Customs Ruling HQ H030656 - Request to Set Aside Denial of Further Review of Protest No. 5301-06-100286, Assessment of Antidumping Duties on Merchandise Entered for Consumption from a Foreign Trade Zone; Retroactive Application of Revocation of an Antidumping Duty Order, 19 U.S.C. § 1515(d)

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HQ H030656
Jan 13, 2009

Type : • HTSUS :

FOR-02-06
LIQ-04-01
PRO-2-05
OT:RR:CTF:ER - H030656 ECD

Terry L. Estell, Port Director
U.S. Customs and Border Protection
2350 N. Sam Houston Pkwy E. #1000
Houston, Texas 77032-3100

Re: Request to Set Aside Denial of Further Review of Protest No. 5301-06-100286, Assessment of Antidumping Duties on Merchandise Entered for Consumption from a Foreign Trade Zone; Retroactive Application of Revocation of an Antidumping Duty Order, 19 U.S.C. § 1515(d)

Dear Dir. Estell:

This letter represents our decisions with respect to the request to set aside denial of further review of Protest No. 5301-06-100286 (the “Protest”) filed on behalf of Mitsui Tubular Products LLC (“MTP”), on May 29, 2008.

FACTS:

Prior to its merger with MTP, Mitsui & Co. purchased oil country tubular goods (“OCTG”) from another company, “Company X”. A Mexican company, Tubos de Acero de Mexico S.A. (“TAMSA”) manufactured the OCTG that Mitsui & Co. purchased and that MTP acquired during the merger. The Mexican OCTG was admitted into the foreign trade zone (“FTZ”), in privileged foreign status, on August 4, 2000. The OCTG was withdrawn from the FTZ and entered for consumption into U.S. Customs Territory on February 23, 2004. CBP extended the date of liquidation, and liquidated the entry at a rate of “21.7 percent,” according to the submission, on April 14, 2006.

OCTG from Mexico was subject to an antidumping duty order. See Antidumping Duty Order: Oil Country Tubular Goods From Mexico, 60 Fed. Reg. 41056 (August 11, 1995)(“Antidumping Duty Order”). The antidumping duty rates calculated as a result of the investigation were 23.79 percent for TAMSA and for “all others.” Id. There was no rate for Company X or for Mitsui & Co. In 1997, the rate was decreased to 21.7 percent for TAMSA and for “all others.” See Oil Country Tubular Goods From Mexico: Notice of Panel Decision, Amended Order and Final Determination of Antidumping Duty Investigation in Accordance With Decision Upon Remand, 62 Fed. Reg. 5612 (February 6, 1997).

The U.S. Department of Commerce (“Commerce”) initiated an administrative review of the antidumping duty order on OCTG from Mexico, and of TAMSA, for the period from August 1, 2000 through July 31, 2001, but later rescinded the review, because TAMSA “had no entries for consumption of subject merchandise that are subject to review in the United States.” See Oil Country Tubular Goods From Mexico: Rescission of Antidumping Duty Administrative Review, 67 Fed. Reg. 56269 (September 3, 2002). The instructions issued after the rescission stated:

IN ACCORDANCE WITH SECTION 351.212(c) OF THE COMMERCE DEPARTMENT REGULATIONS, YOU ARE TO ASSESS ANTIDUMPING DUTIES ON MERCHANDISE ENTERED, OR WITHDRAWN FROM WAREHOUSE, FOR CONSUMPTION AT THE CASH DEPOSIT OR BONDING RATE IN EFFECT ON THE DATE OF ENTRY.

The instructions also stated that the CBP should assess zero percent for TAMSA. See Message No. 3009206. No rate was listed for Company X or MTP.

Commerce also initiated an administrative review of the antidumping duty order for the period from August 1, 2003 through July 31, 2004, but later rescinded the administrative review with respect to TAMSA, because TAMSA had no entries of OCTG during the period of review. See Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Oil Country Tubular Goods from Mexico, 70 Fed. Reg. 60492 (October 18, 2005). The liquidation instructions issued after the rescission stated:

1. THE ADMINISTRATIVE REVIEW OF THE ANTIDUMPING ORDER ON OIL COUNTRY TUBULAR GOODS FROM MEXICO, COVERING THE PERIOD 08/01/2003 THROUGH 07/31/2004, WAS RESCINDED WITH RESPECT TO TUBOS DE ACERO DE MEXICO, S.A. (TAMSA)(A-201-817-001/A-201-215-001) ON 10/18/2005 (70 FR 60492). COMMERCE DID NOT IDENTIFY ANY EVIDENCE OF U.S. TRANSACTIONS OF OIL COUNTRY TUBULAR GOODS FROM MEXICO INVOLVING TAMSA DURING THE AFOREMENTIONED PERIOD.2. AS A RESULT OF COMMERCE'S CLARIFICATION OF ITS ASSESSMENT REGULATION ON 05/06/2003 (68 FR 23954), FOR ALL SHIPMENTS OF OIL COUNTRY TUBULAR GOODS FROM MEXICO, PRODUCED BY TAMSA, ENTERED OR WITHDRAWN FROM WAREHOUSE FOR CONSUMPTION DURING THE PERIOD 08/01/2003 THROUGH 07/31/2004, YOU ARE TO ASSESS ANTIDUMPING DUTIES AT THE ALL OTHERS RATE. LIQUIDATE ALL ENTRIES FOR THE PERIOD REFERENCED ABOVE.NOTE THAT ENTRIES OF MERCHANDISE PRODUCED BY TAMSA DURING THISPERIOD MAY HAVE ENTERED UNDER A-201-215-000 AND A-201-817-000.

See Message No. 6027213.

In the most recently completed review prior to these determinations, the antidumping duty rate for TAMSA was zero; however, the all others rate remained unchanged. See Oil Country Tubular Goods From Mexico: Final Results of Antidumping Duty Administrative Review and Determination Not To Revoke in Part, 66 Fed. Reg. 15832 (March 21, 2001)(“the cash deposit rate for all other manufacturers or exporters will continue to be 23.79 percent {sic}. This is the “all others” rate from the LTFV investigation.”). No rate was listed for Company X, Mitsui & Co., or MTP.

Every five years Commerce will review an antidumping duty order to determine whether there is a likelihood of continuation of dumping, which is known as a “sunset” proceeding; in 2000, Commerce found a likelihood of continuation of dumping, and did not revoke the antidumping order on OCTG from Mexico. See Oil Country Tubular goods (“OCTG”) From Mexico; Final Results of Sunset Review of Antidumping Duty Order, 66 Fed. Reg. 14131 (March 9, 2001). This decision was challenged before a Bi-National Panel (“Panel”) constituted pursuant to the North American Free Trade Agreement (“NAFTA”); however, Commerce did not order suspension of liquidation pursuant to 19 U.S.C. § 1516a(g)(5)(B). On August 29, 2007, Commerce published notice of a Panel decision not in harmony with the sunset review, which stated, effective August 9, 2007:

Accordingly, the Department will continue the suspension of liquidation of the subject merchandise pending the expiration of the period for requesting an Extraordinary Challenge Committee (“ECC”). If an ECC request is not filed, or if an ECC request is filed, and the Panel’s decision is upheld, the Department will instruct U.S. Customs and Border Protection to liquidate the subject merchandise without regard to dumping duties.

See Oil Country Tubular Goods from Mexico: Notice of NAFTA Panel Decision Not In Harmony With Final Results of Sunset Administrative Review, 72 Fed. Reg. 49702 (August 29, 2007). Pursuant to the Panel’s decision, Commerce revoked the antidumping duty order, and found that the “effective date of revocation is August 11, 2000.” See Oil

Country Tubular Goods from Mexico: Notice of NAFTA Bi-National Panel's Final Decision, Amended Final Results of Full Sunset Review and Revocation of Antidumping Duty Order, 72 Fed. Reg. 55747 (October 1, 2007). No instructions concerning the NAFTA Panel decision were issued until November 5, 2007. See Message No. 7309209. Pursuant to those instructions, CBP was to: TERMINATE THE SUSPENSION OF LIQUIDATION FOR ALLSHIPMENTS OF OIL COUNTRY TUBULAR GOODS FROM MEXICO, WHETHER ENTERED UNDER CASE NUMBER A-201-817 OR A-201-215, ENTERED OR WITHDRAWN FROM WAREHOUSE FOR CONSUMPTION, ON OR AFTER 08/11/2000. ALL ENTRIES OF THE SUBJECT MERCHANDISE THAT WERE SUSPENDED ON OR AFTER 08/11/2000 SHOULD BE LIQUIDATED WITHOUT REGARD TO ANTIDUMPING DUTIES (I.E., RELEASE ALL BONDS AND REFUND ALL CASH DEPOSITS, WITH INTEREST).

Message No. 7309209 (November 5, 2007).

On July 12, 2006, MTP filed the Protest, and applied for further review, pursuant to 19 C.F.R. § 174.24(b). On December 14, 2007, MTP sent a letter to CBP informing it of the revocation of the antidumping duty order covering OCTG from Mexico. On March 31, 2008, the Port denied the Protest and the Application for Further Review, with the explanation, “Per 15 CFR 400.3(b)(2) {sic}, antidumping duties in effect at time of entry into Customs territory.” ISSUE:

Whether CBP may void the denial of a Protest, pursuant to 19 U.S.C. § 1515(d), when instructions have been issued revoking an entire antidumping duty order retroactively; moreover, those instructions include an entry that was liquidated according to the antidumping duty rates valid at the time of liquidation, liquidation of the entry was not ordered to be suspended by Commerce or a court, but the entry was covered by a Protest open at the time the instructions were issued.

LAW & ANALYSIS:

As an initial matter, this request was timely, pursuant to 19 U.S.C. § 1515(c), because it was filed on May 29, 2008, which is within sixty days of the notice of the denial of the application for further review on March 31, 2008. However, because more than sixty days have passed since the request was filed, the request is considered denied. Nevertheless, given the unusual nature of the facts of this case, we are considering this request, on our own initiative, pursuant to 19 U.S.C. § 1515(d).

Section 1515(d) provides that if a protest is “timely and properly filed, but is denied contrary to proper instructions, the Customs service may on its own initiative . . . void the denial of the protest.” 19 U.S.C. § 1515(d). In this case, the proper instructions were issued on November 5, 2007, prior to the issuance of the decision with respect to the timely and properly filed Protest.

CBP’s role in liquidating entries and assessing antidumping duties is ministerial; Customs liquidates an entry and assesses antidumping duties pursuant to Commerce’s directions. See Mitsubishi Elecs. Am., Inc. v. United States, 44. F.3d 973, 976-77 (Fed. Cir. 1994). As an initial matter, CBP properly assessed duties at the “all others” rate for merchandise entered for consumption on February 23, 2004. Because “Commerce did not identify any evidence of U.S. transactions” of OCTG from Mexico “involving TAMSA” from August 1, 2003, through July 31, 2004, CBP was to assess the “all others rate” to “all shipments” of OCTG from “Mexico, produced by TAMSA, entered or withdrawn from warehouse for consumption during the period 08/01/2003 through 7/31/2004.” See Message No. 6027213. MTP’s shipment of OCTG from Mexico was produced by TAMSA and was withdrawn from the FTZ for consumption on February 23, 2004. The “all others” rate was 21.7 percent, and CBP assessed the antidumping duties owed on MTP’s OCTG from Mexico at 21.7 percent.

At the beginning of its letter, and in its original Protest, MTP argues that the August 4, 2000, FTZ admission date should apply in determining antidumping duties; however, MTP then refutes its own argument, which was based on 15 C.F.R. § 400.33(b)(2), stating that “nowhere in Part 400 is there a regulation that might control the disposition of the July 12 protest.” Compare pages 2-3 with page 4 of May 29, 2008 letter. Assuming that MTP has not abandoned its argument that the August 4, 2000, admission date should apply, its argument would conflict with the antidumping duty order and the statute, which specifically state that antidumping duties be assessed on merchandise “entered, or withdrawn from warehouse, for consumption.” The antidumping duty order itself applies to OCTG from Mexico “entered, or withdrawn from warehouse, for consumption.” Antidumping Duty Order, 60 Fed. Reg. at 41056. This is according to the statute, which states that an antidumping duty order applies to merchandise depending on the date it is entered, or withdrawn from warehouse, for consumption. See 19 U.S.C. § 1673e(b)(2)(“subject merchandise which is entered, or withdrawn from warehouse, for consumption on or after the date of publication of notice of an affirmative determination . . .shall be subject to the assessment of antidumping duties.”) When an antidumping duty order applies or is revoked with respect to particular merchandise depends on when the merchandise was entered, or withdrawn from warehouse, for consumption.

The timing of application of an antidumping order comports with the FTZ statute because, although valuation and classification are determined upon admission to a warehouse, the assessment of antidumping duties, as with tariff quota determinations,

must be based on the date of entry for consumption into the Customs territory of the United States. In deciding whether a quota applied to merchandise placed in an FTZ before the implementation of a quota, the U.S. Customs Court noted that if the date of admission into a warehouse determined whether a quota applied, then

{I}importers are in a position to rush such quantities of quota merchandise into the privileged zone as they desire prior to the actual filling of the quota on merchandise entered into the customs territory, and then withdraw the privileged merchandise in untold quantities after the quota has been filled.

Inter-Maritime Forwarding Co. Inc. v. United States, 192 F. Supp. 631 (Cust. Ct. 1961). Similarly, importers would be in a position to rush dumped goods into an FTZ and then withdraw goods sold at less than fair value that would be exempted from dumping duties. Therefore, the OCTG from Mexico at issue in the Protest was entered for consumption from an FTZ on February 23, 2004.

MTP’s entry was not liquidated by operation of law, pursuant to 19 U.S.C. § 1504(d). Commerce rescinded the administrative review covering entries of OCTG entered, or withdrawn from warehouse, for consumption between August 1, 2003 and July 31, 2004, on October 18, 2005. See Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Oil Country Tubular Goods from Mexico, 70 Fed. Reg. 60492 (October 18, 2005). CBP liquidated MTP’s entry on April 14, 2006, which is within six months of notice from Commerce. See 19 U.S.C. § 1504(d); see also Int’l Trading Co. v. United States, 412 F.3d 1303, 1308-09 (Fed. Cir. 2005).

The liquidation of MTP’s entry was pending before CBP as a Protest when instructions were issued to liquidate, without regard to antidumping duties, all entries of Mexican OCTG that were entered, or withdrawn from warehouse, for consumption on or after August 11, 2000. This case is unusual, because CBP’s original liquidation of the entry of OCTG from Mexico was lawful: during the Panel review of the sunset review, there is no indication that Commerce ordered the suspension of liquidation, nor were there any instructions issued with respect to the Panel consideration of the sunset review, pursuant to 19 U.S.C. § 1516a(g)(5)(C). According to the statute:

Entries of merchandise covered by such determination {by a NAFTA Panel} shall be liquidated in accordance with the determination of the administering authority or the Commission, if they are entered, or withdrawn from warehouse, for consumption on or before the date of publication in the Federal Register by the administering authority of notice of a final decision of a binational panel, or of an extraordinary challenge committee, not in harmony with that determination.

See 19 U.S.C. § 1516a(g)(5)(C). This provision mirrors the provision in 19 U.S.C. § 1516a(c)(1). In a recent decision from the Federal Circuit Court of Appeals, the court explained: We noted there that the statutory provision allowing judicial review of an annual review determination has two subsections concerning liquidation. The first subsection states that the trial court may enjoin the liquidation of covered entries and that, absent such an injunction, Customs is to liquidate the entries at the rate determined by Commerce. 19 U.S.C. § 1516a(c). The second subsection states that if the trial court enjoins the liquidation of entries, those entries will be liquidated in accordance with the final decision of the trial court, or of this court on appeal. Id. § 1516a(e). In short, the statutory scheme provides that entries covered by a challenged review will be liquidated in due course unless the trial court enjoins liquidation.

SKF U.S.A., Inc. v. United States, 512 F.3d 1326, 1328 (Fed. Cir. 2008)(discussing Zenith Radio Corp. v. United States, 710 F.2d 806 (Fed. Cir. 1983)). Without an express statutory provision for reliquidation, once CBP has properly liquidated an entry according to the liquidation instructions, a “subsequent decision by the trial court on the merits of {a} challenge can have no effect on the dumping duties assessed.” Zenith, 710 F.2d at 810. For antidumping or countervailing duty reviews under consideration by NAFTA Panels, the statute requires that entries be administratively suspended; nevertheless, the same principles could apply. See 19 U.S.C. § 1516a(g)(5)(C). Furthermore, in this situation, the order has been revoked, and the matter does not involve reassessment of duties. After stating that liquidation forecloses reassessment of duties, the Federal Circuit stated, “We note that under our recent decision in Koyo, an importer may obtain liquidation at the rate instructed in Commerce’s final review results by timely protesting a deemed liquidation under 19 U.S.C. § 1514(c).” See SKF U.S.A., Inc., 512 F.3d at 1331 n. 1 (citing Koyo Corp. v. United States, 497 F.3d 1231, 1241 (Fed. Cir. 2007)). Furthermore, Commerce’s failure administratively to order suspension of liquidation in this case cannot be subject to judicial review. See 19 U.S.C. § 1516a(g)(5)(c)(iv). Thus it is unclear how CBP should apply a NAFTA Panel decision resulting in revocation of an antidumping or countervailing duty order, when an importer has filed a protest on an entry, but those entries have not been suspended nor deemed liquidated by operation of law.

In this case, we find that CBP should reliquidate MTP’s entry, pursuant to 19 U.S.C. § 1515(d). CBP has the authority to void the denial of a protest on its own initiative, if a properly filed protest is denied contrary to instructions. See 19 U.S.C. § 1515(d). In this case, instructions directed liquidation, without regard to antidumping duties, of all entries of OCTG from Mexico that were entered, or withdrawn from warehouse, for consumption on or after August 11, 2000. See Message No. 7309209 (November 5, 2007). MTP withdrew the Mexican OCTG from the FTZ for consumption in February 2004. CBP properly liquidated the entry on April 14, 2006, and MTP properly filed its protest on July 12, 2006. On November 5, 2007, instructions were issued that the antidumping order covering OCTG from Mexico had been revoked with

respect to all entries, or withdrawals from warehouses, for consumption made on or after August 11, 2000. On December 14, 2007, MTP sent a letter to CBP informing it of the revocation of the antidumping duty order covering OCTG from Mexico. On March 31, 2008, CBP denied the Protest, based on MTP’s argument that it had “entered” the merchandise when it was admitted into the FTZ.

The timing of MTP’s Protest, the timing of CBP’s denial of it, and the timing of the revocation instructions are the factors that allow CBP to void the denial of the Protest, pursuant to 19 U.S.C. § 1515(d). If a protest is properly filed, pursuant to 19 U.S.C. § 1514, then liquidation is not final. See 19 U.S.C. §1514(a). Although MTP did not properly amend its Protest, or introduce the revocation of the Mexican OCTG as part of its Application for Further Review, Commerce did revoke the antidumping duty order covering OCTG from Mexico, retroactively to August 11, 2000, and instructions were issued to liquidate without regard to duties, all such merchandise entered, or withdrawn from warehouse, for consumption, on or after August 11, 2000. Before CBP had made a final decision about the Protest involving MTP’s entry of OCTG from Mexico, instructions had been issued not to assess antidumping duties on entries made on or after August 11, 2000. CBP correctly determined that MTP’s entry of Mexican OCTG was made in February 2004, not on August 4, 2000. Nevertheless, CBP should not make a final assessment of antidumping duties on merchandise that is no longer covered by an antidumping duty order, when it has issued instructions to liquidate, without regard to antidumping duties, all OCTG from Mexico entered for consumption on or after August 11, 2000. If the Protest had been decided before the revocation instructions had been issued, then CBP could neither have granted the Protest, nor voided the denial of the Protest, pursuant to 19 U.S.C. § 1515(d).

HOLDING:

You are instructed to VOID the Protest denial and GRANT the Protest in full. The Port properly determined that MTP’s entry was made when the merchandise was withdrawn from the FTZ for consumption in February 2004, and not when the merchandise was admitted into the FTZ, in privileged foreign status, on August 4, 2000. However, instructions were issued revoking the antidumping duty order covering OCTG from Mexico entered, or withdrawn from warehouse, for consumption on or after August 11, 2000. These instructions were issued after the Protest was properly and timely filed, but before the Protest was denied; therefore, CBP on its own initiative voids the Protest denial to allow reliquidation of the entry without regard to antidumping duties, pursuant to its November 5, 2007, instructions and 19 U.S.C. § 1515(d).

This decision will result in the refund of antidumping duties, and reliquidation of the entries in accordance with the decision must be accomplished prior to mailing of the decision, in accordance with Section IV of the Customs Protest/ Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21). You are to mail this decision, together with CBP Form 19, to the protestant no later than 60 days from the date of this letter.

No later than 60 days from the date of this letter, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and by other means of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division