Commerce Turning EAPA Case Into Circumvention Proceeding, Importer Argues at CIT

The Commerce Department is apparently expanding a covered merchandise inquiry in an Enforce and Protect Act case into what is in effect an anti-circumvention inquiry, but can't use any prospective finding of circumvention to find an importer previously evaded duties in violation of the Enforce and Protect Act, plaintiffs Norca Industrial Co. and International Piping & Procurement Group (IPPG) argued in a Feb. 14 brief asking the Court of International Trade to reconsider its prior stay in the case (Norca Industrial Co. v. U.S., CIT # 21-00192).

A circumvention determination could not result in a retroactive evasion determination but the entire EAPA inquiry is "retroactive per statutory command," making the two incompatible in a single proceeding, Norca said. "Any decision now ... would violate due process and fundamental fairness," Norca argued. Antidumping duties cannot attach to additional products outside the EAPA investigation as it would impose liability without proper notice to the importer at the time of the importation. Further, Norca argued, no party claimed circumvention in the EAPA investigation, so CBP cannot defend its finding by claiming circumvention, as that would mean CBP failed to exhaust its administrative remedies.

In the underlying EAPA investigation, CBP found that Norca evaded antidumping duties on carbon steel butt-weld pipe fittings from China by transshipping them through Vietnam. Norca filed suit at CIT, alleging that its due process rights were violated because a third party submitted evidence from a site visit to a Vietnamese manufacturing facility, which was not shared with Norca. CBP also failed to disclose its communications with the third party. CBP then requested a voluntary remand to allow the third party to supplant the record with a public summary of the information (see 2109290061) and Judge Jennifer Choe-Groves granted the remand motion (see 2203110074).

In July, CBP asked to stay the case pending a covered merchandise referral. The plaintiffs argued that the move essentially conceded that Commerce's determination was "baseless" and that an "11th hour" stay motion is "extraordinary" (see 2207080068). The stay was granted and Commerce began its scope inquiry.

Now, Commerce is feviewing "whether third-country processing of Chinese-origin rough fittings in Vietnam should be covered by the AD Order, which does not itself include a third-country processing provision," Norca said. "Any decision now, a number of years later, as to such past imports, would violate due process and fundamental fairness. Such a situation would impose antidumping liability without proper notice to the importer at the time of the importation. For that reason alone, antidumping liability may not attach to such imports."

Norca said that the lengthy proceeding after Commerce "veered" from the ostensible purpose of the scope referral is causing harm to its business. Interested party comments and rebuttals were submitted to Commerce by November, Norca said, while Commerce "did nothing for nearly three months." At the 120-day deadline to issue its determination, Commerce extended the proceeding by an additional 150 days despite telling the court in July that the matter would be resolved within 120 days, Norca said.

Norca said that Commerce failed to show good cause to extend the deadline again, noting that "Commerce did not issue questionnaires to interested parties until the day after the original deadline." Commerce also is pursuing questions regarding fitting types that are irrelevant to the underlying EAPA investigation, Norca said. And Commerce is expanding the inquiry through its questionnaire into a potential circumvention proceeding "beyond the question of whether merchandise Norca last entered on April 22, 2020 was covered by the AD Order."

Commerce did not explain its move toward a circumvention argument, Norca said. Even if the agency is basing its thinking on recent changes to its AD/CVD regulations, the changes were implemented after the subject imports at issue. An importer could not know about regulations not yet implemented, Norca said.

"Norca is required to collateralize the U.S. customs bond for the imports that are the subject of the EAPA investigation -- imports that ended in April 2020. It has been now three years where Norca, a small company, has not had access to nearly $2 million of the company’s working capital," the importer said. "The suspension of liquidation on the entries only occurred because of an unlawful EAPA investigation, and a determination that covered merchandise was entered that CBP now concedes that it could not justify. Norca has been treated unfairly and the action (and lack thereof) has impeded its ability to grow because of the financial constraints of devoting $2 million of its line of credit for collateral on unfounded allegations.

"Norca relies on its line of credit to maintain and grow its business -- the carve out of $2 million, which at time over the last 3 years, represented 100% of available collateral, created financial hardships that, among other things, required staff reduction, salary, and incentive suspension," it said.