CS Wind Vietnam Co. v. United States , 971 F. Supp. 2d 1271 ( 2014 )

Slip Op. 14- 33
UNITED STATES COURT OF INTERNATIONAL TRADE
CS WIND VIETNAM CO., LTD. and CS
WIND CORPORATION,
Plaintiffs,
.v. Before: Jane A. Restani, Judge
UNITED STATES, Court No. 13-00102
Defendant,
WIND TOWER TRADE COALITION,
Defendant-Intervenor.
OPINION
[Motion for judgment on the agency record in antidumping investigation granted in part.]
Dated: March27, 2014
Ned H. Marshak, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of
New York, NY, argued for the plaintiffs. With him on the brief were Bruce M. Mitchell,
Andrew B. Schroth, Kavit Mohan, and Dharmendra N. Choudhary.
Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, argued for the defendant. With him on the brief
were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald
T. Blades, Jr., Assistant Director. Of counsel on the brief was Daniel J. Calhoun, Attorney,
Office of the Chief Counsel for Trade Compliance and Enforcement, U.S. Department of
Commerce, of Washington, DC.
Robert E. DeFrancesco, III, Wiley Rein, LLP, of Washington, DC, argued for the
defendant-intervenor. With him on the brief were Alan H. Price, Daniel B. Pickard, and Usha
Neelakantan.
Restani, Judge: This action challenges the U.S. Department of Commerce’s
Court No. 13-00102 Page 2
(“Commerce”) final results rendered in the antidumping (“AD”)1 investigation of certain wind
towers from Vietnam. See Utility Scale Wind Towers from the Socialist Republic of Vietnam:
Final Determination of Sales at Less than Fair Value, 77 Fed. Reg. 75,984 (Dep’t Commerce
Dec. 26, 2012) (“Final Determination”); Issues and Decision Memorandum for the Final
Determination in the Antidumping Duty Investigation of Utility Scale Wind Towers from the
Socialist Republic of Vietnam, A-552-814, (Dec. 17, 2012), available at
http://enforcement.trade.gov/frn/summary/vietnam/2012-30944-1.pdf (last visited Mar. 20, 2014)
(“I&D Memo”). Plaintiffs CS Wind Vietnam Co., Ltd. and CS Wind Corp. (collectively “CS
Wind”) seek remand of the Final Determination, contending Commerce erred in calculating its
dumping margin based on the application of certain surrogate values and adjustments. Mem. of
Law in Supp. of Pls.’ Rule 56.2 Mot. for J. upon the Agency R., ECF No. 26 (“Pl. Br.”).
Defendant United States (“the government”) and defendant-intervenor Wind Tower Trade
Coalition (“WTTC”) argue that the Final Determination is based on substantial evidence and in
accordance with law. Def.’s Mem. in Opp’n to Pls.’ Mot. for J. upon the Agency R., ECF No. 32
(“Def. Br.”); Def.-Intvnr.’s Resp. to Pl.’s Mot. for J. on the Agency R., ECF No. 34 (“WTTC
Br.”). For the reasons stated below, the court remands in part and sustains in part the Final
Determination.
BACKGROUND
Following a petition by WTTC, Commerce initiated an AD investigation into
certain wind towers from Vietnam. See Utility Scale Wind Towers from the People’s Republic
1
Dumping is defined as the sale of goods at less than fair value, calculated by a fair
comparison between the export price or constructed export price for the U.S. market and normal
value in the home market. See 19 U.S.C. §§ 1677(34), 1677b(a).
Court No. 13-00102 Page 3
of China and the Socialist Republic of Vietnam: Initiation of Antidumping Duty Investigations,
77 Fed. Reg. 3440 (Dep’t Commerce Jan. 24, 2012). Because Vietnam is considered by
Commerce to be a non-market economy (“NME”), much of the investigation focused on
selecting surrogate values for valuing the various factors of production (“FOPs”) used by CS
Wind in manufacturing wind towers. See 19 U.S.C. § 1677b(c)(1). These surrogate values were
then used to compute the normal value, representing the cost of production for CS Wind if it had
operated in a hypothetical market economy. See id. Before the agency, the parties primarily
disputed the proper surrogate value to use for steel plate, as it is the main input in the production
process for wind towers. See I&D Memo at 2–15. Disputes also arose over carbon dioxide
costs, weight discrepancies for the reported FOPs, market economy input purchases, and
brokerage and handling (“B&H”) expenses. See id. at 28–33, 37–42, 45–46, 48–51.
After verification at CS Wind’s offices in Korea and production facility in
Vietnam, Commerce calculated an average weighted dumping margin of 51.50 percent in its
Final Determination. 77 Fed. Reg. at 75,988. As part of that determination, Commerce selected
a different financial statement to calculate surrogate financial ratios and, in doing so, modified
certain offsets to those ratios in a manner different from that advanced by the parties. See I&D
Memo at 15–16, 26–27. Commerce also adjusted both normal value and the U.S. sales price to
account for a discrepancy between CS Wind’s reported material FOP weights and the “Packed
Weight” of the wind towers, as reported on packing lists. Id. at 28–33. CS Wind filed
ministerial error allegations based on both of these changes, but Commerce rejected them,
asserting that the adjustments were made based on intentional methodological choices. CS Wind
Request to Correct Clerical Errors, bar code 3112173-01 (Dec. 26, 2012), ECF No. 27-12 (Aug.
Court No. 13-00102 Page 4
8, 2013); Ministerial Error Memo at 2–3, bar code 3115888-01 (Jan. 18, 2013), ECF No. 28-9
(Aug. 9, 2013). CS Wind subsequently filed suit and moved for judgment on the agency record,
asserting that Commerce acted contrary to law and without substantial evidence in determining
CS Wind’s dumping margins. See Pl. Br. 10–57.
CS Wind presents six arguments challenging Commerce’s Final Determination:
1) Commerce lacked substantial evidence and acted contrary to law when it used Global Trade
Atlas (“GTA”) import data rather than Steel India data to value steel plate; 2) Commerce
impermissibly valued carbon dioxide based on GTA import data; 3) Commerce improperly
calculated surrogate financial ratios by failing to offset certain expenses with related income line
items; 4) Commerce acted contrary to law and without substantial evidence in rejecting the
market economy input prices paid for flanges, welding wire, and wire flux; 5) Commerce
impermissibly adjusted normal value based on a weight discrepancy and then incorrectly adjusted
the U.S. sales price; and 6) Commerce used an inflated document preparation fee in calculating
B&H expenses. See id.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction of this matter pursuant to 28 U.S.C. § 1581(c). The
court will uphold Commerce’s final determinations in trade remedy investigations unless they are
“unsupported by substantial evidence on the record, or otherwise not in accordance with law.”
19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
I. Valuation of Steel Plate
In NME AD cases, Commerce “shall determine the normal value of the subject
Court No. 13-00102 Page 5
merchandise on the basis of the value of the factors of production utilized in producing the
merchandise.” 19 U.S.C. § 1677b(c)(1)(B). Among other costs, the factors of production
include “quantities of raw materials employed.” Id. § 1677b(c)(3). In calculating normal value,
“the valuation of the factors of production shall be based on the best available information
regarding the values of such factors in a market economy country or countries considered to be
appropriate by the administering authority.” Id. § 1677b(c)(1)(B). Furthermore, Commerce
“shall utilize, to the extent possible, the prices or costs of factors of production in one or more
market economy countries that are—(A) at a level of economic development comparable to that
of the nonmarket economy country, and (B) significant producers of comparable merchandise.”
Id. § 1677b(c)(4).
“Nowhere does the statute speak directly to any methodology Commerce must
employ to value the factors of production, indeed the very structure of the statute suggests
Congress intended to vest discretion in Commerce by providing only a framework within which
to work.” Shakeproof Assembly Components Div. of Ill. Tool Works, Inc. v. United States, 23
CIT 479, 481, 59 F. Supp. 2d 1354, 1357 (1999); see QVD Food Co. v. United States, 658 F.3d
1318, 1323 (Fed. Cir. 2011) (recognizing that Commerce is entitled to deference in interpreting
the undefined term “best available information”). Nonetheless, selection of the best available
information must be in line with the overall purpose of the antidumping statute, which the Court
of Appeals for the Federal Circuit has explained to be “determining current margins as accurately
as possible.” Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990); see
also Lasko Metal Prods., Inc. v. United States, 43 F.3d 1442, 1443 (Fed. Cir. 1994) (“[T]here is
much in the statute that supports the notion that it is Commerce’s duty to determine margins as
Court No. 13-00102 Page 6
accurately as possible, and to use the best information available to it in doing so.”). In
calculating normal value in the NME context, the particular aim of the statute is to determine the
non-distorted cost of producing such goods. See Lasko Metal Prods., Inc. v. United States, 16
CIT 1079, 1081, 810 F. Supp. 314, 316–17 (1992).
In past investigations and reviews, Commerce has articulated the standard it uses
in selecting from among competing surrogate values. See I&D Memo at 9 (citing Crystalline
Silicon Photovoltaic Cells, Whether or Not Assembled into Modules, from the People’s Republic
of China: Final Determination of Sales at Less than Fair Value, and Affirmative Final
Determination of Critical Circumstances, in Part, 77 Fed. Reg. 63,791 (Dep’t Commerce Oct. 17,
2012); Certain Frozen Fish Fillets from the Socialist Republic of Vietnam: Final Results of the
First Administrative Review, 71 Fed. Reg. 14,170 (Dep’t Commerce Mar. 21, 2006)). These
criteria include “a strong preference for valuing all FOPs in the primary surrogate country, as
well as a preference for prices which are period-wide, representative of a broad market average,
specific to the input in question, net of taxes and import duties, contemporaneous with the period
under consideration, and publicly available.” Id. (footnotes omitted).
Because steel plate is the primary input in wind towers, the valuation of the plates
is an important factor in determining normal value and the resulting dumping margin. Before the
agency, CS Wind proposed six different data sets2 for valuing the steel plate, and pointed to at
2
CS Wind put on the record steel price data from Steel India, Steel Chamber, Steel Mint,
JPC, MEPS (India), and Metal Expert India (domestic). See CS Wind First SV Submission, Exs.
3B, 3C, 3D, 3F, PD 3 at bar code 3075091-03-07 (May 10, 2012), ECF No. 28-2 (Aug. 9, 2013);
CS Wind Pre-Preliminary Comments, Ex. 3, CD 4 at bar code 3084019-05 (June 29, 2012), ECF
No. 27-3 (Aug. 8, 2013); CS Wind Post-Preliminary SV Submission, Ex. 1D, PD 6 at bar code
3096954-01 (Sept. 14, 2012), ECF No. 28-4 (August 8, 2013). These data valued the relevant
(continued...)
Court No. 13-00102 Page 7
least ten other data sets3 that purportedly corroborated these prices. Pl. Br. Ex. 1 (summarizing
data sets). Commerce instead relied upon Indian import statistics obtained through GTA,
utilizing India Harmonized Tariff Schedule (“HTS”) line 7208.51.10, the tariff category for “flat-
rolled products of iron or non-alloy steel, of a width of 600 mm or more, hot-rolled, not clad,
plated or coated, other, not in coils, not further worked than hot rolled: of a thickness exceeding
10 mm: plates.”4 I&D Memo at 7. Commerce based its decision to use the GTA data on the fact
that the data were contemporaneous, from the primary surrogate country (India), from an HTS
category that includes the relevant grades of steel plates (S355K2, S355J2, and S355NL), net of
taxes and duties, and publicly available. Id. at 9. Commerce, however, recognized that the HTS
category it chose also covered grades of steel plate other than S355, but it found the data
proffered by CS Wind to be more problematic for a variety of reasons, including lack of
specificity, lack of complete data, lack of broad market averages, and lack of economic
2
(...continued)
steel plate between $0.68/kg and $0.89/kg during the period of investigation (“POI”). See Pl. Br.
Ex. 1; I&D Memo at 10. Commerce’s surrogate value based on the GTA data was $1.20/kg. See
I&D Memo at 10.
3
These data sets included Metal Expert India (import), Infodrive India, MEPS (non-
India), SBB, Metal Expert Ukraine/Russia, GTA Ukraine (import), Steel Orbis Ukraine (export),
GTA India (export), and Steel Prices Europe. See CS Wind First SV Submission, Exs. 3A, 3B,
3E, 3F; CS Wind Post-Preliminary SV Submission, Exs. 1E, 1F, 1H, 1I, 1J, 1K; WTTC
Resubmission of Post-Preliminary Rebuttal SV Information, Ex 5 at bar code 3099084-04 (Sept.
28, 2012), ECF No. 28-9 (Aug. 9, 2013).
4
WTTC also disputed Commerce’s decision to utilize HTS 7208.51.10, but not the use of
GTA data generally. See I&D Memo at 2–4. Commerce rejected WTTC’s arguments that this
was the improper tariff heading, id. at 7, and WTTC did not file suit challenging that
determination by Commerce. Accordingly, the court will not examine the reasonableness of that
aspect of the surrogate value determination. See SEC v. Chenery Corp., 318 U.S. 80, 87 (1943)
(“The grounds upon which an administrative order must be judged are those upon which the
record discloses that its action was based.”).
Court No. 13-00102 Page 8
comparability. See id. at 9–15.
In its motion for judgment on the agency record, CS Wind argues that at least
some of these data points should have been considered as alternate bases for calculating a
surrogate value, while others should have served as evidence that Commerce’s chosen surrogate
value is aberrational. Pl. Br. 10–27. After considering the record concerning each proposed data
point, the court concludes that Commerce acted unreasonably in dismissing many of the
proposed data points, at least for the reasons asserted by Commerce. Each of these data sources
is discussed below based on the reasons for their rejection before turning to the question of
whether Commerce’s selection of the GTA data as the best available information was supported
by substantial evidence. In analyzing the various sources, the court takes into account
Commerce’s reasoning for accepting and selecting the GTA data as the best available
information, including ensuring consistency of the agency’s position from case to case.
A. Proposed Data Sources
1. Steel India
Commerce rejected the Steel India data because they did not include the identical
grades of steel actually used by CS Wind, dismissing arguments that Commerce should consider
data for equivalent or comparable grades of steel plate. I&D Memo at 10–11. CS Wind claims
that the domestic prices from Steel India encompass exclusively grade IS 2062 steel, which is an
equivalent grade of steel also used to produce wind towers.5 Pl. Br. 21; CS Wind Pre-
5
Outside of WTTC’s rejected claim that S355 steel is high-strength low-alloy steel, no
party appears to have challenged before the agency the record evidence submitted by CS Wind
purportedly showing that S355 steel is equivalent to other steel used in wind towers, such as IS
2062 steel. See I&D Memo at 8–9; see, e.g., CS Wind Post-Preliminary SV Submission, Ex. 3E
(continued...)
Court No. 13-00102 Page 9
Preliminary Comments, Ex. 3; CS Wind Post-Preliminary SV Submission, Ex. 3E at 2; CS Wind
Case Brief at 12 n.6, bar code 3099703-01 (Oct. 3, 2012), ECF No. 27-11 (Aug. 8, 2013). As
discussed further below in comparing the GTA and Steel India data, the prices of equivalent
products are at least relevant to calculating a surrogate value for an input, especially when no
data source provides prices exclusively, or even largely, for the precise input used to manufacture
the subject goods. Based on the record before the court, Commerce acted unreasonably in
declining to consider the Steel India prices. Therefore, the court remands to Commerce for
reconsideration of the Steel India data in calculating a surrogate value for steel plate.
2. JPC
Commerce rejected the JPC data because they were not representative of the entire
POI due to a missing month of data. I&D Memo at 11. CS Wind challenges Commerce’s
rejection of the JPC data, claiming that the five months of accurate data covered substantially all
of the six-month POI. Pl. Br. 20–21. The court has held previously that data with minor defects
cannot be summarily rejected by Commerce, particularly where the data is submitted for the
purpose of showing that Commerce’s selected data is aberrational. See Xinjiamei Furniture
(Zhangzhou) Co. v. United States, Slip Op. 13-30, 2013 Ct. Int’l Trade LEXIS 34, at *23 (CIT
Mar. 11, 2013) (remanding for Commerce to consider data set for corroboration purposes even
though the data covered only ten of the twelve months of the period of review). Accordingly,
5
(...continued)
at 2 (identifying A36 and IS 2062 as wind tower steel). One chart placed on the record by
WTTC shows IS 2062 steel labeled as structural steel plate while S355 is labeled as high tensile
plate. See WTTC Pre-Preliminary Comments on Steel Plate, Ex 1, PR 252–54 (July 9, 2012),
ECF No. 36-1 (Nov. 27, 2013). In another document submitted by WTTC, however, S355 is
described as structural steel, as IS 2062 is. See WTTC Response to CS Wind’s SV Comments,
Ex. 1, PR 148 (May 23, 2012), ECF No. 36-1 (Nov. 27, 2013).
Court No. 13-00102 Page 10
although Commerce may have some legitimate basis for rejecting the JPC data as a primary
source for surrogate values, it was unreasonable for Commerce to reject the data entirely in
considering whether the GTA data is aberrational. Therefore, the court remands to Commerce
for reconsideration of the JPC data at least for corroboration purposes, if not more.
3. Steel Mint
Steel Mint data were rejected because they were based on prices from a single day
during the POI. I&D Memo at 11–12. CS Wind simply asserts that the Steel India, Steel Mint,
MEPS, and Metal Expert India data all corroborate the JPC data and each other. Pl. Br. 21. CS
Wind, however, fails to contest directly the deficiency that Commerce found with the Steel Mint
data. Because Commerce must reconsider its chosen surrogate value, it may consider these data,
or not, on remand.
4. MEPS India
Commerce refused to use the MEPS India data because the reported prices for
several months were the same, despite other evidence that prices fluctuated during the POI, and
because the data were not representative of a broad market average. I&D Memo at 12. As with
the Steel Mint data, CS Wind makes no substantive arguments to the contrary. Because
Commerce must reconsider its chosen surrogate value, it may consider these data, or not, on
remand.
5. Steel Chamber
Commerce dismissed the Steel Chamber Weekly prices because they were not
representative of a broad market average. Id. at 11. CS Wind challenges the rejection of the
Steel Chamber data but does not dispute that the data were not representative of a broad market
Court No. 13-00102 Page 11
average. See Pl. Br. 21. Instead, CS Wind criticizes Commerce’s reliance on this criteria
because Commerce’s finding that prices varied across markets was supported by data (JPC and
Steel India) that Commerce already had rejected for other reasons. See id. Because the court has
found the complete rejection of the Steel India and JPC data to be unreasonable, at least for the
reasons given by Commerce, how these data will be treated on remand may affect the use of the
Steel Chamber data, and therefore reconsideration of these data is warranted on remand.
6. MEPS Non-India
Commerce criticized the MEPS data for non-Indian markets because those
countries were not identified as economically comparable to Vietnam and because the range of
thicknesses did not encompass all of the steel plates used by CS Wind. I&D Memo at 12.
CS Wind’s challenge to the exclusion of the MEPS non-India data as benchmarks
has merit. The court recently held that “while the [proposed benchmark] prices might not satisfy
the requirements for surrogate values, they are sufficient to call into question the reliability of the
GTA data,” even when from non-economically comparable countries. Xinjiamei, 2013 Ct. Int’l
Trade LEXIS 34, at *21–22. The GTA import data used by Commerce are based largely on
imports from European countries, including some of the countries covered by the MEPS data, see
Surrogate Values for the Preliminary Determination, Ex. 2 at bar code 3089133-02 (July 26,
2012), ECF No. 28-3 (Aug. 9, 2013), and therefore, these benchmarks are relevant in determining
whether the international market prices reflected in the MEPS data for the grade of steel plate at
issue, or its equivalent, render the GTA import data price aberrational.
Similarly, Commerce’s rejection of the MEPS data based on thickness appears
inconsistent with its selection of the GTA data. The MEPS data cover the vast majority of the
Court No. 13-00102 Page 12
thicknesses of steel plate used by CS Wind, with the remainder falling outside the range by one
millimeter. See CS Wind Verification Exhibit 18I at 2, bar code 3094071-01-07 (Sept. 21,
2012), ECF No. 27-13 (Aug. 8, 2013); CS Wind First SV Submission, Ex. 3F. In choosing to
rely on the GTA data, which include a wide range of plates both significantly thicker and thinner
than the plate used by CS Wind, Commerce implicitly accepted WTTC’s argument that thickness
is not a determinative factor in calculating the price per kilogram of steel plate. See HTS
7208.51.10 (covering steel plate with a thickness greater than 10 mm); WTTC Rebuttal Brief at
22–26, bar code 3100546-01 (Oct. 9, 2012), ECF No. 27-11 (Aug. 8, 2013). After reaching such
a conclusion for the GTA data, Commerce may not reasonably reject the MEPS data on this basis
without further explanation. Accordingly, the MEPS non-India data is remanded to Commerce
for reconsideration.
7. Metal Expert India
Metal Expert India data were not used because Commerce could not determine if
the prices reflected broad market averages and because the import data included imports from an
NME. I&D Memo at 12–13. CS Wind asserts that the Steel India, Steel Mint, MEPS, Metal
Expert India, and JPC data all corroborate each other but fails to contest directly any of the
deficiencies that Commerce found with the Metal Expert India data. See Pl. Br. 21. Given the
overall deficiencies in Commerce’s rejection of data sets, Commerce may reconsider this
evidence, or not, on remand.
8. Metal Expert non-India
Metal Expert data for other countries were rejected because those countries were
not economically comparable. I&D Memo at 13. The court remands this determination for the
Court No. 13-00102 Page 13
same reason given for the MEPS non-India data.
9. SBB
SBB pricing was rejected because it provided prices on a quarterly basis only and
could include NME or subsidized prices. Id. Additionally, the SBB data regarding Turkey were
not for an economically comparable country, not based on broad market averages, and did not
show how prices were determined. Id. Although Commerce’s rejection of the data for lack of
economic comparability was erroneous, for the same reasons as the rejection of the MEPS non-
India data, CS Wind has not challenged the other reasons for which the SBB data set was
excluded, including the lack of frequent price reporting and the possible taint of NME/subsidized
imports. Therefore, the determination with respect to the SBB data is remanded to Commerce to
reconsider whether the data should continue to be rejected based on these unchallenged
deficiencies, or whether it should be used for some purpose in this inquiry.
10. Steel Orbis Ukraine Export
The Steel Orbis Ukraine Export data were rejected because they were not from an
economically comparable country, might have included value added tax, and may have used
different tariff headings. Id. at 14. As with the MEPS non-India data, CS Wind’s challenge
based on economic comparability has merit. CS Wind, however, has not responded to
Commerce’s concerns regarding the latter two reasons for rejection. Commerce should
reconsider on remand whether rejection of the data is still warranted based on these alternate
grounds or whether the data should be used for some purpose in this inquiry.
11. GTA India Export
GTA India Export data were not used because of prior findings that Indian export
Court No. 13-00102 Page 14
prices were affected by export subsidies. Id. CS Wind has not argued that this determination
was unsupported or contrary to law. Whether Commerce has some use on remand for these data
is for Commerce to decide.
12. Steel Price Europe (“Steel Guru”)
Steel Price Europe data were not used because the steel plate thickness range was
not broad enough to cover all of the plate used by CS Wind and because some of the prices did
not cover the exact grade of steel plate used by CS Wind. Id. at 15. Finally, Steel Price Europe
data for Belgium were disregarded because it was unclear how the data were gathered. Id.
At least some of CS Wind’s challenges to this determination have merit. As the
court discussed in the context of the MEPS non-India data, in selecting the GTA data, Commerce
made a decision that thickness was not a decisive factor in valuing steel plate, impliedly
accepting WTTC’s argument that steel of a particular grade is valued at the same per kilogram
price across thicknesses. Similarly, as discussed in the context of the Steel India data, rejection
based on a difference in grade is inappropriate if CS Wind’s submissions demonstrate that the
goods are equivalent.
CS Wind cites to Exhibit 1A of the CS Wind Post-Preliminary SV Submission to
support its claim that Commerce also acted unreasonably in concluding that the record did not
provide evidence that the Steel Guru Belgium data were based on broad market averages. Pl. Br.
25. This document, however, explains only that Steel Guru India prices are collected from ten
different markets to ensure the prices reflect broad market averages. See CS Wind Post-
Preliminary SV Submission, Ex. 1A. CS Wind, however, has not pointed to evidence explaining
whether this practice is carried over to price research in other markets or, more specifically, what
Court No. 13-00102 Page 15
Steel Guru’s practices are with respect to Belgian steel prices. In reviewing the record as a
whole, the court has been unable to locate such evidence. Instead, the relevant letter from Steel
Guru simply explains that the publicly available prices are for S235 and S355 grade non-alloy
steel plate during the POI, exclusive of duties and taxes. Id. at Ex. 1J. The attached chart
references a single port, Antwerp. See id. That said, it is unclear to the court whether this would
matter in the context of a fairly small country like Belgium with limited ports. Accordingly, for
the various reasons described above, Commerce should reconsider this determination as well on
remand.
13. Infodrive India
CS Wind also challenges Commerce’s apparently inconsistent use of Infodrive
India data in its Final Determination. Pl. Br. 18–19, 23–24. Commerce relied on this data set,
submitted by WTTC, for several purposes, including to show the GTA data contained actual
imports of S355 grade steel plate and to demonstrate that prices of steel varied over time during
the POI. See I&D Memo at 10–11. Commerce, however, rejected the use of the same data when
used by CS Wind to show that most imports of S355 grade plate in the GTA data cost the same
as the plates covered by CS Wind’s proffered data sets, that S355 makes up a very small portion
of the total imports of steel plate falling within the chosen basket tariff classification, and that
other imports in the basket included grades of steel plate not used in wind tower production. See
id. at 6. The court has held previously that corroboration data, including Infodrive data in
particular, need not meet the same standards as data offered to calculate surrogate values in order
to be relevant for Commerce to consider. See Dorbest Ltd. v. United States, 30 CIT 1671, 1698,
462 F. Supp. 2d 1262, 1286 (2006) (“Regardless of whether or not Commerce finds it
Court No. 13-00102 Page 16
appropriate to use the Infodrive India data to value mirrors, the Infodrive India data can prove to
be illuminating as to the nature of the product actually being valued within a specific (and in this
case basket) HTS subheading.”); see also Calgon Carbon Corp. v. United States, Slip Op. 11-21,
2011 Ct. Int’l Trade LEXIS 21, at *27–28 (CIT Feb. 17, 2011) (“Commerce must consider
InfoDrive if it covers a definite and substantial percentage of overall imports. . . . Where
InfoDrive data is placed on the record to impeach as opposed to corroborate Commerce’s
determination, a lower threshold may exist.”). But see Dorbest Ltd. v. United States, 32 CIT 185198–99, 547 F. Supp. 2d 1321, 1333 (2008) (accepting Commerce’s complete rejection of
Infodrive data based on substantially incomplete reporting of imports and inconsistent units of
measure).
Here, Commerce’s exclusion of the Infodrive data raises more basic questions
than those addressed in Calgon Carbon and Dorbest because Commerce chose to rely on the data
for some purposes but not others, without providing any rationale for why the data was reliable
for only the selected purposes. Thus far, Commerce’s explanation for this inconsistency in its
use of the Infodrive data is inadequate, and unless it has a heretofore unstated rational
explanation, it must consider the data to the extent they both support and detract from
Commerce’s chosen surrogate value. As the court must in evaluating the record evidence,
Commerce also “must consider the record as a whole, including evidence that supports as well as
evidence that fairly detracts from the substantiality of the evidence.” Nucor Corp. v. United
States, 32 CIT 1380, 594 F. Supp. 2d 1320, 1332 (2008) (internal quotation marks omitted),
aff’d, 601 F.3d 1291 (Fed. Cir. 2010). Accordingly, Commerce may not rely on Infodrive data
when they support Commerce’s determination but then reject the data when they detract from
Court No. 13-00102 Page 17
that conclusion, at least without a substantial reason.
With respect to all of the alternative data sources, the court will not decide at this
point which Commerce should accept or reject and for which purposes. Commerce’s
determination at a minimum gives the appearance that it has pre-determined that the GTA data
must be used and any data contradicting it must be rejected, for good reason or bad. Of course,
this is not acceptable. If Commerce has good reasons for rejecting a data set for some purpose, it
must say so clearly on the record.
B. Best Available Information
Having found that Commerce impermissibly disregarded many of the data sets
proffered by CS Wind for either valuation or corroboration purposes, at least based on the
reasons provided in the I&D Memo, the court turns now specifically to how this error infected
Commerce’s selection of the best available information for valuing steel plate. CS Wind attacks
the GTA import data as not sufficiently product specific because 96 percent of the import data
under the basket tariff heading cover steel not of the relevant grade (S355). Pl. Br. 22. CS Wind
claims that the domestic prices from Steel India, by comparison, encompass exclusively an
equivalent grade of steel plate that is also used to produce wind towers. Id. at 21; CS Wind Case
Brief at 12 n.6; WTTC Pre-Preliminary Comments on Steel Plate, Ex. 1. By contrast, CS Wind
contends that there is no evidence that the non-S355 steel included in the GTA import data is
equivalent to S355, as the basket covers all grades of non-alloy hot-rolled steel greater than a
certain thickness. See HTS 7208.51.10; Pl. Br. 22. Furthermore, CS Wind argues that the Steel
India data are more specific than the GTA data because they separately report prices for a variety
of plate thicknesses corresponding to the thicknesses actually used by CS Wind in producing the
Court No. 13-00102 Page 18
subject wind towers. Pl. Br. 22. Commerce summarily rejected the notion that it should even
consider comparable or equivalent grades of steel in setting a surrogate value for the steel plate
used by CS Wind. See I&D Memo at 10–11.
Although in the abstract Commerce’s preference for prices of identical
merchandise over comparable/equivalent merchandise would be reasonable, in this case its
choice purportedly based on that preference is not. Here, Commerce has selected the GTA data
as the best available information, despite at least some evidence that 96 percent of the steel
falling within the selected basket tariff heading is not of the same grade as the steel used by CS
Wind. See WTTC Resubmission of Post-Preliminary Rebuttal SV Information, Ex 5; CS Wind
Case Brief at 22. It is unclear what portion of this 96 percent could be considered equivalent or
comparable because Commerce never made such a finding on the record. Commerce also never
addressed the question of how accurate the 96 percent figure even is, based on the completeness
of the Infodrive data, assuming instead that the data accurately demonstrated some imports
(approximately 4 percent) were S355 steel while discounting without explanation evidence
demonstrating the converse proposition. As a result, the court is left to review Commerce’s
choice between 1) a set of prices 96 percent of which purportedly correspond to steel that is
similar to but not necessarily comparable to the steel plate at issue and 2) a set of prices based on
the specific thickness of steel and a purportedly equivalent grade of steel. This choice is also in
the context of other data sets that Commerce must reconsider on remand, which, if accepted,
closely corroborate the Steel India data but differ significantly from the GTA data. Commerce’s
choice here in selecting the GTA data is akin to valuing a red onion not based on the prices of
yellow or white onions but based on the prices of a basket of all root vegetables, simply because
Court No. 13-00102 Page 19
one red onion is in the bushel. Assuming equivalence of steel grades for the Steel India data,
which Commerce did not address, it is perplexing how any reasonable mind could consider the
first data set the best available information on the record, even when giving priority to the grade
of steel over the thickness of steel.
In view of the above analysis, the court must remand to Commerce to choose an
appropriate surrogate steel value or explain its reliance on the GTA data as the “best available
information” for valuing the steel plate used by CS Wind in producing wind towers. The
explanation that there is a small amount of identical merchandise in the GTA category it chose is
not substantial evidence to support Commerce’s current choice.
II. Valuation of Carbon Dioxide
In addition to challenging the surrogate value assigned to steel plate, CS Wind
argues that Commerce erred in its valuation of CS Wind’s carbon dioxide (“CO2”) gas input. Pl.
Br. 53–56. Commerce again relied upon GTA Indian import data, using the tariff heading for
“carbon dioxide: other,” HTS 2811.21.90. I&D Memo at 45–46. Commerce rejected CS Wind’s
suggestion that it instead utilize the prices contained in the financial statements for SICGIL
Indian Ltd. (“SICGIL”), an Indian producer of CO2 gas. See id. Commerce found that although
the SICGIL data are “reflective of the primary surrogate country, specific to the input in question,
and net of taxes and import duties, [Commerce was] not able to determine . . . whether or not the
SICGIL price data is representative of a broad market average.” Id. at 46. Commerce further
faulted the data for not being contemporaneous with the POI, as they were based on the April 1,
2010–March 31, 2011 financial statement. Id. at 45–46. Although recognizing that the GTA
data were less specific, as they included all forms of CO2 besides dry ice, Commerce found the
Court No. 13-00102 Page 20
GTA data met all of the other criteria it considers in evaluating potential surrogate values. Id. at
46.
In its motion, CS Wind claims that Commerce’s decision is not supported by
substantial evidence because SICGIL’s data are representative of a broad market average and that
Commerce’s preference for contemporaneity and broadness over specificity was contrary to
Commerce’s practice and relevant law. Pl. Br. 53–56. The government responds that Commerce
acted reasonably and in accordance with law because the GTA data satisfied all of Commerce’s
surrogate value criteria while the SICGIL data were deficient. Def. Br. 22–25. WTTC similarly
claims that Commerce’s selection of the less-specific GTA data was reasonable because of the
noted deficiencies in the SICGIL data. WTTC Br. 51–53.
In reviewing the pages of SICGIL’s financial statement cited by CS Wind, it is
clear that SICGIL is a sizeable producer of CO2, producing 31,381 metric tons of CO2 during the
reported year. See CS Wind Post-Preliminary SV Submission, Ex. 6E at 24. As noted by CS
Wind at oral argument, this quantity is more than twice6 the annual quantity of all CO2 imports
in the relevant tariff category, according to the GTA data relied upon by Commerce. See
Surrogate Values for the Preliminary Determination, Ex. 4-2. Although volume alone may not
be enough to demonstrate that the prices represented broad market averages, it does not appear
that Commerce considered and addressed this argument in the I&D Memo. On the other hand,
Commerce correctly found that the data is not contemporaneous with the POI. Because,
6
Because Commerce excluded imports from South Korea and other countries, the actual
volume of imports upon which the GTA data is based was reduced from 6,752 metric tons to
only 3,389 metric tons, a tenth of the SICGIL data. See Surrogate Values for the Preliminary
Determination, Ex. 4-2.
Court No. 13-00102 Page 21
however, Commerce based its rejection of the SICGIL data on both broadness and
contemporaneity concerns, and because Commerce failed to address evidence significantly
detracting from its finding with respect to one of these criteria, the court remands to Commerce
for it to consider CS Wind’s argument regarding the relative size of SICGIL within the Indian
CO2 market and to reweigh the evidence underlying its choice.
III. Allocation of Civil/Erection Income and Expenses
CS Wind contends that Commerce erred in rejecting its ministerial error
allegation regarding the allocation to overhead of certain income and expenses in Ganges
Internationale’s (“Ganges”) financial statement. Pl. Br. 27–31. In its Final Determination,
Commerce accepted CS Wind’s proposal to use Ganges’s financial statement in calculating
surrogate financial ratios, including overhead expenses, selling and general expenses, and profit.
See I&D Memo at 15–16; see also 19 U.S.C. § 1677b(c)(1), (3), (4). In doing so, Commerce also
accepted WTTC’s argument that it should treat the line item for jobwork charges in the financial
statement as part of overhead because direct labor and energy expenses were reported as separate
line items already. I&D Memo at 26. Without explanation, however, Commerce did not accept
WTTC’s concession that the erection income and civil income line items in the same financial
statement also should be included as offsets to overhead. See id.; Final SV Memo at 4–5, bar
code 3111181-01 (Dec. 17, 2012), ECF No. 28-9 (Aug. 9, 2013).
Commerce then rejected CS Wind’s ministerial error allegation concerning this
calculation, asserting that the allocation was an intentional methodological choice7 because
7
Although this issue was presented to Commerce in the form of a ministerial error
allegation, see 19 C.F.R. § 351.224 (2012), none of the parties have briefed it in this manner
(continued...)
Court No. 13-00102 Page 22
Commerce “normally includes only miscellaneous income items as an offset to the surrogate
financial ratios.” Ministerial Error Memo at 2–3 (citing Lightweight Thermal Paper from the
People’s Republic of China: Final Determination of Sales at Less than Fair Value, 73 Fed. Reg.
57,329 (Dep’t Commerce Oct. 2, 2008)). Commerce determined that the erection and civil
income line items did not meet this criteria and excluded them from the financial ratios. Id. at 3.
CS Wind asserts that this explanation is unreasonable in view of the description of jobwork
charges in the financial statement as “including Erection and Civil Expenses.” CS Wind Request
to Correct Clerical Errors, Ex. 1 at 5. Once Commerce made the determination that jobwork
(including erection and civil expenses) was a miscellaneous expense, CS Wind contends
Commerce then was required to consider the related income lines as miscellaneous income to be
used as an offset. Pl. Br. 27–31. The government argues that Commerce did not err in rejecting
the ministerial error allegation because Commerce “cannot go behind financial statements in
determining the appropriateness of including an item in the financial ratio calculations,” and
accordingly, Commerce could not determine here whether erection and civil income were related
directly to “jobwork charges.” Def. Br. 36 (citing Issues and Decision Memorandum for the
2008–2009 Administrative Review of Chlorinated Isocyanurates from the People’s Republic of
China, A-570-898, at cmt. 5 (Nov. 10, 2010), available at
http://enforcement.trade.gov/frn/summary/prc/2010-29020-1.pdf (last visited Mar. 20, 2014)).
WTTC argues that “CS Wind assumes incorrectly that similarly titled expenses and income are
7
(...continued)
before the court. Because Commerce applied this intentional methodological choice for the first
time in the Final Determination, without notice, CS Wind is permitted to challenge Commerce’s
determination directly in the first instance here. See Lifestyle Enter. v. United States, 768 F.
Supp. 2d 1286, 1313 n.39 (CIT 2011).
Court No. 13-00102 Page 23
automatically related.”8 WTTC Br. 33 (contending that there is no record evidence directly
linking the income and expense lines in question).
CS Wind does not challenge Commerce’s practice of including only
miscellaneous income lines in overhead, but it contends that Commerce failed to follow its
acknowledged practice of offsetting expense line items associated with the general operations of
the company with related income lines. Pl. Br. 28–29 & n.7 (citing Chlorinated Isocyanurates
from the People’s Republic of China: Final Results of 2008–2009 Antidumping Duty
Administrative Review, 75 Fed. Reg. 70,212, cmt. 5 (Dep’t Commerce Nov. 17, 2010);
Polyethylene Terephthalate Film, Sheet, and Strip from the People’s Republic of China: Final
Determination of Sales at Less than Fair Value, 73 Fed. Reg. 55,039, cmt. 3 (Dep’t Commerce
Sept. 24, 2008); Notice of Final Determination of Sales at Less than Fair Value and Negative
Final Determination of Critical Circumstances: Certain Color Television Receivers from the
People’s Republic of China, 69 Fed. Reg. 20,594, cmt. 18 (Dep’t Commerce Apr. 16, 2004)).
The only question then is whether Commerce reasonably could determine that “Erection income”
and “Civil income” were unrelated to the “Jobwork Charges (including Erection and Civil
Expenses)” described in a single financial statement. CS Wind Request to Correct Clerical
Errors, Ex. 1 at 1, 5. Because Commerce does not look beyond the face of the financial
statement to interpret these line items, its decision that the identical terms were not related,
despite the seemingly contrary text of the financial statement, is unsupported by substantial
8
Interestingly, this argument is contrary to the argument that WTTC made in its last brief
before the Final Determination in which it advocated for both the jobwork expenses and the civil
and erection income lines to be included in the overhead calculation, acknowledging that they
were linked. See WTTC Rebuttal Brief at 61.
Court No. 13-00102 Page 24
evidence.9 As a result, the jobwork charges and the associated income lines must be treated
similarly under Commerce’s practice, either including both as overhead or excluding both from
the calculation, unless Commerce explains why different treatment is warranted. Accordingly,
this issue is remanded to Commerce for reconsideration and/or further explanation.
IV. Weight Discrepancy and Adjustment
CS Wind also asserts that Commerce’s decision to account for the discrepancy
between the Packed Weight of its merchandise and the weight it reported for the material FOPs
was unsupported by substantial evidence and contrary to law. See Pl. Br. 40–46. Although the
court finds that Commerce’s adjustment to normal value based on the weight discrepancy was
supported by substantial evidence, the resulting adjustment to the U.S. sales price was not.
A. Weight Discrepancy
Early on in its investigation, Commerce noticed that the total net weight of all of
the FOPs CS Wind had reported was significantly less than the total Packed Weight CS Wind
had reported for its wind towers. See Surrogate Values for the Preliminary Determination at 6;
Preliminary Analysis Memo at 8, CR 213 at bar code 3089102-01 (July 26, 2012), ECF No. 42-9
(Dec. 11, 2013). As a result, Commerce requested that CS Wind reconcile the difference in
weights on multiple occasions. See, e.g., May Supplemental Questionnaire at 15, PR 128 at bar
code 3075213-01 (May 9, 2012), ECF No. 43-1 (Dec. 11, 2013).
CS Wind responded that the difference in the two weights occurred because the
9
WTTC notes in its brief that the combined erection income and civil income line items
are less than the total for jobwork charges, supporting its new argument that the items are
unrelated. See WTTC Br. 33. Commerce did not mention this as a reason for its determination,
and therefore, the court will not consider this alternate justification at this juncture, although the
agency may wish to explore it on remand, along with CS Wind’s explanation for the difference.
Court No. 13-00102 Page 25
Packed Weight was based on theoretical weights of all the inputs plus the weights of
packing/transportation equipment. See CS Wind July 18, 2012 Submission at 2–3, CR 206–08 at
bar code 3087123-01 (July 18, 2012), ECF No. 42-9 (Dec. 11, 2013). CS Wind claimed that the
FOP weights were drawn from the actual weights of the inputs with no additional
packing/transportation equipment weight added. Id. at 3. The Packed Weight, CS Wind alleged,
was calculated solely for purposes of determining the center of gravity of the tower portions in
order to stack the towers on the ship in such a way that they would not roll in transit. I&D Memo
at 28. Thus, these weights were much less accurate than the FOP weights. CS Wind July 18,
2012 Submission at 3.
During verification, Commerce was “not able to observe the actual receipt and
withdrawal of raw materials, the entry of raw materials into the production processes, the packing
process, or receipt and subsequent release of finished goods from inventory.” Verification
Report at 14, bar code 3097980-01 (Sept. 21, 2012), ECF No. 27-11 (Aug. 8, 2013). As a result,
Commerce could not confirm whether the weights of the reported FOPs were accurate by
weighing the individual inputs used in the towers or weighing the final product. Commerce also
could not determine whether the reported consumption quantities of any FOPs matched the FOPs
actually incorporated in the final product. Instead, Commerce continued to rely at that point on
the weights and consumption quantities reported by CS Wind, which were either derived or
theoretical values taken from documentation provided by suppliers or customers (test certificates,
packing lists, bills of material, specifications, etc.). See, e.g., id. at 17, 34, 38–40. At
verification, Commerce also confirmed that the Packed Weight was based on center-of-gravity
calculations created to ensure the wind towers did not roll over in transit. See id. at 47.
Court No. 13-00102 Page 26
Commerce, thus, was faced with an unclear record as to what was the correct
weight of a finished tower — one based on the FOP weight or one based on the Packed Weight.
In its Final Determination, Commerce decided that it was “unreasonable to assume that the
weight of the wind tower section recorded in the packing lists is so grossly overestimated as to
chance the misplacement of the wind tower section on a shipping vessel and risk an imbalance of
the vessel or rolling of the tower section in transit.” See I&D Memo at 31. Commerce adopted
the Packed Weight as the correct measure based on its link to real world choices. See id. at 32.
The discrepancy in the weights, however, meant CS Wind had either underreported its
consumption of FOPs or had not reported certain factors. In particular, as the weights for the
flanges, door frames, and steel plates corresponded between the Packed Weight and FOP
weights, Commerce determined that the consumption of the internal components was
underreported. See id. at 33. To compensate for this, Commerce applied the weighted-average
surrogate value of all internal components to the difference between the weights and included the
resulting adjustment in its calculation of normal value. Id. at 33.
Generally, when “faced with a choice between two imperfect options, it is within
Commerce’s discretion to determine which choice represents the best available information.”
Dorbest Ltd. v. United States, 30 CIT 1671, 1687, 462 F. Supp. 2d 1262, 1277 (2006). In this
case, Commerce reasonably could have accepted the FOP weight or the Packed Weight as the
actual weight of the towers. Because there was a gap in the record, Commerce permissibly
looked to “facts otherwise available” to account for the discrepancy by accepting the Packed
Weight as the actual weight and then increasing the normal value based on the weighted-average
surrogate value for internal components, as that was where the weight discrepancy arose. See 19
Court No. 13-00102 Page 27
U.S.C. § 1677e(a); I&D Memo at 32–33. The “facts otherwise available” to Commerce
demonstrated that although the Packed Weight might not be an exact measure of the actual
weight, based on its actual use, the Packed Weight was likely at least as accurate as the FOP
weight, which also was based on theoretical or derived weights drawn from information provided
by CS Wind’s customers or suppliers.10 See, e.g., Verification Report at 47–48.
Additionally, Commerce requested that CS Wind explain the weight discrepancy
on numerous occasions, requests which were met with responses that the Packed Weight was
merely a theoretical value calculated by CS Wind’s customer. See CS Wind July 18, 2012
Submission at 3. CS Wind responded in this manner despite the importance that CS Wind places
on the Packed Weight’s accuracy in the normal course of business along with the fact that the
Packed Weight was traced back to a packing list prepared by CS Wind. See Verification Report
at 47. Thus, in choosing the Packed Weight and deciding to adjust for differences between the
data choices, Commerce acted reasonably in filling the gap in the record by using the facts
available to it.
B. Amount of Adjustment to U.S. Sales Price
Although Commerce permissibly made an upward adjustment to normal value
based on the weight discrepancy, its resulting upward adjustment to the U.S. sales price was
erroneous.
10
To some extent, CS Wind’s arguments about whether the FOP weights associated with
internal components were “actual” weights and whether such weights were verified by
Commerce are red herrings. Commerce’s determination was not based on a finding that the per-
unit weight of any of the FOPs was incorrect or falsified. Instead, Commerce based its
adjustment to normal value on its finding that the consumption of internal components was
underreported, resulting in a discrepancy in the reported weight of the finished product, which
could not be tested during verification.
Court No. 13-00102 Page 28
CS Wind incorporated into its wind towers certain free-of-charge internal
components provided by its customers. See I&D Memo at 53. Because these inputs were a
factor in the production of the towers, Commerce valued the parts just as it did with any other
material FOP. Id. As CS Wind did not actually pay for these parts, it of course did not charge
the customers that supplied the components to CS Wind. Therefore, the value of the free-of-
charge components was not reflected in the U.S. sales price. In order to offset the increase in the
normal value caused by adding in the value of the free-of-charge components, Commerce
adjusted the U.S. sales price upwards by the same amount it had added for these components to
the normal value. Id.
As explained above, in its Final Determination, Commerce further adjusted
normal value to account for the weight shortfall in reported FOP input weights. Id. at 29. As this
adjustment assumed that consumption of both purchased internal components and free-of-charge
internal components was underreported, the adjustment was based on the combined weighted-
average surrogate value of all inputs, both purchased and free-of-charge. Id. at 29 & n.163. In an
effort to continue to account for the value of the free-of-charge components included in the
normal value calculation, Commerce attempted to make an additional upward adjustment to the
U.S. sales price. Id. at 29. To accomplish this, Commerce determined the percentage by weight
by which all internal components were underreported. See Final Calculation Analysis at 4–5,
7–8, bar code 3111172-01 (Dec. 17, 2012), ECF No. 27-12 (Aug. 8, 2013). Commerce then used
this percentage to calculate the weight by which the free-of-charge components were
underreported. Id. at 8. Commerce finally multiplied that weight by the combined weighted-
average surrogate value of all internal components, both purchased and free-of-charge. Id. This
Court No. 13-00102 Page 29
amount was then added to the U.S. sales price. Id.
CS Wind filed a ministerial error allegation, claiming that Commerce mistakenly
multiplied the weight shortfall for the free-of-charge components by the combined weighted-
average surrogate value for all internal components, instead of by the weighted-average surrogate
value for only the free-of-charge components. CS Wind Request to Correct Clerical Errors at
8–11. Commerce rejected the allegation, claiming that its adjustment was based on an
intentional methodological choice. Ministerial Error Memo at 3. CS Wind continues its
challenge before the court, claiming that the adjustment is unsupported by substantial evidence
and not in accordance with law. Pl. Br. 46–49. The government contends that Commerce’s
adjustment was reasonable because it was a quantity rather than a value adjustment. Def. Br.
45–48. The government explains that Commerce was unable to determine the portion of the
weight discrepancy attributable to purchased versus free-of-charge components. Id. at 47. This
is why Commerce adjusted normal value based on the weighted-average value for all
components and used the same value when adjusting the U.S. sales price. Id.
It is important to keep in mind that Commerce’s sole purpose in adjusting the U.S.
sales price essentially was to cancel out the impact of including the free-of-charge components
on the normal value side of the AD comparison.11 See I&D Memo at 53. Therefore, the weight-
discrepancy adjustment made to the U.S. sales price was intended to cancel out the effect of the
free-of-charge components being included in the normal value equation. The court does not
11
The court notes that Commerce’s original adjustment did not completely accomplish
this goal because the value associated with the components was incorporated into calculations for
financial ratios. See I&D Memo at 53–54. Although CS Wind challenged this aspect of the
adjustment below, see id., it did not raise this argument in its brief before the court.
Court No. 13-00102 Page 30
understand the government’s response that Commerce’s adjustment was one based on weight and
not value, as CS Wind’s argument does not seem to hinge on this distinction. The formula used
for FOP value (with the weight adjustment) could be written as follows, although this appears in
a slightly different mathematical form12 from that reported by Commerce:
FOP Material Value = (ExtW x ExtSV) + (IntW x IntSV) + (FreeW x FreeSV) + (WD% x IntW x IntSV) +
(WD% x FreeW x FreeSV)13
Replacing the variables with fictitious, arbitrary figures, the formula could be written as:
FOP Material Value = (500 x 0.15) + (100 x 0.1) + (100 x 0.2) + (50% x 100 x 0.1) + (50% x 100 x 0.2)
In order to counter the effect of including the free-of-charge components in the
weight adjustment to normal value, as Commerce explained it intended, the final term in the
formula (WD% x FreeW x FreeSV), or applying the fictitious values, (50% x 100 x 0.2) = 10,
simply needed to be included in the calculation for U.S. price. Instead Commerce used the
following additions to the U.S. sales price: WD% x FreeW x (the combined weighted-average
surrogate value for all internal components, both free-of-charge and purchased), which can be
12
The only difference between the formula presented below and the one used by
Commerce is that Commerce first calculated a combined weighted-average surrogate value for
both the purchased and free-of-charge internal components. See Final Calculation Analysis at
4–5. It then multiplied this by the weight discrepancy. Id. at 5. The formula included herein
simply distributes out this adjustment to assist the reader in understanding the effect of this
adjustment.
13
The formula employs the following variables: ExtW = weight of non-internal
components; ExtSV = weighted-average value of non-internal components; IntW = weight of
purchased internal components; IntSV = weighted-average value of purchased internal
components; FreeW = weight of internal components provided free-of-charge by customers;
FreeSV = weighted-average value of internal components provided free-of-charge by customers;
WD% = percentage by which the Packed Weight for internal components exceeded the FOP
weight for internal components.
Court No. 13-00102 Page 31
written using the above fictitious values as (50% x 100 x ((100 x 0.1) + (100 x 0.2))/(100 + 100)
= 7.5. See Final Calculation Analysis at 7–8. As can be seen, this is not equivalent to the normal
value adjustment corresponding to the free-of-charge inputs, as the average surrogate value for
purchased internal components is lower than that of the free-of-charge components, bringing
down the combined average and improperly lowering the U.S. price adjustment. See CS Wind
Request to Correct Clerical Errors, Ex. 7. Unless Commerce is able to provide a mathematically
sustainable explanation as to why its adjustment appropriately offsets the inclusion of the free-of-
charge components in the normal value calculation, the court must hold that Commerce
miscalculated the adjustment to U.S. price.
V. Market Economy Input Purchases
CS Wind argues that Commerce’s decision to reject CS Wind’s market economy
purchase prices for flanges, welding wire, and wire flux, based on a suspicion or belief that they
were subsidized, is unsupported by substantial evidence and contrary to law. Pl. Br. 31–40. CS
Wind contends that Commerce has failed to provide objective and specific evidence of the
existence of subsidy programs within the Korean market from which its suppliers could have
received benefits. Id. at 34–37. CS Wind further supports its assertions by claiming that neither
CS Wind nor its manufacturers received or were even eligible to receive any export subsidies
based on these “domestic” purchases. Id. at 37–40. In its I&D Memo, Commerce found there
was “reason to believe or suspect” that CS Wind’s purchase prices were distorted by “broadly
available, non-industry specific export subsidies” in South Korea, thereby justifying a departure
from its normal practice of using actual purchase prices for inputs from market economies. I&D
Memo at 37–42. As a result, Commerce determined that Indian import data, and not CS Wind’s
Court No. 13-00102 Page 32
actual purchase prices for flanges, welding wire, and wire flux sourced from South Korea, would
be used to value these FOPs. Id. at 42.
When valuing an FOP purchased from a market economy supplier and paid for in
a market economy currency, Commerce “normally” uses the price actually paid by the buyer. 19
C.F.R. § 351.408(c)(1). Nevertheless, when there is “reason to believe or suspect” that these
inputs were subsidized, Commerce instead uses surrogate values from a market economy
country. See Peer Bearing Co.-Changshan v. United States, 27 CIT 1763, 1769, 298 F. Supp. 2d
1328, 1334 (2003) (citing legislative history). Although the legislative history clarifies that
Commerce need not conduct a full-fledged countervailing duty investigation before excluding
market economy purchase prices, it does not alter the general standard by which this court
evaluates all factual determinations by Commerce in trade remedy cases: substantial evidence.
See 19 U.S.C. § 1516a(b)(1)(B)(i). Accordingly, “there must be some positive evidence on the
record to permit the court to evaluate whether Commerce’s decision is supported by substantial
evidence.” Gold E. Paper (Jiangsu) Co. v. United States, 918 F. Supp. 2d 1317, 1324 (CIT
2013). The burden of substantial evidence demands “more than a mere scintilla” of evidence; the
burden is met when there exists “such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938).
In Fuyao Glass, the court held that Commerce must justify its belief or suspicion
of price subsidization with specific and objective evidence. Fuyao Glass Indus. Grp. v. United
States, 29 CIT 109, 114 (2005). Under the standard applied in that case, Commerce was required
to show: “(1) subsidies of the industry in question existed in the supplier countries during the
[POI]; (2) the supplier in question is a member of the subsidized industry or otherwise could
Court No. 13-00102 Page 33
have taken advantage of any available subsidies; and (3) it would have been unnatural for a
supplier not to have taken advantage of such subsidies.” Id. CS Wind alleges that under Fuyao
Glass Commerce has not met its burden in justifying its “reason to believe or suspect” that CS
Wind’s purchase prices were tainted by subsidies. Pl. Br. 34–37. The government primarily
responds by claiming that Fuyao Glass is not binding precedent and has been ignored consistently
by Commerce. Def. Resp. 30–33.
The court agrees with CS Wind that the Fuyao Glass standard is one reasonable
method for evaluating the sufficiency of the evidence upon which Commerce based its belief or
suspicion that prices were subsidized.14 In this case, Commerce has met its burden under Fuyao
Glass, albeit reluctantly. Commerce satisfied the first prong of the test by presenting evidence
that widely available, non-industry specific subsidies existed in Korea during 2010, just months
before the POI under review. I&D Memo at 40 & n.247 (citing Issues and Decision
14
The court notes that the cases cited by Commerce in attempting to cast doubt on the
reasoning of Fuyao Glass fail to address the issue presently before the court. For example, in
Jinan Yipin, the plaintiff waived any argument contesting Commerce’s finding with respect to
generally available export subsidies. See Jinan Yipin Corp. v. United States, 774 F. Supp. 2d
1238, 1244, 1248 (CIT 2011). Likewise in Zhejiang Machinery, the plaintiff failed to argue
before the agency the standard set out in Fuyao Glass, as the court’s decision post-dated the close
of the record. Zhejiang Mach. Imp. & Exp. Corp. v. United States, 31 CIT 159, 166 n.10 (2007).
Similarly, the government’s reliance on Commerce’s finding in Fuyao Glass that the imports
there “are subsidized” versus may have been subsidized is a red herring, as Commerce later
abandoned its reliance on that distinction following remand, and the court retained the same
standard for evaluating Commerce’s determination. See Fuyao Glass, 29 CIT at 112–13.
Commerce explained in its I&D Memo that it has continued to reject the
application of Fuyao Glass in other investigations and reviews. See I&D Memo at 41–42. Time
marches on. In its investigations and reviews, Commerce must either abide by the standard set
out in Fuyao Glass or propose another reasonable means of evaluating whether it has sufficient
evidence to support a belief or suspicion that the market economy inputs in the particular case at
hand were subsidized.
Court No. 13-00102 Page 34
Memorandum for the Final Determination in the Countervailing Duty Investigation of Bottom
Mount Combination Refrigerator-Freezers from the Republic of Korea, C-580-866, at 14–16
(Mar. 16, 2012) (“Refrigerator-Freezers”), available at
http://enforcement.trade.gov/frn/summary/korea-south/2012-7217-1.pdf (last visited Mar. 20,
2014) (discussing short-term export insurance program); Issues and Decision Memorandum for
the Countervailing Duty Administrative Review on Corrosion-Resistant Carbon Steel Flat
Products from the Republic of Korea, C-580-818, at 17, 19–20 (Jan. 7, 2009) (“CORE”),
available at http://enforcement.trade.gov/frn/summary/korea-south/E9-633-1.pdf (last visited
Mar. 20, 2014) (discussing countervailable short-term export financing system,
document/acceptance loans, and trade rediscount program in 2006)). At least with respect to the
Refrigerator-Freezers determination, Commerce did not merely rely on the “existence, at some
point in time, of the subsidy programs” in Korea, Sichuan Changhong Electric Co. v. United
States, 30 CIT 1481, 1496, 460 F. Supp. 2d 1338, 1352 (2006), but rather it identified almost
contemporaneous findings of countervailable subsidies. Thus, Commerce demonstrated with
specific and credible evidence that contemporaneous, widely available export subsidies existed in
Korea, thereby meeting the first prong of the Fuyao Glass test.
Turning to the second prong of Fuyao Glass, Commerce has met this standard
based on the same evidence discussed above for prong one because these prior countervailing
duty determinations demonstrate that South Korea had broadly available, non-industry specific
export subsidies for which exporters, including the suppliers of CS Wind, were eligible. See
Sichuan, 30 CIT at 1495–96, 460 F. Supp. 2d at 1352–53 (finding that widely available, non-
specific export subsidies met the second prong of Fuyao Glass). If Korea had suddenly
Court No. 13-00102 Page 35
discontinued this export support program, this would have been publicly available information
CS Wind could have presented in rebuttal.
Under the third prong of Fuyao Glass, Commerce may meet its burden by
demonstrating “the competitive nature of [the] market economy countr[y]” in which the supplier
operates. Fuyao Glass, 29 CIT at 118 (internal quotation marks omitted). The burden is on
Commerce, however, to prove that “it would have been unnatural for a supplier to not have taken
advantage of such subsidies.” Id. at 114. In the instant case, Commerce found that it would have
been against any market economy supplier’s interest in Korea to not take advantage of these
subsidies. See I&D Memo at 41–42. Thus, Commerce has met the low threshold required under
this prong.
CS Wind argues that even if the Fuyao Glass test has been met by Commerce, this
simply creates a rebuttable presumption of subsidized prices that CS Wind has rebutted. Pl. Br.
37–39. CS Wind contends that the export subsidy programs found to exist in Refrigerators-
Freezers and CORE were available only to entities that export goods under export contracts from
Korea. Pls.’ Reply to Def. & Def.-Intvnrs. Resp. to Pls.’ Rule 56.2 Mot. for J. upon the Agency
R., ECF No. 45, at 15–19. In the instant case, CS Wind alleges that these input purchases were
domestic transactions and that the companies CS Wind purchased these inputs from did not
export goods and thus could not have received export subsidies under these programs. Id.
Consequently, CS Wind alleges that CS Wind Corp., in South Korea, was the only entity in the
chain of these transactions that could have benefitted from export subsidies, and it is undisputed
that Commerce verified that CS Wind Corp. did not receive subsidies. See id. at 17–19.
CS Wind’s evidence, while entitled to some weight, is insufficient to show that
Court No. 13-00102 Page 36
Commerce’s determination was not supported by substantial evidence. Although these inputs
were purchased in South Korea by CS Wind Corp., also located in South Korea, and then
exported to CS Wind Vietnam by CS Wind Corp., the transactional documents support
Commerce’s determination that these documents could have been used by the suppliers to show
that an export transaction occurred, making them eligible for the subsidy programs. The record
shows that two manufacturers of these inputs identified themselves as the “Exporter” of their
products on the certificates of origin. See, e.g., Verification Exhibits at 14, 24, 28, 67, 76, CR
227–34 at bar code 3094071-06 (Aug. 30, 2012), ECF No. 42-11 (Dec. 11, 2013). These
documents also support the findings that the manufacturers were aware that these products would
be exported to Vietnam and that the sales could be classified as export transactions through an
intermediary, CS Wind Corp. Thus, Commerce was justified in its determination that “all parties
involved . . . had prior knowledge that these inputs were destined for exportation.” See I&D
Memo at 41. As a result, it was not unreasonable for Commerce to determine that the suppliers
may have benefitted from the widely available export subsidies based on these “domestic”
transactions that Commerce permissibly found were export transactions.
CS Wind also presented as rebuttal evidence correspondence from one of the
manufacturer’s sales managers, stating that the company did not benefit from any export
subsidies. See CS Wind Submission of Factual Data, Ex. 2 at bar code 3090709-01 (Aug. 6,
2012), ECF No. 27-17 (Aug. 8, 2013). This individual, however, works in the sales division of a
large manufacturer, not in finance. See id.; WTTC Aug. 15, 2012 Submission, Exs. 1, 2, CR 225
at bar code 3092349-01 (Aug. 15, 2012), ECF No. 42-9 (Dec. 11, 2013). Thus, Commerce’s
conclusion that this person might not know about the receipt of subsidies is reasonable,
Court No. 13-00102 Page 37
especially when there is other record evidence showing past government awards for exports. See
WTTC Submission of Additional Factual Information, Ex. 2, CR 216–21 at bar code 3091000-01
(Aug. 6, 2012), ECF No. 42-9 (Dec. 11, 2013).
As CS Wind’s rebuttal arguments are insufficient to undermine Commerce’s
finding, the court sustains Commerce’s determination that there was reason to believe or suspect
that the inputs purchased in Korea were subsidized.
VI. Brokerage and Handling Costs
CS Wind argues that Commerce acted unreasonably in creating a surrogate value
to be allocated per kilogram for export document preparation based on the weight of a full,
twenty-foot container instead of the weight of CS Wind’s actual shipments. Pl. Br. 49–52. In its
Final Determination, Commerce relied upon the World Bank’s 2012 Doing Business India report
to calculate a surrogate value for B&H costs, including those for document preparation and
customs clearance/technical control. I&D Memo at 48–49. The report was based on the costs
associated with exporting a filled, twenty-foot container; CS Wind, however, did not containerize
its wind tower segments, instead laying them in a pyramid fashion on the ship. See id. at 48–50.
To account for the different form of shipment, Commerce converted the report’s per shipment
document preparation cost of $415 into a per kilogram value based on the weight of a filled
twenty-foot container, 10,000 kg, instead of the weight of an average shipment of towers,
2,600,000 kg. See id. at 49–50; Pl. Br. 49–51. This resulted in a surrogate value of $0.0545/kg
for all B&H costs. Pl. Br. 50. Although CS Wind objected during the agency proceedings that
this overstated the document preparation charges, Commerce replied that it had no other way to
convert between the unit of measure in the Doing Business report and CS Wind’s actual
Court No. 13-00102 Page 38
shipments. I&D Memo at 49–50. Commerce further stated that it was following a consistent
practice employed in several prior agency proceedings. Id. at 50 & n.283 (citing Crystalline
Silicon Photovoltaic Cells, Whether or Not Assembled into Modules, from the People’s Republic
of China: Preliminary Determination of Sales at Less than Fair Value, Postponement of Final
Determination and Affirmative Preliminary Determination of Critical Circumstances, 77 Fed.
Reg. 31,309, 31,321 (Dep’t Commerce May 25, 2012)).
At the outset, it is useful to recognize what the document preparation costs are
intended to cover. The Doing Business report explains that several documents typically are
required to export goods: bank documents, customs clearance documents, port terminal and
handling documents, and transport documents. See Trading Across Borders Methodology,
World Bank, available at http://www.doingbusiness.org/methodology/trading-across-borders (last
visited Mar. 20, 2014) (cited in Surrogate Values for the Preliminary Determination, Ex. 6).
Underlying Commerce’s calculation here must be an assumption that the $415 for document
preparation mentioned in the report was derived from a formula by which the exporter pays for
documents based on the weight of the goods, which simply is not reflective of reality.
Accordingly, implicit in Commerce’s methodology is the incorrect assumption that a shipment
weighing less will incur lower document processing costs while a shipment weighing more will
incur higher processing costs.
Common sense indicates that a half-full, twenty-foot container would incur the
same document preparation expenses as a full twenty-foot container of a single type of good.
The court has recognized previously that increasing the surrogate value for B&H proportionally
based on the weight of the shipment or the size of the container may not always be reasonable.
Court No. 13-00102 Page 39
See Since Hardware (Guangzhou) Co. v. United States, 911 F. Supp. 2d 1362, 1380–81 (CIT
2013). The government unsuccessfully attempts to distinguish that case from the present one,
arguing that unlike in Since Hardware, Commerce did not make a presumption of a proportional
increase in costs. Def. Br. 40.
The government’s argument is nonsensical, and the same logic from Since
Hardware applies equally here. By converting the document costs to a per kilogram value based
on the weight of a hypothetical twenty-foot container, and then multiplying that value by the
weight of CS Wind’s actual shipments, Commerce has applied a proportional increase in the
B&H fees. Commerce has failed to explain why document preparation costs, as opposed to other
B&H fees, would change depending on the size or weight of the shipment. Taken to its logical
extreme, under Commerce’s methodology, a single shipment of wind towers by CS Wind, at an
average weight of 2,600,000 kg, would incur a document preparation cost of over $100,000. Pl.
Br. 51. Such a position flies in the face of common sense and commercial reality. Although the
court understands that Commerce typically converts all surrogate values into a per kilogram
amount for use in calculating dumping margins, its method of doing so here, based on the weight
of a filled twenty-foot container and not based on the weight of a shipment of wind towers, for
which the same documents would need to be prepared, is unreasonable and unsupported by
substantial evidence. The reasonable conversion methodology here appears to be to calculate a
per kilogram surrogate value allocating the $415 document cost over the weight of the entire
wind tower shipment. Accordingly, the court remands this issue to Commerce for recalculation
and/or further explanation.
Court No. 13-00102 Page 40
CONCLUSION
As discussed above, Commerce has failed to support with substantial evidence its
determinations with respect to the valuation of steel plate, carbon dioxide, overhead, and B&H
fees. Although Commerce’s decisions to disregard CS Wind’s market economy input purchases
and to adjust for the discrepancy between Packed Weight and FOP weight were reasonable, the
adjustment to the U.S. sales price based on the weight discrepancy was not. Commerce shall file
its remand determination by May 27, 2014. The parties shall have until June 24, 2014 to file
objections, and the government shall have until July 11, 2014 to file its response.
/s/ Jane A. Restani
Jane A. Restani
Judge
Dated: March 27 2014
,
New York, New York