Trade Court Should Uphold CBP Evasion Finding, DOJ Argues

CBP is empowered to make its own scope determinations when evaluating antidumping and countervailing duty evasions, and the Court of International Trade should therefore sustain a determination made by CBP regarding steel grating from China, the government argued in a Dec. 23 brief at the Court of International Trade. The government response comes eight months after a motion for judgment filed by importer Ikadan System USA and manufacturer Weihai Gaosai Metal Product Co. (see 2204260079) because of a voluntary remand (Ikadan System USA v. United States, CIT # 21-00592).

In the underlying Enforce and Protect Act case, CBP found Ikadan and Gaosai guilty of evading AD and CVD orders on steel grating from China by transshipping their grates through South Korea and also misclassifying the entries. Both Ikadan and Gaosai filed scope requests with the Commerce Department, with Ikadan's concerning ductile cast iron flooring for pig farrowing crates and Gaosai's dealing with pig farrowing crates and farrowing flooring systems. In both cases, Commerce found that the products fell within the scope of the AD/CVD orders but issued its ruling after the statutory deadline to be included on the EAPA record.

When Ikadan and Gaosai filed suit at CIT, CBP asked the court for a voluntary remand in order to consider Commerce's scope determination and place it on the administrative record. The Court granted the government's motion, and CBP filed its remand redetermination on Oct. 3. In a Nov. 4 brief, the plaintiffs complained that CBP failed to give a relevant analysis of the scope ruling and that the agency was "attempting to have it both ways -- independent enough under the EAPA statute to be able to make its own scope determinations without Commerce’s aid, yet hiding behind Commerce by insisting that it performs only a 'ministerial' role, such that it is not required to defend its scope determinations" (see 2211070041).

The plain language of the EAPA statute empowers CBP to make determinations as to whether merchandise is subject to an AD/CVD order, DOJ argued. "The statute explicitly contemplates that CBP will make determinations as to whether merchandise is subject to an AD/CVD order," noting that CIT has previously held that scope referrals to Commerce are only required when CBP is unable to determine whether merchandise is covered. In this case, the argument is meaningless, since Commerce's scope determinations, conducted at the request of the plaintiffs,"reached the same conclusion as CBP," DOJ said.

The plaintiffs also argued that, even if their steel grating is covered merchandise, CBP still erred in finding evasion because the "false material statement" and "material omission" require some degree of culpability, and that CBP "must establish that plaintiffs were aware that they were violating the law" before it can make a finding of evasion, citing Diamond Tools Tech. LLC v. U.S. Unlike in Diamond Tools, the "plaintiffs point to no contradictory guidance from either CBP or Commerce as to" the application of the AD/CVD orders, DOJ said.

Further, reading an intent requirement into the EAPA statute would "violate principles of law applicable to all AD/CVD proceedings," DOJ said. Both CIT and the Federal Circuit have declined to read an intent requirement into AD/CVD law because neither CBP nor Commerce possesses the ability or resources to conduct a full-scale criminal-like investigation into alleged wrongdoing by an importer.