Opinion ID: 3066250
Heading Depth: 2
Heading Rank: 1

Heading: Surrogate Value for Carbonized Material

Text: Carbonized material is a material input used to produce activated carbon. To determine the surrogate value for carbonized material, Commerce considered two data sources: (1) Global Trade Atlas (“GTA”) statistics for Philippine imports categorized under Harmonized Tariff Schedule (“HTS”) 4402, “Wood Charcoal (Including Shell or Nut Charcoal), Whether or Not Agglomerated,” and (2) pricing data for coconut charcoal contained in Cocommunity, a monthly publication of the Asian and Pacific Coconut Community organization. 1 Commerce found that 1 Commerce also considered a third data source not at issue on appeal consisting of Thai import statistics. Issues & Decision Memo. at 17 (J.A. 387). JACOBI CARBONS AB v. US 7 the Cocommunity data was flawed for two reasons. First, Commerce found the prices were not representative of the Philippines as a whole because the data was from the Visayas region of the Philippines. Issues & Decision Memo. at 18 (J.A. 388). Second, Commerce found that it was not clear whether the Cocommunity prices were tax and duty exclusive. Id. Commerce therefore used the Philippine import data from the GTA to calculate the surrogate value for carbonized material. Appellants argue that substantial evidence does not support Commerce’s selection of the Philippine import data over the Cocommunity data. They argue the Philippine import data is flawed because it is less specific to the input in question than the Cocommunity data and because it results in an aberrationally high surrogate value compared to the surrogate value of carbonized material in prior reviews of the subject merchandise. Appellants also argue that the record did not support Commerce’s criticisms of the Cocommunity data. Finally, appellants argue that by selecting the Philippine import data over the domestic Philippine Cocommunity data, Commerce violated its preference for using domestic data. Although a close case, substantial evidence supported Commerce’s selection of the Philippine import data as the best available information.
Appellants argue that the Philippine import data is less specific to the carbonized material used to produce the subject merchandise than the Cocommunity data. To determine whether a data source is product specific, Commerce compares the products covered by the data source with the material input in question.
The material input in question is carbonized material. The record shows that Jacobi’s and Cherishmet’s suppli- 8 JACOBI CARBONS AB v. US ers used carbonized material made from coal to produce the subject merchandise. J.A. 110, 133 (questionnaire responses from two of Jacobi’s suppliers); J.A. 150, 155– 56, 290–301 (Cherishmet’s U.S. sales database during the period review); see also Jacobi’s Br. 6. The record also shows that one of Jacobi’s suppliers used carbonized material made from coconut shell charcoal to produce the subject merchandise, in addition to carbonized material made from coal. J.A. 111–15, 765–68. There is no evidence that any of Jacobi’s or Cherishmet’s suppliers used carbonized material made of wood to produce the subject merchandise. 2 Thus, it appears based on the record that the material input in question is carbonized material made of coal and coconut shell charcoal.
The Cocommunity data is limited to coconut shell charcoal, while the Philippine import data includes all imports to the Philippines categorized under HTS 4402, “Wood Charcoal (Including Shell or Nut Charcoal), Whether or Not Agglomerated”—a broader basket category consisting of carbonized material made from wood and coconut shell. 2 The CIT erred when it found that Jacobi and Cherishmet produced the subject merchandise during the period of review using carbonized material made of wood. See Jacobi Carbons, 992 F. Supp. 2d at 1372–73. Although it is possible to produce activated carbon using carbonized material made of wood, id. (citing J.A. 102, 260), the record indicates that Jacobi and Cherishmet used only carbonized material made from coal and coconut shell charcoal, not wood, to produce the activated carbon shipped to the United States during the review period, see J.A. 110–15, 133, 150, 155–56, 290–301, 765– 68. The inputs used to produce the subject merchandise are the inputs most relevant to this review. JACOBI CARBONS AB v. US 9 Appellants argue that the Philippine import data is not specific because there were no imports of coconut shell charcoal to the Philippines during the review period. Appellants contend that HTS 4402 consists of four subcategories, one of which—HTS 4402.00.00.01 (“Of Coconut Shell, Not Agglomerated”)—covers coconut shell charcoal. 3 Jacobi’s Br. 32; Cherishmet’s Br. 30–31. Appellants further contend that the Philippine import data in the HTS 4402.00.00.01 subcategory indicates that there were zero imports of coconut shell charcoal to the Philippines during the review period. Thus, appellants argue that although in theory the Philippine import data includes coconut shell charcoal, the pricing data for the review period is limited to wood charcoal, not coconut shell charcoal. This is a new argument not made, in any meaningful or detailed sense, to Commerce below. The unsupported, conclusory statement by Jacobi made below that there was “no data available for coconut shell charcoal from the Philippines imported under HTS 4402.00.10,” J.A. 177, is insufficient. Jacobi presented Commerce with no evidence supporting the proposition that there were no imports of coconut shell charcoal to the Philippines during the period of review. Indeed, Jacobi incorrectly transcribed the HTS number, stating there was no data available for coconut shell charcoal from the Philippines under “HTS 4402.00.10” instead of HTS 4402.00.00.01, so Commerce could not verify Jacobi’s claim. This is compounded by the fact that the record does not support appellants’ claim that HTS 4402 consists of four ten-digit subcategories and that one of those 3 The other three categories that appellants con- tend make up HTS 4402 are 4402.00.00.02 (“Of Wood, Not Agglomerated”); 4402.00.00.03 (“Of Wood (Including of Shell or Not Agglomerated)”); and 4402.00.00.04 (“Other”). Jacobi’s Br. 32; Cherishmet’s Br. 30–31. 10 JACOBI CARBONS AB v. US subcategories is HTS 4402.00.00.01. Rather, the record indicates that HTS 4402 has only two subcategories, neither of which is limited to coconut shell charcoal: 4402.10.00 (“Of bamboo”) and 4402.90.00 (“Other”). J.A. 255. Thus, Jacobi presented to Commerce a single conclusory sentence which inaccurately references an HTS category, with no record evidence or data to support its claim. Without any record evidence that there were zero imports of coconut shell charcoal to the Philippines during the period of review under HTS 4402.00.00.01, or even that HTS 4402.00.00.01 existed, Commerce could not evaluate Jacobi’s statement that there was “no data available for coconut shell charcoal from the Philippines.” It was Jacobi’s and Cherishmet’s responsibility to build an adequate record before Commerce, so any failure of proof lies with them. QVD Food, 658 F.3d at 1324. We will not reverse Commerce’s decision about the best available information on the basis of an argument not made and evidence not presented on the administrative record. Qingdao, 766 F.3d at 1385 (“Our review is limited to the record before Commerce in the particular review proceeding at issue.”).
Appellants argue that Commerce’s past practice demonstrates that coconut shell charcoal is a better match for coal-based carbonized material than the broader HTS 4402 category of wood charcoal. In past reviews of the instant antidumping duty order, Commerce found coconut shell charcoal comparable to coal-based carbonized material. For example, in the investigation to determine whether to impose antidumping duties on the subject merchandise, Commerce used coconut shell charcoal import data to value carbonized material because the “coconut shell charcoal value, although not identical to the coal-based carbonized material used by respondents, is comparable in that both products are a type of charcoal.” Certain Activated Carbon from the People’s RepubJACOBI CARBONS AB v. US 11 lic of China A-570-904 (Issues and Decision Memorandum for the Final Determination in the Antidumping Duty Investigation of Certain Activated Carbon from the PRC) (Dep’t of Commerce Feb. 23, 2007) (J.A. 48). Similarly, during the first period of review, Commerce wrote: [C]oconut shell charcoal shares similar properties with carbonized material and . . . those similar properties are essential in the production of activated carbon. The expert’s report found that coalbased carbonized materials used by Cherishmet and coconut shell charcoal are similar in porosity and adsorption, which are both properties essen- tial in the production of activated carbon. Thus, in this instance, between the two alternative . . . HTS categories, “Other Cokes of Coal” and “Coco- nut Shell Charcoal,” the Department determines that . . . “Coconut Shell Charcoal” results in a better, input-specific price for coal-based carbonized materials. Final Results of Redetermination Pursuant to Ct. Remand at 10–11, Calgon Carbon Corp. v. United States, No. 09-00524 (Ct. Int’l Trade July 26, 2011), ECF No. 36 (footnotes omitted) (J.A. 55–56). And during the third period of review, Commerce explained that because “coconut shell charcoal shares similar properties with carbonized material and . . . those similar properties are essential in the production of activated carbon,” it would value carbonized material using imports categorized under HTS category “Coconut Shell Charcoal,” instead of HTS category “Other Cokes of Coal.” Certain Activated Carbon from the People’s Republic of China A-570-904 (Issues and Decision Memorandum for the Final Results of the Third Antidumping Duty Administrative Review) (Dep’t of Commerce Oct. 24, 2011) (J.A. 158–61). In these prior analyses, Commerce was choosing between coconut shell charcoal and the HTS category “Other 12 JACOBI CARBONS AB v. US Cokes of Coal” to find a comparable surrogate for coalbased carbonized material. Commerce’s determination that coconut shell charcoal is better than “Other Cokes of Coal” does not mean that coconut shell data is better than wood charcoal. Wood charcoal is also a type of charcoal and can also be used to create the subject merchandise. Thus for the same reasons articulated by Commerce in the earlier periods of review, wood charcoal would be a better surrogate than “Other Cokes of Coal.” There are no express findings or comparisons between wood charcoal and coconut shell charcoal, and this record does not establish any such conclusions. While coconut shell charcoal is more specific than “Other Cokes of Coal,” the record does not compare coconut shell charcoal and wood charcoal. Commerce’s past practice does not demonstrate that coconut shell charcoal is a better match for coal-based carbonized material than the broader Philippine import data category, which includes wood charcoal and coconut shell charcoal.
Here, the material input in question is carbonized material made of coal and coconut shell charcoal. With respect to the coconut shell subset of this material input, the Cocommunity data, which includes only coconut shell charcoal, is more specific than the Philippine import data, which includes other forms of wood charcoal in addition to coconut shell charcoal. With regard to the carbonized material made of coal, which constitutes the bulk of the subject merchandise, there is no evidence on this record comparing wood charcoal and coconut shell charcoal. There are no findings nor have we been presented with record evidence that coconut shell charcoal is a better surrogate for coal-based carbonized material than wood charcoal. Thus for the bulk of the imports at issue, there is no proof that coconut shell charcoal is a better surrogate. Neither of these data sources is specific to carbonJACOBI CARBONS AB v. US 13 ized material made of coal and Commerce’s past selection of coconut shell charcoal as the best available surrogate was based on a comparison with “Other Cokes of Coal,” not wood charcoal. The imports at issue include coconut shell charcoal and coal-based carbonized material. Once again, we do not review Commerce’s determinations de novo. We cannot conclude on this record that Commerce’s decision that both data sources were specific to the inputs in question was not supported by substantial evidence.
Cherishmet also faults the Philippine import data as aberrational compared to the surrogate values for carbonized material in prior reviews of the subject merchandise. During this period of review, Commerce calculated a price of $1,203.90 per metric ton of carbonized material based on the Philippine import data. Cherishmet asserts that Commerce priced the surrogate value of carbonized material much lower in prior reviews: Period of Surrogate Value Review 1st $32.99/MT $66.256/MT (coconut shell charcoal); 2nd $435.62/MT (coal-based carbonized mate- rial) 3rd $83.45/MT Cherishmet’s Br. 32–33 (citations omitted). It argues that the Cocommunity data, with a price of $255 per metric ton, maps more closely to Commerce’s prior valuations of carbonized material than the Philippine import data, with a price almost five times as high. 14 JACOBI CARBONS AB v. US The surrogate values presented by Cherishmet suggest that the Philippine import data is aberrational. And Commerce may opt to disregard data where there is record evidence that it is aberrational. Here, however, we cannot conclude that Commerce should have disregarded the Philippine import data as aberrational. The government argues that there is an explanation for the apparently aberrational nature of the Philippine import data. Commerce selected India as the surrogate country in the first three periods of review. See J.A. 733– 35. In the fourth period of review, Commerce found that India was not at a comparable level of economic development to the PRC, and therefore selected a different surrogate country. See id.; see also J.A. 94–96. Thus, the first three surrogate values were calculated with reference to a different level of economic development than the current surrogate value. Looking at the table above, it is not entirely clear which measure is appropriate for comparison to determine whether the Philippine import data is aberrationally high. Commerce’s price of $1203.90 is more than thirty times more than the surrogate value calculated for the first period of review ($32.99/MT) and nearly fifteen times higher than the surrogate value calculated for the third period of review ($83.45/MT). Both of these comparisons lead toward a conclusion that the Philippine import data is aberrational, and it seems unlikely that the switch from India to the Philippines could account for this dramatic change in pricing. However, in the second period of review, Commerce separated the pricing for coconut shell charcoal ($66.256/MT) and coal-based carbonized material ($435.62/MT). The price for coal-based carbonized material is an order of magnitude higher than the price for coconut shell charcoal. Given that the bulk of the imports in question are produced using coal-based carbonized material, the price from this review is only 2.8 times higher than the surrogate value for coal-based carbonized JACOBI CARBONS AB v. US 15 material from the second period of review. Perhaps this disparity would have been enough to cause Commerce to reach a different conclusion regarding the best available information. Or perhaps Commerce would have concluded that the Cocommunity data for coconut shell charcoal, which was priced at $255/MT, was too low. Its prior determination during the second period of review that coal-based carbonized material was much more expensive than coconut shell charcoal may have only reinforced its conclusion here that the Philippine data was the best available information. We do not know how Commerce would have evaluated this complicated issue because it was not raised below. Neither Jacobi nor Cherishmet presented any evi- dence or made any arguments that the Philippine import data was aberrational during the administrative review. This is another new argument made for the first time at the CIT on judicial review of Commerce’s decision, not to Commerce itself. If all of the arguments made on appeal had been made to Commerce and the record made to support them, Commerce may well have reached a different conclusion regarding the best available information. We will not create a new record, entertain new arguments, and reverse Commerce on the basis of them.
Jacobi argues that substantial record evidence does not support Commerce’s determination that the Cocommunity data describes “regional” prices from a single state in the Philippines, not national prices. We disagree. The record shows that the Cocommunity data covers only a single region of the Philippines. The chart from which the Cocommunity data is taken indicates that the price of coconut shell charcoal is for “Philippines (Domestic), Visayas, Buyer.” J.A. 191. The Visayas is one of three principal geographical regions of the Philippines. By contrast, other entries on the Cocommunity chart indicate 16 JACOBI CARBONS AB v. US that they are national, not regional. Id. (listing coconut shell charcoal from “Sri Lanka (Domestic)” and desiccated coconut from “Philippines (Domestic)”). This constitutes substantial record evidence that the Cocommunity data is regional, not national. Appellants did not show in the record for this administrative review that the Cocommunity coconut shell charcoal prices are representative, despite being regional. Jacobi Carbons, 992 F. Supp. 2d at 1369. For example, the record does not show that the Visayas region is a substantial portion of the market for coconut shell charcoal or that prices in the Visayas are reflective of the national Philippine market. Without record evidence to the contrary, we conclude that substantial evidence supported Commerce’s finding that the Cocommunity prices were less representative of a broad market average than the Philippine import data.
Appellants challenge Commerce’s finding that the Cocommunity data was flawed because there was no indication whether that data was free of taxes and duties. They argue that the burden lay on Commerce to show that the Cocommunity data was distorted by taxes and duties. The government disagrees. We need not resolve the parties’ dispute here. Even if Commerce erred when it critiqued the Cocommunity data for lacking information about whether the prices were tax and duty exclusive, substantial evidence still supports the selection of the Philippines import data.
Substantial evidence supports Commerce’s selection of the Philippine import data to calculate the surrogate value for carbonized material. Commerce was forced to select between two flawed data sets, and selected the Philippine import data because it was product-specific, JACOBI CARBONS AB v. US 17 publicly available, reflected a broad market average, and was contemporaneous with the period of review. Appellants fault Commerce for violating its preference for using domestic data when it selected the Philippine import data instead of the domestic Cocommunity data. Commerce determines what constitutes the “best available information” without reference to any such preference. See Qingdao, 766 F.3d at 1386. (“Commerce generally selects, to the extent practicable, surrogate values that are publicly available, are product-specific, reflect a broad market average, and are contemporaneous with the period of review.”). At best, statements to the contrary indicate that Commerce prefers domestic prices over import prices “all else being equal.” Rhodia Inc. v. United States, 185 F. Supp. 2d 1343, 1352 (Ct. Int’l Trade 2001). All else is not equal here. Both the Cocommunity data and the Philippine import data are flawed. Such is the nature of surrogate data, which is likely never a perfect substitute. The selection of a data source is highly situational and requires weighing numerous factors; no factor is necessarily more important than any other factor and no factor is necessarily dispositive. Commerce considered both data sets and determined that the Philippine import data constituted the best available information for determining the surrogate value for carbonized material on the administrative record for this review period. That Commerce may have found the Cocommunity the best available information in more recent periods of review does not mean that substantial evidence did not support Commerce’s decision that the Philippine import data was the best available information. Commerce selects the best available information based on the record before it at the time of the decision, not a hypothetical record or the record created for other periods of review. We may not agree with Commerce’s selection, particularly in light of the evidence and arguments not made to 18 JACOBI CARBONS AB v. US Commerce below. However, Jacobi and Cherishmet did not make these arguments or place this evidence before Commerce. We cannot say that Commerce’s selection of the Philippine import data was unreasonable based on arguments made and the administrative record created by Jacobi and Cherishmet.