CIT Sends Level-of-Trade Adjustment Denial Back to Commerce in Antidumping Review

The Commerce Department needs to reconsider its decision to deny an antidumping duty review respondent a level-of-trade (LOT) adjustment related to the company's home market sales, the Court of International Trade said in a Dec. 17 opinion. Seeing as the decision was based on a factual finding not backed by enough evidence and a second finding that is "vague and conclusory," Commerce needs to take another look at the issue, Judge Timothy Stanceu said.

The case concerns the final results in the administrative review of the antidumping duty order on certain heavy walled rectangular carbon welded steel pipes and tubes from Mexico, in which Productos Laminados de Monterrey (Prolamsa) served as a mandatory respondent. Prolamsa said that it sold HWR pipes and tubes at four levels of trade in its home market. The first three were made up of commercial sales while the fourth consisted of industrial sales and dealt with much higher amounts in both sales prices and expenses, the company told Commerce.

These "Channel 4" sales were custom-designed parts made from HWR pipes and tubes that were produced for and sold to original equipment manufacturers. Prolamsa told Commerce that all its U.S. sales were through one level of trade -- a commercial one -- and so an adjustment should be made to account for the skewed price of the fourth channel. Originally, Commerce agreed and made the adjustment in its preliminary results, leading to a 0.8% dumping margin. In its final results, however, Commerce backed out of this concession, refusing to make the adjustment due to a change in department practice that requires quantitative evidence to prove whether a LOT adjustment is necessary. The result was a 7.47% dumping rate.

Prolamsa sued and said that Commerce "completely overlooked" the quantitative evidence the company did submit, and the court agreed. Prolamsa provided quantitative evidence that showed that the company's staffing and selling expenses were proportionally higher by a substantial amount in channel four than the other three levels of trade. Further, Prolamsa also gave Commerce data that showed substantially longer average inventory turnover periods for the industrial sales than for the commercial sales. This resulted in higher inventory costs for the channel four goods, the company argued.

Commerce also denied Prolamsa's bid for a LOT adjustment on the grounds that it reached a different conclusion from its preliminary to final results due to the "totality of record evidence." Stanceu tossed this defense aside, ruling that this statement is "entirely conclusory, hiding behind [the] vague and unexplained" term "totality of the record evidence." The judge went on to write that "the actual 'totality of the record evidence' would appear to include circumstances Commerce described in a number of specific factual findings that Commerce stated, and grounded in record evidence, in the Preliminary Results but did not identify in the Final Results as findings that it was reversing or abandoning."

In all, it was Commerce's failure to look at the quantitative data and vague conclusions that did it in, the judge held. "The Department’s analysis rests on one finding that is contradicted by the record evidence and another that is vague and conclusory in invoking the 'totality of the record evidence,'" Stanceu said. "The court, therefore, must remand for reconsideration the Department’s decision that all home market sales occurred at a single LOT and to reject Prolamsa’s request for a level-of-trade adjustment."

(Productos Laminados de Monterrey S.A. de C.V. v. United States, Slip Op.21-170, CIT #20-00166, dated 12/17/21, Judge Timothy Stanceu. Attorneys: David Gond of White and Case for plaintiff Prolamsa; Kara Westercamp for defendant U.S. government; Alan Price of Wiley Rein for defendant-intervenor Nucor Tubular Products; Christopher Cloutier of Schagrin Associates for defendant-intervenors Atlas Tube and Searing Industries)