United States Court of International Trade

Slip Op. 20-151

Before the Court in Uttam Galva Steels Ltd. v. United States, et. al., Court No. 19-00044, Slip Op. 20-151 (October 29, 2020) were Commerce’s remand determinations, regarding a challenge to an administrative review of the countervailing duty order on certain corrosion-resistant steel products from India. Plaintiff challenged Commerce’s assignment of adverse facts available (“AFA”) rates to the other remaining programs in the final results. Plaintiff contended that Commerce “failed to explain the differences in its application of AFA under substantially similar factual circumstances to Uttam Galva as compared with mandatory respondent JSW Steel Limited (“JSW”) during the investigation” Id. at 4. Plaintiff also argued that Commerce unreasonably attributed, as AFA, 20 subsidy programs to Lloyd Steel Industry Limited (“LSIL”), and by extension to Uttam Galva, despite information set forth in LSIL’s financial statement which indicates that LSIL could not have benefitted from the programs. For the following reasons, the Court sustained Commerce’s determinations in part and remanded in part.

The Court sustains Commerce’s “determinations, findings, or conclusions” unless they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” Id. at 5. In this case, the Court found that Commerce’s analysis failed to explain why the agency found it appropriate to apply AFA differently for JSW than it did for Uttam Galva. The Court explained “while there may have been factual distinctions between the application of AFA to JSW …. and the application of AFA to Uttam Galva …, Commerce failed to identify them and explain what distinguished Uttam Galva’s situation from that of JSW.” Id. Thus, the Court remanded this issue. However, the Court did not agree with Uttam Galva that Commerce acted unreasonably by including the 20 disputed LSIL programs in Uttam Galva’s AFA rate. The Court found “Commerce reasonably explained why it found the LSIL financial statement did not conclusively provide a full account of LSIL’s geographic presence and sectoral activities. As such, the Court sustained Commerce’s determinations in part and remanded in part.

Slip Op. 20-154

Before the Court in United States v. NYWL Enterprises, Court No. 16-00257, Slip Op.20-154 (October 30, 2020) was Plaintiff’s motion for the entry of default judgment. Plaintiff alleged that “NYWL Enterprises Inc. (“NYWL”), fraudulently misclassified 107 entries of imported Siamese coaxial cable.” Id. at 1. Defendant’s “documentation listed the cable as either: (1) cored wire of base metal for electric arc welding pursuant to subheading 8311.20.00 of the Harmonized Tariff System of the United States (“HTSUS”) dutiable at zero percent; (2) winding wire pursuant to 8544.11.0050, HTSUS, dutiable at 3.5 percent ad valorem; or (3) insulated wire of a kind used for telecommunications pursuant to 8544.49.10, HTSUS, dutiable at zero percent.” Id. at 2. However, the government alleged that “[t]he subject Siamese coaxial cable was properly classifiable . . . under subheading 8544.20.00, HTSUS, as coaxial cable and other coaxial electric conductors,” dutiable at the rate of 5.3 percent ad valorem. Id. CBP issued pre-penalty notices to NYWL and Mr. He, the companies CEO, alleging fraud and a corresponding penalty in the amount of $3,760,070.00, eight times the loss of revenue. For the following reasons, the Court denied the Government’s motion.

Court Rule 9(b) requires a party alleging fraud to state the circumstances constituting the fraud with particularity, while intent or knowledge “may be alleged generally.” Id. at 5. In examining a penalty enforcement action, “the Court must consider both whether the penalty imposed has a sufficient basis in law and fact, and whether Customs accorded the [importer] all the process to which [it] is entitled by statute and regulation.” Id. at 6. “Section 1592 bars the fraudulent entry or introduction of merchandise into the commerce of the United States by means of a materially false statement or material omission. A violation is fraudulent when the “material false statement . . . was committed . . . knowingly, i.e., was done voluntarily and intentionally.” Id. at 7. In this case, the Court found that “[w]hile the Government’s Complaint states with particularity the facts regarding NYWL’s materially false statements and adequately alleges compliance with administrative procedural requirements, the Complaint lacks sufficient factual allegations demonstrating NYWL’s culpability for fraud.” Id. At most, the Court explained,

Plaintiff alleged that NYWL knew that the imported product would be “use[d] in closed-circuit television systems.” Id. at 9. However, the Court explained that knowledge of the product’s use did not support the plausible inference that NYWL knew that the Siamese coaxial cable was not “cored wire of base metal for electric arc welding,” or “winding wire,” or “insulated wire of a kind used for telecommunications” and had been incorrectly classified as such. Id. As such, the Court denied Plaintiff’s motion.