Commerce Can't Retroactively Suspend Liquidation After Affirmative Scope Ruling, CIT Says
The Commerce Department may not order CBP to retroactively suspend liquidation when it finds a product is subject to the scope of an antidumping or countervailing duty order, even if it thinks the scope’s coverage of the product is obvious, the Court of International Trade said on Jan. 11 (here). Though the court agreed with Commerce that United Steel and Fasteners (US&F) American Railway Engineering and Maintenance-of-Way Association (AREMA) washers are covered by antidumping duties on helical spring lock washers, Commerce’s decision to suspend liquidation back to the date the order was issued was improper, CIT said.
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Commerce issued the scope ruling in 2013 (see 13071529). US&F requested the ruling, even though it had already been importing the washers under subheading 7318.21.0090 and declaring them not subject to AD duties without any word from CBP. The company told Commerce that its AREMA washers are different from the helical spring lock washers because of their exclusive use in the railroad industry and their different shape, size and composition, but Commerce disagreed. AREMA washers aren’t exempt from the scope of the order, and the washers otherwise meet the physical characteristics described in the scope language, the agency said.
But Commerce went one step further than in normal scope rulings, finding the scope’s application to US&F’s washers so obvious that it ordered CBP to suspend liquidation not just back to the date the scope inquiry began, but retroactive to the issuance of the AD duty order in 2011. Though Commerce’s regulations say it can’t suspend liquidation further back than a scope inquiry’s initiation, the agency said it hadn’t initiated a formal scope inquiry and wasn’t bound by the limitation. It also added subheading 7318.21.0090 to the HTS numbers listed in the scope.
In her first published opinion since her confirmation in June (see 1606070033), CIT Judge Jennifer Choe-Groves found that Commerce has no authority to retroactively suspend liquidation in any scope inquiry, whether a “formal” one where the products' physical and other characteristics are examined in depth, or an informal inquiry where the language of the scope and other documents from the original investigation are enough to reach a decision. When it originally issued its scope regulations, Commerce declined to provide for retroactive suspension of liquidation, even though some domestic manufacturers had requested it. That shows the intent of the regulations was not to provide for retroactive suspension of liquidation in some cases but not others.
Also, the Federal Circuit in 2013 found Commerce may never suspend liquidation retroactively when it finds a product that is not subject to an antidumping duty order should be included under the scope (see 13121321). Commerce had argued this case was different because the scope so obviously covered the washers that its scope ruling held that the washers were always subject to the scope of duties. But CBP had not been collecting AD duty cash deposits, indicating that the scope wasn’t so clear, CIT said. And in any case, “all affirmative scope determinations in effect state that certain merchandise has always been included within the scope of an order,” it said. CIT ordered Commerce to redraft its liquidation instructions by Feb. 6.
(United Steel and Fasteners, Inc. v. U.S., Slip Op. 17-2, CIT # 13-00270, dated 01/11/17, Judge Choe-Groves)