On 16 May 2019 the US Court of Appeals for the Federal Circuit ruled in Sunpreme Inc v United States (No 18-1116), finding that where the scope of an anti-dumping/countervailing duty (AD/CVD) order is ambiguous, US Customs and Border Protection (CBP) has no independent authority to suspend liquidation without explicit instructions from the US Department of Commerce (DOC).
US company Sunpreme had been importing solar panels containing innovative bi-facial solar cells made of amorphous silicon thin films deposited on a crystalline silicon wafer. Sunpreme believed that its solar panels were outside the scope of the AD/CVD order on crystalline silicon photovoltaic cells from China and had been entering them as such. Indeed, the scope of the AD/CVD order had an explicit exclusion for "thin-film" products and Sunpreme's solar panels were certified as thin-film panels. Notwithstanding the language of the order, CBP suspended the liquidation of the panels and began imposing AD/CVD duties on Sunpreme's imports in April 2015. Sunpreme filed a scope ruling request with the D)C, which opened a scope inquiry on 30 December 2015. The DOC later concluded that while the language of the AD/CVD order was ambiguous, it did cover Sunpreme's panels, and further directed that CBP continue to suspend the liquidation of the panels, even for the period between April and December 2015.
On 8 September 2016 Sunpreme applied to the US Court of International Trade for a temporary restraining order and a preliminary injunction, alleging that CBP's actions were unlawful. While Sunpreme ultimately lost the challenge to the scope ruling finding the panels covered by the AD/CVD order, the Court of International Trade ruled – and the Court of Appeals for the Federal Circuit affirmed – that CBP had no authority in such circumstances to suspend liquidation before the initiation of the scope inquiry. "[W]hen the duty order is clear and unambiguous, Customs can suspend liquidation of subject merchandise pre-scope inquiry and the DOC is free to continue that suspension," but neither the DOC nor CBP can "order suspension of liquidation pre-scope inquiry for merchandise possibly subject to an unclear or ambiguous duty order".
The court stated that CBP was not permitted to make its own independent decision as to whether a product is within the scope of an order. CBP's duty to suspend liquidation is merely ministerial; it has no discretion to interpret an unclear command from the DOC. The court held that the DoC could not order CBP to continue a suspension that was never authorised in the first place and Sunpreme was therefore entitled to a refund of all AD/CVD duties paid before 30 December 2015.
The court has clarified that CBP has no authority to suspend liquidation or to require the payment of AD/CVD duties when the scope language is ambiguous, unless and until the DOC initiates a formal scope inquiry. Importers that have been consistently entering goods as not being subject to an AD/CV duty order without question from CBP, but find CBP abruptly changing its mind, should look carefully at Sunpreme as it might affect their ability to challenge CBP's actions. Unless the DOC has weighed in, an importer in such circumstances could be entitled to a refund of duties.
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