Slip Op. 25-22
UNITED STATES COURT OF INTERNATIONAL TRADE
Court No. 22-00122
DAIKIN AMERICA, INC., Plaintiff, v. UNITED STATES, Defendant, and GUJARAT FLUOROCHEMICALS LIMITED, Defendant-Intervenor.
Before: M. Miller Baker, Judge
OPINION
[The court sustains Commerce’s redetermination.]
Dated: March 7, 2025
Roger B. Schagrin, Luke A. Meisner, and Nicholas C. Phillips, Schagrin Associates, Washington, DC, on the comments for Plaintiff.
Brian M. Boynton, Principal Deputy Assistant Attor- ney General; Patricia M. McCarthy, Director; Claudia Burke, Deputy Director; and Collin T. Mathias, Trial Attorney, Commercial Litigation Branch, Civil Divi- sion, U.S. Department of Justice, Washington, DC, on Ct. No. 22-00122 Page 2
the comments for Defendant. Of counsel on the com- ments was Leslie M. Lewis, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, Washington, DC.
Jessica R. DiPietro, Matthew M. Nolan, and John M. Gurley, ArentFox Schiff LLP, Washington, DC, on the comments for Defendant-Intervenor.
Baker, Judge: This case involving a challenge to the Department of Commerce’s calculation of the dumping rate assigned to a chemical imported from India re- turns after remand. See Daikin Am., Inc. v. United States, Slip Op. 24-32, 2024 WL 1171736 (CIT Mar. 14, 2024). Both domestic producer Daikin America, Inc., and Indian manufacturer Gujarat Fluorochemicals Limited are unhappy with the agency’s redetermina- tion, although for different reasons. This time, the court concludes that the Department got it right.
I
First, a quick refresher on the relevant (and some- what abstruse) background principles. Generally, Commerce determines a respondent’s dumping mar- gin by comparing the relevant merchandise’s export price or constructed export price in the United States with its normal value. Hung Vuong Corp. v. United States, 483 F. Supp. 3d 1321, 1334 (CIT 2020) (citing 19 U.S.C. § 1673). Normal value is the “home market” price. Id. at 1334 n.6. Ct. No. 22-00122 Page 3
“The ‘export price’ is the price the producer or ex- porter charges to an unaffiliated customer either within, or for exportation to, the United States, while the ‘constructed export price’ is the price the affiliated purchaser charges within the United States to a pur- chaser not affiliated with the producer or exporter.” Id. at 1353 n.34 (CIT 2020) (emphasis in original) (citing Mid Continent Steel & Wire, Inc. v. United States, 203 F. Supp. 3d 1295, 1298–99 (CIT 2017)); see also 19 U.S.C. § 1677a(a) (defining “export price”), (b) (de- fining “constructed export price”).
“Commerce makes certain statutory adjustments to the price of goods to reflect various costs involved in preparing the goods for sale in the United States, and the adjustments to ‘constructed export price’ are more extensive than the adjustments to ‘export price.’” Hung Vuong, 483 F. Supp. 3d at 1353 n.34 (citing 19 U.S.C. § 1677a(c), (d)). One of the adjustments rel- evant here, which the Department makes to both prices, is the cost of transporting the products to the place of delivery in the United States. See 19 U.S.C. § 1677a(c)(2)(A).
The relevant regulation directs that respondents report such expenses on a “transaction-specific” basis. See 19 C.F.R. § 351.401(g)(1). If such reporting is “not feasible,” Commerce may “consider allocated Ct. No. 22-00122 Page 4
expenses[1] . . . , provided [it] is satisfied that the allo- cation method used does not cause inaccuracies or dis- tortions.” 19 C.F.R. § 351.401(g)(1); see also id. § 351.401(g)(2) (“Any party seeking to report an ex- pense or a price adjustment on an allocated basis must demonstrate to the Secretary’s satisfaction that the al- location is calculated on as specific a basis as is feasi- ble” and that “the allocation methodology used does not cause inaccuracies or distortions.”). In making these determinations, the Department “will take into account the records maintained by the party . . . in the ordinary course of its business,” id. § 351.401(g)(3), as well as certain other factors, id.
Along with adjusting the U.S. price, Commerce must sometimes also adjust the home-market price. This is because the statute directs the agency to deter- mine the latter “to the extent practicable” by looking to sales “at the same level of trade as” the former. 19 U.S.C. § 1677b(a)(1)(B)(i). Although neither the
1 “Transaction-specific” reporting means providing the De-
partment with the shipping costs linked to each sale. “Al- located” disclosure of such spending means some method- ology that apportions gross outlays among sales. That is why Commerce prefers “transaction-specific” figures—they represent the actual amounts, while “allocated expenses” inherently involve estimates. Cf. Shikoku Chems. Corp. v. United States, 795 F. Supp. 417, 420 (CIT 1992) (referring to “the standard Commerce practice of preferring actual ex- penses over allocated expenses”). Ct. No. 22-00122 Page 5
statute nor the SAA 2 defines “same level of trade,” see Micron Tech., Inc. v. United States, 243 F.3d 1301, 1305 (Fed. Cir. 2001), binding precedent holds it “to mean comparable marketing stages in the home and United States markets, e.g., a comparison of wholesale sales in [the home market] to wholesale sales in the United States,” id. (citing 19 C.F.R. § 351.412(c)(2)). This “ensures . . . that a [home-market] wholesale price will not be compared to a United States . . . retail price.” Id. (emphasis added).
But the Department may be “unable to find sales in the foreign market at the same level of trade as the sales in the United States.” Id. In those cases, it “com- pare[s] sales in the United States and foreign markets at a different level of trade.” Id. Based on that compar- ison, it must
increase or decrease the [home-market price] to account for the difference in the level of trade, if that difference:
(i) involves the performance of different sell- ing activities; and
2 Statement of Administrative Action Accompanying the Uruguay Round Agreements Act, H.R. Rep. No. 103–316, vol. 1, 1994 U.S.C.C.A.N. 4040. The SAA is an “authorita- tive expression” of the statute’s meaning. 19 U.S.C. § 3512(d). Ct. No. 22-00122 Page 6
(ii) is demonstrated to affect price compara- bility, based on a pattern of consistent price differences between sales at different levels of trade in the country in which normal value is determined.
Id. (quoting 19 U.S.C. § 1677b(a)(7)(A)). This is what the statute refers to as a “level of trade” adjustment.
There’s yet another layer to this onion that we must peel back. When (1) the home-market price is based on a level of trade that “constitutes a more advanced state of distribution than the level of trade of the con- structed export price,” and (2) data are unavailable to carry out a level-of-trade adjustment, as discussed above, Commerce must reduce the home-market price. 19 U.S.C. § 1677b(a)(7)(B). It does so by the “amount of indirect selling expenses” in that country. Id. “[T]he apparent theory” is “that such costs would not have been incurred if the sale had been made on a less ad- vanced level of trade.” Micron, 243 F.3d at 1305. The statute calls this reduction a “constructed export price offset.” 19 U.S.C. § 1677b(a)(7)(B).3
Reflecting these principles, the relevant regulation states that the Department will grant a constructed export price offset only where (i) normal value is
3 This offset “may not exceed” the amount deducted for such
expenses from the constructed export price under 19 U.S.C. § 1677a(d)(1)(D). Micron, 243 F.3d at 1305 (citing 19 U.S.C. § 1677b(a)(7)(B)). Ct. No. 22-00122 Page 7
compared to the constructed export price; (ii) normal value is determined at a more advanced level of trade than that of the constructed export price; and (iii) de- spite full cooperation from the party requesting the off- set, the data available do not allow Commerce to de- termine under its standard methodology whether the difference affects price comparability. See 19 C.F.R. § 351.412(f)(1). An interested party seeking an offset has the burden of satisfying the agency that these re- quirements are met. See id. § 351.401(b)(1).
II
A
Daikin makes granular polytetrafluorethylene resin. It requested, and the Department opened, an antidumping investigation into imports of that chemi- cal. Slip Op. 24-32, at 2, 2024 WL 1171736, at *1. Com- merce selected Gujarat, which produces the same com- pound, as a mandatory respondent. Id. at 2–3, 2024 WL 1171736, at *1. After Commerce imposed duties, Daikin brought this suit arguing they were too low. The U.S. company challenged the agency’s acceptance of allocated movement expenses and its grant of a con- structed export price offset to the Indian producer.
This court remanded for reconsideration. In accept- ing allocated movement expenses, the agency “failed to address record evidence” tending to undermine its conclusion that transaction-specific reporting of those expenses was not feasible. Slip Op. 24-32, at 7, 2024 Ct. No. 22-00122 Page 8
WL 1171736, at *2. And even if the latter method were not feasible, it needed to address whether Gujarat’s re- ported expenses were calculated “on as specific a basis as possible” and did not cause inaccuracies or distor- tions. Id. at 8, 2024 WL 1171736, at *3.
As to a constructed export price offset, the agency found the supporting evidence insufficient. Id. at 8–9, 2024 WL 1171736, at *3. Even so, it granted the offset, reasoning that it would be unfair to hold the Indian producer responsible for holes in its evidence since it had no opportunity “to remedy the deficiency.” Id.; see also 19 U.S.C. § 1677m(d). Assuming, but not deciding, that § 1677m(d) applied here, the court found that Gu- jarat had an opportunity to cure the deficiency in its supplemental questionnaire response. Slip Op. 24-32, at 9–10, 2024 WL 1171736, at *3. And it was undis- puted that the company had the burden “of demon- strating eligibility” for the offset. Id. at 10, 2024 WL 1171736, at *3; see also 19 C.F.R. § 351.401(b)(1). The court thus held that letting the Indian producer “off with a mere warning” was “not substantial evidence” that the latter carried its burden, and remanded for reconsideration on that issue, too. Slip Op. 24-32, at 10, 2024 WL 1171736, at *3. Ct. No. 22-00122 Page 9
B
On remand, Commerce reviewed the evidence 4 Dai- kin cited to show that Gujarat could feasibly have re- ported transaction-specific movement expenses. First, consistent with this court’s prior opinion, see Slip Op. 24-32, at 7–8, 2024 WL 1171736, at **2–3, the Depart- ment considered batch numbers in the Export Cus- tomer Complaint Register, Appx08958, Appx08973– 08976. It observed that the Register covers a very small number of transactions in the unique situation of a post-sale customer complaint. Appx08975. The agency also noted that, while the Register contains comments from Gujarat’s employees describing ac- tions taken in response to a complaint, there is no in- dication in the record that the batch numbers derived from the company or its affiliates. Id. Given the lack of
4 The court declines to redact confidential record material
that it finds does not qualify as “business proprietary infor- mation” under the applicable Commerce regulation, 19 C.F.R. § 351.105(c). See 19 U.S.C. § 1516a(b)(2)(B) (providing that the court “shall . . . preserve[] in any action under this section” the “confidential or privileged status ac- corded to any documents, comments, or information,” ex- cept that it “may disclose such material under such terms and conditions as it may order”); cf. In re Violation of Rule 28(d), 635 F.3d 1352, 1356 (Fed. Cir. 2011) (recognizing the “strong presumption in favor of a common law right of pub- lic access to court proceedings”). Ct. No. 22-00122 Page 10
evidence, the Department concluded the end custom- ers may have submitted those data. Id.
Daikin argued before the agency that the complaint register shows that Gujarat can link merchandise from the factory floor to the end customer, which con- tradicts its justification for reporting shipping costs on an allocated basis (that such linkage is impossible). Appx08976. The Department retorted that “[t]he fact that something is not impossible is not the standard.” Id. (emphasis in original). Rather, “Commerce may consider allocated expenses when transaction-specific reporting is not feasible, accounting for the records maintained by the respondent in the ordinary course of its business.” Id. (citing 19 C.F.R. § 351.401(g)(1), (3)). And the Department explained at length why such reporting was not practicable, see Appx08960– 08961, including that the Indian company “would have to review and compile thousands of pages of records to link movement expenses to particular transactions,” Appx08961.
Commerce also considered other evidence that Dai- kin contended shows that Gujarat can make a one-to- one correlation using batch numbers from sales and shipping paperwork. Appx08958. The agency noted that “although certain shipping and sales documents” on the record contain batch numbers, “there is no rec- ord indication of how” those “numbers are associated with specific shipments or sales of merchandise.” Id. It pointed to an email “relating to a sale that appears to Ct. No. 22-00122 Page 11
reference the same batch and pallet numbers as those on a packing list for a shipment from India in April 2020.” Appx08958–08959. Nothing showed that the “batch and pallet numbers referenced in the shipping documents . . . are unique, such that a one-to-one link- age between the sale and shipping documentation could be made.” Appx08959. Indeed, the Indian pro- ducer’s “sample sales documentation show[ed] that one batch number can cover multiple pallet numbers.” Id.
As the record did not show “how batch numbers are associated with the merchandise in the sales and ship- ping documents, the mere ability to connect [those] documents” was “insufficient to show the feasibility of transaction-specific expense reporting.” Appx08960. Commerce thus found that Gujarat’s normal record- keeping did not allow the latter “to feasibly establish a one-to-one link between sales and shipping docu- ments.” Id. And so “it was not feasible” for the com- pany to report its movement expenses “on a transac- tion-specific basis.” Appx08961.
Having so concluded, the Department next consid- ered whether Gujarat’s movement expense reporting methodology was calculated on as specific a basis as feasible and was not distortive. Appx08961–08962; see also 19 C.F.R. § 351.401(g)(2). As to the first question, the former found that the latter’s per-grade allocation method is based on the company’s records maintained in the ordinary course of business, Appx08962—that Ct. No. 22-00122 Page 12
is, the allocated expenses were based on “the actual expenses incurred and tracked by grade,” Appx08980 (emphasis in original). This is because the Indian pro- ducer’s records “track the quantity and costs of ship- ping subject merchandise” to each U.S. warehouse “on a per-grade basis.” Appx08962 (citing Appx02223– 02245) (all shipping and sales documentation, includ- ing grade information, for one invoice). As the com- pany’s allocation is “calculated based on shipments of subject merchandise during the [period of investiga- tion], on a per-grade basis, and is based on [its] records maintained in the ordinary course,” id., the Depart- ment was “satisfied that [the former’s] expenses were calculated on as specific a basis as feasible,” id.
As for whether this reporting was distortive, Com- merce tested Gujarat’s allocations against the sales and shipping documents submitted to the record. The former reviewed evidence for one product code, com- paring the company’s allocated expense for that prod- uct to standard ocean freight expense ranges also on the record. Appx08963. The allocated expense was “well within the range calculated” for that grade. Id. The Department did note that some reported transac- tions showed no “domestic or international movement or insurance expenses.” Appx08964. But the Indian producer explained in a supplemental questionnaire that this discrepancy exists because it did not sell the “product pertaining to these transactions” to its U.S. affiliate during the period of investigation. Id. Accept- ing this explanation, the agency was “satisfied” that Ct. No. 22-00122 Page 13
the per-grade allocation “does not cause inaccuracies or distortions.” Id.
With respect to Gujarat’s request for a constructed export price offset, Commerce observed that it reduces the home-market price if the sales in that market “oc- cur at a more advanced [level of trade] than” those in the U.S. market, Appx08964 (citing Micron, 243 F.3d at 1305), “and there is insufficient record information to determine the effect of this difference on price com- parability,” id. (citing 19 C.F.R. § 351.412(f)). Moreo- ver, an interested party in possession of the relevant information has the burden of proving its eligibility. Id. (citing 19 C.F.R. § 351.401(b)(1)). To that end, the Department required the Indian company to “provide both qualitative and quantitative analyses to evaluate whether reported differences in selling functions are substantial enough to warrant a finding that sales were made at different” levels of trade. Appx08965.
Gujarat, however, “only provided qualitative sup- port documentation for two of the 21 reported selling activities and no documentation at all pertaining to a quantitative analysis.” Appx08985. Commerce thus declined to grant the requested offset. Appx08985– 08986. Ct. No. 22-00122 Page 14
III
Daikin now objects to the agency’s acceptance of Gujarat’s allocated movement expenses. See ECF 62. The Indian producer, for its part, challenges the De- partment’s decision not to grant it a constructed export price offset. See ECF 57. The government defends both its flanks, see ECF 68, with the private parties’ roles reversed, see ECF 70 (Gujarat defending the allocation finding); ECF 69 (Daikin defending the offset denial).
Daikin challenges Commerce’s finding that it was infeasible for Gujarat to report movement expenses on a transaction-specific basis. ECF 62, at 5–22. The American company’s quarrel with the Department on this question goes to both the law and the facts.
As to the law, Daikin and the agency do battle over the legal standard. Recall that the relevant regulation requires that respondents report movement expenses on a transaction-specific basis insofar as it is “feasi- ble.” 19 C.F.R. § 351.401(g)(1). In assessing feasibility, Commerce must “take into account the records main- tained by the party . . . in the ordinary course of its business, as well as such factors as the normal ac- counting practices in the country and industry in ques- tion and the number of sales made by the party during the period of investigation or review.” Id. § 351.401(g)(3). Ct. No. 22-00122 Page 15
According to Daikin, under this standard “it is only necessary that [a respondent] possess the information in its records necessary” to report movement expenses on a transaction-specific basis. ECF 62, at 21 (empha- sis in original). The company invokes the familiar (to the trade bar, at least) refrain that escaping an ad- verse inference requires an importer to respond to agency data requests “to the full extent of [its] ability to do so.” ECF 62, at 21–22 (emphasis removed) (quot- ing Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003)). 5 In essence, it contends that so long as the importer can provide transaction-specific movement expenses, it must do so, no matter how on- erous the undertaking. Fiat justitia ruat caelum (“Let justice be done though the heavens may fall.”). And the government does not dispute that with enough time, toil, tears, and sweat—if not blood, which no doubt Daikin would also demand—Gujarat could do that. See ECF 68, at 32–33.
Daikin’s argument has considerable force. In vari- ous contexts, federal courts have struggled with the
5 For background on when Commerce may apply an ad-
verse inference in calculating dumping margins, see Hung Vuong Corp. v. United States, 483 F. Supp. 3d 1321, 1336– 39 (CIT 2020). Ct. No. 22-00122 Page 16
definition of “feasible.” Does it mean what is possible, or rather what is practicable? 6
The Supreme Court has twice indicated that it means the former. In Citizens to Preserve Overton Park, Inc. v. Volpe, the relevant statutes directed an agency not to “‘approve any [highway] program or pro- ject’ that requires the use of any public parkland ‘un- less . . . there is no feasible and prudent alternative to the use of such land . . . .’” 401 U.S. 402, 411 (1971) (quoting 23 U.S.C. § 138, 49 U.S.C. § 1653). The Court held that “the requirement that there be no ‘feasible’ alternative route admits of little administrative dis- cretion.” Id. If it were possible “as a matter of sound engineering . . . to build the highway along any other route,” the agency had to do so. Id.
In American Textile Manufacturers Institute, Inc. v. Donovan, the Court considered the meaning of “feasi- ble” in Section 6(b)(5) of the Occupational Safety and Health Act, 29 U.S.C. § 655(b)(5). 452 U.S. 490 (1981). Rejecting the contention that this term allows a cost- benefit analysis, the Court held that it means
6 Dictionary definitions unhelpfully use both (very differ-
ent) meanings. See, e.g., Feasible, Oxford English Diction- ary (2d ed. 1989) (“Capable of being done, accomplished[,] or carried out; possible, practicable.”); cf. Cass R. Sunstein, Interpreting Statutes in the Regulatory State, 103 Harv. L. Rev. 405, 419 (1989) (observing that sometimes “statutory words have more than one dictionary definition . . . . It is not clear, for example, whether the term ‘feasible’ contem- plates a cost-benefit analysis . . . .”). Ct. No. 22-00122 Page 17
“‘capable of being done, executed, or effected.’” Id. at 508–09 (quoting Webster’s Third New International Dictionary of the English Language 831 (1976)).
Although Overton Park and Donovan support Dai- kin’s reading of “feasible” in 19 C.F.R. § 351.401(g)(1) standing alone, the government correctly argues that provision does not exist in isolation. See ECF 68, at 32. In assessing feasibility, Commerce must “take into ac- count the records maintained by the party in question in the ordinary course of its business, as well as such factors” as normal accounting practices and the com- pany’s sales. 19 C.F.R. § 351.401(g)(3) (emphasis added). The common denominator of these enumer- ated (but non-exclusive) factors is that they bear on practicability. Cf. Ctr. for Biological Diversity v. Nat’l Highway Traffic Safety Admin., 538 F.3d 1172, 1194 (9th Cir. 2008) (distinguishing the statute at issue in Donovan—where “no other language . . . modified the phrase at issue: ‘to the extent feasible’”—from the stat- ute before it, which stated that “‘maximum feasible’ standards are to be determined in light of” certain specified criteria). Unlike the statute in Overton Park, see 401 U.S. at 411, the regulation here invests the De- partment with considerable “administrative discre- tion” to determine what is feasible. In making that de- termination, the lodestar is the practicable, not the physically possible regardless of time and expense.
This reading of the regulation thus defeats Daikin’s reliance on Nippon Steel and the adverse-inference Ct. No. 22-00122 Page 18
statute, which applies when an interested party “fail[s] to cooperate by not acting to the best of its abil- ity to comply with a request for information from” Commerce. 19 U.S.C. § 1677e(b)(1) (emphasis added). The Department did not ask Gujarat to move moun- tains to report its movement expenses on a transac- tion-specific basis. Instead, it only asked for such in- formation insofar as it was “feasible.” Appx04140. And if the importer contended it was not “feasible,” the agency asked for an explanation with supporting “ac- counting and sales documentation.” Id. The former having provided such an explanation, and the latter having been satisfied with those reasons, there was no failure to cooperate.
Daikin alternatively argues that, even accepting Commerce’s reading of the regulation, substantial ev- idence does not support the latter’s factual finding that it was infeasible for Gujarat to report its movement expenses on a transaction-specific basis. The Ameri- can company first points to batch numbers in its com- petitor’s Export Customer Complaint Register. It ar- gues that they show Gujarat “link[ed] . . . merchandise packed in India with merchandise sold to unaffiliated U.S. customers when it had a need to do so.” ECF 61, at 12. That’s certainly a reasonable inference.
But it’s not the only reasonable inference one can draw from this evidence. As the Department ex- plained, that batch numbers are included in the Reg- ister does not necessarily mean Gujarat supplied that Ct. No. 22-00122 Page 19
information, much less that its records maintained in the ordinary course of its business can be connected using batch numbers to make a one-to-one comparison and calculate per-transaction movement expenses. Appx08974–08975. Rather, the Department noted, such a comparison would entail a “manual review” of “thousands of pages of records.” Appx08960–08961. Although physically possible, such an undertaking “was not feasible due to [Gujarat’s] sales and inventory processes and . . . records maintained” in the ordinary course. Appx08976.
It suffices here that the inference Commerce has drawn is reasonable. “Where two different, incon- sistent conclusions may reasonably be drawn from the evidence in [the] record, an agency’s decision to favor one conclusion over the other is the epitome of a deci- sion that must be sustained upon review for substan- tial evidence.” In re Morsa, 713 F.3d 104, 109 (Fed. Cir. 2013) (brackets omitted) (quoting In re Jolley, 308 F.3d 1317, 1329 (Fed. Cir. 2002)).
Daikin next points to language in contracts with various warehouses requiring them to maintain a dig- ital inventory of goods stored for Gujarat or its Ameri- can affiliate. See ECF 61, at 14; see also Appx03676– 03677. Some of these agreements required the ware- houses to track and ship goods by batch and pallet numbers. See ECF 61, at 16; Appx03706, Appx03729. Daikin argues that this shows how batch numbers are linked to merchandise in sales and shipping Ct. No. 22-00122 Page 20
documents, meaning Gujarat can make the one-to-one connection necessary to calculate transaction-specific movement expenses. ECF 62, at 15–16.
Commerce explained, however, that the limited ex- amples of sales and shipping documentation with batch numbers are not enough to support the broader conclusion that these numbers are unique or can link sales and shipping documentation together to allow for a per-transaction calculation. Appx08977. And even if it did, the agreements only prove that the warehouse will track inventory by batch and pallet number, and that it will ship out orders on a by-batch basis. See, e.g., Appx03706 (“Warehouse shall ship the products to customer on a by batch basis.”), Appx03729 (Ware- house will track product “using GFL Americas LLC batch number and pallet number.”). That is, the ware- houses do not maintain records of which batches are part of which transactions. This tracks with Gujarat’s questionnaire responses, which reported that one sale from its American affiliate can “involve multiple pur- chases from [Gujarat].” Appx05087–05088. The im- portant question for the feasibility determination is not merely whether batch numbers are unique, but how batch numbers relate to individual shipments and purchases. See Appx08977. The agency’s conclusion that the mere fact that “certain documents from the sales and shipment chain contain the same batch numbers” does not demonstrate that it would be feasi- ble for Gujarat “to piece these various documents to- gether” to report transaction-specific movement Ct. No. 22-00122 Page 21
expenses, Appx08959, is supported by substantial evi- dence.
Once the Department finds transaction-specific ex- pense reporting to be infeasible, it may accept an ex- pense reported by allocation if it is “satisfied that the allocation method used does not cause inaccuracies or distortions.” 19 C.F.R. § 351.401(g)(1). As explained above, Commerce found that Gujarat’s reporting had no such effects. Appx08964.
Daikin disagrees. It asserts that record evidence shows distortions and “suggest[s]” that the Indian pro- ducer manipulated the movement expense calculation “in order to mask its actual level of dumping.” ECF 61, at 26. In the American producer’s telling, Gujarat’s per-grade allocation produces disparities in cost be- tween “physically identical” grades, even when shipped together, id. at 25–26, creating “numerous anomalies,” including sales with zero or negative movement expenses for “many product types,” id. at 24. Thus, according to Daikin, the per-grade allocation method is the equivalent of allocating by product value, a methodology it claims this court rejected. Id. at 23 (citing SKF USA Inc. v. United States, 800 F. Supp. 2d 1316, 1324–25 (CIT 2011)). It claims Com- merce ignored this evidence, instead choosing to “cherry-pick[]” a “single product code,” which it con- tends cannot support the “blanket conclusion” that a Ct. No. 22-00122 Page 22
per-grade allocation does not cause distortions. Id. at 25.
But Daikin’s argument proves too much. As the De- partment noted, it cherry-picked nothing; indeed, it picked nothing. The agency merely “examined the sample sales documents submitted by [Gujarat] in re- sponse to a standard question in the antidumping questionnaire.” Appx08980. And the American pro- ducer’s invocation of SKF fares similarly. There, Com- merce permissibly determined that a “value-based al- location” method “caused unreasonable distortions.” 800 F. Supp. 2d at 1324. The court thus sustained the Department’s decision to use an alternative methodol- ogy. Id. Here, the agency made no such finding and re- jected Daikin’s proposed alternative allocation as more distortive because it would include non-subject prod- ucts. Appx08979–08981.
Further, while the American producer contends that Commerce failed to “substantively address” evi- dence purportedly supporting a contrary determina- tion, ECF 62, at 26, the record shows otherwise. The Department acknowledged “a certain number of trans- actions” with no reported movement expenses, and noted the product codes for those sales did not appear in Gujarat’s calculation chart. Appx08964. The Indian producer explained that it did not sell any of those products to its U.S. affiliate during the period of inves- tigation, so there were no actual movement expenses. See, e.g., Appx05092 (explaining the discrepancy as to Ct. No. 22-00122 Page 23
packing expenses). Commerce was satisfied with that answer. Appx08964.
Finally, Daikin’s contention that disparities in re- ported movement expenses between grades demands the conclusion that the methodology was intrinsically distortive is belied by Commerce’s observation that, at least as to some grades, the calculated expense is within the normal range for that product. Appx08963. And the Department need not respond to the Ameri- can producer’s arguments in precisely the way that company prefers. As explained above, the agency “ex- amine[d] the relevant” evidence, including that which arguably undermines its conclusion, and “articulate[d] a satisfactory explanation for its action including a ra- tional connection between the facts found and the choice made.” Motor Veh. Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (cleaned up). Based on that evidence, it concluded that Gujarat’s “product-specific allocation methodology is preferable to [the] overall average movement ex- penses” advocated by Daikin. Appx08981. The latter points to no other evidence to support what amounts to little more than speculation that the Indian pro- ducer’s allocation method was distortive, or a sugges- tion that the company chose this method to hide its ac- tual level of dumping. See ECF 61, at 25–26. For these reasons, Commerce’s decision to accept Gujarat’s movement expenses reported on a per-grade allocation is supported by substantial evidence. Ct. No. 22-00122 Page 24
IV
Gujarat contests the Department’s denial of its re- quested constructed export price offset. The former ar- gues that it established by qualitative and quantita- tive analysis that its home-market and constructed ex- port price sales are made at different levels of intensity such that the expenses assigned to the period of inves- tigation sales made at different intensities impact price comparability. ECF 57, at 3. It asserts that it “provided the information it could,” including docu- mentation of relevant expenses and an “explanation of how the quantitative analysis . . . supported its claimed levels of intensity.” Id. at 8–9.
Commerce explained, however, that the Indian pro- ducer provided no substantial quantitative analysis. The agency asked for a “quantitative analysis showing how the expenses assigned to . . . sales made at differ- ent claimed levels of trade impact price comparabil- ity.” Appx01910. Instead, Gujarat merely referred to its descriptive, qualitative analysis accompanying the selling functions chart. Id. The Department then re- peated the request. Appx03880. Again, the Indian pro- ducer only referred to its initial response even as it provided more evidence that certain sales activities were performed. Appx03881. Missing was any actual, quantitative analysis showing how it came up with the figures included in the selling functions chart.
Based on this failure, the Department found Guja- rat’s responses lacking. The Indian producer “did not Ct. No. 22-00122 Page 25
demonstrate how indirect selling expenses vary by the different [levels of trade] claimed,” Appx08713; did not “provide any selling expense data,” id.; and provided only “qualitative support documentation for two of the 21 reported selling activities and no documentation at all pertaining to a quantitative analysis,” Appx08985.
The company’s arguments to the contrary are una- vailing. It is certainly correct to observe that “[n]ot all selling functions carry the same weight” and that re- quiring the same level of support for each selling func- tion would be unreasonable. ECF 57, at 7. But the De- partment did not ask for the same level of support for each. It asked for any documentation at all of the quan- titative analysis undertaken to summarize Gujarat’s information in the selling functions chart. And the In- dian producer’s complaints that it “provided detailed descriptions, as well as ample supporting documenta- tion including where the expenses are captured,” id. at 8, similarly fall flat. The agency asked for the docu- mentation of those expenses and the analysis support- ing their summarization in the chart, not merely the raw data.
Gujarat does not point this court to any place in the record where it provided the requested information. It is simply not relevant that the Indian producer pro- vided a “description of sales activities,” id. at 9; “ex- penses relevant” to each market, id. at 10; and “evi- dence such as correspondence with customers, its dif- ferent warehouse agreements . . . , and . . . sales docu- Ct. No. 22-00122 Page 26
ments for each channel of trade,” id. at 11. What is rel- evant is that Commerce asked repeatedly for the quan- titative analysis showing how Gujarat “distilled these [alleged] quantified differences as requested in its sell- ing functions chart.” Id. The company cannot now com- plain that the agency did not do that work.
The Indian producer also attacks Commerce’s deci- sion on the grounds that it “never clarified or specifi- cally requested additional information relating to [Gu- jarat’s]” questionnaire responses. Id. at 12. But again, even if that were true, see Appx08982–08984, it is just not relevant. “The interested party that is in posses- sion of the relevant information has the burden of es- tablishing to the satisfaction of the [Department] the amount and nature of a particular adjustment.” 19 C.F.R. § 351.401(b)(1). Declaring that Gujarat “pro- vided the information it believed to comprise a quanti- tative analysis,” ECF 57, at 13, is not sufficient. And it is no more help to claim the agency “cannot now say that [Gujarat] provided no quantitative analysis.” Id. It is well within Commerce’s discretion to so find, as long as that determination is supported by substantial evidence, as it is here. The court thus sustains the agency’s denial of the offset.
* * * Ct. No. 22-00122 Page 27
For these reasons, the court sustains the Depart- ment’s redetermination. A separate judgment will is- sue. See USCIT R. 58(a).
Dated: March 7, 2025 /s/ M. Miller Baker New York, NY Judge