RESTANI, Judge:
This action challenges the U.S. Department of Commerce's ("Commerce") final results rendered in the antidumping ("AD")
Following a petition by WTTC, Commerce initiated an AD investigation into certain wind towers from Vietnam. See Utility Scale Wind Towers from the People's Republic of China and the Socialist Republic of Vietnam: Initiation of Antidumping Duty Investigations, 77 Fed. Reg. 3440 (Dep't Commerce Jan. 24, 2012). Because Vietnam is considered by Commerce to be a non-market economy ("NME"), much of the investigation focused
After verification at CS Wind's offices in Korea and production facility in Vietnam, Commerce calculated an average weighted dumping margin of 51.50 percent in its Final Determination. 77 Fed. Reg. at 75,988. As part of that determination, Commerce selected a different financial statement to calculate surrogate financial ratios and, in doing so, modified certain offsets to those ratios in a manner different from that advanced by the parties. See I & D Memo at 15-16, 26-27. Commerce also adjusted both normal value and the U.S. sales price to account for a discrepancy between CS Wind's reported material FOP weights and the "Packed Weight" of the wind towers, as reported on packing lists. Id. at 28-33. CS Wind filed ministerial error allegations based on both of these changes, but Commerce rejected them, asserting that the adjustments were made based on intentional methodological choices. CS Wind Request to Correct Clerical Errors, bar code 3112173-01 (Dec. 26, 2012), ECF No. 27-12 (Aug. 8, 2013); Ministerial Error Memo at 2-3, bar code 3115888-01 (Jan. 18, 2013), ECF No. 28-9 (Aug. 9, 2013). CS Wind subsequently filed suit and moved for judgment on the agency record, asserting that Commerce acted contrary to law and without substantial evidence in determining CS Wind's dumping margins. See Pl. Br. 10-57.
CS Wind presents six arguments challenging Commerce's Final Determination: 1) Commerce lacked substantial evidence and acted contrary to law when it used Global Trade Atlas ("GTA") import data rather than Steel India data to value steel plate; 2) Commerce impermissibly valued carbon dioxide based on GTA import data; 3) Commerce improperly calculated surrogate financial ratios by failing to offset certain expenses with related income line items; 4) Commerce acted contrary to law and without substantial evidence in rejecting the market economy input prices paid for flanges, welding wire, and wire flux; 5) Commerce impermissibly adjusted normal value based on a weight discrepancy and then incorrectly adjusted the U.S. sales price; and 6) Commerce used an inflated document preparation fee in calculating B & H expenses. See id.
The court has jurisdiction of this matter pursuant to 28 U.S.C. § 1581(c). The court will uphold Commerce's final determinations in trade remedy investigations unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).
In NME AD cases, Commerce "shall determine the normal value of the subject merchandise on the basis of the value of the factors of production utilized in producing the merchandise." 19 U.S.C.
"Nowhere does the statute speak directly to any methodology Commerce must employ to value the factors of production, indeed the very structure of the statute suggests Congress intended to vest discretion in Commerce by providing only a framework within which to work." Shakeproof Assembly Components Div. of Ill. Tool Works, Inc. v. United States, 23 CIT 479, 481, 59 F.Supp.2d 1354, 1357 (1999); see QVD Food Co. v. United States, 658 F.3d 1318, 1323 (Fed.Cir.2011) (recognizing that Commerce is entitled to deference in interpreting the undefined term "best available information"). Nonetheless, selection of the best available information must be in line with the overall purpose of the antidumping statute, which the Court of Appeals for the Federal Circuit has explained to be "determining current margins as accurately as possible." Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed.Cir.1990); see also Lasko Metal Prods., Inc. v. United States, 43 F.3d 1442, 1443 (Fed.Cir.1994) ("[T]here is much in the statute that supports the notion that it is Commerce's duty to determine margins as accurately as possible, and to use the best information available to it in doing so."). In calculating normal value in the NME context, the particular aim of the statute is to determine the non-distorted cost of producing such goods. See Lasko Metal Prods., Inc. v. United States, 16 CIT 1079, 1081, 810 F.Supp. 314, 316-17 (1992).
In past investigations and reviews, Commerce has articulated the standard it uses in selecting from among competing surrogate values. See I & D Memo at 9 (citing Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules, from the People's Republic of China: Final Determination of Sales at Less than Fair Value, and Affirmative Final Determination of Critical Circumstances, in Part, 77 Fed. Reg. 63,791 (Dep't Commerce Oct. 17, 2012); Certain Frozen Fish Fillets from the Socialist Republic of Vietnam: Final Results of the First Administrative Review, 71 Fed. Reg. 14,170 (Dep't Commerce Mar. 21, 2006)). These criteria include "a strong preference for valuing all FOPs in the primary surrogate country, as well as a preference for prices which are period-wide, representative of a broad market average, specific to the input in question, net of taxes and import duties, contemporaneous with the period under consideration, and publicly available." Id. (footnotes omitted).
Because steel plate is the primary input in wind towers, the valuation of the plates is an important factor in determining normal value and the resulting dumping margin. Before the agency, CS Wind proposed six different data sets
In its motion for judgment on the agency record, CS Wind argues that at least some of these data points should have been considered as alternate bases for calculating a surrogate value, while others should have served as evidence that Commerce's chosen surrogate value is aberrational. Pl. Br. 10-27. After considering the record concerning each proposed data point, the court concludes that Commerce acted unreasonably in dismissing many of the proposed data points, at least for the reasons asserted by Commerce. Each of these data sources is discussed below based on the reasons for their rejection before turning to the question of whether Commerce's selection of the GTA data as the best available information was supported by substantial evidence. In analyzing the various sources, the court takes into account Commerce's reasoning for accepting and selecting the GTA data as the best available information, including ensuring consistency of the agency's position from case to case.
Commerce rejected the Steel India data because they did not include the identical grades of steel actually used by CS Wind, dismissing arguments that Commerce should consider data for equivalent or comparable grades of steel plate. I & D Memo at 10-11. CS Wind claims that the domestic prices from Steel India encompass exclusively grade IS 2062 steel, which is an equivalent grade of steel also used to produce wind towers.
Commerce rejected the JPC data because they were not representative of the entire POI due to a missing month of data. I & D Memo at 11. CS Wind challenges Commerce's rejection of the JPC data, claiming that the five months of accurate data covered substantially all of the six-month POI. Pl. Br. 20-21. The court has held previously that data with minor defects cannot be summarily rejected by Commerce, particularly where the data is submitted for the purpose of showing that Commerce's selected data is aberrational. See Xinjiamei Furniture (Zhangzhou) Co. v. United States, Slip Op. 13-30, 2013 WL 920276, at *6-7, 2013 Ct. Int'l Trade LEXIS 34, at *23 (CIT Mar. 11, 2013) (remanding for Commerce to consider data set for corroboration purposes even though the data covered only ten of the twelve months of the period of review). Accordingly, although Commerce may have some legitimate basis for rejecting the JPC data as a primary source for surrogate values, it was unreasonable for Commerce to reject the data entirely in considering whether the GTA data is aberrational. Therefore, the court remands to Commerce for reconsideration of the JPC data at least for corroboration purposes, if not more.
Steel Mint data were rejected because they were based on prices from a single day during the POI. I & D Memo at 11-12. CS Wind simply asserts that the Steel India, Steel Mint, MEPS, and Metal Expert India data all corroborate the JPC
Commerce refused to use the MEPS India data because the reported prices for several months were the same, despite other evidence that prices fluctuated during the POI, and because the data were not representative of a broad market average. I & D Memo at 12. As with the Steel Mint data, CS Wind makes no substantive arguments to the contrary. Because Commerce must reconsider its chosen surrogate value, it may consider these data, or not, on remand.
Commerce dismissed the Steel Chamber Weekly prices because they were not representative of a broad market average. Id. at 11. CS Wind challenges the rejection of the Steel Chamber data but does not dispute that the data were not representative of a broad market average. See Pl. Br. 21. Instead, CS Wind criticizes Commerce's reliance on this criteria because Commerce's finding that prices varied across markets was supported by data (JPC and Steel India) that Commerce already had rejected for other reasons. See id. Because the court has found the complete rejection of the Steel India and JPC data to be unreasonable, at least for the reasons given by Commerce, how these data will be treated on remand may affect the use of the Steel Chamber data, and therefore reconsideration of these data is warranted on remand.
Commerce criticized the MEPS data for non-Indian markets because those countries were not identified as economically comparable to Vietnam and because the range of thicknesses did not encompass all of the steel plates used by CS Wind. I & D Memo at 12.
CS Wind's challenge to the exclusion of the MEPS non-India data as benchmarks has merit. The court recently held that "while the [proposed benchmark] prices might not satisfy the requirements for surrogate values, they are sufficient to call into question the reliability of the GTA data," even when from non-economically comparable countries. Xinjiamei, 2013 WL 920276, at *6, 2013 Ct. Int'l Trade LEXIS 34, at *21-22. The GTA import data used by Commerce are based largely on imports from European countries, including some of the countries covered by the MEPS data, see Surrogate Values for the Preliminary Determination, Ex. 2 at bar code 3089133-02 (July 26, 2012), ECF No. 28-3 (Aug. 9, 2013), and therefore, these benchmarks are relevant in determining whether the international market prices reflected in the MEPS data for the grade of steel plate at issue, or its equivalent, render the GTA import data price aberrational.
Similarly, Commerce's rejection of the MEPS data based on thickness appears inconsistent with its selection of the GTA data. The MEPS data cover the vast majority of the outside the range by one millimeter. See CS Wind Verification Exhibit 18I at 2, bar code 3094071-01-07 (Sept. 21, 2012), ECF No. 27-13 (Aug. 8, 2013); CS Wind First SV Submission, Ex. 3F. In choosing to rely on the GTA data, which include a wide range of plates both significantly thicker and thinner than the plate used by CS Wind, Commerce implicitly accepted WTTC's argument that thickness is not a determinative factor in calculating the price per kilogram of steel plate. See HTS 7208.51.10 (covering steel plate
Metal Expert India data were not used because Commerce could not determine if the prices reflected broad market averages and because the import data included imports from an NME. I & D Memo at 12-13. CS Wind asserts that the Steel India, Steel Mint, MEPS, Metal Expert India, and JPC data all corroborate each other but fails to contest directly any of the deficiencies that Commerce found with the Metal Expert India data. See Pl. Br. 21. Given the overall deficiencies in Commerce's rejection of data sets, Commerce may reconsider this evidence, or not, on remand.
Metal Expert data for other countries were rejected because those countries were not economically comparable. I & D Memo at 13. The court remands this determination for the same reason given for the MEPS non-India data.
SBB pricing was rejected because it provided prices on a quarterly basis only and could include NME or subsidized prices. Id. Additionally, the SBB data regarding Turkey were not for an economically comparable country, not based on broad market averages, and did not show how prices were determined. Id. Although Commerce's rejection of the data for lack of economic comparability was erroneous, for the same reasons as the rejection of the MEPS non-India data, CS Wind has not challenged the other reasons for which the SBB data set was excluded, including the lack of frequent price reporting and the possible taint of NME/subsidized imports. Therefore, the determination with respect to the SBB data is remanded to Commerce to reconsider whether the data should continue to be rejected based on these unchallenged deficiencies, or whether it should be used for some purpose in this inquiry.
The Steel Orbis Ukraine Export data were rejected because they were not from an economically comparable country, might have included value added tax, and may have used different tariff headings. Id. at 14. As with the MEPS non-India data, CS Wind's challenge based on economic comparability has merit. CS Wind, however, has not responded to Commerce's concerns regarding the latter two reasons for rejection. Commerce should reconsider on remand whether rejection of the data is still warranted based on these alternate grounds or whether the data should be used for some purpose in this inquiry.
GTA India Export data were not used because of prior findings that Indian export prices were affected by export subsidies. Id. CS Wind has not argued that this determination was unsupported or contrary to law. Whether Commerce has some use on remand for these data is for Commerce to decide.
Steel Price Europe data were not used because the steel plate thickness range was not broad enough to cover all of the plate used by CS Wind and because some of the prices did not cover the exact grade of steel plate used by CS Wind. Id. at 15. Finally, Steel Price Europe data for Belgium
At least some of CS Wind's challenges to this determination have merit. As the court discussed in the context of the MEPS non-India data, in selecting the GTA data, Commerce made a decision that thickness was not a decisive factor in valuing steel plate, impliedly accepting WTTC's argument that steel of a particular grade is valued at the same per kilogram price across thicknesses. Similarly, as discussed in the context of the Steel India data, rejection based on a difference in grade is inappropriate if CS Wind's submissions demonstrate that the goods are equivalent.
CS Wind cites to Exhibit 1A of the CS Wind Post-Preliminary SV Submission to support its claim that Commerce also acted unreasonably in concluding that the record did not provide evidence that the Steel Guru Belgium data were based on broad market averages. Pl. Br. 25. This document, however, explains only that Steel Guru India prices are collected from ten different markets to ensure the prices reflect broad market averages. See CS Wind Post-Preliminary SV Submission, Ex. 1A. CS Wind, however, has not pointed to evidence explaining whether this practice is carried over to price research in other markets or, more specifically, what Steel Guru's practices are with respect to Belgian steel prices. In reviewing the record as a whole, the court has been unable to locate such evidence. Instead, the relevant letter from Steel Guru simply explains that the publicly available prices are for S235 and S355 grade non-alloy steel plate during the POI, exclusive of duties and taxes. Id. at Ex. 1J. The attached chart references a single port, Antwerp. See id. That said, it is unclear to the court whether this would matter in the context of a fairly small country like Belgium with limited ports. Accordingly, for the various reasons described above, Commerce should reconsider this determination as well on remand.
CS Wind also challenges Commerce's apparently inconsistent use of Infodrive India data in its Final Determination. Pl. Br. 18-19, 23-24. Commerce relied on this data set, submitted by WTTC, for several purposes, including to show the GTA data contained actual imports of S355 grade steel plate and to demonstrate that prices of steel varied over time during the POI. See I & D Memo at 10-11. Commerce, however, rejected the use of the same data when used by CS Wind to show that most imports of S355 grade plate in the GTA data cost the same as the plates covered by CS Wind's proffered data sets, that S355 makes up a very small portion of the total imports of steel plate falling within the chosen basket tariff classification, and that other imports in the basket included grades of steel plate not used in wind tower production. See id. at 6. The court has held previously that corroboration data, including Infodrive data in particular, need not meet the same standards as data offered to calculate surrogate values in order to be relevant for Commerce to consider. See Dorbest Ltd. v. United States, 30 CIT 1671, 1698, 462 F.Supp.2d 1262, 1286 (2006) ("Regardless of whether or not Commerce finds it appropriate to use the Infodrive India data to value mirrors, the Infodrive India data can prove to be illuminating as to the nature of the product actually being valued within a specific (and in this case basket) HTS subheading."); see also Calgon Carbon Corp. v. United States, Slip Op. 11-21, 2011 WL 637605, at *7, 2011 Ct. Int'l Trade LEXIS 21, at *27-28 (CIT Feb. 17, 2011) ("Commerce must consider InfoDrive if it covers a definite and substantial percentage of
Here, Commerce's exclusion of the Infodrive data raises more basic questions than those addressed in Calgon Carbon and Dorbest because Commerce chose to rely on the data for some purposes but not others, without providing any rationale for why the data was reliable for only the selected purposes. Thus far, Commerce's explanation for this inconsistency in its use of the Infodrive data is inadequate, and unless it has a heretofore unstated rational explanation, it must consider the data to the extent they both support and detract from Commerce's chosen surrogate value. As the court must in evaluating the record evidence, Commerce also "must consider the record as a whole, including evidence that supports as well as evidence that fairly detracts from the substantiality of the evidence." Nucor Corp. v. United States, 32 CIT 1380, 594 F.Supp.2d 1320, 1332 (2008) (internal quotation marks omitted), aff'd, 601 F.3d 1291 (Fed.Cir.2010). Accordingly, Commerce may not rely on Infodrive data when they support Commerce's determination but then reject the data when they detract from that conclusion, at least without a substantial reason.
With respect to all of the alternative data sources, the court will not decide at this point which Commerce should accept or reject and for which purposes. Commerce's determination at a minimum gives the appearance that it has pre-determined that the GTA data must be used and any data contradicting it must be rejected, for good reason or bad. Of course, this is not acceptable. If Commerce has good reasons for rejecting a data set for some purpose, it must say so clearly on the record.
Having found that Commerce impermissibly disregarded many of the data sets proffered by CS Wind for either valuation or corroboration purposes, at least based on the reasons provided in the I & D Memo, the court turns now specifically to how this error infected Commerce's selection of the best available information for valuing steel plate. CS Wind attacks the GTA import data as not sufficiently product specific because 96 percent of the import data under the basket tariff heading cover steel not of the relevant grade (S355). Pl. Br. 22. CS Wind claims that the domestic prices from Steel India, by comparison, encompass exclusively an equivalent grade of steel plate that is also used to produce wind towers. Id. at 21; CS Wind Case Brief at 12 n. 6; WTTC Pre-Preliminary Comments on Steel Plate, Ex. 1. By contrast, CS Wind contends that there is no evidence that the non-S355 steel included in the GTA import data is equivalent to S355, as the basket covers all grades of non-alloy hot-rolled steel greater than a certain thickness. See HTS 7208.51.10; Pl. Br. 22. Furthermore, CS Wind argues that the Steel India data are more specific than the GTA data because they separately report prices for a variety of plate thicknesses corresponding to the thicknesses actually used by CS Wind in producing the subject wind towers. Pl. Br. 22. Commerce summarily rejected the notion that it should even consider comparable or equivalent grades of steel in setting a surrogate value for the steel plate used by CS Wind. See I & D Memo at 10-11.
In view of the above analysis, the court must remand to Commerce to choose an appropriate surrogate steel value or explain its reliance on the GTA data as the "best available information" for valuing the steel plate used by CS Wind in producing wind towers. The explanation that there is a small amount of identical merchandise in the GTA category it chose is not substantial evidence to support Commerce's current choice.
In addition to challenging the surrogate value assigned to steel plate, CS Wind argues that Commerce erred in its valuation of CS Wind's carbon dioxide ("CO2") gas input. Pl. Br. 53-56. Commerce again relied upon GTA Indian import data, using the tariff heading for "carbon dioxide: other," HTS 2811.21.90. I & D Memo at 45-46. Commerce rejected CS Wind's suggestion that it instead utilize the prices contained in the financial statements for SICGIL Indian Ltd. ("SICGIL"), an Indian producer of CO2 gas. See id. Commerce found that although the SICGIL data are "reflective of the primary surrogate country, specific to the input in question, and net of taxes and import duties, [Commerce was] not able to determine ... whether or not the SICGIL price data is representative of a broad market average." Id. at 46. Commerce further faulted the data for not being contemporaneous with the POI, as they were based on the April 1, 2010 — March 31, 2011 financial statement. Id. at 45-46. Although recognizing that the GTA data were less specific, as they included all forms of CO2 besides dry ice, Commerce found the GTA data met all
In its motion, CS Wind claims that Commerce's decision is not supported by substantial evidence because SICGIL's data are representative of a broad market average and that Commerce's preference for contemporaneity and broadness over specificity was contrary to Commerce's practice and relevant law. Pl. Br. 53-56. The government responds that Commerce acted reasonably and in accordance with law because the GTA data satisfied all of Commerce's surrogate value criteria while the SICGIL data were deficient. Def. Br. 22-25. WTTC similarly claims that Commerce's selection of the less-specific GTA data was reasonable because of the noted deficiencies in the SICGIL data. WTTC Br. 51-53.
In reviewing the pages of SICGIL's financial statement cited by CS Wind, it is clear that SICGIL is a sizeable producer of CO2, producing 31, 381 metric tons of CO2 during the reported year. See CS Wind Post-Preliminary SV Submission, Ex. 6E at 24. As noted by CS Wind at oral argument, this quantity is more than twice
CS Wind contends that Commerce erred in rejecting its ministerial error allegation regarding the allocation to overhead of certain income and expenses in Ganges Internationale's ("Ganges") financial statement. Pl. Br. 27-31. In its Final Determination, Commerce accepted CS Wind's proposal to use Ganges's financial statement in calculating surrogate financial ratios, including overhead expenses, selling and general expenses, and profit. See I & D Memo at 15-16; see also 19 U.S.C. § 1677b(c)(1), (3), (4). In doing so, Commerce also accepted WTTC's argument that it should treat the line item for jobwork charges in the financial statement as part of overhead because direct labor and energy expenses were reported as separate line items already. I & D Memo at 26. Without explanation, however, Commerce did not accept WTTC's concession that the erection income and civil income line items in the same financial statement also should be included as offsets to overhead. See id.; Final SV Memo at 4-5, bar code 3111181-01 (Dec. 17, 2012), ECF No. 28-9 (Aug. 9, 2013).
Commerce then rejected CS Wind's ministerial error allegation concerning this
CS Wind does not challenge Commerce's practice of including only miscellaneous income lines in overhead, but it contends that Commerce failed to follow its acknowledged practice of offsetting expense line items associated with the general operations of the company with related income lines. Pl. Br. 28-29 & n. 7 (citing Chlorinated Isocyanurates from the People's Republic of China: Final Results of 2008-2009 Antidumping Duty Administrative Review, 75 Fed. Reg. 70,212, cmt. 5 (Dep't Commerce Nov. 17, 2010); Polyethylene Terephthalate Film, Sheet, and Strip from the People's Republic of China: Final Determination of Sales at Less than Fair Value, 73 Fed. Reg. 55,039, cmt. 3 (Dep't Commerce Sept. 24, 2008); Notice of Final Determination of Sales at Less than Fair Value and Negative Final Determination of Critical Circumstances: Certain Color Television Receivers from the People's Republic of China, 69 Fed. Reg. 20,594, cmt. 18 (Dep't Commerce
CS Wind also asserts that Commerce's decision to account for the discrepancy between the Packed Weight of its merchandise and the weight it reported for the material FOPs was unsupported by substantial evidence and contrary to law. See Pl. Br. 40-46. Although the court finds that Commerce's adjustment to normal value based on the weight discrepancy was supported by substantial evidence, the resulting adjustment to the U.S. sales price was not.
Early on in its investigation, Commerce noticed that the total net weight of all of the FOPs CS Wind had reported was significantly less than the total Packed Weight CS Wind had reported for its wind towers. See Surrogate Values for the Preliminary Determination at 6; Preliminary Analysis Memo at 8, CR 213 at bar code 3089102-01 (July 26, 2012), ECF No. 42-9 (Dec. 11, 2013). As a result, Commerce requested that CS Wind reconcile the difference in weights on multiple occasions. See, e.g., May Supplemental Questionnaire at 15, PR 128 at bar code 3075213-01 (May 9, 2012), ECF No. 43-1 (Dec. 11, 2013).
CS Wind responded that the difference in the two weights occurred because the Packed Weight was based on theoretical weights of all the inputs plus the weights of packing/transportation equipment. See CS Wind July 18, 2012 Submission at 2-3, CR 206-08 at bar code 3087123-01 (July 18, 2012), ECF No. 42-9 (Dec. 11, 2013). CS Wind claimed that the FOP weights were drawn from the actual weights of the inputs with no additional packing/transportation equipment weight added. Id. at 3. The Packed Weight, CS Wind alleged, was calculated solely for purposes of determining the center of gravity of the tower portions in order to stack the towers on the ship in such a way that they would not roll in transit. I & D Memo at 28. Thus, these weights were much less accurate than the FOP weights. CS Wind July 18, 2012 Submission at 3.
During verification, Commerce was "not able to observe the actual receipt and withdrawal of raw materials, the entry of raw materials into the production processes,
Commerce, thus, was faced with an unclear record as to what was the correct weight of a finished tower — one based on the FOP weight or one based on the Packed Weight. In its Final Determination, Commerce decided that it was "unreasonable to assume that the weight of the wind tower section recorded in the packing lists is so grossly overestimated as to chance the misplacement of the wind tower section on a shipping vessel and risk an imbalance of the vessel or rolling of the tower section in transit." See I & D Memo at 31. Commerce adopted the Packed Weight as the correct measure based on its link to real world choices. See id. at 32. The discrepancy in the weights, however, meant CS Wind had either underreported its consumption of FOPs or had not reported certain factors. In particular, as the weights for the flanges, door frames, and steel plates corresponded between the Packed Weight and FOP weights, Commerce determined that the consumption of the internal components was underreported. See id. at 33. To compensate for this, Commerce applied the weighted-average surrogate value of all internal components to the difference between the weights and included the resulting adjustment in its calculation of normal value. Id. at 33.
Generally, when "faced with a choice between two imperfect options, it is within Commerce's discretion to determine which choice represents the best available information." Dorbest Ltd. v. United States, 30 CIT 1671, 1687, 462 F.Supp.2d 1262, 1277 (2006). In this case, Commerce reasonably could have accepted the FOP weight or the Packed Weight as the actual weight of the towers. Because there was a gap in the record, Commerce permissibly looked to "facts otherwise available" to account for the discrepancy by accepting the Packed Weight as the actual weight and then increasing the normal value based on the weighted-average surrogate value for internal components, as that was where the weight discrepancy arose. See 19 U.S.C. § 1677e(a); I & D Memo at 32-33. The "facts otherwise available" to Commerce demonstrated that although the Packed Weight might not be an exact measure of the actual weight, based on its actual use, the Packed Weight was likely at least as accurate as the FOP weight, which also was based on theoretical or derived weights drawn from information provided by CS Wind's customers or suppliers.
Although Commerce permissibly made an upward adjustment to normal value based on the weight discrepancy, its resulting upward adjustment to the U.S. sales price was erroneous.
CS Wind incorporated into its wind towers certain free-of-charge internal components provided by its customers. See I & D Memo at 53. Because these inputs were a factor in the production of the towers, Commerce valued the parts just as it did with any other material FOP. Id. As CS Wind did not actually pay for these parts, it of course did not charge the customers that supplied the components to CS Wind. Therefore, the value of the free-of-charge components was not reflected in the U.S. sales price. In order to offset the increase in the normal value caused by adding in the value of the free-of-charge components, Commerce adjusted the U.S. sales price upwards by the same amount it had added for these components to the normal value. Id.
As explained above, in its Final Determination, Commerce further adjusted normal value to account for the weight shortfall in reported FOP input weights. Id. at 29. As this adjustment assumed that consumption of both purchased internal components and free-of-charge internal components was underreported, the adjustment was based on the combined weighted-average surrogate value of all inputs, both purchased and free-of-charge. Id. at 29 & n. 163. In an effort to continue to account for the value of the free-of-charge components included in the normal value calculation, Commerce attempted to make an additional upward adjustment to the U.S. sales price. Id. at 29. To accomplish this, Commerce determined the percentage by weight by which all internal components were underreported. See Final Calculation Analysis at 4-5, 7-8, bar code 3111172-01 (Dec. 17, 2012), ECF No. 27-12 (Aug. 8, 2013). Commerce then used this percentage to calculate the weight by which the free-of-charge components were underreported. Id. at 8. Commerce finally multiplied that weight by the combined weighted-average surrogate value of all internal components, both purchased and free-of-charge. Id. This amount was then added to the U.S. sales price. Id.
CS Wind filed a ministerial error allegation, claiming that Commerce mistakenly multiplied the weight shortfall for the free-of-charge
It is important to keep in mind that Commerce's sole purpose in adjusting the U.S. sales price essentially was to cancel out the impact of including the free-of-charge components on the normal value side of the AD comparison.
FOP Material Value = (ExtW × ExtSV) + (IntW × IntSV) + (FreeW × FreeSV) + (WD% × IntW × IntSV) + (WD% × FreeW × FreeSV)
Replacing the variables with fictitious, arbitrary figures, the formula could be written as:
FOP Material Value = (500 × 0.15) + (100 × 0.1) + (100 × 0.2) + (50% × 100 × 0.1) + (50% × 100 × 0.2)
In order to counter the effect of including the free-of-charge components in the weight adjustment to normal value, as Commerce explained it intended, the final
CS Wind argues that Commerce's decision to reject CS Wind's market economy purchase prices for flanges, welding wire, and wire flux, based on a suspicion or belief that they were subsidized, is unsupported by substantial evidence and contrary to law. Pl. Br. 31-40. CS Wind contends that Commerce has failed to provide objective and specific evidence of the existence of subsidy programs within the Korean market from which its suppliers could have received benefits. Id. at 34-37. CS Wind further supports its assertions by claiming that neither CS Wind nor its manufacturers received or were even eligible to receive any export subsidies based on these "domestic" purchases. Id. at 37-40. In its I & D Memo, Commerce found there was "reason to believe or suspect" that CS Wind's purchase prices were distorted by "broadly available, non-industry specific export subsidies" in South Korea, thereby justifying a departure from its normal practice of using actual purchase prices for inputs from market economies. I & D Memo at 37-42. As a result, Commerce determined that Indian import data, and not CS Wind's actual purchase prices for flanges, welding wire, and wire flux sourced from South Korea, would be used to value these FOPs. Id. at 42.
When valuing an FOP purchased from a market economy supplier and paid for in a market economy currency, Commerce "normally" uses the price actually paid by the buyer. 19 C.F.R. § 351.408(c)(1). Nevertheless, when there is "reason to believe or suspect" that these inputs were subsidized, Commerce instead uses surrogate values from a market economy country. See Peer Bearing Co.-Changshan v. United States, 27 CIT 1763, 1769, 298 F.Supp.2d 1328, 1334 (2003) (citing legislative history). Although the legislative history clarifies that Commerce need not conduct a full-fledged countervailing duty investigation before excluding market economy purchase prices, it does not alter the general standard by which this court evaluates all factual determinations by Commerce in trade remedy cases: substantial evidence. See 19 U.S.C. § 1516a(b)(1)(B)(i). Accordingly, "there must be some positive evidence on the record to permit the court to evaluate whether Commerce's decision is supported by substantial evidence." Gold E. Paper (Jiangsu) Co. v. United States, 918 F.Supp.2d 1317, 1324 (CIT 2013). The burden of substantial evidence demands "more than a mere scintilla" of evidence; the burden is met when there exists "such
In Fuyao Glass, the court held that Commerce must justify its belief or suspicion of price subsidization with specific and objective evidence. Fuyao Glass Indus. Grp. v. United States, 29 CIT 109, 114, 2005 WL 280437 (2005). Under the standard applied in that case, Commerce was required to show: "(1) subsidies of the industry in question existed in the supplier countries during the [POI]; (2) the supplier in question is a member of the subsidized industry or otherwise could have taken advantage of any available subsidies; and (3) it would have been unnatural for a supplier not to have taken advantage of such subsidies." Id. CS Wind alleges that under Fuyao Glass Commerce has not met its burden in justifying its "reason to believe or suspect" that CS Wind's purchase prices were tainted by subsidies. Pl. Br. 34-37. The government primarily responds by claiming that Fuyao Glass is not binding precedent and has been ignored consistently by Commerce. Def. Resp. 30-33.
The court agrees with CS Wind that the Fuyao Glass standard is one reasonable method for evaluating the sufficiency of the evidence upon which Commerce based its belief or suspicion that prices were subsidized.
Turning to the second prong of Fuyao Glass, Commerce has met this standard based on the same evidence discussed above for prong one because these prior countervailing duty determinations demonstrate that South Korea had broadly available, non-industry specific export subsidies for which exporters, including the suppliers of CS Wind, were eligible. See Sichuan, 30 CIT at 1495-96, 460 F.Supp.2d at 1352-53 (finding that widely available, nonspecific export subsidies met the second prong of Fuyao Glass). If Korea had suddenly discontinued this export support program, this would have been publicly available information CS Wind could have presented in rebuttal.
Under the third prong of Fuyao Glass, Commerce may meet its burden by demonstrating "the competitive nature of [the] market economy countr[y]" in which the supplier operates. Fuyao Glass, 29 CIT at 118 (internal quotation marks omitted). The burden is on Commerce, however, to prove that "it would have been unnatural for a supplier to not have taken advantage of such subsidies." Id. at 114. In the instant case, Commerce found that it would have been against any market economy supplier's interest in Korea to not take advantage of these subsidies. See I & D Memo at 41-42. Thus, Commerce has met the low threshold required under this prong.
CS Wind argues that even if the Fuyao Glass test has been met by Commerce, this simply creates a rebuttable presumption of subsidized prices that CS Wind has rebutted. Pl. Br. 37-39. CS Wind contends that the export subsidy programs found to exist in Refrigerators-Freezers and CORE were available only to entities that export goods under export contracts from Korea. Pls.' Reply to Def. & Def.-Intvnrs. Resp. to Pls.' Rule 56.2 Mot. for J. upon the Agency R., ECF No. 45, at 15-19. In the instant case, CS Wind alleges that these input purchases were domestic transactions and that the companies CS Wind purchased these inputs from did not export goods and thus could not have received export subsidies under these programs. Id. Consequently, CS Wind alleges that CS Wind Corp., in South Korea, was the only entity in the chain of these transactions that could have benefitted from export subsidies, and it is undisputed that Commerce verified that CS Wind Corp. did not receive subsidies. See id. at 17-19.
CS Wind's evidence, while entitled to some weight, is insufficient to show that Commerce's determination was not supported by substantial evidence. Although these inputs were purchased in South Korea by CS Wind Corp., also located in South Korea, and then exported to CS Wind Vietnam by CS Wind Corp., the transactional documents support Commerce's determination that these documents could have been used by the suppliers to show that an export transaction occurred, making them eligible for the subsidy programs. The record shows that
CS Wind also presented as rebuttal evidence correspondence from one of the manufacturer's sales managers, stating that the company did not benefit from any export subsidies. See CS Wind Submission of Factual Data, Ex. 2 at bar code 3090709-01 (Aug. 6, 2012), ECF No. 27-17 (Aug. 8, 2013). This individual, however, works in the sales division of a large manufacturer, not in finance. See id.; WTTC Aug. 15, 2012 Submission, Exs. 1, 2, CR 225 at bar code 3092349-01 (Aug. 15, 2012), ECF No. 42-9 (Dec. 11, 2013). Thus, Commerce's conclusion that this person might not know about the receipt of subsidies is reasonable, especially when there is other record evidence showing past government awards for exports. See WTTC Submission of Additional Factual Information, Ex. 2, CR 216-21 at bar code 3091000-01 (Aug. 6, 2012), ECF No. 42-9 (Dec. 11, 2013).
As CS Wind's rebuttal arguments are insufficient to undermine Commerce's finding, the court sustains Commerce's determination that there was reason to believe or suspect that the inputs purchased in Korea were subsidized.
CS Wind argues that Commerce acted unreasonably in creating a surrogate value to be allocated per kilogram for export document preparation based on the weight of a full, twenty-foot container instead of the weight of CS Wind's actual shipments. Pl. Br. 49-52. In its Final Determination, Commerce relied upon the World Bank's 2012 Doing Business India report to calculate a surrogate value for B & H costs, including those for document preparation and customs clearance/technical control. I & D Memo at 48-49. The report was based on the costs associated with exporting a filled, twenty-foot container; CS Wind, however, did not containerize its wind tower segments, instead laying them in a pyramid fashion on the ship. See id. at 48-50. To account for the different form of shipment, Commerce converted the report's per shipment document preparation cost of $415 into a per kilogram value based on the weight of a filled twenty-foot container, 10,000 kg, instead of the weight of an average shipment of towers, 2,600,000 kg. See id. at 49-50; Pl. Br. 49-51. This resulted in a surrogate value of $0.0545/kg for all B & H costs. Pl. Br. 50. Although CS Wind objected during the agency proceedings that this overstated the document preparation charges, Commerce replied that it had no other way to convert between the unit of measure in the Doing Business report and CS Wind's actual shipments. I & D Memo at 49-50. Commerce further stated that it was following a consistent practice employed in several prior agency proceedings. Id. at 50 & n. 283 (citing Crystalline Silicon
At the outset, it is useful to recognize what the document preparation costs are intended to cover. The Doing Business report explains that several documents typically are required to export goods: bank documents, customs clearance documents, port terminal and handling documents, and transport documents. See Trading Across Borders Methodology, World Bank, available at http://www. doingbusiness.org/methodology/trading-across-borders (last visited Mar. 20, 2014) (cited in Surrogate Values for the Preliminary Determination, Ex. 6). Underlying Commerce's calculation here must be an assumption that the $415 for document preparation mentioned in the report was derived from a formula by which the exporter pays for documents based on the weight of the goods, which simply is not reflective of reality. Accordingly, implicit in Commerce's methodology is the incorrect assumption that a shipment weighing less will incur lower document processing costs while a shipment weighing more will incur higher processing costs.
Common sense indicates that a half-full, twenty-foot container would incur the same document preparation expenses as a full twenty-foot container of a single type of good. The court has recognized previously that increasing the surrogate value for B & H proportionally based on the weight of the shipment or the size of the container may not always be reasonable. See Since Hardware (Guangzhou) Co. v. United States, 911 F.Supp.2d 1362, 1380-81 (CIT 2013). The government unsuccessfully attempts to distinguish that case from the present one, arguing that unlike in Since Hardware, Commerce did not make a presumption of a proportional increase in costs. Def. Br. 40.
The government's argument is nonsensical, and the same logic from Since Hardware applies equally here. By converting the document costs to a per kilogram value based on the weight of a hypothetical twenty-foot container, and then multiplying that value by the weight of CS Wind's actual shipments, Commerce has applied a proportional increase in the B & H fees. Commerce has failed to explain why document preparation costs, as opposed to other B & H fees, would change depending on the size or weight of the shipment. Taken to its logical extreme, under Commerce's methodology, a single shipment of wind towers by CS Wind, at an average weight of 2,600,000 kg, would incur a document preparation cost of over $100,000. Pl. Br. 51. Such a position flies in the face of common sense and commercial reality. Although the court understands that Commerce typically converts all surrogate values into a per kilogram amount for use in calculating dumping margins, its method of doing so here, based on the weight of a filled twenty-foot container and not based on the weight of a shipment of wind towers, for which the same documents would need to be prepared, is unreasonable and unsupported by substantial evidence. The reasonable conversion methodology here appears to be to calculate a per kilogram surrogate value allocating the $415 document cost over the weight of the entire wind tower shipment. Accordingly, the court remands this issue to Commerce for recalculation and/or further explanation.
As discussed above, Commerce has failed to support with substantial evidence
Commerce explained in its I & D Memo that it has continued to reject the application of Fuyao Glass in other investigations and reviews. See I & D Memo at 41-42. Time marches on. In its investigations and reviews, Commerce must either abide by the standard set out in Fuyao Glass or propose another reasonable means of evaluating whether it has sufficient evidence to support a belief or suspicion that the market economy inputs in the particular case at hand were subsidized.
