Tianjin Tiancheng Pharmaceutical v. U.S., SLIP OP. 05-29.

• Citation: 366 F.Supp.2d 1246
• Decision Date: 09 March 2005
• Docket Number: Court No. 03-00654.,SLIP OP. 05-29.
• Parties: TIANJIN TIANCHENG PHARMACEUTICAL CO., LTD., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

Page 1246

366 F.Supp.2d 1246

TIANJIN TIANCHENG PHARMACEUTICAL CO., LTD., Plaintiff, v. UNITED STATES, Defendant.

SLIP OP. 05-29.

Court No. 03-00654.

United States Court of International Trade.

March 9, 2005.

Lafave & Sailer LLP, Washington, DC (Francis J. Sailer & Arthur J. Lafave III), for Plaintiffs.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Jeanne E. Davidson, Assistant Director, Stephen C. Tosini, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; James K. Lockett, Senior Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant.

OPINION

POGUE, Judge.

This action requires the Court to review certain determinations in the "new shipper" review of Plaintiff's imports of glycine from the People's Republic of China. Defendant, the U.S. Department of Commerce ("Commerce"), rescinded its review of Plaintiff's imports after concluding that the sale upon which the review was based was not bona fide. Because the Court finds that Defendant's conclusions are supported by substantial record evidence, the Court denies Plaintiff's motion and enters judgment for Defendant.

BACKGROUND

Commerce published an antidumping duty order on glycine from the People's Republic of China in 1995. Glycine from the People's Republic of China, 60 Fed.Reg. 16,116 (Dep't Commerce Mar 29, 1995) (antidumping duty order). An exporter may request a "new shipper review" of its products that are subject to an antidumping duty order if it began shipment of the products after the order was imposed. See 19 U.S.C. § 1675(a)(2)(B) (2000). This statute enables the new shipper to demonstrate that it should be accorded a dumping rate specific to itself, and not the "all-others" rate, which is usually higher than a firm-specific rate would be.

In this case, Commerce received a request for a new shipper review from Plaintiff on March 29, 2002. Plaintiff refiled its request on May 1, 2002, after having been informed by Commerce that its original request did not comply with the applicable statutes and regulations. See Pl.'s Conf. Mem. Supp. R. 56.2 Mot. J. Agency R. at 2-3 ("Pl.'s Conf. Br."); Final Results of Determination Pursuant to Court Remand ("Remand Determ."), CRR Doc. No. 13 at 2 (Apr. 23, 2004).¹

In response to a Commerce questionnaire issued pursuant to the new shipper review, Plaintiff indicated that on January 25, 2002, it sold 1000 kilograms of glycine to a U.S. importer of pharmaceuticals, denoted here for confidentiality purposes as Company X. The goods were sold at a price of [ ]² per kilogram, and the accompanying customs documentation did not indicate that the goods were subject to antidumping duties. See Additional Copy of CF 7501, Sales Contract, Exs. S-1 & S-3 to Response of Tianjin Tiancheng Pharmaceutical Co., Ltd. to the Supplemental Questionnaire in the New Shipper Review of the Antidumping Duty Order on Glycine from the People's Republic of China, Attach. to Letter from Francis J. Sailer, Lafave & Sailer LLP, to the Hon. Donald L. Evans, Sec'y of Commerce, Re: First Supplemental Questionnaire Response of Tianjin Tiancheng Pharmaceutical Co. Ltd. in the New Shipper Review of Glycine from the People's Republic of China, CR Doc. No. 11 (Dec. 9, 2002).

In response to a supplemental questionnaire, Plaintiff disclosed that although payment on the sale to Company X had been due one month after the date of sale, the payment was not made until over nine months later. See Pl.'s Conf. Br. at 23-24. This was confirmed by Commerce during verification procedures. See Memorandum from Matthew Renkey & Scott Fullerton, Analysts, Office of AD/CVD Enforcement VII, to The File, Re: New Shipper Review of Glycine from the People's Republic of China: Sales and Factors Verification Report for Tianjin Tiancheng Pharmaceutical Co., Ltd., CR Doc. No. 19 at 5 (Mar. 6, 2003). Commerce also ascertained that Company X had previously purchased products other than glycine from Plaintiff for importation. See id. Finally, Commerce learned that during the period corresponding to Plaintiff's sale into the United States, Plaintiff had sold the same product to a third-country market for [ ]. See October 10, 2001 Invoice, Spot Checks of Other Sales, Ex. 7. to CR Appendix 1.

Commerce then issued questionnaires to Plaintiff's importer, Company X. See Glycine from the People's Republic of China, 68 Fed.Reg. 49,434 (Dep't Commerce Aug. 18, 2003) (notice of rescission of antidumping duty new shipper review). The responses confirmed that the January 25, 2002 invoice was paid nine months after the invoice date. See Bank Statement 11/01/02 — 11/29/02, Attach. B to Glycine from PRC (A-570-836) Questionnaire Response, CR Doc. No. 25 (April 28, 2003) (showing that an international funds transfer from Company X to Plaintiff was made on Nov. 22, 2002.) Company X also reported that it had been late in making payment to Plaintiff on previous occasions, but that this transaction represented the longest delay. See Glycine from PRC (A-570-836); Questionnaire Response, CR Doc. No. 35 at Answer 3 (July 17, 2003). In response to questions about Customs irregularities, Company X averred that it had improperly filed documentation because its broker was unaware of the antidumping duties on the goods. Id. at Answer 2.

On August 18, 2003 Commerce rescinded Plaintiff's new shipper review. Commerce stated that it was taking this action because the questionnaire responses from both Plaintiff and its importer indicated that the sale upon which the review was based was not bona fide — that is, it was not typical of normal commercial transactions in the industry. Commerce based its finding that the sale was not bona fide on four considerations: (1) the price at which the goods were sold was not "commercially reasonable," (2) the sales were made outside Plaintiff's normal U.S. sales channels, (3) the extent to which late payment was made by Company X, the importer, and (4) inconsistencies in the import documentation. See Glycine from the People's Republic of China, 68 Fed.Reg. 49,434, 49,435 (Dep't Commerce Aug. 18, 2003) (notice of rescission of antidumping duty new shipper review).

Plaintiff consequently filed suit, seeking review of the determination to rescind the new shipper review. See Remand Determ., CRR Doc. No. 13 at 4 (Apr. 23, 2004). Plaintiff challenged Commerce's use of factual information upon which the parties had had no opportunity to comment in the determination to rescind. Id. at 4-5. On November 19, 2003, Commerce requested that the Court remand the determination so that the record could be reopened to allow the parties to comment on the two new pieces of factual information: (1) publicly available U.S. Customs and Border Protection ("Customs") data on average unit values for glycine and (2) proprietary data from a Customs query regarding U.S. imports of glycine from the People's Republic of China. Id. at 5.

After hearing comments and rebuttals from the parties, as well as after issuing a new questionnaire to Company X, Commerce issued a new determination. See id. at 34-35. In this new determination, Commerce found that Plaintiff's sale had not been bona fide for the same reasons stated in its earlier determination, except that Commerce now found that the sale had been within Plaintiff's normal U.S. sales channels. Id. Commerce still maintained, however, that the price, payment timing, and import documentation all revealed a sale that was not reflective of "normal commercial realities," such that it was not "a reliable indicator of future activity." Id. Therefore, Commerce found that the sale was not bona fide for purposes of a new shipper review. Id.

Plaintiff now challenges this remand determination before the Court.

STANDARD OF REVIEW

This Court reviews Commerce's determinations in antidumping duty proceedings, including new shipper reviews, to determine whether they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(I)(2000).

DISCUSSION

In conducting a new shipper review, Commerce is essentially conducting a new antidumping review that is specific to a particular producer. To conduct such a review, Commerce must determine the "normal value and export price (or constructed export price) of each entry of the subject merchandise." See 19 U.S.C. 1675(a)(2)(A). However, pursuant to the rulings of the Court, Commerce may exclude sales from the export price calculation where it finds that they are not bona fide. A sale is not bona fide, and therefore may be excluded from export price, where it is "unrepresentative or extremely distortive." See Am. Silicon Techs. v. United States, 24 CIT 612, 616, 110 F.Supp.2d 992, 995 (2000) (quoting FAG U.K. Ltd. v. United States, 20 CIT 1277, 1282, 945 F.Supp. 260, 265 (1996)). Accordingly, where a new shipper review is based on a single sale, exclusion of that sale as non-bona fide necessarily must end the review, as no data will remain on the export price side of Commerce's antidumping duty calculation.

To determine whether a sale in a new shipper review is "unrepresentative or extremely distortive," and therefore excludable as non-bona fide, Commerce employs a "totality of the circumstances" test, see Memorandum from Joseph A. Spetrini, Deputy Assistant Sec'y for Imp. Admin. Group III, to James J. Jochum, Assistant Sec'y for Imp. Admin., Re: Glycine from the People's Republic of China: the Bona Fide Issue in the New Shipper Review of Tianjin Tiancheng Pharmaceutical Co Ltd. ("Bona Fide Memo"),³ CR Doc. No. 39 at 3 (Aug. 8, 2003), focusing on whether or not the transaction is "commercially unreasonable" or "atypical of normal business practices." See Freshwater Crawfish Tail Meat from the People's Republic of China, 68 Fed.Reg. 1,439, 1,440 (Jan. 10, 2003) (notice of final results of antidumping duty new shipper review, and final...