United States Court of International Trade

Commerce’s Determinations Sustained

In Itochu Building Products Co. Ltd., et. al. v. United States, et.al. Slip Op. 18-24, Court No. 12-00065 (March 22, 2018) the Court reviewed Commerce’s determinations on remand regarding an antidumping order. Previously, the Court had remanded the case for reconsideration of surrogate Indian import data, surrogate financial ratios and to determine if the adverse facts available (“AFA”) should be applied to a respondent. In addition, The Court also requested Commerce to conduct an investigation regarding if defendant intervener, Mid Continent, acted improperly by withdrawing numerous antidumping petitions in the case. For the following reasons the Court sustains all of Commerce’s determinations in full.

The first issue discussed was Commerce’s finding that Mid Continent did not act improperly by withdrawing petitions. In responses to Commerce, Mid-Continent replied “its decision to withdraw the requests was based on the particular facts of the case” and “no payments were made in exchange for the withdrawal.” Id. at 6. Commerce had no further evidence on the record; as a result the determination was sustained. The next issue was the selection of surrogate values for import data and financial ratios. Commerce’s previous determination was remanded because they were not supported by substantial evidence. On
remand Commerce selected India Joint Plan Committee (“JPC”) import data. The “use of JPC data on remand is supported by substantial evidence because the data is more specific, “tax-exclusive, publicly available, contemporaneous with the POR, and represented imports into the principal surrogate country.” Id. at 10. The next issue was the use of financial ratios from
Sundram. Commerce had requested the Court remand this issue in order to investigate if the company received countervailable subsidies. On remand, Commerce determined that it was appropriate to rely on the financial statements “because while Sundram was eligible for subsidies, there was no evidence showing that Sundram actually benefitted from them.” Id. at 12. As a result, the determination was sustained. The final issue was Commerce’s decision not to apply the AFA to Jinchi, a respondent, for failing to supply information from a supplier. The Court had previously ruled that Commerce was not allowed to apply the AFA because
Commerce never found Jinchi failed to cooperate. On remand, Commerce applied neutral facts available because the evidence shows that Jinchi tried to persuade its producer to provide the necessary records. As a result the determination is upheld.

Decision in Diamond Sawblades Remanded in Part

In Diamond Sawblades Manufacturers’ Coalition v. United States, Court No. 16-124,Slip Op. 18-29 (March 22, 2018), the Court reviewed the Final Results in a review of an antidumping order on diamond sawblades. This opinion concerns the November 1, 2013, through October 31, 2014 period of review (“POR”) of the antidumping duty order on diamond sawblades (“DSBs”) and parts thereof from the People’s Republic of China (“PRC”). DSBs and Parts Thereof From the PRC, 81 Fed. Reg. 38673 (June 14, 2016) (“Final Results”).

The following issues are being challenged: (1) deduction of irrecoverable value added tax (“VAT”) from Jiangsu Fengtai and Weihai’s export prices, (2) surrogate valuation of nitrogen and oxygen, (3) surrogate valuation of labor, (4) calculation of surrogate truck freight, (5) treatment of graphite plates as direct material rather than factory overhead, (6) selection of financial statements for financial ratios, (7) denial of a request to rescind the review as to Weihai, (8) valuation of self-produced and purchased DSB cores in the calculation of Weihai’s normal value, and (9) the margin for the separate rate respondents, as impacted by the foregoing.

Because Commerce asks for a voluntary remand on the last two of these issues, valuation of self-produced and purchased DSB cores and the margin for separate respondents, the Court grants the request for a voluntary remand.

As for deducting irrevocable VAT, Jiangsu Fengtai and Weihai argued that the irrevocable VAT, represents an amount that must necessarily be included in the export price, because it is that differential, between the full amount that the PRC government would otherwise receive, and the amount of VAT that the exporter actually receives in rebate. This amount is the irrevocable VAT and functions as an equivalent cost. The Court however, sustains Commerce’s decision to NOT deduct this irrevocable VAT from the export prices.

The Court sustained the surrogate valuation of nitrogen, oxygen, and labor, as well as the treatment of graphite plates as a direct material. Further, the Court sustained the selection of financial statements from K.M. and A.A. Co., Ltd. (“KM”), a Thai company, because the alternative predated the POR and they are from the primary surrogate country. However, the
calculation of surrogate truck freight was remanded to consider whether the freight distance must be based on the average of the distances to both the Port of Khlong Toei (i.e. the Port of Bangkok) and the Port of Laem Chabang. The Court affirmed Commerce’s decision to include Weihai as a respondent because it did not raise the issue of the denial of its request to rescind the review in its administrative case brief, unlike a U.S. petitioner in Glycine & More, Inc. v. United States, 39 CIT ___, 107 F. Supp. 3d 1356 (2015), remand results sustained, 40 CIT ____, 181 F. Supp. 3d 1360 (2016)(“Glycine & More”), affirmed, 880 F.3d 1335 (Fed. Cir. 2018) who submitted a timely request for rescission of the review.

For these reasons, the Commerce’s decisions are remanded in part.

No Conference? No Section 592 Penalty, Court Says

Customs’ failure to provide an importer with a requested in-person conference to discuss a penalty claim being imposed under Section 592 of the Tariff Act invalidates the agency’s $4.5 million claim for penalties and withheld duties, according to recent decision of the United States Court of International Trade.

In United States v. Aegis Sec. Ins. Co, Slip Op. 18-29 (March 26 th , 2018), Customs sued Tricots Liesse 1983 Inc., a Montreal area fabric producer, for withheld duties and penalties under Section 592. Tricots had made a “prior disclosure” to CBP that some fabric it imported into the United States did not qualify as “originating” goods, entitled to duty free entry under the North American Free Trade Agreement (NAFTA). However, Tricots claimed that the products did qualify for duty free entry under Tariff Preference Level (TPL) programs. The company tendered merchandise processing fees to Customs, but took the position that no duties had been underpaid or withheld.

Customs rejected the importer’s tender, asserting that a claim for TPL treatment had to be made prior to the time the import entries were liquidated, and told Tricots Liesse that it would need to pay withheld duties to perfect its prior disclosure and avoid the imposition of penalties.  Tricots continued to argue that no loss of revenue had occurred. After efforts to resolve the matter with an offer in compromise failed, Customs sued the company for Section 592 withheld duties and penalties. This case was consolidated with another, related, case, previously brought to recover withheld duties from Tricots’ Customs bond surety.

Tricots moved to dismiss the Government’s complaint for failure to state a claim. Tricots argued that it had requested an in-person conference with Customs officials to discuss the penalty claim, and had not received it. Since the Customs regulations gave the importer the right to such a conference, Tricots claimed, the government by failing to provide the conference, had failed to exhaust its administrative remedies.

The Court of International Trade agreed. After holding that telephone calls between Tricots officials and Customs officers did not constitute the requested and required conference, Senior Judge Richard Eaton held that Customs had failed to exhaust its administrative remedies which were necessary to undertake in order to perfect its cause of action. The legislative history to Section 592, he held, provided importers with the right to a hearing, which was an expected part of the process. Finding the oral conference to be an essential part of the section 592 administrative process, and having determined that CBP failed to exhaust this remedy, the Court held that the government had failed to state a cause of action, and dismissed the government’s penalty case. The court further held that the defendant did not need to show substantial prejudice to itself to secure the dismissal.

The case is a surprising one, and a pleasant surprise for importers. The decision will undoubtedly be appealed by the government to the Federal Circuit in an appeal that will bear watching.

No Injunction Pending Appeal in Silicon Photovoltaic Cells Case

The Court would again, not grant the injunction sought by plaintiffs in Silfab Solar, Inc. et al, v. United States, Court No. 18-00023, Slip Op. 18-30 (March 26, 2019). On March 5, 2018, the court denied the motion of plaintiffs Silfab Solar, Inc., Heliene, Inc., Canadian Solar (USA), Inc., and Canadian Solar Solutions, Inc. for a temporary restraining order and a
preliminary injunction. Silfab Solar, Inc. v. United States, Slip Op. 18-15, 2018 WL 1176619 (Mar. 5, 2018), ECF No. 47 (“Silfab I”). The motion for equitable relief sought to enjoin defendants from asserting “safeguard” measures, or temporary duties, beginning February 7, 2018 on imports of silicon photovoltaic (“CSPV”) cells and certain products (including “modules”) that contain such cells. This was imposed by presidential proclamation (“Proclamation”) on January 23, 2018 under section 203 of the Trade Act of 1974, 19 U.S.C. 2253. The Court now entertains two motions pursuant to the interlocutory appeal of that order.  The first motion seeks an injunction preventing defendants from taking action to impose or enforce the Proclamation with respect to their products, and a stay of proceedings in this Court pending appeal, and the second seeks an expedited ruling on their first motion. In regards to the second motion, in the alternative, plaintiffs seek an extension of time to respond to a motion to dismiss until their first motion is resolved.

While the Court granted the second motion, the Court denied the injunction motion. First,  there was no likelihood of success, where ITC affirmatively found CSPV products were being imported into the United States in such increased quantities to cause serious injury to the domestic industry, and that plaintiff’s interpretation of applicable statutes would negate the ITC’s findings and recommendations. As to the second Count of the Complaint, the Court questioned standing to assert a claim that the Proclamation violated section 312 of the North American Free Trade Agreement Implementation Act where the plaintiffs did not allege that they produced or imported CSPV cells from Canada. Even if there were standing, the Court doubted that the tariff-rate quota can be said not to “permit” the importation of a specified quantity or value of CSPV cells from Canada, and was a “quantitative restriction” within the meaning of 19 U.S.C. 3372. Finally, as to the third count that the President lacked authority to impose a restriction on CSPV products, the Court found that determinations of the ITC are not binding on the President who is directed to make his own findings, and that the Court may not review the judgment of the President in this matter. As to the other issues for an injunction pending appeal, the Court found that it would not be in the public interest; that it would not be necessary to have a hearing; and that a Stay would not be necessary. While it did it not make a finding, the Court presumed that the plaintiffs have met the requirement of irreparable harm in the absence of an injunction pending an appeal.