Thai Plastic Bags Indus. Co. v. United States

904 F.Supp.2d 1326

THAI PLASTIC BAGS INDUSTRIES CO., LTD., Plaintiff,

v. UNITED STATES, Defendant,andPolyethylene Retail Carrier Bag Committee, Hilex Poly Co., LLC, and Superbag Corporation, Defendant–Intervenors.

Slip Op. 13–34. Court No. 11–00408.

United States Court of International Trade.

March 19, 2013.

Irene H. Chen, Chen Law Group LLC, of Rockville, MD, and Mark B. Lehnardt, Lehnardt & Lehnardt, LLC, of Liberty, MO, for Thai Plastic Bags Industries, Co., Ltd., Master Packaging, Inc., and Inteplast Group, Ltd.

Joseph W. Dorn, Stephen A. Jones and Daniel L. Schneiderman, King & Spalding LLP, of Washington, DC, for Polyethylene Retail Carrier Bag Committee, Hilex Poly Co., LLC, and Superbag Corporation.

Vincent D. Phillips, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. Also on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Scott D. McBride, Senior Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

OPINION

POGUE, Chief Judge:

This consolidated action seeks review of five determinations by the United States Department of Commerce (“Commerce”) in the sixth administrative review of the antidumping duty order on polyethylene retail carrier bags from Thailand.¹ Specifically, Plaintiffs Thai Plastic Bags Industries Company, Limited (“TPBI”)—a respondent in this review—and two importers of subject merchandise who participated in this review—Master Packaging, Incorporated, and Inteplast Group, Limited (collectively the “Importers”)—challenge 1) Commerce's zeroing of, rather than deducting, negative normal-to-export price comparisons in the calculation of respondents' dumping margins; and 2) Commerce's decision, when calculating TPBI's general and administrative expenses, not to deduct income received from an export-conditional government rebate.² In addition, Plaintiffs Polyethylene Retail Carrier Bag Committee, Hilex Poly Company, LLC, and Superbag Corporation—members of the domestic like product industry who participated in this review (collectively the “Domestic Producers”)—challenge 3) Commerce's decision, when calculating TPBI's general and administrative expenses, to include a particular gain from TPBI's sale of assets; 4) Commerce's adjustment of the surrogate financial statements used to construct respondent Landblue (Thailand) Company, Limited (“Landblue”)'s normal value to reduce the reported selling expenses in proportion to Landblue's own direct to indirect selling expense ratio for export sales; and 5) Commerce's decision, when calculating Landblue's constructed profit, to use publicly available surrogate financial statements, rather than confidential information from TPBI.³

The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006) and 28 U.S.C. § 1581(c) (2006).

As explained below, Commerce's Final Results are sustained with respect to both of TPBI and the Importers' challenges. With regard to the Domestic Producers' challenges, Commerce's calculation of a constructed profit based on publicly available surrogate financial statements is sustained, but Commerce's adjustment of these surrogate financial statements' direct selling expense ratio is remanded. In addition, Commerce's inclusion of TPBI's asset sale gain in TPBI's general and administrative expense calculation is also remanded.

STANDARD OF REVIEW

This court will uphold Commerce's antidumping determinations if they are in accordance with law and supported by substantial evidence. 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence refers to “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” SKF USA, Inc. v. United States, 537 F.3d 1373, 1378 (Fed.Cir.2008) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) (defining “substantial evidence”)). Moreover, the substantiality of evidence is evaluated “on the record as a whole, including [any evidence that] fairly detracts from its weight.” Target Corp. v. United States, 609 F.3d 1352, 1358 (Fed.Cir.2010) (internal quotation marks and citation omitted). The “substantial evidence” standard of review can be roughly translated to mean “is the determination unreasonable?” Nippon Steel Corp. v. United States, 458 F.3d 1345, 1351 (Fed.Cir.2006) (internal quotation and alteration marks, as well as citation, omitted).

DISCUSSION

I. Zeroing

In their request for review of Commerce's decision to zero negative normal-to-export price comparisons in the calculation of respondents' dumping margins, TPBI and the Importers make substantially the same arguments here as TPBI made in the preceding review. Compare TPBI & Importers' Br. at 13–17 with Thai Plastic Bags Indus. v. United States, ––– CIT ––––, 895 F.Supp.2d 1337 (CIT 2013) (“Thai Plastic Bags II ”) (adjudicating TPBI's challenge to Commerce's decision to zero negative price comparisons in the preceding review). Commerce similarly provides the same explanation for its decision as that upheld by this Court in response to TPBI's challenge in that preceding review. Compare I & D Mem. cmt. 6 at 17–18 with Thai Plastic Bags II, –––CIT at ––––, 895 F.Supp.2d at 1341–45. As the record of this review is not materially different from that of the preceding review, Commerce's decision not to aggregate the price differences of TPBI's above-normal value sales with the dumping margins of TPBI's dumped sales (while employing the average-to-transaction comparison method in this review) is affirmed on the grounds stated in Thai Plastic Bags II. See Thai Plastic Bags II, ––– CIT at ––––, 895 F.Supp.2d at 1341–45.

II. TPBI's Export–Conditional Government Rebate Revenue

When calculating TPBI's cost of production (“COP”) in this administrative review,⁴Commerce rejected TPBI's argument that its general and administrative (“G&A”) expenses ⁵ should be reduced by the value of a rebate that TPBI received from the Thai government (referred to as the “Blue Corner Rebate” or “BCR revenue”). See I & D Mem. cmt. 1 at 2, 5. TPBI and the Importers claim that this decision was not supported by a reasonable reading of the evidence in the record. TPBI & Importers' Br. at 9–13.

But in its decision, Commerce explained that it did not deduct TPBI's BCR revenue from the COP calculation because the BCR revenue—which TPBI described as rebates received “upon export of TPBI's finished bags” ⁶—“is related to export sales rather than the COP” and thus “adjusting production costs (or any component of the COP) with the BCR revenue [was] not appropriate.” I & D Mem. cmt. 1 at 5. More generally, Commerce reasonably concluded that the COP calculation concerns the respondent's home market, ⁷ whereas export-conditional rebates by definition are not available when the foreign like product is sold domestically. Accordingly, Commerce properly excluded the export-conditional BCR revenue from the COP calculation when determining TPBI's normal value, consistent with Commerce's treatment of Thai BCR rebates in other proceedings.⁸Cf. Saha Thai Steel Pipe (Public) Co. v. United States, 635 F.3d 1335, 1338 (Fed.Cir.2011) (“[P]roducers remain subject to [an export-conditional] import duty when they sell the subject merchandise domestically, which increases home market sales prices and thereby increases [normal value].”).⁹

Because the record reasonably supports Commerce's finding that TPBI's BCR revenue was conditioned upon exportation,¹⁰ this finding is supported by substantial evidence. See Consol. Edison, 305 U.S. at 229, 59 S.Ct. 206. And because rebates conditional upon exportation are not applicable to merchandise sold in the respondent's home market, Commerce reasonably determined that TPBI's export-conditional BCR revenue was not relevant to TPBI's COP when calculating normal value for TPBI's merchandise. Cf. Saha Thai Steel Pipe, 635 F.3d at 1338. Commerce's decision not to deduct TPBI's BCR revenue from the COP calculation is therefore affirmed.

III. TPBI's Gain From the Sale of Assets

Next, the Domestic Producers challenge Commerce's decision to offset TPBI's G&A expenses ¹¹ with the value of a particular gain from the sale of assets that was reflected in TPBI's financial statements. Domestic Producers' Br. at 7–10; see I & D Mem. cmt. 1 at 5–6.¹² It is Commerce's practice to include in the G & A expense calculation gains or losses incurred on the routine disposition of fixed assets but to exclude nonrecurring income or losses that are not part of a company's normal production-related business operations.¹³ Here, Commerce decided to include TPBI's asset sale gain in the G&A expense calculation because Commerce found that this gain was attributable to “the routine disposition of assets.” I & D Mem. cmt. 1 at 5–6. As discussed below, however, this decision is not supported by substantial evidence because Commerce did not address record evidence that fairly detracts from its conclusion. See Tudor v. Dep't of Treasury, 639 F.3d 1362, 1366 (Fed.Cir.2011) (quoting Univ. Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (“The substantiality of evidence must take into account whatever in the record fairly detracts from its weight.”)).

As the Domestic Producers point out, “TPBI provided no information regarding the type of assets sold, and it made no claim or representation that sales of such assets were ‘routine’ or otherwise related to normal production operations.” Domestic Producers' Br. at 8; TPBI's Case Br., Admin. R. Con. Doc. 45 [Pub. Doc. 88], at 4 (providing no detail regarding these asset sales beyond the general description of a certain gain “on the sale of assets”). Thus Commerce's conclusion that these sales were routine production-related dispositions was not supported by substantial evidence because it...