Tak Fat Trading Co. v. U.S., 04-1131.

Citation396 F.3d 1378
Decision Date09 February 2005
Docket NumberNo. 04-1174.,No. 04-1131.,04-1131.,04-1174.
PartiesTAK FAT TRADING COMPANY, Mei Wei Foods Industry Co., Ltd., Leung MI International, Tak Yuen Corporation, and Genex International Corporation, Plaintiffs-Appellees, v. UNITED STATES, Defendant-Appellant, and Coalition for Fair Preserved Mushroom Trade, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Erik D. Smithweiss, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, of New York, New York, argued for plaintiffs-appellees. Of counsel was Max F. Schutzman.

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellant United States. With her on the brief were Peter D. Keisler, Assistant Attorney General, and David M. Cohen, Director. Of counsel on the brief were John D. McInerney, Chief Counsel, Berniece A. Browne, Senior Counsel, and Scott D. McBride, Attorney, Office of Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC. Of counsel were Jeanne E. Davidson, Deputy Director, and Richard P. Schroeder, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice.

R. Alan Luberda, Collier Shannon Scott, PLLC, of Washington, DC, argued for defendant-appellant Coalition For Fair Preserved Mushroom Trade. With him on the brief were Michael J. Coursey and Adam H. Gordon.

Before MAYER,* CLEVENGER and LINN, Circuit Judges.

CLEVENGER, Circuit Judge.

The United States and the Coalition for Fair Preserved Mushroom Trade ("Coalition") appeal the decision of the Court of International Trade reversing the scope ruling by the International Trade Administration, U.S. Department of Commerce ("Commerce") that held that mushrooms imported by plaintiffs (collectively "Tak Fat") were not excluded from within the scope of the Notice of Amendment of Final Determination of Sales at Less than Fair Value and Antidumping Duty Order: Certain Preserved Mushrooms From the People's Republic of China, 64 Fed.Reg. 8,308 (Feb. 19, 1999). Because the Court of International Trade erred when it disturbed the determination by Commerce that Tak Fat's mushrooms are not excluded from the dumping order, the decision of the Court of International Trade is reversed and the scope determination by Commerce is reinstated.

I

The antidumping order at issue in this case began as a petition by U.S. mushroom producers who requested an investigation of imported preserved mushrooms from Chile, China, India, and Indonesia but proposed to exclude particular mushrooms that were "marinated," "acidified," or "pickled." In proposing such an exclusion, petitioners cited to the Harmonized Tariff Schedule ("HTS" or "HTSUS") subheading 2001.90.39. In a supplementary letter to Commerce they again stated that marinated, acidified and pickled mushrooms are those "prepared or preserved by means of vinegar or acetic acid," as under HTS subheading 2001.90.39. The petition also included a footnote that stated that the scope of the petition comported with the Food and Drug Administration's ("FDA's") standards of identity for canned mushrooms.

After investigation, Commerce issued an order that applied to "preserved mushrooms" from China which are "prepared or preserved by cleaning, blanching, and sometimes slicing or cutting" and "then packed and heated in containers including but not limited to water, brine, butter or butter sauce." 64 Fed.Reg. at 8,309. Commerce did not include references to either the HTS headings or the FDA standards when it excluded" `marinated,' `acidified' or `pickled' mushrooms, which are prepared or preserved by means of vinegar or acetic acid, but may contain oil or other additives" from the order. Id.

On January 6, 1998, Tak Fat requested a scope ruling to determine whether their mushrooms were excluded from the antidumping order. Tak Fat argued that the FDA standards should be used to determine which mushrooms fall within the order, and that their mushrooms contained vinegar, an ingredient not found in canned mushrooms under the FDA standards. When tested by Commerce, Tak Fat's canned mushrooms were less than 0.1 percent acetic acid by weight and the canning solution had a pH that ranged from 4.5 to 4.7. A pH of less than 4.6 is considered an "acidified" food under the FDA definition. Stating that the pH was lowered in order to prevent the growth of botulism and "preserve" the mushrooms, Tak Fat contended that the presence of vinegar in its mushrooms removes them from the scope of "canned mushrooms" under FDA standards. Commerce rejected Tak Fat's contention and found in its preliminary ruling that the FDA standard of identity "is not controlling of the scope of the order." Instead of the FDA standard, Commerce relied on the language in the order that was "appropriated" from HTS subheading 2001.90.39 to determine the scope of the exclusion. Commerce looked to Customs rulings that classified products under this HTS heading by percentage weight of vinegar or acetic acid. These rulings referenced Headquarters Ruling Letter (HRL) 069121 from May 20, 1983, which defined products prepared or preserved in vinegar or acetic acid as having a minimum of 0.5 percent acetic acid content. Commerce applied the 0.5 percent acetic acid test to Tak Fat's products and found that because they did not meet the test for "prepared or preserved by vinegar or acetic acid," Tak Fat's mushrooms were not excluded from the antidumping order.

Tak Fat then appealed the case to the Court of International Trade. Tak Fat Trading Co. v. United States, 294 F.Supp.2d 1352 (Ct. Int'l Trade 2003). They argued before the court that the plain language of neither the order nor the record supported Commerce's reliance on the HTS reference and the consequent use of the 0.5 percent acetic acid standard in determining whether Tak Fat's mushrooms were excluded. Id. at 1357. The court agreed with Commerce that the HTS, not the FDA, standard was the correct reference for determining if Tak Fat's products were excluded from the scope of the order. Id. at 1358. The court, however, rejected Commerce's reliance on the test found in the Customs Headquarters ruling because the court differentiated "pickled" from "marinated" or "acidified" and found that the 0.5 percent acetic acid standard applies only to "pickled" products and not necessarily to "marinated" or "acidified" products. Id. at 1359. The court thus found the standard set forth in the Customs Headquarters ruling should not apply to Tak Fat's product because it was never contended that Tak Fat's mushrooms were "pickled." Id. Consequently, the court found that there was not substantial evidence in support of the scope determination by Commerce, and that Tak Fat's mushrooms therefore should not be subject to the antidumping duty. Id. Thus, the court granted Tak Fat's motion for summary judgment and vacated the determination by Commerce that Tak Fat's packaged mushrooms were within the scope of the antidumping order. Id. The court agreed with Commerce's basic contention that the HTS as construed through Customs rulings, not the FDA, provides the correct test and it differed with Commerce only on whether Tak Fat's products are not excluded under the definition determined in reference to particular rulings of Customs. See id. at 1358-59.

The United States and the Coalition appeal the decision of the Court of International Trade requesting reinstatement of the initial Commerce scope ruling. We exercise jurisdiction over this appeal from a final decision of the United States Court of International Trade pursuant to 28 U.S.C. § 1295(a)(5) (2000).

II

A decision of the Court of International Trade reviewing a final antidumping determination by Commerce is reviewed "anew" by this court by reapplying the standard of review as applied by the trial court when it reviewed the final determination by Commerce. Mitsubishi Heavy Indus., Ltd. v. United States, 275 F.3d 1056, 1060 (Fed.Cir.2001); Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1559 n. 10 (Fed.Cir.1984). This court will uphold Commerce's determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i) (2000). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938). It is not necessary that there could only be one conclusion; even if two inconsistent conclusions could have been drawn, the determination could still be supported by substantial evidence. See Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984).

A

After investigation, Commerce will issue an antidumping order if merchandise has been sold at less than fair value. After an order is published, scope rulings may be necessary when producers, like Tak Fat, need clarification as to the status of their products under the order. Determinations of whether a product falls under an antidumping order are made pursuant to 19 C.F.R. § 351.225(k):

considering whether a particular product is included within the scope of an order ..., the Secretary will take into account the following:

(1) The descriptions of the merchandise contained in the petition, the initial investigation, and the determinations of the Secretary (including prior scope determinations) and the Commission.

(2) When the above criteria are not dispositive, the Secretary will further consider:

(i) The physical characteristics of the product;

(ii) The expectations of the ultimate purchasers;

(iii) The ultimate use of the product;

(iv) The channels of trade in which the product is sold; and

(v) The manner in which the product is advertised and displayed.

19 C.F.R. § 351.225(k) (2004).

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