AD Petitioners Open CAFC Appeal on AD Investigation of Indonesian Mattresses

Commerce based its decision on its review of aggregate data for all mattresses, which showed that respondent Zinus' U.S. sales affiliate, Zinus U.S., "had a sufficient number of mattresses in its inventory to support its" period of investigation sales. Brooklyn Bedding said this decision was "unreasonable," since Zinus U.S. "made its mattress sales on a model-specific basis and inventory of one model number therefore could not be used to supply a sale of a different model number."

A closer look at model-specific inventory and sales data shows Zinus U.S. didn't have a sufficient number of mattresses in its comingled inventory to support its investigation period sales, Brooklyn Bedding argued. The agency "seemingly failed to recognize, and certainly failed to address, this anomalous model-specific data, which contradicts its stated reasoning for removing in-transit mattresses from the quarterly ratio calculation," the brief said.

In its case, now before the Federal Circuit, Brooklyn Bedding argued that Commerce also erred in relying on "unverified inventory data in its revised quarterly ratio calculations" and improperly utilized "Indonesian import data to determine a fair market price for inputs purchased from a Chinese affiliate."

In the AD investigation on mattresses from Indonesia, Commerce applied a quarterly ratio sales methodology to determine the quantity of Zinus Indonesia's U.S. sales for calculating constructed export profit, since the respondent couldn't identify the country of origin of its goods after import. The Court of International Trade ultimately sided with the government after Comerce, on remand, issued a supplemental questionnaire asking for data on the quantity and value of the mattresses in the inventory of Zinus U.S. at the beginning and end of the period of investigation, along with Zinus Korea's indirect selling expenses.

The agency excluded in-transit mattresses from its calculation, adjusting its quarterly ratio calculation to include only the specific model numbers made and sold by Zinus Indonesia during the investigation period.

On appeal, Brooklyn Bedding is contesting Commerce's decision to revise its quarterly ratio calculation to "incorporate unverified inventory data submitted by Zinus" on remand at CIT. The agency's sole justification for doing so was its conclusion that "quarterly ratios calculated based on purchase data alone resulted in 'impossible' estimates of Indonesian mattress sales for particular model numbers," though Commerce "failed to recognize or address the fact that Zinus US’ actual, all-country comingled inventory and sales records" contained "similar impossibilities," the brief said.

"Commerce’s decision to abandon purchase data based on quarterly ratios in favor of quarterly ratios based on both purchase and inventory data was thus unsupported by substantial evidence," Brooklyn Bedding argued.

Lastly, the petitioner challenged Commerce's decision to "rely on Indonesian import data to establish a fair market price," arguing that it "conflicted with its established practice of relying on the affiliated supplier’s" costs when purchases or sales to unaffiliated parties are unavailable. The agency recently developed an approach to estimating a Chinese affiliated supplier's costs, and Commerce failed to explain why it wasn't appropriate to use that approach here, the brief said.