Al Tech Specialty Steel Corp. v. U.S.

• Decision Date: 19 November 1996
• Docket Number: Court No. 95-01-00125.,Slip Op. 96-185.
• Citation: 947 F.Supp. 510
• Parties: AL TECH SPECIALTY STEEL CORPORATION, Carpenter Technology Corporation, Crucible Specialty Metals Division, Crucible Materials Corporation, Electralloy, Division of G.O. Carlson, Inc., Republic Engineered Steels, Slater Steels Corporation, Talley Metals Technology, Inc. and The United Steelworkers of America, AFL-CIO/CLC, Plaintiffs, v. The UNITED STATES, Defendant, Acciaierie Valbruna S.r.L.; Foroni S.p.A. and Foroni Metals of Texas, Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

947 F.Supp. 510

AL TECH SPECIALTY STEEL CORPORATION, Carpenter Technology Corporation, Crucible Specialty Metals Division, Crucible Materials Corporation, Electralloy, Division of G.O. Carlson, Inc., Republic Engineered Steels, Slater Steels Corporation, Talley Metals Technology, Inc. and The United Steelworkers of America, AFL-CIO/CLC, Plaintiffs, v. The UNITED STATES, Defendant Acciaierie Valbruna S.r.L.; Foroni S.p.A. and Foroni Metals of Texas, Inc., Defendant-Intervenors.

Slip Op. 96-185.

Court No. 95-01-00125.

United States Court of International Trade.

November 19, 1996.

COPYRIGHT MATERIAL OMITTED

Collier, Shannon, Rill & Scott, Washington, DC (David A. Hartquist, Laurence J. Lasoff and Gail S. Usher) for plaintiffs.

Frank W. Hunger, Assistant Attorney General, Washington, DC; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (John P. Sholar), Washington, DC; of counsel: Rebecca Rejtman, Attorney-Advisor, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, Washington, DC, for defendant.

Rogers & Wells, Washington, DC (William Silverman, Douglas J. Heffner and Stephen J. Claeys) for defendant-intervenor Acciaiere Valbruna S.r.L.

Covington and Burling, Washington, DC (Harvey M. Applebaum, David R. Grace and T. Mark Lange) for defendant-intervenors Foroni S.p.A. and Foroni Metals of Texas, Inc.

OPINION

TSOUCALAS, Senior Judge:

Plaintiffs, AL Tech Specialty Steel Corporation, Carpenter Technology Corporation, Crucible Specialty Metals Division, Crucible Materials Corporation, Electralloy, Division of G.O. Carlson, Inc., Republic Engineered Steels, Slater Steels Corporation, Talley Metals Technology, Inc. and The United Steelworkers of America, AFL-CIO/CLC (collectively "AL Tech"), move this Court for judgment upon the agency record pursuant to Rule 56.2 of the Rules of this Court challenging certain aspects of the International Trade Administration, Department of Commerce's ("Commerce" or "ITA") final determination, entitled Notice of Final Determination of Sales at Not Less Than Fair Value: Stainless Steel Bar from Italy ("Final Results"), 59 Fed.Reg. 66,921 (1994).

Background

On January 27, 1994, Commerce published a notice of its initiation of an investigation concerning stainless steel bar imported from Italy during the period of July 1, 1993 through December 31, 1993. See Initiation of Antidumping Duty Investigations: Stainless Steel Bar From Brazil, India, Italy, Japan and Spain, 59 Fed.Reg. 3844 (1994).

Commerce published the preliminary results of its determination of the less than fair value investigation ("LTFV") on August 4, 1994. See Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Stainless Steel Bar From Italy, 59 Fed.Reg. 39,736 (1994).

On December 28, 1994, Commerce issued its final determination finding de minimus margins for both Valbruna and Foroni. See Final Results, 59 Fed.Reg. at 66,921. AL Tech challenges the following actions by Commerce as being inconsistent with law and unsupported by substantial evidence on the agency record: (1) applying a tax rate to U.S. price in excess of the average tax rate assessed on home market sales; (2) excluding B-2 and B-3 home market sales of Acciaierie Valbruna S.r.L. ("Valbruna") from its model match calculation after permitting only limited reporting of such sales; (3) using Valbruna's cost of production ("COP") data from the period of investigation to calculate Valbruna's dumping margin; (4) treating Valbruna's home market pre-sale costs associated with maintaining inventory as direct selling expenses; (5) applying weighted-average calculated margin of Foroni, S.p.A. and Foroni Metals of Texas, Inc. (collectively "Foroni") to comparisons involving Foroni's unreported U.S. sales; and (6) permitting Foroni to assign unique grade codes to nonspecified grades.

Discussion

The Court's jurisdiction in this action is derived from 19 U.S.C. § 1516a(a)(2) (1994) and 28 U.S.C. § 1581(c) (1994).

The Court must uphold Commerce's final determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1994). 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, 459, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216-17, 83 L.Ed. 126 (1938)). "It is not within the Court's domain either to weigh the adequate quality or quantity of the evidence for sufficiency or to reject a finding on grounds of a differing interpretation of the record." Timken Co. v. United States, 12 CIT 955, 962, 699 F.Supp. 300, 306 (1988), aff'd, 894 F.2d 385 (Fed.Cir.1990).

1. Tax Rate

In the Final Results, Commerce compared a weighted-average price of a group of home market sales that incurred a value-added tax ("VAT") of less than 19 percent to U.S. prices that had been adjusted by a VAT rate of 19 percent. See Computer Program for Final Determination, C.R.Doc. No. 80, Pls.' App., Ex. 11. AL Tech argues that pursuant to 19 U.S.C. § 1677a(d)(1)(C) (1988), an adjustment for tax forgiven on export sales is appropriate only where the comparison home market sales have actually been taxed. Accordingly, AL Tech requests a remand with instructions to Commerce to recalculate the adjustment to U.S. price for those sales compared to a foreign market value ("FMV") that is based on a mixture of sales subject to the VAT and sales not subject to the VAT. On remand, AL Tech states that Commerce should compute a weighted-average tax rate for the home market groups and apply the determined rate to the U.S. comparison prices. Pls.' Mem. Supp. Mot. J. Agency R. at 7-13.

Commerce concedes that it erred by improperly comparing home market sales that incurred a VAT of less than 19 percent to U.S. prices that had been adjusted by a VAT rate of 19 percent. Commerce states that to comply with 19 U.S.C. § 1677a(d)(1)(C), it should have applied a weighted-average tax rate to both the home market and U.S. sales. However, Commerce insists that even if it had applied the appropriate tax rate, the margins for both Valbruna and Foroni would have been de minimus (0.17 percent and 0.05 percent, respectively). Therefore, Commerce argues that the error was harmless and does not warrant a remand. Def.'s Opp'n to Mot. J. Agency R. at 59-60.

Defendant-intervenors Foroni and Valbruna both agree that even if Commerce improperly applied the VAT, the error was harmless. Foroni's Opp'n to Mot. J. Agency R. at 10-12; Valbruna's Opp'n to Mot. J. Agency R. at 41-42.

In rebuttal, AL Tech argues that the Court does not have the authority to accept Commerce's new calculations without providing AL Tech with an opportunity to comment. According to AL Tech, the proper remedy for the error is to remand the issue so that Commerce may perform the calculations to determine whether the margin rises above de minimus. Pls.' Reply to Opp'n to Mot. J. Agency R. at 2-4.

Section 1677a(d)(1)(C), Title 19, United States Code, states that United States price shall be adjusted by

the amount of any taxes imposed in the country of exportation directly upon the exported merchandise or components thereof, which have been rebated, or which have not been collected, by reason of the exportation of the merchandise to the United States, but only to the extent that such taxes are added to or included in the price of such or similar merchandise when sold in the country of exportation.

(Emphasis added). As Commerce concedes, by comparing a weighted-average price of a group of home market sales that incurred a VAT of less than 19 percent to U.S. prices that had been adjusted by 19 percent, Commerce failed to comply with the statute.

In reviewing Commerce's actions, the Court is restricted to the administrative record and the evidence contained therein. Atcor, Inc. v. United States, 11 CIT 148, 154, 658 F.Supp. 295, 300 (1987). The Court will not accept post hoc rationalizations in place of evidence on the agency record. Id.; see also Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168-69, 83 S.Ct. 239, 245-46, 9 L.Ed.2d 207 (1962). In the present case, Commerce admits that its calculations were flawed but insists the error was harmless. Commerce has not attempted to provide the Court with a reason for its methodology but, rather, has offered the Court new calculations. The evidence presented by Commerce amounts to post hoc rationalization which cannot support a finding for Commerce. The Court cannot simply accept Commerce's characterization of the error as harmless. It is for the Court, not Commerce, to determine the prejudicial effect of the error, and for the Court to do so, it must examine record evidence.

The new calculations presented by Commerce cannot be considered record evidence. The Court also notes that Commerce does not include in its brief before the Court the actual calculations relied upon to support its position. Instead, Commerce merely states a conclusion without providing the Court with a detailed description of its calculations. As such, Commerce does not provide the Court with sufficient information concerning its recalculations. Finally, AL Tech should be provided with an opportunity to respond to the new calculations. Accordingly, the Court finds that a remand is appropriate for Commerce to recalculate the VAT adjustment by calculating a weighted-average tax rate for each of the subject home market comparison groups.

2. Exclusion of Certain Home Market Sales

On April 1, 1994, Valbruna wrote a letter to Commerce requesting permission to report limited data concerning certain home market sales because the difference in merchandise ("difmer") adjustment would be greater than 20...