Slip Op.04-158 UNITED STATES COURT OF I NTERNATIONAL

TRADE

____________________________________ : VIRAJ FORGI

NGS, LTD., : : Plaintiff, : : Before: WALLACH, J udge v. : Court No. 01-00889 : UNI TED STATE S, : : Defend ant. : ____________________________________: [United States Department of Commerce’s Remand Redetermination is Partially Remanded] Dated: December 9 , 2004 Miller & Chevalier Chartered , ( Peter Ko enig , and Jeffrey C. Lowe ) for Plaintiff. Peter D. Keisler , Assistan t Attorne y G eneral ; David M. Cohen , Direct or; Jeanne E. Davidson , Deputy Director; Stephen C. Tosini , Trial Attorney, U.S. De partment of Justice, Civil Division, Commercial Litigation Bra nch; and James K. Lockett , Senior Attorney-Advisor, O ffice of Chief Counsel for Imp ort Admini stration, U.S. Depa rtment of Commerce , of Counse l, for De fendant

.

OPINION Wallach, Judge:
I Introduction This matte

r comes b efore t

he court following

the cour t’s rema nd of Septe

mber 3, 20 03, to the United States Department of Commerce (“the Depa rtment” or “Commerce”). I n Viraj Forgings, L

td. v. United States , 283 F. Supp. 2d 1335 (CIT 2003) (“Viraj I”), the court remanded Commerce’s findings in Certain Stainless Steel Flanges from I ndia; Final Results of Antidumping Duty Administrative Review , 66 Fed. Reg. 48,244 (Sept. 19, 2001) (“Final1 Familiarity with the cour t’s decision in Viraj I

is presumed.

2 Commerce

published

the antid umping du

ty order for stainle ss steel f langes from I ndia in Amended Final Determination and Antidumping Order; Cer tain Forged Stainless Steel Flanges from I ndia , 59 Fed. Reg. 5,994 (Feb. 9, 1994).

3 See gener

ally Memorandum from Joseph A. Spetrini, Deputy Assistant Secre tary AD/CVD Enforcement Group III , to Farya r Shirzad, Assistant Secretary f or Import 2 Results”). 1 On Dece

mber 19, 2 003, Comme

rce file d its Results

of Redete

rmination Pursuant t

o Court Remand Certain Forged Stainless Steel Sheet Flang es from India (“Rema nd Redetermination”). Plaintiff, Viraj Forging s, Ltd. (“Plaintiff” or “Viraj” ), filed Objections to the Remand Decision of the U.S. Department of Commerce (“Plaintiff’s O bjection”). For the reasons set forth below, Commerce’s Remand Redetermination is aff irmed in part and remanded in part.. This court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2000).
II Background Plaintiff is an I ndian man

ufactur er of sta inless ste el flang es. 2 In 2000, Commerce initiated an antidumping duty administrative re view on certain forged stainless steel fla nges from India for the period of F ebruary 1, 1999, through January 31, 2000. Initiation of Antidumping and Countervailing Duty

Administrative Reviews , 65 Fed. Reg. 16,875 (Mar. 30, 2000). Commerce

prelimina

rily determined that Pla

intiff’s dumping margin was 21.10 p ercent

. Certain F orged

Stainless S teel Fla

nges F rom I

ndia; Pre liminary

Results of

Antidumpin

g Duty Administrative Review , 66 Fed. Reg. 14,127, 14,130 (Mar. 9, 2001) (“Pre liminary Results”). On Sept ember 1 9, 200 1, Co mmerc e publ ished the Fi nal Re sult s cont ainin g the we ighted -avera ge dumping margin f

or the fir ms under r

eview, w hich adopted the 21 .10 perc ent dumpin g margin from the p

relimina ry determination for

Viraj. 3 Final Results, 66 Fed. Reg. at 48,245. TheAdministration, Issues and Decision Memorandum f or the Final Results in the Antidumping Duty Administra

tive of Ce rtain Stai nless Stee l Flang es from I ndia (Sept. 19, 2001). 3 administrative review covered “cer tain forged stainless steel flanges f rom India, both finished and not-finished,” and included five gene ral types of f

langes that generally

matched the American Society

for Testing and Materials (“ASTM”) spe cification A-182. Id. at 48,244. Plaintiff challenged Commerce’s determination and the c ourt ordered a remand.
In Viraj I , the cour

t ordere d Commerc e to (1) r ationally articula te the ba sis for its departure from previous practice or to provide adequate evidence to support its claim of factua l distinction in selecting Germany as the comparison market; (2) adequately explain its departure from precedent in comparing ASTM standar d flanges with the German Deutches I nstitut für Normung e.V. (“DI

N”) standard flanges; (3) e xplain its reasoning for converting reported pric es to a per- kilogra

m basis whe

n this was c ontrary

to Commerc e’s pre cedent or to conf orm itself to prior pr eceden t; and (4)adequa

tely explain its c laim that the compar ison of ro ugh for gings to finished flanges were “similar merc handise” and that any

differences were “insig

nificant.” Viraj
I , 283 F. Supp. 2d at 1344-57. On Dece mber 19, 2 003, Comme

rce file d its Reman

d Redete rmination stating that (1) i t maintains that Ger many is the most a

ppropria te third c ountry

compari son marke

t and that this selection was not contrary to its regulation or prior precedent; (2) it finds that the compar ison of ASTM standard flanges to DI N standard flanges was consistent with the statute, reg ulations, and Commerce ’s prec edent; ( 3) it dete rmines tha

t the use o f the per

-kilogr am compa

rison approach is consi stent with Comm erce’s practi ce and p receden t; and (4) it maint ains t hat co mpari ng rough flanges to finished flanges, whe n no other comparisons are available, was consistent with the4

statute, Commerce’s regulations, and practice . Remand Redetermination at 13-26.
III Arguments Plaintiff claims that Commerce’s continued use of Germany as the comparison market fails to satisfy the statutory “foreign like product” require ments for comparison markets and Commerce’s own regulations on the selection of a third- country marke t. It argues that the use

of Germany a s the comparison market is unsupported by substantial evidence, is not in accordance with the law, and is an impermissible and unexplained departure from past prece dent. Plaintiff states that Commerce’s argument that DI N and ASTM flanges may be compared is unsupported by substantial evidence

and is not in accordance with law. I t further claims that since flanges are

not comme

rcially sold on a pe

r-kilog ram basis , Commerc e’s use o f per-k ilogra m pricing is neither supported by substantial e vidence nor in accordance with the law . Finally, Plaintiff

ar gu es th at Co mm er ce ’s de ci si on th at ro ug h f or gi ng s a re co mp ar ab le to pr oo f- ma ch in ed or fu ll ymachine d (finishe d) flang es rema ins unsupported by

substantia

l evidenc e and is ot

herwise not in accordance with the law. Defendant claims that Commerce’s selection of Ger many as the compa

rison market complies with the court’s decision in Viraj I

. It claims that Commerce followed Viraj I to determine that flanges manufacture d to DIN and ASTM standards are like product. Furthermore, Defendant argues that the use of per-kilogram price and cost compar isons was reasonable and consistent with agency

practice and that Commerce made appropr iate adjustments when compari ng roug h to finishe d flang es.5 IV Applicable Legal Standard The court will uphold Commerce’s determinations unless they are “unsupported by substantial evidence on the record, or otherwise not in ac cordance with law.” 19 U.S.C. § 1516a(b)(1)(B) (2004). Substantial evidence is “such relevant evidence as a re asonable mind might accept as adequate to support a conc lusion.” Universa l Camera Corp. v. N

LRB , 340 U.S. 474, 4 77, 71 S. Ct . 456, 95 L. Ed. 456 (1 951) ( quot ing Consol. Edi son Co. v. N LRB , 305 U.S. 197, 299, 59 S. Ct. 206, 83 L. Ed. 126 (1938)). Under this standard, the cour t does not weigh the evidence nor will it substitute its own judgment for that of the agency

. See Negev Phosphate s, Ltd. v. United States , 12 CIT 1074, 1076-77 (1988). Howeve r, the court’s deference c annot allow the agency

to deviate from the clear intent of Congress. See Rhone-Poulenc, Inc. v. United States , 20 C IT 573, 5 74-75 (1996 ) (cit ing Bd. of Governors of the Fed. Reser ve Sys. v. Dimension Fin. Corp. , 474 U.S. 361, 368, 106 S. Ct. 681, 686, 88 L. Ed. 2d 691 (1986)). The court has found Commerce’s results unlawful in instances whe re Commerce has failed to carry

out its duties properly, relied on inade quate facts or reasoning, or fa iled to provide an adequate basis for its conclusions. See Budd Co. Ry. Div. v. United States , 1 CIT 67, 70-76 (1980); Indus. Fasteners Gr oup v. United States , 2 CIT 181, 190 (1981). I n order for Commerce ’s redeterminat ion to be su stained, it must be r easonab le, suppor

ted by the rec ord as a whole, and the grounds that the administrative age ncy acted upon clearly

disclosed. See Atlantic Sugar, Ltd. v. United States , 744 F.2d 1556, 1563 (Fed. Cir. 1984).6 V Discussion A Comm erce’ s Select

ion of Ger many as the Third Country Com parison Ma rket is No t in

Accordance with the Law
In Viraj I , this cour

t instruct ed Commer

ce to “r ationally articula te the ba sis for its departure from its previous practice or provide adequate evidence to support its claim of a factua l distinction” to provide further evidence that Germany was the appropriate third-country comparison market. 283 F. Supp. 2d at 1344. Defendant claims that Commerce’s selection of Ger many as the compa

rison market complies with the court’s order. Defendant arg ues that its decision to use Germany is supported by t he statute , regu

lations, a nd its long

standing practic e. Reman

d Redete rmination at 4-5. F irst, Defendant claims that 19 U.S.C. § 1677(16) (2000) broadly defines “foreign like product” a nd thereby a llows Commerce the flexibility to determine the most appropriate pr oducts for comparison. Id. at 5. Second, Defendant argues that Commerc e’s regulations give it the flexibility and authority to select the most appropr iate third country for

comparison purposes. Id. at 5 . In support of

its arg ument, De fendant

sets out 19C.F.R. § 35 1.404(e ) (2000)which sta tes that : . . . the Secretary

generally will select the third country ba sed on the following criteria: (1) The fore ign like product e

xported to a

particu lar third country is more similar to the subject merchandise exported to the United States than is the foreign like product exported to other third countrie s; (2) The volume of sales to a particular third country is larger than the volume of

sales to o ther thir

d countri es;4 At oral argument, Defendant cla imed that the preamble to Commerce’s regulations purposely eliminated the ne ed for a hierarchical ana lysis in the selection of the third country market. 7

(3) Such other factors as the Secretary considers appropriate. Commerce claims that it has the authority to se lect from these criteria because “ no hierarchy

or priority is assigned to a

ny of these thre e criteria.” 4 Id. According to Commerce, “[a]t the point when the Department selec ts a third-country market, there is no information on the record offer ing model-specific details of the phy sical charac teristic s of the me

rchandi se sold in the variou s markets . . .,” an d as a re sult marke

t volume becomes the most re adily

appare nt and mea surable

indicator of the “ likelihood of suitab le matches for U.S. sales.” Id. at 6-7. Furthermore, Commerce supports its practice on the grounds that, when it does not have full sales data and “two or more marke ts are suitable for comparison to merchandise sold to the United States,” it selects one of the potential markets based upon a preference for size. Defe

ndant’s Response to Plaintiff’s Comments Concerning the Remand Results in This Case (“Defendant’s Response”) at 5-6. Def endant explains that it first selects the
appropr iate comp arison ma

rket and then cond

ucts a mod

el-spec ific sea

rch for the most comparable foreign like product in the pric e-to-price analysis. Id. at 5. Def endant c ontinues t

o support its initial selection of Germany a s the comparison market on the basis that “the larger market will generally

offer a larger pool of c omparable sales transactions, and will have sales of more models, in more months, than smaller volume markets . . . .” Remand Redetermination at 7; See Defendant’s Response at 4. Defendant also c laims that selecting the larger marke t does not necessarily

mean it did not examine whether there are similar products. Rather, under the provisions of 19 C.F.R. §351.404(e), it is permitted to select the appropriate third country market5 Commerce lists numer

ous case s to suppor

t its position . Defen

dant point s out that in each instance the market selection rema ined unchanged from the preliminary results to the final results. T he only review c ited which occurr ed prior to the re view at is sue is Stainless S teel Plate from Sweden: Preliminary Results of Antidumping Duty Administrative Review , 63 Fed . Reg. 36,877, 36 ,878 (July

8, 1998); Stainless Steel Plate from Sweden: Final Results of Antidumping Duty Administrative Review , 63 Fed. Reg. 63,706 (Nov. 16, 1998). Remand Redeter mination at 8. All of the

remainin g revie ws cited o ccurre d after

the revi ew at issu

e: Notice of Preliminary Re sults and Partial Rescission of Antidumping Duty Administrative Review a nd Intent To Revoke Antidumpin

g Duty Order in Part: Cer tain Pasta From I taly , 66 Fed. Reg. 34414 (June 28, 2001), market selection unchange d in final results, 6 6 Fed. Re g. 300 ( January 3, 2002); Notice of Preliminary Determination of Sales at Less Than F air Value: Low Enriche d Uranium From the United Kingdom; Preliminary Determinations of Sales at Not Less Than Fa ir Value: Low Enriched U ranium From Germany

and the Netherlands; and Postponement of Final Determinations , 66 Fed. Reg. 36748 (July 13, 2001) , market selection unchanged in final results, 66 Fed. Reg . 65903 (Dece mber 21, 2 001); Notice of Preliminary D etermination of Sales at Less Than Fair

Value and Postponement of Final Determination: Structural Steel Beams From L uxembourg , 66 Fed. Reg. 672 23 (Dec ember 28 , 2001), ma rket sele ction unchange d in final re sults, 67 F ed. Reg . 35488 (M ay 20, 2002) ; Stainless Steel Wire Rod F rom I

ndia: Pre liminary

Results of

Antidumpin

g Duty Administrative Review , 67 Fed. Reg. 865 (January 8, 2002), market selection unchanged in final re sults, 68 Fed. Reg. 26288 (May 15, 2003) ; Notice of Preliminarv Determination of Sales at Less Than Fair Va

lue and Postponement of Final Determination: Sulfanilic Acid from Portugal , 67 Fed. Reg. 30362 (May 6, 2002), market selection unchanged in final re sults, 67 Fed. Reg. 60219 (Septemb er 25, 20 02); Notice of Preliminary D etermination of Sales at Less Than Fair

Value: Sulfanilic Acid From Hungary , 67 Fed. Reg . 30358 (M ay

6, 2002), market se lection u nchang ed in final re sults, 67 F ed. Reg . 60221 (Se ptember 25, 2002) ; Notice of 8 based upon one of the three criteria, instead of on a specific hierarchy . Defendant also argues that “there are many

and varied instances of the Department’s choosing the largest third-country market without mention of the degree of similarity of merchandise . . . .” 5 RemandPreliminary Deter mination of Sales at Less Than Fair Value and Postponement of Final Determination: Ferrovanadium from the Republic of South Africa , 67 Fed. Reg. 45083 (July 8, 2002) , market selection unchanged in final re sults, 67 Fed. Reg. 71136 (Novemb er 29, 20 02); Notice of Preliminary Re sults of Antidumping Duty Administrative Review, Pre liminary Determination To Revoke the Order in Part, and Partial Rescission of Antidum

ping Dut y A dministra

tive Revie

w: Fresh Atlantic Salmon Fr

om Chile , 67 Fed. Reg. 51182 (August 7, 2002), marke t selection unchanged in final results, 68 Fed. Reg . 6878 (February 11, 2003) ; Certain Forged Stainless Steel Flange s from India: Preliminary Results of Antidumping Duty Administrative Review , 68 Fed. Reg. 1161, 1162-63, (March 10, 2003), a nd Memorandum from Helen M. Kramer, Team L eader/Senior Analy st and Shireen Pasha, Ca se Analy

st, to the F ile , Administrative Review of the Antidumping Duty Orde

r on Certain Forged Stainless Steel Flanges from I

ndia; Preliminary Results Analy sis for Echjay Forgings Pvt. Ltd. (“As Echjay had no sales of the subject mercha ndise in th e home ma

rket, we used its sa

les to its la

rgest third country marke

t, Belgium, to calculate COS adjustments for CV,” no change

in use of l argest third cou ntry for circ umstance sof-sale adjustment in final results, 68 Fed. Reg. 42005 (July 16, 2003); Certain Polyester Staple F iber from Korea; Preliminary Results of Antidumping Duty Administrative Review and Par tial Rescission of Review , 68 Fed. Reg. 34378, 34380-34381, (June 9, 2003) (ma

rket sele cted wa s the sec ond larg est beca use the la rgest market, the European Union, had a dumping orde r in place), market selection unchanged in final re sults, 68 Fed. Reg. 59366 (October 15, 2003). Remand Redetermination at 8-10. 9 Redetermination at 8. Finally, Def

endant claims that “[w]ithin the context of the antidumping duty order on flanges from I

ndia, there is no instance in which the Department stated that it selected a market based on its having more similar merchandise than a lar ger comparison market.” Remand6 Defendant cites to the Certain F orged Stainless S teel Fla

nges fr om Ind ia; Fina l Results of Antidumping Duty Administrative Review , 61 Fed. Reg. 51,263 (Oct. 1, 1996) (here inafter “Akai Review”), which it claims is unhelpful to this case, and the subsequent 2000-2001 a nd 2001-2002 stainless steel flange reviews to support its claim that Commerce selec ts the third country marke

t with the largest volume and not the market solely based on the most similar mercha ndis e. Rem and Re determ inati on at 1 2 - 13 ( citi ng Certain Stainless Steel Flanges from India; Final Results of Antidumping Duty Administrative Review , 66 Fed. Reg. 48,244 (Sep. 19, 2001); Certain Forged Stainless Steel Flange s from India: Final Results and Partial Rescission of Antidumping Duty Administrative Review , 68 Fed. Reg. 42,005 (July 16, 2003) ). 10 Redetermination at 12. 6 Defendant maintains that the product sold in both Germany and Canada

were c omparab le to the me rchandi se sold in the United S tates and since the volume o f sales in Germany were larger, it offer ed the likelihood of greater contempora neous matches. Id. at 13. As a result, the Defendant maintains that its selection of Germany as the comparison market conformed to law and precedent since both potential c omparison markets involved sales of like product and any

differences in product could be acc ounted for through normal means. Id. at 13- 14. Plaintiff argues that Commerce’s continued use of Ge rmany as the third- country comparison market fails to satisfy the statutory “for

eign like product” requirements under 19 U.S.C. § 1677(16) and Commerce’s own regulation, 19 C.F.R. § 351.404(e) . Plaintiff’s Objection at 3-4. Plaintiff says that the use of Germany

as the comparison market is unsupported by substantial evidence ; is not in accordance with the law; and is an impermissible and unexplaine d depart

ure from past pre cedent. Plaintiff further argues that Commerce continues to violate its own re gulation by essentially rea

ding out the foreign like product provision of 19 C.F.R. § 351.404(e) . Plaintiff says that the merc

handise sold to Canada was identical to the merchandise sold in the United States and thus “a fortiori more similar to the flanges Viraj sold to the U.S. than the flanges Viraj11

sold to Germany .” Id. at 5 (emphasis in or iginal) . Accor

ding to Pla

intiff, Co mmerce had modelspecific data on Ca

nada fr om the beg

inning of the revi ew, and only

later on in the re view did Commerce request model-specific data on Ger many. Id. at 6. Viraj argues, as a result, that Commerce “never claim[ed] that the German sales [were] more similar to the U.S. sales than the Canada sales . . . .” Id. Plaintiff alleges that Commerce’s focus on the size of the marke t as a criteria for selection of the appropriate comparison market is contrary to law. Id. at 7. It s tates that a ltho ugh “Commerc e says that ‘quantity was the appropriate basis for determining the compar ison market . . . .” No one factor in the selection of the comparison mar ket is supposed to be dispositive.” Id. at 7 (ci ting Viraj I , 283 F. Supp. 2d at 1340, 1341-42) (internal citations omitted). Plaintiff claims that since Commerce cannot cite to any record evidence that indicates that it could not find comparable sales in Canada to calculate the dumping margin, Commerce’s decision is not supported by substantial evidenc e. Plaintiff further argues that Commerce ca nnot disregard the Akai Review that prece ded the Viraj review. Plaintiff’s Objection at 8. I n the Certain Forged Stainless Steel Flange s from India; Final Results of Antidumping Duty Administrative Review , 61 Fed. Reg. 51,623 (Oct. 1, 1996) (“ Akai Revi ew”), Commerce s electe d a smalle r third co untry market b ecause

it sold merchandise under the same industry specifications as in the United States. Id. at 8. Further more, Vir aj claims that the Re

mand Rede

terminat ion cites t o no case where a market w

ith “merchandise found to be more similar . . . was rejec ted for a larger marke

t.” Id. It al so claims that Commerce’s reliance on volume of sales violates its own reg ulation and statute on the grounds that both say

that the “similarity of merc handise sold to the United States must be12

considered when selecting the appr opriate third-country

comparison market . . . .” Id. at 9. Commerce’s selection of Germany as the most appropriate comparison market is not supported by substantial evidenc e. Commerce is incorrect when it arg ues that there is no hierarchy or structure in the selection of the third country comparison market. Section 1677(16) establishes just suc

h as appr oach an d sugg ests a hie

rarchy for how Commerce should conduct its comparisons for model matching. See NSK Ltd. v. United States , 217 F. Supp. 2d 1291, 1300 (CIT 2002). Commerce’s re gulation, 19 C.F.R. § 351.404(e), provides additional guidance on how to sele ct the most

appropr iate for eign lik e product for comp arison pu rposes. T his author ity to interpr et and de termine markets a

nd products most appr

opriate for comp arison do es not, however, permit Commerce to disregard general and accepted principles of statutory construction. Section 351.404(e) provides that Commerce may choose a third country

market where (1) the foreign like product is more similar to the product sold to the United States than another third country; (2) the volume of sales is greater than that sold to another third country ; and (3) any other factors that Commerce considers appropria te. The preamble to Commerce’s reg ulations states tha t “we be lieve tha

t § 351.404 (e) is suf

ficientl y c lear tha

t (1) not a ll of the th

ree cr iteria need to be

present in order to justify the sele ction of a

particu lar mark et, and (2) no single criterion is dispositive.” Antidumping Duties; Countervailing Duties , 62 Fed. Reg. 27,296, 27,358 (May 19, 1997). Commerc e must thus choose a third country c omparison market that meets one or more of these enumerated c riteria. Commerce is incorrect in its argument that the prea mble to the regulations establishes no hierarchy in the application of the selection criteria in 19 C.F.R. § 351.404(e). Under general7 “The que stion for t he court is whethe

r the ag ency ’s constr

uction of the lang uage is within the range of meanings that could be pla usibly attributed to the relevant statutory language.” Administra

tive L aw Trea

tise §3.6.

8 For example, if the court were to follow Commerce’s re asoning of selecting the appropriate third country

based upon the volume of sales without considering the similarity of merchandise sold in both potential comparison markets (as seems to be suggested by Commerce’s explanation), then this approach could lead to the comparison of produc ts that are either entirely

dissimilar or dissimilar enough that all matches would be based upon constructed value rather than on a price to price ba sis after adjusting for DI FMER. This would run contrary to the logic of 19 C.F.R. § 351.404(e). 13 principles and canons of statutory construction, statutes should be read and giv en their plain meaning to avoid absurd results. NSK Ltd. , 217 F. Supp. 2d at 1296; Richard J. Pierce, Jr., Administra

tive L aw Trea

tise §3.6 (4th ed. 2002) 7 . Extending this logic to the reading of regula tions promu

lgated to interpr et the correspon

ding sta tute, it fo llows that

absent a ny s pecific language in the reg

ulation or its explanatory notes, reg ulations should also be read logically and according to their plain meaning. Nor man J. Singer, Sutherland Statutes and Statutory Construction §31.6, at

722-23 (6 th ed. 200 2) (“[i]t is o bvious, tha

t insasmuc

h as a re gulation is a written instrument the general rules of interpre tation apply”). In 19 C.F.R. § 351.404(e), Commerce is first instructed to look to a third country that has a product similar to that sold in the United States, and if this is not feasible, to look to a third country that has a

large volume of sales. Only then is Commerce to look to any other f actors that it deems appropriate. Id. Given this seriatim instruction, 19 C.F.R. §351.404(e) has a descending hierarchy of criteria from which Commerce must select the appr opriate third country c omparison market. See, e .g. , NSK Ltd. , 217 F. Su pp. 2d at 1 296-97. H ere Comme rce did n ot try to work its way throug

h the enumerated hierarchy of the regulation and its failure to do so lead to absurd results. 8 Commerce deviated from the canons of statutory construction and based its third14

count ry selecti on on t he seco nd enu merat ed crit eria wi thou t ind icati ng whether it considered the other enumerated criteria in making its deter mination. Commerce thus has failed to provide a

reasona ble explanation of it s analy sis. This iss

ue is rema

nded to Com

merce to provide a full explanation of its reasoning and the criteria it examined in selecting Ge rmany as the c omparison market. In addition, Commerce ’s claims of a long standing

practic e must be s

upported by v alid evidence. Viraj I , 283 F. Supp. 2d at 1344. By de finition, a longstanding practice must have bee n established prior to the review in issue. The court may not accept a post-hoc rationalization or a subsequent methodology

as a reasoned basis for a prior occ urring review. See Motor Veh icle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co. , 463 U.S. 29, 50, 103 S. Ct. 2856, 77 L.Ed. 2d 443 (1983); Burlington Truck L ines, Inc. v. United States , 37 1 U. S. 156 , 16 8-6 9, 8 3 S . C t. 239 , 9 L. Ed. 2d 207 (1962). As the court stated in Viraj I , Commerce need not “forever hew” to its prior decisions, but it must explain with specificity the reason for its depar ture from a prior practice. Viraj I , 283 F. Supp. 2d at 1342.

“An ag ency

is obliga ted to foll ow prec edent, a nd if it cho oses to change, it must explain why.” M.M. & P. Ma r. Advan cement, Training , Educ. &

Safety Progra m v. Dep’ t of Comm. , 729 F. 2d 748, 755 (Fed. Cir . 1984); see also Atchison, Topeka, & Sant e Fe Ry. v. Wichita Bd. , 412 U.S. 800, 808, 93 S. Ct. 2367. 37 L. Ed. 2d 350 (1973). “[B]efore a change is made in established policy there should be evidence to show that the change is war ranted.” British Steel PLC v. United States , 127 F. 3d 1471, 1475 (Fed. Cir. 1997). Commerce ’s relia

nce on c ases occ

urring after the revie

w at hand does not c onstitute valid precedent to support its methodology

. See Usinor v. United States , Slip Op. 02-70 at 30-42, 2002 Ct. In t’l Trad e LEX IS 98 (July 1 9, 2002). Precede nt, by definition, must pre cede tha t which it is9 During the Akai Review, the exporter arg ued against the use of Canada as its third country compari son marke

t. 61 Fed . Reg. a

t 51,265; see Viraj I , 283 F. Supp. 2d at 1343. The exporter claimed that Japan was the more appropriate comparison mar ket because Japan was the largest of the third country markets available for comparison. Id. Additionally, the exporter wanted Commerce to determine normal value by comparing its sales made to the United States ASTM standard, to sales made to the Japanese Industria l Standards (“JIS”). Akai Review, 61 Fed. Reg. at 51, 265. I

t reasoned that “the merchandise end use, r aw material and process of manufacturing is [sic] same” and the end product in terms of “Dollar per K.G.” could be a reasonable comparison methodology

. Viraj I , 283 F. Supp. 2d at 1343 (citing Akai Review, 61 Fed. Reg. at 51,263. Ultimately , however, Commerce chose the smaller marke t, Canada, which had goods made to the similar ASTM standard, and compared themerchandise on a price-perpiece basis rather than enga ging in the methodology

the exporter proposed. 15 cited to support. “An agency determination must be supported by c oncurrent agency reasoning and not by post hoc rea soning by the a gency or its counsel.” Id. at 38-39. Although Commerce cites to various reviews in its Remand Redetermination that occurred either prior to or contemporane ous with the review at hand, there is not consistency that the metho dology

used to se lect the a

ppropria te third c ountry

compari son marke

t which wo

uld offer e vidence of a cons istent “longstand ing pra ctice.” In the Akai Revi ew, Comme

rce cho se Canada as the appropriate third country comparison market based on product similarities rather than the largest available market, Japan. See 61 Fed. Reg. at 51,265. 9 Yet, Commerce claims that “the Department’s determination to use Canada rathe r than Japan does not predetermine the

out com e of

th e ma rke t s ect io n [ si c] in th e Vi raj rev iew .” R ema nd R ede ter mi nat io n at 17. In Stainless Steel Plate from Sweden: Preliminary Results of Antidumping Duty Administrative Review , 63 Fed. Reg. 36,877 (July 8, 1998) , Commerce used the largest market in deter mining the appropriate third country . In Notice of Final Results and Partial Recission of Antidumping Duty Administrative Review: Canned Pineapple Fruit From Thailand , 63 Fed . Reg. 4 3,661 (Aug. 14, 1998) and Stainless S teel Plate From Swe den: Notic e of Fina l Results of

Antidumpin

g Duty16

Administrative Review , 64 Fed. Reg. 61,065 (Nov. 9, 1999), Commerce used both produc t similarity and larg est marke

t in deter mining th e approp

riate thi rd countr y ma rket. Fi nally , in Stainless Steel Bar From India ; Final Results of Antidumping Duty Administrative Review a nd New Shipper Review , 63 Fed. Reg. 63,288 (Nov. 12, 1998) and Stainless Steel Bar from India: Preliminary Results of Antidumping Duty Administrative Review and New Shipper Review and Partial Rescission of Administrative Review , 65 Fed. Reg. 48,965 (Aug. 10, 2000), Commerc e used the most similar product in a smaller third country comparison market. Commerce gives no justifica tion for sw

itching among me

thodolog ies in sele cting the compar ison mark et. As a r esult, there is no basis to determine prior binding agenc y prece dent. Since Commerce has provided no evidenc e to suppor

t its claim o f a long standing practic e, this issu

e is rema nded to Com

merce to explain its b asis for s electing Germany as the mos t appropr

iate comp arison ma

rket.
B Commerce ’s Comparison of ASTM Standard Flanges and DIN Standard Flanges is Not Supported by Substantial Evidence Viraj I found tha

t Commerc e had fa

iled to provide ade quate re cord evi dence to explain why it was appropriat e to compare AS TM standard flanges and DIN standar d flanges. 283 F. Supp. 2d at 1350. It also determined that Commerce ha d changed its methodology from previous reviews without adequate explanation. Id. at 1352. Defendant states that its “selection of Germany as the third country mar

ket . . . , and the resultant comparison of ASTM-standard merchandise to DI N-standard models, was consistent with the statute, the regulation, and Department prec edent.” Remand Redetermination at 18. Commerce disputes Plaintiff’s allegation that DI N standard flanges are not compa rable to ASTM standard flanges. Id. at 14. De fendant also cla ims that, in

steel ca ses, Comme

rce “r egular ly10 The antid umping st

atute pr ovides for an adju stment to normal valu e for dif ferenc es in physical char

acteristics between the foreign like pr oduct and the merchandise exported to the United States. See 19 U.S.C. § 1677b(a)(6)(C)(ii). Thus, where the foreig n like product is not identica l to the sub

ject mer chandise , Commerc e adjusts normal va

lue for the “diff

erence in cost attributa ble to the differe nce in phy

sical characte

ristics” --the dif

ferenc e in merc

handise (“DIFMER”)

adjustment. See Impor

t Policy Bulletin 92.2 (July

29, 1992)(“Policy

Bulletin 92.2”). When the variable cost difference between two products exceeds 20%, Commerce considers that the probable differences in va lues of the items to be compared are so larg e that they cannot re asonably be c ompared. Since the merchandise is not identical, does not have approxima

tely equal commercia

l value, a nd has suc

h large differe nces in c ommercia

l value that it cannot reasonably

be compared, the merchandise cannot be considered similar under 19 U.S.C. § 1677(16)(A), (B), or (C) of the statute. See Policy Bulletin 92.2. 17 compares merchandise of the differ ent standards.” Id. at 14. Defendant asserts that as long as there is not greater than a twenty percent difference in the cost of ma nufacture, product comparisons of differing industrial standards are common. Id. at 16. I

t further states tha t ASTM, DIN, JUS, British, and other specifications ar e within the scope of the order, and as such are
compara ble produ cts which are suita ble for c omparison if any or all of t he physical characte

ristic matching criteria (i.e., gr

ade, size, type, ra

ting, and finish) are similar. Id. at 16-17. At oral argument, Defendant stated that it compare d ASTM and DIN standard produc ts by gra de, type, size , diam eter, w idth , and p ressu re rati ng. Pl ain ti ff a ll ege s t hat Co mm erc e’s Rem and res ul ts are st il l n ot in acc ord anc e wi th law . It claims that the Defendant has failed to explain how the comparison of DI N and ASTM standard flanges satisfy

the “foreign like product” require ments for comparability. Plaintiff’s O bjection at 11. Plaintiff also claims that Commerce’s reliance on the 20% DI FMER 10 adjustment is absurd because it failed to apply

the test correctly

in the current case. Id. at 11-12. As stated in Viraj I , “Commer ce must de

termine t he appro priate ‘ foreig

n like pro duct,’ in accordance with 19 U.S.C. § 1677(16)(B), a nd must ‘make a fair comparison between the United11 The term “identical merchandise” does not re quire Commerce to make comparisons of

mercha ndise tha t are “e xactly the same ,” rathe

r Commerc e is permi

tted to co mpare me

rchandi se 18 States price charged for the subje ct merchandise . . . and the price char ged for the corresponding ‘foreign like product.’” 283 F. Supp . 2d at 1347 ( citi ng Pesquera Mares Australes L tda. v. United States , 266 F. 3d 1372, 1375 (Fed. Cir. 2001))

. Pursuant to 19 U.S.C. § 1677, (16) the term “foreign like product” means merchandise in the first of the following categories in respec t of which a determination for the purposes of part II of this subtitle can be satisfactorily ma de: (A) The subject me

rchandi se and other merc handise w

hich is identical in physical cha

racteristics with, and was produced in the same country

by the same per

son as, that merchandise. (B) Merchandise– (I) produced in the sa

me country and by

the same person as the subject merchandise, (ii) like that merchandise in component material or materials and in the purposes for which used, and (iii) approximately

equal in c ommercia

l value to that merchandise. (C) Merchandise– (I) produced in the sa

me country and by

the same person and of the same ge neral c lass or kin

d as the su

bject merchandise, (ii) like that merchandise in the purposes for which used, and (i ii ) w hi ch th e a dm in is te ri ng au th or it y de te rm in es ma y reasonably

be compared with that merchandise. The statu te requi res that C ommerce

first look for iden tical mer chandise with which to match the United Sta

tes’ mode l to the co mparabl e home or third cou ntry market mo del. 11 Seethat is “the same with minor differences.” Pesquera , 266 F. 3d at 1383. 19 Torrington Co. v. United States , 25 CIT 395, 417 (2001); 19 U.S.C. § 1677(16). I f identical

me rc ha nd is e i s u na va il ab le , C om me rc e m us t l oo k t o m er ch an di se un de r t he se co nd ca te go ry, and, if that is not available, under the third category

. Torrington , 25 CI T at 417 (c iting 19 U .S.C. § 1677(16)). Whenever possible, Commerce must make an “apples-to- apples” comparison of merchandise to effectuate a fa ir comparison between the normal value and United States price

. See Torrington Co. v. United States , 68 F.3d 1347, 1352-53 (Fed. Cir. 1995). Thus, “[i]n accordance with this statutory manda te [of 19 U.S.C. § 1677(16)], absent identical merchandise, Commerce must ‘choose the most similar merchandise’ for comparison.” Hussey Copper, L

td. v. United States , 17 C IT 993, 9 95 (19 93) (q uoti ng Timken Co. v. United States , 10 CIT 86, 96, (1986)). As stated in Viraj I , “[w]hile it is certainly simpler for Commerce to identify and compar

e identical merchandise when it exists; lacking identical goods for compari son Commer

ce must fi nd similar

mercha ndise in or

der to ma ke a prop er compa

rison with the United States imports.” 283 F. Supp. 2d at 1347 (citing NTN Bearing Corp. of Am. v. United States , 127 F.3d 1061, 1063 (Fed. Cir. 1997)). This cour t has pre viously found tha

t the lack of interc hange ability

betwee n produc ts will not defeat a finding of “similar mercha ndise.” See Sony Corp. of America v. United States , 13 CIT 353, 359 (1989). However , Commerce must explain why its comparison of “similar merchandise” is reasonable and appr opriate. See Mitsubishi Heavy I ndus., Ltd. v. United States , 24 CIT 27 5, 277 (2000 ) (cit ing Ad Hoc Comm. v. United States , 19 CIT 1398, 1401 (1995); NTN Bearing Corp. v. United States , 19 CI T 1221, 123 8-39 (199 5); Koyo Seiko Co., L td. v. United States , 19 CIT 1085, 1091-92 (1995), aff’d in pa rt, rev’ d in part , 92 F.3d 1162 (Fed. Cir.12 Conclusory is defined as “ [e]xpressing a factual inference without stating the

underlying

facts on which the inference is based.” Black’s Law

Dictionary 308 (8th e d. 2004).

13 An example of a conclusory statement by Commerce a ppears in the Remand Redetermination at 16 which states “[f]or example a DIN- standard stainless steel thread-onmodel with a 3-centimeter diameter would be a better ma tch for a 1-inch ASTM standard stainless steel thread-on model than a 12-inch ‘blind’ (end-ca p) model sold in Canada under ASTM standards would be.” 20 1996)). Viraj I

instructed Defendant to explain its basis and reasoning for compar ing ASTM and DIN standard flang es and to clarify how it determined that these products made to differing industrial standards were comparable. 283 F. Supp. 2d at 1352. Defendant relies on several reviews occurring both before and after the review at issue to support its claim that comparing products of differing industrial standards is in accorda nce with agency

precedent. Remand Redetermination at 14-15. Defend ant also c laims that

“[d]epend

ing on the specific charac teristic s of the f

langes being c ompared , a parti cular mo del made to DI N standa rds and so ld in a third c ountry

market ma

y pr ovide a more suitab le compa rison, by offerin g gre ater simi larity in any or all of the phy

sical characteristic matching cr iteria . . . to a U.S. model than any A STM model sold in a smaller market.” Id. at 16. Howev er, Def endan t fail s to ex plain its m ethod ology or the basis upon which it determined that, given the reported sa les in the instant case, such a comparison was appropriate. Conclusory 12 statemen ts are ins ufficie nt. 13 Commerce

has faile d to provide a reasonable explanation or adequate support for its conclusion that ASTM flanges and
DIN flange s are “s imilar mer

chandise ” and ar

e there fore comparabl e. This iss ue is rema

nded to Commerce to comply with the “f oreign like product” requirement of 19 U.S.C. § 1677(16), a nd to adequately e

xplain that compliance.21 C Comm erce’ s Calculat

ion of the Ant

idumping M argin Base d on Per K ilogram Price s is in Accordance with the Law Viraj I , instructed Commerce to explain its methodology for converting prices to a per kilogram basis in calculating the dumping marg in. 283 F. Supp. 2d, at 1354. Defendant argues that it has a c onsistent methodology of comparing prices on a perkilogra m basis an

d theref ore its pr ice comp arison me

thodolog y in this case is in acc ordance

with law. Remand Redetermination at 24. Commerce contends that using per -kilogram prices and expenses is the “least distortive manner of making comparisons among items with varying weights, and that it is not a departure from prece dent.” Id. at 19. Commerce asserts that by using a uniform unit of measure and expressing all monetar y
amounts on

a unifor m, per-k ilogra m, basis, it

eliminate s any

potentia lly d istorting effects in comparing two different sized flange s. Id. at 20. Commerce claims that, if it used Plaintiff’s approach of comparing products on a per-piece or per-unit basis, every price comparison of products of differing weights would have significant distortions stemming from price adjustments for differently sized items. Id. In su

pport of i ts argu ment that t

he compa risons did not lead to distortions, Defendant states that Plaintiff has “failed to demonstrate that there we re

an y sp ec if

ic in ap pr op ri at e m er ch an di se co mp ar is on s m ad e, no r [ is Co mm er ce ] a wa re of an y. Defendant’s Reply

at 9 (citing Remand Redetermination at 35). Defenda nt also states that Plaintiff’s argument that, because finished flang es cost more than rough forging s, Commerce should use

a per-p iece analy sis, is witho ut founda tion. Def endant’ s Reply

at 10. De fendant

rebuts Plaintiff’s assertions on the grounds that any differences between the products would be eliminated by the applica tion of the DIFMER test where phy sical characteristics cause signif icant14 See Reman d Rede termi natio n at 21 -22 (ci ting Notice of Final Results of Antidumping

Duty Administrative Reviews and Determination Not To Revoke in Part: Certain CorrosionResistant Carbon Steel Flat Products and Cut-to-Leng th Carbon Steel Plate from Canada , 66 Fed. Reg. 3543 (Jan. 16, 2001) (where the Department c hose to use weight as the standard unit of measure to deter mine gr oss unit pr

ice and c alculate

the dumpin

g margin); Notice of Final Determination of Sales at Less Than F air Value: Non-Malleable Cast I ron Pipe Fittings from the People’s Republic of China , 68 Fed. Reg. 776 5 (Feb. 18, 2003) ; Antidumpin g Duty Orders: Stainless Steel Butt-Weld Pipe Fittings from Italy, Malaysia, and the Phillipines , 66 Fed . Reg. 11,257 (Feb. 23, 2001) (where the use of pe r-kilogram monetary

amounts was undisputed).

15 Defendant cites for its assertion Certain Forged Stainless Steel Flange s from India: Final Results of Antidumping Duty Ne w Shipper Review , 63 Fed. Reg. 25,824 (May 11, 1998), and acc ompany

ing Memorandum to

File; Certain St

ainless Ste el Flanges From I ndia: Bh ansali Ferromet Pvt. Ltd. , 66 Fed. Reg. 11, 258 (Fe b. 23, 2001 ) and the

corres ponding analy sis memoranda. Remand Redetermination at 22. Defendant also cites to three subsequent reviews of stainless steel flanges from I ndia. Specifically, Certain Forged Stainless Steel Flange s From India; Final Results of Antidumping Duty Administrative Review , 67 Fed. Reg. 62, 439 (Oct . 7, 2002) ; Certain F orged Stainless S teel Stainless Steel Flanges From I ndia: Final Results of Antidumping Duty Ne w Shipper Review , 68 Fed. Reg. 351 (Jan. 3, 2003); and Certain Forged Stainless Steel Flange s From India: Final Results and Partial Rescission of Antidumping Duty Administrative Review , 68 Fed . Reg. 42,005 (July

16, 2003) . Remand Re determination at 2 2-23. De fendant cites the se revie

ws to demonstrate that after the current revie w, the Department has consistently applied a per-kilogram pricing comparison to calculate the dumping mar gin. 22 price differences. Id. Defendant also claims that it is rely ing on precedent to support its methodology of calculating prices on a per unit of we ight rather than a per-piece basis. Remand Redetermination at 21. Defendant cites to a number of non-flang e decisions to support its assertion that it was consiste nt in conve

rting pr ices and expenses t

o a per- kilogra

m basis. 14 Commerce

also cla ims that in all flange orders except those “not involving solely identical models since 1998" it has used per-kilogram pricing as the basis for calculating the dumping margin. Id. at 22. 15 Defendant concedes that in the Akai Review the age ncy used a pe

r-model approach, but it claims that this review was inappo site to the matter a t hand sinc e the ag ency

did not hav e a prope

r model-23

matching methodology

to appropriately c alculate the dumping margin. Plaintiff argue s that Comme

rce’s f ailure to compare prices on a per-

piece ba sis “impermissibly led to the comparison of models in the dumping margin calculation with over a 20% diff erence in cost per piece .” Plaintiff’s Objection at 12 (emphasis in original). Plaintiff claims tha

t “Commer

ce’s pr actice is that models (products) themselves (not a kilogram part thereof) with over a 20% differe nce in cost should not be compared, because then they no longer have ‘the greatest commerc ial similarity’ given diff erences in the products’ physical characteristics (one of which is size) that affe ct prices for the product.” Id. (citi ng Viraj I , 283 F. Supp. 2d at 1342 n.5, 1350 n.15, 1351 n. 16, 1355. Plaintiff cites to the Akai Review as an example of an instance where Commerce
compare d flang es on a pe r-piec e basis a

nd adjuste d for any

phy sical dif

ferenc es using

DIF MERs, and matching by

size without difficulty. Plaintiff’s Objection at 13. Further more, it claims that Commerce cannot support its explanation that the DIFMER adjustment ca nnot account for differences between products if c omparisons are on a per-piece basis. Id. at 14. Plai ntiff als o arg ues th at t he p ric es a nd c ost s of U.S . AS TM f

org in gs b ein g co mp are d t o t he G erm an D IN finished flanges are inversely related to weight. Id. As a result, according to Plaintiff, Commerce’s reasoning for ca lculating the dumping margin on a per -kilogram basis is not supported by substantial evidenc e. Id. at 14-15. Viraj I instructed Commerce to “conform itself to its prior precedent and c ompare Plaintiff’s merchandise in the manner in which it was sold, or adequately explain its departure and support all of its factual arguments with substantial evidence.” 283 F. Supp. 2d at 1353-54. At oral a rgumen t, Plaintif f cited to its origi nal repl y br ief at pa ge 70- 72, in whic

h it claims

that it24

has demonstrated that the Department’s calculations led to unrea sonable or erroneous matches. Although Plaintiff argues that Commerce’s methodolog y leads to distortions in the calculation of the dumpin

g margin, it has f

ailed to provide pr

oof that the methodo logy utilized actually

led to any distortions. The methodologie s relied upon by Commerce in calculating the antidumping margins are presumptively correct when supported by substantial evidence. Thai Pineapple Pub. Co. v. United States , 187 F.3d 1362, 1365 (Fed. Ci

r. 1999); see also Fujitsu Gen. Ltd. v. United States , 88 F.3d 1034, 1044 (Fed. Cir. 1996). Review of the methodology described in the Remand Redetermination shows that price comparisons on a per-kilogram basis were supported by substantial evidenc e. Commerce explained in the Remand Redetermination that it had matched the phy sical characteristics of the products, then applied the price adjustments uniformly and consistently to ensure tha t compari sons of mod

els with di ffering

weight s did not le ad to distortions in the expense adjustments. Remand Redetermination at 20. Commerce has supported its conclusion by providing a reasonable ba sis for the court to d

etermine that using

a per-k ilogra m approa ch resul ts in a more precise price-to-price c omparison of U.S. sales to the foreign like product. Accordingly , Commerce’s explanation of its methodologyof converting expenses to a perkilogram basis is supported by substantial evidence and is in accordance with the law

.

D Comm erce’ s Compar

ison of ASTM F orgings and D IN Proo f Machined an d Fully Machined Flanges is Not Supported by Substantial Evidence Viraj I remanded this issue to Commerce to provide support for its conclusion that any differences that exist between rough for gings sold in the United States and semi-finished flange s or fully finished flang es sold in Germany we re insignificant. 283 F. Supp. 2d at 1350.25

In its Remand Redetermination, Commerce continues to ar gue the insignificance of a ny differences between roug h forgings and finished flang es. Remand Redetermination at 24. Defendant states that any differences in physical characteristics or differenc es in manufacturing costs are adjusted for via the DI FMER cap. See Footnote 10 infra ; id. at 25. It contends that Plaintiff’s argument that these products cannot be compa red is at odds with the definition of “like product.” Id. Commerce defends its methodology on the grounds that it ensures that comparisons of products are properly

made, first seeking to compare flang es of the same finish before comparing prices for roug h and finished flanges. Defendant’ s Reply at 11. Moreover, Commerce claims that it explained that any unreasona ble matches would be excluded by the 20% DIFMER test and would not be compared in calculating the dumping margin. Id. Based on these g rounds, the Department maintains its view that comparing rough f langes to semi-finished or finished flanges was consistent with the statute, regula tions, and practice. Id. Plaintiff argues that the Remand Redetermination does not demonstrate that roug h and finished flange s are comparabl e. Plaintif f’s Obje ction at 1 5. Plaintif f asser ts that just

because
many differe nt flang es are produced

it “does not demonst

rate tha t rough f orging s are comparabl e to finished flanges.” Id. As a resu lt, it say s, the Rema

nd Redete

rmination is still not in accordance with the law or supported by substantial evidence. Viraj I remanded Commerce’s determination and found that the re cord evidence provided by Pl aintiff i

ndicate d that Comme

rce mad e an err oneous a ssumption r

egard ing the c omparab ility of rough forgings a

nd proof and fully mac

hined flanges in this review. 283 F. Supp. 2d at 1347. Commerce

was instr ucted tha t on rema nd, if it de cided to u se weig ht when c omparing

flange s, it must ensure that it is in fact comparing the most similar products and that its methodology and16 In Viraj I , Plaintiff explained in its supplemental answers that where grade, size, and

typ e are th e same, t

he follow ing eff ect occ urs for the same f

lange w ith diffe rent fini shes:

Finis h of Fl ange Weight Per Piece $ Price per Piece $ Price Per Kilogram 1. Ro ugh 7.100 kg. $16.29 $ 2.294 2. Proof-Machined 6.500 kg. $15.27 $ 2.349 3. Fully-Finished 5.200 kg. $15.72 $ 3.023 283 F. Supp. 2d at 1355 n.19 Therefore, Plaintiff claimed that the price of the product was not more correlative with weight, a s Commerce claimed, but rather with finish. Id. 26 reasoning comport with its results. Because of the weight diff erences between forgings and flanges, the court in Viraj I stated that: If D efenda nt’s clai m were a ccurat e, then lo gicall

y, a heavier forgin g should cost more per-kilogram than the lighter f lange. The record evidenc e indicates the opposite. Commerce has broad discretion to determine similar merchandise, however, its methodology and reasoning must be supported by substantial record evidence. In this case , Plaintiff claims, and the record evidence sug gests, that the value added from machining give s the lighter proof or fully machined flange a higher cost o f prod uctio n on a c ost-p er-ki logram basis , than the he avier r ough forging, even though on a cost-per-piece basis the heavier f orging costs more. 16 Therefore, the record e

vidence indicates that the finish must be more determinative of cost than the weight of the piece

. 283 F. Supp. 2d at 1354-1355 (internal citations omitted). Commerce

consider s differ ences in phy sical characte

ristics of similar me

rchandi se pursuant to 19 U.S.C. § 1677b(a)(6)(C)(ii) and 19 C.F.R. § 351.411. For that rea son, Viraj I , did not hold tha

t Commerc e may

not make weight c omparisons of fla nges a nd forg ings. I

nstead it required on remand, if Commerce decided to use weight, it must ensure that it was in fact compari ng the mo st similar products a nd that its methodolog

y a nd reasoning co mport with its27

results. Viraj I , 283 F. Supp. 2d at 1357. Commerce has again failed to provide ade quate reasoning to support its methodology and show that i

t is prope rly compari ng the mo st similar products. Commerce seeks to e

xplain its reasoning for comparing A STM forgings and DI N finished and semi-finished flanges by arguing that any differe nces in th ese two products w ill be acc ounted for via the DIF MER adjustment. Remand Redetermination at 25. Mere refere nce to Commerce’s DIF MER methodology and the principles behind the DIFMER ca lculation are not sufficient to explain the issues at hand. The issue is whether rough forging s are comparable based upon phy sical characteristics to finished and semi- finished

flange s and how C ommerce conclude d that the

y a re in fa ct compa rable. A s a result, Commerce’ s compar ison of ASTM standar

d forgi ngs to DI N standa rd finishe d flang es is not suppor

ted by substantia

l evidenc e and is not in accordance with the la

w. This issu

e is remanded to Commerce for a final opportunity to explain its methodology and how it adjusted for differences that result from compar ing products of different industrial standards, weig ht, size, and finish, and why this compar ison did not lead to distortions in calculating the dumping margin. If De fendant is unable or unwilling to do that it should say so.28 V Conclusion For the reasons stated above, this Remand Redetermination is partially affirmed and partially rema

nded for action consistent with this opinion.

__________________________ Evan J . Wal lach, Judge
Date: December 9, 2004 New York, New York