E.I. Dupont De Nemours & Co. v. U.S., Slip Op. 98-35.

• Citation: 4 F.Supp.2d 1248
• Decision Date: 26 March 1998
• Docket Number: Slip Op. 98-35.,Court No. 95-09-01216.
• Parties: E.I. DUPONT DE NEMOURS & COMPANY, Hoechst Celanese Corporation and ICI Americas Inc., Plaintiffs, v. UNITED STATES, Defendant, SKC Limited and SKC America, Inc.; Cheil Synthetics, Inc. and Samsung America, Inc.; STC Corporation, STC of America, Inc. and American Tape Company; Kolon Industries, Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

4 F.Supp.2d 1248

E.I. DUPONT DE NEMOURS & COMPANY, Hoechst Celanese Corporation and ICI Americas Inc., Plaintiffs, v. UNITED STATES, Defendant, SKC Limited and SKC America, Inc.; Cheil Synthetics, Inc. and Samsung America, Inc.; STC Corporation, STC of America, Inc. and American Tape Company; Kolon Industries, Inc., Defendant-Intervenors.

Slip Op. 98-35.

Court No. 95-09-01216.

United States Court of International Trade.

March 26, 1998.

COPYRIGHT MATERIAL OMITTED

Wilmer, Cutler & Pickering (John D. Greenwald) and Howry & Simon (Michael A. Hertzberg, Matthew J. Clark, Maria Tan Pedersen and F. Alexander Amrein), Washington, DC, for Plaintiffs.

Frank W. Hunger, Asst. Atty. Gen.; David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice; Velta A. Melnbrencis, Asst. Director (Lance J. Lerman); of counsel: Karen L. Bland, Attorney-Advisor, Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, DC, Washington, DC, for Defendant.

Akin, Gump, Strauss, Hauer & Feld, L.L.P. (Warren E. Connelly and Katherine M. Ho), Washington, DC, for Defendant-Intervenors, Cheil Synthetics, Inc. and Samsung America, Inc.

Kaye, Scholer, Fierman, Hays & Handler, LLP (Michael P. House, R. Will Planert and Stephen E. Lebowitz), Washington, DC, for Defendant-Intervenors, SKC Ltd. and SKC America, Inc.

Shearman & Sterling (Jeffrey M. Winton), Washington, DC, for Defendant-Intervenor, Kolon Industries, Inc.

OPINION

TSOUCALAS, Senior Judge:

Plaintiffs, E.I. DuPont de Nemours & Company, Hoechst Celanese Corporation and ICI Americas Inc. (collectively "DuPont"), move for judgment on the agency record pursuant to Rule 56.2 of the Rules of this Court. DuPont challenges the Department of Commerce, International Trade Administration's ("Commerce") final results of the administrative review, entitled Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea; Final Results of Antidumping Duty Administrative Review ("Final Results"), 60 Fed.Reg. 42,835 (Aug. 17, 1995), as amended, 61 Fed.Reg. 5375 (Feb. 12, 1996).

Background

On June 5, 1991, pursuant to an affirmative final determination of sales at less than fair value ("LTFV") and an affirmative final determination of material injury, Commerce issued an antidumping duty order encompassing all entries of Polyethylene Terephthalate ("PET") film from Korea. See Antidumping Duty Order and Amendment to Final Determination of Sales at Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea, 56 Fed. Reg. 25,669. Commerce subsequently initiated an administrative review of PET film for the period covering November 30, 1990, through May 31, 1992.¹ See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 57 Fed.Reg. 32,521 (July 22, 1992). Commerce published the preliminary results of the first administrative review on July 8, 1994. See Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea; Preliminary Results of Antidumping Duty Administrative Review ("Preliminary Results"), 59 Fed.Reg. 35,098. On August 17, 1995, Commerce published the Final Results at issue. See 60 Fed.Reg. at 42,835.

In light of the Court of Appeals for the Federal Circuit's ("CAFC") decision in IPSCO, Inc. v. United States, 965 F.2d 1056 (Fed.Cir.1992), this court remanded to Commerce certain aspects of the LTFV investigation. See E.I. DuPont de Nemours & Co. v. United States, 17 CIT 1266, 841 F.Supp. 1237 (1993). On March 20, 1996, the court issued a ruling on the remand redetermination of the LTFV investigation. See E.I. DuPont de Nemours & Co. v. United States, 20 CIT ___, 932 F.Supp. 296 (1996). In that case, the court affirmed Commerce's remand redetermination with respect to Cheil's and SKC's cost methodologies for recycled PET material, Cheil's and SKC's cost methodologies for prime and off-grade PET film and SKC's product-specific costs. See id.

DuPont now claims Commerce erred in the Final Results by: (1) accepting the value-based costing methodologies utilized by Cheil Synthetics, Inc. ("Cheil") and SKC Limited and SKC America, Inc. (collectively "SKC") to calculate the material costs of recycled PET material; (2) accepting SKC's methodology for calculating the production costs of off-grade PET film; (3) accepting SKC's product-specific cost data; (4) determining that there was no evidence in the record that SKC manipulated roll film pricing on its United States sales to Anacomp, Inc. ("Anacomp"); (5) accepting inventory carrying costs as reported by Kolon Industries, Inc. ("Kolon"); (6) calculating an imputed credit expense based on the short-term interest rate as reported by SKC; and (7) deciding to account for non-customary inventory carrying costs incurred by Cheil in the home market on its United States sales.

Discussion

The Court has jurisdiction over this matter under 19 U.S.C. § 1516a(a)(2) (1994) and 28 U.S.C. § 1581(c) (1994).

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). Substantial evidence is "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). "It is not within the Court's domain either to weigh the adequate quality or quantity of the evidence for sufficiency or to reject a finding on grounds of a differing interpretation of the record." Timken Co. v. United States, 12 CIT 955, 962, 699 F.Supp. 300, 306 (1988), aff'd, 894 F.2d 385 (Fed.Cir. 1990).

1. Acceptance of Cheil's and SKC's Costing Methodologies for Recycled PET Film

In calculating the cost of production ("COP") and constructed value ("CV") of the PET film, Commerce accepted the cost data reported by Cheil and SKC, concluding that both methodologies reasonably calculated the material costs of recycled material. See Final Results, 60 Fed.Reg. at 42,836. PET film is manufactured in a two-stage process that ultimately combines virgin and recycled PET chips in different combinations to produce different types of PET film. In the first stage, raw materials of ethylene glycol, dimethyl terephthalate and terephthalate acid are combined to produce virgin polyester chips from polymerization. In the second stage, the virgin chips are melted down and extruded through a dye and rolled out on rollers to produce finished PET film. The production of PET film from chips features a first pass efficiency, i.e., a percentage of good, salable finished film from each production run, of between 50% and 80% of the volume of input material. Cheil and SKC both recycle the PET material edge trimmings and scrap resulting from the production process into chips and combine them with virgin material to manufacture film of the same or lower specification in subsequent runs. As very little PET polymer degrades during production, over 90% of the total volume of raw material introduced into the production process ultimately emerges as finished PET film.

Cheil and SKC both calculate material costs utilizing valuebased methodologies to account for the recycled PET material. Cheil employs a figure representing the potential resale value of a recycled chip, known as a "net realizable value" ("NRV"). To arrive at its total materials cost for each run, Cheil adds the cost of the virgin material to the NRV of the chip input and subtracts the NRV of the chips produced. In contrast, SKC assigns a cost to its transferred recycled PET equal to the processing cost involved in recovering and recycling the scrap material into chips and treats the recycled material as having a zero materials cost. In essence, from a materials cost standpoint, SKC assigns a zero value for recycled PET transferred to the receiving film, but includes the cost of processing the edge trimmings into recycled PET. See Final Results, 60 Fed.Reg. at 42,836. Cheil includes this processing cost in its film fabrication costs.

DuPont claims Cheil's and SKC's methodologies attribute a value to recycled PET that is far below the cost of virgin PET, for which it is substitutable, hence resulting in a cost figure unrepresentative of actual cost. DuPont argues that the end result of defendant-intervenors' methodologies is the shifting of costs from films sold in the United States to films sold in Korea when material is transferred. In essence, DuPont maintains that a distinction can be made between films that both Cheil and SKC manufacture: those that generate recycled PET and those that consume recycled PET. According to DuPont, as consuming films are predominantly sold in the United States and generating films are predominantly sold in Korea, Cheil's and SKC's inaccurate accounts for costs succeed in shifting costs away from the films principally involved in the review, thus systematically understating COP and CV. DuPont's Mem. Supp. Mot. J. Agency R. at 24-53.

Commerce first responds that it need not apply the cost methodology mandated by the CAFC in IPSCO, as that case applies solely to co-products and the recycled chips in this case are by-products of the PET film production process. Commerce further reiterates its conclusion in the Final Results that both methodologies at issue reasonably reflect the actual cost of producing PET film. Nevertheless, Commerce acknowledges the potential merit of DuPont's cost-shifting claims and commits to specifically investigate this allegation in subsequent reviews. Def.'s Partial Opp'n to Mot. J. Agency R. at 23-34. Cheil and SKC agree generally with the position taken by Commerce. Cheil's Opp'n to Mot. J. Agency R. at 14-33; SKC's Opp'n to Mot. J. Agency R. at 7-14.

The edge trimmings and other scrap materials that...