Company-Changshan v. United States

• Decision Date: 10 June 2014
• Docket Number: Court No. 11–00022.,Slip Op. 14–62.
• Citation: 986 F.Supp.2d 1389
• Parties: PEER BEARING COMPANY–CHANGSHAN, Plaintiff, v. UNITED STATES, Defendant, and The Timken Company, Defendant-intervenor.
• Court: U.S. Court of International Trade

986 F.Supp.2d 1389

PEER BEARING COMPANY–CHANGSHAN, Plaintiff,

v.UNITED STATES, Defendant,andThe Timken Company, Defendant-intervenor.

Slip Op. 14–62.

Court No. 11–00022.

United States Court of

International Trade.

June 10, 2014.

John M. Gurley and Diana Dimitriuc Quaia, Arent Fox LLP, of Washington, DC, for plaintiff and defendant-intervenor Peer Bearing Company–Changshan.

L. Misha Preheim, Trial Attorney, and Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With them on the brief were Stuart F. Delery, Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel on the brief was Joanna V. Theiss, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Herbert C. Shelley and Christopher G. Falcone, Steptoe & Johnson LLP, of Washington, DC, for defendant-intervenors Changshan Peer Bearing Company Ltd. and Peer Bearing Company.

William A. Fennell, Terence P. Stewart, and Stephanie R. Manaker, Stewart and Stewart, of Washington, DC, for plaintiff and defendant-intervenor The Timken Company.

OPINION AND ORDER

STANCEU, Judge:

This consolidated case arose from challenges to the final determination (“Final Results”) that the International Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department”) issued to conclude the twenty-second periodic administrative review of an antidumping duty order (the “Order”) on tapered roller bearings (“TRBs”) and parts thereof, finished and unfinished, from the People's Republic of China (“China” or “PRC”). Tapered Roller Bearings & Parts Thereof, Finished & Unfinished, From the People's Republic of China: Final Results of the 2008–2009 Antidumping Duty Admin. Review, 76 Fed.Reg. 3,086 (Jan. 19, 2011) (“ Final Results ”). The twenty-second administrative review pertained to entries of TRBs and parts thereof from China (the “subject merchandise”) occurring during the period of June 1, 2008 through May 31, 2009 (the “period of review” or “POR”). Id., 76 Fed.Reg. at 3,086.

Before the court is the decision (“Remand Redetermination”) Commerce submitted in response to the court's remand order in Peer Bearing Co.–Changshan v. United States, 36 CIT ––––, 884 F.Supp.2d 1313 (2012) (“Peer Bearing–Changshan ”). Final Results of Redetermination Pursuant to Ct. Remand (May 13, 2013), ECF No. 100 (public version), ECF No. 101 (confidential version) (“ Remand Redetermination ”).¹ For the reasons stated herein, the court orders a second remand on two issues in this case and affirms the Remand Redetermination on a third issue.

I. Background

Background is provided in the court's prior opinions and is supplemented herein. Peer Bearing–Changshan, 36 CIT at ––––, 884 F.Supp.2d at 1317–18;Peer Bearing Co.–Changshan v. United States, 35 CIT ––––, ––––, Slip Op. 11–125, at 2, 2011 WL 4852207 (Oct. 13, 2011) (denying a motion to dismiss one of the claims brought in this consolidated action).

Plaintiffs Peer Bearing Company–Changshan (“CPZ”), a Chinese producer and exporter of TRBs, and its affiliated U.S. reseller, Peer Bearing Company, initiated the above-captioned matter to contest the Final Results. See Compl. (Feb. 2, 2011), ECF No. 6. The Timken Company (“Timken”), a domestic TRB producer, initiated a separate action contesting the Final Results and is a defendant-intervenor in this action. See Compl. (Mar. 10, 2010), ECF No. 9 (Court No. 11–00039). The two cases have since been consolidated. See Order (June 13, 2011), ECF No. 27 (consolidating Timken Co. v. United States (Court No. 11–00039) into the above-captioned matter). The other defendant-intervenors are Changshan Peer Bearing Company Ltd., a new company formed after the shares of CPZ were acquired during the POR (on September 11, 2008) by various companies controlled by Swedish company SKF, and its affiliated U.S. reseller, also known as Peer Bearing Company, a new U.S. entity that was formed when the SKF companies acquired the former Peer Bearing Company at the same time they acquired CPZ. See Peer Bearing–Changshan, 36 CIT at ––––, 884 F.Supp.2d at 1317. CPZ and the former Peer Bearing Company are no longer in existence; each transferred its responsibilities for participating in antidumping proceedings to a separate company, PBCD, LLC, which also assumed liability for paying antidumping duties. Id. Commerce determined that Changshan Peer Bearing Company Ltd., the new Chinese producer, and the new U.S. entity, Peer Bearing Company, are not successors in interest to the former entities, and as a result Peer Bearing Company–Changshan and Changshan Peer Bearing Company were separaterespondents in the twenty-second review. Id.

In the Final Results, Commerce assigned a weighted-average antidumping duty margin of 38.39% to PBCD and a weighted-average antidumping duty margin of 14.13% to the new exporter/producer, Changshan Peer Bearing Company, to which Commerce referred as “SKF”. Id. at ––––, 884 F.Supp.2d at 1317–18. In this Opinion and Order, the court also refers to Changshan Peer Bearing Company as “SKF.” The court refers to the former producer and respondent as “CPZ” and to the entity now litigating the claims brought by CPZ as “PBCD.”

Pursuant to the court's remand order, Commerce filed the Remand Redetermination on May 1, 2013. The various parties have filed comments on the Remand Redetermination with the court. PBCD raises objections to the Remand Redetermination on one issue. Pl. Peer Bearing Co.–Changshan's Comments on Def.'s Final Results of Redetermination Pursuant to Ct. Remand (June 12, 2013), ECF No. 106 (public version) (“PBCD's Comments”). SKF objects on two issues. Pls.' Comments on Final Results of Redetermination Pursuant to Remand (June 12, 2013), ECF No. 103 (“SKF's Comments”). Timken supports the Remand Redetermination in the entirety. Comments on Final Results of Redetermination Pursuant to Ct. Remand (June 12, 2013), ECF No. 105 (“Timken's Comments”). The changes Commerce made in the Remand Redetermination resulted in a decrease of PBCD's margin from 38.39% to 22.82% and an increase in SKF's margin from 14.13% to 22.12%. See Remand Redetermination 68.

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 (“Tariff Act”), 19 U.S.C. § 1516a, including an action contesting the final results of an administrative review that Commerce issues under section 751 of the Tariff Act, 19 U.S.C. § 1675(a).² When reviewing the final results of an administrative review, 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. Remaining Issues

Three issues remain in dispute in this case. In the Remand Redetermination, Commerce addressed each of these issues and departed from the decision in the Final Results with respect to two of them, as summarized below.

The first remaining issue is PBCD's challenge to the Department's decision that certain TRBs resulting from processing and assembly operations conducted in Thailand by a CPZ affiliate were of Chinese origin and therefore within the scope of the Order. The court remanded this issue for the Department's reconsideration, and in response, Commerce modified its country-of-origin analysis in minor respects but again determined that the country of origin of the TRBs in question was China. Remand Redetermination 9–36, 45–58. PBCD opposes the origin determination on various grounds. PBCD's Comments 3–19. As discussed later in this Opinion and Order, the court concludes that the Department's decision to include the TRBs within the Order was contrary to law.

The second remaining issue is PBCD's challenge to the Department's surrogate value determination for bearing-quality steel bar that PBCD used in producing TRBs. In response to the court's remand order in Peer Bearing–Changshan, Commerce calculated a new surrogate value for the bearing-quality steel bar. Remand Redetermination 36–39, 60–61, 63–67. PBCD supports the redetermined surrogate value. PBCD's Comments 3. SKF opposes it on the ground that Commerce should not have used a surrogate value but instead should have valued all steel bar input using data pertaining to SKF's own market economy purchases of bearing-quality steel bar. SKF's Comments 12–16. For the reasons discussed herein, the court sustains the redetermined surrogate value.

The final remaining issue is Timken's challenge to the Department's determination of the factors of production (“FOPs”) used to calculate the normal value of certain TRBs that had been manufactured by the former producer, CPZ, but were sold from SKF's acquired inventory by the newly formed Peer Bearing Company. Specifically, Timken claimed that Commerce incorrectly used the FOPs pertaining to SKF and instead should have used the FOPs pertaining to CPZ because CPZ had produced the merchandise in question. Peer Bearing–Changshan, 36 CIT at ––––, 884 F.Supp.2d at 1338. In the Remand Redetermination, Commerce recalculated the normal value of the TRBs at issue using certain record FOP data pertaining to the brief period between the beginning of the POR and the acquisition. Remand Redetermination 39. Timken supports the decision Commerce made to resolve this issue. Timken's Comments 1. SKF opposes it on various grounds. SKF's Comments 3–12. As discussed later in this Opinion and Order, the court orders reconsideration of the decision, concluding that Commerce failed to address the issue of which record data pertaining to CPZ was most appropriate for use in valuing the factors of production.

C. Commerce Erred in Finding that Certain TRBs Processed in Thailand Were...