CIT Orders Commerce to Clarify 'Finished Merchandise' Exemption From AD/CV Duties on Aluminum Extrusions

The case stemmed from a 2011 scope ruling on mop frames and handles imported by Rubbermaid that allow the user to attach interchangeable damp or dry mops and cleaning cloths. Some of the frames and handles subject to the ruling were imported separately, while others were imported, still without the mop itself, together in a kit. Rubbermaid requested that Commerce find the mop handles and frames are not subject to duties on aluminum extrusions, arguing they are exempt “finished merchandise.” The company also said the handles and frames imported together should be exempt as “finished goods kits.”

Under the scope of the AD/CV duties on aluminum extrusions from China, each order “excludes finished merchandise containing aluminum extrusions as parts that are fully and permanently assembled and completed at the time of entry, such as finished windows with glass, doors with glass or vinyl, picture frames with glass pane and backing material, and solar panels.” Also exempt from duties are “finished goods containing aluminum extrusions that are entered unassembled in a ‘finished goods kit,’” which the scope defines as “a packaged combination of parts that contains, at the time of importation, all of the necessary parts to fully assemble a final finished good and requires no further finishing or fabrication … and is assembled ‘as is’ into a finished product.”

In its scope ruling, Commerce looked to the definition of finished goods kits as “containing all necessary parts to fully assemble a final finished good” to find that the mops and handles imported separately are not “finished merchandise” because they don’t include everything necessary for a mop. The agency also found that even when imported together in kits, the mop handles and frames aren’t exempt because they don’t include the interchangeable mop heads.

In support of its scope ruling, Commerce argued the exemptions are basically the same, with the only difference being that the finished merchandise exemption is for goods that are already fully and permanently assembled, while the finished goods kit exemption is for goods that are not. But the trade court found Commerce improperly conflated the two exemptions, and that Commerce can’t use the finished goods kits exemption to define finished merchandise. Although CIT noted the “seductive logic and symmetry” in the rationale that the two exemptions run parallel, the scope would have clearly said so if that were the case, the court said. Instead, given the lack of clarity in the scope, Commerce needs to set out a “clear and cogent” definition of the finished merchandise exemption, said CIT.

CIT said Commerce’s definition has to address whether the finished merchandise exemption covers products that are designed to work in conjunction with other merchandise. Although Commerce had found Rubbermaid’s mop handles and frames aren’t a complete mop, the scope itself lists goods that are designed to work together like Rubbermaid’s products, such as doors and windows that must be attached to frames. Commerce’s definition also has to address whether goods with interchangeable parts, like Rubbermaid’s handles and frames that accept different mop heads, are covered by exemptions from duties for finished merchandise and finished goods kits. Although Commerce argued otherwise, CIT noted that the agency has in its own scope rulings found that products designed to hold interchangeable banners qualify for the exemptions.

(Rubbermaid Commercial Prods. LLC v. U.S., Slip Op. 14-113, CIT No. 11-00463, dated 09/23/14, Judge Ridgway)