Acquisition 362 and Protests of Countervailing Duties

Welcome back to what I hope is a more consistent flow of updates. I have a couple in the hopper, so come back soon.

Importers of goods subject to antidumping and countervailing duties often find themselves dealing with unexpected compliance issues. Acquisition 362, LLC v. United States, a recent decision from the Court of Appeals for the Federal Circuit, is a good example of how this can go sideways. 

Aquisition is an importer of tires from China that are subject to a countervailing duty order. As a result, Acquisition deposited CV duties at the rate of 30.61%, which was the rate applicable to tires from "all-other" producers and exporters at the time of entry. When Commerce instituted a review of the deposit rate, it instructed Customs to continue to suspend the liquidation of entries from companies participating in the review, including a company known as Shandong Zhongyi, which was Aquisition's nominal suppler.  Unfortunately for Aquisition, Shandong withdrew from the review, at which point Commerce instructed Customs to liquidate the entries. That follows from 19 CFR § 351.212(c)(1)-(2). Customs followed the instructions and liquidated the entries. 

Photo by Enis Yavuz on Unsplash

Commerce completed its review and amended the rates for "non-selected companies" to 15.56%. It then instructed Customs to liquidate the remaining suspended entries. At that point, Aquisition, noted that it had not benefited from the favorable adjusted rate. 

It is not clear exactly what Aquisition understood or expected to happen to its entries. Aquisition may not have known that Shandong withdrew or the consequences of that happening. It had the ability to track the status of its entries and presumably knew Customs had liquidated them. But, giving it the best possible reading, Aquisition appears to have believed that Shandong is the same company as Dongying Zhongyi Rubber Co., which remained a party to the review. Entries of Dongying products, therefore, remained suspended. Aquisition might have believed that it could wait and would be entitled to whatever CVD rate was ultimately applied to its entries of Shandong/Dongying merchandise. Finally, it is possible no one thought about any of this, and this case is best argument counsel found to support an effort to get the lower rate applied to the liquidated entries.

What to do?

Within 180 days of Commerce publishing its Amended Final Results of the CVD review, Aquisition filed protests with Customs and Border Protection challenging the liquidations. The protests were filed more than 180 days after the challenged liquidations. Therein lies the rub that causes this to go sideways.

Without a timely and valid protest, liquidations are final and conclusive as to the importer and the United States. 19 USC § 1514. That is why liquidations are routinely suspended during antidumping and countervailing duty proceedings. Once liquidated, a corrected AD or CV duty cannot be assessed unless some exception applies.

The fact that Customs erroneously liquidated an entry that was supposed to be suspended is not an exception. Assuming this was an improper liquidation of entries that should have been suspended, that may be a mistake by Customs and is subject to the protest requirement. Consequenlty, the Federal Circuit held that Aquisitions had missed the 180-day from liquidation deadline to protest. The Court did not buy Aquisition's otherwise clever argument that the decision being protested was not the liquidation but Customs' subsequent denial of Aquisition's request for a refund of excess countervailing duties paid. 

The Court of Appeals appears to see the reality of the situation as both starting and ending with Customs' liquidation. To give Aquisition credit, there is a question of what instructions Commerce gave to Customs with respect to the continued suspension or liquidation of entries by producer. In cases where Commerce issues incorrect instructions and Customs acts on those instructions, the Court has found that it can review Commerce Department instructions independent of a protest of a liquidation. This would happen at the Court of International Trade under its residual jurisdiction pursuant to 28 USC § 1581(i). Here, the Federal Circuit found that a timely protest would have provided an adequate remedy, Aquisition was precluded from seeking relieve under subsection (i).




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