Court Opinion

ID: 9965342
Source: CourtListenerOpinion
Date Created: 2024-05-02 14:03:20.425366+00
Date Added: 2024-06-11T08:24:54.277451
License: Public Domain

Slip Op. 24-54

            UNITED STATES
     COURT OF INTERNATIONAL TRADE

               Court No. 22-00107

   SAHAMITR PRESSURE CONTAINER PLC.,
                    Plaintiff,
                       and
      WORLDWIDE DISTRIBUTION, LLLP,
               Plaintiff-Intervenor,
                        v.
                UNITED STATES,
                   Defendant,
                       and
         WORTHINGTON INDUSTRIES,
              Defendant-Intervenor.

          Before: M. Miller Baker, Judge

                   OPINION

[Sustaining the Department of Commerce’s final de-
termination.]

                                 Dated: May 2, 2024

David E. Bond, Ron Kendler, and Danica Harvey,
White & Case LLP of Washington, DC, on the briefs
for Plaintiff.
Ct. No. 22-00107                                Page 2

Gregory S. Menegaz, J. Kevin Horgan, and Alexandra
H. Salzman, deKieffer & Horgan, PLLC, of Washing-
ton, DC, on the briefs for Plaintiff-Intervenor.

Brian M. Boynton, Principal Deputy Assistant Attor-
ney General; Patricia M. McCarthy, Director; Tara K.
Hogan, Assistant Director; and Alison S. Vicks, Trial
Attorney, Commercial Litigation Branch, Civil Divi-
sion, U.S. Department of Justice of Washington, DC,
on the brief for Defendant. Of counsel on the brief was
Spencer Neff, Attorney, Office of Chief Counsel for
Trade Enforcement & Compliance, U.S. Department of
Commerce of Washington, DC.

Paul C. Rosenthal; R. Alan Luberda; David C. Smith,
Jr.; and Matthew G. Pereira, Kelley Drye & Warren
LLP of Washington, DC, on the brief for Defendant-
Intervenor.

   Baker, Judge: In this antidumping case, a foreign
producer of propane canisters and a domestic importer
challenge the Department of Commerce’s recalcula-
tion of the former’s proffered sales expenses. Finding
the agency’s methodology supported by substantial ev-
idence, the court sustains it.

                           I

   This matter arises from a Commerce order
imposing tariffs on propane canisters. Steel Propane
Cylinders from the People’s Republic of China and
Thailand: Amended Final Determination of Sales at
Less Than Fair Value and Antidumping Duty Orders,
84 Fed. Reg. 41,703 (Dep’t Commerce Aug. 15, 2019).
Sahamitr Pressure Container PLC, a Thai producer
Ct. No. 22-00107                                       Page 3

and exporter, and Worthington Industries, a domestic
manufacturer, each requested an administrative
review of that order as it pertains to Thailand.
Appx1007; see also Antidumping or Countervailing
Duty Order, Finding, or Suspended Investigation;
Opportunity to Request Administrative Review,
85 Fed. Reg. 47,167, 47,168 (Dep’t Commerce Aug. 4,
2020).

   The Department obliged and opened a review cov-
ering a 19-month period in 2019 and 2020. Initiation
of Antidumping and Countervailing Duty Administra-
tive Reviews, 85 Fed. Reg. 63,081, 63,085 (Dep’t Com-
merce Oct. 6, 2020). It selected Sahamitr as the sole
respondent. Appx6013.

    As relevant here, Commerce requested that Sa-
hamitr report sales costs using a transaction-specific
method and cautioned that providing such information
on an “allocated basis (e.g., on an average basis)” was
permissible only when those expenses could not “be
tied to a specific sale.” Appx6027. The Department fur-
ther warned that allocated reporting would be accepta-
ble only if the company could “demonstrate that the
allocation is calculated on as specific a basis as is fea-
sible (e.g., on a customer-specific basis, product-spe-
cific basis, and/or monthly-specific basis, etc.) and is
not unreasonably distortive.” Id. (emphasis added).

   Sahamitr nonetheless reported its certification ex-
penses 1 for U.S. sales on an allocated basis by applying

1 Third parties test and certify the canisters as safe for use.

See ECF 29-1, at 3.
Ct. No. 22-00107                                 Page 4

a “certification-fee ratio” to “customers’ gross unit
prices to calculate the [reported] per-unit certification
expense.” Appx2352. The company did not explain why
it couldn’t disclose such costs using a transaction-spe-
cific system or why its method wasn’t distortive.

   At Worthington’s prompting, Commerce directed
Sahamitr to explain why it “cannot report the [certifi-
cation] price adjustment or expense on a more specific
basis” and why its “allocation methodology does not
cause inaccuracies or distortions.” Appx3450.

   The company responded that it

   pays its certification fees to outside vendors af-
   ter [its] production and sale of the merchandise
   under review, [and] the company cannot attrib-
   ute individual certification-related expenses to
   individual sales invoices. The expense-allocation
   provided is the most accurate basis on which
   [the company] is able to report [period-of-review]
   certification expenses using the books and rec-
   ords the company maintains in the normal
   course of business . . . .

Appx3654. Sahamitr also observed that “the Depart-
ment accepted this approach in the underlying . . . in-
vestigation.” Id. The company again, however, failed
to explain why its allocation method did not cause dis-
tortions.

   Once again at Worthington’s importuning, the De-
partment then requested that Sahamitr “calculate a
monthly, per unit, certification expense for the [period
of review] for the U.S., and, separately, the home
Ct. No. 22-00107                                  Page 5

market.” Appx5587. It responded with a calculation
that showed wide fluctuations in costs from month to
month. Appx5607.

    In its preliminary determination, Commerce found
that Sahamitr’s (second) proffered allocation of its cer-
tification costs was distortive

   due to timing differences between when [the
   company] produces and sells cylinders and when
   it records the certification expenses associated
   with those sales. These timing differences create
   monthly fluctuations in [Sahamitr’s] reported
   certification[] expenses (e.g., two months of ex-
   penses allocated to a single month and no fee ex-
   penses allocated to other months).

Appx1025. Thus, the Department “calculated a [pe-
riod-of-review]-wide certification expense ratio . . . ra-
ther than relying on [the company’s] reported alloca-
tion methods.” Id. Commerce carried over that analy-
sis to its final determination, Appx1323–1324, which
(combined with other unchallenged aspects of that de-
cision) resulted in a dumping margin of 13.89%,
Appx1630.

                            II

   Invoking jurisdiction conferred by 28 U.S.C.
§ 1581(c), Sahamitr sued under 19 U.S.C.
§ 1516a(a)(2)(B)(iii) to challenge Commerce’s final de-
termination. ECF 2. Worldwide Distribution LLLP, a
domestic importer of Sahamitr’s propane canisters, in-
tervened as a plaintiff, ECF 23, and Worthington in-
tervened in support of the government, ECF 18.
Ct. No. 22-00107                                Page 6

   Sahamitr (ECF 29) and Worldwide (ECF 30) both
moved for judgment on the agency record. See USCIT
R. 56.2. The government (ECF 31) and Worthington
(ECF 33) opposed. Sahamitr (ECF 58) and Worldwide
(ECF 60) replied. The court decides the motions on the
papers.

   In § 1516a(a)(2) actions such as this, “[t]he court
shall hold unlawful any determination, finding, or con-
clusion found . . . to be unsupported by substantial ev-
idence on the record, or otherwise not in accordance
with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). That is, the
question is not whether the court would have reached
the same decision on the same record—rather, it is
whether the administrative record as a whole permits
Commerce’s conclusion.

   Substantial evidence has been defined as more
   than a mere scintilla, as such relevant evidence
   as a reasonable mind might accept as adequate
   to support a conclusion. To determine if substan-
   tial evidence exists, we review the record as a
   whole, including evidence that supports as well
   as evidence that fairly detracts from the sub-
   stantiality of the evidence.

Nippon Steel Corp. v. United States, 337 F.3d 1373,
1379 (Fed. Cir. 2003) (cleaned up).

                          III

   To determine whether merchandise is being
dumped in the U.S., the Tariff Act of 1930, as amen-
ded, requires Commerce to figure out the product’s
“normal value,” 19 U.S.C. § 1677b(a)—the home
Ct. No. 22-00107                                   Page 7

market price, see Hung Vuong Corp. v. United States,
483 F. Supp. 3d 1321, 1334 n.6 (CIT 2020)—and then
compare that figure to the “export price or constructed
export price” at which the product is sold to the im-
porter, see id. at 1334 n.34 (explaining “export price”
and “constructed export price”). The Act further di-
rects the Department to adjust the normal value of
such goods by the amount of “any difference” between
that figure and the export price that “is established to
the satisfaction” of the agency “to be wholly or partly
due to . . . differences in the circumstances of sale.” Id.
§ 1677b(a)(6)(C)(iii).

   As described above, Sahamitr sought such an ad-
justment for costs associated with obtaining the requi-
site safety certifications for its propane cylinders. The
Department requires that expenses be reported on a
transaction-specific basis except when doing so “is not
feasible, provided the Secretary is satisfied that the al-
location method used does not cause inaccuracies or
distortions.” 19 C.F.R. § 351.401(g)(1). When a re-
spondent uses an allocated, rather than transaction-
specific, method, that party has the burden of showing
that the “allocation is calculated on as specific a basis
as is feasible” and “explain[ing] why the allocation
methodology used does not cause inaccuracies or dis-
tortions.” Id. § 351.401(g)(2).

   Sahamitr and Worldwide argue that the former’s
recalculation of its certification expenses (performed
at Commerce’s request) was as specific as feasible
given the company’s records. See ECF 29-1, at 10–11;
ECF 30-1, at 4–5; see also 19 C.F.R. § 351.401(g)(3) (re-
quiring the Department to evaluate the feasibility of
Ct. No. 22-00107                                      Page 8

transaction-specific reporting based on the “records
maintained by the party in question in the ordinary
course of its business”). They also contend that the
company’s recalculation of its expenses was more spe-
cific than the period-of-review-wide recalculation
Commerce adopted, and that the agency violated
19 C.F.R. § 351.401(g)(1)–(2) by choosing a less-spe-
cific calculation methodology. ECF 29-1, at 10–11;
ECF 30-1, at 4–5. 2

    Sahamitr and Worldwide misapprehend the regu-
lation, which requires the “party seeking to report an
expense . . . on an allocated basis” to do so “on as spe-
cific a basis as is feasible.” 19 C.F.R. § 351.401(g)(2)
(emphasis added). Commerce, on the other hand, “is
not required to accept [expense] adjustments on an al-
located basis.” NSK Ltd. v. United States, 510 F.3d
1375, 1382 (Fed. Cir. 2007) (citing 19 C.F.R.
§ 351.401(g)(1)). Instead, as the “master of antidump-
ing law,” the Department has wide discretion to “se-
lect[] and develop[] proper methodologies.” Thai Pine-
apple Pub. Co. v. United States, 187 F.3d 1362, 1365
(Fed. Cir. 1999) (quoting Daewoo Elecs. Co. v. United
States, 6 F.3d 1511, 1516 (Fed. Cir. 1993)).

   Here, the Department exercised that discretion by
selecting an allocation method that provided Sahamitr

2 In its reply brief, Sahamitr argues for the first time that

it was unreasonable for the Department to reject the com-
pany’s initial expense calculation for this review as insuffi-
ciently specific when the agency previously accepted an
identical methodology in its original investigation. ECF 58,
at 5–6, 9–10. The court declines to entertain this new ar-
gument.
Ct. No. 22-00107                                Page 9

the opportunity to obtain a price adjustment for certi-
fication expenses, while avoiding the distortions re-
flected in the company’s recalculation. See Appx1324
(explaining that Sahamitr’s recomputation “continues
to fail to account for months in which certification ex-
penses are overreported (e.g., the revised method con-
tinues to allocate multiple months of expenses to a sin-
gle month)”).

   That brings us to the elephant in the courtroom
that neither Sahamitr’s nor Worldwide’s opening brief
directly confronts—Commerce’s finding that the
former’s recalculated reporting was distorted because
it resulted in months with zeroed-out certification
expenses. Appx1025. That unchallenged determina-
tion is supported by substantial evidence. As the
record shows, there were significant fluctuations in
Sahamitr’s recalculated expenses from month to
month, including some months with zero expenses. See
Appx5607. The Department therefore reasonably
applied a methodology that allowed Sahamitr’s export
price to be properly adjusted, but which did not feature
those distortions. Appx1323–1324.

   The closest Sahamitr’s opening brief comes to chal-
lenging the finding that the company’s monthly-based
calculation was distortive is the plaintive assertion
that it’s “unclear why [Sahamitr’s] certification ex-
penses—reported per the Department’s instructions—
were so unreasonably inaccurate that an alternate al-
location methodology was warranted.” ECF 29-1,
at 11. Commerce, however, explained precisely why it
found that calculation distortive: The “timing differ-
ences between when [Sahamitr] produces and sells
Ct. No. 22-00107                                 Page 10

cylinders and when it records the certification ex-
penses associated with those sales . . . create monthly
fluctuations in [the company’s] reported certification[]
expenses (e.g., two months of expenses allocated to a
single month and no fee expenses allocated to other
months).” Appx1025. Sahamitr fails to articulate how
or why that determination is unreasonable or other-
wise not supported by substantial evidence.

    The company’s more thorough reply brief argues
that the finding that its monthly-based calculations
were distortive, Appx1025, is unreasonable because
fluctuations are inherent in such computations.
ECF 58, at 6–7. Similarly, it maintains that the De-
partment unreasonably rejected “an alternative allo-
cation that [Sahamitr] proposed in its case brief to ad-
dress the purported concerns about ‘timing differ-
ences.’୻” Id. at 8. The company further contends that
“the antidumping questionnaire itself presumes dif-
ferences based on timing when it directs respondents
to ‘demonstrate that the allocation is calculated on as
specific a basis as is feasible (e.g., on a customer-spe-
cific basis, product-specific basis, and/or monthly-
specific basis, etc.).’୻” Id. at 8–9 (boldface Sahamitr’s)
(quoting Appx6027).

   The court rejects these new arguments, not only be-
cause they’re untimely, but also because they’re wrong
on the merits. The regulation expressly authorizes
Commerce to disregard a respondent’s allocated ex-
pense reporting, even if it is as specific as possible, if
the Department concludes that it “cause[s] inaccura-
cies or distortions.” 19 C.F.R. § 351.401(g)(1). Contrary
to Sahamitr’s specificity–über alles reading, specificity
Ct. No. 22-00107                              Page 11

in allocated reporting under the regulation is merely a
means to an end, not an end in itself.

                      *   *    *

   The court denies the motions for judgment on the
agency record and sustains Commerce’s final determi-
nation. A separate judgment will issue. See USCIT
R. 58(a).

Dated: May 2, 2024            /s/ M. Miller Baker
       New York, NY           M. Miller Baker, Judge