CIT Nixes Aluminum Content Requirements for 'Finished Goods Kit' Exemption from China Aluminum Extrusions Duties

The Court of International Trade on June 23 struck down a core tenet of the Commerce Department’s interpretation of the scope of antidumping and countervailing duties on aluminum extrusions from China, finding Commerce’s position that “finished goods kits” must include non-extruded aluminum components is unsupported by the language of the scope. CIT also unsettled another agency precedent by holding fasteners are not irrelevant when determining whether a product meets the “finished goods kit” exemption.

In its 2012 scope ruling on Meridian Products’ refrigerator door and trim kits (see 12122601), as well as many other scope rulings since, Commerce had held “finished goods kits” must have non-extruded aluminum parts that go beyond mere fasteners. It relied on a sentence in the scope that provides an “imported product will not be considered a “finished goods kit” and therefore excluded from the scope … merely by including fasteners such as screws, bolts, etc. in the packaging with an aluminum extrusion product.” According to Commerce, a product that exists solely of aluminum extrusions cannot qualify for the finished goods kit exemption, and as Meridian’s trim kits consist only of extruded aluminum parts and “mere fasteners,” they are not eligible.

However, Commerce’s reading contradicts the specific requirements for “finished goods kits” laid out in the scope’s previous sentence, said CIT. “The specific governing language of the Orders unambiguously lists the requirements a kit must meet in order to be excluded from the scope as a ‘finished goods kit,’” it said. “The kit must be (1) an unassembled combination of parts that (2) includes at the time of importation all of the necessary parts to fully assemble a final finished good, with no further finishing or fabrication (such as cutting or punching), and (3) be capable of assembly “as is” into a finished product.”

Nowhere does the scope explicitly set a requirement non-aluminum content in products that otherwise meet the stated requirements of the “finished goods kits” exemption, said CIT. “The exclusionary language does not bar an unassembled “combination of parts” consisting solely of aluminum extrusions, or aluminum extrusions, “fasteners”, and “extraneous materials” from qualifying for the exclusion if the combination includes all of the parts necessary for forming a complete finished good,” it said.

Nor does the scope say that the inclusion of “fasteners” or “extraneous materials” can disqualify a kit that otherwise meets the exemption’s requirements, said the court. The sentence in the scope that says products don’t qualify as finished goods kits “merely by including fasteners” is “simply an attempt to prevent the circumvention of the scope of the Orders by ensuring that the “mere” inclusion of fasteners in a packaged aluminum extrusion product, that does not otherwise meet the scope-exclusion requirements, will not qualify it as a “combination of parts” for the “finished goods kit” exclusion,” said CIT.

Commerce’s interpretation “impermissibly expanded the scope language by placing a restriction on the ‘finished goods kit’ exclusion that is not supported by the plain language of the scope of the Orders,” said CIT. Reversing its own ruling from December that found Meridian could not raise the fastener and aluminum content requirements (see 1501050040), CIT sent the case back to Commerce with “instructions to provide an interpretation of the ‘finished goods kit’ exclusion to the Orders that complies with the scope language and to evaluate the plaintiff’s Trim Kits under that interpretation.”

Meridian’s lead attorney praised the decision, calling it a chance for Commerce to clarify the sprawling scope of duties on aluminum extrusions. “Commerce has systematically expanded the scope of the extrusions matter far beyond what was covered by the petition or produced in the U.S.,” said Daniel Cannistra of Crowell & Moring. “In fact, most products that are being litigated in the extrusions antidumping cases haven't been produced in the U.S. for decades,” he said. “Hopefully, Commerce will take this opportunity to develop a meaningful framework in line with the scope of the order and petition. Otherwise, the already unprecedented number of scope rulings and litigation arising from those rulings will continue,” said Cannistra.

The Justice Department and a lawyer that represents the domestic manufacturer-led Aluminum Extrusions Fair Trade Committee in several trade cases did not respond for comment.

(Meridian Prods. v. U.S., Slip Op. 15-67, CIT # 13-00018, dated 06/23/15, Judge Musgrave)

(Attorneys: Daniel Cannistra of Crowell & Moring for plaintiff Meridian Products, LLC; Tara Hogan for defendant U.S. government)