Slip Op. 10-41
UNITED STATES COURT OF INTERNATIONAL TRADE
ZHEJIANG DUNAN HETIAN METAL CO., LTD.
Plaintiff,
v.
UNITED STATES, Before: Pogue, Judge
Court No. 09-00217
Defendant,
- and - PUBLIC VERSION
PARKER-HANNIFIN CORP.,
Defendant-Intervenor.
OPINION AND ORDER
[Plaintiff’s motion for judgment upon the administrative record
denied.]
Dated: April 19, 2010
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Mark
E. Pardo and Andrew T. Schutz) for the Plaintiff.
Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director; Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (L. Mischa Preheim and Carrie A. Dunsmore); and, of
counsel, Joanna Theiss, Office of the Chief Counsel for Import
Administration, United States Department of Commerce, for the
Defendant.
Roetzel & Andress, LPA (Donald R. Dinan and Craig A. Koenigs)
for the Defendant-Intervenor.
Pogue, Judge: This case involves a challenge to the United
States Department of Commerce’s (“Commerce” or “the Department”)
Court No. 09-00217 Page 2
data choices and adjustments in its calculation of an antidumping
(“AD”) duty on goods produced in a non-market economy (“NME”).
Specifically, Plaintiff Zhejiang DunAn Hetian Metal Co., Ltd.
(“DunAn”) challenges the Department’s data selection, use of
partial adverse facts available (“AFA”), and scrap offset
methodology in Commerce’s final affirmative determination AD duty
order regarding frontseating service valves (“FSVs”) from the
People’s Republic of China (“China”).1
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c).
Currently before the court is DunAn’s USCIT R. 56.2 Motion for
Judgment Upon the Agency Record.
Standard of Review
The statutory provision which supplies the standard for review
for Commerce’s final determination requires that the court shall
“hold unlawful any [agency] determination, finding, or conclusion
found . . . to be unsupported by substantial evidence on the
record, or otherwise not in accordance with law.” Tariff Act of
1
See Frontseating Service Valves From the People’s Republic
of China, 74 Fed. Reg. 10,886 (Dep’t Commerce Mar. 13, 2009)
(final determination of sales at less than fair value and final
negative determination of critical circumstances) (“Final
Determination”), and accompanying Issues and Decision Memorandum,
A-570-933, [period of investigation (“POI”)] 7/1/07 - 12/31/07
(Mar. 6, 2009), Admin. R. Pub. Doc. 226, available at
http://ia.ita.doc.gov/frn/summary/PRC/E9-5480-1.pdf (last visited
Apr. 19, 2010) (“Decision Mem.”); Frontseating Service Valves
from the People’s Republic of China, 74 Fed. Reg. 19,196 (Dep’t
Commerce Apr. 28, 2009) (AD duty order). Commerce selected
DunAn, a Chinese producer of FSVs, as a mandatory respondent in
this administrative proceeding.
Court No. 09-00217 Page 3
1930, § 516A(b)(1)(B)(i), 19 U.S.C. § 1516a(b)(1)(B)(i)(2006).2 See
also 19 U.S.C. §§ 1516a(a)(2)(A)(i)(II), 1516a(a)(2)(B)(i); Huaiyin
Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374
(Fed. Cir. 2003).
Discussion
By its instant motion, DunAn seeks (1) recalculation of the
Indian3 import statistics used to value brass bar4; (2) replacement
of the labor wage rate -- calculated in accordance with the
Department’s regulatory regression analysis5 -- with an Indian
labor rate of $0.21 per hour; (3) reversal of the Department’s
application of partial AFA to DunAn’s December 2007 U.S. sales data
and inventory carrying costs (“ICC”)6; and (4) revision of the
2
Further citations to the Tariff Act of 1930, as amended,
are to the relevant provisions of Title 19 of the U.S. Code, 2006
edition.
3
Plaintiff does not challenge the choice of India as the
appropriate country from which to select the relevant data. See
19 U.S.C. § 1677b(c)(4) (providing for the valuation of
merchandise exported from a nonmarket economy, to “the extent
possible,” using prices or costs in a comparable market economy
country).
4
DunAn uses brass bar to make FSV valve bodies and valve
stems. See Frontseating Service Valves from the People’s Republic
of China, 73 Fed. Reg. 20,250, 20,253 (Dep’t Commerce Apr. 15,
2008)(initiation of AD duty investigation).
5
See 19 C.F.R. § 351.408(c)(3)(2009) (providing for the use
of “regression-based wage rates reflective of the observed
relationship between wages and national income in market economy
countries.”).
6
ICC are costs associated with keeping merchandise in
inventory before it is sold. Mittal Steel Point Lisas Ltd. v.
Court No. 09-00217 Page 4
Department’s methodology for recognizing the value of DunAn’s
recycled brass scrap.
The court will, in turn, analyze each of these values.
A. Commerce’s Selection of a Value for Brass Bar
Commerce’s selection of a value for brass bar is governed by
19 U.S.C. § 1677b(c), which requires that Commerce choose data that
is the “best available information” on the record.7 Here, Commerce
United States, 31 CIT 638, 645, 491 F. Supp. 2d 1222, 1230
(2007), aff’d, 548 F.3d 1375 (Fed. Cir. 2008). Commerce’s
authority to account for ICC arises from 19 U.S.C. § 1677a(d).
NTN Bearing Corp. of Am. v. United States, 368 F.3d 1369, 1373
(Fed. Cir. 2004).
7
Section 1677b(c)(1) provides that Commerce
shall determine the normal value of the subject
merchandise on the basis of the value of the factors of
production [“FOP”] utilized in producing the
merchandise . . . . the valuation of the [FOPs] 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
[Commerce].
19 U.S.C. § 1677b(c)(1)(emphasis added).
As the court has previously noted:
The term “best available” is one of comparison,
i.e., the statute requires Commerce to select, from the
information before it, the best data for calculating an
accurate dumping margin. The term “best” means
“excelling all others.” This “best” choice is
ascertained by examining and comparing the advantages
and disadvantages of using certain data as opposed to
other data.
Dorbest Ltd. v. United States (“Dorbest I”), 30 CIT 1671, 1675,
462 F. Supp. 2d 1262, 1268 (citations omitted).
Court No. 09-00217 Page 5
selected an average unit value (“AUV”) derived from the World Trade
Atlas (“WTA”)8 Indian import statistics for the POI. DunAn does
not challenge Commerce’s use of the WTA data set in general or the
particular HTS classification used.9 Rather, DunAn argues that
some aspects of the WTA data set are incorrect and should be
eliminated. Specifically, DunAn challenges the sufficiency of the
evidence to support Commerce’s inclusion, in the WTA data, of brass
bar values for Indian imports from France, Japan, and the United
Arab Emirates (“UAE”).10
The relevant WTA data for HTS 7407.21.10 “Bars of Brass” are
as follows:
8
Global Trade Information Services, Inc. publishes the WTA,
organizing the data using the Indian Harmonized Tariff Schedule
(“HTS”) classifications. See Global Trade Information Services,
Inc., World Trade Atlas®,
http://www.gtis.com/english/GTIS_WTA.html (last visited Apr. 19,
2010). Global Trade Information Services, Inc. obtains the
specific import values for India contained in the WTA directly
from the Directorate General of Commercial Intelligence and
Statistics, Ministry of Commerce of India; the WTA reports the
data in rupees. See Frontseating Service Valves from the People’s
Republic of China, 73 Fed. Reg. 62,952, 62,957 (Dep’t Commerce
Oct. 22, 2008) (preliminary determination of sales at less than
fair value, preliminary negative determination of critical
circumstances, and postponement of final determination).
9
Thus the representativeness of the WTA under HTS 7407.21.10
as to the brass bar that DunAn actually uses as an FOP is not at
issue before the court. (Cf. Pl.’s Rule 56.2 Mot. for J. Upon
Agency R. (“Pl.’s Br.”) 5, 14-15.)
10
Denying DunAn’s request, Commerce did not, in the
underlying investigation, remove UAE, French, or Japanese imports
from the AUV calculated from WTA data.
Court No. 09-00217 Page 6
Country Quantity Value AUV
(Kgs) (Rupees)
Sri Lanka 44,720 7,990,000 178.67
Malaysia 24,262 8,031,000 331.01
UAE 8,000 3,652,000 456.50
Germany 4,526 2,581,000 570.26
Japan 3,911 1,574,000 402.45
United Kingdom 3,380 1,779,000 526.33
Denmark 1,300 541,000 416.15
Netherlands 1,042 501,000 480.81
Singapore 392 487,000 1,242.35
France 261 374,000 1,432.95
United States 90 78,000 866.67
TOTAL 91,884 27,588,000 300.25
Petitioner’s Surrogate Value Comments Regarding Frontseating
Service Valves from the People’s Republic of China, A-570-933, POI
7/01/07 - 12/31/07 (Sept. 29, 2008), Admin. R. Pub. Doc. 106,11 at
Ex. 1A. See also Zhejiang DunAn Heitan’s First Surrogate Value
Submission, A-570-933, POI 7/01/07 - 12/31/07 (Sept. 29, 2008),
Admin. Pub. Doc. 107 (“DunAn’s First Surrogate Value Submission”),
at Ex. 3A. See also Antidumping Duty Investigation of Frontseating
Service Valves from the People’s Republic of China: Factor
Valuations for the Final Determination, A-570-933, POI 7/1/07 -
12/31/07 (Mar. 6, 2009), Admin. R. Pub. Doc. 227, at Attach. 3
(providing HTS classification for “Of copper-zinc base alloys
11
In the record the Department provided to the court,
Commerce has organized the documents according to sequence
numbers. Administrative record document numbers and sequence
numbers may be cross-referenced using court document number 22.
Court No. 09-00217 Page 7
(brass) . . . Bars” as HTS 7407.21.10).
Failing to remove imports from France, Japan, and the UAE
constituted error, according to DunAn, because other record
evidence, i.e., data from Infodrive India,12 demonstrated that
shipments from the above countries did not consist of brass13 bar,
and, thus, that WTA data as to the UAE, France, and Japan were
flawed and unreliable.
12
Infodrive India Pvt Ltd., an Indian company, publishes
export and import information from India and other countries.
Infodrive India, http://www.infodriveindia.com/ (last visited
Apr. 19, 2010). Each month, Infodrive India “collects, collates
and standardizes,” from Indian ports, over two million export
shipping bills and import bills of entry. Infodrive India,
Benefits of India Export Import Data,
http://www.infodriveindia.com/India-Trade-Data/Benefits.aspx
(last visited Apr. 19, 2010). Infodrive India then cleans up and
stores the data on its server. Id. Due to inconsistencies in
product information and the fact that, according to Infodrive
India, “classification is often wrong,” Infodrive India provides,
for each import or export, the actual product description as well
as the reported HTS Code. Id. As recognized in Dorbest I,
“Infodrive India presents Indian government import data that it
receives on a monthly basis from the Indian customs department.”
Dorbest I, 30 CIT at 1697, 462 F. Supp. 2d at 1285. “Infodrive
India data appears to be the same data provided [in the WTA] in a
desegregated form, providing descriptions of the items that are
imported and classified under a particular [HTS] subheading.” 30
CIT at 1697, 462 F. Supp. 2d at 1285-86. In essence, Infodrive
India is a subset of the WTA, only more detailed. 30 CIT at 1697,
462 F. Supp. 2d at 1286.
13
Brass is “[a]n alloy of copper and zinc.” Webster’s II New
Riverside University Dictionary 197 (1988). Copper is “[a]
ductile, malleable, reddish-brown metallic element that is an
excellent conductor of heat and electricity and is used for
electrical wiring, water piping, and corrosion-resistant parts,”
id. 310, whereas zinc is “[a] bluish-white, lustrous metallic
element used to form a wide variety of alloys including brass
[and] bronze . . . .” Id. 1339.
Court No. 09-00217 Page 8
The Infodrive India data as to France, Japan, and the UAE14 are
as follows:
HTS Code Actual Product Origin Qty Value AUV
Description (Kgs) (Rupees)
74072110 Barre B33/25 H Q1.5MM France 12.0 57091.02 4757.59
(Copper Bar)
74072110 Bronze Bars (Aircraft Raw France 161.0 316566.20 1966.25
Materials for Defence
Use)P.O.NO: 4160375
74072110 Beryllium Copper Flat Bar Japan 3589.5 1444719.91 402.49
(TK46267)
74072110 Beryllium Copper Round Japan 322.0 129600.17 402.49
Bar (TK46268)
74072110 Cupro Nickel Bar UAE 8110.0 3652206.74 450500.40
Second Surrogate Value Submission of Zhejiang DunAn Heitan
(“DunAn”): Investigation of Frontseating Service Valves from the
People’s Republic of China, A-570-933, POI 7/1/07 - 12/31/07 (Dec.
15, 2008), Admin. R. Pub. Doc. 189 (“DunAn’s Second Surrogate Value
Submission”), at Ex. 2. DunAn stresses that copper bar, bronze15
14
Infodrive India reported UAE data in metric tons, which
the court translated into kilograms.
15
Bronze is “[a]n alloy of copper and tin, occas[ionally]
with traces of other metals” or “[a]n alloy of copper, with or
without tin, and antimony, phosphorus, or other components.”
Webster’s II New Riverside University Dictionary, supra note 13,
at 203.
Court No. 09-00217 Page 9
bar, beryllium16 copper bar, and cupronickel17 bar are distinct from
brass bar.18
As a result, the dispute between the parties on this issue
turns on Commerce’s assessment of these Infodrive data. Explaining
its decision not to exclude these imports, Commerce stated:
we find that the Infodrive data contain insufficient
product information in the description of the line items
to enable the Department to make a definitive
determination that these line items are misclassified.
Specifically, the product description in the Infodrive
data are such that, given the dependency upon the
chemical make-up of the underlying products, they could
be properly classified within the Indian HTS category
where they are, or in the category addressed by DunAn.
Thus, the Department cannot determine, due to lack of
product detail, i.e., chemical properties, the precise
chemical make-up of these line items. Accordingly,
without clear evidence to the contrary, the Department
will not speculate that these materials have been
misclassified. Therefore, . . . the Department has
determined to include imports from Japan, France, and the
UAE in calculating the surrogate value for brass bar in
the final determination because the record evidence does
not demonstrate that the imports from these countries
were misclassified.
16
Beryllium is “[a] high-melting, lightweight, corrosion-
resistant, rigid, steel-gray metallic element used as an
aerospace structural material, as a moderator and reflector in
nuclear reactors, and in a copper alloy used for springs,
electrical contacts, and nonsparking tools.” Webster’s II New
Riverside University Dictionary, supra note 13, at 167.
17
Cupronickel is “[a] copper-based alloy containing 10-30%
nickel.” Webster’s II New Riverside University Dictionary, supra
note 13, at 336. Nickel is “[a] silvery, hard, ductile, metallic
element used in alloys, in corrosion-resistant surfaces and
batteries, and for electroplating . . . .” Id. 794.
18
Should Commerce exclude import information from the UAE,
France, and Japan, the AUV for brass bar would decrease by 8.13%.
Court No. 09-00217 Page 10
Decision Mem. at 21.19
DunAn argues that Commerce should have accorded more weight to
the Infodrive India data and that Commerce should have, based on
these data, eliminated the three countries’ data as unreliable.
DunAn in addition contends that it is irrelevant which HTS
classification applies; “[t]he issue is not whether these shipments
have been properly classified within the HTS [but rather] is
whether these shipments are representative of the factor input
Commerce is attempting to value.” (Pl.’s Br. 13.) DunAn offered
record evidence to demonstrate that bronze, beryllium copper, and
cupronickel have different chemical properties and have different
19
Moreover, in its analysis during its preliminary
investigation, Commerce concluded that WTA data:
represent an average of import prices, net of taxes and
import duties, and contemporaneous with the POI for the
input in question. . . . Our analysis of the WTA data
shows that the Infodrive data, analyzed by quantity,
only accounts for 26 percent of the WTA data. We
derived this figure by dividing the total quantity of
the misclassified line items by the total quantity of
WTA data. . . .
Furthermore, record evidence indicates that the line
items that DunAn argues represents materials that are
misclassified [] are, in fact, types of brass, and
therefore these line items are not outside the HTS
category.
Antidumping Duty Investigation of Frontseating Service Valves
from the People’s Republic of China: Factor Valuations for the
Preliminary Determination, A-570-933, POI 7/1/07 - 12/31/07 (Oct.
15, 2008), Admin. R. Pub. Doc. 150 (“Factor Valuations Prelim.
Mem.”), at 7. Because the court affirms Commerce’s decision in
the Final Determination, the court need not address these
additional reasons given for Commerce’s determination.
Court No. 09-00217 Page 11
uses than brass. (See id. 12-13;) DunAn’s Second Surrogate Value
Submission at Exs. 3A-3E. Therefore, according to DunAn, because
the data from these three countries distorted the resulting brass
bar surrogate value and because the Department’s usage of that WTA
data is not a selection of the “best available” evidence,
Commerce’s determination is unsupported by substantial evidence.20
The government responds that the complete WTA data set under
HTS category 7407.21.10 was the best available information on the
record. Commerce chooses surrogate values on a case-by-case basis,
and prefers to use “public, country-wide data.” (Def.’s Opp’n to
Pl.’s Mot. for J. Upon the Agency R. (“Def.’s Br.”) 27 (quoting
Mittal Steel Galati S.A. v. United States, 31 CIT 1121, 1124, 502
F. Supp. 2d 1295, 1298 (2007)).) Consequently, the government
argues, Commerce used “the full WTA data set, with the exception of
imports from non-market economy countries, countries known to have
country-wide export subsidies, or unidentified countries . . .
because [the data] are publicly-available, broad-based, product-
specific, tax-exclusive and contemporaneous.” (Id. (citing Decision
Mem. at 22-23).) In addition, the government points out that
Commerce did in fact examine the Infodrive India data, but did not
find them definitive, particularly because DunAn failed to “provide
20
DunAn’s argument is that Commerce should have used data
from Infodrive India to discredit certain WTA data. This is a
factual question. See Dorbest I, 30 CIT at 1676, 462 F. Supp. 2d
at 1268.
Court No. 09-00217 Page 12
any specific evidence that entries containing a certain amount of
a chemical were inappropriately considered ‘brass bar’ such as
would be classified under the HTS category for brass bar.” (Id. 27,
28.)
The government is correct. The problem with DunAn’s claim is
that it does not focus on the specific information in the
administrative record. In scrutinizing the Infodrive India data,
Commerce confronted two inconsistent descriptions of the imports
from the three countries at issue. Whereas the Infodrive India
spreadsheet listed an “actual product description” for France,
Japan, and the UAE, specified as copper and bronze, beryllium
copper, and cupronickel, respectively, the spreadsheet also
categorized the imported metals as “brass” under the HTS Code.
Bronze, brass, beryllium copper, and cupronickel are all copper
alloys and, although having distinct properties and uses, the types
of metals at issue here are relatively similar in chemical makeup.
See supra notes 13, 15-17. The accuracy of labels assigned to
these imports, therefore, depends very much upon the types and
percentages of metals contained therein. Commerce did not have
this information. Thus, even had Commerce solely relied upon the
Infodrive data, Commerce would still have had to choose between the
“brass bar” classification listed and the perhaps conflicting
product description. It was therefore reasonable for Commerce to
rely upon the Infodrive India HTS classifications rather than the
Court No. 09-00217 Page 13
product descriptions, the former being consistent with the WTA
data. As the court frequently emphasizes, “the possibility of
drawing two inconsistent conclusions from the evidence does not
prevent [Commerce’s] finding from being supported by substantial
evidence.” Matsushita Elec. Indus. Co. v. United States, 750 F.2d
927, 933 (Fed. Cir. 1984) (quoting Consolo v. Fed. Mar. Comm’n, 383
U.S. 607, 619-20 (1966)). It is not the court’s place to choose
between the classification and the description based on this
record. See U.S. Steel Group v. United States, 96 F.3d 1352, 1357
(Fed. Cir. 1996).
DunAn cites to opinions of the Court which, according to
DunAn, “admonished the Department . . . for failing to accord
sufficient weight to Infodrive India data or other trade
intelligence data that indicated the Indian import statistics
utilized for the surrogate value were not representative of the
input being valued.” (Pl.’s Br. 9-12 (discussing Taian Ziyang Food
Co. v. United States, __ CIT __, __, 637 F. Supp. 2d 1093, 1149
(2009); Zhengzhou Harmoni Spice Co. v. United States, __ CIT __,
__, 617 F. Supp. 2d 1281, 1325, 1327 (2009); Globe Metallurgical,
Inc. v. United States, No. 07-00386, 2008 WL 4417187, at *5-7 (CIT
Oct. 1, 2008); Longkou Haimeng Mach. Co. v. United States, __ CIT
__, __, 581 F. Supp. 2d 1344, 1363 (2008)).) See also Dorbest I, 30
CIT at 1698, 1700, 462 F. Supp. 2d at 1286, 1288.
The case law DunAn cites, however, focuses on Commerce’s
Court No. 09-00217 Page 14
failure to provide a sufficient reasoned explanation of its chosen
data set.21 In these cases, the Department wholly failed to address
“whether or not Infodrive India casts light on potential
inaccuracies” in the WTA data. Dorbest I, 30 CIT at 1695, 462 F.
Supp. 2d at 1284. See also Zhengzhou, __ CIT at __, 617 F. Supp. 2d
at 1322-23 (rejecting Commerce’s cursory presumption that Infodrive
data were unreliable without “even a scintilla of evidence of
manipulation or distortion or affiliation”), 1326-27; Taian Ziyang,
__ CIT at __, 637 F. Supp. 2d at 1156 (“Commerce simply dismissed
[respondents’] concerns” in a “terse three sentences” and “failed
21
See Taian Ziyang, __ CIT at __, 637 F. Supp. 2d at 1126
(determining that Commerce had not supported its choice of data
set with substantial evidence, as it had “failed to establish
that its chosen data[]set . . . adequately approximates the
respondent’s production experience” and “failed to establish that
the NDRDF data are sufficiently representative of the garlic seed
used by respondents”), 1144, 1156, 1157, 1162; Zhejiang Native
Produce & Animal By-Products Imp. & Exp. Group v. United States
(“Zhejiang I”), No. 06-00234, 2008 Ct. Intl. Trade LEXIS 69, at
*53 (CIT June 16, 2008) (repudiating Commerce’s conclusion that
its chosen data are most reliable, to value brokerage and
handling, due to the data’s “quality and specificity,” when
Commerce “at no point . . . explain[ed] how the data meets either
one of these standards”); Zhengzhou, __ CIT at __, 617 F. Supp.
2d at 1297-1303 (holding Commerce’s grounds for using Agmarket
data “impermissibly speculative”), 1308-12 (noting Commerce’s
failure to support its use of Maersk data with record evidence),
1321 (“Commerce failed to explain how the seemingly non-
representative import data is the best available information when
domestic data on the record represent the exact type of product
used by the respondents and actual domestic market prices for
that input.” (citation, quotation marks, emphasis, & alterations
omitted)); Globe Metallurgical, 2008 WL 4417187, at *7; Longkou,
__ CIT at __, 581 F. Supp. 2d at 1363; Allied Pac. Food (Dalian)
Co. v. United States (“Allied Pac. I”), 30 CIT 736, 752-68, 435
F. Supp. 2d 1295, 1309-22 (2006).
Court No. 09-00217 Page 15
to directly confront” respondent’s claims), 1159-60. Instead,
Commerce “conclude[d] that Infodrive data [are] unreliable or
contain[] misclassifications, while simultaneously claiming that
[WTA data are] both reliable and contain[] no inaccuracies.”
Dorbest I, 30 CIT at 1697, 462 F. Supp. 2d at 1286.
In the determination at issue in this case, however, the
Department directly addressed the relevance of the Infodrive data
to the WTA data. Commerce did not merely dismiss the Infodrive
India data out of hand, nor did it make a general finding that
Infodrive data were unreliable.22 Rather, Commerce, assuming the
Infodrive data were in fact reliable, directly discussed Infodrive
India’s relevance to the WTA data and found the Infodrive data to
be inconclusive.
Further, even if the overall WTA data were being challenged,
DunAn did not present Commerce with evidence that HTS 7407.21.10
includes imports that are other than the specific input at issue
here. Moreover, DunAn did not provide evidence, other than
Infodrive India, to attempt to demonstrate WTA misclassifications.
Compare Dorbest I, 30 CIT at 1694, 462 F. Supp. 2d at 1283 (noting
that respondents provided evidence that Taiwanese export data did
22
In this respect, the issue here differs from that in
Zhengzhou, where the court rejected the Department’s “bare
speculation” and unsupported presumptions about the domestic
data’s reliability. __ CIT at __, 617 F. Supp. 2d at 1317, 1320-
21, 1322-23, 1325.
Court No. 09-00217 Page 16
not match the WTA-listed Indian imports from Taiwan).23 See also
Allied Pac. I, 30 CIT at 754-55, 435 F. Supp. 2d at 1311-12;
Zhengzhou, __ CIT at __, 617 F. Supp. 2d at 1317 (rejecting
Commerce’s determination on grounds that plaintiffs provided
specific proof that the relevant HTS classification was too broad
and “the great majority of entries” covered goods other than the
subject merchandise (quotation marks & citation omitted)). In
other words, here, both the WTA data and the Infodrive India data
are sufficiently product-specific or representative to be
considered the “best available” information. As the finder of
fact, Commerce therefore had the discretion to choose between these
data sets.
23
The plaintiff in Dorbest I presented evidence that the
Indian domestic furniture industry did not utilize some types of
mirrors imported under the relevant HTS classification reflected
in the WTA. See Dorbest I, 30 CIT at 1698-90, 1694, 1697-98 &
n.17, 1699, 462 F. Supp. 2d at 1279-80, 1283, 1286 & n.17, 1287.
See also Longkou, __ CIT at __, 581 F. Supp. 2d at 1361, 1363.
These plaintiffs also placed evidence on the record demonstrating
that these mirrors were “higher-priced speciality mirrors” and,
therefore, these mirrors had “a distortive effect on the
valuation of the mirror inputs used in furniture production.”
Dorbest I, 30 CIT at 1694, 462 F. Supp. 2d at 1283. See
also Globe Metallurgical, 2008 WL 4417187, at *5-6; Taian Ziyang,
__ CIT at __, 637 F. Supp. at 1149, 1155-56; Zhejiang Native
Produce & Animal By-Products Imp. & Exp. Group v. United States,
No. 06-00234, 2009 Ct. Intl. Trade LEXIS 64, at *18-19 (CIT June
19, 2009); Zhengzhou, __ CIT at __, 617 F. Supp. 2d at 1324.
DunAn did not present Commerce with similar evidence
demonstrating cost of production (“COP”) distortion. In fact,
the AUV of $300.25 fits well within the range of brass bar prices
in India. Globe Metallurgical, Inc. v. United States, No. 07-
00386, 2009 Ct. Intl. Trade LEXIS 35, at *11 (CIT May 5, 2009)
(“The new value selected by Commerce is well within the range of
silica fume prices in India.”).
Court No. 09-00217 Page 17
The court’s duty, in reviewing Commerce’s determination as to
whether a certain set of data is the “best available information,”
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). Thus, “[i]f Commerce’s determination of what
constitutes the best available information is reasonable, then the
[c]ourt must defer to Commerce.” Id. Accord Fujian Lianfu Forestry
Co. v. United States, __ CIT __, __, 638 F. Supp. 2d 1325, 1333
(2009); Zhejiang I, 2008 Ct. Intl. Trade LEXIS 69, at *20; Dorbest
I, 30 CIT at 1676-77, 462 F. Supp. 2d at 1269.
Accordingly, because Commerce’s reading of the evidence is
reasonable, the court rejects DunAn’s challenge to Commerce’s
selection of WTA data, including data on imports from France,
Japan, and the UAE.
B. Commerce’s Calculation of Labor Costs
Next, DunAn challenges Commerce’s derivation of a wage rate
for DunAn’s labor using a “regression-based” calculation24 that
included wage rate and income data from countries (a) not
economically comparable to China and (b) not significant producers
24
For an explanation of the use of regression models, see
Allan G. Bluman, Elementary Statistics: A Step by Step Approach
528-30, 544-46 (6th ed. 2007) and Mario F. Triola, Elementary
Statistics 541-45 (10th ed. 2008).
Court No. 09-00217 Page 18
of merchandise comparable to the subject FSV.25 DunAn instead
advocates the use of an Indian wage rate as the surrogate wage rate
for DunAn’s labor. For the following reasons, the court sustains
the Department’s use of the labor regression model in this
determination.
In its wage rate calculation, Commerce performs a simple
regression to estimate the linear relationship between yearly per
capita gross national income (“GNI/capita”)26 and hourly wage rate
(“wage”). To describe this relationship, Commerce uses publicly
available GNI/capita and wage data from 61 market economy
countries.27 28
GNI/capita serves as the independent variable (x)
25
Plaintiff does not challenge the type of regression used
by Commerce, but rather generally challenges, as inconsistent
with the statute, the use of a regression model to calculate
labor.
26
GNI/capita is equivalent to per capita gross national
product, the latter defined as “the dollar value of a country’s
final output of goods and services in a year divided by its
population.” Antidumping Methodologies: Market Economy Inputs,
Expected Non-Market Economy Wages, Duty Drawback; and Request for
Comments, 71 Fed. Reg. 61,716, 61,723 (Dep’t Commerce Oct. 19,
2006) (quotation marks omitted).
27
The 61 countries plotted on the 2005 regression are:
Albania; Argentina; Australia; Austria; Belgium; Botswana;
Bulgaria; Canada; Chile; Colombia; Costa Rica; Croatia; Czech
Republic; Denmark; Dominican Republic; Ecuador; Egypt; El
Salvador; Estonia; Finland; France; Germany; Hong Kong, China;
Hungary; Iceland; India; Ireland; Israel; Japan; Jordan;
Kazakhstan; Republic of Korea; Latvia; Lithuania; Luxembourg;
Former Yugoslav Republic of Macedonia; Madagascar; Malta;
Mauritius; Mexico; Mongolia; Netherlands; New Zealand; Nicaragua;
Norway; Panama; Poland; Portugal; Romania; Russian Federation;
Seychelles; Singapore; Slovakia; Slovenia; Spain; Sri Lanka;
Sweden; Switzerland; United Kingdom; United States; and West Bank
Court No. 09-00217 Page 19
and wage as the dependent variable (y);29 predictably, these
and Gaza Strip. Import Administration, International Trade
Administration, United States Department of Commerce, Expected
Wages of Selected Non-market Economy Countries (2008),
http://ia.ita.doc.gov/wages/05wages/05wages-051608.html#table1
(last visited Apr. 19, 2010).
28
Commerce utilizes four data sets to regress wage on
GNI/capita: country-specific earnings data from the International
Labour Organization’s Yearbook of Labour Specifics; to account
for inflation, country-specific consumer price index data from
the International Monetary Fund’s (“IMF”) International Financial
Statistics; IMF International Financial Statistics exchange
rates; and country-specific GNI data from the World Bank’s World
Development Indicators. Commerce uses a “base year” of two years
prior to the regression to enter into its calculation.
Antidumping Methodologies: Market Economy Inputs, Expected
Non-Market Economy Wages, Duty Drawback; and Request for
Comments, 71 Fed. Reg. at 61,722; Expected Non-Market Economy
Wages, 70 Fed. Reg. 37,761, 37,762 (Dep’t Commerce June 30, 2005)
(request for comment on calculation methodology). The regression
was performed in 2008, and, given lag time in availability of
data, the base year was 2005. Factor Valuations Prelim. Mem. at
8; (Pl.’s Br. 36 n.*.) Commerce used the base year average
exchange rates to convert the GNI and earnings data into U.S.
Dollars. Decision Mem. at 17.
Commerce uses these data sets to obtain a “complete picture
of labor in the particular market economy,” and, therefore,
attempts to use data including coverage of, among other things,
all types of industries in the respective country. Decision Mem.
at 17; Antidumping Methodologies: Market Economy Inputs, Expected
Non-Market Economy Wages, Duty Drawback; and Request for
Comments, 71 Fed. Reg. at 61,721. In other words, the labor data
used is not industry-specific and “the value for labor will be
the same in every proceeding [in a given year] involving a given
NME.” Antidumping Methodologies: Market Economy Inputs, Expected
Non-Market Economy Wages, Duty Drawback; and Request for
Comments, 71 Fed. Reg. at 61,720.
DunAn has not challenged the use of these data sets in
particular, and instead focuses on the overall use of the
regression analysis.
29
The equation is therefore: Wage[predicted] = Y-intercept +
slope * GNI/capita[entered]. Antidumping Methodologies: Market
Economy Inputs, Expected Non-Market Economy Wages, Duty Drawback;
and Request for Comments, 71 Fed. Reg. at 61,723.
Court No. 09-00217 Page 20
variables have a positive linear relationship. Commerce then
estimates the wage for an NME country by using the NME GNI/capita.
Accordingly, although Commerce used Indian data for other
FOPs, in calculating a 2005 surrogate wage for merchandise from
China, Commerce regressed 2005 market economy wages on 2005
GNI/capitas, as follows:
Expected Wages of Selected Non-Market Economy Countries, supra note
27. Thus, Commerce created a 2005 NME regression line equation to
describe the relationship between the 61 countries’ wages and
GNI/capita:
Court No. 09-00217 Page 21
Wage[predicted] = 0.257585 + 0.000448 * GNI/capita[entered]
See id. Because Commerce estimates that NME countries’s GNI/capita
and wages would have the same relationship, Commerce used the same
regression line to also describe predicted NME wages:
NME wage[predicted] = 0.257585 + 0.000448 * NME GNI/capita[entered]
See id. That is to say, by entering in an NME’s GNI/capita,
Commerce could predict the NME’s wages.
Using this equation, Commerce then entered China’s 2005
GNI/capita –- $1,740 -- into the above equation and derived a wage
of, approximately, $1.04.30 Id. Commerce selected this surrogate
wage rate as the labor FOP for the calculation of DunAn’s COP.
DunAn notes that, had Commerce limited its surrogate values to that
of India as it did for other FOPs, DunAn’s surrogate wage would
have instead amounted to $0.21. (Pl.’s Br. 39;) Expected Wages of
Selected Non-Market Economy Countries, supra note 27.
Like the plaintiff in Dorbest I and in the subsequent decision
post-remand, Dorbest Ltd. v. United States (“Dorbest II”), __ CIT
__, 547 F. Supp. 2d 1321 (2008), DunAn attacks 19 C.F.R. §
351.408(c)(3) as invalid both facially and as-applied in this
case.31 The court will address each of DunAn’s arguments in turn.
30
I.e., 0.257585 + 0.000448 * 1740 = 1.037105 . 1.04.
31
Dorbest I and Dorbest II are on appeal to the Federal
Circuit on the issue of the validity of the labor regression
Court No. 09-00217 Page 22
1. Facial Challenge
First, DunAn argues that Commerce’s regulation is contrary to
the statute and, therefore invalid on its face. Following Dorbest
I, the court rejects DunAn’s facial challenge.32
Section 1677b does, of course, require Commerce to
utilize, to the extent possible, the prices or costs of
factors of production in one or more market economy
countries that are –-
(A) at a level of economic development comparable
to that of the nonmarket economy country, and
(B) significant producers of comparable merchandise.
19 U.S.C. § 1677b(c)(4). Commerce’s regulation –- providing for
the use of “regression-based wage rates reflective of the observed
relationship between wages and national income in market economy
regulation. No. 2009-1257 (Fed. Cir. Mar. 18, 2009).
32
In Dorbest I, plaintiff Dorbest, like DunAn, argued that
the statute mandated that Commerce input only countries that
fulfilled the economic comparability category. In addressing
that challenge, the court assumed, arguendo, that Dorbest’s
reading of the statute was correct, holding that:
Although Commerce’s regulation does not
specifically provide that Commerce must choose
comparable market economies, it does not suggest the
opposite either. Rather, the regulation is silent as to
how Commerce will select market economies for its data
set. As such, even if . . . the antidumping statute
permits use of data only from comparable market
economies, Commerce could conceivably be faithful to
both its regulation and [this] interpretation of the
antidumping statute by using data from only comparable
market economies.
Dorbest I, 30 CIT at 1705, 462 F. Supp. 2d at 1292.
Court No. 09-00217 Page 23
countries” -- is not, on its face, inconsistent with the statutory
requirement for use of prices or costs from a market economy
country. Rather, consistent with the statute, Commerce’s
regulation derives a wage rate for a “hypothetical” market economy
China, that is, a market economy country with China’s level of
economic development and that produces merchandise comparable to
the Chinese merchandise at issue. See Nation Ford Chem. Co. v.
United States, 166 F.3d 1373, 1378 (Fed. Cir. 1999)(“§ 1677b(c)’s
goal [is] constructing a hypothetical ‘market value’ representative
of the foreign producers under investigation”). See also Shakeproof
Assembly Components Div. of Ill. Tool Works, Inc. v. United States,
268 F.3d 1376, 1381 (Fed. Cir. 2001) (according Commerce discretion
to depart from surrogate country valuation “when there are other
methods of determining the ‘best available information’ regarding
values of [FOPs].”).
DunAn attempts to distinguish Dorbest I on the grounds that
Dorbest I did not address the substantial producer prong of section
1677b(c). However, the court’s reasoning for economic
comparability applies equally to the significant producer
requirement, as to choice of an underlying data set, should such a
requirement indeed exist. Therefore, Dorbest I is persuasive here.
DunAn also attacks Dorbest I by highlighting an excerpt from
the legislative history of section 1677b(c). DunAn cites the
Conference Agreement discussion of this provision contained in the
Court No. 09-00217 Page 24
Omnibus Trade and Competitiveness Act of 1988: “[t]he [FOPs] would
be valued from the best available evidence in a market economy
country (or countries) that is at a comparable level of economic
development as the country subject to investigation and is a
significant producer of the comparable merchandise.” H.R. Rep. No.
100-576, at 590 (1988) (Conf. Rep.), reprinted in 1988 U.S.C.C.A.N.
1547, 1623. But the language from the Conference Report does not
provide any more guidance than the wording of section 1677b(c), nor
has DunAn demonstrated that the Report is in any way inconsistent
with the court’s reading of the statute.
Finally, DunAn points the court to other decisions from this
Court that have invalidated 19 C.F.R. § 351.408(c)(3) as an
impermissible and unreasonable implementation of section 1677b(c).
See, e.g., Taian Ziyang, __ CIT at __, 637 F. Supp. 2d at 1136-38;
Allied Pac. Food (Dalian) Co. v. United States (“Allied Pac. II”),
__ CIT __, 587 F. Supp. 2d 1330 (2008). These opinions take the
position that the regulation is invalid because it precludes
Commerce from considering investigation- and product-specific wage
data. See Allied Pac. II, __ CIT at __, 587 F. Supp. 2d at 1356
(“The regulation requires a single calculated wage rate to be
determined annually . . . . [and therefore] [t]he regulation does
not permit a surrogate labor rate to be determined for an
individual proceeding”), 1358 (“Commerce’s response in the preamble
[to the regulation] falls short of a plausible explanation of why
Court No. 09-00217 Page 25
Commerce considered it acceptable to foreclose consideration of
data specific to the type of labor required to produce comparable
merchandise. . . . [Commerce’s] rationale [is] insufficient to
justify a regulation that disallows the use of data on the cost of
a specific type of labor”). But the statute imposes a data
selection requirement of country comparability, not merchandise
specificity; nor does the statute require the use of data generated
for an individual or specific investigation. See 19 U.S.C. §
1677b(c)(4) (Commerce “shall utilize . . . the prices or costs of
factors of production in one or more market economy countries that
are . . . significant producers of comparable merchandise”).33
Consequently, the Department’s labor rate regulation is not, on its
33
Moreover, assuming arguendo that the statute does not
contemplate a hypothetical market economy China, it is far from
clear that -- despite the fact that Commerce calculates labor
wage rates “each year” -- Commerce cannot limit its data set,
through an investigation, to those countries that satisfy the
statutory criteria. Whether Commerce should so limit its data
set or should instead include a broad set of data such as that
used in this case, that is, which set of data qualifies as the
“best available information,” goes to Commerce’s application of
section 351.408(c)(3) rather than to the regulation’s facial
validity. See Wash. State Grange v. Wash. State Republican Party,
552 U.S. 442, 449 (2008) (“a plaintiff can only succeed in a
facial challenge by establishing that no set of circumstances
exists under which the [regulation] would be valid” (citation,
quotation marks, & alteration omitted)); Preminger v. Sec’y of
Veterans Affairs, 517 F.3d 1299, 1311 (Fed. Cir. 2008) (“A facial
challenge to a statute or regulation is independent of the
individual bringing the complaint and the circumstances
surrounding his or her challenge. . . . In contrast, an
as-applied challenge is specific to the facts of the particular
individual involved in the suit.” (citations & quotation marks
omitted)).
Court No. 09-00217 Page 26
face, inconsistent with the statute.
2. As-Applied Challenge
Second, DunAn argues that the Department should have used the
Indian wage rate in lieu of the number for China’s wage rate
derived from the regression. In this regard, DunAn does not attack
the methodology Commerce used in implementing the regulation and
does not, other than challenging the legality of the regression
model, explain how the Indian wage rate instead constitutes the
“best available information.” Rather, DunAn argues that Commerce
did not explain how use of global regression-based calculation has
produced a wage rate that is more accurate for the valuation of
labor in the FSVs industry. (See Pl.’s Br. 39-40; Pl.’s Reply Br.
15.)
But Commerce did in fact explain its reasoning on this issue:
While surrogate values for other FOPs are selected from
a single surrogate country, due to the gross variability
between wage rates and GNI, we do not find reliance on
wage data from a single surrogate country reliable for
purposes of valuing the labor input. While there is a
strong positive correlation between wage rates and GNI,
there is also variation in the wage rates of comparable
market economies. For example, even for countries that
are relatively comparable in terms of GNI for purposes of
factor valuation (e.g., where GNI is below US$ 2500), the
wage rate spans from US$ 0.21 to US$ 2.06. To further
illustrate, DunAn advocates that instead of relying on
the regression methodology, the Department should value
labor using India’s single wage rate. Petitioner contends
that should the Department consider valuing labor from a
single surrogate, other comparable countries should also
be considered, such as [Colombia]. Although both India
and [Colombia] have GNIs of under US $2500, India’s wage
rate is approximately US $0.21, as compared to
[Colombia’s] observed wage rate of US $1.13. The large
Court No. 09-00217 Page 27
variance in these two countries’ wages—not to mention the
variances which occur when wage rates are considered for
other market economy countries of economic comparability—
illustrate the arbitrariness of relying on a wage rate
from a single country. For these reasons, DunAn’s
suggestion of using a single surrogate country to value
labor does not constitute the best available information.
Decision Mem. at 20 (citations omitted).
Moreover, earlier in its Decision Memo, Commerce explained the
benefits of its global regression model: “[t]he Department . . .
considers that the regression methodology constitutes the best
available information for purposes of valuing labor” as “[t]he
Department’s methodology avoids extreme variances in labor wage
rates that exist across market economies, and instead, accounts for
the global relationship between GNI and wages.” Id. at 17.
Further:
relying only on data from countries that are economically
comparable to each NME would undermine, rather than
enhance, the accuracy of the Department’s regression
analysis. The number of “economically comparable”
countries would be extremely small. For example, when
examining countries with GNIs that range between US $700
and US $2500 (e.g., countries that might be considered
economically comparable to [China]), there are just nine
countries out of a full data set of 61 countries used in
the revised wage calculation in May 2008. A regression
based on such a small subset of countries would be highly
dependent on each and every data point, and thus, the
inclusion or exclusion of any one country could have an
extreme effect on the regression results from
case-to-case, and from year-to-year. Relying on a broad
data set, as opposed to data from just the economically
comparable countries, maximizes the accuracy of the
regression results, minimizes the effects of the
potential year-to-year variability in the basket, and
provides predictability and fairness. . . .
[T]he purpose in using a regression methodology . . . is
Court No. 09-00217 Page 28
to provide a more accurate labor value that is stable and
predictable across all cases. The regression methodology
accomplishes this by providing a variable average that
“smoothes out” the variations in the data and permits, in
a predictable manner, the estimation of a market economy
wage rate relative to a level of GNI that is as accurate
as practicable, with the least amount of volatility
across cases.
Id. at 19 (citations & footnote omitted).
Considered in light of Commerce’s analysis, DunAn did not
create a record establishing that the particular Indian surrogate
value, $0.21/hour, would somehow be more accurate, and thus better
information, than the regression surrogate value derived for China.
Compare Dorbest II, __ CIT at __, 547 F. Supp. 2d at 1328-30
(analyzing plaintiffs’ argument that the regression was
heteroscedastic); Dorbest I, 30 CIT at 1710-12, 462 F. Supp. 2d at
1296-98 (addressing plaintiffs’ arguments that the regression model
is distorted given the existence of a non-zero y-intercept).
Contrary to DunAn’s arguments, Commerce’s explanation reasonably
supports Commerce’s use of the broader global regression
methodology and preference for the wage rate selected here when
compared to India’s surrogate wage rate. See Dorbest I, 30 CIT at
1677, 462 F. Supp. 2d at 1269 (Commerce must “justify its selection
of data with a reasoned explanation.”). There is nothing on the
record here that would preclude a reasonable mind from preferring
the regression-generated wage rate to the specific India-based
$0.21 rate.
Accordingly, the court affirms Commerce’s use of the
Court No. 09-00217 Page 29
regression model in calculating the FOP for labor in this case.
C. Partial AFA Applied as to DunAn U.S. Sales and ICC
DunAn next challenges, as unsupported by substantial evidence
on the record, Commerce’s decision to apply partial AFA –- to
DunAn’s reported U.S. December 2007 sales and to the ICC for the
months of October through December 2007 –- because the Department
was unable to verify the data DunAn submitted.34 As the court will
explain, the court also affirms this aspect of the Department’s
final determination.
1. Commerce’s Verification of DunAn’s U.S. Sales and ICC
The court begins with a summary of the relevant facts at issue
during Commerce’s verification of DunAn’s POI U.S. sales of FSVs.
During the POI and beyond, Dunan’s U.S. subsidiary, DunAn
Precision, Inc., and a U.S. customer had a purchasing agreement
whereby the customer maintained quantities of imported DunAn FSV
inventory in the customer’s U.S. warehouse. Each month, the
customer withdrew FSVs out of the warehouse as needed, and reported
the number of used inventory (or “usage”) to DunAn Precision.
According to DunAn, DunAn Precision would review these “consumption
reports” for accuracy, and, if correct, would invoice the customer
for the values on the consumption report each month. (Pl.’s Br. 15-
16;) Application of Partial Adverse Facts Available for Zhejiang
34
Commerce is required to verify “all information relied
upon” in making its final determination. 19 U.S.C. § 1677m(i)(1).
Court No. 09-00217 Page 30
DunAn Precision Industries Co., Ltd., Zhejiang DunAn Hetian Metal
Co., Ltd. and their U.S. Subsidiary DunAn Precision Inc. in the
Antidumping Investigation of Frontseating Service Valves (“FSVs”)
from the People’s Republic of China, A-570-933, POI 7/1/07 -
12/31/07 (Mar. 6, 2009), Admin. R. Conf. Doc. 228 (“Application of
AFA Mem.”), at 2-3. If the consumption reports were inaccurate,35
DunAn Precision would invoice the customer at the correct value, and
“would keep a record of the discrepancy and invoice [the customer]
on the corrected quantity.” (Pl.’s Br. 16.) Accord Application of
AFA Mem. at 2, 3. Thereafter, based on the customer’s recent
consumption and projected upcoming needs, DunAn Precision would
issue FSV orders to DunAn. Application of AFA Mem. at 3.
During verification, DunAn submitted to Commerce DunAn
Precision’s invoices and financial statements together with a “Sales
Reconciliation” worksheet harmonizing the two. Verification of the
U.S. sales questionnaire responses of Zhejiang DunAn Precision
Industries Co., Ltd., Zhejiang DunAn Hetian Metal Co., Ltd., and
their U.S. subsidiary DunAn Precision Inc. in the Antidumping
Investigation of Frontseating Service Valves (“FSVs”) from the
People’s Republic of China, A-570-933, POI 7/1/07 - 12/31/07 (Jan.
35
During the POI, Mr. Shu, the DunAn Precision general
manager, verified the accuracy of the consumption report by
forwarding the report to Mr. Han, an engineer, who compared the
report with the physical FSV inventory in the warehouse.
Application of AFA Mem. at 2. During Commerce’s investigation
and verification, DunAn Precision’s general manager was Mr. Qi.
Id.
Court No. 09-00217 Page 31
15, 2009), Admin. R. Conf. Doc. 254 (“Verification Mem.”), at 7.
DunAn noted that payment received from its customer in December 2007
was thirty cents less than the value on its December 2007 invoice,
but, at the time, provided no reason for this seemingly minor
discrepancy.36 Application of AFA Mem. at 3.
Subsequently, in its investigation into other DunAn Precision
sales records, Commerce discovered that, for the month of December
2007, the consumption report and the invoice did not match.
Although the total value noted in the invoice deviated by only
thirty cents from the consumption report –- consistent with the
December 2007 discrepancy between payment and invoice noted above --
the quantities in the December 2007 consumption report differed
significantly from those in the invoice. Verification Mem. at 8;
Application of AFA Mem. at 3. Specifically, the consumption report
quantity for one FSV model vastly exceeded that in the invoice, and,
for another FSV model, the invoice quantity vastly exceeded that in
the consumption report.37 Application of AFA Mem. at 5; Decision Mem.
36
DunAn Precision also informed Commerce of a
misclassification, as income, of a $[[ ]] security deposit;
Commerce confirmed this misclassification. Verification Mem. at
7.
37
For December 2007, the consumption report indicated a
quantity of [[ ]] pieces of FSV model [[ ]]
whereas the invoice noted [[ ]] pieces of this model; this
is a difference of [[ ]] pieces. Verification Mem. at 8.
Also for December 2007, the consumption report recorded a
quantity of [[ ]] pieces of FSV model [[ ]] as
opposed to the invoice number of [[ ]], a difference of
[[ ]]. Application of AFA Mem. at 3.
Court No. 09-00217 Page 32
at 49-50.
Commerce asked for an explanation of these discrepancies. Mr.
Qi responded that he did not have one. Verification Mem. at 8.
Later, he told Commerce that he “remembered” that “when he first
received the December 2007 [] monthly consumption report, he noticed
an abnormally large withdrawal” of a certain FSV model;38 after
verifying that the amount in the consumption report was inaccurate,
he corrected the error with the customer. Id. Accord Application of
AFA Mem. at 3. However, DunAn did not have any record of the
discrepancy and correction, despite DunAn Precision and Mr. Qi’s
policy to maintain such documentation. Verification Mem. at 8;
Application of AFA Mem. at 2, 3. Moreover, Mr. Qi did not explain
this deviation from policy and claimed not to know the location of
any of Mr. Han’s reports. Application of AFA Mem. at 3.
The only document DunAn voluntarily produced as to the
discrepancy was an e-mail exchange between Mr. Han and an employee
of the U.S. customer, in which the latter sent the consumption
report, asking Mr. Han to “[p]lease review this and confirm this
payment is accurate.” U.S. Sales Verification Ex. 7. Mr. Han
responded that “[t]he numbers showing on the report of the month of
Dec.[ are] right [and] [p]lease go ahead [and] arrange the payment.”
Id. DunAn explained that the e-mail shows an assent to value rather
than quantity. Verification Mem. at 9; Application of AFA Mem. at
38
Model No. [[ ]]
Court No. 09-00217 Page 33
4. DunAn also claimed that the U.S. customer likely misreported
numbers on its consumption reports for financial reasons.39 Further,
DunAn argued that the consumption report numbers were abnormally
large in comparison to other 2007 orders,40 and, in any event, it
would have been impossible for the customer to withdraw so many of
the relevant model of FSVs from inventory, as DunAn Precision did
not have enough of the model in stock.41 Verification Mem. at 10;
39
According to DunAn, the U.S. customer [[
]]. Verification Mem. at 10. Accord
Application of AFA Mem. at 4. In other words, the customer
[[
]]. Verification Mem. at 10. Accord
Application of AFA Mem. at 4. Despite this business tactic,
however, DunAn Precision [[
]]. Verification Mem. at 10. Accord Application of AFA Mem.
at 4. During verification, Commerce confirmed the
[[ ]] and the U.S. customer’s
[[ ]]. Verification Mem. at
10; Application of AFA Mem. at 5.
40
DunAn noted that “the consumption alleged for a single day
in December for [[ ]] was [[ ]] units, which
far exceeded the daily total for any other day and, in fact,
exceeded the entire monthly total for this model in other
months.” (Pl.’s Br. 18.) [[ ]] is twenty times greater
than the average usage for this model. (Id. 25.)
41
Taking into account consumption reports through November
2007, DunAn Precision usage in 2007, and imports through December
7, 2007, the quantity of the relevant FSV model in warehouse
inventory available to the U.S. customer, adjusted by Commerce,
totaled [[ ]], which is [[ ]] less than the customer’s
December 2007 consumption report. See supra note 37; Verification
Court No. 09-00217 Page 34
Application of AFA Mem. at 5.
Confusing matters further, however, Mr. Qi maintained separate
“monthly inventory reports” or “MIRs,” which Commerce obtained for
the months October 2007 through March 2008.42 43
Conspicuously, the
January 2008 MIR was singularly structured. Verification Mem. at 11;
Application of AFA Mem. at 5-6. Unlike the other MIRs, the January
2008 MIR did not account for the final inventory from the previous
month, that is, the report did not account for December 2007
inventory remaining after subtracting out the U.S. customer’s
purchases that month; the January MIR instead used the U.S.
customer’s consumption numbers.44 Verification Mem. at 11-12;
Mem. at 10-11; U.S. Sales Verification Ex. 7; (Pl.’s Br. 18.)
42
Significantly, DunAn Precision’s outside accountant used
the MIRs as the basis for inventory on the balance sheet and for
costs of sales calculation in the income statement. Verification
Mem. at 12-13; Application of AFA Mem. at 6.
43
Mr. Qi also kept a worksheet on his computer allowing him
to compare 2007 and 2008 sales in order to project future FSV
demand. Verification Mem. at 8. The total 2007 quantity differed
from the total 2007 quantity provided in the monthly invoices.
Id. Mr. Qi stated that he did not know where the numbers came
from except that another employee provided them to him. Id. The
employee had no record of these 2007 numbers, and also could not
determine the source of the quantity figures contained in Mr.
Qi’s worksheet. Id.
44
In describing the MIRs, Commerce explained that:
each [MIR], other than January 2008, was similarly
structured: the first column is total inventory from
the previous month, the second column is inventory
received during the current month, the third column is
the total of the previous two columns, the fourth
column is the usage during the current month, and the
Court No. 09-00217 Page 35
Application of AFA Mem. at 5-6. The remaining 2008 MIRs carried
over the sales from December 2007, but the amount carried over still
came from the December consumption report, not the December
invoice.45 Verification Mem. at 12; Application of AFA Mem. at 6.
fifth column is the total ending inventory (the third
column total minus the fourth column usage). This last
column is then carried over to the next month’s DunAn
Precision [MIR] as the first column.
Verification Mem. at 11. But as to the January 2008 MIR:
the first column . . . is not the same as the last
column of the December report, i.e., the ending
inventory from December 2007. Rather, the first column
of the January 2008 DunAn Precision [MIR] is the same
as the third column of the December 2007 DunAn
Precision [MIR], i.e., the total inventory in December
before usage is deducted. Therefore, the last two
columns of the December 2007 DunAn Precision [MIR],
including December usage, which consists of the
quantities reported by DunAn in its sales
reconciliation, is excluded from the inventory
calculation starting in January 2008.
Secondly, the January DunAn Precision [MIR] has an
additional column that the other reports do not have: a
column for the usage of the previous month: December
2007. We noted that the December 2007 usage column in
January 2008 DunAn Precision [MIR] contained the
quantity figures from the [U.S. customer] monthly
consumer report, not the quantities from the December
2007 sales invoice. Thus, the January 2008 DunAn
Precision [MIR] begins with the total inventory of
December 2007 (without the deduction of December 2007
usage), and then deducts December 2007 usage based on
the [U.S. customer] monthly consumption report figures,
and January 2008 usage.
Id. at 11.
45
Commerce “examined the DunAn Precision [MIRs] for February
and March 2008, to see if [they] were reconciled to include the
allegedly correct quantity figures from the December 2007 DunAn
Court No. 09-00217 Page 36
Commerce was concerned that this MIR structure, by eliminating
December 2007 net inventory, served to side-step, rather than to
reconcile, the very quantity discrepancies at issue. Verification
Mem. at 12; Application of AFA Mem. at 6. At first, Mr. Qi could
not provide any explanation for the difference in the January 2008
MIR or how the MIRs resolved the quantity/inventory December 2007
conundrum and could not even remember making the report.
Verification Mem. at 9, 12. Mr. Qi finally answered that DunAn
Precision reported its numbers in that way for tax reasons.46
Verification Mem. at 12.
In essence, Mr. Qi admitted that the inventory numbers
contained in the October, November, and December 2007 MIRs were
Precision [MIR].” Verification Mem. at 12. Commerce “note[d] that
[these MIRs] were not [so reconciled], and the December 2007
[U.S. customer] monthly consumption figures were carried
forward.” Id.
46
As to DunAn Precision’s purported tax reasons for the
January 2008 MIR, Mr. Qi informed the Department that DunAn
Precision [[
]]
although it must, in accordance with its agreement with its U.S.
customer “keep four to six weeks of inventory on hand at all
times.” Verification Mem. at 12; Application of AFA Mem. at 6.
Because DunAn Precision [[
]]
Verification Mem. at 12. Thus, DunAn Precision must continue
receiving inventory but [[
]], Verification Mem.
at 12, that is, it [[
]]. Application of AFA Mem. at 6.
Court No. 09-00217 Page 37
incorrect. But while Commerce pointed out that this recordation of
inventory indicated that the consumption reports were accurate, Mr.
Qi again, without explanation, maintained that the invoice
quantities were correct. Verification Mem. at 12. Mr. Qi still
refused to answer why consumption report numbers, rather than
invoice numbers, were used in the MIRs, except to indicate that the
U.S. customer [[ ]].
Application of AFA Mem. at 6.
As a result of the Commerce’s inability to verify DunAn’s
conflicting sales data for December 2007, and because of DunAn’s
lack of clarity regarding these data, Commerce applied AFA to
DunAn’s December 2007 entries at an AD margin of 55.62 –- the
margin from the initiation and the highest margin calculated for the
proceeding. Decision Mem. at 52. Moreover, because Mr. Qi provided
evidence that inventory numbers were incorrectly reported in the
MIRs for the latter three months of 2007, Commerce applied AFA as to
the ICC for these months and used the highest ICC expense calculated
for any sale during the POI. Id.
2. Analysis
a. Application of “Facts Otherwise Available”
The administrative record contains substantial evidence
supporting Commerce’s application of AFA as to the December 2007
sales. In accordance with 19 U.S.C. § 1677e(a)(2)(D), Commerce
noted significant irreconcilable differences, in December sales,
Court No. 09-00217 Page 38
between the consumption reports and the invoices, and thus could not
verify these sales numbers.47
When a respondent has not provided Commerce with accurate,
verifiable record evidence, the statutory provision for application
of facts otherwise available is intended to permit Commerce to fill
the gap. Ningbo Dafa Chem. Co. v. United States, 580 F.3d 1247, 1255
(Fed. Cir. 2009); Statement of Administrative Action, H.R. Rep. No.
103-316, at 869 (1994) (“SAA”), reprinted in 1994 U.S.C.C.A.N. 4040,
4198. See also Nippon Steel Corp. v. United States, 337 F.3d 1373,
1381 (Fed. Cir. 2003); Dorbest I, 30 CIT at 1737, 462 F. Supp. 2d at
1318 (“Section 1677e(a) requires that there be a gap in the record
47
Commerce may use “facts otherwise available” in reaching
its determination, specifically where:
(1) necessary information is not available on the
record, or
(2) an interested party or any other person–
(A) withholds information that has been
requested by the administering authority or the
Commission under this title,
(B) fails to provide such information by the
deadlines for submission of the information or in
the form and manner requested, subject to . . .
[other provisions not relevant here],
(C) significantly impedes a proceeding under
this title, or
(D) provides such information but the
information cannot be verified as provided in [19
U.S.C. § 1677m(i)] . . . .
19 U.S.C. § 1677e(a). Accord 19 C.F.R. § 351.308(a).
Court No. 09-00217 Page 39
of verifiable information due to a party’s failure to supply
necessary or reliable information in response to an information
request from Commerce” (citing NTN Bearing Corp., 368 F.3d at 1377
(“All that is required is that the necessary information be
unavailable on the record.”))(other citations omitted)).
Accordingly, Commerce’s use of facts otherwise available is
warranted when Commerce cannot verify the accuracy of respondent’s
data or cannot reconcile the information produced. 19 U.S.C. §
1677e(a); Heveafil Sdn. Bhd. v. United States, 58 F. App’x 843, 847-
48 (Fed. Cir. 2003). As to its procedures for verifying information
provided in respondent’s questionnaire responses, Commerce is
accorded broad discretion. Heveafil, 58 F. App’x at 847; Micron
Tech., Inc. v. United States, 117 F.3d 1386, 1396 (Fed. Cir. 1997).48
DunAn points to other documents, separately verified by
Commerce, such as the invoices and consumption reports through
November, that purportedly demonstrate the accuracy of its December
invoices. Because of these other invoices and documents, DunAn
claims that no “gaps” existed on the record to justify the use of
AFA.49 DunAn contends that Shandong Huarong Mach. Co. v. United
48
To the extent DunAn rejects Commerce’s administration of
the verification, DunAn has presented the court with no evidence
that Commerce acted arbitrarily in these proceedings.
49
DunAn also argues that, because Commerce accepted the date
of invoice as the date of sale for its calculations, Commerce
should have accepted the sales listed on the invoice only. The
court agrees with the government that the date of sale does not
wed Commerce to accepting invoice amounts at face value despite
Court No. 09-00217 Page 40
States, 30 CIT 1269, 435 F. Supp. 2d 1261 (2006) supports the
conclusion that, because it provided Commerce with “necessary
information,” Commerce could not apply facts otherwise available.
Shandong, 30 CIT at 1301-02, 435 F. Supp. 2d at 1289.
The government responds, however, that, when attempting to
verify the accuracy of sales and ICC, Commerce “discovered documents
that contradicted those previously provided to it.” (Def.’s Br. 17.)
Because of these inconsistencies, Commerce was unable to verify the
information on the record and could not rely on the accuracy of
DunAn’s documentation. The government also argues that DunAn’s
consumption reports prior to December 2007 are not relevant to the
question of whether records for December 2007 were accurate, and
shipment records only display import numbers and do not account for
the debated consumption numbers. (Id. 21.) As to DunAn’s complaints
that Commerce did not utilize the consumption reports instead of the
invoices, the government argues that Commerce did not accept the
accuracy of the consumption reports, but, rather, determined that
the consumption reports indicated contradictions in DunAn
Precision’s records that prevented Commerce from verifying the
December sales numbers. (Id. 21-22.)
significant discrepancies in the documentation. Nor does the
choice of date of sale render the consumption report numbers
irrelevant, as it was DunAn Precision’s practice to review the
consumption reports for accuracy and, after recording
inconsistencies, invoice its customer based on these data.
Moreover, DunAn Precision’s own January 2008 accounting records
conflicted with the December invoice numbers.
Court No. 09-00217 Page 41
The government is once again correct. Nothing in Shandong
indicates that Commerce may not apply facts otherwise available when
information is unverifiable; unverifiable “necessary information”
creates a “gap” in the administrative record to the same degree as
a complete absence of “necessary information.” See Heveafil, 58 F.
App’x at 847-48. See also SAA at 869, reprinted in 1994 U.S.C.C.A.N.
at 4198. Such information is still “missing” from the record that
would serve to verify the contradictory sales numbers. A
respondent’s submission of unverifiable evidence, rather than no
evidence at all, does not save the respondent from Commerce’s
reasonable use of facts otherwise available.50 In any event, the
court would direct DunAn to read the clear and unambiguous language
of section 1677e(a) that instructs that facts otherwise available
are appropriate either when “necessary information is not available
on the record” or when “an interested party or any other person . .
. provides such information but the information cannot be verified
. . . .” 19 U.S.C. § 1677e(a).
For the same reason, as to ICC, the court cannot mandate that
Commerce ignore purportedly unreliable statements made by Mr. Qi in
favor of what Commerce has reasonably determined to be unverifiable
50
As Defendant-Intervenor points out, “[i]f DunAn’s argument
were taken to its illogical conclusion, all a respondent would
have to do to overcome application of [AFA] for failing to
provide information, would be to supply any information, even if
it were false and unverifiable.” (Def.-Intervenor’s Opp’n to
Pl.’s Rule 56.2 Mot. for J. Upon the Agency R. (“Def.-
Intervenor’s Br.”) 14.)
Court No. 09-00217 Page 42
information.
Finally on this issue, DunAn argues that the inventory reports
show that it was impossible to fulfill the consumption reports’
requirements, and claims that the December 2007 withdrawal was
clearly so large as to be aberrational. Commerce replied to DunAn’s
concerns that “DunAn attempts to demonstrate the accuracy of its
records by pointing to the very records that could not be
substantiated at verification.” Decision Mem. at 51.51
The court again agrees with the government’s position. Given
that, for the relevant valves, Commerce could verify neither the
exact number of December 2007 sales nor the total inventory in stock
between October and December 2007, it is reasonable for Commerce to
decline to square alleged December inventory amounts and sales, even
in light of DunAn’s proffered import data and even assuming,
arguendo, that this import information is correct. Moreover,
because its December 2007 sales were unverifiable and because of Mr.
Qi’s admission,52 it was also within Commerce’s discretion to refuse
51
DunAn also disputes Commerce’s finding that “the
withdrawals on DunAn’s inventory reports cover a broad range of
quantity, and while the monthly withdrawal in question is the
largest, we do not find that it is so much larger than the others
as to be anomalous, and indicate that it is inaccurate.” Decision
Mem. at 51. As the court determines that Commerce’s reasoning,
regarding problems with verification of December sales, was
supported by substantial record evidence, the court need not
address this further factual finding.
52
Mr. Qi admitted that [[
]]. See supra.
Court No. 09-00217 Page 43
to find that anomalies in December sales numbers definitively either
verified or discredited the accuracy of various other information on
the record.
As such, Commerce’s use of facts otherwise available, as to the
December 2007 sales and ICC, is sustained.
b. Application of Adverse Inferences
The administrative record also reflects that Commerce
supported, with substantial evidence, its decision that DunAn did
not act “to the best of its ability” to aid Commerce in resolving
record discrepancies. 19 U.S.C. § 1677e(b).53
In making its determination whether or not to utilize an
adverse inference, Commerce need only make a “factual assessment of
the extent to which a respondent keeps and maintains reasonable
records and the degree to which the respondent cooperates in
investigating those records and in providing Commerce with the
requested information.” Nippon, 337 F.3d at 1383. Moreover, there
is no mens rea requirement to warrant an adverse inference, and
Commerce may use adverse facts regardless of a respondent’s
motivation or intent. Id.
53
Commerce may “use an inference that is adverse to the
interests of [the interested party]” if Commerce “finds that an
interested party has failed to cooperate by not acting to the
best of its ability to comply with [Commerce’s] request for
information.” 19 U.S.C. § 1677e(b). Accord 19 C.F.R. §
351.308(a). The adverse inference “may include reliance on
information” from the petition, a final determination in the same
investigation, or “any other information placed on the record.”
19 U.S.C. § 1677e(b). Accord 19 C.F.R. § 351.308(c).
Court No. 09-00217 Page 44
The statutory standard does not require perfection;
nonetheless, though mistakes may sometimes be discounted, a
respondent cannot be “inattentive[], careless[], or inadequate [in]
record keeping.” Id. at 1382. Commerce may presume that a
respondent is familiar with its own records. Id. Commerce may also
assume that respondents are familiar with rules and regulations that
apply to the import activities undertaken. Id. As a consequence, in
order to avoid an adverse inference, a respondent must:
(a) take reasonable steps to keep and maintain full and
complete records documenting the information that a
reasonable importer should anticipate being called upon to
produce; (b) have familiarity with all of the records it
maintains in its possession, custody, or control; and (c)
conduct prompt, careful, and comprehensive investigations
of all relevant records that refer or relate to the
imports in question to the full extent of the importers’
ability to do so.
Id.
Errors resulting in failure to provide information (e.g.,
computer errors or mistaken advice from an attorney) will not
absolve a respondent from a Commerce determination that the
respondent has failed to cooperate. See PAM, S.p.A. v. United
States, 582 F.3d 1336, 1339 (Fed. Cir. 2009). A respondent may not
rely on excuses that its employee designated to prepare the response
either does not know about the needed records, Nippon, 337 F.3d at
1383, or has a lack of familiarity with the respondent’s accounting
records. Heveafil, 58 F. App’x at 849. Nor can the respondent avoid
adverse inferences if it finds that records no longer exist or
Court No. 09-00217 Page 45
cannot be located. See id.
DunAn argues that DunAn Precision merely failed to maintain
sufficient records to account for discrepancies between consumption
reports and invoices. These failures, however, even if inadvertent,
support Commerce’s decision to apply an adverse inference. See
Nippon, 337 F.3d at 1383. Further, Commerce met with Mr. Qi several
times and, in some instances, Mr. Qi could not explain the
inconsistencies in DunAn Precision’s documents. Of those
inconsistencies for which he could account, Mr. Qi informed Commerce
that DunAn Precision made adjustments in its accounting records –-
also provided to Commerce –- but, at the same time, kept MIRs that
conflicted with the invoices. Yet Mr. Qi continued to insist that
the invoices were correct. This lack of clarity indicates, at best,
negligent record keeping, inadequate knowledge of existing records,
insufficient inquiry into these records, and failure to adequately
prepare Mr. Qi for Commerce’s investigation. See id.; Heveafil, 58
F. App’x at 849; PAM, 582 F.3d at 1339.
DunAn once again relies on Shandong, 30 CIT at 1301-02, 435 F.
Supp. 2d at 1288-89, as support for its position.54 But, consistent
with Shandong, it is within Commerce’s discretion to make factual
54
The Shandong court upheld Commerce’s decision because, on
the record, it was reasonable for Commerce to refuse to apply AFA
in light of its determination that “SMC complied with [the
Department’s] requests for documentary evidence regarding its
ocean freight expenses . . . .” Shandong, 30 CIT 1301, 435 F.
Supp. 2d at 1289 (quotation marks omitted).
Court No. 09-00217 Page 46
conclusions based upon the administrative record so long as a
reasonable fact finder could make such conclusions. DunAn has not
demonstrated to the court that, on this administrative record, a
reasonable fact finder could not come to the conclusion that
Commerce reached here. See U.S. Steel Group, 96 F.3d at 1357-58; In
re Alonso, 545 F.3d 1015, 1019 (Fed. Cir. 2008).
On the record before the court, it was reasonable for Commerce
to find that either DunAn was not completely forthcoming to Commerce
or that DunAn Precision was at least negligent with its record
keeping. Therefore, the court sustains Commerce’s application of an
adverse inference against DunAn.
c. Use of AFA Margin of 55.62 percent55
DunAn also contests the resulting AFA rate. Commerce applied
a 55.62 percent dumping margin to DunAn’s December 2007 sales of the
two FSV models at issue, as 55.62 percent was the initiation rate
and the highest rate in the proceeding. Application of AFA Mem. at
9; Decision Mem. at 52.56
The statute explicitly authorizes Commerce, in determining an
appropriate AFA rate, to rely on any information placed on the
record, including information derived from the petition. 19 U.S.C.
55
DunAn does not challenge the particular AFA rate applied
to the ICC.
56
55.62 percent happens to also be the China-wide rate.
Frontseating Service Valves from the People’s Republic of China,
74 Fed. Reg. at 19,197.
Court No. 09-00217 Page 47
§ 1677e(b); 19 C.F.R. § 351.308; F.lli De Cecco di Filippo Fara S.
Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir.
2000); SAA at 870, reprinted in 1994 U.S.C.C.A.N. at 4199.
That said, Commerce may not “overreach reality” in resorting to
an adverse margin. De Cecco, 216 F.3d at 1032. See also PAM, 582
F.3d at 1340; 19 U.S.C. § 1677e(c). When using “secondary
information,” such as that from the petition, to create a proxy
margin, Commerce must “to the extent practicable, corroborate that
information from independent sources that are reasonably at [its]
disposal.” 19 U.S.C. § 1677e(c); 19 C.F.R. § 351.308(d). “Commerce
evaluates whether secondary information has probative value by
assessing its reliability and relevance.” KYD, Inc. v. United
States, __ CIT __, __, 613 F. Supp. 2d 1371, 1378 (2009) (citation
omitted). See also Mittal Steel Galati S.A. v. United States, 31 CIT
730, 734, 491 F. Supp. 2d 1273, 1278 (2007).
Accordingly, the rate chosen must attempt to be a “reasonably
accurate estimate” of respondent’s actual rate, “albeit with some
built-in increase intended as a deterrent,” and must be corroborated
with information on the record. De Cecco, 216 F.3d at 1032. See also
id. (“Congress could not have intended for Commerce’s discretion to
include the ability to select unreasonably high rates with no
relationship to the respondent’s actual dumping margin.”). Within
these constraints, Commerce is entitled to use the highest margin
applied to DunAn or any other respondent. See Heveafil, 58 F. App’x
Court No. 09-00217 Page 48
at 846, 849-50; De Cecco, 216 F.3d at 1032.
DunAn first argues that Commerce may not apply the China-wide
rate because DunAn is independent from the Chinese government. See
Qingdao Taifa Group Co. v. United States, __ CIT __, __, 637 F.
Supp. 2d 1231, 1240-41 (2009), aff’d on other grounds, 581 F.3d 1375
(Fed. Cir. 2009); Gerber Food (Yunnan) Co. v. United States, 29 CIT
753, 771-72, 387 F. Supp. 2d 1270, 1287 (2005). But the government
responds that Commerce utilized the petition rate, rather than
purposefully applying the China-wide rate, and claims that Commerce
did not specifically group DunAn within the China-wide entity which
received the China-wide rate: “Commerce’s use of the petition rate
as [AFA] for DunAn’s December 2007 sales quantity [] cannot be
equated to Commerce treating DunAn as part of the China-wide
entity.” (Def.’s Br. 22.)
Consistent with the government’s arguments, in Commerce’s
determinations it referred to the high margin given to DunAn merely
as the rate in the petition, and did not, in using this rate, deny
DunAn a separate rate. Final Determination at 10,889; Decision Mem.
at 52; Frontseating Service Valves from the People’s Republic of
China, 73 Fed. Reg. at 62,956; Application of AFA Mem. at 9. Compare
Qingdao, __ CIT at __, 637 F. Supp. 2d at 1240, 1242 (reversing
Commerce’s decision, when applying AFA, to apply the PRC-wide rate
instead of a separate rate). As a consequence, whether or not
Commerce can apply the China-wide rate to DunAn is irrelevant here.
Court No. 09-00217 Page 49
Be that as it may, Commerce’s use of the petition margin, when
based upon secondary information such as the petition rate, still
must approximate DunAn’s actual rate, and Commerce must corroborate
the use of the rate with evidence on the record. See PAM, 582 F.3d
at 1340; De Cecco, 216 F.3d at 1032.
In this regard, DunAn does not argue that Commerce failed to
adequately corroborate, as required by 19 U.S.C. § 1677e(c),
Commerce’s use of the 55.62 percent petition rate. Rather, DunAn
argues that the applied rate was not directly related to the
unverified information at issue. DunAn complains that, while
Commerce found DunAn’s sales quantity data to be unverifiable,
Commerce, in its calculations, nonetheless used this same quantity
data when calculating DunAn’s weighted-average dumping margin. To
DunAn, this choice was inconsistent.
Yet DunAn’s argument is unpersuasive because it “conflate[s]
Commerce’s determination to reject as unreliable [certain
information DunAn] submitted with Commerce’s determination to use as
AFA ‘other’ record evidence . . . .” Wash. Int’l Ins. Co. v. United
States, No. 08-00156, 2010 Ct. Intl. Trade LEXIS 13, at *16-17 (CIT
Feb. 9, 2010) (citation omitted). Commerce may, as here, use the
quantity information rejected as unverifiable because it is DunAn’s
own number. DunAn cannot now complain that Commerce used, when
applying AFA, the information DunAn itself submitted during the
investigation. See id.
Court No. 09-00217 Page 50
The court thus sustains Commerce’s use of 55.62 percent as
DunAn’s AFA rate.
D. Offset for Recycled Brass Scrap
The court also rejects DunAn’s final ground for remand. In
using brass bar to manufacture its FSVs, DunAn produces by-product
brass scrap. DunAn sells some of this scrap, but much of the brass
scrap is recycled and integrated into later production of other
FSVs. Responding to DunAn’s case brief in the administrative
proceeding below, the Department allowed an offset, in part, for the
reduced value of brass scrap, and applied this offset to DunAn’s
normal value. See Decision Mem. at 58-59.
DunAn claims that Commerce’s scrap offset methodology is
contrary to law. Specifically, DunAn argues that Commerce reduced
its calculation of DunAn’s COP by the reduced value of brass scrap
rather than subtracting the brass bar created from scrap from the
total brass bar used. This method of calculating the offset,
according to DunAn, leads to significant undervaluation of DunAn’s
cost savings from the use of recycled brass scrap.57
Commerce did not address this argument in its Decision
Memorandum. Accordingly, DunAn asks that the court direct Commerce
57
DunAn has not argued or presented the court with evidence
that Commerce acts arbitrarily or capriciously in implementing
its offset methodology.
Court No. 09-00217 Page 51
to explain its choice of offset calculation.58
The court’s analysis of this issue begins with the recognition
that it is Commerce’s consistent practice to grant, from the COP, an
offset of the scrap’s sales value.59 In addition, the court sees no
conflict between the offset methodology and the governing statutes
and regulations, and thus determines the Department’s practice to be
reasonable and hence in accordance with law.
DunAn cites Commerce decisions to demonstrate that “the
Department’s practice is not to value by-products reused in
production.” (Pl.’s Reply Br. 13 (quoting Coated Free Sheet Paper
from the People’s Republic of China, 72 Fed. Reg. 60,632 (Dep’t
Commerce Oct. 25, 2007) (final determination of sales at less than
fair value), and accompanying Issues and Decision Memorandum,
A-570-906, POI 04/01/06 - 09/30/06 (Oct. 17, 2007), at 36, available
58
Both the government and Parker note that DunAn’s position
unrealistically treats brass scrap and brass bar as perfectly
interchangeable and so fails to take into account costs
associated with scrap processing. (Def.’s Br. 36; Def.-
Intervenor’s Br. 27.)
59
See Arch Chems., Inc. v. United States, No. 08-00040, 2009
Ct. Intl. Trade LEXIS 78, at *5-6 (CIT July 13, 2009); Ass’n of
Am. Sch. Paper Suppliers v. United States, No. 06-00395, 2008 Ct.
Intl. Trade LEXIS 128, at *20 (CIT Nov. 17, 2008); Ames True
Temper v. United States, 31 CIT 1303, 1317 (2007); Steel Concrete
Reinforcing Bars from the People’s Republic of China, 66 Fed.
Reg. 33,522, 33,524 (Dep’t Commerce June 22, 2001) (notice of
final determination of sales at less than fair value), and
accompanying Issues and Decision Memorandum, A-570-860, POI
10/1/99 - 3/30/00 (June 22, 2001), at Comment 5c, available at
http://ia.ita.doc.gov/frn/summary/prc/01-15652-1.txt (last
visited Apr. 19, 2010). (See also Pl.’s Br. 32.)
Court No. 09-00217 Page 52
at http://ia.ita.doc.gov/frn/summary/PRC/E7-21041-1.pdf (last
visited Apr. 19, 2010)) (quotation marks omitted).) Pursuant to
this practice, Commerce will not add the value of the brass scrap as
an FOP in calculating the COP, as the scrap came from the already-
valued brass FOP.
But this is a different issue. Here, Commerce indeed did not
add the sales value of the scrap to DunAn’s COP. In fact, Commerce
granted DunAn an offset because DunAn used some of the scrap. If
DunAn’s argument were correct, namely that the values of brass bar
and brass bar scrap were equivalent and therefore were completely
fungible, then the sales value of the scrap would equal the sales
value of the brass bar and the value Commerce applied to the scrap
would not be in dispute. Rather, for whatever reason, brass scrap
does not equal brass bar, and it was thus reasonable for Commerce to
treat these inputs differently based upon the sales value of each.
Moreover, the court does not agree that Commerce’s failure to
address this one issue constitutes error. Commerce is presumed to
have considered all the record evidence, see Thomas v. Office of
Pers. Mgmt., No. 2009-3107, 2010 WL 391327, at *2 (Fed. Cir. Feb. 4,
2010) (per curiam); Gonzales v. West, 218 F.3d 1378, 1381 (Fed. Cir.
2000); Nucor Corp. v. United States, 28 CIT 188, 233, 318 F. Supp.
2d 1207, 1247 (2004), aff’d, 414 F.3d 1331 (Fed. Cir. 2005), and
need not address every argument raised by a respondent in its
briefing. Timken U.S. Corp. v. United States, 421 F.3d 1350, 1354-56
Court No. 09-00217 Page 53
(Fed. Cir. 2005). As has been explained many times before, the
court will remand if Commerce “failed to consider an important
aspect of the problem . . . .” Motor Vehicle Mfr. Ass’n of the U.S.,
Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). By
following its reasonable established practice, Commerce has not so
failed.
Conclusion
For all of the foregoing reasons, Plaintiff’s Motion for
Judgment Upon the Agency Record is DENIED. Judgment will be entered
for Defendant.
It is SO ORDERED.
/s/ Donald C. Pogue
Donald C. Pogue, Judge
Dated: April 19, 2010
New York, New York