313 F. Supp. 3d 1308
Ct. Int'l Trade2018Background
- Plaintiffs (Jacobi and several Chinese activated-carbon producers/intervenors) challenged Commerce’s AR7 antidumping determinations for activated carbon from China, contesting: selection of Thailand as the primary surrogate country, specific Thai surrogate values (financial ratios and carbonized material), and Commerce’s irrecoverable VAT CEP adjustment.
- The Court previously remanded (Apr. 7, 2017) to require better explanation on surrogate-country economic comparability, significant production of comparable merchandise, and the irrecoverable VAT calculation; Commerce issued remand results retaining Thailand and explaining VAT.
- On remand Commerce: (a) defended its GNI-based surrogate-country band and exclusion of the Philippines; (b) relied on Thai firm financial statements and net-export data to find Thailand a "significant producer"; (c) used a Thai import unit value for carbonized material without benchmarking to Philippine/Indonesian data; and (d) adjusted Jacobi’s CEP by 17% VAT using an estimated customs/FOB basis.
- Plaintiffs argued (inter alia) that the Philippines remained economically comparable, Thailand was not shown to be a "significant producer," the Thai surrogate values were aberrant and inadequately benchmarked, and Commerce’s VAT calculation overstated the adjustment or lacked statutory basis.
- The Court sustained Commerce’s economic-comparability methodology and exclusion of the Philippines, but remanded: (1) the significant-producer finding, (2) surrogate-value selections (financial ratios and carbonized material) for further analysis/benchmarking, and (3) the irrecoverable VAT adjustment for clearer, record-supported methodology.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Economic comparability / surrogate-country list | Philippines remains economically comparable to China; Commerce’s GNI band arbitrary | Commerce reasonably re-centered and adjusted GNI band as China’s GNI grew; list is discretionary | Sustained — Commerce provided reasoned explanation and substantial evidence for excluding Philippines |
| Significant-producer criterion | Thailand not shown to be a "significant producer"; Commerce improperly treats any production or exports as "significant" | Commerce relied on Thai firms’ financial statements and net-export quantities as evidence of significant production | Remanded — Commerce failed to explain why the cited production or net-export figures meet a "significant" threshold; must justify metrics and amounts if relied upon |
| Surrogate values — financial ratios (use of Carbokarn statements) | Carbokarn statements show possible countervailable subsidies and are not contemporaneous; Philippine data more contemporaneous | Commerce relied on Thai data (Carbokarn) as most suitable; rejected Philippine data due to economic comparability | Remanded — Commerce must reconsider/explain whether Carbokarn’s statements reflect subsidies (and thus are usable) and address contemporaneity relative to alternatives |
| Surrogate values — carbonized material (Thai import value) | Thai import unit value is aberrantly high; Commerce should benchmark against Philippine/Indonesian or historical values | Commerce selected Thai value for specificity and refused benchmarks because those countries are less economically comparable | Remanded — Commerce must explain/refute aberrancy concerns and either benchmark (including against non-surrogate-country data where appropriate) or justify not doing so |
| Irrecoverable VAT adjustment (CEP) | Commerce miscalculated and/or lacks statutory basis; applying VAT to FOB/estimated customs value overstates input-based irrecoverable VAT | Commerce may adjust for irrecoverable VAT; PRC law shows VAT is included and not rebated for activated carbon; adjustment reflects VAT included in U.S. price | Remanded — Commerce’s remand explanation is inconsistent (input vs. output VAT basis) and lacks adequate record reasoning; must reconcile theory, address Jacobi’s input-VAT offset evidence, basis for using estimated customs/FOB value, and whether gross/net prices were used |
Key Cases Cited
- Jiaxing Brother Fastener Co. v. United States, 822 F.3d 1289 (Fed. Cir. 2016) (discusses Commerce’s surrogate-country selection process and Policy Bulletin 04.1)
- Dorbest Ltd. v. United States, 755 F. Supp. 2d 1291 (CIT 2011) (Court’s critique of surrogate-country GNI banding and need for balanced list)
- Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29 (U.S. 1983) (agency must articulate rational connection between facts and choice)
- NMB Singapore Ltd. v. United States, 557 F.3d 1316 (Fed. Cir. 2009) (agency explanations must make the path of decision reasonably discernable)
- Calgon Carbon Corp. v. United States, 190 F. Supp. 3d 1224 (CIT 2016) (discusses use of exports/net exports in assessing significant production)
- Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1337 (Fed. Cir. 2017) (Chevron deference and review of Commerce’s statutory interpretations)