4 F.Supp.2d 1221 (CIT. 1998), 96-08-01970, Borden, Inc. v. United States

Docket Nº:Court No. 96-08-01970.
Citation:4 F.Supp.2d 1221
Party Name:BORDEN, INC., Gooch Foods, Inc. and Hershey Foods Corp., Plaintiffs, v. UNITED STATES and United States Department Of Commerce, Defendant, and Delverde, SrL and Delverde USA, Defendant-Intervenors. Slip Op. 98-36.
Case Date:March 26, 1998
Court:Court of International Trade
 
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Page 1221

4 F.Supp.2d 1221 (CIT. 1998)

BORDEN, INC., Gooch Foods, Inc. and Hershey Foods Corp., Plaintiffs,

v.

UNITED STATES and United States Department Of Commerce, Defendant,

and

Delverde, SrL and Delverde USA, Defendant-Intervenors.

Slip Op. 98-36.

Court No. 96-08-01970.

United States Court of International Trade.

March 26, 1998

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[Copyrighted Material Omitted]

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Collier, Shannon, Rill & Scott, PLLC (Paul C. Rosenthal, Kathleen W. Cannon, David C. Smith, Jr., and John B. Brew), Washington, DC, for Borden, Inc., Gooch Foods, Inc., and Hershey Foods Corp.

Gilbert, Segall and Young LLP (Jeffrey E. Livingston and David D. Howe), New York City, for F.lli De Cecco di Filippo Fara San Martino S.p.A.

McKenna & Cuneo, LLP (Lawrence J. Bogard, Andrew E. Bej, and Malaika D. Carter), Mound, Cotton & Wollan, (Constantino P. Suriano), Washington, DC, for Delverde, SrL and Delverde USA.

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Dept. of Justice (Lesleyanne Koch Kessler), Dean Pinkert, Attorney-Advisor, Office of Chief Counsel for Import Administration, U.S. Dept. of Commerce, of counsel, Washington, DC, for Defendant.

OPINION

RESTANI, Judge.

This matter is before the court on cross Motions for Judgment on the Agency Record, pursuant to USCIT Rule 56.2, by Borden, Inc., Gooch Foods, Inc., and Hershey Foods Corp. (collectively "Borden" or "the domestic industry") and Delverde, SrL and Delverde USA, Inc. (collectively "Delverde"). This matter is also before the court on a Motion for Judgment on the Agency Record by F.lli De Cecco di Filippo Fara San Martino S.p.A. ("De Cecco"). The International Trade Administration, U.S. Department of Commerce's ("Commerce" or "the agency") determinations under review are Certain Pasta from Italy, 61 Fed.Reg. 30,326 (Dep't Commerce 1996) (final determination) [" Final Determination "] and 61 Fed.Reg. 38,547 (Dep't Commerce 1996) (amended final determination and antidumping order).

Borden asks the court to find that Commerce erred in failing to calculate dumping margins for Delverde using transactionspecific export prices, rather than weighted-average prices, pursuant to 19 U.S.C. § 1677f-1(d)(1) (1994), the "targeted dumping" provision. Borden also challenges Commerce's commission offset methodology.

Delverde argues that Commerce, during Delverde's level of trade inquiry, unlawfully denied its request for a constructed export price ("CEP") offset, an adjustment to normal value which Delverde claims would have led to a de minimis dumping margin. The

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defendant agrees in part and requests a remand to correct analytical errors. Defendant-intervenor Borden opposes this request. Delverde also argues that Commerce erred in rejecting the capital asset depreciation expense component of the cost of production data submitted by Delverde affiliate Tamma Industrie Alimentari, SrL ("Tamma").

De Cecco asks the court to review the 46.67% antidumping margin assigned to it by Commerce based on an "adverse facts available" analysis.

The court considers issues raised by Borden, Delverde, and De Cecco separately, in that order. The facts relating to each issue will be stated separately.

JURISDICTION

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994).

STANDARD OF REVIEW

The court must uphold Commerce's Final Determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1994).

I. Borden

A. Targeted Dumping Investigation

Background

On May 12, 1995, Borden filed a petition with Commerce seeking the imposition of antidumping and countervailing duties against certain pasta from Italy, pursuant to 19 U.S.C. § 1677f-1(d)(1)(B). Certain Pasta from Italy, 60 Fed.Reg. 30,268, 30,268 (Dep't Commerce 1995) (notice of initiation of investigation). Borden used average weekly retail prices to demonstrate that, for all Italian exporters, certain regions of the United States experienced significantly different pricing than others, submitting that this suggested targeting 1 and justified the use of individual ( i.e. transaction-specific) export prices rather than weighted-averages to detect dumping without masking targeting. Letter from Borden to Commerce (Oct. 20, 1995), P.R. 355, Pl. Borden's App., Tab 4. Commerce initiated a sales at less than fair value ("LTFV") investigation on June 1, 1995. Certain Pasta From Italy, 60 Fed.Reg. at 30,268. Commerce found Borden's attempts to demonstrate targeting insufficient reason to depart from its normal methodology and employ instead a comparison with transaction-specific prices. Final Determination, 61 Fed.Reg. at 30,329. Commerce did not perform an independent targeted dumping analysis of the data. Commerce did find a 2.8% dumping margin using the weighted-average to weighted-average comparison. Id. at 30,365. On February 14, 1997, Borden moved for Judgment on the Agency Record, alleging that Commerce erred in refusing to conduct a transaction-specific comparison and that such a comparison would have produced a dumping margin of 6.14%. Pl. Borden's Br. at 6.

Discussion

The issue before the court is whether Commerce erred in rejecting Borden's targeted dumping allegation due to the inadequacy of Borden's pricing pattern evidence. The court concludes that Commerce erred by failing to articulate the methodology or standards by which a targeted dumping allegation would be judged and failed to clearly allocate burdens of production and analysis in the targeting context.

1. Transaction-Specific Price Comparisons, Not Weighted-Average Price Comparisons, are the Exception Requiring Justification

Section 1677f-1(d)(1) of Title 19 of the United States Code describes the LTFV price comparison analysis. The first part of the section describes the normal methodology.

(A) In general

[T]he administering authority shall determine whether the subject merchandise is being sold in the United States at less than fair value -

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(i) by comparing the weighted average of the normal values to the weighted average of the export prices (and constructed export prices) for comparable merchandise, or

(ii) by comparing the normal values of individual transactions to the export prices (or constructed export prices) of individual transactions for comparable merchandise.

19 U.S.C. § 1677f-1(d)(1)(A). The statute continues with a description of conditions under which Commerce might deviate from this method. 19 U.S.C. § 1677f-1(d)(1)(B).

(B) Exception

The administering authority may determine whether the subject merchandise is being sold in the United States at less than fair value by comparing the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions for comparable merchandise, if -

(i) there is a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time, and

(ii) the administering authority explains why such differences cannot be taken into account using a method described in paragraph (1)(A)(i) or (ii).

Id. Commerce reasonably interprets the statute to mean that the weighted-average to weighted-average comparison is the normal method required by law, but that it may, though is not required to, deviate from this requirement under certain conditions and then only upon explicit justification of its decision.

Borden's opposite interpretation, that Commerce must default to the transaction-specific methodology and justify its use of weighted-average price comparisons, is not borne out by the statutory language. 19 U.S.C. § 1677f-1(d)(1)(B)(ii). The practice Borden recommends is contrary to law as it now exists; it reflects the law as it was prior to the changes enacted by the Uruguay Round Agreements Act ("URAA"). Pub.L. No. 103-465, 108 Stat. 4809 (1994). Statement of Administrative Action accompanying the URAA, at 842, H.R. 5110, H.R. Doc. No. 316, Vol. 1, 103d Cong., 2d Sess. (1994) ( "SAA"). Borden quotes the SAA selectively:

Although current U.S. law permits the use of averages on both sides of the dumping equation, Commerce's preferred practice has been to compare an average normal value to individual export prices in investigations and reviews. In part, the reluctance to use an average-to-average methodology has been based on a concern that such a methodology could conceal "targeted dumping." In such situations, an exporter may sell at a dumped price to particular customers or regions, while selling at higher prices to other customers or regions.

SAA at 842 (emphasis supplied). The passage continues, however, to describe as normal the methodology set forth in 19 U.S.C. § 1677f-1(d)(1)(A).

Consistent with the Agreement, new [19 U.S.C. § 1677f-1(d)(1)(A) ] provides that in an investigation, Commerce normally will establish and measure dumping margins on the basis of a comparison of a weighted-average of normal values with a weighted-average of export prices or constructed export prices.

SAA at 842. The SAA explains that the exception to the normal methodology is an antidote to targeted dumping:

New [19 U.S.C. § 1677f-1(d)(1)(B) ] provides for a comparison of average normal values to individual export prices or constructed export prices in situations where an average-to-average or transaction-to-transaction methodology cannot account for a pattern of prices that differ significantly among purchasers, regions, or time periods, i.e., where targeted dumping may be occurring. Before relying on this methodology, however, Commerce must establish and provide an explanation why it cannot account for such differences through the use of an average-to-average or transaction-to-transaction comparison. In addition, the Administration intends that...

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