Slip-op 01-88
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: CHIEF JUDGE GREGORY W. CARMAN
________________________________________________
:
SHANDONG HUARONG GENERAL CORP.; :
LIANONING MACHINERY IMPORT & EXPORT :
COMPANY; AND TIANJIN MACHINERY :
IMPORT & EXPORT CORP., :
:
Plaintiffs, :
:
v. : Consol. Court No.:
: 00-08-00393
:
UNITED STATES, :
:
Defendant, :
:
O. AMES COMPANY, :
:
Defendant-Intervenor. :
________________________________________________:
[Plaintiffs’ Rule 56.2 Motion for Judgment on the Agency Record is granted in part and denied
in part.]
Hume & Associates (Robert T. Hume), Washington, D.C., for Plaintiffs.
Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director, United
States Department of Justice, Civil Division, Commercial Litigation Branch, Kenneth S. Kessler,
Attorney, United States Department of Justice, Civil Division, Commercial Litigation Branch,
David Richardson, Attorney, Officer of the Chief Counsel for Import Administration, United
States Department of Commerce, Washington D.C., for Defendant.
Wiley, Rein & Fielding (Charles Owen Verrill, Eileen P. Bradner, Timothy C. Brightbill,
Nicholas A. Kessler), Washington, D.C., for Defendant-Intervenor.
Date: July 23, 2001
Consolidated Court No. 00-08-00393 Page 2
OPINION
CARMAN, Chief Judge: This consolidated action challenges the final and amended final
results of the United States Department of Commerce’s (Commerce) administrative review of
antidumping orders covering certain heavy forged hand tools from the People’s Republic of
China (PRC). See Notice of Final Results and Partial Rescission of Antidumping Duty
Administrative Reviews: Heavy Forged Hand Tools from the People’s Republic of China, 65
Fed. Reg. 43,290 (July 13, 2000) (Final Results) and Heavy Forged Hand Tools from the
People’s Republic of China; Amended Final Results of Antidumping Duty Administrative
Reviews, 65 Fed. Reg. 50,499 (August 18, 2000) (Amended Final Results). The questions
presented are whether Commerce: (a) improperly chose Indian HTS Category 7214.10.09 as the
surrogate value for steel inputs; (b) exceeded its authority in correcting a ministerial error; and
(c) selected an aberrational surrogate value for pallets. For the reasons stated below, the Court
answers questions (a) and (b) in the negative, but answers questions (c) in the affirmative.
BACKGROUND
On February 11, 1999, Commerce published a notice of opportunity to request
administrative reviews of the antidumping duty order covering heavy forged hand tools from the
People’s Republic of China (China) imported between February 8, 1998 and January 31, 1999.
See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation;
Opportunity to Request Administrative Review, 64 Fed. Reg. 6,878 (Feb. 11, 1999). On February
25, 1999, Shandong Huarong General Corp., Lianoning Machinery Import & Export Company,
and Tianjin Machinery Import & Export Corp. (collectively, Plaintiffs) requested an
Consolidated Court No. 00-08-00393 Page 3
administrative review of the axes/adzes and bars/wedges they entered into the United States
during the relevant time period. The O. Ames Company (Defendant-Intervenor) also requested
an administrative review of Plaintiffs’ entries. On March 29, 1999, Commerce formally initiated
its administrative reviews. See Heavy Forged Hand Tools from the People’s Republic of China,
64 Fed. Reg. 14,860 (Mar. 29, 1999).
Because China is a non-market economy, Commerce selected a surrogate market
economy against which to value China’s factors of production. As in past administrative
reviews, Commerce chose India as the most suitable market economy due to its comparable level
of economic development and the fact that it produces a substantial amount of equivalent
merchandise.
Commerce initiated its reviews by sending Plaintiffs questionnaires soliciting detailed
information about their manufacturing processes. Plaintiffs’ responses indicated that three types
of steel were used to produce the hand tools subject to the antidumping orders – steel bar, steel
billet, and railroad steel scrap. In past administrative reviews, Commerce valued this steel by
placing it in Indian HTS category 7214.50 – “Forged Bars and Rods Containing 0.25% or greater
but less than 0.6% Carbon.” In the year prior to the administrative review at issue, however, this
HTS category was removed from the Indian HTS schedule. Commerce, therefore, requested
additional information from Plaintiffs regarding the nature of the steel used to make their hand
tools, including whether the steel was in billet or bar form, the size and tolerance of the steel
used, and whether the steel underwent further processing prior to its use as an input. After
reviewing Plaintiffs’ responses, Commerce confirmed that a portion of Plaintiffs’ hand tools
were made from steel billets and railroad scrap, but concluded the majority were made from steel
Consolidated Court No. 00-08-00393 Page 4
bars. From this conclusion, Commerce determined that steel bar was an appropriate factor of
production.
Commerce notified Plaintiffs of its determination and requested submissions regarding
the proper Indian HTS category from which to draw an appropriate surrogate value. Plaintiffs
and Defendant-Intervenor both provided surrogate value information and suggested HTS
categories. The information submitted, however, did not contain any data for steel bar, but
focused solely on steel scrap and steel billet.
On March 8, 2000, Commerce issued its preliminary determination. See Heavy Forged
Hand Tools, Finished or Unfinished, With or Without Handles, From the People's Republic of
China; Preliminary Results and Partial Recission of Antidumping Duty Administrative Reviews,
65 Fed. Reg. 12,202 (March 8, 2000) (Preliminary Results). Commerce selected forged steel
bar as a factor of production and calculated the applicable surrogate value by averaging the
import price of steel scrap and two other types of steel entered India under Indian HTS Category
7214.10 – “Other bars and rods of iron and non-alloy steel, not further worked than forged, hot-
rolled, hot-drawn or hot-extruded, but including those twisted after rolling – Forged bars and
rods.”
Plaintiffs requested that Commerce disclose the calculations performed in connection
with its preliminary determination. Based upon this information, on March 28, 2000, Plaintiffs
submitted additional surrogate value data in an attempt to persuade Commerce to utilize either
Indian domestic prices or export prices as the benchmark for surrogate value. On April 19, 2000,
Commerce held an administrative hearing at which Plaintiffs continued their argument that HTS
7214.10 was not an appropriate category upon which to base surrogate value. Plaintiffs
reiterated that HTS 7214.10 covered forged steel and there was nothing in the record indicating
Consolidated Court No. 00-08-00393 Page 5
that Plaintiffs used forged inputs in the production of subject merchandise. Commerce asked
several questions regarding the type of steel used as inputs for its subject merchandise, including
whether forged steel was used. Plaintiffs’ counsel responded that he was uncertain whether
forged steel was used to produce subject merchandise.
On July 6, 2000, Commerce issued its Final Results in the 1998/1999 administrative
reviews. The agency determined that because verified information indicated one of the
respondents in the underlying administrative reviews used forged bar as a factor of production,
Indian HTS category 7214.10 was the proper category under which to determine the surrogate
value for steel bar.
On July 17, 2000, Plaintiffs requested that Commerce correct a ministerial error
contained in the Final Results. Plaintiffs claimed that Commerce had relied upon Indian import
data for only a portion of the period of review. Plaintiffs argued they had submitted data for the
entire period of review in their March 28, 2000 submission, but that Commerce failed to utilize
that data in the Final Results. Commerce recognized its error and made the correction requested
by Plaintiffs. In addition, Commerce noted that it had failed to incorporate the full period of
review data for all factors of production in its Final Results. Commerce, therefore, not only
adjusted the factor indicated by Plaintiffs, but also adjusted all the factors of production used to
calculate normal value. Further, Commerce determined that the data for “spring steel” contained
in HTS category 7214.10 was aberrational and, therefore, excluded it from the surrogate value.
Because of the adjustments and the decision to exclude spring steel, Commerce changed its steel
bar surrogate value from HTS category 7214.10 to the subcategory 7214.10.09 – a category that
explicitly excludes spring steel.
Consolidated Court No. 00-08-00393 Page 6
Plaintiffs timely filed suit with this Court challenging several aspects of Commerce’s
final and amended final determinations. Specifically, Plaintiffs challenge: (1) Commerce’s
selection of HTS category 7214.10.09 to value a specific factor of production; (2) Commerce’s
adjustment of several factors of production through the correction of a ministerial error; and (3)
Commerce’s selection of a surrogate value for pallets. The United States and Defendant-
Intervenor (collectively, Defendants) oppose Plaintiffs’ motion. The Court has jurisdiction over
this matter pursuant to 28 U.S.C. §1581(c).
DISCUSSION
It is broadly recognized that Commerce is the master of the antidumping laws and that its
determinations are to be afforded considerable deference. See, e.g., Zenith Electronics Corp. v.
United States, 77 F.3d 426, 430 (Fed. Cir. 1996); Daewoo Elec. Co., Ltd. v. International Union,
6 F.3d 1511, 1516 (Fed. Cir. 1993). Despite this recognition, Commerce may not act arbitrarily,
violate the antidumping laws, or apply the law in a manner contrary to congressional intent. See
Allied Tube & Conduit Corp v. United States, 127 F. Supp. 2d. 207, 219 (Ct. Int’l Trade 2000),
citing, Smith Corona Group v. United States, 713 F.2d 1568, 1571 (Fed. Cir. 1983); Hussey
Copper Ltd. v. United States, 895 F. Supp. 311, 314 (Ct. Int’l Trade 1995). Thus, the Court
reviews Commerce’s determinations to see whether they are “supported by substantial evidence
and otherwise in accordance with law.” 19 U.S.C. §1516a(b)(1)(B)(i) (1994).
The substantial evidence standard applies to Commerce’s factual findings. This standard
requires more than a “mere scintilla” of evidence, Primary Steel, Inc. v. United States, 834 F.
Supp. 1374, 1380 (Ct. Int’l Trade 1993), and consists of “such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.” Consolidated Edison Co. v. NLRB, 305
Consolidated Court No. 00-08-00393 Page 7
U.S. 197, 229 (1938); Matsushita Elec. Indus. Co., Ltd. v. United States, 750 F.2d 927, 933 (Fed.
Cir. 1984). Under this standard, the Court will not disturb an agency determination if its factual
findings are reasonable and supported by the record as a whole, even if there is some evidence
that detracts from the agency’s conclusion. See Heveafil Sdn. Bhd. & Filati Lastex Sdn. Bhd. v.
United States, 2001 WL 194986, *2 (Ct. Int’l Trade), citing, Atlantic Sugar, Ltd. v. United
States, 744 F.2d 1556, 1563 (Fed. Cir. 1984).
“Otherwise in accordance with law” governs Commerce’s legal interpretations of the
statutes it administers. To determine whether Commerce’s interpretation and application of the
antidumping statutes are in accordance with law, the Court applies the two-step test set forth by
the Supreme Court in Chevron U.S.A., Inc. v. Natural Resource Defense Counsel, Inc., 467 U.S.
837, 842 (1984). Under this test, the Court examines whether the relevant statute addresses the
specific question at issue, and if not, whether the agency’s statutory interpretation is reasonable
in light of the overall statutory scheme. See id. at 842-43. Although considerable weight must
be accorded to Commerce’s construction of the antidumping statute, see E.I. DuPont De
Nemours & Co. v. United States, 8 F. Supp. 2d 854, 858 (Ct. Int’l Trade 1998), the Court does
not fulfill its duty to say what the law is by perfunctorily agreeing with Commerce’s
interpretation of the statutory provision at issue. See Timex V.I., Inc. v. United States, 157 F.3d
879, 881 (Fed. Cir. 1998). Rather, through the application of traditional tools of statutory
construction, the Court must examine whether Congress expressed its intent on the matter at
issue. Only if Congress was silent or ambiguous with respect to the question at issue can the
Court assess whether Commerce’s construction thereof is reasonable or whether it is merely a
post hoc rationalization. See id. at 882. To survive judicial scrutiny, however, “an agency’s
construction need not be the only reasonable interpretation or even the most reasonable
Consolidated Court No. 00-08-00393 Page 8
interpretation… [A] court must defer to an agency’s reasonable interpretation of a statute even if
the court might have preferred another.” U.S. Steel Group v. United States, 225 F.3d 1284, 1287
(Fed. Cir. 2000); NSK Ltd. v. United States, 115 F.3d 965, 973 (Fed. Cir. 1997); Koyo Seiko Co.,
Ltd. v. United States, 36 F.3d 1565, 1570 (Fed. Cir. 1994) (internal citation omitted) (emphasis in
original).
A. Commerce’s Selection of Indian HTS Category 7214.10.09 as a Surrogate Value for
Steel Bar
The antidumping law clearly establishes the standard by which Commerce is to determine
the normal value of merchandise exported from a non-market economy. Commerce must value
the factors of production based on the “best available information” 1 in “one or more market
economy countries that are at a level of economic development comparable to that of the non-
market economy country” and that is a significant producer of “comparable” subject
merchandise. 19 U.S.C. §1677b(c)(4) (1994). Commerce historically has been afforded
substantial discretion in determining what is the best available information. See, e.g., Novachem
Inc. v. United States, 797 F. Supp. 1033, 1037 (Ct. Int’l Trade 1992). Ordinarily, this
information would be derived from answers to the questionnaires Commerce issues during the
investigation. Where, however, a respondent fails to respond to Commerce’s questions or fails
to provide sufficiently detailed information, Commerce has been given the latitude to determine
1
The “best available information” standard set forth in 19 U.S.C. §1677b(c) should not be confused with the “facts
otherwise available” standard set forth in 19 U.S.C. §1677e (previously referred to as the “best information
available.”) The former standard guides Commerce’s valuation of factors of production when the agency is forced
to calculate normal value using a market economy surrogate for a non-market economy respondent. In all such
cases, Commerce is obligated to determine that the information upon which it bases its surrogate values is the best
available, regardless of whether the information relates directly to the respondent’s production or is secondary
information regarding prices and values in the surrogate country. The latter is a more general standard that governs
Commerce’s actions where there is insufficient record evidence to make a finding, a party withholds relevant
information, a party significantly impedes an investigation, or the agency is unable to verify certain information.
Consolidated Court No. 00-08-00393 Page 9
what constitutes the best information otherwise available. See Manifattura Emmepi S.p.A. v.
United States, 799 F. Supp. 110, 115 (Ct. Int’l Trade 1992).
Despite the broad latitude afforded Commerce and its substantial discretion in choosing
the information it relies upon, the agency must act in a manner consistent with the underlying
objective of 19 U.S.C. § 1677b(c) – to obtain the most accurate dumping margins possible. See
Writing Instrument Mfrs. Ass’n. v. United States, 984 F. Supp. 629, 637 (Ct. Int’l Trade 1997).
This objective is achieved only when Commerce’s choice of what constitutes the best available
information evidences a rational and reasonable relationship to the factor of production it
represents. See, e.g., Allied Tube and Conduit Corp. v. United States, 132 F. Supp. 2d 1087,
1095 (Ct. Int’l Trade 2001); Usinas Siderurgicas De Minas Gerais v. United States, 1998 WL
442297, * 18 (Ct. Int’l Trade); AK Steel Corp. v. United States, 988 F. Supp. 594, 605 (Ct. Int’l
Trade 1997); Manifattura Emmepi S.p.A., 799 F. Supp. at 115 (stating that the ITA can not
choose information out of context). Accordingly, although the standard of review applicable to
this case precludes the Court from rendering judgment on whether the surrogate value chosen by
Commerce was the absolute best available, precedent clearly establishes that the Court may
judge whether Commerce’s selection was reasonable. Anything less would simply be judicial
abdication.
Plaintiffs’ arguments can be divided into two categories, both questioning the rational
relationship between Commerce’s decision to use Indian HTS category 7214.10.09 and its steel
inputs. First, Plaintiffs contend Indian HTS category 7214.10.09 is a basket category that covers
forged and other high-end specialty steel and, because nothing in the record indicates Plaintiffs
used forged steel to manufacture subject merchandise, Commerce’s selection is unsupported by
When confronted with such situations, Commerce is statutorily permitted to use secondary, publicly available
information as the basis for its factual conclusions.
Consolidated Court No. 00-08-00393 Page 10
substantial evidence and otherwise not in accordance with law. Second, Plaintiffs argue that the
selection of Indian HTS category 7214.10.09 was not in accordance with law because Commerce
disregarded substantial amounts of data reflecting prices in India that would have provided a
better surrogate value contrary to the statutory requirement that surrogate values be based on
factors of production in the surrogate country. The following sections detail the parties’
contentions, as well as the Court’s analysis and conclusions.
1. Commerce’s decision to use Indian HTS category 7214.10.09 to calculate the
surrogate value for forged steel was supported by substantial evidence and
otherwise in accordance with law.
a. Parties’ Contentions
Plaintiffs’ primary contention is that Indian HTS category 7214.10.09 covers “forged”
steel and that there is no evidence Plaintiffs used such steel as an input to the production of
subject merchandise. To the contrary, Plaintiffs argue that the record clearly demonstrates each
of the steel inputs for subject merchandise was comprised of “merchant grade steel.” Plaintiffs
note that because heavy forged hand tools are produced through forging, the use of forged steel
in the production of heavy forged hand tools runs counter to normal business practice.
Plaintiffs further maintain Commerce’s conclusion that imported forged steel was used in
the production of heavy forged hand tools was based solely on information obtained from the
Shandong Machine Corporation – a separate company that did not produce the same subject
merchandise as Plaintiffs. Plaintiffs allege that “separate orders” covered the four categories of
subject merchandise and that Commerce conducted “separate reviews” for each of these orders.
As such, Plaintiffs argue Commerce may not lawfully use factual information from one review in
order to establish the surrogate value for another review.
Consolidated Court No. 00-08-00393 Page 11
The United States and Defendant-Intervenor (collectively, Defendants) counter that
Commerce’s decision to use Indian HTS category 7214.10.09 was supported by substantial
record evidence indicating that forged steel was used to produce heavy forged hand tools.
During the course of the administrative review, Commerce discovered that at least one
respondent had imported steel that fit within Indian HTS category 7214.10.09. From this
discovery, Commerce concluded this tariff category would provide an accurate surrogate value
for steel inputs.
Although acknowledging that the one respondent found to have used forged steel is not a
plaintiff in this action and that “just because one respondent used forged bar to make hammers
does not mean that the plaintiffs used forged bar to make axes/adzes and bars/wedges,”
Defendants argue that absent other more compelling evidence, Commerce’s conclusion is
reflective of the best available information. Defendants argue that nothing on the record
confirms Plaintiffs claim that its component steel was of merchant grade quality because
Plaintiffs failed to submit relevant information on this issue. Defendants further argue that
although Commerce is statutorily obligated to value factors of production according to the best
available information, when this value is challenged on appeal, it is sufficient to demonstrate that
Commerce’s decision is supported by substantial evidence. Thus, the Court’s role is not to judge
whether “the information chosen by Commerce is the ‘best’ actually available, but whether the
choice is supported by substantial evidence and in accordance with law.”
b. Analysis
Because China is a non-market economy, Commerce calculated normal value based on
surrogate values obtained from India, a market economy similarly situated in terms of economic
Consolidated Court No. 00-08-00393 Page 12
development and production capabilities. The question confronting the Court is whether
Commerce’s use of Indian HTS category 7214.10.09 as a surrogate value for steel inputs is
supported by substantial evidence. As discussed earlier, Commerce values the factors of
production in a non-market economy “based on the best available information regarding the
values of such factors in a market economy country.” 19 U.S.C. § 1677b(c)(1) (1994). Since the
statute does not specify what constitutes the best available information, these decisions are
within Commerce’s discretion. Accordingly, Commerce need not prove that its methodology
was the only way or even the best way to calculate surrogate values for factors of production as
long as it was reasonable. When Commerce’s method is challenged, the Court’s proper role is to
determine whether the methodology is in accordance with law and supported by substantial
evidence. Assuming both criteria are satisfied, the Court will not impose its own views as to the
sufficiency of the agency’s investigation or question the agency’s methodology.
At the outset, the Court rejects Plaintiffs’ argument that Commerce unlawfully
incorporated data from a separate review when it selected forged steel as a factor of production.
Although Plaintiffs argue that heavy forged hand tools are covered by four separate orders, the
record makes clear that each category of hand tool is covered by a single antidumping order: A-
570-803. See Antidumping Duty Orders: Heavy Forged Hand Tools, Finished or Unfinished,
With or Without Handles, From the People’s Republic of China, 56 Fed. Reg. 6,622, 6,622
(February 19, 1991). See also Antidumping or Countervailing Duty Order, Finding or
Suspended Investigation; Opportunity to Request Administrative Review, 64 Fed. Reg. 6,878,
6,878 (February 11, 1999) (listing the orders that are subject to review and including all four
categories of hand tools under antidumping duty order A-570-803). From the inception of this
order Commerce has reviewed these categories jointly, either overlapping data or utilizing
Consolidated Court No. 00-08-00393 Page 13
category-specific data as appropriate. Nothing differentiates Commerce’s methodology in the
present reviews from that used in the past. Thus, the mere fact that Commerce selected a factor
of production based on information from a respondent not a party to the present litigation does
not alone invalidate the agency’s Final Determination. The validity of Commerce’s
determination will turn on whether substantial evidence supports its conclusions and whether the
agency’s methodology is in accordance with law.
This Court has repeatedly upheld the use of surrogate data to value certain factors of
production when that data amounts to the best available information. See Olympia Indus. Inc. v.
United States, 7 F. Supp. 2d 997, 1000, n.2 (Ct. Int’l Trade 1998). See also Tianjin Mach. Imp.
& Exp. Corp. v. United States, 806 F. Supp. 1008, 1018 (Ct. Int’l Trade 1992) (“Commerce’s
ability to construct foreign market value from weighted alternatives advantageously serves the
antidumping statute’s purpose of ‘determining current margins as accurately as possible’”). The
Court has further held that surrogate values may provide the best information available even
though “the surrogate values used by Commerce in [non-market economy] cases are fictional.”
Olympia Indus., 7 F. Supp. 2d. at 1001. As such, in the present case there is no question that
Commerce’s use of surrogate values is a reasonable method of calculating normal value. The
issue, therefore, is whether the chosen value is supported by substantial evidence.
Despite Plaintiffs’ arguments to the contrary, the Court is compelled to find that
Commerce’s selection of Indian HTS category 7214.10.09 is supported by substantial evidence.
Although recognizing that “it is improper [for Commerce] to use tariff items covering
inappropriate surrogate materials in lieu of another tariff item that covers the appropriate
surrogate material,” Writing Instrument Mfrs. Ass’n., 984 F. Supp. 639-40, quoting, Sigma Corp.
v. United States, 888 F. Supp. 159, (Ct. Int’l Trade 1995), in light of the record evidence, the
Consolidated Court No. 00-08-00393 Page 14
Court must conclude Commerce’s determination that forged steel was used in the production of
subject merchandise was reasonable.
The Court’s conclusion does not come easily, however. Commerce determined that one
of the respondents had imported steel under a tariff heading covering forged steel bar and rod.
Based on this conclusion, Commerce selected the Indian Tariff schedule that most closely
reflected the type of steel imported by the respondent – Indian HTS category 7214.10.09.
Commerce additionally used Plaintiffs’ questionnaire responses as evidence that Plaintiffs failed
to establish their products were manufactured with non-forged steel. Commerce further relied
upon statements made by Plaintiffs’ counsel at an administrative hearing as proof that forged
steel likely was used by Plaintiffs to produce subject merchandise:
In the spirit of honesty and cooperation, and so on, I would say that on the record, I can’t
say that it is forged. I can’t say that it is not forged, because I don’t think that question
was ever asked, [sic] nor answered. The portions of the record cited by Defendants
provide only the barest of support for Commerce’s conclusion that one of the respondents
used forged steel as a component in the production of subject merchandise.
The evidence relied upon by Commerce is not overwhelming. The record evidence cited
provides little more than the barest support for Commerce’s conclusions. Likewise, the
comments made by Plaintiffs’ counsel serve only to create additional ambiguity surrounding the
use of forged steel. The Court, however, is bound by the standard of review established by
Congress. Congress has granted Commerce substantial discretion and has bound the Court to
respect that discretion, even where the Court would have reached a different conclusion if it had
been the ultimate trier of fact. The Court likely would have reached a different conclusion had
this case been reviewed de novo. Nevertheless, despite its tenuous nature, the Court must
conclude that in toto there is more than a “mere scintilla” of evidence supporting Commerce’s
determination. The Court recognizes that the record also provides some evidence that Plaintiffs
Consolidated Court No. 00-08-00393 Page 15
actually used “merchant grade” steel in the production of subject merchandise. The presence of
this contradictory evidence, however, is insufficient to negate the validity of Commerce’s
conclusion. It is well established that substantial evidence supporting an agency’s determination
may exist even when there is sufficient evidence to support a reasonable, but contrary
conclusion. See Heveafil Sdn. Bhd, 2001 WL 194986, *2 (Ct. Int’l Trade), citing, Atlantic
Sugar, Ltd. v. United States, 744 F.2d at 1563. Plaintiffs could prevail only if they demonstrated
that Commerce’s conclusion was unreasonable. In the absence of such proof, the Court finds
that Commerce’s selection of Indian HTS category 7214.10.09 is supported by substantial
evidence and otherwise in accordance with law.
2. Commerce’s use of import data to calculate the surrogate value of forged steel is
supported by substantial evidence and otherwise in accordance with law.
a. Parties’ Contentions
Plaintiffs contend that Commerce is statutorily required to value factors of production
based on prices and information from within the chosen country. Specifically, Plaintiffs cite 19
U.S.C. §1677b(c)(4), which states that Commerce shall value a non-market economy’s factors of
production, to the extent possible, in one or more market economies at the same level of
economic development and that are significant producers of comparable merchandise. Taking a
literal approach to the “in a market economy,” Plaintiffs argue that “the best choice for selecting
a price ‘in’ India is a domestic Indian price.” In support of this argument, Plaintiffs note that in
addition to being a significant producer of heavy forged hand tools, India is a significant
producer of steel and, therefore, only imports specialty steel not normally associated with the
production of subject merchandise. Accordingly, Plaintiffs argue that the import prices reflected
Consolidated Court No. 00-08-00393 Page 16
in Indian HTS category 7214.10.09 are inaccurate and bear no rational relationship to the actual
value of steel inputs actually used in India.
Plaintiffs finally argue that Commerce’s use of domestic Indian prices as the surrogate
values for coal and electricity further supports its claim that import prices, as reflected in Indian
HTS category 7214.10.09, were an inappropriate surrogate value. Plaintiffs take the allegedly
disparate treatment of steel, coal, and electricity, and conclude that “Commerce failed totally to
conduct a reasonable review…. The fact that [merchant grade steel bar] is steel “bar” does not
mean that it is comparable to Indian [HTS] category 7214.10.”
Defendants counter that Commerce reasonably exercised its discretion in selecting import
data as opposed to domestic Indian prices to value forged steel bar.
b. Analysis
Plaintiffs’, in essence, ask the Court to do two things. First, they ask the Court to
construe the meaning of “in” within the context of 19 U.S.C. §1677b(c)(4). Second, assuming a
statutory construction favorable to Plaintiffs, they ask the Court to reevaluate the evidence and
draw a factual conclusion different from that of the administering agency. The Court is unable to
fulfill either request.
As stated, Commerce’s authority to control, administer, and interpret the antidumping
laws is universally recognized and customarily afforded substantial deference. To determine
whether Commerce’s construction of 19 U.S.C. §1677b(c)(4) is “in accordance with law,” the
Court first must determine whether Congress has expressly addressed the issue. See Chevron,
467 U.S. at 842-43. This Court has already addressed this issue in Shakeproof Assembly
Components Division of Illinois Tool Works, Inc. v. United States, 59 F. Supp. 2d. 1354, 1356-57
Consolidated Court No. 00-08-00393 Page 17
(Ct. Int’l Trade 1999). In Shakeproof, the plaintiff argued that the use of import prices to value
non-imported material is contrary to law because 19 U.S.C. §1677b(c) requires that valuation be
based on factors in a surrogate economy. 59 F. Supp. 2d. at 1356. The Court initially noted that
“[n]owhere does the statute speak directly to any methodology Commerce must employ to value
the factors of production” and that “the very structure of the statute suggests Congress intended
to vest discretion in Commerce by providing only a framework within which to work.” Id. at
1357, citing, Olympia Indus. v. United States, 7 F. Supp. 2d 997, 1000, (Ct. Int’l Trade 1998)
(“The relevant statute does not clearly delineate how Commerce should determine what
constitutes the [best available information]”). The Court went on to find that the phrase “to the
extent possible” is “[a]nother signal that Congress did not speak and therefore left Commerce
discretion in developing the details of its methodology.” Id. From this language, the Shakeproof
court concluded “the statute grants discretion to Commerce to decide what qualifies as the best
available information.” Id.
The Court is persuaded by the logic and rationale underlying the Shakeproof holding.
The language and structure of 19 U.S.C. §1677b(c)(4) clearly indicates that Congress intended to
grant Commerce discretion to determine what constitutes the best available information from
which to select a surrogate value. Thus, having confirmed that 19 U.S.C. §1677b(c)(4) endows
Commerce with discretion, the Court must determine whether Commerce’s use of Indian import
data was reasonable.
Commerce defended its use of Indian import data on two grounds. First, the domestic
pricing data provided by Plaintiffs did not contain data for forged steel bars and Commerce had
already concluded that forged bars would serve as the basis for establishing the surrogate value.
Second, Commerce stated that “[i]t is the Department’s practice, when the data are equal in
Consolidated Court No. 00-08-00393 Page 18
terms of specificity, contemporaneity, and representativeness, to use an import price over a
domestic price because the former is reported on a duty-exclusive, tax-exclusive basis, while the
latter almost always is not.” See Issues & Decision Memo for the Administrative Reviews of
Heavy Forged Hand Tools from the People’s Republic of China – February 1, 1998 through
January 31, 1999, reprinted at, Plaintiffs Appendix, Tab 8. (Issues & Decision Memo).
The Court has already found Commerce’s selection of forged steel as a factor of
production to be reasonable. In light of this finding, the Court’s reasonableness inquiry must
now focus on whether Commerce’s use of import data constituted the best available information
from which to value forged steel in India. The alternatives suggested by Plaintiffs consisted of
domestic Indian prices and export prices for non-forged steel bar and billet. Commerce
reasonably concluded that these categories could not produce a viable surrogate value for forged
steel. Indeed, it is difficult for the Court to comprehend how Plaintiffs could argue that such
divergent products were readily comparable. Asking the Court to determine whether the value of
non-forged steel is comparable to and accurately reflects the underlying value of forged steel is
equivalent to asking the Court, as Justice Scalia once quipped, to “judg[e] whether a particular
line is longer than a rock is heavy.” Bendix Autolite Corp. v. Midwesco Enter. Inc., 486 U.S.
888, 896 (1988) (Scalia, J., concurring). The best available information is that which provides a
suitable basis of comparison between the factor of production selected by Commerce and
comparable merchandise in India. In the present case, the data pertaining to imported forged
steel satisfies this requirement. Thus, the Court finds Commerce’s use of Indian import data to
be reasonable.
Moreover, the Court notes that Commerce’s use of import data comports with its well-
established practice. As stated, when the data are equal in terms of specificity, contemporaneity,
Consolidated Court No. 00-08-00393 Page 19
and representativeness, Commerce’s practice is to use an import price over a domestic price
because the former is reported on a duty-exclusive, tax-exclusive basis, while the latter almost
always is not. The Court finds this practice to be wholly reasonable and consistent with the
antidumping law’s underlying purpose of calculating the fairest and most accurate margins
possible. In light of this finding, the Court will not overturn Commerce’s factual conclusion that
import data provided more accurate information than did the alternative Indian domestic and
export data. Despite the potential relevance of the domestic prices cited by Plaintiffs, the Court
will not reweigh the evidence and substitute its judgment for that of the administering agency in
the face of substantial evidence.
Finally, the mere fact that Commerce used domestic prices to value some factors of
production is insufficient to negate the validity of Commerce’s use of import data to value forged
steel. Nothing in 19 U.S.C. §1677b(c) establishes the explicit methodology Commerce must
employ to select surrogate values. Rather, Commerce’s methodology must be guided by the
antidumping law’s underlying purpose of calculating the most accurate dumping margins
possible. Thus, the courts will not hamper Commerce’s freedom to choose data that effectuates
this purpose. Additionally, the United States Court of Appeals for the Federal Circuit has
affirmed Commerce’s use of import prices even when domestic prices were used to value other
factors of production. See Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1378 (Fed.
Cir. 1999). The Court, therefore, finds that Commerce’s use of import data is supported by
substantial evidence and otherwise in accordance with law.
Consolidated Court No. 00-08-00393 Page 20
B. Commerce’s Correction of a Ministerial Error
In its Preliminary Results, Commerce indicated that the surrogate values used to calculate
normal value were based on data reflecting only half of the period of review. Commerce also
indicated in the Preliminary Results Surrogate Value Memorandum, issued on the same day, that
partial-year data was used because “Indian import statistics for the remainder of the [period of
review] were not published” at the time the Preliminary Results were issued. On March 28,
2000, one month following the publication of the Preliminary Results, Plaintiffs submitted a case
brief providing Commerce with complete data for the entire period of review. The information
provided was taken from the same public sources Commerce had relied upon to establish the
surrogate values in its Preliminary Results. Due, however, to an apparent agency oversight,
Commerce never reviewed or incorporated this information into Commerce’s Final Results. As
such, the surrogate values used to calculate the final normal value were inaccurate. Following
publication of the Final Results, Plaintiffs petitioned Commerce to address this omission and
correct its ministerial error. Plaintiffs, however, limited their request to the correction of only
one factor of production.
On August 1, 2000, Commerce issued amended final results acknowledging its failure to
fully consider the updated data, and adjusting the value of the factor of production requested by
Plaintiffs. Additionally, Commerce noted that by overlooking the March 28, 2000 case brief, it
had failed to update surrogate values for all relevant factors of production. Thus, because
Commerce had asserted throughout the administrative review that it intended to use full year
surrogate value data, the agency adjusted each of the factors of production relied upon to
establish normal value. These adjustments raised normal value, thereby increasing the resultant
dumping margins.
Consolidated Court No. 00-08-00393 Page 21
Plaintiffs argue Commerce’s actions exceed its authority as set forth in 19 U.S.C.
§1675(h). This section provides:
The administering authority shall establish procedures for the correction of ministerial
errors in final determinations within a reasonable time after the determinations are issued
under this section. Such procedures shall ensure opportunity for interested parties to
present their views regarding any such errors. As used in this subsection, the term
“ministerial error” includes errors in addition, subtraction, or other arithmetic function,
clerical errors resulting from inaccurate copying, duplication, or the like and any other
type of unintentional error which the administering authority considers ministerial.
(Emphasis in Plaintiffs’ brief). The procedures established by Commerce to enforce this statute
are found in 19 C.F.R. §351.224, and provide:
(c) A party to the proceeding to whom the Secretary has disclosed calculations
performed in connection with a preliminary determination may submit
comments concerning a significant ministerial error in such calculations. A
party to the proceeding to whom the Secretary has disclosed calculations
performed in connection with a final determination or the final results of a
review may submit comments concerning any ministerial error in such
calculations…
(d) Comments filed under [the above paragraph] must explain the alleged
ministerial error by reference to applicable evidence in the official record, and
must present what, in the party’s view, is the appropriate correction… Replies
to any comments must be limited to issues raised in such comments.
(e) The Secretary will analyze any comments received and, if appropriate, correct
any significant ministerial error by amending the preliminary determination,
or correct any ministerial error by amending the final determination or the
final results of review (whichever is applicable)…
Plaintiffs note that their July 17, 2000 comments and request to correct a ministerial error
were limited to the recalculation of the steel billet surrogate value. Because Commerce exceeded
the scope of this original request without seeking any additional input from the parties, Plaintiffs
argue that their right to “present their views” on these additional surrogate values was violated.
Consolidated Court No. 00-08-00393 Page 22
Alternatively, Plaintiffs argue Commerce’s corrections were not ministerial in nature
because they involved significant discretionary considerations. Plaintiffs note that although
Commerce may, with or without a party’s request, correct errors that it reasonably regards as
ministerial in final determinations, the agency’s decision to do so must not be arbitrary,
capricious, or unsupported by substantial evidence. Plaintiffs argue the corrections made by
Commerce fall outside what is normally perceived as ministerial error. Moreover, Plaintiffs
argue Commerce’s assertion that they intended to use the full year data but simply forgot is
nothing more than a post-hoc, self-serving litigation strategy – “Commerce did not just forget
about the one-hundred-and-eighty-four (184) page March 28 submission, it just never intended to
use it for any purpose.” Thus, Plaintiffs argue that it is not reasonable to characterize the
changes as ministerial.
Quoting a July 7, 2000 surrogate values memo, the United States counters that
Commerce always intended to use “Indian prices contemporaneous with the [period of review.]”
(United States’ Brief, at 20). The United States argues that Commerce’s policy is to calculate
surrogate values based on “publicly available published information or other publicly available
sources for information regarding prices in India during the [period of review];” however, at the
time the preliminary determinations were made, “Indian import statistics for the [entire period of
review] were not published….” (Id. at 44, quoting, Commerce’s Preliminary Results Surrogate
Memo, at 2; and Commerce’s Final Results Surrogate Memo, at 2.) Thus, the United States
argues that Commerce’s failure to incorporate data properly contained in the record into the
Final Results, despite an expressed intent to do so, constitutes an unintentional ministerial error.
For several reasons, the Cour t is persuaded that the United States is correct. First, the
Court can find no support for Plaintiffs’ contention that Commerce should be limited to
Consolidated Court No. 00-08-00393 Page 23
correcting only those ministerial errors requested by an interested party. Neither the relevant
statutes nor Commerce’s regulations impose such a restriction, and case law clearly establishes
that “Commerce may, with or without a party’s request, correct errors that it reasonably regards
as ministerial in final determinations.” Aramide Maatschappij V.o.F. v. United States, 901 F.
Supp. 353, 361-62 (Ct. Int’l Trade 1995) (Emphasis added). The statutory and regulatory
provisions Plaintiffs cite merely ensure that interested parties have the right to highlight errors
that Commerce may have made and to present arguments in support of correcting those errors.
Nothing in the cited provisions precludes Commerce from acting to correct errors it discovers on
its own accord. Because Plaintiffs only pointed out the error associated with the steel billet
surrogate value, Commerce’s conclusion that all the factors of production should be updated was
clearly reached sua sponte. Restricting Commerce in the manner suggested by Plaintiffs would
be tantamount to granting parties the power to manipulate administrative determinations by
selectively withholding and updating data. Such power is anathema to Commerce’s broad
authority to correct ministerial errors and its underlying obligation to calculate the most accurate
dumping margins possible.
Second, despite Plaintiffs’ argument to the contrary, the Court finds that the “errors” at
issue are ministerial. Plaintiffs initially acknowledge the ministerial nature of these errors and
argue that Commerce could only correct the “ministerial error” they highlighted. Plaintiffs,
however, later argue that the “errors” Commerce corrected required the application of
discretionary considerations and, therefore, were neither “ministerial,” nor amenable to
correction under 19 U.S.C. § 1675h. Statute, regulations, and case law largely leave the question
of what constitutes a “ministerial error” to Commerce’s discretion. Both the relevant statute and
Commerce’s regulations broadly define “ministerial error” as
Consolidated Court No. 00-08-00393 Page 24
… an error in addition, subtraction, or other arithmetic function, clerical error resulting
from inaccurate copying, duplication, or the like, and any other similar type of
unintentional error which the Secretary [or administering authority] considers
ministerial.
19 C.F.R. § 351.224(f) (2000); 19 U.S.C. § 1675h (Emphasis added). This Court has recognized
the broad nature of Commerce’s definition and consistently granted the agency substantial
discretion in determining which errors are “ministerial.” See Fabrique de Fer de Charleroi, S.A.
v. United States, 2001 WL 630995, *12 (Ct. Int’l Trade), citing, Cemex, S.A. v. United States, 19
CIT 587, 593 (1995) (“Commerce is given fairly broad discretion to determine which types of
unintentional error to regard as ministerial.”). Moreover, where Commerce identifies an error as
“inadvertent,” the Court has frequently held that it may uphold the correction as a ministerial
error. See Fabrique de Fer de Charleroi, S.A, 2001 WL 630995, *12; Geneva Steel v. United
States, 914 F. Supp. 563, 607 (Ct. Int'l Trade 1996) (basing, in part, its conclusion that
Commerce's failure to aggregate the grants received was an error of addition and therefore
Commerce’s characterization of the error as “inadvertent” was a ministerial error).
In the present case, Commerce failed to incorporate surrogate value data from the entire
period of review into its final determination. Although 19 U.S.C. §1677b(c) specifies the type of
data Commerce should use in calculating surrogate values, it fails to specify the time period from
which the surrogate values are to be taken. Despite the absence of statutory guidance, the Court
has recognized that Commerce’s practice is to use surrogate value data that is contemporaneous
with the period of review. See Coalition for the Pres. of the American Brakedrum and Rotor
Aftermarket Mfrs. v. United States, 44 F. Supp. 2d 229, 259 (Ct. Int’l Trade 1999) (“Commerce’s
practice is to use publicly available values which are representative of a range of prices within
the [period of investigation]”); Union Camp Corp. v. United States, 941 F. Supp. 108, 116 (Ct.
Int’l Trade 1996) (noting that Commerce will select, where possible, publicly available published
Consolidated Court No. 00-08-00393 Page 25
value which is: (1) an average non-export value; (2) representative of a range of prices within the
POI; (3) product-specific; and (4) tax-exclusive). Commerce reflected this practice in its
Preliminary Results Surrogate Memorandum and again in its Final Results Surrogate Value
Memorandum when it stated “[w]here possible we value factors of production using publicly
available published information or other publicly available sources for information regarding
prices in India during the [period of review.]” (United States’ Appendix, Tab 11, at 2; Plaintiffs’
Appendix, Tab 9, at 2.) (Emphasis added.) Commerce further stated that it “valued [factors of
production] using publicly available import statistics for the period February through August
1998… Indian import statistics for the remainder of the [period of review] were not published at
the time [Commerce] prepared this memorandum.” (Id.)
Under normal conditions and absent evidence to the contrary, the Court presumes that
Commerce acts or seeks to act in a regular manner consistent with its established practices.
Commerce indicated during its investigations that its calculations were made on partial period of
review data only because more comprehensive data was not available. Commerce also
characterized its failure to incorporate the full-year data into its final determination as
“inadvertent.” Given the remarks found in the surrogate value memorandum and Commerce’s
well-established practice of using data that incorporates the entire period of review, the Court
finds Commerce’s characterization to be reasonable. Moreover, the Court finds that the
application of the full year data did not require discretionary consideration by Commerce. Had
this information been available at the time the preliminary results were issued, Commerce would
have considered it as a matter of course. Likewise, when this information was ultimately
brought to Commerce’s attention, the agency adhered to its long-standing policy and
unquestioningly considered the data. Thus, notwithstanding Plaintiffs’ claim that “Commerce
Consolidated Court No. 00-08-00393 Page 26
did not just forget about the one-hundred-and-eighty-four (184) page March 28 submission, it
just never intended to use it for any purpose,” Plaintiffs have not demonstrated anything that
would cause the Court to conclude Commerce either intentionally disregarded the submitted
information or in its discretion determined it was inapplicable. Likewise, Plaintiffs have
demonstrated nothing that would rebut the presumption that Commerce intended to act regularly
and in a manner consistent with its established practice. Thus, the Court is left to conclude that
Commerce’s characterization of its “error” as an unintentional omission is reasonable and
supported by substantial evidence.
Finally, the Court finds that the antidumping law’s underlying purpose of using the best
available information to determine the most accurate dumping margins is furthered by the
correction of the ministerial error. Were the Court to adopt Plaintiffs’ position restricting the
information Commerce can rely upon to that contained in the narrowly drafted request to correct
a ministerial error, it would be sanctioning a practice that ultimately would skew the
antidumping duty margins. Such a restriction would unreasonably restrict Commerce’s ability to
calculate fair and accurate dumping margins. Thus, in light of the ministerial nature of the
corrected errors, the Court finds Commerce’s actions to be reasonable, supported by substantial
evidence, and otherwise in accordance with law.
C. Commerce’s Selection of Surrogate Values for Pallets
Plaintiffs argue Commerce’s selection of surrogate value for pallets was unsupported by
substantial evidence and not in accordance with law. Specifically, Plaintiffs argue that
Commerce improperly used a surrogate value that the agency had expressly rejected in a prior
segment of the proceeding. The United States concedes that Commerce used an inappropriate
Consolidated Court No. 00-08-00393 Page 27
surrogate value and acknowledges the issue should be remanded so that the agency can
determine the proper surrogate value. Defendant-Intervenor does not address this issue in its
brief and the Court concludes, therefore, that it does not oppose remand. The Court agrees with
the conclusion reached by the parties and finds Commerce’s selection of pallet surrogate value to
be unsupported by substantial evidence and otherwise not in accordance with law. The issue,
therefore, is remanded to Commerce for determination of the appropriate surrogate value.
Commerce shall complete this task and file its findings with the Court no later than forty-five
(45) days from the date this opinion is issued.
CONCLUSION
For the reasons stated above, the Court finds that Commerce’s selection of Indian HTS
category 7214.10.09 is supported by substantial evidence and otherwise in accordance with law.
The Court further finds that Commerce did not exceed its authority when it adjusted the
surrogate values for all factors of production under the auspices of correcting a ministerial error.
Finally, the Court finds that Commerce’s selection of a surrogate value for pallets is not
supported by substantial evidence. Accordingly, the Court remands this issue to Commerce for
recalculation. In all other respects, Commerce’s Final Determination and Amended Final
Determination are sustained.
_______________________________
Gregory W. Carman,
Chief Judge
Dated: July 23, 2001
New York, NY