Appvion, Inc. v. United States

100 F.Supp.3d 1374

APPVION, INC., Plaintiff

v. UNITED STATES, DefendantandPapierfabrik August Koehler SE, Defendant–Intervenor.

Slip Op. 15–104.

Court No. 14–00143.

United States Court of International Trade.

Sept. 17, 2015.

Gilbert B. Kaplan and Daniel L. Schneiderman, King & Spalding LLP, of Washington, D.C., for Plaintiff.

Joshua E. Kurland, Trial Attorney, U.S. Department of Justice, Commercial Litigation Branch, of Washington, D.C., for Defendant. With him on the brief were Reginald T. Blades, Jr., Assistant Director, Jeanne E. Davidson, Director, and Benjamin C. Mizer, Principal Deputy Assistant Attorney General. Of counsel on the brief was Nanda Srikantaiah, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce of Washington, D.C.

F. Amanda DeBusk and Matthew R. Nicely, Hughes Hubbard & Reed LLP, of Washington, D.C., for Defendant–Intervenor.

OPINION

TSOUCALAS, Senior Judge:

This case concerns the Defendant United States Department of Commerce's (“Commerce”) Final Results of the fourth administrative review (“AR4”) of the antidumping order on lightweight thermal paper (“LWTP”) from Germany. Lightweight Thermal Paper From Germany: Final Results of Antidumping Duty Administrative Review; 2011–2012 , (“Final Results ”) 79 Fed.Reg. 34,719 (June 18, 2014) ; Issues and Decision Memorandum for the 2011–2012 Final Results of the Administrative Review on Lightweight Thermal Paper from Germany, (“IDM for AR4 ”) A–428–840, (June 11, 2014). The period of review (“POR”) is November 1, 2011, through October 31, 2012. Final Results, 79 Fed.Reg. at 34,719.

Plaintiff, Appvion Inc., (“Appvion”) filed the instant suit disputing Commerce's determination that certain sales were within the ordinary course of trade and that the application of Adverse Facts Available (“AFA”) was not warranted. Compl., June 19, 2014, ECF No. 7. Appvion has filed a Motion for Judgment on the Agency Record. Pl.'s Mot. for J. on the Agency R. (“Pl.'s Br.”), Dec. 22, 2014, ECF No. 28. Commerce and Defendant–Intervenor, Papierfabrik August Koehler SE (“Koehler” or “Defendant–Intervenor”) oppose Appvion's Motion. Def.'s Mem. in Opp'n to Pl.'s Rule 56.2 Mot. for J. Upon Agency R. (“Def.'s Br.”), May 29, 2015, ECF No. 39; Def.-Intervenor's Resp. in Opp'n to Pl.'s Rule 56.2 Mot. for J. on the Agency R., May 28, 2015, ECF No. 36. For the following reasons, Appvion's Motion for Judgment on the Agency Record is denied, and Commerce's Final Results are affirmed.

BACKGROUND

Appvion is a manufacturer of domestic like product and participated in the review that gave rise to the Final Results. Compl. at ¶ 4. Koehler is a foreign exporter/producer of LWTP in Germany, whose paper was subject to a 6.50% weighted average dumping margin pursuant to the Antidumping Duty Orders: Lightweight Thermal Paper From Germany and the People's Republic of China, 73 Fed.Reg. 70,959, 70,959 –60 (Nov. 24, 2008).

A brief synopsis of the third administrative review (“AR3”) is necessary to place the instant review in context. In AR3, Koehler engaged in a fraudulent transshipment scheme where it sold 48–gram thermal paper that was destined for consumption in Germany through various intermediaries in third countries, in order to manipulate prices of paper shipped directly to its German customers. Issues and Decision Memorandum for the Final Results of the 2010–2011 Administrative Review on Lightweight Thermal Paper from Germany (“IDM for AR3 ”) at 2, A–428–840, Apr. 10, 2013. The manipulated prices would affect the calculation of normal value that would be used in determining the antidumping margin. Id. Koehler did not voluntarily disclose the transshipment scheme during AR3. Id. at 12. Koehler discontinued the transshipment scheme on [[Confidential Data Deleted ]]. Pl.'s Confidential App. Koehler's Supplemental Resp. at 25, May 15, 2013, ECF No. 30. As a result, Commerce applied total AFA to Koehler in AR3. IDM for AR3 at 6. Commerce's decision was affirmed by this Court. Papierfabrik August Koehler SE v. United States, 38 CIT ––––, 7 F.Supp.3d 1304 (2014), appeal filed and docketed, Papierfabrik August Koehler SE v. United States, Appeal No. 15–1489 (Fed.Cir. Mar. 25, 2015).

In AR4, however, Koehler acknowledged that the transshipments began prior to the POR and ended during AR4. Pl.'s Confidential App., Koehler Section A Response at 15–17, Feb. 25, 2012. In contrast to AR3, in AR4 Koehler fully disclosed the transshipment sales channel, Channel 2, and its related sales data in its reporting of home market sales during AR4. See id.at 15–17, 24, and Ex. A–7. Koehler sold LWTP through three sales channels to its German customers during AR4: Channel 1 (direct shipments), Channel 2 (transshipped sales), and Channel 3 (consignment sales). IDM for AR 4, at 3.

During AR4, Appvion contended that sales of KT 48 (a grade of thermal paper) products through Channels 1 and 3 were outside the ordinary course of trade. Id. Appvion claimed that the sales were made at artificial prices that were “aberrationally low and not determined by commercial considerations nor market-based supply and demand, in part because of the particular manner in which Koehler established prices for these sales.” Id. Appvion also argued that the application of AFA was warranted. Id. at 18.

In the Final Results, Commerce determined that the sales were not outside the ordinary course of trade and concluded that Koehler did not make sales of subject merchandise at less than normal value.Id. at 6–7; Final Results 79 Fed.Reg. at 34,719. Accordingly, Commerce found that Koehler's LWTP was subject to a zero percent weighted-average dumping margin for the POR. Final Results 79 Fed.Reg. at 34,720. Furthermore, Commerce found no basis to apply AFA. IDM for AR4 at 19. Appvion filed the instant action disputing Commerce's Final Results and a Motion for Judgment on the Agency Record. Compl. at 1–6; Pl.'s Br. at 1–45.

JURISDICTION AND STANDARD OF REVIEW

This Court has jurisdiction pursuant to section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c) (2012), and section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012).¹

In reviewing a challenge to Commerce's final determination in an antidumping administrative review, the Court will 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 means “more than a mere scintilla” of “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456, 462 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126, 140 (1938) ). To determine if substantial evidence exists, the court reviews the record as a whole, including whatever “fairly detracts from its weight.” Id. at 488, 71 S.Ct. at 464, 95 L.Ed. at 467. The mere fact that it may be possible to draw two inconsistent conclusions from the record does not prevent Commerce's determination from being supported by substantial evidence. Am. Silicon Techs. v. United States, 261 F.3d 1371, 1376 (Fed.Cir.2001) ; see also Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131, 141 (1966).

DISCUSSION

1. Ordinary Course of Trade

Antidumping duties are equal to the “amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise.” 19 U.S.C. § 1673. The antidumping statute defines normal value as the price of the subject merchandise “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), where the price is “the price at which the foreign like product is first sold ... for consumption in the exporting country, in the usual commercial quantities and in the ordinary course of trade....” 19 U.S.C. § 1677b(a)(1)(B)(i). In order for Commerce to include particular sales in its calculation of normal value, the sales must have been made in the ordinary course of trade. U.S. Steel Corp. v. United States, 37 CIT ––––, 953 F.Supp.2d 1332, 1341 (2013). In turn, the “ordinary course of trade” means:

the conditions and practices which, for a reasonable time prior to the exportation of the subject merchandise, have been normal in the trade under consideration with respect to merchandise of the same class or kind. The administering authority shall consider the following sales and transactions, among others, to be outside the ordinary course of trade:

(A) Sales disregarded under section 1677b(b)(1) of this title [sales below the cost of production].

(B) Transactions disregarded under section 1677b(f)(2) of this title [sales between affiliated persons where the amount representing the element of value does not fairly reflect the amount usually reflected in sales of merchandise under consideration in the market under consideration].

19 U.S.C. § 1677(15). Other than for the aforementioned subsections (A) and (B), the Tariff Act provides “little assistance in determining what is outside the scope of that definition.” NSK Ltd. v. United States, 25 CIT 583, 599, 170 F.Supp.2d 1280, 1296 (2001). The Court has held that “the statutory provision defining what is considered outside the ordinary course of trade is unclear.” Id. Accordingly, the Court has found that Commerce has discretion to determine what sales are outside the ordinary course of trade. U.S. Steel, 37 CIT at ––––, 953 F.Supp.2d at 1341. Commerce may consider sales or transactions to be outside the ordinary course of trade “if ... based on an evaluation of all of the circumstances particular to the sales in question, that such sales or transactions have characteristics that are extraordinary for the market in question.” 19 C.F.R. § 351.102(b)(35) (2015). Examples of sales that Commerce might...