Page 1 of 4 Steel Service Center Institute Comments on ‘Reseller Liquidation’ – Item No. II November 13, 1998 II. The DOC’s Proposed Modification is Unnecessary, Unduly Burdensome, and Contrary to the Well Established Principle That Unreviewed Entries Should Be Liquidated at the Cash Deposit Rate Comment: The DOC’s proposal is contrary to law, insofar as it is premised on the assumption that the reseller’s sales are not encompassed within the Annual Review of the manufacturer (the DOC posits that “no review of the reseller’s sales was conducted”), and results in an assessment rate which differs from both the reseller’s cash deposit rate and the manufacturer’s rate calculated by the DOC during the course of the ongoing review. Thus, assuming that the DOC rejects our suggestion, as discussed above, to apply the manufacturer’s rate to the reseller’s shipments in accordance with Section 777A(c)(2) of the Tariff Act), the DOC is required, by law, to assess duty on the reseller’s shipments at the cash deposit rate, in accordance with Section 351.212(c) of the Regulations. This Regulation expressly provides that: If the Secretary does not receive a timely request for an administrative review of the order. . .the Secretary. . .will instruct the Customs Service to (i) assess antidumping duties…on the subject merchandise…at rates equal to the cash deposit of, or bond for, estimated antidumping duties…required on that merchandise at the time of entry, or withdrawal from warehouse, for consumption This Regulation is clear and unambiguous. It is based on a “statutory framework for administrative reviews [which] clearly anticipates that in cases where a company makes cash deposits on entries of merchandise subject to antidumping duties, and no administrative review of those entries is requested, the cash deposit rate automatically becomes that company’s assessment rate for those entries.” Federal Mogul Corporation v. United States, 822 F. Supp. 782, 787 – 788 (CIT 1993). This requirement that unreviewed entries would be automatically liquidated at cash deposit rates was initially adopted by the DOC in 1985 in response to 1984 amendments to U.S. law. In these amendments, Congress eliminated automatic administrative reviews of Antidumping Duty Orders, and required that the DOC “provide by regulation for the assessment of antidumping and countervailing duties on entries for which review is not requested, including . . .the conversion of cash deposits of estimated duties, previously ordered.” H.R. Rep. No. 1156, 98th Cong., 2d Sess. 181 (1984),reprinted in 1984 USCCAN 5220, 5298. Page 2 of 4 In Interim-Final Regulations published on August 13, 1985 (50 Fed. Reg. 32556) in response to the Congressional directive, the DOC expressly recognized that antidumping duties would be assessed at the “rate of the cash deposit of estimated antidumping duties required at the time of entry of the merchandise, when the Secretary has received no request, under subsection (a) for an administrative review.” Proposed Rule and Request for Comments, 51 Fed. Reg. 29046, 29051 (August 13, 1986). On March 28, 1989, the DOC published its Final Regulations, incorporating the 1984 amendments to U.S. law. See 54 Fed. Reg. 12742. In comments on the Final Regulations, the DOC reconfirmed its position that “when no interested party requests an administrative review, the Department will instruct Customs to liquidate the entries for the review period at the rate deposited at time of entry.” 54 Fed. Reg. at 12757. The DOC discussed the rationale for its decision in the following manner: Interested parties that believe the assessment level should be higher or lower than the estimated antidumping duties deposited at the time of entry can request an administrative review. In addition, the use of the cash deposit rate required at the time of entry is in accordance with the purpose of the entire review-upon-request mechanism, i.e, to reduce administrative burdens. . .In any event, the failure of an interested party to file a timely request for review constitutes a determination under section 751 of the dumping margin for the entries made during the review period. (54 Fed. Reg. at 12757) These Regulations remained in force until the DOC revised all of its Antidumping Regulations, on May 19, 1997. See 62 Fed. Reg. 27295. The new Regulations were promulgated after the DOC had expressly rejected a change of its longstanding policy, as proposed on February 27, 1996. See 61 Fed. Reg. at 7364 – 65. The DOC stated: The Department has decided to continue its current practice with respect to automatic assessment; i.e., if an entry is not subject to a request for a review. The Department will instruct the Customs Service to liquidate that entry and assess duties at the rate in effect at the time of entry. 62 Fed. Reg. 27313 – 14 (May 19, 1997). Thus, the Court’s conclusion in Jeumont Schneider Transformateurs v. United States, 18 CIT 647 (CIT 1994), with respect to Section 353.22(e) of the DOC Regulations (the predecessor to 351.212(c)) is equally applicable to Section 351.212 (c); that is, this Regulation: Page 3 of 4 “requires the continuation of a prior deposit rate when no administrative review is undertaken for a particular firm. . . .This continuation is necessary because the alternative would allow the deposit rate to be changed by Commerce without a company specific administrative review, an occurrence precluded by the regulations.” See also Mitsubishi Electronics America, Inc. v. United States, 44 F. 3d 973, 976-77 (Fed. Cir. 1994) (“If an interested party wants Commerce to assess duties at the actual, rather than the estimated rate of dumping, it may request administrative review of the duties under section 751 of the 1979 Act. If no party makes such a request, Commerce instructs Customs automatically to assess duties at the estimated rate.”). In view of the foregoing, the DOC fails in its suggestion that ABC International Traders, supra, supports the proposition that a reseller’s entries can be assessed duty at an “all other” rate, which differs from both the reseller’s cash deposit rate and the manufacturer’s rate resulting from a review. ABC International Traders involved the limited circumstance in which there was neither a specific reseller rate nor an “all others” rate. In fact, the Court expressly noted that “ABC should have known that it would have been assigned the only existing rates,” which in that case were the producer’s rates based on the results of the pending producer review. Unlike the situation in ABC International Traders, the resellers whose sales are subject to the DOC’s current proposal had absolutely no reason to believe that their entries would be subject to the “all others” rate – a rate different from their “cash deposit” rate and their manufacturer’s rate as determined during the review. In sum, as discussed above, the rationale upon which the DOC’s proposal is based – that the reseller’s shipments are not encompassed within the review – effectively prohibits the DOC from assessing duty on reseller entries at the “all other rate.” While it is our opinion, as discussed above, that the DOC has the authority and should continue its practice of assessing duty on reseller entries at the manufacturer’s rate, should the DOC persist in its belief that a change in current policy is required, such change would, by law, be limited to assessing duty on reseller entries at the initial cash deposit rate. In no event could the DOC resort to the “all others” rate, which had been determined in the initial fair value investigation. Finally, the DOC must recognize that its proposed policy is fundamentally unfair to all concerned parties – Petitioners, Foreign Respondents, resellers and importers. By proposing that a reseller’s assessment rate should revert to the “all others” rate, as determined in the initial fair value investigation, the DOC has turned the review process into a virtual “crapshoot” with respect to resellers. Thus, a Petitioner who requests a review of a designated foreign manufacturer, with the intention of obtaining an increase from initial margins, reasonably expects that the DOC’s Final Determination will apply to all goods produced by that manufacturer, without creating a “loophole” for any Page 4 of 4 particular reseller. Similarly, a reseller who has in the past relied on the DOC’s analysis of its suppliers as the basis for determining additional duties should not be unfairly surprised when the DOC decides to assess a completely new rate (different from the cash deposit rate or the manufacturer’s rate) at the conclusion of the review process. Neither of these results constitutes good law or fair policy, especially since both Petitioners and Resellers have the opportunity, if they so desire, to request reseller specific reviews in a timely manner, in the Anniversary Month of an Order. For all of these reasons, we urge the DOC to abandon its proposed policy, or if the Department concludes that modification of its policy is required, to instruct Customs to assess duty on reseller entries at the cash deposit rate.