Hangzhou Spring Washer Co., Ltd. v. U.S.

• Decision Date: 06 July 2005
• Docket Number: SLIP OP. 05-80.,Court No. 04-00133.
• Citation: 387 F.Supp.2d 1236
• Parties: HANGZHOU SPRING WASHER CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and Shakeproof Assembly Components Division of Illinois Tool Works, Inc., Defendant-Intervenor.
• Court: U.S. Court of International Trade

387 F.Supp.2d 1236

HANGZHOU SPRING WASHER CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and Shakeproof Assembly Components Division of Illinois Tool Works, Inc., Defendant-Intervenor.

Court No. 04-00133.

SLIP OP. 05-80.

United States Court of International Trade.

July 6, 2005.

COPYRIGHT MATERIAL OMITTED

White & Case LLP (William J. Moran, William J. Clinton, Adams C. Lee, Emily Lawson), Washington, D.C., for Plaintiff.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice; Jeanne M. Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, United States Department of Justice; David S. Silverbrand, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice; James K. Lockett, Senior Attorney, Office of Chief Counsel for Import Administration, United States Department of Commerce, for Defendant, of counsel.

Hume & Associates PC (Robert T. Hume), Washington, D.C., for Defendant-Intervenor.

OPINION

CARMAN, Judge.

This matter comes before this Court on a motion for judgment on the agency record filed by Plaintiff Hangzhou Spring Washer Company ("Plaintiff" or "Hangzhou"). Plaintiff challenges the final results by the United States Department of Commerce ("Defendant" or "Commerce") in Certain Helical Spring Lock Washers from the People's Republic of China, 69 Fed.Reg. 12,119 (Dep't Commerce Mar. 15, 2004) (notice of final results of antidumping duty admin. review) [hereinafter Final Results]. Plaintiff seeks remand on the following four issues: (1) valuation of steel wire rod; (2) valuation of plating; (3) valuation of overhead, selling, general and administrative expenses ("SG & A"), and profit; and (4) request for revocation. The parties concur regarding the remand request on the issue of the subsidy suspicion determination. This Court affirms in part and remands in part the Final Results as set forth below. This Court has jurisdiction over this case pursuant to 28 U.S.C. § 1581(c) (2000) and 19 U.S.C. § 1516a(a)(2)(A)(i) (2000).

BACKGROUND

This is the ninth administrative review of the antidumping duty order pertaining to helical spring lock washers ("HSLW") from the People's Republic of China ("China"), and the period of review ("POR") is from October 1, 2001, through September 30, 2002. Pursuant to 19 C.F.R § 351.222(e)(1) (2004),¹ Hangzhou requested revocation of the antidumping duty in this administrative review, claiming this is the third consecutive year it sold the subject merchandise not below normal value. (Pl.'s Mem. of P. & A. in Supp. of Hangzhou's Mot. for J. on the Agency R. at 38 ("Pl.'s Mem.").) However, Commerce found that HSLW were being sold in the United States at below normal value by Hangzhou during this POR. Final Results, at 12,120. Accordingly, Commerce determined not to revoke the antidumping duty order with respect to Hangzhou pursuant to 19 C.F.R. § 351.222(b)(1) (2004).² Id.

On October 2, 2002, Commerce published Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation, 67 Fed.Reg. 61,849 (Dep't Commerce Oct. 2, 2002) (opportunity to request administrative review). In response to Hangzhou and Defendant-Intervenor Shakeproof Assembly Components Division of Illinois Tool Works, Inc.'s ("Defendant-Intervenor" or "Shakeproof") timely request, Commerce initiated a review. Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 67 Fed.Reg. 70,402 (Dep't Commerce Nov. 22, 2002).

Because it is undisputed that the China qualifies as a non-market economy ("NME"), Commerce constructed a normal value for the various factors of production by gathering surrogate normal value data from market economy sources using a factors of production methodology. Commerce invited interested parties to submit information regarding surrogate values. (Public Record ("P.R.") 13-14.) After Commerce issued the initial and first supplemental questionnaires and received responses from Hangzhou and deficiency comments from Shakeproof, the concept of subsidy suspicion against this subject merchandise appeared on the record. (P.R. 19, 23, 24, 28, 30, 39, 49.)

On June 20, 2003, Shakeproof requested that Commerce apply its subsidy suspicion policy in its pre-preliminary determination comments. Shakeproof cited subsides found in earlier Commerce countervailing duty investigations involving cut-to-length steel from the United Kingdom ("UK") and contended that Hangzhou's wire rod supplier may have benefitted. Commerce then issued a second supplemental questionnaire to Hangzhou and subsequently conducted a verification of Hangzhou's second supplemental questionnaire responses. (P.R. 45.) On October 31, 2003, Commerce issued a memorandum on the valuation of the factors of production, which determined that India would be the surrogate country and detailed the valuation of the factors of production. (P.R. 49.)

On November 7, 2003, Commerce published Certain Helical Spring Lock Washers from the People's Republic of China, 68 Fed.Reg. 63,060 (Dep't Commerce Nov 7, 2003) (preliminary results of antidumping duty admin. review) [hereinafter Preliminary Results]. In the Preliminary Results, Commerce declined to value wire rod at the price Hangzhou paid its market economy supplier because Hangzhou's supplier may have benefitted from subsidies. Preliminary Results at 63,063. Commerce instead used surrogate country data to determine the value of the steel wire rod and the value of the plating factors of production. Commerce also opted to use more contemporaneous surrogate data than formerly used in prior reviews.

In December 2003, Hangzhou submitted additional information on surrogate value. In January 2004, Hangzhou and Shakeproof submitted case and rebuttal briefs. (P.R. 58-61.) On March 15, 2004, Commerce issued the Final Results. Commerce found that Hangzhou sold HSLW at below normal value during the POR, calculated Hangzhou's dumping margin to be 28.59 percent ad valorem, and rejected Hangzhou's request for revocation. Final Results, 69 Fed.Reg. at 12,119-20. Hangzhou timely appealed.

STANDARD OF REVIEW

In reviewing a challenge to Commerce's final determination in an antidumping administrative review, the Court will uphold Commerce's decision unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law...." Tariff Act of 1930, § 516A(b)(1)(B) (codified as amended at 19 U.S.C. § 1516a(b)(1)(B)(i) (2000)). "Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) (citations omitted); see also Micron Tech., Inc. v. United States, 117 F.3d 1386, 1393 (Fed.Cir.1997). "As long as the agency's methodology and procedures are reasonable means of effectuating the statutory purpose, and there is substantial evidence in the record supporting the agency's conclusions, the court will not impose its own views as to the sufficiency of the agency's investigation or question the agency's methodology." Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404-05, 636 F.Supp. 961 (1986) (citations omitted), aff'd, 810 F.2d 1137 (Fed.Cir.1987).

In determining whether Commerce's interpretation and application of the antidumping statute is in accordance with law, this Court must consider "whether Congress has directly spoken to the precise question at issue," and if not, whether the agency's interpretation of the statute is reasonable. Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). "[A] court must defer to an agency's reasonable interpretation of a statute even if the court might have preferred another." Koyo Seiko Co. v. United States, 36 F.3d 1565, 1570 (Fed.Cir.1994) (citation omitted). Deference is based upon a recognition that Commerce has special expertise in administering the anti-dumping law. Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1335 (Fed.Cir.2002).

PARTIES' CONTENTIONS

Plaintiff appeals four main issues: (1) valuation of steel wire rod; (2) valuation of plating; (3) valuation of overhead, SG & A, and profit; and (4) request for revocation. The contentions of the parties are set forth below.

A. Plaintiff's Contentions

(1) Valuation of steel wire rod

Hangzhou argues that Commerce's rejection of its market economy prices for steel wire rod is an arbitrary and unreasonable departure from its past practice. Hangzhou points to Commerce's longstanding preference for using market economy prices. (Pl.'s Mem. at 8.) Hangzhou cites to case law requiring that Commerce rely upon "particular, specific and objective evidence" to reject market prices under the subsidy suspicion policy. (Id. at 9.) Hangzhou contends that Shakeproof's speculation that Hangzhou's supplier benefitted from additional subsidies does not meet the evidentiary requirements to invoke the subsidy suspicion policy. (Id. at 14.)

Hangzhou also argues that there is no evidence that any possible subsidy from its UK supplier benefitted Hangzhou since it purchased steel wire rod imports through a third country trading company in Hong Kong. (Pl.'s Mem. at 24.) Hangzhou cites to Certain Color Television Receivers from the People's Republic of China, 69 Fed.Reg. 20,594, 20,597 (Apr. 16, 2004) (notice of final determination) [hereinafter Color TVs³], in support of its assertion that the presumption of a subsidy does not automatically pass through to an intermediate trading company. (Pl.'s Mem. at 24.)

(2) Valuation of plating

Hangzhou contends Commerce's decision to use a single surrogate price quote for plating services is contrary to established practice and not in accordance with law. Hangzhou argues that Commerce...