Manchester Tank & Equip. Co. v. United States , 2020 CIT 173 ( 2020 )

Slip Op. 20-
UNITED STATES COURT OF INTERNATIONAL TRADE
MANCHESTER TANK & EQUIPMENT
CO. AND WORTHINGTON
INDUSTRIES,
Plaintiffs,
v.
Before: Mark A. Barnett, Judge
UNITED STATES, Court No. 19-00147
Defendant,
and
SAHAMITR PRESSURE CONTAINER
PLC.,
Defendant-Intervenor.
[Sustaining the U.S. Department of Commerce’s final determination in the antidumping
duty investigation of steel propane cylinders from Thailand.]
Dated:'HFHPEHU
Paul C. Rosenthal, Kelley Drye & Warren LLP, of Washington, DC, argued for Plaintiffs.
With him on the brief were David C. Smith, Jr., Matthew G. Pereira, and R. Alan
Luberda.
Alison S. Vicks, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, argued for Defendant. With her on the brief
were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and
Tara K. Hogan, Assistant Director. Of counsel on the brief was Vania Wang, Attorney,
Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department
of Commerce, of Washington, DC.
Ron Kendler, White & Case LLP, of Washington, DC, argued for Defendant-Intervenor.
With him on the brief was David E. Bond.
Court No. 19-00147 Page 2
Barnett, Judge: This matter is before the court following the final determination
of the U.S. Department of Commerce (“Commerce” or “the agency”) in the antidumping
duty investigation of steel propane cylinders (“cylinders”) from Thailand for the period of
investigation April 1, 2017, through March 31, 2018 (“the POI”).1 See Steel Propane
Cylinders From Thailand, 84 Fed. Reg. 29,168 (Dep’t Commerce June 21, 2019) (final
determination of sales at less than fair value) (“Final Determination”), ECF No. 22-4,
and accompanying Issues and Decision Mem., A-549-839 (June 17, 2019) (“I&D
Mem.”), ECF No. 22-5.
On June 18, 2018, Commerce initiated this investigation. See Steel Propane
Cylinders From the People’s Republic of China, Taiwan, and Thailand, 83 Fed. Reg.
28,196 (Dep’t Commerce June 18, 2018) (initiation of less-than-fair-value
investigations), PR 40, CJA (Vol. I) Tab 4. During the investigation, Plaintiffs
Manchester Tank & Equipment Co. and Worthington Industries (collectively, “Plaintiffs,”
or when in reference to the administrative proceeding, “Petitioners”) and Defendant-
Intervenor Sahamitr Pressure Container Plc. (“Sahamitr” or “SMPC”)2 each
1
The administrative record for this case is divided into a Public Administrative Record
(“PR”), ECF No. 22-2, and a Confidential Administrative Record (“CR”), ECF No. 22-3.
The Parties submitted joint appendices containing record documents cited in their
briefs. See Nonconfidential Joint Appendix, ECF Nos. 47 (Vol. I), 47-1 (Vol. II), 47-2
(Vol. III), 47-3 (Vol. IV), 47-4 (Vol. V); Confidential Joint Appendix (“CJA”), ECF Nos. 46
(Vol. I), 46-1 (Vol. II), 46-2 (Vol. III), 46-3 (Vol. IV), 46-4 (Vol. V). Citations are to the
confidential joint appendix unless stated otherwise.
2
Commerce selected Sahamitr as the sole mandatory respondent. See Respondent
Selection Mem. (July 9, 2018), PR 52, CJA (Vol. I) Tab 7.
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recommended different model-match criteria.3 See, e.g., Pet’rs’ Cmts. on the Important
Prod. Characteristics and Prod. Matching Hierarchy (July 6, 2018), PR 48, CJA (Vol. I)
Tab 5; [SMPC] Cmts. on AD Questionnaire Prod.-Matching Characteristics (July 6,
2018), PR 49, CJA (Vol. I) Tab 6. For the portion of the CONNUM related to the
external coating of the cylinder, Commerce initially instructed Sahamitr to report codes
that indicate whether a cylinder is coated or uncoated. See Ltr. Physical Characteristics
for the Antidumping Duty Investigation of Steel Propane Cylinders from Thailand (July
25, 2017) (“Initial Model-Match Ltr.”), Attach. 1B, ECF p. 155, PR 63, CJA (Vol. I) Tab
11. In its questionnaire responses, Sahamitr provided a further breakdown of coated
cylinders, distinguishing between zinc-coated and other-coated cylinders in addition to
uncoated cylinders. Narrative Resp. of [Sahamitr] to Secs. B, C, and D of the
Antidumping Duty Questionnaire (Sept. 13, 2018) (“BCDQR”) at B-14, C-12, CR 49–51,
PR 84–86, CJA (Vol. I) Tab. 14. For the Preliminary Determination, Commerce relied
on this additional distinction. See Decision Mem. for the Prelim. Determination (Dec.
18, 2018) (“Prelim. Mem.”) at 9, PR 162, CJA (Vol. III) Tab 31.
3
In any antidumping proceeding, there may be numerous “models” or “types” of
products that meet the description of the product under investigation. In order to ensure
an apples-to-apples comparison of sales in the U.S. and home markets, Commerce
establishes a set of product criteria, from most to least important, to identify identical
and similar products. Within each of these criteria, the distinct characteristics are given
different numeric values which, when listed next to each other, constitute the “control
number” or “CONNUM” for that “model” or “type.” In other words, the CONNUM is a
number designed to reflect the “hierarchy of certain characteristics used to sort subject
merchandise into groups” and allow Commerce to match identical and similar products
across markets. Bohler Bleche GmbH & Co. KG v. United States, 42 CIT ___, ___, 324
F. Supp. 3d 1344, 1347 (2018).
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Following Commerce’s Preliminary Determination, Petitioners submitted
comments challenging, in relevant part, the model-match methodology and the reliability
of Sahamitr’s cost of production information. Pet’rs’ Case Br. on [Sahamitr] (May 2,
2019) (“Pet’rs’ Case Br.”) at 6–20, 42–50, CR 280, PR 196, CJA (Vol. V) Tab 41; see
also Rebuttal Br. of [Sahamitr] (May 9, 2019) at 10–11, CR 282, PR 199, CJA (Vol. V)
Tab 42 (responding to Petitioners’ argument regarding cost of production information).
For the Final Determination, Commerce continued to use the CONNUM data that
distinguished zinc-coated cylinders from other-coated cylinders for model-match
purposes. See I&D Mem. at 22–24. Commerce also found Sahamitr’s reported costs to
be reliable and rejected Petitioners’ arguments that Sahamitr’s failure to reliably report
cost of production data warranted total adverse facts available (or “total AFA”). Id. at
36–40. Commerce calculated a weighted-average dumping margin for Sahamitr of
10.77 percent. See Final Determination, 84 Fed. Reg. at 29,169.
Before the court, Plaintiffs challenge Commerce’s determinations to rely on the
zinc coating distinction in the model-match methodology and Sahamitr’s reported cost
data. See Pls.’ Rule 56.2 Mot. for J. on the Agency R., ECF No. 27, and accompanying
Confidential Pls.’ Mem. in Supp. of Rule 56.2 Mot. for J. Upon the Agency R. (“Pls.’
Mem.”), ECF No. 29; Confidential Pls.’ Reply Br. (“Pls.’ Reply”), ECF No. 44.
Defendant United States (“the Government”) and Sahamitr filed responses
supporting the Final Determination. See Confidential Def.’s Resp. to Pls.’ Mot. for J.
Upon the Agency R. (“Gov’t’s Resp.”), ECF No. 38; Confidential Def.-Int.’s Resp. in
Opp’n to Pls.’ Rule 56.2 Mot. for J. Upon the Agency R. (“SMPC’s Resp.”), ECF No. 41.
Court No. 19-00147 Page 5
For the reasons discussed below, the court sustains Commerce’s Final
Determination and denies Plaintiffs’ motion for judgment on the agency record.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to section 516A(a)(2)(B)(i) of the Tariff Act of
1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2018),4 and 28 U.S.C. § 1581(c)
(2018). The court will uphold an agency determination that is supported by substantial
evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
I. Zinc Coating
A. Legal Framework
To calculate a dumping margin, Commerce compares the amount by which
normal value exceeds the export price or constructed export price. See 19 U.S.C.
§ 1677(35)(A). To calculate normal value, Commerce determines “the price at which
the foreign like product is first sold . . . for consumption in the exporting country . . . in
the ordinary course of trade.” 19 U.S.C. § 1677b(a)(1)(B)(i); see also Pastificio Lucio
Garofalo, S.p.A. v. United States, 35 CIT 630, 632–33 & n.6, 783 F. Supp. 2d 1230,
1233 & n.6 (2011), aff’d, 469 F. App’x 901 (Fed. Cir. 2012) (detailing the statutory
scheme by which Commerce determines whether sales were made in the ordinary
course of trade). Foreign like product is statutorily defined according to a hierarchy of
4
All citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S. Code,
and references to the U.S. Code are to the 2018 edition.
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characteristics. See 19 U.S.C. § 1677(16).5 “Congress has granted Commerce
considerable discretion to fashion the methodology used to determine what constitutes
‘foreign like product’ under the statute.” SKF USA, Inc. v. United States, 537 F.3d 1373,
1379 (Fed. Cir. 2008) (citation omitted).
Determinations of both identical and like/similar (i.e., non-identical but capable of
comparison) merchandise are made using Commerce’s model-match methodology.
See Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1383–84 (Fed.
Cir. 2001).6 The discretion that the statute affords Commerce to establish its model-
match methodology allows it to find certain products to be identical, notwithstanding
minor differences in physical characteristics, if those differences are commercially
insignificant. Id. at 1384 (Fed. Cir. 2001); see also 19 C.F.R. § 351.411(a) (Commerce
“may determine that merchandise sold in the United States does not have the same
5
Those characteristics are, in order of preference:
(A) The subject merchandise and other merchandise which is identical in
physical characteristics with, and was produced in the same country by
the same person as, that merchandise.
(B) Merchandise-- (i) produced in the same country and by the same
person as the subject merchandise, (ii) like that merchandise in
component material or materials and in the purposes for which used, and
(iii) approximately equal in commercial value to the subject merchandise.
(C) Merchandise-- (i) produced in the same country and by the same
person and of the same general class or kind as the merchandise which is
the subject of the investigation, (ii) like that merchandise in the purposes
for which used, and (iii) which [Commerce] determines may reasonably be
compared with that merchandise.
19 U.S.C § 1677(16).
6
Prior to 1995, the statute used the “term ‘such or similar merchandise’ . . . and was
replaced (following the enactment of the [Uruguay Round Agreements Act, Pub. L. No.
103–465, 108 Stat. 4809 (1994)]) by the term ‘foreign like product.’” Pesquera, 266
F.3d at 1384 n.8.
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physical characteristics as the merchandise sold in the [home] market,” and that
Commerce “will make a reasonable allowance for such differences”).
B. Background
Shortly after initiating this investigation, Commerce issued a letter containing the
criteria to be used for the model-match methodology. Initial Model-Match Ltr., Attach.
1B. Although the letter instructed Sahamitr to report a cylinder as coated or uncoated,
id., Attach. 1B, ECF p. 155, Sahamitr reported three codes for coating: uncoated,
coated-normal, and coated-special (i.e., zinc coating), see BCDQR at B-14, C-12.
In a supplemental questionnaire, Commerce directed Sahamitr to correct its
response consistent with the Initial Model-Match Letter. See Narrative Resp. of
[Sahamitr] to the Suppl. Sec. B and Sec. C Questionnaire (Nov. 6, 2018) (“SBCQR”) at
SSQ-10, SSQ-25, CR 106–120, PR 134–139, CJA (Vol. II) Tab 22. Sahamitr reported
cylinder coatings as instructed but also included an alternative CONNUM field based on
the same three coating classifications that it reported in response to the initial
questionnaire. See id. at SSQ-10 to SSQ-11, SSQ-25 to SSQ-26, Exs. SSQ-9 & SSQ-
26.
Sahamitr argued to Commerce that zinc-coated cylinders are not comparable to
non-zinc-coated cylinders such that Sahamitr’s margin would be inaccurate or distorted
if Commerce relied on the model-match criteria in the Initial Model-Match Letter. See id.at SSQ-10 to SSQ-11. Sahamitr explained that it applies zinc coating at its customer’s
request and that zinc coating has a “significant and direct bearing on the per-unit prices
and per-unit production costs of SMPC’s zinc-coated steel propane cylinders.” Id. at
Court No. 19-00147 Page 8
SSQ-10; see also Narrative Resp. of [Sahamitr] to the First Suppl. Sec. D Questionnaire
(Nov. 13, 2018) (“SDQR”) at FSD-11, CR 159–60, PR 141, CJA (Vol. II) Tab 24.
Sahamitr pointed out that “products with zinc coating are sold in [Sahamitr’s] home
market and, in contrast, are never sold in the United States.” SDQR at FSD-11.
For its Preliminary Determination, Commerce used Sahamitr’s dataset that
distinguished between zinc-coated cylinders and cylinders with other coatings,
notwithstanding Petitioners’ objections. Prelim. Mem. at 9; Analysis for the Prelim.
Determination (Dec. 18, 2018) at 6, CR 196, PR 165, CJA (Vol. III) Tab 32.
For the Final Determination, Commerce continued to account for zinc coating in
the model-match methodology. See I&D mem. at 22–24. Commerce explained that it
confirmed at verification that Sahamitr applies zinc coating at its customer’s request and
that zinc coating requires additional steps in the production process. See id. at 22
(citations omitted); see also Verification of the Sales Resps. of [Sahamitr] (Apr. 15,
2019) at 16, CR 277, PR 192, CJA (Vol. V) Tab 38 (referencing Sales Verification Exs.
For [Sahamitr] (Mar. 12, 2019), Ex. SVE-5A, CR 229–51, PR 183, CJA (Vol. V) Tab 36).
Per-unit comparisons showed that the cost of producing zinc-coated cylinders was
“significantly higher” than for non-zinc-coated cylinders. I&D Mem. at 23 & n.184
(citation omitted). Citing Sahamitr’s 2016 annual report, Commerce also found that zinc
coating “prevent[s] metal from rusting in humid climates.” Id. at 22 & n.175 (citing Exs.
Accompanying the Narrative Response of [Sahamitr] to Sec. A of the Antidumping Duty
Questionnaire, (Aug. 13, 2018) (“AQR”), Ex. A-9 at 89, CR 38–47, PR 72–76, CJA (Vol.
I) Tab 13).
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C. Parties’ Arguments
Before the court, Plaintiffs advance the following arguments. First, Plaintiffs
argue that Commerce departed from its policy of using the model-match methodology
announced at the outset of an investigation. Pls.’ Mem. at 14–17. Second, Plaintiffs
argue that Commerce did not support its revision to the model-match methodology with
compelling reasons or substantial evidence. Id. at 17–20. Third, Plaintiffs argue that
substantial evidence does not support Commerce’s finding that zinc coating is
commercially significant. Id. at 20–28.
The Government counters that substantial evidence supports the agency’s
determination that zinc coating is a commercially significant characteristic, Gov’t’s Resp.
at 9–10, and further assert that compelling reasons support Commerce’s determination
to revise the model-match methodology, Gov’t’s Resp. at 17–18; see also SMPC’s
Resp. at 4–6. The Government points to evidence that Thai customers request zinc
coating, zinc coating requires a special process, and zinc coating extends the useful life
of a cylinder and prevents rusting in humid climates. See Gov’t’s Resp. at 10–11.
D. Substantial Evidence Supports Commerce’s Use of Zinc Coating in the
Model-Match Methodology
1. Standard of Review Applicable to Commerce’s Selection of Model-
Match Criteria
The parties articulate, and Commerce applied, a more rigorous standard
concerning its development of the model-match criteria than was necessary. The U.S.
Court of International Trade and the U.S. Court of Appeals for the Federal Circuit have
looked for “compelling reasons” when Commerce modifies a model-match methodology
Court No. 19-00147 Page 10
in a review after having used that methodology in previous segments of the proceeding.
See, e.g., SFK USA, 537 F.3d at 1380; Koyo Seiko Co. v. United States, 31 CIT 1512,
1517–18, 516 F. Supp. 2d 1323, 1331–32 (2007), aff’d 551 F.3d 1286 (Fed. Cir. 2008);
Fagersta Stainless AB v. United States, 32 CIT 889, 894–95, 577 F. Supp. 2d 1270,
1276–77 (2008). “Compelling reasons” require the agency to provide “compelling and
convincing evidence that the existing model-match criteria are not reflective of the
merchandise in question, that there have been changes in the relevant industry, or that
there is some other compelling reason” requiring the change. Fagersta, 32 CIT at 894,
577 F. Supp. 2d at 1277 (citation omitted). By comparison, when Commerce develops
a model-match methodology in an investigation, it is afforded “considerable discretion”
and need only support the methodology with substantial evidence and a reasoned
explanation. Bohler Bleche, 324 F. Supp. 3d at 1350–54.
Here, the original investigation is being challenged and there was no
methodology from a previous segment for Commerce to alter. In the investigation,
Commerce was developing, not revising, its model-match methodology. Accordingly,
the agency was not required to address the higher “compelling reasons” standard to
support including a code for zinc coating. The agency’s model-match methodology
need only be supported by substantial evidence. See id. at 1354 (stating that the “only
question before [the] court is whether the [agency’s] chosen methodology is reasonable,
supported by substantial evidence on the record, and otherwise in accordance with the
law”) (emphasis omitted).
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2. Commercial Significance of the Zinc Coating
Next, the court considers whether substantial evidence supports Commerce’s
determination that zinc coating is a commercially significant characteristic (i.e., a
characteristic that merits distinguishing between identical and similar products). The
court finds that substantial evidence supports Commerce’s determination.
As discussed above, foreign like product includes both identical and similar
merchandise and Commerce has considerable discretion to establish its model-match
criteria to distinguish between them. See SFK USA, 537 F.3d at 1379. “Commerce has
wide latitude in choosing what physical characteristics to consider,” and generally will
recognize physical differences that are significant in terms of cost and price differences.
New World Pasta Co. v. United States, 28 CIT 290, 308, 316 F. Supp. 2d 1338, 1354
(2004).
Here, Commerce supported with substantial evidence its conclusion that zinc
coating is a commercially significant characteristic.7 Commerce cited sales documents
indicating that zinc coating is optional and selected by Sahamitr’s customers.8 I&D
7
While Plaintiffs fail to identify evidence that detracts from the agency’s findings, their
questioning of the evidence is somewhat understandable. Although Commerce cited
record evidence in its analysis, certain of its citations are mis-directed and do not
obviously support the associated findings. Nevertheless, examining the agency’s
reasoning and referenced record evidence as a whole, the court is able to reasonably
discern the path of the agency’s reasoning. See NMB Singapore Ltd. v. United States,
557 F.3d 1316, 1319 (Fed. Cir. 2009).
8
Plaintiffs argue that Commerce’s conclusion that Sahamitr’s customers request zinc
coating is unsupported by substantial evidence because Commerce relied on
Sahamitr’s 2016 annual report, which does not describe a spraying process, and new
information obtained at verification. See Pls.’ Mem. at 23–24; Oral Arg. at 15:10–15:20
(time stamp from recording), available at https://www.cit.uscourts.gov/sites/cit/files/
Court No. 19-00147 Page 12
Mem. at 23 & n.182 (citing, inter alia, SBCQR, Ex. SSQ-7 (customer’s terms and
conditions requiring spray coating of zinc wire)). Commerce found that zinc coating
requires a “special process” in that Sahamitr “‘prepare[s] the base coat by spraying pure
zinc wire’ with certain specified thickness’” and applies “other specified base coat or
‘other brands.’” Id. at 22 & n.171 (quoting SBCQR, Ex. SSQ-7). Commerce also relied
on evidence in which Sahamitr identified the price and cost differentials between
CONNUMs differing only as to zinc coating. See id. 23 & n.184 (citing SBCQR, Ex.
SSQ-7, pt. 2; SDQR, Ex. FSD-11). Commerce also cited Sahamitr’s 2016 annual report
to support its finding that zinc coating prevents rust and extends the useable life of a
cylinder. See id. at 22 & n.174 (citing AQR, Ex. A-9 at 89). The 2016 annual report
states that Sahamitr offers a hot-dipped galvanized cylinder that is “highly resistant” to
the effects of high humidity and, “therefore[,] it helps reduce the maintenance and cost
of [the] cylinder, and waste of the obsolete cylinder.” AQR, Ex. A-9 at 89. Although not
explicitly stated in the Issues and Decision Memorandum, nothing suggests that
Commerce’s finding that zinc protects against rust and extends the life of cylinder is
dependent on how the zinc coating is applied (i.e., spray or hot dip).9
092420-19-00147-MAB.mp3 (last accessed Dec. 3, 2020). However, Commerce also
identified the terms and conditions in a contract between Sahamitr and a customer
indicating that the customer required the zinc coating. See I&D Mem. at 23 & n.182
(citation omitted). Thus, substantial evidence supports this finding.
9
Plaintiffs contend that the hot-dipped galvanized cylinders are not the same type of
cylinders sprayed with zinc coating, thereby challenging whether the protective
properties described in the 2016 annual report can be attributed to the subject
merchandise. See Pls.’ Mem. at 22; Oral Arg. at 13:25–15:07. Plaintiffs, however,
agree that zinc protects against rust in humid climates, Oral Arg. at 5:10–5:15, and do
Court No. 19-00147 Page 13
Plaintiffs argue that substantial evidence does not support Commerce’s finding
that zinc coating results in a pricing premium because Commerce accepted Sahamitr’s
reporting of home market and U.S. sales on a tare-weight basis but considered the cost
and pricing effects of zinc coating on a per-cylinder basis. See Pls.’ Mem. at 25–26.
Commerce explained that although Sahamitr reported sales on a tare-weight basis,
Sahamitr conducted sales in both the home and U.S. markets on a per-cylinder basis.
I&D Mem. at 23; see generally id. at 25–26 (explaining that Sahamitr’s home market
and U.S. sales databases, which were reported on a tare-weight basis, were reliable).
Commerce found it “more meaningful to measure the price differences based on . . . a
per-unit cylinder basis.” Id. at 23. Although Plaintiffs disagree with Commerce’s
conclusion, they have not identified any evidence indicating that price and cost
comparisons on a per-cylinder basis are less reliable for evaluating the relevance of
zinc coating than if they had been performed on a tare-weight basis. Thus, Plaintiffs fail
to provide a basis to call into doubt Commerce’s analysis.
The Parties also dispute whether Plaintiffs exhausted their administrative
remedies with respect to the argument that Commerce failed to address evidence that
zinc coating is not commercially significant because non-zinc coatings also extend the
life of a cylinder and prevent rust. See Gov’t’s Resp. at 11–15; SMPC’s Resp. at 6; Pls.’
not identify evidence that such protection changes depending on the method by which
the cylinder is coated. Thus, although the evidence cited by Commerce is less than
ideal, the court “cannot find . . . so little evidence on the record as to be less than a
mere scintilla or less than that which a reasonable mind might accept as adequate to
support a conclusion.” Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1563 (Fed. Cir.
1984).
Court No. 19-00147 Page 14
Reply at 7. The court, however, need not resolve this issue. Assuming that Plaintiffs
did exhaust their administrative remedies and that Commerce did not address evidence
identified by Plaintiffs, see Pls.’ Mem. at 22–23, the agency’s oversight would not
require a remand. Commerce is not “required to explicitly address every piece of
evidence presented by the parties,” but only “significant arguments and evidence which
seriously undermines its reasoning and conclusions.” U.S. Steel Corp. v. United States,
36 CIT 1172, 1174, 856 F. Supp. 2d 1318, 1321 (2012) (citations omitted). Considering
the record as a whole, Commerce has supported with substantial evidence its decision
to accept as commercially significant the distinction between zinc and non-zinc coatings
because zinc coating requires unique production processes, is specifically requested by
customers, and leads to price variations. Cf. Bohler Bleche, 324 F. Supp. 3d at 1350
(finding that “differences in cost and price” attributable to a physical characteristic and
that “customers would view” such products as distinct, indicate that a physical
characteristic is commercially significant). Any failure to compare protective qualities (or
the degree of protection) as between zinc coatings and non-zinc coatings would not
undermine that decision. Thus, Plaintiffs’ argument is not sufficient to warrant remand
under the substantial evidence standard. See U.S. Steel, 36 CIT at 1181, 856 F. Supp.
2d at 1327 (noting that the reviewing court “under the substantial evidence standard
must defer to the [agency]” when “there is an adequate basis in support of the
[agency’s] choice of evidentiary weight”).
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For the foregoing reasons, the court sustains Commerce’s conclusion that zinc
coating is a commercially significant characteristic.10
II. Cost of Production Data
A. Legal Framework
“In assessing the reliability of a respondent’s cost of production,” the agency
must confirm, among other things, “that the costs are reasonably and accurately
allocated to individual control numbers.” Hyundai Elec. & Energy Sys. Co. v. United
States, 44 CIT ___, ___, 466 F. Supp. 3d 1303, 1309 (2020) (emphasis omitted)
(citation omitted). Typically, Commerce will rely on a respondent’s normal books and
records to determine the cost of production, provided that they “reasonably reflect the
costs associated with the production and sale of the merchandise.” See 19 U.S.C. §
1677b(f)(1)(A).
When necessary information (such as cost of production information) is not
available on the record, or an interested party withholds information requested by
Commerce, fails to provide requested information by the submission deadlines,
10
Plaintiffs argue that Sahamitr failed to report the portion of the CONNUM related to
the external coating of the cylinder consistent with Commerce’s instructions in the Initial
Model-Match Letter. See Pls.’ Mem. at 15–16. However, at oral argument, Plaintiffs
acknowledged that Sahamitr did in fact provide the information as requested by
Commerce albeit with alternative CONNUM fields including a code for zinc coating.
Oral Arg. at 4:15–4:40. Therefore, Plaintiffs’ argument that Sahamitr failed to comply
with Commerce’s reporting instructions must fail.
Similarly, Plaintiffs’ argument that Commerce’s initial model-match criteria, which
did not distinguish zinc from other coatings, implies that zinc coating is not commercially
significant, see Pls.’ Mem. at 15, fails because Commerce obtained information
regarding the commercial significance of the zinc coating during the investigation (i.e.,
after the Initial Model-Match Letter), see, e.g., I&D Mem. at 22–24.
Court No. 19-00147 Page 16
significantly impedes a proceeding, or provides information that cannot be verified
pursuant to 19 U.S.C. § 1677m(i), Commerce “shall . . . use the facts otherwise
available.” Id. § 1677e(a).
B. Background
For the Final Determination, Commerce accepted Sahamitr’s reported
CONNUM-specific costs notwithstanding Plaintiffs’ arguments that there were cost
differences between certain pairs of CONNUMs that appeared to be out of proportion to
the differences in physical characteristics based on the CONNUM description. I&D
Mem. at 39 & n.269 (citation omitted). Because Commerce found that Sahamitr’s cost
of production data were reliable, the agency found it unnecessary to rely on facts
otherwise available or use an adverse inference. See id. at 39–40. Plaintiffs challenge
these conclusions. See Pls.’ Mem. at 28–40.
In response to section D of the initial questionnaire, Sahamitr stated that it tracks
“production costs on [a] product-specific basis” and reported “weighted-average costs
for all products sharing identical CONNUM physical characteristics.” BCDQR at D-17 to
D-18. In response to the supplemental section D questionnaire, Sahamitr further
explained that it used its “standard cost structure to capture accurately cost differences
stemming from the different physical characteristics of the various cylinder types that
SMPC produces.” SDQR at FSD-10.
Commerce preliminarily determined that Sahamitr’s cost data were reliable
subject to two exceptions that are not relevant here. See Prelim. Mem. at 12. At
verification, Commerce confirmed that Sahamitr allocated “total actual costs for each
Court No. 19-00147 Page 17
cost element [of a CONNUM] on a product-specific basis.” Verification of the Cost
Resp. of [Sahamitr] (Apr. 24, 2019) at 15, CR 278, PR 193, CJA (Vol. V) Tab 39.
In their administrative case brief, Petitioners argued that Sahamitr’s cost of
production data were unreliable because they had identified several CONNUM pairings
that were nearly identical—with the exceptions of two characteristics—but had
unexplained cost differences. Pet’rs’ Case Br. at 18; see also id. at 15–16 (citing
several pairs of CONNUM that purportedly exhibited such cost differences). Petitioners
argued to Commerce that Sahamitr’s failure to provide reliable cost of production
information warranted the use of total AFA. Id. at 19.
Commerce rejected Petitioners’ arguments and continued to find Sahamitr’s cost
of production information reliable. See I&D Mem. at 36–40. Commerce explained that
Sahamitr’s reported costs “derived from the company’s normal accounting records,”
which Commerce found were “maintained in accordance with the generally accepted
accounting principles (GAAP) of Thailand.” Id. at 37; see also id. at 38 (finding that
Sahamitr’s books and records satisfied the requirements of 19 U.S.C. § 1677b(f)(1)(A)).
Commerce found that Sahamitr “classified each cylinder produced into the appropriate
CONNUM based on the physical characteristics defined by Commerce and used the
product-specific costs from its system to derive weighted average per-unit cost[s] for
each unique CONNUM.” Id. at 38–39 & n.265 (citation omitted).
Commerce acknowledged that the physical characteristics captured by each
CONNUM did not reflect all “processing activities” and “physical distinctions” in
Sahamitr’s cylinders. Id. at 39. In particular, the size, weight, and design of collars and
Court No. 19-00147 Page 18
foot rings assembled and welded to the cylinders sold in the home market differed from
those used on cylinders sold in the U.S. market. See id. Commerce acknowledged that
the “CONNUM structure [did] not reflect any differences associated with these physical
distinctions.” Id. at 39 & n.270 (citation omitted). Nevertheless, Commerce found that
these cost variations were “relatively minor” and insufficient to conclude that Sahamitr
did not submit its costs on a CONNUM-specific basis. Id. at 39. Commerce also
rejected Petitioners’ analysis of Sahamitr’s cost data as including material costs that
were inconsistent with differences associated with one physical characteristic unrelated
to coating. Id. According to Commerce, Petitioners’ analysis of this issue did not
account for zinc coating and how “the product costs would differ depending on whether
the cylinders are coated with zinc.” Id.
Accordingly, Commerce concluded that Sahamitr did not withhold cost data, the
record did not lack “necessary information,” and thus, reliance on total AFA was
unnecessary. Id. at 40.
C. Parties’ Arguments
Plaintiffs argue that Sahamitr reported cost differences that cannot be attributed
to the physical characteristics based on Plaintiffs’ selected pairs of CONNUMs. See
Pls.’ Mem. at 28. Plaintiffs assert that the unexplained cost differences owe to Sahamitr
withholding cost information and not accurately reporting costs on a CONNUM-specific
basis. See id. at 28–29. Thus, Plaintiffs argue, substantial evidence does not support
the agency’s conclusion that Sahamitr’s cost data were reliable. See id. at 28; Pls.’
Reply at 11. Because, in Plaintiffs’ view, Sahamitr’s cost data are unreliable, substantial
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evidence does not support Commerce’s refusal to rely on total AFA. See Pls.’ Mem. at
40.
The Government argues that the cost differences in the pairs of CONNUMs
selected by Plaintiffs are explained by differences in costs for the collars and foot rings
on the cylinders differing as between the home and U.S. markets. Gov’t’s Resp. at 23.
To that end, the Government contends that most cost variations between CONNUM
pairings align with cost variations for different dimensions of collars and foot rings as
recognized and explained by Commerce. Id. at 22; see also SMPC’s Resp. at 10–11.
The Government acknowledges that one CONNUM comparison identified by Plaintiffs
shows more than minor cost differences but contends that this example is an outlier and
not representative of the other cost differences. Gov’t’s Resp. at 20. Finally, the
Government argues that total facts available—neutral or adverse—was not appropriate
in this case because Commerce reasonably determined that necessary information was
not missing from the record. Id. at 24; see also SMPC’s Resp. at 11–14.
D. Substantial Evidence Supports Commerce’s Conclusion that Sahamitr’s
Cost of Production Information is Reliable
Commerce acknowledged the cost variances between CONNUM pairs identified
by Petitioners and provided a reasoned explanation why the variances did not detract
from the reliability of Sahamitr’s cost of production data: they were minor and explained
by differences in the collars and foot rings that were not accounted for in the physical
characteristics used to assign CONNUMs. See I&D Mem. at 39 & n.269 (citing
Narrative Resp. of [Sahamitr] to the Third Suppl. Questionnaire (Feb. 20, 2019), Exs.
TSQ-8 & TSQ-9, CR 214–25, PR 175, CJA (Vol. III) Tab 35). The CONNUM pairs
Court No. 19-00147 Page 20
selected by Plaintiffs reflect cost differences across non-identical CONNUMs which
Commerce reasonably associated with the processing activities for distinct cylinders
sold in the Thai home market and the U.S. market (i.e., the collars and foot rings). See
I&D Mem. at 39. In other words, this was not a case in which the respondent failed to
average cost differences within a CONNUM and Commerce rejected the suggestion
that it average those differences across different CONNUMs. Plaintiffs have not
presented any evidence undermining this conclusion.
Again, Commerce considered and rejected Plaintiffs’ argument based on other
comparisons of CONNUM pairings with one physical difference. See id. at 39 & n.271
(citing Pet’rs’ Case Br. at 15); Pls.’ Mem. at 30. Commerce explained that Plaintiffs’
argument in this regard was not credible because it was based on an analysis that did
not account for cost differences attributable to zinc coating—a commercially significant
feature. See I&D Mem. at 39. Plaintiffs’ arguments on appeal are little more than an
invitation for the court to reweigh the evidence considered and rejected by Commerce, a
task that the court will not do. See Downhole Pipe & Equip., L.P. v. United States, 776
F.3d 1369, 1376–77 (Fed. Cir. 2015) (explaining that the court does not reweigh the
evidence).11
11
Plaintiffs contend that Commerce’s determination is not supported by substantial
evidence because the agency did not consider the cost difference evident in a particular
CONNUM pair. See Pls.’ Mem. at 32–33. As explained above, Commerce supported
its determination that the cost data were reliable with substantial evidence. Thus, the
absence of a discussion regarding this one specific CONNUM pair that the Government
now describes as an outlier does not prevent the agency’s decision from being
supported by substantial evidence. See Timken U.S. Corp. v. United States, 421 F.3d
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Finally, Plaintiffs contend that Sahamitr’s purported failure to report cost data
reliably warrants use of total AFA. See Pls.’ Mem. at 40. Because substantial evidence
supports the agency’s conclusion that Sahamitr reliably reported cost data, substantial
evidence also supports Commerce’s determination not to rely on total AFA. See I&D
Mem. at 39–40.
CONCLUSION AND ORDER
In accordance with the foregoing, it is hereby
ORDERED that Commerce’s Final Determination is sustained. Judgment will
enter accordingly.
/s/ Mark A. Barnett
Mark A. Barnett, Judge
Dated:'HFHPEHU
New York, New York
1350, 1354 (Fed. Cir. 2005) (citation omitted) (explaining that the agency is only
required to address “issues material to the agency’s determination”).