OPINION
In this case, the domestic industry and a foreign manufacturer both challenge an anti-dumping duty determination by the United States Department of Commerce, International Trade Administration (“ITA”). ITA’s determination excluded the foreign manufacturer Chang Tieh Industry Co., Ltd. (“Chang Tieh”) from an antidumping order on certain conditions. Certain Welded Stainless Steel Pipes from Taiwan, 57 Fed.Reg. 53, 705, 53,-709 (Dep’t Comm.1992) (final determ, of sales at less than fair value) (requiring Chang Tieh’s consent to conditions) {“Final Results ”); Certain Welded Stainless Steel Pipe from Taiwan, 57 Fed.Reg. 62,300, 62,301 (Dep’t Comm.1992) (amended final determ. & antidumping duty order) (excluding Chang Tieh after having received its consent to conditions) (“Amended Final Results”). Among these conditions was Chang Tieh’s acquiescence to the immediate application of the antidumping order if ITA subsequently found that Chang Tieh “has sold or is likely to sell subject merchandise to the United States at less than its foreign market value.” Id.
Chang Tieh moves for judgment on the agency record on the ground that the conditional exclusion was an inappropriate exercise of ITA’s power. Avesta Sheffield, Inc. (“Avesta”), representing the domestic industry, argues that the court has no jurisdiction over Chang Tieh’s challenge of the agency determination. Avesta also moves for judgment on the agency record, contending that data concerning Chang Tieh’s sales do not support its exclusion from the antidumping order.
In resolving Avesta’s motion, the court will address the following issues: 1) whether Chang Tieh’s sales data were unrepresentative or not bona fide and should have been disregarded, 2) whether ITA should have determined that the foreign market value (“FMV”) was duty-inclusive before granting a duty drawback, 3) whether ITA should have adjusted either U.S. price or FMV to account for value-added taxes (“VAT”), and 4) whether ITA properly allocated Chang Tieh’s labor and overhead costs. ITA’s determination will be sustained if it is supported by substantial evidence on the record and is otherwise in accordance with law. 19 U.S.C. § 1516a(b)(l)(B) (1988).
BACKGROUND
On November 18, 1991, Avesta and other representatives of the domestic steel pipe industry (“petitioners”) filed with ITA petitions alleging dumping by Chang Tieh and other foreign manufacturers. Certain Welded Stainless Steel Pipes from the Republic of Korea and Taiwan, 56 Fed.Reg. 65,043, 65,-043 (Dep’t Comm.1991) (init. of antidumping duty investigations). Based on petitioners’ submissions, ITA initiated an antidumping duty investigation on December 13, 1991. Id. at 65,044.
The United States International Trade Commission (“ITC”) reached an affirmative preliminary determination of injury in January 1992.
Certain Welded Stainless Steel
On July 1, 1992, petitioners informed ITA of their suspicion that Chang Tieh had sold its merchandise in intentionally small volumes and at artificially inflated prices inconsistent with commercial reality for the purpose of avoiding antidumping duty liability. See Final Results, at 53,706. Petitioners’ preverification comments, submitted on July 2, alleged collusion between Chang Tieh and its U.S. importer and compared Chang Tieh’s prices to those of other importers in an attempt to show that Chang Tieh had priced its goods above market value. Appendix to Memorandum of Points and Authorities in Support of Motion by Plaintiffs Avesta Sheffield, Inc., et al., for Judgment Upon the Agency Record (“Avesta’s Appendix”), Doc. 6, at 2-4. Approximately two weeks later, ITA received a confidential two-page affidavit repeating petitioners’ allegations with regard to collusion. Id., Doc. 7, Attachment 1. ITA granted anonymity to petitioners’ sources of information on September 2, 1992. Final Results, at 53,706.
Petitioners filed additional affidavits on September 10 and 21 without providing redacted versions. Id. Officials at ITA spoke with the affiants on September 22 in order to confirm their identities and their knowledge of information contained in the affidavits. Avesta’s Appendix, Doc. 5, at 1. On September 23, petitioners prepared redacted versions of the affidavits, but refused to serve them on other interested parties. Final Re-suits, at 53,706. ITA made several subsequent requests for public versions that could be released pursuant to the administrative protective order. Id. Public versions were finally submitted on November 3. Id.
Despite the delay in issuing public versions of the additional affidavits, Chang Tieh received notice of petitioners’ concerns and a copy of the first affidavit detailing their allegations in July 1992. Avesta’s Appendix, Doc. 3, at 4 (certificate of service on Chang Tieh); id., Doc. 7, Attachment 1, at 3 (certificate of service on Chang Tieh). In late September and early October, ITA sent inquiries to Chang Tieh and its U.S. importer, who both provided ITA with arguments and data to rebut the allegations. Final Results, at 53,706; Avesta’s Appendix, Docs. 17 & 19.
On November 12, ITA issued a final affirmative determination of LTFV sales, finding a zero dumping margin for Chang Tieh. 1 Final Results, at 53,722. ITA adjusted Chang Tieh’s U.S. price upward for duty drawback on raw materials imported into Taiwan and then converted into steel pipe for export. Id. at 53,709-10. Rather than tracing the raw materials from import to export as finished goods, ITA confirmed that the manufacturer had imported sufficient raw materials to make the quantity of goods eventually exported to the United States. Id. at 53,710. ITA adjusted U.S. price for VAT without performing an econometric analysis to determine whether the tax had been passed through to the consumer. Id. ITA also made a circumstance of sale adjustment to foreign market value based on VAT issues. Id.
Because of its concerns regarding Chang Tieh’s possible creation of an artificially high U.S. price, ITA directed Chang Tieh to provide a certification “similar to those required under [19 C.F.R.] §§ 353.14 and 353.25(b)” before excluding Chang Tieh from the dumping order.
Id.
at 53,709. The “similar” certification constituted an affirmation by Chang Tieh that it had not dumped goods in the past and would not dump goods in the fu
DISCUSSION
1. Avesta’s Motion for Judgment on the Agency Record
A. Exclusion of Unrepresentative Sales from U.S. Price Data Pool
Avesta argues that the questionable nature of Chang Tieh’s U.S. sales data should have caused ITA to ignore the data as being unrepresentative and to apply BIA to determine a dumping margin. See 19 U.S.C. § 1677e(b), (e) (1988) (mandating use of BIA if data cannot be verified or are not produced in a timely manner and in the form required). Chang Tieh responds that its U.S. sales were typical of its normal business practices and that ITA had no discretion to discard the entire sales base on the ground of unrepresentativeness.
The antidumping statute directs ITA to calculate foreign market value on the basis of sales made “in the ordinary course of trade for home consumption.” Id. § 1677b(a)(l)(A) (1988). Sales intended to establish a fictitious market are excluded from the computation of foreign market value. Id. § 1677b(a)(l). The statutory and regulatory definitions of U.S. price do not contain similar limitations. See id. § 1677a (1988); 19 C.F.R. § 353.41 (1992). This court has reasoned,
if Congress intended to require [ITA] to exclude all sales made outside the “ordinary course of trade” from its determination of United States price it could have provided for such an exclusion in the definition of United States price, as it has in the definition of foreign market value. It has not done so.
Ipsco, Inc. v. United States,
ITA instead has the discretion to disregard certain U.S. pricing data if “inclusion of certain sales which are clearly atypical would undermine the fairness of the comparison of foreign and U.S. sales.”
Ipsco, Inc. v. United States,
In accordance with this practice, ITA has excluded seven sales of damaged or defective merchandise from a fair value comparison.
Circular Welded Non-Mloy Steel Pipe from the Republic of Korea,
57 Fed.Reg. 42,942, 42,949 (Dep’t Comm.1992) (final determ, of LTFV sales). It has also disregarded transactions in which the U.S. customer withheld payment, where the sales comprised less than one percent of the respondent’s U.S. trade.
Fabric and Expanded Neoprene Laminate from Taiwan,
52 Fed.Reg. 37,193, 37,194 (Dep’t Comm.1987) (final determ, of LTFV sales). In contrast, sales of experimental goods have been included in U.S. price because “it is not unusual for a company to sell experimental lines of merchandise.”
Ipsco II,
Avesta argues that Chang Tieh’s sales are unrepresentative because other producers of
Apparently ITA recognizes it has authority to prevent fraud upon its proceedings. In at least one ease ITA discarded a respondent’s entire U.S. sales base and applied BIA where documents discovered at verification indicated that information might have been fabricated for the purpose of the investigation. Sulfanilic Acid from the Republic of Hungary, 58 Fed.Reg. 8256, 8257 (Dep’t Comm.1993) (final determ, of LTFV sales). Thus, if evidence demonstrated to ITA that Chang Tieh orchestrated an export scheme involving artificially set prices for purposes of dumping after the investigative period, one would expect ITA to disregard the sales as not resulting from a bona fide transaction.
In
PQ,
where ITA found the single U.S. sale
bona fide,
the price of the single sale was lower than a price set by the one known U.S. supplier.
ITA also accepted and examined Avesta’s affidavits alleging fraud. ITA found that affidavits by officials in the domestic industry “raise[d] significant concerns about potential evasions ... of the antidumping order.” Final Results, at 53,709. The affidavits, however, are vague and inconclusive. They contain the bare allegation of a conversation between an unidentified representative of Chang Tieh’s U.S. customer and an industry official, in which the representative is purported to have admitted to importing a small volume of merchandise at inflated prices in order to elude the imposition of duties. See Avesta’s Appendix, Doc. 7, Attachment 1; id., Doc. 8, Attachments 1 & 2. No hard data substantiating this allegation appears in the administrative record, and it was made clear at oral argument that the representative of Chang Tieh’s U.S. customer, who allegedly admitted wrongdoing, was never identified. Apparently ITA found the hearsay evidence insufficiently reliable to support the charges. As stated by ITA, “petitioner’s allegation does not constitute sufficient grounds to reject all of [Chang Tieh’s] U.S. sales data and resort to BIA.” Final Results, at 53,711. A review of both the pricing data and the affidavits reveals that ITA did not act unreasonably, nor did it disregard significant evidence in reaching its conclusion in this regard. ITA weighed conflicting evidence and reached a conclusion based on substantial evidence as to U.S. price.
B. Duty Drawback Adjustment
Avesta argues that ITA misinterpreted the statute by adjusting U.S. price for duty drawback without ensuring that the foreign market value was duty-inclusive.
3
This
ITA applied the same test in the case at bar.
Final Results,
at 53,709. In this case, there is no dispute that the first prong of the test has been met.
Id.
In previous reviews of ITA determinations involving steel coil and the Taiwanese system of drawbacks, this court has concluded that Taiwan does require a producer to demonstrate that a certain linkage exists between duties paid on import and rebated upon export.
4
Far East Mach. Co. v. United States,
It is clear that in the second prong “there is no requirement that specific input be traced from importation through exportation before allowing drawback on duties paid.”
Avesta Sheffield, Inc.,
Slip Op. 93-217, at 8,
Avesta’s arguments provide no basis from which to conclude that drawback adjustments should not be made unless ITA determines that the cost of the products sold in the home market is duty-inclusive. To require such a finding would add a new hurdle to the drawback test that is not required by the statute. Assuming arguendo that the statute would permit ITA to add a new test, there is nothing about this ease which suggests that under these facts ITA abused any discretion it had, by not adding the test. ITA’s duty drawback adjustment to U.S. price is sustained.
C. Value-Added Tax Adjustment
Avesta contends that ITA erred in adjusting U.S. price upward for value-added taxes (“VAT”) forgiven upon exportation without conducting an analysis of whether the tax was passed through to the home market customer. See 19 U.S.C. § 1667a(d)(l)(C). It further objects to ITA’s circumstance of sale adjustment to foreign market value based on VAT. See 19 U.S.C. § 1677b(a)(4)(B).
Both issues have been resolved by recent Federal Circuit opinions. In
Daewoo Elecs. Co. v. United States,
D. Allocation of Costs
Avesta alleges two principal errors in ITA’s allocation of Chang Tieh’s labor and overhead costs. First, it objects to ITA’s calculation of per ton costs as a ratio between costs incurred exclusively for subject merchandise and tonnage of all manufactured
Avesta also faults ITA with basing verification on untrustworthy documents not demonstrative of Chang Tieh’s normal cost accounting methodology. Chang Tieh responds that its cost accounting system mirrors its financial accounting system, which ITA examined at verification. It asserts that ITA relied not only on the documents Chang Tieh appended to its questionnaire, but also on verification of the audited financial records. ITA’s determination states, “[t]he labor and overhead costs reported by [Chang Tieh] were reviewed at verification and determined to be consistent with [Chang Tieh’s] normal cost accounting methodology.” Id. Avesta has not demonstrated that this finding is unsupported by substantial evidence on the record or is otherwise not in accordance with law. ITA did not err in allocating Chang Tieh’s labor and overhead costs.
II. Chang Tieh’s Motion for Judgment on the Agency Record
As a prehminary matter, this court finds that it has jurisdiction over Chang Tieh’s challenge of the administrative determination. It is axiomatic that a prevailing party may not appeal a decision favorable to him.
Freeport Minerals Co. v. United States,
The issue before the court on Chang Tieh’s motion is the propriety of ITA’s demand for a signed certification as a prerequisite to exclusion of Chang Tieh from the antidumping order. The certification states in relevant part,
if [ITA] has reasonable cause to believe or suspect at any time during the existence of the antidumping order ... [that] Chang Tieh has sold or is likely to sell the subject merchandise to the United States at less than its foreign market value, then [ITA] may institute an administrative review of Chang Tieh under section 751 of the Tariff Act of 1930, as amended.
Avesta’s Appendix, Doc. 24, Attachment A. 5
The statutory section concerning final administrative determinations of LTFV sales does not address the question of whether ITA may condition its exclusion determination upon consent to review by investigated parties. See 19 U.S.C. § 1673(a) (1988). The regulations, however, provide that ITA “will” publish an antidumping duty order that “[e]xcludes ... any producer or reseller for which [ITA] finds that there was no weighted-average dumping margin.” 19 C.F.R. § 353.21(c) (1992) (emphasis added). 6 Whenever a company is investigated and receives a zero margin, it should thus be excluded from the antidumping order pursuant to 19 C.F.R. § 353.21(c). ITA cites to no case in which a party found to have a zero margin was not excluded.
This court has approved so-called end use certification procedures without explicit support in the regulations, but these procedures bear little or no resemblance to the certification required by ITA in the challenged determination. Further, they do not appear to
Once ITA decided, based on the record, that there was no substantial evidence of fraudulent behavior, it was bound to accept its own zero margin finding and act accordingly. ITA essentially admits that the regulation is applicable by its terms and that those terms leave no room for the certification procedure. Nonetheless, it states that on a “case by case” basis ITA may abandon its regulations for good reason. None of the cases cited support such a notion. One case,
NMB Singapore Ltd. v. United States,
ITA made no finding of fraudulent activity, nor did it find “unrepresentativeness” or lack of a bona fide transaction. ITA decided, after examining all facts, to grant Chang Tieh a zero rate. Final Results, at 53,722. If ITA’s concerns as to the reliability of the underlying data were not serious enough to result in imposition of a dumping margin, they should not lead ITA to ignore the lack of a margin altogether. Chang Tieh was excluded from the order and should not be treated as if it was assigned an antidumping duty rate that may be reviewed at any time. The court declines to address the issue of whether ITA could commence a changed circumstances review, as opposed to commencing a new dumping investigation, if Chang Tieh is later alleged to be dumping. That is, the certification may be surplusage. As no subsequent dumping is currently alleged, this issue is not before the court.
CONCLUSION
Avesta’s motion for judgment on the agency record is denied. ITA’s determination with respect to the treatment of allegedly unrepresentative sales, duty drawback adjustment and allocation of costs is sustained. The adjustment to U.S. price to account for VAT is upheld despite ITA’s decision not to perform a pass-through analysis. Adjustments to foreign market value based on VAT were improper, but remand is not requested for this factor alone. Chang Tieh’s motion for judgment on the agency record is granted. The certification is invalid and may not be relied on by ITA to commence an administrative review of Chang Tieh. Any such review must have another basis.
JUDGMENT
This case having been submitted for decision and the Court, after deliberation, having rendered a decision therein; now, in conformity with that decision,
IT IS HEREBY ORDERED: that the motion of Avesta Sheffield, Inc., et al. for judgment upon the agency record is denied;
Notes
. ITA did not use a "best information available" ("BIA”) margin as requested by Avesta. The margin determination was based on verified sales data from Chang Tieh, although ITA did resort to partial BIA in the calculation of ocean freight charges. Final Results, at 53,712.
. Chang Tieh made the same representations in open court and this aspect of the certification is not the essential point of dispute.
. Section 772(d)(1)(B) of the Tariff Act of 1930, as amended, provides for an upward adjustment to United States price, often referred to as a "duty drawback” adjustment, as follows:
(d) [t]he purchase price and the exporter’s sales price shall be adjusted by being—
(1) increased by—
(B) the amount of any import duties imposed by the country of exportation which have been rebated, or which have not been collected, by reason of the exportation of the merchandise to the United States.
. This conclusion is also consistent with other decisions that analyzed the Taiwanese rebate system in the context of trade of other products. See, e.g., Bicycles from Taiwan, 48 Fed.Reg. 31,-688, 31,690 (Dep’t Comm.1983) (final determ, of LTFV sales).
. As indicated, the certification also contains Chang Tieh's promise that it did not engage in past dumping practices and would not do so in the future. Id.
. A separate regulation provides that a request for exclusion will be considered only if accompanied by a certification that the company did not dump goods in the past and would not dump goods in the future. 19 C.F.R. § 353.14 (1992). Chang Tieh did not specifically request exclusion. Rather, it was a respondent found to have a zero rate. The regulations require a similar certification from parties requesting a revocation or termination. 19 C.F.R. § 353.25(b)(1) (1992).