Baoding Mantong Fine Chemistry Co. v. United States

• Decision Date: 03 November 2015
• Docket Number: Slip Op. 15–123.,Court No. 12–00362.
• Citation: 113 F.Supp.3d 1332
• Parties: BAODING MANTONG FINE CHEMISTRY CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and GEO Specialty Chemicals, Inc., Defendant–Intervenor.
• Court: U.S. Court of International Trade

113 F.Supp.3d 1332

BAODING MANTONG FINE CHEMISTRY CO., LTD., Plaintiff,

v. UNITED STATES, Defendant,andGEO Specialty Chemicals, Inc., Defendant–Intervenor.

Slip Op. 15–123.

Court No. 12–00362.

United States Court of International Trade.

Nov. 3, 2015.

Ronald M. Wisla, Kutak Rock LLP, of Washington, D.C., argued for plaintiff Baoding Mantong Fine Chemistry Co., Ltd. With him on the brief was Lizbeth R. Levinson.

Antonia R. Soares, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for defendant United States. With her on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Jessica Forton, Attorney–International, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce.

David M. Schwartz, Thompson Hine LLP, of Washington, D.C., argued for defendant-intervenor GEO Specialty Chemicals Inc.

OPINION AND ORDER

STANCEU, Chief Judge:

Plaintiff Baoding Mantong Fine Chemistry Co., Ltd. ("Baoding") contests the final determination ("Final Results") that the International Trade Administration of the U.S. Department of Commerce ("Commerce" or the "Department") issued to conclude an administrative review of an antidumping duty order on glycine from the People's Republic of China (the "subject merchandise").¹ See Glycine from the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 77 Fed.Reg. 64,100 (Int'l Trade Admin. Oct. 18, 2012) (" Final Results "). In the review, Commerce assigned to Baoding, a Chinese producer and exporter of glycine and a respondent in the administrative review proceeding conducted by Commerce, a weighted average dumping margin of 453.79%. Id. at 64,101. Defendant-intervenor GEO, also a party to the administrative proceeding, is a domestic producer of glycine.

Before the court is plaintiff's Motion for Judgment on the Agency Record. Pl.'s Mot. for J. on the Agency R. (July 22, 2013), ECF No. 30 ("Pl.'s Mot."); Mem. of P. & A. in Supp. of Pl.'s R. 56.2 Mot. for J. on the Agency R. (July 22, 2013), ECF No. 30–1 ("Pl.'s Br."). Plaintiff contends that the 453.79% dumping margin Commerce calculated for Baoding is impermissible because it defies commercial and economic reality. Pl.'s Br. 10, 13. Plaintiff also challenges certain "surrogate values" that Commerce applied to various factors of production when calculating the normal value of Baoding's subject merchandise. Pl.'s Br. 11–34. Finally, plaintiff challenges the surrogate financial ratios Commerce used to value Baoding's factory overhead, selling, general and administrative (SG & A) expenses, and profit (collectively, the "financial ratios") for the normal value calculation. Pl.'s Br. 34–39.

Also before the court is defendant's Motion for a Partial Voluntary Remand, which seeks a voluntary remand to allow Commerce to reconsider the financial ratios it used in determining the normal value of Baoding's subject merchandise. Def.'s Mot. for a Voluntary Remand 1 (Aug. 6, 2014), ECF No. 64 ("Def.'s Mot. for Voluntary Remand"). Both Baoding and defendant-intervenor GEO Specialty Chemicals, Inc. ("GEO") oppose defendant's motion. Id. at 1–2.

The court rules that Commerce failed to fulfill its obligation to determine the most accurate margin possible when it assigned Baoding a weighted average dumping margin of 453.79%, which on the record of this case was not realistic in any commercial or economic sense and punitive in its effect. The court directs Commerce to determine a new margin for Baoding that is the most accurate margin possible, that is grounded in the commercial and economic reality surrounding the production and sale of Baoding's subject merchandise, and that is fair, equitable, and not so large as to be punitive.

I. BACKGROUND

A. The Administrative Review Proceedings before Commerce

Commerce issued the antidumping duty order on glycine from China (the "Order") in 1995. Antidumping Duty Order: Glycine From the People's Republic of China, 60 Fed.Reg. 16,116 (Int'l Trade Admin. Mar. 29, 1995). On April 27, 2011, Commerce initiated the administrative review at issue in this case, for which the period of review ("POR") was March 1, 2010 through February 28, 2011, and in which Baoding was the sole respondent.² See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 76 Fed.Reg. 23,545 (Int'l Trade Admin. Apr. 27, 2011).

On April 11, 2012, Commerce published the preliminary results of the review ("Preliminary Results"), in which it determined a preliminary dumping margin of zero for Baoding. Glycine From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission of Antidumping Duty Administrative Review,

77 Fed.Reg. 21,738, 21,743 (Int'l Trade Admin. Apr. 11, 2012) ("Prelim. Results "). In response to an allegation that Commerce made a currency conversion error in the Preliminary Results, Commerce notified the parties that it was revising the Preliminary Results and adjusting Baoding's antidumping margin from zero to 457.74% ("Revised Preliminary Results").³

Letter to File Concerning Revision to Certain Surrogate Valuations & the Prelim.-Margin Calculation Program for Baoding 2 (June 27, 2012) (Admin.R.Doc. No. 84) ("Revisions to the Prelim. Results "). Commerce explained that "correction of this error has a significant impact on Baoding Mantong's dumping margin." Issues & Dec. Mem. for the Final Results in the Admin. Review of Glycine from the People's Republic of China 29 (Oct. 9, 2012), A–570–836, (Admin.R.Doc. No. 127), available at http://enforcement.trade.gov/frn/summary/PRC/ 2012–25595–1.pdf (last visited Oct. 29, 2015) ("Decision Mem. ").

On October 12, 2012, Commerce issued the Final Results and an accompanying Issues & Decision Memorandum, determining a final margin for Baoding of 453.79%.⁴ See Final Results, 77 Fed.Reg. at 64,100 ; Decision Mem. 1.

B. Proceedings before the Court of International Trade

Baoding filed its summons on November 16, 2012 and its complaint on December 7, 2012. Summons, ECF No. 1; Compl., ECF No. 7. It followed with its Motion for Judgment on the Agency Record on July 22, 2013, and defendant and defendant-intervenor filed oppositions to plaintiff's motion on January 15, 2014. Mot. for J. on the Agency R., ECF No. 30 ("Pl.'s Mot."); Def.'s Resp. to Pl.'s R. 56.2 Mot. for J. upon the Agency R., ECF No. 46 ("Def.'s Opp'n"); Def.–Intervenor's Resp. Br. in Opp'n to Pl. Baoding Mantong Fine Chem. Co. Ltd.'s R. 56.2 Mot. for J. upon the Agency Rec., ECF No. 45 ("Def.-intervenor's Opp'n"). Plaintiff filed a reply brief on March 10, 2014. Pl.'s Reply Br., ECF No. 57 ("Pl.'s Reply"). The court held oral argument on July 23, 2014.

Following oral argument, defendant filed a motion for partial voluntary remand of the case, Def.'s Mot. for Voluntary Remand, which both defendant-intervenor and plaintiff opposed, Def.–Intervenor's Resp. in Opp'n to Def.'s Mot. for a Voluntary Remand (Aug. 25, 2014), ECF No. 65 ("GEO Opp'n to Voluntary Remand"); Pl.'s Opp'n to Def.'s Mot. for a Voluntary Remand (Aug. 25, 2014), ECF No. 66. Defendant then filed a motion for leave to file a reply to plaintiff's opposition to a voluntary remand. Def.'s Mot. for Leave to Reply to Pl.'s Resp. to Def.'s Mot. for Voluntary Remand (Aug. 27, 2014), ECF No. 67.

II. DISCUSSION

A. Jurisdiction and Standard of Review

The court exercises jurisdiction under section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c), pursuant to which the court reviews actions commenced under section 516A of the Tariff Act of 1930 (the "Tariff Act"), as amended, 19 U.S.C. § 1516a, including an action contesting a final determination that Commerce issues to conclude an antidumping administrative review.⁵ In reviewing a final determination, the court "shall 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).

B. The Court Remands the Final Results for Redetermination of the 453.79% Margin, which Does Not Conform to Baoding's Commercial Reality and Fails to Fulfill the Department's Fundamental Responsibilities under the Statute

In contesting the Final Results, plaintiff makes various specific objections to the way in which Commerce calculated its margin but also argues generally that "[e]ven where Commerce has acted in conformity with its statutory and regulatory obligations, the resulting dumping margin must be examined for its accuracy and fairness." Pl.'s Br. 3 (citing NTN Bearing Corp. v. United States, 74 F.3d 1204 (Fed.Cir.1995) ). Baoding submits that the 453.79% weighted average dumping margin Commerce assigned to it "defies commercial and economic reality." Pl.'s Br. 13. The court agrees.

In conducting a periodic administrative review of an antidumping duty order, Commerce is required to determine "the normal value and export price (or constructed export price) of each entry of the subject merchandise" and "the dumping margin for each such entry." 19 U.S.C. § 1675(a)(2)(A). A "dumping margin" is "the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise," 19 U.S.C. § 1677(35)(A), and a "weighted average dumping margin" is "the percentage determined by dividing the aggregate dumping margins determined for a specific exporter or producer by the aggregate export prices and constructed export prices of such exporter or producer," id. § 1677(35)(B).

Antidumping duties are remedial, not punitive, measures. Their purpose is "prevent[ing] foreign manufacturers from injuring domestic industries by selling their products in the United States at less than ‘fair value,’ i.e., at prices below the prices the foreign manufacturers charge for the same products in their home markets."

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