Exporter Challenges Use of Specific HS Subheading Over Basket Provision to Value Carbmat at CAFC
The Commerce Department erroneously used Malaysian tariff schedule subheading 4402.90.1000 as the surrogate value for coal-based carbonized materials in an antidumping review of activated carbon instead of the broader Harmonized System subheading 4402.90, exporters Carbon Activated Tianjin Co. and Carbon Activated Corp. argued. Filing their opening brief at the U.S. Court of Appeals for the Federal Circuit, the exporters said Commerce's decision was based on "inaccurate and unsupported factual findings" (Carbon Activated Tianjin Co. v. U.S., Fed. Cir. # 23-2135).
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The Court of International Trade in May sustained Commerce's surrogate value calculations for carbonized material as part of the 2018-19 AD review on activated carbon from China (see 2305010006). The court cited Commerce's "significant discretion" in picking how to value factors of production. The agency chose the more precise category, 4402.90.1000, which is limited to coconut shell charcoal, as opposed to the basket category, 4402.90, that includes other wood charcoal. Commerce said chemically activated carbon is generally made using wood-based materials.
On appeal, Carbon Activated said the agency improperly cited a "long, demonstrable history in this proceeding of using coconut-shell charcoal" in making activated carbon. While Commerce cited three prior AD reviews in which this subheading was used, the respondents in those reviews reported using coal-based carbonized materials and not coconut-shell charcoal. In the present review, the record clearly shows that the mandatory respondents didn't "purchase or use coconut-shell charcoal to produce subject merchandise," the brief said.
In sustaining Commerce's tariff subheading selection, the trade court mischaracterized the proceeding's history and "ignored both Plaintiff-Appellants' arguments and record evidence of this administrative review," the exporters said.
The appellants also emphasized the alleged error in Commerce's finding that the activation processes used to make wood-based charcoal and coal-based carbonized materials differ. Carbon Activated said "the authorities that Commerce cited do not support its conclusion that coconut-shell charcoal is a better surrogate value for the respondents’ coal-based carbmat than wood-based charcoal."
The agency cited the respondents' reports, which said the companies used only steam activation to make their activated carbon, along with the International Trade Commission's report, which said chemically activated carbon is "generally" made using wood charcoal. "Commerce erroneously inferred from the ITC’s statement that steam activated carbon could not be made using wood charcoal," the brief noted, adding that the record shows that "inference is unfounded."