2012 CIT 86
Ct. Intl. Trade2012Background
- TPBI is a Thai producer of polyethylene retail carrier bags, and PRCBC comprises domestic producers that challenge Commerce’s fifth AD review of PRCBs.
- The fourth and fifth reviews involved TPBI cost allocations, DIFMER adjustments, and adjustments to conversion costs.
- PRCBC challenges four aspects: TPBI’s cost allocation adjustments, Commerce’s use of zeroing, the transactions-disregarded rule for LLD resin, and TPBI’s 2009 inventory valuation losses excluded from G&A.
- The court remands issues 2 (zeroing) and 3 (transactions-disregarded rule) for further explanation; issues 1 (cost allocation) and 4 (inventory losses) are affirmed.
- Standard of review requires substantial evidence and consistency with law; the court may remand for additional justification when needed.
- The court sets remand proceedings and deadlines for Commerce’s redetermination and parties’ comments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce properly reallocates TPBI costs | TPBI argues TPBI’s costs reflect normal GAAP practices; relocation distortions are not warranted | Commerce reasonably reallocated costs to reflect true costs and prevent distortions | TPBI’s cost-reallocation methodology was reasonable and sustained (issue 1 affirmed) |
| Whether zeroing is permissible in reviews | TPBI challenges zeroing citing WTO rulings and inconsistent interpretation | Commerce uses zeroing to combat masked dumping; exhaustion arguments raised | Remanded for explanation of zeroing rationale (issue 2 remanded) |
| Whether the major input/transactions-disregarded rule was applied correctly to TPBI’s resin | TPBI contends the major-input rule should apply; arguments about specificity and affiliate pricing | Commerce ultimately used the transactions-disregarded rule | Remanded to reconsider and provide proper comments on the applied method (issue 3 remanded) |
| Whether TPBI’s 2009 inventory valuation losses were properly excluded from G&A | PRCBC argues losses should be included in cost of production | Record evidence supports excluding finished-goods-related losses from G&A | Affirmed; losses attributed to finished goods properly excluded (issue 4 affirmed) |
| Whether the record supports adjustments to DIFMER and related cost allocations | TPBI contends DIFMER is misapplied and cost factors were not adequately benchmarked | Commerce reasonably used DIFMER reflecting physical differences to adjust costs | Affirmed (part of issue 1) |
Key Cases Cited
- Dongbu Steel Co. v. United States, 635 F.3d 1363 (Fed. Cir. 2011) (inconsistent interpretations of 19 U.S.C. § 1677(35) are arbitrary without justification)
- JTEKT Corp. v. United States, 642 F.3d 1378 (Fed. Cir. 2011) (addresses reasonableness of interpreting § 1677(35) across contexts)
- Timken Co. v. United States, 354 F.3d 1334 (Fed. Cir. 2004) (zeroing vs. offsetting methodologies under § 1677(35))
- NTN Bearing Corp. of America v. United States, 368 F.3d 1369 (Fed. Cir. 2004) (major-input rule and use of affiliated supplier data in cost adjustments)
- Nippon Steel Corp. v. United States, 458 F.3d 1345 (Fed. Cir. 2006) (context for substantial evidence and reasonableness in administrative determinations)