Meridian Products, LLC v. United States

OPINION

This opinion addresses the Final Results of Redetermination Pursuant to Court Remand, Meridian Products, LLC v. United States, Court No. 13-0018, PDoc 29 (June 17, 2014) (“Second Remand”) of the International Trade Administration of the U.S. Department of Commerce (“Commerce”) pursuant to Meridian Products, LLC v. United States, 38 CIT -, 971 F.Supp.2d 1259 (2014) (“Meridian II”). *1344 The plaintiff, Meridian Products LLC, a U.S. importer of refrigerator/freezer trim kits, moves for a third remand of this action challenging various aspects of the Second Remand. Meridian’s Motion for Remand and accompanying Cmts in Resp. to Second Redetermination Upon Remand, PDoc 35 (July 15, 2014) (“Pi’s Mot.”). The defendant asks that the court sustain the Second Remand results, claiming that it complied with the court’s order and that its determination is both supported by substantial evidence and is in accordance with law. Def s Resp. to Cmts Regarding the Second Remand Redetermination, PDoc 38 (Aug. 8, 2014) (“Def s Resp.”).

Upon review of the Second Remand results, the court finds that the redetermination complies with the judicial orders in Meridian II and sustains the results.

I. Background

Familiarity with the facts of this case as provided in the court’s prior opinions is presumed, but background is supplemented herein for ease of understanding. See Meridian II; see also Meridian Products, LLC v. United States, 37 CIT-, Slip Op. 13-75, 2013 WL 2996233 (June 17, 2013) (“Meridian I ”). In Meridian I, the court remanded to Commerce, directing it to reconsider if the plaintiffs trim kits fell within finished goods scope exclusion of the antidumping and countervailing duty orders on aluminum extrusions from the People’s Republic of China 1 as applied in the Side Mount Valve Controls Scope Ruling, the Drapery Rail Kits Remand, and the Auto Parts Remand. 2 In Meridian II, the court remanded to Commerce a second time, directing it to “proceed from a clean slate on the question of whether the [t]rim [k]its fall within the scope of the Orders, fully taking into account the prior relevant scope rulings”, including evaluating the trim kits under the finished goods exclusion methodology in the Drapery Rail Kits Remand and Solar Panel Mounting Ruli ng, 3

The relevant scope language, which Commerce must first examine in any scope determination to determine whether merchandise falls within the scope of an anti-dumping duty order, 4 is as follows:

*1345 The scope also excludes [1] finished merchandise containing aluminum extrusions as parts that are fully and permanently assembled and completed at the time of entry, such as finished windows with glass, doors with glass or vinyl, picture frames with glass pane and backing material, and solar panels. The scope also excludes [2] finished goods containing aluminum extrusions that are entered unassembled in a “finished goods kit.” A finished goods kit is understood to mean a packaged combination of parts that contains, at the time of importation, all of the necessary parts to fully assemble a final finished good and requires no further finishing or fabrication, such as cutting or punching, and is assembled “as is” into a finished product. An imported product will not be considered a “finished goods kit” and therefore excluded from the scope of the [Orders] merely by including fasteners such as screws, bolts, etc. in the packaging with an aluminum extrusion product.

Orders, 76 Fed.Reg. at 30651 and 30654 (italics and bracketing added).

In the Second Remand, Commerce again determined that the plaintiffs trim kits fell within the scope of the Orders as subject aluminum extrusions identified by reference to their end use: as “frames” for major appliances. 5 Commerce first determined that the trim kits did not qualify for the “finished merchandise” exclusion. It found that the kits consisted entirely of aluminum extrusions, fasteners, and extraneous materials. Based on the plaintiffs own description of its trim kits as consisting of a package of finished parts which, when assembled, will make up a customized frame around a single freezer unit or single refrigerator unit, Commerce found that the kits were included with the scope language of the Orders and did not meet the “finished merchandise” exclusion because they entered the U.S. unassembled. See Second Remand at 5-6, referencing “Aluminum Extrusions from the People’s Republic of China: Request for Scope Ruling for Refrigerator/Freezer Trim Kits” (Nov. 13, 2012) (“Trim Kits Scope Ruling Request”) at 1-2; see also id. at 12-14, 22-24.

Commerce next determined that the plaintiffs trim kits did not qualify as an excluded “finished goods kit” on the ground that, again, they consisted entirely of aluminum extrusions, fasteners, and extraneous materials and fell within the express limitation to the exclusion. Id. at 12-14, 23-25. Commerce distinguished the trim kits from the goods in the Drapery Rail Kits Remand and in the Solar Panel Mounting Ruling by first determining that unlike the trim kits, the goods in the Drapery Rail Kits Remand and Solar Panel Mounting Ruling were eligible for the “finished goods kit” exclusion because those goods “do not consist entirely of aluminum extrusions” and did not fall within the “limitation” to the exclusion. 6 Pursuant to the court’s instruction, Com *1346 merce then analyzed the trim kits ability to “display” or “work with” an appliance. See Second Remand at 15, referencing Meridian II at 1268; see also id. at 25-27, referencing Meridian II at 1269. Commerce determined that the trim kits “merely frame the space into which the refrigerator is placed” and were therefore unlike the goods in those rulings, because in those rulings the subject goods were designed to “display” or “work with” a missing non-essential interchangeable component by the functional means of holding the component. Second Remand at 15-20, 25-26.

The plaintiff filed with the court its comments in response to Commerce’s Second Remand objecting to the findings of the Second Remand. In its filing, the plaintiff claims in the Second Remand Commerce did not comply with the court’s order because it did not sufficiently explain why the trim kits do not meet the criteria, for the finished goods exclusion and did not distinguish between goods that “incorporate” and goods that “display”. Pi’s Mot. at 1.

The defendant responds that it complied with the court’s remand order, maintaining that its finding that the trim kits consist solely of subject aluminum extrusions, fasteners, and extraneous materials and do not satisfy the two finished goods exclusions is supported by .the scope language and prior scope rulings. Def s Resp. at 1, 10-19, 22. The defendant further argues it provided a reasonable explanation of why the Drapery Rail Kits Remand and Solar Panel Mounting Ruling did not apply to the plaintiffs trim kits that is supported by substantial evidence. Id. at 1922.

II. Discussion

1. Exhaustion of Administrative Remedies

At the outset, the defendant claims that the plaintiff raised certain arguments in its comments before the court with respect to both the “finished goods kit” and “finished merchandise” exclusions 7 that the plaintiff did not raise in its draft comments on the Second Remand, and that the plaintiff has accordingly failed to exhaust its administrative remedies concerning those issues. See Defs Resp. at 13-15, referencing Pi’s Mot. at 4; see also id. at 17, referencing Pi’s Mot. at 5; id. at 17-18, referencing Pi’s Mot. at 6-10. Specifically, the defendant contends the following are precluded by failure to exhaust: the argument opposing the determination that the trim kits were not eligible for the “finished goods kit” exclusion because Commerce found that they consist solely of aluminum extrusions, fasteners, and extraneous materials; 8 the argument that Commerce erroneously applied an “aluminum content limitation” with the effect of disqualifying goods consisting entirely of *1347 aluminum extrusions from ever satisfying either the “finished merchandise” or “finished goods kit” exclusions; 9 and the argument that Commerce is inconsistent in the test(s) it applies in order to determine if the non-aluminum components of a good qualify it for the exclusions. Defs Resp. at 17, referencing Pi’s Mot. at 5, citing Memorandum to Christian Marsh, “Final Scope Ruling on Titan’s Scaffolding Planks” (July 8, 2014) (“Scaffolding Planks Scope Ruling ”).

The court tends to take a strict approach to the doctrine of administrative exhaustion in accordance with its statutory mandate. See SeAH Steel Corp. v. United States, 35 CIT-, 764 F.Supp.2d 1322, 1325 (2011), referencing Jiaxing Brother Fastener Co., Ltd. v. United States, 34 CIT -, 751 F.Supp.2d 1345, 1355-57 (2010); see also 28 U.S.C. § 2637(d) (stating that in trade cases the court “shall, where appropriate, require the exhaustion of administrative remedies”). Exhaustion is generally appropriate in antidumping proceedings as it protects the administrative agency’s authority and promotes judicial efficiency by permitting the agency to apply its expertise, correct its own administrative mistakes, and create an adequate record for judicial review. See Woodford v. Ngo, 548 U.S. 81, 88-89, 126 S.Ct. 2378, 165 L.Ed.2d 368 (2006) (discussing the “two main purposes” of exhaustion of administrative remedies); see also Sandvik Steel Co. v. United States, 164 F.3d 596, 599-600 (Fed.Cir.1998) (internal citations omitted); Ta Chen Stainless Steel Pipe, Ltd. v. United States, 28 CIT 627, 644, 342 F.Supp.2d 1191, 1206 (2004) (internal citations omitted).

In the Second Remand Draft, Commerce defined both the “finished merchandise” and “finished goods kit” exclusions to the Orders. Citing previous scope rulings, Commerce discussed its finding that a good that consists entirely of subject aluminum extrusions, fasteners, and extraneous materials will not qualify for either exclusion 10 and then, critically, Commérce found that the trim kits consist entirely of aluminum extrusions “of various shapes and forms” within the scope definition as well as fasteners and extraneous materials and that they did not qualify for either of the two exclusions. Second Remand Draft at 13-14, referencing Trim Kits Scope Ruling Request at 5-6.

Although the plaintiff had the opportunity in its comments before- Commerce to challenge these factual bases for Commerce’s determinations and develop the administrative record, it did not do so *1348 with sufficient specificity at that level to enable proper judicial review of the arguments it now here considers relevant. 11 See Dorbest Ltd. v. United States, 604 F.3d 1363, 1375 (Fed.Cir.2010) (“Commerce regulations require the presentation of all issues and arguments in a party’s administrative case brief’), citing 19 C.F.R. § 351.309(c)(2) (“The case brief must present all arguments that continue in the submitter’s view to be relevant to the Secretary’s final determination.”); see also Aluminum Extrusions Fair Trade Comm. v. United States, 37 CIT -, -, 938 F.Supp.2d 1337,1342 (2013) (time to object to “new discretionary policy regarding an interpretation of a scope exclusion” is at preliminary determination). The plaintiff did not continue to press in its comments on the Second Remand Draft those arguments it had raised during the First Remand relating to its claim that its trim kits consisted of more than aluminum extrusions, fasteners, and extraneous materials, 12 nor, apparently, did it incorporate arguments by reference. For the court to address these issues properly the plaintiff needed to raise them in its arguments first *1349 before Commerce, in order to assist Commerce in compiling an administrative record that is adequate for judicial review. See McCarthy v. Madigan, 503 U.S. 140, 145, 112 S.Ct. 1081, 117 L.Ed.2d 291 (1992) (“exhaustion of the administrative procedure may produce a useful record for subsequent judicial consideration, especially in a complex or technical [or] factual context”).

The plaintiff has not done so, and none of the apparent exceptions to exhaustion apply. See SeAH Steel Corp., supra, 35 CIT at -, 764 F.Supp.2d at 1325-26 (listing the exceptions as, “where exhaustion would be ‘a useless formality,’ intervening legal authority ‘might have materially affected the agency’s actions,’ the issue involves ‘a pure question of law not requiring further factual development,’ where ‘clearly applicable precedent’ should have bound the agency, or where the party ‘had no opportunity’ to raise the issue before the agency”), referencing Jiaxing, supra, 34 CIT at -, 751 F.Supp.2d at 1355-56 (internal citations omitted). Accordingly, the court will not consider those arguments of the plaintiffs summarized above. 13

2. “Finished Goods Kit” Exclusion

The plaintiffs lack of exhaustion impacts the remaining arguments it raised concerning Commerce’s determination that the trim kits did not qualify for the “finished goods kit” exclusion. The Second Remand’s analysis clarifies that Commerce essentially interprets the methodology applied in the Solar Panel Mounting Ruling and the Drapery Rail Kits Remand as the latter part of a multi-step analysis it uses in examining whether the “finished goods kit” exclusion is applicable to a given product. The first step in Commerce’s analysis is determining whether the unassembled good under consideration overcomes the “limitation” to the “finished goods kit” exclusion. If the good does not overcome the limitation, it is within scope; if it does, the question is then whether the good contains all the necessary parts to fully assemble a final finished good. 14 If it does contain all the necessary parts to fully assemble a final finished good and otherwise meets the definition of a “finished goods kit”, the good is outside the scope; if it does not, the next question the rulings address is whether the “missing” “customizable/interchangeable” component is “nonessential” to the final finished good by determining if the good is intended to “display” or “work with” the component. 15 If *1350 it is, and otherwise meets the definition of a “finished goods kit”, the product is outside scope.

Addressing that analysis in part, the plaintiff faults Commerce’s definition of “display” as applied to the trim kits, the definition of which was applied from the Solar Panel Mounting Ruling and the Drapery Rail Kits Remand. 16 Commerce’s interpretation thereof is normally entitled to “significant deference”, Global Commodity Grp. LLC v. United States, 709 F.3d 1134, 1138 (Fed.Cir.2013) (internal citations omitted) (granting Commerce “significant deference” to interpret the scope of an antidumping order), however the court cannot reach the merits of the contention in any event because the plaintiffs arguments over “display” only arise in the context of the last step of Commerce’s analysis. Further consideration here of that aspect is precluded due to the plaintiffs failure to press the contention with greater specificity at the administrative level, i.e., exhaustion.

In clarifying its methodology, Commerce distinguished the trim kits from the products in the aforementioned rulings by finding that the products in the rulings met the initial requirement for the “finished goods kit” exclusion and that the trim kits did not. Second Remand at 24-25. In order to analyze whether the trim kits are intended to “display” (or for that matter “work with”) a “non-essential” “customizable/interchangeable” component, Commerce concluded in this instance that it only needed to rely on the plaintiffs own description of its trim kits in its scope ruling request rather than engage in a full “(k)(2)” factors analysis. 17 Commenting on *1351 the Second Remand Draft, the plaintiff only disagreed with Commerce’s finding that its “[t]rim [k]its are not intended to ‘display’ an appliance simply because they do not physically hold the appliance in place” and only argued that “Commerce cannot know if [t]rim [k]its are intended to display a customizable appliance purely based on the application and descriptions of the merchandise” without applying the “(k)(2)” criteria, which Commerce explicitly stated it had not done. Pi’s Cmts on the Second Remand Draft at 3.

Thus, proceeding from a “clean slate” during the Second Remand, Meridian did not revive its earlier arguments, raised during the First Remand, with sufficient particularity to contest Commerce’s factual distinction or distinguishment of the trim kits from the Solar Panel Mounting Ruling and the Drapery Rail Kits Remand on the basis of the first step of the analysis, as argued by the defendant. 18 The court is left unable to further address the plaintiff’s critique of “display”, because “display” is only applicable in the final step of Commerce’s analysis and the plaintiff did not exhaust its administrative remedies on the finding of whether the trim kits consisted of “more than” aluminum extrusions, fasteners, and extraneous materials. Commerce having ended its consideration of the issue at step one, with the kits falling within the limitation to the “finished goods kit” exclusion, and the plaintiff having failed to exhaust its remedies on the factual predicate underpinning that consideration, the court’s review is thus constrained.

In distinguishing the trim kits based on this reasoning, upon which it did not rely in the First Remand, Commerce has facially complied with the court’s orders in Meridian II. See Meridian II at 1261-62, referencing Solar Panel Mounting Ruling and Drapery Rail Kits Remand; see also id. at 1268-69, 1269-71. There appearing to be no further challenges to Commerce’s determination that the trim kits do not qualify as a “finished goods kit”, the Second Remand will be sustained as to the defendant’s “finished goods kit” exclusion findings.

3. “Finished Merchandise” Exclusion

The plaintiff also advances several arguments to support its claim that its trim kits qualify as “finished merchandise”. Here, however, the plaintiff is now pursuing the wrong path. The plaintiff first proposes its own interpretation of the Orders and exclusion, stating that the Orders are only intended to cover aluminum extrusions that could be “further processed into something else after importation” and that “once an extrusion is bent, shaped, molded, assembled, etc. it is no longer an extrusion; it has become something else”. Pi’s Mot. at 4. It claims that its trim kits should accordingly be exclud *1352 ed as they are “akin to a fully finished door frame that has been so completely and irrevocably processed that it can never become anything other than a finished frame.” 19 Id. at 6. The plaintiff points to the Petition to further advance its claim that its trim kits qualify as “finished merchandise” that are analogous to finished door frames, and it maintains that the petitioners made a clear distinction between parts of door frames that were to be included in the scope of the Orders, as opposed to excluded final finished door frames, and that like final finished door frames its kits are “completely and permanently processed to the extent that they are suitable only for their ultimate purpose at the time of importation^] ... are fully fabricated[,] and do not require further cutting, punching, or other processing pri- or to installation”. 20

While the plaintiffs argument might be reasonable, it is Commerce, not the plaintiff, that is tasked with interpreting the scope of the Orders, and Commerce’s interpretation is to be sustained so long as the interpretation reasonably clarifies the scope. See, e.g., Sandvik Steel Co., supra, 164 F.3d at 600 (“the order’s meaning and scope are issues particularly within the expertise of [Commerce]”). The plaintiffs argument does not, per se, render Commerce’s interpretation unreasonable. Further, the argument is directed towards requirements of the “finished goods kit” exclusion and ignores the explicit language in the “finished merchandise” exclusion of the Orders that requires full and permanent assembly of the parts for final finished products “at the time of importation”, as well as the language of the Petition that requires a good be “imported in finished form, i.e., fully and permanently assembled” in order for a good to qualify for that exclusion. See Orders, 76 Fed.Reg. at 30651; see also Petition at 5; Second Remand at 22-23.

In the Second Remand Commerce determined that the trim kits do not qualify as “finished merchandise” first because they exist entirely of “aluminum extrusions, fasteners and extraneous materials”, and second because they enter the U.S. unassembled. See Second Remand at 13-14, 22-24. As discussed supra, the plaintiff has failed to exhaust its administrative remedies concerning Commerce’s factual determination that its trim kits consist entirely of aluminum extrusions, fasteners, and extraneous materials and do not meet one of the two proposed requirements of *1353 the “finished merchandise” exclusion. 21 Concerning the second requirement of this exclusion, the plaintiff does not claim that its trim kits enter the U.S. assembled; rather, it argues that defining the trim kits as an “unfinished good simply because the product is unassembled upon entry is absolutely nonsensical” because Commerce recognizes that a “kit” is considered a finished good if it contains all the parts required to assemble the finished good. Pi’s Mot. at 12-13. The argument is unpersuasive, because in advancing it the plaintiff ignores that there are two separate exclusions for finished goods and that the exclusions each have separate requirements that a good must meet in order to qualify. The scope language expressly supports the defendant’s second requirement for the “finished merchandise” exclusion that a good must be “fully and permanently assembled and completed at the time of entry”. Orders, 76 Fed.Reg. at 30651. The Petition also supports this requirement stating the scope excludes “final finished goods containing aluminum extrusions that are imported in finished form, i.e., jully and permanently assembled, such as finished window frames, door frames, picture frames, and solar panes.” 22

The plaintiff is correct in stating that a good will not be considered an unfinished good “merely because it is unassembled upon entry”, as that trait only disqualifies the good from the “finished merchandise” exclusion while still permitting it, possibly, to qualify as a “finished goods kit”. However, based upon the plaintiff’s own description of its trim kits being a packaged combination of parts that contains, at the time of importation, all of the necessary components to assemble a complete frame to surround a refrigerator or freezer, Commerce’s determination, that even if the trim kits when assembled after importation are akin to a “finished door frame” they still enter the U.S. as unassembled as parts and thus do not qualify for the “finished merchandise” exclusion, was not improper. Likewise, neither was Commerce’s determination that the trim kits are necessarily included within the language of the scope of the Orders as “parts of final finished products that are assembled after importation” if they do not satisfy the “finished goods kit” exclusion. See Second Remand at 6, 23; see also Trim Kits Scope Ruling Request at 5-6.

There being no further challenges to Commerce’s determination that the trim *1354 kits do not qualify as “finished merchandise”, the Second Remand will be sustained as to the defendant’s “finished merchandise” exclusion findings.

III. Conclusion

Based upon the foregoing, the second redetermination results will be sustained and a separate judgment to that effect entered.