HQ H152586
Dec. 20, 2013
OT:RR:CTF:ER H152586 ASL
Port Director
U.S. Customs and Border Protection
330 Second Avenue S., Rm. 560
Minneapolis, MN 55401
Attn: Ms. Beverly Baer, Supervisory Import Specialist
Re: Application for Further Review of Protest No: 3501-10-100069 on entries of Hand Trucks from China subject to Antidumping Order A-570-891-004
Dear Port Director,
The purpose of this correspondence is to address the Application for Further Review (“AFR”) of Protest Number: 3501-10-100069, dated November 03, 2010, which we received March 9, 2011. The protesting party is Northern Tool & Equipment Company (“Northern Tool”).
FACTS:
Northern Tool made the following entries of hand trucks from the People’s Republic of China (“PRC”) that were subject to antidumping duty order number A-570-891-004:
Date of Entry
Entry Number
12/10/2007
xxx-xxxx6065
12/28/2007
xxx-xxxx9614
01/06/2008
xxx-xxxx0786
02/12/2008
xxx-xxxx6262
03/01/2008
xxx-xxxx9035
03/13/2008
xxx-xxxx1229
04/02/2008
xxx-xxxx2078
06/30/2008
xxx-xxxx0112
See Notice of Antidumping Duty Order: Hand Trucks and Certain Parts Thereof From the People's Republic of China, 69 Fed. Reg. 70122 (Dec. 2, 2004). Northern Tool’s shipments of hand trucks were manufactured in the PRC by Qindao Taifa Group Co., Ltd. (“Taifa”). ITI Co. Ltd. (“ITI”), in Shanghai, purchased the hand trucks from Taifa. In turn, Northern Tool purchased the hand trucks from ITI (Shanghai). Taifa was not the invoicing party, nor was it listed as the foreign shipper on the pro forma invoices, commercial invoices, or packing list. Also, the pro forma invoices and commercial invoices were between ITI (Shanghai) and Northern Tool. There were additional invoices included between Taifa and ITI (Shanghai), which stated the final destination of the merchandise was Minnesota.
On November 12, 2004, the U.S. Department of Commerce (“Commerce”) issued an amended final determination finding that hand trucks from the PRC were being sold, or likely to be sold, at less than fair value within the United States. See Amended Final Determination of Sales at Less Than Fair Value: Hand Trucks and Certain Parts Thereof From the People's Republic of China, 69 Fed. Reg. 65410 (Nov. 12, 2004). Subsequently, on December 2, 2004, Commerce issued the antidumping duty order for hand trucks from the PRC. The antidumping duty order instructed Customs and Border Protection (“CBP”) to require cash deposits for PRC hand trucks produced or exported by Taifa equal to the specific weighted-average antidumping duty margin of 26.49 percent. See Notice of Antidumping Duty Order: Hand Trucks and Certain Parts Thereof From the People's Republic of China, 69 Fed. Reg. at 70123. The PRC-wide rate was set at 383.60 percent. Id.
On May 25, 2010, Commerce published its final results of the antidumping duty administrative review, for the period of review from December 1, 2007, to November 30, 2008. Hand Trucks and Parts Thereof from the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 75 Fed. Reg. 29314 (May 25, 2010). Taifa was not reviewed. On June 10, 2010, Commerce sent CBP liquidation instructions for entries exported by the PRC-wide entity during this period, stating that CBP should assess antidumping duties equal to the PRC-wide rate of 383.60 percent of the entered value of all shipments of hand trucks from the PRC exported by the PRC-wide entity. See Message No. 0161304 (June 10, 2010). On June 15, 2010, Commerce sent CBP liquidation instructions for entries exported by Taifa for this period stating that CBP should assess antidumping duties equal to the cash deposit rate at the time of entry for hand trucks from the PRC exported by Taifa. See Message No. 0166303 (June 15, 2010). Taifa’s cash deposit rate was 26.49 percent.
On September 3, 2010, CBP liquidated the entries in accordance with Message No. 016304 and assessed an antidumping duty equal to the PRC-wide rate of 383.60 percent. On November 3, 2010, Northern Tool filed a protest with the port protesting the liquidation of its entries at the PRC-wide rate, arguing the liquidation of the entries was not executed in accordance with Commerce’s instructions. Northern Tool asserts that CBP failed to properly follow Commerce’s liquidation instruction and seeks reliquidation of these entries under the cash deposit rate of 26.49 percent. The port argues that the entries were properly liquidated because while the hand trucks were produced by Taifa, they were not exported by Taifa, but by ITI (Shanghai), as the invoicing party, and thus properly received the PRC-wide rate.
Northern Tool’s counsel sought a meeting with CBP with regards to the protest. In early September 2013, CBP held a teleconference with Northern Tool’s counsel. As a result of the teleconference, CBP said it would accept additional legal arguments in support of its protest. On October 22, 2013, CBP received a supplemental submission from the protestant arguing that in addition to its original submission, that the protest should be granted because ITI was a third-country exporter as it was based in Taiwan, and in accordance with CBP’s prior ruling in H155957 (March 29, 2013), third-country exporters should receive the rate of its PRC supplier. Northern Tool’s counsel submitted documents showing that ITI had an office in Taiwan, which included an email string about a planned meeting of Northern Tool officials in Taiwan, a 2010 trip itinerary to ITI in Taiwan, business cards of ITI employees in Taiwan, as well as a quotation sheet of LED strobe lights with ITI’s Taiwan address.
ISSUES:
Whether CBP properly followed Commerce’s liquidation instructions.
LAW AND ANALYSIS:
We note initially that the instant protest was timely filed, within 180 days from the date of liquidation. 19 U.S.C. § 1514(c)(3)(A). CBP liquidated Northern Tool’s entries on September 3, 2010, and this protest was filed on November 3, 2010, within 180 days. Further, the protestant requests further review per 19 C.F.R. § 174.24(b). CBP’s regulations provide for further review of a protest when, inter alia, the decision against which the protest was filed:
(b) Is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts
19 C.F.R. § 174.24(b). Upon review of the application for further review, we find that there are legal arguments that have not been the subject of a ruling or court decision. See 19 C.F.R. § 174.24(b), (c) and 19 C.F.R. § 174.26(b)(1)(iv). Accordingly, further review is warranted.
Generally, assessed antidumping duties properly applied by CBP are not protestable, because "Customs has a merely ministerial role in liquidating antidumping duties." Mitsubishi Electronics America, Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994). However, inasmuch as Northern Tool protests the liquidation, i.e., disputes the application by CBP of Commerce's liquidation instructions, this matter is protestable. See Xerox Corp. v. United States, 289 F.3d 792 (Fed. Cir. 2002) (holding that correcting a ministerial, factual error of CBP is protestable).
Concerning the role of CBP in liquidating antidumping duties, under the applicable statutes, Commerce is the agency with the authority to calculate and determine antidumping duties. Per 19 U.S.C. § 1673, Commerce calculates and determines the antidumping duty rate. Commerce then directs CBP to collect the estimated duties. See 19 U.S.C. § 1673e(a)(1). In Mitsubishi Electronics America, Inc. v. United States, 44 F.3d 973 (Fed Cir. 1994) the court stated:
Customs merely follows Commerce's instructions in assessing and collecting duties. Customs does not determine the “rate and amount” of antidumping duties under 19 U.S.C. § 1514(a)(2). Customs only applies antidumping rates determined by Commerce. Further, Customs has a merely ministerial role in liquidating antidumping duties under 19 U.S.C. § 1514(a)(5).
(Id. at 977.) Therefore, Commerce is required to determine the rate of antidumping duty to be assessed. CBP’s ministerial role is to follow the liquidation instructions and to compute the duty by applying the antidumping duty rate set by Commerce to the appraised value as determined by CBP.
CBP properly assessed the PRC-wide rate and not Taifa’s separate rate. Because ITI (Shanghai) was the exporter, and not Taifa, the PRC-wide rate was applicable as ITI did not have a separate rate. Based on the relevant documentation, the exporter of these hand trucks was ITI (Shanghai), as Taifa did not appear on any of the sales documents between Northern Tool and ITI (Shanghai). The documentation establishes that there were two separate sales, one from Taifa to ITI (Shanghai) and another from ITI (Shanghai) to Northern Tool. The protestant, Northern Tool, purchased the hand trucks from ITI (Shanghai), which is evident from the pro-forma invoices, commercial invoices, and packing lists. Taifa was not the invoicing party, nor was it listed as the foreign shipper on the pro forma invoices, commercial invoices, or packing lists. Similarly, in H089277, dated January 10, 2012, CBP found that the protestant was unable to establish company X as the exporter because the sales documents and entry documents did not identify company X as the exporter. Rather, company Y was listed as the seller of the merchandise and thus CBP ruled that the port properly identified the exporter as company Y. Based on the documentation, the exporter of the hand trucks was ITI (Shanghai), not Taifa.
Commerce issued two liquidation instructions that are relevant for these entries. The first liquidation instruction, which the port followed, stated that:
For all shipments of hand trucks and parts thereof from the People’s Republic of China (PRC) exported by the PRC-wide entity (A-570-891-000) entered, or withdrawn from warehouses, for consumption during the period 12/01/2007 through 11/30/2008, assess an antidumping liability equal to 383.60 percent of the entered value, except for those exported by Qindao Taifa Group Co., LTD. or Since Hardware (Guangzhou) Co., Ltd.
Message No. 0161304 (June 10, 2010) (emphasis added). The second liquidation instruction stated that:
For all shipments of hand trucks and parts thereof from the People’s Republic of China (PRC) exported by the firms listed below and entered, or withdrawn from warehouse, for consumption during the period 12/01/2007 through 07/27/2008, assess an antidumping liability equal to the cash deposit or bonding rate at the time of entry.
Exporter
Qindao Taifa Group Co., Ltd….
Message No. 0166303 (June 15, 2010) (emphasis added). The first instruction applies to entries of hand trucks that were exported by the PRC-wide entity. The second instruction applies to entries where the hand trucks were exported by Taifa. The port determined the former instruction to be applicable because while the hand trucks were produced by Taifa, they were not exported by Taifa, but by ITI (Shanghai). The port relied upon the sales documents and two previous inquiries with Commerce that sought a clarification of which instruction was applicable on similarly situated entries, where Taifa was the manufacturer, but not the exporter. Commerce stated in both instances that if there is no separate rate for the exporter, than the PRC-wide rate applied. Because ITI (Shanghai) did not have a separate rate, CBP applied the PRC-wide of 383.60 percent.
Northern Tool asserts that Taifa knew its sales of hand trucks to ITI (Shanghai) were bound for the United States and thus, based on this knowledge of the sales, the hand trucks should receive the same rate as Taifa. The protestant points to the pro forma invoices from Taifa to ITI (Shanghai) indicating the destination of the merchandise as Minnesota as proof that Taifa was the exporter. In furtherance of its position, the protestant cited to Mazak Corp. v. U.S., 659 F. Supp. 2d 1352, 1358 (Ct. Int’l Trade 2009), which states that “[s]hould it be determined that the producer knew, or should have known, that its merchandise was destined for the United States via the reseller, the producer’s assessment rate is applied to the reseller.” However, that case is not applicable.
The part of Mazak cited by the applicant concerned Commerce’s reseller policy, which is stated in Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 Fed. Reg. 23954 (May 6, 2003). In the reseller policy, Commerce determines whether the producer/seller has the knowledge that its merchandise being sold to the reseller is destined for the United States. If so, then those sales will be included in the margin calculation for that producer/seller. In Mazak, one issue was whether Mazak, as a reseller of NSK merchandise, should have had its entries suspended when Commerce conducted a review of NSK. Mazak, 659 F. Supp. 2d at 1358. The court noted that Mazak’s entries could not be liquidated without Commerce first reviewing NSK because CBP could not know which antidumping duty rate would apply. Prior to any investigation, there would be no way of discerning whether NSK was or was not aware that the bearings it sold Yamakazi Mazak, and imported by Mazak, were destined for the United States, pursuant to the Reseller Policy. Id. Thus, part of Mazak concerned the application of the knowledge test for Commerce to determine whether those entries were NSK’s or Mazak’s when calculating the margin.
If CBP applied the knowledge test, it may be doing so to entries not part of Commerce’s retrospective administrative review. In Wonderful Chem. Indus. v. United States, 259 F.Supp. 2d. 1273, 1279 (Ct. Int'l Trade 2003) the court noted that “Commerce has established and applied a ‘knowledge test’ for purposes of determining whether various parties involved in importing and exporting goods are subject to antidumping laws.” The court further explained that a “producer passes the knowledge test if the ‘producer knew or had reason to know at the time of sale that the goods were for export to the United States.’” Id. The court then noted the various contexts in which Commerce applied the knowledge test. Id. In each example, Commerce, not CBP, applied the knowledge test in its determination of the antidumping rate. Had Taifa reported its sales to Northern Tool via ITI (Shanghai) to Commerce and if Commerce determined they were Taifa’s sales because of the knowledge test and conducted a review of those sales, it would have included them in its instructions to CBP. Instead, Commerce’s instructions to CBP did not include any reference to these. Rather, Commerce clarified that if no separate rate for an exporter was given, i.e., ITI (Shanghai), then the PRC-wide rate was applicable. Furthermore, in a message from Commerce to CBP, dated July 27, 2010, Commerce confirmed that the knowledge test is inapplicable in applying the relevant liquidation instruction.
Alternatively, the protestant argues that ITI was a third-country exporter because it was headquartered in Taiwan. Thus, the protestant asserts that ITI, as a third-country exporter that does not have its own rate, should receive the rate of its PRC supplier. In support of its position, Northern Tool cites to CBP ruling HQ H155957, which dealt with the same antidumping order, period of review, and liquidation instructions that applies here. In that case, there was a third-country exporter based in Hong Kong that exported Taifa hand-trucks to the United States. The sales invoices were between an exporter based in Hong Kong and a U.S. company. Thus, it was considered a third-country exporter that should have received the rate of its PRC supplier. Likewise, Northern Tool claims that ITI was a third-country exporter because its headquarters was in Taiwan. However, Northern Tool’s focus on where ITI has its headquarters is misplaced as a company’s headquarters does not determine the exporter of the sale.
Commerce’s instructions are based upon who the manufacturer and exporter are. Based on the relevant documentation, the exporter of these hand trucks was ITI (Shanghai). The documentation establishes that there were two separate sales, one from Taifa to ITI (Shanghai) and another from ITI (Shanghai) to Northern Tool. That Northern Tool purchased the hand trucks from ITI (Shanghai) is evident from the pro-forma invoices, commercial invoices, and packing lists. ITI (Taiwan) was not the invoicing party, nor was it listed on the pro forma invoices, commercial invoices, or packing lists. Additionally, it should be noted that Northern Tool’s payment for the hand trucks were made to a bank in Shanghai. While the attached sea waybills identify the shipper/exporter as ITI (Taiwan), that in and of itself is not determinative of who the exporter is. The commercial practice of the transportation industry is for the carrier to identify the shipper as the party with whom the carrier has a contractual relationship. See Dictionary of Shipping Terms, Peter R. Brodie 119 (Lloyd’s of London Press Ltd. 1985). Thus, this document only proves that ITI (Taiwan) contracted with a carrier to ship the goods to the United States.
Northern Tool also submitted internal emails, agendas, business cards, and a product list of LED strobe lights that it claims identify Taiwan as ITI’s headquarters. However, for the reasons noted above, these documents do not establish that the hand trucks were exported by ITI (Taiwan). Therefore, based on the provided documentation, ITI (Shanghai) was the company that purchased the hand trucks from Taifa, owned the merchandise, and then sold it to Northern Tool. Based on the provided documents, we determine that for purposes of this entry, ITI (Shanghai) was the exporter of the hand trucks. Thus, in accordance with Commerce’s instructions, Northern Tools’ entries of Taifa hand trucks, exported by ITI (Shanghai), a PRC-wide entity without a separate rate, were correctly liquidated at the PRC-wide rate of 383.60 percent.
HOLDING:
Northern Tools’ entries were properly liquidated at the rate of 383.60 percent and protest 3501-10-100069 should be DENIED.
No later than 60 days from the date of this letter, the Office of Regulations and Rulings 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 other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division