Slip Op 09 - 30



## UNI TED STATES COU

RT OF INTERNATIO

NAL TRADE

: NUCOR CORPOR ATI ON, GERDAU : A M E R IS T E E L, IN C

. , an d C O M M E R C IA L : METAL S COMP ANY, : : Pla int if

fs , : : v . : B e fo re : M USG RA VE , Senior Jud ge : Consol. C ourt No. 07-00457 UNI TED STATES OF AMERI CA, : : De fe nd ant, : : an d : : EKI NCI L ER DEMI R ve CEL I K SANAYI A.S., : EKI NCI L ER DI S TI CARET A.S., HABA S : S IN A I v e T IB B I G A Z LA R IS T IH S A L : EN DU STR I SIA. S., CO L AK OG L U D I S : T IC A R E T A

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. , C O LA K O G LU M E T A LU R J I : A

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. , K A P T A N D E M IR

C E LIK E N D U S T R IS I : ve TI CA RET A. S., KA PTA N M ET AL

DI S : TI CA RET ve NA KL I YA T A .S. , D I L ER D EM I R : CEL I K END UST RI SIve TI CA RET A. S., : DI L ER D I S TI CA RET A. S., TA Z I CI DE MI R : CEL I K SANAYI

ve TURI Z M TI CARET A.S., : KROMAN CEL I K SANAYI IA.S., : : De fe nd ant- I nte rv e no rs . : :

OP IN ION AN D O RD ER [ M o t i o nf o r j u d g m e n to n an a d m i n i s t r a t i v e r e c o r d o f an t i d u mp i n g d u t y r e v i e w o f

r e b ar f r o m T u r k e y, re m an ded to I nternational Trade Administration, U.S. Department of Commerc e, for further proce eding s.] Dated: Apr il 14, 2009Court No. 07-00457 Pag e 2

W ile yRe in L LP ( John R. Shane , Alan H. Price , Mauree n E. Thorson , and Lor i E . S c he e tz ), f o r N u c o r C o r p o r a t i o n , G e r d a

uA m e r i s t e e l , In c . , an d

C o m m e r c i a l M e t a l s C o mp an y. M i c ha e l F . H e rtz , A c tin g As sis tant A tto rn e y Ge ne ra l; JeanneE. Davidson , Direc tor, Pa tri c ia M. Mc Carthy , Assistant D irec tor, Civil Division, Commerc ial L itigation Br anch, Un i t ed States Depa rtment of Just ice (

R ic h a rd P

. S c hroeder ); Offic e of the Chief Counsel for Import Administration, United States Depar tmen t o f C o m merc e ( Scott D. Mc Bride ), of c ounsel, for The United States of Amer ica. Arnold & Porter

( Michae l T. Shor , Lawrence A. Sc hneider , and Fr an cis Fr an ze- Na kam ur a ), fo r E kin c ile r D e mir

ve Ce lik Sana y i A .S. and

Ek inc ile r D is T ic are t A .S. La w Of f i ce s of David L. Simon (

David L. Simon ) for

Haba s Sinai ve Tibbi Gazlar I stihsal En du str isi A. S. a

nd Kr oma n Ce lik Sana y ii A .S. Ar e nt F ox LLP ( Myle s S. Getlan ) for Colakog lu Dis Ticare t A.S., Col akog lu Metalurji A.S., Kaptan D emir Celik Endustrisi ve Ticar et A.S., and Ka ptan Metal Dis Tica

ret ve Nakliy at A.S. Hogan and Hartson ( Cra ig A. Le wis , Jonathan T. Stoel and Le wis E. Le ibo witz ), for Diler Demir Celik Endustrisi ve Ticaret A.S., Diler Dis Ticar et A.S ., and Tazi ci Demir Celik S anay i ve Turi zm Ti c are t A .S.

MU SGR AV E, Se nio r Jud g e : T his c on so lid a te d matte r i mplic a te s Certain Steel Concrete Reinforcing Bars from Turkey; Final Results of Anti dumping Duty Administrative Rev iew

an d Ne w Sh ipp e r Re v ie w an d De te rm ina tio n to Re v ok e in P ar t , 72 Fe d. Reg . 62630 (Nov. 6, 2007) (“ Fi na l Resu lts ”), int e r a lia an a nti dumpi ngdu ty

a dmi nis tr a tiv e re vie w c ov e ri ngthe pe ri od Ap ri l 1, 2005 throug h Marc h 31, 2006 (“POR”)

. Orig inally , it included three separ ate a ctions initi ated by the do me sti c pe tit ion e rs Nu c or Cor po rat io n, Ge rd a

u A me ri ste e l, I

nc ., and Com me rc ia l Me ta ls Company that have sinc e bee n voluntarily dismiss ed, and on Marc h 23, 2009, the par ties prese nted oral a r g u me n t o n th e r e ma in in g matt e r : th e c la im o f E k in c il e r D e mi r v e Ce li k Sa n y i A.S. and Ekinciler Dis Ta car et A.S. (“Ekinc iler”) , responde nt produce r and e x porter of Turkish reba

r, that the I nternational Trade Ad m i nistration, U.S. Depar tment of Commerce (“Commerc e”) err ed byCourt No. 07-00457 Pag e 3

imputing depr eciation to a specific a ccount Ekinc iler maintains on its books and rec ords as a fix ed asset, nominally

“melt shop modernization,” which pur portedly consists a lmost solely of losses on fore ig n e xc h an g e lo an s d u e to th e d e v a lu a ti o n o f th e T u r k is h li r a in 2 0 0 0 /2 0 0 1 an d th a t were not incurre d for the c onstruction or ac quisiti on of fixed assets.

Duri ng the pr e vio us a dmi nis tr a tiv e re vie w, Com me rc e a lso imp ute d d e pr e c ia tio n to th e a c c o u n t, an d

E k in c il e r w a s u lt im a te ly

u n s u c c e s s f

u l i nc o n te s ti n g th a t d e c is io nb e c a u s e it had failed to prove as a matter of e vidence or law that depre ciation could not be imputed to the ac count based on the administrative re cord be fore the cour t. Ekinciler Demir ve Ce lik Sanyi A.S. v. U nited States , 32 CI T ___, Slip Op. 08-34 (Mar. 20, 2008) , aff’d , No. 08-1371, 2009 WL 279066 (F ed. Cir. F e b. 6 , 2 0 0 9 ) , i n c o r

p o r a t e d h e r e i n b y s u c h r e f e r e n c e . E k i n c i l e r r e n e w e d i t s c l a i m d u r i n g thi s

su bs e qu e nt r e vie w, bu t w a s a g a in r e bu ff e d, for the re a so ns Com me rc e e xpla ins in i ts Issues and Dec ision Memorandum for the Antidumping Duty Administrative Re view and New Shipper Rev iew on Certain Steel Concrete Re inforcing Bars from T urkey – April 1, 2005, through March 31, 2006 (Oc t. 31, 2007) (“I DM”).

The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a )(2 )( B) (i i i ) to hold unlawful in ac corda nce w ith 19 U.S.C . § 1516a(b) (1)( B) (i) any administrative deter

mination “unsupported by substantial evidenc e on the r ecor d, or otherw ise not in acc ordanc e with law[.]”

Acc ording to the I DM, Commerce reje cted Ekinc iler’s e x planations reg ardingthe
nature of the e x penses a

nd the supporting documentation it had submitted beca use “the re is no wa

y to link the documents to the ‘asset’ listed in Ekinciler’ s financia l statement.” I DM at 43. CommerceCourt No. 07-00457 Pag e 4

did not, however , find that the account re flec ted expenses incurr ed for melt shop modernization or for a ny other fixed asset . I ndeed, a s befor e, Commerce ag ain made no e x plicit finding a s to what the ac count ac tually

repr esents. Cf

. Slip Op

. 08 -3 4 a t 7. Ra the r, Com me rc e re a so ne d th a t e ve n if the e xpe ns e s w e re of

a ty pe tha t sh ou ld have be e n e xpe ns e d in the y e ar i nc ur

re d und e r U .S. g e ne ra lly

acc epted accounting princ iples (GAAP) a nd the international equivalent, international financia l repor ting st an d ar d s (I FRS), the fa ct that Ekinciler did not do so “r esults in a situation sim ply not addre ssed by

U.S. GAAP or the I FRS.” Id . I n the end, Commerc e conc luded it i s unre a so na

ble fo r E kin c ile r t o ig no re the e xpe ns e fo re ve r a nd a s a re su lt artificia lly

inflate its balanc e sheet. I n other words, it is unreasonable f or Ekinciler to continue to rec ord the a sset in its fi nancia l statements and indef initely suspend rec ording the cor

respondingdepre ciation expense a s s o ci ated with the a sset. More imp or tantl y , we fi nd that Ekin c ile r’ s fa ilure to re c og nize an all oc a te d por tio n o f t he se capitalized expenses during the POR is co n t rary to the require ments of sec tion 773(f) (1)( A) of the Act, beca use Ekinciler ’s re ported c osts do not “rea sonably ref lect the costs associated with the produc tion of the merc handise.” Id . at 44. And y et, as noted, w hen C ommerce examines costs of produc tion the antidumping
statut e s re qu ir e the c a lc ulatio n of on ly tho se c os ts that “ re a so na bly re fl e c t th e c os ts a sso c ia te d w ith the produc tion and sale of the merc handise.” 19 U.S.C. § 1677b(f)(1) (A). See , e.g. , Hor nos Electricos de Vene

z. v. United States , 2 7 C I T 1 5 2 2, 1533, 285 F.Supp.2d 1353, 1364 (2003) (“ Com me rc e ’s pr a c tic e is t o c a lc ulate CO P ba se d o n ac tua l c os ts i nc ur re d d ur ingthe POI ” ); Micron Tech., Inc . v. United States , 2 3 CI T 3 80 , 3 82 (1 99 9) (“ [t]he ob je c t of the c os t of

pr od uc tio n e xer c ise is not to capture a ll past ex penses, but rather those e x penses that rea sonably and acc urate ly ref lect

a re spondent’s ac tual production costs for a period of review ”). B ut here , Commerce did not find or

a lle g e fr om t

he re c or d th a t th e “ me lt s ho p mod e rn iza tio n” a c c ount r e fl e c te d c os ts “ a sso c ia te d w ithCourt No. 07-00457 Pag e 5

t h e p ro d u ct i o n o f m er ch an d i s e” d

u ri n g t h e P OR o r fi n d t h at i t l ar gel y co n s i s t s o f o t h er t h an fo re i gn exchang e losses incurr ed outside the POR that are unrelated to acquisition or construc tion of fix ed
assets. E.g. , se e ge ne ra lly Pl. ’s B r. a t 5- 11 , 1 9- 21 (a nd c itatio ns the re in) . E kin c ile r f ur the r a g re e s, with Comm erc e, that the f oreig n exchang e losses should have be en re cog nized as they w e r e in c urre d, and it also presse d the point, before Commerce, that maintaining those losses, pr oved by source do c ume ntatio n, on

its bo ok s and re c or ds a s a fixed a sse t amo un ts t o in c or re c t a c c ounti ngtr e a tme nt. E.g. , Pu b. R. D oc . 3 63 (O c t. 3 , 2 00 7 H e ari ngTr .) a t 10 1; see Pl.’s App. E at EK 0052. Commerce’ s stated policy is to treat all fore ign exchang e losses as an expense in the y ear rea liz ed. See , e.g. , Certain Preserve d Mush r o o ms from India: Preliminary Re sults of Antidumping Administrat ive Re view , 68 Fe d. Reg . 11045, 1104 8 (Mar. 7, 2003). I t has not justifiably explained its depar ture from such policy in this instance

. See , e.g. , Cul tiv os Mi ra mo nte S.A. v. United States , 2 1 CI T 1 05 9, 10 64 -65, 98 0 F .Su pp . 1 26 8, 12 74 -7 5 ( 19 97 ); Hu sse yCop pe r, Ltd. v. United States , 17 CI T 99 3, 99 8, 83 4 F .Su pp . 4 13 , 4 19 (1 99 3) ; Citros uco Paulista, S.A. v. United States , 12 CI T 1196, 1209, 704 F.Supp. 1075, 1088 (1988)

. I ts only appar ent rationale for imp uti ngde pr e c ia tio n to thi s a c c ount i s c on c e rn ov e r Ek inc ile r sh ow ing an “ inf la te d” ba lanc e sh e e t. But, a s Ekinciler pointedly stated at ora l argument, Commerce’ s mandate doe s not include ac ting a s t h e “ f i n a n c i a l st a te me nts po lic e ,” it i nc lud e s c a lc ulatin g on ly tho se c os ts that r e a so na

bly re la te to c os t of produc tion during the period of r eview. 19 U .S.C. § 1677b(f)(1)( A).

Given Ekinciler ’s uncontrove rted e vidence on th e n at u re of the melt shop modern ization account at the a dminist rative r eview, the decision to impute depre ciation to the

acc ount has no basis on the administrative recor d or i n law. Cf

. Pullman-Standard v. Swint , 4 56 U. S.Court No. 07-00457 Pag e 6

273, 2 9 2 ( 1 9 8 2 ) ( a d d it io n a l f a c t f in d in g u n n e c e s s ar

y w h e r e r e c o r d

p e r mi ts o n ly o n e r e s o luti o nof fa c tua l is su e ); Richardson v. Suzuki M otor Co. , 868 F.2d 1226, 1240 ( Fe d. Cir. 1989) (additional fa ct fi nd ingunnec e ssa

ry wh e re re c or d is c le ar) . T he c ourt c on sid e rs Com me rc e ’s oth e r a rgume nts without mer it a

nd here by rema

nds the matter to Commerc e for the purpose of

rede termining imputed depre ciation without the amount that curr ently ref lects t he foreig n exchang e los ses i n the melt shop modernization acc ount. Results of remand shall be f iled within 30 day s here of. So ordere d.

/s / R

. Kenton Musgra ve R

. KE NT ON M US GR AV E , S en i o r J u d ge Dated: Apr il 14, 2009 New Y ork, Ne w York