China First Pencil Co. Ltd. v. U.S.
| Decision Date | 07 March 2006 |
| Docket Number | Court No. 04-00242.,Slip Op. 06-34. |
| Parties | CHINA FIRST PENCIL CO., LTD., et al., Plaintiffs, v. UNITED STATES, Defendant, and Sanford Corporation, et al., Defendant-Intervenors. |
| Court | U.S. Court of International Trade |
Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Jeanne E. Davidson, Deputy Director; Michael Panzera, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department
of Justice; and Ada E. Bosque, Attorney, Office of Chief Counsel, for Import Administration, U.S. Department of Commerce, for Defendant United States, of counsel.
Neville Peterson LLP, (George W. Thompson), for Defendant-Intervenors Sanford Corporation, Musgrave Pencil Company, Rose Moon Inc., and General Pencil Company.
I
This matter comes before the court following an order granting a voluntary remand dated September 20, 2004, to the United States Department of Commerce ("Defendant", "the Department", or "Commerce"). On December 20, 2004, the Department filed its Final Results of Voluntary Redetermination ("Remand Redetermination"). On February 17 and 18, 2005, Plaintiffs, Shandong Rongxin Import & Export Co., Ltd. ("Shandong") and China First Pencil, Co., Ltd., ("China First") (collectively "Plaintiffs") filed their responses, respectively, and on May 18, 2005, Defendant-Intervenors, Sanford Corporation, Moon Products, Inc., General Pencil Company, and Musgrave Pencil Company (collectively "Defendant-Intervenors") filed their reply. Also on May 18, 2005, Defendant filed a Motion for Judgment Upon the Administrative Record and Response to Plaintiffs' Comments Upon the Remand Results ("Defendant's Motion and Response"). On July 22, 2005, Plaintiffs filed their Opposition to Defendant's Motion and Response. On August 11, 2005, Defendant and Defendant-Intervenors filed their respective replies, and on September 12, 2005, Plaintiffs filed their respective sur-replies. Oral argument was held on January 27, 2006. This court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2002).
II
Commerce published its notice of final results and partial rescission of the 2001-2002 review on May 21, 2004. Certain Cased Pencils from the People's Republic of China; Final Results and Partial Rescission of Antidumping Duty Administrative Review, 69 Fed.Reg. 29,266 (May 21, 2004) ("Final Results"). These results were challenged by Plaintiffs and were remanded pursuant to Commerce's request to allow it to make a Voluntary Remand Redetermination. The court is now reviewing the issues arising from these Final Results and the Remand Redetermination.
III
First, Commerce argues that China First Pencil Co., Ltd. ("CFP") and Three Star Stationery Industry Corp. ("Three Star") should remain collapsed on the basis that none of the circumstances from the previous review have changed sufficient to warrant a different determination. Second, Commerce argues that its use of Indian import statistics from 2001, adjusted for inflation, on remand is reliable and results in an accurate calculation of the surrogate value of pencil cores. Third, Commerce contends that China First did not timely challenge Commerce's decision to reject certain acquisition costs during the administrative process and consequently cannot contest the determination at this juncture.
China First asserts that the Department erroneously found that China First is affiliated with Three Star and Commerce's decision to collapse the two entities has no basis in fact or law. China First also asserts that the Department erroneously declined to accept market economy based acquisition costs and its determination was unsupported by substantial evidence. Finally, all Plaintiffs argue that the Department incorrectly utilized a single value derived from Indian import statistics for black and color pencil cores as the surrogate value for pencil cores.
IV
In reviewing a final antidumping duty decision by Commerce, "the Court of International Trade must sustain `any determination, finding, or conclusion found' by Commerce unless it is `unsupported by substantial evidence on the record, or otherwise not in accordance with the law.'" Fujitsu Gen. Ltd. v. United States, 88 F.3d 1034, 1038 (Fed.Cir. 1996) (quoting 19 U.S.C. § 1516a(b)(1)(B)). Substantial evidence has been defined as "`more than a mere scintilla,' as `such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Nippon Steel Corp. v. United States, 337 F.3d 1373, 1379 (Fed.Cir. 2003); (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)) Where the evidence is reasonably reliable, the court "will not impose its own views as to the sufficiency of the agency's investigation or question the agency's methodology." Ceramica Regiomontana, S.A., et al., v. United States, 10 CIT 399, 404-05, 636 F.Supp. 961, 966 (1986), aff'd 810 F.2d 1137 (Fed.Cir. 1987).
V
Commerce, in the instant review, continued to collapse China First and Three Star because there was sufficient record evidence to demonstrate that the operations of the two entities were intertwined and that there continued to be the potential to manipulate price and/or production. Commerce argues that once it has made a determination to collapse two entities in an administrative proceeding, the burden is on the parties to provide evidence that circumstances have changed sufficient to warrant making an alternate determination. Defendant's Motion and Response at 23; Defendant's Reply at 2. Commerce states that in this review, there was insufficient evidence submitted by China First to refute Commerce's determination that China First and Three Star were affiliated and that there was significant potential for the manipulation of price or production. Id.
Defendant says that "the record evidence in the instant administrative review does not demonstrate that there has been a change in the relationship between [China First] and Three Star such that the companies should no longer be treated as a single entity for its antidumping analysis.'" Defendant's Response at 26 (quoting Issues and Decision Memorandum, at 18); see Defendant's Reply at 5. Commerce also asserts that China First assumes that Commerce's determination is based solely upon whether or not the two companies actually merged, when in fact Commerce's analysis focused on the level of management oversight, operational oversight, and financial oversight by China First over Three Star and the extent to which there was the potential to manipulate price and/or production. Id. at 27; Defendant's Reply at 9-10. According to Defendant, these facts have not changed and therefore Commerce continued to collapse China First and Three Star. Id. As result, Defendant urges the court to sustain the Final Results in its entirety as based upon substantial evidence and in accordance with law.
Defendant-Intervenors support Commerce's decision to continue to collapse China First and Three Star on the grounds that there continues to be substantial influence over Three Star by China First. Defendant-Intervenors Brief at 12-16. Defendant-Intervenors claim that China First and Three Star continue to share a common owner, Shanghai Light Industries; that there are still common board members and directors; and that there continues to be the potential for the manipulation of price and/or production. Id. As a result, Defendant-Intervenors argue that Commerce continues to present sufficient evidence to collapse the two entities and utilized the proper standard of review to reach its determination. Id. at 17.
China First still claims that it is not affiliated with Three Star, and that Commerce's decision to collapse the two entities is not supported by substantial evidence nor in accordance with law. Plaintiffs' Opposition to Defendant's Motion for Judgment Upon the Administrative Record ("China First Opposition") at 16. China First claims that there is no involvement of China First in Three Star's operations, there was no merger of the two entities, and the Department's continued reliance upon facts in a prior review is unsupported by substantial evidence. Id. at 17-29; Plaintiffs' Rebuttal Brief at 2-3. China First also claims that it did not submit "any records to substantiate its position because it had none to demonstrate a non-event" but "the Department did have before it all (and reviewed some at its own choosing) of China First's corporate governance records, it refused to accept the accounting records that were designed to objectively demonstrate that the two companies had virtually no commercial interaction." Plaintiffs' Rebuttal Brief at 2.
Commerce's decision to continue to collapse China First and Three Star is supported by substantial evidence and is in accordance with law. Commerce found that China First and Three Star continue to have intertwined operations and that there was an "absence of any evidence upon the record that would justify departing from Commerce's determination in the previous review to collapse [China First] and Three Star." Defendant's Motion and Response at 30. More importantly, China First failed to meet its burden of establishing that the facts and circumstances had changed sufficiently to warrant a re-examination of Commerce's decision. Defendant's Reply at 2 (...
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