CIT Orders AD Deposit Refund for Importer; ITA Retroactively Suspended Liquidation in China Sacks Review
The Court of International Trade ordered a refund, with interest, of antidumping duty cash deposits paid by U.S. importer AMS Associates (d/b/a Shapiro Packaging), after finding the International Trade Administration violated its regulations by retroactively suspending liquidation of entries of laminated woven sacks from China (A-570-916) in what was in effect a scope inquiry. The ITA had conducted the scope inquiry during the 2008-09 administrative review of the AD duty order, in response to concerns that importers were avoiding AD duties by entering merchandise made with third-country fabric. CIT also found the ITA is permitted to conduct scope inquiries during administrative reviews.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
During the 2008-09 administrative review, the ITA grew concerned that Chinese company Zibo Aifudi Plastic Packaging was not including exports of laminated woven sacks produced in China from third-country fabric in the information it was providing the agency. Aifudi responded that CBP, in ruling HQ N028508 (here), had previously said sacks made from non-Chinese fabric are not of Chinese origin. The ITA disagreed, and though a substantial transformation analysis conducted during the review found that China was the country of origin for the merchandise at issue.
Based upon this finding, the ITA sent message 02044301 (here) to CBP on July 23, 2010, clarifying that CBP should “continue to suspend liquidation of all LWS from the PRC, regardless of the origin of the woven fabric, that is entered or withdrawn from warehouse, for consumption, on or after January 31, 2008.” The message had the effect of retroactively suspending liquidation and requiring cash deposits on entries of laminated woven sacks from China made from third-country fabric.
Although AMS challenged the retroactive suspension of liquidation in a separate case decided by CIT in July 2012, CIT said its arguments against the retroactive suspension of liquidation were moot because all relevant entries at issue in that action had all already been liquidated without regard to AD duties, and no harm resulted (see ITT's Online Archives 12073102 for summary). However, the retroactive suspension also included most of the 2009-10 administrative review, which AMS is challenging in this action.
Although AMS argued that the ITA should have initiated a separate scope inquiry, rather than folding it into an administrative review, CIT disagreed and said the ITA had the right to do so. The regulations specifically permit it at 19 CFR 351.225(f)(6), it said.
The corollary of that ability, however, is that the ITA must follow scope regulations when it does so, and the ITA ignored other aspects of the scope regulations when it retroactively suspended liquidation, CIT said. The ITA’s regulations at 19 CFR 351.225(l)(2) allow the ITA to suspend liquidation in a scope inquiry beginning on the date of the initiation of that inquiry, it said. “In bridging the gap between regulations governing administrative review … and scope determinations ... [the ITA] chose to be bound by neither,” CIT said. If the ITA’s actions were allowed to stand, it would be able to avoid the restriction on suspension of liquidation by simply declaring an “informal” scope inquiry, the court said.
CIT remanded the action to the ITA, and ordered the agency to issue instructions to CBP to lift suspension of liquidation on AMS’ affected entries and liquidate without regard to AD or CV duties. CIT also ordered cash deposits to be refunded with interest.
(AMS Associates, Inc. v. U.S., Slip Op. 12-154, dated 12/18/12, Judge Musgrave)
(Attorneys: Lizbeth Levinson of Kutak Rock for plaintiff AMS Associates; Tara Hogan for defendant U.S. government; Joseph Dorn of King & Spalding for defendant-intervenors Laminated Woven Sacks Committee, Coating Excellence International, and Polytex Fibers Corporation)