CIT Hints at More Limits for Suspension of Liquidation, AD/CVD Cash Deposits Before Scope Rulings
The Court of International Trade recently blocked the Commerce Department and CBP from collecting antidumping and countervailing duty cash deposits on entries suspended by CBP before Commerce began a scope ruling on the merchandise. After it found Sunpreme’s hybrid solar cells were subject to AD/CV duties in August (see 1608030041), Commerce directed CBP to collect cash deposits on all unliquidated entries, even those that CIT had previously decided CBP had improperly suspended before the scope proceeding (see 1601190080). In a decision publicly released on Oct. 12 (here), the court found Commerce likely had no authority to do so, issuing an injunction stopping collection of cash deposits until it reaches a final decision in the case.
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CBP began suspending liquidation of the entries of hybrid cells in April 2015. Though the scope of solar cells duties says thin-film cells are exempt, CBP determined Sunpreme’s modules were subject to duties because they also had the physical characteristics of products covered by the scope. Commerce eventually came to the same conclusion, but CIT in January ruled CBP did not have the authority to interpret the “ambiguous” scope, saying the agency should have waited for a scope ruling. It issued an injunction ordering CBP to stop collecting cash deposits -- though it could still suspend liquidation -- until Commerce issued its final ruling. But after Commerce’s final ruling came out in July, causing the injunction to expire, Commerce told CBP to continue to suspend liquidation on the entries, including those before the scope ruling, and collect cash deposits.
Commerce justified its instructions to CBP by pointing to two passages of its scope regulations that say: (1) while Commerce is conducting a scope inquiry, entries already subject to suspension of liquidation will remain suspended and subject to cash deposit requirements; and (2) if Commerce finds the product is subject to duties in its final scope ruling, suspension of liquidation and cash deposit requirements will continue. The agency argued that, because CBP had already suspended liquidation before the scope ruling began, it could continue to suspend liquidation and begin collecting cash deposits on the pre-scope ruling entries.
Though it did not reach a final decision on the issue, CIT ruled that collection of cash deposits for the pre-scope ruling entries was likely improper. Considering whether to issue an injunction, CIT only had to decide whether Sunpreme was likely to win the case as it relates to the pre-scope ruling entries. The court ruled it was, finding that because CBP's original suspension of liquidation was against the law, Commerce couldn't order it extended. "Commerce’s regulations make it likely that Plaintiff will succeed in demonstrating that Commerce was without authority to order the suspension of pre-initiation entries or to collect cash deposits on such entries," it said. "Commerce may not continue CBP’s suspension of liquidation pursuant to its regulation where Plaintiff has demonstrated it is likely CBP acted contrary to law.”
(Sunpreme Inc. v. U.S., Slip Op. 16-93, CIT # 16-00171, dated 10/05/16, Judge Kelly)