Alloy Piping Products, Inc. v. United States , 28 Ct. Int'l Trade 1805 ( 2004 )

Slip Op. 04 - 134
UNITED STATES COURT OF INTERNATIONAL TRADE
- - - - - - - - - - - - - - - - - - - -x
ALLOY PIPING PRODUCTS, INC., FLOWLINE
DIVISION, MARKOVITZ ENTERPRISES, INC., :
GERLIN, INC., and TAYLOR FORGE STAIN-
LESS, INC., :
Plaintiffs, :
Consolidated
v. : Court No. 02-00124
UNITED STATES OF AMERICA and THE UNITED:
STATES DEPARTMENT OF COMMERCE,
:
Defendants.
:
- - - - - - - - - - - - - - - - - - - -x
Memorandum & Order
[Upon motion(s) for judgment on the agency
record, remand to the International Trade
Administration for recalculation of general
and administrative expenses and reconsider-
ation of indirect selling expenses.]
Decided: October 28, 2004
Collier Shannon Scott, PLLC (David A. Hartquist and Jeffrey S.
Beckington) for the plaintiffs.
Miller & Chevalier Chartered (Peter J. Koenig) for Ta Chen
Stainless Steel Pipe, Ltd.
Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director, and Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice
(Richard P. Schroeder); and Office of Chief Counsel for Import
Administration, U.S. Department of Commerce (Rachael E. Wenthold),
of counsel, for the defendants.
AQUILINO, Judge: This case consolidates complaints filed
pursuant to 19 U.S.C. §1516a(a)(2)(A)(i)(I) and (2)(B)(iii) on
behalf of Ta Chen Stainless Steel Pipe, Ltd. ("TCSSPL"), CIT No.
02-00115, and on behalf of the above-encaptioned plaintiffs, each
Consolidated Page 2
Court No. 02-00124
seeking judicial review of and relief from Certain Stainless Steel
Butt-Weld Pipe Fittings From Taiwan: Final Results of Antidumping
Duty Administrative Review, 66 Fed.Reg. 65,899 (Dec. 21, 2001),
promulgated by the International Trade Administration, U.S. Depart-
ment of Commerce ("ITA"). The relief they seek is posited in
motions pursuant to USCIT Rule 56.2 for judgment upon the agency
record compiled in connection with that determination.
The jurisdiction of the court to hear and decide the
parties' motions is based upon 28 U.S.C. §§ 1581(c), 2631(c).
I
TCSSPL's complaint1 alleges that it is a Taiwanese
producer and exporter of stainless steel butt-weld pipe fittings
and that it was a party to the ITA administrative review at issue,
which resulted in a weighted-average margin of dumping by it of
6.11 percent. See 66 Fed.Reg. at 65,900. The complaint and Rule
56.2 motion contest this final result on grounds (a) that the ITA
ignored inventory-carrying and credit costs incurred by TCSSPL's
subsidiary, Ta Chen International Corp. ("TCI"), in the United
States, thereby overstating profit; (b) that the agency failed to
make a level-of-trade adjustment; and (c) that the ITA's failure to
1
Alloy Piping Products, Inc. etc. et al. obtained leave to
intervene in CIT No. 02-00115 as parties defendant. TCSSPL did
not seek similar leave in plaintiffs' subsequently-filed, above-
numbered action, into which No. 02-00115 has now been consoli-
dated.
Consolidated Page 3
Court No. 02-00124
allocate TCI freight costs between warehouses only to sales of sub-
ject merchandise was not in accordance with law.2
As recited by this motion itself, the statutory standard
for the court's review in an action such as this is whether the
agency's determination is "unsupported by substantial evidence on
the record, or otherwise not in accordance with law". 19 U.S.C. §
1516a(b)(1)(B)(i).
A
The ITA's Final Results adopt its December 10, 2001
Issues and Decisions Memorandum ("DecMemo") for the underlying
administrative review and "list[] the issues raised and to which we
have responded, all of which are in the Decision Memorandum". 66
Fed.Reg. at 65,900. That memorandum, the contents of which have
been reproduced along with TCSSPL's motion, states that it is
the Department's practice to calculate the CEP profit
ratio based on actual expenses, not imputed expenses. In
a recent antidumping duty administrative review, the
Department articulated that "normal accounting principles
only permit the deduction of actual booked expenses, not
imputed expenses, in calculating profit. Inventory-
carrying costs and credit expenses are imputed expenses,
not actual booked expenses, so we have established a
practice of not including them in the calculation of
total actual profit."3
2
Contingent upon affirmative relief on these claims is TCS-
SPL's prayer that the underlying antidumping-duty order, pub-
lished at 58 Fed.Reg. 33,250 (June 16, 1993), be revoked "on
the basis of three years . . . of sales of fittings by [it] at
not less than fair value, which qualifies [it] for revocation
under [the ITA]'s regulation 19 CFR §351.222(b)." TCSSPL Rule
56.2 Memorandum, p. 22.
3
Id., Appendix, Tab 10, p. 17. The acronym "CEP" refers to
constructed export price pursuant to 19 U.S.C. §1677a(b).
Consolidated Page 4
Court No. 02-00124
That is, the crux of the controversy is the refusal to factor
imputed expenses. This practice apparently draws upon Import
Administration Policy Bulletin 97/1, Calculation of Profit for
Constructed Export Price, and upon certain, recent caselaw, e.g.,
U.S. Steel Group v. United States, 225 F.3d 1284, 1290-91 (Fed.Cir.
2000); Ausimont SPA v. United States, 25 CIT 865, 893 (2001).4
That caselaw is predicated, of course, upon the Trade
Agreements Act of 1979, as amended, in particular the special rule
for determining profit per 19 U.S.C. §1677a(f) in the context of
constructed export price. TCSSPL contends, among other things,
that the ITA's approach (1) is not in accordance with that section
of the statute, (2) violates the statutory mandate to calculate CEP
profit only for subject merchandise, and (3) violates the obliga-
tions of the United States under Articles 2.3 and 2.4 of the Agree-
4
The DecMemo does point out, however, that in both SNR Roule-
ments v. United States, 24 CIT 1130, 118 F.Supp.2d 1333 (2000),
and FAG Italia, S.p.A. v. United States, 24 CIT 1311 (2000), the
court
held that Commerce's CEP methodology with respect to
imputed expenses was not in accordance with law. The
United States has appealed both judgments. However, in
Ausimont SPA v. United States, . . . the Court sustained
Commerce's methodology. Consequently, until such time as
these decisions are final, the Department will continue
to apply its current methodology in excluding imputed
expenses when calculating profit.
TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 18.
Insofar as the undersigned has been able to determine, the
government's appeals in SNR and FAG remain sub judice under Fed-
eral Circuit docket numbers 01-1327 and 02-1096, respectively.
Consolidated Page 5
Court No. 02-00124
ment on the Implementation of Article VI of the General Agreement
on Tariffs and Trade 1994 ("WTO Antidumping Agreement"). See
TCSSPL Rule 56.2 Memorandum, pp. 3-13.
(1)
According to the statute, 19 U.S.C. §1677a(b), con-
structed export price means the price at which the subject
merchandise is first sold in the United States to a purchaser not
affiliated with the producer or exporter, as adjusted under subsec-
tions (c) and (d) of 1677a. For the purposes of subsection (d),
the price used to establish CEP shall be reduced by "the profit
allocated to the expenses described in paragraphs (1) and (2)" 5,
which include the amount of any
(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) . . . selling expenses that the seller pays on
behalf of the purchaser; and
(D) . . . selling expenses not deducted under sub-
paragraph (A), (B), or (C)[.]
19 U.S.C. §1677a(d)(1). Section 1677a(f) sets forth the special
rule for determining profit as follows:
(1) In general
For purposes of subsection (d)(3) of this section,
profit shall be an amount determined by multiplying the
total actual profit by the applicable percentage.
5
19 U.S.C. §1677a(d)(3).
Consolidated Page 6
Court No. 02-00124
(2) Definitions
For purposes of this subsection:
(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 subsec-
tion (d)(1) and (2) of this section.
(C) Total expenses
The term "total expenses" means all ex-
penses in the first of the following categor-
ies which applies and which are incurred by
or on behalf of the foreign producer and for-
eign 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 re-
spect 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 [ITA]
for the purpose of establishing normal
value and constructed export price.
(ii) The expenses incurred with re-
spect to the narrowest category of mer-
chandise 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.
Consolidated Page 7
Court No. 02-00124
(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.
In other words, CEP profit6 equals total profit times total U.S.
expenses divided by total expenses. TCSSPL is of the view that
total expenses should include those that are imputable, while the
defendants contend that that approach would amount to double
counting of interest. Compare TCSSPL Rule 56.2 Memorandum, pp. 5-6
with Defendants' Memorandum, pp. 38-39.
As this court reads the foregoing statutory language,
Congress has not directly spoken to the precise question at issue,
whereupon it must determine whether the ITA's interpretation "is
based on a permissible construction of the statute." Chevron
U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837, 842-43 (1984). See, e.g., U.S. Steel Group v. United States,
225 F.3d at 1286-87. In that case, the court upheld the agency's
interpretation of section 1677a(f)(2)(C), supra, to include "move-
ment expenses" in the denominator of the CEP ratio because the
statute "does not require or even vaguely suggest symmetry between
the definitions of U.S. expenses and total expenses." 225 F.3d at
1290 (internal quotation marks deleted). Moreover, total U.S.
6
The parties' papers refer to "CEP profit" instead of "pro-
fit" and "CEP profit ratio" rather than "applicable percentage".
Consolidated Page 8
Court No. 02-00124
expenses are not a subset of total expenses because the "statute
itself defines total U.S. expenses distinctly, both structurally
and substantively, from total expenses." Id. at 1289. In Timken
Co. v. United States, 26 CIT , 240 F.Supp.2d 1228 (2002), aff'd,
354 F.3d 1334 (Fed.Cir. 2004), the court upheld the ITA's decision
not to impute expenses in calculating total expenses:
. . . [A]lthough the definitions of both total U.S.
expenses and total expenses direct Commerce to include a
figure for selling expenses, it is not clear from the
statute that these figures need to be precisely the same.
26 CIT at , 240 F.Supp.2d at 1246.
TCSSPL reads Thai Pineapple Canning Indus. Corp. v.
United States, 23 CIT 286 (1999), and Ausimont SPA v. United
States, supra, to
indicate that the CEP Profit of the subject merchandise
must be accurately calculated, including considering any
unaccounted for imputed costs as to the subject mer-
chandise in particular.
TCSSPL Reply Brief, p. 5. In Thai Pineapple, the court remanded
the issue of imputed expenses to the ITA with instructions to
explain on the record whether the excluded imputed expenses in the
denominator of the CEP profit ratio were in fact a part of an
expense which was allocated to U.S. sales. See 23 CIT at 296-97.
And, if that was the case, then the agency would need to support
its conclusion with citations to that record. Id. at 296.
Consolidated Page 9
Court No. 02-00124
. . . It may not be an unreasonable interpretation to
conclude that imputed expenses should be excluded in the
actual profit calculation, if that construction can be
squared with the necessity of a properly calculated
statutory ratio. It is a proper ratio that ensures prop-
er allocation of profit to U.S. sales. If the profit
allocable to CEP is somewhat lower because U.S. expenses
are made higher by the addition of imputed expenses, this
would not seem to be antithetical to the statute. There
is also nothing that categorically prevents the inclusion
of imputed expenses. Rather, imputed expenses should be
omitted from actual profit if they duplicate expenses
already accounted for. Their inclusion is not per se
incompatible with the use of the word "actual." The
question is whether the imputed expenses represent some
real, previously unaccounted for, expense.
Id. After receipt of the results of the remand, the court stated:
Theoretically, the total expenses denominator would
reflect the interest expenses captured in the U.S. sales
expenses numerator specified in 19 U.S.C. §1677a(f)(2)-
(B), as well as "home" market interest expenses, because
the total expenses denominator is derived from a net unit
figure based on all company interest expenses without
regard to sales destination. . . . The issue is whether
there is some peculiarity of this case that belies the
relevancy of the theory.
Thai Pineapple Canning Indus. Corp. v. United States, 24 CIT 107,
115 (2000), aff'd in part, rev'd in part on other grounds, 273 F.3d
1077 (Fed.Cir. 2001). The court(s) sustained the ITA's methodology
for CEP profit calculation because the plaintiffs did not demon-
strate "any great discrepancy". Id. The court(s), however, did
not address what would be a "truly distortive situation[]". Id.,
n. 13. Cf. SNR Roulements v. United States, 28 CIT , , Slip
Op. 04-100, p. 9 (Aug. 10, 2004):
Consolidated Page 10
Court No. 02-00124
. . . Commerce's findings may be challenged (1) by
demonstrating that a distortion was caused by different
expenses over time or (2) that the inclusion of imputed
expenses will not result in double counting because there
were no actual U.S. expenses included in the actual book-
ed expenses.
Here, TCSSPL claims that there is an "enormous" discrep-
ancy; namely, imputed expenses total 17.3 percent, whereas actual
interest costs are 1.37 percent. TCSSPL Rule 56.2 Memorandum, p.
7. It further asserts that including imputed expenses in the
denominator of the CEP profit ratio would eradicate the dumping
margin. See id. at 13.
This court cannot find, however, that the "imputed
expenses represent some real, previously unaccounted for, expenses"
because the actual interest cost, 1.37 percent, is allocated to
selling expenses, which are included in the figure for "total
expenses". See Plaintiffs' Reply Brief, Appendix 6, lines 651-92.
That imputed expenses are greater than actual expenses does not
necessarily engender an actionable distortion. Compare Ta Chen
Stainless Steel Pipe, Ltd. v. United States, 28 CIT , , Slip
Op. 04-46, p. 22 (May 4, 2004)("The evidence of record suggests
that the agency's CEP profit methodology in this case . . . may
have distorted the allocation of profit to TCI's U.S. sales"7),
7
That issue was remanded to the ITA by the court in Ta Chen,
and, on August 26, 2004, the agency filed its Final Results Pur-
suant to Remand, which state at pages 11-12, in pertinent part,
that it tested the plaintiff's thesis and found that approach
"flawed":
(footnote continued)
Consolidated Page 11
Court No. 02-00124
with SNR Roulements v. United States, supra, Slip Op. 04-100, pp.
9-10 ("SNR has failed to demonstrate any peculiarity or discrepancy
which necessitates the inclusion of imputed expenses because they
are not otherwise accounted for").
(2)
As recited above, section 1677a(f)(2)(C) provides that
the term "total expenses" means all expenses in the first of three
enumerated subcategories which applies. TCSSPL points out that the
ITA normally
will use the aggregate of expenses and profit for all
subject merchandise sold in the United States and all
foreign like products sold in the exporting country.
TCSSPL Rule 56.2 Memorandum, p. 7, quoting 19 C.F.R. §351.402(d)(1)
(underscoring in original). But it misreads the legislative
history of the Uruguay Round Agreements Act, Pub. L. No. 103-465,
108 Stat. 4809 (Dec. 8, 1994), taking the position "that profit on
. . . According to the Department's methodology, the
imputed interest expenses are already reflected in the
recognized financial expenses, which is included in the
cost of merchandise in the denominator and the multiplier
of the CEP profit equation. By adding the imputed in-
terest expenses to the denominator and the multiplier,
these amounts are then double-counted in the denominator
and in the multiplier, such that the denominator and the
multiplier would have both the recognized amount and the
imputed measurement of the respondent's interest expens-
es. Furthermore, the CEP profit equation applied . . .
is not accurate or symmetrical. By adding only the U.S.
imputed interest expenses, but ignoring the home market
imputed interest expenses and any imputed expenses re-
lated to production, purchasing, financing, or adminis-
trative activities, this version places undue emphasis on
Ta Chen's imputed U.S. selling expenses.
Consolidated Page 12
Court No. 02-00124
subject merchandise is to be used in the CEP Profit deduction."
Id. Rather, H.R. Rep. No. 103-826(I) (1994) states at page 81:
. . . No distortion in the profit allocable to U.S. sales
is created if total profit is determined on the basis of
a broader product-line than the subject merchandise, be-
cause the total expenses are also determined on the basis
of the same expanded product line. Thus, the larger
profit pool is multiplied by a commensurately smaller
percentage.
Accord: Statement of Administrative Action, H.R. Doc. No. 103-316,
vol. 1, p. 825 (1994). Hence, this court cannot conclude that the
agency did not act in accordance with law when it decided to use a
broader product line, instead of solely the subject merchandise, in
calculating total actual profit.
(3)
TCSSPL contends that the ITA's exclusion of imputed
expenses violates Articles 2.3 and 2.4 of the WTO Antidumping
Agreement because, "[r]ead together, these provisions require that
allowances made for CEP profit relate to the subject merchandise."
TCSSPL Rule 56.2 Memorandum, p. 12. The court does not concur.
Recognizing that U.S. statutes should not be read so as to be in
conflict with the country's international obligations 8, the court
8
See, e.g., Federal Mogul Corp. v. United States, 63 F.3d
1572, 1581 (Fed.Cir. 1995); Murray v. Schooner Charming Betsy,
6 U.S. (2 Cranch) 64, 118 (1804). See also Statement of Admini-
strative Action, H.R. Doc. No. 103-316, vol. 1, p. 669 (1994):
(footnote continued)
Consolidated Page 13
Court No. 02-00124
does not find that the agency's exclusion herein runs afoul of the
language in either GATT article.
B
TCSSPL points out that TCI is a "master distributor"9,
responsible for all selling and distribution in the U.S. market to
other distributors.
. . . It is TCI in the United States, not TC[SSPL], that
takes the [] Taiwan mega-shipments . . . and performs the
enormous selling effort associated with 22,998 individ-
ual TCI[] sales (as well as shipment and packing there-
of) to unaffiliated U.S. customers. As a result, TC-
[SSPL]'s selling effort for its much smaller home market
sales, per unit of home market sale, far exceeds that of
its sales to its U.S. affiliate, with such differences in
selling effort warranting an LOT [level-of-trade] ad-
justment. The fact that TC[SSPL] is dealing with . . .
TCI . . . means far less effort is required, as compared
to dealing with its many unaffiliated home market cus-
tomers . . ..
TCSSPL Rule 56.2 Memorandum, pp. 14-15 (citations omitted).
According to the statute, constructed export price shall
be
increased or decreased to make due allowance for any
difference . . . between . . .[it] and [normal value]
. . . The implementing bill, including the authority
granted to federal agencies to promulgate implementing
regulations, is intended to bring U.S. law fully into
compliance with U.S. obligations under those agreements.
The bill accomplishes that objective with respect to
federal legislation by amending existing federal statutes
that would otherwise be inconsistent with the agreements
and, in certain instances, by creating entirely new
provisions of law.
9
TCSSPL Rule 56.2 Memorandum, p. 14.
Consolidated Page 14
Court No. 02-00124
. . . that is shown to be wholly or partly due to a
difference in level of trade . . . , if th[at] difference
. . .
(i) involves the performance of different
selling activities; and
(ii) is demonstrated to affect price
comparability, based on a pattern of consist-
ent price differences between sales at differ-
ent levels of trade in the country in which
normal value is determined.
19 U.S.C. §1677b(a)(7)(A). Subsection (a)(7)(B) proceeds to pro-
vide for an offset
[w]hen normal value is established at a level of trade
which constitutes a more advanced stage of distribution
than the level of trade of the constructed export price
. . ..
Cf. 19 C.F.R. §351.412(c)(2) (2001):
Differences in levels of trade. The Secretary will
determine that sales are made at different levels of
trade if they are made at different marketing stages (or
their equivalent). Substantial differences in selling
activities are a necessary, but not sufficient, condition
for determining that there is a difference in the stage
of marketing. Some overlap in selling activities will
not preclude a determination that two sales are at
different stages of marketing.
The evidence on the record led the ITA to conclude that
the sales of the subject merchandise were made at the same level of
trade. That is, TCSSPL's position did "not withstand close
scrutiny." TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 13.
See Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan:
Preliminary Results of Antidumping Duty Administrative Review, 66
Fed.Reg. 36,555, 36,558-59 (July 12, 2001). Those Preliminary Re-
Consolidated Page 15
Court No. 02-00124
sults were affirmed in the agency's subsequent DecMemo on grounds,
inter alia, that TCSSPL holds inventory in Taiwan prior to shipment
to TCI, as well as to home-market customers; that it did not
perform more selling functions for sales in Taiwan than for sales
to the United States; that, while TCSSPL incurs seller's risk and
handles after-sales service in the home market but not for sales
here, this did not outweigh the functions it performed for those
sales to TCI; and that TCSSPL had not provided enough evidence to
reach the contrary conclusion that its sales at home and to TCI
were in fact at different levels of trade. See TCSSPL Rule 56.2
Memorandum, Appendix, Tab 10, pp. 12-14.
Upon review of the record relevant to this agency
reasoning, the court finds sufficient evidence in support thereof.
As for TCSSPL's claim that the ITA erred by including in its
analysis "movement" expenses rather than solely "selling" ex-
penses10, the statute does indeed segregate them in the context of
constructed export price. Compare 19 U.S.C. §1677a(c)(2)(A) (CEP
shall be reduced by "any additional costs, charges, or expenses,
and United States import duties, which are incident to bringing the
subject merchandise from the original place of shipment in the
exporting country to the place of delivery in the United States")
with §1677a(d)(1). While the courts agree that those costs,
charges, or expenses should be disregarded by the agency when
10
Id. at 16.
Consolidated Page 16
Court No. 02-00124
comparing the differences, if any, between home- and U.S.-market
selling efforts11, this court is unable to conclude that the
expenditures TCSSPL refers to12 are of that ilk. The Statement of
Administrative Action, H.R. Doc. No. 103-316, vol. 1, p. 823
(1994), refers to them as "transportation and other expenses,
including warehousing expenses, incurred in bringing the subject
merchandise from the original place of shipment . . . to the place
of delivery in the United States", whereas the ITA's Preliminary
Results herein
found that Ta Chen's selling functions for sales to TCI
include inventory maintenance to date of shipment, in-
curring risk of non-payment, extension of credit terms,
research and development and technical assistance, after-
sale services, and freight and delivery arrangement.
66 Fed.Reg. at 36,558. Moreover, if the practice is to define
movement expenses per 19 U.S.C. §1677a(c)(2)(A) as the cost of a
"market transaction" between unrelated parties13, then the transfer
of subject merchandise from TCSSPL to its subsidiary TCI would not
satisfy that standard.
TCSSPL's papers refer to a number of cases wherein the
ITA concluded that a CEP offset was necessary. See TCSSPL Rule
11
See, e.g., Micron Technology, Inc. v. United States, 243
F.3d 1301, 1315 n. 12 (Fed.Cir. 2001).
12
See TCSSPL Rule 56.2 Memorandum, pp. 15-16.
13
See, e.g., AK Steel Corp. v. United States, 22 CIT 1070,
1088, 34 F.Supp.2d 756, 770 (1998), aff'd in part, rev'd in
part on other grounds, 226 F.3d 1361 (Fed.Cir. 2000).
Consolidated Page 17
Court No. 02-00124
56.2 Memorandum, p. 17; TCSSPL Reply Brief, p. 15. But of course,
it was the evidence on the records developed in each of those
matters that supported those offsets, which is not this case at
bar.
C
Genuine movement expenses are the basis of TCSSPL's
contention that the ITA should have taken only those incurred in
transferring subject merchandise between TCI's various, inland
warehouses across the United States. The issue before the court
has arisen due to the company's failure to report them in its
responses to agency questionnaires. According to the DecMemo,
[d]uring verification, TCI did not claim that the intra-
warehouse transfer expenses were not reported because it
did not have the information to calculate them, but
stated that the expenses were de minimis and therefore
not reported.
TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 9. But that
memorandum indicated that the ITA came to conclude otherwise:
. . .[C]ontrary to Ta Chen's claim that the intra-ware-
house[14] expense was not a major omitted expense, the
evidence on the record clearly indicates that Ta Chen
failed to report a major expense.
Id. at 7 . Whereupon, in its final analysis the agency applied
facts available in the following manner:
14
According to the record, the prefix "intra" relates to "ex-
penses TCI incurs when transferring its merchandise among its
. . . warehouses in the United States." TCSSPL Rule 56.2 Memo-
randum, Appendix, Tab 10, p. 8.
Consolidated Page 18
Court No. 02-00124
. . . [W]e identified the highest monthly intra-warehouse
transfer expense. We then applied that month's amount to
the remaining months in the POR. We then summed each
month into a POR total and, in recognition of Ta Chen's
accurate assessment that its records do not permit sales-
specific identification of these expenses, we divided the
summed total amount by TCI's POR net sales figure for all
merchandise, both subject and non-subject. We then mul-
tiplied this figure by the gross unit price to arrive at
the amount we deducted from CEP.
Id. at 10.
TCSSPL now complains about this approach on grounds that
the ITA noted on the record that movement costs of particular
merchandise could not be traced, and thus there was no duty to
report transfer expenses among the TCI warehouses15; even if, after
verification, those expenses were found to be calculable, they are
nevertheless insignificant16; it acted in "good faith", to the best
of its ability, because it provided all the necessary documents to
calculate them17; and the facts selected by the agency among those
available to choose from were punitive in nature and hence not in
accordance with law18.
15
See TCSSPL Rule 56.2 Memorandum, p. 18 n. 14. In the light
of the record, however, this point may well be post-hoc rational-
ization.
16
See id. at 20, citing 19 C.F.R. §351.413.
17
See TCSSPL Reply Brief, p. 18.
18
See id. at 22, citing Timken Co. v. United States, 26 CIT
, , 240 F.Supp.2d 1228, 1234 (2002)("Commerce should ad-
here to the overriding goal of the antidumping law, which is
not to create a punitive result").
Consolidated Page 19
Court No. 02-00124
(1)
The defendants correctly point out that the statute
grants the ITA the authority to decide when an adjustment is
"insignificant in relation to the price or value of the merchan-
dise." Defendants' Memorandum, p. 23, quoting 19 U.S.C. §1677f-
1(a)(2) and relying on SKF USA Inc. v. United States, 24 CIT 1100,
1113, 118 F.Supp.2d 1315, 1325 (2000). Here, it found that the TCI
warehouse transfer expenses, when ranked against other costs, were
"significantly larger than the majority of [them]". TCSSPL Rule
56.2 Memorandum, Appendix, Tab 10, p. 7. The
intra-warehouse transfer expenses were not small . . ..
The [] $750,807.47 figure is significant because a ma-
jority of the line items used to calculate the U.S. in-
direct selling expenses . . . [we]re smaller.
Id. That figure was subsequently reduced to $667,142,
which only accounts for indirect selling expenses where
we could not separate non-subject merchandise, ensuring
that the Department did not include expenses which were
not for subject merchandise.
Id. at 8, quoting in part the ITA Preliminary Analysis Memorandum,
p. 4.
On their face, these figures do not seem insignificant,
and the court cannot conclude otherwise and thereby foreclose
resort to the facts available.
(2)
The statute provides for agency determinations on the
basis of facts available if
Consolidated Page 20
Court No. 02-00124
(1) necessary information is not available on
the record, or
(2) an interested party . . .
(A) withholds information that has been
requested by the [ITA] . . .,
(B) fails to provide such information by
the deadlines for submission of the informa-
tion or in the form and manner requested . . .,
(C) significantly impedes a proceeding
. . ., or
(D) provides such information but the
information cannot be verified . . .,
the [ITA] . . . shall . . . use the facts otherwise
available in reaching the applicable determination . . ..
* * *
If the [ITA] . . . finds that an interested party
has failed to cooperate by not acting to the best of its
ability to comply with a request for information . . .,
the [ITA] . . ., in reaching the applicable determination
. . ., may use an inference that is adverse to the in-
terests of that party in selecting from among the facts
otherwise available. Such adverse inference may include
reliance on information derived from--
(1) the petition,
(2) a final determination in the investigation
under this subtitle,
(3) any previous review under section 1675 of
this title or determination under section 1675b
of this title, or
(4) any other information placed on the record.
19 U.S.C. §1677e(a) and (b). See, e.g., Nippon Steel Corp. v.
United States, 337 F.3d 1373, 1381-82 (Fed.Cir. 2003).
Consolidated Page 21
Court No. 02-00124
TCSSPL takes the position now that, since it provided the
agency during verification with an allocation factor for calcula-
tion of TCI warehouse transfer expenses, that fact alone should
save it from the effect of reliance on the foregoing provisions.
It refers to other cases in support of this position, e.g., Notice
of Final Determination of Sales at Less Than Fair Value: Static
Random Access Memory Semiconductors From Taiwan, 63 Fed.Reg. 8,909,
8,928 (Feb. 23, 1998); Notice of Final Determination of Sales at
Less Than Fair Value: Certain Steel Concrete Reinforcing Bars From
Turkey, 62 Fed.Reg. 9,737, 9,742 (March 4, 1997); Notice of Final
Determination of Sales at Less Than Fair Value: Bicycles From the
People's Republic of China, 61 Fed.Reg. 19,026, 19,044 (April 30,
1996). In each of those matters, however, the ITA concluded that
the failure to report what was a minor expense was inadvertent,
which is not the circumstance reflected in the record at bar. Cf.
TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 7. As for other
cases referred to for support, the court in Usinor Sacilor v.
United States, 19 CIT 711, 745, 893 F.Supp. 1112, 1142 (1995),
aff'd in part, rev'd in part, 215 F.3d 1350 (Fed.Cir. 1999), for
example, held that the agency's determination was "procedurally
unfair" because it had failed to advise the parties of the de-
ficiencies in their submissions. The ITA did not so fail in this
matter. In Mannesmannrohren-Werke AG v. United States, 23 CIT
826, 77 F.Supp.2d 1302 (1999), the agency considered adverse facts
Consolidated Page 22
Court No. 02-00124
warranted because a respondent failed to answer a questionnaire and
had also misrepresented itself. Upon judicial review, the court
found that the ITA did not explain why the respondent's actions
amounted to anything more than inadvertence and thus held that it
could not apply adverse facts without reconsideration after remand
of that matter. See 23 CIT at 842-43, 77 F.Supp.2d at 1316.
But this matter now at bar does not have an appearance of
respondent inadvertence. Moreover, in Maui Pineapple Co. v. Unit-
ed States, 27 CIT , 264 F.Supp.2d 1244 (2003), another action
referred to by TCSSPL, the administrative record contained the
basic information, upon which corrections to the U.S. sales could
be made. That kind of information with regard to the TCI warehouse
transfers is not on the record herein.
Counsel for TCSSPL would limit 19 U.S.C. §1677e(a)(1),
supra, to resort to facts otherwise available "only"19 if necessary
information is not on the record, but subsection (a)(2) thereto
posits four additional grounds for such resort. And this court is
required to construe the statute so as to give meaning to all of
its provisions, and it thus necessarily declines to read section
1677e(a) as if subsection (2) thereto does not exist. See, e.g.,
NTN Bearing Corp. of America v. United States, 368 F.3d 1369, 1377
(Fed.Cir. 2004).
19
TCSSPL Reply Brief, p. 21.
Consolidated Page 23
Court No. 02-00124
(3)
The expectation of the statute that an interested party
cooperate to the best of its ability has been interpreted to mean
that it "do the maximum it is able to do." Nippon Steel Corp. v.
United States, 337 F.3d 1373, 1382 (Fed.Cir. 2003). The court of
appeals further explained in that case that,
under section 1677e(b), Commerce need only make two
showings. First, it must make an objective showing that
a reasonable and responsible importer would have known
that the requested information was required to be kept
and maintained under the applicable statutes, rules, and
regulations. Second, Commerce must then make a subject-
ive showing that the respondent under investigation not
only has failed to promptly produce the requested in-
formation, but further that the failure to fully respond
is the result of the respondent's lack of cooperation in
either: (a) failing to keep and maintain all required
records, or (b) failing to put forth its maximum efforts
to investigate and obtain the requested information from
its records.
Id. at 1382-83 (citation omitted).
Here, the ITA determined that the use of partial adverse
facts was warranted, based upon the following rationale:
. . . Ta Chen's knowledge of the intra-warehouse transfer
expenses and its decision not to report them to the De-
partment properly warrants the use of adverse facts
available. Ta Chen did not cooperate to the best of its
ability with regard to its responses [to] requests for
information during the course of the administrative re-
view. It was only at the Department's request at verifi-
cation that TCI offered its explanation for not reporting
these expenses earlier. At verification, TCI stated that
the inland freight cost was very small and was therefore
not reported.
Consolidated Page 24
Court No. 02-00124
TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 9 (citation
omitted). Furthermore, "Ta Chen acknowledged that TCI chose not to
report these expenses even after calculating its allocation
factor." Id. (citation omitted). Hence, the two showings required
by Nippon, supra, are evident. TCSSPL was aware that intra-
warehouse transfer expenses were ordinarily reported in an
antidumping administrative review, and it failed to provide the ITA
with its full cooperation, even upon request during verification.
Nonetheless, TCSSPL would have the court believe that the
methodology used by the agency, specifically its decision to
attribute the highest reported monthly freight rate to those sales
with no reported freight during the period of review, is punitive
in nature and thus not in accordance with law. See TCSSPL Reply
Brief, p. 22, citing Timken Co. v. United States, 26 CIT , ,
240 F.Supp.2d 1228, 1234 (2002) (the ITA must "appropriately
balanc[e] th[e] goal of accuracy against the risk of creating a
punitive margin"). In support of this assertion, counsel claim
that the intra-warehouse allocation factor submitted during
verification is a more accurate way to calculate the dumping
margin. See TCSSPL Rule 56.2 Memorandum, p. 21. Additionally,
TCSSPL attempts to equate the situation here with the ITA’s
subsequent administrative review (covering June 2000 to May 2001),
wherein its allocation factor was accepted. See TCSSPL Reply
Brief, pp. 21-22, citing Certain Stainless Steel Butt-Weld Pipe
Consolidated Page 25
Court No. 02-00124
Fittings from Taiwan: Final Results and Final Rescission in Part of
Antidumping Duty Administrative Review, 67 Fed.Reg. 78,417 (Dec.
24, 2002), and the accompanying Issues and Decision Memorandum, pp.
2-3 (Comment 1).
That the agency chose the highest reported monthly intra-
warehouse transfer expense to determine total such expenses does
not make that choice per se punitive in nature. Rather, section
1677e(b) grants the ITA the discretion to choose among applicable
data on the record. See, e.g., Allied-Signal Aerospace Co. v.
United States, 996 F.2d 1185, 1191 (Fed.Cir. 1993). Second, the
ITA did consider TCSSPL's allocation factor but chose not to rely
on it:
. . . The Department took exhibits indicating both the
total amount of unreported intra-warehouse transfer
expenses and whether such expenses could be segregated
into subject and non-subject merchandise components. The
Department did not need to take Ta Chen’s allocation
factor because that calculation was not material to the
total amount of the unreported expense or whether the
expense could be segregated; it merely represents an
argument regarding the proper treatment of the deliber-
ately unreported expenses . . ..
TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 9.
As for other ITA administrative reviews, this court
reiterates that the agency is not bound to a method used in a prior
review so long as its particular approach is supported by substan-
tial evidence on the record and otherwise in accordance with law.
Here, the ITA followed a method applied in Final Results of Anti-
Consolidated Page 26
Court No. 02-00124
dumping Duty Administrative Review: Certain Welded Carbon Steel
Pipe and Tube From Turkey, 61 Fed.Reg. 69,067 (Dec. 31, 1996).
Although TCSSPL is correct to point out that there were no data on
the agency record even after verification in that matter, the
situation herein is not all that different. To repeat, the ITA
chose not to accept the company's allocation factor "because that
calculation was not material to the total amount of the unreported
expense or whether the expense could be segregated". On the record
presented, this court cannot hold otherwise.
D
As noted at the beginning of this part I, contingent upon
affirmative relief on these foregoing claims is TCSSPL's prayer
that the underlying antidumping duty order be revoked "on the basis
of [these] three years . . . of sales of fittings by [it] at not
less than fair value, which qualifies [it] for revocation under
[the ITA]'s regulation 19 CFR §351.222(b)." TCSSPL Rule 56.2
Memorandum, p. 22.
Suffice it to respond at this stage that the Final Re-
sults under review entail a dumping margin for TCSSPL and that none
of its foregoing claims, in this court's judgment, eliminate it.
However, since claims by the plaintiffs, as discussed hereinafter,
lead to a remand to and consideration by the agency, final
determination of the plea for revocation should abide the results
of that remand.
Consolidated Page 27
Court No. 02-00124
II
In support of their motion for judgment upon the same
agency record, the plaintiffs summarize their claims for relief as
follows:
In particular, the Department erred as a matter of
law . . . (1) by calculating U.S. indirect selling
expenses based on fiscal year 1999 financial statements,
in lieu of the information provided in the more recent
and relevant fiscal year 2000 financial statements, of
. . . TCI . . . ; (2) by failing to increase TCI’s U.S.
short-term interest rate for additional costs related to
TCI’s U.S. short-term financing, and thereby understating
Ta Chen’s U.S. credit expenses and U.S. inventory carry-
ing costs; (3) by failing to include in Ta Chen Taiwan’s
cost of production and constructed value data bonuses
paid by Ta Chen Taiwan to management and employees, which
bonuses were distributed directly from stockholders’
equity and improperly not recorded in Ta Chen’s profit
and loss statement, a practice that the Department
previously has found to be distortive; and, (4) by ac-
cepting average direct selling expenses for Ta Chen’s
U.S. sales made from U.S. inventory, in lieu of import-
specific direct selling expenses that could have been
reported . . . based on Ta Chen’s normal books and
records.
Plaintiffs' Rule 56.2 Memorandum, pp. 1-2. The third of these
specifications of error is labeled "C" and discussed more fully at
pages 45 to 52 of this memorandum, concluding that "this issue
should be remanded to the [ITA] with instructions to properly
account for the various bonus payments as compensation expenses."
Id. at 52. Initially, the defendants respond that
this action should be remanded to Commerce to reopen the
record, seek additional relevant information regarding
employee bonuses, and recalculate Ta Chen's general and
administrative expenses. In all other respects, the
motion[] should be denied because the administrative de-
termination is otherwise supported by substantial evi-
dence and otherwise in accordance with law.
Consolidated Page 28
Court No. 02-00124
Defendants' Memorandum, p. 2. Cf. id. at 55-56.
Neither TCSSPL's counsel nor this court objects to remand
on the issue indicated. Cf. Rhone Poulenc, Inc. v. United States,
899 F.2d 1185, 1191 (Fed.Cir. 1990) ("the basic purpose of the
statute [is to] determin[e] current margins as accurately as
possible"); Koyo Seiko Co. v. United States, 14 CIT 680, 683, 746
F.Supp. 1108, 1111 (1990) ("affirming a final determination known
to be based on incorrect data would not only perpetuate the error,
[i]t would also be contrary to legislative intent").
A
Plaintiffs' first specification of error is that the ITA
erred in relying on five months' data from TCI's fiscal year 1999
rather than seven months' contained in the company's financial
statements for fiscal year 2000 to calculate the U.S. indirect
selling expenses for the period of review. The defendants respond
that the agency
determined that TCI’s FY 1999 financial statements were
preferable because Ta Chen had not had an opportunity to
adjust its fiscal year 2000 data for antidumping purposes
in accordance with 19 U.S.C. §1677a(d). . . . Because Ta
Chen’s fiscal year runs from November 1 through October
31 of the following year, and because the relevant POR
ran from June of 1999 through May of 2000, Ta Chen did
not have time to adjust TCI’s FY 2000 financial data
before Commerce needed the data for its calculations
(beginning in late calender year 2000).
Defendants' Memorandum, pp. 46-47 (footnote and citation omitted).
They also contend that "when both types of information are
available, Commerce acts reasonably when it selects actual in lieu
Consolidated Page 29
Court No. 02-00124
of estimated information", despite the fact that it could have
estimated the FY 2000 indirect selling expenses based on those
expenses reported in FY 1999. Id. at 48, citing CEMEX, S.A. v.
United States, 19 CIT 587, 595-96 (1995), aff’d, 133 F.3d 897(Fed.Cir. 1998). Moreover, they argue that
the FY 2000 . . . data is only slightly more contempo-
raneous with the period of review than the 1999 fiscal
year data used by Commerce. Specifically, the FY 2000
. . . data overlaps with seven months of the period of
review. The 1999 fiscal year data overlaps with five
months of the period of review. Indeed, even the data
favored by Alloy Piping utilizes data from outside the
period of review.
Id. at 49-50.
The governing statute, 19 U.S.C. §1677a(d)(2), provides
for the deduction of indirect selling expenses from
constructed export price. Indirect selling expenses are
expenses which do not meet the criteria of "resulting
from and bearing a direct relationship to" the sale of
subject merchandise, do not qualify as assumptions, and
are not commissions. Such expenses would be incurred by
the seller regardless of whether the particular sales in
question are made, but reasonably may be attributed (at
least in part) to such sales.
Statement of Administrative Action, H.R. Doc. 103-316, vol. 1, p.
824 (1994). Because the statute does not specify how to calculate
such expenses, the ITA can resort to the audited fiscal-year
financial statements that most closely correspond to a period of
review. E.g., Large Newspaper Printing Presses and Components
Thereof, Whether Assembled or Unassembled, From Japan: Final Re-
sults [of] Antidumping Duty Administrative Review, 66 Fed.Reg. 11,-
555 (Feb. 26, 2001); Certain Corrosion-Resistant Carbon Steel Flat
Consolidated Page 30
Court No. 02-00124
Products and Certain Cut-to-Length Carbon Steel Plate From Canada:
Final Results of Antidumping Duty Administrative Reviews, 62 Fed.
Reg. 18,448, 18,456-57 (April 15, 1997). On occasion, the agency
takes a different approach, which is the case here, depending on
the facts and circumstances. That is, it
has the flexibility to change its position providing that
it explains the basis for its change6 and providing that
the explanation is in accordance with law and supported
by substantial evidence7.
Cultivos Miramonte S.A. v. United States, 21 CIT 1059, 1064, 980
F.Supp. 1268, 1274 (1997).20 Furthermore, the mere fact that re-
20
In its footnote 6, the court stated that
"[t]he underlying ground of that principle is that the
reviewing court should be able to understand the basis of
the agency’s action and so may judge the consistency of
that action with the agency’s general mandate." The rule
also . . . "prohibit[s] the agency from adopting
significantly inconsistent policies that result in the
creation of 'conflicting lines of precedent governing the
identical situation.'" . . . "This is not to say that an
agency, once it has announced a precedent, must forever
hew to it. Experience is often the best teacher, and
agencies retain a substantial measure of freedom to
refine, reformulate, and even reverse their precedents in
the light of new insights and changed circumstances.
However, the law demands a certain orderliness. If an
administrative agency decides to depart significantly
from its own precedent, it must confront the issue
squarely and explain why the departure is reasonable."
21 CIT at 1064, 980 F.Supp. at 1274 (quotations and brackets in
original, citations omitted). Its footnote 7 states that the
review of an agency’s change of position or practice will
typically center on whether the action was arbitrary. A
change is arbitrary if the factual findings underlying
the reason for change are not supported by substantial
evidence.
Id.
Consolidated Page 31
Court No. 02-00124
sults can differ, depending on the method or data chosen, does not
automatically render either way unlawful if there is substantial
evidence21 on the record in support of that way. Here, the ITA came
to conclude that reliance on the already-adjusted 1999 fiscal year
data, as opposed to estimating adjustments to TCI's FY 2000
financial statements, would lead to a more accurate margin. See
Defendants' Supplemental Appendix, pp. 29-30. On its face, that
approach was not contrary to law. Cf. Ta Chen Stainless Steel
Pipe, Ltd. v. United States, 28 CIT , , Slip Op. 04-46, pp.
23-25 (May 4, 2004).
Nonetheless, according to the plaintiffs, the ITA failed
to consider all of TCI's indirect U.S. selling expenses for fiscal
year 1999. See Plaintiffs Rule 56.2 Memorandum, pp. 23-24. In-
deed, it does appear that the agency took that year's interest
expense only for TCI operations (and not for financing) into
account. See, e.g., id., pp. 39-40 and notes 124-26. That is,
"the U.S. indirect selling expenses submitted by Ta Chen were wrong
and should be corrected." Id. at 40. Upon review of the record,
the court concurs.
B
A compensating balance is an "amount of money a bank
requires a customer to maintain in a non-interest bearing account,
21
"Substantial evidence . . . means such relevant evidence
as a reasonable mind might accept as adequate to support a con-
clusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229
(1938); Matsushita Elec. Indus. Co. v. United States, 750 F.2d
927, 933 (Fed.Cir. 1984).
Consolidated Page 32
Court No. 02-00124
in exchange for which the bank provides . . . free services."
investorwords.com at http://www.investorwords.com/. "Compensating
balances increase the effective rate of interest on borrowings."
Barron's Dictionary of Finance and Investment Terms, p. 110 (5th
ed. 1998). TCSSPL reported a compensating balance on an "old loan"
in response to an ITA supplemental questionnaire. The agency
thereafter stated:
. . . There is no indication that Ta Chen lost title to
any portion of the compensating balance during the POR.
Therefore, contrary to petitioners' claim, the compensat-
ing balance cannot be viewed as an interest payment and
therefore is inappropriate for inclusion in the calcula-
tion of the short-term interest rate.
Defendants' Supplemental Appendix, p. 27.
The plaintiffs take the position that this compensating
balance should be taken into account when calculating TCSSPL's U.S.
short-term interest rate in order to properly determine credit ex-
penses and inventory carrying cost, which, inter alia, are subse-
quently deducted from the gross U.S. price to obtain the con-
structed export price.22 The plaintiffs claim that, by disregarding
22
Gross U.S. price is reduced by, among other things, "ex-
penses that result from, and bear a direct relationship to, the
sale, such as credit expenses, guarantees and warranties". 19
U.S.C. §1677a(d)(1)(B). See also 19 C.F.R. §351.402(a), (b),
clarifying certain adjustments to constructed export price.
. . . "[T]he imputation of credit cost . . . is a
reflection of the time value of money," that it "must
correspond to a . . . . figure reasonably calculated to
(footnote continued)
Consolidated Page 33
Court No. 02-00124
the compensating balance, the ITA is ignoring the true commercial
reality of the cost of doing business. See Plaintiffs' Rule 56.2
Memorandum, pp. 41-43.
The defendants do not disagree about the inherent cost of
money but instead repeat the agency's Decision Memorandum that
"[t]here is no indication that Ta Chen lost title to any portion of
the compensating balance during the POR". They rely on NTN Bear-
ing Corp. of America v. United States, 18 CIT 104, 106, 843 F.Supp.
737, 739, aff'd, 41 F.3d 1519 (Fed.Cir. 1994), wherein the court
concluded that the amount of the compensating account available to
the account holder was "irrelevant in calculating the interest rate
. . . paid." Here, the record reflects neither any interest earned
on TCSSPL's compensating balance nor paid, and this court thus
cannot conclude that the ITA should have taken that balance into
account.
Apparently, during the two fiscal years subject to this
discussion, TCSSPL provided TCI with collateral in the form of a
promissary note (or loan guarantee), the cost of which was not
included in the U.S. short-term interest-rate calculation. The ITA
account for such value during the gap period between
delivery and payment," and that it should conform with
"commercial reality."
Commerce Bulletin 98.2, Imputed Credit Expenses and Interest
Rates (Feb. 23, 1998) (internal quotation marks deleted), re-
lying on LMI-La Metalli Industriale, S.p.A. v. United States,
912 F.2d 455, 460-61 (Fed.Cir. 1990).
Consolidated Page 34
Court No. 02-00124
found that there was no interest due on the note and no reason to
impute interest. See Defendants' Supplemental Appendix, p. 27.
As the court in Micron Technology, Inc. v. United States, 23 CIT
55, 63, 44 F.Supp.2d 216, 224 (1999), has pointed out,
without some evidence that actual expenses were incurred
or even might have been incurred, [plaintiff's] request
to impute costs for loan fees is entirely too speculative
and . . . therefore unreasonable.
C
According to the governing statute, export price con-
structed pursuant to 19 U.S.C. §1677a shall be reduced by
the amount, if any, included in such price, attributable
to any additional costs, charges, or expenses, and United
States import duties, which are incident to bringing the
subject merchandise from the original place of shipment
in the exporting country to the place of delivery in the
United States[.]
19 U.S.C. §1677a(c)(2)(A). The ITA regulation promulgated in
conjunction with this statutory provision provides:
Allocation of expenses and price adjustments--
(1) In general. The Secretary may consider allo-
cated expenses and price adjustments when transaction-
specific reporting is not feasible, provided the Secre-
tary is satisfied that the allocation method used does
not cause inaccuracies or distortions.
(2) Reporting allocated expenses and price adjust-
ments. Any party seeking to report an expense or a price
adjustment on an allocated basis must demonstrate to the
Secretary’s satisfaction that the allocation is calcu-
lated on as specific a basis as is feasible, and must
explain why the allocation methodology used does not
cause inaccuracies or distortions.
Consolidated Page 35
Court No. 02-00124
(3) Feasibility. In determining the feasibility of
transaction-specific reporting or whether an allocation
is calculated on as specific a basis as is feasible, the
Secretary will take into account the records maintained
by the party in question in the ordinary course of its
business, as well as such factors as the normal account-
ing practices in the country and industry in question and
the number of sales made by the party during the period
of investigation or review.
(4) Expenses and price adjustments relating to
merchandise not subject to the proceeding. The Secretary
will not reject an allocation method solely because the
method includes expenses incurred, or price adjustments
made, with respect to sales of merchandise that does not
constitute subject merchandise or a foreign like product
(whichever is applicable).
19 C.F.R. §351.401(g).
The plaintiffs complain that the ITA considered allocated
expenses in this matter, arguing that TCSSPL did not meet its
burden of showing that transaction-specific reporting was not feas-
ible and that the allocation method chosen did not cause inaccura-
cies or distortions. See Plaintiffs' Rule 56.2 Memorandum, p. 54.
According to the ITA Decision Memorandum, prior to verification the
company stated that it had
about 25,000 U.S. sales in this review. There is no com-
puter record/date base, sale by sale, of the heat number
for each sale. Thus, even if tracing by heat number of
each Ta Chen U.S. b/w fitting sale all the way back to Ta
Chen Taiwan was viable (it is not), it would have to be
done manually for about 25,000 sales. In such cases, DOC
has permitted the simplifying allocation approach done
here, even if a more transaction-specific approach was
possible, simply because any other approach is too
burdensome (especially in the short time permitted to
answer DOC questionnaires) as well as the reasonable
allocation approach here causes no apparent distortion to
the dumping margin calculation.
Consolidated Page 36
Court No. 02-00124
Defendants' Supplemental Appendix, p. 26. In its final analysis,
the agency "continue[d] to determine that the POR weighted-average
methodology used by Ta Chen should not be amended". Id.This court has not found evidence on the record to
conclude otherwise, nor can it conclude that that approach was not
in accordance with the law quoted above.
III
In view of the foregoing, the motions of TCSSPL and the
plaintiffs for judgment upon the agency record must be denied,
except for remand to the ITA to reopen the record, seek additional
relevant information regarding employee bonuses, and recalculate
the general and administrative expenses of Ta Chen Stainless Steel
Pipe, Ltd. and also to reconsider its U.S. indirect selling
expenses.
The ITA may have until December 30, 2004 to comply with
this remand and report the results thereof to the court and to the
other parties, which may file comments thereon on or before January
17, 2005.
So ordered.
Decided: New York, New York
October 28, 2004
Thomas J. Aquilino, Jr.
Judge