents, whether it be within the home or

elsewhere. It is apparent that the subject articles are put up together to meet a

particular need and carry out a specific activity. That activity consists of

electrical/mechanical work.

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imported with only one or two inexpensive makeup items. In that case, the set could have the

purpose of putting on makeup but the case would provide the essential character of the set.

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However, shortly thereafter in HQ 082213, dated February 13, 1990, Customs held

that a drain cleaning system stored in a tool box was not classifiable as a set. Customs reasoned:

The components packed inside the tool box are put together to carry out a specific

activity, i.e., to use water pressure from the faucet to clear sink drains that are

blocked. However, the tool box does not contribute to this activity. While the tool

box functions as a container for the drain cleaning system, it can also be used for

holding other items. This is so because the size of the tool box is larger than would

be necessary to serve only as a holder for the drain cleaning system.

Customs’ Sets ICP fails to explain why the extra room in the electrical tool box was

not excessive but the extra room in the drain cleaning tool box was. The arbitrary application of

a flawed analysis and application of the “rule” therefrom has been inconsistent and arbitrary.

V. Conclusion

By application of GRI 1 and 3, the court finds that the Blockbuster cosmetic set is

“put up . . . for retail sale” as those terms are used in GRI 3(b) because the items packaged in the set

meet the particular need of putting on makeup. The court finds that the makeup contained in the

set gives it its essential character. Under GRIs 1, 3(b) and 6, the court concludes that classification

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Judgment will therefore enter in favor of the plaintiff.

/s/

R. Kenton Musgrave, Senior Judge

Dated: January 3, 2012

New York, New York