Toho Titanium Co., Ltd. v. US

• Citation: 657 F. Supp. 1280
• Decision Date: 13 March 1987
• Docket Number: Court No. 85-1-00024.
• Parties: TOHO TITANIUM COMPANY, LTD., Plaintiff, v. The UNITED STATES, the United States Department of Commerce, and the United States International Trade Commission, Defendants, and RMI Company and Titanium Metals Corporation of America, Intervenors.
• Court: U.S. Court of International Trade

657 F. Supp. 1280

TOHO TITANIUM COMPANY, LTD., Plaintiff, v. The UNITED STATES, the United States Department of Commerce, and the United States International Trade Commission, Defendants, and RMI Company and Titanium Metals Corporation of America, Intervenors.

Court No. 85-1-00024.

United States Court of International Trade.

March 13, 1987.

Graham & James, Denis H. Oyakawa, James H. Broderick, Jr. and Patrick J. Fields, Los Angeles, Cal., for plaintiff.

Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., Dept. of Justice, Sheila N. Ziff, Washington, D.C.; Lisa B. Koteen, Office of the Deputy Chief Counsel for Import Admin., for defendants.

Wilmer, Cutler & Pickering, A. Douglas Melamed, John D. Greenwald and Deborah M. Levy, Washington, D.C.; John F. Hornbostel, Jr., New York City, RMI Co., for intervenors RMI Co.

Pillsbury, Madison & Sutro, Donald E. deKieffer and Francis J. Sailer, Washington, D.C.; Frederick W. Steinberg, Pittsburgh, Pa., Titanium Metals Corp. of America, for intervenor Titanium Metals Corp. of America.

DiCARLO, Judge:

Toho Titanium Company, Ltd. (Toho), a Japanese exporter of titanium sponge, challenges a final determination by the United States Department of Commerce, International Trade Administration (Commerce) that titanium sponge from Japan is being sold in the United States at less than fair value. Titanium Sponge From Japan: Final Determination of Sales at Less Than Fair Value, 49 Fed.Reg. 38,687 (October 1, 1984). Pursuant to Rule 56.1 of the rules of this Court, Toho moves for a judgment upon the agency record, asserting Commerce erred in its determination to use constructed value rather than sales of titanium sponge in Japan as the basis for determining foreign market value. The action is remanded for an explanation by Commerce why Toho's sales below the cost of production are not at prices which would allow recovery of all costs within a reasonable period of time in the normal course of trade.

BACKGROUND

On November 28, 1983, the RMI Company (RMI) filed an antidumping petition with Commerce on behalf of the United States titanium sponge industry. The petition alleged that imports of titanium sponge from Japan were being, or were likely to be, sold in the United States at less than fair value and that such imports were materially injuring or threatening to materially injure the United States titanium sponge industry. The petition further alleged that sales of titanium sponge in the home market of Japan were being made at less than the cost of production. After evaluation of the petition, Commerce decided to initiate an antidumping investigation and published notice of such decision. See Titanium Sponge From Japan; Initiation of Antidumping Investigation, 48 Fed.Reg. 56,815 (December 23, 1983).

On December 30, 1983, Commerce presented antidumping questionnaires to the three known Japanese producers and exporters of titanium sponge — Nippon Soda Co., Osaka Titanium Co., Ltd. and Toho. The questionnaires requested data respecting sales and production costs for a six-month period covering June 1, 1983 to November 30, 1983.

Based on the questionnaire responses, Commerce made a preliminary determination that Japanese titanium sponge was being sold, or was likely to be sold, at less than fair value in the United States. Preliminary Determination of Sales at Less Than Fair Value; Titanium Sponge From Japan, 49 Fed.Reg. 20,042 (May 11, 1984). In that preliminary determination, Commerce stated with respect to the determination of foreign market value:

In accordance with section 773(a)(1) of the Act, we used home market prices or constructed value to determine foreign market value. The petitioner alleged that sales in the home market were at prices below the cost of producing titanium sponge. In order to determine the cost of production, we examined production costs, including materials, labor and general expenses.

Where sales of merchandise under investigation were made over an extended period of time in substantial quantities, and at prices that did not permit recovery of all costs within a reasonable period of time in the normal course of trade, we disregarded these sales in our analysis in accordance with section 773(b) of the Act. Where sufficient sales of the merchandise under investigation were made at or above the cost of production, we used them in making price-to-price comparisons with sales in the U.S. market. Where sales of the merchandise under investigation above the cost of production were inadequate to provide a basis for foreign market value, we used constructed value to determine foreign market value.....

We compared Toho's home market sales to its cost of production. We found that all sales were made at less than cost. Therefore, we used constructed value as the basis of foreign market value. We found that all U.S. sales were made at less than the constructed value.

49 Fed.Reg. at 20,042-43.

In its prehearing brief, Toho argued that six months did not constitute "an extended period of time" of below costs sales for the titanium sponge industry and that six months is an insufficient period for collecting data to determine what is "an extended period of time" or whether Toho's prices would allow recovery of costs "over a reasonable period of time," as required by section 773(b) of the Tariff Act of 1930 (the Act), as amended, 19 U.S.C. § 1677b(b) (1982). Toho requested that Commerce use actual home market sales prices to calculate foreign market value or, alternatively, to determine whether Toho's prices would permit recovery of all costs over the company's business cycle.

At the hearing on July 25, 1984 and in its posthearing brief, Toho again requested that Commerce assess whether Toho's prices would permit recovery of all costs over the company's business cycle. In response to a letter sent by Toho dated August 21, 1984, Commerce replied by letter dated September 24, 1984 that it would not consider Toho's position both because the argument was made too late in the investigation to allow verification or comment and because the data submitted by Toho was inadequate to support its position.

In its final determination, Commerce stated:

In accordance with section 773(a)(2) of the Act, we used constructed value to determine foreign market value. The petitioner alleged that sales in the home market were at prices below the cost of producing titanium sponge. In order to determine the cost of production, we examined production costs, including materials, labor and general expenses.

We found that all non-U.S. sales of the merchandise under investigation were made over an extended period of time in substantial quantities, and at prices that did not permit recovery of all costs within a reasonable period of time in the normal course of trade. Therefore, we disregarded these sales in our analysis in accordance with section 773(b) of the Act. Instead, we used constructed value to determine foreign market value.

49 Fed.Reg. at 38,688.

Commerce also responded to Toho's position concerning the use of constructed value rather than home market sales:

Comment 1: Toho aserts that the Department must determine that its home market sales at less than the cost of production (1) have been made over an extended period of time and (2) are not at prices which permit recovery of all costs within a reasonable period of time in the normal course of trade, pursuant to section 773(b) of the Act. Toho argues that the six-month period which the Department examined is not and "extended period of time" nor a "reasonable period" within the meaning of the Act.

DOC Position: Toho submitted the company's plant utilization data for 10 years to support its allegation that the titanium sponge industry was in a trough in its business cycle during the period of investigation and that Toho's prices would allow recovery of all costs over a "reasonable period of time," were that period to include an entire business cycle. The adjustment was not considered by the Department because the information (1) did not justify Toho's position that its prices would recover all costs over a "reasonable period of time," and (2) was not submitted in a timely manner.

49 Fed.Reg. at 38,691.

On November 30, 1984, Commerce published an antidumping duty order regarding titanium sponge from Japan, imposing a required cash deposit of estimated antidumping duties of 34.25 percent on entries of titanium sponge manufactured by Toho. See 49 Fed.Reg. 47,053 (1984). Toho timely brought this action to contest that final order. The Court granted motions to intervene by RMI and Titanium Metals Corporation of America.

OPINION

In its motion for judgment upon the agency record, Toho is seeking a review of an antidumping duty order under section 516A(a)(2) of the Act, as amended, 19 U.S.C. § 1516a(a)(2) (1982). The standard of review of such action by the Court is set forth in 19 U.S.C. § 1516a(b)(1)(B) which states that "The court shall hold unlawful any determination, finding, or conclusion found to be unsupported by substantial evidence on the record or otherwise not in accordance with law."

Toho argues that Commerce must use sales in the home market, Japan, to calculate foreign market value unless it determines pursuant to section 773(b) of the Act, as amended, 19 U.S.C. § 1677b(b) (1982) that home market sales have been made at a price less than the cost of production over an extended period of time in substantial quantities and at prices which will not permit recovery of all costs within a reasonable period of time in the normal course of trade. Toho claims that Commerce did not make these determinations, and even if such determinations were made they are not supported by substantial evidence on the record.

The relevant portion of section 1677b(b) states:

If the administering authority determines that sales made at less than cost of production —

(1) have been made

...