Carpenter Tech. Corp. v. United States

477 F.Supp.3d 1356

CARPENTER TECHNOLOGY CORPORATION, et al., Plaintiffs,

v. UNITED STATES, Defendant,andVenus Wire Industries Pvt. Ltd., et al., Defendant-Intervenors.

Slip Op. 20-158

Court No. 19-00200

United States Court of International Trade.

November 4, 2020

Grace W. Kim and Laurence J. Lasoff, Kelley Drye & Warren LLP, of Washington, DC, for Plaintiffs.

Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. With her on the brief were Ethan P. Davis, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director. Of counsel was Elio Gonzalez, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Eric C. Emerson and St. Lutheran M. Tillman, Steptoe & Johnson LLP, of Washington, DC, for Defendant-Intervenors.

OPINION AND ORDER

Barnett, Judge:

This matter is before the court following the U.S. Department of Commerce's ("Commerce" or "the agency") final results in the administrative review of stainless steel bar (or "SS bar") from India for the period of review February 1, 2017 through January 31, 2018 ("the POR"). See Stainless Steel Bar From India , 84 Fed. Reg. 56,179 (Dep't Commerce Oct. 21, 2019) (final results of admin. review of the antidumping duty order; 2017–2018) (" Final Results "), ECF No. 20-4, and accompanying Issues and Decision Mem., A-533-810 (Oct. 15, 2019) ("I&D Mem."), ECF No. 20-5.¹

Plaintiffs² filed a motion for judgment on the agency record challenging Commerce's revised method of selecting partial adverse facts available (or "partial AFA")³ to use in determining Defendant-Intervenors’ ("Venus")⁴ final antidumping duty margin. See Confidential Pls.’ Rule 56.2 Mot. for Judgment Upon the Agency R., and Confidential Mem. of Law in Supp. of Pls.’ Rule 56.2 Mot. for Judgment [upon] the Agency R. ("Pls.’ Mem."), ECF No. 25. Specifically, Plaintiffs contend that: (1) Commerce did not adequately explain or provide notice of its decision to revise its methodology for determining partial AFA for the Final Results , see id. at 10–17; and (2) Commerce's application of the revised methodology is not supported by substantial evidence or in accordance with the law, see id. at 17–35.

In response, Defendant United States ("the Government") requests a remand to Commerce so that the agency may "reconsider or further explain its application of [the] revised partial [AFA] methodology, its change in methodology from the preliminary results to the final results, and if appropriate, the rates assigned to the respondents."⁵ Def.’s Resp. to Pls.’ Mot. for Judgment Upon the Agency R. ("Gov't’s Resp.") at 6, ECF No. 27. Venus filed a reply to the Government's remand request asserting that remand is not appropriate, but otherwise taking no position on the remand request. See Def.-Ints.’ Reply to [Pls.’] Mot. for Judgment on the Agency R. and [Def.’s] Request for Voluntary Remand ("Venus's Resp."), ECF No. 28. Plaintiffs filed a reply supporting the Government's request for remand, see Confidential Pls.’ Reply in Supp. of Def.’s’ Request for Voluntary Remand, ECF No. 29, and a motion for oral argument, see Pls.’ Mot. for Oral Arg., ECF No. 32.

For the following reasons, the court finds that the Government has established that the agency's concerns are substantial and legitimate and, thus, grants the Government's request for remand. Plaintiffs’ motions for oral argument and for judgment on the agency record are otherwise denied as moot.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2018),⁶ and 28 U.S.C. § 1581(c) (2018).

BACKGROUND

Commerce published the antidumping duty order on SS bar from India on February 21, 1995. See Stainless Steel Bar from Brazil, India and Japan , 60 Fed. Reg. 9,661 (Dep't Commerce Feb. 21, 1995) (antidumping duty orders). In 2011, Commerce conditionally revoked the antidumping duty order on SS bar with respect to subject merchandise produced or exported by Venus. See Stainless Steel Bar from India , 76 Fed. Reg. 56,401, 56,402 –03 (Dep't Commerce Sept. 13, 2011) (final results of the antidumping duty admin. review, and revocation of the order, in part). Thereafter, Commerce initiated a changed circumstances review of Venus and, as a result of that review, determined that Venus had resumed selling SS bar in the United States at less than fair value. See Stainless Steel Bar From India , 83 Fed. Reg. 17,529 (Dep't Commerce Apr. 20, 2018) (final results of changed circumstances review and reinstatement of certain companies in the antidumping duty order).

In the changed circumstances review, Venus reported consuming inputs referred to as "SS rounds, straight rounds, or hot rolled bar" (referred to herein as "SS rounds") provided by an unaffiliated supplier, but Commerce found that these inputs were in fact subject merchandise. See Venus Wire Indus. Pvt. Ltd. v. United States ("Venus I "), 43 CIT ––––, ––––, 424 F. Supp. 3d 1369, 1371–73 (2019). Commerce requested, but Venus did not provide, the unaffiliated producers’ cost of production for the SS rounds used to make SS bar. See id. at 1373. "[I]n the absence of cost information from Venus's suppliers, [Commerce] assigned Venus a margin based on total AFA." Id. The court has issued two opinions in the appeal of the changed circumstances review which provide additional background regarding Commerce's finding that the SS bar provided by Venus's unaffiliated producers and reported as inputs are subject merchandise and the agency's reliance on total AFA. See generally Venus Wire Indus. Pvt. Ltd. v. United States ("Venus II "), Slip Op. 20-118, 471 F.Supp.3d 1289 (CIT Aug. 14, 2020) ; Venus I , 424 F. Supp. 3d 1369.

Commerce initiated this administrative review on April 16, 2018. See Initiation of Antidumping and Countervailing Duty Admin. Reviews , 83 Fed. Reg. 16,298, 16,300 (Dep't Commerce Apr. 16, 2018). As Commerce did in the changed circumstances review, it sought to determine whether SS rounds reported as inputs and provided by Venus's unaffiliated suppliers were in fact subject merchandise. See Prelim. Mem. at 5, 7. Venus explained that "it purchased stainless steel wire rods (^["] SSWR^["]) in coil form and hot-rolled stainless-steel bars ... and [SS rounds] from unaffiliated suppliers during the POR." Id. at 7 (footnotes omitted). Venus stated that it "further processed these inputs into cold finished SS Bar." Id. (citation omitted). Commerce found that the inputs reported as SS rounds were subject merchandise and instructed Venus to provide the unaffiliated suppliers’ cost of production information for the SS rounds. See id. at 8. Venus did not provide this information in its entirety. Id. at 8–9 (stating that one of Venus's unaffiliated suppliers provided its cost information, but that it was unusable "because it represents a small number of sales").

Absent the unaffiliated suppliers’ cost of production information, the agency found that it could not calculate Venus's rate. Id. at 9. Commerce made the additional finding that Venus and its unaffiliated suppliers failed to act to the best of their ability to provide cost of production data, and thus, the agency preliminarily relied on partial AFA. See id. at 9–10. As partial AFA, Commerce preliminary selected "one of the highest transaction-specific rate[s] calculated for the U.S. sales of subject merchandise produced using the SSWR input." Id. at 13 (citation omitted). As a result, Commerce preliminarily determined a rate of 77.49 percent for Venus. See Stainless Steel Bar From India , 84 Fed. Reg. 15,582, 15,583 (Dep't Commerce Apr. 16, 2019) (prelim. results of antidumping duty admin. review; 2017–2018).

For the Final Results , Commerce continued to find that Venus was not the producer of the subject merchandise produced from SS rounds purchased from unaffiliated suppliers, see I&D Mem. at 19, and that Venus did not act to the best of its ability to provide Commerce with its unaffiliated producers’ cost of production data, see id. at 23–24. Commerce, however, revised its method of selecting partial AFA. Id. at 24. Rather than using the "highest (non-aberrational) transaction-specific margin" to determine the sales at issue, Commerce "calculated a ‘surrogate’ [cost of production] for these sales."⁷ Id. As a result, Commerce determined a margin of 5.35 percent for Venus. See Final Results , 84 Fed. Reg. at 56,180.

DISCUSSION

I. Legal Framework

When an agency determination is challenged in the courts, the agency may "request a remand (without confessing error) in order to reconsider its previous position" and "the reviewing court has discretion over whether to remand." SKF USA Inc. v. United States , 254 F.3d 1022, 1029 (Fed. Cir. 2001). Remand is appropriate "if the agency's concern is substantial and legitimate," but "may be refused if the agency's request is frivolous or in bad faith." Id. "A concern is substantial and legitimate when (1) Commerce has a compelling justification, (2) the need for finality does not outweigh that justification, and (3) the scope of the request is appropriate." Hyundai Heavy Indus. v. United States , 43 CIT ––––, ––––, 393 F. Supp. 3d 1293, 1300 (2019) (quoting Changzhou Hawd Flooring Co. v. United States , 38 CIT ––––, ––––, 6 F. Supp. 3d 1358, 1361 (2014) ).

II. The Government Has Demonstrated that the Agency's Concerns are Substantial and Legitimate

The Government has established that its remand request is based on concerns that are substantial and legitimate, consistent with the three-pronged test referenced in Hyundai Heavy Industries.

First, the Government identifies a compelling justification for the remand request. The Government represents to the court that Commerce "acknowledges potential concerns with how it applied the new...