Floral Trade Council v. United States , 1999 CIT 10 ( 1999 )

Slip Op. 99-10
UNITED STATES COURT OF INTERNATIONAL TRADE
FLORAL TRADE COUNCIL,
Plaintiff,
v.
UNITED STATES, BEFORE: Pogue, Judge
Defendant,
Consol. Court No. 97-11-01988
and
ASOCIACION COLOMBIANA de
EXPORTADORES de FLORES, et al.,
Defendant-Intervenors.
[Sustained in part; remanded in part.]
Decided: January 27, 1999
Stewart and Stewart, (Terence P. Stewart, James R. Cannon, Jr., Amy S. Dwyer,
William A. Fennell, and Mara M. Burr) for Plaintiff.
Frank W. Hunger, Assistant Attorney General of the United States; David M.
Cohen, Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice; Lucius B. Lau, Attorney, Commercial Litigation Branch,
Civil Division, United States Department of Justice; Of Counsel, Mildred E.
Steward, Office of the Chief Counsel for Import Administration, United States
Department of Commerce, for Defendant.
Arnold & Porter, (Michael T. Shor and Kevin T. Traskos) for Defendant-
Intervenors.
OPINION
Pogue, Judge: This matter is before the Court on the separate
motions of Plaintiff, Floral Trade Council ("FTC"), and Defendant-
Intervenors, Asociacion Colombiana de Exportadores de Flores, et
Consol. Court No. 97-11-01988 Page 2
al. ("Asocoflores"), for judgment on the agency record pursuant to
U.S. CIT Rule 56.2. The parties filed separate actions challenging
various aspects of the Department of Commerce’s ("Commerce") final
results of the ninth administrative review1 of the antidumping duty
order on certain fresh cut flowers from Colombia. See Certain
Fresh Cut Flowers From Colombia, 62 Fed. Reg. 53,287 (Dep’t
Commerce, Oct. 14, 1997)(final determination)("Final Results").
The actions were consolidated.
The Court has jurisdiction pursuant to 28 U.S.C. §
1581(c)(1994) and 19 U.S.C. § 1516a(a)(2)(B)(iii)(1994).
The ninth administrative review covers a total of 351
Colombian producers and/or exporters of standard carnations,
miniature (spray) carnations, standard chrysanthemums, and pompon
chrysanthemums during the period March 1, 1995 through February 29,
1996 ("the period of review"). See Final Results at 53,288. Given
the large number of producers and/or exporters, Commerce narrowed
its examination to the thirteen respondents accounting for the
largest volume of subject flowers in accordance with §
777A(c)(2)(B) of the Tariff Act of 1930, as amended, 19 U.S.C. §
1677f-1(c)(2)(B)(1994).2 See Certain Fresh Cut Flowers From
1
The antidumping statute provides for Commerce to conduct an
administrative review of an antidumping duty order upon the
request of an interested party. See 19 U.S.C. § 1675. As a
result of the administrative proceeding, Commerce determines the
actual antidumping duty rate for the entries covered by that
period of review and establishes the duty deposit rate for future
entries. See id.2
Unless otherwise indicated, all citations to the
antidumping statute are references to the provisions effective
Consol. Court No. 97-11-01988 Page 3
Colombia, 62 Fed. Reg. 16,772 (Dep’t Commerce, Apr. 8,
1997)(preliminary results).
FTC challenges: (1) Commerce’s decision not to deduct
commissions paid to affiliated consignment agents from constructed
export price and (2) Commerce’s decision not to collect third-
country sales prices from the respondents in the review
("respondents") to determine whether third-country prices could be
used as a basis for normal value.3 See Pl.’s Mot. for J. on the
Agency R. at 2.
January 1, 1995, the effective date of the amendments to the
statute by the Uruguay Round Agreements Act ("URAA"). In
addition, unless otherwise indicated, all citations to Commerce’s
regulations are to those codified at 19 C.F.R. § 353 (April
1997).
3
This Court sustained Commerce’s decision to resort to
constructive value rather than use third-country prices in the
appeal of the final results for the consolidated fifth, sixth,
and seventh administrative reviews. See Asociacion Colombiana de
Exportadores de Flores, et al. v. United States, 22 CIT , ,
6 F. Supp.2d 865, 901-03 (1998). In its brief, FTC offers no
legal or factual arguments to advance its position that Commerce
should have used third-country sales prices as the basis for
normal value. See Pl.’s Mem. of P. & A. in Supp. of Rule 56.2
Mot. for J. on the Agency R. at 10. Instead, FTC merely states
that it raises the issue again in the present action to preserve
it pending the appeal of this Court’s decision in Asociacion.
See id.Although this Court’s decision in Asociacion applied the
pre-URAA version of the antidumping statute, the current law
codifies Commerce’s prior practice. See 19 U.S.C. §
1677b(a)(1)(B)(ii)(III)(1994)(requiring Commerce to reject third-
country prices as a basis for normal value when "the particular
market situation in such other country prevents a proper
comparison with the export price or constructed export price.").
Moreover, the factual basis supporting Commerce’s decision to
reject third-country sales has not changed since the prior
reviews. See Recommendation Memorandum Regarding Calculation of
Normal Value (Pub. Doc. 309)(Nov. 21, 1996) at 7-8. Therefore,
the Court sustains Commerce’s decision to reject third-country
sales as the basis for normal value.
Consol. Court No. 97-11-01988 Page 4
Asocolfores challenges: (1) Commerce’s rejection of the
constructed value "profit cap" in calculating constructed value,
see Initial Br. of Def.-Intervenors in Supp. of Rule 56.2 Mot. for
J. on the Agency R. ("Asocolfores Br.") at 2; (2) Commerce’s
determination to deduct credit expenses from U.S. price but not
from constructed value, see id. at 3; (3) Commerce’s determination
to exclude antidumping surcharges from constructed export price,
see id. at 4; (4) Commerce’s decision not to include the net
monetary correction in calculating constructed value, see id. at 5;
(5) Commerce’s issuance of erroneous questionnaire instructions and
subsequent penalization of respondents for complying with such
instructions,4 see id. at 6; (6) Commerce’s calculation and
4
For purposes of the ninth administrative review, Commerce’s
questionnaire instructed respondents not to offset expenses with
interest income or other revenue in calculating indirect selling
expenses (a component of the constructed export price). Because,
as Asocolfores correctly notes, the antidumping statute and
regulations require compliance with Commerce’s instructions, the
respondents accordingly did not offset indirect selling expenses
with interest income in completing the questionnaire. See
Asocolflores Br. at 41-42 (citing 19 C.F.R. § 353.37 and 19
U.S.C. § 1677e).
One respondent, however, Queen’s Flowers Group, noted in its
response that it believed Commerce’s instruction to treat
interest expenses as indirect selling expenses while ignoring
interest income was unfair. See id. at 41 (citing Queen’s July
19, 1996 Submission (Pub. Doc. 240) at 56-57). In its final
determination, Commerce "acknowledge[d] that the questionnaire
did not clearly reflect the Department’s practice of allowing
interest income offsets in limited circumstances[,]" but only
allowed Queen’s Flowers Group to make the adjustment, since
Queen’s raised the issue in a "timely manner[.]" Final Results at
53,294.
Asocolflores argues that Commerce’s determination is
inconsistent with the procedural regulations and deprives
respondents of procedural due process by penalizing them for
complying with Commerce’s own express instructions. See
Asocolflores Br. at 42.
Consol. Court No. 97-11-01988 Page 5
application of the constructed export price profit ratio, see id.
at 7; (7) Commerce’s decision to impute a consolidated general and
administrative expense rate for all farms of the HOSA Group in
calculating the cost of production, see id. at 8; and (8)
Commerce’s determination not to allocate any production costs to
second quality subject flowers.5 See id.
Standard of Review
The Court will uphold a Commerce determination in an
administrative review unless it is "unsupported by substantial
evidence on the record, or otherwise not in accordance with law[.]"
19 U.S.C. § 1516a(b)(1)(B)(i)(1994).
The issues presented here primarily require the Court to
determine whether Commerce’s interpretations of the antidumping
Commerce concedes that this issue should be remanded. See
Def.’s Mem. in Partial Opp’n to Def.-Intervenors’ Mot. for J. on
the Agency R. at 47. Because the antidumping statute and
regulations require compliance with Commerce’s instructions, and
because the instructions issued in this review were inconsistent
with Commerce’s practice, the Court remands the issue directing
Commerce to: (1) reconsider this issue; (2) allow respondents to
submit information concerning the interest income offset to
indirect selling expenses in calculating constructed export
price; and (3) make adjustments, as appropriate, based upon this
information.
5
This Court sustained Commerce’s decision not to allocate
any costs of production to "national quality" flowers sold in the
home market for the fifth, sixth, and seventh administrative
reviews. See Asociacion, 22 CIT at , 6 F. Supp.2d at 880-83.
In its brief, Asocolflores states, "[s]ince we are not making any
new arguments or presenting any new factual evidence to the
Court, we simply identify the issue here to preserve it for any
future appeal." Asocolflores Br. at 54. The Court sustains
Commerce’s treatment of national quality flowers in the ninth
review.
Consol. Court No. 97-11-01988 Page 6
statute are permissible. In determining whether Commerce’s
interpretation and application of the antidumping statute is in
accordance with law, the Court applies the two-step analysis
articulated in Chevron U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 842-43 (1984), as applied and refined
by the Court of Appeals for the Federal Circuit ("Federal
Circuit").
The first step is to investigate a matter of law--"whether
Congress’s purpose and intent on the question at issue is
judicially ascertainable." Timex V.I., Inc. v. United States, 157
F.3d 879, 881 (Fed. Cir. 1998)(citing Chevron, 467 U.S. at 842-43
& n.9). "To ascertain whether Congress had an intention on the
precise question at issue, [the Court] employ[s] the ’traditional
tools of statutory construction.’" Id. at 882 (citing Chevron, 467
U.S. at 843 n.9). If the statute’s plain language answers the
question, "that is the end of the matter." Id. (citing Muwwakkil
v. Office of Personnel Management, 18 F.3d 921, 924 (Fed. Cir.
1994)). Beyond the statute’s text, the tools of statutory
construction include the statute’s legislative history, the
statute’s structure, and the canons of statutory construction.6
See id.If, after employing the first prong of Chevron, the Court
6
Not all rules of statutory construction rise to the level
of a canon, however. See U.S. Steel Group v. United States, 22
CIT , , 998 F. Supp. 1151, 1157-58 (1998)(rejecting the
use of the maxim expressio unius est exclusio alterius to discern
Congress’s intent under Chevron step one).
Consol. Court No. 97-11-01988 Page 7
determines that the statute is silent or ambiguous with respect to
the specific issue, the Court proceeds to the second step. See
Chevron, 467 U.S. at 843. The second step concerns an issue of
policy. Because Congress intended to delegate policymaking to
Commerce, the Court must defer to Commerce’s reasonable
interpretation. See Koyo Seiko Co., Ltd. v. United States, 36 F.3d
1565, 1573 (Fed. Cir. 1994). "In determining whether Commerce’s
interpretation is reasonable, the Court considers, among other
factors, the express terms of the provisions at issue, the
objectives of those provisions[,] and the objectives of the
antidumping scheme as a whole." Mitsubishi Heavy Industries, Ltd.
v. United States, 22 CIT , , 15 F. Supp.2d 807, 813 (1998).
Discussion
Commerce calculates an antidumping duty by comparing an
imported product’s price in the United States to its normal value
("NV")(i.e., the price of comparable merchandise in the exporting
country). The dumping margin is the amount by which the normal
value exceeds the United States price. See 19 U.S.C. § 1673(1994).
The United States price is calculated as either the "export
price" ("EP") or the "constructed export price" ("CEP"). See 19
U.S.C. § 1677a. Typically, Commerce uses EP when the foreign
exporter sells directly to an unrelated U.S. purchaser. See 19
U.S.C. § 1677a(a). Commerce uses CEP when the foreign exporter
sells through a related party in the United States. See 19
Consol. Court No. 97-11-01988 Page 8
U.S.C. § 1677a(b).
NV is the price of the merchandise in the producer’s home
market or its export price to countries other than the United
States. See 19 U.S.C. § 1677b(a)(1). Where Commerce cannot
compute the home market price, Commerce may base NV on a
constructed value ("CV"), see 19 U.S.C. § 1677b(a)(4), which is
calculated pursuant to § 1677b(e).
I. Commerce’s Decision Not to Deduct Commissions Paid to
Affiliated Consignment Agents from CEP7
In a consignment arrangement, the exporter (the consignor)
delivers merchandise to an agent in the United States (the
consignee) under agreement that the agent will sell the merchandise
for the account of the exporter. See EDWARD G. HINKELMAN, DICTIONARY OF
INTERNATIONAL TRADE 44 (1994). The consignor retains title to the
goods sold, and the consignee sells the goods for commission,
remitting the net proceeds to the consignor. See id.; see also
BLACK’S LAW DICTIONARY 307 (6th ed.). Here, certain Colombian exporters
were engaged in consignment arrangements during the period of
review, paying commissions to both affiliated and unaffiliated
consignees. See Def.’s Mem. in Opp’n to Pl.’s Mot. for J. on the
7
This Court previously sustained Commerce’s decision not to
deduct commissions paid to related consignees in the fifth,
sixth, and seventh administrative reviews of Certain Fresh Cut
Flowers from Colombia. See Asociacion, 22 CIT at , 6 F.
Supp.2d at 898-901. Because the wording of the applicable
statutory provision has since been amended by the URAA, and the
parties make different arguments, the Court revisits the issue
here.
Consol. Court No. 97-11-01988 Page 9
Agency R. ("Def.’s Mem. in Opp’n to Pl.") at 11.
The statute provides for the deduction of certain expenses
from CEP, including commissions:
[T]he price used to establish constructed export price
shall also be reduced by--
(1) the amount of any of the following expenses generally
incurred by or for the account of the producer or
exporter, or the affiliated seller in the United States,
in selling the subject merchandise (or subject
merchandise to which value has been added)--
(A) commissions for selling the subject merchandise in
the United States;
(B) expenses that result from, and bear a direct
relationship to, the sale, such as credit expenses,
guarantees and warranties;
(C) any selling expenses that the seller pays on behalf
of the purchaser; and
(D) any selling expenses not deducted under subparagraph
(A), (B), or (C)[.]
19 U.S.C. § 1677a(d)(1)(1994).
For the unaffiliated consignees, Commerce deducted the
commissions paid by the exporters from the CEP. See Def.’s Mem. in
Opp’n to Pl. at 11. For the affiliated consignees, however,
Commerce explained that it did not deduct commissions paid by
exporters from the CEP because to do so would have led to "double-
counting." See Final Results at 53,294. Commerce argues that the
commissions paid to affiliated consignees reimburse them for
expenses that Commerce already deducts as indirect selling expenses
under § 1677a(d)(1)(D). See Def.’s Mem. in Opp’n to Pl. at 14.
Therefore, deducting both the commissions paid to affiliated
consignees and indirect selling expenses would double-count the
expenses. See id. In contrast, double-counting does not arise
Consol. Court No. 97-11-01988 Page 10
from the deduction of commissions for the unaffiliated consignees
because the statute does not require the deduction of the
unaffiliated consignees’ U.S. selling expenses from CEP. See 19
U.S.C. § 1677a(d)(1).
FTC points out that the plain language of the amended
provision does not distinguish between commissions paid to
affiliated and unaffiliated parties. See Pl.’s Mem. of P. & A. in
Supp. of Rule 56.2 Mot. for J. on the Agency R. ("FTC Br.") at 8.
Although the statute does appear to require the expense represented
by commissions to be deducted from CEP whether or not the
producer/exporter and U.S. consignee are related, the statute does
not define "commission." Where, as here, Congress’s intended
definition of "commission" is not ascertainable through the
traditional tools of statutory construction, the Court will defer
to Commerce’s reasonable interpretation. See Koyo Seiko, 36 F.3d
at 1573.
This Court has sustained Commerce’s practice of treating
commissions paid by the producer/exporter to a related consignee as
an intracompany transfer, rather than as a true commission
because they merely serve as reimbursements to related parties.
See Asociacion, 22 CIT at , 6 F. Supp.2d at 900.8 Commerce’s
decision not to deduct commissions paid to affiliated consignees is
therefore reasonable to the extent that it fulfills the statutory
8
Although the Court’s decision in Asociacion involved pre-
URAA law, the amended statute continues not to define
"commission." Therefore, the Court’s analysis in that decision
is still applicable here.
Consol. Court No. 97-11-01988 Page 11
objective of preventing double-counting. See U.S. Steel Group v.
United States, 22 CIT , , 15 F. Supp.2d 892, 905
(1998)(holding that, "if because of the relatedness of the producer
and U.S. selling agent expenses represented by the commissions are
already accounted for by means of a deduction for selling expenses
nominally made under another provision of 19 U.S.C.A. § 1677a(d) .
. . , no additional commission deduction need be made.").
FTC, however, does not dispute that the prevention of double-
counting is a reasonable application of the statute. See Pl.’s
Reply to Def.-Intervenors’ Rebuttal Br. at 1-2. FTC explains that
double-counting of the deduction will not occur because the statute
"instructs [Commerce] to calculate constructed export price first
by deducting commissions and direct selling expenses and then [by]
any selling expenses not already deducted." FTC Br. at 8 (citing
19 U.S.C. § 1677a(d))(emphasis provided). "To the extent that the
record demonstrates that the commissions include reimbursement for
expenses incurred by the consignee, such expenses, already adjusted
for under subparagraph A, would not be adjusted for under
subparagraph D." Pl.’s Reply to Def.-Intervenors’ Rebuttal at 2.
Instead, FTC argues that Commerce’s application of the statute
violates its plain language because Commerce did not apply the
deductions of 19 U.S.C. § 1677a(d)(1) in proper sequence. See id.
at 2. FTC contends that the statute sets up a hierarchy of
deductions to be followed sequentially. See FTC Br. at 8.
According to FTC, "[Commerce] cannot properly implement the
statutory language unless it performs its adjustments in sequence."
Consol. Court No. 97-11-01988 Page 12
Pl.’s Reply to Def.-Intervenors’ Rebuttal Br. at 2.
Neither the statute nor its legislative history, however,
explicitly requires that the deductions should be made in literal
sequence. Subparagraph (D) requires Commerce to reduce CEP by "any
selling expenses not deducted under subparagraph (A), (B), or
(C)[.]" 19 U.S.C. § 1677a(d)(1)(D). So long as expenses are not
double-counted under subparagraph (D), Commerce may apply the
deductions in any order reasonable under the circumstances. Here,
Commerce’s application of the statute would seemingly result in the
exact same calculation for total adjustments to CEP advocated by
FTC. Because Commerce’s application of the statute neither
violates Congress’s express intent nor is unreasonable, it is in
accordance with law.
Nevertheless, Commerce’s determination must also be supported
by substantial evidence. FTC argues that the record does not
demonstrate that commissions paid to affiliated consignees were
reimbursements (i.e., intracompany transfers) for their U.S.
selling expenses, and therefore, "[Commerce’s] failure to deduct
such commissions is unsupported by substantial evidence[.]" Pl.’s
Reply to Def.-Intervenors’ Rebuttal Br. at 2-3. The record,
however, indicates that commissions paid to related consignees were
intracompany transfers by definition, since Commerce’s
questionnaire instructs that "commissions paid to affiliates need
not be reported." See Dep’t of Commerce Questionnaire (Public Doc.
42)(May 16, 1996) at C-16.
FTC further appears to be concerned that, to the extent that
Consol. Court No. 97-11-01988 Page 13
commissions paid to affiliated consignees exceed the consignees’
indirect selling expenses, Commerce fails to deduct the difference
as a commission expense to producers/exporters. FTC’s concern is
resolved, however, by § 1677a(d)(3), a new provision under the URAA
that requires CEP to also be reduced by "the profit allocated to
the expenses described in paragraphs (1) and (2),"9 which include
indirect selling expenses. 19 U.S.C. § 1677a(d)(3). While
commissions represent expenses to the paying producers, the amount
by which the commissions exceed the selling expenses incurred by
consignees constitute profit for these consignees. By reducing CEP
by the profit allocated to the indirect selling expenses incurred
by affiliated consignees, the provision assures that CEP will not
be inflated to the extent that the commissions paid to affiliated
consignees exceed their expenses. In this regard, Congress
instructed Commerce to calculate a "statutory profit" as opposed to
an "accounting profit." At oral argument on January 12, 1999,
Commerce demonstrated that this adjustment was made for commissions
paid to related consignees that exceeded the consignees’ actual
expenses. See Commerce Calculation Printout (Prop. Doc. 285)(Oct.
6, 1997) at line 661.
Therefore, the Court sustains Commerce’s decision not to
deduct commissions paid to related consignees from CEP.
9
The expenses in paragraph (1) refer to commissions, direct
selling expenses, selling expenses paid by the seller on behalf
of the purchaser, and indirect selling expenses. See 19 U.S.C. §
1677a(d)(1). Paragraph (2) refers to "the cost of any further
manufacture or assembly" in the United States. 19 U.S.C. §
1677a(d)(2).
Consol. Court No. 97-11-01988 Page 14
II. Commerce’s Rejection of the Constructed Value "Profit Cap"
A. Background
Profit is a component in the calculation of CV. See 19 U.S.C.
§ 1677b(e)(2)(1994). Under the current statute, as amended by the
URAA, the preferred method for measuring profit is to add to CV
"the actual amounts incurred and realized by the specific exporter
or producer being examined in the investigation or review . . . for
profits, in connection with the production and sale of a foreign
like product, in the ordinary course of trade, for consumption in
the foreign country[.]" 19 U.S.C. § 1677b(e)(2)(A).
If data are not available with respect to § 1677e(2)(A), then
Commerce may select one of the following three alternative methods
for calculating profit:
(i) the actual amounts incurred and realized by the
specific exporter or producer being examined in the
investigation or review . . . for profits, in connection
with the production and sale, for consumption in the
foreign country, of merchandise that is in the same
general category of products as the subject merchandise,
(ii) the weighted average of the actual amounts incurred
and realized by exporters or producers that are subject
to the investigation or review (other than the exporter
or producer described in clause (i)) . . . for profits,
in connection with the production and sale of a foreign
like product, in the ordinary course of trade, for
consumption in the foreign country, or
(iii) the amounts incurred and realized . . . for
profits, based on any other reasonable method, except
that the amount allowed for profit may not exceed the
amount normally realized by exporters or producers (other
than the exporter or producer described in clause (i)) in
connection with the sale, for consumption in the foreign
country, of merchandise that is in the same general
category of products as the subject merchandise[.]
Consol. Court No. 97-11-01988 Page 15
19 U.S.C. § 1677b(e)(2)(B)(emphasis provided); see also Statement
of Administrative Action, H.R. Doc. No. 103-316, 103rd Cong., 2nd
Sess. (1994), reprinted in URUGUAY ROUND AGREEMENTS ACT, LEGISLATIVE
HISTORY, Vol. VI, at 840 ("SAA")(stating that "new section
[1677b(e)(2)(B)] does not establish a hierarchy or preference among
these alternative methods").10 The underlined portion of
alternative (iii) is known as the "profit cap." See SAA at 840.
Commerce rejected alternative (ii) because there was no data
concerning foreign like product sold in the "ordinary course of
trade" as required by the provision. See Def.’s Mem. in Partial
Opp’n to Def.-Intervenors’ Mot. for J. on the Agency R. at 26-27;
see also 19 U.S.C. § 1677b(e)(2)(B)(ii). The "ordinary course of
trade" test requires, among other conditions, that the sales are
profitable (i.e., not made at below-cost prices). See 19 U.S.C. §
1677(15)(A)(1994); see also SAA at 840. Unlike the preferred
methodology and alternative (ii), however, alternatives (i) and
(iii) do not require the amount for profit to be calculated based
on home country sales of a foreign like product in the ordinary
course of trade. See 19 U.S.C. §§ 1677b(e)(2)(B)(i) & (iii).
Instead, alternatives (i) and (iii) simply require that the
calculation for profit be based on home country sales of
10
The Statement of Administrative Action represents "an
authoritative expression by the Administration concerning its
views regarding the interpretation and application of the Uruguay
Round agreements . . . ." SAA at 656. "[I]t is the expectation
of the Congress that future Administrations will observe and
apply the interpretations and commitments set out in this
Statement." Id. (quoted in Delverde, SrL v. United States, 21
CIT , , 989 F. Supp. 218, 229-30 n.18 (1997)).
Consol. Court No. 97-11-01988 Page 16
"merchandise in the same general category of products as the
subject merchandise." Id.In calculating profit for CV, Commerce selected alternative
(iii) and applied it on the basis of "the facts available." See
Final Results at 53,302 (citing SAA at 841). Commerce explained
that it interprets CV as requiring a positive amount for profit.
See id. at 53,301-302. Because home market sales of the same
general category of merchandise as flowers were made at below-cost
prices, Commerce reasoned it could not calculate a positive profit
cap. See id. Where a positive profit cap cannot be measured,
Commerce interpreted the SAA as allowing it to disregard
alternative (i) and the alternative (iii) profit cap and apply
alternative (iii) on the basis of "the facts available." See id.
at 53,302 (citing SAA at 841). As "the facts available," Commerce
assigned a profit rate of five percent (of the sum of general
expenses and cost), which it obtained from Compania Nacional de
Chocolates S.A., a Colombian producer of chocolate, coffee, and
dairy products. See id. at 53,301.
Asocolflores argues that Commerce’s ruling that the profit cap
contained in alternative (iii) does not apply is contrary to the
statute’s intent, and thus, must be reversed under the first prong
of Chevron. See Asocolflores Br. at 17. According to
Asocolflores, the profit cap is mandatory, requiring "that the
amount allowed for profit may not exceed the amount normally
realized by exporters or producers . . . in connection with the
sale, for consumption in the foreign country, of merchandise that
Consol. Court No. 97-11-01988 Page 17
is in the same general category of products as the subject
merchandise[.]" See id. at 20 (citing 19 U.S.C. §
1677b(e)(2)(B)(iii)).
Asocolflores demonstrates that numerous respondents made sales
in Colombia of "merchandise that is in the same general category of
product as the subject merchandise,"11 and neither Commerce nor FTC
dispute this claim. Moreover, all such producers indicated in
their questionnaires that the home market sales of other export
quality flowers were made below-cost. See Asocolfores Br. at 18-19
(and citations at n. 18). Therefore, Asocolflores contends, the
profit amount normally realized by producers for sales in Colombia
of merchandise in the same general category of products as the
subject merchandise is zero. See id. at 20.
B. Analysis
This Court must determine whether Commerce’s decision to
reject the profit cap during the period of review is in accordance
11
The flowers subject to the current review are carnations,
miniature carnations, pompons, and mums. Asocolflores
demonstrates that numerous Colombian producers made sales in
Colombia of export quality flowers other than those subject to
the antidumping order, including roses, alstroemeria, gypsophia,
gerbera, and statice, among others. See Asocolflores Br. at 18-
19 (citing, e.g., Inverpalmas July 11, 1996 Response (Conf. Doc.
60) at 55; Manjui July 11, 1996 Response (Conf. Doc. 68) at 50-
51; Flores de Suba July 12, 1996 Response (Conf. Doc. 99) at D-55
to D-56; Flores de la Sabana July 12, 1996 Response (Conf. Doc.
87) Sec. D at 39; Agricola Bonanza July 11, 1996 Response (Conf.
Doc. 41) at 51-52; Industrial Agricola Aug. 15, 1996 Response
(Conf. Doc. 149) Sec. D, Field 10.0. Because alstroemeria,
gypsophila, and gerbera were within the scope of the original
antidumping order, see Certain Fresh Cut Flowers From Colombia,
52 Fed. Reg. 6,842, 6,843 (Dep’t Commerce Mar. 5, 1987)(final
determination), they are in the "same general category of
products as the subject merchandise" in the ninth review.
Consol. Court No. 97-11-01988 Page 18
with law. The plain language of alternative (iii) indicates that
the profit cap is a mandatory requirement of that provision.
Again, that section states that Commerce will add to CV "the
amounts . . . realized . . . for profits, based on any other
reasonable method, except that the amount allowed for profit may
not exceed the amount normally realized by . . . producers" in
connection with home market sales of "merchandise that is in the
same general category of products as the subject merchandise." 19
U.S.C. § 1677b(e)(2)(B)(iii). Commerce, however, justified its
rejection of the profit cap by reference to language in the SAA,
which states,
The Administration also recognizes that where, due to the
absence of data, Commerce cannot determine amounts for
profit under alternatives (1) and (2) or a "profit cap"
under alternative (3), it might have to apply alternative
(3) on the basis of "the facts available." This ensures
that Commerce can use alternative (3) when it cannot
calculate the profit normally realized by other companies
on sales of the same general category of products.
SAA at 841.
The question of whether Commerce properly rejected the profit
cap hinges on Commerce’s determination that the statute is
ambiguous as to whether it requires a positive amount for profit.
If the language of § 1677b(e)(2)(B)(iii)--in light of its
legislative history, structure, and the canons of construction--is
ambiguous, Commerce may reasonably interpret it as requiring a
positive profit amount for CV. Commerce could then permissibly
reject the profit cap and resort to the facts available because it
could not calculate a positive amount for profit. If, however,
Consol. Court No. 97-11-01988 Page 19
Congress intended that alternative (iii) would not require a
positive amount for profit, then Commerce’s rejection of the profit
cap is impermissible.
The SAA explicitly states that Commerce may resort to "the
facts available" under alternative (iii) "due to the absence of
data." Id. If Congress intended that the actual amount of profit
be zero where all sales are made below cost, then this is not a
situation where data is absent because Asocolflores has pointed to
undisputed record evidence indicating that numerous Colombian
producers made home market, below-cost sales of flowers in the same
general category as the subject flowers. Commerce would then apply
the profit cap as demonstrated by Asocolflores, using a profit rate
of zero for the below cost sales of export quality flowers.
Therefore, the precise question before the Court is whether
Commerce’s determination that alternative (iii) of 19 U.S.C. §
1677b(e)(2)(B) may require a positive amount for profit is in
accordance with law. In reviewing Commerce’s interpretation, the
Court employs the two-step analysis of Chevron.
Under the first prong of Chevron, the Court asks whether
Congress’s purpose and intent on the question at issue is
judicially ascertainable. See Timex, 157 F.3d at 881. Commerce
based its interpretation of a positive profit amount requirement on
language from the SAA. Commerce explained,
Although the URAA eliminated the use of a minimum profit
rate, the presumption of a profit element in the
calculation of CV was not eliminated. The SAA [at page
839] states: "Because constructed value serves as a proxy
for a sales price, and because a fair sales price would
Consol. Court No. 97-11-01988 Page 20
recover SG&A expenses and would include an element of
profit, constructed value must include an amount for SG&A
expenses and for profit."
Final Results at 53,301 (citing SAA at 839). Although the above
statement could possibly be interpreted in isolation as requiring
a positive amount for profit, the Court is not persuaded by
Commerce’s reliance on it alone in light of the statute’s language,
legislative history, and structure. See United States v. Taylor,
487 U.S. 326, 344-46 (1988)(concurring opinion of Justice
Scalia)(stating that reliance upon an isolated excerpt from a
statute’s legislative history is indeterminate and result-
oriented). The Court affords the plain language of the statute the
most weight. See Timex, 157 F.3d at 882. If the provision’s text
does not resolve the issue, the Court conducts a more thorough
examination of the statute’s legislative history and structure,
employing the canons of statutory construction, to determine
whether Congress’s intent is otherwise clearly discernible. See
id.
1. The Statute’s Language
Although the text of § 1677b(e)(2)(B)(iii) is not explicit as
to whether it requires a positive amount for profit in CV, its
language impliedly contradicts such a conclusion. Unlike both the
preferred methodology and alternative (ii), alternative (iii) does
not require that the sales from which profit is calculated be in
"the ordinary course of trade." See 19 U.S.C. §
1677b(e)(2)(B)(iii). The "ordinary course of trade" test requires
that the sales are profitable (i.e., not made at below cost
Consol. Court No. 97-11-01988 Page 21
prices).12 See 19 U.S.C. § 1677(15)(A). "It is well established
that where Congress has included specific language in one section
of a statute but has omitted it from another, related section of
the same Act, it is generally presumed that Congress intended the
omission." Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray
Portland Cement v. United States, 13 F.3d 398, 401 (Fed. Cir.
1994). That Congress specifically required the sales for the
preferred methodology and alternative (ii) to be profitable, but
did not require alternative (iii) sales to be profitable,
undermines Commerce’s conclusion that the amount allowed for profit
in alternative (iii) must be positive.
Statements in the SAA add support to the conclusion that
Congress did not intend to require alternative (iii) sales to be
profitable. After discussing alternative (iii), the SAA states
that, "the Administration does not intend that Commerce would
engage in an analysis of whether sales in the same general category
are above-cost or otherwise in the ordinary course of trade." SAA
12
Although the ordinary course of trade test requires more
than that the sales be profitable, Congress clearly was cognizant
of this condition when amending the CV profit calculation because
Congress amended the definition of "ordinary course of trade"
under the URAA to specifically exclude below cost sales. See 19
U.S.C. § 1677(15)(1994)(referencing 19 U.S.C. § 1677b(b)(1)
(1994)); see also SAA at 834 ("Section 222(h) of the bill amends
section [1677(15)] to specify additional types of transactions
that Commerce may consider to be outside the ordinary course of
trade, including: (1) sales disregarded as being below-cost[.]").
Moreover, in discussing alternative (ii) of the CV profit
calculation, the SAA states, "although it relies on the sales
experience of other companies, this alternative requires the use
of sales in the ordinary course of trade, i.e., profitable
sales." SAA at 840.
Consol. Court No. 97-11-01988 Page 22
at 841. Alternative (iii) bases its calculation on "sales in the
same general category;" thus, Congress intentionally permitted
sales serving as alternative (iii)’s basis for calculation to be
below cost. Moreover, the SAA discussion of § 1677b(e)(2)
indicates that Congress was aware that where sales are below cost,
profit is zero. See SAA at 839 ("Moreover, Commerce has used an
average profit rate, which includes below-cost sales for which the
profit is zero.")(emphasis provided). That Congress did not
require alternative (iii) sales to be profitable undermines
Commerce’s conclusion that the amount allowed for profit in
alternative (iii) must be positive.
2. Legislative History
A further look into the legislative history adds support to
Asocolflores’ position. The URAA amendments significantly changed
the statute’s calculation of CV. The previous provision included
a minimum profit amount of eight percent of the sum of the general
expenses and cost. See 19 U.S.C. § 1677b(e)(1)(B)(ii)(1988). The
URAA amendments eliminated the minimum profit amount, introducing
the preferred methodology and the three alternatives as the bases
for profit calculation. The House Report to the URAA states that
the CV calculation was "amended to reflect more specifically the
obligations of the Agreement[,]" referring to the Agreement on
Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994 (Antidumping)("Agreement"). H. Rep. No. 103-826(I),
103rd Cong., 2nd Sess. at 95 (1994). Indeed, the language of the
amended provision, § 1677b(e)(2) closely mirrors the language of
Consol. Court No. 97-11-01988 Page 23
Article 2.2.2 of the Agreement.13
During the negotiations that provided the foundation for the
Agreement’s CV calculation, "[t]he focus of the debate was whether
statutory minimums for profit and general selling and
administrative expenses, such as those employed by the United
States, were consistent with the Agreement or whether perhaps
actual data for expenses and profit should be explicitly required
by the Code provisions." THE GATT URUGUAY ROUND: A NEGOTIATING HISTORY
Vol. II at 1554 (Terence P. Stewart ed., 1993). Korea, Hong Kong,
Singapore, Japan, and the Nordic countries, among others,
"expressed the position that the general expenses and profit used
for purposes of calculating the constructed value should be
13
Article 2.2.2 of the Agreement provides,
[T]he amounts for administrative, selling and general
costs and for profits shall be based on actual data
pertaining to production and sales in the ordinary
course of trade of the like product by the exporter or
producer under investigation. When such amounts cannot
be determined on this basis, the amounts may be
determined on the basis of:
(i) the actual amounts incurred and realized by the
exporter or producer in question in respect of
production and sales in the domestic market of the
country of origin of the same general category of
products;
(ii) the weighted average of the actual amounts incurred and
realized by other exporters or producers subject to
investigation in respect of production and sales of the like
product in the domestic market of the country of origin;
(iii) any other reasonable method, provided that the amount
for profit so established shall not exceed the profit
normally realized by other exporters or producers on sales
of products of the same general category in the domestic
market of the country of origin.
Consol. Court No. 97-11-01988 Page 24
determined on the basis of the company’s actual data in all cases
where it is possible." Id. at 1557-58.
The final version of the Agreement did not include a minimum
profit figure, and therefore, to specifically reflect the
obligations of the Agreement, Congress eliminated the minimum
profit requirement from its own statute. See 19 U.S.C. §
1677b(e)(2). Commerce maintains that alternative (iii) requires a
positive profit amount in CV--even where actual data indicate below
cost sales in the home market of merchandise that is in the same
general category of products as the subject merchandise. To
require a positive amount for profit, in essence, would still
enforce a minimum. Commerce’s interpretation, therefore, violates
the spirit of Congress’s intention to eliminate a profit minimum
for CV in favor of actual data to conform with the Agreement.
3. The Statute’s Structure
Finally, the Court examines the statute’s structure. Again,
alternative (iii) requires that Commerce add to CV "the amounts
incurred and realized for selling, general, and administrative
expenses, and for profits, based on any other reasonable method,
except that the amount allowed for profit may not exceed the amount
normally realized[.]" 19 U.S.C. § 1677b(e)(2)(B)(iii)(emphasis
provided).
The antidumping statute contains numerous provisions requiring
Commerce to adjust for the "amount" of various expenses. See,
e.g., 19 U.S.C. §§ 1677a(c) & (d), 1677b(a)(6) & (7)(B). When the
"amount" of such expenses is zero or negative, Commerce makes a
Consol. Court No. 97-11-01988 Page 25
zero or negative adjustment.14 The Court presumes that the same
words used twice in the same act have the same meaning. See ICC
Industries, Inc. v. United States, 812 F.2d 694, 700 (Fed. Cir.
1987). Therefore, the requirement of a positive amount for profit
in § 1677b(e)(2)(B)(iii) is presumptively negated where the record
indicates that profitable sales do not exist.
Moreover, Commerce’s treatment of profit is inconsistent with
respect to the calculations of CV and CEP. To calculate the amount
of profit to be deducted from CEP pursuant to § 1677a(d)(3),
Commerce must calculate "total actual profit." See 19 U.S.C. §
1677a(f)(2)(D). For the current review, Commerce interpreted
"total actual profit" to include profits on home market sales and
U.S. market sales. See Memorandum: Calculation Methodology for CEP
Profit in the Ninth Antidumping Administrative Review of Certain
Fresh Cut Flowers from Colombia (Pub. Doc. 438)(Mar. 20, 1997) at
1. In addition, Commerce addressed whether non-profitable home
market sales would be used as the basis for home market profit in
calculating "total actual profit" pursuant to § 1677a(f)(2)(D).
See id. at 2. Commerce concluded that "there is no provision in
the statute for disregarding sales below cost in this context, and
doing so would conflict with the statutory requirement to use
14
For example, the "amount" of credit expenses can be
negative when the customer prepays. Commerce then reduces the
U.S. price by a negative amount, thereby increasing the price.
See 19 U.S.C. § 1677a(d)(1)(B); see also Silicon Metal from
Brazil, 62 Fed. Reg. 1970, 1977-78 (Jan. 14, 1997); Industrial
Nitrocellulose from Brazil, 55 Fed. Reg. 23,120, 23,122 (June 6,
1990)(stating that, where the customer prepays, the "credit
expense result[s] in a negative amount").
Consol. Court No. 97-11-01988 Page 26
’actual profit.’" Id. Thus, for purposes of calculating "total
actual profit," Commerce recognizes that the actual profit of below
cost sales in the home market is zero.
Commerce’s incongruous treatment of home market profit for CV
and CEP is inconsistent with Congress’s intent. As noted, there is
a presumption that the same words used twice in the same act have
the same meaning. ICC Industries, 812 F.2d at . To interpret
the actual profit incurred for below cost sales in the home market
for purposes of CEP to be zero, while denying that the profit
"amount normally realized" can be zero for purposes of the CV
profit cap in alternative (iii), violates the presumption that home
market profit will have the same meaning for both sections.
Moreover, § 1677b(a) states that, "[in] determining under this
title whether subject merchandise is being, or is likely to be,
sold at less than fair value, a fair comparison shall be made
between the export price or constructed export price and normal
value." 19 U.S.C. § 1677b(a). It seems hardly fair for Commerce
to interpret actual profits of below cost sales in the home market
to be zero for purposes of CEP while denying that the same actual
profit may be zero for purposes of CV. Such an interpretation
appears inconsistent with Congress’s specific intent to make a fair
comparison between the home market price and the export price.
C. Conclusion
Commerce’s determination that 19 U.S.C. § 1677b(e)(2)(B)(iii)
may reasonably be interpreted to require a positive amount for
profit is inconsistent with Congress’s intent, and therefore, not
Consol. Court No. 97-11-01988 Page 27
in accordance with law. The Court recognizes that Commerce is to
be accorded substantial deference in interpreting the antidumping
laws. See Torrington Co. v. United States, 68 F.3d 1347, 1351
(Fed. Cir. 1995)(citing Daewoo Elecs. Co. v. Int’l Union, 6 F.3d
1511, 1516 (Fed. Cir. 1993), cert. denied, 512 U.S. 1204 (1994)).
Moreover, the Court acknowledges the SAA statement upon which
Commerce relied in interpreting the CV provision as mandating a
positive amount for profit. See SAA at 839 ("Because constructed
value serves as a proxy for a sales price, and because a fair sales
price would recover SG&A expenses and would include an element of
profit, constructed value must include an amount for SG&A expenses
and for profit.").
Here, however, upon examination of the statute’s language,
legislative history, and structure, it is clear that Congress did
not intend 19 U.S.C. § 1677b(e)(2)(B)(iii) to require a positive
amount for profit where all available data demonstrate that sales
in the same general category were made at below cost. To the
contrary, the Chevron step one analysis indicates that: 1) Congress
intended to eliminate the profit minimum from the CV calculation in
favor of actual amounts; 2) Congress intended that where sales are
not made in the ordinary course of trade, they are not profitable;
3) Congress understood that where sales are not profitable, the
actual amount of profit is zero; and 4) Congress intended that a
fair comparison be made between the home market and U.S. prices.
While the CV provision may presume a positive amount for profit, it
is clear that new URAA provision 19 U.S.C. § 1677b(e)(2)(B)(iii)
Consol. Court No. 97-11-01988 Page 28
does not mandate the creation of a positive amount where all
available evidence indicate non-profitable sales.
The record indicates that numerous Colombian producers made
home market sales of the same general category of merchandise at
below cost prices. Therefore, pursuant to § 1677b(e)(2)(B)(iii),
the profit "normally realized" is zero, and zero is thus the profit
cap. The Court remands the matter to Commerce for an application
of the statute consistent with this standard.
III. Commerce’s Treatment of Imputed Credit Expense
Credit expenses are the costs of financing sales accounts
receivables. Imputed credit expenses, therefore, represent the
amounts Commerce attributes to interest expenses incurred between
shipment date and payment date. See Koenig & Bauer-Albert AG v.
United States, 22 CIT , , 15 F. Supp.2d 834, 841 (1998).
Asocolflores argues that, because Commerce included all
interest expenses in CV, while subtracting the imputed cost of
credit from the EP and CEP, Commerce violated the statutory
requirement of a fair comparison. See Asocolflores Br. at 29
(citing 19 U.S.C. § 1677b(a) and the Agreement, Art. 2.4).
Asocolflores maintains that, "unless the statute expressly provides
otherwise, if the export price is adjusted for an item of expense,
normal value must also be adjusted for that item of expense." Id.
Therefore, according to Asocolflores,
To comply with the statute’s requirement of a fair
comparison, Commerce must either (i) exclude from CV that
portion of actual financial expenses attributable to
Consol. Court No. 97-11-01988 Page 29
sales (by subtracting from net financial expenses an
amount determined by multiplying net financial expenses
by the ratio of accounts receivable over total assets, as
was its practice prior to the URAA), or (ii) subtract an
amount for imputed credit from CV, as a circumstances of
sale adjustment pursuant to 19 U.S.C. §
1677b(a)(6)(C)(iii), as it has done in more recent cases.
Id. at 32.
Commerce specifically stated in the Final Results, however,
that "[a]ny differences in credit expense between the U.S. and
foreign market are taken into account as a circumstance of sale
adjustment[.]" Final Results at 53,300. The statute requires that
constructed value be "increased or decreased by the amount of any
difference . . . between the [U.S. Price] and [CV] . . . that is
established to the satisfaction of the administering authority to
be wholly or partly due to . . . differences in the circumstances
of sale." 19 U.S.C. § 1677b(a)(6)(C). This Court has previously
held that Commerce’s treatment of imputed interest expenses as a
circumstance of sale is in accordance with law. See Koenig &
Bauer-Albert, 22 CIT at , 15 F. Supp.2d at 842. Therefore,
Commerce’s method for accounting for differences in credit expense
treatment between CV and EP (and CEP) is in accordance with the
statute’s fair comparison requirement. The Court is unable to
discern from the record, however, whether Commerce in fact did
account for differences in credit expenses as a circumstance of
sale.15
15
At oral argument on January 12, 1999, counsel for Commerce
cited certain adjustments to EP, but nevertheless was unable to
confirm that the appropriate adjustments were made.
Consol. Court No. 97-11-01988 Page 30
Asocolflores further contends that Commerce failed to exclude
credit expenses associated with sales of subject flowers to the
United States and third countries from CV. See Reply Br. of Def.-
Intervenors in Supp. of Mot. for J. on the Agency R. ("Asocolflores
Reply Br.") at 10. Asocolflores points to the questionnaire
Commerce sent to respondents, which requests "total financial
expenses . . . incurred in connection with the production and sale
of all products." See Asocolflores Br. at 29-30 (citing Dep’t of
Commerce Questionnaire (Pub. Doc. 42)(May 16, 1996) at D-39). The
statute requires that CV only include those selling, general, and
administrative ("SG&A") expenses incurred "in connection with the
production and sale of a foreign like product . . . for consumption
in the foreign country[.]" 19 U.S.C. § 1677b(e)(2)(A)(emphasis
provided). Therefore, to the extent that Commerce includes credit
expenses in connection with United States and third market sales in
SG&A, that calculation would not be in accordance with law.
Commerce counters, however, that it did not include credit
expenses to all markets in the CV calculation, but properly limited
such expenses to home market consumption. See Def.’s Mem. in
Partial Opp’n to Def.-Intervenors’ Mot. for J. on the Agency R. at
40. According to Commerce, it treats credit expenses as a type of
"selling expense" for purposes of SG&A. See id. at 39. In the
Preliminary Results, Commerce explained that, "[r]egarding selling
expenses, all respondents reporting sales of export quality flowers
in the home market stated they had no selling expenses in that
market. Therefore, as facts otherwise available, we did not
Consol. Court No. 97-11-01988 Page 31
include selling expenses for those respondents that had no home
market sales." Certain Fresh Cut Flowers From Colombia, 62 Fed.
Reg. 16,772, 16,777 (Dep’t Commerce April 8, 1997)(preliminary
results). Thus, according to Commerce, because it did not include
selling expenses in the calculation of SG&A, Commerce did not
include credit expenses to all markets in SG&A. See Def.’s Mem. in
Partial Opp’n to Def.-Intervenors Mot. for J. on the Agency R. at
39-40.
"The orderly functioning of the process of review[, however,]
requires that the grounds upon which the administrative agency
acted be clearly disclosed and adequately sustained." SEC v.
Chenery Corp., 318 U.S. 80, 94 (1943). Commerce does not cite to
record evidence confirming that it indeed accounted for differences
in CV and EP (and CEP) as a circumstance of sale and treated credit
expenses as "selling expenses" for purposes of SG&A. The Court
requires a more detailed account with citations to record evidence
to sustain Commerce’s arguments. Therefore, the Court remands the
matter to Commerce to provide a more detailed explanation of (1)
whether it accounted for differences in credit expenses as a
circumstance of sale and (2) its treatment of credit expenses to
United States and third markets for the purpose of CV.
IV. Commerce’s Decision to Exclude Antidumping Surcharges Paid to
Unrelated Consignees from CEP
Colombian producers sell most of their flowers in the United
States on a consignment basis. Following the entry of the
Consol. Court No. 97-11-01988 Page 32
antidumping duty order in 1987, numerous consignees of subject
flowers from Colombia began a practice of raising their United
States prices by a surcharge to cover the antidumping duties.
Asocolflores explains that such importers include an additional
line item on their invoices that they refer to as an antidumping
duty surcharge, "so that they can pay to Customs the amounts of
estimated antidumping duty deposits and any actual antidumping duty
assessments." See Asocolflores Br. at 33 (citing, e.g., Maxima
July 12, 1996 Response (Pub. Doc. 78) at 3, 47).
During the period of review, Commerce decided to deduct the
antidumping duty surcharge from the United States price in
calculating CEP for unaffiliated consignees. See Final Results at
53,293. Commerce explained that, where the Colombian
producer/exporter and consignee are not related,
the payment to the consignment reseller for [antidumping]
reserve surcharges does not accrue to [the
producer/exporter]. Therefore, we have taken as our
starting price the price charged by the unaffiliated
consignment seller net of the [antidumping] reserve
surcharge. This differs from our treatment of
[antidumping] surcharges paid to affiliated consignment
sellers, where the [antidumping] surcharge can be said to
accrue to the affiliated producer/exporter.
Id. Thus, Commerce interprets the statute as requiring the
inclusion of antidumping surcharges in CEP where the
producer/exporter and consignee are unrelated. In reviewing
Commerce’s interpretation, the Court employs the two-step analysis
of Chevron.
The statute provides that,
The term "constructed export price" means the price at
Consol. Court No. 97-11-01988 Page 33
which the subject merchandise is first sold . . . in the
United States . . . by or for the account of the producer
or exporter of such merchandise or by a seller affiliated
with the producer or exporter, to a purchaser not
affiliated with the producer or exporter, as adjusted
under subsections (c) and (d).
19 U.S.C. § 1677a(b).
Commerce does not argue that antidumping surcharges are a cost
to be adjusted pursuant to either subsection (c) or (d) of § 1677a.
See Def.’s Mem. in Partial Opp’n to Def.-Intervenors’ Mot. for J.
on the Agency R. at 42. Rather, Commerce argues that it deducts
antidumping surcharges charged by unaffiliated consignees because
such charges are not a component of the "starting price" defined in
§ 1677a(b). See id. Commerce predicates its argument on
Commerce’s finding that, in the case of an unaffiliated consignee,
the antidumping surcharge "does not accrue" to the producer
exporter. See id. at 41 (citing Final Results at 53,293). Because
the producer/exporter "did not receive or control the funds which
comprised the [antidumping] reserve surcharge," Commerce argues,
"it is apparent that the surcharge is not part of ’the price . . .
at which the subject merchandise is first sold . . . by or for the
account of the producer or exporter . . . .’" Id. (citing 19 U.S.C.
§ 1677a(b)).
The plain language of § 1677a(b) does not expressly require
that the components of the "price at which the subject merchandise
is first sold . . . in the United States" accrue to the producer.
Commerce appears to argue that the "for the account of the producer
or exporter" phrase expresses the requirement. See id. In
Consol. Court No. 97-11-01988 Page 34
rebuttal, Asocolflores contends that,
The condition ’for the account of the producer’ modifies
the verb ’sold,’ not the noun ’price,’ and the
unaffiliated consignee plainly sold the flowers ’for the
account of the producer.’ Indeed, in a consignment
transaction, the consignee does not ever take title to
the flowers, and thus has nothing to sell for its own
account. Rather, the unaffiliated consignee acts as [the
producer’s] agent.
Asocolflores Reply Br. at 14-15. In the context of a consignment
arrangement, the "for the account of" language is not so ambiguous
as to support Commerce’s conclusion that it may reasonably
interpret the statute as requiring all price components to accrue
to the producer/exporter to be deemed elements of the starting
price.
Moreover, Commerce’s accrual requirement is inconsistent with
the provision’s language as a whole. Section 1677a enumerates
numerous expenses, included in the starting price, that do not
accrue to the producer, including international air freight,
Customs’ clearance fees, selling expenses, and other charges.
Congress specifically required that these expenses be deducted from
CEP in subsections (c)(2) and subsection (d). See 19 U.S.C. §
1677a(c)(2)-(d). Again, as these expenses comprise part of the
starting price, they are included in the starting price.
Therefore, if, as Commerce contends, Congress intended to restrict
the CEP starting price to components of that price that actually
accrue to the producer, the adjustments provided for in subsections
(c)(2) and (d) would be superfluous. The canons of statutory
construction provide that "[a] statute should be construed so that
Consol. Court No. 97-11-01988 Page 35
effect is given to all its provisions, so that no part will be
inoperative or superfluous, void or insignificant[.]" SUTHERLAND STAT
CONST § 46.06 (5th ed. 1992). Commerce’s interpretation of the
provision would render its subsections superfluous; therefore, the
Court concludes that Commerce’s interpretation is contrary to
Congress’s intent.
Finally, the SAA provides that, "constructed export price will
be calculated by reducing the price of the first sale to an
unaffiliated customer in the United States by the amount of the
following expenses[.]" SAA at 823. The price of the first sale in
the United States includes the antidumping surcharge, and the
surcharge is not listed as one of the adjusted expenses.
Therefore, the legislative history indicates that the CEP should
include the antidumping surcharge.
The statute’s language and legislative history, examined
according to the accepted canons of construction, indicate that
Congress intended to include antidumping surcharges in the starting
price whether or not the consignee is related to the
producer/exporter. Therefore, Commerce’s application of the
provision is not in accordance with law. The Court remands for a
determination consistent with Congress’s intended meaning.
V. Commerce’s Decision Not to Employ the Net Monetary Correction
in Calculating CV
For the current review, Commerce requested and respondents
provided information regarding the monthly net correction gain or
Consol. Court No. 97-11-01988 Page 36
loss reflected in the respondents’ financial statements. See
Questionnaire (Pub. Doc. 42)(May 16, 1996) at D-40. The monetary
correction "represents the net gain or loss to [a] company caused
by inflation on its net exposed monetary assets and
liabilities[.]"16 Final Results at 53,299. According to
Asocolflores, Colombian law requires companies to use the net
monetary correction to adjust their financial expenses as a
generally accepted accounting principle ("GAAP"). See Final
Results at 53,299.
In calculating costs for the purposes of CV, the antidumping
statute provides that,
Costs shall normally be calculated based on the records
of the exporter or producer of the merchandise, if such
records are kept in accordance with the generally
accepted accounting principles of the exporting country
(or the producing country, where appropriate) and
reasonably reflect the costs associated with the
production and sale of the merchandise.
19 U.S.C. § 1677b(f)(1)(A)(1994).
In the current review, Commerce applied the Colombian net
monetary correction in calculating the depreciation and
amortization expense for CV, but rejected the adjustment in
calculating financial costs. See Final Results at 53,299-300.
Asocolflores argues that the new statutory provision requires
Commerce to use Colombian GAAP unless it makes a specific finding
16
The net monetary correction equals the difference between
monetary assets and liabilities, multiplied by the inflation
rate. Gains result from inflation’s effect on monetary
liabilities, such as accounts payable. Losses are generated as
inflation erodes the value of monetary assets, such as cash.
Consol. Court No. 97-11-01988 Page 37
that Colombian GAAP does not "reasonably reflect the costs
associat[ed] with the production and sale of the merchandise." See
Asocolflores Br. at 38-39 (citing 19 U.S.C. § 1677b(f)(1)(A)).
Therefore, Asocolflores contends that, because Commerce did not
make a specific finding that the net monetary correction
unreasonably distorted or misstated financial costs for purposes of
the CV calculation, Commerce was required to adjust the
respondents’ financial expenses for the inflation correction. See
Asocolflores Br. at 39.
Commerce argues that it recognized the statute’s requirement
that costs normally be calculated in accordance with a company’s
records kept pursuant to the home country’s GAAP, but did not
adjust for the monetary correction of respondents’ financial
expenses because that correction did not pertain to the cost of
flower production. See Def.’s Mem. in Partial Opp’n to Def.-
Intervenors’ Mot. for J. on the Agency R. at 45-46. Thus, Commerce
interprets § 1677b(f)(1)(A) as being limited to production costs.17
The Court reviews Commerce’s interpretation to determine whether it
17
In the Final Results, Commerce explained that "the statute
merely requires that [Commerce] include in its calculation of CV
the cost of manufacturing ’which would ordinarily permit the
production of the merchandise in the ordinary course of
business.’" Final Results at 53,300. In making this assertion,
however, Commerce only cites 19 U.S.C. § 1677b(e)(1) as
authority. See id. Section 1677b(e)(1) provides that one of the
components of CV is the "cost of materials and fabrication . . .
employed in producing the merchandise[.]" 19 U.S.C. §
1677b(e)(1). Commerce fails in its discussion, however, to
acknowledge § 1677b(e)(2), which provides that selling, general,
and administrative expenses are also included in CV, and §
1677b(f)(1)(A), the relevant section at issue.
Consol. Court No. 97-11-01988 Page 38
is in accordance with law.
For the fifth, sixth, and seventh reviews, this Court
sustained Commerce’s rejection of the monetary correction for
Asocolflores’ financial expenses in calculating CV "[b]ecause the
monetary correction does not relate to flower production."
Asociacion, 22 CIT at , 6 F. Supp.2d at 876. That decision,
however, concerned Commerce’s practice under the pre-URAA statute.
Prior to the enactment of the URAA, Commerce’s practice was "to
adhere to an individual firm’s recording of costs in accordance
with GAAP of its home country if . . . satisfied that such
principles reasonably reflect the costs of producing the subject
merchandise."18 Certain Fresh Cut Flowers From Colombia, 61 Fed.
Reg. 42,833, 42,846 (Dep’t Commerce Aug. 19, 1996)(emphasis
provided); see also Furfuryl Alcohol From South Africa, 60 Fed.
Reg. 22,550, 22,556 (Dep’t Commerce May 8, 1995); Silicon Metal
From Brazil, 56 Fed. Reg. 26,977, 26,986 (Dep’t Commerce June 12,
1991).
This court has upheld Commerce’s practice as limited to
18
Commerce based its policy on the following excerpt from the
House Report to the Trade Reform Act of 1973:
[I]n determining whether merchandise has been sold at
less than cost, [Commerce] will employ accounting
principles generally accepted in the home market of the
country of exportation if [Commerce] is satisfied that
such principles reasonably reflect the variable and
fixed costs of producing the merchandise.
H. Rep. No. 93-571, 93rd Cong., 1st Sess. at 71 (1973). See
Camargo Correa Metais, S.A. v. United States, 17 CIT 897, 898
(1993).
Consol. Court No. 97-11-01988 Page 39
production costs. See, e.g., Thai Pineapple Public Co., Ltd. v.
United States, 20 CIT , , 946 F. Supp. 11, 18 (1996), appeal
docketed, No. 97-1437 (Fed. Cir. May 15, 1997); Micron Technology,
Inc. v. United States, 19 CIT 829, 833, 893 F. Supp. 21, 28,(1995);
Camargo Correa Metais, S.A. v. United States, 17 CIT 897, 898
(1993). But cf. Laclede Steel Co. v. United States, 18 CIT 965,
975 (1994)(characterizing Commerce’s practice as used in connection
with the firm’s "financial position or actual costs"); Ipsco, Inc.
v. United States, 22 CIT , , 701 F. Supp. 236, 238, n.3
(1988).
The current provision, however, is clearly not limited to
production costs. Nineteen U.S.C. § 1677b(f)(1)(A) adopted and
enhanced Commerce’s pre-URAA practice, clarifying that Commerce
will calculate costs based on the records of the producer where
such records are in accordance with the home country’s GAAP and
"reasonably reflect the costs associated with the production and
sale of the merchandise." (Emphasis provided.) Moreover, in
discussing § 1677b(f)(1)(A), the SAA states that "[c]osts shall be
allocated using a method that reasonably reflects and accurately
captures all of the actual costs in producing and selling the
product under . . . review." SAA at 835 (emphasis provided).
Accordingly, because the statute’s language and legislative history
indicate that Congress did not intend to limit § 1677b(f)(1)(A) to
production costs, Commerce’s interpretation of the provision is not
permissible under the first prong of Chevron.
The proper question, then, is whether the respondents’
Consol. Court No. 97-11-01988 Page 40
financial costs relate to the production and sale of the subject
flowers. If so, Commerce would either have to apply the Colombian
monetary correction or explain how it would distort these costs.
See Borden, Inc. v. United States, 22 CIT , , 4 F. Supp.2d
1221, 1234 (1998)(holding that 19 U.S.C. § 1677b(f)(1)(A) "is
conditional, requiring Commerce to use the company’s own
calculation only if satisfied with the accuracy of the cost
representations they render.").
The SAA clearly recognizes that financial costs may relate to
production costs in discussing § 1677b(f)(1)(A)’s scope:
In determining whether to accept the cost allocation
methods proposed by a specific producer, Commerce will
consider the production cost information available to the
producer and whether such information could reasonably be
used to compute a representative measure of the
materials, labor and other costs, including financing
costs, incurred to produce the subject merchandise, or
the foreign like product. . . . Also, if Commerce
determines that costs, including financing costs, have
been shifted away from production of the subject
merchandise, or the foreign like product, it will adjust
costs appropriately, to ensure they are not artificially
reduced.
SAA at 835 (emphasis provided).
In addition, Commerce itself has recognized that financial
expenses in this review may relate to the production and sale of
the subject flowers. As noted above, Commerce claims to treat
credit expenses as a type of "selling expense" for purposes of
SG&A. See supra p.30 (citing Def.’s Mem. in Partial Opp’n to Def.-
Intervenors’ Mot. for J. on the Agency R. at 39). Credit expenses
are financial expenses. Therefore, financial expenses may be
characterized as selling expenses.
Consol. Court No. 97-11-01988 Page 41
Moreover, in its questionnaire to respondents, Commerce
specifically requests "information regarding total financial
expenses . . . incurred in connection with the production and sale
of all products." Dep’t of Commerce Questionnaire (Pub. Doc.
42)(May 16, 1996) at D-39. Therefore, it is clear that Commerce
recognizes that financial expenses may relate to production and
sale.
Therefore, unless Commerce can demonstrate that respondents’
financial expenses do not relate to the production and sale of the
subject flowers, Commerce must either apply the net monetary
correction to the respondents’ financing costs or explain how the
adjustment distorts such costs. The Court remands for Commerce to
make a determination consistent with this standard.
VI. Commerce’s Calculation and Application of the CEP Profit Ratio
Nineteen U.S.C. § 1677a(d)(3) instructs Commerce to deduct the
profit allocated to various U.S. selling expenses from CEP.
Section 1677a(f) provides that "profit" for purposes of subsection
(d)(3) is to be calculated by multiplying "total actual profit" by
the ratio of "total United States expenses" to "total expenses"
(the "CEP profit ratio"). See 19 U.S.C. § 1677a(f).19
19
19 U.S.C. § 1677a(f) states,
(1) In general. For purposes of subsection (d)(3),
profit shall be an amount determined by multiplying the
total actual profit by the applicable percentage.
(2) Definitions. For purposes of this subsection:
Consol. Court No. 97-11-01988 Page 42
A. Commerce’s Decision Not to Include U.S. Credit Expenses
in "Total Expenses"
In calculating the CEP profit ratio, Commerce did not include
U.S. credit expenses in its calculation of "total expenses," but
did include U.S. credit expenses in "total United States expenses."
See Asocolflores Br. at 45. Asocolflores argues that by including
(A) Applicable percentage. The term "applicable
percentage" means the percentage determined by dividing
the total United States expenses by the total expenses.
(B) Total United States expenses. The term "total
United States expenses" means the total expenses
described in subsection (d)(1) and (2).
(C) Total expenses. The term "total expenses" means
all expenses in the first of the following categories
which applies and which are incurred by or on behalf of
the foreign producer and foreign exporter of the
subject merchandise and by or on behalf of the United
States seller affiliated with the producer or exporter
with respect to the production and sale of such
merchandise:
(i) The expenses incurred with respect to the subject
merchandise sold in the United States and the foreign
like product sold in the exporting country if such
expenses were requested by the administering authority
for the purpose of establishing normal value and
constructed export price.
(ii) The expenses incurred with respect to the
narrowest category of merchandise sold in the United
States and the exporting country which includes the
subject merchandise.
(iii) The expenses incurred with respect to the
narrowest category of merchandise sold in all countries
which includes the subject merchandise.
(D) Total actual profit. The term "total actual
profit" means the total profit earned by the foreign
producer, exporter, and affiliated parties described in
subparagraph (C) with respect to the sale of the same
merchandise for which total expenses are determined
under such subparagraph.
Consol. Court No. 97-11-01988 Page 43
U.S. credit expenses in "total United States expenses," but not in
"total expenses," Commerce impermissibly over-allocated profit to
"total United States expenses" in violation of the plain language
of 19 U.S.C. § 1677a(f). See id. at 45-46.
As Asocolflores correctly demonstrates, credit expenses are
included in "total United States expenses" under § 1677a(f)(2)(B)
because credit expenses are deducted from CEP pursuant to §
1677a(d)(1)(B). See id. at 45. According to Asocolflores, credit
expenses must also be included in "total expenses" because,
pursuant to § 1677a(f)(2)(C)(i), "[t]he expenses incurred with
respect to the subject merchandise sold in the United States" must
necessarily include U.S. credit expenses. See id. at 46.
Commerce has provided no reasoned basis for its decision not
to include U.S. credit expenses in "total expenses." Therefore,
the Court remands to Commerce to reconsider this issue.
B. Commerce’s Decision Not to Deduct Credit Expense from
"Total Actual Profit"
According to Asocolflores, Commerce did not deduct credit
expense in calculating "total actual profit." See Asocolflores Br.
at 46. Asocolflores reasons that, since credit expense is
considered a United States expense, it must also be treated as an
expense for purposes of calculating "total actual profit." See id.
"It makes no sense to allocate profit to credit expense while not
considering credit an expense for purposes of calculating that
profit." Id.
The Court is unable to discern from the record whether
Consol. Court No. 97-11-01988 Page 44
Commerce in fact did fail to calculate "total actual profit" net of
credit expenses. Moreover, Commerce has not provided a reasoned
response to Asocolflores’ argument. Therefore, the Court remands
the matter, instructing Commerce to reconsider and explain its
treatment of credit expenses in calculating "total actual profit."
C. Commerce’s Decision to Compute the CEP Profit Ratio on an
Annual Rather Than on a Monthly Basis
For purposes of CEP profit under 19 U.S.C. § 1677a(f),
Commerce calculated the rate on an annual, rather than on a
monthly, basis. See Final Results at 53,295. As Asocolflores
concedes, neither the provision nor its legislative history
indicates Congress’s specific intent with regard to the time period
over which the CEP profit rate is to be allocated. See
Asocolflores Br. at 48. Therefore, the Court reviews whether
Commerce’s construction is reasonable under the second prong of
Chevron.
Asocolflores argues that Commerce’s use of an annual rate is
unreasonable "because it does not fulfill the purpose of the
statute of equilibrating constructed export price with export
price." See Asocolflores Br. at 48-49 (citing SAA at 823 ("The
deduction of profit is a new adjustment in U.S. law, consistent
with the language of the Agreement, which reflects that constructed
export price is now calculated to be, as closely as possible, a
price corresponding to an export price between non-affiliated
exporters and importers.")). Asocolflores points out that, due to
specific flower-giving holidays, the demand for fresh cut flowers
Consol. Court No. 97-11-01988 Page 45
in the United States--and consequently the profits arising
therefrom--vary significantly from month-to-month. See id. at 49.
Therefore, Asocolflores contends, "[t]he resulting constructed
export price does not resemble ’as closely as possible’
contemporaneous export prices, because the profit rate on export
prices also vary with flower-giving holidays, and are not constant
year-round." Id. at 50.
Asocolflores’ argument is not persuasive. First, as FTC
argued before Commerce, an average rate of profit still inherently
accounts for monthly variation. See Final Results at 53,295.
Second, Asocolflores fails to explain how use of an annual profit
rate for CEP violates the statute’s objective of corresponding CEP
with EP.
Asocolflores also contends that Commerce failed to provide a
reasoned response for its decision. See Asocolflores Br. at 51.
The Court disagrees. In the Final Results, Commerce pointed out
that the CEP profit calculation, as defined by § 1677a(f), "is not
intended to be based on the profit of particular U.S. sales."
Final Results at 53,295. Moreover, based on the provision’s use of
the term "total actual profit," Commerce explained that it
interprets the statute to normally require an overall profit for
home market and United States sales. See id. Therefore, Commerce
"use[s] an average profit rate for those U.S. and home market sales
that were made." Id.
Nineteen U.S.C. § 1677a(f) explains that CEP profit is to be
calculated by multiplying "total actual profit" by the ratio of
Consol. Court No. 97-11-01988 Page 46
"total United States expenses" to "total expenses." Both "total
actual profit" and "total expenses" include data for both U.S. and
home market sales. See 19 U.S.C. § 1677a(f)(2)(C) & (D).
Therefore, Congress clearly did not intend for CEP profit to be
based on U.S. sales alone. Morever, the Court finds Commerce’s
interpretation of "total actual profit" to indicate the presumption
of a single profit rate to be reasonable. Cf. Toyota Motor Sales,
U.S.A., Inc. v. United States, 22 CIT , , 15 F. Supp.2d 872,
891 (1998)(upholding Commerce’s construction of 19 U.S.C. §§
1677a(d)(3) and (f) as requiring a single, aggregated CEP profit
even where there are multiple lines of subject merchandise and
foreign like product). Therefore, based on the terms of the
provision, the Court finds Commerce’s interpretation to be
reasonable.
The Court sustains Commerce’s determination to calculate CEP
profit as a single, annual rate.
VII. Commerce’s Decision to Impute a Consolidated General and
Administrative Expense Rate for All Farms of the HOSA Group in
Calculating the Cost of Production for CV
"The HOSA Group consists of several related companies
dedicated to the production and sale of fresh cut flowers[.]" See
HOSA’s July 12, 1996 Response (Pub. Doc. 75) at A-9. Only one of
the HOSA Group companies, Innovacion Andina, S.A., performs bouquet
operations on top of growing flowers subject to the antidumping
duty order. See id. To make the bouquets, Innovacion Andina
purchases flowers from non-HOSA Group farms. See Asocolflores Br.
Consol. Court No. 97-11-01988 Page 47
at 52. For purposes of the ninth administrative review, Commerce
treated the farms of the HOSA Group as a single entity. See Final
Results at 53,300-301. Therefore, in calculating the costs for
computing CV, Commerce applied a consolidated rate of general and
administrative ("G&A") expenses for the entire group, which was the
average of each farm’s separate G&A expense. See id. at 53,301.
Asocolflores argues that Commerce’s G&A expense methodology
for the HOSA Group "is unlawful under the second prong of the
Chevron standard because it fails to fulfill the statutory purpose
of calculating dumping margins using the most accurate information
available." Asocolflores Br. at 53. According to Asocolflores,
because Innovacion was the only HOSA Group farm to purchase flowers
for bouquet operations, and because its G&A expense rate was
significantly lower than those of the other HOSA Group farms,
Commerce should have used Innovacion Andina’s separate G&A expense
rate, rather than applying the HOSA Group average. See id. at 52-
53.
Commerce argues that its use of a single, average G&A expense
rate for the HOSA Group is consistent with the agency’s collapsing
and G&A expense allocation practices, both of which have been
sustained by this Court.
Adhering to its collapsing practice, Commerce treated the HOSA
Group as one company, since it is composed of several related
companies. See Def.’s Mem. in Partial Opp’n to Def.-Intervenors’
Mot. for J. on the Agency R. at 52. This Court has held that
Commerce’s decision to define "company" to include several closely
Consol. Court No. 97-11-01988 Page 48
related companies is a permissible application of the antidumping
statute. See Queen’s Flowers de Colombia v. United States, 21 CIT
, , 981 F. Supp. 617, 622 (1997).20
Moreover, in calculating a company’s G&A expenses, Commerce
finds the ratio of the company’s total G&A expenses relative to the
total cost of goods sold by the company and applies this ratio to
the cost of manufacture of each product. See Final Results at
53,300. In other words, Commerce treats G&A expenses as "expenses
incurred for the operation of the corporation as a whole and not
directly related to the manufacture of a particular product." Id.This Court has recognized that G&A expenses relate to the
activities of a company as a whole. See U.S. Steel Group, 22 CIT
at , 998 F. Supp. at 1154.21
Therefore, Commerce’s calculation of a single G&A expense rate
for the HOSA Group is consistent with the agency’s affirmed
practices of treating related companies as a single entity and
calculating the G&A expenses for a company as a whole. Moreover,
Commerce’s calculation of the HOSA Group G&A expense rate is
consistent with the objective of promoting accuracy in the
determination of dumping margins. Commerce explained that it does
"not allow companies to pick and choose which G&A expenses and
20
Although the Queen’s Flowers decision involved pre-URAA
law, the amended provision does not mandate a different
conclusion.
21
Although the U.S. Steel decision involved the pre-URAA law,
the amended provision does not mandate a different conclusion
because the definition of G&A expenses has not changed.
Consol. Court No. 97-11-01988 Page 49
which divisions of the company will be used in accounting for this
expense." Final Results at 53,301. If Commerce treated Innovacion
Andina’s bouquet operation G&A expenses as distinct from the rest
of the HOSA Group’s G&A expenses, it would improperly overstate the
HOSA Group’s G&A expense rate. Therefore, Commerce’s calculation
of a consolidated G&A expense rate for the entire HOSA Group is a
reasonable application of the statute. The Court sustains
Commerce’s practice.
Conclusion
This case having been duly submitted for decision and the
Court, after due deliberation, having rendered a decision herein;
now in conformity with said decision it is hereby
ORDERED that the Department of Commerce’s final determination
in Certain Fresh Cut Flowers From Colombia, 62 Fed. Reg. 53,287(Dep’t Commerce, Oct. 14, 1997) is sustained in part and remanded
in part; and it is further
ORDERED that the issue of Commerce’s instruction to
respondents not to offset expenses with interest income in
calculating indirect selling expenses is remanded for
reconsideration and to allow respondents to submit information
concerning the interest income offset and for Commerce to make
adjustments to constructed export price, as appropriate, based upon
this information; and it is further
ORDERED that the issue of Commerce’s rejection of the
constructed value "profit cap" in calculating constructed value is
Consol. Court No. 97-11-01988 Page 50
remanded for Commerce to apply 19 U.S.C. § 1677b(e)(2)(B)(iii) in
a manner consistent with this Court’s opinion; and it is further
ORDERED that the issue of Commerce’s decision to deduct
imputed credit expenses from U.S. price but not from constructed
value is remanded for Commerce to reconsider and to provide a more
detailed explanation of whether it accounted for differences in
credit expenses as a circumstance of sale and of its treatment of
credit expenses to U.S. and third markets for the purpose of
constructed value; and it is further
ORDERED that the issue of Commerce’s decision to exclude
antidumping surcharges paid to unrelated consignees from
constructed export price is remanded for a determination consistent
with this Court’s opinion; and it is further
ORDERED that the issue of Commerce’s decision not to employ
the Colombian net monetary correction in calculating constructed
value is remanded for Commerce to either apply the net monetary
correction to the respondents’ financing costs or to explain how
the adjustment distorts such costs unless Commerce can demonstrate
that the respondents’ financing expenses do not relate to the
production and sale of the subject flowers; and it is further
ORDERED that the issue of Commerce’s decision not to include
U.S. credit expenses in "total expenses" is remanded for
reconsideration; and it is further
ORDERED that the issue of Commerce’s decision not to calculate
"total actual profit" net of credit expense is remanded for
reconsideration and for Commerce to explain its treatment of credit
Consol. Court No. 97-11-01988 Page 51
expenses in calculating "total actual profit;" and it is further
ORDERED that remand results are due on Monday, March 29, 1999;
comments and responses thereto are due on Wednesday, April 28,
1999; any rebuttal comments are due on Thursday, May 13, 1999; and
it is further
ORDERED that Commerce’s final determination is sustained in
all other respects.
Donald C. Pogue
Judge
Dated: January 27, 1999
New York, New York