Commerce Sticks by Constructed Value Profit Calculation Method on Remand in AD Case at CIT
The Commerce Department in July 20 remand results submitted to the Court of International Trade stuck by its methodology used to calculate profit for the constructed value of antidumping duty respondent Building Systems de Mexico (BSM). Commerce also dropped the use of adverse facts available for one unreportable sale, used the date of substantial completion of a fabricated structural steel (FSS) project as the date of sale rather than the date of the purchase order or sales order acknowledgment, and didn't exclude the operating results of the business unit in question from the calculation of the constructed export price profit rate (Building Systems de Mexico v. U.S., CIT #20-00069).
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The case concerns the antidumping duty investigation into fabricated structural steel from Mexico, covering entries in 2018. In April, Judge Claire Kelly sent back multiple elements of the investigation, including the use of respondent Corey S.A.'s home market sales to calculate the amount of profit in BSM's CV. Commerce rejected the use of BSM's data for insufficient volume but relied on Corey's even though it had less data. The court also sent the issue back to Commerce because it didn't address evidence showing that one of the projects related to Corey's home market sales wasn't contracted for during the review period as it has a 2017 project number, and showing that BSM's operations differ from Corey's.
On remand, Commerce said it couldn't use BSM's own home market sales to calculate CV. "BSM's home market sales were not viable for comparison purposes, and BSM did not sell the merchandise under consideration in third-country markets" during the investigation period, Commerce said. Addressing the time of the contested project's contract, Commerce said record evidence shows that all the purchase orders Corey received for the project were dated in 2018. "All points to the fact that this project was contracted and completed in 2018" besides the project number, Commerce said.
As for the court's concerns over the number of BSM's and Corey's sales, the agency said home market sales viability is based on volume, not number. "Although BSM’s number of sales were greater than Corey’s, the volume of BSM’s home market sales of FSS was less than five percent of its sales of FSS in the United States," the remand results said. "Therefore, BSM’s volume of home market sales of FSS during the POI was too insignificant to reflect a meaningful home market profit rate." Reviewing the different business operations between the two companies, Commerce said its only concern is that they both sold subject merchandise.
The court also remanded the use of AFA on one sale finding that it was out of scope because it was incomplete by the end of the review period. On remand, Commerce agreed and said BSM properly excluded it from its U.S. sales database, dropping its reliance on AFA for the sale. Addressing the court's remand order over the decision to use the purchase order date as the date of sale, Commerce reconsidered its position and found the date of substantial completion is the proper date of sale because it's the earliest date on which the terms of the sale were firmly established.
The agency also addressed the court's order to explain why the statute permits it to exclude the operating results of a Costa Rican drafting facility from its profit rate calculation. "Because the drafting and engineering services provided by the Costa Rica facility could be for U.S. projects for which BSM fabricated subject merchandise, BSM included the expenses from the Costa Rica facility in the engineering, selling, and general and administrative expenses that it reported as part of its CEP indirect selling expenses," the brief said. "Because these expenses reflect 'shared' expenses related to U.S. sales of subject merchandise, Commerce concluded that these expenses are indirect selling expenses. Thus, the expenses of the Costa Rica facility are selling expenses incurred by the foreign producer and its U.S. affiliate with respect to the subject merchandise sold in the United States."