Jiangsu Zhongji Lamination Materials Co. v. United States

Decision Date15 August 2019
Docket NumberSlip Op. 19-111,Court No. 18-00091
Citation396 F.Supp.3d 1334
Parties JIANGSU ZHONGJI LAMINATION MATERIALS CO., (HK) LTD., Jiangsu Zhongji Lamination Materials Co., Ltd., Jiangsu Zhongji Lamination Materials Stock Co., Ltd. and Jiangsu Huafeng Aluminium Industry Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant, and Aluminium Association Trade Enforcement Working Group and its individual members, Defendant-Intervenors.
CourtU.S. Court of International Trade

James C. Beaty and Sarah M. Wyss, Mowry & Grimson, PLLC, of Washington, DC, argued for plaintiff. With them on the brief were Jeffrey S. Grimson and Jill A. Cramer.

Aimee Lee, Senior Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director. Of counsel on the brief was Khalil N. Gharbieh, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

John H. Herrmann and Joshua R. Morey, Kelley Drye & Warren, LLP, of Washington, DC, argued for defendant-intervenors. With them on the brief were Paul C. Rosenthal, Kathleen W. Cannon, and Grace W. Kim.

OPINION

Katzmann, Judge:

This case involves a challenge to the Department of Commerce's ("Commerce") selection of surrogate values for exports from a nonmarket economy in an antidumping duty investigation. Plaintiff Jiangsu Zhongji Lamination Materials Company ("Zhongji"), a mandatory respondent in Commerce's investigation on aluminum foil from the People's Republic of China ("PRC"), appeals Commerce's dumping margin determination to this court. Specifically, Zhongji argues that Commerce erred in: (1) selecting South Africa rather than Bulgaria as the primary surrogate country to value respondents' inputs; (2) relying on inferior data when valuing international freight; (3) valuing Zhongji's aluminum scrap using the incorrect Harmonized Tariff Schedule ("HTS") classification; (4) calculating Zhongji's value-added tax ("VAT") adjustment based on the wrong transaction; and (5) deferring its preliminary determination beyond the statutory deadline. The court grants Commerce's request for a remand to reassess its VAT calculation and sustains Commerce's determinations on all other issues.

JURISDICTION AND STANDARD OF REVIEW

This court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2)(B)(i). The standard of review in antidumping duty proceedings is set forth in 19 U.S.C. § 1516a(b)(1)(B)(i) : "[t]he Court shall hold unlawful any determination, finding, or conclusion" of Commerce that is "unsupported by substantial evidence on the record, or otherwise not in accordance with law."

BACKGROUND
I. Legal and Regulatory Framework for Surrogate Value Selections.

Dumping occurs when a foreign company sells a product in the United States for less than "fair value" – that is, for a lower price than in its home market. Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046 (Fed. Cir. 2012). To prevent dumping, Congress enacted the Tariff Act of 1930 ("Act"), which empowered Commerce to investigate the extent to which an imported product is being dumped and impose offsetting duty rates. Id. at 1047. The Act allows various interested parties, including domestic trade or business associations in the affected industry, to petition Commerce to initiate an antidumping duty investigation. 19 U.S.C. §§ 1673a(b)(1), 1677(9)(E)(F).

Once Commerce has initiated an investigation, it determines whether dumping is occurring by comparing the export price of the merchandise in question with the "normal value" of the merchandise when it is sold for consumption in the exporting country. 19 U.S.C. § 1677b(a)(1)(B)(i). If the subject merchandise is exported from a nonmarket economy country and Commerce finds that available information is therefore insufficient for a standard normal value calculation, Commerce values the merchandise using surrogate values for "the factors of production utilized in producing the merchandise" and "an amount for general expenses and profit plus the cost of containers, coverings, and other expenses." 19 U.S.C. § 1677b(c)(1)(B). Factors of production include labor, raw materials, energy and other utilities, and representative capital costs including depreciation. 19 U.S.C. § 1677b(c)(3)(A)(D).

To select a market economy country from which it will draw surrogate values, Commerce first requests that its Enforcement and Compliance Office of Policy assemble a list of countries that are, "to the extent possible," (A) "at a level of economic development comparable to that of the nonmarket economy country," and (B) "significant producers of comparable merchandise." 19 U.S.C. § 1677b(c)(4)(A)(B). Commerce has the discretion to "mix and match" surrogate country values with more accurate market-based values to the extent the latter are available in the exporting country, Lasko Metal Prods. v. United States, 16 C.I.T. 1079, 810 F. Supp. 314, 316 (1992), aff'd 43 F.3d 1442 (Fed. Cir. 1994), but Commerce normally prefers to value all factors in a single surrogate country. 19 C.F.R. § 351.408(c)(2) ; see also Jiaxing Bro. Fastener Co. v. United States, 822 F.3d 1289, 1302 (Fed. Cir. 2016) (finding no error in Commerce basing its decision on a preference for a single surrogate when multiple surrogates' data is otherwise equally usable); Clearon Corp. v. United States, 2013 Ct. Intl. Trade LEXIS 27 at *20–21, 2013 WL 646390 (Feb. 20, 2013) (finding that Commerce's preference for a single surrogate country is reasonable because it "limits the amount of distortion introduced into its calculations").

When several countries meet these threshold criteria, Commerce decides which among them offers the "best factors data" with preference for the following: "investigation or review period-wide price averages, prices specific to the input in question, prices that are net of taxes and import duties, prices that are contemporaneous with the period of investigation or review, and publicly available data." Policy Bulletin 04.1: Non-Market Economy Surrogate Country Selection Process (Mar. 1, 2004) (available at: http://enforcement.trade.gov/policy/bull04-1.html) (hereinafter "Policy Bulletin 04.1").

Statute requires Commerce to value a respondent's factors of production using the "best available information." 19 U.S.C. 1677b(c)(1)(B). "Commerce has broad discretion to determine what constitutes the best available information, as this term is not defined by statute." Qingdao Sea-Line Trading Co. v. United States, 766 F.3d 1378, 1386 (Fed. Cir. 2014) ; see also QVD Food Co. v. United States, 658 F.3d 1318, 1323 (Fed. Cir. 2011). The data selected need not be perfect. Home Meridian Int'l, Inc. v. United States, 772 F.3d 1289, 1296 (Fed. Cir. 2014).

In reviewing Commerce's choice of information, "[the] court's duty is ‘not to evaluate whether the information Commerce used was the best available, but rather 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) (quoting Goldlink Indus. Co. v. United States, 30 C.I.T. 616, 619, 431 F. Supp. 2d 1323, 1327 (2006) ). The reviewing court must consider "the record as a whole, including that which ‘fairly detracts from its weight,’ " Nippon Steel Corp. v. United States, 458 F.3d 1345, 1351 (Fed. Cir. 2006) (quoting Universal Camera v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) ), and must affirm Commerce's conclusion "if it is reasonable and supported by the record as a whole, even if some evidence detracts from the [agency]'s conclusion." Id. at 1352 (quoting Altx, Inc. v. United States, 370 F.3d 1108, 1121 (Fed. Cir. 2004) ).

II. Factual and Procedural History of the Antidumping Order
A. Petition and Selection of Respondents

Commerce received an antidumping duty petition concerning imports of certain aluminum foil from the PRC, filed on behalf of the Aluminum Association Trade Enforcement Working Group and its individual members ("Defendant-Intervenors"). See Letter on Behalf of Petitioners to the Dep't re: Petitions for the Imposition of Antidumping and Countervailing Duties (Mar. 9, 2017), P.R. 1–11. In response, Commerce initiated an antidumping duty investigation on aluminum foil from the PRC. See Certain Aluminum Foil from the People's Republic of China: Initiation of Less-Than-Fair-Value Investigation, 82 Fed. Reg. 15,691 (Dep't Commerce Mar. 30, 2017), P.R. 35. After receiving responses to a quantity and value questionnaire from 26 companies, Commerce selected Zhongji as one of three mandatory respondents1 for individual examination. See Mem. re: Respondent Selection (May 22, 2017), P.R. 177. The other mandatory respondents were Dingsheng Aluminum Industries (Hong Kong) Trading Co. Ltd. and Hangzhou Dingsheng Import & Export Co. Ltd. (collectively, "Dingsheng"). Id.

B. Comments on Surrogate Value Selection

Commerce entered into the record a list of six market economy countries satisfying the threshold criteria of 19 U.S.C. § 1677b(c)(4) : Brazil, Mexico, Romania, Bulgaria, South Africa, and Thailand (collectively, "list countries"). See Mem. to Michael J. Heaney from Carole Showers re: Request for List of Surrogate Countries (May 23, 2017), P.R. 182. Commerce invited interested parties to submit comments concerning the selection of the primary surrogate country, whether other countries should be considered, and the selection of information to value the respondents' factors of production. See Letter re: Request for Economic Development, Surrogate Country, and Surrogate Value Comments and Information (May 24, 2017), P.R. 181.

Parties submitted comments on Commerce's selection of the primary surrogate country. Zhongji suggested that other countries besides...

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