Jinxiang Hejia Co. v. United States, Court No. 09-00471

• Decision Date: 07 September 2011
• Docket Number: Court No. 09-00471
• Parties: JINXIANG HEJIA CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and FRESH GARLIC PRODUCERS ASSOCIATION, CHRISTOPHER RANCH L.L.C., THE GARLIC COMPANY, VALLEY GARLIC, AND VESSEY AND COMPANY, INC., Defendant-Intervenors.
• Court: U.S. Court of International Trade

JINXIANG HEJIA CO., LTD., Plaintiff, v. UNITED STATES, Defendant and FRESH GARLIC PRODUCERS ASSOCIATION CHRISTOPHER RANCH L.L.C., THE GARLIC COMPANY VALLEY GARLIC, AND VESSEY AND COMPANY, INC., Defendant-Intervenors.

Court No. 09-00471

UNITED STATES COURT OF INTERNATIONAL TRADE

Dated: September 7, 2011

Before: Judith M. Barzilay, Senior Judge

OPINION & ORDER

[The court sustains in part and remands in part the redetermination of the U.S. Department of Commerce.]

deKieffer & Horgan (John J. Kenkel, Gregory J. Menegaz, and J. Kevin Horgan) for Plaintiff

Jinxiang Hejia Co., Ltd.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, Reginald T. Blades, Jr.,

Assistant Director, Richard P. Schroeder, Trial Counsel, Commercial Litigation Branch, Civil

Division, U.S. Department of Justice; George Kivork, Attorney, Office of the Chief Counsel for

Import Administration, U.S. Department of Commerce, for Defendant.Kelley Drye & Warren LLP (Michael J. Coursey and John M. Herrmann), for Defendant-

Intervenors Fresh Garlic Producers Association, Christopher Ranch L.L.C., The Garlic

Company, Valley Garlic, and Vessey and Company, Inc.

Barzilay, Senior Judge:

Plaintiff Jinxiang Hejia Co., Ltd. ("Plaintiff" or "Hejia") contests the remand determination by the U.S. Department of Commerce ("Commerce" or "the Department") concerning a new shipper review for single-clove garlic from the People's Republic of China. See Final Results of Redetermination Pursuant to Court Order, J.A. Tab 8 (Dep't of Commerce Jan. 14, 2011) ("Redetermination"). Plaintiff argues that Commerce's calculation of normal value for the subject merchandise is not supported by substantial evidence. Plaintiff also argues that Commerce unreasonably converted the terms of one of the sales offers on record such that the offer did not reliably serve as surrogate value data and that Commerce relied on an unsupported weighted-average of surrogate value data. The court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c). For the reasons set forth below, the court sustains Commerce's determination with regard to the conversion of the sales offer, but remands for further consideration the particular weighted-average of surrogate value data.

I. Background

In July 2008, Commerce initiated new shipper reviews for six producers and exporters of fresh garlic from the People's Republic of China. See Fresh Garlic from the People's Republic of China, 73 Fed. Reg. 38,979 (Dep't of Commerce July 8, 2008) (initiation of new shipper reviews). Commerce included among these a review of Hejia's one-time sale of single-clove garlic made during the period of review spanning November 1, 2007, to June 9, 2008. Redetermination at 1. Based on information provided by Hejia, the Department determined that single-clove garlic differs significantly from the more common Grade A and Super Grade Amulti-clove garlic exported by the other producers included in the new shipper reviews.¹ New Shipper Review of Fresh Garlic from the People's Republic of China, J.A. Tab 6 at 3 (Dep't of Commerce Apr. 27, 2009) ("Preliminary Analysis Mem."). As a result, Commerce concluded that the factors of production data on record for multi-clove garlic, which Commerce used to calculate a surrogate value for multi-clove garlic from China, would not yield an accurate surrogate value for single-clove garlic. See Fresh Garlic From the People's Republic of China, 74 Fed. Reg. 20,452, 20,457 (Dep't of Commerce May 4, 2009) ("Preliminary Results").

To compensate for this deficiency in the record, Commerce initiated a search for surrogate value data for this distinct variety of garlic and selected India as an appropriate surrogate country. Redetermination at 2; Preliminary Analysis Mem. at 2. Commerce's search yielded limited data regarding the price of single-clove garlic in India. See Redetermination at 20 ("Despite extensive research during the administrative review, . . . we were able to find only limited surrogate value information for single-clove garlic."). In fact, Commerce found only a single price quote² for comparable garlic, posted by the Indian exporter Sundaram Overseas Operations ("SOO"), Redetermination at 2; Preliminary Results, 74 Fed. Reg. at 20,457, for Himalayan pearl garlic, which the Department determined was "physically similar to the productsold by Hejia," Issues and Decision Memorandum for the Final Results of the New Shipper Reviews and Rescission, In Part, of the New Shipper Reviews, J.A. Tab 2 at 17-18 (Dep't of Commerce Sept. 24, 2009) ("Issues and Decision Memorandum"). Originally posted on January 17, 2009, on a third-party website, the SOO offer was for garlic at 20 cents per unit. Preliminary Analysis Mem. Ex. IV. The offer did not, however, specify the unit of sale. See Preliminary Analysis Mem. Ex. IV. On April 20, 2009, an official from the Department sent an email to SOO requesting additional information about its offer and product, seeking in particular to clarify the terms of the offer and obtain additional pricing information for Indian-grown garlic. Preliminary Analysis Mem. Ex. V. Commerce did not receive a reply. Redetermination at 3.

On May 4, 2009, Commerce issued the preliminary results of its administrative review. See Preliminary Results, 74 Fed. Reg. at 20,452. Because no interested party had submitted at that stage any data regarding the value of single-clove garlic, Commerce concluded that the SOO offer was the "best available information" from which to derive normal value. Redetermination at 2-3. It therefore endeavored to convert the terms of the SOO offer to a price per kilogram such that the offer could serve as a surrogate value for single-clove garlic. Redetermination at 3. Additionally, for purposes of the Preliminary Results, the Department assumed that SOO was a trading company, as opposed to a manufacturer, and adjusted the offer price by deducting profit, overhead, and general and administrative expenses. Redetermination at 3. In the Preliminary Results, Commerce found a weighted-average dumping margin for Hejia of 70.38 percent and requested that the parties to the administrative proceedings submit "factual information regarding the appropriate surrogate value to use in calculating [normal value] for Hejia for purposes of the final results of review." Preliminary Results, 74 Fed. Reg. at 20,457-58.

On May 19, 2009, Hejia timely submitted four publicly available sales offers from separate Indian³ suppliers of single-clove garlic to serve as surrogate value information. Redetermination at 3-4. The four offers Hejia submitted price single-clove garlic at $1.15 per kilogram, $1.18 per kilogram, $1.18 per kilogram, and $1.20 per kilogram, respectively. Redetermination at 4, 11. Like the SOO offer Commerce placed on the record, these four sales offers are not contemporaneous with the period of review. Issues and Decision Memorandum at 18. The website on which three of the offers were posted labeled the offers as "New Arrivals" at the time of submission, while the fourth offer explicitly lists its posting date as May 18, 2009. Redetermination at 4. The four offers were also for Himalayan pearl garlic. Issues and Decision Memorandum at 18.

On October 2, 2009, Commerce issued its final results for the new shipper review. See Fresh Garlic from the People's Republic of China, 74 Fed. Reg. 50,952 (Dep't of Commerce Oct. 2, 2009) ("Final Results"). In the Final Results, Commerce amended its previous determination regarding the level of trade at which SOO operates based on a description of SOO on the company's website. Issues and Decision Memorandum at 9. Commerce concluded that SOO was a manufacturer and exporter of garlic, as opposed to a trading company, and determined that it would be inappropriate to deduct profit, overhead, and general and administrative expenses from the offer price. Issues and Decision Memorandum at 19. Forreasons not discussed in the Issues and Decision Memorandum, Commerce resolved to treat the four offers as a single source of surrogate value data, as opposed to four sources, and determined that this single source and the SOO offer "are equally usable and equally represent the best available information on the record." Issues and Decision Memorandum at 18-19. In calculating normal value, therefore, Commerce took the simple average of (1) the SOO sales offer and (2) a simple average of the four sales offers Hejia placed on the record.⁴ Issues and Decision Memorandum at 19. This calculation resulted in a revised weighted-average dumping margin of 15.37 percent. Final Results, 74 Fed. Reg. at 50,954.

Commerce also concluded in the Final Results that Hejia's one-time sale was a bona fide commercial transaction. Id. at 50,953-54. In defending the relatively high price of its sale, Hejia argued that prices for single-clove garlic are significantly higher than those for multi-clove garlic. See Redetermination at 11; Issues and Decision Memorandum at 5. To support its argument, Plaintiff placed on the record sales offers of single-clove garlic to Germany, Great Britain, and Japan, all for single-clove garlic at prices significantly higher than the multi-clove variety. See Redetermination at 11. Thus, the Department rejected the contention by Defendant-Intervenors Fresh Garlic Producers Association, Christopher Ranch L.L.C., The Garlic Company, Valley Garlic, and Vessey and Company, Inc. that Hejia's sale was not reflective of future sales and determined that the agency "[did] not have a basis for concluding that [Hejia's] price is aberrationally high for single-clove garlic in the United States." Issues and Decision Memorandum at 5.

Plaintiff subsequently filed in this court a complaint and motion pursuant to Rule 56.2 challenging Commerce's determination in the Final Results. Responding to Plaintiff's motion, Commerce conceded that it did not adequately explain its surrogate value determination in the Issues and Decision...