HQ 230289 - AFR protest No. 3001-02-102311; 19 U.S.C. 1671b(d)(3); 19 U.S.C. 1673b(d); countervailing duties; antidumping duties; gap period - United States International Trade Commision Rulings

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HQ 230289

February 11, 2005

LIQ-4-01-LIQ-11-RR:CR:DR 230289 IOR

CATEGORY: LIQUIDATION

Port Director
Customs and Border Protection
610 Canal St.
Chicago, Il 60607

Attn: M. Lewis, Import Specialist

RE: AFR protest No. 3001-02-102311; 19 U.S.C. 1671b(d)(3); 19 U.S.C. 1673b(d); countervailing duties; antidumping duties; gap period

Dear Port Director:

The above-referenced protest has been forwarded to this office for further review. Our decision follows.

FACTS:

The subject protest covers four entries of pasta from Italy, manufactured by Pastificio Campano (“Campano”), and imported by the protestant, JCM Ltd. dba Racconto. The entries were made on July 22 and 23, 1996. The entries were entered into the Automated Commercial System (“ACS”) as type “07”, which indicates that they are subject to quota/visa and ADD/CVD.

The pasta imported under the protested entries was the subject of countervailing duty (CVD) and antidumping duty (ADD) cases. The facts of each case are set out separately below.

Countervailing duty case C-475-819

The subject pasta from Italy was the subject of a preliminary affirmative CVD determination as of October 17, 1995 (60 FR 53739). The CVD investigation had been initiated on June 8, 1995. See, 60 FR 30280. As of October 17, 1995, the U.S. Customs Service (now Customs and Border Protection ) (“Customs”), was directed to suspend liquidation of all entries of the subject pasta from Italy that are entered, or withdrawn from warehouse, for consumption on or after October 17, 1995, and was instructed to require a cash deposit or posting of a bond equal to the published CVD rate. The applicable rate published for Campano was 2.23%. The specific case number assigned to Campano is C-475-819-004.

On February 1, 1996, Commerce published a Notice of Postponement of Final Countervailing Duty Determinations and Termination of Suspension of Liquidation for the subject CVD case (CVD Notice of Postponement). 61 FR 3672. The CVD Notice of Postponement stated that in light of a January 19, 1996 Notice of Preliminary Determination and Postponement in the ADD case, which stated that the final determination in the ADD case would be postponed, Commerce set forth June 3, 1996 as the date for the final ADD determination. Commerce stated that in accordance with section 703(d) of the Tariff Act of 1930, as amended by the Uruguay Round Agreements Act (“the Act”), and which is codified as 19 U.S.C. §1671b(d), it would direct Customs to terminate the suspension of liquidation in the CVD case, on February 14, 1996, and that no cash deposits or bonds would be required for merchandise which enters on or after February 14, 1996. The CVD Notice of Postponement further stated that the suspension of liquidation will not be resumed “unless and until [Commerce] publishes countervailing duty orders.” 61 FR 3673.

Customs message no. 6045114, dated February 14, 1996, based on instructions from Commerce, instructed Customs field officers to terminate the suspension of liquidation for CVD purposes on all shipments of the subject merchandise, entered, or withdrawn from warehouse for consumption on or after February 14, 1996, and that the suspension shall not be resumed unless and until Commerce publishes countervailing duty orders in the pertinent cases. This message was submitted by the protestant, and is not in ACS. According to a Customs review of ACS records, the suspension of liquidation for case C-475-819 was terminated in ACS on February 14, 1996.

On June 14, 1996 Commerce published a Final Affirmative Countervailing Duty Determination in the subject case. 61 FR 30288. The determination stated that Commerce will reinstate suspension of liquidation under section 706(a) of the Act (19 U.S.C. §1671e) if the ITC issues a final affirmative injury determination, and cash deposits of estimated countervailing duties for subject entries of merchandise will be required in the amounts indicated. The rate of estimated CVD set forth for Campano was 2.59%. The “all others” rate was 3.78%. 61 FR at 30308-30309.

On July 24, 1996, Commerce published a Notice of Countervailing Duty Order and Amended Final Countervailing Duty Determination (“CVD Order”). 61 FR 38544. The CVD Order stated that the International Trade Commission had notified Commerce that an industry in the U.S. was materially injured by imports of the subject merchandise under the Act, and that CVD will be assessed on all unliquidated entries of the subject merchandise entered or withdrawn from warehouse for consumption on or after October 17, 1995 and before February 14, 1996, and:
on all entries and withdrawals made on or after the date of publication of this countervailing duty order in the Federal Register. Entries of pasta made on or after February 14, 1996, and prior to the date of publication of this order in the Federal Register are not liable for the assessment of countervailing duties due to the Department’s termination, effective February 14, 1996, of the suspension of liquidation.

In accordance with section 706 of the Act, the Department will direct United States Customs officers to reinstate suspension of liquidation an [sic] to assess, upon further advice by the administering authority pursuant to section 706(a)(1) of the Act, countervailing duties for each entry of the subject merchandise in an amount based on the net countervailable subsidy rate for the subject merchandise.

61 FR 38544 – 38545.

According to Customs review of ACS records, the suspension of liquidation for case C-475-819 was reinstated in ACS on July 24, 1996.

Based on instructions from Commerce, on October 2, 1998, in message 9275111, Customs issued “Non Review Automatic Liquidation Instructions.” The message stated that Commerce had not received a request for an administrative review of the CVD order for the merchandise in case C-475-819, for the period from October 17, 1995 to December 31, 1996, except for the listed firms, and that except for the listed firms, Customs is to liquidate all entries and assess CVD on the merchandise “at the cash deposit or bonding rate in effect on the date of entry summary.” The message further stated that the notice constitutes the immediate lifting of suspension of liquidation of entries for the merchandise and period listed. Neither Campano nor the protestant were listed among the excepted firms. With respect to interest, the message states that the “interest provisions are not applicable to cash or bonds posted as estimated countervailing duties before the date of publication of the countervailing duty order.”

Antidumping duty case A-475-818

On January 19, 1996, with regard to the subject pasta from Italy, a Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination was published by the Department of Commerce (“Commerce”). 61 FR 1344. The ADD investigation had been initiated on June 8, 1995. See, 60 FR 30268. In the January 19, 1996 Notice, Customs was directed to suspend liquidation of all entries of the subject pasta from Italy that are entered, or withdrawn from warehouse, for consumption on or after January 19, 1996. In the January 19, 1996 notice, Commerce granted requests of the respondents, and agreed to postpone the final determination. 61 FR at 1345. The notice stated that, in accordance with applicable law, Commerce was subtracting, for deposit purposes, the cash deposit rate attributable to the export subsidies found in the CVD investigation. Because the suspension of liquidation was going to be terminated in the CVD case on February 14, 1996, the ADD rate would revert to the full amount on February 14, 1996. The “all others” rate at the full amount was stated as 15.85%. No separate rate for Campano was provided. 61 FR at 1350.

On June 14, 1996 Commerce published a Notice of Final Determination of Sales at Less Than Fair Value. 61 FR 30326. The Notice stated that Commerce was directing Customs to continue to suspend liquidation of all entries of the subject merchandise, that were entered or withdrawn from warehouse for consumption, on or after January 19, 1996, and that the suspension of liquidation would remain in effect until further notice. The Notice stated that the all others weighted average margin is 11.21%, and the all others bonding percentage is 10.38%, which does not include the amount determined to constitute an export subsidy. 61 FR at 30365. No separate rate for Campano was provided. The Notice also stated that the petitioners’ requests for an extension of the final determination had been considered an implied request to extend the provisional measures period to six months. 61 FR 30326.

Based on instructions from Commerce, on June 20, 1996, in message 6172112, Customs issued a Notice of Final Determination in ADD investigation A-475-818. The message referred to the June 14, 1996 Federal Register notice on the ADD case, and stated that with respect to the merchandise subject to case A-475-818:

[Customs] shall continue to suspend liquidation of such shipments that are entered or withdrawn from warehouse, for consumption on or after January 19, 1996. Effective June 14, 1996 Customs shall require for entry summaries a cash deposit or the posting of a bond equal to the margins shown below.

Neither Campano nor the protestant are identified as having a specific margin, and the “all others” deposit rate is stated as 11.21%.

On July 24, 1996, a Notice of Antidumping Duty Order and Amended Final Determination of Sales at Less Than Fair Value: Certain Pasta from Italy (“ADD order”), was published by Commerce. (61 FR 38547). The ADD order stated that Commerce will direct Customs to assess ADD “equal to the amount by which the normal value of the merchandise exceeds the export price or constructed export price for all entries of pasta from Italy”, “on all unliquidated entries of pasta from Italy entered, or withdrawn from warehouse, for consumption on or after January 19, 1996”. The specific “all others” rate of ADD to be assessed was 11.26%.

On October 2, 1997, the Court of International Trade issued a decision in F.LLI De Cecco Di Filipo Fara San Martino S.P.A. v. United States, 21 C.I.T. 1130, holding that Commerce incorrectly implied a request on the part of the petitioners in the ADD case to extend the provisional measures, where the petitioners had requested a delay in the final determination. The court held that where a statute requires a “request”, a request should not be implied by an action under a separate provision. Therefore, based on the decision in the CIT case, the provisional measures could not extend beyond May 19, 1996 (four months after the preliminary determination was published), under 19 U.S.C. §1673b(d).

On December 15, 1997, Commerce published a Notice of Court Decision, 62 FR 65673, to give notice that the Court of International Trade (CIT) in the De Cecco case had ordered Commerce to issue appropriate instructions to Customs to implement the court’s decision. The Notice stated that absent an appeal, or if appealed, upon a “conclusive” court decision affirming the CIT judgment:

[Commerce] will direct the U.S. Customs Service to: (1) lift the suspension of liquidation, release any bonds or other security posted, and refund any and all cash deposits paid as estimated antidumping duties on any and all entries of the subject merchandise which were produced by the following producers or imported by the following importers and were entered, or withdrawn from warehouse for consumption, after May 18, 1996, and before July 24, 1996; and (2) liquidate those entries without regard to any antidumping duty; and (3) pay any such refunds of cash deposits in accordance with law, including interest, from the date of entry at the rate(s) as announced from time to time by the Customs Service. Liquidation of such entries is suspended pending final and conclusive disposition.

62 FR at 65674. Neither the importer, protestant in this case, nor Campano, the producer of the subject imported merchandise were included in this list. On December 31, 1997, a correction of the December 15, 1997 notice was published, adding an additional producer, not Campano, to the list. 62 FR 68257. Customs issued liquidation instructions based on instructions from Commerce, on January 20, 1998, message 8020111, for entries of pasta from Italy, produced or imported by the firms listed in 62 FR 68257, for the period of May 18, 1996 to July 24, 1996. The instructions were in accordance with the December 15, 1997 notice of the court decision in 62 FR 65673, and did not list Campano or the protestant.

Based on instructions from Commerce, on February 17, 1998, in message 8048116, Customs issued “Non Review/ Automatic Liquidation Instructions.” In the heading, the message indicated that the period covered is July 24, 1996 to June 30, 1997, however, within the text of the message, the period covered for pasta from Italy was January 19, 1996 to June 30, 1997. The message stated that Commerce had not received a request for an administrative review of the ADD order for certain pasta from Italy in case A-475-818, for the period from January 19, 1996 to June 30, 1997, except for the listed firms, and that except for the listed firms, Customs is to assess antidumping duties on the merchandise entered, or withdrawn from warehouse, for consumption at the cash deposit or bonding rate in effect on the date of entry summary, and that the notice constitutes the immediate lifting of suspension of liquidation of entry summaries for the merchandise and periods listed. Neither Campano nor the protestant were listed among the excepted firms. The instructions further stated that “interest is applicable for all entries from 7/24/96 – 6/30/97.”

Based on instructions from Commerce, on May 2, 2000, in message 0123205, Customs issued a correction of the February 17, 1998 message 8048116, stating that the automatic liquidation of any unliquidated entries should be terminated, and liquidation should only be as directed in message 0123205, paragraphs 4 and 5:

Liquidate all entries from 01/19/1996 through 06/13/1996 only, except entries from [firms other than Campano and the protestant]. Liquidate all other [firm other than Campano and protestant] entries. Liquidate all entries from [firm other than Campano and protestant] for the period 01/19/1996 through 06/30/1997.

A correction was made to the May 2, 2000 message on March 12, 2002, based on instructions from Commerce, in Customs message 2071201, to change the time period for which the entries should be liquidated to January 19, 1996 through June 30, 1997 (which period would include the subject entries), as opposed to January 19, 1996 through June 13, 1996 (which period does not include the subject entries). These appear to be the last liquidation instructions pertaining to the subject merchandise. Thus, CBP was instructed to liquidate the subject merchandise at the cash deposit or bonding rate, in accordance with messages 8048116 of February 17, 1998, 0123205 of May 2, 2000, and 2071201 of March 12, 2002.

According to a review of ACS records, the suspension of liquidation for ADD entries under case A-475-818 was not terminated at any time prior to July 24, 1996. No record could be found in ACS that Customs had been instructed to terminate the suspension of liquidation of the entries under case A-475-818 prior to the subject entries having been made.

The entries

None of the protested entries were suspended under case C-475-819. The subject entries were suspended upon entry due to the continuation of suspension instructions issued by Commerce in the ADD case. See Customs message 6172112, dated June 20, 1996. According to ACS, notice of such suspension was issued to both the importer and the surety. The entries were liquidated on September 13, 2002, more than six months after the final issuance of corrected liquidation instructions on March 12, 2002.

A CF 7501 has been provided for representative entry AS4-xxxx8019. That CF 7501 shows that the merchandise was entered at a “free” rate for regular duties and ADD for case A-475-818-000, at the rate of 11.21% was asserted. No CVD was asserted on the entry. Handwritten on the CF 7501 is “C475819000” the rate of 4.08% and CVD in the amount of $360.88, in the duty column. According to the ACS record of entry AS4-xxxx8019, upon liquidation, CVD in the amount of $360.88 was assessed, plus interest. This is consistent with the information pertaining to the remaining entries.

The Protest

With respect to the CVD case, the protestant asserts that 1) CVD should not have been assessed because the provisional measures were not in effect at the time of entry, 2) the CVD was assessed at the incorrect rate, and 3) notices of rate advance and liquidation were not sent to the protestant but its broker who had gone out of business, and the protestant was not given the opportunity to respond prior to liquidation. With respect to the ADD case, the protestant asserts that 1) ADD should not apply because the provisional ADD measures were not applicable for entries made between July 19, 1996 and July 24, 1996, and 2) the entries should have been liquidated at the lower of the ADD deposit rate or the final rate.

The Customs Protest and Summons Information Report, CF 6445A, states that the entries were liquidated with CVD in accordance with Customs message 9275111 under the “all others” rate of 4.08%.

ISSUE:

Whether the entries were correctly liquidated with antidumping duties and countervailing duties.

LAW AND ANALYSIS:

We note that the protest was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. §1514 and 19 CFR Part 174). Customs liquidated the entries on September 13, 2002 and the protest was filed within 90 days, on December 12, 2002.

Under 19 U.S.C. §1514(a)(5), decisions of CBP as to the liquidation of an entry are subject to protest. Protestable decisions are "substantive determinations involving the application of pertinent law and precedent to a set of facts, such as tariff classification and applicable rate of duty." United States Shoe Corp. v. United States, 114 F.3d 1564, 1569-70 (Fed. Cir. 1997) (collecting harbor maintenance tax a purely "ministerial task" not requiring a decision by Customs), cert. granted, 118 S. Ct. 361, 139 L. Ed. 2d 281, 1997 WL 561769 (1997). Generally, we have held that the role of Customs in the antidumping process is "[s]imply to follow Commerce’s instructions in collecting deposits of estimated duties and in assessing antidumping duties, together with interest, at the time of liquidation." HQ 225382 (July 3, 1995); Mitsubishi Electronic America Inc. v. United States, 44 F.3d 973 (Fed. Cir. 1994).

The court in LG Electronics U.S.A., Inc. v. United States, 21 C.I.T. 1421, 991 F.Supp. 668 (1997) distinguished between CBP’s collection of ADD and liquidation of ADD. The court stated as follows:

A passive activity is not a decision. Id.; see also Dart Export Corp. v. United States, 43 C.C.P.A. 64, 69-70, 74 (1956) (accepting duty deposits falls short of decision-making). Where Customs only collects antidumping duties and does not determine the rate or amount of duties, Customs has not made a protestable decision. Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973, 976-77 (Fed. Cir. 1994). By contrast, calculation of antidumping duties by Commerce is a decision. Id. In the instant case, Customs has more than merely received duties. The actions here were more than merely ministerial. Relatively soon after entry, Customs decided for each "no change" entry that the rate of duty imposed at the time of deposit was correct and that the entry should be liquidated at that rate. By ordering the liquidations, Customs went beyond ministerial acts; Customs determined the amount of duty imposed.

Under LG Electronics, a CBP liquidation of CVD in an amount other than that which was deposited, resulting in a changed liquidation, goes beyond a merely ministerial decision, and as such is a protestable decision. In addition, an importer may protest the failure of Customs to follow a Commerce instruction under 19 U.S.C. §1514. American Hi-Fi International, Inc. v. United States, 19 C.I.T. 1340 (1995).

With respect to the CVD, the liquidation of the entries was not suspended for purposes of the CVD case, in accordance with Commerce instructions. The instructions issued by Customs, in message 6045114, only addressed the termination of suspension of liquidation. They did not address the deposit of cash or the posting of a bond for estimated CVD. Therefore based on the instructions alone it is not clear whether a deposit of CVD was required. However, based on the February 1, 1996 Federal Register CVD Notice of Postponement, according to which no cash deposits or bonds were to be required for merchandise which enters on or after February 14, 1996, the protestant was correct in not making any cash deposit or posting a bond. This is further confirmed by the CVD Order of July 24, 1996, which expressly states that entries of pasta made between February 14, 1996 and July 24, 1996 are not liable for CVD due to the termination of the suspension. No specific instructions were issued with respect to the liquidation of merchandise which was entered during this “gap” period between the provisional measures and the CVD Order. However, because liquidation of the entry was not suspended for the CVD case, upon the lifting of the suspension in the ADD case, the entry can be liquidated without regard to any CVD liquidation instructions. If an entry is not suspended for CVD, no liquidation instructions are required to be followed upon the liquidation of that entry. Because no estimated CVD deposit was required, even if the liquidation instructions sent in message 9275111 applied to these entries, no CVD was due.

Therefore, the protest should be allowed with respect to the CVD assessed upon liquidation of the entry, and any interest assessed thereon.

With respect to the assertion that notices of liquidation were not received by the protestant, we point out that it is well settled that the only notice of liquidation that is statutorily mandated is bulletin notice. See, Goldhofer Fahrzeugwerk GmbH & Co. v. United States, 13 CIT 54, 706 F. Supp. 892 (1989), aff’d, 885 F.2d 858 (Fed. Cir. 1989), reh'g denied, suggestion for reh'g declined, cert. denied 110 S. Ct. 1946 (1989); Tropicana Products, Inc. v. United States, 13 CIT 390, 395, 713 F.Supp. 415 (1989). The bulletin notice is the only effective notice of liquidation and the courtesy notice is predictive only. SSR v. Robles, 18 C.I.T. 475, 476, 853 F. Supp. 451 (1994). The Court of International Trade has held that the importer has the burden to check for posted notices of liquidation and to protest in a timely manner. See, Juice Farms, Inc. v. United States, 18 CIT 1037, 1040 (1994), aff’d, 68 F.3d 1344 (Fed. Cir. 1995); (stating that although Customs erroneously liquidated entries, protestant had no right to protest after the running of the 90-day periods after the posting of the bulletin notices of liquidation); Penrod Drilling Co., v. United States, 13 CIT 1005, 1009, 727 F.Supp. 1463 (1989), reh’g denied, 14 C.I.T. 281, 740 F.Supp. 858 (1990), aff’d. 925 F.2d 406 (Fed. Cir. 1991). In addition, a presumption of regularity attaches to the acts of government officials. See, e.g., International Cargo & Surety Ins. Co., v. United States, 15 CIT, 544, 779 F. Supp. 174, 177 (1991). There is no assertion made that bulletin notice was not provided.

With respect to the ADD, we find that the entries were correctly liquidated as entered with ADD. Customs was never instructed to lift the suspension of liquidation on entries subject to case A-475-818 after July 19, 1996, when prior to the De Cecco decision, the provisional measures would have expired under 19 U.S.C. §1673b(d). Moreover, in message 6172112, of June 20, 1996, Customs was specifically instructed to continue to suspend liquidation and to require a cash deposit or a bond equal to the stated margin. Therefore, when the subject entries were made, Customs suspended liquidation and collected duty deposits at the all others rate of 11.21%. Subsequently, Customs was specifically instructed to liquidate certain entries without any ADD, based on the De Cecco decision, but neither the subject manufacturer, Campano, nor the subject protestant was included in the instructions. Subsequent instructions as to the liquidation of these entries, were to liquidate the entries as entered. See, messages 8048116 of February 17, 1998, 0123205 of May 2, 2000, and 2071201 of March 12, 2002.

The protestant asserts that the entries should have been liquidated at the lower of the ADD deposit rate or the final rate, under 19 U.S.C. §1673f. Under section 1673f, which addresses handling of the difference between a cash deposit or a bond required as security under 19 U.S.C. 1673b(d)(1)(B) and the amount of antidumping duty determined under an antidumping duty order under 19 U.S.C. 1673e, the difference shall be refunded or released to the extent that the cash deposit or bond is higher than the duty under the order. In this case, the “all others” entered cash deposit or bond rate of 11.21%, was lower than the 11.26% “all others” rate in the Order.

The protest should be denied with respect to the ADD, as the entries were correctly liquidated as entered with respect to the ADD.

HOLDING:

The entries were incorrectly liquidated with CVD and should have been liquidated with no CVD, as entered. The entries were correctly liquidated with ADD, as entered.

The protest should be granted in part, as to the CVD, in accordance with the above decision, and denied with respect to the ADD. In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), you are to mail this decision, together with the Customs Form 19, 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 CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director

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