Slip Op. 06-47

UNITED STATES COURT OF INTERNATIONAL TRADE

________________________________________

 :

TA CHEN STAINLESS STEEL PIPE, LTD., 

 :

Plaintiff, 

 :

 v. 

 :

UNITED STATES, 

 : 

 Defendant, 

 :

and 

 :

ALLOY PIPING PRODUCTS, INC., ET AL., 

 :

Defendant-Intervenors. 

________________________________________: Consolidated 

________________________________________ Court No. 01-00027 

 : ALLOY PIPING PRODUCTS, INC., 

FLOWLINE DIVISION, MARKOVITZ :

ENTERPRISES, INC., GERLIN, INC. and 

TAYLOR FORGE STAINLESS, INC., :

 

Plaintiffs, : 

 

v. : 

 

UNITED STATES, :

 

 Defendant. : 

________________________________________

[U.S. Department of Commerce’s Final Results Pursuant to Remand are sustained.]

 Decided: April 6, 2006

Miller & Chevalier Chartered (Peter J. Koenig), for Plaintiff Ta Chen Stainless Steel Pipe,

Ltd.
Court No. 01-00027 Page 2

1Ta Chen is a Taiwanese producer and exporter of stainless steel butt-weld pipe fittings

subject to the underlying antidumping duty order. Ta Chen sells its pipe fittings to its U.S.

subsidiary, Ta Chen International (“TCI”), which – in turn – sells them to unaffiliated U.S.

customers. See generally Ta Chen Stainless Steel Pipe, Ltd. v. United States, 28 CIT ____, ____,

342 F. Supp. 2d 1191, 1195 (2004) (“Ta Chen I”).

2The Domestic Producers – Alloy Piping Products, Inc.; Flowline Division, Markovitz

Enterprises, Inc.; Gerlin, Inc.; and Taylor Forge Stainless, Inc. – were the domestic petitioners in the

underlying administrative review.

Collier Shannon Scott, PLLC (David A. Hartquist and Jeffrey S. Beckington), for

Plaintiffs/Defendant-Intervenors Alloy Piping Products, Inc., et al.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, and Jeanne E.

Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, U.S. Department of

Justice (Stephen C. Tosini); Rachael E. Wenthold, Office of the Chief Counsel for Import

Administration, U.S. Department of Commerce, Of Counsel; for Defendant United States.

OPINION

RIDGWAY, Judge:

At issue in this action are the final results of the U.S. Department of Commerce’s sixth

administrative review of the antidumping duty order covering certain stainless steel butt-weld pipe

fittings from Taiwan. See Final Results of Antidumping Administrative Review: Certain Stainless

Steel Butt-Weld Pipe Fittings From Taiwan, 65 Fed. Reg. 81,827 (Dec. 27, 2000) (“Final Results”).

The Final Results were challenged by Ta Chen,1 as well as the Domestic Producers,2 in two separate

appeals which were consolidated into this action.

In brief, Ta Chen I addressed a total of four issues disputing the Final Results, remanding two

of those issues to Commerce. See generally Ta Chen Stainless Steel Pipe, Ltd. v. United States, 28
Court No. 01-00027 Page 3

3Familiarity with Ta Chen I is presumed.

4

In contrast, Ta Chen I rejected the Domestic Producers’ attack on Commerce’s calculation

of TCI’s indirect selling expenses, as well as Ta Chen’s challenge to the agency’s decision denying

the company a CEP Offset Adjustment. See generally Ta Chen I, 28 CIT at ____, 342 F. Supp. 2d

at 1203-07. 

CIT ____, 342 F. Supp. 2d 1191 (2004) (“Ta Chen I”).3 Specifically, Ta Chen I instructed

Commerce to reconsider its determination to double Ta Chen’s dumping margin based on an

agreement dating from 1992 to 1994 under which the agency found that Ta Chen had agreed to

reimburse antidumping duties paid by TCI. See Ta Chen I, 28 CIT at _____, 342 F. Supp. 2d at

1197-99. In addition, Commerce was directed to justify its practice of using recognized expenses

in some parts of its standard equation for calculating Constructed Export Price (“CEP”) Profit, in

light of its use of imputed expenses elsewhere in that equation. See Ta Chen I, 28 CIT at _____, 342

F. Supp. 2d at 1199-1203.4

Now pending before the Court are Commerce’s Final Results Pursuant to Remand (“Remand

Results”), together with the parties’ comments thereon. See Plaintiff Ta Chen Stainless Steel Pipe,

Ltd.: Opposition to August 16, 2004 Final Results Pursuant to Remand of the U.S. Department of

Commerce (“Ta Chen Remand Brief”); Defendant-Intervenors’ Comments Regarding the U.S.

Department of Commerce’s Final Results Pursuant to Remand (“Dom. Prods. Remand Brief”);

Defendant’s Response to the Parties’ Comments Concerning the Remand Results (“Gov’t Remand

Brief”).
Court No. 01-00027 Page 4

As a result of its reconsideration on remand, Commerce has recalculated the antidumping

margin for Ta Chen. As revised, Ta Chen’s weighted-average margin for the period of review is

6.42%. See Remand Results at 29, 31.

As discussed more fully below, the Remand Results that Commerce has filed with the Court

comply with Ta Chen I. They are, therefore, sustained.

I. The Remand Results on the Alleged Reimbursement Agreement

As Ta Chen I explained, Ta Chen’s threshold attack on the results of the administrative

review challenged Commerce’s determination to double Ta Chen’s dumping margin based on the

agency’s finding that company financial statements evidenced an agreement by Ta Chen to reimburse

TCI (its U.S. subsidiary) for antidumping duties imposed on Ta Chen’s merchandise. The agency

concluded that “evidence pointing to a reimbursement agreement dating from 1992 to 1994 raised

‘a rebuttable presumption that the agreement [was] still in effect during [this period of review].’” Ta

Chen I, 28 CIT at ____, 342 F. Supp. 2d at 1196-97 (quoting final results of administrative review).

Ta Chen argued that the mere existence of an agreement to reimburse duties incurred from

1992 through 1994 cannot constitute evidence that reimbursement occurred during the period of

review here at issue. In addition, Ta Chen asserted that Commerce abused its discretion by refusing

to consider evidence proffered by the company to prove that there was no reimbursement agreement

and that no reimbursement had occurred during the relevant period. Finally, Ta Chen challenged the

validity of Commerce’s “reimbursement regulation” – the regulation that the agency invoked in

doubling Ta Chen’s duty rate. According to Ta Chen, because that regulation authorizes the

imposition of antidumping duties in excess of the calculated dumping margin, the regulation
Court No. 01-00027 Page 5

contravenes both the U.S. antidumping statute and the United States’ international obligations. See

Ta Chen I, 28 CIT at ____, 342 F. Supp. 2d at 1197-98. 

The Government vigorously defended the legality of Commerce’s regulation. But even the

Government had to concede that Commerce’s rejection of the information that Ta Chen sought to

submit to the agency in the course of the administrative review had “denied [Ta Chen] a meaningful

opportunity to rebut [the Commerce Department’s] presumption of reimbursement.” Ta Chen I, 28

CIT at ____, 342 F. Supp. 2d at 1198 (quoting Government’s opening brief).

Accordingly, with the support of the Government as well as the Domestic Producers, Ta

Chen I remanded the reimbursement issue to Commerce, with instructions to “reconsider the bases

for its determination concerning the alleged reimbursement agreement, in light of any relevant

factual evidence, as well as the agency’s own findings, conclusions, and determinations in other

matters . . . , and the applicable law.” Ta Chen I, 28 CIT at ____, ____, 342 F. Supp. 2d at 1198-99,

1207.

On remand, Commerce requested and reviewed additional information fromTa Chen. Based

on that information, the agency found that the reimbursement agreement “expressly mentions only

the 1992-1994 period.” Remand Results at 28. Concluding that “an agreement to reimburse

antidumping duties . . . was not in effect” for any subsequent period (including the period of review

here at issue), Commerce has rescinded its decision to double Ta Chen’s antidumping margin

(reducing the margin to 6.42%). Id. at 28-29, 31.
Court No. 01-00027 Page 6

5

See Gov’t Remand Brief at 2 (noting that no party objected to the Remand Results on the

issue of the reimbursement agreement, and asserting that “thus, the Remand Determination should

be sustained upon that issue”); Dom. Prods. Remand Brief at 1 n.1 (advising that the Domestic

Producers’ comments on the Remand Results “do not address the . . . question of reimbursement

of antidumping duties”). Ta Chen’s brief is entirely silent on the issue. 

6

See generally Ta Chen I, 28 CIT at ____, 342 F. Supp. 2d at 1193-95. 

7All statutory citations are to the 1994 version of the U.S. Code. The pertinent text of the

cited provisions remained the same at all times relevant herein.

Because the Remand Results on the issue of the reimbursement agreement comply in full

with the Court’s instructions in Ta Chen I, and absent any objection by the parties,5 those Remand

Results are sustained.

II. The Remand Results on Calculation of CEP Profit

As Ta Chen I sets forth in greater detail,6 dumping occurs when goods are imported into the

U.S. and sold at a price lower than their “normal value.” 19 U.S.C. §§ 1673, 1677(34).7 When

normal value is compared to the U.S. price and dumping is found, antidumping duties equal to the

“dumping margin” – the difference between the normal value and the U.S. price – may be imposed.

19 U.S.C. §§ 1673(2)(B), 1677(35)(A).

 Normal value is calculated using the exporting (home) market price (i.e., the price in the

market where the goods are produced), an appropriate third country market price, or the cost of

production of the goods. 19 U.S.C. § 1677b. Where – as in this case – the U.S. purchaser is

affiliated with the producer or exporter, the U.S. price is based on the first sale from the affiliated

purchaser (here, Ta Chen’s subsidiary, TCI) to an unaffiliated purchaser in the U.S. This is the basis

for constructed export price (“CEP”). 19 U.S.C. § 1677a(b). 
Court No. 01-00027 Page 7

Because the prices used to determine normal value and the U.S. price occur at different points

in the stream of commerce, and under different circumstances, certain adjustments are made to

attempt to make them comparable, to ensure “apples to apples” price comparisons. Where – as here

– the price to be calculated is CEP, additional special adjustments are made. Among these are

adjustments to account for selling expenses incurred in the U.S. by the entity affiliated with the

foreign producer or exporter (including expenses such as commissions, guarantees and warranties,

and credit expenses). 19 U.S.C. § 1677a(d)(1).

In addition to the adjustments for selling expenses, the CEP is reduced to account for the

portion of profit attributable to those selling expenses. 19 U.S.C. § 1677a(d)(3). It is the calculation

of this CEP Profit adjustment that is the focus of Ta Chen’s remaining claim. Specifically, Ta Chen

maintains that the “enormous . . . inventory carrying and credit costs” in this case are not properly

accounted for by Commerce’s application of its standard methodology for calculating CEP Profit,

which treats such costs as “embedded” in a respondent’s actual, recognized expenses in certain parts

of the CEP Profit equation, while accounting for the same costs with imputed expenses elsewhere

in the equation. See Ta Chen Remand Brief at 13;SNR Roulements v. United States, 402 F.3d 1358,

1361, 1363 (Fed. Cir. 2005) (explaining assumptions underlying Commerce’s standard

methodology). 
Court No. 01-00027 Page 8

8

See U.S. Department of Commerce Policy Bulletin 97/1, Calculation of Profit for

Constructed Export Price Transactions (Sept. 4, 1997) (“CEP Profit Policy Bulletin”); see also The

Timken Co. v. United States, 26 CIT 1072, 1087, 240 F. Supp. 2d 1228, 1244 (2002), aff’d on other

grounds, 354 F.3d 1334 (Fed. Cir. 2004) (Commerce’s official CEP Profit Policy Bulletin is “wellestablished” and “consistently applied” by the agency).

As outlined in Commerce’s CEP Profit Policy Bulletin,8 CEP Profit is determined by

allocating a portion of the “Total Actual Profit” for all production and selling activities of the subject

merchandise to U.S. CEP selling and further-manufacturing activities. The calculation of CEP Profit

can be expressed in an equation:

Total CEP Profit allocated = Total Actual Profit x Total U.S. Expenses 

 to U.S. expenses Total Expenses

 

For purposes of the CEP Profit equation, Commerce calculates the “Total Actual Profit”

multiplier by (1) adding the revenue attributable to sales of subject (or like) merchandise in both the

U.S. and the home market; (2) deducting from that sum the cost of the merchandise for both markets;

and (3) deducting the selling, packing, and distribution expenses for both markets. See Remand

Results at 4 (citing 19 U.S.C. § 1677a(f)(2)(D); CEP Profit Policy Bulletin). The “Total Expenses”

denominator is calculated by adding (1) the cost of merchandise for both markets and (2) the selling,

packing, and distribution expenses for both markets. See Remand Results at 4 (citing 19 U.S.C. §

1677a(f)(2)(C); CEP Profit Policy Bulletin). Under Commerce’s standard methodology for

calculating CEP Profit, in both the “Total Expenses” denominator and the “Total Actual Profit”

multiplier, recognized financial expenses are included in the cost of both the U.S. and the home

market merchandise. See Remand Results at 4 & n.1 (citing CEP Profit Policy Bulletin); Uruguay

Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103-316, at 825 (1994),
Court No. 01-00027 Page 9

9

See generally n.14, infra.

10Commerce notes that “inclusion of the imputed financial expenses in the ‘Total U.S.

Expenses’ numerator is consistent with 19 U.S.C. § 1677a(f)(2)(B), which defines the term ‘Total

reprinted in 1994 U.S.C.C.A.N. 4040, 4164 (stating that “[t]he total profit is calculated on the same

basis as the total expenses”). 

As Commerce explains its standard methodology, “[w]hen calculating both the ‘Total Actual

Profit’ multiplier and the ‘Total Expenses’ denominator, net financial expenses are calculated from

the [foreign producer/exporter’s] constructed value (‘CV’) database in determining the cost of U.S.

merchandise, and from the [foreign producer/exporter’s] cost of production (‘COP’) database in

determining the cost of home market merchandise.” Remand Results at 5 (citing 19 U.S.C. §§

1677b(e), 1677b(b)(3)). Commerce notes that “[g]enerally, net financial expenses are calculated by

offsetting the total financial expenses incurred with any financial income earned during the period.”

Remand Results at 5. Because net financial expenses are included in both the “Total Actual Profit”

multiplier and the “Total Expenses” denominator as a cost item, and because Commerce historically

has read the statute to require that those two numbers be actual (i.e., recognized) amounts,

9

 the

agency’s standard methodology does not include imputed financial expenses as an expense item in

the CEP Profit calculation. See Remand Results at 5-6 (citing CEP Profit Policy Bulletin at n.5).

In contrast to the recognized figures used in other parts of the CEP Profit equation, “Total

U.S. Expenses” – the numerator of the ratio in that equation – includes imputed credit and inventory

carrying costs, as an approximation of the borrowing costs associated with U.S. selling activities.

See Remand Results at 5.10 As Commerce observes, “[t]he imputed financial expenses related to
Court No. 01-00027 Page 10

U.S. Expenses’ as described under 19 U.S.C. § 1677a(d)(1) and (2).” Remand Results at 5;see also

Gov’t Remand Brief at 4. 

selling activities [i.e., imputed credit and inventory carrying costs] simply represent the opportunity

cost of having . . . 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” than it would

if the company received payment immediately upon production. Remand Results at 6-7.

As the Remand Results explain, imputed expenses are used in the “Total U.S. Expenses”

numerator largely because, as a practical matter, appropriate recognized figures do not exist. In other

words, because money is fungible, “it is difficult to ascertain exactly which portion of [a

producer/exporter’s] financial expenses arises as a result of certain specific operations of the

company, such as U.S. selling activities.” The imputed expenses are an estimate of that amount.

See Remand Results at 5-6, 17, 22.

Finally, as the Remand Results note – because a company’s total recognized financial

expenses reflect its costs of carrying merchandise in inventory and extending credit, and because

those recognized expenses are included in the “Total Expenses” denominator and in the “Total

Actual Profit” multiplier – the corresponding imputed expenses must be excluded from those parts

of the CEP Profit equation, to avoid double-counting. By the same token, because the “Total U.S.

Expenses” numerator includes imputed expenses, the corresponding recognized expenses must be

excluded from that part of the equation. See Remand Results at 5-7, 15-16.
Court No. 01-00027 Page 11

 A. The General Sufficiency of the Remand Results 

From the inception of this case, Ta Chen has asserted that the Commerce Department’s

application here of its standard methodology for calculating CEP Profit essentially “ignore[d]

enormous . . . inventory carrying and credit costs,” making U.S. sales of Ta Chen’s merchandise

appear overly profitable in comparison to home market sales. See Ta Chen I, 28 CIT at ____, 342

F. Supp. 2d at 1199-1200 (quoting Ta Chen’s opening brief); Ta Chen Remand Brief at 3-4, 8, 10,

13-16.

Based on the arguments raised by Ta Chen, as well as the then-existing conflicts in the

relevant case law, Ta Chen I instructed the Commerce Department to explain in greater detail why

the recognized expenses included in the “Total Expenses” denominator and in the “Total Actual

Profit” multiplier are an adequate proxy for the imputed expenses included in the “Total U.S.

Expenses” numerator. See generally Ta Chen I, 28 CIT at ____, 342 F. Supp. 2d at 1199-1203.

Ta Chen now claims that Commerce’s Remand Results do little more than parrot the

agency’s previous arguments and analyses, and thus fail to comply with the remand instructions in

Ta Chen I. See, e.g., Ta Chen Remand Brief at 2-6, 15-16. There is, however, no truth to that

charge. The Remand Results amply evidence Commerce’s compliance with the Court’s mandate.

See Remand Results at 1-4, 13-14 & passim; see generally Gov’t Remand Brief at 2-3; Dom. Prods.

Remand Brief at 1. 

Specifically, as summarized above, the Remand Results elaborate on the statutory basis for

Commerce’s standard methodology, and describe in greater detail the methodology in general. See

generally Remand Results at 4-8, 14; Gov’t Remand Brief at 4. In particular, the Remand Results
Court No. 01-00027 Page 12

11The reasoning advanced by Commerce here has been sustained in other cases, some of

which have expressly recognized that, although the imputed figures and recognized figures may not

be exactly the same, they are reasonable surrogates for one another. See, e.g., SNR Roulements, 402

F.3d at 1361-63; SNR Roulements v. United States, 28 CIT ____, ____, 341 F. Supp. 2d 1334, 1340

(2004) (citation omitted), appeal docketed, Nos. 05-1297, 05-1322 & 05-1323 (Fed. Cir. April 11,

2005); The Timken Co., 26 CIT at 1090, 240 F. Supp. 2d at 1247; Thai Pineapple Canning Indus.

Corp. v. United States, 24 CIT 107, 115 (2000), aff’d in part, and rev’d in part on other grounds,

273 F.3d 1077 (Fed. Cir. 2001). See also Remand Results at 16. 

explain how the imputed financial expenses included in the “Total U.S. Expenses” numerator are

a reasonable surrogate for the relevant recognized financial expenses included in both the “Total

Expenses” denominator and the “Total Actual Profit” multiplier. See generally Remand Results at

1-2, 4-10, 14, 16; Gov’t Remand Brief at 4-5.11 The Remand Results further demonstrate that, in

principle, the application of Commerce’s standard methodology properly accounts for a

producer/exporter’s financial expenses in all parts of the CEP Profit equation. See generally

Remand Results at 3-8, 14; Gov’t Remand Brief at 3-4.

Moreover, as discussed more fully in section II.D below, the supplemental administrative

record filed with the Remand Results includes the test program that Commerce ran in this case. As

the Remand Results explain, that test program demonstrates that – even if the imputed expenses had

been included in the “Total Actual Profit” multiplier and the “Total Expenses” denominator in this

case – such a change would have had only a minimal effect on Ta Chen’s dumping margin. See

Remand Results at 10-11, 21. Indeed, the Remand Results indicate that – contrary to Ta Chen’s

assertions – the addition of imputed expenses to those parts of the CEP Profit equation that already

include corresponding recognized financial expenses would not render a more accurate dumping
Court No. 01-00027 Page 13

12See generally Ta Chen Remand Brief at 2, 4-6, 13-16; but see Gov’t Remand Brief at 5-6.

margin but, rather, would itself result in distortion (due to double-counting). See Remand Results

at 11-12; see also id. at 5-7, 15-16.

For its part, Ta Chen has failed to adduce any real evidence to substantiate its claims that

Commerce’s standard methodology for calculating CEP Profit improperlydistorted the results in this

case.12 See SNR Roulements, 402 F.3d at 1361 (Commerce’s standard methodology for calculation

of CEP Profit to be sustained absent challenging party’s “showing that the amount of imputed

expenses is not accurately reflected or embedded in its actual expenses”); see also SNR Roulements,

28 CIT at ____, 341 F. Supp. 2d at 1340 (Commerce’s standard methodology to be sustained absent

demonstration that(1)including imputed expenses in denominator and multiplier parts of calculation

would not result in double-counting, or (2) that standard methodology results in distortion); Thai

Pineapple, 24 CIT at 114-15 (sustaining Commerce’s standard methodology because plaintiff failed

to demonstrate any significant discrepancy). 

Ta Chen’s brief contesting the Remand Results is not a model of clarity, to say the least.

However, distilled to its essence, it appears to press two principal challenges to the application of

Commerce’s standard methodology in this case. As discussed below, neither of those arguments is

well-founded; and Ta Chen’s other points are equally unavailing.

B. The Magnitude of the Numerator vs. the Denominator

Ta Chen first seeks to make much of the fact that the imputed credit and inventory carrying

expenses reflected in the numerator of Commerce’s CEP Profit equation exceed the recognized
Court No. 01-00027 Page 14

13See also Remand Results at 16 (“The imputed expenses are an estimate of the amount of

gross financial costs associated with the respondent’s U.S. selling activities. The recognized

financial expenses are net amounts of financial expenses associated with all production and selling

activities, both in the United States and the home market.”), 22 (“The imputed expenses are an

estimate of the amount of financial costs associated with the respondent’s U.S. selling activities. The

recognized expenses are net financial costs associated with all production and selling activities, both

in the United States and the home market.”), 23 (addressing claim that “Ta Chen had large imputed

financial expenses for U.S. selling activities, yet . . . TCI had very little recognized interest expense

during the [Period of Review]” at issue).

The gravamen of Ta Chen’s case – and the apparent basis for its preference for the use of

imputed figures – seems to be that it has “enormous . . . inventory carrying and credit costs” which,

it contends, are not adequately reflected (i.e., are understated) in the recognized figures used in both

the “Total Expenses” denominator and the “Total Actual Profit” multiplier of Commerce’s standard

CEP Profit equation. See, e.g., Ta Chen Remand Brief at 13. However, contrary to Ta Chen’s

financial expenses included in the denominator. See Ta Chen Remand Brief at 6, 8, 11. Indeed, Ta

Chen characterizes this point as the “basic distortion at issue” here. See Ta Chen Remand Brief at

6.

Ta Chen simply misunderstands the CEP Profit equation. See generally Gov’t Remand Brief

at 6-7. Contrary to Ta Chen’s implication, “there is no theoretical or logical requirement that the

imputed U.S. inventory carrying cost[s] and imputed U.S. credit expense[s] [reflected in the

numerator of Commerce’s equation] should somehow be limited to or less than the total amount of

recognized net financial expenses . . . included in the ‘Total Expenses’ denominator.” Remand

Results at 10. The operative word in that sentence is “net.” As the Remand Results explain, “the

imputed expenses in the numerator are gross expenses, while the recognized financial expenses in

the denominator are net of interest income, which itself may not be allocable to U.S. selling

activities. Thus, the imputed expenses may reasonably exceed the amount of recognized financial

expenses in the denominator without the existence of a distortion.” Remand Results at 13.13
Court No. 01-00027 Page 15

claims, Commerce has not ignored any of the company’s costs. See Remand Results at 16; Gov’t

Remand Brief at 7.

Indeed, in the Remand Results, Commerce expresslyacknowledgedTaChen’srelatively high

credit and inventory carrying costs. But, as Commerce observes, there is no apparent reason why

all such costs – whatever their magnitude – would not be fully and accurately reflected in Ta Chen’s

consolidated financial statements. See Remand Results at 9, 12-13, 14. Ta Chen has failed to

advance any such reason (much less to proffer any evidence to substantiate such a claim). And it is

Ta Chen’s consolidated financial statements that are the source of the “recognized” figures that the

company seeks to avoid. See, e.g., Remand Results at 17, 22.

Moreover, although Ta Chen seems to view “imputed” figures as emanating from some

mystical source, they are, in fact, derived directly from “recognized” figures. See Remand Results

at 6-7, 12, 16; Dom. Prods. Remand Brief at 3-4. Ta Chen’s claim that Commerce ignored certain

of its expenses thus finds no support in the record here. 

14Ta Chen continues to criticize Commerce’s reliance on generally accepted accounting

principles. Ta Chen accuses the agency of improperly invoking accounting principles to justify its

use of recognized expenses, which – according to Ta Chen – violates the agency’s statutory

obligation to calculate dumping margins as accurately as possible. Ta Chen Remand Brief at 4, 6,

10-12. 

C. Commerce’s Use of Data for Subject Merchandise vs. All Products

Ta Chen’s second principal argument turns on its claim that the recognized expenses used

in the equation are “impermissibly company-wide versus for the subject merchandise in particular.”

Ta Chen Remand Brief at 4. See also Ta Chen Remand Brief at 6 (asserting that Commerce

“erroneously uses [‘company-wide . . . actual expenses on all products’] as a proxy for [the] costs

of the subject merchandise in particular”), 9-10 (arguing that Commerce “failed to calculate the

profit on the subject merchandise” and “did not consider imputed credit and inventory carrying costs

incurred specifically on the subject merchandise”), 11 (alleging that Commerce “impermissibly uses

. . . company-wide costs”).14
Court No. 01-00027 Page 16

The Government emphasizes that Commerce’s standard methodology for calculating CEP

Profit is based on the statute, and that the agency’s normal practice is to value costs using recognized

financial expenses. See Gov’t Remand Brief at 12-13 (citing Remand Results at 5, which in turn cite

CEP Profit Policy Bulletin; Uruguay Round Agreements Act, Statement of Administrative Action,

H.R. Doc. No. 103-316, at 825 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4164-65). Indeed, the

Remand Results state flatly that “the statute indicates that [‘Total Actual Profit’ and ‘Total

Expenses’] are to be actual (i.e., recognized) amounts.” Remand Results at 5. But see SNR

Roulements, 402 F.3d at 1361-62 (holding that the statute “does not unambiguously address the

issue” of the use of recognized expenses vs. imputed expenses in calculating “Total Expenses”).

In any event, Commerce has the discretion to depart from its standard methodology where

necessary to achieve a more accurate result. But Ta Chen has failed to establish that any such

departure is warranted here. See Gov’t Remand Brief at 13.

This argument, too, reflects a fundamental misconception as to Commerce’s methodology.

As Ta Chen correctly points out, its financial statements report its financial expenses related to all

of its products – not just those expenses related to subject merchandise. But, contrary to Ta Chen’s

implication, Commerce did not use the raw numbers in its CEP Profit equation. Instead, in

accordance with its standard methodology, Commerce calculated the portion of the total net financial

expenses that are reflected in Ta Chen’s consolidated financial statements which are attributable to

the subject merchandise. See Remand Results at 23-24. Thus, as the Remand Results explain, “the

recognized net financial expenses in the ‘Total Actual Profit’ multiplier and the ‘Total Expenses’

denominator . . . in fact represent a figure for subject merchandise only, excluding the appropriate

amounts for any non-subject products.” Remand Results at 24 (emphasis added).

D. Commerce’s Test Program

The validity of Commerce’s standard methodology as applied to the facts of this case is

buttressed by the results of the test program that the agency ran in the course of the administrative
Court No. 01-00027 Page 17

15The Government takes pains to emphasize that the test program “does not represent a

change in practice or an approach which Commerce intends to employ in the future.” Gov’t Remand

Brief at 8-9; see also Remand Results at 10, 12, 21. The Government characterizes the exercise

instead as “a unique and extraordinary attempt to probe the potential factual basis underlying Ta

Chen’s argument, and an effort to resolve Ta Chen’s assertions that Commerce’s longstanding CEP

profit methodology results in inaccuracies.” Gov’t Remand Brief at 8-9.

As the Remand Results explain, “the [alternative] methodology for calculating CEP profit

set forth in [the test program] is flawed”:

According to the Department’s [standard] methodology, the imputed interest

expenses are already reflected in the recognized financial expenses, which [are]

included in the cost of merchandise in the denominator and the multiplier of the CEP

profit equation. By adding the imputed interest expenses to the denominator and the

multiplier, these amounts are then double-counted in the denominator and in the

multiplier, such that the denominator and the multiplier would have both the

recognized amount and the imputed measurement of the respondent’s interest

expenses. Furthermore, the CEP profit equation applied in [the test program] is not

accurate or symmetrical. By adding only the U.S. imputed interest expenses, but

review at issue. In accordance with Ta Chen I, all documentation related to that test program was

disclosed to Ta Chen and included in the supplemental administrative record compiled on remand.

See Ta Chen I, 28 CIT at ____, 342 F. Supp. 2d at 1202; Remand Results at 11, 20, Att. A; Draft

Results Pursuant to Remand at Att. I (including both “Log for CEP Test Program” and “Output for

CEP Test Program”).

Commerce’stest program included Ta Chen’s imputed expenses in all parts of the CEP Profit

equation. See Remand Results at 10, 19-20. Still, the results that the test program yielded did not

differ significantly from the results reached using Commerce’s standard methodology. See Remand

Results at 10-11, 21. The Government highlights this fact as further proof that “Commerce’s

standard methodology did not result in a distorted calculation.” Gov’t Remand Brief at 8 (citing

Remand Results at 21).15
Court No. 01-00027 Page 18

ignoring the home market imputed interest expenses and any imputed expenses

related to production, purchasing, financing, or administrative activities, [the test

program] places undue emphasis on Ta Chen’s imputed U.S. selling expenses.

Remand Results at 11-12; Dom. Prods. Remand Brief at 5. See also Remand Results at 25-26

(cataloguing a few of the “additional adjustments” that would be necessary to remedy flaws in the

test program methodology, which “leaves much room for improvement”; even so, Commerce’s

standard methodology would still “represent[ ] the most accurate methodology”).

Ta Chen attacks Commerce’s test program, asserting (a) that there is no evidence that the test

program actually ever even “considered, much less adequately [considered], imputed credit and

inventory costs,” and (b) that – more generally – there must be an error in the test program because

there is no great discrepancy between the results yielded by that program and the results of the

agency’s standard methodology. See Ta Chen Remand Brief at 2, 7-9.

 The Government argues that Ta Chen’s challenges to the test program come too late. In the

course of the remand proceedings, Commerce served Ta Chen with copies of both the complete test

program and the output log. According to the Government, Ta Chen was obligated to raise all

objections to the test program with the agency at that time. The Government maintains that any

attempt to raise such concerns now – for the first time – is barred by the doctrine of exhaustion of

administrative remedies. See Gov’t Remand Brief at 9; Remand Results at 20. See generally Ta

Chen I, 28 CIT at ____, 342 F. Supp. 2d at 1205-07 (discussing doctrine of exhaustion); 28 U.S.C.

§ 2637(d).

The Government is only about half right. It is true that Ta Chen failed to raise the second

(more general) point at the administrative level. But, contrary to the Government’s claim, it appears

that Ta Chen’s comments on the Draft Remand Results in fact did flag the first point (concerning
Court No. 01-00027 Page 19

16See Letter to U.S. Sec’y of Commerce from Counsel to Ta Chen (Aug. 9, 2004) at 2

(arguing that, in the Draft Remand Results, “the Department purports . . . to recalculate the CEP

Profit adjustment per Ta Chen’s arguments that imputed costs must be considered”) (emphasis

added); Remand Results at 21 (stating that “the test program did in fact include the U.S. imputed

financial expenses in the ‘Total Actual Profit’ multiplier and the ‘Total Expenses’ denominator,

despite Ta Chen’s claims to the contrary”) (emphasis added).

17The Remand Results describe the test program in detail:

As evidenced by the equations set forth in the test program, the Department added

the imputed expenses to the “Total Expenses” denominator, thus increasing “Total

Expenses” by the amount of the imputed expenses. [Commerce] also deducted this

recalculated “Total Expenses,” which now includes the imputed expenses, from Ta

Chen’s “Total Revenue” to recalculate the “Total Actual Profit” multiplier. See CEP

Test Program Log at lines 3293-3391. Thus, [Commerce] did in fact increase the

“Total Expenses” denominator by the amount of the imputed expenses, and . . . also

did in fact decrease “Total Actual Profit” multiplier by including the same imputed

expenses as a deduction from “Total Revenue.” . . . .

. . . . As evidenced from the actual calculations in the CEP test program and the test

program computer language, the test program did in fact include the U.S. imputed

financial expenses in the “Total Actual Profit” multiplier and the “Total Expenses”

denominator, despite Ta Chen’s claims to the contrary. 

the test program’s use of imputed expenses). Indeed, Ta Chen’s comment on that issue precipitated

a response from Commerce in the agency’s final Remand Results filed with the Court.16

In any event, and more to the point, neither of Ta Chen’s arguments is persuasive on the

merits. As the Government puts it, “Ta Chen takes fragments of the test program out of context to

incorrectly argue that imputed costs are not included in Total United States Selling Expenses

(‘TOTSELLU’).” See Gov’t Remand Brief at 9-10; Ta Chen Remand Brief at 7-8. Ta Chen

apparently examined only a part of the test program. A more comprehensive review of the relevant

parts of the program confirms that Commerce did indeed include Ta Chen’s imputed expenses in the

Total Selling Expenses (“TOTSELLU”) line item. See generally Remand Results at 19-21.17
Court No. 01-00027 Page 20

Remand Results at 20-21; see also Gov’t Remand Brief at 10.

Equally lacking in substance is Ta Chen’s claim that the relatively insignificant change in the

results yielded by the test program somehow “defies mathematical logic” and constitutes proof of

some fundamental error. See generally Ta Chen Remand Brief at 2, 8-9. Apart from its general

expressions of skepticism and incredulity, Ta Chen largely fails to elucidate this point, or to proffer

any real evidence to support it.

As the Government observes, “The test program resulted in a difference of 6.5% in the total

United States selling expenses. This, in turn, [would] lower[ ] Ta Chen’s margin slightly.” Gov’t

Remand Brief at 10 (citing Remand Results at 11). According to the Government, the difference in

results between the test program and the application of the agency’s standard methodology –

however modest that difference may be in Ta Chen’s eyes – itself constitutes “evidence that

Commerce did in fact add imputed expenses to two parts of the calculation.” Gov’t Remand Brief

at 10-11.

Notwithstanding its various criticisms of the test program, Ta Chen seeks to avail itself of

the program’s results. Specifically, Ta Chen argues that, at a minimum, the results of the test

program “confirmed that it does make a difference in the dumping margin to consider imputed

expenses on U.S. sales” in calculating CEP Profit. Ta Chen Remand Brief at 2-3. Emphasizing that

the statute and judicial precedent require that dumping margins be calculated as accurately as

possible, Ta Chen apparently contends that its dumping margin must be recalculated to reflect the

test program results: “The statute does not say that minor inaccuracies may be ignored.” Ta Chen
Court No. 01-00027 Page 21

18In the Remand Results, Commerce noted – as an aside – that, in the event that one were to

consider actually relying on the approach employed in the test program, numerous refinements and

adjustments would be necessary. See Remand Results at 11-12, 25-26. Ta Chen pounces on the

agency’s observations, dismissing them as mere “speculation without record support.” Ta Chen

Remand Brief at 8. To the contrary, the points that Commerce makes are well-reasoned and clearly

articulated, and (among other things) further illuminate the deficiencies in Ta Chen’s proposed

alternative approach to the calculation of CEP Profit.

19It has become increasingly unclear precisely how Ta Chen would propose to calculate CEP

Profit. Although Ta Chen now denies advocating the use of TCI’s financial statements, it appears

that, in fact, it has urged exactly that in the past. CompareTa Chen Remand Brief at 9 (asserting that

it is not proposing use of TCI’s financial statements) with Ta Chen Memorandum of Law In Support

of Motion For Judgment On the Agency Record (Sept. 4, 2001) at 28 (arguing for use of “TCI’s

relevant financial statement ending October 31, 1998”).

As the Remand Results detail, however, any such use of TCI’s financial statements would

pose a panoply of problems. See generally Remand Results at 16-17, 21-23. As Commerce

explains, it would be inappropriate for the agency to “rely on the individual financial statements of

a single subsidiary [i.e., TCI] to reflect the full financial results and position of the consolidated

Remand Brief at 2-3, 15-16 (citing D & L Supply Co. v. United States, 113 F.3d 1220, 1223 (Fed.

Cir. 1997)).

But Ta Chen’s claim is wide of the mark, and must be rejected. As detailed in note 15 above,

the test program has a number of inherent flaws. See generally Remand Results at 11-12, 21, 25-

26.18 Thus, there can be no suggestion that the test program is more accurate than Commerce’s

standard methodology. See Remand Results at 25.

E. Commerce’s Departure from

Its Standard Methodology in Other Cases

Ta Chen continues to emphasize that there are other cases where Commerce has deviated

from its standard methodology for calculating CEP Profit. Ta Chen urges that the same course

should be followed here. See generally Ta Chen Remand Brief at 14-16.19
Court No. 01-00027 Page 22

correspondent [i.e., Ta Chen].” Id. at 17. For example, because TCI “sells a full range of products

which are outside the scope of [the] [antidumping] order [at issue], and has significant related-party

transactions with other Ta Chen companies,” there is no basis for treating TCI’s financial statements

as though they “effectivelyisolate the proper portion of Ta Chen’s recognized financial expenses that

may be attributable to U.S. selling activities of subject merchandise.” Id. at 17, 23. For this reason,

and others, “[n]either [Commerce] nor the Court has contemplated using TCI’s recognized financial

expenses as a substitute for Ta Chen’s recognized financial expenses or as a substitute for Ta Chen’s

imputed financial expenses.” Id. at 23; see also id. at 17.

Further, as the Remand Results note, Ta Chen has previously argued that “Ta Chen had large

imputed financial expenses for U.S. selling activities, yet that TCI had very little recognized interest

expense during the [period of review].” Remand Results at 23 (citation omitted). As Commerce

observes, “[t]his suggests that any recognized financing expenses related to imputed credit or

inventory carrying costs are not being borne by TCI, but rather by the parent company [Ta Chen] or

other Ta Chen companies. Such amounts are not reported in TCI’s separate financial statements, but

would be reflected in Ta Chen’s consolidated statements.” Id. 

Most recently, Ta Chen has suggested that – to avoid the “double counting” that results from

including both imputed and recognized numbers in the same parts of the equation (a phenomenon

that Ta Chen apparently now concedes) – Commerce “need only include imputed and not recognized

expenses” in all parts of its CEP Profit equation. Ta Chen Remand Brief at 8. But it is far too late

in the day to start vetting new proposed alternative methodologies. In any event, Commerce’s

preference for the use of actual, recognized, “booked” figures, where available (rather than imputed

figures), is entirely reasonable and in accordance with generally accepted accounting principles. See,

e.g., The Timken Co., 26 CIT at 1090, 240 F. Supp. 2d at 1246 (citing Antidumping Manual). Cf.

The Thai Pineapple Public Co. v. United States, 187 F.3d 1362, 1366 & n.5 (Fed. Cir. 1999). Absent

some showing that Commerce’s use of recognized figures in its CEP Profit calculations improperly

skews the results, there is no basis for requiring the agency to use some other set of data. Certainly

Ta Chen has made no such showing here. 

20See NTN Bearing Corp. of America v. United States, 25 CIT 664, 155 F. Supp. 2d 715

(2001); FAG Kugelfischer Georg Schafer AG v. United States, 25 CIT 74, 131 F. Supp. 2d 104

But the cases that Ta Chen invokes are anomalies. See generally Gov’t Remand Brief at 11-

12. In each of those cases, Commerce departed from its standard methodology only because it was

required to do so by the court – not because the agency viewed the alternative methodology as more

accurate.20 In each of those cases, although Commerce complied with the court’s directive, the
Court No. 01-00027 Page 23

(2001); FAG Italia, S.p.A. v. United States, 24 CIT 1311 (2000); SNR Roulements v. United States,

24 CIT 1130, 118 F. Supp. 2d 1333 (2000). 

21The Government summarizes some of Commerce’s concerns about its departures from its

standard methodology in the three (outdated) cases on which Ta Chen relies:

Commerce respectfully objected to the court-ordered methodology because the

change distorted the ratio of United States selling expenses to total expenses. A

distortion was created because the addition of imputed expenses incurred upon sales

of the subject merchandise in the United States does not result in the addition of

imputed expenses incurred upon sales of foreign like product sold in the exporting

country. This overstatement of costs understates the ratio of United States selling

expenses to total expenses and, thus, understates the amount of actual profit allocated

to selling, distribution, and further manufacturing activities in the United States.

Gov’t Remand Brief at 11-12.

22Obviously, these decisions by the Court of Appeals also dispose of Ta Chen’s claim that

judicial precedent mandates the inclusion of imputed expenses in all parts of the CEP Profit

equation. See Ta Chen Remand Brief at 13-16.

agency respectfully objected to the departure from its standard methodology.21 And, in each of those

cases, the agency prevailed on appeal. See SNR Roulements, 402 F.3d 1358; FAG Italia S.p.A. v.

United States, 402 F.3d 1356 (Fed. Cir. 2005).22 See generally Gov’t Remand Brief at 11-12.

Indeed, Ta Chen itself has been down this road before. Another court has previously rejected

basically the same arguments that Ta Chen presses here, in a case in which Ta Chen challenged a

different administrative review of the same underlying antidumping order at issue in this action. See

generally Alloy Piping Prods. Co. v. United States, 28 CIT ____, 2004 WL 2418314 (2004); Ta

Chen Remand Brief at 4 n.3 (acknowledging that Ta Chen raised same challenges to Commerce’s

standard CEP Profit calculation methodology both in instant case and in Alloy Piping). In Alloy

Piping, the court sustained Commerce’s application of its standard CEP Profit calculation
Court No. 01-00027 Page 24

methodology, because Ta Chen was unable to demonstrate that imputed expenses were not

adequately reflected. Alloy Piping, 28 CIT at ____, 2004 WL 2418314 at * 5. So too Ta Chen has

failed to demonstrate that imputed expenses were not properly reflected in Commerce’s CEP Profit

calculations in the case at bar.

In sum, pursuant to Ta Chen I and in accordance with the Court of Appeals’ holding in SNR

Roulements, Ta Chen has been accorded more than ample opportunity to demonstrate that – under

the facts of this case – the Commerce Department’s use of actual, recognized expenses in the

calculation of “Total Expenses” and “Total Actual Profit” did not fully account for U.S. credit and

inventory carrying costs. See Ta Chen I, 28 CIT at ____, 342 F. Supp. 2d at 1199-1203; SNR

Roulements, 402 F.3d at 1361, 1363. Yet Ta Chen has pointed to nothing in the record that casts

doubt on the agency’s determination that its standard methodology for calculating CEP Profit

(including the use of recognized figures) remains “the most accurate methodology.” See Remand

Results at 25. Under the circumstances, Commerce was well within its rights to decline to depart

from that methodology.

III. Conclusion

For all the reasons set forth above, the Final Results Pursuant to Remand filed by the

Department of Commerce in this action are sustained. Judgment will enter accordingly.

________________/s/________________

 Delissa A. Ridgway 

 Judge

 

Decided: April 6, 2006

 New York, New York