                          Slip Op. 04 - 134

            UNITED STATES COURT OF INTERNATIONAL TRADE

- - - - - - - - - - - - - - - - - - - -x
ALLOY PIPING PRODUCTS, INC., FLOWLINE
DIVISION, MARKOVITZ ENTERPRISES, INC., :
GERLIN, INC., and TAYLOR FORGE STAIN-
LESS, INC.,                            :

                          Plaintiffs,   :
                                            Consolidated
                  v.                    :   Court No. 02-00124

UNITED STATES OF AMERICA and THE UNITED:
STATES DEPARTMENT OF COMMERCE,
                                       :
                          Defendants.
                                       :
- - - - - - - - - - - - - - - - - - - -x

                          Memorandum & Order

[Upon motion(s) for judgment on the agency
 record, remand to the International Trade
 Administration for recalculation of general
 and administrative expenses and reconsider-
 ation of indirect selling expenses.]

                                            Decided: October 28, 2004


     Collier Shannon Scott, PLLC (David A. Hartquist and Jeffrey S.
Beckington) for the plaintiffs.

     Miller & Chevalier Chartered (Peter J. Koenig) for Ta Chen
Stainless Steel Pipe, Ltd.

     Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director, and Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice
(Richard P. Schroeder); and Office of Chief Counsel for Import
Administration, U.S. Department of Commerce (Rachael E. Wenthold),
of counsel, for the defendants.


          AQUILINO, Judge: This case consolidates complaints filed

pursuant to 19 U.S.C. §1516a(a)(2)(A)(i)(I) and (2)(B)(iii) on

behalf of Ta Chen Stainless Steel Pipe, Ltd. ("TCSSPL"), CIT No.

02-00115, and on behalf of the above-encaptioned plaintiffs, each
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Court No. 02-00124

seeking judicial review of and relief from Certain Stainless Steel

Butt-Weld Pipe Fittings From Taiwan: Final Results of Antidumping

Duty Administrative Review, 66 Fed.Reg. 65,899 (Dec. 21, 2001),

promulgated by the International Trade Administration, U.S. Depart-

ment of Commerce ("ITA").    The relief they seek is posited in

motions pursuant to USCIT Rule 56.2 for judgment upon the agency

record compiled in connection with that determination.


          The jurisdiction of the court to hear and decide the

parties' motions is based upon 28 U.S.C. §§ 1581(c), 2631(c).


                                 I

          TCSSPL's complaint1 alleges   that   it   is   a Taiwanese

producer and exporter of stainless steel butt-weld pipe fittings

and that it was a party to the ITA administrative review at issue,

which resulted in a weighted-average margin of dumping by it of

6.11 percent.   See 66 Fed.Reg. at 65,900.   The complaint and Rule

56.2 motion contest this final result on grounds (a) that the ITA

ignored inventory-carrying and credit costs incurred by TCSSPL's

subsidiary, Ta Chen International Corp. ("TCI"), in the United

States, thereby overstating profit; (b) that the agency failed to

make a level-of-trade adjustment; and (c) that the ITA's failure to


   1
     Alloy Piping Products, Inc. etc. et al. obtained leave to
intervene in CIT No. 02-00115 as parties defendant. TCSSPL did
not seek similar leave in plaintiffs' subsequently-filed, above-
numbered action, into which No. 02-00115 has now been consoli-
dated.
Consolidated                                                  Page 3
Court No. 02-00124

allocate TCI freight costs between warehouses only to sales of sub-

ject merchandise was not in accordance with law.2

            As recited by this motion itself, the statutory standard

for the court's review in an action such as this is whether the

agency's determination is "unsupported by substantial evidence on

the record, or otherwise not in accordance with law".    19 U.S.C. §

1516a(b)(1)(B)(i).

                                  A

            The ITA's Final Results adopt its December 10, 2001
Issues and Decisions Memorandum ("DecMemo") for the underlying

administrative review and "list[] the issues raised and to which we

have responded, all of which are in the Decision Memorandum".      66

Fed.Reg. at 65,900.    That memorandum, the contents of which have

been reproduced along with TCSSPL's motion, states that it is

       the Department's practice to calculate the CEP profit
       ratio based on actual expenses, not imputed expenses. In
       a recent antidumping duty administrative review, the
       Department articulated that "normal accounting principles
       only permit the deduction of actual booked expenses, not
       imputed expenses, in calculating profit.       Inventory-
       carrying costs and credit expenses are imputed expenses,
       not actual booked expenses, so we have established a
       practice of not including them in the calculation of
       total actual profit."3

   2
     Contingent upon affirmative relief on these claims is TCS-
SPL's prayer that the underlying antidumping-duty order, pub-
lished at 58 Fed.Reg. 33,250 (June 16, 1993), be revoked "on
the basis of three years . . . of sales of fittings by [it] at
not less than fair value, which qualifies [it] for revocation
under [the ITA]'s regulation 19 CFR §351.222(b)." TCSSPL Rule
56.2 Memorandum, p. 22.
   3
     Id., Appendix, Tab 10, p. 17. The acronym "CEP" refers to
constructed export price pursuant to 19 U.S.C. §1677a(b).
Consolidated                                                 Page 4
Court No. 02-00124

That is, the crux of the controversy is the refusal to factor

imputed expenses.     This practice apparently draws upon Import

Administration Policy Bulletin 97/1,     Calculation of Profit for

Constructed Export Price, and upon certain, recent caselaw, e.g.,

U.S. Steel Group v. United States, 225 F.3d 1284, 1290-91 (Fed.Cir.

2000); Ausimont SPA v. United States, 25 CIT 865, 893 (2001).4

            That caselaw is predicated, of course, upon the Trade

Agreements Act of 1979, as amended, in particular the special rule

for determining profit per 19 U.S.C. §1677a(f) in the context of

constructed export price.     TCSSPL contends, among other things,

that the ITA's approach (1) is not in accordance with that section

of the statute, (2) violates the statutory mandate to calculate CEP

profit only for subject merchandise, and (3) violates the obliga-

tions of the United States under Articles 2.3 and 2.4 of the Agree-


   4
     The DecMemo does point out, however, that in both SNR Roule-
ments v. United States, 24 CIT 1130, 118 F.Supp.2d 1333 (2000),
and FAG Italia, S.p.A. v. United States, 24 CIT 1311 (2000), the
court

       held that Commerce's CEP methodology with respect to
       imputed expenses was not in accordance with law. The
       United States has appealed both judgments. However, in
       Ausimont SPA v. United States, . . . the Court sustained
       Commerce's methodology. Consequently, until such time as
       these decisions are final, the Department will continue
       to apply its current methodology in excluding imputed
       expenses when calculating profit.

TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 18.

     Insofar as the undersigned has been able to determine, the
government's appeals in SNR and FAG remain sub judice under Fed-
eral Circuit docket numbers 01-1327 and 02-1096, respectively.
Consolidated                                                            Page 5
Court No. 02-00124

ment on the Implementation of Article VI of the General Agreement

on Tariffs and Trade 1994 ("WTO Antidumping Agreement").                See

TCSSPL Rule 56.2 Memorandum, pp. 3-13.

                                      (1)

            According to the statute, 19 U.S.C. §1677a(b), con-

structed    export   price   means    the   price   at   which   the   subject

merchandise is first sold in the United States to a purchaser not

affiliated with the producer or exporter, as adjusted under subsec-

tions (c) and (d) of 1677a.          For the purposes of subsection (d),

the price used to establish CEP shall be reduced by "the profit

allocated to the expenses described in paragraphs (1) and (2)" 5,
which include the amount of any

            (A) commissions for selling the subject merchandise
       in the United States;

            (B) expenses that result from, and bear a direct
       relationship to, the sale, such as credit expenses,
       guarantees and warranties;

            (C) . . . selling expenses that the seller pays on
       behalf of the purchaser; and

            (D) . . . selling expenses not deducted under sub-
       paragraph (A), (B), or (C)[.]


19 U.S.C. §1677a(d)(1).       Section 1677a(f) sets forth the special

rule for determining profit as follows:

       (1) In general

            For purposes of subsection (d)(3) of this section,
       profit shall be an amount determined by multiplying the
       total actual profit by the applicable percentage.

   5
       19 U.S.C. §1677a(d)(3).
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Court No. 02-00124


     (2) Definitions

          For purposes of this subsection:

               (A) Applicable percentage

                    The term "applicable percentage" means
               the percentage determined by dividing the
               total United States expenses by the total
               expenses.

               (B) Total United States expenses

                    The term "total United States expenses"
               means the total expenses described in subsec-
               tion (d)(1) and (2) of this section.

               (C) Total expenses

                    The term "total expenses" means all ex-
               penses in the first of the following categor-
               ies which applies and which are incurred by
               or on behalf of the foreign producer and for-
               eign exporter of the subject merchandise and
               by or on behalf of the United States seller
               affiliated with the producer or exporter with
               respect to the production and sale of such
               merchandise:

                            (i) The expenses incurred with re-
                       spect to the subject merchandise sold in
                       the United States and the foreign like
                       product sold in the exporting country if
                       such expenses were requested by the [ITA]
                       for the purpose of establishing normal
                       value and constructed export price.

                            (ii) The expenses incurred with re-
                       spect to the narrowest category of mer-
                       chandise sold in the United States and
                       the exporting country which includes the
                       subject merchandise.

                            (iii) The expenses incurred with
                       respect to the narrowest category of
                       merchandise sold in all countries which
                       includes the subject merchandise.
Consolidated                                                 Page 7
Court No. 02-00124

               (D) Total actual profit

                    The term "total actual profit" means the
               total profit earned by the foreign producer,
               exporter, and affiliated parties described in
               subparagraph (C) with respect to the sale of
               the same merchandise for which total expenses
               are determined under such subparagraph.

In other words, CEP profit6 equals total profit times total U.S.

expenses divided by total expenses.      TCSSPL is of the view that

total expenses should include those that are imputable, while the

defendants contend that that approach would amount to double

counting of interest. Compare TCSSPL Rule 56.2 Memorandum, pp. 5-6
with Defendants' Memorandum, pp. 38-39.


          As this court reads the foregoing statutory language,

Congress has not directly spoken to the precise question at issue,

whereupon it must determine whether the ITA's interpretation "is

based on a permissible construction of the statute."       Chevron

U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S.

837, 842-43 (1984).    See, e.g., U.S. Steel Group v. United States,
225 F.3d at 1286-87.    In that case, the court upheld the agency's

interpretation of section 1677a(f)(2)(C), supra, to include "move-

ment expenses" in the denominator of the CEP ratio because the

statute "does not require or even vaguely suggest symmetry between

the definitions of U.S. expenses and total expenses."    225 F.3d at

1290 (internal quotation marks deleted).      Moreover, total U.S.


   6
     The parties' papers refer to "CEP profit" instead of "pro-
fit" and "CEP profit ratio" rather than "applicable percentage".
Consolidated                                                    Page 8
Court No. 02-00124


expenses are not a subset of total expenses because the "statute

itself defines total U.S. expenses distinctly, both structurally

and substantively, from total expenses."     Id. at 1289.   In Timken

Co. v. United States, 26 CIT      , 240 F.Supp.2d 1228 (2002), aff'd,

354 F.3d 1334 (Fed.Cir. 2004), the court upheld the ITA's decision

not to impute expenses in calculating total expenses:


     . . . [A]lthough the definitions of both total U.S.
     expenses and total expenses direct Commerce to include a
     figure for selling expenses, it is not clear from the
     statute that these figures need to be precisely the same.


26 CIT at     , 240 F.Supp.2d at 1246.


            TCSSPL reads Thai Pineapple Canning Indus. Corp. v.

United States, 23 CIT 286 (1999), and Ausimont SPA v. United

States, supra, to

     indicate that the CEP Profit of the subject merchandise
     must be accurately calculated, including considering any
     unaccounted for imputed costs as to the subject mer-
     chandise in particular.


TCSSPL Reply Brief, p. 5.      In Thai Pineapple, the court remanded
the issue of imputed expenses to the ITA with instructions to

explain on the record whether the excluded imputed expenses in the

denominator of the CEP profit ratio were in fact a part of an

expense which was allocated to U.S. sales.     See 23 CIT at 296-97.

And, if that was the case, then the agency would need to support

its conclusion with citations to that record.     Id. at 296.
Consolidated                                                  Page 9
Court No. 02-00124


      . . . It may not be an unreasonable interpretation to
      conclude that imputed expenses should be excluded in the
      actual profit calculation, if that construction can be
      squared with the necessity of a properly calculated
      statutory ratio. It is a proper ratio that ensures prop-
      er allocation of profit to U.S. sales. If the profit
      allocable to CEP is somewhat lower because U.S. expenses
      are made higher by the addition of imputed expenses, this
      would not seem to be antithetical to the statute. There
      is also nothing that categorically prevents the inclusion
      of imputed expenses. Rather, imputed expenses should be
      omitted from actual profit if they duplicate expenses
      already accounted for. Their inclusion is not per se
      incompatible with the use of the word "actual."       The
      question is whether the imputed expenses represent some
      real, previously unaccounted for, expense.


Id.   After receipt of the results of the remand, the court stated:


           Theoretically, the total expenses denominator would
      reflect the interest expenses captured in the U.S. sales
      expenses numerator specified in 19 U.S.C. §1677a(f)(2)-
      (B), as well as "home" market interest expenses, because
      the total expenses denominator is derived from a net unit
      figure based on all company interest expenses without
      regard to sales destination. . . . The issue is whether
      there is some peculiarity of this case that belies the
      relevancy of the theory.


Thai Pineapple Canning Indus. Corp. v. United States, 24 CIT 107,
115 (2000), aff'd in part, rev'd in part on other grounds, 273 F.3d

1077 (Fed.Cir. 2001). The court(s) sustained the ITA's methodology

for CEP profit calculation because the plaintiffs did not demon-

strate "any great discrepancy".     Id.   The court(s), however, did

not address what would be a "truly distortive situation[]".       Id.,

n. 13.   Cf. SNR Roulements v. United States, 28 CIT      ,   , Slip

Op. 04-100, p. 9 (Aug. 10, 2004):
Consolidated                                                           Page 10
Court No. 02-00124

         . . . Commerce's findings may be challenged (1) by
         demonstrating that a distortion was caused by different
         expenses over time or (2) that the inclusion of imputed
         expenses will not result in double counting because there
         were no actual U.S. expenses included in the actual book-
         ed expenses.

              Here, TCSSPL claims that there is an "enormous" discrep-

ancy; namely, imputed expenses total 17.3 percent, whereas actual

interest costs are 1.37 percent.         TCSSPL Rule 56.2 Memorandum, p.

7.       It further asserts that including imputed expenses in the

denominator of the CEP profit ratio would eradicate the dumping

margin.      See id. at 13.


              This   court   cannot   find,   however,   that   the   "imputed

expenses represent some real, previously unaccounted for, expenses"

because the actual interest cost, 1.37 percent, is allocated to

selling expenses, which are included in the figure for "total

expenses".      See Plaintiffs' Reply Brief, Appendix 6, lines 651-92.

That imputed expenses are greater than actual expenses does not

necessarily engender an actionable distortion.             Compare Ta Chen
Stainless Steel Pipe, Ltd. v. United States, 28 CIT               ,     , Slip

Op. 04-46, p. 22 (May 4, 2004)("The evidence of record suggests

that the agency's CEP profit methodology in this case . . . may

have distorted the allocation of profit to TCI's U.S. sales"7),

     7
     That issue was remanded to the ITA by the court in Ta Chen,
and, on August 26, 2004, the agency filed its Final Results Pur-
suant to Remand, which state at pages 11-12, in pertinent part,
that it tested the plaintiff's thesis and found that approach
"flawed":
                                             (footnote continued)
Consolidated                                               Page 11
Court No. 02-00124

with SNR Roulements v. United States, supra, Slip Op. 04-100, pp.

9-10 ("SNR has failed to demonstrate any peculiarity or discrepancy

which necessitates the inclusion of imputed expenses because they

are not otherwise accounted for").


                               (2)

          As recited above, section 1677a(f)(2)(C) provides that

the term "total expenses" means all expenses in the first of three

enumerated subcategories which applies. TCSSPL points out that the

ITA normally

     will use the aggregate of expenses and profit for all
     subject merchandise sold in the United States and all
     foreign like products sold in the exporting country.

TCSSPL Rule 56.2 Memorandum, p. 7, quoting 19 C.F.R. §351.402(d)(1)

(underscoring in original).     But it misreads the legislative

history of the Uruguay Round Agreements Act, Pub. L. No. 103-465,

108 Stat. 4809 (Dec. 8, 1994), taking the position "that profit on


     . . . According to the Department's methodology, the
     imputed interest expenses are already reflected in the
     recognized financial expenses, which is included in the
     cost of merchandise in the denominator and the multiplier
     of the CEP profit equation. By adding the imputed in-
     terest expenses to the denominator and the multiplier,
     these amounts are then double-counted in the denominator
     and in the multiplier, such that the denominator and the
     multiplier would have both the recognized amount and the
     imputed measurement of the respondent's interest expens-
     es. Furthermore, the CEP profit equation applied . . .
     is not accurate or symmetrical. By adding only the U.S.
     imputed interest expenses, but ignoring the home market
     imputed interest expenses and any imputed expenses re-
     lated to production, purchasing, financing, or adminis-
     trative activities, this version places undue emphasis on
     Ta Chen's imputed U.S. selling expenses.
Consolidated                                                 Page 12
Court No. 02-00124


subject merchandise is to be used in the CEP Profit deduction."

Id.    Rather, H.R. Rep. No. 103-826(I) (1994) states at page 81:


       . . . No distortion in the profit allocable to U.S. sales
       is created if total profit is determined on the basis of
       a broader product-line than the subject merchandise, be-
       cause the total expenses are also determined on the basis
       of the same expanded product line.      Thus, the larger
       profit pool is multiplied by a commensurately smaller
       percentage.

Accord: Statement of Administrative Action, H.R. Doc. No. 103-316,
vol. 1, p. 825 (1994).    Hence, this court cannot conclude that the

agency did not act in accordance with law when it decided to use a

broader product line, instead of solely the subject merchandise, in

calculating total actual profit.


                                 (3)


            TCSSPL contends that the ITA's exclusion of imputed

expenses violates Articles 2.3 and 2.4 of the WTO Antidumping

Agreement because, "[r]ead together, these provisions require that

allowances made for CEP profit relate to the subject merchandise."

TCSSPL Rule 56.2 Memorandum, p. 12.      The court does not concur.

Recognizing that U.S. statutes should not be read so as to be in

conflict with the country's international obligations 8, the court


   8
     See, e.g., Federal Mogul Corp. v. United States, 63 F.3d
1572, 1581 (Fed.Cir. 1995); Murray v. Schooner Charming Betsy,
6 U.S. (2 Cranch) 64, 118 (1804). See also Statement of Admini-
strative Action, H.R. Doc. No. 103-316, vol. 1, p. 669 (1994):
                                             (footnote continued)
Consolidated                                                   Page 13
Court No. 02-00124

does not find that the agency's exclusion herein runs afoul of the

language in either GATT article.


                                    B

              TCSSPL points out that TCI is a "master distributor"9,

responsible for all selling and distribution in the U.S. market to

other distributors.

         . . . It is TCI in the United States, not TC[SSPL], that
         takes the [] Taiwan mega-shipments . . . and performs the
         enormous selling effort associated with 22,998 individ-
         ual TCI[] sales (as well as shipment and packing there-
         of) to unaffiliated U.S. customers. As a result, TC-
         [SSPL]'s selling effort for its much smaller home market
         sales, per unit of home market sale, far exceeds that of
         its sales to its U.S. affiliate, with such differences in
         selling effort warranting an LOT [level-of-trade] ad-
         justment. The fact that TC[SSPL] is dealing with . . .
         TCI . . . means far less effort is required, as compared
         to dealing with its many unaffiliated home market cus-
         tomers . . ..

TCSSPL Rule 56.2 Memorandum, pp. 14-15 (citations omitted).


              According to the statute, constructed export price shall

be

         increased or decreased to make due allowance for any
         difference . . . between . . .[it] and [normal value]


         . . . The implementing bill, including the authority
         granted to federal agencies to promulgate implementing
         regulations, is intended to bring U.S. law fully into
         compliance with U.S. obligations under those agreements.
         The bill accomplishes that objective with respect to
         federal legislation by amending existing federal statutes
         that would otherwise be inconsistent with the agreements
         and, in certain instances, by creating entirely new
         provisions of law.
     9
         TCSSPL Rule 56.2 Memorandum, p. 14.
Consolidated                                               Page 14
Court No. 02-00124


     . . . that is shown to be wholly or partly due to a
     difference in level of trade . . . , if th[at] difference
     . . .

               (i) involves the performance of different
          selling activities; and

               (ii) is demonstrated to affect price
          comparability, based on a pattern of consist-
          ent price differences between sales at differ-
          ent levels of trade in the country in which
          normal value is determined.

19 U.S.C. §1677b(a)(7)(A).   Subsection (a)(7)(B) proceeds to pro-

vide for an offset

     [w]hen normal value is established at a level of trade
     which constitutes a more advanced stage of distribution
     than the level of trade of the constructed export price
     . . ..

Cf. 19 C.F.R. §351.412(c)(2) (2001):

          Differences in levels of trade. The Secretary will
     determine that sales are made at different levels of
     trade if they are made at different marketing stages (or
     their equivalent). Substantial differences in selling
     activities are a necessary, but not sufficient, condition
     for determining that there is a difference in the stage
     of marketing.    Some overlap in selling activities will
     not preclude a determination that two sales are at
     different stages of marketing.


          The evidence on the record led the ITA to conclude that

the sales of the subject merchandise were made at the same level of

trade.   That is, TCSSPL's position did "not withstand close

scrutiny."   TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 13.

See Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan:
Preliminary Results of Antidumping Duty Administrative Review, 66

Fed.Reg. 36,555, 36,558-59 (July 12, 2001).   Those Preliminary Re-
Consolidated                                                             Page 15
Court No. 02-00124

sults were affirmed in the agency's subsequent DecMemo on grounds,

inter alia, that TCSSPL holds inventory in Taiwan prior to shipment

to TCI, as well as to home-market customers; that it did not

perform more selling functions for sales in Taiwan than for sales

to the United States; that, while TCSSPL incurs seller's risk and

handles after-sales service in the home market but not for sales

here, this did not outweigh the functions it performed for those

sales to TCI; and that TCSSPL had not provided enough evidence to

reach the contrary conclusion that its sales at home and to TCI

were in fact at different levels of trade.            See TCSSPL Rule 56.2
Memorandum, Appendix, Tab 10, pp. 12-14.


            Upon     review   of   the   record   relevant   to   this   agency

reasoning, the court finds sufficient evidence in support thereof.

As for TCSSPL's claim that the ITA erred by including in its

analysis "movement" expenses rather than solely "selling" ex-

penses10, the statute does indeed segregate them in the context of
constructed export price.          Compare 19 U.S.C. §1677a(c)(2)(A) (CEP

shall be reduced by "any additional costs, charges, or expenses,

and United States import duties, which are incident to bringing the

subject merchandise from the original place of shipment in the

exporting country to the place of delivery in the United States")

with §1677a(d)(1).        While the courts agree that those costs,

charges, or expenses should be disregarded by the agency when


   10
        Id. at 16.
Consolidated                                                  Page 16
Court No. 02-00124

comparing the differences, if any, between home- and U.S.-market

selling efforts11, this court is unable to conclude that the

expenditures TCSSPL refers to12 are of that ilk.      The Statement of

Administrative Action, H.R. Doc. No. 103-316, vol. 1, p. 823

(1994), refers to them as "transportation and other expenses,

including warehousing expenses, incurred in bringing the subject

merchandise from the original place of shipment . . . to the place

of delivery in the United States", whereas the ITA's Preliminary
Results herein

        found that Ta Chen's selling functions for sales to TCI
        include inventory maintenance to date of shipment, in-
        curring risk of non-payment, extension of credit terms,
        research and development and technical assistance, after-
        sale services, and freight and delivery arrangement.


66 Fed.Reg. at 36,558.       Moreover, if the practice is to define

movement expenses per 19 U.S.C. §1677a(c)(2)(A) as the cost of a

"market transaction" between unrelated parties13, then the transfer

of subject merchandise from TCSSPL to its subsidiary TCI would not

satisfy that standard.


             TCSSPL's papers refer to a number of cases wherein the

ITA concluded that a CEP offset was necessary.        See TCSSPL Rule


   11
     See, e.g., Micron Technology, Inc. v. United States, 243
F.3d 1301, 1315 n. 12 (Fed.Cir. 2001).
   12
        See TCSSPL Rule 56.2 Memorandum, pp. 15-16.
   13
     See, e.g., AK Steel Corp. v. United States, 22 CIT 1070,
1088, 34 F.Supp.2d 756, 770 (1998), aff'd in part, rev'd in
part on other grounds, 226 F.3d 1361 (Fed.Cir. 2000).
Consolidated                                                 Page 17
Court No. 02-00124

56.2 Memorandum, p. 17; TCSSPL Reply Brief, p. 15.     But of course,

it was the evidence on the records developed in each of those

matters that supported those offsets, which is not this case at

bar.

                                   C

             Genuine movement expenses are the basis of TCSSPL's

contention that the ITA should have taken only those incurred in

transferring subject merchandise between TCI's various, inland

warehouses across the United States.      The issue before the court

has arisen due to the company's failure to report them in its

responses to agency questionnaires.     According to the DecMemo,

        [d]uring verification, TCI did not claim that the intra-
        warehouse transfer expenses were not reported because it
        did not have the information to calculate them, but
        stated that the expenses were de minimis and therefore
        not reported.


TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 9.       But that

memorandum indicated that the ITA came to conclude otherwise:


        . . .[C]ontrary to Ta Chen's claim that the intra-ware-
        house[14] expense was not a major omitted expense, the
        evidence on the record clearly indicates that Ta Chen
        failed to report a major expense.

Id. at 7 .     Whereupon, in its final analysis the agency applied

facts available in the following manner:

   14
     According to the record, the prefix "intra" relates to "ex-
penses TCI incurs when transferring its merchandise among its
. . . warehouses in the United States." TCSSPL Rule 56.2 Memo-
randum, Appendix, Tab 10, p. 8.
Consolidated                                                  Page 18
Court No. 02-00124

        . . . [W]e identified the highest monthly intra-warehouse
        transfer expense. We then applied that month's amount to
        the remaining months in the POR. We then summed each
        month into a POR total and, in recognition of Ta Chen's
        accurate assessment that its records do not permit sales-
        specific identification of these expenses, we divided the
        summed total amount by TCI's POR net sales figure for all
        merchandise, both subject and non-subject. We then mul-
        tiplied this figure by the gross unit price to arrive at
        the amount we deducted from CEP.

Id. at 10.


             TCSSPL now complains about this approach on grounds that

the ITA noted on the record that movement costs of particular

merchandise could not be traced, and thus there was no duty to

report transfer expenses among the TCI warehouses15; even if, after
verification, those expenses were found to be calculable, they are

nevertheless insignificant16; it acted in "good faith", to the best

of its ability, because it provided all the necessary documents to

calculate them17; and the facts selected by the agency among those

available to choose from were punitive in nature and hence not in

accordance with law18.



   15
     See TCSSPL Rule 56.2 Memorandum, p. 18 n. 14. In the light
of the record, however, this point may well be post-hoc rational-
ization.
   16
        See id. at 20, citing 19 C.F.R. §351.413.
   17
        See TCSSPL Reply Brief, p. 18.
   18
     See id. at 22, citing Timken Co. v. United States, 26 CIT
   ,    , 240 F.Supp.2d 1228, 1234 (2002)("Commerce should ad-
here to the overriding goal of the antidumping law, which is
not to create a punitive result").
Consolidated                                              Page 19
Court No. 02-00124


                                 (1)

           The defendants correctly point out that the statute

grants the ITA the authority to decide when an adjustment is

"insignificant in relation to the price or value of the merchan-

dise."   Defendants' Memorandum, p. 23, quoting 19 U.S.C. §1677f-

1(a)(2) and relying on SKF USA Inc. v. United States, 24 CIT 1100,

1113, 118 F.Supp.2d 1315, 1325 (2000). Here, it found that the TCI

warehouse transfer expenses, when ranked against other costs, were

"significantly larger than the majority of [them]".   TCSSPL Rule

56.2 Memorandum, Appendix, Tab 10, p. 7.   The

      intra-warehouse transfer expenses were not small . . ..
      The [] $750,807.47 figure is significant because a ma-
      jority of the line items used to calculate the U.S. in-
      direct selling expenses . . . [we]re smaller.

Id.   That figure was subsequently reduced to $667,142,

      which only accounts for indirect selling expenses where
      we could not separate non-subject merchandise, ensuring
      that the Department did not include expenses which were
      not for subject merchandise.

Id. at 8, quoting in part the ITA Preliminary Analysis Memorandum,
p. 4.


           On their face, these figures do not seem insignificant,

and the court cannot conclude otherwise and thereby foreclose

resort to the facts available.

                                 (2)

           The statute provides for agency determinations on the

basis of facts available if
Consolidated                                                Page 20
Court No. 02-00124


          (1) necessary information is not available on
          the record, or

          (2) an interested party . . .

               (A) withholds information that has been
          requested by the [ITA] . . .,

               (B) fails to provide such information by
          the deadlines for submission of the informa-
          tion or in the form and manner requested . . .,

               (C) significantly impedes a proceeding
          . . ., or

               (D) provides such information but the
          information cannot be verified . . .,

     the [ITA] . . . shall . . . use the facts otherwise
     available in reaching the applicable determination . . ..

                               *   *   *

          If the [ITA] . . . finds that an interested party
     has failed to cooperate by not acting to the best of its
     ability to comply with a request for information . . .,
     the [ITA] . . ., in reaching the applicable determination
     . . ., may use an inference that is adverse to the in-
     terests of that party in selecting from among the facts
     otherwise available. Such adverse inference may include
     reliance on information derived from--

          (1) the petition,

          (2) a final determination in the investigation
          under this subtitle,

          (3) any previous review under section 1675 of
          this title or determination under section 1675b
          of this title, or

          (4) any other information placed on the record.


19 U.S.C. §1677e(a) and (b).       See, e.g., Nippon Steel Corp. v.
United States, 337 F.3d 1373, 1381-82 (Fed.Cir. 2003).
Consolidated                                                Page 21
Court No. 02-00124


           TCSSPL takes the position now that, since it provided the

agency during verification with an allocation factor for calcula-

tion of TCI warehouse transfer expenses, that fact alone should

save it from the effect of reliance on the foregoing provisions.

It refers to other cases in support of this position, e.g., Notice

of Final Determination of Sales at Less Than Fair Value:     Static

Random Access Memory Semiconductors From Taiwan, 63 Fed.Reg. 8,909,

8,928 (Feb. 23, 1998); Notice of Final Determination of Sales at
Less Than Fair Value: Certain Steel Concrete Reinforcing Bars From

Turkey, 62 Fed.Reg. 9,737, 9,742 (March 4, 1997); Notice of Final

Determination of Sales at Less Than Fair Value:   Bicycles From the

People's Republic of China, 61 Fed.Reg. 19,026, 19,044 (April 30,

1996).    In each of those matters, however, the ITA concluded that

the failure to report what was a minor expense was inadvertent,

which is not the circumstance reflected in the record at bar.   Cf.

TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 7.   As for other

cases referred to for support, the court in Usinor Sacilor v.
United States, 19 CIT 711, 745, 893 F.Supp. 1112, 1142 (1995),

aff'd in part, rev'd in part, 215 F.3d 1350 (Fed.Cir. 1999), for

example, held that the agency's determination was "procedurally

unfair" because it had failed to advise the parties of the de-

ficiencies in their submissions.   The ITA did not so fail in this

matter.   In   Mannesmannrohren-Werke AG v. United States, 23 CIT

826, 77 F.Supp.2d 1302 (1999), the agency considered adverse facts
Consolidated                                                 Page 22
Court No. 02-00124

warranted because a respondent failed to answer a questionnaire and

had also misrepresented itself.      Upon judicial review, the court

found that the ITA did not explain why the respondent's actions
amounted to anything more than inadvertence and thus held that it

could not apply adverse facts without reconsideration after remand

of that matter.    See 23 CIT at 842-43, 77 F.Supp.2d at 1316.


            But this matter now at bar does not have an appearance of

respondent inadvertence.    Moreover, in Maui Pineapple Co. v. Unit-
ed States, 27 CIT       , 264 F.Supp.2d 1244 (2003), another action

referred to by TCSSPL, the administrative record contained the

basic information, upon which corrections to the U.S. sales could

be made. That kind of information with regard to the TCI warehouse

transfers is not on the record herein.


            Counsel for TCSSPL would limit 19 U.S.C. §1677e(a)(1),

supra, to resort to facts otherwise available "only"19 if necessary

information is not on the record, but subsection (a)(2) thereto

posits four additional grounds for such resort.    And this court is

required to construe the statute so as to give meaning to all of

its provisions, and it thus necessarily declines to read section

1677e(a) as if subsection (2) thereto does not exist.     See, e.g.,
NTN Bearing Corp. of America v. United States, 368 F.3d 1369, 1377

(Fed.Cir. 2004).


   19
        TCSSPL Reply Brief, p. 21.
Consolidated                                               Page 23
Court No. 02-00124


                               (3)

          The expectation of the statute that an interested party

cooperate to the best of its ability has been interpreted to mean

that it "do the maximum it is able to do."   Nippon Steel Corp. v.

United States, 337 F.3d 1373, 1382 (Fed.Cir. 2003).   The court of

appeals further explained in that case that,

     under section 1677e(b), Commerce need only make two
     showings. First, it must make an objective showing that
     a reasonable and responsible importer would have known
     that the requested information was required to be kept
     and maintained under the applicable statutes, rules, and
     regulations. Second, Commerce must then make a subject-
     ive showing that the respondent under investigation not
     only has failed to promptly produce the requested in-
     formation, but further that the failure to fully respond
     is the result of the respondent's lack of cooperation in
     either: (a) failing to keep and maintain all required
     records, or (b) failing to put forth its maximum efforts
     to investigate and obtain the requested information from
     its records.

Id. at 1382-83 (citation omitted).

          Here, the ITA determined that the use of partial adverse

facts was warranted, based upon the following rationale:


     . . . Ta Chen's knowledge of the intra-warehouse transfer
     expenses and its decision not to report them to the De-
     partment properly warrants the use of adverse facts
     available. Ta Chen did not cooperate to the best of its
     ability with regard to its responses [to] requests for
     information during the course of the administrative re-
     view. It was only at the Department's request at verifi-
     cation that TCI offered its explanation for not reporting
     these expenses earlier. At verification, TCI stated that
     the inland freight cost was very small and was therefore
     not reported.
Consolidated                                                          Page 24
Court No. 02-00124


TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 9 (citation

omitted). Furthermore, "Ta Chen acknowledged that TCI chose not to

report    these   expenses   even   after    calculating    its   allocation

factor." Id. (citation omitted). Hence, the two showings required

by Nippon, supra, are evident.             TCSSPL was aware that intra-

warehouse     transfer   expenses   were    ordinarily     reported   in   an

antidumping administrative review, and it failed to provide the ITA

with its full cooperation, even upon request during verification.


             Nonetheless, TCSSPL would have the court believe that the

methodology used by the agency, specifically its decision to

attribute the highest reported monthly freight rate to those sales

with no reported freight during the period of review, is punitive

in nature and thus not in accordance with law. See TCSSPL Reply
Brief, p. 22, citing Timken Co. v. United States, 26 CIT               ,    ,

240 F.Supp.2d 1228, 1234 (2002) (the ITA must "appropriately

balanc[e] th[e] goal of accuracy against the risk of creating a

punitive margin").       In support of this assertion, counsel claim

that   the    intra-warehouse   allocation     factor    submitted    during

verification is a more accurate way to calculate the dumping

margin.      See TCSSPL Rule 56.2 Memorandum, p. 21.          Additionally,

TCSSPL attempts to equate the situation here with the ITA’s

subsequent administrative review (covering June 2000 to May 2001),

wherein its allocation factor was accepted.              See TCSSPL Reply

Brief, pp. 21-22, citing Certain Stainless Steel Butt-Weld Pipe
Consolidated                                               Page 25
Court No. 02-00124


Fittings from Taiwan: Final Results and Final Rescission in Part of

Antidumping Duty Administrative Review, 67 Fed.Reg. 78,417 (Dec.

24, 2002), and the accompanying Issues and Decision Memorandum, pp.

2-3 (Comment 1).


          That the agency chose the highest reported monthly intra-

warehouse transfer expense to determine total such expenses does

not make that choice per se punitive in nature.    Rather, section

1677e(b) grants the ITA the discretion to choose among applicable

data on the record.    See, e.g., Allied-Signal Aerospace Co. v.
United States, 996 F.2d 1185, 1191 (Fed.Cir. 1993).    Second, the

ITA did consider TCSSPL's allocation factor but chose not to rely

on it:

     . . . The Department took exhibits indicating both the
     total amount of unreported intra-warehouse transfer
     expenses and whether such expenses could be segregated
     into subject and non-subject merchandise components. The
     Department did not need to take Ta Chen’s allocation
     factor because that calculation was not material to the
     total amount of the unreported expense or whether the
     expense could be segregated; it merely represents an
     argument regarding the proper treatment of the deliber-
     ately unreported expenses . . ..

TCSSPL Rule 56.2 Memorandum, Appendix, Tab 10, p. 9.


          As for other ITA administrative reviews, this court

reiterates that the agency is not bound to a method used in a prior

review so long as its particular approach is supported by substan-

tial evidence on the record and otherwise in accordance with law.

Here, the ITA followed a method applied in Final Results of Anti-
Consolidated                                                         Page 26
Court No. 02-00124


dumping Duty Administrative Review:          Certain Welded Carbon Steel

Pipe and Tube From Turkey, 61 Fed.Reg. 69,067 (Dec. 31, 1996).

Although TCSSPL is correct to point out that there were no data on

the agency record even after verification in that matter, the

situation herein is not all that different.              To repeat, the ITA

chose not to accept the company's allocation factor "because that

calculation was not material to the total amount of the unreported

expense or whether the expense could be segregated". On the record

presented, this court cannot hold otherwise.


                                       D

            As noted at the beginning of this part I, contingent upon

affirmative relief on these foregoing claims is TCSSPL's prayer

that the underlying antidumping duty order be revoked "on the basis

of [these] three years . . . of sales of fittings by [it] at not

less than fair value, which qualifies [it] for revocation under

[the ITA]'s regulation 19 CFR §351.222(b)."               TCSSPL Rule 56.2

Memorandum, p. 22.



            Suffice it to respond at this stage that the Final Re-
sults under review entail a dumping margin for TCSSPL and that none

of its foregoing claims, in this court's judgment, eliminate it.

However, since claims by the plaintiffs, as discussed hereinafter,

lead   to   a   remand   to   and   consideration   by   the   agency,   final

determination of the plea for revocation should abide the results

of that remand.
Consolidated                                               Page 27
Court No. 02-00124


                                II

           In support of their motion for judgment upon the same

agency record, the plaintiffs summarize their claims for relief as

follows:

          In particular, the Department erred as a matter of
     law . . . (1) by calculating U.S. indirect selling
     expenses based on fiscal year 1999 financial statements,
     in lieu of the information provided in the more recent
     and relevant fiscal year 2000 financial statements, of
     . . . TCI . . . ; (2) by failing to increase TCI’s U.S.
     short-term interest rate for additional costs related to
     TCI’s U.S. short-term financing, and thereby understating
     Ta Chen’s U.S. credit expenses and U.S. inventory carry-
     ing costs; (3) by failing to include in Ta Chen Taiwan’s
     cost of production and constructed value data bonuses
     paid by Ta Chen Taiwan to management and employees, which
     bonuses were distributed directly from stockholders’
     equity and improperly not recorded in Ta Chen’s profit
     and loss statement, a practice that the Department
     previously has found to be distortive; and, (4) by ac-
     cepting average direct selling expenses for Ta Chen’s
     U.S. sales made from U.S. inventory, in lieu of import-
     specific direct selling expenses that could have been
     reported . . . based on Ta Chen’s normal books and
     records.

Plaintiffs' Rule 56.2 Memorandum, pp. 1-2.     The third of these

specifications of error is labeled "C" and discussed more fully at

pages 45 to 52 of this memorandum, concluding that "this issue

should be remanded to the [ITA] with instructions to properly

account for the various bonus payments as compensation expenses."

Id. at 52.   Initially, the defendants respond that

     this action should be remanded to Commerce to reopen the
     record, seek additional relevant information regarding
     employee bonuses, and recalculate Ta Chen's general and
     administrative expenses.    In all other respects, the
     motion[] should be denied because the administrative de-
     termination is otherwise supported by substantial evi-
     dence and otherwise in accordance with law.
Consolidated                                                         Page 28
Court No. 02-00124


Defendants' Memorandum, p. 2.         Cf. id. at 55-56.

              Neither TCSSPL's counsel nor this court objects to remand

on the issue indicated.         Cf. Rhone Poulenc, Inc. v. United States,

899 F.2d 1185, 1191 (Fed.Cir. 1990) ("the basic purpose of the

statute [is to] determin[e] current margins as accurately as

possible");     Koyo Seiko Co. v. United States, 14 CIT 680, 683, 746

F.Supp. 1108, 1111 (1990) ("affirming a final determination known

to be based on incorrect data would not only perpetuate the error,

[i]t would also be contrary to legislative intent").

                                         A

              Plaintiffs' first specification of error is that the ITA

erred in relying on five months' data from TCI's fiscal year 1999

rather than seven months' contained in the company's financial

statements for fiscal year 2000 to calculate the U.S. indirect

selling expenses for the period of review.          The defendants respond

that the agency

       determined that TCI’s FY 1999 financial statements were
       preferable because Ta Chen had not had an opportunity to
       adjust its fiscal year 2000 data for antidumping purposes
       in accordance with 19 U.S.C. §1677a(d). . . . Because Ta
       Chen’s fiscal year runs from November 1 through October
       31 of the following year, and because the relevant POR
       ran from June of 1999 through May of 2000, Ta Chen did
       not have time to adjust TCI’s FY 2000 financial data
       before Commerce needed the data for its calculations
       (beginning in late calender year 2000).


Defendants' Memorandum, pp. 46-47 (footnote and citation omitted).

They   also    contend   that    "when   both   types   of   information   are

available, Commerce acts reasonably when it selects actual in lieu
Consolidated                                               Page 29
Court No. 02-00124


of estimated information", despite the fact that it could have

estimated the FY 2000 indirect selling expenses based on those

expenses reported in FY 1999.    Id. at 48, citing CEMEX, S.A. v.

United States, 19 CIT 587, 595-96 (1995), aff’d, 133 F.3d 897

(Fed.Cir. 1998).   Moreover, they argue that

     the FY 2000 . . . data is only slightly more contempo-
     raneous with the period of review than the 1999 fiscal
     year data used by Commerce. Specifically, the FY 2000
     . . . data overlaps with seven months of the period of
     review. The 1999 fiscal year data overlaps with five
     months of the period of review. Indeed, even the data
     favored by Alloy Piping utilizes data from outside the
     period of review.

Id. at 49-50.

          The governing statute, 19 U.S.C. §1677a(d)(2), provides

     for the deduction of indirect selling expenses from
     constructed export price. Indirect selling expenses are
     expenses which do not meet the criteria of "resulting
     from and bearing a direct relationship to" the sale of
     subject merchandise, do not qualify as assumptions, and
     are not commissions. Such expenses would be incurred by
     the seller regardless of whether the particular sales in
     question are made, but reasonably may be attributed (at
     least in part) to such sales.


Statement of Administrative Action, H.R. Doc. 103-316, vol. 1, p.
824 (1994).   Because the statute does not specify how to calculate

such expenses, the ITA can resort to the audited fiscal-year

financial statements that most closely correspond to a period of

review.   E.g., Large Newspaper Printing Presses and Components

Thereof, Whether Assembled or Unassembled, From Japan: Final Re-

sults [of] Antidumping Duty Administrative Review, 66 Fed.Reg. 11,-

555 (Feb. 26, 2001); Certain Corrosion-Resistant Carbon Steel Flat
Consolidated                                                  Page 30
Court No. 02-00124

Products and Certain Cut-to-Length Carbon Steel Plate From Canada:

Final Results of Antidumping Duty Administrative Reviews, 62 Fed.

Reg. 18,448, 18,456-57 (April 15, 1997).       On occasion, the agency

takes a different approach, which is the case here, depending on

the facts and circumstances.     That is, it

        has the flexibility to change its position providing that
        it explains the basis for its change6 and providing that
        the explanation is in accordance with law and supported
        by substantial evidence7.

Cultivos Miramonte S.A. v. United States, 21 CIT 1059, 1064, 980

F.Supp. 1268, 1274 (1997).20     Furthermore, the mere fact that re-


   20
        In its footnote 6, the court stated that

        "[t]he underlying ground of that principle is that the
        reviewing court should be able to understand the basis of
        the agency’s action and so may judge the consistency of
        that action with the agency’s general mandate." The rule
        also . . . "prohibit[s] the agency from adopting
        significantly inconsistent policies that result in the
        creation of 'conflicting lines of precedent governing the
        identical situation.'" . . . "This is not to say that an
        agency, once it has announced a precedent, must forever
        hew to it. Experience is often the best teacher, and
        agencies retain a substantial measure of freedom to
        refine, reformulate, and even reverse their precedents in
        the light of new insights and changed circumstances.
        However, the law demands a certain orderliness. If an
        administrative agency decides to depart significantly
        from its own precedent, it must confront the issue
        squarely and explain why the departure is reasonable."

21 CIT at 1064, 980 F.Supp. at 1274 (quotations and brackets in
original, citations omitted). Its footnote 7 states that the

        review of an agency’s change of position or practice will
        typically center on whether the action was arbitrary. A
        change is arbitrary if the factual findings underlying
        the reason for change are not supported by substantial
        evidence.
Id.
Consolidated                                                 Page 31
Court No. 02-00124

sults can differ, depending on the method or data chosen, does not

automatically render either way unlawful if there is substantial

evidence21 on the record in support of that way. Here, the ITA came

to conclude that reliance on the already-adjusted 1999 fiscal year

data, as opposed to estimating adjustments to TCI's FY 2000

financial statements, would lead to a more accurate margin.       See

Defendants' Supplemental Appendix, pp. 29-30.      On its face, that

approach was not contrary to law.       Cf. Ta Chen Stainless Steel
Pipe, Ltd. v. United States, 28 CIT       ,    , Slip Op. 04-46, pp.

23-25 (May 4, 2004).


             Nonetheless, according to the plaintiffs, the ITA failed

to consider all of TCI's indirect U.S. selling expenses for fiscal

year 1999.      See Plaintiffs Rule 56.2 Memorandum, pp. 23-24.   In-

deed, it does appear that the agency took that year's interest

expense only for TCI operations (and not for financing) into

account.     See, e.g., id., pp. 39-40 and notes 124-26.    That is,

"the U.S. indirect selling expenses submitted by Ta Chen were wrong

and should be corrected."     Id. at 40. Upon review of the record,

the court concurs.

                                   B

             A compensating balance is an "amount of money a bank

requires a customer to maintain in a non-interest bearing account,

   21
     "Substantial evidence . . . means such relevant evidence
as a reasonable mind might accept as adequate to support a con-
clusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229
(1938); Matsushita Elec. Indus. Co. v. United States, 750 F.2d
927, 933 (Fed.Cir. 1984).
Consolidated                                                  Page 32
Court No. 02-00124

in exchange for which the bank provides . . . free services."

investorwords.com at http://www.investorwords.com/. "Compensating

balances increase the effective rate of interest on borrowings."

Barron's Dictionary of Finance and Investment Terms, p. 110 (5th

ed. 1998). TCSSPL reported a compensating balance on an "old loan"

in response to an ITA supplemental questionnaire.          The agency

thereafter stated:

        . . . There is no indication that Ta Chen lost title to
        any portion of the compensating balance during the POR.
        Therefore, contrary to petitioners' claim, the compensat-
        ing balance cannot be viewed as an interest payment and
        therefore is inappropriate for inclusion in the calcula-
        tion of the short-term interest rate.


Defendants' Supplemental Appendix, p. 27.


             The plaintiffs take the position that this compensating

balance should be taken into account when calculating TCSSPL's U.S.

short-term interest rate in order to properly determine credit ex-

penses and inventory carrying cost, which, inter alia, are subse-

quently deducted from the gross U.S. price to obtain the con-

structed export price.22 The plaintiffs claim that, by disregarding

   22
     Gross U.S. price is reduced by, among other things, "ex-
penses that result from, and bear a direct relationship to, the
sale, such as credit expenses, guarantees and warranties". 19
U.S.C. §1677a(d)(1)(B). See also 19 C.F.R. §351.402(a), (b),
clarifying certain adjustments to constructed export price.

        . . . "[T]he imputation of credit cost . . . is a
        reflection of the time value of money," that it "must
        correspond to a . . . . figure reasonably calculated to


                                                 (footnote continued)
Consolidated                                                Page 33
Court No. 02-00124

the compensating balance, the ITA is ignoring the true commercial

reality of the cost of doing business.    See Plaintiffs' Rule 56.2

Memorandum, pp. 41-43.


           The defendants do not disagree about the inherent cost of

money but instead repeat the agency's Decision Memorandum that

"[t]here is no indication that Ta Chen lost title to any portion of

the compensating balance during the POR".    They rely on NTN Bear-
ing Corp. of America v. United States, 18 CIT 104, 106, 843 F.Supp.

737, 739, aff'd, 41 F.3d 1519 (Fed.Cir. 1994), wherein the court

concluded that the amount of the compensating account available to

the account holder was "irrelevant in calculating the interest rate

. . . paid." Here, the record reflects neither any interest earned

on TCSSPL's compensating balance nor paid, and this court thus

cannot conclude that the ITA should have taken that balance into

account.


           Apparently, during the two fiscal years subject to this

discussion, TCSSPL provided TCI with collateral in the form of a

promissary note (or loan guarantee), the cost of which was not

included in the U.S. short-term interest-rate calculation. The ITA



     account for such value during the gap period between
     delivery and payment," and that it should conform with
     "commercial reality."

Commerce Bulletin 98.2, Imputed Credit Expenses and Interest
Rates (Feb. 23, 1998) (internal quotation marks deleted), re-
lying on LMI-La Metalli Industriale, S.p.A. v. United States,
912 F.2d 455, 460-61 (Fed.Cir. 1990).
Consolidated                                                 Page 34
Court No. 02-00124


found that there was no interest due on the note and no reason to

impute interest.     See   Defendants' Supplemental Appendix, p. 27.

As the court in Micron Technology, Inc. v. United States, 23 CIT

55, 63, 44 F.Supp.2d 216, 224 (1999), has pointed out,

     without some evidence that actual expenses were incurred
     or even might have been incurred, [plaintiff's] request
     to impute costs for loan fees is entirely too speculative
     and . . . therefore unreasonable.


                                   C

          According to the governing statute, export price con-

structed pursuant to 19 U.S.C. §1677a shall be reduced by

     the amount, if any, included in such price, attributable
     to any additional costs, charges, or expenses, and United
     States import duties, which are incident to bringing the
     subject merchandise from the original place of shipment
     in the exporting country to the place of delivery in the
     United States[.]

19 U.S.C. §1677a(c)(2)(A).       The ITA regulation promulgated in

conjunction with this statutory provision provides:


          Allocation of expenses and price adjustments--

          (1) In general. The Secretary may consider allo-
     cated expenses and price adjustments when transaction-
     specific reporting is not feasible, provided the Secre-
     tary is satisfied that the allocation method used does
     not cause inaccuracies or distortions.

          (2) Reporting allocated expenses and price adjust-
     ments. Any party seeking to report an expense or a price
     adjustment on an allocated basis must demonstrate to the
     Secretary’s satisfaction that the allocation is calcu-
     lated on as specific a basis as is feasible, and must
     explain why the allocation methodology used does not
     cause inaccuracies or distortions.
Consolidated                                               Page 35
Court No. 02-00124


          (3) Feasibility. In determining the feasibility of
     transaction-specific reporting or whether an allocation
     is calculated on as specific a basis as is feasible, the
     Secretary will take into account the records maintained
     by the party in question in the ordinary course of its
     business, as well as such factors as the normal account-
     ing practices in the country and industry in question and
     the number of sales made by the party during the period
     of investigation or review.

          (4) Expenses and price adjustments relating to
     merchandise not subject to the proceeding. The Secretary
     will not reject an allocation method solely because the
     method includes expenses incurred, or price adjustments
     made, with respect to sales of merchandise that does not
     constitute subject merchandise or a foreign like product
     (whichever is applicable).

19 C.F.R. §351.401(g).


          The plaintiffs complain that the ITA considered allocated

expenses in this matter, arguing that TCSSPL did not meet its

burden of showing that transaction-specific reporting was not feas-

ible and that the allocation method chosen did not cause inaccura-

cies or distortions.   See Plaintiffs' Rule 56.2 Memorandum, p. 54.
According to the ITA Decision Memorandum, prior to verification the

company stated that it had

     about 25,000 U.S. sales in this review. There is no com-
     puter record/date base, sale by sale, of the heat number
     for each sale. Thus, even if tracing by heat number of
     each Ta Chen U.S. b/w fitting sale all the way back to Ta
     Chen Taiwan was viable (it is not), it would have to be
     done manually for about 25,000 sales. In such cases, DOC
     has permitted the simplifying allocation approach done
     here, even if a more transaction-specific approach was
     possible, simply because any other approach is too
     burdensome (especially in the short time permitted to
     answer DOC questionnaires) as well as the reasonable
     allocation approach here causes no apparent distortion to
     the dumping margin calculation.
Consolidated                                                Page 36
Court No. 02-00124


Defendants' Supplemental Appendix, p. 26.   In its final analysis,

the agency "continue[d] to determine that the POR weighted-average

methodology used by Ta Chen should not be amended".   Id.


            This court has not found evidence on the record to

conclude otherwise, nor can it conclude that that approach was not

in accordance with the law quoted above.


                                 III

            In view of the foregoing, the motions of TCSSPL and the

plaintiffs for judgment upon the agency record must be denied,

except for remand to the ITA to reopen the record, seek additional

relevant information regarding employee bonuses, and recalculate

the general and administrative expenses of Ta Chen Stainless Steel

Pipe, Ltd. and also to reconsider its U.S. indirect selling

expenses.


            The ITA may have until December 30, 2004 to comply with

this remand and report the results thereof to the court and to the

other parties, which may file comments thereon on or before January

17, 2005.

            So ordered.

Decided:    New York, New York
            October 28, 2004



                                 Thomas J. Aquilino, Jr.
                                              Judge
