We are writing to bring your attention to a recent decision by the U.S. Court of International Trade (CIT) (Sunpreme, Inc. v. United States) with significance for importers of products which may or may not be covered by an antidumping or countervailing duty order. The decision highlights that unless an importer’s products are clearly covered by the scope of an AD or CVD order, CBP is powerless to require the importer to file Type 03 entries and pay cash deposits of antidumping and countervailing duties until Commerce issues a decision finding the products to be in-scope.
The products imported in Sunpreme had some features described by the scope of the AD and CVD Orders on Crystalline Silicon Photovoltaic Cells (solar panels), and some features specifically excluded from these orders. For several years, the plaintiff filed Type 01 entries for its product without issue, before CBP began rejecting entries, requiring that they be refiled as Type 03 with cash deposits of AD and CV duties. The importer engaged in a protracted discussion with CBP over the applicability of the orders, which included visits by CBP to the importer’s U.S. manufacturing facilities, written correspondence, and testing by a CBP lab.
When CBP ultimately decided that the products were covered by the orders, the importer responded by formally requesting a scope ruling from Commerce and by filing suit at the CIT challenging the cash deposits CBP had already collected, and challenging the suspension of liquidation. Commerce considered the importer’s scope request, and decided that a full-blown scope inquiry was warranted (which is still underway). The CIT considered and granted the importer’s request for a preliminary injunction, forbidding CBP from collecting further cash deposits during the pendency of litigation. In granting the injunction, the Court ruled that the importer is likely to prevail on the merits of its underlying case (which would result in obtaining refunds of the cash deposits CBP had previously collected).
The key takeaway from the case is that CBP’s handling of AD and CVD matters is limited to a ministerial (i.e., administrative) functions. In cases when CBP must decide if a product is covered by AD and CVD orders, it can only conclude that a product is in scope based on “observed factual information” and clear scope language. In other words, CBP may only require an importer to file Type 03 entries and collect cash deposits of AD and CV duties when the scope decision is clear cut. CBP may not interpret ambiguous scope language in reaching that outcome. As the CIT put it:
“At the point CBP realized it was unsure that the language of the Orders included Plaintiff’s merchandise, it could not place the goods within the scope of the Orders because Congress charged Commerce with clarifying and interpreting its antidumping and countervailing orders.”
If you find yourself in a good faith dispute with CBP regarding whether or not your imports are subject to an AD or CVD order, we encourage you to keep this case in mind (and to give us a call!).