HQ 229410 - Protest No. 3901-01-100880 and Application for Further Review; 19 U.S.C. §1504(d); 19 U.S.C. §1677g; “deemed liquidation”; liquidation instructions; assessment of interest - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 2003 HQ Rulings > HQ 116015 - HQ 229481 > HQ 229410

Previous Ruling Next Ruling
HQ 229410

September 27, 2002

LIQ-4-01-LIQ-11-RR:CR:DR 229410DR

Port Director of Customs
Attn: Assistant Port Director
Trade Operations
610 Canal Street
Chicago, IL 60607

RE: Protest No. 3901-01-100880 and Application for Further Review; 19 U.S.C. §1504(d); 19 U.S.C. §1677g; “deemed liquidation”; liquidation instructions; assessment of interest

Dear Sir or Madam:

The above referenced protest and application for further review was forwarded to this office for a determination. We have considered the points raised and a decision follows.

FACTS:

The subject protest covers fifteen entries of television receivers entered between May 23, 1983, and September 25, 1984, by Protestant. See Table, Protest Attachment Page 1. According to the record before us, the subject merchandise was manufactured by NEC Home Electronics Ltd. (“NEC”), and was the subject of an antidumping order concerning antidumping case number A-588-015, issued on March 10, 1971, by the Department of Treasury. See 36 Fed. Reg. 4597.

On June 5, 1981, the Department of Commerce (“Commerce”) published Notice of Final Results of Administrative Review of Antidumping Finding concerning television receivers from Japan. See 46 Fed. Reg. 30163. That publication established a dumping margin of 0% for subject merchandise manufactured by NEC and entered between April 1, 1979, and March 31, 1980, but also required a cash deposit of 0% on all subject merchandise manufactured by NEC and entered on or after the notice’s publication date.

Upon entry, Protestant posted bonds, in lieu of cash deposits, to cover estimated antidumping duties. A copy of entry 83XXX338-7, which is presumed to be representative of the subject entries, was included in the file and shows that Protestant did not cite any antidumping duty investigation number on the entry documents, nor did it assert that any antidumping duties were owed upon entry. We were informed by the port that the handwritten annotations on the entry papers were done by Customs officers.

On July 9, 1986, Commerce initiated administrative reviews of the antidumping order for the time periods involved in this protest. See 51 Fed. Reg. 24883. On August 28, 1989, Commerce published the final results of the administrative review for the covered periods. See Television Receivers, Monochrome and Color, From Japan; Final Results of Antidumping Duty Administrative Review and Determination Not To Revoke in Part, 54 Fed. Reg. 35517. The final results were based upon a consolidation of the fifth, sixth, seventh, and eighth administrative reviews (the periods April 1, 1983, through February 28, 1987) of the original order. The subject merchandise was assigned the following dumping margins :

Review period Margin (%)

Commerce stated that it would “determine, and the Customs Service shall assess, antidumping duties on all appropriate entries [and] issue appraisement instructions for each exporter directly to the Customs Service.”

Before Customs could liquidate the subject entries, Protestant initiated a suit in 1989 to challenge those final results and the calculation of antidumping duty margins therein by Commerce. The proceedings in the case are detailed in NEC Home Electronics, Ltd. v. United States, 18 C.I.T. 336 (1994), NEC Home Electronics, Ltd. v. United States, 54 F.3d 736 (Fed. Cir. 1995), NEC Home Electronics v. United States, 19 C.I.T. 1283 (1995), and NEC Home Electronics, Ltd. v. United States, 22 C.I.T. 167, 3 F.Supp. 2d 1451 (1998), the latest of which remanded to Commerce for recalculation of the foreign market value ("FMV") of NEC television receivers based on "data that NEC provided in establishing a market price based upon its sales to related parties in home market plus the additions imposed by the Japanese government pursuant" to the Japanese Commodities Tax and in accordance with the "proper standard" set forth by the Court of Appeals for the Federal Circuit. 3 F.Supp. 2d at 1456. On July 21, 1999, the C.I.T. sustained Commerce’s eventual Final Results of Redetermination and the following margins:

Review period Margin (%)

See NEC Home Electronics, Ltd. v. United States, 23 C.I.T. 453, 59 F.Supp. 2d 1337 (July 21, 1999). However, Commerce never published notice of the Court’s decision in the Federal Register, nor did it publish the Final Results of Redetermination.

On January 10, 2001, Commerce issued liquidation instructions to Customs which covered the subject entries. See Message 1010203, Message 1010205. Both messages directed Customs to liquidate the subject entries, with those made between April 1, 1983 and March 31, 1984, to be assessed a per unit dumping margin of $27.68, and those made between April 1, 1984, and March 31, 1985, to be assessed a per unit dumping margin of $18.33. Both messages also stated that “the[ ] instructions constitute the immediate lifting of suspension of liquidation of entries” for the merchandise listed in the instructions, and instructed Customs to assess interest on “underpayments of the required amounts deposited as estimated antidumping duties.” On March 26, 2001, Commerce re-transmitted the liquidation instructions to Customs, which amended the dates of the review periods and contained instructions specifically directed towards Protestant’s entries made between March 1, 1985, and February 28, 1986. The amended instructions mirrored the from the previous instructions pertaining to the assessment of interest.

Customs liquidated a portion of the entries on April 13, 2001, and the remaining portion on April 20, 2001, and assessed interest on the “underpaid” antidumping duties from the date of payment of estimated antidumping duties.

Protestant now contends that, under 19 U.S.C. 1504(d), the entries were liquidated by operation of law at the duty rates and deposit amounts included in the entry documentation at the time of entry. Furthermore, it is Protestant’s position that the no interest is due on the “underpaid” antidumping duties under 19 U.S.C. 1677g. Alternatively, Protestant claims that interest may only be assessed “from the date of the final determination for the involved review period.” Finally, Protestant claims that “the assessment of compound interest on antidumping duties is an illegal assessment under the statute and U.S. international trade treaty obligations,” and that “liquidation of these entries with a fixed dollar amount per unit, without regard, to application of the final margin set in the NEC case, is without legal and regulatory foundation, is an abuse of discretion by the Commerce Department and the Customs Service, and is without substantial support in the administrative record of the involved case.”

ISSUES:

Whether the subject entries were “deemed liquidated” within the meaning of 19 U.S.C. §1504(d)

Whether Protestant owes interest on any “underpaid” antidumping duties

LAW AND ANALYSIS:

First, we note that the protest was filed in a timely manner. The entries were liquidated March 13 and 20, 2001, and the protest was filed on May 3, 2001. See 19 U.S.C. §1514(c)(3) (requiring that protest of a decision regarding liquidation of an entry be filed within 90 days after the notice of liquidation or reliquidation).

The statute principally at issue in this matter is 19 U.S.C. §1504 (1988 & Supp. V 1993), states

When a suspension required by statute or court order is removed, the Customs Service shall liquidate the entry within 6 months after receiving notice of the removal from the Department of Commerce, other agency, or a court with jurisdiction over the entry. Any entry not liquidated by the Customs Service within 6 months after receiving such notice shall be treated as having been liquidated at the rate of duty, value, quantity, and amount of duty asserted at the time of entry by the importer of record.

Thus, in order to determine the date on which suspension was removed, one must first determine the date on which that removal was effected. In Fujitsu General America, Inc. v. United States, 283 F.3d 1364 (Fed. Cir. 2002), the Court of Appeals for the Federal Circuit (“CAFC”) considered a situation similar to the one hand, and concluded that where liquidation is suspended pursuant to court injunction, the suspension is removed when a “final court decision” is reached in the cause of action before the court, i.e., when the decision can no longer be appealed. Id. at 1377. The court then concluded that the requisite notice of the removal is received by Customs when Commerce publishes notice of the “final court decision” in the Federal Register. Id. at 1380 (also citing to International Trading Co. v. United States, 281 F.3d 1268 (Fed. Cir. March 1, 2002), and its similar removal and notice via publication standard in those cases where suspension is imposed by statute, instead of court injunction).

Here, after the final decision by the C.I.T., Commerce failed to publish notice of that decision in the Federal Register. In fact, Customs received no notice of the final decision until Commerce issued the liquidation instructions on January 10, 2001, that contained the applicable per unit margins ($27.68 per unit for units entered between April 1, 1983, and March 31, 1984, and $18.33 per units for units entered between April 1, 1984, and March 31, 1985). Customs followed Commerce’s liquidation instructions by liquidating the merchandise in February, 2001, with interest assessed according to those instructions. Generally, we have held that the role of Customs 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 HQ 225382, July 3, 1995; see also Mitsubishi Electronic America Inc. v. United States, 44 F.3d 973, 976, 977 (Fed. Cir. 1994) (“Section 1514(a) applies exclusively to Customs ‘decisions’ within the enumerated categories [and it] expressly refers to ‘decisions of the Customs service.’ Section 1514(a) does not embrace decisions by other agencies Customs has a mere ministerial role in liquidating antidumping duties under 19 U.S.C. 1514(a)(5). Customs cannot ‘modify [Commerce’s] determinations, their underlying facts, or their enforcement.’”). However, if Customs fails to follow the instructions of Commerce, that failure may be subject to protest under 19 U.S.C. §1514. See, e.g., ABC International Traders (“... claims [that Customs erroneously liquidated certain entries and failed to follow Commerce’s liquidation instructions] may be brought before the [CIT] under 28 U.S.C. §1581(a)(1988), after denial of protests by Customs.”) (emphasis added); see also, in this regard, American Hi-Fi International, Inc., v. United States, 936 F. Supp. 1032, 20 CIT 910 (August 2, 1996) (“[j]urisdiction for actions challenging Customs’ failure to follow Commerce’s actual liquidation instructions ... is found under 28 U.S.C. §1581(a).”).

Assessment of Interest

Under 19 U.S.C. 1677g(a), interest shall be payable on overpayments or underpayments of amounts deposited on merchandise entered, or withdrawn from warehouse, for consumption on and after the date of publication of a countervailing or antidumping order or the date of a finding under the Antidumping Act, 1921 (represented by the difference between the required cash deposit of estimated antidumping duties that was actually deposited and the final amount of assessed duties on the date of liquidation). In HQ 226263 (December 10, 1996) we stated that the courts have conclusively held that 19 U.S.C. 1677g “requires interest only when a cash deposit of estimated duties is required under an antidumping order.” (19 U.S.C. 1677g(b) states that 26 U.S.C. 6621 establishes the rate of interest payable on overpayments or underpayments of countervailing or antidumping duties ). See Dynacraft Industries, Inc. v. United States, 118 F. Supp. 2d 1286 (2000) (where estimated antidumping duties are required to be deposited pursuant 19 U.S.C. 1673e(a)(3), then 19 U.S.C. 1673f(b) explicitly provides for the recovery of interest pursuant to 19 U.S.C. 1677g).

However, where the estimated rate is 0%, or where Commerce waives the cash deposit, and thus no actual cash deposit has been made, then upon the determination of the final assessed duty, the importer is still required to pay interest on the ultimate underpaid amount. Here, Protestant was required to make a cash deposit of 0% of the estimated duties at the time of entry, and once the liquidation instructions were issued, Protestant was assessed antidumping duties of $27.68 and $18.33 per unit for the respective entry periods, with interest assessed on the underpayments of the required cash deposits. As stated by the CAFC in Sharp Electronics Corporation v. U.S., 124 F.3d 1447, 1449 (Fed.Cir. 1997),

To be sure, section 1677g speaks in terms of "amounts deposited," but it also speaks to "underpayments." Here, the underpayment was 100% of the final assessed duty. Therefore, interest is due on the entire assessment, unless the provision only applies when "amounts" are actually "deposited." We hold the provision applies whenever such amounts are statutorily owed, whether or not actually deposited, because any other result would be absurd.

See also American Hi-Fi International Inc. v. U.S., 936 F. Supp. 1032, 20 CIT 910 (1996).

Therefore, for the reasons discussed above, this protest should be denied with regard to the argument that the entries were liquidated by operation of law, and also with regard to the argument that Customs was barred from assessing interest on any underpaid antidumping cash deposits.

HOLDING:

This protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act and other methods of public distribution.

Sincerely,

Myles Harmon
Acting Director,
Commercial Rulings Division

Previous Ruling Next Ruling