United States Court of International Trade

Remand Ordered in Scope Ruling

In Agilent Technologies, Inc. v. United States, Court No. 16-183, Slip Op. 17-119 (September 1, 2017), the Court reviewed Department of Commerce’s (Commerce’s) scope ruling on Agilent’s mass filter radiator (MFR).  Commerce determined that the MFR is covered by the scope of the antidumping and countervailing duty orders on aluminum extrusions from the People’s Republic of China (“China”). See Final Scope Ruling on Agilent Technologies, Inc.’s Mass Filter Radiator, A-570-967 and C-570-968 (Aug. 10, 2016).  Before the Court was plaintiff’s Rule 56.2 motion for judgment on the agency record, where plaintiff argued that (1) the MFR is within the finished merchandise exclusion because it is a finished product comprised exclusively of aluminum extrusions; and (2) the MFR is within the finished heat sink exclusion because it was designed precisely to have specific thermal resistance properties to remove damaging heat from electronic equipment and the MFR has been tested around meeting certain thermal requirements.  Because Commerce did not fully explain its decision and provided a conclusory statement in its consideration of plaintiff’s objections, the Court remanded the ruling. The Court stated, “The court finds that Commerce’s scope ruling did not adequately discuss the record evidence submitted in support of Agilent’s position, including the R&D Declaration and questionnaire responses. Commerce noted merely that ‘surface finish, flatness, perpendicularity, and locational tolerances’ were ‘not in and of themselves ‘specified thermal performance requirements,’ around which the design and production of the product is organized.’”  Commerce must explain why the description of thermal performance requirements provided by Agilent were insufficient.

Remand on a Remand Decision Regarding Polyester Fiber from China

In Zhaoqing Tifo New Fibre Co., Ltd.,  v. United States and DAK Americas LLC., Slip Op. 17-118, Court No. 13-00044 (August 30th 2017) the Court reviewed Commerce’s determination on remand regarding the Fourth Administrative Review of the Antidumping Duty Order on polyester staple fiber from China. Previously in the case, the Court had remanded the review in order for Commerce to reconsider if values for energy expenses, such as coal, had been counted twice in the process and inflated the ADD margin for Zhaoqing. On remand, Commerce reconsidered the selection of financial statements as a whole for the review, instead of the limited scope from the Court regarding potential double counting. Zhaoqing argued that Commerce should not have considered the financial statements and instead should have just considered the remand issued from the Court. For the following reasons, the Court agreed with the Plaintiffs and remanded the issue back to Commerce again with specific instructions to consider if energy costs were double-counted in the surrogate value process.

The main issue in the case was if Commerce reconsidering the financial statements used to calculate surrogate values was outside of the remand scope from the Court. In general, Commerce is given much discretion and “remands that restrict Commerce’s ability to collect and fully analyze data on a contested issue” are disfavored. Id at 30. In this case, Commerce was not permitted to reopen and re-review the settled issue of the agency’s decision in its Final Determination to select the financial statements.  The Court said “the issue of Commerce’s selection of financial statements was laid to rest in the Final Determination” and, because no party sought judicial review, the issue cannot be resurrected. Id. at 34.  Commerce could have done many things which would have met the remand requirements, such as reopening the agency record on the financial statements regarding only the section on energy. Commerce supported their financial statement determination with little evidence and did not give plaintiff’s argument much thought. The case will be remanded again for Commerce to adequately consider if energy costs have been counted twice in the surrogate value process.

Preliminary Injunction Granted

In New Mexico Garlic Growers Coalition, et al., and Shandong Jinxiang Zhengyang Import & Export Co., Ltd.  v. United States, Consol. Court No. 17-146, Slip Op. 17-121 (September 7, 2017), the court considered plaintiff-intervenors Shandong Jinxiang Zhengyang Import & Export Co., Ltd. (“Zhengyang”) and Jining Alpha Food Co., Ltd.’s (“Alpha”) partial consent motion for a preliminary injunction to enjoin defendant, the United States (“Defendant”), from liquidating certain of its entries of fresh garlic from the People’s Republic of China.  Despite the government’s arguing that intervenors could not move for a preliminary injunction under court rules, the court granted the motion claiming that such rules were intended to provide deadlines for filing the intervenor motion and did not limit the scope of injunctive relief.   Moreover, the court found that plaintiff intervenors satisfied the requirements for preliminary injunction, where plaintiff-intervenors would suffer irreparable harm because liquidation of entries would bar them from obtaining any benefits from the outcome; where Qingdao Tiantaixing Foods Co., Ltd. (“QTF”) demonstrated likelihood of success on the merits; and where public interest and balance of equities supported plaintiff-intervenor’s position. 

Government’s Motion to Dismiss was Denied

Before the Court, in Kent International, Inc. v. United States, Court No.  15-135, Slip Op.  17-23 (September 8, 2017), was Defendant United States’ partial motion to dismiss the second and third causes of action (“Count 2” and “Count 3” respectively) of Plaintiff’s complaint pursuant to USCIT Rule 12(b)(6).   Plaintiff’s Count 2 alleges the existence of an established and uniform practice under Section 315 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1315(d),2 and Count 3,  alleges the existence of a treatment under 19 U.S.C. § 1625(c) and 19 C.F.R. § 177.12(c)(1)(i).  Kent argues that due to existing rulings its imported bicycle seats should be classified under 9401.80, as duty free.   Kent alleges that Customs classified numerous entries of child bicycle seats, duty free, under HTSUS subheading 9401.80 for multiple importers at multiple ports, other than the ports utilized by the Plaintiff.  Plaintiff further alleges that over a seven year period—between 2007 and 2014— Customs classified child bicycle seats for Bell, Todson, and Brix under HTSUS heading 9401, duty free. Kent also claims that, despite the 2005 Ruling, Customs granted Kent’s protests for duty free classification for the Newark entries of its imported merchandise, but failed to grant Kent the same classification for its Long Beach entries. The Court determined that with the existence of a series of rulings and actions by Customs there is uncertainty as to the classification of the imported bicycle seats and that there is plausible claim for Established Uniform Practice (EUP).

As for Count 3, Plaintiff claims that Customs accorded duty-free treatment to children’s bicycle seats between September 21, 2007 (at the latest), and September 22, 2014, as evidenced by the Child Bicycle Seat Rulings and subsequent liquidation of duty free entries for Plaintiff by Newark Customs, and for Bell, Todson, and Brix at other ports. It also appears that Plaintiff’s requested relief is the duty-free reliquidation for its entries from (at the latest) September 21, 2007 through September 22, 2014 by Long Beach Customs. Given the facts presented in the complaint, plaintiff does have a plausible claim which may show the existence of treatment under 19 U.S.C. 1625(c)(2). 

Remanded Commerce Decision in Part Regarding Steel Nails from the People’s Republic of China

In Xi’an Metals & Minerals Import & Export Co., Ltd., & The Stanley Works (Langfang) Fastening Systems Co., Ltd. and Stanley Black and Decker, Inc., v. United States, & Mid Continent Steel & Wire, Inc., Slip Op. 17-120, Court No. 15-00109 (September, 6 2017) the Court reviewed Commerce’s determinations from the final results of the Fifth Administrative Review the Antidumping Order covering certain steel nails from the People’s Republic of China (PRC). For the following reasons the Court remanded in part back Commerce for further consideration, but upheld in part other parts of the review.

The first issue was Commerce’s selection of Thailand as the surrogate for the non-market economy (NME) of the PRC. Plaintiffs challenged the selection because, there was reported corruption in Thailand as the military controlled the government during the period of review which inflated statistics.  The Court said the “record evidence of manipulation of Thai customs values does not rise to such a level” where Commerce must reject it. Id. at 11. In regards to the military, “the burden is on the plaintiff, however, to provide for the record evidence to support its argument.” The Court said the plaintiffs did not present enough evidence the military affected surrogate values. Id. at 11. The Court upheld the selection of Thailand as a surrogate.

The next issue was whether the surrogate values used by Commerce were unreliable. Plaintiff believed that the some fees were unreasonable for surrogate calculation.  With regards to the brokerage and handling fees, no arguments happened during the administrative review under Commerce.  The court shall “require the exhaustion of administrative remedies” before jurisdiction can be exercised. Id. at 16. In this case, the Court said “by failing to raise this argument until now, Xi’an Metals deprived ITA of the opportunity to consider the matter” and therefore the Court may not consider the issue. Id. at 17. In regards to the labor fees, plaintiffs argued the fees were counted twice. The Court said “by not removing the various line items such as welfare and social security and compensation that are presumptively included already in the Thai NSO rate, the SV for labor is inflated.” Id. at 24.  The Court remanded the labor fees back to Commerce for further consideration.

The final issues were raised by consolidated plaintiffs, who argued that clerical errors made by the respondent inflated the ADD rate and challenged the use of the A-T method by defendant. A decimal point was misplaced in the hundredth column of a spreadsheet provided to Commerce by respondent. Commerce refused to adjust the ADD for such a mistake which led to an increase in the dumping margin of about 30%. Given the large adverse affect, the Court remanded the issue for reconsideration by Commerce. The other issue was the use of the A-T method by plaintiff to calculate dumping margin. In general A-A or T-T method is preferred unless “the existence of a pattern of export prices that differ significantly among customers, regions, or time periods” is found. Id. at 28. Plaintiffs attacked the A-T method for not being in conformity with regulations and as an improper application of the test used to prove irregularities.  The Court said defendant missed the “point that the regulation expressly limits the A-T methodology to those sales that constitute targeted dumping”.  Id. at 36. It was improper for Commerce to apply the A-T methodology to all Stanley sales”. Id. at 37.  In regards to the rest of plaintiff arguments, the Court said “plaintiffs have not established that ITA’s utilization of its differential pricing analysis was out of order”. Id. at 63.  The labor surrogate values and A-T methodology were remanded back to Commerce for further consideration.