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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, ANANDA AQUA APPLICATIONS, ANANDA AQUA EXPORTS (P) LIMITED, ANANDA FOODS, ASVINI FISHERIES PRIVATE LIMITED, AVANTI FEEDS LIMITED, BLUEPARK SEAFOODS PRIVATE LTD., BMR EXPORTS, CHOICE CANNING COMPANY, CHOICE TRADING CORPORATION PRIVATE LIMITED, DEVI FISHERIES LIMITED, SATYA SEAFOODS PRIVATE LIMITED, USHA SEAFOODS, DEVI MARINE FOOD EXPORTS PRIVATE LTD., KADER EXPORTS PRIVATE LIMITED, KADER INVESTMENT AND TRADING COMPANY PRIVATE LIMITED, LIBERTY FROZEN FOODS PVT. LTD., LIBERTY OIL MILLS LTD., PREMIER MARINE PRODUCTS, FALCON MARINE EXPORTS LIMITED, K.R. ENTERPRISES, FIVE STAR MARINE EXPORTS PRIVATE LIMITED, GVR EXPORTS PRIVATE LIMITED, JAGADEESH MARINE EXPORTS, JAYALAKSHMI SEA FOODS PRIVATE LIMITED, KADALKANNY FROZEN FOODS, DIAMOND SEAFOOD EXPORTS, EDHAYAM FROZEN FOODS PRVT. LTD., THEVA & COMPANY, MANGALA MARINE EXIM INDIA PVT. LTD., NEKKANTI SEA FOODS LIMITED, NILA SEA FOODS PRIVATE LIMITED, PENVER PRODUCTS PRIVATE LIMITED, SAGAR GRANDHI EXPORTS PRIVATE LIMITED, SAI MARINE EXPORTS PVT. LTD., SAI SEA FOODS, SANDHYA MARINES LIMITED, SPRINT EXPORTS PVT. LTD., STAR ARGO MARINE EXPORTS PRIVATE LIMITED, SURYAMITRA EXIM PVT. LTD., WELLCOME FISHERIES LIMITED, UNIVERSAL COLDSTORAGE PRIVATE LIMITED, Plaintiffs-Appellants
v.
UNITED STATES, AD HOC SHRIMP TRADE ACTION COMMITTEE, Defendants-Appellees

         Appeal from the United States Court of International Trade in No. 1:14-cv-00226-CRK, Judge Claire R. Kelly.

          Robert L. LaFrankie, Crowell & Moring, LLP, 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.

          Whitney Marie Rolig, Picard Kentz & Rowe LLP, Washington, DC, argued for defendant-appellee Ad Hoc Shrimp Trade Action Committee. Also represented by Nathaniel Rickard, Andrew William Kentz, Roop Bhatti, Meixuan Li.

          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 eighth administrative review of the antidumping duty order on certain frozen warmwater shrimp from India. Apex Frozen Foods Private Ltd. v. United States, 144 F.Supp.3d 1308 (Ct. Int'l Trade 2016); see also Certain Frozen Warmwater Shrimp from India, 79 Fed. Reg. 51, 309 (Dep't Commerce Aug. 28, 2014) (final administrative review). Using the "average-to-transaction" methodology with zeroing, Commerce assessed mandatory respondent Devi Fisheries Limited ("Devi") with a 1.97 percent duty for entries between February 1, 2012, and January 31, 2012. Using a "mixed alternative" methodology, which blends both the average-to-transaction and average-to-average methodologies, Commerce assessed the second mandatory respondent Falcon Marine Exports Limited/K.R. Enterprises ("Falcon") with a 3.01 percent duty for the same time period. Non-mandatory respondents (including Apex Frozen Foods Private Limited ("Apex")) were assessed with a simple-averaged antidumping duty of 2.49 percent.

         Plaintiffs include Apex, Devi, Falcon, and other exporters subject to Commerce's antidumping duties on frozen warmwater shrimp from India (collectively, "Apex"). Apex challenges the methodology used by Commerce to calculate the antidumping duties 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 "antidumping 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).

19 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 ...


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