PRO 2-05
OT:RR:CTF:ER
H308063 SMS
Center Director
U.S. Customs and Border Protection
Pharmaceuticals, Health, and Chemicals Center
2813 Business Park Drive
Memphis, TN 38118
Attn: Vivian Collins, Supervisory Import Specialist
Re: Application of Further Review of Protest Numbers 5203-2019-100095; Concerning Hydrofluorocarbon Blends from the People’s Republic of China under Antidumping Order A-570-028
Dear Center Director:
The following is our decision regarding the Application for Further Review (“AFR”) of Protest Number 5203-19-100095, filed by Sandler, Travis & Rosenberg, P.A., counsel for RLX Refrigerants, LLC. (“RLX”) on July 3, 2019, which contests the antidumping duty (“ADD”) rate assessed on its entries of hydrofluorocarbon blends (“HFC blends”).
FACTS:
On June 29, 2016, the U.S. Department of Commerce (“Commerce” or “DOC”) published its final determination of sales at less than fair value and final affirmative determination of critical circumstances in the antidumping duty investigation of hydrofluorocarbon blends and components thereof (“HFCs”) from the People's Republic of China (“PRC”). See Hydrofluorocarbon Blends and Components Thereof from the People’s Republic of China: Final Determination of Sales at Less Than Fair Value and Final Affirmative Determination of Critical Circumstances; 81 Fed. Reg. 42,314 (June 29, 2016) (“Final Determination”). On July 1, 2016, Commerce issued a notice to U.S. Customs and Border Protection (“CBP”), which explains the Final Determination and scope:
The products subject to this investigation are HFCs and single components of blends thereof, whether or not imported for blending . . . R-410A, a zeotropic mixture of 50 percent Difluoromethane and 50 percent Pentafluoroethane . . .
This investigation includes any Chinese HFC components (i.e., R-32, R-125, and R-143a), as well as Chinese R-134a, ** that are blended in a third country to produce a subject HFC blend before being imported into the United States. . . .
DOC Message No. 6183303 (July 1, 2016). Lastly, Commerce instructed CBP, effective June 29, 2016, to require cash deposits at the PRC-wide rate of 216.37 percent for all PRC exporters that did not receive a specific deposit rate. Id.
On August 19, 2016, Commerce published the ADD order with scope of HFC blends subject to ADD. See Hydrofluorocarbon Blends From the People’s Republic of China: Antidumping Duty Order, 81 Fed. Reg. 55,436 (Aug. 19, 2016) (“ADD Order”).
The ADD Order stated, in pertinent part:
The products subject to this order are HFC blends. HFC blends covered by the scope are . . . R–410A, a zeotropic mixture of 50 percent Difluoromethane and 50 percent Pentafluoroethane . . . Any blend that includes an HFC component other than R–32, R–125, R– 143a, or R–134a is excluded from the scope of this order.
Id. (emphasis added). The ADD Order continues:
In its determination, the ITC found two domestic like products: (1) HFC blends, and (2) HFC components. The ITC notified the Department of: Its affirmative determination that an industry in the United States is materially injured . . . by reason of the LTFV [less than fair value] imports of HFC blends from the PRC; its negative determination that an industry in the United States is not materially injured or threatened with material injury by reason of imports of HFC components from the PRC . . . Because the ITC determined that imports of HFC blends from the PRC are materially injuring a U.S. industry, unliquidated entries of such merchandise from the PRC, entered or withdrawn from warehouse for consumption, are subject to the assessment of antidumping duties.
Id. at 55,437.
On December 7, 2017, and May 1, 2018, RLX made three entries of HFC blend, R-410A, exported from Brazil by RLX Industrial Importadora, LTDA. The HFC blends were made using Chinese origin components, R-125 and R32, which were blended in Brazil to make the imported R-410A. On the entry documents, RLX listed the country of origin as Brazil and made an “01” consumption entry without the payment of ADD cash deposits. The commercial documents list RLX as both the supplier and consignee. Lastly, RLX provided a Brazilian Certificate of Origin, in Portuguese, with all three entries. In communications with the Pharmaceuticals, Health, and Chemicals Center (“the Center”), RLX provided further information regarding the mixing ratio of the R-32 and R-125, and the country of origin of the R-410A.
On October 22, 2018, Commerce issued liquidation instructions for entries of HFC blends from China made between August 1, 2017, and July 31, 2018. See DOC Message 8295319 (Oct. 22, 2018); see also, 83 Fed. Reg. 50,077 (Oct. 4, 2018). With DOC Message 8295319, Commerce instructed CBP to liquidate entries made by firms that did not request administrative review of the ADD order for the pertinent period of review, at the rate in effect on the date of entry. Id. We note RLX was not a firm listed as participating in the administrative review. CBP liquidated all three entries on January 4, 2019, as subject to the ADD per case A-570-028 and assessed ADD at the PRC-wide rate. On July 3, 2019, RLX protested CBP’s liquidation and determination that its entries are subject to the scope of the ADD Order on HFC Blends from China. RLX contends that “Blends manufactured in Brazil using non-subject components fall outside the scope of the Order.”
Commerce subsequently issued a scope ruling and clarification related to HFC components, R-32 and R-125. On January 27, 2020, Commerce published a Preliminary Determination of circumvention of the ADD order on HFC Blends with respect to R-32 and R-125, which are imported from China for further processing in the United States into a covered HFC Blend. See Hydrofluorocarbon Blends from the People’s Republic of China: Affirmative Preliminary Determination of Circumvention of the Antidumping Duty Order; Unfinished R-32/R-125 Blends, 85 Fed. Reg. 4,632 (Jan. 27, 2020) (“Preliminary Determination”). See also DOC Message 0034418, February 3, 2020. Commerce invited parties to comment and participate in the review, which no entity, including RLX, did. On March 18, 2020, Commerce issued a new scope ruling for HFC components R-32 and R-125, confirming the Preliminary Determination of circumvention. See Hydrofluorocarbon Blends from the People’s Republic of China: Affirmative Final Determination of Circumvention of the Antidumping Duty Order; Unfinished R-32/R-125 Blends, 85 Fed. Reg. 15,428 (Mar. 18, 2020). See also DOC Message 0080404, March 20, 2020. Thus, as clarified, as of March 2020, included in the scope of the ADD order are imported HFC Blends, such as R-410A, and HFC components, R-32 and R-125, that will be further blended in the United States. See id.
ISSUE:
Whether CBP properly assessed liquidated RLX’s entries of HFC Blends.
LAW AND ANALYSIS:
Generally, assessed antidumping duties properly applied by CBP are not protestable. It is well settled that when assessing and collecting antidumping duties, CBP follows Department of Commerce (“Commerce”) 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). The courts have consistently held that CBP’s role 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. See Fujitsu Ten Corporation of America v. United States, 21 C.I.T. 104, 107 (1997); and American Hi-Fi International, Inc. v United States, 19 C.I.T. 1340, 1342-43 (1995). However, “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). On the other hand, if the scope of the order is unambiguous and CBP follows Commerce’s instructions, there is no decision that is made by CBP that would be protestable. See Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994) (holding that CBP “cannot modify Commerce’s determinations, their underlying facts, or their enforcement”); HQ H258302 (Sept. 3, 2015) (finding that “because the scope of the antidumping and countervailing duty orders was clear and CBP acted in accordance with Commerce’s instructions, CBP acted in its ministerial capacity when it liquidated its entries” and the protest “failed to raise a protestable issue”). See also H284348 (Aug. 10, 2017).
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. If the importer believes that CBP has made a mistake of fact and does not want its goods to be covered by the order, the remedy is to seek a scope ruling. See LDA Incorporado, 79 F. Supp. 3d at1342 n.12.
Here, there is no dispute that if Chinese manufactured HFC Blend, R-410A, was shipped directly from China to the United States, it would fall under the ADD order. See 81 Fed. Reg. 55,436. Additionally, there is no dispute to whether Chinese origin HFC components, R-32 and R-125 shipped to the United States for further processing to create R410A would also fall under the scope of the ADD order, as of March 2020. See 85 Fed. Reg. 15,428. The only fact in contention is whether Chinese origin R-32 and R-125 components may be blended in a third country (Brazil) to create R-410A, preceding entry into the United States prior to 2018, without the assessment of ADD under the ADD order.
Commerce investigated the HFC Components, HFC Blends, and specifically their place of blending multiple times. Originally, in July 2016, Commerce explained “this investigation includes any Chinese HFC components . . . that are blended in a third country to produce a subject HFC blend before being imported into the United States” See Message Number 6183303. However, once the final scope ruling applicable to RLX’s December 7, 2017, and May 1, 2018 entries was issued, this third country language was noticeably missing. See 81 Fed. Reg. 55,436 (Aug. 19, 2016). Furthermore, subsequent clarification was sought of Commerce regarding HFC Blends and yet again, Commerce did not include in the scope of the ADD Order blending taking place in a third country. Specifically, in its March 2020 circumvention determination, Commerce explained that Chinese origin R-32 and R-125 blending that took place in the United States would fall within scope. See DOC Message 0080404, March 20, 2020. Accordingly, on more than one occasion, Commerce contemplated the inclusion or exclusion of third country blended Chinese origin R-32 and R-125 components, and yet did not expressly include that in its scope ruling. CBP, in its ministerial capacity, cannot ignore this omission. Thus, we find that the Center erred when it determined that the HFC Blends, blended in a third country, fell under the ADD scope order. Accordingly, CBP improperly assessed antidumping duties on RLX’s entries of R-410A. CBP welcomes any additional clarification from Commerce with regards to whether blending in a third country falls within the scope of the ADD Order.
HOLDING:
Based on the above discussion, CBP improperly assessed ADD on RLX’s entries of HFC Blends under the ADD order. Accordingly, protest number 5203-2019-100095 is GRANTED.
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 & Trade Facilitation Division