Slip Op. 06 - 40



## UNITED STATES COURT OF INTERNATIONAL TRADE

: AGRO DUTCH INDUSTRI ES, LTD., :

: Plaintiff, :

: v. : Before: M USGRAV

E, Judge : Court No. 04-00493 UNI TED STATE S, : : Defend ant, : : and : : COALI TION FOR FAI

R MUSHROOM TRADE, : : Defendant-Inte

rvenor. :

: [On chall enge by producer/export er to ant idumping duty administr ative re view mar gin dete rminatio n by U.S. Department of

Commerce, matter remanded for rec onsideration.] Dated: March 28, 2006 Garvey Schubert Barer

( Lizbeth R. Levinson , Ronald M. Wisla ), for the plaintiff. Peter D. Keisler , Assistan

t A ttorney

Genera l; David M. Cohen , Director, Patricia M. McCarthy , Assistant Director, Civil Division, Commerci al Lit i gation Branch, United States Department

of Justice ( Richard Schroeder ); and Office of Chief Counsel for Import Administration, U.S. Department of Commerce ( Matthew D. Walden ), of cou nsel, for the defe ndant. Collier Shannon Scott, PLLC (

Michael J. Coursey , Adam H . G ordon ), for th e defen

dantintervenor. OPINION The plain tiff A gro Dut ch Indus tries , Ltd. br ings th is action t o contest Certain Preserved Mushrooms From India: Final Results of Antidumping Duty Administrative Review , 69 Fed. Reg.Court No. 04-00493 Page 2

51630 (Aug. 20, 2004), as amended 69 Fed. Reg. 55405 (Sep. 14, 2004), the fourth administrative review since publication of

the underlying

antidumping duty order

. See Pub R. 140 (unpublished), 153. Agro Dutchchallenges three aspects of the determination, conducted by the U.S. Department of Commerce, Internation al Tra de Administration (“Commerce” or the “Department” ): (1) the decisionto treat t

he cost of mercha ndise returns to I

ndia as a n indirect selling

expense incurred on U.S. sales , (2) t he wei ghted a verage of home ma rket sell ing expen ses of other resp ondents used as

a surrog ate for

Agro Dutch’s, which Agro Dutch contends incorporate d the incorrect conclusion that commission pay

ments from respond

ent Weikfi eld to its affiliate seller in the home market had not been at arm’s length (which were thus trea ted not as deductible direct selling expenses but

as indirect selling expenses), and

(3) a finding of

antidumping duty absorption. The de fendant United States and the defendant-intervenor Coalition for Fair Mushroom Tra de (“CFMT”) oppose Agro Dutch’s US CIT Rule 56.2 motion, arguing that Commerce’s determination should be sustained as is. For the following reasons, the matter will be remanded to Commerce for reconsideration. Jurisdiction; Standard of Review The Courthas jurisdiction over the matter pursuant to 19 U.S.C. § 1516a(a)(2)(B) (iii) and 28 U.S.C. § 1581(c). A final de terminat ion for a n antidump ing duty

administr

ative re view is to be upheld unless it is unsupported by substantial evidenc e or is otherwise not in accordance with law. See 19 U.S.C. § 1516a(b)(1)(B)(i). Background Plaintiff Agro DutchIndustries, L td. is a producer or exporter of I ndia of certain preserved Agaricus bisporus and Agaricus b itorquis m ushrooms s ubject to Notice of Amendment of FinalCourt No. 04-00493 Page 3

Determination of Sales at Less Than Fair Value and Antidu mping Duty

Order: Certain Preserved Mushroom

s From Ind

ia , 64 Fed. Reg. 8311 (Feb. 19, 1999). The contested administrative review

covers the period February 1, 2002 through January 31, 2003 ( “POR”) and resulted in a 34.57% antidumping m argin against Agro Dutch. The mar gin of dumping thereat is the excess of normal value (the price at which

the merchandise or

foreign like product is sold in the foreign home mar ket in the ordinary c ourse of trade) over export price (the price at which the produ

cer or e xporter se lls to anunaffiliated

purchaser in the U.S. market) or, as appropria te, constructed export price (the price at whichan affiliate of the producer or exporter sells to an una ffiliated purchaser in the U.S. market). See generall

y19 U.S.C. §§ 1675(a)(1)(B), 1675(a)(2)(A), 1677(35)(A), 1677a (a ), 1677b(a)(1)(B)&(C), 1677b( a)(4). Discussion I. Movement Expense of Canceled Sales Commerce determined at the prelimina

ry review t hat durin g the POR

Agro Dutch had s old mercha ndise directly to one or more unaffiliated purchasers in the U.S. prior to importation on an FOB, C&F or CI

F basis a nd acted as the importer of r

ecord. B ecause

the circumstances of

the U.S. sales did not otherwise indicate that a constructed export pri ce methodology was appropriate, Commerce determine d that reliance upon export price was appropriate. Certain Preserved Mushrooms from India: Preliminary Results of Antidumping Duty Administrative Review , 69 Fed. Reg. 10659, 10662 (Mar. 8, 2004), Pub. R. 113. See 19 U.S.C. §§ 1677(35)(A), 1677a(a). From the starting price, Commerce deducted foreig n inland freight, freight document cha rges, transportation insurance, foreign brokerag e and handling , Ind

ian export duty , and inte

rnationa l freig ht, and madeCourt No. 04-00493 Page 4

cert ain other adjustments, as required by statute. 69 Fed. Reg. at 10662. See 19 U.S.C. § 1677a(c)(2); 19 C.F.R. § 351.402. Due to insufficient Agro Dutch sales in the home mar ket, at t he preliminary r

eview Commerce based normal value on Agro Dutch’s sale s to Israel, except fo r certain noncontemporaneous sales to the U.S. and Israel for which Commerce used

constructed value (the sum of materials and fabrication, plus an amount for indi rect costs such as selling, gener al and administrative (SGA), plus an amount for profit, plus whatever costs would be incurred to place the mercha ndise into ex

factory condition , packe d and rea dy f or shipme nt to the United States). 69 Fed. Reg. at 10662. See 19 U.S.C. § 1677b(e). Commerce also excluded certain sales below the cost of productionto Israel from Ag ro Dut ch from the determination of normal value. 69 Fed. Reg. a t 10664. See 19 U.S.C. § 1 677b(b)( 1). Commer ce also d etermine d that the

compari sons of exp ort price and normal value were at the same level of trade (“LOT”) a

nd therefore no LO T adjustment was necessary . 69 Fed. Reg. at 10662. See 19 U.S.C. § 1677b(a)(1)(B)(i). Certain Agro Dutch shipments dee med pert inent to the POR were discovered upon arrival inthe United States to have minute tra ces of co ntaminates exceeding a U.S. Food and Drug Administration zero tolerance specification. Accordingly , Agro Dutch canceled the sa les, recalled the merchand ise, and the merchandise thus never entered into U.S. commerce . According to the

re cord, Agro Dutch unde rtook re call, ra

ther tha n destruction, on the

expectat ion that it c ould reproc ess the merchandise for resale to custom ers in oth er count ries, an d a major ity were, in f

act, sol d to c ustomers in other countries during the POR. Cf. , e.g. , Conf. R. 50, Attachment 2 (total quantity resold). Commerce preliminarily conclude d that notwithsta

nding the cancel lation of s ales,Court No. 04-00493 Page 5

the movement

of the me rchandi se to the United Sta tes was nonethele ss “assoc iated wit h U.S. sale s” and therefore the expense of moving the merc ha ndise t o the U.S. was properly regarded as an indirect sel ling ex pense associated with U.S. sales; thus for the preliminary results, Commerce included t he entire co st of moving the recalled merchandise fr om the U.S. to India as an indirect selling expense a ssociate d with U.S. sa les but allowed a deduction for resales of the re called merchandise to third-country customers. 69 Fed. Reg. at 10664. The fi na l r es ul ts us ed th e s am e m et ho do lo gy as the p reliminary re sults except that Commerce revised its position and included all expenses related to the move

ment of the

recalle d mercha

ndise fromthe U.S. to India, rega rdless of resale to other markets during the POR. Commerce explained that t he assig

nment of “ all such e

xpenses to t

he marke t of the or iginatin g sale” is consistent wit

h Notice of Final De terminati on of S ales at Not Less Than Fair Value: Certain Color Television Receiv ers From Mala

ysia , 69 Fed. Reg. 20592 (April 16, 2004) ( see issues and decision

memorandum, comment 2 ), that “ Agro Dutch did no t ship the recalled sales directly to third-c ountry customers, but rather returned them to I ndia to re place th e merch andise in

its inventory[,]” and that since “the expe

nse is associated with sellingto the United States and the original place of shipment for sales in other markets does not become the United States, we cannot a s sign the mov ement expense for the return of the goods to the third-country re sales.” Issues and Decision Memorandum for Final Resu lts of the Antidumping Duty Administrative Review on Certain Preserved Mushrooms from India

(“ I&D Memo ”), Pub. R. 141, at 4-5. None of the parties contests the India- to-U.S. movement as ind irect se lling expe nse associated

with U.S. sales: the complaint is that the U.S.-to-India movement was also trea ted asCourt No. 04-00493 Page 6

“indirect selli ng e xp enses as sociate d with U.S. s ales.” Agro Dut ch arg ues that th

is finding is unsupported

by substantial evidence

on the record. It emphasizes that the reason for returning the mercha ndise to Ind

ia, with w hich Comme

rce ag reed, w as to reprocess t

he merchandise f

or resa le to other markets i n other c ountries

. The major ity were, in

fact, sold to countries other than Isr ael during the POR, and Agro Dutch therefore ar gu es that the cost of moving the recalled mercha ndise from the U.S. to India is tied

direct ly to the subs equen t sale s and i s prop erly chargea ble to such f oreign market sa les. The gover

nment def

ends on the

ground that “th e a ssociate d expenses never lo st their character of rel ating to Un ited State s sales” and ther efore Commerce p

roperly included these expenses as U.S . ind irect selli ng exp enses. Def.’s Br. at 8-11. CFMT, the petitioner a t the administrative proceeding, argue s that Com merce ’s methodology r ecognizes all attributes of the failed U.S. sales as U.S. expe

nses until s

uch time a s the goo ds have r eturned to their place of origin. Def-Int’s B r. at 5-8. As an initial observation, the Court notes that Commerce has defined “direct selling expenses”

in the context of the differences in circumstances of sale regulation. They

are “expense s, suchas commiss ions, cre dit expense s, guarantees, and warr anties, that

result from, and bear a direct relation ship to, the part icular sale in question.” 19 C.F.R. § 351.410(c). By contrast, Commerce defines “indire ct selling

expenses”

inthe context of the constructed export price offset regulation, to wit: “sel ling expe

nses, othe r than dir ect selli ng expen ses or as sumed sel ling expe nses ( see [ 1 9 C.F.R.] § 351.410), that the seller would incur regardle ss of whether particular sales were made, but that reasonably

may be attributed, in whole or in part, to such sales.” 19 C.F.R. § 351.412(f)(2).Court No. 04-00493 Page 7

1 The SAA is “an

authoritative expression by the United States conc erningthe interpretation and application of the Uruguay Round Agreements and [the URAA] in any judicial procee ding in which a question arises concerning such inter pretation or application.” 19 U.S.C. § 3512(d). More gener ally, with amen dment of U .S. law by

passag e of the U

rugua y Ro und Agr eements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994) (“URAA” ), Commerce described indirect selling expenses as expenses which do not meet the cri teria of “res ulti ng from and be aring a direct relationship to” the sale of the subject merchandise, do not qualify as assumption s, and are

not commiss ions. Such expenses would be incurred by the seller regardless of whether the particular

sales in question are made, but reasonably may be attributed (at least in part) to such sales

. H.R. Rep. No. 103-316, at 824 (Dec. 8, 1994) (Statement of Administrative Action (“SAA”)), 1 as reprinted in 1994 U.S.C.C.A.N. 4040, 4164 (italics added). The courts have further observed that indirect selling expenses ar e considered those “sales-related” expenses that do not vary with the quantity sold or are not related to a particular sale. E.g. SKF USA Inc. v. INA Walzlager Schae ffler KG , 180 F.3d 1370, 1374 n.7 (Fed. Cir. 1999) (citations omitted). They are, quite simply, a pa

rt of the cost of doing business. Inthis matter, substantial evidence suppo rts Co mmerce’s conclusion that the movement costs, both to and from the U.S., did not encompass direct selling expenses related to U.S. sales. The underlying

U.S. sales to which they re lated were canceled and excluded from the d

umping a naly sis. But that is not to imply that the movement costs therefor

e encompassed indirect selling expenses that may “reasonably

be attrib uted (at least in part)” to the U.S. sales or that it is appropriate to include suchin the dump ing ana lys is. In the dete rmination of export price, in addi tion to the other modifications of the starting price, the only provision of apparent relevance to the immediate issueCourt No. 04-00493 Page 8

is 19 U.S.C. § 1677a(c)(2)(A), w hich require s deducti on of the e xpenses “w

hich are incident to bringing the subject merchandise from the original place of shipment in the exporting country to the place of delivery in the U nited States[.]” 19 U.S.C. § 1677a(c)(2)(A). However, those expenses encompa ss movement expenses, not U.S. indirect selling expenses. See NSK Ltd v. United States , 390 F.3d 1352(Fed. Ci

r. 2004) ( selling

expenses a

re not mov eme nt expe nses). Cf . 19 U.S.C. § 1677a(d)(1)(D) (allowing for deduction of “other”selling expenses from constructed export price). Inany event, the recalled merchandise was not “subjec t merchandise . . . in the Unite d States” because it never entere d the comm erce of the Unite d States. Considering the baseline variable of the dumping equation, the calculation of normal value present s a similar

conundr um to th e inclus ion of U.S. indirec t selling expenses i

n the mar

gin calculation

for this matter. No relevant part of subsection (a) or ( e) of 19 U.S.C. § 1677b appears to permit an adjustment to normal or constructed value for indirect selling expensesassocia ted with U.S. selling . The sell ing, g eneral and admi

nistr ative expenses component of constructed value focuses on those SG&A expenses undertaken in connection with the produ ct ion and sale of a “forei gn like product” “in the ord in ar y course of trade” “for consumption in the fore ign country ,” plus profit. See 19 U.S.C. § 1677b(e)(2). Although paragr aph (a)(8) of section 1677b allows that constructed

value “may

be adjust

ed, as ap propria te, pur suant to this subsection,” subparagraph (a)(6)(B)(ii)—which

describes reductions to the starting foreign market price (including, as part of the purchas e price , “additi onal cost s, charg es and expe nse s inciden

t to bringing the foreign like product from the origina

l place o f shipmen

t in the expo rting c ountry to the place of delivery

to the purchas er”)—i s not applicable to determining constructed value, which involves a build-up of theCourt No. 04-00493 Page 9

2 In passing, it is perhaps worth noting that Commerce calculates the cost of manufacturing component

of constructed value as the cost of manufactur ing the U.S. sub

ject merchandise. See Import Administra tion Polic

y Bulletin 91.2 (Dep’t Comm. Jul. 18, 1991). Therefore an adjustment to constructed value “for differenc es in merchandise” is unnecessary when considering constructed value, according

to Antidumping Manual , ch. 8, sec. XII I, para. B.2 (

Dep’t Comm. Jan. 22, 1998).

3 The offset of 19 C.F.R. § 351.410(e) (l imited to the lesser o f commissi ons paid or U.S. indirect selling expenses, to account for commissions paid in one market but not in the comparison market)also appeared inapplicable to Agro D utch’s situation, see 69 Fed. Reg. a t 10664 (offset applied to Premier

and Weikf

ie ld), and i f it were applicable, it might have been to Ag ro Dutch’s benefit, given the magnitude of the disputed “U .S.” expenses. See , e.g. , Conf. R. 50, Attach. 2.

4 69 Fed. Reg. at 10662. See also 69 Fed. Reg. 51630 (no m odification of LOT determination). Although subsection 1677b(a) does not specifically a uthorize aLOT a

djustment t

o constructed value, paragra ph (a)(8) states that constructed value “may be adjusted, as appropriate, pursuant to this subsection.” costs involved

in pro duction and sale, plus profit, to the same or similar point in distribution that may be compared to export price as the foregoing determination of normal value. 2 Moreover, the possible consideration of

the movement costs of the canceled sales even a s a matter of constructed value is made fu rther pr

oblematic by t he absen ce of an y de terminat ion that the

y w ere pro

perly considered “foreign like product.” Elsewhere in section 1677b, the circumstance- of- sale adjustment of subparagraph (a)(6) (C)(iii)is inapplicable because it is limited to expenses that “bear a

direct relationship to[ ] the particul ar sale in question.” 19 C.F.R. § 351.410(b). 3 The LOT adjustment of subparag raph (a)(7)(A) offered the tantalizing possibility of expl ainin g the inclusion of these indirect selling expenses i n the margin calcu lation, g iven the f

act that t his revie w involve s export pr

ice sale s; however, Commerce preliminarily de termined that all sales comparisons for Agro Dutch were a tthe

same LOT, such that “an adjustment pursuant to sec tion 773(a)(7)(A) [19 U.S.C. § 1677b(a)(7)(A)] is not warranted.” 4 In any event, these are expenses “associated with U.S. sales.” Similar ly ,Court No. 04-00493 Page 10

al thou gh the constructed export price offset provision, 19 U.S.C. § 1677b(a)(7)(B ), refere nce s “indirect selling expenses” (and concerning w hich appears the only

definition thereo f i n the U.S. Code), the provi sion is inap plicable , since th

is matter does not involve constructed export price. Cf

. 19 C.F.R. § 351.412(f)(2) . Las tly, th e Court considered the possibility that U.S. indirect selling expenses might somehow be implicated in the al location of profit in the constructed value determination. However, in the final results Commerce ultimately de cided that all of Agro Dutch’s sales to Israel

were be low the co st of prod uction an d it theref ore rel ied up on th e weigh ted av erage selling expe nses and profit ratios derived for other respondents in deriving constructed value for Agro Dutch. See infra . Agro Dutch’s U.S. indirect selling expenses w

ould simply

be irre levant in that context. In short, based on the foregoing, constructed va lue does not appear to have provided the vehic le for c onsideri

ng the U .S. indire ct selling expenses a

t issue to be

part of the calcu

lus. If the expenses at bar are in fact indirect selling expenses a ssociate d with U.S. s ales, and at this point this opinion draws no conclusions one way or the other about the matter, then the statutory and regulatory

provisions do not explain their impact upon the margin for Agro Dutch, and neither do the par ties. Their briefs focus on attributing these movement expenses to either the U.S. or forei gn market b

ut do not ad

dress how such expenses would enter into the dumping equation at the outsetor whether that would even b e proper. For example, although Commerce state d that the treatment of these movement expenses is consistent with Certain Color Television Receivers From Malaysia , supra , 69 Fed. Reg. 20592 ( see issues an

d decision memora

ndum, comment 2), tha t determination

involved both export price and constructed export price, w hereas only the latter were adjusted for indirect

selling expenses “associated with economic activities occurring in the United States.” See Notice of Negative Preliminary Determination of Sales at Less Than Fair Value,Court No. 04-00493 Page 11

Postponement

of Final De term in ation, and Negative Preliminary Determination of Critical Circumstan ces: Certain Colo r Televis ions From M alaysia , 68 Fed. Reg. 66810, 66812-13 (Nov. 28, 2003). Also, the parties focused on disputing the implications of the returned merchandise that

were addressed in Certain Porcelain-on-Steel Cookware From Me xic o: Final Results of Antidumping

Duty Administrative Review , 62 Fed . Reg. 424 96 (Aug. 7, 1997), the government im pl ying that the determination stands for the proposition that associating return fre ight expenses to future sales is administratively bur densome, because of the difficu lty of f ollowing the expens e history of various merchandise lots resold in subsequent lots, as well as di stortive t o U.S. price, t

o the extent that 19 U.S.C. § 1677a(c)(2)(A) would require freig ht charges for the future s ales to be gin at the point of

shipment associated with such later sales (Def.’s Br . at 11 (ref erenci ng id . at 42502)), and Agro Dutch distinguishing, correc tly, Cookware From Mexico as hav ing i nvo lved a sale that was not canceled and

arguing that any

“administrative difficulty” of understanding the expense history of the rec alled sa

les of this matter is not prese nt in this re

view sinc e Commerc e was ab le to identify withoutproblem that the re called me rchandi se itself

was in fact resold in third countrie s (Pl.’s Re

ply at 3- 4). But b e that as

it may , the admi

nistrativ e recor

d also indi cates c ertain “ aware ness” th a t treatingthe expens es at issue as indire ct selling

expense s, howeve r associ ated, wo uld seem to obviate thei r inclusio n in a comparison involving export price and constructed value. Cf . I&D Memo , Pub. R. 141, at 4 (“[CF MT] notes th at, in EP comparisons, as is the case here, indirect selling expenses are not subtracted from the U.S. price, nor adde d to NV, nor included in the COP”). There being insufficient

explanation on the record to address or explain the impact of these movement

expenses of the canceled sales as U.S. indirect selling expenses on the calculation of Agro Dutch’s margin , not to men tion doubt as to t he lega li ty o f such ap plication , it is appr

opriate toCourt No. 04-00493 Page 12

remand the matter to Commerce for reconsideration of the issue of these movement

expenses, both to and from

the Unite d States, i

n its entirety. I

n doing so, Commerce

shall also consider whether it is appropr iate to treat the expenses as extraordinary costs or otherwise distortive to include them in the margin calculation. Cf

. Notice of Final Determination of Sales at Less Than Fair Value: Ce

rtain Preserved

Mushroom

s from Indi

a , 63 Fed. Reg. 72246, 72251 (Dec. 31, 1998) (“ The Department’s long-standing

practice with regard to ‘unfor eseen events’ is to treat expense items as extraordinary . . . when they a

re both unusual in nature and infrequent in occurre nce”). II

. Surrogate

Home Mar

ket Selli ng Expen ses (Co mmissions

) Th e ant idumping statute provides that the calculation of constructed value re quires the inclusion of the actual amounts realized by the expo rter under

review for selling, gene ral and administrative expenses in its home market, and if no actua l exp ense dat a are a vailable then it requires the inclusion of

the selling expenses incurred “in connection with the production and sale, for cons umpti on in the foreign country , of merchandise that is in the same genera l category of products as the subject merchandise” are used, but if no such data are available then inter alia a weighted average of the actual selling expenses experienced by other producers or exporters in the home market under review in the same proce eding will substitute. See 19 U.S.C. § 1677b(e). Agro Dutch did not incu r any selling expenses in the home market. In the preliminary review, in order to achiev e an appropriate comparison of export price to constructed value Commerce made a circumstance-of-sale adjustment to Ag ro Dutch’s constructed

value by deduc

ting the weight ed aver age direct selling expenses of AgroDutch’s above-cost sales in the third country market and addin

g U.S. dir

ect selli ng expen ses. 69 F ed. Reg . at 1 0665. See 19 U.S.C. § 1677b(a)(8); 19 C.F.R. § 351.410 (providing for circumstance of sale adjustments, pursuant

to 19Court No. 04-00493 Page 13

U.S.C. § 1677b(a)(6)(C)(iii), “only for direct selling expenses and other assumed expenses” under subsection(b) as we ll as “othe r selling expenses”

und er subsection (e) to compensate for commissions paid only in one market) . For the final results, Commerce determined that all of Ag ro Dutch’s sales to I srael ha d been be low the co st of prod uction an d it th er efore relied entirely on constructed

value in place of normal value. Agre eing with CFMT’s argument, Commerce use d the weighted averag e selling

expenses a

nd profit ratio de rived fr om two othe

r respon dents, Premier and Weikfield, as the profit allocation to the constructed value for Agro Dutch. 69 Fed. Reg. a t 51631. The issue her

e conce rns Commer

ce’s de cision to tr

eat the home mark

et commiss io ns paid by Weikfield to its sellin

g-ag ent aff

iliate, WPCL , as indir

ect expen ses rath er than a s direct e xpenses. Commerce’s practice is to treat affiliated party payments for se

rvices directly

related to the sale o f merchand ise as commissions if the respondent can demonstrate that the pay ments were at arm’s length. See , e.g. , Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, and the United Kingd

om: Final Resu lts of Antidu mping Duty Administra tive Reviews , 67 Fed . Reg. 55780 (Aug. 30, 2002) (issues and d ecision me morandum , comment

7); Final Determination of Sales at Less ThanFair Value : Coated G roundwood P

aper fro m Belgi um , 56 Fed. Reg. 56359, 56362 (Nov. 4, 1991). To establish that affiliate pay ments are at arm’s length, Commerce compa res them to those pa

id to unaf filiated selling agents in the same

market, but only

if the co mp ariso n

w ould be usef ul. For example, in the preceding administrative review, w hich was the third such review, Commerce denied Weikfield’s claim that the home market c ommissions p aid to WPCL had been at arm’s length because of the dif ficulty of try ing to eq uate WPCL ’s servic es to and pay ments by Weikfield

wit h those pro vided by and to unaff iliated selling agents. See Certain Preserved Mushrooms From Indi

a: Final Re

sults of Antidumping Duty Administrative Review , 68 Fed. R eg.Court No. 04-00493 Page 14

41303 (Jul. 11, 200 3) (issue s and dec ision memor andum, comment

4); see also Certain Preserved Mushrooms From Indi

a: Prelim inary Res ults of Antidumping Duty Administrative Review , 68 Fed. Reg. 11045 (Mar. 7, 2003). Cf. Certain Preserved Mushrooms from India: Preliminary Results of Antidumping

Duty Administrative Review , 6 6 Fed. Re g. 13896 , 13901 (M ar. 8, 20 01) (first administrative review). Inthe instant re

view, Weik

field ag ain

asserted that the commissions paid to WPCL during the POR had been at arm’s length and that its marketing and promotion

activitie s in In

dia would cost at least as much

as if contracted

by an unaff

iliated company. See Pub. R. 98 at 28 (Dec. 23, 2003) (verification

report). Commerce verified that Weikf

ield had i n fact pa id commission s to WPCL i

n connect ion with its sal es activities on be half of We ikfield a

nd that WPCL

was instr

umental i n establishing a market

for Weikfield’s products in India, id . at 17, bu t in the end Commerce agreed with CFMT that

We ikfield had not established the arm’s length nature of the home market commissions pai d t o W PC L, and it therefore declined to consider the home-market commissions paid to WPCL as a direct deduction, instead considering the payments as indirec

tselling expenses. See I&D Memo , Pub. R. 141, at 9. The final results, incorpora ti ng by r eference the unaltered preliminary

determination on the issue, implied that the decision was consistent with the f inal resu lts reached in the preceding

administrative review. See 69 Fed. Reg. 51631 (refere ncing I&D

Memo , Pub. R. 141); see also 69 Fed. Reg. at 10664. Agro Dutch argues he re that this determination was arbitrary and resu lted in ove

rstated s elling e

xpenses at

trib uted to Weikfield and assigned to Agro Dutch. The government

defends the decision to treat the commissions as indirect selling expenses

as co ns is te nt wi th Co mm er ce ’s pr ac ti ce , w hi ch is no t t o t re at ho me ma rk et co mm is si on s p ai d b y aCourt No. 04-00493 Page 15

respon dent

to an affiliate as direct deductions unless the respondent ca n demonstrate that

th e commissions were made at arm’s length. De f.’s Br. at 14. The gov ernment contends that Weikf

ield simply failed to demonstrate that the commissions paid to WPCL had been at arm’s leng th. Since We ikfield

d id not question the decision to treat the commissions to WPCL as indirect selling expenses in its brief commenting on the pre liminary results, Commerce therefore did not address the issue in greater detail in the final results, acc ording to the government. CFMT supports the government’s position but contends as an initial matter that Agro Dutch did not raise the issue before Commerce either and the refore failed to exhaust its administrative remedies pursuant to 28 U.S.C. § 2637(d). CFMT argues that Agro D utch, as the party in possession of its own sales and cost data, knew or should have known of t

he conse quence s of the r

evised da ta it presented to Commerce on June 2, 2004, particularly in lig htof CFMT’s argument in its case brief that Commerce

should use

Weikfield ’s selling

expenses as part of any normal value c alculation. Def-Int’s B r. at 10. Pursuant to 19 C.F.R . § 351.309 (c)(2) , a party to the proceeding is required to prese nt “all argume nts” in its case br

ief that “ continue

in the subm

itter’s v iew to be r

elevant ” to the fina

l results of the review. The question is whethe r the issue of the arm’s length nature of Weikfield’s commission pay

ments to WPCL became relevant to Agr o Dutch prior to conclusion of administrative case briefing. CFMT contends that it did, and that Agro Dutch knew or should have knownthat Commerce would rely on constructed value in the final results. CFMT contends that at verific ation Ag

ro Dutch present ed cert ain clar ifications and co rrections, and tha t [a]nalysis of

theserevised data revealed the need to r ely on constructe d value, a consequence of which Agro D utch was surely a

ware. The consequences of Agro Dutch’s data revisions wererecognized by [CFMT] upon release of theCourt No. 04-00493 Page 16 verification

report and exhibits and

receipt of the revised third-country sales database. They

would hav e been no less recogn izable to respondent Agro Dutch, which ow ned, pres ented and verified those same data. Yet Ag ro Dut chfaile d to t ake any affi rmati ve pos itio n regard ing anyaspect of ho w Weikfield’s or Premier’s selling expenses wo uld be imputed to its own constructed

value. I

t then also

failed to

address [CF MT]’ s case brief argume nts on the need

to use Weikfield’s data for constructing normal value. A gro Dutch’s failure to raise any issue related to the trea

tment o f Weikfield’s affilia

ted-par ty c ommissions i s particu larly noteworthy

because Agro Dutch had actual knowledge that Commerce would not consider Weikfield’s affi liate d-pa

rty commi ssion s to be

[at ar m’s le ngth ] . . . since the Prelimina ry Result

s of the review. . . . Def-Int’s B r. at 11-12 (italics in original). Agro Dutch replies that it did not challenge the issue of the calculation of Weikfield’s selling expenses after the prelimi nary results be cause it

was i rrelev ant to its own preliminary results and therefore it had no cause or standing to brief the issue at this juncture. Pl.’s Reply at 5. Agro Dutch contends that it was not until issuance of the final re sults that i t could co mplain

of the implications of an administrative decision not to rely

on Agro Dutch’s t hird-co untry sales inf ormation a

nd rely instead entirely on c onstructed value. Id . at 6. As a general matter, “[t]he doctrine of exhaustion of administrative remedies provides ‘that

no one is ent

itled to jud

icial re lief for

a suppose d or th

reatened injury until the prescribed administrative remedy ha s been exhausted.’” McKart v. United States , 395 U.S. 1 85, 193 (1969) ( quot ing Myers v

. Bethleh em Shipbu ilding Corp ., 303 U.S. 41, 50-51 (1938)). If a pa rty does not exhaust avail abl e administ

rative r emedies , “judici al revie w of admin

istrative action is inap prop riate[.]” Sharp Corp. v. United States , 837 F.2d 1058, 1062 (Fed . Cir. 1988) . When consideringnon-classification matters, howe ver, there are several identified exceptions to the exhaustion requirement, including (1) thefutility of raising the issue, (2) a judicial decision renderedCourt No. 04-00493 Page 17

subsequent

to the administrative determination materially impacting the issue, (3) a pure question of law, (4) the plaintiff had no reaso n to suspect t hat the a gency would re fuse to a

dhere to clearly applica ble precedent. See generally Consolidated Bearings Co. v. United States , 25 CIT 546, 552- 53, 166 F.Supp.2d 580, 586 (2001), rev’d on ot her grounds , 348 F.3d 997 (Fed. Cir. 2003). The situation here, however, is not one of these. Ag ro Du tch was awar e that CFMT had raised the possibility

that ana lys is of the c ost of pro duction f or the sa les to I srael wo

uld resul t in no abov e-cost sales, and that in that event Commerce s ho uld use the weighted averag e of Weikfield’s and Premier’s home market selling expenses and profits as part of Agro Dutch’s constructed value calculation. See Pub R. 130 at 15 (CFMT’s case brief). Further, Agro Dutch was a lso aware of CFMT’s argument that Weikfield’s commission payments to WPCL had not been at

arm’s length and of the record a s devel oped

with respect to that issue, including the preliminary determination to treat tho s e commissions as indirect selling expenses rather than direct expenses. Agro Dutch did not comment

on the issue by way

of rebuttal before Commerce, where it might have better-preserved its intere sts inthe arg uments before Commerce that it presses here. Cf . Pub. R. 135 (June 24, 2004) (Agro Dutch rebuttal brief). After c onsideri ng the p arties’ respect ive positions on the ma tter, the Court is constrained

to agree that Agro Dutc

h has indee d faile d to exhaust its adminis trative r

emedy with respect to this issue. Accord

, N.A.R. , S.p.A. v. United States , 14 CIT 409, 419, 741 F. Supp. 936, 944-45 (1990) (party

who “was aware, or should have bee n awa re ” of action taken in preliminary determination should have raised its objection to action before final deter mination). Even if there had not be en a fai lure to e xhaust ad ministrati ve reme dies, the

final re sults would have to be

sustaine d with res

pect to this issue. The record shows that Weikfield asserted that “contracting

with an unaffiliated company

to perform the same marketing and promotion activitiesCourt No. 04-00493 Page 18

that WPCL has performed for WAPL [i.e., Weikfield] would probably cost at least as much as the

. . . commission that WAPL pays WPCL ,” Pub. R. 98 , supra , at 28 , and also that Weikf

ield acknowledged

“[c]ircum stances

have not c

hange d since th e last

admin istra tive r evie w[,]” in which Commerce found that the WPCL commissions had not been made at a

rm’s leng th. Pub. R. Doc. 68 at S-10 (Aug . 19, 2003) . This stat ement, th at commiss ions to unaffiliate d commissionaires would “p ro ba bl y” cost as mu

ch as thos e paid

to WPCL, appears to be mere speculation and the refore falls sho rt of the specific evidence required for a respondent to demonstrate that its commissions were made at arm’s length. See NTN Corp. v. United States , 28 CIT ___, ___, 306 F. Supp. 2d 1319, 1341 (2004); Torrington Co. v. United States , 25 CIT 395, 436, 146 F. Supp. 2d 845, 890 (2001). Further, altho ugh Weikfield

stated the

WPCL pla

ys a “distinctly differe

nt” role than the unaffiliated commissionaire in home market sales, it provided no evidenc e as to wh at the co mmission pa yme nts would ha ve be en fo r a n u na ff

il ia te d c om mi ss io na ir e w ho pl ays a similar role as WPCL. See Pub. R. 98 at 28. This was essentially the sa me problem that Commerce confronted in theprior review. See 68 Fed. R eg. 41303, supra (issues and decision memorandum, comment 4). Commerce determined that the evidence w as in sufficient to support finding Weikfield’s commissions to WPCL to have been made at arm’s length, and the Court finds that substa

ntial evid ence sup ports thisconclusion. Wi thouta proper benchmark of pay ment for services against which to evalua te Weikfield’s payment s to WPCL, it is difficult to discern how Commerce could have found otherwise. Cf

. O utukump u Copper Rolled Pro ducts AB v

. Unit ed State s , 18 CIT 204, 210-11, 850 F. Supp. 16, 22-23 (1994) (affirming

finding that commissions were no t made at a rm’s leng thbecause

“Commerc e was una

bleCourt No. 04-00493 Page 19

to establish a benchmark against which to compare the arm’s length nature of the ‘commission’ payments”)) . Therefore, the Court sustains the final results as to this issue. III. Duty Absorption Las tl y, Agro Dutch complains that Commerce’s decision that it absorbed antidumping duties

was errone ous. See 19 U.S.C. § 1675(a)(4). The duty absorption provision was added by section 220(a) of the URAA, see 108 Stat. at 4859, and provides that Commerce shal l, if requ este d, determine during an administrative review that is initiated two or four years a fter the publication of the antidumping duty order whether antidumping duties have been absorbe d by a fore ign producer

or exporter if the subject merchandise is sold in the United States through an importer affiliated with suchforeign producer or

exporter , and it sha

ll share t hat findin g with the U.S. International Trade Commission. Id

. The provision does not affect the calculation of the margin in the review, as it was notintended to provide for the treatment of antidumping duties as a cost; ra ther, a f inding of duty absorptionis only

to be considered a “strong indicator” by Commerce of whether current dumping margins are not indicative of the margins that would exist if the order were revoke d. See H.R. Rep. No. 103-826(I), at

60 (Oct. 3, 1994); S. Rep. No. 103-412, at 44, 50 (Nov. 22, 1994); SAA at 886, 1994 U.S.C.C.A.N. at 4210. In practice, fr om Commerce’s perspective the duty absorption inquiry appears to involve

littl e more tha n dete rmini ng whet her th e impo rter i s affi liat ed wit h the f oreign producer/exporter

and whether there is more than a de minimi

s dumping margin: if both conditions

are true, the

burden sh

ifts to the

responde

nt to prove non-absorption, e.g. , by producing an enforc eable

contract for the ultimate purchaser to pay the full duty assessed on the mer chandise. See , e.g. , Fabrique de Fer de Charleroi S.A. v. United States , 25 CIT 741, 751, 155 F. Supp. 2d 801, 812- 813 (2001).Court No. 04-00493 Page 20

The par ties do not

dispute that the first two prerequisites to a duty a bsorption inquiry were present in this instance: CFMT requested that Commerce conduct the inquiry, see Pub. R. 6 (Feb. 28, 2003) (letter to Commerce from counsel for CFMT), and the administrative review was initiated four years a fter publication of the antidumping duty order. F or

the preliminary re

view, Commerce determined

that since Agro Dutch had acted a s importer

of record for ne arly

80% of its U .S. sales, it was ther efore “ affilia

ted” (wi th itself)within the

meaning of the sta

tute, and theref ore a dut y absorptioninquiry was requir ed. See 69 Fed. R

eg. at 1 0661. Aft

er rec eiving C FMT’s re quest, Commerce requested evidence from Ag ro Dutch to demonstrate that the unaffiliated purchaser(s ) will ultimately be responsible for pa yment of antidumping

duties assessed on

entries during the POR

as a res ult of the administrative review proceeding. Pub. R. 80 (Sep. 30, 2003) (letter fr o m Commerce to counsel for Agro Dutch). Ag ro Dutch proffered no such evidence in response, a

n d Comm e rce theref

ore pre liminarily

determined that th e eviden ce was in

conclusi ve to esta

blish unconditional commitment by the first unaffiliated pur chaser of the subject merchandise to pay the full duty to be assessed on the subjec t merchandise and that Agro Du tch had therefore absorbed antidumping duties. See 69 Fed. Reg. at 10661. For suppo rt, Comm erce relied on Certain Corrosion-Resistant

Carbon Ste el Flat Produc ts and Certa in Cut-to- Length Carb on Steel P

late From Canada: Fi

nal Result

s of Antidumping

Duty Adm inistrativ

e Revie ws , 63 Fed. Reg. 12725 (Mar. 16, 1998) (finding that exporters who are also the importer s of rec ord are “‘aff iliated’ within the meaning of” 19 U.S.C. § 1675(a)(4)). See Pub. R. 77 (Sep. 23, 2003) (memorandum of to file). For the final results, Com merce reiterated its determination that Agro Dutch had a bsorbed antidumping du ties. See I& D Memo , Pub. R. 141, at 7-8 (finding lack of evidence that “the unaffiliated purchaser will pay the full duty ultimately

assessed on the subject merchandise”).Court No. 04-00493 Page 21

Agro Dutch argues the standard applied by Commerce in this instance, that Agro Dutch was “affiliated” as an exporter and importer for the purpose of deter mining whether to c onduct a du ty absorptioninquiry, is not in a ccorda nce with t he plain language of the

statute. A

gro Dut ch points out that all of

its sales w ere con sidered

export pric e sales a

nd not con structed

export sale s, and that there was no evidence or finding by Commerce that Agro Dutch had sold subject merchandise during the POR t hrough a related importer. Pl.’s Br. at 11 (referencing 69 Fed. Reg. 10659, Pub. R. 113). Agro Dutch further

argue s that eve

n if the sta

ndard em ployed is in ac cordanc e with law, the record compiled in the matter does not support a finding of

duty absorption beca

use Commerce verified that the antidumpin

g duties p a id upon importation were passed along to Agro Dutc h’s unaffiliated purchaser and that the verified

sample invoices show that the price of the merc handise charged by Agro Dutch to its customer included the payment of duties. Id . (referencing Conf. R., Ver if. Ex. 17, Inv. ADIL

/0756). Agro Dutch describes invoice 0756 as showing a price origina lly charg ed to the customer that includes the antidumping duties paid, from which are subsequently subtracted in a separa te line item these same

duties, sin

ce they had actu ally been pa id by the custo mer dire ctly

to U.S. customs—all of which Commerce verified and which was in ag reement with what

Agro Dutch report ed to C ommer ce in i ts sal es lis ting. The government’s initial re sponse is t hat Agr o Dutch a lso faile d to exhaust

its administrative remedies with respect to this issue, specifically with respect to the argument that a basic prerequ

isite for finding duty abs orption—s eparat e importe r and pro ducer/e

xporter e ntities—is

absent in this matter. The gover

nment con strues Ag

ro Dutch ’s adminis trative c ase brie f as “conceding ” that a d uty absorptioninquiry was “prope r” in this instance because it only objected to the factualfinding that Agro Dutch had absorbed duties and did not challenge the pr erequisites to such finding. Def.’s Br.Court No. 04-00493 Page 22

5 Timex V.I. v. United States , 157 F.3d 879, 882 (Fed. C ir. 19 98) (q uoti ng Chevron , 467 U.S. at 843 n.9). at 25 (referencing Pub. R. 130, at 2-3 (June 10, 2004) (Ag ro Dutch administrative case brief)). The government

argue s that this matter issimilar to Ta Chen Stainless Steel Pipe, Ltd. v. United States , 28 CIT ___, 342 F. Supp. 2d 1191 (2004) and Heveafil Sdn. Bhd. v . United States , 25 CIT 147 (2001) because, as in those cases, the issue was not ra ised in the claimant’s case brief. Once again, if a party

does not exhaust available administrative remedies, “judicial review of administrative a ction is inappropriate[.]” Sharp Corp. , supra , 837 F.2d at 1062. One of the exceptions to the exhaustion doctrine, however, is a “pure” question of

law, i.e. , a novel argument of a purely legal nature requiring neither furthe r agency involvement

nor further factual development

or an “opening up” of the administrative rec ord or undue delay nor expenditure of scarce time and

resourc es. See Consolidated Bearings , supra 25 CIT at 553, 166 F. Supp. 2d at 586-87. To the extent Agro D

utch’s a rgumen t implicate s a pure q

uestion of law, it may be addressed here. Cf. id. , 348 F.3d at 1003 (“[s]tatutory construction alone is not sufficient to resolve this case” because one of cross-appellant’s arguments conc erned divergence fr om administrative practice). The government

next ar gues that if the issue is appropriate for considera tion, then Commerce’s interpretation of subsection 1675(a) (4) is reasona ble because Congre ss fai led to provide clear guidance on the issue of conducting a n duty absorption inquiry

when the producer or exporter is itself the importer of record, thus making the statute si lent or a

mbiguous with resp ect to that issue and Commerce’s interpretation thereof deserving of Chevron deference. See Chevron U.S.A., Inc.

v. Natural Re

sources D efense Co uncil, Inc. , 467 U.S. 837, 843 (1984). Apply ing “tr aditiona l tools of statutory construction,” 5 the gov ernment argue s that it is e

vident fr om the pla

in text of the

statuteCourt No. 04-00493 Page 23

6 When an importer is affiliated with the exporter, dumping is measured by refe renc e to the affiliated importer’s resale price. However, it is the affiliated importer, not the unaf filiate d U.S. purchaser of the du mp ed go od s, wh o m us t p ay t he an ti du mp in g d ut y. Under certain circumst ances, t he affi liated imp orter ma y c hoose to pay the antidumping duty ra

ther than eliminate the dumping, either throu gh lowering prices in the foreign ma rket, raising prices in the United States, or a combination of both. SAA at 886, 1994 U.S.C.C.A.N. at 4210. As a legal and practical matter, the respo nsibility for payment of

antidumpin

g duty alway s falls on the importer of record, rega rdless of affiliation. See 1 9 U.S.C. §§ 14 81, 1484, 1 624; 19 C.F .R. § 141.1 . If e limination of dumping

is the obje ctive , “lowering pric es in the foreign market” is bey ond the ability of the importer, and thus it may be inferred that this “suggestion” was made with the fore ign producer or exporter in mind. At any rate, whether the provi sion was e

nacted w ith deter rence i n mind, fr

om t he pers pective of either the

(continued...) that the relevant inquiry

is whether the “foreign producer or exporter” absorbed antidumping duties and that the “statute was written to encompass the ambiguous scena rio of absorption when there is

anaffil ia ted importer; thus, by implication it similarly encompasses the more obvious scenario of absorptionwhen the producer or exporter acts as importer.” Def.’s Br. at 29 (r eferencing ge neral principle of statutory

construction that a

s tatute “embraces such consequential applica tions and effec ts as a

re n ece ssa ry , es sen tial, n atu ral or p rop er” ) (q

uot ing 2B N orm an J. Singer, ed., Sutherland

on Statutes and Statutory Construc tion § 55.036, at 285 (6th ed. 2000)). The government thus argues “[i]t is nece ssary , essenti al, natural or proper that [sub]section 1675(a)(4) encompass sales through the produ

cer or e xporter its elf

as the importer of record.” Def.’ s Br. at 29. Cf . 19 U.S.C. § 1675(a) (4). The

gover nment con

tends tha t examinati on of the l egisla tive his tory suppor

ts Commerce’s conclus ion tha t the purpose of subsection 1675(a)(4) is to provide a disincentive for the exporter

or produc er to abs orb antid umping du

ties and to

pass the c ost

of the dutie s on to its customers, whichwould “eliminate” the dumping. Def.’s Br. a t29 (referencing SAA). 6 Lastly , theCourt No. 04-00493 Page 24

6 (...continued) importer or the foreign producer or e xporter it is difficult to disce rn h ow the uncertainty of retrospective antidumpin

g duty assessme nt in the fu

ture cou ld possibly be quantified

at the present time of an importation. government

argue s that subs tantial e vidence supports Commerce’ s dete rmination because Agro Dutchdid not provide the necessary evidence to establish that the unaffiliated purchaser w ill pay the full duty ultimately

assessed on the merchandise, and also that the final results are con sistent wit h other administrative determinations that have construed subsection 1675(a)(4) as encompassing the situation where the importe r and producer/exporter are one and the same. Def.’s Br. at 27 (referencing C

e rtain Hot-

Rolled Car

bon Steel Flat Produ cts from th e Netherl ands: Pre liminary Results of Antidumping Duty Administrative Review; 69 Fed. Reg. 702 26 (Dec . 3, 2004) ; Certain Preserved

Mushrooms from the People’s Republic of China: Fina l Re sults of Sixth Antidumping Duty New Shippe

r Review and Final R esultsand Partial Rescission of the FourthAntidumpi

ng Duty Administrative Review , 69 Fed. Reg. 54635, 54637 (Sep. 9, 2004); Prelimi nary Results of Antidumping

Duty Administrative Review: Stainless Steel Sheet and Strip in Coils From France , 69 Fed. Reg. 478 92 (Aug . 6, 2004) ; Certain Corrosion- Resistant Carbon Steel Flat Products and Certain Cut-to-Le

ngth CarbonSteel Pla te from Can ada: Fina l Results o f Antid umping Du ty Administra tive Reviews , 63 Fed. Reg. 12725 (Mar. 16, 1998)). The issue here turns on whether the duty absorptionprovision is clear or ambiguous. Where the meaning of

the statute is clear, that is the end of the matter and a court should not examine the legislative history

to resolve the question. Int’l Bus. Mach. Corp. v. United States , 201 F.3d 1367, 1372 (Fed. Ci

r. 2000). If th e meanin

g is plai n, it is a pplicable unless “it is quite impossible that Congre ss could have intended the result . . . and where the allege d absurdi ty is so clear as to beCourt No. 04-00493 Page 25

7 The defining antidumping regula tion states that “[a]ffiliated persons” and “affi liat ed parties” have the same mea

ning as in sectio n 771(33) of the Act[,]” and in describing affiliated relationships goes on

to st ate that “ [t] he Secretary will not find that control exists . . . unless the relation ship has the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise or foreign like product. The Secretary

will consider the temporal aspect of a relation ship in deter

mining whether c ontrol exist s; normall y, t emp orary c i rcumstances will not suffice as evidence of control.” 19 C.F.R. § 351.102(b)

. obvious to most anyone.” Public Citizen v. United States Dep’t of Justice , 491 U.S. 440, 471 (1989) (K en ne dy, J., concur

ring) ( citation omitted). I n this instance, although the parties apparently take the position that the conditional clause of the statute is “plain text” ( i.e. , the operati on of the s tatute is predicated on finding that “the subject mer chandise is sold in the United States through an importer who is affiliated

with such foreign producer or exporter”), the Court can not conclude that the mean ing of “ affilia

ted” is unambiguo

us. Onthe one hand, the term is not defined either as a noun or a verb in the antidumping statute butappears only

in the context of “affiliated persons,” who include in relevant par t “[t]wo or

more persons directly or

indirectly controlling , controlled by, or unde r common control with, any person”

as well as “[a]ny

person w ho contro ls any other pe

rson and such other person” among other f amilial and corporate relationships, and “a person shall be c onsidered to control another person if the person is legall y or operati onally

in a position to exerc ise restraint or direction over the other person.” 19 U.S.C. § 1677(33)(F)&(G). 7 Common to such def initions is the fact that an af filiated relation ship involves two or more persons. See Ta Chen Stainless Steel Pipe, Inc. v. United States , 298 F.3d 1330, 1336 (Fed. Cir. 2002) (“‘[a]ffiliated persons’ includes any group in which one person c ontrols another”). The statu

te does not reference, let alone def ine, a singular “affiliated person.” Hence,Court No. 04-00493 Page 26

8 Discussion of the appropriate level of defere nce to be a ccorded to Commerce’s interpretation is therefore obviated. on the one hand, it is a stretch to interpret a s ing le entity as being affilia ted with its elf, poss ibly precluded by

operation of merger. Onthe other

hand, the antidumping statute more accura tely describ es funct

ions, not e ntities. A single entity may

, i n fac t, wear “multiple hats” in the process of manufacturing , selling and distr ibuting mercha

ndise. Commerce’ s interpr etation a ppears l ess conto

rted whe n conside red in such context. Cf

., e.g. , United Dominion Industries, Inc. v. United States , 532 U.S. 822 , 829-838 (2001) (affili ated gr

oup’s pro duct liab ility

loss must be

figure d on a con solidated , single -entity basis and no t b y ag gr eg at in g p ro du ct li ab il it y lo ss es , s ep ar at el y d e termined company by company); N.L.R.B. v. Thalbo Corp. , 171 F.3d 102, 114 (2nd Cir. 1999) (hotel operator and its affiliate were single entity for purposes

of the National Labor Relatio ns Act); Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke &

Liquors, Ltd. , 416 F.2d 71 (9th C ir. 1969), cert. denied, 396 U.S. 1062 (1970) (commonownership and control do not liberate corporations from the impact of the antitrust laws). The fact that this determination involves export price and not constructed export price might appear at odds with Commerce’s interpretation of subsection 1675(a )(4), cf. 19 U.S.C. § 1677a(a) with § 1677a(b), however Commerce’s interpre tation of subsection 1675(a)(4) appea rs to be a reasonable, common-s ense solution to w hat Cong ress atte mpted to a

ccomplish

with its enactment. This conclusionis inhere

nt from the

statute’ s focus—u

pon duty absorption in the foreign producer

or exporter—and ther efore even if the meaning of “affiliate” we re clear, and resort to legislative history unnecessary , to find that the statute does not address the circumstance of the fore ign producer

or ex po rt er it se lf

ac ti ng as th e i mp or te r o f r ec or d w ou ld re su lt in an ap pa re nt ab su rd it y. 8Court No. 04-00493 Page 27 Conclusion For the fore going

reasons , this matte

r willbe rema

nded to Commerce for reconsideration of Agro Dutch’s movement expenses associated with the rec alled merchandise.

/ s/ R. Kenton Musgrave R. KENTON MUSGRAVE, JUDGE Dated: March 28, 2006 New York, New York