was versus the united states are this is a dumping case and the issue is how to allocate general and administrative expenses director attention to the government's opening or the government's response brief which is the government found that eleven percent of the remaining g n a t expenses were trivial to newsprint trading and eighty nine percent to line paper manufacture line paper manufacturing is the subject mark newsprint trading is the rest of the company's business so they some they  allocated eighty nine percent of the general expenses to subjection that is what the government did and that's precisely why it's wrong because everything else in the misread of record stock broker executes a five hundred million there mittened well they are the general accepted accounting principles right how to allocate expenses over a commodity trading business is to use the value of the goods traded on the commerce department abandon that principle here but that is the generally accepted accounting principles for value for allocating expenses over the value of goods traded is to use the value of that merchandise i say is fundamentally different than a stock transactions where you're talking about shares in  company this is his actual merchandise being treated so i think it's very different than that and i would if your position is that the value of the goods traded is taken into account even when that title is not passed to the party in question that's correct well we don't we're not saying that hast we're saying that in this case if you look at everything that went on during these transactions they did in fact absorb exercise all the control provide the financing actually take responsibility for payment for the goods so then act very much like an owner but the real issue here he is what it was issue was respect to the indian government was was not that's correct it was a tax was a little is it hard for tax purposes little part to play both sides of that issue right but ok but the question is even if you're correct that because of that you should abandon the normal way of valuing these goods what the commerce department did still produced a result which is completely at odds with the record ninety percent is company's business was newsprint trading how do you end up nature of their business the contours of their business their business activity was ninety percent the other way so you can't you can't take a business which is ninety percent trading newsprint trading and eleven percent  commerce department use it produced an unreasonable result it goes right to the heart of substantial elements of this is where reasonable might accept this evidence when everything in the record says including the commerce department itself says the vast majority of their business is newsprint trading what does it mean what is their definition to the best majority of their business i mean in the percentages you start out with what are those percentage just based on is there a generally accepted accounting operations value volume number of employees you know number of transactions they had sixty customers for newsprint and in only two there were only two sales of lined paper during this investigation so again they're not supervising the manufacturing operation they're supervising one subcontractor so that's why it's unreasonable because this isn't a case where they're running around watching two hundred workers on  of the goods there were transferred in a broken operation because we don't know whether we can be sure that if we do that we're not going to alter the overhead numbers they talking about that again they couldn't be certain speculation over here that associated with the with the newsprint business with the ownership they did so and didn't say well we don't know what's going to happen what would happen if they actually took title we don't know whether there might be some additional expense well that's a what if analysis that's not record evidence that doesn't support the idea that there are some there are more expenses that we don't know about or that you know they're just saying well maybe under a different scenario west illusion when you they're there they're saying i mean there are some perhaps some reason what they're saying saying we slug a number and a fraction the way you want us to do we've got to be sure of that we can do that without altering the pristine perfection of the other corporate office who keep track of taxes go to the end government and part of your general overhead expenses in the front office you know taxes for the whole corporation right whole you going to have to hire somebody in there who's going to calculate the because we're confident that all the rest of the calculations remain risky right and and you accept that on financing yes so aren't you in essence saying that commerce is really only allowed to give you the benefit of the doubt on the sales where they can be sure that their formulas aren't otherwise affected now what we're saying is that whatever formula congress uses has to produce a reasonable result it has to produce a result which is of commerce i think you're saying is yes we have a duty to produce the most reasonable result we can produce given the circumstances i mean any time you've got this this make believe formula as you're putting together right because there's no actual transactions that relate to we have a construct about here there's a little bit of a whole lot who smoke and what in all those calculations that we've seen all that may be true and that's why you have to look at what the fundamental nature of the transaction is congress agreed that the fundamental nature of this transaction was as a trading operation the way you value the way you allocate merchandise or our expenses or trading operation is over the palio of the  income statement then commerce wanted standard methodology adjusted to account for the unique business model here and this is yet it so the so at the at the end of the day the percentage is not as disproportionately when he says he's relying on gap and this is referring to you know this is a generic principle that cost is a resource sacrificed for god to achieve a specific objective and he wants to have plugged into the denominator the value of the newsprint trade it which is not a cost that casual ever incurred because it never purchased the and never purchased the newsprint and so what congress did was take expenses on  in achieving the revenue for the newspaper training business which is which is a eminently reasonable methodology and specifically to address and then the passage of title is not a not a formalistic requirement t appellant here a break on the financial charges calculations which you did right yes so you said even though these characters are not in any way shape or form responsible for the value of the goods traded in the news print so it's fiction you're saying when it comes to that to the basic issue here which is on the finance chair it will give them the benefit of the doubt right so if you do that why aren't you required to give them the benefit of the doubt across the board how can you treat as real the brokering transaction from the fin because because there is a because there's really no no logical nexus between the cost of of a traded good that you do not own and how that has to do with your office supplies your your warehouse expenditures because you don't between the financing of the newsprint to trading in the value of that rating in terms of loans and financing it just has nothing to do with g d p sheen is a fundamentally different expense it's an indirect expenditure that applies across the board to the company for instance the president  expenses the overhead expenses associated with the president the vice president of this operation they're not neither attributable to newsprint or to line paper those are regina expenses and that's what commerce that's what commerce it went through and a best to canada's judges and quite rightly below it takes the record as a came to it and it could have applied and we could i could defend it could have applied it's done a methodology and and that's a lot of there's a lot of deference here that congress is entitled to but it did and it went the it very good job of this on page six of its opinion the main reason is that kejriwal does finance newsprint and it does encourage costs for financing newsprint but it does not buy or sell newsprint and it doesn't encourage costs for buying or selling again most of their employees are on the telephone all the time saying that you need some newsgroup in and say hey could you make some talking to the insurance people talking to the transportation people yes but your honor over the hub of the one of their main office the noise the to the denominator so it it properly did that in fact right now you know you go you go challenge your adversary arithmetic when they say the bottom bottom line you're going to tell the whole world that eighty nine percent of the ga in this the eight in eighty nine eleven is that correct it's correct that it doesn't take into account the adjustment the commerce man parsed the phrase that mr morgan read was this is from page twelve of the u s brief commerce found that eleven percent of the remaining janay expenses were attributable to newsprint trading and eighty nine percent aligned paper remaining ignores the fact that it made that huge adjustment up front moving numbers out of the adjustments that commerce may neuer stand again i just want you to come to grips with your adversaries main argument which is this doesn't make any sense it does not make any sense to say that ninety percent if you will of the g and a is a tribute of will to ten percent of the well off commerce did was look at the costs and we are clear the costs were that's how it made the eighty nine percent eleven percent allocation it looked at that very carefully i think join end up with an end result which is just irrational then i think your adversaries corrigan that is the methodology has to be flawed yes i would argue is what your response to that it's not irrational commerce i could not identify which gap principal mr oregon was referring to in his brief i don't think there is one that speaks to that precise question i would just note that kegel all in its own books and records  included if you look again at its profit and loss account and this is joint appendix three o eight it doesn't include a value for turnover except as a note i can't get much more into the  details but it get prepared its own right profit and loss account in accordance with gap i presume and the newsprint is not included there any title comment final comment just to  regarding your idea if we welcome that comparison to euro def because the real lesson of that supreme court decision is that commerce determines whether a transaction is a sale of goods or a sale of services and applying that reasoning hedge while didn't case and the reason is because they assigned eighty nine percent of general expenses to ten percent of the business that's unreasonable that's irrational as you said any board of directors would say what's going on here if you did that and that is the core of how they allocate expenses age eighteen eighteen at if you begin at the bottom of that paragraph and also we cited twenty just we our glass industry corporate united states the i t v decision recognized in the financial and it's an eye out analysis of the finance expense that what they were doing was essentially a trick and merchandise trading operation so if that's true if that's the reality all right and that's your supreme court decision if that's the peter to they've all right but that is our basic principle is that you produced an irrational result in the example we used in our preferred was the president's salary i mean if the president's salary is clearly a general expense and if he's devoting eighty nine percent of his efforts to ten percent of his business that's irrational and that's what we've got here we've got an irrational result so whatever formula they used to get there doesn't really matter it produced an irrational result which is what you're going to ask them with the law they're they have much discretion here so they would be breaking the law they didn't break the law when they record when they when they calculate a financial instrument the court look through that we're asking to use the same kind of approach in this