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Transcom Inc. v. United States

June 16, 1999

TRANSCOM, INC., PLAINTIFF-APPELLANT, AND L & S BEARING COMPANY, PLAINTIFF,
v.
UNITED STATES, DEFENDANT-APPELLEE, AND THE TIMKEN COMPANY, DEFENDANT.



Before Plager, Rader, and Bryson, Circuit Judges.

The opinion of the court was delivered by: Bryson, Circuit Judge.

Appealed from: United States Court of International Trade Senior Judge Nicholas Tsoucalas

In 1987, the Department of Commerce issued an antidumping order with respect to tapered roller bearings imported from the People's Republic of China. Commerce subsequently conducted annual administrative reviews of that order. Appellant Transcom, Inc., an importer of Chinese tapered roller bearings, challenges the antidumping duties assessed against it in connection with the fourth, fifth, and sixth administrative reviews of the antidumping order (for 1990-91, 1991-92, and 1992-93). Transcom points out that several of the Chinese companies from which it obtained tapered roller bearings were not named in the notices of initiation for those three administrative reviews. For that reason, Transcom argues, it was improper for the administrative reviews to result in an increase in the antidumping duty on those companies' products. We agree with Transcom that Commerce did not provide adequate notice that the unnamed exporters' products would be subject to the administrative reviews, and we therefore reverse the judgment of the Court of International Trade.

I.

In 1986, when the Commerce Department began its investigation of tapered roller bearings from the People's Republic of China, the state- controlled entity China National Machinery and Equipment Import and Export Corporation (CMEC) was the sole Chinese exporter of tapered roller bearings. At that time, all tapered roller bearings that were imported from China into the United States were sourced, either directly or indirectly, through a Hong Kong trading company, Premier Bearing and Equipment, Limited (Premier). Following an investigation, the issuance of an antidumping duty order, and a court challenge to that order, Commerce established an antidumping duty rate of 4.69% for CMEC, a rate of 0.97% for Premier, and an "all others" rate of 2.96% applicable to other potential resellers of tapered roller bearings from China.

The antidumping order was subjected to an administrative review each year after its issuance. In the first two annual reviews, Commerce named only Premier and CMEC in the notices of initiation. In the third annual review, however, several other Chinese exporters requested that they be treated separately from CMEC. Commerce accordingly sent antidumping duty questionnaires to those companies and reviewed each of the parties that provided responses. In the final results of the third review, Commerce concluded that CMEC no longer held a monopoly on the exportation of tapered roller bearings from China. Commerce thus assigned separate antidumping duty rates to each of the eight participating companies, including CMEC. For all other exporters, the Commerce Department selected an "all others" duty rate of 8.83%, which was reduced to the previous "all others" rate of 2.96% following a court challenge.

In June 1991, Commerce published a notice of opportunity to request an administrative review for the fourth period of review of the antidumping order. A request for review was received from the Timken Company, a United States bearings producer. In its request, the Timken Company asked that the Department review all merchandise covered by the order, and it listed 43 companies known to Timken to be sources of tapered roller bearings from China. Commerce subsequently published notices of initiation in which it stated that it was initiating an administrative review of the tapered roller bearings antidumping order and then listed the 43 companies Timken had identified in its request for review. Commerce sent questionnaires to all of the companies listed in the notices of initiation. Some of those companies responded to the questionnaires and some did not.

The same procedure was followed in the case of the fifth and sixth annual reviews, in which Commerce identified the same 43 companies in connection with the notices of initiation of the reviews. The Chinese exporters whose products are at issue in this case were not named in the notices of initiation for any of the three reviews at issue here, and they were not sent questionnaires in connection with those reviews.

Commerce consolidated the fourth, fifth, and sixth periods of review for the purpose of announcing its decisions. In the preliminary results for those three periods, Commerce found dumping margins for each of the companies that had responded to its questionnaires. For companies that had been sent questionnaires but had not responded, Commerce stated its intention to apply the "best information available" (BIA) rate. For all other Chinese exporters, which had not been identified in the notices of initiation or been sent questionnaires, Commerce announced that it intended to apply the "PRC rate" of 23.76%, which was same as the "best information available" rate, i.e., the rate assigned to companies that had been identified as subject to the review but had refused or been unable to provide information requested by Commerce in connection with the review. As proposed by Commerce, the "PRC rate" would apply to any supplier that had not established its independence from the state-controlled entity, including each of Transcom's suppliers that had not participated in the three administrative reviews under consideration.

In response to the preliminary results, Transcom entered an appearance and filed a brief in which it argued that Commerce had no authority to conduct a review of entries from exporters that were not named in the notices of initiation. Transcom argued that because those exporters were not subject to the reviews, entries from those exporters should be liquidated at the amount of the antidumping duties that were deposited at the time of entry, pursuant to 19 U.S.C. § 1675(a) and 19 C.F.R. § 353.22 (1991). The proper antidumping duty rate for such goods, Transcom argued, was the "all others" rate established in the initial investigation, i.e., 2.96%.

In its final review results, Commerce rejected Transcom's argument that the unnamed exporters were outside the scope of the fourth, fifth, and sixth reviews. Commerce explained that it presumed all Chinese producers and exporters to be part of a single state-controlled enterprise and that the companies named in the notices of initiation were required to prove their independence from the state-controlled entity in order to receive a separate antidumping duty rate. Because some of the named companies had failed to prove their independence, Commerce concluded that the state-controlled entity was covered by all three reviews. And because the unnamed exporters had not proved their independence from the state-controlled entity, Commerce announced that the unnamed exporters were considered to be part of the state-controlled entity and would be treated, for antidumping purposes, just like those companies that had been named in the initiation orders but had failed to prove that they should be accorded separate treatment. Commerce therefore rejected Transcom's argument that because its suppliers had not been named in the notices of initiation for the fourth, fifth, and sixth review periods, those suppliers could not be assigned the "best information available" rate that was assigned to the named companies that had failed to demonstrate their right to separate treatment. In the final results, Commerce settled on 8.86% as the "PRC rate" applicable to the Transcom suppliers that had not been named in and had not participated in the three annual reviews.

Transcom filed an action in the Court of International Trade challenging Commerce's decision, but the court upheld Commerce's ruling. In the court's view, Commerce's treatment of the unnamed exporters was justified as a logical extension of the presumption of state control that applies to companies in a nonmarket economy country such as China. Although the unnamed exporters had not been given direct notice of the reviews, the court nonetheless concluded that the presumption of state control was applicable to them and that, not having participated in the reviews and overcome that presumption, they were subject to the same antidumping rates that applied to the other companies that had failed to demonstrate their independence from the state-controlled entity.

II.

Transcom renews its argument that because the exporters from which it obtained tapered roller bearings were not named in the fourth, fifth, and sixth administrative reviews, it was improper for Commerce to apply the 8.86% "PRC rate" for bearings that Transcom obtained from those unnamed exporters. Because Commerce did not make clear that the unnamed exporters' goods were subject to those reviews, Transcom argues that it had no reason to believe it was required to demonstrate that the unnamed exporters were independent of the state-controlled entity in order to avoid having the 8.86% rate (the highest antidumping rate in any of the three reviews) applied to their products. We agree with Transcom ...


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