Garg Tube Export LLP v. United States

• Citation: 527 F.Supp.3d 1362
• Decision Date: 09 July 2021
• Docket Number: Slip Op. 21-83,Court No. 20-00026
• Parties: GARG TUBE EXPORT LLP and Garg Tube Limited, Plaintiffs, v. UNITED STATES, Defendant, and Wheatland Tube and Nucor Tubular Products Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

527 F.Supp.3d 1362

GARG TUBE EXPORT LLP and Garg Tube Limited, Plaintiffs,

v.UNITED STATES, Defendant,andWheatland Tube and Nucor Tubular Products Inc., Defendant-Intervenors.

Slip Op. 21-83

Court No. 20-00026

United States Court of International Trade.

July 9, 2021

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 briefs 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, Jeanne E. Davidson, 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.

Roger B. Schagrin, Schagrin Associates, of Washington, DC, for defendant-intervenor Wheatland Tube. Also on the brief were Christopher Cloutier, Elizabeth J. Drake, and Luke A. Meisner.

OPINION AND ORDER

Kelly, Judge:

Before the court is Plaintiffs Garg Tube Export LLP and Garg Tube Limited's (collectively, "Garg") motion for judgment on the agency record, challenging aspects of the U.S. Department of Commerce's ("Commerce") final determination in its 2017–2018 administrative review of the antidumping duty ("ADD") order covering welded carbon steel standard pipes and tubes ("CWP") from India. See Pls.’ Mot. J. Agency R. & accompanying Supp. Memo. Confidential Version, Aug. 17, 2020, ECF No. 32 ("Pls.’ Mot." and "Pls.’ Br.", respectively); see also [CWP] From India, 85 Fed. Reg. 2715 (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"). Garg challenges as unsupported by substantial evidence Commerce's finding that a particular market situation ("PMS") in India distorts the cost of producing CWP, see Pls.’ Br. at 4–32, as well as Commerce's methodology for calculating the PMS adjustment. See id. at 32–36. Moreover, Garg challenges as contrary to law Commerce's application of the PMS adjustment to Garg's reported costs for purposes of examining whether Garg's home market sales of CWP were made below the cost of production. See id. at 36–38. Finally, Garg challenges as unlawful Commerce's application of partial facts available with an adverse inference ("AFA")¹ in response to its unaffiliated suppliers’ refusal to cooperate with Commerce's requests for information during the administrative review. See id. at 38–49. For the following reasons, Commerce's final determination is remanded for further explanation or reconsideration.

BACKGROUND

On July 12, 2018, in response to timely requests from interested parties, Commerce initiated an administrative review of the ADD order covering certain CWP from India, the period of review ("POR") 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). Finding it impractical to subject all companies to individual review,² Commerce limited its examination to Apl Apollo Tubes Limited and Garg³ as mandatory respondents. See Resp't Selection Memo. at 2–4, PD 15, bar code 3743783-01 (Aug. 15, 2018).⁴

During an administrative review, Commerce calculates the dumping margin for a respondent's entries of subject merchandise during the POR by comparing prices for those U.S. sales to their normal value. See Sections 751 and 773 of the Tariff Act of 1930, as amended, 19 U.S.C. §§ 1675, 1677b (2018).⁵ Here, Commerce attributed to Garg sales of certain unaffiliated suppliers of the foreign like product when determining the normal value of Garg's subject merchandise.⁶ See [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 16, A-533-502, PD 207, bar code 3859225-01 (July 11, 2019) ("Prelim. Decision Memo"). On November 30, 2018, Commerce issued to Garg a supplemental questionnaire requesting, in relevant part, that Garg obtain information from its unaffiliated suppliers regarding the actual costs of producing the purchased merchandise. See Letter Re: Suppl. Questionnaire to Garg's Section A–D Resps. at 12, PD 67, CD 32, bar codes 3778772-01, 3778771-01 (Nov. 30, 2018).

On December 21, 2018, Independence Tube Corporation and Southland Tube, Incorporated (collectively "Petitioners")—later consolidated into Nucor Tubular Products Inc. ("Nucor")⁷ —submitted to Commerce an allegation that a PMS in India distorted the cost of producing CWP during the POR, and furnished information supporting their submission. See [PMS] Allegation, Resubmitted Market Viability Allegation, & Supp. Info., PDs 72–99, CDs 33–61, bar codes 3785365-01–28, 3785322-01–29 (Dec. 21, 2018) ("PMS Allegation"). On February 1, 2019, Petitioners supplemented their PMS allegation. See Letter Re: Other Factual Info. – Alternative PMS Valuation Calculation, PDs 102–04, CDs 62–68, bar codes 3789235-01–03, 3789217-01–07 (Feb. 1, 2019) ("PMS Allegation Suppl."). Petitioners proposed various regression models for Commerce to use to quantify any adjustment made to the dumping margin should Commerce determine that a PMS in India distorted the cost of producing CWP in India during the POR. See, e.g., PMS Allegation Suppl. at 14–17 & Ex. 1.1.

On February 19, 2019, Garg submitted its response to Commerce's initial supplemental questionnaire. See Resp. to Commerce Re: Section A–D Suppl. Questionnaire, PDs 110–34, CDs 69–101, bar codes 3794286-01–25, 3794250-01–33 (Feb. 19, 2019) ("Garg's Suppl. Resp."). Pertinent here, Garg detailed unsuccessful efforts to persuade one of its unaffiliated suppliers to provide the cost information requested by Commerce.⁸ See Garg's Suppl. Resp. at 51–53. On April 30, 2019, Commerce sent a second supplemental questionnaire to Garg, see Letter from Commerce Re: Second Suppl. Questionnaire, PD 173, CD 131, bar codes 3827345-01, 3827342-01 (Apr. 30, 2019), and, on May 2, 2021, Commerce directly requested information from Garg's unaffiliated supplier. See Letter Re: Req. for Cost Info. from Supplier 1, PD 174, CD 132, bar code 3828743-01, 3828737-01 (May 2, 2019). Garg responded to the second supplemental questionnaire on May 16, 2019. See [Garg's] Resp. to Commerce's Second Suppl. Questionnaire, PDs 178–181, CDs 134–141, bar codes 3834711-01–04, 3834703-01–08 (May 16, 2019). Shortly thereafter, Garg submitted to Commerce copies of its communications with the unaffiliated supplier. See Letter from [Garg] Re: Supplier Communications, PD 182, CD 142, bar codes 3836053-01, 3836052-01 (May 20, 2019) ("Garg's Letter"). According to Garg, these email communications document attempts to persuade the unaffiliated supplier to cooperate with Commerce's examination.⁹ See Garg's Letter at 1–3.

On July 16, 2019, Commerce published its preliminary determination. See generally Prelim. Results, 84 Fed. Reg. 33,916. Based on evidence cited by Petitioners in their PMS submissions regarding the collective impact on the Indian market of global steel overcapacity, Government of India trade interventions, and Garg's nonpayment of antidumping and safeguard duties on imports of hot-rolled coil ("HRC"), Commerce determined that a PMS in India distorted the cost of producing CWP during the POR. See Prelim. Decision Memo at 19–21; see also Memo. Re: Decisions on [PMS] Allegations at 18–27, PD 209, bar code 3859233-01 (July 10, 2019) ("PMS Memo"). Commerce accounted for the distortion by upwardly adjusting Garg's reported costs for HRC, a primary input in the production of subject CWP. See Prelim. Decision Memo at 19–21; Memo. Re: Prelim. Analysis for [Garg] at 5–6, PD 212, bar code 3859260-01 (July 10, 2019) ("Prelim. Analysis Memo"). Relevant here, Commerce made the adjustment for purposes of determining which of Garg's sales were made below cost.¹⁰

Commerce calculated the adjustment by using a regression model provided in Petitioners’ PMS submissions. See Prelim. Analysis Memo at 6 & n. 12 (citing Letter from Petitioners Re: Revised PMS Valuation Methodology, PDs 152–64, CDs 107–26, bar codes 3810691-01–13, 3810640-01–20 (Mar. 22, 2019) ("Revised PMS Methodology Memo")); see also Revised PMS Methodology Memo at 18–22, Ex. 1.1. The regression model, called "Ordinary Least Squares" ("OLS"), seeks to predict a counterfactual AUV for HRC imports into India in 2017, representing what the AUV would be "if the global steel industry had operated at a utilization rate of 85 percent." Revised PMS Methodology Memo at Ex. 1.1. Regressing data drawn from 38 countries, covering a period from 2008 through 2017, the OLS model predicted that the counterfactual AUV would be "38.54 percent higher than the actual 2017 Indian import AUV of $575.12." Id. Thus, Commerce increased the reported costs of Garg's HRC inputs by using an adjustment factor of 38.54 percent. See Prelim. Analysis Memo at 6 & n. 12 (citing Revised PMS Methodology Memo).

Moreover, when calculating Garg's dumping margin, Commerce purported to apply partial AFA to fill the gap in the record stemming from the refusal of Garg's unaffiliated suppliers to provide the requested cost information. See Prelim. Decision Memo at 16–17. Commerce found that Garg's unaffiliated suppliers were interested parties within the meaning of 19 U.S.C. § 1677(9)(A) because "they are producers of pipe and tube, which is...