CIT Again Rejects Criteria for AD/CVD Scope Rulings on Mixed Sets
The Court of International Trade on Oct. 6 again rejected a new framework from the Commerce Department for conducting antidumping and countervailing duty scope rulings on products included in “mixed media” sets. Tasked by the U. S. Court of Appeals for the Federal Circuit in 2013 with setting out criteria for deciding whether nails included in a tool set imported by Target should be subject to the AD duty order on steel nails from China, Commerce came up with a four-part test that failed to comply with CAFC’s order, said the trade court.
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Neither Commerce nor domestic industry disputed that the nails would be subject to AD duties if imported on their own. But Commerce in a 2010 scope ruling found that, when viewed as a whole, Target’s toolkits are outside of the scope of the order. Mid Continent Nail, the Missouri-based manufacturer that originally requested duties on Chinese nails, filed a court challenge that would eventually see a CIT remand on the basis that Commerce isn’t allowed to consider the mixed media set as a whole. Commerce subsequently reversed its position under protest, finding the nails subject to AD duties, and appealed to CAFC.
The Appeals Court in July 2013 found that, while Commerce does have the authority to conduct a “mixed media analysis,” it needs to set out a clear test (see 13071820). Commerce should first look at whether the product at issue falls within the literal terms of the AD duty scope itself, said CAFC. Then, if it does, the agency should look at whether the product’s incorporation in a mixed media set should exclude it from AD duty coverage anyway. When it conducts its analysis, Commerce should work under the presumption that the subject product’s incorporation into a mixed media item doesn’t take it out of scope, said CAFC. To overcome that presumption and find an object’s incorporation into a set exempts it from AD/CV duties, Commerce must support its position with “published guidance” issued before the AD/CV duties were first put in place by an order, it said.
Commerce Sets Four-Part Criteria; CIT Rejects
Now relying on nine other scope rulings issued before 2009 as precedent, Commerce again found Target’s nails to be exempt from duties based on their inclusion in a tool set. The agency set out a revised four-factor test for deciding whether subject items in mixed media sets are exempt:
- The unique language of the order.
- The practicability of separating the component merchandise for repackaging or resale.
- The value of the component merchandise as compared to the value of the product as a whole.
- The ultimate use or function of the component merchandise relative to the ultimate use or function of the mixed-media set as a whole.
Commerce pointed to seven scope rulings that found items included in mixed media sets were not subject to duties under orders where the scope language doesn’t specify whether mixed media sets are covered. The agency also cited two other scope rulings where it found items included in mixed media sets are subject to duties where the scope language specifically included items included in mixed-media sets.
CIT decided that Commerce was picking and choosing its evidence, and remanded. The scope rulings picked by Commerce “appear to be isolated examples of how the test is outcome determinative as to whether Commerce finds that the mixed media set is subject to the order,” it said. They all rely on different reasons for exempting the relevant item from duties, and don’t indicate a broader unstated policy, said CIT. Also, Commerce’s inference that vague scope language means mixed media sets are exempt goes against the Appeals Court’s specific instruction that there is a presumption that items in mixed media sets are subject to duties, said the trade court.
(Mid Continent Nail Corp. v. U.S., Slip Op. 14-118, CIT No. 10-00247, dated 10/06/14, Judge Tsoucalas)