Scope, Protests, and De Novo Review

The scope of antidumping and countervailing duty orders is one of those issues that sits right at the intersection of trade law and customs law. The Department of Commerce determines the scope of an order and can issue rulings clarifying whether particular products are within the scope of the order. Customs and Border Protection makes the day-to-day decisions whether to apply an order to imports as they arrive and the entries are liquidated. Traditionally, Customs' role in this process has been described as "ministerial," meaning it simply does what Commerce says to do. On the other hand, Commerce has not envisioned every possible product and product description. What Customs does is, in reality, more than ministerial. It requires the analysis of the scope of the order and the nature of the merchandise. Customs applies facts to law--that is not really ministerial.

That is what LDA Incorporado v. United States is about. LDA imports rigid electrical conduit from China. After it arrived, LDA became embroiled in a dispute with Customs about whether the merchandise was finished electrical conduit. If it is finished, the merchandise is outside the scope of the order covering "circular welded carbon quality steel pipe" from China. It is unfinished, it is included in the scope of the order. The dispute centered on whether the conduit was internally coated with a non-conductive liner, a requirement apparently not in the order.

As entries liquidated, Customs demanded the deposit of antidumping duties. The importer protested. Parallel to the protests, the importer also sought a ruling from Commerce clarifying whether the conduit was within the scope of the order. Commerce returned a decision saying the merchandise was excluded from the scope of the order. That should be a win for LDA, but CBP diod not see it that way.

The Court previously considered whether Customs and Border Protection's decision that merchandise is within the scope of the order is protestable. Here, the Court of International Trade first reiterates that "CBP made a protestable decision as to the application of the Orders to Plaintiff's entry."

This raises a new and interesting question: What is the Court reviewing in this case? The plaintiff is challenging the denied protest, not the scope of the order. It is certainly not challenging the Commerce Department ruling issued in its favor. The sole question is whether Customs properly applied the scope of the order. That is protestable because it relates to factual errors and other inadvertence by Customs that is adverse to the importer. Importantly, this is not a review of the scope of the order itself; just Customs' application of it to specific imported merchandise.

Thus, on the review of this protest (and similar future protests), the Court's role is to review de novo Customs' factual analysis of the merchandise and its decision to apply the orders to the merchandise.

On the facts presented, the Court found it undisputed that the merchandise is finished rigid electrical conduit. That means that Customs improperly applied the orders to this merchandise. This also means that importers are not required to go to Commerce for a ruling when they do not dispute the clear meaning of the order.


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