Chinese Sink Importer Misconstruing Rule Excluding Nonsubject Components From AD/CVD, US Says

An importer’s stainless steel sinks from China weren't incorrectly liquidated by CBP despite “express instructions” from Commerce, the U.S. said Oct. 1 in a cross-motion for summary judgment and in partial opposition to the importer’s own Sept. 5 motion for judgment. Rather, it said, the importer was misunderstanding a “straightforward issue” by mixing up components and value added (R.H. Peterson v. U.S., CIT # 20-00099).

Importer R. H. Peterson claimed in its own motion (see 2409040048) that the value added to its sinks by further processing in Taiwan shouldn’t have been included in the sinks’ calculated value when their antidumping and countervailing duties were assessed by CBP, the government said.

“Were the Court to adopt RH Peterson’s legal theory, such a rule would create a system in which an importer could lower the imported value of a good subject to AD/CVD by passing it through a third country for finishing work that, while not substantially transformative, adds some value,” it said. “That is not the law.”

After R.H. Peterson’s sinks were imported into Taiwan, a brand logo was stamped onto each sink’s side; drains and holes for faucets were cut out; dampening pads were added; and brackets were added so that the sinks could be mounted on countertops, the U.S. said. Along with the sinks, each of R.H. Peterson’s ultimate entries into the United States also included a drainer pipe, drainer, instruction manual and a few other materials, it said -- all of which were manufactured in China.

The government agreed that CBP had incorrectly assessed AD/CVD on the importer’s drainers and drainer pipes. Commerce had previously held those to be accessories outside the scope of the AD/CVD orders, it said.

However, R.H. Peterson also argued that the customs agency had also incorrectly applied duties to the value added to the sinks by processing in Taiwan: the cutting of drain and faucet holes and the addition of brand logos, dampening pads and brackets. But CBP is supposed to assess AD/CVD on the value of merchandise upon entry to the U.S., not upon exit from the country subject to orders, the U.S. said.

For example, regarding the dampening pads, “it does not follow that while the dampening pad is explicitly covered by the order, the application of the dampening pad -- that is, the action necessary to allow the dampening pad to perform its intended function as part of the sink -- is not,” it said.

The only way R.H. Peterson could have escaped having AD/CVD calculated using the entire value of its sinks would be if it could somehow show that the sinks’ country of origin was actually Taiwan, not China, it said. But the importer itself isn’t advancing that argument, it said.

In its brief, the importer pointed to a CBP witness who claimed during deposition that the sinks’ brackets, which had been made in Taiwan, shouldn’t have been included in the sinks’ overall value calculation. But the witness had been making a statement of law here, not fact, meaning the deposition wasn’t binding on the government, the U.S. said.

It described another ruling in which CBP found that stainless steel sinks from China were subject to AD/CVD even though they were part of a vanity that included a stone countertop and wood cabinet base. In that case, the sinks themselves were the only piece for which duties were assessed because the base and the countertops were nonsubject components; the sinks themselves were components, it explained. In contrast, the brackets in R.H. Peterson’s sinks are part of the sinks themselves, it said.

And the U.S. denied that its legal position wasn't substantially justified, pointing out that its claim was reasonable and that the importer “failed to include a single legal citation to support its analysis.”