Commerce's Reliance on Actual Costs of AD Respondent Complies With Dillinger, Respondent Says

Antidumping duty review petitioner Maverick Tube Corporation's argument's against the Commerce Department's move to rely on the actual costs of prime and non-prime products as reported by the AD respondent misinterprets a key precedential decision, AD respondent Nexteel Co. argued in a Nov. 3 brief at the Court of International Trade. Instead, Commerce complied with the court's orders and the precedent set in this decision made by the U.S. Court of Appeals for the Federal Circuit -- Dillinger France S.A. v. United States -- when it reversed the adjustment to the respondent's reported costs (Husteel Co., Ltd. v. U.S., CIT Consol. #19-00112).

The case stems from the 2016-17 antidumping duty administrative review of welded line pipe from South Korea, in which Nexteel Co. and Husteel Co. served as respondents. In the review, Commerce calculated the costs of non-prime welded line pipe goods based on their resale value and then reallocated the difference between resale value and actual costs of production for non-prime products to the costs of prime products.

Judge Claire Kelly said this practice was “problematic” and violated the standards set in Dillinger (see 2106150083). Under Dillinger, Commerce must calculate constructed value based on the actual costs of production for prime and non-prime products. Taking the ruling into consideration, Commerce then made the switch to rely on Nexteel's actual costs of prime and non-prime goods (see 2109030024).

Nexteel, in its comments on the remand results, refuted Maverick's conception of what Dillinger means. Maverick suggested that Commerce misinterpreted this opinion by unnecessarily removing the adjustment to Nexteel's reported costs and that Commerce should not "automatically" accept the respondent's cost reporting.

"The fundamental problem with this line of reasoning is that it ignores the CAFC’s reasoning in Dillinger," Nexteel said. "In particular, in Commerce’s initial determination, Commerce disregarded the reported costs for non-prime merchandise, which were consistent with NEXTEEL’s books and records, and substituted in a sales price for the reported costs. However, according to Dillinger, such sales value-based methodologies are so inconsistent with the statutory directive to calculate costs that those methodologies are unacceptable, even where the sales value-methodology is consistent with a respondent’s books and records."

In fact, the Dillinger court went farther than in the present case by finding that when a respondent's records use a price-based valuation methodology instead of costs for non-prime products, the agency must divert from those values and use actual costs instead, the respondent argued. Having reverted to actual costs, the question now becomes is this finding backed by substantial evidence, and not, as Maverick suggests, a question over whether Commerce's original findings were properly supported, the brief said.