Mueller Comercial de Mexico, S. de R.L. de C v. v. United States , 807 F. Supp. 2d 1361 ( 2011 )


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  •                            Slip Op. 11B 159
    UNITED STATES COURT OF INTERNATIONAL TRADE
    ______________________________
    :
    MUELLER COMERCIAL DE MEXICO, :
    S. DE R.L. DE C.V.,            :
    : Before: Richard K. Eaton, Judge
    and                      :
    : Court No. 10-00163
    SOUTHLAND PIPE NIPPLES CO.,    :
    INC.,                          :
    :
    Plaintiffs,               :
    :
    v.                        :
    :
    UNITED STATES,                 :
    :
    Defendant,               :
    :
    and                      :
    :
    UNITED STATES STEEL            :
    CORPORATION,                   :
    INC.                           :
    :
    Defendant-Intervenor.     :
    ______________________________:
    OPINION AND ORDER
    [Plaintiffs‟ motion for judgment on the agency record is granted,
    and the matter is remanded to the Department of Commerce.]
    Dated: December 16, 2011
    White & Case LLP (David E. Bond, Yohai Baisburd, and Jay C.
    Campbell), for plaintiffs Mueller Comercial de Mexico, S. de R.L.
    de C.V. and Southland Pipe Nipples Co., Inc.
    Tony West, Assistant Attorney General; Jeanne E. Davidson,
    Director, Patricia M. McCarthy, Assistant Director, Commercial
    Litigation Branch, Civil Division, United States Department of
    Justice (Douglas Edelschick); Office of Chief Counsel for Import
    Administration, U.S. Department of Commerce (Ahran Kang McCloskey),
    of counsel, for defendant.
    Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer
    and Jeffrey D. Gerrish), for defendant-intervenor United States
    Steel Corporation.
    Eaton, Judge:   Before the court is plaintiffs‟ motion for
    judgment on the agency record, pursuant to USCIT R. 56.2, challenging
    the Department of Commerce‟s (“Commerce” or the “Department”) final
    results of the Sixth Administrative Review of the antidumping duty
    order on Certain Circular Welded Non-Alloy Steel Pipe (“CWP”) from
    Brazil, the Republic of Korea, Mexico, and Venezuela, 
    57 Fed. Reg. 49,453
     (Dep‟t of Commerce Nov. 2, 1992) (final determination and
    amendment to final determination of sales at less than fair value)
    (the “Order”) for the period of review (“POR”) August 1, 2007 through
    July 31, 2008.   See CWP from Mexico, 
    75 Fed. Reg. 20,342
     (Dep=t of
    Commerce Apr. 19, 2010) (final results) and the accompanying Issues
    and Decision Memorandum (“Issues & Dec. Mem.”) (collectively, the
    “Final Results”).
    The court has jurisdiction pursuant to 
    28 U.S.C. § 1581
    (c)
    (2006) and 19 U.S.C. § 1516a(a)(2)(B)(i) (2006).     For the reasons
    set forth herein, the plaintiffs= motion is granted and the matter
    is remanded to Commerce.
    BACKGROUND
    Plaintiffs Mueller Comercial de Mexico, S. de R.L. de C.V.
    (“Mueller”) and Southland Pipe Nipples Co., Inc. (“Southland”)
    Court No. 10-00163                                            Page 3
    (collectively, “plaintiffs”) challenge the Department=s
    determination, in the Final Results, to assign Mueller an antidumping
    duty rate of 48.33% based on adverse facts available (“AFA”).1
    Plaintiff Mueller is a Mexican company whose business includes
    selling CWP in the United States that it purchases from Mexican
    producers.   Mueller‟s merchandise is imported by its U.S. affiliate,
    plaintiff Southland.
    On November 3, 2008, Commerce published notice of the
    opportunity to request an administrative review of the Order for the
    POR November 1, 2007 through October 31, 2008.     Thereafter, both
    Mueller and defendant-intervenor United States Steel Corporation
    asked Commerce to conduct an administrative review of Mueller‟s
    entries of CWP.   On March 10, 2009, the Department selected Mueller,
    Tuberia Nacional, S.A. de C.V. (“TUNA”), and Hylsa, S.A. de C.V.
    1
    The Department generally makes its antidumping
    determinations based on the information it solicits and receives from
    interested parties concerning the normal value and export price of
    the subject merchandise. Commerce may, however, rest its
    determinations on “facts otherwise available . . . to fill in the
    gaps when Commerce has received less than the full and complete facts
    needed to make a determination.” Gerber Food (Yunnan) Co., Ltd. v.
    United States, 
    29 CIT 753
    , 767, 
    387 F. Supp. 2d 1270
    , 1283 (2005)
    (quoting Nippon Steel Corp. v. United States, 
    337 F.3d 1373
    , 1381
    (Fed. Cir. 2003)). Having determined that the use of facts otherwise
    available is warranted, if the Department further finds that “an
    interested party has failed to cooperate by not acting to the best
    of its ability to comply with a request for information . . .
    [Commerce] may use an inference that is adverse to the interests of
    that party in selecting from among the facts otherwise available.”
    19 U.S.C. § 1677e(b).
    Court No. 10-00163                                              Page 4
    (“Hylsa”) as mandatory respondents in the administrative review.
    See Mem. re Selection of Respondents, A-201-805 (Dep‟t of Commerce
    Mar. 10, 2009) at 7 (P.R. Doc. 24).   Mueller had not been a respondent
    in any of the five previous reviews of the Order.
    Plaintiffs claim that both prior to and during the POR, Mueller
    purchased the CWP it exported to the United States from the two
    Mexican producers that were mandatory respondents in the review–TUNA
    and Hylsa.   According to plaintiffs, relying on Commerce‟s reseller
    policy2 in the period before and during the POR, Southland posted cash
    deposits on the entries Mueller purchased from TUNA and Hylsa at those
    producers‟ respective antidumping duty deposit rates of 2.92% and
    10.38%.   See Mem. to File re CWP from Mexico: Customs Package
    Information of 2007-2008 Period of Review, A-201-805 (Dep‟t of
    Commerce June 9, 2009) (C.R. Doc. 9) (“Customs Data File”).
    On May 29, 2009, after responding only to Section A of Commerce‟s
    Antidumping Duty Questionnaire, Mueller informed Commerce that it
    would not participate in the administrative review.    See Letter from
    White & Case LLP to Secretary of Commerce (May 29, 2009) (P.R. Doc.
    2
    Pursuant to the reseller policy, under certain
    circumstances, an exporter that does not produce the goods it exports
    pays the cash deposit rate of its producer. See Parkdale Int’l, Ltd.
    v. United States, 
    31 CIT 1229
    , 1231, 
    508 F. Supp. 2d 1338
    , 1343 (2007)
    (“Because the producer is assumed to be the first company in the
    commercial chain that knew of the product‟s destination, cash
    deposits for antidumping duties on all merchandise sold to identified
    resellers is initially set at the producer‟s cash deposit rate.”).
    Court No. 10-00163                                              Page 5
    53).       According to Mueller, it decided not to participate because
    the review had been rescinded with respect to TUNA,3 and it became
    apparent that Hylsa was not going to participate.    Mueller maintains
    that it would have been futile for it to continue further with the
    review because the information necessary to determine its
    antidumping duty rate would have had to come from its producers, TUNA
    and Hylsa. Pls.‟ Mem. Pts. Auth. Supp. Mot. J. Agency R. (“Pls.‟
    Mem.”) 4.
    Based on Mueller‟s withdrawal from participation in the review,
    Commerce applied AFA to determine Mueller=s antidumping duty rate.
    See Issues & Dec. Mem. at 10 (“Because Mueller did not cooperate in
    this review by refusing to respond to the Department‟s questionnaire,
    we have applied total AFA for these final results.”); see also Gallant
    Ocean (Thailand) Co. v. United States, 
    602 F.3d 1319
    , 1321 (Fed. Cir.
    2010) (quoting 19 U.S.C. § 1677e(b)) (“Upon a finding that an
    interested party refuses to cooperate with [Commerce‟s] information
    requests, Commerce „may use an inference that is adverse to the
    interests of that party in selecting from among the facts otherwise
    available.‟”).      The Department assigned Mueller the AFA rate of
    48.33% based on a single transaction of TUNA=s during the Fifth
    3
    The Department rescinded the review with respect to TUNA
    because the company timely notified Commerce, in accordance with 
    19 C.F.R. § 351.213
    (d)(3) (2011), that it did not have any exports of
    subject merchandise to the U.S. during the POR. Issues & Dec. Mem.
    at 15.
    Court No. 10-00163                                            Page 6
    Administrative Review of the Order, which covered the period 1998
    through 1999.   See Issues & Dec. Mem. at 10; see also Memorandum re
    CWP from Mexico, Use of Adverse Facts Available (AFA) and
    Corroboration of AFA Rate, A-201-805 (Dep‟t of Commerce Nov. 30,
    2009) (the “AFA Memo”).
    STANDARD OF REVIEW
    The standard of review is set forth in 19 U.S.C. §
    1516a(b)(1)(B)(i), which provides, in relevant part, that the court
    “shall hold unlawful any determination, finding, or conclusion found
    . . . to be unsupported by substantial evidence on the record or
    otherwise not in accordance with law.”
    DISCUSSION
    I.   Commerce‟s Final Results
    In the Final Results, Commerce assigned Mueller the AFA rate
    of 48.33%,4 which was greater than the highest overall rate
    determined in either the original investigation or any subsequent
    review.   In assigning that rate, the Department did not follow its
    established practice of applying the highest overall margin
    determined in any segment of the proceeding - in this case, the
    4
    In arriving at this rate, Commerce chose the highest
    transaction-specific margin calculated for TUNA in the Fifth
    Administrative Review. Issues & Dec. Mem. at 10.
    Court No. 10-00163                                                  Page 7
    all-others rate of 32.62% - to an uncooperative respondent.      See AFA
    Memo at 7 (“Generally, the Department finds that selecting the
    highest rate from any segment of the proceeding as AFA is
    appropriate.”).
    Commerce reasoned that it should assign a rate even higher than
    the all-others rate because Aas Mueller has never previously been
    reviewed by the Department, it is currently subject to the 32.62
    percent rate.@    AFA Memo at 9; see also Issues & Dec. Mem. at 11. Based
    on this finding, Commerce further concluded that by withdrawing from
    the review, Mueller demonstrated that “the all-others rate [of
    32.62%] proved insufficiently adverse to induce Mueller to cooperate
    to the best of its ability in this administrative review.”      AFA Memo
    at 9.    Accordingly, Commerce “deem[ed] it necessary to apply a rate
    higher than the all-others rate to which Mueller is already subject.
    Otherwise, Mueller would have no incentive to cooperate.”       AFA Memo
    at 9.     The Department ultimately found “48.33 percent to be
    sufficiently high so as to encourage Mueller=s participation in future
    segments of this proceeding.”      AFA Memo at 9.    According to
    Commerce,
    applying 48.33 percent to . . . Mueller would ensure [that
    the company] shall not benefit from [its] failure to
    cooperate in this administrative review and provides an
    incentive for . . . Mueller to cooperate in future segments
    of the proceeding.
    AFA Memo at 8.     In other words, Commerce determined that, because
    Court No. 10-00163                                             Page 8
    Mueller was subject to the 32.62% rate prior to the POR and
    nevertheless withdrew from the review, a higher rate was needed to
    insure that it did not profit from its decision not to participate
    in the review and to encourage compliance in future reviews.
    In addition, the Department determined that it could not take
    into account Mueller‟s claim that it complied with Commerce‟s
    reseller policy by making cash deposits for its entries equal to the
    antidumping duty rates assigned to its alleged producers - TUNA and
    Hylsa.    Commerce found that “[w]hile we recognize Mueller‟s claim
    that its entries of subject merchandise sourced from TUNA and [Hylsa]
    would be subject to those producers= individual cash deposit rates,
    because of Mueller=s failure to cooperate, we cannot determine the
    universe of Mueller=s sales, let alone the origin of those unreported
    sales.”   Issues & Dec. Mem. at 11.   Put another way, the Department
    found that Mueller=s failure to participate in the review prevented
    Commerce from determining if its entries were subject to the rate
    set under the reseller policy.   Thus, according to Commerce, it would
    be “inappropriate” to determine if the reseller policy would apply
    to Mueller‟s entries.    See Issues & Dec. Mem. at 11.
    II.   Plaintiffs Insist Mueller Should Be Assigned the All-Others
    Rate
    Plaintiffs‟ threshold argument is that the Department‟s
    Court No. 10-00163                                             Page 9
    determination is unlawful because Commerce lacked any reasonable
    basis for departing from its established practice of assigning an
    uncooperative respondent5 the highest overall rate from any segment
    of the proceeding as the AFA rate.     Here, the all-others rate of
    32.62%.     Plaintiffs assert that the Department=s determination to
    depart from its established practice was contrary to law because “it
    is only in extraordinary circumstances - none of which are present
    here - that [the Department] deviates from using the highest rate
    assigned in a previous segment of the proceeding.”     Pls.‟ Mem. 15.
    Plaintiffs maintain that such “extraordinary circumstances” exist
    when the highest overall margin is equal to the cash deposit rates
    of a respondent subject to AFA, such that the “adverse consequences
    for the respondent would have been diminished . . . because [the
    respondent] would not have owed monies over and above the deposited
    amounts.”     Pls.‟ Mem. 16.
    According to plaintiffs, such extraordinary circumstances are
    not present here because Mueller‟s cash deposit rates were well below
    the 32.62% all-others rate.    Specifically, they claim that Mueller‟s
    cash deposit rates were 2.92% for merchandise manufactured by TUNA,
    and 10.38% for merchandise manufactured by Hylsa.    Thus, they insist
    that “[b]ecause the rates at which Mueller deposited duties were far
    5
    Plaintiffs do not dispute that, by failing to answer the
    Department‟s questionnaires, Mueller was an uncooperative
    respondent subject to the application of AFA.
    Court No. 10-00163                                           Page 10
    below the 32.62% rate, assigning AFA to Mueller Mexico based on
    [Commerce=s] declared practice would have had significant adverse
    consequences.” Pls.= Mem. 17.   For plaintiffs, “[u]nder these
    circumstances, there was no legitimate reason or reasonable basis
    for [Commerce] to depart from its established practice and select
    an aberrationally high, transaction-specific rate as AFA.”       Pls.‟
    Mem. 17.
    Moreover, plaintiffs contend that the record does not support
    Commerce‟s finding that it could not determine whether Southland
    posted cash deposits at the rates of TUNA and Hylsa.     While
    recognizing that Mueller withdrew its questionnaire responses,
    plaintiffs assert that these responses were unnecessary to a finding
    relating to the deposits.    Rather, plaintiffs note that the
    Department itself obtained Customs‟ documentation for eleven of
    Mueller‟s entries during the POR, all of which confirmed that
    Southland paid cash deposits on those entries at TUNA‟s and Hylsa‟s
    antidumping duty rates.   Pls.‟ Mem. 17-18; see also Customs Data
    File.   Plaintiffs further insist that, if this documentation was not
    sufficient to establish the amounts of Southland‟s cash deposits,
    Commerce could have further confirmed Southland‟s cash deposits by
    obtaining the balance of Mueller‟s entry documentation from Customs.
    Pls.‟ Mem. 18.
    Court No. 10-00163                                           Page 11
    III.       Analysis
    A. Legal Framework for the Selection of AFA Rates
    When selecting an appropriate AFA rate, “Commerce must balance
    the statutory objectives of finding an accurate dumping margin and
    inducing compliance.”    Timken Co. v. United States, 
    354 F.3d 1334
    ,
    1345 (Fed. Cir. 2004).    Under 19 U.S.C. § 1677e(b), the Department
    may select “secondary information” as facts otherwise available in
    determining AFA rates, which “includes „[i]nformation derived from
    the petition that gave rise to the investigation or review, the final
    determination concerning the subject merchandise, or any previous
    review under [
    19 U.S.C. § 1675
    ] concerning the subject merchandise.‟”
    KYD, Inc. v. United States, 
    607 F.3d 760
    , 765 (Fed. Cir. 2010)
    (citations omitted).
    It is undisputed that Commerce‟s usual practice is to assign
    an uncooperative respondent the highest overall rate from any segment
    of the proceeding as AFA.6    See AFA Memo at 7 (“Generally, the
    6
    Just what constitutes a lack of cooperation to justify the
    application of this rule is an open question. In the seminal case
    Rhone Poulenc, Inc. v. United States, 
    899 F.2d 1185
     (Fed. Cir. 1990),
    the Federal Circuit first confirmed the “common sense presumption”
    that a respondent that fails to answer Commerce‟s questionnaires does
    so “knowing the rule” that it will be assigned the highest rate from
    any segment of the proceeding. This presumption, however, has been
    refined over the years.
    In addition, in the most recent cases where the [Rhone
    Poulenc] presumption is mentioned, the Federal Circuit
    appears to restrict its use to situations where a
    Court No. 10-00163                                          Page 12
    Department finds that selecting the highest rate from any segment
    of the proceeding as AFA is appropriate.”).
    This practice was first upheld by the Federal Circuit in Rhone
    Poulenc, Inc. v. United States, 
    899 F.2d 1185
     (Fed. Cir. 1990).   As
    this Court has recently noted:
    The Rhone Poulenc case is most often cited for its
    statement on the assignment of the highest prior margin
    to an uncooperative respondent: “[I]t reflects a common
    sense inference that the highest prior margin is the most
    probative evidence of current margins because, if it were
    not so, the importer, knowing of the rule, would have
    produced current information showing the margin to be
    less.” Rhone Poulenc, 
    899 F.2d at 1190
    . In other words,
    the case stands for the proposition that a respondent can
    be assumed to make a rational decision to either respond
    or not respond to Commerce's questionnaires, based on
    which choice will result in the lower rate.
    Tianjin Mach. Imp. & Exp. Corp. v. United States, 35 CIT __,
    respondent has not answered Commerce's questionnaire at
    all, rather than when the questionnaire responses were
    found wanting for one reason or another. In fact, in the
    most recent case citing the Rhone Poulenc presumption, the
    Federal Circuit paid particular attention to the fact that
    the exporter put nothing on the record. See KYD, 
    607 F.3d at 764
     (“King Pac had elected not to cooperate at all in
    the review.”); see also 
    id. at 767
     (“King Pac's failure
    to cooperate deprived Commerce of the most direct evidence
    of King Pac's actual dumping margin.”). Thus, the KYD case
    seems to confirm that “common sense” restricts the Rhone
    Poulenc presumption to cases where a respondent can be
    assumed to have chosen not to respond to a questionnaire
    at all, in order to achieve a lower rate.
    Tianjin Mach. Imp. & Exp. Corp. v. United States, 35 CIT __, __, 
    752 F. Supp. 2d 1336
    , 1347 (2011). Here, it is apparent that Mueller
    was an uncooperative respondent because it withdrew all of its
    answers to Commerce‟s questionnaires.
    Court No. 10-00163                                           Page 13
    __, 
    752 F. Supp. 2d 1336
    , 1348 (2011).    Thus, Rhone Poulenc
    established that Commerce may assign the highest rate from any
    segment of the proceeding to an uncooperative respondent based on
    that respondent‟s knowing7 decision to accept this highest rate as
    a result of its considered choice not to answer Commerce‟s
    questionnaires.   This idea that an uncooperative respondent
    receives the highest rate by choice, based on an understanding of
    its position, is carried forward in recent cases.   See KYD, 
    607 F.3d at 766-67
     (quoting Rhone Poulenc, 
    899 F.2d at 1190
    ).
    As is the case with all established agency practices, if the
    Department chooses to depart from this practice it is required to
    provide a reasonable explanation for doing so.   See Allegheny Ludlum
    Corp. v. United States, 
    24 CIT 452
    , 459, 
    112 F. Supp. 2d 1141
    , 1148
    (2000) (“„Although Commerce is traditionally granted broad
    discretion in its selection of methodology to implement the
    7
    What a respondent knows, or should know, is a common aspect
    of the unfair trade laws. See, e.g., Quingdao Taifa Group Co. v.
    United States, 33 CIT __, __, 
    637 F. Supp. 2d 1231
    , 1239 (2009) (“A
    reasonable and responsible foreign producer would have known that
    it must keep and maintain documents such as factory-out slips,
    production notices, and production subledgers, and [respondent‟s]
    officials‟ efforts to avoid producing the requested documents
    demonstrates that Taifa failed to put forth maximum efforts to
    investigate and obtain the documents.”). Indeed, the reseller
    policy itself relies on the notion that the antidumping duty rate
    should be that of the “first company in the commercial chain that
    knew, at the time merchandise was sold, that the merchandise was
    destined for the United States.” Reseller Notice, 63 Fed. Reg. at
    55,362.
    Court No. 10-00163                                            Page 14
    [antidumping and countervailing duty statutes], Commerce may not
    abuse its discretion and its choice of methodology may not be
    arbitrary.‟   Rather, „an agency must either conform itself to its
    prior decisions or explain the reasons for its departure.‟”)
    (internal citations omitted).
    B. Commerce‟s Determination to Depart from Its Established
    Practice was Contrary to Law and Unsupported By Substantial
    Evidence
    Here, Commerce has not adequately explained its reasons for
    departing from its established practice of assigning the highest
    previous rate to an uncooperative respondent as AFA.   This is because
    it has failed to support its findings with respect to the antidumping
    duty rate to which Mueller‟s entries were subject prior to the POR.
    This failure has two aspects.   First, Commerce has not adequately
    explained its basis for determining that Mueller knew or should have
    known it was subject to the 32.62% all-others rate prior to the POR.
    Second, Commerce‟s determination that Mueller was subject to the
    all-others rate is not supported by substantial evidence because it
    ignores record evidence that Mueller‟s entries were, in fact, subject
    to lower rates based on Commerce‟s reseller policy.      Accordingly,
    the court finds that the Department‟s determination to apply the
    48.33% rate must be remanded.
    As noted, in accordance with Rhone Poulenc and its progeny, a
    Court No. 10-00163                                            Page 15
    prerequisite to Commerce‟s assignment of a rate in excess of 32.62%
    is that Mueller knew, or could be presumed to have known, that it
    was subject to the all-others rate prior to the POR.      Here, the
    Department‟s reason for departing from its established practice was
    that, as a respondent that had not been previously reviewed, Mueller
    was subject to the highest prior margin from the investigation
    onward.   This being the case, it was apparent to Commerce that a rate
    higher than the all-others rate of 32.62% was necessary in order to
    keep Mueller from profiting from its decision not to participate in
    this review, and to encourage Mueller‟s compliance in future reviews.
    In other words, Commerce assumed that Mueller was subject to the
    all-others rate prior to the POR and, based on this assumption,
    concluded that, because Mueller withdrew from the review, the
    all-others rate was clearly not sufficiently adverse to it to insure
    the company‟s cooperation.
    Therefore, Commerce determined not to follow its established
    practice by assigning Mueller the highest previous rate from any
    segment of the antidumping proceeding, because it found that
    the all-others rate proved insufficiently adverse to
    induce Mueller to cooperate to the best of its ability in
    this administrative review . . . [because] as Mueller has
    never previously been reviewed by the Department, it is
    currently subject to the 32.62 percent rate. We deem it
    necessary to apply a rate higher than the all-others rate
    to which Mueller is already subject. Otherwise, Mueller
    would have no incentive to cooperate.
    Court No. 10-00163                                             Page 16
    AFA Memo at 9 (emphasis added).
    As has been seen, for Commerce‟s determination to be lawful,
    Mueller must be found to have made a knowing decision not to respond
    to Commerce‟s questionnaire requests.    That is, it must have been
    the case that Mueller was aware, or that Mueller could have reasonably
    been presumed to be aware, that it was subject to the all-others rate
    prior to the POR for Commerce to be justified in departing from its
    established practice.   Notably, while the Department assumed that
    Mueller was subject to the all-others rate, Commerce does not discuss
    how it was that Mueller knew that it was subject to this rate or how
    the company could reasonably be charged with such knowledge.    Since
    a knowing decision not to participate in the review is required for
    the assignment of the highest rate from any segment, the same is also
    necessary for Commerce to assign an even higher rate pursuant to AFA.
    The Department‟s failure to address the question of whether Mueller
    had, or could be charged with, knowledge that it was at all times
    subject to the 32.62% rate, thus, requires a remand.
    In addition, Commerce‟s reseller policy suggests that Mueller
    was not, in fact, subject to the all-others rate prior to the POR.
    Under the reseller policy, “company-specific [antidumping]
    assessment rates must be based on the sales information of the first
    company in the commercial chain that knew, at the time the merchandise
    was sold, that the merchandise was destined for the United States.”
    Court No. 10-00163                                            Page 17
    Antidumping and Countervailing Duty Proceedings: Assessment of
    Antidumping Duties, 
    63 Fed. Reg. 55,361
    , 55,362 (Dep=t of Commerce
    Oct. 15, 1998) (notice and request for comment on policy concerning
    assessment of antidumping duties) (“Reseller Notice”).    Because the
    Department presumes that foreign producers are aware of the ultimate
    destination of their merchandise, resellers are required to post
    antidumping duty deposits at the same rates as the producers from
    whom they acquire the merchandise they export into the United States.
    Reseller Notice, 63 Fed. Reg. at 55,362.
    Accordingly, if a reseller identifies a producer on the forms
    it submits to Customs and Border Protection (“Customs”), and the
    reseller has not been assigned a company-specific cash deposit rate,8
    the agency will require the payment of cash deposits for those entries
    at the rates of the identified producers.     These entries are then
    liquidated at the producer=s cash deposit rate, unless an
    administrative review is requested for either the producer or
    reseller.   Reseller Notice, 63 Fed. Reg. at 55,362 (“The Department
    instructs Customs to apply any reseller‟s company-specific cash
    deposit rate to entries of merchandise sold by that reseller.      If
    there is no company-specific reseller cash deposit rate and the
    8
    A reseller, or a producer, may have its own
    company-specific cash deposit rate if one was determined for it in
    the initial investigation or an administrative review. Both TUNA
    and Hylsa had company-specific rates determined during the Fifth
    Administrative Review.
    Court No. 10-00163                                           Page 18
    importer identifies the producer, the Department instructs Customs
    to apply the producer's cash deposit rate to the entry.   This logic
    stems from the fact that, when subject merchandise enters the United
    States through a reseller, the Department does not know who set the
    price of the subject merchandise to the United States.     The
    Department instructs Customs to apply the producer's cash deposit
    rate where the producer of the merchandise is identified on the
    assumption that the producer knew that the merchandise was destined
    for the United States.   This assumption is more often true than not.
    Subject merchandise sold through a reseller and imported where there
    is no company-specific reseller rate or where the importer did not
    identify the producer of the merchandise is subject to the all-others
    cash deposit rate.”).
    Importantly, under the reseller policy, the all-others rate9
    only applies to a reseller when (1) either Commerce “determines in
    an administrative review that the producer did not know10 that the
    9
    The all-others rate is a default cash deposit rate that
    applies when no company-specific deposit rate has been determined
    for goods from a particular exporter in the initial investigation
    or during any prior administrative review. Entries will only be
    liquidated at the all-others rate when cash deposits are made at the
    all-others rate, and those entries are not subject to an
    administrative review. See 
    19 U.S.C. § 1504
    (a).
    10
    If Commerce determines that a producer did not know that
    merchandise sold to a reseller was destined for the United States
    then the reseller‟s goods will not be liquidated at the producer‟s
    rates under the reseller policy.
    Court No. 10-00163                                             Page 19
    merchandise it sold to the reseller was destined for the United
    States” or no producer-specific or reseller-specific cash deposit
    rate has been determined; and (2) “there was no company-specific
    review of the reseller for that review period.”       Reseller Notice,
    63 Fed. Reg. at 55,362-63.    Here, Commerce assumed that Mueller was
    subject to the all-others rate prior to the POR because it had never
    been subject to a review under the Order.     This assumption, however,
    does not necessarily hold when the record evidence is examined under
    Commerce‟s reseller policy.
    The only evidence on the record concerning the cash deposits
    made on Mueller‟s entries suggests that Mueller, as a reseller
    without its own cash deposit rate, paid cash deposits at the rates
    of its producers.    See Customs Data File.    That is, Commerce itself
    placed on the record information it solicited from Customs relating
    to eleven of Mueller‟s entries, all of which demonstrate that
    Southland paid cash deposits for these entries equal to either TUNA‟s
    or Hylsa‟s antidumping duty rate.
    By making these deposits it appears clear that plaintiffs
    believed that these entries were subject to Mueller‟s producers‟
    rates in accordance with the reseller policy.       Because this Sixth
    Review is the first review under the Order in nearly ten years,
    Mueller‟s entries have likely been liquidated at its producers‟ cash
    deposit rates of 2.92% and 10.38% for almost a decade.      Therefore,
    Court No. 10-00163                                            Page 20
    Commerce‟s determination that Mueller was subject to the all-others
    deposit rate from the outset does not seem to be in accord with the
    only evidence on the record.
    Except to decline to take it into account, however, Commerce
    does not discuss this evidence in the Final Results.     See Issues &
    Dec. Mem. at 11 (“[B]ecause the Department has been unable to examine
    Mueller‟s claim that it sourced subject merchandise from TUNA and
    [Hylsa], it is inappropriate to assign separate assessment rates for
    those entries, as advocated by Mueller.”).    Commerce attempts to
    justify its failure to address the evidence of Mueller‟s cash deposit
    rates by finding that “what rate Mueller was or was not subject to
    at the beginning of this administrative review is moot, because the
    fact remains that Mueller refused to cooperate with the Department=s
    requests for information and is now subject to AFA.” Issues & Dec.
    Mem. at 11.
    A respondent‟s failure to cooperate, however, does not relieve
    the Department of its responsibility to assign a rate sufficient,
    but no more than sufficient, to insure cooperation.   Timken, 
    354 F.3d at 1345
    ; F.Lli de Cecco Di Filipo Fara S. Martino, S.p.A. v. United
    states, 
    216 F.3d 1027
    , 1032 (Fed. Cir. 2000) (“Obviously a higher
    adverse margin creates a stronger deterrent, but Congress tempered
    deterrent value with the corroboration requirement.     It could only
    have done so to prevent the petition rate (or other adverse inference
    Court No. 10-00163                                            Page 21
    rate), when unreasonable, from prevailing and to block any temptation
    by Commerce to overreach reality in seeking to maximize
    deterrence.”).   Nor does it mean that Commerce can ignore evidence
    that it put on the record itself.    See Kaiyuan Group Corp. v. United
    States, 28 CIT. 698, 724, 
    343 F. Supp. 2d 1289
    , 1314 (2004)
    (“Substantial evidence requires that the agency's determination be
    based on the whole record and the reviewing court must examine all
    evidence that fairly supports and detracts from the
    determination.”); Huaiyin Foreign Trade Corp. v. United States, 
    322 F.3d 1369
    , 1374 (Fed. Cir. 2003) (quoting Atl. Sugar, Ltd. v. United
    States, 
    744 F.2d 1556
    , 1562 (Fed. Cir. 1984) (The existence of
    substantial evidences is determined “by considering the record as
    a whole, including evidence that supports as well as evidence that
    „fairly detracts from the substantiality of the evidence.‟”).
    Evidence of the rate Mueller was subject to at the beginning
    of the review, therefore, was not rendered moot by Mueller‟s status
    as an uncooperative respondent.     Further, this rate is important to
    the outcome of this case because, if Mueller was not subject to the
    all-others rate at the beginning of the POR the Department=s
    established practice leads to the conclusion that 32.62% would be
    sufficiently high to encourage Mueller‟s future cooperation.      As a
    result, Commerce‟s failure to examine this information provides the
    second reason for a remand.
    Court No. 10-00163                                            Page 22
    CONCLUSION
    The Department‟s practice of applying the highest previously
    determined overall rate to an uncooperative respondent as AFA is
    based on the presumption that such a rate is inherently adverse.
    This practice is longstanding, frequently used, and has been held,
    in most circumstances, to be lawful.   See, e.g., Rhone Poulenc, 
    899 F.2d at 1190
    ; NSK Ltd. v. United States, 
    28 CIT 1535
    , 1561, 
    346 F. Supp. 2d 1312
    , 1335 (2004); Shanghai Taoen Int’l Trading Co. v. United
    States, 
    29 CIT 189
    , 199, 
    360 F. Supp. 2d 1339
    , 1348 (2005).     Thus,
    any decision to abandon the application of this rate in favor of the
    highest transaction specific rate for another respondent in a
    previous review must be fully explained and based on substantial
    evidence.   See Cultivos Miramonte S.A. v. United States, 
    21 CIT 1059
    ,
    1064 n.7, 
    980 F. Supp. 1268
    , 1274 n.7 (1997) (“A change is arbitrary
    if the factual findings underlying the reason for change are not
    supported by substantial evidence.”); see also SKF USA Inc. v. United
    States, 
    263 F.3d 1369
    , 1382 (Fed. Cir. 2001) (“[A]n agency action
    is arbitrary when the agency offer[s] insufficient reasons for
    treating similar situations differently.”) (internal quotation and
    citation omitted).
    The Final Results do not provide a reasonable explanation for
    departing from Commerce‟s established practice based on Mueller‟s
    knowledge that it was subject to the all-others rate and,
    Court No. 10-00163                                           Page 23
    nonetheless, withdrew from the review.    Nor has the Department
    supported with substantial evidence its conclusion that Mueller was,
    in fact, subject to the all-others rate during the time leading up
    to the POR.   Thus, the Final Results do not provide a lawful
    explanation, supported by substantial evidence, for departing from
    Commerce‟s established practice of assigning to an uncooperative
    respondent the highest overall rate from any segment of the
    proceeding as the AFA rate.
    ORDER
    Accordingly, for the reasons stated, it is hereby
    ORDERED that, upon remand, Commerce issue a redetermination
    that complies in all respects with this Opinion and Order, is based
    on determinations that are supported by substantial record evidence,
    and is in accordance with law; it is further
    ORDERED that Commerce shall reconsider its determination not
    to apply the all-others rate to Mueller‟s entries.   In doing so, the
    Department shall consider whether Mueller knew, or could be charged
    with knowing, that it was subject to the all-others rate of 32.62%
    prior to the POR, and discuss the record evidence related to the cash
    deposits made on Mueller‟s entries.    Commerce shall then determine
    an antidumping duty rate for Mueller; it is further
    ORDERED that the Department may reopen the record to solicit
    Court No. 10-00163                                            Page 24
    any information it reasonably deems necessary to make its
    determination; it is further
    ORDERED that the remand results shall be due on April 16, 2012;
    comments to the remand results shall be due thirty (30) days following
    filing of the remand results; and replies to such comments shall be
    due fifteen (15) days following filing of the comments.
    /s/ Richard K. Eaton
    Richard K. Eaton
    Dated: December 16, 2011
    New York, New York
    

Document Info

Docket Number: Slip Op. 11-159; Court 10-00163

Citation Numbers: 2011 CIT 159, 807 F. Supp. 2d 1361, 33 I.T.R.D. (BNA) 2386, 2011 Ct. Intl. Trade LEXIS 159

Judges: Eaton

Filed Date: 12/16/2011

Precedential Status: Precedential

Modified Date: 10/19/2024

Authorities (16)

flii-de-cecco-di-filippo-fara-s-martino-spa-v-united-states-v , 216 F.3d 1027 ( 2000 )

Kaiyuan Group Corp. v. United States , 28 Ct. Int'l Trade 698 ( 2004 )

Shanghai Taoen Intern. Trading Co., Ltd. v. United States , 29 Ct. Int'l Trade 189 ( 2005 )

Allegheny Ludlum Corp. v. United States , 24 Ct. Int'l Trade 452 ( 2000 )

Parkdale International, Ltd. v. United States , 31 Ct. Int'l Trade 1229 ( 2007 )

Qingdao Taifa Group Co., Ltd. v. United States , 33 Ct. Int'l Trade 1090 ( 2009 )

the-timken-company-plaintiff-cross-v-united-states-v-koyo-seiko-co , 354 F.3d 1334 ( 2004 )

Gerber Food (Yunnan) Co., Ltd. v. United States , 29 Ct. Int'l Trade 753 ( 2005 )

Nsk Ltd. v. United States , 28 Ct. Int'l Trade 1535 ( 2004 )

huaiyin-foreign-trade-corp-30-worldwide-link-inc-captain-charlie , 322 F.3d 1369 ( 2003 )

Gallant Ocean (Thailand) Co., Ltd. v. United States , 602 F. Supp. 3d 1319 ( 2010 )

Tianjin MacHinery Import & Export Corp. v. United States , 752 F. Supp. 2d 1336 ( 2011 )

nippon-steel-corporation-v-united-states-v-bethlehem-steel-corporation , 337 F.3d 1373 ( 2003 )

Atlantic Sugar, Ltd. v. The United States and Amstar ... , 744 F.2d 1556 ( 1984 )

Rhone Poulenc, Inc. And Rhone Poulenc Chimie De Base, S.A. ... , 899 F.2d 1185 ( 1990 )

skf-usa-inc-skf-france-sa-sarma-skf-gmbh-skf-industrie-spa-and , 263 F.3d 1369 ( 2001 )

View All Authorities »