Bridgestone Americas, Inc. v. U.S.
| Decision Date | 04 August 2009 |
| Docket Number | Court No. 08-00256.,Slip Op. 09-79. |
| Citation | 636 F.Supp.2d 1347 |
| Parties | BRIDGESTONE AMERICAS, INC., Bridgestone Americas Tire Operations, LLC, and Titan Tire Corporation, Plaintiffs, v. UNITED STATES, Defendant, and Xuzhou Xugong Tyres Co., Ltd., Defendant-Intervenor. |
| Court | U.S. Court of International Trade |
King & Spalding, LLP, Washington, DC (Joseph W. Dorn, Daniel L. Schneiderman, and J. Michael Taylor) for plaintiffs Bridgestone Americas, Inc. and Bridgestone Americas Tire Operations, LLC.
Stewart and Stewart (Wesley K. Caine) for plaintiff Titan Tire Corporation.
Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (John J. Todor and Loren Misha Preheim); Irene H. Chen and David Richardson, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel, for the defendant.
White & Case, LLP, Washington, DC (Adams C. Lee and Frank H. Morgan) for the defendant-intervenor.
This matter is before the court on the motions of plaintiffs Bridgestone Americas, Inc. and Bridgestone Americas Tire Operations, LLC (collectively, "Bridgestone") and Titan Tire Corporation ("Titan") for judgment on the agency record pursuant to USCIT Rule 56.2. Plaintiffs, domestic producers of certain off-the-road ("OTR") tires, contest the Department of Commerce's ("Commerce") exclusion of defendant-intervenor Xuzhou Xugong Tyres Co., Ltd. ("Xugong"), a Chinese producer of OTR tires, from the scope of a final antidumping ("AD") determination. See Certain New Pneumatic Off-The-Road-Tires from the People's Republic of China: Final Affirmative Determination of Sales at Less Than Fair Value and Partial Affirmative Determination of Critical Circumstances, 73 Fed.Reg. 40,485 (Dep't Commerce July 15, 2008) ("Final Determination"). Bridgestone and Titan contest Commerce's determination that fifteen of the raw material inputs Xugong used in producing the tires were indirect materials. Titan also contests Commerce's refusal to include the amount of value-added tax ("VAT") that Xugong paid in acquiring inputs to produce the tires, but was not refunded by the Chinese government, in Xugong's normal value calculation.1 Xugong opposes the motions. Commerce opposes Titan's motion as to the unrefunded VAT but seeks a remand to reconsider and explain its decision as to the fifteen inputs.2 For the following reasons, Bridgestone's motion will be granted in part and denied in part, and Titan's motion will be granted in part and denied in part.
In July 2007, Commerce initiated an AD investigation to determine whether imports of certain pneumatic OTR tires from the People's Republic of China for the period of October 1, 2006 through March 31, 2007, were being sold in the United States at less than fair value. See Initiation of Antidumping Duty Investigation: Certain New Pneumatic Off-the-Road Tires From the People's Republic of China, 72 Fed.Reg. 43,591 (Dep't Commerce Aug. 6, 2007). Commerce selected Xugong as a mandatory respondent. Certain New Pneumatic Off-The-Road Tires From the People's Republic of China; Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 73 Fed.Reg. 9278, 9282-83 (Dep't Commerce Feb. 20, 2008) ("Preliminary Determination").3 In a preliminary determination, Commerce calculated a dumping margin of 51.81% for Xugong. Id. at 9291.
After the preliminary determination, Commerce issued Xugong a supplemental questionnaire requesting clarifying information and an updated factors of production ("FOP") database for the purpose of calculating normal value to compare with the United States price.4 In addition to providing the requested information, Xugong informed Commerce that fifteen of the raw material inputs it previously reported as direct materials were in fact indirect materials, as they were used for "cleaning or supplemental purpose[s] in the production process," and included the corrections in the updated database. (Fifth Supplemental Questionnaire 4, Xugong's App. Tab 1.) Commerce had treated the fifteen inputs as direct materials in calculating the preliminary dumping margin. (See Surrogate Value Memorandum, A-570-912, POR 10/01/06-3/31/07, at 3 n. 6 (Feb. 5, 2008), Xugong's App. Tab 12.) Although Bridgestone requested that Commerce "verify that . . . each of [the fifteen] inputs is properly treated as overhead and cannot be reported as a direct input" (Pre-Verification Comments 4, Xugong's App. Tab 3), Commerce's verification report does not discuss the nature of the inputs (see Verification Report, Xugong's App. Tab 4).5 In their case briefs submitted after verification, none of the parties addressed the issue of whether the fifteen inputs were direct or indirect materials. In its case brief, however, Titan did argue that Commerce should have included in normal value the amount of VAT that the Chinese producers had paid to acquire inputs in producing the goods but which the Chinese government had not refunded.
In July 2008, Commerce published a final determination, calculating a zero dumping margin for Xugong. Final Determination, 73 Fed.Reg. at 40,488. In its calculations, Commerce did not include unrefunded VAT in Xugong's normal value because its surrogate value methodology did not rely on Chinese prices and costs. Issues and Decision Memorandum for the Antidumping Investigation of Certain New Pneumatic Off-the-Road Tires from the People's Republic of China, A-570-912, POR 10/1/2006-3/31/2007, at 21 (July 7, 2008), available at http://ia.ita.doc.gov/frn/summary/PRC/E8-16156-1.pdf ("Issues and Decision Memorandum"). Commerce also reasoned that the normal value was already tax neutral and therefore no adjustment for unrefunded VAT was warranted. Id. Commerce did not address the nature of the fifteen inputs in its issues and decision memorandum, but in a separate memorandum calculating Xugong's final dumping margin, it stated: "Because there is no evidence that these raw materials are direct materials, we have treated all 15 inputs as indirect materials and excluded them from the calculation of the normal value."
Thereafter, Bridgestone and Titan submitted comments, contending that Commerce's treatment of the fifteen inputs as indirect materials was a "ministerial error." (Comments Regarding Ministerial Errors In The Final Margin Calculations For Xugong 2-12, Bridgestone's App. Tab 26.) Commerce rejected the contention.6 (Final Determination of Antidumping Duty Investigation on Certain New Pneumatic Off-The-Road Tires from the People's Republic of China: Allegations of Ministerial Errors, A-570-912, POR 10/01/06-03/31/07, at 7 (Aug. 14, 2008) ("Ministerial Errors Memorandum"), Bridgestone's App. Tab 27.) Bridgestone and Titan then commenced separate actions, challenging Commerce's exclusion of Xugong from the final determination. (Titan's Compl ¶ 1; Bridgestone's Compl. ¶ 1.) Xugong intervened in both (Order (No. 08-00258) (Sept. 25, 2008); Order (No. 08-00256) (Sept. 23, 2008)), and the actions were consolidated (Order (Dec. 22, 2008)).
Bridgestone and Titan now move for judgment on the agency record pursuant to USCIT Rule 56.2. Both contend that Commerce's treatment of the fifteen inputs as indirect materials was unsupported by substantial evidence and not in accordance with law and that substantial evidence actually shows that the inputs were direct materials. Titan also argues that Commerce's refusal to include the amount of unrefunded VAT in Xugong's normal value calculation was unsupported by substantial evidence and not in accordance with law. (Titan's Br. 12-14, 22.) Bridgestone and Titan request that the court remand the matter with instructions directing Commerce to reclassify the fifteen inputs as direct materials and to recalculate Xugong's dumping margin accordingly. (Bridgestone's Br. 31; Titan's Br. 22-23.) Bridgestone additionally requests that the court instruct Commerce to value thirteen of the inputs as it had valued them in the preliminary determination and, with respect to the remaining two, to consider the proper Harmonized Tariff Schedule ("HTS") classification to use in valuing them.7 (Bridgestone's Br. 31.) Titan also requests that the court direct Commerce to include unrefunded VAT in the recalculation. (Titan's Br. 22-23.)
The court has jurisdiction under 28 U.S.C. § 1581(c). The court must uphold Commerce's final determination in an AD investigation unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). "Commerce's findings must be reached by reasoned decision-making, including a reasoned explanation supported by a stated connection between the facts found and the choice made." Rhodia, Inc. v. United States, 185 F.Supp.2d 1343, 1349 (CIT 2001) (internal quotation marks, citations, and alteration omitted).
Titan argues that Commerce's change of position as to the treatment of the fifteen inputs in...
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