Nation Ford Chem. Co. v. U.S.

• Decision Date: 12 December 1997
• Docket Number: Court No. 96-11-02502.,Slip Op. 97-171.
• Citation: 985 F.Supp. 133
• Parties: NATION FORD CHEM. CO., Plaintiff, v. UNITED STATES, Defendant, Yude Chem. Co., Zhenxing Chem. Indus. Co., & Pht Int'l, Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

985 F.Supp. 133

NATION FORD CHEM. CO., Plaintiff, v. UNITED STATES, Defendant, Yude Chem. Co., Zhenxing Chem. Indus. Co., & Pht Int'l, Inc., Defendant-Intervenors.

Slip Op. 97-171.

Court No. 96-11-02502.

United States Court of International Trade.

December 12, 1997.

King & Spalding (Stephen A. Jones; Martin M. McNerney with him on the brief), Washington, DC, for plaintiff.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Reginald T. Blades, Jr.), and Linda S. Chang, International Office of Chief Counsel for Import Administration, of counsel, Washington, DC, for defendant.

Williams Mullen Christian & Dobbins (William E. Perry), Washington, DC, for defendant-intervenors.

MEMORANDUM OPINION

DiCARLO, Senior Judge.

Plaintiff Nation Ford, the sole domestic producer of sulfanilic acid, challenges the final results of the antidumping administrative review found in Sulfanilic Acid from the People's Republic of China, 61 Fed.Reg. 53,711 (Dep't Commerce 1996) (final admin. review) [hereinafter Final Determination]. The review covered the period from August 31, 1993 to July 1, 1994. The court has jurisdiction under 28 U.S.C. § 1581(c) (1994). Nation Ford claims that Commerce undervalued the cost to Chinese producers of aniline, the primary raw material used in the manufacture of sulfanilic acid. It argues that Commerce would have found a greater margin of dumping had it correctly calculated the foreign market value of sulfanilic acid in the People's Republic of China (PRC). For the reasons given below, Commerce's final results are sustained.

BACKGROUND

Commerce calculates an antidumping margin by comparing an imported product's price in the United States to the foreign market value (FMV) of comparable merchandise. FMV typically equals the domestic price of the product in the exporting country. When a nonmarket economy (NME) country such as the PRC is involved, however, domestic product sales are usually not reliable indicators of market value. In most such cases, Commerce must estimate the FMV by 1) isolating each factor of the production process in the NME country, 2) choosing a surrogate market economy country at a comparable level of economic development that produces comparable merchandise, 3) assigning a value to each factor of production equal to its cost in the surrogate country, and 4) adding to those values an estimated amount for profit and general expenses. 19 U.S.C. § 1677b(c) (1988) (pre-Uruguay Round law applies to this administrative review). The purpose of the procedure is to construct the product's price as it would have been if the NME country had been a market economy, using the best information available regarding surrogate values. Tianjin Machinery Import & Export Corp. v. United States, 16 CIT 931, 940, 806 F.Supp. 1008, 1018 (1992); see Timken Co. v. United States, 16 CIT 142, 144, 788 F.Supp. 1216, 1218 (1992).

Commerce used the above procedure in this administrative review, using India as the surrogate market economy country. In order to construct a surrogate market cost for sulfanilic acid, it was necessary to assign a value to aniline, a key raw material and thus a major factor of production. Aniline is subject to a two-tier price structure in India. Indian aniline producers are protected by high import tariffs, and their product is accordingly more expensive than the imported aniline available from other countries. Indian manufacturers must pay an eighty-five percent duty on imported aniline used to manufacture domestic products, but may import aniline duty free when it is used to produce exports. (Resp'ts' Additional PAPI Submission of June 28, 1995, Pub. Doc. 114.) There is, however, no material difference in quality or kind between domestic and imported aniline. As a result, Indian manufacturers tend to use domestically-produced aniline for domestic products and imported aniline for exports. Final Determination at 53,715. PRC manufacturers use aniline produced in the PRC for both domestic and exported products. (Resp'ts' Resp. Dep't Questionnaire of Feb. 3, 1995, Pub. Doc. 50 app. D at 5 (Yude); id. app. E at 5 (Zhenxing).) Defendant states that aniline is not subject to tariffs in the PRC. (Def.'s Br. at 45.)

During the administrative proceedings, the parties disagreed as to whether Commerce should use the domestic or import price of aniline in India as a surrogate value for the aniline used in the PRC. Plaintiff urged Commerce to use the domestic price, while the PRC respondents argued that the import price was more representative. Commerce decided to use import prices obtained from the Monthly Statistics of the Foreign Trade of India Volume Two — Imports (Indian Import Statistics), as it had done in its original investigation. Final Determination at 53,714-15.

Plaintiffs argue again before this court that Commerce should have used domestic rather than import prices because 1) PRC manufacturers use domestically produced aniline, and 2) Indian import prices are subsidized, aberrational, and not market-based. In the alternative, they argue that if Commerce does use import statistics to value aniline, it should add two items to the basic Indian import price: 1) the 85% import duty, and 2) an importer mark-up, on the assumption that independent companies import the aniline and then resell it to manufacturers of sulfanilic acid.

DISCUSSION

Once Commerce has made a final determination, the court will uphold that 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)(i) (1994). Substantial evidence is "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)). The law requires Commerce to estimate as accurately as possible what the market price of aniline would have been in the PRC "if such prices ... were determined by market forces." Tianjin Machinery, 806 F.Supp. at 1018. Commerce decided that Indian import prices, without added duties or mark-ups, were the best estimate of aniline costs in a theoretical market-economy PRC. Final Determination at 53,715. Plaintiff argues that Commerce's decision is not entitled to deference because it is unsupported by substantial evidence and not in accordance with the antidumping statute and its legislative history. Plaintiff also claims Commerce's finding that Indian importers did not pay duties or importer mark-ups is not supported by substantial evidence.

I.

The court finds that there is substantial evidence to support Commerce's decision to choose import prices over domestic prices. The record contains evidence of protective tariffs, which distort Indian domestic aniline prices. (Resp'ts' Additional PAPI Submission of June 28, 1995, Pub. Doc. 114 (showing eighty-five percent tariff).) Congress has directed Commerce to avoid surrogate values tainted by nonmarket forces. See H.R. Conf. Rep. No. 100-576, at 590-92 (1988). A protective import tariff is a classic example of a nonmarket force. Commerce's rejection of domestic aniline prices as a surrogate value simply followed Congress' directive to avoid such distortions.

After finding that domestic prices were not an appropriate surrogate value, Commerce reasonably decided to use import prices as an alternative. The court has held that import prices in the surrogate market may be used to set the value of a factor of production. Tehnoimportexport, UCF America Inc. v. United States, 16 CIT 13, 16, 783 F.Supp. 1401, 1405 (1992). Commerce had ample detail available concerning the price of aniline imported to India. (See, e.g., Resp'ts' Comments Regarding Appropriate Surrogate Value for Aniline of Aug. 11, 1995, Pub. Doc. 136 app. 1.) Its use of import prices was thus based on substantial evidence in the record, and the court will uphold its results.

Commerce's refusal to add import duties and importer mark-ups to those prices is also supported by substantial evidence. Commerce found that the evidence in the record did not justify making such adjustments. Respondents produced evidence that Indian producers did not pay import duties on aniline used to manufacture exports. Id.; (Resp'ts' Additional PAPI Submission of June 28, 1995, Pub. Doc. 114.) Plaintiffs produced no evidence to the contrary. As for importer markups, Commerce found that "[t]here is no evidence on the record of the review indicating who imports the aniline, the sulfanilic acid producer or an importer.... Accordingly, there is no basis for determining that an importer's markup would be included in the price to the Indian sulfanilic acid producer[.]" Final Determination at 53,716.

Given the absence of proof that Indian producers paid import duties or markups on imported aniline, Commerce's refusal to add those adjustments was supported by the record. Commerce made a reasonable decision based on the evidence available to it. It had no duty to seek out additional information not submitted by the parties. The burden of creating an adequate record lies with the party challenging Commerce's determination, not with Commerce. Tianjin Mach. Import & Export Corp. v. United States, 16 CIT 931, 936-37, 806 F.Supp. 1008, 1015 (1992). In fact, even if the record had shown that Indian importers paid duties or markups, Commerce would not have had to add them to the surrogate value for aniline if it decided that the result was not representative of what the price of aniline would have been in a theoretical market-economy PRC.

II.

As Commerce's decision to use unadjusted Indian import prices was supported by substantial evidence, it is entitled to deference unless plaintiff can show that it was not in accordance with...