Pencil Importer Says CBP Misapplied Commerce's Scope Ruling, Subjecting Goods to AD Order on China
CBP illegally subjected importer Raymond Geddes & Company's pencils to antidumping duties on cased pencils from China, since the company's pencils are made in the Philippines, Raymond Geddes argued in a Nov. 14 complaint at the Court of International Trade. The importer said CBP improperly applied a scope ruling on a separate importer, School Specialty, to its goods (Raymond Geddes & Company v. United States, CIT # 25-00265).
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Raymond Geddes said all the manufacturing steps for its pencils were performed in the Philippines. The pencils at issue were made using Serbian-origin wooden slats and Philippine-origin writing cores, glue and lacquer. The only parts of Chinese origin are the "optional ferrules, erasers, and foil wraps used with novelty pencils" that Raymond Geddes imports into the U.S.
CBP liquidated the goods as subject to the China-wide AD rate of 114.9% on the grounds that the scope ruling on School Specialty applied to "any pencils manufactured in the Philippines using Chinese inputs." The agency said the Commerce Department confirmed that "any component of Chinese origin, no matter what the component is and no matter how much of the pencil it makes up, makes the pencils subject to the case."
In its complaint, Raymond Geddes said Commerce never analyzed its "Philippine pencil-manufacturing operations, never sought or reviewed any data concerning those operations, never sought data regarding those operations, and never issued any scope ruling concerning the Raymond Geddes’ pencils" or the pencils of any importer other than School Specialty. Raymond Geddes argued that School Specialty's pencils were manufactured in the Philippines "using nearly all Chinese-origin materials."
Commerce used the "substantial transformation" test regarding School Specialty's pencils, finding they weren't substantially transformed in the Philippines.
At CIT, Raymond Geddes argued that the scope ruling regarding School Specialty's products doesn't extend to importers other than School Specialty. A field message from CBP summarized Commerce's findings in the School Specialty proceeding, though it "incorrectly indicated that any pencils manufactured in the Philippines containing Chinese-origin materials were subject to" the AD order on Chinese cased pencils. "This erroneous communication appears to have caused confusion among CBP field offices regarding the proper application of the order."
The importer said its pencils aren't subject to the AD order, since "Commerce’s scope ruling applies only to School Specialty’s pencils and to no other importer or manufacturer."