Citations
- 322 F. Supp. 3d 1308
Full opinion text
Stanceu, Chief Judge:
In this consolidated action, numerous parties contest the final determination the International Trade Administration, U.S.
Department of Commerce ("Commerce" or the "Department"), issued to conclude the second periodic administrative review of an antidumping duty order on multilayered wood flooring from the People's Republic of China ("China" or the "PRC"). Concluding that the contested determination is contrary to law in certain respects, the court remands the determination to Commerce for reconsideration and correction as appropriate.
I. BACKGROUND
A. The Contested Decision
The determination contested in this litigation (the "Final Results") is Multilayered Wood Flooring From the People's Republic of China: Final Results of Antidumping Duty Administrative Review and Final Results of New Shipper Review; 2012-2013 , 80 Fed. Reg. 41,476 (Int'l Trade Admin. July 15, 2015) ("Final Results "). Incorporated by reference in the Final Results is the Department's issues and decision memorandum ("Final Issues and Decision Memorandum"). Issues and Decision Mem. for the Final Results of 2012-2013 Antidumping Duty Administrative Review of Multilayered Wood Floor from the People's Republic of China (Int'l Trade Admin. July 8, 2015) (P.R. Doc. 418), available at https://enforcement.trade.gov/frn/summary/prc/2015-17368-1.pdf (last visited June 5, 2018) (" Final I & D Mem .").
B. Proceedings before Commerce
Commerce issued the antidumping duty order on multilayered wood flooring from the PRC (the "Order") in late 2011. Multilayered Wood Flooring from the People's Republic of China: Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order , 76 Fed. Reg. 76,690 (Int'l Trade Admin. Dec. 8, 2011). Commerce identified the "subject merchandise," i.e., the merchandise that is subject to the Order, as "multilayered wood flooring" ("MLWF") but stated that this merchandise "is often referred to by other terms, e.g., 'engineered wood flooring' or 'plywood flooring.' " Id. at 76,690. The Order defines such flooring generally as "composed of an assembly of two or more layers or plies of wood veneer(s)" in which "[t]he several layers, along with the core, are glued or otherwise bonded together to form a final assembled product." Id. (footnote omitted).
In December 2013, Commerce announced the opportunity for interested parties to request a review of the Order. Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review , 78 Fed. Reg. 72,636 (Int'l Trade Admin. Dec. 3, 2013). The Coalition for American Hardwood Parity (the "Coalition"), the petitioner in the antidumping duty investigation culminating in the Order (and a plaintiff and defendant-intervenor in this litigation), requested that Commerce review 91 Chinese exporter/producers of the subject merchandise, and 45 additional interested parties also requested a review. See Multilayered Wood Flooring From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review; 2012-2013 , 80 Fed. Reg. 1,388 (Int'l Trade Admin. Jan. 9, 2015) ("Prelim. Results "). Commerce initiated the second periodic administrative review of the Order ("second review") on February 3, 2014, covering the period of December 1, 2012 through November 30, 2013 (the "period of review" or "POR"). Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part , 79 Fed. Reg. 6,147 (Int'l Trade Admin. Feb. 3, 2014).
On April 21, 2014, Commerce determined it impracticable to examine individually all of the respondents subject to the review and, therefore, selected the two largest exporters during the POR, Dalian Dajen Wood Co., Ltd. ("Dalian Dajen") and Zhejiang Layo Wood Industry Co. Ltd. ("Layo Wood"), as "mandatory respondents," i.e., exporter/producers whose sales of subject merchandise during the POR Commerce would examine individually and to whom Commerce intended to assign individual weighted-average dumping duty margins. See Selection of Respondents for the 2012-2013 Administrative Review of the Antidumping Duty Order on Multilayered Wood Flooring from the People's Republic of China at 3-7 (Int'l Trade Admin. Apr. 21, 2014) (P.R. Doc. 161) ("Respondent Selection Mem. "). Because Layo Wood was excluded from the Order as a result of litigation stemming from the final determination that culminated in issuance of the Order, see Baroque Timber Industries (Zhongshan) Company, Ltd. v. United States , 38 CIT ----, 971 F.Supp.2d 1333 (2014), Commerce substituted for Layo Wood the next largest exporter by volume, Jiangsu Senmao Bamboo and Wood Industry Co., Ltd. ("Senmao"), as the second mandatory respondent.
Commerce published the preliminary results of the second review (the "Preliminary Results") on January 9, 2015. Prelim. Results , 80 Fed. Reg. at 1,388. Commerce incorporated by reference a "Decision Memorandum for Preliminary Results." Id. at 1,388 n.1 ; see Decision Memorandum for Preliminary Results of Antidumping Duty Administrative Review: Multilayered Wood Flooring from the People's Republic of China (Int'l Trade Admin. Dec. 31, 2014) (P.R. Doc. 343), available at https://enforcement.trade.gov/frn/summary/prc/2015-00197-1.pdf (last visited June 5, 2018) ("Prelim. I & D Mem. "). For the Preliminary Results, Commerce calculated weighted-average dumping margins of zero for Dalian Dajen and 18.27% for Senmao. Prelim. Results , 80 Fed. Reg. at 1,389. Commerce preliminarily assigned the 18.27% rate calculated for Senmao to the "separate-rate" respondents, i.e., those exporter/producers of the subject merchandise whom Commerce was not examining individually but who could establish independence from the control of the PRC government. See id. Under the Department's practice, the separate-rate respondents would qualify for a rate different than the rate Commerce would assign to exporters/producers who had failed to establish independence from government control.
In the Final Results, published on July 15, 2015, Commerce assigned weighted-average dumping margins of zero to Dalian Dajen and 13.74% to Senmao. Final Results , 80 Fed. Reg. at 41,478. Commerce assigned the 13.74% rate calculated for Senmao to the separate-rate respondents. Id.
C. The Parties to this Consolidated Action
Eight cases contesting the Final Results, commenced between July 28, 2015 and August 14, 2015, were consolidated by order dated January 15, 2016. Order (Jan. 15, 2016), ECF No. 56.
The following parties and groups of parties are plaintiffs in this consolidated action: (1) the Coalition, an association of U.S. producers of multilayered wood flooring and a participant in the second review; (2) Dunhua City Jisen Wood Industry Co., Ltd. ("Jisen Wood") and Yingyi-Nature (Kunshan) Wood Industry Co., Ltd. ("Yingyi-Nature"), two separate-rate respondents; (3) Old Master Products, Inc. ("Old Master"), a U.S. importer of subject merchandise; (4) Armstrong Wood Products (Kunshan) Co., Ltd., a producer and exporter of subject merchandise (that was previously imported by Armstrong World Industries, Inc.), and Armstrong Flooring, Inc. (together, "Armstrong"), the successor-in-interest to Armstrong World Industries, Inc.; (5) the "Penghong Plaintiffs," a group that includes separate-rate respondents and importers of subject merchandise; (6) Fine Furniture (Shanghai) Limited ("Fine Furniture"), a separate-rate respondent; (7) Lumber Liquidators Services, LLC ("Lumber Liquidators"), a U.S. importer of subject merchandise; and (8) the "Senmao Plaintiffs," which include the mandatory respondent Senmao and various separate-rate respondents. Guangdong Yihua Timber Industry Co., Ltd. ("Yihua"), a separate-rate respondent, is a plaintiff-intervenor in this consolidated action. Before the court are motions for judgment on the agency record filed by these plaintiffs and Yihua, which are opposed by defendant United States.
II. DISCUSSION
A. Jurisdiction and Standard of Review
The court exercises jurisdiction according to section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c), under which the court reviews actions commenced under section 516A of the Tariff Act of 1930 (the "Tariff Act"), as amended , 19 U.S.C. § 1516a, including an action contesting a final determination concluding an administrative review of an antidumping duty order. See 19 U.S.C. § 1516a(a)(2)(B)(iii). In reviewing a final determination, 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." Id. § 1516a(b)(1)(B)(i).
B. Periodic Review of an Antidumping Duty Order on Merchandise Imported from a Nonmarket Economy Country
When Commerce conducts, upon a request or requests, a periodic review of an antidumping duty order, Commerce is directed by the statute to "review and determine ... the amount of any antidumping duty," 19 U.S.C. § 1675(a)(1)(B), and in doing so is directed to determine "the normal value and export price (or constructed export price) of each entry of the subject merchandise, and ... the dumping margin for each such entry." Id. § 1675(a)(2)(A). A "dumping margin" is "the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise." Id. § 1677(35)(A).
Under the antidumping duty statute, the normal value of subject merchandise typically will be determined based on prices in sales in the exporting country (the "home market") of a product that is "like" the subject merchandise (the "foreign like product," see 19 U.S.C. § 1677(16) ). 19 U.S.C. § 1677b(a)(1). When the exporting country is a nonmarket economy ("NME") country, Commerce, as provided in section 773(c) of the Tariff Act, 19 U.S.C. § 1677b(c), as a general matter determines the normal value of subject merchandise "on the basis of the value of the factors of production utilized in producing the merchandise" with additions for "general expenses and profit plus the cost of containers, coverings, and other expenses." 19 U.S.C. § 1677b(c)(1). Among the "factors of production" are "(A) hours of labor required, (B) quantities of raw materials employed, (C) amounts of energy and other utilities consumed, and (D) representative capital cost, including depreciation." 19 U.S.C. § 1677b(c)(3). The statute provides that "the 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). The statute further provides that Commerce, "in valuing factors of production ... 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, and ... significant producers of comparable merchandise." 19 U.S.C. § 1677b(c)(4). In the second review, Commerce chose Thailand as the single "surrogate" country for purposes of § 1677b(c). See Final I & D Mem. at 41.
C. Issues Presented for Judicial Review
Certain claims in this consolidated case, made by various plaintiffs, pertain to the Department's method of determining the normal value of the subject merchandise produced by Senmao under the nonmarket economy country procedures of 19 U.S.C. § 1677b(c). The Coalition challenges the Department's surrogate value for Senmao's plywood input, and Senmao, Yingyi-Nature, and Jisen Wood, joined by Yihua and several other plaintiffs who were respondents in the second review, challenge the Department's surrogate value for "overlaying" glue and challenge the method by which Commerce calculated a surrogate cost for foreign inland freight. All plaintiffs, and Yihua, who were respondents in the second review challenge the Department's choice of record information for use in calculating categories of surrogate expenses (factory overhead and selling, general, and administrative ("SG & A") expenses) and surrogate profit.
Fine Furniture claims that the Department's refusal to accept Fine Furniture as a voluntary respondent was not in accordance with the law and was an abuse of discretion.
Yingyi-Nature, Jisen Wood, and Armstrong, joined by Fine Furniture, Old Master, the Penghong Plaintiffs, and Yihua, claim that Commerce, in determining the export price for Senmao's subject merchandise, made an unlawful deduction from the price upon which export price is determined (the "starting price") to account for irrecoverable value-added tax ("VAT") imposed by the PRC.
Old Master claims that Commerce acted unlawfully in assigning to the separate-rate respondents the rate of 13.74%, arguing that this rate, being based entirely on the individual margin Commerce determined for one respondent, i.e., Senmao, is not a representative sample and not reflective of commercial reality.
The Penghong Plaintiffs claim that the Department impermissibly allowed the Coalition to amend its request for an administrative review of, and thereby obtain an administrative review of, Shenyang Haobainian Wooden Co., Ltd. after the expiration of the applicable due date for such requests. The court addresses the various claims below.
D. Claims Challenging the Department's Surrogate Values for Raw Materials
1. The Coalition's Claim Challenging the Department's Surrogate Value for Plywood
The Coalition claims that the surrogate value Commerce applied for plywood, one of the raw materials Senmao used in producing the subject merchandise, was not based on the best available information on the record and therefore was unlawful. Pl.'s Rule 56.2 Mem. in Supp. for J. upon the Agency R. 7 (Mar. 15, 2016), ECF No. 61-1 ("Coalition's Br."). Because Commerce did not address in its Final Issues and Decision Memorandum a particular argument the Coalition made in the brief it filed during the review, the court remands the surrogate value determination to Commerce for reconsideration of this issue.
For the Final Results, Commerce used import value data obtained from the Global Trade Atlas ("GTA") pertaining to plywood imports in Thailand (Thai Harmonized Tariff Schedule ("Thai HTS") subheading 4412.32.00-000) to value Senmao's plywood input. Final I & D Mem. at 41. Commerce calculated an average unit value ("AUV") for Thai imports from all countries other than those Commerce inferred to have benefited from export subsidies (India, Indonesia, South Korea and Thailand) and nonmarket economy countries (e.g., China and Vietnam). See Prelim. I & D Mem. at 20. The six remaining source countries in the Thai import data were Finland, Germany, Malaysia, Russia, Taiwan, and the United States (with Germany representing a negligible quantity). The resulting AUV was the surrogate value Commerce applied to the plywood input, which was $96.53 per cubic meter. Final I & D Mem. at 42.
The Coalition does not contest the Department's decision to use import data from Thailand, rather than data from another possible surrogate country, in determining the plywood surrogate value. Nor does the Coalition contest the decision to exclude the data from certain countries based on subsidization or status as a nonmarket economy country. The Coalition confines its claim to how Commerce used the GTA Thai import data, arguing that Commerce erred by not excluding from the AUV calculation the data on imports into Thailand from Taiwan and the United States, the data for each of which the Coalition characterizes as having an aberrationally low AUV. Coalition's Br. 8. The AUVs for the imports from Taiwan and the United States were $13 per cubic meter and $23 per cubic meter, respectively. See Coalition for American Hardwood Parity's Case Br. at Ex. 6 (Feb. 10, 2015) (P.R. Doc. 392) ("Coalition's Case Br. "). The Coalition submits that an AUV of $370 per cubic meter would have resulted were the imports from Taiwan and the United States excluded from the surrogate value calculation. Coalition's Br. 9.
The Coalition argues that the Thai AUV for plywood imports from Taiwan on a per-kilogram basis is less than the Thai AUVs for imports of wood chips or particles and for other sawdust, wood waste, and scrap. See Coalition's Br. 9; see also Coalition's Case Br. 14. The Coalition argues, essentially, that wood chips or particles and other sawdust, wood waste, and scrap should be valued less than plywood, such that the Thai AUV for plywood imports from Taiwan must be aberrationally low. The Coalition asserts that the Thai AUV "for non-coniferous wood scrap in the form of chips or particles" is $0.0243 per kilogram and that the Thai AUV "for other sawdust, wood waste, and scrap" is $0.0805 per kg, while the Thai AUV for plywood from Taiwan, on a per-kilogram basis, is $0.0204 per kg. Coalition's Br. 9. The Coalition calculated this latter figure by converting the AUV for Taiwan of $13 per cubic meter to kilograms by applying a density factor of 638.96 kg/cubic meter. See Coalition's Case Br. at Ex. 1, Ex. 8.
Because the Coalition made its argument regarding chips, sawdust, waste, and scrap in its case brief filed before Commerce, see Coalition's Case Br. at 14, and because the data supporting this argument potentially would detract from the Department's finding that the Thai AUV of plywood imports from Taiwan was not aberrationally low, Commerce was obligated to address this argument in its final determination. See SKF USA Inc. v. United States , 630 F.3d 1365, 1374 (Fed. Cir. 2011) ("Commerce also has an 'obligation' to address important factors raised by comments from petitioners and respondents." (citations omitted) ). Commerce did not do so. See Final I & D Mem. at 41-43. The court, therefore, directs Commerce to reconsider its surrogate value for plywood in light of this argument. In doing so, the court expresses no view on whether the data the Coalition cites necessarily require Commerce to find that the Thai AUVs of plywood imports from Taiwan or the United States are aberrationally low. At this time, the court will not rule on the other arguments the Coalition presented in contesting the plywood surrogate value.
2. Claims Challenging the Department's Surrogate Value for "Overlaying" Glue
Senmao reported using two types of glue in producing subject merchandise, "overlaying" glue and "fixing" glue. Final I & D Mem. at 47. At issue in this litigation is the surrogate value for overlaying glue, which Senmao used "to adhere the face veneer and plywood." Id. Commerce valued Senmao's overlaying glue input using AUVs obtained from Thai GTA import data pertaining to a subheading under Thai HTS heading 3506. Id. at 48.
Senmao, Yingyi-Nature, and Jisen Wood claim that Commerce erred in concluding that Thai HTS heading 3506 includes within its scope Senmao's overlaying glue. They claim that the correct classification for this overlaying glue is under Thai HTS heading 3909 and, therefore, that Commerce should have used instead the GTA data for a subheading under this heading to value the overlaying glue. Mem. of Law in Supp. of Senmao Pls.' Mot. for J. on the Agency R. under USCIT Rule 56.2 34 - 38 (Mar. 15, 2016), ECF No. 63 ("Senmao's Br."); Pls. Dunhua City Jisen Wood Industry Co., Ltd. and Yingyi-Nature (Kunshan) Wood Industry Co., Ltd. Mem. in Supp. of Mot. for J. on the Agency R. 6-7 (Mar. 22, 2016), ECF No. 69-2 ("Jisen Wood's Br.").
The two headings at issue are internationally harmonized, i.e., the relative scope of each is determined according to the tariff classification rules and principles of the international Harmonized Commodity Description and Coding System ("Harmonized System" or "HS"). Because Thailand (like the United States and, essentially, all of its trading partners) is a member of the Harmonized System Convention, the Thai HTS is structured according to the nomenclature of the HS to the six-digit level. Classification of all goods under the Harmonized System is governed by the "General Rules for the Interpretation of the Harmonized System," (also identified as the "General Interpretive Rules" or "GIRs"), which, like the HS nomenclature, are effectuated in the tariff laws of all member countries of the Harmonized System Convention. See Explanatory Notes to the Harmonized Commodity Description and Coding System, 5th ed. (2012) ("ENs") (setting forth and explaining the proper application of the GIRs to the HS nomenclature). GIR 1 provides that "for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions," i.e., GIRs 2 through 6.
Adjudicating Senmao's and Yingyi-Nature and Jisen Wood's claims requires the court to consider whether the Department's finding that the GTA data for Thai HTS heading 3506 were the "best available information," 19 U.S.C. § 1677b(c)(1), is supported by substantial evidence. For the reasons discussed below, the court concludes that it was not. The record does not contain evidence to support a determination that the overlaying glue is properly classified under Thai HTS heading 3506.
The terms of HS heading 35.06 (and, therefore, the terms of Thai HTS heading 3506 as well) are as follows: "Prepared glues and other prepared adhesives, not elsewhere specified or included; products suitable for use as glues or adhesives, put up for retail sale as glues or adhesives, not exceeding a net weight of 1 kg." EN 35.06. The terms of HS heading 39.09 (and Thai HTS heading 3909) are: "Amino-resins, phenolic resins and polyurethanes, in primary forms." EN 39.09.
There is evidence on the record, in a questionnaire response submitted by Senmao, indicating that the overlaying glue, as would be expected for an adhesive used in manufacturing, was not put up for retail sale in containers of 1 kg. or less. See Multilayered Wood Flooring from the People's Republic of China: Supplemental Section A, C & D Response 8 (Sept. 29, 2014) (P.R. Doc. 295) ("Senmao's Supp. QR ") (describing the overlaying glue as a glue "only used for industrial purposes"). The questionnaire response also states that the overlaying glue, as purchased by Senmao, is a finished glue rather than a powder resin that is processed into finished glue. Id. at 9. Accordingly, by application of GIR 1, the glue could be classified under Thai HTS 3506 only if it is "not elsewhere specified or included," i.e., not included in another heading of the nomenclature. The record lacks evidence to support a conclusion that the overlaying glue is not included within the scope of another heading of the Thai HTS.
Some finished glues are in the form of liquids and pastes ("primary forms") and are classified within HS Chapter 39 ("Plastics and articles thereof"):
In addition to substances necessary for "curing" (such as hardeners (cross-linking agents) or other co-reactants and accelerators), these liquids or pastes may contain other materials such as plasticizers, stabilisers, fillers and colouring matter, chiefly intended to give the finished products special physical properties or other desirable characteristics. The liquids and pastes are used for casting, extrusion, etc., and also as impregnating materials, surface coatings, bases for varnishes and paints, or as glues , thickeners, flocculants, etc.
EN to Chapter 39 (emphasis added).
Within Chapter 39, Heading 39.09 ("Amino-resins, phenolic resins and polyurethanes, in primary forms") contains a six-digit, internationally-harmonized subheading, 3909.10 ("Urea resins; thiourea resins"). In its surrogate value comments, Senmao identified Thai HTS subheading 3909.10 as the correct six-digit subheading for its overlaying glue (specifically identifying as the correct classification the country-specific subheading of HTS 3909.10.90-000). See Multilayered Wood Flooring from the People's Republic of China: Surrogate Value Comments at Ex. 1 (Aug. 11, 2014) (P.R. Doc. 266-67) ("Senmao's SV Comments "). HS Subheading 3909.10 is one of three six-digit subheadings within HS heading 39.09 that pertain to the amino-resins classifiable under the heading (the others being HS subheading 3909.20 ("Melamine resins") and HS subheading 3909.30 ("Other amino-resins") ). The Explanatory Note for heading 39.09 provides that:
These resins are used for the manufacture of transparent, translucent or brightly coloured articles of plastics and are much used for moulding table and fancy ware and electrical goods. In solutions and dispersions (emulsions and suspensions), (whether or not modified with oils, fatty acids, alcohols, or other synthetic polymers) they are employed as glues and as textile dressings, etc. (See the General Explanatory Note to this Chapter [39], exclusion (b), for the classification of glues.).
EN 39.09 (emphasis added). "Exclusion (b)" in the General Explanatory Note to Chapter 39 provides the critical distinction between the resin-based glues of HS heading 35.06 and those of heading 39.09. It instructs that the following glues are excluded from Chapter 39:
Preparations specially formulated for use as adhesives, consisting of polymers or blends thereof of headings 39.01 to 39.13 which, apart from any permitted additions to the products of this Chapter (fillers, plasticisers, solvents, pigments, etc.) contain other added substances not falling in this Chapter (e.g., waxes, rosin esters, unmodified natural shellac) ... (heading 35.06 ).
EN Chapter 39, exclusion (b). There is evidence of record that the overlaying glue does not contain added substances other than those considered permitted additions by the language of exclusion (b), which identifies as including fillers, plasticizers, solvents, and pigments, but this evidence is limited to Senmao's surrogate value comments, which identified Thai HTS subheading 3909.10 as the correct six-digit subheading for its overlaying glue. See Senmao's SV Comments at Ex. 1. On the other hand, the record contains no evidence that the overlaying glue does contain any substance that would result in its classification outside of the scope of HS heading 39.09 and, therefore, within the scope of HS heading 35.06, which as to bulk liquids and pastes is limited to prepared glues "not elsewhere specified or included." See EN 35.06. Despite this complete lack of record evidence, Commerce determined Thai HTS heading 3506 to be the correct tariff classification for Senmao's overlaying glue. It did so without even making a finding of fact that the overlaying glue contained a specific substance removing it from the scope of Thai HTS heading 3909. Nor did Commerce conduct a proper analysis of the tariff classification issue presented to it. Instead, Commerce based its determination that the Thai GTA import data for a subheading of heading 3506 (specifically, Thai HTS subheading 3506.91.90-000 ) was the best available information on a series of findings-all of which are irrelevant to the issue of which heading is the correct one-and erroneous conclusions that violate established principles of tariff classification under the HS.
Commerce began its analysis by reciting its familiar criteria for selecting surrogate values. Final I & D Mem. at 47 ("[T]he Department's preference is to use, where possible, a range of publicly available, non-export, tax-exclusive, and product-specific prices for the POR ...."). It then compared the two competing tariff classifications based on these four criteria, stating that "[r]egarding HTS subheading 3909.10.90-000 and 3506.91.90-000, we find that both represent a broad market average, are publicly available, are exclusive of taxes and duties and are contemporaneous with the POR. However, based on the record before us, we do not find the HTS classifications to be equally specific to the overlaying glue input reported by Senmao." Id. This was error. Because the GTA data are generated according to the international HS nomenclature and the GIRs, which form the basis of Thailand's tariff classification scheme, a surrogate value determined according to a set of Thai import data can be valid and reliable only if the data set is selected according to the established HS tariff classification principles. Commerce itself seems to acknowledge this much, citing and relying in part on a legal note within the international "harmonized commodity description and coding system." Id. In deciding which set of GTA data was the best available information, Commerce first needed to determine which of the competing Thai HTS headings, 3506 or 3909, was correct for the overlaying glue. Commerce overlooked this issue, addressing instead the question of which of two subheadings, each of which was under a different heading, was more specific. "Relative specificity" is the criterion applied by GIR 3(a), not GIR 1, and it is a fundamental principle of tariff classification under the HS (if not the most fundamental principle) that resort to GIR 3 may not be had unless the correct heading cannot be determined according to GIRs 1 and 2. GIR 3 applies only "[w]hen by application of Rule 2(b) or for any other reason, goods are prima facie , classifiable under two or more headings." GIR 3. Here, it is error to choose between the two headings based on relative specificity because the terms of both cannot, even prima facie , describe the overlaying glue. By the terms of HS heading 35.06, the two headings are mutually exclusive. See HS heading 35.06 ("Prepared glues and other prepared adhesives, not elsewhere specified or included ..." (emphasis added) ). In short, Commerce erred in choosing Thai HTS 3506 over Thai HTS 3909 without regarding the principle of GIR 1, and it also erred in deciding upon a subheading (which it based on the impermissible criterion of relative specificity) before deciding upon a heading, in violation of the GIRs in general and GIRs 1 and 6 in particular.
Commerce further erred in rejecting Thai HTS heading 3909 based in part on HS Note 6 to Chapter 39 as it relates to the term "in primary forms" as used in Thai HTS heading 3909 and certain subheadings thereunder. See Final I & D Mem. at 47-48. As Commerce noted, "Legal Note 6 of Chapter 39 of the harmonized commodity description and coding system provides that 'primary forms' includes liquids, pastes, and powders." Id. at 47. The record evidence (i.e., Senmao's response to the supplemental questionnaire) shows that the overlaying glue is not a powder, but it does not show that it is not a liquid or paste, and, as a practical matter, it is hard to imagine that it could function as overlaying glue if it were anything but a liquid or paste. See Senmao's Supp. QR at 9. Finding as a fact that "[t]o the extent that Senmao's purchased 'finished' glue undergoes any further processing, it is minimal at best," Commerce concludes that this finding "weighs against finding that the overlaying glue reported by Senmao was in a 'primary form.' " Final I & D Mem. at 48. This conclusion is misguided. The finding that Senmao's overlaying glue did not undergo significant processing after it was purchased in no way supports a conclusion that this glue is excluded from the scope of Thai HTS heading 3909. As Note 6 to Chapter 39 of the HS and the ENs make clear, a finished glue can be in a "primary form" as a liquid or paste, and some finished glues are liquids or pastes that are correctly classified under HS heading 39.09. Similarly misguided is the Department's conclusion that "Senmao expressly stated that it did not use powder resin in producing subject merchandise, which is a subset of the products covered under HTS 3909.10.90-000" and "[a]s such, HTS 3909.10.90-000 includes a product that Senmao expressly disclaims using (powder resin), detracting from its specificity to Senmao's input." Id. The record evidence that Senmao did not use a powder resin does not support a finding or conclusion that Senmao's asserted classification was incorrect.
In summary, there was no record evidence to support a valid finding that the overlaying glue is excluded from the scope of Thai HTS heading 3909. As discussed above, Thai HTS heading 3506 could be correct only if the overlaying glue is excluded from heading 3909. There was some evidence that Thai HTS heading 3909 is the correct heading, albeit limited to Senmao's assertion to that effect. The finding that the Thai GTA data for a subheading of Thai HTS heading 3506 were better "available information" than the data for a subheading of Thai HTS heading 3909 is, therefore, entirely unsupported by record evidence.
Senmao argues that Commerce acted contrary to law when, at the urging of the petitioner, it rejected Senmao's case brief on the ground that the portions of the brief referencing the HS Explanatory Notes constituted an untimely submission of new factual information. Senmao's Br. 37; see Rejection of Submission of Case Brief Filed in the 2012-2013 Administrative Review of the Antidumping Duty Order on Multilayered Wood Flooring from the People's Republic of China (Feb. 12, 2015) (P.R. Doc. 396) ("Dep't's Letter "). Senmao refiled its brief after deleting the references Commerce rejected. Before the court, Senmao again relies upon the ENs in support of its claim. See Senmao's Br. 36-37. Defendant argues that the Department's decision to reject Senmao's initial case brief was proper and, further, that because the ENs constitute information that is not on the record, the court may not consider them in addressing Senmao's claim. See Def.'s Resp. to Mots. for J. upon the Admin. R. 24 (July 14, 2016), ECF No. 90 ("Def.'s Br."). According to defendant, because this is not a "customs classification case," the court's review of the Department's determination is "limited to the record developed before Commerce." See id.
Commerce was wrong to reject the case brief with the EN references, and defendant is wrong in arguing that the court should not consider the ENs in adjudicating the claim. The Department's regulation, 19 C.F.R. § 351.102(b)(21), defines "factual information" to include several categories of "evidence" and also to include "[p]ublicly available information submitted to value factors under § 351.408(c)," i.e., factors of production in a nonmarket economy proceeding. The ENs are not evidence. Rather than factual information that might be considered "evidence," they are an international legal reference essential to the proper interpretation of the HS nomenclature and GIRs. See, e.g. , Degussa Corp. v. United States , 508 F.3d 1044, 1047 (Fed. Cir. 2007) (explaining that the ENs are "generally indicative of the proper interpretation of a tariff provision"). Nor are the ENs information described by 19 C.F.R. § 351.102(b)(21)(iii) ("Publicly available information submitted to value factors under § 351.408(c) ..."). The information to which § 351.408(c)(iii) refers is properly interpreted, consistent with the statutory provision it is effectuating, as "information regarding the values of ... factors [of production] in a market economy country or countries," 19 U.S.C. § 1677b(c)(1), and "prices or costs of factors of production," id. § 1677b(c)(4). The ENs cannot serve as "information" to "value" anything, are not information on "prices" or "costs," and, moreover, emanate from an international body, the World Customs Organization (the "WCO"), not from any particular country or countries. Here, the pertinent information Senmao submitted, and Commerce considered, for valuation of the overlaying glue factor of production was the Thai GTA information. As a legal reference on the interpretation of the GIRs and the HS nomenclature, including the scope of headings and six-digit subheadings, the WCO's Explanatory Notes are in this context essentially no different than any other legal reference a party may cite in a case brief before Commerce or argue before a court, such as a statute, judicial precedent, or restatement of the law. For these reasons, the court concludes that Commerce misapplied its regulation in rejecting Senmao's case brief and that defendant is misguided in arguing that the court may not consider the ENs as a legal reference in adjudicating this claim.
Senmao argues that the record citations to the ENs that Commerce refused to consider "would have resolved the issue." Senmao's Br. 35. If by this Senmao is arguing that the ENs, when applied to the record information about the overlaying glue, resolve the question of the proper tariff heading, the court disagrees. As the court discussed previously, the fact needed to determine whether Thai HTS heading 3506 or Thai HTS heading 3909 is the correct heading is the composition of the glue that includes, in particular, the identity of the added ingredients. By submitting Thai HTS subheading 3909.10.90-000 as the correct tariff classification, Senmao has disclosed publicly that the finished glue is based on a urea resin or thiourea resin. Senmao included in its questionnaire response a more specific chemical identity for the main component of the finished glue (for which it claimed confidential treatment), but it did not disclose the identity of any other component of the finished glue (nor did Commerce request that it do so).
In conclusion, the Department's determination that GTA data for a subheading under Thai heading 3506 is the best available record information with which to value the overlaying glue input is not supported by substantial evidence. The court, therefore, must remand this determination for reconsideration.
Nothing on the record refutes Senmao's assertion in its surrogate value submission that its overlaying glue is properly classified under Thai HTS heading 3909. On the record as it now stands, Commerce on remand must accept that assertion because the opposite assertion-that heading 3506, which applies only to bulk finished adhesives that are "not elsewhere specified or included," is the correct heading-is entirely unsupported by record evidence. In the alternative, Commerce has the discretion to reopen the record in an effort to reach a new determination, supported by valid factual findings, of which of the two tariff headings is correct. If using GTA import data to value this input, it must determine the correct tariff heading before it may proceed to select the proper subheading. See GIRs 1, 6 (the correct subheading is to be determined according to terms of the subheadings and related subheading legal notes and according to GIRs 1-5 applied mutatis mutandis at the subheading level, only after the correct heading has been determined).
E. Claims Challenging the Department's Choice of Financial Statements for Valuing Factory Overhead Expenses, Selling, General and Administrative Expenses, and Profit
In determining normal value in a proceeding involving goods from a nonmarket economy country, Commerce typically calculates surrogate values for factory overhead expenses, for selling, general & administrative expenses, and for profit, by calculating and applying "financial ratios" derived from the financial statements of one or more producers of identical or comparable merchandise in the primary surrogate country. See 19 C.F.R. § 351.408(c)(4). For these purposes, Commerce used the financial statements of Eiwlee Industrial Co., Ltd. ("Eiwlee"), a producer in Thailand of various wood products, including MLWF, finding that those financial statements constituted the best available information on the record. See Final I & D Mem. at 27.
All plaintiffs except the Coalition challenge the Department's use of Eiwlee's financial statements to calculate the surrogate financial ratios. See Senmao's Br. 11-23; Mem. of P. & A. in Supp. of Rule 56.2 Mot. for J. upon the Agency R. by Consol. Pl. Fine Furniture (Shanghai) Ltd. 20-34 (Mar. 15, 2016), ECF No. 62-1 ("Fine Furniture's Br."); Pl.-Intervenor Lumber Liquidators Services, LLC Rule 56.2 Mem. in Supp. of Mot. for J. upon the Agency R. 2-8 (Mar. 22, 2016), ECF No. 67 ("Lumber Liquidators' Br."); Jisen Wood's Br. 3-4; Mem. in Supp. of Rule 56.2 Mot. for J. upon the Agency R. by Consol. Pls. Armstrong Wood Products (Kushan) Co., Ltd. and Armstrong World Industries, Inc. 4-6 (Mar. 22, 2016), ECF No. 68-1 ("Armstrong's Br.") (summarizing arguments in support of its financial ratios claim and incorporating the arguments of Senmao, Fine Furniture, and "other parties seeking reduction of Senmao's rate"); see also Mem. of P. & A. in Supp. of Rule 56.2 Mot. for J. upon the Agency R. by Consol. Pl. Old Master Products Inc. 5 (Mar. 22, 2016), ECF No. 70 ("Old Master's Br.") (incorporating the arguments made by "other parties challenging," inter alia , the selection of the surrogate financial ratios); Pl.-Intervenor Guangdong Yihua Timber Industry Co., Ltd.'s Rule 56.2 Mot. for J. on the Agency R. 2 (Mar. 22, 2016), ECF No. 71 ("Yihua's Br.") (incorporating Senmao's and Fine Furniture's arguments); Mem. of P. & A. in Supp. of Consol. Pls.' 56.2 Mot. for J. on the Agency R. 9 (Mar. 22, 2016), ECF No. 72-1 ("Penghong's Br.") (same).
For the Preliminary Results, Commerce calculated the financial ratios using Eiwlee's financial statements because it found that "Eiwlee is the only surrogate producer for which there is record evidence showing that it is a producer of identical (i.e. , engineered wood flooring), rather than comparable (e.g. , plywood, solid wood flooring, etc.) merchandise." Prelim. I & D Mem. at 22 (footnote omitted). Commerce chose Eiwlee's 2013 statements over Eiwlee's 2012 statements because "the 2013 statements ... cover 11 months of the [December 1, 2012 through November 30, 2013] POR, whereas the 2012 statements cover only the first month of the POR." Id. ; see Ex. 1 ("Eiwlee's 2013 Financial Statements ") and Ex. 2 ("Eiwlee's 2012 Financial Statements ") to Multilayered Wood Flooring from the People's Republic of China: Second Administrative Review: Petitioners' Comments Prior to Preliminary Results and Submission of Factual Information (Nov. 3, 2014) (P.R. Docs. 314-315).
For the Final Results, Commerce again chose to rely on Eiwlee's financial statements over those on the record pertaining to any other producer in Thailand. In doing so, it stated that "it is the Department's preference to match the surrogate companies' production experience with respondents' production experience, and whenever possible, surrogate country producers of identical merchandise provided that the [surrogate value ("SV") ] data is not distorted or otherwise unreliable." Final I & D Mem. at 27 (footnote omitted).
In a change from the Preliminary Results, Commerce used the 2012 Eiwlee statements despite the reduced coverage of the POR, based on a finding that an auditor of Eiwlee's 2013 statements qualified her opinion as to the 2013 statements, having identified an insufficiency in the information the company provided on Eiwlee's employee retirement benefit obligations for the fiscal year ending on December 31, 2013. Id. at 29. Nevertheless, Commerce "relied on certain 2012 figures reported in the 2013 statements in instances where the 2012 figures offer greater detail when compared to the 2012 figures in the 2012 statements." Id. Commerce added that "[s]pecifically, we have used the detailed breakout of the 2012 cost of sales, which includes material costs and overhead expenses, from the 2013 statements." Id.
The arguments made in support of the claims that Eiwlee's financial statements are not the best available information on the record are that (1) Eiwlee's production process is less similar to Senmao's production process than that of another company whose financial statement is on the record and (2) there is evidence that Eiwlee's financial statements are affected by Eiwlee's receipt of a countervailable subsidy. Fine Furniture raises an additional objection to the use of the 2013 Eiwlee financial statements based on the auditor's finding of an insufficiency in the information the company provided on Eiwlee's employee retirement benefit obligations. For the reasons discussed below, the court concludes that these arguments do not suffice to cause the court to order Commerce to reconsider the decisions it made in the Final Results that relate to the use of Eiwlee's 2012 and 2013 financial statements to calculate the financial ratios.
1. Commerce Was Not Compelled by the Record Evidence to Choose Neotech's Financial Statement over Eiwlee's Financial Statements Due to the Type of Merchandise Produced
For their argument that the Eiwlee statements are not the best available information, plaintiffs point to the financial statement of a Thai producer of plywood, Neotech Plywood Company Limited ("Neotech"), arguing that this is preferable to the statements of Eiwlee, which produced, in addition to MLWF, products including wooden household products and wooden furniture. They argue that the production process of these other products is less comparable to the production process of subject merchandise than is the production process for plywood. See Senmao's Br. 15-23; Lumber Liquidators' Br. 2-8; Fine Furniture's Br. 27-29, 32-34; Jisen Wood's Br. 3-4; Armstrong's Br. 4. Senmao argues that the other products Eiwlee produces, e.g., wooden furniture, involve a more complex production process than does MLWF and that this production process differs from Senmao's MLWF production process to a greater degree than the difference between the MLWF production process and that of plywood. Senmao's Br. 13, 15-16. Senmao adds that "[a]ll three websites of Eiwlee indicate that Eiwlee is a member of 'The Thai Furniture Industries Association' and the 'Thai Housewares Trade Association,' " while "[n]o mention is made of any membership in any association of flooring producers." Senmao's Br. 18. Lumber Liquidators argues that "Commerce's use of Eiwlee's financial statements was improper because it is a manufacturer of furniture and other merchandise more complex than MLWF." Lumber Liquidators' Br. 2. According to Lumber Liquidators, the fact that Eiwlee produces furniture "disqualifies it as a surrogate for financial ratios based on Commerce's prior decisions," pointing out that in the investigation Commerce concluded that wooden bedroom furniture producers were less comparable to MLWF producers than were plywood producers. Id. at 3 (citation omitted).
Among the evidence Commerce relied upon was Eiwlee's website, which "describes Eiwlee as 'one of Thailand's leading wood manufacturers and exporters of high quality wood flooring (engineered wood flooring, solid wood flooring, & wood deck), and woodenware/houseware/furniture' " and "states that Eiwlee 'is committed to producing highest quality engineered hardwood flooring and woodenware in alignment with American and European standards.' " Final I & D Mem. at 27 (citing Multilayered Wood Flooring from the People's Republic of China: Second Administrative Review: Petitioners' Comments Prior to Preliminary Results and Submission of Factual Information at Ex. 3 (Nov. 3, 2014) (P.R. Docs. 314-315) ("Pet.'s Pre-Prelim. Comments ") ). Commerce further noted that "one of Eiwlee's websites is www.asianfloor.com" and that "there is no record evidence that establishes the percentage of wood flooring Eiwlee produces as compared to any other products." Id. at 27-28 (footnote omitted).
While the record lacked quantitative evidence on the proportion of Eiwlee's production that was multilayered wood flooring, the qualitative evidence consisting of Eiwlee's highlighting its engineered wood flooring production on its website is sufficient to support the Department's finding, id. at 27, that Eiwlee's MLWF production was significant. Neotech produced plywood but, according to the record evidence, did not produce MLWF. Commerce did not err in placing significant weight on that distinction. As a laminated wood product, plywood has a physical characteristic in common with MLWF, but still it is a different product. Plaintiffs have not made the case that the record compels the conclusion that the Neotech statement necessarily was the better choice. The record evidence, considered on the whole, was sufficient for Commerce to conclude that the statement of Neotech was not preferable to those of Eiwlee because of Eiwlee's production of merchandise in addition to MWLF.
2. The Record Did Not Require Commerce to Reject the Eiwlee Statements for Receipt of a Countervailable Subsidy
Fine Furniture, Yingyi-Nature, Jisen Wood, and Armstrong argue that the inclusion of an entry for "packing credits" in Eiwlee's financial statements provided Commerce with reason to believe or suspect that Eiwlee benefited from a countervailable subsidy. See Fine Furniture's Br. 21-27; Jisen Wood's Br. 4; Armstrong's Br. 4; see also Eiwlee's 2012 Financial Statement at Note 7; Eiwlee's 2013 Financial Statement at Note 7. These plaintiffs contend that because Commerce "prefers to use financial statements without evidence of a countervailable subsidy," Final I & D Mem. at 30, Commerce erred in using Eiwlee's financial statements. Rather than support these arguments, the record supported the Department's decision not to reject the Eiwlee financial statements on the ground that Eiwlee benefited from a countervailable subsidy.
Fine Furniture's argument relies, in part, on the legislative history of the Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, 102 Stat. 1107 (1988). See Fine Furniture's Br. 21 (citing H.R. Rep. No. 100-576, at 590-91 (1988) (Conf. Rep.), reprinted in 1988 U.S.C.C.A.N. 1547, 1623-24 ("In valuing such factors [of production], Commerce shall avoid using any prices which it has reason to believe or suspect may be dumped or subsidized prices. However, the conferees do not intend for Commerce to conduct a formal investigation to ensure that such prices are not dumped or subsidized, but rather intend that Commerce base its decision on information generally available to it at that time.") ).
In past proceedings, Commerce has found certain government-provided export packing credits to constitute countervailable subsidies. Final I & D Mem. at 30 (citing as an example 1,1,1,2-Tetrafluroethane From the People's Republic of China: Final Determination of Sales at Less Than Fair Value , 79 Fed. Reg. 62,597 (Int'l Trade Admin. Oct. 20, 2014) ). In this review, Commerce found the evidence insufficient to support a conclusion that Eiwlee "benefitted from a government-provided countervailable subsidy." Id. The record evidence in question consisted of a line item under Note 7 of Eiwlee's 2012 statement and a similar line item under Note 7 of Eiwlee's 2013 statement. Note 7 of the 2013 statement is entitled "Overdraft and Short-term Borrowing from Financial Institutions," see Eiwlee's 2013 Financial Statement at Note 7, while Note 7 of the 2012 statement is entitled "Bank Overdrafts and Short-term Loans from Financial Institutions," see Eiwlee's 2012 Financial Statement at Note 7. Each Note 7 lists the total overdraft and short-term borrowing for each of two fiscal years, broken down into four categories: "Bank overdraft," "Promissory notes," "Promissory notes sale agreement" (2013 statement) and "Agreements to sell promissory notes" (2012 statement), and "Packing credit." See Eiwlee's 2013 Financial Statement at Note 7; Eiwlee's 2012 Financial Statement at Note 7. A line item lists the combined interest expense for all four categories of credit and instructs that the credit is guaranteed with the Company's land and building and the director's personal guarantee in full. See Eiwlee's 2013 Financial Statement at Note 7; Eiwlee's 2012 Financial Statement at Note 7. For the packing credit, the interest rate is listed in both statements as "6.625% - 6.75%." See Eiwlee's 2013 Financial Statement at Note 7; Eiwlee's 2012 Financial Statement at Note 7.
Commerce noted that "Eiwlee's financial statements only contain an item for 'packing credit,' " Final I & D Mem. at 30 (footnote omitted), and indeed the notes lack any reference to an export packing credit and any indication that the packing credit was provided by the government. Plaintiffs point to no record evidence indicating that this credit was an export credit or a government-provided credit or that it was provided at a below-market interest rate. As a result, this record evidence was insufficient to compel Commerce to find that it had been presented with a reason to believe or suspect that the data in the Eiwlee financial statements were distorted by a government-provided, countervailable subsidy.
3. Commerce Permissibly Relied upon Information in Eiwlee's 2013 Financial Statement that Pertained to 2012
Fine Furniture argues that Commerce should not have used the 2012 information from Eiwlee's 2013 financial statements because of the issue raised by the auditor. See Fine Furniture's Br. 29-31. According to Fine Furniture, "Commerce's decision to use data from a financial statement that failed to comply with applicable accounting rules cannot be the 'best available information' where other financial statements on the record were not disavowed by the companies' own auditors." Fine Furniture's Br. 30. Fine Furniture further argues that "Commerce relied on sheer speculation that Eiwlee's failure to follow Thai accounting rules had no impact on 2012 data carried forward and restated in the tainted 2013 financial statement" and that "Commerce places greater reliance on Eiwlee's accountants in 2013 than the company's own auditor who conferred only a 'qualified opinion' with respect to the whole 2013 report, including the 2012 data contained therein." Id.
The language by which the auditor expressed her reasons for issuing a conditional opinion on the 2013 Eiwlee financial statements refutes the premise of Fine Furniture's arguments. The auditor's entire explanation, presented in the Auditor's Report under the heading "Criteria for Conditional Opinion for Material Misstatement (Insufficient Accounting Audit Evidence)," was as follows:
As at 1 January 2011, the Federation of Accounting Profession issued the reporting standard for Non-Publicly Accountable Entities which requires that the Company must provide estimate employee retirement benefit obligations.
However, the Company neither provided nor recorded estimate employee retirement benefit obligations in accordance with such reporting standard in their financial statements for the year ended 31 December 2013. As a result, I was not satisfied with the audit evidence regarding the estimate employee retirement benefit for the year ended 31 December 2013 because I did not receive documents and relevant information for the audit of such estimate from the Company. I, therefore, was unable to reach conclusion on the adjustment value for the estimate employee retirement benefit. Any adjustment, if any, may affect the presentation of the Company's performance for the year ended 31 December 2013.
Eiwlee's 2013 Financial Statement. Commerce did not rely on "sheer speculation" in concluding that the 2012 data as restated in the 2013 financial statements was not affected by the auditor's finding of noncompliance with a reporting standard. As to any adjustment to correct the deficiency in required reporting of estimated employee retirement benefit obligations, the auditor stated that "[a]ny adjustment, if any, may affect the presentation of the Company's performance for the year ended 31 December 2013." Id. Fine Furniture's argument that the auditor "conferred only a 'qualified opinion' with respect to the whole 2013 report, including the 2012 data contained therein," Fine Furniture's Br. 30, is not persuasive because it is not the most reasonable interpretation of the auditor's explanation. Commerce was not unreasonable in interpreting the auditor's statement of the reasons for issuing a conditional opinion to refer only to the company's financial performance for 2013. The auditor's statement under the heading "Conditional Opinion" provides further support for the Department's conclusion that the auditor did not consider the restated 2012 data to have been affected by the failure of the company to follow the cited reporting standard:
In my opinion, except the effect from the abovementioned issued [sic ] for which I expressed conditional opinion, the financial statements referred to above present fairly, in all material respects, the statement of financial position as at 31 December 2013, and the results of operations for the year then ended of Eiwlee Industrial Co., Ltd. are in accordance with the reporting standard for Non-Publicly Accountable Entities.
Eiwlee's 2013 Financial Statement . Therefore, substantial evidence is present on the record to support the Department's finding that the auditor did not consider the restated 2012 information, as presented in the 2013 financial statements, to have been affected by the noncompliance with the reporting standard for estimated employee retirement benefit obligations.
F. Claims Challenging the Department's Surrogate Value for Foreign Inland Freight
In calculating normal value according to 19 U.S.C. § 1677b(c), Commerce adds to the price of material inputs a surrogate cost for the expense incurred for inland transportation of the materials, to which it refers as "foreign inland freight" or "truck freight," to the point of production. It also applies its foreign inland freight surrogate cost to capture the expense of transporting finished goods to the port of exportation, which it deducts from U.S. price (EP or CEP). Senmao, Yingyi-Nature, Jisen Wood, and Armstrong claim that the Department's surrogate cost for foreign inland freight was unsupported by substantial evidence. See Senmao's Br. 23-29; Jisen Wood's Br. 5-6; Armstrong's Br. 4-5.
To calculate a surrogate cost for foreign inland freight in the second review, Commerce relied in part on a World Bank report entitled Doing Business 2014: Thailand . See Attach. V to Preliminary Results of the Second Administrative Review of Multilayered Wood Flooring from the People's Republic of China: Surrogate Value Memorandum (Dec. 31. 2014) (P.R. Docs. 347-48) ("Doing Business. "). In a section entitled "Trading across Borders," the report provides "indicators" for various costs associated with importing goods into Thailand and exporting goods out of Thailand. Id. at 72-79. In a table entitled "Procedures to export," Doing Business lists a cost of $210 for "Inland transportation and handling." Id. at 78. This cost is presented in the report in association with three other costs, "Documents preparation" ($175), "Customs clearance and technical control" ($50), and "Ports and terminal handling" ($160), for a total cost of $595 for "Procedures to export." Id. In a parallel table entitled "Procedures to import," the report also lists a cost of $210 for "Inland transportation and handling." Id. at 78-79. This cost is also presented in the report in association with three other costs, "Documents preparation" ($135), "Customs clearance and technical control" ($255) and "Ports and terminal handling" ($160), for a total cost of $760 for "Procedures to import." Id.
Doing Business states that its cost indicators, inter alia , "cover trade logistics, including the time and cost of inland transport to the largest business city." Id. at 72. "To make the data comparable across economies, Doing Business uses several assumptions about the business and the traded goods." Id. Among the several assumptions are that the business "[i]s located in the periurban area of the economy's largest business city" and that the traded goods "[a]re transported in a dry-cargo, 20-foot full container load." Id.
Commerce did not rely solely on Doing Business in calculating a surrogate cost for