PRO 2-05
OT:RR:CTF:ER
H276752 ABH
Port Director
Port of Baltimore
U.S. Customs & Border Protection
40 South Gay Street
Baltimore, MD 21202
Attn: Jeremy Jackson, Supervisory Import Specialist
RE: Application for Further Review of Protest 1301-2015-100088; Antidumping and Countervailing Duties; Aluminum Extrusions
Dear Port Director:
The purpose of this correspondence is to address the application for further review (“AFR”) of Protest 1301-2015-100088, dated July 17, 2015, filed by Nomadic Structures, Inc. (“Nomadic”), regarding the assessment of antidumping and countervailing duties under the terms of the order covering aluminum extrusions from the People’s Republic of China in Case Numbers A-570-967 and C-570-968 (“AE Orders”).
FACTS:
On May 7, 2012, Nomadic made entry number XXX-XXXX463-1 of a Three Quad High Connected Strut ZMSC3 (“strut”) from the People’s Republic of China as a Type 01 entry at the U.S. Customs and Border Protection (“CBP”) Port of Baltimore. On June 21, 2012, CBP issued a Form 28 Request for Information regarding the type of metal the merchandise was made and, if it was aluminum alloy, to provide the series designation. On July 16, 2012, Nomadic responded that the ZMSC3 strut is a finished good produced in China and includes multiple components as aluminum, injected plastic parts, magnets, bungee cords and labels. Photographs of the struts were included, which show an item in the form of a “Z” composed of three aluminum extrusions connected with bungee cords that allow the three parts to be stretched into a straight line and then connected together with plastic connectors and magnets at each junction. The user takes the struts and connects them to a pop-out display frame via the plastic connectors, which are attached to studs on the display frame. The display frames are intended for use at events such as trade shows. Panels are ultimately attached to the display frame that is buttressed by the struts and create a backdrop for the consumers marketing materials. Nomadic states that it receives the materials in boxes of 10 units each. Nomadic states that it is their opinion that part number ZCMS3 does not fall within the antidumping order of case number A-570-967 because the struts are not solely made of aluminum extrusions, but they are finished merchandise containing aluminum extrusions as parts that are fully and permanently assembled and completed at the time of entry.
On August 9, 2012, CBP issued an Informed Compliance Notice stating that “[b]ased on information provided it has been determined that the three quad high connected strut falls within the scope of the antidumping order. If you do not feel your merchandise should fall within the scope of the antidumping order you may request a ‘scope ruling’ from the [U.S. Department of Commerce]. Goods which fall within the scope of an antidumping duty order, remain liable for antidumping duties, unless Commerce directs CBP otherwise.” On December 13, 2012, CBP issued Form 29, Notice of Action, proposing the country-wide rate of 33.28 percent for the antidumping duty order and the country-wide rate of 374.15 percent for the countervailing duty order. CBP once again advised Nomadic to seek a scope ruling from Commerce if it believed the merchandise did not fall within the scope of the orders. The entry was liquidated on May 1, 2015, with the assessment of antidumping and countervailing duties.
On July 17, 2015, Nomadic protested the assessment of antidumping and countervailing duties. Nomadic does not argue that the merchandise is not subject to the AE Orders, but asserts that the scope of the AE Orders expressly excludes the struts at issue because the scope excludes “finished merchandise containing aluminum extrusions as parts that are fully and permanently assembled and completed at the time of entry” and “finished goods containing extrusions that are entered unassembled in a ‘finished goods kit.’” See Aluminum Extrusions from the People’s Republic of China: Antidumping Duty Order, 76 Fed. Reg. 30,650 (May 26, 2011); Aluminum Extrusions from the People’s Republic of China: Countervailing Duty Order, 76 Fed. Reg. 30,653 (May 26, 2011). Nomadic also argues, for purposes of the CVD Order, the entries are deemed liquidated at the amount of duty asserted at the time of entry. In the event CBP does not agree with Nomadic with regard to deemed liquidation, Nomadic argues that CBP applied the wrong CVD rate.
On November 12, 2015, the port denied both the protest and the application for further review. Nomadic timely requested to set aside the denial of further review and we granted that request.
ISSUES:
Whether CBP properly assessed antidumping and countervailing duties on Nomadic’s entries under the terms of the AE Orders?
Whether Nomadic’s entries deemed liquidated under the AE CVD Order?
If Nomadic’s entries were not deemed liquidated under the AE CVD Order, whether CBP assessed the proper CVD rate?
LAW AND ANALYSIS:
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). CBP’s ministerial role is to follow the liquidation instructions and to compute the duty by applying the antidumping duty rate set by Commerce to the appraised value as determined by CBP. “Customs, incident to its ‘ministerial’ function of fixing the amount of duties chargeable, must make factual findings to determine ‘what the merchandise is, and whether it is described in an order’ and must decide whether to apply the order to the merchandise. LDA Incorporado v. United States, 79 F. Supp. 3d 1331, 1339 (Ct. Int’l Trade 2015). Pursuant to its ministerial function, however, CBP cannot “affect the scope of the order.” Id.
“[W]here the importer claims that Customs erred as a matter of fact by including its goods within the scope of the order, Customs’ determination is the proper subject for a protest. LDA Incorporado v. United States, 978 F. Supp. 2d 1359, 1367 (Ct. Int’l Trade 2014) (citing Xerox Corp. v. United States, 289 F.3d 792, 795 (Fed. Cir. 2002). Accordingly, “where CBP can conclude that a product falls within the words of the order, both the affirmative scope language and any exclusions, CBP properly requires an importer to enter its goods as subject to an order.” Sunpreme, Inc. v. United States, 190 F. Supp. 3d 1185, 1202 (Ct. Int’l Trade 2016). The inquiry “comes down to whether CBP can determine that merchandise falls within the common meaning of the scope language based upon observable physical characteristics.” Id.
At issue in this case are the AE AD/CVD Orders issued by Commerce in May 2011. Aluminum Extrusions from the People’s Republic of China: Antidumping Duty Order, 76 Fed. Reg. 30,650 (Dep’t of Commerce May 26, 2011); Aluminum Extrusions from the People’s Republic of China: Countervailing Duty Order, 76 Fed. Reg. 30,653 (Dep’t of Commerce May 26, 2011). The scope of the order includes “aluminum extrusions which are shapes and forms, produced by an extrusion process, made from aluminum alloys . . . .” Id.
Nomadic asserts that the merchandise falls under the specific exclusion for finished merchandise. The scope specifically
excludes finished merchandise containing aluminum extrusions as parts that are fully and permanently assembled and completed at the time of entry, such as finished windows with glass, doors with glass or vinyl, picture frames with glass pane and backing material, and solar panels. The scope also excludes finished goods containing aluminum extrusions that are entered unassembled in a “finished goods kit.” A finished goods kit is understood to mean a packaged combination of parts that contains, at the time of importation, all of the necessary parts to fully assemble a final finished good and requires no further finishing or fabrication, such as cutting or punching, and is assembled “as is” into a finished product. An imported product will not be considered a “finished goods kit” and therefore excluded from the scope of the investigation merely by including fasteners such as screws, bolts, etc. in the packaging with an aluminum extrusion product.
Id. (emphasis added). Pursuant to this paragraph there are two exclusions: a finished merchandise exclusion, and a finished goods kit exclusion. Nomadic claims that the finished merchandise exclusion, rather than the finished goods kits exclusion, is the relevant exclusion for purposes of Nomadic’s struts.
To fall under the finished merchandise exclusion the product “must contain aluminum extrusions as parts and, therefore, must include some non-extruded aluminum component.” Memorandum to Gary Taverman from Michael Heaney, Antidumping and Countervailing Duty Orders on Aluminum Extrusions from the People’s Republic of China: Final Scope Ruling on Ferguson Enterprises Inc. Air Duct Fixtures, A-570-976 at 12 (Dep’t of Commerce May 10, 2017). The non-extruded aluminum component must go beyond a fastener, such as screws and bolts, to qualify for the finished merchandise exclusion. Id. at 12-13. The “finished merchandise exclusion also requires that the product at issue be ‘fully and permanently assembled and completed at the time of entry.’” Id. at 13. Commerce has revised its analysis of the finished merchandise exclusion “to include subassemblies of ultimate downstream products or systems provided that they enter the United States as fully and permanently assembled and completed at the time of entry and ready for installation in the downstream product with no further finishing or fabrication.” Id. at 14. A subassembly has been defined as a good that is “later incorporated with other components, or assembled into a larger downstream product.” Rubbermaid Commercial Prods. LLC v. United States, 2015 Ct. Int’l Trade LEXIS 79, at *16 (July 22, 2015). Thus, a final finished good is not required to have a consumptive use on its own in order to be excluded from the scope of the Orders. Memorandum to Christian Marsh from Christopher Harget, Final Scope Ruling on Fan Blade Assemblies, A-570-967 at 17 (Dep’t of Commerce July 25, 2014).
As mentioned above, Nomadic confirmed that the aluminum alloy used to make the ZMSC3 strut is within the scope of the AE Order. At issue, however, is whether CBP can determine that Nomadic’s struts fall within the finished merchandise exclusion of the scope language based upon observable physical characteristics. To understand Nomadic’s struts, it is helpful to understand the final downstream product – a Nomadic Display®. Nomadic provided the instruction manual for “Setting Up Your Display.” The Nomadic Display® is typically used as a display at events such as trade shows and consists of three components, the frame, the struts, and the panels. The frame resembles metal scaffolding that pops into place as it is opened. The struts consist of three sections and once unfolded, the bungee cords and plastic connector parts allow the strut to straighten and solidify into a solid straight unit. The unfolded struts are then connected to the frame of the display unit at intervals and provide stability to the frame as well as a connection point for the background panels and lighting. Finally, the background panels attach to the frame and struts via studs and bond magnets. A consumer is then able to apply surface graphics or displays to the background panels.
As discussed, Nomadic’s struts include aluminum extrusions as parts as well as other non-extruded aluminum components. The non-aluminum components include injected plastic parts, magnets, bungee cords, and labels. The instruction manual for the Nomadic Display® that incorporates the struts at issue demonstrate that these non-aluminum parts go beyond fasteners. The bungee cords allow the strut to be folded into three sections and unfolded as necessary. The injected plastic parts allow the junction of each of the three sections of the struts to connect together and for the strut to unfold and snap into a solid straight unit. The plastic parts also connect the strut to the display frame. Accordingly, these non-extruded aluminum components go beyond mere fasteners such as screws and bolts.
Next we turn to whether the strut is fully and permanently assembled and completed at the time of entry. The invoice included with the entry packet describes the merchandise as a “three quad high connected strut.” The photo of the strut included with the protest shows a semi-folded three-section strut that matches the strut depicted in the instruction manual of the Nomadic Display®, which was provided to Headquarters by Nomadic. The fact that the strut is folded is part of its function and design as a part of a mobile display that can be set up and broken down and easily transported. There is nothing about the strut that otherwise requires assembly or completion after entry. All the components and hardware of the strut are fully fabricated and require no further finishing or fabrication prior to being incorporated into the display. The three sections of the strut are held together with the bungee cord and once the plastic connectors are joined, the solid strait strut is ready to be incorporated into the display assembly. Based on this information, we find the strut meets the exclusion criteria for subassemblies of an ultimate downstream product – the Nomadic Display® – that enter the United States as “finished goods.” The strut does not require any further finishing or fabrication to be later assembled into the Nomadic Display® frame, which is a larger downstream product.
Because we determine based on observable characteristics and the plain language of the scope exclusion that Nomadic’s struts are excluded from the scope of the AE Orders, there is no need to reach the merits of Nomadic’s arguments with regard to deemed liquidation and the proper CVD rate.
HOLDING:
Based on the foregoing, Nomadic’s struts fall within the finished goods scope exclusion of the AE AD/CVD Orders. You are instructed to GRANT the protest in full.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Sixty days from the date of the decision, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP 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