Guangdong Chemicals v. U.S.

• Citation: 414 F.Supp.2d 1300
• Decision Date: 25 January 2006
• Docket Number: Slip Op. 06-13. Court No. 05-00023.
• Parties: GUANGDONG CHEMICALS IMPORT & EXPORT CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

414 F.Supp.2d 1300

GUANGDONG CHEMICALS IMPORT & EXPORT CORPORATION, Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 06-13. Court No. 05-00023.

United States Court of International Trade.

January 25, 2006.

COPYRIGHT MATERIAL OMITTED

Garvey Schubert Barer, Washington, DC (Ronald M. Wisla and William E. Perry) for the plaintiff.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Jeanne E. Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (David S. Silverbrand), Arthur D. Sidney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, for the defendant, of counsel.

OPINION

RESTANI, Chief Judge.

Guangdong Chemicals Import and Export Corporation ("Guangdong") appeals from a ruling by the Department of Commerce ("Commerce" or "the Department") conducting an administrative review of an antidumping duty order entered against sebacic acid from the People's Republic of China ("China"). See Sebacic Acid from the People's Republic of China, 69 Fed. Reg. 75,303 (Dep't Commerce Dec. 16, 2004) (final results of antidumping admin. review). Guangdong alleges that the review should be dismissed for lack of service or remanded for lack of substantial evidence supporting Commerce's calculation of the surrogate value of the input factor sebacic acid and failure to properly credit by-product offsets.

Commerce's failure to properly serve Guangdong was harmless error, but the determination is remanded as to the surrogate value for sebacic acid and by-product credit.

BACKGROUND

The facts of this case may neatly be divided into two parts. The first set of relevant facts relate to the circumstances surrounding Genesis Chemical Corp.'s ("Genesis") failure to serve Guangdong. On July 2, 2003, Commerce published notice of an opportunity to request review of an antidumping duty order entered against exporters of sebacic acid from China. Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation, 68 Fed.Reg. 39,511 (Dep't Commerce July 2, 2003) (opportunity to request administrative review). On July 21, 2003, Genesis submitted a request that Commerce perform an administrative review of sebacic acid from two specific companies, Tianjin Chemical Import and Export Co. and Guangdong. See Letter from Greg E. Mitchell, Frost Brown LLC, to the Assistant Sec'y for Imp. Admin, Int'l Trade Admin. (Jul. 21, 2003), P.R. Doc. 2, Pl.'s App. Tab 2. In mid-July, counsel for Genesis contacted an employee of the Department of Commerce to inquire whether the firm was required to serve its client's request for administrative review on parties on the public service list. See Memorandum from Michael Strollo, Senior Analyst, Dep't. of Commerce to Louis Apple, Office Director, Dep't of Commerce (Aug. 22, 2003), P.R. Doc. 6, Pl.'s App. Tab 4, at 1 [hereinafter Service Mem.]. A Commerce employee stated that no service was necessary because no public service list had yet been generated. Id. Counsel for Guangdong received an antidumping review questionnaire on August 14, 2003, which was its first notice of the review. See Letter from Ronald M. Wisla, Garvey Schubert Barer, to Donald Evans, Sec'y of Dep't of Commerce (Aug. 20, 2003), P.R. Doc. 4, Pl.'s App. Tab 3, at 1-2. On August 20, Guangdong sent Commerce a letter requesting that Commerce decline review because it had not been properly served. Id.

Commerce published a notice of initiation on August 22, 2003. Initiation of Antidumping and Countervailing Duty Reviews and Request for Revocation in Part, 68 Fed.Reg. 50,750 (Dep't Commerce Aug. 22, 2003). That day, it also entered a memorandum into its files recognizing that Genesis had failed to serve Guangdong within the regulatory time-frame established by 19 C.F.R. § 351.303(f)(3)(ii) (2005). See Service Mem., Pl.'s App. Tab 4. The memorandum stated that Genesis would be allowed to cure its deficient service by serving the request on or before August 29, 2003. Id., Pl.'s App. Tab 4, at 1-2. Genesis served Guangdong on August 26. Letter from Greg E. Mitchell, Frost Brown Todd LLC, to Assistant Sec'y for Imp. Admin, Int'l Trade Admin. (Aug. 26, 2003), P.R. Doc. 9, Def.'s App. Tab 1.

The second set of facts relate to Commerce's method of calculating a surrogate value for sebacic acid. Guangdong purchases its sebacic acid from a producer named Hengshui Dongfeng Chemical Co. Ltd. ("Hengshui"). See Sections C and D Response of Guangdong Chems. Imp. & Exp. Corp. Group (Nov. 4, 2003), P.R. Doc. 21, Pl.'s App. Tab 13, at D-1. Sebacic acid production results in the creation of a co-product, capryl alcohol. Prelim. Valuation of Factors of Prod., Memorandum from Greg Kalbaugh, Dep't of Commerce, to File (Jul. 30, 2004), P.R. Doc. 47, Pl.'s App. Tab 6, at 4 [hereinafter Prelim. Valuation of Factors of Prod. Mem.]. In order to calculate Hengshui's production costs for sebacic acid, Commerce allocated production costs between the two products based on their relative sales values in India. Id., Pl.'s App. Tab 6, at 4. Because India does not produce sebacic acid, Commerce relied on import statistics to estimate the value of sebacic acid in India. Id., Pl.'s App. Tab 6, at 1-2. Commerce used statistics from the Indian Department of Commerce's Import/Export, Data Bank (the "Indian government statistics".), which lumped sebacic with azelaic acid (a common derivative of sebacic acid) under Indian Harmonized Tariff Schedule ("HTS") subheading 291713. Id., Pl.'s App. Tab 6, at Attach. 4. Guangdong proposed using surrogate value data for sebacic acid maintained by the Indian publication Chemical Weekly (the "Chemical Weekly data"), which was based on a selection of the Indian government data, but was further subdivided and included a specific subheading for sebacic acid (291713.02). Guangdong Chems. Imp. & Exp. Co. Case Br. (Sept. 20, 2004), P.R. Doc. 65, Pl.'s App. Tab 8, at 2-3 [hereinafter Guangdong Case Br.]. Based on this data, Guangdong argued that the value of sebacic acid in India during the Period of Review ("POR") was $3,551.73 per metric ton. Id., Pl.'s App. Tab 8, at 7. Guangdong corroborated its proposed value with data from U.S. import statistics for sebacic acid, published Indian prices for oxalic acid (asserted to be similar to sebacic acid), and benchmark price data from the publication Chemical Market Reporter. Id., Pl.'s App. Tab 8, at 6-7.

Commerce refused to use the Chemical Weekly data, stating that its authenticity could not be verified, and that the data, which relied on two shipments totaling 1,400 kilograms, did not "represent a sufficiently broad range of import values on which to base the surrogate value for sebacic acid." See Issues & Decision Mem. for the Antidumping Duty Admin. Review of Sebacic Acid from the People's Republic of China (Dec. 10, 2004), P.R. Doc. 80, Pl.'s App. Tab 10, at 7 [hereinafter Issues & Decision Mem.]. Recognizing that HTS 291713 was a basket category including both sebacic and azelaic acid, Commerce conducted additional research to determine whether prices for azelaic acid and sebacic acid were similar. See Comparison of U.S. Int'l Trade Comm'n Dataweb Values for Sebacic Acid & Azelaic Acid Imps. to the U.S., Memorandum from Jennifer Moats, Dep't of Commerce, to File (Dec. 10, 2004), P.R. Doc. 79, Pl.'s App. Tab 11, at 1 [hereinafter Price Comparison Mem.]. It concluded that the two products were similarly priced, varying only by $0.30 per kilogram over a twenty-three month period during which the price for sebacic acid ranged between $2 and $3 per kilogram. Id., Pl.'s App. Tab 11, at 1. Commerce therefore used the basket category Indian government statistics to determine the surrogate value of sebacic acid, calculating the surrogate value of sebacic acid in India to be $15,826.30 per metric ton. See Issues & Decision Mem., Pl.'s App. Tab 10, at 9 (electing to use Indian government statistics); see also Prelim. Valuation of Factors of Prod. Mem., Pl.'s App. Tab 6, at 4 (using Indian government statistics to arrive at $15,826.30 per-metric-ton value for sebacic acid).

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction to review Commerce's administration of an antidumping review under 28 U.S.C. § 1581(c) (2000). The Court will uphold an administrative decision 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) (2000).

DISCUSSION

I. Failure To Serve Notice

A. Genesis Did Not Make A Reasonable Attempt to Serve Guangdong Under 19 C.F.R. § 351.303(f)(3)(ii).

A petitioner requesting an administrative review of an antidumping order "must serve a copy of the request by personal service or first class mail on each exporter or producer specified in the request ... by the end of the anniversary month or within ten days of filing the request for review, whichever is later." 19 C.F.R. § 351.303(f)(3)(ii). A petitioner has the responsibility to serve a specified exporter whether or not that exporter appears on Commerce's service list; however, if the interested party is "unable to locate a particular exporter or producer ... the Secretary may accept the request for review if the Secretary is satisfied that the party made a reasonable attempt to serve a copy of the request on such person." Id.

A Commerce employee advised Genesis that no service was necessary at the time it filed its petition for review because no public service list had yet been generated. Genesis understood this advice to mean that it did not have to serve Guangdong with notice of its request for review despite its obligations under 19 C.F.R. § 351.303(f)(3)(ii). Although the petitioners "misconstrued" Commerce's instruction, Commerce granted Genesis additional time in which to "remedy the procedural deficiency." Service Mem., Pl.'s App. Tab 4, at 1. This was done by letter thirty-six days after Genesis's initial request and four...