365 F. Supp. 3d 1344
Ct. Intl. Trade2019Background
- This case challenges Commerce’s final results in the 8th administrative review of the antidumping order on activated carbon from China; key disputes concern (1) Commerce’s selection of Thailand as the primary surrogate country and related surrogate values, and (2) Commerce’s adjustment to Jacobi’s constructed export price (CEP) for Chinese VAT.
- Commerce issued a first remand explaining its economic-comparability methodology and relying on domestic production evidence; the Court sustained economic-comparability but remanded Commerce’s finding that Thailand is a “significant producer,” several surrogate-value selections, and the VAT adjustment.
- On second remand Commerce relied on export quantities (global exports) to find Thailand a significant producer, selected Thai surrogate values for certain inputs (carbonized material, HCl) but replaced coal tar and financial ratio sources, and shifted its VAT theory from irrecoverable input-VAT to deducting 17% output VAT from CEP.
- Plaintiffs (Jacobi and intervenors) opposed Thailand’s significant-producer finding, the Thai surrogate values for carbonized material and HCl, and the VAT adjustment; the Government and interested parties defended Commerce’s remand results.
- The Court remanded Commerce’s determination that Thailand is a significant producer (and thus the primary surrogate choice) and the surrogate values tied to that choice, finding the agency’s export-quantity analysis unsupported and inadequately explained; the Court sustained Commerce’s VAT adjustment (deduction of output VAT from CEP) as lawful and supported by substantial evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Thailand is a “significant producer” (primary surrogate) | Thailand is not a significant producer; Commerce’s export-quantity metric is arbitrary and ignores Thailand’s net-importer status and Commerce’s own Policy Bulletin guidance | Commerce validly interpreted the ambiguous statutory term and export quantities show Thailand is among top global exporters and the largest among candidate surrogate countries | Remanded: Commerce’s Thailand significant-producer determination is unsupported; agency must reassess primary surrogate country selection with reasoned analysis and substantial evidence |
| Surrogate values for carbonized material and hydrochloric acid | Plaintiffs argue values derived from Thailand are improper given defective surrogate-country selection and record issues | Commerce relied partly on primary-surrogate preference and available Thai data to select these SVs | Remanded: because SVs were tied to Thailand as primary surrogate, Commerce must revisit SVs for these inputs on remand |
| VAT adjustment: deducting VAT from constructed export price | Jacobi contends Commerce hasn’t shown output VAT is actually included in U.S. prices and that Commerce failed to address Jacobi’s ability to offset input VAT; challenges statutory authority | Government and Commerce argue Chinese VAT law and reporting show 17% output VAT applies to activated carbon exports and CEPs include VAT; deduction is needed for tax-neutral comparison to tax‑exclusive normal value | Sustained: Court upholds Commerce’s deduction of 17% output VAT from CEP as a permissible interpretation of 19 U.S.C. §1677a(c)(2)(B) and supported by substantial evidence |
| Effects on separate-rate and margins for non-examined respondents | Plaintiffs urge reconsideration if Jacobi’s margin changes | Government/Calgon note remand will resolve margins and rates accordingly | Court directed Commerce to reconsider separate-rate assignments if margins are amended on remand |
Key Cases Cited
- Jiaxing Brother Fastener Co. v. United States, 822 F.3d 1289 (Fed. Cir.) (describing Commerce’s four-step surrogate-country selection approach)
- Federal Mogul Corp. v. United States, 63 F.3d 1572 (Fed. Cir. 1995) (supports tax-neutral adjustments in dumping calculations)
- Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927 (Fed. Cir. 1984) (substantial-evidence standard permits inconsistent inferences)
- NMB Singapore Ltd. v. United States, 557 F.3d 1316 (Fed. Cir. 2009) (agency decision must have a reasonably discernable path)
- Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir. 2003) (review requires consideration of the whole record)
- United States v. International Business Machines Corp., 517 U.S. 843 (1996) (Export Clause precedent relevant to taxes applied at export)
- United States v. U.S. Shoe Corp., 523 U.S. 360 (1998) (Export Clause analysis of taxes applied at export)
- Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1322 (Fed. Cir. 2017) (Chevron framework for agency interpretation of ambiguous statute)