United States Court of International Trade

Remand Results Sustained

Before the Court, in TMK IPSCO et al. v. United States, Slip Op. 17-54, Court No. 10-00055, Slip Op. 17-54 (May 3, 2017), was the U.S. Department of Commerce’s (“Department” or “Commerce”) Final Results of Redetermination Pursuant to Court Remand filed pursuant to the Court’s decision in TMK IPSCO v. United States, 40 CIT __, __, 179 F. Supp. 3d 1328 (2016). See Final Results of Redetermination Pursuant to Court Remand, Dec. 21, 2016, ECF No. 171 (“Remand Results”). The Court remanded Commerce’s final determination in its countervailing duty (“CVD”) investigation of certain oil country tubular goods (“OCTG”) from the People’s Republic of China (“China”) to explain or reconsider its determinations.  The Court sustained the Remand Results.

In regards to analyzing subsidies, the Court held that by ending its investigation and measurement of subsidies on December 11, 2001, when China acceded to the WTO, Commerce failed to countervail all identifiable and measurable subsidies as required by statute.  However, on remand, Commerce identified the dates adopted for each type of subsidy program and tied  specific reforms to Commerce’s ability to identify the sphere of commercial activity involved, the economic actors involved, and the government action required to bestow the type of subsidy.  Thus it complied with the Court’s decision by identifying the dates and specific reforms implemented and making connections between the reforms and the legal conditions reasonably deemed necessary for a particular grant.

In regards to the disparate freight quotes, the Court remanded to Commerce to reconsider or further explain its decision to use an average of two freight quotes from Maersk and Jianli’s freight-forwarder because Commerce had not adequately explained how two such disparate quotes could be representative of freight prices available to respondents. On remand, Commerce continued to find that the ocean freight quotes provided by Maersk and by Jianli’s freight forwarder are both reflective of market rates that the importer would have paid to import steel rounds and billets notwithstanding the pricing disparity. Commerce determined that working with a shipping company versus contracting with a freight forwarder may result in different costs, but still reflects market rates.

With regards to the inclusion of the SBB East Asia pricing from tier ii benchmark price for steel rounds and billets, Commerce decided to exclude the SBB East Asia pricing data from its tier ii benchmark pricing for steel rounds. If there is no useable market-determined price with which to make the comparison, Commerce will measure the adequacy of remuneration by comparing the government price to a world market price “where it is reasonable to conclude that such price would be available to purchasers in the country in question” (i.e., a tier ii benchmark). 19 C.F.R. § 351.511(a)(2)(ii). Here, Commerce concluded that the fact that the SBB East Asia pricing data could include Chinese import prices presents “a more compelling rationale for removing the data source from [its] benchmark.” Slip Op. pg. 24.

As to the attribution methodology, Commerce reconsidered it and agreed that it in some instances it should not have attributed subsidies to certain subsidiaries, however if the companies were cross-owned it attributed subsidies to the combined sales of both companies. The Court agreed with such findings.

In regards to the provision of steel rounds tied to production of subject merchandise, the Court remanded Commerce’s decision to attribute the benefit received by TPCO from the provision of steel rounds at LTAR because the Court could not “discern whether Commerce determined that the provision of steel rounds at less than adequate remuneration (LTAR) is tied to sales of seamless pipe.” TMK IPSCO, 40 CIT at __, 179 F. Supp. 3d at 1359. On remand, Commerce finds no record evidence as to the purpose or intended use of the steel rounds and billets under the subsidy program.  Thus, Commerce attributed the provision of steel rounds and billets at LTAR to all sales of TPCO rather than to only sales of seamless pipe. Such a decision was supported by substantial evidence.

Motion for Partial Summary Judgment Granted

In United States v. International Trading Services, LLC, and Julio Lorza, Court No. 12-135, Slip Op. 17-55 (May 5, 2017), the Court considered plaintiff’s motion for partial summary judgment pursuant to section 592 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1592 (2006), regarding eight misclassified shipments of sugar. Plaintiff contended that defendants International Trading Services, LLC (“ITS”) and Julio Lorza (“Mr. Lorza”) were jointly and severally liable for unpaid duties and penalties amounting to $986,967.31.  Entry documents show that ITS classified the sugar under HTSUS subheading 1701.99.0500, which provides for “[c]ane or beet sugar and chemically pure sucrose, in solid form,” that also is “[d]escribed in general note 15 of the tariff schedule and entered pursuant to its Provisions,” andhas a corresponding duty rate of $0.036606 per kilogram. Customs later classified defendants’ entries under HTSUS subheadings 1701.99.5010 and 1701.99.5090, with a corresponding duty rate of $0.3574 per kilogram. Moreover, defendants’ entries were not covered by general note (GN) 15 because they were not imported for any U.S. agency, exceeded the net weight of 5 kilograms, were cotton or blended syrups and were introduced to the commerce of the U.S.   As such, the classification of entries under subheading 1701.00.99.0500 constituted a material false statement.

Because defendants did not respond to plaintiff’s motion, and defendants have not provided any evidence of reasonable care, the Court held defendants jointly and severally liable for unpaid duties, penalties, and applicable interest. Applying the United States v. Optrex Am., Inc., 32 CIT 620, 640-42 (2008) and Complex Machine Works Co., 23 CIT 942 (1999) factors, the Court found the penalty amount to be appropriate where the defendants have not cooperated with the investigation, or provided any type of disclosure.  Moreover, further deterrence supported a heightened penalty for public policy reasons.  The Court awarded prejudgment and post-judgment interest to plaintiff. The Court, therefore, granted plaintiff’s motion for partial summary judgment. 

Motion to Amend Complaint Granted

In Jinxiang Hu Ameng Imp & Exp Co., Ltd. v. United States, Court No. 16-243, Slip Op. 17-57(May 10, 2017),  plaintiff sought to add two counts to the complaint, pursuant to 28 U.S.C. § 1581(i), asserting that (1) Customs unlawfully liquidated the single entry of subject merchandise subject to the new shipper review and (2) Commerce unlawfully failed to exclude plaintiff’s entry from the liquidation instructions issued during the administrative review. Moreover, plaintiff’s motion also wanted to add one count pursuant to 28 U.S.C. § 1585 claiming that equity requires reliquidation of the entry in order to avoid substantial injury to the importer of record, who is not a party in this action.  Defendant argued that plaintiff could have filed a protest to challenge the liquidation, but because plaintiff is an exporter, and not an importer, there would be no means for the plaintiff to file a protest.  Therefore, the Court allowed the first two counts to be added to the complaint and denied the third count because plaintiff did not have standing to make claims regarding the importer.  For these reasons, the Court partially granted the motion.

Motion to Dismiss Denied

In Jinxiang Hu Ameng Imp & Exp Co., Ltd. v. United States, Court No. 16-243, Slip Op. 17-58(May 10, 2017),  the Court denied defendant’s motion to dismiss because it must draw all reasonable inferences in favor of the plaintiff.  Those inferences are that the liquidation of the sole entry was in contravention of Commerce’s instructions and that the liquidation instructions were unlawful in deciding the motion. Assuming that plaintiff prevails on either of its claims, the complaint would therefore not be moot even if the entry was liquidated.