                           Slip Op. 15-104

           UNITED STATES COURT OF INTERNATIONAL TRADE

________________________________
APPVION, INC.,                   :
                                 :
          Plaintiff,             :   Before: Nicholas Tsoucalas,
                                 :           Senior Judge
     v.                          :
                                 :   Court No.: 14-00143
UNITED STATES,                   :
                                 :   PUBLIC VERSION
          Defendant,             :
And                              :
                                 :
PAPIERFABRIK AUGUST KOEHLER SE, :
                                 :
          Defendant-Intervenor. :
                                 :
_____________________            :

                             OPINION

[Plaintiff’s Motion for Judgment on the Agency Record is denied
and Commerce’s Final Results are affirmed.]

                                          Dated: ______________
                                                 September 17, 2015

Gilbert B. Kaplan and Daniel L. Schneiderman, King & Spalding LLP,
of Washington, D.C., for Plaintiff.

Joshua E. Kurland, Trial Attorney, U.S. Department of Justice,
Commercial Litigation Branch, of Washington, D.C., for Defendant.
With him on the brief were Reginald T. Blades, Jr., Assistant
Director, Jeanne E. Davidson, Director, and Benjamin C. Mizer,
Principal Deputy Assistant Attorney General. Of counsel on the
brief was Nanda Srikantaiah, Office of the Chief Counsel for Trade
Enforcement & Compliance, U.S. Department of Commerce of
Washington, D.C.

F. Amanda DeBusk and Matthew R. Nicely, Hughes Hubbard & Reed LLP,
of Washington, D.C., for Defendant-Intervenor.
Court No.   14-00143                                                              Page 2


            Tsoucalas,        Senior     Judge:        This     case    concerns    the

Defendant   United      States    Department          of   Commerce’s    (“Commerce”)

Final Results of the fourth administrative review (“AR4”) of the

antidumping     order    on     lightweight      thermal      paper    (“LWTP”)     from

Germany.    Lightweight Thermal Paper From Germany: Final Results of

Antidumping      Duty     Administrative              Review;     2011–2012,(“Final

Results”) 79 Fed. Reg. 34,719 (June 18, 2014); Issues and Decision

Memorandum for the 2011-2012 Final Results of the Administrative

Review on Lightweight Thermal Paper from Germany, (“IDM for AR4”)

A-428-840, (June 11, 2014).               The period of review (“POR”) is

November 1, 2011, through October 31, 2012.                       Final Results, 79

Fed. Reg. at 34,719.

            Plaintiff, Appvion Inc., (“Appvion”) filed the instant

suit disputing Commerce’s determination that certain sales were

within the ordinary course of trade and that the application of

Adverse Facts Available (“AFA”) was not warranted. Compl., June

19, 2014, ECF No. 7. Appvion has filed a Motion for Judgment on

the Agency Record. Pl.’s Mot. for J. on the Agency R. (“Pl.’s

Br.”),   Dec.   22,     2014,    ECF    No.     28.        Commerce    and   Defendant-

Intervenor,     Papierfabrik           August     Koehler       SE     (“Koehler”    or

“Defendant-Intervenor”) oppose Appvion’s Motion. Def.’s Mem. in

Opp’n to Pl.’s Rule 56.2 Mot. for J. Upon Agency R. (“Def.’s Br.”),

May 29, 2015, ECF No. 39; Def.-Intervenor’s Resp. in Opp’n to Pl.’s

Rule 56.2 Mot. for J. on the Agency R., May 28, 2015, ECF No. 36.
Court No.    14-00143                                                 Page 3


For the following reasons, Appvion’s Motion for Judgment on the

Agency Record is denied, and Commerce’s Final Results are affirmed.

                                   BACKGROUND

            Appvion is a manufacturer of domestic like product and

participated in the review that gave rise to the Final Results.

Compl. at ¶4.     Koehler is a foreign exporter/producer of LWTP in

Germany, whose paper was subject to a 6.50% weighted average

dumping     margin      pursuant   to   the     Antidumping   Duty   Orders:

Lightweight Thermal Paper From Germany and the People’s Republic

of China, 73 Fed. Reg. 70,959, 70,959-60 (Nov. 24, 2008).

            A brief synopsis of the third administrative review

(“AR3”) is necessary to place the instant review in context.             In

AR3, Koehler engaged in a fraudulent transshipment scheme where it

sold 48-gram thermal paper that was destined for consumption in

Germany through various intermediaries in third countries, in

order to manipulate prices of paper shipped directly to its German

customers.     Issues and Decision Memorandum for the Final Results

of the 2010-2011 Administrative Review on Lightweight Thermal

Paper from Germany (“IDM for AR3”) at 2, A-428-840, Apr. 10, 2013.

The manipulated prices would affect the calculation of normal value

that would be used in determining the antidumping margin. Id.

Koehler did not voluntarily disclose the transshipment scheme

during AR3. Id. at 12. Koehler discontinued the transshipment

scheme on [[                       ]]. Pl.’s Confidential App. Koehler’s
Court No.   14-00143                                                  Page 4


Supplemental Resp. at 25, May 15, 2013, ECF No. 30.        As a result,

Commerce applied total AFA to Koehler in AR3. IDM for AR3 at 6.

Commerce’s decision was affirmed by this Court.              Papierfabrik

August Koehler SE v. United States, 38 CIT ____, 7 F.Supp.3d 1304

(2014), appeal filed and docketed, Papierfabrik August Koehler SE

v. United States, Appeal No. 15-1489 (Fed. Cir. Mar. 25, 2015).

            In   AR4,   however,   Koehler    acknowledged     that     the

transshipments began prior to the POR and ended during AR4. Pl.’s

Confidential App., Koehler Section A Response at 15-17, Feb. 25,

2012.   In contrast to AR3, in AR4 Koehler fully disclosed the

transshipment sales channel, Channel 2, and its related sales data

in its reporting of home market sales during AR4. See id. at 15-

17, 24, and Ex. A-7. Koehler sold LWTP through three sales channels

to its German customers during AR4: Channel 1 (direct shipments),

Channel 2 (transshipped sales), and Channel 3 (consignment sales).

IDM for AR 4, at 3.

            During AR4, Appvion contended that sales of KT 48 (a

grade of thermal paper) products through Channels 1 and 3 were

outside the ordinary course of trade.        Id.   Appvion claimed that

the sales were made at artificial prices that were “aberrationally

low and not determined by commercial considerations nor market-

based supply and demand, in part because of the particular manner

in which Koehler established prices for these sales.” Id. Appvion

also argued that the application of AFA was warranted.         Id. at 18.
Court No.   14-00143                                                    Page 5


            In the Final Results, Commerce determined that the sales

were not outside the ordinary course of trade and concluded that

Koehler did not make sales of subject merchandise at less than

normal value.     Id. at 6-7; Final Results 79 Fed. Reg. at 34,719.

Accordingly, Commerce found that Koehler’s LWTP was subject to a

zero percent weighted-average dumping margin for the POR.               Final

Results 79 Fed. Reg. at 34,720.           Furthermore, Commerce found no

basis to apply AFA. IDM for AR4 at 19. Appvion filed the instant

action disputing Commerce’s Final Results and a Motion for Judgment

on the Agency Record.      Compl. at 1-6; Pl.’s Br. at 1-45.

                  JURISDICTION AND STANDARD OF REVIEW

            This Court has jurisdiction pursuant to section 201 of

the Customs Courts Act of 1980, 28 U.S.C. § 1581(c) (2012), and

section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended,

19 U.S.C. § 1516a(a)(2)(B)(iii) (2012). 1

            In   reviewing       a     challenge    to     Commerce's   final

determination in an antidumping administrative review, the Court

will uphold Commerce's determination unless it is “unsupported by

substantial evidence on the record, or otherwise not in accordance

with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).                Substantial evidence

means “more than a mere scintilla” of “such relevant evidence as

a   reasonable    mind   might       accept   as   adequate   to   support   a



1 Further citations to the Tariff Act of 1930, as amended, are to the relevant
provisions of Title 19 of the U.S. Code, 2012 edition.
Court No.      14-00143                                                              Page 6


conclusion.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71

S.Ct. 456, 459, 95 L.Ed. 456, 462 (1951)(quoting Consol. Edison

Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126,

140 (1938)).           To determine if substantial evidence exists, the

court reviews the record as a whole, including whatever “fairly

detracts from its weight.” Id. at 488, 71 S.Ct. at 464, 95 L.Ed.

at    467.    The     mere   fact   that    it    may   be   possible to          draw   two

inconsistent          conclusions     from       the    record   does       not    prevent

Commerce's       determination       from    being      supported     by     substantial

evidence.       Am. Silicon Techs. v. United States, 261 F.3d 1371,

1376 (Fed. Cir. 2001); see also Consolo v. Fed. Mar. Comm'n, 383

U.S. 607, 620, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131, 141 (1966).

                                      DISCUSSION

     1. Ordinary Course of Trade

               Antidumping duties are equal to the “amount by which

the normal value exceeds the export price (or the constructed

export       price)    for   the    merchandise.”       19   U.S.C.     §   1673.        The

antidumping statute defines normal value as the price of the

subject merchandise “at a time reasonably corresponding to the

time of the sale used to determine the export price or constructed

export price,” 19 U.S.C. § 1677b(a)(1)(A), where the price is “the

price at which the foreign like product is first sold . . . for

consumption in the exporting country, in the usual commercial

quantities and in the ordinary course of trade . . . .” 19 U.S.C.
Court No.     14-00143                                                   Page 7


§ 1677b(a)(1)(B)(i).       In order for Commerce to include particular

sales in its calculation of normal value, the sales must have been

made in the ordinary course of trade.         U.S. Steel Corp. v. United

States, 37 CIT ____, 953 F.Supp.2d 1332, 1341 (2013).                 In turn,

the “ordinary course of trade” means:

             the conditions and practices which, for a
             reasonable time prior to the exportation of
             the subject merchandise, have been normal in
             the trade under consideration with respect to
             merchandise of the same class or kind. The
             administering authority shall consider the
             following   sales  and   transactions,  among
             others, to be outside the ordinary course of
             trade:

             (A)     Sales   disregarded    under   section
                     1677b(b)(1) of this title [sales below
                     the cost of production].

              (B) Transactions disregarded under section
              1677b(f)(2) of this title [sales between
              affiliated    persons    where   the    amount
              representing the element of value does not
              fairly reflect the amount usually reflected in
              sales of merchandise under consideration in
              the market under consideration].

19   U.S.C.     §   1677(15).   Other     than   for    the     aforementioned

subsections (A) and (B), the Tariff Act provides “little assistance

in determining what is outside the scope of that definition.” NSK

Ltd. v. United States, 25 CIT 583, 599, 170 F.Supp.2d 1280, 1296

(2001).     The Court has held that “the statutory provision defining

what   is   considered    outside   the   ordinary     course    of   trade   is

unclear.” Id.       Accordingly, the Court has found that Commerce has

discretion to determine what sales are outside the ordinary course
Court No.    14-00143                                                         Page 8


of trade.        U.S. Steel, 37 CIT at ____, 953 F.Supp.2d at 1341.

Commerce may consider sales or transactions to be outside the

ordinary course of trade “if . . . based on an evaluation of all

of the circumstances particular to the sales in question, that

such   sales      or    transactions       have     characteristics     that     are

extraordinary       for     the   market     in     question.”    19    C.F.R.     §

351.102(b)(35) (2015).            Examples of sales that Commerce might

consider as being outside the ordinary course of trade are sales

or transactions involving off-quality merchandise or merchandise

produced according to unusual product specifications, merchandise

sold at aberrational prices or with abnormally high profits,

merchandise sold pursuant to unusual terms of sale, or merchandise

sold to an affiliated party at a non-arm’s length price.                   Id. In

determining whether home market sales are in the ordinary course

of trade, Commerce must “evaluate not just ‘one factor taken in

isolation but rather . . . all the circumstances particular to the

sales in question.’” Cemex, S.A. v. United States, 133 F. 3d 897,

900 (Fed. Cir. 1998) (quoting Murata Mfg. Co. v. United States, 17

CIT 259, 264, 820 F.Supp. 603, 607 (1993)).                  “In applying its

totality    of    the     circumstances     test,    Commerce    does   not    give

particular     weight      to   any   single      factor.   Instead,     Commerce

determines which factor may be more or less significant based on

the case at hand.”          U.S. Steel, 953 F. Supp.2d at 1342 (citing

Murata, 17 CIT at 263, 820 F.Supp. at 606). “An analysis of these
Court No.   14-00143                                         Page 9


factors should be guided by the purpose of the ordinary course of

trade provision which is ‘to prevent dumping margins from being

based on sales which are not representative’ of the home market.”

Id. (quoting Monsanto Co. v. United States, 12 CIT 937, 940, 698

F.Supp. 275, 278 (1988)).

            Very low prices or profits may be indicative of sales

outside the ordinary course of trade; however, the mere fact of

such low prices or profits does not necessarily mean that such

sales are outside the ordinary course of trade, as Commerce must

evaluate all the circumstances particular to the sales in question.

See Cemex, S.A. v. United States, 19 CIT 587, 592, (not reported

in Federal Supplement) (1995), aff’d, Cemex, S.A. v. United States,

133 F.3d at 900; see also, NTN Bearing Corp. of America, 25 CIT

664, 681, 155 F.Supp.2d 715, 732 (2001), rev’d on other grounds

sub nom. Fag Italia S.p.A. v. United States, 402 F.3d 1356 (2005).

            Commerce’s decision is “entitled to deference from this

Court.” Mantex, Inc. v. United States, 17 CIT 1385, 1403, 841 F.

Supp. 1290, 1306 (1993). “The Plaintiff has the burden of proving

whether sales used in Commerce’s calculations are outside the

ordinary course of trade or not . . . .” Nachi-Fujikoshi Corp. v.

United States, 16 CIT 606, 608, 798 F. Supp. 716, 718 (1992).

            Appvion argues that direct sales of matching 48 gram

products were outside the ordinary course of trade and should not

have been included in the calculation of normal value, because the
Court No.   14-00143                                                      Page 10


sales had extraordinary characteristics.              Pl.’s Br. at 9.     Appvion

argues that the sales were exceptional and should be excluded,

because they were the only sales vetted through [[

                                       ]] to eliminate dumping. Id. at 10.

Appvion further contends that the sales were outside the ordinary

course of trade, because they were made at artificially low prices

or profit levels, while higher market-priced sales were concealed

through transshipments (Channel 2).              Id. at 9-10.     Appvion calls

this Koehler’s “two-tier pricing mechanism.” Id. at 19. Appvion

came to this conclusion by aggregating sales between Channels 1

(direct shipments) and 3 (consignment sales) and comparing them

against Channel 2 (transshipped sales).               Def.’s Br. at 10.

            Commerce contends that when the sales are disaggregated,

it did not find “aberrationally low” profits earned on Channel 1

and   3   sales,   rather,      it    found   that   variations   in   price   and

profitability      were   due    to    market    factors   as   opposed   to   the

transshipment scheme.        Id. at 11.         Appvion does not point to any

authority questioning the reasonableness of Commerce’s decision to

disaggregate the channels.            Pl.’s Br. at 1-44.        Accordingly, the

court finds that Commerce’s decision to disaggregate the channels

was reasonable given that Koehler identified them as separate sales

channels. Pl.’s Confidential App. Koehler’s Resp. to Section A

Questionnaire at 15, Feb. 25, 2012.
Court No.    14-00143                                                              Page 11


            Appvion      argues    that      sales      of     the    55-gram     product

(another grade of LWTP) “form a commercial benchmark” against which

to evaluate Koehler’s pricing for the matching product.                          Pl.’s Br.

at 14.   Appvion assumes that sales of the “48-gram product would

carry a substantial price premium (on a per weight basis) over

sales of a 55-gram product, because one kilogram of the 48-gram

product has 15% more square meters of paper than one kilogram of

the   55-gram    product.”        Id.        Nevertheless,           Commerce    properly

considered various factors that may explain the difference in

price:   there    is    “significant         demand”     for    KT     55    products       in

Koehler’s    home   market,       as   the    KT   55    product       is    thicker    and

stronger; transport costs are [[

            ]]; and [[                                   ]] for the KT 55 product

allow for [[                                                        ]].     Def.’s Br. at

23-24.   Thus, Commerce cited evidence in the record showing that

pricing patterns may be influenced by a variety of factors. See

id.   Accordingly,      Commerce’s      decision        not    to    use    KT   55    as    a

commercial benchmark was reasonable and supported by substantial

evidence.

            Appvion further alleges that a dramatic price increase

among Channels 1 and 3 direct sales after the transshipment scheme

ended in June 2012 confirms that the sales at issue were made

outside the ordinary course of trade.                    Pl.’s Br. at 14-15. The

court disagrees.        When the sales were disaggregated, Commerce did
Court No.   14-00143                                            Page 12


not find a dramatic price increase after the transshipment scheme

ended.    Pl.’s Confidential App. Price and Profitability Analysis

at Fig. 2, June 11, 2014.

            Further, after the transshipment scheme was discontinued

in [[           ]] Channel 1 prices [[          ]] only in [[

     ]], which is [[                       ]] after the scheme was

discontinued.    Id. at 3.   This suggests that the price increase

was not connected to the transshipment scheme.     See id.   There is

a consistency in prices between Channels 2 and 3, as the Channel

3 customer replaced the [[               ]] Channel 2 customer after

the transshipment scheme ended in [[             ]]. See id. at Fig.

2. The prices were similar both during and after the transshipment

scheme ended in [[           ]]. See id. Correspondingly, Channel 1

sales were made to [[                    ]] and showed more variation

in price. See id. at 5. This suggests that the price differences

between sales could be attributed to [[                            ]].

See id.

            Appvion counters that Channel 3 (consignment) sales are

irrelevant to its ordinary course of trade argument, because

[[                                  ]] of matching 48-gram products

during the transshipment period. Pl.’s Br. at 25.            Appvion’s

argument, however, is inconsistent, because it claims that Channel

3 sales are irrelevant, yet it argues for an aggregated price

analysis of Channels 1 and 3. Id. at 21, 25. Channel 3 sales are
Court No.   14-00143                                                   Page 13


relevant, because they relate to Appvion’s claim of a dramatic

increase in price when the transshipment scheme was discontinued.

            Commerce’s disaggregated profitability analysis reveals

that “Channel 1 profits, while ranging from [[

                   ]]     than   the   Channel   2   profits,   were   not   so

different as to be ‘aberrational.’” Pl.’s Confidential App. Price

and Profitability Analysis at 8.

            The court finds that Commerce’s profitability analysis

was reasonable.        See id.   Even assuming arguendo that the sales

were made at abnormally low prices and profits, the sales are not

necessarily outside the ordinary course of trade.               The mere fact

of abnormally low prices and profits is not enough to put sales

outside of the ordinary course of trade, as Commerce examines all

the circumstances particular to the sales in question. Cemex, 133

F.3d at 900 (quoting Murata, 17 CIT at 264, 820 F.Supp. at 607).

Moreover, here, none of the other factors associated with sales

outside the ordinary course of trade are present, as there were no

sales involving: off quality merchandise; merchandise produced

according to unusual specifications; merchandise sold pursuant to

unusual terms of sale; or merchandise sold to an affiliated party

at a non-arm’s length price.           19 C.F.R. § 351.102(b)(35).      Thus,

Commerce’s determination was reasonable.
Court No.     14-00143                                                     Page 14


              Lastly, Appvion argues that Commerce’s interpretation of

the    pricing   data     for   KT    48   F20   (another   grade   of   LWTP)    is

unsupported and irrational.            Pl.’s Br. at 31.     Appvion’s argument,

however, does nothing to change the fact that under a disaggregated

analysis, Commerce did not find a dramatic price increase after

the transshipment scheme ended.             Pl.’s Confidential App. Price and

Profitability Analysis at Fig. 2.

  2. Adverse Facts Available

         Commerce may apply AFA where “an interested party has

failed to cooperate by not acting to the best of its ability to

comply with a request for information.”                  19 U.S.C. § 1677e(b).

“Compliance with the ‘best of its ability’ standard is determined

by assessing whether respondent has put forth its maximum effort

to provide Commerce with full and complete answers to all inquiries

in an investigation.” Nippon Steel Corp. v. United States, 337

F.3d 1373, 1382 (Fed. Cir. 2003). Commerce enjoys broad discretion

when considering whether to apply AFA.                See PAM, S.p.A. v. United

States, 582 F.3d 1336, 1339-40 (Fed. Cir. 2009).                 This discretion

does not require that Commerce show that an importer cooperated to

the best of its ability every time it determines that AFA should

not be applied.          AK Steel Corp. v. United States, 28 CIT 1408,

1417, 346 F.Supp.2d 1348, 1355 (2004).                Cooperating to the best of

its ability means that the company must: take reasonable steps to

keep    and   maintain     full      and   complete    records   documenting     the
Court No.    14-00143                                                         Page 15


information that a reasonable importer should anticipate being

called upon to produce; have familiarity with all the records it

maintains;     and      conduct      prompt,     careful,      and   comprehensive

investigations of all relevant records.                Nippon, 337 F.3d at 1382.

            In AR3, Commerce found that Koehler failed to cooperate

to the best of its ability and significantly impeded the review by

not fully reporting its home market sales. IDM for AR3 at 9.

Consequently,       Commerce   applied     AFA    in    that    review.    Id.      By

comparison, in AR4, Koehler fully disclosed its home market sales

information    including       the    transshipment      scheme,     and   Commerce

confirmed this through verification. IDM for AR4, at 15. Appvion,

however, contends that the transshipment scheme affected Koehler’s

entire accounting system with fraud such that any verification by

Commerce cannot be trusted.           Pl.’s Br. 40-41.

            Appvion heavily relies on the Court’s holding in Tianjin

Magnesium Int’l Co., Ltd. v. United States, 844 F. Supp. 2d 1342,

1347 (2012), in support of its contention.                The Court takes issue

with Appvion’s contention.           In Tianjin, this Court concluded that

the application of AFA was warranted where the respondent submitted

false documents two months after their falsity had been established

in a failed verification. Id. The instant case is distinguishable,

because, here, Koehler fully disclosed its home market sales

information    including       the    transshipment      scheme,     and   Commerce

confirmed    this    through      verification.     Pl.’s      Confidential      App.,
Court No.   14-00143                                                 Page 16


Koehler Section A Response at 15-17, 24, and Ex. A-7. Furthermore,

Koehler put forth maximum effort to provide Commerce with full and

complete answers to the request for information. See Nippon, 337

F.3d at 1382.     Moreover, there is no indication that Koehler was

unfamiliar with its records or that it failed to maintain full and

complete records or that it did not conduct a prompt, careful, and

comprehensive     investigation.     See   id.     The   court   finds    that

Commerce’s decision not to apply AFA here was reasonable.

  3. Conclusion

            For   the   foregoing   reasons,     Plaintiff’s     Motion   for

Judgment on the Agency Record is denied and Commerce’s Final

Results are affirmed.      Judgment will be entered accordingly.




                                            /s/ Nicholas Tsoucalas
                                               Nicholas Tsoucalas
                                                  Senior Judge
Dated: September 17, 2015
       New York, New York
