CAFC Finds CBP Can Interpret AD/CVD Scope Coverage at Entry
CBP has the authority to interpret the scope of antidumping and countervailing duty orders when making decisions related to the release of goods, the U.S. Court of Appeals for the Federal Circuit said in a Jan. 7 decision. Reversing parts of its own May 2019 decision (see 1905170047), the full court ruled “en banc” that CBP has the responsibility to decide whether AD/CV duties apply to specific entries, even if the scope of the relevant AD/CV duty order is ambiguous without a Commerce Department scope ruling.
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The decision, written by CAFC Chief Judge Sharon Prost, mirrors her dissent from that three-judge panel decision in May. The customs laws, and in particular 19 USC 1500, require that CBP fix the amount of duty owed on imported goods, including the application of AD/CV duties. “While Customs may not expand or alter the scope of such orders, its authority and responsibility to determine whether they apply does not dissipate simply because an order lacks perfect clarity,” Prost said in the en banc decision.
The case involves “hybrid” solar cells imported by Sunpreme, that consisted of a polycrystalline silicon substrate with a layer of amorphous silicon “thin-film” cell on top. Both the Court of International Trade and the three-judge CAFC panel had agreed with the eventual Commerce scope ruling that found the hybrid cells subject to AD/CV duties on solar cells from China. But they also took issue with Commerce’s order that CBP “continue to suspend liquidation” for entries where CBP decided to require AD/CV duties before Commerce began that scope proceeding.
Under Commerce’s regulations, when the agency issues a ruling finding a product is covered by AD/CV duties, it may direct CBP to “continue to suspend liquidation” only if liquidation had already been suspended before the beginning of the scope inquiry. Otherwise, suspension of liquidation may only extend back to the initiation date of the scope inquiry. CBP’s initial suspension of liquidation was based on CBP’s interpretation of ambiguous scope language, not Commerce’s; CBP was overstepping its “ministerial” role and the suspension of liquidation could not be “continued” because it was illegal, the three-judge CAFC panel said.
The U.S. promptly requested reconsideration of the CAFC decision by the full Federal Circuit. Sitting “en banc,” 11 CAFC judges held CBP’s initial suspension of liquidation was proper and Commerce could suspend liquidation back to that date. “Contrary to the CIT’s conclusion, Customs’s yes-or-no answer to whether an order applies does not invade the interpretive province of Commerce,” CIT said. “Any other result would significantly limit Customs’s ability to perform its statutory role and would encourage gamesmanship by importers hoping to receive the type of windfall that Sunpreme seeks here.”
Indeed, the judges noted that the antidumping and countervailing duty laws legally prohibit CBP from releasing goods that are subject to an “antidumping or countervailing duty order, ambiguous or not, unless the importer pays a cash deposit.” Another section “provides that ‘determinations of the Customs Service,’ including whether goods fall within the scope of an antidumping or countervailing duty order, ‘are final and conclusive’ unless appealed to Commerce,” further bolstering the full court’s conclusion, the decision said.
Recognizing that CIT’s decision was rooted in the Federal Circuit’s own case law, CAFC disagreed with the notion that its earlier decisions meant CBP can’t interpret AD/CV duty orders. While CAFC has held in a case involving Xerox that CBP’s duties with respect to AD/CV duties are ministerial, the appeals court has not held that the ministerial duty of CBP excludes interpreting ambiguous scope language “for the limited but essential purpose of making the daily, yes-or-no decisions about whether a particular product meets the test of an antidumping or countervailing duty order,” it said.
Neither that Xerox case nor another case involving an importer called AMS Associates “controls the outcome of this case,” CAFC said. “Under a proper reading, neither is contrary to our current holding that Customs has the authority to suspend liquidation of goods when it determines that the goods fall within the scope of an ambiguous antidumping or countervailing duty order. In the interest of clarity, however, to the extent any portions of AMS or Xerox could be read as contrary to this holding, those portions are hereby overruled,” the appeals court said.
Finding CBP can interpret ambiguous scope language when making clearance decisions also meets the government’s policy objectives, CAFC said. “Our decision in this case is driven by the law, and not by policy considerations. But, when a policy is declared in a statute, we must consider and ‘follow the policy Congress has prescribed,’” the appeals court said. “Sunpreme’s limited view of Customs’s authority runs afoul of the policy declared in the Tariff Act, which instructs the government to ‘provide, to the maximum extent practicable, for the protection of revenue.’”
(Sunpreme Inc. v. U.S., Fed. Cir. # 2018-1116, -1117 and -1118, dated Jan. 7, 2019)