United States Court of International Trade
 

Redetermination Remanded Regarding Curtain Walls

In Shenyang Yuanda Aluminum Industry Engineering Co. v. United States, Court No. 14-106 Slip Op. 16-94 (October 6, 2016), this court reviewed the second remand determination resulting from challenges from plaintiffs Shenyang Yuanda Aluminum Industry Engineering Co., Ltd. and Yuanda USA Corporation (collectively “Yuanda”); Jango Curtain Wall Americas Co. (“Jangho”); and Permasteelisa North America Corp., Permasteelisa South China Factory, and Permasteelisa Hong Kong Ltd. (collectively “Permasteelisa”).  Plaintiffs challenged the scope determination, made by the Defendant, the U.S. Department of Commerce (“Commerce”), that Yuanda’s unitized curtain wall, i.e., a complete curtain wall, unitized and imported in phases pursuant to a sales contract, was within the scope of the antidumping and countervailing duty orders (the “AD&CVD Orders” or the “Orders”) on aluminum extrusions from the People’s Republic of China (“PRC”).  The remand determination called for exclusion of the goods, and Defendant-Intervenors, Walters & Wolf, Architectural Glass & Aluminum Company, and Bagatelos Architectural Glass Systems, Inc. (collectively the “Curtain Wall Coalition” or “CWC”) challenged Commerce’s determination.

First, the court held that there was no final decision to preclude Commerce from considering the finished goods kit exclusion and the subassemblies test as applied to Yuanda’s products, or finding one way or the other on these issues.  Thus, stare decisis and res judicata do not apply to Commerce’s decisions administratively.

Second, in regards to the scope, Commerce initial decided that “unassembled unitized curtain walls” were included in the scope where the finished good exception applies only to single entry unitized curtain walls.  In the second remand determination, while Commerce determined the goods were excluded from scope, it did not provide any substantial reason to allow for the exclusion where it previously determined that single entry unitized curtain walls do not exist.   The court asked for explanations as to what merchandise would the exclusion apply, in light of the fact that single entry unitized curtains walls do not exist. The court remanded the determination for a substantial reason for the exclusion of the goods from the scope.

Third, Commerce provided the subassemblies test as follows: the subassemblies test requires (1) that the product at issue meets the definition of subassembly – i.e., “merchandise that is ‘partially assembled’ and inherently part of a larger whole” and (2) such subassemblies “require no further ‘finishing’ or ‘fabrication’ prior to assembly, contain all the necessary hardware and components for assembly, and are ready for installation at the time of entry.” Slip op. pg. 21.  In this case, Commerce simply examined whether the product at issue is “a part of a larger structure or system” (a curtain wall), rather than actually applying the subassembly test outlined above. Thus, the court remanded Commerce’s decision to ensure that the standards for making a particular decision regarding subassemblies was correct.

Court Upholds Respondent’s Effort to Withdraw Request for Antidumping Review

An importer of glycine from China succeeded in obtaining a court order allowing it to withdraw a request for an annual review of an antidumping order, in a new decision from the United States Court of International Trade.

In Glycine & More, Inc. v. United States, Slip Op 16-96 (October 11, 2016), the plaintiff, an importer of Chinese glycine, requested that the Commerce Department perform an annual review of the antidumping order.  When the company sought to withdraw its request for review, Commerce denied the request asuntimely and issued a final determination.  Glycine & More sued to overturn that final determination on the ground that Commerce unlawfully refused to allow it to withdraw its request for a review. 

The CIT remanded the case once to Commerce, noting that Commerce’s regulations generally gave an interested party 90 days to withdraw a request for review, but but allowed an extension of that period for good cause shownCommerce then decided to allow the withdrawal.  The Department noted that under its regulations, a request for an annual review must generally be withdrawn within ninety (90) days, unless good cause is shown. The CIT sustained this determination, overruling objections from the domestic petitioner, claiming that the review should have been conducted and the results allowed to stand. 

United States Court of Appeals for the Federal Circuit

Retorts Used to Make Magnesium May be Treated as Overhead, Rather than Direct Material

Steel crucibles, known as “retorts” used in the “pidgeon” method of magnesium production may be considered as “overhead” expenses rather than direct materials, for purposes of determining the “normal value” of magnesium in an antidumping proceeding, according to a recent decision of the United States Court of Appeals for the Federal Circuit (CAFC). 

In U.S. Magnesium LLC v. United States, No. 2015-1864 (October 6, 2016), the CAFC upheld a decision by the United States Court of International Trade that retorts could be treated as overhead rather than as direct materials consumed in the production of magnesium.  The evidence indicated that the retorts—large steel crucibles—are placed under vacuum and heated during the magnesium production process, resulting in the separation and vaporization of magnesium.  Magnesium vapor forms into magnesium metal which is then removed from the retorts, melted down, purified and cast into ingots.  Evidence indicated that the retorts needed to be replaced at regular intervals—approximately every sixty days—since the intense heat and chemical reactions degrade their interiors.

In connection with the antidumping order against Pure Magnesium from the People’s Republic of China, the Commerce Department concluded that the retorts should be treated as overhead expenses, rather than as direct material costs.  The agency and the CIT treated the retorts as part of the production line equipment rather than a direct material.  US Magnesium, the domestic producer, argued unsuccessfully that the retorts should be considered as materials, since they are effectively consumed during the production process.  However, the Federal Circuit disagreed, upholding the CIT and the final Commerce Department antidumping review calculation. 

Judge Pauline Newman dissented, indicating that retorts should be considered a direct material input.  She determined that the factors used to classify goods as material inputs were satisfied in that the retorts were consumed continuously with each unit of production, were required for a given segment of the production process, were essential for production, were not used for incidental purposes, and were a regular material used in magnesium production.  She indicated that the industry treats these goods in such a manner and argued that the Commerce Department determination was not based on substantial evidence. 

Third Circuit Reinstates Whistle-Blower Case Regarding Pipe Fitting Markings

The United States Court of Appeals for the Third Circuit, reversing a District Court ruling, has reinstated a “whistle-blower” case charging a United States importer with failing to properly mark imported pipe fittings to show country of origin. 

In United States Ex. rel. Customs Fraud Investigations LLC v. Victaulic Company, No. 15-2169 (October 5, 2016) the Third Circuit found that the District Court had erred when it denied the plaintiff-informant’s motion to amend its complaint as “futile”.  The complaint had consisted largely of a series of legal conclusions, information about Victaulic’s shipments, drawn  from public sources, and a rather unscientific survey of Victaulic products sold on eBay from which the plaijntiff drew conclusions regarding  country of origin markings.  The lower court found that the complaint did not meet minimum requirements for pleading, and that allowing amendment of the complaint would be “futile”, since the complaint was not reasonably likely to lead to the recovery of funds owed to the government—marking duties. 

However, the Third Circuit reversed.  First, the Circuit noted that leave to amend should be granted freely, and denied only in the most extreme cases.  The Court also found that amendments to the Federal False Claims Actallow whistle-blower suits based on a failure to pay marking duties, such that the amendment of the complaint would not be futile.  It thus ordered reinstatement of the case, but directed the trial judge to carefully monitor and regulate discovery proceedings. 

Circuit Judge Fuentes, concuring in part and dissenting from the judgment, found that the complaint was a mishmash of unconnected allegations and would not meet minimum pleading requirements, and indicated that he would have sustained the dismissal. 

Attempt to Withdraw Request for Antidumping Denied

While the Plaintiff in Glycine & More was allowed to withdraw its request for a review of an antidumping order, the Federal Circuit took a different position in the recent case of Viet-E-Mei Frozen Foods, Co. Ltd. v. United States, No. 2006-1006 (October 11, 2016).  In this case, a Vietnamese exporter of Frozen Warmwater Shrimp asked to be treated as a voluntary respondent in an antidumping review.  Commerce initially refused, and Viet-E-Mei fought a two year battle in the Court of International Trade, which ordered the Commerce Department to accept the company as a voluntary respondent and conduct the requested review. 

When Commerce commenced the review, however, the plaintiff reversed course and sought to withdraw the request, claiming that it had undergone significant personnel, management and accounting changes, and that the administrative and legal costs of the review would be greater than the company wished to incur.  It asked that the company be accorded the 3.92% antidumping rate it would previously have obtained.

Commerce insisted on conducting the review, however, and when the plaintiff failed to participate, it was assigned an “adverse facts available” rate of 25.76%– the Vietnam-wide rate assigned to those companies unable to show their independence from state control.  The Plaintiff claimed that the ninety day period in Commerce’s regulations for withdrawing a request for review should be applicable to withdrawing a request for a review in performed at court order.  Commerce declined to terminate the review and the CIT upheld that determination. 

On appeal, the Federal Circuit affirmed the CIT’s decision, noting that Commerce’s regulations “point away” from granting a voluntary respondent’s request to cancel an individual examination it had requested.  The Federal Circuit also noted that the CIT’s final judgment order requiring the review also justified Commerce’s decision to carry it out.  Finally, the Court rejected the Plaintiff’s attempt to challenge the AFA rate as being five times higher than the assigned rate and not supported by commercial reality.