HQ 229695 - Protest No. 4909-02-100053 and Application for Further Review; 19 U.S.C. 1514(a)(5); L.G. Electronics, USA v. United States; Timken Co. v. United States; liquidation performed contrary to injunction; liquidation performed contrary to Commerce instructions - United States International Trade Commision Rulings

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HQ 229695

April 21, 2005

LIQ-4-02-LIQ-11-RR:CR:DR

Port Director of Customs
ATTN: Rafael Cuevas, Protest Officer
San Juan, Puerto Rico 00901

RE: Protest No. 4909-02-100053 and Application for Further Review; 19 U.S.C. 1514(a)(5); L.G. Electronics, USA v. United States; Timken Co. v. United States; liquidation performed contrary to injunction; liquidation performed contrary to Commerce instructions

Dear Mr. Cuevas:

The above referenced protest and application for further review was forwarded to this office for a determination. We have considered the points raised and a decision follows.

FACTS:

The protest pertains to one entry of cut-to-length carbon steel plate from Belgium, entered on June 2, 1999, by Duferco Steel, Inc. (Protestant). The merchandise was subject to antidumping duties (ADD) in case A-423-805-003 and countervailing duties (CVD) in case C-423-209-000.

Protestant challenged Commerce’s determination that its merchandise fell within the scope of the ADD and CVD orders issued by the Department of Commerce (“Commerce”), and on February 4, 2000, the U.S. Court of International Trade (CIT) ordered a preliminary injunction against the liquidation of all unliquidated entries of the subject merchandise imported by Protestant (“[Customs is enjoined from] during the pendancy of this litigation, from making or permitting liquidation of the subject entries [or] following the final court decision in this action, from causing or permitting liquidation of the subject entries except in accordance with such final decision.”)

On October 23, 2000, in Message No. 0297216, Commerce instructed Customs to assess antidumping duties and liquidate the subject merchandise entered between August 1, 1998, and July 31, 1999, under ADD case number A-423-805-003. There were no restrictions on the release of the information contained within the message.

On May 29, 2001, the CIT held that Protestant’s merchandise fell within the scope of the orders, and sustained Commerce’s 1999 scope determination. See Duferco Steel. Inc. v. U.S., 146 F. Supp. 2d 913, Slip Op. 2001-62.

On June 6, 2001, in Message No. 1157202, Commerce notified Customs of the February 4, 2000, preliminary injunction, and ordered Customs to not liquidate any entries of the subject merchandise made by Protestant and to un-set any such entries that were scheduled for liquidation. There were no restrictions on the release of the information contained within the message.

On January 8, 2002, the continued existence of the preliminary injunction was reiterated in Message No. 2008202, as was Commerce’s instruction that Customs not liquidate any unliquidated entries of the subject merchandise. There were no restrictions on the release of the information contained within the message.

Protestant appealed the CIT’s decision to the Court of Appeals for the Federal Circuit (“CAFC”). On April 8, 2002, during the pendancy of the appeal, Commerce issued instructions regarding CVD case no. C-423-209, in which it ordered Customs to assess countervailing duties and liquidate the subject merchandise entered between January 1, 1999, and December 31, 1999. There were no restrictions on the release of the information contained within the message. See Message No. 2098203.

On July 12, 2002, the CAFC reversed the CIT’s decision and held that Protestant’s steel was not within the scope of the antidumping and countervailing duty orders. Duferco Steel v. U.S, 296 F.3d 1087 (Fed.Cir. 2002). Commerce did apply for certiorari to the Supreme Court.

On August 9, 2002, Commerce reiterated the existence of the CIT’s preliminary injunction, referencing Message Nos. 1157202 and 2008202, and ordered Customs to not liquidate any entries of the subject merchandise made by Protestant and to un-set any such entries that were scheduled for liquidation. There were no restrictions on the release of the information contained within the message. See Message No. 2221203. That same day, however, Customs liquidated the subject entry as a “no change” liquidation and assessed antidumping and countervailing duties.

On October 17, 2002, in a judgment order and pursuant to the CAFC’s ruling, the CIT ordered Commerce to instruct Customs to implement the exclusion of Protestant’s merchandise from the scope of the subject ADD and CVD orders pursuant to the decision of the CAFC. Duferco Steel, Inc. v. United States, Judgment Order, Slip Op. 02-125 (October 17, 2002). Commerce did not publish notice of the CIT’s judgment order in the Federal Register.

On October 18, 2002, in Message No. 2291201, Commerce reiterated the existence of the CIT’s preliminary injunction, referencing Message Nos. 1157202 and 2008202, and ordered Customs to not liquidate any entries of the subject merchandise made by Protestant and to un-set any such entries that were scheduled for liquidation. There were no restrictions on the release of the information contained within the message.

On December 10, 2002, in Message No. 2344201, Commerce notified Customs of the termination of the injunction, instructed Customs to terminate the suspension of liquidation for all entries of the subject merchandise. There were no restrictions on the release of the information contained within the message.

Protestant now protests the August 9, 2002, liquidation of the entry and the attendant assessment of the antidumping and countervailing duties.

ISSUE:

Whether the liquidation of the subject entry on August 9, 2002, was illegal and voidable.

LAW AND ANALYSIS

The action protested in this case is the August 9, 2002, liquidation of an entry that fell under the scope of a preliminary injunction against liquidation issued by the CIT. On August 12, 2002, the protest was timely filed within 90 days of the liquidation date of August 9, 2002. See 19 U.S.C. §1514(a)(5); see also 19 C.F.R. 174.12. Protestant argues that the liquidation by Customs was “premature and invalid in that it was done contrary to an outstanding injunction against liquidation issued by the CIT, and contrary to repeated instructions from [Commerce] not to liquidate.” Protestant wishes Customs to suspend final disposition pending receipt of instructions

In accordance with 19 U.S.C. §1516a(e), entries of merchandise for which liquidation has been suspended by court order remain subject to suspension of liquidation until there is a “final court decision on the action”:

§1516a(e) Liquidation in accordance with final decision

If the cause of action is sustained in whole or in part by a decision of the United States Court of International Trade or of the United States Court of Appeals for the Federal Circuit --

(1) entries of merchandise of the character covered by the published determination of the Secretary, the administering authority, or the Commission, which is entered, or withdrawn from warehouse, for consumption after the date of publication in the Federal Register by the Secretary or the administering authority of a notice of the court decision, and

(2) entries, the liquidation of which was enjoined under subsection(c)(2) of this section shall be liquidated in accordance with the final court decision in the action. Such notice of the court decision shall be published within ten days from the date of the issuance of the court decision.

A decision of the CIT that has been appealed “is not a final court decision within the plain meaning of §1516a(e).” Timken Co. v. United States, 893 F.2d 337, 339 (Fed. Cir. 1990); see also Smith Corona Corp. v. United States, 915 F.2d 683, 688 (Fed. Cir. 1990) ("Suspension of liquidation continues until a 'conclusive' court decision is reached, i.e., a decision that is not subject to further appeal or collateral attack."); NTN Bearing Corp. v. United States, 892 F.2d 1004, 1006 (Fed. Cir. 1989) ("return of final duties must await a final court decision and liquidation by the agency in accordance with that decision"); Melamine Chemicals, Inc. v. United States, 732 F.2d 924, 934 (Fed. Cir. 1984) ("administrative handling of the involved entries of melamine from the Netherlands can be affected only by (1) a preliminary injunction pursuant to 19 U.S.C. §1516a(c)(2), or (2) a final court decision adjudicating the legality, vel non, of the challenged determination. 19 U.S.C. §1516a(e)").

Here, the preliminary injunction against liquidation existed until October 17, 2002, when the CIT ordered Commerce to instruct Customs to implement the exclusion of Protestant’s merchandise from the scope of the subject ADD and CVD orders, pursuant to the decision of the CAFC. At that point a “final court decision” was reached in the Duferco case and the preliminary injunction of February 4, 2000, lifted. Prior to that, any liquidation of entries covered by that injunction against liquidation would have had no legal effect.

“An importer is entitled to rely on a preliminary injunction, or other court order barring liquidation, obtained in an effort to resolve a dispute with Customs or Commerce and when liquidation is enjoined by order of the court, liquidation may only be at the rate ultimately approved by the court to permit liquidation at any other rate violates the clear mandate of the unfair trade laws, not to mention the final judgment of the court entered in cases in which injunctions were issued.”

L.G. Electronics, USA v. United States, 21 CIT 1421, 1428, 991 F.Supp. 668, 675 (1997).

HOLDING:

This protest should be GRANTED. The liquidation of the entry was illegal and voidable because it took place while liquidation was enjoined and Protestant timely protested the liquidation.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act and other methods of public distribution.

Sincerely,

Myles Harmon
Director,
Commercial Rulings Division

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