United States Court of International Trade

Customs Allowed to Collect Dump Duties from Surety with Interest

In United States v. International Fidelity Insurance Company, Slip Op. 17-136, Court No. 13-00256, (October 5, 2017) the Court heard arguments about the United States efforts to collect unpaid antidumping duties from Fidelity. In May of 2002, China Leader Express Co. imported fresh garlic from China with a 376.67% antidumping rate. China Leader submitted a bond as security for the estimated dumping duties, with Fidelity as the surety.  In December of 2002, Commerce began a periodic review of Huaiyang Hongda Dehydrated Vegetable Company (“Hongda”) the exporter of garlic imported by China Leader. However, Commerce rescinded the review with respect to Hongda, and the garlic was subject to the full PRC rate. Commerce’s decision was challenged in Court, which suspended efforts to collect. In November of 2004, the Court sustained Commerce’s decision, and no appeals were filed. In January 2007, Commerce notified Customs the injunction had expired and the shipments were to be liquidated. In September 2007,  Customs liquidated the goods with a 376.67% duty. Customs’ attempts to collect from China Leader and Fidelity were unsuccessful which resulted in the filing of this case on July 23, 2013. For the following reasons the Court agreed with the government and ordered Fidelity to pay $231,000 plus pre-judgment and post judgment interest.

The first issue was whether the Government’s case was commenced after the statute of limitations for collecting on a bond had expired. The government may collect “within six years of the date on which the Government’s right of action accrues,” which for a Customs bond is the date of liquidation. Id. at 7. “Here, the six-year statute of limitations on the Government’s collection action commenced on the date the subject entry was deemed liquidated by operation of law.”  Id. at 8.  Notice of removal of the suspension is when deemed liquidation occurred.  In this case, Commerce sent the liquidation instructions to Customs on July 24, 2007; the summons was filed on July 23, 2013, one day before the six year period expired. Thus, the case was timely.

Next, the Court denied any claims that the bond was invalid due to handwritten changes on the bond made by Customs.  The Court said that “Fidelity offers no evidence in support” of this claim and the bond was valid. Id. at 17.

The final issue was the amount of interest that the Government was entitled to collect. The Court allowed the government to collect statutory pre judgment interest because “19 U.S.C. § 580 provides for interest on bonds securing both traditional customs duties and antidumping duties” at a rate of 6% per annum. Id. at 21. The Court stated that “the Government’s entitlement to statutory pre-judgment interest” outweighs any equitable factors in the Government’s favor because “the 6% rate under § 580 far exceeds the applicable rates at which the Government would receive equitable interest.” Id. at 25.  Post judgment interest was allowed because 28 U.S.C. § 1961(a) provides that post-judgment “interest shall be allowed on any money judgment in a civil case”. Id. at 26. For these reasons, the Court denied defendant’s motion for summary judgment and granted plaintiff’s cross motion.

U.S. Commissions are Constructed Export Price Selling Expenses

In ABB, Inc. v. United States, Court No. 15-108, Slip Op. 17-137 (October 10, 2017), the Court sustained Department of Commerce’s (“Commerce”) redetermination on remand in the first administrative review of the antidumping duty order on large power transformers from the Republic of Korea (“Korea”), for the period of review (“POR”) February 16, 2012, through July 31, 2013 (“POR 1”). The court directed Commerce to “further address the sequencing of certain of [Hyundai Heavy Industries Co., Ltd. and Hyundai Corporation USA’s (collectively “Hyundai”)] documents in the record,” and “defer[red] ruling on the issue of whether Commerce should have applied facts available or [adverse facts available (“AFA”)] in calculating Hyundai’s dumping margin with respect to the discrepancies in the sequencing of Hyundai’s documents alleged by ABB.” ABB Inc. v. United States (ABB I), 40 CIT_ 190 F. Supp. 3d 1159, 1164, and 1184 (2016). The court also directed Commerce to “further explain its treatment of the respondents’ U.S. commissions, the record basis for such treatment, whether such U.S. commissions result in the granting of commission offsets, and the legal and factual basis for the granting or denial of the commission offsets.” See id.

As for the sequencing of Hyundai’s sales documents, on remand, all discrepancies on the sequencing were resolved.  However, in regards to commission offsets, because respondents’ commissions were incurred in the U.S., Commerce denied home market commission offsets to Hyosung Corporation, the defendant intervenor, and Hyundai, because there were no commission expenses in the home market.  Such expenses are already treated as constructed export price or CEP selling expenses and get deducted from the price to establish CEP. Both Hyosung and Hyundai challenged this decision, arguing that Commerce went beyond the remand instructions in its factual findings to findwhere the commissions were incurred and that the review was “results-oriented” and contrary to government statutes and regulations.

The Court accorded substantial weight to the agency’s interpretation of the statute it administers and held that deductions in the CEP for U.S. commissions is in accordance with the law under 19 U.S.C. § 1677a(d)(1)(A).  For these reasons, the Court sustained Commerce’s redetermination.

Default Judgment Granted in Misclassification Case

In a penalty case seeking the collection of duties amounting to $40,288.82 and penalties totaling $131,358.22 for misrepresentations on entry documents regarding the classification of dairy products, defendants Juan Carlos Chavez and Chavez Import & Export, Inc. (“CIE”) failed to appear. Summary judgment was already granted in plaintiff’s favor against Chavez in a previous opinion. Plaintiff then moved for entry of default judgment against CIE. Because CIE has failed to appear or respond to the government’s allegations, CIE has not shown that it exercised reasonable care or competence to justify the claimed classifications.  As result, the Court granted default judgment in favor of plaintiff and against CIE for unpaid duties, penalty, interest, and costs.