The recent actions come in response to allegations by the National Candle Association that imports of mixed wax candles (candles with less than 50% petroleum wax) are circumventing the AD duty order on petroleum wax candles from China. In a May 24 preliminary ruling, the DOC determined that mixed wax candles that contain up to 87.80% palm and/or other vegetable oil-based waxes mixed with petroleum wax are covered by that order. The DOC will therefore instruct U.S. Customs and Border Protection to (a) suspend liquidation of entries of such mixed wax candles and (b) require a cash deposit in the amount of 108.30% of the entered value for all unliquidatedentries retroactive to February 25, 2005.
There are several troubling aspects to this situation. Perhaps most significant is the DOC's determination to impose AD duties retroactive to the date the anticircumvention investigation was initiated. While some attorneys believe such retroactive liability violates U.S. trade law, we are unaware of any court ruling on that issue. In the absence of a definitive judicial decision, the DOC is likely to continue this practice in future investigations, which could result in unforeseen and possibly substantial liability for importers numerous types of products.
The preliminary determination also indicates the DOC's willingness to ignore the various exclusions from the AD duty order on petroleum wax candles from China made in prior scope rulings. As a result, additional types of candles that are not currently subject to AD duties under that order could soon become so. For example, the NCA has already requested an anticircumvention investigation with respect to wickless candles. It appears likely that the DOC will ultimately determine that those items are covered by the order as well, in which case retroactive liability for AD duties can be expected.