Trans Tex. Tire, LLC v. United States

• Citation: 519 F.Supp.3d 1275
• Decision Date: 18 May 2021
• Docket Number: Slip Op. 21-62,Consol. Court No. 19-00188
• Court: U.S. Court of International Trade
• Parties: TRANS TEXAS TIRE, LLC, Plaintiff, and Zhejiang Jingu Company Limited, Consolidated Plaintiff, v. UNITED STATES, Defendant, and Dexstar Wheel, Defendant-Intervenor.

519 F.Supp.3d 1275

TRANS TEXAS TIRE, LLC, Plaintiff,andZhejiang Jingu Company Limited, Consolidated Plaintiff,

v. UNITED STATES, Defendant,andDexstar Wheel, Defendant-Intervenor.

Consol. Court No. 19-00188

Slip Op. 21-62

United States Court of International Trade.

May 18, 2021

Jordan C. Kahn, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, N.Y. and Washington, D.C., argued for plaintiff. With him on the briefs were Ned H. Marshak, Alan R. Klestadt, and Max F. Schutzman.

Ting-Ting Kao, White & Case LLP, of Washington, D.C. and New York, N.Y., argued for consolidated plaintiff. With her on the briefs were Walter J. Spak and Jay C. Campbell.

Ashley Akers, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for defendant. With her on the briefs were Ethan P. Davis, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and L. Misha Preheim, Assistant Director. Of Counsel Brandon J. Custard, Senior Attorney, Office of Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce. With them on the post argument submission were Brian M. Boynton, Acting Assistant Attorney General, and Daniel J. Calhoun, Assistant Chief Counsel.

Nicholas J. Birch, Schagrin Associates, of Washington, D.C., argued for defendant-intervenor. With him on the brief was Roger B. Schagrin and Geert De Prest.

OPINION

Katzmann, Judge:

Was the final scope determination by the U.S. Department of Commerce ("Commerce") in an antidumping duties ("AD") investigation a permissible clarification or an improper scope expansion in the application of duties to a product manufactured in China and sold at less than fair value in the American market? Was Commerce's assessment of retroactive duties on the product permissible or in error for failure to provide adequate notice prior to its issuance of a final scope decision in the AD proceedings? This case involves Commerce's final AD determination of on steel trailer wheels from the People's Republic of China. Mem. from J. Maeder to J. Kessler, re: Issues and Decision Mem. for the Final Determination in the Less Than Fair Value Investigation (Dep't Commerce July 1, 2019), P.R. 300 ("IDM"); Certain Steel Wheels 12 to 16.5 Inches in Diameter from the People's Republic of China: Final Affirmative Determination of Sales at Less Than Fair Value, and Final Affirmative Determination of Critical Circumstances, 84 Fed. Reg. 32,707 (Dep't Commerce July 9, 2019), P.R. 302 ("Final Determination"). Plaintiffs Trans Texas Tire, LLC ("TTT"), a domestic importer, and Zhejiang Jingu Company Limited ("Jingu") a Chinese manufacturer of trailer wheels, (collectively, "Plaintiffs"), filed this suit to challenge Commerce's Order on Certain Steel Wheels 12 to 16.5 Inches in Diameter from the People's Republic of China, 84 Fed. Reg. 45,952 (Dep't Commerce Sept. 3, 2019), P.R. 308 ("Order"); Compl. of Trans Texas Tire at 1–2, Nov. 1, 2019, ECF No. 10 ("Pl.’s Compl."); Compl. of Zhejiang Jingu, Zhejiang Jingu Co. Ltd. v. United States, No. 19-cv-00187 (CIT Nov. 1, 2019), ECF No. 13 ("Consol.-Pl.’s Compl."). The suit challenges the inclusion of steel trailer wheels coated in chrome through a Physical Vapor Deposition ("PVD") process ("PVD chrome wheels") in the final AD determination and the assessment of duties back to Commerce's preliminary determination.¹ Pl.’s Compl. at 5–6.

Initially, Commerce excluded "certain on-the-road steel wheels that are coated entirely in chrome" from its preliminary determination. Certain Steel Wheels 12 to 16.5 Inches from the People's Republic of China: Preliminary Affirmative Determination of Sales at Less Than Fair Value, and Preliminary Affirmative Determination of Critical Circumstances, 84 Fed. Reg. 16,643, 16,646 (Dep't Commerce Apr. 22, 2019), P.R. 255 ("Preliminary Determination"). Although the parties’ positions differ as to the meaning of this preliminary language, Commerce determined in the course of its investigation that its final AD scope determination included PVD chrome wheels and excluded only electroplated chrome wheels. Final Determination at 32,710. Plaintiffs assert that the inclusion of PVD chrome wheels in Commerce's Final Determination is unsupported by substantial evidence and that the retroactive assessment of duties on PVD chrome wheels is unlawful, and move for judgment on the agency record accordingly. Pl.’s Mot. for J. on the Agency R., Apr. 28, 2020, ECF No. 29 ("Pl.’s Br."); Consol.-Pl.’s Mot. for J. on the Agency R., Apr. 28, 2020, ECF. No. 30 ("Consol.-Pl.’s Br."). Defendant United States ("Government") and Defendant-Intervenor Dexstar Wheel oppose this motion and ask the court to sustain Commerce's Final Determination and retroactive assessment of duties. Def.’s Resp. to Pl.’s Mot. for J. on Agency R., Aug. 10, 2020, ECF No. 35 ("Def.’s Br."); Resp. Br. of Dexstar Wheel, Aug. 10, 2020, ECF No. 34 ("Def.-Inter.’s Br.").

At the request of the petitioner -- Defendant-Intervenor Dexstar Wheel ("Petitioner" or "Dexstar") -- and in accordance with section 705(a)(1) of the Tariff Act of 1930, Commerce aligned the final AD determination in this case with the final determination in the companion countervailing duties case, Consol. Ct. No. 19-00189. Similarly, this court has considered the cases simultaneously and publishes both cases today. The court sustains Commerce's AD determination but concludes that retroactive assessment of duties was impermissible under the circumstances here.

BACKGROUND

I. Legal & Regulatory Framework

To facilitate fair trade and to level the playing field for American businesses that face foreign goods introduced into the domestic market, "[t]he Tariff Act of 1930, as amended, allows Commerce to impose ... duties on imports that injure domestic industries." Guangdong Wireking Housewares & Hardware Co. v. United States, 745 F.3d 1194, 1196 (Fed. Cir. 2014). Commerce assesses ADs when it determines that "the subject merchandise is being, or is likely to be, sold in the United States at less than its fair value" and the United States International Trade Commission ("ITC") finds that the dumping injures a domestic industry. See 19 U.S.C. § 1673d(a)(1). After so determining, Commerce issues an AD duty order and the plain language of the order determines its scope. Tak Fat Trading Co. v. United States, 396 F. 3d 1378, 1382 (Fed. Cir. 2005) (citing Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir. 2002) ); see generally 19 U.S.C. § 1673e.

The federal regulations describe the AD duty assessment process in 19 C.F.R. § 351. The requirements for the description of the merchandise are found in 19 C.F.R. § 351.202(b)(5), and state that "[a] detailed description of the subject merchandise that defines the requested scope of the investigation, including the technical characteristics and uses of the merchandise and its current U.S. tariff classification number." The ITC uses the provided merchandise description to determine the effects of the dumped or countervailed imported goods on the domestic like product. 19 U.S.C. § 1677(4)(D) ; Timken Co. v. United States, 20 C.I.T. 76, 80, 913 F.Supp. 580, 584 (1996).

II. Factual Background

On August 8, 2018, Dexstar Wheel Division of Americana Development, Inc. ("Dexstar" or "Petitioner"), a domestic producer of trailer wheels, filed AD and CVD petitions on certain steel trailer wheels from the People's Republic of China. Petitions for the Imposition of AD and CVD Duties on Behalf of Dexstar Wheel Division of Americana Development, Inc. Re: Certain Steel Wheels 12 to 16.5 Inches in Diameter from the People's Republic of China, P.R. 50, 5 ("Petition"). Commerce initiated its AD investigation on September 5, 2018. Certain Steel Wheels 12 to 16.5 Inches in Diameter From the People's Republic of China: Initiation of Less-Than-Fair Value Investigation, 83 Fed. Reg. 45,095 (Dep't Commerce Sept. 5, 2018), P.R. 72 ("Initiation Notice"). Commerce requested and received supplemental information from Dexstar before initiating the investigation into certain steel trailer wheels on August 28, 2018. Petitioner's Response to the Department's August 17, 2018 Additional Questions (Aug. 20, 2018), P.R. 65. In October 2018, the ITC found that there is a reasonable indication that the government of China's subsidization of certain steel trailer wheels and the sale of those wheels in the U.S. at less than fair value materially injured U.S. industry. Steel Trailer Wheels from China, Inv. Nos. 701-TA-609 and 731-TA-1421 (Preliminary), USITC Pub. 4830 (Oct. 2018) ("Preliminary ITC Determination"). On April 22, 2019, Commerce published its preliminary AD determination finding that certain steel wheels from China were being sold in the United States for less-than-fair value. Preliminary Determination. On July 9, 2019, Commerce issued its final affirmative determination. Final Determination. In August of 2019, the ITC found that domestic industry was materially injured by the import of certain steel wheels from China. Steel Trailer Wheels from China, Inv. Nos. 701-TA-609 and 731-TA-1421 (Final), USITC Pub. 4943 (Aug. 2019) ("Final ITC Determination"). On September 3, 2019, Commerce issued its AD order on certain steel wheels from China. Order.

A. The Scope Determination

The Petition filed on August 8, 2018 described the scope of the subject merchandise as certain "on-the-road steel wheels" and included several statements excluding steels wheels coated in chrome. Petition at I-2, I-5. The Petition did not reference specific chrome plating processes or mention electroplating or PVD processing but did state that there are no U.S. producers of chrome-coated steel wheels. Id. Before publication of the Initiation Notice, Commerce requested and received clarification from Dexstar regarding whether its Petition intended to specify a minimum chrome content or level of chrome plating. Petitioner's Response to the Department of Commerce's ...