Creswell Trading Co., Inc. v. US

• Decision Date: 15 August 1996
• Docket Number: Slip Op. No. 96-137. Court No. 91-01-00012.
• Citation: 936 F. Supp. 1072
• Parties: CRESWELL TRADING CO., INC. SOUTH BAY FOUNDRY 1989, D & L Supply Co., Southern Star, Inc., City Pipe & Foundry, Inc., Capitol Foundry of Virginia, Inc., Virginia Precast Corp., and Techsales, Inc., Plaintiffs, Crescent Foundry Co. P. Ltd., Select Steels, Ltd., RSI (India) Pvt. Ltd., Kejriwal Iron & Steel Works, Govind Steel Co., Ltd., R.B. Agarwalla & Co., Serampore Industries P. Ltd., Super Castings (India), Carnation Enterprises P. Ltd., UMA Iron & Steel Co., and Commex Corp., Plaintiff-Intervenors, v. UNITED STATES, Defendant, Allegheny Foundry Co., Campbell Foundry, Co., Deeter Foundry, Inc., East Jordan Iron Works, Inc., Lebaron Foundry, Inc., Municipal Castings, Inc., Neenah Foundry Co., Pinkerton Foundry, Inc., U.S. Foundry & Manufacturing Co., Vulcan Foundry, Inc. and Alhambra Foundry, Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

936 F. Supp. 1072

CRESWELL TRADING CO., INC. SOUTH BAY FOUNDRY 1989, D & L Supply Co., Southern Star, Inc., City Pipe & Foundry, Inc., Capitol Foundry of Virginia, Inc., Virginia Precast Corp., and Techsales, Inc., Plaintiffs, Crescent Foundry Co. P. Ltd., Select Steels, Ltd., RSI (India) Pvt. Ltd., Kejriwal Iron & Steel Works, Govind Steel Co., Ltd., R.B. Agarwalla & Co., Serampore Industries P. Ltd., Super Castings (India), Carnation Enterprises P. Ltd., UMA Iron & Steel Co., and Commex Corp., Plaintiff-Intervenors, v. UNITED STATES, Defendant, Allegheny Foundry Co., Campbell Foundry, Co., Deeter Foundry, Inc., East Jordan Iron Works, Inc., Lebaron Foundry, Inc., Municipal Castings, Inc., Neenah Foundry Co., Pinkerton Foundry, Inc., U.S. Foundry & Manufacturing Co., Vulcan Foundry, Inc. and Alhambra Foundry, Inc., Defendant-Intervenors.

Slip Op. No. 96-137. Court No. 91-01-00012.

United States Court of International Trade.

August 15, 1996.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Manatt, Phelps & Phillips (Irwin P. Altschuler and Ronald M. Wisla) and White & Case (Walter J. Spak and Vincent Bowen), Washington, DC, for plaintiffs.

Cameron & Hornbostel (Dennis James, Jr.), Washington, DC, for plaintiff-intervenors.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, (Velta A. Melnbrencis) and Robert E. Nielsen, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel, Washington, DC, for defendant.

Collier, Shannon, Rill & Scott (Paul C. Rosenthal and Robin H. Gilbert), Washington, DC, for defendant-intervenors.

MEMORANDUM OPINION AND ORDER

DiCARLO, Chief Judge:

Plaintiffs, Plaintiff-Intervenors and Defendant-Intervenors move for a third remand, contesting certain aspects of the Department of Commerce's second remand determination countervailing certain portions of the subsidy provided to Indian castings exporters under India's International Price Reimbursement Scheme (IPRS). Final Results of Redet. Pursuant to Court Remand, Creswell Trading Corp., Inc. et al. v. United States, Slip Op. 94-65 (Dep't Comm. Feb. 13, 1995) hereinafter Second Remand Determination. This court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1988) and 19 U.S.C. § 1516a(a)(2)(B)(iii) (1988).

BACKGROUND

In Creswell Trading Corp. v. United States, 783 F.Supp. 1418 (Ct.Int'l Trade 1992) hereinafter Creswell I, the initial issue faced by this court was whether Commerce appropriately determined that India's IPRS program was countervailable. 783 F.Supp. at 1419. Under the program, the Indian government provided a payment to users of domestically-produced pig iron upon export of their finished products, such as iron castings. This payment reimbursed the difference between the more expensive domestic pig iron being used and the lower priced pig iron available on the world market. Plaintiffs claimed the IPRS program was not a countervailable subsidy, pointing to Item (d) of the Illustrative List of Export Subsidies annexed to the Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the General Agreement on Tariffs and Trade, which defines a subsidy as follows:

(d) The delivery by governments or their agencies of imported or domestic products or services for use in the production of exported goods, on terms or conditions more favourable than for delivery of like or directly competitive products or services for use in the production of goods for domestic consumption, if (in the case of products) such terms or conditions are more favourable than those commercially available on world markets to their exporters.

783 F.Supp. at 1420 (quoting H.R.Doc. No. 153, Pt. I, 96th Cong. 1st Sess. 295 (1979) (emphasis added)). Congress has incorporated the Illustrative List, including Item (d), into United States law by 19 U.S.C. §§ 2502(1) and 2503(c)(5) (1988). See Creswell Trading Co. v. United States, 15 F.3d 1054, 1057 n. 4 (Fed.Cir.1994) (noting incorporation) hereinafter Creswell III.

Plaintiffs argued that the IPRS program only reimbursed the difference between the prices of pig iron in the domestic and world markets. Commerce reasoned that, regardless of such reimbursement limitations, the program was still countervailable as a subsidy under U.S. law. This court remanded the case, instructing Commerce to assess the IPRS program in light of the exception to countervailable subsidies — the "if" clause — contained in Item (d).

On remand, Commerce explained that Indian information regarding international prices was unclear, and determined that the record evidence was "ambiguous" and "woefully deficient" to establish the IPRS program was non-countervailable pursuant to Item (d). Redetermination on Remand: Final Results of Countervailing Duty Administrative Review Pursuant to Court Remand; Certain Iron-Metal Castings From India (C-533-063) at 4 (Dep't Comm. Mar. 16, 1992). This court upheld the determination, emphasizing the Indian government had failed to carry its burden to establish a singular world market price during the relevant period. Creswell Trading Co. v. United States, 797 F.Supp. 1038, 1040-41 (Ct.Int'l Trade 1992) hereinafter Creswell II.

The Court of Appeals for the Federal Circuit (CAFC) in Creswell III reversed and remanded the case. The CAFC reasoned that Commerce had the burden of proof to establish by a preponderance of the evidence the statutory condition established by the "if" clause of Item (d) — i.e., Commerce had the ultimate burden of persuasion in convincing a fact finder of the existence of a countervailable subsidy. Creswell III, 15 F.3d at 1060-61. The CAFC held that while Commerce had satisfied its burden of production by establishing the existence of the IPRS program, the burden shifted back to Commerce when respondents produced evidence that the pig iron was not provided on terms or conditions more favorable than available on world markets. Creswell III, 15 F.3d at 1061. The CAFC determined that Commerce had not met its burden of demonstrating that respondents' information was either inaccurate or insufficient, and that it was procedurally unfair for Commerce to find that the world price information on record was "ambiguous" and "woefully deficient" without allowing respondents an opportunity to supplement the record. Creswell III, 15 F.3d at 1059, 1062. The CAFC further noted that Commerce had made no attempt to determine any price at which pig iron could be purchased on international markets during the relevant review period. Creswell III, 15 F.3d at 1061.

In the present remand, Commerce determined that although the basic terms and conditions of the provision of pig iron under the IPRS program were not more favorable than those commercially available internationally, the IPRS rebates were excessive in two respects. Second Remand Determination at 3-4. Commerce explained that the Government of India (1) neglected to include ocean freight in calculating a world market price and (2) neglected to factor out the use of scrap in its calculation of IPRS rebate payments. Id. at 4. Commerce found the "excessive" portion of the IPRS reimbursements did not meet the Item (d) exception and were countervailable. Id. This appeal followed.

DISCUSSION

The ultimate burden of proving countervailability under Item (d) rests with Commerce. Creswell III, 15 F.3d at 1056. Therefore, in reviewing these determinations, the court must consider if (1) Commerce has carried its burden of production and produced sufficient evidence to argue the rebates were excessive and (2) if so, whether Commerce has proven by a preponderance of the evidence that the rebates were excessive. Creswell III, 15 F.3d at 1060-61. The CAFC has simultaneously instructed that the court is furthermore guided by the statutory standard of review which provides the court's role is to uphold Commerce's determination 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) (1988); see also Creswell III, 15 F.3d at 1056 (providing standard of review). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938)). Although (1) a deferential, substantial evidence standard applied to Commerce as the trier of fact and (2) a preponderance of the evidence standard imposed as if Commerce were a party plaintiff or defendant appear facially inconsistent, the court has endeavored to apply both standards pursuant to the CAFC's instructions.

1. Commerce's Item (d) Examination Methodology

Defendant-Intervenors challenge the Second Remand Determination as flawed. Defendant-Intervenors argue Commerce failed to comply with Creswell III, because Commerce blindly accepted the Indian government's benchmark world prices. (Dom.Ind.Comments on Results of Redet. on Remand at 3.) According to Defendant-Intervenors, Commerce failed to examine whether the Indian government provided pig iron to exporters on terms or conditions more favorable than those commercially available on world markets to its exporters. Id. at 5. They argue Commerce erred in looking only at whether the Indian government applied a consistent, updated calculation methodology for determining rebate figures, rather than looking towards the actual terms and conditions at which pig iron could be purchased on the world market. Id.

The court disagrees that Commerce employed an improper methodology in determining whether the IPRS program falls within the Item (d) exception. In conducting its present remand determination, Commerce issued additional questionnaires to the Indian government and Indian castings exporters, and conducted...