Hebei New Donghua Amino Acid v. U.S.

• Citation: 374 F.Supp.2d 1333
• Decision Date: 15 June 2005
• Docket Number: SLIP OP. 05-70.,Court No. 04-00409.
• Parties: HEBEI NEW DONGHUA AMINO ACID CO., LTD., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

374 F.Supp.2d 1333

HEBEI NEW DONGHUA AMINO ACID CO., LTD., Plaintiff, v. UNITED STATES, Defendant.

SLIP OP. 05-70.

Court No. 04-00409.

United States Court of International Trade.

June 15, 2005.

Hume & Associates PC, Washington, DC (Robert T. Hume) for Plaintiff.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (David S. Silverbrand), Barbara J. Tsai, Attorney-Advisor, Office of the Chief Counsel for Import Administration, United States Department of Commerce, for Defendant, of counsel.

OPINION

RESTANI, Chief Judge.

Plaintiff Hebei New Donghua Amino Acid Co., Ltd. ("New Donghua") challenges the decision of the United States Department of Commerce to rescind its new shipper review of New Donghua as an exporter of glycine into the United States. See Glycine from the People's Republic of China: Notice of Recision of Antidumping Duty New Shipper Review of Hebei New Donghua Amino Acid Co., Ltd., 69 Fed.Reg. 47,405 (Dep't Commerce Aug. 5, 2004) [hereinafter "Recision Notice"]. New Donghua claims that Commerce improperly rejected its lone U.S. sale as not bona fide, contesting both the statutory basis for Commerce's bona fide sales analysis and the evidentiary basis for its decision. Because Commerce's decision was in accordance with law and supported by substantial evidence, New Donghua's motion for judgment on the agency record is denied and judgment is entered for Defendant.

BACKGROUND

On March 29, 1995, Commerce published an antidumping duty order on imports of glycine from China, which currently imposes an antidumping duty of 155.89 percent on nearly all Chinese glycine imports to the United States. See Glycine from the People's Republic of China, 60 Fed.Reg. 16,116 (Dep't Commerce Mar. 29, 1995) (antidumping duty order).¹

New Donghua's first sale of glycine to a customer in the United States, the sale at issue in the instant proceeding, entered on February 10, 2003 (referred to hereinafter as the "U.S. sale" or the "new shipper sale"). Pursuant to 19 U.S.C. § 1675(a)(2)(B) (2000), and 19 C.F.R. § 351.214(d), New Donghua filed a new shipper review request on March 26, 2003, certifying it was both an exporter and producer of glycine and did not export glycine to the United States during the original period of investigation. Section 1675(a)(2)(B) of title 19 enables a new shipper "to demonstrate that it should be accorded a dumping rate specific to itself, and not the `all-others' rate...." Tianjin Tiancheng Pharm. Co. v. United States, 366 F.Supp.2d 1246, 1247 (CIT 2005).

Commerce initiated a new shipper review to determine whether New Donghua was entitled to its own antidumping duty rate and to calculate a weighted average margin for New Donghua. See Notice of Initiation of Antidumping Duty New Shipper Review: Glycine from the People's Republic of China, 68 Fed.Reg. 23,962 (May 6, 2003) [hereinafter "Notice of Initiation"]. The period of review covered sales of glycine by New Donghua from March 1, 2002, through February 28, 2003 (the "POR").

I. NEW DONGHUA'S GLYCINE BUSINESS AND THE U.S. SALE

New Donghua began producing glycine in 2000. New Donghua Sections A, C, D Questionnaire Response (July 11, 2003), at A-3, P.R. Doc. 11, C.R. Doc. 2, Pl.'s Conf.App. at tab 1. As reported in its questionnaire responses to Commerce, New Donghua sold a small quantity of glycine to a customer in the United States on January 2, 2003. Id. at Ex. 1.² New Donghua describes the U.S. sale as a "test sale" in which the U.S. importer was attempting "to ascertain whether a dumping margin would apply to the sale so it could determine what prices it could sell glycine for in the United States market." Pl.'s Conf. Op. Br. at 4 (citing New Donghua First Supp. Questionnaire Response (Dec. 19, 2003), Supp — 21, C.R. Doc. 5, Pl.'s Conf.App. at tab 3).

II. THE PRELIMINARY RESULTS OF THE NEW SHIPPER REVIEW

Commerce issued the preliminary results of the new shipper review on March 2, 2004. Notice of Preliminary Results of Antidumping Duty New Shipper Review: Glycine from the People's Republic of China, 69 Fed.Reg. 9,804 (Dep't Commerce Mar. 2, 2004) [hereinafter "Preliminary Results"]. The Preliminary Results calculated a preliminary dumping margin of 8.89 percent, based in part on adverse inferences made from New Donghua's failure to report factors of production data to the best of its ability. Preliminary Results, 69 Fed.Reg. at 9,808. For the purpose of calculating U.S. price, Commerce made a preliminary finding that New Donghua's single U.S. sale was bona fide — i.e., not commercially unreasonable — with the qualification that the bona fide sale issue would be considered further. Id. at 9,807.

In the memorandum explaining the preliminary bona fide sale finding, Commerce found a large differential between New Donghua's U.S. sale price and the average unit values ("AUVs") for U.S. imports of glycine from China over the three-year period from 2001 through November 2003 ($2.54) and U.S. glycine imports from all countries ($2.67). Mem. from Matthew Renkey to Barbara E. Tillman Re: Bona Fide Nature of the Sale in the New Shipper Review of Hebei New Donghua Amino Acid Co., Ltd. at 3 (Dep't Commerce Feb. 24, 2004) [hereinafter "Preliminary Bona Fides Memo"]. Commerce declined to make a preliminary not bona fide finding on the basis of these price comparisons, explaining that New Donghua's U.S. sale was for food grade glycine while the comparison AUVs did not differentiate among the different grades of glycine. See id.

Commerce remained concerned about the bona fide nature of the sale, however. It viewed the large price differential between the new shipper sale and the comparison AUVs as "significant." Id. Commerce noted "that the quantity of New Donghua's sale is low in comparison with other entries of glycine from the PRC, and is also low in comparison with the quantities of its other international sales to third country markets." Id. Commerce also remained "concerned about the fact that this merchandise has not been resold by the importer." Id.

III. THE RECISION OF THE NEW SHIPPER REVIEW

Ultimately, Commerce did not adopt the preliminary position it took in the Preliminary Results and Preliminary Bona Fides Memo. Instead, Commerce rescinded the new shipper review on August 5, 2004, citing three factors as leading to the conclusion that "New Donghua's single sale to the United States is not a bona fide commercial transaction":

A) the pricing of the sale is artificially high and otherwise commercially unreasonable;

B) the quantity of the single shipment is extremely low in comparison with other sales from the People's Republic of China (PRC); and

C) the importer has not resold the merchandise and has otherwise not acted in a commercially reasonable manner.

Mem. re: Bona Fides Analysis for Hebei New Donghua Amino Acid Co., Ltd.'s Sale in the New Shipper Review of Glycine from the People's Republic of China at 5 (Dep't Commerce July 23, 2004), Pl.'s Conf.App., Ex. 7 [hereinafter "Final Bona Fides Memo"]; see also Recision Notice, 69 Fed.Reg. 47,405.

Commerce explained its decision not to maintain a bona fide sale finding on the ground that the price differential "could not reasonably be accounted for solely by the difference between food and industrial grade glycine." Final Bona Fides Memo at 13. In reaching its conclusion as to price, Commerce compared New Donghua's U.S. sale price to (1) the weighted AUV of all Chinese glycine entries during the POR that were of the types covered by the antidumping duty order and not clearly aberrational, based on proprietary data in the United States Customs & Border Protection ("CBP") database;³ (2) the weighted AUV of all Chinese imports of glycine during the POR based on public import statistics; and (3) the weighted AUV of U.S. imports of glycine from all countries during the POR based on publicly available U.S. import data. Id. at 11 (citing Preliminary Bona Fides Memo at 2 and attachments 2, 3). In reaching its conclusion as to quantity, Commerce compared New Donghua's U.S. sale quantity to quantities it sold to other markets during the POR and quantities of entries made by other Chinese glycine exporters during the POR. Final Bona Fides Memo at 16. In reaching its conclusion regarding the actions of the U.S. importer, Commerce relied on information provided by New Donghua. Id. at 17-18.

JURISDICTION

New Donghua timely filed a summons challenging Commerce's decision to rescind the new shipper review on August 13, 2004. New Donghua timely filed its complaint on August 26, 2004. The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a) and 28 U.S.C. 1581(c) (2004).

STANDARD OF REVIEW

As with other antidumping duty proceedings, the court reviews Commerce's determinations in new shipper reviews to determine whether 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) (2000); Tianjin Tiancheng Pharm., 366 F.Supp.2d at 1249.

DISCUSSION

New Donghua contends that (1) Commerce lacked the authority to determine whether New Donghua's sales of glycine were bona fide, and (2) even if Commerce possessed such authority, Commerce misapplied its bona fide sale test.

I. COMMERCE HAS STATUTORY AUTHORITY TO CONDUCT A "TOTALITY OF THE CIRCUMSTANCES" BONA FIDE SALE TEST IN THE COURSE OF A NEW SHIPPER REVIEW

New Donghua challenges the bona fide sale test conducted by Commerce as an unreasonable interpretation of the statute. According to New Donghua, Commerce's practice is contrary to Congress' intent because, without any direction from the statute, Commerce wields the bone fide sale test like an anti-fraud test, imposing the maximum antidumping duties on new shippers whose transactions are deemed not bona fide. See Pl.'s Conf. Op. Br. at 17. New Donghua also challenges the...