Court Opinion

ID: 817636
Source: CourtListenerOpinion
Date Created: 2013-02-01 01:56:21.273742+00
Date Added: 2024-06-11T09:03:53.583745
License: Public Domain

Slip Op. 09-61

            UNITED STATES COURT OF INTERNATIONAL TRADE
_____________________________
                              :
ZHEJIANG NATIVE PRODUCE AND :
ANIMAL BY-PRODUCTS IMPORT & :
EXPORT GROUP CORP., JIANGSU :
KANGHONG NATURAL HEALTHFOODS :
CO., LTD., AND ANHUI HONGHUI :
FOODSTUFF (GROUP) CO., LTD., :
                              : Before: Richard K. Eaton, Judge
                              :
                              : Court No. 06-00234
          Plaintiffs,         :
                              :
     v.                       :
                              :
                              :
UNITED STATES,                :
                              :
          Defendant,          :
                              :
     and                      :
                              :
THE AMERICAN HONEY PRODUCERS :
ASSOCIATION AND THE SIOUX     :
HONEY ASSOCIATION,            :
                              :
          Def.-Ints.          :
_____________________________:

                             OPINION

[United States Department of Commerce’s Final Results of
Redetermination are sustained.]

                                          Dated: June 19, 2009

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Bruce M.
Mitchell, Ned H. Marshak, Elaine F. Wang), for plaintiffs.

Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Reginald T. Blades, Jr., Assistant Director, United
States Department of Justice Commercial Litigation Branch, Civil
Division,(Jane C. Dempsey); Office of the Chief Counsel for
Import Administration, United States Department of Commerce,
(Sapna Sharma), of counsel, for defendant.
Court No.   06-00234                                             Page 2

Kelley Drye & Warren (Michael J. Coursey, R. Alan Luberda), for
defendant-intervenors.

     Eaton, Judge:     In Zhejiang Native Produce and Animal By-

Products Import & Export Group Corp. v. United States, 32 CIT __,

Slip Op. 08-68 (June 16, 2008) (not reported in the Federal

Supplement) (“Zhejiang I”), this court sustained, in part, and

remanded the final results of the United States Department of

Commerce’s (“Commerce” or the “Department”) third administrative

review of the antidumping duty order on honey from the People’s

Republic of China (“PRC”) for the period of review (“POR”)

beginning on December 1, 2003 through November 30, 2004.     See

Honey from the PRC, 71 Fed. Reg. 34,893 (Dep’t of Commerce June

16, 2006) (final results) and the accompanying Issues and

Decision Memorandum (Dep’t of Commerce June 9, 2006) (“Issues &

Dec. Mem.”) (collectively, “Final Results”).

     Commerce has now issued the Final Results of Redetermination

Pursuant to Court Remand (Dep’t of Commerce Dec. 18, 2008)

(“Remand Results”).     Plaintiffs Zhejiang Native Produce and

Animal By-Products Import & Export Group Corp., Jiangsu Kanghong

Natural Healthfoods Co., Ltd., and Anhui Honghui Foodstuff

(Group) Co., Ltd. (collectively, “plaintiffs”) have filed their

comments in response to the Remand Results.     See Pls.’ Comments

Resp. Remand Results (“Pls.’ Comments”).     In addition, Commerce

has filed its response to those comments, and defendant-
Court No.    06-00234                                         Page 3

intervenors the American Honey Producers Association and the

Sioux Honey Association have filed their respective responses, as

well.    See Def.’s Resp. Pls.’ Comments (“Defs.’ Resp.”); Def.-

Ints.’ Comments Remand Results (“Def.-Ints.’ Comments”).

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

U.S.C. § 1516a(a)(2)(B)(iii).   As explained in Zhejiang I,

certain of the issues in this action have been litigated

previously in this Court.1   Zhejiang I, 32 CIT at __, Slip Op.

08-68 at 3.    For the reasons set forth below, the court sustains

the Remand Results.

                         STANDARD OF REVIEW

     The court reviews the Remand Results under the substantial

evidence and in accordance with law standard 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

     1
          These include: a challenge to Commerce’s second
administrative review of the antidumping duty order on Chinese
honey (for the period of review from December 1, 2002 through
November 30, 2003) in Shanghai Eswell Enter. Co. v. United
States, 31 CIT __, Slip Op. 07-138 (Sept. 13, 2007) (not reported
in the Federal Supplement) and in Wuhan Bee Healthy Co. v. United
States, 31 CIT __, Slip Op. 07-113 (July 20, 2007)(not reported
in the Federal Supplement); and a challenge to Commerce’s first
administrative review of the antidumping duty order on Chinese
honey (for the period of review from December 1, 2001 through May
31, 2002) in Wuhan Bee Healthy Co. v. United States, 29 CIT 587,
374 F. Supp. 2d 1299 (2005).
Court No. 06-00234                                             Page 4
not in accordance with law . . . .”).

                             DISCUSSION

I.   Calculation of Surrogate Values

     In determining whether the subject merchandise is being, or

is likely to be, sold at less than fair value, 19 U.S.C.

§ 1677b(a) requires Commerce to make “a fair comparison . . .

between the export price2 or constructed export price3 and normal

value.”   When merchandise that is the subject of an antidumping

investigation is exported from a nonmarket economy (“NME”)4

     2
          The “export price” is “the price at which the subject
merchandise is first sold . . . by the producer or exporter of
the subject merchandise outside of the United States to an
unaffiliated purchaser in the United States or to an unaffiliated
purchaser for exportation to the United States,” as adjusted. 19
U.S.C. § 1677a(a).
     3
          “Constructed export price” is “the price at which the
subject merchandise is first sold . . . in the United
States . . . by or for the account of the producer or exporter of
such merchandise or by a seller affiliated with the producer or
exporter, to a purchaser not affiliated with the producer or
exporter,” as adjusted. 19 U.S.C. § 1677a(b).
     4
          A “nonmarket economy country” is “any foreign country
that [Commerce] determines does not operate on market principles
of cost or pricing structures, so that sales of merchandise in
such country do not reflect the fair value of the merchandise.”
19 U.S.C. § 1677(18)(A). “Because it deems China to be a
nonmarket economy country, Commerce generally considers
information on sales in China and financial information obtained
from Chinese producers to be unreliable for determining, under 19
U.S.C. § 1677b(a), the normal value of the subject merchandise.”
Shanghai Foreign Trade Enters. Co. v. United States, 28 CIT 480,
481, 318 F. Supp. 2d 1339, 1341 (2004). Therefore, because the
subject merchandise comes from the PRC, Commerce constructed
normal value by valuing the factors of production using surrogate
                                                        (continued...)
Court No. 06-00234                                         Page 5
country, such as the PRC, Commerce, under most circumstances,

determines normal value by valuing the factors of production used

in producing the merchandise using surrogate data, to which it

adds

            an amount for general expenses and profit
            plus the cost of containers, coverings, and
            other expenses. . . .[T]he valuation of the
            factors of production shall be based on the
            best available information regarding the
            values of such factors in a market economy
            country or countries considered to be
            appropriate by the administering authority.

19 U.S.C. § 1677b(c)(1).

       A.   Calculation of Surrogate Financial Ratios: Expenses for
            Jars and Corks

       In determining normal value, Commerce uses ratios5 to

       4
     (...continued)
data from India.      See 19 U.S.C. § 1677b(c)(4).
       5
            As this Court has explained:

            [t]o calculate the SG&A ratio, the Commerce
            practice is to divide a surrogate company’s
            SG&A costs by its total cost of
            manufacturing. For the manufacturing
            overhead ratio, Commerce typically divides
            total manufacturing overhead expenses by
            total direct manufacturing expenses.
            Finally, to determine a surrogate ratio for
            profit, Commerce divides before-tax profit by
            the sum of direct expenses, manufacturing
            overhead and SG&A expenses. These ratios are
            converted to percentages (“rates”) and
            multiplied by the surrogate values assigned
            by Commerce for the direct expenses,
            manufacturing overhead and SG&A expenses.

                                                            (continued...)
Court No. 06-00234                                         Page 6
calculate amounts for “general expenses and profit,” calculating

separate values for selling, general and administrative expenses;

manufacturing overhead; and profit.   See Wuhan Bee Healthy Co. v.

United States, 31 CIT __, __, Slip Op. 07-113 at 41-42 (July 20,

2007) (not reported in the Federal Supplement) (citation and

quotation omitted); 19 U.S.C. § 1677b(c)(1)(B).

     In the Final Results, Commerce did not include expenses for

jars and corks as direct material costs in the calculation of the

materials, labor and energy (“MLE”) denominator in the

Department’s financial ratio calculations.   See Zhejiang I, 32

CIT at ___, Slip Op. 08-68 at 30-31; Remand Results at 2.6

Commerce stated that the financial statements of the

Mahabaleshwar Honey Producers’ Cooperative (“MHPC”)7 indicated

     5
     (...continued)
Wuhan Bee Healthy Co. v. United States, 31 CIT __, __, Slip Op.
07-113 at 42 n.15 (July 20, 2007) (not reported in the Federal
Supplement) (citing Shanghai Foreign Trade Enters. Co. v. United
States, 28 CIT 480, 482, 318 F. Supp. 2d 1339, 1341 (2004)).
     6
          In the calculation of surrogate financial ratios, the
denominator should include the expenses of all direct material
costs. See Persulfates from the PRC, 68 Fed. Reg. 6,712 (Dep’t
of Commerce Feb. 10, 2003) (notice of final results), and
accompanying Issues and Decision Memorandum, at Comm. 9 (Dep’t of
Commerce Feb. 3, 2003).
     7
          In the Final Results, Commerce determined that the
information from the 2004-2005 financial statements of the MHPC
was “the best and most contemporaneous available information for
valuing the financial ratios.” Issues & Dec. Mem. at 19
(footnote omitted). The court upheld Commerce’s determination to
use the MHPC financial statements in Zhejiang I. See 32 CIT at
___, Slip Op. 08-68 at 25.
Court No. 06-00234                                         Page 7
that these items were being purchased and sold by MHPC, rather

than being consumed in the sale of honey: “Respondents failed to

provide evidence that the ‘jars and corks’ were consumed as

packing8 in the manner described.”   Issues & Dec. Mem. at 23.

     The court in Zhejiang I found no reason to deviate from its

finding in Shanghai Eswell with regard to this issue.9    Zhejiang

I, 32 CIT at __, Slip Op. 08-68 at 32-33 (citing Shanghai Eswell

Enter. Co. v. United States, 31 CIT __, Slip Op. 07-138 at 24-25

     8
          The Department refers to “packing” and “packaging”
interchangeably. It is not clear to the court that the words, as
used in MHPC’s financial statements, are necessarily referring to
the same thing.
     9
          First, the court observes . . . that the
          chart specifically pertains to honey sale and
          collection. Next, the court notes that the
          chart contains line items for 250 gram, 500
          gram and 1 kilogram jars; 53 millimeter and
          38 millimeter corks; and honey machines in
          both the “Sale” column and the “Purchase”
          column. The line item for 100 gram jars
          appears only in the “Sale” column. The chart
          is therefore ambiguous. While it is possible
          that MHPC buys and sells jars [with] corks
          that are either empty or filled with
          something other than honey, there is no
          evidence in the MHPC financial statement
          tending to support such a conclusion.
          Without further explanation the court cannot
          accept as adequate Commerce’s reliance solely
          on the line items for jars and corks being
          separate from other line items, to support
          its conclusion that they are not direct
          materials associated with finished honey.

Zhejiang I, 32 CIT at ___, Slip Op. 08-68 at 32-33 (citing
Shanghai Eswell Enter. Co. v. United States, 31 CIT __, Slip Op.
07-138 (Sept. 13, 2007) (not reported in the Federal
Supplement)(citations and footnote omitted)).
Court No. 06-00234                                            Page 8
(Sept. 13, 2007) (not reported in the Federal Supplement)

(“Shanghai Eswell”)).   The court thus rejected as unsupported by

substantial evidence Commerce’s findings regarding expenses for

jars and corks and remanded this question to Commerce.     Id. at

__, Slip Op. 08-68 at 33.

     In its Remand Results, Commerce states:

          In accordance with the Court’s instruction,
          and after careful examination of the record,
          and consistent with the Department’s finding
          in the Shanghai Eswell Remand, as affirmed by
          the Court, the Department has revised the
          financial ratio calculations to include
          MHPC’s reported expenses for jars and corks
          as direct materials used to produce finished
          honey.

Remand Results at 3 (citation omitted).   As a result, the

Department revised the calculation of the surrogate financial

ratios to include expenses for jars and corks in the MLE

denominator.

     In their response to the Remand Results, plaintiffs state

that they “agree with the Department[’s]. . . determination that

in calculating surrogate value financial ratios, jars and corks

should be included as ‘direct material costs’ in the materials,

labor and energy denominator.”   Pls.’ Comments 2.   No other party

has objected to the Department’s finding.    Accordingly, the court

sustains Commerce’s inclusion of jar and cork expenses in its

calculation of surrogate financial ratios.
Court No. 06-00234                                              Page 9
     B.   Calculation of Labor Costs

     The cost of labor is another factor of production used to

determine normal value.   To calculate the labor wage rate in NME

countries, Commerce, pursuant to its regulations, employs a

regression-based analysis using data from multiple countries.

See Dorbest Ltd. v. United States, 30 CIT __, __, 462 F. Supp. 2d

1262, 1291 (2006); see 19 C.F.R. § 351.408(c)(3) (“For labor, the

Secretary will use regression-based wage rates reflective of the

observed relationship between wages and national income in market

economy countries.   The Secretary will calculate the wage rate to

be applied in nonmarket economy proceedings each year.    The

calculation will be based on current data, and will be made

available to the public.”).

     In Zhejiang I, plaintiffs challenged the Department’s use of

this methodology, primarily because it was based on a basket of

countries not economically comparable to China, which

“contradicts the statute’s language that the factors of

production be valued using data from economically comparable

countries pursuant to 19 U.S.C. § 1677b(c)(4).”   32 CIT at __,

Slip Op. 08-68 at 34-35 (quotation omitted).   On remand the court

instructed Commerce to reconsider its analysis

          with specific reference to the reliance on
          data from countries whose level of
          development is not comparable to the PRC, and
          how its insistence that it need not alter its
          database for the wage rate calculation
          conforms to its behavior in other cases.
Court No.    06-00234                                          Page 10
Zhejiang I, 32 CIT at __, Slip Op. 08-68 at 44.

     On remand the Department “recalculated the regression

analysis to include all countries for which data are available

and suitable, pursuant to the country data selection criteria

established in Antidumping Methodologies: Market Economy Inputs,

Expected Non-Market Economy Wages, Duty Drawback; and Request for

Comments, 71 Fed. Reg. 61,716 (Dep’t of Commerce October 19,

2006) (“Selection Criteria”). . . .”    Remand Results at 6.

Commerce thus revised its labor rate regression to include all

countries in its analysis that meet the Department’s Selection

Criteria.    Id.   Plaintiffs state that they “do not challenge the

Department’s redetermination.”    Pls.’ Comments 2.   Nor does any

other party object to Commerce’s findings.    Consequently, the

court sustains Commerce’s redetermination regarding the selection

of data10 to calculate the labor wage rate.

     C.     Calculation of Brokerage and Handling

     In the Final Results, in calculating surrogate values,

Commerce used a simple average of two surrogate values to

     10
          The only question dealing with Commerce’s cost of labor
regulations addressed by this opinion relates to which countries
should be included in Commerce’s regression analysis. The court
does not have before it issues dealing with the validity of the
regression analysis, and therefore has made no finding with
respect thereto. Cf. Allied Pac. Food (Dalian) Co. v. United
States, 32 CIT __, __ 587 F. Supp. 2d 1330, 1361 (2008)
(concluding “that 19 C.F.R. § 351.408(c)(3) is contrary to 19
U.S.C. § 1677b(c) and therefore invalid.”).
Court No.   06-00234                                           Page 11
calculate domestic brokerage and handling.    See Remand Results at

18.   Commerce calculated this average using data provided by

Essar Steel Limited (“Essar Steel”) and Pidilite Industry

(“Pidilite”).    Commerce explained that the simple average

“achieves the most representative surrogate value in lieu of a

honey-specific brokerage and handling value.”    Remand Results at

18 (citation omitted).    Moreover, the Department explained in the

Final Results that “it calculated the surrogate value using the

Essar Steel and Pidilite data because together they constitute

the best available information for valuing brokerage and handling

based on the quality and specificity of the data.”    Remand

Results at 18.

      In Zhejiang I, plaintiffs challenged the Department’s use of

the Pidilite data, arguing that only the Essar Steel data should

be used because: “(1) the Essar data is more contemporaneous; and

(2) the Pidilite data has an aberrationally high brokerage and

handling value based on a very low sales quantity.”    Zhejiang I,

32 CIT at __, Slip Op. 08-68 at 40 (citation and quotation

omitted).

      The Zhejiang I court found that “Commerce acted within its

discretion when it concluded that, in the absence of data more

specific to honey, the several months’ difference in

contemporaneousness was not material, and thus that the Pidilite

data should not be excluded on that basis alone.”    32 CIT at ___,
Court No. 06-00234                                            Page 12
Slip Op. 08-68 at 42.   However, the court also found that:

          Commerce’s determination that use of a simple
          average of the data constituted the best
          available information for valuing brokerage
          and handling, . . . does not appear to be
          supported by substantial evidence. Commerce
          states that the Pidilite data constitutes the
          best available information for valuing
          brokerage and handling because of the data’s
          “quality and specificity.” The Department at
          no point, however, explains how the data
          meets either one of these standards.

Id. at __, Slip Op. 08-68 at 42.

     On remand, the Department “continues to find that the

combination of both Pidilite and Essar Steel comprise the best

available information in terms of quality and specificity.”

Remand Results at 19.

     The Department explained that “lacking a honey-specific

brokerage and handling value, the brokerage and handling costs of

Essar Steel’s hot-rolled carbon steel flat products, and

Pidilite’s carbazole violet pigment, are equally applicable to

determine a surrogate brokerage and handling value.”   Remand

Results at 19 (citation omitted). “[W]ithout additional record

evidence to suggest that hot-rolled steel was more comparable to

honey than carbazole violet pigment, the selection of either

Pidilite’s or Essar’s data over the other would not be supported

by substantial evidence.”   Def.’s Resp. 5 (citation omitted).

     In objecting to the use of the Pidilite data on remand,

plaintiffs make three primary arguments: (1) that Commerce has

not shown that the Pidilite data is as representative as the
Court No. 06-00234                                        Page 13
Essar Steel data; (2) that the Pidilite data should not be used

because it consists of only 19 shipments, while the Essar Steel

data represents 446 shipments;11   and (3) that the Pidilite data

itself is marred by the presence of “clearly anomalous” value

derived from a single shipment.    See Pls.’ Mem. 3-6.   Despite

plaintiffs’ arguments to the contrary, the Department has

supported with substantial evidence both the use of the Pidilite

data and the use of a simple average.

     First, Commerce has shown that the Pidilite data is as

representative as the Essar Steel data.   As noted, there are no

brokerage and handling values for honey on the record.    Thus, the

Department looked elsewhere.   The Essar Steel data represents

values for steel; those for Pidilite, brokerage and handling

costs for carbazole violet pigment.   Each of these products is

far removed from honey, however, no party questions the use of

the Essar Steel data.

     That being the case, it is difficult to see how the Pidilite

data is less representative of honey than the Essar Steel data.

Both data sets are relatively contemporaneous to each other and

to the POR.   See Zhejiang I, 32 CIT at __, Slip Op. 08-68 at 42.

While the Essar Steel data represents many price points, the

nineteen price points for the Pidilite data is not a de minimis

     11
          See Factors of Production Valuation Mem. for the
Preliminary Results and Partial Rescission of Antidumping Duty
Admin. Review of Honey from the PRC dated December 9, 2005,
Administrative Record 229, Att. 15.
Court No. 06-00234                                         Page 14
number. Thus, the court agrees with Commerce that:

          in terms of specificity, the Department finds
          that neither of the products shipped by Essar
          Steel nor Pidilite is more or less comparable
          to honey, and thus the brokerage and handling
          costs of both are equally relevant. In terms
          of quality, the Department finds that neither
          Essar Steel nor Pidilite are more or less
          reliable than the other, and thus are both
          equally reliable.

Remand Results at 19.

     Commerce’s decision to use the Pidilite data even though it

represents fewer data entries than the Essar Steel data is also

not unreasonable.   The mere fact that there are fewer data points

does not necessarily render the Pidilite data unreliable, and

plaintiffs have provided no specific reason pointing to the

data’s unreliability.

     Finally, plaintiffs’ insistence that the Pidilite data

should either be adjusted or disregarded altogether because of

the presence of one “clearly anomalous” data entry is

unconvincing.   Again, beyond pointing out that the price for one

entry is far greater than the other 18 price points, plaintiffs

give no reason why that price point should be excluded.   The

court thus agrees with Commerce that plaintiffs “fail[] to cite

to any record evidence demonstrating that the price values for

the 19 shipments ‘skewed’ the data and fails to identify any

record evidence establishing the ‘normal’ brokerage and handling

value for carbazole violet pigment” which would demonstrate that

a “particular shipment value was aberrational.”   Def.’s Resp. 5.
Court No. 06-00234                                        Page 15
Accordingly, the court finds that because there is no record

evidence supporting a conclusion that Commerce should exclude a

particular Pidilite shipment value, or exclude Pidilite’s data as

a whole, Commerce’s inclusion of Pidilite’s data to calculate the

brokerage and handling value is reasonable.   The court thus finds

that the Department has provided substantial evidence to support

its use of the Pidilite data.

     Further, the court sustains Commerce’s decision to use a

simple average of the Pidilite and Essar Steel data.    Commerce

explained that it found these two sets of data to be equally

probative for determining the surrogate brokerage and handling

value, and plaintiff has not demonstrated that its preference of

using Essar Steel data alone will yield a more reliable result

than the average of the Essar Steel and Pidilite data.    Without

additional record evidence to suggest that hot-rolled steel was

more comparable to honey than carbazole violet pigment, the

selection of either Pidilite’s or Essar Steel’s data over the

other would not be supported by substantial evidence.    This Court

has held that “[w]here there exist[ ] on the record ‘alternative

sources of data that would be equally or more reliable ... it is

within Commerce's discretion to use either set of data.’”     Wuhan

Bee Healthy Co. v. United States, 29 CIT 587, 592-93, 374 F.

Supp. 2d 1299, 1304 (2005) (quoting Geum Poong Corp. v. United

States, 26 CIT 322, 326, 193 F. Supp. 2d 1363, 1369 (2002)).
Court No. 06-00234                                        Page 16
Using the same reasoning Commerce acted within its discretion by

including both sets of data and averaging them.

                           CONCLUSION

     For the foregoing reasons, the court sustains the

Department’s Remand Results.

                                           /s/Richard K. Eaton
                                           Richard K. Eaton

Dated:    June 19, 2009
          New York, New York