Court Opinion

ID: 819312
Source: CourtListenerOpinion
Date Created: 2013-02-05 02:37:17.159521+00
Date Added: 2024-06-11T11:22:56.575083
License: Public Domain

Slip Op. 01-83

                 UNITED STATES COURT OF INTERNATIONAL TRADE

__________________________________________
                                          :
TUNG MUNG DEVELOPMENT CO., LTD.,          :
                                          :
            Plaintiff,                    :                Before: WALLACH, Judge
                                          :                Consol. Court No.: 99-07-00457
      and                                 :
                                          :
YIEH UNITED STEEL CORP.,                  :
                                          :
            Plaintiff-Intervenor,         :                PUBLIC VERSION
                                          :
      v.                                  :
                                          :
UNITED STATES,                            :
                                          :
            Defendant,                    :
                                          :
      and                                 :
                                          :
ALLEGHENY LUDLUM CORP. et al.,            :
                                          :
            Defendant-Intervenors.        :
_________________________________________ :

[Plaintiff’s motion for judgment on the agency record DENIED. Plaintiff-Intervenor’s motion
for judgment on the agency record DENIED. Final Determination REMANDED.]

                                                           Decided: July 3, 2001

Akin, Gump, Strauss, Hauer & Feld, L.L.P. (Patrick F. J. Macrory, Spencer S. Griffith, Karen L.
Bland, Thomas J. McCarthy), for Plaintiff.

White & Case (William J. Clinton, Osamu Umejima, Adams Lee), for Plaintiff-Intervenor.

Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director; Velta
Melnbrencis, Assistant Director; Lucius B. Lau, Karla J. De Steuben, Commercial Litigation
Branch, Civil Division, Department of Justice; Patrick Gallagher, Office of the Chief Counsel for
Import Administration, United States Department of Commerce, of counsel, for Defendant.

Collier Shannon Scott, PLLC (David A. Hartquist, Jeffrey S. Beckington, Adam H. Gordon), for
Defendant-Intervenors.
Consol. Court No. 99-07-00457                PUBLIC VERSION                                  Page 2

                                           OPINION

WALLACH, Judge.

                                                 I

                                       INTRODUCTION

       This case is before the court upon Plaintiff Tung Mung Development Co., Ltd.’s (“Tung

Mung”) USCIT Rule 56.2 Motion For Judgment On The Agency Record, and Plaintiff-

Intervenor Yieh United Steel Corp.’s (“YUSCO”) Rule 56.2 Motion For Judgment Upon The

Agency Record, both of which challenge the decision of the U.S. Department of Commerce,

International Trade Administration (the “Department,” “Commerce” or “ITA”) in Notice of Final

Determination of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils From

Taiwan, 64 Fed. Reg. 30,592 (Dep’t Commerce) (June 8, 1999) (“Final Determination”).

       Tung Mung and Plaintiff-Intervenor YUSCO challenge the Department's decision to

assign a single, weighted average cash deposit dumping rate to their merchandise, regardless of

the channel of distribution through which that merchandise is sold. Tung Mung and YUSCO

argue that imposition of a single rate is contrary to congressional intent, and would impose an

excessive cash deposit rate on merchandise that is not “tainted” by the middleman dumping

found by the Department. The court remands the Department's determination.

       YUSCO also challenges four other aspects of the Final Determination: (1) the

Department’s determination that certain sales characterized by YUSCO as indirect export sales

were in fact home market sales; (2) the Department’s decision to apply total adverse facts

available, on the basis of YUSCO’s failure to report a significant percentage of its home market

sales; (3) the Department’s inclusion of certain other sales within YUSCO’s export sales

database; and (4) the Department’s determination to adjust YUSCO’s reported cost of

manufacture based on YUSCO’s submission of accounting records that reflected a higher cost of
Consol. Court No. 99-07-00457                PUBLIC VERSION                                Page 3

manufacture than YUSCO reported. The court denies YUSCO’s motion on these issues.

                                                II

                                        BACKGROUND

       On June 10, 1998, the domestic industry filed an antidumping petition alleging that

imports from Taiwan of stainless steel sheet and strip in coils ("SSSS") were being injuriously

dumped in the United States. The Department initiated an antidumping duty investigation on

July 13, 1998. See Initiation of Antidumping Duty Investigations: Stainless Steel Sheet and

Strip in Coils From France, et al., 63 Fed. Reg. 37,521 (Dep’t Commerce) (July 13, 1998).

       YUSCO and Tung Mung, Taiwanese producers of the subject merchandise, were selected

as respondents in the Taiwan investigation. During the period covered by the Department's

investigation, April 1, 1997 - March 31, 1998, YUSCO and Tung Mung made United States sales

of subject SSSS through middleman Ta Chen Stainless Pipe Co., Ltd. (“Ta Chen”)1.

       On August 3, 1998, Commerce sent a questionnaire to YUSCO and the other

respondents. The instructions to Section B of the questionnaire required the respondents to

report all sales of the subject merchandise in the home market of Taiwan or a third country

market during the period of investigation (“POI”). In pertinent part, the questionnaire instructed

respondents to

       If known, identify customers that export some or all of their purchases of the
       foreign like product. Explain how you determined which sales were for
       consumption in the foreign market.

Questionnaire at B-13. On September 25, 1998, YUSCO submitted its responses to Section B

       1
               Ta Chen was also investigated as part of this investigation. Ta Chen has not
appealed Commerce’s determination of dumping and assignment of a cash deposit rate, which
was issued on the basis of adverse facts available.
       Tung Mung also made direct sales to the United States, to an affiliate of Ta Chen.
Consol. Court No. 99-07-00457                PUBLIC VERSION                               Page 4

and C of Commerce’s questionnaire, stating that it had reported “all sales of subject merchandise

in the home market made during the period of investigation.” Response to Questionnaire, dated

September 25, 1998, at B-2. At that time, YUSCO also submitted computer printouts listing

those sales. On November 2, 1998, Commerce sent YUSCO a supplemental questionnaire for

sections A, B and C. YUSCO responded on November 18, 1998.

       On October 14, 1998, petitioners submitted allegations of middleman dumping by Ta

Chen of subject merchandise produced by Tung Mung; on October 15, 1998, petitioners

submitted allegations of middleman dumping by Ta Chen of subject merchandise produced by

YUSCO. On December 3, 1998, the Department initiated a middleman dumping investigation

with respect to sales by Ta Chen of YUSCO’s and Tung Mung’s subject merchandise. On

January 4, 1999, Commerce published its preliminary determination. Notice of Preliminary

Determination of Sales at Less Than Fair Market Value and Postponement of Final

Determination: Stainless Steel Sheet and Strip in Coils From Taiwan, 64 Fed. Reg. 101 (Dep’t

Commerce) (Jan. 4, 1999) (“Preliminary Determination”). In the Preliminary Determination,

Commerce calculated a weighted average dumping margin of 2.94 percent for YUSCO and a

weighted average dumping margin of .07 percent for Tung Mung, in each instance exclusive of

any dumping by the middleman. Id. at 108. Commerce made no preliminary determination with

regard to the middleman dumping investigation, which was incomplete.

       On January 8, 1999, shortly before the January 18-22, 1999 time scheduled for

verification of YUSCO’s sales, YUSCO submitted additional information concerning its home

market sales. This additional information included some details regarding sales designated by

YUSCO as “UZ” sales. Letter from White & Case to Commerce, dated January 8, 1999,

containing corrections to and clarifications of YUSCO’s earlier response (the “1/8/99

Supplemental Response”). YUSCO stated in the 1/8/99 Supplemental Response that the UZ

sales consisted of sales “to customers in Taiwan who informed YUSCO that they would export
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                Page 5

YUSCO’s SSSS to third countries after their further processing the SSSS.” Id. at 4. On January

13, 1999, the Department issued a supplemental questionnaire requesting that YUSCO provide

additional information regarding the UZ sales referenced in the 1/8/99 Supplemental Response.

Commerce letter dated 1/13/99.

       On January 15, 1999, YUSCO responded to the January 13, 1999 Supplemental

Questionnaire. In response to Commerce’s question as to whether YUSCO considered the UZ

sales to be home market, United States, or third country sales in the context of the investigation,

YUSCO responded that it believed those sales to be third country sales, and stated that although

it “generally knew or presumed at the time of sale that the merchandise would be further-

processed prior to export, YUSCO did not know the extent of further processing or the final

product that would result from further processing,” and that YUSCO “did not know whether the

final exported product was subject or non-subject merchandise.” YUSCO Jan. 15, 1999

Response to Suppl. Questionnaire at Sup. D-1. In response to another question by Commerce as

to whether YUSCO had “additional sales to home market customers that were not further-

processed, but for which you claim knowledge of export to countries other than the United

States”, YUSCO explained in this January 15, 1999 submission that it had made additional

indirect export sales, which it identified as “U*” sales, to home market customers who informed

YUSCO of the final export destination of the merchandise. Id. at Sup. D-3 to Sup. D-4. YUSCO

further explained that its “U*” and “UZ” designations were part of its order coding system, and

were assigned by YUSCO’s staff based on oral information from the customer. Id. at Sup. D-4.

The assignment of these designations did not take into account whether or not the merchandise

remained in the form of subject merchandise at the time of ultimate export.

       The Department conducted a sales verification of YUSCO’s questionnaire responses on

January 18 through 22, 1999. During that investigation, Commerce interviewed a number of

employees in YUSCO’s sales department. The responses provided by these employees indicated
Consol. Court No. 99-07-00457                PUBLIC VERSION                                Page 6

that they either knew that some or all of YUSCO’s customers further manufactured its subject

merchandise, or had no specific knowledge as to whether the SSSS was further manufactured

prior to export.2 YUSCO Facts Available Memorandum at 1; Sales Verification Report Ex. 7.

       On April 12, 1999, Commerce issued a verification report for YUSCO. The parties to the

investigation submitted briefs on April 20, 1999. On May 3, 1999, the parties submitted an

additional round of briefs, devoted to the issue of middleman dumping by Ta Chen. On May 19,

1999, the Department released its Facts Available Memorandum, in which it determined that it

was required to apply total adverse facts available to YUSCO, in light of YUSCO’s failure to

report its UZ and U* sales as home market sales, its disregard for Commerce’s instructions as to

what sales to include within its reported home market sales, and its exclusive reliance on an

internal sales classification system which the Department concluded was flawed. YUSCO Facts

Available Memorandum at 2-3. Also on May 19, 1999, the Department placed on the record of

this investigation the YUSCO Sales Verification Report from the investigation of Notice of Final

Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coils From Taiwan, 64

Fed. Reg. 15,493 (“Dep’t Commerce”) (March 31, 1999) (“SSPC from Taiwan” or “SSPC”).

Memo from Gideon Katz of Commerce to File, dated May 19, 1999.

       On May 25, 1999, YUSCO wrote to Commerce, protesting the inclusion of information

from SSPC from Taiwan in the file of this investigation, as a violation of the Administrative

Protective Order in SSPC from Taiwan. Letter from White & Case to Commerce, dated May 25,

1999. On May 28, 1999, YUSCO’s counsel again wrote to Commerce, this time identifying a

number of alleged ministerial errors in the Final Determination, which had been announced on

May 19, 1999. Letter from White & Case to Commerce, dated May 28, 1999. These alleged

       2
                None of the responding employees stated that they knew that YUSCO’s customers
did not further manufacture the subject merchandise. All of the other responses – in which the
employees either lacked knowledge, or knew of further manufacture – support Commerce’s
determination, and contradict YUSCO’s claims.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                Page 7

ministerial errors included: the decision to apply facts available based on YUSCO’s responses

regarding the U* sales, the Department’s conclusion that the information submitted by YUSCO

regarding the UZ sales was incomplete and thus unusable, and the Department’s reliance on

information from SSPC from Taiwan. Id. On this last point, YUSCO argued that “[i]f anything,

the example cited by the Department from the stainless steel plate case shows that YUSCO’s

system captured any sales that the Department could have considered to be home-market sales.”

Id. at 17. On June 4, 1999, petitioners submitted a response to YUSCO’s allegations of

ministerial error. Also on June 4, 1999, the Department wrote to counsel for YUSCO,

responding to the May 25, 1999 letter to clarify that no business proprietary information from

SSPC from Taiwan was placed on the record in this investigation. On July 7, 1999, the

Department issued a Memorandum rejecting each of YUSCO’s allegations of ministerial error.

       On June 8, 1999, Commerce published its Final Determination in this investigation, in

which it assigned YUSCO a total adverse facts available single weighted average rate of 34.95

percent; it assigned Tung Mung a single weighted average rate of 14.95, based largely on the rate

assigned for middleman Ta Chen.

                                                III

                                           ANALYSIS

                                                 A

                             Jurisdiction and Standard of Review

       The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994).

       In reviewing the Final 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) (1994). Substantial evidence

is something more than a "mere scintilla," and must be enough evidence to reasonably support a
Consol. Court No. 99-07-00457                 PUBLIC VERSION                               Page 8

conclusion. Primary Steel, Inc. v. United States, 17 CIT 1080, 1085, 834 F. Supp. 1374, 1380

(1993); Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 405, 636 F. Supp. 961, 966

(1986), aff'd, 810 F.2d 1137 (Fed. Cir. 1987). "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."

Ceramica Regiomontana, S.A., 10 CIT at 404-5, 636 F. Supp. at 966.

                                                 B

                                      Tung Mung’s Motion

       Plaintiff3 contests Commerce’s decision to assign a single, weighted average antidumping

cash deposit rate to all sales of Tung Mung merchandise, whether sold directly by Tung Mung to

customers in the United States or sold to Ta Chen and resold by it in this country. In the Final

Determination, Commerce found that Tung Mung had a dumping margin of 0.0% on its direct

sales to the United States, and of .06% on its sales to Ta Chen -- both well below the de minimis

threshold set forth in 19 U.S.C. § 1673b(b)(3) (1994). Commerce assigned Ta Chen a margin of

15.34% to sales by Ta Chen of product produced by Tung Mung and YUSCO, based on

Commerce’s application of total adverse facts available to Ta Chen.4 Commerce then weight-

averaged these sales and applied a single rate to Tung Mung of 14.95%, and a single rate to

YUSCO of 34.95%.5

       3
               YUSCO makes arguments in its Motion which echo those raised by Tung Mung.
Both parties’ arguments on the issue of a single weighted average dumping rate are addressed in
this subsection.
       4
               The rate assigned to Ta Chen is not at issue in this case.
       5
              Commerce concluded that Tung Mung was not eligible for exclusion under the de
minimis standard based on this weighted average dumping margin.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                Page 9

       Tung Mung and YUSCO now raise several arguments that the Department should have

assigned separate, or combination, cash deposit antidumping rates to Tung Mung and YUSCO,

without weight-averaging their rates with that of Ta Chen.6 Defendant and Defendant-

Intervenors argue that the dumping statute and Commerce’s regulation support Commerce’s

determination and that Commerce’s decision to impose a single, weighted average rate is entitled

to deference. Because the court finds no express statutory or regulatory authority for single,

weighted average rates in middleman dumping cases, and because the court finds that Commerce

has not adequately explained its decision not to follow its prior practice of issuing combination

rates, the court concludes that remand is proper. A detailed review of the parties’ contentions

follows.

                                                 1.

                                 Plain Language of the Statute

       Tung Mung claims that Commerce’s decision to assign a single rate is inconsistent with

the language of the dumping statute. Memorandum in Support of Plaintiff Tung Mung

Development Co. Ltd.’s Rule 56.2 Motion for Judgment on the Agency Record (“Tung Mung

Moving Brief”) at 13. Tung Mung argues that the statutory definition of “dumping margin”

precludes the imposition on a producer of a rate based in whole or in part on an “export price”

derived from a sale by an entity other than that producer.7 Id. 19 U.S.C. § 1677(35)(A) defines

“dumping margin” as “the amount by which the normal value exceeds the export price . . . of the

       6
               A “combination rate”, also referred to as a “separate” or “channel” rate, refers to a
method by which each producer and each exporter is assigned its own rate, and the rate applied to
imported subject merchandise consists of a combination of the individual rates of the producer of
the goods and the exporter through whom the producer has sold the goods.
       7
               Tung Mung also seeks exclusion from the order on the grounds that its margin is
de minimis, under the definition set forth in 19 U.S.C. § 1673d(a)(4) (1994). Tung Mung
Moving Brief at 6, 17. It does not, however, provide any argument that § 1673d(a)(4) requires its
exclusion as de minimis, or requires the use of combination rates to ensure exclusion of
respondents with a de minimis rate based on their direct sales.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                  Page 10

subject merchandise.” 19 U.S.C. § 1677(35)(A) (1994). 19 U.S.C. § 1677a(a) then defines

“export price” as “the price at which the subject merchandise is first sold . . . by the producer or

exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in

the United States or to an unaffiliated purchaser for exportation to the United States . . . .” 19

U.S.C. § 1677a(a) (1994) (emphasis supplied). Tung Mung contends that the emphasized

language requires that Tung Mung’s export price, and by extension its cash deposit rate, be based

on Tung Mung’s sales to Ta Chen (“an unaffiliated purchaser for exportation to the United

States”) and Tung Mung’s direct sales to the United States, rather than Ta Chen’s sale price to its

customers.8 Tung Mung Moving Brief at 13.

       Similarly, Tung Mung cites the definition of “normal value,” set forth at 19 U.S.C. §

1677b(a)(1)(B)(i): “the price at which the foreign like product is first sold . . . for consumption

in the exporting country.” 19 U.S.C. § 1677b(a)(1)(B)(i) (1994) (emphasis added). Tung Mung

argues that the dumping margin for Tung Mung’s direct sales to the United States, where no

middleman is involved, must be based only on the prices of sales by Tung Mung to Ta Chen and

Tung Mung’s direct sales to the United States (the “first sales” under § 1677b(a)(1)(B)), and not,

in whole or in part, on the prices of an unaffiliated middleman. Tung Mung Moving Brief at 14.

Neither Defendant nor Defendant-Intervenors state that Tung Mung’s construction of this

provision is inaccurate, much less why it might be so. However, even assuming that construction

to be accurate, it is not dispositive as to whether the statute permits the issuance of a single,

       8
               This reasoning is undercut, however, by 19 U.S.C. § 1677(28), which defines
“exporter or producer” to mean “the exporter of the subject merchandise, the producer of the
subject merchandise, or both where appropriate.” 19 U.S.C. § 1677(28) (1994) (emphasis
supplied). This definition might reveal an ambiguity in the provision cited by Tung Mung, which
thus does not mandate the result it urges. However, none of the parties have cited this provision,
nor does the court find any authority construing it in any context.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 11

weighted average dumping margin in middleman dumping cases.9

       Defendant cites 19 U.S.C. § 1673d(c),10 the statutory provision which provides

Commerce with the underlying authority to compute a dumping margin and impose a cash

deposit rate. Defendant’s Memorandum in Opposition to Plaintiff’s and Plaintiff-Intervenor’s

Motions for Judgment Upon the Agency Record (“Defendant’s Opposition Brief”) at 18. The

antidumping statute does not provide guidance for the Department on exercising the discretion

granted to it in § 1673d(c)(1)(B) for the calculation of cash deposit rates, and it says nothing

       9
                Tung Mung has not argued that Commerce erred in computing either normal
value or export price; rather, it appears to imply that the use of a single weighted average
dumping rate would, working backwards, render those predicate figures flawed. Tung Mung has
cited no authority to support such an approach.
        Tung Mung and YUSCO also argue that the method used by the agency to compute the
cash deposit rate must be “reasonably correct”, though they concede that these rates need not be
absolutely accurate. See Torrington Co. v. United States, 44 F.3d 1572, 1579 (Fed. Cir. 1995)
(“Title 19 requires only cash deposit estimates, not absolute accuracy. These estimates need only
be reasonably correct pending the submission of complete information for an actual and accurate
assessment.”); Asociacion Colombiana de Exportadores de Flores v. United States, 6 F. Supp. 2d
865, 905 (CIT 1998). As noted in these cases, cash deposit rates represent estimated
antidumping duties on future entries. 19 U.S.C. § 1673f provides for refund or collection of
over- and under-payment of estimated duty deposits. 19 U.S.C. § 1673f(a) (1994). Of course,
better estimates produce fewer and less costly reviews. In any event, however, this argument is
not dispositive of the issues presented to the court in this case.
       10
                 19 U.S.C. § 1673d(c) provides, in pertinent part:
       (1) Effect of affirmative determination by the administering authority
       If the determination of the administering authority under subsection (a) of this section is
affirmative, then –
       ***
       (B)
       (i)      the administering authority shall–
                (I)     determine the estimated weighted average dumping margin for each
                        exporter and producer individually investigated, and
                ***
       (ii)     the administering authority shall order the posting of a cash deposit, bond, or other
                security, as the administering authority deems appropriate, for each entry of the
                subject merchandise in an amount based on the estimated weighted average
                dumping margin or the estimated all-others rate, whichever is applicable . . . .
19 U.S.C. § 1673d(c)(1) (1994).
Consol. Court No. 99-07-00457                   PUBLIC VERSION                                   Page 12

whatsoever about middleman dumping rates. Defendant argues that it “complied with this

provision, which provides little guidance as to how cash deposit rates are to be determined.” Id.

at 18.

         Defendant also argues that it is authorized by statute to consider the “full range of

dumping,” although it cites no statutory provision utilizing this term, nor does it detail why a

combination rate would not capture the “full range of dumping.” Id. Defendant cites 19 U.S.C.

§ 1673b(a) and 1673d(a), together with the legislative history to 19 U.S.C. § 1677a,11 as its

authority to “consider the full range of dumping.”12 Id. at 21. That concept is neither implicitly

nor explicitly found in any of these cited provisions.13

         11
               This legislative history relates to a term – “purchase price” – which is not
employed in the current version of the cited statutory subsection. In any event, this legislative
history would appear to support Tung Mung’s position, because it provides that “if a producer
knew that the merchandise was intended for sale to an unrelated purchaser in the United States
under terms of sale fixed on or before the date of importation, the producer’s sale price to an
unrelated middleman will be used as the purchase price.” S. Rep. No. 96-249 at 94 (1979),
reprinted in 1979 U.S.C.C.A.N. 381, 480; and H.R. Rep. No. 96-317 at 75 (1979) (emphasis
added). While that history goes on to indicate that Commerce should examine sales to and by
middlemen to avoid below cost sales by the middlemen, that latter comment does not speak to or
modify the purchase price definition.
         12
                 Defendant-Intervenors also adopt the “full range of dumping” expression, and
argue that “Tung Mung has blurred the distinction between computing the extent of Tung
Mung’s dumping and Commerce’s authority to consider the full range of dumping and arrive at
an overall weighted-average dumping margin[.]” Brief of Defendant-Intervenors in Response to
Motion for Judgment on the Agency Record by Tung Mung Development Co., Ltd. at 11. Clear
statutory principles, however, authorize the assessment of dumping margins. See 19 U.S.C. §
1673d(c)(5)(B)(i). There is no statutory authority for the “full range of dumping” argument, nor
is there statutory authority for the use of single weighted average margins for middleman
dumping, which comes about, if at all, only through Commerce’s authority to fill in the gaps in
the antidumping law.
         13
                 However, 19 U.S.C. § 1673d(a)(4) (1994) does require Commerce to “disregard
any weighted average dumping margin that is de minimis as defined in section 1673b(b)(3) of
this title” – a provision that is plainly at odds with Commerce’s position that the statute provides
it with a mandate to consider the “full range of dumping.” Congress, by mandating the exclusion
of parties with a dumping margin of up to two percent, has deliberately elected not to pursue
antidumping duties on the “full range of dumping.”
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 13

       Defendant-Intervenors, in turn, argue that the plain language of the dumping statute

forecloses Tung Mung’s argument. They contend that the focus of the dumping statute is on

whether the subject merchandise (the unstated implication being that the “subject merchandise”

means “all subject merchandise produced by a given producer”; see Transcript of April 11, 2001

oral argument (“Tr.”) at 90) has been dumped in the United States, regardless of whether the

dumping was done by the producer or a middleman. Brief of Defendant-Intervenors in Response

to Motion for Judgment on the Agency Record by Tung Mung Development Co., Ltd. (“D-I

Opposition Brief”) at 5. “Subject merchandise” is defined in 19 U.S.C. § 1677(25) (1994) (in

pertinent part) as “the class or kind of merchandise that is within the scope of an investigation[.]”

This definition does not provide any guidance in the instant case, and does not support

Defendant-Intervenors’ argument. Indeed, given that many investigations involve merchandise

produced by several different respondents, Defendant-Intervenors’ construction of that term is

untenable for use throughout the statute.14

       Defendant-Intervenors attempt to support the subject merchandise argument, citing Jia

Farn Mfg. Co. v. U.S. Dep’t of Commerce, 17 CIT 187, 817 F. Supp. 969 (1993). That case

hinged on whether Commerce retained jurisdiction to conduct an administrative review in

connection with allegations that a manufacturer, who had been excluded from an antidumping

       The court notes that the statutory de minimis exclusion does not detail the means by
which the “weighted average dumping margin” is calculated, and is not dispositive of the issues
presented in the instant case.
       14
               As Tung Mung notes, the “subject merchandise” argument would, if adopted,
prohibit Commerce from ever issuing combination rates, though Commerce’s own regulations
recognize its authority to do so. Tung Mung Development Co., Ltd.’s Reply Memorandum to:
Defendant’s Memorandum in Opposition to Plaintiff’s and Plaintiff-Intervenor’s Motions for
Judgment Upon the Agency Record and Defendant-Intervenors’ Brief in Response to Judgment
on the Agency Record by Tung Mung Development Co., Ltd. (“Tung Mung Reply Brief”) at 4.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                  Page 14

order,15 was transshipping subject merchandise produced by other manufacturers who were

subject to the order. The court concluded that “exclusion of a firm from the order applies only

when the firm acts as in the same capacity as it was excluded from the order. In the case of

plaintiff, the exclusion from the order applies so long as it acts as an exporter of the sweaters it

produces because the zero percent dumping margin was assigned to the sweaters it produces.”

Id., 817 F. Supp. at 973. When the plaintiff began shipping the subject merchandise of other

producers to whom a rate had been assigned, Commerce had jurisdiction to collect duties on the

merchandise shipped by Jia Farn from the other producers.

       Defendant-Intervenors cite Jia Farn in support of their argument that “only subject

merchandise with a zero or de minimis margin of dumping is eligible for exclusion.” D-I

Opposition Brief at 17.16 This argument lacks relevance to the current inquiry for at least two

reasons. First, the court was not construing the statutory provisions nor the regulation at issue

here. Second, the decision in Jia Farn was necessary to eliminate a means of circumvention, by

which producers subject to an order could avoid payment of any antidumping duties (including

the all-others rate that would have applied to an exporter not specifically included within the

terms of the order) by selling through a producer/exporter that had been excluded. See Jia Farn,

17 CIT at 190, 817 F. Supp. At 972 (“Plaintiff claims because it obtained the negative

determination as an exporter, the company is excluded from any administrative review regardless

of whether it exports the sweaters manufactured by itself or by others under the order.”). Put

simply, Jia Farn forbade the use by “upstream” producers or exporters of “downstream” sellers to

evade antidumping duties imposed on the “upstream” parties.17 In the instant case, however,

       15
               Jia Farn did not discuss the manner in which the plaintiff’s de minimis margin had
been set.
       16
               The court finds no case citing Jia Farn for such a proposition.
       17
               A similar analysis applies to the regulations cited by Defendant-Intervenors in
further support of their subject merchandise argument. 19 C.F.R. 351.204(e)(3)(i), regarding
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 15

Commerce is attempting to impose the liability of a downstream exporter18 on an upstream

producer/exporter, although the record does not reflect any way in which Tung Mung has

attempted to use Ta Chen as a “front”. Jia Farn is simply inapposite.

       At least one part of the antidumping statute, however, does categorize the goods by their

producer. Specifically, the term “foreign like product”, which is integral to the definition of

“normal value” cited by Tung Mung, is defined in pertinent part as merchandise which “was

produced in the same country by the same person as” the subject merchandise. 19 U.S.C. §

1677(16).19 The antidumping statute does, thus, trace goods by their producer, for purposes of

establishing normal values. It also tracks goods by producer to avoid the types of jiggery pokery

described in Jia Farn. The statute does not, however, mandate the imposition on the producer of

any downstream dumping of its goods.

       Tung Mung notes that 19 U.S.C. § 1673d(c)(1)(B)(i), which is cited by Defendant and the

Defendant-Intervenors, requires Commerce to “determine the estimated weighted average

dumping margin for each exporter and producer individually investigated.” 19 U.S.C. §

1673d(c)(1)(B)(i) (1994) (emphasis added). The plain language of this provision supports Tung

exclusions, provides that
         In the case of an exporter that is not the producer of subject merchandise, the
         Secretary normally will limit an exclusion of the exporter to subject merchandise
         of those producers that supplied the exporter during the period of investigation.
19 C.F.R. 351.204(e)(3)(i) (1998). When this regulation was promulgated, Commerce explained
that “[t]his limitation is appropriate, because the lack of knowledge [of exportation] by these
producers provided the basis for investigating and establishing a rate for the exporter.”
Antidumping Duties; Countervailing Duties; Final Rule, 62 Fed. Reg. 27,296, 27,310 (Dep’t
Commerce) (May 19, 1997) (the Supplementary Information of which is referenced herein as the
“Preamble”).
       18
                 The court has not located, nor were the parties able to cite, any case imposing
liability of a downstream exporter on an upstream producer.
       19
                 The definition of “export price” does not trace the goods by their producer; it
simply looks to the price of sale of any generic subject merchandise, produced by any respondent,
at the time of its first sale by a producer or an exporter.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                  Page 16

Mung’s position; it tends to indicate that a separate dumping rate must be computed for each

respondent.20 This construction is supported by Commerce’s own regulation, at 19 C.F.R. §

351.204(c)(1) (1998), which states that “[i]n an investigation, the Secretary will attempt to

determine an individual weighted-average dumping margin . . . for each known exporter or

producer of the subject merchandise.”

       The dumping statute doesn’t say whether a middleman’s dumped sales of a producer’s

subject merchandise justifies imposing a single rate. Where a statute is ambiguous or silent on a

specific issue, and it is apparent from the agency’s generally conferred authority and other

statutory circumstances that Congress expects the agency to be able to speak with the force of

law when it addresses ambiguity in the statute or fills a space in the enacted law, a reviewing

court “is obliged to accept the agency’s position if Congress has not previously spoken to the

point at issue and the agency’s interpretation is reasonable.” United States v. Mead, 2001 WL

672258 at *6 (U.S. June 18, 2001). “[T]he fair measure of deference to an agency administering

its own statute has been understood to vary with circumstances, and courts have looked to the

degree of the agency’s care, its consistency, formality, and relative expertness, and to the

persuasiveness of the agency’s position.” Id.; see also Chevron, U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984). Agency "[i]nterpretations ... in

opinion letters – like interpretations contained in policy statements, agency manuals, and

enforcement guidelines, all of which lack the force of law -- do not warrant Chevron-style

deference." Christensen v. Harris County, 529 U.S. 576, 587 (2000). Agency interpretations

which lack the force of law are "entitled to respect ... but only to the extent that those

interpretations have the 'power to persuade'." Id., citing Skidmore v. Swift & Co., 323 U.S. 134,

       20
              Reference to 19 U.S.C. § 1677(28), which defines “exporter or producer” to mean
“both where appropriate”, would, on the other hand, prompt the conclusion that the provision
cited by Tung Mung is ambiguous. However, neither party has cited, much less analyzed,
§ 1677(28), and the court finds no cases construing this provision.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 17

140 (1944). Not surprisingly, Commerce argues that the decision of whether to impose a single

rate or a combination rate is committed to its discretion, under the relevant regulation – 19

C.F.R. § 351.107 -- and the preamble thereto. Commerce further argues that its “interpretation of

its own regulation is entitled to deference.” Torrington Co. v. United States, 82 F.3d 1039, 1050

(Fed. Cir. 1996).

       Section 351.107 provides in pertinent part:

       (b)      Cash deposit rates for nonproducing exporters-

               (1)     Use of combination rates–
                       (i)    In general. In the case of subject merchandise that is exported to
                              the United States by a company that is not the producer of the
                              merchandise, the Secretary may establish a “combination” cash
                              deposit rate for each combination of the exporter and its supplying
                              producer(s).

                       (ii)    Example. A nonproducing exporter (Exporter A) exports to the
                               United States subject merchandise produced by Producers X, Y,
                               and Z. In such a situation, the Secretary may establish cash deposit
                               rates for Exporter A/Producer X, Exporter A/Producer Y, and
                               Exporter A/Producer Z.

19 C.F.R. § 351.107(b) (1998) (emphasis added). The cited portion of the regulation never says

of what type of cash deposit rate will be established if a combination rate is not used, nor how

that alternative rate would be calculated. Thus, the regulation cited by Commerce does not speak

directly to the issue presented in this case – derivation of a single, weighted average rate from the

rates of two unaffiliated companies.

       Defendant and Defendant-Intervenors also cite the Preamble to 19 C.F.R. § 351.107.21 It

does not, however, provide any direct support for Commerce’s decision in the instant case. That

Preamble identifies circumstances in which the use of combination rates would or would not be

       21
                The Preamble is not part of the governing regulations set forth in the CFR.
Rather, it is described by Commerce as “supplementary information”, published
contemporaneously with the regulations. Antidumping Duties; Countervailing Duties; Final
Rule, 62 Fed. Reg. at 27,296.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 18

appropriate. It does not, however, discuss the use of a single, weighted average rate at any point.

Indeed, where the Preamble does reference the use of other, non-combination rates, it discusses

employing the rate assigned to the producer or to the non-producing exporter (middleman).

While the parties have cited only narrow portions of the Preamble, the court finds a broader

review provides greater insight into the agency’s intended meaning of certain relevant terms.

Review of the entirety of the Preamble also renders more striking the absence of any reference to

the single weighted average methodology.

        The Preamble provides, in part:

             We have added a new §351.107 that deals with (1) the establishment of
      deposit rates in situations involving a nonproducing exporter, (2) the selection of
      the appropriate deposit rate where entry documents do not identify the producer of subject merchandise, a
nonmarket economy countries.

                Nonproducing exporters: In the AD Proposed Regulations, 61 FR at 7311,
        the Department requested additional public comment on the issue of whether to
        promulgate special rules regarding the rates applicable to exporters that are not
        also producers, such as trading companies. We noted that one alternative would
        be to calculate a separate rate for each exporter/producer combination.22

                 One commenter suggested that the Department should apply this approach
        in all instances. Other commenters argued that the Department should not codify
        an across-the-board rule, but instead should establish rates for exporter/producer
        combinations on a case-by-case basis. Another commented that it would be
        inappropriate to determine rates solely on the basis of exporter/producer
        combinations, and that normally the Department should base deposits of estimated
        duties on the rate calculated for the producer.

Antidumping Duties; Countervailing Duties: Final Rule, 62 Fed. Reg. 27,296, 27,302-303

(1997). The Preamble continues:

               The Department agrees with the comments suggesting that it is appropriate
        in some instances to establish rates for exporter/producer combinations.
        Therefore, in paragraph (b)(1)(i), we have provided for the establishment of such
        "combination rates."

        22
                In the Proposed Regulations, Commerce did not detail any of the other
alternatives.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                     Page 19

               We believe that combination rates are appropriate, because, in an AD
       proceeding, the Department usually investigates or reviews sales by a
       nonproducing exporter only if that exporter's supplier sold the subject
       merchandise to the exporter without knowledge that the merchandise would be
       exported to the United States. While we agree with one commenter that in these
       instances the producer's pricing is not at issue [implying, then, that there is no
       need for a combination rate, but only for a rate for the exporter alone], we are
       concerned about the proper application of any deposit rate determined on the basis
       of the exporter's pricing. Establishing a deposit rate for an exporter and, without
       regard to the identity of the supplier, applying that rate to all future exports by that
       exporter could lead to the application of that rate even if other suppliers sold to
       the exporter with knowledge of exportation to the United States. This would
       enable a producer with a relatively high deposit rate to avoid the application of its
       own rate by selling to the United States through an exporter with a low rate. [So
       Commerce implicitly rejects the approach of imposing a rate only on the exporter,
       without regard to the producer.] Therefore, in order to ensure the proper
       application of deposit rates, the Department believes that it should establish,
       where appropriate, individual rates for nonproducing exporters in combination
       with the particular supplier or suppliers from whom the exporter purchased the
       subject merchandise.

Id., 62 Fed. Reg. at 27,303 (emphasis added). Defendant cites the preceding passage, arguing

that it establishes Commerce’s “discretion to use channel rates or a single rate in situations it

deems appropriate.” Defendant Opposition Brief at 20. While the Preamble states that

Commerce “may” use a combination rate, it does not discuss the use of a single weighted average

rate in the middleman dumping context, and that passage does not mention a “single rate” at all.

And, while Defendant-Intervenors cite the Preamble, they do not indicate how it authorizes the

single weighted average method. Indeed, in the second paragraph quoted above at p. 18,

Commerce states that “the producer’s pricing is not at issue” in the “instances” where a

nonproducing exporter is investigated and the producer sold without knowledge. This implies,

then, that in such circumstances, the producer’s rate is essentially assumed to be zero, since they

had no knowledge of export. Here, Tung Mung’s rate has been found to be zero or its de

minimis equivalent. Thus, in the Preamble’s hypothetical situation, Commerce concludes that a
Consol. Court No. 99-07-00457                PUBLIC VERSION                                Page 20

combination rate is proper.   The Preamble continues, outlining three different situations as

examples of instances in which a combination rate may be impractical or inappropriate:23

               On the other hand, the Department believes that there are situations where
       it may be inappropriate and/or impractical to establish combination rates.24 For
       example, it may not be necessary to establish combination rates when
       investigating or reviewing nonproducing exporters that are not trading companies,
       such as original equipment manufacturers. In addition, it may not be practicable
       to establish combination rates when there are a large number of producers, such as
       in certain agricultural cases. The Department will make such exceptions to
       combination rates on a case-by-case basis.
               Another instance in which the Department assigns rates to exporters is in
       AD investigations and reviews of imports from nonmarket economies (NMEs). In
       those cases, if sales to the United States are made through an NME trading
       company, we assign a noncombination rate to the trading company regardless of
       whether the NME producer supplying the trading company has knowledge of the
       destination of the merchandise. One exception to this NME practice occurs where
       we find no dumping and exclude an exporter from an AD order. Where
       exclusions are involved, we publish a combination rate to address the same
       concerns described above regarding redirection of exports through an excluded
       trading company. Nothing in §351.107(b)(1) is intended to change our policy for
       assigning rates in NME proceedings.
               The Department also believes it is not appropriate to establish combination
       rates in an AD investigation or review of a producer; i.e., where a producer sells
       to an exporter with knowledge of exportation to the United States. In these
       situations, the establishment of separate rates for a producer in combination with
       each of the exporters through which it sells to the United States could lead to
       manipulation by the producer. Furthermore, the Department recognizes that in

       23
                Section 351.107(b)(2) contemplates another circumstance when a combination
rate would not be employed:
       In the case of subject merchandise that is exported to the United States by a
       company that is not the producer of the merchandise, if the Secretary has not
       established previously a combination cash deposit rate under paragraph (b)(1)(i)
       of this section for the exporter and producer in question or a noncombination rate
       for the exporter in question, the Secretary will apply the cash deposit rate
       established for the producer. If the Secretary has not previously established a cash
       deposit rate for the producer, the Secretary will apply the “all-others” rate[.]
19 C.F.R. § 351.107(b)(2) (1998).

       24
               The record does not reflect any finding by Commerce that it would be
impracticable to apply a combination rate in this situation.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                    Page 21

       many industries it is not uncommon for a producer to sell some amount of
       merchandise purchased from other producers. In such situations, the Department
       generally intends to establish a single rate for such a respondent based on its status
       as a producer, although unusual circumstances may warrant the application of a
       combination rate.

Id., 62 Fed. Reg. at 27,303 (emphasis added).

       In the first full paragraph quoted on this page, the implication is that a single rate will be

imposed on the original equipment manufacturer or the agricultural exporter, without regard to

the rate of the producer. In the next quoted paragraph, regarding NMEs, it appears that a single

rate is applied for the exporter only.25 Defendant and Defendant-Intervenors cite the first and last

sentences of the third quoted paragraph as providing the authority for the single weighted average

rate. Tung Mung, on the other hand, argues that this paragraph does not apply to the situation

where there has been a finding of dumping by the middleman. Rather, Tung Mung states, this

discussion pertains to the situation when a producer sells through a middleman, and there is a

finding of dumping at the level of the producer’s sale, but the middleman is not named as a

respondent or there is no finding that the middleman has dumped. Id. at 12. Tung Mung argues

that in such a situation, the statement that the “Department generally intends to establish a single

rate for such a respondent based on its status as a producer” comports with the general practice of

imposing a rate on a producer, without regard to the actions of the middleman. Id.26 This

reading is buttressed by the earlier statement in the Preamble that Commerce “usually

investigates or reviews sales by a nonproducing exporter only if that exporter’s supplier sold the

       25
               The application of the rate to the exporter, rather than the producer, appears to
contravene Defendant-Intervenors’ “subject merchandise” argument, because it does not require
tracking the goods by producer.
       26
               Indeed, there is no mention of a single weighted average rate here or elsewhere.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                  Page 22

subject merchandise without knowledge that the merchandise would be exported to the United

States.” Preamble, 62 Fed. Reg. at 27,303. In other words, the normal situation is that either (1)

the producer did not know that the exporter was sending its merchandise to the United States and

Commerce thus investigates the exporter and not the producer, or (2) the producer did know that

the exporter was sending its merchandise to the United States and Commerce investigates the

producer and not the exporter; investigation of both is an “unusual circumstance.” See Tr. at 67,

69.

       The Preamble continues, speaking in the context of countervailing duties:

               In the case of CVD proceedings, subject merchandise may be subsidized
       by means of subsidies provided to both the producer and the exporter. In the
       Department's view, all subsidies conferred on the production of subject
       merchandise benefit that merchandise, even if it is exported to the United States
       by a reseller rather than the producer itself. Therefore, the Department calculates
       countervailable subsidy rates on the basis of any subsidies provided to the
       producer, as well as those provided to the exporter in any investigation or review
       involving exports by a nonproducing exporter. As a result, rates established for
       particular combinations of exporters and producers are the most accurate rates.
       Moreover, as in an AD proceeding, combination rates help to ensure the proper
       application of combination rates when other producers sell through the same
       exporter.
               As in AD proceedings, in CVD proceedings there may be situations in
       which it is not appropriate or practicable to establish combination rates. In such
       situations, the Department will make exceptions to its combination rate approach
       on a case-by-case basis.

Id., 62 Fed. Reg. at 27,303 (emphasis added). The underlined language in the preceding

paragraph appears to further undercut Commerce’s post-hoc explanation for its ruling in the

instant case. The cited passage uses the “subject merchandise” language that drives Defendant-

Intervenors’ single weighted average argument before this court. Here, however, where

Commerce states an intention to calculate rates based on transactions at both the producer and

the exporter levels (exactly the situation before the court now), it states that “rates established for
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 23

particular combinations of exporters and producers are the most accurate rates.” Id. In the next

two sentences, Commerce specifically connects the methodology to that used in an AD

proceeding. And in the final situation, Commerce indicates that in both antidumping cases and

countervailing duty cases are to be the default method, and special circumstances must apply to

warrant another approach.27 The Preamble continues:

               Nonmarket economy cases: The second sentence of the definition of

       27
                  The court has reviewed the published decisions in which Commerce has cited 19
C.F.R. § 351.107. In each case, Commerce has found some “exception” which warrants the use
of a method other than the combination rate norm set through its notice-and-comment
rulemaking process. See, e.g., Certain Welded Carbon Steel Pipes and Tubes From Turkey;
Final Results of Countervailing Duty Administrative Review, 65 Fed. Reg. 49,230, 49,230
(Dep’t Commerce) (2000) (“we determine that it is not appropriate to establish combination rates
. . . based on the fact that the subsidies conferred upon the subject merchandise were received by
the producer only. Therefore, combination rates would serve no practical purpose. Instead, we
have only calculated one rate, for . . . the producer of the subject merchandise.”); Final
Affirmative Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality Steel
Plate From the Republic of Korea, 64 Fed. Reg. 73,176, 73,178 (Dep’t Commerce) (1999) (“we
have determined that it is not appropriate to establish combination rates . . . based on two main
facts: first, the majority of the subsidies conferred upon the subject merchandise were received by
the producers. Second, the difference in the levels of subsidies . . . among the individual trading
companies is insignificant. Therefore, combination rates would serve no practical purpose
because the calculated [combination] rate [for each producer/exporter combination] . . . would
effectively be the same rate.”); Preliminary Negative Countervailing Duty Determination and
Alignment of Final Countervailing Duty Determination With Final Antidumping Duty
Determination: Structural Steel Beams From the Republic of Korea, 64 Fed. Reg. 69,731, 69,733
(Dep’t Commerce) (1999) (“we preliminarily determine that it is not appropriate to establish
combination rates . . . based on two main facts: First, the majority of subsidies conferred upon the
subject merchandise were received by the producers. Second, the difference in the levels of
subsidies . . . [to] the individual trading companies . . . is insignificant. Thus, combination rates
would serve no practical purpose because the calculated [combination] rate [for each
producer/exporter combination] . . . would effectively be the same rate.”); Final Affirmative
Countervailing Duty Determination: Stainless Steel Sheet and Strip in Coils from the Republic of
Korea, 64 Fed. Reg. 30,636, 30,641 (Dep’t Commerce) (1999) (same); Final Negative
Countervailing Duty Determination: Stainless Steel Plate in Coils From the Republic of Korea,
64 Fed. Reg. 15,530, 15,532 (Dep’t Commerce) (1999) (same). In all of these cases, Commerce
employed a weighted average method, even though the Preamble states that the combination rate
approach is for all but exceptional cases. It appears that Commerce has, without notice and
comment, developed a practice which differs from the norm articulated in its Preamble.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                 Page 24

       "rates" in proposed §351.102(b) provided the Department with the authority to
       apply a single AD margin to all producers and exporters from a nonmarket
       economy ("NME") country. We have moved that sentence to paragraph (d) of
       §351.107.
                As explained in the AD Proposed Regulations, 61 FR at 7311, the
       Department elected not to codify its current presumption that a single rate will be
       applied in NME cases. We received several comments on this issue.
                Four commenters suggested that the Department codify its current
       presumption of a single rate. Three of these commenters viewed the presumption
       as correct, because the fact that a country is an NME carries with it an assumption
       that the government controls all exporters. Moreover, these commenters asserted
       that NME governments, due to their control, can funnel sales of the subject
       merchandise through, or transfer production of the subject merchandise to, the
       entity that receives the most favorable dumping margin.
       ***
                As in the proposed regulations, we have refrained from codifying the
       presumption of a single rate in NME AD cases. Nor have we adopted a modified
       version of the presumption. We appreciate the many thoughtful comments that
       we received on this topic. However, because of the changing conditions in those
       NME countries most frequently subject to AD proceedings, we do not believe it is
       appropriate to promulgate the presumption or the separate rates test in these
       regulations. Instead, we intend to continue developing our policy in this area, and
       the comments that were submitted will help us in that process. We would like to
       clarify, however, that we do intend to grant separate rates in appropriate
       circumstances, and that our decision not to codify the presumption or the separate
       rates test should not be seen, as one commenter suggested, as a decision not to
       grant separate rates. Also, as discussed above in connection with §351.107(b)(1),
       we intend to continue calculating AD rates for NME export trading companies,
       and not the manufacturers supplying the trading companies.

Id., 62 Fed. Reg. 27,304-305 (emphasis added). This last excerpted section is instructive in

several respects. First, this Preamble section, and in particular the last quoted sentence, rebuts

Defendant-Intervenors’ “subject merchandise” argument: AD rates are repeatedly discussed as

applying to producers and/or middlemen, not to “merchandise.” Second, this section discusses at

length the use of a single rate (though not a single weighted average rate), suggesting28 that is it

       28
                This section of the Preamble, regarding rates for NME respondents, is one of only
two mentions of a single rate in the Preamble governing §351.107. The absence of this term
elsewhere underscores the exceptional nature of single rates under §351.107. The use of this
term also highlights the fact that Commerce was aware of the option of single rates, and did not
specify their use in the circumstances presented in this case.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 25

appropriate only where there is an actual finding of central influence over the pricing of the

exporter – namely, in the case of a nonmarket economy, where, by definition, the government is

“pulling the strings” controlling the exporter. There is no finding of such control in this case,

and no mention in any other part of the Preamble of the possibility of such a finding.

       Defendant and Defendant-Intervenors have argued that the use of a combination rate here

would permit Tung Mung to avoid paying any dumping duties, by selling directly to the United

States or through another channel of distribution. They argue that a single rate is necessary to

ensure that Tung Mung be covered by any dumping order, to preclude the possibility of

manipulation. See Defendant Opposition Brief at 20; D-I Opposition Brief at 20.

       Commerce points to the Preamble, see supra at p. 20, in which it has essentially adopted

knowledge of exportation as evidence that a producer knew of the exporter’s dumping and

assisted in that dumping. Defendant-Intervenors argue that “trading companies typically operate

at small mark-ups and presumably do not take losses” and that “Ta Chen’s apparent willingness

to engage in middleman dumping was thus aberrational and peculiar behavior that the

Department properly exercised it authority to scrutinize.” D-I Opposition Brief at 17 n.24.29

Defendant and Defendant-Intervenors contend that there should be a presumption that Tung

Mung colluded with Ta Chen in dumping, because Tung Mung knew that Ta Chen would export

its subject merchandise to the United States. See, e.g., Tr. at 67-68. In support of this argument,

Defendant and Defendant-Intervenors cite to the Preamble.30

       The Preamble, although it was issued after the notice-and-comment rulemaking procedure

       29
                Defendant-Intervenors also argued that Ta Chen’s decision not to contest
Commerce’s decision was suspicious, such that it was indicative of collusion. D-I Opposition
Brief at 17 n.24; Tr. at 69. In fact, Ta Chen benefits from a single, weighted average rate in
which its rate is averaged with the much lower rate of Tung Mung. Ta Chen’s incentives for
appeal do not mirror those of Tung Mung.
       30
                Defendant and Defendant-Intervenors have not cited any statutory basis, nor basis
in the regulation itself, for such a presumption.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                 Page 26

that went into 19 C.F.R. § 351.107, is a policy statement, and not an agency interpretation that

holds the “force of law”, such as would be entitled to deference under Christensen. It does not

articulate the reason for the presumption it summarily references; failing that, the court finds it

unpersuasive under Skidmore. Commerce notes that all of Tung Mung’s sales of subject

merchandise to the United States, whether directly or indirectly, are to or through Ta Chen or its

affiliates, and argues that this indicates collusion in dumping. Final Determination, 64 Fed. Reg.

at 30,605; Tr. at 31. Defendant-Intervenors argue that Tung Mung, not Ta Chen, in fact absorbed

the loss resulting from this dumping, through some arrangement between the two companies.

       During verification, however, Commerce examined the relationship between the two

parties and found no affiliation. The record contains no evidence of such collusion, and

Defendant and Defendant-Intervenors acknowledge that the investigation yielded no evidence of

affiliation between the two companies. Tr. at 15, 23 and 64. The court has been presented with

no factual reason to conclude that Ta Chen did not engage in dumping for the same reason

producers do: to retain or gain market share.31

       The court’s research, and the responses of the parties at oral argument, reveal only two

instances in which a dumping margin is based on the activities of parties other than the

respondent at issue: in nonmarket economy cases, and in “collapsing” cases, where Commerce

has made findings to support a determination that affiliated companies should be treated as a

single entity, and thus receive a single, weighted average dumping margin. See, e.g., Asociacion

Colombiana, 6 F. Supp. 2d at 892-96. Each of these situations requires a finding of affiliation

between the parties whose margins are to be combined; no such finding is present here. The

       31
                At one point in oral argument, an attorney attributed alleged “national
characteristics” to certain parties. The court interrupted that line of argument, ordered that it not
be raised again, and admonished counsel, who repeatedly apologized. The court here notes that
admonition not to further chastize counsel, but rather to reiterate the impropriety of any such
argument before this, or any, court of the United States.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                  Page 27

imputed knowledge rationale referenced in the Preamble, assuming it could be construed to

require the use of a single weighted-average rate, does not rise to a similar level, sufficient to

justify a single weighted average rate for two unaffiliated entities.

       Defendant-Intervenors have taken the position that, once a middleman dumping

investigation is launched and a middleman is found to have dumped, a producer respondent can

never be excluded. The contention has no basis in the statute, and in this case, another producer,

Chang Mien, was excluded from the order.

       Review of the Preamble provides no support for the use of a single, weighted average

rate, and certainly does not mandate such a method. It does not even contain a discussion of such

a rate in this context. To the contrary, a review of all of the Preamble indicates that a

combination rate may well be proper in the instant case, although the court defers to Commerce’s

authority to make the determination as to whether a combination rate or some other rate is

appropriate. However, this Preamble, and the associated regulation, do not constitute an agency

construction of the statute at issue, on the issue of a single, weighted average rate, such as would

trigger Chevron deference. The agency is quite silent, in this regulation and Preamble, on the

issue of a single, weighted average rate in the context of a middleman dumping investigation.

There is thus nothing there for the court to analyze for reasonableness or substantial evidence.

       The cited statutory provisions do not support nor explicitly foreclose Commerce’s use of

the single, weighted average cash deposit rate. The new regulation cited by Commerce – 19

C.F.R. § 351.107 – explicitly provides for combination rates, but does not require the use of

combination rates, and provides no indication whatsoever as to the situations in which another

type of rate might be used, nor the type of rate that might be used. Commerce then cites the

Preamble, which reiterates that the combination rate methodology is the norm, but allows

Commerce to use an unspecified other method in where a combination rate is “impractical” or

“inappropriate”. The Final Determination in this case represents the first instance in which
Consol. Court No. 99-07-00457                PUBLIC VERSION                                Page 28

Commerce has articulated a position of requiring single weighted average rates in middleman

dumping cases. Nor has Tung Mung32 or YUSCO demonstrated that the statute or regulation

requires reversal of Commerce’s determination in this regard. The court will look, then, to the

agency’s prior practice in this area.

                                                2.

                                  Reasons for Reversal of Policy

        Tung Mung correctly notes that this is the first instance in which the Department has

imposed a single weighted average dumping rate in a middleman dumping investigation, and

argues that this reversal is contrary to Commerce’s prior practice. In the Final Determination,

Commerce stated that it was examining this issue for the first time since its decision in Fuel

Ethanol from Brazil, in which Commerce imposed separate, or combination, rates.33

       32
                 Tung Mung also argues that Commerce’s imposition of a single rate improperly
penalizes Tung Mung for pricing decisions made by Ta Chen, an unaffiliated company over
which Tung Mung has no control. Tung Mung Moving Brief at 14. Because the court has
decided to order a remand on the issue of the proper rate, this argument is moot. However, were
the court to reach this argument, it would be constrained to reject it, at least on the grounds
offered. Tung Mung bases its argument on the 1974 amendments to the Antidumping Act, which
ended the practice of using other producers’ home market sales as a basis for the normal value of
a producer that had no home market sales, citing “occasional inequities” which resulted from
“rendering [producers] liable to the imposition of dumping duties on the basis of prices which
they cannot control and may not even know about.” Report of the Committee on Finance,
United States Senate, on H.R. 10710 (Report No. 93-1298, 93rd Cong., 2nd Sess.), Nov. 26, 1974,
at 177. Tung Mung argues that “[w]e are aware of no other situation in which a foreign producer
is held liable under the antidumping law for the pricing actions of an unaffiliated entity which it
cannot influence or control.” Tung Mung Moving Brief at 16.
         This statutory provision does not govern the situation at issue here. Tung Mung does not
cite to any relevant provision of the Antidumping Act, the accompanying regulations, or case law
in support of its argument, which is essentially equitable in nature. Tung Mung is essentially
arguing that Commerce’s construction of its own regulation, regarding the decision of whether to
issue combination or single rates, is inequitable. Such an argument is insufficient as a matter of
law in light of the deference generally accorded to Commerce under Chevron.
       33
             That is not entirely accurate; in its SSPC From Taiwan decision, decided by
Commerce less than three months prior to the decision now before this court, Commerce
imposed combination rates on the producer and the middleman. This aspect of the decision in
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                Page 29

Antidumping: Fuel Ethanol from Brazil; Final Determination of Sales at Less Than Fair Value,

51 Fed. Reg. 5,572 (Dep’t Commerce) (1986) (“Fuel Ethanol from Brazil”). Defendant-

Intervenors note correctly that “there seem to have been just three occasions on which the

Department has rendered final affirmative middleman dumping determinations:” SSPC From

Taiwan, Fuel Ethanol from Brazil, and the instant case. D-I Opposition Brief at 18.

       In Fuel Ethanol from Brazil, Commerce decided to impose a combination rate for

Copersucar, a consortium of producers, “based on its sales to a trading company other than [the

middleman found to have dumped the subject merchandise], because Copersucar knew the

destination of the ethanol prior to the sale and because Copersucar filed an adequate response.”

Id., 51 Fed. Reg. at 5,575. Commerce rejected the argument that “[s]ince virtually all of the fuel

ethanol sold by Copersucar for export to the United States was sold to [the dumping middleman],

and since [the dumping middleman] was selling at less than its acquisition cost plus expenses,” a

single rate was proper. Id.

       An administrative agency has the authority to change or revoke its policies and practices,

if a reasonable explanation is provided for the change. American Silicon Technologies v. United

States, 118 F. Supp. 2d 1329, 1331 (CIT 2000). The court will review an agency’s change of

position or practice to determine whether the action was arbitrary and capricious, and will find

the change arbitrary unless it is supported by substantial evidence. Id. The underlying rationale

of this principle is that the reviewing court should be able to understand the basis of the agency’s

action and so may judge with consistency of that action with the agency’s general mandate. The

rule also ensures that an agency will be “faithful and not indifferent to the rule of law”, and

“prohibits the agency from adopting significantly inconsistent policies that result in the creation

SSPC From Taiwan was remanded to Commerce for further consideration in light of 19 C.F.R. §
351.107, and Commerce has since issued a remand determination applying a single, weighted
average rate. Tung Mung notes, however, that Commerce sought that remand only after Tung
Mung filed its Rule 56.2 Memorandum in this case.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 30

of conflicting lines of precedent governing the identical situation.” Cultivos Miramonte S.A. v.

United States, 21 CIT 1059, 1064 n.6, 980 F. Supp. 1268, 1274 n.6 (1997) (citations and

punctuation omitted). See also Allegheny Ludlum Corp. v. United States, 112 F. Supp. 2d 1141,

1147 (CIT 2000) (“Accordingly, it is well-established that Commerce may depart from a prior

practice so long as it provides a ‘reasoned analysis’ for its change.”). “The case for judicial

deference is less compelling with respect to agency positions that are inconsistent with

previously held views.” Hylsa, S.A. v. United States, 1998 WL 51731, *3 (CIT Feb. 3, 1998);

see also Mead, 2001 WL 672258 at *6 (“the fair measure of deference to an agency

administering its own statute has been understood to vary with circumstances, and courts have

looked to the degree of the agency’s care, its consistency, formality, and relative expertness, and

to the persuasiveness of the agency’s position”) (emphasis added).

       Commerce’s decision in the instant case represents a clear reversal of its prior practice set

forth in Fuel Ethanol. Commerce and the Defendant-Intervenors claim that the approach used in

Fuel Ethanol was expressly altered by 19 C.F.R. § 351.107.34 Defendant Opposition Brief at 25;

       34
                 Commerce now states that its “practice generally has been to favor a single,
weighted-average dumping margin for each producer or exporter.” Defendant Opposition Brief
at 24, citing Ferrovanadium and Nitrided Vanadium from the Russian Federation: Notice of Final
Results of Antidumping Duty Administrative Review, 62 Fed. Reg. 65,656, 65,659 (Dep’t
Commerce) (1997) (“Ferrovanadium”). Commerce did not reference Ferrovanadium in the
Final Determination, however, and this appears to be a post hoc rationalization, which this court
will not entertain.
        Tung Mung argues that Ferrovanadium supports its position, to the extent that it refers to
“a number of past determinations where the Department has refused to establish
producer/exporter combination rates, except where a producer/exporter margin is found to be
zero or de minimis and thus excluded from an antidumping order.” Ferrovanadium, 62 Fed. Reg.
at 65,659; Tung Mung Reply Brief at 5-6. Tung Mung apparently reads this excerpt to mean that
the Department has refused to establish combination rates except where a producer or an exporter
margin is found to be zero or de minimis. This excerpt in context does not support that reading.
Rather, it appears that the Department has refused to establish a combination rate except where
the averaging used in the single rate method yields a rate below the de minimis threshold, and use
of a combination method would permit the Department to impose a margin on one of the two
parties that is above the de minimis threshold. Ferrovanadium, 62 Fed. Reg. At 65,659.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                  Page 31

D-I Opposition Brief at 19.

        Close examination of Fuel Ethanol, § 351.107, and the decision below are necessary to

determine whether Commerce has provided a “reasonable explanation for the change.” The

decision to impose a combination rate in Fuel Ethanol was predicated on four facts: (1) the

producer had sold to a trading company other than the middleman found to have dumped the

subject merchandise; (2) the producer knew the subject merchandise was for export to the United

States; (3) the producer filed an adequate response; and (4) the subject merchandise was sold to

the dumping middleman to the extent there were almost no sales through any other channel.

Each of these facts is identical to the findings vis-a-vis Tung Mung in the instant case. Two

questions thus arise: First, does 19 C.F.R. § 351.107 directly alter the analysis relating to one or

more of these four factual grounds for the ruling in Fuel Ethanol; and second, did Commerce

otherwise provide a “reasonable explanation” supported by substantial evidence in the Final

Determination below, regarding the reasons for its change in practice?

        In the Final Determination, Commerce did not attempt to distinguish Fuel Ethanol. It did,

however, offer two grounds to distinguish its imposition of combination rates in SSPC, stating

that

        in that determination, YUSCO sold the subject merchandise to the United States
        only through Ta Chen and the dumping margin on that channel was above de
        minimis, such that we were not faced with the same factual situation in the instant
        case. . . . [Here,] both Tung Mung and YUSCO had a small volume of sales to the
        United States not subject to our current middleman investigation. Moreover, in
        the Preliminary Determination, we determined that on an overall basis, neither
        Tung Mung nor YUSCO had estimated dumping margins that exceeded the de
        minimis level such that the possibility of exclusion existed for these firms.

Final Determination, 64 Fed. Reg. at 30,605. Commerce did not, however, provide any

explanation as to how these facts tied into the rationale for a single as opposed to a combination

rate.

        Review of this record compels the conclusion that Commerce has indeed changed its
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                    Page 32

prior practice with regard to the imposition of combination rates where there is a finding of

middleman dumping and the producer is a named respondent. Commerce has failed to provide

any explanation for this change in practice, nor has it provided substantial evidence to support

the change.35

       “[T]he fair measure of deference to an agency administering its own statute has been

understood to vary with circumstances, and courts have looked to the degree of the agency’s care,

its consistency, formality, and relative expertness, and to the persuasiveness of the agency’s

position.” Mead, 2001 WL 672258 at *6. In this Final Determination, the agency’s stated

rationale, while arrived at in the course of a formal adjudication, is far from persuasive in

supporting its conclusion that the statute, regulation, and/or Preamble require or warrant the use

of a method other than the normative combination rate. Nor is that rationale consistent with the

agency’s prior position on identical facts. Under the Chevron and Mead standards, Commerce’s

position articulated in the Final Determination is entitled to deference only under Skidmore v.

Swift & Co., 323 U.S. 134, 140 (1944), to the extent that it has the power to persuade. The Final

Determination provides no persuasive factual or legal rationales for an agency departure from the

norms articulated in the regulation and Preamble, nor from the Fuel Ethanol practice.36

       Remand is therefore required on the issue of the single, weighted average rate.

Commerce shall either provide a reasonable explanation and substantial evidence for its change

       35
                Tung Mung argues that Commerce’s decision to impose a single rate was a
“results-oriented approach”, and is thus improper. Tung Mung Moving Brief at 10. Tung Mung
cites Notice of Final Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled
Carbon-Quality Steel Plate from Japan, 64 Fed. Reg. 24,329, 24,354 (Dep’t Commerce) (1999),
in which Commerce rejected a petitioner’s claim, noting that “[t]o allow a respondent to choose
between the Department’s normal method and an alternative method simply because one method
results in a lower rate, would be a results oriented approach”, and by implication, improper. The
court of course agrees that a results oriented approach would be improper.
       36
                Indeed, the application of a single weighted-average rate to two entities as to
which there is no record evidence of affiliation may represent a significant departure from
existing practice and law.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                             Page 33

in practice, or shall apply a combination rate, consistent with its prior practice.37

                                                  C

                                         YUSCO’s Motion

       YUSCO contests several aspects of the Final Determination. Primarily, YUSCO

challenges Commerce’s decision to resort to adverse facts available under 19 U.S.C. § 1677e(b)

(1994). Central to its challenge on the facts available issue is YUSCO’s contention that the

Department improperly determined that sales reported by YUSCO as export sales were in fact

home market sales, and that YUSCO’s failure to report these home market sales warranted the

application of adverse facts available. YUSCO also argues that Commerce improperly included

sales by an affiliated company, Yieh Mau, among YUSCO’s United States sales listings.

       YUSCO also challenges another aspect of the Final Determination which, because of the

Department’s resort to adverse facts available, was not material to the Department’s calculation

of the cash deposit rate ultimately assigned to YUSCO. Specifically, YUSCO argues that the

Department improperly adjusted its reported cost of production (“COP”), due to discrepancies

between those reported costs and the costs reflected in YUSCO’s accounting records.

       These claims are examined in turn below.

                                                   1

     Commerce Properly Invoked 19 U.S.C. § 1677e to Apply Adverse Facts Available

       In the Final Determination, Commerce concluded that the use of facts available was

proper, based on Commerce’s conclusion that YUSCO had failed to report “a large portion” of

sales “possibly consumed by home market customers.” Final Determination, 64 Fed. Reg. at

30,597-8. Specifically, Commerce found that, as to the UZ sales, “these sales must be included

in a normal value calculation for YUSCO because YUSCO has not demonstrated that it knew

       37
               On remand, Commerce may also analyze the relevance of Ferrovanadium or any
other relevant precedent.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                  Page 34

that the SSSS from these sales was not consumed in the home market.” Final Determination, 64

Fed. Reg. at 30,598. Regarding U* sales, Commerce stated that YUSCO “did not submit a U*

sales listing and it did not provide evidence that this merchandise was exported as subject

merchandise.” Id. In both types of sales, Commerce noted that YUSCO had not “reported the

individual sales transaction data necessary to conduct the dumping analysis.” Id. Commerce

agreed that YUSCO did at least submit UZ sales listings, but said this information was “grossly

incomplete and thus unusable for our dumping calculation purposes,” and, as it was submitted

late, on January 11, 1999, Commerce “had no opportunity to issue supplemental questionnaires

regarding these sales.” Id. at 30,599. The Department also expressed doubt as to the reliability

of YUSCO’s internal reporting methodology, in light of the Department’s earlier findings in

SSPC, and concluded that “[b]ecause YUSCO’s reliance on this internal classification of home

market and third country sales for reporting sales to the Department was inadequate, by relying

on it YUSCO failed to comply to the best of its ability with the Department’s instructions.” Id.

       Commerce further determined that the use of adverse facts available was appropriate,

because it concluded that YUSCO had failed to “cooperate to the best of its ability . . . because

YUSCO failed to follow the Department’s instructions to report all home market sales.” Id.

       Commerce made more detailed findings on these points in its Facts Available

Memorandum. Commerce cited YUSCO’s November 18, 1998 Supplemental Questionnaire

Response, in which it stated that

       the majority of YUSCO’s home market customers are further manufacturers
       [which] . . . produce different types of SSSS and/or non-subject merchandise from
       YUSCO’s SSSS, and sell to their customers in the home market, U.S., and third
       countries. . . . YUSCO . . . does not know which [of] YUSCO’s SSSS was further
       manufactured into different types of SSSS or into non-subject merchandise. Nor
       does YUSCO claim to know which [of] YUSCO’s SSSS was finally destined to
       either the home market, the United States, or third countries.

Facts Available Mem. at 1, quoting YUSCO Suppl. Questionnaire Response at Sup. ABC-3-4,
Consol. Court No. 99-07-00457                  PUBLIC VERSION                              Page 35

dated November 18, 1998.38 Commerce concluded that the explicit terms of its original

questionnaire required YUSCO to report these sales of further-manufactured goods within its

home market sales database. That questionnaire provided “instructions for reporting your sales

of the foreign like product in your home market or a third-country market.” YUSCO

Questionnaire at B-1. “Foreign like product” was defined as “merchandise that is sold in the

foreign market and that is identical or similar to the subject merchandise. When used in the

questionnaire, foreign like product means all merchandise that is sold in the foreign market and

that fits within the description of merchandise provided in Appendix III to the questionnaire.”

YUSCO Questionnaire at I-9.

       In explaining how to report customer codes for home market sales, the questionnaire

asked the respondent to “(i)f known, identify customers that export some or all of their purchases

of the foreign like product. Explain how you determined which sales were for consumption in

the foreign market.” Final Determination, 64 Fed. Reg. at 30,598 (quoting Questionnaire at B-8).

The Department concluded that these instructions required YUSCO to include the UZ and U*

sales within their initial reported home market sales database. Id. Commerce cited INA

Walzlager Schaeffler KG v. United States, 21 CIT 110, 123-24, 957 F. Supp. 251, 264 (1997),

aff'd SKF USA Inc. v. INA Walzlager Schaeffler KG, 180 F. 3d 1370 (Fed. Cir. 1999), for its

position that sales should be excluded from the home market database only where a respondent

knew or had reason to know that merchandise was not sold for home market consumption –

knowledge that YUSCO did not have in light of its November 18, 1999 supplemental response.

Final Determination, 64 Fed. Reg. at 30,598.

       38
              YUSCO made this statement as part of its response to the following question by
Commerce: “Describe in fuller detail the sales involving Yieh Mau. With regard to sales of
subject merchandise, did Yieh Mau only further manufacture sell [sic] steel which it originally
purchased from YUSCO? Does Yieh Mau purchase steel from other companies?” YUSCO
Suppl. Questionnaire at 3.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 36

       YUSCO raises several arguments that the reclassification of its UZ and U* sales as home

market sales, and the application of facts available and adverse facts available, were not

supported by substantial evidence and were contrary to law.

                                                 a

         Commerce Properly Classified the U* and UZ Sales as Home Market Sales

       YUSCO contends that “the Department erred in determining YUSCO’s third country

sales through its home market customers to be home market sales.” Memorandum of Points and

Authorities in Support of Yieh United Steel Corp.’s Motion for Judgment Upon the Agency

Record (“YUSCO Moving Brief”) at 23. YUSCO raises several arguments on this point, which

are addressed in turn below.

                                                (1)

        Introduction of Sales Verification Report from Stainless Steel Plate in Coils

       YUSCO argues that the Department erred in incorporating its Sales Verification Report

(the “SVR”) from the investigation of SSPC into the record of the instant investigation, and in

relying in part on the SVR in reaching its Final Determination. YUSCO argues, without citation

of authority, that the Department’s use of this Report was illegal. YUSCO Moving Brief at 18-

19. YUSCO also argues the Report’s introduction was untimely.39 Id. at 20. In support of this

       39
               YUSCO also argues that these investigations involve different products and their
records should be separate. YUSCO Moving Brief at 19. The only case YUSCO cites on this
point is Notice of Final Determination of Sales at Less Than Fair Value: Collated Roofing Nails
From the People’s Republic of China, 62 Fed. Reg. 51,410 (comment 11) (Dep’t Commerce)
(1997). The case does not support YUSCO’s position. There, a respondent argued that the
petitioner was barred from introducing new information into the investigation, because the
Department did not have sufficient time to collect and analyze the information necessary to make
a determination as to whether the cited rule applied. The case did not involve information
introduced by the Department, let alone information in another case to which the complaining
party had been a party.
        Indeed, it appears that the Department was under an obligation to take notice of this
information. As noted by this court, “[T]he record . . . is not limited solely to those documents
submitted to the ITA. The ITA may obtain information from public documents as long as it
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                  Page 37

argument, YUSCO cites 19 U.S.C. § 1677m(g), which provides as follows:

        Information that is submitted on a timely basis to the administering authority or
        the Commission during the course of a proceeding under this subtitle shall be
        subject to comment by other parties to the proceeding within such reasonable time
        as the administering authority or the Commission shall provide. The
        administering authority and the Commission, before making a final determination
        under section 1671d, 1673d, 1675, or 1675b of this title shall cease collecting
        information and shall provide the parties with a final opportunity to comment on
        the information obtained by the administering authority . . . upon which the parties
        have not previously had an opportunity to comment.

19 U.S.C. § 1677m(g) (1994) (emphasis added). This statutory opportunity for comment applies

only to information submitted “to” the administering authority, not “by” the administering

authority; thus, this section is inapposite.

        YUSCO then cites 19 C.F.R. § 351.301(c), which provides that “[a]ny interested party

may submit factual information to rebut, clarify, or correct factual information submitted by any

other interested party at any time prior to the deadline provided in this section for submission of

such factual information.” 19 C.F.R. § 351.301(c) (1998) (emphasis added). “Interested party”

is defined at 19 U.S.C. § 1677(9) as:

        (A) a foreign manufacturer, producer, or exporter, or the United States importer,
        of subject merchandise or a trade or business association a majority of the
        members of which are producers, exporters, or importers of such merchandise,
        (B) the government of a country in which such merchandise is produced or manufactured
        or from which such merchandise is exported,
        (C) a manufacturer, producer, or wholesaler in the United States of a domestic like
        product,
        (D) a certified union or recognized union or group of workers which is representative of

relates such information to the facts of the case before it, or the record may consist of those
documents at the agency which become sufficiently intertwined with the relevant inquiry no
matter how or when they arrived at the agency.” Sanyo Electric Co., Ltd. v. United States, 86 F.
Supp. 2d 1232, 1239 (CIT 1999) (citations and punctuation omitted). “The agency cannot ignore
relevant information which is before it, and the reviewing court must be in a position to
determine if it had done so.” Floral Trade Council of Davis, Cal. v. United States, 13 CIT 242,
242-43, 709 F. Supp. 229, 230 (1989). Under this standard, the Department acted properly in
incorporating the Sales Verification Report from SSPC from Taiwan to supplement the meager
information provided by YUSCO.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                              Page 38

        an industry engaged in the manufacture, production, or wholesale in the United States of a
        domestic like product,
        (E) a trade or business association a majority of whose members manufacture, produce, or
        wholesale a domestic like product in the United States,
        (F) an association, a majority of whose members is composed of interested parties
        described in subparagraph (C), (D), or (E) with respect to a domestic like product, and
        (G) in any investigation under this subtitle involving an industry engaged in producing a
        processed agricultural product, as defined in paragraph (4)(E), a coalition or trade
        association which is representative of either--
                (i) processors,
                (ii) processors and producers, or
                (iii) processors and growers[.]

19 U.S.C. § 1677(9) (1994). This definition does not, by its terms, include the Department.

Submissions by the Department are thus not included within the language of the cited regulation.

There appears to be no administrative mechanism for review of claims such as that raised by

YUSCO regarding the SSPC Sales Verification Report. As a procedural matter, such claims are

presented for the first time to this court.

        YUSCO then details the practical essence of its complaint regarding the introduction of

the Sales Verification Report from SSPC: it was “deprived . . . of any opportunity to explain

that, contrary to what the Final Determination claims, YUSCO’s internal order coding system

identified in the SSPC investigation actually proves that YUSCO did not under-report home-

market sales of SSSS because YUSCO’s system captured any sales that the Department could

have considered to be home-market sales.” YUSCO Moving Brief at 21.40 YUSCO also claims

that it was deprived of “the right to comment on the relevancy and accuracy of the SSPC sales

verification report for purposes of the SSSS investigation.” Id.

        YUSCO’s own submissions in the instant case, however, document an order coding

        40
                YUSCO argues that Commerce misclassified one sale in SSPC, which YUSCO
contends it properly classified as a “D” or home market sale, and that this led to an incorrect
result in SSPC. See YUSCO Moving Brief at 22. This court has rejected the identical claim in
its review of the SSPC decision, on both factual and legal grounds. Allegheny Ludlum Corp. v.
United States, Consol. Court No. 99-06-00369, slip op. 00-170 at 21-22 (CIT Dec. 28, 2000).
YUSCO has provided the court with no information which would render that decision incorrect.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                Page 39

system identical to that used by YUSCO in SSPC, and show this order coding system formed the

basis of YUSCO’s characterization of its sales41 in both cases. The Sales Verification Report in

SSPC reflects this commonality, and revealed further flaws in YUSCO’s reporting in reliance on

its order coding system. YUSCO’s own submissions acknowledge the relevance and similarity

of SSPC:

        YUSCO does not know whether customers of UZ Sales further-manufactured
        YUSCO’s SSSS into merchandise outside the scope of this investigation before
        exporting the SSSS. YUSCO’s customers did not provide this information to
        YUSCO. Upon request from the Department at the time of the sales verification
        in the antidumping investigation of Stainless Steel Plate in Coils from Taiwan,
        YUSCO obtained sample production and export documentation from one
        customer of UZ Sales. These documents showed that the customer further-
        manufactured some of YUSCO’s stainless steel plates in coils into pipes and tubes
        and exported the same to a third country. YUSCO acquired this information,
        however, after the fact at the request of the Department. YUSCO made its
        January 8, 1999 submission to the Department because the verifier’s requests in
        the Plate verification indicated that the Department would like to examine in more
        detail those sheet and strip sales that appeared to have been further-processed.

YUSCO Jan. 15, 1999 Response to Suppl. Questionnaire at Sup. D-2. The Department

reasonably placed public information from a parallel investigation on the record of this case, to

supplement a deficit of information received from the respondent. YUSCO has pointed to

nothing which would render the Department’s decision in this respect to be illegal or improper.

                                                 (2)

                                              U* Sales

        YUSCO raises several arguments in support of its assertion that Commerce erred in

concluding that the “U*” sales were not third country sales, as reported by YUSCO, but should

rather have been reported as home market sales. The court examines each of these arguments in

turn.

        41
             They were classified by YUSCO as home market, U.S., or third country.
Consol. Court No. 99-07-00457                PUBLIC VERSION                                  Page 40

       YUSCO argues that Commerce improperly applied a statement from its November 18,

1999 response -- a statement that YUSCO claims was limited to Yieh Mau – to all of YUSCO’s

sales to home market customers, and that this determination then led Commerce to improperly

determine that the “U*” sales were in fact home market sales. On its face, however, the quoted

statement, taken in context, makes a pronouncement about customers other than Yieh Mau:

       YUSCO sells its SSSS to Yieh Mau, which is one of YUSCO’s home market
       customers. Please see Exhibit 36 for a revised chart showing YUSCO’s selling
       activities and services provided to home market customers. For YUSCO, its sales
       to Yieh Mau are at the same level of trade with YUSCO’s sales to its other home
       market customers.
                As shown in YUSCO’s customer lists in its Section B response at Exhibit
       6, YUSCO sold SSSS to its home market customers, including certain further
       manufacturers. In fact, the majority of YUSCO’s home market customers are
       further manufacturers. These further manufacturers produce different types of
       SSSS and/or non-subject merchandise from YUSCO’s SSSS, and sell to its
       customers in the home market, U.S. and third countries. As stated above,
       YUSCO does not know which [of] YUSCO’s SSSS was further manufactured
       into different types of SSSS or into non-subject merchandise. Nor does YUSCO
       know which [of] YUSCO’s SSSS was finally destined to either of the home
       market, the United States, or third countries.
                YUSCO’s sales to Yieh Mau therefore are at the same level of trade with
       YUSCO’s other home market sales. Yieh Mau’s sales to its home market
       customers are therefore at a different level of trade with YUSCO’s home market
       sales.

YUSCO Nov. 18, 1999 Response to Suppl. Questionnaire at Sup. ABC 3-4 (emphasis added).

       This response repeatedly juxtaposes information applicable to Yieh Mau in particular

against that for all of YUSCO’s home market customers. The latter comments are categorical in

nature, and in fact reference other customers by name as examples. There is no basis for

YUSCO’s claim that its categorical statement was distorted by taking it out of context.

       YUSCO claims that this statement “had nothing whatsoever to do with any ‘U*’

sales. . . . Thus, [it says,] there is no linkage between the quote excerpted from YUSCO’s

supplemental response and YUSCO’s ‘U*’ sales that would justify the Department’s conclusion

that YUSCO’s ‘U*’ sales were home market sales that YUSCO supposedly ‘failed to report.’ ”
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                Page 41

YUSCO Moving Brief at 13.

       YUSCO itself, however, identified the U* sales as having been made to its home market

customers, thus arguably bringing the U* sales under the reach of its November 18, 1999

description of its sales to home market customers. YUSCO Jan. 15, 1999 Response to Suppl.

Questionnaire at Sup. D-3 to D-4 (“YUSCO also had other sales to home market customers, who

informed YUSCO of the final export destination of YUSCO’s SSSS at the time of sale . . . .

These sales were coded ‘U’[.]”). YUSCO, however, notes that the question in response to which

it first identified the U* sales asked for “additional sales to home market customers that were not

further-processed, but for which you claim knowledge of export to countries other than the

United States?” YUSCO Jan. 13, 1999 Suppl. Questionnaire (emphasis added). That statement

is the only information provided by YUSCO to Commerce regarding the U* sales, and that was

provided three days prior to verification.

       YUSCO’s earlier generalized statements had informed the Department that the “majority”

of its home market sales were further manufactured prior to export, and that YUSCO could not

identify which sales were consumed to produce non-subject merchandise and which were

consumed to produce other forms of SSSS. YUSCO Nov. 18, 1999 Response to Suppl.

Questionnaire at ABC-4. This information, coupled with the Department’s additional findings

on YUSCO’s U* sales in SSPC, provided a reasonable basis for Commerce’s conclusions

regarding the U* sales, in light of the paucity and tardiness of information submitted by

YUSCO.42 The argument must, then, be rejected. Based on YUSCO’s own mixed responses, the

       42
                YUSCO has argued that the Department should have known of the U* and UZ
sales through its SSPC investigation. The Department did not, however, learn of those sales in
that investigation until verification, which took place from December 14-17, 1998, only three
weeks before YUSCO submitted the January 8, 1999 supplemental response in the instant case.
Allegheny Ludlum, slip op. 00-170 at 34. Particularly in light of the intervening holiday season,
the court cannot conclude that the government had any prior notice that would have called into
question YUSCO’s November 18, 1998 certification that its response was complete.
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court cannot say that there is not substantial evidence to support Commerce’s determination.43

       YUSCO also claims that Commerce erred in the Final Determination in stating that it

confirmed, by written questionnaires to 12 members of YUSCO’s sales department, that YUSCO

does not know which of YUSCO’s SSSS was further manufactured, nor which was finally

destined for the home market, the U.S., or third countries. YUSCO Moving Brief at 13 n.10; see

Final Determination at 30,598. Specifically, YUSCO claims that “neither the questionnaire nor

the company officials’ responses distinguished among the types of customers and sales, and in

particular did not distinguish the U* sales from other sales.” YUSCO Moving Brief at 13 n.10.

The record refutes YUSCO’s claim.

       The questionnaire to the 12 members of the sales department specifically asks, inter alia,

“How do you know to code a sale to a Taiwanese company as a ‘U’ sale?” Sales Verification

Report Ex. 7 at 7-1. The responses reflect this distinction, and elaborate upon it, noting that they

use the code “U” for export or indirect export, and “D” or “S” for domestic sales; they also

reference different customers by name. See id. at 7-2 through 7-49. These responses in fact

support the Department’s statement; they repeatedly indicate that the responding sales employee

made the designations of U, D or S based on conversations with the customer; and that the

customers further processed the material. 44

       43
               YUSCO also argues that verification efforts by Commerce did not differentiate
between the U* sales and other types of sales. YUSCO has not provided any evidence which
would substantiate this claim. Certainly, the verification questionnaire did differentiate U* sales
from other sales. Sales Verification Report Ex. 7 at 7-1.
       44
               Following is a sampling of the questions asked by the Department and some of the
responses received:
3)a. How do you assign the order number on the order acceptance (O.A.)?
       •       “D” - Production line; “S” - Inventory
       •       “according to the sales destination”
       •       “Export or Domestic Different Country”
       •       “the computer will bring out automatically”
       •       “UA–> U.S.A.; Q –> Europe; C–> South America; Z –> Indirect Export”
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4)     What information do you base this decision on?
       •      “the customer told the products they need; according the products list can tell
              what code to use”
       •      “the customer request”
       •      “according to the company’s rules”
       •      “according to the customer’s need”
       •      “according to company rules”

5)     How do you know to code a sale to a Taiwanese company as a “U” sale?
       •     “‘U’ - for Export; ‘D’, ‘S’ for Domestic”
       •     “for Export”
       •     “U=for Indirect Export”
       •     “I don’t know”
       •     “because ‘U’ means Export”

6)a.   Do your customers further-process the coil?
       •     “Yes, they do.”
       •     “no”
       •     “Yes”
       •     “Yes”
       •     “Some they do. Some they don’t.”
       •     “No.”
       •     “Some, they do and some I don’t know very well”

6)b.   How do you know this?
       •     “Contact with customer then know.”
       •     “the customer told”
       •     “tour in factory”
       •     “after talked to customer”
       •     “according to the company’s character. Then I know.”
       •     “Because Direct Export”
       •     “if I do, because the customer told”

7)     Which of your customer(s) [sic] ultimately sell sheet and strip to the United States?
       •     “None”
       •     “no”
       •     “steel pipes; steel plates”
       •     “No”
       •     “I don’t know. (Maybe they do or other products spare parts.)”
       •     “I’m not in charge of that area”
       •     “HR, CR coils”
Consol. Court No. 99-07-00457                PUBLIC VERSION                               Page 44

                                               (3)

                                            UZ Sales

         YUSCO raises several arguments in support of its assertion that Commerce erred in

concluding that the “UZ” sales were not export sales, as reported by YUSCO, but should rather

have been reported as home market sales. The court examines each of these arguments in turn

below.

         YUSCO claims that Commerce ignored certain facts which, it argues, compel the

conclusion that the “UZ” sales were for export. YUSCO Moving Brief at 13. YUSCO argues

that Commerce erred in determining that the UZ sales information was “so incomplete that it

cannot serve as a reliable basis for reaching our determination of normal value.” Final

Determination, 64 Fed. Reg. at 30,599; see YUSCO Moving Brief at 17. YUSCO contends that

Commerce verified all UZ sales information, finding “no discrepancies.” YUSCO Moving Brief

at 17. At verification, however, Commerce only examined 27 UZ sales reported by YUSCO as

sales to the United States, which YUSCO had erroneously classified as export sales. See

YUSCO Sales Verif. Report at 8 and Ex. 5. These sales were not part of the UZ sales reported

on January 8, 1999.

         YUSCO then argues that “an overwhelming part” of “UZ” sales were to a bonded area.

YUSCO Moving Brief at 26. The Verification Report does recite YUSCO’s statement that Ta

Chen, one of two recipients of the “UZ” sales, was located in a bonded area. Sales Verification

Report at 7. YUSCO claims that Commerce verified that no SSSS “would be” reintroduced into

the home market from the Ta Chen factory. YUSCO Moving Brief at 26. In actuality, the

Verification Report contains no such statement, nor has YUSCO pointed to any other record

Sales Verification Report Ex. 7 at 7-2 through 7-49.
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evidence that would support its assertion.45

       YUSCO also argues that the verification report confirms YUSCO’s characterization of

the U* sales as export sales of subject merchandise. Id. at 15. The portions of the verification

report cited by YUSCO only confirm, however, that the selected sales from the third-country

printout contained sales of both subject and non-subject merchandise; they do not show that

YUSCO knew or had reason to know that the sales it reported as third-country sales and

excluded from its home market sales listing were in fact exported without further processing. In

fact, one of the cited excerpts specifically states that “some of the UZ sales are thought to be

further-processed before exportation.” Sales Verification Report at 7.

       YUSCO’s arguments regarding the Department’s classification of the UZ sales do not

reveal any error in that aspect of the Final Determination.

                                                 (4)

                  Commerce Applied the Correct Standard in Determining
                    That the U and UZ Sales Were Home Market Sales

       The statutory scheme does not provide explicit criteria for determining whether a sale is

for export or is a home market sale. LG Semicon Co., Ltd. v. United States, 1999 WL 1458844

at *3 (CIT Dec. 30, 1999). Export sales are governed by 19 U.S.C. § 1677a(a), which defines

the term "export price" as:

       the price at which the subject merchandise is first sold (or agreed to be sold)
       before the date of importation by the producer or exporter of the subject
       merchandise outside of the United States to an unaffiliated purchaser in the United
       States or to an unaffiliated purchaser for exportation to the United States, as
       adjusted under subsection (c).

19 U.S.C. § 1677a(a) (1994). Normal value, an adjusted price derived from home market sales,

is defined under the following relevant subsection of 19 U.S.C. § 1677b(a)(1)(B):

       45
                YUSCO has also argued that its “UZ” sales into bonded warehouses should be
classified as export sales, because goods sold into such warehouses are generally exported.
YUSCO abandoned this claim at oral argument.
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       (i)     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) (1994).

       In implementing the provisions of 19 U.S.C. § 1677b(a), sales should be included within

the home market database if the producer “knew or should have known that the merchandise was

. . . for home consumption based upon the particular facts and circumstances surrounding the

sales.” INA Walzlager Schaeffler KG, 21 CIT at 123-24, 957 F. Supp. at 264 (footnotes

omitted). On the other hand, in implementing the provisions of 19 U.S.C. § 1677a(a), Commerce

looks to whether the producer knew or should have known, at the time of a sale, whether or not

the subject merchandise will be exported. See LG Semicon Co., 1999 WL 1458844 at *4 (listing

examples of Commerce’s application of the knowledge test); Yue Pak, Ltd. v. United States ITA,

20 CIT 495 (1996), aff’d, 111 F.3d 142 (Fed. Cir. 1997). This test reflects the guidance of the

Statement of Administrative Action which accompanied the Trade Agreements Act of 1979: “if

the producer knew or had reason to know that the goods were for sale to an unrelated U.S. buyer .

. . the producer’s sales price will be used as ‘purchase price’ to be compared with that producer’s

foreign market value.” S.R. Doc. No. 96-249, at 411 (1979).

       In determining whether the producer knew or should have known that the subject

merchandise will be exported, Commerce looks in part to the place where the product is

“consumed”. Merchandise cannot be “sold . . . for consumption in the exporting country”, 19

U.S.C. § 1677b(a)(1)(B)(i), if it has already been consumed in the home market. Merchandise

sold in the home market, even if ultimately destined for export, is “consumed” in the home

market if it is used there to produce non-subject merchandise prior to exportation. See Final

Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products,

Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel Flat
Consol. Court No. 99-07-00457                PUBLIC VERSION                              Page 47

Products, and Certain Cut-to-Length Carbon Steel Plate From Korea, 58 Fed. Reg. 37,176,

37,182 (Dep’t Commerce) (July 9, 1993); Final Determination of Sales at Less Than Fair Value:

Dynamic Random Access Memory Semiconductors of One Megabit and Above From the

Republic of Korea, 58 Fed. Reg. 15,467, 15,473 (Dep’t Commerce) (March 23, 1993). Compare

LG Semicon, 1999 WL 1458844 at *6 (finding that goods were not “consumed” in Mexico

where the producer knew or should have known that the goods it sold to the business there “most

likely could not be processed by that entity or absorbed by the Mexican or Latin American

markets, and instead were destined for export to the United States.”).

       Although YUSCO acknowledges this governing legal standard, it claims that “the market

of a respondent’s sales shall be determined based upon the respondent’s actual knowledge of the

final destination at the time of sale.” YUSCO Moving Brief at 24. This argument fails.

       YUSCO bases its actual knowledge argument on a flawed reading of this court’s opinion

in INA Walzlager Schaeffler KG, 957 F. Supp. 251.46 INA Walzlager Schaeffler KG follows the

       46
               YUSCO also cites certain Commerce determinations which, it claims, reflect an
established practice for Commerce to determine the market of the respondent’s sales based on the
respondent’s actual knowledge at the time of sale. YUSCO Moving Brief at 24 (citing, e.g.,
Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat
Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon
Steel Flat Products, and Certain Cut-to-Length Carbon Steel Plate From Korea, 58 Fed. Reg.
37,176 (Dep’t Commerce) (July 9, 1993), and Notice of Final Determination of Sales at Less
Than Fair Value: Fresh Atlantic Salmon From Chile, 63 Fed. Reg. 31,411 (Dep’t Commerce)
(June 9, 1998)). None of these supports YUSCO’s position.

       In Certain Steel Plate From Korea, Commerce

       included in the home market sales databases and the calculation of FMV those
       local sales which are further manufactured into merchandise outside the scope of
       these investigations, in accordance with our practice in DRAMs from Korea.
       Where a product within the scope of an investigation has been transformed into a
       product outside that scope before exportation, we consider that product to have
       been “consumed” within the country, and thus properly includable in home market
       sales.

Certain Steel Plate From Korea, 58 Fed. Reg. at 37,182. As to other local customers which
Consol. Court No. 99-07-00457                PUBLIC VERSION                                Page 48

line of authority holding that

       the appropriate burden of proof for determining whether to exclude sales from the
       home market database in calculating FMV is whether [the producer] knew or
       should have known that the merchandise was not for home consumption based
       upon the particular facts and circumstances surrounding the sales.

INA Walzlager Schaeffler KG, 957 F. Supp. at 263-64. The INA Walzlager Schaeffler KG court

quoted language requiring Commerce “to diligently inquire into . . . allegations” where “the

petitioner has provided Commerce with evidence which a reasonable mind would accept as

calling into question whether respondents were able to distinguish home market sales destined

for consumption in the home market from home market sales destined for consumption in the

U.S. market[.]” Id. at 264 (punctuation and citation omitted). The court concluded, however,

that facts similar to those presented here required a finding of imputed knowledge. The court

rejected the producer’s argument that “unless [the producer] knew the specific destination of the

merchandise and actually admitted to such knowledge, Commerce cannot find [it] should have

known the reseller would export the merchandise.” Id. at 265. “[U]nder those circumstances, it

would be extremely difficult for Commerce to ever conclude that a respondent knew sales were

for export[.]” Id. “The only way to determine actual knowledge is through an admission of the

respondent.” Id. Presumptive reliance on such statements would require deference to self-

serving allegations even in the face of contrary evidence that the producer should have known the

true place of consumption of the subject goods. That would eviscerate the acknowledged

further manufactured the merchandise into both subject and non-subject merchandise, Commerce
“excluded [that merchandise] from the home market databases since there is no way to determine
the nature of the finished product that was exported from Korea, nor is there any evidence that
[the respondent] knew the nature of that product.” Id.

        Similarly, in Fresh Atlantic Salmon, Commerce disregarded the producer’s assertion of a
lack of actual knowledge, focusing on record evidence of knowledge by the consignee, which
was imputed to the producer. See Fresh Atlantic Salmon, 63 Fed. Reg. at 31,411.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                Page 49

standard.

       YUSCO also argues that it had actual knowledge at the time of sale through its order

coding system that the U* and UZ sales would be exported and not consumed in the home

market. YUSCO Moving Brief at 25. In point of fact, Commerce relied on admissions by

YUSCO that it had actual knowledge that sales to its home market customers would be further

manufactured prior to export. These admissions are buttressed by a review of the record

evidence, which consistently supports Commerce’s conclusion.

       YUSCO’s arguments that its indirect export sales were not home market sales all rest

ultimately on YUSCO’s internal order coding system and documentation, which the record

demonstrates were flawed from inception as methods of categorizing sales in conformance with

Commerce’s instructions and the United States antidumping laws. These arguments fail in the

face of YUSCO’s repeated admissions that it knew that its customers further manufactured much

of their purchases of its product domestically. That knowledge provides substantial evidence

supporting Commerce’s determination that YUSCO knew or should have known that its indirect

export sales would be further manufactured in YUSCO’s home market and should properly have

been included in the list of home market sales provided to Commerce.

                                                 b

                  Commerce Properly Resorted to Adverse Facts Available

       YUSCO contends that the Final Determination “fail[ed] to explain how YUSCO’s

alleged exclusion of UZ sales and other indirect export sales from its home market sales listing

rose beyond the level of an inadvertent omission so as to constitute a failure to cooperate.”

YUSCO Moving Brief at 29. In other words, YUSCO argues that Commerce has not indicated
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                  Page 50

the presence of facts which would justify the imposition of adverse facts available.47

       For an adverse facts available determination “to be supported by substantial evidence,

Commerce must articulate why it concluded that a party failed to act to the best of its ability, and

explain why the absence of this information is of significance to the progress of its

investigation.” Mannesmannrohren-Werke AG v. United States, 77 F. Supp. 2d 1302, 1313-14

(CIT 1999); accord Ferro Union, Inc. v. United States, 44 F. Supp. 2d 1310, 1330-31 (CIT

1999). Where Commerce concludes that the respondent wilfully tried to withhold requested

information, Commerce should “explicitly state such a conclusion, [and] identify why [the]

errors [are something] more than inadvertent omissions.” Mannesmannrohren-Werke, 77 F.

Supp. 2d at 1315. “A respondent can fail to respond because it was not able to obtain the

requested information, did not properly understand the question asked, or simply overlooked a

particular request.” Id. at 1316. Commerce must rather explain why an omission is a deliberate

evasion, rather than an oversight. Id. Insufficient attention to statutory duties under the unfair

trade laws can also be sufficient to warrant adverse treatment. Nippon Steel Corp. v. United

States, 118 F. Supp. 2d 1366, 1379 (CIT 2000). “It implies an unwillingness to comply or

       47
                19 U.S.C. § 1677e(b) governs the use of adverse facts available in an antidumping
investigation, and provides:
        (b)     Adverse inferences.
                If the administering authority or the Commission (as the case may be) finds that
                an interested party has failed to cooperate by not acting to the best of its ability to
                comply with a request for information from the administering authority or the
                Commission, the administering authority or the Commission (as the case may be),
                in reaching the applicable determination under this subtitle, may use an inference
                that is adverse to the interests of that party in selecting from among the facts
                otherwise available. Such adverse inference may include reliance on information
                derived from–
                (1)      the petition,
                (2)      a final determination in the investigation under this title,
                (3)      any previous review under section 1675 of this title or determination under
                         section 1675b of this title, or
                (4)      any other information placed on the record.
19 U.S.C. § 1677e(b) (1994).
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reckless disregard of compliance standards. Commerce must be in a position to compel

meaningful attention to and compliance with its requests.” Id. The deficient response must be

analyzed in light of the respondent’s overall conduct, the importance of the information, the

particular time pressures of the investigation, and any other information that bears on the issue of

whether the deficiency was an excusable inadvertence or a demonstration of a lack of regard for

its responsibilities in the investigation. Id.

        YUSCO argues that it was

        fully cooperative throughout this investigation and acted to the best of its ability.
        In fact, the Department’s sales and cost verification reports attest to the high level
        of YUSCO’s cooperation and accuracy and completeness of YUSCO’s responses.
        Except for minor errors, the Department found at verification no discrepancies in
        YUSCO’s reported U.S. and home market sales, and COP and CV data.

YUSCO Moving Brief at 28-29. YUSCO thus argues that Commerce erred as a matter of law in

applying adverse facts available. Id. at 28. YUSCO’s argument lacks legal or factual substance.

        Commerce found in the Final Determination that “YUSCO failed to cooperate to the best

of its ability . . . because YUSCO failed to follow the Department’s instructions to report all home

market sales.” Final Determination, 64 Fed. Reg. at 30,599. This finding, coupled with the more

detailed analysis earlier in the Final Determination, 64 Fed. Reg. at 30,598-99, regarding the

details of Commerce’s instructions and the shortfalls in YUSCO’s adherence to those instructions,

as well as the related analysis in the May 19, 1999 Facts Available Memorandum, at 1-3, is

sufficiently explicit under § 1677e(b). Commerce’s findings show that YUSCO failed to report

approximately one fifth of its home market sales, a reporting failure that goes to the heart of a

dumping investigation. Commerce stated, and YUSCO has not disputed, that it did not learn of

the deficiency until the week prior to verification.

        This is not a situation such as Mannesmannrohren-Werke or Ferro Union, where the

shortcomings in the response were arguably due to the existence of new governing laws and

unclear requests by Commerce for information. Here, Commerce fairly requested data regarding
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                Page 52

home market sales, a term which was defined both in the questionnaire and by longstanding

practice. YUSCO certified in its November 18, 1998 questionnaire response that it had reported

all of its home market sales. The responsibility for the deficient response here rests squarely with

YUSCO, whose response displayed a disregard for the statute and for its responsibilities in the

investigation.48

       YUSCO then cites 19 U.S.C. § 1677m(d). 19 U.S.C. § 1677m provides the following

relevant provisions:

       (d)     Deficient submissions.
               If the administering authority or the Commission determines that a response to a
               request for information under this title does not comply with the request, the
               administering authority or the Commission (as the case may be) shall promptly
               inform the person submitting the response of the nature of the deficiency and shall,
               to the extent practicable, provide that person with an opportunity to remedy or
               explain the deficiency in light of the time limits established for the completion of
               investigations or reviews under this title. If that person submits further information
               in response to such deficiency and either–
               (1)     the administering authority or the Commission (as the case may be) finds
                       that such response is not satisfactory, or
               (ii)    such response is not submitted within the applicable time limits,
               then the administering authority or the Commission (as the case may be) may,
               subject to subsection (e), disregard all or part of the original and subsequent
               responses.
       (e)     Use of certain information
               In reaching a determination under section . . . 1675 . . . the administering authority
               and the Commission shall not decline to consider information that is submitted by
               an interested party and is necessary to the determination but does not meet all the
               applicable requirements established by the administering authority or the
               Commission, if–
               (1)     the information is submitted by the deadline established for its submission,

       48
                In light of this conclusion, the court also rejects YUSCO’s contention that the
Department erred in stating, in the Final Determination at 30,599, that it “had no opportunity to
issue supplemental questionnaires regarding [the UZ sales].” YUSCO notes that the Department
did in fact issue a supplemental questionnaire on January 13, 1999, five days after YUSCO first
reported the UZ sales to Commerce, and that this included questions regarding the UZ sales.
YUSCO Moving Brief at 16-17. YUSCO responded to this questionnaire two days later, on
January 15, 1999. Because the court finds that Commerce had already “fairly requested” this
information, the court concludes that Commerce was under no obligation to make a second
request for that information.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                  Page 53

                 (2)   information can be verified,
                 (3)   the information is not so incomplete that it cannot serve as a reliable basis
                       for reaching the applicable determination,
                 (4)   the interested party has demonstrated that it acted to the best of its ability in
                       providing the information and meeting the requirements established by the
                       administering authority or the Commission with respect to the information,
                       and
                 (5)   the information can be used without undue difficulties.

19 U.S.C. § 1677m(d) (1994) (emphasis added).

       YUSCO claims that Commerce should have provided an opportunity for YUSCO to

provide additional information in response to the deficiencies found at verification in YUSCO’s

reporting of its home market sales. YUSCO Moving Brief at 30. YUSCO says it did not become

aware until verification that “the Department might consider ‘U’ sales or ‘UZ’ sales to be home

market sales,” and that it thus had a legitimate reason not to report those sales as home market

sales. Id. at 31. YUSCO argues that Commerce is obligated to provide YUSCO with an

opportunity to correct a misunderstanding such as this. Id. at 30-31.

       YUSCO analogizes this situation to that in Ta Chen Stainless Steel Pipe, Ltd. v. United

States, 1999 WL 1001194 (CIT Oct. 28, 1999). The court in that case found that Commerce

failed to provide a sufficient opportunity to remedy a submission which the court found was

deficient due to ambiguous requests by Commerce for information. Id. at *12. Commerce had

“applied an adverse facts available margin to these sales because Ta Chen did not provide

information on [its affiliate’s] U.S. sales.” Id. “Commerce could . . . foresee that in order to

properly calculate Ta Chen's sales as CEP sales, it would need information on [its affiliate’s] U.S.

sales. But Commerce did not ask for this information specifically.” Id. The Ta Chen court

cautioned that

       broad questions initially asked of respondent do not discharge Commerce from its
       obligation to put parties on notice as to the deficiencies in their responses. The
       court will not endorse an investigation where Commerce sent out a general
       questionnaire and a brief deficiency letter, then effectively retreated into its
       bureaucratic shell, poised to penalize respondent for deficiencies not specified in
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 54

       the letter that Commerce would only disclose after it was too late, i.e., after the
       preliminary determination.

Id. at *13 (quotations and punctuation omitted) (citing Bowe-Passat v. United States, 17 CIT 335,

343 (1993)). The linchpin of the court’s finding rested on its conclusion that “Commerce has

behaved in the same way as it did in Bowe-Passat by failing to notify the respondent of the

deficiency when it had an opportunity to do so[.]” Id.

       This case differs from Ta Chen. Commerce has not “hidden the ball” in its initial requests

for information from YUSCO. Commerce plainly requested data regarding all home market sales,

defined the term, and invited respondents to contact it for clarification of any matter as to which it

was unclear. YUSCO has conceded that Commerce fairly requested this data.49 In response to

this inquiry into home market sales, a defined term that is one of the central issues in any dumping

investigation, YUSCO had a statutory obligation to prepare an accurate and complete record in

response to questions plainly asked by Commerce. Olympic Adhesives, Inc. v. United States, 899

F.2d 1565, 1571-72 (Fed. Cir. 1990). Commerce asked YUSCO to report all of its home market

sales, which for several years have been defined as including all subject merchandise consumed

(including merchandise further manufactured) within the home market. See, e.g., Stainless Steel

Plate From Korea, 58 Fed. Reg. at 37,182; DRAMs From Korea, 58 Fed. Reg. at 15,473.

       In Ta Chen, “a new statute was not fully explained and Commerce suspected that” there

would be a need for additional information. Ta Chen, 1999 WL 1001194 at *14. The standards

for home market sales are clear. In addition, here YUSCO admittedly had knowledge that at least

some of its customers further manufactured its merchandise prior to export, thus providing a

       49
               This concession negates YUSCO’s argument that “broad questions asked initially
of the respondent in the original questionnaires do not ‘discharge [the Department] from its
obligation to put parties on notice as to the deficiencies in their responses.’” YUSCO Moving
Brief at 30, quoting Usinor Sacilor v. United States, 19 CIT 711, 745, 893 F. Supp. 1112, 1141-
42 (1995), rev’d in part, 215 F.3d 1350 (Fed. Cir. 1999). In any event, Usinor Sacilor is
inapposite, because it was a countervailing duty case, and did not discuss the provisions of 19
U.S.C. § 1677m, which are controlling here.
Consol. Court No. 99-07-00457                  PUBLIC VERSION                               Page 55

reason for YUSCO to inquire further in the course of preparing its response to Commerce.

Commerce, on the other hand, had no reason to realize prior to verification that the information

thus far provided to it was deficient. YUSCO had certified in its November 18, 1998

questionnaire response that it had reported all of its home market sales. The deficiencies in

YUSCO’s responses do not fall within the scenario described in Ta Chen.

       Nor do the terms of § 1677m(d) give rise to an obligation for Commerce to permit a

remedial response by YUSCO. Its remedial provisions are not triggered unless the respondent has

met all of the five enumerated criteria. Failure to fulfill any one criterion renders

§ 1677m(d) inapplicable.

       YUSCO failed to meet two of these criteria. First, YUSCO’s indirect export sales listings

were not sufficiently complete for incorporation into the rest of the data; they provided data on

only a few of fifty data categories required by Commerce. Such shortcomings would threaten the

accuracy of the resulting margin calculations. Second, the belated information could not be used

without undue difficulties, for its incorporation would have required the gathering and verification

by Commerce of data for the additional data fields ignored by YUSCO, or Commerce would have

had to reduce the precision of its dumping calculations by discarding the remaining categories of

data. See Final Determination, 64 Fed. Reg. at 30,599. This court cannot say that completion of

those tasks at that late date did not present an undue difficulty.

       YUSCO also asserts that inclusion of the “U” and “UZ” sales in its home market sales

would have favored YUSCO, by lowering the average per-unit home market price. YUSCO

Moving Brief at 29 n.42. In support of this assertion, YUSCO cites the Facts Available

Memorandum, at 4, which shows tonnage and aggregate value for the reported home market sales,

and the reported home market sales augmented by the UZ and U sales. Expression of those

figures as a ratio shows a lower price per ton of the home market sales if the UZ and U sales are

included than if YUSCO’s original reported numbers are used.
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                 Page 56

        The UZ and U numbers are crude, however, and do not reflect the more sophisticated 50-

field analysis that Commerce prepares when provided with a complete response. It is undisputed

that YUSCO did not provide information for the full range of data fields for the UZ and U sales

when Commerce requested that information at verification, upon its discovery that those sales

were properly includable in the home market sales database. Commerce contends that omission

of numerous fields of information for the UZ sales prevented Commerce from matching

transactions, and that YUSCO provided no sales listing or fields at all for its U* sales, for which it

provided only volume and value information. Defendant Opposition Brief at 41. YUSCO makes

no response to this argument regarding the U* sales, and argues that fields omitted for the UZ

sales were immaterial, and that the omitted information had already been provided. Reply Brief

Memorandum [sic] of Points and Authorities in Support of Yieh United Steel Corp.’s Motion for

Judgment Upon the Agency Record (“YUSCO Reply Brief”) at 7 and nn. 23, 26. YUSCO also

contends that the Department was obligated to ask it for the full sales listing for the UZ and U*

sales. See id. at 7.

        YUSCO next contends that its January 8, 1999 submission contained all of the product

characteristics necessary for Commerce’s analysis. Id. at 7 n.23. YUSCO provided information

for 10 fields for the “UZ” sales, and for 11 fields for the “U” sales. See Response Brief of

Plaintiffs at 11-12 for a listing of those fields. YUSCO argued in its Reply Brief that it had

already provided some of the remaining fields in the sales verification exhibits (though it does not

indicate which ones). YUSCO Reply Brief at 7 n.23. Review of YUSCO’s September 25, 1998

Response appears to indicate that many of the answers set forth therein would apply to the UZ

sales without further supplementation. See, e.g., YUSCO Sept. 25, 1998 Response to

Questionnaire at B-21 through B-26, fields 16.2, 16.3, 19.1 (providing generic responses for

certain fields), and 18.1-n and 20.1-n (indicating that there was no responsive data to report).

YUSCO also argued that the remaining fields relate to expenses which would reduce normal
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                   Page 57

value, and which Commerce normally denies absent proper proof by the respondent. See RHP

Bearings v. United States, 19 CIT 133, 139, 875 F. Supp. 854, 859 (1995). Examination of the

September 25, 1998 Response reveals, however, several fields which YUSCO treated on a

transaction-specific basis and which do not fall squarely under the heading of “expenses”. See,

e.g., YUSCO Sept. 25, 1998 Response to Questionnaire at B-17 through B-19, fields 12.0, 13.0,

14.0 (date of receipt of payment, terms of delivery, terms of payment). These missing fields, and

the complete lack of matching data for the U* sales, appear to substantiate Commerce’s position

that the matching needed for a proper margin computation was adversely impacted. On these

facts, the court cannot say this determination was not supported by substantial evidence.

       The court finds no error in Commerce’s application of adverse facts available.

                                                   c

                  Commerce Properly Included YUSCO’s Sales to Yieh Mau
                             Within YUSCO’s Export Sales

       YUSCO next argues that the margin assigned to it was distorted because Commerce

treated YUSCO’s sales to Yieh Mau as part of YUSCO’s United States sales, rather than as part

of YUSCO’s home market database, as YUSCO had reported the sales. YUSCO Moving Brief at

37. The inclusion of these additional sales impacted the weighted average margin rate, because it

increased the quantity of sales in certain categories, thus affecting the weight accorded to those

categories in the margin calculation.

       YUSCO does not dispute that YUSCO and Yieh Mau are affiliated. Id. YUSCO

contends, however, that the department did not explain why this affiliation warranted the

treatment of sales to Yieh Mau as U.S. sales. Id. In fact, Commerce did provide an explanation

for its treatment of the Yieh Mau sales as U.S. sales: it did so as part of its adverse facts

determination. Final Determination, 64 Fed. Reg. at 30,606. Treatment of the Yieh Mau sales as
Consol. Court No. 99-07-00457                PUBLIC VERSION                                   Page 58

U.S. sales, rather than home market sales, was thus the drawing of an inference adverse to

YUSCO, in the face of a record that shows that Yieh Mau resold some of the subject merchandise

from YUSCO, further-processed some of YUSCO’s merchandise into other subject merchandise,

and consumed still other amounts of YUSCO’s subject merchandise, and that YUSCO was not

able to identify how much of its merchandise fell within each of these three categories.

       YUSCO also contends that the Department was required to apply the arm’s length test,

under 19 C.F.R. § 351.403(c), to determine whether the Yieh Mau sales should be treated as home

market sales. YUSCO Moving Brief at 37. This section provides that:

       If an exporter or producer sold the foreign like product to an affiliated party, the
       Secretary may calculate normal value based on that sale only if satisfied that the
       price is comparable to the price at which the exporter or producer sold the foreign
       like product to a person who is not affiliated with the seller.

19 C.F.R. § 351.403(c) (1998). For this provision to apply, Commerce must first find that the

sales in question are “foreign like product.” Instead, Commerce concluded that the sales to Yieh

Mau were of subject merchandise. This provision is thus inapplicable.

       YUSCO also states that “[i]t is also undisputed that Yieh Mau was one of YUSCO’s home

market customers during the POI.” YUSCO Moving Brief at 38. YUSCO provides no record

support for this assertion, nor does the court find any. YUSCO simply argues that it did not know

at the time of sale whether Yieh Mau would sell YUSCO’s SSSS to home market or foreign

customers. That is not enough.

                                             d

                           YUSCO’s Reported Cost of Manufacture

       YUSCO contends that Commerce erred in adjusting YUSCO’s cost of manufacture, based

on Commerce’s determination that YUSCO did not identify and quantify all differences between
Consol. Court No. 99-07-00457                  PUBLIC VERSION                                 Page 59

its submitted COP and CV data, on the one hand, and its audited financial statement, on the other

hand. Id. at 38.

       The Government argues that the cost adjustment issue is not yet ripe for adjudication, and

thus is not justiciable, because Commerce utilized total adverse facts available, such that the

margin imposed did not rest in any way on the adjusted COP and CV. Defendant Opposition

Brief at 47.

       [The] basic rationale [of the ripeness doctrine] is to prevent the courts, through
       avoidance of premature adjudication, from entangling themselves in abstract
       disagreements over administrative policies, and also to protect the agencies from
       judicial interference until an administrative decision has been formalized and its
       effects felt in a concrete way by the challenging parties. The problem is best seen
       in a twofold aspect, requiring us to evaluate both the fitness of the issues for
       judicial decision and the hardship to the parties of withholding court consideration.

Abbott Labs. v. Gardner, 387 U.S. 136, 148-49 (1967). The Supreme Court thus requires

application of a two-part test to determine whether a case is ripe for judicial action. First, the

court must determine whether the issues are fit for judicial decision--that is, whether there is a

present case or controversy between the parties, see Lake Carriers' Ass'n v. MacMullan, 406 U.S.

498, 506 (1972); BP Chems. Ltd. v. Union Carbide Corp., 4 F.3d 975, 977 (Fed. Cir. 1993); and

second, whether there is sufficient risk of immediate hardship to warrant prompt adjudication --

that is, whether withholding judicial decision would work undue hardship on the parties,

MacMullan, 406 U.S. at 509; Pacific Gas & Elec. Co. v. State Energy Resources Conservation &

Dev. Comm'n, 461 U.S. 190, 200-01 (1983). Both prongs must be satisfied before an Article III

court may apply its adjudicative powers to a case's merits.

       This issue is indeed not yet ripe for adjudication. There is no actual controversy between

the parties, because Commerce did not set the cash deposit rate based in whole or in part upon the

adjusted cost of manufacturing. The cash deposit rate imposed rests entirely on total adverse facts
Consol. Court No. 99-07-00457                 PUBLIC VERSION                                  Page 60

available. YUSCO has not been injured in any way by Commerce’s decision to adjust the cost of

manufacturing. Commerce did not rest its facts available determination upon its conclusion that

the cost of manufacturing required adjustment. A decision by this court in YUSCO’s favor on

this issue would be purely advisory and would result in no benefit whatsoever to YUSCO. If

YUSCO were to appeal on the issues of facts available and adverse facts available, and to prevail

on both issues, such that Commerce were somehow wholly precluded from applying either

provision, the case would be remanded to Commerce for calculation of the proper margin. Unless

and until these events have come to pass, there is no controversy for this court to adjudicate.

                                                 IV

                                          CONCLUSION

         For the foregoing reasons, the Court remands this case to Commerce for consideration of

the issues discussed herein. In all other respects, the Department's Final Determination is

affirmed.

                                      __________________________
                                       Evan J. Wallach, Judge

Dated:          July 3, 2001
                New York, New York
                                          ERRATA

Tung Mung Development Company, Ltd. v. United States, Court No. 99-07-00457, Slip Op. 01-
83, dated July 3, 2001.

•     On page 8, delete:

      “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.” Ceramica Regiomontana, S.A., 10 CIT at 404-5, 636 F. Supp. at
      966.

•     On page 27, insert a footnote immediately after the word “reasonableness” in the
      following sentence: “There is thus nothing there for the court to analyze for
      reasonableness or substantial evidence.”

      The footnote shall be as follows:

      By use of the word “reasonableness”, the court references the factors identified in
      United States v. Mead, 2001 WL 672258 at *6 (U.S. June 18, 2001) (“[T]he fair
      measure of deference to an agency administering its own statute has been
      understood to vary with circumstances, and courts have looked to the degree of
      the agency’s care, its consistency, formality, and relative expertness, and to the
      persuasiveness of the agency’s position.”).

August 29, 2001