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Truck Wheel Importer Tells CIT No AD/CVD Prior to Start of Scope Ruling Proceeding

Importer Vanguard National Trailer Corp. challenged CBP's finding that the company evaded the antidumping and countervailing duty orders on Chinese truck wheels, filing a complaint on Feb. 6 at the Court of International Trade. The importer said CBP improperly assessed AD/CVD on its entries from before May 12, 2021 -- the date on which the Commerce Department started a scope inquiry on whether Vanguard's truck wheels, imported from Thai manufacturer Asia Wheel, were covered by the AD/CVD orders (Vanguard National Trailer Corp. v. United States, CIT # 24-00034).

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In its scope decision, Commerce said the importer lacked "fair warning" that its goods were potentially subject to the orders on truck wheels from China until May 12, 2021. As a result, CBP was wrong to impose duties on entries from before that date, the complaint said.

In addition, CBP was unjustified in its finding that Vanguard made a material false statement or material omission in declaring its products as not subject to AD/CVD prior to May 12, 2021, Vanguard argued. The company said it "reasonably understood the third-country-processing provision of the scope" and Commerce's clarification of that language in the original AD/CVD investigations to mean that truck wheels made in third countries are only subject to the orders if both the rims and discs are made in China.

The wheels subject to the duties -- 22.5 and 24.5 inch steel wheels from China -- are made of rims and discs. During the underlying AD/CVD investigation, the proposed scope language didn't include language covering rims or discs from China that undergo further processing in a third country. However, following arguments from the petitioners seeking broader language, Commerce said that rims and discs from China further processed in a third country into finished wheels are included in the scope of the orders.

A few years later, CBP opened an Enforce and Protect Act investigation on Vanguard's wheels, which are completed by Asia Wheel. CBP requested a scope ruling from Commerce on the wheels. The agency said that since the scope's plain language is ambiguous on the question of whether wheels in which either the rims or discs are from China but completed in a third country are covered goods, it was appropriate to carry out a "substantial transformation analysis."

Commerce ultimately found that Chinese-origin discs used in Vanguard's wheels didn't undergo substantial transformation in Thailand, making the completed wheel subject to the orders. The result prompted CBP to find that Vanguard evaded the orders.

The importer's five-count complaint challenges CBP's imposition of duties prior to the start of the scope referral proceeding and alleges that CBP violated the company's due process rights by not providing it access to the confidential information in the review. The latter has previously been found to be a due process violation by the U.S. Court of Appeals for the Federal Circuit in Royal Brush Manufacturing v. U.S. (see 2310230022).

The final count of the complaint was a space reserved for any challenges that may arise once Vanguard's counsel gets access to the confidential record.