CAFC Reverses CIT Rejection of Commerce's Inclusion of Door Thresholds in Extrusions AD/CVD Order
The U.S. Court of Appeals for the Federal Circuit on Oct. 8 said the Court of International Trade improperly rejected the Commerce Department's inclusion of door thresholds imported by Worldwide Door Components and Columbia Aluminum Products in the antidumping and countervailing duty orders on aluminum extrusions from China. Judges Sharon Prost, Richard Linn and Todd Hughes said Commerce adequately explained on remand that the door thresholds are subassemblies and thus not qualified for the finished merchandise exception.
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Hughes authored the opinion, finding Commerce to have "engaged in a thorough analysis of the scope language," specifically explaining how the door thresholds are subassemblies. The agency offered enough evidence "as a reasonable mind might accept as adequate to support a conclusion," the decision said. Hughes disagreed with the trade court's treatment of the evidence and its finding that Commerce still had to consider whether the goods fit under the finished merchandise exception after finding them to be subassemblies.
Since "subassemblies and finished merchandise are mutually exclusive categories," Hughes said "it was error for the trial court to remand the case back to the agency for failure to consider the finished merchandise exception." The court said in its 2023 decision China Custom Manufacturing v. U.S., it "firmly foreclosed" the position that the agency needed to consider the exception despite the subassemblies finding.
The original scope decision including the door thresholds in the AD/CVD orders was remanded three times by the trade court (see 2212190051). In its final remand, Commerce said the goods fit under the finished merchandise exclusion, which exempts finished goods made with aluminum extrusions that are fully assembled and completed at the time of entry, such as finished windows with glass and doors with glass or vinyl. If a good is found to be a subassembly, it's barred from being considered for the exception.
The petitioner appealed the case, prompting the appellate court to question which decision from the agency and the trade court it was reviewing (see 2407110042). Ultimately, the Federal Circuit said that the initial scope ruling was insufficiently reasoned, but Commerce's first remand results at CIT were legal and backed by sufficient evidence.
Hughes held that the original scope ruling's conclusion on subassemblies was insufficient. The decision only had two sentences on the topic, neither of which specifically dealt with the importers' door thresholds.
Defects in the original decision were fixed by the first remand results, the decision said. Hughes highlighted three points made by Commerce, the first of which said that the subassemblies language "is broad enough to cover single aluminum extrusion components that are attached to other aluminum extrusion components" or non-aluminum extrusion components at the time of importation. The second point said a subassembly also could be described as an "intermediate product," making it definitely less than a finished good for purposes of applying the exclusion.
The third point said that while the subassemblies provision specifically says goods found to be subassemblies can qualify for the finished goods kit exclusion, no such allowance is made for the finished merchandise exclusion.
The trade court said the first remand results rest on improper inferences or factual findings not supported by the record, centering on evidence from the petitioners showing that door units are highly customizable and might require additional processing. CIT said this evidence is at odds with the importers' evidence that says the thresholds are fully assembled at the time of importation and don't require further processing.
Hughes said it doesn't appear that Commerce actually relied on the petitioners' evidence, and that Commerce rejected the importers' conclusion that their goods are finished merchandise since they are ready for use at the time of import. Since Commerce found that the thresholds must be attached to other components after importation to "become part of the downstream product," the thresholds qualify as subassemblies even without further finishing after import, the court said.
The trade court also faulted Commerce for failing to discuss certain exemplars listed in the finished merchandise exception. Hughes said the court recognizes CIT's concern "with line-drawing in the context of these Orders" and agrees that a "discussion distinguishing the categories could have been a helpful addition to the agency's decision. However, this omission "does not constitute reversible error," the court held.
Enbar Toledano, counsel for petitioner Aluminum Extrusions Fair Trade Committee, said the petitioner is “gratified that the Court ultimately sustained the Commerce Department’s determination that door thresholds from China should be subject to duties. The domestic industry has been injured by importers’ and foreign producers’ attempts to evade duties, and we now have the certainty that we need to ensure U.S. aluminum extruders will have a level playing field.”
(Worldwide Door Components v. United States, Fed. Cir. # 23-1532, dated 10/08/24; Judges: Sharon Prost, Richard Linn and Todd Hughes; Attorneys: John Foote of Kelley Drye for plaintiff-appellee Worldwide Door Components; Jeremy Dutra of Squire Patton for plaintiff-appellee Columbia Aluminum Products; Enbar Toledano of Wiley Rein for defendant-appellant Aluminum Extrusions Fair Trade Committee; Claudia Burke for amicus curiae U.S. government)