Washington International Ins. Co. v. United States, 072909 USCIT, 08-00156

Docket Nº08-00156
Opinion JudgeR. KENTON MUSGRAVE, Senior Judge
Party NameWASHINGTON INTERNATIONAL INSURANCE COMPANY, Plaintiff, v. UNITED STATES, Defendant. Slip Op. 09-78
AttorneySandler, Travis & Rosenberg (Thomas V. Vakerics, T. Randolph Ferguson, Kristen S. Smith, and Mark D. Tallo), for the plaintiff. Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United State...
Judge PanelBefore MUSGRAVE, Senior Judge
Case DateJuly 29, 2009
CourtCourt of International Trade

WASHINGTON INTERNATIONAL INSURANCE COMPANY, Plaintiff,

v.

UNITED STATES, Defendant.

No. 08-00156

Slip Op. 09-78

United States Court of International Trade

July 29, 2009

Remanding antidumping duty administrative review of producer/exporter of crawfish tail meat from the People's Republic of China to the U.S. Department of Commerce.

Sandler, Travis & Rosenberg (Thomas V. Vakerics, T. Randolph Ferguson, Kristen S. Smith, and Mark D. Tallo), for the plaintiff.

Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (David S. Silverbrand); Office of the Chief Counsel for Import Administration, United States Department of Commerce (Hardeep K. Josan), of counsel, for the defendant.

Before MUSGRAVE, Senior Judge

OPINION AND ORDER

R. KENTON MUSGRAVE, Senior Judge

As surety on imports from respondent Xuzhou Jinjiang Foodstuffs Co., Ltd. ("Xuzhou" or "Jinjiang"), the plaintiff Washington International Insurance Company ("WII") moves for judgment pursuant to USCIT Rule 56.2 on certain decisions of the 2005-2006 administrative review of the antidumping duty order on freshwater crawfish tail meat from the People's Republic of China ("PRC"), as compiled by the International Trade Administration of the U.S. Department of Commerce ("Commerce"). See Freshwater Crawfish Tail Meat From the People's Republic of China, 73 Fed. Reg. 20249 (Apr. 15, 2008) (final results), Public Document ("PDoc") 135 ("Final Results").1 Jurisdiction here is pursuant to 28 U.S.C. § 1581(c). For the following reasons, there is substantial evidence to support the decision to reject Xuzhou's claim that certain U.S. sales were non-subject merchandise, to resort to facts available, and to apply an adverse inference ("AFA") therefor; however, the record does not support the decision to use the PRC-wide rate of 223.01% as AFA for Xuzhou, and the matter must therefore be remanded for recalculation of the AFA rate.

Background

Immediately prior to the instant administrative review, Xuzhou obtained its own dumping margin from Commerce through participation in new shipper and administrative reviews. See Freshwater Crawfish Tail Meat from the People's Republic of China, 72 Fed. Reg. 19174 (Apr. 17, 2007) (final results of new shipper and administrative reviews); see generally 19 C.F.R. § 351.214. Based upon bona fide sales during the period September 1, 2004 through October 5, 2005, Xuzhou's margin of dumping was calculated to have been 0.00%. Id. See also Freshwater Crawfish Tail Meat From the People's Republic of China, 71 Fed. Reg. 59432 (Oct. 10, 2006) (preliminary results of new shipper and administrative reviews).

For the administrative review at bar, Xuzhou reported making [[ ]] United States sales of subject merchandise between September 1, 2005 and August 31, 2006 (the "POR").2] Commerce then placed a memorandum on the record, together with copies of entry documentation received from the U.S. Customs and Border Protection ("CBP"), regarding [[ ]] imports from Xuzhou (the "first disputed entries") that questioned whether Xuzhou had reported all sales of subject merchandise. Public Record Document ("PDoc") 61, CDoc 22 (Mar. 30, 2007). The document invited comment from the parties.3

Xuzhou's response sought to clarify the entry documents with respect to the entry code declarations, count size descriptions, change in product description (purportedly in response to request by CBP), and certain clerical errors. See generally PDoc 65 (Apr. 13, 2007), CDoc 23 (Apr. 12, 2007). By way of broader explanation, Xuxhou alleged that [[ ]] prepared shipment(s) of subject merchandise involved substitution of non-subject merchandise (i.e. whole crawfish) before leaving port in response to a last-minute request from, and after transmission of the original order documentation to, the customer. Xuzhou alleged that it sent to the customer new set(s) of commercial documents bearing the same invoice number(s) to reflect the change but that apparently the importer or its broker submitted the wrong documentation for customs declaration. This error was further compounded, as told by Xuzhou, because Xuzhou's sales person did not properly revise the unit price on one of the invoices to reflect non-subject merchandise, although supposedly the proper sales revenue for the invoice was entered on Xuzhou's sales ledger that had been submitted to Commerce as part of its sales reconciliation. See CDoc 23 at 4-5. Xuzhou also claimed to submit copies of the correct invoices for the [[ ]] shipment(s) as an attachment to its clarification to Commerce. See id. at Attachment 1.

As of June 4, 2007, Commerce had not found any attempt by Xuzhou to change the allegedly incorrect entry coding of the [[ ]] shipment(s) declared upon importation to be subject merchandise (apparently pursuant to their Customs Form ("CF") 7501s). See PDoc 69, CDoc 24 (memorandum to file dated June 6, 2007). By June 7, 2007, for reasons that are unclear, CBP's database reflected that the remainder of the first disputed entries had been reclassified to subject merchandise. See PDoc 72, CDoc 27 (memorandum to file dated June 18, 2007). Commerce also obtained information from the OASIS database of the U.S. Food and Drug Administration ("FDA")4implying [[ ]] entries of subject merchandise (including [[ ]] of the first disputed entries) had not been declared as such. See PDoc 70, CDoc 25 (memorandum to file dated June 12, 2007).

In response to those observations, Xuzhou reiterated to Commerce that its earlier comments had "fully explained" each5 of the alleged unreported sales of subject merchandise, and Xuzhou further commented that, as reflected in the OASIS database, the FDA had not conducted actual inspection of any of the [[ ]] entries in question but had merely re-transcribed the erroneous documentation describing the merchandise as subject merchandise. PDoc 76, CDoc 29 (July 6, 2007). Xuzhou also explained it was not in a position to redress CBP's reclassifications or address why CBP had reclassified in the first instance and suggested Commerce seek answers from the customer concerned, but regardless, "[[ ]]." See id. at 2-3. Nonetheless, by September 2007, CBP's database reflected [[ ]] entries CBP had reclassified as subject merchandise, and Commerce placed another memorandum to that effect in the record. Cf. PDoc 85, CDoc 35 (Sep. 21, 2007).

Commerce published its preliminary results the following month. Freshwater Crawfish Tail Meat From the People's Republic of China, 72 Fed. Reg. 57288, 57295 (Oct. 9, 2007) (preliminary results), PDoc 91. They inferred that Xuzhou had failed to report all sales of subject merchandise and that the circumstances of that failure supported application of a total adverse inference and the assessment of antidumping duties in the amount of 223.01%. See id.

After gaining admission to the proceeding as an interested party, see PDoc 93 (Oct. 19, 2007), PDoc 107 (Nov. 28, 2007), WII commented on the preliminary results alongside Xuxhou via case briefing. See PDoc 115, CDoc 43 (Dec. 17, 2007), and PDoc 116, CDoc 44 (Dec. 18, 2007), respectively. The briefing essentially claimed that the evidence of record showed Xuzhou had properly reported all sales of subject merchandise, that total adverse inferences were not appropriate, and that the rate Commerce had selected therefor was inappropriate in any event. See id. Commerce then placed on the record a memorandum summarizing other information obtained from the FDA pertaining to three entries (the "second disputed entries") that had been reclassified. PDoc 122, CDoc 48 (Feb. 7, 2008). Cf. PDoc 85, CDoc 35. The information included photographs of samples identified as being from two entries, [[ ]]. The photographs each show a plastic bag labeled "crawfish tails" and the ingredients as [[ ]] and, for one entry, the count size as [[ ]]." See PDoc 122, CDoc 48. Xuzhou and WII further responded by explaining that after the purchase order change, Xuzhou insisted the importer accept the whole crawfish in bags labeled as crawfish tail meat because it had already made a substantial investment in the bags, and the importer agreed because it intended to repack the merchandise upon importation anyway. PDocs 126, CDoc 49 (Feb. 22, 2008), and PDoc 128, CDoc 50 (Feb. 25, 2008), respectively. They also argued there was no evidence directly linking these photographs to the entries in question.

Commerce ultimately found this explanation incredible because the "pictures clearly show that the bags contain crawfish tail meat, not whole crawfish, " "tail meat bags are inappropriately small for whole crawfish[, ]" Xuzhou "failed to provide documentary evidence that discussed the order change that supposedly led to packing whole crawfish in bags labeled as tail meat (e.g., letters, email correspondence, or cancelled or new purchase orders), " and Xuzhou also was not forthcoming with the fact that "the order change resulted in shipping whole crawfish in bags labeled as crawfish tail meat until Commerce placed the pictures of the bags on the record." Proprietary Issues and Decision Memorandum (Comment 3), CDoc 52 (Apr. 7, 2008) ("AFA memo"), at 11. For the final review results, Commerce rejected WII's and Xuzhou's claims and published the final results in April 2008 reiterating an antidumping duty rate of 223.01% for Xuzhou as a result of applying AFA. 73 Fed. Reg. at 20250; PDoc 135.

Standard of Review

When reviewing challenges to final results of administrative reviews of antidumping duty orders, this Court will sustain any determination, finding or conclusion of Commerce unless it is "unsupported by substantial evidence on the...

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