AD HOC COMMITTEE OF AZ-NM-TX-FL v. US

• Decision Date: 05 March 1992
• Docket Number: No. 90-10-00508.,90-10-00508.
• Citation: 787 F. Supp. 208
• Parties: The AD HOC COMMITTEE OF AZ-NM-TX-FL PRODUCERS OF GRAY PORTLAND CEMENT, Plaintiff, v. UNITED STATES, Defendant, and Apasco, S.A. de C.V., and Cemex, S.A., Defendant-Intervenors.
• Court: U.S. Court of International Trade

787 F. Supp. 208

The AD HOC COMMITTEE OF AZ-NM-TX-FL PRODUCERS OF GRAY PORTLAND CEMENT, Plaintiff, v. UNITED STATES, Defendant and Apasco, S.A. de C.V., and Cemex, S.A., Defendant-Intervenors.

No. 90-10-00508.

United States Court of International Trade.

March 5, 1992.

Kilpatrick & Cody, Joseph W. Dorn, Martin M. McNerney, Gregory C. Dorris and Damon V. Pike, for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice, Vanessa P. Sciarra, Diane M. McDevitt, Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, of counsel, for defendant.

Skadden, Arps, Slate, Meagher & Flom, Thomas R. Graham and John J. Burke, for defendant-intervenor Cemex, S.A.

O'Connor & Hannan, Joseph H. Blatchford and Guy C. Smith, for defendant-intervenor Apasco, S.A. de C.V.

OPINION

RESTANI, Judge:

Plaintiff, an association composed of United States producers of gray Portland cement and cement clinker with production facilities in Arizona, New Mexico, Texas and Florida, challenges the final determination of sales at less than fair value by the United States Department of Commerce, International Trade Administration ("ITA" or "Commerce") in Gray Portland Cement and Clinker from Mexico, 55 Fed.Reg. 29,244 (Dep't Comm.1990) ("Final Determination" or "Final Det."). In the determination, ITA concluded that imports of gray portland cement and clinker from Mexico are being, or are likely to be, sold in the United States at less than fair value ("LTFV"). Plaintiff, representing domestic cement producers, challenges the level of LTFV margins. Cemex, S.A. ("Cemex") and Apasco, S.A. de C.V. ("Apasco"), Mexican producers of the subject merchandise, are defendant-intervenors in this action.

I. Background

In response to a petition filed by plaintiff on behalf of the domestic cement industry, ITA initiated an antidumping investigation of imports of gray Portland cement and cement clinker from Mexico. Gray Portland Cement and Clinker from Mexico, 54 Fed.Reg. 43,190 (Dep't Comm.1989).

On April 12, 1990, by notice published in the Federal Register, ITA issued a preliminary affirmative determination of sales at less than fair value. Gray Portland Cement and Clinker from Mexico, 55 Fed. Reg. 13,817 (Dep't Comm.1990). Following verification of the questionnaire responses, ITA published its final affirmative determination of sales at less than fair value. Final Det., 55 Fed.Reg. 29,244.

On August 30, 1990, an antidumping duty order was published in the Federal Register. Gray Portland Cement and Clinker from Mexico, 55 Fed.Reg. 35,443 (Dep't Comm.1990).¹ In this order, Cemex was assigned a final dumping margin of 58.38% and Apasco — 53.26%. A third Mexican producer not a party in this appeal, Cementos Hidalgo, S.C.L., was assigned a dumping margin of 3.69%. The "all other" category of Mexican producers and exporters of the subject merchandise received a dumping margin of 58.05%.

II. Issues and Decision

Plaintiff raises three issues:

1. Whether ITA erred by comparing Cemex's home market and United States sales at two distinct levels of trade;

2. Whether ITA erred by deducting home market inland freight charges incurred by Cemex and Apasco from foreign market value ("FMV"); and

3. Whether ITA erred by not initiating a sales below cost of production ("COP") investigation of Cemex's home market sales of Type V cement.

Oral argument was held on February 20, 1992. At that time, the court ordered remand on the first issue and upheld ITA's decision on issues two and three. This opinion further explains the court's ruling from the bench.

III. Discussion

A. Remand is necessary for ITA to explain its rationale for comparing Cemex's home market and United States sales at different levels of trade.

The "level of trade" regulation provides:

The Secretary normally will calculate foreign market value and United States price based on sales at the same commercial level of trade. If sales at the same commercial level of trade are insufficient in number to permit an adequate comparison, the Secretary will calculate foreign market value based on sales of such or similar merchandise at the most comparable commercial level of trade as sales of the merchandise and make appropriate adjustments for differences affecting price comparability.

19 C.F.R. § 353.58 (1991). Authority for this regulation is found in the statutory provision mandating adjustments to foreign market value for "other differences in circumstances of sale." 19 U.S.C. § 1677b(a)(4)(B) (1988).

During the period of the investigation, Cemex maintained that its pricing policies for sales of the subject merchandise did not vary according to the type of customer or the level of trade. Pub.R.Doc. 126 at 12. Rather, Cemex attributed price variance to the differing competitive conditions in different sales regions. Id. In the preliminary determination ITA treated all home market sales as if they were made at a single level of trade. See 55 Fed.Reg. 13,817.

On June 13, 1990, Cemex raised the level of trade issue with ITA, arguing that ITA should not combine the sales to distributors with the sales to end-users in making the fair value comparison. Pub.R.Doc. 269 at 937-38. In comment 9 of its final determination, ITA stated: "We determined that CEMEX had sufficient sales in the home market at the same commercial level of trade as its U.S. sales to permit an adequate comparison to all U.S. sales." Final Det. at 29,248. This statement is ambiguous. It does not reflect that ITA found two distinct levels of trade in each market and that it chose to make comparisons on two different levels, although the parties seem to agree that ITA did make separate comparisons. Absent from the final determination is an explanation of why ITA reversed its preliminary determination which combined distributor and end-user sales. Although ITA consents to remand to consider this issue anew, plaintiff requested that ITA be directed to follow its preliminary methodology.

As the court stated at oral argument, the level of trade issue must be remanded so that ITA may explain its analysis and rationale for concluding that Cemex's sales should be compared at two different levels of trade based on the evidence submitted in this case. The court declines to give further direction in view of the absence of reasoning and the presence of some evidence of two levels of trade. This issue requires further consideration by the agency before the court can make a determination as to ITA's level of trade methodology.

B. It was reasonable for ITA to deduct pre-sale inland freight expenses from FMV.

In its final determination, ITA deducted from FMV inland freight expenses that were incurred prior to the date of sale, stating:

We have deducted from the U.S. price inland freight which represents movement expenses from the plant to the storage facility. Therefore, to ensure an "apples-to-apples" comparison, we have deducted movement expenses from the plant to the storage pick-up point on home market sales in our determination of FMV.

Final Det. at 29,251 (Comment 27). Plaintiff alleges that this deduction is contrary to ITA's standard practice of denying direct expense deductions to FMV for pre-sale inland freight charges and further, that the new procedure violates the antidumping law.

Pursuant to statute and regulation, ITA must reduce the United States price by any expenses "incident to bringing the merchandise from the place of shipment in the country of exportation to the place of delivery in the United States." 19 U.S.C. § 1677a(d)(2)(A) (1988); 19 C.F.R. § 353.41(d)(2)(i) (1991). No corresponding provision exists with regard to FMV. Under 19 U.S.C. § 1677b(a)(4)(B) and the implementing regulation, however, FMV may be adjusted for differences in the circumstances of sale that are directly related to sales of the merchandise in the home market.²

Although Cemex and Apasco argue that ITA's determination is sustainable based on the circumstances of sale provision because the expenses are directly related to the sales, ITA did not rely on this provision in its treatment of home-market pre-sale inland freight expenses. Thus, ITA's determination as to this issue rests not on the circumstances of sales adjustment historically used by ITA,³ but on a seemingly new approach that uses prices at the factory gates for comparison, which necessarily would involve inland freight deductions on both sides of the equation.

In this case, pre-sale movement expenses were incurred in both the home market and the United States market. The similarity of selling procedures in both markets distinguishes this case from prior ones discussing pre-sale costs. See Silver Reed America, Inc. v. United States, 7 CIT 23, 581 F.Supp. 1290 (1984), rev'd on other grounds sub nom., Consumer Prod. Div., SCM Corp. v. Silver Reed America, Inc., 753 F.2d 1033 (Fed.Cir.1985); LMI-La. Metalli Industriale, S.p.A. v. United States, 13 CIT 305, 712 F.Supp. 959 (1989), aff'd in part, rev'd in part, 912 F.2d 455 (Fed.Cir.1990). In both of these cases, pre-sales expense deductions were discussed only with regard to the home market side; thus, it was only the circumstances of sale provision which could justify a deduction.

Plaintiff views ITA's new approach as a circumvention of the circumstances of sale provision. The court doubts a circumvention is occurring because it would appear to be an unnecessary one. The court does not find the clarity in the circumstances of sale provision that is apparent to plaintiff. The obvious thrust of the statute is a fair comparison. The absence of language addressing a movement deduction in the FMV statute suggests no hard and fast rule to the court in view of Congress' broad direction to make adjustments for differences in circumstances of sale and its lack of direction as to which exact price factors to use. Even ITA's regulation is not as absolute as p...