Advanced Tech. & Materials Co. v. United States

• Decision Date: 12 October 2011
• Docket Number: Consol. Court No. 09-00511
• Parties: ADVANCED TECHNOLOGY & MATERIALS CO., LTD., BEIJING GANG YAN DIAMOND PRODUCTS COMPANY, and GANG YAN DIAMOND PRODUCTS, INC., Plaintiffs, BOSUN TOOLS GROUP CO. LTD, Plaintiff-Intervenor, v. UNITED STATES, Defendant, and DIAMOND SAWBLADES MANUFACTURERS COALITION, WEIHAI XIANGGUANG MECHANICAL INDUSTRIAL CO., LTD., and QINGDAO SHINHAN DIAMOND INDUSTRIAL. CO., LTD., Defendant-Intervenors.
• Court: U.S. Court of International Trade

ADVANCED TECHNOLOGY & MATERIALS CO., LTD., BEIJING GANG YAN DIAMOND PRODUCTS COMPANY and GANG YAN DIAMOND PRODUCTS, INC., Plaintiffs BOSUN TOOLS GROUP CO. LTD, Plaintiff-Intervenor, v. UNITED STATES, Defendant and DIAMOND SAWBLADES MANUFACTURERS COALITION, WEIHAI XIANGGUANG MECHANICAL INDUSTRIAL CO., LTD., and QINGDAO SHINHAN DIAMOND INDUSTRIAL. CO., LTD., Defendant-Intervenors.

Consol. Court No. 09-00511

UNITED STATES COURT OF INTERNATIONAL TRADE

Dated: October 12, 2011

Slip Op. 11- 122

Before: R. Kenton Musgrave, Senior Judge

PUBLIC VERSION

OPINION AND ORDER

[Remanding for further explanation on the question of separate rates and granting defendant's consent motion for remand to reconsider surrogate steel values. ]

Barnes, Richardson & Colburn (Jeffery S. Neeley, Michael S. Holton and Stephen W. Brophy) for Plaintiffs.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Delisa M. Sanchez); Office of the Chief Counsel for Import Administration, U.S. Department of Commerce (Hardeep K. Josan), Of Counsel, for Defendant.

Wiley Rein, LLP (Daniel B. Pickard and Maureen E. Thorson) for Diamond Sawblades.

Musgrave, Senior Judge: This consolidated action concerns the final less than fair value ("LTFV") determination issued by the International Trade Administration, United States Department of Commerce ("Commerce" or "the Department") in the antidumping investigation of diamond sawblades imported from the People's Republic of China. See Diamond Sawblades and Parts Thereof From the People's Republic of China, 71 Fed. Reg. 29303 (May 22, 2006) (final LTFV determination) ("Final Determination"), as amended, 71 Fed. Reg. 35864 (June 22, 2006). Plaintiffs Advanced Technology & Materials Co. Ltd., Beijing Gang Yan Diamond Products Company, and Gang Yan Diamond Products, Inc. ("ATM") challenge several aspects of the Final Determination including (1) the Department's use of zeroing to calculate the weighted-average dumping margin; (2) the selection of Carborundum financial data to calculate surrogate financial ratios; and (3) the Department's valuation of certain steel inputs. See ATM's Mot. at 1-2. Defendant-Intervenor Diamond Sawblade Manufacturers Coalition ("DSMC") challenges the Department's country of origin determination and its decision to award ATM a separate rate. ATM and DSMC move for judgment on the agency record, and the Department also moves for voluntary remand to reconsider aspects of its selection of surrogate values for steel used to produce diamond sawblade cores, which moots ATM's third cause of action.¹

The court exercises jurisdiction pursuant to 28 U.S.C. § 1581(c), under which the Court of International Trade is granted exclusive jurisdiction of any civil action commenced under 19 U.S.C. § 1516a. The court reviews the Final Determination on the basis of the agency record. See 28 U.S.C. § 2640(b); 19 U.S.C. § 1516a(b)(1)(B)(i). Upon such review, the court must "hold unlawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). "Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). As requested by the Department and for the reasons set forth below, this matter will be remanded for further consideration.

Discussion

I. Surrogate Financial Data

An accurate calculation of normal value necessarily includes selling, general and administrative expenses ("SG&A"), overhead, and profit. For non-market economy producers, Commerce estimates these items by using the financial ratios of a surrogate producer, i.e., a "producer[] of identical or comparable merchandise in the surrogate country." 19 C.F.R. § 351.409. Commerce chose India as an appropriate surrogate country for the investigation of PRC producers, but industry-specific information was apparently unavailable at the time of the preliminary determination, and therefore Commerce used financial ratios taken from the Reserve Bank of India Bulletin (August 2005) ("RBI data"). The RBI data "include[ ] the experience of 2,201 public limited companies in India, including Tea plantations, Mining & Quarrying, Food Products &Beverages, Sugar, Edible Oils, Cotton, Paper Products, Chemical Products, Paint, and Medicines." Issues and Decision Memorandum ("Decision Mem.") at 8.

After issuance of the preliminary determination, DSMC placed on the record specific financial reports of two Indian producers of grinding wheels and abrasive products, namely Grindwell Norton, Ltd., ("Norton") and Carborundum Universal Limited ("Carborundum"). After examination of these financial reports, Commerce determined that the Carborundum data were the best choice of the three available data sets (RBI data, Norton, Carborundum), and, accordingly, recalculated the SG&A expenses using Carborundum's financial ratios. Commerce declined to use the Norton financials because that data predated the period of investigation by more than three years.

ATM argues Commerce's choice to use Carborundum's financial data is erroneous because (1) substantial evidence does not support the conclusion that grinding wheels are comparable to diamond sawblades; (2) the record contains no clear indication that Carborundum produced grinding wheels during the financial statement period; and (3) the RBI data are less likely to be distortive and therefore represent the "best available information" required by 19 U.S.C. § 1677b(c)(1) (the Department's valuation "shall be based on the best available information regarding the value of such factors in a market economy country or countries considered to be appropriate"). However, in reviewing the Final Determination the question before the court is not "whether the information Commerce used was the best available, but rather whether a reasonable mind could conclude that Commerce chose the best available information." Goldlink Indus. Co. v. United States, 30 CIT 616, 619, 431 F. Supp. 2d 1323, 1327 (2006). For the reasons discussed below, thecourt finds the Department's selection of the Carborundum data was reasonable and is supported by substantial evidence.

To determine whether two products are comparable, Commerce typically considers whether they had similar physical characteristics, end uses, and production processes. See, e.g., ATM's Mot. at 25-33. Contrary to ATM's allegations, however, Commerce did not ignore these factors. The Department observed that diamond sawblades and grinding wheels both physically function as abrasives, that is, "by abrading the materials against which they are placed in a grinding process" instead of cutting the material. Decision Mem. at 8 (referring to description set forth in the original Petition). The Department also recognized differences in the products, i.e., that diamond sawblades use a different abrading component (diamonds) than grinding wheels, and it also observed that all of the respondents produced grinding wheels that use a diamond abrasive. The Department noted that both products are used in the construction and infrastructure industry but disagreed that comparable products necessarily must have identical end users. Id. at 8.

ATM contends that the Department should have considered that the production of diamond sawblades requires expensive raw materials not used in grinding wheels and that these differences would distort the SG&A ratio. While this is a colorable argument, ATM does not point to record evidence to support it. Diamonds or diamond powders may or may not be an expensive material, but all record indications are that they are apparently used in extremely small quantities. The court cannot assume the existence of such distortions when none are immediately apparent. Moreover, it is not necessary for Commerce to "duplicate the exact production experience" of non-market economy manufacturers, or "undergo an item-by-item accounting" when determining production costs. Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1377 (Fed. Cir. 1999).

Next, ATM contends that even assuming grinding wheels are comparable, nothing in the record indicates Carborundum produced grinding wheels during the financial statement period. According to ATM, Carborundum's statement noting its efforts "resulted in . . . the development of new products such as thread grinding wheels" should only support the conclusion that Carborundum was developing the capability to produce such grinding wheels, not that it actually produced them. ATM's Mot. at 34-35. The government asserts that the court should reject this argument because it was never presented at the agency level, and that even if the court were to consider it, the Department's interpretation of the financial statement language was reasonable. Def's Mot. in Opp'n at 32.

The court agrees with the government. The comment in the financial statement is ambiguous at best, and the Department's interpretation of it is not unreasonable. More importantly, ATM should have raised this question when the matter was before Commerce. The doctrine of administrative exhaustion of remedies is "appropriate in the antidumping context because it allows the agency to apply its expertise, rectify administrative mistakes," and advances "the twin purposes of protecting administrative agency authority and promoting judicial efficiency." Carpenter Tech. Corp. v. United States, 30 CIT 1373, 1374-75, 452 F. Supp. 2d 1344, 1346 (2006). The Court has, of course, found exceptions when requiring exhaustion would be futile, a useless formality, or in the face of a manifestly inadequate remedy, see, e.g., Alhambra Foundry Co., Ltd. v. United States, 12 CIT 343, 685 F. Supp. 1252, 1256 (1988), but this is...