Globe Metallurgical Inc. v. United States

Slip Op. 11-72
UNITED STATES COURT OF INTERNATIONAL TRADE
GLOBE METALLURGICAL INC.,
Plaintiff,
v.
UNITED STATES,
Defendant.
Before: Leo M. Gordon, Judge
Consol. Court No. 10-00032
OPINION and ORDER
[Administrative review results remanded.]
Dated: June 21, 2011
DLA 	Piper 	LLP 	(US) 	(William 	D. 	Kramer, 	Martin 	Schaefermeier, 	Arlette
Grabczynska) for Plaintiff Globe Metallurgical Inc.
Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Reginald
T. Blades, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice (L. Misha Preheim, Stephen C. Tosini); and Office of the Chief
Counsel for Import Administration, U.S. Department of Commerce (Aaron P. Kleiner), of
counsel, for Defendant United States.
Mayer Brown LLP (Sydney H. Mintzer, Duane W. Layton, Jeffrey C. Lowe) for
Defendant-Intervenors Shanghai Jinneng International Trade Co., Ltd. and Jiangxi
Gangyuan Silicon Industry Co., Ltd.
Gordon, 	Judge: 	This 	consolidated 	action 	involves 	an 	administrative 	review
conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty
order covering Silicon Metal from the People’s Republic of China. 	See Silicon Metal
from China, 75 Fed. Reg. 1,592 (Dep’t of Commerce Jan. 12, 2010) (final results admin.
review) (“Final Results”); see also Issues and Decision Memorandum for Silicon Metal
from 	People’s 	Republic 	of 	China, 	A-570-806 	(Jan. 	5, 	2010), 	available 	at
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http://ia.ita.doc.gov/frn/summary/PRC/2010-378-1.pdf 	(last 	visited 	June 	21, 	2011)
(“Decision Memorandum”). 	Before the court are motions for judgment on the agency
record filed by Globe Metallurgical Inc. (“Globe”), and Shanghai Jinneng International
Trade Co., Ltd. (“Shanghai”) and Jiangxi Gangyuan Silicon Industry Company, Ltd.
(“Jiangxi”) (collectively “Respondents”). 	The court has jurisdiction pursuant to Section
516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii)
(2006), 1 and 28 U.S.C. § 1581(c) (2006).
Globe challenges (1) Commerce’s decision not to reduce Respondents’ export
prices by the amount of an export tax and value added tax; (2) Commerce’s selection of
the average value for Grade A non-coking coal published in the Indian Bureau of Mines
Yearbook as the surrogate value for Respondents’ coal input; and (3) Commerce’s
reliance upon all sales invoiced by Respondents during the period of review (“POR”),
rather than all sales entered during the POR.
Respondents challenge Commerce’s decision to include FACOR in its SG&A
calculations despite Respondents’ contention that FACOR is a “sick” company under
Indian law. 	Alternatively, Respondents challenge the exclusion of the following line-
items in FACOR’s financial statements from the SG&A expense ratio calculation: (1) the
sale of a surplus captive power plant (a fixed asset) and (2) miscellaneous income.
For the reasons set forth below, the court remands this action to Commerce to
address Respondents’ challenge to Commerce’s treatment of FACOR’s SG&A expense
1 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions
of Title 19 of the U.S. Code, 2006 edition.
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ratio calculation. 	The court sustains Commerce's determinations regarding all other
issues in this action.
I. Standard of Review
For 	administrative 	reviews 	of 	antidumping 	duty 	orders, 	the 	court 	sustains
determinations, findings, or conclusions of the U.S. Department of Commerce 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). 	More specifically, when reviewing
agency determinations, findings, or conclusions for substantial evidence, the court
assesses whether the agency action is reasonable given the record as a whole. Nippon
Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). 	Substantial
evidence has been described as “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” Dupont Teijin Films USA v. United States,
407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). 	Substantial evidence has also been described as “something less
than 	the 	weight 	of 	the 	evidence, 	and 	the 	possibility 	of 	drawing 	two 	inconsistent
conclusions from the evidence does not prevent an administrative agency's finding from
being supported by substantial evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607,
620 (1966). 	Fundamentally, though, “substantial evidence” is best understood as a
word formula connoting reasonableness review. 	3 Charles H. Koch, Jr., Administrative
Law and Practice § 9.24[1] (3d. ed. 2011). 	Therefore, when addressing a substantial
evidence issue raised by a party, the court analyzes whether the challenged agency
action “was reasonable given the circumstances presented by the whole record.”
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Edward D. Re, Bernard J. Babb, and Susan M. Koplin, 8 West's Fed. Forms, National
Courts § 13342 (2d ed. 2010).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of
Commerce's interpretation of the antidumping statute. Dupont, 407 F.3d 1211, 1215;
Agro Dutch Indus. Ltd. v. United States, 508 F.3d 1024, 1030 (Fed. Cir. 2007).
“[S]tatutory interpretations articulated by Commerce during its antidumping proceedings
are entitled to judicial deference under Chevron.” 	Pesquera Mares Australes Ltda. v.
United States, 266 F.3d 1372, 1382 (Fed. Cir. 2001); see also Wheatland Tube Co. v.
United 	States, 	495 	F.3d 	1355, 	1359 	(Fed. 	Cir. 	2007) 	(“[W]e 	determine 	whether
Commerce's statutory interpretation is entitled to deference pursuant to Chevron.”).
II. Discussion
A. Export Tax and VAT
During the administrative review Respondents provided information regarding a
Chinese 	export 	tax 	and 	a 	value 	added 	tax 	(“VAT”) 	on 	subject 	merchandise.
Respondents reported that their sales of subject merchandise after January 1, 2008
were subject to a 10% export tax. 	See Jiangxi’s Sec. C Questionnaire Response, PD
35 at frm. 16 (Nov. 17, 2008) 2 ; Shanghai’s Sec. C Questionnaire Response, PD 36 at
frm. 18 (Nov. 17, 2008). 	Respondents reported that their respective export sales were
also subject to a VAT, in addition to the export tax. 	See Jiangxi’s Supp. Secs. C-D
2 “PD __” refers to a document contained in the public administrative record. “CD __”
refers to a document contained in the confidential administrative record.
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Questionnaire Response, CD 24 at frms. 11, 35-41 (Feb. 23, 2009); Shanghai’s Supp.
Secs. C-D Questionnaire Response, CD 28 at frms. 11-12, 19-30 (Mar. 11, 2009).
Commerce 	published 	the 	preliminary 	results, 	reducing 	Respondents’ 	export
prices by 10 percent based upon the export tax, pursuant to 19 U.S.C. § 1677a(c)(2)(B).
See 74 Fed. Reg. 32,885, 32,887 (July 9, 2009) (“Preliminary Results”). Commerce did
not reduce Respondents’ export prices based upon the VAT, stating that it had not
previously considered whether a VAT applied to export sales would be covered by
subsection 1677a(c)(2)(B) and invited parties to comment upon the issue for the final
results. 	Id.; 	see 	also 	Letter 	to 	Interested 	Parties 	Requesting 	Comments 	Upon
Treatment of Chinese Value Added Taxes on Export Sales, PD 129 (June 29, 2009).
Respondents 	argued 	in 	their 	administrative 	case 	brief 	that 	Commerce’s
preliminary determination to reduce their export prices based upon the export tax was
correct, but that Commerce should not further reduce their export prices based upon the
VAT. See Respondents’ Admin. Case Br., PD 156 at frms. 14-21 (Aug. 21, 2009). In its
case brief Globe also argued that Commerce’s preliminary determination to reduce
Respondents’ export prices based upon the export tax was correct, and Globe further
claimed that Respondents’ export prices should be reduced based upon the VAT. 	See
Globe’s Admin. Case Br., PD 155 at frms. 12-21 (Aug. 21, 2009).
Commerce subsequently placed three documents upon the record for comment
by the parties. Two of the documents were letters from Chinese Government officials to
the U.S. Secretary of Commerce regarding Commerce’s treatment of the export tax and
VAT. 	These letters stated that Commerce’s preliminary determination with respect to
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the export tax was inconsistent with Commerce’s administrative practice, as upheld by
the U.S. Court of Appeals for the Federal Circuit in Magnesium Corp. v. United States,
166 F.3d 1364, 1370-71 (Fed. Cir. 1999), and that any reduction to Respondents’ export
prices based upon the VAT would also run counter to this practice. 	See Letter to
Interested Parties Requesting Comments Upon Letters from Ms. Zhou Wenzhong,
Ambassador Extraordinary and Plenipotentiary of the People’s Republic of China to the
United States, and Madame Zhou Xiaoyan, Director General of the Bureau of Fair
Trade for Imports and Exports, Ministry of Commerce of the People’s Republic of China,
PD 170 at frms. 1-8 (Nov. 9, 2009). 	Commerce also placed its voluntary remand
redetermination 	in 	the 	Magnesium Corp. litigation upon the record. 	Id. at 9-26.
Because Commerce placed these documents upon the record subsequent to the
administrative briefing period, Commerce requested that parties comment upon the
letters and remand redetermination.
Commerce received comments from Globe, Respondents, and the Chinese
Ministry of Commerce. 	Respondents and the Chinese Ministry of Commerce argued
that Commerce should reverse its preliminary determination with respect to the export
tax and should not reduce Respondents’ export prices for the VAT, while Globe
maintained that Commerce should maintain its preliminary determination with respect to
the export tax and apply the same approach to the VAT. 	See Globe’s Comments, PD
176 (Dec. 3, 2009); Respondents’ Comments Upon Deduction of Export Taxes and VAT
from Export Price, PD 177 (Dec. 3, 2009); Chinese Ministry of Commerce’s Comments
Upon Deduction of Export Tax and VAT From Export Price, PD 175 (Dec. 2, 2009).
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Commerce 	then 	placed 	upon 	the 	record 	a 	letter 	from 	a 	third 	Chinese
Government official to the Secretary of Commerce regarding Commerce’s treatment of
the 	export 	tax 	and 	VAT. 	The 	letter 	argued 	that 	Commerce 	should 	reverse 	its
preliminary 	determination 	with 	respect 	to 	the 	export 	tax 	and 	should 	not 	reduce
Respondents’ export prices based upon the VAT. 	See Letter to Interested Parties
Requesting Comments Upon Letter from Mr. Chen Deming, Minister of Commerce of
the People’s Republic of China, PD 178 (Dec. 11, 2009). 	On December 16, 2009,
Globe provided comments in opposition to the Chinese Government’s approach. 	See
Globe’s Comments, PD 179 (Dec. 16, 2009).
In the Final Results Commerce relied on Magnesium Corp. and Commerce’s
longstanding administrative practice in deciding not to reduce Respondents’ export
prices by the export tax or VAT. 	Decision Memorandum at 13-20, PD 184 at frms. 13-
20. 	Commerce explained that “the salient issue in the instant case is the same issue
that was before the Federal Circuit in Magnesium Corp.: 	whether respondents’ U.S.
prices reflect a NME export tax such that the export tax is ‘included in such price’ within
the meaning of subsection 1677a(c)(2)(B).” Id. at 15 (citing Magnesium Corp., 166 F.3d
at 1370-71).
Globe 	challenges 	this 	decision, 	arguing 	that 	the 	statute 	mandates 	that
Commerce reduce export price by the export tax and VAT in a non-market economy
(“NME”) case. 	The Federal Circuit in Magnesium Corp., however, held otherwise.
Magnesium Corp. addressed Commerce’s final 	determinations 	in 	the 	antidumping
investigations of pure magnesium and magnesium alloy from the Russian Federation,
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an NME. As in this case, the Russian respondents reported that they paid an export tax
and similar administrative fees on subject merchandise. 	Commerce reasoned that “the
export tax paid to an NME government is an intra-NME transfer of funds between a
Russian producer and the Russian government. 	As such, it is inappropriate to account
for such transfers in our [less than fair value] analysis just as it is NME prices and
costs.” See Pure Magnesium & Alloy Magnesium from the Russian Federation, 60 Fed.
Reg. 16,440, 16,448 (Dep’t of Commerce Mar. 30, 1995) (final determ. of sales at less
than 	fair 	value). 	Accordingly, 	Commerce 	did 	not 	reduce 	the 	Magnesium 	Corp.
respondents’ export prices.
The Magnesium Corp. petitioners challenged Commerce’s determination before
the U.S. Court of International Trade. 	Commerce, in turn, requested a voluntary
remand to further explain its determination not to implement subsection 1677a(c)(2)(B)
in the underlying investigations. 	See Magnesium Corp. v. United States, 20 CIT 1092,
1113-14, 938 F. Supp. 885, 905-06 (1996). 	On remand Commerce reasoned that the
nature of NMEs precluded Commerce from valuing the Russian Federation’s export
taxes and fees as a component of the respondents’ prices. Commerce explained:
[I]n a market economy country, a producer subject to a government-
imposed export tax can be expected to actually incur the tax liability and to
incorporate the tax amount into its cost and pricing structure. . . . No such
presumption can be made, however, in the context of a [NME]. 	The
[NME] is governed by a presumption of widespread intervention and
influence in the economic activities of enterprises. 	An export tax charged
for one purpose may be offset by government transfers provided for
another purpose. 	In such circumstances, [Commerce] has no basis for
determining whether and to what extent a tax might be reflected in a price.
This is the very type of internal NME transfer that the statute directs the
Department to reject.
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See Remand Redetermination, PD 170 at frm. 15. 	The Court of International Trade
upheld 	Commerce’s 	remand, 	deferring 	to 	Commerce’s 	analysis 	of 	subsection
1677a(c)(2)(B) under Chevron Step 2. 	See Magnesium Corp. v. United States, 20 CIT
1464, 1466, 949 F. Supp. 870, 872 (1996).
The petitioners appealed to the Federal Circuit, which sustained Commerce’s
determination, albeit under Chevron Step 1. 	The Federal Circuit concluded that
subsection 1677a(c)(2)(B) expressly contemplates that export taxes will not be included
in all export prices, given that the statute requires Commerce to reduce the export price
only when the export tax is “included in such price.” 	Magnesium Corp., 166 F.3d at
1370. 	The court further held that Commerce’s approach properly recognized the
statutory distinction between market economies and NMEs with respect to valuation of
internal costs and prices. 	Id. 	The court distinguished between market and NME
economies with respect to application of subsection 1677a(c)(2)(B):
In a market economy, Commerce can presume that any tax imposed on
the merchandise to be exported will be included in the [United States
price] of that merchandise. 	However, that presumption is not available
when 	the 	merchandise 	is 	produced 	in 	a 	non-market 	economy. 	By
definition, in a [NME], the price of merchandise does not reflect its fair
value 	because 	the 	market 	does 	not 	operate 	on 	market 	principles.
Therefore, no reliable way exists to determine whether or not an export tax
has been included in the price of a product from a [NME].
Id. (internal citation omitted; emphasis added). 	Accordingly, the Federal Circuit held
that Commerce’s interpretation harmonized subsection 1677a(c)(2)(B) with the statutory
definition of an NME, and that Commerce’s approach gave meaning to the phrase,
“included in such price.” Id. at 1371.
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In attempting to distinguish the facts of Magnesium Corp., Globe argues that the
export tax and VAT in this case were not internal-NME transfers because, according to
Globe, Respondents included both taxes in their export prices. Rev. Br. in Supp. of
Globe’s Mot. for J. upon Agency R. at 4-7, 10-11, ECF No. 42 (“Globe’s Br.”). 	The
administrative record, however, does not support Globe’s argument that the export tax and
VAT are not internal NME transfers. The record indicates that the export tax is paid by the
exporter to Chinese Customs authorities in remimbi (“RMB”) upon exportation of the
merchandise, not by the U.S. purchaser. Shanghai Jinneng’s Supp. Sec. C Questionnaire
Response, CD 28 at Ex. SC-3 (Mar. 11, 2009). 	Similarly, the VAT is paid in RMB on an
aggregated basis by Respondents to the Chinese authorities. Id. Also, contrary to Globe’s
claim, the record indicates that Chinese law does not require the VAT to be charged to
customers on export sales. 	See Respondent’s 2007/2008 Admin. Review Rebuttal Brief,
CD 69 (Sept. 9, 2009). Defendant adds that even if an NME respondent asserts that its
export prices incorporate a tax payment, such tax payments would still be intra-NME
transfers that cannot be properly valued. Def.’s Resp. to Pl.’s and Def.-Ints.’ Mots. for J.
upon the Agency R. at 17 (citing Magnesium Corp.), ECF No. 49 (“Def.’s Br.”).
Focusing upon Respondents’ statements that their export prices are based upon
the 	“world 	market 	price” 	for 	silicon 	metal, 	Globe 	argues 	that 	the 	Respondents’
operations 	within 	an 	NME 	is 	irrelevant 	to 	Commerce’s 	application 	of 	subsection
1677a(c)(2)(B). 	Globe’s 	Br. 	at 	12. 	Globe’s 	argument 	mistakenly 	implies 	that
Respondents’ 	prices 	reflect 	market 	conditions. 	Commerce’s 	determination 	as 	to
whether merchandise is priced according to market conditions is based upon the nature
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of the exporting country, not the destination country. See Decision Memorandum at 16-
17 (citing Lasko Metal Prods., Inc. v. United States, 43 F.3d 1442, 1445-46 (Fed. Cir.
1994)). 	Commerce explained that equating Respondents’ export prices with market
economy prices “would suggest that NME export prices are determined by market
conditions. 	The Department declines to adopt this fundamental change to its NME
methodology.” Id.
Globe further argues that Commerce’s determination not to reduce Respondents’
export 	prices 	runs 	counter 	to 	Congressional 	intent 	with 	respect 	to 	subsection
1677a(c)(2)(B). Globe’s Br. at 14-16. The legislative history cited by Globe, however, is
silent with respect to the issue presented by this case—the application of subsection
1677a(c)(2)(B) within NME proceedings. 	See id. (citing H. Rep. No. 93-571 at 69
(1973), S. Rep. No. 93-1298, at 172 (1974)). 	In addressing this issue the Federal
Circuit 	explained 	that 	Commerce’s 	practice 	“both 	harmonizes 	subsection
[1677a(c)(2)(B)] (deduction of export taxes) with subsection 1677(18) (definition of non-
market economy), and gives meaning to every part of subsection [1677a(c)(2)(B)],
including the clause ‘if included in such price.’” Magnesium Corp., 166 F.3d at 1371.
Globe also claims that Commerce’s determination not to reduce Respondents’
export prices by the amount of the Chinese taxes violates Commerce’s statutory
obligation to calculate tax-neutral dumping margins. Globe’s Br. at 16-17. According to
Globe, because Commerce prefers tax-exclusive surrogate values in determining the
normal 	value 	of 	subject 	merchandise, 	Commerce’s 	determination 	not 	to 	reduce
Respondents’ export prices for the Chinese taxes runs counter to administrative and
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judicial precedent to calculate accurate, tax-neutral dumping margins. 	Id. 	Globe’s “tax
neutrality” argument, however, relies exclusively on cases that dealt with administrative
reviews 	of 	market 	economy 	antidumping 	duty 	orders, 	and 	thus 	fails 	to 	address
subsection 1677a(c)(2)(B) in the NME context. See Parkdale Int’l v. United States, 475
F.3d 1375, 1380 (Fed. Cir. 2007) (addressing Commerce’s reseller policy in market
economy administrative review); Micron Techs., Inc. v. United States, 243 F.3d 1301,
1313 (Fed. Cir. 2001) (addressing application of 19 U.S.C. § 1677a(d)(1)(D) in market
economy case); Viraj Forgings, Ltd. v. United States, 27 CIT 1472, 1477, 283 F. Supp.
2d 1335, 1340 (2003) (regarding application of 19 U.S.C. § 1677b(a)(1)(C) in market
economy 	administrative 	review); 	Certain 	Corrosion-Resistant 	Carbon 	Steel 	Flat
Products From Korea, 61 Fed. Reg. 18,547, 18,548 (Dep’t of Commerce Apr. 26, 1996)
(final results of admin. review).
In sum, Globe’s arguments challenging Commerce’s treatment of Respondent’s
export taxes and VAT are unpersuasive. 	These issues were long ago addressed and
resolved by the Federal Circuit in Magnesium Corp., a decision that is binding here.
The court therefore must sustain Commerce’s decision on these issues.
B. Respondents’ Coal Input
When valuing the factors of production in an NME proceeding, Commerce must
use the “best available information” when selecting surrogate data from “one or more”
surrogate market economy countries. 19 U.S.C. § 1677b(c)(1), (4). 	Commerce's
regulations provide that surrogate values should “normally” be publicly available and
(other than labor costs) from a single surrogate country. 19 C.F.R. § 351.408(c) (2009).
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When making its surrogate value selections (and when comparing and contrasting
various data sets), Commerce considers “the quality, specificity, and contemporaneity of
the available values.” Certain Frozen Fish Fillets from the Socialist Republic of Vietnam,
73 Fed. Reg. 52,015, 52,020 (Dep't of Commerce Sept. 8, 2008) (prelim. results admin.
review). 	Commerce prefers data that reflects a broad market average, is publicly
available, contemporaneous with the period of review, specific to the input in question,
and exclusive of taxes on exports. Certain Pneumatic Off-the-Road Tires from the
People's Republic of China, 73 Fed. Reg. 40,485 (Dep't of Commerce July 15, 2008)
and accompanying Issues and Decision Memorandum, A-570-912 (July 7, 2008), cmt.
10 	at 	26, 	available 	at 	http:// 	ia.ita.doc.gov/frn/ 	summary/PRC/E8-16156-1.pdf 	(last
visited June 21, 2011).
When reviewing substantial evidence issues involving Commerce's selection of
the best available surrogate values, the court evaluates “whether a reasonable mind
could conclude that Commerce chose the best available information.” 	Goldlink Indus.
Co. v. United States, 30 CIT 616, 619, 431 F. Supp. 2d, 1323, 1327 (2006); see also
CITIC Trading Co. v. United States, 27 CIT 356, 366 (2003) (“[W]hile the standard of
review precludes the court from determining whether [Commerce's] choice of surrogate
values was the best available on an absolute scale, the court may determine the
reasonableness of Commerce's selection of surrogate prices.”).
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For the surrogate values for Respondents’ inputs and expenses, Commerce
selected India as the surrogate country. Preliminary Results, 74 Fed. Reg. at 32,887-88.
During the administrative review Commerce asked for, and Respondents reported, the
technical specifications of the coal input used in the production of subject merchandise.
See Jiangxi’s Supp. Secs. C-D Questionnaire Response, CD 24 at frms. 49-50, 157
(Feb. 23, 2009); Shanghai’s Supp. Secs. C-D Questionnaire Response, CD 28 at frms.
141, 176, 179-180 (Mar. 11, 2009). 	Jiangxi reported its coal specifications, which
included, in part: moisture content; ash content; volatile matter content; and caking
index. See Jiangxi’s Supp. Secs. C-D Questionnaire Response, CD 26 (Feb. 23, 2009).
Shanghai’s 	affiliated 	producer, 	Datong, 	reported 	that 	its 	coal 	had 	the 	following
specifications, in part: moisture content and ash. 	See Datong’s Supp. Secs. C-D
Questionnaire Response, CD 28 at frm. 176 (Mar. 11, 2009). 	Additionally, Datong
provided a sample invoice for its purchases of coal, which listed its ash and moisture
content requirements and also specified caking index requirements. Id. at frm. 179.
To value Respondents’ coal input, Commerce relied upon the average value for
Grade A non-coking coal provided by the Indian Bureau of Mines Yearbook for 2007
(“IBM Yearbook”). 	See Selection of Factor Values Memo., PD 131 at frms. 4, 66-97
(June 29, 2009). 	Commerce noted that the Indian coal system uses an empirical
formula to identify commercial-grade non-coking coal. 	See Prelim. Surrogate Value
Memo., PD 131 at frm. 4 (citing Globe’s Rebuttal Surrogate Value Submission, PD 92 at
frms. 17-18). 	Specifically, the Indian coal classification system identifies commercial
Grade A non-coking coal as having a Useful Heat Value (“UHV”) in excess of 6200,
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pursuant to the following formula: 	UHV = 8900 - 138 (A + M), where A is ash
percentage 	and 	M 	is 	moisture 	percentage. 	See 	Respondents’ 	Surrogate 	Value
Submission, PD 87 (Apr. 3, 2009). 	After deriving the UHV for Respondents’ coal input
using Respondents’ ash and moisture content specifications, Commerce determined
that the appropriate surrogate value was the average value for Grade A non-coking coal
provided in the IBM Yearbook. 	See Decision Memorandum at 43 (citing Respondents’
Surrogate Value Submission, PD 87 at frm. 429 (Apr. 3, 2009)).
Globe 	argues 	that 	Commerce 	erred 	in 	its 	surrogate 	value 	selection 	for
Respondents’ coal input, insisting that Commerce’s decision not to use the Chinese
coal classification system to first determine whether Respondents’ coal input was
“coking” or “non-coking” coal caused Commerce to select an erroneous surrogate value.
Globe’s Br. at 20-21. Defendant counters that it “is inherent in the process of identifying
many surrogate values that Commerce must rely on the surrogate country’s product
classification systems.” Def.’s Br. at 24.
In this case Commerce used Respondents’ coal specifications and tied them to a
surrogate data source using an empirical formula. 	To the extent that Commerce
classified Respondents’ coal inputs using surrogate data, it did so in the same manner
that it would in any other NME proceeding—it matched the technical specifications of
Respondents’ inputs with an appropriate surrogate data source. 	This approach is
reasonable on this administrative record given the differences between the Chinese and
Indian coal classifications systems. 	According to the information on the administrative
record, India apparently has two classes of coal, coking and non-coking, with many grades
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Consol. Court No. 10-00032 	Page 16
within each class, while China appears to have 11 classes of coal with no grades.
Compare Respondent’s Surrogate Value Submission, PD 87 at frm. 429 (Apr. 3, 2009)
(2007 IBM Yearbook at 24-24) with Plaintiff’s Rebuttal Surrogate Value Submission, PD 92
at frm. 52 (Apr. 13, 2009) (Chinese GB5751-86 Standard Classification).
Commerce had no reason to rely upon the Chinese coal classification system
because Respondents’ detailed coal specifications allowed Commerce to accurately
select a surrogate value from India. 	Commerce explained that because ash and
moisture content provide a sufficient basis to identify the appropriate surrogate value in
India, Commerce did not need to consider how various other technical specifications
(such as volatile matter content) are treated under other countries’ coal classification
systems to identify an appropriate surrogate. This determination was both sensible and
reasonable and satisfies the requirement of Hebei Metals & Minerals Import & Export
Corp. v. United States, 29 CIT 288, 295, 366 F. Supp. 2d 1264, 1270 (2005) that
Commerce determine the type of coal used by Respondents and select an appropriate
surrogate value. Commerce relied upon Respondents’ particular coal specifications and
an empirical classification formula to identify the appropriate surrogate value for coal.
Globe also argues that the record demonstrates that Respondents’ coal could
only have been coking coal. 	Globe’s Br. at 25. 	Defendant responds that Globe relies
exclusively upon a vague definition of coking coal that lacks the empirical rigor of
Commerce’s approach. 	Defendant explains that Globe cites a definition for primary
coking coal that characterizes it as coal with “high coking properties and low volatile
matter content,” and then Globe asserts that Respondents’ coal must be coking coal
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Consol. Court No. 10-00032 	Page 17
because of its caking index and volatile matter content. 	Globe’s Br. at 26. 	Defendant
points out that Globe fails to provide any benchmark for the “relative” properties of
coking 	versus 	non-coking 	coals 	under 	the 	Indian 	system. 	Globe’s 	analysis 	is
unreasonably vague and imprecise when compared with Commerce’s reliance upon
what appears to be a more robust empirical formula. 	Accordingly, Globe does not
provide 	a 	basis 	for 	the 	court 	to 	conclude 	that 	Commerce’s 	determination 	is
unreasonable.
Globe also argues that it is impossible to identify the type of Indian coal used by
Respondents based on ash and moisture content because the ash and moisture
content of coking and non-coking coal overlap. Globe’s Br. at 24. Globe concludes that
Respondent’s coal would be graded as either Steel Grade I coking coal or Grade A non-
coking coal, depending on whether it is coking coal or non-coking coal. 	Id. at 24-25.
Respondents explain that Globe’s conclusions are factually incorrect. 	As an initial
matter, the IBM Yearbook does not assign a moisture content for Steel I Grade coking
coal. 	See 	Respondent’s 	Surrogate 	Value 	Submission, 	PD 	87 	at 	frm. 	430 	(IBM
Yearbook at 24-25). The IBM Yearbook indicates that Steel Grade I coking coal has an
ash content “exceeding 15% but not exceeding 18%,” while Grade A non-coking coal
has a combined ash and moisture content of 19% or less. 	Id. 	Respondents’ coal has
much lower ash levels than that of Steel Grade I coking coal. 	See Jiangxi Gangyuan’s
Supp. Sec. D Questionnaire Response, CD 24 (Feb. 23, 2009); Jiangxi Gangyuan’s
Supp. Sec. C-D Questionnaire Response, CD 41 (Apr. 21, 2009); Datong Jinneng’ s
Supp. 	Sec. 	D 	Questionnaire 	Response, 	CD 	28 	(Mar. 	11, 	2009). 	Therefore,
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Consol. Court No. 10-00032 	Page 18
Respondents’ coal ash content is well below the floor set by the Indian Steel Grade I
coking coal standard. Further, the combined ash and moisture content of Respondents’
coal fall under 19%, like Grade A non-coking coal. Id. There is, therefore, ample record
evidence 	demonstrating 	that 	Grade 	A 	non-coking 	matched 	Respondents’ 	coal
specifications.
Finally, Globe argues that Respondents’ coal could not have been non-coking
coal because only coking coal could withstand metallurgical applications such as silicon
metal production. 	Globe’s Br. at 26. 	If this were true, one wonders why Globe would
bother with all its other arguments on this issue. 	Here again, Commerce determined
that the record did not support Globe’s claim. 	Commerce explained that the Coal
Directory of India (a publication of the Indian Ministry of Coal that Globe placed upon
the record), stated that non-coking coal with low ash content and higher fixed carbon
relative to coking coal can be used in metallurgical applications. 	Globe’s Rebuttal
Surrogate Value Submission, PD 92 at frm. 34 (Apr. 13, 2009).
In short, Globe’s arguments about the unreasonableness of Commerce’s coal
input surrogate value selection are unpersuasive. 	Commerce’s choice was reasonable
given the administrative record, and therefore must be sustained.
C. Respondents’ Sales Database
During the administrative review Respondents submitted their United States
sales databases, which identified the date that the United States customer was invoiced
(the “invoice date”), the date that payment was received (the “payment date”), and the
date that the merchandise was shipped (the “shipment date”). 	See Jiangxi’s Sec. C
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Consol. Court No. 10-00032 	Page 19
Questionnaire Response, CD 10 at frms. 31-34 (Nov. 17, 2008); Shanghai’s Second
Supp. Secs. C-D Questionnaire Response, CD 40 at frms. 20-23 (Mar. 11, 2009). 	The
databases did not identify the date that the sales entered the United States (the “entry
date”).
In May 2009, Commerce conducted verification of Datong’s production data,
Shanghai’s United States sales data, and Jiangxi’s production and United States sales
data. See Verification Report for Datong, CD 62 (June 30, 2009); Verification Report for
Shanghai, CD 57 (June 29, 2009); Verification Report for Jiangxi, CD 58 (June 29,
2009). 	In 	calculating 	Respondents’ 	preliminary 	dumping 	margins, 	pursuant 	to
Respondents’ designation of the invoice date as the date of sale for their United States
sales, 	Commerce 	relied 	upon 	all 	sales 	invoiced 	during 	the 	POR 	in 	its 	price
comparisons. 	See Jiangxi’s Sec. C Questionnaire Response, CD 10 at frm. 10 (Nov.
17, 2008) (“The date of invoice is the date of sale.”); Shanghai’s Sec. C Questionnaire
Response, CD 11 at frm. 11 (Nov. 17, 2008) (“The date of invoice is the date of sale.”);
see also Preliminary Analysis Memo. for Jiangxi, CD 55 at frm. 13 (June 29, 2009)
(using 	the 	sales 	invoice 	date 	(“SALINDTU”) 	to 	identify 	sales 	within 	the 	POR);
Preliminary 	Analysis 	Memo. 	for 	Shanghai, 	CD 	56 	at 	frm. 	13 	(June 	29, 	2009)
(SALINDTU to identify sales within the POR).
In the Final Results Commerce calculated Respondents’ dumping margins based
upon all sales invoiced during the POR. 	Decision Memorandum at 49-51; see also
Final Analysis Memo. for Jiangxi, CD 74 at frm. 9 (Jan. 5, 2010) (using SALINDTU to
identify sales within the POR); Final Analysis Memo. for Shanghai, CD 73 at frm. 12
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Consol. Court No. 10-00032 	Page 20
(Jan. 5, 2010) (using SALINDTU to identify sales within the POR). 	In response to
Globe’s claim that this determination was inconsistent with Commerce’s normal practice
of using only sales that entered during the POR, Commerce stated that it would deviate
from its normal practice for two reasons. 	First, Commerce reasoned that it had relied
upon all sales invoiced during the period of review for the 2005-06 new shipper reviews
of Respondents, thus it had to adopt the same approach in this case to avoid missing
transactions 	from 	review-to-review. 	See Decision Memorandum at 50. 	Second,
Commerce 	determined 	that 	it 	could 	not 	filter 	Respondents’ 	United 	States 	sales
databases to exclude sales that may have entered after the POR because Respondents
had not provided the entry dates for their United States sales. Id.
Subsection 1675(a)(2)(A) of the antidumping statute provides that Commerce
calculate dumping margins for each entry during the period of review. See 19 U.S.C. §
1675(a)(2)(A). 	In interpreting this provision, Commerce has explained that, under 19
U.S.C. § 1677a and 19 U.S.C. § 1677b, Commerce is to evaluate sales in determining
the appropriate export price (or constructed export price) and normal value, “without
recognizing that [entries and sales] are not synonymous or providing a mechanism for
linking them.” 	See Advance Notice of Proposed Rulemaking, 56 Fed. Reg. 63,696
(Dep’t of Commerce Dec. 5, 1991). 	Given this ambiguity, Commerce determined that
Congress intended that Commerce must examine all transactions during the POR.
Specifically, Commerce explained that, “by referring to ‘entry’ the drafters . . . likely
intended that in a review, unlike an investigation, [Commerce] would examine every
transaction; they did not mean necessarily that Commerce would have to tie ‘entries’ to
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Consol. Court No. 10-00032 	Page 21
‘sales’ in ordering assessment.” 	Id. 	Accordingly, Commerce’s regulations provide that
an administrative review “will cover, as appropriate, entries, exports, or sales.” 	See 19
C.F.R. § 351.213(e)(1)(ii).
In this review both Respondents made “export price” or “EP” sales, meaning that
their sales to the United States were made to one or more unaffiliated purchasers. See
19 	U.S.C. 	' 	1677a(a). 	Normally, 	in 	administrative 	reviews 	involving 	EP 	sales,
Commerce calculates dumping margins based upon sales that entered the United
States during the POR. See, e.g., Certain Frozen Warmwater Shrimp from Ecuador, 73
Fed. Reg. 39,945 (Dep’t of Commerce July 11, 2008), and accompanying Issues and
Decision 	Memorandum 	at 	cmt. 	4, 	available 	at
http://www.ia.ita.doc.gov/frn/summary/ECUADOR/E8-15830-1.pdf (last visited June 21,
2011). 	However, in this case, Commerce departed from its normal practice for two
reasons. 	First, Commerce explained that, in the 2005–06 new shipper reviews for
Respondents, it calculated dumping margins using all transactions with a date of sale
during the POR. 	See Decision Memorandum at 50. 	Given that Respondents had
designated the invoice date as the date of sale and all sales were invoiced during the
POR, Commerce found that it must rely upon all sales invoiced during this review to
prevent 	it 	from 	missing 	transactions 	from 	review 	to 	review. 	Id. 	“In 	order 	to
comprehensively 	examine 	the 	universe 	of 	any 	respondent’s 	transactions, 	the
Department must apply a consistent methodology across segments in order to avoid
potentially overlooking transactions.” Id.
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Second, Commerce explained that Respondents had not provided the entry
dates for their United States sales. 	Id. 	Specifically, Respondents’ United States sales
databases identified the invoice date, payment date, and shipment date for the United
States customer. 	The databases did not identify the entry date for the United States
sales. 	See Jiangxi’s Sec. C Questionnaire Response, CD 10 at frms. 31-34 (Nov. 17,
2008); Shanghai’s Second Supp. Secs. C-D Questionnaire Response, CD 40 at frms.
20-23 (Mar. 11, 2009). 	Commerce reasoned that Respondents’ inability to provide the
entry dates for their sales distinguished this case from other reviews involving EP sales
in which the respondents provided Commerce with the entry dates of their sales. 	See
Decision Memorandum at 50-51 (citing, e.g., Certain Frozen Warmwater Shrimp From
Thailand, 73 Fed. Reg. 50,933 (Dep’t of Commerce Aug. 9, 2008) (final results of
admin. review), and accompanying Issues 	and Decision Memorandum at cmt. 4,
available 	at 	http://www.ia.ita.doc.gov/frn/summary/THAILAND/E8-20165-1.pdf 	(last
visited June 21, 2011)).
Globe challenges both of Commerce’s stated reasons for its departure from its
normal practice. 	First, with respect to Commerce’s determination that its reliance upon
Respondents’ sales invoiced during the POR is consistent with its methodology in the
2005-06 	new 	shipper 	reviews 	of 	Respondents, 	Globe 	claims 	that 	Commerce’s
determination is inconsistent with those reviews. Globe fails, however, to demonstrate
any inconsistency between the two reviews. As Commerce correctly explained, in both
the new shipper reviews and in this case, Commerce relied upon the date of sale
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Consol. Court No. 10-00032 	Page 23
reported by Respondent (invoice date) in determining which sales to utilize in the
dumping margin calculations. See id. at 50.
Next, with respect to Commerce’s finding that the record does not provide an
evidentiary basis to filter Respondents’ United States sales database to exclude sales
entered after the POR, Globe argues that both Respondents provided Commerce with
entry information for their sales. 	Defendant concedes that Commerce erred, in part, in
its statement that “[t]he instant record does not provide the specific entry dates of
Respondents’ transactions.” See id. at 50. Specifically, this statement was in error with
respect to Jiangxi, which provided a spreadsheet that identifies the entry date of its
shipments. 	See Jiangxi’s Supp. Sec. C-D Questionnaire Response, CD 24 at frm. 3
(Feb. 23, 2009). 	This error, however, has no material effect on the Final Results
because all of Jiangxi’s sales entered the United States during the POR.
Additionally, Commerce’s statement that the record lacks the entry dates for
Respondents’ transactions remains true with respect to Shanghai. 	Although Globe
suggests that Shanghai reported its entry dates, the evidence cited by Globe does not
contain the entry dates. 	Globe’s Br. at 27 (citing Shanghai’s Sec. C Questionnaire
Response, PD 35 at frms. 8, 29 (Nov. 18, 2008)). 	Thus, Globe’s claim that the record
contains Shanghai’s entry dates is unsupported.
In addition to the above claims, Globe raises a new argument before the court
that it did not present to Commerce. 	Globe argues that Commerce should have used
the U.S. Customs and Border Protection (“CBP”) data showing Respondents’ entries as
a filter against Respondents’ United States sales databases, thereby identifying which
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Consol. Court No. 10-00032 	Page 24
sales entered during the POR. 	Globe’s Br. at. 29, Ex. 3-4. 	However, Globe never
raised this claim before Commerce, nor did Globe present the evidentiary analysis
contained in its supporting exhibits. 	Commerce’s regulations require parties to raise all
relevant arguments during the administrative briefing, 19 C.F.R. § 351.309, but Globe’s
administrative case and rebuttal briefs contain no mention of the CBP data as a basis to
filter Respondents’ United States sales databases, despite the issue of those databases
being squarely in play.
When reviewing Commerce's antidumping determinations, the U.S. Court of
International 	Trade 	requires 	litigants 	to 	exhaust 	administrative 	remedies 	“where
appropriate.” 28 U.S.C. § 2637(d). 	“This form of non-jurisdictional exhaustion is
generally appropriate in the antidumping context because it allows the agency to apply
its expertise, rectify administrative mistakes, and compile a record adequate for judicial
review—advancing the twin purposes of protecting administrative agency authority and
promoting judicial efficiency.” Carpenter Tech. Corp. v. United States, 30 CIT 1373,
1374-75, 452 F. Supp. 2d 1344, 1346 (2006) (citing Woodford v. Ngo, 548 U.S. 81, 89
(2006)). By failing to raise their arguments about the CBP data at the administrative
level, Globe deprived Commerce of the opportunity to address that data and “apply its
expertise,” potentially “rectify administrative mistakes,” or “compile a record adequate
for judicial review.” Id. 	Therefore, the court will not consider Globe's new arguments
regarding Respondents’ sales database. Instead, the court will sustain Commerce’s
determination to calculate Respondents’ dumping margins using all sales invoiced
during the POR.
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Consol. Court No. 10-00032 	Page 25
D. FACOR: Indian Sick Industrial Companies Act
To 	value 	Respondents’ 	factory 	overhead, 	profit, 	and 	selling, 	general, 	and
administrative expenses (“SG&A”) for the preliminary results, Commerce relied upon the
financial statements of two Indian companies, Sharp Ferro Alloys, Ltd. and SovaIspat
Alloys (Mega Projects), Ltd. 	For the final results Commerce relied upon the same
surrogate companies plus two additional surrogate companies that Globe placed upon
the record following the preliminary results – VBC and FACOR Alloy Limited (“FACOR”).
Although Respondents claimed that Commerce should not rely upon FACOR because it
was a “sick” company under Indian law, Commerce found otherwise. 	See Decision
Memorandum at 38-29.
Respondents challenge Commerce’s use of FACOR’s financial statement in its
calculation 	of 	Respondents’ 	surrogate 	financial 	ratios. 	Respondents 	contend 	that
FACOR 	was 	designated 	as 	a 	“sick” 	company 	under 	the 	Indian 	Sick 	Industrial
Companies Act (“SICA”) during the POR.
In NME proceedings Commerce includes an amount for “general expenses and
profit” in its determination of normal value. 	19 U.S.C. § 1677b(c)(1)(B). 	Pursuant to its
regulations, Commerce relies upon financial statements from surrogate producers of
“identical or comparable merchandise” to determine surrogate values for manufacturing
overhead, general expenses, and profit (“surrogate financial ratios”). 	19 C.F.R. §
351.408(c)(4). Because the statute and regulations do not specify how to calculate this
component 	of 	normal 	value, 	Commerce 	has 	developed 	methodologies 	in 	its
administrative practice. 	Commerce first examines the surrogate financial statements
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Consol. Court No. 10-00032 	Page 26
and classifies the surrogate companies’ line-item expenses and income as they relate to
the following categories: SG&A; materials, labor, and energy; factory overhead; and
profit. 	Lightweight 	Thermal 	Paper 	from 	China, 	73 	Fed. 	Reg. 	57,329 	(Dep’t 	of
Commerce Oct. 2, 2008) (final results of admin. review), and accompanying Issues and
Decision 	Memorandum 	at 	cmt. 	3, 	available 	at
http://www.ia.ita.doc.gov/frn/summary/PRC/E8-23284-1.pdf 	(last 	visited 	June 	21,
2011). 	Commerce then excludes expenses that are accounted for elsewhere in the
normal value calculation, such as movement expenses. 	Id. 	Lastly, based upon its
classification of the surrogate companies’ expenses, Commerce calculates surrogate
financial ratios for overhead, SG&A, and profit that it includes in the normal value
calculation. See generally Hebei Metals, 29 CIT at 303, 366 F. Supp. 2d at 1277 n.7.
Additionally, 	when 	Commerce 	relies 	upon 	Indian 	surrogate 	companies, 	its
practice 	is 	to 	disregard 	financial 	statements 	that 	plainly 	state 	that 	the 	surrogate
company is “sick” under SICA. 	See, e.g., Color Televisions from China, 69 Fed. Reg.
20,594 	(Dep’t 	of 	Commerce 	Apr. 	16, 	2004) 	(final 	results 	of 	admin. 	review), 	and
accompanying 	Issues 	and 	Decision 	Memorandum 	at 	cmt. 	14 	available 	at
http://www.ia.ita.doc.gov/frn/summary/prc/04-8694-1.pdf (last visited June 21, 2011).
Commerce has previously explained that SICA was designed for companies whose
accumulated losses surpass the net equity of share capital. Such companies must refer
themselves to the Indian Board for Industrial and Financial Reconstruction (“BIFR”)
within 60 days of finalizing their audited financial statements, which triggers a judicial
process that brings companies under the oversight of the BIFR. 	See Hot-Rolled Steel
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Consol. Court No. 10-00032 	Page 27
from India, 69 Fed. Reg. 907, 913-14 (Dep’t of Commerce Jan. 7, 2004) (prelim. results
of admin. review).
Commerce 	relied 	upon 	the 	financial 	statements 	of 	four 	Indian 	companies,
including FACOR, in calculating the surrogate financial ratios. 	Commerce explained
that the financial statements constituted the “best available information” on the record
because they were “contemporaneous with the POR, publicly-available, and specific to
ferro-alloy producers in India.” Decision Memorandum at 36-37.
In response to Respondents’ arguments that FACOR was a “sick” company
under SICA and, therefore, unsuitable as a surrogate company, Commerce found that
FACOR’s financial statement did not plainly state that the company was sick during the
POR. 	Id. 38-39. 	As Commerce explained, in prior cases in which it has rejected sick
companies, the auditor’s notes accompanying the financial statements classified the
companies as sick. Id. (citing Color Televisions from China, 69 Fed. Reg. 20,594 (Dep’t
of Commerce Apr. 16, 2004) (final results of admin. review), and accompanying Issues
and 	Decision 	Memorandum 	at 	cmt. 	14, 	available 	at
http://www.ia.ita.doc.gov/frn/summary/prc/04-8694-1.pdf (last visited June 21, 2011);
Steel Threaded Rod from China, 74 Fed. Reg. 8,907 (Dep’t of Commerce Feb. 27,
2009) 	(final 	results 	of 	admin. 	review), 	and 	accompanying 	Issues 	and 	Decision
Memorandum 	at 	cmt. 	1 	available 	at 	http://www.ia.ita.doc.gov/frn/summary/PRC/E9-
4248-1.pdf (last visited June 21, 2011). 	FACOR’s financial statements did not have a
corresponding auditor’s note indicating the company as sick.
Respondents challenge Commerce’s factual determination that FACOR was not
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Consol. Court No. 10-00032 	Page 28
sick during the POR. 	According to Respondents, substantial evidence demonstrates
that FACOR was sick, and therefore Commerce’s reliance upon FACOR as a surrogate
company was inconsistent with Commerce’s administrative practice. 	See Def.-Ints.’
Mem. in Supp. of Mot. for J. upon the Agency R. at 6-8, ECF No. 30 (“Respondents’
Br.”). The court is not persuaded by Respondents’ arguments.
Respondents point to three brief passages in FACOR’s financial statement that
they argue indicate FACOR was sick during the POR. 	See id. at 6-7. 	Respondents do
not, however, point to any direct statement in FACOR’s financial statement that the
company was sick during the POR. 	As Commerce explained, Commerce will not use
an Indian surrogate company when the financial statement provides a plain statement
that the company was sick. 	See Decision Memorandum at 38. 	For example, in
Tapered 	Roller 	Bearings 	from 	China, 	Commerce 	rejected 	a 	potential 	surrogate
company because the auditor’s notes accompanying the financial statements stated
that the company was sick. 	Tapered Roller Bearings from China, 64 Fed. Reg. 61,837
(Dep’t of Commerce Nov. 15, 1999) (final results of admin. review), and accompanying
Issues 	and 	Decision 	Memorandum, 	available 	at
http://www.ia.ita.doc.gov/frn/1999/9911frn/99-b15h.txt (last visited June 21, 2011)
Although it may have been possible for Commerce draw an inference regarding
FACOR’s status by piecing together various passages in FACOR’s financial statement,
that possibility does not undermine the reasonableness of Commerce’s determination.
With respect to the single reference to a “Rehabilitation Scheme” in FACOR’s financial
statement cited by Respondents, Commerce reasonably explained that, while Section
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Consol. Court No. 10-00032 	Page 29
18 of SICA provides that sick companies may be required to prepare a scheme for
financial 	reconstruction, 	“there 	is 	no 	record 	evidence 	to 	demonstrate 	that 	the
Rehabilitation Scheme referenced by FACOR was, in fact, instituted based on the
company’s designation as a sick company under Indian law.” Decision Memorandum at
39 (citing Respondents’ Submission of Factual Info. to Rebut Globe’s Surrogate Value
Submission (Aug. 10, 2009) (“Respondents’ Aug. 10 Submission”) (Section 18 of SICA,
concerning “Rehabilitation Schemes”)). 	Additionally, Commerce reasonably found that,
even if FACOR had been previously designated as a sick company during an earlier
period, FACOR was not a sick company during the POR. 	Commerce explained that
Section 17(2) of SICA provides “time to the company as it may deem fit to make its net
worth exceed the accumulated losses,” and cited the fact that FACOR was profitable in
2007 and 2008. 	Id. at 39 (citing Respondents’ Aug. 10 Submission) (Section 17 of
SICA, concerning “Powers of Board to Make Suitable Order on the Completion of
Inquiry”); Final Surrogate Memo., PD 186 at frm. 141 (FACOR’s financial statement)
(Jan. 5, 2010).
Respondents 	insist 	that 	Section 	17 	of 	SICA 	dictates 	that 	FACOR’s
implementation of a “Rehabilitation Scheme” must mean that the company remains sick,
and that FACOR’s multi-year profits are irrelevant because sick companies can be
profitable. 	See Respondents’ Br. at 7-8. 	At bottom, however, Respondents’ argument
is simply that another interpretation of the SICA is possible, and the possibility of
drawing two inconsistent conclusions from the record does not mean that Commerce’s
conclusion is unsupported by substantial evidence. Consolo, 383 U.S. at 620.
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Consol. Court No. 10-00032 	Page 30
This is the fundamental problem with Respondents’ argument. 	Commerce’s
approach, requiring a plain statement within the financial statements that a company is
operating under SICA, has the benefit of certainty and predictability. Respondents want
the court to disrupt that practice, adopt Respondents’ interpretation of SICA, and order
Commerce to find that FACOR was “sick”. The court’s ability to direct Commerce in the
manner Respondents desire requires a command of SICA (a technical, foreign statutory
scheme), 	which 	in 	turn 	depends 	upon 	the 	administrative 	record 	and 	how 	well
Respondents developed it. 	All the record contains on this issue are the pertinent SICA
provisions (no commentary, treatises, decisions), FACOR’s financial statements, and
competing interpretations of the meaning of those statutes offered by Respondents’
U.S.-based counsel, and Commerce, which has dealt with the statute in multiple
instances when selecting surrogate data. 	Respondents did not put on the record the
opinion of an expert familiar with the Indian Sick Industrial Companies Act, such as an
Indian lawyer or accountant.
Commerce did not disqualify FACOR as a “sick” company because it could not
identify 	a 	plain 	statement 	that 	the 	company 	was 	so 	designated 	in 	its 	financial
statements. 	That 	determination 	was 	consistent 	with 	Commerce’s 	practice, 	and
reasonably supported by the administrative record. 	Accordingly, the court sustains
Commerce’s decision not to disqualify FACOR.
E. FACOR: Expense Ratio Calculation
Respondents argue that Commerce disregarded its administrative practice by
excluding the following line-items in FACOR’s financial statements from the SG&A
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Consol. Court No. 10-00032 	Page 31
expense ratio calculation: (1) the sale of a surplus captive power plant (a fixed asset)
and 	(2) 	miscellaneous 	income. 	Respondents 	claim 	that 	Commerce 	should 	have
incorporated these revenues into its SG&A expense ratio calculation, which, in turn,
would have produced a ratio with a zero or negative value, which, ultimately, violates
Commerce’s administrative practice of only relying on financial statements in NME
cases that report an SG&A ratio greater than zero.
Defendant contends that Respondents “did not present their alternative argument
about FACOR’s line-items during the administrative briefing. . . . wait[ing] until after the
final results and then submit[ing] this argument among several alleged ‘ministerial
errors.’” Def. Resp. Br. at 31. Defendant rejected this challenge as one to Commerce’s
substantive surrogate value calculation rather than a ministerial error. 	Defendant
argues 	that 	Respondents 	failed 	to 	challenge 	Commerce’s 	SG&A 	expense 	ratio
calculation at the appropriate stage of the administrative process and therefore failed to
exhaust their administrative remedies.
Problematically for Defendant, however, the issue of Commerce’s treatment of
FACOR’s expense ratios first manifested itself in the Final Results. 	It was after the
Preliminary 	Results 	that 	FACOR’s 	financial 	statements 	first 	appeared 	on 	the
administrative record, and the debate in the case briefs was whether those financial
statements should be used at all. Respondents ultimately lost that issue. Importantly, it
was 	only 	after 	Commerce 	issued 	the 	Final 	Results 	that 	Respondents 	had 	the
opportunity 	to 	review 	the 	specific 	methodology 	Commerce 	applied 	to 	calculate
FACORS’s SG&A expense ratio.
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Consol. Court No. 10-00032 	Page 32
Defendant’s reliance on Dorbest Ltd. v. United States, 604 F.3d 1363, 1375 (Fed.
Cir. 2010) is misplaced given the distinction between the facts presented here, where
Commerce did not apply its ratio methodology to FACOR’s financial statements in the
Preliminary Results, and in Dorbest, where Commerce did apply its ratio methodology
to the surrogate’s financial statements in the preliminary determination. See Dorbest
Ltd. v. United States, Court No. 05-00003, Pub. Admin. R., ECF No. 46 	(Preliminary
Determination Factors Valuation Mem. (June 17, 2004)). 	The Dorbest respondent had
the opportunity to review and challenge Commerce’s ratio calculation before issuance of
the final results. Here, Respondents did not have that same opportunity and application
of the exhaustion doctrine would not be appropriate.
With that said, the court must remand this issue to Commerce to address
Respondents’ arguments in the first instance. 	Defendant seems to concede that this is
the proper approach. Def.’s Br. at 34 n.3. The court expresses no view as to the merits
of Respondents’ claims.
III. Conclusion
For the reasons stated, the court sustains Defendant’s determinations as to (1) a
Chinese 	export 	tax 	and 	a 	value 	added 	tax, 	(2) 	Respondents’ 	coal 	input, 	(3)
Respondents’ 	sales 	database, 	and 	(4) 	FACOR 	and 	the 	Indian 	Sick 	Industrial
Companies Act, and remands the issue of FACOR’s SG&A expense ratio calculation.
Accordingly, it is hereby
ORDERED 	that 	Commerce’s 	determinations 	other 	than 	FACOR’s 	SG&A
expense ratio calculation are sustained; it is further
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Consol. Court No. 10-00032 	Page 33
ORDERED that the issue of FACOR’s expense ratio calculation is remanded to
Commerce for further consideration; it is further
ORDERED that Commerce shall file its remand results with the court on or
before August 17, 2011; and it is further
ORDERED that the parties shall file a proposed scheduling order with page limits
for comments on the remand results no later than 14 days after Commerce files those
results with the court.
/s/ Judge Leo M. Gordon
Judge Leo M. Gordon
Dated: June 21, 2011
New York, New York
Case 1:10-cv-00032-LMG Document 73 Filed 06/21/11 Page 33 of 33