Tianjin Machinery Import & Export Corp. v. U.S.

353 F.Supp.2d 1294

TIANJIN MACHINERY IMPORT & EXPORT CORP., Liaoning Machinery Import & Export Company, Shandong Huarong General Group Corp., and Shandong Machinery Import & Export Corp., Plaintiffs, v. UNITED STATES, Defendant, and Ames True Temper, Defendant-Intervenor.

Slip Op. 04-125.

Court No. 02-00637.

United States Court of International Trade.

October 4, 2004.

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COPYRIGHT MATERIAL OMITTED

Hume & Associates PC (Robert T. Hume), Washington, DC, for Plaintiffs Tianjin Machinery Import & Export Corp. and Shandong Huarong General Group Corp.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Jeanne E. Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Stephen C. Tosini); Barbara J. Tsai, Office of Chief Counsel for Import Administration, United States Department of Commerce, for Defendant United States, of counsel.

Wiley Rein & Fielding LLP (Eileen P. Bradner), Washington, DC, for Defendant-Intervenor Ames True Temper.

OPINION

GOLDBERG, Senior Judge.

In this action, Plaintiffs Tianjin Machinery Import & Export Corp. ("TMC") and Shandong Huarong General Group Corp. ("Huarong") (collectively "Plaintiffs")¹ challenge the final determination of the United States Department of Commerce ("Commerce") in the tenth administrative review of antidumping duty orders covering heavy forged hand tools in Heavy Forged Hand Tools From the People's Republic of China: Final Results and Partial Rescission of Antidumping Duty Administrative Review and Determination Not To Revoke in Part, 67 Fed.Reg. 57789 (Sept. 12, 2002) ("Final Results").² The Final Results covers the period of review from February 1, 2000 through January 31, 2001. Pursuant to USCIT Rule 56.2, Plaintiffs move for judgment on the agency record.

For the reasons that follow, the Court sustains the Final Results, but finds that Commerce's new policy of issuing liquidation instructions within fifteen days of publication of the final results of review is not in accordance with law. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c) and (i).

I. STANDARD OF REVIEW

The Court will sustain the Final Results 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). To determine whether Commerce's construction of the statutes is in accordance with law, the Court looks to Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The first step of the test set forth in Chevron requires the Court to determine "whether Congress has directly spoken to the precise question at issue." Id. at 842, 104 S.Ct. 2778. It is only if the Court concludes that "Congress either had no intent on the matter, or that Congress's purpose and intent regarding the matter is ultimately unclear," that the Court will defer to Commerce's construction under step two of Chevron. Timex V.I., Inc. v. United States, 157 F.3d 879, 881 (Fed.Cir.1998). If the statute is ambiguous, then the second step requires the Court to defer to the agency's interpretation so long as it is "a permissible construction of the statute." Chevron, 467 U.S. at 842, 104 S.Ct. 2778. In addition, "[s]tatutory interpretations articulated by Commerce during its antidumping proceedings are entitled to judicial deference under Chevron." Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed.Cir.2001) (interpreting United States v. Mead, 533 U.S. 218, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001)). Accordingly, the Court will not substitute "its own construction of a statutory provision for a reasonable interpretation made by [Commerce]." IPSCO, Inc. v. United States, 965 F.2d 1056, 1061 (Fed.Cir.1992).

II. DISCUSSION

A. Commerce's Decision to Apply Adverse Facts Available to the Packing Factor of Production for TMC's Hammers/Sledges Is Supported by Substantial Evidence and Otherwise in Accordance with Law.

For the cost portion of TMC's verification, Commerce preselected one of TMC's three hammer factories. See Defendant's Response in Opposition to Plaintiffs' Rule 56.2 Motion for Judgment Upon the Agency Record ("Def.'s Br.") at 6. When Commerce arrived at the factory, Commerce discovered that it had closed approximately ten months before verification. See Verification Report (TMC's Hammer Factory), Defendant's Appendix to Defendant's Response in Opposition to Plaintiffs' Rule 56.2 Motion for Judgment Upon the Agency Record ("Def.'s App.") at Ex. 7 (July 24, 2002). As a result, there were no packing materials present that Commerce could weigh to verify the packing factors reported in the review. Id. at 8. Moreover, there were no records available documenting the weights of the packing materials. See id. Commerce concluded that adverse inferences were warranted, and therefore applied the highest reported packing rate as adverse facts available ("AFA") for all of TMC's hammers, regardless of whether they were made by the closed factory or not. See Issues and Decision Memorandum for the Administrative Reviews of Heavy Forged Hand Tools from the People's Republic of China — February 1, 2000 through January 31, 2001, Def.'s App. at Ex. 11 at Cmt. 22 (Sept. 3, 2002) ("Issues and Decision Memo"); Memorandum of Points and Authorities in Support of Motion of Plaintiffs Tianjin Machinery Import & Export Corp. and Shandong Huarong General Group Corp. for Judgment on the Agency Record ("Pls.' Br.") at 9.

The asserted basis for Commerce's decision to apply AFA is that "TMC was responsible for demonstrating the reliability of its own data, [and] its failure to do so supports [the] conclusion that [TMC] did not act to the best of its ability." Issues and Decision Memo at Cmt. 22. Commerce assumes that "when a respondent prepares its response, it [will] maintain the records which were used to compile its data." Id. Furthermore, Commerce reasons that because TMC maintained records for a variety of reported factors of production despite the closure of its factory, "[i]t is ... reasonable to assume that [TMC] would have maintained records for all reported [factors of production,]" including packing factors. Id. Thus, Commerce concluded that TMC's failure either to maintain packing records or to provide actual packing materials for weighing constituted a failure to act to the best of its ability, warranting application of AFA. See id.

Before Commerce is allowed to apply AFA, Commerce must find that "an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information[.]" 19 U.S.C. § 1677e(b). "The statutory mandate that a respondent act to `the best of its ability' requires the respondent to do the maximum it is able to do." Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed.Cir.2003). For Commerce to conclude that a respondent failed to cooperate to the best of its ability and to draw an adverse inference under 19 U.S.C. § 1677e(b), Commerce need only make two showings.

First, it must make an objective showing that a reasonable and responsible [respondent] would have known that the requested information was required to be kept and maintained under the applicable statutes, rules, and regulations. Second, Commerce must then make a subjective showing that the respondent under investigation not only has failed to promptly produce the requested information, but further that the failure to fully respond is the result of the respondent's lack of cooperation in either: (a) failing to keep and maintain all required records, or (b) failing to put forth its maximum efforts to investigate and obtain the requested information from its records.

Id. at 1382-83 (internal citation omitted); see also China Steel Corp. v. United States, 28 CIT ___, ___, 306 F.Supp.2d 1291, 1304 (2004).

The first requirement is easily satisfied. As the Court has held, "[t]here can ... be no doubt that a reasonable and responsible producer, seeking an administrative review, will have accurate records of its factors of production." Shandong Huarong Gen. Group Corp. v. United States, 27 CIT ___, ___, 2003 WL 22757937 (2003).

With regard to the second requirement, it is undisputed that TMC did not provide either packing materials for weighing³ or records documenting packing weights, even though Commerce expressly notified TMC in advance that packing materials and documentation would be required for verification. See Verification Agenda Outline for TMC, Def.'s App. at Ex. 3 at 10 (Apr. 9, 2002). TMC claims that it has never maintained records of packing weights, but rather, has always provided and verified packing data by weighing actual inventory. Plaintiffs' Reply Brief ("Pls.' Reply Br.") at 8. Thus, TMC asserts, short of weighing inventory, there is no way to verify packing weights. See id.

TMC's argument is unpersuasive. A respondent's failure to maintain required records is not an adequate defense to a determination by Commerce that the respondent failed to act to the best of its ability. The Court of Appeals for the Federal Circuit has clearly articulated that "the [best of ability] standard does not condone ... inadequate record keeping." Nippon Steel, 337 F.3d at 1382. It assumes that respondents are familiar with the rules and regulations that apply, and requires respondents to "take reasonable steps to keep and maintain full and complete records documenting the information that a reasonable [respondent] should anticipate being called upon to produce[.]" Id.

TMC has not adduced any evidence to suggest that maintaining packing records would be impossible, or even impracticable; rather, TMC merely asserts that its methodology does not involve maintaining packing records. TMC's assertion supports the subjective showing by Commerce that TMC's failure to respond fully is the result of its own lack of cooperation in failing...