Ames True Temper v. United States

Slip Op. 07-133

UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
:
AMES TRUE TEMPER, :
:
Plaintiff, : Before: Richard K. Eaton, Judge
:
v. : Court No. 05-00581
:
UNITED STATES, :
:
Defendant. :
______________________________:

OPINION AND ORDER

[United States Department of Commerce’s final results of the
thirteenth administrative review of the antidumping duty orders
on heavy forged hand tools from the People’s Republic of China
sustained in part and remanded.]

Dated: August 31, 2007

Wiley Rein, LLP (Timothy C. Brightbill and Charles O. Verrill,
Jr.), for plaintiff.

Peter D. Keisler, Assistant Attorney General; 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 (Stephen C. Tosini); Office of Chief
Counsel for Import Administration, United States Department of
Commerce (Scott McBride), of counsel, for defendant.

Eaton, Judge: This matter is before the court on plaintiff

Ames True Temper’s (“Ames”) motion for judgment upon the agency

record pursuant to USCIT Rule 56.2. By its motion, Ames

challenges certain aspects of the United States Department of

Commerce’s (“Commerce” or the “Department”) final results for the
Court No. 05-00581 Page 2

thirteenth administrative review of the four antidumping duty

orders covering imports into the United States of heavy forged

hand tools (“HFHTs”) from the People’s Republic of China (“PRC”)

made between February 1, 2003, and January 30, 2004 (“POR”). See

generally Pl.’s Mem. Supp. Mot. J. Agency R. (“Pl.’s Mem.”); see

also HFHTs, Finished or Unfinished, With or Without Handles, From

the PRC, 70 Fed. Reg. 54,897 (Dep’t of Commerce Sept. 19, 2005)

(“Final Results”).

With the exception of plaintiff’s changed circumstances

claim, see infra Part V., jurisdiction is had pursuant to 28

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

(2000). For the following reasons, Commerce’s Final Results are

sustained in part and remanded.

BACKGROUND

Ames is a domestic producer of HFHTs. On March 26, 2004,

pursuant to Ames’s request, Commerce initiated the thirteenth

administrative review of the four antidumping duty orders

applicable to imports into the United States of heavy forged

bars/wedges, hammers/sledges, picks/mattocks and axes/adzes from

the PRC. See Initiation of Antidumping and Countervailing Duty

Admin. Revs. and Requests for Revocation in Part, 69 Fed. Reg.

15,788, 15,789 (Dep’t of Commerce Mar. 26, 2004); see also HFHTs,

Finished or Unfinished, With or Without Handles From the PRC, 56
Court No. 05-00581 Page 3

Fed. Reg. 6622 (Dep’t of Commerce Feb. 19, 1991). In its review,

the Department analyzed the international trade behavior of a

number of respondents, including Shandong Huarong Machinery Co.,

Ltd. (“Huarong”) and Tianjin Machinery Import & Export Corp.

(“TMC”). See HFHTs From the PRC, 69 Fed. Reg. at 15,789-800. On

March 10, 2005, Commerce issued its preliminary results

rescinding reviews with respect to some companies and finding

that others continued to sell their HFHTs in the United States at

less than normal value.1 See HFHTs, Finished or Unfinished, With

or Without Handles, From the PRC, 70 Fed. Reg. 11,934, 11,935,

11,937 (Dep’t of Commerce Mar. 10, 2005) (“Preliminary Results”).

Plaintiff and the respondents filed with the Department

case briefs contesting the Preliminary Results on June 13, 2005.

See Pl.’s Mem. 3. The Department, having considered the parties’

arguments, published in the Federal Register the Final Results on

1
“Normal value” is the price at which the “foreign like
product is first sold (or, in the absence of a sale, offered for
sale) for consumption in the exporting country, in the usual
commercial quantities and in the ordinary course of trade and, to
the extent practicable, at the same level of trade as the [U.S.
price].” 19 U.S.C. § 1677b(a)(1)(B)(i).
Because China is a nonmarket economy, Commerce generally
will calculate the normal value of merchandise produced and sold
in that country based on surrogate values “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 expenses.” 19 U.S.C.
§ 1677b(c)(1). The surrogate values “shall be based on the best
available information . . . in a market economy country or
countries considered to be appropriate by the administering
authority.” Id.
Court No. 05-00581 Page 4

September 19, 2005. See Final Results, 70 Fed. Reg. 54,897. By

its Final Results, Commerce: (1) assigned TMC’s sales the PRC-

wide dumping margins of 174.58 percent for axes/adzes, 139.31

percent for bars/wedges, 45.42 percent for hammers/sledges and

98.77 percent for picks/mattocks; and (2) assigned Huarong’s

sales of axes/adzes a margin of 174.58 percent, and its sales of

bars/wedges a rate of 139.31 percent. See id. at 54,898, 54,899.

STANDARD OF REVIEW

When reviewing a final antidumping determination from

Commerce, the court “shall hold unlawful any determination,

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

substantial evidence on the record, or otherwise not in

accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

“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)). To determine whether substantial evidence

exists, the court must consider “the record as a whole, including

evidence that supports as well as evidence that ‘fairly detracts

from the substantiality of the evidence.’” Id. (quoting Atl.

Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed. Cir.

1984)).
Court No. 05-00581 Page 5

When reviewing the Department’s treatment of various factors

when calculating normal value, “the proper role of this court,

. . . is to determine whether the methodology used by the

[agency] is in accordance with law . . . .” Shieldalloy

Metallurgical Corp. v. United States, 20 CIT 1362, 1368, 947 F.

Supp. 525, 532 (1996) (internal quotation marks & citations

omitted; ellipsis & alteration in original). That is, “[a]s long

as the agency’s methodology and procedures are reasonable means

of effectuating the statutory purpose, and there is substantial

evidence in the record supporting the agency’s conclusions, the

court will not impose its own views as to the sufficiency of the

agency’s investigation or question the agency’s methodology.”

Id., 947 F. Supp. at 532 (internal quotation marks & citations

omitted).

DISCUSSION

I. Scrap Offset to Normal Value for Huarong

The Department will grant a requesting respondent an offset

to normal value “for sales of the scrap generated during the

production of the subject merchandise,” Def.’s Resp. Pl.’s Mot.

J. Upon Admin. R. (“Def’s Resp.”) 14 (citing Shandong Huarong

Mach. Co. v. United States, 29 CIT , , Slip Op. 05-54 at 3–4

(May 2, 2005) (not reported in the Federal Supplement), only if

the respondent can demonstrate that the scrap is “either resold
Court No. 05-00581 Page 6

or has commercial value and re-enters the respondent’s production

process.” Issues & Decision Mem. for the 13th Administrative

Review of HFHTs from the PRC (Dep’t of Commerce Sept. 6, 2005)

(“Issues & Dec. Mem.”) at 30; see also 19 U.S.C. § 1677b(c)(1).2

In the Final Results, the Department concluded that Huarong

“[was] entitled to continue to receive an offset for its sales of

steel scrap” that was originally granted in the Preliminary

Results. Issues & Dec. Mem. at 31.

Commerce accepted Huarong’s proffered allocation method for

calculating the amount of the offset. See id. Under Huarong’s

formula, the scrap offset was determined by “allocating total

scrap sales for the POR divided by total steel input used for the

production of both subject and non-subject merchandise and then

multiplied by the steel used in production of subject

merchandise.” Id. Using this methodology, “Huarong was able to

take the total amount of scrap allocated for axes/adzes during

the POR to calculate a per-unit amount of scrap allocated to one

kilogram of the finished subject merchandise.” Id. at 32.

Ames insists that “[t]his scrap offset allowance was

erroneously granted . . . because the allocation method used to

2
That subsection provides, in pertinent part that, when
determining the normal value of merchandise produced in a
nonmarket economy country, Commerce shall rely on “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
expenses.” 19 U.S.C. § 1677b(c)(1).
Court No. 05-00581 Page 7

calculate the value of the scrap offset produces inaccurate

results.” Pl.’s Mem. 7. Plaintiff raises three related “flaws”

in Huarong’s allocation formula that it views as fatal to the

grant of a scrap offset. First, Ames argues that Huarong’s

methodology fails to capture accurately Huarong’s sales of scrap

generated from the production of subject merchandise during the

POR, specifically because Huarong “admitted during the

administrative review that some of the scrap sold during the POR

was generated from both subject and non-subject merchandise

produced prior to the POR.” Pl.’s Mem. 7. Second, Ames contends

that “Huarong has repeatedly conceded that it cannot

differentiate whether the scrap sold was produced from the

manufacture of subject or non-subject merchandise.” Pl.’s Mem.

8. Third, Ames insists that “Huarong has stated that it cannot

correlate specific scrap sales to the production of subject

merchandise.” Pl.’s Mem. 8 (claiming that because Huarong cannot

establish that the scrap was produced from subject merchandise

and sold during the POR, Commerce lacks factual support for its

finding of a “‘sufficient link’ between recovery and sale of

scrap generated by subject merchandise”).

In addition, Ames contends that “[b]y accepting Huarong’s

method to determine the scrap offset . . . the Department assumes

that the production of subject and non-subject merchandise

generates the same percentage of scrap from the same amount of
Court No. 05-00581 Page 8

steel.” Pl.’s Mem. 8–9. For plaintiff, this assumption results

in unavoidable inaccuracies “[g]iven the substantial physical

differences between the subject and non-subject merchandise that

[Huarong] produce[s] . . . .” Pl.’s Mem. 9.

Finally, Ames maintains that the Department’s grant of the

scrap offset based on Huarong’s allocation method constitutes an

unlawful departure from the agency’s past practice because it did

not accept this same allocation method in the eleventh review.

See Pl.’s Mem. 7 (“In the Final Results, the Department deviated

from its past agency precedent and granted Huarong a scrap offset

to normal value.”). Ames, therefore, asks the court to remand

this case “and direct the Department to deny Huarong’s scrap

offset.” Pl.’s Mem. 9.

Commerce asserts that it was justified in granting the scrap

offset even though it acknowledges that Huarong “could not

differentiate between scrap generated from production of subject

and non-subject merchandise since scrap was collected for sale

from all of its workshops.” Issues & Dec. Mem. at 31. For the

Department, this inability to differentiate did not preclude the

grant of the scrap offset because Huarong established an adequate

connection between the scrap resulting from its manufacture of

axes/adzes and the scrap sold. See id. (“[W]hile the Department

determined that Huarong’s accounting records cannot differentiate

scrap sales generated by subject and non-subject merchandise, the
Court No. 05-00581 Page 9

Department finds that the scrap offset should not be denied

because there was a sufficient link between the recovery and sale

of scrap generated by subject merchandise.”).

In addition, Commerce argues that it properly relied on the

data contained in Huarong’s books and records as support for its

decision to grant the scrap offset. The Department observes that

when making its calculations, it “usually utilizes company

records so long as they are maintained in accordance with the

exporting country’s [generally accepted accounting principles]

and reasonably reflect actual costs.” Def.’s Resp. 14 (citing 19

U.S.C. § 1677b(f)(1)).3 For Commerce, “[r]ather than penalize

Huarong because its records are not exactly tailored to

antidumping calculations, the agency permissibly relied upon

Huarong’s existing record keeping system and allocation.” Def.’s

Resp. 15.

As to the methodology used to calculate the amount of the

offset, Commerce insists that its decision to accept Huarong’s

method was reasonable. The Department points out that the

antidumping statute does not prescribe a method for calculating

scrap offsets but rather leaves the decision to Commerce’s

3
Subsection 1677b(f)(1) codifies the intent expressed in
the Statement of Administrative Action (“SAA”) that “[c]osts
shall be allocated using a method that reasonably reflects and
accurately captures all of the actual costs incurred in producing
and selling the product under investigation or review.” SAA,
Uruguay Round Agreements Act, accompanying H.R. Rep. No. 103-316,
656, 835 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4172.
Court No. 05-00581 Page 10

discretion. See Def.’s Resp. 15. Thus, while conceding that “it

is preferable for costs to be tied as closely as possible to

subject merchandise,” the Department urges that it “may consider

allocations between subject and non-subject merchandise, so long

as the agency is satisfied that the allocation method used does

not cause inaccuracies or distortions.” Def.’s Resp. 15 citing

19 C.F.R. § 351.401(g)(4) (2005)) (“The Secretary will not reject

an allocation method solely because the method includes expenses

incurred, or price adjustments made with respect to sales of

merchandise that does not constitute subject

merchandise . . . .”).

Ames’s claim presents both a legal and a factual question:

(1) whether the Department acted in accordance with law when it

accepted Huarong’s allocation methodology and granted Huarong the

scrap offset (a challenge to the methodology); and (2) whether

Commerce supported with substantial evidence its decision to

grant Huarong the offset. With respect to the legal aspect of

Ames’s claim, the court notes that the antidumping statute is

silent as to how Commerce is to determine whether a respondent is

entitled to a scrap offset to normal value and, if so entitled,

how to calculate the amount of the offset. Under such

circumstances, “the court does not simply impose its own

construction on the statute . . . [but] [r]ather . . . the

question for the court is whether the agency’s answer is based on
Court No. 05-00581 Page 11

a permissible construction of the statute.” Chevron U.S.A. Inc.

v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984).

The Department, while not choosing to fill in the statutory gap

with a regulation, has understood the antidumping statute to

allow for the “offset [of] production costs with the sales

revenue only if the byproduct is either resold or has commercial

value and re-enters the respondent’s production process.” Issues

& Dec. Mem. at 30; see also Guangdong Chem. Imp. & Exp. Corp. v.

United States, 30 CIT , , 460 F. Supp. 2d 1365, 1373 (2006)

(“19 U.S.C. § 1677b(c) does not mention the treatment of by-

products, nonetheless, Commerce sometimes grants a respondent a

credit for a by-product generated in the manufacturing process

that is either reintroduced into production or sold for

revenue.”) (internal quotation marks, citation & alterations

omitted).

The court finds that the Department acted in accordance with

law in granting Huarong the scrap offset. It is clear from the

record that Commerce reasonably based its decision to grant

Huarong the offset on the information contained in the company’s

accounting books and records demonstrating that the scrap was

sold. “As a general rule, an agency may either accept financial

records kept according to generally accepted accounting

principles in the country of exportation, or reject the records

if accepting them would distort the company’s true costs.” Thai
Court No. 05-00581 Page 12

Pineapple Pub. Co. v. United States, 187 F.3d 1362, 1366 (Fed.

Cir. 1999). Here, the Department accepted Huarong’s books after

verification and found that the company sold a quantifiable

amount of scrap during the POR.

Commerce also verified: (1) the amount of scrap generated

during the POR from the production of subject and non-subject

merchandise; and (2) the total amount of steel used to produce

both kinds of merchandise. Using these two numbers, Commerce

calculated a scrap percentage. This percentage applied to the

verified amount of steel used in the manufacture of the

axes/adzes. While this calculation does assume that both subject

and non-subject merchandise produce comparable amounts of scrap,

there is nothing on the record indicating that this assumption is

not reasonable. See Issues & Dec. Mem. at 31 (acknowledging that

Huarong cannot differentiate between subject and non-subject

scrap sales, but granting the offset “because there was a

sufficient link between the recovery and sale of scrap generated

by subject merchandise”).

Thus, although it would be possible to make a more accurate

adjustment were there more facts on the record, it cannot be said

that Commerce’s methodology is unreasonable. See Pesquera Mares

Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed. Cir.

2001) (“[S]tatutory interpretations articulated by Commerce

during its antidumping proceedings are entitled to judicial
Court No. 05-00581 Page 13

deference under Chevron.”). The court, therefore, concludes that

Commerce was justified in granting Huarong a scrap offset.

As to Ames’s claim that Commerce violated its past practice

in granting the offset, the Department insists:

Although [Ames] is correct that in a past
administrative review of this order the
Department denied Huarong the scrap offset,
the Department finds that the facts of this
review regarding Huarong’s offset are
distinguishable. First, while the Department
determined that Huarong’s accounting records
cannot differentiate scrap sales generated by
subject and non-subject merchandise, the
Department finds that the scrap offset should
not be denied because there was a sufficient
link between the recovery and sale of scrap
generated by subject merchandise. This is
contrary to the facts of the [eleventh
review], where the Department denied Huarong
the offset because there was an insufficient
link between the recovery and sale of subject
merchandise.

Issues & Dec. Mem. at 31 (internal citations omitted).

The court finds that Commerce has not violated its past

practice. While it is true that Commerce initially denied

Huarong a scrap offset in the eleventh administrative review, on

remand from this Court, the Department reopened the record,

considered the additional evidence regarding Huarong’s sales of

scrap during the period of review and granted the offset. See

Shandong Huarong Mach. Co., 29 CIT at , Slip Op. 05-54 at 8.

That determination was sustained by this Court. Thus, the past

practice on which plaintiff relies was not sustained by this

Court, while the practice to which it objects was. See Shandong
Court No. 05-00581 Page 14

Huarong Mach. Co. v. United States, 31 CIT , , Slip Op. 07-3

at 9 (Jan. 9, 2007) (not reported in the Federal Supplement).

Because the court finds that Commerce properly based its

decision to grant Huarong the steel scrap offset on the company’s

financial books and records, applied a reasonable methodology,

supported its conclusion with substantial evidence and did not

violate past agency practice, the court sustains Commerce’s grant

of the offset.

II. Surrogate Value for Brokerage and Handling Expenses

Plaintiff next insists that Commerce erred in using the data

contained in Certain Hot-Rolled Carbon Steel Flat Products from

India, 66 Fed. Reg. 50,406 (Dep’t of Commerce Oct. 3, 2001) (“HR

from India”), as a surrogate value for brokerage and handling

expenses. See Pl.’s Mem. 9–10. Commerce maintains that it

relied on the value in HR from India because it was reliable and

because it was “the only [brokerage and handling] value on the

record of this review . . . .” Issues & Dec. Mem. at 34.

In support of its position, Ames urges that prior to the

publication of the Final Results, it placed on the record the

brokerage and handling value contained in Certain Stainless Steel

Wire Rod from India, 63 Fed. Reg. 48,184 (Dep’t of Commerce Sept.

9, 1998) (“SSWR”). See Pl.’s Mem. 10. Thus, Ames insists that

“[t]he Department erroneously found that the surrogate value from
Court No. 05-00581 Page 15

HR from India was the only [brokerage and handling] value on the

record.” Pl.’s Mem. 10.

According to Ames, it placed the SSWR brokerage and handling

data on the record on two different occasions, both taking place

before Commerce reached its final determination. Plaintiff

claims that it first notified Commerce of the alternate surrogate

value nine months prior to the Final Results in a letter to the

Department. See Pl.’s Mem. 10. In its letter, plaintiff stated:

For purposes of valuing [r]espondents’
brokerage and handling expenses, the
Department should continue to utilize the
public version questionnaire response placed
on the record in Stainless Steel Wire Rod
from India, 63 Fed. Reg. 48,184 (Sept. 9,
1998) (admin. rev., final). This surrogate
has been consistently used by the Department
in this and in dozens of other recent
administrative proceedings.

Letter from Wiley Rein LLP to The Honorable Donald L. Evans, re:

HFHTs From the PRC: Publicly Available Information on Factor

Values (Dec. 28, 2004) (quoted in Pl.’s Mem. 10).

Ames also asserts that it put the SSWR brokerage and

handling value on the record through its case brief in response

to Commerce’s Preliminary Results filed on June 13, 2005. See

Pl.’s Mem. 10. In its case brief, Ames stated that it had placed

the SSWR value on the record by way of its December 28, 2004,

letter. See Case Br. of Ames True Temper (June 13, 2005) 8–9.

Plaintiff further argues that Commerce was on notice that

the SSWR data existed because “[i]n the Preliminary Results, the
Court No. 05-00581 Page 16

Department stated that it had used the rates reported in SSWR to

value the [brokerage and handling] costs.” Pl.’s Mem. 11 (citing

Preliminary Results, 70 Fed. Reg. at 11,941). While the

Preliminary Results do contain this statement, Commerce, in fact,

used the HR from India data. Nonetheless, for plaintiff,

Commerce’s indication in the Preliminary Results that it

determined the value of brokerage and handling costs using the

SSWR data precluded the Department from claiming that the data

was on the record.

Finally, plaintiff claims that Commerce violated its past

practice of valuing brokerage and handling using the value in

SSWR. See Pl.’s Mem. 13 (“Although the Department may deviate

from its past practice, it must provide an explanation for its

departure.”). As plaintiff states:

The Department has used the SSWR surrogate in
many other administrative proceedings,
including several prior administrative
reviews of this antidumping order. For
example, in the eleventh review of this
order, the Department determined that SSWR
was the most appropriate surrogate
value. . . .

The Department has failed to provide any
reasons for its departure from its prior
practice. Furthermore, nothing has changed
in the review under appeal that would alter
the Department’s prior holding and findings.

Pl.’s Mem. 12, 13 (internal citations omitted).

Commerce counters by first pointing out that plaintiff at no

point contests the reasonableness of the HR from India data. See
Court No. 05-00581 Page 17

Def.’s Resp. 17 (“Ames maintains that Commerce should have used

the surrogate value used in the prior review, i.e., the

calculations from SSWR -- without ever maintaining that the

surrogate value used is unreasonable.”).

Next, Commerce insists that Ames never put its preferred

data on the record:

[Ames] argues that, for the final results, the
Department should value [brokerage and handling]
using a value from SSWR [new shipper reviews].
However, the only [brokerage and handling] value
on the record of this review is the one used in
the preliminary results. [Title 19 C.F.R. §]
351.301(c)(3)(ii) of the Department’s regulations
allows interested parties to submit factor
information up to 20 days after the preliminary
results. Consequently, we note that after the
preliminary results, [Ames] had an opportunity to
place the SSWR . . . [brokerage and handling]
value on the record, but did not. The Department
cannot use information not on the record of this
review for purposes of valuing [brokerage and
handling] in these final results and, therefore,
will continue to use the [brokerage and handling]
surrogate value from HR from India. We note that
the brokerage and handling value in HR from India
is generally contemporaneous with the POR and,
thus, is an appropriate surrogate.

Issues & Dec. Mem. at 34. Thus, it is the Department’s position

that merely referencing the SSWR data was not enough; if Ames

wanted the value considered, it should have placed it on the

record.

In addition, the Department insists that its reference to

the SSWR data in the Preliminary Results was a mistake. See

Def.’s Resp. 18. Commerce states that “[t]his inadvertency does
Court No. 05-00581 Page 18

not change the information upon the record. As the underlying

calculations show, Commerce used the calculations from [HR from

India] in the Preliminary Results.” Def.’s Resp. 18 (citation

omitted).

Finally, in response to Ames’s claim that the use of the HR

from India value constituted an unlawful deviation from its past

practice, Commerce notes that “what represents the best available

information may vary on a case-by-case basis.” Def.’s Resp. 19

(internal quotation marks omitted). Thus, the Department

maintains that it was not bound to use information that was not

on the record simply because it had previously used that

information in earlier reviews.

Where the subject merchandise is exported from a nonmarket

economy country, Commerce “shall determine the normal value of

the subject merchandise on the basis of the value of the factors

of production utilized in producing the merchandise . . . .”

19 U.S.C. § 1677b(c)(1). The statute further directs Commerce to

value the factors of production “based on the best available

information regarding the values of such factors in a market

economy country or countries considered to be appropriate by the

[Department].” Id.

As the Court of Appeals for the Federal Circuit has held,

“‘the process of constructing foreign market value for a producer

in a nonmarket economy country is difficult and necessarily
Court No. 05-00581 Page 19

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, 1408 (Fed. Cir. 1997)). Notably, Ames

does not take issue with the reasonableness of the HR from India

data but rather bases its demand for a remand solely on its

argument that, because the Department used the SSWR data as a

surrogate value for brokerage and handling costs in prior

reviews, it had to explain why it did not rely on that data when

making the same valuation in this review.

For Commerce, the HR from India value for brokerage and

handling was the best information available because: (1) it was

“generally contemporaneous with the POR”; and (2) it was the

“only [brokerage and handling] value on the record of this

review . . . .” Issues & Dec. Mem. at 34.

The court sustains Commerce’s determination. First, despite

plaintiff’s claim to the contrary, at no point in any of its

filings did Ames place the SSRW brokerage and handling value on

the record. Instead, plaintiff merely made mention of the SSWR

source. Next, Ames’s insistence that Commerce’s previous use of

the data and, in this case, mistaken reference to the SSWR source

in the Preliminary Results created an obligation to use the SSWR

brokerage and handling value overstates the case. As has been

previously noted, plaintiff knew that the SSWR data was not used

by Commerce in the Preliminary Results. If Ames wished Commerce
Court No. 05-00581 Page 20

to employ the brokerage and handling surrogate value from SSWR in

its calculation of the normal value of Huarong’s axes/adzes, it

should have made both its position and the actual value amount

known to the Department within twenty days after publication of

the Preliminary Results. See 19 C.F.R. § 351.301(c)(3)(ii)

(permitting an interested party to submit data to be used for

valuing factors of production in the final results 20 days after

publication of the preliminary results).

Most importantly, the failure to use a particular data set

from a previous investigation does not constitute a past

practice. It is well settled that what is the best available

information may change from one investigation to the next. See

Nation Ford Chem. Co., 166 F.3d at 1377 (“Whether . . . analogous

information from the surrogate country is ‘best’ will necessarily

depend on the circumstances . . . .”). At no point does Ames

claim that the HR from India data is unreliable, nor does it

contend that the SSWR data is superior to that used by Commerce.

Thus, the court sustains Commerce’s use of the HR from India

surrogate value for brokerage and handling.

III. Huarong’s Production of Metal Pallets

Ames further asserts that the Department unreasonably denied

its request that Commerce “reopen the administrative record and

require the respondents to report the associated factors used in
Court No. 05-00581 Page 21

producing metal pallets.” Pl.’s Mem. 13. In particular, Ames

argues that Commerce had to account for the cost of “oxygen,

acetylene, and welding solder or rods” or other materials used

for welding steel together to construct the metal pallets even

though Commerce insists that there was no evidence on the record

that such materials were employed in the pallet-production

process. Pl.’s Mem. 13, 14. That is, given: (1) that Huarong

made its pallets using a welding process; and (2) that the record

contained no values for inputs necessary to weld the pallets

together, Commerce should have conducted a more detailed

investigation.

To support its position, Ames relies on this Court’s finding

in Shandong Huarong Mach. Co. v. United States, 29 CIT , Slip

Op. 05-54 (May 2, 2005). In remanding that case, the Court held

that “it is not sufficient for Commerce to simply rely on the

absence of evidence to reach its decision; rather, Commerce must

provide findings and analysis justifying its determination.”

Id., Slip Op. 05-54 at 23. For Ames, the Court’s decision in

Shandong applies here and requires remand of the Final Results

with instructions for Commerce to reopen the record and collect

more evidence concerning Huarong’s construction of metal pallets.

Specifically, Ames asserts that remand is necessary because the

Department “supported its decision . . . by explaining that

‘there is no evidence on the record to indicate that Huarong has
Court No. 05-00581 Page 22

used solder, welding rods or inert gases in the manufacture of

pallets.’” Pl.’s Mem. 15 (quoting Issues & Dec. Mem. at 36).

In addition, Ames contends that Commerce’s conclusion that

the verification report showed that there was no welding rod,

solder or inert gases at Huarong’s packing facility, is

erroneous. See Pl.’s Mem. 15. According to Ames:

Contrary to the Department’s claim, the
verification report did not include an
affirmative finding that Huarong did not use
or have any of the listed associated factors.
Rather, the verification report simply did
not mention or include observations regarding
any inputs associated with the production of
steel pallets, other than metal.

Pl.’s Mem. 15 (emphasis & citation omitted).

The Department maintains that it reasonably declined to

reopen the record. For Commerce:

Huarong reported all labor, electricity and
steel used in the production of pallets and
. . . the Department verified these usage
factors. A careful review of Huarong’s
verification report reveals that the
Department noted no solder, welding rods, gas
tanks or inert gases in Huarong’s packing
facility. In addition, there is no evidence
on the record to indicate that Huarong has
used solder, welding rods or inert gases in
the manufacture of pallets.

Issues & Dec. Mem. at 36.

The Department does not view this conclusion as one based on

the absence of evidence. See Def.’s Resp. 20. It is Commerce’s

position that “[a]bsent evidence that a company actually utilizes

a particular input, there is no basis to value that input.”
Court No. 05-00581 Page 23

Def.’s Resp. 19. Commerce further emphasizes that it verified

Huarong’s reported factors of production relating to metal

pallets at Huarong’s packing facility and did not find any

evidence that welding rods, solder or inert gases were used. See

Def.’s Resp. 19 (“Because Huarong’s verified factors of

production do not include rivets, welding flux, welding solder,

acetylene, and oxygen, it is entirely lawful to decline to value

these items.”) (emphasis omitted)). In other words, “Commerce

does not assume that a company utilizes a particular input.

Rather, [it] values the factors of production actually used.”

Def.’s Resp. 20.

Ames does not ask Commerce to assume the use of a particular

input but rather points out that some input must have been used

to construct the pallets. See Pl.’s Reply 7 (“Although the

factors of production for metal pallets may include labor,

electricity and steel, common sense dictates that other

unreported factors had to be used to produce the pallets. . . .

[I]t is inexplicable how the respondent could have manufactured

the pallets without utilizing any other inputs.”). This

proposition seems irrefutable. Therefore, despite Commerce’s

having verified Huarong’s responses, it is apparent that

something held the pallets together and therefore something has

been overlooked. Commerce is instructed to reopen the record and

obtain additional evidence regarding Huarong’s production of
Court No. 05-00581 Page 24

metal pallets.

IV. Commerce’s Application of By-Product Credit and Packing
Materials Cost Directly to Normal Value

Next, Ames urges the court to find unlawful Commerce’s

decision to apply the credit for Huarong’s by-product sales and

add the value of Huarong’s packing material costs directly to

normal value. Ames contends that “[t]he Department erred in

directly adding the packing material costs to and subtracting the

byproduct offset from [normal value]. Instead, the Department

should have added the cost of packing materials to the total cost

of manufacturing (“TOTCOM”), and deducted the byproduct offset

from [cost of manufacturing], before applying the financial

ratios to them.” Pl.’s Mem. 17. For its part, the Department

maintains that its methodology is consistent with its current

practice of applying the by-product offset and cost of packing

materials directly to normal value where the surrogate financial

statement does not specifically account for those items. See

Def.’s Resp. 21.

As noted, when constructing the normal value of merchandise

exported from a nonmarket economy country, Congress has provided

that Commerce base its determination on “the value of the factors

of production utilized in producing the merchandise . . . .”

19 U.S.C. § 1677b(c)(1). In doing so, the Department typically

relies on factor of production data from a surrogate country,
Court No. 05-00581 Page 25

i.e., a “market economy countr[y] that [is] at a level of

economic development comparable to that of the nonmarket economy

country . . . .” 19 U.S.C. § 1677b(c)(4); see Shakeproof

Assembly Components, Div. of Ill. Tool Works, Inc. v. United

States, 268 F.3d 1376, 1381 (Fed. Cir. 2001). Once Commerce has

determined the value of the factors of production, the statute

mandates that it add to that value “an amount for general

expenses and profit plus . . . other expenses.” 19 U.S.C.

§ 1677b(c)(1); see also Guandong Chem. Imp. & Exp. Corp., 30 CIT

at __, 460 F. Supp. 2d at 1373. In calculating the amount of

these expenses, Commerce generally applies financial ratios

derived from a surrogate company’s (1) overhead; (2) selling,

general and administrative (“SG&A”) expenses; and (3) profit to

the surrogate factors of production values.

Here, Commerce used as its surrogate source financial data

reported by 2,031 Public Limited Companies in India for the

period 2002-2003 contained in the August 2004 Reserve Bank of

India Bulletin (“RBI Bulletin”) to construct the overhead and

SG&A surrogate financial ratios. See Preliminary Results, 70

Fed. Reg. at 11,942. Because it could find no evidence of how

by-product sales or packing materials were treated in the RBI

Bulletin, Commerce applied the amounts associated with these

items directly to normal value. See Issues & Dec. Mem. at 38.

Ames’s primary argument is that Commerce unreasonably
Court No. 05-00581 Page 26

concluded that the surrogate companies’ financial statements in

the RBI Bulletin did not account for the by-product offset or

packing material costs simply because the statements did not list

those values. See Pl.’s Mem. 17. For plaintiff, “[r]egardless

of whether costs and materials are individually identified in a

surrogate company’s financial statements, it can be assumed that

all of the costs involved in producing merchandise, such as

direct materials, scrap offsets, and packing materials, will be

included in the financial statements.” Pl.’s Mem. 17 (citing

Floor-Standing, Metal-Top Ironing Tables and Certain Parts

Thereof From the PRC, 69 Fed. Reg. 35,296 (Dep’t of Commerce June

24, 2004) (final determination)).

In support of its position, Ames argues:

In order to calculate an accurate normal
value, the Department must apply the overhead
and SG&A ratios on an apples-to-apples basis.
This can only be accomplished by including
the same costs that were used to derive the
overhead and SG&A ratios in the production
costs in the calculation of [cost of
manufacture] and TOTCOM. Thus, the
Department should have deducted the
respondent’s byproduct offset from [cost of
manufacturing] before applying the overhead
ratio, which was devised from financial data
that accounted for byproduct offset.
Similarly, the Department should have added
packing material costs to TOTCOM before
applying the SG&A ratio, in which packing
material costs were accounted for.

Pl.’s Mem. 18–19.

As previously mentioned, “as long as the agency’s
Court No. 05-00581 Page 27

methodology and procedures are reasonable means of effectuating

the statutory purpose, and there is substantial evidence in the

record supporting the agency’s conclusions, the court will not

impose its own views as to the sufficiency of the agency’s

investigation or question the agency’s methodology.” Shieldalloy

Metallurgical Corp., 20 CIT at 1368, 947 F. Supp. at 532

(internal quotation marks & citations omitted). The court finds

that Commerce has supported with substantial evidence its

practice of directly adding the packing material costs to – and

subtracting the by-product offset from – normal value when such

values are not specifically accounted for in the surrogate

financial statements upon which the surrogate financial ratios

are based.

First, the court observes that both Ames’s preferred

methodology and that of Commerce require the making of

assumptions. While Ames does not dispute Commerce’s conclusion

that the financial statements found in the RBI Bulletin do not

mention either by-product credits or packing material costs, it

insists that Commerce must assume that those surrogate companies’

financial statements took the unlisted values into account.

Commerce, on the other hand, assumes that the absence of specific

values for by-product sales and packing material costs from the

surrogate financial statements means that they were not taken

into account.
Court No. 05-00581 Page 28

The court cannot agree with Ames. In using its preferred

methodology, Commerce followed its reasoning in Fresh Garlic From

the PRC, 69 Fed. Reg. 33,626 (Dep’t of Commerce June 16, 2004) at

cmt. 6. See Issues & Dec. Mem. at 38.

Where the Department cannot ascertain from
the surrogate financial information whether
packing expenses are in the surrogate
financial ratio calculations, such as in the
denominator, it is not necessarily
appropriate to include packing expenses in
the production costs to which the surrogate
financial ratios are applied. If packing
expenses are not in the denominator of
surrogate financial ratio calculations or, as
here, we cannot identify where and to what
extent such expenses are in the ratio
calculation, and we apply the ratios to
production costs that include amounts for
packing materials and labor, we may distort
the amount of overhead, SG&A, and profit that
we calculate for the cost of production.
Accordingly, for the final results of these
reviews, in calculating the amount of
overhead, SG&A, and profit included in the
cost of production, we have determined not to
apply the surrogate financial ratios to
production costs that include packing
expenses (i.e., we have removed packing
expenses from the production-cost build-up to
which we apply the surrogate ratios).

Fresh Garlic From the PRC, 69 Fed. Reg. 33,626 at cmt. 6. In

like manner, “Commerce developed a practice that provided for the

application of a by-product credit to normal value when financial

statements used as a surrogate do not expressly address the

treatment of by-products.” Def.’s Resp. 21.

Even though Commerce’s methodology requires the making of an

assumption, i.e., that the RBI Bulletin financials do not capture
Court No. 05-00581 Page 29

by-product sales or packing material costs, the court cannot say

that its assumption is unreasonable. As the Guandong Court

noted, “[e]ven if Guandong’s alternative approach to

implementation of the statute were reasonable, the court could

not substitute its own view of the statute for Commerce’s

reasonable interpretation or implementation.” Guandong Chem.

Imp. & Exp. Corp., 30 CIT at __, 460 F. Supp. 2d at 1376 (citing

Chevron U.S.A. Inc., 467 U.S. at 844).

Therefore, because Commerce has adequately explained its

decision to apply the by-product offset and packing material

costs directly to normal value, the court upholds the

Department’s methodology.

V. Changed Circumstances Review

Finally, Ames asserts that, because Commerce applied adverse

facts available (“AFA”) to Huarong’s and TMC’s sales of

bars/wedges in the ninth, twelfth and thirteenth reviews based on

their participation in the agency sales invoicing scheme, the

Department should have granted Ames’s request that it initiate a

changed circumstances review for the tenth and eleventh reviews

pursuant to 19 U.S.C. § 1675(b)4 and 19 C.F.R. § 351.216.5 See

4
Subsection 1675(b) provides, in pertinent part:

Whenever the administering authority
. . . receives information concerning, or a
(continued...)
Court No. 05-00581 Page 30

Pl.’s Mem. 19; Pl.’s Supplemental Br. 1–4; see also Shandong

Huarong Mach. Co. v. United States, 30 CIT __, __, 435 F. Supp.

2d 1261, 1270 (2006) (finding that respondents’ failure to

provide relevant information about their agency sales invoicing

scheme justified Commerce’s application of AFA). By its request,

Ames had hoped to demonstrate that the agency sales invoicing

scheme was present during the period of investigation for each of

those reviews too. In the tenth and eleventh reviews, Commerce

did not apply AFA to respondents’ bars/wedges sales.

Commerce maintains that its “refusal to reopen closed cases

remains squarely within [its] discretion,” and is not reviewable

4
(...continued)
request from an interested party for a review
of——

(A) a final affirmative
determination that resulted in an
antidumping duty order under this
subtitle or a finding under the
Antidumping Act, 1921, or in a
countervailing duty order under
this subtitle or section 1303 of
this title, . . .

which shows changed circumstances sufficient
to warrant a review of such determination or
agreement, the administering authority
. . . shall conduct a review of the
determination or agreement after publishing
notice of the review in the Federal Register.

19 U.S.C. § 1675(b)(1).
5
The regulations permit the Department to conduct a
changed circumstances review either on request from an interested
party or on its own initiative. See 19 C.F.R. § 351.216(b), (d).
Court No. 05-00581 Page 31

by this Court. Def.’s Resp. 24 (citing Interstate Commerce

Comm’n v. Bhd. of Locomotive Eng’rs, 482 U.S. 270, 278 (1987);

United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515,

534–35 (1946)). For the Department, “an agency’s refusal to

reopen a closed case is generally committed to agency discretion

by law and therefore exempt from judicial review.” Def.’s Resp.

24 (internal quotation marks & citation omitted).

With respect to Commerce’s insistence that its denial of

plaintiff’s request is immune from judicial review, the court

finds that Commerce overstates its claim that an appeal of a

denial of a request for a changed circumstances review cannot be

heard. This Court has recently held otherwise. See Trs. in

Bankr. of N. Am. Rubber Thread Co. v. United States, 30 CIT __,

__, 464 F. Supp. 2d 1350, 1355-56 (2006) (finding jurisdiction

under subsection 1581(i) to hear an appeal of Commerce’s

determination denying a request for a changed circumstances

review). Nonetheless, the court finds that, here, Ames has

asserted no valid basis for jurisdiction. Ames claims that the

court has jurisdiction to hear its appeal under 28 U.S.C.

§ 1581(c). Compl. ¶ 1. Subsection (c) provides this Court with

jurisdiction to hear appeals of those determinations listed in 19

U.S.C. § 1516a. See Shinyei Corp. of Am. v. United States, 355

F.3d 1297, 1304 (Fed. Cir. 2004) (“Section 1581(c) provides the

court with exclusive jurisdiction over actions commenced under
Court No. 05-00581 Page 32

section 516A of the Tariff Act [19 U.S.C. § 1516a].”). A

determination by Commerce (as distinct from the United States

International Trade Commission) denying a request for a changed

circumstances review is not among the listed determinations that

can be reviewed pursuant to section 1516a. See AOC Int’l v.

United States, 17 CIT 1412, 1414-15 (1993) (not reported in the

Federal Supplement); Trs. in Bankr. of N. Am. Rubber Thread Co.,

30 CIT at __, 464 F. Supp. 2d at 1355–56. Thus, despite Ames’s

claims to the contrary, the court has no jurisdiction under 28

U.S.C. § 1581(c) to hear its appeal regarding Commerce’s denial

of a request to initiate a changed circumstances review.

CONCLUSION

Based on the foregoing, the court sustains in part and

remands Commerce’s Final Results. On remand, Commerce is

instructed to render a determination in accordance with this

opinion. Remand results are due on December 3, 2007. Comments

on the remand results are due on January 2, 2008. Any replies to

such comments are due on January 14, 2008.

/s/ Richard K. Eaton
Richard K. Eaton

Dated: August 31, 2007
New York, New York