CIT Tells Commerce to Revisit if 'Further Processed' Parts in AD Order's Scope

The Court of International Trade on Oct. 4 sent back the Commerce Department's decision in the 2020-21 administrative review of the antidumping duty order on light-walled rectangular pipe and tube from Mexico to include exporter Tecnicas de Fluidos' (TEFLU's) "further processed" products.

Judge Jennifer Choe-Groves said that, on remand, Commerce must answer whether TEFLU's products "were downstream products outside of the scope," telling the agency it can't base its determination solely "on the physical and chemical composition" of the products. Commerce was also instructed to address whether the goods "are within an industry that was investigated by the ITC when" the commission made its corresponding injury determination.

As a result of the remand order, Choe-Groves deferred consideration of three other issues in the case: Commerce's "rejection of the manufacturer code and the further processing variable in its SAS programming code," treatment of TEFLU's sales made through the Program for the Promotion of Manufacturing, Maquiladora and Expert Services as home market sales and use of the Cohen's d test in detecting "masked" dumping.

In the review, Commerce treated TEFLU and exporter Maquilacero as a collapsed, single entity and found TEFLU's goods to be covered by the plain language of the AD order's scope. The exporter's products are "light-walled rectangular pipe and tube that underwent a process of saw-cutting, laser cutting-to-length, drilling, perforation, bending, or other further processing."

Choe-Groves rejected the scope finding, noting that the agency based its decision on the "silence" in the scope. Commerce said that because the order neither includes nor excludes car parts or other downstream goods, it was reasonable to include the products. The judge said this determination upsets the "well-established principle" that goods can be in scope only if the scope language specifically includes them or can be reasonably interpreted as including them.

The scope language "makes no reference to downstream products," nor does the agency cite any language suggesting the scope can be reasonably read to include them, the opinion said.

While Commerce centered its finding on the products' physical characteristics, these specifications "only begin the inquiry," Choe-Groves said, citing precedent from the U.S. Court of Appeals for the Federal Circuit. Goods can "fall out of the ambit of an order" based on further processing. Choe-Groves said the agency on remand must look at whether TEFLU's goods were within an industry investigated by the ITC in its injury analysis and whether the products "were interchangeable with the pipe and tube covered under the scope." The agency failed to address evidence of around 83 different custom parts that were made by TEFLU for various customers, the decision said.

Choe-Groves also faulted Commerce for its insufficient consideration of the (k)(1) factors. While the agency didn't mention that (k)(1) factors should be considered, it's clear it considered certain of these sources in its decision. The judge said the agency "made cursory conclusions with minimal citations and failed to include most of the documents on the record before the Court." Choe-Groves held that "Commerce's determinations under the (k)(1) analysis are neither" legal nor backed by evidence since the agency didn't conduct "a complete and fair substantive analysis" of the sources or put the documents on which it relied on the record.

Since it's remanding the scope decision, the court also sent back the decision to collapse Maquilacero and TEFLU. On remand, Commerce must reconsider whether the goods made by Maquilacero and TEFLU are similar or identical under the collapsing analysis, the decision said.

(Maquilacero S.A. de C.V. v. U.S., Slip Op. 24-107, CIT Consol. # 23-00091, dated 10/04/2024; Judge: Jennifer Choe-Groves; Attorneys: Diana Dimitriuc-Quaia of ArentFox for plaintiffs Maquilacero S.A. de C.V. and Tecnicas de Fluidos S.A. de C.V.; Jeffrey Winton of Winton & Chapman for consolidated plaintiff Perfiles LM; Franklin White for defendant U.S. government; Alan Price of Wiley for defendant-intervenor Nucor Tubular Products)