OT:RR:CTF:EPDR H324283 ND
Center Director
Consumer Products and Mass Merchandising
Center of Excellence and Expertise
U.S. Customs and Border Protection
555 Battery St.
San Francisco, CA 94111
Attn: David O. Farfan, Import Specialist
Re: Application for Further Review of Protest 280920106874; Antidumping Duties; Certain Cased Pencils from the People’s Republic of China; A-570-827
Dear Center Director:
The purpose of this decision is to address the application for further review (“AFR”) of protest number 280920106874, filed by Imagine Nation Books LLC d/b/a Collective Goods (“Collective Goods”) on September 23, 2020, regarding the assessment of antidumping duties (“ADD”) pursuant to the ADD order in case A-570-827.
FACTS:
Between January 4, 2013, and December 8, 2014, Collective Goods imported eight entries of pencil sets from the People’s Republic of China (“PRC”). According to the protestant, the pencil set contained fifty pencils in total: ten coloring pencils, ten drawing pencils, ten watercolor pencils, ten metallic pencils, and ten charcoal pencils. U.S. Customs and Border Protection (“CBP”) liquidated the relevant entries on March 27, 2020, and April 3, 2020, in accordance with the liquidation instructions from the U.S. Department of Commerce (“Commerce”). See Commerce Message Numbers 0027404 (Jan. 27, 2020); 0052407 (Feb. 21, 2020).
The imported goods were liquidated as subject to the ADD order in case A-570-827 (“ADD Order” or “PRC Pencils Order”). See Certain Cased Pencils from the People’s Republic of China: Final Results and Partial Recission of Antidumping Duty Administrative Review, 71 Fed. Reg. 38,366 (July 6, 2006); see also Antidumping Duty Order: Certain Cased Pencils from the People’s Republic of China, 59 Fed. Reg. 66,909 (Dec. 28, 1994). The scope of the order, in pertinent part, is as follows:
Imports covered by this order are shipments of certain cased pencils of any shape or dimension (except as described below) which are writing and/or drawing instruments that feature cores of graphite or other materials, encased in wood and/or man-made materials, whether or not decorated and whether or not tipped (e.g., with erasers, etc.) in any fashion, and either sharpened or unsharpened . . . . Specifically excluded from the scope of this investigation are mechanical pencils, cosmetic pencils, pens, non-cased crayons (wax), pastels, charcoals . . . .
Id. Commerce clarified the language exempting charcoal pencils in a scope ruling to mean that “only uncased charcoal pencils are specifically excluded” from the ADD order. Letter to All Interested Parties from Charles Riggle, Program Manager, Office 8, Antidumping and Countervailing Duty Operations, Re: Preliminary Scope Ruling on Antidumping Duty Order on Certain Cased Pencils from the People’s Republic of China: Request by Walgreen Co., (ArtSkills Draw & Sketch) (Jan. 29 2009); see also Commerce Message Number 9079204 (Mar. 20, 2009).
Collective Goods filed its protest on September 23, 2020. Collective Goods protests the assessment of ADD because it contends that the merchandise it imported is not covered by the scope of the PRC Pencils Order. Specifically, it contends that the plain and literal language of the order omits mixed media, i.e., merchandise that includes a mix of goods subject to the scope of the ADD order and goods excluded from the order. Collective Goods does not dispute the casing, composition, or sharpness of the charcoal pencils in the set, but argues that “charcoal” pencils are expressly exempt from the scope of the order regardless of any additional considerations. In the alternative, the Protestant requests that only the portion of the pencil set that falls within the scope is assessed ADD based on this portion’s value.
ISSUE:
Whether CBP properly assessed ADD on Collective Goods’ entries?
LAW AND ANALYSIS:
It is the opinion of your office that this protest meets the criteria for further review. We agree and are of the opinion that this protest involves questions of law and fact which have not previously been ruled upon, namely whether the described imported pencil sets may be assessed ADD per the PRC Pencils Order. 19 C.F.R. § 172.24(b).
We note that the protest was timely filed. Pursuant to 19 U.S.C. § 1514(c)(3)(A), a party must file a protest within 180 days after the date of liquidation. CBP liquidated the relevant entries on March 27, 2020, and April 3, 2020. Collective Goods filed its protest on September 23, 2020, which is within 180 days of both liquidation dates.
Generally, assessed ADD duties properly applied by CBP are not protestable. It is well settled that when assessing and collecting ADD duties, CBP follows Commerce’s instructions. “Customs has a merely ministerial role in liquidating ADD duties.” Mitsubishi Electronics America, Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994). The courts have consistently held that CBP’s role in the ADD process is simply to follow Commerce’s instructions in collecting deposits of estimated duties and in assessing ADD duties, together with interest, at the time of liquidation. See Fujitsu Ten Corporation of America v. United States, 21 C.I.T. 104, 107 (1997); American Hi-Fi International, Inc. v United States, 19 C.I.T. 1340, 1342-43 (1995).
However, “Customs, incident to its ‘ministerial’ function of fixing the amount of duties chargeable, must make factual findings to determine ‘what the merchandise is, and whether it is described in an order’ and must decide whether to apply the order to the merchandise.” LDA Incorporado v. United States, 79 F. Supp. 3d 1331, 1339 (Ct. Int’l Trade 2015); see also Sunpreme, Inc. v. United States, 946 F.3d 1300, 1320-21 (Fed. Cir. 2020) (internal citation omitted). CBP “is tasked with determining, for every imported product, whether the product falls within the scope of an antidumping or countervailing duty order. 19 U.S.C. § 1500(c). That necessarily entails valuating both the product and the order.” Sunpreme, Inc. v. United States, 946 F.3d at 1320-21. “In each instance, Customs is statutorily tasked with answering a yes-or-no question as to whether the order applies, in order to fix the duty owed. Id. Pursuant to its ministerial function, though, CBP cannot “affect the scope of the order.” LDA Incorporado, 79 F. Supp. 3d at 1339.
“[W]here the importer claims that Customs erred as a matter of fact by including its goods within the scope of the order, Customs’ determination is the proper subject for a protest.” LDA Incorporado v. United States, 978 F. Supp. 2d 1359, 1367 (Ct. Int’l Trade 2014) (citing Xerox Corp. v. United States, 289 F.3d 792, 795 (Fed. Cir. 2002). On the other hand, if the scope of the order is unambiguous and CBP follows Commerce’s instructions, there is no decision that is made by CBP that would be protestable. See Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994) (holding that CBP “cannot modify Commerce’s determinations, their underlying facts, or their enforcement”); Headquarters Ruling (“HQ”) H258302 (Sept. 3, 2015) (finding that “. . . . because the scope of the antidumping and countervailing duty orders was clear and CBP acted in accordance with Commerce’s instructions, CBP acted in its ministerial capacity when it liquidated its entries.”). See also H284348 (Aug. 10, 2017).
Accordingly, “where CBP can conclude that a product falls within the words of the order, both the affirmative scope language and any exclusions, CBP properly requires an importer to enter its goods as subject to an order.” Sunpreme, Inc. v. United States, 190 F. Supp. 3d 1185, 1202 (Ct. Int’l Trade 2016). The inquiry “comes down to whether CBP can determine that merchandise falls within the common meaning of the scope language based upon observable physical characteristics.” Id. If the importer believes that CBP has made a mistake of fact and does not want its goods to be covered by the order, the remedy is to seek a scope ruling. See LDA Incorporado, 79 F. Supp. 3d at 1342 n.12.
Collective Goods alleges that its entries are not covered by the scope of the order because its pencils are mixed media goods such that some pencils fall within the scope while others, i.e., charcoal pencils, are outside the scope. It does not dispute the casing, composition, or sharpness of the charcoal pencils in the set. The only argument that Collective Goods makes is that “based upon the plain and literal language of the order, the order does not cover sets of pencils containing mixed media, namely goods subject to the order and goods excluded from the order.” The Protestant refers to the following language in the scope: “. . . . [s]pecifically excluded from the scope of this investigation are . . . . charcoals . . . .” Certain Cased Pencils from the People’s Republic of China: Final Results and Partial Recission of Antidumping Duty Administrative Review, 71 Fed. Reg. 38,366 (July 6, 2006); see also Antidumping Duty Order: Certain Cased Pencils from the People’s Republic of China, 59 Fed. Reg. 66,909 (Dec. 28, 1994).
Customs has merely a ministerial role in liquidating ADD, so we must look to the scope language of the ADD order and any guidance provided by Commerce to determine whether the charcoal pencils are subject to the ADD order. See Mitsubishi Electronics America, Inc., 44 F.3d at 977 (Fed. Cir. 1994). We ultimately disagree with the Protestant. While the scope of the ADD order expressly excludes “charcoals,” Commerce determined in a scope ruling for charcoal pencils that “only uncased charcoal pencils are specifically excluded” from the ADD order. Letter to All Interested Parties from Charles Riggle, Program Manager, Office 8, Antidumping and Countervailing Duty Operations, Re: Preliminary Scope Ruling on Antidumping Duty Order on Certain Cased Pencils from the People’s Republic of China: Request by Walgreen Co., (ArtSkills Draw & Sketch) (January 29, 2009) (“Walgreen”); see also Commerce Message No. 9079204 (Mar. 20, 2009). In that case, Walgreen Co. imported an art set containing three graphite pencils, three charcoal pencils, two erasers, one pencil sharpener, one sanding pad, and one tortillon. Commerce ruled that the three graphite pencils and three charcoal pencils were within the scope of the ADD order because both pencil types were “‘writing and drawing instruments,’ ‘with cores of graphite or other materials’ that are ‘encased in wood and/or man-made materials.’” Id.
Based on the Walgreen scope ruling, the charcoal pencils at issue here are within the scope of the ADD order. There is no evidence that the charcoal pencils at issue are any different from those Commerce found within the scope of the Order in Walgreen. Therefore, based on Commerce’s guidance in the scope ruling, the entire imported pencil set falls within the scope of and is subject to the ADD order. Accordingly, CBP properly assessed ADD on Collective Goods’ entries per the PRC Pencils Order. If Collective Goods continues to believe that CBP has erred as a matter of fact, it must seek a scope ruling request from Commerce to determine whether the pencil set at issue is outside the scope of the ADD order.
HOLDING:
Based on the foregoing, we find that Collective Goods’ imported pencil sets are subject to the ADD order in A-570-827. Accordingly, CBP properly assessed ADD on Collective Good’s entries. The protest should be DENIED in full.
You are instructed to notify the Protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
For Yuliya A. Gulis, Director
Commercial & Trade Facilitation Division