CIT Rules Bond Amount Can Reflect AD Liability, Not Liquidated Entries, Older Bonds

In National Fisheries III,¹the Court of International Trade ordered CBP to again reconsider and recalculate the continuous bond requirement for certain importers of shrimp products subject to antidumping duty liability.

In National Fisheries II, the CIT had ruled that an enhanced bonding requirement established by CBP to cover potential liability for AD duties was unreasonable and capricious. CBP had sought to apply a formula that secured such duties at substantially higher amounts than the cash deposit established by the Department of Commerce. The Court set aside the individual continuous bond determinations based on the enhanced bonding requirement and remanded CBP to redetermine the limit of liability on each individual continuous entry bond, without application of the enhanced bonding requirement.

In response to the National Fisheries II remand order, CBP indicated it had applied procedures contained in Customs Directive 99-3510-004 in arriving at the redetermined amounts, which were based on 10 percent of all duties, taxes, and fees paid by the importer during the relevant bond period plus potential antidumping duty liability.

National Fisheries raised three principal objections to the remand redetermination submitted by CBP. First, it argued that CBP should require security for potential AD duty liability only under limited circumstances, and that CBP erred when it determined the new continuous bond amounts by applying a fixed ten-percent formula, rather than considering the payment history or financial circumstance of the importer.

However, the CIT rejected this argument, finding that CBP had treated AD duty deposits in the same way in which it treats ordinary duties, for which an importer deposits estimated duties upon making entry of the merchandise. The CIT further stated that CBP is granted a measure of discretion to set continuous bond liability limits to protect the revenue.

In its remaining arguments, National Fisheries stated that the recalculation failed to recognize that many prior entries had been liquidated and should not have been included in the calculation, and that CBP had incorrectly included older continuous bonds to which the enhanced bonding requirement had never applied.

On these two arguments, the CIT agreed with National Fisheries ruling that CBP must reconsider its application of the 10 percent formula on entries that had already been liquidated. The CIT further ruled that CBP could not increase the liability limits for those older continuous bonds, whose liability limits had not been subject to enhanced bonding requirements.

(See ITT’s Online Archives or 08/31/09 news, 09083135, for BP summary of Slip Op. 09-89 in which CIT invalidated CBP’s “high value” bonding requirements, ordering CBP to recalculate the continuous bond requirement for shrimp imports.

See ITT’s Online Archives or 04/01/09 news, 09040130, for BP summary on CBP’s termination of shrimp as a special category subject to “high value” bonding requirements. Note that shrimp had been the only category subject to this high value requirement.)

¹National Fisheries Institute, Inc., et al., v. U.S. Customs and Border Protection (“III” added for editorial purposes)

(Slip Op 10-61, dated 05/25/10)