Opinion ID: 208083
Heading Depth: 2
Heading Rank: 4

Heading: Commerce's Valuation of Ningbo's PET Flake Factor of Production

Text: Having determined that Commerce properly relied on the facts otherwise available to value Ningbo's PET flake purchases by color, the court must next consider whether Commerce's application of the facts available was reasonable and supported by substantial evidence. [5] Indeed, the invocation of facts available does not alter the court's mandate to ensure that Commerce's determinations and methodology are supported by substantial evidence. See NTN Bearing Corp. v. United States, 368 F.3d 1369, 1377 (Fed. Cir.2004) (evaluating Commerce's facts available methodology for substantial evidentiary support); Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1335 (Fed.Cir.2002) (applying substantial evidence standard to Commerce's imposition of adverse facts available); Nippon Steel, 25 C.I.T. at 1196 (Commerce may thus employ record evidence to arrive at a margin calculation in the absence of complete data, even if the evidence does not necessarily replace the precise data missing, subject to the constraint that the facts and the manner in which they are employed are reasonable.). Ningbo argues that Commerce's methodology for allocating the facts available market economy invoices to value its PET flake by color was not supported by substantial evidence because it did not match its actual production experience. Ningbo contends that a reasonable investigator would have assigned the color white to the invoices (the top 60%) with the highest unit values; and would have assigned the color green to the unknown color invoices in the middle of the unit value range (the next 32%); and the remainder (approximately 8%) to brown. Appellant's Br. 47. The government argues that, as a threshold matter, this court cannot consider Ningbo's argument that Commerce should have calculated color-specific PET flake values according to Ningbo's period-of-investigation production of finished PSF because Ningbo failed to exhaust its administrative remedies with respect to that argument. The government and the Domestic Producers further assert that Commerce's determinations, including its calculation of facts available color-specific PET flake values, are supported by substantial evidence and not contrary to law.
According to the government, prior to briefing before the Court of International Trade, Ningbo had never suggested allocating its non-color-specific market economy invoices based on its color-specific production ratios. Nor, the government adds, did Ningbo present the production-based invoice allocations and calculations to which it now points. The government concludes that the court cannot consider Ningbo's production-based arguments because Ningbo did not exhaust its administrative remedies by presenting them to Commerce during the investigation. The Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies. 28 U.S.C. § 2637(d). This court has held that applying exhaustion principles in trade cases is subject to the discretion of the judge of the Court of International Trade. Corus Staal BV v. United States, 502 F.3d 1370, 1381 (Fed.Cir.2007). Here, the Court of International Trade concluded that the record does not indicate a clearly better method for valuation than the one used by Commerce. Ningbo Dafa, 577 F.Supp.2d at 1312. Addressing Commerce's exhaustion argument, however, that court stated that it d[id] not agree with Commerce's stance that Commerce lacked an opportunity to consider Ningbo's production and sales numbers as an alternative methodology. Id. at 1311. Indeed, Commerce verified Ningbo's color-specific production quantities during the investigation, and the government confirmed at oral argument that Commerce was aware of Ningbo's actual production data. Moreover, the record before Commerce contained at least a suggestion, incorporated in Ningbo's internal cost allocation, of a production-based allocation methodology. Accordingly, the Court of International Trade did not abuse its discretion in finding that Commerce had the opportunity to consider a production-based methodology. See Corus Staal, 502 F.3d at 1381. The court, therefore, will consider Ningbo's arguments on the merits.
Commerce is the `master of antidumping law,' and reviewing courts must accord deference to the agency in its selection and development of proper methodologies. Thai Pineapple Pub. Co. v. United States, 187 F.3d 1362, 1365 (Fed. Cir.1999). In fact, the methodologies relied upon by Commerce in making its determinations are presumptively correct. Id. ; Fla. Citrus Mut. v. United States, 550 F.3d 1105, 1110 (Fed.Cir.2008). Even when Commerce makes adverse inferences in connection with its reliance on facts otherwise available, however, Commerce cannot overreach reality in imposing a dumping margin in the name of maximizing deterrence. See Ta Chen, 298 F.3d at 1340; Huvis, 570 F.3d at 1353 (Even when Commerce uses adverse inferences [which it did not in Huvis], it must use a reasonably accurate estimate of the respondent's actual rate when using `facts available.' (internal quotation marks omitted)). This limitation holds especially true where, as here, Commerce concluded that adverse inferences were not warranted.
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.
As indicated above, Ningbo also argues that Commerce diverted invoices fairly attributable to white and green PET flake and added them to the average for brown, the least expensive PET flake. In support, Ningbo points to the following verified facts suggesting that the actual cost of white flake was lower than Commerce's constructed value: (1) the invoices Commerce relied on to value white PET flake reflected the highest cost PET flake Ningbo purchased during the period of investigation; (2) Ningbo's PSF production is 60% white PSF; (3) white PSF is made almost entirely from white PET flake; and (4) the amount of white PET flake reflected by the white-indicating invoices was significantly less than required to produce the amount of white PSF Ningbo actually manufactured during the period of investigation. Consequently, non-color-specific invoices from purchases of relatively lower-priced white PET flake were necessarily excluded from Commerce's calculation. Ningbo reasons that Commerce's constructed color-specific PET flake valuations are thus clearly and demonstrably inaccurate. The court disagrees. Despite some evidence detracting from its weight, substantial record evidence supports Commerce's valuations. To begin, for the reasons discussed above, no exact correlation between Ningbo's PET flake purchases and PSF production is possible based on the incomplete information on the record. Commerce's constructed prices for white, green, and brown PET flake (which are confidential) approximate the relative price differences between white and green and white and brown PET flake that Ningbo employees reported to Commerce during its verification visit. Moreover, Commerce's calculated values are identical to the prices derived from co-respondent Cixi Jiangnan's [6] color-specific market economy invoices and are comparable to the prices listed in Ningbo's internal inventory allocation chart from one month during the period of investigation. Although Cixi's prices were for washed PET flake, while Ningbo purchased only less expensive, unwashed flake, this evidence is nonetheless more than a mere scintilla supporting Commerce's valuations. Finally and most significantly, as the Court of International Trade found, Ningbo has not demonstrated that Commerce's constructed prices resulted in higher dumping margins than if Ningbo had provided actual PET flake purchases by color. See Ningbo Dafa, 577 F.Supp.2d at 1311. In sum, Commerce's determination appears to reflect a reasonable approximation in light of Ningbo's actual record keeping. Substantial evidence is a deferential standard of review, which requires only that a determination be supported by `such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' SKF USA, 537 F.3d at 1378 (quoting Consol. Edison, 305 U.S. at 229, 59 S.Ct. 206). Commerce's methodology and resulting color-specific PET flake valuations, while not perfect, are supported by substantial evidence.