Slip Op. 23-88
UNITED STATES COURT OF INTERNATIONAL TRADE
IKADAN SYSTEM USA, INC., and WEIHAI GAOSAI METAL PRODUCT CO., LTD.,
Plaintiffs, Before: Leo M. Gordon, Judge v.
UNITED STATES, Court No. 21-00592 Defendant,
and
HOG SLAT, INC.,
Defendant-Intervenor.
OPINION
[CBP’s Remand Results sustained.]
Dated: June 13, 2023
Richard P. Ferrin, Faegre Drinker Biddle & Reath LLP, of Washington, D.C., argued for Plaintiffs Ikadan System USA, Inc., and Weihai Gaosai Metal Product Co., Ltd. With him on the brief were Douglas J. Heffner and William Randolph Rucker.
Ashley Akers, Trial Attorney, U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Washington, D.C., argued for Defendant United States. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, and Patricia M. McCarthy, Director. Of counsel was Shae Weathersbee, Attorney, Office of the Chief Counsel, U.S. Customs and Border Protection, Washington, D.C.
Zachary Simmons, Steptoe & Johnson LLP, of Washington, D.C., argued for Defendant-Intervenor Hog-Slat, Inc. With him on the brief was Gregory S. McCue.
Gordon, Judge: This action involves a challenge by Plaintiffs Ikadan System
USA, Inc. and Weihai Gaosai Metal Product Co., Ltd. (“Ikadan” and “Gaosai” respectively) Court No. 21-00592 Page 2
to an affirmative determination of evasion by U.S. Customs and Border Protection
(“Customs” or “CBP”) under the Enforce and Protect Act, 19 U.S.C. § 1517 (2018) 1
(“EAPA”). See Notice of Determination as to Evasion in EAPA Consol. Case No. 7474,
(CBP Office of Trade Remedy & Law Enforcement Directorate (“TRLED”) June 21, 2021),
PR 2 46, CR 123 (“Initial Determination”); Final Administrative Review Determination in
EAPA Consol. Case No. 7474, (CBP Office of Trade Regulations & Rulings (“OR&R”)
Oct. 26, 2021), PR 80 (“Final Determination”); Remand Redetermination in EAPA Consol.
Case No. 7474, ECF No. 52 (“Remand Results”). 3
Before the court, Plaintiffs maintain that CBP’s determinations rest on unlawful
interpretations of EAPA and unreasonable findings of fact by CBP.4 See Pls.’ Mot. for J.
1 All citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S. Code, and all references to the U.S. Code are to the 2018 edition unless otherwise specified. The Enforce and Protect Act was enacted as part of the Trade Facilitation and Trade Enforcement Act of 2015, Pub. L. No. 114–125, § 421, 130 Stat. 122, 161 (2016). 2 “PR” refers to a document contained in the public administrative record. See ECF No. 25. “CR” refers to a document contained in the confidential administrative record. See ECF No. 26. “RPR” refers to a document contained in the public administrative record filed in support of CBP’s Remand Results. See ECF No. 57. 3 Following Plaintiffs’ initial motion for judgment on the agency record under USCIT Rule 56.2 challenging the Final Determination, Defendant moved for a remand to place on the administrative record a relevant scope ruling by the U.S. Department of Commerce. See Consent Motion for Remand, ECF No. 50; Order (Aug. 18, 2022), ECF No. 51 (granting remand request). 4 Under EAPA, Plaintiffs may challenge CBP’s evasion determination after the completion of the administrative review by OR&R. See 19 U.S.C. § 1517(g)(1). Here, the Final Determination affirmed CBP’s Initial Determination in its entirety. See Final Determination at 10. Accordingly, Plaintiffs’ Complaint and their briefing address CBP’s findings and conclusions from the Initial and Final Determinations. See Complaint at 9–11, ECF No. 2; Pls.’ Br. 1. Subsection (g) of the statute permits judicial review of both initial and final determinations, and the court has previously observed that its “review of Customs’ determination as to evasion may encompass interim [i.e., building-block] decisions subsumed into the final determination.” Vietnam Finewood Co. v. United States, 44 CIT ___, ___, 466 F. Supp. 3d 1273, 1284 (2020); see 19 U.S.C. § 1517(g). Court No. 21-00592 Page 3
on the Agency R., ECF No. 44 5 (“Pls.’ Br.”); Pls.’ Supp. Br. for Mot. for J. on the Agency
R., ECF No. 60 (“Pls.’ Supp. Br.”); see also Def.’s Resp. Pls.’ Mot. for J. on the Agency
R., ECF No. 64 (“Def.’s Resp.”); Def.-Intervenor’s Resp. Pls.’ Mot. for J. on the Agency
R., ECF No. 66; Pls.’ Reply, ECF No. 68. The court has jurisdiction pursuant to 19 U.S.C.
§ 1517(g) and 28 U.S.C. § 1581(c). For the reasons set forth below, the court sustains
CBP’s Remand Results.
I. Background
A. Determinations Under EAPA
Under EAPA, Customs makes a determination of evasion when an importer is
entering covered merchandise into the customs territory of the United States by means of any document or electronically transmitted data or information, written or oral statement, or act that is material and false, or any omission that is material, and that results in any cash deposit or other security or any amount of applicable antidumping or countervailing duties being reduced or not being applied with respect to the merchandise.
Id. § 1517(a)(5)(A).
In reaching a determination as to what constitutes “covered
merchandise,” i.e., “merchandise that is subject to … an antidumping [or] countervailing
duty order,” Customs shall refer the matter to the U.S. Department of Commerce
(“Commerce”) if CBP is “unable to determine whether the merchandise at issue is covered
merchandise.” Id. § 1517(a)(3), (b)(4)(A) (emphasis added). Commerce shall then
determine whether the merchandise is covered under an antidumping or countervailing
5 All citations to the parties’ briefs and the agency record are to their confidential versions unless otherwise noted. Court No. 21-00592 Page 4
duty order. Id. § 1517(b)(4)(B) (“After receiving a referral … the administering authority
shall determine whether the merchandise is covered merchandise and promptly transmit
that determination to [CBP].”).
Under § 1517(c), CBP (TRLED) makes an initial determination of evasion based
on the record before it. Following this determination, a party found to have entered
covered merchandise through evasion may file an appeal with CBP (OR&R) for de novo
review under subsection (f) (“administrative review”). After completion of the
administrative review, an importer may seek judicial review. Id. § 1517(g).
Subsection (d) of the statute sets forth the enforcement measures that flow from
CBP’s initial determination. Id. § 1517(c)–(d). Subsection (e) empowers CBP to take
additional interim measures if it determines within 90 days of the initiation of investigation
that “there is a reasonable suspicion that such covered merchandise was entered into the
customs territory of the United States through evasion.” Id. § 1517(e). These interim
measures include “suspend[ing] the liquidation of each unliquidated entry of such covered
merchandise that entered on or after the date of the initiation of the investigation” and
taking “such additional measures as [Customs] determines necessary to protect the
revenue of the United States, including requiring a single transaction bond or additional
security or the posting of a cash deposit with respect to such covered merchandise.” Id.
§ 1517(e)(3).
B. CBP’s Determination of Evasion
Plaintiffs are importers of pig farrowing crates and pig farrowing flooring systems,
of which steel tribar floors are a component. In early 2020, Defendant-Intervenor Hog Court No. 21-00592 Page 5
Slat, Inc. (“Hog Slat”) filed an allegation with Customs contending that Plaintiffs’ entries
containing steel tribar floors evaded certain antidumping duty (“AD”) and countervailing
duty (“CVD”) orders issued by Commerce. See Initial Determination at 2; see also Certain
Steel Grating from the People’s Republic of China, 75 Fed. Reg 43,143 (Dep’t
of Commerce July 23, 2010) (AD order); Certain Steel Grating from the People’s Republic
of China, 75 Fed. Reg. 43,144 (Dep’t of Commerce July 23, 2010) (CVD order) (together,
the “AD/CVD Steel Orders”).
The AD/CVD Steel Orders cover:
certain steel grating, consisting of two or more pieces of steel, including load-bearing pieces and cross pieces, joined by any assembly process, regardless of: (1) size or shape; (2) method of manufacture; (3) metallurgy (carbon, alloy, or stainless); (4) the profile of the bars; and (5) whether or not they are galvanized, painted, coated, clad or plated. Steel grating is also commonly referred to as “bar grating,” although the components may consist of steel other than bars, such as hot-rolled sheet, plate, or wire rod.
75 Fed. Reg. at 43,143, 43,144.
In June 2021, TRLED initially determined that “[s]ubstantial evidence
demonstrate[d] that the Importers [Gaosai and Ikadan] entered certain steel grating [in the
form of tribar floors] from the People’s Republic of China … into the United States [during
the period of investigation (“POI”) 6], and failed to declare [their] merchandise … as subject
to the [AD/CVD Steel Orders].” Initial Determination at 2.
6 “[T]he entries covered by the investigation are those entered for consumption, or withdrawn from warehouse for consumption, from May 26, 2019, through the pendency of [the] investigation.” Initial Determination at 3–4 (citing 19 C.F.R. § 165.2). Court No. 21-00592 Page 6
Contrary to Ikadan’s assertions that “no tribar floors were imported during the POI,”
TRLED found that several entries made by Ikadan contained steel tribar floors, and that
“the image of a fully assembled farrowing crate unit … along with purchase order details
submitted to the Manufacturer, clearly indicate that the tribar floors are part of the crate
unit.” Id. at 7. Gaosai claimed that only a few of its entries contained steel tribar floors,
but TRLED found that a greater number of entries than Gaosai reported “contained either
farrowing crates or tribar floors.” Id. Further, as to the entries identified by Gaosai,
“the commercial invoices and packing lists for [those] entries disclosed the descriptions
as ‘farrowing crates,’ with no indication of whether the shipments contained tribar
flooring.” Id. Nonetheless, Gaosai “indicated that all farrowing crates … imported were
designed to include tribar floors.” Id. at 7–8.
TRLED acknowledged that it “is not required to initiate a scope referral” to
Commerce unless CBP “is unable to determine whether the imported merchandise
properly falls within the scope of the relevant AD/CVD order.” Id. at 8 n.58 (citing
19 C.F.R. § 165.15(a)). Here, TRLED determined that it was not necessary to make such
a referral. Therefore, based on the record before it, TRLED “found that the tribar floors
portion of the imported farrowing crate systems” was covered by the AD/CVD Steel
Orders. Id. at 8 (“[T]ribar floors are an essential part of the farrowing crate systems being
imported into the United States, [and the importers list] them under the description ‘parts
for farrowing crates’ rather than separately listing the tribar floors and declaring them as
subject to the AD/CVD orders.”). Court No. 21-00592 Page 7
In light of its evasion determination, TRLED suspended (or continued to suspend)
liquidation for Plaintiffs’ entries covered by the EAPA investigation and stated its intention
to change “entries previously extended and … all future [subject] entries” from type 01
(not subject to AD/CVD cash deposits for steel grating) to type 03 (subject to cash
deposits). See Initial Determination at 6–9.
Upon Plaintiffs’ request, pursuant to their rights under EAPA, OR&R conducted a
de novo administrative review of the record and affirmed TRLED’s determination. Final
Determination at 8, 10 (“[T]he purpose of this de novo review is to analyze the [Initial]
Determination and the accompanying administrative record to determine whether
substantial evidence of evasion exists.”). OR&R concluded that “[a] review of the
administrative record and … requests for administrative review clearly indicate that tribar
floors were entered as type ‘01’ entries and, therefore, the applicable AD/CV duties owed
on steel grating were not paid.” Id. at 8. “So long as the tribar floors are considered
covered merchandise under the applicable AD/CV duty orders,” Ikadan and Gaosai
should have entered their merchandise as type 03 entries and paid the applicable duties.
Id. Thus, OR&R found that “all entries of tribar floors that have been suspended or
extended as a result of this EAPA investigation, regardless of the date of entry,” were
covered merchandise. Id. at 10. Accordingly, CBP concluded that Plaintiffs’ failure to
enter their merchandise as type 03 entries constituted evasion.
Concurrent with CBP’s evasion investigation, Commerce initiated a scope review
of the Orders, discussed infra Section I.C. For Customs, Commerce’s review here did
not limit CBP’s ability to make an independent covered merchandise determination or Court No. 21-00592 Page 8
impose interim measures, such as suspending liquidation of entries subject to the EAPA
investigation. Final Determination at 9 (“CBP found that it was able to determine that
tribar floors are covered merchandise based upon the contents of the record without a
scope referral to Commerce.”). In reaching an affirmative determination, OR&R relied,
as had TRLED initially, on CBP’s own interpretation of the AD/CVD Steel Orders to find
that Plaintiffs’ merchandise was “covered merchandise.” Id. (“Specifically, CBP found,
based upon the evidence in the administrative record, that the way the tribar floors are
constructed would place them within the scope of the AD/CV duty orders and that no
exclusions apply to the tribar floors.”). OR&R determined that the “retroactive application
of AD/CV duties to the entries subject to the EAPA investigation is permitted under the
statute and implementing regulations …. Here, the [Tribar Steel Flooring] was already
subject to a lawful suspension and extension of liquidation when Commerce began its
independent scope [review].” Id.
C. Remand to Consider Commerce’s Scope Ruling
Commerce issued a scope ruling as to the following products imported by Plaintiffs:
“(1) a farrowing flooring system that is partly made of galvanized steel tribar truss flooring
and partly made of a ductile cast-iron floor; (2) a pig farrowing crate with the farrowing
flooring system described in item (1); and (3) a pig farrowing crate without any flooring.”
See Certain Steel Grating from the People’s Republic of China: Scope Ruling on Pig
Farrowing Crates and Farrowing Floor Systems, (Dep’t of Commerce May 11, 2021),
RPR 7 (“Scope Ruling”). Contrary to the Plaintiffs’ position that their merchandise was
not “covered” for purposes of CBP’s evasion determination, Commerce concluded that Court No. 21-00592 Page 9
“the decking of the tribar truss flooring under consideration in this proceeding is covered
by the scope of the [AD/CVD Steel Orders], even when it is imported with other parts of
the farrowing flooring system or the pig farrowing crate under consideration here.” Id. at
15 (emphasis added). Commerce stated, however, “that the other parts and components
of the tribar truss flooring that are under consideration, the cast-iron flooring, and the other
components of the pig farrowing crate under consideration are outside of the scope of the
[AD/CVD Steel Orders].” Id.
CBP did not consider Commerce’s Scope Ruling in the Initial and Final
Determinations because the record in the EAPA investigation had closed before
Commerce issued its Ruling. See Remand Results at 2. Given the relevance of the
Scope Ruling to Plaintiffs’ challenge, Defendant moved for a remand to allow CBP
“to place on the record and consider [Commerce’s scope ruling] that certain products
imported by plaintiffs are subject to the [AD/CVD Steel Orders].” See Consent Motion for
Remand at 1, ECF No. 50.
In the Remand Results, CBP maintained its affirmative determination of evasion
as to Plaintiffs’ entries based on its own investigation, citing Commerce’s Scope Ruling
as additional support for its findings. Remand Results at 5. Customs stated that the
Scope Ruling “was not needed for CBP to factually find that the tribar flooring portions
are subject to the AD/CVD Orders,” but that the “Ruling confirms these findings and has
now been added to the administrative record.” Id. at 4. Based on the record before it,
including Commerce’s Scope Ruling, CBP continued to find that Plaintiffs “engaged in
evasion by entering Chinese-origin [steel grating] declared as type ‘01’ entries, not subject Court No. 21-00592 Page 10
to AD/CVD Orders, in their consumption entries.” Id. (“Such designation as a type ‘01’
at the time of entry was materially false in that it failed to indicate that the CSG was
merchandise covered by the relevant AD and CVD Orders. The false designation also
led to the non-collection of AD and CVD deposits.”).
II. Standard of Review
In reviewing a determination of evasion under EAPA, the court shall first “examine
… whether [CBP] fully complied with all procedures under subsections (c) [initial
determinations] and (f) [final determinations based on administrative review],” and then
determine “whether any determination, finding or conclusion is arbitrary, capricious,
an abuse of discretion or otherwise not in accordance with law.” 19 U.S.C.
§ 1517(g)(1)–(2).
To determine whether an agency’s decision is “arbitrary, capricious, or an abuse
of discretion,” the court “look[s] for a reasoned analysis or explanation for [the] decision.”
Wheatland Tube Co. v. United States, 161 F.3d 1365, 1369 (Fed. Cir. 1998). “The scope
of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to
substitute its judgment for that of the agency.” Motor Vehicle Mfrs. Ass’n v. State Farm
Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). The agency must nonetheless articulate
a “rational connection between the facts found and the choice made.” Id. (quoting
Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)). The court “will,
however, ‘uphold a decision of less than ideal clarity if the agency’s path may reasonably
be discerned.’” State Farm, 463 U.S. at 43 (quoting Bowman Transp. Inc. v. Ark.-Best
Freight System, 419 U.S. 281, 286 (1974)). Court No. 21-00592 Page 11
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 842–45 (1984), governs judicial review
of Customs’ interpretation of EAPA. See United States v. Eurodif S.A., 555 U.S. 305, 316
(2009) (“[An agency’s] interpretation governs in the absence of unambiguous statutory
language to the contrary or unreasonable resolution of language that is ambiguous.”).
III. Discussion
A. Culpability Under 19 U.S.C. § 1517(a)(5)(A)
As a threshold matter, Plaintiffs raise a legal question, specifically arguing that
“[t]he plain meaning of the term ‘evasion’ in EAPA requires at least some level of
culpability.” Pls.’ Br. 2; 22. In reaching its determinations, however, CBP made no finding
as to Plaintiffs’ culpability (e.g., negligence, gross negligence, fraud, or other degree of
blameworthiness or fault). Rather, CBP relied on the simple fact that Plaintiffs had
misclassified their entries as not subject to AD/CVD duties in determining that Plaintiffs
had engaged in evasion. See, e.g., Final Determination at 10 (“The administrative record
contains substantial evidence that entries of covered merchandise were made by the
Importers during the period of investigation and were not declared as subject to the
AD/CV duty orders. This constitutes evasion as defined by EAPA.”); Def.’s Resp. 22
(arguing that CBP correctly declined to read culpability requirement into EAPA statute);
see also Oral Argument at 02:07:00–56 (Apr. 17, 2023), ECF No. 76 (expressly clarifying
that CBP interprets EAPA as strict liability statute). Thus, the precise question before the
court is whether EAPA’s definition of “evasion” contains a requirement that CBP find that Court No. 21-00592 Page 12
importers acted culpably in making material false statements or omissions before
determining whether the importers engaged in evasion.
Under Chevron, “[w]hen a court reviews an agency’s construction of the statute
which it administers,” the court must first determine whether the statutory language is
clear or ambiguous. 467 U.S. at 842. If “Congress has directly spoken to the precise
question at issue,” and its intent is clear, then “that is the end of the matter.” Id. at 842–43
(“[T]he court, as well as the agency, must give effect to the unambiguously expressed
intent of Congress.”). If, however, “the statute is silent or ambiguous with respect to the
specific issue, the question for the court is whether the agency’s answer is based on a
permissible construction of the statute.” Id. at 843; see also City of Arlington v. FCC,
569 U.S. 290, 296 (2013) (“Congress knows to speak in plain terms when it wishes to
circumscribe, and in capacious terms when it wishes to enlarge, agency discretion.”).
Plaintiffs believe that this question should be resolved under the first step
of Chevron—i.e., the plain language of the definition. For Plaintiffs, “to read the EAPA
statute as carrying no culpability requirement ignores the fact that any false statement or
‘omission’ must be ‘material.’” Pls.’ Br. 22 (quoting Diamond Tools Tech. LLC v. United
States, 45 CIT ___, ___, 545 F. Supp. 3d 1324, 1353 (2021) (“Diamond Tools I”)); Oral
Argument at 02:03:07–40 (emphasizing that inclusion of word “material” creates intent
requirement in definition of evasion). Defendant counters that, by its plain terms, the
statutory definition of evasion does not require CBP to find that importers acted culpably
when evading AD or CVD orders. Def.’s Resp. 21–22. Defendant also urges the court
to consider EAPA in light of the language of 19 U.S.C. § 1592, CBP’s civil penalty statute, Court No. 21-00592 Page 13
emphasizing that “when Congress intends for the motivations behind a party’s actions to
impact the penalty for improper importation, it says as much in the statutory language.”
Id.
The court concludes that the question at issue here is not resolved under Chevron
step one because the plain language of the statutory definition of evasion does not
express clear Congressional intent to establish a culpability requirement. Plaintiffs have
not pointed to any authority or broader statutory context defining the specific words on
which they rely to indicate culpability. § 1517(a)(5)(A); see generally Pls.’ Br. “Unless
otherwise defined, ‘words will be interpreted as taking their ordinary, contemporary,
common meaning.’” Diamond v. Diehr, 450 U.S. 175, 182 (1981) (quoting Perrin
v. United States, 444 U.S. 37, 42 (1979)). Here, the general meaning of a “false”
statement or representation is one that is “Untrue … Deceitful … Not genuine; inauthentic
… Wrong; erroneous.” Black’s Law Dictionary (11th ed. 2019). “What is false can be so
by intent, by accident, or by mistake.” Id. (emphasis added). “Omission” is defined as
“[a] failure to do something; esp., a neglect of duty … [t]he act of leaving something out
… [t]he state of having been left out or of not having been done … [s]omething that is left
out, left undone, or otherwise neglected.” Id. Finally, “material” indicates something
“[o]f such a nature that knowledge of the item would affect a person’s decision-making;
significant; essential.” Id. Thus, nothing in the definition requires that a materially false
statement or omission be made with a particular state of mind.
Plaintiffs’ reliance on the court’s observations in Diamond Tools regarding
culpability under EAPA is misplaced. There, the court concluded that CBP had failed Court No. 21-00592 Page 14
to justify its finding that the plaintiff-importer had “entered covered merchandise by means
of a material and false statement or a material omission.” 45 CIT at ___, 545 F. Supp. 3d
at 1351; see also Diamond Tools Tech. LLC v. United States, 46 CIT ___, ___,
609 F. Supp. 3d 1378, 1387–88 (2022) (“Diamond Tools II”) (remanding to CBP for
second time). The relevant antidumping duty order that the plaintiff evaded covered
diamond sawblades and parts thereof from China and Korea. Diamond Tools I, 45 CIT
at ___, 545 F. Supp. 3d at 1328. Specifically, the plaintiff had reported the country of
origin of its subject imports as Thailand rather than China, in reliance on express
guidance from Commerce permitting importers to label their merchandise as originating
in the country where its component parts were assembled. See Diamond Tools II, 46 CIT
at ___, 609 F. Supp. 3d at 1387–88. Commerce later changed its position as to the proper
scope of the relevant AD order—partially in response to a scope referral by CBP pursuant
to § 1517(b)(4)(A)—and determined that the plaintiff’s merchandise was covered by the
order based on the Chinese origin of its component parts. Diamond Tools I, 45 CIT
at ___, 545 F. Supp. 3d at 1330. CBP then concluded that the new scope applied to all
of the plaintiff’s entries covered by the EAPA investigation, including those made prior to
Commerce’s change in position. Id. at ___, 545 F. Supp. 3d at 1331.
The court disagreed, and found—twice—that CBP had failed to show what false
statements or omissions the plaintiff had made as to the country of origin of merchandise
entered prior to the scope change. See id. at ___, 545 F. Supp. 3d at 1354 (“Neither the
[original decision by Commerce] nor the [original AD order] prohibited [the plaintiff] from
manufacturing Chinese-origin cores and segments in Thailand and labelling the finished Court No. 21-00592 Page 15
diamond sawblades as Thai-origin. To the contrary, the way in which [the plaintiff] labeled
its imports was expressly contemplated and sanctioned by Commerce’s [then-in-effect
decision].”); Diamond Tools II, 46 CIT at ___, 609 F. Supp. 3d at 1388–89 (“[F]illing out
the forms in a way that tracked explicitly Commerce’s [decision] does not constitute a
material and false statement or omission. In fact, not only did the importer expressly and
verbatim follow the terms of the [original antidumping order], there was, in fact, no other
possible interpretation of the scope of this Order.”). Ultimately, the court there held that
CBP had acted unreasonably in determining that the plaintiff had made material false
statements or omissions within the meaning of EAPA, given that the plaintiff had complied
with express agency guidance. Accordingly, Diamond Tools does not resolve the legal
question of statutory interpretation presented in this action.
Given the above, the court concludes that the definition of evasion is silent as to
culpability, and to the second step of the Chevron inquiry: “whether the agency’s answer
[to the question at issue] is based on a permissible construction of the statute.” 467 U.S.
at 843 (footnote omitted). A “permissible” interpretation is one that is “reasonable”—even
if it is not “the only possible interpretation or … the one a court might think best.”
Holder v. Martinez Gutierrez, 566 U.S. 583, 591 (2012); see also Globe Metallurgical Inc.
v. United States, 34 CIT 1153, 1155–56 (2010) (where language does not show “clear
Congressional intent,” implementing agency “has a measure of Chevron step-two,
gap-filling discretion”).
Plaintiffs do not address Chevron step two beyond the bare assertion that CBP’s
construction of the evasion definition is “impermissible.” Pls.’ Br. 21. Plaintiffs also fail to Court No. 21-00592 Page 16
address the broader context of the definition in the language of § 1517 itself. Indeed,
Plaintiffs’ only reference to the larger statutory scheme is an attempt to draw a parallel
between § 1517 and CBP’s civil penalty statute, 19 U.S.C. § 1592. See Pls.’ Br. 26;
Pls.’ Reply 17. Specifically, Plaintiffs point to the parties’ obligations in civil penalty
actions: i.e., where “Customs has the burden merely to show that a materially false
statement or omission occurred; once it has done so, the defendant must affirmatively
demonstrate it exercised reasonable care under the circumstances.” Pls.’ Br. 26 (citing
United States v. Ford Motor Co., 463 F.3d 1267, 1279 (Fed. Cir. 2006)).
EAPA read as a whole supports CBP’s strict liability interpretation of the definition
of evasion. First, following the general definition of evasion, the statute contains
an explicit exception for clerical errors that provides that “the term ‘evasion’ does not
include entering covered merchandise … by means of [documents or statements that are
false or omissive] as a result of a clerical error” unless “the clerical error is part of a pattern
of negligent conduct.” 19 U.S.C. § 1517(a)(5)(B) (emphasis added). “[W]here Congress
includes particular language in one section of a statute but omits it in another …, it is
generally presumed that Congress acts intentionally and purposely in the disparate
inclusion or exclusion.” Russello v. United States, 464 U.S. 16, 23 (1983). The inclusion
of language assessing an importer’s state of mind in one subsection of the definition
shows that Congress could have incorporated the same wording in the general definition,
if it had intended culpability as a prerequisite for an affirmative determination of evasion.
It did not. Court No. 21-00592 Page 17
Likewise, the contrast between § 1517 and § 1592 only serves to underscore the
reasonableness of Defendant’s construction, not to contradict it. Section 1592—unlike
§ 1517—explicitly incorporates three levels of culpability (negligence, gross negligence,
and civil fraud). Furthermore, § 1592 is accompanied by a provision granting Customs
subpoena power. See 19 U.S.C. § 1595; Oral Argument at 01:14:25–15:15
(distinguishing § 1517 from § 1592 based on Customs’ subpoena power in civil penalty
context). Under EAPA, Customs has no subpoena power, but must nonetheless
incentivize importer cooperation with its requests for information. It is well-established
that “[s]trict liability maximizes deterrence and eases enforcement difficulties.” Dep’t
of Housing & Urban Dev. v. Rucker, 535 U.S. 125, 134 (2002). A determination of
evasion when a party has, for whatever reason, made materially false statements or
omissions in the course of entering covered merchandise deters future acts of evasion.
EAPA itself expressly sets forth that CBP is free to pursue other enforcement
actions, including under § 1592, where “appropriate.” 19 U.S.C. § 1517(d)(1)(E)(i). This
further supports CBP’s interpretation, which Plaintiffs fail to address.
Subsection (d)(1)(E)(i) implies that penalties based on culpable conduct may be
warranted in some, but not all, circumstances involving evasion. It therefore follows that
not all circumstances supporting a determination of evasion will involve culpable conduct.
Finally, Plaintiffs assert that they did not evade the AD/CVD Steel Orders because
they had a “good faith disagreement” with CBP about the scope of the Orders.
See Pls.’ Br. 25 (“Even assuming CBP has met its burden of establishing a ‘material’ act
or omission in this case (we assert it has not), Ikadan and Gaosai have affirmatively Court No. 21-00592 Page 18
rebutted such a finding and demonstrated that any scope issue in this case is merely an
honest, good faith disagreement between the Plaintiffs and CBP, not ‘evasion.’”).
Essentially, this argument is an application of Plaintiffs’ preferred interpretation of the
definition of evasion: specifically, that non-culpable (i.e., good faith) conduct cannot be
found to constitute evasion. Because Plaintiffs have failed to show that the plain language
of the definition establishes a culpability requirement, or that CBP’s interpretation of the
definition is impermissible, this argument also fails.
B. CBP’s Determination as to Covered Merchandise
Plaintiffs next challenge CBP’s determination that their merchandise—pig
farrowing crates and floor systems—was “covered merchandise” within the meaning of
the AD/CVD Steel Orders. See Pls.’ Supp. Br. 3–5. Plaintiffs argue that, “[t]o withstand
Court review, CBP must justify its finding that Plaintiffs’ products are ‘covered
merchandise,’ applying the same legal framework that the Court would use in direct
review of a scope determination by Commerce”—i.e., that the determination be supported
by substantial evidence and in accordance with law. Pls.’ Supp. Br. 5; Pls.’ Br. 6–7.
Prior to the remand and the placement of Commerce’s Scope Ruling on the
administrative record, Plaintiffs conceded that they were “not aware of any caselaw
addressing the standard of review for CBP in its interpretation of AD/CVD Orders that
were created and are administered by Commerce.” Pls.’ Br. 6. Nonetheless, Plaintiffs
contend that Customs erred both when it made its initial covered merchandise
determination (without a referral to Commerce), and in the Remand Results, when it
included Commerce’s Scope Ruling on the record. Pls.’ Supp. Br. 5 (“CBP is attempting Court No. 21-00592 Page 19
to have it both ways—independent enough under the EAPA statute to be able to make
its own scope determinations without Commerce’s aid, yet hiding behind Commerce by
insisting that it … is not required to defend its scope determinations when it relies on a
scope determination by Commerce in a separate proceeding.”). Plaintiffs argue that the
court “must determine whether all aspects of CBP’s determination,” including its covered
merchandise determination, “are supported by substantial evidence.” Id.
Defendant, on the other hand, urges the court to reject Plaintiffs’ proposed
application of the standard that governs Commerce’s interpretation of its AD and CVD
orders to CBP’s covered merchandise determination. Def.’s Resp. 27. Throughout its
brief, Defendant emphasizes that CBP has the authority to make covered merchandise
determinations, and that here, its determination was in accord with Commerce’s Scope
Ruling. See id. at 14–19 (“Commerce’s scope determination thus confirmed what CBP
found: plaintiffs’ products containing steel grating components are covered by the scope
of the Orders and, thus, plaintiffs failed to pay applicable duties when the products entered
the United States and evasion occurred.”). Further, Defendant argues that the court,
in the process of reviewing CBP’s covered merchandise determination for arbitrariness,
should not undertake a review of Commerce’s Scope Ruling court on its merits. Id. at 27
(“[P]laintiffs acknowledge, they could have appealed, but chose not to appeal,
Commerce’s scope determination under 19 U.S.C. § 1516a …. With § 1517 limiting this
Court’s review to whether CBP’s evasion determination is arbitrary, capricious, or not in
accordance with the law, and a statutory provision that – plaintiffs concede – would allow
them to challenge a scope ruling before this Court, plaintiffs’ assertions fail.”). Court No. 21-00592 Page 20
As an initial matter, Plaintiffs misunderstand the standard governing the
court’s review of Customs’ determinations. Under EAPA, the court shall review “whether
any determination, finding, or conclusion [made by CBP in its initial determination and in
the administrative review] is arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” 19 U.S.C. § 1517(g)(2)(B). Arbitrariness review is distinct from
reasonableness review, i.e., review for “substantial evidence.” 3 Charles H. Koch, Jr.
& Richard Murphy, Administrative Law and Practice §§ 9.24, 9.25 (3d ed. 2023).
“[I]n terms of critical attitude, the reasonableness and arbitrariness standards point
judicial review in emotionally opposite directions.” Administrative Law and Practice,
§ 9.25[2]. Specifically, reasonableness review “requires the court to reach
the positive conclusion that the agency’s decision is reasonable before it may accept that
decision,” while arbitrariness review “requires only that the court reach
the negative conclusion that the agency’s decision is not arbitrary in order to accept that
decision.” Id. (“Thus, in order to uphold the agency under the reasonableness standard,
the court must to some extent approve of the agency’s determination, even if it does not
reach the point of agreement. But, in order to uphold the agency under the arbitrariness
standard, the court need only reach the point at which it can conclude that the agency’s
decision is not intolerable.” (emphasis added)).
Plaintiffs have failed to show that CBP’s covered merchandise determination is
arbitrary and capricious. Given the broad language of the AD/CVD Steel Orders, the
evidence in the record describing the subject merchandise, and the additional support of
Commerce’s Scope Ruling, Customs has established the necessary “rational connection Court No. 21-00592 Page 21
between the facts found and the choice made” to support its conclusion on the merits.
Burlington Truck Lines, 371 U.S. at 168. Here, Customs reviewed the parts and
production process associated with the subject merchandise, and concluded that,
because Plaintiffs’ tribar floors consisted “of two or more pieces of steel joined together
by welding,” they were covered by the AD/CVD Steel Orders—which, in turn, encompass
“certain steel grating, consisting of two or more pieces of steel … joined by any assembly
process.” Initial Determination at 8; see also Final Determination at 9 (summarizing initial
findings). CBP also determined that the scope of the AD/CVD Steel Orders did
“not include any exclusions [as to] the tribar floors.” Initial Determination at 8.
Plaintiffs’ arguments to the contrary are a misguided attempt to reframe the
standard of review and would require Customs to withstand a higher level of scrutiny than
that set forth in EAPA. Additionally, Plaintiffs mischaracterize how CBP exercised its
authority to make the covered merchandise determination here. In their initial brief
supporting their motion for judgment on the agency record, filed prior to the remand and
issuance of the Remand Results, Plaintiffs seemingly challenged CBP’s authority to make
that determination at all. See Pls.’ Br. 23 (“[T]he statutory scheme of EAPA, viewed as a
whole, cannot be construed as allowing CBP to issue its own scope determinations under
the guise of preventing ‘evasion’ of AD/CVD orders.”); see also id. at 8 (“EAPA does not
grant CBP the authority to develop its own set of criteria in determining whether a
particular product falls within the scope of an AD/CVD order established by Commerce.”).
Plaintiffs further asserted that, because “only Commerce can interpret and clarify the
scope of an antidumping duty order,” the court should not grant any deference to CBP’s Court No. 21-00592 Page 22
interpretation of the scope of the AD/CVD Steel Orders. Id. at 7 (quoting United Steel
& Fasteners, Inc. v. United States, 947 F.3d 794, 803 (Fed. Cir. 2020)).
As noted, Plaintiffs sought (and eventually obtained) a scope ruling from
Commerce as to Plaintiffs’ subject merchandise. In its Scope Ruling, Commerce
determined that the tribar floor portions of Plaintiffs’ entries were within the scope of the
AD/CVD Steel Orders. Remand Results at 3 (tribar floors are within scope “despite their
inclusion with other farrowing crate and/or flooring system components”). Once CBP
placed Commerce’s Scope Ruling on the record, Plaintiffs abandoned their earlier
emphasis on Commerce’s sole authority to interpret the AD/CVD Steel Orders, arguing
instead that CBP should not rely on Commerce’s Scope Ruling. See Pls.’ Supp. Br. 2
(“Plaintiffs … submitted their comments on CBP’s Draft Remand Redetermination,
demonstrating in detail why Commerce’s Scope Ruling does not provide substantial
evidence in support of CBP’s conclusion that Plaintiffs’ pig farrowing crates and farrowing
flooring systems are within the scope of the [AD/CVD Steel Orders].”). Plaintiffs also
contended that “even if CBP had made a scope referral [to Commerce], there is nothing
in the EAPA statute or CBP’s regulations that requires CBP to follow Commerce’s scope
determination, when CBP makes its EAPA determination.” Pls.’ Supp. Br. 5.
The court does not agree with Plaintiffs. By reaching its conclusion that
Plaintiffs’ merchandise is covered by the AD/CVD Steel Orders, CBP was not making a
“scope determination” in Commerce’s stead; it was acting pursuant to EAPA’s directive
to initiate an investigation based on CBP’s determination “that the information provided in
the allegation … reasonably suggests that covered merchandise has been entered into Court No. 21-00592 Page 23
the customs territory of the United States through evasion.” 19 U.S.C. § 1517(b)(1).
Specifically, Customs shall either reach a covered merchandise determination itself, as it
did here, or refer the matter to either Commerce if it is unable to reach the determination
independently. Id. § 1517(b)(4). Indeed, despite their arguments to the contrary, Plaintiffs
acknowledged in their briefing that “the text and structure of EAPA requires CBP to
determine what is ‘covered merchandise.’” See Pls.’ Br. 40.
Further—and even setting aside the inconsistency of Plaintiffs’ arguments—it is
important to note that CBP did not “follow” or rely on Commerce’s Scope Ruling in this
matter. Rather, CBP treated the Ruling as additional information on the record that
supported CBP’s independent covered merchandise determination. Remand Results
at 2 (“[U]pon reconsideration and in the interest of completeness of the record, [Customs]
is considering the Scope Ruling on remand.”). This was in accord with CBP’s position
throughout the administrative proceedings below: that Commerce’s interpretation was not
a prerequisite for CBP to reach its own covered merchandise determination under EAPA.
See, e.g., Final Determination at 9 (“[S]uch a scope referral to Commerce was not needed
and CBP acted within its authority in determining that the tribar floors are within the scope
of the [AD/CVD Steel Orders].”).
Finally, Plaintiffs concede that they have not actually challenged
Commerce’s Scope Ruling on its merits. Pls.’ Supp. Br. 6 (“Although Plaintiffs could have
challenged [the Scope Ruling] under [19 U.S.C. § 1516a], … Section 1517 concerns an
entirely different statute (EAPA), with an entirely different set of consequences.”). Thus,
the Scope Ruling is before the court only as additional record evidence buttressing Court No. 21-00592 Page 24
CBP’s ultimate covered merchandise determination. Cf. State Farm, 463 U.S. at 43
(agency action may be arbitrary and capricious where agency “offered an explanation for
its decision that runs counter to the evidence before” it). Given CBP’s determinations,
the court discerns no “clear error of judgment” on the part of the agency. Bowman,
419 U.S. at 285 (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,
416 (1971)). Therefore, the court sustains Customs’ determination that Plaintiffs’ entries
containing steel tribar floors were covered by the AD/CVD Steel Orders.
C. Plaintiffs’ Challenges to CBP’s Suspension of Liquidation and Assignment of Cash Deposits
Plaintiffs’ final arguments are framed as another challenge to CBP’s evasion
determination contending that Customs applied its “covered merchandise” determination
too broadly. Pls.’ Br. 27. Nonetheless, their objections primarily target the suspension of
liquidation and the assignment of AD/CVD cash deposits via required rate advances.
See id. (“CBP arbitrarily and capriciously suspended liquidation and assigned AD/CVD
cash deposits in an overbroad manner to Plaintiffs’ imports that contain no tribar ….”);
see also 19 U.S.C. § 1517 (d)–(e) (suspension of liquidation and rate advances are
available to CBP as interim measures or as effects flowing from evasion determination
itself). These arguments essentially challenge the interim measures that CBP took
pursuant to subsection (e) of EAPA, and the ultimate effect of its evasion determination
under subsection (d). See Notice of Initiation of Investigation and Interim Measures,
EAPA Consol. Case No. 7474, (Sept. 18, 2020), PR 15; Final Determination at 3
(discussing interim measures); Notice of Action as to Ikadan (CF-29) (July 7, 2021), Court No. 21-00592 Page 25
ECF No. 36-5; Notice of Action as to Gaosai (CF-29) (July 27, 2021), ECF No. 36-6;
see also Pls.’ Br. 27–41.
Plaintiffs first contend that, under the statute, “CBP is required to not only make a
determination of ‘evasion,’ but the agency must also identify the ‘covered merchandise’
that is subject to an AD or CVD order and was entered into the United States through the
‘evasion.’” Pls.’ Br. 40. For Plaintiffs, because the statute permits CBP to suspend
liquidation of entries of covered merchandise under § 1517(d) or continue to suspend
liquidation of entries already suspended as an interim measure under § 1517(e), CBP
must “determine the universe of unliquidated merchandise already imported that
constitutes ‘covered merchandise’ and apply the suspension of liquidation to those entries
and nothing that falls outside the universe of ‘covered merchandise.’” Pls.’ Br. 40–41.
Plaintiffs further maintain that, contrary to these requirements, “CBP simply issued CF-29
notices that listed entries covered, without any detail as to what items were and were not
covered or the amount of the rate advances.” Pls.’ Br. 27.
In support of their arguments, Plaintiffs describe the evidence in the record that
they believe demonstrates that certain of their entries subject to the EAPA investigation
do not contain any tribar flooring. Pls.’ Br. 33–37 (“CBP ignored detailed information that
Ikadan and Gaosai provided to help CBP identify precisely those entries and line items
that contained tribar, and identify the correct values of those items so that rate advances
based on the AD/CVD cash deposit rates could be properly calculated.”). Of particular
importance to Plaintiffs is the fact—which the Government does not dispute—that CBP
undertook some review of each individual entry early in the investigation, when assessing Court No. 21-00592 Page 26
which entries contained covered tribar floors. See Pls.’ Reply 23 (“It was CBP that chose
to review all of the entries and, in its EAPA Determination, judge which ones were and
were not covered.”); see also Def.’s Resp. 31 (“Hog Slat’s allegation – resulting in the
initiation of this investigation – asserted that all of plaintiffs’ entries contained subject
merchandise … . Notwithstanding this, CBP tailored its actual evasion determination to
only those entries for which record evidence indicated, in CBP’s estimation, the inclusion
of subject merchandise.”).
Defendant contends that Plaintiffs’ challenge to CBP’s implementation of its
covered merchandise determination is beyond the scope of the court’s review under
EAPA. Specifically, Defendant argues that the court cannot reach challenges to the
suspension of liquidation or assignment of cash deposits because subsection (g) of EAPA
only permits judicial review as to “CBP’s determination that evasion occurred – not the
final duty rates applied to a given entry at liquidation (which has not yet occurred).”
Def.’s Resp. 28. The proper recourse for Plaintiffs’ challenge, according to Defendant,
is via a protest under 19 U.S.C. § 1514. Id. at 29 (“[Plaintiffs] can submit argument and
documentation to CBP before the duties are assigned (but after review of the actual
evasion determination in this Court are completed), protest CBP’s assignment of duties
…, and, if necessary, appeal the results of that protest to this Court [under 28 U.S.C.
§ 1581(a)].”). 7
7 As Defendant points out, Plaintiffs can pursue an alternate remedy by protesting CBP’s implementation of its evasion determination under § 1514, and seeking judicial review under 28 U.S.C. § 1581(a). Because of EAPA’s limitation of the court’s review, discussed supra, the court does not reach Plaintiffs’ undeveloped argument that pursuing (footnote continued) Court No. 21-00592 Page 27
The court agrees with Defendant. Plaintiffs’ challenges to CBP’s suspension of
liquidation and assignment of cash deposits ask the court to reach beyond the scope of
EAPA’s judicial review. The statutory text explicitly establishes the court’s authority to
examine “a determination under subsection (c) or review under subsection (f).” 19 U.S.C.
§ 1517(g)(2). The following subparagraphs of the section further provide that the court
shall determine “whether the Commissioner fully complied with all procedures under
subsections (c) and (f)” and “whether any determination, finding, or conclusion is arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.” Id.
§ 1517(g)(2)(A)–(B). It is well-established that “Congress ordinarily adheres to a
hierarchical scheme in subdividing statutory sections,” where subparagraphs
denominated by capital letters (here, A and B) fall within paragraphs denominated by
numerals (here, 2). Koons Buick Pontiac GMC, Inc. v. Nigh, 543 U.S. 50, 60 (2004) (citing
to Congressional legislative drafting manuals). Therefore, the subparagraph language
referring to “any determination, finding, or conclusion” in § 1517(g)(2)(B) must be read
within the context of the paragraph language preceding it: i.e., “[i]n determining whether
a determination under subsection (c) or review under subsection (f) is conducted
in accordance with those subsections.”
the protest route “could erase any unlawful duty but could not compensate for the injury of Plaintiffs having to post cash deposits.” Pls.’ Supp. Br. 9–10. As a general matter, however, the court notes that the payment of cash deposits is not a cognizable injury. See, e.g., Valeo N. Am., Inc. v. United States, 41 CIT ___, ___, 277 F. Supp. 3d 1361, 1366 (2017) (holding that payment of cash deposits is “ordinary consequence of the statutory scheme,” not harm preventable by issuance of temporary restraining order (quoting MacMillan Bloedel Ltd. v. United States, 16 CIT 331, 333 (1992))). Court No. 21-00592 Page 28
Plaintiffs have not pointed to any language in the EAPA statute permitting the court
to assess the reasonableness, or indeed the lawfulness, of CBP’s actions taken pursuant
to subsection (d) or (e). Based on its reading of the statute as a whole, the court declines
to stray beyond the bounds of judicial review established by subsection (g).
IV. Conclusion
For the foregoing reasons, the court sustains the Final Determination and Remand
Results determining that Plaintiffs’ entries covered by EAPA Consol. Case No. 7474
evaded the AD/CVD Steel Orders. Judgment will enter accordingly.
/s/ Leo M. Gordon Judge Leo M. Gordon
Dated: June 13, 2023 New York, New York