Skf Usa, Inc. v. U.S., 2007-1039.

• Decision Date: 07 January 2008
• Docket Number: No. 2007-1039.,2007-1039.
• Citation: 512 F.3d 1326
• Parties: SKF USA, INC., SKF France S.A., and Sarma, Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellant, and Timken U.S. Corporation, Defendant.
• Court: U.S. Court of Appeals — Federal Circuit

512 F.3d 1326

SKF USA, INC., SKF France S.A., and Sarma, Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellant, and Timken U.S. Corporation, Defendant.

No. 2007-1039.

United States Court of Appeals, Federal Circuit.

Nonprecedential Opinion Issued: August 30, 2007.

Precedential Opinion Issued: January 7, 2008.

Herbert C. Shelley, Steptoe & Johnson LLP, of Washington, DC, argued for plaintiff-appellee. With him on the brief was Alice A. Kipel. Of counsel was Susan R. Gihring.

Stephen C. Tosini, Attorney, Commercial Litigation Branch, Civil Division, United States Department of. Justice, of Washington, DC, argued for defendant-appellant. With him on the brief were Peter D. Keisler, Assistant Attorney General, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Rachael E. Wenthold, Senior Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Before RADER, BRYSON, and PROST, Circuit Judges.

PER CURIAM.

The United States appeals from a decision of the Court of International Trade affirming the Department of Commerce's determination of the antidumping duties applicable to certain imports of ball bearings. SKY USA Inc. v. United States, 452 F.Supp.2d 1335 (Ct. Int'l Trade 2006). Because the liquidation of the importers' accounts for the pertinent period rendered the action moot, we vacate the judgment of the Court of International Trade and remand with directions to dismiss.

I

On May 15, 1989, the Department of Commerce published an antidumping duty order imposing antidumping duties on ball bearings from France. 54 Fed.Reg. 20902 (May 15, 1989). Between May 1, 2001, and April 30, 2002, the appellants (collectively, "SKF") imported ball bearings made in France and deposited estimated duties on those entries at the rate of 11.43%. Customs treated SKF's entries as subject to the antidumping duty order and therefore suspended liquidation of the entries. Upon request, Commerce initiated a review of the antidumping duty rate for SKF's entries during that period. In June 2003, Commerce published the final results of its review and assigned SKF an antidumping duty rate of 10.08%. 68 Fed.Reg. 35623, 35625 (June 16, 2003).

SKF sought review of Commerce's determination by filing an action in the Court of International Trade. Oh September 15, 2003, SKF asked the court to enjoin liquidation of its covered entries while the case was pending before that court or before this court on appeal. The government agreed that an injunction of liquidation while the case was pending before the trial court would be appropriate, but it disagreed that the injunction should extend through the appeal.

SKF asked for an order enjoining liquidation because without such an order liquidation may occur while the case is pending in the trial court. 19 U.S.C. § 1516a(c)(1). Customs did not liquidate the covered entries while SKF's motion for an injunction was pending. The government argues, however, that the covered entries were liquidated by operation of law before the trial court ruled on SKF's motion. The government relies on 19 U.S.C. § 1504(d), which directs that, with a few exceptions, Customs must liquidate an entry of goods within six months after receiving notification that Commerce has completed its annual review and removed the suspension of liquidation. If Customs has not liquidated an entry by that time, the entry is deemed liquidated at the amount of duty deposited by the importer at the time of import. Id. In this case, the six-month statutory period ended on December 16, 2003, which was before the trial court ruled on SKF's motion to enjoin liquidation. Based on section 1504(d), the government argues that the covered entries must be considered to have been liquidated on that date.

Under our case law, once liquidation occurs the trial court is powerless to order the assessment of duties at any different rate. See Zenith Radio Corp. v. United States, 710 F.2d 806, 810 (Fed.Cir. 1983): The government argues that because liquidation was deemed to occur on December 16, 2003, the trial court's subsequent review of Commerce's determination could have no practical effect on the amount of the duty assessed, and the case was therefore moot.

Neither SKF nor the government mentioned the possibility of deemed liquidation to the trial court before the six-month deadline, and proceedings in the trial court continued in the normal course after that deadline passed. On February 18, 2004 the trial court acted on SKF's motion and enjoined the liquidation of SKF's covered entries. Upon considering the merits of the action, the court held that Commerce's determination of the antidumping duty rate was flawed, and it remanded to Commerce for a proper resolution. On remand, Commerce lowered the duty rate by 0.51%.

After Commerce's remand determination, the government for the first time alerted the trial court to the deemed liquidation provision of section 1504(d) and asked the court to dismiss the case as moot. The trial court denied the motion. The court reasoned that because the government consented to SKF's motion for an injunction lasting through trial, "an injunction existed de facto prior to the issuance of the court's actual order" ruling on the motion. The court explained that because the "de facto" injunction came into existence when SKF filed its motion, liquidation was enjoined before section 1504(d) could take effect, and hence the case was not moot. The trial court then considered and affirmed Commerce's remand determination of the antidumping duty rate for the covered entries. The government now appeals.

II

The government's mootness argument is based on the proposition that liquidation of entries covered by an annual review terminates any judicial challenge to the final determination of that review. That proposition stems from our opinion in Zenith Radio Corp. v. United States, 710 F.2d 806 (Fed.Cir.1983). We noted there that the statutory provision allowing judicial review of an annual review determination has two subsections concerning liquidation. The first subsection states that the trial court may enjoin the liquidation of covered entries and that, absent such an injunction, Customs is to liquidate the entries at the rate determined by Commerce. 19 U.S.C. § 1516a(c). The second subsection states that if the trial court enjoins the liquidation of entries, those entries will be, liquidated in accordance with the final decision of the trial court, or of this court on appeal. Id. § 1516a(e). In short, the statutory scheme provides that entries covered by a challenged review will be liquidated in due course unless the trial court enjoins liquidation.

In Zenith, we noted that "the statutory scheme has no provision permitting reliquidation ... after liquidation if [the challenge to Commerce's determination] is successful on the merits." 710 F.2d at 810. From the absence of an express provision for reliquidation, we inferred that "[Once liquidation occurs, a subsequent decision by the trial court on the merits of [a] challenge can have no effect on the dumping duties assessed." Id. Essentially, the Zenith court concluded that liquidation renders the administrative determination final not only as to Commerce and Customs, but also as to the trial court and this court.

The Zenith court may not have foreseen some of the consequences of the rule it adopted. Indeed, the rule's effect may run counter to a congressional intent to facilitate judicial review of Commerce determinations. See Shinyei Corp. of Am. v. United States, 355 F.3d 1297, 1311 n. 9 (Fed.Cir.2004) (noting that "the 1979 Trade Agreements Act ... created [the judicial review statute, 19 U.S.C. § 1516a,] to allow for increased review of Commerce determinations," and relying on that legislative history to reject the idea that Congress intended the liquidation of entries to moot judicial review). Nonetheless, we have consistently applied the Zenith rule, at least in the context of judicial review under section 1516a. See Belgium v. United States, 452 F.3d 1289, 1296-97 (Fed.Cir.2006); Yancheng Baolong Biochemical Prods. Co. v. United States, 406 F.3d 1377, 1381 (Fed.Cir.2005); FMC Corp. v. United States, 3 F.3d 424, 431 (Fed.Cir.1993). Stare decisis compels us to apply it here.

The Zenith rule renders a court action moot once liquidation occurs. Zenith focused on the fact of liquidation; it did not turn on the nature of the action giving rise to liquidation. There is therefore no reason to conclude that the Zenith rule applies when liquidation occurs by action of Customs but not when it occurs by operation of law. Deemed liquidation, moreover, serves the same policy as liquidation by Customs. Both types of liquidation are designed to close the books on an importer's entries; deemed liquidation simply achieves that result when Customs has not timely done so. Deemed liquidation may be easy to implement and therefore easy to undo because no money changes hands, but that is also true, of regular liquidation when the final duty equals the deposited duty. Mootness under Zenith does not depend on the disbursement of funds but rather on the fact of liquidation, itself—the decision that an importer's liability has been finalized. Accordingly, we cannot accept SKF's invitation to hold that because the liquidation was effected by statute, rather than by an affirmative act of Customs, the trial court was' empowered to grant relief.

The second premise of the government's argument is that section 1504(d), the deemed liquidation statute, applies to the entries covered by the annual review in this case. Section 1504(d) begins with the proviso, "Except as provided in section 1675(a)(3) of this title." Section 1675(a)(3) governs entries reviewed by Commerce in an annual review; it Mandates the prompt liquidation of those entries but does not enforce that mandate with deemed liquidation at the cash...