Viraj Group v. U.S.

• Decision Date: 13 February 2007
• Docket Number: No. 2006-1158.,2006-1158.
• Citation: 476 F.3d 1349
• Parties: VIRAJ GROUP, Plaintiff-Appellant, v. UNITED STATES, Defendant, and Slater Steels Corporation, Carpenter Technology Corporation, Electralloy Corp., Crucible Specialty Metals Division, and Crucible Materials Corp., Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

476 F.3d 1349

VIRAJ GROUP, Plaintiff-Appellant, v. UNITED STATES, Defendant, and Slater Steels Corporation, Carpenter Technology Corporation, Electralloy Corp., Crucible Specialty Metals Division, and Crucible Materials Corp., Defendants-Appellees.

No. 2006-1158.

United States Court of Appeals, Federal Circuit.

February 13, 2007.

Daniel P. Wendt, Miller & Chevalier, Chartered, of Washington DC., argued for plaintiff-appellant. On the brief was Peter J. Koenig. Of counsel was Jeffery C. Lowe.

Robin H. Gilbert, Kelley Drye Collier, Shannon, of Washington DC., argued for defendants-appellees, Slater Steels Corporation, et al.

Before NEWMAN, LINN, and MOORE, Circuit Judges.

MOORE, Circuit Judge.

Viraj Group appeals the decision of the United States Court of International Trade instructing the United States Department of Commerce ("Commerce") to treat the Viraj Group companies as separate entities for purposes of calculating an antidumping duty on stainless steel bar imports from India. Slater Steels Corp. v. United States, 27 I.T.R.D. (BNA) 1486, 2005 WL 388610 (Ct. Int'l Trade 2005) ("Slater III"). As instructed, Commerce calculated separate antidumping duties for the Viraj Group entities but stated that it believed the Viraj Group companies should be treated as one entity for the duty calculation. Redetermination Pursuant to Remand (III), Consol. Court No. 02-00551, slip op. 05-23 (July 15, 2005) ("Remand Results III"). The Court of International Trade affirmed the imposition of separate antidumping duties. Slater Steels Corp. v. United States, 395 F.Supp.2d 1353 (Ct. Int'l Trade 2005) ("Slater IV"). This appeal followed.

Appellant argues that the Court of International Trade erred by finding that Commerce had a prior practice of not collapsing the Viraj Group in other antidumping reviews. Appellant further argues that Commerce's interpretation of its collapsing regulation is correct, and that in accordance with that regulation, the Viraj Group entities should be collapsed for purposes of calculating an antidumping duty.

We agree. Accordingly, we reverse the Court of International Trade's decisions in Slater III and Slater IV, and instruct the Court of International Trade to vacate Commerce's imposition of separate antidumping duties, or margins, and reinstate Commerce's prior antidumping duty calculation for the Viraj Group as a collapsed entity.

BACKGROUND

I

Congress has created a system for investigating and resolving antidumping disputes. According to this system, Commerce must make a determination as to whether the subject merchandise is being or is likely to be sold in the United States at "less than fair value." 19 U.S.C. § 1673d(a)(1) (2000). The International Trade Commission ("ITC") must determine whether a domestic industry exists that would suffer material injury from the dumping activity. Id. § 1673d(b)(1). If both findings are affirmative, the importer is subjected to an antidumping duty, which is intended to equalize the prices between comparable goods sold in the United States and the importer's home market. See id. § 1673 (2000).

To carry out its obligations in the antidumping context, Commerce has promulgated regulations that guide its analyses. At issue in the present case is the treatment of affiliated companies for purposes of calculating the antidumping duty under 19 C.F.R. § 351.401(f)(1). The regulation provides:

In an antidumping proceeding under this part, the Secretary will 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 the Secretary concludes that there is a significant potential for the manipulation of price or production.

19 C.F.R. § 351.401(f)(1) ("collapsing regulation"). Specifically, this appeal questions whether the Viraj Group meets each of the requirements set forth in Commerce's collapsing regulation, such that Commerce should treat the Viraj Group entities as one company when calculating an appropriate dumping margin.

II

In 1995, Commerce issued the antidumping order central to this dispute, covering stainless steel bars from India. Stainless Steel Bar from Brazil, India, and Japan, 60 Fed.Reg. 9,661 (Dep't of Commerce Feb. 21, 1995) ("the SSB Order"). Under an antidumping order, such as the SSB Order, Commerce is required to conduct an administrative review for each new importer of the subject merchandise as well as to review entries for subject merchandise for any prior one-year period upon request.

The present review involves Viraj's stainless steel bar imports during the period from February 1, 2000 to January 31, 2001 ("the '00-'01 POR"). For the '00-'01 POR, the relevant Viraj Group companies are: (1) Viraj Impoexpo, Ltd. ("VIL"), (2) Viraj Alloys, Ltd. ("VAL"), and (3) Viraj Forgings, Ltd. ("VFL"). The subject merchandise includes two types of steel bar products, stainless steel hot-rolled bar ("black bar") and stainless steel cold-rolled bar ("bright bar").

In 2002, Commerce made a final determination that the Viraj Group should be collapsed (i.e., treated as a single entity) for calculating its dumping margin, and it assigned the Viraj Group a single de minimis dumping margin of 0.47%. Stainless Steel Bar from India, 67 Fed.Reg. 45,956 (Dep't of Commerce July 11, 2002) (final admin. review). On appeal, the Court of International Trade questioned Commerce's decision to collapse, focusing primarily on whether the Viraj Group companies had the type of production capabilities required under the collapsing regulation to support Commerce's decision. Slater Steels Corp. v. United States, 279 F.Supp.2d 1370, 1376-79 (Ct. Int'l Trade 2003) ("Slater I"). Finding that Commerce's decision was not supported by substantial evidence, the Court of International Trade remanded to Commerce to reanalyze the collapsing decision and "if necessary, to revise its dumping margin calculation." Id. at 1379.

Commerce thereafter reconsidered its collapsing analysis and again determined that collapsing was permissible under its regulation because VAL could produce equivalent products as VIL by adding annealing and pickling equipment to its facilities. Final Results of Redetermination Pursuant to Remand (I), Consol. Court No. 02-00551, slip op. 03-108, at 9 (Oct. 24, 2003) ("Remand Results I"). This retooling was not "substantial" because Commerce estimated that it would require "less than 10 percent of [VAL's] current fixed asset value" to carry out. Id. On appeal, the Court of International Trade disagreed with Commerce's interpretation of its collapsing regulation as not requiring analysis of the retooling that each company would need in order to produce similar or identical products. Slater Steels Corp. v. United States, 316 F.Supp.2d 1368, 1375 (Ct. Int'l Trade 2004) ("Slater II"). The Court of International Trade remanded again, concerned that Commerce focused solely on the retooling that VAL would need to produce VIL's products, without consideration of the retooling VIL would need to produce VAL's products. Id. In Slater II, the Court of International Trade also questioned how Commerce determined that less than ten percent of a company's fixed assets did not constitute "substantial retooling." Id. at 1379. Finally, the Court of International Trade criticized Commerce's failure to address whether the "major input rule" might have been more appropriate than collapsing for treatment of the affiliated Viraj Group companies. Id. at 1380.

On remand again, Commerce addressed each of the concerns that the Court of International Trade raised in Slater II. Final Results of Redetermination Pursuant to Remand (II), Consol. Court No. 02-00551, slip op. 04-22 (May 7, 2004) ("Remand Results II"). Commerce explained that the regulation states collapsing is appropriate where substantial retooling would not be required for "either facility," which means that Commerce needs only to consider whether retooling could occur in one direction. Id. at 9-21. Commerce also explained that its ten percent estimation was conservative and detailed why a more precise calculation (2.88%) did not amount to a "substantial retooling." Id. at 33-38. Finally, Commerce defended its practice of not considering the major input rule in its collapsing analysis. Id. at 38-41.

Slater Steels Corporation ("Slater") appealed this decision to the Court of International Trade. Before the court ruled on the appeal, Slater submitted an ex parte letter to the court, asking the court to consider its intervening decision in Carpenter Technology Corp. v. United States, 344 F.Supp.2d 750 (Ct. Int'l Trade 2004) ("Carpenter"). In Carpenter, the Court of International Trade considered the dumping margins assessed on the Viraj Group under an unrelated antidumping order involving wire rods ("the Wire Rod Order"). The Court of International Trade, in Carpenter, reversed a decision by Commerce to collapse the Viraj Group for the review because it found that collapsing was inexplicably inconsistent with Commerce's prior treatment of the Viraj Group under the Wire Rod Order. Id. at 755. Specifically, during an earlier review period under the Wire Rod Order, Commerce affirmatively decided not to collapse the Viraj Group, a decision that was affirmed by the Court of International Trade on appeal. Viraj Group Ltd. v. United States, 162 F.Supp.2d 656 (Ct. Int'l Trade 2001). Accordingly, in Carpenter, the court would not allow Commerce to depart from its prior practices under the Wire Rod Order without valid reason. After reviewing Carpenter and its possible implications in the present review, the court issued a letter on October 5, 2004, asking Commerce to "indicate what, if any, factual changes have occurred prior to the ['00-'01 POR] such that its decision to collapse the Viraj Group companies should not be remanded as...