Commerce to Reconsider Major Input Rule, Partial AFA, G&A Expenses in CTL Plate AD Case

The Commerce Department will reconsider its application of the major input rule, treatment of certain general and administrative expenses and its use of adverse facts available in an antidumping duty case, according to two Aug. 18 Court of International Trade opinions. After remanding the case once before, Judge Leo Gordon remanded certain elements of the results yet again, but did sustain certain parts of Commerce's reconsideration, including its differential pricing analysis and adjustment of interest expenses to include a portion of the respondent's parent holding company's interest expense.

The case stems from an antidumping duty investigation of carbon and alloy steel cut-to-length plate from Germany in which AG der Dillinger Huttenwerke served as one of the respondents. The exporter challenged, among other things, Commerce's cost of production determination for its prime and non-prime plates. The agency found that Dillinger uses internal "factory results reports" to value the non-prime products at their "likely selling prices," using this vlaue as an offset to the production of prime goods.

Remanding this reliance, Gordon said that "The U.S. Court of Appeals for the Federal Circuit has held that Commerce’s decision to rely on information reflecting a respondent’s 'likely selling price,' rather than actual cost data, violates the requirements of § 1677b(f)."

Further challenges also came from Dillinger directed toward Commerce's use of its major input rule and use of AFA. In particular, the exporter challenged the agency's use of its affiliate, Rogesa Roheisengesellschaft's affiliated and unaffiliated consumption values in applying the major input rule. "Since Rogesa provided consumption values for its coke by supplier, Commerce reasonably decided to use those values in applying the major input rule," Gordon said. "Accordingly, the court is not persuaded by Dillinger’s argument that Commerce contravened § 351.407(b) by selecting consumption values over purchase prices for determining coke value under the major input rule."

In the case's first decision, Gordon sustained the use of partial AFA but asked Commerce to review whether the same label made in a similar case, Dillinger France S.A. v. United States, would have any effect on Dillinger's case. The agency said it would, so Gordon remanded the case to recalculate the dumping margin for another respondent and consolidated plaintiff Salzgitter. The agency wants to differentiate between the French and German Dillinger cases, as made evident by its remand. "If Commerce wishes to apply a different AFA approach in this proceeding than the one it ultimately applied in the French investigation, the agency must explain why such a disparate approach is reasonable," Gordon said.

After initially remanding Commerce's determinations regarding its differential pricing analysis to root out targeted dumping and interest expense adjustments, Gordon sustained them following further explanation from Commerce. On the DPA finding, Gordon relied on another Federal Circuit case, Dillinger France S.A. v. United States, to find that Commerce accounted for the respondent's concerns and sufficiently explained its finding of a "pattern of significant price differences." This led to a sustention of Commerce's use of the DPA to identify targeted dumping.

As for the interest expense adjustment, Commerce further explained that it typically excludes investment-related gains and losses from its cost of production calculations since it "considers them a separate profit-making activity unrelated to a company's normal operations." Based on this, Commerce increased a portion of Dillinger holding company SHS Stahl-Holdings-Saar's unrecovered costs that should've been allocated to its affiliates, including Dillinger. The respondent argued that Commerce's practice is to not include interest expenses in a respondent's G&A expenses.

"These arguments are unpersuasive," Gordon said. "They conflate financial expenses with Commerce’s treatment of investment activities and are contrary to Commerce’s practice to include the suppliers’ financial expenses in the cost of production as Commerce explained in the administrative proceeding. The court also perceives no inconsistency in requiring a respondent to report separate ratios for its own G&A and interest expenses versus Commerce’s treatment of supplier expenses attributable to the respondent."

(AG der Dillinger Huttenwerke et al. v. United States, Slip. Op. 21-101 and 21-102, CIT Consol. # 17-00158, dated 08/18/21, Judge Gordon. Attorneys: Marc Montalbine of deKieffer & Horgan for plaintiff Dillinger; Kelly Krystyniak for defendant U.S. government)