Jiangsu Changbao Steel Tube Co. v. United States

• Decision Date: 14 November 2012
• Citation: 884 F.Supp.2d 1295
• Parties: JIANGSU CHANGBAO STEEL TUBE CO., LTD. and Jiangsu Changbao Precision Tube Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant, and TMK IPSCO et al., Defendant–Intervenors.
• Court: U.S. Court of International Trade

884 F.Supp.2d 1295

JIANGSU CHANGBAO STEEL TUBE CO., LTD. and Jiangsu Changbao Precision Tube Co., Ltd., Plaintiffs,

v.UNITED STATES, Defendant,andTMK IPSCO et al., Defendant–Intervenors.

United States Court of

International Trade.

Slip Op. 12–135.

Court No. 10–00180.

Nov. 14, 2012.

William Silverman, Douglas J. Heffner and Richard P. Ferrin, Drinker Biddle & Reath LLP, of Washington, DC, for Plaintiffs Jiangsu Changbao Steel Tube Co., Ltd. and Jiangsu Changbao Precision Tube Co., Ltd.

L. Misha Preheim and Marcella Powell, Trial Attorneys, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, and New York, NY, for Defendant. With them on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Jonathan M. Zielinski, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Roger B. Schagrin, Michael J. Brown and John W. Bohn, Schagrin Associates, of Washington, DC, for Defendant–Intervenors TMK IPSCO, V & M Star L.P., Wheatland Tube Corporation, Evraz Rocky Mountain Steel and United Steel Workers.

Robert E. Lighthizer, Jeffrey D. Gerrish and Soo–Mi Rhee, Skadden, Arps, Slate, Meagher & Flom LLP, of Washington, DC, for Defendant–Intervenor United States Steel Corporation.

Alan H. Price, Tessa Capeloto and Maureen E. Thorson, Wiley Rein LLP, of Washington, DC, for Defendant–Intervenor Maverick Tube Corporation.

OPINION

POGUE, Chief Judge:

In this action, Plaintiffs seek review of certain determinations made by the United States Department of Commerce (“Commerce”) during an antidumping investigation of oil country tubular goods (“OCTG” or “subject merchandise”) from the People's Republic of China (“China” or “PRC”).¹ Currently before the court is Plaintiffs' Jiangsu Changbao Steel Tube Co., Ltd. and Jiangsu Changbao Precision Tube Co., Ltd. (collectively “Changbao”) motion pursuant to USCIT Rule 56.2 for judgment on the agency record. Specifically, Plaintiffs challenge Commerce's decision to apply to Changbao the antidumping duty cash deposit rate that was calculated for the China-wide entity, rather than assigning to Changbao a separate rate based at least in part on information it submitted. See Mem. Supp. Pls.' Mot. for J. on Agency R. under Rule 56.2, ECF No. 63 (“Pls.' Br.”).² The court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2006),³ and 28 U.S.C. § 1581(c) (2006).

As explained below, Commerce reasonably determined to disregard Changbao's separate rate application as unreliable. Commerce reached this determination based on findings that neither Changbao nor its computer accounting software could be relied upon to furnish truthful and accurate information. These findings reflected Changbao's eleventh-hour revelation that it maintained two contradictory sets of certain records and concealed this fact when Commerce examined Changbao's accounting software. Because these findings are supported by a reasonable reading of the record, the court sustains Commerce's Final Determination.

BACKGROUND

When investigating imports from China, Commerce employs a methodology specific to non-market economies (“Commerce's NME methodology”). Transcom, Inc. v. United States, 294 F.3d 1371, 1373 (Fed.Cir.2002). One aspect of Commerce's NME methodology is that exporters are presumed to operate under government control (the “presumption of government control”) and must submit reliable evidence to the contrary in order to receive an antidumping duty rate that is separate from the countrywide entity (“separate rate status”). Id. (citing Sigma Corp. v. United States, 117 F.3d 1401 (Fed.Cir.1997)). Here Plaintiffs are challenging Commerce's decision to disregard as unreliable the totality of Changbao's submissions in this investigation, including in particular submissions in support of Changbao's application for separate rate status. See Pls.' Br.; Final Determination, 75 Fed.Reg. at 20,339.

Commerce's unreliability determinations with regard to Changbao were based on the discovery that Changbao had willfully deceived Commerce when submitting its factors of production data.⁴ Changbao had initially reported using both alloy and non-alloy steel billets to produce the subject merchandise, ⁵ but subsequently recanted these submissions, contending that, during the period of investigation (“POI”), Changbao used alloy billets exclusively. Changbao Mem. at 3 (citing Changbao's Pre–Preliminary Cmts., A–570–943, POI 08–09 (Oct. 28, 2009), Admin. R. Con. Doc. 143 [Pub. Doc. 306], at 2 n. 2). Preliminarily accepting Changbao's separate rate application, Commerce responded to Changbao's FOP submission by tentatively valuing Changbao's billets exclusively as alloy billets, but noted that it “intend[ed] to pursue this issue at verification”.⁶

During verification, Changbao provided Commerce with certain mill test certificates (“MTCs”) to support the chemical composition that Changbao claimed for its billets, and Commerce compared these hardcopy MTCs to the versions maintained in Changbao's computer accounting system.⁷ When questioned regarding apparent discrepancies between the MTCs provided to Commerce during verification and documents accompanying U.S. entries of Changbao's subject merchandise during the POI, Changbao denied having any relevant knowledge beyond the fact that Changbao's customers, not Changbao, generally complete entry documents. Changbao Mem. at 4 (citing Changbao Verif. Rep. at 29).

After verification, however, Defendant–Intervenors TMK IPSCO, V & M Star L.P., Wheatland Tube Corp., Evraz Rocky Mountain Steel, and the United Steel Workers (“Petitioners”) sought “to rebut the authenticity of the MTCs placed on the record by Changbao and statements made by Changbao officials during the verification.” Changbao Mem. at 4 (citing Rebuttal Cmts. Re Changbao Verif. Rep., A–570–943, POI 08–09 (Feb. 22, 2010), Admin. R. Con. Doc. 183 [ Pub. Doc. 390] (“ Pet'rs' Cmts. Re Changbao Verif.”)). Petitioners' submission included an MTC that TMK claimed accompanied OCTG produced by Changbao and imported into the United States. Id. This MTC was issued for OCTG imported shortly before the POI and corresponded to a steel grade reviewed at Changbao's verification (grade “K55”), but, unlike the MTCs provided by Changbao to Commerce during verification, this MTC “did not contain the requisite levels of manganese, vanadium, or boron to qualify the OCTG as alloy steel.” Id.; see Pet'rs' Cmts. Re Changbao Verif. at 2. In addition to this MTC, Petitioners' submission also included an affidavit affirming that the OCTG in question was analyzed and that it was determined that this OCTG was non-alloy steel. Id. Petitioners therefore asserted that Changbao's representations to Commerce to the contrary were fraudulent. Id.

Changbao responded to Petitioners' allegations of fraud by submitting “all grade K55 OCTG laboratory test reports corresponding to all customers, in all markets for the [POI],” contending that, contrary to the MTC submitted by the Petitioners, all of Changbao's K55 OCTG during this period contained the requisite levels of boron to qualify the OCTG as alloy steel. Id. at 4–5 (citing Exs. 1 and 2 to Changbao's Rebuttal to Pet'rs' Feb. 22, 2010 Cmts., A–570–943, POI 08–09 (Mar. 4, 2010), Admin. R. Con. Doc. 192 [Pub. Doc. 414] ).

Seeking clarification, Commerce requested from U.S. Customs and Border Protection (“Customs”), and placed on the record, certain data pertaining to imports of Changbao's subject merchandise during the POI, including “MTCs for three of Changbao's sales of subject merchandise during the POI.” Changbao Mem. at 5; see Release of [Customs] Information, A–570–943, POI 08–09 (Mar. 9, 2010), Admin. R. Con. Doc. 199 [Pub. Doc. 422] (“ Customs Data ”). One of the MTCs that Commerce received from Customs corresponded to a U.S. sale that Commerce had reviewed during Changbao's verification. Changbao Mem. at 5. With regard to this sale, a comparison of the MTC received from Customs and the MTC provided by Changbao “demonstrated discrepancies between the two MTCs.” Id. (citing Ex. 8 to Changbao Verif. Rep.); see also Customs Data. Specifically, the MTC received from Customs indicated that the imported OCTG was produced from non-alloy steel, not alloy steel as Changbao had reported to Commerce. Id.⁸ In addition, the remaining two MTCs received from Customs for Changbao's sales of subject merchandise during the POI also indicated use of non-alloy steel. Id.

Responding to Commerce's release of this new information from Customs, Changbao admitted that, contrary to its representations during verification, Changbao was in fact aware of material discrepancies between the MTCs submitted to Commerce and those accompanying Changbao's subject entries, and Changbao also knew how these discrepancies were created. See Changbao's Cmts. on [Customs] Data, A–570–943, POI 08–09 (Mar. 11, 2010), Admin. R. Con. Doc. 203 [Pub. Doc. 429] (“ Changbao's Mar. 11 Cmts.”).⁹ Counsel for Changbao argued that “[t]hough [Changbao's] practice [in this regard] is regrettable, it does not contradict [Commerce]'s verification findings regarding the [composition] of Changbao's billets.” Id. at 6. Changbao also suggested that the issue of Changbao's actual billet composition be resolved by Commerce conducting its own independent and party-neutral analysis of Changbao's OCTG. See id. at 7.

Commerce disagreed, finding instead that the nature and timing of Changbao's admission implicated the overall credibility of Changbao officials, as well as the reliability of Changbao's computer accounting software, which had corroborated Changbao's material misrepresentations during verification. See Changbao Mem. at 11–12. Commerce found Changbao's explanation—referring to a concern for...