Chang Tieh Industry Co., Ltd. v. US

• Decision Date: 09 December 1993
• Docket Number: Court No. 93-01-00053.
• Citation: 840 F. Supp. 141
• Parties: CHANG TIEH INDUSTRY CO., LTD., Plaintiff and Defendant-Intervenor, Avesta Sheffield, Inc., Bristol Metals, Inc., Damascus Tube Division, Damascus-Bishop Tube Co., Trent Tube Division of Crucible Materials Corporation, and the United Steelworkers of America (AFLCIO/CLC), Plaintiffs and Defendant-Intervenors, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

840 F. Supp. 141

CHANG TIEH INDUSTRY CO., LTD., Plaintiff and Defendant-Intervenor, Avesta Sheffield, Inc., Bristol Metals, Inc., Damascus Tube Division, Damascus-Bishop Tube Co., Trent Tube Division of Crucible Materials Corporation, and the United Steelworkers of America (AFLCIO/CLC), Plaintiffs and Defendant-Intervenors, v. The UNITED STATES, Defendant.

Court No. 93-01-00053.

United States Court of International Trade.

December 9, 1993.

COPYRIGHT MATERIAL OMITTED

Grunfeld, Desiderio, Lebowitz & Silverman, David L. Simon and Jeffrey S. Grimson, Washington, DC, for plaintiff and defendant-intervenor Chang Tieh Industry Co., Ltd.

Collier, Shannon, Rill & Scott, David A. Hartquist, Jeffrey S. Beckington and Kathleen W. Cannon, Washington, DC, for plaintiffs and defendant-intervenors Avesta Sheffield, Inc., et al.

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Cynthia B. Schultz, Marguerite E. Trossevin, Atty. Advisor, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, of counsel, Washington, DC, for defendant.

OPINION

RESTANI, Judge:

In this case, the domestic industry and a foreign manufacturer both challenge an anti-dumping duty determination by the United States Department of Commerce, International Trade Administration ("ITA"). ITA's determination excluded the foreign manufacturer Chang Tieh Industry Co., Ltd. ("Chang Tieh") from an antidumping order on certain conditions. Certain Welded Stainless Steel Pipes from Taiwan, 57 Fed.Reg. 53,705, 53,709 (Dep't Comm.1992) (final determ. of sales at less than fair value) (requiring Chang Tieh's consent to conditions) ("Final Results"); Certain Welded Stainless Steel Pipe from Taiwan, 57 Fed.Reg. 62,300, 62,301 (Dep't Comm.1992) (amended final determ. & antidumping duty order) (excluding Chang Tieh after having received its consent to conditions) ("Amended Final Results"). Among these conditions was Chang Tieh's acquiescence to the immediate application of the antidumping order if ITA subsequently found that Chang Tieh "has sold or is likely to sell subject merchandise to the United States at less than its foreign market value." Id.

Chang Tieh moves for judgment on the agency record on the ground that the conditional exclusion was an inappropriate exercise of ITA's power. Avesta Sheffield, Inc. ("Avesta"), representing the domestic industry, argues that the court has no jurisdiction over Chang Tieh's challenge of the agency determination. Avesta also moves for judgment on the agency record, contending that data concerning Chang Tieh's sales do not support its exclusion from the antidumping order.

In resolving Avesta's motion, the court will address the following issues: 1) whether Chang Tieh's sales data were unrepresentative or not bona fide and should have been disregarded, 2) whether ITA should have determined that the foreign market value ("FMV") was duty-inclusive before granting a duty drawback, 3) whether ITA should have adjusted either U.S. price or FMV to account for value-added taxes ("VAT"), and 4) whether ITA properly allocated Chang Tieh's labor and overhead costs. ITA's determination will be sustained if it is supported by substantial evidence on the record and is otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B) (1988).

BACKGROUND

On November 18, 1991, Avesta and other representatives of the domestic steel pipe industry ("petitioners") filed with ITA petitions alleging dumping by Chang Tieh and other foreign manufacturers. Certain Welded Stainless Steel Pipes from the Republic of Korea and Taiwan, 56 Fed.Reg. 65,043, 65,043 (Dep't Comm.1991) (init. of antidumping duty investigations). Based on petitioners' submissions, ITA initiated an antidumping duty investigation on December 13, 1991. Id. at 65,044.

The United States International Trade Commission ("ITC") reached an affirmative preliminary determination of injury in January 1992. Certain Welded Stainless Steel Pipes from the Republic of Korea and Taiwan, USITC Pub. 2474, Inv. Nos. 731-TA-540 and 541 (Jan. 1992) (prelim. determ.). ITC found a reasonable indication that the domestic industry was materially injured due to imports of Korean and Taiwanese stainless steel pipe, which were allegedly sold at less than fair value ("LTFV"). Id. at 1. ITA subsequently issued an affirmative preliminary determination of LTFV sales, calculating Chang Tieh's dumping margin to be zero. Certain Welded Stainless Steel Pipes from Taiwan, 57 Fed.Reg. 27,735, 27,738 (Dep't Comm.1992) (prelim. determ. of LTFV sales & postponement of final determ.).

On July 1, 1992, petitioners informed ITA of their suspicion that Chang Tieh had sold its merchandise in intentionally small volumes and at artificially inflated prices inconsistent with commercial reality for the purpose of avoiding antidumping duty liability. See Final Results, at 53,706. Petitioners' preverification comments, submitted on July 2, alleged collusion between Chang Tieh and its U.S. importer and compared Chang Tieh's prices to those of other importers in an attempt to show that Chang Tieh had priced its goods above market value. Appendix to Memorandum of Points and Authorities in Support of Motion by Plaintiffs Avesta Sheffield, Inc., et al., for Judgment Upon the Agency Record ("Avesta's Appendix"), Doc. 6, at 2-4. Approximately two weeks later, ITA received a confidential two-page affidavit repeating petitioners' allegations with regard to collusion. Id., Doc. 7, Attachment 1. ITA granted anonymity to petitioners' sources of information on September 2, 1992. Final Results, at 53,706.

Petitioners filed additional affidavits on September 10 and 21 without providing redacted versions. Id. Officials at ITA spoke with the affiants on September 22 in order to confirm their identities and their knowledge of information contained in the affidavits. Avesta's Appendix, Doc. 5, at 1. On September 23, petitioners prepared redacted versions of the affidavits, but refused to serve them on other interested parties. Final Results, at 53,706. ITA made several subsequent requests for public versions that could be released pursuant to the administrative protective order. Id. Public versions were finally submitted on November 3. Id.

Despite the delay in issuing public versions of the additional affidavits, Chang Tieh received notice of petitioners' concerns and a copy of the first affidavit detailing their allegations in July 1992. Avesta's Appendix, Doc. 3, at 4 (certificate of service on Chang Tieh); id., Doc. 7, Attachment 1, at 3 (certificate of service on Chang Tieh). In late September and early October, ITA sent inquiries to Chang Tieh and its U.S. importer, who both provided ITA with arguments and data to rebut the allegations. Final Results, at 53,706; Avesta's Appendix, Docs. 17 & 19.

On November 12, ITA issued a final affirmative determination of LTFV sales, finding a zero dumping margin for Chang Tieh.¹ Final Results, at 53,722. ITA adjusted Chang Tieh's U.S. price upward for duty drawback on raw materials imported into Taiwan and then converted into steel pipe for export. Id. at 53,709-10. Rather than tracing the raw materials from import to export as finished goods, ITA confirmed that the manufacturer had imported sufficient raw materials to make the quantity of goods eventually exported to the United States. Id. at 53,710. ITA adjusted U.S. price for VAT without performing an econometric analysis to determine whether the tax had been passed through to the consumer. Id. ITA also made a circumstance of sale adjustment to foreign market value based on VAT issues. Id.

Because of its concerns regarding Chang Tieh's possible creation of an artificially high U.S. price, ITA directed Chang Tieh to provide a certification "similar to those required under 19 C.F.R. §§ 353.14 and 353.25(b)" before excluding Chang Tieh from the dumping order. Id. at 53,709. The "similar" certification constituted an affirmation by Chang Tieh that it had not dumped goods in the past and would not dump goods in the future.² Id. The dissimilar condition contained in the certification, and the condition that led to Chang Tieh's challenge to the determination at issue, was the requirement of Chang Tieh's consent to the immediate application of the antidumping order "if the Department determines at any time during the existence of the antidumping order that Chang Tieh has sold or is likely to sell the subject merchandise to the United States at less than its foreign market value." Id. Chang Tieh submitted the certification under protest, reserving all legal rights. Avesta's Appendix, Doc. 24, Attachment B, at 1. ITA issued an antidumping order excluding Chang Tieh on December 30, 1992. Amended Final Results, at 62,301.

DISCUSSION

I. Avesta's Motion for Judgment on the Agency Record

A. Exclusion of Unrepresentative Sales from U.S. Price Data Pool

Avesta argues that the questionable nature of Chang Tieh's U.S. sales data should have caused ITA to ignore the data as being unrepresentative and to apply BIA to determine a dumping margin. See 19 U.S.C. § 1677e(b), (c) (1988) (mandating use of BIA if data cannot be verified or are not produced in a timely manner and in the form required). Chang Tieh responds that its U.S. sales were typical of its normal business practices and that ITA had no discretion to discard the entire sales base on the ground of unrepresentativeness.

The antidumping statute directs ITA to calculate foreign market value on the basis of sales made "in the ordinary course of trade for home consumption." Id. § 1677b(a)(1)(A) (1988). Sales intended to establish a fictitious market are excluded from the computation of foreign market value. Id. § 1677b(a)(1). The statutory and regulatory definitions of U.S. price do not contain similar limitations. See id. § 1677a (1988); 19 C.F.R. § 353.41 (1992). This court has reasoned,

if Congress intended to require

...