Longkou Haimeng MacHinery Co., Ltd. v. United States

Slip Op. 09-46

UNITED STATES COURT OF INTERNATIONAL TRADE

Before: Nicholas Tsoucalas, Senior Judge
________________________________________
:
LONGKOU HAIMENG MACHINERY CO., LTD., :
LAIZHOU AUTO BRAKE EQUIPMENT COMPANY, :
LAIZHOU HONGDA AUTO REPLACEMENT :
PARTS CO., LTD., :
LAIZHOU LUQI MACHINERY CO., LTD., :
QINGDAO GREN (GROUP) CO., and :
LONGKOU TLC MACHINERY CO., LTD., :
:
Plaintiffs, :
:
v. : Consolidated
: Court No. 07-00321
United States, :
:
Defendant, :
:
and :
:
COALITION FOR THE PRESERVATION OF :
AMERICAN BRAKE DRUM AND ROTOR :
AFTERMARKET MANUFACTURERS, :
:
Defendant-Intervenor. :
________________________________________:

OPINION

Held: The Court affirms, in its entirety, the United States
Department of Commerce’s Final Results of Redetermination Pursuant
to Court Remand (Feb. 18, 2009).

Dated: May 18, 2009

Trade Pacific PLLC, (Robert G. Gosselink; Jonathan Michael Freed)
for Longkou Haimeng Machinery Co., Ltd.; Laizhou Auto Brake
Equipment Company; Laizhou Hongda Auto Replacement Parts Co., Ltd.;
Laizhou Luqi Machinery Co., Ltd.; and Qingdao Gren (Group) Co.,
Plaintiffs.

Venable LLP, (Lindsay Beardsworth Meyer) for Longkou TLC Machinery
Co., Ltd., Plaintiff.
Court No. 07-00321 Page 2

Michael F. Hertz, Deputy Assistant Attorney General, Commercial
Litigation Branch, Civil Division, United States Department of
Justice; Jeanne E. Davidson, Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice;
Patricia M. McCarthy; Assistant Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice
(Courtney E. Sheehan and Stephen C. Tosini); Evangeline D. Keenan,
Office of Chief Counsel for Import Administration, United States
Department of Commerce, for the United States, Defendant.

Porter, Wright, Morris & Arthur, LLP, (Leslie A. Glick) for The
Coalition for the Preservation of American Brake Drum and Rotor
Aftermarket Manufacturers, Defendant-Intervenor.

Tsoucalas, Senior Judge: This matter comes before the Court

following its decision in Longkou Haimeng Mach. Co., Ltd. v. United

States (“Longkou”), 32 CIT __, 581 F. Supp. 2d 1344 (2008), in

which the Court remanded the administrative determination in Brake

Rotors From the People’s Republic of China: Final Results of

Antidumping Duty Administrative and New Shipper Reviews and Partial

Rescission of the 2005-2006 Administrative Review, 72 Fed. Reg.

42,386 (Aug. 2, 2007) (“Final Results”) to the United States

Department of Commerce, International Trade Administration

(“Commerce” or “Department”). Longkou arose from Plaintiffs’

challenge to Commerce’s Final Results, and ensuing motion for

judgment on the agency record under USCIT Rule 56.2. In their

motion, Plaintiffs alleged, inter alia, that Commerce failed to

adhere to the statutory requirement to value factors of production

using the best available information. Because Commerce valued pig

iron using Indian import data, despite record evidence indicating
Court No. 07-00321 Page 3

that the imported pig iron (Sorelmetal) was not specific to the pig

iron used by Plaintiffs, the Department’s valuation of this input

was not based on the best available information. In Longkou, the

Court instructed Commerce to specifically address: (1) whether

Sorelmetal is fundamentally different from the pig iron consumed by

respondents and cannot be used in the production of subject brake

rotors; or alternately (2) whether pig iron imports into India

under HTS 7201.1000 are the best available information for valuing

the pig iron consumed by Plaintiffs in the production of subject

brake rotors. See Longkou, 32 CIT at __, 581 F. Supp. 2d 1344,

1364. The Court now reviews the Final Results of Redetermination

Pursuant to Court Remand (Feb. 18, 2009) (“Final Remand

Redetermination”), in which the surrogate value for pig iron, and

hence Plaintiffs’ margin, remains unchanged from the Final Results.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 19

U.S.C. § 1516a(a)(2) and 28 U.S.C. § 1581(c).

STANDARD OF REVIEW

The Court reviews the agency’s redetermination pursuant to the

Court’s remand under the substantial evidence and in accordance

with law standard, which is set forth in 19 U.S.C. §

1516a(b)(1)(B)(i) (2000) (“The court shall hold unlawful any

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

by substantial evidence on the record, or otherwise not in
Court No. 07-00321 Page 4

accordance with law . . . .”). Substantial evidence is “‘such

relevant evidence as a reasonable mind might accept as adequate to

support a conclusion.’” Huaiyin Foreign Trade Corp. (30) v. United

States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Consol.

Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). “Substantial

evidence requires more than a mere scintilla, but is satisfied by

something less than the weight of the evidence.” Altx, Inc. v.

United States, 370 F.3d 1108, 1116 (Fed. Cir. 2004) (internal

citations and quotation marks omitted). The existence of

substantial evidence is determined “by considering the record as a

whole, including evidence that supports as well as evidence that

‘fairly detracts from the substantiality of the evidence.’”

Huaiyin, 322 F.3d at 1374 (quoting Atl. Sugar, Ltd. v. United

States, 744 F.2d 1556, 1562 (Fed. Cir. 1984)). The Court “must

affirm [Commerce’s] determination if it is reasonable and supported

by the record as a whole, even if some evidence detracts from the

[Department’s] conclusion.” Nippon Steel Corp. v. United States,

458 F.3d 1345, 1352 (Fed. Cir. 2006) (internal citations and

quotation marks omitted).

BACKGROUND

The Court presumes familiarity with its decision in Longkou,

which provides background discussion on the less-than-fair-value

determination that Plaintiffs contest in this judicial proceeding.

See Longkou, 32 CIT __, 581 F. Supp. 2d 1344. Below, the Court
Court No. 07-00321 Page 5

provides additional background information specific to the Final

Remand Redetermination now before the Court.

In making the determination of whether imported merchandise is

being sold at less-than-fair-value in the United States, Commerce

must first quantify the term “normal value.” Whereas normal value

typically equals the domestic price of the product in the exporting

country, see 19 U.S.C. § 1677b(a)(1), if the exporting country is

a non-market economy (“NME”), domestic sales of subject merchandise

may not be a reliable indicator of market value, see id. §

1677b(c)(1). In such instances, Commerce must “determine the

normal value of the subject merchandise on the basis of the value

of the factors of production utilized in producing the merchandise

and to which shall be added an amount for general expenses and

profit plus the cost of containers, coverings, and other expense.”

Id. Section 1677b(c)(1) further provides that “the valuation of

the factors of production shall be 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.” Id.

In the Final Results, Commerce calculated the value of each

input in the production process, using information from a market

economy surrogate country.1 The Department rejected alternative

1
Commerce relied on publicly available Indian surrogate
values for each input. With respect to pig iron, the agency used
Court No. 07-00321 Page 6

data submitted by Plaintiffs which included the financial

statements of Indian Steel producer, Steel Authority of India

Limited (“SAIL”). See Def.’s Resp. in Opp’n to Pls.’ Mot. J. Upon

the Agency R. (“Def.’s Brief”) at 28. Plaintiffs contested the

Department’s refusal to consider this alternative data, and argued

that its reliance on what Plaintiffs consider less representative

data to value pig iron, was unsupported by substantial evidence.

See Mem. of P. & A. in Supp. of Pls.’ Mot. J. Upon the Agency R.

(“Pls.’ Brief”) at 26. Specifically, Plaintiffs pointed to record

evidence indicating that “approximately seventy percent of the pig

iron imported into India during the POR was Sorelmetal.”2 Id. at

25. Sorelmetal, Plaintiffs argued, is a high-purity ductile iron

that is dissimilar to the type of pig iron consumed by Plaintiffs

in the production of subject merchandise. See id. Therefore,

Plaintiffs concluded, the data Commerce relied on did not

constitute the best available information for valuing pig iron. In

defense of its position, Commerce pointed to the fact that the

imports comprised primarily of Sorelmetal had the same range of

average unit values (“AUVs”) as those pig iron imports from the

other six countries recorded in the WTA, and that “the respondents

Indian import statistics obtained from the World Trade Atlas
(“WTA”), a published data source that tracks global imports and
exports. See Longkou, 581. F. Supp. 2d at 1361.
2
The entirety of Indian imports from South Africa, under
HTS category 7201.1000, were of Sorelmetal. See id.
Court No. 07-00321 Page 7

failed to place anything on the record of the review that indicated

that Sorelmetal is different from the pig iron used by

respondents.” Def.’s Brief at 30.

The Court, in Longkou, concluded that Commerce failed to

adequately explain whether the Indian imports under HTS 7201.1000

were the best available information for valuing the pig iron used

by Plaintiffs. See 581 F. Supp. 2d at 1363. Therefore, the Court

remanded the matter back to Commerce with instructions to

specifically address (i) Plaintiffs’ argument that Sorelmetal is

fundamentally different from the pig iron consumed by respondents

and cannot be used in the production of subject brake rotors; or

alternately (ii) whether pig iron imports into India under HTS

7201.1000 are the best available information for valuing the pig

iron consumed by Plaintiffs in the production of subject brake

rotors. See id. at 1364.

The Department issued its draft results of redetermination on

January 15, 2009. See Draft Results of Redetermination Pursuant to

Court Remand. Plaintiffs filed comments objecting to the draft

results on January 22, 2009, and Commerce issued its Final Remand

Redetermination on February 18, 2009. See Letter From Trade

Pacific Respondents (Jan. 22, 2008 [sic]) (“Draft Comments”); Final

Remand Redetermination. Consistent with the time parameters set

forth on remand, Plaintiffs submitted their comments to the Final

Remand Redetermination on March 20, 2009, and the Department filed
Court No. 07-00321 Page 8

its response to those comments on May 8, 2009. See Plaintiffs’

Comments On Remand Redetermination (March 20, 2009) (“Final

Comments”); Defendant’s Response to Plaintiffs’ Comments Regarding

the Remand Redetermination (May 8, 2009). In the Final Remand

Redetermination, Commerce undertook a more extensive examination of

the record with regard to pig iron imports into India. During the

course of the remand, Commerce re-evaluated the record evidence

with respect to the metallurgical properties of Sorelmetal,

concluding that Sorelmetal is a non-alloy pig iron and does not

possess any qualities that would fundamentally distinguish it from

the pig iron used in the production of subject brake rotors. See

Final Remand Redetermination at 5. Specifically, Commerce found

that the chemical composition of Sorelmetal is consistent with that

of the pig iron consumed by Plaintiffs in that they both contain

low concentrations of sulphur and phosphorous. See id. at 6,8.

Therefore, Sorelmetal’s low phosphorous content fits neatly into

HTS subheading 7201.1000, as a non-alloy pig iron with a

phosphorous content of less than or equal to 0.5 percent. See id.

at 8. Accordingly, Commerce continued to rely on Indian HTS

category 7201.1000 as the best available information for valuing

pig iron imports into India. See id. at 4.

The Department further concludes that “because Sorelmetal is

compared to steel scrap and other iron units, which record evidence

indicates are not ingredients used to make ductile iron,” it can be
Court No. 07-00321 Page 9

used for other types of castings than just ductile iron. Id. at

13. Moreover, the AUVs for those imports from South Africa, i.e.,

Sorelmetal, fall within the range of the other country-specific

AUVs under Indian HTS category 7201.1000. This, according to

Commerce, confirms that the Department’s inclusion of Sorelmetal as

a surrogate value does not distort its normal value calculation for

respondent’s consumption of pig iron. See id. at 14-16.

By contrast, Plaintiffs, in their comments, have modified

their original stance as to the type of iron with which Sorelmetal

can be identified. Originally, Plaintiffs argued that Sorelmetal

was “a high-purity[] ductile iron that is not used, and cannot be

used, to produce the subject merchandise.” Pls.’ Brief at 25.

While now conceding that Sorelmetal is a high-purity pig iron,

Plaintiffs argue that their consumption of pig iron in the

manufacture of subject brake rotors is limited to the basic low-

purity pig iron traditionally used for such applications. See

Final Comments at 3. According to Plaintiffs, Sorelmetal is a

higher value product with superior characteristics which allow its

manufacturer to charge a premium price. See id. at 5. This

premium price as applied to Plaintiffs’ use of basic pig iron

distorts the normal value calculation of Commerce. See id.

Therefore, Plaintiffs allege, Commerce’s use of surrogate value

data comprised primarily of the specialty metal, Sorelmetal,

distorts its input valuation methodology. See id. at 5.
Court No. 07-00321 Page 10

In addition, Plaintiffs aver, Sorelmetal is a component used

primarily, if not exclusively, in the production of ductile iron

products. See id. at 2. Plaintiffs point to the fact that the

sole application discussed on the Sorelmetal website is one in

which Sorelmetal is used as an ingredient in the production of

ductile iron, and charge that because the record is void of any

“information [which] indicate[s] that Sorelmetal is intended for,

or marketed for, use in non-ductile iron applications,” Commerce’s

attempt to characterize it as interchangeable with basic pig iron

is ill-conceived. Id. Moreover, Plaintiffs argue as incorrect,

the Department’s conclusion that Sorelmetal can be used for non-

ductile iron applications because it is compared to steel scrap and

other iron units not used in the production of ductile iron. See

id. at 6. According to Plaintiffs, the record clearly demonstrates

that ductile iron castings are “‘made by mixing and melting

together different grades of . . . steel scrap.’” Id. at 6

(citation omitted).

Lastly, Plaintiffs contend that the comparison of the sulfur

content in Sorelmetal to that of the pig iron consumed by

Plaintiffs is not an accurate barometer of whether Sorelmetal is

specific to the pig iron used in the production of subject brake

rotors. See id. at 7. The low concentrations of sulphur in both

Sorelmetal and Plaintiffs’ low-grade pig iron only tends to show

that Plaintiffs’ pig iron could conceivably be included in the
Court No. 07-00321 Page 11

metallic charge used in the production of ductile iron, not that

Sorelmetal is used or could be used to produce subject merchandise.

See id. at 7-8.

DISCUSSION

As noted above, because pricing information in a NME is

largely unreliable, section 1677b(c)(1) authorizes Commerce to

approximate the cost of production with pricing information from

surrogate countries and companies. In calculating factors of

production, Commerce typically employs data sets for its analyses.

Judicial review of whether Commerce’s data set selection is the

best available information addresses whether the particular

selection is supported by substantial evidence or otherwise in

accordance with law. Whether a data selection issue is factual or

legal, i.e., reviewed for substantial evidence or for its

accordance with law, depends on the question presented. See

Dorbest Ltd. v. United States, 30 CIT 1671, 1676, 462 F. Supp. 2d

1262, 1268 (2006). For example, if the question is whether

Commerce may use a particular piece of data; may use a factor in

weighing the choice between two sets of data; or what weight may be

applied to such a factor, the question is legal. See id. If,

however, the question is whether Commerce should have used a

particular piece of data, or what weight should be assigned to

certain data, the question is factual. See id.

In reviewing the factual issues of the case at bar, the Court
Court No. 07-00321 Page 12

must consider whether Commerce’s selection of Indian import data,

comprised mostly of Sorelmetal, was appropriate. In so doing, the

Court’s role “is not to evaluate whether the information Commerce

used was the best available, but rather whether a reasonable mind

could conclude that Commerce chose the best available information.”

Goldlink Indus. Co. v. United States, 30 CIT 616, 619, 431 F. Supp.

2d 1323, 1327 (2006). While the statute is silent with regard to

the definition of best available information, Commerce has been

provided with “broad discretion to determine the ‘best available

information’ in a reasonable manner on a case-by-case basis.” Id.

at 619, 431 F. Supp. 2d at 1327 (quoting Timken Co. v. United

States, 25 CIT 939, 944, 166 F. Supp. 2d 608, 616 (2001)).

Commerce’s exercise of its discretion is not unfettered, however,

and must still maintain fidelity to its statutory mandate of

calculating dumping margins “as accurately as possible.” Lasko

Metal Prods., Inc. v. United States, 43 F.3d 1442, 1443 (Fed. Cir.

1994).

For the Court to conclude that a reasonable mind would support

Commerce’s selection of surrogate data as the best available

information, Commerce must justify its selection with a reasoned

explanation. See Dorbest, 30 CIT at 1677, 462 F. Supp. 2d 1262,

1269. Hence, if Commerce selects a particular set of data that is

demonstrably unrepresentative or distortional, a reasonable mind

may rightly question how such a selection could be considered the
Court No. 07-00321 Page 13

“best.” While its choice may in fact be the best available

information, affirming Commerce’s decision requires a reasoned

explanation that is supported by evidence on the record.

In addition to the statute, Commerce has promulgated

regulations specifying that the information utilized is “normally”

to be “publicly available” and that, except for labor, the

Department will normally value all factors using data from a single

surrogate country.3 19 C.F.R. § 351.408(c). While Commerce has

not promulgated additional regulations to govern its selection of

data for the valuation of factors of production, it has adopted

policy preferences relating to its data choices. Specifically,

Commerce prefers data that is (1) a non-export average value; (2)

contemporaneous with the period being examined; (3) product-

specific; and (4) tax exclusive. See Issues and Decision

Memorandum for the 2005-2006 Administrative and New Shipper Reviews

of the Antidumping Duty Order on Brake Rotors From the People’s

3
19 C.F.R. § 351.408(c)(1)-(2) reads in pertinent part:

(c) Valuation of Factors of Production. For purposes of
valuing factors of production . . . under section 773(c)(1)
of the Act the following rules will apply:

(1) Information used to value factors. The Secretary
normally will use publicly available information to value
factors . . . .

(2) Valuation in a single country. Except for labor, as
provided in paragraph (d)(3) of this section, the Secretary
normally will value all factors in a single surrogate
country.
Court No. 07-00321 Page 14

Republic of China at 6, cmt. 1 (“Issues and Decision Memorandum”);

Notice of Final Determination of Sales at Less Than Fair Value:

Bicycles From the People’s Republic of China, 61 Fed. Reg. 19,026,

19,030 (Dep’t of Commerce April 30, 1996).

In the underlying administrative review, application of the

factors outlined above led Commerce to rely on published values

from the WTA. With regard to pig iron, Commerce selected HTS

category 7201.1000 as the product most similar to the reported type

of pig iron used by respondents. See Issues and Decision

Memorandum at 6, cmt. 1. While the Court, in Longkou, affirmed

Commerce’s choice of WTA data as appropriate, the agency’s

individual determinations, on a factor by factor basis, must also

be supported by substantial evidence. If the Department’s specific

data choices do not actually include or capture the factor or input

it is estimating, or a reasonably comparable item, such a choice is

not supported by the record. Moreover, if the data is

disproportionately weighted by the inclusion of higher or lower

priced materials, such that Commerce is systematically overvaluing

or undervaluing the factors of production, a broad range of

statistics, such as those employed here would not, in and of

itself, render the data reliable. See Goldlink Indus., 30 CIT at

629, 431 F. Supp. 2d 1323, 1334 (“Since the presumption is that

NME data is distorted, Commerce must find a reasonable surrogate

value. Logically then, Commerce cannot use a surrogate value if it
Court No. 07-00321 Page 15

is also distorted, otherwise defeating the purpose of using a

surrogate value rather than the actual export value.”).

The WTA data selected by Commerce represents the cumulative

values for inputs classified under the Harmonized Tariff Schedule

for the period of review. See Preliminary Factor Valuation

Memorandum at 2 (Feb. 9, 2007) (PR 179). The Department classified

each input based upon the factor-specific data submitted by

respondents in their questionnaire and supplemental questionnaire

responses. See Brake Rotors From the People’s Republic of China:

Preliminary Results of the 2005-2006 Administrative and New Shipper

Reviews and Partial Rescission of the 2005-2006 Administrative

Review, 72 Fed. Reg. 7,405, 7414 (Feb. 15, 2007) (“Preliminary

Results”). For each input value, the Department used the AUV for

that input as imported by India from all countries.4 See

Preliminary Factor Valuation Memorandum at 2 (PR 179). In its

valuation of pig iron, the Department selected a surrogate value

based on the AUVs of the 4,381 metric tons (“MT”) of pig iron

4
Import statistics from NME’s (i.e., Armenia, Azerbaijan,
Belarus, Georgia, Kyrgyz Republic, Moldova, People’s Republic of
China (“PRC”), Tajikistan, Turkmenistan, Ukraine, Uzbekistan, and
Vietnam), countries with broadly available, non-industry specific
export subsidies (i.e., Indonesia, South Korea, and Thailand),
and undetermined countries were excluded from the calculation of
the average unit value. See Preliminary Factor Valuation
Memorandum at 2 (PR 179).
Court No. 07-00321 Page 16

imported into India from seven different countries.5 See Issues

and Decision Memorandum at 2, 7, cmt. 1. According to Commerce,

this surrogate value is consistent with its preference for

surrogate data that are (1) non-export average values; (2)

contemporaneous with the period being examined; (3) product-

specific; and (4) tax exclusive. See id. at 6, cmt. 1. For

purposes of the instant matter, the Court’s analysis is confined to

the third of these factors. Namely, whether the surrogate data

relied on is product-specific.

Recognizing that a significant percentage of the pig iron

imports into India are comprised of Sorelmetal, Commerce maintains

that Sorelmetal “does not contain qualities that fundamentally

distinguish it from the pig iron used in the production of subject

brake rotors.” Final Remand Redetermination at 5. In addition to

the similar chemical composition of respondent’s pig iron and the

surrogate, the Department cites to the lack of any definitive

statement that “Sorelmetal is used only for ductile iron

applications,” id. at 13, as a basis for its conclusion that

Sorelmetal “can be used in the production of subject merchandise,”

id. at 14. While it may be true that record evidence does not

5
The country-specific AUVs for each of the seven countries
are as follows: South Africa (19.85 Rs/kg), United States (45.00
Rs/kg), Malaysia (20.21 Rs/kg), Russia (16.59 Rs/kg), Germany
(16.00 Rs/kg), Egypt (14.57 Rs/kg), and Iran (11.96 Rs/kg). See
Issues and Decision Memorandum at 7, fn. 14, cmt. 1.
Court No. 07-00321 Page 17

assign Sorelmetal any exclusive application, the record is

unmistakable as to its intended purpose. For example, the

marketing materials included in the company’s web page make clear

that Sorelmetal is a high-purity pig iron produced and marketed as

an ingredient in the manufacture of ductile iron. See Respondents’

Surrogate Value Submission for Final [Results], Exhibit 4 at 1

“More Metal For Your Money” (March 28, 2007) (PR 193) (“With

Sorelmetal, foundrymen can produce highly machinable Ductile Iron

castings.”); id. at 2 (“Ductile Iron foundrymen report improved

physical properties . . . when Sorelmetal is included in the

metallic charge.”); id. at 3 (“Sorelmetal Ductile Iron Castings are

ideal for a large diversity of applications.”). On the other hand,

nothing in the record supports Plaintiffs’ claim that Sorelmetal

commands a premium price as a result of its status as a high-purity

pig iron. It is Plaintiffs’ contention that because of the

enhanced physical properties of Sorelmetal, it logically follows

that these superior characteristics add to its cost. Plaintiffs,

however, have failed to demonstrate factually how this conclusion

may be drawn. The general assertions that “Sorelmetal costs more

than alternative iron inputs,” or that “a foundry would pay a

premium for high-purity pig iron with exceptional dilution

qualities, such as Sorelmetal,” fail to convince the Court of this

allegation. Final Comments at 5. As Commerce points out, the AUV

for Sorelmetal is consistent with the imports of low-grade pig iron
Court No. 07-00321 Page 18

from the other six countries. In fact, Sorelmetal’s AUV falls

below the cumulative average of the other six countries.

Plaintiffs’ alternate argument, that the absence of any “non-

ductile iron applications” on the company’s website is evidence of

Sorelmetal’s restricted use, is similarly flawed. Id. at 2. As

mentioned previously, the manufacturer’s marketing scheme clearly

promotes Sorelmetal as a preferred ingredient in the production of

ductile iron. Yet, Plaintiffs acknowledge that Sorelmetal is a

type of pig iron, which by its nature is a transitional product

used almost exclusively as an ingredient in the mixture of higher

grade iron castings.6 Therefore, its value is measured as such and

is limited only by its ability to integrate with other forms of

ferrous materials. Here, the record lends support to Commerce’s

explanation that Sorelmetal possesses chemical properties that are

consistent with other grades of pig iron used in the production of

gray iron castings. Plaintiffs’ own evidentiary submission states:

Gray iron castings are made of pig iron, of mixtures of pig
iron and steel, or of mixtures of pig iron, steel and other
metals in smaller amounts . . . the consensus of mold makers
in this country indicates that the composition should be about
as follows:

Silicon 1.25 to 1.75%
Phosphorous 0.120 to 0.140%
Sulphur 0.035 to 0.050%

6
As the record demonstrates, iron “castings are made by
mixing and melting together different grades of pig iron.”
Respondents’ Surrogate Value Submission for Final [Results],
Exhibit 3 at 1220 (PR 193).
Court No. 07-00321 Page 19

Manganese 0.75 to 1.25%

Respondents’ Surrogate Value Submission for Final [Results],

Exhibit 3, at 1226-27 (PR 193). Likewise, Sorelmetal is described

as “containing very low concentrations of manganese, phosphorous,

sulphur and other undesirable elements.” Id. Exhibit 4 at 1 “A

Better Product Means Better Results” (PR 193). These traits are

consistent with the type of pig iron used in the manufacture of

gray iron castings, the same material used in the production of

subject merchandise. While the Court recognizes the lack of

specificity with regard to Sorelmetal’s chemical composition,

Plaintiffs were free to develop the record as they saw fit, and

have simply failed to provide any substantive information

contradicting the Department’s findings. The burden of creating an

adequate record lies with respondents and not with Commerce. See

NSK Ltd. v. United States, 20 CIT 361, 369, 919 F. Supp. 442, 449

(1996).

Notwithstanding the fact that Sorelmetal may or may not be a

perfect fit for the surrogate value calculation of pig iron, it is

well established that “the process of constructing foreign market

value for a producer in a nonmarket economy country is difficult

and necessarily imprecise.” Nation Ford Chem. Co. v. United States,

166 F.3d 1373, 1377 (Fed. Cir. 1999) (quoting Sigma Corp. v.

United States, 117 F.3d 1401, 1407 (Fed. Cir. 1997)); see also

Dorbest, 30 CIT at 1684, 462 F. Supp. 2d 1262, 1275 (“[T]he
Court No. 07-00321 Page 20

estimation of a normal value using surrogate values is an inexact

science.”). Of course, a surrogate value must be as representative

of the production process in the NME country as is practicable, if

it is to achieve the statutory objective of assigning dumping

margins as accurately as possible. This, however, does not mean

that Commerce must duplicate the exact production experience of the

NME manufacturers at the expense of choosing a surrogate value that

most accurately represents the fair market value of subject

merchandise in a hypothetical market economy China. See Nation

Ford, 166 F.3d at 1377 (quoting Nation Ford Chem. Co. v. United

States, 21 CIT 1371, 1376, 985 F. Supp. 133, 137 (1997)). What

constitutes the best available information concerning any

particular factor of production will necessarily depend on the

circumstances, including the relationship between the market

structure of the surrogate country and a hypothetical free market

structure of the NME producer under investigation. Simply put, the

issue is whether Commerce acted reasonably when it included

Sorelmetal in its estimation of the price and type of pig iron used

in the manufacture of gray iron brake rotors in a theoretical

market economy PRC. The Court finds that it did.

Here, Commerce has chosen, based upon Plaintiffs’ own

questionnaire responses, HTS category 7201.1000 as the product most

similar to the reported type of pig iron used in the production of

subject merchandise. The Indian imports selected by Commerce based
Court No. 07-00321 Page 21

upon this HTS classification represent the types and prices of pig

iron available to Indian producers of gray iron brake rotors.

Plaintiffs have not pointed to any evidence of record which

supports the contention that Sorelmetal cannot be used in the

manufacture of these products, or that its inclusion in the

calculation of normal value was distortional. Without more it

cannot be said that Commerce has failed to provide a reasoned

explanation for its choice of surrogate data, or that a reasonable

mind could not conclude that Commerce chose the best available

information.

CONCLUSION

For the reasons set forth above the Court finds that

Commerce’s decision to use Sorelmetal as a surrogate value for pig

iron in its normal value calculations is supported by substantial

evidence and in accordance with law. The Court therefore affirms

Commerce’s Final Remand Redetermination in its entirety. Judgment

to be entered accordingly.

/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: May 18, 2009
New York, New York