Jiangsu Zhongji Lamination Materials Co., (HK) v. United States

• Docket Number: 21-00138,Slip Op. 23-84
• Decision Date: 07 June 2023
• Parties: JIANGSU ZHONGJI LAMINATION MATERIALS CO., (HK) LTD., et al., Plaintiffs, v. UNITED STATES, Defendant, and ALUMINUM ASSOCIATION TRADE ENFORCEMENT WORKING GROUP AND ITS INDIVIDUAL MEMBERS, et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

1

JIANGSU ZHONGJI LAMINATION MATERIALS CO., (HK) LTD., et al., Plaintiffs, v. UNITED STATES, Defendant, and ALUMINUM ASSOCIATION TRADE ENFORCEMENT WORKING GROUP AND ITS INDIVIDUAL MEMBERS, et al., Defendant-Intervenors.

No. 21-00138

Slip Op. 23-84

Court of Appeals of International Trade

June 7, 2023

[The court denies Plaintiffs' motion for judgment on the agency record, sustains the Department of Commerce's determination, and grants judgment on the agency record to Defendant and Defendant-Intervenors.]

Jeffrey S. Grimson, Sarah M. Wyss, Bryan P. Cenko, and Wenhui "Flora" Ji, Mowry & Grimson, PLLC, of Washington, DC, on the papers for Plaintiffs.

Brian M. Boynton, Acting Assistant Attorney General; Patricia M McCarthy, Director; Reginald T. Blades, Jr., Assistant Director; and Catharine M. Parnell, Trial Attorney, Civil Division, U.S. Department of Justice of Washington, DC, on the papers for Defendant. Of counsel for Defendant was JonZachary Forbes, Staff Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce of Washington, DC.

John M. Herrmann, Paul C. Rosenthal, Joshua R. Morey, and Grace W Kim, Kelley Drye & Warren LLP of Washington, DC, on the papers for Defendant-Intervenors.

Baker Judge:

A Chinese aluminum foil producer challenges the Department of Commerce's imposition of antidumping duties in an administrative review based on the Department's calculation of surrogate values, denial of a double remedies adjustment, and liquidation instructions. Finding it supported by substantial evidence, the court sustains the determination.

Before: M. Miller Baker, Judge.

OPINION

M. Miller Baker, Judge.

I

A

An antidumping duty represents the amount by which the "normal value" of subject merchandise exceeds its "export price." 19 U.S.C. § 1673. If an investigation involves a non-market economy such as China, then Commerce determines normal value using surrogate values for "the factors of production utilized in producing the merchandise," along with "an amount for general expenses and profit plus the cost of containers, coverings, and other expenses." Id. § 1677b(c)(1).

"In selecting surrogate values, Commerce 'attempts to construct a hypothetical market value of [the subject merchandise] in the [nonmarket economy].'" Changzhou Trina Solar Energy Co. v. United States, 975 F.3d 1318, 1330 (Fed. Cir. 2020) (first alteration in original) (quoting Downhole Pipe &Equip., L.P. v. United States, 776 F.3d 1369, 1375 (Fed. Cir. 2015)). The Department values factors of production, "to the extent possible," using data from surrogate countries that have market economies and that are (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).

By statute, the Department must value factors of production using the "best available information regarding the values of such factors in a market economy country or countries considered" appropriate. Id. § 1677b(c)(1); see also Seah Steel VINA Corp. v. United States, 950 F.3d 833, 842 (Fed. Cir. 2020); Dorbest Ltd. v. United States, 462 F.Supp.2d 1262, 1268 (CIT 2006). Because the statute is silent about what constitutes the "best available information," Commerce has "broad discretion" in deciding what record evidence meets the criteria. Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333, 1341 (Fed. Cir. 2011); Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1377 (Fed. Cir. 1999). "Commerce's analysis when selecting the 'best available information' on the record inherently involves a comparison of the competing data sources to identify what available information is 'best' to value factors of production ...." Weishan Hongda Aquatic Food Co. v. United States, 917 F.3d 1353, 1367 (Fed. Cir. 2019) (citing 19 U.S.C. § 1677b(c)(1)); see also Ass'n of Am. Sch. Paper Suppliers v. United States, 716 F.Supp.2d 1329, 1334 (CIT 2010).

In practice, the Department selects surrogate values that are product-specific, representative of a broad market average, publicly available, contemporaneous with the review period, and exclusive of tax and duty. See Import Administration Policy Bulletin 04.1, NonMarket Surrogate Country Selection Process at 4 (Mar. 1, 2004) (Policy Bulletin);^[1] Jiaxing Brother Fastener Co. v. United States, 822 F.3d 1289, 1294 (Fed. Cir. 2016) (citing 19 C.F.R. § 351.408(c)(2)); see also Changzhou Trina Solar, 975 F.3d at 1331.

Commerce's data need not be perfect. Jiaxing, 822 F.3d at 1301. And the Department need not duplicate a manufacturer's precise experience. See Nation Ford, 166 F.3d at 1377. Instead, it seeks information that "most accurately represents the fair market value." Id. at 1377.

B

The antidumping statute requires the Department to avoid imposing a double remedy when it simultaneously imposes countervailing duties and antidumping duties based on its non-market economy calculation methodology. See 19 U.S.C. § 1677f-1(f). This issue arises in non-market economy cases because the use of surrogate values-that is, values from countries other than the non-market economy country at issue- means that a countervailable subsidy "is not embedded in the price used as normal value. Consequently, the subsidy could potentially be remedied both by the [countervailing duty] and by the [antidumping duty]." Vicentin S.A.I.C. v. United States, 404 F.Supp.3d 1323, 1339 n.26 (CIT 2019).

In applying § 1677f-1(f), the Department examines (1) whether a countervailable subsidy has been provided; (2) whether that subsidy has been shown to have reduced the average price of imports during the relevant period; and (3) whether Commerce can reasonably estimate the extent to which that countervailable subsidy, in combination with the use of normal value determined under 19 U.S.C. § 1677b(c), has increased the weighted-average dumping margin for the class or kind of merchandise. Appx02468 (citing 19 U.S.C. § 1677f-1(f)(1)(A)-(C)). For a subsidy meeting these criteria, the statute requires the Department to reduce the antidumping rate by the estimated amount of the increase in the weighted-average dumping margin, subject to a specified cap. Id. (citing 19 U.S.C. § 1677f-1(f)(1)-(2)).

II

A

In 2019, Commerce opened the first administrative review of duties on aluminum foil from China covering November 2, 2017 through March 31, 2019. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 84 Fed.Reg. 27,587, 27,589 (Dep't Commerce June 13, 2019), Appx25964, Appx25966. The Department selected two mandatory respondents: (1) Jiangsu Zhongji Lamination Materials Co., (HK) LTD (Zhongji); and (2) Xiamen Xiashun Aluminum Foil Co. See Appx02464.

Zhongji submitted surrogate value comments recommending that the aluminum dross/ash produced as a byproduct in its aluminum foil production process should be classified under Harmonized Tariff Schedule (HTS) heading 7602.00.19. Appx28870. It also recommended classifying rolling oil and rolling oil additive it uses in its production of aluminum foil under HTS 2710.12.21. Appx28868. Finally, the company suggested using information from Xeneta AS, a Norwegian shipping company, or the Descartes Group, a Canadian logistics company, to calculate international freight costs. Appx01026; Appx02483.

As to double remedies, Zhongji argued that its material inputs are subsidized according to a countervailing duty determination by the Department, and that those subsidies lower its costs. Appx02489-02490. In connection with the second part of the statutory double remedy test, the company explained that the price of all its aluminum materials-inputs bought and foil sold-is directly related to the London Metal Exchange ingot price, which the company contends further showed that its aluminum prices declined during the review period. See Appx02490.

Zhongji then asked Commerce to modify its liquidation instructions. See generally Appx02488-02489. The company explained that some of its customers reinvoiced sales prior to import and thus the importer of record could differ from the final customer. Id. Consequently, it worried that U.S. Customs and Border Protection might liquidate its imports at the China-wide rate. Id. To avoid this, Zhongji requested that the Department insert the words "resold or imported" into the instructions. Appx02488.

B

Commerce published the preliminary results in June 2020 and calculated a dumping margin of zero percent for Zhongji. See Appx02465.

In the final determination, however, that rate changed to 23.62 percent. See Certain Aluminum Foil from the People's Republic of China: Final Results of Antidumping Duty Administrative Review; Final Determination of No Shipments; 2017-2019, 86 Fed.Reg. 11,499, 11,500 (Dep't Commerce Feb. 25, 2021), Appx3640. The final determination measured Zhongji's aluminum ash byproduct using the four-digit HTS code 2620. See Appx02485-02486. Commerce rejected the company's proposed HTS code 7602.00.19 concluding that at the four digit-level HTS 7602 correctly covers scrap, cuttings, and other byproducts, but not ash, and emphasized that because Zhongji reported its byproduct as "dross/ash," HTS 7602 was not the most specific category available. Appx02486.

The Department used HTS 3403.99 and HTS 3811.90 to value Zhongji's rolling oil and rolling oil additive, finding that the company's "description of these inputs available on the record is not sufficiently detailed to support selection of the eight-digit HTS categories" Zhongji recommended using instead. Appx02487; see also Appx01241, Appx01039. Commerce used Maersk data for international freight rather than data from Xeneta^[2] or...