Acciai Speciali Terni S.P.A. v. U.S.

Decision Date30 March 2001
Docket NumberSlip Op. 01-36.,Court No. 99-08-00551.
Citation142 F.Supp.2d 969
PartiesACCIAI SPECIALI TERNI S.P.A. and Acciai Speciali Terni (USA), Plaintiffs, v. UNITED STATES, Defendant, and Zanesville Armco Independent Organization et al., Defendant-Intervenors.
CourtU.S. Court of International Trade

Hogan & Hartson L.L.P. (Lewis E. Leibowitz, T. Clark Weymouth, Craig A. Lewis, Daniel J. Cannistra, Stephen F. Propfst), Washington, DC, for Plaintiffs.

Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director; Michele D. Lynch, U.S. Department of Justice, Civil Division, Commercial Litigation Branch; Brian K. Peck, Office of Chief Counsel for Import Administration, Washington, DC, for Defendant, of counsel.

Collier Shannon Scott, PLLC (David A. Hartquist, Paul C. Rosenthal, Kathleen W. Cannon, Eric R. McClafferty), Washington, DC, for Defendant-Intervenors.

WALLACH, Judge.

I INTRODUCTION

At issue in this case are several aspects of the Department of Commerce, International Trade Administration's ("Commerce" or the "Department") Notice of Final Determination of Sales at Less Than Fair Value; Stainless Steel Sheet and Strip in Coils From Italy, 64 Fed. Reg. 30750 (Dep't Commerce 1999) ("Final Determination"), as amended by 64 Fed. Reg. 40567 (Dep't Commerce 1999) ("Amended Final Determination") in which Commerce found that Plaintiffs, Acciai Speciali Terni S.p.A. and Acciai Speciali Terni USA, Inc. (collectively "AST") were selling their products for less than fair value (i.e. dumping) in the United States. Plaintiff AST and Defendant-Intervenors Zanesville Armco Independent Organization, et al, through respective Motions For Judgment On The Agency Record, pursuant to USCIT Rule 56.2, challenge the Final Determination. For the reasons set forth below, the Final Determination is affirmed in part and remanded in part.

II BACKGROUND

AST is a producer and exporter/importer of steel products. See Initiation of Antidumping Duty Investigations: Stainless Steel Sheet and Strip in Coils From France, Germany, Italy, Japan, Mexico, South Korea, Taiwan, and the United Kingdom, 63 Fed.Reg. 37521, 37524 (Dep't Commerce 1998). A related key player in this investigation is an affiliated reseller identified in Commerce's determinations as reseller 001 ("USR"). See Final Determination at 30750 (referring to reseller 001 as AST's "affiliated U.S. reseller").

On June 30, 1998, Commerce initiated antidumping investigations of imports of stainless steel sheet and strip ("SSSS") in coils from several countries, including Italy. See Initiation of Antidumping Duty Investigations: Stainless Steel Sheet and Strip in Coils From France, Germany, Italy, Japan, Mexico, South Korea, Taiwan, and the United Kingdom, 63 Fed. Reg. 37521 (Dep't Commerce 1998).

On December 17, 1998, Commerce issued its Preliminary Determination. See Notice of Preliminary Determination for Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils From Italy, 64 Fed.Reg. 116 (Dep't Commerce 1999). On June 8, 1999, Commerce issued the Final Determination. The Department amended the Final Determination on July 27, 1999, to correct certain ministerial errors. See Amended Final Determination.

A

Commerce Found the Database Prepared by USR Had Pervasive Errors, and Applied Adverse Facts Available.

In the course of the investigation, Commerce "requested AST to provide information for all affiliates involved in the production or sale of the subject merchandise in the foreign market or the United States." Memorandum of the United States in Opposition to the Motion of Acciai Speciali Terni S.p.A. For Judgment upon the Agency Record ("Defendant's Response to Plaintiffs' Motion") at 3 (citing Dep't Commerce Questionnaire at G-6 (Aug. 3, 1998) ("Prepare a single response that includes information, including financial statements, for all affiliates involved with the production or sale of the products under investigation during the period of investigation (`POI') in the foreign market or the United States market or both. Include the sales and cost of these affiliates with your sales and cost in the same computer data file(s) and submit a single narrative response.")).

In its response AST did not provide complete downstream sales data for its affiliates, stating instead that:

AST continues to believe that it should not be required to submit any data on downstream sales by resellers that might be deemed to be affiliated companies. Nevertheless, to respond to the Department's request for transaction-specific home market downstream sales data, AST solicited this data from the specific resellers.... Unfortunately, ... AST cannot compel the resellers in which it has only a minority interest to provide the requested data. Though AST asked these resellers to provide this data and offered to assist in the compilation and preparation of the data, the minority-owned resellers declined to cooperate.

Letter from Counsel for AST to Commerce, November 12, 1998, at 3. In reply, Commerce issued a deficiency letter in which it reiterated its request for the downstream sales data by AST's affiliates in the U.S. market. Letter from Commerce to counsel for AST, November 27 1998 ("[W]e request the following information .... the downstream sales of....").

AST did provide downstream sales information for USR. AST submitted a database prepared by USR containing information on further manufacturing and downstream sales. The database was first submitted to Commerce on December 11, 1998, and was then modified and resubmitted to Commerce on January 15, 1999. See Letters from Counsel for AST to Commerce, December 11, 1998 ("enclosed ... [is] AST's response to the Department's November 27, 1998 request for data on downstream sales and further manufacturing by [USR and other resellers].") and January 15, 1999 ("enclosed ... [is] AST's response to the Department's January 8, 1999 request for additional information from [USR] ... This submission also corrects certain minor errors in the data previously submitted. ...").

At verification,1 Commerce noted discrepancies between the database submitted to it and the records of USR. It found sales which were not attributed to suppliers, misallocated processing costs, incorrectly applied buffing costs, inaccurately reported quantity surcharges, and inaccurately allocated respinning costs. Final Determination at 30758-60.

In the Final Determination, Commerce held that those discrepancies undermined the entire sales database prepared by USR. It stated that "the frequency of the errors and the absence on the record of information necessary to correct certain of these errors serve to undermine the overall credibility of the further-manufacturing response as a whole, thus compelling the Department to rely upon total facts available for further-manufactured sales by" USR. Id. at 30758.

Commerce identified discrepancies in the program in regard to widths of further-processed coils. It stated that:

[USR] created a computer program ... which sought to match an input coil to each output coil sold and to assign a cost for each processing step through which the finished coil supposedly passed. As noted, at verification we tested this computer program to assess its accuracy and reliability and found that seven of eighteen transactions tested contained errors in either the allocation of processing costs or in the matching of input coils to output coils. In two of these cases [USR] had assigned processing costs to products which had, in fact, undergone no processing whatever. We note that this discrepancy arose from the input coils and output coils identified by [USR]'s own computer program. In another transaction the combined widths of the finished products were greater than the original width of the input coil as identified by the system, an obvious physical impossibility that should have been identified by [USR] as an error.

Final Determination at 30759.

Commerce also found errors in the reported finishing costs, stating that "[c]ertain coils with a pre-buff finish applied to the underside had no finishing costs reported for the additional processing." Id. Finally, Commerce noted that "other transactions contained errors in the application of surcharges for processing small quantity orders." Id. As to the finishing costs and small quantity surcharges, Commerce stated "both errors reduced the costs allocated to further processed products, thus creating further doubts as to the accuracy of the underlying reporting methodology." Id.

"In this case a partial correction is not a viable option, because of both the high percentage of errors found through our sample testing and the fact that some of the errors cannot be corrected with information on the record. Therefore, pursuant to section 776(a) of the Act, facts otherwise available are applicable to the downstream sales of" USR. Id. at 30760.

Commerce held that "the fundamental and pervasive nature of these errors raises concerns as to the validity not only of the data subjected to direct testing, but of the remainder of the response as well." Id. at 30758. Furthermore:

[t]he computer programming used by [USR] to identify its products' physical characteristics and to match each of these products with its associated costs were found at verification to be accomplishing neither end consistently or accurately. Moreover, both the frequency of the errors and the absence on the record of information necessary to correct certain of these errors serve to undermine the overall credibility of the further-manufacturing response as a whole, thus compelling the Department to rely upon total facts available for further-manufactured sales by [USR].

Id. This rejection having left a gap in the necessary data, Commerce resorted to facts available.

Commerce also determined that AST had not acted to the best of its ability in creating this...

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