Court Opinion

ID: 4445788
Source: CourtListenerOpinion
Date Created: 2019-10-10 16:00:31.951497+00
Date Added: 2024-06-11T14:53:21.335520
License: Public Domain

NOTE: This disposition is nonprecedential.

 United States Court of Appeals
     for the Federal Circuit
              ______________________

         VINH HOAN CORPORATION,
              Plaintiff-Appellant

   ANVIFISH JOINT STOCK COMPANY, VINH
 QUANG FISHERIES CORPORATION, VIETNAM
 ASSOCIATION OF SEAFOOD EXPORTERS AND
PRODUCERS, BINH AN SEAFOOD JOINT STOCK
                COMPANY,
                 Plaintiffs

                         v.

   UNITED STATES, CATFISH FARMERS OF
   AMERICA, AMERICA'S CATCH, ALABAMA
CATFISH, INC., DBA HARVEST SELECT CATFISH,
    INC., HEARTLAND CATFISH COMPANY,
 MAGNOLIA PROCESSING, INC., DBA PRIDE OF
 THE POND, SIMMONS FARM RAISED CATFISH,
                      INC.,
               Defendants-Appellees

--------------------------------------------

  CATFISH FARMERS OF AMERICA, AMERICA'S
CATCH, ALABAMA CATFISH, INC., DBA HARVEST
 SELECT CATFISH, INC., HEARTLAND CATFISH
 COMPANY, MAGNOLIA PROCESSING, INC., DBA
 PRIDE OF THE POND, SIMMONS FARM RAISED
               CATFISH, INC.,
              Plaintiffs-Appellees
2                 VINH HOAN CORPORATION v. UNITED STATES

                            v.

 UNITED STATES, VIETNAM ASSOCIATION OF
SEAFOOD EXPORTERS AND PRODUCERS, BINH
   AN SEAFOOD JOINT STOCK COMPANY,
                Defendants

            VINH HOAN CORPORATION,
                Defendant-Appellant
               ______________________

                       2018-2190
                 ______________________

    Appeal from the United States Court of International
Trade in Nos. 1:13-cv-00138-CRK, 1:13-cv-00141-CRK,
1:13-cv-00155-CRK, 1:13-cv-00156-CRK, 1:13-cv-00159-
CRK, Judge Claire R. Kelly.
                ______________________

               Decided: October 10, 2019
                ______________________

    MATTHEW MCCONKEY, Mayer Brown LLP, Washing-
ton, DC, for appellant. Also represented by GRETEL
ECHARTE MORALES.

    KARA WESTERCAMP, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, for appellee United States. Also represented
by JEANNE DAVIDSON, JOSEPH H. HUNT, PATRICIA M.
MCCARTHY; DAVID W. RICHARDSON, Office of the Chief
Counsel for Import Administration, United States Depart-
ment of Commerce, Washington, DC.

  JAMES R. CANNON, JR., Cassidy Levy Kent USA LLP,
Washington, DC, for appellees Catfish Farmers of America,
VINH HOAN CORPORATION v. UNITED STATES                     3

America’s Catch, Alabama Catfish, Inc., Heartland Catfish
Company, Magnolia Processing, Inc., Simmons Farm
Raised Catfish, Inc. Also represented by JONATHAN M.
ZIELINSKI.
                 ______________________

     Before NEWMAN, DYK, and CHEN, Circuit Judges.
Dyk, Circuit Judge.
     Vinh Hoan Corporation (“Vinh Hoan”) appeals the U.S.
Department of Commerce’s (“Commerce”) determination in
the eighth antidumping duty administrative review of fro-
zen fish fillets from the Socialist Republic of Vietnam (“Vi-
etnam”). Vinh Hoan challenges the methodology used by
Commerce in calculating the value of Vinh Hoan’s fish oil
by-product. This by-product was an offset used in calculat-
ing a constructed normal value for Vinh Hoan’s frozen fish
fillets from Vietnam. Because we agree with the Court of
International Trade (“CIT”) that the methodology was sup-
ported by substantial evidence and was not arbitrary and
capricious or contrary to the law, we affirm.
                              I
     The antidumping statute imposes duties on imports of
foreign merchandise sold in the United States at less than
fair value that threatens to or materially injures a domestic
industry. Viet I-Mei Frozen Foods Co. v. United States, 839
F.3d 1099, 1101 (Fed. Cir. 2016). The imposed duty is “an
amount equal to the amount by which the normal value ex-
ceeds the export price . . . for the merchandise.” 19 U.S.C.
§ 1673. The export price is the price of the goods sold in
the United States. The normal value of the merchandise is
determined by considering the sales of the merchandise in
either the home market or in a third country, or by a con-
structed value of the merchandise.                19 U.S.C.
§ 1677b(a), (e).
4                   VINH HOAN CORPORATION v. UNITED STATES

    In cases where the merchandise originated from a non-
market economy such as Vietnam, the “sales of merchan-
dise in such country do not reflect the fair value of the mer-
chandise.” 19 U.S.C. § 1677(18) (A). The normal value of
the merchandise in such countries is calculated “on the ba-
sis of the value of the factors of production utilized in pro-
ducing the merchandise and to which shall be added an
amount for general expenses and profit plus the cost of con-
tainers, coverings, and other expenses.”           19 U.S.C.
§ 1677b(c)(1)(B). “[T]he valuation of the factors of produc-
tion [is] 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 administer-
ing authority.” Id.
     The factors of production include: hours of labor, quan-
tities of raw materials used, amounts of energy and other
utilities consumed, and capital costs.             19 U.S.C.
§ 1677b(c)(3). In valuing the factors of production, Com-
merce selects, “to the extent possible . . . prices or costs of
[the] factors of production in one or more market economy
countries that are—(A) at a level of economic development
comparable to that of the nonmarket economy country, and
(B) significant producers of comparable merchandise.” 19
U.S.C. § 1677b(c)(4).
    There are situations, and this is one of them, where the
importer concurrently produces the imported product and
a by-product of the imported product. This necessitates
separation of the normal value of the by-product from the
normal value of the imported product. The statute does not
address offsets for by-products. Am. Tubular Prods., LLC
v. United States, 847 F.3d 1354, 1361 (Fed. Cir. 2017) (cit-
ing 19 U.S.C. § 1677b(c)). Nevertheless, Commerce credits
the respondent with the value of a by-product sold for profit
in determining the normal value of the subject merchan-
dise. Guangdong Chems. Imp. & Exp. v. United States, 460
F. Supp. 2d 1365, 1373 (Ct. Int’l Trade 2006).
VINH HOAN CORPORATION v. UNITED STATES                         5

    Commerce has established a regulatory preference for
valuing all factors of production from a single surrogate
country wherever possible. 19 C.F.R. § 351.408(c)(2) (“Ex-
cept for labor . . . the Secretary normally will value all fac-
tors [of production] in a single surrogate country.”).
Commerce selects the “best available information” for the
factors of production and the by-product offset based on
data where “prices [are] specific to the input in ques-
tion, . . . are net of taxes and import duties, . . . are contem-
poraneous with the period of investigation or review, and
[are derived from] publicly available data.” Import Ad-
min., U.S. Dep’t Commerce, Non–Market Economy Surro-
gate Country Selection Process, Policy Bulletin 04.1 (2004),
http://enforcement.trade.gov/policy/bull04-1.html; see also
Soc Trang Seafood Joint Stock Co. v. United States, 365 F.
Supp. 3d 1287, 1292 (Ct. Int’l Trade 2019) (discussing Com-
merce’s selection of “best available information” for calcu-
lating the surrogate value of by-products). Ultimately,
Commerce selects the “best available information” that al-
lows it to achieve the purpose of the antidumping statute
in calculating dumping margins “as accurately as possible.”
Shakeproof Assembly Components, Div. of Ill. Tool Works,
Inc. v. United States, 268 F.3d 1376, 1382 (Fed. Cir. 2001)
(quoting Lasko Metal Prods., Inc. v. United States, 43 F.3d
1442, 1446 (Fed. Cir. 1994)).
                               II
     In an eighth antidumping duty administrative review,
Commerce calculated antidumping duties for frozen fish
fillets imported in the United States. Calculating those du-
ties required determining a constructed value for Vinh
Hoan’s frozen fish fillets (imported into the United States)
excluding the value of the fish oil by-product (not imported
into the United States). Vinh Hoan makes fish oil by sav-
ing fish scrap during the fillet production process, chop-
ping, grinding, and cooking the scrap, pressing oil out of
the scrap, and collecting the oil in a large vat. The oil is
unrefined and is distributed to customers in Vietnam by
6                   VINH HOAN CORPORATION v. UNITED STATES

turning a spigot on the vat, which empties the oil into a
customer’s bucket.
    In its final determination, Commerce initially selected
data under the Indonesian Harmonized Tariff Schedule
(“HTS”) category 1504.20.9000 (“HTS data”), 1 as the best
available information to value Vinh Hoan’s fish oil by-prod-
uct. The category is entitled “Fish Fats & Oils & Their
Fractions Exc Liver, Refined or Not, Not Chemically Mod”
and appears to be the only HTS category that includes un-
refined fish oil. Commerce was concerned that the HTS
data “may be an overly broad HTS category in which to
value the respondents’ fish oil, given that by its terms it
may include refined fish oil.” Certain Frozen Fish Fillets
from the Socialist Republic of Vietnam: Issues and Decision
Mem. for the Final Results of the Eighth Admin. Review
and Aligned New Shipper Reviews (“Final Decision
Memo”), 78 ITADOC 17350, slip op. at 38 (issued Mar. 13,
2013).
    To address this concern, Commerce capped the HTS
data price by using Vinh Hoan’s actual factors of produc-
tion for fish waste, labor, sawdust, rice husks, coal, and
electricity. The factors of production were valued by apply-
ing surrogate values previously selected for constructing
the value of the frozen fish fillets to each respective factor
of production. 2 The financial ratios (for selling, general

    1    Commerce acquired these Indonesian import sta-
tistics from the Global Trade Atlas database. Import sta-
tistics are collected by a respective country’s customs
agency. See Fuwei Films (Shandong) Co. v. United States,
837 F. Supp. 2d 1347, 1351–52 (2012).
     2   See Memo to File for 8th Administrative Review,
and Aligned 9th New Shipper Reviews, of Certain Frozen
Fish Fillets from the Socialist Republic of Vietnam: Surro-
gate Values for the Final Results (“Surrogate Values
VINH HOAN CORPORATION v. UNITED STATES                      7

and administrative expenses, overhead, and profit) of an
Indonesian fish producer, Indonesian PT Dharma Sam-
udera Fishing Industries (“DSFI”) were added to the fac-
tors of production to determine the final value.
    On appeal, the CIT three times remanded Commerce’s
final determination for further proceedings. As is relevant
here, the CIT asked Commerce to acknowledge that it was
using a constructed value for the fish oil and was not using
the constructed value to merely cap the HTS data.
     In its third and last remand determination, Commerce
admitted that it was in fact constructing the value of Vinh
Hoan’s fish oil. It explained that “while Indonesian HTS
1504.20.9000 meets many of the SV [surrogate value selec-
tion] criteria, it is overly broad and not specific to the low
value, unrefined fish oil produced by Vinh Hoan, such that
its use would lead to an unreasonable result.” Final Re-
sults of Redetermination Pursuant to Vinh Hoan Corpora-
tion et al. v. United States (“Third Remand Decision”), slip
op. at 10 (issued Sept. 22, 2017). Commerce provided a fur-
ther reason to reject the high fish oil value derived from the
HTS data: because “[i]t would be illogical to value an unre-
fined by-product like fish oil at a value greater than that of
the main input, a value that also approaches that of the
finished product, frozen fish fillets.” Third Remand Deci-
sion, at 13 (quoting Redetermination Pursuant to Court Re-
mand Order in Vinh Hoan Corporation et al. v. United
States (“First Remand Decision”), slip op. at 80 (issued Aug.
3, 2015)). Commerce explained that a “by-product by defi-
nition is less valuable than the input from which it is de-
rived.”      Third Remand Decision, at 14 (quoting
Monosodium Glutamate from the People's Repub-
lic of China: Issues and Decision Memorandum for the Fi-
nal Determination of Sales at Less Than Fair Value, 79

Memo”), slip op. at 3–6 (issued Mar. 13, 2013), Barcode No.
3124119-01.
8                  VINH HOAN CORPORATION v. UNITED STATES

ITADOC 58326, slip op. at 11 (issued September 29, 2014)).
Commerce noted that its constructed value of fish oil is the
best available information because “the use of Vinh Hoan’s
own information in its production of fish oil is necessarily
the most representative, and specific, value.” Third Re-
mand Decision, at 9 (quoting Final Results of Redetermina-
tion Pursuant to Vinh Hoan Corporation et al. v. United
States (“Second Remand Decision”), slip op. at 25 (issued
Jan. 27, 2017)).
    The CIT found that “Commerce’s explanation is rea-
sonable, and its findings are supported by substantial evi-
dence.” Vinh Hoan Corp. v. United States (Vinh Hoan IV),
317 F. Supp. 3d 1295, 1298 (Ct. Int’l Trade 2018). Vinh
Hoan timely appealed. We have jurisdiction under 28
U.S.C. §§ 1295(a)(5) and 2645(c). This court will uphold
Commerce’s determination unless it is “unsupported by
substantial evidence on the record, or otherwise not in ac-
cordance with law.” 19 U.S.C.§ 1516a(b)(1)(B)(i).
                             III
    Vinh Hoan argues that Commerce’s methodology for
valuing fish oil is not in accordance with the law and that
the HTS data constitutes the best available information.
    First, Vinh Hoan contends that Commerce erred in se-
lecting Indonesia when valuing the factors of production for
fish oil because Commerce has not determined that Indo-
nesia is a significant producer of fish oil. Vinh Hoan failed
to raise this argument before Commerce and CIT. It is thus
waived. It also lacks merit.
     The statutory language Vinh Hoan cites does not help
its cause. 19 U.S.C. § 1677b(c)(4) states that: “[t]he admin-
istering authority, in valuing factors of production under
paragraph (1), shall utilize, to the extent possible, the
prices or costs of factors of production in one or more mar-
ket economy countries that are—(A) at a level of economic
development comparable to that of the nonmarket economy
VINH HOAN CORPORATION v. UNITED STATES                     9

country, and (B) significant producers of comparable mer-
chandise.” 19 U.S.C. § 1677b(c)(4) (emphasis added). The
statute does not explicitly discuss by-product offsets. See
Am. Tubular Prods., 847 F.3d at 1361; DuPont Teijin Films
China Ltd. v. United States, 7 F. Supp. 3d 1338, 1345 (Ct.
Int’l Trade 2014). Furthermore, even if this language were
to apply in this context and required surrogate value coun-
tries to be significant producers of the by-product, it only
requires Commerce to select such countries “to the extent
possible.” 19 U.S.C. § 1677b(c)(4). Given Commerce’s reg-
ulatory preference for the selection of a single surrogate
country for valuing all factors of production, 19 C.F.R.
§ 351.408(c)(2), it was reasonable for Commerce to select
primarily Indonesian surrogate values 3 in its constructed
by-product offset even if that country might not be a signif-
icant producer of unrefined fish oil. As Commerce has ex-
plained in other portions of this review, “[i]t is most
accurate to rely on factor costs from a single surrogate
country because sourcing data from a single country better
reflects the trade-off between labor costs and other factors’
costs, including capital, based on their relative prices.”
Second Remand Decision, at 22.
    Second, Vinh Hoan argues that the use of DSFI’s finan-
cial ratios to construct the fish oil by-product will lead to
inaccurate results because there is no information on the
record indicating that DSFI produces fish oil. We find that
Commerce has provided a sufficient explanation on this
point in its third remand redetermination. Commerce ex-
plained that “[b]ased on the simple production process for
fish oil, as compared to the more complicated production
process for frozen fish fillets, the ratios could be over-

    3   In one limited respect, in selecting a surrogate
value for the fish waste input, Commerce appears to have
used Philippine data. See Surrogate Values Memo, supra
note 2, at 6.
10                  VINH HOAN CORPORATION v. UNITED STATES

stated.” Third Remand Decision, at 16. Thus, any inaccu-
racy would only work in Vinh Hoan’s favor in overstating
the by-product offset. Moreover, just as with its arguments
before Commerce, Vinh Hoan has not stated in this appeal
“how[,] specifically[,] it believes the ratios are distorted or
what adjustments should be made to them.” Id.
     Third, Vinh Hoan argues that the HTS data was the
best available information for valuing fish oil and that
Commerce’s rejection of it was not supported by substan-
tial evidence, noting that Commerce had used the HTS
data in earlier stages of the proceeding. In its last remand
determination, Commerce rejected the HTS data as not
“sufficiently representative” of Vinh Hoan’s unrefined fish
oil because it includes unrefined and refined fish oil. Third
Remand Decision, at 6. Commerce reasoned that the HTS
data would be distorted by the inclusion of refined, pack-
aged oil, which would logically be more expensive than the
unrefined fish oil that Vinh Hoan produces. Commerce ex-
plained its preference, instead, for the constructed value of
unrefined fish oil: “the use of Vinh Hoan’s own information
in its production of fish oil is necessarily the most repre-
sentative, and specific, value.” Third Remand Decision at
9 (quoting Final Results of Second Redetermination at 25).
Vinh Hoan argues that there is no “information on the rec-
ord quantifying how much of the fish oil . . . was unre-
fined.” Appellant Br. 32. This does not detract from
Commerce’s reasoning that the HTS data is not specific to
unrefined fish oil, however. So too Commerce’s limited use
of the HTS data in the earlier stages does not prevent Com-
merce from ultimately discarding such data. We find Com-
merce’s methodology to be reasonable.
    Finally, Vinh Hoan argues that Commerce erroneously
concluded that the use of HTS data would “lead to an un-
reasonable result” in overvaluing Vinh Hoan’s unrefined
fish oil by-product because “the value of . . . [the refined
fish oil] by-product [included in the HTS data] is larger
than the main input, whole live fish, and even the subject
VINH HOAN CORPORATION v. UNITED STATES                     11

merchandise.” Third Remand Decision, at 7. In particular,
Commerce noted that “Indonesian HTS 1504.20.9000 val-
ues fish oil at $3.10/kg, while the SV for the main input,
whole fish, is $1.79[/kg].” Third Remand Decision, at 13
(quoting First Remand Decision, at 80). Vinh Hoan points
out that directly comparing the per weight values of the
main input and the by-product ignores the fact that “when
deducting the by-product offset from the subject merchan-
dise’s normal value . . . [Commerce] uses the value applica-
ble to the amount of fish oil obtained from the [factors of
production] used to obtain 1 kg of the subject merchandise”
and “the quantity of fish oil obtained for 1 kg of the subject
merchandise is 0.3492 kg.” Appellant Br. 37. But, says
Vinh Hoan, Commerce is comparing apples to oranges
here, since 1 kg of fish waste does not to produce 1 kg of
fish oil.
     We agree that, while in the case of low value products
(products requiring little processing) it may be appropriate
to compare the main input value to the value of the ulti-
mate product, any such comparison must be reasonable.
Here, the comparison was flawed. It was an error for Com-
merce to rely on such a comparison of kilogram values, and
we note that Commerce in its briefing did not defend this
comparison. But Commerce did not determine that the
HTS data was inappropriate simply because its value was
greater than the main input. As discussed earlier, Com-
merce alternatively rejected the HTS data because the de-
scription of this data category included refined, packaged
oil that is not specific to Vinh Hoan’s unrefined, unpack-
aged oil. Since rejecting the data on this other ground was
proper, Commerce’s reliance on the input/final product
comparison was harmless error.
    Because we find Commerce’s methodology was sup-
ported by substantial evidence and neither arbitrary or ca-
pricious or contrary to the law, the decision of the CIT is
                        AFFIRMED