Pencil Importer Fights Dismissal Motion in EAPA Case Over Entries Liquidated During Investigation
The government's motion to dismiss an Enforce and Protect Act case at the U.S. Court of Appeals for the Federal Circuit because the entries at issue have been liquidated would deprive importer Royal Brush Manufacturing of any judicial recourse and allow CBP's illegal liquidation of the entries, Royal Brush argued in a Jan. 23 reply brief. Arguing the case is moot because of the liquidations misconstrues the law and presumes incorrectly that Royal Brush’s interests are limited to the erroneous assessment of additional duties," the importer said (Royal Brush Manufacturing v. U.S., Fed. Cir. # 22-1226).
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.
In the EAPA investigation, CBP said Royal Brush evaded the antidumping and countervailing duty orders on pencils from China by transshipping them through the Philippines. CBP determined during an unannounced site visit and a subsequent on-site verification that Royal Brush’s supplier in the Philippines was incapable of manufacturing pencils in the amounts imported. CBP officials also found evidence the supplier was repackaging Chinese-origin pencils into boxes marked, “Made in Philippines.”
Royal Brush sued, arguing its due process rights were violated because it was not granted access to the confidential information in the case and that the public summaries CBP provided were inadequate. The Court of International Trade initially agreed with the latter point, but it stopped short of finding CBP should have shared all the confidential information with Royal Brush (see 2012020050). However, CIT eventually upheld the final evasion finding from CBP after the agency provided the public summaries. Royal Brush appealed to the Federal Circuit, where it is seeking a broader ruling against CBP on due process grounds (see 2202070071).
But in the meantime, it came to light that the entries at issue had been liquidated before Royal Brush requested an injunction from the trade court. Four of the five entries at issue liquidated during the EAPA proceeding itself. As a result, the U.S. moved for dismissal of the appeal (see 2212090066).
The idea that Royal Brush has no "judicial recourse" since CBP violated "its own legal obligations" throughout the EAPA investigation "offends common sense and the applicable law," Royal Brush said in response. CBP based the mootness argument on the 1983 Federal Circuit case Zenith Radio v. U.S., in which the court said that allowing liquidation of the merchandise at issue before a decision on the merits was rendered would deprive Zenith of its right to obtain judicial review of the determination. The court, however, has recognized exceptions to this rule, the importer said.
Royal Brush said that, unlike in the Zenith case, the present EAPA action does not challenge the correctness of an AD/CVD rate under 19 U.S.C. Section 1516a. Additionally, it said the goal of promoting finality should give way to more compelling interests. In this case, "the more compelling interest is effecting the intent of Congress [to] prevent a premature liquidation while an evasion investigation is being conducted," the brief said.
The importer also said that a case is not moot so long as the litigants "have a concrete interest, however small, in the outcome of the litigation," as is the case here, given the "damage to Royal Brush's reputation resulting from" the evasion determination, the brief said. "Here, Customs’ finding that Royal Brush evaded antidumping duties is inherently stigmatizing and could be detrimental to Royal Brush’s reputation and success," the brief said. "This reputational harm constitutes another reason why this case is not moot."