Shenzhen Xinboda Indus. Co. v. United States

• Decision Date: 17 April 2020
• Docket Number: Slip Op. 20-50,Court No. 12-00174
• Citation: 456 F.Supp.3d 1272
• Parties: SHENZHEN XINBODA INDUSTRIAL CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and Fresh Garlic Producers Association, et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

456 F.Supp.3d 1272

SHENZHEN XINBODA INDUSTRIAL CO., LTD., Plaintiff,

v.UNITED STATES, Defendant,andFresh Garlic Producers Association, et al., Defendant-Intervenors.

Slip Op. 20-50

Court No. 12-00174

United States Court of International Trade.

April 17, 2020

Gregory S. Menegaz, Alexandra H. Salzman, and J. Kevin Horgan, deKieffer & Horgan, PLLC, of Washington, DC, for plaintiff Shenzhen Xinboda Industrial Co., Ltd.

Joseph H. Hunt, Assistant Attorney General, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With him on the brief were Jeanne E. Davidson, Director, Reginald T. Blades, Jr., Assistant Director, and Richard P. Schroeder, Trial Attorney. Of counsel was Brendan Saslow, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Michael J. Coursey and John M. Herrmann, Kelley Drye & Warren LLP, of Washington, DC, for defendant-intervenors Fresh Garlic Producers Association, Christopher Ranch L.L.C., The Garlic Company, Valley Garlic, and Vessey and Company, Inc.

OPINION AND ORDER

Kelly, Judge:

Before the court is Plaintiff Xinboda Industrial Co. Ltd.’s ("Xinboda") motion for judgment on the agency record challenging various aspects of the U.S. Department of Commerce's ("Department" or "Commerce") final results in the sixteenth administrative review of the antidumping duty ("ADD") order covering fresh garlic from the People's Republic of China ("PRC"). See [Pl.’s] Mot. J. Agency R., Aug. 30, 2019, ECF No. 45. See Fresh Garlic from the [PRC], 77 Fed. Reg. 34,346 (Dep't Commerce June 11, 2012) (final results of the 2009–2010 admin. review of the [ADD] order) ("Final Results"), and accompanying Issues and Decisions Memo. for the [Final Results ], A-570-831, (June 4, 2012), ECF No. 54 ("Final Decision Memo"); see also Fresh Garlic from the [PRC], 59 Fed. Reg. 59,209 (Dep't Commerce Nov. 16, 1994) ( [ADD] order) ("ADD Order").

Xinboda commenced this action pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012).¹ See Summons, June 21, 2012, ECF No. 1; Compl., June 27, 2012, ECF No. 10.² Xinboda challenges as unsupported by substantial evidence Commerce's selection of surrogate values ("SVs") for Xinboda's garlic bulb intermediate input as well as its selection of Tata Global Beverages Limited's ("Tata Tea") unconsolidated financial statements to calculate Xinboda's surrogate financial ratios. See Pl.’s Memo. Supp. Mot. J. Agency R. at 1–2, 14–44, Aug. 30, 2019, ECF No. 45-1 ("Pl.’s Br."). Defendant and Defendant-Intervenors Fresh Garlic Producers Association ("FGPA") and its individual members, Christopher Ranch L.L.C., The Garlic Company, Valley Garlic, and Vessey and Company, Inc., request that the court sustain the Final Results in its entirety. See Def.’s Resp. Pl.’s Mot. J. Agency R. at 1, 5–41, Dec. 18, 2018, ECF No. 50 ("Def.’s Br."); Def-Intervenors’ Resp. Opp'n Pl.’s Mot. J. Agency R. at 1–2, Jan. 9, 2020, ECF No. 51 ("Def.-Intervenors’ Br."). For the reasons set forth below, the court sustains Commerce's SV determination for Xinboda's garlic bulb intermediate input and remands for further consideration or explanation Commerce's decision to rely on Tata Tea's unconsolidated financial statements to calculate Xinboda's surrogate financial ratios.

BACKGROUND

On December 28, 2010, Commerce initiated its sixteenth administrative review of the ADD Order on fresh garlic from the PRC, for the period of review November 1, 2009 through October 31, 2010 ("POR"), at the request of FGPA and its individual members. See Initiation of Antidumping and Countervailing Duty Admin. Reviews, 75 Fed. Reg. 81,565, 81,568 –69 (Dep't Commerce Dec. 28, 2010). On December 7, 2011, Commerce published its preliminary results. See Fresh Garlic from [the PRC], 76 Fed. Reg. 76,375, 76,377 –80 (Dep't Commerce Dec. 7, 2011) (prelim. results of the 2009–2010 [ADD] admin. review) ("Prelim. Results"), and accompanying Issues and Decisions Memo for the [Prelim. Results ], A-570-831, PD 134, Doc. No. INT_042256 (Nov. 30, 2011) ("Prelim. Decision Memo.").³ Commerce selected, inter alia, Xinboda and Golden Bird as mandatory respondents. See Prelim. Results, 76 Fed. Reg. 76,376.⁴ Given that Commerce considers the PRC to be a non-market economy ("NME"), Commerce calculated normal value by using India as the primary surrogate country to value factors of production ("FOPs"). See Prelim. Decision Memo. at 6, 8–18. However, Commerce elected to apply its "intermediate input methodology" to directly determine SVs for an intermediate input, garlic bulbs, rather than select SVs for the FOPs used to produce that intermediate input. Id. at 11. As a result, Commerce approximated the SV of fresh garlic based on the value of garlic bulbs, and selected prices of grade A and grade Super A ("grade SA") garlic bulbs⁵ from the Azadpur Agricultural Produce Marketing Committee's "Market Information Bulletin" ("APMC Bulletin")⁶ as the best available information to value Xinboda's garlic bulb input. Id. at 12–13. In addition, Commerce selected Tata Tea Ltd.’s ("Tata Tea") 2010–2011 unconsolidated financial statement to calculate surrogate financial ratios. See id. at 17–18.

On June 11, 2012, Commerce published its Final Results. See generally Final Results, 76 Fed. Reg. 34,346 –49. Commerce continued to rely on garlic prices from the APMC Bulletin, rather than the financial statements of Garlico Industries Limited ("Garlico"), to value the garlic bulb input, because the APMC Bulletin prices were publicly available, specific to the input, largely contemporaneous with the POR, tax and duty exclusive, and represented a broad market average. See Final Decision Memo at 11–36. Commerce adjusted the data by deducting a six percent commission reflected in those prices. See id. at 23. In addition, Commerce continued to use Tata Tea's financial statements to calculate Xinboda's surrogate financial ratios, finding that its production processes—albeit of tea—were most similar to Xinboda's fresh garlic processing. See Final Decision Memo at 40–45. Commerce noted that there was no evidence in the financial statements that indicated the company was in receipt of countervailable subsidies. See Final Decision Memo at 42.

JURISDICTION AND STANDARD OF REVIEW

This court has jurisdiction pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c) (2012), which grant the court authority to review actions contesting the final determination in an administrative review of an ADD order. The court will 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).

DISCUSSION

I. APMC Bulletin Prices to Value Garlic Bulbs

Xinboda challenges Commerce's decision to rely on the APMC Bulletin's pricing data to value garlic bulbs as unsupported by substantial evidence, arguing it is not the best available information on the record. See Pl.’s Br. at 1–2, 14–17. Rather, according to Xinboda, Garlico's financial statements better reflect Xinboda's production process and similar purchasing power and trading; and, Garlico, like Xinboda, pays farmgate prices for large quantities of garlic bulb inputs. Id. at 15–17. However, should the court sustain Commerce's use of the APMC Bulletin, Xinboda argues Commerce should rely solely on grade A garlic bulb prices, because record evidence indicates grade SA prices were subsumed into grade A prices. Pl.’s Br. at 17–19. In addition, according to Xinboda, Commerce must deduct certain costs and expenses in order to bring the grade A prices closer to farmgate prices. See Pl.’s Br. at 20–26. Defendant counters that Commerce's decision to rely on the APMC Bulletin is supported by substantial evidence, emphasizing Commerce's preference for size-specific data and noting deficiencies in Garlico's financial statements. See Def.’s Br. at 5, 8–25. Further, Defendant argues that Commerce reasonably rejected arguments in the underlying proceeding that grade SA prices were subsumed into grade A prices, see id. at 25–28, and that additional adjustments to grade A prices should be made, see id. at 28–32.⁷ For the reasons that follow, the court sustains Commerce's determination to rely on the AMPC Bulletin prices to value Xinboda's garlic bulb input, including grade SA garlic bulbs, and its decision not to adjust the pricing data further.

A. Use of APMC Bulletin Prices

In an antidumping proceeding, if Commerce considers an exporting country to be an NME, like the PRC, it will identify one or more market economy countries to serve as a "surrogate" for that NME country in the calculation of normal value. See 19 U.S.C. § 1677b(c)(1), (4).⁸ Normal value is determined on the basis of FOPs from the surrogate country or countries used to produce subject merchandise.⁹ See id. at § 1677b(c)(1) ; see also 19 C.F.R. §§ 351.408(a) – (c) (2014).¹⁰ However, in certain circumstances, Commerce will utilize its "intermediate input methodology" to apply a SV to an intermediate input directly, as opposed to the FOPs used to yield that intermediate input.¹¹

Section 1677b requires Commerce to use "the best available information" to value FOPs. 19 U.S.C. § 1677b(c)(1). Although Commerce has broad discretion in deciding what constitutes the best available information, see QVD Food Co., Ltd. v. United States, 658 F.3d 1318, 1323 (Fed. Cir. 2011) (noting the absence of a definition for "best available information" in the antidumping statute), it must ground its selection of the best available information in the overall purpose of the antidumping statute, calculating accurate dumping margins. See CS Wind Vietnam Co. v. United States, 38 CIT ––––, ––––, 971 F. Supp. 2d 1271, 1277 (2014) (citing Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (...