U.S. Court of International Trade

Final Results Affirmed in Part and Remanded in Part; Defendants Collaterally Estopped from Defending Fifteen Day Liquidation Rule

In NTN Bearing Corporation of America, et al., v. United States and the Timken Company (Defendant-intervenor), Court No. 10-286, Slip Op. 15-12 (February 3, 2015), plaintiffs (collectively, “NTN”) contested the final determination (“Final Results”) issued by the International Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department”), to conclude a set of administrative reviews of antidumping duty orders on ball bearings and parts thereof (“subject merchandise”) from France, Germany, Italy, Japan, and the United Kingdom.  Plaintiffs asserted claims stemming from the antidumping order on subject bearings from Japan.  For Count I, they challenged the Department’s use of zeroing in the twentieth administrative review, to which Commerce assigned to U.S. sales made above normal value a dumping margin of zero.  In Count II, they challenged the Department’s issuance of liquidation instructions to Customs and Border Protection (“CBP”) fifteen days after the publication of the final results of the review, and in Count III, plaintiffs asserted that Commerce made clerical and other methodological errors in calculating NTN’s credit expenses by failing to use updated information from NTN’s supplemental questionnaire. Plaintiff-intervenor JTEKT Corp., a Japanese producer and exporter of ball bearings, and an affiliated importer, joined in the “zeroing” claim.  While defendants claimed that plaintiffs did not have subject matter jurisdiction to assert claims I and III, the Court decided to find subject matter jurisdiction over such claims which is subject to judicial review under 19 U.S.C.§1516a(b)(1)(B)(i). Additionally, the court has subject matter jurisdiction over Count II under 28 U.S.C. §1581(i).

As for Count I, the court rejected such a claim where Union Steel v. United States, 713 F.3d 1101, 1103 (Fed. Cir. 2013) (“Union Steel II”) held permissible the Department’s construction of the antidumping statute that authorized the use of zeroing in administrative reviews despite the Department’s decision not to use zeroing in antidumping investigations.  Thus, the court affirmed the Department’s use of zeroing.

For purposes of Count III, the court allowed a voluntary remand for the Department to correct its inadvertent use of “CREDITU” variable in calculating the constructed export price (CEP).  Finally, for  Count II, because SKF USA Inc. v. United States, 35 CIT__, __, 800 F. Supp. 2d 1316, 1326-28 (2011) (“SKF V”) found the rule to liquidate entries fifteen days after publication of the final results, as applied, was unlawful, defendants were collaterally estopped from defending the fifteen-day rule in the twentieth administrative review as applied to NTN, where defendants had full and fair opportunity to litigate that issue in SKF V.  As for defendants challenge to NTN’s standing to challenge the fifteen day liquidation instructions, the court reiterated, “Due to the burden of filing a summons and a complaint and obtaining an injunction against liquidation within fifteen days of publication, the application of the fifteen-day rule caused and adverse effect on NTN following publication of the final results of the twentieth reviews that is capable of repetition in future reviews.” The court held that NTN had shown injury in fact sufficient for standing.  However, NTN had no relief when asking the court to correct the Department’s November 2010 announcement which continually applied the fifteen day rule in the face of declaratory judgments issued by this court that such practice was unlawful.

Final Results of Remand Redetermination Affirmed

Changshan Peer Bearing Company, Ltd. and Peer Bearing Company v. United States and Timken Company, the  v. United States, concerned the final determination by the U.S. Department of Commerce in the twenty-third administrative review of an antidumping duty order on tapered roller bearings and parts thereof from the People’s Republic of China.  Court No. 12-00039, Slip Op. 15-10 (February 2, 2015).  Previously, the Court remanded the Final Results to Commerce to reconsider the method of determining a surrogate value for certain bearing-quality alloy steel bars used as material in the production of the tapered roller bearings.  Before the Court was Plaintiffs’ challenge to the Remand Redetermination, in which Commerce decided not to reopen the administrative record and not to modify its valuation of the steel bar input.  The surrogate value for the input in the Remand Redetermination continued to be based on Indian import data. 

The Court affirmed Commerce’s use of the Indian import data rather than the market-economy-country data to determine the surrogate value for the steel bar input.  Commerce explained that market-economy purchase prices are only used for producers whose market economy-purchases comprise 33 percent of the total volume of steel bar input purchased to produce the tapered roller bearings.  Commerce also offered as an explanation the fact that market-economy purchase prices are not representative of the producers experience, are not publicly available, are not from an economically comparable country, and are not broad market averages.  While the market-economy purchase data might be superior in that it describes the steel bars actually purchased for use in making the tapered roller bearings, all other statutory guidance support Commerce’s decision to use the Indian import data.  Finding that Commerce was justified in using the Indian import data, the Court affirmed the Remand Redetermination in that respect. 

The Court affirmed the Remand Redetermination in full, finding that Plaintiffs’ objections were meritless.  The Court rejected Plaintiffs’ first argument that Commerce erred in rejecting certain market-economy purchase data from one producer but accepting the same data from a different producer, reasoning that it was reasonable for Commerce to limit the use of market-economy purchase data to one producer due to its statutory directives.  Furthermore, Commerce’s decision not to reopen the record was reasonable given that the Court did not direct the agency to reopen the record, but rather left it to Commerce’s discretion.  The agency provided a rational explanation for its decision.  Finally, cases cited by Plaintiff as directing Commerce to use the market-economy data are not binding precedent and each can be easily distinguishable from the case at bar.

United States Court of Appeals for the Federal Circuit

Federal Circuit B CIT Lacks Jurisdiction Over Challenges to Rulings, Court Holds

Again turning cases away from the Court of International Trade, the Court of Appeals for the Federal Circuit has ruled that the CIT lacks subject matter jurisdiction to hear challenges to the issuance and revocation of Customs rulings.

In Best Key Textiles Co. v. United States, No. 2014-1327 (February 3, 2015), the recipient of a ruling concerning the tariff classification of metalized yarn challenged Customs decision to revoke the ruling as being Aarbitrary, capricious, an abuse of discretion, and not otherwise in accordance with law@, in violation of the Administrative Procedure Act. The plaintiff contended that it had lost $200 million in customer orders as a result of the revocation, and asked the court to review both the substance of the ruling and the process by which it was revoked. The ruling recipient could not file a protest on the classification of its yarn, since the revocation ruling assigned it a lower rate of duty than applied to metalized yarn. The plaintiff=s damage was not in the payment of Customs duties, but in the loss of business, it contended.

After initially dismissing the case for lack of subject matter jurisdiction, the CIT reconsidered and reinstated the case, and upheld the revocation ruling. Best Key appealed to the Federal Circuit.

In its decision, the Federal Circuit ignored the merits of the plaintiff=s claim altogether, and told the CIT to reinstate its earlier ruling dismissing the action for lack of subject matter jurisdiction. The plaintiff was not trying to vindicate its own rights, the appellate court said, but the rights of its customers who would be assessed with higher duties on garments made with the yarn. The plaintiff=s remedy, the Court held, would be to go into the garment business, import garments and pay the higher duty, and then slog through the traditional protest procedure B a years-long undertaking which, in any event, would not lead to review of the contested ruling. The plaintiff did not have a case which could be heard under the CIT=s 28 U.S.C. ‘1581(I) residual jurisdiction which, the Court indicated, must be Astrictly construed@.The decision should be alarming to the trade community, since it suggests that Customs rulings, and their revocation or modification, are not judicially reviewable C or perhaps reviewable only in the Federal District Courts.

The Federal Circuit Affirms CIT Decision to Deny Motion for Judgment on Agency Record

In Dongtai Peak Honey Industry Co., Ltd. v. United States, 2014-1479 (January 31, 2015), Dongtai Peak Honey Industry Co., Ltd. (“Dongtai Peak”) appealed the decision of the United States Court of International Trade (“CIT”) denying its Motion  for Judgment on the Agency Record. See Dongtai PeakHoney Indus. Co. v. United States, 971 F. Supp. 2d 1234

(Ct. Int’l Trade 2014). Because the United States Department of Commerce (“Commerce”) properly exercised its discretion in denying Dongtai Peak’s untimely filings, and because Commerce’s decisions to treat Dongtai Peak as part of the China-wide entity and to impose a dumping margin based on adverse facts available were supported by substantial evidence and were in accordance with law, this court affirms. Dongtai Peak challenged Commerce’s decisions to deny untimely supplemental filings where good cause was allegedly shown.  Dongtai Peak pointed to such reasons as difficulties in communication between the rural-Chinese based Appellant and its U.S counsel, Chinese holidays, debilitating computer systems, and burdens of responding to the Supplemental questionnaire. 

However, the Federal Circuit found none of these reasons to be good cause in light of the obligations under the regulations and the fact that Appellant was aware of each of these items causing delay before April 17th. It could have asked for a timely extension.  The Federal Circuit held that Commerce properly exercised its discretion in rejecting Dongtai Peak’s extension requests and Supplemental Responses because (1) the extension requests were submitted after the established deadline in violation of 19 C.F.R. § 351.302(c), and (2) Appellant failed to show “good cause” for an extension as required by § 351.302(b). As to Dongtai Peak’s fairness and accuracy argument, this court has made clear Commerce’s rejection of untimely-filed factual information does not violate a respondent’s due process rights when the respondent had notice of the deadline and an opportunity to reply. Dongtai Peak had full opportunity to be heard and was well aware of the deadlines for filing.  With regard to issues regarding control by a government entity, the Federal Circuit held that Commerce did not have accurate information to make the proper evaluation.  The Federal Circuit stated, “Without a timely-filed Supplemental Response, Commerce did not have information regarding Dongtai Peak’s “shareholders, management, accounting practices, corporate structure, and affiliations,” and information addressing whether “several organizations to which [Dongtai] Peak belonged were state-sponsored, controlled [Dongtai] Peak’s business operations or coordinated [Dongtai] Peak’s export activities.” Slip Op.pg. 16. Without the necessary responses, Appellant did not provide information to demonstrate the absence of government control.  Finally, because Dongtai Peak was fully aware of the mandatory deadlines, it had the opportunity to participate in the investigation.  Because little information was provided timely, Commerce was correct in applying adverse facts available (AFA). Substantial evidence supported Commerce’s use of AFA in this case and its selection of an AFA rate for the China-wide entity.

Federal Circuit Affirmed CIT’s Decision to Sustain Commerce’s Scope and Remand Redetermination Results

In Downhole Pipe & Equipment, LP and DPMaster Manufacturing Co., Ltd. v. United States, Court et al., Court No. 2014-1225 (January 30, 2015), Downhole Pipe & Equipment, LP, and DPMaster Manufacturing Co., Ltd. (collectively, “Downhole Pipe”) appealed the decisions of the United States Court of International Trade (“CIT”) (1) affirming the United States Department of Commerce’s (“Commerce”) scope and industry support determinations and (2) sustaining Commerce’s Final Results of Redetermination Pursuant to Court Remand.  Downhole Pipe is a United States importer of “drill pipe” produced by DP-Master Manufacturing Co., Ltd. (“DP-Master”), a Chinese producer. Drill pipe is a specialized high-strength iron alloy tube, used in oil-drilling applications, and is manufactured in three stages: first, seamless tubes called “green tube” are produced from raw steel; second, the manufacturer uses complex processes to “upset” and heat-treat green tube to thicken the ends and increase the yield strength to the desired American Petroleum Institute (“API”) grade; third, the manufacturer friction-welds a specialized “tool joint” to the ends of the heat-treated and upset tube to complete the drill pipe. While green tube is the primary input in the production of drill pipe, it can also be processed into other “oil country tubular goods.” Oil country tubular goods, which consist primarily of casing and tubing, are used in connection with the transport of oil and gas, while drill pipe is primarily used in drilling. 

In the Final Results, Commerce narrowed the scope of Commerce’s determinations to green tube: (1) that is seamless; (2) that has a certain outer diameter; and (3) that contains specific percentages of molybdenum and chromium.  The court below affirmed this scope finding but remanded Commerce’s decision as to the surrogate values for the green tube.  In particular, the CIT found Commerce had failed to address the InfoDrive India (“InfoDrive”) import data Appellants had placed on the administrative record that called into question Commerce’s finding that green tube entered India under Harmonized Tariff Schedule of India (IHTS) subheadings 7304.23 and 7304.29. The CIT acknowledged data from the IHTS subheadings might be the best available information, but it could not affirm the Final Determination on the basis of the explanation provided by Commerce. 

On remand, Commerce made the necessary examinations of all other potential surrogate values for green tube on the record, including: (1) import statistics for goods imported into India under IHTS categories 7304.23, 7304.29, and 7304.59; (2) Metal Bulletin Research price data for J/K 55 and for “P110”; (3) adjusted value data for alloy steel billets processed into green tube provided by Appellants; and (4) adjusted value data for seamless tubes provided by Appellants.

Commerce found the price data for products entered  under IHTS 7304.59 (as opposed to IHTS 7304.23 and 7304.29) was the best available information on the record because it was most representative of the green tube used for drill pipes, contemporaneous with the period of investigation, duty and tax exclusive, publicly available, and represented a broad market average.  The court sustained the remand results and Downhile Pipe appealed.

In its appeal Downhole Pipe argued that substantial evidence did not support the three criteria for green tube which are already in the scope of another investigation.  Appellants argued, “[b]ecause these three criteria do not distinguish drill-pipe green tube from [oil country tubular goods] green tube, the same green tube is impermissibly covered by two antidumping duty orders.”  Yet, the court reiterated the findings of Commerce in establishing support for the criteria.  The Federal Circuit stated, “the first criterion (that green tube for drill pipe must be seamless) was “based on Petitioners’ comments and submission of technical specifications.” As to the second criterion, that the drill pipe green tube must have a certain outer diameter, Commerce explained this was “based on DP-Master Group’s submission of [API] specifications for drill pipe.” As to the final criterion regarding the green tube’s chemical composition, this was “based on Petitioners’ submission of declarations from experienced drill pipe engineers who direct the purchase of green tubes for drill pipe based on specific physical and chemical requirements.” Slip Op. pg. 14 (citations omitted). All three of these criteria do not apply to oil country tubular goods.

Additionally, Downhole Pipe challenged Commerce’s selection of the surrogate value for green tube on three grounds. First, Appellants contended Commerce improperly rejected the alternative surrogate values on the record, and that its legal analysis in support of selecting IHTS 7304.59.20 was insufficient.  Second, Appellants argued that the values selected were unrealistically high and does not represent commercial reality, and third Commerce erred in relying on a memo from an import specialist in selecting 7304.59. 

As to the first argument, the Federal Circuit is never required to reweigh evidence, and will only decide if a reasonable mind would concur that Commerce applied the best available information. In light of Commerce’s well-reasoned explanation of its selection process, the Federal Circuit found that Commerce’s selection of data from IHTS 7304.59.20 was supported by substantial evidence.  As to the second argument, Appellants provided no evidence to support it contention that the selected values were high or not commercially real. Finally, none of Appellants’ allegations regarding the memo were supported by evidence.   For all these reasons, the Federal Circuit affirmed the CIT’s findings.

Note: The information contained in this memorandum is for general information only, and is not intended as advice or counsel regarding any specific situation. If you have an issue relating to the subject matter discussed in this memorandum, you should consult with counsel or your customs advisers concerning the proper course of action to be followed in your case.

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