Viraj Forgings, Ltd. v. U.S.

• Decision Date: 09 December 2004
• Docket Number: Court No. 01-00889,Slip Op. 04-158.
• Citation: 350 F.Supp.2d 1316
• Parties: VIRAJ FORGINGS, LTD., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

350 F.Supp.2d 1316

VIRAJ FORGINGS, LTD., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 04-158.

Court No. 01-00889

United States Court of International Trade.

December 9, 2004.

Miller & Chevalier Chartered, Washington, DC (Peter Koenig, and Jeffrey C. Lowe) for Plaintiff.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Jeanne E. Davidson, Deputy Director; Stephen C. Tosini, Trial Attorney, U.S. Department of Justice, Civil Division, Commercial Litigation Branch; and James K. Lockett, Senior Attorney-Advisor, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant, of counsel.

OPINION

WALLACH, Judge.

I Introduction

This matter comes before the court following the court's remand of September 3, 2003, to the United States Department of Commerce ("the Department" or "Commerce"). In Viraj Forgings, Ltd. v. United States, 283 F.Supp.2d 1335 (CIT 2003) ("Viraj I"), the court remanded Commerce's findings in Certain Stainless Steel Flanges from India; Final Results of Antidumping Duty Administrative Review, 66 Fed.Reg. 48,244 (Sept. 19, 2001) ("Final Results").¹ On December 19, 2003, Commerce filed its Results of Redetermination Pursuant to Court Remand Certain Forged Stainless Steel Sheet Flanges from India ("Remand Redetermination"). Plaintiff, Viraj Forgings, Ltd. ("Plaintiff" or "Viraj"), filed Objections to the Remand Decision of the U.S. Department of Commerce ("Plaintiff's Objection"). For the reasons set forth below, Commerce's Remand Redetermination is affirmed in part and remanded in part. This court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2000).

II Background

Plaintiff is an Indian manufacturer of stainless steel flanges.² In 2000, Commerce initiated an antidumping duty administrative review on certain forged stainless steel flanges from India for the period of February 1, 1999, through January 31, 2000. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 65 Fed.Reg. 16,875 (Mar. 30, 2000).

Commerce preliminarily determined that Plaintiff's dumping margin was 21.10 percent. Certain Forged Stainless Steel Flanges From India; Preliminary Results of Antidumping Duty Administrative Review, 66 Fed.Reg. 14,127, 14,130 (Mar. 9, 2001) ("Preliminary Results"). On September 19, 2001, Commerce published the Final Results containing the weighted-average dumping margin for the firms under review, which adopted the 21.10 percent dumping margin from the preliminary determination for Viraj.³ Final Results, 66 Fed.Reg. at 48,245. The administrative review covered "certain forged stainless steel flanges from India, both finished and not-finished," and included five general types of flanges that generally matched the American Society for Testing and Materials ("ASTM") specification A-182. Id. at 48,244. Plaintiff challenged Commerce's determination and the court ordered a remand.

In Viraj I, the court ordered Commerce to (1) rationally articulate the basis for its departure from previous practice or to provide adequate evidence to support its claim of factual distinction in selecting Germany as the comparison market; (2) adequately explain its departure from precedent in comparing ASTM standard flanges with the German Deutches Institut fur Normung e. V. ("DIN") standard flanges; (3) explain its reasoning for converting reported prices to a per-kilogram basis when this was contrary to Commerce's precedent or to conform itself to prior precedent; and (4) adequately explain its claim that the comparison of rough forgings to finished flanges were "similar merchandise" and that any differences were "insignificant." Viraj I, 283 F.Supp.2d at 1344-57.

On December 19, 2003, Commerce filed its Remand Redetermination stating that (1) it maintains that Germany is the most appropriate third country comparison market and that this selection was not contrary to its regulation or prior precedent; (2) it finds that the comparison of ASTM standard flanges to DIN standard flanges was consistent with the statute, regulations, and Commerce's precedent; (3) it determines that the use of the per-kilogram comparison approach is consistent with Commerce's practice and precedent; and (4) it maintains that comparing rough flanges to finished flanges, when no other comparisons are available, was consistent with the statute, Commerce's regulations, and practice. Remand Redetermination at 13-26.

III Arguments

Plaintiff claims that Commerce's continued use of Germany as the comparison market fails to satisfy the statutory "foreign like product" requirements for comparison markets and Commerce's own regulations on the selection of a third-country market. It argues that the use of Germany as the comparison market is unsupported by substantial evidence, is not in accordance with the law, and is an impermissible and unexplained departure from past precedent. Plaintiff states that Commerce's argument that DIN and ASTM flanges may be compared is unsupported by substantial evidence and is not in accordance with law. It further claims that since flanges are not commercially sold on a per-kilogram basis, Commerce's use of per-kilogram pricing is neither supported by substantial evidence nor in accordance with the law. Finally, Plaintiff argues that Commerce's decision that rough forgings are comparable to proof-machined or fully-machined (finished) flanges remains unsupported by substantial evidence and is otherwise not in accordance with the law.

Defendant claims that Commerce's selection of Germany as the comparison market complies with the court's decision in Viraj I. It claims that Commerce followed Viraj I to determine that flanges manufactured to DIN and ASTM standards are like product. Furthermore, Defendant argues that the use of per-kilogram price and cost comparisons was reasonable and consistent with agency practice and that Commerce made appropriate adjustments when comparing rough to finished flanges.

IV Applicable Legal Standard

The court will uphold Commerce's determinations unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (2004). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 299, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). Under this standard, the court does not weigh the evidence nor will it substitute its own judgment for that of the agency. See Negev Phosphates, Ltd. v. United States, 699 F.Supp. 938, 12 CIT 1074, 1076-77 (1988). However, the court's deference cannot allow the agency to deviate from the clear intent of Congress. See Rhone-Poulenc, Inc. v. United States, 927 F.Supp. 451, 20 CIT 573, 574-75 (1996) (citing Bd. of Governors of the Fed. Reserve Sys. v. Dimension Fin Corp., 474 U.S. 361, 368, 106 S.Ct. 681, 686, 88 L.Ed.2d 691 (1986)).

The court has found Commerce's results unlawful in instances where Commerce has failed to carry out its duties properly, relied on inadequate facts or reasoning, or failed to provide an adequate basis for its conclusions. See Budd Co. Ry. Div. v. United States, 507 F.Supp. 997, 1 CIT 67, 70-76 (1980); Indus. Industrial Fasteners Group v. United States, 525 F.Supp. 885, 2 CIT 181, 190 (1981). In order for Commerce's redetermination to be sustained, it must be reasonable, supported by the record as a whole, and the grounds that the administrative agency acted upon clearly disclosed. See Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1563 (Fed.Cir.1984).

V Discussion

A Commerce's Selection of Germany as the Third Country Comparison Market is Not in Accordance with the Law

In Viraj I, this court instructed Commerce to "rationally articulate the basis for its departure from its previous practice or provide adequate evidence to support its claim of a factual distinction" to provide further evidence that Germany was the appropriate third-country comparison market. 283 F.Supp.2d at 1344.

Defendant claims that Commerce's selection of Germany as the comparison market complies with the court's order. Defendant argues that its decision to use Germany is supported by the statute, regulations, and its long standing practice. Remand Redetermination at 4-5. First, Defendant claims that 19 U.S.C. § 1677(16) (2000) broadly defines "foreign like product" and thereby allows Commerce the flexibility to determine the most appropriate products for comparison. Id. at 5.

Second, Defendant argues that Commerce's regulations give it the flexibility and authority to select the most appropriate third country for comparison purposes. Id. at 5. In support of its argument, Defendant sets out 19 C.F.R. § 351.404(e) (2000) which states that:

... the Secretary generally will select the third country based on the following criteria:

(1) The foreign like product exported to a particular third country is more similar to the subject merchandise exported to the United States than is the foreign like product exported to other third countries;

(2) The volume of sales to a particular third country is larger than the volume of sales to other third countries;

(3) Such other factors as the Secretary considers appropriate.

Commerce claims that it has the authority to select from these criteria because "no hierarchy or priority is assigned to any of these three criteria."⁴ Id.

According to Commerce, "[a]t the point when the Department selects a third-country market, there is no information on the record offering model-specific details of the physical characteristics of the merchandise sold in the various markets...," and as a result market volume becomes the most readily apparent and measurable indicator of the "likelihood of suitable matches for U.S. sales." Id. at 6-7. Furthermore, Commerce supports its practice on the grounds that,...