Aspects Furniture Int'l v. United States

• Decision Date: 28 November 2022
• Docket Number: 20-03824,Slip Op. 22-132
• Parties: ASPECTS FURNITURE INTERNATIONAL, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

ASPECTS FURNITURE INTERNATIONAL, INC., Plaintiff, v. UNITED STATES, Defendant.

No. 20-03824

Slip Op. 22-132

Court of Appeals of International Trade

November 28, 2022

[Remanding in part and sustaining in part U.S. Customs and Border Protection's evasion determination under the Enforce and Protect Act.]

Robert W. Snyder and Laura A. Moya, Law Offices of Robert W. Snyder of Irvine, CA, for Plaintiff Aspects Furniture International Inc.

Douglas G. Edelschick, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant United States. With him on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Tamari Lagvilava, Attorney, Office of the Chief Counsel, U.S Customs and Border Protection.

Before: Jennifer Choe-Groves, Judge Court No. 20-03824

OPINION

JENNIFER CHOE-GROVES, JUDGE

Plaintiff Aspects Furniture International, Inc. ("Plaintiff" or "Aspects") filed this action challenging the final affirmative determination of evasion of the antidumping duty order on wooden bedroom furniture from the People's Republic of China ("China") by U.S. Customs and Border Protection ("Customs"), issued pursuant to Customs' authority under the Enforce and Protect Act ("EAPA"), 19 U.S.C. § 1517. See Compl. at 1, ECF No. 2; see also Trade Facilitation & Trade Enforcement Act of 2015, Pub. L. No. 114-125, § 421, 130 Stat. 122, 161 (2016). Before the Court is Aspects' Motion for Judgment on the Agency Record, ECF No. 20. See also Pl.'s Mem. Supp. Mot. J. Agency R. ("Pl.'s Br."), ECF No. 20. Defendant United States ("Defendant" or "the Government") opposes the motion. Def.'s Resp. Opp'n Pl.'s Mot. J. Agency R. ("Def.'s Resp."), ECF No. 23.

ISSUES PRESENTED

The Court reviews the following issues:

1. Whether Customs may apply the EAPA statute and regulations retroactively to Aspects' entries made prior to the EAPA statute entering into force;

2. Whether Customs' consideration of hearsay evidence was in accordance with the law and whether Customs' decision to disregard Aspects' affidavits was arbitrary or capricious;

3. Whether Customs' evasion determination was supported by substantial evidence; 4. Whether the EAPA statute, its regulations, and Customs' administration of the EAPA statute denied Aspects' procedural due process protections; and

5. Whether Customs' combination of the EAPA investigation with a regulatory audit was in accordance with the law.

BACKGROUND

On January 4, 2005, the U.S. Department of Commerce ("Commerce") issued antidumping duty order A-570-890 covering wooden bedroom furniture from China. See Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Wooden Bedroom Furniture from the People's Republic of China ("Order"), 70 Fed.Reg. 329 (Dep't of Commerce Jan. 4, 2005). The American Furniture Manufacturers Committee for Legal Trade ("AFMC") filed an allegation of evasion with Customs' Trade Remedy & Law Enforcement Directorate in April 2017 requesting that an investigation be initiated against Aspects. See Letter from J. Michael Taylor on behalf of AFMC (Apr. 6, 2017) ("AFMC's Allegation"), PR 13.^[1] AFMC's Allegation claimed that Aspects was importing wooden bedroom furniture covered by the Order produced by two Chinese companies, Nantong Fuhuang Furniture Co., Ltd. ("Nantong Fuhuang") and Nantong Wangzhuang Furniture Co., Ltd., while claiming that the subject items were produced by two other Chinese companies, Shanghai Jian Pu Import & Export Co., Ltd. and Wuxi Yushea Furniture Co., Ltd. ("Wuxi Yushea"), which were subject to lower or no antidumping duty rates. See id. at 3, 5-15; Customs' Notice of Initiation of an Investigation and Interim Measures (Aug. 14, 2017) ("Notice of Investigation and Interim Measures"), PR 138, CR 113.

An investigation was initiated on May 9, 2017. See Customs' Mem. Initiation Investigation EAPA Case Number 7189 (May 9, 2017) ("Initiation Memo" or "Initiation Mem."), PR 100; Notice of Investigation and Interim Measures at 2. That same month, the investigation team conducted a teleconference with counsel for AFMC to "provide [AFMC] with an opportunity to brief the Enforce and Protect Act investigative team on its allegation and to answer any questions on the information presented therein." See Customs' Mem. AFMC's Meeting Discuss Allegations Evasion (May 31, 2017), PR 104. Aspects claims that it was not invited to participate in the call and was not provided with a transcript of the conversation. Pl.'s Br. at 5.

On August 14, 2017, Plaintiff was provided with notice of the EAPA investigation and was informed that Customs had imposed interim measures, including: (1) rate-adjustments were applied to subject merchandise; (2) "live entry" was required for future imports; (3) liquidation for entries made after May 9, 2017 was suspended and liquidation for all entries made before that date was extended; and (4) entries previously liquidated but still subject to Customs' reliquidation authority were reliquidated. See Notice of Investigation and Interim Measures at 4, 5. Customs also advised Aspects that it was already reviewing Aspects' entries for calendar year 2016 for potential evasion of duties and would extend the scope of its EAPA investigation to align with that review. Id. at 2.

Between October 2017 and March 2018, Customs sent requests for information to Aspects and to Chinese companies associated with Aspects' wooden bedroom furniture entries. Customs' Importer Questionnaire (Oct. 24, 2017), PR 146, CR 114; Customs' Manufacturer Questionnaire (Oct. 24, 2017), PR 147; Customs' Additional Manufacturer Request for Information (Jan. 25, 2018), PR 296-99, CR 237-40; Customs' Manufacturer Request for Information Nantong Fuhuang (Jan. 26, 2018), PR 300; Customs' Importer Request for Information (Mar. 9, 2018), PR 321, CR 253; Customs' Request for Information Aspects Nantong (Mar. 9, 2018), PR 322, CR 254; see also On-Site Verification Report Enforce and Protect Act (EAPA) Case 7189 (Dec. 13, 2019) ("Verification Report") at 2, PR 373, CR 295. Wuxi Yushea and Nantong Fuhuang provided replies. Wuxi Yushea's Resp. Request for Information (Feb. 6, 2018), PR 311- 318, CR 242-52; Nantong Fuhuang's Resp. Request Information (Feb. 11, 2018), PR 319. In April 2018, Customs' verification team conducted site visits in China to Wuxi Yushea, Nantong Fuhuang, and Aspects' Nantong office. See Verification Report at 3. The site visits included: (1) interviews with company officials about company operations and record keeping; (2) tours of facilities; and (3) reviews of original records to verify the request for information responses. See id. at 3-4. The verification team identified instances in which Aspects "co-mingled merchandise," created "multiple versions of invoices," created "descriptions of merchandise on documentation" that differed from those provided by the manufacturers, and "manipulated per unit prices" on entry documents. Id. at 4-15. The verification team also observed two instances in which an Aspects employee deleted or destroyed records relating to container loading plans. Id. at 16-17. The verification team concluded that both Wuxi Yushea and Nantong Fuhuang "were able to produce the [wooden bedroom furniture] at sufficient quantities as to account for the imported merchandise totals" associated with Aspects' entries. See id. at 4.

On December 22, 2017, Customs notified the parties to the investigation that deadlines in the investigation were stayed to allow Customs to request a referral scope determination from Commerce as to whether certain merchandise was covered by the Order. See Customs' Scope Referral Request Mem. (Dec. 22, 2017), PR 294, CR 235. Customs submitted a revised referral in July 2019 amending errors in the original submission. Commerce's Scope Ruling Antidumping Duty Order (Dec. 31, 2019) ("Final Scope Ruling") at 2, PR 387, CR 303. Commerce issued its Final Scope Ruling on December 31, 2019, concluding that four of the six considered items were not covered by the Order and two of the items were covered by the Order. Id. at 1.

Customs' Trade Remedy & Law Enforcement Directorate determined that substantial evidence demonstrated that Aspects entered covered merchandise into the United States through evasion of the Order. See Notice of Final Determination as to Evasion (May 18, 2020) ("May 18 Determination") at 9, PR 419, CR 310. Aspects requested de novo administrative review of the May 18 Determination. See Pl.'s Request Administrative Review (June 30, 2020) ("Pl.'s Request Admin. Rev."), PR 420, CR 311. On September 24, 2020, Customs' Office of Trademark, Regulations, and Rulings issued its Final Determination, affirming the May 18 Determination. See Customs' Final Determination Aspects Furniture International, Inc. Enforce and Protect Act (EAPA) Case No. 7189 (Sept. 24, 2020) ("Final Administrative Determination" or "Final Admin. Determination") at 11, PR 429. Aspects filed this action in a timely manner. See Summons, ECF No. 1; Compl.

LEGAL FRAMEWORK FOR EAPA INVESTIGATIONS

19 U.S.C. § 1517 requires Customs to investigate allegations that an importer has evaded antidumping and countervailing duty orders. 19 U.S.C. § 1517. Evasion is defined as:

[E]ntering covered merchandise into the customs territory of the United States by means of any document or electronically transmitted data or information, written or oral statement or act that is material and false, or any omission that is material, and that results in any cash deposit or other security or any amount of applicable antidumping or countervailing duties being

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