Court Opinion

ID: 9843187
Source: CourtListenerOpinion
Date Created: 2023-09-24 02:30:08.847972+00
Date Added: 2024-06-11T09:15:00.399854
License: Public Domain

ARCHER, Senior Judge,
dissenting.
The decision of the Court of International Trade sustaining Commerce’s deduction from foreign market value (FMV) of the Route B freight costs as home market selling expenses should in my view be reversed. Tor-rington is correct in arguing that under the governing statute and regulation Route B freight costs are not normal expenses related to home market sales but rather are additional costs incurred to obtain general benefits for the company, i.e., to preserve favorable VAT tax and export duty exemptions.
In general the antidumping statute and regulations seek to produce a fair, “apples-to-apples” comparison between FMV and United States price (USP). To achieve that end, adjustments are made to the base value of both FMV and USP to permit comparison of the two prices at a similar point in the chain of commerce. See Torrington Company v. United States, 68 F.3d 1347, 1352 (Fed.Cir.1995). The USP is adjusted by deducting expenses incurred in selling the merchandise in the United States. Id. FMV is adjusted by deducting direct selling expenses under the circumstances of sale (COS) provision, 19 U.S.C. § 1677b(a)(4)(B) (1988). Moreover, when the USP is based on the exporter’s sales price (ESP), the FMV is reduced by the indirect selling expenses to the extent of the deduction for indirect selling expenses from USP. See Torrington, 68 F.3d at 1353.
Home market transportation costs have been considered by Commerce to be sales related and have been treated as selling expenses. See Torrington, 68 F.3d at 1355-56. As a result, post-sale transportation costs have been allowed as a COS adjustment. Pre-sale transportation costs (not related to any particular sale) have been allowed as indirect selling expenses when the USP is based on ESP. Id.
Deductions for transportation costs have previously been made for in-country transportation costs — transportation within the country in the normal course of home market sales. See Cemex, S. A. v. United States, 133 F.3d 897, 901 (Fed.Cir.1998) (in-country transportation for home market sales); Sharp Corporation v. United States, 63 F.3d 1092, 1093 (Fed.Cir.1995) (same). There is no evidence that Commerce has previously made an adjustment for transportation costs to and from a point outside the country in which home market sales occurred.
This court customarily gives Commerce the benefit of the doubt and defers to its determination, which is the predominant basis for the majority’s decision, when it is interpreting its own regulations. In this ease, however, Commerce’s own verification clearly shows that the Route B transportation costs were not incurred in the process of selling, but were incurred in order to obtain import duty and VAT tax benefits for NMB Thai. To this end, the verification shows that these Route B transportation costs were incurred because bearings produced in their bonded factories “continue to carry duty-free status when they are exported” and when shipped back to related or unrelated Board of Investment (BOI) companies in Thailand they are treated as “duty-free” imported raw materials. The verification states that NMB Thai found it much simpler to import raw materials in this way. Because the verification establishes the reasons why NMB Thai used the circuitous transportation route, it was not necessary for Commerce to delve *1366into the “subjective intent behind the decision to transport merchandise by a particular method or along a particular route,” which is one of the principal concerns of the majority. In this case, the reasons are clear in the verification record and establish that the added transportation costs cannot properly be classified as a form of selling expense.
It is evident in this ease that Commerce did not make an “apples to apples” comparison. By allowing an adjustment for a transportation diversion of the nature and magnitude as here involved, Commerce has not made an adjustment in arriving at FMV which reaches the similar point in the chain of commerce to make a proper comparison with the USP. Torrington correctly argues that the excess transportation costs were in the nature of general and administrative overhead costs “related to the company’s overall corporate strategy to reduce costs generally and reduce its tax and duty burdens specifically.” Selling expenses are commonly understood to be expenses made to support and promote sales. See NSK v. United States, 115 F.3d 965, 974 (Fed.Cir.1997) (when terms not explicitly defined should be given their “ordinary meaning”).1 The commonly understood definition of selling expenses was not applied here.
I would, therefore, reverse the decision below and remand the case to Commerce to make a transportation adjustment in an amount that reflects what would be a normal transportation cost to Route B customers of NMB Thai.

. Torrington concedes that an adjustment for some transportation costs might be appropriate if NMB Thai can show what it would have cost to ship directly to Route B customers.