Commerce Finalizes Overhaul of AD/CVD Regs, Softens Retroactive Liq Provisions for Scope Rulings

The Commerce Department will change its scope ruling procedures so that entries prior to the initiation of the scope inquiry are normally subject to suspension of liquidation and cash deposit requirements, but in a change from a 2020 proposal, will allow for requests to suspend liquidation at a later date, it said in a final rule amending its antidumping and countervailing duty regulations released Sept. 16.

Set for publication Sept. 20, the final rule moves Commerce's regulations into line with its position in a series of court cases stretching back nearly a decade that it is allowed to retroactively suspend liquidation (see 13121321). The U.S. Court of Appeals for the Federal Circuit affirmed in January 2020 that, based on Commerce’s current regulatory scheme, formal scope rulings only apply to goods entered on or after the initiation date of the scope inquiry (see 2001140056).

Scope rulings will now apply back to the first date that liquidation was originally suspended under the AD/CV duty order, unless otherwise directed by Commerce.

Commerce's final rule adopts its proposal that, following an affirmative scope ruling, the agency will direct CBP to suspend liquidation of all unliquidated entries, including merchandise entered prior to the beginning of the scope inquiry. However, Commerce will allow requests during scope rulings for liquidation to be suspended at an "alternative date," and will grant such requests if the agency "determines it is appropriate to do so." One example given by Commerce of such a circumstance is when administrative review timelines mean it would be impossible for an exporter to seek a lower rate on merchandise declared subject to an order in a scope ruling.

The new liquidation timelines will apply to scope requests filed on or after Nov. 4, as well as self-initiated scope inquiries that begin on or after that date. However, Commerce said it will in no case retroactively apply AD/CV duties to "unliquidated entries not yet suspended, entered, or withdrawn from warehouse, for consumption, on or after" Nov. 4.

"Producers, exporters, and importers of products found to be within the scope of an order generally cannot claim ignorance or reliance on another agency’s determinations or actions to avoid the application of Commerce’s scope ruling to their merchandise," Commerce said. "Thus, establishing a rule that normally applies retroactive suspension in scope inquiries will encourage parties to maintain a reasonable awareness of whether the product they are producing, exporting, or importing is subject to an AD/CVD order."

Commerce is also "particularly concerned with gamesmanship, delay, and duty evasion if foreign producers and exporters, as well as U.S. importers, believe that all entries not already suspended prior to the date on which Commerce initiates a scope inquiry are essentially excused from AD/CVDs, even if Commerce finds through the scope inquiry that the product has always been within the scope of the order," the agency said. "Under such a system, importers would have an incentive to import as much merchandise as possible prior to requesting a scope ruling to avoid potential AD/CVD liability."

Commerce is adopting its proposal to amend its scope regulations to say that a "scope ruling that a product is covered by the scope of an order is a determination that the product has always been covered by the scope of that order.”

In another change related to scope rulings, Commerce will no longer direct CBP to end suspension of liquidation when it issues a preliminary scope ruling that a product is not covered by the scope of an AD/CVD order. Instead, suspension of liquidation will continue despite the negative preliminary determination, until the final scope ruling is issued. If the final scope ruling finds the product out-of-scope, it would then direct the end to suspension of liquidation.

The revised scope regulations also provide for uniform scope ruling applications, to be made available on Commerce’s website.

In another change from its proposed rule, Commerce will not apply a scope ruling on one product from a given country to products subject to AD/CVD orders with identical scope descriptions from other countries. However, the regulations do provide for Commerce to issue "scope clarifications" applying previously issued scope rulings to other circumstances.

Other Changes Cover Anti-Circumvention Inquiries, Importer Certifications

The final rule also creates a new section in its regulations for anti-circumvention inquiries, in many ways mirroring its proposed revised regulations on scope rulings. In a change from its proposed rule, Commerce will not normally retroactively apply its anti-circumvention rulings beyond the inquiry's initiation date. However, the agency will allow for requests to apply anti-circumvention inquiries retroactively. The new section, 19 CFR 351.226, also sets deadlines and procedures for anti-circumvention inquiries, which were previously included under the section for scope rulings.

Commerce would also create new 19 CFR 351.227 for covered merchandise referrals for scope rulings from CBP in the context of Enforce and Protect Act investigations.

A new section of the regulations would be created for importer certifications, which will “codify and enhance Commerce’s existing authority and practice to require certifications by importers and other interested parties as to whether merchandise is subject to an AD/CVD order,” Commerce said. Commerce is giving itself the authority to instruct CBP to collect AD/CVD cash deposits from importers that fail to provide certifications or make false statements.

The final rule would also provide for the electronic filing of importer reimbursement certificates, in addition to in paper form. The final rule would also make procedural changes, including for deadlines in AD/CVD investigations and filing requirements in AD/CVD cases, as well as changes to Commerce’s regulations on new shipper reviews.