Golden Dragon Precise Copper Tube Grp., Inc. v. United States , 2016 CIT 73 ( 2016 )

Slip Op. 16 - 73
UNITED STATES COURT OF INTERNATIONAL TRADE
:
GOLDEN DRAGON PRECISE COPPER :
TUBE GROUP, INC., HONG KONG GD :
TRADING CO., LTD., GOLDEN :
DRAGON HOLDING (HONG KONG) :
INTERNATIONAL, LTD., and :
GD COPPER (U.S.A.) INC., : Before R. Kenton Musgrave, Senior Judge
:
Plaintiffs, : Court No. 15-00177
:
v. :
:
UNITED STATES, :
:
Defendant. :
:
OPINION AND ORDER
[Remanding final results of administrative review for further explanation or reconsideration.]
Dated: July 21, 2016
Kevin M. O’Brien, Christine M. Streatfeild, and Yi Fang, Baker & McKenzie, LLP, of
Washington DC, for the plaintiffs.
Michael D. Snyder, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., for the defendant. With him on the brief were
Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and
Claudia Burke, Assistant Director. Of Counsel on the brief was David P. Lyons, Attorney, Office
of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington, D.C.
Musgrave, Senior Judge: The plaintiffs, Golden Dragon Precise Copper Tube Group,
Inc. (et al.; collectively “Golden Dragon”), challenge several aspects of Seamless Refined Copper
Pipe and Tube From the People’s Republic of China, 80 Fed. Reg. 32087 (Jun. 8, 2015) (final
results of 2012-2013 admin. review) (“Final Results”) as stated in the accompanying issues and
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decision memorandum (“IDM”) on the administrative record compiled by the defendant’s
International Trade Administration, U.S. Department of Commerce (“Commerce” or “the
Department”). The Final Results cover the third administrative review of subject merchandise
which covers the period of review (“POR”) from November 1, 2012 to October 31, 2013. Golden
Dragon was selected as the sole mandatory respondent at the administrative outset, and the
proceeding resulted in a weighted average margin for Golden Dragon of 10.50%. Final Results, 80
Fed. Reg. at 32088.
Golden Dragon timely invokes the jurisdiction of the court under 19 U.S.C.
§1516a(a)(2)(B)(iii) and 28 U.S.C. §1581(c). Its complaint challenges the administrative
determinations to (i) make an unrecovered Value Added Tax (“VAT”) adjustment of 4 percent to
Golden Dragon’s U.S. sales, (ii) apply the byproduct offset for recovered copper to normal value
rather than to direct material costs, and (iii) rely upon a truck freight surrogate value that differed
from a truck freight rate used previously. On such matters, the court will sustain an administrative
determination unless it is “unsupported by substantial evidence on the record, or otherwise not in
accordance with law”. 19 U.S.C. §1516a(b)(1)(B)(i). This opinion remands for further explanation
or reconsideration of Commerce’s VAT determination. Each issue is addressed in turn, as follows.
I. Irrecoverable VAT Deduction
A. Background
In determining the dumping margin applied to producers or exporters from non-
market economies (“NME”), Commerce must determine the export price (“EP”) or constructed
export price (“CEP”) of the subject merchandise, or the price at which the subject merchandise is
sold in the United States. 19 U.S.C. §1677b(a). Commerce treats the People’s Republic of China
Court No. 15-00177 Page 3
(“PRC”) as a NME. Decision Memorandum for Preliminary Results, PDoc 98 (“Prelim IDM”) at
6. Both EP and CEP are then to be adjusted by reducing EP or CEP by, inter alia, “the amount, if
included in such price, of any export tax, duty, or other charge imposed by the exporting country on
the exportation of the subject merchandise to the United States”. 19 U.S.C. §1677a(c). Commerce’s
stated practice in determining such reductions is to adjust EP or CEP for the amount of any
(irrecoverable) value-added tax (“VAT”) in certain NME countries, in accordance with 19 U.S.C.
§1677a(c). See Methodological Change for Implementation of Section 772(c)(2)(B) of the Tariff Act
of 1930, as Amended, in Certain Non-Market Economy Antidumping Proceedings, 77 Fed. Reg.
36481 (June 19, 2012) (“Methodological Change”), 36482. Commerce stated that in accordance
with this practice, it would reduce a respondent’s EP or CEP accordingly by the amount of the tax,
duty, or other charge paid, but not rebated. Id.; see also IDM at 5-6. Specifically, for the Final
Results Commerce stated:
In a typical VAT system, companies do not incur any VAT expense
for exports; they receive on export a full rebate of the VAT they pay
on purchases of inputs used in the production of exports (“input
VAT”), and, in the case of domestic sales, the company can credit the
VAT they pay on input purchases for those sales against the VAT
they collect from customers. See, e.g., explanations in Diamond
Sawblades and accompanying IDM at cmt 6, Wood Flooring from
China and accompanying IDM at cmt 3, Methodological Change, 77
Fed. Reg. at 36483. That stands in contrast to the PRC’s VAT
regime, where some portion of the input VAT that a company pays
on purchases of inputs used in the production of exports is not
refunded. See Letter to the Department from Golden Dragon “Section
C Questionnaire Response, Seamless Refined Copper Pipe and Tube
from China” (“Section C Response”) (April 7, 2014) at Exhibit C-13;
see also Letter to the Department from Golden Dragon
“Supplemental Section A, C, & D Questionnaire Response, Seamless
Refined Copper Pipe and Tube from China” (July 10, 2014) at
Exhibits SC-9 through SC-13; see also Methodological Change, 77
FR 36483. This amounts to a tax, duty or other charge imposed on
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exports that is not imposed on domestic sales, and thus we disagree
with respondent’s assertions that irrecoverable VAT should not be
deducted from their U.S. prices. Where the irrecoverable VAT is a
fixed percentage of U.S. price, the Department explained that the
final step in arriving at a tax-neutral dumping comparison is to reduce
the U.S. price downward by this same percentage. Id.
***
Information placed on the record of this review by Golden Dragon
indicates that, according to the PRC VAT schedule, the standard
VAT levy on the subject merchandise is 17 percent and the VAT
rebate rate for the subject merchandise is 13 percent. See
Supplemental Section A, C, & D Questionnaire Response (July 10,
2014), CDoc 33, 14. For the final results, therefore, we removed from
the U.S. price an amount calculated based on the difference between
these rates (i.e., four percent) applied to the export sales value,
consistent with the definition of irrecoverable VAT under PRC tax
law and regulation. See Prestressed Steel from China and
accompanying IDM, at cmt 1.
Irrecoverable VAT is (1) the free-on-board value of the exported
good, applied to the difference between (2) the standard VAT levy
rate and (3) the VAT rebate rate applicable to exported goods. Id., at
cmt 1, n. 35. The first variable, export value, is unique to each
respondent while the rates in (2) and (3), as well as the formula for
determining irrecoverable VAT, are each explicitly set forth in
Chinese law and regulations. Id., at cmt 1, n. 36.
IDM at 5-6. Commerce determined that Golden Dragon, a bonded processor, used both imported
and domestically sourced copper to produce subject merchandise. Id. at 7; see Supp. Questionnaire
Response (July 10, 2014) (“SQR1”), 13; see Section D Resp. at Exs. D5-D6; see also SQR at Exs.
SD-15. Golden Dragon averred in its administrative submissions that it would be liable to pay VAT
on domestically sourced copper, even if this copper was used to produce subject merchandise
destined for the United States. See IDM at 7-8; see also SQR1 at 13. Commerce further determined
that Golden Dragon was unable to sufficiently demonstrate that only raw materials imported under
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bond, i.e. those materials exempt from the VAT, were used in the production of subject merchandise.
IDM at 8; see Sec. D Resp. at Ex. D-2; see also SQR1 at Ex. SD3. Commerce stated that it required
that a respondent substantiate any claimed exemption to the PRC VAT regulations according to
those regulations. IDM at 7. Commerce further explained that Golden Dragon took contradictory
positions during the hearing held on the issue; Golden Dragon asserted during the hearing that both
domestically sourced and imported copper would be exempt from VAT, and further argued that it
was exempt from the VAT because a greater quantity of exempt material was brought into the
bonded facility than was exported to the United States. Id. at 7-8. Both of these assertions,
Commerce stated, stand in opposition to record evidence on irrecoverable VAT and the purchase
and inventory records provided by Golden Dragon. Id. Finally, Commerce determined that Golden
Dragon only selectively translated the relevant VAT regulations, despite Commerce’s request for
the regulations to be fully translated. Id. at 8. Ultimately, Commerce “continued to adjust U.S. price
by the amount of irrecoverable VAT (i.e., four percent) . . . because Golden Dragon has provided
no evidence or support for adjusting these rate[s] for the consumption of in-bond material pursuant
to the PRC VAT regulations.” Id.
Golden Dragon does not argue with the fundamental rationale behind reducing the
EP or CEP by the percentage of irrecoverable VAT, see Def.’s Resp. at 8; instead, Golden Dragon’s
claim is that the PRC’s VAT is not included in the price of its exported merchandise not merely as
a matter of law but as a matter of fact, as Golden Dragon is exempt from paying the VAT on the
copper cathode it imports, under bond, into its bonded processing facility. See generally Pl’s Br.
at 3-6. Golden Dragon supports its claim of exempt status with a translated copy of its exemption
declaration from PRC Customs, effective from December 2012 through June 2014, covering the
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POR. SQR1 at Ex. SC-11. According to Golden Dragon, this declaration shows that its import and
export value have been “written off” by PRC Customs, and that its import and export status is “free”,
meaning that no VAT was owed or collected upon Golden Dragon’s imports of copper used in the
processing of its exports. Pl’s Br. at 12; see IDM at 8; SQR1 at Ex. SC-11.
Golden Dragon further supports its exemption claim with partially-translated copies
of PRC VAT regulations stating that under Article 5 of PRC Customs Regulation 168, entitled
“Measures of the Customs of the PRC for the Supervision and Administration of Processing Trade”,
Golden Dragon qualifies for the VAT exemption by importing copper cathode into its bonded
processing facility and producing copper tubes for export. See Golden Dragon’s Supp.
Questionnaire Response (Oct. 3, 2014), CDocs 58-62 (“SQR2”), 5. Golden Dragon avers that
Article 5 of Regulation 168 provides,
Approved by the Customs, materials and parts imported under
processing trading are bonded supervision after exports of finished
products, it will be written off by the Customs in accordance with the
approved actual processing export quantity; for those imports that
have been collected tax according to the regulations, after finished
products export, the Customs will refund the taxes according to the
approved amount of the actual processing export.
See Pl’s Br. at 12. Golden Dragon contends that in this case, Commerce has applied a theoretical
VAT and reduced the CEP by a theoretical amount while ignoring record evidence that Golden
Dragon did not owe and has not paid VAT on its exported subject merchandise. It argues that
Commerce is obligated to consider evidence of its exemption, as laid out in Methodological Change.
See Methodological Change, 77 Fed. Reg. at 36483 (“[Commerce] will also consider evidence as
to whether the particular respondent(s) was, in some manner, exempted from the requirement to pay
the export tax, duty, or charge. [Commerce] anticipates that such evidence would include official
Court No. 15-00177 Page 7
documentation of the respondent’s exemption.”). Golden Dragon points to its exemption declaration
and the translations of the PRC regulations to demonstrate its VAT exempt status as a bonded
processor.
Golden Dragon also contests Commerce’s basis for rejecting its exempt status by
determining that Golden Dragon failed to segregate its imported VAT-exempt and non-VAT-exempt
copper cathodes during the production process. See Pl’s Br. at 21-22; see also IDM at 4. Golden
Dragon argues that, according to the PRC regulations, if the volume of its imported VAT-free
copper cathodes meets or exceeds its volume of exported U.S. copper tubes, it has met its
requirement for VAT exemption for the exports. Pl’s Br. at 21; SQR1; Pl’s Pre-Preliminary
Comments (Nov 13, 104), CDoc 68; Pl’s Admin. Case Brief (Jan.7, 2014), CDocs 75-77 (stating,
i.e., “[d]uring the POR . . . the quantity of copper that Golden Dragon imported under bond, for
which it was fully VAT exempt, substantially exceeded the quantity of its total POR U.S. sales”).
The government responds by contending Golden Dragon “did not provide sufficient
evidence to show that it avoided the four percent irrecoverable VAT rate set forth under [PRC] law.”
Def.’s Resp. at 11. The government rejects Golden Dragon’s argument that because it imported
more copper under bond than needed to produce the subject merchandise, the U.S.-exported subject
merchandise is exempt from VAT, arguing instead that because Golden Dragon cannot “trace” the
imported VAT-exempt copper through its production lines and verify that only VAT-exempt inputs
went into the production of the subject merchandise, Commerce continued to apply the 4 percent
reduction to the CEP of the exported subject merchandise. Def.’s Resp. at 13-14.
Court No. 15-00177 Page 8
B. Discussion
A basic premise of Commerce’s stated practice in applying certain reductions in price
owing to an export tax, duty, or other charge is that the amount of that export tax, duty or other
charge is included in the EP or CEP. See 19 U.S.C. §1677a(c)(2)(B) (“if included in such price”);
see also Methodological Change, 77 Fed. Reg. at 36482 (“[Commerce] will determine whether, as
a matter of law, regulation, or other official action, the NME government has imposed ‘an export
tax, duty, or other charge’ . . . that is not fully refunded upon exportation”). If Commerce cannot
determine that the EP or CEP includes the export tax, duty or other charge, then Commerce need not
seek to reduce the EP or CEP by the amount of that export tax, duty, or other charge. See id. Here,
Commerce has failed to sufficiently explain its reasoning supporting its determination that the VAT
is included in the CEP for Golden Dragon’s copper tube exported to the U.S. Instead, Commerce
relies upon its initial assumption that the 4 percent VAT was paid or included and was not
recovered, without due regard to Golden Dragon’s exemption documentation or its arguments
regarding how the PRC regulations affect the VAT “payment” accorded to Golden Dragon’s import
volumes as compared with its export volumes. See IDM at 7. In the Final Results, Commerce
stated:
Golden Dragon argued that it simply had to demonstrate to the PRC
government that the quantity of raw materials imported into its
bonded facility exceeds that of its exports to qualify for a total VAT
exemption on all of its exports. While Golden Dragon’s claim, if
true, may satisfy the requirements of the PRC government to qualify
Golden Dragon for an exemption to paying VAT on its exports, the
Department requires that a respondent substantiate any such claimed
adjustment according to the PRC VAT regulations.
Court No. 15-00177 Page 9
Id. Commerce does not explain how Golden Dragon failed to substantiate its argument in
accordance with its own statement; Commerce merely reiterates its finding that Golden Dragon used
both domestically sourced and imported copper during the POR in the production of subject
merchandise, a fact that does not necessarily obviate Golden Dragon’s argument. To the court’s
mind, Commerce’s method for its VAT determination appears straightforward: if Golden Dragon’s
argument is true, i.e., if it has satisfied the requirements under the PRC regulations, and (as
Commerce stated) if Golden Dragon can substantiate its argument before Commerce, Commerce
will recognize Golden Dragon’s VAT exemption on the subject merchandise.
Commerce does not sufficiently explain how Golden Dragon’s submissions failed
to substantiate said PRC requirements. Indeed, the court is hard pressed to conceive of what, if any,
additional information Golden Dragon could provide to demonstrate that it has met Commerce’s
stated requirements. Accordingly, the court cannot find Commerce’s determination to be based on
substantial evidence, and the matter must therefore be, and hereby is, remanded to Commerce either
to further explain how Golden Dragon has failed to substantiate having met its burden under the
PRC VAT regulations to qualify for the VAT exemption, or to reconsider the issue anew, with, as
always, the discretion to re-open the record if that is a necessary consequence of this opinion.
II. By-Product Offset and Surrogate Overhead Calculations
A. Background
In NME antidumping duty cases, 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). When determining the normal value (“NV”) of subject
goods from a NME such as the PRC, Commerce makes its calculation based on surrogate values
Court No. 15-00177 Page 10
(“SV”) on the basis of the value of the factors of production (“FOP”) used in producing the
merchandise. Id. To value FOPs, Commerce must base its determination(s) on the “best available
information”, and Commerce’s practice is to select values that are “publicly available, non-export
average values, most contemporaneous with the POR, product-specific, and tax-exclusive.” Id.; see
also IDM at 14.
In calculating NV in the NME context, “the particular aim of the statute is to
determine the non-distorted cost of producing the subject merchandise.” DuPont Teijin Films China
Ltd. v. United States, 38 CIT ___, ___, 7 F. Supp. 3d 1338, 1345 (2014), referencing Lasko Metal
Prods., Inc. v. United States, 16 CIT 1079, 1081, 810 F. Supp. 314, 316-17 (1992). “Nowhere does
the statute speak directly to any methodology Commerce must employ to value the factors of
production, indeed the very structure of the statute suggests Congress intended to vest discretion in
Commerce by providing only a framework within which to work.” Shakeproof Assembly
Components Div. of Ill. Tool Works, Inc. v. United States, 23 CIT 479, 481, 59 F. Supp. 2d 1354,
1357 (1999); see also 19 U.S.C. §1677b(c) (no particular method prescribed for valuing FOPs in the
NME context).
When valuing FOPs, Commerce typically assigns a surrogate value to recycled inputs
like it would any other raw material input. However, double counting of input costs can occur if
Commerce assigns a value to the raw material and then another cost to the recycled material without
providing some sort of offset to account for the fact that the recycled material did not need to be
purchased. DuPont Teijin, 38 CIT at ___, 7 F. Supp. 2d at 1345-46. Commerce’s recent practice
with regard to avoiding double counting recycled by-product inputs has been to grant the producer
a by-product offset or credit for by-products generated during production that are either sold or
Court No. 15-00177 Page 11
reintroduced into production. See, e.g., Guangdong Chemicals Imp. & Exp. v. United States, 30 CIT
1412, 1426, 460 F. Supp. 2d 1365, 1376 (2006) (applying a credit for by-products made during
production of sebacic acid).
Golden Dragon’s copper tube is produced from copper cathodes; according to Golden
Dragon, copper is extremely valuable and Golden Dragon operates its production process to recycle
virtually all possible copper scrap generated throughout the process by recovering scrap, reentering
it into raw material inventory, and remelting it. See Golden Dragon’s Supp. D Resp. (April 16,
2014), PDoc 32 (“SDR”) at 15 and Ex. D-8; see also Golden Dragon’s Supp. Resp. (July 11, 2014),
PDoc 70 at 24-26 and Ex. SD-20. At the onset of the administrative review, Golden Dragon took
the position that this recycled copper was not a by-product. See SDR at 15; see also IDM at 12.
In the Preliminary Results, Commerce granted a by-product offset for several by-
products, including the reclaimed and reintroduced copper scrap. Prelim IDM at 18. In the Final
Results, Commerce continued to grant a by-product offset for the recycled copper scrap, basing its
determination to do so on several findings: (1) Golden Dragon provided detailed inventory records
demonstrating the amount of recovered copper scrap and detailing the recycling process, (2) Golden
Dragon’s record evidence mirrors its evidence provided in the second administrative review, where
Commerce also granted a by-product offset for recycled copper, Copper Pipe and Tube from the
PRC, 79 Fed. Reg. 23324 and accompanying issues and decision memorandum at cmt 2, and (3)
Golden Dragon has provided actual quantities of recycled copper scrap during the POR which
allows for the calculation of a specific by-product offset. IDM at 13.
Golden Dragon contests two aspects of Commerce’s application of the by-product
offset. It argues that instead of applying the offset as a deduction from NV, Commerce should have
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deducted the offset from the direct material costs. Pl’s Br. at 26. Golden Dragon further contests
the calculation and application of the surrogate financial ratios, which Golden Dragon claims
resulted in an overvaluation of the overhead costs. Id. at 26-28.
Commerce responds that in granting Golden Dragon a by-product offset for copper
that Golden Dragon reintroduced into the production process and applying that offset to NV, it
followed “well-established practice and the methodology employed in the Preliminary Results and
in the preceding review of this order.” Def.’s Resp at 22. Commerce states that its practice in NME
proceedings is to deduct the by-product offset from NV, not from raw materials. Id. at 23,
referencing Polyethylene Terephthlalate Film, and Strip from the PRC, 77 Fed. Reg. 14493 (Mar.
12, 2012) (PET Film from China) and accompanying issues and decision memorandum at issue 9.
B. Exhaustion
As a threshold matter, Commerce contends Golden Dragon failed to exhaust
administrative remedies by not raising the matter of the by-product calculation methodology when
it had the chance. See 28 U.S.C. §2637(d) (the court “shall, where appropriate, require the
exhaustion of administrative remedies”); see, e.g., Sandvik Steel Co. v. United States, 164 F.3d 596,
599 (Fed. Cir. 1998) (“no one is entitled to judicial relief for a supposed or threatened injury until
the prescribed administrative remedy has been exhausted”) (citation omitted). Commerce’s full
reasoning is described below:
In the Preliminary Results, consistent with the offset granted Golden Dragon in the
prior review, Commerce applied Golden Dragon’s byproduct offset for recycled
copper to normal value.
***
Court No. 15-00177 Page 13
However, despite Commerce’s explicit methodological determination in its
Preliminary Results to apply the byproduct offset to normal value, Golden Dragon
declined to argue in its administrative case brief that Commerce should instead apply
the offset to direct material costs rather than to normal value. See Golden Dragon
Case Br., P.R. 112-13. In fact, in its rebuttal brief, Golden Dragon argued that
Commerce should leave untouched the recycled copper byproduct offset to normal
value. Golden Dragon Rebuttal Br., P.R. 115, at 9 (labeling Commerce’s Preliminary
Results “entirely supported by the record, consistent with the statute, and in line with
the Department’s conclusions in the original investigation, first and second reviews
of this case”). Golden Dragon made this argument in response to petitioners’
argument that Commerce should not grant Golden Dragon any byproduct offset on
the basis that Golden Dragon did not request specifically such an offset and did not
report copper byproducts on a CONNUM-specific basis. Petitioners’ Case Br. at
13-14, C.R. 78. Thus, in essence, Golden Dragon now disputes the copper byproduct
offset that it argued for and received from Commerce over petitioners’ objections.
Having failed to exhaust the issue administratively, Golden Dragon raised the issue
for the first time in a post-Final Results ministerial error allegation. At that late stage,
Golden Dragon argued for the first time that in offsetting recycled copper from
normal value rather than the direct material cost, Commerce committed a clerical
error within the meaning of section 351.224(f) of Commerce’s regulations.
Ministerial Error Allegation at 1-2 (arguing that because Golden Dragon
reintroduced copper scrap into the production process, it is mathematically incorrect
to deduct the offset from normal value). In its Ministerial Error Allegation
Memorandum, Commerce explained that its deduction of the recycled copper
byproduct offset from normal value constituted a methodological determination that,
moreover, adhered to Commerce’s consistent practice. Id. at 4-6. Thus, Golden
Dragon did not identify a “ministerial error” as defined in Commerce’s regulations.
Id. (citing 19 U.S.C. §351.224(f)).
Although Golden Dragon tried to cloak its argument as a clerical error, its allegation
exclusively pertained to a methodological decision evident in Commerce’s
Preliminary Results and in the prior review of this order. See Ministerial Error Memo
at 2-4. This Court has refused to “allow Plaintiffs to make an end run around the
exhaustion requirement by entertaining an unexhausted substantive issue disguised
as a ministerial error.” Fischer S.A. Comercio, Industria & Agricultura, et al. v.
United States, 885 F. Supp. 2d 1366, 1376 (Ct. Int’l Trade 2012). Thus, “ministerial
error procedure is not the appropriate method to raise a new, substantive legal
argument.” Id. (rejecting for failure to exhaust an argument on the exclusion of
home market sales outside the period of review, which plaintiffs raised in a
ministerial allegation but not their administrative case brief) (citing 19 U.S.C. §
1673d(e)[)]; see also Ta Chen Stainless Steel Pipe, Ltd. v. United States, 342 F.
Supp. 2d 1191, 1205 (Ct. Int’l Trade 2004). In sum, Golden Dragon did not preserve
Court No. 15-00177 Page 14
its byproduct offset argument through its ministerial error allegation, and the Court
should deny Golden Dragon’s attempt to cure its failure to exhaust by label[ ]ing its
argument as a ministerial error allegation.
The exceptions to the exhaustion requirement do not apply here, nor does Golden
Dragon attempt to invoke any. Commerce’s determination did not involve a purely
legal question and was not altered by an intervening judicial opinion. In addition, the
exception for futility does not apply because there is no indication that Golden
Dragon would have been “required to go through obviously useless motions in order
to preserve {its} rights.” See Corus Staal BV v. United States, 502 F.3d 1370, 1379
(Fed. Cir. 2007). To preserve the issue for appeal, Golden Dragon needed to include
the issue in its administrative case brief to Commerce. Golden Dragon did not.
Consequently, Golden Dragon denied Commerce the opportunity to administratively
evaluate and address this issue, and Golden Dragon should not be permitted to
belatedly raise the issue now.
Def.’s Resp. at 25-27.
Golden Dragon replies that it had no opportunity to brief the precise issue before the
court prior to the Final Results, because in making the methodological determination to treat Golden
Dragon’s recovered and recycled copper as raw material, which it did for the Preliminary Results,
Commerce modified the Preliminary Results’ methodology for the Final Results by “building up”
the total costs using copper quantities net of recovered and recycled copper. Compare Prelim.
Analysis Memo, CDoc 72 at 7, with Final Analysis Memo, CDoc 83 at 7-8. By contrast, in the Final
Results, Commerce announced its change, described it as “new,” and even noted the final number
it used was not in the cost database:
Golden Dragon did not include its recycled copper in the calculation of its copper
consumption ratio. Therefore, the Department took Golden Dragon’s total copper
consumption, including recycled material . . . and divided it by the total production
of subject merchandise . . . , which results in a new consumption rate . . . Because
this consumption rate is not included in Golden Dragon’s FOP database, it was used
in place of the reported consumption rate for copper.
Court No. 15-00177 Page 15
Final Analysis Memo, CDoc 83, at 7-8 (footnotes omitted). Commerce inserted its newly calculated
copper factor into the calculation of Golden Dragon’s copper costs, then input that figure into the
total cost of manufacturing calculation, which was then input into the normal value calculation.
The doctrine of exhaustion does not apply where, after a party’s case brief has been
filed, Commerce’ position fundamentally changes in a manner that the party could not have
anticipated prior to filing its case brief. See, e.g., Corus Staal BV v. United States, 502 F.3d 1370,
1381 (2007). Here, Commerce relied on Golden Dragon’s reported copper consumption ratio for
the Preliminary Results. The fact that Commerce then rejected using that ratio and instead resorted
to its own, new calculation of that ratio gave rise to a right to challenge the rejection of that ratio.
Golden Dragon claims it attempted to challenge the rejection of that ratio via a
“ministerial error” allegation as the only administrative avenue open to it after issuance of the Final
Results. Pl’s Reply at 14-16. Golden Dragon need only have appealed that rejection as part of its
challenge here, but the problem before the court appears to be more than a mere challenge to that
rejection. Instead, Golden Dragon is essentially challenging Commerce’s methodology itself, as
described in its reply brief:
The issue of where to apply the by-product offset is critical to accurately calculate
Golden Dragon’s margin. A simplified hypothetical best illustrates the point. Assume
that Golden Dragon has one component in its costs, raw materials, for a total cost of
$100; the value of its by-product is $2; and the surrogate financial ratios are 10%.
Golden Dragon’s position is that first the total cost of manufacturing should be
calculated by subtracting $2 from $100 to arrive at $98 because, per Commerce’s
description, the by-product has a commercial value of $2 and could be sold for this
amount thereby reducing Golden Dragon’s costs of producing the product. Indeed,
the by-product (i.e., the recovered raw material) is a direct offset to Golden Dragon’s
raw material cost and thus Golden Dragon’s cost of manufacturing. The normal value
calculation would then proceed as follows: COM of $98 x surrogate financial ratio
of 10% equals 9.8 + 98 = 107.8.
Court No. 15-00177 Page 16
Applying the methodology that Commerce used in this case to the above example
results in a significantly different normal value based on an artificial increase in
Golden Dragon’s costs. Specifically, because Commerce did not deduct the value of
the by-product from the cost of manufacturing, the Final Results methodology was:
COM of $100 x surrogate financial ratio of 10% = 10 + 100 = 110, and then subtract
the $2 by-product to arrive at a normal value of 108. Golden Dragon notes that this
difference using the actual consumption rate and ratios amounted to more than $[ 1
million ] in additional dumping duties in the underlying review. The methodology
that Golden Dragon puts forward above reflects Commerce’s methodology in the
market economy context, as Golden Dragon noted in its initial brief.
***
As described above, in the NME context, Commerce multiples the company’s COM
by the surrogate financial ratio, which means that the proper placement of the offset
affects the entire calculation. The surrogate financial ratios are based on costs
exclusive of reused materials. It follows that Commerce should apply these ratios
to Golden Dragon’s costs that are calculated on the same basis. But it did not.
Instead, it applied surrogate ratios to Golden Dragon’s costs that included not only
direct materials (original copper) but also the quantity of recovered copper.
The result is an inflated amount of SG&A and profit and therefore an inaccurate and
inflated margin. Importantly, the recovered coper is copper that has already been
input into the production process (as cathode, purchased scrap, or phoscopper), been
recovered, and been subsequently reintroduced into the production process and
remelted. This is not new material but material simply being recycled from copper
already in the plant and part of the production loop. When Commerce calculated
Golden Dragon’s costs, it included the quantities of the new copper material and also
the recovered copper.
Commerce then calculated the selling, general and administrative expenses
(“SG&A”), and profit ratios from the 2013 audited financial statement of the
surrogate country producer, Furukawa Metal (Thailand) Public Company Ltd. P.R.
124, 2012-2013 Administrative Review of the Antidumping Duty Order on Seamless
Refined Copper Pipe and Tube, Final Results Surrogate Value Memo (May 29,
2015) at 5. Furukawa’s audited financial statement, relied on by Commerce for the
ratio calculations, does not indicate that recovered and reintroduced copper is
separately added to its raw material cost. Yet, Commerce applied these surrogate
ratio calculated for Furukawa to a Golden Dragon cost figure that, by contrast,
includes direct materials (new copper) plus the quantity of recovered materials. Put
simply, Commerce applied the surrogate ratios calculated on one basis to a Golden
Dragon cost that it calculated on a different basis. The result is inflated amounts for
SG&A expenses and profit and thus a margin that is not supported by the record.
Court No. 15-00177 Page 17
There is one solution to the two errors in the by-product offset calculation:
Commerce should deduct the by-product offset from Golden Dragon’s direct material
costs, and not from normal value. Doing so would more accurately account for the
fact that the so-called by-product is a direct raw material that Golden Dragon
captures and reuses and it would result in Commerce’s application of surrogate
financial ratios on a basis consistent with how Golden Dragon’s costs were
calculated.
Pl’s Reply at 16-18.
C. Discussion
The concerns Golden Dragon raises with respect to the foregoing are (1) double
counting and (2) a surrogate value ratio with “mismatched” denominator and numerator. With
respect to the first issue, the challenge Golden Dragon raises here goes beyond challenging
Commerce’s rejection of its reported consumption ratio and instead challenges the methodology
used to adjust for the by-product offset, essentially arguing that Commerce should have applied its
market economy by-product methodology here. Golden Dragon made no such arguments at the
administrative case brief, despite having the opportunity to do so, meaning Commerce had no
opportunity to address said issue at the administrative level. See Golden Dragon’s Administrative
Case Brief, PDocs 111-113, CDocs 77-79; see also 19 C.F.R. §351.309(c)(2) (“[t]he case brief must
present all arguments that continue in the submitter’s view to be relevant to the final
determination”); see also Mittal Steel Point Lisas Ltd. v. United States, 548 F.3d 1375, 1383 (Fed.
Cir. 2008) (parties are procedurally required to raise their issues before Commerce at the same time
Commerce is addressing the issue). The court must therefore conclude that Golden Dragon should
have raised in its administrative case brief the challenge to Commerce’s methodology that it would
raise here, and it has therefore failed to exhaust the issue.
Court No. 15-00177 Page 18
With respect to the second issue, Commerce must calculate NV based on a number
of FOPs, including labor, raw materials, energy used, and the cost of capital. 19 U.S.C.
§1677b(c)(3). After determining the costs of these FOPs, Commerce must also add “an amount for
general expenses and profit plus . . . other expenses. Id. §1677b(c)(1). It does so by valuing
overhead, general and administrative expenses (“G&A”), and profit using non-proprietary
information gathered from producers of identical or comparable merchandise in the surrogate
country. 19 C.F.R. §351.408(c)(4); Prelim Results IDM at 18. Here, Commerce valued overhead,
G&A, and profit using audited financial statements for the year ending December 2013 of Furukawa
Metal (Thailand) Public Company Limited, a Thai producer of merchandise identical to the subject
merchandise. Prelim Results IDM at 18; Preliminary Surrogate Value Memorandum, PDoc 101
(“Prelim SV Memo”) at Ex. 5.
Golden Dragon claims that Commerce erred by using one denominator to calculate
the overhead ratio and then applying that ratio to a denominator calculated on a different basis.
According to Golden Dragon, the Furukawa statements are prepared in accordance with Thai
Financial Reporting Standards, which closely follow International Financial Reporting Standards
(“IFRS”). Under IFRS, according to Golden Dragon, “the costs allocated to by[-]products should
be ‘deducted from the cost pool, being otherwise allocated to the sole or several principal
products.’” Pl’s Br. at 29, citing Ministerial Error Comments (June 8, 2016), PDoc 126, Attachment
1. Golden Dragon explains that this means Furukawa’s costs used as the denominator of the
surrogate overhead ratio are inclusive of recovered scrap and any by-product offset. Id. By contrast,
Golden Dragon claims that Commerce’s calculation applies the Furukawa overhead ratio to Golden
Dragon’s cost of manufacturing, which does not reflect the by-product offset. “By multiplying the
Court No. 15-00177 Page 19
surrogate overhead ratio by the [] cost that includes the quantity of recovered copper used as an
input but not accounting for the quantity of recovered copper as an offset, [Commerce] has
overstated the overhead cost.” Id. at 30. Therefore, Golden Dragon contends, Commerce’s
calculation is mathematically incorrect and must be corrected. Id. at 29-30.
Commerce’s response is that it addressed this methodological argument in its
Ministerial Error Memorandum, with reference to the explanation provided in the Final Results.
Def.’s Resp. at 29. Indeed, Commerce confirmed in the Final Results its practice to calculate
overhead by multiplying the surrogate overhead ratio by respondents’ cost of manufacturing. IDM
at 11, citing PET Film from the PRC at cmt. 3. The overhead ratio therefore is applied to the three
components of the manufacturing cost -- raw materials, labor, and energy. Id. Commerce
elaborated in response to Golden Dragon’s ministerial error allegation that it must determine
surrogate values for all inputs, including recycled inputs, to calculate overhead costs. Ministerial
Error Memorandum, PDoc 128, 5. Commerce stated that this methodology -- multiplying the total
value of all materials used in production -- prevents the overhead ratio from being understated. Id.
The court cannot find unreasonableness in such explanation.
This court has previously upheld Commerce’s by-product methodology in the NME
context. See, e.g., Guangdong Chemicals, 30 CIT at 1425-26, 460 F. Supp. 2d at 1376 (respondent
Guangdong argued that Commerce should have deducted the by-product offset from the cost of
manufacturing, but the court held that to do so would require “costly accounting procedures”
including calculating a separate overhead, SG&A and profit amount for the by-products, deducting
that amount from the by-product offset, and then deducting the remaining by-product credit from
manufacturing costs, and instead upheld Commerce’s practice of deducting the by-product from NV
Court No. 15-00177 Page 20
after applying the surrogate financial ratios); Magnesium Corp. of America v. United States, 20 CIT
1092, 1107-08, 938 F. Supp. 885, 900 (1996) (stating that Commerce’s decision to deduct the by-
product offset from NV was a reasonable means of accounting for costs related to by-product
processing while avoiding costly accounting procedures not warranted for by-products).
As Commerce explained in both the Final Results and the Ministerial Error
Memorandum, “overhead would still be understated if the overhead ratio is not multiplied by the
total value of all materials used in production, including the reintroduced copper.” Accordingly,
Commerce “must determine surrogate values for all inputs, including recycled inputs such as
reintroduced copper.” Ministerial Error Memo at 5. Golden Dragon does not persuade the court that
Commerce’s treatment of the by-product offset and subsequent calculations using the Furukawa
financial statements is unreasonable, especially given its failure to exhaust the related issue of the
by-product deduction from NV or from cost of manufacturing. Even if Golden Dragon’s alternative
approach to Commerce’s by-product methodology was reasonable, the court cannot substitute its
own view of the statute for Commerce’s reasonable interpretation or implementation. Magnesium
Corp., 20 CIT at 1107-08, 938 F. Supp. at 900; see Chevron, U.S.A. v. Nat. Res. Def. Council, Inc.,
467 U.S. 837, 844 (1984). The court therefore finds Commerce’s reasonable determination
regarding the recycled copper by-product supported by substantial evidence.
III. Surrogate Truck Freight Value
A. Background
As described above, in order to value FOPs, Commerce must use the “best available
information”, and Commerce’s practice is to select values that are “publicly available, non-export
average values, most contemporaneous with the POR, product-specific, and tax-exclusive.” 19
Court No. 15-00177 Page 21
U.S.C. §1677b(c)(1); IDM at 14. Commerce’s practice in determining distances for truck freight
has been to calculate a value expressing the cost of moving freight over a given distance in U.S.
dollars per kilometer. See IDM at 14-15. Golden Dragon contests the distance figure determined
for the truck freight SV.
In the Preliminary Results, Commerce first sought to value truck freight using inland
transportation costs obtained from a World Bank report entitled Doing Business 2014: Thailand.
Prelim SV Memo at 5. However, the 2014 report did not provide a distance, which Commerce
needed in order to calculate a truck freight cost that is expressed in U.S. dollars per kilometer. IDM
at 15. Commerce then determined to use the distance information from Prestressed Concrete Steel
Rail Tie Wire from the PRC, 79 Fed. Reg. 25572 (May 5, 2014) (“Prestressed Steel”), which the
Petitioners1 placed on the record. IDM at 15, referencing the Petitioners’ Submission of Factual
Information in Advance of Preliminary Determination (Oct. 31, 2014), PDoc 89, 18-23 (“Pet’s
Factual Submission”). In that review, Commerce determined an average of the reported distances
between Bangkok’s Free Trade Zone (“FTZ”) and the two closest ports of Bangkok and Laem
Chabang (44.33 km and 110 km respectively, averaging 77.165 km2) to calculate a truck freight cost
expressed in U.S. dollars per kilometer. Prestressed Steel IDM at cmt 4. In the Preliminary Results
here, Commerce used the same distance determination from Prestressed Steel to calculate a
preliminary truck freight SV of $0.000272144 per kilometer. Prelim SV Memo at 5; IDM at 15.
1
The Ad Hod Coalition for Domestically Produced Seamless Refined Copper Pipe and Tube
and its individual members, Cerro Flow Products, LLC, Wieland Copper Products, LLC, Mueller
Copper Tube Products, Inc., and Mueller Copper Tube Company, Inc. (collectively, “Petitioners”).
2
In Prestressed Steel, Hand Trucks, and Xanthan Gum, Commerce determined that the
average of 44.33 km and 110 km was 76.67 km.
Court No. 15-00177 Page 22
In a sharp reversal of their earlier position, the Petitioners argued in their comments
to the Preliminary Results that Commerce cannot use the distances from Prestressed Steel because
“the factual information supporting those distances is not on the record in this proceeding.” IDM
at 15. The Petitioners requested that Commerce revise its SV using different distances placed on
the record by the Petitioners (a Google Maps printout) demonstrating shorter distances from Laem
Chabang port and Bangkok port to the Bangkok FTZ (i.e., 86.2 km and 42.4 km respectively,
resulting in an average of 64.3 km). IDM at 15; Pet’s Factual Submission at 22-23; see also Final
Results Surrogate Value Memorandum, PDoc 124, 5-6. In the Final Results, Commerce agreed with
the Petitioners, determining that “the factual information supporting [the average distance of 77.165
km as determined in Prestressed Steel] is not present on the record in this proceeding, because it is
not included in the Doing Business 2014: Thailand report, nor any of the other SV submissions
placed on the record by interested parties.” IDM at 15. Commerce thus determined to use the 64.3
kilometer average supported by the Petitioners’ Google Maps printout and therefore revised its truck
freight SV to $0.000326594 per kilometer. IDM at 15.
Golden Dragon contests this revision, arguing that Commerce improperly calculated
the truck freight SV in the Final Results by using data inconsistent with prior cases and with this
review’s record. Pl’s Br. at 33. Golden Dragon contends that Commerce should use the average
distance underlying the Doing Business 2013: Thailand report because that information was
properly placed on the record here and the use of those distances is supported by at least three recent
Department decisions. Pl’s Br. at 33, citing Final Determination of Sales at Less Than Fair Value:
Prestressed Concrete Steel Rail Tie Wire From the People’s Republic of China; 79 Fed. Reg. 25572
(May 5, 2014) and accompanying IDM, at cmtt 4 (“Prestressed Steel”); Xanthan Gum from the
Court No. 15-00177 Page 23
People’s Republic of China: Preliminary Results of 2013 Antidumping Duty New Shipper Review,
79 Fed. Reg. 78797 (Dec. 31, 2014) and accompanying Preliminary Surrogate Value Memo, at 10
(“Xanthan Gum”); Hand Trucks and Certain Parts Thereof From the People’s Republic of China:
Final Results of Antidumping Duty Administrative Review; 2011–2012, 79 Fed. Reg. 44008 (Jul. 29,
2014) and accompanying IDM, at cmt 8 (“Hand Trucks”). Golden Dragon argues that Commerce
has consistently and repeatedly found that the data adopted in Prestressed Steel is the best available
information for calculating the truck freight SV and that the distances relied upon in Prestressed
Steel “sufficed as factual information” for the truck freight SV calculation. Pl.’s Br. at 33-34.
Therefore, according to Golden Dragon, because the Prestressed Steel determination is properly on
this record and Commerce properly relied upon those figures for the Preliminary Results, Commerce
should use the Prestressed Steel figures in determining the truck freight SV.
The government agrees with the Petitioners, arguing that substantial evidence
supports Commerce’s determination to use the distance information submitted by the Petitioners in
their comments to the Preliminary Results. Def.’s Resp. at 18. The government avers that no
factual information exists on this record to support the average distance of 77.165 km. Def.’s Resp.
at 18; IDM at 15 (averring that Doing Business 2014: Thailand does not contain measurements for
the distance between Bangkok’s FTZ and either Bangkok port or Laem Chabang port). Further, the
government argues that the factual information underlying Doing Business 2013 report was not
properly submitted as record evidence for this review, reiterating the propositions relied upon by the
Petitioners from Clearon and Gourmet Equip. Clearon Corp, Slip Op. 14-88, 38 CIT ___, ___, 2014
WL 3643332 (July 24, 2014), *14; Gourmet Equip. (Taiwan) Corp. v. United States, Slip Op. 00-78,
24 CIT 572, 577-78 (July 6, 2000); Def.’s Resp. at 18-19. The government further argues that
Court No. 15-00177 Page 24
Golden Dragon “overlooks a key difference” between this review and those cited by Golden Dragon,
chiefly, that in those earlier reviews, either record evidence supported that average distance or
Commerce lacked a competing average distance supported by record evidence. Def.’s Resp. at 19-
20. The government concludes by arguing that while Commerce may choose to supplement the
administrative record, it is in no way compelled to do so here. Id. at 21.
B. Discussion
When determining the “best available information”, Commerce’s practice is to select
values that are “publicly available, non-export average values, most contemporaneous with the POR,
product-specific, and tax-exclusive.” 19 U.S.C. §1677b(c)(1); IDM at 14. Commerce has “wide
discretion” to use the best available information to value FOPs in NMEs, Ad Hoc Shrimp Trade
Action Comm. v. United States, 618 F.3d 1316, 1322 (Fed. Cir. 2010), though “the selection of the
best available information must be consistent with the overall purpose of the antidumping statute,
which is to determine margins as accurately as possible.” Changshan Peer Bearing Co. v. United
States, 38 CIT ___, ___, 953 F. Supp. 2d 1354, 1358 (2014), citing Lasko Metal Products, Inc. v.
United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994) (quoting Rhone Poulenc, Inc. v. United States,
899 F.2d 1185, 1191 (Fed. Cir. 1990)) (internal quotations omitted). Further, the court will sustain
Commerce’s selection provided Commerce’s reasoning adequately explains its choice. See Motor
Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Each segment of an
antidumping proceeding is treated as an independent proceeding with a separate record, E.I. DuPont
de Nemours & Co. v. United States, Slip Op. 98-07, 22 CIT 19, 32 (Jan. 29, 1998), though prior
determinations can and often do inform Commerce’s determinations in later or related proceedings.
See also, e.g., Tri Union Frozen Products, Inc. v. United States, Slip Op. 16-33, 40 CIT ___, ___,
Court No. 15-00177 Page 25
(Apr. 6, 2016) (“Commerce’s reliance upon previous determinations that have helped develop its
practice . . . does not, as a result, incorporate the sources or information from the record of that
proceeding to the instant review”).
Golden Dragon’s argument may be characterized as an assertion that because
Commerce used the information from Prestressed Steel in other recent reviews to determine the
distance figures for truck freight in Thailand, it must use that information here. Golden Dragon
misstates Commerce’s obligation. In Prestressed Steel, the underlying factual information was
properly placed on the record from two independent sources, Doing Business 2013: Thailand World
Bank report and, apparently, www.thailand.com. Prestressed Steel IDM at cmt 4. However, here,
the Petitioners placed the Prestressed Steel determination on the record without also placing the
supporting factual information from Prestressed Steel on the record (i.e., the Doing Business 2013:
Thailand report and the website information which supported the Prestressed Steel determination).
Instead, this review’s factual record information regarding distances appears to consist of Doing
Business 2014: Thailand, which the government avers does not contain distance information, and
the Google Maps printouts, which the government avers support an average distance figure of 64.3
km. IDM at 15 (“factual information supporting [the average distance of 77.165 km] is not present
on the record in this proceeding, because it is not included in the Doing Business 2014:Thailand
report, nor any of the other SV submissions placed on the record by interested parties.”). While
Golden Dragon may lament Commerce’s determination, it offers no other choice of factual record
information in this review to support its claim. See generally Pl’s Br. at 33-37 and Pl’s Reply at 18-
21 (offering only the information underlying the Prestressed Steel determination as a basis for
Commerce’s determination here).
Court No. 15-00177 Page 26
Golden Dragon further calls upon Commerce to supplement the record with the
underlying factual information from Prestressed Steel.3 However, while Commerce may choose to
supplement the record, “[t]he interested party who is in possession of the relevant information has
the burden of establishing . . . the amount and nature of a particular adjustment”. 19 C.F.R.
§351.401(b)(1); see also QVD Food Co. v. United States, 658 F.3d 1318, 1324 (Fed. Cir. 2011) (“the
burden of creating an adequate record lies with [interested parties] and not with Commerce”),
quoting Tianjin Mach. Import & Export Corp. v. United States, 16 CIT 931, 936, 806 F. Supp. 1008,
1015 (1992) (internal quotes omitted). Golden Dragon had ample opportunity to place its preferred
factual information on the record and failed to do so. See QVD Food Co., 658 F.3d at 1324 (“QVD
is in an awkward position to argue that Commerce abused its discretion by not relying on evidence
that QVD itself failed to introduce into the record”). The court will not re-weigh the evidence
presented to Commerce, and will uphold Commerce’s determination provided its determination is
supported by substantial evidence on the record. Inland Steel Indus., Inc. v. United States, 188 F.3d
1349, 1359 (Fed. Cir. 1999). The court finds Commerce’s determination supported by substantial
evidence.
3
Golden Dragon’s reliance upon Clearon for this proposition is misguided. See Pl’s Br. at
35-36. In Clearon, Commerce had purportedly relied upon a World Bank report for use in its
determination without making that report available on the record, and this court remanded the issue
back to Commerce to place data that it relied upon in making its determination on the record.
Clearon Corp., 2014 WL 3643362 at*14. Here, a distinct situation exists: Golden Dragon seeks to
compel Commerce to use information that Commerce avers is not present on the record. As
explained above, Golden Dragon seems to misunderstand Commerce’s obligation in supplementing
the administrative record.
Court No. 15-00177 Page 27
IV. Conclusion
For the foregoing reasons, Commerce’s Final Results are hereby remanded in part
for Commerce to further explain or reconsider the application of a VAT adjustment to Golden
Dragon’s export price. Commerce shall file its remand results by October 21, 2016. Within ten days
or sooner of the filing of those remand results with the court, the parties shall confer and report on
proceeding further on the case, including a proposed scheduling order for further comments, if
necessary.
So ordered.
Dated: July 21, 2016 /s/ R. Kenton Musgrave
New York, New York R. Kenton Musgrave, Senior Judge