OT:RR:CTF:EPDR H326941 ND
Center Director
Pharmaceuticals, Health and Chemicals
Center of Excellence and Expertise
U.S. Customs and Border Protection
5600 Pearl Street
Rosemont, IL 60018
Attn: Anh-Tu Hoang, Import Specialist
Re: Application for Further Review of Protest 390118100756; Antidumping Duties; Xanthan Gum from the People’s Republic of China; A-570-985; Liquidation Instructions
Dear Center Director:
The purpose of this correspondence is to address the Application for Further Review (“AFR”) of Protest number 390118100756, filed by Tate & Lyle Ingredients LLC (“Tate”) on July 17, 2018, regarding the assessment of antidumping duties (“ADD”) pursuant to the ADD order in case A-570-985 (“ADD order”). Protest 390118100756 covers entry XXX-XXXX115-8. This protest is designated as the lead protest and addresses the identical facts, issues, and arguments presented in protest number 390119102256. Protest 390119102256 covers entries XXX-XXXX648-2, XXX-XXXX633-7, XXX-XXXX809-2, XXX-XXXX281-0, XXX-XXXX061-5, XXX-XXXX004-4, and XXX-XXXX194-7.
FACTS:
Tate entered entry XXX-XXXX115-8 on June 7, 2017, and the additional seven entries of xanthan gum at issue in protest 390119102256 between July 10, 2017, and April 12, 2018. Xanthan gum from the People’s Republic of China (“PRC or China”) is subject to the ADD order in A-570-985. Xanthan Gum from sthe People’s Republic of China: Amended Final Determination of Sales at Less Than Fair Value and Antidumping Order, 78 Fed. Reg. 43,143 (July 19, 2013).
According to Tate, Neimenggu Fufeng Biotechnologies Co., Ltd. (“Fufeng”) manufactured the imported xanthan gum and sold it to Chinese entity EPC Natural Products (“EPC”), who in turn resold it to its Hong Kong subsidiary Greenhealth International Co. Ltd. (“GHI”), the exporter. We note that none of the evidence or supporting documents indicate EPC was involved in the transaction. The entry summaries (CBP Form 7501) indicate that the imported xanthan gum was manufactured by Chinese company Fufeng. Additionally, the country of origin and country of export identified on the entry summaries is China. In email exchanges between Tate’s counsel and the Port, Tate’s counsel acknowledged that China was not the correct country of export and provided purchase orders, invoices, packing lists, and bills of lading to substantiate counsel’s claim that Hong Kong was the correct country of export. Tate argues that Hong Kong entity GHI is the exporter of the subject xanthan gum. As explained below, identifying the proper country of export is relevant in determining the proper ADD rate for Tate’s entries.
On October 2, 2017, the United States Department of Commerce (“Commerce”) instructed U.S. Customs and Border Protection (“CBP”) to liquidate all relevant entries of xanthan gum from the PRC entered between July 1, 2016, and June 30, 2017. Commerce Message Number 7275319. Commerce further directed CBP to continue suspending the liquidation of entries exported by one of the entities identified in Paragraph 3 of Message 7275319. Id. Fufeng was named as an exporter in Paragraph 3 of Message 7275319, while GHI was not. Id. On September 28, 2018, Commerce issued liquidation instructions for xanthan gum from the PRC entered between July 1, 2017, and June 30, 2018. Commerce Message Number Message 8271304. These instructions mirrored those in Message 7275319. Id.
In Messages 7275319 and 8271304, Commerce instructed CBP to liquidate subject entries at the cash deposit rate in effect on the date of entry. The following cash deposit instructions apply to xanthan gum entered as of February 23, 2017:
2. As a result of Commerce’s review, for shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after 02/23/2017, (the date of publication of the final results of review in the Federal Register), the required cash deposit has been revised for certain exporters as detailed below:
. . . .
Exporter: Neimenggu Fufeng Biotechnologies Co., Ltd. (aka Inner Mongolia Fufeng Biotechnologies Co., Ltd.)/Shandong Fufeng Fermentation Co., Ltd./Xinjiang Fufeng Biotechnologies Co., Lrd.
Case number: A-570-985-011
Cash deposit rate: 0.00%
. . . .
3. If any entries of this merchandise are exported by a firm other than the exporters listed above then the following instructions apply:
A. If the PRC or non-PRC exporter of the subject merchandise has its own rate, use the applicable exporter’s rate for determining the cash deposit rate.
B. For all exporters of subject merchandise that have not been assigned a duty rate, the cash deposit rate will be the China-wide of 154.07.
C. For all non-PRC exporters of subject merchandise that have not received their own rate, the cash deposit rate will be the rate applicable to the PRC exporter that supplied that non-PRC exporter.
Commerce Message No. 7062303 (Mar. 3, 2017). Commerce Message No. 8045310 (Feb. 14, 2018) notified CBP of the cash deposit rates for merchandise entered on or after February 14, 2018, mirroring the instructions in Commerce Message 7062303.
According to ACE, CBP liquidated Tate’s entries as follows:
Entry
Entry Date
Liquidation Date
Duty Rate Assessed
Applicable Liquidation Instructions
Applicable Cash Deposit Instructions
XXX-XXXX115-8
6/7/17
4/27/18
154.07%
7275319
7062303
XXX-XXXX648-2
7/10/17
3/8/19
154.07%
8271304
7062303
XXX-XXXX633-7
8/3/17
3/8/19
154.07%
8271304
7062303
XXX-XXXX809-2
9/18/17
3/8/19
154.07%
8271304
7062303
XXX-XXXX281-0
11/8/17
3/8/19
154.07%
8271304
7062303
XXX-XXXX061-5
12/29/17
3/8/19
154.07%
8271304
7062303
XXX-XXXX004-4
1/15/18
3/8/19
154.07%
8271304
7062303
XXX-XXXX194-7
4/12/18
3/8/19
154.07%
8271304
8045310
CBP determined that because GHI was not expressly assigned an exporter specific duty rate in Messages 7062303 and 8045310, the correct ADD rate for the entries at issue was 154.07% as instructed by Paragraph 3B rather than Paragraph 3C in the aforementioned cash deposit instructions.
Tate filed protest 390118100756 on July 18, 2018, alleging that CBP incorrectly assessed ADD on its entry at the PRC-wide rate of 154.07%. According to Tate, CBP should have liquidated its entries at 0% ADD pursuant to Paragraph 3C of Messages 7062303 and 8045310, which state “[f]or all non-PRC exporters of subject merchandise that have not received their own rate, the cash deposit rate will be the rate applicable to the PRC exporter that supplied the non-PRC exporter.” Tate argues that Paragraph 3C applies rather than Paragraph 3B because Fufeng is the PRC exporter that supplied the xanthan gum to the non-PRC exporter GHI, and GHI did not receive its own exporter specific rate. Tate therefore contends that CBP should have assessed ADD at Fufeng’s exporter specific cash deposit rate of 0% pursuant to the cash deposit instructions in Messages 7062303 and 8045310.
To substantiate its claims, Tate provided various entry summary documentation as well as other documentation evidencing the transaction. Of relevance here, Tate provided commercial invoices and packing lists that evidence a sale from GHI to Tate, and further identify Fufeng as the manufacturer, China as the country of origin, and Hong Kong as the exporting country. Tate also provided proof of payment by Tate to GHI for the imported xanthan gum, as well as purchase orders and bills of lading naming both Tate and GHI. Finally, Tate has provided a frame contract between GHI and Fufeng identifying GHI as the buyer of xanthan gum from Fufeng, who is identified as the seller.
CBP requested clarity from Commerce in applying the proper cash deposit rate to Tate’s entries. CBP specifically inquired as to whether Tate’s entries were subject to the 0% duty rate granted to supplier/exporter Fufeng per Paragraph 3C, or the China-wide rate of 154.07% per Paragraph 3B in Commerce Messages 7062303 and 8045310. We note that in guidance to CBP, Commerce determined that the proper rate for entry XXX-XXXX115-8 was 154.07%. CBP denied protest 390118100756 based on this guidance from Commerce. We further note that Commerce provided the following guidance to CBP regarding the entries at issue in protest 390119102256:
If Neimenggu Fufeng Biotechnologies Co., Ltd. (Fufeng) is the Chinese exporter that supplied the subject xanthan gum to Greenhealth International Co., Ltd. (Greenhealth), and if exporters in Hong Kong are considered to be non-China exporters, then the antidumping duty cash deposit rate that should have been applied to these entries would have been 0%, which would also be the liquidation rate. If CBP determines that there is not enough evidence to find that Fufeng is the Chinese exporter that supplied the subject xanthan gum to Greenhealth, then the applicable antidumping duty cash deposit and liquidation rate for the entries in question would depend on which Chinese exporter supplied the subject xanthan gum to Greenhealth, and whether that company had an antidumping duty cash deposit rate. If the Chinese exporter that supplied the subject xanthan gum to Greenhealth did not have its own antidumping duty cash deposit rate, then CBP should use the China-wide antidumping duty cash deposit rate to liquidate the entries during the period 7/10/2017 to 4/12/2018 that are the subject of this inquiry.
The Port used this guidance to deny protest 390119102256, determining that the entries were subject to the 154.07% ADD rate identified in Paragraph 3B of Commerce Messages 7062303 and 8045310.
ISSUE:
Whether CBP should have liquidated Tate’s entries at the PRC supplier rate granted to Fufeng in Commerce in Messages 7062303 and 8045310?
LAW AND ANALYSIS:
As an initial matter, we find that this protest meets the criteria for further review. Pursuant to 19 U.S.C. § 1514(a)(2), a protestable issue was raised by claiming that CBP erred as to the “amount of duties chargeable” upon liquidation of the entry at issue. Pursuant to 19 C.F.R. § 174.24(a), the protest qualifies for further review because it is inconsistent with a decision made by CBP with respect to the same or substantially similar merchandise.
We note that the instant protest was timely filed. Pursuant to § 1514(c)(3)(A), a party must file a protest within 180 days of the date of liquidation. CBP liquidated entry XXX-XXXX115-8 on April 27, 2018. Tate filed its protest on July 18, 2018, which is within the 180-day deadline. We also note the timely filing of protest 390119102256. CBP liquidated the relevant entries subject to protest 390119102256 on March 8, 2019. Tate filed this protest on September 3, 2019, which is within the 180-day deadline.
While not alleged in the protest, CBP failed to timely liquidate entry XXX-XXXX115-8 within six months of receiving notice of the September 13, 2017, removal of the suspension of liquidation by publication of the notice of initiation of administrative review in the Federal Register. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 82 Fed. Reg. 42,974 (Sept. 13, 2017). If CBP fails to timely liquidate the entries after receiving notice from Commerce, the entries are “deemed” liquidated at the rate asserted by the importer of record. 19 U.S.C. § 1504(d). However, we note that CBP may voluntarily reliquidate an entry, including an entry that has deemed liquidated by operation of law, within ninety days from the date of the deemed liquidation. 19 U.S.C. § 1501. Here, the entry deemed liquidated on March 13, 2018; thus, CBP had ninety days or until June 11, 2018, to reliquidate the entry. Consequently, entry XXX-XXXX115-8 was timely reliquidated on April 27, 2018, and CBP’s timely reliquidation precluded the entries from liquidating by operation of law pursuant to 19 U.S.C. § 1501.
Once Commerce instructs Customs to liquidate entries, “Customs merely follows Commerce’s instructions in assessing and collecting duties.” Mitsubishi Elecs. Am. Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994). Customs cannot “modify Commerce’s determinations, their underlying facts, or their enforcement.” Id. (quoting Royal Bus. Machs. Inc. v. United States, 507 F. Supp. 1007, 1014 n.18 (Ct. Int’l Trade 1980)). Customs plays a “merely ministerial role in liquidating antidumping duties.” Id. at 977. “Customs should do no more than enact the intentions of Commerce.” See e.g., Shinyei Corp. of Am. v. United States, 2011 Ct. Int’l Trade LEXIS 65, *10 (June 15, 2011) (requiring Customs to consider documentation submitted at protest evidencing a sale, which occurred after entry, to an ultimate “sold to” customer listed in Commerce instruction).
Tate disputes CBP’s application of Commerce’s liquidation instructions in Messages 7275319 and 8271304. CBP assessed ADD on entry XXX-XXXX194-7 at the PRC-wide rate of 154.07% per Commerce Messages 7275319 and 7062303, ADD on entries XXX-XXXX648-2, XXX-XXXX633-7, XXX-XXXX809-2, XXX-XXXX281-0, XXX-XXXX061-5, and XXX-XXXX004-4 at the PRC-wide rate of 154.07% per Commerce Messages 8271304 and 7062303, and ADD on entry XXX-XXXX194-7 at the PRC-wide rate of 157.07% per Commerce Messages 8271304 and 8045310. Tate specifically references the language in Messages 7062303 and 8045310 that states “[f]or all non-PRC exporters of subject merchandise that have not received their own rate, the cash deposit rate will be the rate applicable to the PRC exporter that supplied the non-PRC exporter” to underpin its arguments. According to Tate, GHI is the Hong Kong exporter, i.e., the non-PRC exporter, and Fufeng is the enumerated PRC supplier of the subject xanthan gum, therefore Tate is eligible for Fufeng’s specific 0.00% cash deposit rate per Commerce Messages 7062303 and 8045310. Based on the dates of entry, the cash deposit instructions in Message Number 7062303 apply to entries XXX-XXXX115-8, XXX-XXXX648-2, XXX-XXXX633-7, XXX-XXXX809-2, XXX-XXXX281-0, XXX-XXXX061-5, and XXX-XXXX004-4, which were entered between June 7, 2017, and January 15, 2018, and the cash deposit instructions in Message Number 8045310 apply to entry XXX-XXXX194-7, which was entered on April 12, 2018.
The issue is whether to apply the cash deposit rate identified in Paragraph 3B, 154.07%, or Paragraph 3C, 0%. See Commerce Message Numbers 7062303 and 8045310. Based on Commerce’s guidance to CBP, noted above, we must determine whether Fufeng is the Chinese exporter that supplied GHI with the xanthan gum. If the evidence sufficiently indicates that Fufeng is the supplier, then Tate’s entries are subject to the 0% ADD rate granted to Fufeng, otherwise, the entries were properly liquidated at the PRC-wide rate of 154.07%. Neither Commerce, nor CBP have expressly defined exporter. However, we note that merchandise imported from one country, shall for value purposes, be treated as an exportation of the country from which it is immediately imported unless it appears by invoice, bill of lading, or other evidence that the merchandise was destined for the United States at the time of original shipment. See 19 C.F.R. § 152.23.
With its protest, Tate provided entry summaries, commercial invoices, packing lists, proof of payment, purchase orders, and a frame contract. The frame contract evidences that there was a sale of 900,000 kg of xanthan gum from Fufeng, the Chinese supplier, to GHI, a Hong Kong entity. The purchase orders, commercial invoices, and packing lists indicate that there was a sale between GHI and Tate in the amount of 17,500 kg, which is further confirmed in the proof of payment provided by Tate. The invoices and packing lists between Tate and GHI identify Tate as the importer, GHI as the seller and exporter, and Fufeng as the manufacturer. Finally, the bills of lading identify GHI as the exporter and Tate as the consignee but fail to mention any involvement by Fufeng. We also note that there is no evidence to suggest that Fufeng was aware that its merchandise was destined for the United States at the time of the original shipment to GHI. See 19 C.F.R. § 152.23.
In its guidance to CBP, Commerce stated that “[i]f Neimenggu Fufeng Biotechnologies Co., Ltd. (Fufeng) is the Chinese exporter that supplied the subject xanthan gum to Greenhealth International Co., Ltd. (Greenhealth), and if exporters in Hong Kong are considered to be non-China exporters, then the antidumping duty cash deposit rate that should have been applied to these entries would have been 0%.” Based on the evidence provided by Tate, we find that Fufeng was the Chinese supplier of the xanthan gum. Tate has provided a contract between GHI and Fufeng, which evidences that GHI purchased more than enough xanthan gum from Fufeng to resell to Tate. Additionally, the invoices and packing lists between Tate and GHI indicate that Fufeng was the manufacturer of the xanthan gum that Tate purchased from GHI. Accordingly, CBP should have liquidated the entries at the supplier specific cash deposit rate granted to Fufeng in Commerce Message Numbers 7062303 and 8045310. CBP must therefore reliquidate the entries at the 0% duty rate afforded to Fufeng in Commerce Message Numbers 7062303 and 8045310.
HOLDING:
Based on the foregoing, we find that Fufeng is the Chinese supplier of the xanthan gum exported by GHI. Accordingly, CBP should have liquidated Tate’s entries at the supplier specific rate granted to Fufeng by Commerce in Messages 7062303 and 8045310. CBP must reliquidate Tate’s entries with Fufeng’s PRC supplier specific ADD cash deposit rate of 0% in accordance with Commerce Message Numbers 7275319, 7062303, 8271304 and 8045310. The protest should be GRANTED in full.
You are instructed to notify the Protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
For Yuliya A. Gulis, Director
Commercial & Trade Facilitation Division