AD/CVD Case Should Contest Commerce's Findings, Not Duty Collection, DOJ Brief Says

The Court of International Trade should dismiss an importer's lawsuit that improperly challenges CBP assessments of antidumping and countervailing duties rather than the underlying duty calculations done by the Commerce Department, the government said in a June 8 brief. The trade court lacks jurisdiction to entertain the complaint because the true nature of importer Rimco's claim is a challenge to the amount of duties determined by Commerce rather than the enforcement by CBP, DOJ said. The protest and subsequent suit are an attempt to "hide its own failure to challenge Commerce's determinations when it had the opportunity" by essentially circumventing administrative avenues for addressing AD/CVD rate calculations, the government said (Rimco v. United States, CIT #21-00537).

The case stems from antidumping and countervailing duty investigations on steel wheels from China, published by Commerce in March 2019. In the countervailing duty administrative review, In May 2020, Commerce published a notice of opportunity to request an administrative review of the CVD and AD orders for the periods Aug. 31, 2018, through Dec. 31, 2019, and Oct. 30, 2018, through April 30, 2020, respectively. Rimco’s seven entries fell within the time periods in the notice. Rimco did not request either an administrative review in response to the notice at the time. Commerce subsequently issued liquidation instructions in July 2019, directing CBP to liquidate entries at the as entered cash deposit rate described in the orders.

In March 2021, Rimco filed a protest challenging the "grossly excessive" duties and alleging that the duty amount violated the Eighth Amendment prohibition on excessive fines. CBP denied the protest, explaining that “19 U.S.C. 1514 does not authorize protests or petitions filed against Commerce calculations or findings." Rimco filed its case at the Court of International Trade to contest the 457.10% countervailing duty rate and 231.70% China-wide antidumping duty rate on its steel wheel imports (see 2109240049), arguing that because the duties were calculated on incomplete information, they were "penal rather than remedial."

DOJ filed a motion to dismiss on March 15 (see 2203150042), arguing that Rimco failed to exhaust its administrative remedies at Commerce by declining to request an administrative review. DOJ also argued that CIT was the wrong venue for such a challenge and that the case should be challenging Commerce's determinations instead of the implementation by CBP (see 2205040030).

Rimco said in a May 4 reply brief that the lawsuit is not actually contesting Commerce's determinations and instead "addresses the effect of those determinations," primarily whether CBP’s assessment of charges pursuant to Commerce’s determinations has resulted in an "unconstitutional excessive fine" (see 2205050047). Rimco said there was no excessive fine until CBP took the importer's money.

DOJ continued to argue that the correct procedural challenge would have been at the administrative level, following Commerce's opportunity notice in 2020. Going after CBP is improper now because "the decision of what rate to apply is Commerce’s alone... ." DOJ said. Had Rimco exhausted its administrative options, "Commerce ... could have considered Rimco’s arguments that the rates were punitive, and it could have potentially altered its decision," the government said. Because CBP does not decide on the tariff rates, it "cannot possibly assess" whether the duties were excessive and cannot be the target of litigation based on its enforcement. "Rimco does not dispute any practice or action taken by Commerce," DOJ said. Therefore, the court lacks jurisdiction to weigh in on the matter, it said.

The government said that "disputes concerning findings and determinations are the very grist of a typical Commerce administrative proceeding" and "the subject of much litigation." Whether the rates amount an unconstitutional "excessive fine" could only be determined after Commerce had an opportunity to hear Rimco's arguments. Rimco had the opportunity to participate in the process, but instead opted to fight duty enforcement, which is not a protestable action, DOJ said.

Finally, the government argued that because Rimco's action" is a challenge to the AD/CVD rates themselves, it should have invoked jurisdiction under section 1581(c). 1581(i) actions are "strictly limited" to avoid jurisdictional conflict. DOJ said that it is "long-settled" that jurisdiction under subsection 1581(i) may not be invoked if jurisdiction under another subsection of 1581 is or could have been available.

"The bottom line is that the U.S. Government has imposed an excessive fine," John Peterson, counsel for Rimco, said. "There is enough liability to threaten the viability [of Rimco] ... so we have to attack the specific margin," he said. DOJ didn't comment.