CIT Again Remands Commerce's PMS Adjustment to Cost of Production in Sales-Below-Cost Test

The Court of International Trade again rejected the Commerce Department's attempt to make a particular market situation adjustment to the cost of production in a sales-below-cost test in an antidumping case, according to a July 19 opinion. Yet again, the court said that such adjustments, resulting in alternative cost methodologies, are reserved for constructed value and not normal value because sales used when calculating normal value must be carried out in the "ordinary course of trade."

The case, brought by mandatory respondents Hyundai Steel Corp. and SeAH Steel Corp., stems from final results of the 2015-16 administrative review of the antidumping order on circular welded non-alloy steel pipe from South Korea. In the review, Commerce found a PMS existed for hot-rolled steel coil in the South Korean market, basing its determination on five different factors. The agency then attempted to adjust the circular welded pipe's cost of production for the sales-below-cost test. CIT Judge Choe-Groves twice remanded Commerce's finding.

In its second remand results, Commerce still attempted to maintain the PMS adjustment. The agency said that a portion of the Trade Preferences Extension Act of 2015, Section 1677b(e), allows Commerce to make a PMS adjustment for both constructed value and normal value. The court disagreed. "Commerce cannot rely on Section 1677b(e) when Commerce bases normal value on home market sales. No part of the statute allows Commerce to use any other methodology when market sales are used for normal value."

When calculating normal value, Commerce can only use sales conducted in the "ordinary course of trade." Sales made where a PMS exists are excluded from the ordinary course of trade and thus dropped from any normal value calculation. "Nothing in the statute grants Commerce the authority to modify the sales-below-cost test to permit a particular market situation analysis or adjustment, and the specificity of the sales-below-cost test leaves no ambiguity," Choe-Groves said.

The court then said that Commerce made the PMS determination itself unlawfully since it used the home market sales in the antidumping review. "Nothing in the statute can be read to authorize a cost-based particular market situation determination when Commerce bases normal value on home market sales," the opinion said. "The statute does not provide for a cost-based particular market situation analysis when using home market sales to calculate normal value. Commerce made an unlawful particular market situation cost-based determination in this case, while basing normal value on home market sales."

(Hyundai Steel Company v. United States, Slip Op. 21-88, CIT Consol. # 18-00154, dated 07/19/21, Judge Choe-Groves Attorneys: Jaehong Park of Arnold & Porter for plaintiff Hyundai Steel Company, Jeffrey Winton of Winton & Chapman for plaintiff SeAH Steel Corporation; Patricia McCarthy for defendant U.S. government)