1 Slip Op. 04-51 UNITED STATES COURT OF I NTERNATIONAL

TRADE

: KAIYUAN GROUP CORP., et al. , : : Plaintiff s, :

: Before: WALLACH, J udge v. : Consol. Court No.: 02-00573 : UNI TED STATE S, : : Defend ant, : PUBLIC V ERSION : and : : PENCIL SECTION WRITI NG : INST RUMENT MA

NUFACTU

RERS : ASS’N, et al. , : : Defend ant-I nterven ors. :

____________________________________ : [Plaintiff Kaiyuan Group Corp.’s Motion for Judgment On the A gency Record is denied; Plaintiffs China First Pencil’s Motion for Judgment on the Agency Record Pursuant to Rule 56.2 is granted in part and denied in part; and the United States De partment of Commerce’s Final Results are remanded] Dated: May 14 , 2004 DeKieffer & Horg an , ( James Kevin Horgan and Wakako Takatori ) for Plaintiff Kaiyua n Group Corporation. Lafa ve & Sai ler LLP , ( Francis J. Sailer ) for Plaintiffs China First Pencil Co., Ltd., et al. Peter D. Keisler , Assistan t Attorne y G eneral ; David M. Cohen , Director; Ada E. Bosque , Trial Attorney, U.S. Depa

rtment of Justice, Civil Division, Commercial Litigation Branch; and Philip J. Curtin , Attorney, Off

ice of Chief Counsel for Import Administration, U.S. Depar tment of Commerce , of Counse l, for De fendant United Sta

tes. Nev il le P ete rso n LLP , ( George W. Thompson ) for De fendant-Int ervenor s. OPINION2

WALLACH, Judge: I Introduction This matter comes before the court on Plaintiff Kaiy uan Group Corp.’s (“Kaiy uan”) Motion for Judgment Upon the Agency Record (“Kaiy

uan’s Motion”), and Plaintiffs’, China First Pen cil Co. (“ China Fir

st”), Gua ngdong Provincia

l Stationar

y & Sporting Goods I mport & Export Corp. (“Guangdong”), Orient I nternational Holding Shanghai Foreig n Trade Co., Ltd. (“SFTC”), and Three Star Stationary Industry Co., Ltd. (“Three Star”) , (collectively, “Plaintiffs China First”), Motion for Judgment on the Agency Record Pursuant to USCIT R. 56.2 (“China First’s Motion”). Plaintiffs challenge certain a spects of the United States Department of Commerce’s (“Commerce”) decision in Certain Cased Pencils from the People’s Republic of China; Final Results and Partial Rescission of Antidumping Duty Administrative Review , 67 Fed. Reg. 48,612 (July 25, 2002) (“Final Results”), as amended in Notice of Amended Final Results and Partial Rescission of Antidumping Duty Administrative Review: Cer tain Cased Pencils from the People’s Republic of China , 67 Fed. Reg. 59,049 (Sept. 19, 2002) (“Amended Final Results”). The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1999). For the reasons set forth below, Kaiy uan’s Motion is denied; China First’s Motion is granted in part and denied in part; and Commerc e’s Fina l Results a

re rema nded for action c onsistent w

ith this opinion.
II Background In 1994, Commerce published an antidumping or der for certain cased penc ils from the People’s Republic of China (“PRC”). Antidumping Duty Orde r: Certain Cased Pencils from the1 The scope of the administrative review covere d “certain cased pencils of any shape or dimension which are writing and/or drawing instruments that feature cores of gra phite or other materials, encased in wood and/or man-made mater ials, whether or not decorated and whether or not tipped . . . in any fashion, and e ither sharpened or unsharpened.” Certain Cased Pencils From the People’s Republic of China; Preliminary Results and Resc ission in Part of Antidumping Administrative Review , 67 Fed. Reg. 2,402, 2,403 (Jan. 17, 2002). The cores of a black lead pencils are composed of graphite, c lay, wax, and other ing redients. See Kaiyuan’s Motion at 3. The particular combination of these materials determines the c ore’s hardness. Id.

2 The Defendant-I

ntervenors are the Writing I nstrument Manufacturers Association, I nc., Pencil Section (“WIMA”); Sanford Corp.; Dixon-Ticonderog a Corp.; Aakron Rule, Inc.; Gene ral Pencil Co.; Moon Products Inc.; Tennessee Pencil Co.; and Musgr ave Pencil Co. 3 People’s Republic of China , 59 Fed. Reg. 66,909 (Dec. 28, 1994) (“ Antidumping Order”). On December 20, 2000, Commerce published a notice of opportunity to request an administrative review of certain cased penc ils sold during the period of review (“POR”), Dec ember 1, 1999, through Novembe

r 30, 2000 , from the

PRC. 1 Antidumping or Countervailing Duty Order, Finding, or Suspended Inve stigation; Opportunity to Request Administrative Review and Request for Revocation in Part , 65 Fed. Reg. 79,802 (Dec. 20, 2002). Commerce received request s for adm

inistrativ e revie

w from Ka

iyu an, Plaint iffs China First, a nd the De fendant

Inte rvenors . 2 On January 31, 2001, Commerce published a notice initiating the review. Initiation of Antidumping and Countervailing Duty Administrative Reviews , 66 Fed. Reg. 8,378 (Jan. 31, 2001). Commerce published its notice of preliminary results and partial rescission of the 1999- 2000 review on January 17, 2002. Certain Cased Pencils From the People’s Republic of China; Preliminary Results and Rescission in Part of Antidumping Administrative Review , 67 Fed . Reg. 2,402. (Jan. 17, 2002) (“Preliminary Results”). In the Preliminary Results, the review was partially resc inded as to Guangdong and Three Star “because they

made no shipments of the3 Previously, during the 1998- 1999 review, Defendant-I ntervenors had urged Commerce to deter mine that T

hree Sta r was no longer a

separa te produc er, but ha

d become a single entity with China

First. Al though Co mmerce d

id not ag ree, it st ated tha t it would “

revisit th is issue if 4 subject merchandise to the United States during the POR.” Id. at 2,403. China First, Kaiyua n and SFTC actively par

ticipated in the review. Id. Guangdong and Three Star stated that they did not export the subject merchandise during the POR. Id. A Commerce ’s Investigation and the Parties’ Questionnaire Responses 1 China First Pencil and Three Star On Febr uary 12, 2001, C ommerce

issued an tidumping

questionnaires. Ch

ina Firs t indicated in its questionnaire response of April 11, 2001, that it was “a shareholding company listed on the Shanghai Stock exchange . . . owned by its approximately 25,000 shareholders . . . [and that m]ore that 47 percent of [its] shares were held by foreign (non-Chinese) shareholder s.” China First’s Motion at 4. China First stated that one of its shareholders, Shanghai L ight Industry Group Co., Ltd. (“SLI”), had administrative re sponsibility for the protection of Thre e Star’s sta te-owne d assets. China First also sta ted that w hile it wa s under th e oversi ght of SL I, it was neither affiliated with Three Star nor did it coordinate pr ices, suppliers, customers or business operations with Three Star. On May 8, 2001, Def

endant-Intervenor

s provided Commerce with information regarding the relationship between Three Star and China First Pencil. De fendant-Interve nors stated that “[the documents included in the Joint Submission demonstrate that China First was provided wide-ra nging , substant

ive over sight of

Three Sta

r by SLI , the common owner

of both; th ere is nothi ng in dire ct or advi sory abou t Chin a First’s r

ole. ]” 3 Lette

r from De fendant-Int

ervenor s toadditional evidence regarding [China First’s] and Three Star’s relationship is presented in a future review.” Issues and Decision Memorandum f rom The People’s Repiblic of China; Final Results and Partial Recission of Antidumping Duty Administrative Review , 66 Fed. Reg. 37,638 (July 19, 2001), Comment 2. 5 Commerce (May

8, 2001), Defendant’s Opposition to Plaintiff’s Motion for Judgment Upon the Agency Record (“Defendant’s Opposition”), Appendix 2 at 8. On May 18, 2001, Commerce inquired in a supplemental questionnaire about the oversight functions of SLI as a state assets company . In its June 11, 2001, response to the supplemental questions, China First provided a copy of its 2000 annual report including its 1999 and 2000 a

udited fin ancial s tatement s. This aud ited rep ort described the

state-ow ned asse ts company SL

I as an “aff

iliated party” a

nd referred to Three Star, thoug h not by name, as “a

n affiliate of SLI ,” but did not indicate that China First had any connection with Three Star. China First’s Motion at 5. China First said it had a contractual arrang ement with SLI to provide administrative guidance to Three Star rela ting to sanitation and environmental management issues, production safety me asures, and oversight of Three Star’ s yearbook. China F irst’s Motion

at 5. Pl ai nt if

fs cl ai me d t ha t S LI “ re vi ew [e d] th e f in an ci al st at em en ts of

it s ‘ su bs id ia ry’ companie s, owned by ‘ All the Peo ple’ to e nsure tha t indepen dent comp any

manage ment is responsibly managing the businesses.” Id. at 5-6 During January

and February

of 2002, as part of its antidumping investigation, Commerce conducted verifications of China First and Three Star . After verification of China First’s balance sheet and investments ledgers, Commerce stated that “[w]e noted no investment which mig ht indicate unreported [China First Pencil] affiliates, associates or subsidiaries.” Id. at 7. After the verific ation of T

hree Sta r, Commer

ce state d that “[w]e

noted no in

vestment by Th

ree Star in4 The order was issued by Shanghai Light I

ndusty (Group) Co., L

td., “a state-owned corporate entity

that functioned like a government ag ency with administrative re sponsibility for the over-sight of state owned assets that was the c orporate successor to the former Shang hai Municipal State Assets Management Committee.” China First’s Motion at 4.

5 19 C.F.R. § 351.302 se

ts forth th e proce dures for reque sting an extension o f a time limit: 6 [China First Pencil].” Id. at 8. In addition to its responses rega rding its business structure, China First submitted surrogate value information for seve ral raw materials, including pencil core s, on March 1, 2002. China First include d a price list from a

n Ind ian produ cer of b lack and

colored pencil le ads. I

n its Preliminary Results, Commerce deter mined the values of cores using I ndian tariff subheading 9610.20 and relied on the export price quotes, rather than on the I ndian Import Statistics, to value

cores. By letter

dated April 12, 2002, the Defendant-I ntervenors submitted a Chinese document which they said demonstra ted that China First and Three Star had merge d in 1997, three yea rs before the POR. Defendant-I ntervenors also noted the fact that China First and Three Star had offices in the same building in Shanghai. They asserted that the information concerning the two companies’ merger should have bee n provided to Commerce in response to Commerce’s questionnaires. T

he docume

nt, entitle d “Orde

r No. 1997 005”(“t

he Orde r”), wa s a PRC government agency 4 order requiring the merg er of Three Star and China First. I t directed China First to absorb Three Star’s capital and form a g roup company to include T hree Star, and it gave China First the role of managing Thre e Star and coordinating Three Star’s sa les and purchases. As a result of its receipt of the Order, Commerce e xtended the deadline for submission of new factual information pursuant to 19 C.F.R. § 351.302 (2000), 5 reopened the administrative record,(b) Extension of time limits. Unless expressly excluded by statute, [Commerce] may , for go od cause , extend an y time limit esta

blished by

this part. (c) Requ ests for e xtension of

specific time limit. B efore t

he applic able time

limit specifie d under § 351.301 expires, a p arty may request an extensi on pursua

nt to paragraph (b) of this section. The r equest must be in writing and state the reasons for th e reque st. An exte nsio n grant ed to a party mus t be ap prove d in wr itin g. (d) Return of untimely filed or unsolicited material. (1) Unless the Secretary extends a time limit under paragraph (b) of this section, the Secre tary will not consi der or r etain in th e offi cial r ecord o f the p roceed ing: (i) Untimely filed fa

ctual information, written argument, or other materia l that the Secretary

returns to the submitter, except as provided under § 351.104(a)(2). 7 and sought comments from interested parties reg arding the Order. On May 24, 2002, Commerce issued a supplemental questionnaire to China First and Three Star that asked questions regar ding the alleged merg er between the two companies and accepted the Defendant-I

ntervenors submission. By letter dated June 4, 2002, China First and Three Sta r filed va rious doc uments in r

esponse t o Commerc e’s “opp ortunity allowing China First and Three Star to submit rebutting, clarify ing and correcting informa tion concerning the alleged
merge r betwee n the two c ompanies .” China F irst’s Mot ion at 10. On June 6, 200 2, China F irst and Thre e Star re sponded to Commerce ’s supple

mental questionna

ire of Ma y 24 , 2002. I

n their
response s, the com

panies st ated tha t they had neve r merg ed as cla

imed by the DefendantInte rvenors . On June 11, 2002, Defendant-Interve nors submitted to Commerce a series of photographs taken at a Chinese

domestic t

rade fa ir held in B eijing f

rom May 7-9, 2002 , which th ey

said showed China First and Three Star jointly marketing pencils. They also submitted a series of do cu me nt s t ha t w er e i nc lu de d i n t he ad mi ni st ra ti ve re co rd of th e p re vi ou s r ev ie w. Su bs eq ue nt ly,6 An NME is defined as “any foreign country

that the administering authority determines does not op erate o n market principle s of cost or pricing structur es, so tha t sales of mercha ndise in such country do not re flect the fair value of the merchandise .” 19 U.S.C. § 1677(18) (2000). 8 on June 13, 2002, China First submitted a rebuttal including documents intended to explain the photographs. As a resu lt of the O rder, Co mmerce r eevalua ted the e vidence regar ding the relation ship between Three Star and China First. Commerce f ound that “the degree of interac tion between these two companies [was] far greater than . . . pr eviously believed and the form this interaction takes corresponds very

closely to Order

005 as it was issued by SL I, indicating that the orde r may have been effectively

implemented.” Issues and Decision Memorandum f or the Administrative Review of

Certain Ca sed Penc ils from th e People’ s Republic of China; F inal Resul

ts , Comment 12 at 36 (“ Issue s and Dec ision Memor andum”) . In a

ddition, Com

merce r ejecte d Plaintiff

s’
argume nts that cores shoul d be value d using private p arty price qu otes and i nstead c ontinued t

o use the I ndian I mport Stati stics. Commerce considers the PRC a nonmarket economy (“NME”) country , thus, classifying it as an administering authority which did not operate on market principles of cost or pricing structures, pursuant to 19 U.S.C. § 1677(18) (2000). 6 Commerce selected a surroga te market
economy ag ainst which to value the PRC’s factors of production (“FOPs”). 2 Guangdong During this administrative review, Guangdong responded to Commerce’s questionnaires under pr otest and request ed that Com

merce te rminate i ts review because it only exported p encils produced by T

hree Star, and thus, claimed it was excluded by the order during the period of7 Commerce stated tha

t Guang dong wa s excluded because under the NME metho dology : the zero r ate for each exporter is ba sed on a c ompariso n of the exporter’s U.S. price and FMV based on the factors of production of a specific producer (which may be a diff

erent party

). The exclusion, therefore, applies only to subject merchandise sold by the

exporter and manufactured by that specific producer. Mercha ndise tha t is sold by

the export

er but ma nufactu red by other pr oducers will be subject to the order, if one is issued. This is consistent with Jia Farn [ Jia Farn Manufacturing Co. v. United States , 17 CIT 187 (1993)] which held that exclusion of merchandise manufactured and sold by respondent did not cover mercha ndise sold

but not man

ufactur ed by responde nt. There fore, me

rchandi se that is sold

by C hina Fir st or Guan

gdong but produc ed by

another produce r is subject to suspension of liquidation at the “all others” cash deposit rate. Final Determination , 59 Fed. Reg. at 55,631.

8 Petitioners challenged Commerce’s Final De termination and Commerce requested and received a remand order f rom the Court to correct procedural deficie ncies in the investigation, and thereafter conducted a r emand investigation. The remand procee dings resulted in a

9 review. See Initiation of Antidumping Duty Investigations: Certain Cased Pencils F rom the People’s Republic of China and Thailand , 58 Fed. Reg. 64,548 (Dec. 8, 1993). Gua ngdong had been excluded previously f rom the original Antidumping Order beca use Commerce determined that Guangdong had a zero marg in and it exported pencils produced by T hree Star. Commerce explained that it excluded “from the application of any order issued imports of subject merchandise that are sold by . . . Guangdong and manufac tured by the produc ers whose factors formed the basis for the zero margin.” 7 Notice of Final De terminat ion of Sale s at L ess Than Fair Value: Certain Cased Pencils from the People’s Republic of China , 59 Fed. Reg. 55,625, 55,631 (Nov. 8, 1994) (“Final Determination”). The Final Determination did not include the identities of the referenced produce rs, however, the antidumping order issued on Dec ember 28, 1994, excluded the exporter/producer combination China First/China First, and Guangdong /Three Star. 8 Response Brief of Defendant-I ntervenors Pencil Section, Writing Instrumentdetermination that China First was selling pencils at less than fair value, but that Gua ngdong was not. The CIT and the Fede ral Circuit affirmed the remand determination. See Writing Instrument Mfrs. Ass’n, Pencil Section v. United States , 21 CIT 1185 (1997), aff’d without opinion , Writing Instrument Mfrs. Ass’n v. United States , 178 F.3d 1311 (Fed. Cir. 1998). Commerce issued an amended antidumping duty order that covered pencils made and e xported by China First, which excluded the exporter/producer combination Guangdong /Three Star. Certain Cased Pencils from the People’s Republic of China; Notice of Amended Final Determination of Sale s at Less than Fair Value and Amended Antidumping Duty Order in Accordance with Final Court De cision , 64 Fed. Reg. 25,275 (May

11, 1999). 10 Manufacturers Association, et al., Pursuant to Rule 56.2 to Brief F iled by China First Pencil Co., Ltd., et al. at 4 (“Defe

ndant-Intervenor’ s Response to China First”). On July 11, 2001, Guangdong and Three Star responded to Commerce’s supplemental questionnaire an

d provide d copies o f their f inancia l stateme nts for 20 00. Commer

ce found in its Final Results that the China First/Three Star entity was distinct from the Three Star entity which was excluded from the antidumping order. I ssues and Decision Memorandum, Comment 1 at 3. Commerce

decided not to exclu

de the Th ree Star /Guang dong sa

les chai n from the

order a nd to treat China First and Three Star as a single entity for the purpose s of assigning the antidumping duty rate. Ul timately , Commerc e assig

ned to Gua

ngdong the PRC-wid

e rate w ith respe ct to its other sa les. At the

time of the

initiation of the 199 9-2000 re

view, the China-wi de rate

applica ble to any company whose se parate rate wa s not ident

ified be cause it

had neve r respon ded to Commerce ’s questionnaires was 53.65 percen

t. Commerc e calcu

lated a ze ro antidu mping dut

y rate for Guangdong’ s exports to the United States of subject merchandise by Three Star and therefore excluded the Guangdong/Three Star e xport/production channel from the order. 3 Kaiyuan and Laizhou Commerce issued questionnaires to Kaiy uan and in response, Kaiy uan and its supplier11

Laizhou City G

uangming Pencil-Making Co., L td. (“Laizhou”), provided information conc erning the latter’s Factors of Production (“FOP”) in a Section D questionnaire response. L aizhou produced the subject merchandise exported by Kaiyuan, a

nd on April 27, 2001, Laizhou prepared the section D questionnaire response, which Kaiy uan filed with Commerce. Plaintiff Kaiy uan claimed that in its FOP data Laizhou included an inacc urate translation of the Chinese word “paraffin wax” that was unintentionally translated into “petrol wax.” Defendant-Inte

rvenors suggested that Commerce se ek additional information from Kaiyuan c oncerning La

izhou’s FOPs, because they believed that the information provided in the Section D response for a number of factors pr ovided insufficient detail for surrogate valua tion purposes. Commerce issued a request to Kaiy uan, and Kaiy

uan and Laizhou provided copies of invoices. Subsequently, other par ties to the review, but not Kaiyua n, submitted surrogate value data, including Indian a

nd Indonesian import statistics. The data submitted to Commerce included India n import sta

tistics fo r HTS subhe ading 9 610.20. I n the pre liminary

results, Commerce determined the surrogate va lue of petrol wax using Indonesian import statistics for HTS item 2712.90.900, “other petroleum jelly.” Commerce determined the value of the cores using Indian tariff subhe ading 9610.20. Kaiyuan submitted a letter dated February

8, 2002, which requested that Commerce make corrections on behalf of Kaiy uan and Laizhou. Kaiy

uan’s Motion at 3. In this letter, Kaiy uan identifie d the ty

pe of wa x used in the

producti on of its pe

ncils as “ Parafin

icmax- Mel

ting poin t: 53C-56C.” Id.9 By notice, d ated May 8, 2002, Co mmerce i

ndicate d that it wa s not practicable t o complete the review in the time allotted by statute and so extended the final results until July 16, 2002. 12 B. Results of the Department of Comm erce’s Investigation On July 25, 2003, C ommerce

published

a notice announc ing its fi

nal resu lts. 9 Final Results, 67 Fed. Reg. at 48,612. In those results, Commerce changed its rescission of the re view as to Guangdong and Three Star, found Three Star to be affiliated with China First, held that Th re e S ta r a nd Ch in a F ir st we re “s uf fi ci en tl y en tw in ed to wa rr an t a ss ig ni ng th e c om bi ne d e nt ry a separate rate,” and assig

ned Three Star the same rate as it found for China F irst. Guangdong was assigned the China-wide rate of 123 perc ent, the rate based on calculations for a new respondent. On July 30, 2002, Kaiy

uan asked Commerce to amend its Final Results to correct cler ical errors reflected in the calcula tion of Kaiyuan’s dumping margin. Memorandum from Holly A. Kuga, Senior Director, I

mport Administration, Office IV to Be rnard T. Carreau, Deputy Assistant Secretary for Import Administration, Group I I, Antidumping Duty Administrative Review of Certain Ca sed Penc ils from th e People’ s republi c of China -Final Re sults , Allegation of Ministeri al Errors; Kaiy

uan’s Mot

ion for Judg

ment on the

Agenc y Re cord, Ap

pendix at 9 (“Kaiyua n’s Appendix”). Commerce rejected Plaintiff Kaiy uan’s request that cores should be valued using private party price quotes and continued to use I ndian import statistics. Commerce rescinded the review with respect to L aizhou. Final Results, 67 Fed. Reg. at 48,612. Additionally, on July

31, 2002, Plaintiffs China First filed a submission alleging that Commerce made ministerial errors. Subsequently , on August 5, 2002, the Defendant-I ntervenors submitted comments rebutting some of Plaintiffs allegations. Commerce found that the f actual information13

su bm it te d i n s up po rt of

Ka iyu an ’s re qu es t f

or co rr ec ti on of

mi ni st er ia l e rr or s w as un ti me ly. By a notice dated September 11, 2002, Commerce revised its Final Results, and amende d the rates applicable to China First and SFTC, and consequently revised the China-wide rate to 114.9 percent. Amended Final Results, 67 Fed. Reg . at 59,049.
III Arguments A Plaintiffs C hina Firs t Plaintiffs China First argue that Commerce’s finding tha t Three Star is effectively part of China First is without basis, unsupported by substantial evidence , and contrary to law. Additionally, they

claim that Commerce erroneously initiated a review of Guangdong and then erroneously de

termined that Guangdong was not entitled to a separate rate, but rather the “Chinawide” ra te of 114. 90 perce

nt. This, th ey

argue , effectively

applied a dverse f acts ava ilable to Guangd ong. Fi nally , Plaintiff

s claim tha

t Commerc e erroneously

used I ndian import statisti cs to value black and color cores used by China First and SFTC’s suppliers. Defendant and Defendant-I ntervenors’ claim that Commerce’s decision to initiate a review o f Guang dong; a ssign Gu angdon g the PRC- wide mar

gin rat e; deter mine that C hina Fir st and Three Star are sufficiently intertwined and should be considered a single entity for purposes of review; and determine the surrog ate valuation for pencil cores using I ndian import data are supported by substantial evidenc e and otherwise in accordance w ith law.14 B Plaintiffs Kaiyuan Plaintiffs Kaiyuan ar

gue that Commerce’s use of a surrog ate value for “petrol wax,” instead of “paraffin wax,” is neither in accor dance with law nor supported by substantial evidence in the administrative record. Nor, Plaintiffs Kaiy uan claim, is Commerce’s use of surrogate value for black pe ncil cores in accordance with law and suppor ted by substantial evidence in the administrative record. Defendant and Defendant-I ntervenors claim that Commerce’s decision not to correct Plaintiffs Kaiyuan’s er

ror, and Commerce’s utilization of data from I ndian import statistics as the
surrog ate value for bla

ck penc il cores was suppor ted by substantia

l evidenc e and othe

rwise in accordance with law.

IV Standard of Review In reviewing

Commerce’s antidumping determinations, the court “shall hold unlawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in accordanc e with law.” 19 U.S.C. § 1 516a(b) (1)(B) (i) (199 9); Fujitsu General Ltd. v. United States , 88 F.3d 1 034, 1038 ( Fed. Cir . 1996). Su

bstantial evidenc e is defined as “such releva nt eviden ce as a r easonab le mind mig

ht acce pt as ade quate to s

upport a conclusion.” Timken Co. v. United States , 894 F.2d 385, 388 (

Fed. Cir . 1990); Consol. Edison Co. v. NL RB , 305 U.S. 197, 229, 59 S. Ct. 206, 83 L. Ed. 126 (1938). “Substantial evidence supporting an agency

determination must be based on the whole record, and a r eviewing court must take into account not only that which supports the a gency ’s conclusion, but also “whatever15

in the record fairly

detracts from its weight.” Melex USA, Inc. v. United States , 19 CIT 1130, 1132 ( 1995) (citi ng Universa l Camera Corp v. NL

RB , 34 0 U. S. 474 , 48 8, 7 1 S . C t. 456 , 95 L. Ed. 456 (1951)). However, the possibility of drawing two inconsistent conclusions from evidence contained in the record does not re nder Commerce’s conclusion unsupported by substantial evidence. Consolo v. Federal Maritime Comm’n , 383 U.S. 607, 620, 81 S. Ct. 1018, 16 L. Ed. 2d 131 (1966). The court determines whether Commerce’s inter pretation and application of the antidumping statutes are “in accordanc e with law” by a pplying the two-ste

p analysis presc

ribed in Chevron U.S.A. Inc. v. Natura l Res. Def. Council, Inc. , 467 U.S. 837, 842, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984) (“Chevron”). Under the first step, the Court review s Commerce’s construction of the statute to determine whether Congre ss has directly spoken to the que stion at issue. See id. at 842. If the statute unambiguously deals with the matter at issue, the court and the agency

must give deference to Congre ss’s intent. Id. at 842-43. The court determines Congre ss’s inten

t by employ ing the “ traditional tools of

statutory construction,” by

first examining the statute’s text and giving it its plain meaning, because a sta tute’s text is Congress’s final expression of its intent. Id. at 843 n.9. “If the intent of Congr ess is clear, that is the end of the matter.” Id. at 842 If, after e mploying the first prong

of the Chevron two-step analy sis, the court determines that the statute is silent or ambiguous as to the issue, the court must then decide whether Commerce ’s constr

uction is p ermissibl e, ratio nal, rea sonable, and supported by the rec ord as a whole. See id. , 467 U.S. a t 843; Koyo Seiko Co. v. United States , 24 CIT 364, 367 (2000). The court examines Commerce’s interpretation to determine whether it is rea sonable by consider ing16

such fac tors as the

express te

rms of the

provision s at issue, the objectives of those provi sions, and the objectives of the antidumping scheme as a whole

. See Mitsubishi Heavy I ndus. v. United States , 22 CIT 541, 545 (1998). V Discussion Commerce is required to impose antidumping duties on foreign g oods that are being or are likely to be sold in the United States a t less than fair value. 19 U.S.C. § 1673(1) (2000); Micron Tech., Inc. v. U

nited States , 243 F.3d 1301, 1303 (Fed. Cir. 2001). Administrative reviews of antidumping duties are conducted in ac cordance with 19 U.S.C.§ 1675 (2000). Section 1675(a)(2)(A) requires that Commerce “determine . . . the normal value [“NV”] and export price [“EP”] (or constructed export price [“CEP”]) of each entry of subject merchandise, and . . . the dumping margin for eac h such entry.”

19 U.S.C. § 1675(a)(2)(A). The dumping margin is the difference betwe en the NV and the export price EP or CEP of the subject merchandise. 19 U.S.C. § 1677b(a) (2000). In a “market e conomy” antidumping case, the NV of a product is the price at whic h the foreig n produc t is first so ld in the e xporting c ountry . 19 U.S.C. § 1677b(a )(1)(B )(i); Shakeproof Assembly Components Div. of Ill. Tool Works v. United States , 268 F.3d 1376, 1379 (Fed. Cir. 2001). Antidumping cases involving an NME, however, re quire that the subject product’s NV be determined, if possible, as if a market economy country wer

e involved. See Baoding

Yude Che

m. Indus. Co. v. United States , 170 F. Supp. 2d 1335, 1337 (2001). The antidumping statute provides that if subject merchandise is exported from an NME, and “the administering authority finds that available information does not permit the normal10 Additionally, 19 C.F.R. § 351.408(c) (2000) provides for the calculation of NV for mercha ndise fr om NME cou

ntries. I t states th at: For purposes of valuing the factors of production, general expenses, profit, and the cost of containers, coverings, and other expenses . . . under section 773(c)(1) of the Act the following rules wil l apply : (1) I nformati on used to v alue fa ctors. [Com

merce] no

rmally will use pu

blicly available information to value factors. However , where a factor is purchased f rom a m ar ke t e co no my s up pl ie r a nd pa id fo r i n a ma rk et ec on om y cu rr en cy, [C om mer ce] nor mal ly wi ll use th e pr ice pai d t o t he m ark et e con om y sup pl ier . In those insta

nces whe re a por tion of the

factor is purcha sed from

a market economy supplier and the remainder from a nonmarket ec onomy supplier, [Commerce] normally will value

the fac tor using

the pric e paid to t

he marke t economy supplier. 17 value of the subject merchandise to be determined,” Commerce “shall determine the normal value of the subje ct merchandise on the basis of the va lue of the factor s of produ

ction utili zed in producin g the me rchandi se.” 19 U .S.C. § 1677 b(c)(1 ); Anshan Iron & Steel Co. v. United States , __CIT__, SLI

P OP. 2003-83 at 8-9, 2003 Ct. Int’l Trade L EXIS 109 (July

16, 2003). Commerce may determine the

NV of merchandise exported from an NME by valuing the FOPs based on the “best available information” in “one or more marke t economy countries tha

t are at a level of economic development compa

rable to that of the

non-mar ket econ omy country ” and tha t is a significant producer of mercha ndise “comparable” to the subject merchandise, pur suant to 19 U.S.C. § 1677b(c)(1)-(2). 10 Under th e statute , Commerc e has “br oad discr etion to de

termine t he ‘best availab le information’ in a reasonable manner on a ca se-by-c ase basis.” Timken Co. v. United States , 201 F. Supp. 2d 1316, 1321 (CIT 2002). I n general, Commerce derives the be st available information from the answers to the questionnaires issued during the cour se of the investigation. In making its determination, Commerce must also assess the reliability of the NME company’ s information11 In its Preliminary Results, Commerce stated that “[i]n every ca se conducted by [Commerce] involving the PRC, the PRC has been treated as an NME.” Preliminary Results, 67 Fed. Reg. at 2,405. None of the parties to this proce eding contested Commerce’s treatment of the PRC as an NME. Id.

12 In 1991, Commerce determined tha t individual dumping rates were inappropriate in an NME count

ry , and NME e

xporters w ould be sub

ject to a s ingle, c ountry

wide anti dumping d

uty rate unl ess they

demonstr

ated legal, fina

ncial an d economi c indepe

ndence from thei r government. Transcom , 294 F.3d at 1373; see Iron Construction Castings From the People’ s Republic of China; Final Results of Antidumping Duty Administrative Revie w , 56 Fed . Reg. 2,742, 2,744 (Jan. 24, 1991). This is referred to as the NME Presumption. Sigma Corp. v, United States , 20 CIT 852, 858 (1996). 18 and determine whether it does constitute the best available information for purposes of the FOP analysis. Olympia I

ndus., Inc. v. United States , 23 CIT 80, 83 (1999). Once the investigation is complete, Commerce instructs the United States Bur eau of Customs and

Border Protection (“Custom s”) to as sess antid umping du

ties. Comme

rce con ducts its administrative review in antidumping proceedings involving NMEs, suc h as the PRC, with the rebutta ble pres umption tha

t all compa

nies withi n the coun

try are subj ect to g overnme

nt contro l. 11 Sigma Corp. v. United States , 117 F.3d 1401, 1405 (Fed. Cir. 1997). All companies are asse ssed a single antidumping duty deposit rate unless they de monstrate that they ar

e independent of
gover nment con

trol. Commerce’s instruction to Customs to apply the “all others” r ate in an NME inves tigation

is limited to

companie s that esta

blished th eir entit

lement to a

separa te rate and expressed a willingness to participate at the investigative sta ge, but which Commerce did not investig ate. This

is unlike ma

rket ec onomy

cases, i n which Com

merce a pplies the “all othe rs” rate to companies for which a company -specific rate is not applicable. 12 See Transcom, Inc. v. United States , 294 F.3d 1371, 1373 (Fed. Cir. 2002).19 A Comm erce’ s Deter minatio n that Thre e Star and C hina Firs t Should be Co llapsed and

Considered a Single Entity is not in Accordance With the Law In its Final Results, Commerce concluded that China F irst and Three Star were “sufficiently inter

twined to warrant assigning the combined e ntity a separa

te rate.” Issues a

nd Decision Memorandum, Comment 12 at 35. Plaintiffs China First claim that Commerce erroneously f

ound that Three Star was effectively part of China First. Although not required by the Tariff Act of 1930, Commerce has a pra ctice of assigning multiple entities a single antidumping margin in a market ec onomy case whe n it determines that the entities are affiliated during an antidumping review. See Hontex Enters., Inc. v. United States , 248 F. Su

pp. 2d 1323 , 1338 (CI

T 2003); see also Antidumping Manual , Chapter 7 at 24. Comm erce “co llaps es” th ose co mpani es int o one a nd th en calc ulate s a sin gle wei ghted- average margin for those affiliated companies. In or der to co llapse c ompanies in a mark

et econo my investigation, Commerce must first determine that the companies are a ffiliated. Pursuant to 19 U.S.C. § 1677(33)(F), affiliated or affiliated persons means “two or more persons directly or indirectly controlling , controlled by, or unde r common control with, any pe rson.” After determining affiliation, Commerce then examines whether the produc ers share “production facilities for similar or identical products.” 19 C.F.R. § 351.401(f)(1) (2000) . Finally, Commerce determines whether there is “significa nt potential for the manipulation of price or production.” 19 C.F.R. § 351.401(f)(2). Commerce’s initial affiliation determination is concerne d with the parties potential to impact decisions concerning price or production , while Commerce’s collapsing determination is concerned with the potential for manipulation of pr ice or production by the parties.13 The reg ulation, 1 9 C.F.R. § 3 51.401(f ), provid es that the

affilia ted produ cers in antidumping proceedings are tre ated as a single entity where: those producers have production facilities for similar or identica l products that would not require substantial retooling of either facility in order to restructure manufacturing priorities and the Secreta ry conclude s that there is a significant potential for the manipulation of price or production. (2) Significant potential for manipulation. I n identifying a

significant potential for the manipulation of price or production, the factors the Secretary may consider inc lude: (i) The level of common ownership; (ii) The extent to which managerial employ ees or board members of one firm sit on the board of directors of an affiliated firm; and (iii) Whether operations are intertwined, such as throug h the sharing of sales information, involvement in production and pricing decisions, the sharing of fac ilities or employees, or signific ant tran sactions

betwee n the aff iliated pr oducers

. 19 C.F.R. § 351.401(f). 20 In making its collapsing de termination, Commerce considers factors such as the level of common ownership, the presence of interlocking boards of directors, and the extent to which the companie s are inte

rtwined a s evidenc ed by

coordina tion of pr icing de cisions, s hared e

mploy ees,
or trans actions b etween

the compa

nies. 13 Id. ; see Allied Tube & Conduit Corp. v. United States , 24 CIT 1357, 1374 (2000). Collapsing “has be en reviewed by this court in the context of market economy produc ers,” and found to be a permissible interpretation of the antidumping statute. Hontex , 248 F. Supp. 2d at 1338.21 1 Comm erce’ s “Sufficientl y Intert wined” Met hodology in t his Case is no t a Per missible Interpretation of the Antidumping Statute Commerce

determined that Chi

na First and Thre e Star we

re a sing le entity and should receive a single antidumping duty margin. Defendant claims that the market e conomy reg ulatory “collap sing” a

naly sis is not dir

ectly applica ble beca use China First an d Three Star are NME producers. Commerce stated that “antidumping ca ses involving nonmarket economies are unique because the centralized pricing a nd production decisions of these countries make internal pri ces and cos ts ‘in her ent ly su spe ct. ’” Is sue s an d De cis io ns M emo ran dum , C om men t 1 2 at 35. It also state d that bec ause the statutes a nd reg ulations d o not provi de explicit

guidance on how

to analyze rela

tionships between companies located in a nonmarket economy country, it analy

zes their relationships on a case-by -case basis. Id. Defendant stated that when “determining w hether [China First] and Three Star should be treated as a sing le entity

, Commerc e conside

red whether the

companie s were ‘ sufficie ntly intertwined.’” D efenda

nt’s Oppo sition at 15 ; see Issues and Decisions Memorandum, Comment 12 at 35. Becau se the co llapsing statute is silent in th e NME con

text, Commer

ce’s g eneral ly conferred authority

permits the agency

to address the ambiguity

. See United States v. Mead , 533 U.S. 218, 229, 121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001. A reviewing cour t “is obliged to accept Commerce’s position if Congress has not previously spoken to the point at issue and the agency ’s interpretation is reasonable.” Mead , 533 U.S. a t 229; see Chevron467 U.S. a t 843-44. “ The fair

measure of defe rence t o an ag ency

administe

ring its own statute

has been understo od to vary

with ci rc um st an ce s, an d c ou rt s h av e l oo ke d t o t he de gr ee of th e a ge nc y’s ca re , i ts co ns is te nc y, formality, and re lative expertness, and to the persuasiveness of the age ncy’s position.” Mead , 53314 In Koenig , the court had originally ordered a remand because Commerce had not substantiated its decision to collapse plaintiff’s affiliated companies in determining antidumping duties for respondent’s merchandise imported into the United States. The plaintiff had e xported a product produced at one location from a subsidiary in another location. The court stated in a footnote that Comme

rce must d

ecide “ whether the aff iliated c ompanies

are suf ficientl y intertwined as to permit the possibility of price manipulation.” Koenig , 24 C IT at 160 n.5 . It reviewed Commerce’s remand deter mination and stated that because Commerce had considere d factors such as the level of common ownership; whether the companies had interlocking boards of directors; whe

ther the companie s had prod

uction fa cilities f or similar or identic al produc

ts; and whether the companies operations were intertwined, as evidenced by coordination in pricing decisions, shared employees or transactions between the companies, its deter mination was permissible. Id. 22 U.S. at 228 ; see Chevron , 467 U.S. at 842-43. To uphold Commerce’s NME collapsing methodology, Commerc e must have clearly articulated which set of factors formed the ba sis of its collapsing determination. See Hontex , 248 F. Supp. 2d at 1341 (CIT 2003). Commerce has not articulated a cognizable proc edure for collapsing NME companies nor has it followed its former methodology . In determining whe ther Commerce’s collapsing practice is in accordance with law in this case, “the question for the c ourt is whether the agency ’s answer is based on a permissible construction of the statute.” 14 Koenig & Bauer- Albert A.G. v. United States , 24 C IT 157, 1 59 (ci ting Chevron , 467 U.S. at 843). Prior to the reduction of Commerce’s current collapsing methodology in market economy c ases to regulations, the court in Queen’s Flowers de Colom. v. United States , 21 CIT 968, 979 (1997) reviewe d Commerce’s market economy collapsing

methodology, a

nd stated that because Commerce had “articula ted a

reasona ble set of inquiries for answ ering t

he centr al question, whethe

r partie s are suf

ficientl y related to present the possibility of pr ice manipulation . . . the Court finds Commerce’s articulation of collapsing factors . . . to be in acc ordance with law.” Hontex , 248 F. Supp. 2d at 1342 ( citi ng Queen’ s Flowers, 981 F. Supp. at 628). The court’s analysis in Hontex further15 In g eneral , the cour t is not boun

d by the age ncy regula tions, but r

ather is o bliged t o apply the statutory

provisions. See Writing Instrument Mfrs. Ass’n, Pencil Section v. United States , 21 C.I.T. 1185, 1193 (1997). Thus, if Commerce choose s to focus on the statutory language to the neg lect of its own regulations in making its determination the court will review the statutory interpre

tation to see if it is in accordance with law. See id. Commerce’s regulations do not stand on their own, but rather find their basis in the statutory language. See id.

16 In Hontex , Commerce considered whether two companies we re “connected in such a way that it wou

ld frustr ate the p urpose of the statut e to gra nt [them] sep arate a

ntidumping

duty margins.” 248 F. Supp. 2d at 1341. Specifically , it considered whether the record showed a ny control relationships that may have existed between the two companies as contemplated by 19 U.S.C. § 1677(33). Furthermore, in the Department of Commerce’s Final Results of Determination Pursuant to Court Remand , for Hontex , 248 F. Supp. 2d at 1323, Public Version of Propri etary

Doc. A-5 70-848 a

t 9, Commer

ce state s that in examining whether NME exporters should be collapsed and treated as one entity, the Depar

tment applies the factors identified in its regulations concerning collapsing, in addition to examining the export decisions of the exporters being examined. In a

ddressin g wheth er a sig

nifican t potentia l for mani pulation e xists, the Department will consider whether there is common control among the exporters based on the concept of control provided for in section 771(33) of the act. 23 explained that “to the extent that Commerce has followed its market economy collapsing regulations the NME exporter collapsing methodology is necessarily pe

rmissible. Where the NME export

er metho dology

departs from thes e regu

lations, however , the cour t must examin e it to determine whether it is a permissible interpretation of the antidumping statute.” Id. In thi s case, Co mmerce has depar ted from t he reg ulations a nd interpreted th e antidum ping sta tutes. 15 One of its decisions was that 19 U.S.C. § 1677(33)(F)’s definition of affiliated, “ two or more persons directly c ontrolling, controlled by, or under common control with, any person” was not instructi ve in the N

ME context. Defend

ant’s Opp osition at 1 6. Commerc e is free to develo p its practice regarding

NME collapsing. However, in Hontex , Commerce found 19 U.S.C. § 1677(33)(F) instructive. 16 248 F. Supp. 2d at 1342 (stating that “[h]ere, Commerce identified 1924

U.S.C. § 1677(33)(F) as ‘instructive’ for determining whether two NME exporters are affiliated . . . . [T]o the e

xtent that Co mmerce i

nvestig ated by

means of questionnaires a

nd otherw

ise in accordance with established reg ulations whether the Companies were affiliated, such portion of its [collapsing] methodology is a permissible interpre tation of the antidumping statue.”). Commerce

has not expl ained ad

equatel y w hy a ffiliatio n is not simila

rly instructi ve in this instance. It appears that Commerce examined the information before it and, based on that information, determined which portions of its market economy collapsing regulations were satisfied and deemed the remainder of the re gulations inapplicable. Defendant states in its brief that “[t]he intertwining of [China First] and Three Star creates the significa nt potential for manipulation because [China First/Three Star] can circumvent the order by utilizing the exclusion granted to the Guangdong/Thre e Star export/production channel.” Defendant’s Opposition at 25. Defendant-Inter venors provided Commerce with information regar ding the relationship between Three Star and China First Pencil. Fina l Results, 67 Fed. Reg. at 48,612. They submitted a

document

issued in Jan

uary 1997 req uiring Ch ina Firs t and Thre e Star to merge. The document is entitled the “Order of Shanghai Lig

ht Industry

Holding (Group), Order # (1997) 005” (“the Order”), a nd addresses China First and Shanghai Pen & Penc il Company. According to the Defendant-I ntervenors, the Order directs China First to absorb Thr ee Star’s capital a nd form a group c ompany

that inclu

des Thre e Star. A dditionall y, t he Orde r instruc ts China First to manage Three Star and c oordinate its sales and purchases during the ca pital reorganization. Plaintiffs China First claim that “[a]s China First documented over the course of two separate reviews, through the disclosure of financial statements spanning a five-y ear period,25

China First has never

invested in, purchased, merged with, or eve n engaged in joint marketing efforts with Three Star.” China First’s Motion at 20 (emphasis in origina l). Commerce appears to have relied sig nificantly on the Orde

r in making its determination to collapse China First and Three Star. Commerce found that the timing a nd circumstances surrounding certain loans called into question China First’s claim that it was Thre e Star’s competitor. Commerce also found that evidence on the rec ord indicated that China First changed its name from China First Pencil Co., Ltd. to China First Pencil Group Co., L td. See Issues and Decision Memorandum, Comment 12 at 37. Commerce noted that the internet page that Defend ant-I nterven ors submitt

ed showe d that Thr

ee Star’ s addres s was the s ame as Chi na First , except for the floor number. Therefore, ba sed on the information submitted by the Defendant-Inte

rvenors, Commerce found that the degre e of interaction between the two
compa nies w as great er than previ ousl y believe d, and that t he int eracti on bet ween t he com pany's took a form corresponding very closely to the Orde

r as issued by SL

I. Defendant states in its brief that “the issue here is not whether [China First] and Thre e Star actually mer

ged. Rather, the issue is whether [China First] and Three Star ac ted in a manner demonstrating that they

are sufficiently

intertwined, creating the potential for manipulation.” Defendant’s Opposition at 24. Commerce’s actions should promote rule of law; supremacy of specifically

defined government practice, over a rbitrary g overnment action. Absent a definite and articulated set of inquiries, the court is unable to determine whether Commerce’s c onclusion that the companies did in fact act in a manner that created the pote ntial for manipulation was reasonable. Commerce decided that Three Star was effe ctively part of China F irst, and consequently, the pote ntial for17 Defend ant state d in its brie f that Commerce was concerned about the potential manipulation bec ause Three Star and [China First] are producers of the subject merchandise. The intertwining of [China First] and Three Star creates the significant potential for manipulation because [China First/Three Star] can circumvent the order by utilizing the exclusion granted to the Guangdong/Thre e Star export/ production channel. As Commerce

stated: We note tha

t in finding

Three Sta

r and [China

First] suf ficientl y intertwined to war

rant ass igning

the combi

ned entit y a separa te rate, we are also finding that Thre e Star's sales through Guang dong are no longer excluded from the order . These determinations reflect the fact that, ba sed on the evidenc e, Thre e Star is e ffectiv ely part of [Ch

ina Firs t], and at le ast does n ot opera te as a se parate entity . Conseque

ntly , the pote

ntial for manipula tion betwe en these two entitie s is signif

icant. Defendant’s Opposition at 25 (citing I ssues and Decision Memorandum, Comment 12 at 35). 26 manipula tion betwe en these

two entitie s was sig

nifican t. 17 This conclusion has no legal basis. On remand, Commerce must articulate a set of inquiries or methodolog y through w

hich the court
may independ ently ascert ain whether the e

vidence supports Commerce’ s finding s. Plaintiffs China First argue that even if Commerce c onsidered China First and Three Star to be affiliated, there was no basis upon which to collapse them. Plaintiffs China First claim that Three Star was a subsidiary of SLI and that SLI

was Three Star’s sole investor and manag ing authority . The cou

rt will not d

ecide in this case whether this infor mation is sufficien

t to collap se China First and Thr

ee Star b ecause

Commerce

has faile d to artic

ulate an accept able NME collapsing methodology

under which the court might examine the basis for its decision.18 Furthermore, 19 C.F.R. § 351.204(e)(3) provides this example: During the period of investigation, Exporter A exports to the United States subject merchandise produced by Producer X. Based on an examination of Exporter A, the Secr etary determines that the

dumping margins

with resp ect to the se exports are de minimi

s , and the Secretary

excludes Exporter A. Normally, the exclusion of Exporter A would be limited to subject merchandise produced by Producer X. If E xporter A b egan to

export subj ect merc

handise produced

by Pr oducer Y , this me rc ha nd is e w ou ld be su bj ec t t o t he an ti du mp in g d ut y or de r, if an y.

19 The orde

r’s lang uage w as based

on the final deter

mination’ s conclus ion that it “ would exclude from an order imports of subject merchandise that are sold by either China First or Guangdong and manufac

tured by the produc ers whose factors formed the basis for the zero margin .” Antidu

mping Or der, 59 F ed. Reg . at 66,91 0; See Response Brief o f Defen

dantInte rvenors Pencil Sec

tion, Writin

g I nstrumen t Manufa cturer s Associa

tion, et a l., Pursua nt to 27 B. Comm erce’ s Deter minatio n Regarding Guangdong Is Not Ac cordance with the Law and Must be Re-Examined Plaintiffs China First claim that a negative dumping finding r equires that any

reseller found, on a weighted-averag e basis, not to be dumping is excluded from the order. An antidumping duty order

is issued when an a final determination of an antidumping investiga tion is affirmative. 19 U.S.C. § 1673d(c)(2) (2000). 19 C.F.R. § 351.204(e)(3) (2000) provides that “[i]n the case of an exporter that is not the producer of subject merchandise, the Secretary normally will limit an exclusion of the exporter to subject merchandise of those pr oducers that supplied the exporter during the period of investigation.” 18 In the initial antidumping order, Guangd ong, wh o is a res eller/exporter of pencils, was dete

rmined no t to be sell ing pencils at le ss than fair value, Notice of Final Determination of Sales at L ess Than Fair Value: Certain Cased Pencils From the People’s Republic of China , 59 Fed. Reg. 55,625, 55,631 (Nov. 8, 1994), and was excluded from the order, Antidumping Duty Orde r: Certain Cased Pencils from the People’s Republic of China , 59 Fed. Reg. 66,909 (Dec. 28, 1994) (“ Antidumping Order”). 19 China First’sRule 56.2 t o Brief Filed by China First Pencil Co ., Ltd . et al.( “Defe ndant-I nterven or’s Resp onse to China First”) at 4.

20 Section 353.21 required that Commerce publish in the Federal Register an “Antidumping Duty Or

der” that excluded from the application of the order any producer or reseller for which it found that “there was no w eighted-averag e dumping margin during the period for which [Commerce] measured dumping in the investigation.” This sec tion was replaced by

19 C.F.R. § 351.204(e) (1997), which states that “[Commerce] will exclude from an affirmative final determination under section . . . 735(a) of the Act or an order under section . . . 736(a) of the Act, any

exporter or producer for which [it] determines an individual weighted-averag e dumping margin . . . of zero or de minimi s .” “I n the cas e of an exporter tha t is not the producer of the subject merchandise, [Commerce] normally will limit an exclusion of the exporter to subject merchandise of those producers that supplied the exporter during the period of investigation.” 19 C.F.R. § 351.204(3). 28 Motion at 3. Commerce had originally indicated that the exclusion of Guangdong from the antidumping order was in accordanc e with 19 C.F.R. § 353.21 (1994) and consistent with Jia Farn Mfg. Co. v. United States , 17 CIT 187 (1993)

. 20 Plaintiff s claim tha

t the conc erns ra

ised in Jia Farnare not present in this case and Guangdong should have been excluded from the review. In Jia Farn , a produ

cer/expo rter wa s excluded from an a

ntidumping

order a s a producer/exporter. The plaintiff was allege d to be circumventing the antidumping order by acting as a reseller of products manufacture d or produced by other companies whose products were subject to the orde r. Commer

ce dete rmined tha

t Jia Farn was tran sshipping

mercha ndise manufactured by

other companies under the order. Commerce a rgued that it had authority under 19 U.S.C. § 1675 to conduct administrative reviews of Jia Farn as a reseller, e xporting the merchandise produced by other manufacturers. Jia Farn , 17 CIT at 191. The court explained that “the excl usion of a firm fro m the orde

r applie s only

when the firm act s in the sa

me capa city as it was excluded from the order.” Id. at 192. L ikewise, in this cas e, the re gulations permit29

Commerce to include Guangdong if it begins to export merchandise produced by a supplier subject to the antidumping order. See 19 C.F.R. § 351.204 ( 2000); Jia Farn , 17 CIT at 192-93

. Thus explained , Commerc e has the authority to inquire

whether shipment o f merch andise to another manufacturer subjected it to the antidumping or der. Commerce properly

asked that quest ion ab out Gu angdon g. Pl ai nt if fs al so ar gu e t ha t, if

Ch in a F ir st an d T hr ee St ar ar e c ol la ps ed in to on e e nt it y, Guangdong should receive the collapsed rate because it coopera ted in the review, underwent verification, and only

exported pencils from Three-Star. See China First Motion at 38. The exclusion g

iven to Guangdon

g in the a ntidumping

order w as narr

ow, and it particip ated in th

is antidumping review and had sufficient notice that if it exported goods from one of the named producers it would be subject to their antidumping rate. Id. at 41. Af ter par ticipatin g in this review, however, Commerce then assig ned Guangdong the China-wide ra te. Commerce’s practice as to NME exporters is to presume all exporters are under the control o f the ce

ntral g overnme

nt until the

y de monstrate an absen ce of g overnme

nt contro l. This approach has been upheld by the courts. Air Prods. & Chems. Inc. v. United States , 22 CIT 433, 436 (1998 ); Sigma Corp. , 117 F.3d at 1405 (Fed. Cir. 1997). “ Those exporters who do not respond or fail to prove absence of de jure/de facto control are assigned the country -wide rate. Therefore, a NME exporter normally receives one of two rates: either the sepa rate rate for which it qualified or a country -wide rate.” Coalition for the Pres. of Am. Brake Drum and Rotor Aftermkt. Mfrs. v. United States , 23 C IT 88, 10 7 (199 9) (ci ting Transcom Inc. v. United States , 22 CIT 315, 322 (1998). “This approac h obviates the need for an ‘all others’ rate calculation.” Coalition , 23 CIT at 107. Defendant states in its brief tha t “[a]n ‘all others’ rate was not21 Additionally, in Notice of Preliminary D etermination of Sales at Less Than F air Value:

Honey fr om the People’s Republic of China , 60 Fed. Reg. 14,725, 14,729-30 (Mar. 20, 1995), Commerce

confron ted a situa

tion wher e “admin istrative constra ints prev ented it f

rom fully investigating NME Respondents who complied fully with questionnaire requests.” Coalition , 23 CIT at 110. I

t stated that Because it would not be appropriate for the Department to refuse to consider an affirmative documented request for an e xamination of whether these companies were independent of any

non-respondent firms and then assign to the coopera tive firms the rate fo r the nonc ooperat

ive firms , which in

this case is an adve

rse margin based on best information available, the Depa rtment has assigned a special single r ate for these fir ms. Id. (quot ing Notice of Preliminary D etermination of Sales at Less Than F air Value: Honey from the People’s Republic of China , 60 Fed. Reg. at 14,729-30).

22 In Coalition , Commerc e “inves tigat[ed ] the selec

ted resp ondents a

nd [after ] finding all but two qualified for separate rates, Commerce c oncluded that an average mar gin based on the selected Respondents should be assigned to the fully cooperative but uninvestigated Responde nts.” 23 CI

T at 108; see Notice of

Final De terminat ions of Sal es at L ess Than Fair Value: Brake Drums and Bra ke Rotors from the People’s Republic of China , 62 Fed. Reg. 9,160, 9,173-74 (Feb. 2 8, 1997). “Commerc e reasoned that i t would be

inappropriate to a ssign a r ate based on adverse facts a vailable that would

also appl y to PRC exporters who ref

used to 30 calculated during the investigative stag e of this proceeding. Guangdong cites no precedent, and none exists , for ca

lculating an ‘all o thers’ r

ate duri ng an a dministra tive review of an

NME proceeding.” Defenda

nt’s Opposition at 30. In Coalition , which was an NME antidumping investigation, Commerce did assign an “all others” r ate, which this court found to be a reasonable. 21 23 CIT at 107-12. The respondents in Coalition who proved an absence of government control received sepa rate company-specific rates during the investiga tion; respondents who fully pa rticipated in the review, but who were not investigate d, received averaged non-adver

se “all others” rates; and respondents who did not qualify for separate rates or those who

did not re spond to questionna ires rec eived the

China-wi de rate

based on adverse facts available. 22 See Id. at 107. Therefore, precede nt does exist for assigning an “all others” rate.cooperate. Coalition , 23 CIT at 108.

23 In the Preliminary

Results Commerce stated that it was [P] relim inari ly rescin ding t his re view w ith re spect to Thr ee Sta r and [ Guangd ong] because they

made no shipments of subject merchandise to the United States during the POR. The Department reviewed Customs data which indica tes that Three Star and [Guangdong] did not export subject merchandise to the United States during the POR. . . . 67 Fed. Reg. at 2,403.

31 Whether Co mmerce u

ltimately determines that Th

ree Star and China

First ar e one en tity and should

be colla psed doe s not neg ate the e vidence that Guan

gdong only exported p encils produced by T

hree Star. Moreover, Guangdong cooperated in this administrative review. 23 China First’s Motion

at 38; see Preliminary Results, 67 Fed. Reg . at 2,402. Commerce verified that Guangdong only

exported pencils from Three Star. Id. In its verification report for Guangd ong, Comm erce st

ated tha t “[a]ll of th e U.S. sal es that we examined w ere of p encils manufactured by

Three Star. We found no evidence that pencils sold to the United States were procured from producers other than Thr ee Star.” Memorandum from Case Analy sts to The File, No Shipmen

t Verific ation of G

uangdong Stationary

& Sportin

g Goods I mport & E

xport Corp. i

n the 1999-2000 Administrative Review of Certain Cased Pencils from the People’s Republic of China (A-570-827) at 4, China First’s Appendix to Brief, Vol. I II , Exhibit 9. Commerce did not find that Guangdong either transshipped pe ncils from China First or sold pencils made by China First. The record evidence solely shows that Guangdong sold pencils made by Three Star. Plaintiff s China Fi

rst arg ue that by virtue of Guangd ong’s p articipa

tion in the r

eview a nd its verification that it only exports pencils produce d by Three Star, Commerce’s application of the24 Commerce may employ adverse infere nces to a party who has no t cooper

ated in supply ing missin

g infor mation “to

ensure t hat the pa rty does not ob tain a mor

e favor able re sult by f ailing to coopera te than if it had coo

perate d fully .” Urug

uay Round Ag

reemen ts Act, Statement of Administrative Action, H.R. Doc. No. 103-826 at 870 (1994). 32 China-Wide rate effectively applied adverse facts available to Guangdong. Commerce has previously assigned the China-wide rate to respondents who did not qualify for sepa rate ra tes or tho se who did

not respond to quest

ionnaire s based on

adverse facts available. See Coalition , 23 CIT at 107. I t has assigned an “all others” rate to c ooperative, participating respondents. Commerce normally calculate its antidumping assessment rate by “dividing the dumping margin found on the subject mer chandise examined by the e ntered value of such merchandise for normal customs duty purposes.” 19 C.F.R. § 351.212(b)(1) (2000). And the co urt ha s prev ious ly found t hat Co mmerc e’s ass ignmen t of a r ate wh ich is the si mple a verage of dumping margins determined for the e xporters individually investigated to be in ac cordance with the law. Coalition , 23 CIT at 111-12. Certainl y, t he antidu mping sta tutes gi ve Commer

ce the di scretion

to apply an adve rse inference when a party

fails to comply with its requests for informa tion for determining that

rate. 24 See 19 U.S.C. § 1677e(b) (2000). However, in order to make this infere nce, Commerce must first make a determination that facts available is warra nted pursuant to 19 U.S.C. § 1677e(a ). Follow ing that determination, Comm erce ma y th en apply

an adve rse infe rence i f Commerce makes the additional finding that “an interested pa rty has failed to c ooperate by not acting to the best of its ability to comply with a request for information.” 19 U.S.C. § 1677e(b). In apply ing adverse facts available, Commerc e must articulate the reasons for its determination that a party f

ailed to act to the best of its ability. Mannesmannrohren-Werke AG v. United States ,25 In Shandong Huarong Gen. Group Corp. v. U nited States , Slip-Op. 2003-135 at 61-62, 2003 Ct. Intl. Trade L

EXIS 153 (Oct. 22, 2003), the court f ound that Commerce’s determination to reject the Companies’ separate rates e vidence and, thus, assign them the PRC-wide antidumpin

g duty margin based on the pres umption of

state co ntrol due

to verifi cation f

ailures, the inadequacy

of cooperation and the lack of integr ity of reported da

ta “cannot be the basis for assigni ng the Co mpanies the PRC-wide antidumpin

g duty margin based on facts a vailable , as it is clear the Companies did provide evidence of their entitlement to separ ate rates and there is no indication that any nec essary infor mation was missing or incomplete. See [ Nippon Steel Corp. v. United States , 337 F.3d 1373, 1381 (Fed. Cir. 2003)].” The court did not uphold Commerce’s determination in part because the parties in the case provided evidence of their independence from go vernmen

t control w

hich Comme

rce ver ified, a nd thus, the

court did not sustain Commerce’s determination that the Companies should be assigned the PRC-wide antidumping duty marg in based on facts available. Id. at 62-64. 33 23 CIT 826, 838 (1999). I f Commere applies an adverse facts ava ilable rate, it must “balance the statutory objective of f

inding an accurate dumping mar gin and inducing compliance, rather than creating an overly

punitive result.” Timken Co. v. United States , 354 F.3d 1334, 1345 (Fed. Cir. 2004); see F.lli De Cecco di Filippo Fara S. Martino S.p.A. v. United States , 216 F.3d 1027, 1032-33 (Fed. Cir. 2000). Moreover, the court in Usinor Sacilor v. United States , rejected an adverse facts available rate f or a respondent who has substantially complied with Commerce’s requests. 19 CIT 1314, 1316 (1995) (“assessing the circumstances pre sent -- i.e., Usinor’s near total compliance with Commerce’s limited reporting arrang ement as well as the presence of particular data flaws that were outside of Usinor’ s control -- the court finds that Commerce’s inclusion of the hig

hest non- aberra

nt marg in in the we ighted a verag e calcu

lated mar gin is improper .”); see Coalition , 23 CIT at 115. Guangdong participated in the re view and the verification, therefore, Commerc e’s applica tion of the

China-wi de rate

is not in ac cordanc e with the law and e ffectiv ely

applies a punitive r esult to a c ooperat

ive resp ondent. 25 See Id. at 107-12 . Additiona lly, Commerce ’s NME collapsing methodology

regarding Three

Star and China First was not in accordance with the law.34

Therefore, on remand, Commerce’ s decision regarding Guangdong as well as its application of the China-wide rate to Guangdong must be r e-examined. C Commerce ’s Utilization of Data from Indian Import Statistics as the Surrogate Values for “Petrol Wax,” instead of “Paraffin Wax,” and Decision not to Correct Plaintiffs Kaiyuan’s Translatio n Error Wa s in Accor dance with Law a nd Supported by Substantial E vidence in the Administrative Record Commerce

is requir ed to valu e a compa

ny’ s FOPs bas ed on the “ best ava ilable informat ion,” in one or more

market e conomy

countrie s, which a

re at a le vel of ec onomic development comparable to that of the NME country , and “that [are] a significant producer of ‘comparable’ subject merchandise.” Shandong Huarhong Gen. Corp. v. United States , 159 F. Supp. 2d 714 , 719 (200 1); see 19 U.S.C. § 1 677b(c) (4) (199 9). Plaint iffs rep orted FO Ps included numerous types of wax: paraffin wax, emulsified wax, bees wax, wax, clear wax, mixed wax, and petrol wax. Memorandum from The Team to The File, Preliminary Results of the Administrative Review of Certain Cased Pencils from the People’s republic of China (PRC), Selection of Surrogate Values for F actors of Production at 5-6, Kaiy uan’s Appendix 12. Commerce must calculate antidumping duty margins as accurately

as possible. See Rubberflex SDN. BHD. v. United States , 23 CIT 461, 469 (1999). However , in order to calculate the correct margin , an inter

ested pa rty must provid

e Commerc e with “a

ccurat e, cred ible, and verifia ble information.” Gourmet Equip. Corp. v. United States , 24 CI T 572, 574 (2000). Furthermore, it is the respondent’s responsibility to provide tha t information. Chinsung Indus. Co. v. United States , 13 CIT 103, 106 (1989). Commerce

is affor ded discr etion in de

termining what con stitutes th e “best a vailable information,” see Timken , 201 F. Supp. 2d at 1325, and Commerce derives this information from26 Pursuant to 19 U.S.C. § 1673d(e), Commerce “shall establish procedures for the

correction of ministerial errors in final determinations within a rea sonable time after the determinations are issued under this section. Such procedures shall ensur e opportunity for interested parties to present their views reg arding any such errors.”

27 From the

context of

the statut e and the regula tions thems elves, it i s clear that “Cong

ress intended to cover only a

n error committed by Commerc e itself.” Alloy Piping Prods. I nc. v. Kanzen Tetsu Sdn. Bhd. , 334 F.3d 1284, 1290 (Fed. Cir. 2003). 35 a party’ s questionnaire responses. Commerce must deter mine that t

he infor mation tha

t it bases i

ts surrogate values on is the best available; whethe r the information relates to the respondent’s production or related to prices and values in the surrog ate country. Timken , 201 F. Supp. 2d at 1325-26. Information th at is provided in que stionnair e respon ses or pub licly

availab le information used to value factors in nonmarket economy cases, allegations concerning market viability, and upstream subsidy allegations, are considered fa ctual information. World Finer Foods, Inc. v. United States , 24 CIT 541, 549 (2000); 19 C.F.R. § 351.301(a) (1999)

. Commerce, with its limited resources, cannot guarantee that the parties’ submissions are

correct. Murata Mfg. Co. v. United States , 17 CIT 259, 265 (1993). However , in cases where Commerce makes an error, Congre ss intended that Commerce establish procedures for the correction of “ministerial errors” propa gated by Commerce that occur after the final re sults of a review are published. 26 19 U.S.C. § 1673d(e) (2000). Ministerial errors are err ors in addition, subt racti on, or other arith meti c funct ion; cleri cal err ors th at res ult fr om in accurat e copying, duplicat ion, or the

like; and any other simi lar ty

pes of uni ntentiona l or inadv ertent e

rrors. 27 World Finer Foods , 24 CIT at 549-50; 19 C.F.R. § 351.224(f) (1999). I t is these types of ministerial errors that Commerce must correct, espec ially if the error is so obvious and egregious that the28 In Serampore Indus. Pvt., v. United States , the court stated that it was “loathe to affirm

a determination that might be based on a questionable rec ord.”12 CIT 825, 834 (1988). Furthermore, in Koyo Seiko Co., L td. v. United States , the cour t held tha t Commerc e erroneously refuse d plaintif

fs’ req uest that i t corre ct cleri cal and t

ranscr iption err ors in dat a it submitte d to Commerce which was used in the final determination. 14 CI T 680, 683 (1990). The limited burden imposed by virtue of a remand ordering the corr ection of input errors was outweighed by the preference for ac curacy . Id. 36 failure to correct it would be “an abuse of discretion” and “undermine the interests of justice.” 28 Tehnoimportexport v. United States , 15 CIT 250, 258-59 (1991) (explaining that wher e a plaintiff’s mistake was obvious, the government’s failure to cor rect it was an abuse of discretion). The proc edures t

hat Commer

ce promu lgated to corre ct these

errors are fou nd in 19 C.F .R. § 351.224(c)(1) (2000), which provides that comments from

A party to the proc eeding to whom [Commerce] has disclosed calculations perfor med in con

nection w ith a pre liminary

determination may

submit comments concerning a significant ministerial er ror in such calculations. A party to the procee ding to w

hom [Commerc e] has disc losed ca lculation s perfor

med in connection with a final determination or the final re sults of a re

view may submit comments c oncerni

ng any ministeria

l error i n such ca lculation s. Comments concer ning mini sterial e

rrors ma de in the prelimina

ry results of a revie w should be included in a party ’s case brief. Id. (emphasis added). The regulations further provide that Commerce “will analyze any comments received and, if appropriate . . . cor rect any significant ministerial error by amending the final determination .” 19 C.F.R. § 351.224(e) (emphasis added). On September 21, 2001, Plaintiffs China First submitted a letter to Commerce containing comments and information regarding “Commerce ’s selection of surrogate countries and the information to be used by [Commerce] in valuing the factors of production.” Kaiy uan’s Appendix 11. The letter stated that “[t]he principal materials used in Respondents production of pencils include the following29 The Kirk- Othm er Con cise E ncycloped ia of C hemic al Tech nolo gy 1260 (3d ed 1985), under mineral waxes, describes a paraff in wax as a “petroleum wax consisting principally of normal a lkanes.” The encyc lopedia t

hen state s that petr

oleum wax is

“outstan ding as acosteffective moisture and gas bar rier . . . [m]uch of the petroleum wax produced is food-grade quality, although such qua lity may well be used in non-food-grade applica tions to simplify inventorying.” Id. 37 materials: tallow, graphite powder, kaolin (china) clay, white glue, paraff

in wax, pen

cil slats, plastic f oil/film, la

cquer, e rasers , and alum

inum ferr ules,” a nd provide d the valu

e for “p araff

in

wax. Id. Plaintiffs Kaiyuan view their submission’s inclusion of petrol wax as a facial error, and that Commerce should have realized a mistake had been made in Ka iyuan’s submissions. In a letter da ted Octob er 4, 200 1, Commerc e informe d Kaiy uan that i t did not pos sess publicly available infor

mation to value petrol wax. Defendant’s Opposition at 7. Kaiy uan argues that b eca use there w ere n

o val ues o r technic al spe cifi cati ons pl ace d on th e rec ord f or petrol w ax, that this leads to the conclusion that it is an industry norm to use paraf fin wax in the manufacturing and pencil making pr ocess and that in this particular industry wax has only one meaning. Kaiy

uan’s Motion at 8-9. The parties, however, provided no evidenc e or citation to an industry norm. 29 If a respondent’s e rror is apparent from the face of Commerce’s final decision or from the underly

ing calculations, Commerce is required to make cor rections, see Ko yo , 14 CIT at 683, and should it fail to correct that er ror its lack of action is arbitrary and capricious. See Alloy Piping Prods., I

nc. v. United States , 334 F.3d 1284, 1292 (Fed. Cir. 2003)

. Moreove r, if Commerce fails to correct an error tha t is or should have been apparent from the face of the final determination, the error in effect bec omes a government error, and thus, a “ ministerial error,” which Commerce is statutorily re quired to correct. Id. at 1293. Commerce, to the extent possible, relies on publicly ava ilable information from the38

relevant surrogate country to value a company ’s FOPs. See Antidumping Manual , Chapter 8 at 70-71. On December 31, 2001, Commerce published a letter outlining its decision to value petrol wa x using I ndonesia n import da

ta from th e Fore ign Tra

de Statisti cal Bull etin of I ndonesia (“FTSB I”) . Kaiy

uan’s Ap pendix 12. Co mmerce s tated tha t: [i]n determining the appropriate surrogate value f or each factor of production, we selecte d, where

appropr iate and to the exten

t possible, from publ ically availab le information which was: (1) an averag e, non-export value; (2) representative of a range of price s within the

POR, or clo sest in time

to the POR; ( 3) produc

tspecific; and (4) tax-exclusive. Whenever possible, we selected surrog ate values that wer e from the

primary country in accor dance w ith Commerc e’s pre ferenc e to select data from a single country Id. In response, Kaiy

uan submitted a letter dated February 8, 2002, which requested that Commerce make corrections on behalf of Ka iyuan and Laizhou. Kaiyuan’s Motion at 3, Appendix 6. In thi s letter, Kaiy uan ident ified the typ e of wax us ed in the production of its pencils as “Parafinicmax- Melting point: 53C-56C.” Id. Kaiyuan’s F OP submissions included

numerous ty

pes o f wax: paraffin

wax, e mulsi fied wax, b ees w ax, wa

x, cle ar wa

x, mixed wax, and petr ol wax. Kai

yua n’s Appe ndix 12. How ever, in

its letter of Febr uary 8, 2002, K

aiy uan did not indica te what it em Paraf inicmax wa s in addition to or wha t item it wa s to repla

ce in its submission. On July 30, 2002, Kaiy

uan submitted a clerical-error alleg ation to Commerce. Kaiyua n’s Appendix 8. In this letter, Kaiy uan argued that Commerce improperly used a surrogate value for petrol wax when it claimed that the record demonstrated that Kaiy uan used paraffin wax. Commerce disagreed and its memorandum stated that “thr oughout this segment of the
procee ding, Ka

iyu an unequ ivocally and cons istently

identifie d the ty

pe of wa x used in pen

cil39

production as petrol wax.” Kaiy uan’s Appendix 9. The court affords Commerce substantial discretion in determining what ty pes of unintentional or inadvertent errors qualify errors are “ministerial.” Shandong , 159 F. Su pp. 2d at 7 28; Cemex, S.A. v. United States , 19 C.I.T. 587, 593 (1995). In this case, Commerce prope rly refuse d to correct Kaiy uan’s translation error. Kaiy uan did not provide clear evidence so that Commerce might de termine that it was using the incorrect product in making its determination. Infor mation that is provided in questionnaire responses or publicly availab le information use d to value factor s in nonmar

ket econ omy (“NME” ) cases , allega tions conc erning

market viability, and upstr eam subsi dy a

llegat ions, is considere d factua l. 19 C.F.R. § 351.301(a) . Commerc e use of Pl aintiff’ s errone ous trans lation in ma king its determination does not convert Plaintiff’s mistake into a “ministerial” error. Fur thermore, because the mistak

es in this c ase wer

e made by

the Plainti ff, they

are not t he ty pe of “mi nisteria l” errors Congress intended Commerce to corr ect. Kaiyua

n’s error was not so obvious or patent that it would result in injustice, nor did Commerce ignore relevant recor d evidence. D. Commerce ’s Use of Surrogate Values in Calculating the Dumping Margin is in Accordance with Law and Sup ported by Substantial Evidence in the Administrative Record Plaintiff s China Fi

rst arg ue that th e choice

of In dia as the principa l surrog ate coun

try in an NME an

alogy lead to th e use of d

ata they claim is un

reliable . They

argue that while

there is Indo nesian su

rroga te data o n the rec ord for only 25 of the 6 9 FOPs, the

Indonesian da

ta is nonetheless of better quality because the India

n surrogate data available for virtually every significant factor of production are a llegedly aberrational, unreliable, and non-specific

. Commerce

values F OPs using

the costs of the FO P in a mark

et econo my that was at

a40

level of economic

developm

ent compa

rable to the PRC, and

a signif icant pr oducer o f compar

able mercha ndise dur ing the PO R. Commerc e found I ndia to be the appr opriate surrog ate coun

try at a level of economic development comparable to the PRC, because I ndia was comparable to the PRC in terms of per capita gross national product and the national distribution of labor. See Issues a nd Deci sion Memor andum , Com ment 7 at 19; Memor andum from T he Team , Thro ugh Howard S mith, Prog

ram Mana

ger, G roup II, Of

fice 4, T o The Fil e, Fac tors of Pr oduction (

FOP) Valuation (July 16, 2002) (“FO P Memorandum”); China First’s Appendix to Brief, Vol. I Exhibit 20. Moreover , it deter mined tha t Indi a was a s ignific ant produ cer of c omparab le merchandise. Issues a

nd Decision Memorandum, Comment 7 at 19. Commerce determined that Indone sia was comparable to the PRC in terms of its per capita gross national product and national labor distribution, as well as being a significant produce r of comp arable

mercha ndise. Commerce r

elied on I ndonesia n values a nd U.S. va

lues in instances where I

ndian surrogate value information was not ava ilable. For purposes of calcula ting NV, Commerce

attempte d to value

the FOPs u sing sur

rogate values th at were

in effect during the POR. Commerce valued F OPs regarding gr aphite, kaolin clay, be es wax, mixed wax, wax, cl ear wa

x, lacquer , paint, di

pping la cquer, g lue, cle ar glue , foil, se aling pa per, ste aric acid, pr inting in k, key chain, pl astic, fo am grip , glitter , talcum p owder, h eat tran sfer fil m, pigment, dye , dyestuff, diluent, har dening oil, and cellulose based on I ndian import data from the Monthly Statistics of the Foreig n Trade of India ( “MSFTI”) for April-August 2000. Preliminary Results, 67 Fed. Reg . at 2,406 . Commerc e valued black cores, col or core s, raw pe ncils, er asers, and ferrules based on I

ndian import data from the MSFTI for January-Dec ember 2000. Id. It al so valued “petrol wax”, tallow, paraffin wax, and emulsified paraf fin wax based on Indonesian30 The cores data consisted of an undated price quote from an Indian exporter and a price quote dated January 10, 2002, fr om an Indonesian company for export of cores to the United States. 41 import data from the Foreign Trade Statistical Bulletin of Indonesia (“F TSBI”) for January-Dec ember, 2000. Kaiy uan’s Appendix 12. Plaintiff s Kaiy uan clai m that the i

mport stat

istics we re compr ised of da ta relat ing to bot h black an d colore d cores w

ithout diff

erentia ting bet ween the two. They

claim tha t this resu lted in the calculation of a single averag e unit value used as the surrogate value f or Plaintiffs’ black core usage and color core usag e and that this single average va lue was premised upon a small total annual volume of imports into India of both ty pes of cores. They

further claim that the value from the i mport stat

istics wa s aberr

ational a nd that Commerce r

efused t o use wha t they call “legit imate val ues” fr om two othe

r indepe ndent and corroborating

sources that prov ided sepa rate black and color core values that demonstrated the a berrational nature of the I ndian Import statistics-based value. 30 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 , 383 U.S. at 620. Substantial evidence requires that the agenc y’s determination be based on the whole

record and the r eviewing court mus t examine a

ll evidence that f

airly supports and detracts from the determination. Universa l Camera Corp. v. N

LRB , 340 U.S. 474, 488 (1951). Commerce considers small-quantityimport information or data unreliable when the perunit value is substantially different fr om the per-unit values of the larger qua ntity imports of that product from other countries. Shakeproof , 24 CIT at 490-91. Commerce claimed that although the volume of cores imported into I ndonesia during42

2000 was substantially gr eater than that imported into India during the POR, it did not find Indian imports of over 3,400 kgs. of pencil leads from seven different marke t economy countries to be insignificant. Commerce derived weig hted average I

ndian and Indonesian import values of 7.69 USD/kg. and 6.47 USD/kg. Commerce noted that the weig hted-average I

ndian import price did not substantially vary from the weighted-averag e Indonesian import price. Commerc e decided not to consider the Indian pr ice quotes that the Plaintiffs submitted because they were undated, were e xport price s, and it wa s not clea r that an y sa les were made pur suant to th ese quotes. It did not consider the I ndonesian price quotes placed on the record be cause the quotes were for sales to the United States, rather than for sales within a potential surrogate country, and were dated outside the POR. The I ndian and Indonesian import statistics each only include a category for black and colored cores tog ether without providing any more details regarding the types of core s being imported. Moreover, the price quotes for cores were placed on the re cord by a party a ffiliated with a U.S. importer of subject merchandise. There fore, Commerce valued black an d color c ores bas ed on I

ndian import statisti cs, which it concl uded was the best a

vailable information on the record. Issue s and Decision Memorandum, Comment 4 at 12-13; Defendant’s Opposition at 10. This decision is supported by substantial evidence a nd in accordance with the law. VI. Conclusion For the foregoing r

easons, Commerce’s decision in the Final Results, 67 Fed. Reg. 48,612 (July 25, 2002), as amended in the Amended Final Results, 67 Fed. Reg . 59,049 (Sept. 19, 2002) is remanded to Commerce for proceeding s consistent with this opinion. On remand, Commerce43

must articulate specifically the portions of the existing collapsing statutes and regulations which
are app licable or inapplic able in th e NME con text. I t must then provide th e court w ith a clea rly articulated methodology

for collapsing companies in NME countries. Commerce

must reev aluate G

uangdong’s ra

te in ligh t of the c ourt’s de cision tha t its collapsing methodology

was not in accordance with the law. I t must also reevaluate the applica tion of the

China-wi de rate

to Guang dong be cause Co mmerce e ffectiv ely applied a dverse facts to a participating and coopera tive respondent. Commerce’s refusal to correct Kaiy uan’s translation error is supported by substantial evidence and in accordance with the law as is its decision to use values from black and color cores ba sed on I

ndian impo rt statisti cs.

/s/ Evan. J. Wallach Judge

Dated: May 14, 2004 New York, New York