Carpenter Technology Corp. v. United States

Slip Op. 02 - 77
UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
:
CARPENTER TECHNOLOGY CORP., :
:
Plaintiff, :
:
v. :
:
THE UNITED STATES, :
:
Defendant. :
____________________________________: Before: MUSGRAVE, JUDGE
____________________________________
: Consol. Court No. 00-09-00447
VIRAJ IMPOEXPO LTD., :
:
Plaintiff, :
:
v. :
:
THE UNITED STATES :
:
Defendant. :
____________________________________:
[Antidumping duty review determination sustained in part, reversed and remanded in part.]
Decided: July 30, 2002
Collier Shannon Scott, PLLC, (Robin H. Gilbert), Washington, D.C., for the plaintiff
Carpenter Technology Corporation.
Miller & Chevalier (Peter Koenig), Washington, D.C., for the plaintiff Viraj Impoexpo
Ltd.
Robert D. McCallum, Jr., Assistant Attorney General, David M. Cohen, Director,
Commercial Litigation Branch, Civil Division, United States Department of Justice (Lucius Lau,
Kenneth J. Guido), for defendant The United States; (of counsel: William G. Isasi, Esq., U.S.
Department of Commerce).
Consolidated Court No. 00-09-00447 Page 2
OPINION
Carpenter Technology Corporation (“Carpenter”) and Viraj Impoexpo Ltd. (“Viraj”)
brought separate lawsuits to contest certain aspects of Stainless Steel Bar From India: Final
Results of Antidumping Duty Administrative Review and Initiation of Antidumping New Shipper
Review, 65 Fed. Reg. 48965 (Aug. 10, 2000) (“Final Results”).1 The Final Results utilize Viraj’s
reported data except for U.S. sales for which lacking corresponding third-country sales data, for
which the office of International Trade Administration, U.S. Department of Commerce
(“Commerce” or “the Department”) utilized “facts otherwise available” to determine the margin
of dumping. See 19 U.S.C. § 1677e. Carpenter contests Commerce’s reversal of its preliminary
determination that Viraj’s questionnaire responses warranted an adverse inference and also its
model matching methodology. Viraj contests Commerce’s resort to facts available and also its
choice thereof. Commerce contends the Final Results are correct.
Background
Viraj’s stainless steel bar entered the United States commerce subject to Antidumping
Duty Orders: Stainless Steel Bar from Brazil, India and Japan, 60 Fed. Reg. 9661 (Feb. 25,
1995). The Final Results cover the period February 1, 1998 through January 31, 1999 (“POR”)
and were initiated on March 29, 1999.2 Commerce sent to Viraj the department’s standard
questionnaire requesting inter alia information on the home market values of merchandise under
review. See PDoc 950. The questionnaire referred a respondent to an attached Appendix III,
1
The official public and confidential records are herein abbreviated “PDoc” and “CDoc”,
respectively.
2
64 Fed. Reg. 14860 (Mar. 29, 1999). The proceeding was later combined with a new
shipper review. See 64 Fed. Reg. 18601 (Apr. 15, 1999).
Consolidated Court No. 00-09-00447 Page 3
which specified that hot rolled (“black”) stainless steel bars as well as cold rolled (“bright”) bars
were reportable.
In its first response(s), dated June 3, 1999 and July 12, 1999, Viraj indicated that it had
not made home market sales of certain merchandise under review and therefore it was providing
only data on third country sales. PDocs 978, 1267. Specifically, in several places Viraj
indicated that it was reporting sales of bright bars as the only merchandise under review that had
been sold in the United States during the POR. Commerce therefore sent Viraj a supplemental
questionnaire on August 17, 1999 requesting confirmation that Viraj had reported all home
market sales of all merchandise under review as described in Appendix III of the initial
questionnaire. See PDoc 1062. On September 23, 1999, Viraj confirmed that it had properly
reported all sales of the merchandise under review in the United States, the home market, and
third country markets. Viraj again stated that it was reporting “all sales of the subject
merchandise as the total stainless steel bright bars activity.” PDoc 1291.
Not convinced, Commerce therefore issued a second supplemental questionnaire on
January 18, 2000. PDoc 1219. This instructed Viraj to “reconfirm that [it is] reporting all sales
of stainless steel bars (not just bright bars) . . . to the United States, the home market, and to
third countries” and set a deadline of February 1, 2000 for responding. Id. (at Fr. 2)
(highlighting added). On January 24, 2000, Viraj requested an extension of time, which
Commerce granted to February 8, 2000 with the caveat that in view of the pending deadline for
the preliminary determination, no further extension of time would be granted. PDocs 1232,
1238. Viraj submitted data disclosing home market sales of black bar on February 8 and 9, 2000
(PDocs 1287, 1289), however it submitted the narration for the data on February 14, 2000.
Consolidated Court No. 00-09-00447 Page 4
Commerce rejected that submission as untimely and excluded it from the administrative record
on February 17, 2000. See PDoc 1552.
On March 8, 2000, Commerce published the preliminary results sub nom. Stainless Steel
Bar From India; Preliminary Results of Antidumping Duty Administrative Review and New
Shipper Review and Partial Rescission of Administrative Review, 65 Fed. Reg. 12209 (Mar. 8,
2000). Commerce determined that because Viraj’s last response was not timely, it had not
responded to the best of its ability, it had therefore failed to cooperate, and it was therefore
necessary to assign a margin based on total adverse facts otherwise available.3 Id. at 12210. See
19 U.S.C. § 1677e. The preliminary margin was 21.02 percent.
On April 28, 2000, Viraj filed comments on the preliminary results. PDoc 1379. Viraj
explained to Commerce that information provided by its counsel showed Commerce authorizing
other respondents to exclude sales of black bar, and it thought that such exception applied to it
because it had not sold black bar in the United States. Because the correspondence from
Commerce to other parties indicated that black bar was fundamentally different from bright bar,
3
According to the February 28, 2000 facts available memorandum:
no description of any product characteristics was given; no answers to our
questions about customer product codes, relationships, or channels of
distribution were provided; no explanation of the invoicing system was
offered; and no indication were [sic] given as to the basis for determining
date and terms of payment. Furthermore, Viraj offered no explanation for
why it did not provide credit expense data, variable cost of manufacturing
data, or any selling expense information. Nor did Viraj provide any
explanation as to why it did not provide a narrative response to questions
regarding its policies relating to the use of discounts, rebates, and interest
revenue.
PDoc 1329 at 4.
Consolidated Court No. 00-09-00447 Page 5
Viraj explained that it concluded that black bar was not a “foreign like product” or “comparable”
to the only “subject merchandise” it had sold in the United States, i.e., bright bar. Viraj stated
that it had clearly explained in its earlier responses that it was only reporting sales of bright bar
and never intended to mislead Commerce. It also explained that the narrative response to its
second supplemental response was submitted after the deadline due to the short time available to
respond and the time pressures on the one person capable of compiling the information for the
response. Additionally, Viraj argued that even without the narrative the data were sufficiently
complete to enable comparison to U.S. sales. Id.
In the final determination, Commerce again declined consideration of Viraj’s home
market data on the ground that the narrative response had not been submitted by the required
deadline. Nonetheless, Commerce determined that Viraj’s responses had been “due to confusion
and not lack of cooperation” and therefore reversed its earlier conclusion that the circumstances
warranted an adverse inference. Commerce then determined that Viraj’s reported foreign-
market sales were sufficiently complete to serve as a basis for comparison to U.S. sales. It
grouped stainless steel bar by the physical characteristics of type (hot- or cold-rolled), grade, re-
melting process, final finish, and shape. Because Commerce determined that Viraj did not report
complete variable cost of manufacturing information, for size it “banded” the foreign market
sales based on whether bar was above or below 20 millimeters, in accordance with Viraj’s
reported cost of manufacturing information. Commerce then matched sales, and for unmatched
U.S. sales Commerce utilized as facts available the “all-others” rate of 12.45% established at the
original less than fair value (“LTFV”) investigation in 1994. See Stainless Steel Bar From India,
Consolidated Court No. 00-09-00447 Page 6
59 Fed. Reg. 66915 (Comment 1) (Dec. 28, 1994). This resulted in a weighted-average margin
of dumping of 2.50 percent for Viraj during the POR. 65 Fed. Reg. at 48967-68 (Aug. 10, 2000).
Discussion
Jurisdiction over this matter is pursuant to 19 U.S.C. § 1516a(a)(2)(B)(i) via 28 U.S.C. §
1581(c). The standard of review is whether “any [contested] determination, finding or
conclusion” found by Commerce is “unsupported by substantial evidence on the record, or is
otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B). Substantial evidence is
“such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”
E.g., Mitsubishi Heavy Indus. v. United States, 275 F.3d 1056, 1060 (Fed. Cir. 2001) (quoting
Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938) via Universal Camera Corp. v. NLRB,
340 U.S. 474, 477 (1951)).
In an administrative review of an antidumping duty order, Commerce is required to
determine the applicable antidumping duty margin, if any, for each entry of “subject
merchandise.” 19 U.S.C. § 1675(a)(2)(A). The margin is the difference between the “normal
value” (“NV”) and the “export price” (“EP”) or “constructed export price” (“CEP)” (as
applicable) of the subject merchandise. 19 U.S.C. § 1677b(a). Subsection (1) of section
1677b(a) provides that the NV of such subject merchandise “shall” be a
(B) Price
....
(i) . . . at which the foreign like product is first sold (or in the absence
of a sale, offered for sale) for consumption in the exporting country, in the
usual commercial quantities and in the ordinary course of trade and, to the
extent practicable, at the same level of trade as the [EP] or [CEP], or
(ii) in a case to which subparagraph (C) applies, the price at which the
foreign like product is so sold (or offered for sale) for consumption in a
country other than the exporting country or the United States, if—
Consolidated Court No. 00-09-00447 Page 7
(I) such price is representative,
(II) the aggregate quantity (or, if quantity is not appropriate,
value) of the foreign like product sold by the exporter or producer
in such other country is 5 percent or more of the aggregate quantity
(or value) of the subject merchandise sold in the United States or
for export to the United States, and
(III) [Commerce] does not determine that the particular market
situation in such other country prevents a proper comparison with
the export price or constructed export price.
(C) Third Country Sales
This subparagraph applies when—
(i) the foreign like product is not sold (or offered for sale) for
consumption in the exporting country as described in subparagraph (B)(i),
(ii) [Commerce] determines that the aggregate quantity (or, if quantity
is not appropriate, value) of the foreign like product sold in the exporting
country is insufficient to permit a proper comparison with sales of the
subject merchandise to the United States, or
(iii) the particular market situation in the exporting country does not
permit a proper comparison with the [EP] or [CEP].
For purposes of clause (ii), the aggregate quantity (or value) of the foreign
like product sold in the exporting country shall normally be considered to
be insufficient if such quantity (or value) is less than 5 percent of the
aggregate quantity (or value) of sales of the subject merchandise to the
United States.
19 U.S.C. § 1677b(a)(1). If necessary information is missing from the administrative record,
Commerce must make a determination on the basis of available information pursuant to 19
U.S.C. § 1677e, which provides in relevant part:
(a) In general
If—
(1) necessary information is not available on the record, or
(2) an interested party or any other person—
***
(B) fails to provide such information by the deadlines for
submission of the information or in the form and manner
requested, subject to subsections (c)(1) and (e) of section 1677m of
this title,
Consolidated Court No. 00-09-00447 Page 8
[Commerce] . . . shall, subject to section 1677m(d) of this title, use the
facts otherwise available in reaching the applicable determination under
this subtitle.
(b) Adverse inferences
If the administering authority or the Commission (as the case may be)
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 from the
administering authority or the Commission, the administering authority or
the Commission (as the case may be), in reaching the applicable
determination under this subtitle, may use an inference that is adverse to
the interests of that party in selecting from among the facts otherwise
available. Such adverse inference may include reliance on information
derived from--
(1) the petition,
(2) a final determination in the investigation under this subtitle,
(3) any previous review under section 1675 of this title or
determination under section 1675b of this title, or
(4) any other information placed on the record.
19 U.S.C. § 1677e. See also 19 C.F.R. §§ 351.221, 351.308 (2000).
I
Carpenter contends the record lacks substantial evidence to support the determination
that Viraj had acted to the best of its ability. It argues that Viraj, having participated in prior
proceedings, was “well-acquainted” with departmental procedures and the contents of the
agency’s standard questionnaire, and it contends that Commerce violated departmental policy by
not considering the three factors it generally considers in determining whether to apply adverse
facts available: (1) the level of experience of the respondent in other investigations and orders;
(2) whether the respondent has control of the data at issue; and (3) the extent to which the
respondent may have benefitted from its own lack of cooperation. See Def.-Int.’s Br. at 19-26
(citing inter alia Stainless Steel Sheet and Strip Coils from Taiwan, 64 Fed. Reg. 30592 (June 8,
Consolidated Court No. 00-09-00447 Page 9
1999) (final LTFV determination); Roller Chain Other Than Bicycle, From Japan, 62 Fed. Reg.
60472, 60477 (Nov. 10, 1997) (final review results); Certain Welded Carbon Steel Pipes and
Tubes from Thailand, 62 Fed. Reg. 53808, 53820-21 (Oct. 16, 1997) (final review results)).
Carpenter argues for remand and consideration in accordance with Commerce’s own policy.
Assuming arguendo that the foregoing amounts to administrative policy, the Court can
discern nothing of record to justify remand for such consideration. The generic experience of a
respondent in prior proceedings offers little, if any, insight into its actions during a particular
proceeding. Nippon Steel Corp. v. United States, 25 CIT ___, ___, 146 F. Supp. 2d 835, 839
(2001). The second and third factors are predicated on finding a lack of cooperation. None has
been determined, and there is no indication that Viraj intended to or did benefit from
withholding information. Moreover, 19 U.S.C. § 1677e(b) is permissive in scope. See
Hoogovens Steel BV v. United States, 24 CIT ___, ____, 86 F. Supp. 2d 1317, 1332 (2000).
Therefore, even if Viraj had not acted to the best of its ability the law does not compel an
adverse inference.
Of course, clear communication is prerequisite to avoiding confusion. Cf. 19 U.S.C. §§
1677m(c) & 1677m(d). In this matter, Commerce sought the same information three times. But
the apparent need for the second supplemental questionnaire would have been obviated had
Commerce specifically requested confirmation in the first supplemental questionnaire of whether
Viraj had reported all home market sales including black bar. On the other hand, the fact that
Commerce sought confirmation at all (i.e., whether all home market sales had been reported)
should have acted as a red flag to Viraj regarding its reporting of home market sales.
Consolidated Court No. 00-09-00447 Page 10
The purposes of the antidumping laws are not furthered by erroneous assumption. Time
is a precious commodity in these administrative proceedings. If a request from Commerce is
unclear, it is incumbent upon parties to assist the administrative process and clarify the precise
information sought. See 19 U.S.C. §§ 1675(a)(3)(A) & 1675(c)(5); Atlantic Sugar, Ltd. v.
United States, 744 F.2d 1556, 1560 (Commerce is dependent upon the cooperation of
respondents to provide necessary information in order to determine dumping margins “within the
extremely short statutory deadlines which the Congress has built into the . . . antidumping law”);
Persico Pizzamiglio, S.A. v. United States, 18 CIT 299, 304 (1994) (“any ambiguity should have
been resolved through consultation with Commerce before the time . . . the response was due”);
Sugiyama Chain Co. v. United States, 16 CIT 526, 531, 797 F. Supp. 989, 994 (1992) (“if the
burden of compiling, checking, rechecking, and finding mistakes in [a] submission . . . were
placed upon Commerce, it would transform the administrative process into a futility”).
In any event, the standard of review is whether there is substantial record evidence to
support the agency’s determination that Viraj had acted to the best of its ability. There is,
namely: (1) the letter from Commerce to counsel exempting Isibars from reporting black bar
sales, on which Viraj claims to have relied, (2) the generality of the first supplemental
questionnaire request, (3) Viraj’s reiteration of its original response that it was reporting “all
sales of the subject merchandise as the total stainless bright bars activity,”4 and (4) Viraj’s
general diligence and responsiveness to Commerce’s requests for information. See PDoc 1477
(Comment 4). See also PDocs 1219, 1379 at 2. Given the context, Commerce could reasonably
conclude that Viraj had been confused as to its reporting requirements, and that even considering
4
PDocs 1267, 1291 at 2.
Consolidated Court No. 00-09-00447 Page 11
the late narrative Viraj had been responsive. The determination that Viraj had acted to the best
of its ability is therefore sustained. See Consolo v. Federal Maritime Comm’n, 383 U.S. 607,
620 (1966) (the possibility of drawing inconsistent conclusions from the same “evidence does
not prevent an agency’s finding from being supported by substantial evidence”); Inland Steel
Industries, Inc. v. United States, 188 F.3d 1349, 1359 (Fed. Cir. 1999) (reviewing courts do not
weigh the evidence to determine whether a different conclusion is possible).
II
Viraj spends much of its brief criticizing Commerce’s decision to reject the narrative as
untimely and disregard the home market data and base normal values (NVs) on third country
sales. At the same time, however, Viraj complains of being forced to respond to a six-page,
single-spaced document in a mere two weeks, albeit with a one-week extension. The second
supplemental questionnaire was a consequence of the nonspecific request in the first
supplemental questionnaire to confirm that all home market sales had been reported, which Viraj
contends was inadequate notice “of the nature of the deficiency” in accordance with 19 U.S.C. §
1677m(d), particularly in light of awareness of the exemption “granted” to other respondents
from reporting black bar sales in the home market on the ground that they had sold only bright
bar in the U.S. market. Viraj further contends that because its situation was the same as those
other respondents, in light of their exemptions the reporting requirement imposed on it was
arbitrary and capricious. Viraj’s Br. at 5.
The judicial standard of review in a challenge such as this is whether the determination
on the record is unsupported by substantial evidence or not in accordance with law. See 19
U.S.C. § 1516a(b)(1)(B) (1995). Of course, an agency record that reveals an arbitrary or
Consolidated Court No. 00-09-00447 Page 12
capricious decision would not be in accordance with law, but that inquiry is narrower than the
substantial evidence standard and asks whether there was a rational basis in fact for the decision.
Suwanee Steamship Co. v. United States, C.D. 4708, 79 Cust.Ct. 19, 23-24, 435 F.Supp. 389,
392 (1977). If so, a court may not substitute its judgment for that of the agency. Motor Vehicle
Mfrs. Ass'n of U.S. v. State Farm Mutual Automobile Ins. Co., 463 U.S. 29, 43 (1983). See, e.g.,
Melamine Chemicals, Inc. v. United States, 732 F.2d 924, 933-34 (1984) (“Commerce's decision
to disregard margins caused solely by temporary fluctuations in the exchange rate, and to reach a
Final Negative Determination, was reasonable and neither arbitrary nor in violation of law.”);
Bowe Passat v. United States, 17 CIT 335, 338 (1993) (decision to reject supplemental
information arbitrary and capricious and an abuse of discretion). See also 5 U.S.C. § 706(2)(A).
As a general matter “it is Commerce, not the respondent, that determines what
information is to be provided for an administrative review.” Ansaldo Componenti, S.p.A. v.
United States, 10 C.I.T. 28, 37, 628 F. Supp. 198, 205 (1986). The government here
distinguishes Commerce’s treatment of Viraj on the ground that those other respondents
specifically requested an exemption whereas Viraj did not. But, of course, Commerce may
neither abrogate its statutory mandate to inquire into all matters that may bear on the margin
calculation nor engage in partiality. By exempting respondents with no sales of black bar in the
United States from reporting home market sales of such, Commerce obviously concluded that
home market black bar information was not necessary for calculating their NVs in accordance
with 19 U.S.C. § 1677b(a)(1). Whether that decision was correct, Commerce was aware that
Viraj had sold only bright bar in the U.S. market, and that circumstance necessarily superseded
the mandate to use facts otherwise available “if an interested party or any other person . . . fails
Consolidated Court No. 00-09-00447 Page 13
to provide such information by the deadlines for submission of the information or in the form
and manner requested” under 19 U.S.C. § 1677e(a)(2)(B). Respondents have a right to expect
fair, impartial, and consistent treatment in agency proceedings. See, e.g., NEC Corp. v. U.S.
Dep’t of Commerce, 151 F.3d 1361 (1998); Melamine Chemicals v. United States, 732 F.3d 924,
933 (1984); Torrington Co. v. United States, 44 F.3d 1572, 1579 (1995). It was incumbent upon
Commerce to apply its rationale to all respondents similarly situated.
Be that as it may, in view of the fact that Viraj limited its initial response to third country
sales data at the outset of the proceeding, it appears that Viraj’s fundamental concern is the
margin calculated on the basis of facts otherwise available, and that the basis of market data used
to calculate NV is immaterial to Viraj. The foregoing therefore appears to be academic.
III
A margin determination requires the identification of the “foreign like product” used for
purposes of comparison. See 19 U.S.C. § 1677(16). In comparing the foreign and U.S.
merchandise, if a difference in price is “established to the satisfaction of the administering
authority to be wholly or partly due to . . . other differences in the circumstances of sale[,]” 19
U.S.C. § 1677b(a)(6)(C) authorizes Commerce to make a so-called difference in merchandise
(“difmer”) adjustment. In considering any such adjustment, Commerce proceeds on the
assumption that variable costs of manufacturing account for all differences in the physical
characteristics of the products to be compared:
In deciding what is a reasonable allowance for differences in physical
characteristics, the Secretary will consider only differences in variable
costs associated with the physical differences. Where appropriate, the
Secretary may also consider differences in the market value. The
Consolidated Court No. 00-09-00447 Page 14
Secretary will not consider differences in cost of production when
compared merchandise has identical physical characteristics.
19 C.F.R. § 351.411 (1998). If the value of the difmer exceeds 20 percent of the total
manufacturing costs (variable plus fixed costs), Commerce will presume that products are not
comparable in the absence of circumstances that would make such difference reasonable. See
Antidumping Manual, Ch. 8 at 49-52 (U.S. Dep’t of Comm., Feb. 10, 1998); see also Import
Administration Policy Bulletin 92.2 (U.S. Dep’t of Comm., July 29, 1992).
Commerce concluded that Viraj provided total cost of manufacturing data but incomplete
variable cost of manufacturing (“VCOM”) data. Commerce therefore determined to resort to
facts otherwise available for such VCOM data, and its method of accounting for such was to
“band” (to use the parties’ term) foreign-market and U.S.-export sales based on Viraj’s
representation that production processes differed between bar of less than 20 millimeters and bar
greater than 20 millimeters. See CDoc 1266 at D-3; CDoc 1290 at D-14.
Carpenter believes size matters. It argues that there is a fundamental difference between
banding sales and banding manufacturing costs, and that without VCOM data, third-country and
U.S. sales could not be properly matched. The effect of the methodology, Carpenter contends,
was to assign identical product matches irrespective of actual bar size:
In cases where the Department has allowed averaging of cost data for
VCOM, that decision only determined the magnitude of the DIFMER
when a match between non-identical U.S. and foreign products occurs.
Banding sales together by size range actually changes the manner by
which sales are matched. Instead of seeking to match 15 mm prices in the
U.S. to 15 mm prices in the third-country market, the Department has
allowed a 15 mm product in the United States to match a 5, 8, 12, 16, or
19 mm product in the foreign market. Thus, the specific price differences
are obviated and the most accurate possible measure of dumping is
masked.
Consolidated Court No. 00-09-00447 Page 15
Def.-Int.’s Reply Br. at 7, 11. Thus, according to Carpenter, Commerce’s method had the effect
of masking differences in Viraj’s cost of production and “rewarding” Viraj because Commerce
could not make the requisite difmer adjustments.
The government responds that the question here is simply whether Commerce has
reasonably met the requirements of 19 U.S.C. § 1677b(a)(6)(C) to account for the absence of
VCOM information. It contends that Carpenter’s argument assumes that Commerce’s method is
distorted without evidence thereof. Rather, according to the government, the data Viraj supplied
enabled calculation of all legally-mandated adjustments to NV under 19 U.S.C. § 1677b(a)(6)
(e.g., inland freight, insurance, brokerage) and accounted for five out of the six physical
characteristics that Commerce customarily uses in matching these products (type, grade, re-
melting process, final finish, and shape). Def.’s Br. at 33. See CDoc 1266 at B8–B10.
According to the government, the lack of precise VCOM information affected only the
comparability of size, which impacted the “customary” adjustment for “any other differences.”
See 19 U.S.C. § 167b(a)(6)(C)(ii).
Commerce has implicit authority to develop and apply reasonable model-matching
methodologies in order to determine a relevant “foreign like product” under 19 U.S.C. §§ 1677b
and 1677(16), and its statutory interpretation thereof is entitled to Chevron deference.5 See, e.g.,
NTN Bearing Corp. v. United States, 26 CIT ___, ___, 186 F. Supp. 2d 1257, 1302 (2002). See
also Koyo Seiko Co. v. United States, 66 F.3d 1204, 1209-10 (Fed. Cir. 1995) (“Congress has
implicitly delegated authority to Commerce to determine and apply a model-match methodology
5
See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837,
842-43 (1984) (“if the statute is silent or ambiguous with respect to the specific issue, the question
for the court is whether the agency's answer is based on a permissible construction of the statute”).
Consolidated Court No. 00-09-00447 Page 16
necessary to yield ‘such or similar’ merchandise”); Timken v. United States, 10 CIT 86, 98, 630
F. Supp. 1327, 1338 (1986). On the other hand, the methodology chosen must comport with law
and the standards of substantial evidence and reasonableness. See 19 U.S.C. § 1516a; see, e.g.,
Allied Tube & Conduit Corp. v. United States, 132 F. Supp. 2d 1087, 1096 (CIT 2001) (rejecting
Commerce's unreasoned reliance on simple average in lieu of more accurate weighted average in
non-adverse facts available context); Mannesmannrohren-Werke AG et al. v. United States, 24
CIT ___, ___, 120 F. Supp. 2d 1075, 1088-89 (2000) (Commerce’s use of average facts available
methodology upheld in absence of evidence that a more specific methodology would be more
accurate); Koenig & Bauer-Albert AG, et al. v. United States, 22 CIT 574, 581-584, 15 F. Supp.
2d 834, 844-46 (1998) (Commerce’s use of a facts otherwise available methodology upheld
because the methodology bore a rational relationship to the subject matter at issue), aff’d in part,
rev’d on other grounds, 259 F.3d 1341 (Fed. Cir. 2001); Federal-Mogul Corp. et al. v. United
States, 18 CIT 785, 807-808, 862, F. Supp. 384, 400 (1994) (Commerce has discretion in the
choice of methodology as long as the chosen methodology is reasonable and its conclusions are
supported by substantial evidence on the record).
Carpenter’s analysis demonstrates that Commerce’s method matched more sales than
would have been the result had resort to facts otherwise available occurred after a determination
on model matching, but that analysis does not, in itself, demonstrate that Commerce’s method
was unreasonable and not in accordance with law. As above noted, a difmer adjustment is
required to the extent that a difference in price is “established to the satisfaction of the
administering authority to be wholly or partly due to . . . other differences in the circumstances
of sale[.]” 19 U.S.C. § 1677b(a)(6)(C) (highlighting added). Carpenter’s argument does not
Consolidated Court No. 00-09-00447 Page 17
effectively demonstrate that differences in VCOMs (assuming they exist) among the different
individual sizes of stainless steel bar were of such magnitude that they would exceed the difmer
test’s twenty percent allowance before incomparability is presumed. In other words, Carpenter’s
argument does not demonstrate that Commerce’s method of accounting for the absence of
VCOM information for matching purposes was per se unreasonable and therefore not in
accordance with law. Cf. Koyo Seiko, supra, 66 F.3d at 1208-11 (sum-of-deviations without ten
percent cap model matching methodology sustained); Makita Corp. v. United States, 21 CIT
734, 974 F. Supp. 770, 779 (1997) (Commerce has authority to pool home market merchandise
for matching purposes); Federal-Mogul Corp. v. United States, 20 C.I.T. 234, 248-49, 918 F.
Supp. 386, 400 (1996); Torrington Co. v. United States, 19 CIT 403, 414, 881 F. Supp. 622, 635
(1995) (sustaining family model matching methodology); Hussey Copper, Ltd. v. United States,
17 CIT 993, 996, 834 F. Supp. 413, 417-18 (1993) (division of alloys into groups, difmer
adjustments based on London Metal Exchange prices of copper and zinc for each grade within
each group, and derivation of weighted-average group price as the basis for comparison, held to
be in accordance with 19 U.S.C. 1677(16); exact alloy matching not required by statute).
On the other hand, Carpenter points out that the issues and decision memorandum states
that Commerce undertook banding “in order to obtain more identical matches.” PDoc 1466 at 13.
This explanation appears results-oriented. In Hyster Co. v. United States, 18 CIT 119, 127, 848
F. Supp. 178, 185-86 (1994), the court examined seemingly similar statements of Commerce6
6
See Hyster, 18 CIT at 127, 848 F. Supp. at 185-86 (“Our main concern is that we find the
most similar merchandise that is sold in commercial quantities in the home market[.] This approach
appears to be a reasonable solution in that it simplifies the matching process and creates the
likelihood of a greater number of matches”) .
Consolidated Court No. 00-09-00447 Page 18
relating to an announced change in matching methodology but concluded that there were other
factors putting those statements into perspective and were not the justification for the change in
Commerce’s model matching methodology. While an agency determination might be sustained
despite “less than ideal clarity if the agency’s path may be reasonably discerned[,]” Bowman
Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974), the “path” here is
cluttered by apparent disparate treatment between Viraj and Panchmahal, the latter, as Carpenter
points out, having been required to provide for matching purposes cost data in range form and
specific product sizes but penalized for not providing cost information to enable exact-size
product matching. See Def.-Int.’s Br. at 11-12 (citing PDoc 1466 at 2-7 & CDoc. 1284). This
Court therefore cannot conclude that the Final Results do not reflect a desire to produce a
particular result, and the matter requires remand for clarification and, as necessary, reconcilation.
IV
Under prior law, when considering a non-adverse (or “second tier”) facts otherwise
available situation, Commerce would ordinarily use the higher of the original LTFV margin
determined for the respondent’s merchandise or the highest calculated margin during the review
at issue for the same class or kind of merchandise. See, e.g., Koyo Seiko Co. v. United States, 92
F.3d 1162, 1167 (Fed. Cir. 1996). In this proceeding, because Viraj was not a party to the
original LTFV investigation, Commerce utilized as non-adverse facts otherwise available the
LTFV all-others rate, a weighted-average of a verified margin of 3.87% found for Grand
Foundry, a cooperative respondent, and a derived margin based on the petitioner’s allegations of
21.02% determined against Mukand, an uncooperative respondent. Because that rate was based
Consolidated Court No. 00-09-00447 Page 19
on adverse inferences, Viraj argues that its use impermissibly perpetuated pre-URAA law7 and
violated an international obligation of the United States.8
The government essentially argues that the URAA requires only prospective
determination of non-adverse all-others rates, a position it contends is in accordance with
judicial precedent that all-others rates are valid and unalterable until such time as they are
specifically invalidated. Def’s Br. at 23 (citing Federal-Mogul Corp. et al. v. United States, 17
CIT 442, 449, 822 F. Supp. 782, 788 (1993); Federal-Mogul Corp. et al. v. United States, 18
7
The underlying LTFV investigation was initiated on January 27, 1994 and decided on
December 28, 1994. See 59 Fed.Reg. 3844 and 59 Fed.Reg. 66915. On January 1, 1995 section
219(b)(2) of the URAA went into effect:
For purposes of preliminary and final LTFV determinations the estimated all-
others rate shall be an amount equal to the weighted average of the estimated
weighted average dumping margins established for exporters and producers
individually investigated, excluding any zero and de minimis margins, and
any margins determined entirely under section 1677e of this title.
19 U.S.C. § 1673d(c)(5)(A). See 19 U.S.C. § 1677e.
8
Viraj’s Br. at 3 (citing Federal Mogul Corp. v. United States, 93 F.3d 1572, 1581 (Fed. Cir.
1995) (“[S]tatutes should not be interpreted to conflict with international obligations.”)). Viraj notes
that the URAA sought to bring U.S. law into compliance with the United States’ WTO obligations,
including the provision on permissible all-others rates. See Ferro Union Inc. v. United States, 23
CIT 178, 197, 44 F. Supp. 2d 1310, 1328 (1999). Article 9.4 of the WTO Antidumping Duty
Agreement, reflected in 19 U.S.C. § 1673d(c)(5)(A), states that
any antidumping duty applied to imports from exporters or producers not
included in the examination [i.e. an all-others rate] shall not exceed the
weighted average dumping margin with respect to the selected exporters or
producers. . . . Provided that the authorities shall disregard for purposes of
this paragraph any zero and de minimis margins established under the
circumstances referred to in paragraph 8 or Article 6[, i.e., margins based on
adverse-inference facts otherwise available].
See, e.g., United States Antidumping Measures on Certain Hot-Rolled Steel Products from Japan,
WTO Panel Report WT/DS184/R (Feb. 28, 2001).
Consolidated Court No. 00-09-00447 Page 20
CIT 785, 801, 862 F. Supp. 384, 400 (1994)). See also D&L Supply Co. v. United States, 113
F.3d 1220, 1223 (Fed. Cir. 1997); Pulton Chain Co. v. United States, 21 CIT 1290, 1292 (1997).
Pre-URAA all-others rates have not been invalidated and are valid record information for use as
facts available, the government argues (irrespective of any adverse-inference basis), since
decisions of this Court (according to the government) regard all-others rates as non-adverse in
the context of unreviewed exporters. Def.’s Br. at 23 (citing The Coalition for the Preservation
of American Brake Drum and Rotor Aftermarket Manufacturers v. United States, 23 CIT 88,
112, 44 F. Supp. 2d 229, 252 (1999); Borden Inc. v. United States, 22 CIT 233, 265, 4 F. Supp.
2d 1221, 1247 (1996) (if Commerce does not draw an adverse inference, it may apply a lower
rate, including an all-others rate)). Therefore, the government argues, it is logical to regard a
pre-URAA all-others rate as non-adverse for purposes of facts otherwise available. Further,
according to the government, all-others rates conform to the “common sense inference” that the
margins determined at the LTFV investigation are the most indicative of current market
conditions,9 whereas taking Viraj’s argument to its logical extreme “would prevent the
application of the all-others rate against non-reviewed exporters.” Def.’s Br. at 22.
However, American Brake and Drum and Borden each considered the application of an
all-others rate that had been determined after the URAA took effect. They do not provide
guidance on the applicability of a pre-URAA rate based on adverse inferences to a cooperative
respondent reviewed post-URAA. Likewise, Allied Signal interpreted Commerce’s permissible
presumption under pre-URAA law and is not dispositive. Commerce has authority to select
9
Allied Signal v. United States, 996 F.2d at 1192. Commerce further states such
presumption might have been overcome had Viraj simply provided the requested information within
the deadlines established. Rhone Poulenc, Inc. v. United States, 899 F.2d 1185 (Fed. Cir. 1990).
Consolidated Court No. 00-09-00447 Page 21
from among any “information or inferences which are reasonable under the circumstances as
facts otherwise available for a cooperative respondent[.]”10 But, the authority to utilize “any
other information placed on the record”11 as adverse facts otherwise available is restricted to
respondents deemed uncooperative in accordance with 19 U.S.C. § 1677e(b), which Viraj was
not. Post-URAA, it appears Commerce must, by definition, presume non-adversity in the case of
a cooperative respondent, and the Court therefore concludes that an all-others rate based in
whole or in part on adverse inferences cannot be said to constitute “non-adverse” facts otherwise
available. The all-others rate was therefore an inappropriate choice of facts otherwise available
and the matter will be remanded for further consideration.12
10
Statement of Administrative Action, H.R.Rep. No. 103-826(I) 656, 869 (“SAA”),
reprinted in 1994 U.S.C.C.A.N. 4040, 4198.
11
19 U.S.C. § 1677e(b)(4).
12
Considering what would be appropriate facts otherwise available, there must be “a rational
relationship between data chosen and the matter to which they are to apply.” Manifattura Emmepi
S.p.A. v. United States, 16 CIT 619, 624, 799 F. Supp. 110, 115 (1992). See also National Steel
Corp. v. United States, 18 CIT 1126, 1132, 870 F. Supp. 1130, 1136 (1994). On that basis, the 1994
Grand Foundry rate would be a tenuous fit as facts otherwise available. Viraj argues that the zero
percent margin determined against it in 1997 is more probative of its current market conditions than
other information of record, and it contends that where Commerce is unable to calculate a margin
for certain sales of a cooperative respondent, it has used as facts otherwise available a weighted-
average margin based on acceptable sales from the respondent’s own database. Viraj’s Br. at 4
(citing Static Random Access Memory From Taiwan, 63 Fed. Reg. 8909, 8920 (Feb. 23, 1998)
(“SRAM”)). The government argues that SRAM was merely the initial LTFV investigation and thus
“there was no higher rate from an earlier initial LTFV determination available for use.” Def.’s Br.
at 20. The Court fails to see the distinction. Rummaging among facts available for a “high” margin
to use for a cooperative respondent would be prima facie results-oriented and in derogation of
Manifattura’s rational relationship test if such is not probative. Cf. Rhone Poulenc, Inc. v. United
States, 899 F.2d 1185, 1190 (Fed. Cir. 1990) (rejecting low margin information for demonstrably
less probative high margin information would be punitive BIA). Commerce may use a cooperative
respondent’s own data if appropriate to do so. See, e.g., Nippon Steel v. United States, 25 CIT ___,
n.6, 146 F. Supp. 2d 835, n.6 (2001); Mannesmannrohren-Werke AG v. United States, 24 CIT ___,
___, 120 F. Supp. 2d 1075, 1080-1081, 1088-89 (2000).
Consolidated Court No. 00-09-00447 Page 22
Conclusion
In view of the foregoing, this matter will be remanded to Commerce for further
proceedings not inconsistent with this opinion. Commerce shall have 60 days for re-
determination, the parties shall have 30 days from the date thereof for commenting thereon, and
15 days thereafter for replies.
________________________________________
R. KENTON MUSGRAVE, JUDGE
Dated: July 30, 2002
New York, New York