Wirth Ltd. v. U.S.

• Decision Date: 03 April 1998
• Docket Number: Slip Op. 98-40.,Court No. 97-05-00714.
• Citation: 5 F.Supp.2d 968
• Parties: WIRTH LIMITED, Plaintiff, v. UNITED STATES, Defendant, and Bethlehem Steel Corporation; U.S. Steel Group, a Unit of USX Corporation, Defendant-Intervenors.
• Court: U.S. Court of International Trade

5 F.Supp.2d 968

WIRTH LIMITED, Plaintiff, v. UNITED STATES, Defendant, and Bethlehem Steel Corporation; U.S. Steel Group, a Unit of USX Corporation, Defendant-Intervenors.

Slip Op. 98-40.

Court No. 97-05-00714.

United States Court of International Trade.

April 3, 1998.

COPYRIGHT MATERIAL OMITTED

Sharretts, Paley, Carter & Blauvelt, P.C., (Ned H. Marshak and Beatrice A. Brickell), New York, NY, for plaintiff.

Frank W. Hunger, Assistant Attorney General of the United States; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Lucius B. Lau); Linda S. Chang, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Counsel, for defendant.

Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer and John J. Mangan), Washington, DC, for defendant-intervenors.

OPINION

CARMAN, Chief Judge:

Wirth Limited ("Wirth"), an importer of steel "profile slabs" produced in Brazil by Companhia Siderurgica de Tubarao ("CST"), challenges an unpublished scope determination issued by the United States Department of Commerce ("Commerce") finding CST's profile slabs are within the class or kind of merchandise covered by antidumping and countervailing duty orders on certain cut-to-length carbon steel plate from Brazil. See Final Scope Ruling-Antidumping and Countervailing Duty Orders on Certain Cut-to-Length Carbon Steel Plate From Brazil-Request by Wirth Limited for a Ruling on Profile Slab (Dep't Comm. Apr. 2, 1997) [hereinafter "Final Scope Ruling"]. Plaintiff moves for judgment on the agency record pursuant to U.S. CIT R. 56.2, contending Commerce's Final Scope Ruling is not supported by substantial evidence on the record and is not otherwise in accordance with law. Plaintiff also challenges Commerce's determination to apply its Final Scope Ruling to, and the United States Customs Service's ("Customs") ability to assess interest against, profile slabs entered into the United States before Commerce initiated its scope inquiry.

Defendant and defendant-intervenors oppose plaintiff's motion, contending Commerce's Final Scope Ruling should be sustained by this Court. Defendant and defendant-intervenors also argue Commerce appropriately applied its Final Scope Ruling to profile slabs entered before the scope inquiry was initiated. Finally, defendant and defendant-intervenors maintain this Court should not address Customs' authority to assess interest on profile slabs entered before Commerce initiated its scope inquiry due to plaintiff's failure to exhaust its administrative remedies. In addition to raising these arguments, defendant-intervenors have submitted a consent motion for oral argument in this matter. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c) (1994), and for the reasons that follow denies plaintiff's Motion for Judgment Upon the Agency Record.

BACKGROUND

On July 9, 1993, Commerce published its final affirmative determinations in antidumping and countervailing duty investigations on cut-to-length carbon steel plate from Brazil. See Final Affirmative Countervailing Duty Determinations: Certain Steel Products From Brazil, 58 Fed.Reg. 37,295 (Dep't Comm.1993); Final Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-Length Carbon Steel Plate From Brazil, 58 Fed.Reg. 37,091 (Dep't Comm.1993). These determinations defined "certain cut-to-length carbon steel plate" to include:

hot-rolled carbon steel universal mill plates (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 millimeters but not exceeding 1,250 millimeters and of a thickness of not less than 4 millimeters, not in coils and without patterns in relief), of rectangular shape, neither clad, plated nor coated with metal, ...; and certain hot-rolled carbon steel flat-rolled products in straight lengths, of rectangular shape, hot rolled, ..., 4.75 millimeters or more in thickness and of a width which exceeds 150 millimeters and measures at least twice the thickness. ... Included in these investigations are flat-rolled products of nonrectangular cross-section where such cross-section is achieved subsequent to the rolling process (i.e., products which have been "worked after rolling") — for example, products which have been bevelled or rounded at the edges.

Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products From Argentina, 58 Fed.Reg. 37,062, 37,064 (Dep't Comm. 1993); Final Affirmative Countervailing Duty Determination: Certain Steel Products From Austria, 58 Fed.Reg. 37,217, 37,225 (Dep't Comm.1993).¹ Additionally, the two determinations defined the merchandise at issue by reference to several headings within the Harmonized Tariff Schedule of the United States ("HTSUS"). While they cited various subheadings within headings 7208, and 7210 to 7212, HTSUS, the determinations specifically provided "[a]lthough the Harmonized Tariff Schedule of the United States (HTS) subheadings are provided for convenience and customs purposes, our written descriptions of the scope of these proceedings are dispositive." 58 Fed.Reg. at 37,063; see also 58 Fed.Reg. at 37,224. Commerce published countervailing and antidumping duty orders on cut-to-length carbon steel plate from Brazil on August 17 and August 19, 1993, respectively. See Antidumping Duty Order: Certain Cut-to-Length Carbon Steel Plate From Brazil, 58 Fed.Reg. 44,164 (Dep't Comm.1993); Countervailing Duty Order and Amendment to Final Affirmative Countervailing Duty Determination: Certain Steel Products From Brazil, 58 Fed. Reg. 43,751 (Dep't Comm.1993) [hereinafter "plate orders"].²

The merchandise at issue in this matter is profile slab produced by CST in Brazil. CST produces profile slabs on a two-high universal rolling mill by subjecting heated ingots to initial rolling passes. Once the ingots have undergone the preliminary rolling passes, they are subjected to a process known as "hot scarfing", which removes surface imperfections from the slabs using mechanically-guided oxygen torches. Following hot scarfing, the slabs are subjected to final rolling passes, torch-cut to length, and then cooled by a slow cooling process. CST guarantees the chemical, but not mechanical, properties of the resulting profile slab. (See Pl.'s Br. in Supp. of Mot. for J. Upon Agency R. ("Pl.'s Br.") at 4.)

Wirth began importing CST profile slab from Brazil in 1989, and entered it under heading 7207, HTSUS, as "semifinished steel products of iron or nonalloy steel". In November 1994,³ subsequent to Commerce's publication of the plate orders, Wirth imported a shipment of CST profile slab at the port of Detroit, entering it as a semi-finished steel product under heading 7207, HTSUS. Because heading 7207, HTSUS, was not within the scope of the plate orders, Customs did not require Wirth to deposit estimated antidumping or countervailing duties on the profile slabs at the time of entry.

On May 18, 1995, Customs officials at the port of Detroit informed Wirth they were reclassifying the CST profile slab under heading 7208, HTSUS, a heading within the scope of the plate orders. Because merchandise within the scope of outstanding antidumping and countervailing duty orders is suspended from liquidation until an administrative review can be completed, Customs' reclassification of the CST profile slab under heading 7208, HTSUS, resulted in the suspension of liquidation of Wirth's entry of CST profile slab. See 19 U.S.C. § 1671e(a)(3) (1994); 19 U.S.C. § 1675(a)(1) (1994).

Wirth immediately challenged Customs' reclassification of the profile slab under heading 7208, HTSUS. Wirth contacted Customs Service Headquarters, Office of Regulations and Rulings and requested a review of the reclassification. In a letter dated August 27, 1996, the Office of Regulations and Rulings informed Wirth of its determination that CST profile slab was classified properly under heading 7207, HTSUS, because the slabs did not "meet an industry standard for the close tolerances required for flat-rolled plate." (Pl.'s App., Tab 11, Ex. 1 at 5.)

On November 30, 1995, while its request for a review by the Office of Regulations and Rulings was pending, Wirth requested Commerce conduct a scope inquiry pursuant to 19 C.F.R. § 353.29 (1996) (concerning scope inquiry involving antidumping duty order) and 19 C.F.R. § 355.29 (1996) (concerning scope inquiry involving countervailing duty order). Commerce issued its preliminary determination on February 7, 1997, concluding the CST profile slab was within the scope of the antidumping and countervailing duty orders on certain cut-to-length carbon steel plate from Brazil. Following the submission of comments by Wirth, CST and domestic producers Commerce issued its Final Scope Ruling on April 2, 1997.

In its Final Scope Ruling, Commerce determined that "[b]ased upon a review of the underlying record-the petition, the Department and ITC determinations and the relevant orders .... [i]t is not clear if profile slab is a hot-rolled, flat-rolled product covered by the orders." Final Scope Ruling at 7. Because it could not determine whether CST profile slab was within the scope of the plate orders based on its review of the petition and other relevant documents, Commerce applied the Diversified Products⁴ criteria in order to determine whether CST's profile slab was within the scope of the plate orders. Based upon its review of the physical characteristics, ultimate use, expectations of ultimate purchasers, and channels of trade of CST's profile slabs, Commerce determined CST profile slab is of the same class or kind of merchandise as certain cut-to-length carbon steel plate and therefore falls within the scope of the plate orders.

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