Slip Op. 06-9
UNITED STATES COURT OF INTERNATIONAL TRADE
HYUNDAI ELECTRONICS INDUSTRIES
CO., LTD. and HYUNDAI
ELECTRONICS AMERICA, INC.,
Plaintiffs, Before: Richard W. Goldberg,
Senior Judge
v.
Cons. Court No. 00-01-00027
UNITED STATES,
Defendant,
and
MICRON TECHNOLOGY, INC.,
Defendant-
Intervenor.
OPINION
[Motion for reconsideration and partial modification granted in
part. Previous remands of Commerce antidumping duty
determination modified and case remanded with instructions.]
Dated: January 18, 2006
Willkie, Farr & Gallagher LLP (Daniel L. Porter and James P.
Durling) for Plaintiffs Hyundai Electronics Industries Co., Ltd.
and Hyundai Electronics America, Inc.
Peter D. Keisler, Assistant Attorney General, David M. Cohen,
Director, Jeanne E. Davidson, Deputy Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Kenneth S. Kessler); Patrick V. Gallagher, Jr., Of
Counsel, Office of the Chief Counsel for Import Administration,
United States Department of Commerce, for Defendant United
States.
King & Spalding LLP (Gilbert B. Kaplan, Cris R. Revaz, and Daniel
L. Schneiderman) for Defendant-Intervenor Micron Technology, Inc.
Cons. Court No. 00-01-00027 Page 2
GOLDBERG, Senior Judge: This case is before the Court following
second remand to the United States Department of Commerce
(“Commerce”) of the results of a fifth administrative review of
an antidumping duty order and upon motion for reconsideration of
the Court’s previous remand decisions. The Court has
jurisdiction pursuant to 28 U.S.C. § 1581(c).
I. BACKGROUND
In Hyundai Electronics Industries Co. v. United States, 29
CIT __, Slip Op. 05-105 (Aug. 25, 2005) (“Hyundai II”),
familiarity with which is presumed, the Court sustained in part
and remanded in part Commerce’s first redetermination in the
fifth administrative review regarding Dynamic Random Access
Memory Semiconductors of one megabit or above from the Republic
of Korea (“Korea”) produced by Hyundai Electronics Industries
Co., Ltd. and Hyundai Electronics America, Inc. (collectively
“Hyundai”) and LG Semicon Co., Ltd. (“LG Semicon”).1 See Final
Results of Redetermination Pursuant to Court Remand (Aug. 31,
2004), available at http://ia.ita.doc.gov/remands/04-37.pdf (the
“First Remand Results”); Dynamic Random Access Memory
Semiconductors of One Megabit or Above From the Republic of
Korea, 64 Fed. Reg. 69694 (Dec. 14, 1999) (final results of
1
After the fifth administrative review was completed,
respondent Hyundai acquired LG Semicon. In this opinion,
Hyundai-as-successor-in-interest-to-LG Semicon is referred to as
LG Semicon.
Cons. Court No. 00-01-00027 Page 3
administrative review) (the “Final Results”).
In Hyundai II, the Court reviewed several aspects of the
First Remand Results, including, in relevant part2: (1)
Commerce’s decision to use Plaintiffs’ amortized research and
development (“R&D”) expenses in the calculation of the cost of
producing the subject merchandise; and (2) Commerce’s provision
of additional evidence to support its rejection of Plaintiffs’
deferral of R&D costs related to long-term projects. See Hyundai
II, 29 CIT at ___, Slip Op. at 17-23. The Court sustained
Commerce’s redetermination with respect to issue (1), id. at ___,
Slip Op. at 20; but, citing evidentiary deficiencies, rejected
Commerce’s position as to issue (2). Id. at ___, Slip Op. at 23.
The Court remanded this issue to Commerce with instructions to
accept Plaintiffs’ deferral methodology in calculating R&D
expenses for long-term projects. Id. Commerce duly complied
with the Court’s order. After receiving no comments from
Plaintiffs or Defendant-Intervenor Micron Technology, Inc.
2
These are two of the aspects of the Final Results which
were first remanded to Commerce in Hyundai Electronics Industries
Co. v. United States, 28 CIT ___, 342 F. Supp. 2d 1141 (2004)
(“Hyundai I”), familiarity with which is presumed. In addition,
the Court in Hyundai II also reviewed two other previously-
remanded aspects of the Final Results: Commerce’s recalculation
of LG Semicon’s dumping margin using only partial adverse facts
available and Commerce’s provision of additional evidence to
support its R&D cost cross-fertilization theory. Hyundai II, 29
CIT at ___, Slip Op. at 6-17. Hyundai II also addressed certain
newly raised challenges to Commerce’s calculation of Hyundai’s
entered value. Id. at ___, Slip Op. at 23-28.
Cons. Court No. 00-01-00027 Page 4
(“Micron”) on its draft calculations, Commerce released the Final
Results of Redetermination Pursuant to Court Remand (Sept. 23,
2005) (the “Second Remand Results”). Although expressing
disagreement with the findings in Hyundai II, Commerce
recalculated Plaintiffs’ R&D expenses pursuant to the Court’s
instructions. Second Remand Results at 1.
Eighteen days later, Micron submitted a Memorandum
Addressing the Final Results of Redetermination Pursuant to Court
Remand (“Def.-Intvr.’s Br.”). While acknowledging the Second
Remand Results’ conformity with Hyundai II, Micron argued that an
intervening opinion by the United States Court of Appeals for the
Federal Circuit (the “Federal Circuit”) had indirectly overruled
the conclusions of law underpinning Hyundai II. Def.-Intvr.’s
Br. at 1 (citing Hynix Semiconductor Inc. v. United States, 424
F.3d 1363 (Fed. Cir. 2005) (“Hynix IV”)3). Plaintiffs submitted
Rebuttal Comments in Response to Defendant-Intervenor’s
Memorandum (“Pls.’ Br.”), arguing that the Federal Circuit’s
decision in Hynix IV was based on conclusions of fact particular
to the investigation at issue in that case rather than general
conclusions of law. Pls.’ Br. at 2. Commerce filed a response
brief (“Commerce’s Br.”) agreeing with Micron’s arguments.
Commerce’s Br. at 2. Commerce additionally filed a motion for
3
The Federal Circuit issued its mandate in Hynix IV on
November 28, 2005.
Cons. Court No. 00-01-00027 Page 5
reconsideration and partial modification of the Court’s previous
remand decisions (“Commerce’s Motion”), requesting that the Court
direct Commerce to reinstate certain of its original findings and
recalculate the antidumping duty margins accordingly. Commerce’s
Motion at 2.
This case is now properly before the Court following second
remand and upon Commerce’s Motion, consolidated for purposes of
this opinion. The Court must uphold Commerce’s determination if
it is supported by substantial evidence and otherwise in
accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i) (2000). The
Court may exercise its discretion to revise its previous remand
decisions, see USCIT R. 59(a),4 although the Court will generally
only do so on motion for reconsideration where the Court’s
previous decisions are “manifestly erroneous.” Former Employees
of Quality Fabricating, Inc. v. United States, 28 CIT ___, ___,
353 F. Supp. 2d 1284, 1288 (2004) (quotation marks omitted); cf.
Doe v. New York City Dep’t of Social Services, 709 F.2d 782, 789
(2d Cir. 1983) (“The major grounds justifying reconsideration are
an intervening change of controlling law, the availability of new
evidence, or the need to correct a clear error or prevent
manifest injustice.”) (quotation marks omitted). After due
4
“Courts have liberally construed Rule 59(a) to include any
matter which is appealable, or for which the court has issued a
decision foreclosing further arguments pertaining thereto.”
Witex, U.S.A., Inc. v. United States, 29 CIT ___, ___ n.2, 360 F.
Supp. 2d 1327, 1328 n.2 (2005) (citations omitted).
Cons. Court No. 00-01-00027 Page 6
consideration of the parties’ submissions, the Federal Circuit’s
decision in Hynix IV, the administrative record, and all other
papers had herein, and for the reasons that follow, the Court
grants in part Commerce’s Motion, modifies its previous
decisions, and remands this case with instructions.
II. DISCUSSION
A. The Court Must Apply Relevant Federal Circuit Decisions
Issued During the Course of Remand Proceedings
At the outset, it is necessary to recite that this Court is
bound by the decisions of its appellate courts. Before entering
final judgment, the U.S. Court of International Trade must
consider the legal effect of Federal Circuit or U.S. Supreme
Court decisions issued during the course of the often lengthy
remand proceedings which characterize this Court’s antidumping
and countervailing duty cases. When, for example, an intervening
decision by the Federal Circuit clarifies a legal principle of
relevance to a case at bar, the Court must apply it. See, e.g.,
E.I. DuPont de Nemours & Co. v. United States, 17 CIT 1266, 1288,
841 F. Supp. 1237, 1254 (1993) (remanding case to allow Commerce
to reexamine its methodology in light of intervening Federal
Circuit decision); Fed.-Mogul Corp. v. United States, 18 CIT 160,
163 (1994) (remanding case to allow Commerce to consider issues
raised by intervening Federal Circuit decision). A regrettable
byproduct of this due deference may be to prolong already lengthy
litigation with another agency remand; nonetheless, the Court may
Cons. Court No. 00-01-00027 Page 7
not shirk its ongoing responsibility to review the legality of
agency determinations.
It is, however, equally true that there are certain natural
limits to the reach of Federal Circuit decisions. As with any
judicial precedent, they are only as relevant to subsequent cases
as their unique fact patterns will allow. A Federal Circuit
decision which turns on case-specific findings of fact may be of
less precedential importance to a case at bar than a decision
based on generally applicable conclusions of law. The Court is
charged with discerning the controlling legal principles from
Federal Circuit decisions. See Aves. in Leather, Inc. v. United
States, 423 F.3d 1326, 1331 (Fed. Cir. 2005) (noting “doctrine of
stare decisis applies to only legal issues and not issues of
fact”).
In this light, it is clear that Micron has rightly drawn the
Court’s attention to Hynix IV, a recent Federal Circuit decision
potentially relevant to the disposition of certain issues in this
case. By the same measure, Plaintiffs have appropriately
cautioned the Court to consider the possibly limited application
of a case involving a different factual record. With the inquiry
so framed, the Court turns to its analysis of Hynix IV.
B. Hynix IV Clarified Legal Principles at Issue in this Case
1. Overview of Hynix IV
The factual and procedural background of Hynix IV is
familiar to the parties and the Court. Hynix IV involved an
Cons. Court No. 00-01-00027 Page 8
appeal of judgments by the U.S. Court of International Trade
(Carman, J.)5 which reviewed several aspects of the seventh
administrative review of the same antidumping duty order at issue
in the case at bar. Although the cases cover two different
periods of review and two different administrative records, the
parties in these two cases are identical6 and they raised many of
the same issues in both proceedings.
Of particular relevance is the issue of the appropriate
treatment by Commerce of certain R&D cost accounting practices
used by Hynix during the period of review covered by Hynix IV.
During the seventh administrative review, Hynix accounted for R&D
costs by amortizing them, which represented a change from the
cost accounting practice of expensing used in previous periods of
review. Hynix I, 27 CIT at ___, 248 F. Supp. 2d at 1305. At the
same time, Hynix also chose to defer recognition of the R&D costs
associated with certain long-term projects until these projects
were commercialized (i.e., revenue-producing). Id. Although
acknowledging that these two cost accounting practices were
5
See Hynix Semiconductor, Inc. v. United States, 27 CIT
___, 248 F. Supp. 2d 1297 (2003) (“Hynix I”); Hynix
Semiconductor, Inc. v. United States, 27 CIT ___, 295 F. Supp. 2d
1365 (2003) (“Hynix II”); Hynix Semiconductor, Inc. v. United
States, 28 CIT ___, 318 F. Supp. 2d 1314 (2004) (“Hynix III”).
The Hynix case history also includes two opinions concerning
evidentiary issues which were not reviewed in Hynix IV.
6
The difference in the named plaintiffs in these two cases
is attributable to Hyundai’s corporate name change, which took
place subsequent to the fifth administrative review at issue
here.
Cons. Court No. 00-01-00027 Page 9
recognized under Korea’s generally accepted accounting principles
(“GAAP”), Commerce rejected the amortization and deferral of
Hynix’s R&D expenses as distortive of the antidumping
calculations required for its final determination. Id. at ___,
248 F. Supp. 2d at 1307-09. Concerning amortization, Commerce
found that the switch in accounting methods resulted in an
undercounting of production costs in the current period of
review, because Hynix’s recent adoption of amortization
necessarily resulted in recognition of only a fraction of Hynix’s
costs. Id. at ___, 248 F. Supp. 2d at 1308. Likewise, Commerce
found that deferral also resulted in an undercounting of
production costs, because the future commercialization dates of
Hynix’s long-term projects were too speculative and could result
in indefinite deferral of certain R&D costs. Id. at ___, 248 F.
Supp. 2d at 1309.
After two remands, the court required Commerce to accept the
amortization of R&D costs as an acceptable accounting method, but
upheld Commerce’s rejection of deferred R&D costs related to
long-term projects. With regard to the amortization issue, the
court concluded that Commerce had failed to establish “that a
change from one permissible accounting method to another
necessarily creates a distortion in the cost of production
calculation[.]” Hynix II, 27 CIT at ___, 295 F. Supp. 2d at
1369. In so concluding, the court rejected Commerce’s use of
hypothetical factual scenarios to demonstrate the per se
Cons. Court No. 00-01-00027 Page 10
distortive effect of switching cost accounting practices from
expensing to amortization. Id. Instead, the court viewed the
relevant section of the antidumping statute, 19 U.S.C. §
1677b(f)(1)(A),7 as requiring Commerce to produce substantial
evidence that the change in cost accounting methods actually
resulted in a distortion of antidumping calculations “in this
period of review for these Plaintiffs under these facts.” Id.
Unable to produce such specific evidence, Commerce revised its
calculations using amortized R&D costs, which the court affirmed.
Hynix III, 28 CIT at ___, 318 F. Supp. 2d at 1319.
With regard to the deferral issue, the court concluded that
Commerce was ultimately able to satisfy 19 U.S.C. §
1677b(f)(1)(A) by providing “a reasoned explanation for rejecting
Plaintiffs’ indefinite deferral of certain R&D expenses.” Hynix
II, 27 CIT at ___, 295 F. Supp. 2d at 1371. The court concurred
with Commerce that Hynix had failed to provide evidence on the
administrative record of the expected timing of revenues from the
deferred R&D costs, making likely the prospect of indefinite
7
This section provides, in pertinent part, that:
Costs shall normally be calculated based on the records
of the exporter or producer of the merchandise, if such
records are kept in accordance with the generally
accepted accounting principles of the exporting country
(or the producing country, where appropriate) and
reasonably reflect the costs associated with the
production and sale of the merchandise.
19 U.S.C. § 1677b(f)(1)(A) (2000).
Cons. Court No. 00-01-00027 Page 11
deferral and thus cost undercounting during the period of review.
Id. at ___, 295 F. Supp. 2d at 1371.
On appeal, the Federal Circuit reversed the court on the
issue of amortization but affirmed as to the issue of deferral.
Hynix IV, 424 F.3d at 1370, 1372. First speaking generally of
the appropriate application of 19 U.S.C. § 1677b(f)(1)(A), the
Hynix IV court stated:
The statute and our prior pronouncements are clear.
The company has the responsibility of showing that its
records are kept in accordance with its home country’s
GAAP. If the company meets this burden, Commerce may
counter with substantial evidence that the records do
not comply with the home country’s GAAP. If the
records withstand this scrutiny, Commerce may show, by
substantial evidence, that the costs do not reasonably
reflect the costs of production and should not,
therefore, be used.
Id. at 1369.
Turning specifically to the issue of amortization, the
Federal Circuit concluded that, “[w]hile Hynix was able to show
that its records compl[ied] with Korean GAAP, Commerce showed by
substantial evidence that Hynix’s reported R&D expenses fail[ed]
to reflect the costs of production.” Id. at 1370. The Hynix IV
court found that, during the period immediately following a
company’s switch in cost accounting methods from expensing to
amortizing, an amount representing only a fraction of the
company’s current costs is necessarily recognized by the
Cons. Court No. 00-01-00027 Page 12
company.8 Id. The Federal Circuit concluded that “[i]t is
facially apparent that a fraction of costs does not accurately
capture full costs[,]” thereby justifying a judgment by Commerce
that a company’s reported costs do not reasonably reflect the
costs of production under 19 U.S.C. § 1677b(f)(1)(A). Id. The
Hynix IV court further indicated that, even in situations where
the “inadequacy of [the cost accounting] method [is] not
transparent,” it would be appropriate to defer to Commerce’s
expert judgment in this area. Id. The Hynix IV court therefore
remanded this issue with instructions for Commerce to revise its
calculations by expensing R&D costs as in Commerce’s original
determination. Id.
Next considering the issue of deferral, the Federal Circuit
found that Commerce produced substantial evidence that Hynix’s
8
For example, in the first year following a switch to a
five-year cost amortization schedule, a company would recognize
only one-fifth of its current expenses, instead of recognizing
one-fifth of its current expenses plus one-fifth of the previous
four years’ expenses as would occur under an established
amortization schedule. In this example, undercounting of current
costs would continue until the fifth year following the switch in
cost accounting methods. See Hynix IV, 424 F.3d 1370. Of
course, this analysis assumes that no radical decreases in the
company’s year-over-year costs occur during the period
immediately following the switch in cost accounting methods - a
factor which Commerce is apparently not required to consider
under Hynix IV’s per se rule that a switch in this cost
accounting practice is necessarily distortive of antidumping
calculations in subsequent periods of review. But see Hynix IV,
424 F.3d at 1374 (Dyk, J., dissenting) (rejecting per se rule and
noting that “Commerce is obligated to base its decision on actual
data establishing distortion, not on hypothetical numbers picked
from thin air”).
Cons. Court No. 00-01-00027 Page 13
cost accounting records did “not comport with the requirements of
its home country’s GAAP[.]” Id. at 1372. The Hynix IV court
accepted Commerce’s conclusion that an investigated company has
the burden of providing sufficient evidence that “its R&D costs
[would] result in future revenues” in order to establish
compliance with home country GAAP and that Hynix failed to do so
on the record of the seventh administrative review. Id. The
Federal Circuit therefore affirmed Commerce’s disallowance of
indefinite deferral of certain R&D costs. Id.
2. Applicability of Hynix IV to this Case
The applicability of Hynix IV to the case at bar is
manifest. Hynix IV plainly clarifies legal principles of direct
relevance to this case - i.e., Commerce’s permissible treatment
of certain cost accounting practices in antidumping proceedings.
These are the very same cost accounting practices at issue in
this case. Indeed, the Federal Circuit expressly stated that its
analysis of the factual scenarios presented in Hynix IV was
intended to “help to clarify the application of [19 U.S.C. §
1677b(f)] further.” Hynix IV, 424 F.3d at 1369. It cannot be
seriously argued that the Federal Circuit did not mean for this
clarification of the law to be applied on a prospective basis by
courts facing similar (much less the same) interpretative issues
under the same section of the antidumping statute. Plaintiffs’
arguments to this effect are therefore without merit.
Cons. Court No. 00-01-00027 Page 14
Moreover, the factual parallels between Hynix IV and this
case cannot be ignored. The cases involve the same cost
accounting practices followed by the same company and subject to
the same treatment by Commerce during the course of antidumping
review. The only difference between the two cases is the timing
of Commerce’s review of the underlying antidumping duty order.
To be sure, this difference is an important one, as material
variations in the records for each administrative review (and
arguments related thereto) could lead to divergent dispositions.
Absent such variations, however, the Court cannot reach an
outcome other than that legally compelled by Hynix IV. See Elkem
Metals Co. v. United States, 28 CIT ___, ___, Slip Op. 04-36 at 6
(2004) (finding an issue resolved as a matter of law by Federal
Circuit in earlier review).
C. The Court Must Revise Its Previous Decisions and Remand to
Bring the Instant Case into Conformity with Hynix IV on the
Issue of R&D Cost Amortization Only
The sole remaining question before the Court is therefore
the appropriate next step in this long-litigated case in light of
Hynix IV. In Commerce and Micron’s view, Hynix IV is virtually
identical to this case and thus requires the Court to revise its
prior decisions and reinstate Commerce’s original findings with
respect to both amortization and deferral of Plaintiffs’ R&D
costs. Plaintiffs maintain that Hynix IV did not announce
Cons. Court No. 00-01-00027 Page 15
conclusions of law which require a change in the Court’s prior
fact-based holdings with regard to either issue.
The Court finds that Hynix IV announced legal conclusions
which require modification of the Court’s prior decisions only
with respect to the first issue - the amortization of R&D costs.
Because the Court discerns an important factual difference
between this case and Hynix IV on the issue of R&D cost deferral,
the Court finds that application of the legal conclusions of
Hynix IV does not upset (and in fact reinforces) the Court’s
prior decisions with regard to this second issue.
1. Amortization of Plaintiffs’ R&D Costs
With regard to the amortization issue, it is uncontroverted
that Plaintiffs switched their cost accounting method from
expensing to amortization during the fifth administrative review.
Because Hynix IV concluded that such a recent switch in these
cost accounting practices is facially distortive of antidumping
calculations, Commerce was entitled to reject Plaintiffs’
amortized R&D costs without any additional factual
substantiation. Commerce’s original findings to this effect
therefore must be reinstated; the Court’s previous decisions to
the contrary must be, and accordingly are, modified.
2. Deferral of R&D Costs
With regard to the deferral issue, a similarly
straightforward application of Hynix IV is foreclosed by certain
Cons. Court No. 00-01-00027 Page 16
factual findings expressly made by Commerce in this case. In
Hyundai I, the Court noted that “Commerce does not disagree that
the [deferral] accounting methodology is in accordance with
Korean GAAP[.]” Hyundai I, 28 CIT at ___, 342 F. Supp. 2d at
1158. In other words, the Court found that Commerce had conceded
that Plaintiffs’ R&D cost deferral was in accordance with Korean
GAAP.9 This is a critical factual distinction between this case
and Hynix IV overlooked by Commerce and Micron. In Hynix IV,
Commerce was able to demonstrate by substantial evidence to the
Federal Circuit that “Hynix’s records do not comport with the
requirements of its home country’s GAAP[.]” Hynix IV, 424 F.3d
at 1372.10 Unlike Hynix IV, Commerce did not attempt to prove
here that Plaintiffs had failed to meet the requirements of their
home country GAAP; rather, Commerce expressly found the opposite
to be true. As such, the Federal Circuit’s specific disposition
of the R&D cost deferral issue in Hynix IV on the basis of
noncompliance with home country GAAP - an argument neither raised
9
See also Final Results, 64 Fed. Reg. at 69699 (“We agree
with Hyundai and LG [Semicon] that their method of amortizing and
deferring R&D costs is permissible with Korean GAAP . . . .”).
The Court has carefully reviewed the First Remand Results and the
Second Remand Results and has found no indication of Commerce’s
intention to eschew its original factual finding on this issue.
10
Commerce was entitled and, according to the Federal
Circuit, chose to make different arguments and factual
concessions in this case than in Hynix IV. But see Hynix I, 27
CIT at ___, 248 F. Supp. 2d at 1308 (noting that Commerce
“concedes that Plaintiffs’ method of amortizing and deferring R&D
costs is permissible under Korean GAAP”).
Cons. Court No. 00-01-00027 Page 17
nor proven here by Commerce - is not applicable to this case
under well established principles of administrative law. It is
axiomatic that the Court’s review is defined by Commerce’s
determination below. See SEC v. Chenery Corp., 332 U.S. 194, 196
(1947) (“[A] reviewing court, in dealing with a determination or
judgment which an administrative agency alone is authorized to
make, must judge the propriety of such action solely by the
grounds invoked by the agency.”). “Chenery stands for the
proposition that a court may not make its own factual findings to
support an agency’s determination.” Defenders of Wildlife v.
Hogarth, 330 F.3d 1358, 1368 (Fed. Cir. 2003). Because the Court
would essentially have to rewrite Commerce’s factual findings in
order to apply the same legal principles used by the Federal
Circuit to resolve the R&D cost deferral issue in Hynix IV, the
Court cannot agree that Hynix IV controls this case in the way
Commerce and Micron contend. For this reason, the Court declines
to modify its previous decisions on this issue.
Moreover, in the Court’s view, Hynix IV’s general guidance
on the application of 19 U.S.C. § 1677b(f) actually supports the
analytical framework employed in the Court’s previous decisions
concerning this issue. Commerce’s arguments in Hyundai I and
Hyundai II focused on the agency’s contention that Plaintiffs had
failed to offer “reasonable evidence” that the deferred R&D costs
were more appropriately recognized in future periods rather than
Cons. Court No. 00-01-00027 Page 18
the current period of review. First Remand Results at 6.11 The
Court rejected Commerce’s arguments on the basis of its holding
that Commerce, not Plaintiffs, bore the burden of proof on this
issue - i.e., the burden of providing substantial evidence that
R&D costs deferred in accordance with home country GAAP in fact
benefitted (and thus should be reflected in the cost accounting
for) the current period of review. Hyundai II, 29 CIT at ___,
Slip Op. at 22-23. Hynix IV confirms this holding. In Hynix IV,
the Federal Circuit made clear that, where an investigated
company’s cost accounting records withstand scrutiny of their
compliance with home country GAAP, it is the obligation of
Commerce to “show, by substantial evidence, that the costs do not
reasonably reflect the costs of production and should not,
therefore, be used.” Hynix IV, 424 F.3d at 1369. This case
presents exactly that scenario. Because the Court employed the
burden of proof dictated by Hynix IV, the Court finds no legal
error in its analytical approach to this issue.
Nevertheless, the Court acknowledges that Commerce’s
argument on the issue of R&D cost deferral is identical in form
to Commerce’s argument, accepted by the Federal Circuit in Hynix
11
This argument is based on the second half of the two-part
statutory requirement for use of exporter/producer cost
accounting records in antidumping calculations. See 19 U.S.C. §
1677b(f)(1)(A) (2000) (for use in antidumping calculations,
requiring investigated company’s cost records to (1) be kept in
accordance with home country GAAP and (2)“reasonably reflect the
costs associated with the production and sale of the
merchandise”).
Cons. Court No. 00-01-00027 Page 19
IV, concerning the distortive effect of switching cost accounting
methods from expensing to amortizing. The Hynix IV court allowed
Commerce to satisfy its evidentiary burden by employing a per se
rule concerning the distortive effect of such a switch. In this
case, Commerce seeks a similar rule for situations involving
switches from expensing to deferral. However, the Court does not
understand Hynix IV to have created the broad rule that all
switches in cost accounting methods are per se distortive of
antidumping calculations. Such a rule seems particularly inapt
here: it is not “facially apparent” that a switch to deferral
necessarily results in cost undercounting in the current period
of review, Hynix IV, 424 F.3d at 1370, because Plaintiffs’ home
country GAAP allows deferral only if “certain conditions are
satisfied, namely that there be a reasonable expectation of
future benefit.” Id. at 1372.
Finally, while the Court is mindful that “Commerce’s
determinations are entitled to deference” in the complex area of
antidumping calculations, id. at 1370, such deference is
appropriate only “so long as there is substantial evidence to be
found in the record as a whole.” NLRB v. Brown, 380 U.S. 278,
292 (1965); see also Anderson v. Dep’t of Transp., FAA, 827 F.2d
1564, 1577 (Fed. Cir. 1987) (Baldwin, J., dissenting) (“Although
deference is to be accorded to an administrative determination,
we, the reviewing court, retain a responsibility to scrutinize
the entire record and to reverse or remand a decision which is
Cons. Court No. 00-01-00027 Page 20
not supported by substantial evidence.”). Here, the Court has
concluded that Commerce did not meet its evidentiary burden;
therefore, deference to Commerce’s determination on the issue of
R&D cost deferral is not warranted.
Accordingly, absent a showing of previous manifest error,
see Former Employees of Quality Fabricating, 28 CIT at ___, 353
F. Supp. 2d at 1288, the Court declines to revisit its
conclusions on the issue of R&D cost deferral.
III. CONCLUSION
The Court concludes that it is a sound use of its discretion
under USCIT Rule 59(a) to revise its previous decisions in order
to bring this case into conformity with Hynix IV. This case is
therefore remanded for Commerce to reinstate its original
findings regarding R&D cost amortization and recalculate the
antidumping duty margins. A separate order will be issued
accordingly.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Dated: January 18, 2006
New York, New York