698 F.Supp. 275 (CIT. 1988), 87-01-00001, Monsanto Co. v. United States

Docket Nº:Court No. 87-01-00001.
Citation:698 F.Supp. 275
Party Name:MONSANTO COMPANY, Plaintiff, v. The UNITED STATES, Defendant. v. NISSAN CHEMICAL INDUSTRIES, LTD., et al., Intervenors.
Case Date:October 14, 1988
Court:Court of International Trade

Page 275

698 F.Supp. 275 (CIT. 1988)

MONSANTO COMPANY, Plaintiff,

v.

The UNITED STATES, Defendant.

v.

NISSAN CHEMICAL INDUSTRIES, LTD., et al., Intervenors.

Court No. 87-01-00001.

United States Court of International Trade.

Oct. 14, 1988

Page 276

Stewart and Stewart, Eugene L. Stewart, Terence P. Stewart, David Scott Nance, and Lane S. Hurewitz, Washington, D.C., for plaintiff.

John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Platte B. Moring, III, Civ. Div., U.S. Dept. of Justice, Washington, D.C., for defendant.

Graham & James, Yasuhiro Hagihara, Los Angeles, Cal., Lawrence R. Walders, Washington, D.C., and Denis Oyakawa, Los Angeles, Cal., for defendant-intervenor Nissan Chemical Industries, Inc.

Weil, Gotshal & Manges, A. Paul Victor, Charles H. Bayar and Douglas A. Nave, New York City, for defendant-intervenors Shikoku Chemical Corp. and Mitsubishi Corp.

OPINION

RESTANI, Judge:

This matter is before the court on plaintiff's motion for judgment upon the administrative record pursuant to Rule 56.1 of the Rules of this Court. In this action, plaintiff challenges the Department of Commerce, International Trade Administration's (ITA) final results in the first administrative review of antidumping duty orders covering certain chemicals imported from Japan. Cyanuric Acid and its Chlorinated Derivatives from Japan Used in the Swimming Pool Trade, 51 Fed.Reg. 45,495 (Dec. 19, 1986). The challenged administrative review covers two Japanese manufacturers of cyanuric acid and its chlorinated derivatives (CA & CD) exported to the United States and the period November 18, 1983 through March 31, 1984. ITA found weighted average dumping margins of zero percent for one manufacturer, Nissan

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Chemical Industries, Inc., on the two subject products it exported to the United States--dichloro isocyanurates and trichloro isocyanuric acid. For the second manufacturer, Shikoku Chemicals Corporation, ITA arrived at margins of 1.74 percent for imports of cyanuric acid, 9.66 percent for dichloro isocyanurates and 0.66 percent for trichloro isocyanuric acid. 51 Fed.Reg. at 45,497.

ARGUMENTS

Plaintiff raises five basic issues: (1) it alleges that ITA violated the statute by including in its calculation of foreign market value sales of merchandise which were not within the class or kind of merchandise covered by the investigation; 1 (2) plaintiff asserts a circumstances of sale adjustment should be made to foreign market value because of differences in value between CA & CD sold in the swimming pool trade and that sold in other trades, and that foreign market value should be adjusted to reflect restrictions on the sale of CA & CD in Japan; (3) plaintiff alleges that ITA's investigation to determine whether certain sales were below cost of production was inadequate; 2 (4) plaintiff alleges that it was deprived of its constitutional right to meaningful participation in the administrative review because of ITA's failure to provide it access to certain documents relating to the cost of production investigation; and (5) plaintiff objects to a circumstances of sale adjustment to foreign market value for Shikoku's advertising expenses.

Plaintiff's motion is opposed by defendant and two intervenors. The intervenors are the foreign producers of the relevant chemicals that were the subject of the investigation.

DISCUSSION

I. Sales to be Included in Calculation of Foreign Market Value

The chemicals under investigation are cyanuric acid and its chlorinated derivatives (CA & CD). For purposes of 19 U.S.C. § 1673 (1982), ITA, in its original less than fair value investigation, defined the class or kind of merchandise under investigation as CA & CD for use in the swimming pool trade. 48 Fed.Reg. 52,497 (Nov. 18, 1983) (Preliminary Determination). Both respondents in this case sold CA & CD in granular form in the United States.

In order to determine whether goods are being sold in the United States at less than fair value, ITA must compare the foreign market value of the subject merchandise with the price at which such merchandise is sold in the United States. 19 U.S.C. § 1673 (1982). Foreign market value is defined, in relevant part, as the price, at the time of exportation of such merchandise to the United States, at which "such or similar merchandise" is sold in the "ordinary course of trade" in the home market of the country of exportation. 19 U.S.C. § 1677b(a)(1) (1982).

Pursuant to 19 U.S.C. § 1677(16) (1982), there are three categories of such or similar merchandise. The first category is the preferred category and it is to be used if sales of such merchandise exist. 3 It includes merchandise which is the subject of the investigation and other merchandise which is identical in physical characteristics to the merchandise under investigation. Sales of CA & CD in granular form were made in Japan. To a large degree, however, they were made outside the swimming pool trade. 4 Plaintiff argues that because CA & CD in granular form for use outside the swimming pool trade do not fall

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within the scope of the class or kind of merchandise to be subjected to antidumping duties in the United States, ITA erred in its selection of the basis for the determination of foreign market value. ITA argues that it is following the words of the statute exactly as set forth, and that it has no choice under 19 U.S.C. § 1677(16) but to proceed to include in its foreign market value calculations merchandise with identical characteristics as that under investigation.

Plaintiff has presented no credible argument that the literal words of the statute should be read in any other way than that suggested by ITA. The words of the first category of § 1677(16) can only mean that other identical merchandise is to be included even if it is not the merchandise which is in the relevant class. Plaintiff argues that ITA's literal interpretation of the statute may produce absurd results. Plaintiff argues it is simply inconceivable that Congress intended non-subject merchandise to form the basis for establishing foreign market value. Essentially, the argument is that the comparison being made is of apples and oranges. The answer here is that apples are apples no matter who buys them and that a market or use limitation on the subject class, by itself, does not restrict the basis for the fair market calculation if all the merchandise included is physically identical. 5

The general rule of law is that a statute must be applied according to its plain language unless absurd results are produced thereby. Plaintiff's speculations about the conduct of the producers here, see discussion infra, is not a demonstration that the plain language is absurd. The antidumping law does not counteract all conduct of harm to plaintiff. Furthermore, it does not contain every safeguard possible to prevent avoidance of dumping margins by foreign producers in situations where their conduct might seem to plaintiff to warrant duties. The antidumping laws counteract dumping in a very specific way. ITA is not at liberty to alter the scheme.

In a related argument, Monsanto argues that sales not made in the swimming pool trade are outside the ordinary course of trade within the meaning of 19 U.S.C. § 1677b(a)(1)(A) (1982), and may not be included in the fair market value calculation. The term ordinary course of trade, is defined at 19 U.S.C. § 1677(15) (1982) as "the conditions and practices which ... have been normal in the trade under consideration with respect to merchandise of the same class or kind" as the subject merchandise. According to Monsanto's reading of the statute, if the sales are not sales of the class or kind of merchandise defined by ITA, i.e., those within the swimming pool "trade," they are not sales in the ordinary course of trade and should be excluded from the fair value comparison.

To read the statute in the manner suggested by Monsanto would cause it to conflict with the hierarchies set out in section 1677(16), which indicates that merchandise that is physically identical to that in the subject class should be the basis for foreign market value, if such merchandise is available. The commonly understood purpose of the ordinary course of trade provision is to prevent dumping margins from being based on sales which are not representative, for example, sales of obsolete merchandise. Ordinarily such sales are not appropriate for comparison purposes. A sale destined for a different type of end user is not automatically a sale made under different conditions or pursuant to different practices than sales made to the end user described in the subject class, so as to render the sale outside the ordinary course of trade. Some confusion may have been caused in this case because the scope of the investigation order has been defined as the swimming pool trade. It is difficult to reconcile the use of the word "trade" in the scope determination with the way the word is used in the ordinary course of trade definition. Perhaps if ITA had said the subject of the investigation was CA & CD sold for swimming pool "use" this issue would not have arisen.

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The language of section 1677(15) would appear to mean in this circumstance that if the ordinary conditions of trade are different for some of the identical merchandise than they are generally for the merchandise which is in the class or kind as defined by ITA so as to make the sales unsuitable for comparison purposes, then such sales should not be considered as in the ordinary course of trade. Such a reading does not conflict with section 1677(16). Plaintiff has not demonstrated that any of the sales of granular CA & CD used in computing foreign market value were made under conditions...

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