Itochu Building Products, Co., Inc. v. United States, 041516 USCIT, 15-00009

Docket Nº:15-00009
Opinion Judge:Mark A. Barnett, Judge
Party Name:ITOCHU BUILDING PRODUCTS, CO., INC., Plaintiff, v. UNITED STATES, Defendant. MID-CONTINENT STEEL & WIRE, INC., Defendant-Intervenor. Slip Op. 16-37
Attorney:Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, NY, argued for plaintiff. With him on the brief were Bruce M. Mitchell, Andrew T. Schutz, and Kavita Mohan. David F. D'Alessandris, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department o...
Judge Panel:Before: Mark A. Barnett, Judge
Case Date:April 15, 2016
Court:Court of International Trade
 
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ITOCHU BUILDING PRODUCTS, CO., INC., Plaintiff,

v.

UNITED STATES, Defendant.

MID-CONTINENT STEEL & WIRE, INC., Defendant-Intervenor.

No. 15-00009

Slip Op. 16-37

Court of Appeals of International Trade

April 15, 2016

[Plaintiffs motion is granted and the determination is remanded to the Department of Commerce for further clarification or revision on the issue of affiliation.]

Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, NY, argued for plaintiff. With him on the brief were Bruce M. Mitchell, Andrew T. Schutz, and Kavita Mohan.

David F. D'Alessandris, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of Counsel on the brief were Eric J. Singley, U.S. Department of Justice, and Elika Eftekhari, U.S. Department of Commerce.

Adam H. Gordon, The Bristol Group PLLC, of Washington, DC, argued for defendant-intervenor.

Before: Mark A. Barnett, Judge

OPINION AND ORDER

Mark A. Barnett, Judge

In this action, Plaintiff, Itochu Building Products Company, Inc. ("Plaintiff" or "Itochu")1 challenges the final determination of the U.S. Department of Commerce ("Defendant" or "Commerce") in the first administrative review of the antidumping duty order on certain steel nails from the United Arab Emirates (UAE) ("AD order").2 Plaintiff claims that Commerce should not have found affiliation between Dubai Wire FZE ("Dubai Wire") and Itochu, and, alternatively, that Commerce should not have based normal value on third country sales to Canada and should have used constructed value instead.3

For the reasons discussed below, the Court remands the determination for Commerce to clarify and, if necessary, revise its findings on affiliation. The Court defers ruling on the use of Canadian sales to determine normal value pending the agency's determination on remand.

BACKGROUND

On June 28, 2013, Commerce initiated the first administrative review of the antidumping duty order on Certain Steel Nails from the United Arab Emirates, for the period of review from November 3, 2011 through April 30, 2013 ("POR").4 Commerce selected Dubai Wire as one of the mandatory respondents.5 Itochu was the importer of record for multiple shipments of subject nails from the UAE produced and sold by Dubai Wire during the POR.6

On May 28, 2014, Commerce preliminarily determined that Dubai Wire and Itochu were affiliated parties.7 On June 18, 2014, Commerce issued the preliminary results of its review and calculated Dubai Wire's dumping margin to be 3.88 percent; however, this calculation was not based on treating Dubai Wire and Itochu as affiliated due to outstanding questionnaires.8 The Department indicated its intention to "consider Dubai Wire's responses to {those outstanding} questionnaires for the final results."9Subsequently, on October 16, 2014, the Department issued a post-preliminary results memorandum for Dubai Wire using the additional requested information, recalculating the antidumping margin to be 18.13 percent.10 On December 30, 2014, Commerce issued the Final Results of its review and confirmed that Dubai Wire's antidumping duty margin was 18.13 percent.11

In this case, Itochu challenges Commerce's finding that Dubai Wire and Itochu are affiliated and, in the alternative, Commerce's determination to base normal value on third country sales to Canada rather than using constructed value. For the reasons discussed below, the Court remands the determination to Commerce to provide further explanation of its determination to find Dubai Wire and Itochu to be affiliated or to otherwise reconsider that determination. The Court defers ruling on the use of Canadian sales to determine normal value pending the agency's determination on remand.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012) and 28 U.S.C. § 1581(c) (2012).12

The court will uphold an agency determination that is supported by substantial evidence and otherwise in accordance with law.13 Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion."14 It '"requires more than a mere scintilla, " but "less than the weight of the evidence."15 In determining whether substantial evidence supports Commerce's determination, the court must consider "the record as a whole, including evidence that supports as well as evidence that 'fairly detracts from the substantiality of the evidence.'"16 The court "may not reweigh the evidence or substitute its own judgment for that of the agency."17 In sum, "in order for Commerce's determination to be sustained, the determination must be reasonable, supported by the record as a whole, and the grounds that the administrative agency acted upon clearly disclosed."18

The Court reviews Commerce's legal interpretations of the statutes it administers under the "otherwise in accordance with law" standard.19 To do so, the Court utilizes the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.20 First, the Court determines "whether Congress has directly spoken to the precise question at issue."21 If Congress's intent is clear, "that is the end of the matter."22 However, "[i]f the statute is silent or ambiguous, " the Court must determine "whether the agency's [action] is based on a permissible construction of the statute."23

DISCUSSION

Plaintiff challenges Commerce's determination that Dubai Wire and Itochu are affiliated, and, in the alternative, argues that Commerce should not have based normal value on third country sales to Canada and should have used constructed value instead.

I. AFFILIATION BETWEEN DUBAI WIRE AND ITOCHU

In its Affiliation Memorandum, issued prior to the Preliminary Results, Commerce described the relationship between the relevant corporate entities as follows:

IBP {Itochu Building Products, Inc.} is part of the Itochu group of companies, which includes its sister company PrimeSource, the joint venture partner with Integrated Business Group USA LLC (IBG), a wholly-owned subsidiary of DWE {Dubai Wire FZE}. PrimeSource and IBG each own 50 percent of the joint venture company Progressive Steel and Wire LLC (PSW), a producer of nails in the United States. The record indicates that DWE is 100 percent owned by its parent company Dubai Wire Products Limited (DWP), and DWE owns 100 percent of IBG, a company formed in November 2011 for the purpose of creating the joint venture company, PSW, with joint venture partner PrimeSource. DWE stated that PrimeSource and its sister company IBP are each 80 percent owned by Itochu International USA (Itochu USA), and Itochu USA's parent company, Itochu Corporation (Japan)(Itochu Japan) owns 100 percent of Itochu USA and 20 percent of both PrimeSource and IBP . . . the record indicates that the PSW joint venture is 50 percent owned by the DWE business structure and 50 percent owned by the IBP business structure.24

Commerce further stated that it considered "DWP, DWE and IBG to be a single corporate entity" (the "Dubai Wire group") and "Itochu Japan, Itochu USA, PrimeSource and IBP to be a single corporate entity" (the "Itochu group").25

In the Issues & Decision Memorandum accompanying the Final Results, Commerce confirmed its determination that the Itochu and Dubai Wire groups were affiliated through their joint ownership of PSW and cited to the previously issued Affiliation Memorandum for details on its affiliation determination.26 Commerce rejected Plaintiff's arguments that actual control had to exist for a finding of affiliation pursuant to 19 U.S.C. 1677(33) and explained:

[I]n determining whether control over another person exists in a JV within the meaning of section 771(33) of the Act, we must only find the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise or foreign like product . . . In our Affiliation Memo we determined that, based on record evidence of ownership of PSW, the Dubai Wire and IBP corporate entities were in a position to exert control over each other via the JV, not that they actually exerted control over each other.27

Before this Court, Plaintiff does not contest the existence of the joint venture or that "Itochu and Dubai Wire both were legally in a position to exert control over PSW."28Instead, Plaintiff argues that merely determining the existence of a corporate relationship is not the end of the affiliation analysis.29 Plaintiff argues that Commerce has not identified evidence to support its finding and has not addressed the evidence presented by Dubai Wire and Itochu "demonstrating that {the joint venture} relationship does not result in a potential to impact decisions."30

In its brief to the Court, Plaintiff renews the arguments it made to the agency below, that "there is no evidence that it had control over the production, pricing, or cost of nails produced by Dubai Wire, " pointing to facts showing the absence of actual control.31 In sum, Itochu claims that the record demonstrates that Dubai Wire dealt with IBP in an arms-length manner, both before and after the formation of the joint-venture, and that the sales process between the two companies, including prices paid for merchandise...

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