American Silicon Technologies v. United States ( 2000 )

Slip Op. 00- 130
UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
:
AMERICAN SILICON TECHNOLOGIES, :
ELKEM METALS COMPANY, GLOBE :
METALLURGICAL, INC. and SKW :
METALS & ALLOYS, INC., :
:
Plaintiffs, :
:
v. : Before: MUSGRAVE, JUDGE
:
UNITED STATES : Court No. 94-09-00555
:
Defendant, :
:
and :
:
ELETROSILEX BELO HORIZONTE, :
:
Defendant-Intervenor. :
____________________________________:
[The Court remands the Department of Commerce’s determination in Silicon Metal from Brazil;
Final Results of Antidumping Duty Administrative Review, 59 Fed. Reg. 42,806 (Aug. 19, 1994), as
to Companhia Brasileira Carbureto de Calcio and Companhia Ferroligas Minas Gerais-Minasligas
and sustains it as to Eletrosilex Belo Horizonte].
Dated: October 13, 2000
Baker & Botts, L.L.P. (William D. Kramer and Martin Schaefermeier) for plaintiffs
American Silicon Technologies, Elkem Metals Company, Globe Metallurgical, Inc. and SKW
Metals & Alloys, Inc.
David W. Ogden, Assistant Attorney General, David M. Cohen, Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice (Reginald T. Blades, Jr.), and Office
of Chief Counsel for Import Administration, U.S. Department of Commerce (John F. Koeppen), of
counsel, for defendant.
Verner, Liipfert, Bernhard, McPherson & Hand (Wayne S. Bishop) for defendant-intervenor
Eletrosilex Belo Horizonte.
Court No. 94-09-00555 Page 2
OPINION
In this action, plaintiffs American Silicon Technologies, Elkem Metals Company, Globe
Metallurgical, Inc. and SKW Metals & Alloys, Inc. (collectively “American Silicon”), domestic
producers of silicon metal, contest several aspects of the final results of the first administrative
review of the antidumping duty order on silicon metal from Brazil, Silicon Metal from Brazil; Final
Results of Antidumping Duty Administrative Review, 59 Fed. Reg. 42,806 (Aug. 19, 1994)1 (“Final
Results”), issued by the International Trade Administration of the United States Department of
Commerce (“Commerce” or “the agency”). This Court has jurisdiction pursuant to 19 U.S.C. §
1516a(a) and 28 U.S.C. § 1581(c).
American Silicon previously moved for judgment upon the agency record pursuant to CIT
Rule 56.2 requesting remand to Commerce for correction of eleven alleged errors. As Commerce
consented to remand on eight of the issues, the Court remanded those issues and stayed the
remaining three. See American Silicon Technologies v. United States, 21 CIT 501 (1997). After the
initial remand results were issued, the Court, on motion of Commerce, ordered a second remand of
one issue. See American Silicon Technologies v. United States, 22 CIT __, Slip Op. 98-22 (Mar. 5,
1998). After the second remand results were issued, the Court sustained the remand determinations
on all eight issues and lifted the stay on the remaining three. See American Silicon Technologies v.
United States, 23 CIT __, Slip Op. 99-94 (Sept. 9, 1999).
1
The amendments made by the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108
Stat. 4809 (1994), do not apply in this action because this administrative review was commenced
before January 1, 1995. See AK Steel Corp. v. United States, 21 CIT 1204, 1205 n.1 (1997) (citing
Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed Cir. 1995)).
Court No. 94-09-00555 Page 3
The issues now before the Court are: (1) whether Commerce erred in calculating financial
expenses for Companhia Brasileira Carbureto de Calcio (“CBCC”), a Brazilian producer of silicon
metal, by using as best information available (“BIA”)2 a net financial expense figure which had been
offset by both long-term and short-term interest income, rather than only short-term interest income;
(2) whether Commerce erred by excluding from the calculation of constructed value the imposto
sobre a circulacao de mercadorias e servicos (“ICMS”) and imposto sobre produtos industrialzados
(“IPI”) Brazilian value-added taxes paid by CBCC and Companhia Ferroligas Minas Gerais-
Minasligas (“Minasligas”), another Brazilian producer of silicon metal, on materials used to produce
silicon metal; and (3) whether Commerce erred in calculating a dumping margin for Eletrosilex Belo
Horizonte (“Eletrosilex”), also a Brazilian producer of silicon metal, based on sales of silicon metal
during the period of review when Eletrosilex made no entries of silicon metal into U.S. customs
territory during the period of review. For the reasons which follow, the Court remands the first and
second issues to Commerce and sustains Commerce’s determination on the third issue.
Standard of Review
The Court shall uphold Commerce’s determination unless it is “unsupported by substantial
evidence on the record, or otherwise not in accordance with law”. 19 U.S.C. § 1516a(b)(1)(B)(i).
Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to
2
Title 19, section 1677e(c) of the United States Code (1988) provides:
In making their determinations under this subtitle, the administering
authority and the Commission shall, whenever a party or any other
person refuses or is unable to produce information requested in a
timely manner and in the form required, or otherwise significantly
impedes an investigation, use the best information otherwise
available.
Court No. 94-09-00555 Page 4
support a conclusion.” Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir.
1984) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938), and Universal Camera
Corp. v. NLRB, 340 U.S. 474, 477 (1951)).
Discussion
The Court first addresses the issue of whether Commerce erred by calculating CBCC’s
financial expenses using a net financial expense figure. In the Final Results, Commerce determined
that it was appropriate and consistent with its “normal practice” to calculate CBCC’s interest
expenses on a consolidated basis with its parent company, Solvay do Brasil (“Solvay”) because
Solvay owned 99.8 percent of CBCC and facts indicated that “the degree of relationship influenced
the structure of debt for the entire company.” Final Results, 59 Fed. Reg. at 42,807. During
verification Commerce requested source documents for Solvay’s income and expenses, but CBCC
did not provide this information. American Silicon alleges that this information would have enabled
Commerce to “calculate any offset to total financial expenses for interest income derived from short-
term investments of working capital, in accordance with established Department practice.”
Plaintiffs’ Supplemental Brief at 10.
Due to CBCC’s failure to provide the requested information, Commerce used BIA to
determine CBCC’s financial expenses. As BIA, Commerce derived a percentage from Solvay’s
financial statements and “applied [this percentage] to each month’s [cost of manufacture] to ensure
that CBCC’s [cost of production] data fully reflected interest expenses.” Final Results, 59 Fed. Reg.
at 42,807. American Silicon alleges that in calculating this percentage, Commerce
erroneously used a net financial expense figure that had been reduced by all interest
income, including long-term and short-term interest income. In doing so, the
Department violated its established practice . . . which is to offset financial expenses
only with short-term interest income. Moreover, . . . the Department calculated
Court No. 94-09-00555 Page 5
financial expenses more favorable to CBCC than it would have calculated had CBCC
been forthcoming and provided the information requested by the Department.
Plaintiffs’ Supplemental Brief at 10-11 (emphasis in original).
First, the Court considers whether Commerce improperly deviated from its established
practice. Commerce agrees that its “practice is to reduce financial expenses by only short-term
interest income when [it] has adequate information to apply that method properly.” Defendant’s
Supplemental Brief in Reply to Plaintiff’s Supplemental Brief (“Defendant’s Supplemental Brief”)
at 5. This Court has previously recognized that “an administrative agency has the authority to change
or revoke its policies and practices, if a reasonable explanation is provided for such a change.”
Sanyo Elec. Co., Ltd. v. United States, 23 CIT __, __, 86 F. Supp. 2d 1232, 1241 (1999) (citing Rust
v. Sullivan, 500 U.S. 173, 186-87 (1991)); accord Queen’s Flowers de Columbia v. United States,
21 CIT 968, 976, 981 F. Supp. 617, 625 (1997); Citrosuco Paulista, S.A. v. United States, 12 CIT
1196, 1209, 704 F. Supp. 1075, 1088 (1988). The Court’s “review of an agency’s change of position
or practice will center on whether the action was arbitrary and capricious”, and the Court will find
the change arbitrary unless it is supported by substantial evidence. Sanyo Elec. Co., 86 F. Supp. 2d
at 1241 (citation omitted). In the instant case, Commerce explains that “the information chosen . .
. as BIA did not allow separation of long-term from short-term interest income, [therefore]
Commerce had the choice of reducing financial expenses by the interest income as reported upon
the financial statements (which it chose) or not reducing financial expenses at all (which it did not
choose).” Defendant’s Supplemental Brief at 5. In the absence of evidence to the contrary, the Court
finds that this explanation adequately justifies Commerce’s departure from its established practice.
Next, the Court considers whether Commerce’s decision to offset financial expenses by all
reported interest income is otherwise in accordance with law. It is well established that Commerce
Court No. 94-09-00555 Page 6
has discretion in choosing and applying BIA. See Allied Signal Aerospace Co. v. United States, 996
F.2d 1185, 1191 (Fed. Cir. 1993) (“[B]ecause Congress has ‘explicitly left a gap for the agency to
fill’ in determining what constitutes the best information available, the ITA’s construction of the
statute must be accorded considerable deference.”). Nevertheless, “[t]he purpose behind permitting
Commerce to resort to BIA is to induce respondents to provide Commerce with requested
information in a timely, complete, and accurate manner”. National Steel Corp. v. United States, 18
CIT 1126, 1129, 870 F. Supp. 1130, 1134 (1994) (citations omitted). Accordingly, the Court has
recognized that “[a]lthough the ultimate purpose of BIA is not to punish, BIA is intended to be
adverse”. National Steel Corp., 18 CIT at 1132, 870 F. Supp. at 1136 (citing Pulton Chain Co. v.
United States, 17 CIT 1336, 1339 (1993)).3
In the instant case, Commerce resorted to BIA after CBCC failed to provide source
documents which allegedly would have enabled Commerce to determine the amount of Solvay’s
short-term interest income. Plaintiffs’ Supplemental Brief at 10. Nothing on the record indicates
that Commerce’s application of BIA was adverse to CBCC in spite of the fact that the interest
deduction was larger than it would have been under normal circumstances. Based on the facts
presented, and in the absence of evidence to the contrary, the Court concludes that CBCC benefitted
from the use of Solvay’s net financial expense figure as BIA. Therefore, Commerce’s decision to
use Solvay’s net financial expense figure is not in accordance with law. The Court remands this
3
Although National Steel involved the use of “total BIA” and the instant case involves the
use of only “partial BIA,” the principle that BIA should be adverse applies in both instances. See
Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States, 18 CIT
906, 915 n.22, 865 F. Supp. 857, 865 n.22 (1994) (“In a ‘partial BIA’ situation the only instance in
which BIA is not adverse is when there is an inadvertent gap in the record . . . or when the missing
data is beyond the control of the respondent.”).
Court No. 94-09-00555 Page 7
issue to the agency, which shall either (1) demonstrate that CBCC does not benefit from Commerce’s
use of Solvay’s net financial expense figure, or (2) recalculate the percentage used to determine
CBCC’s cost of production using either Solvay’s gross financial expense figure or other appropriate
information as BIA.
The Court next considers the issue of whether Commerce erred by excluding from the
calculation of constructed value the ICMS and IPI taxes paid by CBCC and Minasligas on materials
used to produce silicon metal. Recently in Camargo Correa Metais, S.A. v. United States, 200 F.3d
771 (Fed. Cir. 1999), the Federal Circuit held that “unless ICMS are remitted or refunded ‘upon
exportation’, they are properly included in the constructed value of the exported merchandise.” Id.
at 774. In light of this decision, Commerce states that it now agrees “that ‘the ICMS and IPI taxes
paid by CBCC and Minasligas . . . must be included in [constructed value].’” Defendant’s
Supplemental Brief at 3 (quoting Plaintiff’s Supplemental Brief at 6). Accordingly, the Court
remands this issue to Commerce and instructs the agency to recalculate constructed value for CBCC
and Minasligas. In the recalculation, Commerce shall include ICMS and IPI taxes in conformity
with the Federal Circuit’s holding in Camargo.
Finally, the Court addresses the issue of whether Commerce erred in calculating a dumping
margin for Eletrosilex even though Eletrosilex made no entries of silicon metal into U.S. customs
territory during the period of review. Presently before the Court is a motion by American Silicon
for severance and dismissal of Count II of the Complaint, which pertains to this issue. As this
motion is unopposed, it is hereby granted, and Count II of the Complaint is dismissed. Furthermore,
as all issues in this action concerning Eletrosilex have now been resolved, the Court sustains
Commerce’s dumping margin determination for Eletrosilex.
Court No. 94-09-00555 Page 8
Conclusion
For the foregoing reasons the Final Results are sustained as to Eletrosilex and remanded as
to CBCC and Minasligas for further proceedings consistent with this Opinion. Commerce shall
submit its remand determination within 90 days of the date of this Opinion. The parties shall then
have 30 days to submit comments on the remand determination. Any rebuttal comments shall be
submitted within 15 days thereafter.
__________________________________
R. KENTON MUSGRAVE, JUDGE
Dated: October 13, 2000
New York, New York