Jindal Poly Films Ltd. v. United States

• Decision Date: 22 April 2020
• Docket Number: Slip Op. 20-54,Court No. 19-00050
• Parties: JINDAL POLY FILMS LIMITED OF INDIA, Plaintiff, v. UNITED STATES, Defendant, and DuPont Teijin Films et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

439 F.Supp.3d 1354

JINDAL POLY FILMS LIMITED OF INDIA, Plaintiff,

v.UNITED STATES, Defendant,andDuPont Teijin Films et al., Defendant-Intervenors.

Slip Op. 20-54

Court No. 19-00050

United States Court of International Trade.

April 22, 2020

Lizbeth R. Levinson, Ronald M. Wisla, and Brittney R. Powell, Fox Rothschild LLP, of Washington, D.C., for plaintiff Jindal Poly Films Limited of India.

Joseph H. Hunt, Assistant Attorney General, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of Washington, D.C., for defendant. With him on the brief were Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, and Sonia M. Orfield, Trial Attorney. Of counsel on the brief was Michele D. Lynch, Assistant Chief Counsel, Office of the Chief Counsel for Enforcement and Compliance, U.S. Department of Commerce.

Patrick J. McLain, Sarah S. Sprinkle, and Stephanie E. Hartmann, Wilmer, Cutler, Pickering, Hale and Dorr, LLP, of Washington, D.C., for defendant-intervenors DuPont Teijin Films, Mitsubishi Polyester Film, Inc. and SKC, Inc.

OPINION AND ORDER

Kelly, Judge:

This action is before the court on motion for judgment on the agency record. See Pl.’s 56.2 Mot. J. Agency Rec., Oct. 1, 2019, ECF No. 38. Plaintiff Jindal Poly Films Limited of India ("Jindal"), a foreign producer and exporter of polyethylene terephthalate ("PET") film, sheet, and strip, challenge various aspects of the U.S. Department of Commerce's ("Department" or "Commerce") final determination in its administrative review of the countervailing duty ("CVD") order on PET film, covering the period of review January 1, 2016 to December 31, 2016 ("POR"). See [PET] Film, Sheet, and Strip from India, 84 Fed. Reg. 10,789 (Dep't Commerce Mar. 22, 2019) (final results of [CVD] admin. review; 2016) ("Final Results"), and accompanying Issues and Decision Memo. for the [Final Results], C-533-825, (Mar. 19, 2019), ECF No. 26-5.

Jindal challenges four aspects of Commerce's determination as unsupported by substantial evidence and not in accordance with law. See Pl.’s Memo. of Points and Authorities Supp. Pl.’s 56.2 Mot. J. Agency Rec. at 2, Oct. 1, 2019, ECF No. 38-2 ("Pl.’s Br."). First, Jindal contends that Commerce erroneously included benefits received on both subject and non-subject merchandise in its calculation of countervailable benefits under the Government of India's ("GOI") Merchandise Exports from India Scheme ("MEIS"). Id. at 2, 6–8. Second, Jindal argues that Commerce failed to determine whether the State Government of Maharashtra's ("SGOM") Package Scheme of Incentives ("PSI") constitutes a subsidy to a disadvantaged region. Id. at 2, 8–13. Third, Jindal alleges that Commerce should not have determined that certain capital investment deductions, under subsection 32AC(1A) of Section 32 Capital Investment Deductions of India's Income Tax Act of 1961 ("Subsection 32AC program"), were specific based on adverse facts available, when Jindal had provided sufficient information during the review to demonstrate that the deduction is not specific. Id. at 2, 13–17. Fourth, Jindal avers that because it had purchased goods from suppliers exempt from the requirement of collecting taxes under state laws ("state tax incentive programs"), Commerce erred in determining that these programs provided a benefit to Jindal. Id. at 2, 17–18. For the reasons set forth below, the court sustains Commerce's Final Results in its entirety.

BACKGROUND

On September 13, 2017, Commerce initiated an administrative review of the CVD order on PET film from India. See Initiation of Antidumping and [CVD] Admin. Reviews, 82 Fed. Reg. 42,974, 42,982 (Dep't Commerce Sept. 13, 2017). Subsequently, on August 10, 2018, Commerce issued the preliminary results of its administrative review. See [PET] Film, Sheet and Strip from India, 83 Fed. Reg. 39,677 (Dep't Commerce Aug. 10, 2018) (prelim. results and partial rescission of [CVD] admin. review) ("Prelim. Results"), and accompanying Decision Memo. for the [Prelim. Results], PD 93, bar code 3739891-02 (Aug. 3, 2018) ("Prelim. Decision Memo.").¹

Relevant here, in the preliminary results, Commerce determined that three programs of the GOI—the MEIS, PSI, and state sales tax programs—provided countervailable subsidies. Prelim. Decision Memo. at 20, 24–27. With respect to the MEIS program, in which the GOI issues a duty scrip to exporters to be applied to the payment of future customs duties or transferred to another company, Commerce calculated Jindal's rate by dividing benefits received by total export sales during the POR. Id. at 6, 20. Commerce also preliminarily countervailed the PSI program that provides incentives to encourage economic development within the State of Maharashtra, id. at 24, as well as state tax incentive programs, which allow selected industries in certain regions to sell goods without charging or collecting sales taxes, id. at 26–27. However, Commerce required further information to determine whether the Subsection 32AC program was countervailable. Id. at 28.

On February 25, 2019, Commerce issued a post-preliminary analysis memorandum, where it found that the GOI had withheld requested information concerning, inter alia, the Subsection 32AC program and, as a result, applied adverse facts available ("AFA")² to determine de facto specificity. See Post-Prelim. Analysis Memo. at 3–6, 9–10, PD 136, bar code 3797273-01 (Feb. 25, 2019).

JURISDICTION AND STANDARD OF REVIEW

The court exercises jurisdiction pursuant to section 516A of the Tariff Act of 1930, 19 U.S.C. § 1516a (2012),³ and 28 U.S.C. § 1581(c) (2012), which grant the Court authority to review final determinations in a CVD administrative review. "The court shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Commerce's Calculation of Benefit Under the MEIS Program

Jindal alleges that Commerce erroneously calculated benefit from the MEIS program based on benefits received on sales of both subject and non-subject merchandise. Pl.’s Br. at 6–8; see also Pl.’s Reply Br. at 6–7, Jan. 17, 2020, ECF No. 45 ("Pl.’s Reply Br."). Instead, according to Jindal, Commerce should have calculated benefits received only in connection with subject merchandise. Pl.’s Br. at 7–8. Defendant and Defendant-Intervenors counter that Commerce's reasonably calculated benefit, because benefits under the MEIS program were not tied to subject merchandise. Def.’s Br. at 7–9; Def.-Intervenors’ Br. at 5–6. For the reasons that follow, Commerce's reasonably calculated benefit under the MEIS program.

Generally, Commerce's subsidy attribution depends upon the type of subsidy and whether it is tied to a particular market or product. 19 C.F.R. § 351.525 (2018). However, if a firm produces more than one product, Commerce will attribute the subsidy only to sales of a particular product if the subsidy is tied to the production or sale of only that product. See id. at § 351.525(b)(5).⁴ Neither the statute nor Commerce's regulation defines when a subsidy is tied to the production or sale of a particular product. See 19 U.S.C. § 1677(5)(E)(iv) ; 19 C.F.R. §§ 351.525(b)(2), (b)(5). Commerce, as a matter of practice, determines whether a subsidy is tied by evaluating the purpose of the subsidy based on information available at the time of bestowal; Commerce does not trace how the subsidy is actually used by recipients. See Final Decision Memo. at 19; see also Large Residential Washers From the Republic of Korea, 77 Fed. Reg. 75,975 (Dep't Commerce Dec. 26, 2012) (final affirmative [CVD] determination), and accompanying Issues and Decision Memo. for the Final Determination in the [CVD] Investigation of Large Residential Washers from the Republic of Korea at 41, C-580-869, (Dec. 18, 2012), available at https://enforcement.trade.gov/frn/summary/korea-south/2012-31078-1.pdf (last visited Apr. 14, 2020).

Here, Commerce reasonably attributes the amount of benefit from the MEIS program to all of Jindal's export sales of subject and non-subject merchandise. Under the MEIS program, the GOI issues a duty scrip, or credit, to licensed exporters that can be applied to the payment of future customs duties or transferred to another company. See Prelim. Decision Memo. at 18. Because the actual scrip amount, i.e., the amount of benefit, is not known until export sales are made,⁵ Commerce considers the date that the GOI issued the MEIS license to be the date of bestowal. See Prelim. Decision Memo. at 20; Final Decision Memo. at 19; see also Countervailing Duties, 63 Fed. Reg. 65,348, 65,403 (Dep't Commerce Nov. 25, 1998) (explanation of final rules). The MEIS license does not restrict the merchandise to which an exporter could apply the scrip. See Final Decision Memo. at 19. Therefore, at the point of bestowal, the amount foregone by the GOI was the value of the MEIS license, regardless of the fact that the license was later used for subject and non-subject merchandise. Id. Even though Jindal could identify which scrips were used for export sales of subject merchandise, see Jindal Poly Initial Questionnaire Resp. at Exs. 91–92, CD 48–49, bar codes 3660266-40–41 (Jan. 10, 2018), and of non-subject merchandise, see Jindal Poly Second Supp. Questionnaire Resp. at Exs. 115–116, CD 82, bar code 3735042-01 (July 25, 2018), Commerce's practice is not to post hoc "trace the use of subsidies" through records. See Countervailing Duties, 63 Fed. Reg. at 65,403 ; cf. Royal Thai Gov't v. United States, 30 C.I.T. 1072, 1085, 441 F. Supp. 2d 1350, 1363–64 (2006). Therefore, Commerce did not err in determining that the GOI provided a subsidy not tied to the production or sale of a particular product and reasonably calculated Jindal's CVD rate based on benefits received for both subject and non-subject merchandise.

II. Commerce's Application of AFA to Determine De Facto...