Bridgestone Americas, Inc. v. U.S.

710 F.Supp.2d 1359

32 ITRD 1545

BRIDGESTONE AMERICAS, INC., Bridgestone Americas Tire Operations, LLC, and Titan Tire Corporation, Plaintiffs,

v. UNITED STATES, Defendant,andXuzhou Xugong Tyres Co., Ltd., Defendant-Intervenor.

Slip Op. 10-55.

Court No. 08-00256.

United States Court of International Trade.

May 14, 2010.

King & Spalding, LLP, Washington, DC (Joseph W. Dorn, Daniel L. Schneiderman, and J. Michael Taylor) for plaintiffs Bridgestone Americas, Inc. and Bridgestone Americas Tire Operations, LLC.

Stewart and Stewart (Wesley K. Caine and Terence P. Stewart) for plaintiff Titan Tire Corporation.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Michael David Panzera, John J. Todor and Loren Misha Preheim); Daniel J. Calhoun, Irene H. Chen and David Richardson, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel, for the defendant.

White & Case, LLP (Adams C. Lee and Frank H. Morgan) for the defendant-intervenor.

OPINION

RESTANI, Chief Judge.

This matter is before the court for decision following objections by Defendant-Intervenor Xuzhou Xugong Tyres Co., Ltd. ("Xugong") to the Final Redetermination issued by the International Trade Administration, United States Department of Commerce ("Commerce" or the "Department"). In 2008, Plaintiffs Bridgestone Americas, Inc., Bridgestone Americas Tire Operations, LLC, and Titan Tire Corporation (collectively, "Bridgestone"), domestic producers of certain off-the-road ("OTR")tires, contested Commerce's exclusion of Xugong, a Chinese producer of OTR tires, from the scope of a final antidumping ("AD") determination. See Certain New Pneumatic Off-The-Road-Tires from the People's Republic of China: Final Affirmative Determination of Sales at Less Than Fair Value and Partial Affirmative Determination of Critical Circumstances, 73 Fed.Reg. 40,485, 40,488-89 (Dep't Commerce July 15, 2008) (" Final Determination "). Specifically, Plaintiffs contested Commerce's determination that fifteen of the raw material inputs Xugong used in producing the tires were indirect materials.

In August 2009, the court remanded the Final Determination to Commerce to "reconsider whether each of the fifteen inputs was a direct or indirect material, to reopen the record as appropriate, and to recalculate the dumping margin accordingly." Bridgestone Americas, Inc. v. United States, 636 F.Supp.2d 1347, 1357 (CIT 2009) (" Bridgestone I "). On remand, Commerce adjusted the antidumping duty rate upward from 0.00 percent to 10.01 percent. Final Redetermination Pursuant to Court Remand (Dep't Commerce Jan. 8, 2010) (Docket No. 88) (" Final Redetermination ").¹ Following remand, Xugong asserts that Commerce's redetermination with respect to one of fifteen manufacturing inputs, "HO Oil," cannot be sustained. (Defendant-Intervenor Xuzhou Xugong Tyres Co., LTD.'s Objections to the Department of Commerce's January 8 Remand Determination, at 5, 13 (Docket No. 94) ("Xugong Objection").) The court will enter judgment affirming Commerce's redetermination.

BACKGROUND

In July 2007, Commerce initiated an antidumping ("AD") investigation to determine whether imports of certain pneumatic OTR tires from the People's Republic of China for the period of 1 October 2006 through 31 March 2007, were being sold in the United States at less than fair value. See Initiation of Antidumping Duty Investigation: Certain New Pneumatic Off-the-Road Tires From the People's Republic of China, 72 Fed.Reg. 43,591, 43,592 (Dep't Commerce Aug. 6, 2007). Commerce selected Xugong as a mandatory respondent. Certain New Pneumatic Off-The-Road Tires From the People's Republic of China; Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 73 Fed.Reg. 9278, 9282 83 (Dep't Commerce Feb. 20, 2008) (" Preliminary Determination ").² In the Preliminary Determination, Commerce calculated a dumping margin of 51.81% for Xugong. Id. at 9291.

After the Preliminary Determination, Commerce issued Xugong a supplemental questionnaire requesting clarifying information and an updated factors of production database for the purpose of calculating normal value to compare with the United States price. ( See Xugong's FifthSupplemental Questionnaire Response ("Fifth Supplemental Questionnaire"), Exs. Accompanying the Pl.'s. Br. of Bridgestone, Tab 3 (Docket No. 107) ("Pl.'s App.").) In addition to providing the requested information, Xugong informed Commerce that fifteen of the raw material inputs it previously reported as direct materials were in fact indirect materials and included the corrections in the updated database. ( Id.) Although Commerce treated the fifteen inputs as direct materials in calculating the preliminary dumping margin, Commerce treated them as indirect materials in its Final Determination and calculated a zero dumping margin for Xugong. Final Determination, 73 Fed.Reg. at 40,488-89.

Bridgestone challenged Commerce's zero dumping margin and the court remanded this matter to the Department to "reconsider whether each of the fifteen inputs was direct or indirect material." Bridgestone I, 636 F.Supp.2d at 1357. In response, Commerce reopened the administrative record and issued a Supplemental Questionnaire. ( See Pl.'s App. Tab 7.) Xugong asserts that in the course of preparing the response it determined that the raw material it "referred to as HO Oil was, in fact, aromatic oil." (Xugong Objection 5.) Xugong submitted the alleged translation error correction in its Supplemental Questionnaire Response and postulates that aromatic oil should be valued under HTS Heading 2707.50 as opposed to its suggested HTS Heading 2902.90.90 for HO Oil. ( See Xugong Objection 13; Def.'s Resp. to Def.-Intervenor's Objections to the Dep't of Commerce's Remand Redetermination, 11 (Docket No. 99) ("Def.'s Resp.").) Throughout its objection Xugong focuses on the input labeled HO Oil, and considers the other fourteen inputs "irrelevant," because if Commerce treats HO Oil as an indirect material or values it under the now-claimed HTS Heading 2707.50, Xugong's dumping margin would be de minimis. ( Id.) Accordingly, Xugong objects to Commerce's Final Redetermination.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will uphold Commerce's final results of redetermination pursuant to the court's remand 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).

DISCUSSION

I. Commerce Applied An Appropriate Standard to Determine Whether An Input Was A Direct Or Indirect Material

As a preliminary matter, Xugong submits that Commerce acted unlawfully when it relied on a "new and previously unarticulated standard in the remand determination for defining direct and indirect materials." (Xugong Objection 13.) Xugong relies on Commerce's articulation of a standard it its Issues and Decision Memorandum for the Antidumping Investigation of Certain New Pneumatic Off-the-Road Tires from the People's Republic of China, A-570-912, POR: 10/1/2006 3/31/2007, at 88-90 (July 7, 2008) (" I & D Memo "), Admin. R. Pub. Doc. 648, available at http:// ia. ita. doc. gov/ frn/ summary/ PRC/ E 8- 16156- 1. pdf (last visited May 14, 2010). In the I & D Memo, Commerce stated that

[i]n determining whether a given material should be treated as a part of factory overhead versus a direct material for purposes of calculating [normal value], the Department takes into consideration: 1) whether the material is physically incorporated into the final product; 2) the material's contribution to the production process and finished product; 3)the relative cost of the input; and 4) the way the cost of the input is typically treated in the industry.

I & D Memo at 88-89. Xugong argues that Commerce improperly focused on only the first two of the four criteria the physical incorporation of the input and its significance to the production process. See Final Redetermination at 3-5. Xugong further argues that if Commerce is going to rely solely on the first two criteria, the input is direct only if the "subject merchandise could not be produced without using [the input]." (Xugong Objection 14-15.)

Although Xugong is correct that the Department's language in its I & D Memo appears to refer to a hard-and-fast four-prong standard, it appears that such a characterization is not appropriate. This "standard" is merely a survey of various criteria taken into consideration in different past determinations to distinguish direct materials. See I & D Memo at 89. Indeed, Commerce acknowledged that in prior proceedings, for this and other antidumping cases, the Department evaluated other criteria. Final Redetermination at 4. Commerce explained its decision, however, to focus on the first two criteria. ( Id. at 5.) Specifically, the criterion of "the way the cost of the input is typically treated in the industry," I & D Memo at 89, was not assessed by Commerce because there was insufficient evidence to discern Indian surrogate producers' treatment of the inputs.³ Final Redetermination at 4-5. Thus, the criterion did not provide a useful manner to determine whether the input was direct and therefore, Commerce did not rely upon it. Accordingly, the court finds that in focusing on the first two criteria, Commerce did not abuse its discretion to rely on various criteria to value factors of production. See Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1377 (Fed.Cir.1999).

Further, although Commerce has found, as Xugong contends, a material to be direct if the subject merchandise could not be produced without using the input, see e.g., Issues and Decision Memorandum for the Less-Than-Fair-Value Investigation of Wooden Bedroom Furniture from the People's Republic of China, A-570-890, at...