CIT Sustains AD/CVD Scope Changes on Trailer Wheels, Remands Retroactive Imposition of Duties

The Court of International Trade on May 18 sustained a scope revision in antidumping and countervailing duty investigation on steel trailer wheels from China, backing the Commerce Department's addition to the scope in its final determinations of language covering Physical Vapor Deposition (PVD) chrome-covered wheels. In a pair of opinions, Judge Gary Katzmann said Commerce had authority to determine the scope of its investigations, and found that the agency "provided adequate explanation" for its decision to include PVD chrome wheels. However, Katzmann did remand the cases due to Commerce's retroactive imposition of antidumping and countervailing duties, instructing the agency to assess the duties from the final scope memo that made the scope changes, and not the date of the preliminary determination.

The cases were both brought by importer Trans Texas Tire and foreign supplier Zhejiang Jingu Company Limited. In the petition that requested the steel trailer wheel investigations, the petitioner, Dexstar, made several statements to the effect that it wanted to exclude steel wheels. However, the petition did not reference specific chrome plating processes including electroplating or PVD processing, nor did Commerce's scope when it initiated the investigations. Even after the preliminary determinations, the scope excluded "road steel wheels that are coated entirely with chrome."

Only after the preliminary determinations did Dextar confirm that it did not intend the scope exclusion to cover trailer wheels coated in chrome with a PVD process. In the final determination, Commerce changed the chrome wheel exclusion to now exclude only "wheels coated entirely in chrome and produced through a chromium electroplating process," but not wheels finished with PVD or other processes from the order.

In both CIT challenges to the AD and CVD cases, Katzmann upheld Commerce's scope determination, finding that the agency's decision was a permissible clarification of the scope and that the scope change was consistent with the petition's original intent. After differentiating between electroplating and PVD processing to a degree sufficient for the court, "Commerce reasonably found that the Petition intended the scope to exclude only electroplated chrome wheels, and not PVD chrome wheels," Katzmann said. Further, "the case law supports deference to Commerce's scope determinations."

However, Commerce unlawfully imposed antidumping and countervailing duties on PVD chrome wheels back to the original suspension of liquidation on the date Commerce issued its preliminary determination. According to the judge, "Commerce failed to provide adequate notice upon the initiation of the [AD/CVD] proceedings that PVD chrome wheels would not qualify for the exclusion for steel trailer wheels coated in chrome." The agency is required to provide adequate notice to any "reasonably informed importer" that duties are to be levied on their products before any retroactive assessment of the duties may occur, the judge said. Katzmann remanded the case with instructions to the agency to reformulate its instructions consistent with the opinion within 30 days.

(Trans Texas Tire, LLC v. U.S., Slip Op. 21-63, CIT # 19-00188, -00189, dated 05/18/21, Judge Katzmann; Attorneys:Jordan Kahn of White & Case for plaintiff Trans Texas Tire LLC; Ting-Ting Kao of White & Case for consolidated plaintiff Zhejiang Jingu Company Limited; Ashley Akers of DOJ for defendant U.S. government; Nicholas Birch of Schagrin Associates for defendant-intervenor Dexstar Wheel)