Dong-A Steel Co. v. United StatesDong-A Steel Co. v. United States
OPINION
[Sustaining a final determination of sales at less than fair value issued by the U.S. Department of Commerce following the antidumping duty investigation of heavy walled rectangular welded pipes and tubes from the Republic of Korea.]
Dated: October 3, 2018
Christopher T. Cloutier, Schagrin Associates, of Washington, D.C., argued for Consolidated Plaintiff and Defendant-Intervenor Atlas Tube and Defendant-Intervenors Searing Industries and Bull Moose Tube Company. With him on the brief was Roger B. Schagrin. Elizabeth J. Drake, John W. Bohn, and Paul W. Jameson also appeared.
Timothy C. Brightbill and Cynthia C. Galvez, Wiley Rein LLP, of Washington, D.C., for Plaintiff-Intervenor and Defendant-Intervenor Independence Tube Corporation and Defendant-Intervenor Southland Tube Inc. With them on the brief was Alan H. Price. Adam M. Teslik, Christopher B. Weld, Derick G. Holt, Jeffrey O. Frank, Laura El-Sabaawi, Maureen E. Thorson, Robert E. DeFrancesco, III, Stephanie M. Bell, Tessa V. Capeloto, and Usha Neelakantan also appeared.
Tara K. Hogan, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justicе, of Washington, D.C., argued for Defendant United States. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Zachary Simmons, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, D.C. Mercedes C. Morno, Of Counsel, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, D.C., also appeared.
Jeffrey M. Winton and Daniel E. Parga, Law Office of Jeffrey M. Winton PLLC, of Washington, D.C., argued for Defendant-Intervenor HiSteel Co., Ltd. Amrietha Nellan also appeared.
Choe-Groves, Judge: This case involves an antidumping duty investigation of heavy walled rectangular welded carbon steel pipes and tubes from the Republic of Korea (“Korea“). The court reviews a final antidumping duty determination issued by the U.S. Department of Commerce (“Commerce” or “Department“) concluding that imports of heavy walled rectangular welded carbon steel pipes and tubes from Korea are being, or are likely to be, sold at less than fair value. See Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes From the Republic of Korea, 81 Fed. Reg. 47,347 (Dep‘t Commerce July 21, 2016) (final determination of sales at less than fair value) (“Final Determination“); see also Issues and Decision Memorandum for the Final Affirmative Determination in the Less-Than-Fair-Value Investigation of Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea, A-580-880, (July 14, 2016), available at http://enforcement.trade.gov/frn/summary/korea-south/2016-17313-1.pdf (last visited Sept. 28, 2018) (“Final Decision Memorandum“).
Dong-A Steel Company (“DOSCO“), Atlas Tube (“Atlas Tube“), and Independence Tube Corporation (“Independence Tube“) filed
- the decision to use the earlier of either the invoice date or the shipment date as the “date of sale“;
- the decision to assign full costs to non-prime merchandise;
- the decision to adjust DOSCO‘s reported hot-rolled coil costs for merchandise that was identical in all physical characteristics except for paint;
- the decision to compare merchandise on a theoretical weight basis;
- the decision to deny a constructed export price offset to DOSCO; and
- the decision to use the zeroing methodology in Commerce‘s differential pricing analysis.
Defendant United States (“Government“) and Defendant-Intervenor HiSteel Co., Ltd. (“HiSteel“) oppose the
PROCEDURAL HISTORY
Atlas Tube, Bull Moose Tube Company, EXLTUBE, Hannibal Industries, Inc., Independence Tube, Maruichi American Corporation, Searing Industries, Southland Tube, and Vest, Inc. (collectively, “Petitioners“) filed petitions seeking an antidumping duty order on heavy walled rectangular welded carbon steel pipes and tubes from Korea. See Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea, Mexico, and the Republic of Turkey, 80 Fed. Reg. 49,202, 49,203 (Aug. 17, 2015) (initiation of less-than-fair-value investigations). Commerce initiated a less-than-fair-value investigation of the subject merchandise from Korea. See id. at 49,205. Commerce selected DOSCO and HiSteel as mandatory respondents because they were the two largest publicly-identifiable producers and exporters of heavy walled rectangular welded carbon steel pipes and tubes by volume. See Decision Memorandum for the Preliminary Determination in the Antidumping Duty Investigation of Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea (Korea) at 2, A-580-880, (Feb. 22, 2016), available at http://enforcement.trade.gov/frn/summary/korea-south/2016-04520-1.pdf (last visited Sept. 28, 2018) (“Preliminary Decision Memorandum“); see also Respondent Selection for the Antidumping Duty Investigation of Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea, PD 25, bar code 3302635-01 (Sept. 4, 2015).
DOSCO and HiSteel submitted timely responses to Commerce‘s initial questionnaire in October and November 2015. See HiSteel Response to Section A of Questionnaire, CD 13–17, bar code 3405116-01 (Oct. 13, 2015) (“HiSteel Sec. A Resp.“); DOSCO Section A Response, CD 18–23,
In its preliminary determination, Commerce assigned weighted-average dumping margins of 2.53 percent to DOSCO and 3.81 percent to HiSteel. See Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes From the Republic of Korea, 81 Fed. Reg. 10,585, 10,586 (Dep‘t Commerce Mar. 1 2016) (preliminary determination of sales at less than fair value and postponement of final determination); Preliminary Decision Memorandum at 2. After considering the parties’ arguments in thеir administrative case and rebuttal briefs, Commerce issued its final determination on July 21, 2016. See Final Determination, 81 Fed. Reg. at 47,347. Commerce calculated margins of 2.34 percent for DOSCO and 3.82 percent for HiSteel. See id. at 47,348.
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,
ANALYSIS
I. Date of Sale
The first issue before the court is whether Commerce erred in deciding to use the earlier of either the invoice date or the shipment date as the “date of sale,” rather than using the purchase order date. Atlas Tube and Independence Tube argue that Commerce erred by ignoring both precedent and record evidence and ask the court to find that Commerce‘s actions were neither supported by substantial evidence nor in accordance with the law. See Atlas Tube‘s Br. 10; Independence Tube‘s Br. 2, 7. The Government counters that Commerce‘s decisions regarding date of sale were reasonable and should be upheld because the dates used best reflected when the material terms of sale were established. See Def.‘s Resp. 9–14.
Commerce issuеd antidumping duty questionnaires to DOSCO and HiSteel after selecting the two companies as mandatory respondents in this investigation. See Preliminary Decision Memorandum at 2; see also Respondent Selection for the Antidumping Duty Investigation of Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of
Commerce stated that it “has a long-standing practice of finding that, where the shipment date precedes the invoice date, the shipment date better reflects the date on which the material terms of sale are established.” Id. (footnotes omitted). Accordingly, Commerce decided preliminarily to use “the earlier of the invoice date or the shipment date as the date of sale in both markets, in accordance with [its] practice.” Id. at 8.
Petitioners disputed the date of sale for U.S. market sales selected by Commerce in the preliminary determination. Petitioners argued that Commerce:
[S]hould instead use the date of the purchase order because: 1) under the Department‘s regulations, the Department may use a different date if it better reflects when the respondent establishes the material terms of sale; 2) both respondents intended the terms of sale to be final as of that date; and 3) sales documentation submitted by both respondents demonstrates thаt there were no changes to the material terms of sale after the purchase order date.
Final Decision Memorandum at 4 (footnotes omitted). Petitioners requested that Commerce either request additional information or, pursuant to
In the final determination, Commerce “continue[d] to find that the earlier of factory shipment date or invoice date correctly reflects the date on which the material terms of DOSCO‘s and HiSteel‘s U.S. sales are finalized.” Final Decision Memorandum at 6. Commerce relied upon the fact that HiSteel reported the invoice date as the date of sale for export price sales, whereas DOSCO reported the invoice date as the date of sale for export price sales and the shipment date as the date of sale for constructed export price sales. Id. (citing HiSteel Sec. B–C Resp. at 49; DOSCO Sec. B–D Resp. at C-16). Commerce verified that the prices and/or quantities can and do change after the order date, and both DOSCO and HiSteel provided documentation stating that the changes exceeded the allowable tolerance. See id. (citing DOSCO Sec. A Resp. at A-23–A-24; DOSCO Suppl. Sec. A–C Resp. at 3, Ex. SA-4; HiSteel Sec. A Resp. at 21, App‘x A-6-B; Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea—Sales Verification Exhibits at Ex. 17, CR 253–258, 262–270, bar code 3451968-40 (Apr. 1, 2016) (“HiSteel Ex. VE-17“)). Commerce disagreed with Petitioners’
Commerce must conduct a “fair comparison” of normal value and export price in determining whether merchandise is being, or is likely to be, sold at less than fair value. See
In identifying the date of sale of the subject merchandise or foreign like product, [Commerce] normally will use the date of invoice, as recorded in the exporter or producer‘s records kept in the ordinary course of business. However, [Commerce] may use a date other than the date of invoice if [Commerce] is satisfied that a different date better reflects the date on which the exporter or producer establishes the material terms of sale.
In promulgating the implementing regulation, Commerce explained that “as a matter of commercial reality, the date on which the terms of a sale are first agreed is not necessarily the date on which those terms are finally established” because “price and quantity are often subject to continued negotiation between the buyer and the seller until a sаle is invoiced.” Antidumping Duties; Countervailing Duties, 62 Fed. Reg. 27,296, 27,348 (Dep‘t Commerce May 19, 1997). “[A]bsent satisfactory evidence that the terms of sale were finally established on a different date, the Department will presume that the date of sale is the date of invoice. . . . If the Department is presented with satisfactory evidence that the material terms of sale are finally established on a date other than the date of invoice, the Department will use that alternative date as the date of sale.” Id. at 27,349. Commerce will rely on the date provided on the invoice “as recorded in a firm‘s records kept in the ordinary course of business.” Id. at 27,348. Rather than determine the date of sale for each sale, Commerce prefers to use a single and uniform source for the date of sale for each respondent. Id. The party seeking a date other than the invoice date bears the burden of presenting Commerce with sufficient evidence demonstrating that “another date . . . ‘better reflects the date on which the exporter or producer establishes the material terms of sale.‘” Viraj Group, Ltd. v. United States, 343 F.3d 1371, 1377 n.1 (Fed. Cir. 2003) (citing
Commerce applied its regulatory presumption correctly in favor of the earlier invoice date or shipment date when conducting
Atlas Tube and Independence Tube have the burden of proof to demonstrate that another proposed date better reflects the date on which the material terms of sale were established.
With respect to HiSteel, Atlas Tube and Independence Tube argue that HiSteel and its customer had the necessary meeting of the minds on the purchase order date, demonstrated by HiSteel‘s sample sales documentation showing that the quantity shipped was within the tolerance level shown on the purchase order. See Atlas Tube‘s Br. 16–17; Independence Tube‘s Br. 9–10. This argument fails, however, because Commerce considered numerous other documents on the record showing that quantities shipped were outside the level of tolerance of the purchase order and concluded reasonably that there was no meeting of the minds on the purchase order date. For example, a sample direct U.S. sale order submitted by HiSteel showed that the difference in the ordered quantity from the purchase order dated September 18, 2014 and the quantity stated in the commercial invoice dated November 13, 2014 exceeded the permitted tolerance stated in the terms of the purchase order. See HiSteel Sec. A Resp. at 21, App‘x A-6-B. Commerce cited another example of a direct U.S. sale order where the difference in the quantity listed in the purchase order dated March 25, 2015 and the quantity stated in the commercial invoice dated May 7, 2015 also exceeded the allowed tolerance. See HiSteel Ex. VE-17. For an indirect sale (through the Korean unaffiliated intermediary), the difference between the ordered quantity from the purchase order dated January 12, 2015 and the quantity stated in the bill of lading dated March 15, 2015 appears to be within the permitted tolerance level. See HiSteel Sec. A Resp. at 21, App‘x A-6-B. HiSteel itself states that “U.S. sales are made pursuant to written purchasе orders, which specify the price and estimated quantity,” but “[t]he final quantity is not fixed . . .
With respect to DOSCO, Atlas Tube and Independence Tube argue that DOSCO and its customer had the necessary meeting of the minds on the purchase order date and that the canceled portions of the purchase order should not be considered changes in the material terms of sale. See Atlas Tube‘s Br. 17–18; Independence Tube‘s Br. 11. Atlas Tube and Independence Tube have the burden to show that thе purchase order date better reflects the material terms of sale. See Viraj Group, 343 F.3d at 1377 n.1. DOSCO stated that “[f]or U.S. sales, quantity and delivery terms can change up until shipment from DOSCO‘s factory,” and that “[q]uantity can change after the initial purchase order and order confirmation, for instance, because of overruns and shortages.” DOSCO Sec. A Resp. at A-23. Documents on the record show that quantities stated in the purchase order differed significantly from the shipped quantities and exceeded the allowed tolerances. See DOSCO Suppl. Sec. A–C Resp. at Ex. SA-4. Atlas Tube and Independence Tube contend that the discrepancy in quantity was due to the buyer‘s cancellation of portions of the order, and that by discounting the canceled portions of the order, the quantities shipped could be viewed as being within the allowed tolerances. Commerce reasoned, however, that “the portion of any given order that never shipped is a change to the quantity originally ordered by the customer.” Final Decision Memorandum at 6–7. It was reasonable to view the canceled portions and difference in shipped quantities to be a variance in the material terms of sale. Because the evidence on the record demonstrated that shipped quantities were significantly fewer than the purchase order quantities and were outside the allowed tolerances, it was reasonable for Commerce to find that Petitioners did not sufficiently establish that there was a required meeting of the minds regarding the quantity of products at the time of the purchase order. See USEC Inc., 31 CIT at 1055, 498 F. Supp. 2d at 1344–45. Commerce‘s decision to use the earlier of the invoice date or the shipment date for DOSCO was reasonable and supported by evidence on the record. Based on the foregoing, the court affirms Commerce‘s decision to use the earlier of the invoice date or shipment date as the date of sale.
II. Assignment of Costs for Non-Prime Merchandise
The second issue before the court is whether Commerce‘s decision to assign full costs to the non-prime heavy walled rectangular welded carbon steel pipe and tube was supported by substantial evidence. The Government argues that Commerce reasonably determined that full costs were appropriate based on the review of record evidence for the non-prime merchandise of both DOSCO and HiSteel. Atlas Tube and Independence Tube argue that Commerce erred by not adjusting the
Atlas Tube and Independence Tube argue that full production costs should not be assigned to non-prime merchandise based on: (1) evidence on the record demonstrating that non-prime merchandise was sold at a discount without certification or warranty, and (2) lack of record evidence showing that non-prime products are generally used for the same applications as prime products. Final Decision Memorandum at 13. Commerce reviewed the record evidence and concluded that DOSCO‘s non-prime products were rusted pipes, and HiSteel‘s non-prime products consisted of products with minor defects, including dents or weld defects, that prevented HiSteel from certifying the product as free from deformities. See Final Decision Memorandum at 15 (Verification of the Cost Response of Dong-A Steel Company in the Antidumping Duty Less Than Fair Value Investigation of Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea at 21, CD 273, bar code 3456223-01 (Apr. 5, 2016) (“DOSCO Cost Verification Report“); HiSteel Suppl. Sec. D Resp. at 7). Commerce concluded that the record documents showed that DOSCO‘s non-prime products were used in the same general applications as primе products, and HiSteel‘s customers could use the non-prime and prime products interchangeably for any suitable application. See id. (citing DOSCO Cost Verification Report at 21; HiSteel Suppl. Sec. D Resp. at 7). Commerce found that the sales prices of DOSCO‘s and HiSteel‘s non-prime products do not reflect a significant difference from the sales prices of prime products. See id. (citing DOSCO Cost Verification Report at 21; HiSteel Suppl. Sec. D Resp. at App‘x SD-4). Based on the record evidence, Commerce elected not to adjust the costs assigned to non-prime products because it found that the costs calculated by DOSCO and HiSteel reasonably reflect the costs associated with the production of the subject merchandise. Id.
Atlas Tube and Independence Tube counter that Commerce should have adjusted the costs reported by DOSCO and HiSteel. Atlas Tube and Independence Tube argue that Commerce erred because record evidence established that non-prime merchandise was sold without certification or warranty at a thirty-percent discount from prime merchandise; there was no evidence that non-prime merchandise is generally used for the same applications as prime merchandise; Commerce has a practice of treating non-prime sales as scrap that is not assigned costs; and non-prime merchandise differs from prime merchandise in inventory values. See Atlas Tube‘s Br. 21–25; Independence Tube‘s Br. 13–15.
Commerce normally calculates costs “based on the records of the exporter or producer of the merchandise, if such records are kept in accordance with generally accepted accounting principles [“GAAP“] of the exporting country (or the producing country, where appropriate) and reasonably reflect the costs associated with the production and sale of the merchandise.”
With respect to DOSCO‘s non-prime products (such as defective or rusted pipes), Commerce verified that DOSCO allocates the same costs to non-prime products as prime products in its books and records, which were kept in acсordance with Korean GAAP. See DOSCO Cost Verification Report at 21. The non-prime products were sold at a discount and without a warranty, but evidence on the record includes DOSCO‘s statements that customers generally use the non-prime products for the same applications as prime products, such as identical light load-bearing applications. See id. Despite the discounted sales prices, Commerce determined that “the sales (i.e., market) prices of DOSCO‘s non-prime products do not reflect a significant difference from the full costs that the company assigns to them in the normal course of business.” Final Decision Memorandum at 15 (citing DOSCO Cost Verification Report at 21). The non-prime products are manufactured using the same materials and undergo the same production processes as prime products, indicating that the production costs for both types of products are comparable, if not the same. See id. Commerce‘s decision was supported by the fact that DOSCO documented sales of non-prime products in its sales database in the normal course of its business operation. See DOSCO Cost Verification Report at 21. Based on the evidence on the record, Commerce dеtermined that DOSCO‘s records assigning full costs to non-prime merchandise reasonably reflected the costs associated with the production and sale of non-prime merchandise. The court affirms Commerce‘s decision to assign full costs to DOSCO‘s non-prime merchandise.
With respect to HiSteel‘s non-prime merchandise, HiSteel‘s production process produces non-prime merchandise in the form of “dents, weld-defects, or other deformations” and other products that “developed excessive surface rust while stored in inventory.” See HiSteel Suppl. Sec. D Resp. at 6, App‘x SD-4; HiSteel Sec. D Resp. at 4. The minor defects prevent the non-prime products from meeting industry specifications. HiSteel Sec. D Resp. at 4. These non-prime products are “sold as off-grade pipe [and] are treated as fully-costed products, and not as scrap, in HiSteel‘s normal accounting system.” Id. The defects of the non-prime products identified at the conclusion of the production process prevent HiSteel “from warranting that the product conforms to the relevant industry specifications and has no defects.” HiSteel Suppl. Sec. D Resp. at 6–7. However, “[c]ustomers may use prime and non-prime products in any aрplications for which they consider the products suitable.” Id. at 7. HiSteel treats prime and non-prime products as distinct products and maintains records of the actual costs incurred for the production of each. See id. at 7, App‘x SD-4.
Commerce determined that “the sales prices of non-prime products do not reflect a significant difference from the sales prices of prime products.” Final Decision Memorandum at 15 (citing HiSteel Suppl. Sec. D Resp. at App‘x SD-4). Commerce examined evidence on the record that the non-prime products were sold at a discount and without a warranty, but that customers used the non-prime pipe in applications that each individually found suitable. See HiSteel Sec. D Resp. at 4. Commerce also noted that HiSteel included its sales of non-prime merchandise in its sales database. See id.
Substantial evidence on the record supports Commerce‘s decision to assign full costs to HiSteel‘s production of non-prime merchandise. HiSteel‘s products undergo the same production process during which some products are dented, incorrectly welded, or otherwise deformed. See HiSteel Sec. D Resp. at 4–7. HiSteel stated that both prime and non-prime products may be used in any suitable application but cannot warrant that the non-prime products conform to industry specifications. See id. at 7. There is no evidence suggesting that the non-prime products are unsuitable for use in the same general applications as prime products. Record evidence established that non-prime products with weld defects or excessive surface rust were generally used by customers for the same applications as prime merchandise. See Final Decision Memorandum at 15; see also DOSCO Cost Verification Report at 21; HiSteel Suppl. Sec. D Resp. at 7. Commerce‘s decision was supported by the fact that HiSteel documented sales of nоn-prime merchandise in its sales database in the normal course of its business operations. See HiSteel Suppl. Sec. D Resp. at App‘x SD-4. Based on the evidence on the record, it was reasonable for Commerce to determine that HiSteel‘s records assigning full costs to non-prime merchandise adequately reflected the costs associated with the production and sale of non-prime merchandise. The court concludes that Commerce‘s decision to assign full costs to HiSteel‘s non-prime merchandise was supported by substantial evidence.
III. Adjustment to Reported Hot-Rolled Coil Costs
The third issue before the court is whether Commerce erred in deciding to adjust DOSCO‘s reported hot-rolled coil costs for products that were identical in all physical characteristics except for paint. Plaintiff argues that Commerce erred in adjusting its reported costs for painted products by ignoring evidence establishing the reasonableness and accuracy of DOSCO‘s reported raw material costs. See DOSCO‘s Br. 35–39. The Government argues that Commerce acted properly when it determined that DOSCO‘s records did not reasonably reflect the different production costs for two control numbers that are physically identical except for onе being painted. See Def.‘s Resp. 33–36.
In the preliminary determination, Commerce adjusted DOSCO‘s reported raw material costs for product control numbers that were identical in all physical characteristics except painting to reflect the
Raw material costs for products shall normally be calculated based on the records of the exporter or producer of the merchandise.
the exporting country, and (2) reasonably reflect the costs associated with the production and sale of the merchandise. Id. In other words, the statute provides that as a general rule, an agency may either accept financial records kept according to generally accepted accounting principles in the country of exportation, or reject the records if accepting them would distort the company‘s true costs. Am. Silicon Techs. v. United States, 261 F.3d 1371, 1377 (Fed. Cir. 2001) (citing Thai Pineapple Pub. Co., Ltd. v. United States, 187 F.3d 1362, 1366 (Fed. Cir. 1999); NTN Bearing Corp. v. United States, 74 F.3d 1204, 1206 (Fed. Cir. 1995)). Commerce is directed to consider all available evidence on the proper allocation of costs.
Physical characteristics are a prime consideration when Commerce conducts its analysis. Thai Plastic Bags Indus. Co., Ltd. v. United States, 746 F.3d 1358, 1368 (Fed. Cir. 2014). If factors beyond the physical characteristics influence the costs, however, Cоmmerce will normally adjust the reported costs in order to reflect the costs that are based only on the physical characteristics. See id. Commerce interprets the proper allocation of adjustment to costs. Id.
DOSCO claims that Commerce‘s adjustments to its raw material costs for painted products unreasonably and unlawfully ignored verified record evidence establishing the reasonableness and accuracy of DOSCO‘s reported costs. See DOSCO‘s Br. 35. Plaintiff contends that the specific reported costs from DOSCO‘s books are the most accurate and should be used to determine the cost of production. See id. at 36–37. Commerce does not dispute that DOSCO‘s accounting practices met Korean GAAP as required by
Commerce had to determine whether the reported costs were a reasonable reflection of the cost of production. See
Commerce‘s normal practice is to use the annual average costs of the period of investigation to even out variances in the production costs during different periods of time, as well as fluctuating raw material costs and erratic production levels. Commerce adjusts these costs to ensure different costs between products are the result only of the physical differences. Commerce is permitted to consider all available evidence on the proper allocation of costs,including physical characteristics of the products at issue. See Thai Plastic Bags, 746 F.3d at 1368.
Here, Commerce determined that the difference in price was based on the fluctuating raw material costs during the period of investigation because one product was produced mainly during only part of the year, a fact with which DOSCO agrees. See Final Decision Memorandum at 51–53. The court finds that it was reasonable for Commerce to use annual average costs in order to even out fluctuations in the production costs over short periods of time for goods that only differed based on one being painted and one not being painted. See
IV. Weight Basis for Comparison Methodology
The fourth issue before the court is whether Commerce erred in deciding to compare merchandise on a theoretical weight basis. DOSCO argues that Commerce should have used actual weight in the final determination. Defendant contends that DOSCO‘s favored method of using actual weight is based on nominal values, not actual measurements, and is no more accurate than Commerce‘s preferred measurement of theoretical weight.
Three types of weight bases were examined in this case. The court adopts DOSCO‘s terminology, which DOSCO describes as follows:
- “Scaled Weight“: This reflects the physical weight that a company determines by placing the finished product on a scale.
- “Actual Weight“: This reflects the weight determined through the use of a standard industry formula that is based on the actual wall thickness of the finished pipe product.
-
“Theoretical Weight“: This reflects a weight determined through the use of a standard industry formula, but is based on the nominal wall thickness of the input coil, and that nominal wall thickness is subject to tolerances that differ vastly between the home market and the U.S. market.
DOSCO‘s Br. 5.
DOSCO and HiSteel reported the actual weight and theoretical weight of their finished products. See DOSCO Sec. A Resp. at A-31–A-32; DOSCO Sec. B–D Resp. at B-19–B-20, C-21–C-22, D-34. DOSCO did not physically weigh the merchandise. DOSCO Sec. A Resp. at A-32; DOSCO Sec. B–D Resp. at B-19, C-21. DOSCO‘s U.S. customers ordered products based on nominal dimensions and were invoiced based on theoretical weight. See DOSCO Sec. A Resp. at A-31–A-32, Ex. A-16. DOSCO argues that actual weight reflects the basis on which DOSCO and its U.S. affiliate set prices and negotiate with its customers. See DOSCO‘s Br. 7. DOSCO states that actual weight is based on the actual measured thickness of the input coil as stated in mill test certificates. See id. at 7–8.
In the preliminary determination, Commerce used theoretical weight to compare normal value with export price and constructed export price. See Preliminary Decision Memorandum at 4 n.15 (citing Less Than Fair Value Antidumping Duty Investigation of Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea: Preliminary Determination Calculation for Dong-A Steel Company (DOSCO), PD 152, bar code 3444143-01 (Feb. 22, 2016)). DOSCO challenged the preliminary determination, arguing that it was morereasonable and accurate to use actual weight to measure and compare prices, expenses, and costs because it is based on the actual wall thickness of the input coil. See Final Decision Memorandum at 7. The coil thickness remains the same throughout the production process and is the same as the final pipe or tube thickness. See id. at 7–8. DOSCO cited to mill test certificates from its supplier, stating that “[w]e hereby certify that the material has been made in accordance with the order and specification.” See Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea—Sales Verification Exhibits at Exs. 8–22, CD 262–270, bar code 3454562-12 (Apr. 1, 2016).
In its final determination, Commerce determined that the recorded thickness of the input coil is not an actual measured thickness, based on HiSteel‘s statement that the wall thicknesses of the input coil are theoretical thicknesses that vary within industry tolerances. See Final Decision Memorandum at 7 (citing Verification of the Sales Response of HiSteel Co., Ltd. in the Antidumping Duty Invеstigation of Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from Korea at 9, CD 275, bar code 3456605-01 (Apr. 6, 2016) (“HiSteel Sales Verification Report“); Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from Korea—Verification Exhibits at Ex. 6, CD 198–251, bar code 3451968-01 (Mar. 24, 2016) (“HiSteel Verification Exhibits“)). Commerce relied on a mill test certificate provided by HiSteel‘s supplier. See HiSteel Verification Exhibits at Ex. 6. Commerce‘s product control number also used nominal product dimensions as reported by the respondents to match sales for comparison purposes. See Final Decision Memorandum at 12.
DOSCO objects to Commerce‘s decision to compare the products on a theoretical weight basis instead of an actual weight basis. See DOSCO‘s Br. 4–16. Plaintiff puts forth threearguments to support why Commerce erred in using the theoretical
With respect to DOSCO‘s first allegation, DOSCO objects to Commerce‘s finding that the actual wall thickness is not an actual measurement. See id. at 12–14. Commerce used theoretical weight because HiSteel‘s verification materials stated that input coil measurements were nominal measurements. See Final Decision Memorandum at 13 (citing HiSteel Sales Verification Report at 9 and HiSteel Verification Exhibits at Ex. 6). HiSteel‘s mill test certificate was nearly identical to DOSCO‘s mill test certificate. Compare Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea—Cost Verification Exhibits at Ex. 12, CD 126, bar code 3446551-01 (Mar. 4, 2016) with HiSteel Verification Exhibits at Ex. 17. The court finds that Commerce was reasonable in considering the nearly identical language from DOSCO‘s and HiSteel‘s mill test certificates, along with HiSteel‘s statement that coil measurements are nominal, to mean that if one is based on nominal measurements, then so is the other. The mill test certificates and HiSteel‘s statement are sufficient evidence for Commerce to have reached a reasonable conclusion that the actual weight is based on nominal weight. The court concludes that Commerce‘s choice to use theoretical weight was reasonable and based upon evidence on the record.
With respect to DOSCO‘s second allegation, DOSCO argues that Commerce‘s conversion of the submitted data from actual weight to theoretical weight was unreasonable because it introduced distortions into the antidumping duty calculations. See DOSCO‘s Br. 14–16. According to DOSCO, Commerce should have used actual weight, which represents weight that was calculated from actual measurements of coil thickness and would have prevented the introduction of distortions into the calculation. See id. Commerce supported its decision to use theoretical weight based in part on the fact that DOSCO sold products to its U.S. customers using nominal dimensions and admitted that it invoiced on a theoretical weight basis. See DOSCO Sec. A Resp. at A-31–A-32, Ex. A-16; DOSCO‘s Br. 10. Ordering based on nominal dimensions and invoicing on a theoretical weight basis are consistent with using theoretical weight. Commerce has a “general preference for making sales comparisons on the basis on which U.S. sales were made.” Certain Welded Stainless Steel Pipe From the Republic of Korea, 57 Fed. Reg. 53,693, 53,698 (Dep‘t Commerce Nov. 12, 1992) (final determination of sales at less than fair value). Commerce‘s decision to use theoretical weight is supported by evidence on the record that U.S. customers ordered and were billed using nominal values. See DOSCO Sec. A Resp. at A-31–A-32, Ex. A-16; DOSCO‘s Br. 10.
The court finds that Commerce reasonably determined that theoretical weight is based on a nominal value, and it was reasonable for Commerce to determine that utilizing theoretical weight would not decrease any distortions in the calculation compared to actual weight. The court concludes that Commerce‘s choice to use theoretical weight rather than actual weight is reasonable and supported by evidence.
V. DOSCO‘s Claim for a Constructed Export Price Offset
The fifth issue before the court is whether Commerce erred in deciding to
As part of its statutory mandate to conduct a “fair comparison” of normal value and export price, Commerce must make two types of adjustments to normal value based on differences in the level of trade. The first type is a level of trade adjustment,
Commerce‘s regulation delineates how the agency will determine whether the home market level of trade is at a more advanced stagе of distribution than the level of trade of the sale to the U.S. affiliate. See
When calculating the normal value for price comparability, Commerce determined that DOSCO did not qualify for a level of trade adjustment because DOSCO only had one home market level of trade, which DOSCO does not contest. See DOSCO‘s Br. 17. Commerce denied DOSCO a constructed export price offset in its preliminary determination and upheld that finding in its final determination. See Preliminary Decision Memorandum at 8–9; Final Decision Memorandum at 49. The Department analyzed specific selling activities falling under four general selling
DOSCO claims that Commerce should have translated documents that were submitted in Korean. See DOSCO‘s Br. 22. Commerce‘s regulation clearly requires DOSCO to provide translations of documents that are important to any claims made in the investigation.
Translation to English. A document submitted in a foreign language must be accompanied by an English translation of the entire document or of only pertinent portions, where appropriate, unless the Secretary waives this requirement for an individual document. A party must obtain the Department‘s approval for submission of an English translation of only portions of a document prior to submission to the Department.
DOSCO proffers that Commerce was unreasonable for failing to explain how the facts of the current case differ from numerous prior instanсes in which Commerce has granted constructed export price offsets for similarly situated respondents. See DOSCO‘s Br. 30–32. DOSCO argues also that Commerce should have considered DOSCO‘s indirect selling expenses, as Commerce did in other prior determinations. See id. at 32–33. Commerce is not bound to a specific formula to determine whether to grant a constructed export price offset. See
VI. Use of “Zeroing” in the Differential Pricing Analysis
The sixth issue before the court is whether Commerce erred in deciding to use the zeroing methodology in its differentiаl pricing analysis. DOSCO argues that Commerce‘s use of zeroing in the preliminary and final determinations is not in accordance with the law because it violates the World Trade Organization (“WTO“) Antidumping Agreement.
Commerce‘s discretion to use zeroing has been upheld as a reasonable interpretation of “dumping margin” in
DOSCO argues that Commerce‘s use of zeroing is not in accordance with the law because it violates the WTO Antidumping Agreement. See DOSCO‘s Br. 34–35 (citing United States – Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea, WT/DS464/R (Mar. 11, 2016)). DOSCO contends that Commerce has the ability to discontinue the use of zeroing as a discretionary practice. See id. at 34–35 (citing Dongbu Steel Co. v. United States, 635 F.3d 1363, 1366 (Fed. Cir. 2011)). Commerce is not bound by adverse WTO decisions, as Congress has devised a separate process by which an adverse WTO ruling may be implemented. See
CONCLUSION
For the reasons set forth above, the court concludes the following:
- The court sustains Commerce‘s decision to use the earlier of either the invoice date or the shipment date as the “date of sale“;
- The court sustains Commerce‘s decision to assign full costs to non-prime merchandise;
- The court sustains Commerce‘s decision to adjust DOSCO‘s reported hot-rolled coil costs for products that
were identical in all physical characteristics except for paint; - The court sustains Commerce‘s decision to compare merchandise on a theoretical weight basis;
- The court sustains Commerce‘s decision to deny a constructed export price offset to DOSCO; and
- The court sustains Commerce‘s decision to use the zeroing methodology in its differential pricing analysis.
The court denies the Rule 56.2 motions for judgment on the agency record filed by DOSCO, Atlas Tube, and Independence Tube. Judgment will be issued accordingly.
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: October 3, 2018
New York, New York