EI DuPont De Nemours & Co., Inc. v. US

• Decision Date: 20 March 1996
• Docket Number: Slip Op. 96-56. Court No. 91-07-00487.
• Citation: 932 F. Supp. 296
• Parties: E.I. DuPONT DE NEMOURS & CO., INC., ICI Americas Inc., and Hoechst Celanese Corporation, Plaintiffs, v. The UNITED STATES, Defendant, and SKC Limited, SKC America, Inc., and Cheil Synthetics, Inc., Defendants-Intervenor.
• Court: U.S. Court of International Trade

932 F. Supp. 296

E.I. DuPONT DE NEMOURS & CO., INC., ICI Americas Inc., and Hoechst Celanese Corporation, Plaintiffs, v. The UNITED STATES, Defendant and SKC Limited, SKC America, Inc., and Cheil Synthetics, Inc., Defendants-Intervenor.

Slip Op. 96-56. Court No. 91-07-00487.

United States Court of International Trade.

March 20, 1996.

Wilmer, Cutler, & Pickering (John D. Greenwald), Howrey & Simon (Michael A. Hertzberg, Matthew J. Clark, Maria Tan Pederson), Washington, DC, for plaintiffs.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Michael S. Kane); Priya Alagiri, Attorney-Advisor, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, for defendant.

Kaye, Scholer, Fierman, Hays, & Handler (Michael P. House, R. Will Planert, Raymond Paretzky), Washington, DC, for defendants-intervenor SKC Ltd. and SKC America, Inc.

Akin, Gump, Strauss, Hauer, & Feld (Sukhan Kim, Warren E. Connelly, Damon E. Xenopoulos), Washington, DC, for defendant-intervenor Cheil Synthetics, Inc.

OPINION

MUSGRAVE, Judge.

Background

On December 6, 1993, the Court remanded to the International Trade Administration of the Department of Commerce ("ITA") certain issues arising from the Final Determination of Sales at Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea, 56 Fed. Reg. 16,305 (1991) and from the Amended Final Determination of Sales at Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea, 56 Fed.Reg. 25,669 (1991) (jointly referred to as "Final Determination"). E.I. DuPont de Nemours & Co. v. United States, 17 CIT 1266, 841 F.Supp. 1237 (1993). The parties in this matter now appeal the remand results announced in the ITA's subsequent Final Remand Determination Pursuant to Court Order (April 7, 1994) ("Remand Determination"). The facts and background of this case are exhaustively canvassed in the Court's decision ordering a remand; in obedience to lex parsimoniae, the Court assumes familiarity with that decision and the posture of this case.

In remanding the case, the Court ordered the ITA to reconsider four aspects of the Final Determination. Three of those required reconsideration in light of the intervening decision by the United States Court of Appeals for the Federal Circuit ("CAFC") in IPSCO, Inc. v. United States, 10 Fed.Cir. (T) ___, 965 F.2d 1056 (1992) ("IPSCO Appeal"), which was published after the briefs were filed in the appeal from the Final Determination in the instant case. IPSCO Appeal reversed the United States Court of International Trade decision in Ipsco, Inc. v. United States, 13 CIT 402, 714 F.Supp. 1211 (1989), which had held that in determining foreign market value by way of constructed value calculations, the costs of production of prime grade and off-grade co-products should be allocated proportionately to their market values. In reversing, the CAFC reasoned,

The broad terms of section 1677b(e) sweep within constructed value all components of the actual production costs of merchandise.... The broad language of section 1677b(e) does not at any point expressly authorize adjustment of these production costs to account for products of a lower grade or less value. Under the lower court's analysis, the value of Ipsco's products — their prices in the United States — became a factor in determining their cost of production. That cost of production, in turn, determined by Ipsco's prices in the United States reflected fair value. Essentially, the trial court ordered an unreasonable circular methodology. The selling price of pipe became a basis for measuring the fairness of the selling price of pipe. This circular reasoning contravened the express requirements of the statute which set forth the cost of production as an independent standard for fair value.

10 Fed.Cir. (T) at ___, ___, 965 F.2d at 1059, 1060.

Recognizing the potential impact of IPSCO Appeal on certain calculations performed by the ITA in its Final Determination, the Court, in the case here under consideration, remanded and issued the following mandates:

ORDERED that the ITA shall reexamine its choice of methodology for calculating the production costs incurred by defendants intervenor SKC and Cheil in producing off-grade PET (Polyethylene Terephthalate) films in light of the reversal of IPSCO, Inc. v. United States, 13 CIT 402, 714 F.Supp. 1211 (1989), rev'd, 965 F.2d 1056 (1992); and it is further

ORDERED that the ITA shall reexamine its choice of cost accounting methodology for the calculation of Cheil's recycled scrap film in light of Ipsco's reversal; and it is further

ORDERED that the ITA shall reexamine or comment on the effect of Ipsco's reversal upon its choice of SKC's product specific cost accounting methodology; ...

841 F.Supp. at 1254. The Court also faulted the ITA's methodology for calculating value added tax ("VAT") adjustments, and it

ORDERED that the ITA shall recalculate the VAT adjustments to USP (United States Price) in accordance with the requirements of 19 U.S.C. § 1677a(d)(1)(C), not the general language of 19 U.S.C. § 1677b(a)(4)(B); ...

Id.

In its Remand Determination, the ITA recalculated the production costs incurred by SKC and Cheil in producing off-grade PET film. All parties concur that this altered approach for calculating off-grade PET film production costs should be upheld, although plaintiffs dispute the accuracy of some of the figures contained in the calculations. The ITA did not alter its accounting methodology for valuing Cheil's recycled scrap film ("pellet"). Plaintiffs contest this methodology and argue that a similar flawed methodology infects the valuation of SKC's pellet. Nor did the ITA swerve from its decision in the Final Determination to accept the product specific cost figures submitted by SKC, which decision plaintiffs also contest. The disputed VAT issue is controlled by the CAFC's recent decision in Federal Mogul v. United States, 13 Fed.Cir. ___, 63 F.3d 1572 (1995).

Standard of Review

The Court must find that antidumping determinations are unlawful when they are unsupported by substantial evidence on the administrative record or are otherwise not in accordance with law. 28 U.S.C. § 1581(c); Tariff Act of 1930, § 516A(b)(1)(B), as amended, 19 U.S.C. § 1516a(b)(1)(B) (1988). Substantial evidence "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, 459, 95 L.Ed. 456 (1951). "Substantial evidence is something less than the weight of the evidence, and 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. Federal Maritime Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131 (1966). "As long as the agency's methodology and procedures are reasonable means of effectuating the statutory purpose, and there is substantial evidence in the record supporting the agency's conclusions, the court will not impose its own views as to the sufficiency of the agency's investigation or question the agency's methodology." Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404-05, 636 F.Supp. 961, 966 (1986), aff'd 5 Fed. Cir. (T) 77, 810 F.2d 1137 (1987) (citations omitted).

Discussion

1. Production Costs Incurred in Producing Off-Grade PET Film

The ITA's recalculations of production costs incurred by SKC and Cheil in producing off-grade PET film properly respect the rule announced in IPSCO Appeal and are based on substantial evidence. In its Final Determination, the ITA had allocated the costs of producing off-grade PET film according to the film's value. In its Remand Determination, the ITA rectified its methodology by conforming it to the logic of Ipsco Appeal:

As directed by the Ipsco Appeal ..., we have recalculated SKC's cost of production ("COP") and constructed value ("CV") of off-grade film to reflect actual costs by allocating production costs based on actual production quantities, rather than accounting for value. As a result, COP and CV for SKC have been calculated so as to take into account the actual costs of prime and non-prime production of the same product.... After further review we have determined that the record, in the case of Cheil, provides adequate information on which to base product specific cost calculations. Therefore, we have accepted Cheil's submitted CV and COP costs, adjusted to reflect actual, product specific costs rather than product group costs.

Remand Determination at 6-8 (emphasis added). Plaintiffs agree with defendants that this altered approach is consistent with IPSCO Appeal, but they contest the ITA's reliance on defendants'-intervenor reported pellet costs as well as SKC's reported product specific costs. Subject to the controversy over the reported cost figures, plaintiffs urge the Court to uphold the methodology employed in the Remand Determination for evaluating off-grade PET film production costs. The Court finds that the valuation methodology of the Remand Determination is a lawful application of the IPSCO Appeal doctrine because it accounts for all costs and does not rely on resale prices to make cost calculations. Moreover, as discussed infra, the ITA's use of the disputed cost figures is based on substantial evidence and is otherwise in accordance with law. Therefore, the Court upholds the ITA's Remand Determination with respect to the production costs of producing off-grade PET film.

As an ancillary issue, plaintiffs request a remand so that the ITA may explain why it believes that the IPSCO Appeal valuation methodology is relevant to the calculation of Cheil's test film production costs. Cheil's records denote the total volume of test film produced during any...