Peer Bearing Co.-Changshan v. United States, Slip Op. 11–143.Court No. 10–00013.

• Decision Date: 21 November 2011
• Docket Number: Slip Op. 11–143.Court No. 10–00013.
• Citation: 804 F.Supp.2d 1337,33 ITRD 2287
• Parties: PEER BEARING COMPANY–CHANGSHAN, Plaintiff, v. UNITED STATES, Defendant,andThe Timken Company, Defendant–Intervenor.
• Court: U.S. Court of International Trade

33 ITRD 2287

804 F.Supp.2d 1337

PEER BEARING COMPANY–CHANGSHAN, Plaintiff,

v.UNITED STATES, Defendant,andThe Timken Company, Defendant–Intervenor.

Slip Op. 11–143.Court No. 10–00013.

United States Court of International Trade.

Nov. 21, 2011.

John M. Gurley and Diana Dimitriuc Quaia, Arent Fox LLP, of Washington, DC, argued for plaintiff. With them on the brief was Matthew L. Kanna.

L. Misha Preheim, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Joanna V. Theiss, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

William A. Fennell and Nazakhtar Nikakhtar, Stewart and Stewart, of Washington, DC, argued for defendant-intervenor. With them on the brief was Terence P. Stewart.

OPINION AND ORDER

STANCEU, Judge:

In this consolidated case, plaintiffs Peer Bearing Company–Changshan (“CPZ”) and The Timken Company (“Timken”), challenge the final determination (“Final Results”) that the U.S. Department of Commerce (“Commerce” or the “Department”) issued in the twenty-first review of the antidumping duty order pertaining to imports of tapered roller bearings (“TRBs”) and parts thereof, finished and unfinished, from the People's Republic of China (the “subject merchandise”). Tapered Roller Bearings & Parts Thereof, Finished & Unfinished, from the People's Republic of China: Final Results of the 2007–2008 Admin. Review of the Antidumping Duty Order, 75 Fed.Reg. 844 (Jan. 6, 2010) (“ Final Results ”). Compl. (Jan. 20, 2010), ECF No. 2 (“CPZ's Compl.”); Compl. (Mar. 5, 2010), ECF No. 11 (Court.No. 10–00045) (“Timken's Compl.”). The twenty-first review pertained to entries of subject merchandise made during the period June 1, 2007 through May 31, 2008 (“period of review” or “POR”). Final Results, 75 Fed.Reg. at 845. CPZ, a respondent in the review, brings three claims: (1) that “Commerce's decision to treat certain bearings further manufactured in a third country as covered by the antidumping order for purposes of the Final Results is not in accordance with law,” CPZ's Compl. ¶ 30; (2) that “Commerce improperly issued an assessment rate that results in a significant over-statement of the antidumping duties owed,” id. ¶ 33; and (3) that “Commerce valued CPZ's inputs of steel bar using aberrational price data that should be rejected,” id. ¶ 35. Timken, a domestic producer of tapered roller bearings that participated in the proceedings before Commerce, claims that Commerce, in determining a surrogate value for steel wire rod, a material used in producing CPZ's subject merchandise, “acted contrary to its statutory obligation to value factors based on the most accurate information available....” Timken's Compl. ¶ 13.

Before the court are the motions filed by CPZ and Timken for judgment on the agency record pursuant to USCIT Rule 56.2. Pl.'s Rule 56.2 Mot. for J. upon the Agency R. (Aug. 13, 2010), ECF No. 34; Pl.'s Rule 56.2 Mot. for J. upon the Agency R. (Aug. 16, 2010), ECF No. 38. The court determines that CPZ is entitled to a remand on the claim challenging the Department's country-of-origin determination and the claim challenging the Department's valuation of steel bar, but not on the claim challenging the assessment rate. The court also orders Commerce to reconsider and redetermine the surrogate value for steel wire rod, in response to Timken's claim that the surrogate value was contrary to law and in response to a request for a voluntary remand on this claim that defendant filed following oral argument. Def.'s Mot. for Voluntary Remand (June 15, 2011), ECF No. 88 (“Def.'s Remand Mot.”).

I. Background

The Department initiated the twenty-first review on July 30, 2008. Initiation of Antidumping & Countervailing Duty Admin. Reviews, Request for Revocation In Part, & Deferral of Admin. Reviews, 73 Fed.Reg. 44,220 (July 30, 2008). On July 8, 2009, Commerce issued the preliminary results of the review, which assigned CPZ a margin of 32.02%. Tapered Roller Bearings & Parts Thereof, Finished or Unfinished, from the People's Republic of China: Prelim. Results of the 2007–2008 Admin. Review of the Antidumping Duty Order, 74 Fed.Reg. 32,539, 32,544 (July 8, 2009) (“ Prelim. Results ”). On January 6, 2010, Commerce issued the Final Results, which assigned CPZ a margin of 24.62%. Final Results, 75 Fed.Reg. at 845.

CPZ filed its complaint on January 20, 2010 and Timken filed its complaint on March 5, 2010. CPZ's Compl.; Timken's Compl. The court consolidated the two actions on May 24, 2010. Order (May 24, 2010), ECF No. 27. CPZ and Timken filed memoranda in support of their motions for judgment on the agency record on August 16, 2010. Pl.'s Mem. of Points & Authorities in Supp. of its Mot. for J. on the Agency R. (Aug. 16, 2010), ECF No. 37 (“CPZ's Mem.”); The Timken Co.'s Mem. of Points & Authorities in Supp. of its Mot. for J. on the Agency R. (Aug. 16, 2010), ECF No. 38 (“Timken's Mem.”). CPZ and Timken responded as defendant-intervenors on November 22 and 23, 2010, respectively. Peer Bearing Co.-Changshan's Resp. in Opp'n to Timken's Rule 56.2 Br. in Supp. of Mot. for J. on the Agency R. (Nov. 22, 2010), ECF No. 55; Def.-intervenor The Timken Co.'s Opp'n to Mot. for J. on the Agency R. of Pl. Peer Bearing Co.-Changshan (Nov. 23, 2010), ECF No. 56 (“Timken's Resp.”). CPZ also filed a notice of supplemental authority prior to oral argument to inform the court of a recent decision of the Court of International Trade and of the results in the subsequent administrative review. Pl.'s Notice of Supplemental Authority (May 10, 2011), ECF No. 84 (citing Calgon Carbon Corp. v. United States, 35 CIT ––––, Slip Op. 11–21, 2011 WL 637605 (Feb. 17, 2011)). Defendant initially opposed each claim in this action, Def.'s Opp'n to Pls.' Mots. for J. upon the Agency R. (Nov. 22, 2010), ECF No. 53 (“Def.'s Opp'n”), but, after the court held oral argument on May 19, 2011, requested a voluntary remand as to Timken's claim challenging the surrogate value of steel rod, Def.'s Remand Mot.

At oral argument, the court granted permission to CPZ to file a supplemental submission clarifying its position and summarizing the record evidence pertaining to the challenge to Commerce's country-of-origin determination, which submission CPZ filed on June 20, 2011. Peer Bearing Co.-Changshan's Supplemental Submission Regarding Country of Origin of Further Manufactured Merchandise (June 20, 2011), ECF No. 89. Both Timken and defendant filed comments on CPZ's submission. The Timken Co.'s Resp. to Peer Bearing Co.-Changshan's Supplemental Submission Regarding Country of Origin of Further Manufactured Merchandise (June 27, 2011), ECF No. 94; Def.'s Resp. to Peer Bearing Co.-Changshan's Supplemental Submission (June 28, 2011), ECF No. 95.

II. Discussion

The court exercises jurisdiction under section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c) (2006), pursuant to which the court reviews actions commenced under section 516A of the Tariff Act of 1930 (“Tariff Act” or the “Act”), 19 U.S.C. § 1516a (2006), including an action contesting the final results of an administrative review that Commerce issues under section 751 of the Tariff Act, 19 U.S.C. § 1675(a). The court must hold unlawful any finding, conclusion or determination not supported by substantial evidence on the record, or that is otherwise not in accordance with law. See 19 U.S.C. § 1516a(b)(1)(B)(i).

A. Remand is Required on the Department's Determination of the Country of Origin of Certain Bearings Further Manufactured in Thailand

CPZ challenges the Department's determining certain bearings that underwent final processing in Thailand to be within the scope of the antidumping duty order as products of China.¹ CPZ's Mem. 32–39. The production in China consisted of “forging, turning, heat treatment of cups and cones, and roller and cage production”; the processing in Thailand was “finishing which consists of grinding and honing” and assembly of the components into finished bearings. Issues & Decision Mem., A–570–601, ARP 5–08, at 8 (Dec. 28, 2009) (Admin.R.Doc. No. 5701) (“ Decision Mem.”). Based on what it described as the “totality of the circumstances,” Commerce concluded that the processing in Thailand did not “substantially transform” the merchandise and that the finished bearings therefore were products of China for antidumping purposes. Id. at 11.

In making its country-of-origin determination, Commerce relied on several findings, including that “the average unit cost of manufacturing in the PRC ... represents a significant percent of total COM [ i.e., cost of manufacture] and that the third-country processor's costs as compared to each product's COM are not significant.” Id. at 10. Commerce reasoned that “the finishing process performed in the third country did not move the product out of the scope or create a product of a new class or kind because TRBs and parts thereof, finished and unfinished, are considered the same ‘class or kind’ of merchandise in the antidumping order on TRBs.” Id. at 7. Commerce found, specifically, that “the finishing process does not change the physical or chemical properties of the TRB, nor does it change the essential character of the TRB.” Id. at 9. Commerce also mentioned as a factor in its decision the level of investment in Thailand but concluded that “we have insufficient information to determine whether this factor would preclude or sustain a finding of substantial transformation in this case.” Id. at 11. Commerce also found that “unfinished and finished bearings are both intended for the same ultimate end-use.” Id.

The court determines that remand is appropriate because Commerce based its country-of-origin determination in part on the above-mentioned...