Agro Dutch Industries Ltd. v. United States , 31 Ct. Int'l Trade 215 ( 2007 )

Slip Op. 07-25
UNITED STATES COURT OF INTERNATIONAL TRADE
__________________________________________
:
AGRO DUTCH INDUSTRIES LIMITED, :
:
Plaintiff, :
:
v. :
:
UNITED STATES, : Before: MUSGRAVE, Judge
:
Defendant, : Court. No. 02-00499
:
and :
:
COALITION FOR FAIR PRESERVED :
MUSHROOM TRADE, :
:
Defendant-Intervenor. :
__________________________________________:
OPINION AND ORDER
[Plaintiff argued that agency’s antidumping duty determinations were not proper in that: (1) the
agency’s use of partial facts available and adverse inferences for certain transactions was in error;
(2) that agency’s determination of plaintiff’s constructed value was in error; and (3) that agency’s
adjustment of plaintiff’s imputed credit expenses was in error. The court found: (1) agency’s
reasoning as to use of partial facts available and adverse inferences was not clear and remanded that
matter for further consideration; (2) agency’s determinations as to plaintiff’s constructed value
calculation was proper; and (3) agency’s determination as to plaintiff’s imputed credit expenses was
proper.]
Dated: February 16, 2007
Garvey Schubert Barer (Lizbeth R. Levinson, John C. Kalitka, and Ronald M. Wisla) for the
plaintiff.
Robert D. McCallum, Assistant Attorney General, Civil Division, United States Department
of Justice, Jeanne Davidson, Acting Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Stefan Shaibani, and Delfa Castillo); International Office of Chief
Counsel for Import Administration, United States Department of Commerce (William G. Isasi), of
counsel, for the defendant.
Court No. 02-00499 Page 2
Collier, Shannon, Scott, PLLC (Adam H. Gordon and Michael J. Coursey) for the defendant-
intervenor.
Before the court is plaintiff Agro Dutch Industries, Limited’s (“plaintiff,” “Agro Dutch,” or
“respondent”) motion for judgment on the agency record. Plaintiff challenges aspects of the United
States Department of Commerce’s (“defendant,” “Commerce,” or “Department”) determinations
made for the Second Administrative Review of the antidumping duty order covering certain
preserved mushrooms from India. See Certain Preserved Mushrooms From India: Final Results of
Antidumping Duty Admin. Review, 67 Fed. Reg. 46,172 (ITA July 12, 2002) (“Final Results”); see
id. at 14,173 (adopting reasoning of the Issues and Decision Memo. for [the] Final Results of the
Antidumping Duty Admin. Review on Certain Preserved Mushroom [sic] from India - February 1,
2000, through January 31, 2001, Pub. R. Doc. 154 (“Decision Memo”)). By its motion plaintiff
raises three main issues: (1) that the use of partial facts available and adverse inferences for certain
of plaintiff’s sales was improper; (2) that the methodology used to determine plaintiff’s constructed
value was in error; and (3) that the calculation of plaintiff’s imputed credit expenses was in error.1
Jurisdiction and Standard of Review
The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c) (2000). The court
must uphold Commerce’s determinations unless they are “unsupported by substantial evidence on
the record, or otherwise not in accordance with the law . . . .” 19 U.S.C. § 1516a(b)(1)(B) (2000).
Substantial evidence is “more than a mere scintilla, it means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.” Matsushita Elec. Indus. Co. v. United
1
Plaintiff also alleges that Commerce issued improper liquidation instructions. As
this matter is being remanded, the court does not reach this issue at this time.
Court No. 02-00499 Page 3
States, 750 F.2d 927, 933 (Fed. Cir. 1984) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197,
229 (1938), and Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951)). This standard
requires “something less than the weight of the evidence, and the possibility of drawing two
inconsistent conclusions from the evidence does not prevent an administrative agency’s finding from
being supported by substantial evidence.” Id. (quoting Consolo v. Fed. Mar. Comm’n, 383 U.S. 607,
619–20 (1966)). However, substantial evidence supporting an agency determination must be based
on the whole record, and a reviewing court must take into account not only that which supports the
agency’s conclusion, but also “whatever in the record fairly detracts from its weight.” Melex USA,
Inc. v. United States, 19 CIT 1130, 1132, 899 F. Supp. 632, 635 (1995) (citing Universal Camera,
340 U.S. at 488).
Background
Commerce published a notice in the Federal Register alerting interested parties that they
could request an administrative review of the antidumping duty order covering the subject
merchandise for the period of review of February 2000 through January 2001 (“POR”). See
Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opp’y to Req.
Admin. Review, 66 Fed. Reg. 10,269, 10,269 (ITA Feb. 14, 2001). Plaintiff requested review of its
antidumping duty margin, Commerce initiated a review thereof, and Commerce sent plaintiff an
antidumping questionnaire. See letter from law firm of Manatt, Phelps & Phillips LLP (“MPP”) to
Commerce of 2/26/01, Pub. R. Doc. 3; Initiation of Antidumping and Countervailing Duty Admin.
Reviews and Reqs. for Revocations in Part, 66 Fed. Reg. 16,037, 16,038 (ITA Mar. 22, 2001); letter
from Commerce to MPP of 3/30/01, Pub. R. Doc. 9, Attach. (“Questionnaire”).
Court No. 02-00499 Page 4
Plaintiff timely submitted responses to the Questionnaire. See letter from MPP to Commerce
of 5/7/01, Conf. R. Doc. 3, Attach. (“Section A Response”); letter from MPP to Commerce of
5/25/01, Conf. R. Doc. 7, Attach. (“Section C Response”). In its responses, plaintiff answered
various questions about its sales and sales processes. Of relevance to this discussion, plaintiff
averred that each of its sales were individually negotiated, and indicated that once terms were agreed
to, they were firm. See Section A Resp. at 10 (“We negotiate product, price and quantity with our
customer via the telephone. Once we agree to terms, the price and quantity do not change. . . . Our
payment terms are 90 days after shipment.”); id. at 11; id. at 12 (“Both our customer and we [sic]
are bound to the order price regardless of the change in market prices that occur between [the] order
date and shipment date.”); id. (“All of our sales are made as described . . . above”); see also Section
C Resp. at C-12 (“All of our sales are made [with] payment terms of 90 days after bill of lading
date . . . . We have recorded a ‘3’ in this field [(“PAYTERMU”)] to indicate this payment term.”);
Section C Resp., App.2 (“Sales Database”) (showing a “3” entered in the PAYTERMU field for
every transaction). Plaintiff further stated that, for all of its transactions, it invoiced its customers
several days after the date of shipment, and considered the date of invoice to be the date of sale. See
Section A Resp. at 10 (“We invoice our customer within a few days after shipment.”); id. at 12(“[W]e invoice our customer approximately two to five days after shipment. There are no
circumstances under which we would deviate from this practice.”); Section C Resp. at C-10 (“The
2
This document is a printout of all the data entered for plaintiff’s sales. It can be found
as part of the Section C Response immediately post Appendix C-3b.
Court No. 02-00499 Page 5
date of sale is our date of invoice.”3); Sales Database at “SALINTU” column (showing all
transactions have an entered date of sale). Finally, plaintiff stated that it did “not have a written sales
contract with [its] customers.” Section A Resp. at 11.
After an initial review of the Responses, Commerce requested additional information from
plaintiff. See letter from Commerce to MPP of 8/9/01, Pub. R. Doc. 80, Attach. (“August 9
Questionnaire”). By this questionnaire, Commerce specifically requested that plaintiff clarify
whether there existed “any sales agreement or contract . . . between Agro Dutch and it U.S.
customers,” and “whether or not Agro Dutch and its U.S. customers have any long-term or multi-
purchase contracts or agreements.” Id. at 1. In response, plaintiff stated that it did not have “any
binding contracts or agreements with any U.S. customers during the POR. The quantities and prices
of all sales are subject to change until the date of shipment.” Letter from MPP to Commerce of
8/30/01, Conf. R. Doc. 20, Attach. (“August 30 Response”) at 1.
After reviewing plaintiff’s responses, the Coalition for Fair Preserved Mushroom Trade
(“Coalition” or “intervenor”) raised questions about certain information contained therein.
Specifically, the Coalition noted that, while plaintiff had stated in its Section A and C Responses that
all of its sales had terms that required payment ninety days after invoicing, some of plaintiff’s
transactions had “negative credit periods”—meaning that the entered payment date for a transaction
predated the entered sale date for that transaction (“NCP Transactions”). See letter from law firm
of Collier, Shannon, Scott, PLLC (“CSS”) to Commerce of 1/30/02, Conf. R. Doc. 30 (“Coalition’s
Comments”) at 5; see also Sales Database at obss. 79, 201, 209 (showing transactions with entered
3
For clarity, the court will refer to the date of sale/invoice as the date of sale.
Court No. 02-00499 Page 6
payment dates that predate entered sales dates). The Coalition speculated that these values might
have been entered in error as plaintiff had nowhere indicated in any of its responses that it had made
“prepayment” sales. Coalition’s Comments at 6. In response, plaintiff stated that the entered
payment dates for the NCP Transactions were, in fact, correct. See letter from law firm of Arnold
& Porter (“AP”) to Commerce of 2/11/02, Conf. R. Doc. 34 (“Reply to Comments”) at 2. Plaintiff
stated that the data reflected “cash advances” from one of its U.S. customers (“Customer A”4) that
“were paid in anticipation of future shipments for which the customer, product and price were not
determined at the time of the advance” (“The Arrangement”). Id.Commerce then published the preliminary results of its review. See Certain Preserved
Mushrooms from India: Prelim. Results of Antidumping Duty Admin. Review, 67 Fed. Reg. 10,371(ITA Mar. 7, 2002) (“Preliminary Results”). For the preliminary calculation of plaintiff’s
antidumping margin, Commerce determined that it could not use the data related to the NCP
Transactions. Commerce explained that this was so because: (1) plaintiff’s responses in the Reply
to Comments “suggest[] that Agro Dutch may have a long-term contract or sales agreement with
[Customer A], yet Agro Dutch claims that it had no binding contracts or agreements with any U.S.
customers during the POR,” id. at 10,374 (citing Aug. 30 Resp. at 1); and (2) “Agro Dutch’s
reporting of pre-payments appears inconsistent with its earlier statement that all of its U.S. sales are
sold with payment terms of 90 days after the bill of lading date.” Id. (citing Section C Resp. at C-
12). Commerce concluded that it would use facts available—and not the entered data for the NCP
Transactions—to calculate plaintiff’s preliminary antidumping margin because plaintiff’s
4
Customer A is identified in Conf. R. Doc. 34 at 2.
Court No. 02-00499 Page 7
“description of its sales to this customer requires further explanation as to the existence of any sales
agreement with this customer, the appropriate date of sale, and the relevant payment terms.” Id.(citing 19 U.S.C. § 1677e(a)). Commerce further determined that it was necessary to use adverse
inferences when selecting among the facts available because plaintiff had “not cooperated to the best
of its ability to comply with the Department’s requests in the questionnaire and supplemental
questionnaire to supply full information of its payment terms and copies of any sales agreements.”
Id. (citing 19 U.S.C. § 1677e(b)). As a result of these determinations, Commerce calculated
plaintiff’s preliminary antidumping duty margin to be 1.54 percent. Id. at 10,376. In calculating
plaintiff’s preliminary antidumping duty margin, no issues were raised as to the data related to
plaintiff’s other sales to Customer A (“the POR Transactions”) and Commerce included that data
in calculating plaintiff’s preliminary antidumping margin. Finally, Commerce stated that it would
“provide Agro Dutch with the opportunity to provide further information on this topic after the
issuance of the preliminary results for consideration in the final results.” Id. at 10,374.
After the Preliminary Results were published, Commerce sent plaintiff another supplemental
questionnaire. See letter from Commere to AP of 3/7/02, Pub. R. Doc. 129, Attach. (“March 7
Questionnaire”). Commerce requested that plaintiff:
Explain in detail the sales and payment terms for transactions
involving payment advances, as identified on page 2 of the [Reply to
Comments]. In particular:
a. Specify whether or not any type of written sales
agreement or contract exists with regard to [Customer
A]. If so, provide the document(s). Explain why the
agreements were not provided earlier in response to
the Department’s questionnaire and supplemental
questionnaire.
Court No. 02-00499 Page 8
b. Explain the apparent contradiction between the
description of payment terms to [Customer A] in the
[Reply to Comments], and the statement at page C-12
of the [Section C Response] that all of Agro Dutch’s
U.S. sales are made with payment terms of 90 days
after the bill of lading date.
Id. at 1 (emphasis in original). Plaintiff timely responded to this supplemental questionnaire. See
letter from AP to Commerce of 3/26/02, Conf. R. Doc. 47, Attach. (“March 26 Response”). In
response to Commerce’s question to “[e]xplain in detail the sales and payment terms,” plaintiff
stated that
[Customer A] is both a customer of ADIL and a sales agent.
That is it both purchases ADIL mushrooms for its own account, and
also serves as a sales agent for ADIL sales to other customers.
[Customer A] earns a commission from ADIL for certain sales for
which it acts as an agent.
[Customer A] asked us to produce a product for shipment
during the POI that we were not then producing — A-1 mushrooms,
which are Grade A mushrooms that are sliced 3/8” [sic] thick rather
than the standard 3/16” [sic] thick. We understand that [Customer A
sells this product to a U.S. buyer]. ADIL was concerned that if it
began producing this product, and [Customer A] were to cancel an
order, ADIL would not be able to resell this customized product . . . .
To satisfy this concern, and provide assurance that it would complete
all purchases, [Customer A] provided advance payment deposits . . . ,
in effect as security for future sales of a new product.
There is no written agreement, only an oral understanding.
Moreover, the advances were provided without regard to definite
future sales. Indeed the whole idea of the advance was to provide a
form of security against future orders. There was no corresponding
contemporaneous agreement to ship specific quantities to specific
customers at specific prices.
As we began shipping A-1 mushrooms, and they were
accepted by the ultimate customer, [Customer A] sought the quick
return of its advance payments. We agreed to credit the deposits
Court No. 02-00499 Page 9
against sales of other products as well as A-1 mushrooms. In
addition, we agreed to credit the advance payments against sales to
other customers who would agree to pay the invoiced amounts to
[Customer A] rather than to us. This enabled [Customer A] to
recover its advance payments earlier. The invoices at issue note that
the sale was made against advance payment, and where [Customer A]
was not the customer, it is shown as the consignee. For these sales,
[Customer A] collected payment from the ultimate customer.
Id. at 1–2 (citation omitted); see id. at Ex. 5 (sample invoice listing Customer A as consignee). In
response to Commerce’s question as to whether there was or was not a “written sales agreement or
contract” between plaintiff and Customer A, plaintiff stated that “[n]o written sales agreement or
contract between ADIL and any customer, including [Customer A] of any type was in effect during
the POR or regarding sales made during the POR.” Id. at 2. Finally, in response to Commerce’s
question that plaintiff “explain the apparent contradiction” of its claim that all of its sales were made
with ninety-day payment terms and the data on the record showing that not all sales were made in
this manner, plaintiff stated that
ADIL’s standard payment terms are 90 days after bill of lading date,
and these terms applied to all customers during the POR. With
respect to the advance payments made by [Customer A], obviously
the customer paid in advance and thus did not have 90 days to pay.
For those sales to which the advance payments were applied, it would
have been more accurate to state that the terms of payment were
payment in advance.
Id. Thereafter, Commerce published the Final Results.
For the Final Results, Commerce continued to find that the use of facts available and adverse
inferences was warranted for the NCP Transactions. See Decision Memo at 7–10 (“Comment 2”).
Unlike the Preliminary Results, however, for the Final Results Commerce found that the use of facts
available and adverse inferences was warranted for all of plaintiff’s sales to Customer A—including
Court No. 02-00499 Page 10
the POR Transactions. See id. at 8–9; see also Agro Dutch Final Results Margin Calculation
Program Log and Output, Conf. R. Doc. 54 at ll. 335–340 (stating that the “[f]ollowing programing
to apply AFA rate to all sales to [Customer A], per discussion in Decision Memo, Comment 2 . . . .”
(emphasis added)). In Comment 2, Commerce explained why use of facts available was warranted
for all of these transactions:
[D]espite specific requests from the Department to Agro Dutch in the
instant review to provide documentation and information concerning
this specific sales channel, Agro Dutch failed to provide this
information until the post-preliminary results March 26, 2002,
submission. In this review, Agro Dutch first reported that all of its
U.S. sales are sold with payment terms of 90 days after the bill of
lading date (see May 25, 2001, Section C questionnaire response at
page C-12). It also asserted that it had no binding contracts or sales
agreements with any U.S. customers during the POR (see August 30,
2001, supplemental questionnaire response at page 1[)]. Nowhere in
the May 7, 2001, Section A response discussion on sales process or
any other response does Agro Dutch refer to advance payment sales
circumstances involving [Customer A]. Not until the Department
sought clarification of Agro Dutch’s reported payments, shortly
before the due date of the preliminary results, did Agro Dutch first
mention these unusual sales circumstances (see February 11, 2002,
response at page 2). Only after the preliminary results of this review
and another supplemental questionnaire did Agro Dutch provide any
details about sales to the customer in question in the March 26, 2002,
submission (in full, ten months after the Department first requested
Agro Dutch’s sales information in its initial questionnaire).
However, this belated explanation raises more questions than
it answers. Agro Dutch’s March 26, 2002, explanation indicates that
the customer provided a great deal of money to Agro Dutch merely
as a deposit against future orders for which no written agreement or
contract was required, nor any guarantees on pricing. To advance
such a large amount of money without any further legal commitment
or security reflects an unusual business agreement that requires
further explanation. If no sales agreement or contract exists beyond
an “oral understanding” (see the March 16, 2002, submission at page
1), then such a deal implies either a great deal of trust on the part of
Court No. 02-00499 Page 11
the customer, or that the customer has some other form of
relationship to Agro Dutch.
Not only is the appropriate date of sale and payment date in
question, but also other key sales issues, such as the role of the
customer as a sales and payment agent, the relationship of the
customer to Agro Dutch, and even the price basis for the sales (i.e.,
Agro Dutch’s price to the customer in question, or price that the other
customers paid this customer, as noted at page 1 of the March 26,
2002, response). The petitioners suggested in their case brief that
sales through this customer may be considered more appropriately as
constructed export price sales, rather than EP sales. While the record
information does not support this conclusion, we cannot entirely rule
out this possibility, given the questions that remain about this sales
channel. There is a great deal more to be learned about these sales,
but no further opportunity in this proceeding to obtain the information
because Agro Dutch failed to provide this sales information until late
in the proceeding. Because Agro Dutch withheld information
requested by the Department related to these sales . . . , we have
determined that facts available is warranted in this instance.
Comment 2 at 8–9 (citing 19 U.S.C. § 1677e(a)(2)(A)). Furthermore, Commerce determined that
the use of adverse inferences was warranted for all of plaintiff’s transactions with Customer A.
Commerce explained that
the Department’s lack of full knowledge about the sales involving
this customer, as well as those sales where the customer acted as a
payment agent, stems directly from Agro Dutch’s lack of cooperation
in providing specifically requested information in this review. This
information was maintained in Agro Dutch’s records and was within
its control, but Agro Dutch failed to provide the information in its
questionnaire response. Thus, Agro Dutch has not cooperated with
respect to providing this information and an adverse inference is
warranted in applying facts available for the sales made to the
customer in question . . . .
Id. at 9 (citing 19 U.S.C. § 1677e(b)). Using facts available and adverse inferences for both the NCP
Court No. 02-00499 Page 12
and POR Transactions, Commerce calculated plaintiff’s final antidumping duty margin to be 27.80
percent.
Discussion
I
The court first examines plaintiff’s contention that Commerce’s use of partial facts available
and adverse inferences was not proper. Commerce may use facts available in calculating an
antidumping duty margin. The statute provides, in relevant part:
(a) In general. If– . . .
(2) an interested party or any other person–
(A) withholds information that has been requested
by the administering authority . . . under this title, . . .
the administering authority . . . shall, subject to section 782(d), use
the facts otherwise available in reaching the applicable determination
under this title.
19 U.S.C. § 1677e(a)(2)(A) (2000). Section 782(d) (19 U.S.C. § 1677m(d)) provides:
If the administering authority . . . determines that a response to a
request for information under this title does not comply with the
request, the administering authority . . . shall promptly inform the
person submitting the response of the nature of the deficiency and
shall, to the extent practicable, provide that person with an
opportunity to remedy or explain the deficiency in light of the time
limits established for the completion of investigations or reviews
under this title. If that person submits further information in response
to such deficiency and either–
(1) the administering authority . . . finds that such
response is not satisfactory, or
(2) such response is not submitted within the
applicable time limits,
Court No. 02-00499 Page 13
then the administering authority . . . may, subject to subsection (e),
disregard all or part of the original and subsequent responses.
19 U.S.C. § 1677m(d) (2000). Section 782(e) (19 U.S.C. § 1677m(e)) provides:
In reaching a determination . . . the administering authority . . . shall
not decline to consider information that is submitted by an interested
party and is necessary to the determination but does not meet all the
applicable requirements established by the administering authority or
the Commission, if–
(1) the information is submitted by the deadline
established for its submission,
(2) the information can be verified,
(3) the information is not so incomplete that it cannot
serve as a reliable basis for reaching the applicable
determination,
(4) the interested party has demonstrated that it acted
to the best of its ability in providing the information
and meeting the requirements established by the
administering authority . . . with respect to the
information, and
(5) the information can be used without undue
difficulties.
19 U.S.C. § 1677m(e). Here, the court understands that there are three distinct components to
Commerce’s facts available and adverse inferences determinations: The Arrangement, The NCP
Transactions, and the POR Transactions. The difficulty in reviewing Commerce’s determinations
with respect to these distinct factual situations is that it is not entirely clear how Commerce arrived
at its conclusions. Nucor Corp. v. United States, 414 F.3d 1331, 1339 (Fed. Cir. 2005) (“Where an
agency has not made a particular determination explicitly, the agency’s ruling nonetheless may be
sustained as long as ‘the path of the agency may be reasonably discerned.’” (citing Ceramica
Court No. 02-00499 Page 14
Regiomontana, S.A. v. United States, 810 F.2d 1137, 1139 (Fed. Cir. 1987))); Hynix Semiconductor
Inc. v. United States, 30 CIT __, __, 425 F. Supp. 2d 1287, 1307 (2006) (quoting Bowman Transp.,
Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974)). Here, the court cannot uphold
Commerce’s determinations with regard to the use of partial facts available and adverse inferences
for several reasons.
First, Commerce’s reasoning as to the use of facts available and adverse inferences for The
Arrangement cannot be “reasonably discerned.” For example, The Arrangement is variously
characterized as being for “cash advances” or “security for future sales” or “advance payments.” See
Reply to Comments at 2; March 26 Response at 1–2; Preliminary Results at 10,374. The proper
characterization of The Arrangement would seem vital to Commerce’s determination, but Commerce
never fully resolves this important issue or explains why such resolution is unnecessary to its
determination. Furthermore, Commerce’s determination as to The Arrangement is not clear because
the analyses for The Arrangement, the NCP Transactions and the POR Transactions are intertwined.
For instance, Commerce seems to find that, because the use of facts available might be warranted
for The Arrangement, that—in and of itself—is sufficient reason to find the use of facts available
was warranted for the NCP and POR Transactions. See Decision Memo at 8–9. This cannot be,
however, because the NCP and POR transactions, while possibly related in some way to The
Arrangement, are distinct factual situations that require separate analyses. While the court
appreciates that Commerce has provided some analysis of this complex situation, due to that
complexity, a clear and distinct recitation of Commerce’s reasoning is necessary to facilitate the
Court No. 02-00499 Page 15
proper review of Commerce’s determination as to The Arrangement.5
Second, Commerce’s reasoning as to the use of facts available and adverse inferences for the
NCP Transactions cannot be “reasonably discerned.” A review of the record shows that the only
reason provided for using facts available for the NCP Transactions was that plaintiff “withheld” sales
and payment data. See Comment 2 at 9 (citing 19 U.S.C. § 1677e(a)(2)(A)). The data contained in
plaintiff’s responses, however, seems to contradict this conclusion. Specifically, plaintiff did enter
a sale date for every one of its transactions—including the NCP Transactions—and those values do
not seem aberrational. See Sales Database at SALEINTU column. Thus, it is not clear how plaintiff
“withheld” this information. Furthermore, while the record seems to show that there are unexpected
data points in the PAYDATEU field for the NCP Transactions, it also appears that the amount of
money “assigned” to Customer A for these transactions is not necessarily aberrational, in that the
payment amounts for similar transactions seem equivalent. Compare Sales Database obs. 78 with
obs. 79 (same merchandise/buyer). This being so, it is not clear how these transactions differ
fundamentally from those that Commerce was able to use to calculate plaintiff’s antidumping
margin.6 Indeed, Commerce nowhere explains in detail—with reference to its statutory
5
The fact that Commerce’s analysis cannot be “reasonably discerned” is reflected in
the parties’ submissions, which do not provide separate analyses for The Arrangement, the NCP
Transactions, or the POR Transactions. See generally Pl.’s Resp. at 9–16, Def.’s Resp. at 10–19.
Indeed, only intervenor mentions the NCP and POR Transactions—and then only in passing. See
Intervenor’s Resp. at 29, 30.
6
To put it a slightly different way: “but for” the apparent random assignment of the
payments for the NCP Transactions to Customer A, it seems beyond doubt that those transactions
would have had entered payment dates that conformed to plaintiff’s Section A and C Responses.
Were that the case, it would be logical that Commerce would have used that data to calculate
plaintiff’s antidumping duty margin.
Court No. 02-00499 Page 16
mandate—how this data is “missing” such that the court can now conclude that the use of facts
available and adverse inferences was proper for the NCP Transactions. See 19 U.S.C. §§ 1677m(d),
(e); Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382–83 (Fed. Cir. 2003) (discussing use
of facts available and adverse inferences).
Finally, Commerce’s reasoning as to the use of fact available and adverse inferences for the
POR Transactions cannot be “reasonably discerned.” Again, the only reason given for resorting to
facts available for the POR Transactions is that plaintiff “withheld” sale and payment date data for
them. See Comment 2 at 9 (citing 19 U.S.C. § 1677e(a)(2)(A)). As with the NCP Transactions,
however, plaintiff did enter sales dates for each of these transactions. See Sales Database at
SALEINTU column. Furthermore, plaintiff entered payment dates for these transactions that appear
to conform to plaintiff’s Sections A and C Responses. See id. at PAYDATEU column. Indeed, it
is entirely unclear how this data is “missing,” as Commerce was able to use it to calculate plaintiff’s
preliminary antidumping duty margin. See Preliminary Results, 67 Fed. Reg. at 10,374. Therefore,
the court is unable to conclude that Commerce’s use of facts available and adverse inferences for the
POR Transactions was proper. See 19 U.S.C. §§ 1677m(d), (e); Nippon, 337 F.3d at 1382–83.
For the above reasons, the court cannot find that Commerce’s determination that use of
partial facts available and adverse inferences was warranted for The Arrangement, the NCP
Transactions, or the POR Transactions was proper. On remand, Commerce shall provide separate
analyses for The Arrangement, the NCP Transactions, and the POR Transactions and clearly state
how each of its determinations are in accordance with its statutory mandate and cite to specific
record evidence in support thereof.
Court No. 02-00499 Page 17
II
Plaintiff next contends that Commerce’s determination as to constructed value was not
proper. Plaintiff raises two arguments in this regard: (1) that Commerce’s selection of plaintiff’s
profit rate from the immediately preceding review was not in accordance with law; and (2) that
Commerce did not properly apply the statutory profit cap. The court turns to each contention in turn.
A
For the Final Results, Commerce determined that it was necessary to use constructed value
to calculate plaintiff’s antidumping duty margin. See Decision Memo at 3–6 (“Comment 1”).
Commerce determined that was so because plaintiff had neither home-market nor third-country sales
during the period of review upon which to base normal value. See Comment 1 at 3 (citing 19 U.S.C.
§ 1677b(a)(4)). Thus, Commerce looked to other sources to derive a profit rate and selling expenses
for constructed value. See id. (citing 19 U.S.C. § 1677b(e)). Specifically, Commerce had to
determine constructed value in accordance with one of the three statutory alternatives provided by
19 U.S.C. § 1677b(e)(2)(B). The statute provides, in relevant part:
(e) Constructed value. For purposes of this title, the constructed value of imported
merchandise shall be an amount equal to the sum of-- . . .
(2) (A) the actual amounts incurred and realized by the specific
exporter or producer . . . , or
(B) if actual data are not available with respect to the amounts
described in subparagraph (A), then--
(i) the actual amounts incurred and realized by the
specific exporter or producer being examined in the
investigation or review for selling, general, and
administrative expenses, and for profits, in connection
with the production and sale, for consumption in the
Court No. 02-00499 Page 18
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
selling, general, and administrative expenses, and 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 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 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 . . . .
19 U.S.C. § 1677b(e) (2000). Due to issues related to the possible revelation of proprietary data,
Commerce determined that it could not use the first two statutory alternatives and, so, turned to the
third (“Alternative 3”)7. Commerce noted that, when it had used Alternative 3 in the past, it weighed
various factors to select the proper data. See Comment 1 at 4 (citing Notice of Final Determination
of Sales at Less Than Fair Value: Pure Magnesium from Isr., 66 Fed. Reg. 49,349 (ITA Sep. 27,
2001)). Commerce explained that
in Magnesium from Israel, where the Department also applied
Alternative 3 in determining the profit rate, the Department selected
the most appropriate profit rate based on several factors, including:
(1) the similarity of the potential surrogate companies’ business
7
No party disagrees with Commerce’s selection of Alternative 3.
Court No. 02-00499 Page 19
operations and products to the respondent’s; (2) the extent to which
the financial data of the surrogate company reflects sales in the
United States as well as the home market; and (3) the
contemporaneity of the surrogate data to the period of investigation
or review. In that proceeding, the Department selected a profit rate
derived from the 2000 financial data of an Israeli company that was
found to have the most similar production process to the respondent.
The other financial data available in that investigation was from 1999
and less contemporaneous with the period of investigation.
Id. Using this test, Commerce determined that it would use plaintiff’s own data for the constructed
value calculation. Id. In support, Commerce stated that
[a]pplying the same criteria to this review does not change our profit
rate selection [from the Preliminary Results]. The use of the
respondent’s own data obviously best satisfies the first factor. The
Agro Dutch . . . rate[] also [is] based on sales to the comparison
market and not on U.S. sales. As for contemporaneity, the third
factor, we note that the profit rate experience from the 1998--2000
review period reflects the time period immediately prior to the instant
review. There is no information on the record to suggest that the
profit rate experience from that period is so different from the instant
period to render those profit rates distortive. Moreover, the
specificity of Agro Dutch’s . . . own financial data outweighs the
contemporaneity of Himalya’s financial data in selecting the most
appropriate profit rates. We disagree with the petitioners that the
Himalya POR rate can be averaged with Agro Dutch’s . . . 1998--
2000 profit rate without the possibility of disclosing Himalya’s
proprietary information to Agro Dutch . . . . Further, averaging
Himalya’s POR data with each of the other respondents’ own 1998--
2000 data does not necessarily make the resulting average rate a more
appropriate rate. There is no information on the record to indicate that
the difference between the respondent’s 1998--2000 data and
Himalya’s POR rate is due to contemporaneity rather than differences
in business operations and products.
Id. at 5–6.
Plaintiff contends that Commerce’s selection of plaintiff’s own data was not proper.
Specifically, plaintiff argues that, when using Alternative 3, Commerce is constrained to use home
Court No. 02-00499 Page 20
market data where such data is available. See Pl.’s Mem. at 19 (citing Issues and Decision Memo.
for the 1999–2000 Antidumping Admin. Review: Fresh Salmon from Chile, (Aug. 6, 2001)).
Plaintiff argues that this “preference” is shown by the phrase “for consumption in the foreign
country” appearing in each of the three relevant subsections. Id. at 19; see 19 U.S.C. §§
1677b(2)(B)(i)–(iii). Plaintiff claims that, rather than using the selected data, Commerce “should
have used home market profit from the first period of review, not third county profit from the first
period of review . . . .” Id. at 21.
The court does not agree that the statute contains such a “preference” or that Commerce was
required to use home market profit data when using Alternative 3. This is so because this Court has
visited this issue and found that Alternative 3 does not contain a general “preference” for home
market data. See Geum Poong Corp. v. United States, 25 CIT 1089, 1093, 163 F. Supp. 2d 669,
675–76 (2001). In Geum Poong, the Court considered whether Commerce, using Alternative 3, was
limited to using available home market selling expense data—as opposed to available third country
selling expense data. Id. The Court found that Commerce was not so constrained, stating that the
phrase “for consumption in the foreign country” applied only to the “profit cap” language of
Alternative 3, and not the entire subsection. See id. at 1093, 163 F. Supp. 2d at 675. The Court
continued that “Commerce properly calculated selling expenses according to ‘any reasonable
method’ without limitation as to whether the underlying data had been derived from home market
or non-home market sales.” Id. at 1094–95, 163 F. Supp. 2d at 677. Here, Commerce, using
Alternative 3, was faced with a comparable situation, in that it is selecting between home market
profit rates and third country profit rates. Because Alternative 3 does not evince a “preference” for
Court No. 02-00499 Page 21
home market data (even though such data might exist) Commerce was free to use “any reasonable
method” to determine plaintiff’s constructed value. Id. Indeed, Commerce provided an explanation
as to why it was using this data as opposed to other, available, home-market data. Thus, the court
finds that Commerce’s determination to use plaintiff’s own third country profit data for plaintiff’s
constructed value calculation was proper.
B
For the Final Results Commerce applied the statutory “profit cap” when calculating
plaintiff’s antidumping duty margin. To determine the profit cap Commerce considered information
from several sources: (1) data from another respondent in the instant investigation; (2) data from two
respondents from the immediately preceding administrative review; and (3) data from the period of
review for several food companies that did not produce the subject merchandise. See Comment 1
at 68. After considering these various sources, Commerce selected the profit rates of the three
mushroom producers/exporters to determine the profit cap. Id. In support of its determination
Commerce explained that
the three preserved mushroom exporter/producer profit rates meet the
statutory requirement because the rates reflect the profit normally
realized by exporters or producers in connection with the sale, for
consumption in India of preserved mushrooms, which, as the subject
merchandise, fall within the definition of the same general category
of products as the subject merchandise. The statute does not specify
the contemporaneity of the data, and we consider the information
from the immediately prior review to be sufficiently
contemporaneous for this purpose because there is no information on
the record to the contrary (i.e., no reason to believe the profit rates are
significantly different in this POR than the last).
8
The companies’ products included dried and processed fruits, spices, vegetable
products, charcoal, and soft drinks. Pl.’s Mem. at 22.
Court No. 02-00499 Page 22
We are not using the profit rates derived from the [non-subject
merchandise producing companies’] financial statements in
determining the profit cap because their data is less relevant than that
of the reviewed companies. . . .
Id. Using this data, Commerce “compared the 1998-2000 profit rate[] for Agro Dutch . . . to the
profit cap. [This rate did not] exceeded the profit cap (i.e., the highest profit rate among those
included in the profit cap determination) under Alternative 3.” Id. at 6 (citing Constructed Value
Profit Rate Cap Comparison, Conf. R. Doc. 52).
Plaintiff argues that Commerce improperly applied the profit cap. Plaintiff contends that it
was improper for Commerce to select “the highest individual profit rate achieved by producers of
subject mushrooms on sales in India during the past two periods of review.” Pl.’s Mem. at 22
(emphasis removed). Plaintiff continues that “such an approach is inconsistent with the statute’s
requirement that the Department use as the profit cap the amount ‘normally realized.’ Stated simply,
the highest individual profit rate is not the amount ‘normally realized.’” Pl.’s Mem. at 22. Plaintiff
argues that, instead, Commerce should have used profit data that it placed on the record “for other
Indian food products companies,” as this data closely corresponded with the fiscal year of the period
of review. Pl.’s Mem. at 22. Plaintiff states that “[t]hese food processing companies all produce
processed food products . . . .” Id.In essence, plaintiff raises two issues. The first is whether Commerce had the discretion to
select from among the various data on the record for the profit cap; the second is whether, after
selecting that data, Commerce properly used that information to determine a profit cap. As to the
first issue, as previously discussed, when using Alternative 3 Commerce may use “any reasonable
method” in order to determine constructed value. See 19 U.S.C. 1677b(e)(2)(iii); Geum Poong, 25
Court No. 02-00499 Page 23
CIT at 1093, 163 F. Supp. 2d at 675–76. The only limitation placed on Commerce’s determination
of constructed value is that, unless unusual circumstances warrant, it must apply a profit cap that is
based on home market sales. See 19 U.S.C. 1677b(e)(2)(iii); Geum Poong, at 1093, 163 F. Supp.
2d at 675. Here, the court cannot say, given that Commerce may use “any reasonable method,” that
it was improper for Commerce to reject home market data that it considered “less relevant” in favor
of other data. Indeed, plaintiff makes no argument to the contrary. See Pl.’s Mem. at 16–21; Pl.’s
Reply at 6–7.
As to the second issue—whether Commerce properly used the data it selected for
determining the profit rate—plaintiff argues that Commerce should have used a profit cap that was
an average of available rates. See Pl.’s Mem. at 23 (citing Floral Trade Council v. United States,
41 F. Supp. 2d 319, 332 (1999); Magnesium from Isr., 66 Fed. Reg. 49,349 (Comment 8)); Pl.’s
Reply at 7 (“Even if the Court [sic] uses the profit rates of [the] three mushroom companies rather
than the profit rates of the four fruit and vegetable companies, the Department should use the average
rates from the companies selected, not the highest rate.”). Again, there is nothing in the language
of the statute that requires Commerce to average rates when determining the profit cap under
Alternative 3. See 19 U.S.C. § 1677b(e)(2)(iii); compare id. with 19 U.S.C. § 1677b(e)(2)(ii)
(providing that constructed value be based on “the weighted average of the actual amounts incurred
and realized by exporters or producers . . . .”). Indeed, one of plaintiff’s cited sources undermines
its position that it is Commerce’s “normal practice” to average rates. See Magnesium from Isr.,
Comment 8 (stating that “the Department has on the record the financial statements of three
surrogate companies from which to select a reasonable CV profit rate or to calculate an average
Court No. 02-00499 Page 24
profit rate if more than one surrogate’s data is equally reasonable.” (emphasis added)). This being
so, the court cannot say that it was improper for Commerce to select—in this instance—the “highest”
profit rate for the profit cap.
III
Finally, for the Final Results, Commerce revised plaintiff’s imputed credit expense data
because plaintiff deducted commissions from this amount. Commerce explained that it was proper
to do so because,
[i]n accordance with Department practice, we normally impute credit
based on the gross price less any price adjustments granted at the time
of invoicing. As commissions are not considered price adjustments
for purposes of calculating imputed credit, and there are no other
adjustments to price at the time of invoicing, we recalculated Agro
Dutch’s imputed credit expense based on the gross price without any
deductions.
Comment 1 at 2 9. Plaintiff argues that Commerce’s calculation of its imputed credit expenses was
not in accordance with law. Plaintiff contends—in full—that
the Department wrongly calculated Agro Dutch’s imputed credit
expense based on the gross sales value, rather than on the gross sales
value less commissions paid to third parties. Credit expenses are the
costs of financing accounts receivables. The Department’s inclusion
of commission in calculating imputed credit ignores the fact that
commissions are not paid by Agro Dutch until it receives payment
from its customer. In other words, Agro Dutch finances only its net
sales proceeds, not commissions. As a result, the Department should
have deducted commissions prior to calculating the credit expense.
9
The Questionnaire instructions provide guidance as to the meaning of the term
“imputed expenses.” See Questionnaire at I-9 (“Imputed expenses generally are opportunity costs
(rather than actual costs) that are not reflected in the financial records of the company being
investigated, but which must be estimated and reported for purposes of an antidumping inquiry.
Common examples of imputed expenses include credit expenses and inventory carrying costs.”).
Court No. 02-00499 Page 25
Pl.’s Mem. at 23–24. Defendant responds that Commerce’s adjustment to plaintiff’s imputed credit
expenses was proper because it was “[c]onsistent with its standard methodology,” and that
Commerce includes this expense in the antidumping calculation “to estimate the opportunity cost
of money incurred by a company from the time . . . merchandise is shipped from the seller’s facility
until the seller receives payment for the goods.” Def.’s Resp. at 32 (citations omitted). Intervenor
responds by presenting two reasons why Commerce’s should be found proper. First, intervenor
argues that, because plaintiff failed to raise this issue at the administrative level, it is prevented from
doing so now due to the doctrine of exhaustion of administrative remedies. See Intervenor’s Resp.
at 47; 28 U.S.C.§ 2637(d) (stating that the court “shall, where appropriate, require the exhaustion
of administrative remedies.”); JCM, Ltd. v. United States, 210 F.3d 1357, 1359 (Fed. Cir. 1999) (“In
the antidumping context, Congress has prescribed a clear, step-by-step process for a claimant to
follow, and the failure to do so precludes it from obtaining review of that issue in the Court of
International Trade.” (citing Sandvik Steel Co. v. United States, 164 F.3d 596, 599–600 (Fed. Cir.
1998); National Corn Growers Ass’n v. Baker, 840 F.2d 1547, 1555–57 (Fed. Cir. 1988))). Second,
in an argument that parallels defendant’s, intervenor contends that plaintiff’s position lacks merit
because “[i]mputed credit measures the value of the good sold from the time it is shipped from the
seller to the time the buyer makes payment. Imputed credit is based on the gross price of the good
between the buyer and seller.” Intervenor’s Resp. at 50.
Defendant and intervenor’s points are well taken. Indeed, plaintiff—beyond merely alleging,
in its moving brief, that Commerce’s determination was not proper—cites neither statute, regulation,
nor case law in support of its position. See Pl.’s Mem. at 23–24. Furthermore, plaintiff, in its reply
Court No. 02-00499 Page 26
brief, in no way challenges either defendant’s or intervenor’s arguments that Commerce was using
its “standard methodology,” or intervenor’s argument that this issue should have been raised at the
administrative level. Id. As plaintiff neither presses its own argument nor takes issue with those of
defendant and intervenor, the court considers plaintiff to have abandoned its position as to
Commerce’s adjustment of its imputed credit expenses and finds that Commerce’s determination
in this regard proper.
Conclusion
For the foregoing reasons, the court remands this matter so that Commerce may re-visit its
determination that the use of partial facts available and adverse inferences was warranted as to The
Arrangement, the NCP Transactions, and the POR Transactions. Commerce shall file the results of
this remand within sixty days of the date of this opinion; all parties may submit comments to the
remand results within 30 days of filing; and all parties may file responses to any such comments
within 10 days after the submission thereof. As to the other issues addressed in this opinion, the
court finds that Commerce’s determinations are supported by substantial evidence and otherwise in
accordance with law.
SO ORDERED
/s/ R. Kenton Musgrave
R. Kenton Musgrave, Judge
Dated: February 16, 2007
New York, New York