A federal appeals court has delivered potentially good news for companies whose imported products US Customs and Border Protection (CBP) insists are within the scope of an ambiguous antidumping or countervailing duty (AD/CVD) order.
On May 16, 2019, the US Court of Appeals for the Federal Circuit (CAFC) ruled in Sunpreme Inc. v. United States, No. 18-1116, that where the scope of an AD/CVD order is ambiguous, CBP has no independent authority to suspend liquidation without explicit instructions from the US Department of Commerce (Commerce) to do so.
In that case, Sunpreme, a US company, had been importing solar panels containing its innovative bi-facial solar cells made of amorphous silicon thin films deposited on a crystalline silicon wafer. Sunpreme believed its solar panels were outside of the scope of the AD/CVD orders on crystalline silicon photovoltaic cells from China, and had been entering them as such. Indeed, the scope of the AD/CVD orders had an explicit exclusion for “thin-film” products. Sunpreme’s solar panels were certified as thin-film panels. Notwithstanding the language of the scope, CBP suspended liquidation of the panels and began imposing AD/CV duties on Sunpreme’s imports in April 2015. Sunpreme filed a scope ruling request with Commerce, which opened a scope inquiry on December 30, 2015. Commerce later concluded that while the language of the AD/CVD orders was ambiguous, it did cover Sunpreme’s panels, and furthermore directed that CBP “continue” to suspend liquidation of the panels, even for the period April through December 2015.
On September 8, 2016, Sunpreme applied to the US Court of International Trade for a temporary restraining order (TRO) and preliminary injunction, alleging that the actions of CBP were unlawful. While Sunpreme ultimately lost the challenge to the scope ruling finding the panels covered by the AD/CVD orders, the CIT ruled, and the CAFC affirmed, that CBP had no authority in such circumstances to suspend liquidation before the initiation of the scope inquiry. “[W]hen the duty order is clear and unambiguous, Customs can suspend liquidation of subject merchandise pre-scope inquiry and Commerce is free to continue that suspension,” but neither Commerce nor CBP can “order suspension of liquidation pre-scope inquiry for merchandise possibly subject to an unclear or ambiguous duty order.”
CBP, the court said, was not permitted to make its own independent decision as to whether a product is within the scope of an order. CBP’s duty to suspended liquidation is merely ministerial; it has no discretion to interpret an unclear command from Commerce. The court held that Commerce could not order CBP to “continue” a suspension that was never authorized to begin with, and Sunpreme is therefore entitled to a refund of all AD/CV duties paid before December 30, 2015.
The court ruling makes clear that CBP has no authority to suspend liquidation or to require payment of AD/CV duties when the scope language is ambiguous, unless and until Commerce initiates a formal scope inquiry. Importers that have been consistently entering goods as not subject to an antidumping or countervailing duty order without question from CBP, but find CBP abruptly changing its mind, should look carefully at the Sunpreme case as it might impact your ability to challenge CBP’s actions. Unless Commerce itself has weighed in, an importer in those circumstances could be entitled to a refund of duties.