AD Petitioner Challenges Exporter's Work-in-Process Adjustment, Scrap Offset Valuation at CIT

Antidumping duty petitioner American Brass Rod Fair Trade Coalition told the Court of International Trade that the Commerce Department erred in making an adjustment for AD respondent Rajhans Metal's claimed work-in-process (WIP) and in valuing the company's scrap offset. Filing a complaint Aug. 9, the petitioner contested Rajhans' 2.19% AD rate set in the investigation on brass rod from India (American Brass Rod Fair Trade Coalition v. U.S., CIT # 24-00119).

During the investigation, the coalition raised concerns on Rajhans' proposed offset methodology for its self-generated scrap, urging Commerce to deny any offset or revisions to the company's reported amounts. The petitioner also told the agency to deny any adjustment Rajhans claimed for its work-in-process.

In its preliminary results, Commerce revised the proposed scrap offset calculations but still granted the offset and granted the work-in-process adjustment. The coalition argued administratively that the exporter's "two-step cost-reporting methodology avoids the need to account for semi-finished goods WIP adjustments because that methodology already captures the cost of goods manufactured of the final product" during the investigation period.

The coalition also argued that granting Rajhans a work-in-process adjustment for its sellable merchandise would cut against the agency's past practice. It also claimed that the company's work-in-process allocation methodology would lead to "nonsensical results because Rajhans applied the WIP adjustment on a product-specific basis in a manner that distorts reported costs." Lastly, the coalition challenged Rajhans' valuation of its scrap offset, saying the company valued its scrap at the cost of "pristine brass billets" instead of brass scrap itself.

In its final determination, Commerce agreed in part that Rajhans' scrap offset methodology at the brass rod production stage was "unreasonable." However, the agency ultimately revised the offset valuation by using a "ratio of the weighted-average per-unit cost of reintroduced scrap at the billet production stage during the period of investigation and the weighted-average per-unit value of the scrap offset at the brass rod production stage."

The coalition said this "failed to fully resolve the problem" because it "continued to distort the allocation of the scrap offset across various products."

The complaint said the agency also failed to address the claim that if the work-in-process adjustment were to be granted, the "scrap offset would need to be further adjusted" to make sure the scrap offset "for runaround scrap equals the net value of that scrap when reintroduced into the production of billet."

Commerce gave Rajhans the 2.19% AD rate, then used this rate to set the all-others rate at 2.41%. The present suit followed, in which the petitioner challenges the work-in-process adjustment, the scrap offset valuation and the calculation of the all-others rate.