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CAFC Judges Question Scope Exclusion on Thai Pipe, Authority of HTS in Scope Language

Judges at the U.S. Court of Appeals for the Federal Circuit questioned antidumping duty petitioner Wheatland Tube Co. and respondent Saha Thai Steel Pipe Public Co. during a Nov. 7 oral argument over Wheatland's claim that a Commerce Department scope ruling improperly excluded dual-stenciled pipe from the AD order on circular welded carbon steel pipes and tubes from Thailand (Saha Thai Steel Pipe Public Co. v. United States, Fed. Cir. # 22-2181).

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The Court of International Trade sustained the exclusion in August 2022, prompting the present appeal. During the oral argument, Judge Raymond Chen prodded the petitioner's claim that since dual-stenciled pipe qualifies for a standard pipe certification, it should be subject to the order. The judge likened the matter to a child achieving the ranking of "black belt" in karate.

"For example, if my kid has both a brown belt and black belt in karate, nobody's calling my kid a brown belt, they're calling him a black belt," the judge noted.

James Durling, counsel for Saha Thai, approved of the analogy, stating that it doesn't make sense for dual-stenciled pipe to be referred to as standard pipe, even though it necessarily is standard pipe to become dual-stenciled, the same way a black belt necessarily is a brown belt. "We have a product that is different," with different certification requirements, that happen "to function and fit within the kind of broad physical size described in the order," Durling said. "But that's why the language in the order known as standard pipe is so important" and requires the discussion of the (k)(1) factors.

Christopher Cloutier, counsel for Wheatland, said the difference between dual-stenciled and subject pipe is not so different as to not exclude the dual-stenciled pipe. "What we're talking about here is really a standard pipe that's rolled a little thicker than it might be otherwise, but it's still within the tolerance for standard pipe and can be sold as standard pipe and use," Cloutier said.

The judges also probed Durling's other arguments in defense of the trade court's ruling, asking the attorney about the authority of Harmonized Tariff Schedule subheadings included in an order's scope, especially where they are in conflict with the scope language, and about the lack of exclusion language in the present order. In the case, Saha Thai argued that dual-stenciled pipe should be excluded since the HTS number under which it enters the U.S. is not listed under the order's scope. The exporter contests Wheatland's claim that the scope of the HTS numbers is not diapositive and can be set aside.

Judge Jimmie Reyna asked Durling that if there's a contradiction between a tariff heading set out in the orders and the physical description of the subject merchandise, which would trump? Durling admitted that the order's language takes precedence, prompting Reyna's agreement. However, Saha Thai's counsel said that the tariff code may not supersede the language of the order's scope if the scope language is "clear on its face," but that "doesn't mean that the tariff codes are not part of the scope and are relevant."

To this, Reyna pointed out that tariff codes are only included so as to be relevant to CBP. Durling again disagreed and said that the HTS lines are also included so as to better understand the scope language.