Only Assembled Products Qualify for 'Finished Merchandise' Exemption From Aluminum Extrusions Duties, CIT Says
The Court of International Trade on July 5 ruled towel racks and cabinet handles imported by IKEA are subject to antidumping and countervailing duties on aluminum extrusions from China, finding neither qualifies for the finished merchandise or finished goods kits exemptions. Despite disagreeing with Commerce’s original reasoning in a scope ruling issued in April 2015 (see 1505050017), CIT in two separate opinions (here) and (here) held that IKEA’s products nonetheless are not exempt under either carve-out because they are unassembled and include only an aluminum extrusion and fasteners.
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Commerce ruled that the towel racks and cabinet handles aren’t eligible for the finished merchandise exemption because they don’t include both extruded aluminum and non-extruded aluminum parts, and also because fasteners don’t qualify as parts under the exemption. In response, IKEA argued the requirement for non-extruded aluminum parts imposes an “aluminum content” requirement that wasn’t originally included in the orders. It also said fasteners are only excluded from consideration under the finished goods kit exemption, and may be parts of finished merchandise.
Though it agreed with IKEA in some respects, CIT cited recent court decisions on the controversial exemption (see 1512080012), including one involving Whirlpool (see 1602020072), holding IKEA’s products are nonetheless not “finished merchandise” because they are not assembled at time of entry. In order to be eligible for the exemption, “merchandise must contain aluminum extrusions 'as parts' and be ‘fully and permanently assembled,'” CIT said. “As imported, IKEA’s towel racks consist of a single aluminum extrusion, unassembled with any other parts. Because IKEA’s towel racks are not imported assembled with other parts, they cannot qualify for the ‘finished merchandise’ exclusion,” it said. “IKEA cannot steer clear of the Whirlpool Charybdis,” CIT Judge Richard Goldberg said, citing Homer’s Odyssey.
Nor do the towel racks and cabinet hangers qualify for the finished goods kit exemption, CIT said. That exemption clearly says fasteners, when accompanying a single aluminum extrusion, do not transform that extrusion into a finished good kit, it said. The plastic gaskets and steel brackets imported with IKEA’s towel racks and cabinet hangers are fasteners because they are the means by which the products are attached to walls, the court said. That means IKEA’s products are in effect single extrusions, and are thus subject to AD/CV duties, it said.
(IKEA Supply AG v. U.S., Slip Op. 16-65, 16-66, CIT # 15-00153, -00152, dated 07/05/16, Judge Goldberg)