SeAH Steel Corp. v. United States , 25 Ct. Int'l Trade 133 ( 2001 )

Slip Op. 01-20
UNITED STATES COURT OF INTERNATIONAL TRADE
__________________________________
:
SEAH STEEL CORPORATION, LTD., :
:
Plaintiff, :
:
v. :
: Court No. 00-04-00157
THE UNITED STATES, :
: Public
Defendant, : Version
:
and :
:
MAVERICK TUBE CORPORATION and LONE :
STAR STEEL COMPANY, INC. :
:
Defendant-Intervenors. :
__________________________________ :
[ITA’s antidumping determination affirmed.]
Dated: February 23, 2001
Kaye, Scholer, Fierman, Hays & Handler, LLP (Donald B.
Cameron, Randi Turner and Deborah L. Wengel) for plaintiff.
Stuart E. Schiffer, Deputy Assistant Attorney General,
David M. Cohen, Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice (Michele D. Lynch),
William J. Kovatch, Jr., Office of Chief Counsel for Import
Administration, United States Department of Commerce, of counsel,
for defendant.
Schagrin Associates (Roger B. Schagrin) for defendant-
intervenors.
OPINION
RESTANI, Judge: This matter is before the court on a motion
for judgment on the agency record pursuant to USCIT Rule 56.2,
brought by SeAH Steel Corporation (“SeAH” or “plaintiff”), the
respondent in the underlying antidumping administrative review.
SeAH challenges the date of sale determination made by the United
States Department of Commerce (“Department” or “Commerce”) in Oil
Country Tubular Goods from Korea, 65 Fed. Reg. 13,364 (Dep’t
Comm. 2000) (final admin. rev.) [hereinafter “Final Results”].
Defendant-intervenors Maverick Tube Corporation and Lone Star
Steel Company request that this court affirm the Department’s
determination.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)
(1994). In reviewing final determinations in antidumping duty
investigations, this court will hold unlawful those
determinations of Commerce found to be “unsupported by
substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
I. Facts
In September of 1998, Commerce initiated an antidumping
administrative review of oil country tubular goods (“OCTG”) from
Korea for the August 1997 through July 1998 period of review
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(“POR”). Initiation of Antidumping and Countervailing Duty
Administrative Reviews and Requests for Revocation in Part, 63
Fed. Reg. 51,893, 51,894 (Dep’t Comm. 1998). When responding to
the Department’s initial questionnaire and first supplemental
questionnaire, SeAH stated that invoice date was the appropriate
date of sale for its third-country sales and provided Commerce
with sample sales documentation to substantiate its claim. See
Supplemental Questionnaire Response (Jan. 15, 1999), at 7 & Exh.
A-26, C.R. Doc. 9, SeAH App., Tab CR 9, at 2 & Exh. A-26; Section
B Questionnaire Response (Dec. 3, 1998), at 10, C.R. Doc. 5, SeAH
App., Tab CR 5, at 3; Section A Questionnaire Response (Nov. 2,
1998), at A-18 & Exh. A-8, C.R. Doc. 2, SeAH App., Tab CR 2, at 2
& Exh. A-8. In its second supplemental questionnaire response,
SeAH revised its earlier characterization of the date of sale,
insisting that contract date was a more appropriate date of sale.
See Supplemental Questionnaire Response (Mar. 19, 1999), at 17,
C.R. Doc. 13, SeAH App., Tab CR 13, at 2. SeAH maintained its
position on the proper date of sale for third-country sales in
its third supplemental questionnaire response, but in responding
to the Department’s specific question regarding possible changes
in the terms of the purchase order, SeAH acknowledged that the
payment terms did change after the contract date for one of its
third-country orders. Supplemental Questionnaire Response (June
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10, 1999), at 4 & Exh. A-34, C.R. Doc. 15, SeAH App., Tab CR 15,
at 2 & Exh. A-34.
Commerce determined for the preliminary results that the
date of sale for third-country sales should be invoice date. See
Issues & Dec. Mem. to Final Results (March 13, 2000), at cmt. 1,
C.R. Doc. 22, SeAH App., Tab CR22 at 2-7 [hereinafter Issues
Mem.]. After briefing by all interested parties on the date of
sale issue, Commerce maintained its determination that invoice
date was the more appropriate date of sale for third-country
sales. See id. The Department rejected SeAH’s arguments based
on the following observations: (1) respondent had failed to
submit documentation sufficient to show that material terms of
sale had not changed after the contract date; (2) the record
revealed changes in material terms of sale, particularly payment
terms for subject merchandise and other terms for non-subject
merchandise; (3) lag times between contract date and invoice
date, previously found to warrant contract date in another case,
did not justify such a determination in the instant case; and (4)
the circumstances surrounding the Asian financial crisis, which
occurred in part during the POR, were insufficient under these
facts to warrant departure from the presumption in favor of
invoice date as the date of sale. See id.II. Analysis
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Pursuant to 19 C.F.R. § 351.401(i) (2000), the Department
will “normally” employ the invoice date as the date of sale for
the relevant product, if the invoice date is reflected in the
respondent’s business records. Commerce may apply a date of sale
other than invoice date, however, if it is “satisfied” that
another proposed date “better reflects” the date on which the
“material terms of sale” are established. 19 C.F.R. §
351.401(i). Department practice has interpreted “material terms
of sale” to include price, quantity, and payment terms. See,
e.g., Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel
Products from Brazil, 65 Fed. Reg. 5554, 5575 (Dep’t Comm. 2000)
(final determ.) (payment terms); Stainless Steel Sheet and Strip
in Coils from the Republic of Korea, 64 Fed. Reg. 30,664, 30,679
(Dep’t Comm. 1999) (final determ.) (price and quantity). The
Department may exercise its discretion to rely on a date other
than invoice date for the date of sale only if “material terms”
are not subject to change between the proposed date and the
invoice date, or the agency provides a rational explanation as to
why the alternative date “better reflects” the date when
“material terms” are established. See Thai Pineapple Canning
Indus. Corp., Ltd. v. United States, No. 98-03-00487, 2000 WL
174986, at *2 (Ct. Int’l Trade 2000).
Commerce correctly applied its regulatory presumption in
favor of invoice date when conducting its date of sale analysis
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in this case. Respondent’s documentation “kept in the ordinary
course of business,” 19 C.F.R. § 351.401(i), identified invoice
dates, which served as the presumptive basis for the date of
sale. See Supplemental Questionnaire Response (Jan. 15, 1999),
at Exh. A-26, 14, 16-17, SeAH App., Tab CR 9, at Exh. A-26, 14,
16-17. Applying this presumption, Commerce concluded that SeAH
did not provide the agency with sufficient documentation to
evaluate SeAH’s claim that contract date “better reflects” the
date of sale than invoice date.1 For example, the sales contract
1
Plaintiff claims that Commerce’s reliance on invoice
date, based in part on the lack of sufficient sales
documentation, constituted an impermissible adverse inference in
the absence of a finding that SeAH had been uncooperative. See
Pl.’s Br. at 16 n.9. Plaintiff misunderstands the nature of the
regulatory presumption in 19 C.F.R. § 351.401(i). Unlike the
situation warranting the application of adverse facts available
pursuant to 19 U.S.C. § 1677e(b), the Department here did not
penalize respondent for its failure to submit properly requested
information that was necessary for the agency to perform its
dumping analysis. Cf. Mannesmannrohren-Werke AG v. United
States, 120 F. Supp. 2d 1075, 1081-87 (Ct. Int’l Trade 2000)
(upholding application of adverse facts available because
respondent failed to act to best of its ability in responding to
agency’s request for information). Rather, the plain language of
19 C.F.R. § 351.401(i) puts on notice the party seeking to avoid
use of invoice date as the date of sale, whether petitioner or
respondent, that such party must bring to the agency’s attention
sufficient information to “satisfy” the Department that an
alternative date “better reflects” the date upon which material
terms were established. See Allied Tube & Conduit Corp. v.
United States, No. 99-11-00715, 2001 WL 47002, *3-4 (Ct. Int’l
Trade 2001). See also Antidumping Duties; Countervailing Duties,
62 Fed. Reg. 27,296, 27,348-49 (Dep’t Comm. 1997) [hereinafter
Final Rule]. Where, as here, the party proposing an alternative
date provides the Department with insufficient documentation for
the agency to determine whether material terms were established
at an earlier date, Commerce may (and indeed must) rely on
(continued...)
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identified the quantity of total OCTG requested by SeAH’s
customer, without regard to size specifications. See
Supplemental Questionnaire Response (Jan. 15, 1999), at Exh. A-
26, 6-7, SeAH App., Tab CR 9, at Exh. A-26, 6-7. The
corresponding invoices, however, were itemized to reflect
delivered quantities of OCTG of specific size as opposed to an
aggregate quantity of OCTG. See id. at Exh. A-26, 14, 16-17,
SeAH App., Tab CR 9, at Exh. A-26, 14, 16-17. The Department
could not determine from this information whether the quantities
ordered of size-specific OCTG had remained the same from the
contract date to the invoice date. Similarly, while respondent’s
submissions included documentation from shipments made in two
months, the sales contract had specified that shipments were to
be during four months. Compare id. at Exh. A-26, 7, SeAH App.,
Tab CR 9, at Exh. A-26, 7 (identifying four months of delivery)
with id. at Exh. A-26, 14, 16-17, SeAH App., Tab CR 9, at Exh. A-
26, 14, 16-17 (identifying two delivery months). A complete
comparison of the sales contract’s material terms with those
found in the invoices could not have been achieved without the
additional two months’ invoices.2 Respondent’s failure to
(...continued)
invoice date pursuant to 19 C.F.R. § 351.401(i). Such reliance
does not contravene the requirements of 19 U.S.C. § 1677e(b)
(adverse facts available provision).
2
Because respondent was attempting to prove a negative,
(continued...)
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provide the agency with sufficient documentation to evaluate
whether material terms of sale changed after contract date
supports the Department’s reliance on the presumptive date of
sale.
Even the incomplete documentation submitted by SeAH reflects
variances in the material terms of sale after the contract date.3
First, in a fax transmitted subsequent to the signing of the
sales contract, one of SeAH’s customers changed the quantity of
non-subject merchandise4 ordered under the sales contract.
Compare id. at Exh. A-26, 6, SeAH App., Tab CR 9, at Exh. A-26, 6
(contractually-agreed quantities) with id. at Exh. A-26, 4-5,
(...continued)
i.e., no material changes, more complete documentation was
required.
3
The Department notes in its brief before this court
that the submitted sales documentation also reveals a change in
delivery dates. See Def.’s Br. at 15. Commerce already has
determined specifically that delivery dates do not constitute
“material terms of sale” in the absence of specification
otherwise by the parties, and the agency has provided no
explanation for its change in characterization now. See
Stainless Steel Bar from India, 62 Fed. Reg. 4029, 4030 (Dep’t
Comm. 1997) (final new shipper admin. rev.). In any event,
because Commerce did not specify the changed delivery dates as a
basis for its decision, it may not now rely on this factor as a
rationale for its determination. See SEC v. Chenery Corp., 318
U.S. 80, 87 (1943) (“The grounds upon which an administrative
order must be judged are those upon which the record discloses
that its action was based.”).
4
The sample contract provided in SeAH’s sales
documentation covered sales of subject and non-subject
merchandise. See Supplemental Questionnaire Response (Jan. 15,
1999), at Exh. A-26, 6-7, SeAH App., Tab CR 9, at Exh. A-26, 6-7.
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SeAH App., Tab CR 9, at Exh. A-26, 4-5 (fax from customer
specifying quantity changes). The requested changes in quantity
significantly exceeded the tolerance levels specified in the
sales contract.5 Notwithstanding plaintiff’s attempt to
characterize the faxed changes as simply an “amendment to the
contract,” Pl.’s Br. at 21 n.13, and therefore not a change
warranting use of invoice date as the date of sale, such post-
contract modifications are precisely the sort of “amendments”
that form the basis of the Department’s regulatory presumption in
favor of invoice date.6 Second, at the request of one of its
5
The sales contract permitted deviations of [ ]%
and [ ]%, whereas the quantity changes requested by SeAH’s
customer included one of [ ]% and one of [ ]%.
Compare id. at Exh. A-26, 8, SeAH App., Tab CR 9, at Exh. A-26, 8
(contractually-permitted variances) with id. at Exh. A-26, 5,
SeAH App., Tab CR 9, at Exh. A-26, 5 (requested quantity
changes).
6
SeAH seeks to have the agency and the court overlook
the noted quantity change because it was “accomplished by an
amendment to the contract, not simple invoicing, as is presumed
by use of invoice date.” Pl.’s Br. at 21 n.13. Respondent is
incorrect that the regulatory presumption of invoice date is
based on the invoice itself necessarily changing the material
terms of sale in any given instance. Rather, use of invoice date
reflects the possibility that producers and customers may alter
the material terms of sale up at any point after contract date
and until invoicing. As the Department noted in its Preamble to
the final regulations,
[i]n the Department’s experience, price and quantity
are often subject to continued negotiation between the
buyer and seller until a sale is invoiced. The
existence of an enforceable sales agreement between the
buyer and the seller does not alter the fact that, as a
practical matter, customers frequently change their
(continued...)
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customers, SeAH permitted a change in payment terms between the
contract date and invoice date.7 See Supplemental Questionnaire
Response (June 10, 1999), at 4 & Exh. A-34, C.R. Doc. 15, SeAH
App., Tab CR 15, at 2 & Exh. A-34. These post-contract changes
in material terms of sale further support the agency’s choice of
invoice date as the date of sale.8
Commerce further argues that its date of sale determination
was “necessary to maintain administrative consistency.” Def.’s
6
(...continued)
minds and sellers are responsive to those changes. The
Department also has found that in many industries, even
though a buyer and seller may initially agree on the
terms of a sale, those terms remain negotiable and are
not finally established until the sale is invoiced.
Final Rule, 62 Fed. Reg. at 27,348-49. SeAH has failed to adduce
any evidence on record to establish that material terms would not
change beyond contract date.
7
The [ ] sales contract provided that
payment would be made by [ ]. See
Supplemental Questionnaire Response (Jan. 15, 1999), at Exh. A-
26, 7, SeAH App., Tab CR 9, at Exh. A-26, 7. On [
], SeAH’s customer sent a memo to SeAH seeking [
], which request was granted by SeAH.
Supplemental Questionnaire Response (June 10, 1999), at 4 & Exh.
A-34, C.R. Doc. 15, SeAH App., Tab CR 15, at 2 & Exh. A-34.
8
SeAH insists that the “unusual circumstances” of this
case, particularly the onset of the Asian financial crisis and
the long lag times between contract date and invoice date,
warrant reliance on the contract date as the date of sale. Pl.’s
Br. at 21-28. Whether the combination of such factors could have
allowed a determination in favor of the contract date, they
cannot be said to compel the Department to make such a
determination and render its conclusion in this case unsupported
by substantial evidence.
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Br. at 18. The Department notes that because it has relied on
invoice date in prior administrative reviews concerning SeAH,
changing date of sale determinations from one review to the next
would encourage manipulation by respondent. Specifically,
certain sales delivered (i.e., invoiced) at the beginning of the
POR under review (August 1997 through July 1998) may have been
made pursuant to a contract signed during the prior POR (August
1996 through July 1997). Those sales were excluded from the
dumping calculation for the previous administrative review
because the agency had determined that invoice date was the
proper date of sale. If the Department were to conclude now that
contract date was the appropriate date of sale for this review,
those sales made pursuant to a contract from the previous review,
but shipped during the present POR, effectively would be excluded
from review for purposes of dumping margin calculations.
Therefore, the Department argues, it was “required to utilize
invoice date in this administrative review.” Def.’s Br. at 20.
This policy argument does not support the use of invoice
date in this case. The date of sale determination inherently
places certain sales outside the scope of the POR that would have
been examined in the present review had an alternative date of
sale been utilized. It does not follow from this self-evident
characteristic of date of sale analysis, however, that Commerce
is “required” to employ the same date of sale in an ongoing
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review as it had relied upon in a previous review. First, there
is no requirement that all sales be examined by means of a series
of reviews. Second, such a requirement would obviate the need
for any date of sale analysis in all reviews beyond the first
administrative review. A date of sale analysis is essential in
each review “to guarantee that [Commerce] makes the fair value
comparison on a fair basis — comparing apples with apples.” Koyo
Seiko Co. v. United States, 36 F.3d 1565, 1573 (Fed. Cir. 1994)
(quoting Smith-Corona Group v. United States, 713 F.2d 1568, 1578
(Fed. Cir. 1983), cert. denied, 465 U.S. 1022 (1984)). The
Department, under the guise of “administrative consistency,” may
not thus abdicate its statutory duty to ensure that normal value
is calculated “at a time reasonably corresponding to the time of
the sale used to determine the export price or constructed export
price.” 19 U.S.C. § 1677b(a)(1)(A).
Plaintiff additionally argues that Commerce’s finding of
contract date as the date of sale under “virtually identical”
facts in Circular Welded Non-Alloy Steel Pipe from the Republic
of Korea, 63 Fed. Reg. 32,833, 32,835-36 (Dep’t Comm. 1998)
(final determ.) [hereinafter “Circular Welded Pipe”], requires a
similar conclusion in this case. Pl.’s Br. at 24-25. If an
agency departs from prior decisions, it must provide a rational
explanation for doing so. See Atchison, Topeka & Santa Fe Ry.
Co. v. Wichita Bd. Of Trade, 412 U.S. 800, 808 (1973) (“Whatever
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the ground for the departure from prior norms, . . . it must be
clearly set forth so that the reviewing court may understand the
basis of the agency's action and so may judge the consistency of
that action with the agency's mandate.”). In Circular Welded
Pipe, the Department used contract date as the date of sale for
U.S. sales because of a significant lag time between contract
date and invoice date, even though changes in terms of sale were
made after the contract date. 63 Fed. Reg. at 32,836. Commerce
reasoned that the changes were “usually immaterial . . . or, if
material, rarely occur[red].” Id.
Here, Commerce attempted to distinguish Circular Welded Pipe
as follows:
While the Department [in Circular Welded Pipe] did
allude to long lag periods between contract date and
invoice date, the discussion involved [respondent’s]
U.S. sales. For the instant review, only the third-
country comparison market sales are at issue. Here, we
note that periods between contract date and invoice
date varied widely, with “long” lag times not
necessarily representative of [respondent’s] third-
country sales.
Issues Mem. at cmt. 1. Such a rationale for distinguishing
Circular Welded Pipe is meaningless. Rationally, the selection
of date of sale cannot rest on the distinction between U.S. sales
and third country (or home market) sales; the geographical
location of a respondent’s sales has no bearing on when the
material terms of sale were established between the respondent
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and its customers.9 Therefore, the court does not rely on the
agency’s explanation for refusing to adhere to its determination
in Circular Welded Pipe. See Atchison, 412 U.S. at 811-17(rejecting insufficient agency explanation for deviation from
prior decisions).
In any case, whether or not the material facts in Circular
Welded Pipe are “virtually identical” to those in the instant
case, the court would find the rejection of the regulatory
presumption in favor of invoice date on such facts inadequately
supported. See Service v. Dulles, 354 U.S. 363, 386-89 (1957)
(agency bound to comply with its regulations). Where the record
reveals some change in material terms of sale subsequent to the
contract date and less than full documentation by respondent, the
presence of lag times between contract date and invoice date do
not, without further explanation, warrant substitution of
contract date for the presumptive date of sale as mandated by 19
C.F.R. § 351.401(i).10 Therefore, remand for harmonization with
Circular Welded Pipe is not required.
9
It is also unclear why the “long” lag times are “not
necessarily representative,” whereas they apparently were
sufficiently representative in Circular Welded Pipe to justify
the use of contract date.
10
Commerce previously has considered lag times between
invoice and shipment dates, see, e.g., Fresh Tomatoes From
Mexico, 61 Fed. Reg. 56,608, 56,611 (Dep’t Comm. 1996) (prelim.
determ.), but has never explained why lag times between contract
and invoice date, by themselves, would warrant abandonment of the
presumption.
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Conclusion
Plaintiff’s sales documentation did not provide enough
information for the Department to evaluate whether, as plaintiff
claimed, materials terms were in fact established on the contract
date. Furthermore, the documentation that plaintiff did submit
revealed changes in the material terms of sale subsequent to the
contract date. Therefore, notwithstanding the Department’s
apparently erroneous conclusions in a previous determination
under possibly similar facts and its flawed policy argument, the
court finds Commerce’s reliance on the presumptive date of sale,
i.e., invoice date, supported by substantial evidence and affirms
the agency’s date of sale determination.
_______________________
Jane A. Restani
Judge
DATED: New York, New York
This 23rd day of February, 2001
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