CIT Allows Use of Transactions Disregarded Rule, Remands Everything Else in Mattress Case

Again remanding the Commerce Department’s final affirmative determination in mattress exporter Zinus Indonesia's antidumping duty case, the Court of International Trade said that facts otherwise available weren't warranted in Commerce's construction of the exporter’s export price and that the department needed to consider new evidence in constructing its selling expenses.

CIT had already ruled on several issues in March in the challenge brought by Zinus Indonesia, a subsidiary of Zinus, inc., of Commerce's antidumping duty investigation on mattresses from Indonesia (see 2303210054). It sustained many of Commerce's findings but remanded Commerce's inclusion of mattresses in-transit from Indonesia at the end of the investigation period, as well as its adjustments to Zinus Korea's selling expenses to account for actual selling expenses and Commerce's application of the transactions disregarded rule.

In her Feb. 20 decision, Judge Jennifer Choe-Groves again said that Commerce hadn't properly explained why it included mattresses in transit in Zinus Indonesia’s constructed export price.

The department had to construct Zinus Indonesia’s U.S. price because once the exporter’s mattresses reached the warehouses of Zinus, Inc., the importer said, it couldn't tell them apart from those it got from other countries, the judge explained. To make the calculation, Commerce applied a quarterly ratio sales methodology to all of Zinus, Inc.’s mattresses, including those that were still in the process of being shipped to the U.S., to determine the quantity of Zinus Indonesia’s U.S. sales.

The government said it included those incoming mattresses after determining that certain data was missing from Zinus, Inc.’s records; “the purchased quantity of mattresses in inventory was less than the quantity Zinus U.S. reported that it sold out of inventory during the period of investigation,” the judge said.

However, if information is missing, Commerce is obligated to first ask the relevant parties for it before resorting to facts otherwise available, she said.

“It is not apparent from the Remand Redetermination that Commerce requested information from Zinus Indonesia or Zinus U.S. about the missing sales data subject to the requirements of 19 U.S.C. § 1677m(d),” she said.

She remanded the determination and recommended the department reopen the record, “especially because Commerce is requesting to reopen the record on a different issue.”

Second, Choe-Groves granted Commerce’s request for remand to consider further evidence regarding affiliate Zinus Korea’s involvement in Zinus Indonesia’s mattress sales.

The department initially called costs between the parties “commissions and fees” rather than selling expenses, saying the other exporter’s assistance to Zinus Indonesia was “limited to … receiving invoices from Zinus Indonesia and forwarding them to affiliated and unaffiliated U.S. customers.” Zinus Indonesia, it said, did most of the actual selling.

However, defendant-intervenors led by Brooklyn Bedding claimed that the record demonstrated Zinus Korea did more for Zinus Indonesia than just forward invoices (see 2308090035). They argued, with reference to one of Zinus Indonesia’s questionnaires, that Zinus Indonesia sold mattresses to Zinus Korea, which then turned around and resold them in the U.S. They also said Zinus Indonesia “referred to export price sales as sales by Zinus Korea.” They claimed that “it would be commercially unreasonable for Zinus Korea to be responsible for a significant number of sales while not incurring expenses for sales staff or administrative overhead,” Choe-Groves said.

She said the remand was “appropriate on this issue” so that Commerce could address the contradictions.

Finally, Choe-Groves upheld Commerce’s use of the transactions disregarded rule in calculating Zinus Indonesia’s normal value.

In constructing that normal value, the department determined that Zinus Indonesia received 10 types of inputs from its affiliated suppliers in China, so it instead used Global Trade Atlas data from Indonesia. The court initially remanded that decision because Commerce justified it by interpreting the phrase “market under consideration” in the applicable statute “to only refer to the market under review in the investigation,” which was “overly narrow,” the judge said.

On remand, the department changed up its analysis rather than its conclusion, saying that “actual market import prices into Indonesia are more likely to be available to our Indonesian respondent than market import prices in other countries.”

Brooklyn Bedding and the other defendant-intervenors argued that Commerce hadn't yet sufficiently explained or supported its choice to use only GTA data from Indonesia, saying it had gone against common practice and should have gone with the method it used in its preliminary results: the averaging of several countries’ GTA data.

The court, however, disagreed.

“Because a reasonable market price was available on the record, it was not necessary for Commerce to consider other available options, such as the average of other country GTA data,” Choe-Groves said. “The Court concludes that Commerce’s reliance on the Indonesian GTA data was reasonable, in accordance with law, and supported by substantial evidence.”

(PT. Zinus Global Indonesia v. U.S., Slip Op. 24-19, CIT Consol. # 21-00277, dated 02/20/24; Judge: Jennifer Choe-Groves. Attorneys: J. David Park of Arnold & Porter for plaintiff PT. Zinus Global Indonesia; Yohai Baisburd of Cassidy Levy Kent for defendant-intervenors led by Brooklyn Bedding; L. Misha Preheim for defendant U.S. government)