Wonderful Chemical Indus., Ltd. v. U.S.

• Decision Date: 12 March 2003
• Docket Number: No. SLIP OP. 03-26.,Court No. 00-07-00369.,SLIP OP. 03-26.
• Citation: 259 F.Supp.2d 1273
• Parties: WONDERFUL CHEMICAL INDUSTRAL, LTD., Kwong Fat Hong Dye-Chemicals, Ltd., Beijing Dyestuffs Plant, China Jiangsu International Economic Technical Cooperation Corporation, China National Chemical Construction Jiangsu Company, Chongqing Chuanran Chemicals General Plant, Chongqing Dyestuff Import & Export United Corporation, Hebei Jinzhou Import & Export Corporation, Hebei Wuqiang Chemical Factory, Jiahui Chemical Works, Jiangsu Taifeng Chemical Industry Co., Shanghai Yongchen International Trading Company, Ltd., Sinochem Hebei Import & Export Corporation, Taixing Taifeng Dyestuff Co., Ltd., Tianjin Hongfa Group Co., and Wuhan Tianjin Chemicals Imports & Exports Corp., Ltd., Plaintiffs, v. UNITED STATES, Defendant, and Buffalo Color Corporation, Defendant-Intervenor.
• Court: U.S. Court of International Trade

259 F.Supp.2d 1273

WONDERFUL CHEMICAL INDUSTRAL, LTD., Kwong Fat Hong Dye-Chemicals, Ltd., Beijing Dyestuffs Plant, China Jiangsu International Economic Technical Cooperation Corporation, China National Chemical Construction Jiangsu Company, Chongqing Chuanran Chemicals General Plant, Chongqing Dyestuff Import & Export United Corporation, Hebei Jinzhou Import & Export Corporation, Hebei Wuqiang Chemical Factory, Jiahui Chemical Works, Jiangsu Taifeng Chemical Industry Co., Shanghai Yongchen International

Trading Company, Ltd., Sinochem Hebei Import & Export Corporation, Taixing Taifeng Dyestuff Co., Ltd., Tianjin Hongfa Group Co., and Wuhan Tianjin Chemicals Imports & Exports Corp., Ltd., Plaintiffs, v. UNITED STATES, Defendant, and Buffalo Color Corporation, Defendant-Intervenor.

No. SLIP OP. 03-26.

Court No. 00-07-00369.

United States Court of International Trade.

March 12, 2003.

Aitken Irvin Berlin & Vrooman, LLP, Washington, DC, (Bruce Aitken) for plaintiffs.

Robert D. McCallum, Jr., Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice; Velta A. Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice; Lyn M. Schlitt, General Counsel, United States Trade Commission; Philip J. Curtin, Attorney, Office of the Chief Counsel, United States Department of Commerce, for defendant.

Collier Shannon Scott, PLLC, Washington, DC (Michael R. Kershow and Paul C. Rosenthal) for defendant-intervenor.

BEFORE: RICHARD W. GOLDBERG, Senior Judge.

MEMORANDUM OPINION AND ORDER

GOLDBERG, Senior Judge.

In this action, the Court reviews a challenge to the Department of Commerce's ("Commerce") final determination to impose an antidumping ("AD") order covering certain producers of synthetic indigo from the People's Republic of China ("PRC"). See Synthetic Indigo from the People's Republic of China; Notice of Final Determination of Sales at Less Than Fair Value, 65 Fed.Reg. 25706 (May 3, 2000) ("FinalDetermination").

Plaintiffs, Wonderful Chemical Industrial, Ltd. ("Wonderful"), Kwong Fat Hong Dye-Chemicals, Ltd. ("Kwong Fat"), Beijing Dyestuffs Plant, China Jiangsu International Economic Technical Cooperation Corporation, China National Chemical Construction Jiangsu Company, Chongqing Chuanran Chemicals General Plant, Chongqing Dyestuff Import & Export United Corporation, Hebei Jinzhou Import & Export Corporation, Hebei Wuqiang Chemical Factory, Jiahui Chemical Works, Jiangsu Taifeng Chemical Industry Co., Shanghai Yongchen International Trading Company, Ltd., Sinochem Hebei Import & Export Corporation, Taixing Taifeng Dyestuff Co., Ltd., Tianjin Hongfa Group Co., and Wuhan Tianjin Chemicals Imports & Exports Corp., Ltd. (collectively "Plaintiffs"), are PRC-based producers of the subject merchandise and seek relief from Commerce's action under USCIT Rule 56.2. Plaintiffs argue that the Final Determination was neither in accordance with law nor supported by substantial evidence.

The Court exercises jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c) (2000). For the reasons that follow, the Court sustains Commerce's Final Determination.

I. BACKGROUND

On or about June 28, 1999, domestic producers of synthetic indigo, including defendant-intervenor Buffalo Color Corporation ("Buffalo"), and the unions representing their workers filed antidumping duty petitions with Commerce and the International Trade Commission. The petition alleged that the domestic industry was materially injured or threatened with material injury due to imports of certain synthetic indigo sold at less than fair market value from the PRC.

On July 28, 1999, Commerce initiated its antidumping investigation of possible producers/exporters of synthetic indigo. Notice of Initiation of Antidumping Duty Investigation: Synthetic Indigo from the People's Republic of China, 64 Fed.Reg. 40831 (July 28, 1999). Due to limited resources, Commerce limited the number of mandatory respondents in the investigation to the two largest producers/exporters of synthetic indigo, Wonderful and Kwong Fat. Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Synthetic Indigo From the People's Republic of China, 64 Fed.Reg. 69723, 697925 (Dec. 14, 1999) ("Preliminary Determination"). Wonderful and Kwong Fat are exporters of synthetic indigo based in the PRC and Hong Kong, respectively. The focused investigation was permissible under 19 U.S.C. § 1677f-1(c)(2).¹

Upon further analysis, Commerce shifted its investigation from Kwong Fat to Tianjin Hongfa pursuant to 19 U.S.C. § 1677a(a).² Tianjin Hongfa is a PRCbased trading company. Specifically, Commerce examined whether Tianjin Hongfa sold the subject merchandise to Kwong Fat with the knowledge that the merchandise was destined for export to the United States.

On December 14, 1999, Commerce issued a preliminary determination. Preliminary Determination, 64 Fed.Reg. at 69297. In its Preliminary Determination, Commerce found that Tianjin Hongfa knew or should have known that the merchandise was for export to the United States at the time of sale.

Based on that finding, Commerce, pursuant to 19 U.S.C. § 1677b, calculated the dumping margin to determine if Tianjin Hongfa sold its exports at less than fair market value. Id. at 69729. Commerce calculated the dumping margin using surrogate values from Daurala, an Indianbased exporter of phenlyglycine. Phenlyglycine is the primary chemical used in the production of synthetic indigo. Commerce selected Daurala because India is a country that Commerce considers economically comparable to the PRC and because no data was available from a synthetic indigo producer in any other economically comparable country. Id. at 69728. Wonderful offered surrogate values from Atul and Traspek, two Indian-based producers of various chemicals including phenylglycine. Commerce claims that it rejected the Atul and Transpek data on the grounds that departmental practice is to use financial data that is more narrowly limited to a producer of comparable merchandise.

Using surrogate values from Daurala, Commerce calculated a dumping margin of 25 percent. Based on that data, Commerce stated in the Preliminary Determination that it had reasonable grounds to believe that critical circumstances existed with respect to synthetic indigo from Plaintiffs. Id. at 69725.

As defined by 19 U.S.C. § 1673b(e), critical circumstances exist if Commerce has reasonable grounds to believe that:

(A)(i) there is a history of dumping and material injury by reason of dumped imports in the United States or elsewhere of the subject merchandise, or (A)(ii) the person by whom, or for whose account, the merchandise was imported knew or should have known that the exporter was selling the subject merchandise at less than fair value; and (B) there have been massive imports of the subject merchandise over a relatively short period of time.

19 U.S.C. § 1673b(e).

Based on its finding of critical circumstances under subsections (A)(ii) and (B), Commerce issued its final determination on May 3, 2000. Final Determination, 65 Fed.Reg. at 25706. Subsequently, Buffalo petitioned Commerce for a recalculation of the dumping margins on the grounds that Commerce failed to consider other profits of Plaintiffs. Upon reconsideration, prompted by Buffalo's petition, Commerce amended the dumping margins to account for profits not included in its original calculation. See Notice of Amendment of Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Synthetic Indigo From the People's Republic of China, 65 Fed.Reg. 37961 (June 19, 2000).

Plaintiffs appeal the Final Determination on three grounds. First, Plaintiffs appeal Commerce's decision to treat Tianjin Hongfa as an exporter. Plaintiffs argue that Commerce incorrectly found that Tianjin Hongfa had the requisite knowledge of the final destination of the synthetic indigo it sold to Kwong Fat. Plaintiffs also argue that Tianjin Hongfa was an agent of Kwong Fat, rather than an exporter, based on the definitions provided by 19 U.S.C. § 1677(13). Second, Plaintiffs argue that Commerce's use of surrogate values from Daurala produced aberrational results. Third, Plaintiffs claim that Commerce improperly found the existence of critical circumstances based on the miscalculation of a 25 percent dumping margin.

There are two issues on appeal: (1) whether Commerce's determination to treat Tianjin Hongfa as an exporter was proper and (2) whether Commerce's use of surrogate values from Daurala was proper.³ Commerce's Final Determination with respect to both issues is sustained.

II. STANDARD OF REVIEW

The Court will sustain Commerce's Final Determination if it is supported by substantial evidence on the record and is otherwise in accordance with law. See 19 U.S.C. § 1516(b)(1)(B) (1994). To determine whether Commerce's interpretation of a statute is in accordance with law, the Court applies the two-prong test set forth in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). First, the Court must determine "whether Congress has directly spoken to the precise question at issue." See id. at 842, 104 S.Ct. 2778. The Court does so by looking to the statute's text to ascertain Congress's purpose and intent. Timex V.I., Inc. v. United States, 157 F.3d 879, 881 (Fed.Cir.1998). If Congress's intent is unascertainable and the statute is either silent or ambiguous on the question at issue, "the question for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron, 467 U.S. at 843, 104 S.Ct. 2778. Thus, the reviewing court "is obliged to accept the agency's position if Congress has not previously spoken to the point at issue and the agency's interpretation is reasonable." United States...