American Silicon Technologies v. U.S.

• Citation: 334 F.3d 1033
• Decision Date: 03 July 2003
• Docket Number: No. 02-1033.,02-1033.
• Parties: AMERICAN SILICON TECHNOLOGIES and SKW Metals & Alloys, Inc., Plaintiffs, and Elkem Metals Company and Globe Metallurgical, Inc., Plaintiffs-Appellees, v. UNITED STATES, Defendant-Appellee, and Companhia Brasileira Carbureto de Calcio, Defendant-Appellant, and Companhia Ferroligas Minas Gerias-Minasligas and Rima Industrial S/A, Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1033

334 F.3d 1033

AMERICAN SILICON TECHNOLOGIES and SKW Metals & Alloys, Inc., Plaintiffs, and Elkem Metals Company and Globe Metallurgical, Inc., Plaintiffs-Appellees, v. UNITED STATES, Defendant-Appellee, and Companhia Brasileira Carbureto de Calcio, Defendant-Appellant, and Companhia Ferroligas Minas Gerias-Minasligas and Rima Industrial S/A, Defendants.

No. 02-1033.

United States Court of Appeals, Federal Circuit.

DECIDED: July 3, 2003.

Martin Schaefermeier, Verner, Liipfert, Bernhard Mcpherson and Hand, Chartered, of Washington, DC, argued for plaintiffs-appellees. With him on the brief was William D. Kramer.

Reginald T. Blades, Jr., Senior Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Robert D. McCallum, Jr., Assistant Attorney General; and David M. Cohen, Director. Of counsel on the brief were John D. McInerney, Chief Counsel for Import Administration; Elizabeth C. Seastrum, Senior Counsel; and John F. Koeppen, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Philippe M. Bruno, Dorsey & Whitney LLP, of Washington, DC, argued for defendant-appellant. Of counsel was Rosa S. Jeong.

Before MICHEL, RADER, and PROST, Circuit Judges.

RADER, Circuit Judge.

In this silicon metal antidumping case, the United States Department of Commerce (Commerce) initially assessed the dumper's financial costs using the consolidated financial statements of its ultimate Belgian parent. The United States Court of International Trade remanded the case to Commerce with instructions to recalculate the dumping company's financial costs by examining the records of only its immediate Brazilian parent. Because the Court of International Trade did not allow Commerce to examine the entire record to determine financial costs, this court reverses.

I.

In 1991, Commerce found that Companhia Brasileira Carbureto de Calcio (CBCC), a Brazilian producer and exporter of silicon metal, had dumped its product in the United States. Commerce then undertook to determine a duty under 19 U.S.C. § 1675(a)(2)(A). Accordingly, Commerce examined silicon metal entering from Brazil for the period from July 1, 1994 to June 30, 1995. During its review, Commerce learned that Solvay do Brasil (Brasil) owns 99.9% of CBCC. Moreover, Solvay & Cie of Belgium (Solvay) owns 100% of Brasil, CBCC's parent. Thus, in computing CBCC's finance costs — a key component of the dumping margin — Commerce determined that Belgian Solvay was the ultimate parent corporation of CBCC.

Because Commerce found that Belgian Solvay was CBCC's ultimate parent, Commerce used Solvay's 1994 consolidated financial statements to set CBCC's dumping margin. A financial expense ratio figured from these statements became a key component for calculating the cost of production and the value of the silicon metal sold by CBCC in the United States during the review period. See Silicon Metal from Brazil, Amended Final Results of Antidumping Administrative Review, 62 Fed. Reg. 54,087 (Oct. 17, 1997); Silicon Metal from Brazil; Final Results of Antidumping Administrative Review and Determination Not to Revoke in Part, 62 Fed. Reg. 1970 (Jan. 14, 1997). Using the financial expense ratio calculated with the Belgian figures, Commerce issued a dumping margin for CBCC.

American Silicon Technologies, SKW Metal & Alloys, Inc., Elkem Metal Co., and Globe Metallurgical, Inc. (collectively, American Silicon), petitioners in Commerce's administrative review, disagreed with Commerce's calculation of CBCC's financial expense ratio. Instead, American Silicon reasoned, Commerce should employ the combined financial expenses of CBCC and its immediate parent, Brasil. American Silicon based this reasoning on record evidence of inter-company financial transactions between CBCC and Brasil, such as loans and stock transfers. Moreover, American Silicon argued that Brazilian companies ordinarily borrow within domestic credit markets or from Brazilian banks, as opposed to seeking credit from external markets. By calculating CBCC's financial expense ratio using Solvay's consolidated financial statements, American Silicon contended that Commerce inappropriately shifted costs of production away from the subject merchandise.

Commerce's standard policy for assessing finance costs bases interest expenses and income on fully consolidated financial statements because the cost of capital is fungible. According to Commerce, consolidated financial statements indicate that a corporate parent controls a subsidiary. Indeed, market analysts use consolidated statements to fairly represent the financial health of parent companies with substantial subsidiary operations. Therefore, under standard Commerce policy as well as standard accounting principles, "majority ownership is prima facie evidence of control over the subsidiary." Am. Silicon Techs. v. United States, Consol. Court, No. 97-02-00267, slip op. 99-34, 1999 WL 354415 (Ct. Int'l Trade Apr. 9, 1999). Moreover, the Court of International Trade has sustained Commerce's normal practice in calculating financial expense ratios as a permissible interpretation of applicable statutes (19 U.S.C. §§ 1677b(b)(3)(B) (2000), 1677b(e)(2)(A) (2000), and 1677b(f)(1)(A) (2000)), the Statement of Administrative Action, and its case law. See, e.g., Gulf States Tube Div. of Quanex Corp. v. United States, 981 F.Supp. 630, 647-49 (Ct. Int'l Trade 1997).

Therefore, Commerce initially determined Solvay had the power to direct the capital structure of CBCC with its controlling interest. Because Solvay is the ultimate parent of the Solvay corporate group and controls CBCC's financial expenses, Commerce and CBCC relied on Solvay's consolidated financial statements to calculate CBCC's financial expenses.

American Silicon appealed to the Court of International Trade. The Court of International Trade determined that Commerce erred in employing the consolidated financial statements of Solvay when calculating CBCC's financial expense ratio. Am. Silicon, 1999 WL 354415, at *8. In support of that finding, the Court of International Trade noted that Brasil engaged in financing with CBCC, while no direct financial exchanges occurred between CBCC and Solvay during the relevant period. Id. The Court of International Trade did not assess whether Belgian Solvay controlled and accounted for Brasil's financial transactions with CBCC in the relationships of its subsidiaries. Nonetheless, the Court of International Trade deviated from the normal rule and determined that, in this case at least, the ultimate parent's financial statements did not reasonably reflect "the actual cost incurred by CBCC to produce and sell silicon metal." Id. at *7; see also 19 U.S.C. § 1677b(f)(1)(A).

The trial court remanded to Commerce with instructions to recalculate CBCC's financial expense ratio utilizing the consolidated financial statements of CBCC and its immediate parent company, Brasil, excluding any financial information from Belgian Solvay, the ultimate parent of both Brasil and CBCC. Following the remand, Commerce reluctantly recalculated CBCC's financial expense ratio, asserting in its final remand results the continued belief that the initial calculation was appropriate. The Court of International Trade disagreed and sustained the remand results. Am. Silicon Techs. v. United States, Consol. Court No. 97-02-00267, slip op. 01-109, 2001 WL 1223714 (Ct. Int'l Trade Aug. 27, 2001). CBCC appeals, asserting error by the Court of International Trade in denying Commerce sufficient deference in its initial calculation of CBCC's financial expense ratio based on the consolidated financial statements of its ultimate parent, Belgian Solvay.

II.

The Court of International Trade reviews final decisions of Commerce for "substantial evidence on the record" and consistency "with law." 19 U.S.C. § 1516a(b)(1)(B)(i) (2000). This court has jurisdiction under 28 U.S.C. § 1295(a)(5) to review final decisions of the Court of International Trade.

This court reviews anew decisions of the Court of International Trade applying the same statutory standard as the trial court. Mitsubishi Heavy Indus., Ltd. v. United States, 275 F.3d 1056, 1060 (Fed.Cir.2001); F.LLI De Cecco Di Flippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1031 (Fed.Cir.2000). Thus, without affording any deference to the Court of International Trade, this court reassesses the administrative record for "substantial evidence" and for consistency "with law." 19 U.S.C. § 1516a(b)(1)(B)(i); Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1559 (Fed.Cir.1984); see also Zenith Elecs. Corp. v. United States, 99 F.3d 1576 (Fed.Cir.1996); Suramerica de Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978, 982-83 n. 1 (Fed.Cir.1994); Am. Permac, Inc. v. United States, 831 F.2d 269, 274-76 (Fed.Cir.1987); Matsushita Elec. Indus. Co. v. United States, 750 F.2d, 927, 933-36 (Fed.Cir.1984). Thus, this court must review the entire record for substantial evidence and compliance with law. Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951); see also Mitsubishi Heavy Indus., Ltd., 275 F.3d at 1060. Commerce's determination may be supported by substantial evidence of record "[e]ven if it is possible to draw two inconsistent conclusions from evidence in the record." Am. Silicon Techs. v. United States, 261 F.3d 1371, 1376 (Fed.Cir.2001) (citing Fujitsu Gen. Ltd. v. United States, 88 F.3d 1034, 1044 (Fed.Cir.1996)). In view of the record as a whole, the reviewing court must consider supporting evidence as well as that which "fairly detracts from its weight." Universal Camera, 340 U.S. at 478, 481, 488, 71 S.Ct. 456. A review of the entire administrative...