Xiamen Int'l Trade and Industrial Co., Ltd. v. United States , 953 F. Supp. 2d 1307 ( 2013 )

Slip Op. 13-
UNITED STATES COURT OF INTERNATIONAL TRADE
XIAMEN INTERNATIONAL TRADE
AND INDUSTRIAL CO., LTD.,
ZHEJIANG ICEMAN GROUP CO., LTD.,
Before: Richard W. Goldberg, Senior Judge
and FUJIAN GOLDEN BANYAN
Court No. 11-00411
FOODSTUFFS INDUSTRIAL CO., LTD.,
Plaintiffs,
v.
UNITED STATES,
Defendant.
OPINION AND ORDER
[Final results of an administrative review of the antidumping duty order on certain preserved
mushrooms from the People’s Republic of China remanded.]
Dated:
Lizbeth R. Levinson and Ronald M. Wisla, Kutak Rock LLP, of Washington DC, for plaintiffs.
Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for defendant. With him on the brief were Stuart F.
Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M.
McCarthy, Assistant Director. Of counsel on the brief was Devin S. Sikes, Attorney, Office of the
Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.
Goldberg, Senior Judge: Plaintiffs Xiamen International Trade & Industrial Co., Ltd.
(“XITIC”), Zhejiang Iceman Group Co., Ltd. (“Iceman Group”), and Fujian Golden Banyan
Foodstuffs Industrial Co., Ltd. (“Golden Banyan”) (collectively, “Plaintiffs”) challenge the U.S.
Department of Commerce’s (“Department” or “Commerce”) findings in the 2009–2010
administrative review of the antidumping duty order on certain preserved mushrooms from the
People’s Republic of China (“PRC”). See Certain Preserved Mushrooms from the People’s
Court No. 11-00411 Page 2
Republic of China, 76 Fed. Reg. 56,732, 56,733 (Dep’t Commerce Sept. 14, 2011) (final admin.
review) (“Final Results”); Certain Preserved Mushrooms from the People’s Republic of China,
76 Fed. Reg. 70,112 (Dep’t Commerce Nov. 10, 2011) (am. final admin. review) (“Amended
Final Results”).1 Specifically, XITIC challenges Commerce’s selection of surrogate values for
XITIC’s inputs of lime, fresh mushrooms, and mushroom spawn. XITIC also argues that
Commerce should have applied its new surrogate labor methodology when calculating XITIC’s
surrogate labor rate and financial ratios. Iceman Group asserts that Commerce unlawfully
assigned Iceman Group a separate rate because the company was not being reviewed. Iceman
Group and Golden Banyan also allege that Commerce’s separate rate calculations incorrectly
included Guangxi Jisheng Foods, Inc.’s (“Jisheng”) 266.13% partial adverse facts available
(“AFA”) margin. As set forth below, the court sustains in part and remands in part.
BACKGROUND
On March 30, 2010, Commerce initiated an administrative review of the antidumping
duty order on certain preserved mushrooms from the PRC. See Initiation of Antidumping and
Countervailing Duty Administrative Reviews and Request for Revocation in Part, 75 Fed. Reg.
15,679, 15,681 (Dep’t Commerce Mar. 30, 2010) (“Initiation Notice”). Commerce initiated its
review at the request of petitioner Monterey Mushrooms (“Petitioner”), which asked that the
Department review twenty-six PRC exporters and producers of subject merchandise. See
Certain Preserved Mushrooms from the People’s Republic of China, 76 Fed. Reg. 12,704,
12,704 (Dep’t Commerce Mar. 8, 2011) (prelim. admin. review) (“Preliminary Results”). The
review period ran from February 1, 2009 to January 31, 2010. Id.1
The court initially consolidated this case under consolidated case number 11-00378. Order, Court No. 11-
00378, ECF No. 15. The court later deconsolidated the action and stayed member case number 11-00411 pending a
final decision in Union Steel v. United States, 713 F.3d 1101 (Fed. Cir. 2013). Order, Court No. 11-00378, ECF No.
45. After that decision issued, XITIC voluntarily dismissed its zeroing claim. Order, Court No. 11-00411, ECF No.
24. Unless otherwise specified, all ECF citations contained herein are to documents filed in Court No. 11-00378.
Court No. 11-00411 Page 3
Commerce determined that it could only individually examine the three largest producers
or exporters of subject merchandise. Accordingly, Commerce selected XITIC, Blue Field
(Sichuan) Food Industrial Co, Ltd. (“Blue Field”), and Jisheng as mandatory respondents.
Resp’t Selection Mem. at 5, PD I 35 (May 17, 2010), ECF No. 16 (Dec. 12, 2011) (“PD I 35”).
Commerce also accorded separate rate status to certain companies, including Plaintiffs Golden
Banyan and Iceman Group. Final Results, 76 Fed. Reg. at 56,733.
Using India as the primary surrogate market economy country, Commerce calculated
dumping margins of 13.12% for XITIC and 84.55% for Golden Banyan and Iceman Group. Id.
The Department later amended its Final Results to correct a ministerial error, which adjusted
Golden Banyan’s and Iceman Group’s rates to 76.12%. Amended Final Results, 76 Fed. Reg. at
70,113.
SUBJECT MATTER JURISDICTION AND STANDARD OF REVIEW
This Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006) and must uphold
Commerce’s determination unless it is “unsupported by substantial evidence on the record, or
otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence is
“such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”
Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). The Court reviews the substantiality of
the evidence “by considering the record as a whole, including evidence that supports as well as
evidence that ‘fairly detracts from the substantiality of the evidence.’” Huaiyin Foreign Trade
Corp. v. United States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Atl. Sugar, Ltd. v. United
States, 744 F.2d 1556, 1562 (Fed. Cir. 1984)).
The Court employs a two-part analysis to determine whether Commerce’s statutory
construction is otherwise in accordance with law. See Chevron, U.S.A., Inc. v. Natural Res. Def.
Court No. 11-00411 Page 4
Council, Inc., 467 U.S. 837, 842–43 (1984). The Court first asks whether Congress has directly
spoken to the question at issue in the case. Id. If it has, the Court gives effect to Congress’s
unambiguously expressed intent. Id. If Congress has not directly addressed the pertinent issue,
the Court assesses whether Commerce’s interpretation “is based on a permissible construction of
the statute.” Id. at 843. To survive scrutiny, Commerce need not provide “the only reasonable
interpretation or even the most reasonable interpretation” of a statutory provision. Koyo Seiko
Co. v. United States, 36 F.3d 1565, 1570 (Fed. Cir. 1994).
DISCUSSION
I. Commerce’s surrogate values for lime and mushroom spawn were not based in
substantial evidence, and voluntary remand is appropriate so Commerce can
recalculate XITIC’s surrogate labor rate and financial ratios
XITIC2 challenges Commerce’s selection of surrogate values for its inputs of lime,
mushroom spawn, and fresh mushrooms, as well as the methodology Commerce used to derive
XITIC’s surrogate labor rate and financial ratios. For the following reasons, the court sustains
Commerce’s selection of a surrogate value for fresh mushrooms, but remands so Commerce can
reconsider its values for lime and mushroom spawn. The court also grants the United States’
request for a voluntary remand to recalculate XITIC’s surrogate labor rate and financial ratios.
A. Legal framework for the selection of surrogate values
A dumping margin is “the amount by which the normal value exceeds the export price or
constructed export price of the subject merchandise.” 19 U.S.C. § 1677(35)(A). In non-market
economy (“NME”) proceedings, Commerce constructs normal value by valuing the inputs used
2
XITIC sold subject merchandise to the U.S. market during the period of review, but an affiliated producer
apparently produced the merchandise. See, e.g., XITIC Section A Questionnaire Resp. at A-13, PD I 44 (June 16,
2010), ECF No. 16 (Dec. 12, 2011) (“PD I 44”). For purposes of this opinion, the court uses XITIC to refer to both
entities.
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to produce the merchandise (the factors of production) 3 plus “an amount for general expenses
and profit plus the cost of containers, coverings, and other expenses.” 4 Id. § 1677b(c)(1)(B).
The goal of this practice is to construct a hypothetical market value for a product, which then
serves as the normal value for purposes of computing any dumping margin. See Nation Ford
Chem. Co. v. United States, 166 F.3d 1373, 1375 (Fed. Cir. 1999).
Commerce selects values for each factor of production—known as “surrogate values”—
“based on the best available information regarding the values of such factors in a market
economy country or countries.” 19 U.S.C. § 1677b(c)(1); see also id. §1677b(c)(4) (elaborating
that, to the extent possible, Commerce must use an economically comparable market economy
that is a significant producer of subject merchandise). Because no statute or regulation defines
the “best available information,” Commerce has established certain non-dispositive policy
preferences. Namely, the Department prefers surrogates values that are contemporaneous with
the period of review, publicly available, product-specific, representative of broad market average
prices, and free of taxes and import duties. I&D Mem. at 7, PD II 10 (Sept. 6, 2011), ECF No.
16 (Dec. 12, 2011) (“I&D Mem.”). Commerce has not identified a hierarchy among these
factors, and the weight accorded to a factor varies depending on the facts of each case. Id.
Commerce has broad discretion to decide which data constitute the best available
information regarding the value of a particular factor. QVD Food Co. v. United States, 658 F.3d
1318, 1323 (Fed. Cir. 2011). The role of a reviewing court is “not to evaluate whether the
3
Factors of production include “(A) hours of labor required, (B) quantities of raw materials employed, (C)
amounts of energy and other utilities consumed, and (D) representative capital cost, including depreciation.” 19
U.S.C. § 1677b(c)(3). A respondent identifies the factors used to produce subject merchandise along with
consumption rates. Commerce then calculates the cost of each input by multiplying the consumption rate by the
surrogate value. See Prelim. Results Analysis Mem. at 2, PD I 107 (Feb. 28, 2011), ECF No. 16 (Dec. 12, 2011).
4
General expenses and profit include expenses that are not traceable to a specific product. Dorbest Ltd. v.
United States, 30 CIT 1671, 1715, 462 F. Supp. 2d 1262, 1300 (2006). To capture these expenses and profits,
Commerce must factor in overhead, profit, and selling, general, and administrative expenses. Id. Commerce
achieves this by using surrogate financial ratios. Id.Court No. 11-00411 Page 6
information Commerce used was the best available, but” to determine “whether a reasonable
mind could conclude that Commerce chose the best available information.” Zhejiang DunAn
Hetian Metal Co. v. United States, 652 F.3d 1333, 1341 (Fed. Cir. 2011). To meet that standard,
Commerce must justify its surrogate value with a reasoned explanation supported by substantial
evidence. Dorbest Ltd. v. United States, 30 CIT 1671, 1677, 462 F. Supp. 2d 1262, 1269 (2006).
Though a reasoned explanation need not be a perfect explanation, Commerce must still fairly
evaluate and compare the data sets on the record using its established analytical criteria. Id.B. Commerce’s decision to value XITIC’s “lime” input using GTA import data for
slaked lime was not supported by substantial evidence
With that framework in mind, the court turns to XITIC’s first challenge to Commerce’s
surrogate values. Commerce valued one of XITIC’s factors, “lime,” using Global Trade Atlas
(“GTA”) import data for Indian Harmonized Tariff Schedule (“HTS”) subheading 2522.20
(“slaked lime”). XITIC submits that this value was unsupported by substantial evidence because
record evidence suggested that XITIC used calcium carbonate (identified as Indian HTS
subheading 2836.50.00) in producing mushrooms. Pls.’ Mot. for J. on Agency R., ECF No. 23
(“Pls.’ Br.”), at 11.
i. Factual background
In its initial Section D questionnaire response, XITIC used the word lime to describe one
of its inputs. XITIC clarified in a concise spreadsheet accompanying that submission that lime
was associated with PRC HTS subheading 2836.50.00 (“[c]alcium carbonate”). XITIC Section
D Questionnaire Resp. at Ex. D-5, PD I 56 (July 13, 2010), ECF No. 16 (Dec. 12, 2011) (“PD I
56”). XITIC first used the words “calcium carbonate” when submitting proposed surrogates for
use in the preliminary determination. XITIC Proposed Surrogate Value Submission at 2, PD I 92
(Nov. 22, 2010), ECF No. 16 (Dec. 12, 2011) (“PD I 92”). In that submission, XITIC listed one
Court No. 11-00411 Page 7
of its raw material inputs as “Lime (Calcium Carbonate)” and again supplied Indian HTS
subheading 2836.50.00 as the correct tariff number from which to draw a surrogate value. Id.Commerce disregarded XITIC’s proposed tariff number in its Preliminary Results, which
would have yielded a value of 6.36 Indian Rupees per kilogram (“Rs./kg.”). Prelim. Surrogate
Value Mem. at 5, PD I 110 (Feb. 28, 2011), ECF No. 16 (Dec. 12, 2011) (“PD I 110”). Instead,
Commerce valued lime at 8.96 Rs./kg. using GTA import data for slaked lime (Indian HTS
2522.20). Id. at 6. Commerce rejected XITIC’s value because there was no record information
“that XITIC actually used calcium carbonate in the production of subject merchandise.” Id.
In response, XITIC submitted a Wikipedia entry defining agricultural lime as “pulverized
rock containing primarily calcium carbonate.” XITIC Surrogate Value Submission at Attach. 1,
PD I 117 (Mar. 28, 2011), ECF No. 16 (Dec. 12, 2011). XITIC later relied on that definition
when arguing that lime meant calcium carbonate, not slaked lime. XITIC Case Br. at 2–3, PD I
119 (Apr. 7, 2011), ECF No. 16 (Dec. 12, 2011) (“PD I 119”). XITIC additionally cited record
evidence that another respondent, Blue Field, used calcium carbonate as an input. Id. at 2.
Commerce rejected XITIC’s request to revalue lime in its Final Results. I&D Mem. 27.
First, Commerce dismissed XITIC’s Wikipedia entry as unreliable because it contained no
citations to outside sources supporting the article’s definitions. Id. Commerce then noted that
the term “‘lime’ is generic, has multiple usages, and can be used to describe any treatment to
soils with a calcium compound.” Id. In light of the ambiguity, Commerce decided that lime
likely meant slaked lime because calcium carbonate “lack[ed] the term lime” and “slaked lime
. . . include[d] the term lime.” Id. Commerce finally concluded that “[i]f XITIC used calcium
carbonate it should have specifically so stated in its questionnaire responses, as Blue Field did,
and not leave it to a term that has multiple meanings.” Id.
Court No. 11-00411 Page 8
ii. Commerce’s value for lime was not supported by substantial evidence
Commerce’s determination was not supported by substantial record evidence. Commerce
rejected the Wikipedia entry as unreliable and implicitly dismissed the notion that the term lime
could refer to calcium carbonate. Nonetheless, several lines later, Commerce found that the term
“can be used to describe any treatment to soils with a calcium compound.” Id. By making that
general assertion, Commerce suggested that lime could mean either calcium carbonate or
calcium hydroxide (slaked lime), as both are calcium compounds. See XITIC Third Suppl.
Questionnaire Resp. at App’x S3-1 at 35, PD I 101 (Jan. 28, 2011), ECF No. 16 (Dec. 12, 2011)
(“PD I 101”) (identifying slaked lime’s chemical name).
Assuming that lime could reasonably refer to calcium carbonate and slaked lime,
Commerce did not effectively explain why a surrogate value for slaked lime was the best
available information regarding that input. Initially, Commerce never found that slaked lime
could be used in producing subject merchandise. See Calgon Carbon Corp. v. United States,
Slip-Op 11-21, 2011 WL 637605, at *8 (CIT Feb. 17, 2011) (“Commerce must show a rational
relationship between the surrogate value and the input to which it is applied.”). Moreover,
Commerce apparently based its selection solely on the fact that slaked lime actually contained
the word lime, while calcium carbonate did not. That logic is flawed because, as XITIC notes,
calcium carbonate is a chemical name and slaked lime is the common name for a different
chemical compound (calcium hydroxide). See Pls.’ Reply in Supp. of Mot. for J. on Agency R.,
ECF No. 36 (“Pls.’ Reply”), at 2; PD I 101 at App’x S3-1 at 35 (listing chemical name for slaked
lime). Commerce’s misleading and mismatched comparison of the two products did not rise to
the level of substantial evidence supporting its chosen surrogate value for lime.
Court No. 11-00411 Page 9
Commerce’s analysis was also flawed because it inaccurately presumed that nothing on
the record tied XITIC’s lime input to calcium carbonate. In fact, in its initial questionnaire
response, XITIC described lime by reference to the HTS subheading for calcium carbonate.
XITIC persisted in this classification when it submitted its proposed surrogate values before the
Preliminary Results and even put calcium carbonate in parentheses next to lime. XITIC again
explained to Commerce in its case brief that it did not use slaked lime in its production process.5
This evidence collectively signaled that XITIC used calcium carbonate and, albeit imperfectly,
communicated this to Commerce on multiple occasions.6
Commerce apparently believed that XITIC should have communicated this information
more directly, like Blue Field, by listing calcium carbonate as an input on its questionnaire
responses. However, Commerce may not ignore what XITIC did place on the record because it
wishes XITIC were more precise. Based on the record before the court, a reasonable mind could
not conclude that Commerce chose the best available information to value XITIC’s factor of
production. Commerce is, therefore, instructed on remand to reconsider its finding that a
surrogate value for slaked lime is the best available information for valuing XITIC’s lime input.
C. Commerce’s decision to use GTA import data to value XITIC’s mushroom
spawn was not supported by substantial evidence
XITIC also disputes Commerce’s valuation of mushroom spawn, another input that
XITIC used in producing subject merchandise. Commerce valued mushroom spawn using GTA
import data for Indian HTS subheading 0602.90.10. XITIC argues that Commerce’s
5
In its USCIT Rule 56.2 brief, XITIC also argues that it could not use slaked lime in its production process
because of a possible chemical reaction. Pls.’ Br. 9–10. XITIC did not raise that argument before the agency, and
the court will not consider it for the first time at this late stage. See 28 U.S.C. § 2637(d) (providing that this Court
“shall, where appropriate, require the exhaustion of administrative remedies”).
6
The court finds that there was evidence tying XITIC’s lime input to calcium carbonate, but expresses no
opinion on whether record evidence also suggested that XITIC used slaked lime as an input. If that is the case,
Commerce did not make any finding to that end on the record.
Court No. 11-00411 Page 10
determination was unsupported by substantial evidence in essentially two ways. XITIC avers
that, by focusing exclusively on why XITIC’s proffered surrogates were flawed, Commerce
failed to explain why the GTA data were preferable. Pls.’ Br. 19–20. XITIC additionally
submits that Commerce did not support with substantial evidence its determination that XITIC’s
proffered surrogates were flawed. Id. at 20. Specifically, XITIC asserts that Commerce based
its dismissal of XITIC’s surrogates on impermissible speculation. Id. at 20–21.
i. Factual background
In proceedings before Commerce, XITIC proposed two surrogate values to value
mushroom spawn—one derived from a 2004–2005 annual report of Agro Dutch Industries
Limited (“Agro Dutch”), and the other from a 2007–2008 annual report of Himalya International
Limited (“Himalya”). PD I 92 at 3. Commerce instead valued mushroom spawn at 217.38
Rs./kg. using GTA import data for Indian HTS subheading 0602.90.10 (mushroom spawn). PD I
110 at 6. Commerce preliminarily dismissed XITIC’s proffered data, which would have resulted
in surrogate values of approximately 115.38 Rs./kg. or 36.97 Rs./kg., because that data “did not
include broad market averages.” Id.In its case brief, XITIC asserted that the GTA data were not specific to XITIC’s input.
PD I 119 at 6. In particular, XITIC argued that it only used white button mushroom spawn and
that the GTA basket data encompassed all four types of mushroom spawn sold in India. Id.XITIC thus advocated for the use of its own surrogates based on Agro Dutch and Himalya data.
Petitioner criticized XITIC’s proposed data, citing the following language from a 2009–
2010 report of a different Indian mushroom producer, Flex Foods Limited (“Flex Foods”):
The yield of mushroom to a great extent depends upon quality of spawn. Good
quality of spawn should be contamination free with high yield potential. The non-
availability of quality spawn is a common problem of large mushroom growers.
Court No. 11-00411 Page 11
Pet’r’s Rebuttal Br. at 10, PD I 123 (Apr. 14, 2011), ECF No. 16 (Dec. 12, 2011) (emphasis
omitted). Petitioner reasoned that Agro Dutch and Himalya, both large mushroom growers, must
have also experienced difficulty obtaining high-quality spawn. For that reason, Petitioner
questioned the “quality and applicability of” the companies’ data. Id.Commerce continued to use the GTA data to value mushroom spawn in its Final Results,
but never directly stated why the non-specific GTA data were the best available information
regarding the value of mushroom spawn. Instead, Commerce explained why both of XITIC’s
surrogates were flawed. Commerce believed the Agro Dutch and Himalya reports were
imperfect because they were “not representative of broad market averages, free of taxes and
import duties, or contemporaneous with the” review period. I&D Mem. 28. Commerce also
concurred with Petitioner “regarding the common problem of the availability of quality spawn
for large mushroom growers.” Id. Commerce elaborated:
Due to the size and nature of Flex Foods, Agro Dutch, and Himalaya [sic], they
would be affected by the shortage of quality spawn and would most likely have to
use lower quality spawn. Such usage of lower quality spawn would not be
reflective of the high quality spawn indicated by XITIC.
Id.ii. Commerce’s value for mushroom spawn was not supported by substantial
evidence
The court agrees with XITIC that Commerce erred by not explaining why the GTA data
was the best available information for valuing mushroom spawn. To support a surrogate value
with substantial evidence, Commerce “must do more than simply identify flaws in the data sets it
rejects.” Guangdong Chems. Imp. & Exp. Corp. v. United States, 30 CIT 1412, 1417, 460 F.
Supp. 2d 1365, 1369 (2006); see also Shanghai Foreign Trade Enters. Co. v. United States, 28
CIT 480, 495, 318 F. Supp. 2d 1339, 1352 (2004) (noting that Commerce errs by “discard[ing]
Court No. 11-00411 Page 12
the alternatives as flawed” without “evaluat[ing] the reliability of its own choice”). “Commerce
must also apply the same criteria to the data upon which it relies, and explain how the preferred
data meet these criteria, or why a given criterion should not apply to the preferred data.”
Guangdong Chems., 30 CIT at 1417, 460 F. Supp. at 1369. Moreover, though Commerce need
not rely on perfect data, it must explain why its data are superior to competing values. See
Dorbest, 30 CIT at 1675, 462 F. Supp. 2d at 1268 (explaining that the “‘best’ choice is
ascertained by examining and comparing the advantages and disadvantages of using certain data
as opposed to other data”). Here, Commerce neither critically evaluated the non-specific GTA
data nor compared that data against XITIC’s proffered data. Therefore, remand is appropriate so
Commerce can fully explain whether the data it selected comports with its statutory duty to use
the best available information.7
The court also agrees that Commerce poorly reasoned its rejection of XITIC’s proposed
surrogate values. Commerce dismissed the Agro Dutch and Himalya reports because the data
contained therein were not (1) contemporaneous with the period of review, (2) representative of
broad market averages, (3) free of taxes and import duties, or (4) reflective of the high-quality
spawn that XITIC uses to produce subject merchandise. While XITIC does not challenge the
first three of Commerce’s findings, XITIC correctly argues that Commerce failed to support its
conclusion that the Agro Dutch and Himalya data did not reflect XITIC’s high-quality spawn.
See Pls.’ Br. 20–21.
7
Commerce explained elsewhere that it uses GTA data because it satisfies the Department’s preference for
publicly-available information representative of broad market averages. PD I 110 at 3. Presumably, Commerce
used the GTA data to value mushroom spawn for those reasons. However, Commerce never so stated, and more
importantly, Commerce never explained why the GTA data fit its selection criteria better than XITIC’s data. This
failure is especially notable because XITIC raised specificity concerns in its case brief. Though the Government
summarily addresses the specificity issue in its responsive briefing, see Def.’s Br. 30, the court cannot accept these
post-hoc rationalizations, see Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168–69 (1962).
Court No. 11-00411 Page 13
In concluding that the Agro Dutch and Himalya data did not properly value XITIC’s
input, Commerce reasoned that those companies would experience difficulty obtaining high-
quality spawn in the market. As a result, they would purchase lower-quality spawn, and lower-
quality spawn was not reflective of XITIC’s high-quality spawn. I&D Mem. 28. Commerce’s
analysis is flawed because it relies exclusively on unfounded assumptions.
First, Commerce assumed that Agro Dutch (in 2004–2005) and Himalya (in 2007–2008)
had difficulty obtaining high-quality spawn because they were large mushroom producers. But
the report undergirding this assumption refers only to one company’s experience during the
2009–2010 year. Commerce also assumed without any knowledge that large mushroom growers
purchased low-quality spawn just because they had difficulty obtaining high-quality spawn.
Lastly, Commerce assumed that XITIC used high-quality spawn in manufacturing subject
merchandise and that the Agro Dutch and Himalya data for lower-quality spawn did not reflect
XITIC’s input. Yet, if that is the case, Commerce did not cite (nor can the court locate) any
record support for its assertion that XITIC used high-quality spawn.
In sum, based on this record, the court cannot find that Commerce supported its surrogate
value for mushroom spawn with substantial evidence. On remand, Commerce must reconsider
whether its proffered data is the best available information for valuing mushroom spawn. In
doing so, Commerce must address what fairly detracts from the reliability of its selected
surrogate value. Therefore, Commerce must consider XITIC’s argument that the GTA data were
not specific to subject mushrooms, especially because the GTA value is more than double
XITIC’s competing surrogate values. Finally, Commerce must revisit the reliability of the Agro
Dutch and Himalya data and clearly explain why it believes that data do not accurately
approximate XITIC’s “high quality” mushroom spawn.
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D. Commerce’s decision to value fresh mushrooms using the average of a price
range found in a Flex Foods report was supported by substantial evidence
XITIC’s final challenge to the valuation of XITIC’s raw material inputs pertains to
Commerce’s selection of a surrogate value for fresh mushrooms. See Pls.’ Br. 11–17.
Commerce valued fresh mushrooms using a 2009–2010 annual report for Flex Foods, an Indian
purchaser of fresh mushrooms. That report provides a range of prices for fresh mushrooms, from
which Commerce selected the average as a surrogate value. XITIC argues that Commerce
should have used sales data from various Agro Dutch reports to value fresh mushrooms, or at
least valued fresh mushrooms using the low end of the Flex Foods price range. Id.i. Factual background
XITIC proposed that Commerce value fresh mushrooms at 12.12941 Rs./kg., a figure
derived from a 2009–2010 annual report for Agro Dutch. PD I 92 at 3, Attach. 4 at 29.
Although Agro Dutch primarily sold canned mushrooms during the 2009–2010 period, it also
reported volume and value figures for a smaller quantity of fresh mushroom sales.
Commerce preliminarily rejected XITIC’s proffered value as well as a comparatively
higher value submitted by Petitioner. PD I 110 at 7. According to Commerce, Agro Dutch’s
2009–2010 data were unreliable because the company reported a loss that fiscal year. Id.Commerce instead relied on statistics from Agro Dutch’s 2006–2007 annual report to extrapolate
a surrogate value of 14.69 Rs./kg., which Commerce then inflated to 17.02 Rs./kg. to make it
contemporaneous with the period of review. Id.After the Preliminary Results, Petitioner maintained that the Agro Dutch report did not
reflect market conditions in India because it was based on sales of a relatively small quantity of
fresh mushrooms occurring at “fire-sale” prices below the cost of production. See Pet’r’s Case
Br. at 3–5, PD I 120 (Apr. 7, 2011), ECF No. 16 (Dec. 12, 2011) (“PD I 120”). To corroborate
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its assertions regarding Agro Dutch’s data, Petitioner cited the 2009–2010 annual report from
Flex Foods. Id. Summarizing Flex Foods’ experience in the market, that report provided:
When there is a glut in the market, the price of mushroom falls down to Rs. 20-
30/Kg but as the demand increases or there is shortage [sic] of mushrooms in the
market the price rises up to Rs. 60-70/Kg. Thus there is always an uncertainty in
market prices of mushroom which reduces the amount of net profit and this
discourages the mushroom growers. This problem gets aggravated during peak
production months . . . .
Commerce Surrogate Values Source Docs. at Ex. 4 at 5, PD I 106 (Feb. 28, 2011), ECF No. 16
(Dec. 12, 2011).
XITIC argued in rebuttal that Commerce should continue to use the 2006–2007 Agro
Dutch data because they were both verified by certified public accountants and based on a large
number of actual sales occurring over an extended period of time. XITIC Rebuttal Br. at 2, PD I
122 (Apr. 12, 2011), ECF No. 16 (Dec. 12, 2011). XITIC did not criticize the accuracy of
Petitioner’s corroborative Flex Foods data, but averred that the Agro Dutch data were consistent
with the values in the Flex Food report. Id. at 4–5.
Commerce rejected both proposed surrogates and, therefore, changed its surrogate value
for fresh mushrooms between the Preliminary Results and Final Results. Commerce agreed that
the “Agro Dutch data are now two years old, and may not be as representative of a variety of
market conditions as are other data on the record.” I&D Mem. 8. Further, Commerce questioned
the reliability of the Agro Dutch data because it was unclear how many transactions were
reflected in the sales volume and value figures. Id. Commerce found that the Flex Foods data,
by contrast, were both contemporaneous and “representative of a variety of market conditions
affecting the price of fresh mushrooms in India.” Id. at 9. The data were also specific to button
mushrooms, and therefore specific to subject merchandise. Id.
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When selecting among the range of prices provided in the Flex Foods report, Commerce
used the average of the low- and high-bounds. Id. Commerce reasoned that an average was
appropriate because the information on the record did not signal “which (if either) of these two
conditions may have prevailed in India during the POR, or for how long.” Id.
ii. Commerce’s value for fresh mushrooms was supported by substantial
evidence
Before this court, XITIC contests Commerce’s final surrogate value on multiple grounds.
Initially, XITIC revives its argument that the best available information for valuing fresh
mushrooms is the 2009–2010 Agro Dutch report. Pls.’ Br. 13. XITIC argues, alternatively, that
Commerce should have continued to use inflated 2006-2007 Agro Dutch data to value fresh
mushrooms. Id. at 14.8 According to XITIC, the data from the Agro Dutch reports are “vastly
superior” because they are based on documented sales transactions, as opposed to “a generalized
description of the range of market prices” that Flex Foods experienced. Id. XITIC also submits
that the Agro Dutch data are equally representative of market averages because, like the Flex
Foods data, they reflect only one company’s experience in the market. Id. at 15.
Commerce supported with substantial evidence its conclusion that the Flex Food data
were the best source of information for valuing fresh mushrooms. Commerce reasonably
decided to use the Flex Foods report because it was (1) contemporaneous, (2) publicly available,
(3) specific to button mushrooms, and (4) representative of a variety of market conditions
affecting fresh mushroom prices. I&D Mem. 9. Commerce also explained why both Agro Dutch
data sets were not better valuation sources.
8
XITIC also suggests that Commerce acted unreasonably by finding that the 2006–2007 Agro Dutch data
were the best available during the Preliminary Results and later attacking the same data on contemporaneity grounds
in the Final Results. Pls.’ Br. 12–13. “However, preliminary determinations are ‘preliminary’ precisely because
they are subject to change.” NTN Bearing Corp. v. United States, 74 F.3d 1204, 1208 (Fed. Cir. 1995). Commerce
did not even discuss the excerpt from the Flex Foods report in the Preliminary Results because no one advocated for
the data’s use as a surrogate value for fresh mushrooms. In the face of an evolving administrative record containing
multiple data sets, Commerce reasonably shifted course between its preliminary and final determination.
Court No. 11-00411 Page 17
Commerce explained that it dismissed the 2009–2010 Agro Dutch data, notwithstanding
its contemporaneity, because Agro Dutch reported a loss during the 2009–2010 financial year.
See PD I 110 at 7. Presumably, Commerce interpreted this to mean that the data were unreliable
for use as a surrogate value, or at a minimum that they were not the best available information
for valuing fresh mushrooms. See Ceramica Regiomontana, S.A. v. United States, 810 F.2d
1137, 1139 (Fed. Cir. 1987) (sustaining decision “of less than ideal clarity” because the agency’s
path was reasonably discernible). This decision comports with Federal Circuit precedent. See
QVD Food, 658 F.3d at 1325–26 (upholding Commerce’s rejection of company financial data
reported during a period of “serious financial trouble”); see also Shanghai Foreign Trade
Enters., 28 CIT at 489, 318 F. Supp. 2d at 1347 (upholding Commerce’s decision to disregard
contemporaneous financial data compiled in year where company sustained a loss).
Commerce also explained that it rejected the 2006–2007 Agro Dutch report because,
unlike the Flex Foods report, it was neither contemporaneous with the period of review nor as
representative of broad market averages. Specifically, Commerce noted that while the Agro
Dutch report “provides the only data on the record that give fresh mushroom sales volume and
value figures,” the report did not indicate how many unique transactions were reflected in those
figures or the timing of the transactions. I&D Mem. 8. The data could have been unreliable if,
for example, they were based on a small number of large sales or if all the sales occurred within
a condensed timeframe. Due to this uncertainty, Commerce preferred the Flex Foods report
because it provided a broad range reflecting market fluctuations throughout the review period.
XITIC alleges that there was “no basis in the administrative record for Commerce to have
concluded that the Flex Foods description of the range of prices during the period of review
somehow reflected a broader market than the Agro Dutch data.” Pls.’ Br. 15. However, XITIC
Court No. 11-00411 Page 18
misinterprets Commerce’s actual conclusion. Commerce did not find that the Flex Foods data
necessarily reflected a broader market, but rather that the Agro Dutch data “may not be as
representative of a variety of market conditions.” I&D Mem. 8 (emphasis added). Commerce’s
concerns regarding the representativeness of the Agro Dutch data were well-founded. Fresh
mushroom sales comprised only a small percentage of Agro Dutch’s overall sales, and
Commerce did not know whether the relatively sparse mushroom sales reflected a range of
market conditions. Since the Flex Foods data provided the certainty that the Agro Dutch data
lacked, Commerce reasonably preferred the Flex Foods data to value fresh mushrooms.
The court next addresses whether Commerce supported its decision to use the average of
the Flex Foods range when valuing fresh mushrooms. XITIC asserts that the low end of the Flex
Foods range more accurately approximates what XITIC would have paid for fresh mushrooms in
a comparable market economy. Citing record evidence, XITIC avers that it only purchased fresh
mushrooms during peak production periods and that the surrogate value should, similarly, reflect
purchases made during this time. See Pls.’ Br. 16 (citing PD I 44, App’x A-17 (containing
XITIC brochure listing mushroom’s season as December to April); PD I 101, App’x S3-1 at 28–
29 (discussing mushroom growing seasons in North China)). XITIC further argues that if the
surrogate value reflected prices during peak production periods, it would be close to 20 Rs./kg.
because there would likely be an excess supply, or glut, in the market. See id. at 16–17.
XITIC’s speculative arguments do not undermine Commerce’s reasoned decision to use
the average of the Flex Foods prices. Initially, XITIC assumes that there is ample record
evidence supporting its argument that it only purchases fresh mushrooms during months of peak
production. But the corroborative evidence XITIC cites never actually states that proposition.
Indeed, though XITIC suggests mushroom harvest season stretches from January to mid-April,
Court No. 11-00411 Page 19
XITIC indicated in a questionnaire response that it purchased fresh mushrooms between October
and December. See PD I 56 at 10. Moreover, XITIC concludes without any evidentiary support
that peak mushroom season necessarily corresponds with a glut in the market for the length of
that season. This unsupported claim paints an overly simplistic picture of the fresh mushroom
market by both assuming that mushroom producers oversupplied the market during the period of
review and ignoring that market prices are not set exclusively by supply.
E. Voluntary remand is appropriate so Commerce can recalculate XITIC’s
surrogate labor rate and financial ratios
Lastly, XITIC challenges the methodology Commerce used to calculate its surrogate
labor rate and surrogate financial ratios. XITIC’s argument turns on changes that Commerce
made to its labor methodology during the administrative review at issue in this case. See
Antidumping Methodologies in Proceedings Involving Non-Market Economies: Valuing the
Factor of Production: Labor, 76 Fed. Reg. 36,092 (Dep’t Commerce June 21, 2011). When
Commerce announced its new procedures, it indicated that it would employ the revised
methodology to pending proceedings if “feasible” in light of statutory deadlines. Id. at 36,093.
Commerce did not apply the revised methodology to XITIC, but it did in other review
proceedings initiated in the same month. Pls.’ Br. 24. XITIC asserts that Commerce’s disparate
treatment rendered the surrogate labor rate calculations unsupported by substantial evidence.
The Government agrees that it should have calculated XITIC’s surrogate labor rate and
surrogate financial ratios using the revised methodology. Def.’s Resp. to Pls.’ Mot. for J. on
Agency R., ECF No. 30 (“Def.’s Br.”), at 33. Therefore, the Government requests a voluntary
remand granting the agency sixty days to make necessary adjustments. Id. Because the
Government has raised a “substantial and legitimate” concern, the court remands for
recalculation. See SKF USA Inc. v. United States, 254 F.3d 1022, 1029 (Fed. Cir. 2001) (noting
Court No. 11-00411 Page 20
that “if the agency’s concern is substantial and legitimate, a remand is usually appropriate”); Ad
Hoc Shrimp Trade Action Comm. v. United States, 37 CIT __, __, 882 F. Supp. 2d 1377, 1381
(2013) (providing that Commerce’s concerns are substantial and legitimate when, inter alia,
Commerce offers a compelling justification for its request).
II. Commerce lawfully included Iceman Group as a separate rate company but did
not support its calculation of Iceman Group and Golden Banyan’s separate rates
with substantial evidence
Two separate rate respondents, Iceman Group and Golden Banyan, challenge the separate
rates that Commerce calculated in this administrative review. Iceman Group avers that
Commerce never initiated a review for Iceman Group and that it was, thus, not lawfully covered
by the review. Iceman Group contends, alternatively, that Commerce improperly included one
mandatory respondent’s large margin in the calculation of Iceman Group’s separate rate. Golden
Banyan joins in this alternative claim. As discussed below, the court sustains with regard to the
inclusion of Iceman Group, but remands on the issue of the separate rate calculation.
A. Legal framework for initiation of reviews and assignment of separate rates
The United States has a “retrospective” assessment system whereby final liability for
antidumping duties is determined after importation. 19 C.F.R. § 351.212(a). As such, importers
deposit estimated duties at importation, and actual duty assessment often occurs in an
administrative review proceeding covering an already lapsed discrete period of time. Id.Commerce does not automatically conduct administrative reviews for all subject
merchandise that entered during the period of review. To secure review, interested parties must
identify specific exporters or producers for which a review is requested. Id. § 351.213(b).
Commerce publicly lists those companies in a Federal Register notice. If entries are not covered
by a review, Commerce instructs Customs to assess duties at the cash deposit rate at entry. Id.
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§ 351.212(c)(1). If entries are covered by a review, Commerce “review[s] . . . and determine[s]
. . . the amount of any antidumping duty” and assesses final duties. 19 U.S.C. § 1675(a)(1)(B).
Commerce may determine that it is not practicable to calculate individual dumping
margins for every company subject to a review. Id. § 1677f-1(c)(2). In that scenario, Commerce
limits its analysis to a sample of mandatory respondents (often with the largest export volumes of
subject merchandise). See id.; Yangzhou Bestpak Gifts & Crafts Co. v. United States, 716 F.3d
1370, 1372–73 (Fed. Cir. 2013). In market economy proceedings, Commerce calculates an “all-
others” rate for companies that were not individually investigated. 19 U.S.C. § 1673d(c)(5).
That rate is usually a weighted average of the mandatory respondents’ rates, excluding any zero
or de minimis rates and any rates based entirely on facts available or AFA. Id. § 1673d(c)(5)(A).
In NME proceedings, Commerce employs a different procedure. The Department begins
with a rebuttable presumption that all NME exporters and producers are subject to government
control. See, e.g., Yangzhou Bestpak, 716 F.3d at 1373. Thus, the Department assigns a single
PRC-wide rate to all companies unless a company establishes the absence of de jure and de facto
government control. Id. The PRC-wide rate is usually based on total AFA. Id.
Companies usually establish the absence of government control through separate rate
applications or certifications. Id. at 1374. Non-mandatory respondents that successfully rebut
the presumption of control are known as separate rate respondents. Id. Though not compelled
by statute, Commerce calculates separate rates for non-mandatory separate rate respondents in
the same way that it calculates all others rates in market economy investigations. Id.
B. Commerce’s decision to assign a separate rate to Iceman Group was in
accordance with law
Iceman Group alleges that the Department did not comply with relevant law and past
practice when it conducted a review for a company not specifically identified in Commerce’s
Court No. 11-00411 Page 22
initiation notice. Pls.’ Br. 25, 29–33. Iceman Group argues that Commerce was instead required
to instruct U.S. Customs and Border Protection (“CBP”) to liquidate Iceman Group’s entries at
the cash deposit rate in effect at entry (zero percent). Id. at 31. According to Iceman Group, its
accidental participation in the review did not absolve Commerce of its duty to follow its own
regulations. Id. at 32. Some background is helpful to understand Iceman Group’s claim.
i. Factual background
In this case, Petitioner requested an administrative review for a company identified as
“Zhejiang Iceman Food Co., Ltd.” (“Iceman Food”). Pet’r’s Req. for Review at 9, PD I 1 (Mar.
1, 2010), ECF No. 16 (Dec. 12, 2011). Petitioner’s request did not encompass Iceman Group,
and Commerce did not initiate a review for that company. See Initiation Notice, 75 Fed. Reg. at
15,681. Shortly after initiating its review, Commerce instructed CBP to liquidate entries from
specified separate rate companies that were not subject to the review. See Pls.’ Br. at Attach. 1.
Iceman Group had previously obtained a separate rate and was not nominally subject to the
review, but Commerce nonetheless omitted Iceman Group from its liquidation instructions. Id.
Kutak Rock LLP appeared in the review proceeding on behalf of Iceman Food a few
weeks later. Kutak Rock Notice of Appearance at 1, PD I 7 (Apr. 5, 2010), ECF No. 16 (Dec.
12, 2011). Counsel later began referring to its client as Iceman Group in a separate rate
certification. See Iceman Group Separate Rate Certification at 1, PD I 33 (Apr. 29, 2010), ECF
No. 16 (Dec. 12, 2011) (“PD I 33”). In that certification, counsel listed the email address for
Iceman Group as “jacky@icemanfood.com.” Id. at 2.
In the Preliminary Results, Commerce determined that Iceman Group (not Iceman Food)
was entitled to separate rate status and assigned the company a separate rate of 53.69%. See 76
Fed. Reg. at 12,710. Iceman Group did not comment on those results, and Commerce continued
Court No. 11-00411 Page 23
to list Iceman Group in its Final Results. Shortly thereafter, Iceman Group realized that it was
not named in the initiation notice and submitted a ministerial error allegation. See Iceman Group
Ministerial Error Allegation, PD II 30 (Oct. 25, 2011), ECF No. 16 (Dec. 12, 2011).
In that submission, Iceman Group alleged that the review covered only Iceman Food and
asked to be omitted from the amended final results. Id. at 3. Iceman Group cited Commerce’s
behavior in a subsequent administrative review in support. In that review, Petitioner again listed
Iceman Food in its request. Id. at 4. But this time, Commerce recognized the error and
instructed Customs to liquidate Iceman Group’s entries at the cash deposit rate at entry. Id.
In rejecting Iceman Group’s request, Commerce found, first, that Iceman Group’s
submission did not raise a genuine ministerial error. See Amended Final Results, 76 Fed. Reg. at
70,113 (citing 19 U.S.C. § 1675(h); 19 C.F.R. § 351.224(f)). Moreover, Commerce identified
four reasons for equating Iceman Group with Iceman Food:
(1) Counsel filed an entry of appearance on behalf of Iceman Food on April 5,
2010; (2) Iceman Group, which never filed a separate notice of appearance, filed a
certification for a separate rate on April 29, 2010; (3) the separate rate
certification filed by Iceman Group lists the company Web site as
www.icemanfood.com and the company email address as
“jacky@icemanfood.com;” [sic] and (4) Iceman Group did not comment on the
Preliminary Results, which specifically list Iceman Group as preliminarily
receiving a separate rate.
Id.ii. Commerce lawfully included Iceman Group in the review
Iceman Group contends that Commerce’s failure to follow the automatic assessment
procedures set forth in 19 C.F.R. § 351.212(c) is dispositive. In other words, because Commerce
did not receive a request for a review for Iceman Group, Commerce’s subsequent inclusion of
Iceman Group as a separate rate company was ultra vires. Pls.’ Br. 31 (relying on regulatory
language indicating that Commerce “will” instruct Customs to liquidate the unreviewed entries at
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their cash deposit rate). Based on the unique circumstances of this case, the court declines to
adopt Iceman Group’s belated and overly narrow arguments.
Because Commerce did not initiate a review for Iceman Group, Commerce should have
included Iceman Group in its non-review liquidation instructions pursuant to § 351.212(c).
However, rather than alert Commerce to the flawed instructions, Iceman Group’s counsel
appeared in the proceeding on behalf of Iceman Food and filed a separate rate certification for
Iceman Group. When Commerce assigned Iceman Group a separate rate, Iceman Group filed no
response. This behavior, among other evidence, reasonably led Commerce to find that Iceman
Group and Iceman Food described the same company.9
After having long acquiesced in Commerce’s misconception, Iceman Group claimed after
the Final Results that assigning Iceman Group a separate rate was a ministerial error. Iceman
Group was in an awkward position to make this claim, though, because Commerce merely
complied with Iceman Group’s own request for a separate rate. Indeed, Iceman Group did not
explain how Commerce’s alleged ministerial error fit the legal definition of that term, and
Commerce found that it did not. See Amended Final Results, 76 Fed. Reg. at 70,113.
Even assuming that Iceman Group raised an actual ministerial error, Commerce does not
abuse its discretion when it declines to correct a ministerial error that was reflected in a review’s
preliminary results and that no one challenged. See QVD Food, 658 F.3d at 1328. In these
Preliminary Results, Commerce published a separate rate for Iceman Group. At that point,
Iceman Group was conclusively on notice of Commerce’s belief that Iceman Group was the
same entity as Iceman Food. Since it did not challenge the appropriateness of the rate at that
juncture, Commerce did not commit reversible error by not correcting the mistake later. See id.9
Though not on the record in the review, Iceman Group admits in briefing before the court that Iceman
Food is the company’s former name. See Pls.’ Br. 26 n. 2.
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The court is not persuaded that relevant law compels a different result. 19 U.S.C.
§ 1675(a) requires only that Commerce publish notice of reviews in the Federal Register, but
neither mandates the substance of the notice nor prescribes a particular method for assessing
final duties on unreviewed entries. Commerce established its own method for assessing duties
on non-reviewed entries in 19 C.F.R. § 351.212(c). Notably, though, that regulation was chiefly
designed to “reduce the administrative burden on [Commerce] of automatically reviewing every
outstanding order,” not to benefit respondents. See H.R. Rep. No. 98-725, at 22–23 (1984),
reprinted in 1984 U.S.C.C.A.N. 5127, 5149.
Critical to the outcome here, this is not a case where Commerce omitted a company from
an initiation notice and that company did not participate because it believed it was excluded from
the review. It would be unlawful to bind an unsuspecting company in that scenario, as the
company would not have notice or “recourse to protect itself against an unfavorable antidumping
duty.” See Transcom, Inc. v. United States, 294 F.3d 1371, 1379 (Fed. Cir. 2002).10 The facts
here are different. Iceman Group clearly knew that it was the intended subject of the review.
That knowledge led Iceman Group to seek and receive a separate rate in its own name.
Consequently, Iceman Group cannot seriously claim that its inclusion in the review “c[a]me as a
surprise,” nor can it somehow allege that it was unable to protect its interests. See id.; accord
UCF Am. Inc. v. United States, 18 CIT 1074, 1081, 870 F. Supp. 1120, 1126 (1994) (upholding
Commerce’s inclusion of non-named companies when companies “were afforded an opportunity
10
In Transcom, 294 F.3d at 1378, the Federal Circuit interpreted the statutory and regulatory provisions to
require “that ‘any reasonably informed party should be able to determine, from the published notice of initiation
read in light of announced Commerce Department policy, whether particular entries in which it has an interest may
be affected by the administrative review.’” (citation omitted). The court elaborated that the underlying purpose of
the notice provisions is to “provide[] notice that the exporters’ interests might be affected” so that an exporter can
protect its interests by proving its entitlement to a separate rate. Id. at 1379. In this case, the notice of initiation
itself may have been deficient. Nonetheless, that deficiency did not prejudice Iceman Group, as it believed it was
covered by the review and ultimately received a separate rate.
Court No. 11-00411 Page 26
to defend their interests” and therefore “suffered no prejudice”). Cf. Sigma Corp. v. United
States, 17 CIT 1288, 1298, 841 F. Supp. 1255, 1264 (1993) (ordering assessment at cash deposit
rate at entry because company did not know it was being reviewed and did not participate).11
C. Commerce’s separate rate calculation methodology was not supported by
substantial evidence
As an alternative claim, Iceman Group (joined by Golden Banyan) alleges that
Commerce unlawfully included mandatory respondent Jisheng’s 266.13% margin in its separate
rate calculations.12 Iceman Group and Golden Banyan also argue that Commerce’s separate rates
were not supported by substantial evidence even if it were proper to include Jisheng’s margin.
Specifically, Iceman Group and Golden Banyan claim that Commerce did not explain how the
separate rate reasonably reflected those companies’ commercial activities, and that Commerce’s
failure rendered the Amended Final Results unsupported by substantial evidence.
i. Factual background
To calculate Golden Banyan’s and Iceman Group’s separate rates, Commerce followed
its normal practice of weight averaging the margins of the three mandatory respondents in this
case. Because none of the mandatory respondents received zero, de minimis, or “entirely” facts
available margins, the Department included all three rates in its calculations. See Final Results,
76 Fed. Reg. at 56,733 (following framework in 19 U.S.C. § 1673d(c)(5)(A)). The final separate
rate was 76.12%, the weighted average of Blue Field’s 2.17% margin, XITIC’s 13.12% margin,
11
The court is equally unpersuaded that Commerce’s practice requires a different result. Initially, what
Commerce did in a subsequent review of this order is not binding in the present review. See U.S. Steel Corp. v.
United States, 33 CIT 984, 1003, 637 F. Supp. 2d 1199, 1218 (2009). Moreover, the proceedings that Iceman Group
cites to establish Commerce’s prior practice are inapposite. See Pls.’ Br. 32. Those proceedings simply do not
mirror the facts of the case at bar.
12
Iceman Group and Golden Banyan did not raise this issue before the agency because Jisheng’s margin
did not exceed the PRC-wide rate until the Final Results. Because the basis for their claim did not arise until after
the Final Results, Iceman Group and Golden Banyan are not precluded from raising the issue here. See, e.g., U.S.
Magnesium LLC v. United States, 31 CIT 988, 990 (2007).
Court No. 11-00411 Page 27
and Jisheng’s 266.13% margin. See id. (containing final margins for XITIC and Jisheng);
Amended Final Results, 76 Fed. Reg. at 70,113 (containing final margin for Blue Field).
Jisheng’s 266.13% margin was based on partial, but not total, AFA. Preliminary Results,
76 Fed. Reg. at 12,709–10. Nonetheless, the PRC-wide rate for the review period was a
comparatively smaller 198.63%. Id. at 12,710. The PRC-wide rate is typically based on total
AFA, and it appears that was true here. See Yangzhou Bestpak, 716 F.3d at 1373; Certain
Preserved Mushrooms from the People’s Republic of China, 71 Fed. Reg. 64,930, 64,933 (Dep’t
Commerce Nov. 6, 2006) (prelim. admin. review) (noting PRC-wide rate based on total AFA).
ii. Commerce did not support its methodology with substantial evidence
The question before the court is whether Commerce could reasonably interpret 19 U.S.C.
§ 1673d(c)(5) to permit Commerce’s methodology in this case. Because § 1673d(c)(5)
establishes procedures for calculating an all others rate in market economy investigations, it does
not speak directly to calculating a separate rate in NME reviews. See Chevron, 467 U.S. at 842.
Nonetheless, Commerce has consistently applied that statute’s framework when determining
separate rates, apparently equating the all others rate with separate rates in the NME context.
The Federal Circuit has implicitly accepted Commerce’s practice. See, e.g., Yangzhou Bestpak,
716 F.3d at 1377–38 (analyzing Commerce’s separate rate calculations under § 1673d(c)(5)).
Since there is no statute or regulation directly on point, “Commerce has a measure of
discretion in determining what methodology to employ.” Albemarle Corp. v. United States, 37
CIT __, __, 931 F. Supp. 2d 1280, 1291 (2013). Here, Commerce applied the “[g]eneral rule”
for calculating the all others rate. See 19 U.S.C. § 1673d(c)(5)(A). That general rule sets the all
others rate at “an amount equal to the weighted average of the estimated weighted average
dumping margins established for exporters and producers individually investigated, excluding
Court No. 11-00411 Page 28
any zero and de minimis margins, and any margins determined entirely under” the facts available
statute. Id.
Section 1673d(c)(5)(A) only requires the exclusion of margins determined “entirely”
under facts available or AFA and is silent with regard to partial AFA rates. As a result,
Commerce could have reasonably interpreted the statutory language to allow the inclusion of
partial AFA margins in some circumstances. See Chevron, 467 U.S. at 843 (requiring deference
to an agency’s reasonable construction of ambiguous statute).
Nonetheless, “it is possible for the application of a particular methodology to be
unreasonable in a given case.” Yangzhou Bestpak, 716 F.3d at 1378 (quoting Thai Pineapple
Canning Indus. Corp. v. United States, 273 F.3d 1077, 1085 (Fed. Cir. 2001)). Moreover,
Commerce may not rely on a literal interpretation of the statute “at the expense of the reason of
the law and producing absurd consequences.” Sorrells v. United States, 287 U.S. 435, 446
(1932). The court is concerned that Commerce’s mechanical application of § 1673d(c)(5) in this
case undercut the actual purpose behind that statutory subsection and antidumping law
generally—that is, to calculate dumping margins as accurately as possible. See, e.g., Yangzhou
Bestpak, 716 F.3d at 1379.
The two fully cooperative mandatory respondents in this case—Blue Field and XITIC—
received rates of 2.17% and 13.12%. By contrast, Commerce assigned Jisheng a partial AFA
rate of 266.13%. That rate is over 250% greater than the rates assigned to Blue Field and XITIC,
and it is also substantially higher than the 198.63% PRC-wide total AFA rate. Commerce would
not have included the 198.63% figure in its separate rate calculations, as the statute expressly
excludes total AFA margins. It is unclear how the inclusion of a figure 67.5% higher than that
and over 250% higher than rates assigned to other mandatory respondents is less distortional.
Court No. 11-00411 Page 29
The Federal Circuit recently found that “rate determinations for nonmandatory,
cooperating separate rate respondents must . . . bear some relationship to their actual dumping
margins.” Id. at 1380. Because Commerce did not even address the seemingly anomalous result
flowing from its separate methodology in this case, the court cannot find that Commerce
“articulate[d] a satisfactory explanation for its action.” See id. at 1378. Therefore, Commerce
did not support its calculations with substantial record evidence and remand is appropriate for
additional investigation or explanation. See id. at 1380.
Although the Government argues that Commerce did not need to explain how Iceman
Group’s and Golden Banyan’s margins reflected their commercial activities, the court disagrees.
The Government asserts that the requirement that separate rates reasonably reflect dumping
margins “attaches only when the record yields only zero or de minimis rates, or rates based
entirely on facts otherwise available.” Def.’s Br. 49. In support of its argument, the Government
cites the Statement of Administrative Action (“SAA”) accompanying the Uruguay Round
Agreements Act. See H.R. Rep. No. 103-316 (1994), reprinted in 1994 U.S.C.C.A.N. 4040.
In discussing § 1673d(c)(5), the SAA notes that the “general rule” is that Commerce will
employ the procedure that it used in this case. See id. at 4201. If all mandatory respondent
margins are zero, de minimis, or based on total AFA, the statute contemplates an alternative
method of weight averaging those margins. Id. But if that alternative method “results in an
average that would not be reasonably reflective of potential dumping margins for non-
investigated exporters or producers,” Commerce should use another reasonable method. Id.
According to the Government, if Commerce applies the general rule (i.e., weight
averages all margins that are not zero, de minimis, or based on total facts available), it
need not consider whether the resulting rate reasonably reflects potential dumping
Court No. 11-00411 Page 30
margins for separate rate respondents. Def.’s Br. 49. While this is correct as a general
rule, it is nonetheless illogical not to expect that the preferred methodology should also
reasonably reflect potential dumping margins. Consequently, where the data used clearly
indicates an unexplained anomaly, Commerce must articulate a reasonable basis for its
use of the anomalous result. Because the circumstances here strongly suggest that
application of the preferred methodology does not reflect dumping margins (and indeed
thwarts the statute’s intended purpose), Commerce must explain why its actions are based
on a reasonable reading of the record.
CONCLUSION AND ORDER
For the foregoing reasons, the court concludes that Commerce must reconsider (1) the
surrogate values it applied to XITIC’s inputs of lime and mushroom spawn; and (2) the
methodology it used to calculate separate rates in this review. The court also grants Commerce’s
request for a voluntary remand to recalculate XITIC’s surrogate labor rate and financial ratios.
Upon consideration of all papers in proceedings in this case and upon due deliberation, it
is hereby
ORDERED that the Final Results and Amended Final Results be, and hereby are,
REMANDED to Commerce for reconsideration and redetermination in accordance with this
Opinion and Order; it is further
ORDERED that Plaintiffs’ Rule 56.2 Motion for Judgment on the Agency Record be,
and hereby is, GRANTED as provided in this Opinion and Order; it is further
ORDERED that Commerce shall reconsider its decision to use GTA data for Indian HTS
subheading 2522.20 as a surrogate value for lime, and in doing so, must determine whether such
surrogate represents the “best available information” on the record in accordance with 19 U.S.C.
§ 1677b(c)(1), as compared with alternative surrogates in the record; it is further
ORDERED that Commerce shall reconsider its decision to use GTA data for Indian HTS
subheading 0602.90.10 as a surrogate value for mushroom spawn, and in doing so, must
determine whether such surrogate represents the “best available information” on the record in
Court No. 11-00411 Page 31
accordance with 19 U.S.C. § 1677b(c)(1), as compared with alternative surrogates in the record;
it is further
ORDERED that Commerce shall employ its revised labor methodology to recalculate
XITIC’s surrogate labor rate and financial ratios and, if appropriate, adjust the financial ratios; it
is further
ORDERED that Commerce shall explain whether the separate rates assigned to Iceman
Group and Golden Banyan reasonably reflect the companies’ potential dumping margins and, if
warranted, redetermine those rates; and it is further
ORDERED that Commerce shall have ninety (90) days from the date of this Opinion and
Order in which to file its Remand Redetermination, which shall comply with all directives in this
Opinion and Order; that Plaintiffs shall have thirty (30) days from the filing of the Remand
Redetermination in which to file comments thereon; and that the Defendant shall have thirty (30)
days from the filing of Plaintiffs’ comments to file comments.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Dated:
New York, New York