Qingdao Sentury Tire Co. v. United States

539 F.Supp.3d 1278

QINGDAO SENTURY TIRE CO., LTD., Sentury Tire USA Inc., Sentury (Hong Kong) Trading Co., Limited, Plaintiffs,andPirelli Tyre Co., Ltd., Pirelli Tyre S.p.A., and Pirelli Tire LLC, Consolidated Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. 21-128

Consol. Court No. 18-00079

United States Court of International Trade.

September 24, 2021

Ned H. Marshak and Jordan C. Kahn, Grunfeld Desiderio Lebowitz, Silverman & Klestadt, LLP, of New York, N.Y. and Washington, D.C., for Plaintiffs Qingdao Sentury Tire Co., Ltd., Sentury Tire USA Inc., and Sentury (Hong Kong) Trading Co., Limited.

Daniel L. Porter, James P. Durling, Ana M. Amador, and James C. Beaty, Curtis, Mallet-Prevost, Colt & Mosle LLP, of Washington, D.C., for Consolidated Plaintiffs Pirelli Tyre Co., Ltd., Pirelli Tyre S.p.A., and Pirelli Tire LLC.

Ashley Akers, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant United States. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Ayat Mujais, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce.

OPINION AND ORDER

Choe-Groves, Judge:

This action arises from the administrative review by the U.S. Department of Commerce ("Commerce") of certain passenger vehicle and light truck tires from the People's Republic of China ("China"). Certain Passenger Vehicle and Light Truck Tires from the People's Republic of China ("Final Results"), 83 Fed. Reg. 11,690 (Dep't of Commerce Mar. 16, 2018) (final results of antidumping duty admin. review and final determination of no shipments; 2015–2016); see also Certain Passenger Vehicle and Light Truck Tires from People's Republic of China: Issues and Decision Mem. Final Results 2015–2016 Antidumping Duty Admin. Review, ECF No. 15-5 ("Final IDM"); Decision Mem. Prelim. Results Antidumping Duty Admin. Review: Certain Passenger Vehicle and Light Truck Tires from People's Republic of China (Aug. 31, 2017), PR 420.¹

Before the Court are the Final Results of Redetermination Pursuant to Court Order, ECF No. 21-1 ("Second Remand Results"), which the Court ordered in Shandong Yongtai Group Co. v. United States (" Shandong Yongtai II"), 44 CIT ––––, 487 F. Supp. 3d 1335 (2020). After the Court issued Shandong Yongtai II, the Court severed the lead case, Shandong Yongtai Group Co. v. United States, (formerly consolidated) Court No. 18-00077, from the consolidated action and reconsolidated the member cases with Qingdao Sentury Co., Ltd. v. United States, Consol. Court No. 18-00079, as the new lead case. Shandong Yongtai Group Co. v. United States (" Shandong Severance"), 45 CIT ––––, ––––, 493 F. Supp. 3d 1342, 1345 (2021).

Plaintiffs Qingdao Sentury Tire Co., Sentury (Hong Kong) Trading Co., and Sentury Tire USA Inc. (collectively, "Sentury") filed comments in support of the Second Remand Results. Sentury's Comments Supp. Second Remand Results, ECF No. 24 ("Sentury's Cmts."). Consolidated Plaintiffs Pirelli Tyre Co., Pirelli Tire LLC, and Pirelli Tyre S.p.A. (collectively, "Pirelli") filed comments on the Second Remand Results. Comments Consol. Pls. Pirelli Tyre Commerce's Second Redetermination on Remand, ECF No. 23 ("Pirelli's Cmts."). Defendant United States ("Defendant") filed a response to all comments on the Second Remand Results. Def.’s Resp. Comments Remand Redetermination, ECF No. 25 ("Def.’s Cmts.").

For the following reasons, the Court remands in part and sustains in part the Second Remand Results.

ISSUES PRESENTED

This case presents the following issues:

1. Whether Commerce's denial of Pirelli's separate rate status for the period of review from January 27, 2015 to October 19, 2015 is supported by substantial evidence; and

2. Whether Commerce's revised dumping margin assigned to Sentury is in accordance with the law.

BACKGROUND

The Court assumes familiarity with the underlying facts and procedural history of this case and recites the facts relevant to the Court's review of the Second Remand Results. See Shandong Yongtai II, 44 CIT at ––––, 487 F. Supp. 3d at 1340–47 ; Shandong Yongtai Grp. Co. v. United States, (" Shandong Yongtai I"), 43 CIT ––––, ––––, 415 F. Supp. 3d 1303, 1306–07, 1312–18 (2019) ; see also Shandong Severance, 45 CIT at ––––, 493 F. Supp. 3d at 1342.

Pirelli applied for separate rate status in this administrative review, but Commerce determined that Pirelli did not qualify for separate rate status because of de facto Chinese government control through Chem China's ownership of Pirelli. Shandong Yongtai I, 43 CIT at ––––, 415 F. Supp. 3d at 1316 ; see also Final IDM at 28; [Pirelli]’s Separate Rate Application (Nov. 17, 2016) ("Pirelli's SRA"), PR 192–193. Commerce also denied Pirelli separate rate status for the segment of the period of review before Chem China's acquisition of Pirelli in October 2015 because Commerce asserted that Pirelli had not provided complete ownership information as to Pirelli's intermediate and ultimate owners from January through October 2015. Shandong Yongtai I, 43 CIT at ––––, 415 F. Supp. 3d at 1317–18 ; see also Final IDM at 28. Commerce determined that Pirelli's separate rate status claim for the period of time before Chem China's acquisition was not supported by the record. Shandong Yongtai I, 43 CIT at ––––, 415 F. Supp. 3d at 1318 ; see also Final IDM at 28. Thus, Commerce assigned Pirelli the China-wide entity rate for the entire period of review. Shandong Yongtai I, 43 CIT at ––––, 415 F. Supp. 3d at 1318.

The Court remanded Commerce's denial of Pirelli's separate rate status for Commerce to reconsider the criteria for de jure and de facto governmental control. Id. at ––––, 415 F. Supp. 3d at 1317. The Court did not reach the issue of Pirelli's request for separate rate status for the period before Chem China's acquisition. Id. at ––––, 415 F. Supp. 3d at 1318.

In the Final Results of Redetermination Pursuant to Remand, Shandong Yongtai Group Co. v. United States, (formerly consolidated) Court No. 18-00077 ("Shandong Docket"), ECF Nos. 71, 72, Commerce maintained its determination of de facto Chinese government control and denied separate rate status to Pirelli. See Shandong Yongtai II, 44 CIT at ––––, 487 F. Supp. 3d at 1344–45. Commerce examined the record and noted that Chinese government-owned entities had majority ownership of Pirelli. Id. at ––––, 487 F. Supp. 3d at 1345. Commerce determined that Pirelli failed to satisfy the third criterion of the de facto test, whether the respondent has autonomy from the government in making decisions regarding the selection of management. Id. at ––––, 487 F. Supp. 3d at 1345–46. The Court sustained Commerce's determination denying separate rate status to Pirelli. Id. at ––––, 487 F. Supp. 3d at 1346. On second remand, Commerce did not address Pirelli's separate rate status before Chem China's acquisition, nor did Pirelli comment on Commerce's draft remand results. Second Remand Results at 2–3.

Commerce selected Sentury for individual examination as a mandatory respondent. See Final IDM App. I at 1. As to Sentury's export price, Commerce reduced Sentury's export price through a two-step methodology that first determined the irrecoverable value-added tax ("VAT") on subject merchandise and then reduced the export price by the VAT determined. Shandong Yongtai I, 43 CIT at ––––, 415 F. Supp. 3d at 1313. The Court remanded the Final Results for Commerce to explain how irrecoverable VAT was properly the subject of a downward adjustment to Sentury's export price and for Commerce to explain the methodology for calculating irrecoverable VAT under 19 U.S.C. § 1677a(c)(2)(B). Id. at ––––, 415 F. Supp. 3d at 1314.

Commerce used the same methodology on remand and explained that Sentury's irrecoverable VAT was an "other charge imposed" by China pursuant to 19 U.S.C. § 1677a(c)(2)(B). Shandong Yongtai II, 44 CIT at ––––, 487 F. Supp. 3d at 1340. The Court held that because the statutory language in 19 U.S.C. § 1677a(c)(2)(B) did not cover the type of internal domestic tax that Commerce alleged was irrecoverable VAT, Commerce's downward adjustment to Sentury's export price was not in accordance with the law and Commerce's irrecoverable VAT calculation was not supported by substantial evidence. Id. at ––––, 487 F. Supp. 3d at 1343–44. The Court remanded for Commerce to eliminate the adjustments made for Sentury's irrecoverable VAT and to recalculate Sentury's export price. Id. On second remand, Commerce recalculated Sentury's export price and excluded any downward adjustment for irrecoverable VAT. Second Remand Results at 4, 8. Commerce assigned a dumping margin of 1.27% for Sentury and the all-others separate rate of 1.45% for separate rate respondents. Id. at 8.

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2)(B)(iii). The Court shall hold unlawful any determination found to be unsupported by substantial evidence on the record or otherwise not in accordance with the law. 19 U.S.C. § 1516a(b)(1)(B)(i). The Court also reviews determinations made on remand for compliance with the Court's remand order. Ad Hoc Shrimp Trade Action Comm. v. United States, 38 CIT ––––, ––––, 992 F. Supp. 2d 1285, 1290 (2014), aff'd, 802 F.3d 1339 (Fed. Cir. 2015).

DISCUSSION

I. Commerce's Denial of Pirelli's Separate Rate Status for a Partial Period of Review

The period of review in this case is from January 27, 2015 to July 31, 2016. Final IDM at 1. Pirelli acknowledges that the Court previously sustained Commerce's determination to deny Pirelli separate rate status for the portion of the period of review following Chem China's acquisition of Pirelli on October 20, 2015, but requests that the Court rule on Pirelli's alternate claim of partial separate rate status for the first ten months of the period...