Trade Updates for Week of September 27, 2017

United States Court of International Trade


Plaintiff’s Motion for Summary Judgment Granted; Defendant’s Motion to Reconsider Denied

In Irwin Industrial Tool Company v. United States, Court No. 14-28, Slip Op. 17-28 (September 21, 2017), the Court granted plaintiff’s motion for summary judgment and denied defendant’s motion for reconsideration. This case involved the classification of five styles of Plaintiff’s hand tools where United Customs and Border Protection liquidated the subject entries of hand tools under Harmonized Tariff Schedule of the United States (HTSUS) subheading 8204.12, which covers “hand-operated spanners and wrenches . . . : Adjustable, and parts thereof.” The Court held that the subject tools were not wrenches but were more akin to pliers classified under HTS Subheading 8203.20. The Court determined that as a matter of law that the term “pliers,” as it appears in subheading 8203.20.6030, 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.”   Furthermore, the Court determined that the term, “vises, clamps and the like,” under 8205.70.0060, HTSUS, refers 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.” 

Defendant in its motion to reconsider did not offer any reasons for reconsideration.  Namely, defendant has not demonstrated that there has been a controlling of significant change in the law; that the Court previously misunderstood the parties; or that the Court failed to consider controlling decisions or data.  Moreover, the Court agreed that the subject tools are classifiable under 8203.20.6030, as pliers, because the products 1) are versatile hand tools, 2) have two handles, and 3) have two jaws, that are flat or serrated and are on a pivot, which can be squeezed together to enable the tools to grasp an object. For these reasons, the Court denied defendant’s motion and granted plaintiff’s motion for summary judgment.


Upholding Customs’ Classification of Metal Key Operating Locks

In Home Depot U.S.A. Inc. v United States, Slip Op. 17-129, Court No. 14-00061, (September 21, 2017)  the Court decided the proper classification of metal key operated locking hardware articles imported into the U.S. by Home Depot. Customs initially classified the goods under HTSUS subheading 8301.40.6030, at a duty rate of 5.7% ad valorem. Home Depot believed that the goods were properly classifiable under HTSUS subheading 8302.41.6045, at a duty rate of 3.9% ad valorem. For the following reasons the Court agreed with the decision of Customs to classify the goods under HTSUS subheading 8301.40.6030.

Goods imported into the US are classified according to the General Rules of Interpretation “GRI”, which are applied in numerical order. If the proper classification of a good is reached further GRI’s are not applied. GRI 1 requires the Court to determine classification “according to the terms of the headings and any relative section or chapter notes”. Id. at 3. The Court may “rely upon its own understanding of the terms used and may consult lexicographic and scientific authorities, dictionaries, and other reliable information sources.” Id. at 3.  In this case, the Court said that the subject articles were described in whole by Heading 8301. 8301 is used to describe “Padlocks and locks (key, combination or electrically operated), of base metal.” The court said that each device was a locking mechanism and the knobs were incorporated into the locks. The Court said heading 8302 was not applicable because the articles possess features “substantially in excess” of plain door knobs. Because Heading 8301 was applicable and not 8302 the Court explained that the subheadings Customs used were also correct. The goods were properly classifiable under 8301.


Sustaining Commerce’s Findings on Remand

In Cooper Tire & Rubber Co. v. United States, Slip Op. 17-130, Court No. 15-00251 (September 25, 2017) the Court examined Commerce’s decisions on remand from a previous decision in the case.  Commerce had assigned plaintiffs a cash deposit rate of 11.13% after ADD and CVD investigations; the rest of the respondents to the investigations received a better rate.  Plaintiffs commenced this action alleging that their cash deposit rate was calculated unlawfully. The Court agreed with plaintiffs, and remanded the issue back to Commerce for reconsideration. On remand, Commerce recalculated the rate and an 8.72% rate as was assigned to the respondent using the weighted average of the export subsidies received by the mandatory respondents in the CVD investigation. However, Commerce instructed Customs to apply the rate 10 days after the Court’s final decision instead of retroactively to when Cooper was paying the 11.13% rate. Cooper sought an injunction for retroactive application. The parties reached an agreement in regards to the terms allowing Customs to refund Cooper, which the Court subsequently entered. Since the parties have reached agreement about the rate and its implementation, the Court upheld Commerce’s findings on remand. 

Claims in Antidumping Case Complaint Require More Detail

A foreign producer’s complaint challenging aspects of the investigation resulting in an antidumping duty against 1-Hydroxythylidine-1, 1-Disphosphonic Acid from China was too vague, requiring a more definite statement of claims, the Court of International Trade recently held. In Nantong Uniphos Chemicals Co. Ltd. v. United States, Slip Op. 17-131 (September 26, 2017), the Court held that allegations in a complaint charging broadly that the Commerce Department “applied excessive and improper adjustments to raw surrogate data”, “misread the record and misapprehended certain key facts” and “erred” in calculating a cash deposit rate, were too general and vague to permit the government to formulate a response, the Court held. These counts were not saved by the fact that other counts had been adequately pleased, the court held. The plaintiff was directed to file an amended Complaint either clarifying or dropping the claims in question.


Plaintiff May Not Pursue Action Under Assumed Name

A company fearing “commercial retaliation” from a trademark owner may not bring its challenge to Customs’ grant of “Lever Rule” protection under an assumed name, the Court of International Trade recently held.

In XYZ Corporation v. United States, Slip Op. 17-124 (September 12, 2017), the plaintiff brought its challenge under an assumed name, and the Court entered a protective order which, among other things, protected the plaintiff’s identity. Subsequently, Duracell intervened in the action and moved to force the plaintiff to proceed under its real name, Milecrest Corporation. The CIT held that fear of commercial retaliation was not a sufficient basis to keep the plaintiff’s name under wraps, and ordered the plaintiff to make future filings under its real name. But Duracell’s glee was probably short-lived, because –


CIT Rejects Motion to Dismiss Importer’s Challenge to “Lever-Rule” Protection Grant

The Court of International Trade denied a motion by Duracell Corporation to dismiss an importer’s lawsuit challenging a Customs’ grant of “Lever Rule” protection to imported gray market batteries.  In Milecrest Corporation v. United States, Slip Op. 17-125 (September 15, 2017), the court upheld an earlier ruling which denied the Government’s motion to dismiss the action, rejecting new grounds which Duracell offered for dismissal. The CIT had earlier held that the Lever Rule grant was a “ruling” which the court could review under its pre-importation ruling jurisdiction.

Milecrest claims that Customs’ decision granting Lever Rule protection, thereby restricting imports of genuine Duracell batteries, constitutes a “rule” which may not be issued without following the “notice and comment” rulemaking procedures of the Administrative Procedure Act (APA).  Under CBP’s regulations, the agency publishes notice of the receipt of Lever Rule applications, and their approval, in the Customs Bulletin, but does not seek public comment or information.

The CIT held that Milecrest had adequately pleased irreparable harm in its amended Complaint. It also rejected Duracell’s argument that the Lever Rule grant was not a “ruling” subject to judicial review because it was issued under Part 133 of the Customs Regulations, rather than Part 177 (which deals with rulings generally). The court also found that Milecrest had standing to bring the action, and that the action was timely and not barred by the statute of limitations.