Customs Law Advisory - US Court Upholds Higher Antidumping Duty Rates for Merchandise Purchased through Resellers

The US Court of International Trade (“CIT”) recently approved a relatively new Department of Commerce (“Commerce”) policy which can have the result of generating substantial additional antidumping (“AD”) duty bills on merchandise purchased from a reseller, rather than the original manufacturer.

Announced in 2003, Commerce’s “Reseller Policy” states that when merchandise subject to an AD order is purchased from a reseller, rather than the manufacturer, the cash deposit rate paid at entry will remain in place and apply at final liquidation only if no administrative review has been requested for either the reseller or the producer.  If an administrative review is conducted of the reseller, that review will determine the final rate to apply.  However, if an administrative review is conducted for the manufacturer (but not the reseller), the outcome will depend on whether Commerce finds that the manufacturer knew, or should have known, that the merchandise it sold to the reseller was destined for the United States.  If so, the manufacturer’s rate established in the administrative review will be applied at liquidation.  If the manufacturer was unaware that the reseller would sell to the United States, the merchandise will be liquidated at the “all-others rate.”  This rate is applied to companies that do not individually participate before Commerce, and it usually is one of the highest AD duty rates applied to products subject to an AD order.

In Impact Steel v. United States, the importers had withdrawn from the administrative review of shipments entered from August 2003 through July 2004, presumably because they preferred to have their entries liquidated at a relatively low cash deposit rate paid at entry.  However, the review continued in connection with certain foreign manufacturers.  Commerce completed its review in August 2007 and instructed US Customs to issue bills to Impact Steel at the “all others” rate of 18.71%.  Impact Steel argued that the “Reseller Policy” was inconsistent with Commerce’s regulation, which provides that entries not subject to an administrative review should be liquidated at the initial cash deposit rate.  The CIT found that the regulation does not specify which entries are covered or how to treat entries of merchandise for which the producer of the merchandise, but not the reseller, is subject to the administrative review.  Consequently, the CIT found that reseller policy is a reasonable step to fill in a gap in the regulation.

The CIT’s decision approves Commerce’s “Reseller Policy” as lawfully established.  Accordingly, if a company imports merchandise subject to an AD order from a seller other than the manufacturer, it is critical for the importer to ask questions about the manufacturer and reseller’s past and likely future participation in Commerce administrative reviews.  Otherwise, years after entry, the importer may receive substantial bills from US Customs for duty amounts that can be many times larger than the AD cash deposits paid at the time of entry.

DEA Proposes to Require Registration By Importers of Products Containing Ephedrine

Last month, the US Drug Enforcement Agency (“DEA”) proposed a new rule that would require importers of ephedrine, pseudoephedrine, or phenylpropanolamine or drug products containing these chemicals to register with the DEA.  These products are subject to regulation because of their potential use as ingredients in methamphetamine production.

Because a recent law requires DEA to calculate annual quotas for the importation and manufacture of these chemicals, the agency plans to require companies to register and provide detailed data on quantities bought and sold, the uses to which the chemicals are put, and so on. 

Comments on the proposed rule can be submitted by mail, e-mail, and via the internet at the addresses listed in DEA’s notice.  Comments are due at DEA by March 18, 2008.

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If you have any questions related to US import procedures, please contact Greg McCue at 202.429.6421 or gmccue@steptoe.com.