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CIT Upholds Commerce's Decision to Use AD Respondent's Actual Costs for Non-Prime Products

The Commerce Department's decision to rely on an antidumping duty respondent's actual costs of its non-prime products is backed by substantial evidence and in line with the law, the Court of International Trade said in its first decision of the new year. The trade court said this complies with a key U.S. Court of Appeals for the Federal Circuit ruling, Dillinger France S.A. v. U.S.

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The case stems from the 2016-17 antidumping duty administrative review of welded line pipe from South Korea, in which Nexteel Co. and Husteel Co. served as respondents. The court had previously remanded Commerce's decision to use Nexteel's non-prime product costs based on their resale value and then reallocate the difference between the resale value and actual costs of making the non-prime goods to the costs of prime products in calculating constructed value.

Judge Claire Kelly said that this practice was "problematic" and violated the standards set in Dillinger (see 2106150083). Under Dillinger, Commerce must calculate constructed value based on the actual costs of production for prime and non-prime products. On remand, the agency then switched to using Nexteel's actual costs of making non-prime goods (see 2109030024).

Kelly then upheld this switch in the Jan. 3 opinion. The court said that Commerce properly relied on Nexteel's actual costs of production since the company's records met the two conditions to do so: the records were kept in accordance with the generally accepted accounting principles in South Korea and the records "reasonably reflect" the actual costs of producing the goods.

The trade court also said that Commerce's decision to rely on Nexteel's actual costs is backed by substantial evidence. Despite comments from defendant-intervenor Tenaris USA arguing to the contrary, Kelly said that Commerce relied on record evidence to support its finding that Nexteel's books and records reasonably reflect its actual costs. The agency relied on Nexteel's Supplemental Section D Questionnaire response and the Cost Verification Memo, each of which has Nexteel accounting for its costs of both non-prime and prime products, the opinion said.

(Husteel Co., Ltd. v. U.S., Slip Op. 22-1, CIT Consol. #19-00112, dated 01/03/22, Judge Claire Kelly. Attorneys: J. David Park of Arnold & Porter for consolidated plaintiff Nexteel; L. Misha Preheim for defendant U.S. government; Gregory Spak for defendant-intervenors Maverick Tube Corporation and IPSCO Tubulars Inc.)