CIT Sends Back Scope Ruling Including Composite Tile in AD/CVD on Ceramic Tile

The Court of International Trade on July 18 sent back the Commerce Department's decision to include importer Elysium Tile's composite tile within the scope of the antidumping and countervailing duty orders on ceramic tile from China. Judge Jane Restani said the "complexity of Elysium's processes" shows that the company's tile underwent more than "minor processing," which would have kept the goods in the orders' scope.

The court also said Commerce provided a "plainly insufficient" summary of an ex parte trip the agency took to U.S. tile maker Florida Tile's production facilities.

Elysium's tile is made of a base layer of porcelain tile, an epoxy layer and a thin top layer of marble, while the scope covers ceramic tile made of a mixture of minerals that are fired, so the raw materials fuse to make a finished good less than 3.2 cm in "actual thickness." Commerce determined that the marble layer is a decorative feature, keeping the importer's goods under 3.2 cm. Elysium claimed that the marble layer creates a "functionally different product" as compared to a tile with porcelain backing alone.

The scope says subject tile includes ceramic tile with "decorative features that may in spots exceed 3.2 cm in thickness." Restani said the parties' mistakenly centered their arguments on the word "decorative."

The court said the scope language doesn't have "clear exclusionary language" and uses "general terms" that are "rendered unclear by nonexclusive examples," noting that some phrases "are clearly misstated." For instance, the scope includes ceramic tile with decorative features that go beyond 3.2 cm in thickness. As a result, the phrase "decorative features" was only meant as an "example of something that could affect the thickness of the final product without impacting the dimensional limitation in the scope description," the judge held.

As a result, the actual scope question at issue is whether applying the marble layer is "so intensive" that it exceeds "minor processing," bringing the product out of scope. To this, Restani said that it does, given the complexity of Elysium's production processes.

In making its products, Elysium glues two porcelain tiles to a marble slice, then slices the marble in the middle to form two tiles. The court said this isn't a minor operation.

Since the scope lacks a definition of a "minor operation," the court said the "scope includes products that have undergone any number of minor processes, so long as the minor processes do not change the product so significantly that it cannot be considered to be the product intended to be described in the first paragraph of the scope description.” However, the scope does list types of minor processing. The court said these "enumerated processes" and other similar measures are included in the scope.

Elysium's processes are not those found in the "enumerated processes" and the complexity of its production exceeds the "complexity of the processes described in the scope language." There's no evidence that the processes can be performed anywhere but a "specialized facility," the judge said, finding that Elysium's processes, without more, can't be considered minor.

Restani added that Commerce erred in putting "significant reliance" on the fact that the composite tile is used for the same purpose and functions in the same way as ceramic tile. The judge said that "these purposes, functions, and characteristics are shared, to some extent, by all flooring options."

To show the difference between ceramic and composite tile, Elysium put a table on the record comparing different tile types, which Commerce used to show that composite tile is like ceramic tile. Restani said that the table "equally supports the opposite conclusion" and also that a "single piece of evidence cannot support one conclusion if it is equally authoritative in its support of an opposite conclusion."

The court lastly said Commerce provided an inadequate summary of its ex parte trip to Florida Tile's production facilities. The summary said Commerce officials took a tour of the facility and conducted a "question and answer session with Florida Tile employees." Restani said this summary was "plainly insufficient."

The court said the agency "presumably" earned "hands on experience with that type of processing and whether it appeared to be 'minor,'" making a greater summary necessary. The summary also failed to say whether Commerce asked or answered questions, and that, either way, valuable information could have been gleaned, requiring a greater summary. Restani said Elysium didn't need to show prejudice, and that "procedural due process violations arising from ex parte communications" don't invoke the "harmless error test."

(Elysium Tiles v. United States, Slip Op. 24-80, CIT # 23-00041, dated 07/18/24; Judge: Jane Restani; Attorneys: David Craven of Craven Trade Law for plaintiffs Elysium Tiles and Elysium Tile Florida; Christopher Berridge for defendant U.S. government; David Spooner of Barnes & Thornburg for defendant-intervenor The Coalition for Fair Trade in Ceramic Tile)