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Trade Court Clarifies Agency Roles in Applying AD/CV Duty Orders to Imports

Tuesday, July 07, 2015
Sandler, Travis & Rosenberg Trade Report

by Arthur Purcell

The Court of International Trade has ruled that a determination by U.S. Customs and Border Protection as to whether imported merchandise is subject to antidumping and countervailing duty orders is a protestable decision that an importer may directly challenge in the CIT, regardless of whether it had simultaneously pursued a Commerce Department scope inquiry. While Commerce alone decides the scope of AD/CV duty orders, the court said, CBP makes a decision when it makes a factual determination as to whether an AD or CV duty order applies.

LDA Incorporado v. United States involves imports of rigid galvanized steel conduit from China that LDA entered as outside the scope of antidumping and countervailing duty orders on circular welded carbon quality steel pipe from China. U.S. Customs and Border Protection disagreed and liquidated the entries subject to AD/CV duties. CBP denied LDA’s subsequent protest of that liquidation, but a scope ruling obtained from Commerce on CBP’s advice determined that the conduit was in fact excluded from the orders.

CBP argued that its actions were merely ministerial and involved no protestable decision, but the CIT disagreed. CBP’s decision to apply the orders to the conduit was not a determination of the scope of the orders, a role reserved for Commerce, but a factual finding to determine what the goods are (e.g., by conducting lab analyses), whether they are described in the orders and whether to apply the orders to the goods. CBP’s error in determining that the orders applied to LDA’s conduit is thus protestable and may be challenged under the CIT’s protest jurisdiction.

It is worth noting that Commerce ruled in favor of LDA in its scope inquiry and determined that CBP misapplied the scope, so there was no basis to challenge that decision under the CIT’s scope review jurisdiction. Had that decision gone the other way, it is unclear whether that might have affected the court’s determination regarding its protest jurisdiction. At the same time, in such an instance the importer would have the right to judicial review of Commerce’s adverse decision under the court’s scope review jurisdiction.

For more information on this ruling and its effect, please contact Arthur Purcell at (212) 549-0131.

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