Diamond Tools Tech. LLC v. United States
| Decision Date | 16 December 2022 |
| Docket Number | Slip Op. 22-145,Court No. 20-00060 |
| Citation | 609 F.Supp.3d 1378 |
| Parties | DIAMOND TOOLS TECHNOLOGY LLC, Plaintiff, v. UNITED STATES, Defendant, and Diamond Sawblades Manufacturers’ Coalition, Defendant-Intervenor. |
| Court | U.S. Court of International Trade |
Jay C. Campbell, White & Case LLP, of Washington, D.C., argued for plaintiff Diamond Tools Technology LLC. With him on the brief were Walter J. Spak, Dean A. Barclay, Ron Kendler and Allison J. G. Kepkay.
Antonia R. Soares, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for defendant United States. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Tamari J. Lagvilava, Attorney, Office of the Chief Counsel, U.S. Customs and Border Protection.
Daniel B. Pickard, Buchanan Ingersoll & Rooney PC, of Washington, D.C., argued for defendant-intervenor Diamond Sawblades Manufacturers’ Coalition.
Before the court is the remand redetermination of U.S. Customs and Border Protection ("Customs") pursuant to the court's order ("Remand Order") in Diamond Tools Tech. LLC v. United States ("Diamond I "), 45 CIT ––––, 545 F. Supp. 3d 1324 (2021). See Final Remand Redetermination ("Remand Results"), ECF No. 70. In Diamond I , the court remanded in part Customs’ Final Determination as to Evasion and Final Administrative Decision on Certain Diamond Sawblades and Parts Thereof from the People's Republic of China ("China"). See Diamond I , 45 CIT at ––––, 545 F Supp. 3d at 1356 ; TRLED Final Determination (7184) (Sept. 17, 2019) ("Final Determination"), CR 199, PR 220; REG AND RULINGS Final Administrative Determination for Diamond Tools (Jan. 29, 2020) PR 232. The court ordered Customs to make a finding consistent with the Remand Order as to whether Diamond Tools Technology LLC ("DTT USA" or "plaintiff") made any material and false statement or act, or material omission, pursuant to the second statutory requirement set forth in section 517(a)(5)(A) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1517(a)(5)(A) (2018).1 See Diamond I , 45 CIT at ––––, 545 F Supp. 3d at 1356. On remand, Customs continued to find that the DTT USA made material and false statements or acts, or material omissions, with respect to the subject diamond sawblades entered prior to December 1, 2017. See Remand Results at 1. For the following reasons, the court remands the Remand Results to Customs for reconsideration in conformity with this opinion.
The court presumes familiarity with the facts of this case, as set out in Diamond I , and now recounts the facts relevant to the disposition of the instant action. On October 29, 2021, the court held that Customs’ determination of evasion did not satisfy the requirement to establish that DTT USA entered covered merchandise by means of a material and false statement or act, or material omission. See Diamond I , 45 CIT at ––––, 545 F Supp. 3d at 1351 (citing 19 U.S.C. § 1517(a)(5)(A) ). In Diamond I , the court held that Customs did not explain how DTT USA's failure to seek clarification from Commerce constitutes a "material and false statement or act, or a material omission." Id. at 1354. Also, the court stated that Customs failed to reference any authority in its Final Determination and Final Administrative Decision that would create an obligation on DTT USA to seek a scope ruling from Commerce or to seek a clarification from Customs as to the applicability of the underlying antidumping duty ("AD") order. Id. ; see Diamond Sawblades and Parts Thereof from the People's Republic of China and the Republic of Korea: Antidumping Duty Orders , 74 Fed. Reg. 57,145 (Dep't of Commerce Nov. 4, 2009) (antidumping duty orders) (the "2009 Order"). The court ordered Customs to make a finding consistent with the court's opinion as to whether DTT USA made any material and false statement or act, or material omission concerning the entry of diamond sawblades pre-dating December 2017. See Diamond I , 45 CIT at ––––, 545 F Supp. 3d at 1356.
On January 27, 2022, Customs filed its Remand Results. Remand Results at 1. In the Remand Results, Customs continued to find that DTT USA made material and false statements or acts, or material omissions, with respect to its entries of diamond sawblades. See id.
On February 28, 2022, DTT USA provided comments on the Remand Results. See Pl.’s Comments in Opp'n to the Final Results of Redetermination Pursuant to Court Remand ("Pl. Br."), ECF No. 77. Plaintiff argues that Customs’ finding is inconsistent with the Remand Order and that Customs’ affirmative "evasion" determination continues to be "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." See id. at 1 (citing 19 U.S.C. § 1517(g)(2)(A)-(B) ). On March 30, 2022, defendant United States (the "Government") and defendant-intervenor Diamond Sawblades Manufacturer's Coalition ("DSMC") responded to the comments of DTT USA. See Def.’s Reply to Pl.’s Comments on the Remand Redetermination ("Def. Br."), ECF No. 83; Def.-Intervenor's Comments in Supp. of Redetermination Pursuant to Court Remand ("Def.-Intervenor Br."), ECF No. 82.
The court has jurisdiction pursuant to 19 U.S.C. § 1517(g) and 28 U.S.C. § 1581(c). The Enforce And Protect Act ("EAPA") requires the court to determine whether a determination issued pursuant to 19 U.S.C. § 1517(c) or an administrative review pursuant to 19 U.S.C. § 1517(f) was conducted "in accordance with those subsections" by examining whether Customs "fully complied with all procedures under subsections (c) and (f)" and "whether any determination, finding, or conclusion is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 19 U.S.C. § 1517(g)(1)-(2). "While the scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency, the agency nevertheless must examine the relevant data and articulate a satisfactory explanation for its action." Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co. , 463 U.S. 29, 30, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). Further, "[i]n reviewing that explanation, a court must consider whether the decision was based on a consideration of the relevant factors and whether there was a clear error of judgment." Id. at 31, 103 S.Ct. 2856.
On remand, the court also reviews the Remand Results "for compliance with the court's remand order." See Beijing Tianhai Indus. Co. v. United States , 39 CIT ––––, ––––, 106 F. Supp. 3d 1342, 1346 (2015) (citations omitted). "[I]n remand proceedings, an administrative agency must modify its original determination in accordance with the remand order." Dorbest Ltd. v. United States , 35 CIT 136, 145, 755 F.Supp.2d 1291 (2011). Substantial evidence requires "more than a mere scintilla" of evidence. Consol. Edison Co. v. NLRB , 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938). Moreover, Union Steel v. United States , 33 CIT 1392, 1399, 645 F. Supp. 2d 1298, 1305 (2009) (emphasis supplied), opinion set aside on reconsideration , 35 CIT 1647, 804 F. Supp. 2d 1356 (2011) judgment entered , 37 CIT 1201, 2013 WL 4038621 (Aug. 8, 2013).
The EAPA directs Customs to investigate allegations of evasion of AD and countervailing ("CVD") duties. See 19 U.S.C. § 1517. Customs must initiate an investigation within 15 days of receiving an allegation that "reasonably suggests that covered merchandise has been entered into the customs territory of the United States through evasion." Id. § 1517(b)(1). The EAPA defines evasion 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 reduced or not being applied with respect to the merchandise.
Id. § 1517(a)(5)(A). The statute defines "covered merchandise" as merchandise that is subject to an AD or CVD order. Id. § 1517(a)(3)(A)-(B).
As the court stated in Diamond I , the purpose of the EAPA "was to empower the U.S. Government and its agencies with the tools to identify proactively and thwart evasion at earlier stages to improve enforcement of U.S. trade laws, including by ensuring full collection of AD and CVD duties and, thereby, preventing a loss in revenue."2 Diamond I, 45 CIT at ––––, 545 F Supp. 3d at 1351 (citing H.R. Rep. No. 114-114, pt. 1 (2015)).
I. Whether Customs complied with the Remand Order in determining that DTT USA made a material and false statement or act, or material omission
A determination of evasion requires three elements: (1) entering covered merchandise into the United States; (2) by means of any document or data or information, written or oral statement, or act that is material and false, or any omission that is material; and (3) that results in any applicable cash deposit or other security being reduced or not applied to the merchandise. See 19 U.S.C. § 1517(a)(5)(A) ; All One God Faith, Inc. v. United States , 589 F.Supp.3d 1238, 1241–42 (C.I.T. 2022). In Diamond I, the court held that the diamond sawblades were properly categorized as "covered merchandise," but remanded to Customs to explain how DTT USA's entry of diamond sawblades prior to December 2017 as type 01 entries constituted a "statement ... that is...
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