CAFC Affirms AD Duty Refunds for Woven Sack Importer; Commerce's Retroactive Suspension Illegal
The Court of Appeals for the Federal Circuit on Dec. 13 affirmed a lower court ruling against the Commerce Department’s retroactive suspension of liquidation on entries of laminated woven sacks from China by U.S. importer AMS Associates, also known as Shapiro Packaging. Commerce’s direction that CBP “continue” to suspend liquidation on entries going back two years was in effect a retroactive suspension of liquidation during a scope ruling, which is impermissible under Commerce’s regulations, said CAFC.
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The 2012 Court of International Trade ruling rejected actions taken by Commerce during an antidumping duty administrative review two years earlier. In 2010, Commerce found that bags made from third-country fabric in China by AMS affiliate Zibo Aifudi Plastic Packaging should be subject to the order. It told CBP to “continue to suspend liquidation” of bags made from third-country fabrics entered since January 2008. CIT found that Commerce’s finding that the Aifudi/AMS bags should be subject to the order was essentially a scope ruling (see 12121904). The decision to suspend liquidation back to 2008 was illegal, because Commerce’s regulations prohibit the suspension of liquidation in scope rulings before the formal initiation of the inquiry (2010 in this instance).
The appeals court agreed with CIT’s findings. First, the decision to include bags made from third-country fabric was a scope ruling. Although Commerce has the ability to clarify the scope of AD/CVD orders without a formal scope inquiry, the agency must begin a formal proceeding if the scope is ambiguous as to whether or not a product is covered. The ambiguity in this case stems from a CBP ruling that said laminated woven sacks made from third-country fabric are from the third-country fabric producer for country of origin purposes.
Having established that the decision was a formal scope ruling, CAFC found Commerce’s regulations at 19 CFR 351.225(l)(1) are clear. When a scope ruling brings a product that was previously not subject to AD/CV duties under the scope of an AD/CV duty order, Commerce “will instruct the Customs Service to suspend liquidation and to require a cash deposit of estimated duties … on or after the date of initiation of the scope inquiry.” Given that Commerce’s liquidation instructions were “clearly inconsistent” with its regulations, CAFC affirmed the lower court order to lift suspension or liquidation, reliquidate without regard to AD/CV duties, and refund cash deposits with interest.
(AMS Associates, Inc. v. U.S., CAFC No. 2013-1208, dated 12/13/13, Judges Lourie, Dyk and O’Malley)