TAI-AO ALUMINIUM (TAISHAN) CO., LTD., TAAL AMERICA LTD., REGAL IDEAS, INC., Plаintiffs v. UNITED STATES, Defendant ALUMINUM EXTRUSIONS FAIR TRADE COMMITTEE, Defendant-Appellant
2020-1501
United States Court of Appeals for the Federal Circuit
December 17, 2020
Appeal from the United States Court of International Trade in No. 1:17-cv-00216-GSK, Judge Gary S. Katzmann.
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.
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, Commеrce 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(“Customs“) to suspend liquidation of all heat-treated 5050-grade extruded aluminum products from the PRC entered, or withdrawn from warehouse, on or after March 21, 2016, the date that the original inquiry was commenced.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 еxclude 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.”
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 [
If Commerce makes a preliminary determination that the products are circumventing duty orders, then Commerce will оrder 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.”
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 affiliatеs (collectively, “Zhongwang“). On request from Commerce, AEFTC resubmitted its request on December 30, 2015, and contended that
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 evidenсe 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 Zhongwаng.” 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 Initiation Notice, Commerce issued an anti-circumvention questionnaire only to Zhongwang. Zhongwang failed to respond.
On July 8, 2016, after the deadline for Zhongwang‘s response passed, AEFTC requested that Commerce “immediately issue anti-circumvention questionnaires to additional Chinese producers believed to be circumventing the orders,” including Tai-Ao. J.A. 1033–34. It appears that Commerce did not issue additional questionnaires. On September 28, 2016, Endura Products, Inc., a domestic interested party, submitted evidence that “multiple companies”
In a Preliminary Determination Memorandum dated November 3, 2016, Commerce “[found] that the record support[ed] applying [the anti-circumvention] inquiry to all imports from the PRC of extruded aluminum products that meet the chemical specifications for 5050-grade aluminum alloy and are heat treated.” J.A. 1060–61. In support of its determination, Commerce cited the information provided by Endura and AEFTC after the publication of the Initiation Notice and Commerce‘s “prior and ongoing scope proceedings concerning 5050 products,” which demonstrated that companies including Regal were “likewise producing, exporting, and/or importing inquiry merchandise.” Id.
On November 14, 2016, Commerce published its Preliminary Determination in the Federal Register, and, under the heading “Merchandise Subject to the Anti-Circumvention Inquiry,” stated:
The products covered by this inquiry are heat-treated extruded aluminum products that meet the chemical specifications for 5050-grade aluminum alloy (inquiry merchandise), regardless of producer, exporter, or importer, from the PRC.
Aluminum Extrusions from the People‘s Republic of China: Affirmative Preliminary Determination of Circumvention (“Preliminary Determination“), 81 Fed. Reg. 79,444, 79,445 (Dep‘t of Commerce Nov. 14, 2016).
Commerce also preliminarily determined that all such imports were “circumventing, and should be included within, the scope of the Orders.” Id. at 79,445–46. Instead of applying its Preliminary Determination to product entries made on or after November 14, 2016, Commerce applied suspension to all entries made on or after March 21, 2016. Commerce accordingly instructed Customs “to suspend liquidation of inquiry merchandise from the PRC (regardless of producer, exporter, or importer), entered, or withdrawn from warehouse, for consumption, on or after March 21, 2016, the date of publication of the initiation of this inquiry” and to “require a cash deposit of estimated duties at the rate applicable to the exporter, on all unliquidated entries of inquiry merchandise entered, or withdrawn from warehouse, for cоnsumption on or after March 21, 2016.” Id. at 79,446.
Tai-Ao and Regal challenged Commerce‘s liquidation instructions before the Trade Court, arguing that the anti-circumvention initiation notice published on March 21, 2016, “did not provide adequate notice that their products were subject to the inquiry and therefore that liquidation should not have been suspended as of that date.” Tai-Ao I, 391 F. Supp. 3d at 1305. Tai-Ao cited previous scope determinations made under § 351.225(k) for Sinobec Resources LLS, Kota International LTD, and Trending Imports LLC, which determined that “5050-grade extrusions were nоn-scope merchandise,”2 arguing that “the existence of the 5050-grade scope rulings coupled
Commerce determined that the statement that Commerce “intend[ed] to consider whether the inquiry should apply to all imports” including those of Tai-Ao and Regal was sufficient to make parties “aware of the lеgal
consequences of an affirmative determination.” Def.‘s Opp‘n Consolidated Pls.’ Mots. J. Agency R. at 43, Tai-Ao I, 391 F. Supp. 3d 1301 (Ct. Int‘l Trade 2019).
On appeal, the Trade Court concluded that “Commerce‘s decision to suspend liquidation with respect to [Tai-Ao and Regal] from the date of the Initiation Notice was impermissible because [Tai-Ao and Regal] did not receive adequate notice at that time. The Preliminary Determination [on November 14, 2016] provided the first notice that [Tai-Ao and Regal‘s] products were subject to the inquiry, and therefore liquidatiоn should be assessed as of that date.” Tai-Ao I, 391 F. Supp. 3d at 1313–14. The Trade Court remanded to Commerce to reformulate its liquidation instructions accordingly. Id. at 1316. Commerce filed reformulated instructions, which the Trade Court sustained as “consistent with the remand order.” Tai-Ao II, 415 F. Supp. 3d at 1395.
AEFTC appeals the Trade Court‘s decision sustaining Commerce‘s reformulated liquidation instructions. Neither Commerce nor any other party to the Trade Court proceeding have appeared in this appeal. We have jurisdiction under
DISCUSSION
The sole issue on appeal is whether Commеrce‘s Initiation Notice, published on March 21, 2016, provided adequate notice to Tai-Ao and Regal that their products would be subject to Commerce‘s anti-circumvention inquiry and therefore their unliquidated entries entered on or after that date could be subject to duties. “We review the [Trade Court‘s] decision to sustain Commerce‘s final results and its remand redeterminations de novo.” SolarWorld Ams., Inc. v. United States, 962 F.3d 1351, 1356 (Fed. Cir. 2020). We review whether Commerce‘s initial decision, prior to remand, was “unsupported by substantial evidence on the record, or otherwise nоt in accordance with law.”
Two subsections of Commerce‘s anti-circumvention inquiry regulations are at issue. First,
If liquidation has not been suspended [at the time of an affirmative preliminary determination of circumvention], the Secretary will instruct the Customs Serviсe 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.
Second,
This notice requirement is designed to avoid unfairness to importers and foreign exporters. In explaining why the regulations require Commerce to first make an affirmative preliminary or final determination of circumvention before suspending liquidation, Commerce noted it must provide
prior notice to foreign interested parties that provides “a meaningful opportunity to present relevant information and defend their interests“:
Suspension of liquidation is an action with a potentially significant impact on the business of U.S. importers and foreign exporters and producers. The Department should not еxercise this governmental authority before it has first given all parties a meaningful opportunity to present relevant information and defend their interests, and before the Department gives a reasoned explanation for its action. Formal initiation of a scope inquiry by the Department represents nothing more than a finding by the Department that it cannot resolve the issue on the basis of the plain language of the scope description or the clear history of the original investigation. It would be extremely unfair to importers and exporters to subject entries not already suspended to suspension of liquidation and possible duty assessment with no prior notice and based on nothing more than a domestic interested party‘s allegation. Because, when liquidation has not been suspended, Customs, at least, and perhaps the Department as well, have viewed the merchandise
as not being within the scope of an order, importers are justified in relying upon that view, at least until the Department rules otherwise. Therefore, the Department will not order the suspension of liquidation until it makes either a preliminary or final affirmative scope ruling, whichever occurs first.
Antidumping Duties; Countervailing Duties (“Preamble“), 62 Fed. Reg. 27,296, 27,328 (Dep‘t of Commerce May 19, 1997) (Final Rule).
Thus, Commerce could only suspend liquidation of entries made on or after March 21, 2016, that were unliquidated as of November 14, 2016, if Commerce provided adequate notice that the merchandise subject to the scope inquiry included Tai-Ao and Regal‘s products on March 21, 2016. The notice requirement reflects “the broader due process principle that before an agency may enforce an order or regulation by means of a penalty or monetary sanction, it must ‘provide regulated parties fair warning of the conduct [the order or regulation] prohibits or requires.‘” Mid Continent Nail Corp. v. United States, 725 F.3d 1295, 1300–01 (Fed. Cir. 2013) (quoting Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 156 (2012)) (alteration in original).
Commerce‘s statement in the Initiation Notice on March 21, 2016, that the anti-circumvention inquiry “cover[ed] extruded aluminum products that meet the chemical specifications for 5050-grade aluminum alloy, which are heat-treated, and exported by Zhongwang” did not provide notice to Tai-Ao and Regal, and neither Commerce nor any other party contended that it did. Initiation Notice, 81 Fed. Reg. at 15,042.
Commerce‘s additional language in the March 21, 2016, Initiation Notice that it “intend[ed] to consider whether the inquiry should apply to all imports . . . regardless of producer, exporter, or importer, from the PRC” also did not provide sufficient notice that all imports other than those of Zhongwang would be “cover[ed]” by the inquiry. Id.4 A statement of intention to “consider whether the
inquiry should apply to all imports” is not the same as a notice that such imports are within the scope of the inquiry.
Several other factors support this conclusion. First, here, the initial anti-circumvention inquiry was not country-wide. Anti-circumvention determinations may be company-specific or country-wide.5 The
inquiry [were] heat-treated extruded aluminum products that meet the chemiсal specifications for 5050-grade aluminum alloy . . . regardless of producer, exporter, or importer, from the PRC.” Preliminary Determination, 81 Fed. Reg. at 79,445.
Second, the regulations require that Commerce‘s Initiation Notice include “[a]n explanation of the reasons for [Commerce‘s] decision to initiate a scope inquiry.”
Here, Commerce‘s explanation for why it initiated the inquiry focused primarily on Zhongwang. Commerce expressly cited AEFTC‘s “Scope Clarification and Anti-Circumvention Inquiry Request for certain merchandise from Zhongwang,” which Commerce described as “contend[ing] that Zhongwang‘s 5050-grade aluminum alloy extrusion products are circumventing the scope of the Orders,” and Commerce explained that, “in response” to that request by AEFTC, it initiated an anti-circumvention inquiry as to Zhongwang. Initiation Notice, 81 Fed. Reg. at 15039–40.
Third, our determination is further supported by Commerce‘s conduct during its investigation, which would not have put Tai-Ao and Regal on notice that they were subject to the inquiry before the Preliminary Determination was published. After the Initiation Notice was published, Commerce issued a questionnaire only to Zhongwang, suggesting that Commerce intended its inquiry to pertain only to Zhongwang. In the period between the Initiation Notice and the Preliminary Determination, Commerce received additional information from domestic intеrested parties, AEFTC and Endura, that led Commerce to apply its inquiry to entities other than Zhongwang. This additional information was significant because it led Commerce to expand the scope of its inquiry.
There are no other indicia that would support a different result. AEFTC relies on Commerce‘s statement in the March 2016 notice that, “[i]n accordance with
Because Commerce did not provide adequate notice to Tai-Ao and Regal until November 14, 2016, Commerce‘s instructions to suspend liquidation effective March 21, 2016, were not in accordance with law. We affirm the Trade Court‘s decision sustaining Commerce‘s rеformulated liquidation instructions as in accordance with law.
AFFIRMED
COSTS
No costs.
Notes
Proposed Regulations, 85 Fed. Reg. at 49,489. ProposedIn its experience, Commerce has witnessed scenarios in which the circumvention determined to exist was unique to the interested party under review. In that situation, a company-specific circumvention determination is warranted. However, Commerce has also found circumvention to exist in other cases in which the circumvention warranted a country-wide determination.