Commerce Unlawfully Rejected Sales Expense Allocation Methodology, Propane Cylinder Exporter Says
The Commerce Department improperly used a period of review-wide allocation methodology for exporter Sahamitr Pressure Container's certification expenses, Sahamitr argued in its opening brief at the U.S. Court of Appeals for the Federal Circuit. The company said it followed Commerce's instructions throughout the 2019-20 review of the antidumping duty order on steel propane cylinders from Thailand only for the agency to find that its methodology to be "distortive" (Sahamitr Pressure Container v. United States, Fed. Cir. # 24-2043).
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In the review, Commerce asked Sahamitr to report sales costs on a transaction-specific basis, warning against reporting on an "allocated basis." The agency said allocated reporting is only acceptable if the company can show that the allocation is calculated on as specific a basis as is feasible and isn't "unreasonably distortive."
Sahamitr initially reported its certification fees on a review period-wide basis, which Commerce accepted only to tell the respondent to revise its approach multiple times at the petitioner's request. The exporter then reported its certifications fees, "which are a direct selling expense," on as specific a basis as "feasible" based on the records it keeps in the "ordinary course of business," it said.
Specifically, Sahamitr reported its costs on an allocated basis by using a certification-fee ratio to customers' gross unit prices to calculate a per-unit certification expense. The company did so on the grounds that it pays certification fees to outside vendors after the sales are made, precluding the firm from attributing individual certification expenses to individual sales.
Commerce said this allocation of certification costs was "distortive" due to "timing differences between when" Sahamitr makes and sells cylinders and when it records the certification expenses tied to those sales. These differences "create monthly fluctuations" in the company's certification expenses, the agency said. Commerce hit the exporter with a 13.89% AD rate. The Court of International Trade sustained the move on the grounds that the agency has wide latitude to select proper reporting methodologies (see 2405020029).
On appeal, Sahamitr said Commerce told it to revise its allocation of certification fees from the review period-wide basis to a monthly basis only later to reject the monthly-specific reporting due to the timing differences. The exporter said the agency knew of the timing differences when it asked for the monthly-specific allocation, adding that "capturing monthly differences in expenses was the point of allocating on a monthly basis in the first place."
As a result, Commerce "failed to draw a rational connection between the record evidence and its ultimate decision to reject" Sahamitr's monthly-specific report, rendering the rejection unsupported, the brief said.