Jacobi Carbons AB and Jacobi Carbons, Inc. v. United States
2017 CIT 39
| Ct. Intl. Trade | 2017Background
- Commerce conducted the seventh administrative review (AR7) of the antidumping duty order on activated carbon from the PRC for Apr. 1, 2013–Mar. 31, 2014 and selected Jacobi and DJAC as mandatory respondents.
- Commerce used surrogate-country methodology (NME case): Office of Policy produced a list based on per-capita GNI; Commerce selected Thailand as the primary surrogate country in the Preliminary and Final Results and used Thai data (including Carbokarn financials) to value inputs and overhead.
- Commerce applied a 17% irrecoverable VAT adjustment to Jacobi’s constructed export price (CEP), ultimately assigning Jacobi a non‑de minimis dumping margin and that rate to separate-rate respondents.
- Plaintiffs (Jacobi and several Chinese producer-intervenors) challenged Commerce’s surrogate-country selection (arguing the Philippines should have been considered), certain surrogate-value choices (e.g., Thai HS codes and Thai financial statements), and Commerce’s VAT deduction method and calculation.
- The Court remanded: it found Commerce’s explanations insufficient on (1) how Office of Policy determined the GNI range that excluded the Philippines, (2) why Thailand is a “significant producer” (Commerce relied on export quantities but did not show significance relative to world production), and (3) Commerce’s method of calculating the irrecoverable VAT (applying VAT percent to finished-goods values rather than inputs) — while deferring SV-specific challenges pending remand. The Court denied Jacobi’s motion to supplement the administrative record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Surrogate-country selection — exclusion of the Philippines | Philippines is economically comparable (per 2013 GNI) and Commerce unlawfully treated economic comparability as a threshold without weighing data quality/production | Commerce permissibly followed Policy Bulletin 04.1 and excluded non-comparable countries; selection may vary by segment | Remanded: court upheld Commerce’s discretion to use a sequential approach but found Commerce failed to explain OP’s GNI-range methodology; remand for reasoned explanation regarding why Philippines was excluded |
| Significant-producer determination (Thailand) | Philippines is a far larger producer; Thailand is not a “significant producer” (Commerce misinterpreted the term) | Commerce may use export quantity and reasonably exercised discretion; Thailand ranks among exporters | Remanded: Commerce’s reliance on Thailand’s total exports (1–2% of world exports) lacked substantial evidence and adequate explanation; must reassess and justify significance relative to world production |
| Surrogate-value/data-quality selections (Thai financials, HS codes) | Thai data choices were flawed/aberrant and Commerce should have relied on Philippines or other data | Commerce selected best available surrogate data from Thailand; agency practice supports its choices | Deferred: court declined to decide SV challenges until Commerce reconsiders surrogate-country choice on remand (single-country preference may change SVs) |
| Irrecoverable VAT adjustment — authority and calculation | Commerce lacked authority or misapplied it; VAT should be applied to input costs (raw materials) and CEP reduction should reflect actual VAT paid, not VAT on finished value | Commerce’s Methodological Change permits deduction of unrefunded VAT as an "other charge" and to apply a fixed percentage to price; Commerce reasonably treated entered values as unreliable and used estimated customs values | Mixed/Remand: court held Commerce permissibly may deduct irrecoverable VAT but remanded because Commerce failed to justify applying the VAT percent to finished-goods (entered or substitute) values rather than to VAT actually paid on inputs; also required further explanation for substituting estimated customs values for entered values |
Key Cases Cited
- Jiaxing Bro. Fastener Co., Ltd. v. United States, 822 F.3d 1289 (Fed. Cir. 2016) (Commerce has discretion in surrogate-country methodology; not required to consider every country)
- Dorbest Ltd. v. United States, 604 F.3d 1363 (Fed. Cir. 2010) (discussing use of GNI and comparability in surrogate selection)
- Magnesium Corp. of Am. v. United States, 166 F.3d 1364 (Fed. Cir. 1999) (statute requires deduction of export taxes only if included in the price; limits deduction when inclusion cannot be determined)
- Qingdao Sea-Line Trading Co. Ltd. v. United States, 766 F.3d 1378 (Fed. Cir. 2014) (Commerce regulations require presentation of issues in an administrative case brief)
- NMB Singapore Ltd. v. United States, 557 F.3d 1316 (Fed. Cir. 2009) (agency must provide a reasonably discernable path to its decision)