Melamine Chemicals, Inc. v. United States, Court No. 80-6-00878.

• Decision Date: 25 March 1983
• Docket Number: Court No. 80-6-00878.
• Citation: 561 F. Supp. 458
• Parties: MELAMINE CHEMICALS, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

561 F. Supp. 458

MELAMINE CHEMICALS, INC., Plaintiff, v. UNITED STATES, Defendant.

Court No. 80-6-00878.

United States Court of International Trade.

March 25, 1983.

Baker & McKenzie, Washington, D.C. (Bruce E. Clubb and Ava A. Zydor, Washington, D.C., on briefs), for plaintiff.

J. Paul McGrath, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch (Francis J. Sailer, Washington, D.C., on briefs), for defendant.

LANDIS, Judge:

This is one of three related cases alleging violation of the antidumping laws with respect to the chemical melamine. Plaintiff commenced the action pursuant to section 516A of the Tariff Act of 1930, as added July 26, 1979, Pub.L. 96-39, Title X, § 1001(a), 93 Stat. 300. (Trade Agreements Act of 1979) (19 U.S.C. § 1516a(a)(2)(B). The exporting nations involved are Austria, Italy and the subject nation of this action, the Netherlands.

Plaintiff moves pursuant to Rule 56.1 of this court for review of a Final Negative Determination of Sales at Less Than Fair Value, issued by the Department of Commerce on May 5, 1980 (45 Fed.Reg. 29619, eff. April 28, 1980), which held that there were no sales of melamine to this country at less than fair value.

Defendant opposes said motion and procedurally cross-moves to affirm the Department of Commerce's Final Negative Determination of Sales at Less Than Fair Value. The court conducted oral argument and the parties filed post-argument supplemental briefs pursuant to Rule 56.1(d).

The record indicates that on February 23, 1979, plaintiff Melamine Chemicals, Inc. filed a timely complaint with the Department of Treasury alleging Less Than Fair Value Sales (LTFV) of melamine from the Netherlands. On May 1, 1979, Treasury initiated antidumping investigations (44 Fed.Reg. 25555) and, on November 13, 1979, Treasury published a Tentative Negative Determination in the Netherlands case finding that there were no sales at LTFV (44 Fed.Reg. 65517).

On January 2, 1980, the Department of Commerce (International Trade Administration Division) assumed responsibility for LTFV determinations previously entrusted to Treasury.¹

On February 26, 1980, Commerce announced that it found error in Treasury's computations and that there was, in fact, a dumping margin (LTFV) in the Netherlands case. (45 Fed.Reg. 12466). The Department of Treasury's Tentative Negative Determination of November 13, 1979, was amended to an Affirmative Preliminary Determination.

On March 20, 1980, Commerce issued an Affirmative Final Determination (45 Fed. Reg. 20152, effective date March 27, 1980). On May 5, 1980, Commerce amended its original findings and published the Final Negative Determination in the Netherlands case herewith, the subject of review. (45 Fed.Reg. 29619, effective date April 28, 1980).

ISSUES

Plaintiff raises several contentions in support of its argument that Commerce's Final Negative Determination is contrary to law.

Initially plaintiff contends that Commerce had no authority to revoke its Final Affirmative Determination dated March 20, 1980, in that the antidumping laws do not specifically grant Commerce authority to change a final determination in an antidumping proceeding and further, that current Commerce regulations do not clothe Commerce with authority to revoke or amend a final determination in an antidumping proceeding. Additionally, plaintiff points out that this court has previously sustained its position in Royal Business Machines, Inc. v. United States, 1 Ct. Int'l. Trade 80, 507 F.Supp. 1007 (1980), aff'd 669 F.2d 692 (Cust. & Pat.App.1982).

In its second major contention plaintiff states that Commerce denied it due process of law by considering correspondence not served on plaintiff and by holding ex parte meetings with Respondent's representatives. In support of this contention plaintiff raises three arguments. First, both Commerce and respondent Dutch State Mines² (DSM) violated Commerce Regulation 19 C.F.R. § 353.46 by not serving copies of DSM's submissions to Commerce upon plaintiff. Second, Commerce violated 19 U.S.C. § 1677f(a)(3) and 19 C.F.R. § 353.26³ by not promptly placing in the public record a written record of meetings between Commerce staff and representatives of DSM. Third, one business day's notice to plaintiff of additional documents submitted by DSM and the ex parte meetings between Commerce staff and DSM does not cure a denial of due process.

In its third major contention plaintiff argues that Commerce's determination of Foreign Market Value (FMV) is contrary to the antidumping laws, citing 19 U.S.C. § 1677b(a)(1).⁴ Plaintiff states that the antidumping laws do not grant Commerce the authority to apply the exchange rate from the preceding calendar quarter to calculate FMV in a LTFV proceeding, citing 31 U.S.C. § 372 and 19 C.F.R. § 353.56.⁵ Plaintiff further argues that by using the exchange rate of the preceding calendar quarter to calculate FMV, Commerce did not compute "the price" of the foreign goods as required by 19 U.S.C. § 1677b(a)(1).

The major issue presented is Commerce's application of monetary conversion rates. The time frame under investigation is November 1, 1978 through March 31, 1979. As previously stated, Commerce found LTFV sales and the consequent dumping margin involving sales of melamine from the Netherlands. (Affirmative Final Determination, pub. in 45 Fed.Reg. 20152). Subsequently, Commerce amended this determination and published a Final Negative Determination of Sales at LTFV for melamine exported from the Netherlands (45 Fed.Reg. 29619).

Commerce's amended ruling (eff. April 28, 1980) was predicated solely upon an exchange rate issue. Defendant relies upon 19 C.F.R. § 353.56(b) to justify its action. Pursuant to this regulation defendant argues that Commerce properly applied the official monetary exchange rate for the calendar quarter preceding the period of the LTFV investigation. Plaintiff essentially contends that the "90 day lag rule" is contrary to both antidumping statutes and regulations, and that Commerce acted in an ultra vires manner by applying the preceding quarter's exchange rate.

Reviewing plaintiff's and defendant's contentions concurrently with the applicable statutes and regulations issued pursuant thereto, the court finds that plaintiff's position is well-taken.

In an antidumping investigation Commerce (ITA division) determines whether the merchandise under investigation is being sold at LTFV. In order to make this determination Commerce calculates the United States price in accordance with 19 U.S.C. § 1677a and compares it with the calculated Foreign Market Value (FMV) pursuant to 19 U.S.C. § 1677b(a)(1)(A). FMV is generally the price at which the subject merchandise is being sold or offered for sale in the home market of the exporting country. If FMV is greater than the United States price the sales are deemed to be at LTFV and, subsequently, dumping duties will be imposed if there is an affirmative material injury finding by the ITC. In the present case Commerce determined that Respondent's sales in its home market (the Netherlands) were inadequate to provide a meaningful basis for comparison. Therefore, Commerce used the weighted average price of Respondent's sales to a third country, West Germany (19 U.S.C. § 1677b(a)(1)(B)). Since these sales were made in Deutsche Marks, and the sales to the United States were made in U.S. dollars, it was necessary to convert the Deutsche Mark price into U.S. dollars for comparison purposes.

At this juncture a review of the legislative history and time sequence of enactment of both 31 U.S.C. § 372 and 19 C.F.R. § 353.56 will shed light on their meanings.

The current 31 U.S.C. § 372 has remained in effect and unchanged since 1956.⁶ 19 C.F.R. § 353.56 was enacted in 1980. Its predecessor, 19 C.F.R. § 153.52, enacted pursuant to the Trade Act of 1974 (P.L. 93-618), contained virtually the same language as the regulation presently under consideration.⁷ Both 19 C.F.R. § 153.52 and 19 C.F.R. § 353.56 mandate that any necessary conversion of foreign currency into United States currency to determine the difference between United States price and fair value or foreign market value shall be made in accordance with the provisions of 31 U.S.C. § 372. Thus, these subsequent revisions of the regulations refer to a statute in effect for many years which, in itself, demonstrates the efficiency of the particular statute.

Defendant, however, argues that 31 U.S.C. § 372 does not apply because there is no "assessment and collection of duties" under 31 U.S.C. § 372(b) in that an antidumping duty order has not been entered upon which duties can be assessed and collected. However, Customs own regulations undermine this argument. 19 C.F.R. § 353.56(a) specifically mentions both fair value and foreign market value as being subject to 31 U.S.C. § 372. Since 19 C.F.R. § 353.0 et seq. applies only to antidumping duties, and fair value is an estimate of foreign market value, it follows that fair value refers to the fair value investigation by Commerce. By defendant's own admissions an antidumping order is not imposed at the fair value stage of the investigation. Therefore, it would be impossible to have an assessment and collection of duties at that juncture. If defendant's contention were upheld it would render certain language referring to fair value in 19 C.F.R. § 353.56(a) meaningless. It is evident that a fair value proceeding and investigation is subject to the conversion rules of 31 U.S.C. § 372.

Defendant proceeds to argue that 19 C.F.R. § 353.56b grants Commerce a wide range of flexibility at the investigative stage where currency fluctuations are prevalent. Defendant states that 19 C.F.R. § 353.56b is valid and in compliance with the legislative intent to give Commerce a wider latitude to determine foreign market value (fair value) at the investigative stage as opposed to determining foreign market value (actual prices) at the...