Citric Acid Importer Blasts CBP's Assessment of AD/CV Duties, Claims Imports Are From India
Importer TR International Trading Company's imports of citric acid anhydrous is not subject to the antidumping and countervailing duty orders on citric acid from China, and CBP was wrong to liquidate the entries as such, TRI said in a Dec. 22 complaint at the Court of International Trade. Seeking to get the court to rule against CBP's decision to liquidate its entries as being from China and not from India, TRI also blasted a Customs Laboratory's role in the process (TR International Trading Company v. United States, CIT #19-00217).
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TRI imported Daffodil brand U.S. Pharmacopeia Kosher grade citric acid from India purchased from the manufacturer, Posy Pharmachem. TRI claims that Posy made both the final product and the active pharmaceutical ingredient, citric acid monohydrate, in the citric acid.
In February 2018, a CBP import specialist issued a Request for Information on 17 entries of Daffodil brand citric acid anhydrous that TRI bought from Posy. In response, TRI documented Posy's receipt of raw material from Indian suppliers, Posy's batch-by-batch processing in India of the raw material into citric acid anhydrous, Posy's costs of converting this acid monohydrate into citric acid anhydrous, and Posy's sale and exportation of the citric acid anhydrous to TRI in the U.S., the complaint said.
In October 2018, following CBP's allegedly botched handling of TRI's submissions and further reports, the Customs Laboratory concluded that Posy's USP Kosher citric acid anhydrous was not substantially transformed in India and thus was not actually from India. At the time that this information was relayed to TRI, though, CBP did not tell the importer that it had identified China or any other country as the real country of origin. Eventually receiving a copy of the CBP lab report, TRI took issue with its findings.
"The Customs Laboratory report failed in numerous respects to support its conclusion that Posy’s USP Kosher citric acid anhydrous was not substantially transformed in India," the complaint said. "First, the Customs Laboratory did not perform any laboratory tests on a sample of TRI’s citric acid anhydrous because CBP did not request a sample. Second, the Laboratory did not acknowledge that the raw material consumed by Posy’s production process was crystalline non-medical grade citric acid monohydrate that was sourced from suppliers in India."
Other issues with the report include an incorrect description of Posy's production process -- an error that led to the incorrect conclusion that citric acid anhydrous is made simply by "drying" citric acid monohydrate, the complaint said. Further, the lab report did not even identify a country of origin, let alone China, for the non-medical grade citric acid monohydrate that Posy bought from Indian suppliers. "In reaching a legal conclusion that producing citric acid anhydrous from citric acid monohydrate does not result in a substantial transformation, the Laboratory ignored the peer-reviewed scientific journal article discussing the chemical reaction required to change citric acid monohydrate into citric acid anhydrous," the complaint said.
The decision to find China as the country of origin of TRI's citric acid was a wrong one, the importer said. The Commerce Department never even issued a scope ruling that would uphold CBP's actions, which said that the citric acid anhydrous made in India made from citric acid monohydrate of unknown origin is within the orders' scope. Nor has Commerce conducted a circumvention proceeding finding that the Indian-made citric acid anhydrous was circumventing the China orders, the complaint said. The assessment of AD/CVD "lacks any evidentiary or legal basis," the importer argued. Instead, TRI said, the imports should receive duty-free treatment under the Generalized System of Preferences.