Polites v. United States

SLIP OP 11-91

UNITED STATES COURT OF INTERNATIONAL TRADE

CONSTANTINE N. POLITES,

Plaintiff,

v.

UNITED STATES,
Before: Pogue, Chief Judge
Defendant, Court No. 09-00387
and

THE AD HOC COALITION FOR FAIR
PIPE IMPORTS FROM CHINA, & THE
UNITED STEELWORKERS,

Defendant-
Intervenors

OPINION

[Department of Commerce’s Remand Results are sustained]

Dated: July 28, 2011

Peter S. Herrick, PA (Peter S. Herrick) for Plaintiff
Constantine N. Polites;

Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director; Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice
(Michael D. Panzera and John J. Todor); Reid P. Swayze, of
Counsel, Office of Chief Counsel for Import Administration, U.S.
Department of Commerce, for the United States Department of
Commerce;

King & Spalding LLP (Gilbert B. Kaplan, Brian E. McGill, &
Daniel L. Schneiderman) for Defendant-Intervenors Ad Hoc
Coalition for Fair Pipe Imports from China; and

Schagrin Associates (Roger B. Schagrin) for Defendant-
Intervenors United Steelworkers
Court No. 09-00387 Page 2

Pogue, Chief Judge: This matter returns to court following

remand in Constantine N. Polites v. United States, __ CIT __, 755

F. Supp. 2d 1352 (2011)(“Polites I”). At issue is whether

Plaintiff Polites’s imports of steel tubes, intended for use as

scaffolding, are exempt from countervailing and antidumping

duties, under an exclusion for “finished scaffolding.”1

On remand, the United States Department of Commerce

(“Commerce” or the “Department”) re-opened the record to obtain

evidence in support of its claim that “finished scaffolding”

refers to “scaffolding kits” that are or may be imported into the

United States. Polites now seeks review of Commerce’s

evidentiary determination. The court has jurisdiction pursuant

to 28 U.S.C. § 1581(c) (2006).2

After a brief review of the relevant background and the

applicable standard of review, the court will explain why it

1
See 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); and 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 Countervailing Duty Order)(collectively, “CWP
Orders” or “orders”).
2
Commerce issues the Final Results pursuant to Section 705
of the Tariff Act of 1930, as amended, 19 U.S.C. § 1671d (2006).
Further citation to the Tariff Act of 1930 is to Title 19 of the
U.S. Code, 2006 edition. In addition, of course, the court has
jurisdiction to enforce its remand orders. Amanda Foods
(Vietnam) Ltd. v. United States, 2011 WL 1423125 at *3 (CIT Apr.
14, 2011)
Court No. 09-00387 Page 3

concludes that Commerce’s definition of “finished scaffolding” as

scaffolding kits is a reasonable interpretation of the CWP

Orders, and that Commerce’s factual finding that such kits are or

may be imported into the United States is supported by the

record. Accordingly, Commerce’s conclusion that Polites’s

scaffolding tubes are within the scope of the Orders must be

sustained.

BACKGROUND

This matter began with Plaintiff Constantine N. Polites’s

(“Plaintiff” or “Polites”) request that Commerce issue a scope

determination as to whether the steel tubes Polites imports are

subject to countervailing and antidumping duties.3 Polites Req.

For Scope Ruling 2, A-570-910 (February 3, 2009), Admin. R. Pub.

Doc. 1. Specifically, Polites urged Commerce to find that his

steel pipes, which he claimed are used exclusively as

scaffolding, are excluded from the scope of the Orders under the

exemption for “finished scaffolding.”

In its original scope determination,4 Commerce provided two

3
Plaintiff appeared in the administrative proceedings under
the name of his company, Constantine N. Polites & Co., though he
filed his complaint under his own name.
4
Commerce obtained a voluntary remand of its first scope
determination for the express purpose of defining “finished
scaffolding.” See Polites I, 755 F. Supp. 2d at 1353–54. For our
purposes, the scope determination pursuant to this voluntary
remand will be referred to as the original scope determination.
Court No. 09-00387 Page 4

definitions for “finished scaffolding:” 1) completed, fully

assembled scaffolding, or 2) scaffolding kits. Final Results of

Redetermination Pursuant to Voluntary Remand 8–9, June 25, 2010,

ECF No. 50 (“2010 Remand”).

Polites sought review of Commerce’s definition, and the

court held in Polites I that the first definition, which

encompassed fully assembled scaffolding, was not in accordance

with the law because it rendered the exclusion a nullity as there

was no evidence which could demonstrate that fully assembled

scaffolding was or could be imported into the United States. The

court also held there was no evidence on the record that

scaffolding kits were or could be imported into the United

States. Polites I, 755 F. Supp. 2d at 1357–58. Accordingly, the

court remanded for Commerce to obtain evidence that scaffolding

kits “are or may be imported into the United States” or,

alternately, to consider the factors listed in 19 C.F.R.

§ 351.225(k)(2) when defining “finished scaffolding.” Polites I,

755 F. Supp. 2d at 1359.

On remand, Commerce chose the first option and modified its

definition of “finished scaffolding” to be “component parts of .

. . final, finished scaffolding that enter the United States

unassembled as a ‘kit’” which is a “packaged combination of

component parts that contains, at the time of importation, all of

the necessary component parts to fully assemble a final, finished
Court No. 09-00387 Page 5

scaffolding.” Final Results of Redetermination Pursuant to

Remand 9, Mar. 23, 2011, ECF No. 63 (“Remand Results”).5

In addition, Commerce has placed evidence on the record

which it claims establishes that scaffolding kits are or may be

imported into the United States. Commerce’s evidence consists of

1) at least eight web-site excerpts from Chinese manufacturers

offering scaffolding kits for sale and claiming the United States

as a primary export market, 2) import data from ship manifests

showing that Eternal Star International Industry Company Limited

(“Eternal Star”) imported scaffolding kits into the United States

in 2009, and 3) a tariff classification ruling from the United

States Customs and Border Protection in which the importer states

its intention to import scaffolding rollers “both alone and with

the complete unassembled steel scaffolding.”6 Remand Results

5–7. Commerce also asserts that evidence of “substantial

entries” of Chinese origin goods, classified in the Harmonized

Tariff Schedule of the United States (“HTSUS”) category which

includes scaffolding kits, establishes that scaffolding kits are

or may be imported into the United States. Remand Results 7–9.

5
Commerce also removed fully assembled scaffolding from the
“finished scaffolding” definition. Remand Results 8—9.
6
The Eternal Star evidence and the tariff classification
ruling were among evidence submitted to the record by Defendant-
Intervenors. Commerce relied on and incorporated these two
evidentiary submissions in its remand results. Remand Results 7.
Court No. 09-00387 Page 6

Consequently, Commerce continues to find that the steel

tubes Polites imports meet the physical description of the

merchandise covered by the Orders and do not fall under the

“finished scaffolding” exemption.7 Remand Results 10–11. While

Commerce concedes that a scaffolding tube could be one component

of a kit, it asserts that the Polites’s tubes still fail to meet

the definition of a “scaffolding kit” because they require the

addition of other components after importation before they can be

used as scaffolding. See Remand Results 10. Commerce therefore

finds that the tubes Polites imports are subject to antidumping

and countervailing duties. See Remand Results 10–11.

STANDARD OF REVIEW

The Department, in its remand redetermination must comply

with the terms of the court’s remand order. See Amanda Foods

(Vietnam) Ltd. v. United States, 2011 WL 1423125 at *3 (Apr. 14,

2011). In addition, the court “shall hold unlawful any

determination, finding, or conclusion found ... to be unsupported

by substantial evidence on the record, or otherwise not in

accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i); Koyo Seiko

Co. v. United States, 20 F.3d 1160, 1164 (Fed.Cir. 1994).

7
The parties do not dispute whether the size and chemical
composition of the tubes that Polites imports fall within the
scope of the CWP Orders. The size of Polites’s tubes falls
within the specified diameter and wall thickness requirements,
and the steel used to construct them is no more than 2% carbon,
1.8% manganese, and 2.25% silicon, by weight, which also places
them within the scope of the Orders. See 2010 Remand Results 14.
Court No. 09-00387 Page 7

Substantial evidence is relevant evidence that, given the

record as a whole, “a reasonable mind might accept as adequate to

support a conclusion.” Consol. Edison Co. v. N.L.R.B., 305 U.S.

197, 229 (1938) (citations omitted). Commerce's factual

conclusions in a scope ruling are not precluded from being

supported by substantial evidence when two different conclusions

may be drawn from the same evidence and need only be reasonable

to be upheld. See id.; Novosteel SA v. United States, 25 CIT 2,

12, 128 F. Supp. 2d 720, 730 (2001).

DISCUSSION

Commerce’s definition of “finished scaffolding.”

The primary issue here is whether the record supports

Commerce’s claim that scaffolding kits are or may be imported

into the United States. Polites asserts that the court should

disregard the lone “fugitive” sale of scaffolding kits to the

United States which Commerce identified because the entry for the

kit was not placed on record. Pl.’s Reply to the Department of

Commerce’s Final Results of Redetermination Pursuant to Remand 2,

May 20, 2011, ECF No. 65 (“Polites Reply”). Polites also argues

that Commerce has found multiple websites offering sales, but no

substantial evidence that sales have actually taken place.

The evidence placed on the record, however, shows that

scaffolding kits have been and may be imported into the United

States. This evidence consists, in part, of 1) import data from
Court No. 09-00387 Page 8

ship manifests showing that Eternal Star imported scaffolding

kits from China into the United States in 2009, and 2) a tariff

classification ruling wherein the importer states its intention

to import scaffolding rollers “‘both alone and with the complete

unassembled steel scaffolding.’”8 Remand Results 5–7 (citing

Def.-Int. Letter 2, April 6, 2011, ECF No. 64-4).

Polites argues that the Eternal Star evidence should be

disregarded because the entry document for the scaffolding kit

sale was not produced.9 Polites Reply 2. However, there is

nothing on the record to suggest that the ship manifests are

inaccurate or misleading. In the absence of any evidence showing

irregularity in the ship manifests, Commerce’s decision that the

data contained therein is accurate and that Eternal Star did,

indeed, bring scaffolding kits into the United States is

reasonable. See, e.g., 19 U.S.C. § 1431(b).10

As further evidence, Defendant-Intervenors provided a tariff

8
Defendant-Intervenors submitted additional evidence in
support of Commerce’s argument that scaffolding kits are or may
be imported into the United States. Because Commerce did not
rely on or incorporate this evidence into the remand results, the
court will not address its sufficiency.
9
The entry document referred to is the documentation
required by Customs before imported merchandise will be released
from Customs’ custody. See 19 C.F.R. § 141.0a(a).
10
Commerce’s directions on remand were to provide
substantial evidence that scaffolding kits are or may be imported
into the United States and this is evidence that at least one
company brought scaffolding kits from China into the United
States.
Court No. 09-00387 Page 9

ruling in which the importer stated its intention to import

scaffolding rollers with “complete unassembled steel

scaffolding.” Remand Results 7 (citing Def.-Int. Letter 2, April

6, 2011, ECF No. 64-4). The stated intent of an importer to

import scaffolding kits supports the reasonable inference that

scaffolding kits may be imported into the United States. See

Consol. Edison, 305 U.S. at 229. Therefore, the tariff ruling

provided by Defendant-Intervenors is further evidence that

scaffolding kits are or may be imported into the United States.

Together, these two pieces of evidence support the

conclusion that scaffolding kits have been imported in the past

and that some importers at least intend to import scaffolding

kits into the United States.11 Commerce’s definition of

11
Commerce argues that web-page excerpts from Chinese
companies claiming to export scaffolding kits primarily to the
United States, support its assertion that scaffolding kits may be
imported. See Remand Results 5–7. While it is possible that
these companies produce and export scaffolding kits, the court
need not decide whether copies from an internet web-site, put up
to advertise and solicit business, are substantial evidence that
scaffolding kits may be imported into the United States. There
is, at the least, a possibility that the statements on these
advertising web-sites, claiming the United States as a “primary
export market,” constitute mere puffery and not actual fact. See
Cook, Perkiss and Liehe, Inc. v. Northern Cal. Collection
Service, Inc., 911 F.2d 242, 246 (9th Cir. 1990) (defining
“puffing” as generalized advertising claims that cannot be relied
upon).
Commerce also claims that because scaffolding kits are
classified under HTSUS 7308.40.00.00 and a “significant quantity”
of Chinese products classified under this HTSUS number have been
imported into the United States, there is substantial evidence
that scaffolding kits are imported into the United States.
Remand Results at 7–8. Commerce’s reasoning is not entirely
Court No. 09-00387 Page 10

“finished scaffolding” to incorporate scaffolding kits is

therefore supported by the record.

Polites’s merchandise

Although the parties do not contest whether the steel tubes

imported by Polites fit the physical description of the

merchandise covered by the Orders, see 2010 Remand Results 8–9.

Polites makes several remaining arguments. None are availing.

First, Polites asserts that a change in wording, between the

petition and the CWP Orders, demonstrates Commerce’s intent to

exclude his merchandise from the scope of the final Orders.

The petition stated that “pipe used for the production of

scaffolding . . . are included within the scope of this

investigation.” Circular Welded Carbon Quality Steel Pipe from

the People’s Republic of China, 72 Fed. Reg. 36,663 (Dep’t

Commerce July 5, 2007) (initiation of antidumping duty

investigation); Circular Welded Carbon Quality Steel Pipe from

the People’s Republic of China, 72 Fed. Reg. 36,668 (Dep’t

convincing. HTSUS 7308.40.00.00 is not limited to scaffolding
kits, but rather, by its own definition, encompasses “equipment
for scaffolding, shuttering, propping or pit-propping.” Remand
Results at 8 (citing HTSUS 7308.40.00.00). Commerce apparently
ignores the other items classified under HTSUS 7308.40.00.00 and
infers that all or most of the items imported under this
classification code are scaffolding kits, despite the absence of
evidence showing that these imports actually were scaffolding
kits. The court need not address whether Commerce’s inference is
reasonable because it has already determined, based on other
evidence, that the record supports Commerce’s finding.
Court No. 09-00387 Page 11

Commerce July 5, 2007) (notice of initiation of countervailing

duty investigation). Polites argues that his merchandise is

outside the scope of the CWP Orders because Commerce removed this

language which would have otherwise incorporated his merchandise.

Commerce responds that it removed the identified language because

of its longstanding preference against relying on end-use in the

CWP Orders.

Commerce’s explanation is sufficient. While Polites notes

correctly that countervailing duty and antidumping investigations

are initiated by Commerce based on petitions filed by a domestic

interested party, 19 C.F.R. § 351.202(a), Commerce is

responsible for determining the language in the final order. See

19 C.F.R. § 351.211(a). When determining whether merchandise

falls within the scope of an antidumping or countervailing duty

order, Commerce first examines the language of the order. If

the terms of the order are dispositive, then the order governs.

See Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1383

(Fed.Cir. 2005) (The “predicate for the interpretive process is

language in the order that is subject to interpretation”). The

petition and investigation may inform Commerce’s determination,

but “they cannot substitute for language in the order itself.”

Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed.

Cir. 2002).

In addition, here, Commerce stated in the notice of
Court No. 09-00387 Page 12

investigation that it has a preference for relying on physical

characteristics, as opposed to end-use, when determining the

scope of product coverage. Circular Welded Carbon Quality Steel

Pipe from the People’s Republic of China, 72 Fed. Reg. 36,663

(Dep’t Commerce July 5, 2007) (initiation of antidumping duty

investigation); Circular Welded Carbon Quality Steel Pipe from

the People’s Republic of China, 72 Fed. Reg. 36,668 (Dep’t

Commerce July 5, 2007) (notice of initiation of countervailing

duty investigation). Subsequently, Commerce modified the

language in the final orders to reflect this preference, removing

all reference to end-use. See Final Orders. This determination

was not unreasonable; the language of the petition cannot prevail

over the language in the final order.12 Duferco, 296 F.3d at

1097.13

12
Polites further contends that Commerce should take the
factors listed in 19 C.F.R. § 351.225(k)(2), particularly end-
use, into consideration. This argument is unavailing because
consideration of the § 351.225(k)(2) factors is a last step that
Commerce uses only if it cannot otherwise determine whether
merchandise fits within the scope of an order. See 19 C.F.R.
§ 351.225(k)(2); Diversified Prods. Corp. v. United States, 6 CIT
155, 162, 572 F.Supp. 883, 889 (1983). Here, as the record
contains substantial evidence supporting Commerce’s definition of
“finished scaffolding,” the Department need not proceed to the
§ 351.225(k)(2) factors. Id.
13
Polites finally asserts that his merchandise is properly
classified under HTSUS 7308.40.00.00 along with scaffolding kits.
However, as the court held in Polites I, the classification of
Polites’s merchandise is not currently before the court. Polites
I, 755 F. Supp. 2d at 1358 n.8.
Court No. 09-00387 Page 13

Conclusion

For the reasons stated above, Commerce’s final

redetermination on remand is sustained. Judgment will be entered

accordingly.

/s/ Donald C. Pogue
Donald C. Pogue, Judge
Dated: July 28, 2011
New York, New York