United States Court of International Trade

Court Denied Motion to File Brief as Amicus Curiae

In Jedwards International, Inc. v. United States, Court No. 11-31, Slip Op. 16-23 (March 21, 2016), the court reviewed a motion by DSM Nutritional Products, LLC (“DSM”), pursuant to USCIT Rule 76 for leave to file a brief, as amicus curiae, in support of Defendant regarding the proper classification of bulk krill oil, the imported merchandise that is the subject of this action. Plaintiff Jedwards International, Inc. (“Jedwards”) is the importer of the subject merchandise, a “krill oil,” which is commonly used as a human nutritional supplement, taken in capsule form.

At liquidation, U.S. Customs and Border Protection (“Customs”) classified the imported merchandise under HTSUS subheading 3824.90.4090, which provides for “chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: Other: Other: Fatty substances of animal or vegetable origin or mixtures thereof,” dutiable at 4.6%. Plaintiff protested Customs’ classification, which Customs denied. Jedwards in the litigation argues that Chapter 15 governs classification of the krill, either under subheading 1506.00.0000, as “Other animal fats and oils and their fractions, whether or not refined, but not chemically modified,” dutiable at 2.3%, or alternatively under HTSUS subheading 1517.90.9000, as “edible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this chapter, other than edible fats or oils or their fractions of heading 1516: Other: Other: Other,” dutiable at 8.8¢ per kilogram.  DSM is a manufacturer, distributor, and importer of fish oil products that are similar to Jedwards’ imported krill oil. DSM sought to participate in this litigation because, in its view, the proper classification of both krill oil and fish oil products turns on the issue of the applicability or non-applicability of Chapter 15.

Despite defendant’s opposition to the motion, DSM argued that in the interest of Jarvis Clark Co v. United States, 733 F.2d 873, 878 (Fed. Cir. 1984), it should be allowed to argue that Chapter 15 does not govern the classification of the subject merchandise and that the subject krill oil is classifiable under HTSUS subheading 2923.20.2000 as “lecithins and other phosphoaminolipids, whether or not chemically defined: Lecithins and other phosphoaminolipids: Other’” dutiable at 5%.

Pursuant to 28 U.S.C. 2631(j)(1)(A), the court may not allow a party to intervene in classification or valuation cases except by leave of court in exceptional circumstances. By allowing DSM to intervene, it would raise an alternative claim not covered by discovery by the other parties and DSM has not identified one case allowing for a competitor to submit a brief, or otherwise participate in a classification case. Moreover, the court noted that if DSM’s motion were granted, retroactive relief may be available by requiring plaintiff to post additional duties if DSM’s classification were to succeed. The only avenues for a manufacturer like DSM is to persuade Customs of the correct classification or lobby Congress to modify the HTSUS to DSM’s outcome.  Therefore, the court saw no reason to allow DSM to participate as amicus curiae.

Court Sustained Fourth Administrative Review on Antidumping Duty Order

In Fushun Jinly Petrochemcial Carbon Co., Ltd. and Fangda Carbon New Material Co., Ltd.  v. United States et al., Court No. 14-287 (Slip Op. 16-25)(March 23, 2016), the court sustained the fourth administrative review of an antidumping duty order on small graphite electrodes from China.  Commerce preliminarily found that Fushun had withheld or misrepresented information and had impeded the review, and accordingly applied “total” facts available with an adverse inference after disregarding Fushun’s submissions.  Fushun had not demonstrated its separation from the PRC government and thus was given the PRC wide rate at 159.64.

As to the challenge to the surrogate value selection for Fangda Group’s forming scrap by- product, the primary raw material inputs for small diameter graphite electrode (“SDGE”) products were calcined petroleum coke and “needle” coke, which is a premium-quality type of calcined petroleum coke produced only by a small number of specialized producers in the United States, the United Kingdom, Japan, and the PRC. Responding to Commerce’s requests for information on its production of SDGEs, Fangda’s Group reported separate FOPs for domestic needle coke, imported needle coke, self-produced calcined petroleum coke (involving raw petroleum coke, labor and electricity inputs) and forming scrap. Because the Fangda Group’s reported market economy POR purchases of needle coke exceeded 33 percent of its total POR purchases of domestic and market economy needle coke, Commerce valued both the reported domestic and market economy needle coke FOPs using the weighted average of the Fangda Group’s market economy needle coke purchases during the POR.  In the Preliminary Results, Commerce identified the Fangda Group’s FOPs for forming scrap as a type of calcined petroleum coke by-product, and valued it using the average unit value (“AUV”) of Ukrainian import data for HTS item 2713.12 (calcined petroleum coke), i.e., $1,820 per MT. Fangda agreed in its administrative case brief that HTS 2713.12 is the proper category for valuing the forming scrap by-product, but it argued that the Ukrainian AUV is aberrational when compared with its own values for calcined petroleum coke and its needle coke purchases.  Defendantemphasized that Fangda’s arguments do not take into account the value added by other material inputs within forming scrap (such as stearic acid — which surrogate value Commerce determined to be $1,803.40/MT, as well as labor and electricity.  The court agreed that in the “absence of precise information as to the composition Fangda’s forming scrap and of the ranges and variation on the record of the values of calcined petroleum coke and needle coke as compared with the ranges of those values among the Ukrainian import data, it may not be concluded that the Ukrainian AUV of $1,820 for HTS 2712.12 is significantly overstated or “skewed” as a surrogate for Fangda’s forming scrap.”  See Slip Op pg. 20.  Moreover, the court will not consider the South African AUV as it would substitute its own analysis for that provided by Commerce.

As to deducting from plaintiffs’ US price, the unrefunded portion of PRC domestic VAT taxes upon their export to the US, the court found that plaintiffs misinterpreted the applicable law.  Whether VAT taxes or export taxes are deducted from US price is a determination by Commerce.  Thus the court afforded Commerce’s decision deference.

Finally, as to the application of adverse facts available (AFA), the court sustained Commerce’s decision. After considering the totality of record, including the inconsistencies of Fushun’s section A, section C, first supplemental, and second supplemental responses, Commerce determined that Fushun withheld information that Commerce had requested, failed to provide information in the form or manner Commerce requested, impeded the proceeding, and provided information that could not be verified. In light of the administrative memorandum on the subject (with record citations therein) the court could not conclude Commerce’s determination on the issue unsupported by substantial evidence or not in accordance with law. Thus a separate rate could not be applied to plaintiffs.  Moreover, because the time for filing additional factual information had passed, Commerce acted correctly in not relying on statements made by Fushun’s counsel regarding certain entry information.

For these reasons, Commerce’s determinations were sustained.