Application for Further Review for Protest 1601-14-100225; Antidumping Duties; Honey

HQ H271014 April 3, 2017 PRO 2-05 OT:RR:CTF:ER H271014 ABH Port Director U.S. Customs and Border Protection 200 E Bay Street Charleston, SC 29401-2611 Attn: Heather Puckhaber, Import Specialist Re: Application for Further Review for Protest 1601-14-100225; Antidumping Duties; Honey Dear Port Director: The purpose of this correspondence is to address the application for further review (“AFR”) of Protest Number 1601-14-100225, dated November 10, 2014, filed by L&N Trading, Inc. (“LNT”), regarding the assessment of antidumping duties pursuant to the antidumping duty order in case A-570-863. FACTS: LNT is the importer of record of the entry at issue, number XXX-XXXX493-9. The merchandise was imported into the Port of Charleston, NC on January 9, 2012, and was entered as “natural honey, light amber” under subheading 0409.00.0062, Harmonized Tariff Schedule of the United States (“HTSUS”). The country of origin indicated on the Entry Summary was Malaysia. CBP took three samples from the entry and one container and conducted trace metal profiling determined by high resolution ICP/MS. On January 25, 2013, the CBP lab provided report number SV20130017 and stated that, [t]he data was compared to our databases from China and Malaysia using multivariate discriminant statistical analysis. The results for the bottles of sample labeled #1 and #3 indicate a greater than 93% probability match with honey in our database from China. Canonical discriminant analysis also indicates a match with honey in our database from China for these two bottles of sample. The results for the bottle of sample labeled #5 are inconclusive. On February 13, 2013, through a Notice of Action (CBP Form 29), CBP indicated to LNT that [b]ased on lab analysis from Customs and Border Protection laboratory, it has been determined that this shipment contained Chinese honey. The antidumping case is A-570-863-000 at a rate of $2.21/kg. Please submit a payment for the antidumping duties owing. If we do not receive a payment, the entry will be liquidated when the Department of Commerce issues liquidation instructions and a bill will be issued for the antidumping duties plus interest. On May 30, 2014, CBP liquidated and rate advanced the entry as honey from China subject to an antidumping order pursuant to A-570-863. On November 10, 2014, LNT protested liquidation of the entry as honey from China and subject to an antidumping order. LNT argued that CBP did not provide any evidence in support of its allegation that the imported honey was not of Malaysian origin and did not provide any evidence that the honey was of Chinese origin. LNT indicated it had made a Freedom of Information Act (“FOIA”) request for information and that LNT received a laboratory report testing for the presence of antibiotics, but did not mention country of origin testing. It is unclear to CBP Headquarters why the FOIA request did not include laboratory report SV20130017, which indicated a 93 percent probability match with honey from China for two of the samples taken from the container. LNT argued that “[h]aving provided no evidence contradicting L&N Trading’s evidence in support of its claims that the honey is of Malaysian origin, CBP’s determination that the honey is Chinese origin honey subject to antidumping duties is unsupported, arbitrary, capricious and thus an abuse of discretion.” In support of its assertion at entry that the imported honey was of Malaysian origin, LNT provided CBP with a Honey Farm Level Traceability report (hereinafter “Traceability Report) that was provided to LNT from the Malaysian shipper Golden Honey Bee Sdn Bhd (“GBH”). LNT provided certificates of origin alleged to be issued under the Malaysian government’s authority delegated to the Malaysian International Chamber of Commerce & Industry. LNT also states that the health certificate, certificate of analysis, invoices, bills of lading and packing lists demonstrate that the imported honey is of Malaysian origin. LNT requested that CBP re-liquidate the protested entry as Malaysian origin honey that was not subject to antidumping duties applicable to Chinese origin honey. The port reviewed these documents and determined that, The records were inadequate. There were no lot numbers on the invoice to tie back to the paperwork [LNT] sent. No invoices for purchasing drums by the manufacturer. No delivery or receiving tickets from the bee keepers to Golden Honey bee. No invoices from the farmers (bee keepers) to Golden Honey Bee or proof of payment to the farmers. We felt that the production records were not enough to override the positive lab report we received. Accordingly, the port denied the protest and approved LNT’s application for further review. ISSUE: Whether CBP properly assessed antidumping duties on the entry at issue as honey from China? LAW AND ANALYSIS: It is the opinion of your office that this protest meets the criteria for further review. We agree and are of the opinion that this protest involves questions of law and fact which have not been previously ruled upon. 19 C.F.R. § 174.24(b). We also note that the instant protest was timely filed. Pursuant to 19 U.S.C. § 1514(c)(3)(A), a party must file a protest within 180 days after the date of liquidation. CBP liquidated the relevant entry on May 30, 2014. LNT filed its protest on November 10, 2014, which is within the 180-day deadline. Generally, assessed antidumping duties properly applied by CBP are not protestable because “Customs has a merely ministerial role in liquidating antidumping duties . . . .” Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994). “When merchandise may be subject to an antidumping duty order,” however, “Customs makes factual findings to ascertain what the merchandise is, and whether it is described in an order.” Xerox Corp. v. United States, 289 F.3d 792, 794 (Fed. Cir. 2002). In this case, because LNT disputes CBP’s country of origin determination and application of Commerce’s liquidation instructions regarding honey from the People’s Republic of China pursuant to antidumping Case A-570-863, the matter is protestable. Id. at 795. CBP enjoys a statutory presumption of correctness with regard to factual disputes. 28 U.S.C. § 2639(a)(1); Anhydrides & Chems., Inc. v. United States, 130 F.3d 1481, 1486 (Fed. Cir. 1997). Thus, “an importer has the burden to prove by a preponderance of the evidence that a Customs’ decision” was incorrect. Ford Motor Company v. United States, 157 F.3d 849, 855 (Fed. Cir. 1998); see also Fabil Manf. Co. v. United States, 237 F.3d 1335, 1340 (Fed. Cir. 2001) (“[E]xcept for cases challenging Customs rulings before importation, the preponderance-of-the-evidence standard that generally applies in civil cases also covers suits in the Court of International Trade challenging post-importation Customs decisions.”). A preponderance of the evidence has been defined in civil cases to mean “the greater weight of evidence, evidence which is more convincing than the evidence which is offered in opposition to it.” St. Paul Fire & Marine Insur. Co. v. United States, 6 F.3d 763, 769 (Fed. Cir. 1993) (citing Hale v. Dept. of Transp., Fed. Aviation Admin., 772 F.2d 882, 885 (Fed. Cir. 1985)). “It is well settled that the methods of weighing, measuring, and testing merchandise used by customs officers and the results obtained are presumed to be correct.” Aluminum Company of America v. United States, 477 F.2d 1396, 1398 (C.C.P.A. 1973) (hereinafter “ALCOA”). “If a prima facie case is made out, the presumption is destroyed, and the Government has the burden of going forward with the evidence.” Id. at 1399. There are two means by which an importer may successfully make a prima facie case and overcome the presumption of correctness afforded to a CBP laboratory report. The protestant can show that “Customs’ results or methods are erroneous,” or “submit[] evidence of analysis [that the protestant] applied to the merchandise which gave a result different from that claimed by the Government.” American Sporting Goods v. United States, 259 F. Supp. 2d 1302, 1308 (Ct. Int’l Trade 2003); see also HQ H089795 (Apr. 19, 2010) (stating that the two means by which an importer may successfully overcome the presumption of correctness afforded a CBP laboratory report is to (1) prove that the testing methods chosen to test the subject material were improper or (2) prove that the CBP laboratory incorrectly carried out the properly chosen scientific procedure) (citations omitted)). In this case, CBP used trace element profiling that has been used by CBP to determine the geographic origin of agricultural products since the 1980s. Smith, Ralph G., Determination of the Country of Origin of Garlic (Allium sativum) Using Trace Metal Profiling, Journal of Agricultural and Food Chemistry, p. 4041 (2005) (hereinafter “Smith”). The uptake of trace metals by agricultural products from the soil in which they are grown provides a mechanism for identification of their geographic origin. There are a number of factors such as rainfall, sunshine, temperature, soil characteristics, and plant species that may play an important role in the uptake of trace metals. It is the combination of these factors that influence the uptake of trace metals creating a rough snapshot or historical record of the plant’s growth. In most cases, the trace metal profiles of agricultural products from various countries display enough statistical uniqueness to make a definitive country of origin prediction. Id. Mr. Smith developed CBP’s testing program methodology with regard to the honey database. Liu Tr. at 98:20-22; 130:15-17. Because honey is a product of nectar from flowers, CBP has been able to apply the trace metal profiling principles. Country of origin testing for honey by CBP began in 2002. Id. at 8:8-14. Trace metal profiling and its resulting country of origin prediction “is only as good as the database that is being used for comparison.” Smith at 4042. As a result, CBP has collected a database of samples to which the imported honey is then compared. The test results must be a 90 percent or greater match with either country (the declared country of origin or the suspected country of origin) in order to be considered conclusive. Id. at 83:19-23. Any result less than 90 percent is declared as “inconclusive.” Id. at 105:15-17. This 90 percent threshold has been selected by CBP “in order to minimize any differences that may be found in not having an absolutely completely representative sample base.” Id. at 96:3-6. Two separate U.S. federal district courts have upheld CBP’s use of trace metal profiling under the probable cause standard. In United States of America v. Chung Po Liu, CR09-185JLR, the United States District Court for the Western District of Washington determined that the detective’s use of the CBP trace metal profiling for honey as a probable cause basis for seeking a warrant was not a “false statement knowingly or intentionally made or a reckless disregard for the truth” required to satisfy the burden in a Frank’s motion. Liu Tr. (No. 100) at 12:10-17. In United States v. 323 “Quintales” of Green Coffee Beans, 21 F. Supp. 3d 122, 134 (D.P.R. 2013), the United States District Court for the District of Puerto Rico found the trace mineral test results for the country of origin for coffee was sufficient to establish probable cause that the property was subject to forfeiture. In this case, a presumption of correctness is afforded CBP’s trace element profile testing results that determined the honey in the three samples taken from the container to be a 93 percent probability match with honey in CBP’s database from China. LNT’s production documents, such as the Honey Farm Level Traceability report (“Traceability Report”), certificates of origin, invoices, bills of lading, and packing lists do not successfully make a prima facie case to sufficiently overcome the presumption of correctness afforded CBP’s laboratory report. As discussed above, LNT provided a Traceability Report that purported to trace the shipment of honey back to honey farms. As discussed by the port, however, there is nothing indicated on LNT’s entry documents that verifies the veracity of the traceability report. The traceability report itself is nothing more than a summary spreadsheet enumerating the container numbers at issue and then listing lot numbers, farm batch numbers, and drum numbers. LNT did not provide supporting evidence establishing a chain of custody, such as invoices of the purchases between GBH and the bee keepers substantiating the farm batch numbers or the sale of specific lot numbers or drum numbers. Accordingly, LNT’s evidence does not successfully overcome the presumption of correctness afforded CBP’s laboratory report. LNT’s arguments and presented evidence do not prove by a preponderance of the evidence that CBP’s decision was incorrect and CBP should not have assessed antidumping duties on the honey found in the container at issue. The evidence provided by LNT is not more convincing than CBP’s trace mineral testing analysis that LNT’s honey in the samples taken from the container had a 93 percent probability match with honey in CBP’s database from China. In conclusion, LNT has not overcome the presumption of correctness and CBP’s trace element test is sufficient to determine the honey to be country of origin China and subject to the antidumping order in case A-570-863. HOLDING: Based on the foregoing, CBP properly assessed antidumping duties on the honey found in the container at issue pursuant to the antidumping duty order in case A-570-863. The protest should be DENIED in full. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Sixty days from the date of the decision, the Office of International Trade, 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 & Trade Facilitation Division