Mannesmannrohren-Werke Ag v. U.S.

• Citation: 77 F.Supp.2d 1302
• Decision Date: 29 October 1999
• Docket Number: Slip Op. 99-118.,Court No. 98-04-00886.
• Parties: MANNESMANNROHREN-WERKE AG and Mannesmann Pipe & Steel Corp., Plaintiffs, v. THE UNITED STATES, Defendant, and Gulf State Tube Division of Vision Metals, Defendant-Intervenor.
• Court: U.S. Court of International Trade

77 F.Supp.2d 1302

MANNESMANNROHREN-WERKE AG and Mannesmann Pipe & Steel Corp., Plaintiffs, v. THE UNITED STATES, Defendant, and Gulf State Tube Division of Vision Metals, Defendant-Intervenor.

Slip Op. 99-118.

Court No. 98-04-00886.

United States Court of International Trade.

October 29, 1999.

COPYRIGHT MATERIAL OMITTED

Sutherland Asbill & Brennan LLP (Mark D. Herlach, Mary Patricia Michel and Christer L. Mossberg), Washington, DC, for Plaintiffs.

David Ogden, Acting Assistant Attorney General; David M. Cohen, Director; U.S. Department of Justice, Civil Division, Commercial Litigation Branch, (Velta A. Melnbrencis); Brian Peck, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, Washington, DC, for Defendant, of counsel.

Schagrin Associates (Roger B. Schagrin), Washington, DC, for Defendant-Intervenor.

OPINION

WALLACH, Judge.

I INTRODUCTION

At issue in this case are various determinations made by the U.S. Department of Commerce, International Trade Administration ("Commerce") in Small Diameter Circular Seamless Carbon and Alloy Steel Standard, Line and Pressure Pipe From Germany: Final Results of Antidumping Duty Administrative Review ("Final Results"), 63 Fed.Reg. 13,217 (1998). Plaintiffs, Mannesmannrohren-Werke AG And Mannesmann Pipe & Steel Corp. ("Mannesmann"), through a motion for judgment on the agency record and an accompanying memorandum (collectively, "Mannesmann's Motion"), argue that Commerce erred (a) in its interpretation of 19 U.S.C. § 1677b(f)(2) and (3) (1994); (b) in its use of adverse facts available to value Mannesmann's purchases of steel billets from a related supplier; and (c) in its use of adverse facts available to value the customs duties Mannesmann paid on its U.S. sales.

For the reasons set forth below, the Court finds that while Commerce reasonably interpreted 19 U.S.C. § 1677b(f)(2) and (3) (1994), what Commerce has identified as substantial record evidence does not support its decisions to use adverse facts available. This determination is remanded to Commerce for further proceedings consistent with this opinion.

II BACKGROUND

On March 18, 1998, Commerce issued its first administrative review of antidumping duties on certain small diameter seamless carbon and alloy steel pipes from Germany. This review covered one manufacturer/exporter of the subject merchandise, Mannesmannrohren-Werke AG and Mannesmann Pipe & Steel Corporation, for the period January 27, 1995, through July 31, 1996. Final Results, 63 Fed.Reg. at 13,217. Two aspects of this review are relevant for present purposes.

Commerce's Affiliated Party Input Adjustment:

As in any antidumping investigation, in this instance Commerce was required to compare the U.S. prices of the subject merchandise to the prices ("normal value") for the same or similar merchandise in the home market. See 19 U.S.C. § 1677a (1994) ("Export price and constructed export price") and 19 U.S.C. § 1677b (1994) ("Normal value"). In the course of calculating the normal value of the subject merchandise in this case, Gulf State Tube Division of Vision Metals, a domestic interested party and Defendant-Intervenor in the current action, alleged that Mannesmann was selling the foreign like product in its home market (Germany) at prices below Mannesmann's cost of production. Pursuant to 19 U.S.C. § 1677b(b) (1994), such below cost sales, if shown to exist, may be disregarded by Commerce in its calculation of normal value. On January 31, 1997, Commerce determined that this allegation of below-cost sales was adequately supported, initiated a sales-below-cost investigation, and requested that Mannesmann respond to Section D of Commerce's Antidumping Duty Questionnaire, covering "Cost of Production and Constructed Value." See Letter from Linda Ludwig to Mark Herlach of 01/31/97 Appendix of Record Documents Accompanying The Memorandum In Support Of The Motion Of Plaintiffs [Mannesmann] For Judgment On The Agency Record ("Mannesmann Appendix"), App. 3. Mannesmann does not contest initiation of the below-cost sales investigation.

Although the Section D Questionnaire requested substantial information concerning Mannesmann's cost-of-production, the question here most pertinent was Question II.A.6.b. In relevant part, Question II.A.6. provided as follows:

6. List the major inputs received from affiliated parties and used to produce the merchandise under review during the cost calculation period. ... For each major input identified, provide the following information:

a. the total volume and value of the input purchased from all sources by your company during the cost calculation period, and the total volume and value purchased from each affiliated party during the same period;

b. the per-unit transfer price charged for the input by the affiliated party (if the affiliated party sells the identical input to other, unaffiliated purchasers, provide documentation showing the price paid for the input by the unaffiliated purchaser; if your company purchases the identical input from unaffiliated suppliers, provide documentation showing the unaffiliated party's sales price for the input); and

c. if you are responding to this section of the questionnaire in connection with an investigation of sales below cost, provide the per-unit cost of production incurred by the affiliated party in producing the major input.

In addition, specify the basis used by your company to value each major input for purposes of computing the submitted COP and CV amounts (e.g. transfer price, cost of production).

Defendant's Memorandum In Opposition To Plaintiffs' Motion For Judgment On The Agency Record ("Defendant's Response"), Public Ex. 1, at 91-92.

Mannesmann responded to subpart (a) of the question by stating, inter alia, that it had not "sourced billets used in producing subject merchandise from unrelated parties." Response Of [Mannesmann] To Section D Of The Antidumping Questionnaire, Mannesmann Appendix, App. 4, at 8. This answer was not fully responsive, since the question asked for information on input purchases related to the "merchandise under review" and not "subject merchandise." As defined in a footnote to Section A of Commerce's Antidumping Questionnaire, "products under review" and "merchandise under investigation" referred generally to "all products within the scope of the order that your company sold during the period of review in any market," while "subject merchandise" referred only to "products sold to the United States." See Commerce's Antidumping Questionnaire, Defendant's Response, Public Ex. 1, at 15 n. 6.

In response to subpart (b) of Question II.A.6., Mannesmann provided a substantial amount of information concerning its relationship with Huttenwerke Krupp Mannesmann GmbH ("HKM"), an affiliated party from whom it purchases the vast majority of the steel it uses to produce seamless and welded tubes. See Response Of [Mannesmann] To Section D Of The Antidumping Questionnaire, Mannesmann Appendix, App. 4, at 9-13. Mannesmann's response, however, did not provide any information in regard to the last part of subpart (b), which requested that "if your company purchases the identical input from unaffiliated suppliers, provide documentation showing the unaffiliated party's sales price for the input." Commerce's Antidumping Questionnaire, Defendant's Response, Public Ex. 1, at 91.

Finally, responding to subpart (c) of Question 6, Mannesmann stated that it utilized transfer price from its affiliated supplier, HKM, to value steel billets, and that "this transfer price exceeded HKM's cost of production." Response Of [Mannesmann] To Section D Of The Antidumping Questionnaire, Mannesmann Appendix, App. 4, at 14. As discussed below, this statement was of considerable importance, since Commerce found that reliance on transfer price from an affiliated party makes 19 U.S.C. § 1677b(f)(2) (1994) applicable to its analysis and findings.

Subsequently, Commerce provided Mannesmann with a supplemental questionnaire ("Supplemental Section D Questionnaire"), which asked Mannesmann two further questions that are relevant here. First, Question 11 of the Supplemental Section D Questionnaire asked Mannesmann:

As requested in the original Section D questionnaire, please provide a complete, translated listing of all inputs used to produce the merchandise under review. For each input received from an affiliated party, provide the name of the affiliated party and state the nature of the affiliation. Also, report the total volume and value of the purchases and the percentage of the COM of the subject merchandise represented by the value of the purchases.

Response Of [Mannesmann] To Supplemental Section D Of The Antidumping Questionnaire, Mannesmann Appendix, App. 5, at 7 (emphasis in original). Answering this question, Mannesmann provided the short response that "[s]teel billets are the only input from affiliated suppliers for the subject merchandise. All of the steel billets purchased for producing the subject merchandise were produced at HKM." Id. Once again, this response was limited to "subject merchandise," although the question asked for information on the broader category of "merchandise under review."

Second, Question 12 of the Supplemental Section D Questionnaire asked that Mannesmann:

Use the following headings to provide a chart which reports purchases of billets from unrelated suppliers, regardless of whether or not they are used in subject merchandise. (Unrelated supplier, month during [the period of review], billet grade, volume purchased, value of purchases. [sic])

Id. (emphasis in original). Mannesmann responded to this question by providing an exhibit that listed billet purchases from unrelated suppliers. See id. at 8; Chart Regarding Purchases of Billets, id. at Ex. D-4. This exhibit, however, did not respond to Commerce's request for billet grade information.

Seeking yet further information, Commerce thereafter requested...