Chinese Refrigerant Exporters Argue at CIT for Valuing Intermediate Product With Reported FOPs
The Commerce Department illegally valued the factors of production (FOPs) of the intermediate product for a refrigerant, anhydrous hydrofluoric acid (AHF), rather than valuing AHF's reported FOPs, plaintiffs led by respondent Zhejiang Sanmei Chemical Ind. Co. argued in an Oct. 25 motion for judgment. Typically, Commerce only values the intermediate input directly if valuing the FOPs might lead to an inaccurate result. That was not the case here, since the record shows that there was no need to differentiate between Sanmei's usage of self-made AHF and purchased AHF since none of the antidumping duty review period's U.S. sales were made with purchased AHF, the brief said (Zhejiang Sanmei Chemical Ind. Co. v. United States, CIT #22-00103).
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The case was launched by three Chinese exporters -- Sanmei, Shandong Dongyue Chemical Co. and Huantai Dongyue International Trade Co. -- to contest the antidumping duty investigation on pentafluoroethane (R-125) from China. In the investigation, Commerce chose to value the AHF material input directly rather than using the reported FOPs for AHF, finding that there was no record showing how Sanmei differentiated between AHF it made and bought.
In their motion for judgment, the exporters said that the record shows that this concern "was no longer relevant" to the investigation. As the result of the date of contract negotiations, certain U.S. sales were removed from the review period, leaving only five transactions made by Sanmei's affiliate Fujian Qingliu. The record also shows that Qingliu made no AHF purchases during the review period, meaning all AHF consumed was self-made by Qingliu, the plaintiffs said.
"In the absence of any sales of subject merchandise by Zhejiang Sanmei during the period of review, Commerce’s concern that Zhejiang Sanmei was unable to distinguish its sales or consumption of domestically purchased AHF and self-produced AHF was no longer relevant to the final determination," the brief said.
Commerce further found that Sanmei did not give enough evidence to "substantiate the FOPs of the upstream inputs for AHF ... by not providing evidence for how Sanmei accounts for the yield loss from these inputs in the consolidated FOP database." In response, the plaintiffs argued that Sanmei did indeed give enough evidence to substantiate the upstream inputs' reported FOPs by handing over accurate unit consumption rates and output rates for these inputs. While the plaintiffs conceded that neither Sanmei nor Qingliu tracked loss yields, these loss yields can be calculated "based upon the quantities of the inputs and outputs."
Also in declining to value the reported FOPs of AHF, Commerce held that the byproducts reportedly made while making AHF fail to reconcile with the total raw materials consumed for three of the inputs for AHF. The plaintiffs said that they did in fact reconcile, with Sanmei saying it put inventory subledgers on the record for Sanmei and Qingliu.