UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 25-01

Before the Court in Tube Forgings of Am., Inc. v. United States, Court No. 23-00231, Slip Op. 25-01 (January 2, 2025) was an issue of first impression regarding the jurisdiction of the Court of International Trade (“CIT”) addressing the question of whether a challenge to a covered merchandise scope referral is moot after an investigation under the Enforce and Protect Act (“EAPA”) has already been resolved and finally adjudicated.

The case concerned a change made to an antidumping order went into effect 30 years ago with respect to carbon steel butt-weld pipe fittings. The plaintiffs argued that Commerce’s 2023 decision that “rough fittings,” which are cut to length pipe in the form of elbows, tees, or reducers, were no longer included in the antidumping duty order, and only products that are heat-treated and processed were in scope was sudden and should be remanded. The EAPA investigation resulted in a negative evasion determination that was sustained by the CIT in a separate litigation. In the covered merchandise scope referral that is the focus of this case, Commerce determined that “rough fittings” purchased in the People’s Republic of China (“China”) were not “unfinished” products within the scope of the antidumping order, and only became equivalent to in-scope “unfinished” products after further processing in the Socialist Republic of Vietnam (“Vietnam”). Thus, Commerce determined that the subject merchandise (“rough fittings” in the form of elbows, tees, or reducers) were out of scope. The domestic manufacturers challenged Commerce’s covered merchandise scope referral determination pursuant to pursuant to 19 U.S.C. § 1675. They argued that the products should be considered within the scope of the antidumping order.

The Court reviewed this matter pursuant to section 516A(a)(2)(B)(vi) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi), and 28 U.S.C. § 1581(c). The Court held that it had jurisdiction over this issue and remanded the covered merchandise scope referral determination by the U.S. Department of Commerce for further explanation and reconsideration. The Court reasoned that the prior EAPA Litigation became final when this Court issued a judgment in that case. Furthermore, whether an ambiguity exists in an antidumping order is a question of law that the Court considers de novo and the Court considers the plain scope language of an antidumping order. Here, Commerce determined that “rough fittings” and “unfinished fittings” were distinct and separate. The Court, however, concluded that the scope language in this case was ambiguous with respect to whether “unfinished” fittings include further processed “rough fittings,” and is also ambiguous as to what the definition of “unfinished” fittings means. The plain scope language did not mention the subject merchandise that were the focus of the covered merchandise scope referral. Commerce determined that an unfinished fitting that underwent the first and second production stages in China (first, converting seamless pipe; and second, reforming/sizing, as noted above) was covered by the scope of the Order, and was not removed from the Order when the third production stage (undergoing finishing processes) took place outside of China in Vietnam. Commerce also determined that a “rough fitting” was a fitting that only underwent the first stage of production (converting seamless pipe) and was not covered by the Order when exported from  China. Commerce explained that the “rough fitting,” which only underwent the first stage of production (converting seamless pipe), was a mere “material input” (i.e., precursor) and was not considered an “unfinished fitting” subject to the Order.

On the other hand, the plaintiffs argued that the scope language “clearly establishes that any Chinese-origin merchandise identifiable as a butt-weld pipe fitting is subject to the Order without regard to the degree to which it might have been processed toward being a finished product.” Plaintiffs assert that “a product is identifiable as a butt-weld pipe fitting when it has been formed into the rough shape of, for example, an elbow, tee, or reducer because, once it is formed, it is dedicated to use as a butt-weld pipe fitting and has no other use.” The Court disagreed with Plaintiffs that the scope language is plain and unambiguous as to what is meant by “unfinished” fittings. The Court also disagreed that a product is identifiable as a butt-weld pipe fitting when it has been formed into the rough shape of an elbow, tee, or reducer, is not clearly demonstrated based on the plain language of the Order. The Court concluded that the scope language was ambiguous.

The Court concluded that Commerce’s reliance on the sources set forth in 19 C.F.R. §351.225(k)(1) was lawful because of the ambiguous scope language. The Court concluded next that Commerce’s determination that “rough fittings” further processed in Vietnam were excluded from the scope of the Order was not supported by substantial evidence. Finally, the Court concluded that Commerce’s determination is not in accordance with law. The Court reasoned that Commerce acted arbitrarily by deviating from its decades-long interpretation and practice of considering products in the rough shape of an elbow, tee, or reducer, which were not heated or formed, to be in-scope buttweld pipe fittings. On remand, Commerce must answer the fundamental question whether a “rough fitting,” also known as a pipe that has been formed into the rough shape of an elbow, tee, or reducer, is identifiable as a “butt-weld pipe fitting,” which follows the language in the Order.