Allegheny Ludlum Corp. v. U.S., SLIP OP. 00-170. No. 99-06-00369.

• Decision Date: 28 December 2000
• Docket Number: SLIP OP. 00-170. No. 99-06-00369.
• Citation: 215 F.Supp.2d 1322
• Parties: ALLEGHENY LUDLUM CORP., et al., Plaintiffs, v. UNITED STATES, Defendant, and Yieh United Steel Corp., Defendant-Intervenor.
• Court: U.S. Court of International Trade

Page 1322

215 F.Supp.2d 1322

ALLEGHENY LUDLUM CORP., et al., Plaintiffs, v. UNITED STATES, Defendant, and Yieh United Steel Corp., Defendant-Intervenor.

SLIP OP. 00-170. No. 99-06-00369.

United States Court of International Trade.

December 28, 2000.

Collier Shannon Scott PLLC, Washington, DC, (David A. Hartquist, Jeffrey S. Beckington, Adam H. Gordon), for Plaintiffs.

David W. Ogden, Assistant Attorney General; David M. Cohen, Director; Lucius B. Lau, Commercial Litigation Branch, Civil Division, Department of Justice; Cindy G. Buys, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of counsel, for Defendant.

White & Case, Washington, DC, (William J. Clinton, Osama Umejima, Adams Lee), for Defendant-Intervenor.

OPINION

WALLACH, Judge.

I INTRODUCTION

This case is before the court upon Plaintiffs'¹ Rule 56.2 Motion For Judgment Upon The Agency Record, and Defendant-Intervenor Yieh United Steel Corp.'s Motion For Judgment Upon The Agency Record, both of which challenge the decision of the U.S. Department of Commerce, International Trade Administration (the "Department," "Commerce" or "ITA") in Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coils From Taiwan, 64 Fed.Reg. 15,493 (March 31, 1999) ("Final Determination"). Also before this court is a cross-motion for a remand made by Defendant United States in response to Plaintiffs' Motion.

Plaintiffs challenge the Department's decision to assign multiple cash deposit dumping rates to merchandise produced by Defendant-Intervenor Yieh United Steel Corp. ("YUSCO"), depending on whether the subject merchandise is exported to the United States through the middleman Ta Chen Stainless Pipe Co., Ltd. ("Ta Chen") or, on the other hand, through any other channel of distribution. The United States asks the court to remand this aspect of the Final Determination to Commerce, arguing that the Department should have cited and addressed 19 C.F.R. § 351.107(b), which Defendant asserts is the governing regulation. YUSCO argues that imposition of a single rate is contrary to congressional intent, and would impose an excessive cash deposit rate on merchandise that is not "tainted" by the middleman dumping found by the Department. For the reasons stated below, the court remands the Department's determination.

YUSCO challenges four aspects of the Final Determination: (1) the Department's determination that the sales characterized by YUSCO as indirect export sales were in fact home market sales; (2) the Department's decision to apply facts available, on the basis of YUSCO's failure to report a significant percentage of its home market sales; (3) the Department's decision to apply total adverse facts available; and (4) the Department's determination to adjust YUSCO's reported cost of production ("COP") and constructed value ("CV") data based on YUSCO's submission of accounting records that reflected higher COP and CV than YUSCO reported. For the reasons stated below, the court denies YUSCO's motion in all respects.

II BACKGROUND

On March 31, 1998, the domestic industry filed an antidumping petition alleging that imports from Taiwan of stainless steel plate in coils ("SSPC") were being injuriously dumped in the United States. The Department initiated an antidumping duty investigation on April 20, 1998. See Initiation of Antidumping Duty Investigations: Stainless Steel Plate in Coils From Belgium, Canada, Italy, Republic of South Africa, South Korea, and Taiwan, 63 Fed. Reg. 20,580 (Apr. 27, 1998).

Commerce's investigation with respect to Taiwan focused entirely upon the SSPC of a single Taiwanese producer, YUSCO. In the underlying investigation, YUSCO described itself to Commerce as the largest integrated stainless steel mill in Southeast Asia. During the period covered by the Department's investigation, January 1 — December 31, 1997, YUSCO made all of its United States sales of subject SSPC through Ta Chen, which resold the subject merchandise through its U.S. affiliate Ta Chen International (CA) Corp. ("TCI").

During the early stages of Commerce's investigation, both YUSCO and Ta Chen urged the Department to calculate dumping margins on YUSCO's subject merchandise imported into the United states on the basis of YUSCO's prices to Ta Chen. In support of their position, both YUSCO and Ta Chen alleged that all of YUSCO's sales of the subject merchandise into the United States took place through Ta Chen and that YUSCO knew at the time of its sales to Ta Chen that all of the subject merchandise produced by YUSCO and routed through Ta Chen was destined for the United States. See Ta Chen Reply to Petitioners (July 20, 1998); YUSCO Questionnaire Response at A-9 (June 24, 1998); Ta Chen Request for Exemption at 1 (June 4, 1998); Ta Chen Reply to Petitioners (July 20, 1998); YUSCO Questionnaire Response (July 21, 1998) (YUSCO's U.S. sales listing identifying Ta Chen as its sole customer for SSPC during the Period of Investigation.).

On August 11, 1998, the domestic industry requested that Commerce initiate a middleman dumping investigation of Ta Chen, and urged the Department to calculate margins of dumping for YUSCO's product sold in the United States by considering both YUSCO's sales prices to Ta Chen and Ta Chen's resale prices to its U.S. purchasers. More specifically, the domestic industry alleged that Ta Chen was reselling YUSCO's SSPC at less than Ta Chen's total cost to acquire the subject merchandise from YUSCO.² Shortly thereafter, the Department commenced a middleman dumping investigation of Ta Chen's resales of YUSCO's SSPC to the United States. See Memorandum from Edward Yang to Joseph A. Spetrini, "Stainless Steel Plate in Coils from Taiwan: Whether to Initiate a Middleman Dumping Investigation" (Aug. 28, 1998).

On November 4, 1998, Commerce published its preliminary affirmative antidumping duty determination, assigning YUSCO a preliminary dumping margin of 67.68 percent ad valorem. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coils From Taiwan, 63 Fed.Reg. 59,524, 59,527 (Nov. 4, 1998) ("Preliminary Determination"). Commerce also set the "All Others" rate at 67.68 percent ad valorem. Id.

Commerce concluded preliminarily that there had been no middleman dumping by Ta Chen, but noted that the timing of Ta Chen's submission of certain data prevented Commerce from issuing a supplemental middleman dumping questionnaire to obtain additional information and data for the Preliminary Determination. 63 Fed. Reg. at 59,526. Commerce indicated that it intended to revisit this issue, after further analysis and verification, in its final determination. Id.

On December 3, 1998, Commerce amended its Preliminary Determination. Notice of Amended Preliminary Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coils From Taiwan, 63 Fed.Reg. 66,785 (Dec. 3, 1998) ("Amended Preliminary Determination"). In light of an augmented record, Commerce determined that middleman dumping by Ta Chen had occurred. Amended Preliminary Determination, 63 Fed.Reg. at 66,787. Commerce assigned a preliminary dumping margin of 3.08 percent ad valorem to the imports into the United States of YUSCO's subject merchandise. This rate reflected the sum of what Commerce computed was YUSCO's dumping margin on its sales to the United States through Ta Chen (0.08 percent ad valorem) and Ta Chen's middleman dumping margin on its resales of YUSCO's SSPC to U.S. customers (3.00 percent ad valorem). Id. Commerce also set the 3.08 percent ad valorem margin as the "All Others" rate. Id.

On December 14-17, 1998, Commerce sought to verify the data submitted by YUSCO. YUSCO's data submitted in response to Commerce's request for information regarding its home market sales and export sales reflected a breakdown of its sales into three categories: home market sales, direct export sales (called "Scenario 1" sales) and indirect export sales ("Scenario 2" sales). In classifying the sales for reporting to Commerce, YUSCO relied solely on internal classifications it assigned to transactions. YUSCO's internal classifications were based on customers' statements that the product would be exported, and did not involve an inquiry as to whether the customer would further manufacture the product prior to export. In its records, YUSCO classified sales with order numbers starting with "D" or "S" as home market sales, and order numbers starting with "U" as destined for export. "Scenario 1", or "direct export", sales consisted of product shipped directly by YUSCO to the port in Taiwan, for export. Those sales are not at issue here. "Scenario 2", or "indirect export", sales were shipped by YUSCO to a customer in Taiwan for further processing prior to export to third countries. Scenario 2 sales consisted of two general categories. "UZ" sales were made to certain of YUSCO's customers, who are unaffiliated pipe manufacturers located in Taiwan. YUSCO provided less information regarding the other category of Scenario 2 sales, which are referenced as "U*" sales. YUSCO did provide information regarding one "U*" sale customer, which YUSCO stated further manufactured the SSPC into non-subject stainless steel sheet.

At verification, the Department determined that YUSCO had not reported "a large portion" of YUSCO's home market sales of subject merchandise and that YUSCO "... withheld information that had been requested by the Department [.]" Final Determination, 64 Fed.Reg. at 15,495. Specifically, Commerce concluded that YUSCO improperly reported the Scenario 2 sales as for export, rather than as home market sales. In so doing, Commerce found, YUSCO ignored explicit definitions and instructions in the Department's antidumping questionnaire, which explained how to classify and report sales and customer codes for home market sales. Commerce concluded that its questionnaire clearly contemplated...