Court Opinion

ID: 817911
Source: CourtListenerOpinion
Date Created: 2013-02-01 01:59:24.228428+00
Date Added: 2024-06-11T15:36:35.137680
License: Public Domain

Slip Op. 11-87

            UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
                               :
ATAR, S.r.L.,                  :
                               :
                Plaintiff,     :
                               :
          v.                   : Before: Richard K. Eaton, Judge
                               :
UNITED STATES,                 : Court No. 08-00004
                               :
                Defendant,     :
                               :
     and                       :
                               :
AMERICAN ITALIAN PASTA CO.,    :
et al.,                        :
                               :
               Deft.-Ints.    :
______________________________:

                             OPINION

[Plaintiff’s motion for judgment on the agency record is denied
and the United States Department of Commerce’s Final Results, as
amended by the Final Remand Determination, are sustained.]

                                             Dated: July 22, 2011

     Riggle & Craven (David J. Craven), for plaintiff Atar,
S.r.L.

     Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Reginald T. Blades, Jr., Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Jane C. Dempsey); Office of Chief Counsel, United States
Department of Commerce (Mykhaylo Gryzlov), of counsel, for
defendant United States.

     Kelley Drye & Warren, LLP (Paul C. Rosenthal and David C.
Smith), for defendant-intervenors American Italian Pasta Company,
Dakota Growers Pasta Company, and New World Pasta Company.

     Eaton, Judge: Before the court is plaintiff’s motion for

judgment on the agency record, challenging the United States
Court No. 08-00004                                             Page 2

Department of Commerce’s (the “Department” or “Commerce”) final

results of the tenth administrative review of the antidumping

duty order on pasta from Italy, covering the period of review

(“POR”) July 1, 2005 through June 30, 2006, as amended by a

voluntary remand.    See Certain Pasta from Italy, 72 Fed. Reg.

70,298 (Dep’t of Commerce Dec. 11, 2007) (notice of final results

of the tenth administrative review and partial rescission of

review) (the “Final Results”) and the accompanying Issues and

Decision Memorandum (Dep’t of Commerce Dec. 4, 2007) (“Issues &

Dec. Mem.”); Final Remand Determination (Dep’t of Commerce May 6,

2010) (the “Remand Results”).    The court has jurisdiction

pursuant to 28 U.S.C. § 1581(c) (2006) and 19 U.S.C.

§ 1516a(a)(2)(B)(iii).   For the reasons set forth below,

plaintiff Atar, S.r.L.’s (“Atar”) motion for judgment on the

agency record is denied, and the Final Results, as amended by the

Remand Results, are sustained.

                             BACKGROUND

     The principal issue before the court is plaintiff’s status

as a producer by tolling.   In a tolling arrangement, a producer

employs a subcontractor that provides processing services for, or

material for incorporation into, the merchandise that is sold by

the producer.   See United States v. Eurodif S. A., 129 S. Ct.

878, 885 (2009).    Here, the question is whether Atar had a
Court No. 08-00004                                              Page 3

sufficient role in the manufacture and sale of the pasta for the

company to be a producer for the purposes of the unfair trade

laws.    Atar’s status as a producer is important because it is

determinative of the antidumping duty rate assigned to the

entries of pasta.

        On January 15, 2009, Atar moved for judgment on the agency

record pursuant to USCIT Rule 56.2, contending that in the Final

Results, the Department wrongfully: (1) determined that Atar was

not a producer by tolling; (2) rescinded the administrative

review with respect to Atar; (3) issued instructions to liquidate

entries resold by Atar at the “all others” rate; and (4) accepted

American Italian Pasta’s uncertified submission relating to

Atar’s questionnaire responses.    Mot. For J. on the Agency Rec.

Submitted Pursuant to R. 56.2 of the Rules of the USCIT (“Pl.’s

Mot.”) 2—4.

        Defendant-intervenors American Italian Pasta Company, Dakota

Growers Pasta Company, and New World Pasta Company

(“defendant-intervenors”) opposed the motion and fully supported

the Final Results.    Commerce, however, asked for a voluntary

remand to reconsider its decision to rescind the administrative

review and to reexamine its conclusions with respect to the rate

at which the entries would be liquidated.    The court granted the

voluntary remand on November 10, 2009, and Commerce filed the

Remand Results on May 6, 2010.     See Atar, S.r.L. v. United
Court No. 08-00004                                            Page 4

States, Court No. 08-00004, Order at 1 (Nov. 10, 2009) (granting

“defendant’s request for a full voluntary remand”).

     In the Remand Results, Commerce reversed its initial

determination to rescind the review with respect to Atar, a

reversal supported by both plaintiff and defendant-intervenors.

The Department also reviewed the appropriate assessment rate for

Atar’s entries, and, based on its reseller policy,1 decided to

use the duty rates applicable to Atar’s subcontractors, rather

than applying the “all others” rate to the entries.

     Following the Remand Results, Atar (1) continues to argue

that the court should find it was properly a producer by tolling,

and (2) renews its objection to American Italian Pasta’s

submission relating to Atar’s questionnaire responses.    For their

part, defendant-intervenors oppose the use of the reseller policy

to set rates for the entries, contending that Commerce should

have invoked its “facts available” authority and applied the “all

others” rate to Atar’s entries.

                       STANDARD OF REVIEW

     The court must uphold a final determination by the

Department in an antidumping proceeding unless it is “unsupported

     1
          Commerce relies on the reseller policy when producers,
in this case Atar’s subcontractors, have not made the final sale
themselves, but are aware that their goods will eventually be
sold in the United States. See Parkdale Int’l, Ltd. v. United
States, 31 CIT 1229, 1231, 508 F. Supp. 2d 1338, 1343 (2007).
Court No. 08-00004                                            Page 5

by substantial evidence on the record, or otherwise not in

accordance with law.”   19 U.S.C. § 1516a(b)(1)(B)(i).

                            DISCUSSION

I.   Atar’s Status As a Producer by Tolling

      A.   Atar Argues that Past Practice Requires Commerce to
           Continue to Find It Is a Producer by Tolling

      As plaintiff sees it, its history of producing pasta is one

that reflects its status as a producer by tolling, a status

accepted by Commerce as valid in a previous new shipper review

and an administrative review.    See Certain Pasta form Italy, 70

Fed. Reg. 30,083 (Dep’t of Commerce May 25, 2005) (notice of

final results of new shipper review of the antidumping duty

order); Certain Pasta from Italy, 72 Fed. Reg. 7,011 (Dep’t of

Commerce Feb. 14, 2007) (notice of final results of the ninth

administrative review of the antidumping duty order); see also

Rep. of Pl. Atar, S.r.L. (“Pl.’s Rep.”) 4—5 (“[B]y the time of

THIS administrative review, Atar had been involved in the

production of Pasta by means of tolling for more than a year.

Atar had already been reviewed in a new shipper review and a

regular administrative review.   The history of THIS

administrative review is that it reflects the continued tolling

of a company which had been previously [] tolling and [whose]

tolling had been accepted by the United States as valid.”).

      In addition to pointing to its specific history of having
Court No. 08-00004                                            Page 6

been found to be a producer by tolling, Atar points to the

Department’s previous history in another pasta determination to

make its arguments.   Atar relies on what it characterizes as “the

specific tests as to what constitutes a producer by tolling”

found in the administrative decisions of Certain Pasta from

Italy, 63 Fed. Reg. 53,641 (Dep’t of Commerce Oct. 6, 1998)

(preliminary results of new shipper antidumping duty

administrative review) and Certain Pasta from Italy, 64 Fed. Reg.

852 (Dep’t of Commerce Jan. 6, 1999) (final results of new

shipper antidumping duty administrative review) (collectively,

“Corex”).2   Pl.’s Rep. 10.   In doing so, the company contends

that the determination relied upon by Commerce, Polyvinyl Alcohol

from Taiwan, 63 Fed. Reg. 32,810 (Dep’t of Commerce June 16,

1998) (final results of antidumping duty administrative review)

(“PVA”), is not pertinent.    Pl.’s Rep. 10—11.

     2
          The Department argues that the court should disregard
Atar’s reliance on Corex in this litigation because “Atar did not
raise any arguments regarding Commerce’s examination of its
circumstances based upon [PVA] in its case brief during the
administrative proceeding.” Def.’s Con. Supp. Mem. in Opp. to
Pl.’s R. 56.2 Mot. for J. Upon the Agency Rec. and Resp. to
Def.-Ints.’ Comm. Upon the Remand Redetermination 18. The court,
however, agrees with Atar that its case brief “addressed the
issues raised by PVA in its discussion of Corex.” Pl.’s Rep. 12.
Although Atar may not have cited the PVA case below, it
nonetheless raised all its relevant arguments there, and
preserved them for use again here.
Court No. 08-00004                                            Page 7

     B.     Commerce Distinguishes Atar from Past Practice

     The Department claims that its determination that Atar was

not a producer by tolling flows from its “totality of the

circumstances” approach that Commerce suggests the United States

Supreme Court endorsed by its focus on the “economic reality” of

tolling contracts in United States v. Eurodif S. A., 129 S. Ct.

878, 887 (2009).   Def.’s Con. Supp. Mem. in Opp. to Pl.’s R. 56.2

Mot. for J. Upon the Agency Rec. and Resp. to Def.-Ints.’ Comm.

Upon the Remand Redetermination (“Def.’s Mem.”) 9.   The agency

explains that the approach allowed it to examine the actual

effect of Atar’s tolling agreements, and not just the legal

formalities employed by the parties.    See Def.’s Mem. 9

(“Commerce’s approach focuses upon the economic reality rather

than the labels given within the tolling contracts.”).

     Specifically, Commerce considered: (1) the history of Atar’s

business relationships with the subcontractors; (2) the timing of

Atar’s decision to begin a toll production operation; (3) the

close and continuing relationships between the U.S. importer and

the pasta producers; (4) Atar’s purchases of inputs from these

producers; and (5) the claimed lack of meaningful value added to

the production process by Atar, considering the overall

arrangement through which the purchase and sale of pasta

occurred.   Def.’s Mem. 10.

     First, the Department sets out Atar’s business history, and
Court No. 08-00004                                              Page 8

the continuing business relationships of its subcontractors, to

support its determination that Atar was not a producer of pasta.

According to Commerce, Atar was originally founded as an

electrical engineering firm, changed ownership multiple times,

and is currently a trading company, selling pasta and various

non-scope products.    Def.’s Mem. 10—11.    The company’s tolling

operation began shortly after some Italian pasta producers

received high antidumping rates during the sixth administrative

review of pasta from Italy for the POR July 1, 2001 through June

30, 2002.     See PAM, S.p.A. v. United States, 582 F.3d 1336 (Fed.

Cir. 2009) (affirming 45.49 percent adverse facts available

rate).

        In late 2003 or early 2004, an importer, adversely affected

because its producers had received these high rates, approached

Atar.    Def.’s Mem. 12.   As a result of the approach, the two

companies entered into an agreement whereby the importer

purchased the same brands of pasta from Atar that it had

previously purchased from, what were now, Atar’s subcontractors.

Def.’s Mem. 12.    Because Atar was a new shipper, the importer was

able to secure the 11.26 percent “all others” cash deposit rate

for its U.S. imports.      Def.’s Mem. 12.   This rate was lower than

the rates the subcontractors would have received.

        According to Commerce, little else changed as a result of

the agreement.    Thus, the same pasta factories manufactured the
Court No. 08-00004                                              Page 9

same brands of pasta and shipped them directly to the same U.S.

importer.    Def.’s Mem. 12.   The Department further asserts that

Atar took on little responsibility in this new arrangement.      That

is, it did not maintain a sales force in Italy or the United

States, engage in marketing or advertising efforts, pay sales

calls to customers, or provide any product support or product

development services in any of its markets.    Def.’s Mem. 14—15.

Indeed, according to Commerce, Atar did not know which customers

owned the various brands of pasta it purportedly produced, nor

did it play any role in price negotiations or sales beyond

issuing invoices and receiving payments.     See Issues & Dec. Mem.

at 7.    Atar does not meaningfully quarrel with these findings.

        Next, the Department claims that Atar did not add any

significant value to the production process.    As to the pasta

ingredients, Commerce cites to record evidence it claims

establishes that, in many instances, the subcontractors used

ingredients from their inventories to produce the pasta.     Def.’s

Mem. 13.    In this regard, the Department cites to Atar’s

questionnaire response that “the toll producer would be

responsible for the shortage” if it did not receive all of the

semolina Atar had ordered for it to process.    Def.’s Mem. 20

(quoting Antidumping Supplement Questionnaire Sections A and D

Response of Atar S.r.L. (Apr. 12, 2007) (“Apr. 12, 2007 Resp.”)

5).   For Commerce, this indicates that “whatever value Atar
Court No. 08-00004                                           Page 10

purportedly contributed to the production process by purchasing

semolina was not reflected in the total price Atar paid for

pasta.”    Def.’s Mem. 14.   In other words, Atar’s purchase of

semolina, or failure to purchase, did not affect the price it

paid its subcontractors for the pasta.    In addition, although

Atar apparently purchased the bulk of the semolina, it purchased

it from the subcontractors themselves and their suppliers, and

“failed to demonstrate that it maintained control over this

input.”    Def.’s Mem. 13.   According to the Department, this is

demonstrated by Atar’s inability to match up the amount of

claimed semolina purchases with the amount of finished product.

Def.’s Mem. 21 (citing Antidumping 2nd Supplemental Questionnaire

Sections D Response of Atar S.r.L. (May 25, 2007) Exhibit SSD-3)

(“Ex. SSD-3").    Atar disputes these findings, insisting that

record evidence supports its claim to having purchased the pasta

inputs.    Pl.’s Rep. 10.

        Finally, the Department claims that no evidence exists on

the record that Atar conducted independent product testing,

independently made arrangements for warehousing, performed

quality control, received deliveries of inputs for the finished

pasta, oversaw the state of the products, or prepared the pasta

at any phase for delivery to the customers.    Issues & Dec. Mem.

at 7.    Atar does not challenge some of these conclusions as a

matter of fact, but rather questions the relevance of any of
Court No. 08-00004                                            Page 11

these activities to its status as a producer by tolling.      See

Pl.’s Mot 29 (“[S]uch analysis does not include an evaluation as

to what a producer by tolling would do.”).

      Taken altogether, then, Commerce concludes the “totality of

the circumstances” indicates that Atar had no significant role in

the production or selling of the pasta entries.    See Issues &

Dec. Mem. at 7 (“Based upon our analysis of the totality of

circumstances, we continue to find that Atar is not properly

treated as a toll producer.”).

      Looking at its previous tolling determinations, the

Department believes Atar’s circumstances are most like those of

the respondent Perry Chemical Corporation (“Perry”) in PVA.       63

Fed. Reg. at 32,811.   Perry was a U.S. importer and reseller of

polyvinyl alcohol and, like Atar, entered into a production

arrangement after a producer was found to be dumping and assigned

a high antidumping margin.   Def.’s Mem. 16.   Prior to the

imposition of this high dumping margin, Perry was not in the

business of producing or manufacturing any chemical.   Def.’s Mem.

16.   After entering into, what it characterized as, a tolling

agreement, Perry purchased the major production input through its

purported subcontractor’s affiliate, and the subcontractor

retained possession and control of this input.    Def.’s Mem. 16.

      According to Commerce, the primary benefit of the tolling

arrangements in PVA and this case is identical: it “allowed
Court No. 08-00004                                            Page 12

importers to purchase the same products made from the same

factories without having to pay the cash deposits applicable to

the producers.”   Def.’s Mem. 17.    Based on these facts, Commerce

concluded that Perry was not a producer by tolling.      See PVA, 63

Fed. Reg. at 32,813 (“We find the mere rearrangement of Perry's

contractual relationship with [its subcontractor] insufficient to

establish Perry as a producer . . . .”).     Thus, the Department

maintains that, here, it has acted in a manner consistent with

its previous methodology for determining the validity of tolling

arrangements, and insists that Atar is being treated in a manner

consistent with its previous determinations.

     The Department further argues that plaintiff’s heavy

reliance on the grant of toll producer status in Corex to be

mistaken.   The Corex administrative review involved another

Italian pasta exporter that the Department ultimately found to be

a producer by tolling, based on evidence that it purchased all of

the pasta inputs, paid the subcontractor a processing fee,

maintained ownership at all times of the inputs as well as the

final product, conducted product testing, and marketed the pasta.

Corex, 63 Fed. Reg. at 53,642.      The Department claims that Atar

does not meet all of the material factors set forth in Corex.

Def.’s Mem. 19—20.   In particular, Commerce stresses that, unlike

the Corex producer, Atar: (1) did not purchase all the pasta

ingredients; (2) did not maintain the ownership of inputs from
Court No. 08-00004                                           Page 13

purchase to the sale of the subject merchandise; and (3) conceded

that it failed to conduct independent product testing and

marketing research.   Def.’s Mem. 20—21.

     Finally, the Department maintains that its previous

determinations finding that Atar was a producer by tolling

provide no support for the company’s contention that it is a

producer.   First, as to the new shipper review, “Atar was the

only participating party and its tolling arrangement was not

challenged.”   Def.’s Mem. 17.   With respect to the one previous

administrative review in which Atar was a participant (the

ninth), Commerce insists, that there, it was unable to rule on

the tolling arrangements because the record contained

insufficient evidence.   Def.’s Mem. 17—18 (citing Issues and

Decisions for the Final Results of the Ninth Administrative

Review of the Antidumping Duty Order on Certain Pasta from Italy

and Determination to Revoke in Part (Dep’t of Commerce Feb. 5,

2007) (“Ninth Review Issues & Dec. Mem.”) at Comm. 1 (“[T]he

Department has serious concerns with respect to the overall

nature of Atar’s operation and its claim to be a producer of

pasta under the tolling regulation.   While in the new shipper

review of Atar and in this current administrative review the

Department has accepted Atar’s claim to be the producer of

subject merchandise and foreign like product under the tolling

regulation, after having reviewed the record of this case and
Court No. 08-00004                                             Page 14

Department precedent cited below, we are concerned with respect

to this conclusion.”)).

        C.   Substantial Evidence Supports Commerce’s Determination
             that Atar is Not a Producer by Tolling

        At the heart of plaintiff’s challenge to Commerce’s

determination is, what it sees as, inconsistent treatment by the

Department of (1) the same facts that were before it in prior

reviews of Atar, and (2) the same facts in determinations

relating to other companies.    As the Federal Circuit recently

reiterated, “an agency action is arbitrary when the agency offers

insufficient reasons for treating similar situations

differently.”     Dongbu Steel Co., Ltd. v. United States, 635 F.3d

1363, 1371 (Fed. Cir. 2011) (citation omitted).    The court,

however, is not convinced that Commerce has acted arbitrarily

here.

        It is well-established that “[w]hen an agency changes its

practice, it is obligated to provide an adequate explanation for

the change.”     SKF USA Inc. v. United States, 630 F.3d 1365, 1373

(Fed. Cir. 2011) (citing Motor Vehicle Mfrs. Ass’n of the United

States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29

(1983)).     As long as an adequate explanation is provided,

“Commerce is entitled to change its views,” even if it is

“changing [a] longstanding policy only in the present case.”

Saha Thai Steel Pipe (Pub.) Co. Ltd. v. United States, 635 F.3d
Court No. 08-00004                                               Page 15

1335, 1342, 1341 (Fed. Cir. 2011).

     Here, Commerce has reached a different conclusion as to

Atar’s producer status from the new shipper review and previous

administrative review.   The Department, however, explains that in

the new shipper review “Atar was the only participating party and

its tolling arrangement was not challenged,” meaning “Commerce

had no reason to question Atar’s tolling arrangement upon the

basis of the record.”    Def.’s Mem. 17.   Put another way, a

challenge to Atar’s producer status was not before it when

Commerce made its new shipper determination, and so the

Department did not question Atar’s assertion of that status.

     As to the previous administrative review, Commerce states

that it “was unable to rule upon petitioners’ challenge to Atar’s

toll producer status because the record contained insufficient

evidence regarding this issue.”   Def.’s Mem. 17.    Nonetheless,

despite lacking “sufficient information to conduct a full

analysis of Atar’s tolling operation” in that review, Commerce

stated that it “intend[ed] to fully pursue this issue and

analysis in the subsequent, ongoing review . . . .”      Ninth

Review Issues & Dec. Mem. at Comm. 1.      In other words, the

Department concluded that it had insufficient information to

reverse its position in the ninth review, but stated that it

intended to make a record sufficient to make a determination in

the next succeeding review, which it has now done.
Court No. 08-00004                                          Page 16

     Thus, in both the new shipper review and the ninth

administrative review, it is apparent that Commerce did not make

a determination based on all the facts concerning the various

questions that were presented relating to Atar’s status as a

producer by tolling.   Commerce now has made its determination

based on a fully-developed record.   That being the case, the

court holds that Commerce has provided sufficient reasons for

making its new finding, and that the company cannot rely on these

previous reviews to preclude a change in Commerce’s

determination.   See Nakornthai Strip Mill Pub. Co. Ltd. v. United

States, 32 CIT __, __, 587 F. Supp. 2d 1303, 1308 (2008) (finding

Commerce had “adequately distinguished and reasonably explained

its departure” from previous case when agency “demonstrated

several key distinguishing facts between the two cases”).

     Moreover, Commerce has marshalled sufficient evidence from

Atar’s questionnaire responses to distinguish it from the

producer by tolling in Corex.    In the original Federal Register

notice for Corex, Commerce noted that the company “purchase[d]

all of the inputs,” “maintain[ed] ownership at all times of the

inputs as well as the final product,” and “conduct[ed]

independent product testing and marketing research,” facts that

led Commerce to determine that Corex was the producer of the

tolled merchandise.    Corex, 63 Fed. Reg. at 53,642; see also

Corex, 64 Fed. Reg. at 852 (stating that the “final results do
Court No. 08-00004                                          Page 17

not differ from the preliminary results”).

     Accordingly, Commerce did not confront the same factual

situation in Corex as in this case.    “[U]nlike Corex, Atar did

not maintain ownership of the inputs from the time of purchase to

the time of sale to United States customers.   Specifically, Atar

was unable to connect the purchase of inputs to the corresponding

sale of the finished product.”   Def.’s Mem. 20—21; see, e.g., Ex.

SSD-3 (illustrating that Atar’s ordered and delivered quantities

of semolina failed to correspond to the ordered and delivered

quantities of pasta).   “Additionally, Atar conceded that the

pasta factories commingled the semolina purchased by Atar with

their own semolina.”    Def.’s Mem. 21 (citing Pl.’s Mot. 21).

While Atar disputes some of this evidence, an examination of the

record does not support the conclusion that Atar maintained

ownership of the semolina at all times.    See, e.g., Response of

Atar S.r.L. to Section D Antidumping Questionnaire (Nov. 13,

2006) 3 (describing that raw material inputs are “shipped by the

vendors directly to the processors’ facilities and maintained by

the processors in inventory” before “the pasta is shipped

directly from the unaffiliated processor to Atar’s customers”).

     In addition, Atar noted in its April 12, 2007 response that

“the toll producer would be responsible for [a] shortage” if it

did not receive all of the semolina Atar had ordered for it to

process.   Apr. 12, 2007 Resp. 5.   This response indicates that
Court No. 08-00004                                           Page 18

Atar had not and did not necessarily intend to purchase all of

the semolina its subcontractors used to make the pasta.    The

agreements show that “the factories bore the risk of the short

fall or loss of raw materials and the finished product.”    Def.’s

Mem. 20 (citing Apr. 12, 2007 Resp. 4-5 (noting that the factory

was responsible for shortfalls in the inputs).

     Finally, Atar conceded that it did not conduct product

testing or marketing research, stating instead that such

activities are “wholly unnecessary” because “pasta is a mature

product.”   Pl.’s Mot. 27.   As the Department notes, though, the

producer in Corex was selling the same product, and its product

testing and marketing research were significant to Commerce’s

determination.    Def.’s Mem. 21—22.   Thus, Commerce concluded that

one of the factors that was important to its finding that Corex

was a producer by tolling was missing here.

     Commerce, however, did support with substantial evidence its

finding that the facts in Atar’s arrangements were strikingly

similar to those addressed in PVA.     “[S]imilar to the respondent

in PVA, Atar, Atar’s subcontractors, and their customers merely

restructured their relationship to avoid payment of antidumping

duties.”    Issues & Dec. Mem. at 8.   Atar, like Perry, entered a

new market after Commerce assigned producers high antidumping

duty rates.   Additionally, Atar purchased its major production

input through its subcontractors’ previous vendors, and the
Court No. 08-00004                                          Page 19

subcontractors maintained control over the input.   Putting these

factors together, then, it was reasonable for Commerce to

conclude that “Atar is more similar to the respondent in PVA

where the Department determined that the respondent was not a

toll manufacturer, rather than to the respondent in Corex.”

Issues & Dec. Mem. at 9.

     Indeed, in addition to the differences between this case and

Corex and the similarities to PVA, Commerce had a variety of

evidence to support its conclusion that Atar was not a producer

by tolling.   For instance, (1) Atar’s decision to enter into the

pasta market directly after Commerce imposed a high antidumping

duty rate on its subcontractors, a move that brought a much lower

cash deposit rate for the entries as a result of Atar’s new

shipper status, (2) the company’s relationship with the

subcontractors and its purchase of inputs from them, (3) its

failure to contribute any meaningful value to the production

process because it did not purchase or control all the inputs,

(4) its ignorance as to which customers owned the various brands

of pasta produced by the subcontractors, and (5) Atar’s lack of

any sales, price negotiating, marketing, or product development

efforts on behalf of its new venture.   Moreover, the continuing

relationships between the subcontractors and the U.S. importer,

before and after tolling allegedly began, indicate the true

nature of the business arrangements, i.e., the same factories
Court No. 08-00004                                           Page 20

produced the same brands of pasta and shipped them directly to

the same importer.

      As noted, Commerce believes that these facts make up a

totality of the circumstances that lead to the conclusion that

Atar was not a producer by tolling.    The court agrees that, taken

as a whole, Commerce has supplied the substantial evidence

necessary to sustain its determination that Atar was not a

producer by tolling.   Notably, the Department adequately

explained its departure from its conclusions in earlier reviews,

demonstrated that it had acted in a manner consistent with its

reviews of other claimed producers by tolling, and highlighted

evidence indicating Atar’s attenuated connection with the

production and sales of the entries.

II.   Applicable Duty Rates

      A.   Defendant-Intervenors Insist Circumstances Demand Use
           of Commerce’s “Facts Available” Authority

      While Atar takes issue with Commerce’s tolling findings,

defendant-intervenors challenge Commerce’s application of its

reseller policy to Atar’s subcontractors to determine the various

applicable duty rates for Atar’s entries.   Based on this policy,

Commerce applied to Atar’s entries previously calculated rates

for the subcontractors that produced the pasta.    See Remand

Results at 13 (“In light of our findings during the proceeding

that entities other than Atar were producers of the subject pasta
Court No. 08-00004                                            Page 21

and had knowledge that pasta was destined for the United States,

our task is to determine an appropriate rate for these

entries.”).

     Defendant-intervenors describe this change as affording Atar

“the opportunity to significantly lower its dumping liability, by

providing information it withheld during the original

administrative proceeding.”   Deft.-Ints.’ Comm. In Opp. to

Portions of Commerce’s May 5, 2010 Final Remand Det.

(“Deft.-Ints.’ Comm.”) 3.   Thus, defendant-intervenors insist

that Atar was given an unlawful opportunity to put information on

the record relating to the subcontractors’ rates.   According to

defendant-intervenors, Atar withheld this information while it

pursued the “charade” that it was a manufacturer under a tolling

operation it had arranged with the actual producers.

Deft.-Ints.’ Comm. 4.   Therefore, they ask the court to reject

the Remand Results insofar as they apply producer-specific cash

deposit rates to some of Atar’s entries, and direct Commerce to

continue to apply the “all others” rate to all of Atar’s entries.

Deft.-Ints.’ Comm. 4.

     In making their argument, defendant-intervenors rely on

Commerce’s “facts available” authority,3 arguing that it was

     3
          See 19 U.S.C. § 1677e(a) (“If . . . necessary
information is not available on the record, . . . the
administering authority . . . shall . . . use the facts otherwise
available in reaching the applicable determination under this
subtitle.”).
Court No. 08-00004                                          Page 22

“designed specifically to allow the agency to address situations

such as the one at bar.”   Deft.-Ints.’ Comm. 6.   According to

defendant-intervenors, in administering its reseller policy,

Commerce typically “would have sent its questionnaires to the

actual producers.”   Deft.-Ints.’ Comm. 4.   Here, however, the

questionnaires were sent to Atar, not the subcontractors, so the

record contained no information as to the production costs and

sales prices of the actual manufacturers, information necessary

for the reseller policy to be used.   Saying the statute directs

Commerce to use “facts available” when needed information is not

available, defendant-intervenors insist that Commerce should have

“filled the gaps” resulting from the missing information by

using facts otherwise available on the original record.

Deft.-Ints.’ Comm. 5.   For defendant-intervenors, by allowing

Atar to first make its claim that it was a producer by tolling,

and only having failed to make this case, then allowing it to

provide information relating to its subcontractors, the

Department gave the company a second chance at a lower rate.

     Ultimately, defendant-intervenors see the findings resulting

from the Remand Results as serving to “undermine all applicable

statutory and regulatory deadlines by permitting Atar the

opportunity to submit actual producer information on an

entry-by-entry basis, when the company claimed such information

was not available—and more importantly failed to provide
Court No. 08-00004                                              Page 23

it—during the course of the administrative review.”       Deft.-Ints.’

Comm. 7—8.       For defendant-intervenors, Atar’s behavior places the

company squarely within the facts available provisions of the

statute.        See Deft.-Ints.’ Comm. 6 (“[T]he agency strives to wrap

its [invocation of the reseller policy] in the cloak of accuracy,

while assiduously avoiding invocation of its statutory “facts

available” authority, which was designed specifically to allow

the agency to address situations such as the one at bar (where

necessary information is missing from the record).”).

        B.    Commerce Relies on Reseller Policy

        The Department argues that its modification on remand to

producer-specific duty rates is supported by substantial evidence

and in accordance with law.       Def.’s Mem. 23.   Commerce states

that, under its reseller policy, if a producer is aware of the

destination of a sale by a reseller, the Department will find

that the producer set the price of sale into the United States

and will assess the antidumping duty based on that producer’s

rate.        See Parkdale Int’l, Ltd. v. United States, 31 CIT 1229,

1231, 508 F. Supp. 2d 1338, 1343 (2007) (“By identifying the

party that had knowledge of the destination of the subject

merchandise, Commerce determines which entity was the ‘price

discriminator’ that engaged in the dumping, and hence which

company's dumping margin should apply to a given entry.”)
Court No. 08-00004                                           Page 24

(citation omitted).    In other words, on remand Commerce looked

behind Atar’s claims that it was a producer by tolling, found

them wanting, and then, using its reseller policy, applied rates

previously calculated for the subcontractors Atar hired.

     Commerce argues that it decided to apply producer-specific

rates to the pasta entries because the subcontractors were the

real producers of the pasta and had knowledge that the goods were

destined for the United States.   Def.’s Mem. 23.    Responding to

defendant-intervenors’ insistence that Commerce should have

assessed duties upon the pasta entries at the “all others” rate

as “facts available,” the Department answers that there was no

factual gap in the record to fill.    Commerce claims that it

obtained all necessary information on remand to assess

producer-specific duty rates.   Def.’s Mem. 24—25.   The Department

further states that it has “broad discretion to determine the

extent of investigation and the information it needs.”    Def.’s

Mem. 25 (citing Micron Tech., Inc. v. United States, 117 F.3d

1386, 1394—95 (Fed. Cir. 1997); PPG Indus., Inc. v. United

States, 978 F.2d 1232, 1238 (Fed. Cir. 1992)).

     C.   Commerce Did Not Err in Declining to Invoke Its “Facts
          Available” Authority

     The relevant section of the antidumping duty statute, 19

U.S.C. § 1677e, governs Commerce’s decision to use facts

otherwise available.   Importantly, “[t]he use of facts otherwise
Court No. 08-00004                                           Page 25

available . . . is only appropriate to fill gaps when Commerce

must rely on other sources of information to complete the factual

record.”   Zhejiang Dunan Hetian Metal Co., Ltd. v. United States,

No. 2010-1367, slip op. at 26 (Fed. Cir. June 22, 2011).

     Defendant-intervenors insist that the use of facts available

is warranted here because the “necessary information” to use the

Department’s reseller policy “is missing from the record.”

Deft.-Ints.’ Comm. 5.   In other words, they assert that Commerce

exceeded its discretion by obtaining additional information

during a voluntary remand, instead of using the existing record.

In PPG Industries, Inc. v. United States, 978 F.2d 1232 (Fed.

Cir. 1992) (“PPG”), however, the Federal Circuit held that

Commerce has the “discretionary authority to determine the extent

of investigation and information it needs.”   PPG, 978 F.2d at

1238; see also id. at 1239 (“[F]or this court to reverse and

remand for further investigation, PPG would have to show that the

ITA abused its discretion in not conducting further

investigation.”).

     The court finds that Commerce did not err in declining to

invoke its “facts available” authority.   Having found that Atar

was not a producer by tolling, the Department was confronted with

the question of what rate to apply to the entries.    Commerce

examined this question in the context of a full voluntary remand

during which it was within its authority to put new evidence on
Court No. 08-00004                                             Page 26

the record.   See Union Camp Corp. v. United States, 23 CIT 264,

282, 53 F. Supp. 2d 1310, 1327 (1999) (“[I]t is Commerce, and not

this Court, which is in the best position to initially decide

whether it should consider new evidence [on remand]”).    In

addition, the Department’s duty on remand continued to be to set

the most accurate rate for the entries.     See U.S. Steel Corp. v.

United States, 34 CIT __, __, Slip Op. 10-104 at 8 n.9 (Sept. 13,

2010) (not reported in the Federal Supplement) (“The Court

generally affords the Department reasonable discretion to

establish the breadth of its review of a particular issue on

remand so that the agency may reach the most accurate results.”)

(citation omitted), aff’d, No. 2011–1074, 2011 WL 2648708 (Fed.

Cir. July 7, 2011).

     Defendant-intervenors cite no authority for this Court to

prevent Commerce from seeking new information on remand or from

using this new information to close any gaps in the record.

     As to the record evidence itself, the court finds that

Commerce has offered the substantial evidence needed to justify

the Department’s reliance on producer-specific rates via its

reseller policy.     See Remand Results at 7 (“[A]t our request,

Atar provided information to link specific producers to specific

pasta products and explained how this information could be tied

to specific entries.”).    Thus, Commerce was able to determine

which company produced which pasta and who it was sold to.      Since
Court No. 08-00004                                           Page 27

these producers were aware that their product would be sold in

the United States and had participated in earlier reviews under

the order, Commerce was able to apply more accurate, company-

specific rates to their entries.

     As the Department notes, this meant avoiding liquidating “at

the incorrect rate, . . . rather than at the rates applicable to

the producers that produced the pasta and knowingly shipped it to

the United States.”   Remand Results at 6—7.   Because, on remand,

Commerce closed any gaps in needed information and because it

further considered information to assign more accurate rates for

the entries, the court rejects defendant-intervenors’ request

that Commerce use facts available and apply, on remand, the “all

others” rate to Atar’s entries.

III. Uncertified Submission

     In the initial administrative review, the Department

accepted for placement on the record a twenty page letter

submitted on July 9, 2007 by defendant-intervenor American

Italian Pasta.   Atar cites 19 C.F.R. § 351.303(g) (2010), which

requires a party to file “with each submission containing factual

information the [proper] certification,” to challenge the

Department’s acceptance of the letter.   Plaintiff insists that

placement of factual information on the record without

certification, and over the objection of the other party, cannot
Court No. 08-00004                                            Page 28

be allowed, and is more than simply a procedural defect.      Pl.’s

Mot. 39.

     For its part, Commerce states that it did not rely on the

submission and therefore, the issue is moot.   Def.’s Mem. 26—27.

     This Court faced an identical question in GSA, S.r.L. v.

United States, 23 CIT 920, 77 F. Supp. 2d 1349 (1999) (“GSA”).

Relying on Intercargo Insurance Co. v. United States, 83 F.3d 391

(Fed. Cir. 1996), the GSA Court analyzed the uncertified

submissions under the “harmless error” rubric applicable to

agency proceedings.    See Sea-Land Service, Inc. v. United States,

14 CIT 253, 257, 735 F. Supp. 1059, 1063 (1990) (“[C]ourts will

not set aside agency action for procedural errors unless the

errors ‘were prejudicial to the party seeking to have the action

declared invalid.’”) (citation omitted), aff’d, 923 F.2d 838

(Fed. Cir. 1991).    As “none of the facts submitted by the

domestic producers were considered by Commerce in drawing its

conclusions” and the plaintiff “failed to allege that such

information was actually used in Commerce’s decision or even that

[it] was somehow prejudiced,” the GSA Court concluded that

“Commerce’s error was harmless.”    GSA, 23 CIT at 930, 77 F. Supp.

2d at 1357.

     With GSA in mind, the court holds that this case’s facts

compel the same result.   Like the plaintiff in GSA, Atar does not

allege that Commerce used the information in this submission or
Court No. 08-00004                                          Page 29

that it was prejudiced.   Moreover, Commerce denies that it used

information from the submission in its final analysis.

Therefore, the court finds that any procedural error on

Commerce’s part in accepting the submission was harmless, and

does not require the relief requested by plaintiff.

                            CONCLUSION

     Based on the foregoing, the court sustains Commerce’s Final

Results, as amended by the Remand Results.   Therefore,

plaintiff’s motion is denied.   Judgment shall be entered

accordingly.

                                             /s/ Richard K. Eaton
                                               Richard K. Eaton

Dated:    July 22, 2011
          New York, New York