Request for Internal Advice for Protest Numbers 3001-2016-1000160 and 3001-2016-100161; Antidumping Duties; Certain Steel Nails from the People’s Republic of China under Antidumping Order 570-909

90 K Street N.E., Washington, DC 20229 U.S. Customs and Border Protection HQ H305706 July 20, 2020 LIQ 4-01 OT:RR:CTF:ER H305706 SMS Center Director U.S. Customs and Border Protection Base Metals Center 477 Michigan Ave, Room 200 Detroit, MI 48226 Attn: Monica Dunbar, Senior Import Specialist Re: Request for Internal Advice for Protest Numbers 3001-2016-1000160 and 3001-2016-100161; Antidumping Duties; Certain Steel Nails from the People’s Republic of China under Antidumping Order 570-909 Dear Center Director: This ruling is in response to your request for internal advice dated November 15, 2016, as to the proper assessment of antidumping duties (“ADD”) on S.T.O. Industries, Inc.’s (“S.T.O.”) entries of steel nails, pursuant to the antidumping duty order in case A-570-909, Certain Steel Nails (“CSN”) from Peoples Republic of China (“China” or “PRC”). We note that Protest Number 3001-16-1000161 is the lead protest, and this ruling also addresses the identical arguments presented in Protest Number 3001-16-1000160. FACTS: On June 16, 2008, the U.S. Department of Commerce (“Commerce” or “DOC”) made its final determination that certain steel nails from China are sold at less than fair value and subject to ADD. See Steel Nails from the People's Republic of China: Final Determination of Sales at Less Than Fair Value and Partial Affirmative Determination of Critical Circumstances 73 Fed. Reg. 33,977 (June 16, 2008). On November 20, 2013, Commerce published its final results for its First Sunset Review of Certain Steel Nails from China, finding that revocation of the ADD order would likely lead to the recurrence of dumping. See Certain Steel Nails From the People's Republic of China: Final Results of Expedited First Sunset Review of the Antidumping Duty Order, 78 Fed. Reg. 69,644 (Nov. 20, 2013); and Certain Steel Nails From the People’s Republic of China: Continuation of Antidumping Duty Order, 79 Fed. Reg. 1,380 (Jan. 10, 2014). (“CSN Order”). The CSN Order specifically finds that “[e]xcluded from the scope of this proceeding are roofing nails of all lengths and diameter, whether collated or in bulk, and whether or not galvanized. Steel roofing nails are specifically enumerated and identified in ASTM Standard F 1667 (2005 revision) as Type I, Style 20 nails.” Id. Between November 8, 2013 and June 5, 2014, S.T.O. made seven entries of steel nails from China, manufactured and exported by Hebei Ansing Fasteners Co., LTD., (“Hebei Ansing”) which are the subject of this internal advice. The following entry numbers are subject to this protest and international advice: Entry Number Date of Entry  xxx-xxxx952-9 November 8, 2013  xxx-xxxx156-5 January 21, 2014  xxx-xxxx929-5 March 6, 2014  xxx-xxxx245-3 April 4, 2014  xxx-xxxx440-0 April 23, 2014  xxx-xxxx825-2 May 7, 2014  xxx-xxxx526-5 June 5, 2014   The goods covered by these entries were described on the bills of lading and invoices as “roofing nails” and entered as not subject to ADD. Specifically, some of the commercial sales documents lists the various stock codes of nails commercially used for roofing. Many, not all, of these stock codes are traced to the nails covered by the invoices. However U.S. Customs and Border Protection (“CBP”) determined that the entries were subject to ADD per case A-570-909, CSN from China. CBP made this determination based on CBP’s San Francisco Laboratory Scientific Services Directorate’s (“LSSD”) report, which resulted from a sample of nails taken from S.T.O.’s March 12, 2014, entry, number xxx-xxxx931-1, manufactured by CANA (Tianjin) Hardware Industrial Co. This entry is not subject to this internal advice. The report concluded that “[t]he sample does not meet ASTM F1667 (2005 revision) as type I, style 20 roofing nails.” CBP concluded that, therefore, based on this report the nails covered by the entries that are the subject of this internal advice are subject to ADD case A-570-909. On April 25, 2016, Commerce issued a non-public liquidation message, instructing CBP to liquidate all shipments of CSN, subject to the scope of the CSN Order A-570-909, and exported by the PRC-wide entity entered during the pertinent period of review. See DOC Message No. 6116309 (Apr. 25, 2016). On May 2, 2016, CBP liquidated the above listed seven entries pursuant to Message Number 6116309 and assessed ADD at the PRC-wide rate. S.T.O. protested the liquation of its entries on July 14, 2016. S.T.O. asserts that the entries subject to the protest are “roofing nails” which are specifically excluded from the scope of the CSN Order and are not subject to ADD. Subsequently on November 15, 2016, your office sought internal advice on the above described protest and application for further review. ISSUE: Whether CBP properly assessed antidumping duties, pursuant to the CSN Order. LAW AND ANALYSIS: 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). “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. LDA Incorporado v. United States, 79 F. Supp. 3d 1331, 1339 (Ct. Int’l Trade 2015). Pursuant to its ministerial function, however, CBP cannot “affect the scope of the order.” Id. Accordingly, CBP must follow Commerce’s instructions with regard to the entries of CSN from China at issue in this case. Additionally, “where the importer claims that Customs erred as a matter of fact by including its goods within the scope of the order, Customs’ determination is the proper subject for a protest. LDA Incorporado v. United States, 978 F. Supp. 2d 1359, 1367 (Ct. Int’l Trade 2014) (citing Xerox Corp. v. United States, 289 F.3d 792, 795 (Fed. Cir. 2002). On the other hand, if the scope of the order is unambiguous and CBP follows Commerce’s instructions, there is no decision that is made by CBP that would be protestable. See Mitsubishi Elecs. Am., Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994) (holding that CBP has a ministerial role in liquidating antidumping duties and “cannot modify Commerce’s determinations, their underlying facts, or their enforcement”); HQ H258302 (Sept. 3, 2015) (finding that “because the scope of the antidumping and countervailing duty orders was clear and CBP acted in accordance with Commerce’s instructions, CBP acted in its ministerial capacity when it liquidated its entries” and the protest “failed to raise a protestable issue”). Specifically, CBP “is tasked with determining, for every imported product, whether the product falls within the scope of an antidumping or countervailing duty order. 19 U.S.C. § 1500(c). That necessarily entails evaluating both the product and the order.”  Sunpreme, Inc. v. United States, 946 F.3d 1300, 1320-21 (Fed. Cir. 2020). “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.” Id. (internal citation omitted). “In each instance, Customs is statutorily tasked with answering a yes-or-no question as to whether the order applies, in order to fix the duty owed. When the order is ambiguous, Customs is nonetheless called upon to answer the question.” Id.  If the importer believes that CBP has made a mistake of fact and does not want its goods to be covered by the order, the remedy is to seek a scope ruling. See LDA Incorporado, 79 F. Supp. 3d at1342 n.12. Additionally, 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)). The courts have long held that “the methods of weighing, measuring, and testing merchandise used by customs officers and the results obtained are presumed to be correct.” Aluminum Co. of America v. United States, 477 F.2d 1396, 1398 (C.C.P.A. 1973) (quoting Consolidated Cork Corp. v. United States, 54 Cust. Ct. 83, 85 (1965)). However, “[i]f 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. CBP Headquarter Rulings (“HQ”) have discussed establishing a prima facie case of rebutting the presumption of correctness in HQ H114760, dated February 14, 2011 and HQ H279772, dated February 22, 2017. In H114760 CBP found that because the sample tested by protestant’s laboratory was not representative of the actual shipment of candles at issue in the protest, it could not be used to dispute CBP’s test result. “When presenting evidence of analysis that proffers different results, it is necessary to demonstrate that the tested sample is removed from the actual shipment under investigation and comparable to the sample tested by the Government.” H114760 (Feb. 14, 2011) (citing HQ 964760 (Oct. 11, 2001)). Also in H114760, CBP elaborated on the fact that it was unclear whether the candles privately sampled were retained from the same manufacturer as the candles subject to the protest. “Therefore, we cannot verify whether the candle tested by DMC was removed from the actual shipment under investigation and representative of the merchandise entered. Nor can we ascertain whether the candle tested by DMC was produced by the same manufacturer or manufactured in the same manner as imported candles.” Id. Similarly in H279772, we found the protestant had not met its burden, in part because, it had “not provided evidence that its private lab results were derived from testing the same merchandise tested by LSSD, or from testing representative samples.” H279772 (Feb. 22, 2017). Accordingly, in order to infer the applicability of test results on a specific shipment, CBP has held that the sample tested must be from that same shipment. In this instance, CBP used a report based on a sample from a different entry to infer the applicability of test results to the entries at issue. Here LSSD tested a sample of nails from a March 12, 2014 shipment, which tested affirmative as subject to the CSN order. CBP is now using the test from the March 12th shipment, as a dispositive factual determination of the specifications of seven separate shipments. Additionally, in this instance the manufacturer from the S.T.O. tested sample, is a different manufacturer from the protested seven shipments. Here CBP has not provided any other reasoning as to why it assessed ADD on S.T.O.’s protested entries. Therefore, we find that CBP erred it its reliance on these test results from a separately manufactured shipment. As we have found, in H114760 and H279772, that a protestant cannot use samples taken from one shipment to establish the characteristics of a different shipment, CBP cannot, without other support, also use testing from a separate shipment to determine the characteristics of the protested entries. CBP must make a factual finding to ascertain whether the merchandise falls within the scope of the CSN Order. See Sunpreme, 946 F.3d at 1320. As provided in the commercial documents and entry materials the nails are described as roofing nails, which are specifically excluded from the CSN Order. Therefore, a determination needed to be made as to whether or not the specific nails under protest fell within the CSN Order or not. The commercial documents that include roofing stock codes on the invoices and the commercial sales documents, suggest that the nails are roofing nails. Additionally, as discussed above, CBP erred when it failed to make a factual determination particular to the entries at issue, beyond the reliance on the test results related to a separate shipment. In conclusion, CBP cannot rely on the March 12, 2014 test alone to conclude that the seven separate shipments of nails currently under protest are subject to the antidumping order in case A-570-909. We note that because not all of the stock codes were included in the commercial sales documents, the Ports may seek additional commercial documentation from S.T.O. to verify that all of the nails imported contain stock codes commercially used for roofing.  Unless CBP has additional reason to believe the nails are subject to ADD, beyond the reliance on the above described LSSD test, the invoices and documents submitted by S.T.O. should be considered as evidence to support granting of the protest. HOLDING: CBP is not legally entitled to rely on the sample from entry number xxx-xxxx931-1 as a dispositive factor applicable to the protested entries. Accordingly, unless CBP has additional reason to believe that the nails are subject to ADD, the protest should be GRANTED. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.” You are to mail this decision to the Internal Advice requester no later than 60 days from the date of the decision. At that time, the Office of Trade, Regulations and Rulings, will make the decision available to CBP personnel and to the public on CBP’s website, located at www.cbp.gov by means of the Freedom of Information Act and other methods of public distribution. Sincerely, for Craig T. Clark, Director Commercial & Trade Facilitation Division