Jinxiang Yuanxin Import & Export Co. v. United States

• Decision Date: 18 June 2013
• Docket Number: Court No. 11-00145,Slip Op. 13-77
• Court: U.S. Court of International Trade
• Parties: JINXIANG YUANXIN IMPORT & EXPORT 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.

JINXIANG YUANXIN IMPORT & EXPORT 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.

Slip Op. 13-77 Court No. 11-00145

UNITED STATES COURT OF INTERNATIONAL TRADE

Dated: June 18, 2013

Before: Richard K. Eaton, Judge

Public Version

OPINION and ORDER

[Plaintiff's motion for judgment on the agency record is granted, in part, and the Department of Commerce's final determination rescinding plaintiff's new shipper review is remanded.]

John J. Kenkel, deKieffer & Horgan, of Washington, D.C., argued for plaintiff. With him on the brief were Gregory S. Menegaz and J. Kevin Horgan.

Melissa M. Devine, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, D.C., argued for defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was George H. Kivork, Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, D.C.

John M. Herrmann, Kelley Drye & Warren, LLP, of Washington, D.C., argued for defendant-intervenors. With him on the brief was Michael J. Coursey.

Eaton, Judge: Before the court is the motion for judgment on the agency record, pursuant to USCIT Rule 56.2, of plaintiff Jinxiang Yuanxin Import & Export Co. ("plaintiff" or "Yuanxin"), an exporter of fresh, whole garlic from the People's Republic of China ("PRC"). By its motion, Yuanxin challenges the Department of Commerce's ("Commerce" or the "Department") rescission of its new shipper review under the antidumping duty order on fresh garlic from the PRC, after finding that Yuanxin's sole U.S. export was not a bona fide sale. See Garlic From the PRC, 76 Fed. Reg. 19,322 (Dep't of Commerce Apr. 7, 2011) (rescission of antidumping duty new shipper reviews) ("Rescission"), and the accompanying Final Bona Fides Memorandum (Dep't of Commerce Mar. 31, 2011) ("Bona Fides Mem."); Fresh Garlic from the PRC, 59 Fed. Reg. 59,209 (Dep't of Commerce Nov. 16, 1994) (antidumping duty order) ("Order"). The period of review ("POR") was November 1, 2008 through October 31, 2009.

Yuanxin claims that "Commerce unlawfully rescinded the new-shipper review . . . [and that the] Department's determination with respect to the issue of whether Yuanxin's sale was bona fide was not supported by substantial evidence on the record and was otherwise contrary to law." Pl.'s Mem. in Supp. of Mot. for J. on the Agency R. 1 (ECF Dkt. No. 34) ("Pl.'s Br"). Defendant United States ("defendant"), on behalf of Commerce, urges that the determination be sustained. Def.'s Mem. in Opp. to Pl.'s Mot. for J. on the Agency R. 1 (ECF Dkt. No. 49) ("Def.'s Mem."). Defendant-intervenors, the Fresh Garlic Producers Association and its individual members (Christopher Ranch, L.L.C., The Garlic Company, Valley Garlic, and Vessey and Company, Inc.) ("defendant-intervenors"), argue that plaintiff's contentions are without merit, and that the court should sustain the determination in its entirety. Def.-Ints.' Resp. in Opp. to Pl.'s Mot. for J. on the Agency R. 1 (ECF Dkt. No. 56) ("Def.-Ints.' Resp.").The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006) and 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006).

For the reasons set forth below, plaintiff's motion is granted, in part, and defendant's Rescission of Yuanxin's new shipper review is remanded.

BACKGROUND

In 1994, Commerce issued an antidumping duty order on imports of fresh garlic from the PRC. Order, 59 Fed. Reg. at 59,209. Because Yuanxin, a new exporter, did not participate in the underlying antidumping investigation or in any prior administrative review, it is subject to the PRC-wide antidumping duty rate unless it can secure an individual rate through a new shipper review.

Yuanxin is a processor and exporter of garlic from the PRC that made one sale of single-clove¹ whole garlic into the United States during the POR.² Bona Fides Mem. at 4. Yuanxin sold its merchandise through a U.S. reseller³ ("the Reseller") that had not formerly purchased garlic. Def.'s Mem. 3. The Reseller did not purchase any other garlic during or subsequent to the POR. Def.'s Mem. 4. The Reseller immediately transferred the garlic to a U.S. wholesaler⁴ ("the wholesaler") that had previously purchased single-clove garlic from another exporter during the preceding period of review. Bona Fides Mem. at 8.

In November 2009, Commerce received a timely request for a new shipper review from Yuanxin. See Fresh Garlic from The PRC (Nov. 25, 2009) (request for new shipper review) (P.R. Doc. 2; C.R. Doc. 2). On January 5, 2010, the Department initiated new shipper reviews for three exporters of fresh garlic from the PRC, including Yuanxin. Fresh Garlic From the PRC, 75 Fed. Reg. 343-44 (Dep't of Commerce Jan. 5, 2010) (initiation of new shipper reviews).

On November 12, 2010, Commerce issued its Preliminary Results, finding that it did not have a basis to conclude that Yuanxin's sale was not bona fide, and setting the company's dumping margin at $0.75 per kilogram. Fresh Garlic From the PRC, 75 Fed. Reg. 69,415, 69,417, 69,422 (Dep't of Commerce Nov. 12, 2010) (preliminary results of new shipper reviews and preliminary rescission, in part) ("Prelim. Results"), and accompanying Preliminary Bona Fides Analysis Mem. at 5. ("Prelim. Bona Fides Mem."). Also, in the Preliminary Results, however, "Commerce expressed its concern . . . that the [average unit value ("AUV")] of Yuanxin's sale was the [[ ]] AUV out of the [[ ]] Chinese entries," and that "Yuanxin's sale quantity was [[ ]] percent [[ ]] than the average quantity of all such entries." Def.'s Mem. 5. The Department "also expressed concern as to" the unusual nature of the Reseller's sale to the Wholesaler. Def.'s Mem. 5. Commerce therefore concluded that "given the concerns regarding the price, quantity, and atypicality of the product and transaction, we plan to continue to examine all factors relating to the bona fide nature of Yuanxin's sale throughout the remainder of this [new shipper review]." Prelim. Bona Fides Mem. at 6.

After the Preliminary Results were issued, the Department sent a supplemental questionnaire to Yuanxin to solicit additional information about its sale and about the nature of single-clove garlic. Rescission, 76 Fed. Reg. at 19,324. Yuanxin submitted a response to the questionnaire and provided supplementary evidence concerning the bona fides of its sale. Pl.'s Third Supp. Questionnaire Resp. (Feb. 14, 2011) (C.R. Doc. 46) ("Pl.'s 3d Resp."). Additionally, information about single-clove garlic was placed on the record by plaintiff and by the Department. Rescission, 76 Fed. Reg. at 19,324.

On April 7, 2011, after reviewing additional briefing from plaintiff and defendant-intervenors and the new record evidence, Commerce determined that Yuanxin's sale was not bona fide and rescinded the company's new shipper review. Rescission, 76 Fed. Reg. at 19,324. In the Rescission, Commerce concluded,

[b]ased on the Department's complete analysis of all the information on the record of this review regarding the bona fides of Yuanxin's . . . sale, the Department finds Yuanxin's sale to be not bona fide because (1) Yuanxin's sale price is so high as to be commercially unreasonable and not indicative of future sales, (2) Yuanxin's sales quantity is not representative of the garlic industry, and (3) the structure of Yuanxin's U.S. sale is of an unusual nature.

Rescission, 76 Fed. Reg. at 19,324.

STANDARD OF 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) (2006).

DISCUSSION

I. Legal Framework

Under 19 U.S.C. § 1675(a)(2)(B), Commerce shall, upon request, conduct administrative reviews "for new exporters and producers." 19 U.S.C. § 1675(a)(2)(B). The purpose of thesenew shipper reviews is to determine whether exporters or producers, whose sales have not been previously examined, are (1) entitled to their own duty rates under an antidumping order, and (2) if so, to calculate those rates. See Hebei New Donghua Amino Acid Co. v. United States, 29 CIT 603, 604, 374 F. Supp. 2d 1333, 1335 (2005). When performing these new shipper reviews, "[i]t is Commerce's practice . . . to determine whether the new exporters and producers have conducted bona fide or commercially reasonable transactions." Shandong Chenhe Int'l Trading Co. v. United States, 34 CIT ___, ___, Slip Op. 10-129, at 5 (2010) (citing 19 C.F.R. § 351.214(b)(2) (2009); Hebei New Donghua, 29 CIT at 608, 374 F. Supp. 2d at 1338). In doing so, "Commerce normally employs a totality of the circumstances test to determine whether the transaction is 'commercially reasonable' or 'atypical of normal business practices.'" Id. at ___, Slip Op. 10-129, at 6 (quoting Hebei New Donghua, 29 CIT at 610, 374 F. Supp. 2d at 1339).

To determine whether a sale is atypical of normal business practices, the Department will look at all of the circumstances surrounding the sale. See Catfish Farmers of Am. v. United States, 33 CIT ___, ___, 641 F. Supp. 2d 1362, 1368 (2009) ("If the weight of the evidence indicates that a sale is not typical of a company's normal business practices, the sale is not consistent with good business practices, or 'the transaction has been so artificially structured as to be commercially unreasonable,' the Department finds that it is not a bona fide commercial transaction and must be excluded from review." (citation omitted)).

"In evaluating whether or not a sale is 'commercially reasonable,' Commerce has considered the following factors, among others: (1) the timing of the sale, (2) the price and quantity[,] (3) the expenses...