2013 CIT 114
Ct. Int'l Trade2013Background
- Commerce initiated an anticircumvention inquiry into U.K. Carbon and Graphite Co. Ltd. (UKCG) on petitioners' allegation that UKCG imported Chinese-produced unfinished small diameter graphite electrodes (SDGE), finished them in the U.K., and exported them to the U.S. to evade an antidumping order on SDGE from China.
- The antidumping order covers SDGE “whether or not finished” and includes graphite pin joining systems; HTSUS subheadings are non-dispositive but were adjusted in the Final Determination to add HTSUS 3801.10.
- Record evidence and verification showed that nearly all manufacturing steps (13 stages) — including graphitization — occurred in China; UKCG’s U.K. operations involved only final machining/finishing (≈ five minutes per electrode).
- Commerce issued an affirmative preliminary and then final circumvention determination, using surrogate values (Ukraine) to value Chinese inputs and concluding Chinese-origin inputs represented a significant portion of the value of U.S.-bound merchandise.
- Commerce directed cash deposits at the China-wide rate for UKCG’s entries pending any administrative review; UKCG sought separate-rate relief but had not exhausted administrative remedies for a rate determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the inputs (artificial graphite rods) are "same class or kind" as SDGE | UKCG: rods are distinct from "electrodes" and classification rulings show rods are not electrodes | Commerce/Petitioners: rods are unfinished SDGE (same class/kind); “unfinished” in scope includes graphitized but unmachined articles | Court: Commerce's finding supported — rods are same class/kind and “unfinished” SDGE falls within scope |
| Whether merchandise was completed/assembled in third country from subject merchandise | UKCG: challenges aspects but argues Commerce misapplied scope language | Commerce: inputs produced in China and finished in U.K.; satisfied statutory subsection (B) under either (i) subject to order or (ii) produced in China | Court: Supported — inputs produced in China and finished in U.K., satisfying §1677j(b)(1)(B) |
| Whether U.K. processing is "minor or insignificant" under §1677j(b)(1)(C) | UKCG: contests value-added analysis and significance of finishing | Commerce: assessed §1677j(b)(2) factors (investment, R&D, process, facilities, value added); finishing is minimal relative to Chinese production | Court: Supported — U.K. finishing (≈5 minutes) is minor/insignificant given record and factor analysis |
| Whether Commerce properly valued Chinese-origin inputs and imposed China-wide deposit rate | UKCG: actual purchase prices should be used; entitled to separate rate and not a punitive China-wide deposit | Commerce: NME prices unreliable; surrogate methodology (Ukraine) permissible; applying China-wide deposit rate is consistent with circumvention practice and administrative channels for final liability | Court: Supported — surrogate valuation reasonable under Chevron; China-wide deposit instruction supported and plaintiff must exhaust administrative remedies for rate relief |
Key Cases Cited
- Universal Camera Corp. v. Nat'l Labor Relations Bd., 340 U.S. 474 (Sup. Ct. 1951) (definition and standard of substantial evidence review)
- Wheatland Tube Co. v. United States, 161 F.3d 1365 (Fed. Cir. 1998) (agency must provide reasoned analysis to avoid arbitrary or capricious decision)
- Novosteel SA v. United States, 284 F.3d 1261 (Fed. Cir. 2002) (HTSUS numbers are not dispositive for antidumping scope)
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (Sup. Ct. 1984) (deference to agency interpretations where statute is silent and interpretation is permissible)
- Globe Metallurgical, Inc. v. United States, 722 F. Supp. 2d 1372 (Ct. Int’l Trade 2010) (some processing must occur in third country for subsection (b) analysis)