2013 CIT 87
Ct. Int'l Trade2013Background
- Paper Resources imported lightweight thermal paper (LWTP) produced as jumbo rolls (JRs) in a third country, coated in that third country, then converted (slit/repackaged) in the PRC by Hanhong; Appvion sought duties asserting PRC conversion made the product subject to PRC LWTP AD/CVD Orders.
- Commerce initiated and conducted a scope inquiry and in the Preliminary Scope Ruling found the converted rolls were outside the Orders because the JRs were not substantially transformed by PRC conversion. Commerce reached the same conclusion in the Final Scope Ruling.
- The Orders cover LWTP “irrespective of dimensions” and expressly state both jumbo and converted rolls are within the scope, but do not specify treatment of JRs manufactured in a third country and converted in the PRC.
- Appvion challenged Commerce’s use of a substantial-transformation/country-of-origin analysis, argued Commerce should have considered circumvention evidence, and sought mandatory country-of-origin certification requirements.
- The Court reviewed Commerce’s Final Scope Ruling for substantial evidence and reasoned explanation under 19 U.S.C. § 1516a(b)(1)(B)(i).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce erred by using a substantial-transformation/country-of-origin analysis instead of treating all LWTP converted in PRC as within the Orders | Appvion: Orders cover all LWTP converted in PRC regardless of JR origin; Commerce unlawfully excluded some subject merchandise by applying substantial-transformation | Commerce: Orders do not explicitly address JRs from third countries; country-of-origin analysis is appropriate to determine whether merchandise is from PRC | Held: Commerce reasonably applied substantial-transformation test; substantial evidence supports finding JRs were not of PRC origin, so converted rolls were outside Orders |
| Whether Commerce should have considered circumvention evidence in the scope ruling | Appvion: shift to third-country JRs shows circumvention; Commerce should have considered circumvention evidence | Commerce: section 1677j not applicable; no risk of evisceration of relief because JRs were not from PRC; considering circumvention would risk expanding scope | Held: Commerce did not abuse discretion; scope ruling is not the proper mechanism to expand scope via circumvention evidence |
| Whether Commerce abused discretion by declining to impose mandatory country-of-origin certification | Appvion: certification should have been imposed given likelihood of circumvention and inconsistent treatment vis-à-vis other cases | Commerce: certification is not part of ordinary scope analysis; no affirmative circumvention finding to justify preemptive certification; customs enforcement may address origin issues | Held: Commerce offered reasoned explanation; declining certification was not arbitrary or an abuse of discretion |
| Whether Commerce altered the Orders’ scope contrary to law | Appvion: Commerce’s interpretation departs from petition intent and effectively denies relief | Commerce: adhered to order language and precedent; interpretation did not change scope | Held: No unlawful scope expansion; Commerce’s interpretation accords with the Orders and law |
Key Cases Cited
- Duferco Steel, Inc. v. United States, 296 F.3d 1087 (Fed. Cir.) (Commerce may not interpret an antidumping order to change its scope)
- Walgreen Co. v. United States, 620 F.3d 1350 (Fed. Cir.) (order language is the controlling element in scope determinations)
- Huaiyin Foreign Trade Corp. v. United States, 322 F.3d 1369 (Fed. Cir.) (definition of substantial evidence)
- Ugine & ALZ Belg., N.V. v. United States, 517 F. Supp. 2d 1333 (Ct. Int’l Trade) (orders must specify class/kind and country of origin; if merchandise fails either parameter, it is outside scope)
- E.I. DuPont de Nemours & Co. v. United States, 8 F. Supp. 2d 854 (Ct. Int’l Trade) (upholding use of substantial-transformation test for multi-country production)