Diamond Tools Tech. v. United States

• Decision Date: 29 October 2021
• Docket Number: Slip Op. 21-151,20-00060
• Parties: DIAMOND TOOLS TECHNOLOGY LLC Plaintiff, v. UNITED STATES, Defendant, and DIAMOND SAWBLADES MANUFACTURERS' COALITION, Defendant-Intervenor.
• Court: U.S. Court of International Trade

DIAMOND TOOLS TECHNOLOGY LLC Plaintiff,
v.
UNITED STATES, Defendant,

and DIAMOND SAWBLADES MANUFACTURERS' COALITION, Defendant-Intervenor.

No. 20-00060

Slip Op. 21-151

Court of Appeals of International Trade

October 29, 2021

[The court sustains in part and remands in part Customs' Final Determination and Final Administrative Decision.]

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.

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

Maureen E. Thorson, Wiley Rein LLP, of Washington D.C., argued for Defendant-Intervenor Diamond Sawblades Manufacturers' Coalition. With her on the brief were Daniel B. Pickard, Stephanie M. Bell, and Derick G. Holt.

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Before: Timothy M. Reif, Judge.

OPINION AND ORDER

Timothy M. Reif, Judge.

The action before the court is a motion for judgment on the agency record pursuant to Rule 56.2 of the U.S. Court of International Trade ("USCIT" or "the Court") filed by plaintiff Diamond Tools Technology LLC ("DTT USA" or "plaintiff"). Pl.'s Mot. for J. on the Agency R. ("Pl. Br."), ECF No. 48. DTT USA challenges: (1) the affirmative final determination of evasion of the antidumping duty order on certain diamond sawblades and parts thereof from the People's Republic of China ("China") issued by U.S. Customs and Border Protection ("Customs"), TRLED Final Determination (Sept. 17, 2019) ("Final Determination"), CR 199, PR 220; and, (2) Customs' Office of Regulations and Rulings ("OR&R) final administrative determination affirming Customs' Final Determination. REG AND RULINGS Final Administrative Determination for Diamond Tools (Jan. 29, 2020) ("OR&R Final Administrative Determination"), PR 232.^[1] Customs issued its Final Determination and Final Administrative Determination pursuant to its authority under the Enforce and Protect Act ("EAPA"), 19 U.S.C. § 1517 (2018).^[2]

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DTT USA challenges Customs' Final Determination on four grounds. DTT USA argues that: (1) Customs' suspension of liquidation on entries that pre-dated December 1, 2017, is a retroactive application of Commerce's circumvention determination and not in accordance with law; (2) Customs' evasion determination related to DTT USA's entries before December 1, 2017, was arbitrary, capricious and an abuse of discretion, and otherwise not in accordance with law; (3) Customs' conduct during the EAPA proceeding deprived DTT USA of its due process rights; and, (4) Customs' imposition of interim measures is not in accordance with law because Customs failed to make a "reasonable suspicion" determination by the statutory deadline. See Pl. Br. at 19-36.

Defendant United States ("the Government" or "defendant") and defendant-intervenor Diamond Sawblades Manufacturers' Coalition ("DSMC") maintain that Customs conducted its investigation lawfully, and that the affirmative evasion determination is supported by substantial evidence and is not an abuse of discretion, and is not arbitrary, capricious, or otherwise not in accordance with law. Def.'s Resp. in Opp'n to Pl.'s Mot. for J. on the Agency R. ("Def. Br.), ECF No. 51; Def.-Intervenor's Resp. in Opp'n to Pl.'s Mot. for J. on the Agency R. ("Def.-Intervenor Br."), ECF No. 52. For the following reasons, the court sustains in part and remands in part Customs' Final Determination and Final Administrative Decision.

BACKGROUND

DTT USA is an importer of diamond sawblades, a circular cutting tool composed of two main components: a "core" and "segments." Pl. Br. at 5. On November 4, 2009,

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Commerce issued an antidumping duty order on imports of diamond sawblades and parts thereof from China. Diamond Sawblades and Parts Thereof from the People's Republic of China and the Republic of Korea, 74 Fed. Reg. 57, 145 (Dep't Commerce Nov. 4, 2009) (antidumping duty order) (the "2009 Order"). On February 24, 2017, DSMC, a group of U.S. producers of diamond sawblades, filed an EAPA allegation that DTT USA was evading the 2009 Order. DSMC Allegation and Attachments A-C (Feb. 24, 2017), CR 1-4, PR 1-4. DSMC alleged that DTT USA, in coordination with DTT Thailand, ^[3] was transshipping Chinese diamond sawblades through Thailand and presenting these transshipped sawblades to Customs as non-subject goods. Id.

On March 1, 2017, Customs acknowledged receipt of DSMC's allegation. See TRLED Notice of Initiation of Investigation (7184) (June 27, 2017) ("Initiation Notice") at 2, CR 24, PR 26. On March 22, 2017, Customs initiated an investigation under the EAPA in response to DSMC's allegation. Id. Customs' investigation covered entries from March 1, 2016, one year before receipt of the EAPA allegation, through the pendency of the EAPA investigation.^[4] Id. On March 24, 2017, Customs issued to DTT USA a request for information ("RFI"), seeking data related to the entry of DTT USA's

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sawblades. Id. at 4. Customs issued follow-up questions on April 25 and May 4, 2017. Id. at 4-5. Customs further investigated DTT Thailand's operations by visiting the facilities in Thailand on June 21, 2017. Id. at 5. After Customs' visit to DTT Thailand's facilities, Customs concluded that the company "does not have sufficient capacity to produce to the amount needed to export to the [United States]." CBP Site Visit Report and Pictures (June 22, 2017), CR 22, PR 51. Based on the findings from its visit, Customs found that there was "reasonable suspicion" of evasion. See TRLED Notice of Interim Measures (7184) (June 27, 2017) ("Notice of Interim Measures") at 2-3, CR 25, PR 27; TRLED Interim Measures E-mail (June 23, 2017), CR 23.

On June 23, 2017, Customs imposed interim measures. TRLED Interim Measures E-mail (June 23, 2017), CR 23; see Public Oral Argument Tr. at 65:23-65:25, ECF No. 63. On June 27, 2017, seven days after the statutory deadline, Customs sent to DTT USA a (1) notice of initiation under 19 C.F.R. § 165.15(d)(1), informing DTT USA that Customs had commenced an EAPA investigation of DTT USA on March 22, 2017, and (2) a notice of the imposition of interim measures under 19 C.F.R. § 165.24(c). Initiation Notice; Notice of Interim Measures.

As interim measures, Customs determined:

Entries under this investigation that entered the United States as not subject to antidumping duties, will be rate-adjusted to reflect that they are subject to the antidumping duty order on diamond sawblades from China and cash deposits are owed. Additionally, "live entry" is required for all future imports for DTT, meaning that all entry documents and duties are required to be provided before cargo is released by [Customs] into the U.S. commerce. [Customs]

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will reject any entry summaries and require a refile for those that are within the entry summary reject period; suspend the liquidation for any entry that has entered on or after March 22, 2017, the date of initiation of this investigation; as well as extend the period for liquidation for all unliquidated entries that entered before that date. For any entries that have liquidated and for which [Customs'] reliquidation authority has not yet lapsed, [Customs] will reliquidate those entries accordingly. [Customs] will also be evaluating DTT's continuous bond to determine its sufficiency, among other measures, as needed.

See Notice of Interim Measures at 3 (internal citations omitted).

After Customs imposed the interim measures, Customs issued an additional RFI to DTT USA and DTT Thailand. TRLED EAPA 7184 Scope Referral and Attachments (Nov. 21, 2017) ("Covered Merchandise Referral"), CR 188-190, PR 184-187. In response to the RFI, DTT Thailand explained that the company manufactured diamond sawblades onsite at its facility in Thailand; however, some of the cores and segments used were sourced from China. Id. Customs determined that the 2009 Order - issued by Commerce - did not address expressly whether "covered merchandise" included diamond sawblades that resulted from the joining of subject components in Thailand. Id. Accordingly, Customs concluded that it was "unable to determine whether the merchandise at issue [diamond sawblade components sourced from China and joined in Thailand] is covered merchandise." Id. On November 21, 2017, pursuant to 19 U.S.C. § 1517(b)(4)(A), Customs referred the matter to Commerce "as to whether the diamond sawblades laser welded in Thailand by DTT Thailand from: (1) cores from Thailand and segments from China, (2) segments and cores that are both produced in

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China, and/or (3) cores from China and segments from Thailand are within the scope of the AD order on diamond sawblades from China." Id.; see Commerce Response to EAPA Referral (July 10, 2019) ("Commerce Response to EAPA Referral") at 4, PR 209.

On August 9, 2017, in addition to its EAPA allegation, DSMC requested separately that Commerce issue a ruling that imports made in Thailand from cores and segments from China circumvent the 2009 Order. Pl. Br. at 10. On December 1, 2017, Commerce initiated a circumvention inquiry pursuant to 19 U.S.C. § 1677j(b) ("Section 1677j(b)"). Commerce DSBs Anti-Circ Final Issues and Decision Memo (7184) (July 10, 2019) at 2, PR 208. Section 1677(b) allows Commerce to include in the scope of an order merchandise that is subject to an antidumping ("AD") or countervailing duty ("CVD") order that is completed or assembled in a third country. On March 5, 2018, Commerce published a notice of the Covered Merchandise Referral in the Federal...