Diamond Sawblades Manufacturers' Coalition v. United States

Slip Op. 21-137
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Richard Goldberg
Court No. 18-00134
OPINION
[Sustaining the U.S. Department of Commerce’s scope determination in the
antidumping duty order covering diamond sawblades and parts thereof from the
People’s Republic of China]
Dated:
Daniel B. Pickard Wiley Rein LLP, of Washington D.C., for plaintiff. With him on
brief were Maureen E. Thorson and Stephanie M. Bell.
John J. Tudor, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington D.C., for defendant. With him on the brief
were Jeanne E. Davidson, Director and Franklin E. White, Jr., Assistant Director. Of
Counsel on the brief was Paul K. Keith, Office of the Chief Counsel for Trade
Enforcement and Compliance, U.S. Department of Commerce, of Washington D.C.
Goldberg, Senior Judge: Before the court is the scope redetermination (“Remand
Redetermination”) of the U.S. Department of Commerce (“Commerce,” or the
“Department”) filed pursuant to the court’s opinion and order in Diamond Sawblades
Mfrs. Coalition v. United States, 43 CIT __, 405 F. Supp. 3d 1345 (2019) (“Diamond
DIAMOND SAWBLADES
MANUFACTURERS’ COALITION,
Plaintiff,
v.
UNITED STATES,
Defendant.
October 7, 2021
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Sawblades I”). Final Results of Remand Redetermination (Feb. 3, 2020), Rem. P.R. Doc.
15, 1 ECF No. 30 (“Remand Redetermination”). This litigation involves a challenge to the
final scope ruling of Commerce which excludes Lyke Industrial Tools LLC (“Lyke”)
cupwheels from an antidumping duty order (the “Order”) on diamond sawblades from
the People’s Republic of China (“China” or “PRC”). Diamond Sawblades and Parts Thereof
From the People’s Republic of China and the Republic of Korea: Antidumping Duty Orders, 74
Fed. Reg. 57,145 (Int’l Trade Admin. Nov. 4, 2009) (“Order”).
Plaintiff Diamond Sawblades Manufacturers’ Coalition (“DSMC”), an ad hoc
coalition of producers of diamond sawblades domestic like products in the United
States, once again challenges the Department’s determination that the scope of the
Order excludes certain cupwheels that Lyke imports into the United States. For the
reasons stated herein, the court holds that the Departments’ scope determination
adheres to the applicable regulatory framework of 19 C.F.R. § 351.2252 and that there is
substantial evidence supporting Commerce’s conclusion that Lyke’s cupwheels are not
1 All citations to documents from the administrative record are to public
documents. References cited as “P.R. Doc. __” are to documents on the original agency
record; references cited as “Rem. P.R. Doc. __” are to documents placed on the record
during the Department’s redetermination proceeding.
2 All citations to the United States Code herein are to the 2012 edition, except
where otherwise indicated. Citations to the Code of Federal Regulations are to the 2020
edition unless otherwise noted.
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within the scope of the Order. Therefore, Commerce’s Remand Redetermination is
affirmed.
I. Background
The court assumes familiarity with the facts as discussed in the prior opinion.
Diamond Sawblades I, 43 CIT at __, 405 F. Supp. 3d at 1349–51. Commerce issued the
antidumping duty order relevant to this litigation in November 2009, pursuant to a
petition filed by DSMC. Order, 74 Fed. Reg. at 57,145; see also Compl. ¶ 5 (July 10, 2018),
ECF No. 9 (“Compl.”). Lyke submitted a scope ruling request to Commerce on
February 23, 2018, requesting that Commerce determine whether two of its products,
diamond sawblades and cupwheels, fell within the scope of the order. Letter from
Pennington, P.A. to Sec'y of Commerce, re: Lyke Industrial Tools, LLC Scope Request: Diamond
Sawblades Whose Cores Have Rockwell C Hardness Less Than 25 Prior to the Incorporation of
Diamond Segments and Diamond Cupwheels - Diamond Sawblades and Parts Thereof from the
People's Republic of China (A-570-900) 2 (Feb. 23, 2018), P.R. Doc. 1 (“Lyke Scope
Request”). Commerce determined that Lyke’s diamond sawblades are within the scope
of the Order and that its cupwheels are not. Final Scope Determination for Scope
Request from Lyke Industrial Tool, LLC 8–10 (May 17, 2018), P.R. Doc. 23 (“Final Scope
Ruling”).
On June 11, 2018, DSMC initiated litigation contesting the Department’s
determination that Lyke’s cupwheels are outside the scope of the Order. Summons
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(June 11, 2018), ECF No. 1; Compl. 1. On November 28, 2018, DSMC moved for
judgment on the agency record. Pl.’s Rule 56.2 Mot. for J. on the Agency R. (Nov. 28,
2018), ECF No. 16. In Diamond Sawblades I, the court remanded the Department’s Final
Scope Ruling. First, the court found that the text of the scope of the Order did not
resolve the scope dispute in and of itself because the term “sawblade” was not clearly
defined. Diamond Sawblades I, 43 CIT at __, 405 F. Supp. 3d at 1352. Second, the court
stated that as the scope was susceptible to interpretation, Commerce needed to turn to
sources listed in 19 C.F.R. § 351.225(k)(1), which Commerce failed to do in a way that
was supported by substantial evidence because the Department’s (k)(1) analysis
improperly considered criteria found under 19 C.F.R. § 351.225(k)(2). Id. at __, 405
F. Supp. 3d at 1353–54. Third, the court held that “[t]he sources used by Commerce in
its (k)(1) analysis do not ‘definitively answer’ the question of whether Lyke’s cupwheels
are excluded from the scope of the Order.” Id. at __, 405 F. Supp. 3d at 1358. The court
ordered Commerce to conduct an analysis under 19 C.F.R. § 351.225(k)(2) to determine
whether Lyke’s cupwheels are included in the scope of the Order. Id. at __, 405
F. Supp. 3d at 1358.
On October 15, 2019, Commerce invited both DSMC and Lyke to provide further
information related to the factors listed in 19 C.F.R. § 351.225(k)(2) and parties
commented and submitted rebuttal comments on October 24, 2019 and October 31,
2019. Mem. from Minoo Hatten, Program Manager, AD/CVD Operations, Off. I to Diamond
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Sawblades Mfrs. Coal. and Lyke Indus. Tools, LLC (Oct. 15, 2019), Rem. P.R. Doc. 1; Letter
from Pennington P.A. to Sec’y Commerce, re: Diamond Sawblades and Parts Thereof from the
People’s Republic of China (A-570-900): Lyke’s Comments on Remand (Oct. 24, 2019), Rem.
P.R. Docs. 4–5 (“Lyke’s Comments”); Letter from Wiley Rein LLP to Sec’y Commerce, re:
Diamond Sawblades and Parts Thereof from the People’s Republic of China: Comments on (k)(2)
Factors (Oct. 24, 2019), Rem. P.R. Doc. 7 (“DSMC’s Comments”); Letter from Pennington
P.A. to Sec’y Commerce, re: Diamond Sawblades and Parts Thereof from the People’s Republic
of China (A-570-900): Lyke’s Rebuttal to Pet’rs’ Remand Comments (Oct. 31, 2019), Rem. P.R.
Doc. 8 (“Lyke’s Rebuttal Comments”); Letter from Wiley Rein LLP to Sec’y Commerce, re:
Diamond Sawblades and Parts Thereof from the People’s Republic of China: Rebuttal Comments
on (k)(2) Factors (Oct. 31, 2019), Rem. P.R. Doc. 9 (“DSMC’s Rebuttal Comments”).
On February 3, 2020, Commerce issued its Remand Redetermination, addressing
the issue of whether Lyke’s cupwheels are within the scope of the Order by conducting
a 19 C.F.R. § 351.225(k)(2) analysis. After considering the five additional factors set
forth in 19 C.F.R. § 351.225(k)(2), Commerce determined, once again, that Lyke’s
cupwheels are not within the scope of the Order. Remand Redetermination 59. On March
18, 2020, DSMC filed its public comments, maintaining that it was unnecessary for
Commerce to proceed to an analysis under 19 C.F.R. § 351.225(k)(2) as “the scope
language unambiguously covers cupwheels,” and that if the language is ambiguous,
then the 19 C.F.R. § 351.225(k)(1) factors are dispositive. Pl. Diamond Sawblades Mfrs.’
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Coal.’s Comments on Final Results of Redetermination Pursuant to Remand 4 (Mar. 18,
2020), ECF No. 35 (“DSMC’s Remand Comments”). DSMC also states that Commerce’s
determination on remand in regards to the (k)(2) factors is flawed and “inadequately
explained, unsupported by substantial evidence, are inappropriately divorced from the
scope language itself, and rest on an overly narrow interpretation of certain (k)(2)
factors.” Id. On May 8, 2020, Commerce responded to DSMC’s Remand Comments and
requested that the court sustain its Remand Redetermination. Def.’s Resp. to
Comments on Remand Results 18 (May 8, 2020), ECF No. 38 (“Def.’s Reply”).
The court now considers the Remand Redetermination.
II. Jurisdiction and Standard of Review
As in the prior opinion and order, the court exercises jurisdiction according to
section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c), under which the
court reviews actions commenced under section 516A of the Tariff Act of 1930, as
amended, 19 U.S.C. § 1516a.
The court sustains Commerce’s determinations unless they are “unsupported by
substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i). Substantial evidence refers to “such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion,” SKF USA, Inc. v.
United States, 537 F.3d 1373, 1378 (Fed. Cir. 2008) (quoting Consol. Edison Co. v. Nat’l
Labor Relations Bd., 305 U.S. 197, 229 (1938)), and under this standard, the court will
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uphold a determination by Commerce provided that Commerce chooses from among
the range of possible and reasonable conclusions based on the record. However,
although “Commerce is entitled to substantial deference with regard to its
interpretations of its own antidumping duty order,” King Supply Co., LLC v. United
States, 674 F.3d 1343, 1348 (Fed. Cir. 2012) (citation omitted) “[t]his broad deference is
not unlimited . . . ‘Commerce cannot interpret an antidumping order so as to change the
scope of that order, nor can Commerce interpret an order in a manner contrary to its
terms.’” Id. (quoting Walgreen Co. v. United States, 620 F.3d 1350, 1354 (Fed. Cir. 2010)).
III. Discussion
The court sustains the Department’s scope ruling. Commerce has made the
determination that Lyke’s cupwheels do not fall within the scope of the Order, and this
determination is supported by substantial evidence on the record. The Department
correctly applied the regulatory framework of 19 C.F.R. § 351.225(k)(2) in conducting its
analysis and has complied with the court’s directives in Diamond Sawblades I.
To determine whether a certain product is within the scope of an order,
Commerce first must consider the language of the order itself. See Arcelormittal Stainless
Belgium N.V. v. United States, 694 F.3d 82, 87 (Fed. Cir. 2012). If the scope language of
the order does not unambiguously cover or not cover the product in question,
Commerce then will take into account the descriptions of the merchandise contained in
sources identified in 19 C.F.R. § 351.225(k)(1) (commonly referred to as the (k)(1)
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sources). See Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1382–83 (Fed. Cir. 2005).
If the descriptions of the merchandise in the (k)(1) sources are not dispositive,
Commerce is required to consider five additional factors, enumerated in 19 C.F.R.
§ 351.225(k)(2). These “(k)(2)” factors are: (i) the physical characteristics of the
merchandise; (ii) the expectations of the ultimate purchasers; (iii) the ultimate use of the
product; (iv) the channels of trade in which the product is sold; and (v) the manner in
which the product is advertised and displayed. 19 C.F.R. § 351.225(k)(2). In
considering these five factors, “it is well settled” that Commerce has discretion in how
to weigh and balance these factors. Meridian Prods., LLC v. United States, 851 F.3d 1375,
1382 (Fed. Cir. 2017) (citing to Novosteel SA v. United States, 25 CIT 2, 15, 128 F. Supp. 2d
720, 732 (2001)) (internal quotation marks omitted). However, when Commerce
conducts this inquiry and analysis according to the strictures of 19 C.F.R.
§ 351.225(k)(1)&(2), the Department’s inquiry still must center on the scope language of
the antidumping duty order, for the Department’s role in issuing a scope ruling is to
interpret, not modify, the scope language. Duferco Steel, Inc. v. United States, 296 F.3d
1087, 1095 (Fed. Cir. 2002). As a practical matter, this must include consideration of the
record information contained in the scope ruling request, which ordinarily will include,
inter alia, “[a] detailed description of the product, including its technical characteristics
and uses.” 19 C.F.R. § 351.225(c)(1)(i).
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In Diamond Sawblades I, the court held that the text of the scope of the Order did
not resolve the scope dispute in and of itself because the term “sawblade” was not
clearly defined and the scope was susceptible to interpretation.3 Diamond Sawblades I, 43
3 The Order includes within its Scope:
[A]ll finished circular sawblades, whether slotted or not, with a working part
that is comprised of a diamond segment or segments, and parts thereof,
regardless of specification or size, except as specifically excluded below. Within
the scope of these orders are semifinished diamond sawblades, including
diamond sawblade cores and diamond sawblade segments. Diamond sawblade
cores are circular steel plates, whether or not attached to non-steel plates, with
slots. Diamond sawblade cores are manufactured principally, but not
exclusively, from alloy steel. A diamond sawblade segment consists of a mixture
of diamonds (whether natural or synthetic, and regardless of the quantity of
diamonds) and metal powders (including, but not limited to, iron, cobalt, nickel,
tungsten carbide) that are formed together into a solid shape (from generally, but
not limited to, a heating and pressing process).
Diamond Sawblades and Parts Thereof From the People’s Republic of China and the Republic of
Korea, 74 Fed. Reg. 57,145, 57,145 (Int’l Trade Admin. Nov. 4, 2009) (“Order”). The
Order also contains several exclusions to this scope language:
Sawblades with diamonds directly attached to the core with a resin or
electroplated bond, which thereby do not contain a diamond segment, are not
included within the scope of the order. Diamond sawblades and/or sawblade
cores with a thickness of less than 0.025 inches, or with a thickness greater than
1.1 inches, are excluded from the scope of the order. Circular steel plates that
have a cutting edge of non- diamond material, such as external teeth that
protrude from the outer diameter of the plate, whether or not finished, are
excluded from the scope of the order. Diamond sawblade cores with a Rockwell
C hardness of less than 25 are excluded from the scope of the order. Diamond
sawblades and/or diamond segment(s) with diamonds that predominantly have
a mesh size number greater than 240 (such as 250 or 260) are excluded from the
scope of the order.
(continued . . .)
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CIT at __, 405 F. Supp. 3d at 1352. Thus, Commerce needed to take the “descriptions of
the merchandise contained in the petition, the initial investigation, and the
determinations of the Secretary (including prior scope determinations) and the
[International Trade] Commission” into account. 19 C.F.R. § 351.225(k)(1). As the court
determined the (k)(1) sources were not dispositive in Diamond Sawblades I, 43 CIT at __,
405 F. Supp. 3d at 1358, Commerce was required to turn to the (k)(2) factors as well in
making its determination.
Upon analyzing the (k)(2) factors, Commerce determined that four of the five
factors supported the determination that Lyke’s cupwheels are not covered by the scope
of the Order on diamond sawblades from China, and that the last factor, the channels of
trade in which the product is sold, is not dispositive to the analysis. Remand
Redetermination 59. In response, DSMC asserts that Commerce erred in its analysis and
its decision must be overturned. DSMC’s Remand Comments 4. Therefore, the court
now addresses Commerce’s analysis of each of these factors in its Remand
Redetermination to determine whether the Department’s conclusions are reasonable
and supported by substantial evidence on the record.
(. . . continued)
Id. The Order does not define the term “sawblade.”
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A. Physical Characteristics of the Product
The first of the (k)(2) factors instructs Commerce to review the physical
characteristics of the product to determine whether the product, in this case cupwheels,
have the same physical characteristics as the product subject to the Order. 19 C.F.R.
§ 351.225(k)(2)(i). After looking at the physical characteristics of the cupwheels,
Commerce determined that “cupwheels are physically distinguishable from diamond
sawblades.” Remand Redetermination 18. In concluding this, Commerce relied on the
finding that a diamond sawblade must have an “attacking” or “cutting” edge to be
considered subject to the Order. Id. at 19. “[D]iamond segments must be attached to
the outer periphery of the core (creating an ‘attacking edge,’ or ‘cutting edge’) to be
within the scope of the [] Order.” Id. These “attacking” or “cutting” edges can be one of
several types, as detailed in Commerce’s questionnaires: “(‘Standard segment with
undercut,’ ‘Standard segment without undercut,’ ‘Turbo,’ ‘Continuous,’ ‘Other (please
describe),’ or ‘Not applicable (cores)’).”4 Id. at 20. Commerce found that while
diamond sawblades have a “cutting” edge or an “attacking” edge of one of the varieties
listed in the questionnaire, cupwheels, due to the fact the diamonds are attached to the
4 Commerce also clarified that the “Not applicable (cores)” designation identified
in Commerce’s antidumping duty questionnaire corresponds to the “Parts Thereof” of
the scope of the Diamond Sawblades Order, and therefore refers to an unfinished
diamond sawblade. Final Results of Remand Redetermination (Feb. 3, 2020), Rem. P.R.
Doc. 15, ECF No. 30 (“Remand Redetermination”). Neither DSMC nor Lyke argue that
Lyke’s cupwheels are unfinished products.
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bottom of the cup, do not. Id. at 18–19. Commerce also found that in regards to the
“Other (please describe)” category, “there is no evidence that this option was intended
to encompass cupwheels, which are designed to grind flat surfaces and therefore do not
have a ‘cutting edge’ to identify.” Id. at 38.
The Department’s finding that Lyke’s cupwheels have diamonds attached to the
bottom of the cup and therefore do not have an “cutting” edge is supported by the
record evidence. Lyke described its cupwheels, in its scope ruling request, as consisting
of a “steel plate that takes the shape of a cup or a hat – the center of the plate is concave
and the outside is flat. Diamond segments are installed on the flat surface of the plate.”
Lyke’s Scope Request 3; Remand Redetermination 5.
DSMC does not disagree that Lyke’s cupwheels have diamonds attached to the
bottom of the cup as opposed to an edge but questions the relevance of this physical
difference. DSMC’s Rebuttal Comments 11–12. Although Commerce determined that
“diamond segments must be attached to the outer periphery of the core (creating an
“attacking edge,” or “cutting edge”) to be within the scope of the [] Order,” Remand
Redetermination 19, DSMC argues that this insistence on a diamond sawblade having an
“attacking” edge to be within scope of the Order is a requirement engendered by
Commerce, and not found in the language of the Order itself, DSMC’s Rebuttal
Comments 9–12. DSMC therefore disagrees with Commerce’s assertion that for a
product to be a diamond sawblade, it needs to have a “cutting” or “attacking” edge.
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“In finding that cupwheels are so physically different from subject goods as to
constitute non-subject merchandise, Commerce begins from an unsound premise: that
subject goods are distinguished by having a ‘cutting’ or ‘attacking’ edge that results
from the placement of diamond segments on the outer periphery of the products.”
Id. at 9.
Commerce directly addresses DSMC’s argument: “Addressing DSMC’s
argument that the scope of the Order is indifferent to the location of segment placement,
Commerce explained that statements from DSMC and the ITC throughout the
investigation indicate that a product that does not have an attacking edge that
penetrates the material is not subject merchandise.” Def.’s Reply 9–10; see also Remand
Redetermination 39 (citing Order, 74 Fed. Reg. at 57,146 n.9; Final Determination of Sales at
Less Than Fair Value and Final Partial Affirmative Determination of Critical Circumstances:
Diamond Sawblades and Parts Thereof from the People’s Republic of China, 71 Fed. Reg.
29,303, 29,305 (Dep’t of Commerce May 22, 2006) (final determ.); Diamond Products and
Parts Thereof from China and Korea: Investigation Nos. 731-TA-1092 and 1093 (Final) 3,
USITC Publication 3862 (July 2006) (“ITC Report”)). As further support for this
conclusion, Commerce cites language from the Order itself, examining the Order’s
exclusions, which include “[c]ircular steel plates that have a cutting edge of non-
diamond material, such as external teeth that protrude from the outer diameter of the
plate, whether or not finished.” Order, 74 Fed. Reg. at 57,145; Def.’s Reply 10; Remand
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Redetermination 39. As Commerce notes, this scope exclusion language lends support to
Commerce’s reading in two ways:
First, it supports Commerce’s reading that the product must have a
“cutting edge” to be considered a sawblade. If the scope was intended to
cover merchandise without a cutting edge, the exclusionary language
might have instead addressed circular steel plates with a “cutting
element” or “working part” of non-diamond material. Second, it supports
Commerce’s interpretation that a cutting edge is formed by a cutting
element on the outer diameter of the core, rather than on the flat surface.
Therefore, this language supports Commerce’s conclusion that, because
Lyke’s cupwheels do not have diamond segments attached to the outer
diameter of the cores, they do not have a cutting edge and are physically
distinguishable from diamond sawblades.
Def.’s Reply 10. Besides relying on the scope language itself, Commerce explains that
the initial questionnaires it sent respondents also support the finding that a product
must have a “cutting” edge to be within the scope of the Order. Commerce had
requested that respondents identify the type of “cutting edge” their merchandise had
“for model matching purposes” and “Lyke’s cupwheels do not have a cutting edge at
all because the diamond segments in cupwheels are attached to the bottom of the cup,
not the rim.” Id. at 9; see also Remand Redetermination 19.
Commerce also concluded that there were other physical differences between
cupwheels and diamond sawblades. Remand Redetermination 20. “For example, we find
that with respect to physical form, Commerce’s questionnaire provides participating
respondents three options to identify the type of physical form of their merchandise,
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‘finished diamond sawblades,’ ‘cores,’ or ‘segment.’ Lyke’s cupwheels do not have any
of the physical forms listed in Commerce’s questionnaire.” Id. at 20.
DSMC disagrees with Commerce’s determination that cupwheels are physically
distinguishable from diamond sawblades. DSMC’s Remand Comments 8–12. DSMC
highlights that diamond sawblades are “physically distinguished from all other types of
sawblades by the presence of diamonds in the working part of the blade,” which work,
not by cutting materials, but by “milling” or “grinding” them. DSMC’s Rebuttal
Comments 5. According to DSMC, as cupwheels have diamonds on the working part
of the blade and they also “cut” through materials by grinding them, they meet the
description provided in the Petition of subject merchandise. Id.; see also Remand
Redetermination 6. Furthermore, DSMC argues that there are additional physical
similarities, such as “[b]oth diamond sawblades and cupwheels consist of a circular
steel core and diamond segments that are attached to the core” and “[b]oth diamond
sawblades and cup wheels also have a hole in the center of the core to allow them to be
attached to a grinding tool.” DSMC Rebuttal Comments 4–5. DSMC asserts further
that, similarly, the cores for cupwheels are typically convex or concave, and therefore
there are no differences in the diamond segments used for diamond sawblades and
cupwheels. Id. at 5; Remand Redetermination 7.
Commerce acknowledges these arguments from DSMC but indicates that it does
not find them persuasive as these comparisons between cupwheels and diamond
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sawblades are “overly generalized.” Remand Redetermination 20. For instance, under
DSMC’s analysis of physical characteristic similarities, a diamond core drill also would
be covered by the Order because it consists of a core and diamond segments and has a
hole in the center of the core for attaching the core drill bit to a grinding tool, despite the
fact that Commerce and the ITC already determined that diamond core drill bits were
non-subject merchandise. Id. at 21.
Taken altogether, Commerce emphasizes that the location of the diamonds on
the product is strongly determinative of whether that product is within the scope of the
Order, and that cupwheels and diamond sawblades were physically distinguishable
largely based on this difference. Id. at 21. Commerce’s decision to rely on the location
of the diamonds within the product, and the Department’s finding that to constitute a
diamond sawblade within the scope of the Order the product must have an “attacking”
or “cutting” edge is not unreasonable, despite plaintiff’s protestations to the contrary.
This finding is supported by the record read as a whole, including Commerce’s
questionnaires, the language in the Petition, the investigation, the ITC report, and the
scope language of the Order. Id. at 35–40.
Contrary to what DSMC argues (“[i]ndeed, the Court already found, in the
decision remanding this action, that the (k)(1) materials do not support Commerce's
conclusion that cupwheels are out-of-scope products by reason of edge type or segment
placement”), DSMC’s Remand Comments 12, the court did not instruct Commerce that
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the (k)(1) materials did not support Commerce’s conclusions regarding what constitutes
a diamond sawblade. Instead, the court found that the (k)(1) analysis, without
additional evidence coming from the (k)(2) factors, was not sufficient to uphold the
Department’s determination. “Commerce has failed to demonstrate that Lyke’s
cupwheels are not within the scope of the order based solely on the three sources
available under 19 C.F.R. § 351.225(k)(1).” Diamond Sawblades I, 43 CIT at __, 405
F. Supp. 3d at 1353. The court did not instruct Commerce to ignore the record as a
whole or discount evidence in the language of the Order itself or from (k)(1) sources
when doing its (k)(2) analysis.
B. Expectations of the Ultimate Purchaser and the Manner in Which the
Product is Advertised and Displayed
Commerce analyzes the second and fifth (k)(2) factors, the “expectations of the
ultimate purchasers” and “the manner in which the product is advertised and
displayed” in tandem. See 19 C.F.R. § 351.225(k)(2)(ii), (v). Commerce determined that
the record regarding these factors supports a finding that cupwheels and diamond
sawblades are advertised and displayed differently, and that the expectations of the
ultimate purchaser differ with each product. Remand Redetermination 21–25, 46–54.
Commerce reviewed evidence put on the record both by Lyke and by DSMC
regarding the expectations of the ultimate purchaser. Commerce analyzed consumer
reviews posted to websites, website advertisements and product descriptions, and an
affidavit provided by DSMC. Id. at 48–53. Commerce compared the reviews posted by
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consumers who purchased diamond sawblades with reviews posted by consumers who
purchased grinding cupwheels and concluded that the consumers have different
expectations of each product. Id. at 49–50. For instance, Commerce found that the
websites and advertisements showed that diamond sawblades are advertised as cutting
through hard material and that cupwheels are advertised as tools designed to grind,
level or smooth surfaces of hard material. The expectations of the ultimate purchaser
similarly differ. “Commerce also observed that the ‘related searches,’ ‘customers also
viewed,’ and ‘related items’ features of these websites supported finding that diamond
sawblades and cupwheels are distinct products.” Def.’s Reply 14; Remand
Redetermination 10. In fact, “[n]one of the advertisements placed on the record by
parties identify ‘grinding cupwheels’ as a diamond sawblade.” Remand Redetermination
50–51. Based on evidence such as this, Commerce permissibly found that the
expectation of the end purchaser was different for each product. Id. at 23–24.
DSMC’s central argument is that, “in reaching this determination, Commerce has
gone beyond its proper role of interpreting the current scope language, and has strayed
into the realm of amendment.” DSMC’s Remand Comments 12. DSMC argues that
Commerce is making an irrelevant distinction between grinding or polishing material
as opposed to cutting it, as the scope language of the Order “does not define subject
goods based on spin direction and location of segment placement (or whether these
result in a ‘cutting’ or ‘grinding’ action).” Id. at 14–15. Additionally, DSMC argues that
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diamond sawblades and cupwheels are both advertised as being used for cutting,
creating that consumer expectation. DSMC’s Comments 5–7, DSMC’s Rebuttal
Comments 6–7; DSMC’s Remand Comments 12–13. According to DSMC, both
diamond sawblades and cupwheels are expected to grind or abrade material by way of
contact between the diamond segments and the material at issue, and that purchasers
expect that the diamond sawblades and cupwheels both will be able to maintain its
strength during the grinding and abrading process. DSMC’s Rebuttal Comments 5.
Commerce addresses DSMC’s evidence, noting that DSMC put on the record a
printout of a website (U.S. Diamond) where it describes diamond sawblades and its
uses. Remand Redetermination 22–23; DSMC’s Comments Ex. 2. The website excerpt
reads: “Are you looking to cut block? If so, you’ll want a diamond blade. . . Diamond
saw blades have diamonds fixed on their edges which allow for cutting hard or abrasive
materials. There are many types of diamond blades, and they have many uses,
including cutting stone, concrete, asphalt, bricks and many others.” DSMC’s
Comments Ex. 2 (emphasis added). The same website states that cup grinding wheels
are used for “grinding and polishing.” Id. (emphasis added). Lastly, the website also lists
diamond sawblades and cupwheels separately in its search function, which Commerce
took as support for the finding that they are considered distinct, non-fungible products.
Remand Redetermination 23.
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DSMC argues that the Home Depot website describes cupwheels as being used
for “cutting,” an argument that Commerce found took the word “cutting” out of
context. For instance, Home Depot’s website stated that “the 4-inch Double Row
Diamond Cup Wheel” is engineered “for maximum cutting performance,” which
DSMC argues supports the determination that the ultimate purchaser’s expectation of
cupwheels is to cut into materials. DSMC’s Rebuttal Comments 6, Ex. 2; Remand
Redetermination 11. However, Commerce, in reviewing the full description of the
product in the Home Depot website, noted that the description of the cupwheel
includes additional language, such as the cupwheels are “engineered with top-grade
industrial diamond for maximum cutting performance and superior grinding life” and
that the cupwheels could be used for a range of projects including “shaping and
polishing [] concrete surfaces and floors, to fast aggressive concrete grinding or leveling
and coating removal.” Remand Redetermination 23. The description also noted that the
cupwheels have “faster grinding and longer life than standard abrasive grinding
wheels,” indicating that this particular cupwheel was being advertised as superior to
other “abrasive grinding wheels,” and not being advertised in relation to its ability to
function as a diamond sawblade. Id. at 24. Taken all together, Commerce made the
reasonable finding that the word “cutting” in the context of the advertisement meant
that the cupwheels were being advertised as designed to cut materials in a parallel
fashion, grinding or polishing the surface of a material, rather than cutting into a
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material in a perpendicular fashion as one would expect from a diamond sawblade.
Remand Redetermination 24.
Lastly, Commerce considers the affidavit submitted by DSMC from an official at
a company that manufactures and sells diamond sawblades and cupwheels which
claims that “all diamond sawblades and cup wheels are expected to grind or abrade
materials by pressing the diamond segments against said materials.” DSMC’s
Comments Ex. 1. Commerce discounts this affidavit in light of the other evidence on
the record, Remand Redetermination 22–23, stating that Commerce “considered this
second-hand explanation of the expectations of customers to be less compelling
evidence of consumer expectations than the direct reviews posted from consumers
themselves,” Def.’s Reply 14.
Commerce ultimately found that the consumer reviews from websites like Home
Depot and Lowes, as well as the advertisement printouts from the same, supported
Commerce’s finding that the expectations of the ultimate purchasers are different for
cupwheels and diamond sawblades, and that the manner in which these products are
advertised and displayed also differ by the type of product. Remand Redetermination 24–
25. “That is, based on the consumer reviews and the advertisements of both diamond
sawblades and cupwheels, we find that consumers would, for example, purchase a
diamond sawblade if they expected to use the tool to cut a block of concrete from a
driveway (diamond sawblades ‘allow for cutting hard or abrasive materials’), and they
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would purchase a cupwheel if they expected to “grind and polish hard or abrasive
materials.” Id. at 25.
Because Commerce reviewed the record evidence, acknowledged and addressed
both DSMC’s and Lyke’s comments, and came to a conclusion supported by the record,
it was not unreasonable for Commerce to conclude that diamond sawblades and
cupwheels are advertised differently and that ultimate purchasers have different
expectations for each product.
C. Ultimate Use of the Product
With respect to the ultimate use of the product, 19 C.F.R. § 351.225(k)(2)(iii),
Commerce found that diamond sawblades were used for cutting hard materials while
cupwheels were used for grinding, leveling, or polishing hard materials. Remand
Redetermination 25. In coming to the conclusion that the products were ultimately used
differently, Commerce partly relied on the U.S. Diamond website placed onto the
record by DSMC, which indicated that diamond sawblades were used to cut block,
while another source provided by DSMC, a printout from Wikipedia describing
cupwheels, noted that they were used for grinding concrete and stone or could be used
to remove paints or other surface coatings. Id. at 26. Commerce also reviewed the end
use description used by the ITC stating that diamond sawblades end use was to cut
concrete, stone, and other hard materials. Diamond Sawblades and Parts Thereof from
China and Korea, Prehearing Report to the Commission on Investigation Nos. 731-TA-1092-
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1093 (Final) (May 2, 2006). Therefore Commerce found that “based on the information
on the scope record, the ITC’s description of the end use of the products, and
Commerce’s experience in conducting numerous administrative reviews in this
proceeding, we find that the ultimate use of Lyke’s cupwheel is not the same as the
ultimate use of diamond sawblades.” Remand Redetermination 27.
DSMC argues that diamond sawblades “do not actually cut materials, rather,
diamond sawblades mill (i.e., grind) them.” DSMC’s Rebuttal Comments 5; see also
DSMC’s Remand Comments 19–22. According to DSMC, this is also how cupwheels
are used, and that to the extent diamond sawblades are used for cutting, so too are
cupwheels. DSMC’s Rebuttal Comments 8. “[B]oth diamond sawblades and
cupwheels are generally used to grind or abrade materials (i.e., cut) through contacting
the diamond segments with the material at issue. Thus, according to DSMC, the
ultimate use of diamond sawblades and cupwheels is the same.” Remand
Redetermination 14 (footnote omitted). Commerce agrees with DSMC that both diamond
sawblades and cupwheels, by virtue of their diamonds, do not, in a technical sense, cut
materials but instead grind them, but that “the manner in which diamond sawblades
cut hard or abrasive materials is by grinding the material in a perpendicular manner at
one specific point of the hard or abrasive material, such as how you would use a general
purpose saw blade or typical saw. However, based on the information provided on the
record, the ultimate use of a grinding cupwheel is to grind the material in a parallel
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manner similar to what one would expect from a sandpaper power tool.” Remand
Redetermination 25. Thus, despite both tools working by “grinding” the hard material,
one “cuts” into the material perpendicularly, and the other “polishes” the hard material
in parallel. This interpretation is supported by the U.S. Diamond website and the
Wikipedia pages put on the record by DSMC. As Commerce’s conclusion is supported
by the evidence on the record and it is reasonable to determine that cupwheels are used
to polish material while diamond sawblades are used to cut into material, the court
finds that Commerce appropriately analyzed this factor to find that cupwheels were
ultimately used differently than cupwheels.
D. Channels of Trade in Which the Product is Sold
Commerce agrees with DSMC that both diamond sawblades and cupwheels are
sold within similar channels of trade. See 19 C.F.R. § 351.225(k)(2)(iv); Remand
Redetermination 27, 59. Commerce notes that the record evidence shows that both
products are sold to distributors (retail outlets such as Home Depot and Lowes) and to
end-users. Thus, this (k)(2) factor, unlike the other four, supports a finding that
diamond sawblades and cupwheels should both be products within the scope of the
Order. However, Commerce permissibly found that the other four factors weighed in
favor of finding that Lyke’s cupwheels are not covered by the scope of the Order.
Commerce concluded that “[a]lthough we find that the channels of trade are relatively
the same for both products, we find that it is not indicative or dispositive that they are
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subject to the [] Order for the reasons outlined above.” Remand Redetermination 28. This
was appropriate, as it is it is well settled that Commerce has discretion in how to weigh
and balance (k)(2) factors, Meridian, 851 F.3d at 1382, and the court finds that it is not
unreasonable of Commerce in this case to allocate more weight to four (k)(2) factors
than to the one.
IV. Conclusion
As directed to in Diamond Sawblades I, Commerce undertook further evaluation
of whether cupwheels are within the scope of the antidumping duty order on diamond
sawblades from China, pursuant to the factors set forth in 19 C.F.R. § 351.225(k)(2). The
Department’s decision that Lyke’s cupwheels are not within the scope of the Order is
supported by substantial evidence, is a reasonable interpretation based on the evidence
entered in this record, and was determined in accordance with law. In reviewing
Commerce’s analysis under 19 C.F.R. § 351.225(k)(2), the court will not “substitute [its]
judgment for that of Commerce,” see Inland Steel Indus., Inc. v. United States, 188 F.3d
1349, 1359 (Fed. Cir. 1999), but instead will uphold Commerce's determination provided
it chooses from among the range of possible reasonable conclusions based on the
record. See SKF, 537 F.3d at 1378. Here, Commerce has done so. Accordingly, the court
sustains the Department’s determinations in full.
Judgment will enter accordingly.
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/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Dated:
New York, New York
October 7, 2021
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