Protest 3001-09-100371; International Fidelity Insurance Co.

HQ H185976 April 16, 2013 OT:RR:CTF:ED H185976 RDC Port Director U.S. Customs and Border Protection 100 Second Avenue, Room 2100 Seattle, WA 98104 Attn: Scott Johnson Supervisory Import Specialist RE: Protest 3001-09-100371; International Fidelity Insurance Co. Dear Sir or Madam: The above-referenced Protest was forwarded to this office for further review. FACTS: The protestant, International Fidelity Insurance Co., (Fidelity), is the surety for the importer (American Coast Processing). At issue is one entry on October 16, 2000, of frozen crawfish tailmeat from the People’s Republic of China, (PRC) that was subject to antidumping duty (AD) case A-570-848. See Notice of Final Determination of Sales at Less Than Fair Value: Freshwater Crawfish Tail Meat From the People's Republic of China, 62 Fed. Reg. 41,347 (August 1, 1997). The importer was required to deposit cash at the rate specified by the Department of Commerce (DOC). See Notice of Final Results of Antidumping Duty New Shipper Reviews, 66 Fed. Reg. 45,002 (August 27, 2001). The entry summary reflects that the importer entered the goods as subject to the antidumping duty case but failed to provide the requisite cash deposit. A copy of a single transaction bond issued by Fidelity to the importer on October 13, 2000, is provided. The entry documents reflect that China Kingdom Import and Export Co. Ltd. (China Kingdom) is the supplier. Pursuant to Department of Commerce Message number 8365208, December 30, 2008, the entry was liquidated and antidumping duty was assessed. According to the protestant the first demand on the surety was made on August 1, 2009. The instant protest was filed on October 30, 2009. ISSUE: Whether the surety, Fidelity, is liable under the single transaction bond it issued to the importer for the antidumping duties assessed. LAW AND ANALYSIS: The protest is timely filed per 19 U.S.C. § 1514(c)(3) (2004), within 90 days of the first demand on the surety. The first demand on Fidelity was made on August 1, 2009, and the instant protest was filed on October 30, 2009. Moreover, the decision protested, liquidation of the subject entry, is protestable per 19 U.S.C. § 1514(a)(5). Upon review of the application for further review, we find that some of the arguments raised have been addressed in Headquarters Ruling Letters or in the courts. However, there are legal arguments that have not been the subject of a Headquarters ruling or court decision. See 19 C.F.R. § 174.24(b) (c) and 19 C.F.R. § 174.26(b)(1)(iv). Accordingly, further review is warranted. Fidelity argues that it is absolved of liability for the AD duties due because the entry was liquidated by operation of law before it was liquidated by CBP because CBP failed to provide Fidelity a notice of suspension of liquidation. In addition Fidelity asserts that it is not liable under the bond for the AD duties due because CBP, contrary to DOC instructions, permitted the importer to post a bond. It also contends that the distribution of AD duties to domestic producers is a third party distribution not covered by the bond contract. Fidelity further argues that the amount billed "may" not be correct because interest should not have been assessed, the AD duties were miscalculated and the AD duties should not have been doubled because the importer is out of business. Fidelity contends that the miscalculation of AD duties "may" have occurred or "in the event" such did occur, Fidelity asserts that the action was wrong. Most of these arguments have been addressed previously in rulings and in the courts and Fidelity does not prevail on any of them. The antidumping duties due in this case were calculated in a manner consistent with DOC's instructions and the law and regulations. Consequently, the instant protest must be denied. Fidelity first argues that the subject entry liquidated by operation of law due to CBP’s failure to issue to the surety a formal notice of suspension. This argument has been addressed by the Court of International Trade in Hanover Insurance Co. v. United States, (23 Int'l Trade Rep. (BNA) 1495 (Ct. Intl. Trade 2001)) (holding where CBP is required to give notice, there is a rebuttable presumption that CBP provided notice by virtue of the presumption of regularity which attaches to official acts and the plaintiff must rebut such presumption); in Customs Service Decision (C.S.D.) 83-20 (17 Cust. B. & Dec. 754, December 20, 1982); and ruling letters. See, e.g., HRL W563043 (October 18, 2006) (holding that there is a rebuttable presumption that CBP provided notice to surety and surety must produce evidence to rebut that presumption); HRL 230339 (June 25, 2004) (holding that there is a rebuttable presumption that CBP provided notice to surety and surety must produce evidence to rebut that presumption). According to CBP's Automated Commercial System (ACS), a "Notice of Suspension" was sent to Fidelity on February 10, 2001. Per the reasoning in Hanover Insurance, supra, 23 Int'l Trade Rep. (BNA) 1495, because CBP is required by § 1504(c) to provide notice of the suspension of liquidation to Fidelity as the surety for the importer, and CBP's computer system shows that notice was sent to Fidelity, Fidelity must rebut the presumption that notice was sent. See also, A.N. Deringer, Inc. v. United States, 18 Int'l Trade Rep. (BNA) 2105 Ct. Intl. Trade (1996) (concluding that when plaintiff broker asserted it did not receive notice of extension, the CIT held, "the onus upon the government is to establish proper mailing of the requisite notices; it then falls to the plaintiff to establish non-receipt"). Fidelity provides neither facts nor evidence to rebut the presumption that CBP sent notice of the suspension of liquidation. Accordingly, we conclude that CBP did send notice to the surety and Fidelity's argument is without merit. We note that Fidelity makes additional arguments based on its conclusion that the entry liquidated by operation of law. These contentions are: that the surety was prejudicially harmed by CBP's failure to issue a suspension notice to the surety and that the statute of limitations for collection against subject bill has expired. Even if the suspension notice had not been provided to Fidelity, the entry would not have liquidated by operation of law. See United States v. Am. Home Assur. Co., 33 Int'l Trade Rep. (BNA) 1514, Ct. Int'l Trade (May 17, 2011) (holding that the failure to provide notice did not automatically vitiate an otherwise valid suspension of liquidation.) Since the entry did not liquidate by operation of law, those arguments are rendered moot and Fidelity offers no other basis for its contention that this entry liquidated by operation of law. Therefore, we do not address these issues. Fidelity also argues that because the AD duties collected were distributed per the Continued Dumping and Subsidy Offset Act (CDSOA) and the surety bond contract does not cover payment to third parties, it is not liable under the bond. This contention has also been addressed in ruling letters and in the courts. For example, in H070919, October 14, 2009, CBP stated that: [t]he existence of the CDSOA did not change the importer's obligation to pay the duties it owes, nor did it change the surety's liability for those duties. The CDSOA did not alter the contract between the importer and the surety: it did not expose the surety to any greater risk, it did not increase the surety's contractual liability, nor did it alter the payment structure of the bond. See Bierce v. Waterhouse, 219 U.S. 230, 337 (1911); Washington Int'l Ins. Co. v. United States, 138 F. Supp. 2d 1314, 1331 (Ct. Int'l Trade 2001); Restatement (Third) of Suretyship and Guaranty §§ 37, 41. The CDSOA did not create "third party beneficiaries" to the bond. See Cemex, S.A. v. United States, 384 F.3d 1314, 1322 (Fed. Cir. 2004). Accordingly, the payments under the CDSOA have no affect on Fidelity's obligation under its bond. Next Fidelity argues that CBP did not follow Commerce's instructions when permitting the importer to post a bond instead of collecting a cash deposit. Fidelity argues that since the Federal Register notice advising CBP that it was permitted to accept a bond in lieu of cash was published after entry, CBP did not have authority to accept Fidelity's bond instead of cash deposit from the importer. See Freshwater Crawfish Tail Meat From the People's Republic of China: Notice of Initiation of New Shipper Antidumping Administrative Reviews, 65 Fed. Reg. 66,525 (November 6, 2000). With regard to this assertion, Fidelity provides no legal basis, statutory or precedential case law for this contention. The Protestant merely recites the facts and its conclusions drawn from those facts. Since the Protestant offers no law to support its contention that CBP's failure to collect cash deposits absolves the surety of liability under the bond it issued, Fidelity's contention must fail. Moreover, CBP has authority to request bonds for any entry. 16 U.S.C. § 1623 and 19 C.F.R. 113.1. Fidelity also asserts that interest on the AD duties owed "may" have been assessed unlawfully because interest is not permitted when a bond is posted. This issue has already been ruled upon. In HRL 230339 (June 25, 2004), we held that "no interest is assessed on antidumping duty due when, per the DOC, no cash deposit of estimated duty was due and the payment of the antidumping duty was secured by bond." In HRL 230339, we said, "the courts have conclusively held that 19 U.S.C. § 1677g(a) requires interest only when a cash deposit of estimated duties is required under an antidumping order." Id. citing Timken Co. v. United States, 37 F.3d 1470, 1472-73 (Fed Cir. 1994) (holding that the requirement to make cash deposits of estimated duties under the antidumping duty order triggers the interest provision); American Hi-Fi International, Inc. v. United States, 936 F.Supp. 1032, 1038 (Ct. Int'l Trade 1996) (holding that interest is properly assessed after an antidumping duty order is issued). If, as here, a cash deposit was required, regardless of whether it was collected, the interest provisions apply. See 19 U.S.C. § 1677g(a). Since a cash deposit of AD duty was required for the protested entry, interest is properly assessed per 19 U.S.C. § 1677g(a). Fidelity next argues that the wrong antidumping margin might have been applied and that the correct margin is 90.66% ad valorem per a "CIT decision." Fidelity provides nothing more in the way of description of the decision and we were unable to find the referenced case. We reviewed the liquidation instructions in the DOC message number 8365208, December 30, 2008, for goods subject to AD case 510-848-023. We determined that the correct AD assessment rate per DOC instructions was applied to the protested entry. Next Fidelity argues that CBP may have erroneously doubled the antidumping duty for failure to supply a statement of non-reimbursement of AD duty. Fidelity asserts that since the importer had gone out of business prior to liquidation, there should be no doubling of the antidumping duty. This argument too has been previously addressed in HRL 230316 (May 10, 2004). In HRL 230316 we held that "[t]he Protestant is not relieved of liability for double the amount of antidumping duty because no evidence was provided that the importer of record went out of business before the entry liquidated." Commerce's regulations state that, "[t]he importer must file prior to liquidation a certificate in the following form with the appropriate District Director of Customs . . . ." 19 C.F.R. § 351.402(f)(2). Further, Commerce's instructions direct CBP to double the AD duties if no certificate of non-reimbursement is filed. See Message No. 8365208 (December 30, 2008) (providing that "if the importer does not provide the reimbursement statement prior to liquidation, CBP should presume reimbursement and double the antidumping duties due.") Fidelity has provided no evidence that American Coast Processing is or was out of business at any time. Therefore, the AD duties were properly doubled in this case. Finally, Fidelity requests that we "suspend" the decision on the instant application for further review pending the outcome of the litigation in Hartford Fire Ins. Co. v. United States and references no citation but several Court of International Trade (CIT)" numbers." There is no evidence that the protested entry is subject to litigation and thus, there is no legal basis for Fidelity's request. Further, we could find no opinions using the CIT numbers provided. In fact, Hartford Fire Insurance Company's complaint was dismissed for lack of jurisdiction in Hartford Fire Ins. Co. v. United, 544 F.3d 1289 (Fed. Cir. 2008). Consequently, there is no justification to suspend our decision in this case. HOLDING: The surety, Fidelity, is not absolved of liability for the AD duties due under the bond that it issued and the antidumping duties were properly calculated. The Protest should be DENIED in full. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division