Opinion ID: 208083
Heading Depth: 4
Heading Rank: 1

Heading: Commerce's Color-Specific Valuation Methodology

Text: The court disagrees with Ningbo's argument that Commerce's methodology for calculating color-specific PET flake values was demonstrably distortive and inaccurate. Ningbo asserts that Commerce made unrealistic assumptions about Ningbo's PET flake purchases, out of proportion to Ningbo's verified period-of-investigation production ratios contained in the record before Commerce. Ningbo argues that it would have been impossible for it to produce the amount of each color of PSF it actually produced if it had in fact purchased the amount of white and green PET flake assumed by Commerce. Ningbo further contends that any reasonable alternative values for its PET flake purchases, such as the values derived from allocating the non-color-specific invoices in rough proportion to the colors of its PSF production, would result in a de minimis or negative margin, for which no duty would be assessed. In support of its position, Ningbo points out that Commerce relied on three invoices representing 0.41% by weight of Ningbo's total market economy flake purchases during the period of investigation to value Ningbo's white PET flake, even though finished PSF is almost entirely PET flake, the color of PET flake used in production dictates the color of the finished PSF, and 60% of Ningbo's flake consumption was for production of white PSF. Similarly, the five invoices which identified the flake color as green represented 1.2% of Ningbo's market economy flake purchases, yet the production of green PSF accounted for 32% of flake consumption. Commerce then assumed that the remaining 95% of market economy flake purchases during the period of investigation, for which the invoices did not identify a color, were purchases of brown flake. Only 8% of Ningbo's PSF production during the period of investigation, however, was brown. Thus, as Ningbo puts it, Commerce averaged the prices of 95% by weight of Ningbo's market economy PET flake purchases to value the input that constituted approximately 8% of the product. Moreover, the record reveals that although Ningbo purchased PET flake from a number of market economy suppliers, all the color-indicating invoices were from a single supplier. Pointing to this record evidence, Ningbo concludes that Commerce assumed unrealistic facts and, as a result of failing to allocate an appropriate proportion of purchases to white and green flake, unreasonably overstated the value of all three flake colors. Despite some conflicting evidence, the following substantial record evidence supports Commerce's allocation methodology. To begin, as the Domestic Producers point out, the factors of production methodology focuses on input purchases, not production, and the record reveals that Ningbo purchased materially less PET flake during the period of investigation than it consumed during the period. Ningbo also had two to three months inventory of PET flake on hand. Moreover, according to Ningbo, the market economy invoices upon which Commerce relied represented only 40% of its total flake purchases during the period of investigation. That is, Ningbo's flake purchases from other countriesconstituting 60% of its purchases during the period of investigationwere not reflected in Commerce's methodology. In sum, no exact correlation between Ningbo's market economy flake purchases and production was possible given the lack of information provided by Ningbo. As already discussed, although Commerce may have had the opportunity to consider Ningbo's production quantities, despite Commerce's clear requests, Ningbo did not provide its PET flake usage ratios based on color or an alternative means for determining the color of its market economy PET flake purchases. Accordingly, Commerce, working with the incomplete information before it, reasonably and realistically assigned a color to the market economy invoices without stated colors. In light of the broad discretion Commerce enjoys in valuing factors of production, see Nation Ford, 166 F.3d at 1377, Commerce's methodology for valuing white, green, and brown PET flake based on the invoices from Ningbo's market economy purchases is supported by substantial evidence and in accordance with law.