United States Court of International Trade
Scope Determination Regarding Flanges Remanded for Reconsideration
Before the Court in Star Pipe Prods. v. United States et. al., Slip Op. 19-20, Court No. 17-00236 (February 13, 2019) was a 2017 Final Scope Ruling issued by Commerce interpreting the scope of an antidumping duty order on non-malleable cast iron pipe fittings from China to include certain ductile iron flanges imported by Star Pipe. Notice of Antidumping Duty Order: Non-Malleable Cast Iron Pipe Fittings From the People’s Republic of China, 68 Fed. Reg. 16,765 (Apr. 7, 2003) (the “Order”). Plaintiff argued that their product was outside the scope of the Order, and in the alternative, that if the ruling was sustained Commerce acted unlawfully in issuing liquidation instructions to Customs directing the assessment of antidumping duties on entries of Plaintiff’s product that were made prior to issuance of the Final Scope Ruling. For the following reasons, the Court remanded the scope determination back to Commerce.
“Scope orders may be interpreted as including subject merchandise only if they contain language that specifically includes the subject merchandise or may be reasonably interpreted to include it.” Id. at 4. Because the products at issue are made of ductile cast iron rather than non-malleable (“gray”) cast iron, the Court found that they are not described by the first paragraph of the scope language. The Court said that “the analysis portion of the written determination … makes no mention of analyzing the merchandise descriptions in the petition and, to the contrary, indicates that Commerce did not consider the petition at all.” Id. at 9. In addition, the Court found “that no portion of the petition has been placed on the administrative record of this case, indicating further that Commerce failed to consider it.” Id. Therefore the Court ordered “Commerce to consider the merchandise descriptions in the petition and the arguments Star Pipe made regarding them.” Id. at 10.
Remand Redetermination Sustained in Certain Frozen Warmwater Shrimp Case
Before the Court in Soc Trang Seafood Joint Stock Co. et. al. v. United States et. al., Slip Op. 19-23, Court No. 16-00205 (February 19, 2019) was Commerce’s remand redetermination in the tenth administrative review of the antidumping (“ADD”) order on certain frozen warm-water shrimp from Vietnam. The remand redeterminations were filed in response to the Court’s previous remand in order for Commerce to further explain or reconsider its decision to value frozen shrimp using Bangladeshi UN Comtrade data for Harmonized Tariff Schedule (“HTS”) 0306.13, and (ii) its decision to deny an offset for excess/scrap packaging. On remand the agency decided to use Indian data to value the frozen shrimp, and to continue its denial of the offset. For the following reasons the Court sustained Commerce’s remand determinations.
“In antidumping proceedings involving non-market economies, Commerce generally calculates normal value using the factors of production . . .” Id. at 7. “Commerce will value respondents’ factors of production using the best available information.” Id. The Court said “Commerce’s decision, on remand, to value the frozen shrimp input using Indian GTA import data is reasonable” because the agency explained that the Indian data was more specific to the input utilized by respondents, because it was limited in scope to warm-water shrimp and the data was more contemporaneous with the relevant period of review. Id. at 8. In regards to the offset issue, “Commerce has the discretion to set the standards by which items qualify for a byproduct offset, so long as Commerce’s selection satisfies the overall purpose of the antidumping statute, to calculate accurate dumping margins and is reasonable.” Id. at 11. The Court said Commerce adequately explained it reasoning and that “Commerce complied with the court’s order.” Id. at 12.
United States Court of Appeals for the Federal Circuit
Door Knobs with Locks are Composite Goods, Federal Circuit Rules
Door knobs with integral locks, of a kind used to protect the outer entry doors of homes, are “composite goods” and must be classified according to that component which imparts their “essential character,” according to a recent decision of the United States Court of Appeals for the Federal Circuit.
In Home Depot U.S.A., Inc. v United States, No. 2018-1206 (February 15, 2019), the merchandise at question consisted of door knobs having integral locks. They were typically made of steel and consisted of an interior knob assembly, an exterior knob assembly, a key cylinder, a latch mechanism assembly, a flanged strip plate and mounting hardware. Customs liquidated the articles under HTS subheading 8301.40.6030, as “locks (key, combination or electrically operated) of base metal” and specifically as “door locks, lock sets and other locks suitable for use with interior or exterior doors (except garage, overhead or sliding doors).” Home Depot asserted that the articles were properly classified under HTS subheading 8302.41.60 as “base metal… fittings and similar articles for… interior and exterior doors.”
On cross motions for summary judgment, the Court of International Trade upheld Customs’ classification of the products as “locks” under HTS Heading 8301. In its ruling, the CIT explained that “knobs can be, and are here, a part of a lock” and found that “in some types of locks, the lever is a door knob.” The Federal Circuit vacated the CIT’s judgment, and remanded for further findings.
The Federal Circuit held that the products were prima facie classified under both heading 8301 because the goods did contain locks. “[T]he fact that door knobs make up part of the overall locking mechanism does not alter the fact that the products, viewed as a whole, are locks”.
The Court also held that the products were classifiable as “fittings and similar articles suitable for doors, and for “interior or exterior doors.” Home Depot argued that the knobs at issue were not only correctly covered by the classification for “fittings” for “interior and exterior doors” but were also “similar articles” to privacy and passage knobs that the Government acknowledges are classifiable under HTS heading 8302. Finding the Explanatory Notes to the HTS not to be decisive for either party, the Court held that the products were “composite goods” which under General Rule of Interpretation 3(b) to the HTS must be classified as if they consisted of that component or material which imparts the “essential character” to the item. Determining which component imparts the “essential character” is a fact-driven exercise, and the Federal Circuit remanded the case to the CIT with instructions for that court to conduct further proceedings and identify the essential character component of the goods.
Infrared Modules for Fiber Data Networks Classifiable as “Optical Instruments”
Various “Value Added Modules” utilized to make connections in fiber data networks were properly classified by Customs as “optical instruments” of HTS subheading 9013.90.80 of the Harmonized Tariff Schedule, a provision for "other optical appliances”. The modules, used with home fiber optic networks to transmit images and data, consisted of (1) splitter modules, which “take individual signals from a single optical fiber and divide them, enabling that single signal to reach multiple telecommunication network subscribers,” (2) monitor modules, which “allow access to signaling and control functions of a communications network in order to evaluate performance and detect problems,” and (3) wavelength division multiplexer (“WDM”) modules, which “permit infrared signals of two different wavelengths to travel simultaneously on a single fiber, All of the product operated using infrared light, using frequency ranges which made the light undetectable by human eyes.
In ADC Telecommunications Inc. v. United States, No. 2018-1306 (Fed. Cir. February 19, 2019), the Federal Circuit held that the definition of optical appliances did not require the appliances to operate in the human-visible range of the electromagnetic spectrum. Turning to legislative history, including the 1929 Summaries of Tariff Information, the Court held that an “optical instrument” was one which used light waves in a non-subsidiary function. “Optical instruments are primarily used to aid or supplement human vision; they also include apparatus which depends for its operation on the passage of light through prismatic or lenticular optical glass. Lenses and prisms are the fundamental parts of optical instruments”. Summary of Tariff Information, 552 (1929). While optical devices normally aid or supplement human vision, the Federal Circuit noted, this was not a necessary feature of being classified as an optical instrument. What is required, the Federal Circuit held, is that the appliance operate by means of transmitting or bending light – functions which the “value added modules” performed.
Finding the goods to be prima facie classifiable under the HTS subheading 9013.90.80 provision for other optical instruments, the court held that the importer’s proffered classification under HTS subheading 8517.62, as “ Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus” was precluded by an exclusionary note to the tariff.