751 F.Supp.2d 1345 (CIT 2010), 09-00205, Jiaxing Brother Fastener Co., Ltd. v. United States

Docket Nº:Court 09-00205.
Citation:751 F.Supp.2d 1345
Opinion Judge:CARMAN, Judge.
Party Name:JIAXING BROTHER FASTENER CO., LTD., a.k.a. Jiaxing Brother Standard Parts Co., Ltd., IFI & Morgan Ltd., and RMB Fasteners Ltd., Plaintiffs v. UNITED STATES, Defendant, and Vulcan Threaded Products, Inc., Defendant-Intervenor. Slip Op. 10-128.
Attorney:DeKieffer & Horgan (Gregory Stephen Menegaz; James Kevin Horgan) for Plaintiffs. Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy; Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Delisa M. Sanchez; Jan...
Case Date:November 16, 2010
Court:Court of International Trade
 
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751 F.Supp.2d 1345 (CIT 2010)

JIAXING BROTHER FASTENER CO., LTD., a.k.a. Jiaxing Brother Standard Parts Co., Ltd., IFI & Morgan Ltd., and RMB Fasteners Ltd., Plaintiffs

v.

UNITED STATES, Defendant,

and

Vulcan Threaded Products, Inc., Defendant-Intervenor.

Slip Op. 10-128.

Court No. 09-00205.

United States Court of International Trade.

November 16, 2010

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[Copyrighted Material Omitted]

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DeKieffer & Horgan (Gregory Stephen Menegaz; James Kevin Horgan) for Plaintiffs.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy; Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Delisa M. Sanchez; Jane Chang Dempsey); Daniel J. Calhoun, Office of the Chief Counsel for Import Administration, United States Department of Commerce; for Defendant.

Vorys, Sater, Seymour and Pease LLP (Frederick Paul Waite; Kimberly Rae Young) for Defendant-Intervenor.

OPINION & ORDER

CARMAN, Judge.

Plaintiffs Jiaxing Brother Fastener Co., Ltd. (also known as Jiaxing Brother Standard

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Parts Co., Ltd.) (" Jiaxing Brother" ), IFI & Morgan Ltd. (" IFI" ), and RMB Fasteners Ltd. (" RMB" ) (the three companies will be referred to collectively as the " Brother Companies" or " Plaintiffs" ) have brought this case to challenge the Department of Commerce's (" Commerce" or " the Department" ) final determination of sales at less than fair value in Certain Steel Threaded Rod from the People's Republic of China, 74 Fed.Reg. 8,907 (Feb. 27, 2009) (" Final Determination " ), PR 1 189. The Brother Companies have moved for judgment on the agency record pursuant to Rule 56.2 of the Rules of the United States Court of International Trade (" USCIT" ). The United States, Defendant, and Vulcan Threaded Products, Inc. (" Vulcan" ), Defendant-Intervenor, oppose the motion.

At issue here is whether Commerce chose the " best available information," as required by 19 U.S. C. § 1677b(c)(1),2 when selecting among the financial statements of various Indian companies as surrogate sources of data for calculating the normal value of the subject merchandise, steel threaded rod (" STR" ) from China. Of the financial statements at issue in this case, Commerce rejected those of Deepak Fasteners Ltd. (" Deepak" ), Mangal Steel Enterprises, Ltd. (" Mangal" ), Visakha Wire Ropes Ltd. (" Visakha" ), and Rajratan Global Wire Ltd. (" Rajratan" ), but accepted those of Lakshmi Precision Screws (" Lakshmi" ) and Sterling Tools Ltd. (" Sterling" ).

The Court affirms the Final Determination to the extent that Commerce rejected the financial statements of Deepak, Mangal, and Visakha and accepted the statements of Lakshmi and Sterling because the Court finds that substantial record evidence supports these decisions and that they are otherwise in accordance with law. However, the Court finds that Commerce based its decision to reject the financial statement of Rajratan on a mistake as to the nature of that company's products, and that the decision was therefore not supported by substantial evidence on the record. Plaintiffs' motion is therefore granted in part and the Final Determination is remanded to Commerce to reconsider the appropriateness of using Rajratan's financial statement by analyzing the comparability of Rajratan's merchandise to the subject merchandise.

I. PROCEDURAL HISTORY

Commerce began this investigation after receiving a petition from Vulcan seeking the imposition of antidumping duties on STR from China. ( Petition from Law Firm of Vorys Sater to Sec of Commerce (Mar. 5, 2008), PR 2.) Commerce published its preliminary determination of sales at less than fair value (" LTFV" ) on October 8, 2008 ( Certain Steel Threaded Rod from the People's Republic of China, 73 Fed.Reg. 58,931 (Oct. 8, 2008), PR 132), and an amended preliminary determination later that month ( Certain Steel Threaded Rod from the People's Republic of China, 73 Fed.Reg. 63,693 (Oct. 27, 2008), PR 146). After conducting verification and accepting submissions of factual information and case briefs from interested parties, Commerce analyzed and made decisions in an Issues and Decision Memorandum regarding all issues raised. ( Memo w/attachment(s) from DAS/IA to AS/IA issues and decision memo for Final Det of Sales LTFV (Feb. 20, 2009), PR 186 (" IDM " ).)

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Commerce then published the Final Determination in the Federal Register, incorporating the IDM by reference. ( Final Determination, 74 Fed.Reg. at 8,907.)

II. STANDARD OF REVIEW

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," but otherwise shall uphold Commerce's determination. 19 U.S. C. § 1516a(b)(1)(b)(i); Dorbest Ltd. v. United States, 604 F.3d 1363, 1371 (Fed.Cir.2010). 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) (internal quotations omitted). Under this standard, the Court must ensure that Commerce took " into account contradictory evidence or evidence from which conflicting inferences could be drawn." See id. at 487, 71 S.Ct. 456. The reviewing court must also consider " the record as a whole, including evidence that supports as well as evidence that ‘ fairly detracts from the substantiality of the evidence.’ " Huaiyin Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374 (Fed.Cir.2003) ( quoting Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed.Cir.1984)). However, " the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence," Consolo v. Fed. Maritime Comm'n., 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966) (citations omitted), so long as there is a " rational connection between the facts found and the choice made" in the agency's determination. See Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962). Thus, in the specific context of reviewing Commerce's decision regarding which information constitutes the " best available information" under 19 U.S. C. § 1677b(c)(1), " the court's role ‘ is not to evaluate whether the information Commerce used was the best available, but rather whether a reasonable mind could conclude that Commerce chose the best available information.’ " Dorbest Ltd. v. United States, 30 CIT 1671, 1676, 462 F.Supp.2d 1262, 1269 (2006), aff'd-in-part, vacated-in-part, and remanded on other grounds, 604 F.3d 1363 ( quoting Goldlink Indus. Co. v. United States, 30 CIT 616, 619, 431 F.Supp.2d 1323, 1327 (2006)).

III. DISCUSSION

This case centers on whether Commerce violated the mandate, given by 19 U.S. C. § 1677b(c)(1), to choose the " best available information" with its determinations about which proxy financial statements from Indian surrogate companies to accept and reject in valuing the factors of production to calculate the normal value of the subject merchandise. The parties' contentions regarding the appropriateness of the financial data from each potential surrogate company are set forth below, along with the Court's analysis relating to that company.

A. Deepak

Commerce rejected the financial statements of Deepak, an Indian producer of merchandise identical to the subject merchandise, because Commerce found that Deepak might have benefitted from countervailable subsidies and had submitted incomplete financial statements.

1. Contentions of the Parties

Plaintiffs object to Commerce's rejection of Deepak's financial statements on three

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grounds. First, the Brother Companies argue that Commerce mistakenly interpreted Annexure XIX, item 4(c) of Deepak's financial statement as showing Deepak's " participation in the DEPB [Duty Entitlement Pass Book Scheme] subsidy." (Pls.' Rule 56.2 Mem. in Supp. of Mot. for J. Upon the Agency R. (" Pls.' 56.2 Mem." ) 10-12 ( quoting IDM at 10).) According to the Brother Companies, Annexure XIX " simply lists the broad accounting principles applied in preparing the financial statements," and does not indicate whether DEPB subsidy moneys were actually received by Deepak. ( Id. at 10-11.) The Brother Companies contend that Deepak's profit and loss statement in Annexure XV " shows that, while Deepak did receive [DEPB subsidy moneys] in fiscal year 2006," it did not receive any in fiscal year 2007. ( Id. at 11.) Defendant, for its part, acknowledges that Deepak received the DEPB subsidy before the POI, but argues that Commerce's rejection of Deepak's financial statements was nonetheless proper because what matters is whether a company received or may have received a countervailable subsidy at any point, and Deepak's receipt of the DEPB subsidy in 2006 was sufficient to show its participation in the countervailable subsidy regardless of the year in which the funds were received. (Defendant's Response in Opposition to Plaintiff's [sic] Motion for Judgment Upon the Administrative Record (" Def.'s 56.2 Opp." ) 10-12 ( citing Omnibus Trade and Comp. Act of 1988, H.R.REP. NO. 100-576, at 59 (1988) (Conf.Rep.) (stating that Commerce should " avoid using any prices which it has reason to believe or suspect may be dumped or subsidized prices" ) (emphasis added) and Wooden Bedroom Furniture from the People's Republic of China, 73 Fed.Reg. 49,162 (Aug. 20, 2008), and accompanying IDM at cmt. 1c).) Vulcan concurs with the United States, and also asserts that Deepak's lack of revenue under " License Sale...

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