Certain Non-Frozen Apple Juice Concentrate 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 November 20, 2003, in Yantai Oriental Juice Co., et al. v. United States and Coloma Frozen Foods, Inc., et al., Court No. 00-00309, Slip Op. 03-150, the Court of International Trade (“CIT”) affirmed the Department of Commerce's (“the Department's”) remand determinations and entered a judgment order. This litigation related to the Department's Notice of Final Determination of Sales at Less Than Fair Value: Certain Non-Frozen Apple Juice Concentrate From the People's Republic of China, 65 FR 19873 (April 13, 2000) and accompanying Issues and Decision Memorandum (April 6, 2000) (“Issues and Decision Memorandum”), and Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Certain Non-Frozen Apple Juice Concentrate from the People's Republic of China, 65 FR 35606 (June 5, 2000) (collectively, “Final Determination”).

In its remand determinations, the Department reviewed the record evidence regarding the selection of a surrogate country; the valuation of juice apples, steam coal, and ocean freight; and the calculation of selling, general and administrative (“SG&A”) expenses, overhead, and profit. The Department found that Turkey, rather than India was the appropriate surrogate country. Juice apples, SG&A, overhead and profit were valued using surrogate value information from Turkey. Steam coal was valued using a domestic Indian price and the ocean freight rate was revised to include a rate for Detroit.

As the remand determinations resulted in changes to calculated company-specific margins, the Department also recalculated the separate rate margin it applied to producers/exporters that responded to the Department's separate rate (“Section A”) questionnaire but were not selected to respond (“separate-rate companies”). The calculated antidumping rate for Xian Yang Fuan Juice Co., Ltd. (“Fuan”), Xian Asia Qin Fruit Co., Ltd. (“Asia”), Changsha Industrial Products & Minerals Import & Export Corporation (“Changsha Industrial”), and Shandong Foodstuffs Import & Export Corporation (“Shandong Foodstuffs”) (collectively “separate-rate companies”) is 3.83 percent.

The remand determinations also resulted in weighted average margins of zero percent for Yantai Oriental Juice Co. (“Oriental”), Qingdao Nannan Foods Co. (“Nannan”), Sanmenxia Lakeside Fruit Juice Co. Ltd. (“Lakeside”), Shaanxi Haisheng Fresh Fruit Juice Co. (“Haisheng”), and SDIC Zhonglu Juice Group Co. (“Zhonglu”). Therefore, these companies will be excluded from the antidumping duty order on certain non-frozen apple juice concentrate (“AJC”) from the People's Republic of China (“PRC”).

The PRC-wide rate of 51.74 percent is unchanged from our final determination in the investigation.

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 U.S. Customs and Border Protection to terminate the suspension of liquidation for Oriental, Nannan, Lakeside, Haisheng, and Zhonglu and revise the cash deposit rate from the investigation for Fuan, Asia, Changsha Industrial, and Shandong Foodstuffs.

EFFECTIVE DATE:

December 12, 2003.

FOR FURTHER INFORMATION CONTACT:

Audrey Twyman or John Brinkmann, 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) 482-3534 or (202) 482-4126, respectively.

SUPPLEMENTARY INFORMATION:

Background

Following publication of the Final Determination, Oriental, Nannan, Lakeside, Haisheng, Zhonglu, Fuan, Asia, Changsha Industrial and Shandong Foodstuffs (collectively the “respondents”), filed lawsuits with the CIT challenging the Department's Final Determination.

In the underlying investigation, the Department was required to choose a surrogate country based on “significant production” of “comparable merchandise” and “economic comparability” to the PRC. The Department selected India because it is economically comparable to the PRC, and a significant producer of apples and single strength apple juice, products the Department found to be comparable to AJC. The Department then valued the juice apples, SG&A, overhead, profit, steam coal and other factors of production in India. In calculating ocean freight rates, the Department included freight rates to Detroit in its calculation of an East Coast freight rate.

The Court remanded five issues to the Department.

First, the Court questioned the Department's reliance on a market study included in the petition and an annual report for an Indian company as the basis for determining that India was a significant producer of comparable merchandise. In particular, the Court found the Department had not corroborated the market study, nor had it explained the connection between the market study and the annual report, and the Department's conclusion that India was a significant producer of AJC. The Court similarly rejected the Department's determination that India's status as a significant producer of apples was relevant to the Department's treatment of India as a significant producer of comparable merchandise.

The Court directed the Department to develop sufficient evidence from the record of India's suitability as the surrogate market economy country for AJC production, or, if it could not, to select another suitable country.

Second, the Court instructed the Department to provide an explanation of why the distortions caused by the Government of India's market intervention scheme did not disturb the fair market value of Indian apples. The Court also directed the Department to explain why it treated government subsidies that enabled producers to lower their prices as market distorting, but did not apply the same treatment to such subsidies that raise prices. Furthermore, the Court requested that the Department explain why the price paid by Himachal Pradesh Horticultural Produce Marketing & Processing Corp., a government-controlled entity, should be considered a market-derived price.

Third, for steam coal valuation, the Department used Indian import statistics data because it found that the value was contemporaneous with the period of investigation and because there was no evidence to suggest that the data was aberrational or unreliable. The Court instructed the Department either to recalculate normal value using Indian domestic prices for steam coal, or explain why the use of domestic prices for steam coal was not appropriate during the period of investigation.

Fourth, the Court argued that the Department's use of data from the Reserve Bank of India Bulletin, rather than data from an Indian producer to value SG&A and overhead was not supported by substantial evidence on the record and instructed the Department to either recalculate these values using the financial statement of an Indian producer, or fully explain why the Department felt that the Reserve Bank of India Bulletin gave better financial data.

Finally, the Court instructed the Department to explain its reasoning for not calculating a separate Detroit freight rate and to explain why the Department did not weigh its calculation to reflect accurately the volume of merchandise actually shipped to each destination.

To assist it in complying with the Court's instructions, the Department opened the record and requested new information concerning possible surrogate countries. The petitioners submitted data supporting the use of Poland, while the respondents pointed to Turkish data that they had placed on the record in the investigation.

The “Draft Results Pursuant to Court Remand” (“First Draft Results”) was released to the parties on November 6, 2002. In its First Draft Results, pursuant to the analysis followed by the Court, the Department concluded that the record did not support its determination in the investigation that India was a significant producer of AJC. Instead, the Department determined that Turkey was a more appropriate surrogate country for the PRC because it was the country most economically comparable to the PRC that was also a significant producer of AJC.

Accordingly, the Department amended its calculations using Turkish data to value juice apples, SG&A expenses, overhead, and profit. The Department also changed its valuations of steam coal and East Coast freight. Because the Department's recalculated company-specific margins were all zero percent, the Department also recalculated the margin for the separate-rate companies by weighting the calculated margins of zero with the PRC-wide rate of 51.74%, resulting in a separate rates margin of 28.33%.

Comments on the First Draft Results were received from all parties on November 12, 2002. On November 15, 2002, the Department responded to the Court's Order by filing its “Redetermination Pursuant to Court Remand.” (“First Redetermination”). The Department's First Redetermination was similar to the First Draft Results except for the inclusion of the Department's response to comments submitted by the petitioners and respondents. The final margins in the First Redetermination were identical to the First Draft Results.

The CIT affirmed, in part, the Department's First Redetermination on March 21, 2003. See Yantai Oriental Juice Co., et al. v. United States and Coloma Frozen Foods, Inc., et al. Court No. 00-00309, Slip Op. 03-33 (March 21, 2003). The Court affirmed the Department's calculation of company-specific margins but remanded the calculation of the antidumping margin for the separate-rate companies because the Court found that the Department's methodology, weight-averaging the PRC-wide rate and the zero margins, was not supported by substantial evidence on the record.

Accordingly, the “Draft Redetermination Pursuant to Court Remand” (“Second Draft Results”) was released to the parties on April 18, 2003. In its Second Draft Results, the Department reviewed the record evidence and, based on information on the record, calculated a normal value and export price for the separate rate companies. Using this information, the Department calculated estimated margins for the separate rate companies and weight-averaged these margins with the zero margins for the fully-investigated companies and derived a separate rate of 4.91 percent.

Comments on the Second Draft Results were received on April 23, 2003. On May 5, 2003, the Department responded to the Court's Order of Remand by filing its “Redetermination Pursuant to Court Remand.” (“Second Redetermination”). The Department's Second Redetermination differed from the Second Draft Results in that in calculating export price, we removed the fully-investigated companies' constructed export price sales, and adjusted our calculations to reflect the different terms of sale. These changes resulted in a weighted-average separate-rate margin of 3.83%.

The CIT affirmed the Department's Second Redetermination on November 20, 2003. See Yantai Oriental Juice Co., et al. v. United States and Coloma Frozen Foods, Inc., et al. Court No. 00-00309, Slip Op. 03-150 (November 20, 2003).

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 November 20, 2003, decision or, if that decision is appealed, pending a final decision by the Federal Circuit. 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, the Department will instruct U.S. Customs and Border Protection to revise cash deposit rates and liquidate relevant entries covering the subject merchandise effective the date of publication of this notice in the Federal Register.