Ams Assocs., Inc. v. United States

• Citation: 737 F.3d 1338
• Decision Date: 13 December 2013
• Docket Number: No. 2013–1208.,2013–1208.
• Parties: AMS ASSOCIATES, INC. (doing business as Shapiro Packaging), Plaintiff–Appellee, v. UNITED STATES, Defendant, and Laminated Woven Sacks Committee, Coating Excellence International, LLC, and Polytex Fibers Corporation, Defendants–Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

737 F.3d 1338

AMS ASSOCIATES, INC. (doing business as Shapiro Packaging), Plaintiff–Appellee,

v. UNITED STATES, Defendant,andLaminated Woven Sacks Committee, Coating Excellence International, LLC, and Polytex Fibers Corporation, Defendants–Appellants.

No. 2013–1208.

United States Court of Appeals, Federal Circuit.

Decided Dec. 13, 2013.

Ronald M. Wisla, Kutak Rock LLP, of Washington, DC, argued for plaintiff-appellee. With him on the brief was Lizbeth R. Levinson.

Jeffery B. Denning, King & Spalding, LLP, Washington, DC, argued for defendants-appellants. With him on the brief was Joseph E. Dorn.

Before LOURIE, DYK, and O'MALLEY, Circuit Judges.

LOURIE, Circuit Judge.

Laminated Woven Sacks Committee et al. (“LWSC”) appeal from the decision of the United States Court of International Trade (the “trade court”) reversing the final results of a second administrative review of an antidumping duty order for Chinese laminated woven sacks by the United States Department of Commerce (“Commerce”) that retroactively suspended liquidation instructions implementing a country of origin determination. See AMS Assocs., Inc. v. United States, 881 F.Supp.2d 1374 (Ct.Int'l Trade 2012). Because we agree with the trade court that Commerce did not abide by its own regulations, we affirm.

Background

Laminated woven sacks are sacks made of plastic strips that are woven together and then laminated so that graphics or letters can be printed on the resulting surface. In August 2008, Commerce found that laminated woven sacks exported from the People's Republic of China were being sold in the United States at less than fair market value and issued an antidumping duty order pursuant to 19 U.S.C. § 1673. Laminated Woven Sacks from the People's Republic of China, 73 Fed.Reg. 45,941 (Dep't of Commerce Aug. 7, 2008). The scope of the order was defined in part as “bags or sacks consisting of one or more plies of fabric consisting of woven polypropylene strip and/or polyethylene” that are “laminated to an exterior ply of plastic film or to an exterior ply of paper that is suitable for high quality print graphics.” Id. at 45,942.

In September 2009, Commerce initiated a series of administrative reviews of that order for the periods January 31, 2008 through July 31, 2009 (first administrative review) and August 1, 2009 through July 31, 2010 (second administrative review) pursuant to 19 U.S.C. § 1675. During those periods, AMS Associates, Inc., doing business as Shapiro Packaging (“Shapiro”), imported laminated woven sacks into the United States that were manufactured and exported by its Chinese affiliate Zibo Aifudi Plastic Packaging Co., Ltd. (“Aifudi”). There were two types of sacks: (1) those made from fabric sourced in China, and thus undisputedly subject to the antidumping duty order; and (2) those made from fabric that had been imported into China from other countries.

During the first administrative review, petitioners LWSC were concerned that not all of Aifudi's production of laminated woven sacks was being included in the information provided to Commerce and requested that Commerce investigate how respondent Aifudi determined whether or not its merchandise was subject to the antidumping duty order. AMS Associates, Inc. v. United States, No. 11–0101, 2012 WL 3065277, at *1 (Ct.Int'l Trade July 27, 2012). Commerce thus investigated the origin of the Aifudi sacks made with non-Chinese fabric within the ongoing first administrative review, but despite requests by Aifudi, Commerce chose not to initiate a formal scope inquiry pursuant to 19 C.F.R. § 351.225. Id.

Aifudi argued to Commerce that a ruling it obtained from the United States Customs and Border Protection Service (“Customs”) provided that the sacks produced from non-Chinese fabric were deemed to be from the country of origin of the fabric itself ( viz., India, Pakistan, and Vietnam, inter alia ) and thus not subject to the antidumping duty order. Id.;AMS Assocs., 881 F.Supp.2d at 1376. Following that ruling, Aifudi declared a non-Chinese origin for sacks made with non-Chinese fabric, and those entries were consequently not subject to antidumping deposits. Id.

However, in a May 25, 2010 memorandum, Commerce issued a preliminary country of origin determination concluding that China was indeed the country of origin of the Aifudi sacks made with non-Chinese fabric under a substantial transformation analysis and that they were therefore within the scope of the antidumpingduty order. Preliminary Decision Regarding the Country of Origin of Laminated Woven Sacks Exported by [Aifudi] (Dep't of Commerce May 25, 2010) (“ Preliminary Decision ”); J.A. 10283–91. Based on its finding in that Preliminary Decision, Commerce then issued a self-styled “clarification” of its liquidation instructions to Customs. Message No. 0204301 (Dep't of Commerce July 23, 2010) (“ Clarification ”); J.A. 10293–95. In the Clarification, Commerce instructed Customs to “suspend liquidation of all [laminated woven sacks] from [China], regardless of the origin of the woven fabric, that is entered, or withdrawn from warehouse, for consumption, on or after January 31, 2008.” Clarification at 2.

Commerce issued the final results of the first administrative review in March 2011, which prompted a dispute over the rate that Commerce applied to the amount of the duty levied on Aifudi for that period. Acting for Aifudi, Shapiro sued in the trade court, which sustained Commerce's application of a country-wide rate to Aifudi, and we affirmed on appeal. AMS Assocs., 2012 WL 3065277, at *4,aff'd,719 F.3d 1376, 1381 (Fed.Cir.2013). Shapiro argued at the trade court that the effect of the Clarification had been to retroactively suspend liquidation of and collect cash deposits on all entries of Aifudi sacks made since January 31, 2008. However, by the time that the Clarification instructions were transmitted to Customs, all affected entries within the period of the first administrative review had already been liquidated in due course. AMS Assocs., 2012 WL 3065277, at *1.

Aifudi subsequently withdrew from participation in the second administrative review and Commerce thus applied an adverse facts available (“AFA”) rate to Aifudi in the preliminary results. Laminated Woven Sacks from the People's Republic of China: Preliminary Results of the Second Administrative Review, 75 Fed.Reg. 81,218 (Dep't of Commerce Dec. 17, 2010); J.A. 10200–03. Shapiro contested both the application of the retroactive suspension of liquidation and the assessment of antidumping duties on sacks exported from China that had been manufactured from non-Chinese fabric and entered into the United States during the period of the second administrative review. J.A. 20001–16. Shapiro argued that Commerce's determination to apply such duties to merchandise entered during that period related directly to its country of origin determination and issuance of suspension of liquidation instructions during the first administrative review. Id. at 20009–10.

In the final results of the second administrative review, Commerce affirmed its decision to apply AFA to Aifudi. Laminated Woven Sacks from the People's Republic of China: Final Results of the Second Antidumping Duty Administrative Review, 76 Fed.Reg. 21,333 (Dep't of Commerce Apr. 15, 2011); J.A. 10250–52. With respect to whether entries of sacks from China produced from non-Chinese fabric were covered by the antidumping duty order, Commerce stated: “[w]e continue to follow the decision made by the Department in the first administrative review and find that the correct procedures were followed when determining the country of origin....” Laminated Woven Sacks from the People's Republic of China: Issues and Decision Memorandum for the Final Results of the Second Administrative Review at 2 (Dep't of Commerce Apr. 8, 2011); J.A. 10244–49.

Shapiro then filed the instant action challenging the final results of the second administrative review in the trade court. Shapiro did not take issue with Commerce's application of the AFA rate, Commerce'sauthority to conduct a country of origin scope inquiry, or the factual findings of Commerce's country of origin decision. Shapiro only challenged Commerce's authority to issue retroactive suspension of liquidation instructions that brought merchandise that had previously entered not subject to the antidumping duty order within the scope of that order in violation of the procedures specifically set forth in Commerce's scope regulations.

The trade court agreed with Shapiro and held that Commerce violated its own regulations by instructing Customs to retroactively suspend liquidation of entries of the sacks made with non-Chinese fabric. AMS Assocs., 881 F.Supp.2d at 1382. The court found that it was clear from the facts in the record that Commerce and LWSC wanted to prevent Shapiro and Aifudi's alleged circumvention of the antidumping duty order by declaring that sacks made from non-Chinese fabric were of Chinese origin, but that they had not followed the correct procedures to do so. Id. The court therefore held that Commerce had exceeded its authority under 19 C.F.R. § 351.225( l ) and remanded the case to Commerce for further proceedings and with instructions to lift the liquidation suspension. Id.

LWSC timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

Discussion

We review decisions of the trade court without deference, applying the same substantial evidence standard of review that the trade court itself applies in reviewing Commerce's determinations. Mid Continent Nail Corp. v. United States, 725 F.3d 1295, 1300 (Fed.Cir.2013); Global Commodity Grp. LLC v. United States, 709 F.3d 1134, 1138 (Fed.Cir.2013); Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1559 n. 10 (Fed.Cir.1984).

LWSC argues that Commerce's Clarification did not enlarge the scope of the antidumping duty order but merely enforced that order against Shapiro, which LWSC asserts was...