Aristocraft of America, LLC v. United States , 331 F. Supp. 3d 1372 ( 2018 )

Slip Op 18-97
UNITED STATES COURT OF INTERNATIONAL TRADE
ARISTOCRAFT OF AMERICA, LLC,
SHANGHAI WELLS HANGER CO., LTD,
HONG KONG WELLS LTD., HONG KONG)
WELLS LTD. (USA), BEST FOR LESS DRY PUBLIC
CLEANERS SUPPLY LLC, IDEAL CHEMICAL
& SUPPLY COMPANY, LAUNDRY & Before: Leo M. Gordon, Judge
CLEANERS SUPPLY INC., ROCKY
MOUNTAIN HANGER MFG CO., Consol. Court No. 15-00307
ROSENBERG SUPPLY CO., LTD., and ZTN
MANAGEMENT COMPANY, LLC,
Plaintiffs,
v.
UNITED STATES,
Defendant.
OPINION and ORDER

[Remand results remanded to Commerce.]
Dated: August 9, 2018
Jonathan M. Freed, Robert G. Gosselink, and Jarrod M. Goldfeder, Trade Pacific
PLLC of Washington, DC for Consolidated Plaintiffs Shanghai Wells Hanger Co., Ltd.,
Hong Kong Wells Ltd., Hong Kong Wells Ltd. (USA), Best For Less Dry Cleaners Supply
LLC, Ideal Chemical & Supply Company, Laundry & Cleaners Supply Inc., Rocky
Mountain Hanger MFG Co., Rosenberg Supply Co., Ltd., and ZTN Management
Company, LLC.
Ashley Akers, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S.Department of Justice of Washington, DC for Defendant United States. With her on
the brief were Chad A. Readler, Acting Assistant Attorney General, Robert E.
Kirschman,Jr., Director, and Patricia M. McCarthy, Assistant Director. Of counsel was
Jessica DiPietro, Attorney, U.S. Department of Commerce, Office of the Chief Counsel
for Trade Enforcement and Compliance of Washington, DC.
Consol. Court No. 15-00307  Page 2


Gordon, Judge: Before the court are the Final Results of Redetermination Pursuant
to Court Remand (“Remand Results”), ECF No. 65-1, filed by the U.S. Department of
Commerce (“Commerce”) pursuant to Aristocraft of America, LLC v. United States,
42 CIT ___, 269 F. Supp. 3d 1316 (2017) (“Aristocraft”).1 Plaintiffs Shanghai Wells
Hanger Co., Ltd., Hong Kong Wells Ltd., Hong Kong Wells Ltd. (USA), Best For Less Dry
Cleaners Supply LLC, Ideal Chemical & Supply Company, Laundry & Cleaners Supply
Inc., Rocky Mountain Hanger Mfg Co., Rosenberg Supply Co., Ltd., and ZTN
Management Company, LLC (collectively, “Plaintiffs”) challenge (1) Commerce’s
calculation of irrecoverable value-added tax (“VAT”) based on the application of the
standard VAT levy to the FOB export value of finished wire hangers and (2) Commerce’s
determination to continue using certain Thai companies’ surrogate financial statements
to calculate surrogate financial ratios. See Pls.’ Cmts. on Final Results of
Redetermination Pursuant to Court Remand, ECF No. 71 (“Pls.’ Cmts.”); see also Def.’s
Response to Pls.’ Cmts. on Commerce’s Remand Results, ECF No. 76 (“Def.’s Resp.”).
Familiarity with prior administrative and judicial decisions in this action is presumed. The
court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930,
as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012),2 and 28 U.S.C. § 1581(c) (2012).
For the reasons set forth below, the court remands Commerce’s treatment of
irrecoverable VAT and surrogate company financial statement selection.

1
All citations to the remand results, the agency record, and the parties’ briefs are to their
confidential versions unless otherwise noted.
2
Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2012 edition.
Consol. Court No. 15-00307  Page 3


I. Standard of Review
For administrative reviews of antidumping duty orders, the court sustains
Commerce’s “determinations, findings, or conclusions” unless they are “unsupported by
substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings,
or conclusions for substantial evidence, the court assesses whether the agency action is
reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d
1345, 1350–51 (Fed. Cir. 2006); see also Universal Camera Corp. v. NLRB, 340 U.S.
474, 488 (1951) (“The substantiality of evidence must take into account whatever in the
record fairly detracts from its weight.”). Substantial evidence has been described as
“such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.” DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir.
2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial
evidence has also been described as “something less than the weight of the evidence,
and the possibility of drawing two inconsistent conclusions from the evidence does not
prevent an administrative agency’s finding from being supported by substantial evidence.”
Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966). Fundamentally, though,
“substantial evidence” is best understood as a word formula connoting reasonableness
review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d ed. 2018).
Therefore, when addressing a substantial evidence issue raised by a party, the court
analyzes whether the challenged agency action “was reasonable given the circumstances
presented by the whole record.” 8A West’s Fed. Forms, National Courts § 3.6 (5th ed.
Consol. Court No. 15-00307  Page 4


2018).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842–45 (1984), governs judicial review of
Commerce’s interpretation of the Tariff Act. See United States v. Eurodif S.A., 555 U.S.
305, 316 (2009) (An agency's “interpretation governs in the absence of unambiguous
statutory language to the contrary or unreasonable resolution of language that is
ambiguous.”); see generally Harry T. Edwards & Linda A. Elliott, Federal Standards of
Review 273–280 (3d ed. 2018).
II. Discussion
A. Value Added Tax
Plaintiffs contend that Commerce continues to err in its calculation of the amount
of irrecoverable VAT to deduct from Shanghai Wells’ export price (“EP”) and constructed
export price (“CEP”). The court previously held that “Commerce reasonably concluded
that the phrase ‘export tax, duty, or other charge imposed by the exporting country on the
exportation,’ [in] 19 U.S.C. § 1677a(c)(2)(B)[,] could be read to include [irrecoverable
VAT].” Aristocraft, 42 CIT at ___, 269 F. Supp. 3d at 1325. The court also held, however,
that Commerce’s calculation of the deduction for irrecoverable VAT was unreasonable
(unsupported by substantial evidence) and remanded this issue to Commerce for further
explanation, and if appropriate, reconsideration. Id., 42 CIT at ___, 269 F. Supp. 3d
at 1326. Specifically, the court determined that Commerce’s calculation of the amount of
irrecoverable VAT, based on the FOB export value of the finished goods, appeared
inconsistent with Commerce’s definition of irrecoverable VAT as an unrefunded amount
Consol. Court No. 15-00307  Page 5


of VAT “paid on inputs and raw materials (used in the production of exports).” See id.,
42 CIT at ___, 269 F. Supp. 3d at 1326. On remand, Commerce provided further
explanation in support of its calculation of an irrecoverable VAT deduction, in the amount
of eight percent, from Shanghai Wells’ EP and CEP. See Remand Results at 3–4.
Commerce’s Remand Results arrive at the same irrecoverable VAT deduction
Commerce made in the final determination. Commerce has added an additional
explanation of how Chinese law both supports Commerce’s definition of irrecoverable
VAT and resolves the apparent inconsistencies between the definition, and calculation,
of the amount of irrecoverable VAT. See id. at 8–11, 23–25. In addition, Commerce relies
upon Shanghai Wells’ questionnaire responses to justify its findings for Shanghai Wells’
irrecoverable VAT deduction. See id. at 11–12, 25–28. Despite Commerce’s additional
explanation and clarification of its reasoning, Plaintiffs maintain that Commerce’s
irrecoverable VAT determination remains unreasonable (unsupported by substantial
evidence). See Pls.’ Cmts. at 6–13.
In Aristocraft the court could not reconcile (1) Commerce’s definition of
irrecoverable VAT (an amount of unrefunded tax charged on “inputs and raw materials”),
with (2) Commerce’s calculation of irrecoverable VAT based on the FOB export value of
finished merchandise. See Aristocraft, 42 CIT at ___, 269 F. Supp. 3d at 1326. Commerce
alluded generally to Chinese law as the source of any inconsistency between
(1) the definition and (2) its calculation. See Issues & Decision Memorandum for Steel
Wire Garment Hangers from the PRC, A–570–918 (Dep’t of Commerce Mar. 6, 2015)
at cmt. 3, available at http://enforcement.trade.gov/frn/2015/1511frn/2015-28757.txt
Consol. Court No. 15-00307  Page 6


(last visited this date) (“Decision Memorandum”). Commerce though did not cite to
relevant provisions of Chinese law or otherwise reasonably explain how its (1) definition
and (2) calculation of irrecoverable VAT were consistent with one another. Id.
Accordingly, the court remanded the issue to Commerce to address how “VAT paid on
inputs and raw materials (used in the production of exports) that is non-refundable” could
reasonably be calculated using the value of finished goods rather than the value of the
inputs and raw materials. See Aristocraft, 42 CIT at ___, 269 F. Supp. 3d at 1326.
In the Remand Results Commerce addresses the court’s questions about the
apparent inconsistencies between the definition and calculation of irrecoverable VAT by
explaining the Chinese law underlying Commerce’s irrecoverable VAT policy. See
Remand Results at 7–10, 23–25 (citing Shanghai Wells’ June 1, 2015 Supplemental
Questionnaire Response, PD 1343, at Ex. 12, “Circular on Value-Added Tax and
Consumption Tax Policies on Exported Goods and Services, Cai Shui 2012 No. 39,
May 25, 2012” (“2012 VAT Circular”)). Specifically, Commerce relies upon the 2012 VAT
Circular that describes the operation of Chinese VAT law. See Remand Results at 6–10,
22–26 (citing 2012 VAT Circular). The 2012 VAT Circular provides several formulae
detailing how Chinese VAT is calculated for exported goods. See 2012 VAT Circular.
Two of these formulae provide the basis for Commerce’s (1) definition and (2) calculation
of irrecoverable VAT.

3
“PD ___” refers to a document contained in the public administrative record available at
ECF No. 17-4. “CD ___” refers to a document contained in the confidential administrative
record available at ECF No. 17-5.
Consol. Court No. 15-00307  Page 7


First, Commerce explains that Article 5.1 of the 2012 VAT Circular provides:
Tax payable for the current period = output tax for the current
period - (input tax for the current period - taxes prohibited
from exemption and offset for the current period).
Remand Results at 24 (quoting the 2012 VAT Circular at art. 5.1(1) (the “Tax Payable
Formula”)). In the Remand Results Commerce clarifies that the term “irrecoverable VAT”
was intended to describe the “taxes prohibited from exemption and offset” amount
provided in the above formula. See Remand Results at 25.
Second, Article 5.1 of the 2012 VAT Circular provides an additional formula that
explains how “taxes prohibited from exemption and offset” is calculated:
Taxes prohibited from exemption and offset for the current
period = FOB of exported goods for the current period × RMB
conversion rate of foreign currency × (tax rate applicable to
exported goods - tax refund rate for exported goods) -
deductions of taxes prohibited from exemption and offset
for the current period.4
See id. at 24 (citing 2012 VAT Circular at art. 5.1(1) (the “Taxes Prohibited from
Exemption Formula”)). The use of “taxes prohibited from exemption and offset” in these
two formulae sheds light on the source of the apparent inconsistency between

4
The 2012 VAT Circular also provides a formula for calculating “deductions of taxes
prohibited from exemption and offset” as: Deductions of taxes prohibited from exemption
and offset for the current period = price of duty-free raw materials purchased for the
current period × (tax rate applicable to exported goods - tax refund rate for exported
goods). 2012 VAT Circular at art. 5.1(1). However, because Plaintiffs have not claimed
any use of “duty-free raw materials” in the production of their exported goods, this
deduction is irrelevant and is omitted from Commerce’s recitation of the formula. See
Remand Results at 24. Accordingly, for purposes of calculation in this case, Taxes
prohibited from exemption and offset for the current period = FOB of exported goods for
the current period × RMB conversion rate of foreign currency × (tax rate applicable to
exported goods - tax refund rate for exported goods).
Consol. Court No. 15-00307  Page 8


Commerce’s definition and calculation of irrecoverable VAT. Commerce explains that its
definition of irrecoverable VAT (an unrefunded amount of VAT “paid on inputs and raw
materials”) is derived from the Tax Payable Formula in which “taxes prohibited from
exemption and offset” (aka “irrecoverable VAT”) are deducted from “input tax.” See
Remand Results at 24–25; Tax Payable Formula. Commerce then notes that its
calculation of irrecoverable VAT, calculated as “FOB of exported goods for the current
period x (tax rate applicable to exported goods - tax refund rate for exported goods),”
mirrors the calculation of “taxes prohibited from exemption and offset” in the Taxes
Prohibited from Exemption Formula. See Remand Results at 25; Taxes Prohibited from
Exemption Formula. Accordingly, Commerce’s definition of irrecoverable VAT describes
how “taxes prohibited from exemption and offset” is used in the Tax Payable Formula;
however, this figure has no direct connection to the amount of input VAT actually
assessed on Chinese exported goods. Instead, Commerce appears to say that
irrecoverable VAT, or “taxes prohibited from exemption and offset,” stands for a numerical
value calculated using the VAT tax and refund rates assessed against the value of
finished export goods. See Remand Results at 8–10, 24–25; Tax Payable Formula; Taxes
Prohibited from Exemption Formula.
Beyond the 2012 VAT Circular, Commerce relies upon accounting documents
submitted by Shanghai Wells that appear to corroborate the reasonableness of an eight
percent adjustment for irrecoverable VAT to Shanghai Wells’ EP and CEP. See Remand
Results at 10–12, 27–28. Specifically, Commerce cites to Shanghai Wells’ accounting
Consol. Court No. 15-00307  Page 9


data for June 2014 under account code X.5 See id. at 27 (citing Shanghai Wells’ June 1,
2015 Supplemental Questionnaire Response, PD 134, at Ex. 14). Account code X booked
an amount approximating eight percent of Shanghai Wells’ export sales for June 2014.
Id. Accordingly, Commerce found that account code X identifies an amount of
irrecoverable VAT for June 2014, and the fact that the amount in account code X
approximates eight percent of export sales value corroborated the reasonableness of
Commerce’s calculation of eight percent as the amount of irrecoverable VAT to deduct
from Shanghai Wells’ EP and CEP. Id.
Plaintiffs challenge Commerce’s reading of Shanghai Wells’ June 1, 2015
Supplemental Questionnaire Response as unreasonable given conflicting evidence in the
record as to the correct meaning and translation of account code X. See Pls.’ Cmts. at
10–11. Plaintiffs suggest that the record contains alternative meanings and translations
for account code X. See id. (discussing alternate translations for the account code X and
suggesting that the labeling of account code X as connected to irrecoverable VAT
resulted from a singular “misunderstanding of the question”).
As Commerce explained, “[t]he record demonstrates that Shanghai Wells booked
to accounting code [X] an amount of approximately eight percent of its export prices and
consistently translated the account name in a manner indicating an irrecoverable amount.
Commerce did not selectively choose the translation that suited a desired outcome but,
rather, considered the record as a whole in deducing the meaning of Shanghai Wells’

5
Account code X is [[ ]] identified in Shanghai Wells’ questionnaire response
as [[ ]].
Consol. Court No. 15-00307  Page 10


inconsistent submissions.” Remand Results at 28. Commerce further explained that this
accounting code, while assigned slightly different nomenclature in Shanghai Wells’ other
questionnaire responses6, appears to “describe an irrecoverable tax.” Id. at 28. Plaintiffs
simply fail to demonstrate that Commerce’s interpretation of account code X is
unreasonable and that the administrative record leads to one, and only one, reasonable
interpretation of its meaning and translation. The court sustains as reasonable
Commerce’s finding that account code X books Shanghai Wells’ irrecoverable VAT.
Although not persuaded by Plaintiffs’ challenge to Commerce’s interpretation of
Shanghai Wells’ questionnaire responses, the court nevertheless has some remaining
doubts about the overall reasonableness of Commerce’s calculation of irrecoverable VAT.
Commerce’s analysis of Chinese law certainly helps clarify the relationship between the
calculation of irrecoverable VAT and its use within the Chinese VAT system. Remand
Results at 7–9, 24–26. There is, however, an inherent and lingering issue that Commerce
itself acknowledges when it notes that the 2012 VAT Circular “indicate[s] a link between
the input VAT paid and tax paid or refunded.” Id. at 9. Although Commerce urges the
court not to read this language from the 2012 VAT Circular “in a way that confuses how
the exporter incurs the cost on a transaction level for specific exports,” Commerce
reiterates that the complex rules of the Chinese VAT system confirm a “link” between
input VAT paid and tax paid or refunded on the aggregate level. Id.

6
Examples of this slightly different nomenclature include “[[ ]]”,
“[[ ]]”, and “Total Un-exempted Tax”.
Consol. Court No. 15-00307  Page 11


Commerce downplays the relevance of this “link” by explaining that Commerce
adjusts for irrecoverable VAT at the transaction-specific level rather than on an aggregate
level. Id. at 8–9. Commerce further notes that Plaintiffs’ alternative methodology for
adjusting for irrecoverable VAT, i.e. accounting for input VAT actually paid in the
adjustments to EP and CEP, introduces significant distortions to the calculations given
that the input VAT figures may include offsets from periods outside of the period of review
as well as distortions due to the time lag between the payment of input VAT at production
and the subsequent exportation of finished merchandise. Id. at 9.
To summarize, Commerce clarified that “irrecoverable VAT” refers to “Taxes
prohibited from exemption and offset,” i.e., an amount of unrefunded tax charged on
“inputs and raw materials.” Id. at 7–10, 24–25 (emphasis added). Commerce further
acknowledged that this deduction for “irrecoverable VAT” is in some way linked to the
amount of input VAT that Shanghai Wells actually pays, but discounts the significance of
this link. See id. at 9. The court is unfortunately still confused and cannot understand how
a reasonable mind would conclude that the amount of input tax actually deducted from
Shanghai Wells’ VAT liability is “not relevant” to the adjustment of Shanghai Wells’
EP and CEP. See id. at 6. Perhaps the phrase “not relevant” is causing the problem.
Did Commerce instead mean “not calculable”? Is the “link” between Plaintiffs’ input VAT
and tax paid or refunded generally not calculable (or knowable) because of the complexity
of the Chinese VAT system (meaning it is just not possible)? Or, is it at least theoretically
possible to calculate (and account for) the “link” but not in this particular case because
Plaintiffs have failed to proffer enough information and explanation against a dense and
Consol. Court No. 15-00307  Page 12


complicated Chinese VAT system to enable Commerce to make the (transaction-specific)
adjustment to Plaintiffs’ EP and CEP? Or is something else going on? The court therefore
must remand this issue again for Commerce to further explain, and reconsider,
if appropriate, how its deduction of “taxes prohibited from exemption and offset” accounts
for an amount of “input VAT not fully recouped on export sales” that Shanghai Wells
includes in its price for export sales of finished wire hangers.
B. Surrogate Company Financial Statement Selection
In this, the sixth administrative review, Commerce selected financial statements
for calculating surrogate financial ratios from three Thai companies: LS Industries Co.
(“LS Industry”), Sahasilp Rivet Industrial Co. Ltd. (“Sahasilp”), and Thai Mongkol
Fasteners Co., Ltd. (“Mongkol”). See Decision Memorandum at 7–10. In Aristocraft the
court remanded Commerce’s selection of surrogate financial statements for Commerce
“to address reasonably the importance of drawing wire from wire rod as a surrogate
company selection criterion.” Aristocraft, 42 CIT at ___, 269 F. Supp. 3d at 1335.
On remand, Commerce acknowledged that it prefers “financial statements from
companies that draw wire from wire rod to produce identical or comparable merchandise
in order to calculate the surrogate financial ratios of an integrated producer such as
Shanghai Wells.” Remand Results at 14. Given that selection criterion, the question for
Commerce was whether all three companies or just one, LS Industry, constituted the best
available information to use as surrogate companies.
Commerce noted that it “did not directly address record evidence purporting to
demonstrate that LS Industry drew wire from wire rod, which resulted in an incomplete
Consol. Court No. 15-00307  Page 13


analysis of the record information.” Remand Results at 17. That evidence is “six photos
of extremely poor quality” that appeared on the website of LS Industry. Remand Results
at 19. Plaintiffs argue that the photos contain images that “obviously resemble” wire rod
coils and wire drawing machinery. See Pls.’ Cmts. at 17. The photos, though, have no
captions. See Remand Results at 31. Commerce, noting its knowledge of “material and
machinery involved in the production of subject merchandise,” concluded that the “type
of machine is not discernable.” Id. at 19. Commerce also noted that “Shanghai Wells
reported that it used a straightening machine to straighten steel wire before it is fed
through the hanger forming machine and there is nothing on the record to support the
claim that the machine pictured is not, in fact, a straightening machine rather than a wire
drawing machine, or any other type of machine.” Id. Commerce also concluded that it
could not “determine whether the material pictured is wire rod or, instead, any number of
other products, e.g. steel bar, reinforcing bar, steel strip, or bundles of any other type of
coiled materials.” Id. at 20. As a result, Commerce determined “that the financial
statements of LS Industry, Sahasilp, and Thai Mongkol, all represent equally suitable
financial statements … [and a]bsent definitive evidence to the contrary, all three
statements represent the best available information on the record of this review for
calculating surrogate financial ratios.” Id.
Plaintiffs challenge as unreasonable Commerce’s conclusion that the three
companies “equally satisfy its selection criteria.” Id. at 14. Plaintiffs, however, do not make
the straightforward argument that Commerce’s determination is unreasonable because a
reasonable mind would have to conclude that the photographs only depict wire rod and
Consol. Court No. 15-00307  Page 14


wire drawing machinery. Id. at 16–19. Rather, Plaintiffs dismiss Commerce’s suggestion
that the photographs may depict wire straightening machinery and coiled material other
than wire rod as speculation, and argue that Commerce must instead accept Plaintiffs’
proffered view that the photographs likely depict wire rod and wire drawing machinery. Id.
According to Plaintiffs, Commerce must accept Plaintiffs’ speculative inference about the
photographs—that they depict wire drawing machine and wire rod in coils—and reject an
alternative, but equally speculative inference—that LS Industry maintains wire
straightening machinery and coiled material other than wire rod. The court has no idea
which of the two inferences is correct. Both seem plausible. What the court cannot do is
direct Commerce to favor Plaintiffs’ preferred evidentiary inference over another
reasonable inference. See Mitsubishi Heavy Indus. Ltd. v. United States, 275 F.3d 1056,
1062 (Fed. Cir. 2001) (“‘[T]he possibility of drawing two inconsistent conclusions from the
evidence does not prevent an administrative agency's finding from being supported by
substantial evidence.’” (quoting Consolidated Edison, Co. v. NLRB, 305 U.S. 197, 229
(1938))). This issue ultimately boils down to a problem of proof for Plaintiffs. Plaintiffs
could have done much more to remove doubts about the photographs (and undermine
any competing inferences). Better quality photos and better authentication would have
helped, as would have affidavits from its own operators and fabricators explaining what
the photographs depicted. It bears repeating that the burden to develop the administrative
record rests on interested parties like Plaintiffs. QVD Food Co. v. United States, 658 F.3d
1318, 1324 (Fed. Cir. 2011) (“‘[T]he burden of creating an adequate record lies with
[interested parties] and not with Commerce.’” (quoting Tianjin Mach. Imp. & Exp. Corp.
Consol. Court No. 15-00307  Page 15


v. United States, 16 CIT 931, 936, 806 F. Supp. 1008, 1015 (1992)). Without the
additional evidentiary proffer, Plaintiffs simply ask too much of the court to wade into fact
finding on a sparse record.
Plaintiffs additionally argue that Commerce unreasonably discounted “other
deficiencies” in the financial statements of Mongkol and Sahasilp. See Pls.’ Cmts. at 19–
21. Plaintiffs note that Sahasilp’s “company profile” does not list wire rod drawing among
its “Key Manufacturing Process.” Id. at 19. Similarly, Plaintiffs observe that Mongkol’s
website lists various types of machinery but fails to specifically include wire rod drawing
machinery. Id. Plaintiffs contend that this absence of evidence indicates that Sahasilp
and Mongkol do not even arguably draw wire from wire rod and are accordingly not
“equally suitable” as surrogate producers of comparable merchandise. Id. The court is
not persuaded. Here again Plaintiffs have a problem of proof. Missing is an important
evidentiary foundation that companies that draw wire from wire rod would always
advertise that fact on their website or list it as a key manufacturing process. Without that
foundation on the administrative record, Commerce was able to reasonably conclude that
the lack of mention of wire drawing or wire drawing machinery on Mongkol’s or Sahasilp’s
website or online company profile did not provide a sufficient basis to determine whether
either company drew wire from wire rod. Accordingly, Commerce found “that no
information on the record demonstrates that any of the potential surrogate financial
companies draw wire from wire rod.” Remand Results at 33.
The court here cannot muscle aside Commerce and order it to use LS Industry’s
financial statement alone. Plaintiffs simply failed to establish on the administrative record
Consol. Court No. 15-00307  Page 16


that LS Industry, and LS Industry alone, was the best available information to use as a
surrogate company. Commerce reasonably concluded that “LS Industry’s financial
statements are not superior to Sahasilp’s or Mongkol’s” and that “all three financial
statements are equally suitable for valuing Shanghai Wells’ financial ratios.” Remand
Results at 32–33. Accordingly, the court sustains Commerce’s use of all three surrogate
companies’ financial statements.
III. Conclusion
For the foregoing reasons, it is hereby
ORDERED that Commerce’s selection of surrogate companies is sustained; it is
further
ORDERED that the Remand Results are remanded to Commerce to further
explain, and reconsider, if appropriate, how its deduction of “taxes prohibited from
exemption and offset” accounts for an amount of “input VAT not fully recouped on export
sales” that Shanghai Wells includes in its price for export sales of finished wire hangers;
it is further
ORDERED the Commerce shall file its remand results on or before September 26,
2018; and it is further
Consol. Court No. 15-00307  Page 17


ORDERED that, if applicable, the parties shall file a proposed scheduling order
with page limits for comments on the remand results no later than seven days after
Commerce files it remand results with the court.

/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: August 9, 2018
New York, New York