LDA Incorporado v. United States

Slip Op. 15-64

UNITED STATES COURT OF INTERNATIONAL TRADE

LDA INCORPORADO,

Plaintiff,
Before: Claire R. Kelly, Judge
v.
Court No. 12-00349
UNITED STATES,

Defendant.

OPINION

[Upon submission of Joint Stipulation of Undisputed Facts and Proposed Conclusions of
Law, in lieu of trial, judgment is granted in favor of Plaintiff.]

Dated: June 19, 2015

Ronald M. Wisla, Lizbeth R. Levinson, Kutak Rock LLP, of Washington, DC, for
Plaintiff.

Beverly A. Farrell, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of New York, NY, for Defendant. With her on the brief were
Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and Amy M. Rubin,
Assistant Director.

Kelly, Judge: Before the court is the parties’ Joint Stipulation of Undisputed Facts

and Proposed Conclusions of Law, which was submitted in lieu of trial. See Joint

Stipulation Undisputed Facts Proposed Conclusions of Law, May 8, 2015, ECF No. 49

(separately “JSUF,” “Pl.’s PCL.” and “Def.’s PCL”). 1 Familiarity with the case is

presumed, however, the court provides a brief recitation of the procedural history of the

1The parties filed a single document including their joint submission of undisputed facts
and their separate proposed conclusions of law.
Court No. 12-00349 Page 2

case following the court’s earlier denial of Defendant United States’ (“Defendant” or

“United States”) motion to dismiss for lack of subject-matter jurisdiction.

On May 13, 2014, this court denied Defendant’s motion to dismiss for lack of

subject-matter jurisdiction. See LDA Incorporado v. United States, 38 CIT __, __, 978 F.

Supp. 2d 1359 (2014). Thereafter, Defendant submitted its answer to Plaintiff LDA

Incorporado’s (“Plaintiff” or “LDA”) complaint, and the court entered a scheduling order

governing discovery and other trial related matters. See Answer, June 26, 2014, ECF

No. 34; Scheduling Order, July 2, 2014, ECF No. 36.

On March 13, 2015, LDA, with Defendant’s consent, moved “to submit a joint

stipulation of agreed upon facts in lieu of trial . . . .” Pl.’s Consent Mot. Permit Parties

Submit Joint Stipulation Agreed Upon Facts in Lieu of Trial, Mar. 13, 2015, ECF No. 39.

After conferring with the parties, the court granted LDA’s consent motion and ordered the

parties to submit a “joint stipulation of undisputed facts and proposed conclusions of law

. . . .” Order, Mar. 16, 2015, ECF No. 41. The parties submitted their Joint Stipulation of

Undisputed Facts and Proposed Conclusions of Law on May 8, 2015, and the court

deemed the matter submitted for resolution. As the parties have stipulated to the facts

and only continue to disagree about whether jurisdiction exists, a legal issue already

decided by the court, the court finds that based on the undisputed facts, LDA’s protest

was erroneously denied and will enter judgment accordingly.
Court No. 12-00349 Page 3

UNDISPUTED FACTS

The following facts are undisputed. 2

1. LDA “is a Puerto Rican corporation located in Guaynabo, Puerto Rico.

Plaintiff is an importer and reseller of electrical infrastructure products,

including galvanized electrical rigid steel conduit, for use in the construction

industries. Plaintiff represents foreign manufacturers in the local Puerto

Rico market.” JSUF ¶ 1 (citing Compl. ¶ 8, Apr. 16, 2013, ECF No. 5; Pl.’s

Resp. Def.’s Mot. Dismiss 2, Dec. 24, 2013, ECF No. 17 (“Pl.’s Resp.”)).

2. LDA’s “customers are electrical material distributors that operate in both

Puerto Rico and the United States.” Id. ¶ 2 (citing Compl. ¶ 8; Pl.’s Resp.

2, Ex. 1 at Attach. 8).

3. “LDA does not undertake any finishing or further processing operations prior

to the resale of its imports.” Id. ¶ 3 (citing Compl. ¶ 8; Pl.’s Resp. 2).

4. “On July 22, 2008, the U.S. Department of Commerce (“Commerce”) issued

antidumping and countervailing duty orders covering circular welded carbon

quality steel pipe from the People’s Republic of China.” Id. ¶ 4 (citing

Circular Welded Carbon Quality Steel Pipe from the People’s Republic of

China, 73 Fed. Reg. 42,545 (Dep’t Commerce July 22, 2008) (notice of

amended final affirmative countervailing duty determination and notice of

2 In the stipulated facts, the parties cite to the record as filed with the court without
objection. In lieu of trial, the court considers the undisputed facts before it as contained
in the stipulation and in the record.
Court No. 12-00349 Page 4

countervailing duty order) (“CVD Order”); Circular Welded Carbon Quality

Steel Pipe from the People’s Republic of China, 73 Fed. Reg. 42,547 (Dep’t

Commerce July 22, 2008) (notice of antidumping duty order) (“ADD Order”)

(collectively “the Orders”)).

5. “The express language of the AD and CVD orders specifically excluded

‘finished electrical conduit’ from their scope.” Id. ¶ 5. The language of the

Orders provide that

[t]he scope of this order does not include: (a) pipe suitable for use in
boilers, superheaters, heat exchangers, condensers, refining
furnaces and feedwater heaters. whether or not cold drawn; (b)
mechanical tubing, whether or not cold-drawn; (c) finished electrical
conduit; (d) finished scaffolding; (e) tube and pipe hollows for
redrawing; (f) oil country tubular goods produced to API
specifications; and (g) line pipe produced to only API specifications.

CVD Order at 42,546 (cited in JSUF ¶ 5). 3

6. Both before and after Commerce issued the Orders, “Plaintiff purchased

rigid steel conduit manufactured by Guangdong Walsall Steel Pipe

Industrial Co., Ltd. (“Walsall”), a Chinese manufacturer.” JSUF ¶ 6 (citing

Pl.’s Resp. 3). Walsall galvanizes the product “through a hot dipped

process.” Id. (citing Compl. ¶ 10; Pl.’s Resp. Ex. 4 at 2).

7. “On July 22, 2010, Plaintiff imported into the United States at the Port of

San Juan[,]Puerto Rico a single entry (Entry No. 438-0698613-9) of

galvanized rigid steel conduit from China.” Id. ¶ 7 (citing Pl.’s Resp. Ex. 1

3 The scope of the CVD Order and the ADD Order use nearly identical language.
Court No. 12-00349 Page 5

at Attach. 1 at 1). Plaintiff entered the merchandise “as a Type I entry, not

subject to the AD and CVD orders.” Id. (citing Pl.’s Resp. Ex. 1 at Attach. 1

at 1).

8. Upon import, Plaintiff’s “galvanized electrical conduit was both internally

and externally coated with a non-electrically insulating material (zinc) and

was suitable for electrical use in accordance with Underwriters Laboratories

Inc. (“UL”) standard UL-6 for ‘electrical rigid ferrous metal conduit’ and

American National Standard Institute (“ANSI”) standard C80.1-2005 for

‘electrical rigid steel conduit.’” Id. ¶ 8 (citing Pl.’s Resp. Ex. 1 at Attachs. 3,

6).

9. “The commercial invoice associated with Entry No. 438-0698613-9

describes the merchandise as ‘9134 pcs of rigid conduit galvanized rigid

conduit with stantdards (sic) compliance of ANSI C80-1 and Underwriters

Laboratories UL-6 with a standard length of 10 feet, coupling included.’” Id.

¶ 9 (citing Commercial Invoice in Court file.). “Other entry documents,

including the packing list, mill report, and bill of lading, all reference the UL-

6 or ANSI C.80-1 standards.” Id. (citing Court file).

10. The U.S. Customs and Border Protection (“CBP” or “Customs”) conducted

laboratory inspections of the imported merchandise after its entry and “[t]he

CBP laboratory issued seven laboratory reports (one for each of the

diameter sizes contained in the shipment). Each of the laboratory reports

described the sample as ‘galvanized conduit’ and concluded that ‘the pipe
Court No. 12-00349 Page 6

is composed of zinc-galvanized low carbon non-alloy steel’. Each of the

laboratory reports also contained the following conclusion: ‘In our opinion,

the sample is not internally coated with a non-conducting liner.’” Id. ¶ 10

(citing Pl.’s Resp. Ex. 1 at Attach. 1 at 5–18).

11. “On January 10, 2011, CBP issued a Notice of Action notifying Plaintiff that

CBP was assessing antidumping and countervailing duties on the subject

merchandise.” Id. ¶ 11 (citing Pl.’s Resp. Ex. 1 at Attach. 1 at 3; Court file).

“Plaintiff was required to file a revised entry form reflecting the assessment

of antidumping and countervailing duty deposits.” Id. (citing Pl.’s Resp. Ex.

1 at Attach. 1 at 2; Court file). “The Notice of Action did not state the reasons

for the rate advance, but during telephone conferences and a face-to-face

meeting on January 26, 2011, CBP advised LDA that the laboratory

inspections indicated that the subject merchandise was not internally

galvanized and was thus unfinished conduit subject to the antidumping and

countervailing duty orders.” Id. (citing Pl.’s Resp. 4–5).

12. “By letter dated January 28, 2011, Plaintiff provided CBP with additional

information to establish that the subject merchandise was both externally

and internally coated with zinc.” Id. ¶ 12 (citing Pl.’s Resp. Ex. 4). “The

documents included proof of Walsall compliance with ANSI C.80 [sic] and

UL-6 standards; resubmission to CBP of the purchase/entry documents

including the commercial invoice, packing list bill of lading, mill certificate

and certificate of origin, all stating compliance with ANSI and UL standards;
Court No. 12-00349 Page 7

and the pro forma invoice (purchase order) and letter of credit showing

merchandise in compliance with ANSA [sic] and UL standards.” Id. (citing

Pl.’s Resp. Ex. 1 at Attach. 5 at 1–3, 7–8, Attach. 6 at 1–2, Ex. 3 at 2–6).

“Further, Plaintiff explained to CBP that Walsall galvanized the purchased

conduit using the ‘hot dipped galvanized’ process, which internally and

externally galvanizes the product.” Id. (citing Pl.’s Resp. Ex. 4 at 2).

13. On February 28, 2011, CBP released reports of the results of its laboratory

inspections to Plaintiff in response to a Freedom of Information Act Request.

Id. ¶ 13 (citing Pl.’s Resp. Ex. 1 at Attach. 1 at 4). “The reports stated: ‘[i]n

our opinion, the sample is not internally coated with a non-conducting liner.’”

Id. (citing Pl.’s Resp. Ex. 1 at Attach. 1 at 5–18). “Plaintiff responded to

these reports by telling CBP that the absence of a ‘non-conducting liner’

does not refer to zinc, a metal coating that conducts electricity, but refers to

an internal lining of materials that do not conduct electricity, such as rubber

or plastic.” Id. (citing Pl.’s Resp. 6).

14. “In early March 2011, Plaintiff and CBP had another meeting. CBP advised

Plaintiff that CBP now understood that the Plaintiff’s conduit was both

internally and externally galvanized, but CBP continued to determine that

that [sic] the subject merchandise was unfinished conduit and was not

suitable for electrical use because it was not internally coated with a non-

conducting liner.” Id. ¶ 14 (citing Pl.’s Resp. 6–7).
Court No. 12-00349 Page 8

15. “Plaintiff provided additional product samples to CBP for further testing.

Each physical sample was marked with an adhesive label that identified

Walsall as the manufacturer, China as the country of origin, and contained

the UL trademark identifying the conduit as a UL listed ‘electrical rigid metal

conduit’ product. Each conduit piece was also stenciled with permanent ink

identifying the product dimension, the Chinese country of origin and the UL

6 designation as electrical rigid steel conduit (“RSC”).” Id. ¶ 15 (citing Pl.’s

Resp. Ex. 1 at Attach. 4).

16. “Plaintiff provided to CBP the Scope of the ANSI Standard C80.1-2005. The

ANSI standard specifies that conduit with a galvanized (i.e., zinc) interior

and exterior coating is ‘finished’ conduit. There is no additional requirement

that a finished conduit include an electrically insulating interior coating. The

ANSI standard states:

1. Scope

This standard covers the requirements for electrical rigid steel
conduit for use as a raceway for wires or cables of an electrical
system. Finished conduit is produced in nominal 10 ft. (3.05m)
lengths, threaded on each end with one coupling attached. It is
protected on the exterior surface with a metallic zinc coating or
alternate corrosion protection coating (as specified in the 13th edition
of UL 6 in Clauses 5.3.3, 6.2.4, 7.8 and 7.9) and on the interior
surface with a zinc or organic coating.”

Id. ¶ 16 (citing Pl.’s Resp. Ex. 1 at Attach. 9).

17. Plaintiff also gave CBP material from the product brochure of a domestic

competitor, Wheatland Tube, “for metal conduit. The electrical conduit
Court No. 12-00349 Page 9

products offered by Wheatland Tube were similarly subject to the ANSI C

80.1 and UL6 standards, were internally and externally coated with zinc,

and did not have interior coatings of electrically insulating materials.” Id.

¶ 17 (citing Pl.’s Resp. Ex. 1 at Attach. 10); See also Pl.’s Resp. 8.

18. “As a result of these meetings, CBP advised Plaintiff that the case would be

referred to CBP headquarters for further review.” JSUF ¶ 18 (citing Pl.’s

Resp. 9). “On April 26, 2011, Plaintiff received a communication from CBP

via electronic mail stating that personnel from CBP Headquarters had been

consulted and that CBP Headquarters advised CBP Puerto Rico that

Plaintiff should request a scope ruling from Commerce to determine

whether or not the subject merchandise was subject to antidumping and

countervailing duties.” Id. (citing Pl.’s Resp. Ex. 5).

19. “On January 4, 2012 Customs issued a second notice of action concerning

Entry No. 438-0698613-9.” Id. ¶ 19 (citing Compl. ¶ 18; Court file).

20. “On January 27, 2012, CBP liquidated Plaintiff’s entry subject to

antidumping and countervailing duties.” Id. ¶ 20 (citing Compl. ¶ 19; Answer

¶ 19; Pl.’s Resp. 10).

21. “On February 22, 2012, Plaintiff filed expedited antidumping and

countervailing duty scope inquiry requests with Commerce regarding the

subject merchandise.” Id. ¶ 21 (citing Pl.’s Resp. Ex. 1 at Attach. 11). “In

connection with these requests, Plaintiff presented substantially similar
Court No. 12-00349 Page 10

documentation to Commerce as that provided to CBP.” Id. (citing Pl.’s

Resp. Ex. 1 at Attach. 11).

22. “On April 26, 2012, Plaintiff filed a protest with CBP regarding the liquidation

of the entry of the subject merchandise. The protest stated that ‘Importer is

on (sic) the process of a scope ruling in order to proof (sic) that ADD/CVD

does not apply to cargo.’” Id. ¶ 22 (citing Pl.’s Resp. Ex. 6 at 1).

23. “CBP Denied Plaintiff’s protest on May 12, 2012.” Id. ¶ 23 (citing Pl.’s Resp.

Ex. 6 at 2).

24. “On July 2, 2012, Commerce issued a final scope ruling to Plaintiff.

Commerce determined that the electrical rigid metal conduit imported by

Plaintiff was, in fact, finished electrical conduit and therefore outside the

scope of the antidumping and countervailing duty orders.” Id. ¶ 24 (citing

Pl.’s Resp. Ex. 2). “Commerce held that ‘based on record evidence, we

have determined that the electrical rigid steel conduit imported by LDA Inc.

falls under the Department’s exclusion for finished electrical conduit

because it meets the definition of electrical rigid steel conduit.’” Id. (citing

Pl.’s Resp. Ex. 2 at 8).

25. “Commerce’s final scope ruling to Plaintiff acknowledged that ‘[o]n May 21,

2012, the Department, in its final scope ruling regarding finished electrical

conduits imported by All Tools, Inc., defined ‘finished electrical conduit.’” Id.

¶ 25 (citing Pl.’s Resp. Ex. 2 at 2).
Court No. 12-00349 Page 11

26. “‘In the All Tools’ Scope Ruling, the Department noted that the exclusion for

‘finished electrical conduit’ was not defined, and therefore solicited

comments from interested parties for the purpose of defining the ‘finished

electrical conduit’ exclusion in the CWP [(circular welded pipe)] Orders.’” Id.

¶ 26 (citing Pl.’s Resp. Ex. 2 at 6). “Plaintiff did not participate during the

comment period associated with the All Tools’ Scope Ruling.” Id. (citing

Pl.’s Resp. Ex. 2).

27. “In connection with the All Tools Ruling, Commerce determined that

‘finished electrical conduits,’ which are the subject of the exclusion to the

CVD and AD Orders, are Electrical Rigid Steel Conduit, Finished Electrical

Metallic Tubing, and Intermediate Metal Conduit.” Id. ¶ 27 (citing Pl.’s Resp.

Ex. 2 at 6).

28. “In connection with the All Tools Ruling, Commerce defined Electrical Rigid

Steel Conduit as:

• a threadable steel raceway of circular cross-section designed for
the physical protection and routing of conductors and as an
equipment grounding conductor;
• in nominal 10 ft (3. 05 m) lengths [citing ANSI C80.1];
• threaded on each end with one coupling attached;
• protected on the exterior surface with a metallic zinc coating or
alternate corrosion protection [citing UL 6] coating, and on the interior
surface with a zinc or organic coating;
• with the interior surface free from injurious defects;
• made to (1) American National Standard (“ANSI”) CS0.1-2005 [sic]
specification for electrical rigid steel conduit and marked along each
length with ‘Rigid Steel Conduit’ or (2) Underwriters Laboratories Inc.
(“UL”) UL-6 specification for electrical rigid metal conduit-steel and
marked along each length with ‘Electrical Rigid Metal Conduit’ or
‘ERMC-S’; and
Court No. 12-00349 Page 12

• marked with the manufacturer's name, trade name, or trademark or
other descriptive marking by which the organization responsible for
the product can be identified.”

Id. ¶ 28 (citing Pl.’s Resp. Ex. 2 at 6–7).

29. “Commerce’s final scope ruling specifically rejected CBP’s contention that

galvanized electrical conduit had to have an internal lining of non-electrically

conducting material in order to be considered finished electrical conduit.

Commerce stated:

CBP inspected LDA Inc.’s products and determined that the products
are subject to the CWP [(circular welded pipe)] Orders because,
according to its laboratory results, ‘... the sample is not internally
coated with a non-conducting liner.’ According to the Department’s
definition of finished electrical conduit, a ‘non-conducting liner’ is not
a necessary component of finished electrical conduit, and in the All
Tools” [sic] Scope Ruling the Department determined that similar
non-electrically insulated conduit was within the exclusion for
finished electrical conduit.”

Id. ¶ 29 (citing Pl.’s Resp. Ex. 2 at 8–9).

STANDARD OF REVIEW

The court reviews denied protests de novo “upon the basis of the record made

before the court.” See 28 U.S.C. § 2640(a)(1) (2012). 4 Thus, while the question before

the court is the same as the one that faced CBP, the record before the court may, and in

this case does, include different information. Moreover, CBP’s factual determinations are

4 Further citations to Title 28 of the U.S. Code are to the 2012 edition.
Court No. 12-00349 Page 13

presumed to be correct and the burden is on Plaintiff to rebut those presumptions. See

28 U.S.C. § 2639(a)(1).

CONCLUSIONS OF LAW

As the court has explained in its prior slip opinion, the court has jurisdiction over

Plaintiff’s “civil action commenced to contest the denial of [its] protest . . . under [19 U.S.C.

§ 1515].” 28 U.S.C. § 1581(a); see also LDA Incorporado, 978 F. Supp. 2d at 1370; Xerox

Corp. v. United States, 289 F.3d 792, 793 (Fed. Cir. 2002). CBP made a protestable

decision as to the application of the Orders to Plaintiff’s entry. LDA Incorporado, 978 F.

Supp. 2d at 1369–70. CBP’s application of the Orders to Plaintiff’s merchandise did not

become “final and conclusive” because Plaintiff filed a timely protest contesting CBP’s

decision. See 19 U.S.C. § 1514(a)(2). The court’s role here is defined by the nature of

its jurisdiction in this instance. The court is not reviewing what Commerce has done, as

it would if this case involved a challenge to a scope ruling under § 1581(c). The court

exercises jurisdiction under § 1581(a) to review whether Customs’ decision to apply the

Orders to Plaintiff’s merchandise was in error. Thus, the question for both Customs

below, and the court here, is whether Plaintiff’s merchandise is “finished electrical

conduit.” The undisputed facts show Plaintiff’s merchandise is “finished electrical conduit”

and is therefore specifically excluded from the Orders.

The scope of the court’s review is a function of its jurisdiction and therefore it is

necessary to once again carefully distinguish Customs’ and Commerce’s role with respect

to the entry of the merchandise in this case. The court reviews those decisions properly

within the province of Customs, i.e., factual decisions regarding the merchandise and the
Court No. 12-00349 Page 14

decision to apply the order to the merchandise. While Congress gave the role of

determining the scope of an order to Commerce, see 19 U.S.C. § 1516a(a)(2)(B)(vi); 19

U.S.C. § 1677(25); 19 C.F.R. § 351.225, Customs, incident to its “ministerial” function of

fixing the amount of duties chargeable, must make factual findings to determine “what the

merchandise is, and whether it is described in an order” and must decide whether to apply

the order to the merchandise. See Xerox, 289 F.3d at 794–95 (citations omitted).

The court understands the U.S. Court of Appeals for the Federal Circuit in Xerox

to have used the term “ministerial” to refer to Customs’ tasks in that they cannot affect the

scope of the order and the resulting duty owed. As the Court of Appeals has held,

Customs undeniably must act in both ministerial and non-ministerial capacities to

correctly process entries of goods subject to antidumping and countervailing duties. 5 See

Xerox, 289 F.3d at 794. In Xerox, the plaintiff’s imported goods were paper feed belts for

electrostatic photocopiers. Customs assessed antidumping duties based on its

5It seems contradictory to say that Customs is charged with finding facts and ascertaining
whether the merchandise is “described in the order,” but is nonetheless acting in a
ministerial capacity. Typically one thinks of ministerial acts as passive or involving no
analysis or discretion. See Marbury v. Madison, 5 U.S. 137, 151 (1803) (explaining a
ministerial officer exercises no discretion). When Customs discerns facts and then
applies those facts to the scope provided by Commerce, it is conducting analysis to some
degree. However, the Reorganization Plan of 1979 made clear, and the Courts have
repeatedly affirmed, that Customs’ role is “ministerial” as to the rate and amount of duties
chargeable in antidumping and countervailing duty cases. See Reorganization Plan No.
3 of 1979, §§ 5(a)(1), 93 Stat. 1381, 44 Fed. Reg. 69,273, 69,274–75 (Dec. 3, 1979),
effective under Exec. Order No. 12,188 of January 2, 1980, 45 Fed. Reg. 989, 993 (1980);
see also Mitsubishi Elec. Am., Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994).
Thus, even though Customs makes decisions as to the facts and the application of the
order, Customs acts in a ministerial capacity because it cannot change the rate and
amount of antidumping or countervailing duties chargeable.
Court No. 12-00349 Page 15

determination that the belts were covered by an antidumping duty order. Xerox Corp. v.

United States, 24 CIT 1145, 1145, 118 F. Supp. 2d 1354, 1354 (2000), rev’d 289 F.3d

792 (2002). The importer argued that the goods were clearly outside the scope of the

order and that Customs had made a mistake of fact. Customs denied the protest and the

importer sought judicial review. Xerox, 24 CIT at 1145, 118 F. Supp. 2d at 1354. The

United States Court of International Trade held that it did not have jurisdiction under 28

U.S.C. § 1581(a) to hear the case because the importer should have requested a scope

ruling from Commerce. Xerox, 24 CIT at 1146–47, 118 F. Supp. 2d at 1355. The Court

of Appeals, reversing the Court of International Trade, found that the goods “were not

used for power transmission and were not constructed with the materials listed in the

order . . .” and therefore were not covered by the order. Xerox, 289 F.3d at 795.

The Court of Appeals thus held that Customs’ decision was a protestable error.

The Court of Appeals in Xerox explained that:

Customs is charged with the ministerial function of fixing “the amount of duty
to be paid” on subject merchandise. When merchandise may be subject to
an antidumping duty order, Customs makes factual findings to ascertain
what the merchandise is, and whether it is described in an order. If
applicable, Customs then assesses the appropriate antidumping duty.
Such findings of Customs as to “the classification and rate and amount of
duties chargeable” are protestable to Customs under 19 U.S.C.
§ 1514(a)(2).

Id. at 794 (internal citations omitted). Incident to performing its function of assessing

duties on entries of goods that may or may not be subject to antidumping or countervailing

duty orders, Customs must make factual findings to determine the nature of the

merchandise. Additionally, Xerox provides that Customs must read the language of the
Court No. 12-00349 Page 16

order to determine whether or not the goods in question fall under that description. The

factual analysis and application of the scope to the goods in question are decisions of

Customs. Customs’ function, while involving discretion as to the facts and the application

of the facts to the scope, cannot affect the scope of the order. Although Customs’ role as

to the scope of the order is ministerial (i.e., it can do nothing to change the scope), in

applying that scope it has made a protestable decision. Under Xerox, errors made by

Customs in deciding whether the order applies to the goods are protestable. See id. at

795.

The holding in Xerox is consistent with the statutory scheme. The statute in

§ 1514(a) provides that

[e]xcept as provided in subsection (b) of this section, . . . any clerical error,
mistake of fact, or other inadvertence . . . adverse to the importer, in any
entry, liquidation, or reliquidation, and, decisions of the Customs Service,
including the legality of all orders and findings entering into the same, as
to--
...

(2) the classification and rate and amount of duties chargeable,

are final and conclusive unless a protest with Customs is timely filed or the denial of such

protest is challenged at the Court of International Trade. 19 U.S.C. § 1514(a)(2). 6 Clerical

errors, mistakes of fact and other inadvertent mistakes made by Customs are protestable

under § 1514(a). Additionally, the statute provides that the legality and findings forming

6 The decisions covered in § 1514(b) refer to “determinations made under . . . subtitle IV
of this chapter [(19 U.S.C. §§ 1671–1677n, the countervailing and antidumping duty
laws)] which are reviewable under section 1516a of this title . . . .” 19 U.S.C. § 1514(b).
The clarification of the scope of an order by virtue of a scope ruling would be reviewable
under 19 U.S.C. § 1516a, and would not be protestable.
Court No. 12-00349 Page 17

the basis of a decision by Customs regarding the classification, rate, and amount of duties

chargeable for an entry of goods are also protestable decisions. Therefore, as Xerox

holds, the misapplication of the scope of an order by Customs requires Customs to both

determine what the merchandise is and then apply the scope of the order to the

merchandise in question. Per the statute, both the legality of Customs’ decision, as well

as the findings forming the basis of that decision, are protestable and are the focus of the

court’s review in this case. Thus, here the court reviews de novo whether Customs erred

either in its factual analysis of the merchandise or in its decision to apply the Orders, as

written by Commerce, to the merchandise. The Orders specifically exclude finished

electrical conduit. See ¶ 5. 7 Therefore, the court must determine whether the

merchandise was finished electrical conduit.

Here, undisputed evidence makes clear Plaintiff’s merchandise was “finished

electrical conduit.” The scope of the ANSI Standard C80.1-2005 provides:

Finished conduit is produced in nominal 10 ft. (3.05m) lengths, threaded on
each end with one coupling attached. It is protected on the exterior surface
with a metallic zinc coating or alternate corrosion protection coating (as
specified in the 13th edition of UL 6 in Clauses 5.3.3, 6.2.4, 7.8, and 7.9)
and on the interior surface with a zinc or organic coating.

¶ 16. It is undisputed that Plaintiff’s “galvanized electrical conduit was both internally and

externally coated with a non-electrically insulating material (zinc) and was suitable for

electrical use in accordance with . . . UL-6 for ‘electrical rigid ferrous metal conduit’ and

. . . ANSI[] standard C80.1-2005 for ‘electrical rigid steel conduit.’” ¶ 8 (citing Pl.’s Resp.

7All citations to a paragraph number, without more, are to the court’s numbered findings
of fact herein.
Court No. 12-00349 Page 18

Ex. 1 at Attachs. 3, 6). 8 Defendant provides no evidence that LDA’s merchandise was

not “finished electrical conduit.” 9 Nowhere in its papers does Defendant dispute that

Plaintiff’s merchandise was finished electrical conduit. 10 Thus, as a matter of law the

undisputed facts show that Plaintiff’s merchandise was “finished electrical conduit.”

As in Xerox, Customs here made a decision as to whether the goods were covered

by the Orders. In Xerox, Customs erred when it included the plaintiff’s paper feed belts

for electrostatic photocopiers in the order on industrial belts used for power transmission

because the plaintiff’s goods were undisputedly outside the scope of the order. It is not

clear to the court whether in Xerox Customs made any specific factual findings, or simply

concluded, wrongly, that the goods fell within the scope of the order. See Xerox Corp. v.

United States, Ct. No. 97-435-TJA, Def.’s Reply 2 (filed May 21, 1999). See also Xerox,

24 CIT at 1145, 118 (explaining that Customs denied the protest for lack of

8 The parties have stipulated that Plaintiff provided Customs with information establishing
that Walsall, the foreign exporter from whom Plaintiff purchased the rigid steel conduit,
complied with the ANSI C80.1 and UL-6 standards. See ¶¶ 9, 12, 15.
9 Below, Customs mistakenly believed “the subject merchandise was not internally

galvanized and was thus unfinished conduit subject to the antidumping and countervailing
duty orders.” ¶¶ 11–14. However, as Plaintiff explained, its merchandise was, in fact,
internally galvanized. Changing course, Customs then asserted “that the subject
merchandise was unfinished conduit and was not suitable for electrical use because it
was not internally coated with a non-conducting liner.” ¶ 14. As Plaintiff points out, the
ANSI C80.1-2005 and UL-6 standards for finished metal conduit do not require an internal
coating with a non-conducting liner. The court is unaware of why Customs thought a non-
conducting liner was required. Defendant presents no evidence speaking to this point.
10 Defendant does contend in its Proposed Conclusions of Law that “[t]he phrase ‘finished

electrical conduit’ was not defined in the CVD Order and AD Order at issue,” and that the
fact that Commerce issued a scope ruling in response to an importer’s request “reveals
that CVD Order and AD Order were not ‘unambiguous.’” Def.’s PCL ¶ 8 (citing Xerox,
289 F.3d at 792).
Court No. 12-00349 Page 19

documentation). Here, Customs initially made a pure factual mistake in its determination

that the merchandise was not internally galvanized. ¶¶ 11–14. Ultimately, while Customs

acknowledged that Plaintiff’s goods were in fact internally galvanized, ¶ 14, Customs

included the goods within the scope of the Orders because it believed that finished

electrical conduit must be internally coated with a non-conducting liner. ¶ 14. Customs’

belief was in error. Although not a purely factual error, the “misapplication of the order by

Customs is properly the subject of a protest under 19 U.S.C. § 1514(a)(2).” 11 Xerox, 289

F.3d at 795.

In Defendant’s proposed conclusions of law, it does not dispute that the

merchandise is finished electrical conduit. Instead, Defendant claims “Plaintiff’s actual

dispute is with the scope of the CVD and AD Orders applied to its merchandise by CBP.”

Def.’s PCL ¶ 1. This statement is incorrect. Plaintiff challenges Customs’ decision in

applying the Orders to its merchandise. The scope specifically excludes “finished

electrical conduit.” Plaintiff does not challenge the reach of the scope. Plaintiff merely

claims that its merchandise is, and always has been, finished electrical conduit.

Defendant’s argument raises a separate problem. At first, Defendant’s statement

that “Plaintiff’s actual dispute is with the scope of the CVD and AD Orders applied to its

merchandise by CBP” suggests that the scope of the Orders was clear, requiring Plaintiff

11The misapplication of the order by Customs is a protestable decision. Customs has
the duty to discern facts so that it may properly apply countervailing and antidumping duty
orders. Its job in that regard is not ministerial. Customs must also apply the order to the
facts. In many cases, it is clear that the order in question applies to particular entries of
goods, and Customs applies the order in a ministerial fashion. If it is wrong then it has
made a ministerial error.
Court No. 12-00349 Page 20

to seek a scope ruling from Commerce if it disagreed with the clear meaning of the Orders.

However, Defendant also seeks to distinguish Xerox by stating that the phrase “finished

electrical conduit” was ambiguous, noting that Commerce defined the phrase in the All

Tools Ruling. Def.’s PCL ¶¶ 7–9 (internal citations omitted). If Defendant is arguing that

the scope was unclear, then by placing the goods within the scope of the Orders prior to

a clarification by Commerce, Customs would have been interpreting the Orders, which it

is not allowed to do. As discussed above, this is the province of Commerce, not

Customs. 12 See Reorganization Plan No. 3 of 1979 at § 5(a)(1)(C).

12 As discussed above, Customs finds facts regarding what the product is, reads the
order, and applies the order to the facts if appropriate. If Customs makes a mistake in
these two tasks, as it has done here, that is a protestable decision. However, Defendant’s
argument about the need to clarify the scope of the Orders would, if true, raise bigger
problems for Customs in this case. If Customs believes the scope truly needs clarification,
Commerce should be consulted. Congress’s Reorganization Plan did not envision that
Customs would have a role in clarifying the order. See Reorganization Plan No. 3 of 1979
at § 5(a)(1)(C) (stating that the administration of antidumping and countervailing duties
shall be transferred to the Commerce Department except that Customs “shall accept such
deposits, bonds, or other security as deemed appropriate by the Secretary, shall assess
and collect such duties as may be directed by the Secretary . . . .”).
It may be that in some cases there is a concern regarding the clarity of an order
and the question then becomes who should shoulder the burden of consulting Commerce.
In an ideal world, Customs would have a mechanism for seeking Commerce’s guidance
and suspending liquidation while doing so. However, there seems to be no regulatory
provision mandating such a course. As a result, it appears that sometimes Customs tells
the importer to request a scope ruling if it does not want its goods to be covered by the
order. See 19 C.F.R. §§ 351.225(c), (e). The importer can request that CBP extend the
time for liquidation if there is good cause. 19 C.F.R. § 159.12(a)(1)(ii). Sometimes it may
be the case that the importer is familiar with the underlying investigation and the resulting
order, and indeed may be more familiar with the order than Customs. The importer may
feel certain that the scope does not cover its product. In such a case, the importer maybe
reluctant to expend the time and resources to seek a scope ruling when it believes the
scope clearly does not cover its product. If the importer fails to request a scope ruling

(footnote continued)
Court No. 12-00349 Page 21

Moreover, the Orders here were clear and there is not even a plausible argument

in this case that any ambiguity could have supported Customs’ inclusion of the goods in

the scope. It is always possible to find something the order did not say. Orders are

written in general terms. However, Customs has pointed to nothing in the scope language

here that could have indicated to Customs that the presence of a non-conducting liner

was necessary for a product to be classified as finished electrical conduit. The undisputed

facts before Customs, and before this Court, lead to the conclusion that the subject

merchandise was finished electrical conduit.

CONCLUSION

The court finds that Plaintiff’s merchandise was finished electrical conduit and,

therefore, specifically excluded from the Orders. Plaintiff’s Entry No. 438-0698613-9 was

and Customs applies the order to the goods, then Customs will necessarily have
exercised discretion as to what the order means. Such a result might not seem unfair
since the importer could have (and perhaps should have) sought a scope ruling. Fair or
not, it is simply not the scheme envisioned by Congress, and it is not the scheme so often
cited by the Courts. See Cemex, S.A. v. United States, 384 F.3d 1314, 1324 (Fed. Cir.
2004); see also Xerox Corp., 289 F.3d at 794; see also Mitsubishi Elec. Am., Inc., 44 F.3d
at 976–77. If it were the case, as Defendant suggests, that Customs believed that these
Orders truly needed clarification, then Customs would have been acting beyond its
authority in, nonetheless, assessing antidumping and countervailing duties on Plaintiff’s
merchandise.
In this case, the scope of the Orders did not reach the product at issue because
the product at issue was clearly “finished electrical conduit” which is excluded from the
Orders. There is no argument before the court, even from Defendant, that Plaintiff’s
goods are not finished electrical conduit. If there were any arguments that the Orders
could have been interpreted to reach Plaintiff’s merchandise, then such a task was for
Commerce, not Customs.
Court No. 12-00349 Page 22

not covered by the Orders and was not subject to any corresponding antidumping or

countervailing duties. CBP thus incorrectly liquidated Plaintiff’s merchandise, charging

additional duties that were not owed. CBP shall reliquidate Entry No. 438-0698613-9,

and refund all antidumping and countervailing duties paid on the entries with interest as

provided by law.

/s/ Claire R. Kelly
Claire R. Kelly, Judge

Dated:June 19, 2015
New York, New York