Inner Mong. Jianlong Biochemical Co., Ltd. v. United States

• Decision Date: 21 December 2017
• Docket Number: Slip Op. 17–170,Court No. 16–00187
• Citation: 279 F.Supp.3d 1332
• Parties: INNER MONGOLIA JIANLONG BIOCHEMICAL CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and CP Kelco US, Inc., Defendant–Intervenor.
• Court: U.S. Court of International Trade

279 F.Supp.3d 1332

INNER MONGOLIA JIANLONG BIOCHEMICAL CO., LTD., Plaintiff,

v. UNITED STATES, Defendant,andCP Kelco US, Inc., Defendant–Intervenor.

Slip Op. 17–170

Court No. 16–00187

United States Court of International Trade.

December 21, 2017

Robert G. Gosselink, Jonathan M. Freed, Jarrod M. Goldfeder, Trade Pacific PLLC, of Washington, D.C., for plaintiff.

Kelly A. Krystyniak, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and L. Misha Preheim, Assistant Director. Of counsel on the brief was Catherine D. Miller, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Nancy A. Noonan, Matthew L. Kanna, Friederike S. Goergens, Arent Fox LLP, of Washington, D.C., for defendant-intervenor.

Before: Richard W. Goldberg, Senior Judge

OPINION AND ORDER

Richard W. Goldberg, Senior JudgeGoldberg, Senior Judge: Plaintiff Inner Mongolia Jianlong Biochemical Co., Ltd. ("Jianlong") appeals, Mot. for J. on Agency R., ECF No. 33, from the decision of the U.S. Department of Commerce ("Commerce" or "the Department") to rescind its antidumping duty new shipper review ("NSR"). Xanthan Gum from the People's Republic of China , 81 Fed. Reg. 56,586 (Dep't of Commerce Aug. 22, 2016) (rescission of NSR) (" Rescission ") and accompanying Issues & Decision Mem. ("I&D Mem."). In particular, Jianlong challenges Commerce's determinations that: A) Jianlong's NSR request did not comply with Commerce's regulations and B) Jianlong's reported sale was non-bona fide . Because Commerce's reasoning as to both is unsupported in the record, the court grants Jianlong's motion and remands the proceedings to Commerce.

BACKGROUND

On June 4, 2013, Commerce entered an antidumping duty order on xanthan gum from China at a rate of 154.07%. Xanthan Gum from the People's Republic of China , 78 Fed. Reg. 33,351 (Dep't of Commerce June 4, 2013) (final determ.), amended by Xanthan Gum from the People's Republic of China , 78 Fed. Reg. 43,143 (Dep't of Commerce July 19, 2013) (am. final determ.). Jianlong, a Chinese shipper of xanthan gum, thereafter provided free samples to [[ ]] in three different intervals: three samples totaling [[ ]] for quality assurance purposes in January 2014; [[ ]] [[ ]] took while conducting a plant audit at Jianlong's facilities in March 2014; and, finally, samples of [[ ]] in June 2015. Section C & D Resp., Joint Appendix, ECF No. 51 ("J.A.") Tab 5 at I–3–4; Third Suppl. Section D Questionnaire Resp., J.A. Tab 8 at SuppD3–6, Ex. SD3–4. Near the end of that time period, Jianlong established a U.S. entity, Jianlong USA Corporation ("Jianlong USA"), and from May 29 to June 2 Jianlong, through Jianlong USA, negotiated a sale of xanthan gum to [[ ]]. J.A. Tab 5 at I–4. Per the terms of that sale, on June 30, 2015, Jianlong delivered [[ ]] of xanthan gum to [[ ]] at a rate of roughly [[ ]], for a total price of [[ ]]. Req. for NSR, J.A. Tab 1, Ex. 1 (June 26, 2015 Invoice); Section A Questionnaire Resp., J.A. Tab 4, Ex. A–5 (Purchase Order); see also Prelim. Bona Fide Sales Analysis, J.A. Tab 10 at 4.

On July 31, 2015, Jianlong requested a NSR, identifying its June 30, 2015 shipment as its only entry for consumption under 19 C.F.R. § 351.214(b)(2)(iv)(A). J.A. Tab 1, ¶ 5 ("Documentation in Exhibit 1 establishes the date on which subject merchandise produced and exported by Jianlong, was first entered, or withdrawn from warehouse, for consumption in the United States (i.e. , the ‘import date’)."), Ex. 1. Commerce then initiated the NSR on August 27, 2015. Xanthan Gum from the People's Republic of China , 80 Fed. Reg. 52,031 (Dep't of Commerce Aug. 27, 2015) (initiation of NSR). In an initial and then supplemental response to questionnaires from Commerce, Jianlong explained that it had earlier "provided" samples to [[ ]] and [[ ]] also "took" others during its audit of Jianlong's plant. J.A. Tab 5 at I–3–4; J.A. Tab 8 at SuppD3–6. Jianlong stated that "no consideration [was] given for any of the samples." J.A. Tab 8 at SuppD3–6.

On March 22, 2016, Commerce preliminarily determined that: A) Jianlong had failed to report certain entries of subject merchandise and B) Jianlong's one sale was non-bona fide under a "totality of the circumstances" test. Xanthan Gum from the People's Republic of China , 81 Fed. Reg. 15,240 (Dep't of Commerce Mar. 22, 2016) (prelim. rescission of NSR). Ultimately, in its final Rescission , Commerce adopted these findings. In sum, Commerce concluded that Jianlong's omission of sample shipments proved fatal in its meeting the regulatory requirements imposed by 19 C.F.R. § 351.214(b)(2)(iv)(A). I&D Mem. 4. Additionally, Commerce rejected rebutting and clarifying information from Jianlong and also found that Jianlong's sale to [[ ]] was atypical, and thus non-bona fide , because of the timing of the sale, the establishment of Jianlong USA, and the sales price. Id. at 9–14.

On appeal, Jianlong challenges multiple aspects of Commerce's Rescission . Primarily, Jianlong disputes the "totality of the circumstances" test as conducted by Commerce as well as the Department's determination that 19 C.F.R. § 351.214(b)(2)(iv)(A) required Jianlong to identify its sample shipments in its NSR request. Relatedly, Jianlong contends that its submission of factual information was improperly rejected by Commerce as untimely filed.

JURISDICTION AND STANDARD OF REVIEW

This court's jurisdiction rests in 28 U.S.C. § 1581(c). Commerce's decisions will be sustained 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). In reviewing those decisions, this court examines the entire record, including that which detracts from the ultimate decision, to determine whether the record evidence and any reasonable inferences therefrom are sufficient to support Commerce's conclusions. See Nippon Steel Corp. v. United States , 337 F.3d 1373, 1379 (Fed. Cir. 2003) (citation omitted); Daewoo Elecs. Co. v. Int'l Union of Elec., Elec., Tech., Salaried & Mach. Workers , 6 F.3d 1511, 1520 (Fed. Cir. 1993) (citation omitted).

DISCUSSION

This dispute presents two discrete questions for consideration. First, whether Commerce acted arbitrarily in rescinding Jianlong's NSR due to a purported failure to meet the regulatory requirements under 19 C.F.R. § 351.214(b)(2)(iv)(A). Second, whether substantial evidence supports Commerce's decision that Jianlong's sale was non-bona fide . The court remands to Commerce for further consideration of both issues.

a. Legal Framework

Congress has charged Commerce with reviewing shipments of goods that are subject to antidumping orders for the purposes of determining the price margin for antidumping duties. 19 U.S.C. § 1675(a). New shippers otherwise subject to these antidumping orders have an opportunity to obtain a new dumping margin calculation by requesting a NSR. 19 U.S.C. § 1675(a)(2)(B)(i). The new shipper must establish that it: A) has not previously exported merchandise that was subject to an antidumping duty order to the U.S. during the period of investigation and B) is not "affiliated ... with any exporter or producer who exported the subject merchandise to the United States ... during that period ...." 19 U.S.C. § 1675(a)(2)(B)(i)(I)–(II). If the new shipper meets both of those requirements, Commerce will "conduct a review ... to establish an individual weighted average dumping margin ...." 19 U.S.C. § 1675(a)(2)(B)(i). An exporter must initiate the review within a year of the first entry of the subject merchandise, 19 C.F.R. § 351.214(c), and the request must include, among other information:

A) [t]he date on which subject merchandise of the exporter or producer making the request was first entered, or withdrawn from warehouse, for consumption, or, if the exporter or producer cannot establish the date of first entry, the date on which the exporter or producer first shipped the subject merchandise for export to the United States; B) [t]he volume of that and subsequent shipments; and C) [t]he date of the first sale to an unaffiliated customer in the United States ....

19 C.F.R. § 351.214(b)(2)(iv)(A)–(C).

Once Commerce has established that a new shipper has met the regulatory requirements for requesting a NSR, it calculates a dumping margin "based solely on the bona fide United States sales ... made during the period covered by the review." 19 U.S.C. § 1675(a)(2)(B)(iv). In the absence of an "entry and sale to an unaffiliated customer," Commerce may rescind the NSR. 19 C.F.R. § 351.214(f)(2)(i). Individual transactions may be characterized as non-bona fide if they are found to be, in light of all the circumstances, "unrepresentative or extremely distortive." See, e.g. , Tianjin Tiancheng Pharm. Co. v. United States , 29 CIT 256, 259, 366 F.Supp.2d 1246, 1249 (2005) (citation omitted). If Commerce excludes all scrutinized sales as non-bona fide , the Department "necessarily must end the review, as no data will remain on the export price side of Commerce's antidumping duty calculation." Id.

b. Commerce's Determination that Jianlong Had Failed to Meet the Regulatory Requirements for Requesting a NSR

This court's standard of review demands that Commerce support its rescission of Jianlong's NSR with a well-reasoned decision, sufficiently explaining why the agency determined that Jianlong's NSR request did not comply with the Department's regulations. See Atar S.R.L. v. United States , 730 F.3d 1320, 1325 (Fed. Cir. 2013) (quoting Wheatland Tube Co. v. United States , 161 F.3d 1365, 1369 (Fed. Cir. 1998) ). As part of its review under 19 U.S.C. § 1516a(b)(1)(B)(i), the court must "first ask whether Commerce articulated an adequate[, non-arbitrary] reason for" requiring Jianlong to report its sample...