Globe Metallurgical Inc. v. United States

• Decision Date: 21 June 2011
• Docket Number: Slip Op. 11–72.Court No. 10–00032.
• Citation: 781 F.Supp.2d 1340,33 ITRD 1563
• Parties: GLOBE METALLURGICAL INC., Plaintiff,v.UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

781 F.Supp.2d 1340

33 ITRD 1563

GLOBE METALLURGICAL INC., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 11–72.Court No. 10–00032.

United States Court of International Trade.

June 21, 2011.

DLA Piper LLP (US) (William D. Kramer, Martin Schaefermeier, Arlette Grabczynska), Washington, DC, for Plaintiff Globe Metallurgical Inc.Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Reginald T. Blades, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, DC, (L. Misha Preheim, Stephen C. Tosini); and Office of the Chief Counsel for Import Administration, U.S. Department of Commerce (Aaron P. Kleiner), of counsel, for Defendant United States.

Mayer Brown LLP (Sydney H. Mintzer, Duane W. Layton, Jeffery C. Lowe), Washington, DC, for Defendant–Intervenors Shanghai Jinneng International Trade Co., Ltd. and Jiangxi Gangyuan Silicon Industry Co., Ltd.

OPINION and ORDER

GORDON, Judge:

This consolidated action involves an administrative review conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering Silicon Metal from the People's Republic of China. See Silicon Metal from China, 75 Fed.Reg. 1,592 (Dep't of Commerce Jan. 12, 2010) (final results admin. review) (“ Final Results ”); see also Issues and Decision Memorandum for Silicon Metal from People's Republic of China, A–570–806 (Jan. 5, 2010), available at http:// ia. ita. doc. gov/ frn/ summary/ PRC/ 2010– 378– 1. pdf (last visited June 21, 2011) (“ Decision Memorandum ”). Before the court are motions for judgment on the agency record filed by Globe Metallurgical Inc. (“Globe”), and Shanghai Jinneng International Trade Co., Ltd. (“Shanghai”) and Jiangxi Gangyuan Silicon Industry Company, Ltd. (“Jiangxi”) (collectively “Respondents”). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006),¹ and 28 U.S.C. § 1581(c) (2006).

Globe challenges (1) Commerce's decision not to reduce Respondents' export prices by the amount of an export tax and value added tax; (2) Commerce's selection of the average value for Grade A non-coking coal published in the Indian Bureau of Mines Yearbook as the surrogate value for Respondents' coal input; and (3) Commerce's reliance upon all sales invoiced by Respondents during the period of review (“POR”), rather than all sales entered during the POR.

Respondents challenge Commerce's decision to include FACOR in its SG & A calculations despite Respondents' contention that FACOR is a “sick” company under Indian law. Alternatively, Respondents challenge the exclusion of the following line-items in FACOR's financial statements from the SG & A expense ratio calculation: (1) the sale of a surplus captive power plant (a fixed asset) and (2) miscellaneous income.

For the reasons set forth below, the court remands this action to Commerce to address Respondents' challenge to Commerce's treatment of FACOR's SG & A expense ratio calculation. The court sustains Commerce's determinations regarding all other issues in this action.

I. Standard of Review

For administrative reviews of antidumping duty orders, the court sustains determinations, findings, or conclusions of the U.S. Department of Commerce unless they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings, or conclusions for substantial evidence, the court assesses whether the agency action is reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350–51 (Fed.Cir.2006). Substantial evidence has been described as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Dupont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed.Cir.2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). Substantial evidence has also been described as “something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). Fundamentally, though, “substantial evidence” is best understood as a word formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d. ed. 2011). Therefore, when addressing a substantial evidence issue raised by a party, the court analyzes whether the challenged agency action “was reasonable given the circumstances presented by the whole record.” Edward D. Re, Bernard J. Babb, and Susan M. Koplin, 8 West's Fed. Forms, National Courts § 13342 (2d ed. 2010).

Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–45, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), governs judicial review of Commerce's interpretation of the antidumping statute. Dupont, 407 F.3d 1211, 1215; Agro Dutch Indus. Ltd. v. United States, 508 F.3d 1024, 1030 (Fed.Cir.2007). “[S]tatutory interpretations articulated by Commerce during its antidumping proceedings are entitled to judicial deference under Chevron.” Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed.Cir.2001); see also Wheatland Tube Co. v. United States, 495 F.3d 1355, 1359 (Fed.Cir.2007) (“[W]e determine whether Commerce's statutory interpretation is entitled to deference pursuant to Chevron.”).

II. Discussion

A. Export Tax and VAT

During the administrative review Respondents provided information regarding a Chinese export tax and a value added tax (“VAT”) on subject merchandise. Respondents reported that their sales of subject merchandise after January 1, 2008 were subject to a 10% export tax. See Jiangxi's Sec. C Questionnaire Response, PD 35 at frm. 16 (Nov. 17, 2008) ²; Shanghai's Sec. C Questionnaire Response, PD 36 at frm. 18 (Nov. 17, 2008). Respondents reported that their respective export sales were also subject to a VAT, in addition to the export tax. See Jiangxi's Supp. Secs. C–D Questionnaire Response, CD 24 at frms. 11, 35–41 (Feb. 23, 2009); Shanghai's Supp. Secs. C–D Questionnaire Response, CD 28 at frms. 11–12, 19–30 (Mar. 11, 2009).

Commerce published the preliminary results, reducing Respondents' export prices by 10 percent based upon the export tax, pursuant to 19 U.S.C. § 1677a(c)(2)(B). See 74 Fed.Reg. 32,885, 32,887 (July 9, 2009) (“ Preliminary Results ”). Commerce did not reduce Respondents' export prices based upon the VAT, stating that it had not previously considered whether a VAT applied to export sales would be covered by subsection 1677a(c)(2)(B) and invited parties to comment upon the issue for the final results. Id.; see also Letter to Interested Parties Requesting Comments Upon Treatment of Chinese Value Added Taxes on Export Sales, PD 129 (June 29, 2009).

Respondents argued in their administrative case brief that Commerce's preliminary determination to reduce their export prices based upon the export tax was correct, but that Commerce should not further reduce their export prices based upon the VAT. See Respondents' Admin. Case Br., PD 156 at frms. 14–21 (Aug. 21, 2009). In its case brief Globe also argued that Commerce's preliminary determination to reduce Respondents' export prices based upon the export tax was correct, and Globe further claimed that Respondents' export prices should be reduced based upon the VAT. See Globe's Admin. Case Br., PD 155 at frms. 12–21 (Aug. 21, 2009).

Commerce subsequently placed three documents upon the record for comment by the parties. Two of the documents were letters from Chinese Government officials to the U.S. Secretary of Commerce regarding Commerce's treatment of the export tax and VAT. These letters stated that Commerce's preliminary determination with respect to the export tax was inconsistent with Commerce's administrative practice, as upheld by the U.S. Court of Appeals for the Federal Circuit in Magnesium Corp. v. United States, 166 F.3d 1364, 1370–71 (Fed.Cir.1999), and that any reduction to Respondents' export prices based upon the VAT would also run counter to this practice. See Letter to Interested Parties Requesting Comments Upon Letters from Ms. Zhou Wenzhong, Ambassador Extraordinary and Plenipotentiary of the People's Republic of China to the United States, and Madame Zhou Xiaoyan, Director General of the Bureau of Fair Trade for Imports and Exports, Ministry of Commerce of the People's Republic of China, PD 170 at frms. 1–8 (Nov. 9, 2009). Commerce also placed its voluntary remand redetermination in the Magnesium Corp. litigation upon the record. Id. at 9–26. Because Commerce placed these documents upon the record subsequent to the administrative briefing period, Commerce requested that parties comment upon the letters and remand redetermination.

Commerce received comments from Globe, Respondents, and the Chinese Ministry of Commerce. Respondents and the Chinese Ministry of Commerce argued that Commerce should reverse its preliminary determination with respect to the export tax and should not reduce Respondents' export prices for the VAT, while Globe maintained that Commerce should maintain its preliminary determination with respect to the export tax and apply the same approach to the VAT. See Globe's Comments, PD 176 (Dec. 3, 2009); Respondents' Comments Upon Deduction of Export Taxes and VAT from Export Price, PD 177 (Dec. 3, 2009); Chinese Ministry of Commerce's Comments Upon Deduction of Export Tax and VAT From Export Price, PD 175 (Dec. 2, 2009).

Commerce then placed upon the record a letter from a third Chinese Government official to the Secretary of Commerce regarding Commerce's treatment of the export tax and VAT. The letter...