Bethlehem Steel Corp. v. United States

Slip Op. 00 - 63
UNITED STATES COURT OF INTERNATIONAL TRADE
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BETHLEHEM STEEL CORPORATION, INLAND
STEEL COMPANY, INC., and U.S. STEEL :
GROUP A UNIT OF USX CORPORATION,
:
Plaintiffs,
:
v.
:
UNITED STATES, Court No. 96-05-01313
:
Defendant,
:
-and-
:
ALGOMA STEEL INC., GERDAU MRM STEEL
and STELCO, INC., :
Intervenor-Defendants.:
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Memorandum & Order
[Plaintiffs' motion for judgment on agency
record granted in part and denied in part;
remanded to International Trade Administration.]
Decided: June 2, 2000
Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Light-
hizer, John J. Mangan, Ellen J. Schneider and James C. Hecht) for
the plaintiffs.
David W. Ogden, Acting Assistant Attorney General; David M.
Cohen, Director, and Velta A. Melnbrencis, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice; and Office of Chief Counsel for Import Administration, U.S.
Department of Commerce (Linda A. Andros and Jeffrey C. Lowe), of
counsel, for the defendant.
Hogan & Hartson L.L.P. (Mark S. McConnell, Richard L. A. Weiner
and Roger P. Alford) for intervenor-defendant Algoma Steel Inc.
Ross & Hardies (Peter A. Martin) for intervenor-defendant
Gerdau MRM Steel.
Court No. 96-05-01313 Page 2
Willkie Farr & Gallagher (Christopher A. Dunn, Daniel L. Por-ter
and Jacqueline A. Weisman) for intervenor-defendant Stelco, Inc.
Court No. 96-05-01313 Page 3
AQUILINO, Judge: Pursuant to CIT Rule 56.2, the plain-
tiffs have interposed a motion for judgment upon the record com-piled
by the International Trade Administration, U.S. Department of Com-
merce ("ITA") sub nom. Certain Corrosion-Resistant Carbon Steel Flat
Products and Certain Cut-to-Length Carbon Steel Plate From Canada;
Final Results of Antidumping Duty Administrative Reviews, 61
Fed.Reg. 13,815 (March 28, 1996). Those Final Results include margins
of dumping both kinds of steel by Stelco, Inc. of 0.19 and 0.92
percent, respectively, as well as 1.82 and 0.02 percent for cut-to-
length plate from Algoma Steel Inc. and Mani-toba Rolling Mills,
respectively.1 The plaintiffs, the petition of which led to the
underlying antidumping-duty order, contest the Results with regard to
the cut-to-length steel plate2 on the specified grounds that the ITA
erred in (a) accepting after veri- fication an unverified change in
the unit value of Algoma scrap; (b) accepting costs reported for less
than all of that company's facilities which produced the steel under
review; (c) accepting incorrect price adjustments for Stelco
1 See 61 Fed.Reg. at 13,833. Each of these companies has
intervened herein as a party defendant, the last sub nom. Gerdau MRM
Steel, which will be referred to hereinafter by the acronym in the
record, MRM.
2 Issues focusing on the corrosion-resistant carbon steel flat
products are discussed sub nom. AK Steel Corp. v. United States, 21
CIT 1204 (1997), remand results aff'd, 22 CIT , Slip Op. 98-106
(July 23, 1998).
Court No. 96-05-01313 Page 4
products; (d) accepting unsupported MRM rebates; (e) accepting
partial-year information
Court No. 96-05-01313 Page 5
as to MRM general-and-administrative expenses in calculating cost of
production and constructing value; (f) accepting unsupported claimed
credit expenses for that company; and (g) relying on a ministerial
error in calculating margin(s) for Algoma.
The defendant responds that this case should be remanded
to the ITA to
(1) correct a ministerial error in Commerce's model match
program for Algoma Steel . . . and (2) to re-consider the
adjustment made for the credit expenses for . . . MRM[].
Plaintiffs' motion, however, should be denied in all other
respects . . ..
Defendant's Memorandum, p. 1. Counsel for the first-named inter-v-
enor do
not oppose a remand by this Court to the Department for
the sole and limited purpose of correcting the ministerial
error with instructions for the Depart- ment to take full
account of the accuracy of corrections to the computer
programming code.
Brief of Algoma Steel Inc., pp. 30-31. On its part, MRM takes the
position that none of plaintiffs' points, including that
with regard to its credit expenses, merits any judicial relief.
Stelco, Inc. also argues that the agency's Final Results should be
affirmed in their entirety.
I
Court No. 96-05-01313 Page 6
Jurisdiction to decide plaintiffs' motion is pursuant to
28 U.S.C. §1581(c). And the standard for review of the con-tested
ITA determination is whether it is unsupported by substantial
evidence on the record or otherwise not in accordance with law.3
A
For the merchandise at issue, the record reflects three
stages of production at Algoma Steel, denominated as slab, roll-ing,
shearing, during each of which scrap resulted. The company
determined the amount and cost thereof at each stage and reported it
as a cost of production and also, because the scrap was either sold
or remelted, reported a scrap-revenue amount.
During the process of ITA verification of the data
provided, Algoma notified the agency that it had discovered a "minor"
clerical error in the calculation of yield loss4 at one of its
shearing lines, and it submitted a "corrections memorandum", which
the ITA determined to accept. See 61 Fed.Reg. at 13,818. The
3 19 U.S.C. §1516a(b)(1)(B) (1994). As noted in AK Steel Corp.
v. United States, supra, amendments to this governing Title 19,
U.S.C. effectuated by the Uruguay Round Agreements Act, Pub. L. No.
103-465, 108 Stat. 4809 (1994), do not apply to adminis-trative
reviews commenced before January 1, 1995, which is the case here.
See 21 CIT at 1205 n. 1, citing Torrington Co. v. United States, 68
F.3d 1347, 1352 (Fed.Cir. 1995).
4 See Record Document ("R.Doc") 421, p. 1. See also Confi-
dential Record Document ("ConfDoc") 204, first page.
Court No. 96-05-01313 Page 7
agency did so, having verified the existence of the error and also
having recognized that, as a result of its cor-rection, not only the
yield-loss factor changed, scrap revenue did as well. See id.; Brief
for Algoma Steel Inc., Exhibit 1.
The plaintiffs point out that this revision was produced
several months after the deadline for submission of fact- ual
information specified in 19 C.F.R. §353.31(a)(1)(ii) (1994). The
ITA concluded, however, that the submission was based upon the error
detected during verification and that the correction in scrap
revenue was not new information received in contravention of the
foregoing regulation. See 61 Fed.Reg. at 13,818. The court concurs;
that is, its receipt was in accordance with law.
As for plaintiffs' position that the correction is not
supported by substantial evidence, the record shows the yield-loss
percentage at the shearing stage to be a known figure, as are the
numbers for the volume and the value of Algoma's production of
sheared steel plate. Dividing that volume by that per-centage gives
a figure for the volume of steel entering that stage. That is, that
resultant number was derived; it was not otherwise determined in the
regular course of Algoma's process of manufacture. Hence, when the
percentage for yield loss was found during agency verification to be
too high, its downward adjustment necessarily increased the figure
Court No. 96-05-01313 Page 8
for the volume of unshorn plate and thus also for the cost thereof.
Since the volume and value of the finished product were known and
veri-fied, the net effect of the yield-loss percentage correction
was to increase the scrap-revenue number.
The plaintiffs complain that, "if only the total ton-nage
of scrap changes (and not the unit value of scrap) then, as a matter
of simple arithmetic, the rate of change of total scrap revenue
should be identical" to the rate of change in total ton-age of scrap.
Plaintiffs' Brief, p. 15, n. 25. However, the cor- rected yield-loss
percentage changed both total tonnage of scrap and its unit value.
When the yield-loss percentage decreased, the total amount of steel
entering the shearing stage and total costs at that stage increased.
Therefore, the scrap-revenue amount had to increase by the same
amount as the cost of the ad- ditional steel. The unit value of
scrap is derived by dividing the scrap-revenue amount by the total
volume of sheared plate. Since that volume of sheared plate was
fixed, the unit value of scrap also had to increase. In sum, the
record evidence supports the ITA's acceptance of Algoma's correction.
B
The plaintiffs allege that the ITA erred in accepting
Algoma's costs as reported. That is, the company produced sub-ject
merchandise on two mills, a 166-inch plate mill and a 106-inch strip
Court No. 96-05-01313 Page 9
mill, but the former rolled a greater percentage of cut-to-length
steel plate than the strip mill. Algoma calculated cost of production
on a process basis in which the monthly opera- tional costs were
recorded for each mill without allocation to specific products. See
R.Doc 306, p. 17.
During its administrative review, the ITA requested that
Algoma allocate costs on the basis of the different widths and gauges
of steel. In doing so, the company
started with total rolling costs for each mill for each
time period. Dividing that number by the tons produced by
the mill during the period yielded average rolling costs
per ton. Algoma then attributed rolling costs to
individual widths and gauges based on the average cost,
adjusted to reflect mill productivity in producing dif-
ferent widths and gauges.
Brief of Algoma Steel Inc., p. 16. The plaintiffs do not object to
this particular methodology, rather to Algoma's reliance on plate-
mill costs for those of the strip mill. As explained by the company,
the
Strip Mill produces non-subject merchandise almost
exclusively . . .. The only Strip Mill cost recorded in
Algoma's records, however, is overall cost of Strip Mill
operations for a time period, which is determined almost
entirely . . . by the cost of rolling merchandise that is
not subject to the investigation. There exists no
separate record for the cost of rolling sub-ject
merchandise on the Strip Mill -- there simply are no
"actual" costs for rolling of plate on the Strip Mill.
Instead, this number had to be developed by allocation.
Algoma had two options in this respect: either Algoma
could assign a cost that is drawn from Strip Mill
Court No. 96-05-01313 Page 10
experience, but reflects almost entirely non-subject
merchandise, or Algoma could assign a cost that reflects
the cost of subject merchandise as it is rolled on the
Plate Mill, assigning that cost to all plate irrespective
of whether the plate was produced on the Plate Mill or
the Strip Mill.
Id. at 16-17 (emphasis in original). Nonetheless, the plaintiffs
contend that, since the company was able to report actual costs, the
ITA should be required to apply to the strip mill the best
information otherwise available or "BIA", which was defined at the
time to include the factual information submitted in support of the
petition. 19 C.F.R. § 353.37(b) (1994).
Certainly, the ITA has a duty to make determinations as
accurately as possible. E.g., NTN Bearing Corp. v. United States, 74
F.3d 1204, 1208 (Fed.Cir. 1995); Rhone Poulenc, Inc. v. United
States, 899 F.2d 1185, 1191 (Fed.Cir. 1990). And parties should
provide the information requested in an accurate and timely manner.
See, e.g., Societe Nouvelle de Roulements v. United States, 19 CIT
1362, 1368, 910 F.Supp. 689, 694 (1995); Yamaha Motor Co. v. United
States, 19 CIT 1349, 1359, 910 F.Supp. 679, 687 (1995). Indeed,
failure to do so resulted in resort to best information otherwise
available per 19 U.S.C. §1677e and 19 C.F.R. §353.37 (1994). E.g.,
Union Camp Corp. v. United States, 20 CIT 931, 938-39, 941 F.Supp.
108, 115 (1996), and cases cited therein. Moreover, the agency, not
Court No. 96-05-01313 Page 11
a party under review, is responsible for deciding what information is
needed. See, e.g., Olympic Adhesives, Inc. v. United States, 899
F.2d 1565, 1572 (Fed.Cir. 1990); Comitex Knitters, Ltd. v. United
States, 16 CIT 817, 821, 803 F.Supp. 410, 414 (1992).
Historically, "Congress has granted Commerce consider-able
latitude in determining cost of production."5 There was no
requirement that actual costs be used or that a particular meth-
odology be followed. Rather, the agency had discretion to choose
between "reasonable alternatives". Technoimportexport, UCF Amer-ica
Inc. v. United States, 16 CIT 13, 18, 783 F.Supp. 1401, 1406 (1992).
Here, finding that Algoma was unable to provide pro-duct-
specific costs but that a "relatively accurate calculation" was
presented, the ITA verified the "soundness and reasonableness" of
that methodology. Defendant's Memorandum, p. 21, cit-ing Floral
Trade Council v. United States, 17 CIT 392, 399, 822 F.Supp. 766, 772
(1993). The plaintiffs claim that, because actual cost data were
available, yet unreported, the ITA had to rely on BIA, which the
agency was directed to use whenever it was "unable to verify the
accuracy of information submitted" or "whenever a party . . . [wa]s
unable to produce information re-quested in a timely manner and in
5 Timken Co. v. United States, 18 CIT 486, 494, 852 F.Supp.
1122, 1129 (1994). But see Uruguay Round Agreements Act, Pub.L. No.
103-465, §224, 108 Stat. 4809, 4882 (1994).
Court No. 96-05-01313 Page 12
the form required, or other- wise significantly impede[d] an invest-
igation." 19 U.S.C. § 1677e(b) & (c) (1994). In doing so, the
agency could consider the "degree of cooperation by the respondent .
. . in reaching its decision either to apply BIA or accept the
available infor-mation." AK Steel Corp. v. United States, 21 CIT
1204, 1223 (1997), remand results aff'd, 22 CIT , Slip Op. 98-106
(1998). Given this standard, this court cannot conclude that the ITA
was required to rely on BIA for Algoma.
The plaintiffs argue that the company's methodology skewes
the difference-in-merchandise ("difmer") adjustment and 20-percent
test for product comparability.6 Foreign-market value could be
adjusted for differences in price attributable to dif-ferences in
6 The petitioners stated in their brief before the agency in
regard to Algoma:
In the instances where the U.S. sales are match- ed
to non-identical home market products, there is no way to
ensure that the U.S. total cost of manufacture is
accurate, and therefore there is no way to determine
whether the 20 percent test (to show comparability) has
been properly performed. Moreover, there is no way to
determine that the U.S. variable costs, which are used to
calculate the difmer and, in turn, the margins for such
sales, are accurate. Accordingly, BIA must be used for
all such sales as well.
R.Doc 473, p. 14. Despite defendant's argument, the ITA did have an
opportunity to consider this matter, and it is therefore now properly
before the court.
Court No. 96-05-01313 Page 13
physical characteristics of the goods. See 19 U.S.C. §1677(16)(B) &
(C); §1677b(a)(4)(C) (1994). The ITA was author-ized to
make a reasonable allowance for differences in the
physical characteristics of merchandise compared to the
extent that [it] is satisfied that the amount of any
price differential is wholly or partly due to such
difference.
19 C.F.R. §353.57(a) (1994). Furthermore, in determining whether an
allowance is reasonable, the agency "normally will consider
differences in the cost of production but, where appropriate, may
also consider differences in the market value." Id., §353.57(b).
The 20-percent test is set forth in Import Administra-tion
Policy Bulletin 92.2 (July 29, 1992), wherein the ITA re-ports that,
when "the variable cost difference exceeds 20%, we consider . . . the
probable differences in values of the items to be compared [] so
large that they cannot be reasonably compared." See, e.g., SKF USA
Inc. v. United States, 19 CIT 54, 57, 874 F.Supp. 1395, 1399 (1995)
(this approach sustained on the ground that "there is a statutory
preference for comparison of most similar, if not identical,
merchandise").
Whenever actual costs are not available and the ITA
relies on a respondent’s other, existing data to ascertain the cost
of production, a petitioner may argue that they distort the difmer.
Court No. 96-05-01313 Page 14
But the law does not require reliance on actual costs, and the record
indicates that the ITA made a reasonably accurate assessment of the
costs in this case, thereby minimizing any arguable distortion.
The court is urged, "at the very least, [to] require the
Department to apply partial BIA in the comparison of non-identical
merchandise where at least one product was produced on the strip
mill or on both mills." Plaintiffs' Brief, p. 34. In support of
this plea, the plaintiffs cite Cemex, S.A. v. United States, 20 CIT
993 (1996), and Timken Co. v. United States, 18 CIT 897, 865 F.Supp.
850 (1994). In those two cases, however, the court upheld resort to
best information otherwise available where the ITA had repeatedly
requested information which the respondents failed to provide. Here,
the record re-flects Algoma Steel provided requested information, and
the agency's decision not to resort to BIA was in accordance with
law.
Court No. 96-05-01313 Page 15
C
Intervenor-defendant Stelco, Inc. claimed an adjustment to
foreign-market value for billing errors corrected by debit and credit
notes. See 61 Fed.Reg. at 13,831. The plaintiffs allege that the ITA
erred in accepting the adjustment. The defendant agrees that price
adjustments made for billing errors must be transaction-specific but
states that the company did allocate the debit and credit notes on a
transaction-specific basis. See id.Adjustments to the price of a product in response to
billing errors for a particular customer constitute direct sell-ing
expenses. Torrington Co. v. United States, 82 F.3d 1039, 1050
(Fed.Cir. 1996). In order to receive an adjustment for direct
selling expenses, they must be tied to specific trans-actions.7
Stelco's method "matched each credit and debit note to the specific
invoice or invoices to which the note applied so that the
7 Cf. NSK Ltd. v. United States, 190 F.3d 1321, 1328-29
(Fed.Cir. 1999) (adjustment for direct selling expenses denied
because not reported on a transaction-specific basis); AK Steel Corp.
v. United States, 21 CIT at 1224:
The adjustments at issue are not for widely avail-
able discounts, rebates or similar items which may or may
not be determinable on a fixed or constant basis across
numerous sales. Rather they are for generally variable
adjustments for clerical or other billing err- ors. Such
adjustments must be related on the record to specific
transactions, either directly or through proper
allocation.
Court No. 96-05-01313 Page 16
adjustments were transaction-specific". Defendant's Memorandum, p.
30. See also 61 Fed.Reg. at 13,831. The defend-ant notes that,
when the adjustment is made with reference to a specific
invoice or invoices that cover the merchandise under
investigation, it is clear that the adjustment is
transaction-specific, even if it is allocated.8
The "danger of allocation . . . is the averaging effect on prices."
61 Fed.Reg. at 13,831. Where, as here, price adjustments are tied to
specific invoices, allocations are essentially transaction-specific,
and that danger is diminished.
8 Defendant's Memorandum, p. 31. The ITA's Final Results herein
state that
Stelco reported the majority of these expenses on a
transaction-specific basis. However, on occasion, Stelco
allocated debit and credit notes for a par-ticular
customer over more than one invoice. While the
Department prefers that discounts, rebates and other price
adjustments be reported on a transac- tion-specific
basis, the Department has long recog-nized that some price
adjustments are not granted on that basis, and thus cannot
be reported on that basis.
61 Fed.Reg. at 13,831. In AK Steel Corp. v. United States, supra,
the court recognized that, "[w]hen dealing with limited adjustments
applicable to a very few invoices[,] the distinction between
'directly transaction specific' and 'properly allocated' seems to
blur", and upheld the allowance of properly allocated adjustments.
21 CIT at 1226. The court reported that the ad-justments therein "do
appear to be proper allocations." Id. In this case, while the ITA
does appear to be confused as to wheth-er or not Stelco's adjustments
are transaction-specific, it at least takes the position that the
adjustments are properly allo-cated. See 61 Fed.Reg. at 13,831-32.
Court No. 96-05-01313 Page 17
Plaintiffs’ position is also based on the discovery during
agency verification of an improper allocation to several sales of a
particular adjustment that actually pertained to just one. See
Plaintiffs' Brief, pp. 42-43. They claim that "this distortion did
not represent an isolated error in Stelco's re-porting; rather it
reflected Stelco's methodology for allocating price adjustments."
Id. at 44-45 (emphasis in original). Both the defendant and the
company claim it was indeed an "isolated instance" of incorrect
reporting, "resulting in a minor and limited . . . error" that
was "nothing more than a[] clerical oversight on the part of a Stelco
employee."9 Given the small number of verified sales with debit or
credit notes, however, this court is unable to determine on the
record presented wheth-er the agency's adjustment is supported by
substantial evidence.
D
9 Defendant's Memorandum, pp. 34-35. See also Stelco's Brief,
pp. 11-13. The company adds that it was "the very un-usual
circumstance that a single correcting credit note was issued for
two billing errors that was the cause of the cross-referencing
error." Stelco's Brief, p. 13. But the court fails to discern
evidence on the record that the company ordinarily issued a credit
note for each billing error.
Court No. 96-05-01313 Page 18
The ITA granted MRM a circumstances-of-sale adjustment to
foreign-market value for rebates given to customers on subject
merchandise. See 61 Fed.Reg. at 13,828. Such adjustments are
generally allow[ed] . . . for discounts and rebates where
respondents have granted and paid them on sales of subject
merchandise to unrelated parties during the period of
review. Such discounts or rebates should be part of a
respondent's standard business practice and not intended
to avoid potential antidumping duty liability.
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From the Federal Republic of Germany; Final Results
Court No. 96-05-01313 Page 19
of Antidumping Duty Administrative Review, 56 Fed.Reg. 31,692, 31,717
(July 11, 1991).
The plaintiffs complain that MRM presented insufficient
evidence to support its claimed adjustment, but the record shows that
the ITA was provided with substantial evidence in the form of
correspondence between the company and some of its cus-tomers noting
the existence of the rebates. See ConfDoc 194; Defendant's
Confidential Appendix, Exhibit 9. In addition, the agency was able
to verify that the adjustments were tied to the specific transactions
at issue. See id.
E
In determining MRM's cost of production, the ITA calcu-
lated the company's general-and-administrative ("G&A") expenses for
the period of review (February 1993 through July 1994) based upon
audited annual financial statements for 1993 and 1994. See 61
Fed.Reg. at 13,829. The plaintiffs contend that
MRM's inclusion of partial-year data in its reported G&A
expense ignores the Department's long-standing practice of
calculating G&A expense "using the annual audited income
statement for the [one] fiscal year covering the greatest
part of the [period of review]."
Plaintiffs' Brief, p. 61, citing Ferrosilicon From Brazil; Final
Results of Antidumping Duty Administrative Review, 61 Fed. Reg.
Court No. 96-05-01313 Page 20
59,407, 59,412 (Nov. 22, 1996). They ask this court to instruct the
agency "to recalculate MRM's G&A expense using MRM's 1993 annual
audited financial statements only." Id. at 62.
Court No. 96-05-01313 Page 21
As noted above, the ITA historically has had latitude in
determining cost of production but also has been charged with the
duty to make determinations as accurately as possible. The agency
admits that its
long-standing practice is to calculate G&A expenses from
the audited financial statements which most closely
correspond to the [period of review].
61 Fed.Reg. at 13,829. It does this because of "their nature as
period costs." Final Determination of Sales at Less Than Fair Value:
Furfuryl Alcohol From Thailand, 60 Fed.Reg. 22,557, 22,560 (May 8,
1995). General-and-administrative expenses
can neither be easily nor accurately matched to the
revenues generated from the sales of an individual unit
of production. Instead, G&A expenses are typ-ically
incurred in connection with a company's over- all
operations. Many expenses categorized as G&A, such as
insurance and bonus payments, are incurred sporadically
throughout the fiscal year. Moreover, G&A expenses are
often accrued during the fiscal year based on estimates
that are then adjusted to actual expenses at year-end.
Id.
In each determination cited by the plaintiffs to sup-port
their contention that the 1994 data should be excluded, the ITA took
such an approach because the data came from unaudited financial
statements. See, e.g., id. at 22,560-61; Certain Cut-to-Length
Carbon Steel Plate From Finland: Final Results of An-tidumping Duty
Administrative Review, 61 Fed.Reg. 2,792, 2,794 (Jan. 29, 1996);
Court No. 96-05-01313 Page 22
Final Determination of Sales at Less Than Fair Value: Canned
Pineapple Fruit From Thailand, 60 Fed.Reg. 29,553, 29,565 (June 5,
1995).
Reliance on full-year audited financial statements pro-
vides a more accurate picture of general production costs than
expenses attributed to a shorter period. Where, as here, however,
the period of review covered substantially more than one year, and
audited annual financial statements for the two years involved were
available, the ITA's decision to rely on both of them to determine
G&A expenses for MRM was within its discretion and is supported by
substantial evidence on the record.
F
The plaintiffs complain that the ITA should not have
allowed an adjustment to foreign-market value for MRM's estimat-ed
credit expenses because the company initially had records of actual
expenses but chose not to preserve them. See Plaintiffs' Brief, p.
55. The defendant agrees that this issue should be remanded for
reconsideration because the ITA
wrongly equated MRM's not retaining actual dates of
payment in its computer records beyond 90 days with the
circumstance where a respondent has no reason to ever
maintain such data.
Defendant's Memorandum, pp. 46-47.
Court No. 96-05-01313 Page 23
The company responds that automatic purging of this data
from its computer system was in line with its usual business
practice, complied with Canadian generally accepted accounting
principles, and the ITA "accepted an estimate because it was
reasonably accurate." Response Brief of Gerdau MRM Steel, pp. 10-11.
In NSK Ltd. v. United States, 19 CIT 1013, 1026, 896
F.Supp. 1263, 1274 (1995), aff'd in part, rev'd in part on other
grounds, 115 F.3d 965 (Fed.Cir. 1997), the court upheld the ITA's
disallowance of home-market credit expense where a respondent's
computer records did not permit transaction or cus-tomer-
specific calculation of credit expenses [and,]
consequently, it calculated this expense by allocat- ing
total home market credit expenses over each trans-action.
The court stated that "an adjustment to FMV for differences in
circumstances of sale is appropriate where the value determination is
directly correlated with specific in-scope merchandise on the basis
of actual costs." 19 CIT at 1026-27, 896 F.Supp. at 1274, citing
Smith-Corona Group, Consumer Prods. Div., SCM Corp. v. United States,
713 F.2d 1568, 1580 (Fed.Cir. 1983), cert. denied, 465 U.S. 1022(1984). In Krupp Stahl A.G. v. United States, 17 CIT 450, 822
F.Supp. 789 (1993), the court up-held resort to BIA where original
data were unavailable because the respondent had discarded its
Court No. 96-05-01313 Page 24
business records after five years in accordance with the rules of its
home country.
Here again, the court must emphasize that the most im-
portant consideration in cost determination is accuracy of the
information submitted. Respondents will not be allowed to manip-ulate
margins via reporting to their own convenience, nor will petitioners
be allowed to do so by insisting on BIA where another, accurate
approach is possible. If the ITA is able, upon
Court No. 96-05-01313 Page 25
remand, to make a reasonably accurate estimation of the credit
expenses tied to specific transactions from the data submitted by
MRM, resort to BIA, which is now called "facts otherwise available"
in the Trade Agreements Act of 1979, as amended by the Uruguay Round
Agreements Act, Pub. L. No. 103-465, §231(c), 108 Stat. 4809, 4896
(1994), should not occur. If, however, the agency is unable to verify
the accuracy of the data made available, reliance on BIA would be
appropriate.
G
The plaintiffs complain about a ministerial error in
Algoma's model-match program. Both the defendant and the com-pany
confirm the existence of such an error. See Defendant's Memorandum,
p. 14; Brief for Algoma Steel Inc., p. 30.
II
In view of the foregoing, plaintiffs' motion for judg-ment
upon the agency record must be granted to the extent of re-mand to
the ITA for reconsideration of (c) their allegation of a
methodological problem in Stelco, Inc.'s allocation of price
adjustments and (f) the allowance of an adjustment for MRM's credit
expenses, as well as (g) to correct the agreed-upon min- isterial
Court No. 96-05-01313 Page 26
error in Algoma Steel Inc.'s model-match program. In all other
respects, the aforesaid motion must be, and it hereby is, denied.
The agency may have 90 days for such reconsideration and
to report the results thereof to this court, whereupon the parties
may serve and file any comments thereon within 30 days, with replies
thereto due 15 days thereafter.
So ordered.
Decided: New York, New York
June 2, 2000
______________________________
Judge