United States Court of International Trade

Commerce’s Decision Sustained in Differential Pricing Analysis Case

Before the Court in Stanley Works (Langfang) Fastening Co., Ltd. et. al. v. United States Slip Op. 18-135, Court No. 16-00053 (October 10, 2018) were plaintiff’s challenge to Commerce’s determinations in an antidumping duty order covering steel nails from China.

Plaintiff argued Commerce unlawfully rejected Stanley’s original case brief, and the final results were not made in accordance with the governing statute or Commerce’s regulations. For the following reasons the Court sustains Commerce’s results.

In order to remand the case back to Commerce, the Court must find Stanley was substantially prejudiced by Commerce’s rejection of the brief. The Court said Stanley could not have been substantially prejudiced because all arguments made in the brief were considered by the Court in a separate case involving the same issue, which Stanley lost. Moreover, the materials Stanley hoped to put on the record were closer to being part of its legal argument than factual information as defined in 19 C.F.R. § 351.102(b)(2) . Stanley was never denied an opportunity to makes its arguments and therefore was not substantially prejudiced by Commerce’s rejection. For the same reasons cited by the Court previously in Stanley’s lost case,

Slip Op. 18-99, the Court found Commerce’s differential pricing analysis was a reasonable interpretation of the statute and upheld Commerce in full.

Duty Drawback: CIT Orders Final Regulations Issued

The United States Court of International Trade has directed the government to publish, no later than December 17, 2018, duty drawback regulations implementing key provisions of the Trade Facilitation and Trade Enforcement Act of 2015.

In Tabacos de Wilson v. United States, Slip Op. 18-138 (October 12, 2018), the Court issued a judgment order to implement its earlier decision that Treasury had “unlawfully withheld agency action” by failing to issue regulations providing formulas for the calculation of drawback under the new rules set out in TFTEA. Since that time, Customs on August 2, 2018 issued a Notice of Proposed Rulemaking which would create a whole new part of the Customs Regulations for TFTEA drawback. The agency solicited public comments on the proposed regulations through September 17, 2018, with nearly 100 major stakeholders providing comment. The government had represented to the CIT that it could complete the massive rulemaking package before February 2019, the end of the TFTEA drawback “transition year”, but the Court seemed unconvinced.

The Court’s new order directs Customs to publish its drawback regulations in final form by December 17, 2018, and to make them effective on that date. This, the Court indicated, would give drawback claimants at least part of the “transition year” to make informed decisions on how to file drawback claims. But the order gives Customs an important “out”; the agency may delay issuance of any final regulations other than a small group which the plaintiffs had identified as essential to determining how to calculate TFTEA drawback claims.

The ball is now in the Government’s court. As of this writing, the government has not indicated whether it will try to implement its entire regulatory package by December 17. That package contains a number of controversial measures – such as those involving drawback of Federal Excise Taxes – which, if the rules are enacted, could prompt additional litigation.

The Tabacos decision is the latest in a saga which began back in February, 2018, when the Treasury Department bypassed a Congressional deadline for issuing regulations concerning how duty drawbacks should be calculated under TFTEA. Drawback claimants who had been promised a “transition year” in which they could claim drawback either under historical rules or TFTEA rules were at a loss concerning how they should structure and file duty drawback claims.

In lieu of regulations, Customs and Border Protection issued an Interim Guidance Document setting out “guidelines” for calculating TFTEA drawback – guidelines which were changeable at will and which would govern the drawback program until Customs could complete and finalize regulations regarding drawback under TFTEA.

Moreover, Customs indicated that it would not issue accelerated payments of drawback for TFTEA claims until final regulations were adopted. Mindful that CBP’s last major set of drawback regulations had taken nearly five (5) years to be finalized, and facing financial losses, a group of drawback claimants and drawback service providers brought suit, seeking to force Treasury to issue the calculation regulations which Congress had directed be in place by February 2018.

On June 29, 2018, the United States Court of International Trade ruled for the drawback claimants, holding that Treasury had “unlawfully withheld” required agency action, and that, under the Administrative Procedure Act, the Court was required to “compel agency action unlawfully withheld”. Tabacos de Wilson et al. v. United States, Slip Op. 18-81 (June 29, 2018).

Now the court has determined the scope of the action to be taken.