988 F.Supp. 594 (CIT. 1997), 96-05-01441, AK Steel Corp. v. United States

Docket Nº:Court No. 96-05-01441.
Citation:988 F.Supp. 594
Party Name:AK STEEL CORP., et al., Plaintiffs, v. UNITED STATES, Defendant, Union Steel Manufacturing Co., Ltd., Defendant-Intervenor. Slip Op. 97-160.
Case Date:December 01, 1997
Court:Court of International Trade
 
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Page 594

988 F.Supp. 594 (CIT. 1997)

AK STEEL CORP., et al., Plaintiffs,

v.

UNITED STATES, Defendant,

Union Steel Manufacturing Co., Ltd., Defendant-Intervenor.

Slip Op. 97-160.

Court No. 96-05-01441.

United States Court of International Trade.

Dec. 1, 1997

Page 595

[Copyrighted Material Omitted]

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Dewey Ballantine (Michael H. Stein, Bradford L. Ward, Guy C. Smith, Elizabeth A.B. McMorrow, Jennifer Danner Riccardi), Washington, DC, for Plaintiffs.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Velta A. Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Dept. of Justice, John D. McInerney, Deputy Chief Counsel, Bernd Janzen, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel, Washington, DC, for Defendant.

Hogan & Hartson, L.L.P. (Raymond S. Calamaro, Lewis E. Leibowitz, Steven J. Routh, Lynn Kamarck), Washington, DC, for Defendant-Intervenor.

OPINION

POGUE, District Judge.

Plaintiffs, A.K. Steel Corp. et al. ("A.K.Steel") and Union Steel Manufacturing Comp. Ltd. ("Union"), filed separate actions challenging aspects of the International Trade Administration's final results in Certain Corrosion-Resistant Carbon Steel Flat Products from Korea,

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61 Fed.Reg. 18,547 (Dep't. Commerce 1996) (final results admin. review)[hereinafter Final Results]. The two actions were consolidated.

The Court has jurisdiction under 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2)(A).

BACKGROUND

In August 1993, Commerce issued antidumping duty orders on cold-rolled carbon steel products from Korea. Certain Cold-Rolled Carbon Steel Flat Products from Korea, 58 Fed.Reg. 44,159 (Dep't.Commerce, 1993) (antidumping duty ords.). Commerce determined that the weighted-average dumping margin for corrosion-resistant ("CORE") steel products was 17.70 percent for all importers. Id.

In September 1994, pursuant to the requests of Union and other Korean steel producers, 1 Commerce initiated the first administrative review of CORE and cold-rolled steel products from Korea. Certain Cold-Rolled Carbon Steel Flat Products from Korea, 59 Fed.Reg. 46,391 (Dep't.Commerce, 1994) (init. antidumping and countervailing duty admin. reviews). The schedules for the CORE and cold-rolled reviews diverged in May 1995, when Commerce, at the request of the petitioners, decided to "collapse" Union and a related party, Dongkuk Industries Co., Ltd. ("DKI"), for purposes of the cold-rolled review. 2 As a result, Union submitted a new response for the cold-rolled review, consolidating the sales and cost information of Union Steel and DKI. The period of review for sales of CORE steel products was February 4, 1993 to July 31, 1994.

In September 1994 Commerce sent a questionnaire to Union requesting general information about the company; home market and third country sales data; and U.S. sales data. 3 Commerce requested that Union assign control numbers to each class or kind of merchandise and that Union categorize U.S. and home market sales information based upon eleven criteria, i.e., physical characteristics. These characteristics were (1) type, (2) metallic coating process, (3) clad material/coating metal, (4) quality, (5) yield strength, (6) metallic coating weight, (7) minimum thickness, (8) width, (9) form, (10) temper rolling, and (11) levelling. The eleven categories were further divided into subcategories. The criteria were to serve as the basis for assigning control numbers ("CONNUMs") to Union's CORE sales. 4 These characteristics were listed in descending order of importance. Respondents were instructed first to match home-market sales of the same "type," (meaning clad or coated, painted or unpainted) as U.S. sales. Where that was accomplished, respondents were instructed to move down the list until it was no longer possible to find home-market sales that matched U.S. sales with respect to a particular characteristic.

The purpose of this exercise was to identify home-market sales of identical or at least similar merchandise. See 19 U.S.C. § 1677b(a)(1) ( "The foreign market value of imported merchandise shall be the price ... at which such or similar merchandise is sold ... in the principal markets of the country from which exported...."). Where it was not possible to match every model characteristic, the Department made difference in merchandise ("difmer") adjustments for cost differences between similar merchandise to permit appropriate comparison.

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Commerce then sought to verify the data supplied by Union. On March 13, 1995, Commerce sent Union a verification agenda. In the agenda, Commerce advised Union to be prepared, inter alia, (1) to discuss product characteristics of the merchandise at issue in relation to the characteristics identified in the questionnaire, and (2) to demonstrate that the product characteristics shown in its home market and U.S. sales listings were reported correctly. Commerce Verification Outline at 5-6 (Pub.Doc. 184) Commerce stated that Union should explain and document, as appropriate, the process used in deriving the criteria for each product, and provide copies of specification and other relevant documents such as "[m]ill certificates, invoices, product brochures that support [its] categorization of products under each model match variable...." Id. at 6.

On May 16, 1995, Commerce issued its sales verification report. In the "Product Comparison" section, the report said that Union maintained "an internal seven-digit product code assigned to all products that was used to define the majority of the model match variables in submission for cold-rolled and corrosion-resistant flat products." Commerce Sales Verification Rep. at 16 (Pub.Doc. 222). Union supplied Commerce verifiers with mill/inspection certificates of Union's preselected U.S. sales to verify the product code system, but told Commerce verifiers that it no longer had copies of any mill/inspection certificates of its home-market sales for the period of review. The verification report stated that due to Union's failure to provide mill/inspection certificates Commerce was able to verify some but not all of the relevant product characteristics for home-market sales of Union's CORE products.

In August 1995, Commerce issued its preliminary results. Certain Corrosion-Resistant Carbon Steel Flat Products from Korea: Preliminary Results of Antidumping Duty Administrative Review, 60 Fed.Reg. 44,006 (Dep't. Commerce 1995)(prelim.results). Due to its inability to verify product characteristics for Union's home-market sales, Commerce used Union's model-matching product comparisons but applied to all of Union's price-to-price comparisons an across-the-board adjustment for differences in physical characteristics of twenty percent as the best information available ("BIA"). 5

Between April 10 and April 14, 1995, Commerce verified Union's cost of production and constructed value information. The constructed value of imported merchandise equals:

the sum of--

(A) the cost of materials ... and of fabrication or other processing ...;

(B) an amount for general expenses and profit equal to that usually reflected in sales of merchandise of the same general class or kind as the merchandise under consideration ...

(C) the cost of all containers and coverings of whatever nature, and all other expenses incidental to placing the merchandise under consideration in condition, packed ready for shipment to the United States.

19 U.S.C. § 1677b(e). Because this information was verified successfully, Commerce decided to use constructed value as the basis for foreign market value in its final results, pursuant to 19 U.S.C. § 1677b(a)(2). 6 However, Commerce resorted to BIA for the profit component of constructed value, pursuant to its authority under 19 U.S.C. § 1677e(b) which requires that if Commerce is unable to verify the accuracy of information submitted, "it shall use the best information available to it as the basis for its action,...."

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...." Commerce was unable to verify Union's profit figures, just as it was unable to verify the physical characteristics of Union's home market sales, because verifiers were unable to match specific sales to specific costs due to their inability to verify the accuracy of Union's internal product code.

In its case brief filed on October 2, 1995, Union argued that partial BIA was unwarranted since its reported home market product characteristics had been adequately verified. 7

Commerce rejected certain materials in Union's case and rebuttal briefs related to Commerce's verification of Union's home-market product code system. Commerce said it was deleting the materials from the administrative record because they constituted untimely submitted factual information. Final Results, 61 Fed.Reg. at 18,560. According to Commerce's regulations, factual information for an administrative review is to be submitted not later than "the earlier of the date of publication of notice of preliminary results of review or 180 days after the date of publication of notice of initiation of the review." 19 C.F.R. § 353.31(a)(1). When Union submitted its case brief, both regulatory deadlines for submitting factual information had elapsed. 8

Union Steel objects to the following aspects of Commerce's final results:

1) the decision to rely on constructed value rather than home-market sales in calculating foreign market value;

2) Commerce's decision to strike from the administrative record portions of Union's case brief and rebuttal brief;

3) the use of BIA for the profit component of the constructed value calculation, rather than the profit information submitted by Union;

4) Commerce's...

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