PRO 2-04
OT:RR:CTF:ER
H247057 ABH
Port Director
U.S. Customs and Border Protection
200 E Bay Street
Charleston, SC 29401-2611
Attn: Heather Puckhaber, Import Specialist
Re: Application of Further Review for Protest 1601-13-100280; Antidumping Duties; Honey
Dear Port Director:
The purpose of this correspondence is to address the application for further review (“AFR”) of Protest Number 1601-13-100280, dated September 23, 2013, filed by Lamex Foods, Inc. (“Lamex”), regarding the assessment of antidumping duties pursuant to the antidumping duty order in case A-570-863.
FACTS:
Lamex is the importer of record of the entry at issue, number XXX-XXXX501-3. The merchandise was imported into the United States on September 5, 2011, and was entered as “light amber honey” under the Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 0409.00.0062, with the country of origin listed as Vietnam. The entry consisted of three containers: MSCU1782683; TTNU2455938; and CRXU1132191. CBP sent three bottles of samples from each container to CBP’s Laboratories and Scientific Services (“LSSD”) for country of origin analysis.
In November 2011, LSS conducted a trace metal profile by high resolution ICP/MS for three bottles of samples from each of the three containers. LSS compared the samples to the CBP database from China and Vietnam using multivariate discriminant statistical analysis. With regard to container MSCU1782683, LSS determined that the results of one sample bottle indicated a greater than 93 percent probability match with honey in CBP’s database from Vietnam. The results for the other two bottles were determined to be inconclusive. With regard to container TTNU2455938, LSS determined that the results were inconclusive for all three bottles. With regard to container CRXU1132191, LSS determined that the results for all three bottles of samples indicated a greater than 94 percent probability match with honey in CBP’s database from China. Further, LSS determined that canonical discriminant analysis also indicated a match with honey in CBP’s database from China.
Accordingly, with regard to containers MSCU1782683 and TTNU2455938, CBP requested live entry and single-entry bonds. With regard to container CRXU1132191, however, on March 23, 2012, CBP issued a Form 28 stating that the honey was found to be of Chinese origin and subject to antidumping duties pursuant to Case A-570-863. CBP requested that Lamex submit the appropriate antidumping duties at a deposit rate of $2.63 per kilogram. CBP liquidated the entry on May 24, 2013, and sent a bill to Lamex on May 31, 2013.
On September 18, 2013, Lamex submitted a protest and application for further review regarding the antidumping duties assessed against Lamex. Lamex argues that the entry should not be subject to antidumping duties because the imported honey is from Vietnam, which is not subject to an antidumping duty order.
In support of this assertion, Lamex provided County of Origin Affidavits that are signed by the honey supplier and provided with every shipment. Lamex also provided a Vietnam Certificate of Origin Form B, which according to Lamex indicates that the shippers are part of a Vietnamese Beekeepers Association that has been audited by the Vietnamese government for production quantity and origin traceability.
Lamex asserted that it developed a program with Daklak to ensure the traceability of the country of origin of its honey. With regard to the container at issue, container CRXU1132191, Lamex stated that the honey was picked up from various Vietnamese beekeepers by Mr. Khang who delivered a load of honey per day to Daklaks’s factory between February 7, 2011 and February 11, 2011. Daklak combined the honey delivered by Mr. Khang between February 7-11, 2011, into finished raw material lot number NLBP14-11, which according to Daklak spreadsheet dated May 4, 2011, contained 27,356 kilograms of honey. Daklak then created final processed lot TPBPG03-11 out of the raw material lot NLBP14-11, which constituted the 18,600 kilograms of honey in the sixty-two (62) drums found in container CRXU1132191.
On June 24, 2011, an independent auditor (SGS) took samples from each drum and placed a tamper-proof seal with a specific identifying number on each drum hole. The samples were combined and analyzed by Quality Service International (“QSI”) Laboratory in Germany that determined that “[a] declaration of the geographical origin Vietnam is consistent with the above determined pollen spectrum given current scientific research.” Lamex argues that the shipper is located in the highland, Dak Lak Province, which is the largest coffee-producing region in Vietnam, and that “China does not produce coffee honey.”
Upon request by Lamex, SGS then verified the loading of the sealed drums into container CRXU1132191 and sealed the container. Lamex provided extensive documentation to support the traceability of the country of origin of the honey. Specifically, with regard to container CRXU1132191, Lamex provided the following documentation:
Raw Material Lot Batching Document – This document is a Daklak spreadsheet that lists, inter alia, the date the honey is received, the beekeeper’s name, the beekeeper lot number, the number of kilograms collected, and the finished raw material lot number. For the honey at issue, the beekeeper is indicated as Mr. Dinh Quang Khang. The beekeeper lot numbers at issue are 109, 119, 127, and 136. All four beekeeper lot numbers become the only beekeeper lots in “finished raw material lot number” NLBP14-11. The four beekeeper lots were delivered, according to the worksheet, on February 7th, 9th (2 lots), and 11th. The beekeeper lots contained 5,159, 7,462, 5,525, and 9,210 kilos of honey respectively. The relevant information is summarized as follows:
Date Honey Received at Daklak Factory
Beekeeper
Beekeeper Lot Number
Kilos of Honey
Finished Raw Material Lot Number
2/7/2011
Dinh Quang Khang
109
5,159
NLBP14-11
2/9/2011
Dinh Quang Khang
119
7,462
NLBP14-11
2/9/2011
Dinh Quang Khang
127
5,525
NLBP14-11
2/11/2011
Dinh Quang Khang
136
9,210
NLBP14-11
TOTAL
27,356
Input Voucher – This document is a Daklak voucher to beekeeper Dinh Quang Khang that is dated March 13, 2011, and matches the quantity of honey in the raw material lot batching document provided by Daklak and described above.
Invoices – These documents were provided to Lamex by Mr. Khang when Lamex conducted an audit of Mr. Khang in December 2012. Mr. Khang provided invoices to each individual Vietnamese beekeeper that provided the honey to Mr. Khang that made up lot numbers 109, 119, 127, and 136 that Mr. Khang delivered to the Daklak factory. These invoices are on Daklak documented vouchers, which according to Lamex, is part of the traceability program. The invoices include, inter alia, the name of the honey supplier, the amount of honey supplied, the date the honey was received and the date of payment. The relevant information is summarized as follows:
Lot Number
Invoice Date
Name of Beekeeper
Kilos of Honey
109
2/7/2011
Nguyun Dang Luu
2,721
Vu Dang Nahia
1,328
Toan Canh
1,300
TOTAL
5,349
119
2/8/2011
Vu Guang Nuy
1,430
Nguyen Van Nho
906
Nguyen Van Cang
1,575
Nguyen Han Huy
1,750
Bui Hai Dong
1,930
TOTAL
7,591
127
2/9/2011
Luu Van Du
1,230
Nguyen Hau Tung
2,720
Nguyen Dang Luu
1,505
TOTAL
5,455
136
2/10/2011
Nguyen Huy Thau
1,018
Le Sy Nam
1,059
Illegible
3,896
Bui Van Dau
1,436
Le Xuan Daujun
1,687
TOTAL
9,096
Combined Total
COMBINED TOTAL
27,491
Lamex states that the volumes on these invoices match both the input voucher and the raw material lot batch document. This statement is not entirely accurate. The dates of delivery and voucher dates are off by one day on two of the lots. The kilograms of honey declared delivered per lot number are a close, but not a perfect match with the invoices provided by Mr. Khang. For example, the total amount of kilograms of honey reported on this document for the four aforementioned lots is 27,356. The total amount of the four lots per the vouchers is 27,491. Thus, there is less honey recorded in the finished raw material lot number than that delivered pursuant to the invoices to the individual beekeepers.
Photos and Identification Documentation – Lamex provided photos of beekeeper Mr. Bui Van Dau, who supplied 1,436 kilograms to Mr. Khang on February 10, 2011. Lamex also provided a copy of Mr. Khang’s Vietnamese country identification and passport. Lamex provided photographs of Mr. Khang’s home, which he uses for his honey business and photographs of awards given to Mr. Khang by the Vietnam government for excellence in agriculture.
Requirement of Producing – This document is a Daklak spreadsheet dated May 4, 2011. The spreadsheet links the finished raw material lot number NLBP14-11 with an amount of 27,356 kgs of honey to a final processed lot number of TPBPG03-11. Customer Report – This document is a Daklak spreadsheet dated July 25, 2011, that links the final processed lot number of TPBPG03-11 to the sixty-five (65) SGS sealed drums A06936-A07000 with a weight of 18,600 kgs of honey.
SGS Sampling Report – SGS is an independent food auditor that took samples on June 24, 2011, from each of the 65 drums at issue and placed a seal with a specific number (A06936-A07000) on each drum hole. After sampling, SGS blended individual samples into a composite. In this case, 32 individual samples (A06936-A06968) and 33 individual samples (A06969-A07000) were blended together to create two composite samples. SGS then sent those two composite samples to Lamex and to Quality Service International (“QSI”) Laboratory in Germany for analysis and country of origin testing. In addition to the two composite samples, SGS collected and sent to QSI three random samples from the container (A06945, A06965, A06985).
QSI Test Results Report – On July 11, 2011, QSI issued a report regarding SGS drum seal numbers A06936-A07000 and determined that “[a] declaration of the geographical origin Vietnam is consistent with the above determined pollen spectrum given current scientific research.”
SGS Loading Supervision Report To Client - This report notes a loading date of July 27, 2011, of the relevant Lot No. TPBPG03-11 contained in drums with the seal numbers A06936-A07000. SGS verified the loading of sixty-two (62) drums into container CRXU1132191. The document notes that three drums, A06953, A06954, and A06955 were not loaded because there was not enough space in the container. SGS then placed seal number 10989402 on container CRXU1132191.
Lamex argues that this documentation provides full traceability of the honey and supports a Vietnam country of origin determination for the honey shipments.
ISSUE:
Whether CBP properly assessed antidumping duties on entry number XXX-XXXX501-3 as honey from China?
LAW AND ANALYSIS:
It is the opinion of your office that this protest meets the criteria for further review. We agree and are of the opinion that this protest involves questions of law and fact which have not been previously ruled upon. 19 C.F.R. § 174.24(b). We also note that the instant protest was timely filed. Pursuant to 19 U.S.C. § 1514(c)(3)(A), a party must file a protest within 180 days after the date of liquidation. CBP liquidated the relevant entry on May 31, 2013. Lamex filed its protest on September 23, 2013, which is within the 180-day deadline.
Generally, assessed antidumping duties properly applied by CBP are not protestable because “Customs has a merely ministerial role in liquidating antidumping duties . . . .” Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994). “When merchandise may be subject to an antidumping duty order,” however, “Customs makes factual findings to ascertain what the merchandise is, and whether it is described in an order.” Xerox Corp. v. United States, 289 F.3d 792, 794 (Fed. Cir. 2002). In this case, because Lamex disputes CBP’s country of origin determination and application of Commerce’s liquidation instructions regarding honey from the People’s Republic of China pursuant to antidumping Case A-570-863, the matter is protestable. Id. at 795.
CBP enjoys a statutory presumption of correctness with regard to factual disputes. 28 U.S.C. § 2639(a)(1); Anhydrides & Chems., Inc. v. United States, 130 F.3d 1481, 1486 (Fed. Cir. 1997). Thus, “an importer has the burden to prove by a preponderance of the evidence that a Customs’ decision” was incorrect. Ford Motor Company v. United States, 157 F.3d 849, 855 (Fed. Cir. 1998); see also Fabil Manf. Co. v. United States, 237 F.3d 1335, 1340 (Fed. Cir. 2001) (“[E]xcept for cases challenging Customs rulings before importation, the preponderance-of-the-evidences standard that generally applies in civil cases also covers suits in the Court of International Trade challenging post-importation Customs decisions.”). A preponderance of the evidence has been defined in civil cases to mean “the greater weight of evidence, evidence which is more convincing than the evidence which is offered in opposition to it.” St. Paul Fire & Marine Insur. Co. v. United States, 6 F.3d 763, 769 (Fed. Cir. 1993) (citing Hale v. Dept. of Transp., Fed. Aviation Admin., 772 F.2d 882, 885 (Fed. Cir. 1985)).
“It is well settled that the methods of weighing, measuring, and testing merchandise used by customs officers and the results obtained are presumed to be correct.” Aluminum Company of America v. United States, 477 F.2d 1396, 1398 (C.C.P.A. 1973) (hereinafter “ALCOA”). “If a prima facie case is made out, the presumption is destroyed, and the Government has the burden of going forward with the evidence.” Id. at 1399. There are two means by which an importer may successfully make a prima facie case and overcome the presumption of correctness afforded to a CBP laboratory report. The protestant can show that “Customs’ results or methods are erroneous,” or “submit[] evidence of analysis [that the protestant] applied to the merchandise which gave a result different from that claimed by the Government.” American Sporting Goods v. United States, 259 F. Supp. 2d 1302, 1308 (Ct. Int’l Trade 2003); see also HQ H089795 (Apr. 19, 2010) (stating that the two means by which an importer may successfully overcome the presumption of correctness afforded a CBP laboratory report is to (1) prove that the testing methods chosen to test the subject material were improper or (2) prove that the CBP laboratory incorrectly carried out the properly chosen scientific procedure) (citations omitted)).
In this case, CBP used trace element profiling that has been used by CBP to determine the geographic origin of agricultural products since the 1980s. Smith, Ralph G., Determination of the Country of Origin of Garlic (Allium sativum) Using Trace Metal Profiling, Journal of Agricultural and Food Chemistry, p. 4041 (2005) (hereinafter “Smith”).
The uptake of trace metals by agricultural products from the soil in which they are grown provides a mechanism for identification of their geographic origin. There are a number of factors such as rainfall, sunshine, temperature, soil characteristics, and plant species that may play an important role in the uptake of trace metals. It is the combination of these factors that influence the uptake of trace metals creating a rough snapshot or historical record of the plant’s growth. In most cases, the trace metal profiles of agricultural products from various countries display enough statistical uniqueness to make a definitive country of origin prediction.
Id. Mr. Smith developed CBP’s testing program methodology with regard to the honey database. Liu Tr. at 98:20-22; 130:15-17. Because honey is a product of nectar from flowers, CBP has been able to apply the trace metal profiling principles. Country of origin testing for honey by CBP began in 2002. Id. at 8:8-14. Trace metal profiling and its resulting country of origin prediction “is only as good as the database that is being used for comparison.” Smith at 4042. As a result, CBP has collected a database of samples to which the imported honey is then compared. The test results must be a 90 percent or greater match with either country (the declared country of origin or the suspected country of origin) in order to be considered conclusive. Id. at 83:19-23. Any result less than 90 percent is declared as “inconclusive.” Id. at 105:15-17. This 90 percent threshold has been selected by CBP “in order to minimize any differences that may be found in not having an absolutely completely representative sample base.” Id. at 96:3-6.
Two separate U.S. federal district courts have upheld CBP’s use of trace metal profiling under the probable cause standard. In United States of America v. Chung Po Liu, CR09-185JLR, the United States District Court for the Western District of Washington determined that the detective’s use of the CBP trace metal profiling for honey as a probable cause basis for seeking a warrant was not a “false statement knowingly or intentionally made or a reckless disregard for the truth” required to satisfy the burden in a Frank’s motion. Liu Tr. (No. 100) at 12:10-17. In United States v. 323 “Quintales” of Green Coffee Beans, 21 F. Supp. 3d 122, 134 (D.P.R. 2013), the United States District Court for the District of Puerto Rico found the trace mineral test results for the country of origin for coffee was sufficient to establish probable cause that the property was subject to forfeiture.
In this case, a presumption of correctness is afforded CBP’s trace element profile testing results that determined the honey in the three samples taken from container CRXU1132191 to be a 94 percent probability match with honey in CBP’s database from China. Lamex’s arguments individually and taken together do not successfully make a prima facie case to sufficiently overcome the presumption of correctness afforded CBP’s laboratory report. Lamex made six arguments asserting that the country of origin of the honey in the container at issue was Vietnam and, therefore, not subject to antidumping duties.
First, Lamex argues that it presented “full traceability records supporting the country of origin as Vietnam.” Lamex’s efforts to trace the origin of the honey, detailed above, are extensive and commendable. There are, however, breaks in the chain of custody that are outside of Lamex’s control and present reasonable opportunities for Chinese honey to be introduced or mixed with the honey Mr. Khang delivered to Daklak. For example, the honey Mr. Khang delivered between February 7, 2011 and February 11, 2011, that allegedly makes up the honey in container CRXU1132191 is processed by Daklak sometime between those dates and May 4, 2011. The independent auditor SGS did not take samples until June 24, 2011, over four months after the delivery by Mr. Khang. It was not until SGS took the samples that the drums were numbered and fixed with tamper-proof seals. By June 24, 2011, however, there was no way to confirm or ascertain whether the honey delivered by Mr. Khang is the same honey that SGS sealed into drums A06936-A07000. Accordingly, the traceability documents are not airtight and do not provide the evidence necessary to overcome the presumption of correctness attached.
Second, Lamex argues that “a third party testing company has tested and verified the country of origin of the honey as Vietnam.” Specifically, QSI issued a report regarding SGS drum seal numbers A06936-A07000 and determined that “[a] declaration of the geographical origin Vietnam is consistent with the above determined pollen spectrum given current scientific research.” There is no indication that QSI was asked to make a determination or determined whether the same sample would also be consistent with a pollen spectrum found in China. The absence of any such determination makes it impossible to rule out the possibility. Lamex asserts that “China does not make coffee honey,” but does not provide an evidentiary basis to support the assertion. China does produce coffee, however. Additionally, pollen testing for country of origin does not necessarily provide trustworthy results. Pollen is not an ingredient processed by bees in the making of honey, rather pollen “accidentally” ends up in the honey during the bees’ process of making honey. As a result, pollen profiles in honey can be easily manipulated at various stages – either during the bees’ honey producing stage or as an additive following extraction of the honey from its combs. Accordingly, pollen analysis of Lamex’s honey does not provide the evidence necessary to overturn the presumption of correctness afforded to CBP’s trace element testing results.
Third, Lamex argues that “CBP has a history of false positives and inconclusive results in its trace elements origin testing.” Specifically, Lamex relies on its experience in 2009 wherein CBP determined that honey imported as Vietnamese country of origin was determined to be a match for Chinese honey and subject to the antidumping order. Ultimately CBP rescinded the initial notice of action after indicating that LSSD did not have “any authentic reference honey from Vietnam . . . [and therefore] cannot rule out the possibility that the honey sample originated from Vietnam.” CBP liquidated the entry as entered. In this case, however, the CBP lab conducted the trace mineral testing on container CRXU1132191 in November 2011 – over two years after the date of Lamex’s 2009 experience. In 2009, CBP did not have a honey database established for Vietnam, but by November 2011 the lab had a robust database from Vietnam. Thus, Lamex’s 2009 experience is not representative of the state of CBP’s database used in the instant case.
Lamex also argues that “[i]ncorrect honey country of origin determinations may be made due to the fact that harvested honey contains trace elements of bee feed.” Lamex argues that bee feed fed to the bees during the off-season may be of Chinese origin, which could lead to a false positive on CBP’s origin tests. Lamex was unable to obtain country of origin information from the bee feed manufacturer and Lamex stated that the bee feed market in Vietnam is not controlled. Lamex did not provide CBP with a sample of the bee feed at issue. As a result of Lamex’s inability to provide support or evidence for its claim, the mere unsubstantiated assertion does not call into question CBP’s lab analysis results or methodology. Accordingly, Lamex’s prior experience and bee feed assertion does not provide sufficient evidence to rebut CBP’s presumption of correctness.
Fourth, Lamex argues that its Vietnamese supplier, Daklak successfully passed an FDA audit in Vietnam. According to Lamex, Daklak successfully passed a U.S. Food and Drug Administration two-day audit conducted on October 16-17, 2012. Lamex contends that if it were Daklak’s practice to trade in honey of Chinese origin, this likely would have been caught by the FDA audit. The audit of Daklak, however, was conducted over a year after the honey at issue was processed by Daklak. The time frame captured by the audit is unclear, but Lamex does not represent that it covered the time period at issue. Accordingly, it does not provide sufficient evidence to determine that the honey in container CRXU1132191 was of Vietnamese origin despite CBP’s trace mineral testing results.
Fifth, Lamex argues that “honey exports are strictly controlled by the government of Vietnam against transshipments.” Lamex asserts that the “quality of each shipment is tested by the regional veterinary centers.” Additionally, a certificate of origin can only be obtained if the producer is able to prove the origin of the whole shipment. Lamex asserts that producers are required to provide details of the suppliers and amounts of honey purchased and that all the information is verified by the Vietnamese government. These assertions, however, are not supported by documentary evidence. If Daklak provided documentary evidence of the origin of the whole shipment of container CRXU1132191 to the government of Vietnam, that documentation was not provided to CBP. Instead, Lamex provided invoices submitted by Mr. Khang to the individual beekeepers that Lamex received from Mr. Khang during a 2012 audit. Even if such documents had been produced, however, the CBP’s lab results would not be sufficiently challenged due to the ease with which documents can be doctored and falsified.
Finally, Lamex argues that it “takes the ADD laws very seriously and has helped establish ethical honey dealing with the development of True Source Honey program.” The truth of Lamex’s assertion is evident from the production of documentary evidence and care taken by Lamex to validate the Vietnamese country of origin. Such efforts, however, do not obviate the fact that there are months during which the ability to alter the honey was feasible. Given the nature of the antidumping order on honey from the People’s Republic of China and the demand for honey in the United States in the face of waning production capacities due to overall declining honeybee health, the moment for deceit was and continues to be ripe. Evidence should be assessed “in practical terms, considering such factors as completeness, adequacy of bases, and possible motives to deceive . . . .” Georg Muller of Amer. v. United States, 13 C.I.T. 963, 974 (1989) (citing Mannesmann-Meer, Inc. v. United States, 433 F.2d 829, 831 (Customs Court 1970)).
In sum, Lamex’s arguments and presented evidence do not prove by a preponderance of the evidence that CBP’s decision was incorrect and CBP should not have assessed antidumping duties on the honey found in the container CRXU1132191. The evidence provided by Lamex is not more convincing than CBP’s trace mineral testing analysis that Lamex’s honey in the samples taken from container CRXU1132191 had a 94 percent probability match with honey in CBP’s database from Vietnam. In conclusion, Lamex has not overcome the presumption of correctness and CBP’s trace element test is sufficient to determine the honey to be country of origin China and subject to the antidumping order in case A-570-863.
HOLDING:
Based on the foregoing, CBP properly assessed antidumping duties on the honey found in container CRXU1132191 pursuant to the antidumping duty order in case A-570-863. The protest should be DENIED in full.
Consistent with the decision set forth above, you are hereby directed to grant the subject protest. This decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. On that date, the Office of Trade will make the decision available to Customs personnel and to the public on the Customs 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 & Trade Facilitation Division