PATRICK A. FITCH
INTRODUCTION
In
2009, the United States Court of Appeals for the Federal Circuit
frequently
exercised its exclusive statutory jurisdiction under
28
U.S.C. § 1295(a)(5) to hear appeals from the U.S. Court of
International
Trade.1 With
this broad authority to hear the full
panoply
of cases involving the complex and organic regime of U.S.
trade
laws and regulations, the Federal Circuit each year must rule on
complex
and diverse questions of law. The Federal Circuit issued
nineteen international trade-related
precedential opinions in the
2009
calendar year, spanning issues as varied as tariff classification,
drawback
requests, antidumping duty proceedings and the
constitutionality
of the now-repealed Byrd Amendment.
This
Article reviews the Federal Circuit’s 2009 decisions dealing
with
international trade-related matters. While some decisions
turned
on extremely fact-specific issues—often relevant only to that
action’s
litigants—others will undoubtedly alter agency practice for
the
foreseeable future at U.S. Customs and Border Protection
(Customs),
the U.S. Department of Commerce (Commerce) and the
U.S.
International Trade Commission (ITC). This Article separates
the
2009 international trade decisions of the Federal Circuit into two
main
areas: (1) customs law and (2) trade remedies at Commerce
and
the ITC.
I.
U.S. CUSTOMS LAWS
Customs
cases once again represented a significant portion of the
Federal
Circuit’s 2009 international trade decisions. More than half
of
the Federal Circuit’s eleven 2009 Customs decisions concerned
tariff
classification.2 Others
concerned drawback requests and
requests
for refunds of fees incurred by importers in the ordinary
course
of business.3 One
case concerned the ability of brokers to seek
judicial
review of license revocations caused by their failure to file
reports
concerning their brokering activities.4
The Federal Circuit
generally
expresses deference to the decisions of Customs, but has
not
shown any reluctance to intervene on behalf of private litigants
when
circumstances warrant.
A.
Tariff Classification
In
2009, the Federal Circuit decided five tariff classification cases.
These
cases involved disagreements between importers or
manufacturers
and Customs about where certain products fall within
the
voluminous Harmonized Tariff Schedule of the United States
(HTSUS),
a system of ten-digit codes that purports to cover the full
panoply
of products imported into the United States. These ten-digit
codes are significant to importers,
as they determine the duty rate
attached
to a product and whether its country of origin entitles it to
preferential
treatment.5
The
Federal Circuit ruled on the classification of Canadian cut
lumber
in Millenium Lumber Distribution Ltd.
v. United States.6
Millenium
appealed the Court of International Trade’s grant of
summary
judgment in favor of the government that Customs
correctly
classified Millenium’s lumber under HTSUS heading 4407,
which
covers “[w]ood sawn or chipped lengthwise, sliced or peeled,
whether
or not planed, sanded or finger-jointed, of a thickness
exceeding
6 mm.”7
Millenium
argued that 215 entries of its cut lumber, including twoby-
three,
two-by-four and two-by-six lumber, cut to various lengths
ranging
from five to twenty feet and entered between October 1999
and
January 2001, should be classified either under HTSUS
subheading
4418.90.40 as “[b]uilders’ joinery and carpentry of wood”
or
under HTSUS heading 4421 as “[o]ther articles of wood.”8 After
Customs
notified Millenium in December 2000 that it liquidated the
merchandise
under HTSUS heading 4407, Millenium filed two timely
protests.9
On
appeal, the Federal Circuit affirmed. The court found as a
threshold
matter that determining the meaning of tariff provisions is
a
question of law, while determining whether specific imports fall
within
certain tariff provisions is a question of fact.10
Citing the
Explanatory
Note to HTSUS heading 4407, which specifies that
heading
4407 covers all wood and timber thicker than 6 mm “[w]ith a
few
exceptions,” the Federal Circuit upheld Customs’ classification of
Millenium’s
lumber under HTSUS heading 4407.11 The
court
rejected
classification under HTSUS heading 4418, because
Millenium’s lumber had not undergone
sufficient working to
constitute
“joinery and carpentry.”12 The
court also rejected
classification
under the catchall provision in HTSUS heading 4421
because—under
General Rule of Interpretation 3(a)’s rule of relative
specificity,
which provides that goods prima facie classifiable under
two
or more headings are properly classified in the most specific
heading—it
deemed HTSUS heading 4407 more descriptive.13
In Archer
Daniels Midland Co. v. United States,14
the Federal Circuit
upheld
an importer’s protest of Customs’ classification of deodorizer
distillate
(DOD), a residue from edible soybean oil production.15
Customs
classified DOD under HTSUS subheading 3824.90.28, a
“catchall
provision” for “[c]hemical products and preparations of the
chemical
or allied industries . . . not elsewhere specified or included:
Other
. . . : Other.”16 Archer
Daniels Midland (ADM) conceded that
HTSUS
heading 3824 covered the subject products but contended
that
other headings were more descriptive, and filed suit at the Court
of
International Trade seeking classification under HTSUS heading
3825,
a duty-free heading that provides for “[r]esidual products of
the
chemical or allied industries, not elsewhere specified or
included.”17
The
Court of International Trade granted summary judgment for
the
government.18 It
viewed the explanatory note to HTSUS
subheading
3825 as providing an exhaustive list of four substances—
alkaline
iron oxide, residues from antibiotics manufacture,
ammoniacal
gas liquors and spent oxide—that formed the complete
list
of items subject to classification in that subheading.19 The Federal
Circuit
reversed, finding HTSUS subheading 3825 appropriate and
more
descriptive than HTSUS subheading 3824.20
First,
the Federal Circuit found that “[DOD] falls within the
ordinary
meaning of the term ‘residual products,’” as it is left over
from
the distillation of soybean oil.21 The
court rejected the
government’s
argument that the list of products in the Explanatory
Note to HTSUS subheading 3825 was
exhaustive due to “a notable
absence
of language in the Explanatory Note confining the list to the
enumerated
items or suggesting the list is exhaustive.”22
Because the
court
found no evidence that Congress intended for HTSUS
headings
3824 and 3825 to be mutually exclusive, it deemed DOD
prima
facie classifiable in both headings.23
Pursuant to General Rule
of
Interpretation 3(a)’s rule of relative specificity, the Federal Circuit
deemed
the phrase “residual products” as used in HTSUS
subheading
3825 more descriptive than general “chemical products”
as
used in HTSUS subheading 3824.24
In Value
Vinyls, Inc. v. United States,25
the Federal Circuit evaluated
the
proper tariff classification of plastic-coated fabric material,
imported
in sheets and used to make truck covers, dividers,
upholstery,
signs and other products.26 The
Court of International
Trade
classified the product in HTSUS subheading 3921.90.11 as “a
product
with textile components in which man-made fibers
predominate
by weight over any other single textile fiber” because
the
product is made entirely of man-made fibers.27
The Federal
Circuit
agreed with this classification and affirmed.28
The
government argued that the word “predominate” in HTSUS
subheading
3921.90.11 required at least two components and could
not
apply to products made of only one type of fiber.29
In rejecting
this
argument, the Federal Circuit accepted the Court of
International
Trade’s analysis that products made of only man-made
fibers
appeared in HTSUS subheading 3921.90.11, dating back to
that
subheading’s predecessor provision in the Tariff Schedule of the
United
States (TSUS), prior to harmonization.30
Citing legislative
history
indicating that the harmonization of the tariff schedule
intended
to adopt internationally accepted terminology without
affecting classification or duties,
the Federal Circuit found that no
other
HTSUS provision provided for wholly man-made fibers as did
the
TSUS predecessor provision to HTSUS subheading 3921.90.11.31
Thus,
Value Vinyls’ man-made fibers were properly classified under
HTSUS
subheading 3921.90.11.32
United
States v. UPS Customhouse Brokerage, Inc.33
presented the
question
of whether certain alleged misclassifications by UPS
Customhouse
Brokerage, Inc. also gave rise to multiple violations of
19
U.S.C. § 1641, which obligates customs brokers to exercise
reasonable
supervision and control over their business.34
The Federal
Circuit
agreed with the Court of International Trade and with
Customs
that UPS misclassified certain merchandise, but vacated and
remanded
the Court of International Trade’s holding that UPS failed
to
exercise reasonable supervision and control over its business based
on
those misclassifications.35
The
dispute arose from UPS’s classifications under HTSUS
heading
8473, which covers parts and accessories of automatic data
processing
(ADP) machines.36 Specifically,
UPS classified sixty entries
under
HTSUS subheading 8473.30.9000 between January and May
2000.37 Customs initiated eight separate
penalty actions covering
these
sixty entries and argued that 8473.30.9000 required ADP
machine
parts to themselves contain a cathode ray tube (CRT),
rather
than merely be part of a computer that contained a CRT.38
UPS
paid some of the penalties, but Customs filed suit at the Court of
International
Trade in December 2004 to enforce the unpaid portion
of
the penalties (approximately $75,000).39
UPS unsuccessfully
sought
a summary judgment declaration that Customs may only assess
one
penalty for a maximum $30,000 under 19 U.S.C. § 1641.40
After
a bench trial, the Court of International Trade found that
UPS misclassified the ADP machine
parts and failed to exercise
reasonable
supervision and control in so doing.41
UPS appealed, and
the
Federal Circuit affirmed Customs’ and the Court of International
Trade’s
finding of misclassification but reversed and remanded on
the
section 1641 reasonable supervision issue.42
Regarding
its classifications, UPS argued that HTSUS subheading
8473.30
divides items based on whether the ADP machine of which
they
are a part or accessory contains a CRT.43
The Federal Circuit:
(1)
ruled that “subheading 8473.30 demonstrates that there are two
types
of ‘parts and accessories’: those ‘not incorporating a [CRT]’
and ‘other,’”
and thus rejected UPS’s line of argument; (2) found
that
HTSUS subheading 8473 actually differentiated between ADP
machine
parts and accessories with and without a CRT; and (3)
affirmed
Customs’ classification in HTSUS subheading 8473.44
In
reversing and remanding the Court of International Trade’s
decision
on UPS’s section 1641 liability, the Federal Circuit reasoned
that
Customs had not considered the ten factors that it must evaluate
under
19 C.F.R. § 111.1.45 Though
the Federal Circuit deferred to
Customs’
right to interpret its own regulations, the Federal Circuit
cautioned
that “this discretion does not absolve Customs of its
obligation
under the regulation to consider at the least the
ten listed
factors.”46 The court thus reversed and remanded
for further analysis
as to
whether UPS violated 19 U.S.C. § 1641 in light of the
19
C.F.R. § 111.1 factors.47
In
its second wood- and lumber-related classification decision of
2009,
the Federal Circuit considered the proper classification of
laminated
flooring panels in Faus Group, Inc. v. United States.48 Faus
Group,
Inc. made the flooring panels at issue out of a fiberboard core
with a density of 0.85 to 0.95 g/cm3.49 The
panels are nonstructural
finished
articles to be installed by their end-users over an existing
structural
subfloor.50 Each
panel is grooved to facilitate assembly.51
Customs
classified these panels under HTSUS heading 4411, which
provides
for “[f]iberboard of wood or other ligneous materials,
whether
or not bonded with resins or other organic substances.”52
Faus
protested and sought classification under HTSUS subheading
4418,
which provides for “[b]uilders’ joinery and carpentry of wood,
including
cellular wood panels and assembled parquet panels;
shingles
and shakes.”53 Customs
denied Faus’s protest, and Faus filed
suit
at the Court of International Trade.54
In
what the Federal Circuit described as a “fifty-three page
analysis
. . . that can only be described as Talmudic in its breadth and
thoroughness,”
the Court of International Trade deemed the floor
panels
prima facie classifiable under both HTSUS headings 4411 and
4418.55 Under General Rule of Interpretation
3(a)’s rule of relative
specificity,
the Court of International Trade determined that HTSUS
heading
4411 is the more specific of the two headings and thus more
appropriate
for classification.56 Faus
timely appealed to the Federal
Circuit.57
The
Federal Circuit sided with Faus and reversed the Court of
International
Trade.58 Citing
Note 4 to Chapter 44 of the
Harmonized
System—which excludes wood products finished to the
extent
that they acquired “the character of articles of other
headings”—the
Federal
Circuit analyzed whether Faus’ laminate floor panels had
been
processed to the extent that they had the character of articles in
other
tariff headings.59 The
Federal Circuit adopted the Court of
International
Trade’s conclusion that Faus’ products are prima facie
classifiable
in both HTSUS headings 4411 and 4418 but appeared
sympathetic
to Faus’ reading of Note 4 to Chapter 44, that fiberboard
processed
such that it is prima facie classifiable in HTSUS heading
4418 is thus excluded from HTSUS
heading 4411.60
The
Federal Circuit also employed a General Rule of
Interpretation
3(a) analysis to avoid a final interpretation of Note 4
to
Chapter 44, and instead based its holding on the determination
that
HTSUS heading 4418’s requirement that wood products be
processed
makes it more specific than HTSUS heading 4411, which
has
no such processing requirement.61 The
court added that HTSUS
heading
4411 is broader than HTSUS heading 4418 because it covers
any
fiberboard product with the character of an article under
another
heading “as long as it was created using one of the many
enumerated
processes in Note 4.”62
B.
Valuation Issues
The
only valuation-related decision issued by the Federal Circuit
concerned
penalties levied against an importer for a multi-year
double-invoicing
scheme that Customs alleged served to substantially
undervalue
imports of Mexican frozen produce and deprive the
government
of more than $600,000 in duty revenue.63
The
Federal Circuit reaffirmed penalties assessed against an
importer
found guilty of a double-invoicing scheme to suppress the
entered
value of its goods in United States v. Inn Foods, Inc.64 The
government
alleged that Inn Foods, Inc. and its now-defunct Cayman
Islands-based
affiliate SeaVeg fraudulently entered frozen produce
from
and with the cooperation of six Mexican growers between 1987
and
1990.65
Inn
Foods, SeaVeg and the Mexican growers agreed upon a
double-invoicing
system, in which the growers would issue a “factura”
invoice
to Inn Foods or SeaVeg with an invoice number, produce
description
and price.66 The
price on this factura did not represent
the
price actually paid to the grower or the market value of the
produce,
and was in fact “substantially lower” than either of those
figures.67 Inn Foods and SeaVeg would provide
these facturas to their
customs brokers, who would use it to
enter the goods into the United
States
through Customs.68 After
receipt of the goods, Inn Foods and
SeaVeg
would create a second invoice with the original invoice
number
and produce description, but with the higher price reflecting
the
produce’s market value, and would then send it to the grower as
an
order confirmation.69 Inn
Foods or SeaVeg would initially pay
seventy
percent of the higher amount, with the balance months later
after
the parties could determine the final market price of the
produce.70
Customs
began to examine the entries made on behalf of Inn
Foods
and SeaVeg in 1988.71 In
1989, Customs’ third formal request
for
documentation led to the discovery of records indicating that the
actual
value of the entered produce vastly exceeded the values listed
on
the facturas used for entry purposes and presented to Customs.72
After
learning that Customs intended to investigate the case formally,
Inn
Foods added disclaimers to its entries that stated, in relevant part,
“[t]he
value being used on shipments . . . is strictly for customs
clearance”
and that “[l]iquidation . . . is to be withheld until the
importer
of record . . . is able to complete the audit of their files and
arrive
at a true transaction value.”73
The
government filed suit against Inn Foods in 2001 under
19
U.S.C. § 1592, alleging that this fraudulent invoicing system
deprived
the government of significant duties owed.74
The Court of
International
Trade initially dismissed the suit as time-barred, but the
Federal
Circuit reversed.75 On
remand, the Court of International
Trade
held a bench trial and ruled that Inn Foods submitted the
materially
false facturas with intent to defraud Customs.76
Inn Foods
faced
a monetary penalty of $7.5 million under 19 U.S.C.
§
1592(c)(1) and unpaid duties of $624,602.55 under 19 U.S.C.
§ 1592(d).77 The
Court of International Trade found Inn Foods
liable
for the entire penalty amount because it acted as either an alter
ego
or aider and abettor of SeaVeg.78
On
appeal, Inn Foods contended that it acted merely with
negligence
when it filed false invoices and not with any fraudulent
intent.79 In rejecting this theory, the
Federal Circuit held that the
evidentiary
record confirmed the Court of International Trade’s
determination
that Inn Foods knew of the facturas’ falsity, and knew
that
its brokers would use the facturas to enter the subject produce
into
the United States.80 The
court then called on precedent from
the
other circuit courts to confirm that “[i]nferring fraudulent intent
from
the knowing use of false invoices is hardly unique to the
customs
context.”81 The
Federal Circuit also noted that Inn Foods
and
SeaVeg concealed the existence of the double-invoice system,
even
from their brokers.82 Moreover,
Inn Foods and SeaVeg knew
from
their brokers that the values on the facturas were material to the
produce’s
entry and Customs’ valuation process.83
Inn
Foods claimed that the disclaimers added to the facturas in
1989 “belie[d]
any possibility that intent to defraud existed.”84
The
Federal
Circuit disagreed for three reasons. First, the statement that
the
invoices existed “strictly for customs clearance” at best suggested
that “the
invoices contained a mere calculational error,” when in
actuality
Inn Foods presented intentionally falsified values.85 Second,
the
disclaimers’ suggestion of a pending audit to determine the
produce’s
value was implausible because Inn Foods possessed and
kept in its records both the
facturas and the true invoices, and thus
did
not need an audit to learn the entered produce’s true value.86
Third,
the statement that Inn Foods would correct any valuation
errors
rang hollow because Inn Foods never filed any actual
corrections
with Customs.87
Finally,
Inn Foods challenged its liability for the entire sum of
$624,602.55
in unpaid duties.88 Though
the Federal Circuit
conceded
Inn Foods’ argument that Congress intended that
“normally
only importers of record and their sureties are liable for
duty,”89 it also found that 19 U.S.C. §
1592(d) “suggests that the party
liable
for penalties under [19 U.S.C. § 1592(a)] would also be liable
under
[19 U.S.C. § 1592(d)] for the lost duty.”90
The Federal Circuit
further
reasoned that Congress intended for parties liable as aiders
and
abettors to face liability for the duties lost by the government as a
direct
result of aiding and abetting.91 Thus,
Inn Foods remained
liable
for the full amount of unpaid duties.
C.
Jurisdictional Issues
The
only purely jurisdictional issue presented to the Federal
Circuit
in 2009 concerned the Court of International Trade’s ability
to
review the revocation of a customs broker’s license for that
broker’s
failure to file a required periodic report of the broker’s
business
activity.
In Schick
v. United States,92
the Federal Circuit decided that the
Court
of International Trade lacks authority to review Customs’
decision
to revoke a broker’s license for failure to file a triennial
status
report.93 The
plaintiff, a customs broker for more than twenty
years,
failed to file a triennial status report on its due date and failed
again
to do so within the sixty-day grace period referenced in a letter
sent
to him by the applicable Customs Port Director.94
Two months
after
Customs revoked the plaintiff’s license, he requested a hearing
and a withdrawal of the revocation
under 19 U.S.C. § 1641(d)(2)(B),
which
pertains to disciplinary proceedings against customs brokers.95
Customs
denied the request and reasoned that the license revocation
constituted
an operation of law under 19 U.S.C. § 1641(g)(1), and
that
the governing statute did not afford the plaintiff a right to a
hearing.96
Contending
that Customs should have followed the procedures for
disciplinary
proceedings, the plaintiff sought relief in the Court of
International
Trade. The Court exercised jurisdiction under 28
U.S.C.
§ 1581(i)(4), but rejected the plaintiff’s request for relief.97
Citing
Retamal v. United States Customs & Border Protection,98 the Federal
Circuit
rejected the Court of International Trade’s basis for
exercising
jurisdiction in this matter.99 The
Federal Circuit
reaffirmed
its holding in Retamal that
revocation of a customs broker
license
for failing to file a triennial report does not relate to the
disciplinary
provisions of 19 U.S.C. § 1641(g), and is not referenced
anywhere
in 28 U.S.C. §§ 1581(a)–(h) or (i)(1)–(3).100
In remanding
this
proceeding to the Court of International Trade, the Federal
Circuit
concluded that “19 U.S.C. § 1641(g) provides the Secretary
with
independent authority to revoke a customs broker’s license, an
action
that is unreviewable in the Court of International Trade,” and
advised
the court to consider whether the transfer statute,
28
U.S.C. § 1631, applies.101
D.
Other Customs Issues
The
Federal Circuit considered whether an importer’s repeated
Harbor
Maintenance Tax (HMT)102 payments
when none were
required
should be treated as a remediable “inadvertence” or an
irremediable
mistake of law in Esso Standard Oil Co. (PR) v.
United
States.103 Congress amended the HMT statute in
1988 to exempt
shipments between Alaska, Hawaii or “any
possession of the United
States”
to the U.S. mainland, Alaska, Hawaii or a U.S. possession.104
Customs,
which Congress tasked with administering the HMT laws,
had
not updated its regulations to reflect this new exemption for
shipments
between U.S. possessions.105
Esso
intentionally made $339,000 in unnecessary HMT payments
between
1993 and 1997 for petroleum products it shipped between
the
U.S. Virgin Islands and Puerto Rico.106
Customs liquidated these
entries
between 1994 and 1997 without change and without
refunding
Esso’s HMT payments.107 Esso
realized that possession-topossession
shipments
enjoyed an exemption from the HMT later in
1997
and filed three separate requests for HMT refunds, which
Customs
treated as requests for reliquidation under 19 U.S.C.
§
1520(c).108 Customs
denied all three requests because it considered
the
HMT payments “a mistake of law . . . [not] correct[able] under
19
U.S.C. § 1520(c)(1).”109
The
Court of International Trade heard Esso’s challenge to
Customs’
denial, and in a summary judgment ruling found that the
HMT
payments constituted a correctable “inadvertence” under 19
U.S.C.
§ 1520(c)(1) resulting from Customs’ failure to update its
regulations
to accord with the 1988 HMT amendments.110
On appeal,
the
Federal Circuit reversed the Court of International Trade’s
holding
that two of the three requests for reliquidation constituted
correctable
“inadvertences” and affirmed that the third request was
time-barred.111
Esso
advanced four theories to defend its request for HMT refunds:
first,
that a Customs refund procedure in place for entities that pay
quarterly
HMT fees—instead of importers that pay per entry, as Esso
did—should
apply to Esso in this case;112 second,
that a 1989 telex
from
Customs Headquarters created an alternative avenue for
claiming
HMT refunds;113 third,
that the refund requests actually
qualified
as “exactions” under 19 U.S.C. § 1514(a)(3);114
and fourth,
that
the statutory time limits of the applicable Customs statutes
should
be equitably tolled.115 The
Federal Circuit rejected all four
theories.116
First,
the Federal Circuit held that the subject refund procedure
did
not apply to importers at all, and cited Swisher
International, Inc. v.
United
States,117
to confirm that a timely protest represented the sole
avenue
for importers to recover HMT payments.118
Second, the court
declined
to create a new refund procedure based on a 1989 telex
because
the stated purpose of that telex was merely to summarize the
1988
HMT amendments, and not to create any procedures beyond
what
the 1988 amendments specified.119 Third,
the court rejected
Esso’s
“exaction” argument, which relied on Swisher,
because Swisher
involved
a quarterly HMT payer and not an importer.120
Finally, the
court
declined to adopt Esso’s equitable tolling argument because
the
statutory exemption from HMT payments took effect five years
prior
to Esso’s initial HMT overpayment, and “[e]quitable tolling
cannot
excuse this lack of diligence.”121
The
Federal Circuit then held as a general matter that Customs’
lack
of diligence in failing to update its regulations in accordance
with
the 1988 amendments did not offset importers’ lack of diligence
in
understanding the HMT rules.122 In
this regard, the court ruled
that “an
error is not an ‘inadvertence’ if it is the result of negligent
inaction or an advertent
misunderstanding of the law, regardless if
the
inaction or misunderstanding was originally the fault of Customs
or
the importer.”123
In Aectra
Refining & Marketing, Inc. v. United States,124 the Federal
Circuit
considered a claim for a refund of HMT and Merchandise
Processing
Fee (MPF) payments on certain petroleum products
subsequently
used to produce export goods, commonly known as
drawback.125 Aectra Refining and Marketing, Inc.
imported
petroleum
products, paid customs duties, MPFs and HMTs, and
subsequently
exported finished petroleum products between 1987
and
1997.126 The
issue before the Federal Circuit was not whether
Aectra’s
imports and exports qualified for drawback, but rather
whether
Aectra made a timely drawback claim—normally within
three
years.127
Aectra
timely filed ten requests for drawback between 1997 and
1998,
but listed only the duties paid and omitted the MPF and HMT
payments.128 At the time, Customs’ regulations
did not allow for
drawback
on MPF or HMT payments, but Aectra conceded that it
knew
Customs’ policy in this regard was subject to ongoing judicial
review.129 After Aectra filed its drawback
claim—but while those
claims
could be timely amended or re-filed—the Federal Circuit
determined
that MPF payments were recoverable under drawback
but
that HMT payments were not.130 Congress
later amended the
drawback
statute in 2004 to permit the recovery of HMT payments.131
Though
Aectra never amended its drawback claims during the
three-year
statutory period, it filed a protest prior to Congress’ 2004
amendments,
requesting MPF and HMT on the same entries for
which it sought drawback in 1997 and
1998.132 Customs
denied this
protest,
and Aectra appealed to the Court of International Trade.133
Aectra
argued that the 2004 drawback amendments suspended the
three-year
limit on HMT drawback claims, that its original drawback
claims
were sufficiently complete so as to entitle it to HMT and MPF
payment
refunds and that the futility of such claims based on
Customs’
policy at the time the drawback claims were filed rendered
them
unnecessary.134 The
Court of International Trade rejected these
arguments
and affirmed Customs’ denial of the claims.135
In
affirming the Court of International Trade, the Federal Circuit
clarified
that Congress’ 2004 drawback amendments, instead of
creating
a new right to HMT refunds, merely clarified that such
refunds
were always available under the statute.136
Citing Supreme
Court
precedent, the Federal Circuit found nothing in the 2004
amendments
that suggested intent to waive or otherwise modify the
longstanding
three-year statute of limitations on drawback claims.137
The
Federal Circuit also rejected Aectra’s argument that it did not
have
to include HMT and MPF payment amounts in its drawback
request
to complete a claim because 19 C.F.R. § 191.51(b) defines a
“complete”
claim as including a full calculation of the amount of
drawback
due.138 Finally,
the Federal Circuit rejected Aectra’s
argument
that requesting HMT and MPF payment refunds at the
time
it filed drawback requests was futile and thus not required.139
Applying
Supreme Court precedent in the area of tax law, the
Federal
Circuit reasoned that “futility does not excuse the failure to
file
a proper claim for limitations purposes.”140
In Heartland
By-Products, Inc. v. United States (Heartland
VII),141
the
Federal
Circuit ruled that the Court of International Trade must treat
the Circuit’s customs classification
decisions as retroactively
applicable.142 Heartland By-Products’ dispute with
Customs began in
1995,
when Customs issued a ruling letter classifying Heartland’s
prospective
sugar syrup imports as exempt from the Tariff Rate
Quota
(TRQ) duties on sugar.143 In
1999, after Heartland had
established
its sugar refining business and had commenced
importing
significant quantities of sugar syrup into the United States,
Customs
revoked its ruling letter and reclassified Heartland’s sugar
syrup
as subject to the substantially higher TRQ duties.144 Heartland
filed
suit at the Court of International Trade before Customs’
revocation
and reclassification took effect.145
In Heartland I,
the Court
of
International Trade determined that Customs’ revocation was
unlawful
and exempted Heartland’s imports from TRQ duties.146
In
Heartland
II, the Federal Circuit reversed Heartland
I and upheld
Customs’
reclassification.147 After
the Heartland II decision,
Heartland
stopped
importing the sugar syrup at issue.148
Although
Customs did not liquidate or reliquidate most of
Heartland’s
entries at the TRQ rate after the Heartland II mandate
issued,
some entries were liquidated or reliquidated at the TRQ rate
prior
to its issuance.149 Heartland
protested these liquidations and
reliquidations,
while Customs sought more than $65 million in
unpaid
TRQ duties.150 Heartland
also sought a judgment at the Court
of
International Trade that any liquidations or reliquidations made
prior
to the Heartland II mandate
should not be subject to the TRQ
rate,
which was dismissed for lack of jurisdiction under 28 U.S.C.
§
1581(h).151 After
Heartland appealed another suit dismissed by the
Court
of International Trade,152 the
Federal Circuit reversed and
concluded that the Court of
International Trade had ancillary
jurisdiction
to decide the scope of the Federal Circuit’s Heartland
I
decision.153
On
remand, the Court of International Trade granted Heartland’s
motion
for summary judgment and ruled that Customs must
liquidate
any entries made by Heartland before the Heartland
II
mandate
issued at the non-TRQ rate.154 The
court reasoned that
retroactive
liquidation at the TRQ rate would “undermine the
purpose
of pre-importation review.”155 On
appeal, the Federal Circuit
reversed.156
The
Federal Circuit affirmed the Supreme Court’s general rule
that
judicial decisions have retroactive effect.157
The court rejected
Heartland’s
argument that the pre-importation review afforded by
28
U.S.C. § 1581(h) represented an exception to this general rule,
finding
in the legislative history for that provision evidence that it was
intended
as “a very narrow and limited exception to th[e] rule” that
the
Court of International Trade “does not possess jurisdiction to
review
a ruling . . . unless it relates to a subject matter presently
within
the jurisdiction of the United States Customs Court.”158
The
Federal Circuit also determined that, contrary to Heartland’s
contention
that 28 U.S.C. § 1581(h) would be rendered meaningless
if
importers could not rely on section 1581(h) decisions while they
remained
subject to appeal, the pre-importation process merely
existed
to allow importers the chance to challenge Customs rulings
and
exhaust all appeals before importing the goods at issue.159 Thus,
the
Federal Circuit found that its Heartland II decision
applied
retroactively
to entries liquidated or reliquidated before the Heartland
II
mandate issued.160
In
its final Customs-related decision of 2009, Agro
Dutch Industries,
Ltd.
v. United States,161
the Federal Circuit considered whether
Customs’ liquidation of entries
after the Court of International Trade
issued
an injunction barring their liquidation but before that
injunction
took effect, mooted pending claims for reliquidation at a
newer,
lower duty rate.162 The
Federal Circuit decided that it did not,
and
in that regard affirmed the holding of the Court of International
Trade.163
After
the Department of Commerce published the final results of
its
second administrative review in the Court of International Trade
of an
antidumping duty order on preserved mushrooms from India,
Agro
Dutch Industries, Ltd. sought review of its 27.80% antidumping
duty
margin.164 Agro
Dutch moved for a preliminary injunction to
prevent
liquidation of its covered entries during the pendency of its
action.165 The government consented to this
request, even though
Agro
Dutch filed it outside of the thirty-day deadline normally
required
by the Court of International Trade rules of practice.166
The
Court of International Trade granted Agro Dutch’s request for
an
injunction, which took effect five days after service on certain
Commerce
and Customs personnel.167 The
government requested
this
five-day grace period to avoid “an inadvertent violation” of the
injunction
due to lack of notice by the applicable government agents
or
delay in dispensing the required instructions.168
Commerce
had previously issued liquidation instructions to
Customs
after its final administrative review results published.169 On
the
same day that Agro Dutch served the injunction on the
appropriate
Customs and Commerce personnel, “Customs acted on
those
[prior] instructions and liquidated nearly all of Agro Dutch’s
entries.”170
After
“extensive” additional proceedings, Commerce recalculated
Agro
Dutch’s antidumping duty rate from 27.80% to 1.54%.171 The
Court
of International Trade sustained this significantly lower duty
rate
on review, and ordered that the entries be reliquidated at the
lower
duty rate.172
Since
Customs personnel had already liquidated nearly all of Agro
Dutch’s entries at the higher duty
rate on the same day that Agro
Dutch
served the initial injunction, the government argued that the
reliquidation
request was moot.173 The
Court of International Trade
rejected
this line of argument, noted that the injunction issued
before
the liquidations took place, and attributed the liquidations to
“what
might best be charitably described as ‘inadvertence.’”174 The
Court
of International Trade backdated the injunction and held that
not
granting relief would cause “manifest injustice” to the non-party
importer
of record, “which was likely to be rendered insolvent unless
the
entries were reliquidated at the proper, lower duty rate.”175
On
appeal, the Federal Circuit acknowledged that, under Zenith
Radio
Corp. v. United States,176
court actions in which liquidation has
already
occurred are ordinarily mooted.177 However,
the Federal
Circuit
noted that it has previously acknowledged the existence of
exceptions
to that rule.178 When
liquidation occurs in spite of an
injunction
to the contrary, for example, the Federal Circuit held that
“not
only does the trial court retain jurisdiction, but a broad array of
remedies
. . . [are] available to the court to rectify the unlawful
liquidation.”179
Since
the injunction was issued solely to prevent liquidation
pending
a decision on Agro Dutch’s challenge, the Federal Circuit
was
skeptical that Customs’ mass liquidation on the day that the
injunction
was served amounted to merely a mistake.180
Indeed, the
Federal
Circuit emphasized that the five-day grace period “was not
intended
to allow the government to ‘rush in’ to liquidate the
relevant
entries and thereby avoid the effect of the injunction.”181
Thus,
the Federal Circuit affirmed that Customs’ arguably suspicious
liquidation
of the enjoined entries did not moot Agro Dutch’s
173. Id.
request
for reliquidation at the corrected, substantially lower duty
rate.182
II. TRADE REMEDIES
LAWS
Commerce
and the ITC share the responsibility for conducting
antidumping
and countervailing duty investigations.183
Antidumping
investigations
attempt to combat “dumping” of products at less than
fair
value in the United States from other countries.184
Commerce has
the
responsibility of determining whether products are entering the
United
States and being sold at less than fair value, while the ITC
determines
whether this activity injures or threatens to injure a
domestic
industry in the subject goods.185 Countervailing
duty
investigations
seek to determine whether a foreign government or
public
entity is subsidizing the manufacture of the subject goods.186
A.
Department of Commerce
In
2009, the Federal Circuit decided seven cases involving
antidumping
and countervailing duty investigations. Interestingly, all
of
these decisions stemmed from Commerce’s, and not the
International
Trade Commission’s, role in these investigations.
In Belgium
v. United States,187
the Federal Circuit reviewed
Commerce’s
liquidation instructions treating certain imports of
stainless
steel plate in coils (SSPC) as steel of Belgian—not German—
origin,
and thus subject to antidumping and countervailing duties on
Belgian
SSPC.188 Plaintiffs-appellants
Arcelor Stainless USA, LLC and
Arcelor
Trading USA, LLC imported SSPC and made cash deposits in
compliance
with the antidumping and countervailing duty orders,
but
alleged that it had mistakenly designated some of the SSPC as of
Belgian origin when it was actually
of German origin.189
Because
Arcelor
appealed the results of Commerce’s first administrative
review,
albeit on other grounds, the subject entries were not
liquidated.190
Prior
to the fourth administrative review, Arcelor discovered that it
should
have entered as of German origin some of the SSPC entered
under
the antidumping and countervailing duty orders during the
first
administrative review period.191 Arcelor
believed, under the
“substantial
transformation” doctrine, that the SSPC at issue was of
German
origin because the steel was hot rolled in Germany and not
further
cold rolled in Belgium.192 Arcelor
filed timely protests with
Customs
under 19 U.S.C. § 1514 and sent letters to Customs seeking
to
correct the origin designations and collect a refund of the
deposits.193 Based on this logic, Arcelor did not
include the SSPC that
it
considered of German origin in its questionnaire responses during
the
fourth administrative review.194
Commerce
accepted Arcelor’s argument and issued liquidation
instructions
alongside the fourth administrative review that “‘imports
of
SSPC hot rolled in Germany and not further cold rolled in
Belgium
are not subject to the antidumping duty order on SSPC from
Belgium.
Entries of this merchandise made on or after 05/01/02
should
be liquidated without regard to antidumping duties.’”195
In
contrast, Commerce issued liquidation instructions that the
entries
covered by the first administrative review remain subject to
antidumping
and countervailing duties.196 Arcelor
filed suit in the
Court
of International Trade to challenge the liquidation instructions
specific
to the first administrative review.197
After
the Federal Circuit initially remanded the Court of
International
Trade’s denial of the plaintiffs’ joint motion for a
preliminary injunction,198 the
Court of International Trade held that
Commerce’s
liquidation instructions were contrary to law.199
The
lower
court reasoned that “[p]laintiffs can not [sic] be expected to
raise
a challenge on an issue before it ripens or is revealed,” and “that
Commerce
may not impose duties on goods that” it has determined
“are
outside the scope of an antidumping or countervailing duty
order.”200
On
appeal, the Federal Circuit affirmed the Court of International
Trade
and rejected the government’s argument that Arcelor failed to
exhaust
administrative remedies before filing suit.201
The court
reasoned
that because the first administrative review “did not define
what
criteria should be applied to determine whether particular steel
was
Belgian in origin[,] nor did it state which entries were subject to
antidumping
or countervailing duties[,]” Arcelor had no relevant
grounds
on which to challenge the first administrative review, and
thus,
no administrative remedies to exhaust.202
The Federal Circuit
viewed
the government’s real argument as frustration that importers
should
not enjoy the ability to make such belated country-of-origin
corrections,
but held that “neither the [antidumping and
countervailing
duty] statute[,] nor the regulations impose a time
limit
on the correction of errors such as those made here by
Arcelor.”203
Therefore,
the Federal Circuit found Commerce’s liquidation
instructions
for entries subject to the first administrative review as
contrary
to its long-established precedent that SSPC hot rolled in one
country,
and not further cold rolled elsewhere, originates in the
country
where it undergoes hot rolling.204 In
this case, Arcelor and
the
fourth administrative review liquidation instructions correctly
deemed
SSPC hot rolled in Germany and not further cold rolled in
Belgium,
and therefore not of Belgian origin.205
In NMB
Singapore Ltd. v. United States,206
the Federal Circuit
reviewed
Commerce’s decision, in a second sunset review of an
antidumping
duty order on ball bearings, to continue the order while
reducing the dumping margins to
levels lower than before the order
took
effect.207 The
Federal Circuit affirmed Commerce’s decision to
continue
the order, but vacated and remanded the decision to
reduce
the subject dumping margins.208
JTEKT
Corporation and Koyo Corporation of U.S.A. (JTEKT)
argued
that Commerce’s second sunset review determination failed
to
consider evidence that JTEKT submitted, specifically that import
levels
did not decrease substantially, that a U.S. recession caused any
decreases
in JTEKT’s import levels around 2001,209
and that, more
broadly,
“substantial evidence” did not support Commerce’s
decision.210 The Federal Circuit found it
consistent with Commerce’s
Statement
of Administrative Action and Sunset Policy Bulletin to
continue
an antidumping duty order based merely on dumping at
any
level above de minimis,
and thus found it unnecessary to consider
JTEKT’s
argument that Commerce failed to consider its evidence of
import
volume.211 Because
JTEKT did not challenge the validity of
the
Statement of Administrative Action or the Sunset Policy Bulletin,
the
Federal Circuit inferred their validity.212
Moreover, the Federal
Circuit
reaffirmed its holding in Timken U.S. Corp. v. United States213
that
19 U.S.C. § 1677f(i) “does not require us to invalidate a decision
of
Commerce if Commerce failed to explicitly address a party’s nondispositive
argument.”214
The
Timken Company argued on cross-appeal that Commerce
both
lacked substantial evidence to reduce the subject dumping
margins
and deviated from its established methodology in the
process.215 Noting for example that Commerce did
not specify what
data
it used to determine certain importer’s import volumes, the
Federal
Circuit agreed with Timken and found that:
it
is difficult to square many of Commerce’s statements that the
Japanese
importers’ levels of imports were steady or increasing with
the
actual data before Commerce, even if we accepted the
arguments
that Commerce could permissibly consider different
types
of import data and different segments of the five-year review
period
for different importers while ignoring pre-order levels.216
The
Federal Circuit further agreed that Commerce deviated from
its
past practice of comparing pre-order volumes to volumes during
the
life of an antidumping order because Commerce only considered
volumes
during the life of the order in this instance.217
The Federal
Circuit
also vacated and remanded Commerce’s recalculation of its
dumping
margins for further analysis of whether Commerce correctly
substituted
respondents’ export data for Japanese companies’ U.S.
market
share, the traditional relevant metric.218
In Sango
International L.P. v. United States,219
the Federal Circuit
affirmed
Commerce’s determination, on remand, that Sango
International
L.P.’s gas meter swivels and nuts fell within the scope of
the
antidumping duty order on certain malleable iron pipe fittings
(MIPFs)
from China.220 Sango’s
products came under the scope of
the
subject antidumping duty order because Customs classified them
upon
entry under HTSUS subheading 7307.19.90.60, which covers
“[t]ube
or pipe fittings (for example, couplings, elbows, sleeves), of
iron
or steel: Cast fittings: Other: Other Threaded.”221
Sango
requested
classification under HTSUS subheading 9028.90.00 as parts
for and accessories to gas meters,
but Customs denied this request.222
Commerce’s
remand determination followed the requirements of
19
C.F.R. § 351.225(k)(2) and generally determined that Sango’s gas
meter
swivels and nuts cannot be used without each other and were
properly
classified in the tariff heading that subjected them to the
applicable
antidumping duty order.223 The
Court of International
Trade
affirmed Commerce’s remand determination, accepting its
arguments
that Sango’s parts are distributed through the same
avenues
of trade as MIPFs and to purchasers of MIPFs, among other
factors.224
On
appeal to the Federal Circuit, Sango argued that both
Commerce’s
decision to treat its products collectively and
Commerce’s
remand determination lacked substantial evidence in
the
record.225 The
Federal Circuit rejected Sango’s first argument
because
it agreed with Commerce and the Court of International
Trade
that Sango’s gas meter swivels and nuts could not be used
without
each other, and the fact that Sango packaged and sold the
products
separately was unavailing as a matter of law.226
Sango’s
second
argument failed because the Federal Circuit read the
antidumping
duty order as including MIPFs that connect a pipe or a
pipe fitting
to an apparatus, which Sango’s gas meters and swivels
did.227 The Federal Circuit further found
that Sango’s gas meters and
swivels
and the MIPFs subject to the antidumping duty order shared
physical
characteristics and were marketed through the same
channels
of commerce.228
In Huvis
Corp. v. United States,229
the Federal Circuit affirmed
Commerce’s
use of a constructed market price in valuing Huvis
Corporation’s
imported polyester staple fiber subject to an
antidumping
duty order.230 Huvis
appealed after Commerce issued its
findings in the fifth administrative
review.231
Huvis
purchased all of a key component used in the production of
polyester
staple fiber from affiliated companies during this period,
which
triggered the “major input rule” under 19 U.S.C.
§§
1677b(f)(2)–(3) and 19 C.F.R. § 351.407(b).232
The “major input
rule”
requires Commerce to determine the value of an affiliatesourced
key
production component as the higher of (1) the transfer
price,
(2) the market value, or (3) the cost of production.233
As it
had done previously, during the fifth administrative review,
Commerce
requested that Huvis submit the transfer price, market
value
and cost of production for the major inputs at issue.234 For
qualified-grade
and purified terephthalic acids—the major inputs at
issue—Huvis
submitted only transfer price and cost of production,
explaining
that its supplier considered market price data
proprietary.235 Though Commerce had, in three of
four cases,
previously
applied the major input rule for only the two measures
Huvis
supplied, for the fifth administrative review Commerce chose
to
construct a market price from “facts available.”236
In this case,
Commerce
arrived at a market price by adding an average profit rate,
taken
from suppliers’ submitted financial statements, and added it to
Huvis’
submitted cost of production.237 This
constructed market price
exceeded
both the transfer price and cost of production submitted by
Huvis,
and thus Commerce used it to value the subject major
inputs.238
Huvis
filed suit in the Court of International Trade to challenge
Commerce’s
constructed market price as unsupported by substantial
evidence.239 The Court of International Trade
found that
Commerce’s
constructed market value—which relied on Huvis’ own
data—was
supported by substantial evidence and did not apply any
adverse
inferences against Huvis.240 The
Court of International Trade
nonetheless
remanded to Commerce based on the court’s finding
that Commerce’s use of constructed
market price was inconsistent
with
its past practice of simply using the highest available price
measure.241
On
remand, Commerce stood by its methodology and explained
that
it only now realized it had enough data to construct a market
price,
and that doing so provided “a more complete analysis under
the
major input rule, and result[ed] in a more accurate calculation of
Huvis’s
dumping margin.”242 The
Court of International Trade
accepted
this methodology and affirmed Commerce’s constructed
market
value determination.243
Huvis
appealed to the Federal Circuit, again under the theory that
the
constructed market price was unsupported by substantial
evidence
and contrary to law.244 Huvis
argued that Commerce’s
standard
practice was to look only at the available measures and not
to
construct a major input value, which made it the “law of the
proceeding”
and a practice that Huvis should expect from Commerce
during
the fifth administrative review.245 Finally,
Huvis argued that
Commerce’s
methodology of adding cost of production to profit
renders
the cost of production variable in the major input test
meaningless,
since the market value would always be higher.246
First,
the Federal Circuit found that Commerce’s constructed
market
value methodology in this case was permissible under the
antidumping
statute.247 The
Federal Circuit deemed Commerce’s
addition
of an average profit to cost of production reasonable “since
there
is no suggestion here that product sales were unprofitable or
that
the profit margins were unusually low.”248
The court also found it
reasonable
for Commerce to differentiate between varying grades of
terephthalic
acids because Huvis’ own transfer price data showed that
it paid more for higher grade
materials.249
Second,
the Federal Circuit ruled that Commerce had a “good
reason”
to deviate from its past practice.250
In this case, the court
endorsed
Commerce’s determination that it could increase the
accuracy
of its estimated market prices—and consequently its
dumping
margins—by calculating the market price for Huvis.251 The
court
rejected Huvis’s argument that Commerce could not abruptly
change
course, as Huvis offered no evidence of actual detrimental
reliance.252 Thus, Commerce was permitted to
proceed with its fifth
administrative
review based on a calculated market price for certain
of
Huvis’ terephthalic acids.253
Ningbo
Dafa Chemical Fiber Co. v. United States254
concerned an
antidumping
duty investigation of recycled polyester staple fiber
(PSF)
from China.255 Commerce
issued a final determination
imposing
a 4.86% dumping rate for Ningbo Dafa Chemical Fiber
Co.256 The Federal Circuit agreed with the
Court of International
Trade
and affirmed Commerce’s final determination, finding that it
was
supported by substantial evidence.257
PSF
is made in part from recycled polyethylene terephthalate
(PET)
bottle flake, and the color of the PET flake used in production
corresponds
with the color of the finished PSF.258
Commerce
requested
the invoices from Ningbo’s market economy purchases of
PET
flake during its investigation, in furtherance of its obligation to
use
the “best available information” to value the subject PSF.259 In
response,
Ningbo gave Commerce fifty-eight invoices from its
qualifying
market economy PET purchases, but very few of those
identified
the color of PET flake purchased.260
After Commerce
unsuccessfully
made a second inquiry for invoices that matched
purchase price with PET flake color,
Commerce made its
determination
based on “neutral partial ‘facts available’”
inferences.261
First,
the Federal Circuit upheld Commerce’s use of “facts
available”
inferences in this case because “Ningbo did not provide the
requested
information in the form and manner requested” and
because
Commerce reasonably determined the color of PET flake to
be
relevant to its value.262 The
court emphasized that the reason
behind
a respondent’s failure to provide information reasonably
requested
by Commerce is “of no moment”—including if the
respondent
is from a non-market economy country—and the failure
alone
allows Customs to make facts available inferences.263
Second,
the Federal Circuit held that substantial evidence
supported
Commerce’s final determination.264 The
court deferred to
Commerce’s
conclusion that it required color-specific PET flake
values
and that color-specific, surrogate PET flake values from India
did
not exist.265 The
Federal Circuit then decided that Commerce’s
application
of its neutral facts available inferences was supported by
substantial
evidence.266 Noting
that Commerce’s methodologies are
“presumptively
correct” under Thai Pineapple Public Co. v. United
States267 and Florida
Citrus Mutual v. United States,268
Ningbo’s claim that
it
would have been impossible to produce color-specific PET flake
invoices
as requested by Customs was not persuasive.269
In the court’s
view,
Commerce had incomplete information to work with and acted
reasonably
when it used the best information available to assign
colors
to the market economy invoices that lacked colors.270
Moreover,
the Federal Circuit found that substantial evidence
supported
Commerce’s color-specific PET flake valuations, both
because
the incomplete information provided by Ningbo made an
exact
correlation between Ningbo’s PET flake purchases and its PSF
production
possible271 and
because Commerce’s calculated values
matched up with the prices derived
from a co-respondent that did
provide
color-specific PET flake invoices.272
Thus, Commerce’s final
determination
and dumping margin for Ningbo were affirmed.273
The
Federal Circuit upheld an “adverse facts available” (AFA)
antidumping
ruling in PAM, S.P.A. v. United States.274 The appeal
considered
the Court of International Trade’s affirmance of
Commerce’s
determination of a 45.49% AFA margin for PAM S.P.A.
(PAM),
an Italian producer and exporter of pasta, in compliance
with
the Court of International Trade’s earlier instructions on
remand
to recalculate an AFA antidumping margin in accordance
with
19 U.S.C. § 1677e(c).275
This
appeal concerned the sixth administrative review, during
which
PAM filed questionnaire responses with Commerce and
participated
in the verification of its sales databases.276
However, PAM
failed
to report sales to AGEA, a governmental entity, and a set of
invoices
for pasta shipped directly from an external warehouse to
PAM’s
customers.277 These
omissions represented approximately twothirds
of
PAM’s total domestic sales.278
Based
on these omissions, Commerce determined that PAM failed
to
cooperate with its investigation and applied an AFA margin.279 The
AFA
margin of 45.49% applied to PAM represented the highest
margin
applied to any party that had been previously upheld in the
course
of the investigation.280 PAM
challenged Commerce’s decision
and
the Court of International Trade remanded, finding that
Commerce
had not “adequately corroborated” the subject margin.281
On
remand, Commerce took into account PAM’s databases but
found
the same margin that it found in the sixth administrative
review.282
Noting
that “Congress has made very clear the importance of
accurate
and complete reporting of home market sales to the
Department of Commerce,” the Federal
Circuit found that
“Commerce’s
discretion in applying an AFA margin is particularly
great
when a respondent is uncooperative by failing to provide or
withholding
information.”283 The
court identified substantial
evidence
for the 45.49% AFA margin based on Commerce’s finding
that
at least twenty-nine sales occurred with margins at or above
45.49%.284 The court rejected PAM’s argument
that its high margin
sales
were mere outliers, as 0.5% of total sales, based on Ta
Chen
Stainless
Steel Pipe, Inc. v. United States.285
In that case, the Federal
Circuit
held that, “[s]o long as the data is corroborated,” Commerce
may
choose to rely on a small subset of data to support an AFA
margin.286
Qingdao
Taifa Group Co. v. United States287
required the Federal
Circuit
to decide whether the Court of International Trade had the
power
to halt liquidation of entries for importers of hand trucks
made
and exported by Qingdao Taifa Group Co. (Taifa) so that Taifa
could
challenge antidumping duties imposed on it by Commerce.288
Various
U.S. companies purchased Taifa hand trucks in 2005 and
2006
and paid cash deposits pursuant to the applicable antidumping
duty
order, but Taifa did no importation of its own and thus paid no
cash
deposits directly.289 Commerce
later notified all interested
parties
of the opportunity to request a review of the entries.290
Commerce
initiated a review based in part on Taifa’s request and
sent
personnel to China to visit Taifa and interview its employees.291
During
its visit to China, Commerce detected “concealment,
destruction,
and tampering with responsive documents” and, as a
result,
applied an AFA margin under 19 U.S.C. § 1677e(b) and
assigned
the general antidumping duty rate used for China, which
was
much higher than the rate generally applied to individual
exporters.292 Taifa challenged this determination
at the Court of
International
Trade, which granted Taifa’s motion for a preliminary
injunction and halted liquidation
pending the outcome of its
review.293 Certain domestic producers who later
intervened in the
Court
of International Trade action appealed to the Federal
Circuit.294
The
Federal Circuit reviewed the Court of International Trade’s
grant
of an injunction under an “abuse of discretion” standard.295
Pursuant
to this standard, the lower court will only be reversed if it
“made
a clear error of judgment in weighing the relevant factors or
exercised
its discretion based on an error of law or clearly erroneous
fact
finding.”296
As an
initial matter, the Federal Circuit rejected the government’s
argument
that the intervening domestic producers had waived their
right
to participate because they did not intervene until after the
injunction
was granted.297
In
affirming the Court of International Trade’s decision, the
Federal
Circuit determined that Taifa faced irreparable forfeiture in
the
event that an injunction was not granted.298
The court further
reasoned
that no other statutory framework or process existed for
Taifa
to challenge the validity of Commerce’s chosen antidumping
duty
margins, and thus the company would have no recourse after
liquidation
was completed.299 Moreover,
the court found that the
legislative
history of the antidumping statute supports an injunction,
as “[t]he
Tariff Act . . . expressly contemplates protections for foreign
as
well as domestic manufacturers.”300 And
the court finally
determined
that Taifa demonstrated “at least a ‘fair chance of success
on
the merits.’”301 Though
“no party proffers any significant evidence
about
the merits of the imposed tariff rate,”302
Taifa at least claimed
that
it should not be subject to the China-wide rate because it is not a
government-controlled entity.303 Based
on this limited argument, the
Federal
Circuit saw no cause to overturn the Court of International
Trade’s
finding that Taifa demonstrated some likelihood of success
on
the merits.304 Therefore,
the Federal Circuit sustained the
injunction
granted by the Court of International Trade.305
B.
International Trade Commission
The
Federal Circuit issued only one decision in 2009 arising out of
the
ITC, and it related to the constitutionality of the now-repealed
Byrd
Amendment.306 The
case discussed below continued to the
Federal
Circuit, even though Congress repealed the statute, because
the
private parties’ claim for distributions predated the Amendment’s
repeal.307
In
2009, the Federal Circuit upheld the constitutionality of the
Byrd
Amendment,308 which
provided for the distribution of
antidumping
duties collected by the federal government to certain
“affected
domestic producers” of the dumped goods, against First
and
Fifth/Fourteenth Amendment challenges.309
SKF USA (SKF)
challenged
the ITC’s 2005 denial of its request for Byrd Amendment
distributions.310 The ITC reasoned in its denial that
SKF was not
eligible
for distributions because it was not a petitioner and had not
supported
the petition resulting in the antidumping duty order.311
The
Court of International Trade agreed with SKF and found that
the
Byrd Amendment’s language that limited eligible claimants to
petitioners
or supporters of the petition violated the equal protection
guarantees
of the Fifth Amendment.312
On
appeal, the Federal Circuit declined to decide threshold
questions
of jurisdiction and simply assumed that the Court of
International Trade had jurisdiction
to hear SKF’s claim and that the
claim
was not barred by any applicable statute of limitations.313 The
Court
further determined that, since SKF challenged the Byrd
Amendment
as applied to its claim for distributions and not on its
face,
the claim could only accrue once SKF filed suit to collect the
duties.314
Stressing
its adherence to the doctrine of constitutional avoidance,
the
Federal Circuit first considered SKF’s First Amendment
argument.315 The Court rejected SKF’s argument
that the Byrd
Amendment’s
restriction of distributions functioned to penalize
domestic
producers who declined to speak in support of
antidumping
petitions because “[p]arties who are awarded
antidumping
distributions under the Byrd Amendment may say
whatever
they want about the government’s trade policies generally
or
about the particular antidumping investigation, provided they do
so
outside the context of the proceeding itself.”316
In this regard, the
Federal
Circuit found that the Byrd Amendment, rather than chilling
opposing
views, rewards the efforts of domestic producers who aid
enforcement.317
SKF
based its equal protection argument on the theory that no
rational
basis for distributing antidumping duties only to domestic
producers
that supported an antidumping petition furthered the
compensatory
purpose of the Byrd Amendment.318 The
government
countered
that the Byrd Amendment “identifies a group of
beneficiaries
that are entitled to compensation for unfair trade
practices”
and thus rationally supports its purpose.319
The Court of
International
Trade agreed with SKF because it saw the antidumping
laws
as “designed to benefit entire industries rather than individual
companies.”320 But the Federal Circuit rejected
this line of reasoning
and—extending
its First Amendment findings to its equal protection
analysis—found that the Byrd Amendment
was rationally related to
the
legitimate purpose of enforcing U.S. trade laws and rewarding
those
in the private sector who assist in that enforcement.321
In a
split decision, the Federal Circuit denied a petition for a panel
rehearing
and a petition for rehearing en banc on September 29,
2009.322
CONCLUSION
In
2009, the Federal Circuit issued nineteen precedential
international
trade-related decisions that will undoubtedly prove
important
to both the import and export community’s day-to-day
business
operations and the future activities of Customs, Commerce
and
the ITC. The Federal Circuit’s review of international traderelated
appeals
from the Court of International Trade remains a
small
but extremely important body of law, and the Federal Circuit’s
role
in creating judicial precedent for the ever-changing regime of
U.S.
trade policy and trade regulations is only likely to increase with
time. |