CIT Says 'Entered' in AD/CVD Orders Only Means Entered Into US
The Commerce Department improperly found that the plain language of the antidumping duty and countervailing duty orders on chassis and subassemblies thereof from China cover Vietnamese chassis with Chinese-origin components, the Court of International Trade held on Oct. 8. Judge Claire Kelly said the orders "contain multiple ambiguities," including "when components are included within the scope of the Orders," when third-country operations exclude the individual components from the orders, and the meaning of "subassemblies ... whether ... assembled or unassembled."
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Kelly added that, on remand, Commerce must apply the plain meaning of the term "entered," which means "entered into the United States" and not "entered into a" third country. Lastly, the judge said the agency must revisit its decision to apply AD/CVD to the entire value of the merchandise, rather than just the Chinese-origin components of the imported chassis.
At issue is Commerce's scope ruling finding that importer Pitts Enterprises' chassis, made by Vietnamese company Thaco with Chinese-origin axle and landing gear leg components, are within the scope of the AD/CVD orders on Chinese chassis.
In the ruling, the agency assumed the phrase "entered" used in the orders means both entered into the U.S. and "entered into Vietnam." While Pitts didn't contest this point, Kelly found that the plain meaning of the term "entered" necessarily means "entered into the United States." Without a "specific reference to entry into a third country or third countries more generally, the plain meaning of the scope language means 'entered' into the United States," the judge said.
The orders specifically say that chassis or chassis subassemblies "entered with" components or "entered for further assembly with" components are also subject merchandise. If this meant "entered anywhere," the scope would contain an "internal contradiction," Kelly noted. When the term "entered" is used with the phrase "subject merchandise," there's "no dispute that the word 'entered' means 'entry into the United States,'" the court said.
This sentence in the orders' scope then says that subject merchandise includes chassis “entered with or for further assembly with components." If "entered" means "entered into the United States," it must have the same meaning here. It's "not possible for the same word, in the same sentence, to have contradictory meanings," Kelly held. The court said that, on remand, "Commerce must adopt the plain meaning of the word 'entered.'"
Kelly also remanded the orders for a separate reason: that Commerce said the orders' plain language reaches Chinese-origin components that eventually enter the U.S. when there are numerous ambiguities in the orders' scope.
First, the court said the orders are ambiguous "as to when components are included within the scope because the phrase 'sold by themselves,' is ambiguous." The scope says individual components "sold by themselves" aren't subject to the order, though "components entered with or for further assembly with a finished or unfinished chassis are subject merchandise." The scope distinguishes chassis, subassemblies of chassis and components of chassis subassemblies, the court noted, adding that "components" may mean either individual components, such as axles and landing gear legs, or subassemblies, such as drum or brake assemblies.
The judge held that the phrase "sold by themselves" is ambiguous, since it "could mean sold for use in something other than a chassis or sold apart from a chassis." While Commerce and DOJ said the phrase means "sold for a purpose other than use in a chassis," neither offered a "rationale for that position nor confronts an equally plausible meaning," Kelly said.
The court also said the orders are ambiguous "as to when third country operations exclude individual components." The scope language says "all processing" won't remove Chinese components from the scope, though the orders "are unclear as to whether 'processing' includes welding and fabrication, two types of operations that Commerce articulates in its scope ruling and concludes are 'processing' without analysis."
Lastly, Kelly said the orders are ambiguous "as to the meaning of 'subassemblies.'" The judge said the orders' plain meaning doesn't clearly provide that "an instance of fewer than all the necessary components for a subassembly constitutes an unassembled subassembly" rather than just a collection of components. It's unclear if an "unassembled subassembly must be imported with all of its parts together, or whether it is enough that the parts will ultimately become part of a chassis," the court said.
The only claim for which the court found for the government concerned the effective date of suspension of liquidation and cash deposits for the AD/CVD. While Pitts said the imposition of duties prior to the preliminary scope ruling was unlawful, the court said Commerce's regulations provide for a cash deposit rate "to be applied as soon as Commerce initiates a scope inquiry," with no exception for "ambiguous orders which must be clarified," the court said.
Kelly additionally remanded Commerce's decision to apply AD/CVD to the entire value of the imported chassis rather than just on the Chinese-origin components. The agency justified its approach by noting that Thaco imports "almost all of its axle and landing gear subassembly components from China, which constitute an unassembled subassembly." But, "the plain meaning of the scope language does not support Commerce’s premise that components are always 'unassembled subassemblies,'" so the agency can't conclude that the entire chassis are subject merchandise, the court held.
(Pitts Enterprises v. United States, Slip Op. 25-133, CIT # 24-00030, dated 10/08/25; Judge: Claire Kelly; Attorneys: Emily Lawson of Appleton Luff for plaintiff Pitts Enterprises; Kara Westercamp for defendant U.S. government)