Commerce Unlawfully Applied AD Retroactively in Circ Inquiry, MSG Importers Argue
Two monosodium glutamate (MSG) importers told the Court of International Trade in a July 30 complaint that the Commerce Department unlawfully subjected MSG entries from Malaysia that used Chinese glutamic acid to the antidumping duty order on MSG from China retroactively (CPF Legacy v. United States, CIT # 25-00149).
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Challenging Commerce's circumvention finding on MSG from Malaysia, the importers also generally challenged the affirmative circumvention finding as unlawful and claimed that the agency unlawfully denied the importers' request to submit factual information in the proceeding.
In May 2024, Commerce gave notice that it was opening a country-wide circumvention inquiry on whether MSG from Malaysia is circumventing the order on Chinese MSG. In January 2024, Commerce received a covered merchandise referral from CBP regarding an AD evasion case on whether Chinese MSG is being transshipped through Malaysia. The importers received notice that their entries from Malaysia dating back to March 11, 2023, were covered by the Enforce and Protect Act (EAPA) proceeding.
Commerce said it would address the covered merchandise referral in the circumvention inquiry. In addressing the referral, the agency told CBP to begin suspending liquidation and requiring cash deposits on unliquidated entries entered prior to May 15, 2024. The importers said as a result of this move, they "became potentially subject to retroactive AD liability back before publication of both the Covered Merchandise Referral and the Initiation Notice back to March 11, 2023 – entries covered by the EAPA investigation."
Regarding the retroactive application of the AD, the importers, CPF Legacy, which does business as C. Pacific, and JEFI Enterprise (USA), said Commerce failed to make the "requisite regulatory findings to support a retroactive AD assessment under either the circumvention or the covered merchandise referral regulations." Neither the covered merchandise regulation nor the circumvention regulation allows for retroactive AD liability in the circumvention inquiry, the brief said.
Commerce's regulations are clear: the "date when Commerce publishes notice of its circumvention inquiry initiation is the clear cut-off," the brief said. While the agency could have applied AD prior to the date the covered merchandise referral was published, "it lacked the authority to apply AD prior to the date that the Initiation Notice [was] published," the importers said.
C. Pacific and JEFI argued that there's controlling precedent confirming that Commerce "must provide fair warning such that Plaintiffs would reasonably understand that products are subject to AD before such liability can be lawfully assessed retroactively." The importers argued that they received no such warning, adding that the "mere fact that an EAPA allegation was filed did not provide Plaintiffs with fair warning that AD liability could go back to March 11, 2023, particularly since Plaintiffs did not learn of the EAPA investigation until July 2024."
The importers also challenged the actual circumvention finding itself, arguing that the agency erred in "finding that all five factors under 19 U.S.C. § 1677j(b)(2)(A)-(E) determined that the process of assembly or completion in Malaysia is minor or insignificant."