United States Court of International Trade

Slip Op. 22-84

Before the Court in Pro-Team Coil Nail Enterprise, Inc., et. al., v. United States, et. al., Court No. 18-00027, Slip Op. 22-84 (July 15, 2022) was the motion for judgment on Commerce’s Third Remand Results. Plaintiffs claim that the antidumping duty rate is “not reasonably reflective of their potential dumping margins and, therefore, not based on substantial evidence.” Id at 4. For the following reasons, “the court affirms Commerce’s determination of the non-selected respondents’ rate using the so-called expected method.” Id at 4.

“Section 1673d(c)(5)(A) provides that the ‘all-others rate’ assigned to non-examined companies is calculated as ‘the weighted average of the estimated weighted average dumping margins’ assigned to individually-examined companies, ‘excluding any zero and de minimis margins, and any margins determined entirely under section 1677e of this title [i.e., on the basis of adverse facts available].’” Id at 8. “The Statement of Administrative Action accompanying the Uruguay Round Agreements Act, which Congress has approved as an authoritative interpretation of the statute, id. § 3512(d), provides an ‘expected method’ to determine the all-others rate in these situations.” Id at 8-9. The statement also explains that Commerce may use other methods if the expected method “is not feasible, or if it results in an average that would not be reasonably reflective of potential dumping margins for non-investigated exporters or producers.” Id at 9.

“Albemarle Corp. v. United States, 821 F.3d 1345, 1352 & n.6 (Fed. Cir. 2016) and Changzhou Hawd Flooring Co. v. United States, 848 F.3d 1006, 1012 (Fed. Cir. 2017) confirm that the expected method is the default method and that the burden of proof lies with the party seeking to depart from the expected method (or with Commerce as the case may be).” Id at 10-11. Since “the non-selected respondents are in control of the information that would establish whether applying the expected method based on the rates of the mandatory respondents would not reasonably reflect the potential dumping margins of those non-selected respondents, the non-selected respondents bear the burden of providing such evidence.” Id at 15. Case law also “recognize[s] that the largest exporters by volume are assumed to be representative of the non-selected respondents and Commerce is expected to use the mandatory respondents’ rates to determine the antidumping duty rate to be assigned to the non-selected respondents.” Id at 13. “Thus, Commerce will weight-average the above-de minimis calculated rates to determine the non-selected respondent rate.” Id at 10. “However, if the rates for all selected respondents are zero, de minimis, or based on facts available, the SAA provides that the expected method is for Commerce to weight-average such rates to determine the non-selected respondents’ rate.” Id at 10

“Although Bonuts requested deselection as a mandatory respondent and indicated that it believed that it was not representative of the business models of Taiwan nails producers, Commerce determined that Bonuts failed to cooperate to the best of its ability [and therefore,] Commerce was not able to verify Bonuts’ claim that it was not representative.” Id at 18. “The court finds that [substantial evidence supports] Commerce’s determination to include Bonuts’ data in its calculation of the non-selected respondents’ rate [and] Commerce’s rejection of Pro-Team’s argument that Bonuts’ entries were not classified as the same ‘entry type’ as those made by other Taiwanese exporters of steel nails and, therefore, were not representative.” Id at 18. “Commerce rejected this distinction as irrelevant because both entry types were subject to the antidumping duty order [, and so,] Commerce would include both in its respondent selection process.” Id at 19. “Having found that substantial evidence supports Commerce’s use of the expected method to calculate the rate for non-individually examined respondents, the court agrees with Commerce’s determination that ‘no additional information is required for [it] to determine the [Plaintiffs’ rates].’” Id at 20. As such, the court “sustain[s] Commerce’s Third Remand Results.” Id at 20.

Slip Op. 22-85

Before the Court in Cyber Power Systems (USA) Inc. v. United States, Court No. 21-00200, Slip Op. 22-85 (July 20, 2022) was Counterclaim Plaintiff/Defendant Cyber Power Systems (USA) Inc.’s (“Cyber Power”) motion to dismiss Defendant/Counterclaimant United States’ (Defendant) counterclaim. Defendant asked the court to “re-classify under Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 8544.42.90 subject merchandise entered by Cyber Power and CBP to reliquidate the merchandise at a rate of 2.6% ad valorem.” However, Cyber Power argued the Defendant’s counterclaim should be dismissed because “(i) Defendant fails to alleged a cause of action; (ii) the liquidation of the subject merchandise is final” Id. at 2. Defendant then argued that “Cyber Power’s motion should be denied because (i) the Counterclaim states a claim for increased duties under 19 U.S.C. §§ 1202, 1503, and 1514(a); and (ii) liquidation is not final because Cyber Power protested the classification of the subject merchandise and the amount of duties assessed.” Id at 2-3.

The Court agreed that the Defendant lacked statutory authority for asserting a Counterclaim and to seek liquidation from CBP under a different classification under 19 U.S.C. §§ 1202, 1503, and 1514(a). Id. at 7. The Court noted that nothing in 19 U.S.C. 1202, 1503, 1514(a), and 28 U.S.C. § 1583 provisions gave the Defendant the ability for a cause of action to assert a counterclaim challenging CBP’s classification. Id. at 9. The Court noted that the sections the Government relied on were not materially amended when Congress permitted the “U.S. Court of International Trade jurisdiction to hear counterclaims and … determine the correct classification of merchandise.” Id. But, Defendant improperly relied on Section 1202, which permits CBP to enforce tariffs and “collect the proper amount of duties based on the correct classification of imported merchandise.” Id. at 9-10. Nothing in Section 1202 permits the “United States to challenge CBP’s classification via counterclaim … [and] does not provide Defendant with a cause of action.” Id. at 10.

Defendant also relied on Section 1503, and again the Court found it did not provide Defendant with a cause of action. The Court noted that Section 1503 is not relevant to Defendant’s claim “that merchandise should be classified differently” because it “relates to valuation, not classification.” Id. The Defendant’s also relied on Section 1514(a) which was misguided because liquidation is not final to the United States and its officers. Id. at 11. The Court stated that “if liquidation were final to the United States and it officers, then the officers would … be powerless to fix any … error[s].” Id. Moreover, Section 1514(a) does not authorize “Defendant to assert a counterclaim challenging CPB’s classification.” Id.

Finally, the Court noted that Defendant’s reliance on 28 U.S.C. § 1583 did not provide a cause of action to assert a counterclaim. Id. at 12. The Court explained that although Congress may have tried to create an option for the United States the ability to assert counterclaims for a higher rate of duty, it did not. Id. Section 1583 only established the “Court of International Trade … has jurisdiction to render judgment upon any counterclaim.” Id. at 13.

The Court recognized that if justice requires and “a party mistakenly designates a defense as a counterclaim, or a counterclaim as a defense, the court must treat the pleading as though it were correctly designated, and may impose terms for doing so.” Id. at 15. The Defendant’s request for “reliquidation pursuant to a classification with a higher rate of duty”, will be treated as a defense within its answer, rather than a counterclaim. Id. In conclusion, the Court redenominated the Counterclaim “as a defense under United States Court of International Trade 8(d) (2) and Cyber Power’s motion to dismiss the Counterclaim is denied as moot.” Id. at 3.

Neville Peterson LLP represents the Plaintiff, Cyber Power, and we are pleased the Court agreed with our motion regarding the Government ability to plead a counterclaim in 28 U.S.C. 1581(a) classification litigation at the CIT.