Slater Steels Corp. v. U.S.

• Decision Date: 21 August 2003
• Docket Number: Slip Op.03-108.,Court No. 02-00551.
• Parties: SLATER STEELS CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant. VIRAJ GROUP, Plaintiff, v. United States, Defendant, and Slater Steels Corporation, et al., Defendants-Intervenor.
• Court: U.S. Court of International Trade

279 F.Supp.2d 1370

SLATER STEELS CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant.

VIRAJ GROUP, Plaintiff, v. United States, Defendant, and Slater Steels Corporation, et al., Defendants-Intervenor.

Slip Op.03-108.

Court No. 02-00551.

United States Court of International Trade.

August 21, 2003.

Collier Shannon Scott, PLLC, (Robin H. Gilbert), Washington, DC, for Plaintiffs and Defendants-Intervenor Slater Steels Corporation, et al.

Peter D. Keisler, Assistant Attorney General, United States Department of Justice, (David M. Cohen), Director, Commercial Litigation Branch, Civil Division, Patricia M. McCarthy, Assistant Director, (Thomas B. Fatouros), Trial Attorney, Christine J. Sohar, Office of the Chief Counsel for Import Administration, United States Department of Commerce, for Defendant.

OPINION

BARZILAY, Judge.

I. INTRODUCTION

This is a consolidated case.¹ Plaintiffs and Defendants-Intervenor Slater Steels Corporation, Carpenter Technology Corporation, Electralloy Corporation, and Crucible Specialty Metals Division of Crucible Materials Corporation (hereinafter "domestic industry" or "Plaintiffs") challenge the final results of an administrative review of an antidumping duty order on stainless steel bar from India undertaken by the United States Department of Commerce, International Trade Administration ("Commerce"). See Stainless Steel Bar from India; Final Results of Antidumping Duty Administrative Review, 67 Fed. Reg. 45,956 (July 11, 2002) ("Final Results"); Notice of Amended Final Results of Antidumping Duty Administrative Review: Stainless Steel Bar from India, 67 Fed.Reg. 53,336 (Aug. 15, 2002). The sole issue challenged is Commerce's "collapsing" of the companies of the Viraj Group, an Indian competitor, into a single entity for the purposes of calculating dumping margins, pursuant to 19 C.F.R. § 351.401(f) (2000).² The explanations for Commerce's determinations are contained in the accompanying unpublished Issues and Decision Memorandum for the Final Results of the Administrative Review of Stainless Steel Bar from India (July 5, 2002) ("Decision Memorandum") in App. to Mem. in Supp. of Pls.' Mot. for J. upon an Agency R. ("Pls.' App.") 4. For the reasons outlined below, the domestic industry's USCIT R. 56.2 Motion for Judgment upon an Agency Record is granted, and the case is remanded to Commerce to reconsider its analysis of the collapsing issue and, if necessary, to revise its dumping margin calculations in accordance with this opinion.

II. BACKGROUND

In February 2001, the Viraj Group petitioned Commerce to conduct an administrative review of the antidumping duty order on certain stainless steel bar ("SSB") from India for the period of review of February 1, 2000 through January 31, 2001 ("POR").³ In March 2001, Commerce initiated the review. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocations in Part, 66 Fed.Reg. 16,037 (Mar. 22, 2001). On March 7, 2002, Commerce published the preliminary results of the administrative review. See Stainless Steel Bar from India; Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission of Administrative Review, 67 Fed.Reg. 10,377 (Mar. 7, 2002) ("Preliminary Results"). The dumping margin for the Viraj Group was preliminarily determined to be 0.10 percent. Id. at 10,380. On July 5, 2002, Commerce issued the final results of the administrative review, which were published in the Federal Register on July 11, 2002. See Final Results at 45,958. The final dumping margin for the Viraj Group was determined to be 0.47 percent.⁴ Id. at 45,957. Thus, the Viraj Group received a de minimis dumping margin in both the Preliminary and Final Results, as a collapsed entity.⁵

The Viraj Group consists of Viraj Alloys, Ltd. ("VAL"), Viraj Forgings, Ltd. ("VFL"), Viraj Impoexpo, Ltd. ("VIL"), and Viraj USA, Inc. ("Viraj USA").⁶ In the Preliminary Results, Commerce found that the Viraj Group companies had common ownership, shared directors, and intertwined operations — each a factor in the decision to collapse. Preliminary Results at 10,378. In particular, Commerce determined that the following production relationships exist between the companies: VAL produces "black bar" (hot-rolled round bar) and billets for sale in the Indian home market. Apart from direct sale in the market, VAL supplies VIL with the black bar which VIL further processes into "bright bar" (cold-finished bar) for sale in the United States. In addition to bright bar, VIL produces stainless steel billets, flanges, forgings and wires. VAL also supplies VFL with billets which VFL processes into stainless steel forged flanges. Basing its determination on these findings and retracing the language of 19 C.F.R. § 351.401(f), Commerce concluded in the Preliminary Results that no "substantial retooling would be required for VAL, VIL, or VFL to restructure their manufacturing priorities" and that these companies should therefore be collapsed and treated as one entity. Id.

In the Final Results, Commerce added that the Viraj Group companies also leased equipment or facilities from one another. In particular, Commerce announced:

VAL and VIL can produce subject merchandise (i.e., similar or identical products) and can continue to do so, independently or under existing leasing agreements, without substantial retooling of their production facilities. Furthermore, the three Viraj Group companies share the same two directors who have significant ownership of each company. The two directors oversee all aspects of production, pricing and sales. See Viraj Section A Questionnaire Response (June 29, 2001) at A-6 to A-8. Therefore, we find a significant potential for the manipulation of price and production among VIL, VAL and VFL. For these reasons, we find that VIL, VAL and VFL meet the regulations' collapsing requirements.

Decision Memorandum at 3 (emphasis added). The record further contains the Viraj Group's information that "VIL pays plant and machinery hire charges to VAL for VAL's production facilities." Stainless Steel Bar from India; Rebuttal Brief— Viraj at 2 (Apr. 15, 2002) ("Viraj Admin. Br.") in Def.'s App. 1. "In other words, VIL is producing the bright bars sold to the [United States] using VAL-owned machinery, machinery that VAL itself can use to make the bright bars made by VIL." Id.

As a response to the challenge that it had ignored its precedent on collapsing Commerce observed in the Final Results that such determinations were "fact specific in nature, and require[d] a case-by-case analysis." Decision Memorandum at 3 (quoting Antidumping Duties; Countervailing Duties; Final Rule, 62 Fed.Reg. 27,296, 27,346 (May 19, 1997)). Reemphasizing that VAL and VIL both had capability to produce subject merchandise, Commerce factually distinguished two prior Commerce determinations which had refrained from collapsing affiliated producers because they had no or "limited" overlap of respective production capabilities. Id. at 3-4 (discussing Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Bar from Germany, 67 Fed.Reg. 3159 (Jan. 23, 2002) and Stainless Steel Sheet and Strip from Taiwan; Final Results and Partial Rescission of Antidumping Duty Administrative Review, 67 Fed.Reg. 6682 (Feb. 13, 2002)). On the other hand, Commerce emphasized that, contrary to its actions in previous administrative reviews, it collapsed the Viraj Group companies in more recent administrative reviews of two other antidumping duty orders (those of stainless steel wire rod and of stainless steel flanges from India). Id. at 4; compare Stainless Steel Wire Rod from India; Final Results of Antidumping Duty Administrative Review, 65 Fed.Reg. 31,302 (May 17, 2000) (not collapsing the Viraj Group) with Stainless Steel Wire Rod from India; Final Results of Antidumping Duty Administrative Review, 67 Fed.Reg. 37,391 (May 29, 2002) (collapsing the Viraj Group) and Certain Forged Stainless Steel Flanges from India; Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 67 Fed.Reg. 10,358 (Mar. 7, 2002) (preliminarily collapsing the Viraj Group).

III. DISCUSSION

A. Parties' arguments.

"Collapsing" involves treating a group of affiliated producers as a single entity for the calculation of dumping margins. In this review, Commerce used the collapsed entity's cost of production to value steel billet, the primary input in the manufacturing of SSBs. The domestic industry argues that instead of collapsing, Commerce should have used the "major input rule."⁷ See Mem. in Supp. of Pls.' Mot. for J. upon an Agency R. ("Pls.' Br.") at 5. Under the major input rule, Commerce values a major input at the highest of the transfer price between affiliated entities, the input's market price or its cost of production by the entity that produces the input. See 19 C.F.R. § 351.407(b); 19 U.S.C. § 1677b(f)(3). The domestic industry charges that collapsing understates the dumping margin of the Viraj Group companies.

Under the regulations, Commerce will collapse or "treat two or more affiliated producers as a single entity where those producers have production facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities" and where "there is a significant potential for the manipulation of price or production."⁸ 19 C.F.R § 351.401(f)(1) (emphasis added). Emphasizing the word "either" in the regulation, the domestic industry contends that, contrary to the "substantial retooling" prong of the regulation, Commerce made no determination as to whether each Viraj Group company "on its own" could produce the subject merchandise without substantial retooling. Pls.' Br. at 7. Instead, the domestic industry adds, Commerce merely opined that "VIL and VAL can produce subject merchandise (i.e., similar or identical products) and continue to do...