LIQ-4-01/ENT-1-01/PRO-2-02-RR:IT:EC 226263 PH
Port Director
U.S. Customs Service
6747 Eagle Road
Middleburg Heights, Ohio 44130
RE: Protest 4101-95-100206; Antidumping Duties; Interest;
Protestability Under 19 U.S.C. 1514; Timken Co. v. United
States, 15 CIT 526 (1991); 16 CIT 999 (1992); 37 F. 3d 1470
(Fed. Cir. 1994); American Hi-Fi International, Inc., v.
United States, CIT Slip Op. 96-121; 19 U.S.C. 1514
Dear Sir or Madame:
The above-referenced protest was forwarded to this office for
further review. Our decision follows.
FACTS:
According to the file and Customs records, on October 29 and
December 3, 1981, the protestant entered certain merchandise
(tapered roller bearings) from Japan. According to entry
documentation in the file, the importer of record was Nissho-Iwai
American Corporation, the seller/shipper (and exporter, insofar
as the records indicate the identity of the exporter) was Nissho-Iwai Corporation in Tokyo, Japan, and the manufacturer was
Kawasaki Heavy Industries, Ltd., in Tokyo. The protestant states
that "the importer was not required to post a cash deposit for
estimated duties with these entries ...." According to Customs
records, antidumping duties were not deposited at the time of
entry.
The merchandise under consideration was the subject of a finding
of antidumping (Treasury Decision 76-227, 41 F.R. 34974, August
18, 1976) (for a "comprehensive history" (Timken Co. v. United
States, 16 CIT 429, 430, 795 F. Supp. 439 (1992)) of this
antidumping matter, see Koyo Seiko Co., Ltd. v. United States, 16
CIT 366, 796 F. Supp. 517 (1992), and NSK Ltd. v. United States,
16 CIT 401, 794 F. Supp. 1156 (1992)). In a Notice of
Preliminary Results of Administrative Review and Tentative
Revocation in Part of Antidumping Finding (46 F.R. 43864,
September 1, 1981), the International Trade Administration,
Department of Commerce, preliminarily determined that an
antidumping margin of 16.92% existed for Nissho-Iwai Co., Ltd.
for the period April 1979 through July 1980 and an antidumping
margin of 0 (zero) existed for Kawasaki Heavy Industries, Ltd.
For the period October 1977 through July 1980. Also, according
to this notice, "... as required by 353.48(b) of the Commerce
Regulations, a cash deposit based upon the most recent of the
margins calculated above shall be required on all shipments of
tapered roller bearings ... entered, or withdrawn from warehouse,
for consumption on or after the date of publication of the final
results ... Firms for which review is still pending will be
subject to the existing bond requirements." In a Notice of Final
Results of Administrative Review of Antidumping Finding (49 F.R.
8976, March 9, 1984, Case A-588-054), the Department of Commerce
gave notice of the final results of its review. The same margins
as were preliminary determined to exist for Nissho-Iwai Co.,
Ltd., and Kawasaki Heavy Industries, Ltd. were found to exist for
the same periods listed in the September 1, 1981, notice, and a
cash deposit of estimated antidumping duties based upon the
margins was required on all shipments entered, or withdrawn from
warehouse, for consumption on or after the date of the notice.
Subsequently, the Department of Commerce sent Customs
instructions regarding the assessment of antidumping duties on
the merchandise under consideration and liquidation of entries of
the merchandise. These instructions were forwarded to Customs
field offices by a telex dated October 28, 1986 (Antidumping
Duties Ins 86-314). According to the instructions, "[t]his telex
constitutes the immediate lifting of suspension of liquidation of
entries for the merchandise and periods listed above [the list is
of "manufacturer[s]/exporter[s]"; the period for Nissho Iwai is
August 1980 through July 1985; Kawasaki is not listed] ...."
Also according to the instructions:
The assessment of antidumping duties is subject to the
provisions of section 778 of the Tariff Act, which requires
interest on overpayments or underpayments of amounts
deposited as estimated antidumping duties. The rate at
which such interest is payable for any period is the rate
in effect under section 6621 of the Internal Revenue Code
of 1954 for such periods. The interest shall be calculated
from the date of payment of estimated duties through the
date of liquidation only for those entries made after
January 1, 1980.
On January 10, 1995, a Notice of Action (CF29) was issued for one
of the entries under consideration. In the Notice of Action,
Customs advised that liquidation instructions on the merchandise
had been received but that no reimbursement certificate had been
received for the entry and that unless one was received, the
entry would be liquidated at double the antidumping duties plus
interest from the date of December 16, 1981. By letter of
January 23, 1995, a reimbursement certificate for both entries
was sent to Customs.
According to Customs records, both protested entries were
liquidated on February 17, 1995, with antidumping duties totaling
(for both entries) $10,179.36 and interest totaling (for both
entries) $31,565.35. According to Customs records, a bill was
issued for this amount on the same date (February 17, 1995). The
protest under consideration was filed with Customs on May 17,
1995. The protest is against the assessment of interest on the
protested entries (the amount of duty assessed is not protested).
The protestant cites a Federal Register notice (59 F.R. 56035,
56037, November 10, 1995), in which the Department of Commerce
stated that "... because we required cash deposits for the first
time on entries of merchandise manufactured by Koyo and NSK on
June 1, 1990, interest will only be collected or refunded on
under- or overpayments of cash deposits on entries after that
date", and Timken Company v. United States, 15 CIT 526, 777 F.
Supp. 20 (1991), affirmed, 37 F. 3d 1470 (Fed. Cir. 1994). On
the basis of these cases, the protestant argues that Customs "...
cannot assess interest on the two [protested] entries ... since
the [Department of Commerce] did not require cash deposits of
estimated duties for these entries."
Further review was requested and granted.
ISSUE:
May the protest in this case be granted?
LAW AND ANALYSIS:
Initially, we note that the protest was timely filed (i.e.,
within 90 days of the date of the bill for interest; see 19
U.S.C. 1514(c)(3) and New Zealand Lamb Co., Inc. v. United
States, 40 F. 3d 377, 382 (Fed. Cir. 1994), "That decision [i.e.,
Customs billing of New Zealand Lamb for interest], by virtue of
1514(c)(2)(B), commenced the running of the ninety-day
limitations period").
In regard to the protestability under 19 U.S.C. 1514 of this
matter, subsection (c)(2) of section 1514 provides that protests
may be filed with respect to merchandise which is the subject of
a decision specified in subsection (a) of section 1514. The
decisions specified in subsection (a) of section 1514 are "[with
certain exceptions], decisions of the Customs Service, including
the legality of all orders and findings entering into the same,
as to [seven kinds of decisions are listed] ...." Thus, to be
protestable under section 1514, a decision must be a "decision of
the Customs Service."
Generally, we have held that the role of Customs in the
antidumping process is "... simply to follow Commerce's
instructions in collecting deposits of estimated duties and in
assessing antidumping duties, together with interest, at the time
of liquidation" (ruling HQ 225382, July 3, 1995; see also,
Mitsubishi Electronic America Inc. v. United States, 44 F. 3d 973
(Fed. Cir. 1994); Nichimen America, Inc. v. United States, 9 Fed.
Cir. (T) 103, 938 F. 2d 1286 (1991)). However, if Customs fails
to follow the instructions of the Department of Commerce, that
failure may be subject to protest under 19 U.S.C. 1514 (see,
e.g., ABC International Traders, Inc., v. United States, CIT Slip
Op. 95-97 (May 23, 1995) "... claims [that Customs erroneously
liquidated certain entries and failed to follow Commerce's
liquidation instructions] may be brought before the court under
28 U.S.C. 1581(a) (1988), after denial of protests by Customs"
(vol. 29, no. 24, page 51, 54-55, Customs Bulletin and Decisions,
June 14, 1995)). See also, in this regard, American Hi-Fi Inter-
national, Inc., v. United States, CIT Slip Op. 96-121 (August 2,
1996) ("[j]urisdiction for actions challenging Customs' failure
to follow Commerce's actual liquidation instructions ... is found
under 28 U.S.C. 1581(a)" (vol. 30, no. 34, page 56, 62, Customs
Bulletin and Decisions, August 21, 1996).
The liquidation instruction relating to interest is quoted in the
FACTS portion of this ruling. The instruction, as the Court in
American Hi-Fi stated about a similar instruction, "simply
mirrors the statute ..." (ibid, at page 63).
In its review of the similar instruction regarding interest, the
Court in American Hi-Fi asked the question: "... what did the
liquidation instruction mean and what does 19 U.S.C. 1677g
require" (ibid, at page 62). As stated above, the Court conclud-
ed that the instruction "simply mirrors the statute [so that] the
issue remains, does that statute [section 1677g] require interest
if a dumping margin is not yet found for particular goods, but a
duty order or its equivalent is outstanding" (ibid, at page 63).
The Court stated that the statute can only be understood in the
context of the entire statutory scheme, citing Timken Co. v.
United States, 37 F. 3d 1470, 1474 (Fed. Cir. 1994), which
affirmed the CIT's interpretation of section 1677g in Timken Co.
v. United States, 15 CIT 526, 777 F. Supp. 20 (1991), and 16 CIT
999, 809 F. Supp. 121 (1992).
The Timken decisions, supra, make clear that the instructions of
the Department of Commerce were that interest should only be
assessed when cash deposits were required. See 15 CIT at 534,
("Plaintiff fails to note the crucial element in this case, i.e.,
that while section 1677g contemplates the existence of cash
deposits, no actual deposits were made herein"). In the Court of
Appeals decision, the Court notes that this was the determination
of the Department of Commerce ("ITA determined that amounts
deposited' in section 1677g(a) refers only to cash deposits of
estimated antidumping duties, and not to securities such as
posted bonds" (37 F. 3d at 1472)). The CIT decision and ITA
determination were almost all with regard to entries before the
enactment of section 1677g(a), and in the 1992 CIT Timken case
(16 CIT 999), the plaintiff contended that entries after the
enactment of section 1677g(a) (effective January 1, 1980 (section
107, Public Law 93-39)) should be subject to interest under the
amended law. The CIT rejected this contention, stating that "...
the statutory language is clear on its face that interest is
collectable only on deposits and not on bonds" and that "...
ITA's determination on this issue was reasonable, supported by
substantial evidence and in accordance with law and, therefore,
is affirmed" (16 CIT at 1001).
The Court of Appeals reviewed "... de novo the trial court's
determination that amounts deposited' [in 19 U.S.C. 1677g]
refers only to cash deposits, not to bond amounts" (37 F. 3d at
1474). After reviewing section 1677g in the context of the
statutory scheme set forth in the 1979 Act, and noting the
different treatment of cash deposits posted pursuant to 19 U.S.C.
1673b(d)(2) during the pre-antidumping order, investigative phase
(19 U.S.C. 1673f(a) (interest not provided for)), as compared to
the treatment of cash deposits required to be posted by an
antidumping order (19 U.S.C. 1673f(b) (interest provided for)),
the Court concluded that "'amounts deposited' in section 1677g(a)
refers solely to cash deposits of estimated duties provided under
sections 1671e(a)(4) and 1673e(a)(3)" (37 F. 3d at 1476). The
Court went on to state that "... recent amendments to section
1677g(a) did not alter the limitation of amounts deposited' to
cash payments" (37 F. 3d at 1476). The Court reviewed the
treatment of entries of merchandise similar to the protested
entries (merchandise subject to T.D. 76-227 and entered with a
bond for security and not a cash deposit before final results
were published by the Department of Commerce (not published until
1984 in for the protested entries and not published until 1990
for the similarly situated entries)). In regard to those
similarly situated entries the Court stated:
[N]either Treasury nor Commerce required Koyo Seiko or NSK
to make cash payments of estimated antidumping duties.
Instead these importers posted bonds. The 1979 Act
associates bonds with "security." Thus, the Act intended
bonds to serve as a means of securing payment, not a method
of payment. Therefore, when Treasury and ITA did not
require cash deposits of estimated duties over the period
of sixteen years, they relieved Koyo Seiko and NSK of the
duty to make interest payments. Without an obligation to
pay estimated duties, section 1677g(a) cannot apply. [37 F.
3d at 1477]
In summing up its decision, the Court stated:
In sum, the requirement to make cash deposits of estimated
duties, under the duty order, triggers the interest
provision. Without the duty order, the importer has no
obligation to make a cash deposit and consequently no
obligation to pay interest. [37 F. 3d at 1477]
The instructions of the Department of Commerce in regard to the
protested entries were, in pertinent part:
The assessment of antidumping duties is subject to the
provisions of section 778 of the Tariff Act, which requires
interest on overpayments or underpayments of amounts
deposited as estimated antidumping duties. *** The
interest shall be calculated from the date of payment of
estimated duties through the date of liquidation only for
those entries made after January 1, 1980.
As the Court stated in American Hi-Fi (see above), such an
instruction "simply mirrors the statute ...", which the Courts
have conclusively held requires interest only when a cash deposit
of estimated duties is required under an antidumping order. As
the Timken cases make clear, at the time under consideration it
was the position of the Department of Commerce not to require
interest under 19 U.S.C. 1677g when there was no requirement for
a cash deposit under an antidumping order (15 CIT at 532; 16 CIT
at 1001; 37 F. 3d at 1472, 1473). Following the analysis of the
Court in American Hi-Fi (i.e., considering the instruction in the
context of section 1677g and section 1677g in the context of the
entire statutory scheme), we conclude, in answer to the question
posed by the Court in American Hi-Fi (i.e., "... what did the
liquidation instruction mean and what does 19 U.S.C. 1677g
require"), that the instruction was that interest should only be
required on overpayments or underpayments of amounts deposited as
estimated antidumping duties when an antidumping order requires a
cash deposit.
At the time of the entries under consideration there was no
requirement under an antidumping order for a cash deposit of
antidumping duties for the merchandise in those entries (the
merchandise was entered during the pre-antidumping order,
investigative phase referred to in the Court of Appeals Timken
decision (37 F. 3d at 1474-1476), during which interest is not
applicable). No cash deposit was actually posted. In view of
the position of the Department of Commerce as described in the
Timken decisions (see above), we conclude that the instruction
was that no interest should be required for the entries under
consideration (see the statement by the Court of Appeals at 37 F.
3d 1477, described above, that cash deposits and interest were
not required for similarly situated entries). Since Customs
failed to follow this instruction and did liquidate the entries
with interest, the failure by Customs may be subject to protest
under 19 U.S.C. 1514 (see ABC International Traders and American
Hi-Fi, cited and quoted above).
The question of whether the assessment of interest by Customs on
the underpayment of duties is protestable has been addressed by
the Courts. In New Zealand Lamb, supra, concerning interest on
the underpayment of countervailing duties under 19 U.S.C. 1677g,
the Court, citing Syva Co. v. United States, 12 CIT 199, 681 F.
Supp. 885 (1988), stated:
We start from the premise that interest on the underpayment
of duties is a charge "within the jurisdiction of the
Secretary of the Treasury," 19 U.S.C. 1514(a)(3). [40 F. 3d
at 382]
Since a charge or exaction under 19 U.S.C. 1514(a)(3) is one of
the decisions which is protestable under section 1514 (19 U.S.C.
1514(c)(1); 19 U.S.C. 1514(a)(3)), since the failure of Customs
to follow the Department of Commerce liquidation instructions in
an antidumping matter may be protestable under section 1514 (see
above), and since Customs failed to follow the Department of
Commerce instructions in charging interest on the antidumping
duties for these entries, we conclude that the issue protested is
protestable under section 1514. Consistent with the above
authorities and analysis, the protest is GRANTED.
HOLDING:
The protest, of interest on antidumping duties for the protested
entries (the amount of duty is specifically not protested), is
GRANTED.
In accordance with Section 3A(11)(b) of Customs Directive 099
3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by your office, with
the Customs Form 19, to the protestant no later than 60 days from
the date of this letter. Any reliquidation of the entry in
accordance with the decision must be accomplished prior to
mailing of the decision. Sixty days from the date of the
decision the Office of Regulations and Rulings will take steps to
make the decision available to Customs personnel via the Customs
Rulings Module in ACS and the public via the Diskette
Subscription Service, Freedom of Information Act, and other
public access channels.
Sincerely,
Director, International
Trade Compliance Division