Summer Newsletter - Federal Circuit and CIT Case Summaries
|U.S. Court of Appeals for the Federal Circuit
|Mr5 Nexteel Co., Ltd.v. United States, Maverick Tube Corporation, Tenaris Bay City, Inc.
|O’Malley, Bryson, and Hughes
|On March 11, 2022, the CAFC affirmed the CIT’s decision that substantial evidence did not support Commerce’s finding of a particular market situation in the antidumping duty review of oil country tubular goods from the Republic of Korea. However, the CAFC vacated the CIT’s decision to the extent that it directed Commerce to have a certain outcome. The CAFC held that the CIT is not able to outright reverse a decision of Commerce, the most it can do is remand for further consideration.
|Starkist Co. v. United States
|Moore, Dyk, Reyna
|The CAFC affirmed the CIT’s holding and held that tuna salad products were properly classified under subheading 1604.14.10 of the HTSUS. Plaintiff challenged CBP’s classification of tuna salad products under subheading 1604.14.10, which is subject to a 35% duty rate. Plaintiff argued that the goods should be classified under HTSUS subheading 1604.20.05, which is subject to a 10% duty rate, HTSUS subheading 1604.14.22, which is subject to a 6% duty rate, or HTSUS subheading 1604.14.30, which is subject to a 12.5% duty rate. Plaintiff filed two protests that were denied by CBP and brought an action before the CIT. The CIT agreed with the government’s classification and noted that the goods were properly classified under HTSUS subheading 1604.14.10.
The CAFC determined that CBP did not error in its determination that the subject tuna salad products are “not minced” under HTSUS heading 1604 and agreed with the CIT’s view that since the subject products are described as “chunky” at the end of the production process, the subject products fall under the meaning of the term “not minced.” Additionally, the CAFC agreed with CIT that the tuna salad products are properly classified as “in oil” under HTSUS subheading 1604.14.10 because the oil in the tuna salad product was introduced prior to packing the product and the oil is not merely incidental to the preparation. The CAFC rejected the Plaintiff’s argument that the oil must be added after the fish is already in the package to be considered packed “in oil.”
|Red Sun Farms v. United States, Florida Tomato Exchange
|Dyk, Prost, and Taranto
|On April 14, 2022, the CAFC issued three precedential opinions (20-2230, 20-2232, and 20-2265) and one non-precedential opinion relating to an antidumping duty investigation to determine whether fresh Mexican tomatoes were imported into the United States and sold at less than fair value. The Court remanded the cases after finding – contrary to the CIT’s position that it had no jurisdiction – that companies may judicially challenge an antidumping duty investigation final determination that is subject to a suspension agreement. CAFC also disagreed with the CIT, which took the position that would-be plaintiffs needed to file a lawsuit within 30 days of publication of the suspension agreement. Instead, plaintiffs need only file within 30 days of a final determination.
|Mid Continent Steel & Wire, Inc. v. United States
|Newman, Lourie, and Tarnto
|On April 21, 2022, the CAFC remanded an antidumping duty order covering steel nails from Taiwan. The CAFC found the relevant statistical literature cited by Commerce uniformly uses weighted averaging in the Cohen’s d denominator calculation and that Commerce had not explained why the basic choice of weighted averaging of unequal-size groups fails to apply to this context. The Court stated that Commerce must either provide an adequate explanation for its choice of simple averaging or make a different choice, such as use of weighted averaging or use of the standard deviation for the entire population.
|M S International, Inc., v United States, Cambria Company
|Hughes, Mayer, and Stoll
|On April 24, 2022, the CAFC affirmed CIT’s decision upholding Commerce’s scope modification. In parallel antidumping and countervailing duty investigations of quartz surface products from China, the Commerce amended the scope of its investigations to prevent producers and exporters in China from evading its orders by using glass in place of quartz. The Court found that there is substantial evidence supporting Commerce’s factual findings.
|Hitachi Energy USA Inc., United States
|Newman, Lourie, and Dyk
|Appellants Hyundai Heavy Industries and Hyundai Corp. USA sought review of an antidumping duty order determination for large power transformers from the Republic of Korea. At issue was whether Commerce violated the provisions of 19 U.S.C. § 1677m(d), which require Commerce to “notify and permit a party to remedy or explain any deficiency in information provided during an investigation.” Commerce did not do so and subsequently applied partial facts available to Hyundai. The CAFC held that Commerce did not comply with the language of the statute and remanded to Commerce for a redetermination consistent with the opinion.
|U.S. Court of International Trade
|Garb Tube Export LLC v. United States
|On March 11, 2022, the CIT sustained in part and remanded in part Commerce’s remand redetermination and final results in the review of the antidumping duty order on welded carbon steel standard pipes and tubes from India. Commerce determined that there was a particular market situation (PMS) and therefore an adjustment of Garb Tube’s costs were proper. However, the Court held that Commerce’s determination of a PMS was not supported by substantial evidence and remanded to Commerce to further explain the use of PMS or to not use PMS at all.
|The Ancientree Cabinet Co. Ltd., v. United States
|On March 21, 2022, the CIT sustained Commerce’s final results of its redetermination concerning the final affirmative antidumping duty determination in the investigation of wood cabinets and vanities from China. On Remand, Commerce provided explanations for its use of certain financial ratio calculations in determining surrogate values for the calculation of normal value. The Court held that the financial ratio calculations were supported by substantial evidence.
|Building Systems de Mexico, S.A. DE C.V., v.United States
|On March 21, 2022, the CIT remanded Commerce’s final determination in the less-than-fair-value investigation of certain fabricated structural steel from Mexico. Plaintiff contended that Commerce inaccurately calculated its constructed value profit rate, applied AFA, used purchase order date as the date of sale for calculation of exchange rate, and calculated its constructed export price. The Court agreed with plaintiff and remanded to Commerce for further consideration of each point.
|SGS Sports Inc. v. United States
|The CIT found that a warehousing agreement between Plaintiff and another party constituted a lease or similar use agreement under HTSUS subheading 9801.00.20. In the present case, Plaintiff attempted to enter swimwear and related accessories under subheading 9801.00.20. CBP denied Plaintiff’s duty-free treatment claim, reclassified the subject merchandise, and liquidated the entries. Plaintiff filed multiple protests challenging CBP’s classification determination. CBP found that the subject merchandise had not been properly exported under a lease or similar use agreement as required under duty-free HTSUS subheading 9801.00.20 because no bailment occurred.
The Court granted a motion to bifurcate the trial into two phases. Here, the present case covered Phase One – which analyzed the issue of whether the warehousing agreement was a lease or similar use agreement. The CIT determined that there was sufficient credible evidence to establish that the Warehousing Agreement satisfied the meaning of a similar use agreement under HTSUS subheading 9801.00.20. Accordingly, the Court held that Phase Two of the case would proceed to determine whether the Plaintiff’s subject entries qualify for duty treatment under HTSUS subheading 9801.00.20
|Wind Tower Trade Coalition v. United States
|In a March 24, 2022 opinion made public on April 4, the CIT remanded in part the results of the 2018 countervailing duty review on utility scale wind towers from Vietnam for Commerce to respond to petitioner Wind Tower Trade Coalition’s positions that CS Wind Vietnam manipulated the duty rate by shifting revenue and profits from Vietnam to the related entity CS Wind Korea in South Korea and that Commerce ignored evidence that CS Wind Vietnam’s steel plate inputs were, in fact, imported.
|Magid Glove & Safety Manufacturing Co. LLC v. United States
|The CIT granted the United States’ cross motion for summary judgment in finding that upon liquidation, CBP properly classified imported gloves under HTSUS subheading 6116.10.55 subject to a duty rate of 13.2%. Plaintiff protested CBP’s classification and claimed that gloves imported from China and Korea should be classified under HTSUS subheading 3926.20.10 and subject to duty-free treatment. CBP denied Plaintiff’s protest.
The imported gloves are “specially designed and marketed for use in the automotive, metal stamping, and other industrial and commercial settings.” The imported gloves are made of man-made textile fibers and compromised in part of a plastic material. The CIT determined that according to General Rules of Interpretation (GRI) 1, heading 3926, which provides for “[o]ther articles of plastics and articles of materials of heading 3901 to 3914,” did not describe the subject goods because the gloves are not “of plastics” or other materials of headings 3901 to 3914.
Plaintiffs argued that the plastic coating found on certain areas of the gloves excluded the gloves from classification under heading 6116. The CIT held that heading 6116, which provides for “[g]loves, mittens and mitts, knitted or crocheted,” described the imported gloves and that a glove can have a component on the outside surface or the lining of a material that is not knitted material, yet still be described by the general term “knitted glove.” The Court held that CBP determined the correct classification and that that the imported gloves are properly classified under HTSUS subheading 6116.10.55.
|In Re Section 301 Cases
|Barnett, Kelly, Choe-Groves
|The CIT remanded to the U.S. Trade Representative (USTR) its determinations of whether to impose Section 301 List 3 and List 4A duties on Chinese imports, finding that USTR was permitted to promulgate such duties based on China’s retaliatory measures, but that it failed to comply with the Administrative Procedure Act (APA)’s requirement to substantively consider and respond to public comments on whether those duties should be imposed.
First, the Court disagreed with the Government’s argument that promulgation of List 3 and List 4A duties was a presidential decision and therefore not reviewable by the court, concluding that the relevant statutory sections contained clear statutory terms within the Court’s power to interpret. The Court reasoned further that because USTR was acting on Congressionally-delegated rather than Presidential authority, its implementation of the duties constituted reviewable agency rulemaking subject to the APA.
Second, evaluating whether USTR was permitted under the statute to promulgate List 3 and 4A duties based on China’s retaliatory measures, the Court found that USTR did comply with Section 307(a)(1)(B), which gives it the authority to “modify or terminate any action” under certain circumstances. The Court found that the link between the subject of the original Section 301 action and China’s retaliation was plain on its face, amounting to an appropriate basis for modification of agency action.
Third, in reviewing whether USTR’s actions complied with the APA’s notice and comment requirements, the Court determined that USTR failed to adequately explain its decision to promulgate List 3 and 4A duties with respect to public opposition to increased duties, concerns about the impact of such duties on the U.S. economy, and availability of alternative courses of action.
On remand, USTR is directed to reconsider or explain its decision to implement List 3 and List 4A duties, as well as its inclusion or exclusion of tariff codes on those lists. USTR’s remand redetermination will be due on June 30, and a further schedule will be decided upon by parties in early July.
|Risen Energy Co., v. United States
|On April 4, 2022, the CIT sustained in part and remanded in part the Commerce’s final determination in the 2017-2018 antidumping administrative review of crystalline silicon photovoltaic cells, where or not assembled into modules, from the People’s Republic of China. The Court held that Commerce reasonably explained that Malaysia had the best data to be a surrogate country since it is the only country that makes both solar cells and solar modules and has a complete financial statement from a producer of both of these types of merchandise. The Court also ruled that Commerce failed to show that the respondents did not cooperate to the best of their ability and that the respondents had the leverage to induce the suppliers' cooperation.
|Dongku Steel Mill Co. v. United States
|On April 14, 2022, the CIT denied steel company SSAB Enterprises’ attempt to intervene in a 2019 countervailing duty review challenge relating to CTL plates from South Korea that the company itself requested. According to Commerce's regulations, a "party to the proceeding" is one that "actively participates, through written submissions of factual information or written argument" in a segment of the proceeding. The CIT ruled that steel company SSAB Enterprises did not satisfy this definition because it “sat on the sidelines” and, therefore, the company was not a party to the proceeding.
|Oman Fasteners, LLC v. United States
|Choe-Groves, Baker, Stanceu
|On April 15, 2022, the CIT ordered Oman Fasteners to post duty deposits to protect potential government revenue pending defendants’ appeal of a previous judgment challenging the institution of Section 232 tariffs on steel derivative products. The Court concluded that plaintiff Oman Fasteners had not presented a convincing argument as to why the Court should establish and administer an escrow procedure to provide for security on its potential Section 232 duty liability during the remainder of the stay pending appeal as opposed to merely depositing the estimated duties for the affected entries.
|Z.A. Sea Foods Priv. Ltd. v. United States
|On April 19, 2022, the CIT granted Plaintiffs’ motion for judgment upon the agency record and remanded for further action in an antidumping duty administrative review on frozen warmwater shrimp from India. The Court ruled Commerce could not use an antidumping evasion finding to reject AD review sole mandatory respondent Z.A. Sea Foods Private Limited's (ZASF) Vietnamese data when calculating the normal value of ZASF’s shrimp. Since ZASF is not mentioned in the Enforce and Protect Act investigation cited by Commerce as the basis for rejecting the Vietnamese data, the Court stated it is therefore not clear how Commerce ZASF's Vietnamese sales wound up in the United States.
|Nexteel Co. v. United States
|On April 19, 2022, the CIT sustained in part and remanded in part Commerce’s final determination in the 2017-2018 antidumping administrative review of welded line pipe from South Korea. The Court sustained Commerce’s decision to cap SeAH Steel Corporation’s freight revenue, but remanded Commerce’s particular market situation (PMS) adjustment and determination methodology, application of a PMS adjustment to SeAH’s home market sales for the sales-below-cost test, denial of a constructed export price offset for SeAH, reallocation of NEXTEEL’s suspended loss and non-prime product costs, and separate rate calculation.
|Power Steel Co. v. United States
|On April 28, 2022, the CIT ordered, adjudged, and decreed that the remand results of the United States Department of Commerce are sustained. The Remand Results complied with the Court’s remand order. Plaintiff, Defendant, and Defendant-Intervenor indicated that they did not intend to submit further filings, and no other party submitted further filings over the Remand Results.
|Ghigi 1870 S.p.A and Pasta Zara S.p.A v. United States
|On May 4, 2022, the CIT sustained Commerce’s remand results in the twenty-second administrative review of pasta from Italy. Ghigi appealed the use of facts available arguing that Commerce’s use of facts available and application of adverse inferences was not supported by record evidence. In its initial decision, the CIT upheld the use of facts available, but not adverse inferences and remanded the issue to Commerce to provide further support. In the remand redetermination, Commerce continued to find that adverse inferences were warranted because Ghigi did not cooperate to the best of its ability with requests for verification of payment terms from Commerce. The Court held that because Ghigi was an experienced respondent, knew the information that was being asked, and still did not provide it, Commerce showed that the adverse inferences were supported by substantial evidence and thus the results were valid.
|Taizhou United Imp. & Exp. Co. Ltd. v. United States
|On May 10, 2022, the CIT sustained Commerce’s final results in the administrative review of the countervailing duty order on aluminum extrusions from China. At issue was whether Commerce reasonably found that the suppliers of the products at issue were governmental authorities under 19 U.S.C. § 1677(5). Commerce argued that the government of China did not cooperate with the investigation by not providing complete information to its requests for ownership information. The Court sided with Commerce and held that the application of facts available was supported by substantial evidence and in accordance with the law.
|Risen Energy Co., Ltd. v. United States
|On May 12, 2022, the CIT partially sustained and partially remanded Commerce’s final results in the sixth administrative review of the countervailing duty order on crystalline silicon photovoltaic cells from China. Commerce requested a remand to review its decision that a subsidy was received under the Export Buyer’s Credit Program (EBCP), despite receiving verifications of non-use from Risen Energy and its customers. The Court noted that, in past reviews, Commerce has repeatedly said it is not able to verify the certifications of non-use and that adverse facts available was appropriate in reaching a determination that Respondents used EBCP. In the opinion, the Court stated that it has repeatedly remanded to Commerce with instructions to attempt to verify the certifications of non-use before rejecting the submissions. Rather than attempting to do so, Commerce has repeatedly removed EBCP from the calculation under protest without appeal. In this case, the Court held that Commerce may remand but, if it decides to remove EBCP from the calculation under protest again and does not appeal, it “must explain on remand why the Court should not provide some form of equitable relief, such as the immediate return of deposits, or an injunction of the continued inclusion of the program with no attempt at verification that results in the temporary collection of funds that ultimately are not owed.”
|Hyundai Steel Co. v. United States
|On May 13, 2022, the CIT sustained Commerce’s remand results in the remand redetermination pertaining to the administrative review of the antidumping duty order on certain cold-rolled steel flat products from the Republic of Korea. Both Hyundai and the United States asked the Court to sustain the remand results and U.S. Steel argued that Commerce should have applied adverse inferences and asked for another remand. The Court found that Commerce had complied with its order in the remand redetermination and there were no grounds for another remand.
|Canadian Solar Inc., et al. v. United States
|On May 19, 2022, the CIT sustained the U.S. Department of Commerce’s remand results of the fifth administrative review of the countervailing duty order on crystalline silicon photovoltaic cells from China. The remand redetermination concerned Commerce’s review of an electricity subsidy received and whether it was specific enough to be for less than adequate remuneration (LTAR). The Court remanded to Commerce to align its decision with the fourth and fifth administrative reviews. Commerce found that the subsidy was for LTAR and applied adverse facts available based on the non-cooperation of the government of China. The Court held that Commerce’s decision to apply facts available was supported by substantial evidence and in accordance with the law.
|Midwest-CBK, LLC v. United States
|The CIT granted the United States’ cross motion for partial summary judgment in finding that CBP had properly determined that imports by Midwest-CBK, LLC of giftware, houseware, and decorative items were to be valued based on transaction value of the articles and that CBP had not abused its discretion when it extended liquidation of subject entries.
The imported merchandise had been imported to Canada from third countries where Midwest-CBK warehoused the goods. Midwest-CBK had U.S. sales staff that would solicit orders in the United States, which were then processed in the United States and Canada. After sales orders were placed by U.S. customers, merchandise stored in Canada would be imported into the United States through Buffalo, NY, where the merchandise would be placed with domestic carriers for delivery to U.S. customers.
CBP conducted an audit of Midwest-CBK and determined that merchandise reviewed should be appraised based on the transaction value of the merchandise in more than 300 entries. CBP issued a CF-29 informing Midwest-CBK that CBP would reliquidate the entries appraised using the deductive value method by adjusting the values more than 123% (which Midwest-CBK protested and CBP reduced to approximately 75%).
Midwest-CBK argued that its merchandise should not be appraised based on the transaction value method because its sales to U.S. customers were undertaken entirely in the United States and title to the merchandise did not pass to the U.S. customers until after the merchandise was imported. Relying on decisions that pre-dated the Trade Agreements Act of 1979 (TAA), Midwest-CBK argued that transaction value required a “sale abroad for export to the United States.” Midwest-CBK also argued that the entries should have been deemed liquidated by operation of law pursuant to 19 U.S.C. § 1504(a)(1) and CBP had no reasonable basis for extending liquidation beyond the one-year period permitted under the statute.
The CIT held that Midwest-CBK’s reliance on the pre-TAA decisions were overruled by the TAA, which abandoned reliance on export value in favor of the transaction value method. Moreover, subsequent decisions by the Court of Appeals for the Federal Circuit, including with respect to multi-tiered transactions, preclude Midwest-CBK’s interpretation of a requirement that the transaction value may only be based on sales made outside the United States. See, e.g., VWP of America, Inc. v. United States, 175 F.3d 1327, 1338-39 (Fed. Cir. 1999); Generra Sportswear Co. v. United States, 905 F.2d 377, 381 (Fed. Cir. 1990). The CIT ruled that because the merchandise was destined for the United States at the time of sale, CBP correctly concluded that the proper basis for appraisement was the transaction value method at 19 U.S.C. § 1401a(b).
Midwest-CBK also argued that the subject entries were deemed liquidated by operation of law before CBP ordered the entries to be liquidated subject to adjustments to arrive at the transaction value of the merchandise. Midwest-CBK argued that CBP had no reasonable basis for extending liquidation as CBP had all of the information it needed to liquidate the entries. The government responded that it was justified in extending liquidation because CBP required additional information from resources at CBP in order to determine the appropriate method of appraisement. The CIT applied the abuse of discretion standard to determine if CBP had failed to act diligently or otherwise unduly delayed liquidation. The CIT determined that CBP did not abuse its discretion by undertaking efforts internally to ascertain the correct and most accurate valuation methodology for appraising Midwest-CBK’s merchandise, and, therefore, the entries were not deemed liquidated by operation of law.