Serampore Industries Pvt. Ltd. v. US Dept. of Commerce, Court No. 86-06-00743.

• Citation: 696 F. Supp. 665,12 CIT 825
• Decision Date: 12 September 1988
• Docket Number: Court No. 86-06-00743.
• Parties: SERAMPORE INDUSTRIES PVT. LTD., et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF COMMERCE, Defendant, and Alhambra Foundry Co., et al., Defendants-Intervenors.
• Court: U.S. Court of International Trade

696 F. Supp. 665

12 CIT 825

SERAMPORE INDUSTRIES PVT. LTD., et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF COMMERCE, Defendant and Alhambra Foundry Co., et al., Defendants-Intervenors.

Court No. 86-06-00743.

United States Court of International Trade.

September 12, 1988.

Kaplan, Russin & Vecchi, Dennis James, Jr., Washington, D.C., for plaintiffs.

John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation, Branch, Civil Div., U.S. Dept. of Justice, A. David Lafer, U.S. Dept. of Commerce, Duane W. Layton, Washington, D.C., for defendant.

Collier, Shannon, Rill & Scott, Paul C. Rosenthal and Carol A. Mitchell, Washington, D.C., for defendants-intervenors.

DiCARLO, Judge:

This case is before the Court to review the remand results ordered in Serampore Indus. v. United States Dep't of Commerce, 11 CIT ____, 675 F.Supp. 1354 (1987), which held that the International Trade Administration of the United States Department of Commerce (Commerce) was not required to offset less than fair value sales with fair value sales and found that no adjustment was necessary for deposits of estimated countervailing duties, but remanded for Commerce to (1) ascertain whether castings produced by Serampore Industries Pvt. Ltd. (Serampore) incurred the Indian Central Sales Tax; (2) eliminate the addition of excise duty drawback to Serampore's United States price; and (3) explain apparently inconsistent methodologies in determining the "all others" dumping margin.

BACKGROUND

Commerce investigated four exporters of iron construction castings from India and determined that one exporter was dumping merchandise, that one exporter was not dumping, and that two other exporters were dumping at only de minimis levels. Certain Iron Construction Castings From India; Final Determination of Sales at Less Than Fair Value, 51 Fed. Reg. 9,486 (Mar. 19, 1986). The domestic industry challenged the findings of zero and de minimis margins in Alhambra Foundry Co. v. United States, 12 CIT ____, 685 F.Supp. 1252 (1988). This action concerns the Indian producers' challenges to the affirmative rate for Serampore and the "all others" dumping margin.

DISCUSSION

1. "All Others" Dumping Margin

The Court remanded to Commerce to explain its apparently inconsistent methodologies used to calculate the "all others" dumping margin. The "all others" rate applies to firms that Commerce does not include in its antidumping duty investigation and to any new exporters whose first shipment occurs prior to the liquidation of entries covered by the antidumping order. See 19 U.S.C. § 1673e(b)(1).

In calculating the "all others" dumping margin in its final determination, Commerce disregarded three of the four Indian companies investigated that were found to have zero or de minimis dumping margins and based the "all other" rate on Serampore's dumping margin alone. The Court found that Commerce's methodology was apparently inconsistent with a prior determination where Commerce included companies with de minimis margins in calculating the "all other" rate. The Court also noted the domestic industry's observation that in even earlier determinations, Commerce set the "all other" rates at the highest dumping margin found for any firm investigated. Serampore, 11 CIT at ____, 675 F.Supp. at 1361.

In Commerce's clarification of its calculation of the "all other" rate, Commerce indicates it is a long standing practice to exclude firms that receive zero or de minimis margins. See e.g., Carbon Steel Wire Rod From Spain; Amendment to the Final Determination of Sales at Less Than Fair Value, 49 Fed.Reg. 42,969, 42,970 (Oct. 25, 1984); Red Raspberries From Canada; Preliminary Determination of Sales at Less Than Fair Value, 49 Fed. Reg. 49,129, 49,131 (Dec. 18, 1984); Stainless Steel Woven Wire Cloth from Japan; Final Determination of Sales at Less Than Fair Value, 50 Fed.Reg. 10,520, 10,522 (Mar. 15, 1985); Egg Filler Flats From Canada; Final Determination of Sales at Less Than Fair Value, 50 Fed.Reg. 48,238, 48,241 (Nov. 22, 1985). Commerce states that several important considerations provide the basis for its exclusion of firms with zero or de minimis margins.

First, Commerce allows all companies to participate in the antidumping investigation by submitting voluntary responses. If these responses are timely and in good order, Commerce will calculate individual antidumping margins for the submitting companies. Consequently, any company that submits a satisfactory response cannot claim that Commerce has refused to include it in its investigation. Commerce assumes that companies which are not dumping will submit voluntary responses. Under this assumption, Commerce states that including companies that do not sell at less than fair value and that do submit a voluntary response in calculating an "all others" rate including these firms would generally be skewed to reflect the pricing practices of nondumping firms rather than those firms that decided not to respond.

Second, any shipper who requests an administrative review pursuant to section 751 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1675 (1982 & Supp. IV 1986), will receive an individual margin and, at least for purposes of assessment, will not be covered by the all others rate. Thus, even companies that never submit responses in the original investigation are given a second chance in the administrative review.

Third, by establishing the all others rate at the weighted average margin level, and by applying the all others rate to new shippers, Commerce discourages existing firms from creating new corporate entities to avoid paying antidumping duties at their company-specific rate and thus circumvent an antidumping duty order.

Fourth, Commerce assumes that new shippers attempting to gain a foothold in a competitive market will be forced to price aggressively. When competing with firms that are dumping, new firms will most likely be driven to follow the same pricing strategy. Although it is possible that a new entrant will not dump, Commerce infers that as long as other firms are dumping in the market, the new entrant is also likely to dump.

For these reasons, Commerce bases the all others rate on the weighted-average rate of all the firms found to be dumping. Commerce stresses that it does not make the worst case assumption, but rather computes the rate for new companies on an average of all affirmative rates rather than the rate of the company with the highest dumping margin.

Commerce acknowledges that throughout most of 1982 and during the first several months of 1983, Commerce experimented with an all others rate that was equivalent to the highest margin. See Serampore Indus., 12 CIT at ____, 675 at 1361. Commerce ceased using the highest rate for an investigated company because it was believed to be unfair and punitive. Before and after this experimental period, Commerce employed an all others rate equivalent to the weighted-average of all affirmative margins. Relative to the highest margin, a weighted-average all others rate more accurately estimates the pricing practices of uninvestigated companies and new shippers.

Commerce attributed to "inadvertent error" the inclusion of de minimis margins in the all others dumping margin in Certain Welded Carbon Steel Pipe and Tube Products from Turkey; Final Determination of Sales at Less Than Fair Value, 51 Fed.Reg. 13,044 (Apr. 17, 1986). Commerce also confesses that three other administrative determinations inadvertently included a de minimis or zero dumping margin in calculating the all others rate. Lightweight Polyester Filament Fabric From the Republic of Korea; Final Determination of Sales at Less Than Fair Value, 48 Fed.Reg. 49,679 (Oct. 27, 1983); Bicycles from Taiwan; Final Determination of Sales at Less Than Fair Value, 48 Fed.Reg. 31,688 (July 11, 1983); Portland Hydraulic Cement from Japan; Preliminary Determination of Sales at Less Than Fair Value, 48 Fed.Reg. 19,445 (Apr. 29, 1985). Thus, in the absence of error, Commerce will generally not include negative or de minimis margins in calculating the all others rate.

The only instance where Commerce will intentionally include zero or de minimis margins in an all others rate is when the number of producers and exporters is so great that Commerce is forced to investigate only a sampling of companies and not 60 percent or more. See, e.g., Certain Fresh Cut Flowers From Columbia; Final Determination of Sales at Less Than Fair Value, 52 Fed.Reg. 6842 (Mar. 5, 1987). In cases when Commerce has conducted an investigation where the universe of producers and exporters is in the thousands, Commerce has employed a less traditional methodology such as sampling. See Southwest Fla. Winter Vegetables Growers Ass'n v. United States, 7 CIT 99, 584 F.Supp. 10 (1984). When Commerce relies on a sample, the pricing practices of a relatively small number of companies are used to represent the experience of the whole. Because Commerce does not obtain responses from companies accounting for 60 percent of all shipments to the United States, in these cases Commerce finds it appropriate to include in the all others rate firms that have zero or de minimis margins. Under these circumstances, there is no basis in law or fact to assume that a non-participating company is dumping. Even in a sample, however, Commerce will still accept voluntary responses. Thus, firms that feel margins based on Commerce's sample will not reflect their own experience may still submit a voluntary response and receive a company-specific dumping margin if that response is complete.

In the underlying litigation defendant-intervenors stated that it was Commerce's general practice to ignore individual company rates that are based upon the "best information available" within the meaning of 19 U.S.C. § 1677e(a). Commerce states that when it calculates the all others rate, it generally includes all investigated firms that receive...