Pencil Importer's Products Not Sustantially Transformed From Wooden Slat Inputs, US Says
Responding to a motion for judgment, the U.S. stood up for the Commerce Department’s scope ruling that pencil importer School Specialty’s products weren’t substantially transformed in the Philippines and should be subject to antidumping duties on pencils from China (School Specialty v. U.S., CIT # 24-00098).
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The importer claimed that Commerce wrongly “pick[ed] a single factor,” prefabrication of wooden slat inputs from China, that wasn’t in its regulations and that led to the preclusion of “any finding of substantial transformation ‘regardless of the specific facts and product involved.’”
But Commerce isn’t barred from considering prefabrication as a metric -- prefabrication “is directly relevant” to determinations about when and how a product’s essential characteristics have been imparted, the U.S. said.
The essential characteristic of the wooden slat inputs was that they were “to be used specifically for pencil production and associated production machinery,” it said.
It also said School Specialty’s argument that prefabrication “is a new factor ‘nowhere to be found’ in the regulation” had no merit. The regulation didn’t restrict Commerce to reaching substantial transformation determinations “in an identical fashion across proceedings,” it said, nor did the regulation prevent the U.S. from considering factors other than those specifically delineated in the regulation’s language.
And the U.S. disagreed that Commerce found prefabrication “precluded” a determination of substantial transformation in another country. The department “addressed each factor” of a substantial transformation analysis “with citations to the record and explanations for how it weighed each factor.”
The department ruled, for example, that the cased pencil inputs’ physical characteristics were endowed in China, not the Philippines, it said.
And School Specialty claimed that Commerce hadn’t reached that conclusion by following a “logical series of steps,” but the importer “fails to provide any argument as to how such an approach was illogical, and has therefore waived any such argument,” the U.S. said.