Wind Tower Exporter Rails Against Weight-Averaging of Steel Plate Costs for All CONNUMs at CAFC
The Commerce Department illegally found that steel plate cost fluctuations in the production of utility scale wind towers were unrelated to the physical characteristics of the finished wind towers, antidumping duty respondent Dongkuk S&C Co. argued in an opening brief at the U.S. Court of Appeals for the Federal Circuit. While Commerce said its decision to weight-average Dongkuk's reported steel plate costs for all reported control numbers (CONNUMs) was needed to "mitigate the cost differences unrelated to the product physical characteristics," Dongkuk said this approach was not backed by enough evidence (Dongkuk S&C Co. v. U.S., Fed. Cir. # 23-1419).
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Even though there was some evidence, "the complete record and the analysis undertaken by Commerce demonstrates that Commerce erred in concluding that cost differences among finished wind towers were unrelated to their physical characteristics," the brief said.
Dongkuk also objected to Commerce's decision to calculate constructed value profit and selling expenses in the AD investigation on utility scale wind towers from South Korea using exporter SeAH Steel Corp.'s consolidated financial data instead of its "standalone financial data." The consolidated data included company experience unrelated to the manufacture or sale of steel goods along with many companies located outside of South Korea, making it untenable to use as a surrogate. The standalone data, meanwhile, "reflected the financial results from the exclusive production of comparable merchandise in Korea."
In the investigation, Commerce found that Dongkuk's reported steel plate costs were significantly different between its CONNUMs sold in the Japanese and the U.S. markets. The agency decided to account for the "timing of the steel plate purchases, rather than the physical characteristics" of the towers, given that this was the "overwhelming factor" causing the differences in the steel plate costs. Commerce did so by weight-averaging the reported steel plate costs for all reported CONNUMs. Dongkuk unsuccessfully challenged Commerce's final determination at the Court of International Trade (see 2211170084).
Now before the Federal Circuit, Dongkuk said the trade court was wrong in upholding the decision to weight-average the steel plate costs since CIT ignored that the agency focused on the steel inputs' physical characteristics and not the finished wind towers' physical characteristics. Commerce should have instead used Dongkuk's normal books and records since they were kept in accordance with general accounting principles and reasonably reflected the cost to make the merchandise, the exporter said.
While Commerce said it was necessary to weight-average the steel plate costs for all CONNUMs, "steel plate was not one of the physical characteristics identified by Commerce for defining the CONNUMs," Dongkuk argued. "Simply put, Commerce never indicated that the type of steel plate, the grade of steel plate, the dimensions of steel plate, or any other attribute of steel plate was a physical characteristic that should have been incorporated in the CONNUMs, either for establishing similar products or for differentiating the costs between products.
"Any analysis by Commerce of [Dongkuk's] steel plate material input prices thus was not relevant to a determination of whether the costs in DKSC’s normal books and records reasonably reflected differences in the physical characteristics of the completed wind towers."
Dongkuk added that Commerce illegally assumed that steel plate input dimensions dictate wind tower physical characteristics. Commerce first said that the steel plate input "directly impacts" the height and weight of the wind towers, but immediately "adopted the exact opposite view, claiming that it found 'the significant cost differences reported for the steel plate inputs for wind towers of differing dimensions are not associated with the differences in the identified physical characteristics,'" the brief said.