Importer Facing 688%(!) AD/CVC Assessments May Not Challenge Assessment

Jul. 18, 2022
By: David G. Forgue

Imagine receiving a bill from Customs at liquidation assessing duties of almost seven times the value of the imports. Now imagine that there is almost no action you can take against that bill, even if it is clearly wrong, or threatens to put the company out of business. This isn’t a hypothetical question. This is what happened in Rimco v. United States.

In Rimco the importer was assessed with antidumping duties of 231.70% as well as countervailing duties of 457.10%. These rates were based on “adverse facts available” which is to say that they were not based on any company’s actual sales data. Instead, they represented a series of adverse assumptions based on several data sources. These extremely high duties were intended to punish a few uncooperative companies but were applied to a wide range of other importers, including Rimco.

Rimco’s first effort to challenge the AD/CVD assessment was by filing protests against liquidation with Customs. AD/CVD assessments cannot normally be protested unless the error was by Customs in applying the liquidation instructions from Commerce. This is true because Customs does not have legal discretion to change the AD/CVD rates. Unsurprisingly, this is what Customs decided with respect to Rimco’s protests. In response, Rimco filed suit at the Court of International Trade claiming that the denials were erroneous and that the 688% duty assessments were “excessive fines” in violation of the VIII Amendment to the United States Constitution. The VIII Amendment reads in full, “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”

Crucially for importers, the court did not address the merits of the VIII Amendment claims. Although there are several principles in the AD/CVD law that the court might have used to address the claim, the court chose to address a much narrower and more limited point. Namely, jurisdiction. Thus, the court focused entirely on whether Rimco had an opportunity to raise its arguments before the Department of Commerce during the original review. The court decided that Rimco did have that opportunity, even though Rimco did not seek to participate in the review. This means that Rimco needed to make the arguments in 2020 at the Department of Commerce that it would eventually make after liquidation in 2021. Failure to make the argument before the agency meant that Rimco did not have the right to make the argument before the court.

This case is an important one for importers. It is a reminder that (1) AD/CVD can be incredibly costly, threatening businesses with bankruptcy or severe harm, and (2) importers need to be vigilant regarding potential AD/CVD coverage before bills start to arrive. If you have any questions about your potential AD/CVD exposure, or how to properly address existing exposure please contact any attorney at Barnes, Richardson & Colburn, LLP.