Carbon Activated Tianjin Co., Ltd. et al v. United States

Slip Op. 21-
UNITED STATES COURT OF INTERNATIONAL TRADE
CARBON ACTIVATED TIANJIN CO.,
LTD., CARBON ACTIVATED
CORPORATION, AND DATONG
JUQIANG ACTIVATED CARBON CO.,
LTD.,
Plaintiffs,
and
BEIJING PACIFIC ACTIVATED CARBON
PRODUCTS CO., LTD., NINGXIA
GUANGHUA CHERISHMET ACTIVATED
CARBON CO., LTD., NINGXIA MINERAL
& CHEMICAL LIMITED, AND SHANXI
SINCERE INDUSTRIAL CO., LTD.,
Plaintiff-Intervenors,
v.
UNITED STATES,
Defendant,
and
CALGON CARBON CORPORATION
AND CABOT NORIT AMERICAS, INC.,
Defendant-Intervenors.
Before: Mark A. Barnett, Chief Judge
Court No. 20-00007
OPINION
[Sustaining the U.S. Department of Commerce’s remand results in the eleventh
administrative review of the antidumping duty order on certain activated carbon from the
People’s Republic of China.]
Dated: October 22, 2021
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Francis J. Sailer, Dharmendra N. Choudhary and Jordan C. Kahn, Grunfeld, Desiderio,
Lebowitz, Silverman & Klestadt LLP, of Washington, D.C., for Plaintiffs and Plaintiff-
Intervenors.
Mollie L. Finnan, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, D.C., for Defendant. With her on the brief
were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson,
Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Ashlande
Gelin, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S.
Department of Commerce, of Washington, D.C.
John M. Herrmann, R. Alan Luberda, and Melissa M. Brewer, Kelley Drye & Warren
LLP, of Washington, D.C., for Defendant-Intervenors.
Barnett, Chief Judge: This matter is before the court following the U.S.
Department of Commerce’s (“Commerce” or “the agency”) redetermination upon
remand in this case. See Final Results of Redetermination Pursuant to Court Remand
(“Remand Results”), ECF No. 68-1. 1
Plaintiffs and Plaintiff-Intervenors (collectively, “Plaintiffs”) 2 commenced this case
challenging several aspects of Commerce’s final results in the eleventh administrative
review (“AR11”) of the antidumping duty order on certain activated carbon from the
People’s Republic of China (“China”) for the period of review (“POR”) April 1, 2017,
1 The administrative record associated with the Remand Results is divided into a Public
Remand Record (“PRR”), ECF No. 69-3 and a Confidential Remand Record (“CRR”),
ECF No. 69-2. The administrative record associated with the Final Results is divided
into a Public Record (“PR”), ECF No. 39-5, and a Confidential Record (“CR”), ECF No.
39-4. Parties filed joint appendices containing record documents cited in their briefs.
See Public Remand J.A., ECF No. 75; Confidential Remand J.A. (“CRJA”), ECF No. 74.
Citations are to the CRJA unless stated otherwise.
2 Plaintiffs consist of Carbon Activated Tianjin Co., Ltd. (“Carbon Activated”), Carbon
Activated Corporation, Datong Juqiang Activated Carbon Co., Ltd. (“DJAC”), Beijing
Pacific Activated Carbon Products Co., Ltd., Ningxia Guanghua Cherishmet Activated
Carbon Co., Ltd., Ningxia Mineral & Chemical Limited, and Shanxi Sincere Industrial
Co., Ltd.
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through March 31, 2018. See Certain Activated Carbon From the People’s Republic of
China, 84 Fed. Reg. 68,881 (Dep’t Commerce Dec. 17, 2019) (final results of
antidumping duty admin. review; 2017–2018) (“Final Results”), ECF No. 39-2, and
accompanying Issues and Decision Mem., A-570-904 (Dec. 11, 2019) (“I&D Mem.”),
ECF No. 39-3. Plaintiffs challenged Commerce’s (1) selection of Malaysia instead of
Romania as the primary surrogate country; (2) selection of surrogate values for Carbon
Activated and DJAC’s inputs of bituminous coal and coal tar pitch; and (3) calculation of
surrogate financial ratios. See, e.g., [Corrected] Confidential Mem. of Law in Supp. of
Pls.’ and Pl.-Ints.’ Mot. For J. on the Agency R. Pursuant to USCIT Rule 56.3, ECF No.
59.
On April 2, 2021, the court remanded Commerce’s selection of Malaysia as the
primary surrogate country and Commerce’s selection of surrogate data to value
bituminous coal, sustained Commerce’s selection of surrogate data to value coal tar
pitch, and directed Commerce to reconsider the adjustments to the surrogate financial
statements on remand. See Carbon Activated Tianjin Co. v. United States (“Carbon
Activated I”), 45 CIT __, __, 503 F. Supp. 3d 1278 (2021). 3
On June 30, 2021, Commerce filed its Remand Results. Therein, Commerce
retained Malaysia as the primary surrogate country, reconsidered its valuation of
bituminous coal, and further explained its adjustments to the financial ratios. See
Remand Results at 2–19, 21–42.
3 The court’s opinion in Carbon Activated I presents background information on this
case, familiarity with which is presumed.
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Plaintiffs filed comments opposing the Remand Results. See Confidential Pls.’
Comments in Opp’n to Remand Redetermination (“Pls. Opp’n Cmts.”), ECF No. 70.
Defendant United States (“the Government”) filed comments in support of the Remand
Results. See Def.’s Resp. to Pls.’ Comments on Commerce’s Remand
Redetermination, ECF No. 73 (“Def.’s Reply Cmts.”). Defendant-Intervenors Calgon
Carbon Corporation and Cabot Norit Americas, Inc. filed a letter expressing support for
the Remand Results without further comment. Letter from John M. Hermann to the
Court (Aug. 30, 2021), ECF No. 72.
JURISDICTION AND STANDARD OF REVIEW
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) (2018) and 28 U.S.C. § 1581(c)
(2018). 4 The court will uphold an agency determination that is supported by substantial
evidence and otherwise in accordance with law. 19 U.S.C § 1516a(b)(1)(B)(i).
DISCUSSION
I. 	Legal Framework for Surrogate Country and Surrogate Value Selection
An antidumping duty is “the amount by which the normal value exceeds the
export price (or the constructed export price) for the merchandise.” 19 U.S.C. § 1673.
When an antidumping duty proceeding involves a nonmarket economy country,
4 Citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S. Code, and
references to the U.S. Code are to the 2018 edition unless otherwise specified.
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Commerce determines normal value by valuing the factors of production 5 in a surrogate
country, see id. §1677b(c)(1), and those values are referred to as “surrogate values.” In
selecting surrogate values, Commerce must, “to the extent possible,” use “the best
available information” from a market economy country or countries that are
economically comparable to the nonmarket economy country and are “significant
producers of comparable merchandise.” Id. § 1677b(c)(1), (4).
In selecting a primary surrogate country, Commerce has adopted a four-step
approach:
(1) the Office of Policy (“OP”) assembles a list of potential surrogate
countries that are at a comparable level of economic development to the
[non-market economy] country; (2) Commerce identifies countries from the
list with producers of comparable merchandise; (3) Commerce determines
whether any of the countries which produce comparable merchandise are
significant producers of that comparable merchandise; and (4) if more
than one country satisfies steps (1)-(3), Commerce will select the country
with the best factors data.
Jianxing Brother Fastener Co. v. United States, 822 F.3d 1289, 1293 (Fed. Cir. 2016);
see also Import Admin., U.S. Dep’t of Commerce, Non-Market Economy Surrogate
Country Selection Process, Policy Bulletin 04.1 (2004), https://enforcement.trade.gov/
policy/bull04-1.html (last visited Oct. 22, 2021).
Commerce generally values all factors of production in a single surrogate
country, referred to as the “primary surrogate country.” See 19 C.F.R. § 351.408(c)(2)
5 The factors of production include but are not limited to: “(A) hours of labor require, (B)
quantities of raw materials employed, (C) amounts of energy and other utilities
consumed, and (D) representative capital cost, including depreciation.” 19 U.S.C.
§ 1677b(c)(3).
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(excepting labor). But see Antidumping Methodologies in Proceedings Involving Non-
Market Economies: Valuing the Factor of Production: Labor, 76 Fed. Reg. 36,092,
36,093–94 (Dep’t Commerce June 21, 2011) (expressing a preference to value labor
based on industry-specific labor rates from the primary surrogate country). Commerce
prefers surrogate values that are “input-specific, representative of a broad-market
average, publicly available, contemporaneous with the POR, and tax- and duty-
exclusive.” Remand Results at 25 & n.105 (citation omitted); see also 19 C.F.R.
§ 351.408(c)(1), (4) (directing Commerce to select “publicly available”/“non-proprietary
information” to value factors of production and “manufacturing overhead, general
expenses, and profit”). Commerce has broad discretion to determine what constitutes
“the best available information” for the selection of surrogate values. QVD Food Co. v.
United States, 658 F.3d 1318, 1323 (Fed. Cir. 2011).
II. 	Bituminous Coal Surrogate Value Selection
For the Final Results, Commerce valued all bituminous coal using Romanian
import data under the Harmonized System (“HS”) heading 2701.12 (Bituminous Coal,
Not Agglomerated) after finding that the average unit value of Malaysian imports under
HS 2701.12 was unreliable. I&D Mem. at 13–16. The court remanded the issue to
Commerce for further explanation as to the applicability of Chapter 27, Subheading
Note 2 (“Note 2”) 6 to Commerce’s selection of a surrogate value. Carbon Activated I,
6 Note 2 limits HS 2701.12, inter alia, to bituminous coal with “a calorific value limit . . .
equal to or greater than 5,833 [kilocalories per kilogram (“kcal/kg”)].” I&D Mem. at 14.
For the Final Results, Commerce declined to apply Note 2 based on the agency’s view
that Note 2 pertained solely to Thai HS data, not Malaysian HS data. I&D Mem. at 14.
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503 F. Supp. 3d at 1290–91. On remand, Commerce determined that Note 2 applied to
Malaysian HS data and chose different data sets to value bituminous coal depending on
whether the calorific value of the bituminous coal was known to be below 5,833 kcal/kg.
See Remand Results at 3–7. 7 Commerce continued to rely on Romanian import data
under HS 2701.12 to value bituminous coal that was not documented as having a
calorific value below 5,833 kcal/kg but determined to use Malaysian import data under
HS 2701.19 (Other Coal) to value bituminous coal with a known calorific value below
5,833 kcal/kg in light of its determination that Note 2 applied to the Malaysian import
data. Id. at 7–8
A. Bituminous Coal Having Unknown Calorific Value
In its Draft Remand Results, Commerce determined that bituminous coal used by
two of Carbon Activated’s suppliers—Supplier C and an uncooperative supplier 8 —
should be valued using Romanian import data reported under HS 2701.12 because
Commerce lacked record evidence demonstrating that such bituminous coal had a
calorific value of less than 5,833 kcal/kg as required for valuation under HS 2701.19.
Draft Results of Redetermination Pursuant to Court Remand (“Draft Remand Results”)
at 7, PRR 1, CRJA Tab 11.
7 Commerce changed its position regarding the applicability of Note 2 in order to be
consistent with “prior determinations in which Commerce . . . concluded that ‘[t]he
International Convention on the Harmonized Commodity and Coding System applies
the same [HS] six-digit prefix to products subject to international trade.’” Remand
Results at 6–7 & n.26 (citations omitted) (alternations in original).
8 The names of Supplier C and the uncooperative supplier are proprietary and not
relevant to the court’s disposition of this case.
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For the Remand Results, Commerce further explained that “the plain language
description of . . . HS 2701.12 . . . matche[d] the mandatory respondents’ description of
their input (i.e., bituminous coal).” Remand Results at 28. Furthermore, without record
evidence demonstrating that the coal input the mandatory respondents identified as
“bituminous coal” was actually the “kind and grade more appropriately classified under
HS 2701.19” (i.e., coal with a calorific value limit of less than 5,833 kcal/kg), Commerce
stated that it could not consider that coal to fall under HS 2701.19. Id.
In their comments on the Draft Remand Results, Plaintiffs argued that Commerce
never asked Supplier C to provide test reports documenting the calorific value of its
inputs. See id. at 22, 26. Commerce explained that although it did not specifically ask
“Supplier C to provide test results for its bituminous coal input, [it] asked Supplier C to
‘provide a detailed description of “smoke coal” and explain the difference between
smoke coal and bituminous coal.’” Id. at 26 & n.113 (citing Carbon Activated Resp. to
Sec. D Suppl. Questionnaire (Part I) (Feb. 21, 2019) (“Carbon Activated’s SDQR”) at
19, Ex. SD-27, PR 162–65, CR 254–88, CRJA Tab 5). Supplier C responded that
“[b]oth bituminous coal and smoke coal belong to the same technical grade of
bituminous coal.” Id.at 26 & n.114 (citing same). 	However, Supplier C provided only “a
test report for its smoke coal input,” and not for its bituminous coal, leading Commerce
to find that Supplier C failed to substantiate that the two were equivalent. Id. at 26–27.
Without these test results, Commerce continued to use import data reported under
Romanian HS subheading 2701.12 to value bituminous coal used by Supplier C and the
uncooperative supplier. Id. at 30.
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1. 	Parties’ Contentions
Plaintiffs contend that Commerce should have valued all bituminous coal with an
unknown calorific value using the average of Romanian HS 2701.12 and HS 2701.19
data. Pls. Opp’n Cmts. at 2. Plaintiffs argue that because the record establishes that
“the heat value of the bituminous coal input used by [DJAC], [DJAC’s] supplier, and one
of Carbon Activated’s suppliers [was] below 5,833 kcal/kg,” and thus was covered by
HS 2701.19, id. at 3 (quoting Remand Results at 7), Commerce “impermissibly
speculate[d] that the bituminous coal having unknown calorific value should be
classified under [HS] 2701.12,” id. Plaintiffs further argue that “Commerce never asked
Carbon Activated’s Supplier C . . . to provide calorific value information for its
bituminous coal input” and is thus “precluded from . . . ‘impos[ing] a de facto adverse
facts available rate.’” Id. at 3–4 (quoting Calgon Carbon Corp. v. United States, 35 CIT
234, 244 (2011)) (emphasis omitted).
The Government contends that, with respect to bituminous coal having unknown
calorific value, Commerce reasonably relied on Romanian HS 2701.12. Def.’s Reply
Cmts. at 5–6. The Government argues that (i) there is “no record evidence” to support
valuing these suppliers’ “bituminous coal under HS 2701.19,” (ii) “[t]he plain language
description of HS 2701.12 . . . matches [Plaintiffs’] own description of their own input,”
(iii) Commerce’s “decision to use different datasets for different respondents ‘is
consistent with Commerce’s practice,’” and (iv) “Commerce’s path to reliance on
Romanian HS 2701.12 . . . is reasonably discernable.” Id. at 6–7.
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2. 	Commerce’s Selection of Romanian HS 2701.12 Data to Value
Bituminous Coal of Unknown Calorific Value is Supported by
Substantial Evidence
There is no dispute that the record lacks evidence regarding the heat value of the
input for Carbon Activated’s Supplier C and Carbon Activated’s uncooperative supplier.
While Plaintiffs argue that Commerce impermissibly speculated that bituminous coal
should be classified as “bituminous coal” under HS 2701.12, see Pls.’ Opp’n Cmts. at
3–5, any basis for Commerce to apply HS 2701.19 was equally speculative. The court
declines to reweigh the record evidence and finds that substantial evidence supports
Commerce’s decision to value bituminous coal of unknown calorific value under HS
2701.12.
Neither Supplier C nor Carbon Activated’s uncooperative supplier documented
the heat value of the bituminous coal they used. See Remand Results at 28. While
Commerce specifically asked Carbon Activated “to provide a detailed description of
‘smoke coal’ and explain the difference between smoke coal and bituminous coal,”
Carbon Activated’s SDQR at 19 (emphasis added), Carbon Activated only documented
the calorific value of Supplier C’s smoke coal, see id., Ex. SD-27. Because Carbon
Activated failed to document the calorific value of Supplier C’s bituminous coal and
acknowledged that “the two types of coal differ in terms of key parameters such as
volatile matter content, moisture and heat value,” Carbon Activated’s SDQR at 19,
Commerce declined to value such coal as “Other Coal” under HS 2701.19, Remand
Results at 30. Carbon Activated provided no information regarding the calorific value of
the bituminous coal used by its uncooperative supplier. Id. at 7.
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Plaintiffs’ reliance on Calgon Carbon to argue that Commerce was required to
provide Supplier C with a “similar opportunity” to submit evidence of the calorific value
of its bituminous coal is inapposite. See Pls.’ Opp’n Cmts. at 4 (citing Calgon Carbon,
35 CIT at 244). Calgon Carbon involved a respondent that voluntarily provided
supplemental information at verification concerning the purity of hydrochloric acid. 35
CIT at 244. Commerce accepted this supplemental information and, based on that
information, selected a different surrogate value for that respondent than it did for
another respondent. Id. The court held that although Commerce had no obligation to
accept the supplemental information, once it did, the agency had an obligation to give
the other respondent an opportunity to provide comparable information, and failure to do
so “led to arbitrary and unfair treatment.” Id. Unlike the respondent in Calgon Carbon,
Carbon Activated had an opportunity to substantiate its claim that smoke coal and
bituminous coal had similar calorific values, but failed to do so.
Without evidence of the calorific value of the bituminous coal reported by Carbon
Activated’s suppliers, Commerce turned to other methods to value bituminous coal used
by these suppliers. Specifically, Commerce reasoned that the “plain language
description” of HS 2701.12—“Bituminous Coal, Not Agglomerated”—most accurately
described the bituminous coal in question. Remand Results at 28. The court has found
that Commerce may rely on the plain meaning of HS descriptions to determine the best
available information to value a specific input. See Mid Continent Steel & Wire, Inc. v.
United States, 42 CIT __, __, 321 F. Supp. 3d 1313, 1325 (2018) (sustaining use of a
surrogate value based on the HS description that best matched the description provided
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by the respondent). Having reviewed the record and Commerce’s explanation for its
valuation of bituminous coal without a reported calorific value, the court finds that
Commerce has provided a reasoned explanation based on substantial evidence to
value bituminous coal.
B. Bituminous Coal Having Known Calorific Value
As discussed above, having found that Note 2 applied to Malaysian HS
subheading 2701.19, and having found no indication that the average unit value for
Malaysian imports under HS 2701.19 was unreliable or aberrantly high, in the Draft
Remand Results Commerce valued bituminous coal inputs with documented heat value
below 5,833 kcal/kg using Malaysian HS 2701.19. Draft Remand Results at 7.
Plaintiffs argued that because Commerce found Malaysian data reported under HS
2701.12 to be aberrant and unreliable, the agency should also disregard Malaysian data
reported under HS 2701.19. Second Redacted and Resubmitted Comments on Draft
Remand (June 23, 2021) (“Second Comments on Draft Remand”) at 10–11, PRR 19,
CRR 13, CRJA Tab 19. Commerce responded that it continued to find the Malaysian
HS 2701.19 subheading preferable to Romania’s because there was no evidence on
the record showing that the Malaysian data was distorted, aberrational, or otherwise
unreliable. Remand Results at 26. Commerce further noted that it had a preference for
selecting surrogate values from the primary surrogate country which, in this case, was
Malaysia. Remand Results at 25–26.
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1. 	Parties’ Contentions
Plaintiffs contend that Commerce should have valued all bituminous coal having
known calorific value below 5,833 kcal/kg using Romanian HS 2701.19. Pls. Opp’n
Cmts. at 2. Plaintiffs argue that because Commerce found Malaysian HS 2701.12 data
to be “aberrant and unreliable, . . . Commerce should be skeptical of Malaysian [HS]
2701.19” data. Id. at 6. Further, they argue that because Commerce has
“acknowledge[d] that Romanian data is necessary to value bituminous coal” of unknown
calorific value, Commerce should use Romanian data to value all bituminous coal “in
accordance with [Commerce’s] policy underlying surrogate valuation to minimize
distortion that occurs when using data from multiple countries.” Id.
The Government contends that Commerce’s selection of Malaysian import data
under HS 2701.19 should be sustained because Commerce provided a reasoned
explanation for its selection of such data and Plaintiffs’ assertions of unreliability are
unsupported. Def.’s Reply Cmts. at 4–5.
2. 	Commerce’s Selection of Malaysian HS 2701.19 Data to Value
Certain Bituminous Coal is Sustained
Pursuant to 19 C.F.R. § 351.408(c)(2), Commerce “normally will value all [factors
of production] in a single surrogate country.” The court has acknowledged Commerce’s
regulatory preference “to use surrogate value data from the primary surrogate country to
minimize distortion.” 	Tri Union Frozen Prods., Inc. v. United States, 41 CIT __, __, 227
F. Supp. 3d 1387, 1400 (2017). Furthermore, the court has upheld Commerce’s
practice of requiring a party to provide support for any argument that data are
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aberrational or unreliable. See, e.g., Jinan Farmlady Trading Co. v. United States, 41
CIT __, __, 228 F. Supp. 3d 1351, 1356–57 (2017) (finding Commerce’s determination
that data was not aberrational reasonable when respondent had not provided
demonstrative evidence).
Here, Plaintiffs have not provided any evidence that the Malaysian HS 2701.19
data are aberrant or unreliable. See Pls.’ Opp’n Cmts. at 6–7. Plaintiffs have also failed
to justify their position that Commerce should have found Malaysian HS 2701.19 data to
be distorted simply because the agency separately found Malaysian HS 2701.12 data to
be distorted. See id. Accordingly, Plaintiffs’ argument that Romanian HS 2701.19 data
“is preferable to Malaysia because . . . Romanian [HS] 2701.12 data is undistorted,”
Pls.’ Opp’n Cmts. at 6, is without support. Commerce has provided a reasoned
explanation for not rejecting the Malaysian HS 2701.19 data—such import data is
presumed to be reliable and the record is devoid of evidence to the contrary. The
parties to the proceeding bear the burden of establishing an adequate record, QVD
Food Co., 658 F. 3d at 1324, and Plaintiffs have not met that burden with respect to this
issue.
Commerce explained that it selected Malaysian HS 2701.19 data pursuant to its
preference to value all factors of production in a single surrogate country, which, in this
case, was Malaysia. See Remand Results at 25–26 & n.111 (citation omitted); see also
19 C.F.R. § 351.408(c)(2). Plaintiffs have not shown that Commerce was unreasonable
in its selection of Malaysian HS 2701.19 data to value bituminous coal when the record
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demonstrated that the coal had a calorific value of less than 5,833 kcal/kg and
Commerce’s decision was otherwise supported by substantial evidence.
III. 	Surrogate Country Selection
In Carbon Activated I, the court was “unable to discern Commerce’s reasons for
rejecting Romania as a primary surrogate country” and “selecting Malaysia as the
primary surrogate country” and accordingly remanded the matter to Commerce for
reconsideration and further explanation. 503 F. Supp. 3d at 1289. On remand,
Commerce determined that both Malaysia and Romania qualified as potential surrogate
countries, finding that both countries were economically comparable to China and
significant producers of comparable merchandise. Remand Results at 11–14.
However, Commerce again selected Malaysia as the primary surrogate country after
finding that Malaysian surrogate value data was superior to Romanian data based on its
relative specificity. Id. at 14–16; 34.
With respect to the valuation of charcoal, Commerce explained that the
Malaysian data reflected “a tariff classification at the 10-digit level that is specific to
coconut-shell charcoal (i.e., [HS] subheading 4402.90.1000), a direct material that is
consumed in significant quantities in the production of the subject merchandise by the
mandatory respondents;” however, the Romanian data reflected only “a six-digit basket
category HS subheading, 4402.90, which covers wood-based charcoal [but] also
includes nut-based charcoal, which is an input not used by the mandatory respondents.”
Id. at 15.
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Despite selecting Malaysia as the primary surrogate country, Commerce again
chose the financial statement of Romcarbon, a Romanian producer of comparable
merchandise, to determine financial ratios because that statement provided specific
breakouts for raw material, labor, and energy that were not provided in the Malaysian
financial statements. Id. at 15–16
A. Parties’ Contentions
Plaintiffs contend that Commerce should have chosen Romania over Malaysia as
the primary surrogate country because, in their view, “Romania provides superior data
quality” to Malaysia. Pls.’ Opp’n Cmts. at 7 (emphasis and capitalization omitted). As
evidence of this superiority, Plaintiffs point to the aberrant Malaysian HS 2701.12 data
and Commerce’s concession that the Malaysian financial statements lacked usable
financial data. Id. at 7–8. Plaintiffs argue that Commerce incorrectly claimed that
Romanian import data placed on the record was not POR-specific, id. at 10, and that
Commerce’s reliance on the more specific HS subheading for coconut-shell charcoal is
unsupported because Carbon Activated’s suppliers do not use coconut shell charcoal
as an input, id. at 11.
The Government contends that Commerce’s reliance on the specificity of the
tariff classification for coconut shell charcoal, used by some respondents, provides
support for Commerce’s selection of Malaysia as the primary surrogate country. Def.’s
Reply Cmts. at 12. The Government asserts that Commerce has the discretion to
“value coal-based carbonized material with either coconut shell or wood charcoal” and
the record indicated that “[DJAC] used coconut shell charcoal in the production of the
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subject merchandise.” Id. The Government also rejects Plaintiffs’ contention that the
aberrancy of Malaysian HS 2701.12 precluded Commerce from selecting Malaysia as
the primary surrogate country. Id. at 11. According to the Government, “Commerce still
had usable Malaysian data ‘covering nearly all of the bituminous coal input used by the
mandatory respondents,’” id. at 11–12 (quoting Remand Results at 36), and Plaintiffs
“provided no evidence to support discarding Malaysian data beyond the data under
Malaysian HS 2701.12,” id. at 12.
B. Commerce’s Selection of Malaysia as the Primary Surrogate Country
is Sustained
In its Remand Results, Commerce determined that both Malaysia and Romania
were significant producers of comparable merchandise; thus, Commerce selected the
primary surrogate country based on data considerations. Remand Results at 11–16.
While Plaintiffs invite the court to second guess the agency’s determination, it is the
court’s task to determine whether Commerce has supported its determination with
substantial evidence. Huaiyin Foreign Trade Corp. (30), 322 F.3d 1369, 1374 (Fed. Cir
2003). Upon consideration of the Remand Results, the court finds that Commerce’s
selection of Malaysia as the primary surrogate country is supported by substantial
evidence.
First, Commerce has provided a reasoned explanation as to why it selected
Malaysia as the primary surrogate country: the specificity of the HS number for a known
input (coconut shell charcoal) and data that was more contemporaneous with the POR.
See Remand Results at 15, 34–39. While Carbon Activated’s suppliers do not use
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coconut shell charcoal, Carbon Activated Resp. to Sec. D Questionnaire (Sept. 28,
2018), Att. B/Ex.D-5, Att. C/Ex. D-5, Att. D./Ex. D-5, PR 90, CR 50-74, CRJA Tab 2,
Plaintiffs ignore Commerce’s rationale for relying on the specificity provided by the
Malaysian HS data. See Pls.’ Opp’n Cmts. at 11 (focusing solely on Carbon Activated’s
suppliers to the exclusion of DJAC). Specifically, another mandatory respondent,
DJAC, used coconut shell charcoal in the production of the subject merchandise. See
Remand Results at 38 & n.159 (citations omitted). Because Commerce needed to
value coconut shell charcoal for at least one of the respondents, and because
Malaysia—and not Romania—was able to provide data at that level of specificity,
Commerce’s discussion of coconut shell charcoal supports its selection of Malaysia as
the primary surrogate country. Furthermore, Plaintiffs fail to identify any record
evidence suggesting that the Malaysian HS 4402.90.100 data is aberrational or
unreliable—they simply disagree with Commerce’s use of such data.
Plaintiffs also object to Commerce’s consideration of the Malaysian surrogate
value information as more contemporaneous with the period of review than the
Romanian data. See Pls.’ Opp’n Cmts. at 10–11. While Plaintiffs aver that the
Romanian data they submitted were contemporaneous with the POR, id. at 10, those
data were presented to Commerce as covering the period “2016-2018.” See Final
Surrogate Value Comments by DJAC and [Carbon Activated] (May 13, 2019) (“Final SV
Comments”) at Ex. 2A, PR 207–16, CRJA Tab 7. Now, before the court, Plaintiffs seek
to clarify that, “the auto-generated heading was titled ‘2016-2018’ because the data
source is programmed to automatically download three years of data,” but before the
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data was submitted to Commerce, “a ‘macro’ [was] used to filter POR-specific data.”
Pls.’ Opp’n Cmts. at 10. This additional information is not part of the administrative
record, which otherwise supports Commerce’s finding that the Malaysian surrogate
value data is more contemporaneous with the POR than the Romanian data.
The court also rejects Plaintiffs’ argument that Commerce was required to give
the respondent an opportunity to address any deficiency in the data. Potential
surrogate value data is submitted to Commerce on a party’s own initiative, not in
response to a request by Commerce. See, e.g., Shenzhen Xinboda Indus. Co. v.
United States, 42 CIT __, __, 357 F. Supp. 3d 1295, 1305 & n.25 (2018). Thus, 19
U.S.C. § 1677m(d) is inapplicable here. See id. In short, there was no apparent
deficiency in the Romanian data; Commerce accepted the data as presented; and
Commerce evaluated the quality of that data in comparison to the quality of the
Malaysian data. Commerce’s finding that the Malaysian data was more
contemporaneous with the POR is supported by substantial evidence.
Likewise, Plaintiffs’ argument that the primary surrogate country should be
weighted toward the country from which the financial ratios are drawn is unconvincing.
Not only do Plaintiffs fail to cite to any provision of law or regulation requiring Commerce
to weight its analysis in such a way, but they rely on instances in which a production
input’s outsized impact on normal value led Commerce to prioritize that input in
selecting a surrogate country, not the financial ratios’ impact on the normal value; thus,
such reliance is inapposite. Pls.’ Opp’n Cmts. at 8–9 (relying on Issues and Decision
Mem. for the Final Results of the Third Antidumping Duty Admin. Review at 13–14,
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available at https://enforcement.trade.gov/frn/summary/prc/2013-06173-1.pdf (last
visited Oct. 22, 2021) (outsized impact of steel wire rod led to selection of Thailand as
the primary surrogate country); Jiaxing Brother Fastener Co. v. United States, 11 F.
Supp. 3d 1326, 1333 (2014), aff’d 822 F.3d 1289 (Fed. Cir. 2016) (sustaining
Commerce’s choice of primary surrogate country based on superior data quality despite
the relative weakness in financial statements from that country and the more limited
impact of the financial ratios on normal value)).
Furthermore, Plaintiffs’ focus on Commerce’s previous reliance on the source of
financial ratios to select a primary surrogate country is misplaced. See Pls.’ Opp’n
Cmts. at 8–9. At most, these examples show that Commerce may consider the source
of financial ratios to determine the primary surrogate country, not that Commerce must.
See Tianjin Wanhua Co. v. United States, 41 CIT __, __, 253 F. Supp. 3d 1318, 1327–
29 (2017) (affirming Commerce’s selection of Indonesia as the primary surrogate
country based on the relative superiority of the Indonesian financial statements);
Ancientree Cabinet Co. v. United States, 45 CIT __, __, Slip Op. 21-87, 2021 WL
2931313, at *8–9, *11 (CIT July 12, 2021) (concluding that Commerce acted within its
discretion when selecting Romania as the primary surrogate country based on superior
financial data); Certain Cased Pencils from the People’s Republic of China, 78 Fed.
Reg. 42,932 (Dep’t Commerce July 18, 2013) (final results of antidumping duty
administrative review and determination to revoke order in party; 2010-2011), and
accompanying Issues and Decision Mem., A-570-827, (July 10, 2013),
https://enforcement.trade.gov/frn/summary/prc/2013-17160-1.pdf (last visited Oct. 22,
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2021) (selecting the Philippines as primary surrogate country because of the superiority
of Philippine financial data for deriving surrogate financial ratios). Indeed, Carbon
Activated has not cited, and this court cannot find, any authority indicating that
Commerce must base the selection of a primary surrogate country on the quality of
financial data. Accordingly, the court sustains Commerce’s selection of Malaysia as the
primary surrogate country as based on substantial evidence.
IV. 	Financial Ratios
In Carbon Activated I, the court remanded the Final Results to Commerce to
reconsider certain adjustments to the financial ratios, including: (i) offsetting pre-tax
profits by the amount listed under “Gain/(Loss)” for adjustment and disposal of
investment property; (ii) offsetting sales, general and administrative expenses (“SG&A”)
by the amount listed under “Other Gains”; and (iii) allocating the amount listed under
“Social Contributions” and “Meal Tickets” to labor costs instead of SG&A. 503 F. Supp.
3d at 1294–95. The remand provided Commerce with the opportunity to address its
treatment of these issues in AR11 in light of its treatment of similar adjustments to the
financial ratios in the tenth administrative review (“AR10”) of this antidumping duty
order. See id. On remand, Commerce offset pre-tax profits by the amount listed under
“Gain/(Loss)” for adjustment and disposal of investment property and offset SG&A by
the amount listed under “Other Gains.” Remand Results at 17–19. With respect to
“Social Contributions” and “Meal Tickets,” however, Commerce continued to allocate
these line items to SG&A. Id. at 19.
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A. Parties’ Contentions
Plaintiffs contend that Commerce “erroneously allocated [ ] ‘Social Contributions’
and ‘Meal Tickets’ under SG&A” instead of labor costs. Pls.’ Opp’n Cmts. at 17.
Plaintiffs argue that, “[a]bsent evidence that Malaysian labor data excluded these costs,”
such “costs are presumed to be embedded within the reported labor cost.” Id.
The Government contends that Commerce’s retention of “Social Contributions”
and “Meal Tickets” under SG&A is supported by substantial evidence and lawful. Def.’s
Reply Cmts. at 17.
B. Commerce’s Allocation of “Social Contributions” and “Meal Tickets”
to SG&A is Sustained
In Carbon Activated I, the court instructed Commerce to reconsider or further
explain why “Social Contributions” and “Meal Tickets” should be allocated to SG&A
instead of labor expenses as was the case in AR10. 503 F. Supp. 3d at 1295. In the
Remand Results, Commerce explained that it will “avoid double-counting costs [when]
the requisite data are available to do so.” Remand Results at 40 & n.169 (citation
omitted). Thus, “when labor items . . . are clearly included in the [surrogate value] for
labor, [Commerce] will include such items in the labor category of the surrogate financial
ratios calculations to avoid double-counting such expenses.” Issues and Decision Mem.
for the Final Results of the First Antidumping Duty Admin. Review, A-570-985 (February
13, 2017) at 73, https://enforcement.trade.gov/frn/summary/prc/2017-03505-1.pdf (last
visited Oct. 22, 2021); see also Hangzhou Yingqing Material Co. v. United States, 40
CIT __, __,195 F. Supp. 3d 1299, 1310–1311 (2016) (citing agency decisions in which
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Commerce adjusted surrogate financial ratios to avoid double counting labor costs).
Commerce’s practice of adjusting financial ratios to avoid such double counting has
been accepted by the court. See Elkay Mfg. Co. v. United States, 40 CIT __, __,180 F.
Supp. 3d 1245, 1256–1258 (2016) (sustaining a determination Commerce made in
order to avoid the possibility of double-counting).
In the Remand Results, Commerce explained that the source of the Malaysian
surrogate value for labor did not indicate whether “Social Contributions” or “Meal
Tickets” were included in that surrogate value and there was no record evidence
indicating “that the labor [surrogate value] used was overstated.” Remand Results at
41. Plaintiffs do not, and during the remand proceeding did not, point to any evidence
that these items are included in the surrogate value for labor. See Pls.’ Opp’n Resp at
17; Second Comments on Draft Remand at 23–24. Instead, Plaintiffs simply assert,
without citation to any prior Commerce determinations, court precedent, or Commerce
guidelines, that absent evidence that the Malaysian surrogate labor data excluded
“Social Contributions” and “Meal Tickets,” such costs “are presumed to be embedded
within the reported labor cost.” Pls.’ Opp’n Cmts. at 17. Commerce rejected this
unsupported assertion and noted the absence of record evidence demonstrating that
the labor surrogate value included these costs. See Remand Results at 41.
Accordingly, this court finds that Commerce has adequately explained the basis for its
allocation of “Social contributions” and “Meal tickets” to SG&A and sustains
Commerce’s adjustments to the financial ratios as supported by substantial evidence.
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CONCLUSION
For the forgoing reasons, the court will sustain Commerce’s Remand Results.
Judgment will enter accordingly.
/s/ 	Mark A. Barnett
Mark A. Barnett, Chief Judge
Dated: October 22, 2021
New York, New York
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