627 F.Supp.3d 1322
Ct. Intl. Trade2023Background
- Commerce conducted an antidumping administrative review for passenger vehicle and light truck tires from China for Aug. 1, 2017–July 31, 2018 (POR 3); Pirelli (Pirelli China and Pirelli USA) sought a separate rate but Commerce denied it and assigned Pirelli the China‑wide rate.
- Shandong New Continent Tire Co. (New Continent) was the mandatory respondent and originally received a zero percent margin; Customs later notified Commerce of discrepancies between invoices New Continent submitted to Commerce and entry records (an alleged $2.6 million undervaluation), prompting a court‑ordered remand.
- On remand Commerce reopened the record, issued supplemental questionnaires, reviewed over 20,000 pages of new material, and concluded New Continent’s U.S. sales information in the administrative review was accurate and that New Continent was not affiliated with the entities that supplied the data to Customs.
- Pirelli challenged (1) Commerce’s authority to apply a China‑wide entity rate, (2) the denial of Pirelli’s separate‑rate application (arguing it rebutted de facto government control), and (3) Commerce’s treatment of New Continent’s reporting; the court remanded on the Customs referral and later reviewed Commerce’s remand results.
- The court sustained Commerce’s remand findings that New Continent’s submitted U.S. sales data were accurate and that New Continent was not affiliated with the sources of the Customs discrepancies.
- The court also sustained Commerce’s denial of Pirelli’s separate‑rate application, holding Commerce’s conclusion—that Pirelli failed to rebut the presumption of de facto government control—was supported by substantial evidence and lawful; Pirelli’s statutory challenge to China‑wide authority was waived.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Accuracy of New Continent's U.S. sales reporting and fraud to Customs | New Continent's records contradicted Customs entries; Commerce should have found inaccuracies/fraud | Commerce reviewed invoices, reconciled payments to reported U.S. sales, and limited its remit to accuracy of info submitted to Commerce (fraud is Customs' domain) | Commerce's remand finding that New Continent accurately reported sales and was not affiliated with the Customs sources is supported by substantial evidence and sustained |
| Commerce's statutory authority to impose a China‑wide entity rate | Commerce lacks statutory authority to apply a China‑wide rate (Count I) | Federal Circuit precedent upholds Commerce's authority; issue was not pressed below | Pirelli waived this argument by not raising it in its merits briefing; court declines to address on the merits |
| Whether Pirelli rebutted presumption of de facto government control (separate rate) | Pirelli said minority government ownership requires a lower burden, actual control (not potential), connection to export functions, and Italian law protections show independence | Commerce applied the standard rebuttable presumption, examined ownership, board composition, corporate documents, and Pirelli's own annual report showing indirect control | Commerce lawfully applied the de facto test, reasonably considered indicia of potential control with supporting evidence, and substantial evidence supports denial of separate‑rate status |
Key Cases Cited
- China Mfrs. All. v. United States, 1 F.4th 1028 (Fed. Cir. 2021) (upheld Commerce authority re: China‑wide rate)
- Sigma Corp. v. United States, 117 F.3d 1401 (Fed. Cir. 1997) (established rebuttable presumption of government control in NME proceedings)
- Diamond Sawblades Mfrs. Coal. v. United States, 866 F.3d 1304 (Fed. Cir. 2017) (sustaining Commerce's rebuttable presumption approach)
- Transcom, Inc. v. United States, 294 F.3d 1371 (Fed. Cir. 2002) (discussing separate rates and burden to rebut presumption)
- Zhejiang Quzhou Lianzhou Refrigerants Co. v. United States, 350 F. Supp. 3d 1308 (CIT 2018) (discussed weight of majority government ownership vs. minority ownership in control analysis)
- Yantai CMC Bearing Co. v. United States, 203 F. Supp. 3d 1317 (CIT 2017) (explaining conjunctive four‑factor de facto test)
- An Giang Fisheries Imp. & Exp. Joint Stock Co. v. United States, 284 F. Supp. 3d 1350 (CIT 2018) (requiring additional indicia when government owns a minority stake)
- Shandong Yongtai Grp. Co. v. United States, 487 F. Supp. 3d 1335 (CIT 2020) (prior litigation upholding Commerce findings on related Pirelli issues)