Z.A. Sea Foods Private Ltd. v. United States

569 F.Supp.3d 1338

Z.A. SEA FOODS PRIVATE LIMITED, B-One Business House Pvt. Ltd., Hari Marine Private Limited, Magnum Export, Megaa Moda Pvt. Ltd., Milsha Agro Exports Private Ltd., Sea Foods Private Limited, Shimpo Exports Private Limited, Five Star Marine Exports Pvt. Ltd., HN Indigos Private Limited, RSA Marines, and Zeal Aqua Ltd., Plaintiffs,

v. UNITED STATES, Defendant,andAd Hoc Shrimp Trade Action Committee, Defendant-Intervenor.

Slip Op. 22-36

Court No. 21-00031

United States Court of International Trade.

April 19, 2022

Robert G. Gosselink, Trade Pacific PLLC, of Washington, D.C., argued for Plaintiffs Z.A. Sea Foods Private Limited, B-One Business House Pvt. Ltd., Hari Marine Private Limited, Magnum Export, Megaa Moda Pvt. Ltd., Milsha Agro Exports Private Limited, Sea Foods Private Limited, Shimpo Exports Private Limited, Five Star Marine Exports Private Limited, HN Indigos Private Limited, RSA Marines, and Zeal Aqua Limited. With him on the joint briefs was Jonathan M. Freed.

Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant United States. With her on the briefs were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of Counsel Spencer Neff, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance.

Zachary J. Walker, Picard, Kentz & Rowe, LLP, of Washington, D.C., argued for Defendant-Intervenor Ad Hoc Shrimp Trade Action Committee. With him on the briefs was Nathaniel Maandig Rickard.

Katzmann, Judge:

The question presented by this case is whether the U.S. Department of Commerce ("Commerce") was permitted to employ constructed value as the basis for normal value in its administrative review of the antidumping duty ("AD") order covering certain frozen warmwater shrimp from India that had been imported into the United States at less than fair value in derogation of fair competition with domestic producers.¹ Plaintiffs, all foreign producers and exporters in India of the subject merchandise, argue that Commerce's use of constructed value was in error because the facts do not support Commerce's rejection of Vietnam as a third country market through which normal value might have been ascertained.² Defendant, the United States ("the Government"), and domestic producers, Defendant-Intervenor Ad Hoc Shrimp Trade Action Committee ("AHSTAC"), contend that Commerce correctly found that the Vietnamese sales data provided by Plaintiffs was not representative (as required by 19 U.S.C. § 1677b(a)(1)(B)(ii)(I) ) and therefore unsuitable for purposes of calculating normal value. The court concludes that Commerce's use of constructed value was unsupported by substantial evidence. Accordingly, the court remands the administrative review determination to Commerce for further proceedings consistent with this opinion.

BACKGROUND

I. Legal & Regulatory Framework

The Tariff Act of 1930 authorizes Commerce to investigate alleged dumping and, if dumping is found, levy duties on the implicated goods. Sioux Honey Ass'n v. Hartford Fire Ins., 672 F.3d 1041, 1046 (Fed. Cir. 2012). Dumping occurs when a foreign company sells a product in the United States for less than its fair value. 19 U.S.C. § 1673. When investigating whether goods are being dumped, Commerce must therefore first determine whether a good is being sold at less than its fair value. Id.; 19 U.S.C. § 1677b(a). To do so, Commerce compares the export price or constructed export price (export price adjusted for various additional expenses pursuant to 19 U.S.C. § 1677a(c) – (d) ) of the merchandise with its normal value. 19 U.S.C. § 1677b(a). Ultimately, if dumping is found, the duty imposed will be equal to the difference between these two prices (also known as the "dumping margin"). Id.

The statute provides three methods for the calculation of normal value. By default, Commerce calculates normal value by averaging the price at which the exported good (or a like good) is sold for consumption in its home market. 19 U.S.C. § 1677b(a)(1)(B)(i). If the good (or a like good) is not offered for sale in its home market, or if the home market sales are equal to less than five percent of the aggregate U.S. sales, Commerce may instead average the good's prices in a third country. 19 U.S.C. § 1677b(a)(1)(C). Specifically, a third country sales price may be considered for purposes of normal value calculation when:

(i) the foreign like product is not sold (or offered for sale) for consumption in the exporting country [...],

(ii) the administering authority determines that the aggregate quantity (or, if quantity is not appropriate, value) of the foreign like product sold in the exporting country is insufficient to permit a proper comparison with the sales of the subject merchandise to the United States, or

(iii) the particular market situation in the exporting country does not permit a proper comparison with the export price or constructed export price.

Id. The third country price must further be (1) representative; (2) reflective of third country sales in excess of five percent of the aggregate U.S. sales; and (3) not unavailable for proper comparison due to a particular market situation in the third country. 19 U.S.C. § 1677b(a)(1)(B)(ii). Finally, if the home market cannot be used to calculate normal value, and notwithstanding the availability of third country sales data, Commerce may determine the product's normal value by calculating its constructed value. 19 U.S.C. § 1677b(a)(4). Constructed value is calculated by summing the costs of production and processing of the product, and the costs incurred by the exporter under investigation (or other representative exporters under investigation) in the course of the export and sale of the product. 19 U.S.C. § 1677b(e).

Commerce's regulations further specify the process for calculation of normal value. In relevant part, they provide:

(b) Determination of viable market -

(1) In general . [Commerce] will consider the exporting country or a third country as constituting a viable market if [Commerce] is satisfied that sales of the foreign like product in that country are of sufficient quantity to form the basis of normal value.

(2) Sufficient quantity . "Sufficient quantity" normally means that the aggregate quantity (or, if quantity is not appropriate, value) of the foreign like product sold by an exporter or producer in a country is 5 percent or more of the aggregate quantity (or value) of its sales of the subject merchandise in the United States.

(c) Calculation of price-based normal value in viable market -

(1) In general . Subject to paragraph (c)(2) of this section:

(i) If the exporting country constitutes a viable market, [Commerce] will calculate normal value on the basis of price in the exporting country (see [ 19 U.S.C. § 1677b(a)(1)(B)(i) ] (price used for determining normal value)); or

(ii) If the exporting country does not constitute a viable market, but a third country does constitute a viable market, [Commerce] may calculate normal value on the basis of price to a third country (see [ 19 U.S.C. § 1677b(a)(1)(B)(ii) ] (use of third country prices in determining normal value)).

(2) Exception . [Commerce] may decline to calculate normal value in a particular market under paragraph (c)(1) of this section if it is established to the satisfaction of the Secretary that:

(i) In the case of the exporting country or a third country, a particular market situation exists that does not permit a proper comparison with the export price or constructed export price (see [ 19 U.S.C. § 1677b (a)(1)(B)(ii)(III) or (a)(1)(C)(iii) ]); or

(ii) In the case of a third country, the price is not representative (see [ 19 U.S.C. § 1677b(a)(1)(B)(ii)(I) ]).

19 C.F.R. § 351.404(c). Finally, 19 C.F.R. § 351.404(f) provides that Commerce "normally will calculate normal value based on sales to a third country rather than on constructed value if adequate information is available and verifiable."

Representativeness, as required by 19 U.S.C. § 1677b(a)(1)(B)(ii)(I) and 19 C.F.R. § 351.404(c)(2)(ii), is not defined by statute or regulation. Alloy Piping Prod., Inc. v. United States, 26 C.I.T. 330, 334, 201 F. Supp. 2d 1267, 1272 (2002), aff'd sub nom. Alloy Piping Prod., Inc. v. Kanzen Tetsu Sdn. Bhd., 334 F.3d 1284 (Fed. Cir. 2003). Nevertheless, it is well-established that "where the aggregate quantity of third country sales are at a sufficient level, those sales are presumptively representative unless demonstrated otherwise." Husteel Co. v. United States, 45 CIT ––––, ––––, 520 F. Supp. 3d 1296, 1304 (2021) (citing 19 C.F.R. § 351.404(b) – (c) ). A party seeking to establish that sales are not representative bears the burden of making such a showing. Antidumping Duties, Countervailing Duties: Final Rule, 62 Fed. Reg. 27,296, 27,357 (Dep't Commerce May 19, 1997) ("Preamble"). Any determination that the proposed third country sales are not representative must be supported by substantial evidence on the record. Husteel, 520 F. Supp. 3d at 1305 (citing Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48–49, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983) ).

II. Factual & Procedural Background

The administrative review at issue in these proceedings was initiated on May 2, 2019 for the period of review beginning February 1, 2018 and ending January 31, 2019. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 84 Fed. Reg. 18,777, 18,778 (Dep't Commerce May 2, 2019) (P.R. 16) ("Initiation"). ZASF was selected as a mandatory respondent.³ IDM at 1. In its response to Commerce's Section A questionnaire, ZASF acknowledged that its home market sales constitute less than five percent of the volume of its U.S. sales, and therefore cannot provide a viable basis for normal value. Letter from ZASF to Sec'y Commerce re: ZASF's Section A Questionnaire Resp. in the...