Trade Court Sustains Commerce's Rejection of Exporter's Allocation Method for Sales Expenses

In the review, Commerce asked Sahamitr to report sales costs on a transaction-specific basis, warning against reporting on an "allocated basis." The agency said allocated reporting is only acceptable if the company can show that the allocation is calculated on a specific basis as is feasible and isn't "unreasonably distortive."

Sahamitr went on to report its costs on an allocated basis by using a certification-fee ratio to customers' gross unit prices to calculate a per-unit certification expense. The company did so on the grounds that it pays certification fees to outside vendors after the sales are made, precluding the firm from attributing individual certification expenses to individual sales.

Commerce said this allocation of certification costs was "distortive" due to "timing differences between when" Sahamitr makes and sells cylinders and when it records the certification expenses tied to those sales. These differences "create monthly fluctuations" in the company's certification expenses, the agency said. Commerce hit the exporter with a 13.89% AD rate.

Sahamitr and importer Worldwide Distribution defended the exporter's recalculation of its certification expenses, arguing that they were as "specific as feasible" given the company's records. Baker held that both parties "misapprehend the regulation, which requires the 'party seeking to report an expense ... on an allocated basis' to do so 'on as specific a basis as is feasible.'" The agency isn't required to accept expense adjustments on an allocated basis, the court noted.

Commerce, as "master of antidumping," has "wide discretion" to select and develop proper reporting methodologies. "Here, the Department exercised that discretion by selecting an allocation method that provided Sahamitr the opportunity to obtain a price adjustment for certification expenses, while avoiding the distortions reflected in the company’s recalculation," the opinion said.

The judge said the "elephant in the courtroom" that Sahamitr and Worldwide failed to address in their opening briefs is whether Commerce properly found that the reporting was distortive since it "resulted in months with zeroed-out certification expenses." Baker said this determination is backed by substantial evidence since, as the record shows, "there were significant fluctuations in Sahamitr’s recalculated expenses from month to month, including some months with zero expenses."

The "closest Sahamitr's opening brief comes to challenging the finding" is the claim that it's "unclear why" the company's certification expenses were "so unreasonably inaccurate that an alternate allocation methodology was warranted." The judge said the agency adequately answered this claim by finding that the timing differences noted in Sahamitr's reporting create monthly fluctuations in the certification expenses. "Sahamitr fails to articulate how or why that determination is unreasonable or otherwise not supported by substantial evidence," the opinion said.

The "more thorough reply brief" says Commerce's findings are "unreasonable because fluctuations are inherent in such computations" and the agency rejected an alternative allocation to address the timing concerns. Baker said the claims were both untimely and wrong on the merits.

"The regulation expressly authorizes Commerce to disregard a respondent’s allocated expense reporting, even if it is as specific as possible, if the Department concludes that it 'cause[s] inaccuracies or distortions,'" the judge said. Specificity in allocated reporting is "merely a means to an end, not an end in itself."

Brooke Ringel, counsel for petitioner Worthington Industries, said in an email that her client is "very pleased that the Court affirmed Commerce’s findings. The agency’s thorough investigative efforts in this case, along with its consistent methodological approach, are critical to ensuring the effectiveness of this order for the domestic industry. Without such attention to fact-finding, there is real potential for respondents to avoid accurate dumping margins. Commerce did not let that happen here, and rightfully so."

(Sahamitr Pressure Container v. United States, Slip Op. 24-54, CIT # 22-00107, dated 05/02/24; Judge: M. Miller Baker; Attorneys: David Bond of White & Case for plaintiff Sahamitr Pressure Container; Gregory Menegaz of deKieffer & Horgan for plaintiff-intervenor Worldwide Distribution; Brian Boynton for defendant U.S. government; Paul Rosenthal of Kelley Drye for defendant-intervenor Worthington Industries)