Court Opinion

ID: 818302
Source: CourtListenerOpinion
Date Created: 2013-02-02 23:35:00.035272+00
Date Added: 2024-06-11T09:02:42.432410
License: Public Domain

Slip Op. 07-3

           UNITED STATES COURT OF INTERNATIONAL TRADE

______________________________
                              :
SHANDONG HUARONG MACHINERY    :
COMPANY,                      :
                              :
               Plaintiff,     :
                              :
          v.                  :     Before: Richard K. Eaton, Judge
                              :
UNITED STATES,                :     Consol. Court No. 03-00676
                              :
               Defendant,     :
                              :
     and                      :
                              :
AMES TRUE TEMPER,             :
                              :
               Deft.-Int.     :
______________________________:

                                OPINION

[Motions for Judgment Upon the Agency Record of Shandong Huarong
Machinery Co. and Ames True Temper are denied; United States
Department of Commerce’s Final Results of Redetermination
Pursuant to Court Remand are sustained.]

                                              Dated: January 9, 2007

Hume & Associates PC (Robert T. Hume), for plaintiff.

Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice; Jeanne E. Davidson, Deputy
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Stephen C. Tosini), for defendant.

Wiley Rein & Fielding LLP (Timothy C. Brightbill, Eileen P.
Bradner and M. William Schisa), for defendant-intervenor.

     Eaton, Judge: Before the court are the United States

Department of Commerce’s (“Commerce”) Final Results of
Consol. Court No. 03-00676                               Page 2

Redetermination Pursuant to Court Remand (“Remand Results”); the

comments of plaintiff Shandong Huarong Machinery Company

(“Huarong”) and defendant-intervenor Ames True Temper (“Ames”);1

and Commerce’s and Ames’s replies.    The court has jurisdiction

pursuant to 28 U.S.C. § 1581(c) (2000) and 19 U.S.C.

§ 1516a(a)(2)(B)(iii) (2000).   For the reasons that follow, the

court denies Huarong’s and Ames’s motions for judgment upon the

agency record and sustains the Remand Results.

                             BACKGROUND

     In accordance with this court’s opinion and order in

Shandong Huarong Machinery Company v. United States, 29 CIT __,

slip op. 05-54 (May 2, 2005) (not published in the Federal

Supplement) (“Shandong I”), Commerce reopened the record and

issued four supplemental questionnaires on June 20, August 3,

August 17 and September 12, 2005.    Prior to issuing the Remand

Results, Commerce released the Draft Results of Redetermination

Pursuant to Court Remand (“Draft Redetermination”) to Huarong and

Ames, to which both filed comments.    In the Remand Results,

     1
          Ames filed its own motion for judgment upon the agency
record challenging certain aspects of Commerce’s final results in
this investigation as plaintiff in the action commenced under
Court No. 03-00737, which has been consolidated with this case.
See Order of 12/23/03.
Consol. Court No. 03-00676                                Page 3

Commerce revised Huarong’s dumping margin to 31.00 percent.2       See

Remand Results at 2.

                       STANDARD OF REVIEW

     The court reviews the Remand Results under the substantial

evidence and in accordance with law standard, which is set forth

in 19 U.S.C. § 1516a(b)(1)(B)(i) (“The court shall hold unlawful

any determination, finding, or conclusion found . . . to be

unsupported by substantial evidence on the record, or otherwise

not in accordance with law . . . .”).    “Substantial evidence is

‘such relevant evidence as a reasonable mind might accept as

adequate to support a conclusion.’”     Huaiyin Foreign Trade Corp.

(30) v. United States, 322 F.3d 1369, 1374 (Fed. Cir. 2003)

(quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).

“Substantial evidence requires more than a mere scintilla, but is

satisfied by something less than the weight of the evidence.”

Altx, Inc. v. United States, 370 F.3d 1108, 1116 (Fed. Cir. 2004)

(internal citations and quotation marks omitted).    The existence

of substantial evidence is determined “by considering the record

as a whole, including evidence that supports as well as evidence

     2
          Commerce originally assigned Huarong a 30.02 percent
dumping margin for the period of review. See Heavy Forged Hand
Tools, Finished or Unfinished, With or Without Handles, From the
People’s Republic of China, 68 Fed. Reg. 53,347, 53,348 (ITA
Sept. 10, 2003) (“Final Results”). The Issues and Decision
Memorandum, dated September 2, 2003, that accompanied the Final
Results shall be cited as “Issues & Dec. Mem.”
Consol. Court No. 03-00676                                Page 4

that ‘fairly detracts from the substantiality of the evidence.’”

Huaiyin, 322 F.3d at 1374 (quoting Atl. Sugar, Ltd. v. United

States, 744 F.2d 1556, 1562 (Fed. Cir. 1984)).     The court “must

affirm [Commerce’s] determination if it is reasonable and

supported by the record as a whole, even if some evidence

detracts from [Commerce’s] conclusion.”     Nippon Steel Corp. v.

United States, 458 F.3d 1345, 1352 (Fed. Cir. 2006) (internal

quotation marks omitted).

                              DISCUSSION

I.   Steel Scrap Offset

     In the Final Results, when calculating normal value,

Commerce denied Huarong a scrap sales offset for steel scrap

generated from the production of the subject bars and wedges

because Huarong had not allocated the quantity of scrap sold

between subject and non-subject merchandise.     See Issues & Dec.

Mem., cmt. 14 at 28-29.     In Shandong I, the court remanded to

Commerce with instructions to reopen the record to afford Huarong

a reasonable opportunity to respond to Commerce’s second

supplemental questionnaire, i.e., to indicate how much scrap

attributable to the subject merchandise was actually sold during

the period of review.     On remand, Huarong submitted new data.    In

addition, Huarong proposed an allocation methodology.

     In the Remand Results, Commerce largely accepted Huarong’s
Consol. Court No. 03-00676                                Page 5

methodology but revised it to use the weight of steel used as an

input, rather than the weight of finished products as Huarong had

proposed, to calculate the offset.     “[Commerce] divided the scrap

sales allocated to bars by the total steel input weight of both

wrecking bars and crow bars,” and multiplied this ratio “by the

input weight of steel for each CONNUM.”3    Calculation Mem. for

the Final Remand Redetermination at 2, Pub. AR 3527 (ITA Nov. 30,

2005); Remand Results at 28.     Using this methodology, Commerce

applied a steel scrap offset in its calculation of normal value.

         Before the court, Ames does not dispute the revised

methodology itself.     Rather, it argues that the “Remand Results,

like the draft results, are not supported by substantial

evidence,” and reasserts several grounds it raised previously

before Commerce to challenge the sufficiency of the documentation

that Huarong supplied to Commerce on remand.     Ames’s Comments on

Redetermination Pursuant to Court Remand (“Ames’s Remand

Comments”) at 2 (“Rather than repeat them, we again note our

valid concerns as provided in [Ames’s comments to the Draft

     3
          “Control numbers, or CONNUMs are used by Commerce to
designate merchandise that is deemed identical based on the
Department’s model matching criteria. . . . CONNUMs are used as
the basis for product identification in most cases.” Koenig &
Bauer-Albert AG v. United States, 24 CIT 157, 161 n.6, 90 F.
Supp. 2d 1284, 1288 n.6 (2000), aff’d in part, vacated in part on
other grounds, 259 F.3d 1341 (Fed. Cir. 2001).
Consol. Court No. 03-00676                                 Page 6

Redetermination dated Oct. 17, 2005].”).4    In particular, Ames

argues that “Huarong has failed to provide sufficient documentary

support for the data used in calculating [Huarong’s proposed

scrap ratio].”    Ames’s Draft Redetermination Comments at 2.

     First, Ames asserts that Huarong submitted false, unreliable

documentation in response to Commerce’s supplemental

questionnaires:

          On the English translation of the invoice
          [used to support the figures that appear in a
          worksheet prepared by Huarong], Huarong put
          in “scrape {sic} steel sales” under the
          category “goods & labor taxable” to indicate
          that the underlying transaction was a sale of
          scrap. On the original Chinese receipt,
          however, there is no indication whatsoever
          that it is a “scrap steel sale” under that
          category.

Ames’s Draft Redetermination Comments at 2.    In response,

Commerce acknowledges the discrepancy between the Chinese invoice

and the English translation but points out that two other

documents that Huarong submitted along with the invoice – a

payment entry sheet showing the payment Huarong received for the

sale and an accounting voucher - corroborated the information in

the invoice.     See Remand Results, cmt. 1 at 21-22.   Therefore,

Commerce concluded that the documentation submitted by Huarong

was reliable.     See id. at 24.

     Second, Ames argues that Huarong’s supporting documentation

     4
          These comments shall be cited as “Ames’s Draft
Redetermination Comments.”
Consol. Court No. 03-00676                                Page 7

is not “tie[d] . . . to its financial statements or accounting

records” that can be verified, and thus, “under [19 U.S.C.

§ 1677m(e)(2)]5 Commerce must reject this information and deny

Huarong any offset.”   Ames’s Draft Redetermination Comments at 3.

In response, Commerce notes that although Huarong admitted its

accounting records were incomplete for the period of review,

there is other evidence tending to verify its records.     See

Remand Results, cmt. 1 at 22.    Indeed, according to Commerce,

Huarong provided documentary evidence, such as vouchers,

undisputed invoices and payment entry sheets, and explained how

its accounting system works.     Id. (noting Huarong was able to

“demonstrate how its records reconcile when it enters scrap sales

into its books and records.”).

     Third, Ames argues that Huarong should be denied an offset

because Huarong used “caps” to report factors of production, and

     5
          Subsection (e), titled “Use of certain information”
provides, in pertinent part:

          In reaching a determination under [inter
          alia, 19 U.S.C. § 1675] the administering
          authority . . . shall not decline to consider
          information that is submitted by an
          interested party and is necessary to the
          determination but does not meet all the
          applicable requirements established by the
          administering authority or the Commission,
          if— . . .

          (2) the information can be verified . . . .

19 U.S.C. § 1677m(e)(2).
Consol. Court No. 03-00676                               Page 8

not actual usage.6   Ames asserts that because a cap is based on

budgeted rather than actual usage rates, it fails to account for

variances between actual production and budgeted amounts, and

thus constitutes a failed response.   See Ames’s Draft

Redetermination Comments at 4.   Ames also argues that denying the

offset is appropriate here because it is not clear what portion

of Huarong’s reported steel consumption became scrap.    Id. at 5.

     In response, Commerce first notes that it “has accepted

‘caps’ in the past when the ‘caps’ were found to reasonably

reflect actual consumption,” and here, it “accepted Huarong’s use

of ‘caps’ in reporting its steel consumption rates in the

preliminary and final results in this review” without any

     6
          When reporting the amount of an input, such as steel,
that is consumed to produce subject merchandise, a company may
give an estimate, rather than an actual amount. This estimate is
called a “cap.” In this investigation, “Huarong reported ‘caps’
for steel billets, the steel scrap offset, unskilled labor,
skilled labor, and unskilled packing labor.” Heavy Forged Hand
Tools, Finished or Unfinished, With or Without Handles, From the
People’s Republic of China, 68 Fed. Reg. 10,690, 10,693 (ITA Mar.
6, 2003) (prelim. results) (“A production ‘cap’ is an estimate of
the amount of factor input the company used to make the product
in question.”); see also Shandong Huarong Gen. Group Corp. v.
United States, 27 CIT 1568, 1574 (2003) (not published in the
Federal Supplement) (“[T]he consumption amounts reported for the
factors of production were based on what company officials call
‘caps,’ which are the company’s closest approximation of the
inputs used based on years of production experience manufacturing
the subject merchandise.” (internal quotation marks and citation
omitted)); Fujian Mach. & Equip. Imp. & Exp. Corp. v. United
States, 25 CIT 1150, 1169 n.34, 178 F. Supp. 2d 1305, 1326 n.34
(2001) (“Caps are approximations, based on historical production
norms, of costs and quantities of inputs for factors of
production.”).
Consol. Court No. 03-00676                                  Page 9

previous objection from Ames.    Remand Results, cmt. 1 at 24-25.

Next, Commerce points to questionnaire responses where “Huarong

stated on the record that its reported steel [factor of

production] is a pre-production quantity.”     Id. at 25 (citing

Huarong’s June 24, 2002, Sec. D Resp. at D-6).    Since pre-

production quantity, by definition, “includes the steel that will

become scrap during the production process,” id., the caps

reasonably reflected the amount of steel that became scrap.

Thus, according to Commerce, the record evidence supported the

use of caps.

     The court finds that Commerce complied with the court’s

remand instruction to reopen the record in order to afford

Huarong “a reasonable opportunity to respond to [Commerce’s]

second supplemental questionnaire.”    Shandong I, 29 CIT at __,

slip op. 05-54 at 8.    In accordance with the court’s instruction,

Commerce reopened the record and issued four supplemental

questionnaires.    In addition, the court finds that Huarong’s

proposed allocation methodology as revised by Commerce is in

accordance with law.    “Commerce need not prove that its

methodology was the only way or even the best way to calculate

surrogate values for factors of production, as long as it was a

reasonable way.”    Coalition for the Pres. of Am. Brake Drum and

Rotor Aftermarket Mfrs. v. United States, 23 CIT 88, 118, 44 F.

Supp. 2d 229, 258 (1999) (citation omitted).    Here, there is no
Consol. Court No. 03-00676                               Page 10

dispute as to the reasonableness of Commerce’s methodology.

Huarong does not dispute the revised methodology.   Nor does Ames.

Indeed, the revised methodology reflects the change Ames proposed

in its Draft Redetermination Comments.   The revised methodology

is therefore sustained.

     As to Ames’s objections with respect to substantial

evidence, Commerce explained that the documentation submitted by

Huarong to support its reported scrap sales was corroborated by

other record evidence, and was therefore reliable and not

“false.”   In addition, it found that Huarong explained how its

accounting system worked and demonstrated how scrap sales were

reconciled in its accounting records.    Finally, the use of caps

was found by Commerce to be reasonable because the reported

quantity of steel consumed in producing the subject merchandise

is the pre-production quantity, which includes steel that will

become scrap during production.   As set forth above, Commerce has

cited substantial evidence to support its conclusions.   In

addition, Commerce has used reasonable judgment in considering

the evidence and considered evidence that supports as well as

“fairly detracts from the substantiality of the evidence.”

Huaiyin, 322 F.3d at 1374 (internal quotation marks omitted).

The court thus finds Commerce’s conclusions to be supported by

substantial evidence and sustains Commerce’s scrap offset

calculation.
Consol. Court No. 03-00676                                  Page 11

II.   Sigma Cap

      As explained in Shandong I, the court in Sigma Corp. v.

United States, 117 F.3d 1401 (Fed. Cir. 1997) found that

            when calculating constructed value where the
            cost of an imported input is presumed to be
            the same as its domestic counterpart, a
            rational manufacturer will minimize its
            material and freight costs by “purchasing
            imported [product] if the cost of
            transportation from the port to the foundry
            [is] less than the cost of transportation
            from the domestic . . . mill to the foundry.”
            Put another way, where the cost of the
            imported and domestic product are presumed to
            be the same, the manufacturer is further
            presumed to acquire the product from the
            nearest source in order to minimize freight
            costs.

Shandong I, 29 CIT at __, slip op. 05-54 at 8-9 (citing Sigma,

117 F.3d at 1408) (alterations in original).

      In the Final Results, Commerce sought to comply with Sigma

by using “the distances that Huarong’s steel suppliers were from

Huarong to calculate a weighted average distance.    Since the

resulting weighted average was greater than the distance from

Huarong to the nearest port, Commerce applied a cap equal to that

distance for the inland freight cost.”    Id. at 9 (footnore

omitted).

      In Shandong I, the court instructed Commerce to “explain

why, in calculating its weighted average [supplier distance],

[Commerce] should include any distance greater than the distance

from [Huarong’s factory to] the nearest port or, failing that,
Consol. Court No. 03-00676                                 Page 12

adjust its methodology appropriately.”   Shandong I, 29 CIT at __,

slip op. 05-54 at 10 (discussing Lasko Metal Prods., Inc. v.

United States, 43 F.3d 1442 (Fed. Cir. 1994) and Sigma, 117 F.3d

1401).   In other words, the court reasoned that if no rational

producer “would choose to pay the highest combination of prices

for [an input] plus freight,” Sigma, 117 F.3d at 1408, including

distances greater than the distance between Huarong’s factory and

the nearest port would not produce an accurate dumping margin.

     On remand, Commerce examined the Lasko and Sigma cases and

found that “capping the distance for each supplier (the ‘Sigma

cap’) before calculating the weighted-average freight distance

yields a more accurate result, based on Sigma, and [it] . . .

changed [its] calculation of the surrogate freight cost

accordingly.”   Remand Results at 5 (emphasis added).   Commerce

then calculated inland freight cost by weight-averaging the

distances from Huarong’s multiple steel suppliers to Huarong’s

factory with no single distance greater than the distance to the

nearest port.   Commerce explained its reasoning this way:

           [A] rational company located in a market
           economy would purchase identically priced
           inputs only from those suppliers that are
           closer to its factory than the nearest port.
           In the case of the [non-market economy, or
           “NME”] methodology, all suppliers are assumed
           to charge the same price for their input.
           When a NME company reports two or more input
           suppliers, where one supplier is more distant
           than the nearest port and the other is closer
           than the nearest port, the application of a
           single price means that a market-economy firm
Consol. Court No. 03-00676                                  Page 13

            would not purchase inputs from the more
            distant supplier, because purchasing from the
            farther supplier would not be rational under
            these conditions, due to the higher freight
            cost. As a consequence, applying the Sigma
            cap before calculating the weighted-average
            freight distance will result in a more
            accurate surrogate freight cost, in
            accordance with the [Federal Circuit]’s
            reasoning in both Sigma and Lasko.

Id. at 7.    The court finds that Commerce’s methodology and

explanation accord with the principles set forth in Sigma and

Lasko.

     Ames does not disagree with the basic premise that rational

producers seek to minimize freight costs.    Rather, Ames argues

that Commerce’s assumption that suppliers charge the same price

for their input “does not correspond to the reality of this

case.”   Ames’s Draft Redetermination Comments at 10.    According

to Ames, “[i]n this review . . . there is no evidence on the

record to suggest that the price before freight was the same from

every supplier.”    Id. at 9 (emphasis in original).    Because

Huarong purchased input from multiple suppliers, which are at

different distances from the factory, Ames argues this is

evidence that “prices charged were different, or that

transportation cost was not the only variable in decision-

making.”    Id.

     While Ames’s interpretation of the evidence may be

plausible, it is not the only reasonable interpretation.      As

Commerce points out, “Ames appears to concede . . . [that] there
Consol. Court No. 03-00676                               Page 14

are numerous reasons why a particular supplier or group of

suppliers may be used; thus, the use of multiple suppliers does

not, by itself, demonstrate the prices differed.”   Commerce’s

Resp. Pls.’ Remand Comments at 10.    That a piece of evidence is

susceptible to more than one reasonable interpretation does not

detract from the substantiality of the evidence supporting

Commerce’s decision.    See Consolo v. Fed. Mar. Comm’n, 383 U.S.

607, 620 (1966).   Thus, there is no apparent reason to abandon

the teaching in Sigma in this case.

     Commerce examined the methodology employed in the Final

Results in light of Sigma and Lasko, found it appropriate to

revise its calculations and explained its revised calculations in

the Remand Results.    Thus, the court finds Commerce has complied

with the remand instructions in Shandong I, and Commerce’s

revised methodology is in accordance with law.   There being no

challenge to the inland freight calculation itself, that

calculation is sustained.

III. Commerce’s Decision Not To Exclude U.S. Export Data In
     Calculating Normal Value

     In Fuyao Glass Industry Group Company v. United States, 27

CIT 1892 (2003) (not published in the Federal Supplement) (“Fuyao

I”) and Fuyao Glass Industry Group Company v. United States, 29

CIT __, slip op. 05-6 (Jan. 25, 2005) (not published in the

Federal Supplement) (“Fuyao II”), Commerce rejected surrogate
Consol. Court No. 03-00676                                 Page 15

data from the market economies of Korea, Indonesia and Thailand

because of subsidy programs available in those countries.     In

doing so, it relied on the legislative history surrounding the

enactment of 19 U.S.C. § 1677b(c)(4) as its authority, which

states in pertinent part: “In valuing . . . factors [of

production], Commerce shall avoid using any prices which it has

reason to believe or suspect may be dumped or subsidized prices.”

Omnibus Trade and Competitiveness Act of 1988, H.R. Conf. Rep.

100-576, at 590–91 (1988), reprinted in 1988 U.S.C.C.A.N. 1547,

1623.    In its final determination resulting in Fuyao I, Commerce

stated, “What is relevant to [Commerce’s] determination of

whether it has a reason to believe or suspect that prices may be

subsidized, is the existence of a subsidy program.      A subsidy is,

in itself, a market distortion.”   Shandong I, 29 CIT at __, slip

op. 05-54 at 19 (quoting Final Results of Redetermination

Pursuant to Remand, Fuyao Glass Indus. Group Co. v. United

States, 27 CIT 1892, at 37-38).

     Here, Commerce did not exclude U.S. export data from the

Indian import statistics it used to value factors of production,

citing its authority under 19 U.S.C. § 1677f-1 and 19 C.F.R.

§ 351.413 (2003) to disregard “insignificant adjustments” to

normal value.7   See Issues & Dec. Mem., cmt. 2 at 9.    In Shandong

     7
          Section 1677f-1 provides that when determining normal
value under 19 U.S.C. § 1677b Commerce “may . . . decline to take
                                                   (continued...)
Consol. Court No. 03-00676                                  Page 16

I, the court directed Commerce to explain its decision to include

data on allegedly subsidized U.S. exports in light of Fuyao I and

Fuyao II.

     The court finds that Commerce complied with the court’s

instruction to more fully explain its decision to disregard the

effect of subsidies from the United States and other countries,

in light of Fuyao I and Fuyao II.     In both the Fuyao cases and

the case at bar, the question concerns the construction of normal

value in the NME context.    In each case, Commerce valued a factor

or factors of production purchased from a market economy

supplier.   Normally, the price paid for these factors of

production would be considered to be reliable and used to

calculate normal value.     See China Nat. Mach. Imp. & Exp. Corp.

v. United States, 27 CIT 255, 264, 264 F. Supp. 2d 1229, 1237

     7
      (...continued)
into account adjustments which are insignificant in relation to
the price or value of the merchandise.” 19 U.S.C.
§ 1677f-1(a)(2).

     Commerce’s regulations define “insignificant adjustment”:

            Ordinarily, under [19 U.S.C.
            § 1677f-1(a)(2)], an “insignificant
            adjustment” is any individual adjustment
            having an ad valorem effect of less than 0.33
            percent, or any group of adjustments having
            an ad valorem effect of less than 1.0
            percent, of the export price, constructed
            export price, or normal value, as the case
            may be.

19 C.F.R. § 351.413.
Consol. Court No. 03-00676                                Page 17

(2003) (“Where actual prices reflect true market values, not to

employ such prices would indeed be contrary to Commerce’s mandate

of estimating antidumping duty margins as accurately as

possible.” (internal quotation marks and citation omitted)).    In

the Fuyao cases, however, Commerce elected to avoid using the

actual prices paid because it maintained that it had reason to

believe or suspect that the prices were subsidized.     See Fuyao I,

27 CIT at 1904 (“[P]rior CVD findings may provide the basis for

the Department to also consider that it has particular and

objective evidence to support a reason to believe or suspect that

prices of the inputs from that country are subsidized.”) (quoting

Issues & Dec. Mem. at 11).   In those cases, Commerce did not

inquire into the degree of subsidization, reasoning that, under

its methodology, any level of subsidy was sufficient to require

it to disregard the price paid for an input.

     Here, Commerce has refined its methodology by adding a

preliminary step.   Where a claim of subsidization is made,

Commerce will now first determine whether the inclusion or

exclusion of the allegedly subsidized price for the factor of

production affects the calculation of normal value in a

significant way:

          In the Final Results, we conducted our
          analysis by first calculating two surrogate
          values, one with U.S. exports included and
          one other with the [allegedly subsidized]
          U.S. data excluded. We calculated [normal
          value] using both sets of surrogate values
Consol. Court No. 03-00676                                Page 18

          and calculated the total weighted-average
          [normal value] with U.S. exports included,
          and with U.S. exports excluded. We found
          that [normal value] changed only by 0.21
          percent. As this adjustment would be an
          insignificant adjustment to [normal value]
          [under 19 C.F.R. § 351.413], we did not
          remove imports from the United States from
          Indian import data when calculating the
          surrogate values used in the administrative
          review.

Remand Results at 11 (citations omitted).   It can be assumed that

had Commerce found a more substantial effect on normal value from

the inclusion of the challenged prices it would have then

conducted a further analysis in accordance with the “reason to

believe or suspect” test found in the Fuyao cases.8

     The court finds that Commerce’s method of examining

allegedly subsidized inputs by incorporating a preliminary step

to determine whether inclusion or exclusion of inputs affects

normal value in a significant way, is reasonable.     As a result,

     8
          As set forth in Fuyao II:

          [T]o justify a finding with respect to
          subsidization, Commerce must demonstrate by
          specific and objective evidence that (1)
          subsidies of the industry in question existed
          in the supplier countries during the period
          of investigation . . . ; (2) the supplier in
          question is a member of the subsidized
          industry or otherwise could have taken
          advantage of any available subsidies; and (3)
          it would have been unnatural for a supplier
          to not have taken advantage of such
          subsidies.

Fuyao II, 29 CIT at __, slip op. 05-6 at 10.
Consol. Court No. 03-00676                                  Page 19

Commerce’s decision not to exclude U.S. export data in

calculating normal value is sustained.

IV.    Brokerage and Handling: Labor Costs

       In the Final Results, Commerce found, based on its

“judgment” and “experience,” that the surrogate value for

brokerage and handling likely included the labor costs incurred

by Huarong in making steel pallets.    See Shandong I, 29 CIT at

__, slip op. 05-54 at 22-23 (quoting Issues & Dec. Mem. at 21-

22).    In Shandong I, the court found that Commerce had not

supported this finding with substantial evidence and remanded to

Commerce to “supply more information and a more complete

explanation to support its decision to include [labor costs for

making steel pallets] under brokerage and handling.”     Id. at 23.

       On remand, Commerce collected more information from Huarong

and explained:

            For this redetermination, we requested that
            Huarong provide the usage rate for labor
            required to manufacture self-produced steel
            pallets and the consumption rate for the
            materials and energy used when welding the
            steel into pallets. In response, Huarong
            reported consumption rates for labor and
            welding rod used in producing the pallets,
            and noted that the electricity used for
            welding the steel pallets was included in the
            previously reported electricity consumption
            rate. We valued welding rod using publicly
            available Indian import statistics for
            February 2001 through January 2002 . . . .
            We valued labor for making pallets using the
            regression-based wage rate for the PRC that
Consol. Court No. 03-00676                               Page 20

           the Department applied for both skilled and
           unskilled labor in the Final Results.

Remand Results at 13 (citations and footnote omitted).   Thus,

Commerce took labor costs into account in its calculation of

normal value.

     None of the parties filed specific objections with the court

regarding Commerce’s findings on this issue.   As is apparent from

the Remand Results, Commerce requested and received information

from Huarong concerning the labor and electricity used to make

steel pallets and valued the factors of production using Indian

surrogates, as it did with other factors of production in this

case.   That being the case, and Commerce having complied with the

court’s remand instructions, the findings are sustained.

V.   Brokerage and Handling: Movement Costs

     In the Final Results, Commerce relied on its experience,

without citing specific evidence, to find that movement expenses

incurred at the port of export were captured in the surrogate

brokerage and handling values used.    See Shandong I, 29 CIT at

__, slip op. 05-54 at 26.    In Shandong I, the court remanded this

issue for Commerce to provide additional information and

explanation with respect to its inclusion of movement expenses in

brokerage and handling costs, “should Commerce continue to find

on remand that the movement expenses at issue are accounted for

under brokerage and handling.”    Id. at __, slip op. 05-54 at 27.
Consol. Court No. 03-00676                               Page 21

     On remand, Commerce continued to find that movement expenses

were accounted for under brokerage and handling.    It explained

that it is common for companies not to itemize brokerage and

handling expenses, and that neither Huarong nor Viraj,9 the

Indian company whose information Commerce used as surrogate data,

itemized such expenses here.    Nonetheless, it was able to

“identify certain movement-related expenses that both [Huarong

and Viraj] must have incurred, and that therefore must be

captured in the [brokerage and handling] surrogate value.”

Remand Results at 16.

     Ames challenges Commerce’s methodology, arguing that

Commerce failed to find affirmative evidence that Viraj actually

incurred the movement expenses discussed above.    Absent this

evidence, Ames contends Commerce must “deduct [movement] expenses

from Huarong’s U.S. pricing.”    Ames’s Draft Redetermination

Comments at 12.

     It is, of course, true that Commerce’s determinations must

be made on the basis of facts in the record.    It is also true

that, as Commerce contends, “it is entirely appropriate for the

Department to make ‘reasonable inferences’ from the record

evidence,” which it has done here.    Remand Results at 32 (quoting

     9
          Viraj was a respondent in Certain Stainless Steel Wire
Rod From India, 63 Fed. Reg. 48,184 (ITA Sept. 9, 1998) (prelim.
results). Commerce used information from the record in that
investigation to value factors of production in its investigation
of heavy forged hand tools from China.
Consol. Court No. 03-00676                                  Page 22

Shandong I, 29 CIT at __, slip op. 05-54 at 23).      For example,

based on “cost-insurance-freight” delivery terms included in

Viraj’s questionnaire responses, Commerce was able to discern

that “Viraj was responsible for paying all costs incurred at the

port of export.”      Id. at 16.   Since both Huarong’s and Viraj’s

goods were transported to the port of export by truck and loaded

and secured to a vessel, Commerce found that “it [was] reasonable

to infer that Huarong would have incurred . . . expenses,” such

as drayage.10   Id.    In addition, Commerce explained, by reference

to Huarong’s supplemental questionnaire responses and other

record documents, its determination that other movement expenses,

such as containerization, were also included in brokerage and

handling.   See Remand Results at 17 (citing Huarong’s Feb. 4,

2004, Supp. Resp. at Ex. 5; Indian Docs. Mem.).

     Based on this new information and additional explanation,

the court sustains Commerce’s finding that movement expenses

incurred at the port of export were captured in surrogate

brokerage and handling values.

     10
          Drayage, or cartage, is a port charge that includes
“movement of merchandise from truck to container yard and from
container yard to ship . . . .” Remand Results at 17.
Consol. Court No. 03-00676                              Page 23

                             CONCLUSION

     For the foregoing reasons, the court denies Huarong’s and

Ames’s motions for judgment upon the agency record and sustains

the Remand Results.   Judgment shall be entered accordingly.

                                          /s/ Richard K. Eaton
                                              Richard K. Eaton

Dated:    January 9, 2007
          New York, New York
                          Slip Op. 07-3

            UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
                               :
SHANDONG HUARONG MACHINERY     :
COMPANY,                       :
                               :
                Plaintiff,     :
                               :
          v.                   : Before: Richard K. Eaton, Judge
                               :
UNITED STATES,                 : Consol. Court No. 03-00676
                               :
                Defendant,     :
                               :
     and                       :
                               :
AMES TRUE TEMPER,              :
                               :
                Deft.-Int.     :
______________________________:

                         JUDGMENT ORDER

   Upon considering the United States Department of Commerce’s
(“Commerce”) determination in Heavy Forged Hand Tools, Finished
or Unfinished, With or Without Handles, From the People’s
Republic of China, 68 Fed. Reg. 53,347 (ITA Sept. 10, 2003)
(final results) as modified by the Final Results of
Redetermination Pursuant to Court Remand (Nov. 30, 2005), the
memoranda and accompanying materials in support thereof, and upon
all the other papers and proceedings had herein, it is hereby
     ORDERED that Commerce’s determination, as modified on
remand, is sustained.

                                          /s/ Richard K. Eaton
                                              Richard K. Eaton

Dated:    January 9, 2007
          New York, New York