888 F.3d 1222
Fed. Cir.2018Background
- Commerce issued antidumping (AD) and countervailing duty (CVD) orders in 2010 covering certain oil country tubular goods (OCTG) "from the People’s Republic of China," including both finished and unfinished OCTG (green tubes).
- Customs had previously treated green tubes heat‑treated and finished in third countries (e.g., Korea, Japan) as having the third country as their country of origin.
- Bell Supply imported Chinese green tubes that were finished (heat‑treated, threaded, coated) in Indonesia and argued those finished imports were not covered by the China OCTG Orders unless Commerce made a § 1677j anti‑circumvention finding.
- Commerce initially used a substantial‑transformation analysis to treat such finished OCTG as still within the Orders, then on remand relied on scope language; later it concluded third‑country finished OCTG were out‑of‑scope and did not meet circumvention criteria.
- The Court of International Trade sustained Commerce’s later determinations; domestic steel companies appealed, arguing Commerce must be allowed to apply substantial‑transformation to determine country of origin in scope inquiries.
- The Federal Circuit vacated the Trade Court’s decision and remanded, holding Commerce may use the substantial‑transformation test to determine whether imported OCTG are “from” China before, if necessary, applying § 1677j for circumvention.
Issues
| Issue | Plaintiff's Argument (Domestic Steel Cos.) | Defendant's Argument (Bell Supply) | Held |
|---|---|---|---|
| 1. Whether imported finished OCTG may be treated as "from China" for scope purposes | Commerce may apply the substantial‑transformation test to find country of origin is China despite finishing in third country | Substantial‑transformation improperly expands the Orders; Commerce must instead use § 1677j to capture third‑country finishing | Held: Commerce may apply the substantial‑transformation analysis to determine country of origin in scope inquiries |
| 2. Whether Commerce may rely on scope language alone to include third‑country finished OCTG | Orders’ inclusion of "finished or unfinished" OCTG supports including products originating from Chinese green tubes | Plain language does not mention third‑country finishing; absence of explicit inclusion precludes coverage | Held: Orders’ language alone does not resolve the issue; substantial‑transformation may be used to determine origin before scope language or § 1677j are applied |
| 3. Whether § 1677j anti‑circumvention is the exclusive mechanism to include third‑country finished merchandise | Subsection § 1677j(b) governs inclusion of merchandise assembled/completed in third countries and must be used | Subsection is only for circumvention; it does not prevent Commerce from first making a country‑of‑origin determination | Held: § 1677j does not preclude Commerce from performing a substantial‑transformation country‑of‑origin analysis; circumvention applies only if origin is a non‑subject country |
| 4. Whether allowing substantial transformation renders § 1677j superfluous | If Commerce can re‑characterize origin, § 1677j would be unnecessary | Substantial‑transformation and § 1677j are distinct; both can apply and are not coextensive | Held: No; the tests differ and can both operate without making § 1677j superfluous |
Key Cases Cited
- Allegheny Ludlum Corp. v. United States, 287 F.3d 1365 (Fed. Cir.) (explains AD/CVD relief purposes)
- Duferco Steel, Inc. v. United States, 296 F.3d 1087 (Fed. Cir.) (scope inclusion must be grounded in order language; absence of exclusion insufficient)
- Bestfoods v. United States, 165 F.3d 1371 (Fed. Cir.) (defines substantial transformation as change to new name, character, and use)
- E.I. Du Pont de Nemours & Co. v. United States, 8 F. Supp. 2d 854 (Ct. Int’l Trade) (uses substantial‑transformation rule for country‑of‑origin determinations)
- Target Sportswear, Inc. v. United States, 70 F.3d 604 (Fed. Cir.) (recognizes substantial‑transformation test for origin)
- Appleton Papers Inc. v. United States, 929 F. Supp. 2d 1329 (Ct. Int’l Trade) (upholds Commerce’s country‑of‑origin analysis via substantial transformation)