OPINION AND ORDER
This action challenges the Department of Commerce’s (“Commerce”) final results rendered in the third antidumping (“AD”) duty review of certain wooden bedroom furniture (“WBF”) from the People’s Republic of China (“PRC”).
See Wooden Bedroom Furniture from the People’s Republic of China,: Final Results of Anti-dumping Duty Administrative Review and New Shipper Reviews,
74 Fed.Reg. 41,374, 41,374 (Dep’t Commerce Aug. 17, 2009)
(“Final Results”)-, Wooden Bedroom Furniture From the People’s Republic of China: Amended Final Results of Antidumping Duty Administrative Review and New Shipper Reviews,
74 Fed. Reg. 55,810, 55,810 (Dep’t Commerce Oct. 29, 2009)
(“Amended Final Results
”). The plaintiffs, Lifestyle Enterprise, Inc. (“Lifestyle”), Orient International Holding Shanghai Foreign Trade Co., Ltd. (“Orient”), Guangdong Yihua Timber Industry Co., Ltd. (“Yihua Timber”), Dream Rooms Furniture (Shanghai) Co., Ltd. (“Dream Rooms”), Ron’s Warehouse Furniture, Emerald Home Furnishings, LLC, and Trade Masters of Texas, Inc., submitted motions for judgment on the agency record. The intervenor defendants, American Furniture Manufacturers Committee for
BACKGROUND
In January 2005, Commerce published the AD duty order on WBF from the PRC. Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Wooden Bedroom Furniture From the People’s Republic of China, 70 Fed.Reg. 329, 329 (Dep’t Commerce Jan. 4, 2005). On January 31, 2008, AFMC requested an administrative review of 213 exрorters and producers of merchandise entered into the United States between January 1, 2007 and December 31, 2007, thereby triggering the third administrative review of WBF. Def.’s App. to Resp. to Mot. for J. Upon the Admin. R. (“Def.’s App.”) Doc. 18. On February 27, 2008, Commerce published a notice that it would initiate an administrative review and would publish a separate initiation notice for WBF containing additional detail. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 73 Fed.Reg. 10,422, 10,422 (Dep’t Commerce Feb. 27, 2008) (“February Notice ”). On March 7, 2008, Commerce published a notice initiating the WBF administrative review and identifying the 228 exporters and producers under review. Notice of Initiation of Administrative Review of the Antidumping Duty Order on Wooden Bedroom Furniture From the People’s Republic of China, 73 Fed.Reg. 12,387, 12,387 (Dep’t Commerce Mar. 7, 2008) {“March Notice ”).
On March 11, 2008, Commerce informed the parties of its intent to limit the number of individually reviewed respondents and identified the March Notice as the initiation notice. Def.’s App. Doc. 48, 347. Commerce accepted withdrawal from review within 90 days of publication, i.e., from March 7 until June 5, 2008. Def.’s App. Doc. 347, at 2; see 19 C.F.R. § 351.213(d)(1). Commerce selected for review the two largest exporters by volume as of June 6, 2008: Yihua Timber and Orient. Def.’s App. Doc. 347, at 7. Commerce informed Orient that its questionnaire response was deficient. Def.’s App. Doc. 366, 368. Orient requested to withdraw the confidential version of its questionnaire response but not its separate rate certification 3 and informed Commerce it would significantly limit its participation in the review. Def.’s App. Doc. 374, at 1-2.
In February 2009, Commercе published its preliminary results.
Wooden Bedroom Furniture From the People’s Republic of China: Preliminary Results of Anti-
Dream Rooms also filed a separate rate certification. App. to Br. of Lifestyle Enterprise, Inc., Trade Masters of Texas, Inc., Emerald Home Furnishings, LCC, and Ron’s Warehouse Furnishings (“Pl.’s App.”) Tab 10, at 4, 16. Commerce issued a supplemental questionnaire and confirmed through Federal Express that the package had been delivered to Dream Rooms. Def.’s App. Doc. 446, 475. Dream Rooms did not respond to the supplemental questionnaire and claimed to have never received it. Def.’s App. Doc. 549. Commerce found that Dream Rooms had failed to demonstrate eligibility for a separate rate and assigned it the PRC-wide rate.
Preliminary Results,
In August 2009, Commerce published its
Final Results. Final Results,
In determining surrogate values,
4
Commerce preliminarily relied upon financial statements from five Filipino companies: Maitland-Smith Cebu, Inc. (“MaitlandSmith”), Casa Cebuana, Inc. (“Casa Cebuana”), Las Palmas Furniture, Inc. (“Las Palmas”), Global Classic Designs, Inc. (“Global Classic”), and Diretso Design Furnitures, Inc. (“Diretso Design”). Def.’s App. Doc. 480, at 5-8. Commerce preliminarily determined not to rely on those of Arkane International Corp. (“Arkane”) because the company’s financial statements indicated involvement in mining.
Id.
at 6. Commerce also preliminarily determined not to rely on the financial statements of Insular Rattan and Native Products Corp. (“Insular Rattan”).
Id.
In
JURISDICTION & STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will uphold Commerce’s final determinations in AD duty reviews unless they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(l)(B)(i).
DISCUSSION
I. Initiation and Selection of Respondents
Orient and Lifestyle allege that Commerce violated its own regulation when it failed to issue sufficient notice of initiation of review, resulting in the erroneous selection of Orient as a mandatory respondent. Pl.’s Mem. of P. & A. in Supp. of Rule 56.2 Mot. or J. on the Agency R.(“Pl.’s Br.”) at 20; Intervenor PL’s Mem. of Law in Supp. of Mot. for J. on the Agency R. Pursuant to Rule 56.2 (“Intervenor PL’s Br.”) at 8. Plaintiffs request the court void the review ab initio or remand to Commerce to reconsider its selection of Orient. PL’s Br. at 28; Intervenor PL’s Br. at 17-18. This claim lacks merit.
Commerce “[w]ill publish the notice of initiation of the review
no later than
the last day of the. month following the anniversary month,” or, in this case, February 29, 2008.
5
,
6
See
19 C.F.R. § 351.221(c)(l)(i)
Although Commerce appears to have violated its own regulation by failing to individually name the companies under review by the applicable deadline,
7
the failure to meet a procedural requirement does not automatically void the agency’s subsequent action
8
See Brock v. Pierce Cnty.,
What Orient seeks here is to be free of the review based on its fourth highest sales volume at the earlier notice date. Oral Arg. Tr., 17, Nov. 16, 2010. Commerce’s decision to select just two respondents, however, is not mandated. Orient could have been and probably should have been selected as an additional respondent even using sales volume at the earlier initiation date. 9 Whatever “prejudice” Orient has suffered in not avoiding a legally permissible review, it is not one which the regulation was intended to guard against.
II. Separate Rate & AFA Determinations
A) Orient’s Separate Rate Status
AFMC alleges Commerce properly concluded Orient did not have separate rate status in the Preliminary Results, but erred in granting Orient a separate rate status in the Final Results. Intervenor Def.’s Rule 56.2 Br. in Supp. of Mot. for J. on the Agency R. (“Intervenor Def.’s Br.”) at 35. This claim lacks merit.
Commerce granted Orient its separate rate status on the basis that Commerce “did not clearly inform Orient ... of [its] obligation” to otherwise respond to the AD questionnaire.
Issues and Decision Memorandum
at 83. Orient had affirmatively demonstrated an absence of de
B) Orient’s AFA Rate
As indicated, Orient initially participated in the review, but withdrew the confidential version of its questionnaire response relating to its cost and prices and informed Commerce it would significantly limit its participation in the review after Commerce informed Orient its questionnaire response was deficient. Def.’s App. Doc. 366, 368, 374. In the Final Results, Commerce assigned Orient a rate of 216.01% based on adverse facts available (“AFA”) due to Orient’s failure to respond to Commerce’s questionnaire. Issues and Decision Memorandum at 85-87. Commerce calculated this rate by choosing the highest company-specific calculated rate from any segment of the proceeding: 216.01% assigned to Shenyang Kunyu Wood Industry Co., Ltd. (“Kunyu”) in a prior administrative review. Issues and Decision Memorandum at 87-88; Wooden Bedroom Furniture from the People’s Republic of China: Final Results of the 2001-2005 Semi-Annual New Shipper Reviews, 71 Fed.Reg. 70,739, 70,739 (Dep’t Commerce Dec. 6, 2006). Commerce attempted to corroborate Kunyu’s rate as to Orient with the finding “that the margin of 216.01 percent was within the range of margins calculated on the record of the instant administrative review.” Issues and Decision Memorandum at 88. Commerce found that “[b]ecause the record of this administrative review contains margins within the range of 216.01 percent, ... the rate from the 2004 2005 review continues to be relevant for use in this administrative review.” 11 Id.
Lifestyle and Orient allege that Commerce erred when it assigned Orient the PRC-wide rate of 216.01% as an AFA rate, despite Orient’s separate rate status.
12
In calculating an AFA rate, Commerce may rely on secondary information, which includes information derived from the petition, a final determination, or any previous review or determination. 19 U.S.C. § 1677e(b); 19 C.F.R. § 351.308(c)(1). Where Commerce uses “secondary information rather than information obtained in the course of an investigation or review,” it must corroborate that information by demonstrating that it has probative value. 19 U.S.C. § 1677e(e);
KYD, Inc. v. United States,
Corroboration demands that Commerce use reliable facts with “some grounding in commercial reality.”
13
Gallant,
Here, the highest separate rate assigned in the current review to a company other than Orient was 29.89%, which was the rate assigned to eighteen parties.
Fi
C) Dream Rooms’s Separate Rate Status
Lifestyle alleges that Commerce erred when it assigned the PRC-wide rate to Dream Rooms. Pl.’s Br. at 41. Commerce assigned Dream Rooms the PRC-wide rate on the basis that Dream Rooms had failed to reply to the supplemental separate rate questionnaire.
Issues and Decision Memorandum
at 76; Def.’s App. Doc. 130, 446, 475. Lifestyle asserts Dream Rooms never received the supplemental questionnaire. Lifestyle Enter., Inc., Trade Masters of Texas, Inc., Emerald Home Furnishings, LLC and Ron’s Warehouse Furniture D/B/A Vineyard Furniture Int’l, LLC Resp. to Mot. for J. on the Agency R. Pursuant to Rule 56.2(c) Filed by the Am. Furniture Manufacturers Comm, for Legal Trade and Vaughan-Bassett Furniture Co., Inc. and Br. in Support Thereof (“PL’s Resp. Br.”) at 16-17; Def.’s App. Doc. 549. Unlike prior Commerce cases where lack of receipt was supported, here there was no demonstrated error by Commerce, external explanations, or other proof.
16
See, e.g., Issues and Decision
III. Normal Value
A) Wood Inputs
AFMC alleges that Commerce erred because, 1) Commerce failed to adequately explain why the limited gross weight data from the World Trade Atlas (“WTA”) was more reliable in valuing wood inputs than volume data, including some estimated data, from the Philippines National Statistics Office (“NSO”) data, and 2) Commerce improperly accepted and relied upon data submitted in Yihua Timber’s rebuttal brief denying AFMC the opportunity to respond. Intervenor Def.’s Br. at 16-22. AFMC asks the court to remand the issue to Commerce for further deliberation on the surrogate value for wood inputs. Id. at 22. This claim has merit. 17
First, Commerce failed to explain why it chose gross weight data (from the WTA) over volume data (from the NSO). Commerce must explain why volume data are not the superior approach given the patent complications with using gross weight data with wood inputs, such as differences in gross weight between high-moisture green wood imported into the Philippines and kiln-dried wood consumed by Yihua Timber and that different types of packaging of the same wood may result in distortions in the gross-weight data. Intervenor Def.’s Br. at 15, 20-21. Commerce did more than choose between data from the WTA and NSO: It changed the measurement of wood inputs from volume to gross weight without explanation. Differences between the NSO data’s net and gross weights fail to explain why the NSO data’s volume data is anomalous.
18
,
19
Given the essential nature of wood to wooden bed
Second, Commerce, contrary to its normal practice, permitted Yihua Timber to submit data in Yihua Timber’s response brief and Commerce relied upon the data in the
Final Results. See Issues and Decision Memorandum
at 6; 19 C.F.R. § 351.301(b)(2) (setting the deadline for submission of factual information to 140 days after initiation of the administrative review). In such a ease, parties must receive a full and fair opportunity to respond, which AFMC will have on remand.
See Old Republic Ins. Co. v. United States,
B) Medium Density Fiberboard
AFMC alleges that Commerce erred because Commerce failed to, 1) use official Philippine Standard Commodity Classification (“PSCC”) descriptions of tariff subheadings in lieu of those published by the WTA, and 2) distinguish between 4411.21 and 4411.29, both of which could have been used given Commerce’s reasoning. Intervenor Def.’s Br. at 23-25. This claim has merit.
In the Preliminary Results, Commerce assigned a surrogate value for medium density fiberboard (“MDF”) using WTA tariff heading 4411, generally. In the Final Results, Commerce assigned the surrogate value for MDF using only WTA tariff heading 4411.29 because the tariff subheading covered densities from 0.5 g/cc to 0.8 g/ce, providing a more precise value for Yihua Timber’s MDF which ranged from 0.45 g'cc to 0.88 g/cc. Issues and Decision Memorandum at 11. Commerce determined that only one other subheading, 4411.39, covered part of the density range reported by Yihua Timber and, therefore, using subheadings which did not have specific densities “would detract from the accuracy of the calculation.” Issues and Decision Memorandum at 11-12.
First, Commerce statеd as a basis for its decision to use a single subheading rather than an aggregate of subheadings or the broader tariff heading “would detract from the accuracy of the calculation,”
Issues and Decision Memorandum
at 12. But this does not explain why the WTA tariff headings rather than the PSCC tariff
Second, AFMC argues that when Commerce chose to use a subheading rather than a heading, Commerce failed to explain why it selected “Other” MDF under 4411.29 rather than “Not mechanically worked or surface covered” MDF under 4411.21. 21 Intervenor Def.’s Br. at 24-25. Commerce’s failure to offer any factual basis for its selection of “Other” over “Not mechanically worked or surface covered” also necessitates that this issue be remanded.
C) Brokerage and Handling Charges
In the Preliminary Results, Commerce valued brokerage and handling (B & H) charges at 7.86% of the value of exportеd merchandise based on the Philippine Tariff Commission’s (“PTC”) Customs Administrative Order No. 01-2001, using the average of eight shipment value brackets from zero to 200,000 pesos. 22 App. to Lifestyle Enter., Inc., Trade Masters of Texas, Inc., Emerald Home Furnishings, LCC, and Ron’s Warehouse Furniture, D/B/A Vineyard Furniture Int’l, LLC Resp. to the Mot. for J. on the Agency R. Pursuant to Rule 56.2(c) Filed by the Am. Furniture Manufacturers Comm, for Legal Trade and Vaughan-Bassett Furniture Co., Inc. and Br. in Supp. Thereof (“PL’s Resp. App.”) Tab 15, at 8, Attach. 3. In the Final Results, Commerce found that it had erred in the Preliminary Results in not applying the rate for shipments over 200,000 pesos in the PTC’s order. Issues and Decision Memorandum at 28. Commerce relied on Yihua Timber’s high average entry value and used the PTC B & H rate for shipments valued at over 200,000 pesos, significantly lowering B & H value. 23 Id.
AFMC alleges that Commerce failed to calculate a value for handling charges at all because the source of the B
&
H calculations, the PTC’s order, reported only brokerage fees, thus accounting
Yihua Timber alleges that Commerce double-counted when it calculated a surrogate value for PRC B & H where such charges were included in the ME ocean freight B & H.
26
Consol. PL’s Mem. in Supp. of Rule 56.2 Mot. for J. on the Agency R. (“Consol. PL’s Br.”) at 58. This claim lacks merit. Commerce determined that Yihua Timber did not “adequately demonstrate! ] that its B & H was actually provided by an ME supplier.”
Issues and Decision Memorandum
at 28. Commerce based this finding on Yihua Timber officials’ comments that “foreign shipping companies can only handle ocean transportation, where other services ... have to be handled by a local agent.”
Id.
at 28. Furthermore, Commerce found that Yihua Timber failed to partition the PRC B & H charges from the ME ocean freight charges.
Id.
at 28. Thus, Yihua Timber could not demonstrate what double-counting might have been occurring. Further, given the very low rate of B & H charges in the
Final Results
it is unlikely that significant double-counting occurred. Also, Commerce used dаta provided by the NME producer itself.
27
Id.
Thus, Com
D) Electricity
Commerce selected a surrogate value for electricity from The Cost of Doing Business in Camarines Sur, rejecting Yihua Timber’s argument that Commerce should instead use Doing Business in the Philippines. Issues and Decision Memorandum at 22-23. According to Commerce, The Cost of Doing Business in Camarines Sur provides provincial data specific to industrial users of electricity while Doing Business in the Philippines covers a broader geographical area but aggregates residential and commercial customers. Id. at 22.
Yihua Timber alleges that Commerce failed to combine the data sets and use at least some of the data from
Doing Business in the Philippines,
which provides disaggregated data on industrial electricity usage for one region and business electricity usage for another.
28
Intervenor Pl.’s Br. at 56-57. AFMC asserts that this claim was not exhausted at the administrative level because Yihua Timber failed to raise the claim that Commerce should combine the two data sets rather than merely apply the data from
Doing Business in the Philippines.
Intervenor Def.’s Resp. Br. at 37. Yihua Timber counters that it did not have the opportunity to raise the issue because Commerce’s reasoning that the use of industrial data took preference over broader geographical coverage was not articulated until the Final Results. Intervenor PL’s Response Br. at 28. Commerce is not required to consider every possible data set combination.
Hebei Metals & Minerals Imp. & Exp. Corp. v. United States,
IV. Surrogate Financial Ratios
A) Admission of Financial Statements
Yihua Timber and AFMC allege that the reliance on financial statements of certain surrogate companies was not supported by substantial evidence. Consol. PL’s Br. at 15; Intervenor Def.’s Br. at 27. In general, these claims assert that, 1)
Dorbest TV
did not foreclose arguments based on
i. Economies of Scale
Yihua Timber alleges that Commerce distorted the financial ratio data based on economies of scale because the companies selected, unlike the respondents, were both small in operation and customer base, had a different production process than Yihua Timber, or had financial ratio data which was aberrational or double-counted significant costs. 29 Consol. Pl.’s Reply Br. in Supp. of Its Rule 56.2 Mot. for J. on the Agency R. at 2 (“Consol. PL’s Reply Br.”); see Consol. PL’s Br. at 15-16. 30
In
Dorbest IV,
the respondent challenged Commerce’s use of seven companies where the larger companies had SG & A ratios of 24.38%, 13.53%, and 10.44% and the smaller companies had SG & A ratios of 31.51%, 34.39%, 47.30%, and 15.66%.
Dorbest IV,
ii. Mining Operations (Arkane)
Commerce concluded that Arkane was a producer of comparable merchandise because it did not have a significant mining operation. Issues and Decision Memorandum at 42-43; App. to Guangdong Yihua Timber Industry Co., Ltd.’s Reply Br. in Supp. of Its Rule 56.2 Mot. for J. on the Agency R. (“Consol. Pl.’s Reply App.”) Tab 10, at Ex. 18. Commerce identified two conflicting statements in Arkane’s financial statements, which referred to Arkane as, “a family owned corporation principally engaged in the manufacturing of Rattan and wood furniture for export,” and as, “engaged in small scale mining.” Issues and Decision Memorandum at 42. Commerce found the latter statement insignificant because other “record evidence provides a reasonable basis to conclude that Arkane is, in fact, engaged primarily in the production of furniture and not mining,” relying on the Articles of Incorporation, secondary purposes of the corporation, and the absence of other references to mining in the financial statements. Id. at 42-43.
AFMC alleges Commerce erred when it admitted Arkane’s financial statements to calculate surrogate financial ratios because Commerce incorrectly found that Arkane did not have a major mining operation. Intervenor Def.’s Br. at 27-30. In creating surrogate values, Commerce uses data from producers of “comparable merchandise,” considering end uses, physical characteristics, and production processes.
See Issues and Decision Memorandum for the Final Results of Administrative Review of Certain Cased Pencils from the People’s Republic of China,
A-570-827, ARP 12/01/1999 11/30/2000, at 14-18 (July 25, 2002),
available at
http:// ia.ita.doc.gov/frn/summary/prc/02-18856-1. pdf (last visited Feb. 10, 2011). Commerce, therefore, was merely obligated to show substantial evidence that Arkane was a
significant
producer of wooden furniture production. 19 U.S.C. § 1677b(c)(l). In determining Arkane did not engage in significant mining operations, Commerce permissibly chose between two acceptable inconsistent conclusions.
See Consolo v. Fed. Maritime Comm’n,
AFMC further alleges that if Arkane did not have a mining operation, Arkane’s financial statements were unreliable because of the narrative error. Intervenor Def.’s Br. at 27-30. Where Commerce does not rely upon fundamentally flawed or incomplete financial statements, minor narrative inconsistencies do not tend to render entire financial statemеnts invalid.
Compare Issues and Decision Memorandum for the Administrative Review of Chlorinated Isocyanurates from the People’s Republic of China,
A-570-898 ARP 06/01/2007 05/31/2008, at 11-13 (Dee. 14, 2009),
available at
http://ia.ita.doc.gov/frn/ summary/prc/E9-29731-l.pdf (last visited Feb. 10, 2011) (accounting irregularities sufficient to invalidate surrogate companies),
with Issues and Decision Memorandum for the Antidumping Duty Investigation of Certain Frozen Fish Fillets from the Socialist Republic of Vietnam,
A-552-801, at 76-78 (June 16, 2003),
available at
http://ia.ita.doc.gov/frn/summary/vietnam/ 03-15794-l.pdf (last visited Feb. 10, 2011) (articles questioning the clarity of price data from financial statements do not ren
iii. Comparable Merchandise (Diretso/Palmas/SCT)
Commerce determined that Diretso Design produced comparable wooden furniture to Yihua Timber and, therefore, Diretso Design’s financial statements were sufficiently specific. Issues and Decision Memorandum at 43. In doing so, it relied on website printouts of www.diretso.com to determine that the products were comparable. Id. Yihua Timber alleges that Commerce confused two distinct companies, Diretso Design and Diretso Trading, and thereby subjected Yihua Timber to an aberrationally high SG & A rate of 70.37%. Consol. Pl.’s Br. at 22. Yihua Timber bases its claim on website printouts that describe “Diretso Trading” then show images of www.diretso.com, a website which does not identify itself as belonging to eithеr Diretso Trading or Diretso Design. Id. at 23; Def.’s App. Doc. 431, at Attach. 6. Yihua Timber’s contention before Commerce was that the evidence, “is not a description of Diretso Design, but rather, of Diretso Trading (perhaps a Sister Company).” See Def.’s App. Doc. 559, at 34. Commerce did not respond to this comment in the Final Results and therefore does not provide substantial evidence to support its use of Diretso Design. See Issues and Decision Memorandum at 43. 31
In the alternative, Yihua Timber alleges that the evidence on the record does not support the conclusion that the Diretso identified by Commerce produces comparable wooden furniture. Consol. PL’s Br. at 24. Commerce relied on the website printouts as evidence that Diretso Design produces comparable merchandise, demonstrating that Diretso Design produced sofas, chairs, tables, and accessories. 32 Issues and Decision Memorandum at 43. Yihua Timber produces substantially comparable merchandise: wooden chairs, tables, bookcases, and bedroom furniture. The websites used by Commerce constitute substantial evidence that the company described therein produces comparable merchandise to respondent. The matter is remanded so that Commerce may determine if the financial statements match the correct company.
Yihua Timber alleges Commerce improperly selected Las Palmas because Commerce failed to provide substantial evidеnce explaining Las Palmas’s extensive sales operation as well as its retail aspect. Consol. PL’s Br. at 25-26. Commerce concurs that Las Palmas sells furniture at both retail and wholesale and has a large sales operation, but contends that the sales operations and retail presence need not be explained because surro
Yihua Timber alleges that SCT, like Diretso Design and Las Palmas, is not operationally similar to Yihua Timber and does not produce comparable merchandise because SCT, 1) does not produce a significant amount of wooden furniture, 2) sells to retail businesses as opposed to contract orders at the wholesale level therefore having a different marketing and advertising operation, and 3) produces dining room and living room furnishings. Consol. Pl.’s Br. at 28. First, Commerce correctly relied on evidence in the record that SCT produces wooden furniture.
33
Issues and Decision Memorandum
at 45; Consol. Pl.’s Reply App. Tab 9, at Attach. 6. Second, with regard to Yihua Timber’s claim that SCT supplies retail businesses, it is unclear what Yihua Timber seeks to achieve by distinguishing between a company that sells to retail and one which sells to wholesale. Indeed, here this appears to be a distinction without difference. Even if the distinction is meaningful, Commerce cross-references its earlier arguments, stating that it disagrees with Yihua Timber’s arguments, “for the same reasons as discussed above with respect to Diretso Design and Las Palmas.”
Issues and Decision Memorandum
at 45. In the discussion of Las Palmas, Commerce asserted that Yihua Timber had failed to provide evidence that Yihua Timber itself sells or does not sell to retail businesses and that expenses derived from selling retail also apply to sales at the wholesale level.
Id.
at 43; Consol. PL’s Reply App. Tab 9, at Attach. 6. Absеnt evidence distinguishing either SCT or Las Palmas from Yihua Timber, Commerce reasonably relied on the evidence in the record to conclude that the companies sold comparable merchandise "with similar marketing expenses.
See
Consol. PL’s Reply App. Tab 9, at Attach. 6. Third, Yihua Timber’s argument that SCT produces non-WBF is irrelevant as Yihua Timber also produces non-WBF. Furthermore, the comparable merchandise in question is not WBF, but wooden furniture generally.
See
Oral Arg. Tr., 27, Nov.
Yihua Timber alleges that Commerce’s reliance on Global Classic’s financial statements was impermissible because Global Classic does not have a comparable production process. Consol. Pl.’s Br. at 30-31. Yihua Timber asks the court to reject Commerce’s use of Global Classic’s financial statements. Commerce included Global Classic’s contracting expenses as factory overhead cost, leading to a 74.77% overhead ratio, more than twice the other surrogate companies. See
Issues and Decision Memorandum
at 40-41. Global Classic’s contracting expenses are 53% of its materials, labor, and energy (“MLE”). Consol. Pl.’s Br. at 31. Global Classic’s data does not indicate if labor is contracted out. In contrast, Yihua Timber does not use contractors at all in its production process. Consol. Pl.’s App. Tab 3, at 10. Although, as the Government claims, Commerce need not “duplicate the exact production experience,” in determining the production experience of the NME respondent,
Nation Ford Chem. Co. v. United States,
B) Rejection of Financial Statements
In the Final Results, Commerce rejected data from Insular Rattan on the basis that such data were incomplete according to the Philippines’ Statement of Financial Accounting Standards (“SFAS”) beсause the record contained a tax return but not the notes or accounting policies. Issues and Decision Memorandum at 35.
Yihua Timber alleges that data on the record were complete and reliable because Commerce misread the record to include a requirement that the record contain not only tax returns but also notes and accounting policies.
See
Consol. Pl.’s Br. at 33. Yihua Timber’s argues that Commerce had the same evidence before it in the second administrative review and decided to rely on Insular Rattan’s financial statements.
See id.
at 32-33. In this case, as opposed to the second administrative review, new facts were placed on the record regarding the Philippine requirement for notes to financial statements.
Issues and Decision Memorandum
at 35. The SFAS policies placed on the record in this review support Commerce’s assertion that the SFAS considers notes and accounting policies an integral part of complete financial records. Intervenor Def.’s Resp.App. Tab 12. Commerce was apparently unaware of this policy during the second administrative review and therefore relied upon Insular Rattan’s documents. The new requirements placed on the record in this review constitute new
C) Ratio Calculations
i. Factory Overhead
Yihua Timber alleges that Commerce double-counted by including surrogate companies’ indirect materials and indirect labor in factory overhead while requiring Yihua Timber to report indirect materials and indirect labor as MLE. Consol. PL’s Br. at 34-35. Yihua Timber asks the court to remand so that Commerce can disqualify higher ratio companies as dissimilar producers of comparable merchandise or realign the factory overhead and MLE of surrogate companies with Yihua Timber’s. Consol. PL’s Br. at 41. This claim lacks merit.
Commerce found that Yihua Timber had failed to provide a line-item analysis of its indirect materials.
Issues and Decision Memorandum
at 53. Additionally, Commerce determined that, “each of the surrogate companies has a distinct line-item for labor, as well as energy and materials,” and therefore found “no evidence that direct material, labor, or energy costs are included in the subcontracting expenses line-items.”
Id.
at 56. Once Commerce selects surrogate companies, Commerce has some discretion in valuing NME overhead, “[a]s factory overhead is composed of many different elements, the cost for individual items may depend largely on thе accounting method used by the particular factory.”
Magnesium Corp. of Am.,
ii. Work-in-Process
Yihua Timber alleges Commerce erred when it treated “period changes in the value of work-in-process and/or finished goods inventory in addition to, or subtracted from, the surrogate producer’s cost of materials,” because accounting in the Philippines, “assigns the costs of both MLE and factory overhead costs to work-in-process and finished inventory.” Con-
Yihua Timber further alleges that Commerce erred in not deducting MaitlandSmith’s exchange rate gain from SG & A expenses, thus overstating MaitlandSmith’s financial ratios. Consol. Pl.’s Br. at 47-48. Yihua Timber provides no citation indeed because no citation exists in this record that this is common practice, as it alleges. Furthermore, Yihua Timber raised this issue for the first time on rebuttal, thus likely failing to exhaust administrative remedies.
See Dorbest IV,
D) Constructed Export Price Offset
Yihua Timber alleges that Commerce failed to reduce normal value whenever normal value “constitutes a more advanced stage of distribution than the level of trade of the constructed export price,” 19 U.S.C. § 1677b(a)(7)(B), because Yihua Timber’s constructed export price, i.e. the U.S. price, is at a level of trade involving no significant selling expenses whereas several of the surrogate companies used for determining normal value are smaller design shops selling at retail. Consol. Pl.’s Br. at 48;
see also
19 U.S.C. § 1677b(a)(7)(B). Commerce has discretion not to apply a constructed export price offset where it cannot accurately determine the specific indirect selling expenses incurred on sales reflected in the surrogate financial statements because “the plain language of the statute” permits Commerce “the discretion to determine what other expenses will be included in its calculation of NY in an NME.”
GPX III,
Y. Surrogate Labor Value
Commerce requests a voluntary remand to redetermine the surrogate value for Yihua Timber’s labor costs in light of
Dorbest
IV.
37
Def.’s Br. at 77. The Federal Circuit has concluded that Commerce’s wage rate regression methodology is inconsistent with 19 U.S.C. § 1677b(c)(4);
Dorbest IV,
VI. Negative Net U.S. Price
AFMC alleges that in the Final Results Commerce errоneously compared normal value to U.S. sales price without properly accounting for statutory deductions where the deductions resulted in a negative value for U.S. price. 38 Intervenor Def.’s Br. at 31-32; Intervenor Def.’s App. Tab 33, at 8. Commerce does not admit error but asks for a remand because the parties did not have an opportunity to comment. As this matter is remanded for many other matters and the parties and Commerce were not in a position to address this issue it is appropriate to grant Commerce’s request for a voluntary remand so that it may correct its error if there is one or explain its methodology. 39
VII. Combination Rates 40
AFMC alleges Commerce erred when it declined to impose combination rates on
Commerce has a duty to prevent circumvention of AD law and may do so by imposing combination rates.
42
See Shandong Huarong Gen. Grp.,
CONCLUSION
For all the foregoing reasons, the court remands the matter for Commerce to explain or otherwise resolve Orient’s separate rate, the data set for wood inputs, the tariff heading for medium density fiberboard, whether Diretso and Global Classic produce comparable merchandise through a comparable production process, surrogate labor value, and negative export pric
Commerce shall file its remand determination with the court within 90 days of this date. The parties have 30 days thereafter to file objections, and the Government will have 15 days thereafter to file its response.
Notes
. Lifestyle is the U.S. importer of WBF from Orient, Yihua Timber, and Dream Rooms. Orient, Yihua Timber, and Dream Rooms are PRC-based producers of WBF. AFMC is an organization representing U.S. manufacturers of WBF.
. Commerce requires companies operating in a non-market economy (“NME”) such as China to submit documentation demonstrating their independence from government control. If a company does so, it receives a separate
rate
certification and its own rate.
Transcom, Inc.
v.
United States,
. Under its NME AD methodology, Commerce calculаtes normal value ("NV”) "on the basis of the value of the factors of production utilized in producing the merchandise and to which shall be added an amount for general expenses and profit plus the cost of containers, coverings, and other expenses.” 19 U.S.C. § 1677b(c). Surrogate values from market economy (“ME”) countries are used as a measure of these costs.
See id.; GPX Int’l Tire Corp. v. United States,
. The statute is silent as to Commerce's obligation to publish notice within a certain period of time: "[T]he administering authority, if a request for such a review has been received and after publication of notice of such review in the Federal Register, shall ... review and determine ..., the amount of any antidumping duty.” 19 U.S.C. § 1675(a)(1).
. Commerce has previously declined to follow its own regulation and instead used a two-step procedure. Initiation of Antidumping and Countervailing Duty Administrative Reviews, Request for Revocation in Part, and Deferral of Administrative Review, 73 Fed.Reg. 16,837, 16,837 (Dep’t Commerce Mar. 31, 2008); Notice of Initiation of Administrative Reviews of the Antidumping Duty Orders on Frozen Warmwater Shrimp from the Socialist Republic of Vietnam and the People’s Republic of China, 73 Fed.Reg. 18,739, 18,739 (Dep't Commerce Apr. 7, 2008); Initiation of Anti-dumping and Countervailing Duty Administrative Reviews, 72 Fed.Reg. 14,516, 14,516 (Dep’t Commerce Mar. 28, 2007); Notice of Initiation of Administrative Reviews of the Antidumping Duty Orders on Certain Frozen Warmwater Shrimp From the Socialist Republic of Vietnam and the People’s Republic of China, 72 Fed.Reg. 17,095, 17,095 (Dep’t Commerce Apr. 6, 2007). Commerce also has declined to provide the earlier notice, publishing notificatiоn after its regulatory deadline in the two prior reviews of WBF. Notice of Initiation of Administrative Review of the Antidumping Duty Order on Wooden Bedroom Furniture From the People's Republic of China, 72 Fed.Reg. 10,159, 10,159 (Dep't Commerce Mar. 7, 2007); Notice of Initiation of Administrative Review of the Antidumping Duty Order on Wooden Bedroom Furniture from the People’s Republic of China, 71 Fed. Reg. 11,394, 11,394 (Dep’t Commerce Mar. 7, 2006).
. Because the
February Notice
failed to "serve[ ] to notify any interested party that the antidumping rate on goods obtained from exporters named in the notice of initiation for an administrative review may be affected by the outcome of that review,” it was not "notice of initiation of [the] review” under the regulation.
See Transcom,
. Lifestyle cites
Elkem
for the principle that Commerce may not violate its timing deadlines. PL’s Br. at 20-21;
Elkem Metals Co. v. United States,
.See infra note 15.
. Commerce presumes state control unless the contrary is demonstrated. Based on the parties’ arguments the court need not resolve here whether the presumption of state control is supported.
See Qingdao Taifa Grp. Co.
v.
United States,
Slip Op. 10-126,
. At oral argument, the Government clarified that
"[[Confidential Data
Deleted]] transaction specific margins from Yihua Timber during this period of review” were used to corroborate Orient's rate. Oral Arg. Tr., 42, Nov. 16, 2010. During the period of review, Yihua Timber exported
[[Confidential Data
Deleted]] to the United States. Mem. in Supp. of Consol. PL’s Mot. for J. on the Agency R. Under Rule 56.2 Filed by Guangdong Yihua Timber Indus. Co., Ltd. ("Consol. PL’s Apр.”) Tab 1, at 2. The Government has not stated what percentage of Yihua Timber’s sales were used to corroborate Orient’s rate and what the significance of such a percentage would be.
See Gallant Ocean (Thai.) Co. v. United States,
.Lifestyle claims that Commerce de facto revoked Orient’s separate rate status by assigning Orient the PRC-wide rate. PL's Br. at 40. Once a separate rate status determination is made, Commerce may not apply the PRC-wide rate, as such, to an entity.
Qingdao Taifa Grp. Co. v. United States,
637
.
Although clearly distinct standards under Federal Circuit precedent, corroboration and reliability seem to collapse together in that they require demonstration of the same facts and legal conclusions.
See, e.g., KYD,
. The Government and AFMC assert that
Ta Chen
stands for the proposition that a small percentage of sales can be used to corroborate an AFA rate.
See
Def.’s Br. at 37-38; Intervenor Def.'s Resp. Br. at 54, 60-61;
Ta Chen Stainless Steel Pipe, Inc. v. United States,
. [[Confidential Data Deleted]] This radical growth suggests that the business model that yielded Orient a 7.28% rate had given way to a more aggressive business model. Finally, Orient was on notice that Commerce had, in the prior administrative review, assigned Kunyu's 216.01% rate to a non-participating mandatory respondent. Wooden Bedroom Furniture from the People’s Republic of China: Final Results of Antidumping Duty Administrative Review and New Shipper Review, 73 Fed.Reg. 49,162, 49,166 (Dep’t Commerce Aug. 20, 2008). None of this was discussed by Commerce.
. Lifestyle alleges that Commerce’s evidence оf receipt is circumstantial. PL’s Resp. Br. at
. The Government contends that AFMC "failed to squarely challenge the reliability of the WTA data during the administrative briefing, even though Yihua Timber specifically contended that Commerce should rely on the WTA data instead of the NSO data [therefore AFMC] failed to avail themselves of the administrative remedy that Commerce provided in its regulation.” Def.’s Br. at 70-71 (internal citations omitted). First, Commerce seemed to waive its exhaustion claim at oral argument, stating that it was "arguing on the merits.”
See
Oral Arg. Tr., 76, Nov. 16, 2010. Second, to exhaust administrative remedies, normally a party usually must submit a case
. Commerce may not rely on the assumption that because it has determined NSO data to be anomalous therefore it may use WTA data. First, the anomalies were discovered in separate sections of the tariff code, pertaining to nails and adhesives. Issues and Decision Memorandum at 6. Second, Commerce admits that its findings are contingent on highly similar products being packaged using similar containers and materials, an assumption that seems tenuous given the nature of the product. Id. Third, Commerce acknowledges that it has not reached the critical issue of whether the Philippine NSO consistently applies a standard conversion factor to complete missing data fields. Id. Fourth, even if the NSO data is anomalous Commerce has failed to explain why those anomalies would not be present in the WTA data as well. Id. In what is in essence a volume versus gross weight issue, Commerce cannot rely on debunking the NSO data as a rationale for changing the unit of measurement.
. The Government counters that, 1) it incorporated Yihua Timber’s arguments by reference, and 2) Petitioners offer only unsupported hypotheticals. Def.'s Br. at 68-71. First, Commerce did not incorporate Yihua Timber's arguments by reference. Commerce merely stated that it agreed "with Yihua Timber that numeric anomalies bring into question the reliability of the [NSO] data,” that "net weights and corresponding gross weights vary significantly throughout the NSO data,” and that "using a net quantity and gross value to calculate surrogate values would be distor
. [Footnote 20 was intentionally left blank.]
. Neither AFMC nor Commerce explain if Yihua Timber’s MDF is mechanically worked or surface covered. Intervenor Def.’s Br. at 24-25; App. to AFMC’s Reply in Supp. of Mot. for J. on the Agency R. ("Intervenor Def.'s Reply App.”) Tab 8, at 22-23.
. In the Preliminary Results, the rates were as follows:
Up to 10,000 pesos 13.00%
Over 10,000 pesos to 20,000 pesos 10.00%
Over 20,000 pesos to 30,000 pesos 9.00%
Over 30,000 pesos to 40,000 pesos 8.25%
Over 40,000 pesos to 50,000 pesos 7.20%
Over 50,000 pesos to 60,000 pesos 6.67%
Over 60,000 pesos to 100,000 pesos 4.70%
Over 100,000 pesos to 200,000 pesos 2.65%
Average Percentage 7.68%
PL's Resp.App. Tab 15, at Attach. 3.
.In the Final Results, Commerce took the PTC’s B & H rate for shipments of over 200,-000 pesos (at a conversion rate of 0.02151 peso per USD or $114.06), a flat rate of 5300 (at the same conversion rate or $4,304.20) plus 0.00125 of the shipment value, and applied it to Yihua Timber’s average entry value of [[Confidential Data Deleted]] Intervenor Def.’s App. Tab 33, at Attach. 5.
. AFMC offers the World Bank survey, Trading Across Borders in Philippines, as the only report covering both brokerage and handling charges. Intervenor Def.’s Br. at 26. Additionally, AFMC submits that Commerce itself acknowledged this in the 2008 administrative review. Id.; Wooden Bedroom Furniture From the People’s Republic of China: Preliminary Results of Antidumping Duty Administrative Review and Intent To Rescind Review in Part, 75 Fed.Reg. 5,952, 5,962 (Dep’t Commerce Feb. 5, 2010).
. The PTC's order does not say “handling” and does mention "brokerage fees” several times. Intervenor Def.’s App. Tab 33, at Attach. 5. Commerce refers to the numbers resulting from the PTC's order as “B & H.” Issues and Decision Memorandum at 27-28.
. Commerce may use ME values for some factors of production instead of surrogate values if they are separately determinable.
. Yihua Timber compares the instant case to
Shandong Huarong Mach. Co. v. United States,
. Yihua Timber argues Commerce took this approach in the second administrative review, but offers no evidence on record to substantiate this claim. Consol. PL's Br. at 56;
Amended Final Results óf Antidumping Duty Administrative Review and New Shipper Reviews: Wooden Bedroom Furniture From the People’s Republic of China,
72 Fed.Reg. 46,-957, 49,957 (Dep’t Commerce Aug. 22, 2007). Even if this were the case, Commerce is not bound by previous administrative reviews, so long as it does not act arbitrarily.
Cinsa,
S.A.
de C.V. v. United States,
. In order by size: 1) Maitland Smith: Overhead ("OH”) Ratio 28.29%; Selling, General, and Administrative Expenses ("SG & A”) Ratio 5.23%, 2) Casa Cebuana: OH Ratio 19.33%; SG & A Ratio 10.72%, 3) Giardini: OH Ratio 35.52%; SG & A Ratio 12.35%, 4) Arkane: OH Ratio 7.24%; SG & A Ratio 6.55%, 5) Las Palmas: OH Ratio 31.96; SG & A Ratio 23.60%, 6) SCT: OH Ratio 31.36%; SG & A Ratio 20.27, 7) Global Classic: OH Ratio 74.77%; SG & A Ratio 7.72%, 8) Diretso Design: OH Ratio 16.12%; SG & A Ratio 70.37%. Issues and Decision Memorandum at 40-41.
. Yihua Timber concedes that in light of
Dorbest IV,
evidence that smaller companies have higher SG & A ratios than larger companies does not by itself require the exclusion of smaller companies. Consol. Pl.'s Reply Br. at 2; see
Dorbest IV,
. On brief, the Government argues that Commerce did not rely on website documents alone, but rather on auditor’s notes accompanying Diretso Design’s financial statement that the company’s core "activity is manufacturing furniture and furniture accessories," and that these descriptions accord with the website printouts. See Def.'s Br. at 49; Issues and Decision Memorandum at 43; Def.’s App. Doc. 431, at Attach. 6; Consol. Pl.’s Reply App. Tab 9. Nevertheless, this rationale was not articulated at the administrative level.
. Yihua Timber further contends that the website images are not necessarily Diretso Design, but possibly belonging to Diretso Trading. Consol. Pl.’s Br. at 50. Yihua Timber, however, submitted the same website images into evidence as representations of Diretso Design's catalogue. Consol. PL’s Reply App. Tab 12.
. Yihua Timber does not dispute that SCT produces wooden furniture. See Consol. Pl.'s Br. at 29-30. The record shows that SCT produces wood, iron, and rattan furniture. See Consol. Pl.’s Reply App. Tab 9, at Attach. 6. Instead, Yihua Timber contests that Commerce has not demonstrated that a sufficient percentage of SCT’s production of wooden furniture to provide substantial evidence that SCT produces comparable merchandise. Consol. Pl.'s Br. at 30. Based on the catalogues, financial records, and descriptions of SCT, Commerce reasonably concluded that SCT’s production experience was similar to Yihua Timber’s. See Issues and Decision Memorandum at 45.
. Yihua Timber argues that it submitted itemized data on Maitland-Smith's production supplies. Consol. Pl.'s Br. at 39; Con-sol. Pl.'s Reply App. Tab 18. Commerce disregarded the data as unverified. Issues and Decision Memorandum at 54. Additionally, statements by a Filipino professor on classification were disregarded as not related to specific financial statements. Id. Yihua Timber's contention that double-counting occurred confuses the process by which a surrogate financial ratio is created with the act of calculating Yihua Timber's expenses twice.
. Although normal practice may give way when evidence compels appropriate adjustments, nothing on the record suggests that Commerce was compelled to adjust its findings as Yihua Timber offers no citations to the record demonstrating that its own financial statements are itemized to allow for this type of analysis.
See Rhodia, Inc. v. United States,
. Yihua Timber claims that the court's holdings in
Dorbest
apply. Consol. Pl.’s Br. at 48 (citing
Dorbest Ltd. v. United States,
. AFMC contends that the court should not remand because a petition for en banc review will be filed with the Federal Circuit. Intervenor Def.'s Resp. Br. at 75-76. No such petition was ever filed.
. In actuality, Commerce said where the deductions resulted in a negative number for net U.S. price it substituted absolute value, i.e. a positive number. If Commerce actually did this, it is totally arbitrary.
. Lifestyle alleges that AFMC failed to exhausted administrative remedies and therefore this issue should not be remanded to Commerce. Pl.'s Resp. Br. at 44-45. This assertion lacks merit because, 1) the action was intentional and could not be corrected as a ministerial error after the
Final Results,
and 2) AFMC did not have a chance to object earlier because the error was made in the
Final Results.
As AFMC did not have a chance to respond to the error, its claim is not barred for failing to exhaust administrative remedies.
Taifa II,
.Commerce "may establish” a combination cash deposit rate for the combination of the exporter and its supplier when a company exports a product to the United States that it did not produce itself. 19 C.F.R. § 351.107. In 2005, Commerce stated that for all future investigations Commerce would apply a single cash deposit rate to the exporter firm and all producers who supplied the same merchandise during the period of investigation.
See Policy Bulletin 05.1: Separate-Rates Practice and Application of Combination Rates in Antidumping Investigations Involving Non-Market 'Economy Countries
(Apr. 5, 2005),
. ([Confidential Data Deleted^
. AFMC cites Policy Bulletin 05.1 for the proposition that Commerce requires the imposition of combination rates. Intervenor Def.’s Br. at 49. The policy bulletin discusses how the rates are imposed, but does not necessarily state that they must be imposed in every NME investigation. See Policy Bulletin 05.1; see also Policy Bulletin 03.2: Combination Rates in New Shipper Reviews (Mar. 3, 2004), available at http://ia.ita.doc.gov/policy/ bull03-2.html (last visited Feb. 10, 2011) (outlining the policies for implementation of combination rates where the system is being circumvented).