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Apex Frozen Foods Private Ltd. v. United States

United States Court of Appeals, Federal Circuit

July 12, 2017

APEX FROZEN FOODS PRIVATE LIMITED, ASVINI FISHERIES PRIVATE LIMITED, AVANTI FEEDS LIMITED, BLUE PARK SEAFOODS PRIVATE LIMITED, DEVI MARINE FOOD EXPORTS PRIVATE LTD., KADER EXPORTS PRIVATE LIMITED, KADER INVESTMENT AND COMPANY PRIVATE LIMITED, LIBERTY FROZEN FOODS PVT. LTD., LIBERTY OIL MILLS LTD., PREMIER MARINE TRADING PRODUCTS, UNIVERSAL COLD STORAGE PRIVATE LIMITED, FIVE STAR MARINE EXPORTS PRIVATE LIMITED, GVR EXPORTS PRIVATE LIMITED, JAGADISH MARINE EXPORTS, JAYALAKSHMI SEA FOODS PRIVATE LIMITED, NEKKANTI SEAFOODS LIMITED, SAGAR GRANDHI EXPORTS PRIVATE LIMITED, SAI MARINE EXPORTS PRIVATE LIMITED, SAI SEA FOODS, SANDHYA MARINES LIMITED, SPRINT EXPORTS PRIVATE LIMITED, STAR AGRO MARINE EXPORTS PRIVATE LIMITED, SURYA MITRA EXIM PRIVATE LIMITED, WELLCOME FISHERIES LIMITED, Plaintiffs-Appellants
v.
UNITED STATES, AD HOC SHRIMP TRADE ACTION COMMITTEE, AMERICAN SHRIMP PROCESSORS ASSOCIATION, Defendants-Appellees

         Appeal from the United States Court of International Trade in No. 1:13-cv-00283-RWG, Senior Judge Richard W. Goldberg.

          Robert L. LaFrankie, Crowell & Moring, LLP, Washington, DC, argued for plaintiffs-appellants. Also represented by Matthew R. Nicely, Hughes Hubbard & Reed LLP, Washington, DC.

          Joshua E. Kurland, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee United States. Also represented by Benjamin C. Mizer, Jeanne E. Davidson, Patricia M. McCarthy; Scott Daniel McBride, Henry Joseph Loyer, United States Department of Commerce, Washington, DC.

          Philip Andrew Butler, Stewart & Stewart, Washington, DC, argued for defendant-appellee American Shrimp Processors Association. Also represented by Elizabeth Drake, Terence Patrick Stewart, William Alfred Fennell; Edward T. Hayes, Leake & Andersson, L.L.P., New Orleans, LA.

          Nathaniel Rickard, Picard Kentz & Rowe LLP, Washington, DC, for defendant-appellee Ad Hoc Shrimp Trade Action Committee. Also represented by Roop Bhatti, David Albert Yocis, Whitney Marie Rolig.

          Before Newman, Clevenger, and Taranto, Circuit Judges.

          CLEVENGER, CIRCUIT JUDGE.

         Plaintiffs appeal the decision of the Court of International Trade ("CIT") affirming the U.S. Department of Commerce's ("Commerce") final results in the seventh administrative review of the antidumping duty order on certain frozen warmwater shrimp from India. Apex Frozen Foods Private Ltd. v. United States (Apex I), 37 F.Supp.3d 1286, 1289 (Ct. Int'l Trade 2014); see also Certain Frozen Warmwater Shrimp from India, 78 Fed. Reg. 42, 492 (Dep't Commerce July 16, 2013) (final administrative review). Using the "average-to-transaction" methodology with zeroing, Commerce assessed mandatory respondent Apex Frozen Foods Private Ltd. ("Apex") and other non-mandatory respondents (included in this appeal) with a 3.49 percent duty for entries between February 1, 2011, and January 31, 2012.

         Apex and the additional plaintiffs (collectively, "Apex") challenge the methodology used by Commerce to calculate the antidumping duty on a number of grounds related to Commerce's decision to use the average-to-transaction methodology and zeroing. For the reasons that follow, we affirm the CIT's decision and sustain Commerce's results.

         Background

         I

         "Dumping, " in international trade parlance, is a practice where international exporters sell goods to the United States at prices lower than they are sold in their home markets, in order to undercut U.S. domestic sellers and carve out market share. To protect domestic industries from goods sold at less than "fair value, " Congress enacted a statute allowing Commerce to assess remedial "anti- dumping duties" on foreign exports. 19 U.S.C. § 1673; see also Viet I-Mei Frozen Foods Co. v. United States, 839 F.3d 1099, 1101 (Fed. Cir. 2016) ("The antidumping statute provides for the assessment of remedial duties on foreign merchandise sold in the United States at less than fair market value that materially injures or threatens to injure a domestic industry.").

         "Sales at less than fair value are those sales for which the 'normal value' (the price a producer charges in its home market) exceeds the 'export price' (the price of the product in the United States) . . . ." Union Steel v. United States, 713 F.3d 1101, 1103 (Fed. Cir. 2013). Commerce performs this pricing comparison, and the concomitant antidumping duty calculation, using one of three methodologies:

(1) Average-to-transaction ["A-T"], in which Commerce compares the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions.
(2) Average-to-average ["A-A"], in which Commerce compares the weighted average of the normal values to the weighted average of the export prices (or constructed export prices).
(3) Transaction-to-transaction ["T-T"], in which Commerce compares the normal value of an individual transaction to the export price (or constructed export price) of an individual transaction.

Id. (citation omitted).

         Previously, Commerce's general practice was to use the A-T methodology for both investigations and administrative reviews. Id. at 1104. With the adoption of the Uruguay Rounds Agreement Act in 1995, Congress required that the A-A or T-T methods be the presumed defaults for investigations, with the A-T method only to be used in certain circumstances. Id.; see also 19 U.S.C. § 1677f-1(d)(1). Yet "Commerce continued to use average-to-transaction comparisons as its general practice in administrative reviews, " in the absence of any governing statutory authority. Union Steel, 713 F.3d at 1104. Over time, Commerce unified its procedures through regulation, stating, "[i]n an investigation or review, the Secretary will use the average-to-average method unless the Secretary determines another method is appropriate in a particular case, " 19 C.F.R. § 351.414(c)(1) (2012), and began applying the investigations statutory framework to guide its administrative reviews as well.

         The investigations statute provides that, in general, antidumping duties are to be calculated using the A-A method-"comparing the weighted average of the normal values to the weighted average of the export prices (and constructed export prices) for comparable merchandise."[1]19 U.S.C. § 1677f-1(d)(1)(A)(i). The statute, however, contemplates an exception to this general rule:

The administering authority may determine whether the subject merchandise is being sold in the United States at less than fair value by comparing the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions for comparable merchandise, if-

(i) there is a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time, and

(ii) the administering authority explains why such differences cannot be taken into account using a method described in paragraph (1)(A)(i) or (ii).

9 U.S.C. § 1677f-1(d)(1)(B). In other words, the A-T method can be used, provided two preconditions are met: (1) a pattern of significant price differences, and (2) an inability of the A-A method to "account" for these differences.

         The statutory exception exists to address "targeted" or "masked" dumping. Union Steel, 713 F.3d at 1104 n.3. Under the A-A methodology, sales of low-priced "dumped" merchandise would be averaged with (and offset by) sales of higher-priced "masking" merchandise, giving the impression that no dumping was taking place and frustrating the antidumping statute's purpose. See Koyo Seiko Co. v. United States, 20 F.3d 1156, 1159 (Fed. Cir. 1994). The A-T method addresses this concern because, "[b]y using individual U.S. prices in calculating dumping margins, Commerce is able to identify a merchant who dumps the product intermittently-sometimes selling below the foreign market value and sometimes selling above it." Id. The driving rationale behind the statutory exception is that targeted dumping is more likely to be occurring where there is a "pattern of export prices . . . for comparable merchandise that differ significantly among purchasers, regions, or periods of time." See 19 U.S.C. § 1677f-1(d)(1)(B); Union Steel, 713 F.3d at 1104 n.3; see also H.R. Rep. No. 103-826, pt. 1, at 99 (1994) ("[The exception] provides for a comparison of average normal values to individual export prices . . . in situations where an average-to-average . . . methodology cannot account for a pattern of prices that differ significantly among purchasers, regions, or time periods, i.e., where targeted dumping may be occurring.").

         Commerce also devised the practice of "zeroing" when compiling a weighted average dumping margin-"where negative dumping margins (i.e., margins of sales of merchandise sold at nondumped prices) are given a value of zero and only positive dumping margins (i.e., margins for sales of merchandise sold at dumped prices) are aggregated." Union Steel, 713 F.3d at 1104. Commerce has discontinued its use of zeroing when applying the A-A methodology, but zeroing remains part of Commerce's calculus when compiling a weighted average dumping margin under the A-T methodology. Id. at 1104-05, 1109 ("Commerce's decision to use or not use the zeroing methodology reasonably reflects unique goals in differing comparison methodologies. . . . When examining individual export transactions, using the average-to-transaction comparison methodology, prices are not averaged and zeroing reveals masked dumping."); see also U.S. Steel Corp. v. United States, 621 F.3d 1351, 1363 (Fed. Cir. 2010).

         II

         Commerce initiated the seventh administrative review of its antidumping duty covering frozen warmwater shrimp from India ("AR7") in April 2012-the review period covered entries of merchandise that occurred between February 1, 2011, and January 31, 2012. Commerce selected Apex and Devi Fisheries Limited ("Devi") as mandatory respondents. Commerce also individually reviewed Falcon Marine Exports Limited/K.R. Enterprises ("Falcon") as a voluntary respondent. See 19 U.S.C. § 1677m(a) (permitting exporters not selected for mandatory individual review to volunteer to have an "individual weighted average dumping margin" calculated, if not unduly burdensome).

         During the course of AR7, the American Shrimp Processors Association ("ASPA"), a domestic "interested party, " see 19 U.S.C. § 1677(9), alleged that Apex was engaged in targeted dumping during the review period. ASPA requested that Commerce apply the A-T methodology with zeroing when reviewing the antidumping duty.

         Commerce published the final results of AR7 in July 2013, along with an Issues and Decision Memorandum explaining its methodology and results. Commerce noted that, despite the statutory silence on what methodology to apply in the administrative review context, "it would look to practices employed by the agency in antidumping investigations for guidance on this issue." Joint Appendix at 886. As such, following 19 U.S.C. § 1677f-1(d)(1)(B), Commerce considered (1) whether Apex's, Devi's, and Falcon's sales exhibited a pattern of significant price differences among purchasers, regions, or periods of time; and (2) whether "such differences can be taken into account using" the A-A method.

         Applying a court-sanctioned methodology known as the Nails test, see Mid Continent Nail Corp. v. United States, 712 F.Supp.2d 1370, 1376-79 (Ct. Int'l Trade 2010), Commerce identified for Apex a pattern of targeted sales that differed significantly from prices of non-targeted sales.[2] For Devi and Falcon, Commerce conclud- ed there was an "insufficient volume of sales" to justify applying the exception, and therefore used the standard A-A methodology. Joint Appendix at 884.

         Commerce also determined that the A-A method could not "account" for the pattern of price differences in Apex's sales because it observed a "meaningful difference in the weighted-average dumping margins calculated using the A-to-A method and the A-to-T method." Id.; see also id. at 889 ("Where there is a meaningful difference between the results of the A-to-A method and the A-to-T method, the A-to-A method would not be able to take into account the observed price differences, and the A-to-T method would be used to calculate the weighted-average margin of dumping for the respondent in question."). Specifically, Commerce found that "Apex's margin is zero using the A-to-A method and 3.49 percent using the A-to-T method, " and ...


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