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Appeals Court Affirms Mixed Wax Candles are Included in AD Order

The Court of Appeals for the Federal Circuit upheld a finding by the Court of International Trade in favor of an International Trade Administration determination that mixed-wax candles imported by Target Corporation from China are “later-developed merchandise” that are legitimately included in the AD order on petroleum wax candles from China.

Target Took Aim at ITA Scope Determination that Included Mixed-Wax Candles

Target had challenged ITA scope rulings, and later appealed its remand determination, contesting the ITA’s conclusions on four of the five criteria for including petroleum wax candles as later-developed merchandise in the AD order.

Later-developed merchandise can be included in an AD order if it has the same (1) general physical characteristics; (2) expectations of the ultimate purchasers; (3) ultimate use; (4) sales channels; and (5) is advertised in a similar manner. Target argued that mixed-wax candles were different from petroleum wax candles in general physical characteristics, expectations of the ultimate purchasers, channels of trade, and methods of advertisement.

Scope Rulings Arose from Domestic Producers’ Anti-Circumvention Petition

The scope rulings that Target contested originally arose from a petition filed in 2004 by the National Candle Association asking the ITA to initiate anti-circumvention investigations of candles “containing palm or vegetable oil as the majority ingredient.” Prior to those requests from the NCA, the ITA had issued scope rulings that excluded candles containing less than 50% petroleum wax. At about the same time, the International Trade Commission, in its second sunset review of the same product in July 2005, redefined the domestic like product “to include all blended candles,” i.e., candles containing any amount of petroleum wax. That ITC determination went unchallenged, a fact which weighed heavily with both the CIT and the CAFC in upholding the ITA’s scope inclusion for mixed wax candles.

ITA Found Mixed Wax Candles Were in Scope in 2006

In an October 2006 scope determination, and in 2009 on remand from the CIT, the ITA found that mixed-wax candles - candles composed of petroleum wax and over fifty percent or more palm and/or other vegetable oil-based waxes - were not commercially available at the time of the original investigation in 1985-1986, and had not appeared in the market until 1999. The ITA noted that there had been a gradual evolution in petroleum wax candles since 1985-1986, and determined that mixed-wax candles and petroleum wax candles were similar in all of the five criteria for later-developed merchandise, and so could be covered by the AD order .

CIT Upheld ITA in July 2009, Subject to Remand Instructions

The CIT found the ITA's analysis was reasonable, but remanded the case to the ITA to (1) determine more clearly whether mixed-wax candles were or were not commercially available at the time of the original investigation; (2) justify its standard of “definitive conclusiveness” in this regard; and (3) reconsider whether later-developed merchandise must entail a significant technological alteration or advance. The ITA then satisfied the CIT on these issues, establishing that mixed wax candles were not available at the time of the original investigation and that they are the same class or kind of merchandise as is covered by the AD order. Target, multiple Chinese candle makers, and a group of importers led by Nantucket Distributing Co., Inc. appealed.

CAFC Finds Scope Conclusions to be Supported by Evidence

The CAFC ruled that the ITA’s determination that mixed wax candles were later-developed merchandise that was not commercially available at the time of the original investigation was reasonable and was supported by substantial evidence. The importers had cited early 20th century articles and patents to argue that mixed wax candles had been available earlier, but the higher court concurred with the CIT that “exotic” wax blends were not in commercial production in 1985-1986. The court also took note of the ITA’s citations of patents and press releases in the 1990’s announcing commercial production and availability of new types of mixed-wax candles.

(See ITT’s Online Archives or 07/16/09 news, 09071635, for BP summary of the CIT decision upholding the ITA determination that China “mixed wax candles” are covered by the AD Duty order on petroleum wax candles from China.

See ITT’s Online Archives or 11/05/04 news, 04110535, for BP summary of requests by NCA to the ITA to initiate anti-circumvention investigations of petroleum wax candles from China.)

(D/Ns 2009-1518, -1519; decided 06/21/10)