Court Opinion

ID: 4302546
Source: CourtListenerOpinion
Date Created: 2018-08-09 20:01:33.412985+00
Date Added: 2024-06-11T12:48:55.744358
License: Public Domain

Slip Op 18-97

                  UNITED STATES COURT OF INTERNATIONAL TRADE

ARISTOCRAFT     OF   AMERICA,   LLC,
SHANGHAI WELLS HANGER CO., LTD,
HONG KONG WELLS LTD., HONG KONG)
WELLS LTD. (USA), BEST FOR LESS DRY                     PUBLIC
CLEANERS SUPPLY LLC, IDEAL CHEMICAL
& SUPPLY COMPANY, LAUNDRY &                             Before: Leo M. Gordon, Judge
CLEANERS     SUPPLY    INC.,  ROCKY
MOUNTAIN      HANGER     MFG    CO.,                    Consol. Court No. 15-00307
ROSENBERG SUPPLY CO., LTD., and ZTN
MANAGEMENT COMPANY, LLC,

                          Plaintiffs,

             v.

UNITED STATES,

                          Defendant.

                                OPINION and ORDER

[Remand results remanded to Commerce.]

                                                                 Dated: August 9, 2018

      Jonathan M. Freed, Robert G. Gosselink, and Jarrod M. Goldfeder, Trade Pacific
PLLC of Washington, DC for Consolidated Plaintiffs Shanghai Wells Hanger Co., Ltd.,
Hong Kong Wells Ltd., Hong Kong Wells Ltd. (USA), Best For Less Dry Cleaners Supply
LLC, Ideal Chemical & Supply Company, Laundry & Cleaners Supply Inc., Rocky
Mountain Hanger MFG Co., Rosenberg Supply Co., Ltd., and ZTN Management
Company, LLC.

       Ashley Akers, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S.Department of Justice of Washington, DC for Defendant United States. With her on
the brief were Chad A. Readler, Acting Assistant Attorney General, Robert E.
Kirschman,Jr., Director, and Patricia M. McCarthy, Assistant Director. Of counsel was
Jessica DiPietro, Attorney, U.S. Department of Commerce, Office of the Chief Counsel
for Trade Enforcement and Compliance of Washington, DC.
Consol. Court No. 15-00307                                                           Page 2

              Gordon, Judge: Before the court are the Final Results of Redetermination Pursuant

to Court Remand (“Remand Results”), ECF No. 65-1, filed by the U.S. Department of

Commerce (“Commerce”) pursuant to Aristocraft of America, LLC v. United States,

42 CIT ___, 269 F. Supp. 3d 1316 (2017) (“Aristocraft”).1 Plaintiffs Shanghai Wells

Hanger Co., Ltd., Hong Kong Wells Ltd., Hong Kong Wells Ltd. (USA), Best For Less Dry

Cleaners Supply LLC, Ideal Chemical & Supply Company, Laundry & Cleaners Supply

Inc., Rocky Mountain Hanger Mfg Co., Rosenberg Supply Co., Ltd., and ZTN

Management Company, LLC (collectively, “Plaintiffs”) challenge (1) Commerce’s

calculation of irrecoverable value-added tax (“VAT”) based on the application of the

standard VAT levy to the FOB export value of finished wire hangers and (2) Commerce’s

determination to continue using certain Thai companies’ surrogate financial statements

to calculate surrogate financial ratios. See Pls.’ Cmts. on Final Results of

Redetermination Pursuant to Court Remand, ECF No. 71 (“Pls.’ Cmts.”); see also Def.’s

Response to Pls.’ Cmts. on Commerce’s Remand Results, ECF No. 76 (“Def.’s Resp.”).

Familiarity with prior administrative and judicial decisions in this action is presumed. The

court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930,

as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012),2 and 28 U.S.C. § 1581(c) (2012).

              For the reasons set forth below, the court remands Commerce’s treatment of

irrecoverable VAT and surrogate company financial statement selection.

1
   All citations to the remand results, the agency record, and the parties’ briefs are to their
confidential versions unless otherwise noted.
2
  Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2012 edition.
Consol. Court No. 15-00307                                                     Page 3

                                I. Standard of Review

      For administrative reviews of antidumping duty orders, the court sustains

Commerce’s “determinations, findings, or conclusions” unless they are “unsupported by

substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.

§ 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings,

or conclusions for substantial evidence, the court assesses whether the agency action is

reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d
1345, 1350–51 (Fed. Cir. 2006); see also Universal Camera Corp. v. NLRB, 340 U.S.
474, 488 (1951) (“The substantiality of evidence must take into account whatever in the

record fairly detracts from its weight.”). Substantial evidence has been described as

“such relevant evidence as a reasonable mind might accept as adequate to support a

conclusion.” DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir.

2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial

evidence has also been described as “something less than the weight of the evidence,

and the possibility of drawing two inconsistent conclusions from the evidence does not

prevent an administrative agency’s finding from being supported by substantial evidence.”

Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966). Fundamentally, though,

“substantial evidence” is best understood as a word formula connoting reasonableness

review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d ed. 2018).

Therefore, when addressing a substantial evidence issue raised by a party, the court

analyzes whether the challenged agency action “was reasonable given the circumstances

presented by the whole record.” 8A West’s Fed. Forms, National Courts § 3.6 (5th ed.
Consol. Court No. 15-00307                                                       Page 4

2018).

         Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural

Res. Def. Council, Inc., 467 U.S. 837, 842–45 (1984), governs judicial review of

Commerce’s interpretation of the Tariff Act. See United States v. Eurodif S.A., 555 U.S.
305, 316 (2009) (An agency's “interpretation governs in the absence of unambiguous

statutory language to the contrary or unreasonable resolution of language that is

ambiguous.”); see generally Harry T. Edwards & Linda A. Elliott, Federal Standards of

Review 273–280 (3d ed. 2018).

                                       II. Discussion

                                   A. Value Added Tax

         Plaintiffs contend that Commerce continues to err in its calculation of the amount

of irrecoverable VAT to deduct from Shanghai Wells’ export price (“EP”) and constructed

export price (“CEP”). The court previously held that “Commerce reasonably concluded

that the phrase ‘export tax, duty, or other charge imposed by the exporting country on the

exportation,’ [in] 19 U.S.C. § 1677a(c)(2)(B)[,] could be read to include [irrecoverable

VAT].” Aristocraft, 42 CIT at ___, 269 F. Supp. 3d at 1325. The court also held, however,

that Commerce’s calculation of the deduction for irrecoverable VAT was unreasonable

(unsupported by substantial evidence) and remanded this issue to Commerce for further

explanation, and if appropriate, reconsideration. Id., 42 CIT at ___, 269 F. Supp. 3d

at 1326. Specifically, the court determined that Commerce’s calculation of the amount of

irrecoverable VAT, based on the FOB export value of the finished goods, appeared

inconsistent with Commerce’s definition of irrecoverable VAT as an unrefunded amount
Consol. Court No. 15-00307                                                      Page 5

of VAT “paid on inputs and raw materials (used in the production of exports).” See id.,

42 CIT at ___, 269 F. Supp. 3d at 1326. On remand, Commerce provided further

explanation in support of its calculation of an irrecoverable VAT deduction, in the amount

of eight percent, from Shanghai Wells’ EP and CEP. See Remand Results at 3–4.

       Commerce’s Remand Results arrive at the same irrecoverable VAT deduction

Commerce made in the final determination. Commerce has added an additional

explanation of how Chinese law both supports Commerce’s definition of irrecoverable

VAT and resolves the apparent inconsistencies between the definition, and calculation,

of the amount of irrecoverable VAT. See id. at 8–11, 23–25. In addition, Commerce relies

upon Shanghai Wells’ questionnaire responses to justify its findings for Shanghai Wells’

irrecoverable VAT deduction. See id. at 11–12, 25–28. Despite Commerce’s additional

explanation and clarification of its reasoning, Plaintiffs maintain that Commerce’s

irrecoverable VAT determination remains unreasonable (unsupported by substantial

evidence). See Pls.’ Cmts. at 6–13.

       In Aristocraft the court could not reconcile (1) Commerce’s definition of

irrecoverable VAT (an amount of unrefunded tax charged on “inputs and raw materials”),

with (2) Commerce’s calculation of irrecoverable VAT based on the FOB export value of

finished merchandise. See Aristocraft, 42 CIT at ___, 269 F. Supp. 3d at 1326. Commerce

alluded generally to Chinese law as the source of any inconsistency between

(1) the definition and (2) its calculation. See Issues & Decision Memorandum for Steel

Wire Garment Hangers from the PRC, A–570–918 (Dep’t of Commerce Mar. 6, 2015)

at cmt. 3,   available   at   http://enforcement.trade.gov/frn/2015/1511frn/2015-28757.txt
Consol. Court No. 15-00307                                                      Page 6

(last visited this date) (“Decision Memorandum”). Commerce though did not cite to

relevant provisions of Chinese law or otherwise reasonably explain how its (1) definition

and (2) calculation of irrecoverable VAT were consistent with one another. Id.

Accordingly, the court remanded the issue to Commerce to address how “VAT paid on

inputs and raw materials (used in the production of exports) that is non-refundable” could

reasonably be calculated using the value of finished goods rather than the value of the

inputs and raw materials. See Aristocraft, 42 CIT at ___, 269 F. Supp. 3d at 1326.

              In the Remand Results Commerce addresses the court’s questions about the

apparent inconsistencies between the definition and calculation of irrecoverable VAT by

explaining the Chinese law underlying Commerce’s irrecoverable VAT policy. See

Remand Results at 7–10, 23–25 (citing Shanghai Wells’ June 1, 2015 Supplemental

Questionnaire Response, PD 1343, at Ex. 12, “Circular on Value-Added Tax and

Consumption Tax Policies on Exported Goods and Services, Cai Shui 2012 No. 39,

May 25, 2012” (“2012 VAT Circular”)). Specifically, Commerce relies upon the 2012 VAT

Circular that describes the operation of Chinese VAT law. See Remand Results at 6–10,

22–26 (citing 2012 VAT Circular). The 2012 VAT Circular provides several formulae

detailing how Chinese VAT is calculated for exported goods. See 2012 VAT Circular.

Two of these formulae provide the basis for Commerce’s (1) definition and (2) calculation

of irrecoverable VAT.

3
  “PD ___” refers to a document contained in the public administrative record available at
ECF No. 17-4. “CD ___” refers to a document contained in the confidential administrative
record available at ECF No. 17-5.
Consol. Court No. 15-00307                                                                   Page 7

              First, Commerce explains that Article 5.1 of the 2012 VAT Circular provides:

                             Tax payable for the current period = output tax for the current
                             period - (input tax for the current period - taxes prohibited
                             from exemption and offset for the current period).

Remand Results at 24 (quoting the 2012 VAT Circular at art. 5.1(1) (the “Tax Payable

Formula”)). In the Remand Results Commerce clarifies that the term “irrecoverable VAT”

was intended to describe the “taxes prohibited from exemption and offset” amount

provided in the above formula. See Remand Results at 25.

              Second, Article 5.1 of the 2012 VAT Circular provides an additional formula that

explains how “taxes prohibited from exemption and offset” is calculated:

                             Taxes prohibited from exemption and offset for the current
                             period = FOB of exported goods for the current period × RMB
                             conversion rate of foreign currency × (tax rate applicable to
                             exported goods - tax refund rate for exported goods) -
                             deductions of taxes prohibited from exemption and offset
                             for the current period.4

See id. at 24 (citing 2012 VAT Circular at art. 5.1(1) (the “Taxes Prohibited from

Exemption Formula”)). The use of “taxes prohibited from exemption and offset” in these

two formulae sheds light on the source of the apparent inconsistency between

4
  The 2012 VAT Circular also provides a formula for calculating “deductions of taxes
prohibited from exemption and offset” as: Deductions of taxes prohibited from exemption
and offset for the current period = price of duty-free raw materials purchased for the
current period × (tax rate applicable to exported goods - tax refund rate for exported
goods). 2012 VAT Circular at art. 5.1(1). However, because Plaintiffs have not claimed
any use of “duty-free raw materials” in the production of their exported goods, this
deduction is irrelevant and is omitted from Commerce’s recitation of the formula. See
Remand Results at 24. Accordingly, for purposes of calculation in this case, Taxes
prohibited from exemption and offset for the current period = FOB of exported goods for
the current period × RMB conversion rate of foreign currency × (tax rate applicable to
exported goods - tax refund rate for exported goods).
Consol. Court No. 15-00307                                                      Page 8

Commerce’s definition and calculation of irrecoverable VAT. Commerce explains that its

definition of irrecoverable VAT (an unrefunded amount of VAT “paid on inputs and raw

materials”) is derived from the Tax Payable Formula in which “taxes prohibited from

exemption and offset” (aka “irrecoverable VAT”) are deducted from “input tax.” See

Remand Results at 24–25; Tax Payable Formula. Commerce then notes that its

calculation of irrecoverable VAT, calculated as “FOB of exported goods for the current

period x (tax rate applicable to exported goods - tax refund rate for exported goods),”

mirrors the calculation of “taxes prohibited from exemption and offset” in the Taxes

Prohibited from Exemption Formula. See Remand Results at 25; Taxes Prohibited from

Exemption Formula. Accordingly, Commerce’s definition of irrecoverable VAT describes

how “taxes prohibited from exemption and offset” is used in the Tax Payable Formula;

however, this figure has no direct connection to the amount of input VAT actually

assessed on Chinese exported goods. Instead, Commerce appears to say that

irrecoverable VAT, or “taxes prohibited from exemption and offset,” stands for a numerical

value calculated using the VAT tax and refund rates assessed against the value of

finished export goods. See Remand Results at 8–10, 24–25; Tax Payable Formula; Taxes

Prohibited from Exemption Formula.

      Beyond the 2012 VAT Circular, Commerce relies upon accounting documents

submitted by Shanghai Wells that appear to corroborate the reasonableness of an eight

percent adjustment for irrecoverable VAT to Shanghai Wells’ EP and CEP. See Remand

Results at 10–12, 27–28. Specifically, Commerce cites to Shanghai Wells’ accounting
Consol. Court No. 15-00307                                                                                     Page 9

data for June 2014 under account code X.5 See id. at 27 (citing Shanghai Wells’ June 1,

2015 Supplemental Questionnaire Response, PD 134, at Ex. 14). Account code X booked

an amount approximating eight percent of Shanghai Wells’ export sales for June 2014.

Id. Accordingly, Commerce found that account code X identifies an amount of

irrecoverable VAT for June 2014, and the fact that the amount in account code X

approximates eight percent of export sales value corroborated the reasonableness of

Commerce’s calculation of eight percent as the amount of irrecoverable VAT to deduct

from Shanghai Wells’ EP and CEP. Id.

              Plaintiffs challenge Commerce’s reading of Shanghai Wells’ June 1, 2015

Supplemental Questionnaire Response as unreasonable given conflicting evidence in the

record as to the correct meaning and translation of account code X. See Pls.’ Cmts. at

10–11. Plaintiffs suggest that the record contains alternative meanings and translations

for account code X. See id. (discussing alternate translations for the account code X and

suggesting that the labeling of account code X as connected to irrecoverable VAT

resulted from a singular “misunderstanding of the question”).

              As Commerce explained, “[t]he record demonstrates that Shanghai Wells booked

to accounting code [X] an amount of approximately eight percent of its export prices and

consistently translated the account name in a manner indicating an irrecoverable amount.

Commerce did not selectively choose the translation that suited a desired outcome but,

rather, considered the record as a whole in deducing the meaning of Shanghai Wells’

5
 Account code X is [[                                          ]] identified in Shanghai Wells’ questionnaire response
as [[                 ]].
Consol. Court No. 15-00307                                                        Page 10

inconsistent submissions.” Remand Results at 28. Commerce further explained that this

accounting code, while assigned slightly different nomenclature in Shanghai Wells’ other

questionnaire responses6, appears to “describe an irrecoverable tax.” Id. at 28. Plaintiffs

simply fail to demonstrate that Commerce’s interpretation of account code X is

unreasonable and that the administrative record leads to one, and only one, reasonable

interpretation of its meaning and translation. The court sustains as reasonable

Commerce’s finding that account code X books Shanghai Wells’ irrecoverable VAT.

              Although not persuaded by Plaintiffs’ challenge to Commerce’s interpretation of

Shanghai Wells’ questionnaire responses, the court nevertheless has some remaining

doubts about the overall reasonableness of Commerce’s calculation of irrecoverable VAT.

Commerce’s analysis of Chinese law certainly helps clarify the relationship between the

calculation of irrecoverable VAT and its use within the Chinese VAT system. Remand

Results at 7–9, 24–26. There is, however, an inherent and lingering issue that Commerce

itself acknowledges when it notes that the 2012 VAT Circular “indicate[s] a link between

the input VAT paid and tax paid or refunded.” Id. at 9. Although Commerce urges the

court not to read this language from the 2012 VAT Circular “in a way that confuses how

the exporter incurs the cost on a transaction level for specific exports,” Commerce

reiterates that the complex rules of the Chinese VAT system confirm a “link” between

input VAT paid and tax paid or refunded on the aggregate level. Id.

6
  Examples of this slightly different nomenclature include “[[                          ]]”,
“[[               ]]”, and “Total Un-exempted Tax”.
Consol. Court No. 15-00307                                                        Page 11

       Commerce downplays the relevance of this “link” by explaining that Commerce

adjusts for irrecoverable VAT at the transaction-specific level rather than on an aggregate

level. Id. at 8–9. Commerce further notes that Plaintiffs’ alternative methodology for

adjusting for irrecoverable VAT, i.e. accounting for input VAT actually paid in the

adjustments to EP and CEP, introduces significant distortions to the calculations given

that the input VAT figures may include offsets from periods outside of the period of review

as well as distortions due to the time lag between the payment of input VAT at production

and the subsequent exportation of finished merchandise. Id. at 9.

       To summarize, Commerce clarified that “irrecoverable VAT” refers to “Taxes

prohibited from exemption and offset,” i.e., an amount of unrefunded tax charged on

“inputs and raw materials.” Id. at 7–10, 24–25 (emphasis added). Commerce further

acknowledged that this deduction for “irrecoverable VAT” is in some way linked to the

amount of input VAT that Shanghai Wells actually pays, but discounts the significance of

this link. See id. at 9. The court is unfortunately still confused and cannot understand how

a reasonable mind would conclude that the amount of input tax actually deducted from

Shanghai Wells’ VAT liability is “not relevant” to the adjustment of Shanghai Wells’

EP and CEP. See id. at 6. Perhaps the phrase “not relevant” is causing the problem.

Did Commerce instead mean “not calculable”? Is the “link” between Plaintiffs’ input VAT

and tax paid or refunded generally not calculable (or knowable) because of the complexity

of the Chinese VAT system (meaning it is just not possible)? Or, is it at least theoretically

possible to calculate (and account for) the “link” but not in this particular case because

Plaintiffs have failed to proffer enough information and explanation against a dense and
Consol. Court No. 15-00307                                                     Page 12

complicated Chinese VAT system to enable Commerce to make the (transaction-specific)

adjustment to Plaintiffs’ EP and CEP? Or is something else going on? The court therefore

must remand this issue again for Commerce to further explain, and reconsider,

if appropriate, how its deduction of “taxes prohibited from exemption and offset” accounts

for an amount of “input VAT not fully recouped on export sales” that Shanghai Wells

includes in its price for export sales of finished wire hangers.

                B. Surrogate Company Financial Statement Selection

       In this, the sixth administrative review, Commerce selected financial statements

for calculating surrogate financial ratios from three Thai companies: LS Industries Co.

(“LS Industry”), Sahasilp Rivet Industrial Co. Ltd. (“Sahasilp”), and Thai Mongkol

Fasteners Co., Ltd. (“Mongkol”). See Decision Memorandum at 7–10. In Aristocraft the

court remanded Commerce’s selection of surrogate financial statements for Commerce

“to address reasonably the importance of drawing wire from wire rod as a surrogate

company selection criterion.” Aristocraft, 42 CIT at ___, 269 F. Supp. 3d at 1335.

On remand, Commerce acknowledged that it prefers “financial statements from

companies that draw wire from wire rod to produce identical or comparable merchandise

in order to calculate the surrogate financial ratios of an integrated producer such as

Shanghai Wells.” Remand Results at 14. Given that selection criterion, the question for

Commerce was whether all three companies or just one, LS Industry, constituted the best

available information to use as surrogate companies.

       Commerce noted that it “did not directly address record evidence purporting to

demonstrate that LS Industry drew wire from wire rod, which resulted in an incomplete
Consol. Court No. 15-00307                                                         Page 13

analysis of the record information.” Remand Results at 17. That evidence is “six photos

of extremely poor quality” that appeared on the website of LS Industry. Remand Results

at 19. Plaintiffs argue that the photos contain images that “obviously resemble” wire rod

coils and wire drawing machinery. See Pls.’ Cmts. at 17. The photos, though, have no

captions. See Remand Results at 31. Commerce, noting its knowledge of “material and

machinery involved in the production of subject merchandise,” concluded that the “type

of machine is not discernable.” Id. at 19. Commerce also noted that “Shanghai Wells

reported that it used a straightening machine to straighten steel wire before it is fed

through the hanger forming machine and there is nothing on the record to support the

claim that the machine pictured is not, in fact, a straightening machine rather than a wire

drawing machine, or any other type of machine.” Id. Commerce also concluded that it

could not “determine whether the material pictured is wire rod or, instead, any number of

other products, e.g. steel bar, reinforcing bar, steel strip, or bundles of any other type of

coiled materials.” Id. at 20. As a result, Commerce determined “that the financial

statements of LS Industry, Sahasilp, and Thai Mongkol, all represent equally suitable

financial statements … [and a]bsent definitive evidence to the contrary, all three

statements represent the best available information on the record of this review for

calculating surrogate financial ratios.” Id.

       Plaintiffs challenge as unreasonable Commerce’s conclusion that the three

companies “equally satisfy its selection criteria.” Id. at 14. Plaintiffs, however, do not make

the straightforward argument that Commerce’s determination is unreasonable because a

reasonable mind would have to conclude that the photographs only depict wire rod and
Consol. Court No. 15-00307                                                      Page 14

wire drawing machinery. Id. at 16–19. Rather, Plaintiffs dismiss Commerce’s suggestion

that the photographs may depict wire straightening machinery and coiled material other

than wire rod as speculation, and argue that Commerce must instead accept Plaintiffs’

proffered view that the photographs likely depict wire rod and wire drawing machinery. Id.

According to Plaintiffs, Commerce must accept Plaintiffs’ speculative inference about the

photographs—that they depict wire drawing machine and wire rod in coils—and reject an

alternative, but equally speculative inference—that LS Industry maintains wire

straightening machinery and coiled material other than wire rod. The court has no idea

which of the two inferences is correct. Both seem plausible. What the court cannot do is

direct Commerce to favor Plaintiffs’ preferred evidentiary inference over another

reasonable inference. See Mitsubishi Heavy Indus. Ltd. v. United States, 275 F.3d 1056,

1062 (Fed. Cir. 2001) (“‘[T]he possibility of drawing two inconsistent conclusions from the

evidence does not prevent an administrative agency's finding from being supported by

substantial evidence.’” (quoting Consolidated Edison, Co. v. NLRB, 305 U.S. 197, 229

(1938))). This issue ultimately boils down to a problem of proof for Plaintiffs. Plaintiffs

could have done much more to remove doubts about the photographs (and undermine

any competing inferences). Better quality photos and better authentication would have

helped, as would have affidavits from its own operators and fabricators explaining what

the photographs depicted. It bears repeating that the burden to develop the administrative

record rests on interested parties like Plaintiffs. QVD Food Co. v. United States, 658 F.3d
1318, 1324 (Fed. Cir. 2011) (“‘[T]he burden of creating an adequate record lies with

[interested parties] and not with Commerce.’” (quoting Tianjin Mach. Imp. & Exp. Corp.
Consol. Court No. 15-00307                                                        Page 15

v. United States, 16 CIT 931, 936, 806 F. Supp. 1008, 1015 (1992)). Without the

additional evidentiary proffer, Plaintiffs simply ask too much of the court to wade into fact

finding on a sparse record.

       Plaintiffs additionally argue that Commerce unreasonably discounted “other

deficiencies” in the financial statements of Mongkol and Sahasilp. See Pls.’ Cmts. at 19–

21. Plaintiffs note that Sahasilp’s “company profile” does not list wire rod drawing among

its “Key Manufacturing Process.” Id. at 19. Similarly, Plaintiffs observe that Mongkol’s

website lists various types of machinery but fails to specifically include wire rod drawing

machinery. Id. Plaintiffs contend that this absence of evidence indicates that Sahasilp

and Mongkol do not even arguably draw wire from wire rod and are accordingly not

“equally suitable” as surrogate producers of comparable merchandise. Id. The court is

not persuaded. Here again Plaintiffs have a problem of proof. Missing is an important

evidentiary foundation that companies that draw wire from wire rod would always

advertise that fact on their website or list it as a key manufacturing process. Without that

foundation on the administrative record, Commerce was able to reasonably conclude that

the lack of mention of wire drawing or wire drawing machinery on Mongkol’s or Sahasilp’s

website or online company profile did not provide a sufficient basis to determine whether

either company drew wire from wire rod. Accordingly, Commerce found “that no

information on the record demonstrates that any of the potential surrogate financial

companies draw wire from wire rod.” Remand Results at 33.

       The court here cannot muscle aside Commerce and order it to use LS Industry’s

financial statement alone. Plaintiffs simply failed to establish on the administrative record
Consol. Court No. 15-00307                                                      Page 16

that LS Industry, and LS Industry alone, was the best available information to use as a

surrogate company. Commerce reasonably concluded that “LS Industry’s financial

statements are not superior to Sahasilp’s or Mongkol’s” and that “all three financial

statements are equally suitable for valuing Shanghai Wells’ financial ratios.” Remand

Results at 32–33. Accordingly, the court sustains Commerce’s use of all three surrogate

companies’ financial statements.

                                           III. Conclusion

          For the foregoing reasons, it is hereby

          ORDERED that Commerce’s selection of surrogate companies is sustained; it is

further

          ORDERED that the Remand Results are remanded to Commerce to further

explain, and reconsider, if appropriate, how its deduction of “taxes prohibited from

exemption and offset” accounts for an amount of “input VAT not fully recouped on export

sales” that Shanghai Wells includes in its price for export sales of finished wire hangers;

it is further

          ORDERED the Commerce shall file its remand results on or before September 26,

2018; and it is further
Consol. Court No. 15-00307                                                Page 17

      ORDERED that, if applicable, the parties shall file a proposed scheduling order

with page limits for comments on the remand results no later than seven days after

Commerce files it remand results with the court.

                                                          /s/ Leo M. Gordon
                                                        Judge Leo M. Gordon

Dated: August 9, 2018
       New York, New York