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Slip Op. 99-42
UNITED STATES COURT OF INTERNATIONAL TRADE
___________________________________ : THAI PINEAPPLE CANNING INDUSTRY CORP., LTD., and MITSUBISHI INTERNATIONAL CORP., Court No. 98-03-00487 Plaintiffs, Public Version : : UNITED STATES, : : Defendant, : : and : : MAUI PINEAPPLE CO., LTD., and INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION, : : Defendant-Intervenors. ___________________________________ : [ITA determination remanded.] Dated: May 5, 1999 Dickstein Shapiro Morin & Oshinsky LLP (Arthur J. Lafave, III, Douglas N. Jacobson, and Patricia M. Steele) for plaintiffs.
David W. Ogden, Acting Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Lucius B. Lau), Stacy J. Ettinger, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of counsel, for defendant.
OPINION
RESTANI, Judge: This motion is before the court on Plaintiffs' Motion for Judgment on the Administrative Record, pursuant to CIT Rule 56.2. Plaintiffs seek review of the final results of the first administrative review of the antidumping duty order on Canned Pineapple Fruit from Thailand, 63 Fed. Reg. 7,392, 7,392 (Dep't Commerce 1998) [hereinafter "Final Results"], covering sales to the United States during the period January 11, 1995, through June 30, 1996.
Jurisdiction and Standard of Review
The court has jurisdiction pursuant to 28 U.S.C.§ 1581(c) (1994). In reviewing final determinations in antidumping duty investigations, the court will hold unlawful those agency determinations which are unsupported by substantial evidence on the record, or otherwise not in accordance with law. 19 U.S.C.§ 1516a(b)(1)(B)(i) (1994).
Procedural History
On July 18, 1995, the United States Department of Commerce ("Department" or "Commerce") published an antidumping duty order on canned pineapple fruit ("CPF") from Thailand. Canned Pineapple Fruit from Thailand, 60 Fed. Reg. 36,775, 36,776 (Dep't Commerce 1995). On August 15, 1996, the Department published a notice initiating an administrative review for sales during the period January 11, 1995, through June 30, 1996. Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation, 61 Fed. Reg. 42,416, 42,417 (Dep't Commerce 1996). Initial questionnaires were issued on September 5, 1996, to Thai Pineapple Canning Industry Corp., Ltd. ("TPC"), Princes Foods B.V. ("Princes") and Mitsubishi International Corp. ("MIC"). Princes is a TPC affiliate, located in the Netherlands, that resells canned pineapple fruit into the German market. Pl.'s Br. at 4. MIC is an affiliated reseller in the United States. Id. TPC reported third-country sales to Germany in its sales responses because the home market was not viable. TPC Questionnaire Response (Nov. 13, 1996), at 2-3, P.R. Doc. 35, Pl.'s App., Tab 3, at 2-3.
The Department initiated a below-cost sales investigation on January 13, 1997. Canned Pineapple Fruit from Thailand, 62 Fed. Reg. 42,487, 42,487 (Dep't Commerce 1997) (prelim. results and partial termination of antidumping duty admin. rev.) [hereinafter "Preliminary Results"]. TPC, Princes, and MIC participated in verifications conducted in May and June 1997 in Thailand, the Netherlands, and the United States, respectively. Pl.'s Br. at 5. Following verification, the Department issued the Preliminary Results on August 7, 1997. 62 Fed. Reg. at 42,487. The Department provided interested parties the opportunity to comment on its Preliminary Results. See id.
After issuance of the Final Results on February 13, 1998, TPC filed a letter alleging a clerical error. Letter to Commerce (Feb. 17, 1998), at 1, C.R. Doc. 95, Pl.'s App., Tab 7, at 1. TPC noted that, without comment, the Department calculated in the Final Results a single assessment rate for two separate importers, Mitsubishi Foods, Inc., ("MFI") and MIC, even though it had calculated separate rates for each of these companies in its Preliminary Results. Id. at 1-2. The Department issued a memorandum concluding that its calculation of a single assessment rate for these two companies was not a clerical error and was in accordance with its practice regarding affiliated importers.Memo from Commerce (March 5, 1998), at 2-3, P.R. Doc. 204, Pl.'s App., Tab 2, at 2-3.
At issue in this review are the propriety of the single weighted-average cost of production for the entire period of review ("POR"), the selection of date of sale for third-country sales, the calculation of profit for constructed export price ("CEP") purposes, the assessment rate on sales outside the cap period established by 19 U.S.C.A. 1673f (West Supp. 1999), and the related issue of the propriety of a single assessment rate for MIC and its predecessor, MFI. The final issue of the assessment rate on entries made after the Final Results is remanded per agreement of the parties, as neither plaintiffs nor Commerce had an adequate opportunity to address this issue. Facts regarding the remaining issues will be set forth in connection with each issue separately.1
I. Use of a Single Weighted-Average Cost of Production Covering Entire 18-Month Period of Review
A. Facts
As noted, the challenged administrative review results involved CPF from Thailand which entered the United States during the period January 11, 1995, through June 30, 1996. Final Results, 63 Fed. Reg. at 7,392. As part of its antidumping analysis, Commerce conducted a cost of production ("COP") investigation of TPC's third-country sales.2 Id. Because certain CPF products produced by TPC failed the COP test as applied by Commerce, Commerce used constructed value ("CV") as the basis of normal value ("NV")3 where (1) there were no contemporaneous sales of a comparable product or (2) all contemporaneous sales of a comparable product failed the COP test. Gov't Br. at 14. For both COP and CV, Commerce determined the cost of production of CPF using a single, weighted-average cost for the entire period of review. Final Results, 63 Fed. Reg. at 7,399-7,400.
Given generally rising costs,4 TPC computed a separate cost for each fiscal period covered by its sales responses -- 1994, 1995, and 1996 -- and submitted them in its cost responses with a request that the Department use the separate fiscal period costs for its determinations of COP and CV. TPC Section D Questionnaire Response (Feb. 18, 1997), at 27, C.R. Doc. 31, Pl.'s App., Tab 11, at 2. Notwithstanding TPC's request, the Department calculated a single "average" COP and a single "average" CV based on costs of production computed over the period January 1, 1995, to June 30, 1996. Final Results, 63 Fed. Reg. at 7,399-7,400. Plaintiffs allege that the calculation of a single, weighted-average cost over this period, and the use of that cost for comparison to sales prices early in the period, resulted in significant distortions in the Department's pricecost comparisons, including distortions in its determination of which sales should be disregarded as below cost and in the Department's determination of CV. Id. at 7,399. Plaintiffs allege in particular that distortion occurred because the Department did not match up 1995 sales with the low 1994 costs related thereto.5 Id.
Commerce contends that costs did not rise in a continuous manner over that entire POR and that a period-wide weighted-average was approved in Fujitsu General Ltd. v. United States, 88 F.3d 1034, 1038-39 (Fed. Cir. 1996).
1. Defendant-intervenors Maui Pineapple Co., Ltd., elected not to file a response brief and did not otherwise participate in the substantive aspects of this case.
2. Third country sales are sales of like merchandise in other than the United States or the exporting country. See 19 U.S.C. § 1677b(a)(1)(B)(ii) (1994).
3. If sufficient quantities of goods are sold in the country of production above the cost of production, normal value will be based on home country sales prices. If home country sales are not usable, Commerce may use third country sales or CV, which is based on COP, as normal value. See 19 U.S.C. § 1677b(a).
4 By plaintiff's calculations, fresh pineapple costs per carton of CPF, computed using the Department's net realizable value ("NRV") method, rose by [ ]% from 1994 to 1995 and by [ ]% from 1994 to 1996. See Memo from Commerce (July 31, 1997), at Sch. 1, C.R. Doc. 86, Pl.'s App., Tab 9, at 2 ([ ] baht per standard carton in 1995 and [ ] in 1996); TPC Case Brief (Sept. 8, 1997), at Attachment 1, C.R. Doc. 87, Pl.'s App., Tab 10, at 9 ([ ] baht per standard carton in 1994).
Fresh pineapple costs account for about [ ]% of the finished product cost. Plaintiff arrives at this calculation by dividing the Total Net Pineapple Cost to CPF of [ ] by total standard cases, [ ], to yield fruit costs of [ ] baht per carton and comparing this with total cost of manufacturing ("TOTCOM") for 1995 products ranging from [ ] baht per carton to [ ] baht per carton. Memo from Commerce, at Sch.s 1 and 5(a), Pl.'s App., Tab 9, at 2-3. In addition, interest expenses ("INTEX"), calculated according to the methodology used by the Department in its Preliminary and Final Results, amounted to [ ]% of cost of manufacturing ("COM") in 1995, but were [ ] in 1994. TPC Case Brief, at 7, Pl.'s App., Tab 10, at 2.
Therefore, plaintiffs calculate that finished product costs rose by [ ]% from 1994 to 1995 and by [ ]% from 1994 to the first half of 1996. Pl.'s Br. at 8 (computed by multiplying the increase in fresh fruit cost by [ ] to derive the increase in COM and adding [ ]% for increased interest expenses).5 Because there is a 30-40 day transit time from Thailand to the United States, TPC Case Brief, at 40, Pl.'s App., Tab 10, at 8) and merchandise is typically held in inventory in the United States for [ ] months prior to sale to the first unaffiliated customer, most of the merchandise in CEP comparison sales made by TPC's affiliate MFI in the first few months of the POR appear to have been manufactured in 1994. See id. at 9, Pl.'s App., Tab 10, at 4; TPC Questionnaire Response (Nov. 12, 1996), at Ex. 56, C.R. Doc. 5, Pl.'s App., Tab 12, at 4 (showing number of days of approximately [ ] months); TPC Verification Ex. No. LA-18, at 1, C.R. Doc. LA-18, Pl.'s App., Tab 14, at 1 (showing number of days of approximately [ ] months). TPC brought this fact to the Department's attention in its initial responses, reported the year of manufacture in its response, and suggested that the Department calculate a separate fiscal period COP and CV for 1994 production. Final Results, 63 Fed. Reg. at 7,399.