CIT Rules China Nails in Kits are in-Scope of AD Order, Nixes ITA’s Proposed Test

Domestic producer Mid-Continent Nail Corporation challenged a ruling by the International Trade Administration excluding nails imported in home tool kits from the scope of the August 1, 2008 AD order on certain steel nails from China. The Court of International Trade, finding that the ITA had applied contradictory approaches in cases where merchandise covered by AD orders is imported in kits with non-covered items, ruled that "[s]uch inconsistency in agency procedure is not permitted," and instructed the ITA to "identify a test it will employ consistently," with a legal justification.

In its remand redetermination the ITA argued that it has authority from section 731 of the Tariff Act to define the scope of its AD orders, noting that it cannot predict “every possible permutation" of a product when drafting an AD order. As a scope test for kits, the agency said it would consider: "(1) the practicability of separating the component merchandise for repackaging or resale; (2) the value of the component merchandise as compared to the value of the product as a whole; (3) the ultimate use or function of the component merchandise relative to the ultimate use or function of the mixed-media set as a whole; and (4) any other relevant factors that may arise on a product-specific basis."

Using this test, the ITA determined that the proper focus of its scope inquiry was the tool kits within which the nails are packaged, but the court rejected the proposed scope test and over-ruled the exclusion of the contested nails from the scope of the AD order. Holding that the test “invites analysis of the product in question rather than interpretation of the final order’s scope," the court reminded the agency that, “after a final antidumping order is issued, that order can be interpreted, but not changed,” and ruled that "[t]he nails in question …are unambiguously subject to the Final order."

While the CIT remanded the case back to ITA for a redetermination consistent with its opinion, the court did not specifically order the ITA to devise another a priori scope test for AD-covered merchandise imported within kits.

(See ITT’s Online Archives 11051935 for summary of preceding CIT ruling.)

Mid Continent Nail Corp. v. U.S., Slip Op. 12-31, dated 03/07/12, Judge Tsoucalas