Bulk Aspirin from the People's Republic of China: Notice of Court Decision and Suspension of Liquidation

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On September 9, 2002, in Rhodia, Inc. v. United States, Consol. Court No. 00-08-00407, Slip. Op. 02-109 (CIT 2002), a lawsuit challenging the Department of Commerce's (“the Department's”) Notice of Final Determination of Sales at Less Than Fair Value: Bulk Aspirin From the People's Republic of China, 65 FR 33805 (May 25, 2000) and accompanying Issues and Decision Memorandum (May 17, 2000) (“Issues and Decision Memorandum”), and Notice of Amended Final Determination of Sales at Less Than Fair Value: Bulk Aspirin from the People's Republic of China, 65 FR 39598 (June 27, 2000) (collectively, “Final Determination”), the Court of International Trade (“CIT”) affirmed the Department's remand determination and entered a judgment order. In its remand determination, the Department reviewed the record evidence regarding the extent to which the Indian surrogate producers are integrated and concluded that the evidence did not support the Final Determination in this regard. We also reconsidered our use of weighted-average ratios for overhead, SG&A, and profit, and amended our calculations using simple averages. Finally, in accordance with our voluntary request for remand, we removed “trade sales” (or “traded goods”) from the denominator in calculating the overhead ratio.

As a result of the remand determination, Jilin Pharmaceutical (“Jilin”) will be excluded from the antidumping duty order on bulk aspirin from the People's Republic of China (“PRC”) because its antidumping rate was de minimis (1.27 percent).¹ The antidumping duty rate for Shandong Xinhua Pharmaceutical Factory, Ltd. (“Shandong”) was decreased from 16.51 to 6.42 percent. The PRC-wide rate was unchanged from the Final Determination.

Consistent with the decision of the U.S. Court of Appeals for the Federal Circuit in Timken Co. v. United States, 893 F.2d 337 (Fed. Cir. 1990) (“Timken”), the Department will continue to order the suspension of liquidation of the subject merchandise until there is a “conclusive” decision in this case. If the case is not appealed, or if it is affirmed on appeal, the Department will instruct the U.S. Customs Service to terminate the suspension of liquidation for Jilin and revise the cash deposit rate for Shandong.

EFFECTIVE DATE:

September 30, 2002.

FOR FURTHER INFORMATION CONTACT:

Blanche Ziv or Julie Santoboni, AD/CVD Enforcement Group I, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-4207 or (202) 482-4194, respectively.

SUPPLEMENTARY INFORMATION:

Background

Following publication of the Final Determination, Rhodia, Inc., the petitioner in this case, and respondents, Jilin and Shandong, filed lawsuits with the CIT challenging the Department's Final Determination.

In the underlying investigation, the Department was required to develop values for factory overhead, SG&A, and profit relying on “surrogate” data from Indian producers of comparable merchandise. See section 773(c) of the Act. Regarding factory overhead, the Department used information from three Indian producers: Andhra Sugars, Alta Laboratories, and Gujarat Organics, Ltd. In the Final Determination, the Department found that the PRC producers of bulk aspirin were more fully integrated than the Indian producers. Therefore, the Department reasoned, the PRC producers would have a higher overhead-to-raw material ratio than the surrogate Indian producers. To account for this in computing normal value, the Department applied the overhead ratio calculated from the Indian producers' data twice, once to reflect the overhead incurred in producing the inputs for aspirin, and again to reflect the overhead incurred in producing aspirin from those inputs.

The Court remanded this issue to the Department. First, the Court pointed to the lack of evidence or explanation regarding the Department's position that integrated producers would experience higher overhead ratios than non-integrated producers. The Court acknowledged that the Department had provided a more detailed explanation of its rationale in its brief to the Court. However, citing Hoogovens Staal B.V. v. United States, 86 F. Supp. 2d 1317, 1331 (CIT 2000), the Court ruled that the Department could not rely upon such post hoc rationalizations. Rhodia at 10.

Additionally, the Court questioned the Department's conclusion that the Indian producers were less integrated than the PRC producers. Specifically, the Court found that the Department could not reasonably infer this from the evidence cited in the Issues and Decision Memorandum. Therefore, the Court remanded this issue to the Department and asked the agency to identify the facts in the record that support its final determination. Rhodia at 12.

The second issue remanded to the Department relates to the calculation of the ratios for overhead, SG&A, and profit. In the Final Determination, the Department computed a weighted average of the overhead, SG&A, and profit of the three Indian surrogate producers. However, citing to the agency's usual practice of using simple averages in these situations, the Court ruled that the Department had provided no explanation for departing from this practice. Thus, the Court directed the Department to explain its reasoning for computing weighted averages in this case. Rhodia at 15.

Finally, the Department sought, and the Court granted, a voluntary remand to correct the calculation of the overhead ratio by removing traded goods from the denominator. Rhodia at 13.

To assist it in complying with the Court's instructions, the Department asked the parties to identify information on the record of the proceeding regarding the extent of integration of Indian producers of comparable merchandise. See the December 13, 2001, letter to Rhodia, Inc., Jilin and Shandong. Responses were received from the three parties on January 15, 2002, and rebuttal comments were received on January 22, 2002.

The Draft Redetermination Pursuant to Court Remand (“Draft Results”) was released to the parties on February 4, 2002. In its Draft Results, the Department reviewed the record evidence regarding the extent to which the Indian surrogate producers are integrated and concluded that the evidence did not support the Final Determination in this regard. We also reconsidered our use of weighted-average ratios for overhead, SG&A, and profit, and amended our calculations using simple averages. Finally, in accordance with our voluntary request for remand, we removed “trade sales” (or “traded goods”) from the denominator in calculating the overhead ratio.

Comments on the Draft Results were received from Rhodia, Inc. and Shandong on February 11, 2002, and rebuttal comments were received from the petitioner and Jilin on February 14, 2002. On March 29, 2002, the Department responded to the Court's Order of Remand by filing its Final Results of Redetermination pursuant to the Court remand. (“Final Results of Redetermination”). The Department's Final Results of Redetermination were identical to the Draft Results except that in the Final Results of Redetermination, the Department did not include the two companies with negative profits, i.e., Alta and Gujarat, in the profit calculation.

The CIT affirmed the Department's Final Results of Redetermination on September 9, 2002. See Rhodia, Inc. v. United States, Consol. Court No. 00-08-00407, Slip. Op. 02-109 (CIT 2002).

Suspension of Liquidation

The U.S. Court of Appeals for the Federal Circuit, in Timken, held that the Department must publish notice of a decision of the CIT or the Federal Circuit which is not “in harmony” with the Department's Final Determination. Publication of this notice fulfills that obligation. The Federal Circuit also held that the Department must suspend liquidation of the subject merchandise until there is a “conclusive” decision in the case. Therefore, pursuant to Timken, the Department must continue to suspend liquidation pending the expiration of the period to appeal the CIT's September 9, 2002, decision or, if that decision is appealed, pending a final decision by the Federal Circuit. The Department will instruct the Customs Service to revise cash deposit rates and liquidate relevant entries covering the subject merchandise effective September 30, 2002, in the event that the CIT's ruling is not appealed, or if appealed and upheld by the Court of Appeals for the Federal Circuit.