LIQ 4
OT:RR:CTF:ER
H287183 ABH
Port Director
Port of JFK
U.S. Customs & Border Protection
John F. Kennedy International Airport, Building 77
2nd Floor, Executive Office
Jamaica, NY 11430
Attn: Katherine Nucci, Supervisory Import Specialist
RE: Application for Further Review of Protest 4701-17-100545; Antidumping Duties; Pasta from Italy
Dear Port Director:
The purpose of this correspondence is to address the application for further review (“AFR”) of Protest 4701-17-100545, dated February 27, 2017, filed by Delverde Industrie Alimentari S.p.A. (“Delverde”). Delverde protests the demand for payment by U.S. Customs and Border Protection (“CBP”) for increased antidumping duties (“ADD”) and countervailing duties (“CVD”), case numbers, respectively, A-475-818 and C-475-819, on two entries of Italian pasta imported by Delverde in 2007.
FACTS:
In September and October of 2007, Delverde imported two entries of pasta from Italy with a total entered value of $7,706. At the time of entry, Delverde did not deposit ADD and stated in its Protest that it was excluded from the antidumping order on Certain Pasta from Italy based on a decision from the U.S. Department of Commerce (“Commerce”). Notice of Amendment of Final Determination of Sales at Less Than Fair Value Pursuant to Court Decision and Revocation in Part: Certain Pasta from Italy, 66 Fed. Reg. 65,889 (Dec. 21, 2001); see also Commerce Message Number 2023201 (Jan. 23, 2002). Commerce Message Number 2023201 stated that,
[t]he Department of Commerce has revoked the Antidumping duty order on certain pasta from Italy in part and published the revocation in The Federal Register on 12/21/2001 (66 FR 65889). The partial revocation applies to all subject merchandise manufactured by Delverde SRL (A-475-818-008), Delverde USA, Inc., and Tamma Industrie Alimentari Di Capitanata, Srl (A-475-818-021). The effective date of the revocation is 01/19/1996.
(Emphasis added). At the time of entry, Delverde did deposit CVD at a rate of 2.83 percent on the entries pursuant to Commerce Message Number 2231210 (Aug. 19, 2002). See also Commerce’s administrative review under the CVD order: Certain Pasta from Italy: Final Results on the Fifth Countervailing Duty Administrative Review, 67 Fed. Reg. 52,452 (Aug. 12, 2002). Commerce Message Number 2231210 stated the following:
Manufacturer Producer Exporter Id Number Rate
Delverde, S.P.A. C-475-819-008 2.83
CBP liquidated the entries as entered on October 10, 2008.
On July 19, 2012, Delverde submitted a prior disclosure to CBP to disclose ADDs and additional CVDs that “might be imposed” on its two 2007 entries. Delverde filed the prior disclosure in “an abundance of caution” because it simultaneously sought a Changed Circumstances Review (“CCR”) with Commerce. The CCR requested a ruling from Commerce that Delverde was the successor-in-interest of Delverde S.p.A., which Delverde stated was the entity excluded from the AD order on pasta from Italy and qualified for the 2.83 percent CVD rate pursuant to Commerce Message Numbers 2023201 (Jan. 23, 2002) and 2231210 (Aug. 19, 2002). Commerce’s CCR applied only to the AD order but in the CVD context, Delverde indicated that Commerce instructed Delverde to undergo a normal CVD administrative review (“AR”).
On March 4, 2014, Commerce concluded the AR and determined that Delverde’s CVD rate was de minimis and reduced its rate to zero for entries made during the 2011 calendar year. Certain Pasta from Italy; Final Results of Countervailing Duty Administrative Review; 2011, 79 Fed. Reg. 12,154 (Mar. 4, 2014). On September 19, 2014, Commerce concluded the ADD CCR and determined that Delverde was not the successor-in-interest of Delverde S.p.A and, thus, Delverde was not excluded from the antidumping duty order on pasta from Italy. The CCR stated that “[t]his determination will apply to all entries of the subject merchandise entered or withdrawn from warehouse, for consumption on or after the date of the publication of the [CCR] final results.” Certain Past from Italy: Notice of Final Results of Antidumping Duty Changed Circumstances Review, 79 Fed. Reg. 56,339 (Sept. 19, 2014), see also Commerce Message Number 4272302 (Sept. 29, 2014). Commerce Message Number 4272302 stated that for shipments of pasta from Italy produced and or exported by Delverde Industrie Ailimetari S.p.A entered on or after September 19, 2014, the cash deposit rate for case number A-475-818-063 was 13.09 percent.
On October 10, 2014, Delverde received a duty demand letter from CBP stating that with regard to the entries at issue in the prior disclosure, the “company rates should have been the ‘all others’ antidumping case, A-475-818-000 at 15.45%, and the countervailing case C-475-819-000 at 3.85%.” CBP calculated the loss of revenue due to CBP to be $1,269.19 for both entries. The letter stated that “[i]n accordance with 19 CFR 162.74(c), Code of Federal Regulations, you have thirty (30) days from the date of this letter to tender the above stated amount, which represents the actual loss of duty due CBP.”
On November 14, 2014, Delverde submitted a letter to CBP explaining its belief that up to September 19, 2014, Delverde was excluded from the antidumping duty order and, accordingly, CBP’s duty demand letter was in conflict with Commerce’s instruction that the CCR results applied to entries on or after September 19, 2014. Delverde asserted that Commerce’s CCR was prospective in nature, which meant that the ADD Order did not apply to the prior entries covered by the prior disclosure. Delverde asserted that in the CVD context, because it received a de minimis ruling for its 2011 entries, “the 2.83% rate imposed on Delverde S.p.A. and paid [by Delverde] at the time of entry was not too low. Thus, Delverde believes this indicates that no increased CVD duty is appropriate for the disclosure period either.”
In the present protest, Delverde seeks cancellation of the October 10, 2016, demand for payment, and the refund of the additional ADD and CVD tendered (including interest) because there was no underpayment of ADD or CVD. Additionally, Delverde seeks CBP to close the prior disclosure of July 19, 2012, with a refund of tendered duties and with accrued interest provided for by law.
ISSUES:
Whether Delverde’s request for refund of its ADDs and CVDs tendered pursuant to its prior disclosure is protestable?
Whether CBP’s letter of October 10, 2014, constituted a charge or exaction within the meaning of 19 U.S.C. § 1514, so as to constitute a protestable issue.
Whether CBP improperly calculated “actual loss of duties, taxes, and fees”?
LAW AND ANALYSIS:
As a preliminary matter, this protest was timely filed. Pursuant to 19 U.S.C. § 1514(c)(3)(B), a protest must be filed “within 180 days after but not before – (B) . . . the date of the decision as to which protest is made.” The demand for payment protested by Delverde was received by Delverde on October 10, 2016. Delverde filed its protest on February 27, 2017, well within the 180-day limitation.
Whether Delverde’s request for refund of its ADDs and CVDs tendered pursuant to its prior disclosure is protestable?
Delverde seeks CBP to close the prior disclosure of July 19, 2012, with a refund of tendered duties and with accrued interest provided for by law. Delverde argues that there was no underpayment of ADDs on its two entries at issue because Commerce’s 2014 CCR determination did not apply to entries before its publication date. With regard to CVDs, Delverde argues that Commerce’s 2014 CVD AR de minimis determination demonstrated that the 2.83 percent tendered by Delverde at the time of entry was not an underpayment. Accordingly, Delverde seeks a refund of the additional ADDs and CVDs tendered with its prior disclosure in 2012.
Pursuant to 19 U.S.C. § 1514, protestable events include “all charges or exactions of whatever character within the jurisdiction of the Secretary of the Treasury,” among other CBP decisions. The U.S. Court of International Trade (“CIT”), however, has “declined to hold the refusal to refund a voluntary tender of [duties] to be a charge or exaction within the meaning of the Tariff Act.” Thermacote Welco Co. v. United States, 246 F. Supp. 2d 1327, 1334 (Ct. Int’l Trade 2003). To constitute a charge or exaction, “there would have had to have been some compulsion on the part of Customs requiring plaintiff to have paid the moneys.” Carlingswitch, Inc. v. United States, 500 F. sup. 223, 227 (Ct. Int’l Trade 1980).
In this case, Delverde voluntarily tendered the additional ADDs and CVDs to perfect its prior disclosure. The record does not manifest any request or compulsion from CBP. At the time Delverde tendered the prior disclosure amounts, no penalty was asserted nor any demand for payment. “Nor does the refusal of Customs to refund the moneys plaintiff tendered to it constitute an exaction.” Id. Accordingly, Delverde’s deposits do not amount to a “charge or exaction” within the meaning of § 1514, and, thus, Delverde’s refund request of its voluntary tender does not constitute a protestable issue.
Whether CBP’s letter of October 10, 2014, constituted a charge or exaction within the meaning of 19 U.S.C. § 1514, so as to constitute a protestable issue.
Under the same theories presented above, Delverde also seeks cancellation of CBP’s October 10, 2016, demand for payment, and the refund of the additional ADDs and CVDs tendered (including interest). Both the CIT and CBP have recognized that a tender made in response to CBP’s duty demand letter in the context of prior disclosures can constitute a “charge or exaction” that is protestable pursuant to 19 U.S.C. § 1514(a)(3). Brother Int’l Corp. v. United States, 246 F. Supp. 2d 1318, 1327 (Ct. Int’l Trade 2003); HQ W230328 (Feb. 2, 2007).
In Brother Int’l Corp., the CIT stated that
where the circumstances of the payment indicated a lack of voluntariness, either due to Customs making the request “under color of official authority” or an imposition of liability, and where the amount paid is not the product of a settlement process, the cases support the proposition that the demand or request may constitute a charge or exaction.
Id. at 1323. The CIT found that CBP’s duty demand letter in the prior disclosure context to be a “charge or exaction” because it stated that a “demand is hereby made for the balance of the actual loss of revenue” and if the additional amount was not tendered, CBP “will initiate an action to recover the duties and full penalties.” Id.
In HQ W230328 (Feb. 2, 2007), CBP similarly determined that while the initial payment submitted with the prior disclosure was “clearly voluntary,” protestant’s tender in response to CBP’s duty demand letter was involuntary and, “thus, that letter constituted a charge or exaction.” HQ W230328 also determined that whether or not protestant’s arguments on the merits are successful, the duty demand letter “was a protestable action.”
In this case, Delverde enclosed a voluntary initial payment with its prior disclosure in 2012. In October 2016, CBP issued a duty demand letter stating that Delverde had “thirty (30) days from the date of this letter to tender the above stated amount, which represents the actual loss of duty due CBP.” Similar to Brother Int’l Corp. and the protestant in HQ 230328, Delverde was required to tender the amount demanded by CBP or lose the protection of the prior disclosure. “The only advantage gained by [the protestant] was to lessen the chance of additional penalties.” Brother Int’l Corp., 246 F. Supp. 2d at 1324; HQ 230328. Delverde’s second payment cannot be considered voluntary when it only worked to avoid the further liability of a penalty action. Accordingly, it was either a charge or an exaction, but protestable in either event.
Whether CBP properly calculated “actual loss of duties, taxes, and fees”?
Delverde argues that in its duty demand letter, CBP improperly calculated the actual loss of duties for Delverde to perfect its prior disclosure. Delverde argues that it should have been able to benefit from Delverde S.p.A.’s exclusion from the ADD order up until the date Commerce determined it was not a successor-in-interest to Delverde S.p.A. – namely, September 19, 2014. See Certain Past from Italy: Notice of Final Results of Antidumping Duty Changed Circumstances Review, 79 Fed. Reg. 56,339 (Sept. 19, 2014). With regard to CVDs, Delverde argues that Commerce’s de minimis determination in the 2011 administrative review demonstrates that Delverde did not underpay the CVDs owed. Certain Pasta from Italy; Final Results of Countervailing Duty Administrative Review; 2011, 79 Fed. Reg. 12,154 (Mar. 4, 2014).
Despite Delverde’s contentions, the CCR final results states that the cash deposit rate for case number A-475-818-063 was 13.09 percent for “all entries of subject merchandise entered . . . on or after the date of the publication of the final results,” i.e., September 19, 2014. The cash deposit rate is the rate of duty that must be deposited with CBP upon entry. Delverde entered the subject pasta in September and October of 2007.
Further, the CCR final results do not mean that Delverde can benefit from Delverde S.p.A.’s rates as if it had been the successor-in-interest prior to the CCR results. Marsan Gida Sanayi Ve Ticaret A.S. v. United States, 2011 Ct. Int’l Trade LEXIS 19, at *22 (Feb. 16, 2011) (“If, as here, the changes indicated the companies are not the same entity, the ‘all others’ rate would be assigned until the respondent requested a full administrative review to determine its specific rate.”). Rather, Commerce applies the “all others” rate to entries of merchandise from producers and exporters for which Commerce has not established a company-specific rate. Parkdale Int’l v. United States, 429 F. Supp. 2d 1324, 1329 (Apr. 17, 2006). In 2006, when Delverde purchased the assets of the insolvent Delverde S.p.A., Delverde did not seek a company-specific rate. Accordingly, Commerce did not name Delverde in its instructions to CBP to receive a company-specific rate and thus, the actual loss to the Government was the “all others” rate applicable to Delverde’s entries.
The applicable regulations state that “[a] person who discloses the circumstances of the violation shall tender actual loss of duties at the time of disclosure . . . .” 19 C.F.R. § 162.74(h). The “[a]ctual loss of duties” is defined as “the duties of which the Government has been deprived by reason of the violation in respect of entries on which liquidation had become final.” 19 C.F.R. § 162.71(a)(1). In September and October of 2007, Delverde imported two entries of pasta from Italy. Delverde did not deposit antidumping duties and deposited countervailing duties at a rate of 2.83 percent. CBP liquidated the entries as entered on October 10, 2008.
Pursuant to Message No. 7136208 (May 17, 2007), “for all manufacturers/exporters of certain pasta from Italy without their own rate, the cash deposit rate is 15.45 percent.” Thus, upon entry Delverde should have deposited antidumping duties of 15.45 percent. Pursuant to Message No. 8249201 (Sept. 5, 2008), containing liquidation instructions for entries between July 1, 2007, and June 30, 2008, Commerce instructed CBP to assess antidumping duties at the rate in effect on the date of entry with the exception of certain enumerated companies. Delverde was not one of the enumerated companies. Thus, the actual loss to the Government was the antidumping duty rate of 15.45 percent on the relevant entries.
With regard to countervailing duties, Commerce Message No. 6178202 (June 27, 2006) instructed CBP to collect a cash deposit of estimated countervailing duties at 3.85 percent for “all other companies” other than the companies enumerated in the message. Delverde was not a company with an enumerated specific rate. Thus, upon entry Delverde should have deposited countervailing duties of 3.85 percent. Pursuant to Message No. 8261203 (Sept. 17, 2008), Commerce instructed CBP to assess countervailing duties at the cash deposit rate in effect on the date of entry with exception of certain enumerated companies. Delverde was not one of the enumerated companies. Thus, the actual loss to the Government was the difference between the countervailing duty rate of 2.83 percent deposited by Delverde and the 3.85 percent owed on the relevant entries or 1.02 percent.
In addition, Commerce confirmed that Delverde’s entries in this case should have been liquidated at the all others rate in accordance with the relevant liquidation instructions in its communication with the Port on August 25, 2015. As indicated by the Port in the duty demand letter, the relevant ADD all others rate was 15.45 percent. Message No. 7136208 (May 17, 2007); Message No. 8249201 (Sept. 5, 2008). The relevant CVD all others rate was 3.85 percent. Message No. 6178202 (June 27, 2006); Message No. 8261203 (Sept. 17, 2008). Thus, the Port correctly calculated the loss of revenue due to CBP in order for Delverde to perfect its prior disclosure.
HOLDING:
Delverde’s protest should be DENIED IN FULL.
Delverde did not raise a protestable issue with regard to its request for refund of its voluntary tender enclosed with its prior disclosure.
CBP’s October 10, 2014 letter constituted a charge or exaction within the meaning of 19 U.S.C. § 1514, and thus, constitutes a protestable issue.
CBP properly calculated “actual loss of duties, taxes, and fees,” and thus, a refund is not appropriate.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Sixty days from the date of the decision, the Office of International Trade, 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,
Craig T. Clark, Director
Commercial & Trade Facilitation Division