No PMS Adjustment for Sales-Below-Cost Test When Finding Normal Value, CIT Rules

The Commerce Department cannot make a particular market situation adjustment in the sales-below-cost test when calculating normal value, the Court of International Trade again ruled in a Sept. 23 opinion. Pointing to multiple CIT rulings reaching the same conclusion (see 2107210065), Judge Gary Katzmann said that since the statute in one section has language permitting a PMS adjustment but excludes it in the section on normal value adjustments, Commerce could not make the PMS adjustment. Katzmann also said that even if such an adjustment were allowed, Commerce did not provide enough evidence that a PMS existed.

The ruling came in a case over an administrative review of the antidumping duty order on heavy walled rectangular welded carbon steel pipes and tubes (HWR) from South Korea, in which the plaintiffs, HiSteel and Kukje Steel, were mandatory respondents. Following allegations from the AD petitioner, Commerce held that a PMS existed for hot-rolled steel oils, an input of HWR, based on four factors: unfairly traded steel from China, subsidization of HRS by the South Korean government, government control over electricity prices in South Korea, and alliances between South Korean HRC suppliers and HWR producers.

After finding the PMS existed due to these four factors, Commerce then adjusted the costs of production in the sales-below-cost test to account for the PMS when finding HiSteel and Kukje's normal value in the review.

CIT said that a PMS adjustment when calculating normal value is not needed because if it existed, it would be understood to affect both normal value and the export price. In effect, the PMS would cancel out, precluding the need to adjust for the PMS for the purposes of comparing the prices. If Commerce were to find that a PMS uniquely affects sales of HWR to the home market, then the agency should abandon normal value in favor of constructed export price or sales in a third country, the court said.

Katzmann also rejected arguments from Commerce and the petitioner in the case that Commerce is afforded the right to make this adjustment based on Chevron deference afforded to the agency. Since the statute does not expressly forbid this adjustment, Commerce can make the adjustment, Commerce had said.

Relying on U.S. Court of Appeals for the Federal Circuit precedent, Katzmann said that this argument fails since the adjustment is permitted elsewhere but not mentioned in the section on calculating normal value, meaning that it is not permitted, the judge said. Where “Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion," he said, citing Federal Circuit precedent.

Katzmann sided with the government on his determination that Commerce is allowed to find that a PMS existed based on the “totality of the circumstances.” The case included a question over whether the agency could find a PMS even though each of the four reasons given for establishing the PMS was insufficient to find a particular market situation on its own. Katzmann said that yes, all four together could show a PMS existed.

But that is not what happened in this case, the judge said. “The court concludes that there is not substantial evidence that the four factors considered by Commerce contributed to a PMS either individually or cumulatively,” the opinion said.

(HiSteel Co., Ltd., et al. v. United States, Slip Op. 21-126, CIT #20-00146, dated 09/23/21, Judge Gary Katzmann. Attorneys: Michael Chapman of Winton & Chapman for plaintiffs HiSteel and Kukje; Kara Westercamp for defendant U.S. government)