Shandong Huarong General Corp. v. U.S.

• Decision Date: 23 July 2001
• Docket Number: Court No. 00-08-00393.,SLIP OP. 01-88.
• Citation: 159 F.Supp.2d 714
• Parties: SHANDONG HUARONG GENERAL CORP.; Lianoning Machinery Import & Export Company; and Tianjin Machinery Import & Export Corp., Plaintiffs, v. UNITED STATES, Defendant, O. Ames Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

159 F.Supp.2d 714

SHANDONG HUARONG GENERAL CORP.; Lianoning Machinery Import & Export Company; and Tianjin Machinery Import & Export Corp., Plaintiffs, v. UNITED STATES, Defendant O. Ames Company, Defendant-Intervenor.

SLIP OP. 01-88.

Court No. 00-08-00393.

United States Court of International Trade.

July 23, 2001.

Hume & Associates (Robert T. Hume), Washington, D.C., for Plaintiffs.

Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director, United States Department of Justice, Civil Division, Commercial Litigation Branch, Kenneth S. Kessler, Attorney, United States Department of Justice, Civil Division, Commercial Litigation Branch, David Richardson, Attorney, Officer of the Chief Counsel for Import Administration, United States Department of Commerce, Washington D.C., for Defendant.

Wiley, Rein & Fielding (Charles Owen Verrill, Eileen P. Bradner, Timothy C. Brightbill, Nicholas A. Kessler), Washington, D.C., for Defendant-Intervenor.

OPINION

CARMAN, Chief Judge.

This consolidated action challenges the final and amended final results of the United States Department of Commerce's (Commerce) administrative review of antidumping orders covering certain heavy forged hand tools from the People's Republic of China (PRC). See Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Reviews: Heavy Forged Hand Tools from the People's Republic of China, 65 Fed.Reg. 43,290 (July 13, 2000) (Final Results) and Heavy Forged Hand Tools from the People's Republic of China; Amended Final Results of Antidumping Duty Administrative Reviews, 65 Fed.Reg. 50,499 (August 18, 2000) (Amended Final Results). The questions presented are whether Commerce: (a) improperly chose Indian HTS Category 7214.10.09 as the surrogate value for steel inputs; (b) exceeded its authority in correcting a ministerial error; and (c) selected an aberrational surrogate value for pallets. For the reasons stated below, the Court answers questions (a) and (b) in the negative, but answers questions (c) in the affirmative.

BACKGROUND

On February 11, 1999, Commerce published a notice of opportunity to request administrative reviews of the antidumping duty order covering heavy forged hand tools from the People's Republic of China (China) imported between February 8, 1998 and January 31, 1999. See Anti-dumping or Countervailing Duty Order, Finding, or Suspended Investigation: Opportunity to Request Administrative Review, 64 Fed.Reg. 6,878 (Feb. 11, 1999). On February 25, 1999, Shandong Huarong General Corp., Lianoning Machinery Import & Export Company, and Tianjin Machinery Import & Export Corp. (collectively, Plaintiffs) requested an administrative review of the axes/adzes and bars/wedges they entered into the United States during the relevant time period. The O. Ames Company (Defendant-Intervenor) also requested an administrative review of Plaintiffs' entries. On March 29, 1999, Commerce formally initiated its administrative reviews. See Heavy Forged Hand Tools from the People's Republic of China, 64 Fed.Reg. 14,860 (Mar. 29, 1999).

Because China is a non-market economy, Commerce selected a surrogate market economy against which to value China's factors of production. As in past administrative reviews, Commerce chose India as the most suitable market economy due to its comparable level of economic development and the fact that it produces a substantial amount of equivalent merchandise.

Commerce initiated its reviews by sending Plaintiffs questionnaires soliciting detailed information about their manufacturing processes. Plaintiffs' responses indicated that three types of steel were used to produce the hand tools subject to the antidumping orders—steel bar, steel billet, and railroad steel scrap. In past administrative reviews, Commerce valued this steel by placing it in Indian HTS category 7214.50—"Forged Bars and Rods Containing 0.25% or greater but less than 0.6% Carbon." In the year prior to the administrative review at issue, however, this HTS category was removed from the Indian HTS schedule. Commerce, therefore, requested additional information from Plaintiffs regarding the nature of the steel used to make their hand tools, including whether the steel was in billet or bar form, the size and tolerance of the steel used, and whether the steel underwent further processing prior to its use as an input. After reviewing Plaintiffs' responses, Commerce confirmed that a portion of Plaintiffs' hand tools were made from steel billets and railroad scrap, but concluded the majority were made from steel bars. From this conclusion, Commerce determined that steel bar was an appropriate factor of production.

Commerce notified Plaintiffs of its determination and requested submissions regarding the proper Indian HTS category from which to draw an appropriate surrogate value. Plaintiffs and Defendant-Intervenor both provided surrogate value information and suggested HTS categories. The information submitted, however, did not contain any data for steel bar, but focused solely on steel scrap and steel billet.

On March 8, 2000, Commerce issued its preliminary determination. See Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, From the People's Republic of China; Preliminary Results and Partial Recission of Anti-dumping Duty Administrative Reviews, 65 Fed.Reg. 12,202 (March 8, 2000) (Preliminary Results). Commerce selected forged steel bar as a factor of production and calculated the applicable surrogate value by averaging the import price of steel scrap and two other types of steel entered India under Indian HTS Category 7214.10—"Other bars and rods of iron and non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but including those twisted after rolling—Forged bars and rods."

Plaintiffs requested that Commerce disclose the calculations performed in connection with its preliminary determination. Based upon this information, on March 28, 2000, Plaintiffs submitted additional surrogate value data in an attempt to persuade Commerce to utilize either Indian domestic prices or export prices as the bench-mark for surrogate value. On April 19, 2000, Commerce held an administrative hearing at which Plaintiffs continued their argument that HTS 7214.10 was not an appropriate category upon which to base surrogate value. Plaintiffs reiterated that HTS 7214.10 covered forged steel and there was nothing in the record indicating that Plaintiffs used forged inputs in the production of subject merchandise. Commerce asked several questions regarding the type of steel used as inputs for its subject merchandise, including whether forged steel was used. Plaintiffs' counsel responded that he was uncertain whether forged steel was used to produce subject merchandise.

On July 6, 2000, Commerce issued its Final Results in the 1998/1999 administrative reviews. The agency determined that because verified information indicated one of the respondents in the underlying administrative reviews used forged bar as a factor of production, Indian HTS category 7214.10 was the proper category under which to determine the surrogate value for steel bar.

On July 17, 2000, Plaintiffs requested that Commerce correct a ministerial error contained in the Final Results. Plaintiffs claimed that Commerce had relied upon Indian import data for only a portion of the period of review. Plaintiffs argued they had submitted data for the entire period of review in their March 28, 2000 submission, but that Commerce failed to utilize that data in the Final Results. Commerce recognized its error and made the correction requested by Plaintiffs. In addition, Commerce noted that it had failed to incorporate the full period of review data for all factors of production in its Final Results. Commerce, therefore, not only adjusted the factor indicated by Plaintiffs, but also adjusted all the factors of production used to calculate normal value. Further, Commerce determined that the data for "spring steel" contained in HTS category 7214.10 was aberrational and, therefore, excluded it from the surrogate value. Because of the adjustments and the decision to exclude spring steel, Commerce changed its steel bar surrogate value from HTS category 7214.10 to the subcategory 7214.10.09—a category that explicitly excludes spring steel.

Plaintiffs timely filed suit with this Court challenging several aspects of Commerce's final and amended final determinations. Specifically, Plaintiffs challenge: (1) Commerce's selection of HTS category 7214.10.09 to value a specific factor of production; (2) Commerce's adjustment of several factors of production through the correction of a ministerial error; and (3) Commerce's selection of a surrogate value for pallets. The United States and Defendant-Intervenor (collectively, Defendants) oppose Plaintiffs' motion. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c).

DISCUSSION

It is broadly recognized that Commerce is the master of the antidumping laws and that its determinations are to be afforded considerable deference. See, e.g., Zenith Electronics Corp. v. United States, 77 F.3d 426, 430 (Fed.Cir.1996); Daewoo Elec. Co., Ltd. v. International Union, 6 F.3d 1511, 1516 (Fed.Cir.1993). Despite this recognition, Commerce may not act arbitrarily, violate the antidumping laws, or apply the law in a manner contrary to congressional intent. See Allied Tube & Conduit Corp. v. United States, 127 F.Supp.2d. 207, 219 (CIT 2000), citing, Smith-Corona Group v. United States, 713 F.2d 1568, 1571 (Fed.Cir.1983); Hussey Copper Ltd. v. United States, 895 F.Supp. 311, 314 (CIT 1995). Thus, the Court reviews Commerce's determinations to see whether they are "supported by substantial evidence and otherwise in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i) (1994).

The substantial evidence standard applies to Commerce's factual findings. This standard requires more than a ...