• HQ 228611
• Jul 31, 2001

• Type : Antidumping Duties • HTSUS :
•  Related:   228494; 820311; 225382   

PRO-2-05-LIQ-15-LIQ-4-01
RR:CR:DR 228611 IDL

Port Director of Customs
Attn: Laura Webb
2350 N. Sam Houston Pkwy E.
Suite. 1000
Houston, TX 77032

RE: Protest and AFR No. 5301-99-100132; time of entry; 19 CFR 141.68; assessment of antidumping duties

Dear Ms. Webb:

This is in reply to the above-numbered protest, which this office received on September 25, 1999. We have considered the issues raised and the arguments presented and our reply follows.

FACTS:

Protestant, Marubeni America Corp. ("Marubeni"), imports various types of ball bearings, and spare parts for a "HSPE/Big Spring Cogeneration." Protest is made against the liquidation of two entries at the rate Customs assessed for antidumping duties. Protestant also protests the assessment of interest. Finally, it protests the assessment of antidumping duties that were assessed on merchandise identified as spare parts.

According to information provided by Customs' Automated Commercial System (ACS) and an import specialist at the Houston port, entry 306-xxxx831-4 ("831-4") was entered on April 5, 1989. The second protested entry, number 306-xxxx846-2 ("846-2") was entered on April 6, 1989. The entry summaries for entry 831-4 and 846-2, filed on April 20, 1989, were rejected on August 25, 1989, because protestant failed to deposit antidumping duties at the time of filing the entry summaries. On September 13, 1989, protestant filed a bond to cover antidumping duties at the rate of 84.33%, which was the rate found in Commerce's Antidumping Duty Order of May 15, 1989. Both entries liquidated on January 22, 1999.

Protestant filed a protest and application for further review on the above-described issues on April 21, 1999 with the Houston Service Port. According to the CF 19, the protest and application for further review was denied by the port on June 18, 1999. Protestant, in response to the denial, filed with the Office of Regulations and Rulings on June 25, 1999 a request to set aside the denial of the application for further review under 19 U.S.C. 1515(c). In response to the 1515(c) request, HQ 228494, dated August 12, 1999 was issued. In HQ 228494, this office determined that the protest raised issues upon which Customs had not previously ruled. However, it also stated that as the port had already granted the protest on the issue of the assessment of interest, that issue was moot.

On November 9, 1988, the Department of Commerce ("Commerce") issued on case number A-588-804 in the Federal Register (53 FR 45343), a "Preliminary Determination of Sales at Less than Fair Value: Antifriction Bearings (Other than Tapered Roller Bearings) and Parts thereof from Japan." The applicable rate for Protestant, since it was not specifically named in the preliminary determination, was 217.31%. Additionally, it states that Customs shall suspend liquidation on these entries, and require a cash deposit or bond to cover the rates listed.

Commerce then published on case A-588-804 on May 3, 1989 in the Federal Register (54 FR 19101), a "Final Determination of Sales at Less than Fair Value; Antifriction Bearings (Other than Tapered Roller Bearings) and Parts Thereof from Japan." The applicable rate for Protestant since it was not specifically named in the final determination was 84.33%. Additionally, it stated that Customs was to continue to suspend liquidation on the entries that were subject to the preliminary determination, and to require a cash deposit or bond to cover the rates listed.

Commerce then published on case A-588-804 on May 15, 1989 in the Federal Register (54 FR 19101), "Antidumping Duty Orders: Ball Bearings, Cylindrical Roller Bearings, and Spherical Plain Bearings, and Parts Thereof from Japan." The applicable rate for Protestant, since it was not specifically named in the final determination, was 84.33%. The order requires Customs to assess antidumping duties "equal to the amount by which the foreign market value of the merchandise exceeds the United States price (weighted-average dumping margin) for all entries of ball bearings, cylindrical roller bearings, and spherical ball bearings from Japan." Beginning May 15, 1989, Customs "must require a cash deposit equal to the estimated weighted-average dumping margins noted" in the Antidumping Order. In addition, "all unliquidated entries of ball bearings, cylindrical roller bearings, and spherical plain bearings entered or withdrawn from warehouse, for consumption, on or after November 9, 1988, will be liable for the possible assessment of antidumping duties."

Customs received liquidation instructions for Commerce case A-588-804 by message 8203111 on July 23, 1998. Those instructions were itemized and identified by the Customs identification numbers: A-588-201, A-588-203, and A-588-205. The liquidation instructions were for the period of November 9, 1988 to April 30, 1990. Message 820311 referred to 21 other messages containing liquidation instructions for ball bearings, none of which are applicable to this case. The instructions state that after applying all those instructions, Customs should now liquidate all remaining entries from that period at the deposit rate required at the time of entry of the merchandise. Protestant's two entries were assessed antidumping duties under Commerce's case number A-588-804. The Customs identification number assigned to that case number was A-588-205. Customs assessed the entries at the rate of 217.31% as found in the preliminary determination date of November 9, 1988.

ISSUES:

(1) Whether Customs' correctly applied antidumping duties on entries 306-xxxx831-4 ("831-4") and 306-xxxx846-2 ("846-2")?

(2) Whether Customs acted properly in assessing interest on a deposit required by the preliminary determination? (3) Whether spare parts associated with bearings are precluded from antidumping liability under Commerce's case number A-588-804?

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. § 1514 and 19 CFR Part 174). The entries were liquidated on January 22, 1999, and the subject protest was filed on April 21, 1999.

Further, we note that, generally, antidumping duty rates correctly applied by Customs are not protestable. Fujitsu Ten Corp. v. United States, Ct. Int'l Trade, Slip Op. 97-11 (January 29, 1997). 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...at the time of liquidation." HQ 225382; see also, Mitsubishi Electronics America, Inc. v. United States, 44 F. 3d 973 (Fed. Cir. 1994); Nichimen America, Inc. v. United States, 938 F. 2d 1286 (1991). However, an importer may protest Customs' failure to follow a Commerce instruction under 19 U.S.C. 1514. American Hi-Fi International, Inc. v. United States, 19 C.I.T. 1340 (1995).

Issue (1) As noted above, the importer filed two entries in April 1989. Although, Customs later rejected importer's 7501 entry summaries, that rejection had no bearing on time of entry. 19 CFR 141.68(a). On July 23, 1998, subsequent to the antidumping order of May 15, 1989, Commerce issued liquidation instructions, lifting the suspension of liquidation for the entries covered by the review period (November 9, 1988 through April 30, 1990).

On January 22, 1999, Customs liquidated the entries. In accordance with Commerce's preliminary determination of November 1988, the port assessed duties of 217.31%. The port contends that this preliminary determination assessment should apply, reasoning that Commerce issued the order after the date of entry, and that the liquidation instructions refer to the deposit rate required at the time of entry, thus, that the antidumping order is not applicable to the entries in dispute. The importer believes that the antidumping order assessment of 84.33% is the correct duty.

A preliminary determination, issued by Commerce, requires an importer to post a deposit, as collateral, and not as estimated duties:

Effect of determination by the administering authority If the preliminary determination of the administering authority...is affirmative, the administering authority- ... (1)(B) shall order the posting of a cash deposit, bond, or other security, as the administering authority deems appropriate, for each entry of the subject merchandise in an amount based on the estimated weighted average dumping margin or the estimated all-others rate, whichever is applicable... 19 U.S.C. 1673b(d)(1)(B). (emphasis added)

Any instructions included by Commerce to suspend liquidation on entries are meant to halt final computation of duties until Commerce issues an antidumping order (or in the case of a negative final determination, terminates an antidumping investigation).

Consequent to Commerce's publication of an antidumping order, an importer entering merchandise subject to an order is not entitled to simply file a bond to cover the antidumping duties as provided by the security deposit requirements of 1673b(d)(1)(B). Instead, an importer must deposit estimated antidumping duties, pending liquidation of entries, at the time that it deposits estimated normal customs duties on that merchandise. 19 U.S.C. 1673e(a)(3).

19 U.S.C. 1673f addresses handling, upon liquidation of entry, of difference between a security deposit of estimated antidumping duty (required by a preliminary determination) and final assessed duties (required by an antidumping order). Specifically, 1673f(a) refers to entries made prior to publication of Final Determination of Sales at Less than Fair Value:

(a) Deposit of estimated antidumping duty under section 1673b(d)(1)(B) of this title If the amount of a cash deposit, or the amount of any bond or other security, required as security for an estimated antidumping duty under section 1673b(d)(1)(B) of this title is different from the amount of the antidumping duty determined under an antidumping duty order published under section 1673e of this title, then the difference for entries of merchandise entered...for consumption before notice of the affirmative determination of the Commission under section 1673d(b) of this title is published shall be- (1) ... (2) refunded or released, to the extent that the cash deposit, bond, or other security is higher than the duty under the order.

The above statute is closely related to the provisional measures deposit cap, found in 19 CFR 351.212(d). Importer argued that Customs ignored that regulation:

This paragraph applies to subject merchandise entered...for consumption before the date of publication of the Commission's notice of an affirmative final injury determination.... If the amount of duties that would be assessed by applying the rates included in the Secretary's affirmative preliminary or affirmative final antidumping...duty determination ("provisional duties") is different from the amount of duties that would be assessed by applying the assessment rate under paragraphs (b)(1) and (b)(2) of this section ("final duties"), the Secretary (of Commerce) will instruct the Customs Service to...assess antidumping...duties at the assessment rate if the provisional duties exceed the final duties. (parentheses added) 19 CFR 351.212(d).

As noted above, Marubeni entered 831-4 and 846-2 on April 5 and 6, 1989, respectively, subsequent to the preliminary determination of November 9, 1988. As a result of the affirmative preliminary determination, liquidation of the entries was suspended. Liquidation is the final computation or ascertainment of duties accruing on an entry. 19 CFR 159.1. Commerce then published the final determination, pursuant to 19 U.S.C. 1673d, on May 3, 1989, and the antidumping order, pursuant to 19 U.S.C. 1673e, on May 15, 1989.

Marubeni, at the time of entry, was required to post a security to cover the amount of 217.31%. 19 U.S.C. 1673b(d)(1)(B). However, Marubeni failed to post any security, until, it filed a bond pursuant to 1673e(a)(3), to secure payment of estimated antidumping duties. By then, the antidumping order had required antidumping duties in the amount of only 84.33%.

Under 19 U.S.C. 1673f, which addresses handling of difference between a cash deposit of a bond required as security under 19 U.S.C. 1673b(d)(1)(B) and the amount of antidumping duty determined under an antidumping duty order under 19 U.S.C. 1673e, the difference shall be refunded or released to the extent that the cash deposit or bond is higher than the duty under the order.

The preliminary determination rate (security deposit) was 217.31% and the rate determined in the order was 84.33%. Because Customs did not accept the entry summary until September 13, 1989, a date subsequent to the date of the order, acceptance of a bond at the order rate of 84.33% complied with 19 U.S.C. 1673f(a)(2) (i.e., security equal to the order rate was appropriate).

The next point is whether the words of the instruction "you should now liquidate such entries at the deposit rate required at the time of entry of the merchandise" refer to the security deposit rate of 217.31% imposed by the preliminary determination or the assessment rate of 84.33% under the order. Focusing on the words "required at the time of entry" would lead one to conclude that the security deposit rate of 217.31% is required. Such a focus would be contrary to the statutory direction set by 19 U.S.C. 1673f, which requires any excess between a cash deposit required as security and that required by the order to be refunded. That focus would have the effect of reducing the security to cover the ultimate payment while demanding payment of the larger amount set by the preliminary determination. See also Koyo Seiko Co. v. U.S., 95 F.3d 1094, 1098, 1099 (Fed. Cir. 1996).

The preliminary determination is merely based on whether the available information contains a reasonable indication of injury (19 U.S.C. 1673b(a)) and whether there is a reasonable basis to believe or suspect sales at less than fair value (19 U.S.C. 1673(b)). The final determination, however, which results in the assessment of estimated antidumping duties, makes a final determination whether there are sales at less than fair value (19 U.S.C. 1673d(a)(1)), and a final determination whether there is harm to a U.S. industry as a result of those sales at less than fair value (19 U.S.C. 1673d(b)). Given the less stringent standard for preliminary determinations compared with final determinations, it would be anomalous to posit that the earlier less stringent standard takes precedence over the final determination.

Finally, under 19 U.S.C.1677g, interest on overpayments and underpayments is payable only on entries made on or after the date of the antidumping order.

Interest on certain overpayments and underpayments (a) General Rule Interest shall be payable on overpayments and underpayments of amounts deposited on merchandise entered...for consumption on and after- (1) the date of publication of a[n]...antidumping duty order under this subtitle.... 19 U.S.C. 1677g.

Interest for money is defined as the compensation for use or forbearance or detention of money. Black's Law Dictionary, Fourth Ed. (1957). As noted by the court in Timken v. U.S., 865 F. Supp. 881, 18 C.I.T. 942 (1994), there is no obligation to make a cash deposit prior to an antidumping duty order, and consequently, no obligation to pay interest. The dumping order, based on the final determinations of Commerce and the International Trade Commission, sets the right of the government to the use of the money as estimated duty deposits and, as a consequence, triggers the interest provision of 19 U.S.C. 1677g. For these reasons, the only interpretation of the words of the instructions consistent with the statutory scheme is that the reference was to the final estimated duty of 84.33%, which was the only amount that was required to have been deposited as cash.

Therefore, Customs should have assessed duties by applying the assessment rate under the antidumping order. Since, Customs failed to correctly apply Commerce's antidumping duty rates, this issue is a protestable Customs matter. (see American Hi-Fi).

Issue (2) As discussed above in the analysis of Issue (1), when Commerce requires importers to make antidumping duty deposits in its preliminary determination, such deposits function, merely, as collateral, and are not considered estimated duties. Therefore, a preliminary determination does not trigger any interest liability. An antidumping order, however, does trigger an importer's obligation to deposit estimated duties and to pay interest on any underpayments. 19 U.S.C. 1677g.

Since, entries 831-4 and 846-2 occurred prior to date of publication of the antidumping order, clearly, interest is not payable in this instance.

In HQ 228494, this office stated that as the port had already granted the protest on the issue of the assessment of interest based on a preliminary determination, that issue was moot.

Issue (3) Commerce explicitly specified in its antidumping order of May 15, 1989, that Customs shall assess antidumping duties on "Spherical Plain Bearings...and Parts Thereof" (emphasis added).

Customs assesses antidumping duties in accordance with Department of Commerce determinations as to whether a product is within the scope of an antidumping order. (HQ 735426). Customs has no authority to determine whether antidumping duty may be assessed on spare parts. The Commerce Department's antidumping scope determination applies to the merchandise named in that determination, and Customs is not empowered to grant the relief now sought by the Protestant. (HQ 951644). Thus, this issue is not a protestable Customs matter.

HOLDING:

Accordingly, the Protest should be GRANTED with regard to Issue (1), since Customs failed to correctly apply antidumping duties on entries 831-4 and 846-2, making this issue a protestable Customs matter. The Protest should be DENIED with regard to Issue (3), since Customs is not empowered to grant the relief sought by the Protestant, making this a matter not protestable against Customs. With regard to Issue (2), importer's protest of Customs' assessment of interest based on a preliminary determination is moot, as the port has already granted the protest on that issue.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John Durant
Director, Commercial Rulings Division

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