PT. Zinus Glob. Indonesia v. United States , 2024 CIT 19 ( 2024 )

Slip Op. 24-19
UNITED STATES COURT OF INTERNATIONAL TRADE
PT. ZINUS GLOBAL
INDONESIA,
Plaintiff,
and
BROOKLYN BEDDING, LLC,
CORSICANA MATTRESS
COMPANY, ELITE COMFORT
SOLUTIONS, FXI, INC.,
INNOCOR, INC., KOLCRAFT
ENTERPRISES INC., LEGGETT
& PLATT, INCORPORATED,
INTERNATIONAL
BROTHERHOOD OF
Before: Jennifer Choe-Groves, Judge
TEAMSTERS, AND UNITED
STEEL, PAPER AND FORESTRY,
Consol. Court No. 21-00277
RUBBER, MANUFACTURING,
ENERGY, ALLIED INDUSTRIAL
AND SERVICE WORKERS
INTERNATIONAL UNION, AFL-
CIO,
Consolidated Plaintiffs,
v.
UNITED STATES,
Defendant,
Consol. Court No. 21-00277 Page 2
and
BROOKLYN BEDDING, LLC,
CORSICANA MATTRESS
COMPANY, ELITE COMFORT
SOLUTIONS, FXI, INC.,
INNOCOR, INC., KOLCRAFT
ENTERPRISES INC., LEGGETT
& PLATT, INCORPORATED,
INTERNATIONAL
BROTHERHOOD OF
TEAMSTERS, AND UNITED
STEEL, PAPER AND FORESTRY,
RUBBER, MANUFACTURING,
ENERGY, ALLIED INDUSTRIAL
AND SERVICE WORKERS
INTERNATIONAL UNION, AFL-
CIO,
Defendant-Intervenors.
OPINION AND ORDER
[Sustaining in part and remanding in part Commerce’s Final Results of
Redetermination Pursuant to Court Order in the U.S. Department of Commerce’s
antidumping duty investigation of mattresses from Indonesia.]
Dated: February 20, 2024
J. David Park, Henry D. Almond, Daniel R. Wilson, Leslie C. Bailey, Kang Woo
Lee, and Gina Marie Colarusso, of Arnold & Porter Kaye Scholer, LLP,
Washington, D.C., for Plaintiff PT. Zinus Global Indonesia. With them on the
brief were Phyllis L. Derrick and Eric Johnson.
Consol. Court No. 21-00277 Page 3
Yohai Baisburd, Jeffrey B. Denning, Chase J. Dunn, and Nicole Brunda, of
Cassidy Levy Kent (USA) LLP, Washington, D.C., for Consolidated Plaintiffs and
Defendant-Intervenors Brooklyn Bedding, LLC, Corsicana Mattress Company,
Elite Comfort Solutions, FXI, Inc., Innocor, Inc., Kolcraft Enterprises Inc., Leggett
& Platt, Inc., International Brotherhood of Teamsters, and United Steel, Paper and
Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers
International Union, AFL-CIO.
L. Misha Preheim, Assistant Director, and Kara M. Westercamp, Trial Attorney,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of
Washington, D.C., for Defendant United States. With them on the brief were
Brian M. Boynton, Principal Deputy Assistant Attorney General, and Patricia M.
McCarthy, Director. Of counsel on the brief was David W. Richardson, Senior
Counsel, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S.
Department of Commerce.
Choe-Groves, Judge: Before the Court is the U.S. Department of
Commerce’s (“Commerce”) remand redetermination in the antidumping duty
investigation of mattresses from Indonesia, filed pursuant to the Court’s Remand
Order in PT. Zinus Global Indonesia v. United States (“PT. Zinus”), 47 CIT __,
628 F. Supp. 3d 1252 (2023). See Final Results of Redetermination Pursuant to
Court Remand (“Remand Redetermination”), ECF Nos. 59-1, 60-1; see also
Mattresses from Indonesia (“Final Determination”), 86 Fed. Reg. 15,899 (Dep’t of
Commerce Mar. 25, 2021) (final affirmative determination of sales at less than fair
value), accompanying Issues and Decision Memorandum for the Final Affirmative
Determination in the Less-Than-Fair-Market Value Investigation of Mattresses
from Indonesia (“IDM”), ECF No. 15-4.
Consol. Court No. 21-00277 Page 4
In PT. Zinus, the Court remanded for Commerce to reconsider its inclusion
of mattresses in transit from Indonesia at the end of the period of investigation in
the calculation of constructed export price, adjustments made to the selling
expenses of Plaintiff PT. Zinus Global Indonesia’s (“Plaintiff” or “Zinus
Indonesia”) parent company, Zinus, Inc. (“Zinus Korea”), and the application of
the Transactions Disregarded Rule. PT. Zinus, 47 CIT at __, 628 F. Supp. 3d at
1287–88. Commerce addressed each of these issues on remand. See Remand
Redetermination. Plaintiff filed Plaintiff’s Comments in Partial Opposition to
Commerce’s Remand Determination and Plaintiff’s Comments in Partial Support
of Commerce’s Remand Determination. Pl.’s Cmts. Part. Opp’n Commerce’s
Remand Determination (“Pl.’s Cmts. Part. Opp’n”), ECF Nos. 64, 65; Pl.’s Cmts.
Part. Supp. Commerce’s Remand Determination (“Pl.’s Cmts. Part. Supp.”), ECF
No. 73. Defendant-Intervenors filed Defendant-Intervenors’ Comments in Partial
Opposition to the Final Results of Redetermination and Defendant-Intervenors’
Comments in Partial Support of the Final Results of Redetermination. Def.-
Intervs.’ Cmts. Part. Opp’n Final Results Redetermination (“Def.-Intervs.’ Cmts.
Part. Opp’n”), ECF Nos. 62, 63; Def.-Intervs.’ Cmts. Part. Supp. Final Results
Redetermination (“Def.-Intervs.’ Cmts. Part. Supp.”), ECF Nos. 71, 72. Defendant
filed Defendant’s Response to Comments of Remand Redetermination. Def.’s
Resp. Cmts. Remand Redetermination (“Def.’s Resp.”), ECF No. 74, 75. For the
Consol. Court No. 21-00277 Page 5
following reasons, the Court sustains in part and remands in part the Remand
Redetermination.
ISSUES PRESENTED
This case presents the following issues:
1. Whether Commerce’s inclusion of mattresses in transit as facts
otherwise available in the calculation of constructed export price was
in accordance with law and supported by substantial evidence;
2. Whether Commerce’s exclusion of Zinus Korea’s selling expenses
from the calculation of normal value was supported by substantial
record evidence; and
3. Whether Commerce’s use of Indonesian Global Trade Atlas (“GTA”)
import data to value input purchase transactions involving an
affiliated supplier in a non-market economy was supported by
substantial evidence and in accordance with law.
BACKGROUND
The Court presumes familiarity with the underlying facts and procedural
history of this case and recites the facts relevant to the Court’s review of the
Remand Redetermination. See PT. Zinus, 47 CIT at __, 628 F. Supp. 3d at 1258–
59.
Consol. Court No. 21-00277 Page 6
On March 30, 2020, an antidumping duty petition concerning imports of
mattresses from Cambodia, Indonesia, Malaysia, Serbia, Thailand, the Republic of
Turkey, and the Socialist Republic of Vietnam was filed with Commerce by
Brooklyn Bedding, LLC, Corsicana Mattress Company, Elite Comfort Solutions,
FXI, Inc., Innocor, Inc., Kolcraft Enterprises, Inc., Leggett & Platt, Inc., the
International Brotherhood of Teamsters, and the United Steel, Paper and Forestry,
Rubber, Manufacturing, Energy, Allied Industrial and Service Workers
International Union, AFL-CIO. Antidumping Countervailing Duty Pet.
(“Petition”) (Mar. 31, 2020), PR 1–4, CR 1–10.1 In response to the Petition,
Commerce initiated on April 24, 2020 an antidumping investigation on mattresses
imported from Indonesia. Mattresses from Cambodia, Indonesia, Malaysia, Serbia,
Thailand, the Republic of Turkey, and the Socialist Republic of Vietnam, 85 Fed.
Reg. 23,002 (Dep’t of Commerce Apr. 24, 2020) (initiation of less-than-fair-value
investigations). The period of investigation was January 1, 2019 through
December 31, 2019, the four most recent financial quarters prior to the filing of the
March 2020 Petition. Id. at 23,003; Commerce’s Decision Mem. Prelim.
Affirmative Determination and Postponement Final Determination Less-Than-
1
Citations to the administrative record reflect the public record (“PR”) and
confidential record (“CR”) document numbers filed in this case, ECF Nos. 39, 40,
76, 77.
Consol. Court No. 21-00277 Page 7
Fair-Value Investigation Mattresses from Indonesia (“PDM”) at 5, PR 226; see
also 19 C.F.R. § 351.204(b)(1). Zinus Indonesia was selected as the sole
mandatory respondent in the investigation. See Less-Than-Fair-Value
Investigation Mattresses Indonesia Resp. Selection Mem., PR 66, CR 32.
Because Plaintiff was unable to identify the country of origin of imported
mattresses after merchandise entered Plaintiff’s United States warehouse,
Commerce applied a quarterly ratios sales methodology to determine the quantity
of Zinus Indonesia’s U.S. sales for purposes of calculating constructed export
price. See IDM at 8–9; PDM at 9–10; see also Commerce’s Prelim. Determination
Margin Calculation Zinus Indonesia at 1–3 (Oct. 27, 2020), PR 229, CR 258. The
quarterly ratio was applied to the full universe of Zinus, Inc.’s (“Zinus U.S.”)
mattresses, including those mattresses that were in transit and had not yet entered
the United States at the conclusion of the period of investigation. IDM at 8–9.
Commerce calculated Zinus Indonesia’s antidumping duty margin rate at 2.22
percent. Final Determination, 86 Fed. Reg. at 15,900.
The Court remanded for Commerce to explain and support its inclusion of
mattresses in transit from Indonesia in its quarterly ratio calculations, Commerce’s
adjustments to the selling expenses of Zinus Korea, and Commerce’s application
of the Transactions Disregarded Rule. PT. Zinus, 47 CIT at __, 628 F. Supp. 3d. at
1287–88. On remand, Commerce continued to include in transit mattresses in its
Consol. Court No. 21-00277 Page 8
calculation of constructed export price and to exclude affiliated party transfer
payments from its margin calculations. Remand Redetermination. Commerce also
continued to use the market import data for inputs into Indonesia. Id.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction under 19 U.S.C. § 1516a(a)(2)(B)(i) and 28
U.S.C. § 1581(c), which grant the Court authority to review actions contesting the
final determination in an antidumping duty investigation. The Court shall hold
unlawful any determination found to be unsupported by substantial evidence on the
record or otherwise not in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i).
The Court also reviews determinations made on remand for compliance with the
Court’s remand order. Ad Hoc Shrimp Trade Action Comm. v. United States, 38
CIT 727, 730, 992 F. Supp. 2d 1285, 1290 (2014), aff’d, 802 F.3d 1339 (Fed. Cir.
2015).
DISCUSSION
I. Legal Framework
Commerce imposes antidumping duties on foreign goods if “(1) it
determines that the merchandise ‘is being, or is likely to be, sold in the United
States at less than its fair value,’ and (2) the International Trade Commission
determines that the sale of the merchandise at less than fair value materially
injures, threatens, or impedes the establishment of an industry in the United
Consol. Court No. 21-00277 Page 9
States.” Diamond Sawblades Mfrs. Coal. v. United States, 866 F.3d 1304, 1306
(Fed. Cir. 2017). Antidumping duties are calculated as the difference between the
normal value of subject merchandise and the export price or the constructed export
price of the subject merchandise. 19 U.S.C. § 1673.
Normal value is ordinarily determined using the sales price of the subject
merchandise in the seller’s home market. 19 U.S.C. § 1677b(a)(1)(B)(i). If
Commerce determines that normal value cannot be reliably calculated using home
market or third-country sales, Commerce may use the subject merchandise’s
constructed value as an alternative to normal value. Id. § 1677b(a)(4). The
method for calculating constructed value is defined by statute. Id. § 1677b(e).
When calculating constructed value, Commerce must utilize the respondent’s
actual selling, general, and administrative expenses, and profits in the respondent’s
home market or a third-country market. Id. § 1677b(e)(2)(A). If Commerce
cannot rely on those data, it may look to:
(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 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
Consol. Court No. 21-00277 Page 10
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.
Id. § 1677b(e)(2)(B).
Commerce must also calculate export price or constructed export price.
Export price is:
the price at which the subject merchandise is first sold (or agreed to be
sold) before the date of importation by the producer or exporter of the
subject merchandise outside of the United States to an unaffiliated
purchaser in the United States or to an unaffiliated purchaser for
exportation to the United States,
subject to certain adjustments. Id. § 1677a(a). Constructed export price is:
the price at which the subject merchandise is first sold (or agreed to be
sold) in the United States before or after the date of importation by or
for the account of the producer or exporter of such merchandise or by a
seller affiliated with the producer or exporter, to a purchaser not
affiliated with the producer or exporter,
subject to certain adjustments. Id. § 1677a(b). The price used to calculate
constructed export price is reduced by commissions, selling expenses, further
manufacturing expenses, and the profit allocated to these expenses. Id. § 1677a(d).
Consol. Court No. 21-00277 Page 11
II. Facts Available Analysis
Plaintiff alleges that Commerce failed to comply with the statutory
requirements under 19 U.S.C. § 1677e and 19 U.S.C. § 1677m(d) before applying
adverse facts available against Zinus Indonesia. Plaintiff argues that Commerce
failed to request missing data regarding Zinus U.S.’ inventory, and Commerce
violated its statutory obligations when it filled in factual gaps regarding in transit
subject merchandise and improperly applied adverse facts available. Pl.’s Cmts.
Part. Opp’n at 17–20. The Government contends that it did not apply an adverse
inference to Zinus Indonesia under 19 U.S.C. § 1677e(b). Def.’s Resp. at 8–9.
The Government does not assert that it used neutral facts otherwise available under
19 U.S.C. § 1677e(a), but merely argues that it did not apply adverse facts
available. See id.
The Court notes at the outset that Commerce did not make any
determinations in its Remand Redetermination under 19 U.S.C. § 1677e(a) and 19
U.S.C. § 1677m(d) about the use of facts otherwise available, or under 19 U.S.C.
§ 1677e(b) about the use of an adverse inference.
Section 1677e(a) requires the use of facts otherwise available when
necessary information is not available on the record, or a respondent withholds
information that has been requested by Commerce, fails to provide the requested
information by the deadlines in the form and manner requested, significantly
Consol. Court No. 21-00277 Page 12
impedes a proceeding, or provides the requested information but the information
cannot be verified. 19 U.S.C. § 1677e(a). Commerce explained in the Remand
Redetermination that Zinus U.S.’ data in Exhibit SA-5 showed that the purchased
quantity of mattresses in inventory was less than the quantity Zinus U.S. reported
that it sold out of inventory during the period of investigation. Remand
Redetermination at 6. Thus, it appears that substantial evidence supports
Commerce’s determination that certain data was missing because Zinus U.S. sold
more mattresses than it purchased and the data did not account for those missing
mattress quantities.
19 U.S.C. § 1677e(a) specifies that if necessary information is not available
on the record, Commerce shall use facts otherwise available subject to 19 U.S.C.
§ 1677m(d). It is not apparent from the Remand Redetermination that Commerce
requested information from Zinus Indonesia or Zinus U.S. about the missing sales
data subject to the requirements of 19 U.S.C. § 1677m(d). The Remand
Redetermination does not mention Commerce’s requests to Zinus Indonesia or
Zinus U.S. for the missing information, nor does it mention responses or a failure
to respond to such requests by the Zinus entities. The Court agrees with Plaintiff’s
argument that:
[i]f Commerce had any doubt, or considered this information missing
from the record, it had an obligation to ask Zinus for this information.
It failed to do so. Even if it were the case that Zinus had failed to
Consol. Court No. 21-00277 Page 13
provide necessary information or otherwise satisfied 19 U.S.C.
§ 1677e(a), Commerce failed to observe the notice requirements of 19
U.S.C. § 1677m(d).
Pl.’s Cmts. Part. Opp’n at 18. The Government does not address the facts
available issue under 19 U.S.C. § 1677e(a) and 19 U.S.C. § 1677m(d) in its brief,
only arguing that Commerce did not apply adverse facts available. See Def.’s
Resp. at 9.
It is clear that Commerce failed to comply with the requirements under 19
U.S.C. § 1677m(d) to inform Zinus Indonesia of the nature of a deficiency and
provide Zinus Indonesia with an opportunity to remedy or explain the deficiency.
See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382–83 (Fed. Cir. 2003)
(“[T]he statute requires a factual assessment of the extent to which a respondent
keeps and maintains reasonable records and the degree to which the respondent
cooperates in investigating those records and in providing Commerce with the
requested information”). Because Commerce failed to make the necessary
determinations to comply with its statutory obligations under 19 U.S.C. § 1677e(a)
and 19 U.S.C. § 1677m(d), the Court holds that Commerce’s determination to use
in transit mattress information as facts otherwise available is neither in accordance
with law nor supported by substantial evidence. The Court remands this issue for
further consideration and explanation. The Court suggests that on remand,
Commerce should consider reopening the record to address the missing sales data,
Consol. Court No. 21-00277 Page 14
inventory, and in transit mattress issues as Commerce fulfills its obligations under
19 U.S.C. § 1677m(d), especially because Commerce is requesting a remand to
reopen the record on a different issue, as discussed below.
III. Zinus Korea’s Actual Selling Expenses
In the Final Determination, Commerce included Zinus Korea’s actual
incurred selling expenses as a component of its margin calculation. IDM at 32–33.
The Court remanded to Commerce for further explanation the question of Zinus
Korea’s involvement in the sale of subject mattresses and the treatment of selling
expenses under the Korean-version International Financial Reporting Standards
(“K-IFRS”). PT. Zinus, 47 CIT at __, 628 F. Supp. 3d at 1280–83. On remand,
Commerce determined that Zinus Korea’s involvement in the sale of subject
mattresses was minimal and continued to treat costs considered “commissions and
fees” under K-IFRS as payments between related parties and not as selling
expenses. Remand Redetermination at 9–16.
In the Remand Redetermination, Commerce cited record evidence to support
its determination that Plaintiff reported that Zinus Korea’s involvement in the sale
of subject mattresses to the United States during the period of investigation “was
limited to document and invoice management, i.e., receiving invoices from Zinus
Indonesia and forwarding them to affiliated and unaffiliated U.S. customers, as
even Zinus Korea’s invoices were generated by Zinus Indonesia as part of Zinus
Consol. Court No. 21-00277 Page 15
Indonesia’s operations and sales process.” Id. at 9–10; see Zinus Indonesia’s Sec.
A Questionnaire Resp. (June 18, 2020) at A-15, PR 97–102, CR 36–39; Zinus
Indonesia’s Sec. A Supp. Questionnaire Resp. (Aug. 20, 2020) at 9–10, PR 165,
CR 154. Commerce cited to the selling functions chart provided as an exhibit to
Zinus Indonesia’s Section A Questionnaire Response. Remand Redetermination at
10; see Zinus Indonesia’s Sec. A Questionnaire Resp. at Ex. A-7a. Commerce
determined that the chart indicated that for constructed export price sales from
inventory and back-to-back constructed export price sales, Zinus Korea’s
involvement was limited to minimal order input and processing. Remand
Redetermination at 10; see Zinus Indonesia’s Sec. A Questionnaire Resp. at Ex. A-
7a. Commerce determined that for export price sales, Zinus Korea was involved in
sales promotion, order input, and warranty services. Remand Redetermination at
10. Commerce also cited examples in the record supporting its determination that
Zinus Indonesia performed the majority of selling activities, including arranging
shipments and providing technical and sales support. Id. at 11; see Zinus
Indonesia’s Sec. A Supp. Questionnaire Resp. at 10; Zinus Indonesia’s Sec. C.
Questionnaire Resp. (Jul. 13, 2020) at Ex. C-16, PR 119–20; CR 96–97, 104–05,
117–20 (example of freight arrangements arranged by Zinus Indonesia); Zinus
Indonesia’s Sec. A. Supp. Questionnaire Resp. at SA-6b (email regarding online
training); Zinus Indonesia’s Sec. A Questionnaire Resp. at Ex. A-7b (sample
Consol. Court No. 21-00277 Page 16
documents relating to categories of sale reflected in Zinus Indonesia’s selling
functions chart).
Defendant-Intervenors disagree with Commerce’s determination, arguing
that record documents demonstrate that Zinus Korea took a more active role in all
sales of subject mattresses. Def.-Intervs.’ Cmts. Part. Opp’n at 2–3 (citing Zinus
Indonesia’s Sec. A Questionnaire Resp. at A-8). Defendant-Intervenors point to
Zinus Indonesia’s Section A Questionnaire Response as contrary record evidence
showing that for both constructed export price sales and export price sales, Zinus
Indonesia sold subject mattresses to Zinus Korea, which resold the subject
mattresses to affiliated or unaffiliated customers in the United States. Id. at 3; see
Zinus Indonesia’s Sec. A Questionnaire Resp. at A-18–A-19. Defendant-
Intervenors also argue that record evidence shows that Plaintiff referred to export
price sales as sales by Zinus Korea. Def.-Intervs.’ Cmts. Part. Opp’n at 4; see
Zinus Indonesia’s Sec. A Questionnaire Resp. at A-3; Zinus Indonesia’s Sec. A
Supp. Questionnaire Resp. at 11. Defendant-Intervenors contend that it would be
commercially unreasonable for Zinus Korea to be responsible for a significant
number of sales while not incurring expenses for sales staff or administrative
overhead. Def.-Intervs.’ Cmts. Part. Opp’n at 4.
The Government acknowledges existing deficiencies and contradictions in
the record with regard to Zinus Korea’s selling functions and requests a remand of
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this issue to reopen the record for additional information. Def.’s Resp. at 15–17.
The Court concludes that remand is appropriate on this issue because Commerce’s
determinations with respect to the exclusion of Zinus Korea’s selling expenses are
not supported by substantial evidence.
IV. Transactions Disregarded Rule
Commerce determined that during the period of investigation, Zinus
Indonesia obtained ten types of material inputs from affiliated suppliers in the
People’s Republic of China. IDM at 16–18; Remand Redetermination at 16.
Because the suppliers were in a non-market economy, Commerce determined that
it was unable to use the affiliated suppliers’ prices and costs in calculating normal
value. IDM at 17; Remand Redetermination at 16–17. In the Preliminary
Determination, Mattresses From Indonesia, 85 Fed. Reg. 69,597 (Dep’t of
Commerce Nov. 3, 2020) (preliminary affirmative determination of sales at less
than fair value, postponement of final determination, and extension of provisional
measures), Commerce calculated and applied an average of the market prices of
GTA import data for Brazil, Indonesia, Malaysia, Mexico, Romania, Russia, and
Turkey. IDM at 17–18; Commerce’s Cost Production Constructed Value
Calculation Adjustments Prelim. Determination (Oct. 27, 2020) at 1–2, PR 231,
CR 262. In the Final Determination, Commerce changed its approach and adopted
only GTA data from Indonesia to calculate normal value. IDM at 18. Commerce
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interpreted the phrase “market under consideration” in 19 U.S.C. § 1677b(f)(2) to
only refer to the market under review in the investigation. Id. The Court found
this interpretation to be overly narrow and remanded for Commerce to provide
further explanation or to reconsider whether Commerce’s selection of Indonesia
constituted a reasonable method to confirm that the affiliated prices reflect arm’s
length transactions under 19 U.S.C. § 1677b(f)(2). PT. Zinus, 47 CIT at __, 628 F.
Supp. 3d at 1287.
On remand, Commerce continued to use the Indonesian GTA data “because
actual market import prices into Indonesia are more likely to be available to our
Indonesian respondent than market import prices into other countries.” Remand
Redetermination at 16–23.
Under the Transactions Disregarded Rule, Commerce may disregard the
transfer price of inputs provided to a respondent by an affiliated supplier and
instead use the input’s market price in calculating normal value. 19 U.S.C.
§ 1677b(f)(2). Commerce applies the Transactions Disregarded Rule through a
multi-step process. Best Mattresses Int’l Co. v. United States (“Best Mattresses”),
47 CIT __, __, 622 F. Supp. 3d 1347, 1383–84 (2023). First, Commerce looks at
whether the respondent purchased the input from an affiliated supplier. Id. at
1383. If that information is not available, Commerce looks to sales of the input by
the affiliated supplier to an unaffiliated buyer. Id. When no other information is
Consol. Court No. 21-00277 Page 19
available, Commerce looks to a reasonable source of market value available on the
record. Id. As the Court previously noted, when resorting to a “reasonable source
for market value,” if “a market price is not available, Commerce has developed a
consistent and predictable approach whereby it may use an affiliate’s total cost of
providing the [good or service] as information available for a market price.” PT.
Zinus, 47 CIT at __, 628 F. Supp. 3d at 1285 (quoting Best Mattresses, 47 CIT at
__, 622 F. Supp. 3d at 1383–84). The phrase “market under consideration” is
purposefully broad to allow Commerce to choose a market that allows for a
reasonable source for market value to confirm that the affiliated prices reflect
arm’s length transactions. Id.
Defendant-Intervenors argue that Commerce has not sufficiently explained
or supported its change in practice to use only GTA data from Indonesia. Def.-
Intervs.’ Cmts. Part. Opp’n at 9–12. Defendant-Intervenors contend that
Commerce has an established practice of calculating market price in a manner that
best represents the respondent’s own experience in the market under consideration.
Id. at 9–10 (citing Unicatch Indus. Co. v. United States, 45 CIT __, __, 539 F.
Supp. 3d 1229, 1249 (2021)).
In a situation in which transactions are performed between two affiliates and
not at arm’s length, Commerce must attempt to determine an amount that would
have occurred if the parties had not been affiliated. 19 U.S.C. § 1677b(f)(2). As
Consol. Court No. 21-00277 Page 20
Commerce explained in the Remand Redetermination, adoption of the Indonesian
GTA data allowed for the calculation of a market rate that Zinus Indonesia would
have experienced but for its affiliation to its suppliers. Remand Redetermination at
19–20. Because a reasonable market price was available on the record, it was not
necessary for Commerce to consider other available options, such as the average of
other country GTA data. The Court concludes that Commerce’s reliance on the
Indonesian GTA data was reasonable, in accordance with law, and supported by
substantial evidence. The Court sustains Commerce’s application of the
Transactions Disregarded Rule.
CONCLUSION
Accordingly, it is hereby
ORDERED that the Court sustains Commerce’s application of the
Transactions Disregarded Rule; and it is further
ORDERED that the Remand Redetermination is remanded to Commerce to
reconsider consistent with this opinion the inclusion of mattresses in transit; and it
is further
ORDERED that the Remand Redetermination is remanded to Commerce to
reconsider consistent with this opinion Zinus Korea’s selling expenses; and it is
further
Consol. Court No. 21-00277 Page 21
ORDERED that this case shall proceed according to the following schedule:
(1) Commerce shall file its remand determination on or before April 19,
2024;
(2) Commerce shall file the administrative record on or before May 3, 2024;
(3) Comments in opposition to the remand determination shall be filed on or
before June 17, 2024;
(4) Comments in support of the remand determination shall be filed on or
before July 17, 2024; and
(5) The joint appendix shall be filed on or before July 26, 2024.
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: February 20, 2024
New York, New York