DUPONT TEIJIN FILMS, Mitsubishi Pоlyester Film, Inc., SKC, Inc., and Toray Plastics (America), Inc., Plaintiffs, v. UNITED STATES, Defendant, and Tianjin Wanhua Co., Ltd., Fuwei Films (Shandong) Co., Ltd., and Sichuan Dongfang Insulating Material Co., Ltd., Intervenor Defendants.
Court No. 12-00088
United States Court of International Trade
Feb. 7, 2013
RESTANI, Judge
Slip Op. 13-19.
AFMC‘s challenge lacks legal support based on either applicable statutes or case law. Although the statute permits Commerce to use adverse inferences in calculating an AFA rate for a non-cooperating respondent, it is silent as to how adverse these inferences must be. See
CONCLUSION
Orient‘s AFA rate is supported by substantial evidence, and therefore Commerce‘s Third Remand Results are SUSTAINED. Judgment will be entered accordingly.
David M. Horn, Jeffrey I. Kessler, Pat-
Stuart F. Delery, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, and David F. D‘Alessandris, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Depart-
David J. Craven, David A. Riggle, and Saichang Xu, Riggle and Craven, of Chicago, IL, for the Intervenor Defendants.
OPINION AND ORDER
RESTANI, Judge:
This matter is before the court on plaintiffs DuPont Teijin Films, Mitsubishi Polyester Film, Inc., SKC, Inc., and Toray Plastics (America), Inc.‘s (collectively “Plaintiffs“) motion for judgment on the agency record pursuant to USCIT Rule 56.2. Plaintiffs challenge certain findings in the U.S. Department of Commerce‘s (“Commerce“) final results rendered in the second anti-dumping review of polyethylene terephthalate film, sheet, and strip (“PET film“) from the People‘s Republic of China (“PRC“). See Polyethylene Terephthalate Film, Sheet, and Strip from the People‘s Republic of China: Final Results of the 2009–2010 Antidumping Duty Review of the Antidumping Duty Order, 77 Fed. Reg. 14,493 (Dep‘t Commerce Mar. 12, 2012) (“Final Results“). Specifically, Plaintiffs argue that Commerce erred in selecting India as the surrogate country and in using JBF Industries Ltd.‘s financial statement to calculаte surrogate financial ratios. Pls.’ Rule 56.2 Br. in Supp. of Mot. for J. on the Agency R. (“Pls.’ Br.“) 1-2. Defendant and Intervenor Defendants oppose Plaintiffs’ motion. See Def.‘s Resp. to Pls.’ Rule 56.2 Mot. of J. on the Agency R. (“Def.‘s Br.“); Resp. of Def.-Intrvns to the Mot. for J. on the Agency R. Submitted by Pls. For the reasons stated below, the court remands in part and sustains in part the Final Results.
BACKGROUND
In November 2008, Commerce published an anti-dumping duty order on PET film from the PRC. See Polyethylene Terephthalate Film, Sheet, and Strip from Brazil, the People‘s Republic of China and the United Arab Emirates: Antidumping Duty Orders, 73 Fed. Reg. 66,595 (Dep‘t Commerce Nov. 10, 2008). In November 2010, Plaintiffs and others requested an administrative review of certain PRC companies exporting PET film to the United States between November 1, 2009 through October 31, 2010, thereby triggering the second administrative review of PET film from the PRC. See Polyethylene Terephthalate Film, Sheet, and Strip from the People‘s Republic of China: Preliminary Results of the 2009–2010 Antidumping Duty Administrative Review, 76 Fed. Reg. 68,140, 68,140 (Dep‘t Commerce Nov. 3, 2011) (“Preliminary Results“). Commerce selected Intervenor Defendants Tianjin Wanhua Co., Ltd. (“Wanhua“) and Sichuan Dongfang Insulating Material Co., Ltd. (“Dongfang“) as mandatory respondents. Id. at 68,141.
In April 2011, Commerce placed on the record a list of six countries (India, Indonesia, Peru, Philippines, Thailand, and Ukraine) that Commerce‘s Office of Policy had found to be economically comparable to the PRC. See Office of Policy Memorandum of April 7, 2011, P.R. 2/34 (Int_035634) at Attach. 1 at 2. The report was based on the World Bank‘s World Development Report 2010, which reported 2008 per capita gross national income (“GNI“). Id. The Office of Policy Memorandum noted that “the disparity in per capita GNI between India and China has consistently grown in recent years and, should this trend continue, the Department may determine in the future that the two countries are no longer ‘at a comparable level of economic development’ within
On October 3, 2011, Plaintiffs timely submitted pre-preliminary determination comments and placed on the record 2009 per capita GNI data from the World Bank‘s World Development Report of 2011 (the “2009 GNI data“). Pet‘rs’ Pre-Preliminary Cmts. (Oct. 3, 2011), C.R. 2/Ext_030752 at 3. Plaintiffs noted that the 2009 GNI data had been available since the third week of April 2011 and argued that it was the best avаilable information. Id. at 3. Plaintiffs also argued that the 2009 GNI data demonstrated that India was no longer economically comparable with the PRC and that Commerce therefore should select Thailand as the surrogate country. Id. at 3-4; see Preliminary Results, 76 Fed. Reg. at 68,142.
On October 27, 2011, Commerce selected India as the primary surrogate country. Selection of a Surrogate Country Memorandum (Oct. 27, 2011), P.R. 2/34 (INT_035634) at 1. Commerce concluded that India was economically comparable under the statute because its Office of Policy, relying on 2008 GNI data, had determined that India was economically comparable to the PRC. Selection of a Surrogate Country Memorandum 7. Commerce noted that both India and Thailand were economically comparаble and were significant producers of comparable merchandise but selected India because the record contained at least one usable financial statement from an Indian company. Preliminary Results, 76 Fed. Reg. at 68,142.1
After selecting India as the surrogate country, Commerce turned to the available evidence from Indian companies in order to calculate surrogate financial ratios. The record contained the financial statements of two Indian companies: JBF Industries Limited (“JBF“) and Polyplex Corporation Ltd. (“Polyplex“). Preliminary Results, 76 Fed. Reg. at 68,146. In the Preliminary Results, Commerce relied on the financial statement of Polyplex and declined to use the statement from JBF. Id. Commerce noted that both financial statements referenced a countervailable subsidy program and thus, contained evidence of the receipt of subsidies, but Polyplex‘s statement was preferable because it produced identical merchandise whereas JBF produced comparable merchandise. Id.
Before the Final Results, Respondents submitted additional Indian financial statements from Garware Polyester Ltd. (“Garware“), Ester Industries Ltd. (“Ester“), Jindal Poly Films Ltd. (“Jindal“), and JBF‘s 2010 financial statement,2 resulting in a total of six Indian financial statements from five different companies. Issues and Decision Memorandum for the Final Results of the 2009–2010 Administrative Re-
Wanhua and Dongfang received rates of 8.42% and 10.87%, respectively. Final Results, 77 Fed. Reg. at 14,494. Fuwei Films (Shandong) Co., Ltd. received a rate of 8.48%. Id.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to
DISCUSSION
I. Surrogate Country Selection
Plaintiffs argue that Commerce lacks substantial evidence for its selection of India as the surrogate country because the economic comparability determination was undermined by the newly available 2009 GNI data. Pls.’ Br. 11. Plaintiffs also argue that Commerce‘s attempt to downplay the significance of the 2009 data is belied by Commerce‘s treatment of that data in other reviews. Pls.’ Br. 13-14. The Government argues that Commerce reasonably determined that India and the PRC were economically comparable based on the 2008 data and that the change in the World Bank data from 2008 to 2009 was not significant enough to demonstrate that India was not economically comparable. Def.‘s Br. 10-11. Plаintiffs’ argument has merit.
In non-market economy (“NME“) reviews, Commerce must select a surrogate country that is “at a level of economic development comparable to that of the nonmarket economy country” and is a significant producer of comparable merchandise.
Here, Commerce‘s selection of India as the surrogate country is not supported by substantial evidence because Commerce based its decision on 2008 data, even though 2009 GNI data were available on the record, and because Commerce failed to provide a reasoned explanation for disregarding the 2009 data. The 2009 GNI data were placed on the record before Commеrce made its surrogate country selection and Commerce has not suggested that it lacked sufficient time to evaluate the 2009 data.4 Accordingly, both data sets were on the record and equally available to Commerce. The 2009 GNI data, however, were partially contemporaneous with the period of review (“POR“), unlike the 2008 data. Commerce has not explained why it preferred to rely on the 2008 data when data partially contemporaneous with the POR were available.
Commerce justified its decision to disregard the 2009 GNI data by noting that the change in disparity between India‘s and the PRC‘s GNI between 2008 and 2009 was not significant enough to render India not economically comparable to the PRC. Issues and Decision Memorandum 3 (noting its determination was not significantly affected by the 2009 data because there was “only a small change in the proportionality of the per capita GNI of India in relation to that of the PRC between 2008 and 2010.“).5 Implicit in this explanation
is Commerce‘s conclusion that even if the 2009 data were used, India and the PRC would remain economically comparable. See id. at 3-4 (“[T]he disparity in per capital GNI between India and the PRC did not grow so significantly during the POR that the two countries cannot be considered economically comparable for the purposes of this administrative review.“) (emphasis added).
Commerce did not provide any explanation as to why the change in proportionality was too “small” to warrant consideration or affect the economic comparability analysis, why Commerce chose to rely on a change in proportionality between two countries, or how Commerce determines what is an acceptable change in proportionality of GNI. Commerce has previously warned that there is a point at which the disparity between India‘s and the PRC‘s GNI will be too great for India to be considered economically comparable to the PRC. See Office of Policy Memorandum, P.R. 2/34 (INT_035634) at Attach. 1 at 1. Commerce has not, however, provided any explanation as to why the change in disparity between the 2008 and 2009 data either does or does not rise to such a level.6 Commerce merely stated, without further explanation, that the change in disparity was not significant. Issues and Decision Memorandum 3. Additionally, because the Office of Policy did not consider the 2009 GNI data, there is no OP list on which Commerce can base its conclusion
that India and the PRC remain economically comparable even if 2009 data were considered. Because it remains unclear whether India and the PRC are economically comparable based on the 2009 data, Commerce‘s explanation that the 2009 GNI data represented only a small change and did not have a significant affect on its analysis is conclusory and unsupported.
Moreover, Commerce failed to address record evidence that undermines Commerce‘s conclusion that the change in the disparity between India‘s and the PRC‘s GNI was too insignificant to affect the economic comparability analysis. When Plaintiffs placed the 2009 data on the record, Plaintiffs also included an OP list that relied on the 2009 data, issued one month after the OP list issued for this review. See Office of Policy Memorandum of May 25, 2011 in Sodium Hexametaphosphate from the PRC (“Sodium Hex Review“), available at Pet‘rs’ Pre-Preliminary Cmts., C.R. 2/EXT_031388 at Ex. 2 at Attach. 1. The Office of Policy in the Sodium Hex Review did not include India on the list of countries that were economically comparable to the PRC. Id. A country may be excluded from the OP‘s list for reasons other than a lack of economic comparability, such as a lack of available data or because the country is an NME. As Plaintiffs note, however, India has been the surrogate country of choice for the PRC for years because there is generally suffi-
Defendant argues that the exclusion of India from the OP list in the Sodium Hex Review is irrelevant because the list is not exhaustive, and thus, India and the PRC may remain economically comparable even though India is not on the OP list. Def.‘s Br. 7-8. At the outset, the court notes that this explanation was not provided by Commerce and thus, cannot support its determination. Defendant‘s argument is also conclusory because it, like Commerce in its determination, has no support for its statement that India and the PRC could remain economically comparable under the 2009 GNI data. Furthermore, the exclusion of India from the list is relevant not only to whether India remains economically comparable to the PRC, but also to whether Commerce‘s chosen procedures will result in the selection of India as the surrogate country because Commerce generally selects a surrogate country from the OP list. Thus, even if India and the PRC remain economically comparable under some unknown methodology based on the 2009 data, the Sodium Hex Review suggests that Commerce‘s chosen method for determining economic comparability is unlikely to result in the selection of India. Because the record suggests that the use of 2009 GNI data may result in the selection of a surrogate country other than India, Commerce‘s conclusion that the 2009 data did not present a significant enough change to affect its analysis is unreasonable.9
The court remands this issue for Cоmmerce to either provide a reasoned explanation as to why it may disregard the 2009 GNI data or, in the alternative, make a
II. JBF‘s Financial Statement10
Plaintiffs argue that JBF‘s financial statement indicates that it may have benefitted from a countervailable subsidy and thus, Commerce should not have relied on it to calculate financial ratios. Pls.’ Br. 20. Defendant argues that Commerce‘s decision is supported by substantial evidence because even though JBF had a policy for accounting for countervailable subsidies, there was no indication that JBF received any benefit from the subsidy scheme. Def.‘s Br. 13.
In NME reviews, Commerce determines normal value by using the “best available information” frоm the surrogate country to value the factors of production.
The relevant language in JBF‘s financial statement is contained in two accounting notes. See Pet‘rs’ Factors of Production Submission, Def.‘s App. Tab 7, P.R. 2/59 at 31. Accounting note Q states: “Benefit on account of entitlement to Import duty free materials under the ‘Duty Exemption pass book Scheme/Focus Market Scheme/Focus Product scheme’ is recognized as and when right to receive are established as per the terms of the scheme.” Id. Accounting Note N states “Turnover includes sale of goods, waste, export Incentive and excise duty and are net of sales tax, value added tax, discounts and claims.” Id. In the Final Results, Commerce reversed its position and stated that upon closer insрection, the above language did not indicate participation in the DEPB scheme. 77 Fed. Reg. at 14,494; Issues and Decision Memorandum 7. Commerce concluded that the language indicated how a benefit from the DEPB scheme would be accounted for but did not indicate that any benefit had been received and thus, there was insufficient reason to reject JBF‘s financial statement. Issues and Decision Memorandum 7.
There are two distinct issues here. First, is Commerce‘s conclusion that JBF‘s statement was the best available information supported by substantial evidence? Second, is Commerce‘s conclusion that JBF‘s statement does not give rise to a belief or suspicion that JBF may have benefitted from countervailable subsidies suрported by the record? These two issues are distinct because even if JBF‘s statement indicated that it may have benefitted from countervailable subsidies, Commerce could have reasonably concluded that it would be the best available information if the other financial statements on
As to the first issue, Commerce‘s finding that JBF‘s statement is the best available information is supported by the record because the other finanсial statements clearly state that a countervailable subsidy was received and accounted for in a specific line item. Resp‘ts’ Submission of Surrogate Value and Other Factual Information for Prelim. Determination (“Resp‘ts’ Surrogate Value Submission“) (Nov. 28, 2011), P.R. 2/57 (Ext_040739) at Ex. SV-3 at 40 (Jindal) (“Export Incentive under [DEPB] amount to Rs. 152,977,025 ... has been credited in the account of raw material.“); Id. at Ex. SV-2 at 27 (Garware) (“Export Benefits / Incentives are accounted on accrual basis. Accordingly, net estimated benefit aggregating to Rs. 510.21 Lakhs ... against export effected during the period has been credited to Export Benefits earned account which has been included in sales.“); Id. at Ex. SV-1 at 57, 63 (Ester) (line item for “DEPB provision written back” totaling Rs. 14.65 Lacs and stating export benefits under DEPB “hаve been credited to Raw material and Chemical Consumption Account.“); Pet‘rs’ Factors of Production Submission, P.R. 1/118 at Ex. 27 at 62 (Polyplex) (“Import duty benefit under [DEPB] Scheme and profit/loss on sale of DEPB aggregating to Rs. 105.70 Lacs ... are accounted for on accrual basis and have been credited to Raw Materials Consumed.“). This language demonstrates that Jindal, Garware, Ester, and Polyplex received countervailable subsidies and credited those subsidies to the raw material account or other line items. In contrast, the language in JBF‘s statement does not state that a benefit from a countervailable subsidy has been credited to any account or provide a specific amount of any subsidy benefit. Instead, JBF‘s financiаl statement merely indicates that export benefits from the DEPB scheme will be credited “as and when” they are received. Pet‘rs’ Factors of Production Submission, Def.‘s App. Tab 7, P.R. 2/59 at 31. Thus, Commerce‘s determination that JBF‘s statement is the best available information is supported by substantial evidence because it is the financial statement least likely to have been affected by countervailable subsidies.
The second issue of whether JBF‘s financial statement gives rise to a belief or suspicion that JBF may have benefitted from a countervailable subsidy is less clear. Plaintiffs argue that the mere mention of a countervailable subsidy scheme is sufficient to indicate that JBF may have benefitted from a subsidy. Pls.’ Br. 24. Defendant argues that it was reasonable for Commerce to interpret JBF‘s statement as indicating an accounting policy for recording exports incentives, and because no such export incentives were recorded, there is nothing to suggest that JBF may have benefitted from a countervailable subsidy. Def.‘s Br. 13–14.
Commerce‘s finding in the Final Results that JBF‘s financial statement does not suggest that a benefit from a countervailable subsidy may have been received is supported by substantial evidence. Although the statement mentions how countervailable subsidies would be accounted for, the statement does not indicate that any benefit was received in the 2010-2011 fiscal year. The notes state that a benefit will be recorded “as and when” such a benefit is received, but no benefit attributed to the DEPB scheme is recorded in the financial statement. See
Ultimately, Plaintiffs’ argument fails because it requires the court to choose between two reasonable interpretations of the financial statement. See Consolo v. Fed. Mar. Comm‘n, 383 U.S. 607, 620 (1966) (“[T]he possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency‘s finding from being supported by substantial evidence“). Reading accounting notes Q and N together, it may be reasonable to find that Turnover, as listed on the financial statement, has been calculated to include export incentives, and because the DEPB scheme is mentioned under export incentives, Turnover includes export incentives from the DEPB scheme. It is also reasonable, however, for Commerce to read notes Q and N as boilerplate accounting policies that merely indicate when and how a DEPB benеfit would be recorded, and thus, do not indicate that a DEPB benefit was included in the financial statement calculations such that it could distort the financial ratio calculations.
Plaintiffs also argue that Commerce‘s position in the Final Results is inconsistent with Commerce‘s treatment of Garware‘s 2008 financial statement in the first administrative review of PET film and Commerce‘s position in Tires from China. Pls.’ Br. 23-24. Plaintiffs’ arguments are not availing. Garware‘s 2008 financial statement includes a general policy on how to account for subsidies, but, unlike JBF‘s statement, Garware‘s statement also included the actual dollar amount of the subsidies received.11 See P.R. 2/18 (EXT_030843) at Ex. 3 at 31. Thus, Garware‘s 2008 statement indicates a receipt of a subsidy whereas JBF‘s does not, and Commerce was justified in treating the two statements differently.
In Tires from China, Commerce rejected the financial statements of Balkrishna and Apollo because the financial statements indicated that the raw material line item had been calculated by including income earned pursuant to the DEPB scheme. Issues and Decision Memorandum for the Antidumping Investigation of Certain New Pneumatic Off-the-Road Tires from the People‘s Republic of China,
Consumption of Raw Materials is arrived at after adjusting the difference between the costs of indigenous/duty paid imported raw materials and international cost of raw materials entitled to be imported/imported under Duty Exemption Scheme of the Government of India against direct/indirect exports made/to be made by the Company during the year.
Id. at 39. The Apollo statement noted “Export Incentive in the form of Advance Licenses / credit earned and Duty Entitlement Pass Book Scheme are treated as income in the year of export ... and are credited to the Raw Material Consumption account.” Id. at 38. As noted by Commerce, these financial statements indicate that the raw material line item had been adjusted to account for benefits obtained through the DEPB scheme. There is no indication in JBF‘s statement that the raw material, or any other line item, has been adjusted to include benefits from the DEPB scheme. Also in Tires from China, Commerce relied on the financial statement of companies that mentioned the DEPB scheme but that did not indicate the receipt of any benefit from the scheme. See Tires from China Issues and Decision Memorandum 40 (finding insufficient evidence to reject financial statement that referenced DEPB scheme but indicated zero revenue had been received from the scheme). Here, Commerce‘s approach of relying on JBF‘s statement is consistent with Tires from China because although the DEPB scheme is mentioned, the statement does not indicate that JBF benefitted from the scheme. Thus, Commerce‘s interpretation of JBF‘s statement is consistent with Commerce‘s policy and supported by substantial evidence.
CONCLUSION
The court remands for Commerce to provide a reasoned explanation for disregarding the 2009 World Bank GNI data or, in the alternative, to make a surrogate country selection with the benefit of the 2009 data. The court sustains Commerce‘s finding that JBF‘s statement was the best available information and that JBF‘s financial statement should not be excluded based on the receipt of a countervailable DEPB subsidy.
Commerce shall file its remand determination with the court within 60 days of this date. The parties shall have 30 days thereafter to file objections, and the Government will have 15 days thereafter to file its response.
JANE A. RESTANI
JUDGE
Feb. 22, 2013.
Notes
| 2008 GNI data ($) | 2009 GNI data ($) | |
|---|---|---|
| PRC | 2,940 | 3,590 |
| India | 1,070 | 1,180 |