Slip Op. 16-28

UNITED STATES COURT OF INTERNATIONAL TRADE 

TIANJIN WANHUA CO., LTD., 

Plaintiff,

v.

UNITED STATES, 

Defendant.

 Before: Leo M. Gordon, Judge 

 Consol. Court No. 14-00183 

OPINION 

[Final results of administrative review sustained.] 

 Dated: March 29, 2016 

 David J. Craven, Riggle and Craven of Chicago, IL for Plaintiff Tianjin Wanhua Co., 

Ltd.

 Peter J. Koenig, Ludmilla Savelieff, and Nicholas Galbraith, Squire Patton Boggs 

of Washington, DC for Plaintiff Shaoxing Xiangyu Green Packing Co., Ltd. 

 John D. Greenwald, Jonathan M. Zielinski, and Thomas M. Beline, Cassidy Levy 

Kent (USA) LLP, of Washington, DC for Plaintiff-Intervenors DuPont Teijin Films China 

Limited, DuPont Hongi Films Foshan Co., Ltd., and DuPont Teijin Films Hongji Ningbo 

Co., Ltd. 

 Jane C. Dempsey, Trial Attorney, Commercial Litigation Branch, Civil Division, 

U.S. Department of Justice of Washington, DC for Defendant United States. On the brief 

with her were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne 

E. Davidson, Director, Patricia M. McCarthy, Assistant Director and David F. 

D’Alessandris, Trial Attorney. Of counsel on the brief was Michael T. Gagain, Attorney, 

Office of the Chief Counsel for International Trade for Trade Enforcement and 

Compliance, U.S. Department of Commerce of Washington, DC. 

 J. Michael Taylor, Stephen A. Jones, and Mark T. Wasden, King & Spalding LLP 

of Washington, DC for Defendant-Intervenor Terphane, Inc. 
Consol. Court No. 14-00183 Page 2 

 Ronald I. Meltzer, Patrick J. McLain, David M. Horn, and Jeffrey I. Kessler, Wilmer, 

Cutler, Pickering, Hale and Dorr, LLP of Washington, DC for Defendant-Intervenor 

Mitsubishi Polyester Film, Inc. and SKC, Inc. 

Gordon, Judge: This action involves an administrative review conducted by the 

U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering 

polyethylene terephthalate film, sheet, and strip from China. See Polyethylene 

Terephthalate Film, Sheet, and Strip from the People’s Republic of China, 79 Fed. Reg. 

37,715 (Dep’t of Commerce July 2, 2014) (final results admin. review) (“Final Results”); 

see also Issues and Decision Memorandum for the Final Results of the Antidumping Duty 

Administrative Review on Polyethylene Terephthalate Film, Sheet, and Strip from the 

People’s Republic of China, A-570-924 (Dep’t of Commerce June 24, 2014), available at 

http://enforcement.trade.gov/frn/summary/prc/2014-15574-1.pdf (last visited this date) 

(“Decision Memorandum”). Before the court are Plaintiff Tianjin Wanhua Co., Ltd.’s 

(“Wanhua”) and Consolidated Plaintiff Shaoxing Xiangyu Green Packing Co., Ltd.’s 

(“Green Packing”) USCIT Rule 56.2 motions for judgment on the agency record. Mem in 

Supp. of Mot. for J. on the Agency R. Submitted By Pl. Tianjin Wanhua Pursuant to 

R. 56.2 of the Rs. of the U.S. Ct. of Int’l Trade, ECF No. 46 (“Wanhua Br.”); Pl. Shaoxing 

Xiangyu Green Packing Co., Ltd. R. 56.2 Mem. for J. on the R., ECF No. 48 

(“Green Packing Br.”); see also Reply to Resp. of Def. United States to Mot. for J. on the 

Agency R. Submitted by Pl. Tianjin Wanhua Pursuant to R. 56.2 of the Rs. of the U.S. Ct. 

of Int’l Trade, ECF No. 68; Reply Br. of Pl. Shaoxing Xiangyu Green Packing Co., Ltd., 

ECF No. 70. Plaintiff-Intervenors DuPont Teijin Films China, Limited, DuPont Hongji Films 

Foshan Company, Limited, and DuPont Teijin Films Hongji Ningbo Company, Limited join 
Consol. Court No. 14-00183 Page 3 

in support of the Rule 56.2 Motions for Judgment on the Agency Record filed by Wanhua 

and Green Packing. See Statement in Lieu of USCIT R. 56.2 Mot. 1-2, ECF No. 47. 

Defendant responds opposing Wanhua and Green Packing’s Rule 56.2 motions. Def.’s 

Resp. to Pls.’ R. 56.2 Mots. for J. on the Agency R., ECF No. 51 (“Def.’s Resp.”); 

Defendant-Intervenors Mitsubishi Polyester Film, Inc. and SKC, Inc. respond in support 

of the Final Results. See Def.-Intervenors’ Br. in Opp. to Pls.’ Mots. for J. on the 

Agency R., ECF No. 58. Defendant-Intervenor Terphane, Inc. confirms that it agrees with 

and incorporates the arguments made by Defendant in its response to Plaintiffs’ Rule 56.2 

motions. See Letter in Lieu of Resp. Br. 1, ECF No. 57. The court has jurisdiction pursuant 

to Section 516A(a)(2)(B)(iii) of Tariff Act of 1930, as amended, 19 U.S.C. 

§ 1516a(a)(2)(B)(iii) (2012),1 and 28 U.S.C. § 1581(c) (2012). 

Wanhua challenges Commerce’s surrogate country selection and decision to 

deduct value added tax (“VAT”) from Wanhua’s export price. Green Packing also 

challenges the surrogate country selection, as well as Commerce’s surrogate valuation 

for recycled polyethylene terephthalate chip (“PET chip”) without applying Green 

Packing’s proposed by-product offset. For the reasons set forth below, the court sustains 

the Final Results on each issue. 

I. Standard of Review 

For administrative reviews of antidumping duty orders, the court sustains 

Commerce’s “determinations, findings, or conclusions” unless they are “unsupported by 

 

1 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of 

Title 19 of the U.S. Code, 2012 edition. 
Consol. Court No. 14-00183 Page 4 

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. 2015). 

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.” Jane C. Bergner, Steven W. Feldman, the late Edward 

D. Re, and Joseph R. Re, 8-8A, West’s Fed. Forms, National Courts § 13342 (5th ed. 

2015).

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. See United States v. Eurodif S.A., 
Consol. Court No. 14-00183 Page 5 

555 U.S. 305, 316 (2009) (Commerce’s “interpretation governs in the absence of 

unambiguous statutory language to the contrary or unreasonable resolution of language 

that is ambiguous.”). 

When reviewing substantial evidence issues from non-market economy 

proceedings involving Commerce's selection of the “best available” pricing and cost data 

from “surrogate” economies/companies, 19 U.S.C. § 1677b(c), the court's “duty is ‘not to 

evaluate whether the information Commerce used was the best available, but rather 

whether a reasonable mind could conclude that Commerce chose the best available 

information.’” Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333, 1341 

(Fed. Cir. 2011) (quoting Goldlink Indus. Co. v. United States, 30 CIT 616, 619, 

431 F. Supp. 2d 1323, 1327 (2006)); see also Downhole Pipe & Equip., L.P. v. United 

States, 776 F.3d 1369, 1379 (Fed. Cir. 2015); 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.”); Dorbest Ltd. v. United States, 30 CIT 1671, 1675-76, 462 F. Supp. 2d 1262, 

1269-70 (2006) (“The term ‘best available’ is one of comparison, i.e., the statute requires 

Commerce to select, from the information before it, the best data for calculating an 

accurate dumping margin. . . . This ‘best’ choice is ascertained by examining and 

comparing the advantages and disadvantages of using certain data as opposed to other 

data.”).
Consol. Court No. 14-00183 Page 6 

II. Discussion 

A. Exhaustion

Wanhua challenges Commerce’s decision to adjust Wanhua’s U.S. prices to 

account for Chinese VAT as contrary to 19 U.S.C. § 1677a(c)(2)(B). Wanhua Br. at 

11-13. Green Packing challenges Commerce’s selection of Indonesia as the primary 

surrogate country, arguing that the South African data for the most important input was 

superior to the Indonesian data when measured against Commerce’s announced 

selection criteria. Green Packing Br. at 10-12. Neither Wanhua nor Green Packing raised 

these arguments in their administrative case briefs. See Case Br. of Tianjin Wanhua Co., 

Ltd. 17-18 (Dep’t of Commerce Feb. 12, 2014), PD 255 (presenting a factual argument 

against export price adjustment but no legal argument); Case Brief of Shaoxing Xiangyu 

Green Packing Co., Ltd. (Dep’t of Commerce Feb. 11, 2014), PD 254 (stating that “South 

Africa has the best quality of data, as compared to the others” and Commerce “should 

use South Africa as the surrogate country in the final determination” without any further 

elaboration or citation to the record). Defendant urges the court to disregard these 

arguments as unexhausted. Def.’s Resp. at 10-11, 25-28. 

The court agrees with Defendant that requiring exhaustion is appropriate in these 

circumstances. The U.S. Court of International Trade must require exhaustion of 

administrative remedies “where appropriate.” 28 U.S.C. § 2637(d). “This form of nonjurisdictional 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 
Consol. Court No. 14-00183 Page 7 

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, 88-90 (2006)). The court “generally takes a ‘strict view’ of 

the requirement that parties exhaust their administrative remedies before the Department 

of Commerce in trade cases.” Corus Staal BV v. United States, 502 F.3d 1370, 1379 

(Fed. Cir. 2007). 

An important corollary to the exhaustion of administrative remedies is Commerce’s 

own regulatory requirement that parties raise all issues within their administrative case 

briefs. 19 C.F.R. § 351.309(c)(2) (2015) (“The case brief must present all arguments that 

continue in the submitter's view to be relevant to the final determination.”); Mittal Steel 

Point Lisas Ltd. v. United States, 548 F.3d 1375, 1383 (Fed. Cir. 2008) (parties are 

“procedurally required to raise the[ir] issue before Commerce at the time Commerce [is] 

addressing the issue”). This requirement works in tandem with the exhaustion 

requirement and promotes the same twin purposes of protecting administrative agency 

authority and promoting judicial efficiency. 

Both Wanhua and Green Packing had the opportunity during this proceeding to 

raise their arguments in their case briefs, and both chose not to do so. By declining to 

develop or argue these issues, Wanhua and Green Packing signaled that neither issue 

warranted attention from Commerce. In so doing, Wanhua and Green Packing 

undermined Commerce’s ability to analyze both issues in the Decision Memorandum and 

in turn deprived the court of a fully developed record on the contested issues. 

Furthermore, Commerce’s regulatory requirement that parties raise all issues within their 
Consol. Court No. 14-00183 Page 8 

administrative case briefs carries the force of law, and the court cannot simply ignore it. 

Exhaustion is therefore appropriate. 

Wanhua asserts in a footnote that the “pure question of law” exception to the 

exhaustion requirement applies here. Wanhua Br. at 11 n.2. There is no merit in this 

argument. First, the court does not entertain substantive arguments raised in footnotes. 

Am. Tubular Prods., LLC v. United States, 38 CIT ___, ___, Slip Op. 14-116 at 25-26 

(2014) (citing SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir. 

2006); see also Calvert v. Wilson, 288 F.3d 823, 836 (6th Cir. 2002) (explaining that courts 

generally consider arguments raised in footnotes to be waived, and citing sources); 

City of Emeryville v. Robinson, 621 F.3d 1251, 1262 n.10 (9th Cir. 2010) (deeming an 

issue waived where the party “fail[ed] to address the issue in its opening brief except in a 

footnote”). Second, the court simply notes that the pure question of law exception is just 

not likely to apply in this context. It only might apply for a clear statutory mandate that 

does not implicate Commerce’s interpretation of the statute under the second step of 

Chevron. See, e.g., Agro Dutch Indus. Ltd. v. United States, 508 F.3d 1024, 1032 

(Fed. Cir. 2007) (applying pure question of law exception to Chevron step 1 issue). Even 

when the statute is clear, however, it is always preferable to have the agency's 

interpretation of the statute it is entrusted to administer set forth on the administrative 

record. See 2 Richard J. Pierce, Jr., Administrative Law Treatise § 14.3 (5th ed. 2010) 

(describing the primary jurisdiction doctrine and its relationship to Chevron); see also 

Agro Dutch, 508 F.3d at 1029 n. 4 (noting that Commerce had opportunity to, and did, put 

forth its interpretation on administrative record in two instances). In this case the statute 
Consol. Court No. 14-00183 Page 9 

does not define the phrase at the center of Wanhua’s legal challenge. See 19 U.S.C. 

§ 1677a(c)(2)(B) (using the phrase “export tax, duty or other charge imposed” without 

clarification). The pure question of law exception therefore cannot apply in this instance 

because its application would undermine the very purposes the exhaustion requirement 

is designed to promote. See Fuwei Films (Shandong) Co. v. United States, 35 CIT ___, 

___, 791 F. Supp. 2d 1381, 1384-85 (2011). 

To conclude, the court does not reach Wanhua’s unexhausted challenge 

Commerce’s decision to adjust Wanhua’s U.S. prices to account for Chinese VAT as 

contrary to 19 U.S.C. § 1677a(c)(2)(B) and Green Packing’s unexhausted challenge to 

Commerce’s surrogate country selection. Each of those matters is sustained.

B. Surrogate Country Selection 

In an antidumping duty administrative review, Commerce determines whether 

subject merchandise is being, or is likely to be, sold at less than fair value in the United 

States by comparing the export price (the price of the goods sold in the United States) 

and the normal value of the merchandise. 19 U.S.C. §§ 1675(a)(2)(A), 1677b(a). In the 

non-market economy context, Commerce calculates normal value using data from 

surrogate countries to value the factors of production. Id. § 1677b(c)(1)(B). Commerce 

must use the “best available information” in selecting surrogate data from “one or more” 

surrogate market economy countries. Id. § 1677b(c)(1)(B), (4). The surrogate data must 

“to the extent possible” be from a market economy country or countries that are (1) “at a 

level of economic development comparable to that of the nonmarket economy country” 

and (2) “significant producers of comparable merchandise.” Id. § 1677b(c)(4). Commerce 
Consol. Court No. 14-00183 Page 10 

has a stated regulatory preference to “normally . . . value all factors in a single surrogate 

country.” 19 C.F.R. § 351.408(c)(2). 

When choosing among potential surrogate countries that are at a level of economic 

development comparable to the non-market economy country and are significant 

producers of comparable merchandise, Commerce evaluates the relative availability and 

reliability of surrogate value data sourced from each potential country. Commerce is 

guided by a general regulatory preference for publicly available, non-proprietary 

information. 19 C.F.R. § 351.408(c)(1), (4). Beyond that, Commerce generally considers 

the quality, product specificity, and contemporaneity of the available surrogate value data. 

Decision Memorandum at 3, 6-7. 

The administrative record below included surrogate data for each factor of 

production sourced from two economically comparable significant producers of 

comparable merchandise: Indonesia and South Africa. Id. at 6-7. Commerce chose 

Indonesia, explaining that the Indonesian financial surrogate data “pertain to the 

production of identical merchandise, while the South African [data] pertain to the 

production of only comparable merchandise.” Decision Memorandum at 13-14. 

Wanhua challenges Commerce’s selection of Indonesia over South Africa. 

Specifically, Wanhua argues that Commerce’s failure to reject the sole Indonesian 

financial surrogate, PT Argha Karya Prima Industry, Tbk (“Argha”), is inconsistent with 

past practice. According to Wanhua, Argha’s annual report is incomplete under 

Indonesian law, and Argha probably enjoyed the benefit of “broadly-available 

non-industry-specific export subsidies.” Wanhua Br. at 4-9. Wanhua insists that 
Consol. Court No. 14-00183 Page 11 

Commerce has a stated practice of rejecting incomplete annual reports, id. at 5-6 (citing 

Wire Decking from the People’s Republic of China, 75 Fed. Reg. 32,905 (Dep’t of 

Commerce June 10, 2010) (final LTFV determ.); Lightweight Thermal Paper from the 

People’s Republic of China, 73 Fed. Reg. 57,329 (Dep’t of Commerce Oct. 2, 2008) (final 

LTFV determ.); Certain New Pneumatic Off-the-Road Tires from the People’s Republic 

of China, 73 Fed. Reg. 40,485 (Dep’t of Commerce July 15, 2008) (final LTFV determ.)), 

as well as those sourced from subsidized companies, id. at 8 (citing Certain Frozen 

Warmwater Shrimp from the People’s Republic of China, 72 Fed. Reg. 52,049 (Dep’t of 

Commerce Sept. 12, 2007) (final results admin. review). 

In the court’s view, although this particular surrogate value selection is not without 

its issues, Commerce did not act inconsistent with past practice when it used Argha’s 

financial statement. To clarify Commerce’s actual practice, Commerce has rejected 

incomplete financial statements of potential surrogate companies because those 

statements did not include data necessary for calculating financial ratios. Here, however, 

as Commerce explained, the record includes a complete financial statement from Argha 

contained within an incomplete annual report: 

Wanhua argues that the Department needs a complete annual report on the 

record in order to calculate surrogate financial ratios. Wanhua cites three 

antidumping duty administrative reviews in support of its argument. 

However, the Department agrees with Petitioners that Wanhua has failed 

to support its claim that Argha Karya’s financial statements are incomplete. 

First, in Wire Decking/PRC (2010), the Department was faced with partial 

financial statements (not a partial annual report) from an Indian producer 

that did not include key data necessary to calculate SVs. Specifically, the 

financial statements did not contain schedules A through D accompanying 

the balance sheet. Thus, the Department was unable to calculate surrogate 

financial ratios. In this case, Argha Karya’s financial statements include the 
Consol. Court No. 14-00183 Page 12 

schedules necessary for the calculation of surrogate financial ratios. 

Second, in Thermal Paper/PRC (2008), the Department declared a set of 

financial statements incomplete because they did not include a fixed asset 

schedule. The fixed asset schedule is necessary as it supports the 

Department’s use of a depreciation expense in its calculation of financial 

ratios. Argha Karya’s financial statements on the record of the instant review 

include this schedule. Third, in OTR Tires/PRC (2008), the Department 

disregarded certain financial statements from the calculation of surrogate 

financial ratios because the financial statements did not contain the 

auditor's statements, extensive data on the income statement, and 

accompanying schedules, or were not legible. Argha Karya’s financial 

statements on the record of this administrative review include an auditor’s 

statement, the income statements are complete, the necessary schedules 

(as previously stated) are present, and the financial statements are legible. 

Decision Memorandum at 11 (footnotes omitted). Unlike the administrative decisions 

Wanhua cites in its brief, Argha’s financial statement contains all the data necessary for 

calculating financial ratios. Id. Commerce therefore reasonably distinguished this case 

from other instances in which it rejected incomplete financial statements. See id. 

As the court noted above, however, the incomplete annual report is not without its 

issues. As Wanhua explains, 

The annual report was not complete, missing a substantial portion of the 

report. The record, as shown by the table of contents of the Argha annual 

report, indicates that the Argha annual report was missing pages 1 through 

78. (Exhibit SVSI-1 to Wanhua’s Resubmitted Surrogate Values for the 

Final Results, PD 228 at bar code 3178117-02, page 8 (Feb. 3, 2014).) The 

Department acknowledges that an annual report in Indonesia is required to 

contain multiple documents discussing the operations of the company. (Def. 

Resp. at 7.) The Government of Indonesia considers such information of 

sufficient relevance that it requires that it be included in all annual reports. 

(Rule Number X.K.6: Obligation to submit Annual Report for Issuers of 

Public Companies as provided as part of Exhibit SVSI-4 to Wanhua’s 

Resubmitted Surrogate Values for the Final Results, PD 230 at bar code 

3178117-04, pages 12-20 (Feb. 3, 2014).) These points are not in dispute. 
Consol. Court No. 14-00183 Page 13 

Wanhua Reply Br. at 3. Wanhua further explains that it was the domestic interested 

parties that submitted the incomplete document. Id. Commerce appears to have given 

the domestic interested parties a pass, not following up or inquiring about the missing 

pages of the annual report, e.g., asking where and how it was obtained, why the pages 

were missing, or requiring the domestic interested parties to supply a complete version. 

There is a further difficulty with the Argha annual report. Commerce has a general 

policy of disregarding import prices from Indonesia (as surrogate values for input prices) 

because Commerce has found in other proceedings that Indonesia maintains broadly 

available, non-industry specific export subsidies. Decision Memorandum at 11-12. 

Commerce makes a general inference “that all exports to all markets from Indonesia may 

be subsidized,” and Commerce consequently “disregards import prices from Indonesia.” 

Id. at 12 (emphasis added). Wanhua argues that Argha is primarily an export-oriented 

business, and given Commerce’s general inference “that all exports to all markets from 

Indonesia may be subsidized” Commerce should have reasonably inferred that subsidies 

likely tainted Argha’s operations. Wanhua Br. 8-9. Commerce sidesteps this problem by 

noting that Commerce is utilizing financial data from an Indonesian company, not import 

prices of goods from Indonesia into some other country, and that nowhere in the 

incomplete Argha annual report is there any reference to a subsidy. Decision 

Memorandum at 11-12. Wanhua questions the reasonableness of Commerce’s 

inference, from an incomplete annual report, that Argha did not benefit from subsidies. 

Wanhua Br. at 9. 
Consol. Court No. 14-00183 Page 14 

This is a good argument. The Argha annual report has obvious issues that test the 

reasonableness of its selection as the best available information to calculate Wanhua’s 

margin. The court notes, however, that the question ultimately is not whether the 

incomplete Argha annual report in isolation is a good or bad surrogate value selection, 

but more specifically, whether Commerce’s choice of that data set is reasonable 

(supported by substantial evidence) when compared with the other available data sets. 

Dorbest, 30 CIT at 1675-76, 462 F. Supp. 2d at 1269-70 (“The term ‘best available’ is one 

of comparison, i.e., the statute requires Commerce to select, from the information before 

it, the best data for calculating an accurate dumping margin. . . . This ‘best’ choice is 

ascertained by examining and comparing the advantages and disadvantages of using 

certain data as opposed to other data.”). 

Turning to the data set that Wanhua favors, the South African AstraPak’s financial 

statement was also a suboptimal choice. Whereas Argha produced “identical” 

merchandise, AstraPak produced “comparable” but not identical merchandise. Decision 

Memorandum at 13-14. Wanhua, unfortunately fails to address this deficiency, devoting 

all its energies on the disadvantages of the Argha annual report. See Wanhua Br. at 

9-10; Wanhua Reply Br. at 1-5. Missing is an analysis of the consequence of 

“comparable” vs. “identical” merchandise on the margin calculation, e.g., what 

complexities or difficulties would or would not be engendered. So although the court may 

agree that the Argha annual report has weaknesses as a surrogate dataset, the court 

cannot evaluate those weaknesses against the noted weaknesses of the AstaPak dataset 

because Wanhua did not provide any comparative analysis. This is important. For the 
Consol. Court No. 14-00183 Page 15 

court to remand for Commerce to use the AstraPak dataset, Wanhua needed to establish 

that AstraPak, when compared with Argha, is the one and only reasonable surrogate 

selection on this administrative record, not simply that AstraPak may have constituted 

another possible reasonable choice. Globe Metallurgical, Inc. v. United States, 36 CIT 

___, ___, 865 F. Supp. 2d 1269, 1276 (2012) (substantial evidence review “contemplates 

[that] more than one reasonable outcome is possible on a given administrative record”). 

The court therefore must sustain Commerce’s surrogate dataset choice. 

C. PET By-product 

As described above, Commerce in non-market economy cases uses data sourced 

from a surrogate country to value a respondent’s factors of production. 19 U.S.C. 

§ 1677b(c)(1)(B). Factors of production include raw material inputs utilized to 

manufacture the subject merchandise. Id. § 1677b(c)(3). Commerce typically assigns a 

surrogate value to recycled inputs like it would any other raw material input. Decision 

Memorandum at 16. Commerce’s policy, though, is to avoid double counting by offsetting 

the cost of production by the value of recycled inputs (or the value of by-product sold) 

when a respondent demonstrates that the cost of its recycled inputs are already 

accounted for elsewhere. Id. at 19. 

Wanhua uses recycled PET as an input to produce the subject merchandise, which 

Commerce valued as it would any other factor of production. During the period of review, 

however, Wanhua recovered some PET by-product material from its own production of 

subject merchandise. Wanhua sold some of that PET by-product and reintroduced some 

into later production runs. Wanhua requested that Commerce offset the surrogate value 
Consol. Court No. 14-00183 Page 16 

for the recycled PET input to account for the fact that it used some of its own recycled 

PET as the input. Wanhua supported its request with internal records detailing specific 

quantities of sold and reintroduced PET by-product. After considering Wanhua’s 

submissions, Commerce granted Wanhua’s requested offset. Issues and Decision 

Memorandum for the Preliminary Results of the Antidumping Duty Administrative Review 

on Polyethylene Terephthalate Film, Sheet, and Strip from the People’s Republic of 

China, A-570-924, at 24-25 (Dep’t of Commerce Dec. 18, 2013), available at 

http://enforcement.trade.gov/ frn/summary/prc/2013-30919-1.pdf. 

Like Wanhua, Green Packing captures PET by-product materials created during 

the manufacture of subject merchandise. Like Wanhua, Green Packing claims that it sells 

some of that by-product and uses some of that by-product as an input to produce the 

subject merchandise. But unlike Wanhua, Green Packing did not provide Commerce with 

any information to substantiate its claims about how the recycled PET chip it produces 

relates to the recycled PET chip it used to manufacture the subject merchandise. As a 

result, Commerce selected a surrogate value for Green Packing’s recycled PET chip input 

but declined to grant Green Packing an offset. Decision Memorandum at 21-25. 

Green Packing now challenges Commerce’s treatment of Green Packing’s 

recycled PET chip input as unreasonable. Green Packing’s main argument is that 

Commerce double counted the cost of the recycled PET input, since the recycled PET 

chip input is a by-product of the manufacturing process. Green Packing asserts that 

Commerce should have either assigned a zero value to the recycled PET input or granted 

a by-product offset to avoid this double counting. In support of its position, Green Packing 
Consol. Court No. 14-00183 Page 17 

points to DuPont Teijin Films China Ltd. v. United States, 38 CIT ___, 7 F. Supp. 3d 1338 

(2014) (“DuPont”), a decision that rejected Commerce’s explanation for applying a 

surrogate value to an input obtained from earlier production runs without also granting an 

offset.

The court does not agree that Commerce should have assigned a zero to Green 

Packing’s recycled PET chip input. As Commerce explained below, Green Packing did 

not provide any details regarding the quantities of recycled PET chip that it produced and 

reintroduced as an input. Commerce could not in the absence of such detail “exclude the 

reintroduced PET chips from its NV calculation (or assign a zero value to them) on the 

basis that they are completely balanced out by the recyclable PET waste by-product 

generated.” Decision Memorandum at 16-17. As Commerce explained, “[t]here is no 

record evidence to indicate that the quantity of reintroduced PET chips will be equivalent 

to, or closely match, the recyclable PET waste by-product generated during any given 

period.” Id. Green packing also listed recycled PET chip as an ingredient necessary to 

produce the subject merchandise, meaning that assigning a zero to that input would, as 

Commerce noted, “be equivalent to removing that input altogether from the calculation of 

[normal value].” Id. at 17. 

Green Packing also argues that the manufacturing overhead surrogate value 

accounts for its recycled PET chip input. Commerce explained, however, that the 

manufacturing overhead is a percentage applied to the total cost of all raw material inputs. 

The overhead cost therefore only accounts for recycled PET chip to the extent that 

recycled PET chip is included in the total raw material cost. As Commerce detailed below: 
Consol. Court No. 14-00183 Page 18 

The Department calculates overhead by multiplying the surrogate overhead 

ratio by a respondent’s cost of manufacturing, which is comprised of raw 

materials, labor, and energy. Therefore, the overhead ratio is applied to all 

three components of the cost of manufacturing. Even if the labor and energy 

expenses associated with Respondents’ recycling process have been 

reported, overhead would be understated if the overhead ratio is not 

multiplied by the total value of all of the materials used in production, 

including the reintroduced PET chips. This is why the Department, in 

calculating a respondent’s overhead costs, must determine SVs for all 

inputs, including recycled inputs such as reintroduced PET chips. 

Decision Memorandum at 18. Consequently, in the court’s view, Commerce reasonably 

assigned a non-zero surrogate value to Green Packing’s recycled PET chip input. 

As for Green Packing’s proposed offset, the court agrees with Green Packing that 

in certain circumstances the only accurate way to account for by-product reintroduced as 

an input into later production runs may be to offset the cost of production by the amount 

of by-product used. This is exactly what Commerce did for Wanhua. Unlike Wanhua, 

though, Green Packing chose not to paper the record with evidence to substantiate its 

request for an offset. “The interested party that is in possession of the relevant information 

has the burden of establishing . . . the amount and nature of a particular adjustment.” 

19 C.F.R. § 351.401(b)(1) (2015); see also QVD Food Co. v. United States, 658 F.3d 

1318, 1324 (Fed. Cir. 2011) (“‘[T]he burden of creating an adequate record lies with 

[interested parties] and not with Commerce.’” (quoting Tianjin Mach. Imp. & Exp. Corp. v. 

United States, 16 CIT 931, 936, 806 F. Supp. 1008, 1015 (1992))). Here, Green Packing 

simply asserted, without evidentiary support, that the amount of by-product produced and 

the amount of by-product re-entered into production process were, without exception, the 

same figure. In the court’s view, Commerce reasonably concluded that Green Packing 
Consol. Court No. 14-00183 Page 19 

failed to demonstrate that it was entitled to a by-product offset. Decision Memorandum at 

21-23.

The court notes that DuPont does not compel a different outcome here. In DuPont, 

Commerce applied a surrogate value to the recycled PET input for the first time in the 

final results. The court in DuPont provided Commerce with the choice on remand of either 

assigning zero for the recycled PET input surrogate value or offsetting that value so as to 

“reasonably avoid[]” double counting. DuPont, 38 CIT at ___, 7 F. Supp. 3d at 1344-48. 

Commerce opted for the latter methodology. DuPont Teijin Films China Ltd. v. United 

States, 39 CIT ___, ___, Slip Op. 15-19 at 2-3 (2015). Here, unlike DuPont, Commerce 

applied a surrogate value to Green Packing’s recycled PET input in the preliminary 

determination. Green Packing consistently declined Commerce’s invitations to provide 

information that would enable Commerce to calculate an appropriate offset. Decision 

Memorandum at 21-23. Commerce therefore reasonably concluded that Green Packing 

did not demonstrate its entitlement to an offset. 

Lastly, the court does not see any merit in Green Packing’s challenge to the 

surrogate value Commerce ultimately selected for the recycled PET chip input. As 

explained above, the input in question is recycled PET chip, not PET waste film. 

Commerce used the average value of imports under Indonesian HTS 3907.60.90, which 

covers both primary PET chip and PET scrap that is transformed into primary form. 

Decision Memorandum at 19-20. Green Packing’s proposed alternative, Indonesian 

HTS 3915.10, by its own terms only applies to waste products. Commerce therefore 
Consol. Court No. 14-00183 Page 20 

reasonably selected Indonesian HTS 3907.60.90, which as Commerce explained was 

more specific to the recycled PET chip input in question. Id. at 20. 

III. Conclusion 

For the foregoing reasons, the court sustains Commerce’s application of a VAT 

adjustment to Wanhua’s export price, Commerce’s surrogate country selection, and 

Commerce’s surrogate valuation of Green Packing’s recycled PET chip input. Judgment 

will be entered accordingly. 

 /s/ Leo M. Gordon 

Judge Leo M. Gordon 

Dated: March 29, 2016 

 New York, New York