CIT Sustains SV Picks for Ocean Freight, Fabricated Steel Parts in AD Investigation

In June, Baker remanded the surrogate value picks for respondent Zhejiang Dingli Machinery's ocean-shipping costs, which the agency initially based on data from Descartes, Freightos and Drewry (see 2406030039). Dingli submitted its routes as business proprietary information, which the judge remanded "for the agency to explain why such characterization was permissible."

The petitioner, the Coalition of American Manufacturers of Mobile Access Equipment, advocated for the agency to use Maersk data, which was also designated as business proprietary information. On remand, Commerce redesignated both Dingli's and the coalition's submissions as public and switched to using the Maersk data, finding it to be more specific.

The respondent contested the use of the Maersk data, which consists of price quotes rather than transaction-specific pricing found in the other sources. It said "this distinction" alone is sufficient to reject the Maersk data.

Baker said that while that may be true, it's Commerce and not the court that is "authorized to make that discretionary determination." While the court has previously remanded the use of price quotes where the agency has failed to explain "why it favored them, it has also held that using them can be reasonable," the judge noted. To the extent Commerce is balancing its competing preferences for "actual transactions" and "route specificity" in the data sets, the agency can choose between them "as long as it explains its reasoning," which it did here, the court said.

Dingli also challenged Commerce's conclusion that the Maersk data is more specific than the other data sources, since it offers data on the exact shipping routes used by the respondent. Dingli said the other datasets "are nearly as route-specific as Maersk's Shanghai-Oakland route." While the respondent says Commerce "summarily dismissed this argument," Baker found the agency "did no such thing." Instead, Commerce explained that its practice is to use ocean freight surrogate data that is specific to the port combinations a respondent uses.

The respondent also argued that Commerce overlooked a "critical deficiency" in the Maersk price quotes, since the quotes all assumed a load of 18,000 kg in 40-foot dry containers. Dingli said this payload is "unrealistically low as compared to the prescribed industry standard payload of 28,000 kg for a 40-foot container, published by Maersk itself."

The U.S. said Dingli "conflates payload with container capacity and assumes, without evidence, that it is possible to load every container to its maximum capacity." The government offered an example of one cubic foot of feathers versus one cubic foot of lead. While both take up the same amount of space in the container, "the lead weighs considerably more." The government said Commerce has to base its decision on the record, which here, contained evidence showing "various container capacities." The U.S. added that Dingli failed to provide evidence calling the reliability of the Maersk data into question. Baker found the government's arguments persuasive.

The second issue in the case concerned Commerce's valuation of minor fabricated components, which Baker remanded for being "internally inconsistent." Initially, some of the HTS headings Commerce used to value the components were related to base steel plate rather than more processed fabricated steel. The agency first said the coalition offered no evidence to show that Dingli's suppliers fabricated steel plate into various components, but then it said that the suppliers sometimes do "more in-depth fabrication or processing."

On remand, the agency "conceded the inconsistency" and framed the issue as whether various inputs used by Dingli are minor fabricated steel parts or raw steel. Commerce said the record showed the suppliers "fabricated" the inputs to different degrees, meaning they were no longer raw steel. Thus, the agency switched to subheading 8431.20.90 to value the inputs, which covers fabricated steel inputs.

Dingli contested Commerce's conclusion, arguing that the agency inappropriately adopted a customs classification framework in assessing the inputs and that heading 8431.20.90 significantly overvalues the amount of processing that the inputs went through. Baker rejected these arguments, first finding that Dingli doesn't really contest Commerce's explanation that "fabrication of a component adds value," making it "no longer a raw input" that shouldn't be "valued as one." Instead, the respondent "quibbl[es] with the amount of value added," and thus "has tacitly admitted that the raw steel headings result in undervaluation."

And while there is U.S. Court of Appeals for the Federal Circuit precedent saying Commerce need not follow customs classification principles in finding the "best available information" in AD cases, "the flip side is also true." Nothing in the CAFC's decisions bars Commerce "from using such principles if it concludes that they would yield the most accurate result," the judge said.

(Coalition of American Manufacturers of Mobile Access Equipment v. United States, Slip Op. 25-150, CIT # 22-00152, dated 12/11/25; Judge: M. Miller Baker; Attorneys: Ned Marshak of Grunfeld Desiderio for defendant-intervenor Zhejiang Dingli Machinery Co.; Tara Hogan for defendant U.S. government; Timothy Brightbill of Wiley Rein for plaintiff Coalition of American Manufacturers of Mobile Access Equipment)