CAFC OKs Aluminum Content Requirements for Aluminum Extrusions Kit Exemption
Kits must include non-extruded aluminum components to qualify for the finished goods kit exemption from antidumping and countervailing duties on aluminum extrusions from China, the U.S. Court of Appeals for the Federal Circuit said March 28 (here) as it reversed a lower court decision. Reinstating a Commerce Department ruling issued in 2012 (see 12122601), the appeals court found refrigerator trim kits imported by Meridian Products are subject to AD/CV duties because they include only extruded aluminum parts and fasteners.
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The long-running case revolves around the interpretation of language in the scope of the AD/CV duty orders defining the exemption to AD/CV duties for finished goods kits. The scope says a “finished goods kit is understood to mean a packaged combination of parts that contains, at the time of importation, all of the necessary parts to fully assemble a final finished good” and requires no further fabrication before assembly “as is” into a finished product. But a product can’t be considered a finished goods kit “merely by including fasteners such as screws, bolts, etc. in the packaging with an aluminum extrusion product.” Commerce had found that disqualified Meridian’s trim kits from the exemption.
In a series of decisions culminating in 2015 (see 1506240022), the Court of International Trade had rejected the “aluminum content” test Commerce effectively applied in the scope ruling. CIT found the “merely by including fasteners” requirement only serves to prevent circumvention by placing fasteners in a box with an aluminum extrusion and calling it a kit. It is not meant to apply to combinations of parts actually ready for assembly into a final product, even if such kits don’t have any non-extruded aluminum parts like Meridian’s. Commerce subsequently found Meridian’s trim kits are exempt from duties, albeit under protest (see 1601250028).
On appeal, CAFC agreed with Commerce’s original interpretation of the disputed scope language. “The exclusion states that, to fall outside the scope of the Orders, a finished goods kit must contain more than only aluminum extrusion parts necessary for final assembly,” the court said. Finding a kit comprising only extruded aluminum and fasteners is eligible for the exemption would ignore the condition the scope places on finished goods kits, it said. It would broaden the scope of duties and render it “internally inconsistent” by exempting an aluminum extrusion imported with fasteners, but covering the same extrusion imported on its own.
Meridian’s trim kits are subject to AD/CV duties because they don’t meet the requirements of the finished goods kit exemption, CAFC said. The parts of the trim kits that form the finished good include only extruded aluminum trim, grilles and strips that are otherwise subject to AD/CV duties on aluminum extrusions from China, it said. The brackets and screws included in the kits are “fasteners” that “‘meet the definition of extraneous fasteners and packaging materials described in’ the qualifying language of the exclusion,” the appeals court said.
(Meridian Products v. U.S., CAFC # 2016-1730, dated 03/28/17, Judges Prost, Newman and Wallach)