308 F. Supp. 3d 1329
Ct. Intl. Trade2018Background
- Commerce completed the final results of the 2013–2014 administrative review of the antidumping order on certain new pneumatic off‑the‑road (OTR) tires from the PRC, assigning individually calculated margins to two mandatory respondents (Xuzhou Xugong (Xugong) and Qingdao Qihang (Qihang)) and a 70.55% all‑others rate to separate‑rate respondents (including Trelleborg, Full World, Weihai Zhongwei).
- Commerce deducted an "irrecoverable" portion of Chinese VAT (calculated as 17% statutory VAT minus a 9% rebate = 8% of FOB) from EP/CEP starting prices, treating that amount as an "export tax, duty, or other charge" under 19 U.S.C. § 1677a(c)(2)(B).
- Commerce used surrogate values (Thailand as primary surrogate) for factors of production in valuing normal value for non‑market‑economy respondents; challenged surrogate values included reclaimed rubber (Thai GTA data) and foreign inland freight (World Bank Doing Business Thailand distances).
- At verification Commerce found Xugong had omitted certain CEP direct‑ship sales (shipped during the POR but invoiced after), and applied facts available with an adverse inference (AFA) to those missing sales.
- Multiple respondents challenged these determinations in consolidated USCIT actions; the court reviewed whether Commerce’s legal interpretations and evidentiary findings were supported by law and substantial evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce may deduct irrecoverable VAT from EP/CEP under 19 U.S.C. § 1677a(c)(2)(B) | Xugong & Qihang: Chinese VAT is a domestic input tax, not an export tax imposed "on the exportation"; irrecoverable VAT should not be deducted from EP/CEP; Commerce also lacked record evidence that respondents actually paid VAT on exportation. | U.S.: Commerce’s interpretation is reasonable and entitled to Chevron deference; Methodological Change permits deducting irrecoverable VAT for China. | Held: Commerce’s construction is unlawful. Court applies Chevron Step One: statutory text, structure, and legislative history show § 1677a(c)(2)(B) targets taxes imposed on exportation, not domestic VAT on inputs; irrecoverable VAT should not reduce EP/CEP. Remand ordered to remove VAT deduction. |
| Whether Commerce’s surrogate value for reclaimed rubber (Thai GTA AUV $2.49/kg) was supported by substantial evidence | Xugong & Qihang: Thai AUV was aberrational relative to other countries’ data and historical relationship (reclaimed rubber historically cheaper than natural rubber); Peru’s GTA AUV ($0.53/kg) was better. | U.S.: Thai value is usable, commercially significant quantity, and not aberrational; preference to use one surrogate country. | Held: Commerce’s finding that the Thai AUV was not aberrational is unsupported by substantial evidence; remand to reconsider reclaimed rubber surrogate value. |
| Whether Commerce’s surrogate value for foreign inland freight (Thai Doing Business data using 13.87 km) was supported by substantial evidence and whether Peru data had to be considered | Xugong & Qihang: Commerce’s distance estimate (13.87 km) is unsupported; Peru freight data on the record should have been weighed and may be superior. | U.S.: Commerce had usable Thai data and may rely on primary surrogate; regulation allows valuing normally from a single surrogate country. | Held: Commerce failed to address and weigh competing Peruvian freight data on the record; remand to reconsider the surrogate value for foreign inland freight (including consideration of Peru and reexamination of related factual findings). |
| Whether Commerce permissibly used facts otherwise available and an adverse inference for Xugong’s unreported sales | Xugong: Commerce’s supplemental questionnaires conflicted with prior instructions and it reasonably reported sales; application of AFA was unsupported. | U.S.: Supplemental questionnaire unambiguously requested all EP/CEP sales shipped during POR (even if invoiced later); Xugong failed to provide requested info and did not act to the best of its ability. | Held: Commerce permissibly used facts otherwise available and applied an adverse inference. Finding that Xugong omitted requested direct‑ship CEP sales is supported by record; AFA application was warranted. |
| Whether Commerce lawfully (a) selected only Xugong and Qihang as mandatory respondents and (b) assigned the 70.55% all‑others rate to Trelleborg (and whether denial of voluntary respondent status was lawful) | Trelleborg: selection excluding it was arbitrary; all‑others rate (70.55%) is untethered to its commercial reality (it had a zero new‑shipper margin and would have low margin if examined); Commerce unlawfully denied voluntary respondent status. | U.S.: Commerce acted under 19 U.S.C. § 1677f‑1(c)(2)(B) in limiting individual examinations to the largest exporters feasible to examine; resource/workload and statutory TPEA factors justified denying voluntary status. | Held: Commerce lawfully selected the two largest exporters and reasonably limited examinations; assigning the all‑others rate was permissible; Commerce reasonably denied Trelleborg voluntary status under the statutory factors. No relief for Trelleborg on these claims. |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (U.S. 1984) (framework for reviewing agency statutory interpretations)
- Federal‑Mogul Corp. v. United States, 63 F.3d 1572 (Fed. Cir. 1995) (treatment of recoverable VAT in margin calculations)
- Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (use of statutory text, structure, and legislative history to discern congressional intent)
- Gazelle v. Shulkin, 868 F.3d 1006 (Fed. Cir. 2017) (statutory interpretation principles; use of text, structure, and legislative history)
- Kyocera Solar, Inc. v. U.S. Int’l Trade Comm’n, 844 F.3d 1334 (Fed. Cir. 2016) (statutory construction and canons of interpretation)
- SKF USA Inc. v. United States, 630 F.3d 1365 (Fed. Cir. 2011) (Commerce’s obligation to address important arguments and explain surrogate‑value choices)