U.S. Court of International Trade

Motion for Default Judgment Granted

In United States v. NYCC 1959, Inc., Court No. 14-45, Slip Op. 15-13 (February 6, 2015), the United States brings this action to recover a civil penalty as permitted by Section 592 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1592 (2012) (“Section 592”).  Defendant NYCC failed to timely appear, plead, or otherwise defend, default was entered against it, and the government moved for default judgment pursuant to USCIT Rule 55(b).  Because the defendant defaulted in appearing and because the allegations were well-plead and supported by an affirmation, the court granted the motion for default judgment.  The court held, “Because the false entry information was material to Customs’ evaluation of NYCC’s duty liability for the attempted entry, the Government’s factual allegations, deemed admitted by the defaulting defendant, establish that NYCC attempted to enter merchandise into the commerce of the United States by means of information that was both material and false.”  Slip Op, pg. 4.  Moreover, because the penalty amount at $15,310 was lesser than “the domestic value of the merchandise” or “four times the lawful duties, taxes, and fees of which the United States is or may be deprived,” the court upheld the penalty and found that defendant NYCC was liable. For all of the foregoing reasons, the Government’s motion for default judgment against NYCC for a grossly negligent violation of 19 U.S.C. § 1592(a) was granted. 

United States Court of Appeals for the Federal Circuit

Affirming CIT Decision Regarding Export Price 

In Apex Exports & Falcon Marine Exports Limited v. United States, et al., 2014-1234 (February 5, 2015), the Ad Hoc Shrimp Trade Action Committee appealed the final decision of the Court of International Trade (“CIT”), sustaining the refusal by the Department of Commerce (“Commerce”) to deduct antidumping duties when calculating an export price. 

Antidumping duties are levied when foreign merchandise is sold in the United States at less than fair value and such sales pose a threat to domestic industry. 19 U.S.C. § 1673 (2012). Commerce calculates the antidumping duty using the export price methodology where Commerce determines whether subject merchandise is being sold at less than fair value. If it is, Commerce determines how much less, and then assesses antidumping duties to make up the difference.  For purposes of this export price methodology, Commerce first determines the “export price” (“EP”) which is the price that the first unaffiliated U.S. buyer pays for the subject merchandise. 19 U.S.C. § 1677a(a) (2012). Then, Commerce calculates the “normal value” (“NV”). This is treated as the fair value, and it is the price at which the subject merchandise is sold in the exporting country. 19 U.S.C. § 1677b(a)(1)(B)(i) (2012). If EP is lower than NV, and it poses a threat to U.S. industry, then Commerce assesses a duty “equal to the amount by which the normal value exceeds the export price.” Commerce sets the duty by determining the dumping margin. A weighted average dumping margin is the difference between NV and EP, then divided by EP ((NV − EP)/EP). 19 U.S.C. § 1677(35) (2012). The goal of this methodology is to compare fair value with price paid in the United States, allowing for adjustments. For purposes of this case, EP is adjusted by the cost of bringing goods to the United States for example, freight expenses, U.S. customs duties, and port charges. 

In 2005, Commerce made a final determination that certain shrimp imported from India were likely being sold in the U.S. at less than fair market value inCertain Frozen Warmwater Shrimp from India, 70 Fed. Reg. 5147 (Feb. 1, 2005) (notice of amended final determination). During the fifth administrative review of that antidumping order, shrimp exporters Apex Exports (“Apex”) and Falcon Marine Exports Limited (“Falcon”) were selected as individual respondents. Commerce assessed a 2.31% and 1.36% dumping margin for Apex and Falcon, respectively.  Certain Frozen Warmwater Shrimp from India, 76 Fed. Reg. 41203, 41205 (July 13, 2011) (final admin. review, partial rescission, and final determination). Apex and Falcon brought suit in the CIT, challenging the dumping margins assigned to them as excessive because of an alleged error by Commerce in calculating the normal value of their exports. The CIT rejected their claim, and they do not appeal. Ad Hoc Shrimp Trade Action Committee (“Ad Hoc”), an intervenor-defendant association of domestic shrimp producers which participated in the administrative proceeding, also challenged the dumping margins in the CIT. Ad Hoc argued that the EP of the merchandise sold by Apex and Falcon should be recalculated by the deduction of the amount of antidumping duties assessed on their exports and paid by Apex and Falcon. Such a deduction would have the effect of increasing the dumping margins  Because the words of the applicable statute were abundantly clear, Ad Hoc argued that the deduction of “additional costs, charges, or expenses” associated with importation was required, regardless of whether Commerce refused to make such deductions. 

The Federal Circuit in reviewing Commerce’s statutory interpretations, applied the two-part framework laid out in Chevron. Union Steel v. United States, 713 F.3d 1101,1106–07 (Fed. Cir. 2013) (citing Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–43(1984)). The first step in the Chevron analysis asks if the statute in question is ambiguous. If not, the statute speaks for itself in its plain language, and the interpretation springing from the unambiguous language governs. Where the statute is ambiguous, the second step asks if the interpretation proffered by the government is reasonable. 

The Federal Circuit held that the statute was ambiguous as Congress was unclear as to what exactly was deducted as “import duties.” The Federal Circuit stated that “[t]his Court previously held that “Congress has not defined or explained the meaning or scope of ‘United States import duties’ as set forth in 19 U.S.C. § 1677a(c)(2)(A).” Wheatland Tube Co. v. United States, 495 F.3d 1355, 1359 (Fed. Cir. 2007). We agree that Congress was similarly silent on the precise definition of § 1677a(c)(2)(A)’s “any additional costs, charges, or expenses”—and specifically silent as to whether antidumping duties fall within that definition.”  As such, the Federal Circuit then determined that Commerce’s interpretation was reasonable.  Specifically, it stated that Commerce’s refusal to deduct antidumping duties from EP was entitled to deference, as it was consistent with the goals of the statute, and reflects Commerce’s long-standing practice.  

Ad Hoc further argued that because of the reimbursement regulation, the antidumping duties should be deducted where the exporter reimburses the importer for payment of the additional duties due to dumping.  However, Commerce refused to double count duty where it has already been paid by the importer, and thus, Commerce’s general approach of refusing to deduct antidumping duties addresses the situation where the importer has to pay antidumping duties itself.  For these reasons, the Federal Circuit affirmed the CIT’s findings that sustained Commerce’s final determination.

Note: The information contained in this memorandum is for general information only, and is not intended as advice or counsel regarding any specific situation. If you have an issue relating to the subject matter discussed in this memorandum, you should consult with counsel or your customs advisers concerning the proper course of action to be followed in your case.

Entire contents copyright 2015 by Neville Peterson LLP.

For additional information concerning the subjects discussed in this Neville Peterson LLP background memorandum, please contact our offices at (212) 635-2730 or (202) 861-2959, or e-mail using the mailbox on this Website.