Customs Ruling HQ H305297 - Application for Further Review of Protest Number 2704-19-103104 Concerning Passenger Vehicle and Light Truck Tires under Antidumping Order A-570-016 and Countervailing Order C-570-017

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HQ H305297
Sep 23, 2021

Type : • HTSUS :
Related: 221591

PRO 2-05
H305297 SMS
OT:RR:CTF:ER

Center Director
Automotive and Aerospace Center
U.S. Customs and Border Protection
726 Exchange Street
Buffalo, NY 14210

Attn: Judy L. Staudt, Assistant Center Director -Enforcement

RE: Application for Further Review of Protest Number 2704-19-103104 Concerning Passenger Vehicle and Light Truck Tires under Antidumping Order A-570-016 and Countervailing Order C-570-017

Dear Center Director:

The following is our decision regarding the Application for Further Review (“AFR”) of Protest Number 2704-19-103104, filed by Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, counsel for Wheel Group Holding, LLC (“WGH”) on April 30, 2019, which contests the antidumping duty (“ADD”) rate assessed on its entries of passenger vehicle and light truck tires (“tires” or “PVLT”).

FACTS:

On May 15, 2017, WGH, made an entry of tires from the People’s Republic of China (“China” or “PRC”), which was subject to antidumping order A-570-016 and countervailing duty order C-570-017. See Certain Passenger Vehicle and Light Truck Tires From the People’s Republic of China: Amended Final Affirmative Antidumping Duty Determination and Antidumping Order; and Amended Final Affirmative Countervailing Duty Determination and Countervailing Duty Order, 80 Fed. Reg. 47,902 (Aug. 10, 2015). The entry was assigned number xxxxxxx189-6 and upon entry WGH made cash deposits of ADD at the rate of 8.72 percent ad valorem, which was the rate assigned to Shandong Yongtai Chemical Co., Ltd. (“Yongtai Chemical”), as both the exporter and producer, A-570-016-081, in public Department of Commerce (“Commerce” or “DOC”) Message Number 5231301, dated August 19, 2015. See DOC Message No. 5231301 (Aug. 19, 2015). Additionally, WGH made countervailing duty (“CVD”) cash deposits at the PRC-wide entity rate, C-570-017-000, of 30.61 percent.

Specifically, in Message No. 5231301on August 19, 2015, Commerce instructed U.S. Customs and Border Protection (“CBP”) to require ADD cash deposits on certain PVLT from China equal to the listed exporter/producer specific combination rates. Yongtai Chemical’s specific exporter/producer combination cash deposit rate was included in the list; however, neither Shandong Habilead Rubber Co., LTD. (“Habilead”) nor Shandong Yongtai Group Ltd., (“Yongtai”) nor any combination with these entities were included in this message. See DOC Message 5231301. The PRC-wide entity ADD cash deposit rate was set at 76.46 percent. See id.

On October 16, 2017, Commerce issued public ADD liquidation instructions for Certain PVLT from China for the period August 1, 2016, through July 31, 2017 (A-570-016), in Message Number 7307305. Specifically, Commerce instructed CBP as follows: Commerce has not received a request for an administrative review or new shipper review of the antidumping duty order for the period and on the merchandise identified below except for the firms listed in paragraphs 3a and 3b. Therefore, in accordance with 19 CFR 351.212(c), you are to liquidate all entries for all firms except those listed in paragraphs 3a and 3b and assess antidumping duties on merchandise entered, or withdrawn from warehouse, for consumption at the cash deposit or bonding rate in effect on the date of entry. DOC Message No. 7307305 (Oct. 16, 2017) (emphasis added). Neither Yongtai Chemical, Habilead, nor Yongtai were listed in paragraphs 3a and 3b. Additionally, Message Number 7307305 indicated that suspension of liquidation for the pertinent entries lifted with the notice of administrative review, dated October 16, 2017. See id; see also Initiation of Antidumping and Countervailing Duty Administrative Reviews, 82 Fed. Reg. 48,051 (Oct. 16, 2017). As indicated above, the only exporter/producer entity combination with a specific cash deposit rate was that of Yongtai Chemical/Yongtai Chemical. See DOC Message 5231301.

CBP liquidated the entry on November 2, 2018, and determined that the WGH’s tires were produced by Habilead and therefore subject to the PRC-wide ADD rate, issuing a bill to WGH. CBP contends that Habilead is not authorized to use Yongtai Chemical’s specific entity ADD rate and must apply for their own rate. Counsel for WGH contends that the tires were produced and exported by Yongtai, “formally known as Shandong Yongtai Chemical Co., LTD”, and therefore eligible for Yongtai Chemical’s specific rate of duty.

On August 9, 2018, CBP officials visited WGH’s place of business. According to the CBP report of the meeting prepared by Import Specialist Christopher Hughes, CBP officials met with Paul Yang, the owner/CEO of WGH, and reported the following: The Wheel Groups [sic] manufacturer in China was Shandong Yongtai until 2015 when Shandong Yongtai started to go out of business. Mr. Yang stated that is when the Chinese Government stepped in and directed Shandong Habilead and New Continent to take over manufacturing form [sic] Shandong Yongtai to prevent the shutdown. It was determined by the Chinese Governmnt [sic] that Shandong Habilead would assume all responsibilities to include exporting and receiving of payment. Shandong Habilead was directed to use Shandong Yongtais [sic] DOT code and manufacturing codes.

(Emphasis added). Additionally, WBH provided an agreement between Habilead and Yongtai, dated June 5, 2018, that states:

We hereby certify that Shandong Yongtai Group Co., Ltd (formally known as Shandong Yongtai Chemical Co., LTD) has recombined with Shandong Habilead Rubber Co., Ltd. Shandong Habilead took over Shandong Yongtai tyres [sic] manufactory workshop for a period of 5 years (from February 27, 2017 to February 27, 2022) to keep producing the Yongtai’s brand tyres [sic]. Shandong Habilead has the full power for production, export and accounting of the tyres [sic] produced in Yongtai’s workshop.

(Emphasis added). The CBP report notes that the agreement was produced and issued “after the fact” and concluded that it might have been created for purposes of responding to CBP’s investigation and requests into the matter. The CBP report concludes, accordingly, that the document is “not the actual agreement and appears to be a false document.”

Lastly, the manager of Yongtai provided a statement, dated January 25, 2019, from “March 2017, our company has required Wheel Group Holdings., LLC to make the payment for goods to Shandong Habilead Rubber Co., LTD.” In its protest, Counsel contends:

Yongtai was experiencing severe financial issues in early 2017. Apparently, to help resolve its financial issues, the company entered into an agreement . . . under which Habilead agreed to help Yongtai with administration of the Yongtai factory and provide financial assistance to keep the factory operational. We also understand that, pursuant to that arrangement, Habilead required Wheel Group to make payment for the tires to specified bank accounts controlled by Habilead.

On April 12, 2018, Shandong Yongtai filed suit with the Court of International Trade (“CIT”) challenging the final ADD results of the administrative review of PVLT for the period of review from 2015-2016 and the failure of Commerce to determine a successorship relationship between Yongtai and Yongtai Chemical. See Certain Passenger Vehicle and Light Truck Tires From the People’s Republic of China: Final Results of Antidumping Duty Administrative Review and Final Determination of No Shipments; 2015-2016, 83 Fed. Reg, 11,690 (Mar. 16, 2018). Commerce originally denied separate rate status to the Yongtai; however, in Shandong Yongtai Grp. Co. v. United States, 415 F. Supp. 3d 1303 (“Yongtai I”), the CIT remanded the issue back to Commerce to review their determination not to grant a separate rate status to plaintiff, as not supported by the evidence. Shandong Yongtai Grp. Co. v. United States, 415 F. Supp. 3d 1303 (Ct. Int’l Trade Nov. 27, 2019). After seeking more information, Commerce determined that Yongtai, met the criteria to be considered the successor-in-interest to Yongtai Chemical. See Yongtai Grp. Co., v. United States, 487 F. Supp. 3d 1335 (Ct. Int’l Trade Dec. 21, 2020) (“Yongtai II”). In Yongtai II, the CIT sustained Commerce’s determination that Shandong Yongtai Group Co., Ltd, was the successor-in-interest to Shandong Yongtai Chemical Co., Ltd. The court indicated that in instructions to CBP, the party would be described as “Shandong Yongtai Group Co., Ltd. formerly known as Shandong Yongtai Chemical Co., Ltd.” Id. Lastly, while CIT issued a statutory injunction related to these results and Court number 18-00077, this injunction only applied to entries exported by Yongtai Chemical or Yongtai, entered between January 25, 2015 and July 31, 2016. See DOC Message No. 8122314 (May 2, 2018). We also note that Habilead was not referenced or mentioned in any of these administrative reviews or litigation documents. On April 30, 2019, WGH filed the instant protest disputing the ADD rate at which CBP liquidated entry xxx-xxxx189-6. Included as exhibits to the protest were the following documents: 1) a purchase order dated April 3, 2017, on Yongtai’s letterhead; 2) a commercial invoice on Yongtai Chemical’s letterhead dated April 19, 2017; 3) a packing list on Yongtai Chemical’s letterhead dated April 19, 2017; 4) a bill of lading dated May 1, 2017, listing Yongtai Chemical as the shipper/exporter; 5) a memorandum of wire transfer from WGH to Habilead; 6) a spreadsheet of the breakdown of proof of payment for entry xxx-xxxx1896 to Habilead’s account; 8) a screen print from the U.S. Department of Transportation (“DOT”) website reflecting Yongtai’s active DOT registrations; 9) tire inspection records, in Chinese, on Yongtai’s Inspection Center letter head; 10) Habilead and Yongtai Business Agreement; and 11) a Freedom of Information Act (“FOIA”) request. Many documents were not submitted with an English translation, as required, and will be disregarded.

Based on the above facts, WBH requests that CBP find that the entries at issue may be afforded the specific ADD case rate assigned Yongtai Chemical. WBH does not dispute the CVD rate assessed on entry xxx-xxxx-189-6.

ISSUE:

Whether CBP properly liquidated Wheel Group Holding’s entry of tires.

LAW AND ANALYSIS:

As an initial matter, we note that the protest was timely filed on April 30, 2019, within 180 days of liquidation of the entries on November 2, 2018, under the statutory provisions for protests. See 19 U.S.C. § 1514(c)(3). Generally, assessed antidumping and countervailing duties properly applied by CBP are not protestable. It is well settled that when assessing and collecting AD/CVD duties, CBP follows Commerce’s instructions. “Customs has a merely ministerial role in liquidating antidumping duties.” Mitsubishi Electronics America, Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994). Accordingly, CBP must follow Commerce’s instructions with regard to the entries of tires from China at issue in this case. However, inasmuch as WGH contends that CBP failed to properly apply Commerce’s instructions, this issue is protestable. See Xerox Corp. v. United States, 289 F.3d 792 (Fed. Cir. 2002); see also, HQ 221591 (Feb. 13, 1990) (a mistake in the liquidation process can be corrected by one of the statutory methods set forth in 19 U.S.C. § 1514).

Here, CBP received ADD liquidation instructions relevant to the tires under protest on October 16, 2017. See DOC Message Nos. 7307305. In these liquidation instructions Commerce provided rates only for the specific entities that requested administrative review. For all other entities not listed, CBP was instructed to liquidate the entries at the cash deposit rate in place at the time of entry. See id. Neither Yongtai nor Habilead were included in these instructions as an exporter/producer combination afforded a separate cash deposit rate. Only Yongtai Chemical, as both producer and exporter, was afforded a specific cash deposit rate. See DOC Message No. 5231301.

On its face, the entry summary documentation provided to CBP by WBH all point to Yongtai Chemical as the producer and exporter. For example, the commercial invoice and packing list is on Yongtai Chemical’s letterhead. The bill of lading indicates the exporter as Yongtai Chemical. WBH, however, was instructed to pay Habilead for the merchandise at issue. WGH contends that “[t]he fact that WGH made payment to Habilead, and not directly to Yongtai, is not relevant to the application of the correct ADD deposit rate.” We disagree. WGH’s statements and explanation for why payment was made to Habilead evidences that Habilead controlled production and exportation of the tires at issue.

As stated by Mr. Yang, the owner/CEO of WGH, Habilead was directed by the Chinese government to take over manufacturing from Yongtai to prevent a shutdown. Mr. Yang stated that such responsibilities included exporting merchandise and receiving payment for the merchandise. Indeed, the agreement between Habilead and Yongtai states that “Shandong Habilead has the full power for production, export and accounting of the tyres [sic] produced in Yongtai’s workshop.” Although this document may not be reliable given that it was produced after Habilead’s takeover of Yongtai in 2017, it was provided to CBP by WGH as a summary of the arrangement between Habilead and Yongtai. These statements and documents taken together with the fact that WGH was instructed and indeed paid Habilead, as opposed to Yongtai, leads to the conclusion that Habilead produced and exported the merchandise at issue. We note, as discussed above, that Yongtai and Yongtai Chemical pursued administrative and judicial remedies to receive a successor in interest determination from Commerce. To our knowledge, Yongtai and Yongtai Chemical did not include information to Commerce regarding the arrangement with Habilead for its consideration through that process. CBP’s ministerial role is to follow the liquidation instructions and to compute the duty by applying the antidumping duty rate set by Commerce. Here WBH, Yongtai, and Habilead, are all pertinent parties in the entry transaction as demonstrated by the commercial and entry documentation, as well as the explanations and business agreements provided by WBH. As indicated above, the only exporter/producer entity combination with a specific cash deposit rate was that of Yongtai Chemical/Yongtai Chemical. See DOC Message 5231301. Because of Commerce’s successor in interest determination, this specific rate was also extended to Yongtai as the successor in interest to Yongtai Chemical. Commerce did not calculate a separate rate for importations of subject merchandise produced and/or exported by Habilead. Accordingly, CBP did not err in its liquidation of the entries at issue. Therefore, in accordance with Commerce’s instructions, WGH’s entry of PVLT, without a separate rate, was properly liquidated at the PRC-wide entity rate.

HOLDING:

Consistent with the decision set forth above, we find that the entry xxx-xxxx-189-6 was properly liquidated at the PRC-wide AD/CVD rates. Relief from the PRC-wide entity rate for any combination of firms not specifically assigned a rate by Commerce should have been previously sought with Commerce. Accordingly, protest 2704-19-103104 should be DENIED.

Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.

Sincerely,

for Craig T. Clark, Director
Commercial and Trade Facilitation Division