Company-Changshan v. United States
| Decision Date | 21 December 2015 |
| Docket Number | Slip Op. 15–142,Consol. Court No. 10–00013 |
| Citation | 128 F.Supp.3d 1286 |
| Parties | Peer Bearing Company–Changshan, Plaintiff, v. United States, Defendant, and The Timken Company, Defendant-intervenor. |
| Court | U.S. Court of International Trade |
John M. Gurley and Diana Dimitriuc Quaia, Arent Fox LLP, of Washington, DC, argued for plaintiff.
L. Misha Preheim, Senior Trial Counsel, and Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With them on the brief were Stuart F. Delery, Acting 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.
William A. Fennell and Terence P. Stewart, Stewart and Stewart, of Washington, DC, argued for defendant-intervenor. With them on the brief was Stephanie M. Bell.
Stanceu
, Chief Judge:
This consolidated action concerns challenges to a final Commerce ("Commerce" or the "Department") issued to conclude the twenty-first 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 the "PRC"). Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China: Final Results of the 2007–2008 Admin. Review of the Antidumping Duty Order, 75 Fed.Reg. 844 (Int'l Trade Admin. Jan. 6, 2010)
("
").1 The twenty-first review pertained to entries of subject merchandise made during the period of June 1, 2007 through May 31, 2008 ("period of review" or "POR"). Final Results, 75 Fed.Reg. at 844.
Before the court is the second redetermination upon remand ("Second Remand Redetermination") Commerce submitted in response to the court's opinion and order in Peer Bearing Company–Changshan v. United States, 37 CIT ––––, 914 F.Supp.2d 1343 (2013)
("Peer Bearing II"). Final Results of Redetermination Pursuant to Court Remand (Apr. 30, 2014), ECF No. 139 ("Second Remand Redetermination "). The Second Remand Redetermination addresses the only issue remaining in this litigation, which pertains to the issue of whether certain TRBs produced in Thailand from Chinese-origin parts are subject to the Order. For the reasons presented herein, the court affirms the Department's Second Remand Redetermination.
The detailed background of this case is provided in the court's prior opinions in this action and is supplemented herein. See Peer Bearing Company–Changshan v. United States, 35 CIT ––––, ––––, 804 F.Supp.2d 1337, 1340–41 (2011)
("Peer Bearing I") (first remand order); Peer Bearing II, 37 CIT at ––––, 914 F.Supp.2d at 1346–47 (second remand order); Peer Bearing Company–Changshan v. United States, 37 CIT ––––, ––––, Slip Op. 14–15 at 1, 2014 WL 553287 (Feb. 13, 2014), ("Peer Bearing III") ().
Plaintiff Peer Bearing Company–Changshan ("CPZ"), a Chinese producer and exporter of TRBs and a respondent in the twenty-first review, initiated this action to contest, inter alia, the Department's determination in the Final Results that certain TRBs that were produced in, and exported from, Thailand were of Chinese origin for antidumping purposes and therefore were merchandise subject to the Order. Compl. (Jan. 20, 2010), ECF No. 2. Defendant-intervenor The Timken Company ("Timken"), a domestic TRB producer and petitioner in the twenty-first review, initiated a separate action contesting the Final Results that is now consolidated into the above-captioned matter.2 See Compl. (Mar. 5, 2010), ECF No. 11 (Court No. 10–00045); Order (May 24, 2010), ECF No. 27 (consolidating cases).
In Peer Bearing II,
the court affirmed in part, and remanded in part, the remand redetermination Commerce submitted in response to Peer Bearing I, which again determined that the TRBs at issue were subject merchandise.3
. On June 13, 2013, defendant moved for clarification of the court's order in Peer Bearing II. Def.'s Mot. for Clarification, ECF No. 131 ("Def.'s Mot."). The court responded to defendant's motion on February 13, 2014, the substance of which is addressed later in this Opinion. Peer Bearing III, 37 CIT ––––, Slip Op. 14–15.
Commerce filed its Second Remand Redetermination with the court on April 29, 2014. Second Remand Redetermination 1, determining under protest that the TRBs in question were not subject merchandise. CPZ and Timken filed comments on the Second Remand Redetermination on May 30, 2014, and June 9, 2014, respectively. Pl.'s Comments on the Second Remand Redetermination, ECF No. 141 ("CPZ's Comments"); The Timken Co.'s Comments on the Dept. of Commerce's Second Remand Redetermination, ECF No. 151 ("Timken's Comments"). Timken opposes the Department's revised country-of-origin determination on various grounds. See Timken's Comments 2–15. CPZ supports the Department's determination on second remand. CPZ's Comments 1–2. Defendant replied to Timken's opposition on July 16, 2014. Def.'s Response to Def.-intervenor's Comments Regarding the Remand Redetermination, ECF No. 158 ("Def.'s Reply").
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).4 The court will sustain the Department's redetermination if it complies with the court's remand order, is supported by substantial evidence on the record, and is otherwise in accordance with law. See Tariff Act, § 516A, 19 U.S.C. § 1516a(b)(1)(B)(i).
This issue arose from the Department's application of what it termed a "substantial transformation" test to determine whether the Order included TRBs resulting from manufacturing processes conducted in a "third country," i.e., a country other than the United States or the country named in the antidumping duty order. In the twenty-first administrative review, Commerce determined that the TRBs remaining at issue in this case were subject to the Order as products of China. Before the agency, and again before the court, CPZ claimed that Commerce erred in subjecting these TRBs to the Order.
Before Commerce, CPZ submitted information on the manufacturing processes performed on its TRBs during the POR. CPZ reported that in its Chinese facilities it produced finished TRBs, finished TRB components (cages and rollers), and unfinished TRB components (cups and cones). Peer Bearing II, 37 CIT at ––––, 914 F.Supp.2d at 1350
. The TRBs that are the subject of CPZ's claim underwent manufacturing operations conducted in Thailand by a CPZ affiliate. In China, CPZ forged, turned (i.e., machined), and heat-treated cups and cones but did not process these components into a finished form. In Thailand, CPZ's affiliate completed the processing of the cups and cones by performing additional machining, i.e., grinding and honing to achieve the required final dimensions and polished surface. Id .
The Thai affiliate then assembled the finished cups and cones, together with finished rollers and cages that CPZ had manufactured in China and exported to Thailand, to produce completed TRBs that were exported to the United States. Id .
Commerce discussed its application of its "substantial transformation" test in the Issues and Decisions Memorandum ("Decision Memorandum") accompanying the Final Results. Issues & Decision Mem., A–570–601, ARP 07–08, at 6–11 (Dec. 28, 2009) (Admin.R.Doc. No. 5701) available at http://enforcement.trade.gov/frn/summary/PRC/E9–31417–1.pdf (last visited Dec. 16, 2015) ("Decision Mem. "). For the first part of its test, Commerce considered the record evidence according to six criteria, drawing a conclusion under each as to whether the record supports or detracts from a finding that a substantial transformation had occurred in Thailand. Id. The Department's six criteria were: (1) whether the processed downstream product is of a different class or kind than the upstream product; (2) the extent to which the physical and chemical properties, and the essential character of the TRBs, were imparted in the third country, i.e., Thailand; (3) the nature and sophistication of the Thai processing operations; (4) the level of investment in the Thai operations; (5) ultimate use; and (6) the third country cost of manufacturing ("COM") as a percentage of the total COM. Id. For the second part of its test, Commerce evaluated these criterion-specific determinations collectively and made an ultimate finding on substantial transformation according to the "totality of the circumstances." Id.
For the Final Results, Commerce concluded that the record evidence did not support a finding that a substantial transformation occurred in Thailand under any of its six criteria and that, based on the totality of the circumstances, the TRBs were subject to the Order. Id. Consequently, Commerce included the TRBs in CPZ's U.S. sales, which Commerce compared with matching normal value transactions to calculate CPZ's weighted-average dumping margin in the Final Results. Id.
and the First Remand Redetermination
Upon judicial review of CPZ's claim, the court concluded in Peer Bearing I
that a remand was appropriate because "Commerce based its country-of-origin determination in part on [a] ... finding [that] is not supported by...
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