Pig Farrowing Crate Importers Blast EAPA Result for Ignoring Scope Rulings in CIT Complaint
CBP erred when it found that importers Ikadan System USA and Weihai Gaosai Metal Product Co. evaded the antidumping and countervailing duty orders on steel grating from China, the two companies said in a Nov. 23 complaint at the Court of International Trade. Accused of evading the orders via transshipping the grates through South Korea and also misclassifying the entries, Ikadan and Gaosai said that the evasion finding cuts against CBP's own analysis as to the scope of the orders and represents an improper attempt to retroactively apply AD/CV duties (Ikadan System USA, Inc., et al. v. United States, CIT #21-00592)
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The Enforce and Protect Act evasion investigation was based on the allegation of Hog Slat, Inc., which said that Ikadan and Gaosai were evading the AD/CVD orders by transshipping and misclassifying galvanized steel Tri-Bar Floor product. Both Ikadan and Gaosai filed scope requests with the Commerce Department on the AD/CVD orders to clear things up, with Ikadan's concerning ductile cast iron flooring for pig farrowing crates and Gaosai's dealing with pig farrowing crates and farrowing flooring systems.
In its first scope ruling, Commerce said that Gaosai's pig farrowing crates and farrowing floor systems that contained steel decking on the tribar truss floor are covered by the orders but that the other components of the systems are not covered. In Ikadan's scope ruling, Commerce said that imports of ductile cast iron flooring are not covered by the orders. However, these scope rulings were not placed on the EAPA investigation record due to "regulatory timeframes for considering new factual information" not allowing for the normal amount of time for comments.
"Because TRLED did not place Commerce’s scope determinations on the record in this EAPA investigation, the question of whether CBP’s finding of evasion is supported by substantial evidence rises or falls on its own analysis of the scope of the Orders," the complaint said. This move led CBP to completely ignore arguments Gaosai made in the scope ruling request, including that the pig farrowing crates and farrowing flooring systems are "downstream products dedicated to a particular use that are made of several components, including tribar floor that, if it had been imported by itself in a semi-finished form of bar lengths welded in a cross-section pattern, might be considered to be subject steel grating," the complaint said. "But Gaosai does not sell or import the semi-finished input."
It is indisputable that the pig farrowing crates themselves are not in the scope of the orders, the companies said. What CBP has done is find that the crate entries with the tribar flooring were evading AD/CV duties, they said. "The practical effect of its refusal to address this issue is that CBP’s apparent position is that farrowing crates necessarily contain tribar flooring, and are thus subject so the Orders," the complaint said, adding that this move gives CBP the ability to cover farrowing crates that don't contain the tribar flooring.
Further, the companies said that the finding that they skirted the orders by misclassifying steel grating as plastic is wrong as well. CBP's own initial determination ruled against evasion. "When Commerce issues a scope ruling or circumvention finding, it must consider the importance of fairness, under due process principles, to affected importers in the assessment of duties," the complaint said. "Binding precedent of the Federal Circuit and persuasive precedent of this Court hold that Commerce may not impose AD/CVD duties retroactively to a date before the importers were given adequate notice that their products might be within the scope of an order." The companies argue that this evasion finding is an attempt to retroactively assess AD/CV duties and is a due process violation.