U.H.F.C. Co. v. U.S.
| Decision Date | 11 October 1990 |
| Docket Number | No. 89-1502,89-1502 |
| Citation | 916 F.2d 689 |
| Parties | U.H.F.C. COMPANY, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Federal Circuit |
John M. Peterson, Neville, Peterson & Williams, New York City, argued for plaintiff-appellant.
A. David Lafer, Atty., Commercial Litigation Branch, Dept. of Justice, of Washington, D.C., argued for defendant-appellee. With him on the brief were Stuart E. Schiffer, Acting Asst. Atty. Gen. and David M. Cohen, Director. Also on the brief were Wendell L. Willkie, II, General Counsel, Stephen J. Powell, Chief Counsel for Import Admin. and Thomas G. Ehr, Attorney-Advisor, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, D.C., of counsel.
Before NIES, Chief Judge, * MARKEY, Circuit Judge, ** and DUFF, District Judge. ***
U.H.F.C. Company appeals from the final judgment of the Court of International Trade in an antidumping proceeding, U.H.F.C. Co. v. United States, 706 F.Supp. 914 (Ct.Int'l Trade 1989) (Musgrave, J.). Animal glue imported from the Netherlands has been subject to an antidumping order imposed by the Treasury Department on December 22, 1977. This appeal concerns the second of three review periods conducted since 1980 by the International Trade Administration (ITA), which resulted in a final determination imposing a dumping duty rate of 24.60 percent payable by U.H.F.C., the United States importers of glue sold by the Netherlands manufacturer, B.V. Lijmfabriek C. Trommelen. 1 In arriving at this rate, the ITA concluded that sales in the Netherlands were the appropriate basis for determining foreign market value (FMV); denied U.H.F.C.'s request for price adjustments based on certain physical differences between the glues sold in the United States and in the home market; and calculated the dumping margin based on the FMV of a glue grade less similar to the U.S. glue than other glues sold in the home market. In making its determination, the ITA invoked its authority under 19 U.S.C. Sec. 1677e(b) (redesignated in 1988 as Sec. 1677e(c) 2) to use the "best information otherwise available" because, in ITA's view, Trommelen had failed to supply certain information as requested by ITA.
After the ITA published its final determination, U.H.F.C. brought suit in the Court of International Trade challenging (1) the selection of home market sales as the basis for determining FMV; (2) the denial of certain price adjustments; and (3) the selection of sales of a less similar home market glue in calculating the dumping margin. The Court of International Trade affirmed the methodology used by the ITA to determine the dumping margin in all respects. U.H.F.C. appealed the trial court's decision to this court pursuant to 28 U.S.C. Sec. 1295(a)(5) (1988). We now reverse and remand.
This is a trade case involving the importation of animal glues from the Netherlands which have been sold at a price less than their fair value. Animal glues are produced and sold in different, identifiable grades. The glue grade is determined on the basis of comparative jelly-strength and viscosity value. The glue is generally priced based on its jelly strength, with weak jelly, 30 bloomgrams, being the lowest priced and very strong jelly, 500 bloomgrams, being the highest priced. Glues of different strength can be blended in linear mathematical proportions to yield a glue of desired strength. For example, an order for 200 pounds of glue at 300 bloomgrams could be filled by mixing 100 pounds of 250 bloomgram glue with 100 pounds of 350 bloomgram glue. Animal glues may be used in widely varying applications such as general adhesives, abrasives or sizing agents.
Representatives of the United States animal glue industry filed a petition with the Secretary of the Treasury seeking the imposition of antidumping duties against animal glue imports from the Netherlands. After an affirmative less-than-fair-value determination by the Department of the Treasury 3 and an affirmative injury determination by the International Trade Commission, 4 Treasury published a dumping order against Animal Glue and Inedible Gelatin from the Netherlands. See 42 Fed.Reg. 64115 (1977). Thereafter, authority for administering the antidumping laws was transferred to the Commerce Department, and ITA has conducted three administrative reviews of the animal glue dumping duty.
This action concerns the second of these review periods, covering the animal glue entries made by U.H.F.C. that were purchased from Trommelen spanning December 1, 1980 through November 30, 1981. See 48 Fed.Reg. 45583-84 (1983). During this review period, Trommelen sold to U.H.F.C. for import into the United States glue grades having strengths of 250, 350, 365, 380 and 450 bloomgrams. At the same time, Trommelen sold glue grades in the Netherlands having bloomgram strengths of 150, 170, 190, 210, 220, 230, 260, 290, 300 and 400. Trommelen made no sales to the United States of glues identical in grade to those sold in the Netherlands. The grades are normally a function of customer requirements.
Administrative reviews of antidumping duty orders are conducted pursuant to 19 U.S.C. Sec. 1675 (1982). 5 To determine the dumping margin, the statute instructs ITA to separately determine the United States price (USP) and the foreign market value (FMV) and then subtract the USP from the FMV to arrive at the dumping margin which becomes the duty rate. See 19 U.S.C. Sec. 1675(a)(2) (1988).
Determining FMV first requires the ITA to establish which foreign market sales to use. To this end, Congress has mandated a statutory hierarchy aimed at achieving the best approximation of the value of the good in the foreign market. The statute prescribes, in pertinent part:
Sec. 1677b. Foreign market value
(a) Determination; fictitious market; sales agencies
For purposes of this subtitle--
(1) In general
The foreign market value of imported merchandise shall be the price, at the time of exportation of such merchandise to the United States--
(A) at which such or similar merchandise is sold or, in the absence of sales, offered for sale in the principal markets of the country from which exported, in the usual wholesale quantities and in the ordinary course of trade for home consumption, or
(B) if not sold or offered for sale for home consumption, or if the administering authority determines that the quantity sold for home consumption is so small in relation to the quantity sold for exportation to countries other than the United States as to form an inadequate basis for comparison, then the price at which so sold or offered for sale for exportation to countries other than the United States, ... [Emphasis added.]
Thus, where there are sales of "such or similar merchandise" in the home market which satisfy subparagraph A, such sales are to be used as the basis for determining FMV provided they are not too "small in relation to the quantity sold for exportation to countries other than the United States as to form an adequate basis for comparison."
To aid in determining whether the "quantity [of such or similar merchandise] sold for home consumption" forms a sufficient basis for comparison, the ITA promulgated regulation 19 C.F.R. Sec. 353.4(a) (1988): 6
(a) In General. If it is established ... that during the representative period chosen for investigation, the quantity of such or similar merchandise sold for consumption in the country of exportation is so small in relation to the quantity sold for exportation to countries other than the United States (normally, less than 5% of the amount sold to third counrties) as to be an inadequate basis for determining the foreign market value of the merchandise imported into the United States, the foreign market value of the imported merchandise shall be determined either by reference to the price at which such or similar merchandise is sold or offered for sale for exportation to countries other than the United States or by reference to its constructed value. [Emphasis added.]
The products that are to be considered "such or similar merchandise" in determining which market is to serve as a basis for FMV pursuant to section 1677b(a)(1) are defined in a hierarchical fashion in 19 U.S.C. Sec. 1677(16) (1988). Section 1677(16) provides:
(16) Such or similar merchandise
The term "such or similar merchandise" means merchandise in the first of the following categories in respect of which a determination for the purposes of part II of this subtitle can be satisfactorily made:
(A) The merchandise which is the subject of an investigation and other merchandise which is identical in physical characteristics with, and was produced in the same country by the same person as, that merchandise.
(B) Merchandise--
(i) produced in the same country and by the same person as the merchandise which is the subject of the investigation,
(ii) like that merchandise in component material or materials and in the purposes for which used, and
(iii) approximately equal in commercial value to that merchandise.
(C) Merchandise--
(i) produced in the same country and by the same person and of the same general class or kind as the merchandise which is the subject of the investigation,
(ii) like that merchandise in the purposes for which used, and
(iii) which the administering authority determines may reasonably be compared with that merchandise. [Emphasis added.]
In response to the ITA's 1981 review period antidumping questionnaire, Trommelen requested that sales to other countries, namely Rumania and the United Kingdom, be used for calculating foreign market value because Trommelen's sales in the Netherlands accounted for only 4.9 percent of its total sales (including the United States and the Netherlands) during the review period.
The ITA instead found that Trommelen's home market sales sufficed to serve as the basis for establishing FMV. The ITA reasoned that all...
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