OT:RR:CTF:ER H150415 ASL
Port Director
U.S. Customs and Border Protection
2350 N. Sam Houston Pkwy E.
Houston, TX 77032
Attn: Ms. Deborah Wanton, Supervisory Import Specialist
Re: Application for Further Review (“AFR”) of Protest No: 5309-10-100493; Wooden Bedroom Furniture from China; Antidumping Order A-570-890-072
Dear Port Director,
The purpose of this correspondence is to provide further review of Protest Number 5309-10-100493, which we received February 25, 2011. The protesting party is International Fidelity Insurance Co. (“Fidelity”), surety for importer of record Yuan Tai Enterprise Inc. (“Yuan”).
FACTS:
The surety protests the liquidation of two entries of wooden bedroom furniture from the People’s Republic of China, (“PRC”) that were subject to antidumping duty order number A-570-890 and entered on January 23, 2006, and February 1, 2006. See Notice of Final Determination of Sales at Less Than Fair Value in the Investigation of Wooden Bedroom Furniture from the People's Republic of China, 69 Fed. Reg. 67,313, (November. 17, 2004). The entered furniture manufactured by Union Friend International Trade (“Union Friend”) is at issue here.
On February 24, 2009, the Court of International Trade (“CIT”) issued a preliminary injunction enjoining the liquidation of these entries. See Department of Commerce (“DOC” or “Commerce”) Administrative Message No. 9063203 (March 04, 2009). On May 18, 2009, the case was dismissed. On July 9, 2009, Commerce issued liquidation instructions covering the PRC wooden bedroom furniture manufactured by Union Friend. See DOC Administrative Message No. 9190201 (July 09, 2009). Customs and Border Protection (“CBP”) liquidated the entries on December 28, 2009, and assessed antidumping duties of 32.23% as instructed by Message No. 9190201.
Because Yuan failed to pay the bill for the additional antidumping duties, CBP sent a formal demand to Fidelity on March 1, 2010. On August 27, 2010, Fidelity filed Protest number 5309-10-100493 with the port. Fidelity argued that the entries liquidated by operation of law at the rate of duty, value, quantity, and amount of duty asserted by the importer at the time of entry because CBP failed to liquidate the entries within six months of notice that suspension of liquidation was lifted. Additionally, Fidelity denies its bond liability because its bond contract does not cover payment to third-party beneficiaries, which it alleges, occurs under the Continued Dumping and Subsidy Offset Act of 2000 ("CDSOA").
ISSUE:
Whether CBP liquidated the entries within the time limits prescribed in 19 U.S.C. § 1504(d).
LAW AND ANALYSIS:
We note initially that the instant protest was timely filed, within 180 days from the mailing of notice of demand for payment against its bond. See 19 U.S.C. § 1514(c)(3). Notice of demand for payment against the Fidelity’s bond was made on March 1, 2010, and this protest was filed on August 27, 2010, within 180 days. Further, the protestant requests further review per 19 C.F.R. 174.25(b). CBP’s regulations provide for further review of a protest when, inter alia, the decision against which the protest was filed:
(b) Is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts
19 C.F.R. § 174.24(b). Upon review of the application for further review, we find that although some of the arguments raised have been addressed in Headquarters Ruling Letters or in the courts, there are legal arguments that have not been the subject of a Headquarters ruling or court decision. See 19 C.F.R. § 174.24(b), (c) and 19 C.F.R. § 174.26(b)(1)(iv). Accordingly, further review is warranted.
Fidelity contends that CBP did not liquidate the entries within six months after receiving notice of the removal of suspension of liquidation and the protested entries were deemed liquidated as entered per 19 U.S.C. § 1504 under International Trading Co. v United States, 281 F.3d 1268 (Fed. Cir. 2002). Fidelity claims that CBP received notice of the removal of suspension when the Court of International Trade (“CIT”) dissolved the injunction by dismissing American Signature, Ct. No. 08-00316, on May 18, 2009. However, Fidelity’s reliance on International Trading to conclude that the dismissal of American Signature constituted notice under § 1504(d) is misplaced, because International Trading, and its progeny, relied on notice being “unambiguous and public,” and here, the court’s dismissal of American Signature does not constitute unambiguous notice.
Section 1504(d) of Title 19 requires that CBP liquidate entries within six months after receiving "notice" that a suspension of liquidation of such entries has been removed. 19 U.S.C. § 1504(d). If CBP fails to timely liquidate the entries after receiving notice, the entries are "deemed" liquidated at the rate asserted at the time of entry. Id. See also, Fujitsu Gen. Am., Inc. v. United States, 283 F.3d 1364, 1376 (Fed. Cir. 2002). "In order for a deemed liquidation to occur, (1) the suspension of liquidation that was in place must have been removed; (2) Customs must have received notice of the removal of the suspension; and (3) Customs must not liquidate the entry at issue within six months of receiving such notice." Id. CBP typically receives the relevant notice in the form of explicit liquidation instructions from Commerce. The courts, however, have recognized that other methods of notice are sufficient.
The Court of Appeals for the Federal Circuit (“CAFC”) in International Trading affirmed the CIT's ruling that suspension of liquidation because of an administrative review is removed upon publication of the final results of the administrative review. See International Trading, 281 F.3d at 1271. The CAFC found that when liquidation is suspended pending an administrative review, publication of the final results in the Federal Register constitutes notice to CBP within the meaning of 19 U.S.C. § 1504(d) that the suspension is lifted and CBP must liquidate relevant entries within six months of the notice. Id. at 1275. The CAFC explained that the “date of publication provides an unambiguous and public starting point for the six-month liquidation period.” Id. Furthermore, the court noted that when the removal of suspension occurs as the result of a court action, that notice must be provided by a separate mechanism. Id. at 1276.
The court in Fujitsu Gen. Am., Inc. v. United States, 283 F.3d 1364, 1379 (Fed. Cir. 2002) further addressed when notice of the removal of suspension of a court-ordered suspension occurred. In Fujitsu, the plaintiff argued that CBP received notice that a court ordered suspension of liquidation was removed when the court later issued a final decision in the case. However, the court disagreed. The court stated that in cases where litigation comes to an end and the suspension of liquidation is removed, it is important that “an unambiguous and public starting point for the six-month liquidation period” is known. Id. at 1382. The court in Fujitsu found that Commerce’s subsequent publication of the court’s ruling in the Federal Register was such an “unambiguous and public starting point” and thus, constituted notice for purpose of 19 U.S.C. § 1504(d). Id. In this case, Commerce notified CBP on March 04, 2009, in administrative message number 9063203, that the CIT had enjoined liquidation of the entries. When the case was dismissed on May 18, 2009, the injunction was lifted and the Second Amended Final Results became final. However, Fidelity offered no evidence that CBP received notice of the lifting of suspension on May 18, 2009, as a court order does not constitute notice.
Because there was no Federal Register notice in this case as in Fujitsu, CBP first received notice of the dissolution of the injunction on July 9, 2009, when Commerce issued liquidation instructions in administrative message number 9190201. Following the CIT's reasoning in Fujitsu, message number 9190201 from Commerce to CBP, issued July 9, 2009, is the earliest “unambiguous” communication which could constitute notice to CBP that the court-ordered injunction issued February 24, 2009, was lifted with regard to the protested entries. As the court held in Fujitsu, publication of the court’s decision in the Federal Register constituted notice because it was “an unambiguous and public starting point for the six-month liquidation period” to begin. See Fujitsu, 283 F.3d at 1382. The simple act of the court dismissing a case does not constitute notice for purpose of 19 U.S.C. § 1504(d). See Fujitsu, 283 F.3d at 1382; and International Trading, 281 F.3d at 1276. Since the dismissal of the case was never published in the Federal Register and Fidelity failed to provide evidence that CBP received notice on May 18, 2009, notice occurred on July 9, 2009. This was when Commerce issued message number 9190201 to CBP, which stated unambiguously and publicly, “these instructions constitute notice of the lifting of suspension…” and for “all shipments of wooden bedroom furniture from the People’s Republic of China Exported by Union Friend International Trade Co., Ltd.,…assess an antidumping liability equal to 32.23 percent of entered value.” Since this date reflects the earliest unambiguous and public notice to CBP, in accordance with Fujitsu, this represents an “unambiguous and public starting point for the six-month liquidation period” to begin, and thus constitutes notice for purpose of 19 U.S.C. § 1504(d). Id.
Finally, because CBP received notice of lifting of the suspension of liquidation on July 9, 2009, and liquidated the protested entries on December 28, 2009, they were timely liquidated. Therefore, the protested entries are not deemed liquidated as entered.
Fidelity also argues that because the antidumping duties collected were distributed per the CDSOA and the surety bond contract does not cover payment to third parties, it is not liable under the bond. This contention has been addressed in ruling letters and in the courts. For example, in H070919, October 14, 2009, CBP stated that:
[t]he existence of the CDSOA did not change the importer's obligation to pay the duties it owes, nor did it change the surety's liability for those duties. The CDSOA did not alter the contract between the importer and the surety: it did not expose the surety to any greater risk, it did not increase the surety's contractual liability, nor did it alter the payment structure of the bond. See Bierce v. Waterhouse, 219 U.S. 230, 337 (1911); Washington Int'l Ins. Co. v. United States, 138 F. Supp. 2d 1314, 1331 (Ct. Int'l Trade 2001); Restatement (Third) of Suretyship and Guaranty §§ 37, 41. The CDSOA did not create "third party beneficiaries" to the bond. See Cemex, S.A. v. United States, 384 F.3d 1314, 1322 (Fed. Cir. 2004).
Accordingly, the payments under the CDSOA have no affect on Fidelity's obligation under its bond.
HOLDING
The surety, Fidelity, is not absolved of liability for the antidumping duties due under the bond that it issued and the antidumping duties were properly calculated. The Protest should be DENIED in full.
No later than 60 days from the date of this letter, the Office of Regulations and Rulings will make the decision available to CPB personnel, and to the public on the CPB 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