CAFC Seems Poised to Reject Challenge to Affirmative Evasion Finding Regarding Xanthan Gum

In oral arguments Oct. 8, the U.S. Court of Appeals for the Federal Circuit indicated that the plaintiff challenging an Enforce and Protect Act evasion finding whose entries have all already been liquidated was likely not going to succeed in reversing the dismissal of its case by the Court of International Trade (see 2208180045) (All One God Faith v. U.S., Fed. Cir. # 23-1078).

Xanthan gum importer All One God Faith, doing business as Dr. Bronner’s Magic Soaps, was found by CBP to have transshipped its products from China through India to avoid a more than 150% duty on Chinese imports. The customs agency reached the same determination for another importer, Glob Energy, and the two, along with a number of others, filed suit against the finding under 28 USC 1581(c), the CIT jurisdiction provision for challenging EAPA cases. The Dr. Bronner’s and Glob claims were dismissed by the trade court in 2022, with the court noting that CBP had already liquidated the entries found to have been transshipped and that the two were instead supposed to challenge the denial of a protest of that liquidation.

The appeals court pointed out during oral arguments that even if the importers had established jurisdiction for their claim, CIT had still ruled that they would have lost on the merits of the case anyway.

It asked why the importers hadn’t filed after CBP denied their protest against liquidation of their entries.

“Simply put, my clients couldn’t pay to play,” said Kyl Kirby, the attorney for the petitioners.

“Well, that’s what’s necessary to perfect jurisdiction,” a judge said. “There’s no exception for ‘can’t pay’ under jurisdiction.”

The court moved on to discuss the sustained affirmative EAPA finding for other entries for which there wasn’t a jurisdictional question, those imported by Ascension Chemicals, UMD Solutions and Crude Chem Technology.

“Do you agree that the merchandise at issue was subject to the antidumping duty order on xanthan gum at the time of entry?” another judge asked.

“Technically, yes,” Kirby responded.

“Are you trying to equivocate in some way?” she asked. “Because you’ve got the word ‘technically’ in front of that.”

Kirby said that CBP should have reached out to Commerce when it reached its EAPA decision because it had evidence in front of it that circumstances had changed -- there were no longer any domestic producers of xanthan gum who could have been harmed by the importation of the gum, he said.

The court pointed out that CBP has no legal duty to initiate a changed circumstances review without a petition. If the importers had wanted such a review conducted, they needed to have applied for one themselves, it said.

“Yes, but [CBP] had the evidence in front of it,” Kirby said.