Trade Updates for Week of May 17, 2017

United States Court of International Trade

 

Motion of Preliminary Injunction Granted

In Nexteel Co., Ltd. and Husteel Co., Ltd. and Hyundai Steel Company v. United States, Slip Op. 17-59, Court No. 17-91 (May 15, 2017), the court reviewed plaintiff-intervenor Husteel Co., Ltd.’s (“Husteel”) partial consent motionfor preliminary injunction to enjoin defendant United States from liquidating Husteel’s entries of certain oil country tubular goods (“OCTG”) from the Republic of Korea (“Korea”).  These OCTG were produced and/or exported by Husteel and are subject to the U.S. Department of Commerce’s (“Commerce”) final results of the administrative review of the antidumping duty order on OCTG from Korea covering the period July 18, 2014 to August 31, 2015. Certain Oil Country Tubular Goods from the Republic of Korea, 82 Fed. Reg. 18,105 (Dep’t Commerce Apr. 17, 2017).

While the government did not oppose Husteel’s motion on the basis of the four factor test for injunctive relief, it did argue that the motion sought to enlarge the issues in the case by requesting an injunction for entries not the subject of plaintiff’s complaint.  According to the court, a motion for preliminary injunction, which does not raise new or additional substantive issues, does not enlarge the plaintiff’s complaint, because it merely ensures that the judicial opinion resulting from the present litigation will govern entries that are already covered by the administrative review and subject to the Final Results being challenged. The court, therefore granted the motion for preliminary injunction and enjoined defendant, during the pendency of this litigation including any appeals and remands, from issuing instructions to liquidate or allowing liquidation of any entries of certain OCTG from Korea, produced and/or exported by Husteel, Co., Ltd.  and are the subject of Certain Oil Country Tubular Goods from the Republic of Korea, 82 Fed. Reg. 18,105 (Dep’t Commerce April 17, 2017) (final results of antidumping duty administrative review; 2015-2015). 

 

Light Gauge Compression Hosiery Does Not Qualify for Nairobi Protocol Treatment, Compression Armsleeves Do.

Compression socks having 15-20 milligrams of mercury compression strength do not qualify for duty free entry under the HTS subheading 9817.00.96 provision for “articles specially designed for the blind and physically handicapped”, according to a new decision of the United States Court of International Trade.

In Sigvaris Inc. v. United States, Slip Op. 17-60 (May 17, 2017), the court noted that the compression hosiery was used to treat chronic venous insufficiency and lymphedema, chronic conditions which the court noted to be disabling. However, it held that while compression hosiery with higher compression (over 20 mm/Hg) were used by handicapped persons, the court ruled that lighter gauge products were used by ambulatory persons who were not “bedridden” and thus, in the Court’s view, not “handicapped”. For the first time, it appears, the court focused not on the condition being treated, in determining whether goods qualified for Nairobi Protoccol treatment, but rather on the severity of the symptoms the items were intended to treat.       

However, the Court ruled that compression armsleeves used by mastectomy patients did qualify for duty free HTS subheading 9817.00.96 treatment, rejecting a government claim that persons with only one functioning arm were not disabled.

 

Trade Updates for Week of May 10, 2017

United States Court of International Trade

 

Remand Results Sustained

Before the Court, in TMK IPSCO et al. v. United States, Slip Op. 17-54, Court No. 10-00055, Slip Op. 17-54 (May 3, 2017), was the U.S. Department of Commerce’s (“Department” or “Commerce”) Final Results of Redetermination Pursuant to Court Remand filed pursuant to the Court’s decision in TMK IPSCO v. United States, 40 CIT __, __, 179 F. Supp. 3d 1328 (2016). See Final Results of Redetermination Pursuant to Court Remand, Dec. 21, 2016, ECF No. 171 (“Remand Results”). The Court remanded Commerce’s final determination in its countervailing duty (“CVD”) investigation of certain oil country tubular goods (“OCTG”) from the People’s Republic of China (“China”) to explain or reconsider its determinations.  The Court sustained the Remand Results.

In regards to analyzing subsidies, the Court held that by ending its investigation and measurement of subsidies on December 11, 2001, when China acceded to the WTO, Commerce failed to countervail all identifiable and measurable subsidies as required by statute.  However, on remand, Commerce identified the dates adopted for each type of subsidy program and tied  specific reforms to Commerce’s ability to identify the sphere of commercial activity involved, the economic actors involved, and the government action required to bestow the type of subsidy.  Thus it complied with the Court’s decision by identifying the dates and specific reforms implemented and making connections between the reforms and the legal conditions reasonably deemed necessary for a particular grant.

In regards to the disparate freight quotes, the Court remanded to Commerce to reconsider or further explain its decision to use an average of two freight quotes from Maersk and Jianli’s freight-forwarder because Commerce had not adequately explained how two such disparate quotes could be representative of freight prices available to respondents. On remand, Commerce continued to find that the ocean freight quotes provided by Maersk and by Jianli’s freight forwarder are both reflective of market rates that the importer would have paid to import steel rounds and billets notwithstanding the pricing disparity. Commerce determined that working with a shipping company versus contracting with a freight forwarder may result in different costs, but still reflects market rates.

With regards to the inclusion of the SBB East Asia pricing from tier ii benchmark price for steel rounds and billets, Commerce decided to exclude the SBB East Asia pricing data from its tier ii benchmark pricing for steel rounds. If there is no useable market-determined price with which to make the comparison, Commerce will measure the adequacy of remuneration by comparing the government price to a world market price “where it is reasonable to conclude that such price would be available to purchasers in the country in question” (i.e., a tier ii benchmark). 19 C.F.R. § 351.511(a)(2)(ii). Here, Commerce concluded that the fact that the SBB East Asia pricing data could include Chinese import prices presents “a more compelling rationale for removing the data source from [its] benchmark.” Slip Op. pg. 24.

As to the attribution methodology, Commerce reconsidered it and agreed that it in some instances it should not have attributed subsidies to certain subsidiaries, however if the companies were cross-owned it attributed subsidies to the combined sales of both companies. The Court agreed with such findings.

In regards to the provision of steel rounds tied to production of subject merchandise, the Court remanded Commerce’s decision to attribute the benefit received by TPCO from the provision of steel rounds at LTAR because the Court could not “discern whether Commerce determined that the provision of steel rounds at less than adequate remuneration (LTAR) is tied to sales of seamless pipe.” TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1359. On remand, Commerce finds no record evidence as to the purpose or intended use of the steel rounds and billets under the subsidy program.  Thus, Commerce attributed the provision of steel rounds and billets at LTAR to all sales of TPCO rather than to only sales of seamless pipe. Such a decision was supported by substantial evidence.

 

Motion for Partial Summary Judgment Granted

In United States v. International Trading Services, LLC, and Julio Lorza, Court No. 12-135, Slip Op. 17-55 (May 5, 2017), the Court considered plaintiff’s motion for partial summary judgment pursuant to section 592 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1592 (2006), regarding eight misclassified shipments of sugar. Plaintiff contended that defendants International Trading Services, LLC (“ITS”) and Julio Lorza (“Mr. Lorza”) were jointly and severally liable for unpaid duties and penalties amounting to $986,967.31.  Entry documents show that ITS classified the sugar under HTSUS subheading 1701.99.0500, which provides for “[c]ane or beet sugar and chemically pure sucrose, in solid form,” that also is “[d]escribed in general note 15 of the tariff schedule and entered pursuant to its Provisions,” andhas a corresponding duty rate of $0.036606 per kilogram. Customs later classified defendants’ entries under HTSUS subheadings 1701.99.5010 and 1701.99.5090, with a corresponding duty rate of $0.3574 per kilogram. Moreover, defendants’ entries were not covered by general note (GN) 15 because they were not imported for any U.S. agency, exceeded the net weight of 5 kilograms, were cotton or blended syrups and were introduced to the commerce of the U.S.   As such, the classification of entries under subheading 1701.00.99.0500 constituted a material false statement.

Because defendants did not respond to plaintiff’s motion, and defendants have not provided any evidence of reasonable care, the Court held defendants jointly and severally liable for unpaid duties, penalties, and applicable interest. Applying the United States v. Optrex Am., Inc., 32 CIT 620, 640-42 (2008) and Complex Machine Works Co., 23 CIT 942 (1999) factors, the Court found the penalty amount to be appropriate where the defendants have not cooperated with the investigation, or provided any type of disclosure.  Moreover, further deterrence supported a heightened penalty for public policy reasons.  The Court awarded prejudgment and post-judgment interest to plaintiff. The Court, therefore, granted plaintiff’s motion for partial summary judgment. 

 

Motion to Amend Complaint Granted

In Jinxiang Hu Ameng Imp & Exp Co., Ltd. v. United States, Court No. 16-243, Slip Op. 17-57(May 10, 2017),  plaintiff sought to add two counts to the complaint, pursuant to 28 U.S.C. § 1581(i), asserting that (1) Customs unlawfully liquidated the single entry of subject merchandise subject to the new shipper review and (2) Commerce unlawfully failed to exclude plaintiff’s entry from the liquidation instructions issued during the administrative review. Moreover, plaintiff’s motion also wanted to add one count pursuant to 28 U.S.C. § 1585 claiming that equity requires reliquidation of the entry in order to avoid substantial injury to the importer of record, who is not a party in this action.  Defendant argued that plaintiff could have filed a protest to challenge the liquidation, but because plaintiff is an exporter, and not an importer, there would be no means for the plaintiff to file a protest.  Therefore, the Court allowed the first two counts to be added to the complaint and denied the third count because plaintiff did not have standing to make claims regarding the importer.  For these reasons, the Court partially granted the motion.

 

Motion to Dismiss Denied

In Jinxiang Hu Ameng Imp & Exp Co., Ltd. v. United States, Court No. 16-243, Slip Op. 17-58(May 10, 2017),  the Court denied defendant’s motion to dismiss because it must draw all reasonable inferences in favor of the plaintiff.  Those inferences are that the liquidation of the sole entry was in contravention of Commerce’s instructions and that the liquidation instructions were unlawful in deciding the motion. Assuming that plaintiff prevails on either of its claims, the complaint would therefore not be moot even if the entry was liquidated.

Trade Updates for Week of May 3, 2017

United States Court of International Trade

 

Redetermination Sustained.

Before the court in Albemarle Corp. and Ningxia Huahui Activated Carbon Co., Ltd., v. United States, Court No. 11-451, Slip Op. 17-51 (April 28, 2017) were the Final Results of Redetermination Pursuant to Court Remand (Oct. 14, 2016), ECF No. 135 (“Remand Redetermination”), which the International Trade Administration, U.S. Department of Commerce (“Commerce”) issued in response to the court’s Opinion and Order in Albemarle Corp. v. United States, __ CIT __, Slip Op. 16-84 (Sept. 7, 2016). Because all parties commented in favor of the remand redetermination which assigned Ningxia Huahui Activated Carbon Co., Ltd. a redetermined weighted average dumping margin of zero, the remand redetermination was sustained.

 

Sustained Remand Results

In CC Metals and Alloys, LLC and Globe Specialty Metals, Inc. v. United States, Court No. 14-202, Slip Op. 17-52 (April 28, 2017), the Court sustained the final remand results.  Commerce in its final determination, while it was not consistent with its actual treatment of home market warehousing expenses and revenue in the margin calculation program, it did in fact account for those items lawfully under the statute, as well as under its regulations and practice. 

Moreover, in regards to imputed credit expenses, Commerce explained that it “inadvertently applied a simple average of the short-term interest rates, rather than a weighted-average of the short-term interest rates,” and corrected the calculation. In the final determination, Commerce used a “simple” average of short-term rates derived from a small set of Chelyabinsk Electrometallurgical Integrated Plant Joint Stock Company’s (“CHEMK”) factoring arrangements that Commerce examined at verification.  In the remand results, a weighted average was applied.  Finally, Commerce used CHEMK’s verifiable data for purposes of short term borrowing rate selection. 

 

Injunction Granted

In CS Wind Vietnam Co., Ltd., and CS Wind Corporation, v. United States, Court No. 13-00102, Slip Op. 17-53, (April 28, 2017), the Court decided whether liquidation should be enjoined on entries subject to the antidumping duty order regarding wind towers from Vietnam.   CS Wind has already succeeded on the merits before this court and there are no public interest issues or balance of hardship issues, the only issue was whether any irreparable harm will come to CS Wind if liquidation is not suspended.  Because the Court already issued two notices that suspended liquidation pending a “conclusive” court decision, as per Timken Co. v. United States, 893 F.2d 337, 341 (Fed. Cir. 1990), the Court granted the motion for injunction covering the first entry, and decided that an open injunction was not further needed, as per the first Timken notice.  Moreover, the court will issue the limited injunction if the government consents to the broader injunction.  

 

United States District Court

 

Exporter’s Case Not Dismissed Where Administrative Forfeiture Proceedings Not Instituted; Government Blasted for Deception

A court will not dismiss an exporter’s lawsuit seeking return of property seized by United States Customs and Border Protection where no administrative forfeiture proceedings are underway, according to a recent decision by the United States District Court for the Central District of California.

In In re Seizures of Containers of Aluminum Pallets Detained at Long Beach Port, CV 16-2640 (April 21, 2017) was commenced by California-based Perfectus Aluminum Co. after Customs and Border Protection officers first detained, then seized, some 547 containers of aluminum pallets being exported at Long Beach. The basis for the seizure is unclear, but were supposedly part of a criminal investigation. Chinese-based Zhongwang Holdings, believed to be related to Perfectus, is under investigation for evasion of antidumping duties on Chinese-made aluminum extrusions, and there have been claims that Perfectus is hoarding large quantities of aluminum in Mexico.  Perfectus petitioned the Court for release of the seized merchandise, claiming it had no remedy at law.

The government sought to dismiss the case, claiming that the seized aluminum was currently part of “administrative forfeiture” proceedings being conducted by CBP, but these claims turned out to be false. The value of the goods was too high for administrative forfeiture proceedings, and no such proceedings had been initiated, the Court noted.  The Court blasted the government for misrepresenting the status of administrative forfeiture proceedings, noting “It is shocking and deeply disappointing that the United States Attorney’s Office would file a brief with this Court so replete with falsities. After the Court pointed out the inconsistencies in the government’s briefing, see Doc. # 39 (request for supplemental briefing), the government deflected responsibility, stating that any “suggestion” that administrative forfeiture proceedings were underway with respect to the aluminum pallets was “unintended.” Resp. Supp. Brief at 4. The Court refuses to interpret the government’s repeated assertions on this matter as inadvertent errors.”

Perfectus had requested that the seizures be referred to the U.S. Attorney for initiation of administrative forfeiture proceedings. The Court denied the government’s motion to dismiss, and stayed the petition pending initiation of the forfeiture proceedings.

 

 

Trade Updates for Week of April 26, 2017

United States Court of International Trade

 

Determination Remanded

In Borusan Mannesmann Boru Sanayi ve Ticaret A.S. v. United States, Court No. 14-00009, Slip Op. 17-45 (April 20, 2017), plaintiff Borusan Mannesmann Boru Sanayi ve Ticaret A.S. (“Borusan”), a Turkish producer and exporter of standard pipe – contests the final results of the U.S. Department of Commerce’s 2011-2012 administrative review of the antidumping duty order covering welded carbon steel standard pipe and tube products from Turkey (“standard pipe”).  Specifically, Borusan contested Commerce’s decision to exclude yield loss such as scrap and second quality pipe from duty drawback adjustment in calculating the company’s dumping margin.  Borusan argued that the exclusion would create an “imbalance” between export price and normal value, thereby inflating the dumping margin. The duty rate applicable to scrap and second quality pipe during the 2011-2012 period was 0%.   Remand was, therefore, warranted to address Borusan’s argument regarding the zero duty rate.  Moreover, Commerce’s decision misstated Turkish law, stating that any scrap or byproduct not exported would be subject to duties, when in fact only those goods which were actually sold in the Turkish domestic market would be subject to import duties and VAT.   For these reasons Commerce’s determination was remanded.

 

Sustained Remand Results

Before the Court in Hangzhou Yingqing Material Co. And Hangzhou Qingqing Mechanical Co., v. United States, Slip Op., 17-147, Court No. 14-133 were the Remand Results in Steel Wire Garment Hangers from the People’s Republic of China, 79 Fed. Reg. 31,298 (Dep’t Commerce June 2, 2014) (final results 4th admin. rev. and new shipper rev).  In the Remand Results, Commerce reconsidered its allocation of labor costs, determined that it would continue not to adjust the financial ratios, and provided further explanation for its departure from its decision to adjust the financial ratios based on similar labor expenses in the Certain Nails from the People’s Republic of China, 79 Fed. Reg. 19316 (Dep’t Commerce April 8, 2014) (final results 4th admin. rev.). Commerce also reconsidered its valuation of brokerage and handling (“B&H”) costs, deducted the cost of obtaining a letter of credit from the total amount of B&H expenses, and revised the combination rate weighted-average dumping margin accordingly.  All parties agreed that these results addressed the Court’s decision below. For these reasons the Remand Results were sustained.

 

Exporter Who Received Zero Countervailing Duty Margins Lacks Standing to Sue

An exporter who received a favorable determination in a countervailing duty case lacks “injury in fact” and standing to sue, according to a pair of decisions from the United States Court of International Trade.

In PAO Severstal v. United States, Slip. Op. 17-50 (April 25, 2017) an exporter of cold-rolled steel from Russia who had received a de minimis margin in a countervailing duty proceeding, and was thus not subject to special duties, sued to challenge various legal and factual determinations which the Commerce Department made in the CVD proceeding. On the government’s motion, the Court, per Judge Gary Katzmann, dismissed the plaintiff’s case without prejudice, indicating that the exporter, having received a favorable determination, lacked “injury in fact” and thus standing to sue.

In Arcelormittal USA Inc. v. United States, Slip Op. 17-49 (April 25, 2017), the court dismissed Severstal’s cross-claims in the domestic industry’s challenge to the CVD findings, on largely the same grounds. While Severstal could participate in the case and defend against the domestic industry’s challenge, it could not raise its own claims when it had not been subjected to special duties. Those claims were dismissed, without prejudice for Severstal to renew them, in the event that company became subject to a countervailing duty order in the future.

 

“New Shipper Review” Recipient Should Have Been Given Chance at Zero Rate

A company who received a zero antidumping rate in a “new shipper review” involving hardwood flooring should have been given a chance to retain that rate in a subsequent administrative review of the antidumping order, the Court of International Trade recently held.

In Linyi Bonn Flooring v. United States, Slip Op. 17-46 (April 21, 2017), an exporter sought a “new shipper review” and secured its own antidumping rate of 0.0%. While this proceeding was ongoing, the Commerce Department initiated an annual review of the order. Since Linyi Bonn did not enter an appearance in that proceeding and assert its right to a separate rate, Commerce subjected the company to the “China-wide” antidumping rate.  The exporter sued, and Commerce held that, because the company had not timely provided a certificate of no sales for the period in question, it was not entitled to a separate rate.

However, the CIT, per Chief Judge Timothy Stanceu, held that Commerce had erred by not providing the plaintiff, and other interested parties, with notice of an alternative procedure which would have allowed them to file a “partial no shipments” certification in the annual review. The court remanded the case to Commerce with instructions to allow the company to submit the certification.

 

Decision in Antidumping Review of MSG Remanded for Correction

While some of Commerce’s determinations in an annual review of the antidumping order against Monosodium Glutamate from China were supported by “substantial evidence”, others were not, according to a recent decision of the Court of International Trade.

In Ajinomoto North America v. United States, Slip Op. 17-48 (April 25, 2017), a domestic producer challenged Commerce’s determination of certain “surrogate values” used in the antidumping calculation. First, the Court granted a motion by the government for voluntary remand so that the government could recalculate the value of certain corn used in the production process, to reflect the producer’s actual consumption rather than a standard value.  However, the court sustained Commerce’s selection of an index to determine the value of coal used in the production process, as well as the department’s selection of data to value certain “high protein scrap”.

But the court remanded to Commerce the question of how it calculated inland freight charges, claiming that the agency had used some impermissibly fuzzy data centered on the “Jakarta periurban area”, while some of the production facilities were located relatively far from Jakarta.

 

Trade Updates for Week of April 19, 2017

United States Court of International Trade

 

Defendant United States’ Motion for Summary Judgment Denied

In Irwin Industrial Tool Company v. the United States, Court No. 15-00285, Slip Op. 17-41(April 12, 2017), plaintiff, Irwin, challenged the United States Customs and Border Protection (“Customs”) HTSUS classification of hand tools imported into the United States.  Defendant, the United States moved pursuant to USCIT Rule 56(a) for summary judgment in their favor.  There were four types of tools at issue in this case, large jaw locking pliers, curved jaw locking pliers, long nose locking pliers with wire cutter, and curved jaw locking pliers with wire cutter. When the goods were imported, Customs liquidated them under Harmonized Tariff Schedule of the United States (HTSUS) subheading 8204.12.00, Hand-operated spanners and wrenches (including torque meter wrenches but not including tap wrenches); socket wrenches, with or without handles, drives or extensions; base metal parts thereof: Hand-operated spanners and wrenches, and parts thereof: Adjustable, and parts thereof, with a duty rate of 9% ad valorem.

Plaintiff believed that the goods are properly classifiable under subheading 8203.20.60, which provides for Files, rasps, pliers (including cutting pliers), pincers, tweezers, metal cutting shears, pipe cutters, bolt cutters, perforating punches and similar hand tools, and base metal parts thereof: Pliers (including cutting pliers), pincers, tweezers and similar tools, and parts thereof at 12 cents per a dozen plus 5.5% ad valorem.  In the alternative, plaintiff believes the subject pliers are classified under HTS Subheading or 8205.70.0060,  which provides for Handtools (including glass cutters) not elsewhere specified or included; blow torches and similar self-contained torches; vises, clamps and the like, other than accessories for and parts of machine tools; anvils; portable forges; hand- or pedal-operated grinding wheels with frameworks; base metal parts thereof: Vises, clamps and the like, and parts thereof: Vises: Other, dutiable at 5% ad valorem.  For the following reasons, the Court denied the defendant’s motion for summary judgment.

The Court held that the United States did not prove as a matter of law that the tools at issue are classifiable under 8204.12.00. HTSUS heading 8204 applies to various kinds of wrenches. In determining the common meaning of wrenches, the Court looked at several dictionaries, scientific journals, safety aides, and a mechanical engineering journal for help. The Court held that the use of wrench in the HTSUS refers to “a hand tool composed of a head with jaws or sockets having surfaces adapted to snugly or exactly fit and engage the head of a fastener (such as a bolt-head or nut) and a frame with a singular handle with which to leverage hand pressure to turn the fastener without damaging the fastener’s head.” Slip Op., pg. 7.  The Court said that the defendant had not proved the four types of tools at issue fit into this definition and that the defendant’s reliance on a decision regarding the old TSUS was not applicable to the Harmonized schedule. As a result, the United States was not able to convince the Court to grant summary judgment.

The Court used a similar methodology, looking to dictionaries and trade journals, to analyze the possible classifications that the plaintiff put forward. The Court found that under subheading 8203.20.6030 pliers“refers to a versatile hand tool with two handles and two jaws that are flat or serrated and are on a pivot, which must be squeezed together to enable the tool to grasp an object.” Slip Op, pg. 21. The Court also found that under Subheading 8205.70.0060vises, clamps and the like refer“to tools with a frame and two opposing jaws, at least one of which is adjustable, which are tightened together with a screw, lever, or thumbnut, to press firmly on an object and thereby hold the object securely in place while the user is working “.  The Court said it has “determined that the relevant tariff terms are defined in a manner that would suggest that the subject merchandise is classifiable within one of the plaintiff’s preferred terms.” Slip Op., pg. 24. However, since the plaintiff has not filed for summary judgment, the Court may not make a firm determination for classification purposes.

 

Court Sustained Remand Redetermination

In Davis Wire Corporation and Insteel Wire Products Company v. United States, Court No. 14-131 (April 13, 2017), plaintiffs Davis Wire Corporation and Insteel Wire Products Company contested a negative less-than-fair-value determination (“Final Determination”) issued by the International Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department”) following an antidumping duty investigation of prestressed concrete steel tie wire (“PC tie wire”) from Thailand. Final Determination of Sales at Not Less than Fair Value: Prestressed Concrete Steel Rail Tie Wire from Thailand, 79 Fed. Reg. 25,574 (Int’l Trade Admin. May 5, 2014) (“Final Determination”). In the Final Determination, Commerce calculated a 0.00% weighted-average dumping margin for Siam Industrial Wire Company, Ltd. (“SIW”). Because SIW was the sole exporter/producer investigated, Commerce terminated the investigation without issuing an antidumping duty order.

Plaintiffs had argued that certain wire costs were not included in SIW’s costs of production.  On remand, Commerce found that “wire rod used in the production of PC tie wire was also used to manufacture PC strand” and that “[b]ased on this evidence, the identical raw materials (i.e., grade 82B 13 mm wire rod held in inventory in the PC Strand division) should also be included as part of the weighted-average raw materials consumption cost in the cost of production (COP) calculation, in accordance with the Department’s normal practice.” Slip Op. pg. 5.  Commerce therefore included an upward adjustment in SIW’s wire rod costs and reasonably addressed plaintiffs’ claims. 

Moreover, the second issue on remand pertained to plaintiffs’ argument that the ratio the Department calculated for SIW’s general and administrative (“G&A”) expenses failed to include the value of certain information technology services provided to SIW by its parent company, Tata Steel.  In the Remand Redetermination, Commerce expressly found that Tata Steel invoiced SIW monthly for the costs of the IT services.  Thus, the IT services were included in the G&A expenses.

For all these reasons, the Remand Redetermination was sustained.

 

Revised Liquidation Instructions Sustained

In its previous decision, United Steel and Fasteners, Inc. v. United States, 41 CIT __, 203 F. Supp. 3d 1235 (2017), this Court sustained the U.S. Department of Commerce’s (“Commerce”) conclusion that American Railway Engineering and Maintenance-of-Way Association (“AREMA”) washers were included within the scope of the antidumping duty order covering certain helical spring lock washers from the People’s Republic of China (“China”), but remanded Commerce’s instructions to suspend liquidation of AREMA washers.  This Court had determined that the suspension instructions were unlawful because Commerce exceeded its authority by ordering retroactive suspension of liquidation when issuing a final scope ruling that clarified the scope of an order.  Before the Court was the remand determination.

On remand, Commerce revised instructions to “correct the effective date of the suspension of liquidation” and suspend liquidation of AREMA washers imported by United Steel and Fasteners, Inc. from China entered, or withdrawn from warehouse, for consumption on or after July 8, 2013, which is the date that Commerce issued the final scope ruling.    Given the revised instructions complied with the Court’s order and opinion, the Court sustained the remand redetermination.

 

Remand Redetermination Remanded

In Baoding Mantong Fine Chemistry Co., Ltd. v. United States, Court No. 12-362, Slip Op. 17-44 (April 19, 2017), plaintiff Baoding Mantong Fine Chemistry Co., Ltd. (“Baoding Mantong” or “Baoding”) contested the final determination (“Final Results”) that the International Trade Administration of the U.S. Department of Commerce (“Commerce” or the “Department”) issued to conclude an administrative review of an antidumping duty order (the “Order”) on glycine from the People’s Republic of China (“China” or the “PRC”). Glycine from the People’s Republic of China: Final Results of Antidumping Duty Administrative Review, 77 Fed. Reg. 64,100 (Int’l Trade Admin. Oct. 18, 2012) (“Final Results”). In that review, Commerce issued a weighted averaged dumping margin of 453.79% to Baoding, a Chinese exporter and producer of glycine. The Remand Redetermination calculated a new weighted-average dumping margin of 64.97% for Baoding Mantong.

First and foremost, it must be noted that Nan Ya Plastics Corp. v. United States, 810 F.3d 1333 (Fed. Cir. 2016), does not invalidate the opinion issued by this Court in Baoding Mantong Fine Chemistry Co. v. United States, 39 CIT __, 113 F. Supp. 3d 1332 (2015) (“Baoding Mantong”).  While the Court found that Commerce reasonably used Indonesian financial data of urea, fertilizer, and pupuk to calculate the applicable financial ratios and that the surrogate value for liquid chlorine was supported by substantial evidence, the Court did not find that the Surrogate Value for ammonia was reasonable where it was based on aqueous ammonia rather than anhydrous ammonia.  Moreover, the reasons for using Indonesian Global Trade Atlas (GTA) import data over Philippine GTA import data was inadequate.

Likewise, the Court found the use of Indonesian GTA for purposes of calculating Baoding Mantong’s formaldehyde input to be unreasonable considering that Indonesia was the lowest of the four available data sets that merited consideration, and thus the Indonesian import data may not be the best information with which to value the formaldehyde. Finally, in regards to valuing the steam coal input Commerce must ensure that its choice is the best available information, where the GTA import data for Indonesia appears to be lacking.

For these reasons, Commerce’s Remand Redetermination was remanded. 

Trade Updates for Week of April 12, 2017

United States Court of International Trade

 

Default Judgment Granted in Favor of U.S.

In Jacobi Carbons AB & Jacobi Carbons, Inc. v. United States et al, Court No. 15-286, Slip Op. 17-39 (April 7, 2017), plaintiffs Jacobi Carbons AB and Jacobi Carbons, Inc. (together, Jacobi”), and Plaintiff-Intervenors (collectively, with Jacobi, “Plaintiffs”), moved pursuant to United States Court of International Trade (“USCIT”) Rule 56.2, for judgment on the agency record, challenging the United States Department of Commerce’s (“Defendant” or “Commerce”) Final Results in the seventh administrative review (“AR7”) of the antidumping duty order on certain activated carbon from the People’s Republic of China (“PRC”). Plaintiffs argued that Commerce erred in (1) rejecting the Philippines and selecting Thailand as the primary surrogate country, (2) using Thai import data as the surrogate value for carbonized material, and (3) reducing Jacobi’s constructed export price (“CEP”) by an amount for Chinese value added tax (“VAT”). For the following reasons, the court remanded the determination to Commerce to clarify and, if necessary, revise its findings on the issues of the economic comparability and significant production of Thailand, and the irrecoverable VAT calculation.

The Court held that Commerce has discretion to develop a reasonable methodology to implement its surrogate country selection criteria. However, Commerce’s Office of Policy (OP) did not list the criteria reviewed to make the surrogate country selection.  Moreover, if Gross National Incomes (GNI) of potential surrogate countries were considered, there was no discussion of GNI in the Final Results. Reasoning that was offered post hoc, in briefing to the court or during oral argument, was not properly part of this court’s review of the agency’s underlying determination when such reasoning is not discernable from the record itself. Therefore, Commerce, in a remand, was to provide a reasoned explanation as to why the range of GNI data reflected on OP’s list demonstrates economic comparability to the PRC, including why Philippines’ GNI did not.

As for significant producer, Commerce did little in providing what substantiated its choice.  Commerce did not explain whether Thailand actually imports more higher-valued goods than it exports. Nor did it provided any basis for disfavoring net value as a measure of significant production.  Finally, Commerce’s reasoning failed to persuade that reliance on total exports, devoid of evidence of influence on world trade is a permissible method.  Again, more explanation and possible reconsideration was needed for this decision. Because the surrogate country selection was remanded, the Court defers the issue of the surrogate value until the redetermination.

As for reducing the constructed export price (CEP) by the VAT paid, the PRC levies a 17% VAT on inputs and raw materials used in the production of activated carbon, for which there is no VAT rebate. According to the Court since the VAT was irrevocable, Jacobi will be always burdened with such a payment . Thus, it was reasonable for Commerce to deduct the VAT as an export charge. However, the irrevocable VAT deducted must be equal to the actual amount of VAT paid on each transaction.  The Court remanded this decision to determine whether the 17% flate VAT rate did not overstate the amount of VAT Jacob paid.

For these reasons Commerce’s determinations were remanded in part.

 

Sustained Remand Results

In RZBC Group Shareholding, Co., Ltd., RZBC Co., Ltd., RZBC Imp. & Exp. Co., Ltd., RZBC (Juxian) Co., Ltd. v. United States, Court No. 15-22, Slip Op. 17-40 (April 10, 2017), plaintiffs RZBC Group Shareholding Co. and related companies (“RZBC”) moved for judgment on the agency record under USCIT Rule 56.2. This case concerned challenges to the fourth administrative review of a countervailing duty order on citric acid and certain citrate salts from the People’s Republic of China (the “PRC”). See Citric Acid and Certain Citrate Salts from the People’s Republic of China, 79 Fed. Reg. 78,799 (Dep’t Commerce Dec. 31, 2014) (final admin. review) (“Final Results”) (covering imports from January 1, 2012 to December 31, 2012). To ascertain the 10.54% AFA rate, “Commerce adversely inferred that RZBC benefited from the Buyer’s Credit program, a concessional-loan program instituted by the Government of China (“GOC”) owned EXIM Bank, and based the decision to apply AFA on the GOC’s noncooperation in refusing to allow Commerce to access information necessary for verifying non-use of the program.” Slip Op. pg. 2.

First the Court sustained the AFA finding as to whether RZBC benefitted from the credit program, because the “decree governing the Buyer’s Credit program” was “ambiguous” in its terms not making the $2,000,000 contract minimum or 50% Chinese components threshold mandatory. Commerce offered substantial evidence to support a decision to apply AFA that was consistent with the law and the remand order.

Second, as to the 10.54 rate, Commerce has a calculation method where no verified usage information was provided. Based on that program, which no party challenged, Commerce calculated the 10.54 rate. The Court rejected all four reasons proffered by RZBC as to why Commerce’s rate was incorrect, and found that Commerce’s AFA rate was consistent with the law and has the support of substantial evidence.

 

Remanded Labor Decision Declining Certification for TAA Benefits

In Former Employees of Geokinetics, Inc. v. United States Secretary of Labor, Court No. 16-57 (published April 11, 2017), the Court held that the Department of Labor’s (Labor) Remand Results were not supported by substantial evidence where the Court remanded Labor’s determination that Plaintiffs are not entitled to certification for TAA benefits as primary workers.

Labor had not explained why its practice for comparing a firm’s sales data is reasonable where Labor failed to consider whether like imports increased absolutely within additional periods as suggested by plaintiff, or explain why it was reasonable not to examine whether like imports had increased. Moreover, Labor failed to consider whether like imports had shifted to foreign countries, or explain why it was reasonable not to examine whether like imports had shifted to foreign countries. In addition, the court remanded Labor’s determination not to certify Plaintiffs as secondary workers eligible for TAA benefits. On remand, Labor must further explain its determination in light of these concerns or reconsider its determination consistent with this decision.

 

Commerce’s Antidumping Calculation Respecting Diamond Sawblades Remanded

Aspects of the Commerce Department’s dumping calculation in an annual review of the order against Diamond Sawblades from the People’s Republic of China were not supported by substantial evidence, or were insufficiently explained, prompting the United States Court of International Trade to remand the case for further proceedings.

In Diamond Sawblades Manufacturers’ Coalition v United States, Slip Op. 17-    (April 11, 2017),  the domestic petitioners took exception with certain aspects of Commerce’s calculation. In particular, the petitioners questioned Commerce’s’ decision to go outside the list of potential “surrogate” countries (Thailand was selected as the surrogate in this case), and to use data from a Philippine manufacturer to determine overhead and general expenses amounts for the calculation. The court found that Commerce had not satisfactorily explained its decision to use data from a Philippine supplier and remanded for further explanation.

Commerce also failed to explain its choice for selecting a surrogate value for steel “cores” used in making sawblades, having rejected certain value data as being “unreasonably high”, without pointing to a criterion for making that determination. The Court compared the determination to asking the question “How high is up?”

Finally, the Court rejected an argument from one respondent that it should not have been subjected to the “China wide” dumping rate, noting that the status of the entity – which previously had been accorded an individual zero rate – had changed, and that the “PRC-wide” entity had not been reviewed, even conditionally, in the administrative review in suit.

 

 

United States District Court 

Customs Failed to Adequately Respond to FOIA Request Regarding Seizures of Counterfeit and “Parody” Merchandise

At the 2015 Super Bowl, United States Customs and Border Protection announced seizures of large quantities of allegedly “counterfeit” NFL merchandise, including goods which were claimed to “parody” or “defame” team logos and mascots. Concerned that Customs appeared to be exceeding its legal mandate, and seizing “parody” goods which are not counterfeit, but governed by the doctrine of “fair use”, law Professor Rebecca Tushnet filed a Freedom of Information Act request with CBP, seeking information regarding the agency’s seizures of allegedly counterfeit goods.

Although Professor Tushnet received more than 4,500 pages of material in response, including over 3,000 photographs of seized goods, she was concerned that Customs had not conducted an adequate search of relevant terms and database systems, and that the agency had redacted far too much information based on cursory invocation of FOIA’s law enforcement records exception. Federal District Court Judge Christopher Cooper of the District of Columbia agreed with the professor, and ordered CBP to expand its FOIA search and review its redactions, in Tushnet v. United States Immigration and Customs Enforcement, No. 1:15-c-00907 (March 31, 2017).

The case is of potentially great interest to importers who have believed that CBP has used an overbroad definition of “counterfeit” in seizing imported goods.

 

 

Canadian International Trade Tribunal

Infant bottles and ‘sippy cups’ with a valve system are not “machines or mechanical appliances” and cannot be classified in Heading 8479 of the Customs Tariff, the Canadian International Trade Tribunal (CITT) recently held in a newly-released opinion,

In Phillips Electronics Ltd. v. President, Canada Border Services Agency (CBSA), AP 2016-003, the importer asserted that certain AVENT baby bottle “systems”, consisting of a bottle or cup housing, a teat or deformable spout, and connected to an incorporated anti-colic valve should be classified as “other” machines or mechanical appliances” of Heading 8479, rather than as household articles of rubber or plastic under Customs Tariff Heading 3924.

The Tribunal first held that the claims were not barred by “issue estoppel”, as a prior appeal regarding the classification of the valve assemblies alone had turned on specific facts, and not on binding legal interpretations. The Tribunal then held that the spouts were not properly considered “valves” of heading 8481, because the cups and bottles at issue were not “similar” to the pressure vessels described in that note and the Explanatory Notes thereto. Turning to the importer’s Heading 8479 claim, the Tribunal held that the cups, bottles and incorporated valves could be considered a “device, apparatus or instrument”, and that they were a “more or less complex combination of moving and stationary parts. Ultimately, however, the Tribunal lfound that the goods did not “act on something extraneous to themselves”, as all of the motion was generated by the child using the bottle, and the effects of air pressure.

The Tribunal upheld the Canada Border Services Agency (CBSA) classification of the articles in Heading 3924.

 

Certain High Definition Flat Panel Televisions Entitled to Duty-Free Treatment as “Articles for Use in or With Automatic Data Processing Machines or Units Thereof”

Certain high definition flat panel televisions were intended for use with automatic data processing machines and units thereof, and thus duty free treatment under Heading 9984 of Canada’s Customs Tariff, according to a recent Canadian International Trade Tribunal decision.

In Best Buy Canada Ltd. et al. v. President, Canada Border Services Agency, AP No. 2015-034, 2015-036 and 2016-001, the Tribunal addressed the question of whether duty-free classification of goods was dependent on the importer’s compliance with the Imported Goods Recordkeeping Regulations (IGRR), enacted pursuant to the Customs Act. Those regulations required every importer of goods released duty free to retain records showing, in this case, the use of the goods by the users. The Tribunal rejected this argument on two grounds. First, it found that the IGRR, implemented under authority of the Customs Act, was distinct from the provisions of the Customs Tariff. Compliance or non-compliance with the IGRR might have several consequences, but a change in tariff classification was not among them. Failure to keep or produce records would not preclude the plaintiffs from proving classification of the televisions under Heading 9984 of the Customs Tariff.

Second, the IGRR applies to goods released without payment of duty. Since the subject televisions in this case had been imported duty-paid, the IGRR by their terms did not apply to them. The Tribunal ordered that refunds be issued to the plaintiffs.

 

 

 

 

Trade Updates for Week of April 5, 2017

United States Court of International Trade

 

Default Judgment Granted in Favor of U.S.

In U.S. v. Paul Puentes, Court No. 14-310, Slip Op. 17-33 (March 29, 2017), plaintiff Government brought this action to recover a civil penalty imposed on Defendant Paul Puentes (“Puentes”) by the Bureau of Customs and Border Protection (“Customs”). Before the court was  Plaintiff’s Motion for Entry of Default Judgment, which sought judgment against Puentes in the amount of $30,000, as well as post-judgment interest and costs.  The two counts of the Government’s Complaint address four types of misconduct, which the Government characterizes as “Merchandise Processing Fees Deception,” “Late Entry Summaries,” “Failure To File Entry Summaries,” and “Misrepresentation Of The Importer of Record.”  Taking the facts alleged in the complaint to be true, the government has provided a basis for Puentes’ liability.  Because Puentes has not responded to the complaint, the Court found in favor of the plaintiff and held Puentes liable in the amount of $30,000 for his misconduct.

 

Cash Deposit Rate Set Aside

In Cooper Tire & Rubber Company, Cooper (Kunshan) Tire Co., Ltd., and Cooper Chengshan (Shandong) Tire Co., Ltd. v. United States, Slip Op. 17-32, Court No. 15-00251 (March 29, 2017), plaintiffs, Cooper Chengshan (Shandong) Tire Co., Ltd., Cooper (Kunshan) Tire Co., Ltd., and Cooper Tire & Rubber Company, collectively known as “Cooper,”  challenge the antidumping duty cash deposit rate of 11.12% ad valorem that the International Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department”) applied to imports of passenger car and light truck tires that they produced and exported from the People’s Republic of China. For the reasons set forth, the Court set aside the cash deposit rate provided for Cooper.

Cooper was a respondent in parallel antidumping duty (“AD”) and countervailing duty (“CVD”) investigations conducted by Commerce. Cooper arguedthat Commerce erred in not allowing Cooper the benefit of a 13.53% downward export subsidy adjustment, which was the adjustment Commerce allowed for all other separate rate respondents in the AD investigation. Specifically, “even though Cooper is an AD separate rate respondent like the 62 other separate rate respondents, the AD cash deposit rate for Cooper is 11.12% ad valorem and that of all the other 62 separate rate respondents is 8.72% ad valorem.” Slip Op. pg. 10 (citing Cooper’s Brief, pg. 7).  There was no rational basis for treating Cooper differently from other separate AD respondents.  In the alternative, if Commerce were to treat Cooper separately Commerce should account for the record evidence in the CVD investigation recalculating the cash deposit rate down to 6.03% ad valorem.

However, the Court saw an issue with not having Cooper examined individually and not providing a rational basis for differing rates. The uncontested record facts pertaining to the cash deposits did not provide Commerce with a rational basis upon which to treat Cooper differently than the other separate rate respondents. If individually examined in the first review, Cooper would not receive a dumping margin determined by a method parallel to the “hybrid” method Commerce used to calculate its adjusted cash deposit in the AD investigation, which combines an all-others antidumping duty margin and an individually-determined export subsidy adjustment. Because the “hybrid” method Commerce employed as a means of estimating future AD duty liability has no basis in the statute, Commerce acted arbitrarily and capriciously in treating Cooper differently from the other separate rate respondents in the investigation. Therefore, defendant was not correct in arguing that the adjustment Commerce made “ensured that the export subsidy adjustment credited Cooper for the export subsidy rate that will be applied to it.

Trade Updates for Week of March 29, 2017

United States Court of International Trade

 

Sustaining Remand Results

In United States Steel Corporation et al. v. United States, Court No. 14-263, Slip Op. 17-28 (Public Decision Issued March 23, 2017), the Court reviewed the U.S. Department of Commerce’s (“Department” or “Commerce”).  Final Results of Redetermination Pursuant to Remand filed pursuant to the court’s decision in United States Steel Corp. v. United States, 40 CIT __, 179 F. Supp. 3d 1114 (2016) (“U.S. Steel”). See Final Results of Redetermination Pursuant to Remand Confidential Version, Aug. 31, 2016, ECF No. 113 (“Remand Results”). The court remanded Commerce’s final determination in its investigation of the antidumping duty (“ADD”) order covering certain oil country tubular goods (“OCTG”) from India for the period July 1, 2012 through June 30, 2013.  The court asked Commerce to reconsider and provide further explanation regarding: (1) its application of the ratio test of its differential pricing analysis; (2) its determination that Jindal SAW, Limited (“Jindal SAW”) is not affiliated with certain of its suppliers of electricity and steel billets; (3) its determination that Jindal SAW’s yield loss data reasonably reflected its costs of production (“COP”); and (4) its assignment of the highest cost data from GVN Fuels, Ltd.’s (“GVN”) production cost database to GVN’s dual-grade OCTG products.

As for application of the ratio test of its differential price analysis, Commerce first explained that its differential pricing methodology proceeds on a presumption that prices do not differ significantly by purchaser, region, or time period; it does not seek to prove that significant price differences do not exist. It further explained that sales are not excluded from the Cohen’s d test.  Commerce reasonably justifies its inclusion of all sales in the denominator of the ratio generated by comparing the value of sales passing the Cohen’s d test to the value of all sales. Commerce clarifies that “the ratio test assesses the extent of the significant price differences for all sales.”

For review of findings that Jindal SAW was not affiliated with certain of its suppliers of electricity and steel billets, Commerce evaluated the indirect holdings of Jindal families further.  Commerce determined that the additional indirect ownership of the Jindal family members that might be added to insignificant direct ownership numbers would be unlikely to rise to the level of ownership necessary to create a potential for control. Nor do the board memberships, management positions, or supplier relationships create a potential for control to manipulate production, pricing, or cost of the subject merchandise.

For Jindal SAW’s yield loss data, Commerce determined that it was necessary to adjust the per-unit direct material costs to take into account varying processing costs for CONNUMs with different physical characteristics, including thickness and diameter.  No party challenged Commerce’s determinations that Jindal SAW’s yield loss data did not reasonably reflect its COP or its determination to apply partial AFA, thus the Court found substantial evidence for this determination.

Finally, as for assignment of highest cost data from GVN cost database to GVN’s OCTG products,  Commerce found on remand, that it had “unintentionally overlooked its standard ‘proxy cost’ methodology by selecting the highest cost of L-80 grade” merchandise, and revised the cost assigned to the L-80 grade CONNUMs to conform to its standard proxy cost methodology.  This methodology provides that Commerce determines cost values for products for which it lacks COP data by matching COP to the most similar products based on reported physical characteristics where no adverse inference is applied, and assigned costs associated with cost data most similar to L-80 grade products.  Based on this cost adjustment, Commerce calculated a de minimis AD 1.07 rate for GVN. 

For all the above reasons, the Court sustained the remand results.

 

U.S. Court of Appeals for the Federal Circuit

Scope Determination Reversed

In Meridian Products, LLC v. United States, Ct. No. 2016-1730 (March 28, 2017),  the Federal Circuit reversed the Court of International Trade (“CIT”)’s decision sustaining Commerce’s finding that the trim kits do not fall within the scope of antidumping and countervailing duty orders on aluminum extrusions from the People’s Republic of China (“the Orders”).  See Meridian Prods., LLC v. United States (Meridian V), 145 F. Supp. 3d 1329, 1331 (Ct. Int’l Trade 2016). Meridian described the trim kits as “an aesthetic frame around the perimeter of (though not attached to) a major home kitchen appliance,” such as a “freezer” or “refrigerator.” According to Meridian, the “[t]rim kits are sold as a package of finished parts” and “consist[] of extruded aluminum forms[] made from aluminum alloy,” and further stated that “[t]he trim kits also include a customer installation kit for the consumer to use during the final assembly in the residential kitchen,” with the installation kit consisting of “a hexagonal wrench,” “fasteners,” “[a] set of instructions,” and “hinge covers.” Slip Op., pg. 6.

There were three issues for the Federal Circuit. First, in the CIT’s view, the inquiry ended if a disputed product met the definition of a “finished goods kit,” which then resulted in the disputed product’s exclusion from the Orders. However, according to the Federal Circuit, that interpretation failed to consider all of the terms of the exclusion, especially any exception to the exclusion, that a product will not be considered a finished goods kits “merely by including fasteners,” and “elevates certain aspects of the exclusion over others.”   Second, the CIT would exclude a kit even if it consists entirely of unassembled aluminum extrusions and fasteners. Third, citing precedent, the Federal Circuit held that the CIT’s interpretation would “render[] the [O]rders internally inconsistent” because it would allow for kits containing only unassembled aluminum extrusions and fasteners to be excluded from the scope of the Orders, whereas aluminum extrusions imported individually or as parts would be explicitly included in the scope.

For these reasons, the Federal Circuit reversed the CIT’s decision.

Trade Updates for Week of March 22, 2017

United States Court of International Trade

 

Sustaining Remand Results

In CS Wind Vietnam Co. v. United States, Court No. 13-102, Slip Op. 17-26 (March 17, 2017) the court sustained Commerce’s remand determination. This matter was before the court following a remand to the U.S. Department of Commerce (“Commerce”) ordered after the Court of Appeals for the Federal Circuit (“Federal Circuit”) issued its mandate in CS Wind Vietnam Co. v. United States, 832 F.3d 1367 (Fed. Cir. 2016) (“CS Wind IV”). Defendant-Intervenor Wind Tower Trade Coalition (“WTTC”) opposes the Third Remand Results on several grounds.

First at issue was whether Commerce incorrectly used manufacturer report weights in the normal value calculation.  However, because the Federal Circuit’s direction to Commerce bound Commerce under the mandate rule to use the manufacturer-reported weights, Commerce reasonably relied on that instruction. 

Second, WTTC argued that Commerce’s failure to request information from Ganges “regarding how [Ganges] classifies its jobwork expenses” is an abuse of discretion. However, the Court held that Commerce did not abuse its discretion in deciding not to send a letter to Ganges, or in maintaining a practice of generally not requesting information from third party surrogate value companies over whom it has no control.

Finally, WTTC argued that information developed in the first administrative review shows that CS Wind made material misstatements regarding the accuracy of the Steel India data used by Commerce in the original investigation, and that the Steel India data used in the original investigation “does not accurately reflect the steel consumed in the production of CS Wind’s wind towers.”  Yet, WTTC fails to explain why there is a “material misstatement”   where there simply could have been an update to the original data.  The mere fact that Commerce uses different data in different proceedings is insufficient for the court to disturb Commerce’s continued use of the original Steel India data in the original investigation.  For all these reasons, the Remand Results in the Third Review were sustained.

 

Commerce’s Determination in Shrimp Case was Remanded

In Ad Hoc Shrimp Trade Action Committee v. United States, Court No. 15-279, Slip Op. 17-27 (March 16, 2017), plaintiff challenged the Department of Commerce’s (“Commerce”) decision to use labor wage rate data from the Bangladeshi shrimp industry to value the labor factor of production in the final results of the ninth administrative review of the antidumping duty order on certain frozen warmwater shrimp from the Socialist Republic of Vietnam (“Vietnam”). Commerce’s final determination was remanded for Commerce to clarify or reconsider its practice for determining whether a surrogate country’s labor data is aberrational and to clarify or reconsider its use of Bangladeshi labor data in this review, despite record evidence that the data is from an industry affected by alleged labor abuses.

The Court found that Commerce’s selection of Bangladeshi labor wage rate data was not supported by substantial evidence because Commerce failed to (i) quantitatively assess Plaintiff’s claims that the Bangladeshi labor wage rate data was aberrational, and (ii) address record evidence that the Bangladeshi data was the product of abusive labor practices and therefore could not be the best available information to value the merchandise.  While Commerce is obligated to obtain the best information available, evidence that the labor wage rates do not reflect the true cost of labor because of systemic abuses including forced and child labor specific to the shrimp industry detracts from accuracy, and therefore detracts from the reasonableness of finding the data to be the best information available.

 

Trade Updates for Week of March 15, 2017

United States Court of International Trade

 

Motion to Dismiss Granted

Before the Court in American Furniture Manufacturers Committee for Legal Trade et al. v. United States, Court No. 16-70, Slip Op. 17-25 (March 13, 2017), was defendant United States (“the government”)’s motion to dismiss a complaint filed by plaintiffs American Furniture Manufacturers Committee for Legal Trade and Vaughan-Bassett Furniture Company, Inc. (collectively, “AFMC”), for lack of subject-matter jurisdiction pursuant to U.S. Court of International Trade Rule 12(b)(1).  AFMC contested the Final Results of the tenth administrative review of Commerce, claiming in essence that Commerce failed to fully investigate AFMC’s evasion allegations, and that Commerce failed to suggest that actions be taken by Customs as a result.  Moreover, Commerce did not address Shanghai Jian Pu Import & Export Co., Ltd.’s(“Jian Pu”) failure to cooperate.

In the review, Commerce selected Jian Pu as the sole mandatory respondent because it was the only respondent for which a request for review had not been withdrawn and Jian Pu had provided the information required by Commerce to be considered for status separate from the PRC-wide entity.  After reviewing the evidence, Commerce determined that Jian Pu was part of the PRC-wide entity because it did “not satisfy the criteria demonstrating an absence of de facto government control over export activities” as the government of the PRC has a “significant ownership interest in Jian Pu,” and therefore, applied a PRC-wide rate of 216.01% to Jian Pu’s exports.

The Court held that no action by Commerce gives rise to AFMC’s alleged injury of lost sales due to duty evasion, where Commerce found that Jian Pu was subject to the PRC wide rate of 216% and accomplished its obligations under the statute to review each respondent and assess the proper rate. According to the Court there is no other remedy to be afforded by AFMC where a party lacks “standing to challenge a subsidiary finding in an administrative determination in which it prevailed on the merits.”  Slip Op. pg. 7 citing Cámara Nacional de las Industrias Azucarera y Alcoholera v. United States, 118 F. Supp. 3d 1360, 1365 (CIT 2015). Moreover, the “ ‘determinative or coercive effect’ of Commerce investigating the allegations is not the issuance of penalties by Customs.”  Slip Op. pg.  7.  Therefore, the Court found that it lacked subject matter jurisdiction over AFMC’s complaint.

Trade Updates for Week of March 1, 2017

United States Court of International Trade

 

Motion for Amended Preliminary Injunction Denied

In An Giang Fisheries Import and Export Joint Stock Company et al. v. United States, Court No. 16-72, Slip Op. 17-19 (February 24, 2017), the court denied plaintiff’s motion to amend the statutory injunction.  This matter was before theCourt on the motion of plaintiffs, An Giang Fisheries Import and Export Joint Stock Company, InternationalDevelopment and Investment Corporation, Thuan An Production Trading and Services Co., Ltd., and Viet Phu Foods and Fish Corporation (collectively “Movants”), to amend the statutory injunction issued by the court to include entries of subject merchandise that the United States Department of Commerce (“the Department” or “Commerce”) ordered to be liquidated and which U.S. Customs and Border Protection (“CBP”) actually liquidated prior to the statutory injunction taking effect.  However, because an injunction is not retroactive in effect, the court could not grant such a motion. The court stated, “Given that the entries in question have liquidated, Movants’ claims as to the dumping margin assessed on the liquidated entries are mooted, and there is no case or controversy concerning the duty rate assessed on those entries.”  Slip Op. pg. 7.   Plaintiffs waited 51 days before filing a motion for injunction, and during that time the entries liquidated.  The only possible remedy left for plaintiffs then was to protest the liquidation of entries challenging the antidumping duty rate assessed on frozen fish fillets from Vietnam. Movants had a chance to suspend liquidation of all involved entries if it moved for the injunction as soon as Commerce published its final results. As a result, the Court denied plaintiffs’ motion for an amended preliminary injunction.

 

Thanksgiving and Christmas Dinnerware and Other Utilitarian Items are Not Articles Used in the Home in the Performance of Rituals

In WWRD U.S., LLCv. United States, Court No. 11-00238, Slip Op. 17-21 (March 1, 2017), before the court are cross-motions for summary judgment. Plaintiff WWRD U.S., LLC, (“Plaintiff” or “WWRD”) contested the denial of several protests challenging U.S. Customs and Border Protection’s (“Customs”) classification of the subject imports according to their constituent materials and dutiable at rates ranging from three to six percent ad valorem.

The merchandise consisted of “Old Britain Castles” and “His Majesty” dinnerware, as well as Christmas flutes, plates, mugs, punch bowls, and lamps.  The court held that because Thanksgiving and Christmas were not cultural or religious rituals, that the subject merchandise was not classifiable under subheading 9817.95.01 of the Harmonized Tariff Schedule of the United States (“HTSUS”) as “Utilitarian articles of a kind used in the home in the performance of specific religious or cultural ritual celebrations for religious or cultural holidays, or religious festive occasions, such as Seder plates, blessing cups, menorahs or kinaras.” The court held that rituals generally encompass specific scripted acts or series of acts that are customarily performed in an often formal or solemn manner, and thus the plain language of subheading 9817.95.01 does not support broadly interpreting the term “ritual” as any event that occurs on a regular basis.  For these reasons, the Court determined the subject merchandise was classified according to their constituent material and denied plaintiff’s motion for summary judgment.

 

Goods Not Cited in Protest Supplement Not Properly Before Court

Products not specifically cited in a protest supplement and discovery materials are not properly within the jurisdiction of the United States Court of International Trade, according to a new decision by Judge Jennifer Choe-Groves.

In Sigvaris, Inc. v. United States, Slip Op. 17-20 (February 28, 2017), an importer of compression hosiery protested Customs’ failure to accord the products secondary classification under the Nairobi Protocol. Discovery documents described certain styles of the hosiery, but did not specifically identify others. Ruling on its own volition – the government not having questioned jurisdiction – the court held that it lacked subject matter jurisdiction to entertain the importer’s protest as to the styles not specially enumerated. The court directed the case to proceed as to other styles of products.

Trade Updates for Week of February 15, 2017

United States Court of International Trade

 

Blanket with Sleeves Classified as Blanket

In Allstar Marketing Group, LLC v. United States, Court No. 13-395, Slip Op. 17-15 (February 10, 2017), plaintiff challenged U.S. Customs and Border Protection’s (“Customs”) liquidation of the subject import, a polyester fleece knit article referred to as a “Snuggie®,” under subheading 6114.30.30 of the Harmonized Tariff Schedule of the United States (“HTSUS”),2 as “Other garments, knitted or crocheted: Of man-made fibers: Other,” dutiable at 14.9 percent ad valorem. Plaintiff contends that Customs should have classified the subject imports under subheading 6301.40.00,HTSUS, as “Blankets,” dutiable at 8.5 percent ad valorem, or alternatively, under subheading 6307.90.98, HTSUS, as “Other made up articles,” dutiable at 7 percent ad valorem. Before the Court were cross motions for summary judgment.

The Snuggie® was inspired by the "Slanket®" and the "Freedom Blanket," two products already on the market that were marketed as blankets. In all purchase orders and specifications, the Snuggie® were described as a blanket. The retail packaging shows users wearing the Snuggie® on their front with their arms through the sleeves while reclining or seated on an airplane, couch, bed, and floor, and engaging in activities such as reading, writing, knitting, holding a remote control, using a laptop, holding a baby, and playing backgammon.

First, the Court found that the Snuggie® was not a garment or “wearing apparel” as discussed in Court of Appeals for the Federal Circuit’s (“Federal Circuit”) decision in Rubie's Costume Co. v. United States, 337 F.3d 1350 (Fed. Cir. 2003), or under the Explanatory Notes of 6114. Second, use of the Snuggie® precludes it from being classified as a garment.  Factors guiding the Court’s determination whether the Snuggie® is classifiable as a garment include (1) its “physical characteristics” and “features,” (2) “how it was designed and for what objectives,” (i.e., its intended use), and (3) “how it is marketed.” GRK Canada, Ltd. v. United States, 761 F.3d 1354, 1358 (Fed. Cir. 2014).  The physical characteristics feature a 71 by 54 inch rectangular piece of polyester fabric with 28.5 inch sleeves attached to the front. There are no closures and the piece is open in the back.  According to the Court, the loose fitting nature of the piece with no closures do not suggest that the article is a garment. In regards to design, it was designed and inspired by other blankets, and was to be loosely worn as an outer layer roughly covering the front to give warmth. All sales and marketing materials, including purchase orders and specs, refer to the Snuggie® as a blanket. Finally the Court found that a blanket is defined as a “a large (possibly oblong) piece of fabric, and second, that a blanket is used as a covering for warmth, often, but not always, as common knowledge dictates, on a bed”. Slip Op. pg. 29.  Because the Snuggie® was more akin to a blanket, the Court found in favor of the plaintiff.

For all these reasons, the Court granted plaintiff’s motion for summary judgment and denied defendant’s cross motion, classifying the subject merchandise under HTS subheading 6301.40.00, which provides for “Blankets (other than electric blankets) and traveling rugs, of synthetic fibers.”

 

Party Lacking Right to be “Importer of Record” Lacks Right to File Tariff Preference Claim

A newly-published decision of the United States Court of International Trade indicates that firms seeking preferential tariff treatment for imported goods must prove that they are qualified to act as the “Importer of Record” for those goods.  Otherwise, the claims for preferential treatment can be denied. 

In La Nica Product Inc. v. United States, Slip Op. 17-9 (February 2, 2017), a company identifying itself as importer of record filed entries of cheese from Nicaragua, claiming duty-free treatment under the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA).  Subsequent to entry, the importer filed Post-Entry Amendments (PEAs), claiming that it had sold the goods in transit, was not the importer, and seeking refunds of the fees it paid at the time of importation.  [This was unusual, since the filing of a superseding bond, rather than submission of a PEA, is the way to substitute a new Importer of Record]. 

Customs responded by issuing a CF 28 Request for Information, requesting documentation of the in-transit sales, and seeking evidence to substantiate the DR-CAFTA claim.  When no response was received, Customs liquidated the entries as dutiable.  La Nica protested, and brought an action before the CIT seeking duty refunds. 

The CIT took the position that, by law,  the importer of record must be the “owner or purchaser” of the imported goods.  Since La Nica was now claiming that it was not the “owner” of the goods at the time of importation, the Court held that it could not properly be the “importer”.  Further, the Court held that since a DR-CAFTA claim must be made by the “importer” and La Nica did not satisfy that requirement, the DR-CAFTA claim was also invalid.  It upheld CBP’s denial of the protest.

The La Nica decision is interesting for a number of reasons.  First, it cautions that companies seeking to claim preferential tariff treatment should ensure that they meet the requirements to act as “importer of record”, if that is a requirement for claiming the preferential tariff treatment .  Second, the Court tied a party’s eligibility to make a claim for duty-free treatment to that party demonstrating that it was a proper “importer”. 

It would not be unreasonable to expect that, in the future, CBP might take a similar position during NAFTA verifications and in considering other claims for duty free entry.

What is unusual, or perhaps ironic, about this case is that, when a party does not qualify to act as importer of record, but files an entry and gives a bond, Customs will generally hold that party liable for payment of duties, and subject that party to the obligations owed by any other importer of record.  In the La Nica decision, the Court agreed with that position to the extent that La Nica remained liable for the duties assessed, but took the position that CBP did not have to accord duty-free treatment to such a technically improper importer of record. 

 

Flavored Sunflower Seeds Held Classifiable as Parts of Plants, Prepared or Preserved

Sunflower seeds which have been cooked and flavored, for sale as snack foods, are more appropriately classified under Harmonized Tariff Schedule (HTS) subheading 2008.19.90 as other parts of plants, “prepared or preserved” than as sunflower seeds of HTS subheading 1206.00.00, the Court of International Trade recently held.

The products in Well Luck Co. v. United States, Slip Op. 17-16 (February 15, 2017) consisted of three flavors of prepared sunflower seeks – “All Natural”, “Spiced” and “Coconut Flavor” which had been slow-cooked or roasted, salted and flavored with spices. The importer claimed that the HTS subheading 1206.00.00 was an eo nomine provision for sunflower seeds, which covered all forms of such seeks.  However, the court held that the tariff provision for sunflower seeds only covered seeds “that are minimally further processed only to an extent that leaves the seeds suitable for general uses, including sowing and oil extraction”.  The operations performed on the sunflower seeds at bar destroyed their range of uses, making them suitable for use only as snack foods.

This, the Court said, exceeded the processing permitted by subheading 1206.00.00. Resorting to dictionary definitions, the Court held that the term “prepared”, as used in Heading 2008, anticipated goods being readied for eating, while “preserved” implied a treatment allowing the goods to be held for later use. These terms accurately described the products at bar, the Court held, sustaining Customs’ classification and dismissing the importer’s claim.

 

 

United States Court of Appeals for the Federal Circuit

 

Federal Circuit Affirmed Oil Country Tubular Goods Determination

In American Tubular Products, LLC and Jiangsu Chengde Steel Tube Share Co., Ltd. v. United States, Court No. 2106-1127 (February 13, 2017), American Tubular Products, LLC (“ATP”) and Jiangsu Chengde Steel Tube Share Co., Ltd. (“Chengde”) (collectively, “the Appellants”) appeal from the decisions of the United States Court of International Trade (“the Trade Court”) affirming the Department of Commerce’s (“Commerce”) antidumping duty calculations in the first administrative review of an antidumping duty order directed to certain oil country tubular goods (“OCTG”) from the People’s Republic of China.

On remand from the Trade Court’s previous decision, Commerce explained that it was unable to conclude that the OCTG not specifically tested were necessarily carbon steel, noting the uncertainties in Chengde’s sampling process and its failure to provide the requested technical descriptions of its steel billet input. However, Commerce found that the Customs entry summary established that the entered OCTG were composed of carbon steel. Commerce thus continued to use a carbon- steel surrogate value to value the portion of steel billets for which there was direct evidence ---  the mill certificates or entry summary, to show that carbon steel billets were consumed. As a result Commerce used a simple average of the carbon steel billets and alloy steel billets to arrive at a dumping margin of 137.62%.  The Trade Court, in its most recent decision regarding these issues, affirmed Commerce’s findings where appellants could not establish that the untested OCTG was made from carbon steel.   Moreover, the Trade Court sustained Commerce’s denial of scrap offset as supported by substantial evidence and in accordance with law, finding that Chengde had failed to meet Commerce’s requirements to secure a scrap offset. As for the freight, Commerce calculated international freight using a surrogate value, as if it was purchased from an NME supplier. Commerce continued to do so in the Final Results, finding that Chengde had failed to establish that the Korean carriers set the freight price. The Trade Court sustained those results.

The Federal Circuit affirmed the Trade Court’s findings.  As for the untested OCTG, Commerce correctly found, the sample mill certificates submitted by Chengde were limited. They did not indicate whether they represented the entire quantity of a sales contract, and did not provide context for their relevance to the untested products by describing the testing procedures. The certificates represented limited quantities of the sales contracts or CONNUMs involved. Even with repeated requests to Chengde for more information on the raw materials used, Chengde did not provide sufficient descriptions of the steel billets used. Thus, the Trade Court was correct it sustaining Commerce’s decision to value the untested steel billets by averaging the surrogate values of both carbon and alloy steel. 

As for the scrap offset, Chengde did not establish the quantity of scrap generated from the production of OCTG during the period of review, and failed to satisfy its evidentiary burden. Finally, in regards to the freight, Chengde failed to properly establish the price paid to the market economy shippers or to otherwise show that the price it paid for ocean freight was set by market economy shippers. Only prices on the record relating to ocean freight are those between Chinese entities, not the prices paid to the Korean carriers.  For all these reasons, the Federal Circuit affirmed the Trade Court’s findings.

 

Spoliation of Evidence in Section 337 Investigation Justified Default Judgment, LEO

A respondent’s spoliation of evidence in a Section 337 investigation was sufficiently wanton and extensive that the United States International Trade Commission was justified in entering a default judgment against the respondent, and imposing a Limited Exclusion Order (LEO), prohibiting imports of subject merchandise by the respondent for 25 years, according to a new decision of the Court of Appeals for the Federal Circuit.

In Organik Kimya v. United States International Trade Commission, No. 2015-1774 (February 15, 2017), the ITC was engaged in a Section 337 investigation respecting certain patents held by Dow Chemical Company with respect to certain opaque polymers. When evidence developed indicating that three former employees affiliated with Dow might have aided Organik Kimya in producing its own, allegedly infringing polymers, the Section 337 complaint was expanded to include trade secret theft, and the patent owners set out to conduct discovery regarding the three former employees.

At this point, the evidence indicates, the respondent embarked on a campaign of rather shocking destruction of evidence. This included wiping clean the computers of two of the three former employees, and, after inviting the third employee to a hotel in Rotterdam on the pretense of a “safety audit”, physically destroying the drive to his computer with a hammer. Another computer was supposedly placed in a bag and “left” at a highway rest stop.

The Commission’s Administrative Law Judge, seeking to sanction Organik Kimya for the destruction of evidence, entered a default judgment against the company on the claims of patent infringement, and imposed a Limited Exclusion Order (LEO) banning imports of opaque pigments by the company for 25 years. The ALJ reasoned that, without the connivance of the former Dow employees, it would have taken Organik Kimya between 15 and 25 years to develop its own, non-infringing opaque pigments.  The full Commission affirmed the default judgment and LEO.

On appeal, Organik Kimya argued that the default judgment was too extreme a sanction, and that a lesser sanction should have been imposed. The Federal Circuit, however, noted that the ITC needed to have the power to impose a default judgment to punish severely sanctionable conduct, and the breath of the spoliation in this case justified the harsh consequences meted out by the Commission. The Court noted that the LEO contained an exception for opaque pigments which Organik Kimya could prove had been developed without the involvement of the three former Dow employees.

 

Commerce Must Recalculate Specific Antidumping Rates for Chinese Hardwood Exporters

Where mandatory respondents to an antidumping duty review receive zero or de minimis antidumping rates, the “individual rates” for companies entitled to receive such rates must be based on the mandatory respondents rates, absent unusual circumstances, according to the Court of Appeals for the Federal Circuit.

In Changzhou Hawd Flooring Co. v. United States, No. 2015-1899 (February 15, 2017), a number of Chinese producers and exporters who had demonstrated their freedom from State control, and who were entitled to receive “individual” antidumping rates, challenged a Commerce Department decision to assign them rates greater than de minimis. Generally, where mandatory respondents cooperate with the Commerce Department’s investigation, the rate assigned to “individual rate” respondents is based on the arithmetic average of the mandatory respondents’ rates. In this case, both mandatory respondents in the review received de minimis rates, and were excused from depositing estimated antidumping duties. Instead of providing the “individual rate” respondents with an arithmetic average of the de minimis rates – which would have yielded de minimis rates for them as well – Commerce instead deviated from its usual methodology and assigned these firms a rate based on averaging the de minimis rate with the China wide rate for companies which had not proven their independence from Chinese state control. The CIT upheld this methodology.

The Federal Circuit disagreed, however, vacating the CIT’s decision and remanding the case for further proceedings below. Relying on its 2016 decision in Albemarle Co. v. United States, the Federal Circuit held that respondents were entitled to have their rates calculated by the “expected method”, unless Commerce makes certain findings that would indicate that the usual method ought not be followed. Commerce having made no such findings in this case, the Court held, it should have assigned de minimis rates to the individual rate respondents.

Trade Updates for Week of February 8, 2017

United States Court of International Trade

 

Court Sustained Remand Results in Part

In Shandong Rongxin Import & Export Co., Ltd.  v. United States and Dixon Ticonderoga, Court No. 15-151, Slip Op. 17-11 (February 3, 2017), the Court remanded in part Commerce’s remand decision in the case of dumped pencils.  Plaintiff, Shandong Rongxin Import & Export Co., Ltd. (“Rongxin”), an exporter of pencils from the People’s Republic of China (“PRC”) brought this action against Defendant, the United States disputing certain aspects of the final administrative review results issued by the U.S. Department of Commerce in Certain Cased Pencils from the People's Republic of China, 80 Fed. Reg. 26,897 (Dep’t Commerce May 11, 2015) (final results of antidumping duty administrative review, 2012–2013) (“Final Results”).   In Shandong Rongxin Import & Export Co., Ltd., v. United States, 40 CIT ____, ____, 163 F. Supp. 3d 1249, 1254–55 (2016) (“Remand Order”), the court remanded this case for further explanation or reconsideration as may be appropriate with regard to the issue of whether Dixon is an interested party with standing to request an administrative review of Rongxin. The court declined to reach the issue of whether Rongxin deserved a separate rate until the threshold issue of standing was resolved.

First, the Court sustained Commerce’s decision to reopen the record on remand and find that Dixon Ticonderoga Company (“Dixon”) was an interested party, as a domestic producer, who manufactured pencils during the period of review (POR). Commerce found Dixon’s work orders and production documents to be credible evidence that Dixon produced pencils in Macon, Georgia during the POR. Thus, there was substantial evidence to support these findings.

Second, the Court sustained Commerce’s findings that Shandong International Trade Group (“SITG”), a state owned enterprise, owned a majority of Rongxin, and that the board is elected by a majority of its shareholders.  Thus, SITG could affect Rongxin’s export decisions.

Third, however, the Court remanded Commerce’s decision to deny a separate rate for Rongxin when it did not review all four factors in determining whether there was de facto government control of Rongxin.  Commerce had already conceded that de jure government control was absent.  Factors in determining de facto government control include: (1) whether the export prices are set by, or are subject to government approval; (2) whether the respondent has authority to negotiate and sign contracts and other agreements; (3) whether the respondent has autonomy from the government in making decisions regarding the selection of management; and (4) whether respondent retains the proceeds of its export sales.   Based on a new formula, and precedent in Advanced Technology & Materials Co. v. United States, 37 CIT ____, ____, 938 F. Supp. 2d 1342, 1353 (2013), aff’d mem., pursuant to Fed. Cir. R. 36, 581 F. App’x 900 (Fed. Cir. 2014), Commerce did not find it necessary to consider all four factors where the exporter had not shown “autonomy from the government in making decisions regarding the selection of management.”  For remand purposes, however, the Court would like Commerce to provide further consideration of the other de facto criteria and the impact of the criterion regarding “autonomous selection of management.”

For these reasons, Commerce’s remand determination was remanded in part.

 

Scope Determination Remanded Back to Commerce

In DynaEnergetics U.S., Inc. v. United States and Maverick Tube Corp., Court No. 16-45, Slip Op. 17-14 (February 7, 2017), the Court considered plaintiff DynaEnergetics U.S. Inc.’s (“DynaEnergetics”) motion for judgment on the agency record pursuant to U.S. Court of International Trade Rule 56.2.  Plaintiff challenged a scope ruling concerning carrier tubing for perforating guns under the antidumping (“AD”) and countervailing duty (“CVD”) orders on Certain Oil Country Tubular Goods (“OCTG”) from the People’s Republic of China, 75 Fed. Reg. 28,551 (Dep’t Commerce May 21, 2010) (antidumping duty order and amended less than fair value determination) (“AD Order”), 75 Fed. Reg. 3,203 (Dep’t Commerce Jan. 20, 2010) (countervailing duty order and amended final countervailing duty determination) (“CVD Order”) (collectively, “AD & CVD Orders” or “Orders”). Plaintiff challenged the scope ruling as inconsistent with evidence presented on the product’s characteristics and purposes, and that Commerce’s definition of OCTG was inconsistent with scope language.  In addition to scope issues, plaintiff also asked that any such remand allow Commerce to reconsider the customs instructions associated with the scope determination.  Defendant requested a full remand to consider plaintiff’s arguments, despite defendant-intervenor’s arguments against the remand. Because defendant’s request was both legitimate and substantial, the Court granted the request for remand to reconsider the scope determination along with any appropriate instructions to Customs.

 

Commerce Erred in Assigning “Noncooperative” Antidumping Rate to Fully Cooperative Respondent

The Commerce Department erred when it assigned an individual antidumping duty rate of 105.59% to a Chinese respondent in an antidumping investigation, instead of the 0.14% de minimis rate calculated using the respondent’s own figures, the Court of International Trade recently ruled.

China All Mfrs. LLC v. United States, Slip Op. 17-12 (February 6, 2017) concerned the 5th administrative review of the antidumping order against Pneumatic Off-Road Tires from the People’s Republic of China. One of the mandatory respondents, Double Coin, provided complete questionnaire responses from which Commerce calculated a de minimis rate of 0.14% ad valorem. However, Commerce found that Double Coin had failed to rebut the presumption that it was State-Controlled, and thus assigned the company a rate of 105.59%, based on an average of the company’s 0.14% de minimis rate and the 210.48% “China wide” rate for state producers, calculated based on the antidumping petition.

This outcome, and the policy behind it, were invalid the Court said. There was no basis for not using the individual rate data supplied by Double Coin, which yielded the de minimis rate. Nor was there any basis for averaging this rate with the China-wide rate. Double Coin had not been uncooperative in the investigation, had provided verified information, and had not been uncooperative. Nor could Commerce introduce into Double Coin’s calculation old data concerning the “China wide” entity, which data was not involved in the instant review, and was based on a “China wide” entity of which Double Coin had not been considered a part.

Double Coin’s failure to rebut the presumption of state control was not a sufficient reason to ignore its data, the Court held, and the agency’s policy of averaging the rates in this case could not be sustained. “No ‘policy’ can justify an agency’s decision if that policy in applied to conflict with a statutory requirement”, the Court held.

The court also struck down a decision by Commerce to reduce the Export Price and Constructed Export Price by what the agency deemed “irrecoverable VAT”, noting that under Chinese tax laws and regulations, the VAT rate applied to an export was zero.  The court also ordered reconsideration of certain surrogate value factors relating to coal costs and cost of living adjustments.

Trade Updates for Week of January 25, 2017

United States Court of International Trade

 

Court Sustained Remand Results

In Juancheng Kangtai Chemical Co., Ltd. et al. v. United States et al., Court No. 14-0056, Slip Op.17-3, the court considered the redetermination on the seventh administrative review of chlorinated isocyanurates from the People’s Republic of China (PRC).  On remand, Commerce reconsidered (1) selection of the primary surrogate country, (2) adjustment of the financial ratio calculation to reflect production labor costs, (3) use of ammonium sulfate as a by-product offset, (4) valuation of ammonium chloride, and (5) adjustment of U.S. price to account for the portion of the PRC’s value added tax (VAT) that is not refunded upon export.

In the remand results, Commerce continued to choose the Philippines as the primary surrogate country as it was on a level comparable to the PRC and India was not. Commerce had fully explained that when considering an all-else-being-equal choice between economically comparable countries, the quality of chlorine input that India provided may prevail.  However, according to Commerce -- “all else is not equal when choosing between a country at the same level of economic development and one that is less comparable.”  As for Thailand, the Redetermination indicated that Commerce did consider in fact whether the Thai data were superior to the Philippine data, all else being equal, and information presented showed the Thai data not to be superior.

As to the financial data ratio calculation and by product offset findings, the court sustained these findings despite the contrary arguments which were similarly posed in Clearon III.

For purposes of the valuation of ammonium chloride, the court found reasonable and supported by substantial evidence, Commerce’s finding that the 5,464 kilograms of Philippine imports of ammonium chloride reflected competitive commercial transactions, and thus sustained Commerce’s determination.

Finally, as for adjustment for the irrevocable VAT, the court first considered what is permissible under the law.  Pursuant to the applicable statute, the export price or constructed export price shall be reduced by any export tax, duty, or other charge imposed on the subject merchandise, with certain limitations. 19 U.S.C. §1677a(c)(2)(B). Because this irrecoverable VAT is a charge imposed only on exports, Commerce reasonably concluded that it is a cost imposed “on the exportation of the subject merchandise”. See 19 U.S.C. §1677a(c)(2)(B).

For all these reasons the court sustained the remand redetermination.

 

Trade Updates for Week of January 11, 2017

United States Court of International Trade

 

Motion to Stay Liquidation Granted

In Sunpreme, Inc. v. United States, Slip Op. 17-1, Court No. 15-315 (January 5, 2017), the court granted defendant’s motion to stay liquidation pending defendant’s appeal where defendant would have no recourse to challenge the court’s decision that CBP’s determination to suspend liquidation and collect deposits on Plaintiff’s entries was unlawful.  The Court granted plaintiff’s motion for judgment on the agency record pursuant to USCIT Rule 56.1 challenging United States Customs and Border Protection’s (“Customs” or “CBP”) determination to require that Plaintiff file its entries as subject to antidumping and countervailing duty (“AD/CVD”) orders on crystalline silicon photovoltaic cells, whether or not assembled into modules from the People’s Republic of China (collectively “Orders”).  See Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, from the People’s Republic of China, 77 Fed. Reg. 73,018 (Dep’t Commerce Dec. 7, 2012).  Specifically, the court set aside CBP’s interpretation of the Orders to the effect that Plaintiff’s imports are subject to the Orders as contrary to law under Section 706 of the Administrative Procedure Act, as amended, 5 U.S.C. § 706 (2012), and that Customs had the power to suspend liquidation and collect cash deposits prior to the scope inquiry.

Despite the likelihood of success on the merits prong of the motion to stay, the Court granted the motion because of the overwhelming irreparable harm posed if plaintiff’s pre-initiation entries liquidated, which would essentially moot defendant’s appeal.

 

Commerce’s Determination Remanded in Part

In United States Steel and Fasteners, Inc. v. United States, Court No. 13-270, Slip Op. 17-2 (January 11, 2017), the Court was asked to determine whether Commerce acted in accordance with the law when it issued retroactive suspension of liquidation instructions. 

On July 10, 2013, Commerce issued a final scope ruling determining that AREMA washers were included within the scope of the Order because the “evidence in the Scope Request as well as in the Petition, the record of the initial investigation, and the determinations of the Department and the ITC, demonstrates that the design of AREMA washers facilitates the same functionality characteristics of helical spring lock washers as described by the scope of the Order.” Plaintiff sought a remand of the final scope ruling with instructions for Commerce to determine that AREMA washers are excluded from the scope of the Order, or alternatively, to initiate a scope inquiry under 19 C.F.R. § 351.225(e) and withdraw the suspension instructions which asked for retroactive suspension of liquidation of AREMA washer entries. Defendant argued that Commerce’s final scope ruling was supported by substantial evidence and in accordance with the law.

Because Commerce found that the scope covers a wide variety of washers of various steel qualities, including coated and no-coated washers, used on installation of railroad tracks, and AREMA washers were used exclusively on railroad tracks, the Court found that there was substantial of evidence to support this finding. 

Though the court affirmed Commerce’s interpretation of the scope, Commerce’s instruction to Customs to retroactively suspend liquidation of AREMA washers was contrary to law because the instruction exceeds Commerce’s regulatory authority under subsection (l) of 19 C.F.R. § 351.225. Under the regulation, suspension of entries should only have occurred on or after the date of the initiation of a scope inquiry.   Here Customs had not been collecting deposits of antidumping duties on Plaintiff’s entries of AREMA washers, suggesting that the scope of the Order was not clear with respect to such merchandise. Customs’ failure to assess antidumping duties on Plaintiff’s entries ostensibly showed that Customs did not view Plaintiff’s merchandise within the scope of the Order.  Thus, the Court held that any retroactive suspension of liquidation was unlawful. Commerce’s instructions were remanded for Commerce to draft new suspension of liquidation instructions to be consistent with the Court’s opinion. 

 

 

United States Court of Appeals for the Federal Circuit

 

Federal Circuit Upholds CIT Classification of “Propants” for Fracking

The Court of Appeals for the Federal Circuit has issued a decision upholding a decision of the United States Court of International Trade that “proppants”, granular bauxite materials designed to prevent fissure sealing during hydrofracking operations are classified in Heading 2606 of the Harmonized Tariff Schedule, as Aluminum ores and concentrates. 

In Schlumberger Technologies Inc. v. United States, No. 2015-2076   (January 9, 2017), the Circuit Court upheld a decision by CIT Chief Judge Timothy Stanceu which rejected Customs’ contention that the granular proppants were either classified under HTS subheading 6909.19.50 as “ceramic wares for laboratory, chemical or technical uses, or alternatively under HTS subheading 6914.90.80, as “ceramic articles”. Looking to the Explanatory Notes to the HTS for guidance, the Federal Circuit determined that “ceramic wares” were goods which had been “shaped after firing” and had a definite finished shape. It rejected the government’s contention that the granulation process imparted a finished shape to the proppant granules, noting that the granules had a permissible 100% size variance. It also rejected the notion that the granules were “ceramic articles”, noting that they were not of a kind of merchandise typically treated as “articles”. 

Trade Updates for Week of January 4, 2017

United States Court of International Trade

 

Remanding in Part Final CVD and AD Determination

In Changzhou Trina Solar Energy Co., Ltd. et al. v. United States, Court No. 15-68, Slip Op. 16-121 (December 30, 2016), the Court of International Trade (“Court”) remanded in part the U.S. Department of Commerce’s (“Commerce” or “DOC”) final determination in its countervailing duty (“CVD”) investigation of certain solar panels from the People’s Republic of China (“PRC” or “China”).  See Certain Crystalline Silicon Photovoltaic Products from the [PRC], 79 Fed. Reg. 76,962 (Dep’t Commerce Dec. 23, 2014) (final affirmative countervailing duty determination) (“Final Determination”).   Plaintiffs Changzhou Trina Solar Energy Co., Ltd., Trina Solar (Changzhou) Science & Technology Co., Ltd., Yingli Green Energy Holding Co., Ltd., Yingli Green Energy Americas, Inc., and Canadian Solar Inc. (collectively “Trina Solar” or “the Respondents”) challenge Commerce’s determinations to include certain grants or programs of the Government of China (“GOC”) as countervailable subsidies in the calculation of Respondents’ CVD cash deposit rates, and its application of adverse facts available (“AFA”).  Plaintiff SolarWorld Americas, Inc. (“SolarWorld”), the domestic industry petitioner, challenges the reasonableness of Commerce’s use of certain benchmark prices, as well as Commerce’s decision not to investigate SolarWorld’s allegations regarding Respondents’ creditworthiness.

While the Court found that additional grants and programs of the GOC may be considered as countervailable subsidies, and that the AFA should be applied where the GOC withheld information regarding these programs and grants, the Court did not agree that Commerce indicated the necessary“facts” adverse or otherwise to find that such programs or grants were “specific” under section 1677(5A) to be countervailable.  Commerce had not indicated that it relied on any information, from any source, to find that all of the Solar I PRC programs and verification grants and tax deduction satisfy the elements for countervailability.  The Court held to be countervailable the subsidy must be specific. Thus, Commerce’s findings regarding the Solar I PRC programs, and verification grants and tax deductions, were not supported by substantial evidence, and thus must be remanded for further findings.

As for aluminum extrusions and solar glass, Commerce found that there were only a limited number of industries consuming aluminum extrusions and solar glass, and thus any provisions directed towards those items were specific. Likewise Commerce’s use of 1% and 12% import duty rates in section 351.511(a)(2)(ii) calculations of benchmark prices were reasonable.  Moreover, Commerce’s determination that the GOC’s provision of polysilicon aided in the production of subject merchandise and was supported by a reasonable reading of the record, as well as Commerce’s determination that Trina Solar benefitted from the Export Buyer’s Credit Program.  For these reasons, Commerce’s decisions in the Final Determination were only partially remanded.

 

Trade Updates for Week of December 28, 2016

United States Court of International Trade

 

Remanding in Part the Fourth Administrative Review

In Hangzhou Yingqing Material Co. and Hangzhou Qingqing Mechanical Co. v. United States, Court No. 14-133 (December 21, 2016), the Court reviewed the fourth administrative review (and aligned new shipper review) conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering steel wire garment hangers from the People’s Republic of China (“PRC”). See Steel Wire Garment Hangers from the PRC, 73 Fed. Reg. 58,111 (Dep’t Commerce Oct. 6, 2008) (antidumping order) (“Order”); Steel Wire Garment Hangers from the PRC, 78 Fed. Reg. 70,271 (Dep’t Commerce Nov. 25, 2013) (prelim. results admin. rev. and new shipper rev.) (“Preliminary Results”).  Plaintiffs challenged (1) Commerce’s selection of Thailand as the primary surrogate country, (2) Commerce’s valuation of several of Yingqing’s factors of production (“FOPs”), i.e., paint, thinner, and corrugated paperboard, (3) Commerce’s rejection, as untimely, of factual information submitted by Yingqing, (4) Commerce’s allocation of labor costs in determining surrogate financial ratios, and (5) Commerce’s valuation of Yingqing’s brokerage and handling (“B&H”) costs.  The Court sustained Commerce’s determinations with respect to the first three issues but remands Commerce’s allocation of labor costs and its valuation of Yingqing’s B&H costs.

As for allocation of labor costs, plaintiffs maintained that Commerce acted unreasonably by failing to adjust surrogate financial ratios in accordance with its prior practice. Commerce cited Certain Steel Nails from the PRC, 79 Fed. Reg. 19,316 (Dep’t Commerce Apr. 8, 2014) (final results) (“Nails”) and Drawn Stainless Steel Sinks from the PRC, 78 Fed. Reg. 13,019 (Dep’t Commerce Feb. 26, 2013) (final determ.)). In Nails, Commerce adjusted the surrogate financial ratios to account for certain indirect labor expenses.  According to the Court, Commerce failed to explain why it did not make that same adjustment as in Nails where there was similar information on the record.

For purposes of B&H costs, while the Court affirmed Commerce’s use of World Bank data as a reliable and accurate source to value B&H, it did not agree with Commerce’s refusal to deduct costs of obtaining a letter of credit from B&H costs. Specifically, “the record contained email correspondence with the World Bank’s Doing Business Unit, International Finance Corporation, “confirm[ing] that the cost of a letter of credit has always been and continues to be included in the reported figures for [B&H] under the subdivision for ‘document preparation’ fees,” and that “[t]he cost to obtain the export letter of credit for . . . Thailand 2013 = $60.””  Slip Op. pg. 22.

The Court therefore remanded in part Commerce’s decisions regarding labor costs and its refusal to deduct costs for obtaining a letter of credit. 

 

Cross Motions for Summary Judgment Denied

In United States v. Univar USA, Inc., Court No. 15-215 (December 22, 2016), plaintiff, United States, sought to recover unpaid antidumping duties and a monetary penalty pursuant to 19 U.S.C. § 1592, stemming from 36 entries of saccharin, allegedly transshipped from China through Taiwan, which Defendant, Univar USA, Inc. (“Defendant” or “Univar”), entered into the commerce of the United States between 2007 and 2012. Before the Court were cross motions for partial summary judgment.

Following investigations by both the Department of Commerce and the International Trade Commission, on July 2, 2003, the Department of Commerce issued an antidumping duty order on imports of saccharin from the PRC. AD Order, 68 Fed. Reg. 40,906. That order imposed cash deposits of estimated antidumping duties at the rate of 329.94 percent on imports of saccharin from the PRC. Id. at 40,907. Thereafter, Univar sought other sources of saccharin and, as of 2004, was importing saccharin from Taiwan. After a qui tam action brought by Kinectic Industries, Inc. and CBP’s own investigations, CBP concluded that there was a sufficient correlation between imports into Taiwan from China and exports from Taiwan to Univar to indicate that Univar’s imports were simply being transshipped from China, through Taiwan, to the United States.

Because a penalty case was brought to the Court to be tried de novo, plaintiff was not barred from introducing evidence developed during discovery solely because it was not before CBP during the administrative proceeding.  While defendant argued that plaintiff provided no evidence supporting transshipment prior to March 2010, discovery is still on-going until January 25, 2017.  Furthermore, the Court issued letters rogatory for the testimony of two Taiwanese representatives, and plaintiff is in the process of procuring certified statements from Taiwanese authorities pertaining to saccharin production, manufacture or repackaging in Taiwan during the relevant period, data on saccharin imports into Taiwan during the relevant period, and import/export data relating to Lung Huang during the relevant period.

Thus, because plaintiff has not provided sufficient evidence to show transshipment from China to Taiwan, and because further discovery is being conducted, the cross motions for partial summary judgment were denied.

 

Motion for Preliminary Injunction Granted

In Fine Furniture, Amstrong Wood Products (Kunshan) Co., Ltd. et al. v. United States, Court No. 16-145, Slip Op. 16-120 (December 28, 2016), plaintiff-intervenor Armstrong Wood Products (Kunshan) Co., Ltd.’s (“plaintiff-intervenor” or “Armstrong”) moved with partial consent  (consent was provided by plaintiff) for a preliminary injunction to enjoin defendant, the United States (“defendant” or “the Government”), from liquidating its entries of multilayered wood flooring from the People’s Republic of China (“PRC”) during the pendency of the action.  Plaintiff-intervenor asked that liquidation be enjoined for all of its unliquidated entries of multilayered wood flooring from the PRC that “were entered, or withdrawn from warehouse, for consumption during the period December 1, 2013 through November 30, 2014, inclusive;” and were subject to the Department of Commerce’s (“the Department” or “Commerce”) multilayered wood flooring from the PRC December 1, 2013 through November 30, 2014 administrative review of the corresponding antidumping duty order. Multilayered Wood Flooring From the PRC, 81 Fed. Reg. 46,899, 46,901–02 (Dep’t of Commerce July 19, 2016) (final results of antidumping duty administrative review; 2013–2014) (“Final Results”) (determining that the weighted average dumping margins for the POR from December 1, 2013 through November 30, 2014 are 17.37 percent); Multilayered Wood Flooring From the PRC, 76 Fed. Reg. 64,318, 64,318 (Dep’t of Commerce Oct. 18, 2011) (final determination of sales at less than fair value).

In regards to defendant’s objections, plaintiff-intervenor maintains that it is not enlarging the case set out in plaintiff’s Complaint by introducing new substantive issues or theories but insists that it would hope to obtain the same benefit plaintiff would receive if plaintiff won this litigation. According to plaintiff-intervenor, were its entries to be liquidated before the case’s

conclusion, it could lose the relief that plaintiff would get for its entries.  The Court agreed that without a preliminary injunction, plaintiff-intervenor would indeed lose any relief awarded to plaintiff.  The Court found that because plaintiff-intervenor timely intervened, granting a preliminary injunction to prevent liquidation of its entries is proper.  According to the Court, the Court’s Rules contemplate that a plaintiff-intervenor may seek a preliminary injunction to protect its entries where it timely intervenes in an action before this Court; and these Rules contain no suggestion that any motion is required within the time the intervenor could have sued as a plaintiff.  Finally, plaintiff-intervenor met all the requisite requirements for a preliminary injunction: irreparable injury, likelihood of success, public interest, and balance of hardships.  For all these reasons, the Court granted plaintiff-intervenor’s motion for preliminary injunction.

Trade Updates for Week of December 14, 2016

United States Court of Appeals for the Federal Circuit

 

Federal Circuit Upholds Award of Attorney’s Fees in Customs Classification Case

International Customs Products Inc. fought in the Federal courts for over a decade when Customs increased duties on its imported “white sauce” product without revoking a binding ruling the company had. In most cases, the courts turned ICP’s appeals away because the company was without the tens of millions of dollars of increased duty whose payment was a prerequisite to invoking the Court of International Trade’s protest jurisdiction.

Only on one occasion was ICP able to pay the duties demanded and seek review of Customs’ actions. ICP prevailed in that case, and the Court of International Trade, finding the government’s position in litigation “not substantially justified”, ordered the government to pay ICPsome $772,000 under the Equal Access to Justice Act (EAJA).

The Court of Appeals for the Federal Circuit has now upheld that award. In International Custom Products Inc. v. United States, No. 2016-1024 (December 15, 2016), the appellate court agreed that the government’s position in litigation was not “substantially justified”, and that it should be forced to pay ICP’s attorney fees.

The Court held that it was harmless error for the CIT to invoke a standard for determining whether the government’s position was “substantially justified”, which the Supreme Court had set aside, nothing that the rejected standard was more demanding than the correct one, and that the CIT had in fact applied the correct standard in making the attorney’s fee award. Second, the Court held that, while the fact the government’s case might have survived a motion for summary judgment may be taken into account in a fee application, merely surviving such a motion is not dispositive proof that the government’s test was “substantially justified”. The government might survive a summary judgment motion at an early stage of the case, the Court noted, simply because its adversary was not in possession of all relevant facts.

Finally, the Court rejected a government argument that it was reasonable for Customs officials to issue a Form 29 Notice of Action increasing ICP’s duties, since they did not know whether that Form constituted a ruling. The Court noted that the decision to increase duties was not based on that notice, but on deliberations occurring before the notice was issued, in which Customs officials acknowledged that there was a “notice and comment” procedure for revoking or modifying rulings, but they simply decided to act in disregard of it.  

Trade Updates for Week of December 7, 2016

United States Court of International Trade

 

Plaintiff’s Motion for Judgment on Agency Record Denied

In Neo Solar Powerv. United States et al., Court No. 16-88, Slip Op. 16-111 (December 1, 2016), the court reviewed plaintiff Neo Solar Power Corporation (“NSP”)’s motion for judgment on the agency record pursuant to U.S. Court of International Trade Rule 56.1. The case concerned Certain Crystalline Silicon Photovoltaic Products from Taiwan: Antidumping Duty Order, 80 Fed. Reg. 8596, 8596 (Dep’t Commerce Feb. 18, 2015) (“AD Order”).  NSP asserted that Commerce improperly excluded it from the administrative review of that AD order, which covered entries from July 31, 2014, through January 31, 2016, because its request for review was not submitted by February 29, 2016, the last day of the anniversary month of the order.  According to NSP,  it could not timely file its request for a review, because (1) it did not have access to Commerce’s Antidumping and Countervailing Duty Centralized Electronic Service System (“ACCESS”); and (2) a Taiwan holiday prevented delivery of its request for review. The court did not consider these reasons to be extraordinary circumstances, and therefore agreed with Commerce’s decision to deny the request to file for an extension to file the review request.

 

Plaintiff’s Motion for Summary Judgment was Denied; Defendant’s Cross Motion for Summary Judgment was Granted

In Special Commodities, Inc. v. United States, Court No. 11-91, Slip Op. 16-114 (December 2, 2016), the court considered the classification of seeds of the Pinus koraiensis tree.  After review of dictionary definitions and industry sources, the court agreed with defendant in finding that while Pinus pinea or pignolia nuts are commercially known as “pine nuts,” not all pine nuts are pignolia nuts classifiable under HTS Subheading 0802.90.25, which provides for classification of “Other nuts, fresh or dried, whether or not shelled or peeled: Other: Pignolia: Shelled.”  According to the court, plaintiff failed to establish that Pinus koraiensis nuts were included in the common and commercial term pignolia nuts.  Moreover, there was no established term for pignolia nuts under the Tariff Schedule of the United States (TSUS) or a definition in Customs rulings that supported plaintiff’s contention that Pinus koriansis seeds are pignolia nuts. Accordingly, with regards to the subject entries, seeds of the Pinus koraiensis, were properly classified under HTSUS 0802.90.97 for “Other nuts, fresh or dried, whether or not shelled or peeled: Other: Other: Shelled: Other.”  For all these reasons, the court granted defendant’s cross motion for summary judgment and denied plaintiff’s motion for summary judgment.

 

Petition for Mandamus Denied

In Fresh Garlic Producers Association et al. v. United States, et al., Court No. 14-180, Slip Op. 16-115 (December 6, 2016), the court considered consolidated plaintiff Shenzhen Xinboda Industrial Co., Ltd.’s (“Xinboda”) Petition for Writ of Mandamus (“Mandamus Petition”), requesting the court to order the U.S. Department of Commerce (“Commerce”) to not reopen the administrative record in the underlying eighteenth annual administrative review of fresh garlic from the People’s Republic of China (“PRC”).  Xinboda did not have a clear and indisputable right to a second remand proceeding to consider new surrogate country candidates, without a reopened record.  Commerce is permitted to reopen the administrative record on remand, unless the court forbids it, and thus there is no indisputable right afforded for Xinboda here. Moreover, Xinoboda has an alternative remedy to wait for the redetermination to challenge Commerce’s findings. The court found that “[w]ere Xinboda to successfully challenge Commerce’s decision to reopen the record after the issuance of the second remand results, Xinboda would not then have suffered any negative consequences other than the burden and expense of participating in the administrative proceedings.” Slip Op. at pg. 10. Thus, the court denied Xinboda’s Mandamus Petition.

 

Motion to Dismiss Denied

United States v. International Trading Services, LLC and Julio Lorza, concerns the recovery of unpaid duties and penalties assessed pursuant to 19 U.S.C. § 1592, or, alternatively, the recovery of unpaid duties and mandatory accrued interest pursuant to 19 U.S.C. § 1505, for the misclassification of certain entries of sugar.  Court No. 12-00135, Slip Op. 16-112 (December 2, 2016).  Julio Lorza (“Lorza”), the CEO of International Trade Services (“ITS”) moved to dismiss the Complaint against himself for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted.  Specifically, Lorza argued the court lacked subject matter jurisdiction over him because administrative remedies were not exhausted since he was not named on the pre-penalty and penalties notices.  As such, U.S. Customs and Border Protection’s (“CBP”) failure to perfect its claim against him prior to the institution of the action deprived the court of jurisdiction over him and deprived him of due process.  Furthermore, Lorza argued, the complaint lacked factual allegations necessary to state a claim upon which relief can be granted. The court denied Lorza’s motion.

The court held that while Lorza accurately argued that administrative remedies must be exhausted in order for subject matter jurisdiction to exist, such remedies were indeed exhausted.  Looking to the language of § 1592(b), the court found that issuing a pre-penalty and penalty notice that included specific information as required by the statute satisfied the exhaustion requirement.  Furthermore, the court reasoned, case law precedent has held that the complaint in a § 1592 recovery action need not be brought against the same parties named in the administrative proceeding.  The court relied heavily on the Federal Circuit’s opinion in United States v. Prior Products, 793 F. 2d 296 (Fed. Cir. 1986), which upheld the court’s subject matter jurisdiction over individual shareholders in a § 1592 recovery action when the administrative proceedings solely named the corporation.  There, the Federal Circuit reasoned that while the court may assume jurisdiction over any complaint, the issue of the party or parties responsible for payment of the penalty is subject to de novo consideration.  Thus, the failure to name Lorza during the administrative proceedings did not constitute a failure to exhaust administrative remedies, but instead, at most, represented a procedural defect that amounted to harmless error.

Nor did the failure to name Lorza on the pre-penalty or penalty notice deprive him of due process.  The court reasoned that Lorza received, at a minimum, constructive notice of the recovery action and his potential personal liability.  Not only was he the CEO of ITS and someone directly involved in introducing the misclassified merchandise into the United States, he personally confirmed receipt of the penalty notice and payment demand.  The cover letter of the penalty notice stated that Lorza was jointly and severally liable for the penalty.  Lorza had the opportunity to petition for remission or mitigation of the pre-penalty and penalty notice during the years long process, but did not avail himself of that option or attempt to participate whatsoever at the administrative level.

Finally, the court denied Lorza’s motion to dismiss for failure to state a claim, properly construed motion for judgment on the pleadings given that an answer had already been filed.  The court held that the complaint properly alleged one of the elements of a violation under § 1592, negligence, and therefore stated a claim upon which relief can be granted.  

 

Action Dismissed for Mootness

In Qingdao Barry Flooring Co., Ltd. v. United States, plaintiff on March 2, 2015 commenced an action pursuant to 28 U.S.C. § 1581(c) and, alternatively, § 1581(i), seeking a writ of mandamus to compel the U.S. Department of Commerce (“Commerce”) to conduct a new shipper’s review of Qingdao Barry’s shipment of multilayered wood flooring (“MLWF”) from the People’s Republic of China (“China”).  Court No. 15-00056, Slip Op. 16-113.  Qingdao Barry had filed with Commerce a request for initiation of a new shipper review prior to commencing the subject action; however, Commerce had not taken action on that request.  Upon commencement of the action, the parties entered into consultation and, with an order from the court that Commerce had the authority to initiate and conduct the review, Commerce announced the initiation of a new shipper review of the antidumping duty order on MLWF from China on October 26, 2015.  On June 2, 2016, Commerce published its preliminary determination to rescind the review on the grounds that there was not a bona fide sale of MLWF, and affirmed that conclusion on July 19, 2016.  Plaintiff argued that Commerce failed to comply with the court’s order and with its own statue and regulations.  The court held that the action was moot and therefore dismissed the case for lack of jurisdiction.

The court reasoned that the injury complained of by the plaintiff, Commerce’s failure to initiate and conduct a new shipper review, had been resolved.  Plaintiff’s present allegations, that the new shipper review was not lawfully conducted, was a new complaint, which could only be asserted in an action contesting the final results of the new shipper review. 

 

 

 

Trade Updates for Week of November 30, 2016

United States Court of International Trade

 

Second Redetermination in Sixth Administrative Review Sustained

In Clearon Corporation and Occidental Chemical Corporation v. United States et al., Court No. 13-73, Slip Op. 16-110 (November 23, 2016), the court reviewed the second redetermination (“RR2”) on the sixth (2010-2011) administrative review of chlorinated isocyanurates (“chlor-isos”) from the People’s Republic of China (“PRC”).   The following issues were remanded for consideration by Commerce: (1) selection of surrogate values for hydrogen gas and chlorine, (2) selection of the Philippines as the primary surrogate country; (3) selection of import data to value urea, (4) adjustment to the selling, general, and administrative (SG&A) expenses; and (5) methodology for calculating the by-product offset. 

As for the surrogate values for hydrogen gas and chlorine, defendant intervenors had not shown how Commerce’s data was unreliable to have the court substitute its judgment for Commerce’s.  Moreover, plaintiff overlooked Commerce’s preference for domestic data from the primary surrogate country.