                                     Slip Op. 12-69

                UNITED STATES COURT OF INTERNATIONAL TRADE


 FUWEI FILMS (SHANDONG) CO., LTD.,

                     Plaintiff,
                                                      Before: Leo M. Gordon, Judge
         v.
                                                      Consol. Court No. 11-00061
 UNITED STATES,

                    Defendant.


                                  OPINION and ORDER

[Administrative review results remanded.]

                                                                    Dated: June 1, 2012


      David J. Craven, Riggle & Craven, of Chicago, IL, for Plaintiffs Fuwei Films
(Shandong) and Shaoxing Xiangyu Green Packing Co., Ltd.

       David D’Alessandris, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, for Defendant United States. With him
on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director
and Patricia M. McCarthy, Assistant Director. Of Counsel on the brief was Whitney
Rolig, Office of the Chief Counsel for Import Administration, International Trade
Administration, Department of Commerce, of Washington, D.C.

       Ronald I. Meltzer, Patrick J. McLain, David M. Horn, and Jeffrey I. Kessler,
Wilmer, Cutler, Pickering, Hale and Door, LLP, of Washington, DC, for Defendant-
Intervenors DuPont Teijin Films, Mitsubishi Polyester Film, Inc., SKC, Inc., and Toray
Plastics (America), Inc.

         Gordon, Judge:    This consolidated action involves an administrative review

conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty

order covering Polyethylene Terephthalate (“PET”) Film from the People’s Republic of

China.    See Polyethylene Terephthalate Film from the People’s Republic of China,
Consol. Court No. 11-00061                                                         Page 2


76 Fed. Reg. 9,753 (Dep’t of Commerce Feb. 22, 2011) (“Final Results”) and

accompanying Issues and Decision Memorandum, A-570-924 (Feb. 14, 2011), available

at http://ia.ita.doc.gov/frn/summary/prc/2011-3909-1.pdf (last visited June 1, 2012)

(“Decision Memorandum”). Before the court are motions for judgment on the agency

record filed by Fuwei Films (Shandong) Co., Ltd., and Shaoxing Xiangyu Green Packing

Co., Ltd. (“Green”), respondents in the administrative proceeding (collectively

“Respondents”), and DuPont Teijin Films, Mitsubishi Polyester Film, Inc., SKC, Inc., and

Toray Plastics (America), Inc. (collectively “DuPont”), petitioners in the administrative

proceeding. 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) (2006), 1 and 28 U.S.C. §

1581(c) (2006).

         Respondents challenge Commerce’s (1) surrogate valuation of labor inputs, (2)

alleged clerical errors for Green’s packing material and per-unit electricity and water,

and (3) surrogate valuation of PET chips. 2 DuPont also challenges the surrogate

valuation of Respondents’ PET chips. For the reasons set forth below, this matter is

remanded to Commerce.

                                   I. Standard of Review

         For administrative reviews of antidumping duty orders, the court sustains

determinations, findings, or conclusions of the U.S. Department of Commerce unless

1
 Further citation to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2006 edition.
2
    PET chips are the primary raw material for production of PET film.
Consol. Court No. 11-00061                                                     Page 3


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). 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. 2011). 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.”

Edward D. Re, Bernard J. Babb, and Susan M. Koplin, 8 West's Fed. Forms, National

Courts § 13342 (2d ed. 2010).
Consol. Court No. 11-00061                                                             Page 4


                                       II. Discussion

                                   A. Voluntary Remand

       Commerce has requested a voluntary remand to (1) address Respondents’

arguments regarding the surrogate value for the labor input, and (2) correct a clerical

error in Green’s per-unit water and electricity costs, which the court will

grant. See SKF USA Inc. v. United States, 254 F.3d 1022, 1029 (Fed. Cir. 2001).

                       B. Green’s other Clerical Error Allegation

       When calculating Green’s packing material expenses for the preliminary results,

Commerce included a space between a parenthesis and a slash mark in a line of

computer code. Green did not raise this issue in its case brief, nor did Green raise the

issue as a clerical error submission following issuance of the Final Results. Green has

instead raised this issue for the first time in its opening brief in this action, alleging that

the extra space caused an error in the conversion (or non-conversion) of units from tons

to kilos.

       The extra space actually has no effect whatsoever on the calculation. Defendant

explains that the software computes each instruction line as a whole. Def.’s Br. at 16 n.

5, Nov. 30, 2011, ECF No. 55 (quoting SAS Institute, Inc., SAS 9.3 Language

Reference: Concepts 21 (Cary, NC SAS Institute, Inc. 2011) (“A blank [space] is not

treated as a character in a SAS statement unless it is enclosed in quotation marks . . .

[t]herefore, you can put multiple blanks any place in a SAS statement where you can

put a single blank. It has no effect on the syntax.”). In its reply brief, Green raises an
Consol. Court No. 11-00061                                                        Page 5


entirely new argument about an apparently different clerical error affecting the

converted or calculated weight of Green’s plastic caps. See Respondents’ Reply Br. at

11-12, Jan. 4, 2012, ECF No. 58-1 (“Plaintiffs initially believed that this error was

reflected in the identified instruction. Apparently it was not.”). The time of one’s reply

brief, however, is not the opportune moment to figure out the specifics of one’s

argument, and introduce a brand new theory. See Scheduling Order at 6, July 14,

2011, ECF No. 36 (“The reply brief may not introduce new arguments.”). The court will

therefore sustain Commerce’s treatment of Green’s packing expenses.

                       C. Surrogate Valuation of PET Chip Inputs

       When valuing the factors of production in a non-market economy proceeding,

Commerce must use the “best available information” when selecting surrogate data

from “one or more” surrogate market economy countries. 19 U.S.C. § 1677b(c)(1), (4).

Commerce's regulations provide that surrogate values should “normally” be publicly

available and from a single surrogate country.         19 C.F.R. § 351.408(c) (2008).

Commerce prefers data that reflects a broad market average, is publicly available,

contemporaneous with the period of review, specific to the input in question, and

exclusive of taxes on exports. Certain Pneumatic Off–the–Road Tires from the People's

Republic of China, 73 Fed. Reg. 40,485 (Dep't of Commerce July 15, 2008) and

accompanying Issues and Decision Memorandum cmt. 10 at 26, A–570–912 (July 7,

2008), available at http://ia.ita.doc.gov/frn/summary/PRC/E8–16156–1.pdf (last visited

this date).
Consol. Court No. 11-00061                                                          Page 6


         “[T]he process of constructing foreign market value for a producer in a nonmarket

economy country [using surrogate values] is difficult and necessarily imprecise.” Nation

Ford Chem. Co. v. United States, 166 F.3d 1373, 1377 (Fed. Cir. 1999) (citation

omitted) (internal quotation marks omitted). Importantly, Commerce’s surrogate value

decision or data choice is not rendered unreasonable because an alternative inference

or conclusion could be drawn from the administrative record. Daewoo Elec. Co. v. Int’l

Union of Elec., Elec., Tech., Salaried & Mach. Workers, 6 F.3d 1511, 1520 (Fed. Cir.

1993).     Rather, the court will upset Commerce’s surrogate valuation only if no

“reasonable mind could conclude that Commerce chose the best available information.”

Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333, 1341 (Fed. Cir.

2011) (quoting Goldlink Indus. Co. v. United States, 30 CIT 616, 619, 431 F. Supp. 2d

1323, 1327 (2006)) (internal quotation marks omitted).

         In determining the “best available information” to value Respondents’ PET film

inputs of bright polyester and master batch (“BP&MB”) PET chips, Commerce needed

to determine which provision of the Harmonized Tariff Schedule (“HTS”) of India (the

primary surrogate country) best applied to Respondents’ BP&MB chips. This was an

involved undertaking:

         When selecting surrogate values with which to value the FOPs used to
         produce subject merchandise, the Department is directed to use the “best
         available information” on the record. See Section 773(c)(1) of the Act. As
         noted by Petitioners, when selecting surrogate values for use in an NME
         proceeding, the Department’s preference is to use, where possible, a
         range of publicly available, non-export, tax-exclusive, and product-specific
         prices for the POR, with each of these factors applied non-hierarchically to
         the particular case-specific facts and with preference to data from a single
Consol. Court No. 11-00061                                                          Page 7


      surrogate country. In the Preliminary Results, the Department selected a
      surrogate value based on an eight-digit basket category that was the most
      specific on record to the input in question. The Department valued PET
      chips with HTS 3907.60.20, “Polyethylene Terephthalate With Intrinsic
      Viscosity >= 0.64 Dl/G & <=0.72 Dl/G,” the HTS subheading applicable to
      Respondents’ FOPs for PET chips with the intrinsic viscosity meeting this
      description. However, the Department has reviewed the additional factual
      information placed on the record by Respondents regarding the
      methodologies employed for measuring intrinsic viscosity and, after further
      review of the certificates of analysis submitted by Respondents, the
      Department has determined that there is insufficient evidence on the
      record to support the selection of HTS 3907.60.20 as the only surrogate
      value for the inputs that comprise all, or nearly all, of Respondents’ direct
      materials, and the great majority of Respondents’ cost of manufacturing.
      Therefore, for the final results, the Department has determined to use the
      GTA Indian import data under both HTS subheadings 3907.60.10 and
      3907.60.20. Data for both subheadings are publicly available, broad
      market averages, contemporaneous with the POR, tax-exclusive, and
      representative of significant quantities of imports, thus satisfying critical
      elements of the Department’s surrogate value test.

      Respondents have argued that the customs service of the Indian
      government uses a different testing methodology for calculating intrinsic
      viscosity than those used by Respondents in their questionnaire
      responses. Information on the record regarding testing methods in India,
      i.e., a letter from an Indian customs official secured by Respondents’
      counsel during the less than fair value investigation, indicates that to
      correctly classify merchandise entering India, importers should have
      intrinsic viscosity details for their product(s) based on ASTM standards.
      The letter, dated April 7, 2008, was written only six months prior to the
      beginning of the POR. Further, Respondents have also submitted
      information regarding intrinsic viscosity testing methods commonly used in
      the PRC, which are testing methods conforming to those set forth by ISO,
      but which are not the same as the ASTM testing protocol for measuring
      PET chip intrinsic viscosity used in India. Finally, the Department has
      reviewed the submission of the DuPont Group, respondents in the
      investigation, which Respondents submitted to the record of this review
      subsequent to the Preliminary Results. In the investigation, the DuPont
      Group submitted to the public record a list of its suppliers, the PET chips
      that it purchased from each supplier, the PET chip intrinsic viscosity by the
      suppliers’ specification and, finally, conversions of these intrinsic viscosity
      values to demonstrate what the values would be using other testing
Consol. Court No. 11-00061                                                        Page 8


      methods. Thus, Respondents’ submitted factual information indicates that
      there are several different testing methods for measuring the intrinsic
      viscosity of PET chips, which differ based upon the nature and proportion
      of solvents used in the testing process. The actual testing method used to
      measure the intrinsic viscosity of PET chips is done at the discretion of the
      tester. Depending upon the testing method used, the intrinsic viscosity of
      PET chips could be measured either above or below the 0.64 Dl/G
      threshold which defines HTS 3907.60.20.

      The record evidence in this review supports the Department’s use of HTS
      3907.60.20 as we concluded in our Preliminary Results. Nevertheless, we
      reviewed again the certificates of analysis that Respondents submitted to
      the record prior to the Preliminary Results, and it appears from the record
      that the testing method used by Respondents’ suppliers to provide the
      intrinsic viscosity values reported on the certificates is not disclosed.
      Further, the certificates of analysis for Respondents’ PET chips indicates
      that at least some of Respondents’ PET chips have an intrinsic viscosity
      very near the 0.64 Dl/G threshold which defines the upper limit of HTS
      3907.60.10, and the lower limit of HTS 3907.60.20. Due to the absence of
      record evidence that would provide the Department with information for
      determining the correct intrinsic viscosity and the most accurate HTS
      subheading, the Department believes that some of Respondents’ PET
      chips match the description for HTS 3907.60.10. Moreover, as the bright
      polyester chip FOP and master batch chip FOP make up the vast majority
      of the cost of manufacturing for Respondents, it is critical in this instance
      that the Department applies a comprehensive valuation for the inputs at
      issue.

      Respondents and Bemis have noted various PET chip quantity and value
      examples on the record for other India HTS subheadings, and argued that
      the quantity in the surrogate value used in the Preliminary Results (i.e.,
      HTS 3907.60.20) is lower when compared to these examples. In
      particular, Respondents have contrasted the quantity of HTS 3907.60.20
      with the greater merchandise quantity of HTS 3907.60.10, the HTS
      subheading used to value DuPont Group’s PET chip input in the original
      investigation. Respondents have presented information showing that the
      adjacent HTS 3607.60.10 represents a more reliable quantity than the
      Indian HTS 3907.60.20. Generally, the Department’s practice has found
      that the existence of lower commercial quantities and higher prices alone
      does not necessarily indicate that price data are distorted or
      misrepresented and, thus, are not sufficient to exclude particular surrogate
      values absent specific evidence that the values are otherwise aberrational.
Consol. Court No. 11-00061                                                         Page 9


      Moreover, as stated in the preceding paragraph, the Department has
      determined to apply an equal balance of all surrogate values that are, or
      could potentially be applicable to, Respondents’ PET chips. Therefore,
      due to: (1) the reasonable likelihood that Indian HTS 3907.60.10 may be
      applicable, at least in part, to Respondents’ inputs; and (2) the magnitude
      of the surrogate value in relation to Respondents’ cost of production, the
      Department has applied the simple-average of the two weighted-average
      unit values of Indian HTS subheadings 3907.60.10 and 3907.60.20 to
      calculate the surrogate values for bright polyester chips and master batch
      chips in order to calculate as accurately as possible Respondents’
      antidumping margins for the final results. The information on the record
      supports a finding that both HTS subheadings may be equally applicable
      to Respondents’ inputs. The Department has applied the simple-average
      of the two weighted-average unit values of the Indian HTS subheadings
      3907.60.10 and 3907.60.20, and not a weighted-average unit value of all
      merchandise under these HTS subheadings, to avoid an imbalanced
      result due to the greater merchandise quantity of HTS 3907.60.10.

      Finally, Respondents have submitted Infodrive India data as a
      corroborative tool to show that the GTA surrogate value data are distorted.
      Due to the Department’s well-established reservations regarding the use
      of Infodrive data, either as a corroborative tool or price benchmark, the
      viability of this particular Infodrive dataset (and, thus, Respondents’ claims
      that the GTA data are distorted) must be analyzed in accordance with
      Department practice and policy regarding the use of Infodrive data. The
      Department has stated that it will consider Infodrive data to further
      evaluate import data, provided: (1) there is direct and substantial evidence
      from Infodrive reflecting the imports from a particular country; (2) a
      significant portion of the overall imports under the relevant HTS category
      is represented by the Infodrive India data; and (3) distortions of the
      surrogate value in question can be demonstrated by the Infodrive data; but
      that the Department will not use Infodrive data when they do not account
      for a significant portion of the imports which fall under a particular HTS
      subheading.

      On point (1), all countries but one that are reported in GTA for HTS
      3907.60.10 are reported in the Infodrive data, and the Infodrive data for
      HTS 3907.60.20 do indicate shipments from Germany to India as shown
      in GTA. Regarding point (2), we find that the Infodrive India is under-
      inclusive, representing only 48.44 percent of POR value and 53.05
      percent of POR quantity for Indian HTS 3907.60.10, and only 79.16
      percent of POR value and 84.72 percent of POR quantity for Indian HTS
Consol. Court No. 11-00061                                                        Page 10


      3907.60.20, as reported in the official source. Over half of the value in
      HTS 3907.60.10, and one-fifth of the value in HTS 3907.60.20, based on
      official Indian import statistics is not accounted for by the Infodrive.
      Information in this unaccounted for portion of the actual entries may
      contradict the claim that these HTS numbers produce a distortive average
      value. In numerous cases, the Department has rejected Infodrive data
      because they did not account for a significant portion of the overall official
      import data. If the Department considers that Infodrive information is not
      conclusive regarding the validity of the surrogate value based on HTS
      3907.60.10 and HTS 3907.60.20, the Department may continue to apply
      the surrogate value. As to point (3), Respondents and Bemis have not
      provided any benchmarks to show that the AUVs are abnormally high or
      the quantity is abnormally low. Furthermore, Infodrive India data are
      collected by a private party that only reviews bills of lading for commercial
      descriptions. The data in Infodrive may differ from the actual entries of the
      shipments as recorded in the Indian official import statistics.

      In sum, the Department has applied the simple average of the two
      weighted-average unit values of the Indian HTS subheadings 3907.60.10
      and 3907.60.20 to calculate the surrogate values for bright polyester chips
      and master batch chips for the final results. Further, Respondents’
      submitted Infodrive India data are not a reliable basis for the Department
      to abandon the surrogate value calculated by the Department in the
      Preliminary Results, as doing so would require a speculative interpretation
      of the data, and also because the data are an under-inclusive portion of
      the officially reported Indian import data. Therefore, because there is
      insufficient evidence that Indian HTS 3907.60.20 should be used
      exclusively for valuing Respondents’ PET chips, as mentioned above for
      the final results, we will value Respondents’ PET chip inputs using Indian
      import statistics HTS subheadings 3907.60.10 and 3907.60.20.

      Because the Department has not departed from its selection of India as
      the surrogate country and has maintained the application of the selected
      surrogate value from India for PET chips in this AR, the Department need
      not address Respondents’ arguments against the application of surrogate
      values from Thailand, and surrogate values from other potential surrogate
      countries that may or may not have been properly translated.

Decision Memorandum at 12-16 (footnotes omitted).

      Both Respondents and DuPont challenge Commerce’s surrogate valuation of

Respondent’s PET chips as the “best available information,” 19 U.S.C. § 1677b(c)(1).
Consol. Court No. 11-00061                                                      Page 11


DuPont argues that the administrative record supports HTS 3907.60.20 as the one,

true, correct data source for Respondents’ PET chips, while Respondents argue that

HTS 3907.60.10 is the one, true, correct data source.

      During the review Respondents submitted test certificates from their suppliers

that showed intrinsic viscosities (“IVs”) between 0.64 and 0.72 dl/g, placing them

squarely under HTS 3907.60.20 if the testing method (ISO or ASTM) is ignored. The

certificates did not identify the testing method used to calculate the IVs. Respondents

addressed this problem indirectly by relying on submissions from the investigation that

had been provided by the “DuPont Group,” which consisted of the participating

mandatory respondent, DuPont Teijin Films China Limited, together with DuPont Teijin

Hongji Films Ningbo Co., Ltd., and DuPont-Hongji Films Foshan Co., Ltd.—all apparent

affiliates of the petitioner here, DuPont Teijin Films. In the investigation the DuPont

Group argued, and Commerce agreed, that the correct surrogate value measure was

3907.60.10, not 3907.60.20. Issues and Decision Memorandum for Final Determination

of Sales at Less than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip

from the People’s Republic of China at 2-3, A-570-924 (Sept. 17, 2008), available at

http://ia.ita.doc.gov/frn/summary/prc/E8-22454-1.pdf (last visited this date). The DuPont

Group (1) explained and documented that ISO tests produce higher IVs than ASTM

tests, and (2) submitted detailed charts recalculating the DuPont Group’s IVs under

ASTM standards. Commerce, though, did not address these submissions, relying on

different reasons to favor HTS 3907.60.10 over 3907.60.20 (import statistics for
Consol. Court No. 11-00061                                                     Page 12


3907.60.20 contained an insignificant quantity of imports not representative of the

DuPont Group’s PET chip purchase volume or consumption experience). Id. With this

background in mind, the court first addresses DuPont’s arguments, then Respondents’.

                               1. DuPont’s Arguments

      At the outset, the court must note that DuPont has assumed a somewhat difficult

position by arguing that HTS 3907.60.20 constitutes the only proper dataset (for

Respondents PET Chips) shortly after the DuPont Group successfully argued in the

investigation that HTS 3907.60.10 is the only proper dataset (for the DuPont Group’s

PET chips). Here the main thrust of DuPont’s argument is that Commerce’s decision to

include HTS 3907.60.10 in its surrogate valuation is conjectural. See DuPont Br. at 5-8,

ECF No. 46-2.    “Conjecture” though is not really a word that springs to mind after

reading Commerce’s detailed analysis quoted above, which does not appear to be the

product of mere guesswork.       DuPont’s contention is also a surprising, if unfair,

characterization given the position the DuPont Group assumed in the investigation.

      DuPont argues that Commerce’s conclusion that the ISO standard is “commonly”

used in China (and by extension, Respondents) is conjecture. DuPont Br. at 5-7.

DuPont builds its argument from a cherry-picked statement in China Nat'l Machinery

Import & Export Corp. v. United States, 27 CIT 255, 268, 264 F. Supp. 2d 1229, 1240

(2003) ("CMC I"), “Conjectures are not facts and cannot constitute substantial

evidence."   DuPont, however, neglects to cite or discuss the subsequent history of

CMC I, in which Commerce maintained its original position on remand, Court No. 01-
Consol. Court No. 11-00061                                                       Page 13


01114, May 16, 2003, ECF No. 40, which the court then sustained as reasonable

despite its earlier (and ultimately unfounded) concerns about potential “conjecture.”

See China Nat'l Machinery Import & Export Corp. v. United States, 27 CIT 1553, 293 F.

Supp. 2d 1334 (2003), aff’d without opinion, 104 Fed. Appx. 183 (Fed. Cir. 2004).

CMC I, therefore, has limited persuasive value given its subsequent history.

      Here, the question is not whether Commerce engaged in “conjecture” that fails to

qualify as “substantial evidence,” or that Commerce predicated its decision on mere

“suspicion,” DuPont Br. at 5-8, (characterizations that are hard to justify given

Commerce’s detailed analysis above as well as the results of the investigation), but

simply whether Commerce’s findings and conclusions supporting its ultimate

determination to use data from HTS 3907.60.10 are reasonable given the

circumstances presented by the record. DuPont argues that Commerce’s conclusion

that Chinese producers “commonly” use the ISO standard is unreasonable because the

administrative record did not contain direct evidence that the ISO standard is universally

used in China. DuPont’s insistence upon direct evidence is an unusual stance in a

proceeding in which Commerce determines “surrogate” values that substitute for the

direct evidence of a respondent’s own accounting. It is all the more curious because

the statute does not require, nor have the courts imposed, a requirement of evidentiary

exactitude for Commerce’s surrogate valuations.

      If framed in absolutes, DuPont is correct that the administrative record does not

establish that everyone in China always uses the ISO standard. The record also does
Consol. Court No. 11-00061                                                     Page 14


not establish that the ISO standard is never used in China.          Judicial review of

Commerce’s action here does not depend on absolutes like always or never, but

instead on whether Commerce’s inference about Respondents’ ISO utilization is

reasonable given the information on the administrative record. It is. As Defendant

explains, any lack of documentation explicitly linking Respondents’ inputs to the ISO

testing method is balanced by the DuPont Group information from the investigation3

demonstrating that Chinese PET chip producers generally use the ISO method, and

have done so for the models of PET chip that Respondents consumed.             Decision

Memorandum at 13.

      DuPont also relies on Peer Bearing Company-Changshan v. United States, 35

CIT ___, ___, 752 F. Supp. 2d 1353, 1369-71 (2011) to argue that if Commerce was

uncertain about which Indian HTS subheading to apply, it was obligated to explain why

that data was superior to Thai surrogate value data.      Peer Bearing, though, is not

applicable here.   In Peer Bearing the court determined Commerce’s preference for

using data from a single country unreasonable when the data was demonstrably

aberrational as compared to certain benchmark prices, and alternative data sources

could be better corroborated. The issue here focuses on which HTS category is most

appropriate, not whether the values reported for the HTS categories are aberrational.

      For the foregoing reasons the court believes DuPont’s arguments regarding


3
 Respondents submitted the information from the investigation on the record of the
administrative review.
Consol. Court No. 11-00061                                                         Page 15


Commerce’s surrogate valuation of Respondents PET chips lack merit.              Given the

information on the administrative record, it was reasonable for Commerce to include

data from HTS 3907.60.10 in its surrogate valuation of Respondents’ PET chips. The

question remains, though, whether a reasonable mind would conclude on this

administrative record that data from HTS 3907.60.10, and that provision alone, is the

best available information to value Respondents’ PET chips, or, if not, whether a

reasonable mind would conclude that Commerce’s simple average of the two HTS

provisions constitutes the best available information.

                              2. Respondents Arguments

       Respondents contend that Commerce’s use of unconverted IV levels from China

for Indian HTS subheadings is unreasonable (unsupported by substantial evidence), as

is Commerce’s use of an un-weighted (simple) average of Indian HTS 3907.60.10 and

Indian HTS 3907.60.20 as the basis for the surrogate value. Commerce ultimately

determined that a “broader” straddling of import data for HTS 3907.60.10 and HTS

3907.60.20 is the best available information of Respondents’ PET chip value, and that

reliance upon the data for only one or the other HTS provisions, or a weighted average

of both, is not a better surrogate. The court has identified three specific infirmities that

challenge the reasonableness of Commerce’s determination, each of which requires

further explanation or reconsideration by Commerce.

       First, Respondents relied on a summary chart prepared by the DuPont Group in

the investigation covering the ISO-to-ASTM conversions of the models of PET chips
Consol. Court No. 11-00061                                                        Page 16


Respondents purchased from certain of the listed suppliers. See, e.g., Respondents’

Br. at 8-9 (citing PD 137 at Ex. PSV-8, Ex. 6-H (frm 468) and 6-I (frms 470-71)).

Considering the record and the arguments, Commerce agreed that Respondents had

provided additional information showing that “HTS 3607.60.10 represents a more

reliable quantity than the Indian HTS 3907.60.20” and Commerce found a “reasonable

likelihood” that Indian HTS 3907.6010 may apply to “some” of Respondents’ PET chips.

Decision Memorandum at 13-14. This requires amplification.

      Commerce’s      statement   could   be   construed   as   a   distinction   between

Respondents’ BP&MB and PETG chip model purchases, but the test report for the latter

shows an IV level far in excess of even the upper limit of HTS 3907.60.20, implying that

HTS 3907.60.90 (without regard to the product’s IV level) would be the correct

classification for that model. Commerce’s stated focus for purposes of valuing

Respondents’ factors of production, of course, is the IV levels of Respondents’ BP&MB

chips. Each of the test reports for the BP&MB chips declares a single IV level, without

indication of uncertainty or standard deviation. If one accepts the logic that the proper

classification of Respondents’ BP&MB chips in India requires conversion from

ISO (China) to ASTM (India), then why are only “some” and not all of those chips

considered within HTS 3907.60.10? And why does that logic also not undermine the

reasonableness of any continued reliance upon the “stated” facial declarations of the IV

levels on the BP&MB chip test reports?

      The second matter requiring clarification is Commerce’s consideration of the
Consol. Court No. 11-00061                                                        Page 17


record data for HTS 3907.60.20, and specifically Commerce’s finding on the unreliability

of Infodrive data to corroborate that data. As a matter of practice, Commerce may

consider Infodrive data as a corroborative tool when (1) there is direct and substantial

evidence from Infodrive reflecting the imports from a particular country; (2) a significant

portion of the overall imports under the relevant HTS category is represented by the

Infodrive data; and (3) distortions of the surrogate value in question can be

demonstrated by the Infodrive data. Decision Memorandum at 15 (citing Lightweight

Thermal Paper from the People’s Republic of China, 73 Fed. Reg. 57,329 (Dep’t of

Commerce Oct. 2, 2008) (final LTFV determination) and accompanying Issues and

Decision Memorandum at cmt. 9, A-570-920 (Sept. 25, 2008), available at

http://ia.ita.doc.gov/frn/summary/prc/E8-23271-1.pdf (last visited this date)). Applying

that framework here, Commerce concluded that the Infodrive data satisfied the first

prong, but not the second. Commerce, therefore, declined to consider the Infodrive

data. Decision Memorandum at 16. More specifically, Commerce found the Infodrive

data for HTS 3907.60.10 under-inclusive as it represented only 48.44 percent of period

of review by value and 53.05 percent of period of review by quantity as compared with

GTA data.     This finding was reasonable under Commerce’s framework.            However,

Commerce’s finding that the Infodrive data for HTS 3907.60.20 could also not be used

as a corroborative tool requires further clarification for two reasons.

       First, Commerce concluded the data under-inclusive because they represented

“only” 79.16 percent by value and 84.72 percent by quantity for HTS 3907.60.20. Id. at
Consol. Court No. 11-00061                                                       Page 18


15. As support, Commerce cited Lightweight Thermal Paper. In Lightweight Thermal

Paper, however, Commerce accepted Infodrive data that represented 88 percent of the

quantity of country-specific imports. Why does Commerce consider import quantity data

covering slightly less than 85 percent unreliable, but 88 percent reliable?

       Second, Respondents explained that (1) all of the Infodrive data for HTS

3907.60.20 for this period of review consisted of non-PET product exported from

Germany (Respondents’ Br. at 12-13), (2) there is no evidence in the record of what

product the “missing” data pertained to (15.28 percent by quantity), (3) the quantity

represented by the “missing” data would be consistent with less than one full shipment,

(4) the Infodrive data from the investigation showed that the imports were of the same

non-PET material, and (5) even if all of the unidentified material in HTS 3907.60.20

(totaled over a 12-month period) were PET chips, the most that such quantity could be

is 8.20 metric tons, or nearly half of the quantity (totaled over a six-month period) that

Commerce rejected in the original investigation as insignificant. These appear to be

sound arguments testing the reasonableness of Commerce’s unwillingness to consider

as corroboration, the Infodrive data for HRS 3907.60.20. Commerce needs to provide

an explanation that takes these considerations into account.

       These arguments, in turn, also lead to the third and final matter requiring further

explanation: Commerce’s use of a simple (as opposed to weighted) average of the two

HTS data sets. Because Commerce applied the simple average for the first time in the

Final Results, Respondents did not have the opportunity to challenge that decision
Consol. Court No. 11-00061                                                     Page 19


during the administrative review. In their briefs before the court, Respondents have

raised legitimate concerns that test the reasonableness of Commerce’s use of a simple

average, which according to Respondents, gives “inordinate weight to a provision [HTS

3907.60.20] with very small quantities [that] also does not consist of the kind of goods

[that] comprise the factor of production.” Respondents’ Reply Br. at 8. Commerce

needs to address the arguments raised by Respondents, see Respondents’ Br. at 14-

17; Respondents’ Reply Br. at 8.

                                     III. Conclusion

        Accordingly, it is hereby

        ORDERED that this action is remanded to Commerce to address Respondents’

submissions regarding the surrogate valuation of its labor inputs, as well as the

inadvertent transposition of Green’s per-unit consumption levels for water and

electricity; it is further

        ORDERED that the Final Results are sustained with respect to Commerce’s

calculation of Green’s packing material expenses; it is further

        ORDERED that Commerce on remand clarify or reconsider, as appropriate, the

issues the court identified regarding Commerce’s surrogate valuation of Respondents’

PET chips; it is further

        ORDERED that Commerce shall file its remand results on or before August 1,

2012; and it is further
Consol. Court No. 11-00061                                                  Page 20


      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 its remand results with the court.




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

Dated: June 1, 2012
       New York, New York
