- Type : • HTSUS :
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Related:
31401
ENT-1-07
LIQ-4-01
OT:RR:CTF:ER H034575 DCC
Mr. John S. Porter
Area Port Director
U.S. Customs and Border Protection
1 East Bay Street
Savannah, Georgia 31401
RE: Request for Internal Advice; Shrimp from China; Antidumping Duty
Dear Mr. Porter:
This is in response to a request for internal advice, dated July 23, 2008, pursuant to 19 C.F.R. § 177.11(a). Your request concerns the application of a scope determination issued by the U.S. Department of Commerce (“Commerce”). We also received and considered comments submitted by counsel for the importer, Royal Hunan Seafood (“Royal Hunan”). Our decision follows.
FACTS:
Between May 10 and June 28, 2007, Royal Hunan imported multiple shipments of frozen warmwater shrimp. CBP personnel at the Port of Savannah selected twelve of these shipments for targeted inspection. After the container was opened for examination, a CBP import specialist physically inspected eleven of these shipments, and a CBP officer inspected the twelfth. Of the eleven shipments inspected by the import specialist, four were sampled and sent to the CBP laboratory in Savannah for analysis. According to the request for internal advice, the sampled shrimp remained in sealed refrigerated containers until the
time of the inspection. For the samples taken for laboratory analysis, the four bags of unopened frozen shrimp were placed in coolers containing dry ice and transported directly to the CBP laboratory in Savannah. The table below indicates the CBP staff that conducted the physical examinations and which shipments were analyzed at the CBP laboratory.
Entry No.
Entry Date
Physical Examination
Laboratory Analysis
(Report No.)
XXX-XXXX952-7
May 17, 2007
CBP Officer
None
XXX-XXXX071-5
May 10, 2007
Import Specialist
None
XXX-XXXX072-3
May 16, 2007
Import Specialist
None
XXX-XXXX074-9
May 30, 2007
Import Specialist
None
XXX-XXXX173-9
May 16, 2007
Import Specialist
None
XXX-XXXX316-4
May 22, 2007
Import Specialist
None
XXX-XXXX319-8
May 30, 2007
Import Specialist
None
XXX-XXXX828-8
June 11, 2007
Import Specialist
None
XXX-XXXX829-6
June 12, 2007
Import Specialist
SV 20071645
XXX-XXXX841-1
June 20, 2007
Import Specialist
SV 20071731
XXX-XXXX248-8
June 28, 2007
Import Specialist
SV 20071935
SV 20071913
XXX-XXXX057-3
June 28, 2007
Import Specialist
SV 20071934
In a memorandum entitled, “Scope Clarification on Dusted Shrimp and Battered Shrimp,” dated November 29, 2004, Commerce clarified that the scope of the order on frozen warmwater shrimp from the People’s Republic of China, Antidumping Duty Order No. A-570-893 (“Scope Memo”), excluded dusted and battered shrimp. That memorandum defined dusted shrimp as follows:
[C]ertain dusted shrimp, produced from fresh (or thawed-from-frozen) and peeled shrimp; to which a “dusting” layer of rice or wheat flour of at least 95 percent purity has been applied; so that the entire surface of the shrimp flesh thoroughly and evenly coated with the flour; and the non-shrimp content of the end product constitutes between 4 and 10 percent of the product’s total weight after being dusted, but prior to being frozen; and is subjected to IQF freezing immediately after application of the dusting layer.
On February 1, 2005, Commerce published in the Federal Register the “Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Certain Frozen Warmwater Shrimp From the People’s Republic of China,” 70 Fed. Reg. 5149 (Feb. 1, 2005) (“Amended Final Determination”). That notice used almost the same definition of dusted shrimp as the November 29, 2004, Scope Memo.
On February 2, 2005, CBP issued Message No. 5041209 (“Suspension Instructions”), which contained instructions from Commerce to suspend liquidation of entries of warmwater shrimp from China subject to Antidumping Duty Order No. A-570-893 that entered on or after July 16, 2004. According to the Suspension Instructions, the antidumping duty order excludes dusted shrimp. Although similar to the definition contained in the Scope Memo, the definition of “dusted shrimp” in the Suspension Instructions provides as follows:
Dusted shrimp is a shrimp-based product: 1) that is produced from fresh (or thawed-from-frozen) and peeled shrimp; 2) to which a “dusting” layer of rice or wheat flour of at least 95 percent purity has been applied; 3) with the entire surface of the shrimp flesh thoroughly and evenly coated with the flour; 4) constituting between four and ten percent of the product’s total weight after being dusted, but prior to being frozen; 5) that is subjected to individually quick frozen (IQF) freezing immediately after application of the dusting layer.
On April 23, 2007, CBP’s Commercial Targeting Division, Office of International Trade issued guidance to field officers regarding procedures to determine whether imported shrimp was dusted and therefore outside the scope of the Antidumping Order A-570-893. See Evasion of Antidumping Duties—“Dusted” Shrimp (OT - FY07 - 0737) (“CBP Dusted Shrimp Memo”). That document notes that Commerce defines dusted shrimp as shrimp that “has a coating of rice or wheat flour constituting between four and ten percent of the product’s total weight after being dusted, but prior to being frozen.” In addition, the document provides the following table to assist CBP staff in differentiating between dusted and non-dusted shrimp:
True Dusted Shrimp
(ALL four characteristics MUST be met)
Non-Dusted Shrimp
Evading the anti-dumping order
(Evading if ANY characteristics are met)
Individually Quick Frozen (IQF)
Frozen in block form or not readily separable
No shell or head remaining
Evidence of shell or head remaining
Shrimp has a thorough coating of rice or wheat flour, minimal amount of residue at bottom of bag, package or container
Shrimp has minimal coating of material, unusual amount of residue at bottom of bag, package or container (a strong indication that the flour/dust had been applied after freezing)
No noticeable amount of shrimp meat visible
Any noticeable amount of shrimp meat showing
On June 12, 2007, the CBP laboratory in Savannah received four samples of the frozen shrimp for analysis. The laboratory analysis included visual inspection and examination of a cross sections of the imported shrimp with a stereoscopic microscope. On June 25 and July 17, 2007, the laboratory issued five reports (the “Laboratory Reports”) regarding the sampled shipments of frozen shrimp. The laboratory reports noted that some of the shrimp were frozen together in clumps and that the shrimp had a minimal coating of the white colored material on them. The reports further indicate that a “substantial” amount of white colored residue was found in the bag and clumped on the shrimp themselves. The reports also note a noticeable amount of shrimp meat, areas not covered with the dusting material, and that the dusting layer was very uneven. These reports contain the following narrative description of the test results:
The sample consists primarily of peeled, individually frozen shrimp with some shrimp frozen together contained in a sealed plastic bag. The inside of the plastic bag had a significant amount of white flour adhering to it and at the bottom of the bag. The shrimp are coated with a thin layer of starch or flour. The flour does not evenly and completely cover the shrimp and is easily removed by rubbing. A noticeable amount of shrimp meat could be seen. Microscopical observation of a cross-section of the frozen shrimp shows there is a layer of ice between the flesh of the shrimp and the flour coating.
At about the same time, the laboratory also prepared Laboratory Analysis of Sample reports. These reports record the physical observations of the laboratory staff. The reports contain the following comments:
The shrimp have not been frozen individually. They [sic.] are some clumps of several shrimp frozen together.
No shell or head was noted.
The shrimp have a minimal coating of the white colored material on them (see Photographs 3, 4, 5, 6, 7, 8 and 9). Note: Pictures 8 and 9 show the thawed shrimp. These pictures definitely show a noticeable amount of shrimp meat.
A substantial amount of white colored residue was found in the bag (see Photograph 2) and clumped on the shrimp themselves (Picture 5).
A noticeable amount of shrimp meat was seen. (see Photographs 3, 4, 5, 6, 7, 8 and 9)
The white colored material was very uneven on the shrimp. As seen in Photographs 3, 4, 5, 6, 7, 8 and 9. The shrimp was allowed to thaw and large amounts of uncovered shrimp meat was noted. Also, the white material was in clumps. Not an even coating. (See Pictures 8 and 9).
A cross section of a shrimp was examined under the stereoscope. A layer of ice was noted against the shrimps flesh and white powdery material was seen on top of the ice. Indicative of the shrimp being previously frozen when the flour was applied. Also, a large percentage of the shrimps [sic.] body was not covered by flour but by frost alone.
Based on its examination, the laboratory concluded that the imported merchandise did not meet the definition of dusted shrimp contained in the CBP Dusted Shrimp Memo.
On August 28, 2007, counsel for Royal Hunan wrote to the Port of Savannah requesting permission to refile the thirteen contested entries as Entry Type 01, consumption entries. In response to Royal Hunan’s request, the Port of Savannah sent a letter, dated November 7, 2007, advising the importer that the port had contacted Regulations & Rulings concerning the request for internal advice. In addition, the port advised Royal Hunan to contact Commerce regarding the scope of Antidumping Duty Order for case A-570-893.
On November 30, 2007, Royal Hunan wrote a letter to Commerce regarding the scope of Antidumping Duty Order for case A-570-893. Royal Hunan claimed its shrimp was dusted according to definition of dusted shrimp contained in Commerce’s scope exclusion.
On January 7, 2008, Scott Fullerton, Program Manager, AD/CVD Operations, Office 9, Import Administration, U.S. Department of Commerce, issued a letter to Royal Hunan that stated that because Commerce had already addressed the status of products meeting the definition of dusted shrimp, it would not issue an another scope ruling letter for imported shrimp that met the definition of dusted shrimp. The letter also states:
We further note that a determination of whether a particular product entering the United States meets the requirements of an existing scope exclusion based on physical characteristics, inspection, testing, etc., is the responsibility of U.S. Customs and Border Protection (“CBP”). Thus, any particular Royal Hunan imports or Go-Harvest exports which CBP determines to meet the requirements of the dusted shrimp exclusion, as articulated in the original scope language, will be excluded from the antidumping duty order, and any imports/exports which CBP determines do not meet the requirements of the dusted shrimp exclusion will be considered subject merchandise.
The Port of Savannah subsequently received a letter from Royal Hunan dated March 3, 2008, in which the importer requests that the port seek internal advice from this office. Royal Hunan claims that CBP’s laboratory analysis was simply a visual observation of the imported product and that the examination was not based on any scientifically recognized testing standard. Royal Hunan claims that any presumption of correctness in CBP’s determination is overcome by the subjective nature of the laboratory’s examination.
On October 23, 2009, CBP issued Message No. 9296207, which contained instructions from Commerce to liquidate entries of frozen warmwater shrimp from China subject to Antidumping Duty Order A-570-893.
You request internal advice regarding the application of the Suspension Instructions to the merchandise imported by Royal Hunan.
ISSUE:
Whether the imported shrimp constitutes dusted shrimp as described in the Suspension Instructions.
LAW & ANALYSIS:
The fundamental issue in this case is the probative value of the physical observations by CBP port and laboratory staff. According to the Suspension Instructions, in order shrimp to be considered “dusted shrimp,” and therefore excluded from the scope of Antidumping Duty Order No. A-570-893, imported shrimp must satisfy all five of the enumerated criteria. Consequently, if the imported shrimp does not satisfy the third criterion, i.e., the entire surface of the shrimp flesh is thoroughly and evenly coated with the flour, the merchandise would not be covered by the exclusion for dusted shrimp.
The port determined that the subject merchandise failed to satisfy the third criterion. Because failure to satisfy any one of the five criteria means the imported shrimp was not within the dusted shrimp exclusion, we do not address the remaining criteria.
a. The Presumption of Correctness
By statute, CBP decisions regarding the classification of imported merchandise are presumed correct and the burden is on the importer to prove otherwise. See 28 U.S.C. § 2639(a)(1). See also Rollerblade, Inc. v. United States, 282 F.3d 1349, 1352 (Fed. Cir. 2002) (“a classification of merchandise by Customs is presumed to be correct . . . [so] the burden of proof is upon the party challenging the classification.”). The presumption of correctness, however, “does not add evidentiary weight; it simply places the burden of proof on the challenger.” Anhydrides & Chems., Inc. v. United States, 130 F.3d 1481, 1486 (Fed. Cir. 1997).
In support of its position that it has overcome the presumption of correctness, Royal Hunan cites three court cases: Aluminum Co. of America v. United States, 477 F.2d 1396 (C.C.P.A. 1973); Exxon Corp. v United States, 462 F. Supp. 378 (Cust. Ct. 1978); and Libas Ltd. v. United States, 118 F. Supp. 2d 1233 (Ct. Int’l Trade 2000) (Libas I).
In each of these three cases, the importers presented evidence based on independent analysis of the imported merchandise that established a prima facie case to support the importer’s asserted classification. In Aluminum Co., the importer established a prima facie case by presenting the results of four independent tests, all of which supported the importer’s asserted classification. See Aluminum Co., 477 F. at 1399. In Exxon Corporation, the importer made a prima facie case by presenting the result of five separate tests that demonstrated the imported merchandise did not meet the standard for classification as motor fuel. See Exxon Corp., 462 F. Supp. At 382. In Libas, the importer’s prima facie case was made by the certification by the Government of India that the imported fabric was not power-loomed. See Libas Ltd., 118 F. Supp. 2d at 1234. Additionally, in reviewing the lower court’s decision in that case, the U.S. Court of Appeals for the Federal Circuit found the evidence based on Customs’ fabric testing procedure to be unreliable because it failed to meet the standard for evaluating scientific evidence established by the Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). As discussed below, we determine that Royal Hunan failed to present evidence based on an independent analysis of the imported shrimp to support its classification. Furthermore, as discussed below, because CBP’s assessment of the imported shrimp was based on plain observations rather than scientific evidence, the holding in Libas is inapplicable.
b. Royal Hunan’s Prima Facie Case
A prima facie case is a case based on evidence, i.e., prima facie evidence, which is sufficient to establish a fact unless rebutted. The term “prima facie evidence” is defined as, “evidence that will establish a fact or sustain a judgment unless contradictory evidence is produced.” Black’s Law Dictionary, 638 - 39 (9th ed. 2009). Consequently, the initial burden of proof in challenging the reliability of evidence used by CBP to classify imported merchandise is on the importer. In this case, the limited evidence presented by Royal Hunan does not constitute a prima facie case.
Royal Hunan argues that it has made a prima facie case that the imported frozen shrimp were dusted shrimp and, therefore, the presumption of correctness attached to CBP’s determination has been overcome. In support of its claim, Royal Hunan submits as evidence a statement of an employee of the Chinese producer who observed the frozen shrimp production process; photographs of the dusting process from the Chinese producer’s facility; and photographs of dusted shrimp that Royal Hunan imported from the Chinese producer. Each is discussed below.
In its letter dated August 28, 2007, Royal Hunan presents a statement of Yi Yin Lu, an employee of the Chinese producer, which describes the manufacturer’s production process. In his statement, dated August 16, 2007, Mr. Yi states that the Chinese producer dusts shrimp with rice flour before the coated shrimp are individually quick frozen. Royal Hunan also provided seven photographs taken by Mr. Yi on August 16, 2007, that allegedly depict the manufacturer’s production process used to produce the imported shrimp.
Royal Hunan also presents four photographs, all date-stamped August 8, 2007, that allegedly show frozen shrimp from one or more of the twelve entries that are the subject of this ruling. Royal Hunan notes that these photographs show shrimp in the same type of plastic bags as those depicted in the August 16, 2007 photographs taken by Mr. Yi. Based on the consistency of the packaging, Royal Hunan claims Mr. Yi’s description of the Chinese processing operations is validated.
Royal Hunan also asserts that the presumption of correctness was overcome because the CBP laboratory’s examination was based on a simple visual observation and because it did not follow any established scientific testing
standards. Royal Hunan argues that the “subjective nature of [the laboratory’s] examination should be sufficient to overcome any presumption of correctness with respect to CBP’s testing methodology and observations.” Letter from BJ Shannon, Counsel to Royal Hunan, to Angelia Amerson, Import Specialist, U.S. Customs and Border Protection, p. 4 (Mar. 3, 1996).
Royal Hunan claims that because CBP’s examination of the imported shrimp was a simple observation that did not follow any established scientific testing standards, the CBP tests should be disregarded in favor of the Royal Hunan’s conclusion that the shrimp met the definition of dusted shrimp. In addition, Royal Hunan argues that because CBP failed to record or control the temperature between the time the shipping container was opened and the time of analysis at the laboratory, or at the time of examination, the observations of the frozen shrimp may have been affected.
We find that Royal Hunan has failed to make a prima facie case and that the presumption of correctness of CBP’s determination remains intact. With regard to Mr. Yi’s statement and photographs, these items were not prepared at the time of production of the imported shrimp. The statement was prepared, and the photographs were taken, on August 16, 2007, which was 7 to 14 weeks after the dates of entry, and at least three months after the date of production. Because Mr. Yi’s statement was prepared, and photographs were taken, more than three months after the time the imported shrimp was produced, there is no evidence conclusively demonstrating that Mr. Yi’s statement and photographs accurately describe the actual processing operations used to produce the imported merchandise. For example, Royal Hunan failed to provide any actual production documents for the shrimp at issue nor did it have the shrimp at issue tested to verify whether it met Commerce’s criteria for dusted shrimp.
As to the photographs of shrimp allegedly from the same shipment, those photographs do not demonstrate the validity of Mr. Yi’s statement and photographs. Although the shrimp in the photographs taken by Royal Hunan and Mr. Yi were packaged in the same type of plastic bags, the photographs of the packaging only demonstrates that the Chinese producer used the same type of packaging over the course of several months during the spring and summer of 2007. It does not provide evidence, however, of whether the shrimp shipped in those bags constituted “dusted” shrimp as defined in the scope exclusion.
Because it is unknown whether Mr. Yi’s statement and photographs reflect the processing performed on the imported shrimp, they are not persuasive for the analysis of the condition of the shrimp that are the subject of this ruling. In addition, we note that Royal Hunan makes no assertion that its photographs of the samples show that the imported shrimp met the criteria in the Suspension Instructions. Moreover, Royal Hunan did not present any evidence based on independent tests or observations that may have supported its claims regarding the condition of the imported shrimp.
In the context of the presumption of correctness of CBP’s decisions under 28 U.S.C. § 2639(a)(1), a prima facie case means the evidence presented by an importer derived from an independent source or test that is sufficient to sustain the importer’s claimed classification. Because Royal Hunan failed to offer any evidence such as written descriptions based on contemporaneous observations or independent laboratory testing of the imported shrimp upon which a prima facie case could be made, we determine that Royal Hunan has failed to establish a prima facie case and overcome the presumption of correctness of CBP’s determination that the imported merchandise was not dusted shrimp.
Royal Hunan also seeks to overcome the presumption of correctness by criticizing the methodology of the Laboratory’s examination. As explained in the appellate court’s decision in Aluminum Co., however, CBP’s testing procedures are reviewed only after the importer has satisfied its burden of making a prima facie case. See Aluminum Co., 477 F. 2d at 1399. Consequently, any review of the alleged defects in CBP’s analysis of the imported shrimp would be premature until Royal Hunan has met its burden of making a prima facie case in support of its claim.
c. The Probative Value of CBP’s Testing Procedure
Assuming, arguendo, that Royal Hunan has overcome the presumption of correctness we find that that the inspections conducted by the CBP import specialist and officer and the CBP laboratory analysis were sufficient for purposes of determining whether the imported merchandise constituted frozen dusted shrimp.
Royal Hunan relies on three court cases to support its contention that the CBP’s analysis of the imported shrimp was scientifically inadequate. Each of the cited cases, Aluminum Co. of America; Exxon Corp.; and Libas Ltd., involved CBP’s use of scientific testing procedures to analyze imported merchandise. Given the nature of the criteria contained in the Suspension Instructions, however, it would be inappropriate to subject CBP’s evidence to the standard for reviewing evidence articulated in Daubert.
For purposes of determining evidentiary reliability the adjective “scientific” implies a grounding in the methods and procedures of science. Federal Rules of Evidence Rule 702 provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of
an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.
In this case, however, the relevant criterion for dusted shrimp at issue in this case—i.e., whether the exposed shrimp flesh was thoroughly and evenly covered with dusting material—involves a simple non-scientific observation that was determined appropriately through unassisted visual inspection rather than any scientific procedure.
The photographs taken by CBP personnel at the time of the examination and laboratory analysis show that the dusting material was clumpy and did not evenly coat the shrimp body. In addition, the photographs show some of the shrimp bodies were not covered with the flour material. The photographic evidence supports the observations recorded by the CBP officer, import specialist, and laboratory analyst.
We find that the imported shrimp does not meet the third criterion for dusted shrimp for purposes of Antidumping Duty Order No. A-570-893. According to the Suspension Instructions, imported shrimp products must meet all five of the enumerated criteria in order for imported shrimp to be considered “dusted shrimp.” Because it did not satisfy the third criterion, the imported shrimp in this case does not constitute dusted shrimp.
HOLDING:
For the reasons discussed above, the imported shrimp does not meet the definition of dusted shrimp contained in the Suspension Instructions. The shrimp is therefore within the scope of Antidumping Duty Order No. A-570-893.
You are to mail this decision to counsel for the inquirer no later than 60 days from the date of this letter. On that date, the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division