Court Opinion

ID: 817478
Source: CourtListenerOpinion
Date Created: 2013-02-01 01:52:06.337508+00
Date Added: 2024-06-11T09:00:44.976703
License: Public Domain

Slip Op. 08-68

            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

[The final results of United States Department of Commerce
sustained in part and remanded.]

                                          Dated:   June 16, 2008

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Bruce M.
Mitchell, Ned H. Marshak, Paul G. Figueroa), for plaintiffs.

Gregory A. Katsas, Acting Assistant Attorney General; Jeanne E.
Davidson, Director, Patricia M. McCarthy, Assistant Director,
United States Department of Justice Commercial Litigation Branch,
Civil Division,(Jane Chang Dempsey); Office of the Chief Counsel
for Import Administration, United States Department of Commerce,
(Mildred Stewart), of counsel, for defendant.
Court No.   06-00234                                          Page 2

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

     Eaton, Judge: This matter is before the court on the motion

for judgment upon the agency record of 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”).     See

Pls.’ Mem. Supp. R. 56.2 Mot. J. Agency R. (“Pls.’ Mem.”).

Defendant the United States and defendant-intervenors the

American Honey Producers Association and the Sioux Honey

Association oppose the motion.    See Def.’s Mem. Opp’n Pls.’ Mot.

J. Agency R. (“Def.’s Opp’n”); Def.-Ints.’ Br. Opp’n Pls.’ Mot.

J. Agency R. (“Def.-Ints.’ Opp’n”).

     By their motion, plaintiffs challenge 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, and

ending on 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), Administrative Record (“AR”) 265 (“Issues

& Dec. Mem.”) (collectively, “Final Results”).    Jurisdiction lies

pursuant to 28 U.S.C. § 1581(c) (2000) and 19 U.S.C.
Court No.   06-00234                                          Page 3

§ 1516a(a)(2)(B)(iii).

     Certain of the issues in this action have been litigated

previously in this Court.1   For the reasons set forth below, the

court grants, in part, and denies, in part, plaintiffs’ motion

and remands certain of the Final Results to Commerce.

                         STANDARD OF REVIEW

     The court reviews the Final 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

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)).

     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., Ltd. 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., Ltd. v.
United States, 29 CIT 587, 374 F. Supp. 2d 1299 (2005).
Court No. 06-00234                                         Page 4
It “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) (quotations

and citations omitted).   The existence of substantial evidence is

determined “by considering the record as a whole, including

evidence that supports as well as evidence that ‘fairly detracts

from the substantiality of the evidence.’”    Huaiyin Foreign Trade

Corp. (30) v. United States, 322 F.3d at 1374 (quoting Atl.

Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed. Cir.

1984)).   The possibility of drawing two equally justifiable, yet

inconsistent conclusions from the record does not prevent the

agency’s determination from being supported by substantial

evidence.   See Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620

(1966);   Altx, Inc., 370 F.3d at 1116.

     Moreover, “[a]s long as the agency’s methodology and

procedures are reasonable means of effectuating the statutory

purpose, and there is substantial evidence in the record

supporting the agency’s conclusions, the court will not impose

its own views as to the sufficiency of the agency’s investigation

or question the agency’s methodology.”    Ceramica Regiomontana,

S.A. v. United States, 10 CIT 399, 404-405, 636 F. Supp. 961, 966

(1986), aff’d, 810 F.2d 1137 (Fed. Cir. 1987) (”Ceramica”).
Court No.   06-00234                                          Page 5
                             DISCUSSION

I.   Legal Framework for Calculating 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

country, such as the PRC, Commerce, under most circumstances,

determines normal value by valuing the factors of production used

     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
data from India. See 19 U.S.C. § 1677b(c)(4).
Court No. 06-00234                                         Page 6
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 Value of Raw Honey

       In choosing surrogate values, Commerce is directed to meet

the “best available information” standard.    19 U.S.C.

§ 1677b(c)(1).    Commerce has stated that it considers several

factors, “including quality, specificity, and contemporaneity of

the source information” in seeking to meet the standard.    Issues

& Dec. Mem. at 10.     The Department prefers “whenever possible, to

use countrywide data, and only resorts to company-specific (or

regional) information when countrywide data are not available.

In addition, the Department prefers to rely on publicly available

data.”    Id. at 11.   Prior cases have upheld this methodology to

find the best available information.     See, e.g., Wuhan Bee

Healthy Co. v. United States, 31 CIT at __, Slip Op. 07-113 at 28

(July 20, 2007) (not reported in the Federal Supplement) (“Wuhan

II”).

       Commerce calculated the surrogate value of raw honey using
Court No. 06-00234                                         Page 7
data from the website of EDA Rural Systems Pvt. Ltd. (“EDA”),5

which Commerce adjusted for inflation for the purported purpose

of making the data contemporaneous to the POR.    Issues & Dec.

Mem. at 10.   Plaintiffs argue that Commerce’s selection of data

to calculate surrogate value was not supported by substantial

evidence in the record.

     In its Final Results, Commerce found that the adjusted EDA

data constituted the best available information on the record.

“In selecting the EDA data, the Department finds that these raw

honey pricing data are the best information currently available

because they are publicly available, quality data, and specific

to the raw honey beekeeping industry in India.”    Issues & Dec.

Mem. at 11.

          We note that the EDA data are from a
          published, publicly available source, the
          website, www.litchihoney.com. With respect
          to quality, we find that the EDA data source
          is highly documented, including numerous
          specific price points over a six-year period
          for multiple types of honey from many
          suppliers, and includes detailed information
          on production, inputs, and beekeepers.
          Regarding specificity, we note that the
          prices quoted in the EDA data are specific to
          the raw honey beekeeping industry in the
          state of Bihar in India, which the Department
          found to be a significant producer of honey
          in India. Regarding reliability, the

     5
          “[T]he EDA data are from a published, publicly
available source, the website, www.litchihoney.com.” Issues &
Dec. Mem. at 11. The website is maintained by EDA Rural Systems
Pvt. Ltd., “an organization that provides business development
services to the honey and beekeeping sector in India.” Wuhan II,
31 CIT at __, Slip Op. 07-113 at 26.
Court No.    06-00234                                           Page 8
            Department finds that the data collection
            methods for the EDA data are documented with
            respect to data sources, distribution, and
            collection practice.

Issues & Dec. Mem. at 11 (citations omitted).

     Plaintiffs contend that, rather than using the EDA data,

Commerce should have calculated the price of raw honey based on

an average of the prices derived from three news articles found

in Indian publications, i.e., the Tribune of India (“Tribune”),

Business Line Internet Edition (“Money”), and Hindu Online

(“Sunderbans”).    Plaintiffs insist that, had Commerce used their

preferred evidence, Commerce would have found that the price of

raw honey declined during the POR and that the price of raw honey

was substantially lower than Commerce found.       See Pls.’ Mem. 2.

     1.     Evidence Regarding Price Decline

     Plaintiffs first argue that Commerce erred by adjusting the

EDA data upward to account for inflation when there was

“overwhelming evidence on the record confirming that raw and

processed honey prices in India declined during 2004 (POR 3) from

their peak in mid-year 2003.”    Pls.’ Mem. 14.    Plaintiffs argue

that Commerce ignored record evidence of a price decline,

primarily by not taking into account the Tribune, Money, and

Sunderbans articles.    See Pls.’ Mem. 15-16.     Specifically, they

contend that data from these articles show that raw honey prices

were significantly lower in this administrative review (December
Court No. 06-00234                                            Page 9
1, 2003 through November 30, 2004) than in the second

administrative review (December 1, 2002 through November 30,

2003), and lower in the second half of the third POR (June 2004

through November 2004) than in the first half of that period

(December 1, 2003 through May 2004).   Pls.’ Mem. 15-16.

     At the administrative level, Commerce determined that none

of plaintiffs’ proposed sources contained data as “reliable or

appropriate” as the EDA data.   Issues & Dec. Mem. at 12.   As a

result, Commerce found that plaintiffs had not shown evidence of

a price decline.   See Issues & Dec. Mem. at 12.

     First, Commerce addressed the Tribune article, dated

December 15, 2003, which states a price for raw honey at 65

rupees per kilogram in 2003:

          As an initial matter, we note that the
          Tribune article may represent data from a
          state only slightly larger than that
          represented by the EDA data, and therefore
          the EDA data are as representative as the
          prices in the Tribune article. However, the
          Department also finds that the EDA data are
          more detailed in that they contain multiple
          price points over discrete periods of time
          for specific types of honey and contain
          exhaustive information on the source of these
          data. The Department determines for these
          final results that the EDA data are a more
          reliable source to value raw honey because
          the Department finds that the data collection
          methods for the EDA data are documented with
          respect to data sources, distribution, and
          collection practice.

Issues & Dec. Mem. at 13-14.

     Commerce also reviewed the other two articles.   The
Court No.    06-00234                                         Page 10
Sunderbans article, dated March 5, 2004, valued raw honey at 40

rupees per kilogram and the Money article, dated January 26,

2004, valued it at 50 rupees per kilogram.      Issues & Dec. Mem. at

4.   Commerce found that, unlike the EDA data which pertains to

the second-largest honey producing state in India, “the

exceptionally limited nature of the Sunderbans and Money

articles’ data renders them unrepresentative of Indian prices as

a whole in comparison with the broader EDA data.”     Issues & Dec.

Mem. at 14.    Commerce stated,

            [T]he Department deemed the Money article not
            representative of prices in India, because
            the data reported by the article are from a
            single honey processing society, the Chandram
            Honey Producers Society. According to the
            article, the society sold 3,000 kg of honey
            in the previous year (2003). The same
            concerns hold for the Sunderbans article,
            which was placed on the record after the
            Preliminary Results. The Sunderbans article
            refers to prices in a single region of India,
            West Bengal, not alleged to be a major honey
            producing state.

Issues & Dec. Mem. at 13.    The Department concluded: “In light of

the various price points on the record, the Department cannot

agree with respondents that record evidence makes it self-evident

that the Indian honey market suffered a significant price decline

during the POR.”    Issues & Dec. Mem. at 12.

     The court finds that Commerce did not act unreasonably in

finding the EDA data to be more reliable.    A review of the record

reveals that the EDA data are more detailed and more reliable
Court No. 06-00234                                         Page 11
than the news articles plaintiffs placed on the record.6   For

instance, the EDA data do include “numerous specific price points

over a six-year period for multiple types of honey from many

suppliers,” include “detailed information on production, inputs,

and beekeepers,” and the data collection methods “are documented

with respect to data sources, distribution, and collection

practice.”   See Issues & Dec. Mem. at 11.   Thus, Commerce was

justified in finding that the Tribune article was not “unusable

as a source for valuing raw honey,” and that the EDA data are the

“best available information” because they are more detailed and

more reliable than the data in the Tribune article, and because

the EDA data contain many price points over discrete periods of

time for specific types of honey and contain detailed information

on the source of these data.   Issues & Dec. Mem. at 13-14.

     Further, unlike the EDA data, the Sunderbans and Money

articles were not as representative of prices in India because

the prices were from a single honey processing society (in the

     6
          Plaintiffs also urged the court to review the Factors
of Production Valuation Memorandum for the fourth period of
review (for the period December 1, 2004 through November 30,
2005), in which, plaintiffs claim, “the Department expressly
acknowledged that raw honey prices in India experienced a ‘steady
decline through 2004 and the first five months of 2005.’” Pls.’
Mem. 16 and n. 12 (footnote omitted). This Memorandum is not
part of the record in this action. Id. at 16, n. 12. Non-record
evidence regarding a price decline put forth by plaintiffs in
this way cannot properly be considered as a supplement to the
record. See Hynix Semiconductor Inc. v. United States, 26 CIT
1154, 1154, Slip Op. 02-117 at 3 (Sept. 30, 2002) (not reported
in Federal Supplement).
Court No.   06-00234                                            Page 12
Money article) or from a single region of India that is not a

major honey producing state (in the Sunderbans article).        Issues

& Dec. Mem. at 13.     The EDA data, on the other hand, are more

representative of country-wide prices because they come from a

large honey producing state.     Issues & Dec. Mem. at 12.     Given

the evidence on the record, Commerce reasonably relied on the EDA

data, which does not reveal a price decline during the POR.

Plaintiffs have thus failed to meet their burden to put forth

evidence demonstrating a price decline.     See Tianjin Mach. Imp. &

Exp. Corp. v. United States, 16 CIT 931, 937, 806 F. Supp. 1008,

1015 (1992).

     Plaintiffs next contend that the price of honey derived from

the EDA data is not supported by substantial evidence because

there was other, more contemporaneous evidence on the record.

Plaintiffs argue that the EDA data (which cover sales from

December 2002 through June 2003) are entirely outside the period

of review (December 1, 2003 through November 30, 2004), and are

based solely on prices from the first half of 2003 (five months

prior to the beginning of the third period of review) when honey

prices reached their peak.     Pls.’ Mem. 19.   Accordingly,

plaintiffs insist that the EDA data “do not reflect the honey

market conditions in India during [the] POR,” and that, because

the record contains “reliable, contemporaneous, publicly

available surrogate prices for raw honey, the Department
Court No. 06-00234                                        Page 13
committed a reversible error in relying on stale surrogate data .

. . .”   Pls.’ Mem. 19-20.

     Commerce states in response that contemporaneousness is but

one factor it considers, and where the alternate data is not

exactly contemporaneous with the POR, the factor of

contemporaneousness does not carry as much weight.    See Def.’s

Opp’n 17 (quoting Hebei Metals & Minerals Imp. & Exp. Corp. v.

United States, 29 CIT 288, 301, 366 F. Supp. 2d 1264, 1275 (2005)

(“Hebei II”)).

     The court finds that plaintiffs have failed to show that the

price derived from the EDA data is not supported by substantial

evidence.    The EDA data are taken from a six-month period

beginning a year prior to the period of review.    The pricing

data’s distance from the period of review is, however, not

outweighed by plaintiffs’ alternative data, which itself is not

entirely contemporaneous with the period of review.    See Hebei

II, 29 CIT at 301, 366 F. Supp. 2d at 1275. (“While the

contemporaneity of data is one factor to be considered by

Commerce, three months of contemporaneity is not a compelling

factor where the alternative data is only a year-and-a-half

distant from the [period of investigation (“POI”)].”) (citation

omitted).    That is, the Tribune and Money articles provide data

for 2003 but only the month of December 2003 is within the period

of review.    For their part, plaintiffs have not shown that their
Court No. 06-00234                                        Page 14
proposed data is superior to the EDA data in other respects. As

the court has discussed, the EDA data have many more price points

and relate to a state that is a significant honey producer.

Plaintiffs’ data, on the other hand, are not as representative,

are less detailed, have fewer price points, and are less well-

documented.   Therefore, the court agrees with Commerce that the

EDA data are the best available information as the EDA data are

“publicly available, quality data, and specific to the raw honey

beekeeping industry in India.”   Issues & Dec. Mem. at 11.

Therefore, while the evidence offered by plaintiffs may be more

contemporaneous than the EDA data, it cannot be said that

Commerce unreasonably found that that factor alone was not

determinative.   Thus, the court finds that Commerce’s decision

that the EDA data were the best available information is

supported by substantial evidence.

     2.   Plaintiffs’ Proposed Benchmark

     Plaintiffs also claim that the use of the EDA data is

unsupported by substantial evidence because it results in values

for raw honey that are higher than the average export price of

processed honey.   Pls.’ Mem. 9-10.   Plaintiffs rely on a

“benchmark price” for exported honey (based upon data from World

Trade Atlas and India Infodrive)7 to compare Commerce’s

     7
          These sources compile and disseminate official import
statistics.
Court No. 06-00234                                        Page 15
calculated surrogate values for raw honey to the average export

prices for processed honey.    According to plaintiffs, this

comparison demonstrates that raw honey costs based on the EDA

data are artificially high.    Plaintiffs insist that this

comparison is valid because it is “unlikely that Indian exporters

would sell honey below the costs incurred by middlemen purchasing

raw honey as an input.”    Def.’s Opp’n 13.   In other words,

plaintiffs argue that the Final Results are “anomalous” because

the normal value calculated using the EDA Data is higher than

their proposed benchmark for exported honey prices.

     With respect to plaintiffs’ argument for use of a benchmark,

Commerce found that “export data may not accurately reflect the

market value of the goods within the country of exportation.     The

Department’s stated preference is not to use export data.” Issues

& Dec. Mem. at 12 (citations omitted).    “[E]xport prices may be

driven not by the cost of production or market pricing in the

exporting country, but by the prices or other market factors in

the countries to which the product was exported.”     Def.-Ints.’

Opp’n 11.    As a result, for Commerce, plaintiffs’ proposed

benchmark comparison does not necessarily demonstrate that export

prices move in tandem with domestic prices in a way that would be

useful in its analysis.    Moreover, Commerce stated:

            [T]he WTA data and Infodrive data rely on
            values under [Harmonized Tariff Schedule] HTS
            subheading 04900000, which is a basket
            category composed of both raw and processed
            honey shipments. The Department does not use
Court No.    06-00234                                       Page 16
            data based on this subheading to value raw
            honey precisely because it is a basket
            category. The Department has also indicated
            in prior cases that it prefers not to use
            Infodrive data to derive surrogate values or
            to use as a benchmark to evaluate other
            potential surrogate values because it does
            not account for all of the imports that fall
            under a particular HTS subheading.

Issues & Dec. Mem. at 12. (footnote and quotation omitted).

     Commerce has at least some discretion in deciding what is

the best available information.    Hangzhou Spring Washer Co. v.

United States, 29 CIT 657, 666-667, 387 F. Supp. 2d 1236, 1245-46

(2005) (“Hangzhou”); Shakeproof Assembly Components Div. of Ill.

Tool Works, Inc. v. United States, 23 CIT 479, 481, 59 F. Supp.

2d 1354, 1357 (1999)(“Shakeproof”)(“The statute requires Commerce

to use the best available information, but does not define that

term . . . . If Congress had desired to restrict the material on

which Commerce could rely, it would have defined the best

available information.”) (footnote and citation omitted).   This

Court’s role is to evaluate whether Commerce’s choice of

information is reasonable.    Hangzhou, 29 CIT at 667, 387 F. Supp.

2d at 1246.

     Commerce found the EDA data to be the best available

information, and plaintiffs’ “benchmark” argument has not shown

that Commerce’s choice was unreasonable.    It might seem odd that

the price of honey used by the Department should exceed

plaintiffs’ benchmark.    However, plaintiffs have failed to show
Court No. 06-00234                                           Page 17
how their benchmark, based on export prices, is a useful

comparison with domestic prices, because they have failed to

demonstrate that the benchmark price bears any relationship to

the domestic price.   For example, plaintiffs have made no effort

to show that the market factors affecting domestic prices are the

same for export prices.   Nor have plaintiffs shown that there is

a correlation between the domestic and export prices for honey.

Thus, the proposed benchmark, standing alone, fails to provide

convincing evidence that Commerce’s selection of the EDA data as

the best surrogate value source was unreasonable.

B.   Selection of Data Source for Calculation of Surrogate
     Financial Ratios

     Title 19 U.S.C. § 1677b (c)(1)(B) requires that the

calculation of normal value include amounts for “general expenses

and profit.”   Accordingly, Commerce “usually calculates” separate

values for: selling, general and administrative (“SG&A”)

expenses; manufacturing overhead; and profit, using ratios

derived from financial statements of companies that produce

identical or comparable merchandise in the surrogate country.

Wuhan II, 31 CIT at __, Slip Op. 07-113 at 41-42 (citation and

quotation omitted).

     Here, Commerce determined that the information from the

2004-2005 financial statements of the Mahabaleshwar Honey

Producers’ Cooperative (“MHPC”) was “the best and most
Court No. 06-00234                                        Page 18
contemporaneous available information for valuing the financial

ratios.”   Issues & Dec. Mem. at 19 (footnote omitted).    Commerce

states that it chose the MHPC financial statements because they

contain a chairman/president’s report, auditor’s notes, and

itemized costs associated with honey production and sales,

specifically separating MHPC’s honey production and sales from

MHPC’s other business functions. Issues & Dec. Mem. at 19.

     Plaintiffs argue that Commerce’s use of MHPC financial

statements, rather than those of Apis (India) Natural Products

(“Apis”) caused the results to be unsupported by substantial

evidence and not in accordance with law.   The court has

previously addressed two of plaintiffs’ specific arguments in

Wuhan II and in Shanghai Eswell Enter. Co. v. United States, 31

CIT __, Slip Op. 07-138 (Sept. 13, 2007) (not reported in the

Federal Supplement) (“Shanghai Eswell”) where it sustained

Commerce’s decision to rely on the MHPC financials rather than

Apis’s:

           The court finds that Commerce was justified
           in determining that the 2003-2004 MHPC
           financial statement8 was the best available
           information to value factory overhead, SG&A
           expenses and profit. It is apparent from the
           Final Results that Commerce examined both the
           MHPC and Apis financial statements and
           compared their quality, specificity and

     8
          The issues in this litigation are substantially the
same although here Commerce relied on the 2004-2005 MHPC
financial statements for the Final Results, not the 2003-2004
MHPC financial statements at issue in previous cases. See Issues
& Dec. Mem. at 19.
Court No.    06-00234                                         Page 19
            contemporaneity. It then concluded based on
            this examination that “the Apis financial
            statement . . . is not a reliable source for
            calculating the surrogate financial ratios
            because it is neither complete, nor
            sufficiently detailed to provide a reliable
            source for surrogate values.” As Commerce
            observed, the “Apis statement does not
            include any auditor notes, nor does it appear
            to include complete schedules or details on
            Apis’ operations.” The MHPC’s statement, on
            the other hand, “include[s] a complete annual
            report, and auditors report, and complete
            profit and loss and business statement that
            segregate MHPC’s honey and fruit canning
            businesses.” Unlike Apis’s statement, MHPC’s
            statement details its honey operations with
            both narrative text and schedules indicating,
            for example, the number of kilograms of honey
            produced by particular MHPC members and the
            price per kilogram. The court thus finds
            that Commerce’s determination that the MHPC
            financial statement was the best available
            information to value financial ratios was
            reasonable.

Shanghai Eswell, 31 CIT at __, Slip Op. 07-138 at 11-12 (quoting

Wuhan II, 31 CIT at __, Slip Op. 07-113 at 47-48 (citations

omitted)).

     Although the MHPC and Apis financial statements at issue

here are for different years than those in previous cases and

thus contain different numbers, their form and presentation are

the same.    Because the plaintiffs present identical arguments

here, as in previous cases, the court follows the holdings in

Shanghai Eswell and Wuhan II that the MHPC financial statements

constitute the best available information.9   See 19 U.S.C.

     9
          The period of review was different in this POR
(December 1, 2003 through November 30, 2004) than in Shanghai
Court No. 06-00234                                           Page 20
§ 1677b (c)(1).

     In addition, the court in Shanghai Eswell rejected two other

arguments identical to those presented here, that: MHPC as a

cooperative is not a “true market economy entity”; and, that its

financial statements are tainted by expenses related to non-

subject merchandise.   Pls.’ Mem. 27, 35, 37.   As in Shanghai

Eswell, the court finds that “the Final Results demonstrate that

Commerce took into consideration MHPC’s status as a cooperative

when making its determination that its financial statement was

more reliable than Apis’s financial statement.”    Shanghai Eswell,

31 CIT __, Slip Op. 07-138 at 13.   The Shanghai Eswell Court

found no evidence that MHPC’s status as a cooperative rendered

its financial statement unreliable: “[a]n examination of the

record demonstrates that, other than certain unpaid loans,

plaintiffs can rely on no record evidence to support their claim

[that MHPC’s financial data are distorted by non-market forces].”

Id. at __, Slip Op. 07-138 at 13.   In Shanghai Eswell, as here:

“Without supporting with record evidence their claim that unpaid,

personal loans made by MHPC to its members actually affected

MHPC’s financial statement, plaintiffs’ generalized statement

does not undermine Commerce’s finding that MHPC’s status as a

Eswell and Wuhan II (December 1, 2002 through November 30, 2003),
but the issues are substantially the same. See Shanghai Eswell,
31 CIT __, Slip Op. 07-138 at 2; Wuhan II, 31 CIT at __, Slip Op.
07-113 at 1300.
Court No. 06-00234                                        Page 21
cooperative did not render its financial statement unreliable.”

Id. at __, Slip Op. 07-138 at 14.

     Plaintiffs also claim that MHPC’s financial statement was

distorted by its fruit canning division because “there is not a

clear division of costs between MHPC’s honey and fruit canning

operations in some of the schedules used by the Department,” and

that some expenses in the Department’s calculations, such as bank

interest, travel expenses, building appreciation and

depreciation, included expenses for both the honey and the fruit

canning divisions. Pls.’ Mem. 38.   The Shanghai Eswell Court

addressed this issue, finding that plaintiffs failed to

demonstrate that Commerce ignored evidence that the MHPC

financial statement was distorted by its fruit canning division:

          [W]hile acknowledging that MHPC produced non-
          subject merchandise in addition to the
          subject honey, Commerce found that MHPC’s
          financial statement sufficiently
          distinguished the costs associated with the
          honey and fruit canning divisions such that
          Commerce could derive surrogate financial
          ratios based solely on honey data.

Shanghai Eswell, 31 CIT at __, Slip Op. 07-138 at 14-15.

Commerce specifically found that “the asset value of non-subject

operations accounts for only a minor portion of MHPC’s total

asset value.”   Issues & Dec. Mem. at 20.   Moreover, “Commerce

calculated a profit only from the honey processing division.”

Def.’s Opp’n 23.   The Shanghai Eswell Court then found that its

examination of the MHPC financials confirmed the Department’s
Court No.    06-00234                                         Page 22
findings.    Shanghai Eswell, 31 CIT at __, Slip Op. 07-138 at 16.

     Because plaintiffs present nothing new with respect to their

arguments, the court follows the holdings in Shanghai Eswell that

the plaintiffs have not demonstrated that the MHPC financial

statements were unreliable, either because of MHPC’s status as a

cooperative or because of expenses related to non-subject

merchandise.

     In addition to those made in previous cases, plaintiffs

present two arguments not previously litigated in an effort to

demonstrate that the MHPC financials were unreliable.      First,

plaintiffs complain that the MHPC financials lacked a raw

material cost for honey, resulting in Commerce having to

extrapolate the raw material cost.    Pls.’ Mem. 33.   Plaintiffs

argue that, by doing so, the determination relied on “unsupported

assumptions.”    Pls.’ Mem. 33-34.

     In answer to plaintiffs’ claims, Commerce states that

            the MHPC financial statements provide
            adequate information to approximate the cost
            of goods sold, based on the reported amounts
            of “honey collected” and “honey sold.”
            Contrary to respondents’ assertions, the
            necessity of making certain assumptions in
            ascertaining the cost of raw honey consumed
            and the subsequent profit calculation do not
            make the data unusable.

Issues & Dec. Mem. at 19-20 (footnote omitted).    That is,

Commerce insists that it was able to calculate an accurate raw

material cost as follows: “(total cost of honey
Court No. 06-00234                                        Page 23
purchases/quantity purchased) x (sum of the quantities sold &

lost during production).”10    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,

AR 229, Att. 12.11    Commerce found “that the current calculation

methodology provides for a reasonable derivation of the cost of

goods sold and profit ratio.” Issues & Dec. Mem. at 20.

     Although plaintiffs insist that Commerce relied on

unwarranted assumptions in its calculation of raw material costs,

they identify nothing that would lead the court to agree with

them.     While the MHPC financials lack a raw material cost, they

do contain amounts for “honey collected” and “honey sold.”

Plaintiffs make no argument that these amounts are not accurate.

Therefore, Commerce’s straightforward calculation does indeed

     10
          Plaintiffs also argue that it is Commerce’s practice to
“reject a surrogate producer’s financial statement which does not
permit a calculation of the raw materials costs.” Pls.’ Mem. 33
(citing Certain Preserved Mushrooms from the PRC, 63 Fed. Reg.
72,255, 72,265 (Dep’t of Commerce Dec. 31, 1998) (notice)
(“Mushrooms”)). Mushrooms, however, is inapposite, because in
that decision, unlike the present case, the needed data was
difficult to isolate in the financials. Mushrooms, 63 Fed. Reg.
at 72,265 (“The packing material amount is almost as large as the
raw materials amount. The raw materials schedule does not
include cans or jars in the listing of the major raw materials.
Accordingly, we have made the reasonable assumption that
Saptarishi Agro included the costs of containers in the packing
materials amount, and we are unable to break out this amount
further.”).
     11
          The Department did not change this method of
calculation in the Final Results. See Factors of Production
Valuation Memorandum for the Final Results of Antidumping Duty
Admin. Review of Honey from the PRC dated June 9, 2006, AR 266.
Court No. 06-00234                                        Page 24
seem to be a reasonable method of approximating the cost of goods

sold.   Because Commerce has demonstrated that the MHPC financial

statements are equal to or superior to those of Apis in most

material respects (i.e., they are more complete, more detailed,

and more reliable), and because the Department has shown that it

can make a reasonable calculation of the cost of honey, the court

sustains its cost of goods sold calculation.

     Finally, plaintiffs complain that MHPC, as a cooperative, is

not required to comply with Indian Generally Accepted Accounting

Principles (“GAAP”) requirements and thus that its financial

statements cannot be certain to conform to Indian GAAP.    Pls.’

Mem. 37.   As noted above, the court previously addressed the

argument that, as a cooperative, MHPC is not a true market entity

such that its financial statements could not be reliable.

     In response to the argument regarding Indian GAAP, Commerce

stated:

           . . . the Department finds that the
           respondents’ claim that the Apis financial
           statements comport with Indian GAAP, while
           MHPC’s does not, is based on the respondents’
           assessment rather than an auditor’s official
           certification and we therefore accord it
           little weight, especially given the Court’s
           acceptance of the Department’s reliance on
           MHPC in prior reviews.

Issues & Dec. Mem. at 20 (citation omitted).   In fact, plaintiffs

cite to no evidence on the record demonstrating that the MHPC

financials do not comply with Indian GAAP.   Moreover, they fail

to demonstrate how Indian GAAP reporting differs from the method
Court No. 06-00234                                          Page 25
used in compiling the MHPC financials.    Because plaintiffs have

pointed to no record evidence that: (1) the MHPC financials were

not kept in accordance with Indian GAAP; or (2) that, even if the

MHPC financials were not kept in accordance with Indian GAAP, how

they would be less reliable than those of Apis, the court cannot

credit plaintiffs’ argument.

     Plaintiffs have failed to show that the Apis financial

statement was more reliable than that of MHPC, and as a result

have failed to make the case that the MHPC statement is not the

best information available.     See 19 U.S.C. § 1677b (c)(1).

Therefore, it cannot be said that Commerce’s choice to rely on

the MHPC financial statement is unsupported by substantial

evidence or not in accordance with law.     See Ceramica, 10 CIT at

404-405, 636 F. Supp. at 966.    The court sustains Commerce’s

choice.

C.   Calculation of the Surrogate Financial Ratios

     In determining normal value, Commerce uses ratios12 to

     12
          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
                                                           (continued...)
Court No. 06-00234                                        Page 26
calculate amounts for “general expenses and profit,” calculating

separate values for SG&A expenses; manufacturing overhead; and

profit.      See Wuhan II, 31 CIT at __, Slip Op. 07-113 at 41-42

(citation and quotation omitted).

     1.       Calculation on a LIFO Versus FIFO Basis

     To determine the denominator in the financial ratios,

Commerce must use a closing value for inventory, an element in

calculating the cost of materials consumed.        As addressed above,

plaintiffs have taken issue with the Department’s reliance on the

MHPC financial statements, in part because they did not include a

raw material cost for honey.       “As a result, the Department

assumed that MHPC has no ending inventory at all and imposed a

‘last in, first out’ (“LIFO”) valuation of MHPC’s raw materials,

by valuing all production using current honey purchases without

regard to the value of raw materials in beginning stock.”         Pls.’

Mem. 40.      Plaintiffs claim that a LIFO method of valuing

     12
          (...continued)
                 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.

Wuhan II, 31 CIT at __, Slip Op. 07-113 at 42 n. 15, (citing
Shanghai Foreign Trade Enters. Co. v. United States, 28 CIT 480,
482, 318 F. Supp. 2d 1339, 1341 (2004)).
Court No. 06-00234                                        Page 27
inventory “does not make sense in the case of an input such as

honey, where there would be an incentive to use the oldest raw

material first.”   Pls.’ Mem. 40.    Plaintiffs contend that honey

is perishable, meaning that its value would decrease over time,

necessitating the use of a first-in-first-out (“FIFO”)

methodology.

     Commerce rejected plaintiffs’ claim that it should use a

FIFO approach to “calculate the cost of goods sold on the basis

that honey is a perishable product.”     Issues & Dec. Mem. at 22.

In doing so the Department stated, “Respondents have provided no

evidence to support their claim that honey is perishable; thus,

the Department finds no reason to alter its inventory valuation

methodology, which was applied in the Preliminary Results and

previous segments of this order.”     Issues & Dec. Mem. at 22.

     While it may seem obvious that honey is perishable, the

discussion at oral argument made clear that there is considerable

dispute over how long it can be stored.13    What is clear, though,

is that there is nothing on the record indicating how long raw

honey can be kept in inventory.     That being the case, any

conclusion with respect to plaintiffs’ claims would be

speculation.   Commerce’s determination must be based on record

evidence and not speculation.     See Anshan Iron & Steel Co. v.

     13
          See generally Transcript of Oral Argument, Court No.
06-00234 (Nov. 29, 2007).
Court No.    06-00234                                           Page 28
United States, 28 CIT 1728, 1734, n. 2, 358 F. Supp. 2d 1236,

1241, n. 2 (2004) (“Speculation is not support for a finding . .

. .”) (quotation and citation omitted).    Because plaintiffs have

not shown by record evidence that Commerce reached the wrong

conclusion with respect to ending inventory, it is within

Commerce’s discretion to use a LIFO methodology to value

inventory.    See Wuhan II, 31 CIT at __, Slip Op. 07-113 at 49

(quoting Shakeproof, 268 F. 3d at 1382 (“The critical question is

whether the methodology used by Commerce is based upon the best

available information and establishes antidumping margins as

accurately as possible.”)).    The court thus finds that Commerce

was reasonable in applying the LIFO approach.

     2.     Honey Sales Commissions

     Commerce calculated the SG&A surrogate ratio “based on

publicly available information in the MHPC financial statement,

which included ‘honey sale[s] commissions’ paid by MHPC to

salesman [sic] to sell honey.”    Pls.’ Mem. 41.   Plaintiffs

contend honey sales commissions were “impermissibly double

counted because any commissions reported by Respondents, as a

matter of law, were deducted from the U.S. sales price.”     Pls.’

Mem. 41.    According to plaintiffs:

            In calculating the United States side of the
            dumping equation, the Department deducts an
            amount for “commissions” from the Plaintiffs’
            U.S. sales prices. In contrast, in
Court No.    06-00234                                       Page 29
            calculating normal value in the instant
            proceeding, the Department calculated the
            SG&A surrogate ratio based on publicly
            available information in the MHPC financial
            statement, which included “honey sale[s]
            commissions” paid by MHPC to salesman [sic]
            to sell honey.

Pls.’ Mem. 41 (citations omitted).    Thus, plaintiffs contend that

Commerce’s calculation of the SG&A ratio is contrary to law.

     In the Final Results, Commerce rejected this argument,

insisting, “the Department has determined that because sales

commissions represent standard selling expenses, these

commissions should be included in the surrogate SG&A

calculation.”    Issues & Dec. Mem. at 23 (citations omitted).14

That is, according to the Department, because standard selling

expenses relate to both home market sales and United States

sales, no adjustment need be made for them either to normal value

     14
          Standard selling expenses stand in contrast to direct
selling expenses. Under Commerce’s regulations, “direct selling
expenses” include “commissions . . . that result from, and bear a
direct relationship to, the particular sale in question.” 19
C.F.R. § 351.410(c) (2008). In a market economy proceeding,
Commerce is required to make a “circumstances-of-sale” adjustment
to (A) either export price or constructed export price; and (B)
normal value to account for differences in direct selling
expenses incurred in the United States and foreign markets. See
19 U.S.C. § 1677a(d)(1)(A) (providing for the reduction in the
price used to establish constructed export price by the amount of
any commissions for selling the subject merchandise in the United
States); 19 U.S.C. § 1677b(a)(6)(C)(iii) (providing for
adjustment to normal value for differences in circumstances of
sale). The purpose of the adjustment is to ensure that export
price and normal value are being compared on an “equivalent
basis” when Commerce makes its dumping determination. See Imp.
Admin. Antidumping Manual, Ch. 8 at 16 (Jan. 22, 1998) (available
at http://www.ia.ita.doc.gov).
Court No. 06-00234                                            Page 30
or constructed export price.

     The court cannot accept plaintiffs’ argument.    While

plaintiffs contend that there has been “double counting” with

respect to sales commissions, they have failed to demonstrate

that the expenses they describe as “commissions” are direct

selling expenses and not the kind of standard selling expenses

that are not deducted when calculating the SG&A ratio.

Plaintiffs cite to no record evidence to substantiate their

claims as to how these “commissions” should be characterized.

This failure is fatal to their claims.    Commerce has the

discretion to characterize evidence as long as its determination

is supported with substantial evidence.    See Saudi Iron and Steel

Co. (Hadeed) v. United States, 11 CIT 880, 889, 675 F. Supp.

1362, 1371 (1987) (finding substantial evidence supported

Commerce’s characterization of the transfer of equipment as a

lease/purchase rather than as a loan).

     Because plaintiffs have not shown that the expenses claimed

to be commissions should be treated as being directly related to

home market sales, the court upholds Commerce’s finding.

     3.   Jars and Corks

     Plaintiffs also argue that in calculating the financial

ratios, Commerce improperly “failed to capture all direct

materials in the calculation of the denominator [of the

Department’s financial ratio calculations], particularly jars and
Court No. 06-00234                                        Page 31
corks for retail-packed honey and honey machine purchases.”

Pls.’ Mem. 43.15   Plaintiffs claim that MHPC sells its processed

honey in jars, meaning that the jars should be considered direct

materials.   Plaintiffs’ position is based on: (1) the listing in

MHPC’s financial statements of jar and cork expenses along with

its other honey-related expenses (such as honey collection, honey

sales commissions, and honey boxes purchases); (2) a lack of

evidence demonstrating that the jars and corks were used in

MHPC’s fruit canning division; and (3) the observation that the

MHPC financial statements do not show purchases of steel drums or

other honey containers.   Pls.’ Mem. 43-44.   According to

plaintiffs, “the only reasonable explanation is that MHPC sells

its honey in jars and corks.”   Pls.’ Mem. 44.

     In the Final Results, Commerce stated that MHPC’s financial

statements indicate 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 packing16 in the manner described.”   Issues &

     15
          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).
     16
          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.
Court No. 06-00234                                          Page 32
Dec. Mem. at 23.

          The Department notes that the costs and
          revenues associated with “jars and corks” are
          independently itemized on the MHPC financial
          statements——specifically apart from the lines
          [sic] items labeled “honey sales” and
          “packaging.” Without supporting evidence to
          suggest that the items are associated with or
          incorporated into the sale of subject
          merchandise, the Department must treat the
          financial statement line items as they have
          been reported in the MHPC financial
          statement——independent of sales and
          packaging. Thus, consistent with previous
          segments of this order, the Department will
          continue to deduct only those packing
          expenses identified in the line item
          “packing” in the MHPC annual report, and will
          not adjust the surrogate financial statements
          to include the expenses for “jars and corks.”

Issues & Dec. Mem. at 23.

     Both parties made identical arguments in Shanghai Eswell.

See 31 CIT at __, Slip Op. 07-138 at 22-26.   After again

reviewing the chart on page 15 of the MHPC financial statement,

which contains the line items in question, and again finding it

nondeterminative, the court finds no reason to deviate from its

finding in Shanghai Eswell pertaining to this issue.

          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
Court No.    06-00234                                         Page 33
            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.

Shanghai Eswell, 31 CIT __, Slip Op. 07-138 at 24-25 (citations

and footnote omitted); see also Pls.’ App. 12 at 15 (MHPC Main

Journal Business Statement).    The court thus rejects as

unsupported by substantial evidence Commerce’s findings regarding

expenses for jars and corks and remands this question to

Commerce.

D.   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:

            Commerce treats the wage rate differently
            from all other factors of production[.] [F]or
            labor, Commerce employs regression-based wage
            rates reflective of the observed relationship
            between wages and national income in market
            economy countries . . . . Using this
            regression analysis, Commerce determines the
            relationship between countries’ per capita
            Gross National Product [(“GNI”)]17 and their

     17
          While per capita GNP and per capita GNI are not
precisely the same, both courts and the Department use them
interchangeably. See Dorbest Ltd. v. United States, 30 CIT __,
__, 462 F. Supp. 2d 1262, 1291 (2006); Antidumping Methodologies:
                                                        (continued...)
Court No.    06-00234                                        Page 34
            wage rates; Commerce approximates the wage
            rate of the PRC by using the PRC’s GNI as the
            variable in the equation that was the result
            of the regression.

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

1262, 1291 (2006) (citations omitted) (“Dorbest I”); 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.”)

     Plaintiffs’ primary challenge to the Department’s labor rate

calculation is that it is contrary to law because “the

Department’s use of a regression analysis based on a group of

market economy countries . . . contradicts the statute’s language

that the factors of production be valued using data from

economically comparable countries pursuant to 19 U.S.C.

     17
      (...continued)
Market Economy Inputs, Expected Non-Market Economy Wages, Duty
Drawback; and Request for Comments, 71 Fed. Reg. 61,716, 61,723
(Dep’t of Commerce Oct. 19, 2006) (“The [World Bank] WB defines
GNI per capita as equivalent to gross national product (“GNP”)
per capita, which is the dollar value of a country’s financial
output of goods and services in a year divided by its
population.”) (quotation omitted); Floor-Standing, Metal-Top
Ironing Tables and Certain Parts Thereof from the PRC, 68 Fed.
Reg. 44,040, 44,042 (Dep’t of Commerce July 25, 2003) (notice)
(referring to GNI as “the current World Bank term for what was
previously termed “Gross National Product”).
Court No. 06-00234                                          Page 35
§ 1677b(c)[(4)] . . . .”   Pls.’ Mem. 45.   Section 1677b(c)(4)

requires that:

          The administering authority, in valuing
          factors of production [to determine normal
          value of the subject merchandise exported
          from a nonmarket economy], shall utilize, to
          the extent possible, the prices or costs of
          factors of production in one or more market
          economy countries that are . . . at a level
          of economic development comparable to that of
          the nonmarket economy country. . . .18

     Plaintiffs argue that the 2003 labor calculation was “based

on a basket of countries not economically comparable to China.”

Pls.’ Mem. 46.   Commerce determined that the PRC’s wage rate was

$0.97 per hour in contrast to that of India, an economically

comparable country, whose wage rate is $0.23 per hour.    Issues &

Dec. Mem. at 28, 30.

     The Department insists that its use of data from a wide

range of market economy countries enhances the “accuracy,

predictability, and stability of the wage rate.”   Issues & Dec.

Mem. at 29.

          Due to the variability of wage rates in
          countries with similar per capita GNI, were
          the agency to select a single surrogate
          country, or even a small group of surrogate
          countries, to value labor wage rates, the
          result would vary widely depending upon the
          economically comparable countries selected.
          Thus, the regulations, as implemented,
          provide for a more accurate and more

     18
          The statute further states that, to the extent
possible, the surrogate countries used to determine the wage rate
be “significant producers of comparable merchandise.” 19 U.S.C.
§ 1677b(c)(4)(B).
Court No.    06-00234                                           Page 36
            predictable result by utilizing data from
            multiple countries.

Issues & Dec. Mem. at 28 (citations omitted).    In other words,

Commerce bases its case on the idea that its regression analysis

would yield inaccurate results if it depended only on data from

countries that are economically comparable to the PRC.

     Commerce’s argument seems to refer to the validity of using

data from a wide range of market economy countries within the

regression model, but does not explain how its regulations,19

which rely on per capita GNI, rather than surrogate data from

market economy countries at a level of development comparable to

that of the nonmarket economy, meet the requirements of the

antidumping statute.    Issues & Dec. Mem. at 28-29.

     Thus, Commerce appears to be side-stepping the issue raised

by plaintiffs.    In other words, in valuing all other factors of

production, Commerce follows the statute and “prices or costs”

the factors of production using values found in surrogate

countries that are economically comparable to the NME country

under investigation.    Indeed, as has been seen, here Commerce

valued raw honey using surrogate data from India.      In its

response to the issue raised by plaintiffs, however, the

Department attempts to justify the use of data in the methodology

     19
          The regulation describes the methodology by which the
Department calculates expected NME wages: “For labor, the
Secretary will use regression-based wage rates reflective of the
observed relationship between wages and national income in market
economy countries.” 19 C.F.R. § 351.408(c)(3).
Court No. 06-00234                                          Page 37
prescribed by its regulations, but not the regulations

themselves.   Because Commerce has failed to explain how its

regulations comport with the statute, this matter is remanded for

the Department to supply that explanation.   “Commerce is obliged

to adequately explain how its chosen methodology achieves the

required result [of determining antidumping margins as accurately

as possible].” Shandong Huarong Machin. Co. v. United States, 29

CIT 484, 489, Slip Op. 05-54 at 10 (May 2, 2005) (not reported in

Federal Supplement) (citing NTN Bearing Corp. v. United States,

14 CIT 623, 634, 747 F. Supp. 726, 736 (1990)).

      Plaintiffs also take issue with the implementation of the

regulations themselves.   In doing so, plaintiffs challenge the

exclusion of data from countries that they claim meet the

Department’s selection criteria, that is, “all countries for

which the requisite data are available.”   Issues & Dec. Mem. at

30.   Specifically, plaintiffs cite to the decision in Dorbest I,

30 CIT __, __, 462 F. Supp. 2d 1262, and ask that the court issue

the same instructions to Commerce in this proceeding, i.e., that

on remand, Commerce is to either

           (a) justify why its data set constitutes the
           best available information; or (b)
           incorporate those countries meeting its
           criteria into the data set; and (c)
           reconsider its use of its methodology or an
           alternative method for determining the labor
           rate for the PRC in this case.

Pls.’ Mem. 45.   The Department notes that its regression

analysis, which does not include “all countries for which the
Court No. 06-00234                                        Page 38
requisite data are available” is “the same as that used for the

past several years, and is sufficiently robust to conduct a

meaningful regression analysis.”   Issues & Dec. Mem. at 30.   To

recalculate the regression analysis with a different basket of

countries would “amount to a significant change” in the current

methodology requiring a public notice and comment process. Id.20

As this Court held in Wuhan II, Commerce errs when it excludes

countries that meet its selection criteria from the data set:

          Commerce’s argument that the data set in
          question must be developed through notice-
          and-comment rulemaking appears to be
          inconsistent with Commerce’s past practice.
          Commerce has in the past updated and expanded
          the number of countries within the data set
          without resorting to notice and comment
          rulemaking. In fact, during the
          investigation here, Commerce used a basket of
          fifty-six countries, but during the voluntary
          remand, used a basket of only fifty-four. No
          notice-and-comment rulemaking was used to
          effect the change. Commerce has also, over
          time, expanded its data set of countries from
          forty-five countries to fifty-six countries
          without vetting its choices through notice-
          and-comment rulemaking.

Wuhan II, 31 CIT at __, Slip Op. 07-113 at 39 (quoting Dorbest I,

     20
          Commerce did indeed announce a revised methodology in a
notice published on October 19, 2006. See Antidumping
Methodologies: Market Economy Inputs, Expected Non-Market Economy
Wages, Duty Drawbacks; and Request for Comments, 71 Fed. Reg.
61,716, 61,721-23 (Dep’t of Commerce Oct. 19, 2006). Under the
revised methodology, the basket of countries “will include data
from all market economy countries that meet the criteria
described [in the notice] and that have been reported within 1
year prior to the Base Year,” which is the most recent reporting
year of the data required for the regression methodology. Id. at
61,721-61,722.
Court No. 06-00234                                            Page 39
30 CIT at __, 462 F. Supp. 2d at 1295).    Indeed,

“Commerce has acknowledged . . . the desirability of a broader

data set in its own justification for the creation and

utilization of a regression model for wage rates . . . .”

Dorbest I, 30 CIT at __, 462 F. Supp. 2d at 33.      Commerce’s

explanation that the basket of countries it used “is the same as

that used for the past several years,” and that recalculating

would “amount to a significant change” is insufficient to support

its determination.    Commerce has conceded as much by modifying

its selection criteria and list of included countries in at least

two cases.    See Wuhan Bee Healthy Co. v. United States, 32 CIT

__, __, Slip Op. 08-61 (May 29, 2008) (“Wuhan III”); Dorbest Ltd.

v. United States, 32 CIT __, __, Slip Op. 08-24 (Feb. 27, 2008)

(“Dorbest II”).    As a result, issues relating to Commerce’s

selection of data used to calculate labor costs will be remanded.

E.   Calculation of Brokerage and Handling

     Finally, plaintiffs contest Commerce’s calculation of

brokerage and handling value as unsupported by substantial

evidence and not in accordance with law.    For the purposes of

calculating surrogate values, Commerce “normally values brokerage

and handling using nonproprietary information gathered from

producers of identical or comparable merchandise in the surrogate

country.”    Def.’s Opp’n 37 (citing 19 C.F.R. § 351.408(c)(4)).

Commerce selects this data based on its “quality, specificity and
Court No. 06-00234                                            Page 40
contemporaneity.” Issues & Dec. Mem. at 24-25.

     Commerce used a simple average of two surrogate values for

domestic brokerage and handling:

          The December 2003 - November 2004 data of
          Essar Steel (Essar) originally submitted in
          the anti-dumping administrative review of
          hot-rolled steel flat products from India
          (hereinafter “Essar” value or data). This
          value of 0.17 rupees per kilogram is derived
          from data on shipments totaling 4,000 metric
          tons.

          [The] November 2002 - September 2003 data of
          Pidilite Industry (Pidilite) originally
          submitted in the antidumping investigation of
          carbazole violet pigment 23 from India
          (hereinafter “Pidilite” value or data). This
          value of 6.48 rupees per kilogram is derived
          from data on shipments totaling 13 metric
          tons.

Pls.’ Mem. 47 (citing Factors of Production Valuation Mem. for

the Preliminary Results and Partial Rescission of Antidumping

Duty Admin. Review of Honey from the PRC dated Dec. 9, 2005, AR

229 at 10).

     Plaintiffs argue that only the Essar 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.”   Pls.’ Mem. 48.

     Commerce acknowledges that the Essar data is the most

contemporaneous data on the record, as it overlaps with the POR.

Issues & Dec. Mem. at 25.   However, it states that “when

considering the quality and specificity of the data on the

record, e.g., Essar and Pidilite’s brokerage and handling values,
Court No. 06-00234                                        Page 41
calculating an average of the two values results in the most

appropriate value on the record in this case.”     Id. (footnote

omitted).   Commerce found that a simple average achieved the most

representative value considering the values reported: “[A]s there

are no honey-specific brokerage and handling values on the

record, the Department finds that a simple average of Essar and

Pidilite’s values achieves the most representative value.”

Issues & Dec. Mem. at 25.21

     Moreover, the Department claims that “the Pidilite value

from the period October 1, 2002, through September 30, 2003, is

not distant enough from the POR in this case (December 1, 2003

through November 30, 2004) for it to be disqualified for use.”

Issues & Dec. Mem. at 25 (citing Hebei II, 29 CIT at 301, 366 F.

Supp. 2d at 1275 (“[t]hree months of contemporaneity is not a

compelling factor where the alternative data is only a year-and-

a-half distant from the POI.”)).

     “Despite the broad latitude afforded Commerce, its

discretion is not unlimited, but must be exercised in a manner

consistent with underlying objective of [the statute]——to obtain

the most accurate dumping margins possible.”     Hebei Metals &

Minerals Imp. & Exp. Co. v. United States, 28 CIT 1185, __, Slip

     21
          In addition, Commerce found the average of the data was
the most representative because “the values reported by Essar and
Pidilite are the actual prices paid by market economy companies
and are representative of their normal business practices.”
Issues & Dec. Mem. at 25-26.
Court No. 06-00234                                        Page 42
Op. 04-88 at 10 (July 19, 2004) (quotation omitted) (not reported

in Federal Supplement) (“Hebei I”);   see also Shakeproof, 268

F.3d at 1382 (“In determining the valuation of the factors of

production, the critical question is whether the methodology used

by Commerce is based on the best available information and

establishes antidumping margins as accurately as possible.”).

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.

Commerce’s determination that use of a simple average of the data

constituted the best available information for valuing brokerage

and handling, however, 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.

     “An agency must explain its rationale . . . such that a

court may follow and review its line of analysis, its reasonable

assumptions, and other relevant considerations.   Explanation is

necessary . . . for this court to perform its statutory review

function.”   Shanghai Eswell, 31 CIT at __,   Slip Op. 07-138 at 10

(citing Int'l Imaging Materials, Inc. v. United States Int'l

Trade Comm'n, 30 CIT __, Slip Op. 06-11 at 13 (Jan. 23, 2006)
Court No. 06-00234                                         Page 43
(not reported in the Federal Supplement)).   Such an explanation

is particularly important because, as plaintiffs point out:

           The Pidilite brokerage charge is derived from
           only 19 sales consisting of only 13 metric
           tons of merchandise, resulting in a weighted
           average brokerage fee of 6.48 Rs/kg. By
           contrast the Essar brokerage charge was
           derived from over 4,000 metric tons of
           shipments with a weighted average brokerage
           fee of 0.17 Rs/kg. Thus, the Pidilite
           brokerage charge is more than 37 times
           greater than the Essar value . . . .

Pls.’ Mem. 48 (citations omitted).   Plaintiffs conclude that

“record evidence clearly demonstrates that the Pidilite

represents an unrepresentative and aberrational brokerage value.”

Id.   Plaintiffs and the court are entitled to an explanation for

Commerce’s use of the Pidilite data, and therefore, this matter

is remanded.
Court No.    06-00234                                        Page 44

                             CONCLUSION

     For the foregoing reasons, the court grants the plaintiffs’

motion for judgment on the agency record, in part, and denies it

in part.    The court remands this case to Commerce for further

action consistent with this opinion.

     On remand Commerce shall make specific reference to the

questions raised in this opinion, as follows.    (1)   Commerce

shall reconsider and explain its decision not to include expenses

for jars and corks in its financial ratio calculations as direct

expenses used for producing finished honey.    If Commerce

concludes that the expenses for the jars and corks should be

taken into account in the financial ratio calculations, it shall

make the necessary adjustments. (2) Commerce shall reconsider and

explain how its regulations for determining the cost of labor

conform to the antidumping statute, 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.    In the event that Commerce

concludes that its regulations do not conform to the antidumping

statute, it shall propose a method for determining the cost of

labor that does conform to the statute. (3)    Commerce shall

reconsider and explain its use of the Pidilite data in

calculating the brokerage and handling value with particular
Court No. 06-00234                                         Page 45
reference to “quality and specificity.”   Should Commerce conclude

that its use of the Pidilite data is not justified it shall

recalculate the brokerage and handling value using only the Essar

data.

                                   /s/Richard K. Eaton
                                      Richard K. Eaton

Dated:    June 16, 2008
          New York, New York