CIT Allows CBP to Require Enhanced Bonding Based on Commerce's Preliminary AD Rates

The Court of International Trade allowed CBP to proceed with enhanced bonding requirements on an importer of garlic from China, finding on Feb. 11 that a preliminary antidumping duty rate calculated by the Commerce Department is sufficient basis to mandate a high single transaction bond. Premier Trading had requested an injunction, arguing Commerce’s decision was premature until the final results of an AD duty administrative review set an actual final rate. But CIT said Premier failed to cite specific laws and evidence in favor of the injunction, criticizing a “lack of candor” by the company’s lawyer.

Premier Trading entered garlic in 2015 produced and exported by Qingdao Tiantaixing Foods, which at the time was subject to a 32.78% AD rate and a cash deposit requirement of $0.35 per kilogram. In November, Commerce issued the preliminary results of its latest administrative review of antidumping duties on garlic from China, preliminarily finding Qingdao Tiantaixing Foods ineligible for its own rate and subject to the China-wide entity rate of 367.67%, or $4.71/kg. Though the higher cash deposit rate is not in effect, CBP imposed an additional single transaction bond condition for release in the amount of $4.36 per kilogram, the difference between Qingdao Tiantaixing Foods’ current rate and the preliminary rate calculated by Commerce.

Premier Trading filed suit at CIT, requesting an injunction preventing CBP from requiring the single transaction bonds. It claims it is unable to meet the enhanced bonding requirements, particularly given the high costs of bonds on garlic from China. As a result, some of its entries are already spoiling, and reexportation is “limited and increasingly futile,” it said.

However, CBP is authorized under its regulations at 19 CFR 113.13(d) to “impose additional security equal to an importer’s potential antidumping duty liability,” noted CIT. Qingdao Tiantaixing Foods may be subject to the higher China-wide rate “as a consequence of Commerce’s preliminary determination,” and there has been a long and documented pattern of non-payment and underpayment of antidumping duties” on garlic from China. CBP provided confidential documents to the court showing Qingdao Tiantaixing Foods’ connection to other importers that show a pattern of non-payment and underpayment, which suggests that Premier Trading “poses a similar risk to the revenue,” said CIT.

Furthermore, Premier Trading failed to cite specific laws that say CBP can’t require enhanced bonding based off preliminary rates, nor did it cite specific evidence that it is harmed by the single transaction bond requirement. Despite representing other importers of garlic from China in similar cases, Premier Trading’s lawyer failed to cite those cases as precedent, and “feigned ignorance about the underlying facts behind Customs’ decision to require the additional bonding,” said CIT. “In this action the court has perceived a lack of candor on the part of counsel for Plaintiff,” said the court. “Understanding that one who seeks equity must do equity, the court believes that the balance of the equities tips in favor of the Government,” it said. Premier Trading’s lawyer did not immediately comment.

(Premier Trading, Inc. v. U.S., Slip Op. 16-13, CIT #16-00020, dated 02/11/16, Judge Gordon)

(Attorneys: Robert Hume of Hume & Associates for plaintiff Premier Trading; Tara Hogan for defendant U.S. government)