Importer Says US Read of AD/CVD Scope on Sinks Would Lead to 'Absurd' Results

The government's interpretation of the antidumping and countervailing duty orders on drawn stainless steel sinks from China would lead to "absurd" results and would plainly expand the scope of the orders to out-of-scope items, importer R.H. Peterson told the Court of International Trade on Oct. 29 in a reply brief (R.H. Peterson v. United States, CIT # 20-00099).

The AD/CVD orders cover sink bowls, mounting clips, fasteners, seals and sound-deadening pads, the importer said. The Commerce Department read the scope language to include the value of any part or additional processing costs included in the sink's sale price when the finished sinks are sold for export to the U.S. that aren't specifically excluded from the orders. R.H. Peterson said this "position makes no sense" and would allow for AD/CVD to be assessed on labor and finishing work in a third country, "which is clearly beyond the express language of the scope of the order here."

The importer provided an example wherein an importer enters unfinished sink bowls into a U.S. foreign-trade zone and out-of-scope U.S.-origin parts are added and machining and other work is conducted. Under this scenario, AD/CVD would apply to all of the U.S. parts and labor costs upon entry from the foreign-trade zone.

"This absurd result, in which AD/CVD duties on Chinese sinks are assessed on out-of-scope U.S. parts and labor just because they are part of the purchase price, cannot possibly be the case," the brief said. The government offers no evidence to support its position that duties should be put on labor and further processing costs in Taiwan, as is the case with R.H. Peterson's products, the brief said.

The importer also took issue with the government's request that the court ignore "the testimony of its own witness" (see 2410020053). The U.S. called CBP employee Christopher Chen to speak about the issue, then told the court his testimony amounts to non-binding "legal conclusions of law." The importer said it's his job to "read and interpret laws, regulations, and agency orders and apply them to the matters in front of him." He said he did so regarding the sinks at issue and said the value of parts that fall under exclusions or don't otherwise meet the description of the scope couldn't be included in the value of the goods subject to AD/CVD.

R.H. Peterson also argued that CBP's instructions say that when only part of the entered value is within scope, break out the scope value from the entered value. The U.S. said Commerce tells CBP to assess AD/CVD on the entered value then subtract the value of non-covered parts.

The importer said this "misinterpretation twists Commerce’s instructions to Customs that are incorporated into the agency’s instructions." R.H. Peterson said it's not trying to reduce the entered value of its goods by backing out the value of the "cartons, instruction manuals, freight, machining/labor, and quality control, shipping and profit, all of which are properly included in the price paid or payable when sold for exportation to the United States."