Garg Tube Exp. v. United States

• Decision Date: 11 March 2022
• Docket Number: 20-00026,Slip Op. 22-18
• Court: U.S. Court of International Trade
• Parties: GARG TUBE EXPORT LLP and GARG TUBE LIMITED, Plaintiffs, v. UNITED STATES, Defendant, and WHEATLAND TUBE and NUCOR TUBULAR PRODUCTS INC., Defendant-Intervenors.

GARG TUBE EXPORT LLP and GARG TUBE LIMITED, Plaintiffs, v. UNITED STATES, Defendant, and WHEATLAND TUBE and NUCOR TUBULAR PRODUCTS INC., Defendant-Intervenors.

No. 20-00026

Slip Op. 22-18

Court of Appeals of International Trade

March 11, 2022

[Sustaining in part and remanding in part the U.S. Department of Commerce's remand redetermination and final results in the 2017-2018 administrative review of the antidumping duty order covering welded carbon steel standard pipes and tubes from India.]

Ned H Marshak and Dharmendra N. Choudhary, Grunfeld, Desiderio Lebowitz, Silverman & Klestadt LLP, of New York, NY argued for plaintiffs Garg Tube Export LLP and Garg Tube Limited. Also on the brief was Jordan C. Kahn.

Robert R. Kiepura, Trial Attorney, Commercial Litigation Branch Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. Also on the brief were Jennifer B. Dickey, Acting Assistant Attorney General, Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Director, and Franklin E. White, Jr., Assistant Director. Of counsel was Rachel A. Bogdan, JonZachary Forbes, and Shelby M. Anderson, Attorneys, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Robert E. DeFrancesco, III and Theodore P. Brackemyre, Wiley Rein LLP, of Washington, DC, argued for defendant-intervenor Nucor Tubular Products Inc. Also on the brief were Alan H. Price and Cynthia C. Galvez.

Before: Claire R. Kelly, Judge

OPINION AND ORDER

CLAIRE R. KELLY, JUDGE

Before the court is the U.S. Department of Commerce's ("Commerce") redetermination filed pursuant to the court's order in Garg Tube Export LLP and Garg Tube Ltd. v. United States, 527 F.Supp.3d 1362 (Ct. Int'l Trade 2021) ("Garg I") in connection with Commerce's 2017-2018 administrative review of the antidumping duty ("ADD") order on welded carbon steel standard pipes and tubes ("CWP") from India, covering the period of May 1, 2017 to April 30, 2018. Final Results of Redetermination Pursuant to Ct. Remand, Oct. 7, 2021, ECF Nos. 73-1-2 ("Remand Results"); see generally Garg I, 527 F.Supp.3d 1362; [CWP] From India, 85 Fed.Reg. 2, 715 (Dep't Commerce Jan. 16, 2020) (final results of [ADD] admin. review; 2017-2018) ("Final Results") and accompanying Issues and Decision Memo., A-533-502, (Jan. 9, 2020), ECF No. 24-5 ("Final Decision Memo."). On remand, Commerce no longer relies on facts available with an adverse inference for the missing cost of production data. Remand Results at 17-22. Commerce's Remand Results with respect to the use of neutral facts available are sustained.

Also before the court is Commerce's determination in the Final Results regarding the finding of and subsequent adjustment for a particular market situation ("PMS"). Final Decision Memo. at 3-31; see also Remand Results at 4-10. Because Commerce's application of the PMS adjustment to the sales-below-cost test was improper under the statute, the court remanded to Commerce and declined to reach the issues of whether Commerce's PMS finding was supported by substantial evidence and the reasonableness of the regression model as a methodology for calculating the PMS adjustment. Garg I, 527 F.Supp.3d at 1371-73. Although Commerce is no longer applying a PMS adjustment to the sales-below-cost test, it continues to find that a cost-based PMS exists in India for hot-rolled coil ("HRC") and applies a PMS adjustment to the cost of production for sales based on constructed value. Remand Results at 8-10. For the reasons that follow, Commerce's determination with respect to the finding of a PMS and the corresponding adjustment to Garg's cost of production are remanded.

BACKGROUND

The court presumes familiarity with the facts of this case as set forth in its previous opinion ordering remand to Commerce and now recounts those facts relevant to the court's review of the Remand Results as well as the Final Results' finding and subsequent adjustment for a PMS. See generally Garg I, 527 F.Supp.3d at 1365-70. Commerce conducted an administrative review of the ADD order covering certain CWP from India, for the period of review covering May 1, 2017 through April 30, 2018. See generally Initiation of Antidumping and Countervailing Duty Administrative Reviews, 83 Fed.Reg. 32, 270, 32, 270 (Dep't Commerce July 12, 2018); see also id. at 1365. In calculating the dumping margin for Garg, Commerce relied on facts available with an adverse inference to fill the gap in the record stemming from the refusal of one of Garg's unaffiliated suppliers to provide the requested cost information. See Final Decision Memo. at 32-41; Garg I, 527 F.Supp.3d at 1371-73.

Commerce found that a PMS existed in India distorting the price of HRC, an input used in CWP, based on the cumulative and collective impact of global steel overcapacity, subsidization of the Indian HRC market by the Government of India ("GOI"), trade interventions by the GOI, and Garg's nonpayment of antidumping and safeguard duties on imports of HRC on the Indian steel market. Final Decision Memo. at 19; see also [CWP] from India, 84 Fed.Reg. 33, 916 (Dep't Commerce July 16, 2019) (prelim. results of [ADD] admin. review; 2017-2018) ("Prelim. Results") and accompanying Prelim. Decision Memo. at 19-21, A-533-502, PD 207, bar code 3859225-01 (July 11, 2019) ("Prelim. Decision Memo."); Memo. Re: Decisions on [PMS] Allegations at 18-27, PD 209, bar code 3859233-01 (July 10, 2019) ("PMS Memo.").^[1] Commerce adjusted the cost of production in its sales-below-cost test to account for its PMS finding. Final Decision Memo. at 50.

The court remanded Commerce's decision to rely on an adverse inference when selecting from facts available to fill the gap in Garg's cost of production data for further explanation or reconsideration because it could not discern how Commerce applied Section 776 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1677e (2018), ^[2]from Commerce's explanation in the Final Decision Memo. Garg I, 527 F.Supp.3d at 1371-73 (setting forth contradictory statements from the Final Decision Memo. indicating that Commerce's rationale may have relied on 19 U.S.C. § 1677e(a) and/or § 1677e(b)). The court also remanded Commerce's determination to use a PMS adjustment in its sales-below-cost test finding "the statute does not empower Commerce to adjust a respondent's reported costs to account for a cost-based PMS when Commerce relies on home market or third country market sales to determine normal value."^[3] Garg I, 527 F.Supp.3d at 1370.

Commerce filed the Remand Results on October 7, 2021. Remand Results. Under respectful protest, ^[4] Commerce made several revisions to the Final Results. See generally id. First, Commerce clarifies that it is operating under 19 U.S.C. § 1677e(a) to fill the gap in the record and explains that it is no longer using facts available with an adverse inference and instead relies on neutral facts available. Id. at 17-22. Second, Commerce removes the PMS adjustment to the cost of production in its sales-below-cost test. Id. at 33. Commerce continues to find that a PMS in India distorted the cost of HRC and applies an upward adjustment to Garg's reported cost of production for sales where normal value was based on constructed value. Id. at 8-9.

Garg and Nucor filed comments and replies to the remand redetermination. Pls.' Comments on Remand Redetermination, Nov. 8, 2021, ECF No. 79 ("Garg's Remand Comments"); Pls.' Reply to Comments on Remand Redetermination, Dec. 15, 2021, ECF No. 85 ("Garg's Reply"); Def.-Intervenor [Nucor]'s Comments on [Remand Results], Nov. 8, 2021, ECF No. 80 ("Nucor's Remand Comments"); Def.-Intervenor [Nucor's] Reply Comments on [Remand Results] at 1-4, Dec. 15, 2021, ECF No. 84 ("Nucor's Reply"). Neither party objects to Commerce's decision to use neutral facts available to fill in the missing cost of production data before the court. Garg's Remand Comments at 3; see Nucor's Remand Comments; Nucor's Reply. However, the parties disagree about whether Commerce's decision to remove the PMS adjustment to costs of production from the sales-below-cost test, the existence of a PMS, and the methodology used to quantify the PMS adjustment should be sustained. Compare Garg's Remand Comments at 3-5; Garg's Reply with Nucor's Remand Comments at 2-3; Nucor's Reply at 1-5. Garg argues that Commerce's continued finding of a PMS is not supported by substantial evidence and Commerce's use of the regression analysis to quantify the PMS adjustment is arbitrary; therefore, a second remand is required. Garg's Remand Comments at 3-5.

Nucor argues that Commerce may adjust costs of production to account for a PMS when Commerce performs the sales-below-cost test. Nucor's Remand Comments at 2; Nucor's Reply at 4-5; but see Hyundai Steel Co. v. United States, 19 F.4th 1346 (Fed. Cir. 2021). However, in light of the court's remand order, Nucor agrees with Commerce's decision to remove the PMS adjustment in the sales-below-cost test under respectful protest. Nucor's Remand Comments at 2; see also Nucor's Reply at 4-5 (suggesting the court reconsider its position because the Court of Appeals for the Federal Circuit has not issued a mandate in Hyundai). Nucor further argues that Commerce's continued finding of a PMS and the corresponding regression-based adjustment are supported by substantial evidence and otherwise in accordance with law. Nucor's Reply at 1-4. On December 15, 2021, Defendant filed its reply to the remand comments. Def.'s Resp. to Comments on Remand Redetermination, Dec. 15, 2021, ECF No. 83 ("Def.'s Reply"). Defendant incorporates its previous arguments in support of Commerce's PMS finding and the resulting...