Juancheng Kangtai Chem. Co. v. United States

• Citation: 322 F.Supp.3d 1351
• Decision Date: 19 June 2018
• Docket Number: Slip Op. 18–72,Court No. 17–00257
• Parties: JUANCHENG KANGTAI CHEMICAL CO., LTD, NAC Group Limited, Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

322 F.Supp.3d 1351

JUANCHENG KANGTAI CHEMICAL CO., LTD, NAC Group Limited, Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. 18–72

Court No. 17–00257

United States Court of International Trade.

June 19, 2018

Gregory S. Menegaz, Alexandra H. Salzman, J. Kevin Horgan, and John J. Kenkel, deKieffer & Horgan, PLLC, of Washington, D.C., for plaintiff.

Sonia M. Orfield, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Catherine D. Miller, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

OPINION AND ORDER

Richard W. Goldberg, Senior JudgePlaintiffs Juancheng Kangtai Chemical Co. ("Kangtai") and NAC Group Limited ("NAC") (collectively referred to as "Kangtai"), purport to challenge the administration and enforcement by Customs and Border Protection ("CBP") of the final results issued by the U.S. Department of Commerce ("Commerce" or "the Department") in an antidumping duty investigation to which Kangtai is a party. Compl., ECF No. 2 (Oct. 26, 2017); see also Pls.' Resp. in Opp'n to Mot. to Dismiss 10, ECF No. 19 (Apr. 16, 2018) (citations omitted) ("Pls.' Resp."). The Government moves to dismiss Kangtai's complaint, invoking U.S. Court of International Trade Rules 12(b)(1) and 12(b)(6) to contest the court's subject matter jurisdiction and, in the alternative, contend that even if the court does have jurisdiction, the complaint should be dismissed for failure to state a claim. Def.'s Mot. to Dismiss, ECF No. 13 (Feb. 16, 2018). For the reasons stated below, the court grants the Government's motion to dismiss.

BACKGROUND

For several years, Commerce has maintained administrative reviews of the antidumping order for chlorinated isocyanurates from the People's Republic of China ("PRC"), under which Kangtai is a covered entity. On July 31, 2014, the Department initiated the ninth administrative review ("AR 9") for the period of review spanning June 1, 2013 to May 31, 2014 ("POR 9"). Antidumping and Countervailing Duty Administrative Reviews , 79 Fed. Reg. 44,390 (Dep't Commerce July 31, 2014) (initiation). On August 3, 2015, Commerce initiated the tenth administrative review ("AR 10") covering the period of review from June 1, 2014 through May 31, 2015 ("POR 10"). Antidumping and Countervailing Duty Administrative Reviews , 80 Fed. Reg. 45,947 (Dep't Commerce Aug. 3, 2015) (initiation).

As part of its review, Commerce issued a questionnaire to Kangtai during AR 9 requesting that Kangtai "prepare a separate computer data file containing each sale made during the POR" and "[r]eport each U.S. sale of merchandise entered for consumption during the POR." Public App. to Pl.'s Resp., ECF No. 21 Tab 2, Kangtai Section C Resp. 1 (Dec. 15, 2014). Kangtai's response attached an exhibit identifying sales and the corresponding entry dates for those sales. See id. ex. C–1. The Department issued this same request to Kangtai during AR 10. See Heze Huayi Chem. Co. and Juancheng Kangtai Chem. Co. v. United States , Ct. No. 17–00032 ("Heze Huayi Chem. Co. "), J.A. ECF No. 35, Kangtai Section C & D Resp. 1, P.D. 35 (Nov. 23, 2015). Similarly, Kantai's AR 10 response reported certain sales and entries, but did not report those entries it had already reported in AR 9.

For POR 9, Kangtai was assessed a weighted average dumping margin of zero because Commerce found there to be no countervailable export subsidies. Chlorinated Isocyanurates from the People's Republic of China , 81 Fed. Reg. 1,167, 1,168 (Dep't Commerce Jan. 11, 2016) (final results) ("AR 9 Final Results"). As to liquidation, Commerce stated:

The Department will determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries covered by this review. The Department intends to issue assessment instructions to CBP 15 days after the publication date of these final results of this review.... For each individually examined respondent whose weighted-average dumping margin is above de minimis (i.e., 0.50 percent), the Department will calculate importer-specific assessment rates on the basis of the ratio of the total amount of dumping calculated for the importer's examined sales and the total entered value of sales. We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review when the importer-specific assessment rate is above de minimis.

Id. For POR 10, Kangtai was assessed a weighted average dumping margin of 35.05%. Chlorinated Isocyanurates from the People's Republic of China , 82 Fed. Reg. 4,852, 4,852 (Dep't Commerce Jan. 17, 2017) (final results). In its preliminary results, Commerce indicated that it would instruct CBP "to assess duties on all appropriate entries of subject merchandise during the POR," Chlorinated Isocyanurates from the People's Republic of China , 81 Fed. Reg. 45,128, 45,130 (Dep't Commerce July 12, 2016) (prelim. results) and accompanying Decision Mem., and it was Kangtai's failure to report certain entries sold during POR 9 but entered in POR 10 led to the imposition of the separate rate for these shipments. See also Def.'s Reply to Pls.' Resp. 15–19, ECF No. 25 (May 21, 2018) (discussing Commerce's practice of assessing duties based on the date of entry).

The first liquidation instructions at issue here were submitted to CBP on January 28, 2016. In those instructions, Commerce ordered that all shipments imported or sold to NAC and entered during POR 9 were to be assessed a rate of $0 per metric ton. Def.'s Confidential App., ECF No. 16, Liquidation Instrs. from Commerce to Customs, P.R. 2 (Jan. 28, 2016). "For all other shipments ... entered" during the same period, Commerce directed CBP to impose the PRC rate of 285.63%, id. , the rate assigned to all other Chinese manufacturers not subject to a separate rate. The next set of instructions, issued February 2, 2017, followed a similar structure: setting certain rates for entries shipped to specific purchasers during POR 10 and the PRC rate for all others. Def.'s Confidential App., ECF No. 16, Liquidation Instrs. from Commerce to Customs, P.R. 4 (Feb. 2, 2017). Following these instructions, CBP liquidated eleven of the eighteen entries at issue. On March 6, 2017, as part of a separate lawsuit challenging the results of AR 10, Kangtai obtained an injunction preventing CBP from liquidating the remaining AR 10 entries. See Heze Huayi Chem. Co. , Order Granting Prelim. Inj., ECF No. 17 (Mar. 6, 2017). Thereafter, Commerce instructed CBP to suspend the liquidation of all other entries. Def.'s Confidential App., ECF No. 16, Liquidation Instrs. from Commerce to Customs, P.R. 5 (Mar. 9, 2017). As a result, seven entries remain unliquidated.

Kangtai filed the instant complaint, alleging four separate counts. Count I alleges that Commerce "acted contrary to law when it assessed individual sales an [antidumping] rate that was higher than the rate calculated upon individual review of the sales in the legal forum appropriate for such calculation, i.e., AR 9." Compl. ¶ 22, ECF No. 2 (Oct. 26, 2017). Kangtai also complains that "[t]he Department's apparent decision to treat the sales as if they were made by the PRC Entity is unsupported by substantial evidence as it had clear evidence that those sales were made by Kangtai" in Count II. Id. ¶ 24. Next, Count III sets forth the allegation that "[t]he Department's apparent decision that the NAC entries were not reviewed merely because they entered in the POR subsequent to the AR in which they were reviewed was unsupported by substantial evidence as well as arbitrary and capricious." Id. ¶ 26. Last, Count IV challenges CBP's application of its 15–day liquidation policy. Id. ¶ 28.

STANDARD OF REVIEW

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). As part of its Rule 12 inquiry, the court is to undertake an examination of the "true nature" of the action in an effort to uncover whether the facts pled properly constitute a claim pursuant to Kangtai's proffered jurisdictional provision. Norsk Hydro Can., Inc. v. United States , 472 F.3d 1347, 1355 (Fed. Cir. 2006). And Kangtai bears the burden of establishing jurisdiction. Id.

DISCUSSION

At issue in this case "are a total of thirty-four sales with legal ‘date of sale’ between June 1, 2013 and May 31, 2014, that were fully and accurately reported in AR 9 and which were included in the antidumping calculation for that review. Among those thirty-four sales, eighteen entered in the United States after June 1, 2014," during AR 10. Pls.' Resp. at 9.

Commerce contests the court's jurisdiction and argues that Kangtai's complaint should be dismissed. As to Counts I–III, Commerce contends that "[b]ecause Kangtai has challenged the assessment rates established by [AR 10] pursuant to 28 U.S.C. § 1581(c), [ ] it could and should have sought relief pursuant to section 1581(c)...." Def.'s Mot. to Dismiss 2, ECF No. 13 (Feb. 16, 2018). In support of this argument, the Government posits that "Kangtai attempts to rely on section 1581(i) instead because it failed to request an injunction covering its affected entries before 11 of its 18 entries subject to [AR 10] were liquidated." Id. at 6. Count IV, on the other hand, ought to be dismissed, in the Government's view, because Kangtai could have timely obtained an injunction as part of its Kangtai's section 1581(c) case, Heze Huayi Chem. Co. , thereby suspending liquidation of the contested entries. See id. at 2.

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