Thai Pineapple Canning Industry Corp. v. United States , 24 Ct. Int'l Trade 107 ( 2000 )

Slip Op. 00-17
UNITED STATES COURT OF INTERNATIONAL TRADE
_________________________________
:
THAI PINEAPPLE CANNING INDUSTRY :
CORP., LTD., and MITSUBISHI :
INTERNATIONAL CORP., :
:
Plaintiffs, : Court No. 98-03-00487
:
v. :
: Public Version
THE UNITED STATES, :
:
Defendant, :
:
and :
:
MAUI PINEAPPLE CO., LTD., and :
INTERNATIONAL LONGSHOREMEN’S AND :
WAREHOUSEMEN’S UNION, :
:
Defendant-Intervenors. :
________________________________ :
[ITA remand results affirmed in part, reversed and remanded in
part.]
Dated: February 10, 2000
Dickstein Shapiro Morin & Oshinsky LLP (Arthur J. Lafave
III, Douglas N. Jacobson, and Patricia M. Steele) for
plaintiffs.
David W. Ogden, Acting Assistant Attorney General,
David M. Cohen, Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice (Lucius B. Lau),
Christine E. Savage, Office of the Chief Counsel for Import
Administration, United States Department of Commerce, of
counsel, for defendant.
Collier, Shannon, Rill & Scott, PLLC (Paul C. Rosenthal
and David C. Smith, Jr.) for defendant-intervenors.
Court No. 98-03-00487 Page 2
OPINION
RESTANI, Judge: On May 5, 1999, the court remanded the
final results of the Department of Commerce, International
Trade Administration (“Commerce” or “the Department”) in
Canned Pineapple Fruit from Thailand, 63 Fed. Reg. 7,392(Dep’t Commerce 1998) (final results of antidumping duty
admin. rev.) [hereinafter “Final Results”]. See Thai
Pineapple Canning Indus. Corp. v. United States, No. 98-03-
00487, 1999 WL 288772 (Ct. Int’l Trade May 5, 1999)
[hereinafter “Thai Pineapple”].1 The case concerned a
challenge by Thai Pineapple Canning Industry Corp., Ltd.
(“TPC”) and Mitsubishi International Corp. (“MIC”)
(collectively “TPC”) to the Department’s Final Results. In
its remand instructions, the court instructed Commerce to (1)
reconsider the date of sale, (2) reconsider the matching of
costs to sales on a fiscal year basis for cost of production
(“COP”) and constructed value (“CV”) purposes, and (3)
recalculate the constructed export price (“CEP”) profit
calculation. Thai Pineapple, 1999 WL 288772, at *11. Because
neither TPC nor Commerce had an adequate opportunity to
1 Familiarity with the court’s earlier opinion is
presumed.
Court No. 98-03-00487 Page 3
address the assessment rate of entries made after the final
determination in the original less-than-fair-value
investigation, that issue was remanded to provide the parties
a further opportunity to brief the issue. Thai Pineapple,
1999 WL 288772, at *2. The court upheld Commerce’s use of a
single assessment rate for the period of review (“POR”). Id.
at *10-11.
Commerce issued its remand determination on September 2,
1999. See Final Results of Redetermination Pursuant to Court
Remand: Thai Pineapple Canning Industry Corp., Ltd., and
Mitsubishi International Corp. v. United States, Court No. 98-
03-00487 [hereinafter “Remand Results” or “RR”].
Jurisdiction and Standard of Review
The court has jurisdiction pursuant to 28 U.S.C. §
1581(c) (1994). In reviewing final determinations in
antidumping duty investigations, the court will hold unlawful
those agency determinations which are unsupported by
substantial evidence on the record, or otherwise not in
accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i) (1994).
I. Date of Sale
A. Background
In the Final Results, Commerce used the date of contract
for purposes of determining the date of sale for export price
Court No. 98-03-00487 Page 4
(“EP”) sales and third country sales. Final Results, 63 Fed.
Reg. at 7,394-95. The court found that Commerce’s policy as
of the time of its review of TPC was to use invoice date for
date of sale, absent a significant reason to do the contrary.
See Thai Pineapple, 1999 WL 288772, at *5-6. The court
therefore remanded for Commerce to state whether there was
“another reason for rejecting invoice date” and to “square its
reasoning with its other contemporaneous determinations.” Id.
at *6. In the Remand Results, Commerce reconsidered the date
of sale determination, and again concluded that “contract date
remains the appropriate date of sale for TPC’s third country
sales, based on the record in this case.” RR, at 13. The
Department states that this decision is consistent with its
date of sale methodology in contemporaneous determinations.
Id.B. Discussion
TPC argues that Commerce has not provided an adequate
explanation for not utilizing invoice date as date of sale in
its remand determination.
The Department announced a new policy, applicable to this
case, of using invoice date for date of sale unless there is
information indicating that date of contract should be used
because all material terms of the sale were firmly fixed at
Court No. 98-03-00487 Page 5
that time. See Thai Pineapple, 1999 WL 288772, at *5. This
policy is now reflected in Commerce’s regulations.2 19 C.F.R.
§ 351.401(i) (1999).
The announced policy was not applied to this matter
although it was applied to other contemporaneous matters. See
Thai Pineapple, 1999 WL 288772, at *6. The new rule
establishes a presumption that invoice date will be the date
of sale. See 19 C.F.R. § 351.401(i). If Commerce can
establish “a different date [that] better reflects the date on
which the exporter or producer establishes the material terms
of sale,” Commerce may choose a different date. Id. Commerce
has cited nothing of substance which indicates sales terms
were fixed at an earlier date. Nor has it cited any other
credible reason for disregarding its announced presumption.
See Antidumping Duties; Countervailing Duties - Final Rule, 62
Fed. Reg. 27,296, 27,349 (Dep’t Commerce 1997) (invoice date
presumption applies “absent satisfactory evidence that the
2 Commerce at times states that the policy reflected its
then current practice. Thus, the court assumes its practice
had evolved over time. See also Antidumping Duties;
Countervailing Duties - Notice of Proposed Rulemaking and
Request for Public Comments, 61 Fed. Reg. 7,308, 7,330 (Dep’t
Commerce 1996) (“This is a change from prior practice under
which the Department based the date of sale on the date on
which the ‘essential terms of sale’ (normally price and
quantity) were established”).
Court No. 98-03-00487 Page 6
terms of sale were finally established on a different date.”)
Commerce does not cite industry practice or a lag between
invoice and shipment, or any other unusual situation,
indicating a date, other than invoice date should be used.
There appears to be no other case in which “rare instances” of
changes after contract date, RR, at 17, was considered
substantial reason to abandon the invoice date presumption.
Under the facts of this case, i.e., rising pineapple costs,
the fact that few purchasers sought changes is meaningless.
The question is could the terms be changed, or were they fixed
at the time of the initial order. See Final Results, 63 Fed.
Reg. at 7,394. The evidence is that the terms could be
changed and were changed in some instances. See Thai
Pineapple, 1999 WL 288772, at *4 & n.11. There was no reason
for Commerce to abandon its presumption in this matter. The
court therefore reverses Commerce’s use of date of contract
and directs the Department to use invoice date for date of
sale purposes.
II. Use of Single Weighted-Average Cost of Production Covering
Entire 18-Month Period of Review
A. Background
In the Final Results, for COP and CV purposes, Commerce
used a single weighted-average cost for the entire POR. Final
Court No. 98-03-00487 Page 7
Results, 63 Fed. Reg. at 7,399. TPC argued that this single
weighted-average cost failed to take into account the rising
cost of fresh pineapple fruit from 1994 through the POR. Id.
TPC alleged that this resulted in significant distortions in
Commerce’s price-cost comparisons. Id.
The court found that the use of the single weighted-
average cost did not take into account the significant rise in
the cost of pineapple fruit, the primary input of canned
pineapple fruit (“CPF”). Thai Pineapple, 1999 WL 288772, at
*3.3 The court also found that Commerce had previously
“adjusted for changes in costs over the POR or matched costs
to POR sales more specifically than it did here.” Id. The
court noted that in Fujitsu Gen. Ltd. v. United States, 88
F.3d 1034 (Fed. Cir. 1996), the Federal Circuit sustained the
use of annual weighted-average COP in calculating FMV, and
that this was what TPC was seeking: “they want costs for a
fiscal year matched to sales for a fiscal year.” Thai
Pineapple, 1999 WL 288772, at *3. The court instructed
Commerce to revisit the issue and “reanalyze the data to
3
The court noted TPC’s calculations reflecting a [ ]%
rise in fresh pineapple costs per carton of CPF from 1994 to
1995 and a [ ]% increase from 1994 to 1996. The price per
standard carton in 1994 was [ ] baht, [ ] baht in 1995 and
[ ] baht in 1996. Thai Pineapple, 1999 WL 288772, at *2,
n.4.
Court No. 98-03-00487 Page 8
determine whether TPC has provided sufficient data to match
costs to appropriate fiscal year sales. If it has, in the
absence of any proper antidumping policy reason . . . Commerce
must proceed as it has in the past and match fiscal year costs
with sales.” Id. at *4.
On remand, Commerce recalculated separate costs for
fiscal years 1995 and 1996. Remand Results, at 11. “Where CV
is the basis for normal value, we have matched 1995 U.S. sales
to 1995 CVs, and have matched 1996 U.S. sales to 1996 CVs.
With respect to the sales-below-cost test, we have tested 1995
comparison market sales against 1995 costs, and have tested
1996 comparison market sales against 1996 costs.” Id. Third
country sales made in December 1994, and used in the margin
calculation, were tested against 1995 costs. Id. Commerce
stated that it believed 1995 annual costs were representative
of December 1994, “and that the use of December 1994 sales
pursuant to the contemporaneity requirement does not warrant a
departure from our practice of using POR costs.” Id. TPC
argues that the failure to use 1994 costs does not conform to
the court’s remand instructions. Commerce counters that its
longstanding policy is to use costs incurred during the POR
for its COP and CV costs analysis. Remand Results, at 12.
Court No. 98-03-00487 Page 9
B. Discussion
The matching of costs actually puts two issues before the
court: 1) the basis on which sales must be matched to costs
(i.e. fiscal year, semi-annually, etc.) and 2) whether costs
incurred outside of the POR, or period of investigation
(“POI”), should be matched to the sales made during the same
year whether or not the sales are within the POI or the POR.
The court ruled on the first issue in Thai Pineapple, and on
remand Commerce generally used fiscal year costs. The court
finds that the use of fiscal year costs adequately addresses
the issue of TPC’s rising pineapple costs, and sustains the
use of separate weighted-average costs for 1995 and 1996. The
Department’s decision to use only POR costs, however, now
raises the second issue.
Sections 1677b(b)(3)(A) and 1677b(e)(1) of Title 19
require that in calculating COP and CV, the Department use
costs “during a period which would ordinarily permit the
production” of the foreign like product or the merchandise,
“in the ordinary course of business.” 19 U.S.C. §
1677b(b)(3)(A) & 1677b(e)(1) (1994). The period to be used is
not further defined in the statute, nor does the statute
dictate the methodology Commerce must use to calculate COP or
CV. See AK Steel Corp. v. United States, No. 96-05-01312,
Court No. 98-03-00487 Page 10
1997 WL 728284, at *5 (Ct. Int’l Trade Nov. 14, 1997) (statute
does not “address the method by which Commerce must calculate
the COM” for either COP or CV). Therefore, pursuant to
Chevron U.S.A. Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 842-43 (1984), the court must defer to the
agency’s reasonable interpretation of this statute. Commerce
is directed, however, to determine COP as “accurately as
possible.” Cinsa, S.A. de C.V. v. United States, 966 F. Supp.
1230, 1239 (Ct. Int’l Trade 1997) (quoting Timken Co. v.
United States, 18 CIT 1, 10, 852 F. Supp. 1040, 1049 (1994)).
Commerce states that its longstanding practice is to use the
cost of manufacturing (“COM”)4 during the POI/POR for its COP
4 Commerce’s standard practice in calculating COP and CV
is to use COM, rather than cost of goods sold (“COGS”),
because COM “represents the cost to manufacture the product
during the period.” Certain Preserved Mushrooms from
Indonesia, 63 Fed. Reg. 72,268, 72,273 (Dep’t Commerce 1998)
(notice of final determination of sales at LTFV). The
Department states that it does not generally use COGS because
of concerns over the inclusion of the value of inventory from
a previous period. Id. COGS is an accounting method used to
measure costs. Inventory value is an issue when using COGS
because COGS is calculated by “(1) adding the cost of goods
manufactured to the beginning finished goods inventory so as
to find the total amount available for sale and then (2)
subtracting the ending finished goods inventory.” Robert N.
Anthony & James S. Reece, Accounting Principles 146 (6th ed.
1989). Because inventory can be valued in different ways,
Commerce expresses concern that costs based on COGS may vary
depending on the method selected. Gov’t Supplemental Br. at 5
(citing Accounting Principles at 151: “the choice of
(continued...)
Court No. 98-03-00487 Page 11
and CV calculation. The fact that a practice is longstanding,
however, is only justification for the practice’s use if it is
also reasonable and in accordance with law. See Mitsubishi
Heavy Indus., Ltd. v. United States, 15 F. Supp.2d 807, 813-14
(Ct. Int’l Trade 1998) (approving Commerce’s test because it
was both longstanding and consistent with law).
Commerce analyzes costs based on the cost to produce the
merchandise during the period in which sales are being made,
“as opposed to the cost to produce each of the particular
sales made during the reporting period.” Remand Results, at
12. Commerce therefore requests that respondents report the
weighted average production data based on costs incurred
during the POI/POR. Stainless Steel Bar from Spain, 59 Fed.
Reg. 66,931, 66,938 (Dep’t Commerce 1994) (notice of final
4
(...continued)
[inventory] method can have a significant effect on net
income.”). In contrast, using COM during the period “normally
covers the period needed to produce the subject merchandise
just prior to export and excludes the changes in inventory.”
Mushrooms, 63 Fed. Reg. at 72,273.
The court requested further briefing on the Department’s
use of COM, rather than COGS, which clarified that TPC did
not, in fact, request that Commerce utilize a COGS
methodology. Although TPC says that COGS would be a more
appropriate methodology, it submitted its costs based on COM
for each fiscal year (1994, 1995, and 1996) and it requests
that separate fiscal year COM be used for each period. TPC
Supplemental Br. at 4, 5, & 9. The court, therefore, need not
resolve whether COGS should be used.
Court No. 98-03-00487 Page 12
determination of sales at LTFV). Commerce departs from this
practice in unique circumstances, “such as when production did
not occur during the period of investigation.” Id. “[A]bsent
strong evidence to the contrary, the Department assumes that
the cost structure during the POI is representative and can be
used to calculate an estimate of the cost of production.” Id.
Commerce recognizes that the statutory language is broad
enough to accommodate calculating COP and CV on a different
basis, but it has chosen to use costs during the POR/POI as a
“consistent and predictable approach.” Remand Results, at 27.
In some instances, the cost of manufacturing the
particular product sold during the POR/POI is higher than
the cost of the identical product manufactured during the
POR/POI; however, sometimes it is lower. We believe that
having a consistent and predictable approach as to which
method we use eliminates results-oriented arguments
regarding which approach to take in a given case.
Id.
In requesting that Commerce deviate from the standard
practice in this case, TPC relies principally on two
determinations: Sweaters Wholly or in Chief Weight of Man-Made
Fiber from Taiwan, 55 Fed. Reg. 34,585 (Dep’t Commerce 1990)
(final determination of sales at LTFV) [hereinafter
“Sweaters”] and Fresh and Chilled Atlantic Salmon from Norway,
58 Fed. Reg. 37,912 (Dep’t Commerce 1993) (final results of
antidumping duty admin. rev.) [hereinafter “Salmon”]. The
Court No. 98-03-00487 Page 13
court found that these determinations supported an adjustment
for changes in costs over the POR and matching costs to sales
more closely than was done in the original Final Results. See
Thai Pineapple, 1999 WL 288772, at *3-4.
In Sweaters, the Department departed from using annual
average unit costs because there was a significant variation
between what was produced during the POI and what was sold
during the POI. 55 Fed. Reg. at 34,596. Instead the
Department used actual costs incurred during the period of
production. Id. This reasoning, however, does not require
using costs from outside the POR in the case of TPC because
there was no difference between the CPF produced during the
POR and the CPF sold during the POR. In Salmon, the
Department did not use a single cost of cultivation (“COC”)
for the entire eighteen month POR. The court discussed
Salmon in Thai Pineapple and found the reasoning in Salmon
justified a closer matching of costs to sales:
[G]iven the fluctuations of farmers’ costs during the
POR, the ease with which different generations’ COC can
be segregated and the fact that we have calculated
separate 1990 and 1991 processing costs for respondent .
. . we believe that it is reasonable to use separate 1990
and 1991 COCs.
Thai Pineapple, 1999 WL 288772, at *4 (quoting Salmon, 58 Fed.
Reg. at 37,913). Commerce’s explanation that the
Court No. 98-03-00487 Page 14
particularity of salmon cultivation (a typical salmon harvest
averages eighteen to twenty-four months),5 requires the use of
non-POR costs is reasonable. CPF does not have the
particularities of the subject merchandise in Sweaters or
Salmon which would necessitate the use of non-POR costs.6
Moreover, a closer matching of costs to sales was achieved
upon remand in this case.
TPC insists that the Department should have used 1994 COM
in the calculation of CV for comparison with U.S. sales of
goods manufactured in 19947 and for the COP calculation for
testing third-country sales of goods manufactured in 1994.8
5 Fresh and Chilled Atlantic Salmon from Norway, 56 Fed.
Reg. 7,661, 7,662 (Dep’t Commerce 1991) (final determination
of sales at LTFV) (“Because the growth cycle of the subject
merchandise is approximately 18 to 24 months, we requested
production costs for the previous two to three years”).
6 In Stainless Steel Bar from India, Commerce also
deviated from its usual practice and used cost information
from outside the POR because of limited production of the
subject merchandise during the POR. 62 Fed. Reg. 4,029,
4,030-31 (Dep’t Commerce 1997) (final results of new shipper
antidumping duty admin. rev.). Limited production is not a
concern in the case of TPC.
7 Although TPC speaks of goods manufactured in 1994, the
record does not reveal in which year goods were manufactured.
8 TPC had reported five months of third-country sales
invoiced in 1994. TPC Br. at 9-10. This was in response to
Commerce’s request that TPC report all sales in the third-
country for a period commencing 90 days prior to the first
(continued...)
Court No. 98-03-00487 Page 15
TPC Comments at 2. TPC states that sales observations with
invoice dates in October through December of 1994 “were
excluded pursuant to the sales below cost test.” TPC Comments
at 6 n.6 & Ex. 1 (citing Commerce’s “Below Cost HM Sales”
table). TPC alleges that the 1995 costs are not
representative of 1994 sales. Although TPC’s 1994 weighted-
average costs may be somewhat lower than the 1995 costs,9 this
is not an investigation of 1994 sales, and only very year-end
8(...continued)
date of sale in the United States. Because Commerce based
date of sale on date of contract, and the date of contract
preceded the date of entry into the United States by several
months, “the first date of sale on an EP sale to the United
States [resulting in an entry] during the POR . . . took place
in November 1994 and TPC was required to report sales in
Germany commencing with invoices issued in August 1994, 90
days before.” TPC Br. at 10, n.25. The “90/60" day
contemporaneity window exists because Commerce limits the
universe of potential matches to those sales “within 90 days
before and 60 days after the month of the U.S. sale.” E.I.
DuPont de Nemours & Co. v. United States, No. 96-11-02509,
1998 WL 42598, at *13 (Ct. Int’l Trade Jan. 29, 1998).
9 The finished product costs rose by [ ]% from 1994 to
the first half of 1996, but only rose by [ ]% from 1994 to
1995. Thai Pineapple, 1999 WL 288772, at *2 n.4. Using
separate fiscal year costs has therefore narrowed the cost
increase experienced by TPC because 1995 costs were used
instead of the single weighted-average cost for the entire
POR.
Court No. 98-03-00487 Page 16
1994 third-country and U.S. sales were used in the margin
calculation.10 Remand Results, at 11.
Because the statute permits Commerce to determine the
period “which would ordinarily permit the production” of the
foreign like product or the merchandise, “in the ordinary
course of business,” it was not unreasonable, under the facts
of this case, for Commerce to select fiscal years within the
POR as the relevant period for calculating costs. The court
finds that in this case, using separate 1995 and 1996 costs
sufficiently accounts for the rising pineapple costs incurred
by TPC, and complies with the court’s remand instruction to
“match fiscal year costs with sales.” Thai Pineapple, 1999 WL
288772, at *4. The court does not find that the circumstances
of this case warrant using costs from outside of the POR, and
therefore sustains Commerce’s calculation of COP and CV based
on 1995 and 1996 COM.
10 It is not clear what effect using invoice date for
date of sale will have on the use of sales and costs from
outside the POR.
Court No. 98-03-00487 Page 17
III. Inclusion of U.S. Interest Expenses in Denominator of CEP
Profit Ratio
A. Background
The court found that Commerce’s calculation of CEP profit
differed from the approach set out in the statute. Thai
Pineapple, 1999 WL 288772, at *7 (citing 19 U.S.C. §
1677a(f)(1)-(2)(A) (1994)). In the Final Results, Commerce
calculated CEP profit by computing the ratio of total profit
to total expenses and multiplying that ratio, on a
transaction-by-transaction basis, by reported U.S. selling
expenses. Final Results, 63 Fed. Reg. at 7,395. The court
held that the statute intended that “profit would be allocated
to U.S. sales in the same ratio as United States selling
expenses are to total expenses.” Thai Pineapple, 1999 WL
288772, at *7. Furthermore, 19 U.S.C. § 1677a(f) requires
that the “statutory ratio applied to ‘actual profit’ for
purposes of calculating CEP profit must be calculated on a
proportional basis.” Id. at *8. Commerce was directed to
demonstrate on remand that the total expense denominator of
the ratio to be applied to total actual profit to obtain the
CEP profit adjustment contains all interest expenses
(including those relating to U.S. sales) as required by 19
Court No. 98-03-00487 Page 18
U.S.C. § 1677a(f)(2)(C). Thai Pineapple, 1999 WL 288772, at
*9.
B. Discussion
For cost of production purposes respondent reports total
interest expenses covering inventory carrying costs and credit
extension expenses. See TPC Section D Questionnaire (Sept. 5,
1996), at D-25, field 10.0, P.R. Doc. 11 (requesting net
interest expense incurred by company in connection with
production and sale of foreign like product).11 For price
adjustment purposes, however, Commerce requires respondents to
impute interest expenses separately for U.S. sales, even
though companies may not account for such expenses separately,
because, inter alia, relevant differences between U.S. and
11Commerce states in the Remand Results that the annual
interest amount reported as part of COP/CV reflects the costs
of carrying merchandise in inventory and extending credit for
the following reasons:
The annual interest expense incurred by a company, and
reported as an element of COP/CV, will reflect the extent
to which the company does not immediately receive payment
upon production of the merchandise, i.e., the opportunity
cost of having the merchandise sit in inventory prior to
sale, and of extending credit after the sale. To the
extent that a company incurs a longer waiting period
between production and payment, it will not have recourse
to such funds and will generally incur greater financial
expenses relative to receiving payment immediately upon
production.
RR, at 20-21.
Court No. 98-03-00487 Page 19
“home” market sales must be accounted for. See e.g., 19
U.S.C. § 1677b(a)(6)(C)(iii) (1994) (circumstances of sales
adjustment). It is this separate U.S. sales figure which TPC
wishes included in the denominator. It also appears true, as
TPC alleges, that the manner of calculating U.S. imputed
interest expenses may result in some cases in amounts which
are not fully reflected in the total interest expenses figure
which is used in the denominator of the CEP profit ratio. See
TPC Section C Questionnaire (Sept. 5, 1996), at C-21, field
36.0, P.R. Doc. 11 (Commerce’s instructions regarding
reporting U.S. credit expense). Nonetheless, Commerce argues
its method will avoid double counting, and that also appears
to be true as to the normal case.
Theoretically, the total expenses denominator would
reflect the interest expenses captured in the U.S. sales
expenses numerator specified in 19 U.S.C. § 1677a(f)(2)(B), as
well as “home” market interest expenses, because the total
expenses denominator is derived from a net unit figure based
on all company interest expenses without regard to sales
destination. The lines of computer program results cited by
Commerce generally support the theory. See RR, at 23 n.21
(citing computer lines from Computer Program for Draft Results
of Redetermination which show inclusion of interest expenses
Court No. 98-03-00487 Page 20
in COP, inclusion of interest expense in U.S. cost and CV, and
inclusion of these costs in “Total Expenses” in the CEP profit
calculation).12 The issue is whether there is some peculiarity
of this case that belies the relevancy of the theory.
TPC has not established that there is any great
discrepancy here. For example, it does not demonstrate a
distortion caused by differing expenses over time. Nor does
it allege that in this case there can be no double counting
because it had no or little actual U.S. interest expenses, but
only imputed U.S. expenses.13 Plaintiff alleges nothing to
counter Commerce’s reasoning on this point. Accordingly, the
court sustains Commerce’s CEP profit calculation.
IV. Assessment rate for entries made after the final LTFV
determination
A. Background
The remaining issue on remand relates to the propriety of
Commerce’s assessment rate calculations. Commerce increased
the cash deposit rate for entries of subject merchandise made
after the final less than fair value (“LTFV”) determination,
12 There was no change in the draft margin program from
the draft remand results to the final remand results. See
Declaration of Gabriel Adler (Nov. 24, 1999), at ¶ 3, Attach.
2 of Commerce’s letter to the court dated Nov. 29, 1999.
13 The court does not address whether these are truly
distortive situations.
Court No. 98-03-00487 Page 21
but before the International Trade Commission (“ITC”) final
affirmative injury determination. Remand Results, at 2. This
rate was higher than the estimated duty rate from the
preliminary LTFV determination. Compare Notice of Amended
Preliminary Determination: CPF From Thailand, 60 Fed. Reg.
9,820, 9,821 (Dep’t Commerce 1995) (all others rate 3.92
percent) with Final Determination of Sales at LTFV: CPF From
Thailand, 60 Fed. Reg. 29,553, 29,571 (Dep’t Commerce 1995)
(all others rate 25.76 percent).14 The statute establishes a
cap period for the assessment rate on entries made between
Commerce’s preliminary LTFV determination and the ITC’s final
affirmative injury determination. See 19 U.S.C.A. § 1673f(a)
(West Supp. 1999).
The court remanded the issue regarding assessment rates
during the cap period to allow the parties an adequate
opportunity to address the issue. Thai Pineapple, 1999 WL
288772, at *2. TPC argues that Commerce erred in adopting the
14 The amended preliminary LTFV determination was
published on February 22, 1995, the final determination was
published on June 5, 1995, and the ITC’s final affirmative
injury determination was published on July 19, 1995. See CPF
From Thailand, 60 Fed. Reg. at 9,820 (notice of amended
prelim. determination); CPF From Thailand, 60 Fed. Reg. at
29,553 (final determination of sales at LTFV); CPF From
Thailand, 60 Fed. Reg. 37,073 (ITC 1995) (ITC determination of
material injury).
Court No. 98-03-00487 Page 22
second and higher assessment rate as the cap for entries made
after the final determination, but before the ITC’s final
injury determination. TPC contends that the statute requires
that Commerce cap the amount of duties collected at the rate
established in the preliminary LTFV determination.
B. Discussion
Commerce’s longstanding practice has been to calculate
separate assessment rates during the cap period: one for the
time between the preliminary and final determination, and
another between the final determination and the ITC’s final
determination.15 That the practice is longstanding is not
sufficient to justify its application, however, it is also
reasonable. See Mitsubishi, 15 F. Supp.2d at 813-14(approving Commerce’s test because it was both longstanding
and consistent with the law); cf. Sonco Steel Tube Div. v.
United States, 12 CIT 745, 749-52, 694 F. Supp. 959, 962-65
15 Commerce’s expression of this policy dates back to
1986. See Antidumping Duties; Proposed Rule, 51 Fed. Reg.
29,046, 29,051 (Dep’t Commerce 1986) (“dumping margin
established in the Secretary’s final determination becomes the
maximum amount which the Secretary may assess on entries made
between publication of that determination and the publication
of the Commission’s final affirmative determination);
Antidumping Duties; Final Rule, 54 Fed. Reg. 12,742, 12,757
(Dep’t Commerce 1989) (“For an entry made after the final
determination, the cash deposit or bond is set by the
Department’s final determination.”).
Court No. 98-03-00487 Page 23
(1988) (rejecting ITA argument regarding longstanding practice
because practice not explained).
The statutory section at issue is the “Deposit of
estimated antidumping duty under section 1673b(d)(1)(B) of
this title," which provides as follows:
If the amount of a cash deposit, or the amount
of any bond or other security, required as security
for an estimated antidumping duty under section
1673b(d)(1)(B) of this title is different from the
amount of the antidumping duty determined under an
antidumping duty order published under section 1673e
of this title, then the difference for entries of
merchandise entered, or withdrawn from warehouse,
for consumption before notice of the affirmative
determination of the Commission [ITC] under section
1673d(b) of this title is published shall be —
(1) disregarded, to the extent that
the cash deposit, bond, or other security
is lower than the duty under the order, or
(2) refunded or released, to the extent
that the cash deposit, bond, or other security
is higher than the duty under the order.
19 U.S.C.A. § 1673f(a). Commerce’s regulation, in effect
during the first administrative review, states the
Department’s interpretation of this section. See 19 C.F.R. §
353.23 (1996). It provides that if the duties assessed in
either the preliminary or final determination by Commerce
Court No. 98-03-00487 Page 24
differ from the duties assessed in an administrative review,
Commerce will instruct Customs accordingly.16
Section 1673b(d) addresses the effect of Commerce’s
preliminary determination in the LTFV investigation. 19
U.S.C. § 1673b(d) (1994). Under section 1673b(d), if
Commerce’s preliminary determination is affirmative, Commerce
estimates the weighted average dumping margin for exporters
and producers individually investigated, and determines an
all-others rate. 19 U.S.C. § 1673b(d)(1)(A)(i)-(ii).
16 The regulation states in relevant part:
If the cash deposit or bond required under the
Secretary’s affirmative preliminary or affirmative final
determination is different from the dumping margin the
Secretary calculates under § 353.22 [administrative
review of orders and suspension agreements], the
Secretary will instruct the Customs Service to disregard
the difference to the extent that the cash deposit or
bond is less than the dumping margin, and to assess
antidumping duties equal to the dumping margin calculated
under § 353.22 if the cash deposit or bond is more than
the dumping margin.
19 C.F.R. § 353.23 (1996) (emphasis added).
The current version of this regulation, 19 C.F.R. §
351.212(d) (1999), differs slightly from the 1996 version.
The 1999 version includes a description of the provisional
measures deposit cap in countervailing duty cases. The 1999
version also clarifies that the duties assessed under the
preliminary or final determination are “provisional duties,”
while the duties assessed in an administrative review are
“final duties.” Otherwise, there has been no substantive
change to this regulation.
Court No. 98-03-00487 Page 25
Commerce then orders the posting of a cash deposit, bond, or
other security, and the suspension of liquidation of entries.
19 U.S.C. § 1673b(d)(1)(B)-(2). Pursuant to 19 U.S.C. § 1673d
(1994), at the time of Commerce’s final affirmative
determination, Commerce again determines the estimated
weighted average dumping margin and orders the posting of a
cash deposit, bond, or other security on entries of subject
merchandise in an amount based on the estimated weighted
average dumping margin or the estimated all-others rate. 19
U.S.C. § 1673d(c)(1)(B)(i)-(ii).
The court has previously determined that nothing in
section 1673f(a) prevents Commerce from applying two different
assessment caps and, indeed, that this practice is reasonable
and in accordance with law. See Daewoo Elecs. Co. v. United
States, 13 CIT 253, 712 F. Supp. 931 (1989), aff’d in part,
rev’d on other grounds, 6 F.3d 1511 (Fed. Cir. 1993).17 The
plaintiff in Daewoo presented the same types of arguments as
TPC does here, asserting that the language of section 1673f(a)
requires that the assessment rate be capped at the rate
17 Daewoo interpreted the 1988 version of the statute.
For the reasons discussed herein, the differences between the
1994 and 1988 statutory sections at issue are inconsequential.
Therefore the court finds that the differences in the statute
do not affect the Daewoo court’s analysis. All references to
the statute will be to the 1994, or most recent version.
Court No. 98-03-00487 Page 26
established in the preliminary determination. Daewoo, 13 CIT
at 275, 712 F. Supp. at 951. The actual assessment of
antidumping duties does not occur until Commerce conducts its
first administrative review of entries subject to an
antidumping order. Id. at 276, 712 F. Supp. at 952. The
court in Daewoo held that 19 U.S.C. § 1673f(a) does not
“impose a limitation on the actual assessment rate by the
rates established in the ITA preliminary determination, but
requires only that the amount of duties assessed on entries
made prior to the ITC final determination should be
‘disregarded, to the extent the cash deposit collected is
lower than the duty.’” Id. (quoting 19 U.S.C. § 1673f(a)(1)
(1988)).
Section 1673b(d) authorizes Commerce to order the
suspension of liquidation and the collection of a cash
deposit, bond, or other security, pursuant to the Department’s
preliminary affirmative determination. 19 U.S.C. § 1673b(d).
In Daewoo, the court found that the reference to 19 U.S.C. §
1673b(d)(2) in 19 U.S.C. § 1673f(a) did not “limit Commerce’s
authority to adjust those preliminary rates in their
subsequent final determination in LTFV investigations.”
Daewoo, 13 CIT at 277, 712 F. Supp. at 952. The court also
noted that the legislative history to 19 U.S.C. § 1673b(d)(2)
Court No. 98-03-00487 Page 27
supported the conclusion that the preliminary deposit rates
could be adjusted when more accurate information became
available. Id. (citing S. Rep. No. 96-249, at 65 (1979),
reprinted in 1979 U.S.C.C.A.N. 381, 451). Moreover, 19 U.S.C.
§ 1673d(c)(1)(C) authorizes Commerce to order the suspension
of liquidation and the posting of the cash deposit after a
final affirmative determination where there has been a
negative preliminary determination. Section 1673d(c)(1)(C)
references the authorization provision of section 1673b(d)(2)
regarding the suspension of liquidation. In Daewoo, the court
held that the reference to this authorization provision in
section 1673b(d) “indicates that that provision granted
Commerce a continuing authority to suspend liquidation and to
collect estimated duty deposits.” Daewoo, 13 CIT at 277, 712
F. Supp. at 953.
TPC maintains that Daewoo was wrongly decided, based on a
plain reading of 19 U.S.C.A. § 1673f(a). Relying on Chevron,
467 U.S. 837, TPC asserts that the court erred when it looked
to legislative history because the statute is clear,
preventing the need to look beyond its plain language. The
court does not agree. As noted by Commerce, the statute is
silent with regard to the application of a cap between the
time of Commerce’s final determination and the ITC’s final
Court No. 98-03-00487 Page 28
determination. The court in Daewoo therefore properly
considered the legislative history in determining that
Commerce’s practice was in accordance with law.
In Daewoo, the court carefully analyzed the interplay of
section 1673f(a) with sections 1673b and 1673d, as well as the
overall structure and purpose of the statute. Daewoo, 13 CIT
at 276-77, 712 F. Supp. at 952-53. The court noted that
plaintiff’s arguments ignored “the provisional nature of
duties which are imposed as a result of the final
determination and which also serve merely as estimated duty
until the actual assessment rates are established as a result
of the administrative review.” Id. at 278, 712 F. Supp. at
953. Plaintiff’s interpretation of 19 U.S.C. § 1673f(a) in
Daewoo would have rendered “meaningless the meticulous
calculations required under the Act in both the final
determinations of LTFV investigations and final results of the
first administrative review.” Id.18
18
As noted by Commerce in one of its early applications
of the two-cap policy, the policy results in a more accurate
assessment of estimated duties.
[B]ecause the dumping margin established in the final
determination is based on verified information afte[r]
all the parties have had an opportunity to comment, it is
a better estimate of the degree of price discrimination
than the preliminary deposit rate, which was based only
(continued...)
Court No. 98-03-00487 Page 29
TPC alternatively argues that the changes made to the
statute, pursuant to the Uruguay Round Agreements Act
(“URAA”), Pub. L. No. 103-465, 108 Stat. 4809 (1994), require
that Commerce change its interpretation of section 1673f(a).
The court finds that the changes to the relevant statutory
provision were minor, and do not undercut Commerce’s practice.
The changes made to 19 U.S.C.A. § 1673f(a)(1)-(2), by
amendment in 1996, are inconsequential. For example, the
amendment replaced the words "cash deposit" for "cash deposit,
bond, or other security." Compare 19 U.S.C.A. § 1673f(a)(1)-
(2) (West Supp. 1999) with 19 U.S.C. § 1673f(a)(1)-(2) (1988).
The amendments made to 19 U.S.C. § 1673b(d) were also
minor. The subsection was restructured and renumbered, and
the 1994 version states with greater clarity the Department’s
18
(...continued)
on the best information available to the Department at
that time. Accordingly, once the final determination is
published, estimated duties are collected . . . until the
order is issued at the final, rather than the preliminary
rate.
Color Television Receivers from Taiwan, 51 Fed. Reg. 46,895,
46,903 (Dep’t Commerce 1986) (final results of antidumping
duty admin. rev.), aff’d in part and remanded in part, AOC
Int’l Inc. v. United States, 13 CIT 716, 722-24, 721 F. Supp.
314, 319-21 (1989) (adhering to reasoning of Daewoo), rev’d on
other grounds, Zenith Elecs. Corp. v. United States, 77 F.3d
426 (Fed. Cir. 1996).
Court No. 98-03-00487 Page 30
responsibilities after a preliminary affirmative
determination. Compare 19 U.S.C. § 1673b(d) (1994) with 19
U.S.C. § 1673b(d) (1988). Likewise the 1994 amendments to 19
U.S.C. § 1673d(c) do not alter the meaning of this section.
Compare 19 U.S.C. § 1673d(c) (1994) with 19 U.S.C. § 1673d(c)
(1988). TPC makes much of the differences between section
1673d(c)(1)(B) (1988) and section 1673d(c)(1)(B)-(C) (1994).
Sections 1673d(c)(1)(B)-(C) of the statute state the effect of
a final affirmative determination by Commerce. The 1988
version of the statute grouped together Commerce’s authority
to order the suspension of liquidation and the posting of a
cash deposit, bond, or other security, in cases where it made
an affirmative final determination after a negative
preliminary determination.19 19 U.S.C. § 1673d(c)(1)(B)
(1988). The current version of the statute states that in
cases of a final affirmative determination, Commerce will
order the posting of a cash deposit, bond, or other security.
19 U.S.C. § 1673d(c)(1)(B) (1994). In the following
19 “(B) in cases where the preliminary determination by
the administering authority under section 1673b(b) of this
title was negative, the administering authority shall order
under paragraphs (1) and (2) of section 1673b(d) of this title
the suspension of liquidation and the posting of a cash
deposit, bond, or other security.” 19 U.S.C. § 1673d(c)(1)(B)
(1988).
Court No. 98-03-00487 Page 31
subsection, the statute provides that in cases of a negative
preliminary determination, Commerce will order the suspension
of liquidation under the authorization provision of section
1673b.20 Id.
TPC asserts that the differences in the 1994 statute
require that the court’s reasoning in Daewoo be discarded. In
referring to situations where the preliminary determination is
negative and the final determination is affirmative, the 1994
statute only states that Commerce shall order the suspension
of liquidation, without stating that Commerce shall order the
posting of the cash deposit, bond, or other security. The
20 The statute currently reads, in relevant part:
(c) Effect of final determination
(1) Effect of affirmative determination by the
administering authority
If the determination of the administering authority
under subsection (a) of this section is affirmative, then
- . . .
(B)(ii) the administering authority shall order the
posting of a cash deposit, bond, or other security . . .
for each entry of the subject merchandise in an amount
based on the estimated weighted average dumping margin or
the estimated all-others rate, whichever is applicable,
and
(C) in cases where the preliminary determination by
the administering authority under section 1673b(b) of
this title was negative, the administering authority
shall order the suspension of liquidation under section
1673b(d)(2) of this title.
19 U.S.C. § 1673d(c) (1994).
Court No. 98-03-00487 Page 32
court does not agree that this formulation alters the holding
in Daewoo. New section 1673d(c) is more properly read to mean
that regardless of the preliminary determination result,
Commerce orders the posting of a cash deposit, bond, or other
security at the time of a final affirmative determination.
Commerce does not need to order the suspension of liquidation
in a case where the preliminary determination was affirmative,
because liquidation would already have been suspended under
section 1673b(d)(2). 19 U.S.C. § 1673b(d)(2). Section
1673d(c)(1)(C) singles out suspension of liquidation in
referring to situations where the preliminary determination
was negative and the final determination affirmative, because
in such a case the suspension of liquidation would not have
already occurred. See 19 U.S.C. § 1673d(c)(1)(C). Therefore,
the change to this section of the statute has not altered the
basic meaning of the provision, rather, it has clarified
Commerce’s responsibilities upon making a final affirmative
determination.
None of the changes to the statute regard the
Department’s assessment rate capping policy for entries made
after Commerce’s final LTFV determination, but before the
ITC’s final injury determination. Commerce’s interpretation
and application of 19 U.S.C.A. § 1673f(a) is reasonable. If
Court No. 98-03-00487 Page 33
Congress objected to Commerce’s longstanding practice
regarding assessment caps, and intended to change that
practice, it likely would have expressed such an intent in the
legislative history, if not within the statutory language
itself. The House Report to the URAA states that sections
1673b and 1673d (sections 733 and 735 of the Tariff Act) were
amended to conform U.S. law more closely to the Uruguay Round
Agreement, and does not indicate any substantive change in
U.S. practice. H.R. Rep. 103-826(I), at 50-51 (1994),
reprinted in 1994 U.S.C.C.A.N. 3773, 3822-23.
TPC cites no legislative history to support its position
that the 1994 URAA amendments reflect an intent to change
Commerce’s practice under section 1673f(a). Because
Commerce’s practice of applying two assessment cap rates is
reasonable, conforms to the statute, and results in a more
accurate assessment rate, and because TPC offers no weighty
arguments in its favor, TPC does not persuade this court that
Commerce’s policy should be changed.
For the foregoing reasons, the court upholds Commerce’s
capping the assessment rate between the time of the final LTFV
determination and the ITC’s final injury determination at the
final LTFV rate.
Court No. 98-03-00487 Page 34
Conclusion
The court finds that there was no reason for Commerce to
abandon its presumption of using invoice date for date of
sale, and therefore reverses Commerce on this issue. Commerce
must use invoice date for date of sale purposes on remand.
The court upholds Commerce’s use of fiscal year costs for
COP and CV purposes, and the calculation of CEP profit, as
well as Commerce’s practice regarding the assessment rate
applied during the cap period.
Remand results are due within 30 days. Objections
thereto are due 15 days thereafter and responses 11 days
thereafter.
_______________________
Jane A. Restani
JUDGE
Dated: New York, New York
This 10th day of February, 2000.