Ningbo Dafa Chemical Fiber Co., Ltd. v. U.S.

• Decision Date: 02 September 2009
• Docket Number: No. 2009-1056.,2009-1056.
• Parties: NINGBO DAFA CHEMICAL FIBER CO., LTD., Consolidated Fibers, Inc., Fibertex Corporation, and Stein Fibers, Ltd., Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and Dak Americas LLC and Nan Ya Plastics Corporation America, Defendants-Appellees, and Wellman, Inc., Defendant.
• Court: U.S. Court of Appeals — Federal Circuit

580 F.3d 1247

NINGBO DAFA CHEMICAL FIBER CO., LTD., Consolidated Fibers, Inc., Fibertex Corporation, and Stein Fibers, Ltd., Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and Dak Americas LLC and Nan Ya Plastics Corporation America, Defendants-Appellees, and Wellman, Inc., Defendant.

No. 2009-1056.

United States Court of Appeals, Federal Circuit.

September 2, 2009.

Gregory S. Menegaz, DeKieffer & Horgan, of Washington, DC, argued for plaintiffs-appellants Ningbo Dafa Chemical Fiber Co., Ltd., et al. With him on the brief was James K. Horgan.

Stephen C. Tosini, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With him on the brief were Michael F. Hertz, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director.

David C. Smith, Kelley Drye & Warren LLP, of Washington, DC, argued for defendants-appellees Dak Americas LLC, et al. With him on the brief was Paul C. Rosenthal.

Before MICHEL, Chief Judge, LINN, Circuit Judge, and ST. EVE,^* District Judge.

ST. EVE, District Judge.

This appeal concerns an antidumping investigation of recycled polyester staple fiber ("PSF") from China. In its Final Determination from that investigation, the United States Department of Commerce ("Commerce") imposed a 4.86% antidumping duty on Ningbo Dafa Chemical Fiber Company, Ltd. ("Ningbo"). Certain Polyester Staple Fiber from the People's Republic of China, 72 Fed.Reg. 19,690 (Dep't of Commerce Apr. 19, 2007) ("Final Determination"). Ningbo, along with Consolidated Fibers, Inc., Fibertex Corporation, and Stein Fibers, Ltd., (collectively "Appellants") appeal from the judgment of the United States Court of International Trade affirming Commerce's Final Determination. See Ningbo Dafa Chem. Fiber Co. v. United States, 577 F.Supp.2d 1304 (Ct. Int'l Trade 2008). Because Commerce's Final Determination was supported by substantial evidence and not contrary to law, we affirm.

I. BACKGROUND

Ningbo is a Chinese manufacturer of PSF. Appellees DAK Americas LLC and Nan Ya Plastics Corporation America (collectively, the "Domestic Producers") are domestic PSF producers that petitioned Commerce to investigate whether imports of PSF from China had been "dumped"— sold at less than fair value—in the United States. Commerce is also an Appellee.

PSF is used as stuffing in consumer items such as sleeping bags, mattresses, pillows, comforters, and furniture. Ningbo manufactures PSF from recycled polyethylene terephthalate ("PET") bottle flake, often in the form of shredded used plastic bottles, such as soda bottles. PET flake constitutes nearly 100% by weight of the raw material used in Ningbo's production of recycled PSF. PET flake comes in a variety of colors, including white, green, and brown, and the color of PET flake used in production determines the PSF's ultimate color. Thus, white PSF is made primarily from white PET flake, green PSF from green PET flake, and brown PSF from brown PET flake. In general, white is the most expensive PET flake color, followed by green and then brown. Similarly, once PET flake is processed into PSF, white PSF commands the highest prices, followed by green and then brown. During the period of investigation here, Ningbo produced approximately 60% white PSF, 32% green PSF, and 8% brown PSF. At issue is whether Commerce properly relied on Ningbo's PET flake invoices in determining Ningbo's antidumping margin.

In 2006, Commerce commenced an investigation into whether Chinese-manufactured PSF was, or was likely to be, sold in violation of United States policy against the dumping of goods. "The statutory definition of `dumping' is the `sale or likely sale of goods at less than fair value.'" SKF USA, Inc. v. U.S. Customs & Border Prot., 556 F.3d 1337, 1340 (Fed.Cir.2009) (quoting 19 U.S.C. § 1677(34) (2006)). Commerce assesses antidumping duties on the basis of a "dumping margin"—the amount by which the calculated "normal value" of subject merchandise exceeds its export price. 19 U.S.C. § 1677(35)(A).

In antidumping investigations of merchandise produced in either market economy or nonmarket economy countries, § 1677b(a) prescribes Commerce's default methods for calculating normal value. See id. § 1677b(a). Very often, however, Commerce is unable to calculate normal value using the general framework of subsection (a). For nonmarket economy ("NME") countries, such as China, Commerce must then apply § 1677b(c)(1)—the "factors of production" methodology—to calculate the normal value of merchandise produced in such countries:

(1) In general

If—

(A) the subject merchandise is exported from a nonmarket economy country, and

(B) the administering authority finds that available information does not permit the normal value of the subject merchandise to be determined under subsection (a) of this section,

the administering authority shall determine the normal value of the subject merchandise on the basis of the value of the factors of production utilized in producing the merchandise ... Except as provided in paragraph (2), the valuation of the factors of production shall be based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the administering authority.

Id. § 1677b(c)(1).¹ Thus, pursuant to § 1677b(c)(1), Commerce bases its valuation of factors of production on the "best available information" of their values in a market economy country. In a "factors of production" analysis, Commerce considers purchases from market economy suppliers the most reliable evidence of an input's value. Consequently, "where a factor is purchased from a market economy supplier and paid for in a market economy currency, [Commerce] normally will use the price paid to the market economy supplier [to value that factor]." 19 C.F.R. § 351.408(c)(1) (2009).

Pursuant to that policy, Commerce requested the invoices from Ningbo's market economy PET flake purchases during the period of investigation. Commerce determined that color-specific PET flake values were needed to accurately calculate Ningbo's dumping margin because the cost of PET flake varies based on color and Ningbo's prices for finished PSF concomitantly vary based on the color of PET flake used during production. Commerce thus asked Ningbo to identify, by color, the quantities and values of its market economy purchases of PET flake.

Ningbo supplied Commerce with fifty-eight invoices from its qualified market economy purchases of PET flake from the period of investigation, but only a few of those invoices identified the specific color of PET flake purchased. Specifically, three of Ningbo's market economy invoices specified white PET flake purchases, and five specified green PET flake purchases. None of Ningbo's market economy invoices indicated a purchase of brown PET flakes. Thereafter, Commerce again requested that Ningbo provide information regarding the quantities and values of its market economy purchases of PET flake segregated by color. Despite Commerce's repeated requests, however, Ningbo did not supply Commerce with complete market economy PET flake purchase prices based on color or its usage ratios based on color because, according to Ningbo, it did not maintain such records in the ordinary course of business. Because Ningbo did not provide the complete requested information on its most significant raw material, Commerce invoked 19 U.S.C. § 1677e(a)(2)(B) in its Final Determination and applied neutral partial "facts available" to calculate color-specific values for Ningbo's PET flake. Final Determination, 72 Fed.Reg. at 19,691.

Section 1677e(a)—the "facts otherwise available" or "facts available" provision— provides in relevant part:

If—

(1) necessary information is not available on the record, or

(2) an interested party or any other person—

(A) withholds information that has been requested by the administering

authority or the Commission under this subtitle, [or]

(B) fails to provide such information by the deadlines for submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 1677m of this title,

. . .

the administering authority and the Commission shall, subject to section 1677m(d)[²] of this title, use the facts otherwise available in reaching the applicable determination under this subtitle.

19 U.S.C. § 1677e(a). Subsection (c)(1) of § 1677m provides that, if an interested party promptly notifies Commerce that it is unable to submit the information in the requested form and manner, together with a full explanation and suggested alternative forms in which it is can submit the information, Commerce shall consider the party's ability to submit the information in the requested form and manner and may modify such requirements to the extent necessary to avoid imposing an unreasonable burden on the party. Id. § 1677m(c)(1).

When § 1677e(a) applies, Commerce may use as "facts available" any "information or inferences which are reasonable to use under the circumstances" to make the applicable determination or substitute for the missing information. See Statement of Administrative Action, H.R.Rep. No. 103-316, at 869 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4198; Nippon Corp. v. United States, 25 C.I.T. 1192, 1196 (2001). In addition, § 1677e(b) authorizes Commerce to draw adverse inferences from the facts available when it concludes that a party "failed to cooperate by not acting to the best of its ability" in supplying the requested information. 19 U.S.C. § 1677e(b).

As already discussed, Commerce requested color-specific PET flake prices because it determined they were important to accurately calculate the normal value of Ningbo's PSF products, and thus the applicable antidumping margin. When Ningbo did not provide color-specific PET...