U.S. v. Itt Industries, Inc., SLIP OP. 04-81.

• Decision Date: 08 July 2004
• Docket Number: Court No. 97-01777.,SLIP OP. 04-81.
• Citation: 343 F.Supp.2d 1322
• Parties: UNITED STATES, Plaintiff, v. ITT INDUSTRIES, INC., d/b/a ITT Jabsco, Defendant.
• Court: U.S. Court of International Trade

343 F.Supp.2d 1322

UNITED STATES, Plaintiff, v. ITT INDUSTRIES, INC., d/b/a ITT Jabsco, Defendant.

SLIP OP. 04-81.

Court No. 97-01777.

United States Court of International Trade.

July 8, 2004.

Peter D. Keisler, Assistant Attorney General, Barbara S. Williams, Attorney-in-Charge, International Trade Field Office, Mikki Graves Walser, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, AnnMarie R. Highsmith, Attorney, Office of Assistant Chief Counsel, U.S. Bureau of Customs and Border Protection, Edward N. Maurer, Attorney, Office of Assistant Chief Counsel, U.S. Bureau of Customs and Border Protection, Washington, DC, for Plaintiff, of counsel.

Barnes, Richardson & Colburn, Washington, DC (Rufus E. Jarman, Jr., Diane A. MacDonald, Helena D. Sullivan) for Defendant.

OPINION

POGUE, Judge.

Plaintiff United States Bureau of Customs and Border Protection¹ moves for summary judgment pursuant to USCIT Rule 56, seeking payment of a civil penalty, together with pre-judgment and post-judgment interest. Defendant ITT Industries, Inc., d/b/a ITT Jabsco ("Jabsco"), opposes Plaintiff's motion and moves for summary judgment, asserting that because Customs improperly calculated the actual loss of antidumping duties Jabsco owed, the agency also inappropriately assessed the civil penalty. Accordingly, Jabsco seeks a refund of excess antidumping duties paid with interest, and either a reassessment of the penalty owed based upon the correct calculation of antidumping duties or a rescindment of the penalty demand. Jurisdiction is predicated on 28 U.S.C. § 1581(a) (1988) and 28 U.S.C § 1583 (1988).² For the reasons discussed below, the Court grants Plaintiff's motion for summary judgment in part, denies its motion in part, and denies Jabsco's motion for summary judgment. The Court orders trial on the penalty amount.

Background

The Department of Commerce issues antidumping duty orders for imported merchandise that is sold in the United States below its fair market value and materially injures or threatens to injure a domestic industry. See 19 U.S.C. § 1673d. These orders impose antidumping duties reflecting the difference between the foreign exporter's sales price and the domestic price of the subject merchandise. See 19 U.S.C. § 1673e(a)(1). Upon the entry of merchandise covered by an antidumping order, an importer is required to make a deposit of estimated duties. See 19 U.S.C. § 1673e(a)(3).

The actual liquidation³ of entries subject to an antidumping order may occur years after importation. Before final liquidation, any interested party may request an administrative review of the antidumping order. See 19 U.S.C. § 1675. The final results of such a review serve as the basis for the actual assessment of antidumping duties on entries of merchandise covered by Commerce's determination. 19 U.S.C. § 1675(a)(2). Commerce publishes the final results of an administrative review in the Federal Register, and later issues liquidation instructions to Customs directing that agency to collect antidumping duties at the rates determined in the review proceeding. Id.; 19 C.F.R. § 353.53a(c)(8); see Consol. Bearings Co. v. United States, 348 F.3d 997, 1002 (Fed.Cir.2003) ("Commerce's liquidation instructions direct Customs to implement the final results of administrative reviews."); J.S. Stone, Inc. v. United States, 27 CIT ___, ___, 297 F.Supp.2d 1333, 1338 (2003) ("Commerce issues its final results [of the administrative review] and directs Customs to collect the appropriate antidumping duties."). If an interested party fails to request an administrative review, Commerce generally directs Customs to liquidate the merchandise at the cash deposit rates in effect at the time the merchandise entered the United States, which rate is published in the Federal Register as the "all others" cash deposit rate, see J.S. Stone, Inc., 27 CIT at ___, 297 F.Supp.2d at 1344 (internal citation omitted); 19 C.F.R. § 353.53a(d)(1),⁴ unless that party received an individual rate in the original investigation. Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 Fed.Reg. 23,954, 23,959 (Dep't Commerce May 6, 2003) (notice of policy concerning assessment of antidumping duties) ("Assessment Notice").

Defendant Jabsco, a division of ITT Corporation, manufactured and sold marine and other liquid pumps, which incorporated cylindrical roller bearings and/or radial ball bearings, types of antifriction bearings, in the United States. Jt. Statement Mat'l Facts Not in Dispute, Def.'s Ex. 1 paras. 1-3 ("Jt. Stat.").⁵ Jabsco imported through the Port of Los Angeles seventy entries of bearings from a related party in the United Kingdom, ITT Jabsco UK ("Jabsco UK"), between November 1988 and April 1991. Id. paras. 5-7. Jabsco UK, which also manufactured and sold marine and other liquid pumps incorporating the same bearing components, purchased the bearings from a division of SKF Ltd. in the United Kingdom. See id. paras. 3-4, 6; Letter from Rufus E. Jarman, Jr., Barnes, Richardson & Colburn, to Imp. Specialist Androvich, Dist. Dir. of Customs, Customs, Pl.'s Ex. 2 at 1 (June 5, 1992); Jabsco's Responses to Pl.'s First Interrogatories and Request for Production of Documents Directed to Def., Pl.'s Ex. 1 para. 17(a) ("Jabsco's Inter. Resp."). The bearings, however, were manufactured by SKF companies located in France, Germany, and Italy. See Jt. Stat., Def.'s Ex. 1 para. 3; Pl.'s Mem. Supp. Mot. Summ. J. at 3 ("Pl.'s Mem."). Upon receipt, Jabsco UK placed the bearings into its inventory and shipped them to Jabsco as needed. Jabsco's Inter. Resp., Pl.'s Ex. 1 para. 5(a).

Jabsco described the bearings entered between November 1988 and August 1990 as "pump parts" on the Entry Summaries; entries made between September 1990 and April 1991 were either described as "needle roller bearings" or "pump parts." Jt. Stat., Def.'s Ex. 1 paras. 9-10. Customs subsequently liquidated the entries as identified between December 1988 and December 1991, id. para. 8, incorrectly classifying the bearings as other parts of pumps for liquids under subheading 8413.91.90 of the Harmonized Tariff Schedule of the United States ("HTSUS"),⁶ 19 U.S.C. § 1202, or Item 660.97 of the Tariff Schedules of the United States ("TSUS"), the predecessor classification statute, or as needle roller bearings under subheading 8482.40.00, HTSUS. See Jt. Stat., Def.'s Ex. 1 paras. 12-13.⁷

Properly identified at the time of entry, the bearings would have been subject to pending antidumping duty investigations and subsequent orders. Id. para. 14. Jabsco neither made any cash deposits of estimated antidumping duties, nor participated in any of Commerce's review proceedings involving the bearings. Id. paras. 19-20. Rather, on October 30, 1991, Jabsco voluntarily disclosed to Customs that it had incorrectly identified the seventy bearing entries as "pump parts" or "needle roller bearings" on its Entry Summaries, a violation of 19 U.S.C. § 1592(a).⁸ See Jt. Stat., Def.'s Ex. 1 paras. 12-13, 46-47; Letter from Rufus E. Jarman, Jr., Barnes, Richardson & Colburn, to Dist. Dir. of Customs, Customs, Pl.'s Ex. 3 at 1-2 (Oct. 30, 1991) ("Prior Disclosure Letter").⁹ That letter offered to tender "any" actual lost duties within thirty days of Customs' notification of its calculation of duties. Prior Disclosure Letter, Pl.'s Ex. 3 at 2.

Five days later, Customs notified Jabsco that it was required to pay $36,344.50 in regular customs duties and $681,127.50 in antidumping duties. Jt. Stat., Def.'s Ex. 1 para. 49. Payment was required within thirty days for Jabsco to perfect its "prior disclosure." Id.¹⁰ Customs' calculation of such duty amounts was based on the cash deposit rates for estimated antidumping duties and the application of liquidation instructions from Commerce for antifriction bearings subject to antidumping duties at the time Jabsco's bearings entered the United States. Id. para. 50. The first instructions, dated June 25, 1991, directed Customs to liquidate all entries of bearings during the period November 9, 1988 through April 30, 1990 and assess antidumping duties at the cash deposit rate required at the time of entry, unless the company had requested an administrative review. Id. para. 31. Those instructions were corrected on June 9, 1992. As corrected, the instructions ordered Customs to liquidate bearing entries using the "all others" rate if the bearings were exported by original equipment manufacturers ("OEMs") to a related affiliate in the United States and the OEMs had not requested administrative review, but only if the bearings were originally produced by a manufacturer listed in the June 25, 1991 instructions. Id. para. 32. The instructions further noted that if the exporter was not an OEM, but the other conditions existed, Customs should continue to suspend all bearing entries. Id. The second set of instructions, dated June 10, 1992, repeated the June 25, 1991 and June 9, 1992 instructions, but applied to bearing entries during the period May 1, 1990 through April 30, 1991. See id. para. 39.¹¹ Jabsco subsequently remitted the customs duties on December 18, 1992, but informed Customs that it disagreed with the amount of antidumping duties assessed. Id. paras. 51-52.

A year later, on December 22, 1993, Customs informed Jabsco that it had negligently "`failed to exercise due care in ascertaining or recording the truth of the facts or in ascertaining [its] obligations under Customs laws.'" Id. para. 53 (quoting Demand for Duty Statement, Pl.'s Ex. 5 at 3 (Dec. 22, 1993)).¹² Customs further demanded that Jabsco owed $619,515.33 in antidumping duties under 19 U.S.C. § 1592(d),¹³ and issued a prepenalty notice in the amount of $217,874.16, the interest on the antidumping duties owed by Jabsco from the dates the bearings entered the United States to the date of the notice. Jt. Stat., Def.'s Ex. 1 paras. 54-55. Jabsco unsuccessfully appealed...