Qingdao Qihang Tyre Co. v. United States

• Decision Date: 04 April 2018
• Docket Number: Consol. Court No. 16–00075,Slip Op. No. 18–35
• Citation: 308 F.Supp.3d 1329
• Parties: QINGDAO QIHANG TYRE CO., LTD., et al., Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

308 F.Supp.3d 1329

QINGDAO QIHANG TYRE CO., LTD., et al., Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. No. 18–35

Consol. Court No. 16–00075

United States Court of International Trade.

April 4, 2018

Jordan C. Kahn, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of Washington, D.C., argued for plaintiff Qingdao Qihang Tyre Co., Ltd. With him on the brief was Brandon M. Petelin.

Richard P. Ferrin, Drinker Biddle & Reath, LLP, of Washington, D.C., argued for plaintiff Trelleborg Wheel Systems (Xingtai) Co., Ltd. With him on the brief was Douglas J. Heffner.

Douglas J. Heffner, Drinker Biddle & Reath, LLP, of Washington, D.C., argued for plaintiffs Xuzhou Xugong Tyres Co., Ltd., Xuzhou Hanbang Tyre Co., Ltd., and Armour Rubber Co. Ltd. With him on the brief was Richard P. Ferrin.

Brandon M. Petelin, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of Washington, D.C., for plaintiff Qingdao Free Trade Zone Full–World International Trading Co., Ltd.

Robert K. Williams, Clark Hill PLC, of Chicago, Ill., for plaintiff Weihai Zhongwei Rubber Co., Ltd. With him on the brief was Lara A. Austrins.

John J. Todor, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for defendant. With him on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Paul K. Keith, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

OPINION AND ORDER

Stanceu, Chief Judge:

In this consolidated action, seven plaintiffs contest an administrative determination the International Trade Administration, U.S. Department of Commerce ("Commerce" or the "Department"), issued to conclude a periodic review of an antidumping duty order on off-the-road tires from the People's Republic of China ("China" or the "PRC").¹ Ruling that certain of the Department's decisions were contrary to law, the court remands the determination to Commerce for appropriate corrective action.

I. BACKGROUND

A. The Contested Determination

The determination contested in this litigation (the "Final Results") is Certain New Pneumatic Off-the-Road Tires From the People's Republic of China: Final Results of Antidumping Duty Administrative Review; 2013–2014 , 81 Fed. Reg. 23,272 (Int'l Trade Admin. Apr. 20, 2016) ("Final Results "). Incorporated by reference in the Final Results is a final "Issues and Decision Memorandum" containing explanatory discussion. Issues and Decision Memorandum for Final Results of Antidumping Duty Administrative Review: Certain New Pneumatic Off-the-Road Tires from the People's Republic of China; 2013–2014 (Int'l Trade Admin. Apr. 12, 2016) (P.R. Doc. 334), available at https://enforcement.trade.gov/frn/summary/prc/2016-09165-1.pdf (last visited Mar. 30, 2018) (" Final I & D Mem. ").

B. Proceedings Conducted by Commerce

Commerce issued an antidumping duty order (the "Order") on certain off-the-road ("OTR") tires from China (the "subject merchandise") in 2008. Certain New Pneumatic Off-the-Road Tires From the People's Republic of China: Notice of Amended Final Affirmative Determination of Sales at Less Than Fair Value and Antidumping Duty Order , 73 Fed. Reg. 51,624 (Int'l Trade Admin. Sept. 4, 2008). Commerce initiated the review at issue in this litigation, which was the sixth administrative review of the Order, on October 30, 2014. Initiation of Antidumping and Countervailing Duty Administrative Review , 79 Fed. Reg. 64,565 (Int'l Trade Admin. Oct. 30, 2014). The sixth administrative review pertained to entries of subject merchandise made during the period of review ("POR") of September 1, 2013 through August 31, 2014. Final Results , 81 Fed. Reg. at 23,272.

Commerce published the preliminary results of the review in October 2015. Certain New Pneumatic Off-the-Road Tires From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review; 2013–2014 , 80 Fed. Reg. 61,166 (Int'l Trade Admin. Oct. 9, 2015) ("Prelim. Results "). Commerce incorporated by reference a "Decision Memorandum for Preliminary Results." Decision Memorandum for Preliminary Results of Antidumping Duty Administrative Review: Certain New Pneumatic Off-the-Road Tires from the People's Republic of China; 2013–2014 (Int'l Trade Admin. Sept. 30, 2015) (P.R. Doc. 269), available at https://enforcement.trade.gov/frn/summary/prc/2015-25804-1.pdf (last visited Mar. 30, 2018) ("Prelim. I & D Mem. ").

In the Final Results, Commerce assigned individually-determined weighted-average dumping margins to two groups of Chinese companies: Xuzhou Xugong Tyres Co., Ltd., Armour Rubber Co. Ltd., and Xuzhou Hanbang Tyre Co., Ltd. (collectively, "Xugong"), which Commerce treated as a single entity for purposes of the review; and Qingdao Qihang Tyre Co., Ltd. ("Qihang"). Final Results , 81 Fed. Reg. at 23,272. Having selected these exporters/producers of OTR tires as "mandatory" respondents, i.e., respondents it intended to examine individually, Commerce assigned a weighted-average dumping margin of 65.33% to Xugong and a weighted-average dumping margin of 79.86% to Qihang in the Final Results. Id. at 23,273. Commerce assigned a weighted average of these two margins, 70.55%, to respondents that it did not select for individual examination but that Commerce found to have qualified for a "separate rate" based on demonstrated independence from the government of China. Id.

C. The Parties to this Consolidated Case

The plaintiffs in this litigation are Qihang and Xugong, i.e., the two mandatory respondents, and the following separate rate respondents: Qingdao Free Trade Zone Full–World International Trading Co., Ltd. ("Full World"), Trelleborg Wheel Systems (Xingtai) Co., Ltd. ("Trelleborg" or "TWS Xinghai"), and Weihai Zhongwei Rubber Co., Ltd. ("Weihai Zhongwei").²

D. Proceedings before the Court

The five actions consolidated in this litigation were each commenced between April 29, 2016 and May 12, 2016. Before the court are plaintiffs' motions for judgment on the agency record brought under USCIT Rule 56.2, all of which are opposed by defendant United States. Defendant advocates that the court sustain the Final Results in all respects. See Def.'s Resp. to Mots. for J. on the Agency R. (June 7, 2017), ECF No. 44 ("Def.'s Br."). The court held oral argument on November 30, 2017. See Order (Aug. 3, 2017), ECF No. 60.

II. DISCUSSION

A. Jurisdiction and Standard of Review

The court exercises jurisdiction under section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c),³ pursuant to which the court reviews actions commenced under section 516A of the Tariff Act of 1930 (the "Tariff Act"), as amended 19 U.S.C. § 1516a, including an action contesting a final determination that Commerce issues to conclude an antidumping duty administrative review. In reviewing a final determination, 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).

B. Summary of the Parties' Claims and the Court's Rulings

Qihang and Xugong have three claims in common. See Pl.'s Mem. of Law in Supp. of Mot. for J. on the Agency R. Pursuant to Rule 56.2 (Dec. 7, 2016), ECF No. 35 ("Qihang's Br."); Mem. of P. & A. of Pls. Xuzhou Xugong Tyres Co., Ltd., Armour Rubber Co. Ltd., and Xuzhou Hanbang Tyre Co., Ltd. in Supp. of their Mot. for J. on the Agency R. (Dec. 7, 2016), ECF Nos. 32 (conf.), 33 (public) ("Xugong's Br."). Both claim that Commerce, when determining the export prices or constructed export prices of the sales of their subject merchandise, erred in making deductions for unrefunded value-added tax ("VAT") incurred in China. Qihang's Br. 5–15; Xugong's Br. 71–78. They also claim that the Department's calculation of a "surrogate" value for one of their production materials, reclaimed rubber, was not supported by substantial evidence on the record. Qihang's Br. 33–54; Xugong's Br. 23–38. In their third claim in common, both contest the method by which Commerce valued foreign inland freight in China. Qihang's Br. 15–33; Xugong's Br. 38–44. In this Opinion and Order, the court explains why it believes a remedy is necessary in response to each of these three claims of the two mandatory respondents.

Xugong claims, additionally, that Commerce erred in not choosing Peru as the market-economy country it would use as a primary surrogate country, see Xugong's Br. 5–23, and that Commerce unlawfully resorted to facts otherwise available and an adverse inference for certain sales Commerce determined to have been unreported in the review, see id. at 44–71. The court does not find merit in these two additional claims of Xugong.

Trelleborg claims that Commerce acted contrary to law in assigning it the margin of 70.55% that Commerce assigned to all separate rate respondents. Mem. of P. & A. of Pl. Trelleborg Wheel Systems (Xingtai) Co., Ltd. in Supp. of its Mot. for J. on the Agency R. (Dec. 7, 2016), ECF Nos. 30 (conf.), 31 (public) ("Trelleborg's Br."). The court rules that Commerce acted in accordance with law in assigning to Trelleborg an all-others rate.

Like Trelleborg, Full World and Weihai Zhongwei were assigned the all-others rate of 70.55% in the sixth administrative review. As plaintiffs in this case, they seek relief in the form of a redetermined all-others rate based on any revision to the rates of the examined respondents that ultimately is made as a result of judicial review. Mem. of Law in Supp. of Pl. Qingdao Free Trade Zone Full–World Int'l Trading Co., Ltd.'s Rule 56.2 Mot. for J. upon the Agency R. (Dec. 7, 2016), ECF No. 34; Mem. of Law in Supp. of Pl.'s Rule 56.2 Mot. for J. on the Agency R. (Dec. 7, 2016), ECF No. 36. The court rules in favor of these two plaintiffs and also rules that Trelleborg will be assigned...