United States Court of International Trade

Court Granted Customs’ Motion For Summary Judgment in Tariff Classification Case  

Before the Court in FANUC Robotics Am., Inc. v. United States, Slip Op. 19-94, Court No. 04-00197 (July 26, 2019) was a challenge by plaintiff to contest Customs tariff classification of its imported printed circuit assemblies (“PCAs”), which were manufactured for use as components in FANUC’s programmable “controllers.” The controllers are then used in conjunction with FANUC’s industrial robots. Ten general types of PCAs were at issue in this case, each of which was manufactured for use as a component within a programmable “controller” The particular PCAs at issue in at issue in this case were imported for use as spare parts for incorporation into FANUC controllers. For the following reasons, the Court granted defendant’s summary motion.  

“Tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) is governed by the General Rules of Interpretation (“GRIs”) and the Additional U.S. Rules of Interpretation.”  Id. at 5-6. “Classification shall be determined according to the terms of the headings and any relative section or chapter notes.” Id. at 6. The Court found that FANUC’s controllers conform to the terms of Heading 8537 because the controllers contain a “circuit breaker, switches, and backplane.” Id. at 9-10. The PCAs were described by the terms of Heading 8538 because the PCAs at issue were imported for use as spare parts to be incorporated into FANUC controllers, and their interfaces made them unsuitable for installation in any other type of machine. Id. at 11. Thus, “whatever else they may be, these PCAs are parts suitable for use solely with an apparatus of Heading 8538, HTSUS. The Court found that the “ADP parts” do not constitute an “automatic data processing machine” for purposes of tariff classification because they perform a function beyond data processing. Id. at 12 Thus, the Court eliminated Heading 8471, HTSUS from consideration. Id. at 22. The Court concluded that the subsequent subheading 8538.90.30 is correct, and subject to duty at 3.5% ad val. Id. at 24.

Court Grants Plaintiff’s Motion for Voluntary Dismissal

Before the Court in Moen, Inc. v. United States, Slip Op. 19-95, Court No. 15-00161 (July 26, 2019) was plaintiff’s motion for voluntary dismissal under USCIT Rule 41(a). Plaintiff moved to dismiss its action against the United States challenging the denial by Customs of its protest pertaining to the tariff classification of various models of showerheads imported from the People’s Republic of China. Defendant opposes plaintiff’s motion for voluntary dismissal, noting its expenditure of resources and its pending summary judgment motion. For the following reasons, the Court granted plaintiff’s motion to dismiss and entered judgment dismissing this action.

 “Where the motion for voluntary dismissal was not filed before the opposing party served its answer to the complaint and there is no stipulation of dismissal signed by all parties, dismissal requires a Court order, and the Court may order dismissal on terms that the Court considers proper.” Id. at 4. “Unless otherwise stated, such dismissal is without prejudice. Id. Plaintiff argued Section 301 duties imposed by the U.S. Government have “significantly changed the importing landscape for showerheads manufactured in China” Id. at 4.  The Court reasoned because plaintiff has multiple protests that have been administratively suspended, if a new action similar to the present case is filed, then at least some of the effort the government devoted to discovery and the summary judgment motion may be useful. Id. at 6. The Court also said, defendant will not suffer clear legal prejudice because the liquidation of the entries that are the subject of this motion will stand. Thus, the Court granted plaintiff’s motion for voluntary dismissal because the “just, speedy, and inexpensive” requirement of Rule 1 does not “require the Court to deny the motion to dismiss where a plaintiff does not wish to proceed with its classification claim and defendant cannot establish that it will be legally prejudiced by dismissal. Id.

Court Vacated Temporary Restraining Order and Denied Plaintiff’s Motion for a Preliminary Injunction in Countervailing Duty case

Before the Court in Committee Overseeing Action for Lumber Int’l Trade Investigations or Negotiations v. United States, Slip Op. 19-88, Court No. 19-00122 (July 26, 2019) was a challenge to Commerce’s final results in the expedited countervailing duty review of certain softwood lumber products from Canada. This matter was before the Court on Plaintiff’s motion for a temporary restraining order “TRO” and preliminary injunction (“PI”). Plaintiff sought to enjoin Defendant from: (1) liquidating “any unliquidated entries of softwood lumber from Canada that” were subject to the Final Results, and were produced or exported by seven of the eight companies that received de minimis or reduced rates in the review; (2) revoking the relevant countervailing duty order on five companies that received de minimis rates in the review; and (3) collecting cash deposits at the rates established in the Final Results on entries which were produced or exported by the eight companies subject to the review. For the following reasons, the Court vacated the TRO and denied Plaintiff’s motion for a preliminary injunction,

To obtain a preliminary injunction, a party must demonstrate “(1) likelihood of success on the merits, (2) irreparable harm absent immediate relief, (3) the balance of interests weighing in favor of relief, and (4) that the injunction serves the public interest.” Id. at 9. “In evaluating irreparable harm, the Court must consider the magnitude of the injury, the immediacy of the injury, and the inadequacy of future corrective relief.” Id. “Immediacy of the injury and the inadequacy of future corrective relief may be weighed more heavily than magnitude of harm.” Id. at 10 In this case, plaintiff unsuccessfully attempted to analogize the effect of liquidation on the Coalition to the effect of liquidation during the pendency of a challenge to an administrative review. The Court found that “liquidation of entries—without more—generally does not constitute irreparable harm in a challenge brought by a domestic producer to an investigation determination”. Id. at 13. Liquidation of entries during the interim period would not moot Plaintiff’s claims and, absent evidence demonstrating specific, irreparable harm from liquidation of those entries, Plaintiff is not entitled to an injunction barring liquidation of such entries. Id. at 13. Thus, Plaintiff’s request for injunctive relief was denied because Plaintiff failed to demonstrate irreparable harm.

Court Sustained Commerce’s Remand Redetermination in Countervailing Duty Investigation

Before the Court in ArcelorMittal USA LLC et. al. v. United States et. al., Slip Op. 19-97, Court No. 16-00168 (July 29, 2019) was a challenge to Commerce’s final affirmative determination in the countervailing duty investigation of certain cold-rolled steel flat products from the Russian Federation. ArcelorMittal argued Commerce’s remand determinations did not comply with the Court’s remand order because Commerce’s explanation for its selection of the .03% AFA rate remained inadequate. NLMK argued Commerce impermissibly rejected its untimely comments on the draft remand redetermination and that Commerce failed to sufficiently justify its AFA decision. For the following reasons, the Court sustained Commerce’s final remand redetermination in its entirety.

The first issue the Court dealt with was if Commerce adequately explained why the .03% AFA rate was sufficiently adverse. Commerce did explain that the rate would best balance the statutory purposes of deterring non-cooperation and using a corroborated rate that reflects the subsidization behavior of the Russian government.  Id. at 9. Thus, it was reasonable for Commerce to use the only available rate which was also explicitly permitted by statute. Id.

Secondly, the Court reviewed whether Commerce abused its discretion by rejecting NLMK’s untimely comments. “Strict enforcement of time limits and other requirements is neither arbitrary nor an abuse of discretion when Commerce provides a reasoned explanation of its decision.” Id. at 13.  In this case, Commerce set deadlines consistent with the procedures established for similar circumstances and explained its rationale for rejecting NLMK’s untimely submission. Id. at 15. Commerce set a clear deadline for comments on the draft remand redetermination. Id. NLMK failed to meet that deadline, without sufficient explanation, and did not even seek an extension of time to submit comments before the deadline had expired. Id. The Court found that “NLMK has not demonstrated an unexpected event that could not have been prevented and that precluded them from timely filing an extension request through all reasonable means.” Id. at 17. Finally, nothing in the record of this case suggests that Commerce’s rejection of the untimely request resulted in a disproportionately punitive margin. Id.

The final issue was whether NLMK failed to exhaust its administrative remedies. A party who fails to exhaust their administrative remedies in this manner therefore may not raise an issue for the first time before the trial Court. Id. The Court reasoned that because Commerce rightly rejected NLMK’s untimely comments and removed them from the record, NLMK’s objections to the draft remand redetermination were never properly before Commerce. Id. Thus, NLMK failed to exhaust its administrative remedies in challenging the draft remand redetermination. Id. at 19. The Court found that Commerce’s Remand Redetermination complied with the Court’s instruction and sustained the results.