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US, AD Petitioners Defend Surrogate Value Picks for Carbonized Material in AD Review at CAFC

The U.S. defended its use of Malaysian Harmonized Tariff Schedule subheading 4402.90.1000 to value antidumping duty respondents' carbonized material over basket category 4402.90, telling the U.S. Court of Appeals for the Federal Circuit it permissibly selected the more specific heading as part of an AD review on activated carbon from China (Carbon Activated Tianjin Co. v. United States, Fed. Cir. # 23-2135).

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Submitting a reply brief to the appellate court on Jan. 22, the government said three reasons backed its pick of subheading 4402.90.1000, which is limited to coconut shell charcoal, as opposed to heading 4402.90, which includes other wood charcoal.

First, there were prior reviews in which Commerce picked coconut shell charcoal as the surrogate value and respondents used coconut shell charcoal to make activated carbon. Second, there is evidence showing that wood charcoal goes through a chemical activation process distinct from the steam or thermal activation process of the coal-based carbonized materials used by the respondents here. Third, Commerce's practice has been to pick the more specific HTS data "to value the mandatory respondents' coal-based carbonized material throughout the history of this order."

Respondent Carbon Activated challenged the agency's use of prior reviews in justifying the surrogate value pick, claiming that the three prior AD reviews cited by Commerce involved coal-based carbonized materials and not coconut-shell charcoal (see 2311080037). In the review at issue in this case, the record shows the respondents didn't buy or use coconut-shell charcoal to make the activated carbon, Carbon Activated argued.

In response, the U.S. said the administrative record in the present review was "sparse" and, as such, justified the consideration of prior reviews. "Carbon Activated fails to show why it was unreasonable for Commerce to consider previous reviews given the sparse record in this administrative review," the brief said.

Carbon Activated also challenged the agency's reliance on the activation process in picking coconut shell charcoal as the surrogate for carbonized material, though in the review, the respondent said it makes only steam activated carbon. The scope of the AD order "covers only steam activated carbon while chemically activated carbon is not considered subject merchandise," the U.S. said, adding that evidence shows that chemically activated carbon is "generally made using wood." As a result, "Commerce reasonably determined" it was "not appropriate" to use heading 4402.90, "which includes other wood."

The respondent "fails to demonstrate that Commerce unreasonably relied on the record evidence establishing that wood charcoal generally undergoes a chemical activation process that is distinct from the steam or thermal activation of the coal-based carbonized materials used by the mandatory respondents," the brief said.

Petitioners Calgon Carbon Corp. and Norit Americas defended Commerce's surrogate pick in the review in their own brief, attacking Carbon Activated's claims. The petitioners said the respondent's argument "rests on one sentence" from the agency which "inadvertently states" that there is a "long, demonstrable history in this proceeding of using coconut-shell charcoal in the production" of activated carbon. What the agency meant is that there is a long history of "using information on the value of coconut-shell charcoal as the surrogate value for carbonized materials used" in making activated carbon, the petitioners said.

Carbon Activated ignores the agency's analysis "in its entirely, instead focusing on one phrase in a single sentence," the brief said. After this statement is "understood in context," the reliance on coconut-shell charcoal is "wholly consistent with the agency's approach in numerous past segments under the antidumping duty order." The petitioners also admonished the petitioners for not filling out the record more to allow a different surrogate value to be chosen.