US, Importer Defend Scope Ruling Excluding Certain Shelf Dividers From AD/CVD Orders on Flexible Magnets

The U.S. and importer Siffron filed a pair of briefs at the U.S. Court of Appeals for the Federal Circuit defending the Commerce Department's finding that Siffron's shelf dividers are outside the scope of the antidumping and countervailing duty orders on flexible magnets from China (Magnum Magnetics Corp. v. U.S., Fed. Cir. # 24-1164).

Both the company and the government said Commerce properly turned to (k)(1) sources in analyzing the language of the orders' scope and that the (k)(1) factors themselves -- the International Trade Commission's injury report and prior scope rulings -- supported the exclusion of Siffron's products from the orders.

The product at issue is "plastic shelf dividers with a raw flexible magnet affixed to the base." It's designed to sit on retail shelving to help display merchandise. Siffron asked for a scope ruling, claiming that the dividers are meant for use in a retail setting and that the "flexible magnet, which is attached to the divider using adhesive, provides the means of attachment to an existing shelf."

The importer pointed to prior scope rulings that said that other goods were outside the orders' scope since adding a flexible magnet to another material rendered the product unflexible and created a good that was "substantially different from a raw flexible magnet." Despite arguments from petitioner Magnum Magnetics that the plain language of the orders covers Siffron's products, Commerce excluded the goods from the orders. The Court of International Trade sustained the scope ruling.

On appeal, Magnum again claimed that the plain language of the orders includes the products, precluding consideration of (k)(1) factors (see 2401190070). The scope language itself includes flexible magnets "regardless of shape, color, or packaging," noting that subject flexible magnets may be fully or partially bonded to paper, plastic or other materials or various flexible bonders.

But making a flexible magnet "functionally inflexible" creates a "substantially different product." This was the case of Siffron's goods, the government said.

Commerce's regulations allow it to use (k)(1) sources, and the agency's analysis "was not required to 'end' at the language of the Orders," the brief said. "Magnum is trying to impose the very rigid order of operations that Commerce expressly rejected when it amended the regulation." Siffron added that "Commerce’s discretion to consider (k)(1) materials in analyzing a scope order exists whether the plain language may appear ambiguous or not."

The U.S. added that the ITC injury report supports Commerce's finding since "the raw flexible magnets are 'functionally inflexible' when affixed to the plastic blade of the shelf divider." And prior scope rulings are consistent with the determination that "affixing the otherwise flexible magnets in Siffron's product to an inflexible plastic blade renders them outside the scope," the U.S. said.

While Magnum criticizes the agency for relying on these past rulings, the petitioner "cites nothing indicating that these rulings have been invalidated or that Commerce cannot rely on them," the brief said. "Magnum’s position rests fundamentally on a disagreement with Commerce’s prior rulings for these orders, but Magnum does not show that Commerce misapplied those rulings in this case."