Ames True Temper v. United States , 31 Ct. Int'l Trade 1303 ( 2007 )

Slip Op. 07-133
UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
:
AMES TRUE TEMPER, :
:
Plaintiff, : Before: Richard K. Eaton, Judge
:
v. : Court No. 05-00581
:
UNITED STATES, :
:
Defendant. :
______________________________:
OPINION AND ORDER
[United States Department of Commerce’s final results of the
thirteenth administrative review of the antidumping duty orders
on heavy forged hand tools from the People’s Republic of China
sustained in part and remanded.]
Dated: August 31, 2007
Wiley Rein, LLP (Timothy C. Brightbill and Charles O. Verrill,
Jr.), for plaintiff.
Peter D. Keisler, Assistant Attorney General; Jeanne E. Davidson,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice; Patricia M. McCarthy, Assistant
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Stephen C. Tosini); Office of Chief
Counsel for Import Administration, United States Department of
Commerce (Scott McBride), of counsel, for defendant.
Eaton, Judge: This matter is before the court on plaintiff
Ames True Temper’s (“Ames”) motion for judgment upon the agency
record pursuant to USCIT Rule 56.2. By its motion, Ames
challenges certain aspects of the United States Department of
Commerce’s (“Commerce” or the “Department”) final results for the
Court No. 05-00581 Page 2
thirteenth administrative review of the four antidumping duty
orders covering imports into the United States of heavy forged
hand tools (“HFHTs”) from the People’s Republic of China (“PRC”)
made between February 1, 2003, and January 30, 2004 (“POR”). See
generally Pl.’s Mem. Supp. Mot. J. Agency R. (“Pl.’s Mem.”); see
also HFHTs, Finished or Unfinished, With or Without Handles, From
the PRC, 70 Fed. Reg. 54,897 (Dep’t of Commerce Sept. 19, 2005)
(“Final Results”).
With the exception of plaintiff’s changed circumstances
claim, see infra Part V., jurisdiction is had pursuant to 28
U.S.C. § 1581(c) (2000) and 19 U.S.C. § 1516a(a)(2)(B)(iii)
(2000). For the following reasons, Commerce’s Final Results are
sustained in part and remanded.
BACKGROUND
Ames is a domestic producer of HFHTs. On March 26, 2004,
pursuant to Ames’s request, Commerce initiated the thirteenth
administrative review of the four antidumping duty orders
applicable to imports into the United States of heavy forged
bars/wedges, hammers/sledges, picks/mattocks and axes/adzes from
the PRC. See Initiation of Antidumping and Countervailing Duty
Admin. Revs. and Requests for Revocation in Part, 69 Fed. Reg.
15,788, 15,789 (Dep’t of Commerce Mar. 26, 2004); see also HFHTs,
Finished or Unfinished, With or Without Handles From the PRC, 56
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Fed. Reg. 6622 (Dep’t of Commerce Feb. 19, 1991). In its review,
the Department analyzed the international trade behavior of a
number of respondents, including Shandong Huarong Machinery Co.,
Ltd. (“Huarong”) and Tianjin Machinery Import & Export Corp.
(“TMC”). See HFHTs From the PRC, 69 Fed. Reg. at 15,789-800. On
March 10, 2005, Commerce issued its preliminary results
rescinding reviews with respect to some companies and finding
that others continued to sell their HFHTs in the United States at
less than normal value.1 See HFHTs, Finished or Unfinished, With
or Without Handles, From the PRC, 70 Fed. Reg. 11,934, 11,935,
11,937 (Dep’t of Commerce Mar. 10, 2005) (“Preliminary Results”).
Plaintiff and the respondents filed with the Department
case briefs contesting the Preliminary Results on June 13, 2005.
See Pl.’s Mem. 3. The Department, having considered the parties’
arguments, published in the Federal Register the Final Results on
1
“Normal value” is the price at which the “foreign like
product is first sold (or, in the absence of a sale, offered for
sale) for consumption in the exporting country, in the usual
commercial quantities and in the ordinary course of trade and, to
the extent practicable, at the same level of trade as the [U.S.
price].” 19 U.S.C. § 1677b(a)(1)(B)(i).
Because China is a nonmarket economy, Commerce generally
will calculate the normal value of merchandise produced and sold
in that country based on surrogate values “of the factors of
production utilized in producing the merchandise and to which
shall be added an amount for general expenses and profit plus the
cost of containers, coverings and other expenses.” 19 U.S.C.
§ 1677b(c)(1). The surrogate values “shall be based on the best
available information . . . in a market economy country or
countries considered to be appropriate by the administering
authority.” Id.
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September 19, 2005. See Final Results, 70 Fed. Reg. 54,897. By
its Final Results, Commerce: (1) assigned TMC’s sales the PRC-
wide dumping margins of 174.58 percent for axes/adzes, 139.31
percent for bars/wedges, 45.42 percent for hammers/sledges and
98.77 percent for picks/mattocks; and (2) assigned Huarong’s
sales of axes/adzes a margin of 174.58 percent, and its sales of
bars/wedges a rate of 139.31 percent. See id. at 54,898, 54,899.
STANDARD OF REVIEW
When reviewing a final antidumping determination from
Commerce, the court “shall hold unlawful any determination,
finding, or conclusion found . . . to be unsupported by
substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).
“Substantial evidence is ‘such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.’” Huaiyin
Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374
(Fed. Cir. 2003) (quoting Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). To determine whether substantial evidence
exists, the court must consider “the record as a whole, including
evidence that supports as well as evidence that ‘fairly detracts
from the substantiality of the evidence.’” Id. (quoting Atl.
Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed. Cir.
1984)).
Court No. 05-00581 Page 5
When reviewing the Department’s treatment of various factors
when calculating normal value, “the proper role of this court,
. . . is to determine whether the methodology used by the
[agency] is in accordance with law . . . .” Shieldalloy
Metallurgical Corp. v. United States, 20 CIT 1362, 1368, 947 F.
Supp. 525, 532 (1996) (internal quotation marks & citations
omitted; ellipsis & alteration in original). That is, “[a]s long
as the agency’s methodology and procedures are reasonable means
of effectuating the statutory purpose, and there is substantial
evidence in the record supporting the agency’s conclusions, the
court will not impose its own views as to the sufficiency of the
agency’s investigation or question the agency’s methodology.”
Id., 947 F. Supp. at 532 (internal quotation marks & citations
omitted).
DISCUSSION
I. Scrap Offset to Normal Value for Huarong
The Department will grant a requesting respondent an offset
to normal value “for sales of the scrap generated during the
production of the subject merchandise,” Def.’s Resp. Pl.’s Mot.
J. Upon Admin. R. (“Def’s Resp.”) 14 (citing Shandong Huarong
Mach. Co. v. United States, 29 CIT , , Slip Op. 05-54 at 3–4
(May 2, 2005) (not reported in the Federal Supplement), only if
the respondent can demonstrate that the scrap is “either resold
Court No. 05-00581 Page 6
or has commercial value and re-enters the respondent’s production
process.” Issues & Decision Mem. for the 13th Administrative
Review of HFHTs from the PRC (Dep’t of Commerce Sept. 6, 2005)
(“Issues & Dec. Mem.”) at 30; see also 19 U.S.C. § 1677b(c)(1).2
In the Final Results, the Department concluded that Huarong
“[was] entitled to continue to receive an offset for its sales of
steel scrap” that was originally granted in the Preliminary
Results. Issues & Dec. Mem. at 31.
Commerce accepted Huarong’s proffered allocation method for
calculating the amount of the offset. See id. Under Huarong’s
formula, the scrap offset was determined by “allocating total
scrap sales for the POR divided by total steel input used for the
production of both subject and non-subject merchandise and then
multiplied by the steel used in production of subject
merchandise.” Id. Using this methodology, “Huarong was able to
take the total amount of scrap allocated for axes/adzes during
the POR to calculate a per-unit amount of scrap allocated to one
kilogram of the finished subject merchandise.” Id. at 32.
Ames insists that “[t]his scrap offset allowance was
erroneously granted . . . because the allocation method used to
2
That subsection provides, in pertinent part that, when
determining the normal value of merchandise produced in a
nonmarket economy country, Commerce shall rely on “the value of
the factors of production utilized in producing the merchandise
and to which shall be added an amount for general expenses and
profit plus the cost of containers, coverings, and other
expenses.” 19 U.S.C. § 1677b(c)(1).
Court No. 05-00581 Page 7
calculate the value of the scrap offset produces inaccurate
results.” Pl.’s Mem. 7. Plaintiff raises three related “flaws”
in Huarong’s allocation formula that it views as fatal to the
grant of a scrap offset. First, Ames argues that Huarong’s
methodology fails to capture accurately Huarong’s sales of scrap
generated from the production of subject merchandise during the
POR, specifically because Huarong “admitted during the
administrative review that some of the scrap sold during the POR
was generated from both subject and non-subject merchandise
produced prior to the POR.” Pl.’s Mem. 7. Second, Ames contends
that “Huarong has repeatedly conceded that it cannot
differentiate whether the scrap sold was produced from the
manufacture of subject or non-subject merchandise.” Pl.’s Mem.
8. Third, Ames insists that “Huarong has stated that it cannot
correlate specific scrap sales to the production of subject
merchandise.” Pl.’s Mem. 8 (claiming that because Huarong cannot
establish that the scrap was produced from subject merchandise
and sold during the POR, Commerce lacks factual support for its
finding of a “‘sufficient link’ between recovery and sale of
scrap generated by subject merchandise”).
In addition, Ames contends that “[b]y accepting Huarong’s
method to determine the scrap offset . . . the Department assumes
that the production of subject and non-subject merchandise
generates the same percentage of scrap from the same amount of
Court No. 05-00581 Page 8
steel.” Pl.’s Mem. 8–9. For plaintiff, this assumption results
in unavoidable inaccuracies “[g]iven the substantial physical
differences between the subject and non-subject merchandise that
[Huarong] produce[s] . . . .” Pl.’s Mem. 9.
Finally, Ames maintains that the Department’s grant of the
scrap offset based on Huarong’s allocation method constitutes an
unlawful departure from the agency’s past practice because it did
not accept this same allocation method in the eleventh review.
See Pl.’s Mem. 7 (“In the Final Results, the Department deviated
from its past agency precedent and granted Huarong a scrap offset
to normal value.”). Ames, therefore, asks the court to remand
this case “and direct the Department to deny Huarong’s scrap
offset.” Pl.’s Mem. 9.
Commerce asserts that it was justified in granting the scrap
offset even though it acknowledges that Huarong “could not
differentiate between scrap generated from production of subject
and non-subject merchandise since scrap was collected for sale
from all of its workshops.” Issues & Dec. Mem. at 31. For the
Department, this inability to differentiate did not preclude the
grant of the scrap offset because Huarong established an adequate
connection between the scrap resulting from its manufacture of
axes/adzes and the scrap sold. See id. (“[W]hile the Department
determined that Huarong’s accounting records cannot differentiate
scrap sales generated by subject and non-subject merchandise, the
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Department finds that the scrap offset should not be denied
because there was a sufficient link between the recovery and sale
of scrap generated by subject merchandise.”).
In addition, Commerce argues that it properly relied on the
data contained in Huarong’s books and records as support for its
decision to grant the scrap offset. The Department observes that
when making its calculations, it “usually utilizes company
records so long as they are maintained in accordance with the
exporting country’s [generally accepted accounting principles]
and reasonably reflect actual costs.” Def.’s Resp. 14 (citing 19
U.S.C. § 1677b(f)(1)).3 For Commerce, “[r]ather than penalize
Huarong because its records are not exactly tailored to
antidumping calculations, the agency permissibly relied upon
Huarong’s existing record keeping system and allocation.” Def.’s
Resp. 15.
As to the methodology used to calculate the amount of the
offset, Commerce insists that its decision to accept Huarong’s
method was reasonable. The Department points out that the
antidumping statute does not prescribe a method for calculating
scrap offsets but rather leaves the decision to Commerce’s
3
Subsection 1677b(f)(1) codifies the intent expressed in
the Statement of Administrative Action (“SAA”) that “[c]osts
shall be allocated using a method that reasonably reflects and
accurately captures all of the actual costs incurred in producing
and selling the product under investigation or review.” SAA,
Uruguay Round Agreements Act, accompanying H.R. Rep. No. 103-316,
656, 835 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4172.
Court No. 05-00581 Page 10
discretion. See Def.’s Resp. 15. Thus, while conceding that “it
is preferable for costs to be tied as closely as possible to
subject merchandise,” the Department urges that it “may consider
allocations between subject and non-subject merchandise, so long
as the agency is satisfied that the allocation method used does
not cause inaccuracies or distortions.” Def.’s Resp. 15 citing
19 C.F.R. § 351.401(g)(4) (2005)) (“The Secretary will not reject
an allocation method solely because the method includes expenses
incurred, or price adjustments made with respect to sales of
merchandise that does not constitute subject
merchandise . . . .”).
Ames’s claim presents both a legal and a factual question:
(1) whether the Department acted in accordance with law when it
accepted Huarong’s allocation methodology and granted Huarong the
scrap offset (a challenge to the methodology); and (2) whether
Commerce supported with substantial evidence its decision to
grant Huarong the offset. With respect to the legal aspect of
Ames’s claim, the court notes that the antidumping statute is
silent as to how Commerce is to determine whether a respondent is
entitled to a scrap offset to normal value and, if so entitled,
how to calculate the amount of the offset. Under such
circumstances, “the court does not simply impose its own
construction on the statute . . . [but] [r]ather . . . the
question for the court is whether the agency’s answer is based on
Court No. 05-00581 Page 11
a permissible construction of the statute.” Chevron U.S.A. Inc.
v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984).
The Department, while not choosing to fill in the statutory gap
with a regulation, has understood the antidumping statute to
allow for the “offset [of] production costs with the sales
revenue only if the byproduct is either resold or has commercial
value and re-enters the respondent’s production process.” Issues
& Dec. Mem. at 30; see also Guangdong Chem. Imp. & Exp. Corp. v.
United States, 30 CIT , , 460 F. Supp. 2d 1365, 1373 (2006)
(“19 U.S.C. § 1677b(c) does not mention the treatment of by-
products, nonetheless, Commerce sometimes grants a respondent a
credit for a by-product generated in the manufacturing process
that is either reintroduced into production or sold for
revenue.”) (internal quotation marks, citation & alterations
omitted).
The court finds that the Department acted in accordance with
law in granting Huarong the scrap offset. It is clear from the
record that Commerce reasonably based its decision to grant
Huarong the offset on the information contained in the company’s
accounting books and records demonstrating that the scrap was
sold. “As a general rule, an agency may either accept financial
records kept according to generally accepted accounting
principles in the country of exportation, or reject the records
if accepting them would distort the company’s true costs.” Thai
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Pineapple Pub. Co. v. United States, 187 F.3d 1362, 1366 (Fed.
Cir. 1999). Here, the Department accepted Huarong’s books after
verification and found that the company sold a quantifiable
amount of scrap during the POR.
Commerce also verified: (1) the amount of scrap generated
during the POR from the production of subject and non-subject
merchandise; and (2) the total amount of steel used to produce
both kinds of merchandise. Using these two numbers, Commerce
calculated a scrap percentage. This percentage applied to the
verified amount of steel used in the manufacture of the
axes/adzes. While this calculation does assume that both subject
and non-subject merchandise produce comparable amounts of scrap,
there is nothing on the record indicating that this assumption is
not reasonable. See Issues & Dec. Mem. at 31 (acknowledging that
Huarong cannot differentiate between subject and non-subject
scrap sales, but granting the offset “because there was a
sufficient link between the recovery and sale of scrap generated
by subject merchandise”).
Thus, although it would be possible to make a more accurate
adjustment were there more facts on the record, it cannot be said
that Commerce’s methodology is unreasonable. See Pesquera Mares
Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed. Cir.
2001) (“[S]tatutory interpretations articulated by Commerce
during its antidumping proceedings are entitled to judicial
Court No. 05-00581 Page 13
deference under Chevron.”). The court, therefore, concludes that
Commerce was justified in granting Huarong a scrap offset.
As to Ames’s claim that Commerce violated its past practice
in granting the offset, the Department insists:
Although [Ames] is correct that in a past
administrative review of this order the
Department denied Huarong the scrap offset,
the Department finds that the facts of this
review regarding Huarong’s offset are
distinguishable. First, while the Department
determined that Huarong’s accounting records
cannot differentiate scrap sales generated by
subject and non-subject merchandise, the
Department finds that the scrap offset should
not be denied because there was a sufficient
link between the recovery and sale of scrap
generated by subject merchandise. This is
contrary to the facts of the [eleventh
review], where the Department denied Huarong
the offset because there was an insufficient
link between the recovery and sale of subject
merchandise.
Issues & Dec. Mem. at 31 (internal citations omitted).
The court finds that Commerce has not violated its past
practice. While it is true that Commerce initially denied
Huarong a scrap offset in the eleventh administrative review, on
remand from this Court, the Department reopened the record,
considered the additional evidence regarding Huarong’s sales of
scrap during the period of review and granted the offset. See
Shandong Huarong Mach. Co., 29 CIT at , Slip Op. 05-54 at 8.
That determination was sustained by this Court. Thus, the past
practice on which plaintiff relies was not sustained by this
Court, while the practice to which it objects was. See Shandong
Court No. 05-00581 Page 14
Huarong Mach. Co. v. United States, 31 CIT , , Slip Op. 07-3
at 9 (Jan. 9, 2007) (not reported in the Federal Supplement).
Because the court finds that Commerce properly based its
decision to grant Huarong the steel scrap offset on the company’s
financial books and records, applied a reasonable methodology,
supported its conclusion with substantial evidence and did not
violate past agency practice, the court sustains Commerce’s grant
of the offset.
II. Surrogate Value for Brokerage and Handling Expenses
Plaintiff next insists that Commerce erred in using the data
contained in Certain Hot-Rolled Carbon Steel Flat Products from
India, 66 Fed. Reg. 50,406 (Dep’t of Commerce Oct. 3, 2001) (“HR
from India”), as a surrogate value for brokerage and handling
expenses. See Pl.’s Mem. 9–10. Commerce maintains that it
relied on the value in HR from India because it was reliable and
because it was “the only [brokerage and handling] value on the
record of this review . . . .” Issues & Dec. Mem. at 34.
In support of its position, Ames urges that prior to the
publication of the Final Results, it placed on the record the
brokerage and handling value contained in Certain Stainless Steel
Wire Rod from India, 63 Fed. Reg. 48,184 (Dep’t of Commerce Sept.
9, 1998) (“SSWR”). See Pl.’s Mem. 10. Thus, Ames insists that
“[t]he Department erroneously found that the surrogate value from
Court No. 05-00581 Page 15
HR from India was the only [brokerage and handling] value on the
record.” Pl.’s Mem. 10.
According to Ames, it placed the SSWR brokerage and handling
data on the record on two different occasions, both taking place
before Commerce reached its final determination. Plaintiff
claims that it first notified Commerce of the alternate surrogate
value nine months prior to the Final Results in a letter to the
Department. See Pl.’s Mem. 10. In its letter, plaintiff stated:
For purposes of valuing [r]espondents’
brokerage and handling expenses, the
Department should continue to utilize the
public version questionnaire response placed
on the record in Stainless Steel Wire Rod
from India, 63 Fed. Reg. 48,184 (Sept. 9,
1998) (admin. rev., final). This surrogate
has been consistently used by the Department
in this and in dozens of other recent
administrative proceedings.
Letter from Wiley Rein LLP to The Honorable Donald L. Evans, re:
HFHTs From the PRC: Publicly Available Information on Factor
Values (Dec. 28, 2004) (quoted in Pl.’s Mem. 10).
Ames also asserts that it put the SSWR brokerage and
handling value on the record through its case brief in response
to Commerce’s Preliminary Results filed on June 13, 2005. See
Pl.’s Mem. 10. In its case brief, Ames stated that it had placed
the SSWR value on the record by way of its December 28, 2004,
letter. See Case Br. of Ames True Temper (June 13, 2005) 8–9.
Plaintiff further argues that Commerce was on notice that
the SSWR data existed because “[i]n the Preliminary Results, the
Court No. 05-00581 Page 16
Department stated that it had used the rates reported in SSWR to
value the [brokerage and handling] costs.” Pl.’s Mem. 11 (citing
Preliminary Results, 70 Fed. Reg. at 11,941). While the
Preliminary Results do contain this statement, Commerce, in fact,
used the HR from India data. Nonetheless, for plaintiff,
Commerce’s indication in the Preliminary Results that it
determined the value of brokerage and handling costs using the
SSWR data precluded the Department from claiming that the data
was on the record.
Finally, plaintiff claims that Commerce violated its past
practice of valuing brokerage and handling using the value in
SSWR. See Pl.’s Mem. 13 (“Although the Department may deviate
from its past practice, it must provide an explanation for its
departure.”). As plaintiff states:
The Department has used the SSWR surrogate in
many other administrative proceedings,
including several prior administrative
reviews of this antidumping order. For
example, in the eleventh review of this
order, the Department determined that SSWR
was the most appropriate surrogate
value. . . .
The Department has failed to provide any
reasons for its departure from its prior
practice. Furthermore, nothing has changed
in the review under appeal that would alter
the Department’s prior holding and findings.
Pl.’s Mem. 12, 13 (internal citations omitted).
Commerce counters by first pointing out that plaintiff at no
point contests the reasonableness of the HR from India data. See
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Def.’s Resp. 17 (“Ames maintains that Commerce should have used
the surrogate value used in the prior review, i.e., the
calculations from SSWR -- without ever maintaining that the
surrogate value used is unreasonable.”).
Next, Commerce insists that Ames never put its preferred
data on the record:
[Ames] argues that, for the final results, the
Department should value [brokerage and handling]
using a value from SSWR [new shipper reviews].
However, the only [brokerage and handling] value
on the record of this review is the one used in
the preliminary results. [Title 19 C.F.R. §]
351.301(c)(3)(ii) of the Department’s regulations
allows interested parties to submit factor
information up to 20 days after the preliminary
results. Consequently, we note that after the
preliminary results, [Ames] had an opportunity to
place the SSWR . . . [brokerage and handling]
value on the record, but did not. The Department
cannot use information not on the record of this
review for purposes of valuing [brokerage and
handling] in these final results and, therefore,
will continue to use the [brokerage and handling]
surrogate value from HR from India. We note that
the brokerage and handling value in HR from India
is generally contemporaneous with the POR and,
thus, is an appropriate surrogate.
Issues & Dec. Mem. at 34. Thus, it is the Department’s position
that merely referencing the SSWR data was not enough; if Ames
wanted the value considered, it should have placed it on the
record.
In addition, the Department insists that its reference to
the SSWR data in the Preliminary Results was a mistake. See
Def.’s Resp. 18. Commerce states that “[t]his inadvertency does
Court No. 05-00581 Page 18
not change the information upon the record. As the underlying
calculations show, Commerce used the calculations from [HR from
India] in the Preliminary Results.” Def.’s Resp. 18 (citation
omitted).
Finally, in response to Ames’s claim that the use of the HR
from India value constituted an unlawful deviation from its past
practice, Commerce notes that “what represents the best available
information may vary on a case-by-case basis.” Def.’s Resp. 19
(internal quotation marks omitted). Thus, the Department
maintains that it was not bound to use information that was not
on the record simply because it had previously used that
information in earlier reviews.
Where the subject merchandise is exported from a nonmarket
economy country, Commerce “shall determine the normal value of
the subject merchandise on the basis of the value of the factors
of production utilized in producing the merchandise . . . .”
19 U.S.C. § 1677b(c)(1). The statute further directs Commerce to
value the factors of production “based on the best available
information regarding the values of such factors in a market
economy country or countries considered to be appropriate by the
[Department].” Id.
As the Court of Appeals for the Federal Circuit has held,
“‘the process of constructing foreign market value for a producer
in a nonmarket economy country is difficult and necessarily
Court No. 05-00581 Page 19
imprecise.’” Nation Ford Chem. Co. v. United States, 166 F.3d
1373, 1377 (Fed. Cir. 1999) (quoting Sigma Corp. v. United
States, 117 F.3d 1401, 1408 (Fed. Cir. 1997)). Notably, Ames
does not take issue with the reasonableness of the HR from India
data but rather bases its demand for a remand solely on its
argument that, because the Department used the SSWR data as a
surrogate value for brokerage and handling costs in prior
reviews, it had to explain why it did not rely on that data when
making the same valuation in this review.
For Commerce, the HR from India value for brokerage and
handling was the best information available because: (1) it was
“generally contemporaneous with the POR”; and (2) it was the
“only [brokerage and handling] value on the record of this
review . . . .” Issues & Dec. Mem. at 34.
The court sustains Commerce’s determination. First, despite
plaintiff’s claim to the contrary, at no point in any of its
filings did Ames place the SSRW brokerage and handling value on
the record. Instead, plaintiff merely made mention of the SSWR
source. Next, Ames’s insistence that Commerce’s previous use of
the data and, in this case, mistaken reference to the SSWR source
in the Preliminary Results created an obligation to use the SSWR
brokerage and handling value overstates the case. As has been
previously noted, plaintiff knew that the SSWR data was not used
by Commerce in the Preliminary Results. If Ames wished Commerce
Court No. 05-00581 Page 20
to employ the brokerage and handling surrogate value from SSWR in
its calculation of the normal value of Huarong’s axes/adzes, it
should have made both its position and the actual value amount
known to the Department within twenty days after publication of
the Preliminary Results. See 19 C.F.R. § 351.301(c)(3)(ii)
(permitting an interested party to submit data to be used for
valuing factors of production in the final results 20 days after
publication of the preliminary results).
Most importantly, the failure to use a particular data set
from a previous investigation does not constitute a past
practice. It is well settled that what is the best available
information may change from one investigation to the next. See
Nation Ford Chem. Co., 166 F.3d at 1377 (“Whether . . . analogous
information from the surrogate country is ‘best’ will necessarily
depend on the circumstances . . . .”). At no point does Ames
claim that the HR from India data is unreliable, nor does it
contend that the SSWR data is superior to that used by Commerce.
Thus, the court sustains Commerce’s use of the HR from India
surrogate value for brokerage and handling.
III. Huarong’s Production of Metal Pallets
Ames further asserts that the Department unreasonably denied
its request that Commerce “reopen the administrative record and
require the respondents to report the associated factors used in
Court No. 05-00581 Page 21
producing metal pallets.” Pl.’s Mem. 13. In particular, Ames
argues that Commerce had to account for the cost of “oxygen,
acetylene, and welding solder or rods” or other materials used
for welding steel together to construct the metal pallets even
though Commerce insists that there was no evidence on the record
that such materials were employed in the pallet-production
process. Pl.’s Mem. 13, 14. That is, given: (1) that Huarong
made its pallets using a welding process; and (2) that the record
contained no values for inputs necessary to weld the pallets
together, Commerce should have conducted a more detailed
investigation.
To support its position, Ames relies on this Court’s finding
in Shandong Huarong Mach. Co. v. United States, 29 CIT , Slip
Op. 05-54 (May 2, 2005). In remanding that case, the Court held
that “it is not sufficient for Commerce to simply rely on the
absence of evidence to reach its decision; rather, Commerce must
provide findings and analysis justifying its determination.”
Id., Slip Op. 05-54 at 23. For Ames, the Court’s decision in
Shandong applies here and requires remand of the Final Results
with instructions for Commerce to reopen the record and collect
more evidence concerning Huarong’s construction of metal pallets.
Specifically, Ames asserts that remand is necessary because the
Department “supported its decision . . . by explaining that
‘there is no evidence on the record to indicate that Huarong has
Court No. 05-00581 Page 22
used solder, welding rods or inert gases in the manufacture of
pallets.’” Pl.’s Mem. 15 (quoting Issues & Dec. Mem. at 36).
In addition, Ames contends that Commerce’s conclusion that
the verification report showed that there was no welding rod,
solder or inert gases at Huarong’s packing facility, is
erroneous. See Pl.’s Mem. 15. According to Ames:
Contrary to the Department’s claim, the
verification report did not include an
affirmative finding that Huarong did not use
or have any of the listed associated factors.
Rather, the verification report simply did
not mention or include observations regarding
any inputs associated with the production of
steel pallets, other than metal.
Pl.’s Mem. 15 (emphasis & citation omitted).
The Department maintains that it reasonably declined to
reopen the record. For Commerce:
Huarong reported all labor, electricity and
steel used in the production of pallets and
. . . the Department verified these usage
factors. A careful review of Huarong’s
verification report reveals that the
Department noted no solder, welding rods, gas
tanks or inert gases in Huarong’s packing
facility. In addition, there is no evidence
on the record to indicate that Huarong has
used solder, welding rods or inert gases in
the manufacture of pallets.
Issues & Dec. Mem. at 36.
The Department does not view this conclusion as one based on
the absence of evidence. See Def.’s Resp. 20. It is Commerce’s
position that “[a]bsent evidence that a company actually utilizes
a particular input, there is no basis to value that input.”
Court No. 05-00581 Page 23
Def.’s Resp. 19. Commerce further emphasizes that it verified
Huarong’s reported factors of production relating to metal
pallets at Huarong’s packing facility and did not find any
evidence that welding rods, solder or inert gases were used. See
Def.’s Resp. 19 (“Because Huarong’s verified factors of
production do not include rivets, welding flux, welding solder,
acetylene, and oxygen, it is entirely lawful to decline to value
these items.”) (emphasis omitted)). In other words, “Commerce
does not assume that a company utilizes a particular input.
Rather, [it] values the factors of production actually used.”
Def.’s Resp. 20.
Ames does not ask Commerce to assume the use of a particular
input but rather points out that some input must have been used
to construct the pallets. See Pl.’s Reply 7 (“Although the
factors of production for metal pallets may include labor,
electricity and steel, common sense dictates that other
unreported factors had to be used to produce the pallets. . . .
[I]t is inexplicable how the respondent could have manufactured
the pallets without utilizing any other inputs.”). This
proposition seems irrefutable. Therefore, despite Commerce’s
having verified Huarong’s responses, it is apparent that
something held the pallets together and therefore something has
been overlooked. Commerce is instructed to reopen the record and
obtain additional evidence regarding Huarong’s production of
Court No. 05-00581 Page 24
metal pallets.
IV. Commerce’s Application of By-Product Credit and Packing
Materials Cost Directly to Normal Value
Next, Ames urges the court to find unlawful Commerce’s
decision to apply the credit for Huarong’s by-product sales and
add the value of Huarong’s packing material costs directly to
normal value. Ames contends that “[t]he Department erred in
directly adding the packing material costs to and subtracting the
byproduct offset from [normal value]. Instead, the Department
should have added the cost of packing materials to the total cost
of manufacturing (“TOTCOM”), and deducted the byproduct offset
from [cost of manufacturing], before applying the financial
ratios to them.” Pl.’s Mem. 17. For its part, the Department
maintains that its methodology is consistent with its current
practice of applying the by-product offset and cost of packing
materials directly to normal value where the surrogate financial
statement does not specifically account for those items. See
Def.’s Resp. 21.
As noted, when constructing the normal value of merchandise
exported from a nonmarket economy country, Congress has provided
that Commerce base its determination on “the value of the factors
of production utilized in producing the merchandise . . . .”
19 U.S.C. § 1677b(c)(1). In doing so, the Department typically
relies on factor of production data from a surrogate country,
Court No. 05-00581 Page 25
i.e., a “market economy countr[y] that [is] at a level of
economic development comparable to that of the nonmarket economy
country . . . .” 19 U.S.C. § 1677b(c)(4); see Shakeproof
Assembly Components, Div. of Ill. Tool Works, Inc. v. United
States, 268 F.3d 1376, 1381 (Fed. Cir. 2001). Once Commerce has
determined the value of the factors of production, the statute
mandates that it add to that value “an amount for general
expenses and profit plus . . . other expenses.” 19 U.S.C.
§ 1677b(c)(1); see also Guandong Chem. Imp. & Exp. Corp., 30 CIT
at __, 460 F. Supp. 2d at 1373. In calculating the amount of
these expenses, Commerce generally applies financial ratios
derived from a surrogate company’s (1) overhead; (2) selling,
general and administrative (“SG&A”) expenses; and (3) profit to
the surrogate factors of production values.
Here, Commerce used as its surrogate source financial data
reported by 2,031 Public Limited Companies in India for the
period 2002-2003 contained in the August 2004 Reserve Bank of
India Bulletin (“RBI Bulletin”) to construct the overhead and
SG&A surrogate financial ratios. See Preliminary Results, 70
Fed. Reg. at 11,942. Because it could find no evidence of how
by-product sales or packing materials were treated in the RBI
Bulletin, Commerce applied the amounts associated with these
items directly to normal value. See Issues & Dec. Mem. at 38.
Ames’s primary argument is that Commerce unreasonably
Court No. 05-00581 Page 26
concluded that the surrogate companies’ financial statements in
the RBI Bulletin did not account for the by-product offset or
packing material costs simply because the statements did not list
those values. See Pl.’s Mem. 17. For plaintiff, “[r]egardless
of whether costs and materials are individually identified in a
surrogate company’s financial statements, it can be assumed that
all of the costs involved in producing merchandise, such as
direct materials, scrap offsets, and packing materials, will be
included in the financial statements.” Pl.’s Mem. 17 (citing
Floor-Standing, Metal-Top Ironing Tables and Certain Parts
Thereof From the PRC, 69 Fed. Reg. 35,296 (Dep’t of Commerce June
24, 2004) (final determination)).
In support of its position, Ames argues:
In order to calculate an accurate normal
value, the Department must apply the overhead
and SG&A ratios on an apples-to-apples basis.
This can only be accomplished by including
the same costs that were used to derive the
overhead and SG&A ratios in the production
costs in the calculation of [cost of
manufacture] and TOTCOM. Thus, the
Department should have deducted the
respondent’s byproduct offset from [cost of
manufacturing] before applying the overhead
ratio, which was devised from financial data
that accounted for byproduct offset.
Similarly, the Department should have added
packing material costs to TOTCOM before
applying the SG&A ratio, in which packing
material costs were accounted for.
Pl.’s Mem. 18–19.
As previously mentioned, “as long as the agency’s
Court No. 05-00581 Page 27
methodology and procedures are reasonable means of effectuating
the statutory purpose, and there is substantial evidence in the
record supporting the agency’s conclusions, the court will not
impose its own views as to the sufficiency of the agency’s
investigation or question the agency’s methodology.” Shieldalloy
Metallurgical Corp., 20 CIT at 1368, 947 F. Supp. at 532
(internal quotation marks & citations omitted). The court finds
that Commerce has supported with substantial evidence its
practice of directly adding the packing material costs to – and
subtracting the by-product offset from – normal value when such
values are not specifically accounted for in the surrogate
financial statements upon which the surrogate financial ratios
are based.
First, the court observes that both Ames’s preferred
methodology and that of Commerce require the making of
assumptions. While Ames does not dispute Commerce’s conclusion
that the financial statements found in the RBI Bulletin do not
mention either by-product credits or packing material costs, it
insists that Commerce must assume that those surrogate companies’
financial statements took the unlisted values into account.
Commerce, on the other hand, assumes that the absence of specific
values for by-product sales and packing material costs from the
surrogate financial statements means that they were not taken
into account.
Court No. 05-00581 Page 28
The court cannot agree with Ames. In using its preferred
methodology, Commerce followed its reasoning in Fresh Garlic From
the PRC, 69 Fed. Reg. 33,626 (Dep’t of Commerce June 16, 2004) at
cmt. 6. See Issues & Dec. Mem. at 38.
Where the Department cannot ascertain from
the surrogate financial information whether
packing expenses are in the surrogate
financial ratio calculations, such as in the
denominator, it is not necessarily
appropriate to include packing expenses in
the production costs to which the surrogate
financial ratios are applied. If packing
expenses are not in the denominator of
surrogate financial ratio calculations or, as
here, we cannot identify where and to what
extent such expenses are in the ratio
calculation, and we apply the ratios to
production costs that include amounts for
packing materials and labor, we may distort
the amount of overhead, SG&A, and profit that
we calculate for the cost of production.
Accordingly, for the final results of these
reviews, in calculating the amount of
overhead, SG&A, and profit included in the
cost of production, we have determined not to
apply the surrogate financial ratios to
production costs that include packing
expenses (i.e., we have removed packing
expenses from the production-cost build-up to
which we apply the surrogate ratios).
Fresh Garlic From the PRC, 69 Fed. Reg. 33,626 at cmt. 6. In
like manner, “Commerce developed a practice that provided for the
application of a by-product credit to normal value when financial
statements used as a surrogate do not expressly address the
treatment of by-products.” Def.’s Resp. 21.
Even though Commerce’s methodology requires the making of an
assumption, i.e., that the RBI Bulletin financials do not capture
Court No. 05-00581 Page 29
by-product sales or packing material costs, the court cannot say
that its assumption is unreasonable. As the Guandong Court
noted, “[e]ven if Guandong’s alternative approach to
implementation of the statute were reasonable, the court could
not substitute its own view of the statute for Commerce’s
reasonable interpretation or implementation.” Guandong Chem.
Imp. & Exp. Corp., 30 CIT at __, 460 F. Supp. 2d at 1376 (citing
Chevron U.S.A. Inc., 467 U.S. at 844).
Therefore, because Commerce has adequately explained its
decision to apply the by-product offset and packing material
costs directly to normal value, the court upholds the
Department’s methodology.
V. Changed Circumstances Review
Finally, Ames asserts that, because Commerce applied adverse
facts available (“AFA”) to Huarong’s and TMC’s sales of
bars/wedges in the ninth, twelfth and thirteenth reviews based on
their participation in the agency sales invoicing scheme, the
Department should have granted Ames’s request that it initiate a
changed circumstances review for the tenth and eleventh reviews
pursuant to 19 U.S.C. § 1675(b)4 and 19 C.F.R. § 351.216.5 See
4
Subsection 1675(b) provides, in pertinent part:
Whenever the administering authority
. . . receives information concerning, or a
(continued...)
Court No. 05-00581 Page 30
Pl.’s Mem. 19; Pl.’s Supplemental Br. 1–4; see also Shandong
Huarong Mach. Co. v. United States, 30 CIT __, __, 435 F. Supp.
2d 1261, 1270 (2006) (finding that respondents’ failure to
provide relevant information about their agency sales invoicing
scheme justified Commerce’s application of AFA). By its request,
Ames had hoped to demonstrate that the agency sales invoicing
scheme was present during the period of investigation for each of
those reviews too. In the tenth and eleventh reviews, Commerce
did not apply AFA to respondents’ bars/wedges sales.
Commerce maintains that its “refusal to reopen closed cases
remains squarely within [its] discretion,” and is not reviewable
4
(...continued)
request from an interested party for a review
of——
(A) a final affirmative
determination that resulted in an
antidumping duty order under this
subtitle or a finding under the
Antidumping Act, 1921, or in a
countervailing duty order under
this subtitle or section 1303 of
this title, . . .
which shows changed circumstances sufficient
to warrant a review of such determination or
agreement, the administering authority
. . . shall conduct a review of the
determination or agreement after publishing
notice of the review in the Federal Register.
19 U.S.C. § 1675(b)(1).
5
The regulations permit the Department to conduct a
changed circumstances review either on request from an interested
party or on its own initiative. See 19 C.F.R. § 351.216(b), (d).
Court No. 05-00581 Page 31
by this Court. Def.’s Resp. 24 (citing Interstate Commerce
Comm’n v. Bhd. of Locomotive Eng’rs, 482 U.S. 270, 278 (1987);
United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515,
534–35 (1946)). For the Department, “an agency’s refusal to
reopen a closed case is generally committed to agency discretion
by law and therefore exempt from judicial review.” Def.’s Resp.
24 (internal quotation marks & citation omitted).
With respect to Commerce’s insistence that its denial of
plaintiff’s request is immune from judicial review, the court
finds that Commerce overstates its claim that an appeal of a
denial of a request for a changed circumstances review cannot be
heard. This Court has recently held otherwise. See Trs. in
Bankr. of N. Am. Rubber Thread Co. v. United States, 30 CIT __,
__, 464 F. Supp. 2d 1350, 1355-56 (2006) (finding jurisdiction
under subsection 1581(i) to hear an appeal of Commerce’s
determination denying a request for a changed circumstances
review). Nonetheless, the court finds that, here, Ames has
asserted no valid basis for jurisdiction. Ames claims that the
court has jurisdiction to hear its appeal under 28 U.S.C.
§ 1581(c). Compl. ¶ 1. Subsection (c) provides this Court with
jurisdiction to hear appeals of those determinations listed in 19
U.S.C. § 1516a. See Shinyei Corp. of Am. v. United States, 355
F.3d 1297, 1304 (Fed. Cir. 2004) (“Section 1581(c) provides the
court with exclusive jurisdiction over actions commenced under
Court No. 05-00581 Page 32
section 516A of the Tariff Act [19 U.S.C. § 1516a].”). A
determination by Commerce (as distinct from the United States
International Trade Commission) denying a request for a changed
circumstances review is not among the listed determinations that
can be reviewed pursuant to section 1516a. See AOC Int’l v.
United States, 17 CIT 1412, 1414-15 (1993) (not reported in the
Federal Supplement); Trs. in Bankr. of N. Am. Rubber Thread Co.,
30 CIT at __, 464 F. Supp. 2d at 1355–56. Thus, despite Ames’s
claims to the contrary, the court has no jurisdiction under 28
U.S.C. § 1581(c) to hear its appeal regarding Commerce’s denial
of a request to initiate a changed circumstances review.
CONCLUSION
Based on the foregoing, the court sustains in part and
remands Commerce’s Final Results. On remand, Commerce is
instructed to render a determination in accordance with this
opinion. Remand results are due on December 3, 2007. Comments
on the remand results are due on January 2, 2008. Any replies to
such comments are due on January 14, 2008.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: August 31, 2007
New York, New York