MTZ Polyfilms, Ltd. v. U.S.

• Decision Date: 14 July 2010
• Docket Number: Court No. 09-00010,Slip Op. 10-78
• Citation: 32 ITRD 1714,717 F.Supp.2d 1346
• Parties: MTZ POLYFILMS, LTD., Plaintiff, v. UNITED STATES, Defendant, and Dupont Teijin Films USA, LP, Mitsubishi Polyester Film of America, LLC, SKC, Inc., and Toray Plastics (America), Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

717 F.Supp.2d 1346

32 ITRD 1714

MTZ POLYFILMS, LTD., Plaintiff,

v. UNITED STATES, Defendant,andDupont Teijin Films USA, LP, Mitsubishi Polyester Film of America, LLC, SKC, Inc., and Toray Plastics (America), Inc., Defendant-Intervenors.

Slip Op. 10-78.

Court No. 09-00010.

United States Court of International Trade.

July 14, 2010.

Riggle & Craven (David J. Craven) for Plaintiff, MTZ Polyfilms, Ltd.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (David D'Alessandris); and Deborah R. King, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, Of Counsel, for Defendant, United States.

Wilmer, Cutler, Pickering, Hale and Dorr, LLP, Washington, DC (Ronald I. Meltzer, John D. Greenwald, and Patrick McLain) for Defendant-Intervenors, Dupont Teijin Films USA, LP, Mitsubishi Polyester Film, Inc., SKC, Inc., and Toray Plastics (America), Inc.

OPINION

WALLACH, Judge.

IINTRODUCTION

Plaintiff MTZ Polyfilms, Ltd. ("MTZ") appears before the court on a motion for judgment on the agency record pursuant to USCIT Rule 56.2, challenging determinations of the U.S. Department of Commerce ("Commerce" or the "Department") in Polyethylene Terephthalate Film, Sheet, and Strip from India: Final Results of Countervailing Duty Administrative Review, 73 Fed.Reg. 75,672 (December 12, 2008), Public Record ("P.R.") 94 (" Final Results "). This court has jurisdiction pursuant to 28 U.S.C. § 1581(c). Because the challenged determinations are supported by substantial evidence and in accordance with law, they are sustained and judgment is entered for Defendant United States ("Defendant").

IIBACKGROUND

ACountervailing Duty Overview

"Countervailing duties are imposed on foreign products that are imported, sold, or likely to be sold in the United States, where the foreign government is directly or indirectly subsidizing the manufacture, production, or export of that merchandise." Royal Thai Gov't v. United States, 502 F.Supp.2d 1334, 1339-40 (CIT 2007) (citations omitted).

They are levied on subsidized imports to offset the unfair competitive advantages created by foreign subsidies. Pursuant to 19 U.S.C. § 1671, [Commerce] must impose countervailing duties on subsidized imports if it determines that the subject imports are in fact being subsidized, and the International Trade Commission determines that an industry in the United States-(i) is materially injured, or (ii) is threatened with material injury ... by reason of the subsidized imports. After the initial determination, Commerce must perform annual reviews of outstanding countervailing duty orders. After Commerce performs an annual review under [19 U.S.C.] § 1675(a), the statute allows an interested party to seek judicial review of the factual findings and legal conclusions of Commerce in the Court of International Trade.

Wolff Shoe Co. v. United States, 141 F.3d 1116, 1117-18 (Fed.Cir.1998) (citations, footnotes, and internal quotations omitted).

BThe Subject Administrative Review And Preliminary Results

In 2002, Commerce published a countervailing duty order applying to Polyethylene Terephthalate Film, Sheet, and Strip (collectively, "PET Film") from India. Notice of Countervailing Duty Order: [PET Film] from India, 67 Fed.Reg. 44,179 (July 1, 2002) (" CVD Order "). In response to a July 2007 notice, MTZ that month sought review of the CVD Order for its U.S. sales during the period of review ("POR") covering calendar year 2006. Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 72 Fed.Reg. 36,420, 36,420 (July 3, 2007), P.R. 1; Letter from David J. Craven, Riggle & Craven, to Carlos M. Gutierrez, Secretary of Commerce, Re: [PET Film] from India; Request for Administrative Review of the Countervailing Duty Order on Certain PET Film Produced and Exported by MTZ ... During the [POR], January 1, 2006 to December 31, 2006 (July 30, 2007), P.R. 2.

Commerce in August 2007 initiated the administrative review requested by MTZ and in October 2007 issued a questionnaire to MTZ and the Government of India ("GOI"). Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 72 Fed.Reg. 48,613, 48,615 (August 24, 2007); Letter from Thomas Gilgunn, Program Manager, AD/CVD Operations, Office 6, U.S. Department of Commerce, to Rupinder Sawhney, Case Officer, Embassy of India, Re: 2006 Countervailing Duty Review: [PET Film] from India (October 5, 2007), P.R. 7 ("Initial Questionnaire").

Commerce issued four supplemental questionnaires to MTZ between April and July 2008. See Letter from Thomas Gilgunn, Program Manager, AD/CVD Operations, Office 6, U.S. Department of Commerce, to MTZ ..., Re: First Supplemental Questionnaire Concerning the Countervailing Duty Administrative Review of [PET Film] from India (April 11, 2008), P.R. 29, Confidential Record ("C.R.") 2 ("Supp. MTZ Questionnaire"); Letter from Thomas Gilgunn, ProgramManager, AD/CVD Operations, Office 6, U.S. Department of Commerce, to MTZ ..., Re: Second Supplemental Questionnaire Concerning the Countervailing Duty Administrative Review of [PET Film] from India (May 28, 2008), P.R. 38, C.R. 4 ("2d Supp. MTZ Questionnaire"); Letter from Thomas Gilgunn, Program Manager, AD/CVD Operations, Office 6, U.S. Department of Commerce, to MTZ ..., Re: Fourth Supplemental Questionnaire Concerning the Countervailing Duty Administrative Review of [PET Film] from India (July 11, 2008), P.R. 51 ("4th Supp. MTZ Questionnaire").

MTZ responded to Commerce between December 2007 and July 2008. Letter from David J. Craven, Riggle & Craven, to Carlos M. Gutierrez, Secretary of Commerce, Re: [PET Film] from India; C-533-825; Response to the Countervailing Duty Questionnaire by MTZ ... (December 4, 2007), P.R. 15, C.R. 1 ("MTZ Response"); Letter from David J. Craven, Riggle & Craven, to Carlos M. Gutierrez, Secretary of Commerce, Re: [PET Film] from India; C-533-825; Response to the Countervailing Duty Supplemental Questionnaire by MTZ ... (May 6, 2008), P.R. 36, C.R. 3 ("MTZ Supp. Response"); Letter from David J. Craven, Riggle & Craven, to Carlos M. Gutierrez, Secretary of Commerce, Re: [PET Film] from India; C-533-825; Response to the Countervailing Duty 2nd and 3rd Supplemental Questionnaires by MTZ ... (June 20, 2008), P.R. 48, C.R. 6 ("MTZ 2d/3d Supp. Response"); Letter from David J. Craven, Riggle & Craven, to Carlos M. Gutierrez, Secretary of Commerce, Re: [PET Film] from India; C-533-825; Response to the Countervailing Duty 4th Supplemental Questionnaires by MTZ ... (July 21, 2008), P.R. 57, C.R. 7 ("MTZ 4th Supp. Response").

In August 2008, Commerce rendered its preliminary determination in the subject administrative review. [PET Film] from India: Preliminary Results of Countervailing Duty Administrative Review, 73 Fed.Reg. 45,956 (August 7, 2008), P.R. 59 (" Preliminary Results "). Commerce preliminarily found the GOI Export Promotion Capital Goods Scheme ("EPCGS") had conferred a countervailable export subsidy. Id. at 45,961-62. EPCGS:

provides for a reduction or exemption of customs duties and excise taxes on imports of capital goods used in the production of exported products. Under this program, producers pay reduced duty rates on imported capital equipment by committing to earn convertible foreign currency equal to four to five times the value of the capital goods within a period of eight years.

Id. at 45,961.

Commerce preliminarily calculated the benefit received by GOI's formal waiver of import duties for MTZ's capital equipment imports under EPCGS. Id. at 45,962-63. In this calculation, Commerce included the GOI Special Additional Duty ("SAD"). See Memorandum from Stephen J. Claeys, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, to David M. Spooner, Assistant Secretary for Import Administration, U. S Department of Commerce, Issues and Decision Memorandum in the Final Results of the Countervailing Duty Administrative Review of [PET Film] from India (December 5, 2008), P.R. 91 (" Decision Memo "), at 22-24.

Commerce also preliminary found that the GOI pre-shipment and post-shipment export financing program conferred countervailable export subsidies. Preliminary Results, 73 Fed.Reg. at 45,958. "The Reserve Bank of India ( ['RBI'] ), through commercial banks, provides short-term pre-shipment financing, or 'packing credits,' to exporters." Id. These "pre-shipmentloans for working capital purposes" and "pre-shipment credit lines ... to Indian companies must, by law, charge interest rates determined by the RBI." Id. Additionally, "[p]ost-shipment export financing consists of loans in the form of discounted trade bills or advances by commercial banks." Id. Commerce preliminarily found that MTZ benefitted from this program based on questionnaire responses from MTZ and GOI. Id. at 45,959. Commerce explained that, despite the numerous questionnaires, MTZ had not provided the necessary information as follows:

[T]he Department repeatedly requested that MTZ provide all short-term loans outstanding during the POR, and record evidence indicates that MTZ has failed to provide the Department with reliable and useable information regarding its short-term export financing loans. As a result, the Department does not have the information necessary to calculate a rate for MTZ based on its own information under the pre-shipment and post-shipment program for theses [sic] preliminary results.

Id.

Finding the MTZ loan information for the export financing program to be "incomplete," Commerce preliminarily concluded that "the application of facts otherwise available is warranted" pursuant to 19 U.S.C. § 1677e(a). Id. at 45,960. "Because MTZ failed to cooperate to the best of its ability to comply with the Department's requests for information, an adverse inference" was preliminarily...