2018 CIT 28
Ct. Intl. Trade2018Background
- This case challenges Commerce’s Final Results for the 2013–14 administrative review of the antidumping order on diamond sawblades from the People’s Republic of China. Multiple Chinese exporters/producers and industry petitioners are parties; the actions were consolidated.
- Jurisdiction: U.S. Court of International Trade reviewing whether Commerce’s determinations are supported by substantial evidence or contrary to law.
- Central administrative determinations contested included: deduction of irrecoverable VAT from U.S. price; surrogate valuations for nitrogen/oxygen and labor; truck freight distance valuation; classification of graphite plates (direct material vs. overhead); selection of surrogate financial statements; inclusion of Weihai in the review (denial of rescission).
- Commerce applied a PRC-based formula to compute an irrecoverable VAT adjustment (17% VAT less 9% rebate = 8% of FOB applied to U.S. price net of movement). Commerce relied on Thai contemporaneous data (GTA, NSO) for several surrogate values and selected a Thai company’s financials for financial ratios.
- The Court: upheld Commerce on most methodological questions but remanded certain issues (Weihai cores valuation and margin; truck freight distance to Bangkok port; inclusion/rescission vis-à-vis Weihai in light of intervening precedent) for further explanation or reconsideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Deduction of irrecoverable VAT from U.S. price | Respondents (Jiangsu Fengtai, Weihai, Bosun) argued statute doesn’t permit deducting unrebated internal VAT as an "export tax, duty, or other charge imposed on exportation" and that Commerce’s formula overstates the actual VAT included in U.S. price. | Commerce argued PRC law defines an "irrecoverable" VAT amount (17% less 9% rebate = 8% of FOB) and record evidence supports that amount being imposed and included in export pricing; Methodological Change and Chevron deference apply. | Court sustained Commerce’s interpretation and methodology as reasonable and supported by substantial evidence. |
| Surrogate valuation of nitrogen & oxygen (Thai GTA data) | Jiangsu Fengtai claimed Thailand GTA import quantities were aberrational and not representative; urged use of prior-review data. | Commerce: party opposing a surrogate must show aberration with comparative surrogate-country evidence; GTA Thai data were contemporaneous and best available. | Court upheld Commerce’s use of Thai GTA data; respondent failed to put comparative surrogate-country evidence on record. |
| Valuation of labor (2014 NSO Labor Force Survey vs 2011 Industrial Census) | Weihai and Bosun argued 2011 Industrial Census is industry-specific and more accurate; CPI inflation adjustment would yield better result than general manufacturing 2014 survey. | Commerce: 2014 NSO Labor Force Survey is contemporaneous, includes direct and indirect compensation categories consistent with ILO Chapter 6A, and 2011 data could not be reliably inflated to POR given wage growth disparities. | Court deferred to Commerce’s selection of 2014 data as best available and supported by substantial evidence. |
| Truck freight valuation — "Port Name: Bangkok" distance | Weihai argued Doing Business’s "Port Name: Bangkok" is ambiguous (Khlong Toei vs Laem Chabang); Commerce should average distances or explain choice; record shows Laem Chabang handles far more cargo. | Commerce treated Doing Business entry as explicit reference to Port of Bangkok and used that distance; other data deemed irrelevant. | Court found Commerce’s explanation inadequate given record evidence and inconsistent agency practice; remanded for further explanation or record development. |
| Treatment of graphite plates (direct material vs factory overhead) | Jiangsu Fengtai: graphite plates are durable and replaced infrequently; Commerce miscalculated usage and double-counted costs. | Commerce: plates are replaced regularly (every ~258 cycles), consistent with being a direct/process material; classification is fact-specific and within agency discretion. | Court upheld Commerce’s treatment as direct material; respondent’s arguments did not overcome substantial-evidence standard. |
| Selection of surrogate financial statement (K.M. & A.A. Co., Ltd. vs Trigger) | Weihai favored Trigger (more detailed, producer of DSBs) even though Trigger is from Philippines (not on OP list) and pre-POR; urged side-by-side comparison. | Commerce preferred KM (Thai, primary surrogate country, contemporaneous and reasonably comparable); single-surrogate-country preference and contemporaneity weighed heavily. | Court sustained Commerce’s selection of KM’s statements as reasonable and supported by substantial evidence. |
| Inclusion of Weihai in review; denial of rescission of Bosch’s late withdrawal | Weihai (and Bosch/DSMC earlier) urged rescission; after Commerce denied Bosch’s belated withdrawal under an "extraordinary circumstances" standard, Weihai argued Commerce should have rescinded. | Government argued Weihai failed to exhaust administrative remedies and that Commerce properly denied rescission. | Court remanded the rescission denial because intervening precedent (Glycine & More and its appellate outcome) invalidated the agency’s 2011 guidance underpinning denial; exhaustion arguments rejected as insufficient to overcome intervening legal change. |
| Valuation of Weihai’s self-produced/purchased cores and non-selected separate-rate margins | DSMC raised issues; Commerce requested voluntary remand to reconcile with a prior remand in related case affecting cores valuation. | Government requested remand to reconsider cores valuation consistent with intervening remand; DSMC supported remand. | Court granted voluntary remand to harmonize methodology with related remand decisions. |
Key Cases Cited
- Federal-Mogul Corp. v. United States, 63 F.3d 1572 (Fed. Cir. 1995) (discusses "multiplier effect" and tax-neutrality considerations in VAT adjustments)
- Magnesium Corp. of Am. v. United States, 166 F.3d 1364 (Fed. Cir. 1999) (addressed Commerce's prior treatment of export taxes in NME contexts)
- SKF USA, Inc. v. United States, 254 F.3d 1022 (Fed. Cir. 2001) (authorizes courts to grant voluntary remand at agency request)
- Nan Ya Plastics Corp. v. United States, 810 F.3d 1333 (Fed. Cir. 2016) (on ‘‘commercial reality’’ and accuracy standards for surrogate selection)
- Glycine & More, Inc. v. United States, 880 F.3d 1335 (Fed. Cir. 2018) (invalidated Commerce’s 2011 Notice requiring showing of "extraordinary circumstances" to accept late rescission)
- Aristocraft of America, LLC v. United States, 269 F. Supp. 3d 1316 (CIT 2017) (upheld Commerce’s approach to deducting irrecoverable VAT in certain NME proceedings)