China Mfrs. All., LLC v. United States, 2017 CIT 12

Background

Commerce completed the 5th administrative review (POR Sept. 1, 2012–Aug. 31, 2013) of the antidumping order on pneumatic off‑the‑road tires from the PRC and issued Final and Amended Final Results assigning margins to respondents including Double Coin (collapsed group) and Guizhou Tyre Co. (GTC).
Commerce designated Double Coin and GTC as mandatory respondents and calculated an individually based, de minimis margin (0.14%) for Double Coin but declined to apply it after finding Double Coin failed to rebut a presumption of PRC government control; instead Commerce assigned Double Coin the PRC‑wide rate (105.31%), derived by averaging the prior PRC‑wide AFA rate (210.48%) with Double Coin’s calculated rate.
Multiple parties sued in the Court of International Trade: Double Coin/CMA challenged application of the 105.31% rate to Double Coin; GTC challenged several valuation and adjustment decisions (VAT deduction, surrogate financial ratios, coal surrogate value, double‑counting of brokerage & handling vs. ocean freight, warehouse inflation adjustment); Titan/USW also challenged rate selection and certain input and inventory treatments.
At review Commerce applied a presumptive irrecoverable VAT adjustment (8% of FOB) to U.S. price for PRC exporters, used Indonesian surrogate data for financial ratios and coal (GTA import data), relied on Descartes freight quotes for ocean freight, and Doing Business (World Bank) data for brokerage & handling.
The Court remanded in part: it held Commerce unlawfully applied the 105.31% PRC‑wide rate to Double Coin (a respondent Commerce chose for individual examination) and directed Commerce to assign Double Coin the 0.14% de minimis margin on remand; it also set aside VAT deductions for GTC and remanded several valuation/adjustment issues for further explanation or reconsideration.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Commerce lawfully applied the 105.31% PRC‑wide rate to Double Coin despite calculating a 0.14% individual margin	Double Coin: statute (19 U.S.C. §1677f‑1(c)(1)) required Commerce to assign an individual weighted‑average margin because Commerce selected Double Coin for individual examination; using a PRC‑wide/AFA based rate was unlawful.	Commerce: longstanding practice allows applying a single PRC‑wide rate to exporters failing to rebut state‑control presumption; prior AFA rates and regulations support using PRC‑wide rate.	Held: Commerce acted contrary to statute — when Commerce selects a respondent for individual examination it must assign an individual margin; remand with instruction to assign Double Coin the 0.14% de minimis margin.
Whether Commerce should have kept/apply the earlier 210.48% PRC‑wide AFA rate (Titan/USW claim)	Titan/USW: 210.48% was the prior PRC‑wide rate and Commerce erred in creating and applying the 105.31% rate; record required application of the higher prior PRC‑wide margin.	Commerce: used its discretion to establish a new PRC‑wide rate by averaging prior rate and current calculated margin.	Held: Court denied relief on the claim to require 210.48%; central defect was Commerce’s refusal to apply the calculated individual margin for Double Coin — remedy was to assign the 0.14% margin.
Whether Commerce lawfully deducted an "irrecoverable VAT" (8% of FOB) from EP/CEP for GTC	GTC: §1677a(c)(2)(B) permits deduction only for the actual amount of a tax/duty/charge imposed by the exporting country and included in price; Commerce made a presumption‑based rate deduction without finding a specific imposed amount for GTC’s exports and therefore exceeded authority.	Commerce/defendant: statute ambiguous; Commerce reasonably interpreted and implemented an NME‑specific rate‑based methodology and relied on respondent submissions and PRC rules.	Held: Deduction unlawful — Commerce substituted a presumption for the statutorily required finding of an amount of tax, duty, or charge imposed in relation to the exported merchandise; VAT deductions set aside.
Whether Commerce’s valuation/adjustment choices for GTC (surrogate financial statements, coal surrogate, double‑counting of B&H vs ocean freight, warehouse inflation adjustment) were supported by substantial evidence	GTC: Commerce improperly rejected usable Gajah Tunggal financials, wrongly chose GTA over Argus Coalindo data for coal, double‑counted certain freight/B&H charges, and failed to adjust warehouse quote for inflation.	Commerce: chose Goodyear financials as best available (complete, audited); GTA import data better reflect non‑export Indonesian prices; Descartes freight and Doing Business costs do not overlap; warehouse quote was contemporaneous and best record data.	Held: Mixed result — Commerce’s selection of Goodyear financials and GTA coal data was sustained (within agency discretion); Commerce’s finding of no double‑counting between Descartes freight surcharges and Doing Business B&H was not supported by substantial evidence and must be reconsidered; Commerce must also reconsider and explain its refusal to adjust the warehouse surrogate for contemporaneity/inflation.

Key Cases Cited

Sigma Corp. v. United States, 117 F.3d 1401 (Fed. Cir. 1997) (addressed presumption regarding input sourcing and freight considerations in NME cases)
Transcom, Inc. v. United States, 294 F.3d 1371 (Fed. Cir. 2002) (upheld Department practice applying PRC‑wide rates to exporters not entitled to separate rates under pre‑URAA practice)
Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (framework for judicial deference to reasonable agency statutory interpretations)
Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012) (agency interpretation reasonable only if consistent with statutory text and purpose)
Shakeproof Assembly Components v. United States, 268 F.3d 1376 (Fed. Cir. 2001) (Commerce has broad discretion in selecting best available information for factor valuation)
Nation Ford Chemical Co. v. United States, 166 F.3d 1373 (Fed. Cir. 1999) (deference to Commerce’s valuation choices under §1677b)