CIT Faults AD Duty Scope on China Petroleum Wax Candles, Says Coverage too Broad
The Court of International Trade on Jan. 31 rejected a Commerce Department ruling on the extent of antidumping duties on petroleum wax candles from China, casting yet more uncertainty onto the agency’s current interpretation of the scope of that order. The court held Commerce based its ruling, which found over 200 novelty holiday candles imported by Trade Associates Group to be subject to AD duties, on an overbroad reading of the scope. In Commerce’s view, which had been codified in a 2011 “scope clarification,” the scope applied to all candles regardless of shape, unless specifically excluded from duty liability. CIT found that reading too expansive, finding a list of shapes of candles in the scope language limited the coverage of AD duties only to candles of those shapes.
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The decision means Commerce may have to take another look at its 2011 scope clarification, given CIT's direct opposition to a central premise of Commerce's interpretation. However, the opinion should leave unscathed other parts of the clarification, including definitions for birthday and utility candle duty exemptions that Commerce recently further defined (see 13051620 and 14013102), said Karen McGee of Barnes & Thornburg, who represents the National Candle Association. The NCA originally requested the candle duties in 1985, and in this case argued in favor of Commerce's broad scope definition. Although they are still analyzing the decision, says McGee, "our initial impression is that although the CIT’s conclusion that candles in the shapes of identifiable objects that are not common candle shapes are outside the scope of the Candles Order, the opinion does not affect other aspects of the Final Clarification Results, including the definition of birthday candle and utility candle." Counsel for Trade Associates did not immediately return a request for comment.
As originally written, the scope of the AD duties on petroleum wax candles explains the order’s coverage in only two sentences. It says the products subject to duties under the order are “certain scented or unscented petroleum wax candles made from petroleum wax and having fiber or paper-cored wicks. They are sold in the following shapes: tapers, spirals, and straight-sided dinner candles; rounds; columns, pillars, votives; and various wax-filled containers.”
Despite its curt scope instructions, Commerce over subsequent decades found utility candles, birthday candles, and figurine candles to be excluded from the order and not subject to AD duties. Faced with hundreds of scope ruling requests because of the ambiguity of the scope, Commerce in 2010 set out to clarify the scope exclusions (see 10081321). In its preliminary results, Commerce found the scope only included candles in the shapes that are specifically listed in the second sentence of the scope. But in its final results in 2011, Commerce reversed course (see 11080221). It found the list of shapes in the scope is only “illustrative,” and that other shapes of candles may be subject to AD duties as long as they aren’t utility, birthday, or figurine candles.
One of the first scope rulings where Commerce applied its new interpretation covered candles imported by Trade Associates in the shape of objects like acorns, beach balls, caramel apples, cupcakes, flip flops, flowers, fruits, haunted houses, trees, and woodies with surfboards. Consistent with its new interpretation, Commerce found these candles to be subject to AD duties even though they aren’t listed as shapes of candles covered by the order. Trade Associates filed suit at CIT, arguing the scope language is clear in requiring Commerce to limit AD duties to candles shaped like “tapers, spirals, and straight-sided dinner candles; rounds; columns, pillars, votives; and various wax-filled containers.”
Relying on its own reading of the scope, CIT agreed. The word “certain” in “certain scented or unscented petroleum wax” limits the order’s coverage so that not all petroleum wax candles are subject to AD duties, said the court. Taken together with this first sentence, the second sentence gives the criteria for which candles are “certain candles” subject to duties -- namely, a list of included candle shapes. Commerce’s finding that the scope covers all candles regardless of shape is too broad given the scope’s narrow language, said CIT, as it set aside the ruling for Trade Associates and remanded to Commerce for a new ruling.
(Trade Associates Group, Ltd. v. U.S.; Slip Op. 14-11, dated 01/31/14, Judge Stanceu)