Commerce Grants Level of Trade Adjustment on Remand in AD Case at Trade Court

The Commerce Department granted a level-of-trade (LOT) adjustment for antidumping duty respondent Productos Laminados de Monterrey (Prolamsa) on remand at the Court of International Trade, reversing course from its previous position. Finding that the totality of evidence supports the position that Prolamsa made sales at two levels of trade, Commerce dropped Prolamsa's dumping rate from 7.47% to 0.89% (Productos Laminados de Monterrey S.A. de C.V. v. U.S., CIT #20-00166).

The case concerns the administrative review of the antidumping duty order on heavy walled rectangular carbon welded steel pipes and tubes from Mexico, in which 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.

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 all its U.S. sales were through one level of trade -- a commercial one -- and an adjustment should be made to account for the skewed price of the fourth channel. Commerce agreed and made the adjustment in its preliminary results. In its final results, however, Commerce didn't make that adjustment due to a change in department practice requiring quantitative evidence to prove a LOT adjustment is necessary.

Prolamsa sued and said Commerce "completely overlooked" the quantitative evidence the company submitted, and the court agreed. CIT said Prolamsa provided quantitative evidence demonstrating the company's staffing and selling expenses were proportionally and substantially higher in the fourth channel than in the other three levels of trade (see 2112200024).

On remand, Commerce found a LOT adjustment was warranted and said the respondent cleared the agency's practice requiring quantitative evidence proving that the two levels of trade existed. Commerce said Prolamsa gave product specifications, performance testing results, mechanical requirements and more to show the sales were conducted at a greater level of intensity along with the activities performed by its sales team to reveal the two levels of trade.

Prolamsa "adequately provided certain quantitative metrics in support of its channel-specific selling functions and corresponding intensities," the remand results said. "Prolamsa provided a chart demonstrating the differences in indirect selling expenses incurred between its commercial and industrial sales. ... Moreover, the costs Prolamsa incurred for salaries and benefits paid to its industrial sales team were substantially higher in relation to the revenue earned on industrial products when compared to the same metric calculated with respect to Prolamsa’s commercial sales."

Commerce said the evidence supported the position that Prolamsa's industrial sales selling activities were sufficient to meet the requirements for a LOT adjustment, performed at a higher intensity and adequately supported through quantitative metrics related to indirect selling expenses. Defendant-intervenor Nucor Tubular Products Inc. contested this position, arguing that the channel-specific salaries and benefit costs as a ratio of channels 1-3 and channel 4 have "little effect on the price comparability between these channel groups."