Jiangsu Senmao Bamboo and Wood Indus. Co. v. United States , 2023 CIT 126 ( 2023 )

Slip Op. 23-126
UNITED STATES COURT OF INTERNATIONAL TRADE
JIANGSU SENMAO BAMBOO
AND WOOD INDUSTRY CO.,
LTD.,
Plaintiff,
and
LUMBER LIQUIDATORS
SERVICES, LLC,
Plaintiff-Intervenor,
Before: Jennifer Choe-Groves, Judge
v.
Court No. 22-00190
UNITED STATES,
Defendant,
and
AMERICAN MANUFACTURERS
OF MULTILAYERED WOOD
FLOORING,
Defendant-Intervenor.
OPINION AND ORDER
[Sustaining in part and remanding in part the U.S. Department of Commerce’s
final results in the 2019–2020 antidumping duty administrative review of
multilayered wood flooring from the People’s Republic of China.]
Dated: August 25, 2023
Court No. 22-00190 Page 2
Jeffrey S. Neeley and Stephen W. Brophy, Husch Blackwell LLP, of Washington,
D.C., for Plaintiff Jiangsu Senmao Bamboo and Wood Industry Co., Ltd.
Mark Ludwikowski and Kelsey Christensen, Clark Hill PLC, of Washington, D.C.,
for Plaintiff-Intervenor Lumber Liquidators Services, LLC.
Tara K. Hogan, Assistant Director, and Kelly M. Geddes, Trial Attorney,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of
Washington, D.C., for Defendant United States. With them on the brief were
Brian M. Boynton, Principal Deputy Assistant Attorney General, and Patricia M.
McCarthy, Director. Of counsel on the brief was Christopher Kimura, Attorney,
Office of the Chief Counsel for Trade Enforcement and Compliance, U.S.
Department of Commerce, of Washington, D.C.
Timothy C. Brighthill and Stephanie M. Bell, Wiley Rein, LLP, of Washington,
D.C., for Defendant-Intervenor American Manufacturers of Multilayered Wood
Flooring.
Choe-Groves, Judge: Plaintiff Jiangsu Senmao Bamboo and Wood Industry
Co., Ltd. (“Plaintiff” or “Senmao”) filed this action pursuant to 19 U.S.C. § 1675contesting the final results of the U.S. Department of Commerce (“Commerce”) in
Multilayered Wood Flooring from the People’s Republic of China (“Final
Results”), 87 Fed. Reg. 39,464 (Dep’t of Commerce July 1, 2022) (final results of
antidumping duty admin. review; 2019–2020) and accompanying Issues and
Decision Memorandum for the Final Results of Antidumping Duty Administrative
Review: Multilayered Wood Flooring from the People’s Republic of China; 2019–
Court No. 22-00190 Page 3
2020 (Dep’t of Commerce June 24, 2022) (“Final IDM”), PR 245.1
Before the Court is Plaintiff’s Motion for Judgment upon the Agency Record
Pursuant to USCIT Rule 56.2. Pl.’s R. 56 Mot. J. Agency R. Pursuant to USCIT
R. 56.2 (“Plaintiff’s Motion” or “Pl.’s Mot.”), ECF No. 38; see also Mem. Supp.
Pl.’s R. 56.2 Mot. J. Agency R. (“Pl.’s Br.”), ECF No. 38-1. Also before the Court
is Plaintiff-Intervenor Lumber Liquidators Services, LLC’s (“Plaintiff-Intervenor”
or “Lumber Liquidators”) Rule 56.2 Motion for Judgment on the Agency Record.
Pl.-Interv.’s R. 56 Mot. J. Agency R. (“Plaintiff-Intervenor’s Motion” or “Pl.-
Interv.’s Mot.”), ECF No. 39; see also Pl.-Interv.’s Mem. Law Supp. Pl.-Interv.’s
R. 56.2 Mot. J. Agency R. (“Pl.-Interv.’s Br.”), ECF No. 39. Defendant United
States (“Defendant”) filed Defendant’s Response in Opposition to Plaintiff’s and
Plaintiff-Intervenor’s Motions for Judgment upon the Agency Record. Def.’s
Resp. Opp’n Pl.’s Pl.-Interv.’s Mots. J. Agency R. (“Def.’s Resp.”), ECF No. 41.
Defendant-Intervenor American Manufacturers of Multilayered Wood Flooring
(“Defendant-Intervenor” or “AMMWF”) filed Defendant-Intervenor’s Response to
Motion for Judgment on the Agency Record. Def.-Interv.’s Resp. Mot. J. Agency
R. (“Def.-Interv.’s Resp.”), ECF Nos. 42, 43. Plaintiff filed Reply Brief of
Plaintiff Jiangsu Senmao Bamboo and Wood Industry Co., Ltd. Pl.’s Reply Br.
1
Citations to the administrative record reflect the public administrative record
(“PR”) document numbers. ECF Nos. 47, 48.
Court No. 22-00190 Page 4
(“Pl.’s Reply”), ECF Nos. 44, 45. Plaintiff-Intervenor filed Reply Brief in Support
of Rule 56.2 Motion for Judgment on the Agency Record by Plaintiff-Intervenor.
Pl.-Interv.’s Reply Br. Supp. R. 56.2 Mot. J. Agency. R. (“Pl.-Interv.’s Reply”),
ECF No. 46. The Court held oral argument on May 31, 2023. Oral Argument
(May 31, 2023), ECF No. 52.
For the following reasons, the Court sustains in part and remands in part the
Final Results.
ISSUES PRESENTED
The Court reviews the following issues:
1. Whether Commerce’s determination to select Brazil as the primary
surrogate country, while using Malaysian data for log inputs, is supported
by substantial evidence and in accordance with law;
2. Whether Plaintiff-Intervenor’s argument that Malaysian data are
aberrational is waived;
3. Whether Commerce’s determination to revise the Brazilian surrogate
value data for plywood is supported by substantial evidence and in
accordance with law;
4. Whether Commerce’s calculation of the Brazilian financial ratios is
supported by substantial evidence and in accordance with law; and
Court No. 22-00190 Page 5
5. Whether Commerce’s denial of Plaintiff’s by-product offset is in
accordance with law.
BACKGROUND
Commerce conducted an administrative review for the period from
December 1, 2019 through November 30, 2020. Initiation of Antidumping and
Countervailing Duty Admin. Review, Multilayered Wood Flooring from the
People’s Republic of China, 86 Fed. Reg. 8166, 8169–71 (Dep’t of Commerce
Feb. 4, 2021). Commerce selected Senmao as the mandatory respondent in the
investigation. See Commerce’s Antidumping Administrative Review of
Multilayered Wood Flooring from the People’s Republic of China; 2019–2020:
Respondent Selection Mem. (“Resp. Selection Mem.”) (Mar. 9, 2021), PR 112.
Prior to Commerce issuing the preliminary results, Senmao proposed that
Commerce should use Brazilian surrogate value data to value its factors of
production and Defendant-Intervenor proposed that Commerce should use
Malaysian surrogate values. Senmao’s Surrogate Value Cmts. (July 29, 2021),2 PR
176–77; AMMWF’s Surrogate Value Cmts. (July 29, 2021), PR 179–82.
On December 27, 2021, Commerce published its preliminary determination.
Multilayered Wood Flooring from the People’s Republic of China (“Preliminary
2
Senmao’s Surrogate Value Comments are incorrectly dated as July 29, 2020.
Senmao’s Surrogate Value Cmts. at 1.
Court No. 22-00190 Page 6
Results”), 86 Fed. Reg. 73,252 (Dep’t of Commerce Dec. 27, 2021) (prelim. results
of the antidumping duty admin. review, prelim. determination of no shipments, and
rescission of review, in part; 2019–2020), and accompanying Decision
Memorandum for the Preliminary Results of Antidumping Administrative Review
(Dec. 17, 2022) (“Preliminary Determination Memo” or “PDM”), PR 213. In the
Preliminary Determination Memo, Commerce selected Brazil as the primary
surrogate country, valued Senmao’s logs with surrogate values from the secondary
surrogate country of Malaysia, determined that the financial data of Duratex were
appropriate to calculate Senmao’s financing costs of the subject merchandise, and
denied an offset to the reported factors of production for Senmao’s by-product.
PDM at 17, 24–25. Commerce calculated an antidumping margin of zero for
Senmao. Id. at 14.
Following the Preliminary Results, the parties to the investigation submitted
additional briefing. Senmao’s Admin. Case Br. (Feb. 7, 2022), PR 228; Lumber
Liquidators’ Letter in Lieu of Admin. Case Br. (Feb. 7, 2022), PR 229; AMMWF’s
Admin. Case Br. (Feb. 7, 2022), PR 230; Senmao’s Admin. Rebuttal Br. (Feb. 17,
2022), PR 233; Lumber Liquidators’ Admin. Rebuttal Br. (Feb. 17, 2022), PR 234;
AMMWF’s Admin. Rebuttal Br. (Feb. 17, 2022), PR 235.
Commerce published its Final Results on July 1, 2022. Final Results, 87
Fed. Reg. 39,464; see also Final IDM. In the Final IDM, Commerce continued to
Court No. 22-00190 Page 7
select Brazil as the primary surrogate country, value Senmao’s logs with
Malaysian surrogate values, and deny Senmao a by-product offset, but Commerce
revised the surrogate values for plywood and revised its calculation of surrogate
financial ratios. See Final IDM at 5, 9–10, 22–23, 26–28. Commerce calculated
Senmao’s antidumping duty margin at 39.27%. Final Results, 87 Fed. Reg. at
39,465.
Plaintiff filed this action timely pursuant to 19 U.S.C. § 1675 contesting
Commerce’s Final Results. See Compl., ECF No. 7.
JURISDICTION
The Court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of the Tariff
Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i), and 28 U.S.C. § 1581(c).
The Court will hold unlawful any determination 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).
DISCUSSION
I. Legal Framework
Antidumping duties are calculated as the difference between the normal
value of subject merchandise and the export price or the constructed export price of
the subject merchandise. 19 U.S.C. § 1673. To determine the normal value of the
subject merchandise in a non-market economy, Commerce must calculate
Court No. 22-00190 Page 8
surrogate values using “the best available information regarding the values of such
factors in a [comparable] market economy.” 19 U.S.C. § 1677b(c). In doing so,
Commerce relies on one or more market economy countries that are (1) “at a level
of economic development comparable to that of the non[-]market economy
country,” and (2) “significant producers of comparable merchandise.” Id.
§ 1677b(c)(4). Commerce’s task is to “attempt to construct a hypothetical market
value” of the subject merchandise in the non-market economy. Nation Ford Chem.
Co. v. United States, 166 F.3d 1373, 1375 (Fed. Cir. 1999). When Commerce
determines that there is more than one country at the same level of economic
development as the non-market economy country and is a significant producer of
comparable merchandise, Commerce will consider the quality and availability of
the surrogate value data. See Fujian Lianfu Forestry Co. v. United States, 33 CIT
1056, 1075, 638 F. Supp. 2d 1325, 1347 (2009).
Commerce’s regulatory preference is to value all factors of production with
surrogate values from a single surrogate country. 19 C.F.R. § 351.408(c)(2);
see Jiaxing Brother Fastener Co., Ltd. v. United States, 822 F.3d 1289, 1302 (Fed.
Cir. 2016). However, Commerce may use a second surrogate country if data from
the primary surrogate country are unavailable or unreliable. See Import Admin.
Policy Bull. No. 04.1: Non-Market Economy Surrogate Country Selection Process
(Dep’t of Commerce Mar. 1, 2004) (“Policy Bulletin No. 04.1”). When the data
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from a single surrogate country are “demonstrably aberrational as compared to
certain benchmark prices, and alternative data sources could be better
corroborated,” Commerce’s preference for using data from a single country is
deemed unreasonable. Peer Bearing Co.-Changshan v. United States, 35 CIT 103,
119, 752 F. Supp. 2d 1353, 1369–72 (2011).
II. Selection of Surrogate Country
Plaintiff and Plaintiff-Intervenor argue that Commerce’s determination to
select Brazil as the primary surrogate country, while also rejecting or adjusting
Brazilian data for the primary inputs (valuing Plaintiff’s log inputs using
Malaysian data, adjusting Brazilian plywood data, and revising the Brazilian
financial ratios) is not in accordance with law or supported by substantial evidence.
Pl.’s Br. at 16–19; Pl.-Interv.’s Br. at 17–20. Plaintiff-Intervenor asserts that
Commerce’s use of Malaysian log data is not in accordance with law because
Commerce deviated from its established methodology and caused an aberrational
result. Pl.-Interv.’s Br. at 20–25. Plaintiff and Plaintiff-Intervenor contend that
Commerce erred by not valuing all factors of production from a single surrogate
country because the record in this case does not support a determination that
Brazilian data are unavailable or unreliable. See Pl.’s Br. at 16–20; Pl.-Interv.’s
Br. at 19–20. Plaintiff-Intervenor challenges Commerce’s determination to use
Court No. 22-00190 Page 10
both Brazilian and Malaysian data as a departure from Commerce’s established
practice of using a single surrogate country. Pl.-Interv.’s Br. at 17–20.
If Commerce has a routine practice for addressing similar situations, it must
either apply that practice or provide a reasonable explanation regarding why
Commerce has deviated from that practice. See SKF USA, Inc. v. United States,
263 F.3d 1369, 1382 (Fed. Cir. 2001) (“An agency action is arbitrary when the
agency offers insufficient reasons for treating similar situations differently.”
(internal citation omitted)); see also M.M. & P. Mar. Advancement, Training,
Educ. & Safety Program v. Dep’t of Commerce, 729 F.2d 748, 755 (Fed. Cir.
1984) (“An agency is obligated to follow precedent, and if it chooses to change, it
must explain why.”); see also Cinsa, S.A. de C.V. v. United States, 21 CIT 341,
349, 966 F. Supp. 1230, 1238 (1997) (“Commerce can reach different
determinations in separate administrative reviews but it must employ the same
methodology or give reasons for changing its practice.”).
19 C.F.R. § 351.408(c) provides that, “[f]or purposes of valuing the factors
of production, . . . [Commerce] normally will value all factors in a single surrogate
country.” 19 C.F.R. § 351.408(c), (c)(2). Commerce explained when
promulgating its regulations that the preference for a single country is meant to
prevent parties from “margin shopping,” and Commerce may depart from its
regulatory preference for a single surrogate country when Commerce determines
Court No. 22-00190 Page 11
that the “accuracy of available information regarding prices for particular factors in
the surrogate country is ‘highly questionable,’” in which case Commerce may
reject the questionable values and use data from a second country. Antidumping
Duties; Countervailing Duties, 61 Fed. Reg. 7308, 7345 (Feb. 27, 1996).
Commerce may use a secondary surrogate country if financial data are “inadequate
or unavailable.” See Policy Bulletin 04.1 (“After all, a country that perfectly meets
the requirements of economic comparability and significant producer is not of
much use as a primary surrogate if crucial factor price data from that country are
inadequate or unavailable.”).
In evaluating surrogate value data, Commerce considers several factors,
including whether the surrogate values are publicly available, contemporaneous
with the period of review, representative of a broad market average, tax and duty-
exclusive, and specific to the inputs being valued. See Policy Bulletin No. 04.1;
see also Qingdao Sea-Line Trading Co. v. United States, 766 F.3d 1378, 1386
(Fed. Cir. 2014) (citing the same factors). Commerce explained that comparable
merchandise is determined on a case-by-case basis, the meaning of a significant
producer can differ from case to case, and fixed standards have not been adopted in
Commerce’s surrogate country selection process. See Policy Bulletin No. 04.1. In
assessing whether a country is a significant producer of comparable merchandise,
Commerce considers whether all of the potential surrogate countries have
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significant exports of comparable merchandise, but does not consider levels of
significance in comparison with other countries. See id.Commerce determined that Romania, Russia, Malaysia, Turkey, Mexico,
and Brazil were economically comparable to China. PDM at 15. Commerce
selected Brazil as the primary surrogate country for valuing all of Senmao’s factors
of production, except for the log inputs. Final IDM at 9. In reaching this
determination, Commerce considered three financial statements that were placed
on the record to calculate the financial surrogate values: (1) Brazilian company
Eucatex S.A. Industria e Comercio (“Eucatex”); (2) Brazilian company Duratex
S.A. (“Duratex”); and (3) Malaysian company Focus Lumber Berhad (“Focus
Lumber”). See PDM at 15, 17; Senmao’s Surrogate Value Cmts. at Ex. 13
(financial statement of Eucatex); AMMWF Surrogate Value Cmts. at Ex. 10
(financial statement of Focus Lumber); AMMWF’s Additional Surrogate Value
Cmts. (Nov. 8, 2021) at Ex. 3B, PR 200 (financial statement of Duratex).
Commerce considered whether the financial statements were publicly available,
contemporaneous with the period of review, representative of broad market
averages, tax- and duty-exclusive, and specific to the inputs being valued. Id. at
17. Commerce considered the financial data from the Brazilian and Malaysian
companies, and determined that the Brazilian company Duratex’s data were
preferable because Duratex was a producer of identical or comparable merchandise
Court No. 22-00190 Page 13
(laminate flooring), the data were contemporaneous with the period of review, and
the data were not questioned by its auditors. Id. In comparison, Commerce
determined that the Brazilian company Eucatex’s data were less reliable because
although the data were contemporaneous with the period of review and related to
laminate flooring, Eucatex’s auditors provided a qualified opinion, thereby calling
into question the reliability of the financial data. Id. Upon reviewing the various
financial data from Brazil, Commerce selected Brazil as the primary surrogate
country because Commerce determined that the Brazilian data contained useable
data for valuing all of Senmao’s factors of production “except for the log inputs.”
Id. Commerce failed, however, to cite any record evidence demonstrating that the
Brazilian data on log inputs was highly questionable, inadequate, or unavailable,
and would therefore warrant a departure from a single surrogate country.
With respect to the log inputs using Malaysian data, Commerce failed to
provide a reasonable explanation to depart from its established practice of using
one surrogate country and failed to support its determination with substantial
evidence. For example, Commerce reviewed the Malaysian company Focus
Lumber’s financial data and determined that the Malaysian financial statements
were publicly available, contemporaneous with the period of review, representative
of broad market averages, tax- and duty-exclusive, and specific to the inputs being
Court No. 22-00190 Page 14
valued. Id. In explaining why Commerce selected Malaysian import data specific
to oak log inputs, Commerce stated:
[W]e find it appropriate to select Brazil as the primary surrogate
country because the record contains usable Brazilian data for valuing
all of Senmao’s [factors of production] except for the log inputs. . . .
While it is Commerce’s preference to value all inputs from a single
surrogate country, we determine that record evidence demonstrates that
the log inputs reported by Senmao are more accurately valued using
Malaysian [surrogate values].
Id. Notably, Commerce failed to cite any record evidence to support its
determination that Brazil’s data on log inputs were either “highly questionable” or
“inadequate or unavailable,” or that Malaysian data were more accurate to value
log inputs. Although Commerce made a conclusory statement in the Preliminary
Determination Memo that “record evidence demonstrates that the log inputs
reported by Senmao are more accurately valued using Malaysian [surrogate
values],” Commerce only cited generally to “[AMMWF’s Additional Surrogate
Value Comments]” in support of its determination and did not cite to any specific
documents on the record. Id. (emphasis added) (citing AMMWF’s Additional
Surrogate Value Comments).
In the Final IDM, Commerce also did not cite to any evidence to support its
determination, stating only that:
Commerce continues to value Senmao’s oak logs using Malaysian
[surrogate values] 4403.91.1000 and non-oak logs using Malaysian
basket category 4403.99.00, as these [surrogate values] constitute the
Court No. 22-00190 Page 15
best available information on the record. . . . For Malaysia, the
petitioner provided [Global Trade Atlas (“GTA”)] import data for logs
classified under Malaysian HS 4403.91.1000 and HS 4403.99. Thus,
the record includes import data from Malaysia that explicitly
differentiates oak and other species of logs, as well as import data from
Brazil that does not explicitly differentiate by log species. . . . Thus,
considering the record evidence in its entirety, we have continued to
value all of Senmao’s logs using Malaysian [surrogate values] in the
final margin calculation.
Final IDM at 22–23. Although Commerce referred generally to GTA import data,
Commerce failed to cite any specific documents on the record to support its
determination, despite its general declarations that the record includes evidence. In
the Final IDM, Commerce stated, “See [Preliminary Surrogate Value
Memorandum (Dec. 17, 2021), PR 210–11]” generally, but did not cite to any
record evidence. Id. at 18 n.94.
In the Preliminary Surrogate Value Memorandum, Commerce stated that:
Commerce has determined that the Brazilian [surrogate values] on the
record for the material inputs appear complete and viable in terms of
the criteria set out above and we selected Brazil as the primary
surrogate country. However, as also noted in the Preliminary
Determination Memorandum, Commerce has determined that
Malaysian [surrogate values] on the record are more specific to
Senmao’s log inputs than are the Brazilian [surrogate values].
Prelim. Surrogate Value Mem. at 2 (citing AMMWF’s Additional Surrogate Value
Cmts.; PDM). Notably, in the Preliminary Surrogate Value Memorandum,
Commerce attached various documents as exhibits, but failed to identify any
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particular record documents on which Commerce relied. See Prelim. Surrogate
Value Mem.
In summary, Commerce in its Final IDM attempted to support its
determinations with citations to record evidence, but Commerce referred only to
GTA import data generally without citations to any particular documents; referred
to the Preliminary Surrogate Value Memorandum without citations to any
particular documents; referred to AMMWF’s Additional Surrogate Value
Comments without citations to any particular documents; and referred to various
court decisions and Policy Bulletin No. 04.1. See Final IDM at 18, 22–23.
Because Commerce failed to identify any record evidence on which it relied, the
Court holds that Commerce’s determinations are not supported by substantial
evidence.
Commerce noted in its Final IDM that “[i]t is not Commerce’s responsibility
to build an adequate record for parties.” Id. at 22. Similarly, the Court notes that it
is not the Court’s responsibility to sift through the record to attempt to identify
which documents, if any, support Commerce’s determinations. Because
Commerce failed to cite any record evidence demonstrating that the Brazilian data
on log inputs were highly questionable, inadequate, or unavailable, and any
evidence demonstrating that Malaysian data on log inputs were “the best available
information” under 19 U.S.C. § 1677b(c)(1), the Court concludes that Commerce
Court No. 22-00190 Page 17
did not provide a reasonable explanation for departing from its established practice
of using a single surrogate country. The Court holds that Commerce’s
determinations to select Brazil as the primary surrogate country and to value
Plaintiff’s log inputs using Malaysian data are not in accordance with law and not
supported by substantial evidence. The Court remands this issue for further
explanation or reconsideration by Commerce.
III. Waiver of Plaintiff-Intervenor’s Argument That Malaysian Data
Are Aberrational
Plaintiff-Intervenor argues that Commerce’s determination to select
Malaysia as a secondary surrogate country is unlawful because Commerce’s use of
Malaysian log data caused an aberrational result and the margin of 39.27% in the
Final Results “defies commercial and economic reality,” focusing on Plaintiff’s
low margins in prior reviews and the margin of 0% in the Preliminary Results. See
Pl.-Interv.’s Br. at 20–25. Defendant contends that Plaintiff-Intervenor waived this
argument because of its failure to exhaust administrative remedies. Def.’s Resp. at
18–20.
Before commencing suit in the U.S. Court of International Trade, an
aggrieved party must exhaust all administrative remedies available to it. “In any
civil action . . . the Court of International Trade shall, where appropriate, require
the exhaustion of administrative remedies.” 28 U.S.C. § 2637(d). The court
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“generally takes a ‘strict view’ of the requirement that parties exhaust their
administrative remedies.” Yangzhou Bestpak Gifts & Crafts Co. v. United States,
716 F.3d 1370, 1381 (Fed. Cir. 2013) (citations omitted). 19 C.F.R.
§ 351.309(c)(2) requires that, “[t]he case brief must present all arguments that
continue in the submitter’s view to be relevant to the . . . final determination or
final results.” 19 C.F.R. § 351.309(c)(2). There are limited exceptions to the
exhaustion requirement. See Pakfood Pub. Co. v. United States, 34 CIT 1122,
1145–48, 724 F. Supp. 2d 1327, 1351–53 (2010) (listing futility for the party to
raise its argument at the administrative level and issues fully considered by
Commerce as two generally recognized exceptions to the exhaustion doctrine); see
also Holmes Prod. Corp. v. United States, 16 CIT 1101, 1104 (1992)
(“[E]xhaustion may be excused if the issue was raised by another party, or if it is
clear that the agency had an opportunity to consider it.”). Incorporation by
reference to another party’s administrative argument is also among the exceptions
this court has recognized to the exhaustion requirement. See Meihua Grp. Int’l
Trading (Hong Kong) Ltd. v. United States, 47 CIT __, __, 633 F. Supp. 3d 1203,
1213 (2023).
Plaintiff-Intervenor Lumber Liquidators filed a letter in lieu of an
administrative case brief and raised objections by incorporating by reference the
arguments made in Plaintiff’s administrative briefs. See Pl.-Interv.’s Reply at 8–9;
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Lumber Liquidators’ Letter in Lieu of Admin. Case Br. at 2; Lumber Liquidators’
Admin. Rebuttal Br. at 2. Plaintiff did not raise the argument, however, of
Malaysian data being aberrational. See Senmao’s Admin. Case Br.; Senmao’s
Admin. Rebuttal Br. The Court concludes that the exception of incorporation by
reference does not exist because Plaintiff did not argue during the administrative
proceeding that the Malaysian data were aberrational and thus Plaintiff-Intervenor
waived this argument.
In addition, Plaintiff-Intervenor argued for the first time during oral
argument that the futility exception applies in this case because the high margins
did not yet exist in the Preliminary Results. Recording of Oral Argument at 13:58–
15:03, ECF No. 53. While this argument may have been persuasive if properly
raised, the Court concludes that Plaintiff-Intervenor waived this argument because
it did not include this argument in its moving or reply briefs. Issues raised for the
first time at oral argument are waived. See Shell Oil Co. v. United States, 35 CIT
673, 702, 781 F. Supp. 2d 1313, 1338 (2011), aff’d, 688 F.3d 1376 (Fed. Cir.
2012) (holding that party’s argument was waived because it was raised for the first
time at oral argument).
The Court concludes, therefore, that Plaintiff-Intervenor waived the issue of
Malaysian data being aberrational and cannot raise it before this Court.
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IV. Adjustment of Surrogate Value Data for Plywood
Plaintiff argues that Commerce’s determination to revise the Brazilian
surrogate value data for plywood is not supported by substantial evidence and not
in accordance with law because Commerce deviated from its practice when it
adjusted Brazilian plywood values to remove a line item reflecting Brazilian
imports of plywood from Spain and did not provide any evidence that the Brazilian
surrogate value for plywood is “aberrational in the aggregate.” Pl.’s Br. at 14–15.
Defendant and Defendant-Intervenor contend that Commerce only applies
the “aberrational in the aggregate” test when Commerce is deciding to exclude a
large amount of data that appear unusually high or low, not when Commerce can
readily determine that data are inaccurate, such as in this administrative review.
Def.’s Resp. at 20–23; Def.-Interv.’s Resp. at 16–17. Plaintiff replies that this is
the first time to its knowledge that the Government has made a distinction between
“aberrational data” and “incorrect data.” Pl.’s Reply at 8.
As noted previously, if Commerce has a routine practice for addressing
similar situations, it must either apply that practice or provide a reasonable
explanation regarding why Commerce has deviated from that practice. See SKF
USA, Inc., 263 F.3d at 1382.
Commerce stated that it did not apply the “aberrational in the aggregate” test
when it revised the Brazilian surrogate data for plywood, reasoning that:
Court No. 22-00190 Page 21
[T]here is prima facie evidence that the January 2020 Spanish import
component of the Brazilian [surrogate value] is incorrect. Therefore,
the concerns underlying Commerce’s practice of evaluating [surrogate
values] in the aggregate are not present here. In this regard, Commerce
evaluates [surrogate values] on an aggregate basis out of administrative
convenience—to avoid the “impossible task” of identifying and
defining “what is and what is not aberrational among . . . thousands of
data points spread along a vast spectrum of relatively high and low
values”—and to discourage the cherry-picking and manipulation of
data.
Final IDM at 10. Commerce determined that the data were inaccurate because “the
Spanish import data in the Brazilian [surrogate value] for the month of January
2020 reported the same quantity figures for M 3 [or cubic meters] as it does for kg,
we conclude that this particular component of the Brazilian [surrogate value] is
clearly incorrect.” Id. at 9.
The Court concludes that Commerce has a standard practice of considering
whether the average unit value (“AUV”) is aberrational in the aggregate for the
economically comparable surrogate countries or as compared to historical AUVs
of the surrogate country at issue. See SolarWorld Americas, Inc. v. United States,
42 CIT __, __, 320 F. Supp. 3d 1341, 1351–52 (2018) (“Commerce explains that
its practice is to assess aberrationality by examining HTS data both across potential
surrogate countries and within the surrogate country over multiple years. . . . [and]
considers import data to be aberrationally high if that data is ‘many times higher
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than import values from other countries.’”). Interested parties need to demonstrate
that the import data are aberrational in the aggregate. Id.


Defendant asserts, however, that Commerce did not apply the “aberrational
in the aggregate” test in this case, but rather disregarded clearly incorrect data as
required by 19 U.S.C. § 1677b(c)(1) to value the factors of production based on the
best available information regarding the values of such factors in order to
determine the antidumping margins as accurately as possible. Def.’s Resp. at 22;
see 19 U.S.C. § 1677b(c)(1).
Commerce determined that the data were clearly inaccurate because “the
Spanish import data in the Brazilian [surrogate value] for the month of January
2020 reported the same quantity figures for M 3 as it does for kg,” explaining that:
M3 and kg are discrete units of measurement where M3 is a
measurement of volume and kg is a measurement of mass.
Accordingly, it is illogical for the Spanish import data to report the
same quantity in these two different units of measure. Because this
component of the Brazilian [surrogate value] is incorrect, we conclude
that the January 2020 Spanish import component in the Brazilian
plywood [surrogate value] should be disregarded.
Final IDM at 9 (citing AMMWF’s Surrogate Value Cmts at Ex. 9). Commerce
states that Exhibit 9 “contains information on the density of certain wood species
and wood products,” AMMWF’s Surrogate Value Cmts. at 3, but the Court
observes that this document was apparently never placed on the record filed with
the Court. The Court notes that AMMWF’s Surrogate Value Comments on the
Court No. 22-00190 Page 23
record contain only Exhibits 1, 10A, and 10B, but do not include Exhibit 9.
Because Commerce only cited to evidence that is not on the record to support its
determination and the Court cannot review the exhibit, the Court concludes that
Commerce’s explanation for its adjustment of the plywood measurement figures as
clearly incorrect is neither in accordance with law nor supported by substantial
evidence. The Court remands the issue of the plywood surrogate value data
adjustment for further explanation or reconsideration by Commerce.
V. Calculation of Financial Ratios
Plaintiff argues that Commerce’s calculation of the Brazilian financial ratios
is not supported by substantial evidence because (1) Commerce’s treatment of
“transport expenses” as manufacturing overhead constituted double-counting; and
(2) Commerce incorrectly excluded certain interest income reported by Duratex to
offset financial expenses. Pl.’s Br. at 19–21.
In calculating the financial ratios, Commerce relied on data from Duratex’s
2020 annual report and preliminarily did not include a line item for “transport
expenses” in Duratex’s total selling, general, and administrative (“SG&A”)
expenses to avoid double-counting outbound freight expenses that were accounted
for elsewhere in the margin calculation, but revised the surrogate financial ratio to
include Duratex’s “transport expenses” line item as part of its manufacturing
overhead in the Final Results. Final IDM at 14. Commerce also preliminarily
Court No. 22-00190 Page 24
included the full amount of Duratex’s reported interest income as an offset to its
financial expenses when calculating Duratex’s net financial expenses for the wood
division, but revised the surrogate financial ratio calculation to exclude this value
from the offset to financial expenses in the Final Results. Id. at 15.
A. “Transport Expenses”
Plaintiff contends that Commerce’s treatment of “transport expenses” as
overhead expenses constituted double-counting and unreasonably increased the
financial ratios because “the estimated transport expenses are based on wood
division selling expenses, which Commerce treats as SG&A and selling expenses”
and are already included in the financial ratio calculations. Pl.’s Br. at 19.
Plaintiff asserts that inventory value of raw materials includes freight expenses
incurred on raw material purchases unless otherwise specified, and estimated
freight expenses do not need to be included because those costs are included in the
cost of products sold in Duratex’s financial statement. Id. at 20.
Defendant and Defendant-Intervenor argue that it was reasonable for
Commerce to assume that freight-in expenses were already included in the raw
material expenses in Duratex’s financial statement and that “transport expenses”
referred to transportation costs distinct from outbound freight and freight-in
because this assumption is based on standard accounting practice. Def.’s Resp. at
27; Def.-Interv.’s Resp. at 24.
Court No. 22-00190 Page 25
Commerce explained that:
[A]ccounting practice prescribes generally that raw materials inventory
. . . is to be valued at a cost that includes all necessary expenditures to
acquire and bring them to the desired condition and location for
use . . . that includes not only the purchase price of the raw material,
but also freight charges (most commonly referred to as “freight-in
expenses”) on incoming materials and other miscellaneous expenses.
Final IDM at 14. Commerce excluded the “transport expenses” line item in its
calculation because:
[W]e relied on the Duratex 2020 annual report submitted by the
petitioner to calculate the surrogate financial ratios, using data for
Duratex’s “wood division.” Regarding the “transport expenses” line
item, we excluded this amount in our calculation of total SG&A
expenses in the surrogate financial ratio calculation to avoid potentially
double counting outbound freight expenses that were accounted for
elsewhere in the margin calculation. However, we have reconsidered
this approach for the final results because there is no indication, either
on the face of the income statement itself or in the accompanying notes,
as to what specifically this item includes or to what activities it relates.
Id. (citing Prelim. Surrogate Value Mem. at 6, Att. 1).
Commerce relied on the surrogate financial ratios calculated from Duratex’s
financial statement based on Duratex’s reported wood division, with overhead
expenses at 16.01%, SG&A expenses at 14.19%, and profit at 12.72%. Prelim.
Surrogate Value Mem. at 6 (citing AMMWF’s Additional Surrogate Value Cmts.
at Exs. 3A (Duratex’s 2020 annual report) & 3B (Duratex’s financial statement)).
In the Final IDM, Commerce considered Senmao’s argument in its
administrative rebuttal brief that raw material inventory values do not include
Court No. 22-00190 Page 26
freight-in expenses and determined that “transport expenses” in Duratex’s financial
statement did not include outbound freight expenses, stating that:
It is reasonable for our purposes to presume that the “raw materials and
consumption materials” line item in Duratex’s financial statement
includes freight-in expenses, and that the “transport expenses” line item
represents a distinct cost element. In this case, we find that it is both
reasonable and solidly grounded in accounting practice and procedure
to classify the “transport expenses” line item as overhead, as it likely
relates to other factory activities (e.g., within-factory transportation,
vehicles used by factory management, etc.), and because the raw
material value likely includes incoming freight. Moreover, treating
“transport expenses” as an overhead is consistent with our practice in
other cases involving similar line items, such as Activated Carbon from
China 2012–13 (“travel and transportation” expenses) and Steel Tie
Wire from China (“transportation” expenses).
Final IDM at 14.
In Certain Activated Carbon From the People’s Republic of China,
Commerce noted that its:
Accounting practice prescribes generally that raw materials inventory
on a company’s balance sheet is to be valued at a cost that includes all
necessary expenditures to acquire such materials and bring them to the
desired condition and location for use in the manufacturing process[,
where this] valuation includes not only the purchase price of the raw
material, but also freight charges (most commonly referred to as
“freight-in”) on incoming materials and other miscellaneous expenses
such as handling or insurance incurred by the buyer related to the
purchase. . . . Accordingly, for the final results, we continue to treat
“travel and transportation” expenses . . . under cost of goods sold as an
overhead item in our surrogate financial ratio calculations.
Certain Activated Carbon From the People’s Republic of China, 79 Fed. Reg.
70,163 (Dep’t of Commerce Nov. 25, 2014) (final results of antidumping duty
Court No. 22-00190 Page 27
admin. review; 2012–2013), and accompanying Issues and Decision
Memorandum. In Prestressed Concrete Steel Rail Tie Wire from the People’s
Republic of China, Commerce confirmed its established practice of including
transportation expenses as manufacturing overhead, especially when the financial
statement contains a separate transport expenses line item. Prestressed Concrete
Steel Rail Tie Wire from the People’s Republic of China, 79 Fed. Reg. 25,572(Dep’t of Commerce May 5, 2014) (final determination of sales at less than fair
value), and accompanying Issues and Decision Memorandum.
The Court concludes that there is an established accounting practice to
include transportation expenses as part of manufacturing overhead in the SG&A
expenses. Commerce provided a reasonable explanation based on evidence of
Duratex’s financial statement and made a determination consistent with established
accounting practices. The Court concludes that Commerce’s treatment of the
“transport expenses” line item as an overhead expense and its determination that
that the raw material value likely included incoming freight in the financial ratio
calculations are in accordance with law and supported by substantial evidence.
B. Interest Income
Plaintiff contends that only the income for remuneration on financial
investments is potentially not related to short-term, while the other line items are
all short-term in nature—foreign exchange variances (related to net gains and
Court No. 22-00190 Page 28
losses on transactions denominated in foreign currencies during fiscal year),
indexation arguments (effectively adjust asset values for impact of inflation or
other factors during fiscal year), and interest and discounts obtained (related to
revenue received from lenders on bank deposits)—and should have been included
as an offset to financial expenses in Commerce’s calculations. Pl.’s Br. at 21.
Defendant asserts that Plaintiff does not deny that the line item for
remuneration on financial investments is potentially a long-term financial activity,
that it was reasonable for Commerce to exclude the line item due to uncertainty,
and that there is insufficient information in Duratex’s financial statement and
record evidence for Commerce to determine whether these categories of interest
income were long-term or short-term in nature. Def.’s Resp. at 29–30. Defendant-
Intervenor argues that Plaintiff fails to cite record evidence to support its assertions
about the short-term nature of the line items. Def.-Interv.’s Br. at 26. Plaintiff
replies that Commerce cites only one case in support of its alleged practice and
cites no record evidence in support of its conclusions. Pl.’s Reply at 16–17.
The first question in calculating an offset is whether the interest income is
short-term or derived from current assets or working capital accounts. Pakfood
Pub. Co., 34 CIT at 1152, 724 F. Supp. 2d at 1357. The burden of proof is on the
respondent to substantiate and document the nature of accounts when making a
claim for an offset, and Commerce will not allow an offset when a respondent
Court No. 22-00190 Page 29
cannot demonstrate that the interest income in question is short-term in nature. Id.;
see also Certain New Pneumatic Off-the-Road Tires from the People’s Republic of
China, 77 Fed. Reg. 14,495 (Dep’t of Commerce Mar. 12, 2012) (final results of
the 2009–2010 antidumping duty admin. review and final recission, in part), and
accompanying Issues and Decision Memorandum at Cmt. 7 (“The Department’s
well-established practice is to allow an offset to interest expenses with short-term
interest income . . . [and it] is the Department’s practice to exclude interest income
generated from long-term financial assets.”).
Commerce preliminarily included the full amount of Duratex’s reported
interest income as an offset to its financial expenses when calculating Duratex’s
net financial expenses for the wood division, but revised the surrogate financial
ratio calculation to exclude this value from the offset to financial expenses in the
final determination. Final IDM at 14–15 (citing PDM; Prelim. Surrogate Value
Mem. at Att. 1). Duratex’s annual report included five line items: “renumeration
on financial investments,” “foreign exchange variances,” “indexation adjustment,”
“interest and discounts obtained,” and “other.” See Final Surrogate Value and
Calculation Mem. (June 24, 2022), PR 246–47; AMWWF’s Additional Surrogate
Value Cmts. at Ex. 3A.
In the Final IDM, Commerce explained that:
We also excluded additional line items for which we cannot determine
Court No. 22-00190 Page 30
whether interest income is long-term or short-term in nature.
Commerce cannot assume that this interest income is short-term
because there is no additional description in the surrogate financial
statement on interest income, and it is Commerce’s practice not to look
behind surrogate financial statements.
Final IDM at 15 (citing Final Surrogate Value and Calculation Mem.). Commerce
provided the same explanation in the Final Surrogate Value and Calculation
Memorandum. Final Surrogate Value and Calculation Mem. at 2 (citing
AMWWF’s Additional Surrogate Value Cmts. at Ex. 3B, “Note 27 – Financial
Income”).
Commerce excluded interest income generated from long-term financial
assets because it determined based on a review of record evidence of Duratex’s
financial statement that such income was related to long-term investing activities.
Final IDM at 15. Commerce also excluded line items for which it could not
determine whether the interest income was long-term or short-term in nature. Id.The Court concludes that Commerce’s determinations in this case were consistent
with its established practice as described in Pakfood Pub. Co. because Commerce
did not allow offsets when it could not determine whether the interest income in
question was short-term in nature.
The Court concludes that Commerce’s calculation of financial ratios is in
accordance with law and supported by substantial evidence. Accordingly, the
Court sustains Commerce’s calculation of financial ratios.
Court No. 22-00190 Page 31
VI. Denial of By-Product Offset
Plaintiff argues that Commerce’s denial of its by-product offset is not in
accordance with law because (1) Commerce’s determination is inconsistent with
Commerce’s past treatment of Plaintiff and (2) Commerce should have provided
Plaintiff with an additional opportunity to submit information regarding its claimed
by-product offset. Pl.’s Br. at 22–26.
Commerce denied Plaintiff’s claim for a by-product offset, explaining that
“[i]n [non-market economy] proceedings specifically, because we rely upon [a
factors of production] methodology, we do not grant claims for a by-product offset
where the companies are not able to provide data for their by-product production
during the [period of review].” Final IDM at 26. It is generally Commerce’s
practice to grant an offset to normal value, for sales of by-products generated
during the production of subject merchandise, if the respondent can demonstrate
that the by-product is either resold or has commercial value and re-enters the
respondent’s production process. Arch Chems, Inc. v. United States, 35 CIT 424,
426 (2011) (citing Ass’n of Am. School Paper Suppliers v. United States, 32 CIT
1196, 1205 (2008)). The burden rests on the respondents to substantiate by-
product offsets by providing Commerce with sufficient information to support their
claims. Id. (citation omitted).
Court No. 22-00190 Page 32
The Section C and D Questionnaire included the following language
regarding by-product offsets:
By-product/co-product offsets are only granted for merchandise that is
either sold or reintroduced into production during the [period of
review], up to the amount of that by-product/co-product actually
produced during the [period of review]. If you are claiming a by-
product or co-product offset in your [factors of production] database,
please report each by-product or co-product in a separate field.
See Jiangsu Senmao’s Sec. C and D Questionnaire Resp. (April 29, 2021) at 17,
PR 145. In its questionnaire response, Plaintiff stated that it “does not track the
quantity of the wood scrap generated during the [period of review] and only
records the quantity of wood scrap sold [and it] did not record the actual
consumption of wood scrap as fuel to generate steam.” Id. Plaintiff also stated
that it could not provide production records because it does not track actual wood
scrap quantity generated. Id. at 18.
Commerce explained that it denied the by-product offset due to Commerce’s
practice:
[I]n considering a by-product offset, Commerce examines whether the
by-product was produced from the quantity of the [factors of
production] reported and whether the respondent’s production process
for the merchandise under consideration actually generated the amount
of the by-product claimed as an offset. Commerce has stated that
“{s}crap sold but not produced during the [period of investigation]
should not be included within the scrap offset because it would be
unreasonable to offset the cost during the [period of investigation] for
scrap produced prior to the [period of investigation].” Furthermore,
Commerce’s practice ensures that a respondent does not receive a by-
Court No. 22-00190 Page 33
product offset for products generated in the production of non-subject
merchandise. Commerce’s methodology ensures the accuracy of its
dumping calculations in [non-market economy] proceedings.
Therefore, we are following this methodology for these final results,
consistent with our general practice in [a non-market economy]
proceeding.
Final IDM at 26–27.
A. Previous Administrative Reviews
Plaintiff asserts that Commerce’s denial of its by-product offset is
inconsistent with Commerce’s treatment of Plaintiff in previous administrative
reviews and that Commerce failed to explain why its practice of requiring
production records to grant a by-product offset was not followed in prior
administrative reviews because there are not new facts to justify different treatment
in this administrative review. Pl.’s Br. at 22–25; Pl.’s Reply at 18–19.
Defendant and Defendant-Intervenor assert that Commerce reasonably
denied a by-product offset because Plaintiff lacked production records indicating
the quantity of scrap during the period of review and each administrative review is
independent in nature. Def.’s Resp. at 31–34; Def.-Interv.’s Resp. at 27–30.
Commerce denied Plaintiff a by-product offset for wood scrap generated
through wood flooring production because Plaintiff reported that it did not track
the quantity of the wood scrap generated, only the quantity sold, during the period
of review. See Final IDM at 26; PDM at 25; see Jiangsu Senmao’s Sec. C and D
Court No. 22-00190 Page 34
Questionnaire Resp. at 17–18. Plaintiff contends that Commerce has an
established practice because it did not deny a by-product offset in prior reviews
despite a lack of production records. Pl.’s Br. at 22–23 (citing Multilayered Wood
Flooring from the People’s Republic of China (“Final Results 2014–2015 Admin.
Review”), 82 Fed. Reg. 25,766 (Dep’t of Commerce June 5, 2017) (final results of
antidumping duty admin. review, final determination of no shipments, and final
partial rescission of antidumping duty admin. review; 2014–2015), and
accompanying Issues and Decision Memorandum (“Senmao’s 2014–2015 Admin.
Review IDM”); Multilayered Wood Flooring from the People’s Republic of China
(“Final Results 2015–2016 Admin. Review”), 83 Fed. Reg. 35,461 (Dep’t of
Commerce July 26, 2018) (final results of antidumping duty admin. review, final
determination of no shipments, and partial rescission; 2015–2016), and
accompanying Issues and Decision Memorandum (“Senmao’s 2015–2016 Admin.
Review IDM”); Multilayered Wood Flooring from the People’s Republic of China
(“Preliminary Results 2018–2019 Admin. Review”), 86 Fed. Reg. 22,016 (Dep’t of
Commerce Apr. 26, 2021) (prelim. results of the antidumping duty admin. review,
prelim. determination of no shipments, prelim. successor-in-interest determination,
and rescission of review, in part; 2018–2019), and accompanying Decision
Memorandum (“Senmao’s 2018–2019 Admin. Review PDM”); Multilayered
Wood Flooring From the People’s Republic of China (“Final Results 2018–2019
Court No. 22-00190 Page 35
Admin. Review”), 86 Fed. Reg. 59,987 (Dep’t of Commerce Oct. 29, 2021) (final
results of antidumping duty admin. review, final successor-in-interest
determination, and final determination of no shipments; 2018–2019), and
accompanying Issues and Decision Memorandum (“Senmao’s 2018–2019 Admin.
Review IDM”).
Commerce’s practice is to grant an offset to normal value for sales of by-
products generated during the production of subject merchandise if the respondent
can demonstrate that the by-product is either resold or has commercial value and
re-enters the respondent’s production process. Arch Chems., 35 CIT at 426.
Commerce determined in this administrative review that Senmao lacked
production records, and denied a by-product offset because Plaintiff was unable to
demonstrate that the by-product was either resold or had commercial value and re-
entered Plaintiff’s production process. Final IDM at 26.
In the 2014–2015 administrative review, Commerce determined that Senmao
was entitled to a by-product offset despite a lack of production records because
“[a]t verification, the Department not only observed how wood scrap was
generated and collected, but also how the reported by-product (i.e., wood scrap)
sales could be tied to the sales general ledger for other income with sales invoices,
sales [value added tax] invoices, receipts, accounting vouchers, and warehouse-
in/out slips” and “Senmao produced no products during the [period of review]
Court No. 22-00190 Page 36
which were not subject merchandise; and thus, all wood scrap sold would be a by-
product from subject merchandise.”

Final Results 2014–2015 Admin. Review, 82
Fed. Reg. 25,766; Senmao’s 2014–2015 Admin. Review IDM at Cmt. 13.
Commerce determined that Senmao was eligible for a scrap offset based on
Commerce’s observations during verification. Id.Commerce denied a by-product offset for Senmao in the 2012–2013
administrative review because Senmao was unable to substantiate that it produced
any of the scrap that it sold during the period of review, but Commerce determined
that the facts in the 2014–2015 administrative review were different from the facts
in the 2012–2013 administrative review. Senmao’s 2014–2015 Admin. Review
IDM; see Multilayered Wood Flooring from the People’s Republic of China, 80
Fed. Reg. 41,476 (final results of antidumping duty admin. review and final results
of new shipper review; 2012–2013) (Dep’t of Commerce July 15, 2015), and
accompanying Issues and Decision Memorandum.
In the 2015–2016 administrative review, Commerce again determined that
Senmao was entitled to a by-product offset despite a lack of production records
because “[a]lthough we did not conduct verification of Jiangsu Senmao’s
questionnaire responses during this segment of the proceeding, we did so during
the immediately preceding (i.e., the 2014–2015) review.” Final Results 2015–
Court No. 22-00190 Page 37
2016 Admin. Review, 83 Fed. Reg. 35,461; Senmao’s 2015–2016 Admin. Review
IDM at Cmt. 4.
In the administrative reviews during the years 2016–2017, 2017–2018, and
2018–2019, no party argued that Senmao’s by-product offset should be denied.
See Multilayered Wood Flooring from the People’s Republic of China, 84 Fed.
Reg. 38,002-01 (Dep’t of Commerce Aug. 5, 2019) (final results of antidumping
duty admin. review and final results of new shipper review; 2016–2017), and
accompanying Issues and Decision Memorandum (“Senmao’s 2016–2017 Admin.
Review IDM”) (determination did not discuss the issue of Senmao’s by-product
offset); Multilayered Wood Flooring from the People’s Republic of China, 85 Fed.
Reg. 78,118 (Dep’t of Commerce Dec. 3, 2020) (final results of antidumping duty
admin. review and final results of new shipper review; 2017–2018), and
accompanying Issues and Decision Memorandum (“Senmao’s 2017–2018 Admin.
Review IDM”) (determination in which Senmao was not selected as a voluntary
respondent); Preliminary Results 2018–2019 Admin. Review, 86 Fed. Reg. 22,016;
Senmao’s 2018–2019 Admin. Review PDM (determination in which Commerce
made an offset to Senmao’s reported factors of production for by-product because
“Senmao provided production records demonstrating it reported recovered
quantities of the by-product and that it later sold these recovered quantities.”);
Final Results 2018–2019 Admin. Review, 86 Fed. Reg. 59,987; Senmao’s 2018–
Court No. 22-00190 Page 38
2019 Admin. Review Final IDM (no changes made to by-product offset
determination).
In the 2018–2019 administrative review, Senmao provided Commerce with
production records demonstrating that it reported recovered quantities of the by-
product and that it later sold these recovered quantities during the 2018–2019
period of review, and Commerce granted an offset as a result. See Senmao’s
2018–2019 Admin. Review PDM; Senmao’s 2018–2019 Admin. Review Final
IDM.
The Court does not agree with Plaintiff’s assertion that an established
practice exists that Commerce will grant a by-product offset to Senmao despite a
lack of evidence, based only on two administrative reviews granting the offset after
verification, followed by three years of no by-product offsets being granted on
such basis. See Senmao’s 2016–2017 Admin. Review IDM; Senmao’s 2017–2018
Admin. Review IDM; Senmao’s 2018–2019 Admin. Review PDM; Senmao’s
2018–2019 Admin. Review Final IDM.
The Court concludes that an existing practice does not exist and it was
reasonable for Commerce to deny a by-product offset because Plaintiff failed to
provide information to substantiate a by-product offset. The Court sustains
Commerce’s denial of an offset due to a lack of evidence as reasonable and in
accordance with law.
Court No. 22-00190 Page 39
B. Opportunity to Submit Additional Information
Plaintiff contends that Commerce should have provided Plaintiff with an
opportunity to submit additional information regarding its claimed by-product
offset because Plaintiff has a substantial “reliance interest” in the required reported
practices pursuant to 19 U.S.C. § 1677m(d). Pl.’s Br. at 25–26. 19 U.S.C.
§ 1677m(d) states:
If the administering authority or the Commission determines that a
response to a request for information under this subtitle does not
comply with the request, the administering authority or the Commission
(as the case may be) shall promptly inform the person submitting the
response of the nature of the deficiency and shall, to the extent
practicable, provide that person with an opportunity to remedy or
explain the deficiency in light of the time limits established for the
completion of investigations or reviews under this subtitle.
19 U.S.C. § 1677m(d) (emphasis added). Defendant and Defendant-Intervenor
assert that Commerce is not obligated to ask additional questions when the
respondent states that it does not possess the requested information. Def.’s Resp.
at 34–35; Def.-Interv.’s Resp. at 29–30.
The Court concludes that Commerce was reasonable in not providing
another opportunity for Plaintiff to submit the missing production records. The
operable language in 19 U.S.C. § 1677m(d) is “to the extent practicable,” and
Plaintiff already stated that it did not track the quantity of wood scrap generated
during the period of review. Thus, even if Commerce allowed another opportunity
Court No. 22-00190 Page 40
for Plaintiff to produce the requested information, Plaintiff already stated that it did
not keep records of the quantity of wood scrap necessary to demonstrate that it was
entitled to a by-product offset. Accordingly, Commerce’s denial of an offset by-
product is reasonable and in accordance with law.
CONCLUSION
For the foregoing reasons, the Court remands for further consideration
consistent with this Opinion: (1) Commerce’s determination to select Brazil as the
primary surrogate country while using data for log inputs from the secondary
surrogate country of Malaysia, and (2) Commerce’s determination to revise the
Brazilian surrogate value data for plywood. The Court sustains Commerce’s
calculation of the Brazilian financial ratios and Commerce’s denial of Plaintiff’s
by-product offset. Plaintiff-Intervenor waived its argument that the Malaysian data
were aberrational.
Accordingly, it is hereby
ORDERED that Plaintiff’s Motion for Judgment upon the Agency Record
Pursuant to USCIT Rule 56.2, ECF No. 38, is granted in part and denied in part;
and it is further
ORDERED that Plaintiff-Intervenor’s Rule 56.2 Motion for Judgment on
the Agency Record, ECF No. 39, is granted in part and denied in part; and it is
further
Court No. 22-00190 Page 41
ORDERED that that this case shall proceed according to the following
schedule:
(1) Commerce shall file its remand determination on or before October 25,
2023;
(2) Commerce shall file the administrative record on or before November 8,
2023;
(3) Comments in opposition to the remand determination shall be filed on or
before December 8, 2023;
(4) Comments in support of the remand determination shall be filed on or
before January 8, 2024; and
(5) The joint appendix shall be filed on or before January 22, 2024.
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: August 25, 2023
New York, New York