United States Court of International Trade

Defendant Ordered to Pay Duties for Incorrect Claims

In United States v. Juan Carlos Chavez, Court No. 12-104, Slip Op. 16-26 (March 25, 2016) a suit for unpaid duties for the corrected classification and incorrectly claiming duty-free treatment under the Caribbean Basin Economic Recovery Act, plaintiff United States was allowed to recover from defendant Juan Carlos Chavez the amount of $8,773.77 in unpaid duties, plus pre-judgment interest on the amount of $8,773.77 calculated from June 14, 2010, plus post-judgment interest on the amount of $8,773.77, plus a civil penalty of $25,441.72, plus post-judgment interest on that amount, plus costs to the government. 

Cross Motions for Summary Judgment were Denied

In Jedwards International, Inc. v. United States, Court No. 11-31, Slip Op. 16-27 (March 28, 2016), plaintiff Jedwards International, Inc. (“plaintiff” or “Jedwards”) challenged the classification by U.S. Customs and Border Protection (“Customs”) of Jedwards’ entries of imported krill oil under the Harmonized Tariff Schedule of the United States (“HTSUS”). Before the court were the cross-motions for summary judgment of Jedwards and defendant United States.

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 argued 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. 

Instead, the court held that plaintiff’s original classification upon entry, subheading 1603.00.90, was the correct classification. Subheading 1603.00.90 therefore covers, among other things, preparations of aquatic crustaceans that retain the essence of the crustacean. There was no dispute that plaintiff obtains its product by capturing and extracting substances from krill, which are small aquatic crustaceans. There was also no dispute that plaintiff’s krill oil retained the “essence” of the krill. Moreover, the court did not defer a ruling classifying the krill oil under Heading 3824 because it lacked “thoroughness, logic, and expertness.”  As for plaintiff’s claims under Chapter 15, there was not enough animal glycerides in the subject product to be considered animal oil.  Plaintiff’s krill oil has 23% triglycerides and 53% phospholipids. Triglycerides were not the “predominant” constituent and phospholipids should only be a “minor” constituent for plaintiff’s krill oil to be an animal oil within the meaning of Chapter 15.  Thus, the court denied cross motions for summary judgment and classified the subject merchandise under HTS Subheading 1603.00.90.

Commerce Determination Sustained

Before the court in Tianjin Wanhua Co., Ltd. v. United States, Court No.14-183, Slip Op. 16-26 (March 29, 2016), were plaintiff Tianjin Wanhua Co., Ltd.’s (“Wanhua”) and Consolidated Plaintiff Shaoxing Xiangyu Green Packing Co., Ltd.’s (“Green Packing”) USCIT Rule 56.2 motions for judgment on the agency record. This action involved an administrative review conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering polyethylene terephthalate (PET) film, sheet, and strip from China. Wanhua challenged Commerce’s decision to adjust Wanhua’s U.S. prices to account for Chinese VAT as contrary to 19 U.S.C. § 1677a(c)(2)(B), and Green Packing challenged Commerce’s selection of Indonesia as the primary surrogate country, arguing that the South African data for the most important input was superior to the Indonesian data when measured against Commerce’s announced selection criteria. However, because both of these arguments were not raised during the administrative case briefing, the court held that it could not decide these issues where plaintiff did not exhaust their administrative remedies.

As to Wanhua’s challenging surrogate values from Indonesia – from PT Argha Karya Prima Industry, Tbk (“Argha”), because the financial statements include schedules for the calculation of surrogate financial ratios, the court held that Commerce acted reasonably. Moreover, because Wanhua’s alternative South African AstraPak’s financial statement looks at comparable not identical merchandise, Commerce’s decision to apply Argha’s statement was reasonable. Additionally, Wanhua needed to establish that AstraPak, when compared with Argha, is the one and only reasonable surrogate selection on this administrative record, not simply that AstraPak may have constituted another possible reasonable choice.

As for the PET byproduct offset argument set forth by Green Packing, the court sustained Commerce’s decision where there was no explicit evidence that a byproduct was recycled and should be offset. The Court found that Green Packing did not provide Commerce with any information to substantiate its claims about how the recycled PET chip it produces relates to the recycled PET chip it used to manufacture the subject merchandise. As a result, Commerce selected a surrogate value for Green Packing’s recycled PET chip input but declined to grant Green Packing an offset.

For the above reasons, the court sustained Commerce’s application of a VAT adjustment to Wanhua’s export price, Commerce’s surrogate country selection, and Commerce’s surrogate valuation of Green Packing’s recycled PET chip input.

The Court Sustained Remand Results

Before the court in Catfish Farmers America, et al., v. United States, Court No. 12-287, Slip Op. 16-27 (March 30, 2016) were the Final Results of Redetermination on the seventh administrative review of the antidumping duty order covering certain frozen fish fillets from the Socialist Republic of Vietnam.  The plaintiffs and a defendant-intervenor, Vinh Hoan Corporation (“Vinh Hoan”), challenged several aspects of the Remand Results.  The court found that Commerce’s Remand Results were supported by substantial evidence on the record.

The plaintiffs asserted that Commerce’s Remand Results were not supported by substantial evidence and otherwise not in accordance with law because (1) the Bangladeshi Department Agricultural Market (“DAM”) data was not specific to the main production input of whole live fish, and (2) the DAM data was otherwise not reliable.

As to specificity of DAM data, Commerce has conflictual evidence on the record and decided to rely on official government documentation in applying the DAM data.  Because the court may not substitute its decision for Commerce’s, it found Commerce’s decision reasonable.

As to reliability of the DAM data, Commerce explained that the discrepancies between the two DAM data sets did not matter where it no longer “accord[s] weight” to the worksheets and that public availability concerns “became moot” with the public availability of the website data.  Additionally, Commerce indicated that DAM’s failure to respond to Commerce’s questions was not meaningful because it submitted the questions with regard to the worksheet data, not the website data, and its questions to the DAM primarily centered on the issue of public availability. Commerce further noted that even if it did afford any weight to the worksheets, the average discrepancy was “about 3 percent, meaning there is no meaningful difference when taken together as a whole.” Remand Results at 8; see also Def’s Resp. at 11-12. Moreover, in the absence of volume information, Commerce found that the record on the whole showed that the DAM data reflected commercial quantities.  According to Commerce, the “DAM website provided a “robust” set of Pangasius prices in Bangladesh and were reliable for SV purposes. Slip-Op pg. 13.

Finally, in regards to Vinh Hoan’s claims regarding by-product SVs for fish oil, the court did not think that any issues remedied by remand would result in the improvement of Vinh Hoan’s margin which was 0%.