LDA Incorporado v. United States , 79 F. Supp. 3d 1331 ( 2015 )

Slip Op. 15-64
UNITED STATES COURT OF INTERNATIONAL TRADE
LDA INCORPORADO,
Plaintiff,
Before: Claire R. Kelly, Judge
v.
Court No. 12-00349
UNITED STATES,
Defendant.
OPINION
[Upon submission of Joint Stipulation of Undisputed Facts and Proposed Conclusions of
Law, in lieu of trial, judgment is granted in favor of Plaintiff.]
Dated: June 19, 2015
Ronald M. Wisla, Lizbeth R. Levinson, Kutak Rock LLP, of Washington, DC, for
Plaintiff.
Beverly A. Farrell, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of New York, NY, for Defendant. With her on the brief were
Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and Amy M. Rubin,
Assistant Director.
Kelly, Judge: Before the court is the parties’ Joint Stipulation of Undisputed Facts
and Proposed Conclusions of Law, which was submitted in lieu of trial. See Joint
Stipulation Undisputed Facts Proposed Conclusions of Law, May 8, 2015, ECF No. 49
(separately “JSUF,” “Pl.’s PCL.” and “Def.’s PCL”). 1 Familiarity with the case is
presumed, however, the court provides a brief recitation of the procedural history of the
1The parties filed a single document including their joint submission of undisputed facts
and their separate proposed conclusions of law.
Court No. 12-00349 Page 2
case following the court’s earlier denial of Defendant United States’ (“Defendant” or
“United States”) motion to dismiss for lack of subject-matter jurisdiction.
On May 13, 2014, this court denied Defendant’s motion to dismiss for lack of
subject-matter jurisdiction. See LDA Incorporado v. United States, 38 CIT __, __, 978 F.
Supp. 2d 1359 (2014). Thereafter, Defendant submitted its answer to Plaintiff LDA
Incorporado’s (“Plaintiff” or “LDA”) complaint, and the court entered a scheduling order
governing discovery and other trial related matters. See Answer, June 26, 2014, ECF
No. 34; Scheduling Order, July 2, 2014, ECF No. 36.
On March 13, 2015, LDA, with Defendant’s consent, moved “to submit a joint
stipulation of agreed upon facts in lieu of trial . . . .” Pl.’s Consent Mot. Permit Parties
Submit Joint Stipulation Agreed Upon Facts in Lieu of Trial, Mar. 13, 2015, ECF No. 39.
After conferring with the parties, the court granted LDA’s consent motion and ordered the
parties to submit a “joint stipulation of undisputed facts and proposed conclusions of law
. . . .” Order, Mar. 16, 2015, ECF No. 41. The parties submitted their Joint Stipulation of
Undisputed Facts and Proposed Conclusions of Law on May 8, 2015, and the court
deemed the matter submitted for resolution. As the parties have stipulated to the facts
and only continue to disagree about whether jurisdiction exists, a legal issue already
decided by the court, the court finds that based on the undisputed facts, LDA’s protest
was erroneously denied and will enter judgment accordingly.
Court No. 12-00349 Page 3
UNDISPUTED FACTS
The following facts are undisputed. 2
1. LDA “is a Puerto Rican corporation located in Guaynabo, Puerto Rico.
Plaintiff is an importer and reseller of electrical infrastructure products,
including galvanized electrical rigid steel conduit, for use in the construction
industries. Plaintiff represents foreign manufacturers in the local Puerto
Rico market.” JSUF ¶ 1 (citing Compl. ¶ 8, Apr. 16, 2013, ECF No. 5; Pl.’s
Resp. Def.’s Mot. Dismiss 2, Dec. 24, 2013, ECF No. 17 (“Pl.’s Resp.”)).
2. LDA’s “customers are electrical material distributors that operate in both
Puerto Rico and the United States.” Id. ¶ 2 (citing Compl. ¶ 8; Pl.’s Resp.
2, Ex. 1 at Attach. 8).
3. “LDA does not undertake any finishing or further processing operations prior
to the resale of its imports.” Id. ¶ 3 (citing Compl. ¶ 8; Pl.’s Resp. 2).
4. “On July 22, 2008, the U.S. Department of Commerce (“Commerce”) issued
antidumping and countervailing duty orders covering circular welded carbon
quality steel pipe from the People’s Republic of China.” Id. ¶ 4 (citing
Circular Welded Carbon Quality Steel Pipe from the People’s Republic of
China, 73 Fed. Reg. 42,545 (Dep’t Commerce July 22, 2008) (notice of
amended final affirmative countervailing duty determination and notice of
2 In the stipulated facts, the parties cite to the record as filed with the court without
objection. In lieu of trial, the court considers the undisputed facts before it as contained
in the stipulation and in the record.
Court No. 12-00349 Page 4
countervailing duty order) (“CVD Order”); Circular Welded Carbon Quality
Steel Pipe from the People’s Republic of China, 73 Fed. Reg. 42,547 (Dep’t
Commerce July 22, 2008) (notice of antidumping duty order) (“ADD Order”)
(collectively “the Orders”)).
5. “The express language of the AD and CVD orders specifically excluded
‘finished electrical conduit’ from their scope.” Id. ¶ 5. The language of the
Orders provide that
[t]he scope of this order does not include: (a) pipe suitable for use in
boilers, superheaters, heat exchangers, condensers, refining
furnaces and feedwater heaters. whether or not cold drawn; (b)
mechanical tubing, whether or not cold-drawn; (c) finished electrical
conduit; (d) finished scaffolding; (e) tube and pipe hollows for
redrawing; (f) oil country tubular goods produced to API
specifications; and (g) line pipe produced to only API specifications.
CVD Order at 42,546 (cited in JSUF ¶ 5). 3
6. Both before and after Commerce issued the Orders, “Plaintiff purchased
rigid steel conduit manufactured by Guangdong Walsall Steel Pipe
Industrial Co., Ltd. (“Walsall”), a Chinese manufacturer.” JSUF ¶ 6 (citing
Pl.’s Resp. 3). Walsall galvanizes the product “through a hot dipped
process.” Id. (citing Compl. ¶ 10; Pl.’s Resp. Ex. 4 at 2).
7. “On July 22, 2010, Plaintiff imported into the United States at the Port of
San Juan[,]Puerto Rico a single entry (Entry No. 438-0698613-9) of
galvanized rigid steel conduit from China.” Id. ¶ 7 (citing Pl.’s Resp. Ex. 1
3 The scope of the CVD Order and the ADD Order use nearly identical language.
Court No. 12-00349 Page 5
at Attach. 1 at 1). Plaintiff entered the merchandise “as a Type I entry, not
subject to the AD and CVD orders.” Id. (citing Pl.’s Resp. Ex. 1 at Attach. 1
at 1).
8. Upon import, Plaintiff’s “galvanized electrical conduit was both internally
and externally coated with a non-electrically insulating material (zinc) and
was suitable for electrical use in accordance with Underwriters Laboratories
Inc. (“UL”) standard UL-6 for ‘electrical rigid ferrous metal conduit’ and
American National Standard Institute (“ANSI”) standard C80.1-2005 for
‘electrical rigid steel conduit.’” Id. ¶ 8 (citing Pl.’s Resp. Ex. 1 at Attachs. 3,
6).
9. “The commercial invoice associated with Entry No. 438-0698613-9
describes the merchandise as ‘9134 pcs of rigid conduit galvanized rigid
conduit with stantdards (sic) compliance of ANSI C80-1 and Underwriters
Laboratories UL-6 with a standard length of 10 feet, coupling included.’” Id.
¶ 9 (citing Commercial Invoice in Court file.). “Other entry documents,
including the packing list, mill report, and bill of lading, all reference the UL-
6 or ANSI C.80-1 standards.” Id. (citing Court file).
10. The U.S. Customs and Border Protection (“CBP” or “Customs”) conducted
laboratory inspections of the imported merchandise after its entry and “[t]he
CBP laboratory issued seven laboratory reports (one for each of the
diameter sizes contained in the shipment). Each of the laboratory reports
described the sample as ‘galvanized conduit’ and concluded that ‘the pipe
Court No. 12-00349 Page 6
is composed of zinc-galvanized low carbon non-alloy steel’. Each of the
laboratory reports also contained the following conclusion: ‘In our opinion,
the sample is not internally coated with a non-conducting liner.’” Id. ¶ 10
(citing Pl.’s Resp. Ex. 1 at Attach. 1 at 5–18).
11. “On January 10, 2011, CBP issued a Notice of Action notifying Plaintiff that
CBP was assessing antidumping and countervailing duties on the subject
merchandise.” Id. ¶ 11 (citing Pl.’s Resp. Ex. 1 at Attach. 1 at 3; Court file).
“Plaintiff was required to file a revised entry form reflecting the assessment
of antidumping and countervailing duty deposits.” Id. (citing Pl.’s Resp. Ex.
1 at Attach. 1 at 2; Court file). “The Notice of Action did not state the reasons
for the rate advance, but during telephone conferences and a face-to-face
meeting on January 26, 2011, CBP advised LDA that the laboratory
inspections indicated that the subject merchandise was not internally
galvanized and was thus unfinished conduit subject to the antidumping and
countervailing duty orders.” Id. (citing Pl.’s Resp. 4–5).
12. “By letter dated January 28, 2011, Plaintiff provided CBP with additional
information to establish that the subject merchandise was both externally
and internally coated with zinc.” Id. ¶ 12 (citing Pl.’s Resp. Ex. 4). “The
documents included proof of Walsall compliance with ANSI C.80 [sic] and
UL-6 standards; resubmission to CBP of the purchase/entry documents
including the commercial invoice, packing list bill of lading, mill certificate
and certificate of origin, all stating compliance with ANSI and UL standards;
Court No. 12-00349 Page 7
and the pro forma invoice (purchase order) and letter of credit showing
merchandise in compliance with ANSA [sic] and UL standards.” Id. (citing
Pl.’s Resp. Ex. 1 at Attach. 5 at 1–3, 7–8, Attach. 6 at 1–2, Ex. 3 at 2–6).
“Further, Plaintiff explained to CBP that Walsall galvanized the purchased
conduit using the ‘hot dipped galvanized’ process, which internally and
externally galvanizes the product.” Id. (citing Pl.’s Resp. Ex. 4 at 2).
13. On February 28, 2011, CBP released reports of the results of its laboratory
inspections to Plaintiff in response to a Freedom of Information Act Request.
Id. ¶ 13 (citing Pl.’s Resp. Ex. 1 at Attach. 1 at 4). “The reports stated: ‘[i]n
our opinion, the sample is not internally coated with a non-conducting liner.’”
Id. (citing Pl.’s Resp. Ex. 1 at Attach. 1 at 5–18). “Plaintiff responded to
these reports by telling CBP that the absence of a ‘non-conducting liner’
does not refer to zinc, a metal coating that conducts electricity, but refers to
an internal lining of materials that do not conduct electricity, such as rubber
or plastic.” Id. (citing Pl.’s Resp. 6).
14. “In early March 2011, Plaintiff and CBP had another meeting. CBP advised
Plaintiff that CBP now understood that the Plaintiff’s conduit was both
internally and externally galvanized, but CBP continued to determine that
that [sic] the subject merchandise was unfinished conduit and was not
suitable for electrical use because it was not internally coated with a non-
conducting liner.” Id. ¶ 14 (citing Pl.’s Resp. 6–7).
Court No. 12-00349 Page 8
15. “Plaintiff provided additional product samples to CBP for further testing.
Each physical sample was marked with an adhesive label that identified
Walsall as the manufacturer, China as the country of origin, and contained
the UL trademark identifying the conduit as a UL listed ‘electrical rigid metal
conduit’ product. Each conduit piece was also stenciled with permanent ink
identifying the product dimension, the Chinese country of origin and the UL
6 designation as electrical rigid steel conduit (“RSC”).” Id. ¶ 15 (citing Pl.’s
Resp. Ex. 1 at Attach. 4).
16. “Plaintiff provided to CBP the Scope of the ANSI Standard C80.1-2005. The
ANSI standard specifies that conduit with a galvanized (i.e., zinc) interior
and exterior coating is ‘finished’ conduit. There is no additional requirement
that a finished conduit include an electrically insulating interior coating. The
ANSI standard states:
1. Scope
This standard covers the requirements for electrical rigid steel
conduit for use as a raceway for wires or cables of an electrical
system. Finished conduit is produced in nominal 10 ft. (3.05m)
lengths, threaded on each end with one coupling attached. It is
protected on the exterior surface with a metallic zinc coating or
alternate corrosion protection coating (as specified in the 13th edition
of UL 6 in Clauses 5.3.3, 6.2.4, 7.8 and 7.9) and on the interior
surface with a zinc or organic coating.”
Id. ¶ 16 (citing Pl.’s Resp. Ex. 1 at Attach. 9).
17. Plaintiff also gave CBP material from the product brochure of a domestic
competitor, Wheatland Tube, “for metal conduit. The electrical conduit
Court No. 12-00349 Page 9
products offered by Wheatland Tube were similarly subject to the ANSI C
80.1 and UL6 standards, were internally and externally coated with zinc,
and did not have interior coatings of electrically insulating materials.” Id.
¶ 17 (citing Pl.’s Resp. Ex. 1 at Attach. 10); See also Pl.’s Resp. 8.
18. “As a result of these meetings, CBP advised Plaintiff that the case would be
referred to CBP headquarters for further review.” JSUF ¶ 18 (citing Pl.’s
Resp. 9). “On April 26, 2011, Plaintiff received a communication from CBP
via electronic mail stating that personnel from CBP Headquarters had been
consulted and that CBP Headquarters advised CBP Puerto Rico that
Plaintiff should request a scope ruling from Commerce to determine
whether or not the subject merchandise was subject to antidumping and
countervailing duties.” Id. (citing Pl.’s Resp. Ex. 5).
19. “On January 4, 2012 Customs issued a second notice of action concerning
Entry No. 438-0698613-9.” Id. ¶ 19 (citing Compl. ¶ 18; Court file).
20. “On January 27, 2012, CBP liquidated Plaintiff’s entry subject to
antidumping and countervailing duties.” Id. ¶ 20 (citing Compl. ¶ 19; Answer
¶ 19; Pl.’s Resp. 10).
21. “On February 22, 2012, Plaintiff filed expedited antidumping and
countervailing duty scope inquiry requests with Commerce regarding the
subject merchandise.” Id. ¶ 21 (citing Pl.’s Resp. Ex. 1 at Attach. 11). “In
connection with these requests, Plaintiff presented substantially similar
Court No. 12-00349 Page 10
documentation to Commerce as that provided to CBP.” Id. (citing Pl.’s
Resp. Ex. 1 at Attach. 11).
22. “On April 26, 2012, Plaintiff filed a protest with CBP regarding the liquidation
of the entry of the subject merchandise. The protest stated that ‘Importer is
on (sic) the process of a scope ruling in order to proof (sic) that ADD/CVD
does not apply to cargo.’” Id. ¶ 22 (citing Pl.’s Resp. Ex. 6 at 1).
23. “CBP Denied Plaintiff’s protest on May 12, 2012.” Id. ¶ 23 (citing Pl.’s Resp.
Ex. 6 at 2).
24. “On July 2, 2012, Commerce issued a final scope ruling to Plaintiff.
Commerce determined that the electrical rigid metal conduit imported by
Plaintiff was, in fact, finished electrical conduit and therefore outside the
scope of the antidumping and countervailing duty orders.” Id. ¶ 24 (citing
Pl.’s Resp. Ex. 2). “Commerce held that ‘based on record evidence, we
have determined that the electrical rigid steel conduit imported by LDA Inc.
falls under the Department’s exclusion for finished electrical conduit
because it meets the definition of electrical rigid steel conduit.’” Id. (citing
Pl.’s Resp. Ex. 2 at 8).
25. “Commerce’s final scope ruling to Plaintiff acknowledged that ‘[o]n May 21,
2012, the Department, in its final scope ruling regarding finished electrical
conduits imported by All Tools, Inc., defined ‘finished electrical conduit.’” Id.
¶ 25 (citing Pl.’s Resp. Ex. 2 at 2).
Court No. 12-00349 Page 11
26. “‘In the All Tools’ Scope Ruling, the Department noted that the exclusion for
‘finished electrical conduit’ was not defined, and therefore solicited
comments from interested parties for the purpose of defining the ‘finished
electrical conduit’ exclusion in the CWP [(circular welded pipe)] Orders.’” Id.
¶ 26 (citing Pl.’s Resp. Ex. 2 at 6). “Plaintiff did not participate during the
comment period associated with the All Tools’ Scope Ruling.” Id. (citing
Pl.’s Resp. Ex. 2).
27. “In connection with the All Tools Ruling, Commerce determined that
‘finished electrical conduits,’ which are the subject of the exclusion to the
CVD and AD Orders, are Electrical Rigid Steel Conduit, Finished Electrical
Metallic Tubing, and Intermediate Metal Conduit.” Id. ¶ 27 (citing Pl.’s Resp.
Ex. 2 at 6).
28. “In connection with the All Tools Ruling, Commerce defined Electrical Rigid
Steel Conduit as:
• a threadable steel raceway of circular cross-section designed for
the physical protection and routing of conductors and as an
equipment grounding conductor;
• in nominal 10 ft (3. 05 m) lengths [citing ANSI C80.1];
• threaded on each end with one coupling attached;
• protected on the exterior surface with a metallic zinc coating or
alternate corrosion protection [citing UL 6] coating, and on the interior
surface with a zinc or organic coating;
• with the interior surface free from injurious defects;
• made to (1) American National Standard (“ANSI”) CS0.1-2005 [sic]
specification for electrical rigid steel conduit and marked along each
length with ‘Rigid Steel Conduit’ or (2) Underwriters Laboratories Inc.
(“UL”) UL-6 specification for electrical rigid metal conduit-steel and
marked along each length with ‘Electrical Rigid Metal Conduit’ or
‘ERMC-S’; and
Court No. 12-00349 Page 12
• marked with the manufacturer's name, trade name, or trademark or
other descriptive marking by which the organization responsible for
the product can be identified.”
Id. ¶ 28 (citing Pl.’s Resp. Ex. 2 at 6–7).
29. “Commerce’s final scope ruling specifically rejected CBP’s contention that
galvanized electrical conduit had to have an internal lining of non-electrically
conducting material in order to be considered finished electrical conduit.
Commerce stated:
CBP inspected LDA Inc.’s products and determined that the products
are subject to the CWP [(circular welded pipe)] Orders because,
according to its laboratory results, ‘... the sample is not internally
coated with a non-conducting liner.’ According to the Department’s
definition of finished electrical conduit, a ‘non-conducting liner’ is not
a necessary component of finished electrical conduit, and in the All
Tools” [sic] Scope Ruling the Department determined that similar
non-electrically insulated conduit was within the exclusion for
finished electrical conduit.”
Id. ¶ 29 (citing Pl.’s Resp. Ex. 2 at 8–9).
STANDARD OF REVIEW
The court reviews denied protests de novo “upon the basis of the record made
before the court.” See 28 U.S.C. § 2640(a)(1) (2012). 4 Thus, while the question before
the court is the same as the one that faced CBP, the record before the court may, and in
this case does, include different information. Moreover, CBP’s factual determinations are
4 Further citations to Title 28 of the U.S. Code are to the 2012 edition.
Court No. 12-00349 Page 13
presumed to be correct and the burden is on Plaintiff to rebut those presumptions. See
28 U.S.C. § 2639(a)(1).
CONCLUSIONS OF LAW
As the court has explained in its prior slip opinion, the court has jurisdiction over
Plaintiff’s “civil action commenced to contest the denial of [its] protest . . . under [19 U.S.C.
§ 1515].” 28 U.S.C. § 1581(a); see also LDA Incorporado, 978 F. Supp. 2d at 1370; Xerox
Corp. v. United States, 289 F.3d 792, 793 (Fed. Cir. 2002). CBP made a protestable
decision as to the application of the Orders to Plaintiff’s entry. LDA Incorporado, 978 F.
Supp. 2d at 1369–70. CBP’s application of the Orders to Plaintiff’s merchandise did not
become “final and conclusive” because Plaintiff filed a timely protest contesting CBP’s
decision. See 19 U.S.C. § 1514(a)(2). The court’s role here is defined by the nature of
its jurisdiction in this instance. The court is not reviewing what Commerce has done, as
it would if this case involved a challenge to a scope ruling under § 1581(c). The court
exercises jurisdiction under § 1581(a) to review whether Customs’ decision to apply the
Orders to Plaintiff’s merchandise was in error. Thus, the question for both Customs
below, and the court here, is whether Plaintiff’s merchandise is “finished electrical
conduit.” The undisputed facts show Plaintiff’s merchandise is “finished electrical conduit”
and is therefore specifically excluded from the Orders.
The scope of the court’s review is a function of its jurisdiction and therefore it is
necessary to once again carefully distinguish Customs’ and Commerce’s role with respect
to the entry of the merchandise in this case. The court reviews those decisions properly
within the province of Customs, i.e., factual decisions regarding the merchandise and the
Court No. 12-00349 Page 14
decision to apply the order to the merchandise. While Congress gave the role of
determining the scope of an order to Commerce, see 19 U.S.C. § 1516a(a)(2)(B)(vi); 19
U.S.C. § 1677(25); 19 C.F.R. § 351.225, Customs, incident to its “ministerial” function of
fixing the amount of duties chargeable, must make factual findings to determine “what the
merchandise is, and whether it is described in an order” and must decide whether to apply
the order to the merchandise. See Xerox, 289 F.3d at 794–95 (citations omitted).
The court understands the U.S. Court of Appeals for the Federal Circuit in Xerox
to have used the term “ministerial” to refer to Customs’ tasks in that they cannot affect the
scope of the order and the resulting duty owed. As the Court of Appeals has held,
Customs undeniably must act in both ministerial and non-ministerial capacities to
correctly process entries of goods subject to antidumping and countervailing duties. 5 See
Xerox, 289 F.3d at 794. In Xerox, the plaintiff’s imported goods were paper feed belts for
electrostatic photocopiers. Customs assessed antidumping duties based on its
5It seems contradictory to say that Customs is charged with finding facts and ascertaining
whether the merchandise is “described in the order,” but is nonetheless acting in a
ministerial capacity. Typically one thinks of ministerial acts as passive or involving no
analysis or discretion. See Marbury v. Madison, 5 U.S. 137, 151 (1803) (explaining a
ministerial officer exercises no discretion). When Customs discerns facts and then
applies those facts to the scope provided by Commerce, it is conducting analysis to some
degree. However, the Reorganization Plan of 1979 made clear, and the Courts have
repeatedly affirmed, that Customs’ role is “ministerial” as to the rate and amount of duties
chargeable in antidumping and countervailing duty cases. See Reorganization Plan No.
3 of 1979, §§ 5(a)(1), 93 Stat. 1381, 44 Fed. Reg. 69,273, 69,274–75 (Dec. 3, 1979),
effective under Exec. Order No. 12,188 of January 2, 1980, 45 Fed. Reg. 989, 993 (1980);
see also Mitsubishi Elec. Am., Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994).
Thus, even though Customs makes decisions as to the facts and the application of the
order, Customs acts in a ministerial capacity because it cannot change the rate and
amount of antidumping or countervailing duties chargeable.
Court No. 12-00349 Page 15
determination that the belts were covered by an antidumping duty order. Xerox Corp. v.
United States, 24 CIT 1145, 1145, 118 F. Supp. 2d 1354, 1354 (2000), rev’d 289 F.3d
792 (2002). The importer argued that the goods were clearly outside the scope of the
order and that Customs had made a mistake of fact. Customs denied the protest and the
importer sought judicial review. Xerox, 24 CIT at 1145, 118 F. Supp. 2d at 1354. The
United States Court of International Trade held that it did not have jurisdiction under 28
U.S.C. § 1581(a) to hear the case because the importer should have requested a scope
ruling from Commerce. Xerox, 24 CIT at 1146–47, 118 F. Supp. 2d at 1355. The Court
of Appeals, reversing the Court of International Trade, found that the goods “were not
used for power transmission and were not constructed with the materials listed in the
order . . .” and therefore were not covered by the order. Xerox, 289 F.3d at 795.
The Court of Appeals thus held that Customs’ decision was a protestable error.
The Court of Appeals in Xerox explained that:
Customs is charged with the ministerial function of fixing “the amount of duty
to be paid” on subject merchandise. When merchandise may be subject to
an antidumping duty order, Customs makes factual findings to ascertain
what the merchandise is, and whether it is described in an order. If
applicable, Customs then assesses the appropriate antidumping duty.
Such findings of Customs as to “the classification and rate and amount of
duties chargeable” are protestable to Customs under 19 U.S.C.
§ 1514(a)(2).
Id. at 794 (internal citations omitted). Incident to performing its function of assessing
duties on entries of goods that may or may not be subject to antidumping or countervailing
duty orders, Customs must make factual findings to determine the nature of the
merchandise. Additionally, Xerox provides that Customs must read the language of the
Court No. 12-00349 Page 16
order to determine whether or not the goods in question fall under that description. The
factual analysis and application of the scope to the goods in question are decisions of
Customs. Customs’ function, while involving discretion as to the facts and the application
of the facts to the scope, cannot affect the scope of the order. Although Customs’ role as
to the scope of the order is ministerial (i.e., it can do nothing to change the scope), in
applying that scope it has made a protestable decision. Under Xerox, errors made by
Customs in deciding whether the order applies to the goods are protestable. See id. at
795.
The holding in Xerox is consistent with the statutory scheme. The statute in
§ 1514(a) provides that
[e]xcept as provided in subsection (b) of this section, . . . any clerical error,
mistake of fact, or other inadvertence . . . adverse to the importer, in any
entry, liquidation, or reliquidation, and, decisions of the Customs Service,
including the legality of all orders and findings entering into the same, as
to--
...
(2) the classification and rate and amount of duties chargeable,
are final and conclusive unless a protest with Customs is timely filed or the denial of such
protest is challenged at the Court of International Trade. 19 U.S.C. § 1514(a)(2). 6 Clerical
errors, mistakes of fact and other inadvertent mistakes made by Customs are protestable
under § 1514(a). Additionally, the statute provides that the legality and findings forming
6 The decisions covered in § 1514(b) refer to “determinations made under . . . subtitle IV
of this chapter [(19 U.S.C. §§ 1671–1677n, the countervailing and antidumping duty
laws)] which are reviewable under section 1516a of this title . . . .” 19 U.S.C. § 1514(b).
The clarification of the scope of an order by virtue of a scope ruling would be reviewable
under 19 U.S.C. § 1516a, and would not be protestable.
Court No. 12-00349 Page 17
the basis of a decision by Customs regarding the classification, rate, and amount of duties
chargeable for an entry of goods are also protestable decisions. Therefore, as Xerox
holds, the misapplication of the scope of an order by Customs requires Customs to both
determine what the merchandise is and then apply the scope of the order to the
merchandise in question. Per the statute, both the legality of Customs’ decision, as well
as the findings forming the basis of that decision, are protestable and are the focus of the
court’s review in this case. Thus, here the court reviews de novo whether Customs erred
either in its factual analysis of the merchandise or in its decision to apply the Orders, as
written by Commerce, to the merchandise. The Orders specifically exclude finished
electrical conduit. See ¶ 5. 7 Therefore, the court must determine whether the
merchandise was finished electrical conduit.
Here, undisputed evidence makes clear Plaintiff’s merchandise was “finished
electrical conduit.” The scope of the ANSI Standard C80.1-2005 provides:
Finished conduit is produced in nominal 10 ft. (3.05m) lengths, threaded on
each end with one coupling attached. It is protected on the exterior surface
with a metallic zinc coating or alternate corrosion protection coating (as
specified in the 13th edition of UL 6 in Clauses 5.3.3, 6.2.4, 7.8, and 7.9)
and on the interior surface with a zinc or organic coating.
¶ 16. It is undisputed that Plaintiff’s “galvanized electrical conduit was both internally and
externally coated with a non-electrically insulating material (zinc) and was suitable for
electrical use in accordance with . . . UL-6 for ‘electrical rigid ferrous metal conduit’ and
. . . ANSI[] standard C80.1-2005 for ‘electrical rigid steel conduit.’” ¶ 8 (citing Pl.’s Resp.
7All citations to a paragraph number, without more, are to the court’s numbered findings
of fact herein.
Court No. 12-00349 Page 18
Ex. 1 at Attachs. 3, 6). 8 Defendant provides no evidence that LDA’s merchandise was
not “finished electrical conduit.” 9 Nowhere in its papers does Defendant dispute that
Plaintiff’s merchandise was finished electrical conduit. 10 Thus, as a matter of law the
undisputed facts show that Plaintiff’s merchandise was “finished electrical conduit.”
As in Xerox, Customs here made a decision as to whether the goods were covered
by the Orders. In Xerox, Customs erred when it included the plaintiff’s paper feed belts
for electrostatic photocopiers in the order on industrial belts used for power transmission
because the plaintiff’s goods were undisputedly outside the scope of the order. It is not
clear to the court whether in Xerox Customs made any specific factual findings, or simply
concluded, wrongly, that the goods fell within the scope of the order. See Xerox Corp. v.
United States, Ct. No. 97-435-TJA, Def.’s Reply 2 (filed May 21, 1999). See also Xerox,
24 CIT at 1145, 118 (explaining that Customs denied the protest for lack of
8 The parties have stipulated that Plaintiff provided Customs with information establishing
that Walsall, the foreign exporter from whom Plaintiff purchased the rigid steel conduit,
complied with the ANSI C80.1 and UL-6 standards. See ¶¶ 9, 12, 15.
9 Below, Customs mistakenly believed “the subject merchandise was not internally
galvanized and was thus unfinished conduit subject to the antidumping and countervailing
duty orders.” ¶¶ 11–14. However, as Plaintiff explained, its merchandise was, in fact,
internally galvanized. Changing course, Customs then asserted “that the subject
merchandise was unfinished conduit and was not suitable for electrical use because it
was not internally coated with a non-conducting liner.” ¶ 14. As Plaintiff points out, the
ANSI C80.1-2005 and UL-6 standards for finished metal conduit do not require an internal
coating with a non-conducting liner. The court is unaware of why Customs thought a non-
conducting liner was required. Defendant presents no evidence speaking to this point.
10 Defendant does contend in its Proposed Conclusions of Law that “[t]he phrase ‘finished
electrical conduit’ was not defined in the CVD Order and AD Order at issue,” and that the
fact that Commerce issued a scope ruling in response to an importer’s request “reveals
that CVD Order and AD Order were not ‘unambiguous.’” Def.’s PCL ¶ 8 (citing Xerox,
289 F.3d at 792).
Court No. 12-00349 Page 19
documentation). Here, Customs initially made a pure factual mistake in its determination
that the merchandise was not internally galvanized. ¶¶ 11–14. Ultimately, while Customs
acknowledged that Plaintiff’s goods were in fact internally galvanized, ¶ 14, Customs
included the goods within the scope of the Orders because it believed that finished
electrical conduit must be internally coated with a non-conducting liner. ¶ 14. Customs’
belief was in error. Although not a purely factual error, the “misapplication of the order by
Customs is properly the subject of a protest under 19 U.S.C. § 1514(a)(2).” 11 Xerox, 289
F.3d at 795.
In Defendant’s proposed conclusions of law, it does not dispute that the
merchandise is finished electrical conduit. Instead, Defendant claims “Plaintiff’s actual
dispute is with the scope of the CVD and AD Orders applied to its merchandise by CBP.”
Def.’s PCL ¶ 1. This statement is incorrect. Plaintiff challenges Customs’ decision in
applying the Orders to its merchandise. The scope specifically excludes “finished
electrical conduit.” Plaintiff does not challenge the reach of the scope. Plaintiff merely
claims that its merchandise is, and always has been, finished electrical conduit.
Defendant’s argument raises a separate problem. At first, Defendant’s statement
that “Plaintiff’s actual dispute is with the scope of the CVD and AD Orders applied to its
merchandise by CBP” suggests that the scope of the Orders was clear, requiring Plaintiff
11The misapplication of the order by Customs is a protestable decision. Customs has
the duty to discern facts so that it may properly apply countervailing and antidumping duty
orders. Its job in that regard is not ministerial. Customs must also apply the order to the
facts. In many cases, it is clear that the order in question applies to particular entries of
goods, and Customs applies the order in a ministerial fashion. If it is wrong then it has
made a ministerial error.
Court No. 12-00349 Page 20
to seek a scope ruling from Commerce if it disagreed with the clear meaning of the Orders.
However, Defendant also seeks to distinguish Xerox by stating that the phrase “finished
electrical conduit” was ambiguous, noting that Commerce defined the phrase in the All
Tools Ruling. Def.’s PCL ¶¶ 7–9 (internal citations omitted). If Defendant is arguing that
the scope was unclear, then by placing the goods within the scope of the Orders prior to
a clarification by Commerce, Customs would have been interpreting the Orders, which it
is not allowed to do. As discussed above, this is the province of Commerce, not
Customs. 12 See Reorganization Plan No. 3 of 1979 at § 5(a)(1)(C).
12 As discussed above, Customs finds facts regarding what the product is, reads the
order, and applies the order to the facts if appropriate. If Customs makes a mistake in
these two tasks, as it has done here, that is a protestable decision. However, Defendant’s
argument about the need to clarify the scope of the Orders would, if true, raise bigger
problems for Customs in this case. If Customs believes the scope truly needs clarification,
Commerce should be consulted. Congress’s Reorganization Plan did not envision that
Customs would have a role in clarifying the order. See Reorganization Plan No. 3 of 1979
at § 5(a)(1)(C) (stating that the administration of antidumping and countervailing duties
shall be transferred to the Commerce Department except that Customs “shall accept such
deposits, bonds, or other security as deemed appropriate by the Secretary, shall assess
and collect such duties as may be directed by the Secretary . . . .”).
It may be that in some cases there is a concern regarding the clarity of an order
and the question then becomes who should shoulder the burden of consulting Commerce.
In an ideal world, Customs would have a mechanism for seeking Commerce’s guidance
and suspending liquidation while doing so. However, there seems to be no regulatory
provision mandating such a course. As a result, it appears that sometimes Customs tells
the importer to request a scope ruling if it does not want its goods to be covered by the
order. See 19 C.F.R. §§ 351.225(c), (e). The importer can request that CBP extend the
time for liquidation if there is good cause. 19 C.F.R. § 159.12(a)(1)(ii). Sometimes it may
be the case that the importer is familiar with the underlying investigation and the resulting
order, and indeed may be more familiar with the order than Customs. The importer may
feel certain that the scope does not cover its product. In such a case, the importer maybe
reluctant to expend the time and resources to seek a scope ruling when it believes the
scope clearly does not cover its product. If the importer fails to request a scope ruling
(footnote continued)
Court No. 12-00349 Page 21
Moreover, the Orders here were clear and there is not even a plausible argument
in this case that any ambiguity could have supported Customs’ inclusion of the goods in
the scope. It is always possible to find something the order did not say. Orders are
written in general terms. However, Customs has pointed to nothing in the scope language
here that could have indicated to Customs that the presence of a non-conducting liner
was necessary for a product to be classified as finished electrical conduit. The undisputed
facts before Customs, and before this Court, lead to the conclusion that the subject
merchandise was finished electrical conduit.
CONCLUSION
The court finds that Plaintiff’s merchandise was finished electrical conduit and,
therefore, specifically excluded from the Orders. Plaintiff’s Entry No. 438-0698613-9 was
and Customs applies the order to the goods, then Customs will necessarily have
exercised discretion as to what the order means. Such a result might not seem unfair
since the importer could have (and perhaps should have) sought a scope ruling. Fair or
not, it is simply not the scheme envisioned by Congress, and it is not the scheme so often
cited by the Courts. See Cemex, S.A. v. United States, 384 F.3d 1314, 1324 (Fed. Cir.
2004); see also Xerox Corp., 289 F.3d at 794; see also Mitsubishi Elec. Am., Inc., 44 F.3d
at 976–77. If it were the case, as Defendant suggests, that Customs believed that these
Orders truly needed clarification, then Customs would have been acting beyond its
authority in, nonetheless, assessing antidumping and countervailing duties on Plaintiff’s
merchandise.
In this case, the scope of the Orders did not reach the product at issue because
the product at issue was clearly “finished electrical conduit” which is excluded from the
Orders. There is no argument before the court, even from Defendant, that Plaintiff’s
goods are not finished electrical conduit. If there were any arguments that the Orders
could have been interpreted to reach Plaintiff’s merchandise, then such a task was for
Commerce, not Customs.
Court No. 12-00349 Page 22
not covered by the Orders and was not subject to any corresponding antidumping or
countervailing duties. CBP thus incorrectly liquidated Plaintiff’s merchandise, charging
additional duties that were not owed. CBP shall reliquidate Entry No. 438-0698613-9,
and refund all antidumping and countervailing duties paid on the entries with interest as
provided by law.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated:June 19, 2015
New York, New York