Shanghai Eswell Enter. Co. v. United States

Slip Op. 08-124

UNITED STATES COURT OF INTERNATIONAL TRADE

SHANGHAI ESWELL ENTER. CO., :
LTD.; JINFU TRADING CO., LTD.; :
and ZHEJIANG NATIVE PRODUCE :
AND ANIMAL BY-PRODUCTS IMPORT :
& EXPORT GROUP CORP., : Before: Richard K. Eaton, Judge
:
Plaintiffs, : Court No. 05-00439
:
v. :
:
UNITED STATES, :
:
Defendant, :
:
and :
:
THE AMERICAN HONEY PRODUCERS :
ASSOCIATION OF AMERICA AND :
THE SIOUX HONEY ASSOCIATION, :
:
Def.-Ints. :
:

OPINION

[United States Department of Commerce’s Remand Results are
sustained.]

Dated: November 18, 2008

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Bruce M.
Mitchell, Ned H. Marshak, and Paul G. Figueroa), for plaintiffs.

Gregory G. Katsas, Assistant Attorney General; Jeanne E.
Davidson, Director, Reginald T. Blades, Assistant Director,
Commercial Litigation Branch, Civil Division, United States
Department of Justice (Jane C. Dempsey); Office of the Chief
Counsel for Import Administration, United States Department of
Commerce (Sapna Sharma), for defendant.

Kelley Drye & Warren LLP (Michael J. Coursey and R. Alan
Luberda), for defendant-intervenors.
Court No. 05-00439 Page 2
Eaton, Judge: In Shanghai Eswell Enterprise Co., Ltd. v.

United States, 31 CIT __, Slip Op. 07-138 (Sept. 13, 2007) (not

reported in the Federal Supplement)(“Shanghai Eswell I”), this

court sustained, in part, and remanded the final results of the

United States Department of Commerce’s (“Commerce” or the

“Department”) second administrative review of the antidumping

duty order on imports of honey from the People’s Republic of

China (“PRC”) for the period December 1, 2002, to November 30,

2003 (“POR”). See Honey from the PRC, 70 Fed. Reg. 38,873,

38,874 (Dep’t of Commerce July 6, 2005) (“notice”) and the

accompanying Issues and Decision Memorandum (June 27, 2005), Pub.

Doc. 341 (“Issues & Dec. Mem.”) (collectively, “Final Results”).

Commerce has now issued the Final Results of Redetermination

Pursuant to Court Remand (Dep’t of Commerce Feb. 11, 2008)

(“Remand Results”). Plaintiffs Shanghai Eswell Enterprise Co.,

Ltd. (“Shanghai Eswell”), Jinfu Trading Co., Ltd. (“Jinfu PRC”),

and Zhejiang Native Produce and Animal By-Products Import &

Export Group Corp. (“Zhejiang”) (collectively, “plaintiffs”) have

filed their comments to the Remand Results. See Pls.’ Comments

to Remand Results (“Pls.’ Comments”). In addition, Commerce has

filed its response to those comments, and defendant-intervenors

The American Honey Producers Association of America, Inc. and The

Sioux Honey Association (collectively, “defendant-intervenors”)

have filed their responses, as well. See Def.’s Resp. to Pls.’
Court No. 05-00439 Page 3
Comments (“Def.’s Resp.”); Def.-Ints.’ Resp. to Pls.’ Comments

(“Def.-Ints.’ Resp.”). Jurisdiction is had pursuant to 28 U.S.C.

§ 1581(c)(2000) and 19 U.S.C. § 1516a(a)(2)(B)(iii)(2000). For

the reasons set forth below, the Remand Results are sustained.

STANDARD OF REVIEW

The court reviews Commerce’s Remand Results under the

substantial evidence standard: “The court shall hold unlawful

any determination, finding, or conclusion found . . . to be

unsupported by substantial evidence on the record, or otherwise

not in accordance with law. . . .” 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Normal Value

In antidumping investigations, Commerce must determine

whether merchandise is sold, or is likely to be sold, at less

than fair value by making “a fair comparison . . . between the

export price,1 or constructed export price2 and normal value.”

1
The “export price” is “the price at which the subject
merchandise is first sold . . . by the producer or exporter of
the subject merchandise outside of the United States to an
unaffiliated purchaser in the United States or to an unaffiliated
purchaser for exportation to the United States,” as adjusted. 19
U.S.C. § 1677a(a).
2
“Constructed export price” is “the price at which the
subject merchandise is first sold . . . in the United States . .
. by or for the account of the producer or exporter of
such merchandise or by a seller affiliated with the producer or
Court No. 05-00439 Page 4
19 U.S.C. § 1677b(a). In cases where the subject merchandise

originates from a non-market economy (“NME”)3 country, such as

the PRC, Commerce usually determines normal value by employing

surrogate data to value the factors of production used to produce

the merchandise. See 19 U.S.C. § 1677b(c)(1). The Department

then adds “an amount for general expenses and profit plus the

cost of containers, coverings and other expenses.” Id.

A. Valuation of Factors of Production: Raw Honey

In its Final Results, Commerce relied on Indian data from

the website maintained by EDA Rural Systems Pvt. Ltd. (“EDA”) to

calculate the value of raw honey.4 In response, plaintiffs

exporter, to a purchaser not affiliated with the producer or
exporter,” as adjusted. 19 U.S.C. § 1677a(b).
3
A “nonmarket economy country” is “any foreign country
that [Commerce] determines does not operate on market principles
of cost or pricing structures, so that sales of merchandise in
such country do not reflect the fair value of the merchandise.”
19 U.S.C. § 1677(18)(A). “Because it deems China to be a
nonmarket economy country, Commerce generally considers
information on sales in China and financial information obtained
from Chinese producers to be unreliable for determining, under 19
U.S.C. § 1677b(a), the normal value of the subject merchandise.”
Shanghai Foreign Trade Enters. Co. v. United States, 28 CIT 480,
481, 318 F. Supp. 2d 1339, 1341 (2004). Therefore, because the
subject merchandise comes from the PRC, Commerce constructed
normal value by valuing the factors of production using surrogate
data from India. See 19 U.S.C. § 1677b(c)(4).
4
Commerce explained: “In selecting the EDA Data, the
Department determines that the raw honey pricing data in this
article is the best information currently available because it is
publicly available, quality data, specific to the raw honey
(continued...)
Court No. 05-00439 Page 5
contended that Commerce had not adequately considered evidence of

a decline in honey prices during the second half of the POR and

cited data from the World Trade Atlas (“WTA”) as evidence of this

decline. Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at 8;

see Pls.’ Comments at 2-5.

In Shanghai Eswell I, the court found merit in plaintiffs’

arguments. Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at

9-10. Thus, the court directed Commerce to

either (1) address the evidence cited by
plaintiffs and explain whether and how the
observed decline in prices during the second
half of the POR is reflected in its
calculation of the value of raw honey; or (2)
recalculate the value to reflect a reasonable
interpretation of the record evidence
concerning the decline.

Id. at __, Slip Op. 07-138 at 11.

On remand, Commerce addressed the evidence of a price

decline offered by plaintiffs: 1) the WTA data; and 2) three

additional sources, specifically, two news articles and the

statements of a journalist.

1. World Trade Atlas Data

On remand, Commerce claims that it did not use the WTA data

offered by plaintiffs for two reasons: (1) because “the WTA

4
(...continued)
beekeeping industry in India, and contemporaneous with the POR.”
Issues & Dec. Mem. at 10.
Court No. 05-00439 Page 6
export data represent export prices from India to other

countries,” and that this data does not necessarily “accurately

reflect the market value of the goods within the country of

exportation”; and (2) because the Harmonized Tariff heading

(“HTS”)5 on which the WTA data is based is a “basket category”

that may include merchandise other than raw honey. Remand

Results at 5-6.

As to the use of export data, Commerce insists that the WTA

data, and export data generally, are not “a reliable source for

valuing inputs or serving as an indicator of internal pricing

trends because [Commerce] could not ascertain whether export

prices reflected or mirrored the domestic prices of honey in the

marketplace.” Def.’s Comments 3 (citations omitted). Thus, the

Department would have “no way of knowing if export prices mimic

5
The heading upon which the WTA data is based, HTS
0409.00.00 is described as “natural honey” in the Harmonized
Tariff Schedule of the United States (“HTSUS”). See HTSUS, USITC
Pub. 3477, sec. 1, ch. 4, at 35 (2002). HTSUS is a listing of
classifications of all goods imported into the United States and
the accompanying duties on those imports.

The Explanatory Notes to this heading describe it as covering
“honey produced by bees (Apis mellifera) or by other insects,
centrifuged, or in the comb or containing comb chunks, provided
that neither sugar nor any other substance has been added. Such
honey may be designated by floral source, origin or color.”
Harmonized System Explanatory Notes 04.09 (2d ed. 1996). The
court notes that, while the explanatory notes are not legally
binding, they are persuasive and considered “generally indicative
of the proper interpretation of a tariff provision.” Drygel,
Inc. v. United States, 541 F. 3d 1129, 1134 (Fed. Cir.
2008)(citations and quotation omitted).
Court No. 05-00439 Page 7
or even reflect domestic prices in the marketplace.” Remand

Results at 5. In other words, Commerce does not find the WTA

data to be the best available information6 because, unlike the

EDA data, there is no evidence on the record demonstrating that

the WTA data reflect domestic prices.

In their comments, plaintiffs do not directly address

Commerce’s claim that record evidence does not support the

conclusion that export prices necessarily reflect domestic

prices. Rather, plaintiffs insist that Commerce’s argument that

export prices are not reliable as a source for valuing domestic

inputs is “reversible legal error” because it “summarily rejects

declining export prices as evidence that Indian raw honey prices

declined during the [POR].” Pls.’ Comments 4.7

6
In choosing surrogate values, Commerce is directed to
value the factors of production based on “the best available
information regarding the values of such factors in a market
economy country or countries considered to be appropriate by the
administering authority.” 19 U.S.C. § 1677b(c)(1).
7
In addition, plaintiffs contend that the Department’s
claim that export prices do not necessarily reflect domestic
prices has been “effectively overruled” by Fuyao Glass Indus.
Group Co. v. United States, 27 Int’l Trade Rep. (BNA) 1328 (Ct.
Int’l Trade 2005) (“Fuyao”) which rejected the Department’s
position that export prices were unreliable based solely upon
speculation that subsidies may have affected these prices. Pls.’
Comments 3.

Contrary to plaintiff’s argument, however, Fuyao is
inapplicable in this case because Commerce did not decline to use
the WTA export data based on a suspicion of export subsidies.
Rather, Commerce explicitly stated that the WTA export data “may
not accurately reflect the market value of the goods within the
(continued...)
Court No. 05-00439 Page 8
With respect to the HTS heading upon which the WTA data is

based, Commerce finds that even if it were to

accept export data in this instance for
purposes of evaluating domestic pricing
trends, we do not find the WTA export data to
constitute an acceptable source for such
because the category of merchandise covered
by the data is much broader than the
merchandise covered by the scope of the
order.

Remand Results at 6. To support this position, Commerce claims

that the WTA export data is based upon an HTS heading that

“includes exports of both raw honey and processed honey, and may

include specialty forms of honey in jars, bottles, etc.” Remand

Results at 6. That this category of merchandise includes

processed honey is not contested, and plaintiffs specifically

note in their comments that the record contained “data for over

70 percent of Subheading8 [0409.00.00] merchandise . . . which

revealed that these exports consisted of processed and filtered

honey packaged in drums.” Pls.’ Comments 4 (footnote omitted).

As Commerce notes, because a basket category may not reflect

prices solely of subject merchandise “[w]hen valuing respondents’

factors of production (“FOPs”) the Department prefers product

specific tariff classifications rather than basket tariff

provisions, unless there is no other available information.”

7
(...continued)
country of exportation.” Remand Results at 5.
8
Plaintiffs refer to heading 0409.00.00 as a subheading.
Court No. 05-00439 Page 9
Remand Results at 6 (citations omitted). As a result, Commerce

does not find the WTA data to be the best available information

to value raw honey, particularly because the record contains the

EDA data which reflects the price solely of raw honey, the

subject of the review. Accordingly, on remand the Department

does not consider the evidence derived from the WTA export data

as probative of a decline in raw honey prices during the latter

half of the POR.

Plaintiffs sole argument in response is that “[t]he

Department’s belief that the HTS category [used in the WTA data]

is ‘broad and expansive’ is simply wrong. Subheading

[0409.00.00] is not a ‘basket’ HTS subheading encompassing

multiple products. It is limited to honey – the precise product

subject to this investigation.” Pls.’ Comments 4 (citation

omitted).

The court sustains Commerce’s findings and holds that

Commerce supports with substantial evidence its reasons for

excluding the WTA data. First, Commerce fully explains the basis

for its decision not to rely on the WTA data as evidence of a

decline in honey prices. Specifically, the Department explains

that the WTA data represents export data, and that being the

case, Commerce has no way of determining if this export data

reflects domestic prices. Put another way, there is no evidence

on the record showing that the WTA data reflects domestic prices,
Court No. 05-00439 Page 10
in contrast to the EDA data which does reflect domestic pricing.

The court therefore finds that the Department’s decision to

exclude the WTA data in favor of the EDA data was reasonable and

supported by substantial evidence. See Shakeproof Assembly

Components Div. of Ill. Tool Works, Inc. v. United States, 23 CIT

479, 481, 59 F. Supp. 2d 1354, 1357 (1999) (“The statute requires

Commerce to use the best available information, but does not

define that term . . . . If Congress had desired to restrict the

material on which Commerce could rely, it would have defined the

best available information.”) (footnote and citation omitted).

Second, Commerce explains that, in addition, it did not use

the WTA data because they are for a broad category of honey

products, not just raw honey, and thus may not accurately

represent prices for raw honey. Plaintiffs do not address how

the price for this HTS heading, which includes both processed and

raw honey, is calculated. More to the point, plaintiffs fail to

explain if and how the data for export prices under HTS

0409.00.00 were affected (i.e., skewed upward) by the inclusion

of processed honey in this category. Accordingly, this

information cited by plaintiffs does not constitute substantial

evidence of a price decline during the second half of the POR.
Court No. 05-00439 Page 11
2. Other Evidence Regarding Price Decline

On remand, in reaching its determination on surrogate value,

Commerce chose not to use evidence from three additional sources

that plaintiffs put on the record in the administrative review to

support their argument that the WTA data reflected a price

decline during the second half of the POR. These three sources

are: (1) “Honey Sweet Despite Price Fall,” published by the

Tribune of India on December 15, 2003, giving a range of honey

prices for 2003 as between 105 and 65 rupees (“Tribune article”);

(2) statements by the author of the Tribune article who advised

Commerce that in September 2003, honey prices were between 45 and

75 rupees (“prices from the journalist”); and (3) “Prospects of

Bee Keeping in Rubber Plantations of Kerala,” from Indiainfoline,

giving the range of honey prices in September 2003 as between 40

and 42 rupees (“Indiainfoline article”).9 Def.’s Comments 6 n.

1; see also Pls.’ Comments 5.

As stated, on remand Commerce was instructed to explain how

plaintiffs’ proffered evidence of a price decline was taken into

account in the Final Results. Commerce explains in the Remand

Results that, because the WTA export data primarily relied upon

by plaintiffs did not demonstrate the alleged decline in raw

9
Indiainfoline is a financial services company focused
on industry in India. Among other things, it provides research
and content for brokerage, commodities, mutual fund and portfolio
management services businesses. See Indiainfoline,
http://www.indiainfoline.com (last visited Nov. 18, 2008).
Court No. 05-00439 Page 12
honey prices within India, it had not “specifically addressed”

three other sources offered by plaintiff as further evidence of a

price decline in the Final Results. See Def.’s Comments 6;

Remand Results at 23. On remand, Commerce has addressed

arguments made by defendant-intervenors on remand regarding the

additional sources, outlining its reasons for rejecting the

evidence from these three sources. Plaintiffs claim that,

nonetheless, the Department has still “failed to explain the

basis of its decision” to exclude this material. Pls.’ Comment

6.

Despite plaintiffs’ claim, the court finds that the

Department has now given a sufficient explanation for rejecting

the additional sources. In reaching its determination on remand,

Commerce states, “the evidence contained in these two articles

and the prices from the journalist fail to demonstrate that raw

honey prices fell during the second half of the POR, or that our

calculation methodology resulted in an inappropriate surrogate

value for raw honey.” Remand Results at 23.

First, Commerce states that the surrogate value for raw

honey (74.9 rupees) “fell within the range of prices reported in

the Tribune article [from 105 rupees to 65 rupees] and provided

by the journalist [from 75 rupees to 45 rupees],” such that these

sources “did not undermine Commerce’s decision not to take into

account WTA export data or rejecting the use of the information
Court No. 05-00439 Page 13
in adjusting or determining the surrogate data.” Def.’s Comments

6 (citing Remand Results at 22). An examination of these sources

reveals that Commerce is correct in making these statements, and

thus these two sources do not provide substantial evidence for

plaintiffs’ claim of a price decline.

In addition, Commerce correctly notes that this court has

previously determined that the Indiainfoline article “was an

unreliable source for surrogate value data.” Def.’s Comments 7

(citing Remand Results at 22; Shanghai Eswell I, 31 CIT at __,

Slip Op. 07-138 at 7-8 (finding “the Indiainfoline article

contained nothing to indicate it was reliable. In particular,

there was ‘no additional information on the author’s

qualifications or the sources of his information’ other than his

status as a first-year business student.”) (quoting Wuhan Bee

Healthy Co. v. United States, 31 CIT __, __, Slip Op. 07-113 at

32-33 (July 20, 2007) (not reported in the Federal Supplement)

(“Wuhan I”)). Consequently, the Department maintains that “this

evidence fails to substantiate plaintiffs’ argument that the

surrogate honey price chosen by the Department was incorrect.”

Remand Results at 23 (citation omitted). The court finds no

reason to depart from this Court’s previous holding that the

Indiainfoline article is unreliable.

Thus, plaintiffs’ argument that Commerce on remand

“summarily rejected” the additional sources is unfounded. See
Court No. 05-00439 Page 14
Wuhan Bee Healthy Co. v. United States, 32 CIT __, __, Slip Op.

08-61 at 8 (May 29, 2008) (not reported in the Federal

Supplement) (“Wuhan II”) (citing United Steel, Paper and

Forestry, Rubber, Manufac., Energy, Allied Industr. and Service

Workers Int'l Union v. United States Sec'y of Labor, 32 CIT __,

__, Slip Op. 08-45 at 7 (Apr. 30, 2008) (“A fundamental

requirement of administrative law is that an agency set forth its

reasons for decision.”) (quotation and citation omitted)). Based

on the foregoing analysis, the court holds that Commerce's

surrogate value determination for the factor of production raw

honey is sustained.

B. Calculation of Surrogate Financial Ratios

Title 19 U.S.C. § 1677b (c)(1)(B) requires that the

calculation of normal value include amounts for “general expenses

and profit.” Accordingly, Commerce “usually calculates” separate

values for: (1) selling, general and administrative (“SG&A”)

expenses; (2) manufacturing overhead; and (3) profit, using

ratios derived from financial statements of companies that

produce identical or comparable merchandise in the surrogate

country. Wuhan I, 31 CIT at __, Slip Op. 07-113 at 41-42

(citation and quotation omitted).

In Shanghai Eswell I, the court affirmed the Department’s

reliance on data from Mahabaleshwar Honey Producers Cooperative
Court No. 05-00439 Page 15
Society, Ltd.’s (“MHPC”) financial statement as the “best

available information” for calculating surrogate financial

ratios. Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at 12.

The court, however, remanded for further explanation (1)

Commerce’s decision to include honey sales commissions in its

calculation of selling, general and administrative expenses

(“SG&A”),10 rather than using them to make an adjustment to

constructed value, and (2) Commerce’s failure to treat MHPC’s

expenses for jars, corks and honey machine purchases as direct

materials. Id. at __, Slip Op. 07-138 at 20, 26.

(1) Honey Sales Commissions

In its Final Results, Commerce determined that the honey

sales commissions found on the MHPC financial statements should

10
As this Court explained in Shanghai Foreign Trade:

[t]o calculate the SG&A ratio, the Commerce practice is
to divide a surrogate company’s SG&A costs by its total
cost of manufacturing. For the manufacturing overhead
ratio, Commerce typically divides total manufacturing
overhead expenses by total direct manufacturing
expenses. Finally, to determine a surrogate ratio for
profit, Commerce divides before-tax profit by the sum
of direct expenses, manufacturing overhead and SG & A
expenses. These ratios are converted to percentages
(“rates”) and multiplied by the surrogate values
assigned by Commerce for the direct expenses,
manufacturing overhead and SG & A expenses.

Shanghai Foreign Trade Enters. Co. v. United States, 28 CT 480,
482, 318 F. Supp. 2d 1339, 1341 (2004) (citations omitted).
Court No. 05-00439 Page 16
be included in the calculation of the surrogate SG&A ratio as

standard selling expenses.11

The court in Shanghai Eswell I held that Commerce had not

addressed plaintiffs’ argument that in this case sufficient

record evidence existed of an “exact correlation” between

Shanghai Eswell’s, Zhejiang’s, and the surrogate producer’s

expenses to enable Commerce to make a circumstances-of–sale

(“COS”) adjustment, and that remand was thus appropriate.

Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at 21. The

court remanded this issue to Commerce to explain in more detail

its determination that the record evidence was insufficient to

permit a COS adjustment in this case. Id. On remand, Commerce

continues to find that “honey sales commissions should be

included in the surrogate SG&A calculation,” primarily because

11
Under Commerce’s regulations, “direct selling
expenses” include “commissions . . . that result from, and bear a
direct relationship to, the particular sale in question.” 19
C.F.R. § 351.410(c)(2008). In a market economy proceeding,
Commerce is required to make a “circumstances-of-sale” adjustment
to (A) either export price or constructed export price; and (B)
normal value to account for differences in direct selling
expenses incurred in the United States and foreign markets. See
19 U.S.C. § 1677a(d)(1)(A) (providing for the reduction in the
price used to establish constructed export price by the amount of
any commissions for selling the subject merchandise in the United
States); 19 U.S.C. § 1677b(a)(6)(C)(iii) (providing for
adjustment to normal value for differences in circumstances of
sale). The purpose of the adjustment is to ensure that export
price and normal value are being compared on an “equivalent
basis” when Commerce makes its dumping determination. See Imp.
Admin. Antidumping Manual, Ch. 8 at 16 (Jan. 22, 1998) (available
at http://www.ia.ita.doc.gov).
Court No. 05-00439 Page 17
there is not sufficient evidence of an “exact correlation”

between Shanghai Eswell’s, Zhejiang’s, and the surrogate

producer’s expenses. Remand Results at 9.

For their part, plaintiffs claim that “the commission

expenses incurred by Shanghai Eswell and Zhejiang parallel the

expenses incurred by MHPC [the surrogate producer].” Pls.’

Comments 7. Plaintiffs argue that “MHPC incurs selling

commissions in its home market sales, which mirror exactly the

honey sale commission expense incurred by plaintiffs in their

sales in the U.S. market.” Id.

Commerce, however, disagrees. It states:

record evidence cited by plaintiffs reveals
that neither Shanghai Eswell, nor Zhejiang,
paid commissions on sales in the United
States as the exporter. Rather, the
commissions paid on U.S. sales were paid in
the United States by Shanghai Eswell’s and
Zhejiang’s U.S. affiliates.

Remand Results at 10 (citations omitted). By way of contrast,

“MHPC’s financial statement does not contain activity for

overseas affiliates; therefore, it is reasonable to conclude that

the commissions reflected on MHPC’s financial statement were

incurred and paid by MHPC itself within India.” Id.

Accordingly, Commerce finds that “an exact correlation did not

exist with respect to commissions between Shanghai Eswell,

Zhejiang, and the surrogate producer.” Def.’s Comments 8.

The court finds that Commerce has provided a sufficient
Court No. 05-00439 Page 18
explanation, supported by substantial evidence, for its decision

not to make a COS adjustment for commissions indicated on MHPC’s

financial statement. The record evidence does not demonstrate

that an exact correlation existed between the commissions paid by

Shanghai Eswell, Zhejiang, and the surrogate producer. This is

because the surrogate producer’s financial statement does not

contain entries relating to activity for overseas activity.

Thus, it is fair to assume that any commissions paid were for

home market sales. The commissions cited by Shanghai Eswell and

Zhejiang on the other hand, were paid in the United States by

their affiliates. Therefore, the record does not support with

substantial evidence a finding of an “exact correlation” between

the MHPC financials and plaintiffs’ actual experience. Beyond

claiming that an exact correlation exists, plaintiffs have not

pointed to any evidence to substantiate their claim. Thus, the

Department’s findings as to its inclusion of honey sales

commissions are sustained.

(2) Jars, Corks and Honey Machine Purchases

In its Final Results, Commerce did not include MHPC’s

expenses for (1) jars and corks and (2) honey machines in its

financial ratio calculation. See Issues & Dec. Mem. at 23;

Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at 22. Commerce

explained that its decision not to include these expenses was
Court No. 05-00439 Page 19
justified because these expenses “appear separately in both the

‘Sales’ and ‘Purchase’ columns, independent of the ‘Honey

Collection’ and ‘Honey Sale’ line items . . . .” Issues & Dec.

Mem. at 23.

In Shanghai Eswell I, the court noted that the chart of

these expenses in the MHPC financial statement, upon which

Commerce relied, “specifically pertains to honey sale and

collection” and that there was no evidence to support a

conclusion that the jars were used for anything other than

containers for honey. 31 CIT at __, Slip Op. 07-138 at 24-25.

As for the honey machines, the court found Commerce’s conclusion

that honey machines are a “productive asset” to be inadequately

explained. Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at

25. The court therefore remanded these issues and instructed

Commerce to further explain its decision not to include expenses

for jars, corks and honey machines in its financial ratio

calculation as direct expenses for producing finished honey. Id.

at __, Slip Op. 07-138 at 26.

As to jars and corks, on remand Commerce reconsiders its

treatment of expenses for jars and corks and revises its

financial ratios to include these expenses as direct material

costs. Remand Results at 15. With respect to honey machines,

Commerce continues to find that they are a productive asset and

therefore do not constitute a direct expense to be included in
Court No. 05-00439 Page 20
its financial ratio calculation. Id. at 16.

As to the honey machines, the Department explains that, in

accordance with generally accepted accounting principles

(“GAAP”), “[p]roductive assets are defined as tangible property

to be used in a productive capacity that will benefit the

enterprise for greater than one year” and that the purchase of

productive assets do not result in a direct expense. Id. In

addition, Commerce notes, honey machines are independently

itemized on MHPC’s financial statement. Id. at 16. Accordingly,

the Department finds that they are properly treated as a

productive asset to be depreciated, rather than as a direct input

to be expensed. Id.

It is worth noting that plaintiffs have not commented on the

Department’s Remand Results with respect to jars, corks or honey

machines. Accordingly, Commerce “may well be entitled to assume

that the silent party has decided, on reflection, that it concurs

in the agency’s [remand results], and the court will uphold the

parties’ concurrence.” Wuhan II, 32 CIT at __, Slip Op. 08-61 at

12 (quotation and citation omitted).

The court sustains the Department’s findings regarding the

treatment of jars, corks, and honey machines, as there is

substantial evidence on the record supporting its conclusions.

See Ceramica Regiomontana, S.A. v. United States, 10 CIT 399,

404-05, 636 F. Supp. 961, 966 (1986). The decision to include
Court No. 05-00439 Page 21
expenses for jars and corks in the financial ratios is supported

by a) the MHPC statement which “specifically pertains to honey

sale and collection,” and b) the lack of evidence to support a

conclusion that the jars were used for anything other than as

containers for finished honey. See Shanghai Eswell I, 31 CIT at

__, Slip Op. 07-138 at 24-25.

The court also finds that the Department’s explanation for

choosing to treat the honey machines as productive assets rather

than direct expenses is reasonable and supported by substantial

evidence. Specifically, honey machines fit the GAAP designation

of productive assets and are separately itemized on MHPC’s

financial statement. As a result, Commerce was correct to treat

them as a capital asset subject to depreciation rather than an

input to be expensed. The Remand Results are sustained with

respect to the treatment of these expenses.

II. Commerce’s Decision to Use Export Price for Jinfu PRC’s
United States Sales

In the Final Results, Commerce found that, prior to October

25, 2003, the date of the transfer document (“Certificate of

Transfer of Shares”), Jinfu PRC and Jinfu Trading (U.S.A.) Co.,

Ltd. (“Jinfu USA”)12 were not under common ownership or otherwise

12
As explained in Shanghai Eswell I, Jinfu USA is the
(continued...)
Court No. 05-00439 Page 22
“affiliated,” within the meaning of 19 U.S.C. § 1677(33)(F).13

See Issues & Dec. Mem. at 45. Because of this finding, Commerce

“treated any sales made between Jinfu PRC and Jinfu USA prior to

October 25, 2003, on an [export price] basis, while all sales

made after this date have been treated as [constructed export

price] sales.” Issues & Dec. Mem. at 45 (citations omitted).

In Shanghai Eswell I, the court sustained the Department’s

determination that CEO B,14 the chairman and CEO of Jinfu PRC, did

12
(...continued)
successor company to Yousheng Trading (U.S.A.) Co., Ltd.
(“Yousheng USA”), a company to which Jinfu PRC sold its honey
during the POR. On November 8, 2002, Yousheng USA filed an
amendment to its articles of incorporation changing its name to
Jinfu Trading (U.S.A) Co., Ltd. 31 CIT at ___, Slip Op. 07-138 at
27 n. 12.
13
In pertinent part, the statute provides:

The following persons shall be considered “affiliated”
or “affiliated persons”:

(F) Two or more persons directly or
indirectly controlling, controlled by,
or under common control with, any person
. . . .

For purposes of this paragraph, a person shall be
considered to control another person if the person
is legally or operationally in a position to
exercise restraint or direction over the other
person.

19 U.S.C. § 1677(33)(F).
14
As in Shanghai Eswell I, the court will apply the same
shorthand that it used most recently in Jinfu Trading Co. v.
United States, 32 CIT __, Slip Op. 08-38 (Apr. 4, 2008) (not
reported in the Federal Supplement). 31 CIT at __, Slip Op. 07-
(continued...)
Court No. 05-00439 Page 23
not own Jinfu USA prior to October 25, 2003.15 Shanghai Eswell I,

31 CIT at __, Slip Op. 07-138 at 29-30. The court, however, also

found that Commerce had failed to provide a sufficient

explanation for its determination on affiliation (which does not

necessarily entail ownership) and remanded this matter to

Commerce. Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at

34.

In accordance with the court’s remand instructions, Commerce

reexamined the record evidence. On remand, it continues to find

14
(...continued)
138 at 27 n. 13. Specifically, Jinfu USA’s sole employee is
referred to as “Mr. A”; the chairman and CEO of Jinfu PRC is
referred to as “CEO B”; and the original owner of Yousheng USA is
referred to as “Mr. D”. Id.
15
The Shanghai Eswell I court based its determination on
the Certificate of Transfer of Shares executed between CEO B and
Mr. D. The document provides, by its terms, that “This
certificate transfer is effective upon execution by the
undersigned,” and accordingly, that the document was not to gain
legal effect unless and until the parties signed it. Shanghai
Eswell I, 31 CIT __, Slip Op. 07-138 at 29 (citation omitted).
Moreover, despite the document being dated October 25, 2003, it
was apparently signed in December of 2003, and the parties
involved backdated the document to October 25, 2003. Id. at __,
Slip Op. 07-138 at 29 n. 15. Thus, the court found:

[t]he earliest possible effective date of the
ownership transfer agreement would be October
25, 2003. As a result, the court finds, as
it did in Jinfu I, that it cannot find as
unsupported by substantial evidence
Commerce’s determination that CEO B did not
have sole ownership of either Yousheng USA or
Jinfu USA prior to October 25, 2003.

Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at 29-30
(footnote, quotation and citations omitted).
Court No. 05-00439 Page 24
that the companies were not affiliated prior to October 25, 2003.

Remand Results at 18. Plaintiffs argue that this remand

determination is unsupported by substantial evidence. In

addition, plaintiffs contend that, in light of a recent United

States Court of Appeals for the Federal Circuit decision, the

court should revisit Commerce’s determination that the Chairman

and CEO of Jinfu PRC did not own Jinfu USA prior to October 25,

2003.

A. Commerce’s Determination That Jinfu PRC and Jinfu USA
Were Not Affiliated Until October 25, 2003

Plaintiffs claim that they have demonstrated that Jinfu PRC

and Jinfu USA were affiliated “during POR 2 [December 1, 2002

through November 30, 2003]”. Pls.’ Comments 11, 17. This Court

has held that Commerce is required to find affiliation where the

party alleging affiliation has demonstrated that “[t]wo or more

entities . . . share various control relationships whereby one

entity is legally or operationally in a position to exercise

restraint or direction over the other and that such relationship

provides one entity the significant potential for the

manipulation of price or production of the other.” Hontex

Enters., Inc. v. United States, 29 CIT 1096, 1101, 387 F. Supp.

2d 1353, 1358 (2005) (quotation and citation omitted); see also

19 U.S.C. § 1677(33) (“[A] person shall be considered to control

another person if the person is legally or operationally in a
Court No. 05-00439 Page 25
position to exercise restraint or direction over the other

person.”); 19 C.F.R. § 351.102(b)(3) (finding of control requires

that “the relationship has the potential to impact decisions

concerning the production, pricing, or cost of the subject

merchandise or foreign like product”).

The facts surrounding the affiliation of the two companies

have been the subject of earlier litigation in this Court. In

Jinfu Trading Co. v. United States, 32 CIT __, Slip Op. 08-38

(Apr. 4, 2008) (not reported in the Federal Supplement) (“Jinfu

III”), the Court sustained Commerce’s finding that Jinfu PRC was

not affiliated with Jinfu USA on or before November 2, 2002.

Having reviewed Jinfu III and having considered the parties

arguments, the court adopts the holding in Jinfu III and finds

that Jinfu PRC and Jinfu USA were not affiliated prior to

November 2, 2002.

Plaintiffs contend that, regardless of the Court’s ruling in

Jinfu III finding no affiliation during the new shipper review at

issue in that case, Commerce’s affiliation findings in this case

are not supported by substantial evidence. Specifically,

plaintiffs argue that record evidence exists to support a finding

that CEO B controlled Jinfu USA prior to the October 25, 2003

Certificate of Transfer of Shares. See Pls.’ Comments 12-14.

Plaintiffs argue that evidence of events occurring after November

2, 2002 demonstrates that the two companies were affiliated after
Court No. 05-00439 Page 26
that date but prior to October 25, 2003. First, plaintiffs

insist that “Mr. A expressly named CEO B as Jinfu USA’s President

in [an annual report] he filed with the State of Washington on

March 12, 2003.” Pls.’ Comments 13 (citations omitted). Second,

plaintiffs state that “CEO B was also named as Jinfu USA’s

President and owner in documents filed with the Internal Revenue

Service and Customs Service.” Pls.’ Comments 13. Finally,

plaintiffs contend that certain sale-specific documents were

signed by CEO B on behalf of Jinfu USA “in his capacity as

President of that company.” Pls.’ Comments 13 (citing Jinfu

Supplemental Section D Response (May 17, 2004), Administrative

Record (“AR”) Doc. 4[7] at Ex. 2 (Human Consumption Certificate

dated Aug. 19, 2003; Certificate of Non-Reimbursement of

Antidumping Duties dated Aug. 19, 2003)).

In response, Commerce states that the documents submitted by

Jinfu PRC, taken as a whole, do not constitute substantial

evidence that the two companies were affiliated prior to October

25, 2003. In addition, Commerce cites one post-November 2, 2002

document to support its case:

Jinfu USA’s Master License Application, filed
with King County, Washington on November 18,
2002, was signed by Jinfu USA’s sole
employee. We note that under the “Purpose of
Application” section, which instructs the
applicant to “Please check all boxes that
apply,” the only checked box is “Open/Reopen
Business.” The next box, “Change Ownership,”
is left blank. In addition, under “List all
owners: Sole proprietor, partners, officers,
Court No. 05-00439 Page 27
and LLC members,” Jinfu USA’s sole employee
only lists himself as the secretary. There
is no mention of any owner of Jinfu USA,
other than this employee asserting that he is
the owner.

Remand Results at 29 (citing Final Results at Comment 8). As to

the Master License Application, the court finds, and plaintiffs

do not dispute, that this document is substantial evidence that

no change with respect to affiliation occurred after November 2,

2002 and before November 18, 2002.

With respect to the documents cited by plaintiffs as

evidence that CEO B controlled Jinfu USA during the POR, the

court first turns to the March 12, 2003 submission to the state

of Washington. This one page annual report does indeed name CEO

B as president of Jinfu USA and was signed by Mr. A.

Nonetheless, this document, by itself, does not demonstrate

ownership of Jinfu USA by CEO B. As the court has previously

held, the earliest that the transfer of ownership could be found

is October 25, 2003, the date of the Certificate of Transfer of

Shares. See Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at

29-30 (The document provides, by its terms, that “‘This

certificate transfer is effective upon execution by the

undersigned.’ It is clear, therefore, that the Certificate of

Transfer of Shares was not to gain legal effect unless and until

the parties signed it.” Shanghai Eswell I, 31 CIT at __, Slip

Op. 07-138 at 29 (citation omitted)).
Court No. 05-00439 Page 28
Moreover, the March 12, 2003 document is scant evidence that

CEO B was in a position to exercise actual or potential control

over Jinfu USA. That is, because the overwhelming evidence up to

this point has been that Mr. A operated Jinfu USA independent of

CEO B’s control (see Jinfu III, 32 CIT at __, Slip Op. 08-38 at

15), Commerce is acting within its discretion in finding the bare

representation in the March 12 document that CEO B was president

of Jinfu USA is not by itself dispositive. In other words,

because the evidence to this point has been that Mr. A had sole

operational control of Jinfu USA, the March 12 document cannot be

said to be substantial evidence that the state of affairs had

changed. This is because there is nothing in the document

demonstrating that CEO B was in a position to impact Jinfu USA’s

“price or cost” decisions. See U.S. Steel Group v. United

States, 96 F.3d 1352, 1357 (Fed. Cir. 1996) (“It is the

[Department’s] task to evaluate the evidence it collects during

its investigation.”).

Next, plaintiffs point to documents allegedly prepared for

the Internal Revenue Service in which CEO B was named as Jinfu

USA’s President and owner. With regard to these documents, this

Court has previously found, in Jinfu Trading Co. v. United

States, 30 CIT __, Slip Op. 06-137 (Sept. 7, 2006) (not reported

in the Federal Supplement) (“Jinfu I”), that the 2002 tax return

“was unsigned, and [it] was unclear whether it was ever filed.”
Court No. 05-00439 Page 29
Def.’s Comments 13; see Jinfu I, 30 CIT at __, Slip Op. 06-137 at

24. Thus, these papers are of little probative value. See Jinfu

I, 30 CIT at __, Slip Op. 06-137 at 24.

Regarding the sale-specific documents signed by CEO B on

behalf of Jinfu USA, these documents designate Jinfu PRC and

Jinfu USA as “related” companies “on entry summaries filed with

Customs for each shipment,” and two of these documents (the Human

Consumption Certificate dated Aug. 19, 2003 and the Certificate

of Non-Reimbursement of Antidumping Duties dated Aug. 19, 2003),

were signed by CEO B on behalf of Jinfu USA “in his capacity as

President of that company.” Pls.’ Comments 13 (citation

omitted). These documents, filed with Customs and regarding a

sale, also do not overcome the evidence of the Certificate of

Transfer of Shares, nor do they indicate the level of control

necessary to show affiliation. In particular, neither of these

documents evidence any control, on CEO B’s part, over costs or

pricing of the products Jinfu USA handles.

Here, Commerce specifically discussed and addressed

plaintiffs’ proffered evidence and found it unpersuasive.

Commerce must assess the weight to be assigned to specific

evidence. Nippon Steel Corp. v. United States, 458 F.3d 1345,

1350 (Fed. Cir. 2006). Having reviewed Commerce’s explanation,

the court finds that Commerce’s determination that Jinfu PRC was

not affiliated with Jinfu USA prior to October 25, 2003 is
Court No. 05-00439 Page 30
supported by substantial evidence.

B. Commerce’s Determination That CEO B Did Not Have
Ownership of Jinfu USA Prior to October 25, 2003

Plaintiffs argue that this court’s prior decision that CEO B

did not have ownership of Jinfu USA before October 25, 2003 must

be revisited and reversed. As discussed above, in Shanghai

Eswell I, the court affirmed the Department’s determination that

CEO B did not have ownership of Jinfu USA prior to October 25,

2003 based on the execution of the Certificate of Transfer of

Shares. Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at 29-

30. Plaintiffs now claim that the recent Federal Circuit

decision in Crawfish Processors Alliance v. United States, 477 F.

3d 1375 (2007) (“Crawfish Processors”), requires the court to

reverse its previous decision because the Federal Circuit has

rejected certain evidence upon which the court relied as not

required to prove affiliation. See Pls.’ Comments 18.

In Crawfish Processors, the company claiming ownership

purchased stock in the other entity using a promissory note

committing the purchaser to pay the purchase price, in

merchandise, over a period of time. See Crawfish Processors, 477

F.3d at 1378. Commerce rejected the purchaser’s affiliation

claim, asserting that 19 U.S.C. § 1677(33) requires that a

“transfer of cash or merchandise” be fully effectuated within the

period of review in order to demonstrate ownership, and that
Court No. 05-00439 Page 31
because payment in full was not made during the period of review

the transfer did not occur. See id. at 1380-81. The Federal

Circuit rejected Commerce’s requirement that payment be made

within the period of review, stating that “[t]he statute imposes

no time requirement on financial transactions showing

affiliation.” Id. at 1381. In other words, because the

documents transferring title were executed, and a promissory note

was delivered, during the period of review, these alone were

sufficient to put ownership of both companies in one place.

Plaintiffs argue that because the court’s previous ruling on

the question of ownership was based, in part, on CEO B’s failure

to pay for his interest in Jinfu USA until more than one year

after the new shipper sale, Crawfish Processors requires the

Court to “revisit its decision, and based on the legal analysis

set forth above, find that CEO B, in fact, had acquired ownership

of Jinfu USA in October 2002, when all of the parties to the

transaction intended that the transfer of ownership take place.”

See Pls.’ Comments 21. The court finds that plaintiffs overstate

the application of Crawfish Processors to the present matter.

The plaintiffs in Jinfu III made this same argument in

support of their contention that the Court should revisit its

holding that CEO B did not own Jinfu USA on the date of the

purported new shipper sale (November 2, 2002). The Jinfu III

Court found that, unlike Jinfu PRC’s situation, the petitioners
Court No. 05-00439 Page 32
in Crawfish Processors “demonstrated that the transfer of

ownership itself took place [during the period of review]

notwithstanding the method of payment. . . .” Jinfu III, 32 CIT

at __, Slip Op. 08-38 at 16-17. In contrast, here, as in Jinfu

III, the record evidence demonstrates that because the

Certificate of Transfer of Shares was dated October 25, 2003,

ownership did not pass until that date. See Id. at __, Slip Op.

08-38 at 17.16 Consequently, the Jinfu III Court found, even if

it were to “‘discount[] the importance of the time when final

payment was made,’ as urged by plaintiff, it still could not

16
The Jinfu III Court noted:

The court has previously detailed six
independent reasons in support of this
conclusion. They are that: (1) Yousheng USA
was not renamed Jinfu USA until at least
November 8, 2002; (2) either Mr. A or Mr. D
owned Yousheng USA from its date of
incorporation at least until its name was
changed to Jinfu USA; (3) the Certificate of
Transfer of Shares explicitly stated that it
is to be “EFFECTIVE UPON EXECUTION BY THE
UNDERSIGNED” and that the execution took
place on December 30, 2003; (4) CEO B did not
pay Mr. D the consideration for the shares
until more than a year after November 2,
2002; (5) the portion of the November 18,
2002 Master Application for Jinfu USA’s
business license that asked if Yousheng USA
was owned, controlled or affiliated with
another entity was left blank; and (6) the
tax return stating that Jinfu USA was wholly
owned by CEO B was dated June 13, 2003,
unsigned, and may never have been filed.

Jinfu III, 32 CIT at __, Slip Op. 08-38 at 17 (citations
omitted).
Court No. 05-00439 Page 33
conclude that CEO B acquired [Jinfu USA] prior to November 2,

2002 because there is no documentary evidence that the

acquisition took place.” Jinfu III, 32 CIT at __, Slip Op. 08-38

at 17-18.

As noted, the record in this case demonstrates that Jinfu

PRC had no ownership interest in Jinfu USA until, at the

earliest, the date of October 25, 2003 found on the Certificate

of Transfer of Shares: “[t]he earliest possible effective date of

the ownership transfer agreement would be October 25, 2003. . . .

The [Certificate of Transfer of Shares] is dated October 25, 2003

. . . .” Shanghai Eswell I, 31 CIT at __, Slip Op. 07-138 at 29;

29 n. 15; Remand Results at 28. This is the very date used by

Commerce in this case in finding that ownership of Jinfu USA

transferred. Accordingly, the court finds that the decision in

Crawfish Processors does not require it to revisit its ownership

analysis, because, regardless of when payment was made, ownership

did not transfer prior to October 25, 2003.

For the reasons above, the court finds that the Department

has complied with the court’s remand instructions and sustains

the Department’s finding that Jinfu PRC was not affiliated with

Jinfu USA prior to October 25, 2003.
Court No. 05-00439 Page 34
CONCLUSION

For the foregoing reasons, the court sustains the

Department’s Remand Results. Judgment shall be entered

accordingly.

/s/Richard K. Eaton
Richard K. Eaton

Dated: November 18, 2008
New York, New York