Juancheng Kangtai Chem. Co. v. United States , 322 F. Supp. 3d 1351 ( 2018 )

Slip Op. 18-72
UNITED STATES COURT OF INTERNATIONAL TRADE
JUANCHENG KANGTAI CHEMICAL CO.,
LTD, NAC GROUP LIMITED,
Plaintiffs,
Before: Richard W. Goldberg, Senior Judge
v. Court No. 17-00257
UNITED STATES,
Defendant.
OPINION AND ORDER
[The court grants Defendant’s motion to dismiss Plaintiffs’ complaint.]
Dated: June 19, 2018
Gregory S. Menegaz, Alexandra H. Salzman, J. Kevin Horgan, and John J. Kenkel,
deKieffer & Horgan, PLLC, of Washington, D.C., for plaintiff.
Sonia M. Orfield, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., for defendant. With her on the brief were Chad A.
Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M.
McCarthy, Assistant Director. Of counsel on the brief was Catherine D. Miller, Attorney, Office
of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington, D.C.
Plaintiffs Juancheng Kangtai Chemical Co. (“Kangtai”) and NAC Group Limited
(“NAC”) (collectively referred to as “Kangtai”), purport to challenge the administration and
enforcement by Customs and Border Protection (“CBP”) of the final results issued by the U.S.
Department of Commerce (“Commerce” or “the Department”) in an antidumping duty
investigation to which Kangtai is a party. Compl., ECF No. 2 (Oct. 26, 2017); see also Pls.’
Resp. in Opp’n to Mot. to Dismiss 10, ECF No. 19 (Apr. 16, 2018) (citations omitted) (“Pls.’
Resp.”). The Government moves to dismiss Kangtai’s complaint, invoking U.S. Court of
International Trade Rules 12(b)(1) and 12(b)(6) to contest the court’s subject matter jurisdiction
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and, in the alternative, contend that even if the court does have jurisdiction, the complaint should
be dismissed for failure to state a claim. Def.’s Mot. to Dismiss, ECF No. 13 (Feb. 16, 2018).
For the reasons stated below, the court grants the Government’s motion to dismiss.
BACKGROUND
For several years, Commerce has maintained administrative reviews of the antidumping
order for chlorinated isocyanurates from the People’s Republic of China (“PRC”), under which
Kangtai is a covered entity. On July 31, 2014, the Department initiated the ninth administrative
review (“AR 9”) for the period of review spanning June 1, 2013 to May 31, 2014 (“POR 9”).
Antidumping and Countervailing Duty Administrative Reviews, 79 Fed. Reg. 44,390 (Dep’t
Commerce July 31, 2014) (initiation). On August 3, 2015, Commerce initiated the tenth
administrative review (“AR 10”) covering the period of review from June 1, 2014 through May
31, 2015 (“POR 10”). Antidumping and Countervailing Duty Administrative Reviews, 80 Fed.
Reg. 45,947 (Dep’t Commerce Aug. 3, 2015) (initiation).
As part of its review, Commerce issued a questionnaire to Kangtai during AR 9
requesting that Kangtai “prepare a separate computer data file containing each sale made during
the POR” and “[r]eport each U.S. sale of merchandise entered for consumption during the POR.”
Public App. to Pl.’s Resp., ECF No. 21 Tab 2, Kangtai Section C Resp. 1 (Dec. 15, 2014).
Kangtai’s response attached an exhibit identifying sales and the corresponding entry dates for
those sales. See id. ex. C-1. The Department issued this same request to Kangtai during AR 10.
See Heze Huayi Chem. Co. and Juancheng Kangtai Chem. Co. v. United States, Ct. No. 17-
00032 (“Heze Huayi Chem. Co.”), J.A. ECF No. 35, Kangtai Section C & D Resp. 1, P.D. 35
(Nov. 23, 2015). Similarly, Kantai’s AR 10 response reported certain sales and entries, but did
not report those entries it had already reported in AR 9.
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For POR 9, Kangtai was assessed a weighted average dumping margin of zero because
Commerce found there to be no countervailable export subsidies. Chlorinated Isocyanurates
from the People’s Republic of China, 81 Fed. Reg. 1,167, 1,168 (Dep’t Commerce Jan. 11, 2016)
(final results) (“AR 9 Final Results”). As to liquidation, Commerce stated:
The Department will determine, and U.S. Customs and Border Protection (CBP)
shall assess, antidumping duties on all appropriate entries covered by this review.
The Department intends to issue assessment instructions to CBP 15 days after the
publication date of these final results of this review. . . . For each individually
examined respondent whose weighted-average dumping margin is above de
minimis (i.e., 0.50 percent), the Department will calculate importer-specific
assessment rates on the basis of the ratio of the total amount of dumping calculated
for the importer’s examined sales and the total entered value of sales. We will
instruct CBP to assess antidumping duties on all appropriate entries covered by this
review when the importer-specific assessment rate is above de minimis.
Id. For POR 10, Kangtai was assessed a weighted average dumping margin of 35.05%.
Chlorinated Isocyanurates from the People’s Republic of China, 82 Fed. Reg. 4,852, 4,852
(Dep’t Commerce Jan. 17, 2017) (final results). In its preliminary results, Commerce indicated
that it would instruct CBP “to assess duties on all appropriate entries of subject merchandise
during the POR,” Chlorinated Isocyanurates from the People’s Republic of China, 81 Fed. Reg.
45,128, 45,130 (Dep’t Commerce July 12, 2016) (prelim. results) and accompanying Decision
Mem., and it was Kangtai’s failure to report certain entries sold during POR 9 but entered in
POR 10 led to the imposition of the separate rate for these shipments. See also Def.’s Reply to
Pls.’ Resp. 15–19, ECF No. 25 (May 21, 2018) (discussing Commerce’s practice of assessing
duties based on the date of entry).
The first liquidation instructions at issue here were submitted to CBP on January 28,
2016. In those instructions, Commerce ordered that all shipments imported or sold to NAC and
entered during POR 9 were to be assessed a rate of $0 per metric ton. Def.’s Confidential App.,
ECF No. 16, Liquidation Instrs. from Commerce to Customs, P.R. 2 (Jan. 28, 2016). “For all
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other shipments . . . entered” during the same period, Commerce directed CBP to impose the
PRC rate of 285.63%, id., the rate assigned to all other Chinese manufacturers not subject to a
separate rate. The next set of instructions, issued February 2, 2017, followed a similar structure:
setting certain rates for entries shipped to specific purchasers during POR 10 and the PRC rate
for all others. Def.’s Confidential App., ECF No. 16, Liquidation Instrs. from Commerce to
Customs, P.R. 4 (Feb. 2, 2017). Following these instructions, CBP liquidated eleven of the
eighteen entries at issue. On March 6, 2017, as part of a separate lawsuit challenging the results
of AR 10, Kangtai obtained an injunction preventing CBP from liquidating the remaining AR 10
entries. See Heze Huayi Chem. Co., Order Granting Prelim. Inj., ECF No. 17 (Mar. 6, 2017).
Thereafter, Commerce instructed CBP to suspend the liquidation of all other entries. Def.’s
Confidential App., ECF No. 16, Liquidation Instrs. from Commerce to Customs, P.R. 5 (Mar. 9,
2017). As a result, seven entries remain unliquidated.
Kangtai filed the instant complaint, alleging four separate counts. Count I alleges that
Commerce “acted contrary to law when it assessed individual sales an [antidumping] rate that
was higher than the rate calculated upon individual review of the sales in the legal forum
appropriate for such calculation, i.e., AR 9.” Compl. ¶ 22, ECF No. 2 (Oct. 26, 2017). Kangtai
also complains that “[t]he Department’s apparent decision to treat the sales as if they were made
by the PRC Entity is unsupported by substantial evidence as it had clear evidence that those sales
were made by Kangtai” in Count II. Id. ¶ 24. Next, Count III sets forth the allegation that “[t]he
Department’s apparent decision that the NAC entries were not reviewed merely because they
entered in the POR subsequent to the AR in which they were reviewed was unsupported by
substantial evidence as well as arbitrary and capricious.” Id. ¶ 26. Last, Count IV challenges
CBP’s application of its 15-day liquidation policy. Id. ¶ 28.
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STANDARD OF REVIEW
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). As part of
its Rule 12 inquiry, the court is to undertake an examination of the “true nature” of the action in
an effort to uncover whether the facts pled properly constitute a claim pursuant to Kangtai’s
proffered jurisdictional provision. Norsk Hydro Can., Inc. v. United States, 472 F.3d 1347, 1355
(Fed. Cir. 2006). And Kangtai bears the burden of establishing jurisdiction. Id.
DISCUSSION
At issue in this case “are a total of thirty-four sales with legal ‘date of sale’ between June
1, 2013 and May 31, 2014, that were fully and accurately reported in AR 9 and which were
included in the antidumping calculation for that review. Among those thirty-four sales, eighteen
entered in the United States after June 1, 2014,” during AR 10. Pls.’ Resp. at 9.
Commerce contests the court’s jurisdiction and argues that Kangtai’s complaint should be
dismissed. As to Counts I–III, Commerce contends that “[b]ecause Kangtai has challenged the
assessment rates established by [AR 10] pursuant to 28 U.S.C. § 1581(c), [] it could and should
have sought relief pursuant to section 1581(c) . . . .” Def.’s Mot. to Dismiss 2, ECF No. 13 (Feb.
16, 2018). In support of this argument, the Government posits that “Kangtai attempts to rely on
section 1581(i) instead because it failed to request an injunction covering its affected entries
before 11 of its 18 entries subject to [AR 10] were liquidated.” Id. at 6. Count IV, on the other
hand, ought to be dismissed, in the Government’s view, because Kangtai could have timely
obtained an injunction as part of its Kangtai’s section 1581(c) case, Heze Huayi Chem. Co.,
thereby suspending liquidation of the contested entries. See id. at 2.
Court No. 17-00257 Page 6
I. Counts I–III
In its complaint, Kangtai asserts three counts—Counts I–III—related to what it describes
as “the Department[’s] unlawful[] instruct[ion to] CBP to liquidate entries that should have been
covered in AR 9 at a punitive rate assigned to entries made in AR 10.” See Pls.’ Resp. at 10.
Kangtai asserts that these claims are properly brought under 28 U.S.C. § 1581(i) because they
seek to challenge CBP’s “administration and enforcement” of Commerce’s antidumping duty
administrative review, a claim rightfully brought under section 1581(i). See id. at 11; see also
Consolidated Bearings Co. v. United States, 348 F.3d 997, 1002 (Fed. Cir. 2003). Yet, for the
reasons outlined below, it is clear that the true nature of Kangtai’s complaint aims to challenge
Commerce’s evaluation of sales in AR 9 and entries in AR 10, a claim properly arising out of
section 1581(c). As a result, the court lacks jurisdiction under section 1581(i) and Counts I–III
are dismissed.
A. Jurisdiction Exists Under Section 1581(c)
The court is called upon to determine whether it has jurisdiction pursuant to 28 U.S.C.
§ 1581(i). Jurisdiction will arise under section 1581(i) when there exists a:
[C]ivil action commenced against the United States, its agencies, or its officers that
arises out of any law of the United States providing for —
(1) revenue from imports or tonnage;
(2) tariffs, duties, fees, or other taxes on the importation of merchandise for reasons
other than the raising of revenue;
(3) embargoes or other quantitative restrictions on the importation of merchandise
for reasons other than the protection of the public health or safety; or
(4) administration and enforcement with respect to the matters referred to in
paragraphs (1)–(3) of this subsection and subsections (a)–(h) of this section.
In this instance, Kangtai asserts jurisdiction under 28 U.S.C. § 1581(i)(2) and (4). Compl. ¶ 4,
ECF No. 2 (Oct. 26, 2017).
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In order to determine if jurisdiction arises under section 1581(i), the court assesses
whether another “subsection of [section 1581] ‘is or could have been available’” and whether
that other subsection would “provide[] no more than a manifestly inadequate remedy.”
Consolidated Bearings Co., 348 F.3d at 1002. In so doing, the court is not necessarily bound to
accept a plaintiff’s characterization of its claims. See Norsk Hydro Can., Inc., 472 F.3d at 1355.
In general, “[a] challenge to liquidation instructions contends that the instructions
themselves do not accurately reflect the results of the underlying administrative proceeding.”
Corus Staal BV v. United States, 31 CIT 826, 835, 493 F. Supp. 2d 1276, 1285 (2007). Here,
Kangtai’s challenge is that the sales made during POR 9—and considered in AR 9—and then
entered during POR 10, should have been assigned the AR 9 rate but were improperly liquidated
at the AR 10 rate. See Pls.’ Resp. at 9. But those eighteen entries went unreported in AR 10,
even though they were entered during POR 10. See Pls.’ Resp. at 3, 11 (stating that the entries at
issue “absolutely were reported in AR 9” but “not reported as invoiced sales in AR 10.”). This
despite the fact that Kangtai was directed to report its AR 10 entries and, by its own admission,
failed to do so.
This appeal arises not from the erroneous “administration and enforcement” of
Commerce’s antidumping duty determinations but rather from an allegation that Commerce
imposed a liquidation rate that improperly considered already reported sales and entries. Such an
action is properly brought under section 1581(c).
Commerce’s regulations—namely 19 C.F.R. § 351.213(e)(1)(i)—grant the Department
“the discretion to choose entries, exports, or sales in determining whether sales activity occurred
during the POR.” Watanabe Group v. United States, 34 CIT 1545, 1548, 2010 WL 5371606, at
*2 (2010). Depending on the circumstances, Commerce may have certain justifications for using
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either sales or entries in its calculations. See Helmerich & Payne, Inc. v. United States, 22 CIT
928, 934, 24 F. Supp. 2d 304, 310 (1998); see also Corus Staal BV v. United States, 29 CIT 777,
791, 387 F. Supp. 2d 1291, 1304 (2005) (upholding “Commerce’s use of the date of entry to
select [] pre-importation EP sales, and the date of sale to select [] CEP sales” within the same
POR as reasonable). Due to the silence in the statute as to the use of either sales or entries, the
promulgation of Commerce’s regulations, and the reasonableness of the Department’s
interpretation, the court defers to Commerce’s reasonable consideration of either sales or entries
in a given POR. See Helmerich & Payne, Inc., 22 CIT at 934, 24 F. Supp. 2d at 310.
Collectively, Watanabe Group, Corus Staal BV, and Helmerich & Payne, Inc. stand for
the proposition that Commerce has the discretion to choose between sales or entries made during
the POR when calculating antidumping duties. Additionally, each case invoked the court’s
section 1581(c) jurisdiction, the proper one for evaluating such claims. In other words,
Commerce’s decisions pursuant to 19 C.F.R. § 351.213(e)(1)(i) are made in the context of the
Department’s duty to make antidumping determinations, 19 U.S.C. § 1516a, not the
“administration and enforcement” thereof, 28 U.S.C. § 1581(i).
At the end of the day, Kangtai cannot make out a section 1581(i) claim as the essence of
its challenge remains directed at Commerce’s use of sales and entries in its antidumping duty
calculations. The Department requested both sales and entries during AR 10. When Kangtai
failed to report its entries—choosing instead to rest on its prior reporting in AR 9 of the sales of
those entries—Commerce determined that only the entries identified in AR 10 would be subject
to the lower rate. Accordingly, those entries that remained unidentified were assessed the higher
PRC rate. The propriety of such a decision may be challenged, but under section 1581(c).
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B. A Remedy Under Section 1581(c) Is Not Manifestly Inadequate
Because the court finds that Kangtai could have brought suit under section 1581(c),
Kangtai’s claim of jurisdiction under section 1581(i) can only survive if the section 1581(c)
remedy would have been “manifestly inadequate.” Because that remedial path was available
to—but declined to be taken by—Kangtai, jurisdiction under section 1581(i) is defeated.
The party seeking to establish jurisdiction has the burden of showing that relief under a
different subsection of section 1581 would be manifestly inadequate. See Miller & Co. v. United
States, 824 F.2d 961, 963 (Fed. Cir. 1987). Where, as here, an exporter participates in the
administrative review, “[t]o be manifestly inadequate, the protest must be an exercise in
futility—i.e., incapable of producing any result.” Hutchinson Quality Furniture, Inc. v. United
States, 827 F.3d 1355, 1362 (Fed. Cir. 2016) (internal quotation marks omitted).
Kangtai has failed to demonstrate that a 1581(c) claim would be an “exercise in futility.”
Kangtai claims that it “dutifully reported its sales” and “[t]here was nothing to appeal” as it had
no indication “that the Department’s plan was to disregard its specific review of a subset of
reported sales and assign an arbitrary antidumping margin to them, unmoored from any specific
review of those sales.” Pls.’ Resp. at 11. Kangtai’s naked assertion that it had no means by
which to comprehend that Commerce would calculate the rate based on entries is a false one.
Before Kangtai filed its complaint, it was certainly on notice that CBP would “assess[]
antidumping duties on all appropriate entries covered by [the] review.” AR 9 Final Results, 81
Fed. Reg. at 1,168 (emphasis added). Thus, a remedy under section 1581(c) was available in the
form of a complaint challenging the results of AR 9 and any resulting remedy could have
addressed Commerce’s consideration of sales/entries. Kangtai’s failure to file such a complaint
does not grant it an opportunity to pursue its section 1581(c) claim under section 1581(i).
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II. Count IV
Kangtai’s final count, that CBP’s 15-day policy is unlawful, stands on somewhat
different footing. Whereas Kangtai’s other arguments are properly grounded in section 1581(c),
a challenge to the 15-day policy is commonly brought under section 1581(i). See, e.g., Jinan
Farmlady Trading Co. v. United States, 41 CIT __, __, 228 F. Supp. 3d 1351, 1357 (2017).
Nevertheless, Kangtai has not articulated an injury that has resulted from CBP’s 15-day policy
and, as a result, Count IV is also dismissed.
When a plaintiff files an action, it must establish not only that it has suffered injury in
fact or the threat thereof, Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992), but also
that the facts asserted give rise to an entitlement to relief. Acceptance Ins. Cos. v. United States,
583 F.3d 849, 853 (Fed. Cir. 2009) (citing Twombly, 550 U.S. at 557). This court has stated that
the 15-day policy “causes recurring injury in fact by repeatedly forcing plaintiffs to file the
summons, complaint, and motion for a preliminary injunction within fifteen days of publication
of the Final Results.” Jinan Farmlady Trading Co., 41 CIT at __, 228 F. Supp. 3d at 1357.
Although a plaintiff can immunize itself from the effects of the 15-day policy by obtaining an
injunction, that plaintiff may still be able plead an injury because the policy is capable of
repetition yet evading judicial review. See NTN Bearing Corp. of Am. v. United States, 39 CIT
__, __, 46 F. Supp. 3d 1375, 1387–88 (2015). But where a plaintiff cannot make out a claim that
alleges such an injury, its challenge to CBP’s 15-day policy shall not be maintained.
Because Kangtai cannot assert an injury, it has neither standing to bring its claim nor has
it met the pleading requirements of Rule 12(b)(6). Simply put, the 15-day policy caused no
injury in this instance and the court possesses no remedial powers to rectify the alleged
impropriety of the policy as applied to Kangtai.
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First, Kangtai cannot even assert that the 15-day policy caused an injury in compelling
Kangtai to file this action in a rushed manner. Rather, Kangtai obtained its liquidation injunction
as part of its separate section 1581(c) case and filed the instant action more than ten months after
Commerce issued the Final Results. As a result, the injury previously recognized by this court in
Jinan Farmlady Trading Co., 41 CIT at __, 228 F. Supp. 3d at 1357, is not present here.
Moreover, this is not a case where “[i]t is the policy itself and the agency’s intent . . . to
follow that policy that [has] caused plaintiffs uncertainty as to how soon their entries would
liquidate . . . .” See SKF USA Inc. v. United States, 33 CIT 370, 385, 611 F. Supp. 2d 1351, 1364
(2009). Rather, the true nature of the injury alleged arises from Commerce’s assessment that
some of Kangtai’s entries should be liquidated at the PRC rate based on Kangtai’s failure to
report those entries in AR 10.1 Kangtai alleges not that the 15-day policy led to unlawful
liquidation; rather, its challenge remains directed at the rate Commerce assigned certain entries
based on the Department’s distinction between sales and entries. Thus, the 15-day policy cannot
be said to have imposed an injury on Kangtai.
Consequently, Count IV of Kangtai’s complaint does not allege any injury whatsoever
and is therefore dismissed.
1
And unlike cases in which a party seeks to challenge a determination and claims that the
15-day policy unfairly rushes this challenge, Kangtai itself claims that it was only put on notice
of the alleged issue by the act of liquidation itself. Whether subject merchandise was set to be
liquidated on day 15 or day 115, Kangtai would presumably be making the same challenge.
Therefore, the 15-day policy did not cause Kangtai any injury here.
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CONCLUSION AND ORDER
Accordingly, for the reasons stated above, the Government’s motion to dismiss all counts
in Kangtai’s complaint under Rules 12(b)(1) and 12(b)(6) is granted.
It is hereby:
ORDERED that the Government’s motion to dismiss is granted; it is further
ORDERED that final judgment is entered for Defendant.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Dated: June 19, 2018
New York, New York