CS Wind Viet. Co. v. United States

• Decision Date: 12 August 2016
• Docket Number: 2015-1850
• Citation: 832 F.3d 1367
• Parties: CS Wind Vietnam Co., Ltd., CS Wind Corporation, Plaintiffs-Appellants v. United States, Wind Tower Trade Coalition, Defendants-Appellees
• Court: U.S. Court of Appeals — Federal Circuit

832 F.3d 1367

CS Wind Vietnam Co., Ltd., CS Wind Corporation, Plaintiffs-Appellants

v.United States, Wind Tower Trade Coalition, Defendants-Appellees

2015-1850

United States Court of Appeals, Federal Circuit.

Decided: August 12, 2016

Ned H. Marshak , Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, New York, NY, argued for plaintiffs-appellants. Also represented by Bruce M. Mitchell ; Dharmendra Narain Choudhary , Kavita Mohan , Andrew Thomas Schutz , Washington, DC; Andrew Schroth , Hong Kong, China.

Joshua E. Kurland , Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee United States. Also represented by Benjamin C. Mizer , Jeanne E. Davidson , Reginald T. Blades, Jr .

Robert E. DeFrancesco III, Wiley Rein, LLP, Washington, DC, for defendant-appellee Wind Tower Trade Coalition. Also represented by Daniel B. Pickard , Derick Holt , Usha Neelakantan .

Before Prost, Chief Judge, Taranto and Chen, Circuit Judges.

Taranto, Circuit Judge.

The Commerce Department determined that a Vietnamese manufacturer of wind towers was selling its products in the United States at about 51.5% below normal value, a figure that Commerce calculated using methods made applicable by statute when imported goods come from a nonmarket economy, as the wind towers at issue here do. The company challenges three aspects of Commerce's calculation upheld by the Court of International Trade: Commerce's selection of data to determine the weight of the manufacturer's products; Commerce's presumption-based premise that the company's supplier received subsidies from the Korean government; and Commerce's calculation of certain overhead expenses for inclusion in the base of costs that go into normal value. We reverse as to Commerce's weight calculation; affirm as to Commerce's treatment of Korean subsidies; and vacate and remand as to Commerce's overhead-expense calculation.

BACKGROUND

A

In December 2011, the Wind Tower Trade Coalition petitioned the Department of Commerce to impose antidumping duties under 19 U.S.C. § 1673 et seq. on wind towers imported into the United States from Vietnam. See Utility Scale Wind Towers From the People's Republic of China and the Socialist Republic of Vietnam, 77 Fed. Reg. 3,440, 3,440 (Dep't of Commerce Jan. 24, 2012). The Coalition alleged that such imported towers were being sold in the United States at less than fair value. Id. The Commerce Department conducted an investigation into whether, in particular, CS Wind Vietnam was engaged in such dumping.¹ As relevant here, CS Wind produces wind towers in Vietnam and ships them in sections to the United States, where they are assembled and erected. J.A. 73; Utility Scale Wind Towers from China & Vietnam, Inv. No. 701–TA–486, 2013 WL 1155424, at *5 (USITC Feb. 2013).

As part of its investigation, Commerce calculated the “normal value,” i.e. , the price at which the product is sold or offered for sale in the exporting country. 19 U.S.C. § 1677b(a)(1)(B). If the normal value exceeds the price at which the product is sold in the United States, and other required findings are made, Commerce is to make a finding of dumping and impose a duty based on the difference—the dumping margin. Id. §§ 1673, 1677(35)(A); see Dorbest Ltd. v. United States , 604 F.3d 1363, 1367 (Fed. Cir. 2010) ; Ningbo Dafa Chem. Fiber Co., Ltd. v. United States , 580 F.3d 1247, 1250 (Fed. Cir. 2009). In percentage terms based on export prices for the towers shipped to the U.S., Commerce calculated a 51.5% “weighted average dumping margin” for CS Wind. 19 U.S.C. § 1677(35)(B) ; Utility Scale Wind Towers From the Socialist Republic of Vietnam: Final Determination of Sales at Less Than Fair Value, 77 Fed. Reg. 75,984, 75,988 (Dep't of Commerce Dec. 26, 2012) (2012 Final Determination ).

It is undisputed here that Vietnam has a “nonmarket economy,” in which prices “do not reflect the fair value of the merchandise.” 19 U.S.C. § 1677(18)(A). Because CS Wind operated in a nonmarket economy, Commerce calculated the normal value pursuant to 19 U.S.C. § 1677b(c)'s special rules for such economies. See Dorbest , 604 F.3d at 1367 (describing such rules). Under those rules, Commerce was to calculate a normal value for the wind towers based on the “value of the factors of production utilized in producing the merchandise” plus “an amount for general expenses and profit plus the cost of containers, coverings, and other expenses”; and “the valuation of the factors of production” was to be “based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate.” 19 U.S.C. § 1677b(c)(1). Commerce was to use, “to the extent possible, the prices or costs of factors of production in one or more market economy countries that are—(A) at a level of economic development comparable to that of the nonmarket economy country, and (B) significant producers of comparable merchandise.” Id. § 1677b(c)(4). The object, under that approach, is “to construct a hypothetical normal value for the merchandise that is uninfluenced by the nonmarket economy.” Jiaxing Brother Fastener Co. v. United States , 822 F.3d 1289, 1292 (Fed. Cir. 2016) ; see Downhole Pipe & Equip., L.P. v. United States , 776 F.3d 1369, 1375 (Fed. Cir. 2015). Here, Commerce used “surrogate values” from India, a market economy, to calculate values for various elements of the normal value of CS Wind's towers. J.A. 1298–99.

Three of Commerce's determinations are pertinent to the present appeal. First, after translating certain Indian prices into U.S. dollars per kilogram, Commerce had to multiply that per-kilogram price by the weight (in kilograms) of the CS Wind components. In arriving at the weight of CS Wind's products, Commerce decided not to use the weights CS Wind reported for its various factors of production. Instead, it used the weights indicated on certain packing slips prepared by one of CS Wind's customers for the necessary transocean shipping of the sections of the towers. J.A. 126–27. CS Wind challenges that decision.

Second, for certain components, i.e. , flanges, welding wire, and wire flux inputs, CS Wind asked Commerce to use the actual prices CS Wind paid for them when buying them from a manufacturer in Korea—a market economy. Commerce denied the request. Based on a determination in earlier proceedings that certain goods exported from Korea are eligible for subsidies, Commerce presumed that CS Wind's purchases benefited from such subsidies, and it then found that CS Wind had provided insufficient evidence to rebut the presumption. J.A. 65–68. Commerce therefore used Indian surrogate values for the prices of those components, rather than the prices CS Wind actually paid. CS Wind challenges that decision.

Third, Commerce used the financial statements of an Indian company, Ganges International, which sells identical and comparable wind towers, J.A. 50, to calculate the required contribution to normal value from, in particular, “general expenses,” 19 U.S.C. § 1677b(c)(1) —here, overhead, selling, general, and administrative expenses (which, following Commerce's usage, we call “overhead” for short). J.A. 220–21. One of the Ganges-reported expense line items that Commerce included in overhead was “Jobwork Charges (including Erection and Civil Expenses).” J.A. 737, 204. The following meanings of those terms are not disputed before us. Firm A incurs “jobwork” expenses when it pays Firm B to provide manufacturing services for A (presumably, therefore, working with raw materials A has supplied to B), with the resulting manufactured goods then transferred to A for A to sell. In the wind-tower setting, “erection and civil” expenses are payments for preparing the foundation on which to set a tower (“civil”) and for setting up the tower on the foundation (“erection”)—which we infer are payments to outsiders where, as here, they are listed as “includ[ed]” in “jobwork.” See CS Wind Br. 49 (quoting J.A. 1712); U.S. Br. 7 n.2; J.A. 221, 740.

(We may refer to the two activities together as “tower setup.”)

CS Wind asked Commerce to reduce the 212,380,751 rupee figure for those jobwork expenses by certain income amounts for what CS Wind alleges are corresponding items, namely, “Erection income” (90,856,566 rupees) and “Civil income” (51,931,347 rupees)—totaling 142,787,913 rupees—which Ganges reported as income separate from the income from its “Sales.” J.A. 733. CS Wind's request would have resulted in including only 69,592,838 rupees of Jobwork Charges in overhead (212,380,751 minus 142,787,913), but Commerce denied the request. Instead, it reduced the “Jobwork Charges (including Erection and Civil Expenses)” only by the tiny amount (2,085,029 rupees) of Ganges-reported income for “Sales—Jobwork,” J.A. 736.² Commerce thus included 210,295,722 rupees of “Jobwork Charges (including Erection and Civil Expenses)” as overhead in calculating normal value. See J.A. 221–22.

In response to CS Wind's challenge to that decision in the present litigation, Commerce eventually adopted a different approach to deciding what amount of the “Jobwork Charges (including Erection and Civil Expenses)” to include in overhead. In some but not all of its descriptions, Commerce characterized its new approach as trying, like CS Wind's approach, to exclude from overhead costs the portion of the “Jobwork Charges (including Erection and Civil Expenses)” line item that were tied to erection and civil income . J.A. 161, 175. But whereas CS Wind did so by simply subtracting the “Erection income” and “Civil income” amounts, Commerce sought to achieve a similar goal by a more complex ratio calculation, using certain aspects of the income and expense sides of the financial statements. Commerce's final approach reduced the 212,380,751 rupees of “Jobwork Charges (including Erection and Civil Expenses)” by 8.62%. J.A. 209. The result was to include more than...