CAFC Says CBP Didn't Need to Refer AD Evasion Case on Xanthan Gum to Commerce
CBP didn't need to refer the question of whether petitioner CP Kelco still made oilfield xanthan gum to the Commerce Department in an antidumping duty evasion case, the U.S. Court of Appeals for the Federal Circuit held on Feb. 27. Judges Kimberly Moore, Todd Hughes and Tiffany Cunningham said the evidence didn't support such a referral and, in any case, such a referral would only apply to future merchandise and not the goods subject to the evasion case.
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Hughes, the author of the opinion, also said CBP permissibly used adverse inferences against the claimed manufacturers of the subject xanthan gum due to their failure to submit requested information, notwithstanding the full participation of the importers subject to the proceeding.
Lastly, the appellate court said the Court of International Trade erred in finding it didn't have jurisdiction over certain entries erroneously liquidated by CBP that importer GLoB Energy Corp. protested but failed to contest under Section 1581(a) at the trade court. Hughes said that while GLoB should have filed a 1581(a) action, the court still had jurisdiction to review the evasion determination as it applies to the entries under Section 1581(c). However, the error is harmless, given that the evasion decision is fully supported, the court held.
In the underlying Enforce and Protect Act action, CBP said importers GLoB, Ascension Chemicals, UMD Solutions and Crude Chem Technology evaded the AD order by misidentifying the imports as being of Indian origin. The agency used adverse inferences against the importers due to the failure of the importers' "purported manufacturer, Chem Fert," to respond to requests for production documentation.
The importers argued that CBP was required to refer the case to Commerce, since the sole petitioner for the EAPA case, CP Kelco, was no longer making oilfield grade xanthan gum in the U.S. CBP refused, finding that this claim didn't relate to the "narrow" question of whether the importers evaded the AD order.
CAFC sustained the trade court's acceptance of CBP's refusal to refer the case to Commerce. To support this claim, the importers relied on a "single email chain," which the trade court said was insufficient to show with "any certainty" that CP Kelco was no longer making oilfield xanthan gum (see 2208180045). In fact, the emails cited by the importers show CP Kelco stating that it "is manufacturing substantial quantities" of oilfield xanthan gum, the appellate court noted.
Even if there was evidence that a referral was needed, the importers didn't claim that "any change of circumstances would apply retroactively," Hughes said. CIT properly said the "issue was not relevant to Customs' present evasion determinations," since it only applied to "future modifications," the court held.
The appellate court then sustained the use of adverse inferences against the foreign manufacturers, noting that the importers themselves admitted that they "had to sue the manufacturers to obtain documentation relevant to the EAPA determination." And while the importers fully cooperated with CBP, there's no "law or precedent to support" the position that this should prevent the use of an adverse inference against the manufacturer, the court said.
Regardless, the evasion finding was supported, Hughes held. The importers don't contest that the products were transshipped from India and originated in China. Data from the International Trade Commission shows that the goods are made in China, Austria, France and the U.S., "with no reference to India." Rising import volumes from India into China, along with a "history of attempted circumvention of the xanthan gum AD order by various companies," is more than enough evidence to end the case, the court said.
Lastly, CAFC addressed the importers' appeal of the trade court's finding that it didn't have jurisdiction over 12 entries that were erroneously liquidated by CBP. GLoB protested the liquidations but failed to file a CIT case under Section 1581(a) challenging the liquidation. The trade court said it didn't have jurisdiction over the entries and couldn't order reliquidation of the entries, since GLoB should have filed suit to preserve its rights.
Hughes agreed regarding jurisdiction under Section 1581(a) but said the court should have reviewed the matter under Section 1581(c). The appellate court referred to its decision in Royal Brush Manufacturing v. U.S., in which CAFC said the trade court had jurisdiction under Section 1581(c) to review the "evasion determination itself even where the merchandise subject to the determination had been finally liquidated."
The distinction between an evasion challenge under Section 1581(c) and the "final liquidation decision" under Section 1581(a) is "central to Royal Brush's holding because" courts don't have Section 1581(a) jurisdiction to order reliquidation of finally liquidated entries, the court said. However, Hughes said the trade court's error is meaningless, given that the evasion decision is supported for the entries.
(All One God Faith v. United States, Fed. Cir. # 23-1078, dated 02/27/25; Judges: Kimberly Moore, Todd Hughes, Tiffany Cunningham; Attorneys: Kyl Kirby for plaintiffs-appellants led by GLoB Energy Corp.; Ashley Akers for defendant-appellee U.S. government)