Tai-Ao Aluminium (Taishan) Co. v. United States

• Decision Date: 17 December 2020
• Docket Number: 2020-1501
• Citation: 983 F.3d 487
• Parties: TAI-AO ALUMINIUM (TAISHAN) CO., LTD., TAAL America Ltd., Regal Ideas, Inc., Plaintiffs v. UNITED STATES, Defendant Aluminum Extrusions Fair Trade Committee, Defendant-Appellant
• Court: U.S. Court of Appeals — Federal Circuit

983 F.3d 487

TAI-AO ALUMINIUM (TAISHAN) CO., LTD., TAAL America Ltd., Regal Ideas, Inc., Plaintiffs

v. UNITED STATES, DefendantAluminum Extrusions Fair Trade Committee, Defendant-Appellant

2020-1501

United States Court of Appeals, Federal Circuit.

Decided: December 17, 2020

Alan H. Price, Wiley Rein, LLP, Washington, DC, for defendant-appellant. Also represented by Robert E. DeFrancesco, III, Laura El-Sabaawi, Derick Holt, Elizabeth S. Lee.

Before Prost, Chief Judge, Dyk and Wallach, Circuit Judges.

Dyk, Circuit Judge.

On May 26, 2011, the United States Department of Commerce ("Commerce") issued antidumping and countervailing duty orders on aluminum extrusions from the People's Republic of China ("PRC") ("Orders"). On March 21, 2016, Commerce initiated an anti-circumvention inquiry as to heat-treated 5050-grade extruded aluminum products exported by China Zhongwang Holdings Ltd. and its affiliates. On November 14, 2016, Commerce announced in its Preliminary Determination that it was applying the anti-circumvention inquiry to all heat-treated 5050-grade extruded aluminum products from the PRC, including those of Tai-Ao Aluminum (Taishan) Co., Ltd. and TAAL America Ltd. (collectively, "Tai-Ao") and Regal Ideas, Inc. ("Regal"), and further determined that all such products were circumventing the Orders. Commerce accordingly instructed the United States Customs and Border Protection ("Customs") to suspend liquidation of all heat-treated 5050-grade extruded aluminum products from the PRC entered, or withdrawn from warehouse, on or after March 21, 2016, the date that the original inquiry was commenced.

The Court of International Trade ("Trade Court") found that Commerce did not provide adequate notice to Tai-Ao and Regal that their products were subject to the inquiry initiated on March 21, 2016, and instead "liquidation should have been suspended from the date of the Preliminary Determination," (November 14, 2016), and remanded to Commerce to reformulate its liquidation instructions accordingly. Tai-Ao Aluminium (Taishan) Co. v. United States ("Tai-Ao I "), 391 F. Supp. 3d 1301, 1315 (Ct. Int'l Trade 2019). On remand from the Trade Court, Commerce reformulated its liquidation instructions, instructing Customs to exclude from the scope of the Orders, and therefore exclude from duty assessment, entries for Tai-Ao made between March 21, 2016, and November 13, 2016.¹ The Trade Court sustained Commerce's reformulated liquidation instructions. Tai-Ao Aluminium (Taishan) Co. v. United States ("Tai-Ao II "), 415 F. Supp. 3d 1391, 1395 (Ct. Int'l Trade 2019). We conclude that the Trade Court did not err in its remand decision and affirm.

BACKGROUND

I

The Tariff Act of 1930, as amended, "permits Commerce to impose two types of duties on imports that injure domestic industries." See Guangdong Wireking Housewares & Hardware Co. v. United States , 745 F.3d 1194, 1196 (Fed. Cir. 2014). First, Commerce may levy antidumping duties on goods "sold in the United States at less than ... fair value." 19 U.S.C. § 1673. Second, Commerce may impose countervailing duties on goods that receive "a countervailable subsidy" from a foreign government. Id. § 1671(a).

In order to effectively combat circumvention of antidumping duty or countervailing duty orders, "a domestic interested party may allege that changes to an imported product ... constitutes circumvention under [ 19 U.S.C. § 1677j ]." 19 C.F.R. § 351.225(a) (2020). When such issues arise, Commerce may initiate an anti-circumvention inquiry and issue "scope rulings" that "clarify the scope of an order or suspended investigation with respect to particular products." Id. ; see also id. § 351.225(g) – (j). As we noted in Deacero S.A. de C.V. v. United States , Commerce may then "determine that certain types of articles are within the scope of a duty order, even when the articles do not fall within the order's literal scope." 817 F.3d 1332, 1337 (Fed. Cir. 2016) ; see 19 U.S.C. § 1677j. Anti-circumvention inquiries are distinct from "[o]ther scope determinations," which clarify whether products fall within the literal scope of an order. 19 C.F.R. § 351.225(a), (k) ; see also Target Corp. v. United States , 609 F.3d 1352, 1362 (Fed. Cir. 2010) (describing differences between "[c]onventional scope inquiries" and anti-circumvention inquiries).

If Commerce makes a preliminary determination that the products are circumventing duty orders, then Commerce will order Customs to "suspend liquidation and to require a cash deposit of estimated duties, at the applicable rate, for each unliquidated entry of the product entered, or withdrawn from warehouse, for consumption on or after the date of initiation of the scope inquiry." 19 C.F.R. § 351.225(l )(2). "Liquidation means the final computation or ascertainment of duties on entries for consumption or drawback entries." Id. § 159.1. Generally, "Customs has one year from the time of filing to liquidate an entry under 19 U.S.C. § 1504(a)." Ford Motor Co. v. United States , 811 F.3d 1371, 1374 (Fed. Cir. 2016). Suspension of liquidation enables Commerce to impose duties on entries that might otherwise escape duty liability pending Commerce's final determination that the products are circumventing duty orders. As we discuss in detail below, Commerce must provide notice of the initiation of the scope inquiry (here, an anti-circumvention inquiry), which must include "[a] description of the product that is the subject of the scope inquiry" and "[a]n explanation of the reasons for the Secretary's decision to initiate a scope inquiry," 19 C.F.R. § 351.225(f)(1)(i)–(ii). If such notice is not given, Commerce cannot suspend liquidation of entries entered "on ... the date of initiation of the scope inquiry." Id. § 351.225(l )(2).

II

On May 26, 2011, Commerce issued antidumping and countervailing duty orders on aluminum extrusions from the PRC. See Aluminum Extrusions from the People's Republic of China: Antidumping Duty Order , 76 Fed. Reg. 30,650 (Dep't of Commerce May 26, 2011) ; Aluminum Extrusions from the People's Republic of China: Countervailing Duty Order , 76 Fed. Reg. 30,653 (Dep't of Commerce May 26, 2011) (collectively, "the Orders"). The Orders expressly included products made of alloy with an Aluminum Association series designation commencing with the number 6 (i.e., designations of 6xxx) where magnesium accounted for at least 0.1 percent but not more than 2.0 percent of total materials by weight. The Orders expressly excluded products made of alloy with an Aluminum Association series designation commencing with the number 5 (i.e., designations of 5xxx) and containing in excess of 1.0 percent magnesium by weight.

On October 22, 2015, the Aluminum Extrusions Fair Trade Committee ("AEFTC"), a trade association of domestic producers of aluminum extrusions, filed a joint Scope Clarification and Anti-Circumvention Inquiry Request for certain merchandise from China Zhongwang Holdings, Ltd. and its affiliates (collectively, "Zhongwang"). On request from Commerce, AEFTC resubmitted its request on December 30, 2015, and contended that Zhongwang's 5050-grade aluminum alloy extrusion products circumvented the scope of the Orders. AEFTC contended that 5050-grade aluminum alloy, which has between 1.1 and 1.8 percent magnesium by weight and therefore "technically meets the scope exclusion for 5xxx series," "behaves like in-scope 6xxx series subject merchandise" and thereby circumvented the Orders. Aluminum Extrusions from the People's Republic of China: Initiation of Anti-Circumvention Inquiry ("Initiation Notice"), 81 Fed. Reg. 15,039, 15,042 (Dep't of Commerce Mar. 21, 2016) ; J.A. 610. AEFTC's application focused on "Zhongwang and its affiliates’ ‘5050’ alloy extrusion imports" and included evidence regarding Zhongwang's advertisements and sales of aluminum products. J.A. 95; Initiation Notice, 81 Fed. Reg. at 15,044.

On March 21, 2016, in response to AEFTC's request, Commerce initiated an anti-circumvention inquiry and published notice of the initiation of the inquiry in the Federal Register. As AEFTC acknowledged, Commerce "initiated this anti-circumvention inquiry only on Zhongwang," J.A. 1032, even though Commerce stated that AEFTC provided evidence that was not limited to Zhongwang, such as "information indicating that domestic producers [were] competing with Chinese-sourced 5050-grade aluminum alloy products" and "evidence showing that such 5050-grade aluminum alloy extruded products [were] marketed by Chinese producers to purchasers in the same manner that 6xxx-series [were] marketed." Initiation Notice, 81 Fed. Reg. at 15,043.

Commerce's "Summary" of the Initiation Notice stated:

In response to a request from [AEFTC], [Commerce] is initiating an anti-circumvention inquiry pursuant to [ 19 U.S.C. § 1677j(c) and (d) ] ... to determine whether extruded aluminum products that meet the chemical specifications for 5050-grade aluminum alloy, which are heat-treated, and exported by [Zhongwang] are circumventing the antidumping duty (AD) and countervailing duty (CVD) orders on aluminum extrusions from the People's Republic of China (PRC).

Initiation Notice, 81 Fed. Reg. at 15,039 (footnote citing the Orders omitted).

Under the heading "Merchandise Subject to the Anti-Circumvention Inquiry," Commerce stated, "This anti-circumvention inquiry covers extruded aluminum products that meet the chemical specifications for 5050-grade aluminum alloy, which are heat-treated, and exported by Zhongwang." Initiation Notice, 81 Fed. Reg. at 15,042 (footnote listing the "names of known Zhongwang's Chinese and U.S. affiliates" omitted). But as pertinent here, Commerce also stated:

The Department intends to consider whether the inquiry should apply to all imports of extruded aluminum products that meet the chemical specifications for 5050-grade aluminum alloy and are heat-treated, regardless of producer, exporter, or importer, from the PRC.

Id.

Following the publication of the...