CIT Says AD Law Doesn't Require Level of Trade Adjustment for 'Any' Selling Differences

In the 2020-22 administrative review of the AD order on Spanish common alloy aluminum sheet, Commerce applied its regulation, 19 C.F.R. Section 351.412(c)(2) and said Baux and Bancolor sold subject merchandise in Spain at one level of trade. Bancolor is an affiliate of Baux that buys, further processes and resells Baux-made common alloy aluminum sheet, selling goods from its distribution center the court dubbed "Madrid DC."

The respondent grouped its selling functions into three alleged levels of trade: "(1) sales made directly from Baux to unaffiliated customers; (2) downstream sales of Baux’s aluminum sheet, which ... Bancolor sold to unaffiliated customers; and (3) downstream sales of Baux’s aluminum sheet, which Bancolor’s Madrid DC resold to unaffiliated customers.” While Baux and Bancolor said they performed "selling functions" at different levels of intensity for each of these three levels, Commerce said the companies failed to substantiate these intensity designations, "despite multiple requests that it do so."

Baux argued that Commerce's application of its regulation conflicts with the SAA, since the regulation requires "substantial differences in selling activities," which isn't found in the statute. The respondent argued that the statute merely requires a finding of "any difference in selling activities" to warrant a level of trade adjustment.

Barnett rejected this claim, first finding the application of a statutory term to the record is a "factual determination for the agency" worthy of "substantial deference." In the present context, the SAA confirms that Congress meant for Commerce to amend its regulations to reflect the changes in AD/CVD laws adopted in the URAA. The agency then amended its regulations to "advise parties how the agency defined level of trade."

"The court must only resolve whether the regulation’s 'substantial differences' requirement is inconsistent" with the SAA, Barnett said, concluding that "the statute does not require a level of trade adjustment for any difference in selling activities."

Starting with the text of the statute, Barnett said the law doesn't "expressly define what constitutes a level of trade." The statutory structure doesn't require Commerce to "recognize a distinct level of trade in connection with any differences in selling activities." The statute says that to be eligible for a level of trade adjustment, the difference in the level of trade must involve the "performance of different selling activities." The statutes don't "equate different levels of trade with different selling activities; rather, the latter is a necessary element for an adjustment based on the former," the court said.

Meanwhile, the regulation defines differences in levels of trade as sales "made at different marketing stages," further explaining that substantial differences in selling activities are "a necessary, but not sufficient, condition for determining that there is a difference in the stage of marketing.” This regulation "ensures that identifying a difference in the level of trade will involve different selling activities" consistent with the statute, the court held. Barnett said the statute sets the "baseline" for the level of trade analysis, "not its outer limits."

The judge then sustained the application of Commerce's approach to Baux and Bancolor. While the companies categorized their selling functions by intensity level and ranked them on a scale of zero to 10, Commerce asked the companies to support the rankings with source documents and linkages to its accounting system, which the companies failed to do. Baux and Bancolor only provided a chart describing and ranking their selling functions.

The agency considered this chart and the firms' other responses, finding that the companies "assertions as to the degrees of intensity at which they performed the selling functions were not supported by record evidence." Baux and Bancolor tried to defend their intensity level ranking based on the "selling activity of payment collection," asserting that Bancolor and Madrid DC collected more payments and issued more invoices than Baux.

Barnett said the companies "failed to explain and document why any differences in the number of transactions (reflected in the number of invoices issued and payments collected) between Baux and its affiliates constituted a difference in the level of trade, particularly when Commerce observed that the nature of the customers involved, that is, end-users, may overlap."

Baux and Bancolor also said a level of trade adjustment could be made, since Bancolor processed the aluminum sheet before selling it, either directly or indirectly through Madrid DC, affecting the type of sheet sold. Commerce said these processing expenses were accounted for by a difference in merchandise adjustment. The court said the companies failed to address any evidence that "reasonably detracts from Commerce’s finding, and the court will not reweigh the evidence that Commerce reasonably addressed."

(Compania Valenciana de Aluminio Baux v. United States, Slip Op. 25-127, CIT # 23-00259, dated 09/25/25; Judge: Mark Barnett; Attorneys: Bryan Cenko of Mowry & Grimson for Compania Valenciana de Aluminio Baux and Bancolor Baux; Kyle Beckrich for defendant U.S. government; Melissa Brewer of Kelley Drye for defendant-intervenors Aluminum Association Trade Enforcement Working Group and its members)