## United States Court of Appeals for the Federal Circuit

04-1131, -1174

TAK FAT TRADING COMPANY, MEI WEI FOODS INDUSTRY CO., LT D., LEUNG MI INTERNATIONAL, TAK YUEN CORPORATION, and GENEX INTERNATIONAL CORPORATION, Plaintiffs-Appellees,

v.
UNITED STATES, Defendant-Appellant, and COALITION FOR FAIR PRE SERVED MUSHROOM TRADE, Defendant-Appellant.

Erik D. Smithweiss , Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, of New York, New York, argued for plaint iffs-appellees. Of counsel was Max F. Schutzman

. Patricia M. McCarthy , Assistant Director, Commerc ial Litigation Branch, Civil Division, United States D epartment of Justice, of Washington, DC, argued for defendant-appellant United States. With her on the brief were Peter D. Keisler , Assistant Attorney General, and David M. Cohen , Director. Of counsel on the brief were John D. McInerney , Chief Counsel, Berniece A. Browne , Senior Counsel, and Scott D. McBride , Attorney, Office of Chief Counsel fo r Import Administration, United States Department of Commerce, of Wash ington, DC. Of counsel were Jeanne E. Davidson , Deputy Director, and Richard P. Schroeder , Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice. R. Alan Luberda , Collier Shannon Scott, PLLC, of Washington, DC, argued for defendant-appellant Coalition Fo r Fair Preserved Mushroom Trade. With him on the brief were Michael J. Coursey and Adam H. Gordon

. Appealed from: United States Court of International Trade Judge Thomas J. Aquilino, Jr.__________ * Haldane Rober t Mayer vacated the position of Chief Judge on December 24, 2004.



## United States Court of Appeals for the Federal Circuit

04-1131, -1174 TAK FAT TRADING COMPANY, MEI WEI FOODS INDUSTRY CO., LT D., LEUNG MI INTERNATIONAL, TAK YUEN CORPORATION, and GENEX INTERNATIONAL CORPORATION, Plaintiffs-Appellees,

v. UNITED STATES, Defendant-Appellant, and COALITION FOR FAIR PRE SERVED MUSHROOM TRADE, Defendant-Appellant.

_________ __________________ DECIDED: February 9, 2005

_________ __________________ Before MAYER,* CLEVENGER and LINN, Circuit Judges

. CLEVENGER, Circuit Judge

.

The United States and t he Coalition for Fair Preserved Mushroom Trade ("Coalition") appeal the decision of the Court of International Trade reversing the scope ruling by the International Trade Administ ration, U.S. Department of Commerce ("Commerce") that held that mushrooms import ed by plaintiffs (collectively "Tak Fat") were not excluded from within the scope of the Notice of Amendment of FinalDetermination of Sales at Less than Fair Va lue and Antidumping Duty Order: Certain Preserved Mushrooms From t he People' s Rep ublic of Ch ina, 64 F e d. Reg. 8,308 (Feb. 19, 1999) . Bec ause the Court of Internati onal T r ade erred when it dis t urbed the determination by Commerce that Tak Fat ' s mushrooms are not exc l ud ed from the dumping order, the decision of the Court of International Trade is reversed and the scope determination by Commerce is reinstated.
I The antidumping order at issue in th is case began as a petition by U.S. mushroom producers who r equested an investigation of imported preserved mushrooms from Chile, China, India, and I ndones ia but proposed to exclude particular mushrooms that were "marinated," "acidif i ed, " or "pickled." In proposin g such an

exc l usion, petitioners cited to the Harmo nized Tar i ff Schedule ("HTS" or "HTSUS") subheading 2001.90. 39. In a s upplement ary lette r to Commerce they again stated that marinated, acidified and pickled mushrooms are those "prepared or preserved by means of v i negar or acetic acid," as under HTS s ubheading 2001.90.39. The petition also included a footnote that stated that the scope of t he petition compor ted with the Food and Drug Administration's ("FDA's") standards of identity for canned mushrooms. After investigation, Commerce issued an order that applied to "preserved mushrooms" from China which are "prepared or preserved by cleaning, blanching, and sometimes slicing or cutting" and "then pack ed and heated in contai ners including but not limited to water, brine, butter or butter sauce." 64 Fed. Reg. at 8,309. Commerce did not include references to eit her the HT S headings or the F D A standards when it

exc l uded " ' marinated,' 'acidified' or 'pi ckled' mushrooms, which are prepared or

04-1131, -1174 2preserved by means of vinegar or acetic ac id, but may contain oil or other additives " from the order. Id. On January 6, 1998, Tak Fat requested a scope ruling to determine whether their mushrooms were exc l uded from the antidumpi ng order. Tak Fat argued that the FDA standards should be used to determine which mu shrooms fall within the order, and that their mushrooms contained vi negar, an ingredient not f ound in canned mushrooms under the FDA standards. W hen tested by Commerce, Tak Fat' s canned mushrooms were less t han 0.1 per cent acet ic acid by weight and the c anning s o lution had a pH that ranged from 4.5 to 4.7. A pH of less than 4.6 is consider ed an "acidified" food under the FDA definition. Stating that the pH was lowered in order to prevent the growth of botulism and "preserve" the mushrooms, Tak Fat contended t hat the presence of vinegar in its mushrooms removes them fr om the scope of "canned mushrooms" under FDA standards. Commerce rejected Tak F a t' s contention and found in its preliminary ruling that the FDA standard of identity "is not controlling of the scope of the order." Instead of the FDA st andard, Commerce reli ed on the language in t he order that was "appropriat ed" from HTS subheading 20 01.90.39 to determine the scope of the

exc l usion. Commerce looked to Customs ruli ngs that classified products under this HTS heading by perc entage weight of vinegar or acetic ac id. These rulings referenced Headquarters Ruling Letter (HRL) 069121 from May 20, 1983, which defined product s prepared or preserved in vinegar or acetic acid as havin g a minimum of 0.5 percent acetic acid content. Commerc e applied the 0.5 percent acetic acid test to Tak Fat's products and found t hat becaus e t hey did not meet the test for "prepared or preserved

04-1131, -1174 3by vinegar or acetic acid," Tak Fat' s mushrooms were not exc l uded from the antidumping order. Tak Fat then appealed the cas e to t he Court of Inter national Trade. Tak Fat Trading Co. v. United States , 294 F. Supp. 2d 1352 (Ct. Int' l Trade 2003). They argued before the court that the pl ain language of neither the order nor the record supported Commerce's reliance on the HTS reference and the consequent use of the 0.5 percent acetic acid standard in dete rmining whether Tak Fat's mushrooms were excluded. Id. at 1357. The court agreed with Commerce that t he HTS, not the FDA, standard was the correct reference for determini ng if Tak F a t's products were exc l uded from the scope of the order. Id. at 1358. The court, however, rejected C o mmerce's reliance on the test found in the Customs Headquar ters ruling bec ause the court differentiated "pickled" from "marinated" or "acidifi ed" and found that t he 0.5 percent acetic acid standard applies only to "pick l ed" produc ts and not nec essarily to "marinated" or "acidified" products. Id. at 1359. The court thus found t he standard set forth in the Customs Headquarters ruling should not apply to Tak Fat's product because it was never contended that Tak Fat's mush rooms were "pickled." Id. Consequently, the court found that there was not s ubst antial evidenc e in support of the sco pe determination b y Commerce, and that Tak F a t's mushrooms t herefore should not be s u bject to the antidumping duty. Id. Thus, the court granted Tak Fat's motion for summary judgment and vacated the determination by Commerce that Tak Fat's packaged mush rooms were within the s c ope of the antidumping order. Id

. The court agreed with Commerce's basic contention that the H T S as construed through Customs rulings, not the FDA, provides the correct test and it differed with Comme rce only on whether Tak Fat's products are

04-1131, -1174 4not exc l uded under the definition determined in reference to particular rulings of Customs. See id. at 1358-59. The United States and t he Coalition appeal the dec ision of the Court of International Trade requesting re instatement of the initial Commerce scope ruling. We exercis e jurisdiction over this appeal from a final decision of the Un ited Stat es Court of International Trade pursuant to 28 U.S.C. § 1295(a)(5) (2000).
II A decision of the C ourt of Internat ional Trade reviewing a final antidumping determination by Com m erce is reviewed "anew" by this court by reapply i ng the standar d of review as applied by the tri a l court w hen it reviewed the final deter m ination b y Commerce. Mitsubis h i Heavy I ndus., Ltd. v. United States , 275 F.3d 1056, 1060 (Fed. Cir. 2001); Atlantic Sugar, Ltd. v. United States , 744 F.2d 1556, 155 9 n.10 (Fed. Cir. 1984). This court will uphold Commerce's det ermination unless it is "unsupported by substantial evidenc e on the record, or otherwis e not in accordanc e wit h law." 19 U.S.C. § 1516a(b)(1)(B)(i) (2000). S ubstantial evidenc e is "such relevant ev idence as a reasonable mind might accept as adequat e to support a conclusion." Con s ol. Ediso n Co. v. NLRB , 305 U.S. 197, 229 ( 1938). It is not neces sary that there could only be one conclus i on; even if two inconsistent conclusions could hav e been drawn, the determination could st ill be suppor ted by s ubstantial evidenc e. See Matsushita Elec. Indus. Co. v. United States , 750 F.2d 927, 933 (Fed. Cir. 1984).

A After investigation, Commerce will i ssue an antidumping order if merchandis e has been s o ld at less than fair value. Afte r an order is published, scope rulings may be

04-1131, -1174 5necessary when producers, like Tak Fat, need cl arification as to the status of their products under the order. D e terminations of whether a product falls under an antidumping order are made purs uant to 19 C.F.R. § 351.225(k): considering whether a particular product is included within the scope of an order . . . , the Secretary will ta ke into accoun t the following: (1) The descriptions of the merc handis e contained in the petition, the initial investigation, and the determinations of the Secretary (including prior scope determinations) and the Commission. (2) When the abov e criteria are not dispositive, t he Secretary will further consider: (i) The physic a l characteristics of the product; (ii) The expectations of the ultimate purchasers; (iii) The ultimate use of the product; (iv) The channels of trade in which the product is sold; and (v) The manner in which the product is advertised and displayed. 19 C.F.R. § 351.225(k) (2004). If the determination can be made based on section (k)(1), a scope ruling will issue without a full ev aluation of the criteria in (k)(2). C o mmerce has "broad authority to interpret its own antidumping duty orders." INA Walzlag e r Sc haeffler K G v. Unite d States , 108 F.3d 301, 307 (Fed. Cir. 1997). The language of the order det ermines the scope of an antidumping duty order. Duferco Steel, Inc. v. United States , 296 F.3d 1087, 1097 (Fed. Cir. 2002). Scope orders are interpreted under 19 C.F.R. § 351.225(k ) with t he aid of the antidumping petition, investigation and preliminary order. Id. But the petition and investigation "cannot substitute for the lan guage in the order itself." Id. T h e F e deral Circuit has said that "[i]t is the responsibilit y of the agency, not those who initiated the proceedings, to determine the scope of the final orders. Thus, a predicate for the interpretive process is language in the order that is subject to interpretation." Id. The scope of the order can

04-1131, -1174 6be clarified but it cannot be changed by the interpretive process. Id. In the c a se before us, the order exclus ion contains l anguage that must be interpreted.
B In the initial petit ion that began the antid umping inquir y, the Coalition described the scope of imported merchandise t he petition was intended to cover: The scope of this investigation covers certain preserved mushrooms whether imported whole, sliced, diced, or as stems and pieces. The preserved mushrooms co vered under this investigation are the species Agaric us bisporus and Agaricus bitor quis . "Preserved mushrooms" refer to mushrooms that have been prepared or preserved by cleaning, blanching, and sometimes slic ing or cutting. These mushrooms are then packed and heated in c ontainers in cluding but not limited to cans or glass jars, in a suitable liquid medi um that may includ e but is not limited to water, brine, or bu tter (or butte r sauce). Pr eserved mushrooms may be imported whole, sliced, di ced, or as stems and piec es. Included within the scope of the investigation are "brined" mushrooms, which are presalted and packed in a heavy salt solution to provisionally preserve them for further processing. The merchandis e s ubject to this investigation is classified at subheadings 2003. 10.27, 2003.10.31, 2003.10.37, 2003.10.43, 2003.10.47, 2003.10.53, and 0711.90.4000 of the Harmonized Tariff Schedule of the Un ited States ("HTS"). Al though the HT S subheadings are provided for convenience and Cus t oms purposes, the written description of the merchandis e under investigation is dis positive. Exc l uded from the scope of this pet ition ar e the following: (1) all other species of mushroom incl uding straw mushrooms (HTS heading 2003.10.009); (2) all fresh and ch illed mushrooms (HTS heading 0709.51.00), including "r efrigerated" or "quick blanched"; (3) dried mushrooms (HTS headings 0712.30. 10 and 0712.30.20); (4) frozen mushrooms (HTS headi ng 0710.80.20); and (5) "marinated," "acidified" or "pickled" mushrooms, which are packed with solutions such as oil, vinegar or acetic acid (HTS heading 2001.90.39). (Antidumping Duty Petition: Ce rtain Preserved Mushrooms from Chile, China, India, and Indonesia (January 6, 1998), J.A. at 25-26) (e mphasis added). Also included in th e petition was a footnote that stated that "[t] he scope of this petition comports with the

04-1131, -1174 7Food and Drug Administration's ('FDA') st andar ds of identity for canned mushrooms." Id. Commerce did not adopt the exact language the petitioners sugg ested. Neither the HTS nor the FDA standards were listed in the preliminary or the final d e termination of sales of less than fair value by Commerc e. The antidumping order was written as follows: The products covered . . . are certain preserved mushrooms whether imported whole, slic ed, dic ed, or as stems and pieces. The preserved mushrooms covered under this order are the spec ies Agaricus bisporus and Agaricus bitorquis. "Preserved mushrooms" . . . have been prepared or preserved by cleaning, blanching, and sometimes slicing or cutting. These mushrooms are t hen packed and heated in container s including but not limited to cans or gl ass jars in a suitable liquid medium, including but not limited to water, bri ne, butter or butter sauce. Preserved mushrooms may be imported whole, sliced, diced, or as stems and pieces. I n cluded within the s c ope of t he inv e stigation are "brined" mushrooms, which are presalted and pa cked in a heavy salt solution to provisionally preserve them for further processing. Exc l uded f r om the scope of this in v e stigation are t he following: (1) all other species of mushroom, including straw mushrooms; (2) all fresh and chilled mushrooms, including "r efrigerated" or "quick blanch ed mushrooms"; (3) dried mushroom s; (4) frozen mushrooms; and (5) "marinated," "acidif i ed" or "pic kled" mushrooms, which are prepared or preserved by means of vi negar or acetic acid, but may contain oil or other additives. The merchandise subject to this in vestigation is class i fiable under subheadings 2003.10. 0027, 2003.10.0031, 2003.10. 0037, 2003.10.0043, 2003.10.0047, 2003.10.0053, and 0711.90.4000 of HTS. Although the subheadings are provided for conv enience and Customs purposes, the Department's written descr iption of the merchandise under the order is dispos itive. 64 Fed. Reg. at 8,309. The language chosen by Commerce for the order referred to mu shrooms that are "prepared or preserved by means of vinegar or acetic acid, but may contain oil or other

04-1131, -1174 8additives," not mushrooms "which are pac ked with s o lutions s u ch as oil, vinegar or acetic acid, " which is t he language the petitioners reco mmended. Part of the adopted language, "prepared or preserv ed by means of vinegar or acetic acid," appears in the HTS s ubheading 2001.90.39 describing the clas s of vegetables covered by that tariff schedule. The exact heading is:
2001 Vegetables , fruit, nuts and other ed ible parts of plants, prepared or preserved by vinegar or acetic acid: Other:

. . . O t h e r : Vegetables :

. . . 2001.39.90 Other

. . . [.] Because of this similarity, Commerce deemed that the language in the order should refer to the same standard as the HTS head ing cited in the orig inal petition. To interpret this heading, Commerce turned to Customs rulings. Commerce determined that decisions by Customs in terpreting "pr epared or preserv ed by means of vinegar or acetic acid, " as used in HTS s u bheading 20 01.90.39, apply a standar d that the product must be a minimum 0.5 percent by weight acetic acid. Commerce thus used this quantitative standard to define wh ich "marinated," "acidified," or "pickled" mushrooms are excluded from the antidumping order. Customs Headquarters Ruling Letter (HRL) 069121 applied the 0.5 percent standard to "pickled" sweet pepper strips that were "prepar ed or preserve din [sic ] vinegar or acetic acid." HRL 069121 (May 20, 1983). Since 1983, Customs has repeatedly applied the 0.5 perc ent by weight standard to determine whic h imported vegetable products are prepared or preserved by or in vinegar or acetic acid. In a ruling on imported jalapenos pr epared by salt and ac etic acid, Customs classified t h e product as "prepar ed or preserved by vinegar or acetic acid" under HTS s u bheading

04-1131, -1174 92001.90.39. HQ 956850 (Mar. 22, 1996). In doing so, Customs looked to the quantitative content of acetic acid in t he product. As support, the ruling stated: Customs position as to the minimum am ount of acetic acid necessary to determine whether a vegetable is prepar ed or preserved by vine gar or acetic acid was outlined in Headquarte rs Ruling Letter (HRL) 06 9121. . . . That decision held that a product r equired a minimum of 0.5 percen t acetic acid (subject to allowable t o le rances) in the equil ibrated product to be considered as prepared or preserved by vinegar or acetic acid. This position is unchanged. Id. Customs has applied the 0.5 percent standard to products in the category "Vegetables . . . prepared or preserved by vinegar or acetic acid," regardless of whether they were called "marinated," "acidified" or "pickled." See, e.g. , HQ 957041 (Nov. 10, 1998) (jalapenos in s o lution) ; HQ 959361 (Apr. 17, 1997) (jal apenos prepared by salt and acetic acid); HQ 959313 (F eb. 20, 1997) (whole artichok es in vinegar); HQ 959314 (Feb. 20, 1997) (whole and quartered arti chokes in vinegar); HQ 953518 (June 24, 1993) (jalapenos); HQ 952738 (J an. 27, 1993) (pepperoncini and giardiniera). These Customs rulings span different types of prod ucts that have been prepared or preserved using vinegar or acetic acid—not only those labeled "pic kled."
III On appeal, the United Stat es and the Coalition argue that the methodology used by Commerce to find Tak Fat's products not exc l uded from the order is s u pported b y substantial evidence, the standard which we apply to the question of whether a particular s c ope ruling is s u stainable. See Micron Tec h ., Inc. v. United States , 117 F. 3d 1386, 1393 (Fed. Cir. 1997) (citi ng 19 U.S.C. § 1516a(b)(1)(B)( i)). To support their view, the appellants point to t he language of the scope or der, which contains n o

04-1131, -1174 10reference to FDA standards, but instead recite s language that is s ubstantially the same as the language employed in the relevant HT S heading. Further, the appellants argue that once the HTS standard is respected as correct, it follows naturally that the interpretations of the HTS heading are perti nent to understand the limits of exclus ion under the antidumping order. See Wheatland Tube Co. v. United States , 973 F. Supp. 149, 156-157 (Ct. Int'l Trade 1997), aff'd , 161 F.3d 1365, 1369 (Fed. Cir. 1998) (approving Commerce's relianc e in a scope det ermination on Customs's interpretation of the phrase "of a kind used for," taken from a HTS heading, to refer to the chief, or principal, use of a product, and not of its actual use). Tak Fat disagrees and urges us to appl y the standar d set forth by the FDA for canned mushrooms and "acidified" foods. Tak Fat relies on the wording of the petition, which references both the FDA standard of identity for canned mu shrooms and the HTS subheading, to argue that because the order does not refer to either the HTS subheading or the FDA standar d, the HTS subheading should not be imported into the petition. T a k Fat argues that the FDA sta ndard unambiguous ly states that any vinegar content warrants a finding t hat the product is not "canned mushrooms" as covered by the antidumping order, but rat her is an "acidified" product. Tak Fat discount s the main argument favoring the HTS st andard, arguing that the pr ecise language of the HT S heading was not used in the initial petition, and therefore, rel i ance on t he HTS is improper. This argument fails for two reasons. First, the issue is what the antidumping order covers, not what domestic industry proposed for coverage. Sec ond, when Commerce modified the petition' s language to reci te specific HT S languag e, that act is strong evidence that Commerce expressly addressed its focus on the HTS standard.

04-1131, -1174 11We think the appellant s have the better of the arguments. Here, the scope order leads more naturally to t he HTS standard than reliance on t he FDA standard . Simply because the Coalition referenced the FDA standard when the proc eeding was initiated is not determinative because HT S standards were als o included in t he petition. While the petition language descr ibing the exclusion differs signif ic antly from t hat of the HTS heading, the order adopts language that is virt ually identic al to that from the HT S heading and not the petitioners ' language. To be precis e, the petition request s

exc l usion for product "packed with solutions su ch as oil, vinegar or acetic acid (HT S heading 2001.90.30)." The order uses differ ent language: "prepar ed or preserved by means of vinegar or acetic acid, but may cont ain oil or other additives." Except for the words "means of," this language tracks t he HTS heading which covers vegetables "prepared or preserved by vine gar or acetic acid." T he language of the order, not the petition, controls. Duferco Steel , 296 F.3d at 1097. We thus agree with t h e Court of International Trade t hat the HT S standard is the correct one to apply here, and w e further agree that it is permissible to refe r to Customs rulings on the HTS to find precision in the reac h of the scope order. We disagree with the Court of Internat ional Trade only over whether Tak Fat' s products are not exc l uded from the scope of the antidumping order, when the Custom s rulings are applied to the product s in question. Here, we thin k it c l ear that Customs has not confined the 0.5 percent test solely to "pickled" goods. Rather , the 0.5 percent test has been relied on to cover goods that are "prepared or preser ved by vinegar or acetic acid," as noted above. Indeed, the various rulings demonstrating that the 0.5 percent

04-1131, -1174 12test is not restricted to "pi ckled" products were presented to the Court of Internationa l Trade as support for Commerce's interpretation of the scope of the antidumping order.
IV Commerce tested Tak Fat's mushroom s and found t hat the product does not meet the threshold 0.5 percent acetic acid by weight test. Applying the proper test, Commerce correctly found that Tak Fat's mushr ooms do not fall within the definition of the listed exc l usions to t he antidumping order. Alt hough the Court of International Trade was essentially correct in its analys is of the underpinnings of Commerce's scope determination, it erred in its view that the pertinent Customs ru ling only applies t o "pickled" mushrooms. Because substantia l ev idence supports the use of the 0.5 percent test for Tak Fat's mushrooms, and becaus e there is no disput e that such mushrooms fail the test for exc l usion fr om the antidumping order, the Court of International Trade erred in reversing Commerce's determi nation that Tak Fat's products fell within the scope of the order. The dec ision of the Court of I n ternational Trade is accordingly r e versed and the scope ruling iss ued by Commerce is reinstated. COSTS No costs.

R E VER SED

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