Slip Op. 08-52

UNITED STATES COURT OF INTERNATIONAL TRADE

_______________________________

 :

ARCELORMITTAL USA INC., :

 :

Plaintiff, :

 :

v. : Before: Richard K. Eaton, Judge 

 : 

UNITED STATES, : Court No. 06-00085 

 :

Defendant, : Public Version

 :

and :

 :

DONGBU STEEL CO., LTD., ET AL.,:

 :

Def.-Ints. :

_______________________________:

[United States Department of Commerce’s final results of the

eleventh administrative review of the antidumping duty order

applicable to corrosion-resistant carbon steel flat products from

Korea, sustained.] 

Dated: May 15, 2008

Stewart and Stewart (Terence P. Stewart and Wesley K.

Caine), for plaintiff.

Gregory G. Katsas, Acting Assistant Attorney General; Jeanne

E. Davidson, Director, Patricia M. McCarthy, Assistant Director,

Commercial Litigation Branch, Civil Division, United States

Department of Justice (Stephen C. Tosini); Office of the Chief

Counsel for Import Administration, United States Department of

Commerce (Irene H. Chen), of counsel, for defendant.

Troutman Sanders LLP (Donald B. Cameron, Julie C. Mendoza,

R. Will Planert, and Brady W. Mills), for defendant-intervenors

Union Steel Manufacturing Co., Ltd. and Dongbu Steel Co., Ltd.

Akin, Gump, Strauss, Hauer & Feld, LLP (Spencer S. Griffith,

J. David Park, Jarrod M. Goldfeder, and Lisa W. Ross), for

defendant-intervenor POSCO.

Eaton, Judge: This action is before the court on plaintiff
Court No. 06-00085 Page 2

 During the pendency of this action, the court granted 1

plaintiff’s consent motion to amend the caption and all filings

in this proceeding to reflect its corporate name change, from

Mittal Steel USA Inc. to ArcelorMittal USA Inc. See

ArcelorMittal USA Inc. v. United States, Court No. 06-00085, Jan.

28, 2008 (order). 

ArcelorMittal USA Inc.’s Rule 56.2 motion for judgment upon the

agency record. By its motion, plaintiff contests certain 1

aspects of the United States Department of Commerce’s (“Commerce”

or the “Department”) final results of the eleventh administrative

review of the antidumping duty order applicable to imports into

the United States of corrosion-resistant carbon steel flat

products (“CORE”) from Korea for the period of review August 1,

2003, through July 31, 2004. See Certain CORE from the Republic

of Korea, 71 Fed. Reg. 7,513 (Dep’t of Commerce Feb. 13, 2006)

(eleventh admin. review), as amended by Certain CORE from the

Republic of Korea, 71 Fed. Reg. 13,692 (Dep’t of Commerce Mar.

20, 2006) (amended final results) (collectively, the “Final

Results”). Jurisdiction lies pursuant to 28 U.S.C. § 1581(c)

(2000), and 19 U.S.C. § 1516a(a)(2)(B)(iii). For the reasons set

forth below, Commerce’s Final Results are sustained.

BACKGROUND 

Plaintiff is a domestic producer of CORE. See Pl.’s Mot. J.

Agency R. (“Pl.’s Br.”) 4. On August 19, 1993, following its

investigation, Commerce published the antidumping duty order
Court No. 06-00085 Page 3

 Under the statute, Commerce is required to “disregard any 2

weighted average dumping margin that is de minimis as defined in

section 1673b(b)(3) of this title.” 19 U.S.C. § 1673d(a)(4). 

“[A] weighted average dumping margin is de minimis if [Commerce]

(continued...)

applicable to imports into the United States of CORE from Korea. 

See Certain CORE From Korea, 58 Fed. Reg. 44,159 (Dep’t of

Commerce Aug. 19, 1993) (the “CORE Order”). On August 3, 2004,

after having conducted ten prior administrative reviews of the

CORE Order, Commerce published notice that it would consider

requests for the eleventh review. See Opportunity to Request

Admin. Review, 69 Fed. Reg. 46,496 (Dep’t of Commerce Aug. 3,

2004) (notice). Thereafter, on August 31, 2004, plaintiff asked

Commerce to conduct a review of the behavior and market

activities of certain Korean respondents including Pohang Iron &

Steel Co., Ltd. (“POSCO”), Dongbu Steel Co., Ltd. (“Dongbu”),

Hyundai HYSCO Co., Ltd. (“HYSCO”), and Union Steel Manufacturing

Co., Ltd. (“Union”). The eleventh administrative review was

initiated on September 22, 2004. See Initiation of Antidumping

and Countervailing Duty Admin. Reviews and Request for Revocation

in Part, 69 Fed. Reg. 56,745 (Dep’t of Commerce Sept. 22, 2004)

(notice). 

On February 13, 2006, Commerce published its Final Results. 

See Final Results, 71 Fed. Reg. at 7,513. Based on its analysis,

the Department assigned imports from POSCO a 2.16 percent dumping

margin; those from Union a de minimis margin; and those from 2
Court No. 06-00085 Page 4

(...continued) 2

determines that it is less than 2 percent ad valorem or the

equivalent specific rate for the subject merchandise.” 19 U.S.C.

§ 1673b(b)(3). 

Dongbu a 2.26 percent dumping margin. See id. at 7,514. 

Defendant-intervenor HYSCO received a margin of zero. See id. 

STANDARD OF REVIEW

When reviewing a final antidumping determination, the court

“shall hold unlawful any determination, finding, or conclusion

found . . . to be unsupported by substantial evidence on the

record, or otherwise not in accordance with law.” 19 U.S.C. 

§ 1516a(b)(1)(B)(i). “Substantial evidence is ‘such relevant

evidence as a reasonable mind might accept as adequate to support

a conclusion.’” Huaiyin Foreign Trade Corp. (30) v. United

States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Consol.

Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). The existence of

substantial evidence is determined “by considering the record as

a whole, including evidence that supports as well as evidence

that ‘fairly detracts from the substantiality of the evidence.’” 

Id. (quoting Atl. Sugar, Ltd. v. United States, 744 F.2d 1556,

1562 (Fed. Cir. 1984)). 

In addition, “[a]s long as the agency’s methodology and

procedures are reasonable means of effectuating the statutory

purpose, and there is substantial evidence in the record
Court No. 06-00085 Page 5

 An additional issue was resolved by the United States 3

Court of Appeals for the Federal Circuit (the “Federal Circuit”)

during the pendency of plaintiff’s action. Plaintiff argued that

“safeguard” duties are “United States import duties” and

therefore that Commerce must deduct these duties in order to

accurately arrive at appropriate ex factory United States prices

for comparison with ex factory prices for comparable home market

sales. See Pl.’s Br. 45-47. As Mittal Steel USA, Inc. (formerly

International Steel Group, Inc.) v. United States, 31 CIT __,

Slip Op. 07-117 (Aug. 1, 2007) (not reported in the Federal

Supplement), acknowledged, the Federal Circuit recently held, in

Wheatland Tube Co. v. United States, 495 F.3d 1355, 1363 (Fed.

Cir. 2007), that the phrase “‘United States import duties’ does

not include § 201 safeguard duties for the purposes of

determining the [United States price] and calculating the dumping

margin . . . .” Therefore, the court again sustains as

reasonable Commerce’s interpretation of “United States import

duties” to exclude Section 201 duties and likewise sustains

Commerce’s decision to not deduct those duties from United States

price. Id.

 The court’s January 28, 2008 order amending the caption 4

(continued...)

supporting the agency’s conclusions, the court will not impose

its own views as to the sufficiency of the agency’s investigation

or question the agency’s methodology.” Ceramica Regiomontana,

S.A. v. United States, 10 CIT 399, 404–05, 636 F. Supp. 961, 966

(1986), aff’d, 810 F.2d 1137, 1139 (Fed. Cir. 1987).

DISCUSSION

Plaintiff’s motion presents four issues in challenging 3

Commerce’s Final Results. The court is mindful that similar

issues were considered in Mittal Steel USA, Inc. (formerly

International Steel Group, Inc.) v. United States, 31 CIT __,

Slip Op. 07-117 (Aug. 1, 2007) (“Mittal”) (not reported in the 4
Court No. 06-00085 Page 6

(...continued) 4

in this matter to reflect plaintiff’s corporate name change does

not extend to the Mittal case, which dealt with the prior, tenth

administrative review of the same company. 

Federal Supplement), by which the final results of Commerce’s

tenth administrative review were sustained. The issues raised by

plaintiff’s motion are resolved as follows.

I. Model Match

Plaintiff’s first claim is that Commerce abused its

discretion by failing to request the more detailed product

information from Dongbu, HYSCO, POSCO, and Union (collectively,

“defendant-intervenors”), that plaintiff believed was necessary

for use in Commerce’s model match comparisons. As a result,

plaintiff insists that Commerce’s model match results were not

supported by substantial evidence, because incomplete information

“likely yielded inaccurate results.” Pl.’s Br. 2.

Model match criteria are used by Commerce to ensure that the

merchandise sold in the United States market is being compared

“with a suitable home-market product” for purposes of calculating

antidumping duties. Koyo Seiko Co. v. United States, 66 F.3d

1204, 1209 (Fed. Cir. 1995); see also 19 U.S.C.

§ 1677(16)(C)(iii). In this eleventh review, Commerce used a

CORE-specific questionnaire to gather information to identify

“identical” merchandise for use in its model match methodology. 
Court No. 06-00085 Page 7

 For instance, Commerce’s Questionnaire uses four 5

measurement groups for widths, “a. >= 1⁄2” but <24” b. >=24” but

<40” c. >=40” but <60” [and] d. >=60”.” Questionnaire, PD No. 19

at 4. Similarly, it defines “minimum thickness” by employing 11

separate groups as follows: “ a. <0.014”; b. >=0.014” but <0.015”

c. >=0.015” but <0.016 d. >=0.016” but <0.018” e. >=0.018” but

<0.022” f. >=0.022” but <0.028” g. >=0.028” but <0.044”; h.

>=0.044” but <0.060” I. >=0.060” but <0.085” j. >=0.085” but

<0.130” [and] k. >=0.130”.” Questionnaire, PD No. 19 at 4.

 For “type” Commerce asked defendant-intervenors to 6

indicate, among other things, whether or not the merchandise was

painted and, if so, whether the paint was “PVDF” (polyvinyledene

flouride) or “all other.” Questionnaire, PD No. 19 at 2. 

Further, for “quality,” Commerce’s questionnaire specified four

groups, as well as an “other” response. The four “quality”

(continued...)

See, e.g., Letter Dated Nov. 1, 2004 from Commerce to POSCO, and

accompanying Request for Information, CORE from Korea (the

“Questionnaire”), Public Doc. (“PD”) No. 19. The Questionnaire

employed twelve criteria including “width,” “thickness,” “type,”

and “quality.” See Questionnaire, PD No. 19 at 3-5. For certain

categories of data sought, the Questionnaire asked for

information based on ranges of characteristics rather than

precise measurements. See Questionnaire, PD No. 19 at 3-5. 5

“Thus, to identify goods for price comparisons, Commerce would

treat as factually ‘identical’ all CORE within a given range . .

. [such that] articles with different actual dimensions could

still be treated as ‘identical’ . . . .” Pl.’s Br. 5. 

Commerce’s questions relating to “type” and “quality” also used

groupings of characteristics rather than requiring exact product

matches. Questionnaire, PD No. 19 at 3-5. 6
Court No. 06-00085 Page 8

(...continued) 6

groups, in addition to the “other” category, were:

(a) Commercial, Lock Forming, or Structural;

(b) Drawing (whether or not special killed);

(c) Bake Hardened/Dent Resistant; and (d)

Deep Drawing Steels (e.g., Deep Drawing

Quality, Deep Drawing Quality Special Killed,

Extra Deep Drawing Quality, Extra Deep

Drawing Quality Special Killed, Deep Drawing

Quality Special Killed Fully Stabilized, Deep

Drawing Quality Special Killed Fully

Stabilized, Interstitial Free).

Questionnaire, PD No. 19 at 3. 

Before Commerce in the tenth administrative review and

before this court in Mittal, plaintiff made similar arguments by

presenting to Commerce a submission employing certain of

defendant-intervenors’ own price lists. See Pl.’s Br. 7. 

According to plaintiff, this submission demonstrated that

Commerce’s model match methodology yielded aberrant results and

that this “should have prompted the agency to at least request

more precise data” such that Commerce and plaintiff “could have

pursued the matching issues in greater depth via computer

analysis.” Pl.’s Br. 26. 

In the tenth administrative review, as it has here, Commerce

rejected plaintiff’s submission and its request to seek more

precise information primarily because the price lists submitted

by plaintiff did not reflect actual transaction prices. Further,

“several of the price lists cited . . . are exclusive to the

Korean respondents’ home market and, thus, offer no information
Court No. 06-00085 Page 9

on how the products are sold in the U.S. market.” Pl.’s Br. 8

(quoting Memorandum from Eric. B. Greynolds to Melissa Skinner

Regarding Petitioners’ Proposal to Change the Model Match

Methodology (Dep’t of Commerce Aug. 27, 2004 (the “Tenth Review

Model Match Memo”), Confidential R. Doc. (“CR”) No. 1 at 5-6).

In this eleventh review, Commerce “reaffirmed” its reasoning

from the tenth administrative review and again declined to seek

all of the information requested by plaintiffs. See Issues and

Decisions for the Final Results of the Eleventh Administrative

Review of the Antidumping Duty Order on Certain CORE from Korea

(2003 - 2004) (Dep’t of Commerce Feb. 6, 2006) (the “I&D Memo”),

PD No. 226 at Comment 1. Before doing so, however, the

Department issued supplemental questionnaires to defendantintervenors responsive to certain of plaintiff’s requests. See

Def.’s Resp. Mot. J. Agency R. (“Def.’s Br.”) 3. By these

supplemental questionnaires, Commerce sought additional

information regarding “the physical characteristics of the goods

sold in Korea and in the United States and associated cost of

production information.” Def.’s Br. 3 (citations omitted). 

Commerce did not, however, “request actual measurement data for

each model sold because such a request ‘would have been extremely

burdensome for [defendant-intervenors].’” See Def.’s Br. 3

(citations omitted). Thus, although Commerce did obtain more

detailed information, particularly with respect to type, quality,
Court No. 06-00085 Page 10

and cost of production, it did not request all of the data asked

for by plaintiff. See, e.g., Dongbu Suppl. Questionnaire

Sections A-D (Dep’t of Commerce May 17, 2005), PD No. 117

(requesting information concerning corporate structure, financial

statements, distribution process, type, and quality). In

addition, unlike in the tenth review, Dongbu, POSCO, and HYSCO

voluntarily submitted additional data reflecting exact widths and

thicknesses of the products covered by sales they reported to

Commerce. See I&D Memo, PD No. 226 at 4-5; see also Pl.’s Br.

11. 

Notwithstanding this more detailed information, plaintiff

continues to insist that it needs more data so that it can

“demonstrate the likely inaccuracy of Commerce’s methodology so

far as quality and type were concerned.” Pl.’s Br. 11 (“Since no

respondent voluntarily submitted more precise ‘Type’ or ‘Quality’

information, Mittal was unable to test for those factors.”).

Having reviewed the record, the court finds that Commerce

made a reasonable decision not to seek all of the information

sought by plaintiff. Here, plaintiff’s submission, which

purports to demonstrate that Commerce’s results were aberrant,

relies on the identical price lists it presented in the tenth

review. Unsurprisingly, Commerce again concluded that “the price

lists submitted by [plaintiff] contained no evidence indicating

that the price lists reflect actual transaction prices, and,
Court No. 06-00085 Page 11

 Commerce’s Issues & Decisions Memorandum explains: 7

It is important to note that [plaintiff’s]

arguments and analysis in this review are

similar to those submitted in the tenth

administrative review. In particular, our

findings with respect to [plaintiff’s]

arguments on price-list information has

already been addressed in our Tenth Review

Model-Match Memo . . . As we also found in

the tenth administrative review, the price

lists submitted by [plaintiff] contained no

evidence indicating that the price lists

reflect actual transaction prices, and, thus,

we found that they do not necessarily reflect

the Korean [defendant-intervenors’] actual

sales and pricing practices.

I&D Memo, PD No. 226 at 6 (footnotes omitted).

thus, . . . do not necessarily reflect the Korean [defendantintervenors’] actual sales and pricing practices.” I&D Memo, PD

No. 226 at 6. Commerce further observed that “several of the

price lists cited by [plaintiff] were exclusive to the [Korean

defendant-intervenors’] home market and offered no information

concerning how the products are sold in the United States.”7

Def.’s Resp. 11. Thus, for Commerce, this evidence is less

reliable and less accurate than the actual sales data it

obtained. See generally I&D Memo, PD No. 226 at Comment 1.

With respect to this evidence, the Mittal Court found that

Commerce was justified in relying upon the actual Unites States

sales data it obtained, rather than price lists for merchandise

sold in the Korean home market. See Mittal, 31 CIT at __, Slip

Op. 07-117 at 11-12. 
Court No. 06-00085 Page 12

As to plaintiff’s argument that Commerce has not supported

its conclusions with substantial evidence because it did not

request the additional information plaintiff asked for, Commerce,

in fact, had in its possession all of the information needed to

make a fair and reasonable product comparison. That is, Commerce

had sufficient information——submitted in response to its initial

Questionnaire, the follow-up questionnaires, and voluntarily

submitted by defendant-intervenors——about product details such as

type, reduction and coating processes, clad material, quality,

yield strength, metallic coating weight, width, thickness, form,

temper rolling, and leveling. See Questionnaire, PD No. 19 at 3-

5. “Commerce enjoys broad discretion in conducting . . . reviews

under the antidumping statute, particularly in . . . [making]

decisions regarding relevant evidence.” See E.I. DuPont de

Nemours & Co. v. United States, 22 CIT 19, 32, Slip Op. 98-7

(Jan. 29, 1998) (not reported in the Federal Supplement); U.S.

Steel Group v. United States, 96 F.3d 1352, 1357 (Fed. Cir. 1996)

(“It is the [Department’s] task to evaluate the evidence it

collects during its investigation.”); but see Ceramica

Regiomontana, S.A., 10 CIT at 405, 636 F. Supp. at 966 (“Of

course, this Court will not allow an agency, under the guise of

lawful discretion, to contravene or ignore the intent of the

legislature or the guiding purpose of the statute.”). 

Plaintiff, seemingly aware that it cannot demonstrate a
Court No. 06-00085 Page 13

 CEP refers to 8

the price at which the subject merchandise is

first sold (or agreed to be sold) in the

(continued...)

compelling need for Commerce to change its model match

methodology, relies on the argument that, if Commerce obtained

more information, then perhaps it could demonstrate a compelling

need. This, however, is mere speculation. While it may be that

more information might be useful, plaintiff’s submission did not

demonstrate that it is necessary. See I&D Memo, PD No. 226 at

Comment 1. Commerce “cannot possibly account for every

difference between products . . . .” See Tenth Review Model

Match Memo, CR No. 1 at 6. Therefore, Commerce’s decision not to

request additional information was a “reasonable means of

effectuating the [antidumping law’s] statutory purpose . . . .”

Ceramica Regiomontana, S.A., 10 CIT at 404–05, 636 F. Supp. at

966. Accordingly, Commerce’s model match results are sustained

as supported by substantial evidence.

II. Constructed Export Price: Deduction of Selling Expenses

As it did in the tenth administrative review, plaintiff

argues that Commerce, in calculating constructed export price

(“CEP”), acted unlawfully and rendered a determination

unsupported by substantial evidence by not deducting certain

expenses incurred by the Korean exporter parent companies. See 8
Court No. 06-00085 Page 14

(...continued) 8

United States before or after the date of

importation by or for the account of the

producer or exporter of such merchandise or

by a seller affiliated with the producer or

exporter, to a purchaser not affiliated with

the producer or exporter, as adjusted under

subsections (c) and (d) of this section.

19 U.S.C. § 1677a(b). CEP, or United States price, is then

compared to normal value to calculate the dumping margin. Normal

value is defined as

the price at which the foreign like product

is first sold (or, in the absence of a sale,

offered for sale) for consumption in the

exporting country, in the usual commercial

quantities and in the ordinary course of

trade and, to the extent practicable, at the

same level of trade as the export price or

constructed export price . . . .

19 U.S.C. § 1677b(a)(1)(B)(i). 

 Plaintiff makes reference to “core selling functions,” 9

“core reselling functions,” and “core selling expenses,” but

these phrases are not defined in the statute or in Commerce’s

regulations. Plaintiff’s briefs and its counsel’s

representations at oral argument, however, make clear that these

phrases are intended to describe such activities as price

negotiations, entering into sales contracts, and approving

resales, as well as certain travel expenses and information

sharing. See Pl.’s Br. 39; Transcript of Oral Argument at 18-19,

Court No. 06-00085 (Sept. 21 2007).

 Subsection 1677a(d) provides, in pertinent part: 10

[T]he price used to establish [CEP] shall

(continued...)

Pl.’s Br. 22-23, 30-36. According to plaintiff, when the Korean

parent companies perform “core selling functions in connection 9

with their U.S. affiliates’ resales,” Commerce must deduct these

expenses when calculating CEP. Pl.’s Br. 22-23. Plaintiff 10
Court No. 06-00085 Page 15

(...continued) 10

also be reduced by—— 

(1) the amount of any of the

following expenses generally

incurred by or for the account of

the producer or exporter, or the

affiliated seller in the United

States, in selling the subject

merchandise (or subject merchandise

to which value has been added)—— 

(A) commissions for

selling the subject

merchandise in the United

States;

(B) expenses that result

from, and bear a direct

relationship to, the

sale, such as credit

expenses, guarantees and

warranties;

(C) any selling expenses

that the seller pays on

behalf of the purchaser;

and

(D) any selling expenses

not deducted under

subparagraph (A), (B), or

(C) . . . .

19 U.S.C. § 1677a(d)(1). Commerce’s regulation further provides:

In establishing [CEP] under section [19

U.S.C. § 1677a(d)(1)], the Secretary will

make adjustments for expenses associated with

commercial activities in the United States

that relate to the sale to an unaffiliated

purchaser, no matter where or when paid. The

Secretary will not make an adjustment for any

expense that is related solely to the sale to

an affiliated importer in the United States,

(continued...)
Court No. 06-00085 Page 16

(...continued) 10

although the Secretary may make an adjustment

to normal value for such expenses under

section 773(a)(6)(C)(iii) of the Act.

19 CFR § 351.402(b).

 Plaintiff’s brief explains its characterization of the 11

facts:

Basically, parent companies in Korea sell

CORE to their U.S. subsidiaries, who in turn

resell the merchandise to unaffiliated U.S.

buyers in so-called “back to back” CEP

transactions. The evidence shows that the

parent companies participate in varying

degrees in the subsidiaries’ U.S. resales,

i.e., they effectively perform selling

functions in the resale operations.

Oftentimes they perform these activities

outside the United States - i.e., in Korea --

and the associated selling expenses appear on

their own books in Korea. The location of

the activities, however, does not change the

basic fact that the activities and associated

expenses relate to the U.S. resale

transactions, to be distinguished from the

sales by the parents to the affiliates. . . .

[Plaintiff] contends that all expenses

associated with core reselling functions are

“CEP selling expenses” for purposes of CEP

calculations under 19 U.S.C. 1677a(d), and

are therefore deductible as such. Commerce,

however, rejected the contention and refused

(continued...)

maintains that “[a]ny other conclusion undermines the concept of

‘CEP’ as contemplated by the statute and construed by the Federal

Circuit.” Pl.’s Br. 22-23.

Plaintiff’s motion notes that, while the facts it relies on

are company-specific, a “common theme exists” for all of the

defendant-intervenors. Pl.’s Br. 12. Accordingly, plaintiff 11
Court No. 06-00085 Page 17

(...continued) 11

to deduct the relevant amounts in all cases

except for HYSCO.

Pl.’s Br. 12 (citations and footnotes omitted).

alleges the following:

A. Union

Defendant-intervenor Union sold CORE to its American

affiliate, which in turn resold the CORE to unrelated United

States purchasers in reportable CEP transactions. Pl.’s Br. 12

(citing Union Sections A-C Questionnaire Resp. (“Union Quest.

Resp.”), PD No. 59 at 15, 17). Plaintiff alleges that record

evidence demonstrates that Union performed numerous selling

functions in the resales, including having final authority to

accept or reject orders and shipping the goods directly to

purchasers, as well as “process[ing] claims for defective

merchandise sold in the U.S. market.” See Pl.’s Br. 13 (citing

Union Quest. Resp., PD No. 59 at 7, 15). Plaintiff argues that

Commerce, despite inquiring in two supplemental questionnaires

about these activities, was wrong in concluding that the record

evidence did not demonstrate that these selling expenses should

have been deducted in CEP calculations. See Pl.’s Br. 13-14.

B. POSCO

Defendant-intervenor POSCO had two Korean affiliates that
Court No. 06-00085 Page 18

sold CORE to its United States affiliate, which then resold the

goods to unrelated United States buyers in CEP reportable

transactions. See Pl.’s Br. 14 (citing POSCO Sections A-D

Questionnaire Resp. (“POSCO Quest. Resp.”), PD No. 68 at 7-11). 

Plaintiff alleges that one of POSCO’s Korean affiliates

negotiated sales terms and that its United States affiliate

simply assisted in these negotiations and communications. Pl.’s

Br. 14. Furthermore, according to plaintiff, the Korean

affiliates performed market research, computer/legal/accounting

work, engineering services, and advertising. See Pl.’s Br. 14-15

(citing POSCO Quest. Resp., PD No. 68 at 25-28). Plaintiff

further alleges that some of these activities had to relate to

United States resales, not simply sales to POSCO’s United States

affiliate. Thus, it again argues that Commerce should have

concluded that there was substantial evidence on the record

demonstrating that these selling expenses should have been

deducted in CEP calculations. See Pl.’s Br. 15.

C. Dongbu

Defendant-intervenor Dongbu sold CORE to its United States

affiliate which then resold the CORE to United States purchasers

in CEP reportable transactions. See Pl.’s Br. 15 (citing Dongbu

Section A Questionnaire Resp. (“Dongbu Quest. Resp.”), PD No. 57

at A-13, A-18). According to plaintiff, Dongbu’s United States
Court No. 06-00085 Page 19

affiliate played a self-described “liaison” role. Plaintiff

insists that Commerce did not ask for sufficient information for

Commerce to understand the true role of the United States

aaffiliate. See Pl.’s Br. 15-16. Thus, plaintiff asserts that,

because Commerce had incomplete information, it is “unclear

whether [the Department] ultimately deducted sufficient selling

expenses in the CEP calculations.” Pl. Br. 16. 

D. HYSCO

Plaintiff insists that the record contained evidence that

HYSCO performed most of the functions in resales by its United

States affiliate. Thus, plaintiff agrees that Commerce has

supported with substantial evidence its decision to include a

portion of these selling expenses in its CEP calculations for

HYSCO. See Pl.’s Br. 16-17. For plaintiff, however, “all

[defendant-intervenor] parent companies participated in their

subsidiaries’ U.S. resales, particularly Union and POSCO.” See

Pl.’s Reply Br. 10. Therefore, plaintiff characterizes

Commerce’s treatment of HYSCO as contradictory behavior by the

agency. It maintains that “the government undercuts its own

position by the action it took on HYSCO’s facts,” when it

purportedly made similar showings for all defendant-intervenors. 

See Pl.’s Reply Br. 10. 
Court No. 06-00085 Page 20

For its part, Commerce maintains that, with respect to three

of the defendant-intervenors, it “reasonably determined not to

deduct home market indirect selling expenses from [CEP].” Def.’s

Br. 13. Commerce asserts that the antidumping statute and the

statute’s legislative history, as well as its “longstanding

practice,” confirm that a deduction is not warranted for indirect

selling expenses that are “general in nature” and “not associated

specifically with United States affiliates’ resales to

unaffiliated customers.” Def.’s Br. 13-14. The Department

further claims that record evidence demonstrates that the

expenses cited by plaintiff were general in nature, i.e.,

attributable to all sales not simply United States resales. 

Def.’s Br. 17-18. For Commerce, plaintiff’s arguments are

misguided:

[Plaintiff] asserts that Commerce should have

deducted certain expenses incurred by the

foreign parent for selling activities like

price negotiation because without these

activities, the United States sales would not

have occurred. Yet, [plaintiff] fails to

recognize the critical distinction, i.e.,

that these types of expenses are general in

nature because they are incurred regardless

of whether the sale in question is an export

price sale (direct to the unaffiliated United

States customer) or a constructed export

price sale. The expenses that Commerce

deducts pursuant to 19 CFR § 351.402(b) are

only those associated with the additional

selling activities that the foreign parent or

its United States affiliate must undertake in

selling constructed export price subject

merchandise to unaffiliated United States

customers.
Court No. 06-00085 Page 21

Def.’s Br. 17 (citations omitted). 

Additionally, Commerce notes that it made the deduction

where warranted, i.e., when “HYSCO had reported that it, not its

United States affiliate, performed most of the resale activities

in the United States market.” Def.’s Br. 18 (citing I&D Memo, PD

No. 226 at Comments 5, 15, and 23). Therefore, Commerce argues

that it “correctly applied the law to the facts” and asks that

this court sustain its determinations. Def.’s Br. 17-18.

A resolution of this dispute revolves around whether

Commerce misinterpreted the evidence before it. The court finds

that it did not. With respect to the deductibility of these

expenses, the only material difference between Mittal and the

present case is the treatment of HYSCO. Thus, Mittal is useful

here. Mittal sustained as lawful and supported by substantial

evidence Commerce’s refusal to deduct expenses it found to be

general in nature. See Mittal, 31 CIT at __, Slip Op. 07-117 at

14-16. 

Here, as in Mittal, there is nothing in the record to

indicate that Commerce did not request and receive all of the

business information required in order to ascertain the

respective levels of involvement of the Korean companies and

their United States affiliates in the United States sales. That

is, 

Commerce requested and received from

[defendant-intervenors] information regarding
Court No. 06-00085 Page 22

 In this review, Commerce relied on its verifications 12

from the tenth review. In that regard, Commerce verified

Dongbu’s home-market indirect selling expenses in the tenth

review and confirmed that they were unrelated to sales between

its United States affiliate and unaffiliated United States

buyers. See I&D Memo, PD No. 226 at 15. Commerce likewise

relied on its verification from the tenth review for Union and

POSCO. See I&D Memo, PD No. 226 at 28-29, 35. Commerce’s

reliance on prior verifications was proper. See Trade and Tariff

Act of 1984, H.R. Rep. 98-725, at 43, reprinted in 1984

U.S.C.C.A.N. 5127, 5170 (1984) (“The Committee . . . believes it

is essential to proper enforcement of the laws that information

used in determining annually the actual amount of any . . .

antidumping duty to be assessed under outstanding orders is

accurate to the extent possible. At the same time, the Committee

is concerned that requiring verification in every review would

result in an unnecessary additional administrative burden on the

(continued...)

all business or operational relationships

affecting the development, product[ion], sale

or distribution of the subject merchandise in

the home and United States markets . . . .

[and] then concluded that [t]he reported

indirect selling expenses were general in

nature and not attributable to [CEP] resales

to unaffiliated United States purchasers.

Def. Br. 17-18; see also I&D Memo at Comments 5 (Dongbu), 14

(Union), and 23 (POSCO); I&D Memo at Comment 11 (HYSCO). 

Although “plaintiff maintains that the record reveals a

substantial level of involvement by the [defendant-intervenors]

in the resale of CORE to unaffiliated U.S. purchasers,” Commerce

disagrees. See Mittal, 31 CIT at __, Slip Op. 07-117 at 17; see

also U.S. Steel Group v. United States, 96 F.3d 1352, 1357 (Fed.

Cir. 1996) (“It is the [Department’s] task to evaluate the

evidence it collects during its investigation.”). Commerce’s

position is based upon its assessment of verified information.12
Court No. 06-00085 Page 23

(...continued) 12

Department of Commerce for perfunctory verifications. Therefore,

verification would not be required if an interested party does

not request it in a timely manner, or after recent verifications

have taken place unless shown to be warranted.”).

 Mittal discussed Commerce’s efforts in collecting and 13

verifying data:

. . . verification of Dongbu’s questionnaire responses

revealed:

[S]ales negotiations begin with Dongbu USA

[Dongbu’s United States affiliate] and the

U.S. customer. Dongbu USA informs Dongbu of

the sales order, then Dongbu inputs the sales

order into Dongbu’s sales system, at which

time the merchandise is produced to order.

Company officials stated that Dongbu ships

directly to the port of the customer’s

request, which is stated in the sales

contract between Dongbu USA and customer. 

Company officials added that the shipment

arrangements are made by Dongbu according to

the terms that are negotiated between the

customer and Dongbu USA. . . . Company

officials also stated that Dongbu USA clears

the merchandise through Customs and arranges

for the payments of the customs broker and

customs duties. . . . Company officials

stated that Dongbu USA generally issues the

invoice to the customer after it has been

shipped, but before it arrives to the United

States. . . . They stated that the customer

pays Dongbu USA. . . . 

Dongbu Verification Mem. (Dep’t of Commerce Feb. 1,

2005) at 29; see also id. at 30 (“We reviewed the list

of selling activities performed by Dongbu and Dongbu

USA for each market, and distribution channel. We also

(continued...)

Here, “plaintiff has not made a case that the selling functions

performed by the parent companies were mischaracterized by

Commerce.” Mittal, 31 CIT at __, Slip Op. 07-117 at 20. Thus, 13
Court No. 06-00085 Page 24

(...continued) 13

reviewed the list of selling activities and confirmed

with company officials the level of activity in each

market . . . . We noted no discrepancies.”). The

Department understood this evidence to indicate that

Dongbu’s U.S. affiliate, not Dongbu, incurred the

selling expenses resulting from U.S. resales of CORE. 

Because “[t]here is no evidence on the record to

suggest [Dongbu’s] reported . . . selling expenses are

directly attributable to U.S. sales,” Commerce

concluded that these expenses were not deductible from

CEP. Issues & Decs. Mem. at 10.

 

Commerce made similar findings with respect to the

level of involvement in resales of CORE to unaffiliated

U.S. purchasers upon verifying Union’s, POSCO’s and

HYSCO’s responses and likewise found the reported

incurred expenses to be unrelated to those sales.

See Mittal, 31 CIT at __, Slip Op. 07-117 at 18-19. 

the court finds that, while plaintiffs and Commerce have a

difference of opinion as to the characterization of the parent

companies’ activities, Commerce adequately applied the law to the

facts and has “‘articulate[d] a[] rational connection between the

facts found and the choice made.’” See Mittal, 31 CIT at __, Slip

Op. 07-117 at 20-21 (quoting Burlington Truck Lines, Inc. v.

United States, 371 U.S. 156, 168 (1962)). 

Plaintiff’s argument that Commerce’s decision to deduct

HYSCO’s selling expenses (and not other defendant-intervenors’

selling expenses) is somehow demonstrative of Commerce’s

contradictory behavior is not convincing. Commerce is entitled

to treat companies differently if it articulates its reasoning

for doing so and if its conclusions are supported by substantial
Court No. 06-00085 Page 25

evidence. Here, Commerce agreed with plaintiff that the “record

evidence indicates that HYSCO performed most of the functions

involved in [its United States affiliates’] resales.” See I&D

Memo, PD No. 226 at 22 (detailing Commerce’s review of HYSCO’s

selling functions chart and explaining that HYSCO “stated that it

negotiated and approved U.S. sales transactions”). Plaintiff has

simply not demonstrated that the selling functions performed by

the other parent companies were mischaracterized by Commerce. 

Based on the foregoing, the court sustains as supported by

substantial evidence and according to law Commerce’s

determination not to deduct selling expenses from CEP because

(1) Commerce had all of the necessary information before it; and,

(2) the Department reasonably concluded that the defendantintervenors’ reported selling expenses were general in nature and

not specifically associated with resales of CORE to unaffiliated

purchasers in the United States. 

III. CEP Offset Adjustments

In its investigation, Commerce was required by statute to

take into account level of trade (“LOT”) differences to account

for any price differential resulting from a Korean exporter’s

sales in Korea being made at a more advanced LOT than its sales

to the United States. See 19 U.S.C. § 1677b(a)(7)(A). Commerce

is directed to make an actual LOT adjustment to normal value only
Court No. 06-00085 Page 26

 This provision provides: “Where available data permit 14

the Secretary to determine under paragraph (d) of this section

whether the difference in [LOT] affects price comparability, the

Secretary will not grant a [CEP] offset. In such cases, . . .

the Secretary will make a [LOT] adjustment.” 19 CFR § 351.412

(f)(3). 

if “the difference in [LOT] . . . is demonstrated to affect price

comparability, based on a pattern of consistent price differences

between sales at different [LOTs] in the country in which normal

value is determined.” 19 U.S.C. § 1677b(a)(7)(A)(ii). 

Under 19 U.S.C. § 1677b(a)(7)(B), where the record contains

insufficient data to make a LOT adjustment, a CEP offset to

normal value calculations may be granted. See 19 U.S.C.

§ 1677(a)(7)(b). 

When normal value is established at a [LOT]

which constitutes a more advanced stage of

distribution than the [LOT] of the [CEP],

but the data available do not provide an

appropriate basis to determine under

subparagraph (A)(ii) a [LOT] adjustment,

normal value shall be reduced by the amount

of indirect selling expenses incurred in the

country in which normal value is determined

on sales of the foreign like product . . . .

19 U.S.C. § 1677b(a)(7)(B); see also Mittal, 31 CIT at __, Slip

Op. 07-117 at 24 (citing 19 CFR § 351.412 (f)(3)). 

14

In deciding whether to grant a CEP offset, Commerce will

analyze a party’s LOT for its home market and for its CEP sales. 

See Def. Br. 20. “Finding sales to be at a more advanced stage

of distribution can be shown by evidence that the foreign

producer or exporter performs more selling activities, and thus
Court No. 06-00085 Page 27

incurs more selling expenses, in its home market than it does in

the United States.” Mittal, 31 CIT at __, Slip Op. 07-117 at 25

(citing Micron Tech., Inc. v. United States, 243 F.3d 1301, 1305

(Fed. Cir. 2001) (“The effect [of the CEP offset] is to reduce

the price of the more advanced [stage of distribution] by

‘indirect selling expenses’ that have been included in the price

on the apparent theory that such costs would not have been

incurred if the sale had been made on a less advanced [stage of

distribution].”)). 

Here, Commerce allowed CEP offsets for all defendantintervenors in the review. It did so based upon information

requested and received “relating to channels of distribution,

categories of customers, and all selling activities performed and

services offered in the United States and foreign markets.” 

Def.’s Br. 5.

Commerce analyzed the defendant-intervenors’

selling functions in the United States and

the Korean markets and determined that sales

for all four defendant-intervenors involved a

single level of trade in both the home and

United States markets, and that the four

defendant-intervenors’ respective [LOT] in

the United States market were at a less

advanced stage of distribution than their

home market [LOT].

Def.’s Br. 6 (internal citations omitted). 

Plaintiff maintains that Commerce’s analyses and conclusions

regarding CEP offsets were improper because Commerce “ignored

[plaintiff’s] contention that none of the [defendant-intervenors]
Court No. 06-00085 Page 28

had described all of the selling activities at the so-called CEP

LOT . . . .” Pl.’s Br. 18. That is, plaintiff asserts that the

record was incomplete and that Commerce did not have sufficient

evidence on the record to “perform fair comparisons of activities

at the two respective LOT[s].” Pl.’s Br. 18. “Because Commerce

refused to ask questions that would have revealed the selling

activities at the so-called CEP [LOT] . . ., it was not possible

for Commerce to determine that the parents’ sales to their U.S.

affiliates were at a less advanced LOT than sales to nonaffiliates in the home market.” See Pl.’s Reply Br. 13; Pl.’s

Br. 39. Plaintiff argues that Commerce’s failure to remedy these

deficiencies in the record demonstrates that the CEP offsets “are

unsupported by substantial evidence because no reasonable mind

would accept Commerce’s analysis of the facts on the basis of the

record as made.” Pl.’s Br. 18.

Specifically, plaintiff insists that defendant-intervenors

provided incomplete information in response to Commerce’s initial

and supplemental questionnaires requesting information about “all

the selling functions” at the CEP LOT. Pl.’s Br. 37 (citations

omitted). Plaintiff further argues that its comments to Commerce

“called attention to [the defendant-intervenors’] failure to show

entitlement to the offsets they claimed.” Pl.’s Br. 38. 

According to plaintiff, the defendant-intervenors collectively

engaged in a “pattern” of “active[ly] assist[ing] their
Court No. 06-00085 Page 29

 According to plaintiff, “[t]hese [activities] include, 15

among other things, continuing inter-company communications,

coordinate efforts, travel and visits, joint planning,

information sharing, and presumably other activities as well.” 

Pl.’s Br. 39. 

 Plaintiff takes issue with Commerce’s explanation 16

responsive to its observations. Plaintiff argues that Commerce

gave similar and equally inadequate explanations in granting each

of the defendant-intervenors offsets. Pl.’s Br. 38-39. 

Regarding Union, for example, Commerce wrote:

Contrary to [plaintiff’s] assertions that

Union’s selling activities in the HM [home

market] via sales intermediaries were not

significantly different from its CEP sales

made to its affiliate . . . we find that

Union provided sufficient information for the

(continued...)

affiliates in reselling in the United States,” and thereby

promoting their own sales to their affiliates at the CEP LOT. 

Pl.’s Br. 38. Plaintiff asserts that Commerce did not exercise

“common commercial sense” by not inquiring further into these

activities at the CEP LOT, thus failing to perceive “that

affiliates engage in numerous inter-company activities when

performing complementary and overlapping roles in marketing goods

internationally.” Plaintiff further asserts that Commerce’s 15

failure to seek more information about sales made by defendantintervenors to their United States affiliates “means that the

record cannot support the agency’s determination that home market

sales were made at a LOT ‘more advanced’ than the CEP LOT, as

judged by a reasonable mind.” Pl.’s Br. 39. Therefore,

plaintiff seeks a remand to have the record made complete.16
Court No. 06-00085 Page 30

(...continued) 16

Department to compare selling functions and

the difference in the degree of selling

functions in the two markets. For example,

information provided by Union demonstrates

that Union’s selling functions for the [home

market] sales are different and more

extensive than those associated with Union’s

sales to [its affiliate]. Therefore, we

conclude that [home market] sales are at a

more advanced LOT than its U.S. sales.

Pl.’s Br. 39 (quoting I&D Memo, PD No. 226 at 25).

Pl.’s Br. 40. 

Notwithstanding plaintiff’s arguments, the court finds that

Commerce’s grant of CEP offsets to defendant-intervenors are

supported by substantial evidence. For each defendantintervenor, Commerce determined that there was sufficient

evidence in the record to determine that: (1) each had a single

LOT in its home market and a single LOT in the United States

market, and (2) their home market sales were at more advanced LOT

than their United States CEP sales. See I&D Memo, PD No. 226 at

Comments 6, 8, 14, 24; see also Def.’s Br. 21. Thus, the

Department reasonably relied on the extensive information

provided by defendant-intervenors concerning their selling

functions in the Korean and United States markets in granting

each a CEP offset. See I&D Memo, PD No. 226 at Comments 6, 8,

14, 24; see also Def.’s Br. 21; Mittal, 31 CIT __, Slip Op. 07-

117 at 19. 

Specifically, for Dongbu, Commerce reviewed its
Court No. 06-00085 Page 31

 Commerce’s Calculation Memorandum for Dongbu indicates 17

[[ 

 

 ]] Dongbu Calc. Memo, CR

No. 79 at 2.

questionnaire responses and concluded that the same selling

activities occurred in both of its two home market distribution

channels in “comparable frequency” and found “that the two home

market channels of distribution alleged by [Dongbu] constitute

one [LOT].” Calculation Memo. for Dongbu Steel, Co., Ltd.

(“Dongbu Calc. Memo”), CR No. 79 at 2. Furthermore, Commerce

noted that, “[i]n the U.S. market, Dongbu made only CEP sales

through its U.S. affiliate, Dongbu USA, to unaffiliated customers

in two customer categories, end-users and distributors.” Dongbu

Calc. Memo, CR No. 79 at 2. Commerce “compared the selling

functions in the home market to the selling functions in the U.S.

market at the CEP LOT, and found a less advanced [LOT] in the

U.S. market.” Dongbu Calc. Memo, CR No. 79 at 2. Based upon 17

this selling function analysis, Commerce concluded that Dongbu’s

home market sales were “made at a different, and more advanced,

stage of marketing than the LOT of CEP sales.” Commerce,

however, found that it lacked the price data needed to make a LOT

adjustment. Dongbu Calc. Memo, CR No. 79 at 2. Therefore,

Commerce reasoned:

Dongbu did not sell subject merchandise in

the home market at the same LOT as that of

the CEP, and there [was] no other data on the
Court No. 06-00085 Page 32

 Commerce’s analysis was as follows: 18

In the home market, HYSCO sold through one

channel of distribution to affiliated and

unaffiliated local distributors and end

users, and provided the same selling services

to all customers.

In the U.S. market, HYSCO made only CEP sales

through its U.S. affiliate, Hyundai Pipe

America (HPA), to unaffiliated U.S.

customers. According to HYSCO’s

questionnaire response, HYSCO conducted all

sales and marketing activities in Korea. 

(continued...)

record that would allow the Department to

establish whether there is a pattern of

consistent price differences between sales at

different [LOTs] in the comparison market. 

Accordingly, while we determined that a LOT

adjustment may be appropriate for CEP sales .

. . we are unable to make such an adjustment. 

Instead, we have made a CEP offset to NV

[normal value] . . . .

Dongbu Calc. Memo, CR No. 79 at 3.

With regard to HYSCO, Commerce undertook a similar analysis

and reached the same conclusion, i.e., that “the evidence on the

record was sufficient to demonstrate that HYSCO’s [home market]

sales were at a more advanced LOT than its CEP sales, and that

the data available does not provide an appropriate basis to

determine an LOT adjustment.” See I&D Memo, PD No. 226 at 19

(citing Calculation Memo. for Hyundai Hysco (Dep’t of Commerce

Aug. 31, 2005) (“HYSCO Calc. Memo”), PD No. 181). To reach this

conclusion, Commerce reviewed HYSCO’s questionnaire responses and

selling function charts. HYSCO Calc. Memo, PD No. 181 at 2. 18
Court No. 06-00085 Page 33

(...continued) 18

HPA, which did not have a separate sales

force for subject merchandise, relayed price

and sales information between potential

customers and HYSCO, and also received

payment from HYSCO’s customers on HYSCO’s

behalf.

. . . HYSCO provided an updated U.S. selling

function chart and requested a [LOT]

adjustment or CEP offset, stating that HYSCO

performed the same functions for its sales to

unaffiliated customers, whether in the home

market or the United States, and that HYSCO

performed very few functions in connection

with its sales to HPA.

HYSCO’s updated selling function chart . . .

indeed shows few selling activities at the

CEP [LOT]. Based on our review of the

selling functions that are related to CEP and

home market sales, we have determined that

HYSCO’s home market sales are made at a

different, and more advanced, stage of

marketing than the LOT of the CEP sales . . .

. Accordingly, while we have determinated

that an LOT adjustment may be appropriate for

CEP sales . . . we are unable to make such an

adjustment.

HYSCO Calc. Memo, PD No. 81 at 2-3 (citations omitted). 

Likewise, Commerce undertook the same kind of analysis for

Union and reached the conclusion, that Union was entitled to a

CEP offset. See generally I&D Memo, PD No. 226 at Comment 14. 

Commerce found that all of Union’s Korean sales were made at one

LOT, which was more advanced than the LOT of its affiliate’s

United States sales, and that “it [was] not possible to quantify

the extent to which sales at different LOTs in the [home and

United States markets] differ in price.” See I&D Memo, PD No.
Court No. 06-00085 Page 34

 Commerce’s Issues & Decisions Memorandum notes that 19

Commerce specifically requested that Union demonstrate that its

home market LOT was more advanced that the CEP LOT. See I&D

Memo, PD No. 226 at 25. Union did so to Commerce’s satisfaction. 

Commerce’s analysis is as follows:

In the home market, Union sold through three

channels of distribution to unaffiliated

local distributors and end-users, and

provided the same selling services to all

customers. Union reported all home market

sales at the same LOT. In the home market,

Unico sold through two channels of

distribution to local unaffiliated local

[sic] distributors and end-users. In the

U.S. market, Union made only CEP sales

through its U.S. affiliate, DKA, to

distributors and end-users.

With respect to sales made by Union and Unico

in the home-market and the U.S. market, Union

identified the following selling activities:

[[ 

 

 ]]

[W]e asked Union to update . . . the selling

function chart . . . to account for all

activities performed by Union in selling

goods at the CEP LOT. Union added [[ 

 ]] to the revised

selling function chart. . . .

. . . [W]e compared the selling functions

performed for home-market sales with those

performed with respect to the CEP

transactions, after deductions for economic

activities occurring in the United States . .

.to determine if the home-market [LOT]

constituted a different [LOT] than the CEP

(continued...)

226 at 25. 

19
Court No. 06-00085 Page 35

(...continued) 19

[LOT]. We compared the selling functions in

the home market to the selling functions in

the U.S. market at the CEP LOT, and found a

less advanced [LOT] in the U.S. market. . . .

Union provided [[ ]] or [[ ]] selling

activities in the U.S. market, as compared to

the home market for [[ ]]

selling functions identified . . . .

. . . Based on our review of the selling

functions that are related to CEP and home

market sales, we have determined that Union’s

home market sales are made at a different,

and more advanced stage of marketing than the

LOT of the CEP sales.

Calculation Memo. for Union (“Union Calc. Memo”), CR No. 77 at 2

(Dep’t of Commerce Aug. 31, 2005). 

 Commerce’s calculation memorandum details the analysis 20

it undertook leading to its conclusion that POSCO’s home market

LOT was more advanced than its CEP LOT.

The Department found that the level of [home

market] selling activities was [[ ]] with

regard to [[ ]] of the [[ ]]

selling activities reported for the three

(continued...)

Commerce again based this conclusion on its review of Union’s

questionnaire responses and selling function chart. See I&D

Memo, PD No. 226 at 25.

Commerce reached the same conclusions for POSCO. It found

that record evidence demonstrated that its home market sales were

at a more advanced LOT than its CEP sales, and granted POSCO a

CEP offset. See I&D Memo, PD No. 226 at 35-36. Commerce again

did so based upon its review of POSCO’s questionnaire responses

and selling chart. See I&D Memo, PD No. 226 at 35-36. 20
Court No. 06-00085 Page 36

(...continued) 20

channels of distribution (i.e., [[ 

 

 ]]). For [[ ]] of the

remaining selling activities (i.e., 

[[ 

 ]]) associated

with the three channels of distribution, we

found that there was [[ ]] selling activity

reported. There was [[ ]]

selling activity reported for [[ ]] of the

[[ ]] selling activities (i.e., [[post

sale warehousing and technical advice]])

associated with the three channels of

distribution. Only [[ ]] selling

activities (i.e., [[ 

 

 ]] were not consistently

found among all three channels of

distribution in the home market. Since the

level of selling activities was generally

consistent among the three channels of

distribution, we found that the home market

channels of distribution constitute one

[LOT].

. . . . We examined the sales to the

affiliated resellers and the selling

functions performed by POSCO or the POSCO

Group on behalf of its affiliate and found

only one [LOT]. [[ ]] of the selling

activities (i.e., [[ 

 

 ]] incurred in the United States

were [[ ]]. The selling activities were

[[ ]] for [[ ]] of the selling

activities (i.e., [[ 

 

(continued...)

As noted, plaintiff takes issue with Commerce’s findings
Court No. 06-00085 Page 37

(...continued) 20

 ]]). 

The CEP [LOT] differed from the home market

[LOT] with respect to [[ ]] selling

activities associated with [[ 

 

 ]]. These selling

activities were [[ ]] for the United

States, and [[ ]] in at least [[ ]] of

the channels of distribution in the home

market. Therefore, we found that the CEP

[LOT] differs from the home market [LOT] and

is at a less advanced stage of distribution

than the home market [LOT].

Calculation Memo. for POSCO (Dep’t of Commerce Aug. 31, 2005)

(“POSCO Calc. Memo”), CR Doc. No. 75 at 2-3.

because it claims that the Department lacked sufficient evidence

to justify the offsets. Plaintiff claims that there was

incomplete information in the record to demonstrate that

defendant-intervenors’ home market sales were made at a more

advanced LOT more advanced than the CEP LOT. Plaintiff, however,

cites no record evidence to demonstrate that defendantintervenors’ reporting to Commerce was lacking; rather it relies

upon “common commercial sense.” Commerce, however, is entitled

to at least some deference when gauging the adequacy of the

factual representations made to it. See U.S. Steel Group v.

United States, 96 F.3d 1352, 1357 (Fed. Cir. 1996) (“It is the

[Department’s] task to evaluate the evidence it collects during

its investigation.”). Without more, plaintiff’s reference to

“common commercial sense” is unavailing. See Ceramica
Court No. 06-00085 Page 38

Regiomontana, S.A., 10 CIT at 404–05, 636 F. Supp. at 966 (“As

long as the agency’s methodology and procedures are reasonable

means of effectuating the statutory purpose, and there is

substantial evidence in the record supporting the agency’s

conclusions, the court will not impose its own views as to the

sufficiency of the agency’s investigation or question the

agency’s methodology.”). Therefore, “[t]he court cannot . . .

credit plaintiff’s unsubstantiated assertion that commercial

realities render insufficient the evidence Commerce relied upon

in making its decision” to grant CEP offsets here. Mittal, 31

CIT at __, Slip Op. 07-117 at 31.

Thus, the court finds that in light of Commerce’s detailed

factual findings, and in accordance with the statutory scheme,

Commerce supported with substantial evidence its grant of CEP

offsets to the defendant-intervenors. That is, under 19 U.S.C.

§ 1677b(a)(7)(B), Commerce determined that “the data available

[did] not provide an appropriate basis to determine . . . a [LOT]

adjustment,” and thus Commerce reasonably relied on the evidence

of the selling functions performed by defendant-intervenors’

United States affiliates in deciding to grant the companies a CEP

offset. See Mittal, 31 CIT at __, Slip Op. 07-117 at 27-28; see

also Timken Co. v. United States, 12 CIT 955, 962, 699 F. Supp.

300, 306 (Fed. Cir 1988) (“It is not within the Court’s domain

either to weigh the adequate quality or quantity of the evidence
Court No. 06-00085 Page 39

for sufficiency or to reject a finding on grounds of a differing

interpretation of the record.”) (citations omitted).

Accordingly, the court sustains as being supported by

substantial evidence Commerce’s grant of CEP offsets to Dongbu,

HYSCO, Union, and POSCO.

 

IV. Duty Drawback Adjustment

A “[d]rawback is the reimbursement of duties paid on goods

imported into the United States and then used in the manufacture

or production of articles which are subsequently exported.” 

Chrysler Motors Corp. v. United States, 14 CIT 807, 809, 755 F.

Supp. 388, 390 (1990); see also E.I. du Pont de Nemours and Co.

v. United States, 24 CIT 1045, 1046 n.2, 116 F. Supp. 2d 1343,

1345 n.2 (2000). The antidumping statute provides that “[t]he

price used to establish . . . [CEP] shall be . . . increased by .

. . the amount of any import duties imposed by the country of

exportation which have been rebated, or which have not been

collected, by reason of the exportation of the subject

merchandise to the United States . . . .” 19 U.S.C.

§ 1677a(c)(1)(B). 

Based on the statute, Commerce has created a two-prong test

that must be satisfied prior to the grant of a drawback

adjustment. The first prong requires the exporter to establish

that “the import duty and rebate are directly linked to, and
Court No. 06-00085 Page 40

 Plaintiff’s brief explains its manipulation argument 21

with the following hypothetical:

Although unquestionably lawful in Korea, the

Korean system makes it possible to manipulate

U.S. antidumping results . . . . The

following hypothetical scenario can occur. 

We can assume that Korean “Producer X”

produces only one product, CORE, and that it

uses steel scrap as the basic input. We can

further assume that “X” imports 50 percent of

its scrap consumption (paying import duties

on the same) and obtains the balance locally. 

(continued...)

dependent upon, one another.” Far East Mach. Co. v. United

States, 12 CIT 972, 974, 699 F. Supp. 309, 311 (1988). The

second prong demands that “the company claiming the adjustment

demonstrate that there were sufficient imports of imported raw

materials to account for the duty drawback received on the

exports of the manufactured product.” Id. at 974, 699 F. Supp.

at 311. For over twenty years, Commerce has consistently

applied, and this Court has consistently upheld, this test. See,

e.g., Carlisle Tire & Rubber Co. v. United States, 11 CIT 168,

171, 657 F. Supp. 1287, 1290 (1987); Far East Mach. Co., 12 CIT

at 431–33, 688 F. Supp. at 612; Hornos Electricos de Venezuela,

S.A. v. United States, 27 CIT 1522, 1525, 285 F. Supp. 2d 1353,

1358 (2003).

Plaintiff argues that Commerce should not have permitted a

duty drawback adjustment to the Korean companies’ CEP because the

Korean drawback system is susceptible to manipulation. See 21
Court No. 06-00085 Page 41

(...continued) 21

We can finally assume that “X” sells 50

percent of its total production for export to

the United States and 50 percent to Canada. 

Under these imagined circumstances, in

conjunction with the Korean law, “X” could

limit its claims for drawback solely to the

shipments to the United States while claiming

nothing on shipments to Canada - with U.S.

antidumping motivations in mind. As a

further hypothetical assumption, we can even

assume that “X” could do this even if, as a

matter of fact, none of the exports to the

United States actually used any imported

scrap, but were produced solely from domestic

scrap. In circumstances such as these, the

result would be a clear distortion so far as

U.S. antidumping results are concerned. The

claims may be normal and lawful in Korea, but

the effect distorts U.S. antidumping

calculations in a way that reduces

antidumping margins to the disadvantage of

U.S. producers. They result in

disproportionate upward adjustments to

reported United States prices.

Pl.’s Br. 41 (citations omitted).

Pl.’s Br. 18-20. According to plaintiff, Commerce’s current

method of making drawback adjustments amplifies the potential for

distorted dumping margins on Korean products, in part, because

“Korean law allows substitution-type drawback, and this allows

Korean exporters to pick and choose the export shipments on which

they base their drawback claims when they export from Korea.” 

Pl.’s Br. 19-20. Plaintiff argues that Commerce wrongfully

denied its request “to require [defendant-intervenors] to submit

certain aggregate data” in order “to test the fairness of their

claims.” Pl.’s Br. 20. According to plaintiff, “[t]his data
Court No. 06-00085 Page 42

 The First Request for Comments reads in pertinent part: 22

The Department is considering whether changes

to its practice, including the two-prong test

. . ., may be appropriate. For instance,

some parties have argued that the

Department’s practice should be modified by

requiring a respondent party seeking a duty

drawback adjustment to demonstrate payment of

import duties on raw material inputs used to

produce merchandise sold in the home market. 

They argue that such a requirement is

consistent with principles of price

comparability and the implementation of

Congressional intent with respect to the duty

drawback adjustment. In addition, according

(continued...)

would have permitted Commerce to analyze whether any [defendantintervenor] claimed excessive amounts on U.S. sales.” Pl.’s Br.

20. Thus, plaintiff maintains that it was foreclosed from

pursuing this “theme” of argument before Commerce. Pl.’s Br. 20. 

Moreover, plaintiff asserts that Commerce’s failure to

request further information was an abuse of its discretion,

particularly because Commerce itself “has called into question

its current methodology for drawback adjustments.” Pl.’s Br. 43-

44. Plaintiff points the court to a Federal Register notice of

June 30, 2005, in which Commerce stated that it “is considering

whether changes to its practice, including the two-prong test . .

., may be appropriate.” See Duty Drawback Practice in

Antidumping Proceedings, 70 Fed. Reg. 37,764, 37,765 (Dep’t of

Commerce June 30, 2005) (notice) (the “First Request for

Comments”). This First Request for Comments, according to 22
Court No. 06-00085 Page 43

(...continued)

to such parties, any duty drawback adjustment

made should also be limited to the amount of

duties actually paid on material inputs used

to produce merchandise sold in the home

market. Certain parties have also argued

that the Department should allocate the total

pool of relevant drawback available under

some systems to total exports of subject

merchandise to ensure that the adjustment

claimed on U.S. sales is not overstated.

Parties advocating a change in Department

practice argue that in creating the duty

drawback adjustment, Congress intended that

an increase in the export price resulting

from the duty drawback adjustment was

designed to offset an increase in the home

market price resulting from the payment of

import duties on inputs. As a result, the

duty drawback adjustment was designed to

prevent dumping margins from arising simply

because of the rebate (or non-collection) of

import duties on the inputs resulting from

the export of subject merchandise to the

United States. Yet, these parties argue, to

permit a drawback adjustment where home

market sales do not include import duties

leaves nothing for the rebate or exemption to

offset.

In order to fully consider and address these

claims as well as other concerns about the

Department’s practice regarding duty

drawback, the Department is providing an

opportunity for the public to comment . . . .

The Department is particularly interested in

comments relating to questions and possible

approaches set forth in the Appendix to this

notice, including comments on the consistency

with the statute and Congressional intent.

First Request for Comments, 70 Fed. Reg. at 37,765 (internal

citations omitted) (emphasis added).

plaintiff, represented an “implicit recognition” that Commerce’s
Court No. 06-00085 Page 44

two-prong test may be invalid in particular circumstances and, as

such, it is unfair to make plaintiff “wait for the agency to

complete is current review to get reconsideration of the drawback

adjustments. Pl.’s Br. 44. 

Plaintiff further notes that, on October 19, 2006, Commerce

published another Federal Register notice that it characterizes

as an admission by the Department that its methodology “might

change” because it “is subject to manipulation and can be

unfair.” Pl.’s Reply Br. 14 (citing Antidumping Methodologies:

Market Economy Inputs, Expected Non-Market Economy Wages, Duty

Drawback; and Request for Comments, 71 Fed. Reg. 61,716, 61,723-

24 (Dep’t of Commerce Oct. 19, 2006) (notice) (the “Second

Request for Comments”)). In its Second Request for Comments,

Commerce wrote:

The Department previously requested and

received comments regarding its practice with

respect to duty drawback adjustments to

export price in antidumping proceedings . . .

. In past cases, certain parties have argued

that the Department should allocate the total

amount of relevant drawback received to total

exports, regardless of destination, to ensure

that the adjustment claimed on U.S. sales is

not overstated.

Second Request for Comments, 71 Fed. Reg. at 61,723 (citation

omitted). It then stated:

The Department agrees with these commenters

and proposes to modify its approach by

limiting the duty drawback adjustment in

certain circumstances. The Department

generally agrees that it should allocate the
Court No. 06-00085 Page 45

total amount of duty drawback received across

all exports that may have incorporated the

duty-paid input in question, regardless of

destination, to ensure that the adjustment

claimed on U.S. sales is not overstated.

Id. at 61,723-24 (emphasis added). According to plaintiff, this

language constitutes “an outright admission that a change in

practice should and will in due course be made.” Pl.’s Reply Br.

15. Plaintiff argues that, in circumstances like this, where

Commerce has stated that its methodology will change, “there is

no basis for the Court to [continue to] defer to Commerce’s

admittedly flawed precedents.” Pl.’s Reply Br. 15. Therefore,

plaintiff seeks a remand in order to “receive the benefit [of a

change in Commerce’s practice] now, not just in future reviews.” 

Pl.’s Br. 44. 

The Mittal Court upheld Commerce’s two-prong test as “a

reasonable interpretation of 19 U.S.C. § 1677a(c)(1)(B)” and held

that Commerce, in the tenth review, “properly applied the test to

the Korean [defendant-intervenors] in this case.” 31 CIT at __,

Slip Op. 07-117 at 35-36. Here, the court likewise agrees with

Commerce that, at this time, there is “no statutory requirement

that Commerce” must, as plaintiff suggests, “proportionateley

allocat[e] the total duty drawbacks to [defendant-intervenors]’

exports to all countries.” Def.’s Br. 23; Mittal, 31 CIT at __,

Slip Op. 07-117 at 36; Pesquera Mares Australes Ltda. v. United

States, 266 F.3d 1372, 1382 (Fed. Cir. 2001) (“[S]tatutory
Court No. 06-00085 Page 46

 As in Mittal, plaintiff’s argument concerning margin 23

manipulation essentially seeks to add a third prong to Commerce’s

two-prong test. That is, plaintiff insists that a third prong

“requir[ing] shipment-wide allocation of drawback would eliminate

the distortion of dumping margins and maintain the integrity of

the antidumping statute.” Mittal, 31 CIT at __, Slip Op. 07-117

at 35. The court declines plaintiff’s invitation to alter

Commerce’s reasonable interpretation of 19 U.S.C.

§ 1677a(c)(1)(B).

interpretations articulated by Commerce during its antidumping

proceedings are entitled to judicial deference under Chevron.”). 

Furthermore, the court finds that Commerce properly

supported with substantial evidence its decision to make an

upward adjustment to CEP in order to account for the drawback

defendant-intervenors received from the Korean government on

their imports of raw materials. See Huaiyin Foreign Trade Corp.

(30), 322 F.3d at 1374 (Fed. Cir. 2003) (citations omitted); Def.

Br. 23 (noting that plaintiff “does not contest the substantial

record evidence that support’s Commerce’s determination pursuant

to its longstanding, Court-approved practice”). An examination

of the evidence reveals that Commerce reasonably concluded that

defendant-intervenors satisfied the two-prong test and, thus,

were entitled to the CEP adjustment.23

The only new argument that plaintiff presses in hopes of

distinguishing the instant review from the tenth review (and

avoiding the holdings of Mittal), is plaintiff’s reference to

Commerce’s two Requests for Comments. Plaintiff’s reliance on

these requests, however, is misplaced. In the administrative
Court No. 06-00085 Page 47

setting

two conditions must be satisfied for agency

action to be final: First, the action must

mark the consummation of the agency’s

decision-making process, it must not be of a

merely tentative or interlocutory nature. 

And second, the action must be one by which

rights or obligations have been determined,

or from which legal consequences will flow.

Bennett v. Spear, 520 U.S. 154, 178 (1997) (quotations and

citations omitted). 

The court’s acceptance of these notices as binding

recognition that Commerce’s methodology was invalid or might be

invalid would contravene the administrative process and hold the

agency to a decision that is not final. This is the case despite

Commerce’s statement that it “agrees with [the] commenters and

proposes to modify its approach.” Second Request for Comments,

71 Fed. Reg. at 61,723. Commerce is still “welcom[ing] comment

on this proposed methodology,” see id. at 61,724 (emphasis

added), and therefore the Second Request for Comment is just

that——a call for comments. Thus, Commerce’s methodology and its

interpretation of 19 U.S.C. § 1677a is entitled to deference

until the Department completes its administrative processes. See

Wieland-Werke AG v. United States, 31 CIT __, __, 525 F. Supp.

2d 1353, 1360 (2007) (“The court must defer to the agency’s

reasonable interpretation of a statute even if the court might

have preferred another.”) (citing Zenith Radio Corp. v. United

States, 437 U.S. 443, 450 (1978)); see also Timken Co. v. United
Court No. 06-00085 Page 48

States, 11 CIT 786, 806, 673 F. Supp. 495, 514 (1987); Moore v.

East Cleveland, 431 U.S. 494, 525 (1977) (“By requiring

exhaustion of administrative processes the courts are assured of

reviewing only final agency decisions arrived at after considered

judgment.”). “Commerce’s potential rulemaking has no effect

here.” Rhone-Poulenc, Inc. v. United States, 20 CIT 573, 584 n.

5, 927 F. Supp. 451, 461 n. 5 (1996) (emphasis added).

Furthermore, while courts have recognized that policy

statements may constitute rules, even if they are not promulgated

through notice and comment rulemaking, this is not the general

practice. See Appalachian Power Co. v. EPA, 208 F.3d 1015, 1022

n. 13 (D.C. Cir. 2000). That is,

[t]he general consensus is that an agency

statement, not issued as a formal regulation,

binds the agency only if the agency intended

the statement to be binding . . . . The

primary consideration in determining the

agency’s intent is whether the text of the

agency statement indicates that it was

designed to be binding on the agency.

Farrell v. Dep’t of Interior, 314 F.3d 584, 590-91 (Fed. Cir.

2002) (citations omitted); see also Hamlet v. United States, 63

F.3d 1097, 1103 (Fed. Cir. 1995) (“Obviously, not every piece of

paper released by an agency can be considered a regulation

entitled to the force and effect of law.”).

Here, even a cursory review of the First and Second Requests

for Comments reveals that Commerce did not intend them to be

binding on the agency or enforceable in this Court. Accordingly,
Court No. 06-00085 Page 49

Commerce’s First and Second Requests for Comments do not

demonstrate that Commerce erred in refusing to request additional

information or otherwise acted improperly in this review by

adhering to its established methodology. See NSK Ltd. v. United

States, 510 F.3d 1375, 1384 (Fed. Cir. 2007) (holding that

Commerce’s public recommendation to change its methodology was

not a final decision where it “has not yet abandoned its previous

methodology or adopted a new one”).

Based on the foregoing, the court sustains as supported by

substantial evidence and otherwise in accordance with law

Commerce’s duty drawback adjustment to defendant-intervenors’

United States price of CORE. 

CONCLUSION

Based on the foregoing, the court sustains Commerce’s Final

Results. Judgment shall be entered accordingly.

 /s/Richard K. Eaton 

Richard K. Eaton

Dated: May 15, 2008

 New York, New York