CIT Says Backboards Are Veneers, Mostly Sustains CVD Review on Chinese Wood Flooring

Reif sustained most parts of the agency's 2018 review of the CVD order on multilayered wood flooring from China, also upholding Commerce's calculation of the benchmark price for plywood using a weighted average of UN Comtrade and International Tropical Timber Organization (ITTO) data and the agency's decision to add a 17% value-added tax (VAT) rate to the benchmark for various inputs.

The court also upheld the use of adverse facts available against respondent Baroque Timber Industries (Zhongshan) Co. for its alleged use of China's Export Buyer's Credit Program. However, the court granted the government's voluntary remand request to reconsider the use of AFA for respondent Jiangsu Senmao Bambood Wood Industry Co.'s supposed use of the program, since Senmao submitted non-use certificates for all of its U.S. buyers.

Baroque challenged Commerce's decision to weight-average the UN Comtrade and ITTO data for the plywood benchmark price, arguing that the agency should only use the ITTO data. This data includes plywood export prices from the EU and Peru specific to "C/CC grade plywood," and Baroque claimed that its plywood purchases "are only of lower-grade plywood," making the ITTO data the only appropriate data to use.

Commerce rejected this claim on the grounds that Baroque didn't provide any official company documentation to show that its plywood input was "limited to a particular grade." While witness statements from the respondent "may be reflective of the industry as a whole," the statements didn't amount to "dispositive evidence of the type of input used by" the respondent and didn't tie to any of its documentation in the review, the agency said.

Reif held that Commerce adequately addressed evidence regarding Baroque's plywood purchases and included the UN Comtrade data in its calculation. The court said the agency "determined reasonably that Baroque failed to demonstrate that its plywood purchases were limited to grade C/D plywood." The respondent submitted as evidence "various purchase orders, monthly purchase summaries and warehouse-in slips," none of which shows that "Baroque purchased exclusively grade C/D plywood," the opinion said. Baroque's counsel said at oral argument that none of the company's actual purchase documents clarify what grade the "different plywood should be."

Baroque and manufacturer Fine Furniture (Shanghai) additionally contested Commerce's inclusion of the respondents' backboard purchases in the veneers for LTAR program. The agency said backboards are a type of veneer, basing its conclusion on the scope language, which says that it's a "thin slice of wood, rotary cut, sliced or sawed from a log, bolt or flitch" and "is referred to as ply when assembled." While Baroque said its backboards have different unit values, physical characteristics, definitions and end-users than veneers, it also described its backboards as one solid piece of wood, which is generally used as the bottom layer.

Reif held that Commerce adequately explained that the plain scope language "defines backboard as a type of veneer" and that the scope doesn't "limit the definition of a veneer to only the top layer of" multilayered wood flooring.

Baroque also challenged the agency's decision to add a 17% VAT rate to the benchmark for veneers, plywood, fiberboard, glue and paint. The respondent said Commerce should have used a 16% VAT rate for the part of the review period starting in May 2018. Reif held that the agency properly relied on evidence from the Chinese government showing that a 17% VAT rate was in effect for 2018 despite evidence from Baroque showing that it paid a 16% rate for the period starting in May 2018.

The court rejected Baroque's second claim that Commerce failed to notify the respondent of a deficiency in its submission. Reif held that Commerce didn't find that Baroque's submissions were deficient but merely said that the Chinese government's submissions were more reliable.

Reif then sustained the use of AFA against Baroque for its use of the EBCP but granted a voluntary remand for Commerce to reconsider the use of AFA for this program against Senmao. The judge first noted that the use of AFA is warranted due to the Chinese government's failure to provide the agency with a list of partner banks it uses to disperse the EBCP credits, documents used in the provision of the program and an accounting of the revisions made to the program in 2013.

The court noted that in the past it has rejected the use of AFA, despite these deficiencies, where a respondent has submitted non-use certificates for 100% of its U.S. buyers. Baroque only submitted certificates for a "minority" of its buyers, making the use of AFA lawful, the court said. Senmao had submitted all its non-use certificates, prompting the agency to ask for a voluntary remand. Reif also granted the agency a voluntary remand request to "correct an inadvertent error" in its calculation of average unit values for Baroque's purchases of fiberboard and veneer.

(Evolutions Flooring v. United States, Slip Op. 25-33, CIT Consol. # 21-00591, dated 03/27/25; Judge: Timothy Reif; Attorneys: Thomas Trendl of Steptoe & Johnson for plaintiffs Evolutions Flooring and Struxtur; Sarah Wyss of Mowry & Grimson for consolidated plaintiffs Fine Furniture (Shanghai) and Double F; Stephen Brophy of Husch Blackwell for consolidated plaintiffs Jiangsu Senmao Bamboo Wood Industry Co., Ltd.; Adams Lee of Harris Bricken for consolidated plaintiff Zhejiang Dadongwu GreenHome Wood Co., Ltd.; Kelsey Christensen of Clark Hill for consolidated plaintiffs led by Yihua Lifestyle Technology Co., Ltd.; Andrew Schutz of Grunfeld Desiderio for consolidated plaintiffs Baroque Timber Industries (Zhongshan) Co., Ltd. and Riverside Plywood Corp.; Kelly Geddes for defendant U.S. government; Theodore Brackemyre of Wiley Rein for defendant-intervenor American Manufacturers of Multilayered Wood Flooring)