Diamond Sawblades Manufacturers Coalition v. United States, 101113 USCIT, 06-00248

Docket Nº06-00248
Opinion JudgeR. Kenton Musgrave, Senior Judge
Party NameDIAMOND SAWBLADES MANUFACTURERS COALITION, Plaintiff, v. UNITED STATES, Defendant, and EHWA DIAMOND INDUSTRIAL CO., LTD., SH TRADING, INC., and SHINHAN DIAMOND INDUSTRIAL CO. LTD., Defendant-Intervenors, Slip Op No. 13-130
AttorneyDaniel B. Pickard and Maureen E. Thorson, Wiley, Rein & Fielding, LLP, of Washington, D.C., for plaintiff Diamond Sawblades Manufacturers Coalition. Eric C. Emerson and Laura R. Ardito, Steptoe and Johnson, LLP, of Washington, D.C., for consolidated plaintiff Hyosung D&P Co., Ltd. Delisa M. Sanch...
Judge PanelBefore: R. Kenton Musgrave, Senior Judge
Case DateOctober 11, 2013
CourtCourt of Appeals of International Trade

DIAMOND SAWBLADES MANUFACTURERS COALITION, Plaintiff,

v.

UNITED STATES, Defendant,

and

EHWA DIAMOND INDUSTRIAL CO., LTD., SH TRADING, INC., and SHINHAN DIAMOND INDUSTRIAL CO. LTD., Defendant-Intervenors

No. 06-00248

Slip Op No. 13-130

Court of Appeals of International Trade

October 11, 2013

Consol. Court No. 06-00248

[Remanding in part investigation of sales at less than fair value of diamond sawblades and parts from the Republic of Korea.]

Daniel B. Pickard and Maureen E. Thorson, Wiley, Rein & Fielding, LLP, of Washington, D.C., for plaintiff Diamond Sawblades Manufacturers Coalition.

Eric C. Emerson and Laura R. Ardito, Steptoe and Johnson, LLP, of Washington, D.C., for consolidated plaintiff Hyosung D&P Co., Ltd.

Delisa M. Sanchez, Trial Attorney, and Melissa M. Devine, Of Counsel Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With them on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of Counsel on the brief was Hardeep K. Josan, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, D.C.

Max F. Shutzman, Bruce M. Mitchell, Mark E. Pardo, Ned H. Marshak, and Andrew T. Shutz, Grunfeld, Desiderio, Lebowitz, Silverman & Kledstadt, LLP, of Washington, D.C., for defendant-intervenor Ehwa Diamond Industrial Co., Ltd.

Michael P. House and Sabahat Chaudhary, Perkins Coie, LLP, of Washington, D.C., for defendant-intervenors SH Trading Inc. and Shinhan Diamond Industrial Co. Ltd.

Before: R. Kenton Musgrave, Senior Judge

OPINION AND ORDER

R. Kenton Musgrave, Senior Judge

This opinion addresses the merits of consolidated challenges to aspects of the investigation into sales of diamond sawblades and parts thereof from the Republic of Korea at less than "fair" value ("LTFV"). See Diamond Sawblades and Parts Thereof from the Republic of Korea, 71 Fed. Reg. 29310 (May 22, 2006) (final LTFV determ.) ("Final Determination"), as ministerially amended by Diamond Sawblades and Parts Thereof from the Republic of Korea, 75 Fed. Reg. 14126 (Mar. 24, 2010). Familiarity is presumed on the background of this matter1 as well as the standard of judicial review, 19 U.S.C. §1516a(b)(l)(B)(i) (whether the administrative determination is "unsupported by substantial evidence on the record, or otherwise not in accordance with law"), which necessarily frames the issues. The reasonableness of agency action is assessed in light of the record as a whole. E.g., Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). On that basis, the case will be remanded as follows.

Discussion

Addressed in order, the defendant's International Trade Administration of the U.S. Department of Commerce ("Commerce") contends (I) jurisdiction is lacking over post-section-126-determination entries but (II) agrees to remand of the determination not to adjust the total indirect selling expenses ("ISEs") for respondent Ehwa Diamond Industrial Co., Ltd. ("Ehwa") to account for expenses attributable to Ehwa's "Industrial Division." The plaintiff, Diamond Sawblades Manufacturers Coalition ("DSMC"), additionally faults the Final Determination for the following: (III) non-inclusion of ISEs incurred in the transaction of subject merchandise through Ehwa and its U.S. affiliates to ultimate purchasers; (IV) non-collapse of various affiliations, namely (A) Ehwa and Shinhan Diamond Industrial Co., Ltd ("Shinhan"), (B) Shinhan and its Korean affiliates, and (C) Ehwa and its affiliates in the People's Republic of China ("PRC"), as well as (D) the impact such non-collapsing had on the weighted average CONNUMs of subject merchandise sold but not produced during the period of investigation ("POI") and the calculation of separate constructed export price ("CEP") offsets for Ehwa and Shinhan; (V) the country of origin determination for finished diamond sawblades; (VI) non-issuance of Section E questionnaires to respondents and therefore (VII) non-deducted further manufacturing costs from U.S. Net Price and unadjusted CEP profit; (VIII) non-application of the major input rule in the adjustment of prices for Ehwa's and Shinhan's purchases from affiliated suppliers; (XI) unadjusted costs of reported purchases from unaffiliated non-market economy ("NME") suppliers; (X) and the decision not to base Shinhan's financial expense rate on facts otherwise available and/or adverse inferences. The consolidated plaintiff Hyosung D&P Co., Ltd. ("Hyosung") and the defendant-intervenors Ehwa and Shinhan, joined by Shinhan's U.S. affiliate SH Trading, Inc., move to contest (XI) Commerce's determination to employ its traditional zeroing methodology.

I. Jurisdiction

Jurisdiction is here pursuant to 19 U.S.C. §1516a(a)(3) and 28 U.S.C. §1581(c), but the defendant again contends none exists with respect to Commerce's determination under section 129 of the Uruguay Round Agreements Act ("URAA") to revoke the AD order on subject merchandise, and therefore the court lacks jurisdiction over the entries effected thereby.

To repeat: The defendant is correct that no jurisdiction exists over the section 129 determination, since the DSMC did not challenge it, but that does not translate to automatic divestment of jurisdiction over the entries covered by the administrative decision to revoke. Following in the wake of the section 129 determination, Commerce's decision to revoke the AD order is independent of that determination, and the entries it would effect necessarily remain subject to this action. See, e.g., 36 CIT, Slip Op. 12-46 (Mar. 29, 2012). In other words, the opportunity to challenge the section 129 determination is indeed a separate matter, but the decision to revoke the AD order is "final" only in the sense that the section 129 determination (upon which that revocation decision depends) may not be challenged judicially. That does not equate to a powerlessness to rescind the revocation, should the final outcome of this matter so require, because it is not the legality of the section 129 determination currently supporting revocation in the first instance that governs jurisdiction here. The outcome of this action in fact governs the "continued propriety" (for want of a better phrase) of that revocation, 2 and this court continues to adhere to the view that Commerce cannot act to divest this court of the jurisdiction here retained, nor deprive the court of the ability to grant relief over any of the entries covered by such jurisdiction, and for which liquidation continues to be suspended. The status quo of this matter is of an AD order that is based upon an affirmative final determination of LTFV sales that Commerce has decided to revoke as a consequence of its implementation of the section 129 determination results. Were this matter ultimately to sustain an affirmative final determination of LTFV sales even in the absence of zeroing methodology, rescission of that revocation would not (continue to) be the lawful result. In that circumstance, if liquidation is permitted to occur between revocation and rescission of revocation, the DSMC will have been deprived of the full relief to which success in this matter entitles them, as compelled by the original status quo of this matter before Commerce. Therefore, the current status quo is not "like" the circumstance of an original negative determination of LTFV sales, where petitioners' precatory motions to a court to enjoin liquidation have been routinely denied. Or, if it is, then the situation is similar to petitioners having no immediate equitable right to enjoinder of liquidation when seeking to change the status quo of an original negative LTFV investigation and pursuant to which no AD order has issued, i.e., respondents have no immediate equitable right to liquidation on the basis of a changed status quo occasioned by revocation of an AD order as the result of a section 129 determination that occurs in the midst of a judicial challenge to the underlying affirmative LTFV investigation and pursuant to which an AD order has issued. Administrative revocation pursuant to a section 129 determination in that circumstance can only be regarded as interlocutory, i.e., provisional, and dependant upon the outcome of this matter, over which the court has jurisdiction, and the relief sought herein.3 Cf. Advanced Technology & Materials Co., Ltd. v. United States, 37 CIT __, Slip Op. 13-129 (Oct. 11, 2013).

II. Voluntary Remand for Recalculation of Ehwa's Divisional ISEs

The DSMC contest two aspects of Commerce's treatment during the investigation of Ehwa's reported indirect selling expenses (ISEs). These are fixed costs that a seller would incur regardless of whether a sale is made; they do not vary with the quantity sold or relate to a particular sale but may reasonably be attributed to such sales through proper cost accounting methodology.4See 19 C.F.R. §351.412(f)(2). On the first of its ISE claims, the DSMC point out that early in the investigation Ehwa originally reported that only its Stone & Construction division sells subject merchandise and based its reported ISEs on the expenses and sales of that division. See Issues and Decision Memorandum accompanying Final Determination ("I&D Memo"), PDoc 529, at cmt. 19. Subsequent to the preliminary results, Commerce issued a scope ruling that certain merchandise sold by Ehwa's Industrial Division, its only other division, was in-scope. The rationale behind Ehwa's divisional reporting having thus disappeared, the DSMC pointed this out in its case brief and requested that Commerce recalculate and apply Ehwa's ISEs on a company-wide basis. PDoc 528, CDoc 231...

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