CBP Can't Collect AD/CVD Cash Deposits Until After Commerce Clarifies Scope, Says CIT

The importer, Sunpreme, had filed suit in December after months of wrangling with CBP over whether its solar modules with thin-film amorphous silicon are subject to the antidumping and countervailing duty orders on solar cells from China. Though the orders specifically exempt “thin film photvoltaic products produced from amorphous silicon,” a CBP investigation that began in early 2015 had found Sunpreme’s modules were “hybrids” with physical characteristics listed in the scope. In April, CBP began rejecting its entries and requesting they be filed type 03 at the 239.42 percent China-wide rate. Letters sent to the electronics Center for Excellence and Expertise in Long Beach got Sunpreme a lower duty rate, but CBP still maintained the modules were subject to duties. While conversations continued with CBP, Sunpreme filed a request for a Commerce scope ruling, which is currently due in April.

In an opinion written by CIT Judge Claire Kelly, the court held CBP’s “unilateral interpretation of ambiguous scope language” and “ignore the thin film exclusion” unlawfully exceeded the agency’s authority. CBP may only apply the scope instructions of Commerce when deciding whether a product is subject to AD/CV duties, said the court. “If there is a question as to the meaning of an antidumping or countervailing duty order … then it is for Commerce to answer that question,” it said. In this case, CBP erred in deciding to find a thin film product subject to duties despite no such instructions in the scope, and then suspend liquidation and cash deposits, before Commerce ruled on the issue.

Any decision to suspend liquidation and require cash deposits may only happen after Commerce unambiguously says a product is within the scope of AD/CV duties, said CIT. “In order to act within its designated role, CBP must be able to point to clear language in the scope of the Orders, including any exclusions, that places goods within the scope based upon observable facts,” said Kelly in the opinion. “Where factual determinations alone do not permit CBP to determine whether a good is within the scope or outside the scope of the Orders, goods must be considered outside of the scope until Commerce clarifies or interprets the Orders and clarifies what products should be included.”

CIT denied the government’s motion to dismiss the case. Though the government had argued Sunpreme’s challenge was premature because there was not yet a final Commerce Department scope ruling or a final liquidation from CBP, Sunpreme is not challenging a Commerce scope ruling, but rather “CBP’s unilateral interpretation of ambiguous scope language in excess of its authority,” said CIT. Nor can Sunpreme challenge CBP’s final liquidation, because CBP’s decision to unilaterally interpret the scope is not a protestable decision under 19 USC 1514, said CIT. The only available remedy to Sunpreme is a suit under 28 USC 1581(i) “residual” jurisdiction for trade cases that cannot be filed otherwise, it said.

Finding Sunpreme would suffer irreparable harm in the form of damage to its reputation and lost business opportunities due to CBP’s collection of cash deposits, CIT issued a preliminary injunction barring CBP from collecting cash deposits on its modules containing thin film cells. Though it rated highly Sunpreme’s chances of success in the case, the court ordered Sunpreme to post a bond until it reaches a final decision.

(Sunpreme Inc. v. U.S., Slip Op. 12-3, CIT # 15-00315, dated 01/08/16, public version 01/13/16, Judge Kelly)

(Attorneys: John Gurley of Arent Fox for plaintiff Sunpreme; Melissa Devine for defendant U.S. government)