15 F.3d 1054 (Fed. Cir. 1994), 93-1062, Creswell Trading Co. Inc. v. United States

Docket Nº:93-1062, 93-1066.
Citation:15 F.3d 1054
Party Name:CRESWELL TRADING COMPANY, INC., South Bay Foundry 1989, D & L Supply Co., Southern Star, Inc., Virginia Precast Corp. and Techsales, Inc., Plaintiffs, and City Pipe & Foundry, Inc., Capitol Foundry of Virginia, Inc., Plaintiffs-Appellants, and Crescent Foundry Co. P. Ltd., Select Steels, Ltd., R.B. Agarwalla & Co., Serampore Industries P., Ltd., Su
Case Date:February 02, 1994
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1054

15 F.3d 1054 (Fed. Cir. 1994)

CRESWELL TRADING COMPANY, INC., South Bay Foundry 1989, D &

L Supply Co., Southern Star, Inc., Virginia

Precast Corp. and Techsales, Inc., Plaintiffs,

and

City Pipe & Foundry, Inc., Capitol Foundry of Virginia,

Inc., Plaintiffs-Appellants,

and

Crescent Foundry Co. P. Ltd., Select Steels, Ltd., R.B.

Agarwalla & Co., Serampore Industries P., Ltd., Super

Castings (India), Carnation Enterprises P., Ltd., Uma Iron &

Steel Co., Commex Corporation, Plaintiffs-Appellants,

v.

The UNITED STATES, Defendant-Appellee,

Allegheny Foundry Co., Deeter Foundry, Inc., East Jordan

Iron Works, Inc., Lebaron Foundry, Inc., Municipal Castings,

Inc., Neenah Foundry Co., U.S. Foundry & Manufacturing Co.,

Vulcan Foundry, Inc. and Alhambra Foundry, Inc., Defendants-Appellees.

Nos. 93-1062, 93-1066.

United States Court of Appeals, Federal Circuit

February 2, 1994

Rehearing Denied April 1, 1994.

Page 1055

Dennis James, Jr., Whitman & Ransom, of Washington, DC, argued for plaintiffs-appellants. With him on the brief was Kathleen F. Patterson.

Christopher A. Dunn and Walter J. Spak, Willkie, Farr & Gallagher, of Washington, DC, were on the brief for plaintiffs-appellants, City Pipe & Foundry, Inc. and Capitol Foundry of Virginia, Inc.

Velta A. Melnbrencis, Asst. Director, Commercial Litigation Branch, Dept. of Justice, of Washington, DC, argued for defendant-appellee, The United States. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen. and David M. Cohen, Director. Also on the brief was Robert C. Nielsen, Sr. Atty., Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, of counsel. Paul C. Rosenthal, Collier, Shannon, Rill & Scott, of Washington, DC, argued for defendants-appellees, Allegheny Foundry Co., et al. With him on the brief was Robin H. Gilbert.

Before NIES, Chief Judge, and RICH, and LOURIE, Circuit Judges.

RICH, Circuit Judge.

Appellants 1 appeal an August 28, 1992 decision of the Court of International Trade

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(CIT), Creswell Trading Co. v. United States, 797 F.Supp. 1038 (Ct.Int'l Trade 1992), sustaining a Department of Commerce (Commerce) determination countervailing the entirety of certain rebates provided by the Indian government pursuant to India's International Price Reimbursement Scheme (IPRS) 2 to exporters of iron-metal castings 3 for the period from January 1, 1985 to December 31, 1985. For the reasons set forth below, we reverse and remand.

The CIT and Commerce have failed to recognize the appropriate burdens of proof and production to be applied in the type of countervailable duty inquiry at issue herein. Although the ultimate burden of proving countervailability in this case rested with Commerce, the existence of India's IPRS program by itself constituted presumptive evidence that the IPRS rebates were countervailable. The evidence relied upon by Appellants, however, sufficiently rebutted this presumption. Thus, the burden of production shifted back to Commerce to prove that this evidence was either inaccurate or insufficient, which it failed to do. On this basis alone, reversal is required. Nevertheless, the CIT also erred in failing to recognize the inherent procedural unfairness in Commerce's ruling that the evidence of record was too ambiguous and deficient for it to render a decision, given that Commerce had indicated during the initial stage of its investigation that it need not consider the type of evidence that it later found missing and given that Commerce indicated affirmatively during a later stage of its investigation that it had all of the information it needed.

I.

The CIT had jurisdiction to consider this case pursuant to 19 U.S.C. Sec. 1516a(a)(2)(B)(iii) (1988) and 28 U.S.C. Sec. 1581(a) (1988). We therefore have jurisdiction over this appeal pursuant to 28 U.S.C. Sec. 1295(a)(5) (1988).

The issue before us is whether the CIT erred in sustaining Commerce's ruling that the IPRS rebates India made to its exporters in 1985 were countervailable in their entirety. In reviewing Commerce's ruling, the CIT was guided by a statutory standard of review which provided that Commerce's ruling should be held unlawful if it was "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. Sec. 1516a(b)(1)(B) (1988). To determine whether the CIT correctly applied this standard in reaching its decision, we must apply anew this statutory standard of review to Commerce's ruling and affirm the CIT unless we conclude that Commerce's ruling is not supported by substantial evidence on the record or is otherwise not in accordance with the law. Nitta Indus. Corp. v. United States, 997 F.2 1459, 1460 (Fed.Cir.1993); see also PPG Indus., Inc. v. United States, 978 F.2d 1232, 1236 (Fed.Cir.1992); Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1189 (Fed.Cir.1990); Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1559 n. 10 (Fed.Cir.1984). "Substantial evidence is more than a mere scintilla. It means such relevant evidence [considering the record as a whole] as a reasonable mind might accept as adequate to support a conclusion." Matsushita Elec. Indus. Co., Ltd. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984).

II.

On December 10, 1990, Commerce issued a first determination that the 1985 IPRS rebates

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were countervailable in their entirety. First Commerce Determination, 55 Fed.Reg. 50747. Commerce stated that it was "irrelevant" whether the 1985 IPRS rebates were consistent with Item (d) of the Illustrative List of Export Subsidies ("Illustrative List") annexed to the Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the General Agreement on Tariffs and Trade (GATT). 4 Item (d) provides that the following is considered to be a subsidy:

(d) The delivery by governments or their agencies of imported or domestic products or services for use in the production of exported goods, on terms or conditions more favourable than for delivery of like or directly competitive products or services for use in the production of goods for domestic consumption, if (in the case of products) such terms or conditions are more favourable than those commercially available on world markets to their exporters. [Emphasis ours.]

H.R.Doc. No. 153, Pt. I, 96th Cong., 1st Sess. 295 (1979).

More specifically, Commerce stated in this first determination:

We consider a government program that results in the provision of an input to exporters at a price lower than to producers of domestically-sold products to confer a subsidy within the meaning of section 771(5). It is irrelevant whether the IPRS is consistent with [I]tem (d) because we are not concerned with world market prices but with the alternative price of pig iron commercially available in the domestic market.

First Commerce Determination, 55 Fed.Reg. at 50749. Commerce believed that it need not defer to Item (d) because section 771(5) of the Tariff Act grants Commerce the authority to find subsidies outside those situations specifically set forth in the Illustrative List. The CIT disagreed.

In a decision dated January 31, 1992, the CIT overruled Commerce's first determination, holding that "Commerce must examine the IPRS in light of the exception to countervailable subsidies provided in [I]tem (d)." Creswell Trading Co. v. United States, 783 F.Supp. 1418, 1419 (Ct.Int'l Trade 1992). The CIT reasoned that Commerce must consider Item (d) because Item (d) explicitly addresses the type of situation at issue in this case. The CIT logically concluded that Commerce's authority to find subsidies in situations not specifically listed in the Illustrative List extends only to those situations which do not fall into one of the specific situations listed. Thus, the CIT refused to allow Commerce to rely on its alleged broad authority under the Tariff Act to circumvent the explicit...

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