Ta Chen Stainless Steel Pipe, Ltd. v. United States

Slip Op. 04-46

UNITED STATES COURT OF INTERNATIONAL TRADE

________________________________________
:
TA CHEN STAINLESS STEEL PIPE, LTD.,
:
Plaintiff,
:
v.
:
UNITED STATES,
:
Defendant,
:
and
:
ALLOY PIPING PRODUCTS, INC., ET AL.,
:
Defendant-Intervenors.
________________________________________: Consolidated
________________________________________ Court No. 01-00027
:
ALLOY PIPING PRODUCTS, INC.,
FLOWLINE DIVISION, MARKOVITZ :
ENTERPRISES, INC., GERLIN, INC. and
TAYLOR FORGE STAINLESS, INC., :

Plaintiffs, :

v. :

UNITED STATES, :

Defendant. :
________________________________________

[Final Results of U.S. Department of Commerce’s administrative review of antidumping duty order
remanded for further action consistent with this opinion.]

Decided: May 4, 2004
Court No. 01-00027 Page 2

Miller & Chevalier Chartered (Peter J. Koenig and Kristen Smith), for Plaintiff Ta Chen
Stainless Steel Pipe, Ltd.

Collier Shannon Scott, PLLC (David A. Hartquist and Jeffrey S. Beckington), for
Plaintiffs/Defendant-Intervenors Alloy Piping Products, Inc., et al.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice (Lucius B. Lau); Berniece A. Browne,
Senior Counsel, Office of Chief Counsel for Import Administration, U.S. Department of Commerce,
Of Counsel; for Defendant United States.

OPINION

RIDGWAY, Judge:

This consolidated appeal contests the final results of the administrative review of the

antidumping duty order covering certain stainless steel butt-weld pipe fittings from Taiwan,

conducted by the U.S. Department of Commerce for the period of June 1998 through May 1999. See

Final Results of Antidumping Administrative Review: Certain Stainless Steel Butt-Weld Pipe

Fittings From Taiwan, 65 Fed. Reg. 81,827 (Dec. 27, 2000) (“Final Results”), adopting the Issues

and Decision Memorandum (Dec. 15, 2000), Pub. Doc. 105 (“Decision Memo”).

Jurisdiction is predicated on 28 U.S.C. § 1581(c) (1994).1 The Commerce Department’s

findings, conclusions and determinations in the Final Results must be sustained unless they are

“unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19

U.S.C. § 1516a(b)(1)(B).

1
All statutory citations are to the 1994 version of the U.S. Code. However, the pertinent text
of the cited provisions remained the same at all times relevant herein.
Court No. 01-00027 Page 3

Pending before the Court are two motions for judgment on the agency record, both of which

challenge certain aspects of the Final Results.

Ta Chen Stainless Steel Pipe, Ltd. (“Ta Chen”) – a Taiwanese producer and exporter of

fittings subject to the antidumping duty order and the administrative review here at issue – is the

plaintiff in one of the two cases consolidated into this action. Ta Chen’s Motion for Judgment on

the Agency Record contests the Commerce Department’s determination that Ta Chen had agreed

to reimburse its U.S. importer for antidumping duties – a determination which caused the agency to

double Ta Chen’s dumping margin. See Plaintiff’s Memorandum of Law in Support of Motion for

Judgment on the Agency Record (“Ta Chen Brief”) at 5-22. In addition, Ta Chen disputes the

Commerce Department’s calculation of profit for the company’s constructed export price (“CEP”)

sales, as well as the agency’s decision to deny the company a CEP offset adjustment. Ta Chen Brief

at 22-33, 33-39. Ta Chen concludes that – if the asserted agency errors are corrected – Commerce

Department regulations require that the antidumping duty order against it be revoked, because the

company’s dumping margin falls to 0% for the period of review at issue here, and because the

company has not been found to be dumping in prior years. Ta Chen Brief at 39-40; 19 C.F.R. §

351.222(b) (2000).2

The other pending motion was filed by four domestic fittings producers (the “Domestic

Producers”) who commenced their own action challenging the Final Results, which was consolidated

2
All citations to agency regulations are to the 2000 version of the Code of Federal
Regulations. However, the pertinent text of the cited provisions remained the same at all times
relevant herein.
Court No. 01-00027 Page 4

with Ta Chen’s case (in which they appear as Defendant-Intervenors).3 The Domestic Producers’

motion is much more limited, challenging only the Commerce Department’s choice of financial

statements used to calculate U.S. indirect selling expenses. The Domestic Producers charge that the

data used by the agency understate those expenses and, thus, the Final Results understate Ta Chen’s

dumping margin. See Domestic Producers’ Memorandum of Law in Support of Motion for

Judgment on the Agency Record (“Dom. Prod. Brief”) at 9-21; Defendant-Intervenors’ Reply to

Defendant’s Memorandum in Partial Opposition to the Motions for Judgment Upon the Agency

Record Filed by Plaintiff and Defendant-Intervenors (“Dom. Prod. Reply Brief”) at 4-12.

Defendant, the United States (“the Government”), contends that the Final Results should be

sustained in all respects, save one. Thus, the Government – joined by the Domestic Producers – urge

that the reimbursement issue be remanded to the Commerce Department, and that Ta Chen’s motion

be denied in all other respects. See Defendant’s Memorandum in Partial Opposition to the Motions

for Judgment Upon the Agency Record (“Gov’t Brief”) at 32-34 (urging remand on reimbursement

issue), 18-32, 34-55; Response of Defendant-Intervenors to Ta Chen Stainless Pipe Co., Ltd.’s

Motion for Judgment on the Agency Record (“Dom. Prod. Response Brief”) at 2 n.2 (urging remand

on reimbursement issue), 8-32. And the Government asserts that the Domestic Producers’ motion

should be denied in its entirety. Gov’t Brief at 55-61.

For the reasons set forth below, the Domestic Producers’ motion is denied. Ta Chen’s

motion is granted in part, and this action is remanded to the Department of Commerce for

3
The Domestic Producers – Alloy Piping Products, Inc.; Flowline Division, Markovitz
Enterprises, Inc.; Gerlin, Inc.; and Taylor Forge Stainless, Inc. – were the four domestic petitioners
in the administrative review here at issue.
Court No. 01-00027 Page 5

reconsideration of its determinations on the alleged reimbursement agreement and the calculation

of constructed export price (“CEP”) profit.

I. Background

A. The Legal Framework

Dumping takes place when goods are imported into the U.S. and sold at a price lower than

their “normal value” – i.e., the foreign market value of the goods. 19 U.S.C. §§ 1673, 1677(34).

The difference between the normal value and the U.S. price is the “dumping margin.” 19 U.S.C. §

1677(35); See generally Antidumping Manual, Chap. 6 at 1-2 (Dept. of Comm., Jan. 22, 1998) (“AD

Manual”). When normal value is compared to the U.S. price and dumping is found, antidumping

duties equal to the dumping margin may be imposed. 19 U.S.C. § 1673(2)(B).

Normal value is calculated using the exporting market price (i.e., the market where the goods

are produced), an appropriate third country market price, or the cost of production of the goods. 19

U.S.C. § 1677b. The U.S. price is calculated in one of two ways – export price (“EP”) or constructed

export price (“CEP”) – depending on the relationship between the producer or exporter and the U.S.

purchaser. 19 U.S.C. § 1677a. Where the U.S. purchaser is unaffiliated with the producer or

exporter, the U.S. price is based on the export price (EP) (i.e., the transaction price). 19 U.S.C. §

1677a(a). Where the U.S. purchaser is affiliated with the producer or exporter, the U.S. price is

based on the first sale from the affiliated purchaser to an unaffiliated purchaser in the U.S. This is

the basis for constructed export price (CEP). 19 U.S.C. § 1677a(b).

Because the sale prices used to determine normal value and the U.S. price (either EP or CEP),

occur at different points in the chain of commerce, and under different circumstances, certain
Court No. 01-00027 Page 6

adjustments are made to attempt to make them comparable. For example, packing expenses, duties

and taxes, and shipping and handling costs may affect normal value and the U.S. price differently,

and therefore could preclude the fair comparison of prices, distorting the dumping margin. Thus,

at least in theory, adjustments to account for such costs ensure “apples to apples” price comparisons.

Certain other special adjustments are made when the price to be calculated is CEP. Among

these are adjustments to account for selling expenses incurred in the U.S. by the entity affiliated with

the foreign producer or exporter, such as commissions, guarantees and warranties, and credit

expenses. 19 U.S.C. § 1677a(d)(1).

1. CEP Profit

In addition to the adjustments for selling expenses, the CEP is reduced to account for the

portion of profit attributable to those selling expenses. 19 U.S.C. § 1677a(d)(3). In calculating this

CEP profit adjustment, the Commerce Department determines the “total actual profit” earned on all

sales, foreign and domestic, of the subject goods. 19 U.S.C. § 1677a(f)(2)(D). To that end, the

agency calculates the “total expenses,” foreign and domestic, incurred in the production and sale of

the goods. See 19 U.S.C. § 1677a(f)(2)(C). Total profit is what remains once expenses are

subtracted from revenue. See Ausimont SPA v. United States, 25 CIT___,___, 2001 WL 1230596

at *20 (2001).

To calculate the portion of profit attributable to U.S. selling expenses – i.e., the CEP profit

– the total actual profit figure is multiplied by the “applicable percentage.” 19 U.S.C.§ 1677a(f)(1).

This statutorily governed figure is arrived at by dividing the “total U.S. expenses” – the selling
Court No. 01-00027 Page 7

expenses incurred in the U.S.4– by the “total expenses.” 19 U.S.C. § 1677a(f)(2). Thus, the amount

of total profit to be designated as U.S. profit is based on the ratio of U.S. expenses to total expenses.

This calculation may be expressed as an equation:

Total profit allocated = Total Actual Profit x Total U.S. Expenses
to U.S. expenses Total Expenses

2. Level of Trade/CEP Offset

The Commerce Department also must make adjustments to the CEP to account for any

differences in the “level of trade” (“LOT”) between the exporting market and the U.S. market that

affect the comparability of prices. 19 U.S.C. § 1677b(7)(A). Differences in LOT occur where, for

example, the sales in the foreign market are made at different marketing stages from the U.S. market,

such that there is a “difference in the actual functions performed by the sellers” in each market.

Statement of Administrative Action for the Uruguay Round Agreements Act of 1994, H.R. Doc. No.

103-316 at 829 (1994) (“SAA”), reprinted in 1994 U.S.C.C.A.N. 4040, 4167; 19 C.F.R. §

351.412(c)(2).

A special adjustment called the “CEP offset” must be made when the agency determines that

the LOT of the exporting market (i.e., normal value) is at a more advanced stage of distribution than

the LOT of the U.S. market (i.e., constructed export price), and that – despite the best efforts of the

producer or exporter – the available data do not provide an adequate basis upon which to determine

whether the difference in the levels of trade affects the comparability of prices. 19 U.S.C. §

4
In some circumstances, other expenses not relevant here may also be included in “total U.S.
expenses.” See 19 U.S.C. § 1677a(f)(2)(B).
Court No. 01-00027 Page 8

1677b(a)(7)(B); 19 C.F.R. § 351.412. In such cases, the agency reduces normal value by the amount

of indirect selling expenses for the goods at issue in the foreign market, capped by the amount of

indirect expenses used in determining constructed export price (in the U.S. market). Id.

B. The Facts of This Case

Ta Chen is a Taiwanese producer and exporter of stainless steel butt-weld pipe fittings

subject to an antidumping duty order dating from 1993.5 See Amended Final Determination and

Antidumping Duty Order: Certain Welded Stainless Steel Butt-Weld Pipe Fittings From Taiwan,

58 Fed. Reg. 33,250 (June 16, 1993). Ta Chen sells its fittings to its U.S. subsidiary, Ta Chen

International (“TCI”), located in California. TCI, in turn, sells the fittings to unaffiliated U.S.

customers. Non-Pub. Doc. 1. As the importer of record, TCI is responsible for any duties on the

fittings.

At the request of both Ta Chen and the Domestic Producers (who were petitioners in the

proceedings before the agency), the Commerce Department conducted an administrative review of

the antidumping order for the period of June 1, 1998 through May 31, 1999. Pub. Docs. 2, 3.6 In

5
Stainless steel butt-weld pipe fittings are manufactured in a variety of shapes, including
elbows, tees, reducers, stub-ends and caps. They are widely used in piping systems subject to, for
example, high pressure or extreme temperatures, and in systems where contamination and/or
corrosion are concerns. Final Results at 81,828.
6
The administrative record in this case consists of two sections, designated “Public” and
“Business Proprietary,” respectively. The “Public” section consists of copies of all documents in the
record of this action, with all confidential information redacted. The “Business Proprietary” section
consists of complete, unredacted copies of only those documents that include confidential
information.
Court No. 01-00027 Page 9

the preliminary results of that review, the Commerce Department determined that all of Ta Chen’s

U.S. sales should be classified as constructed export price (“CEP”) sales, because all of the

company’s sales to unaffiliated buyers occurred in the United States, between Ta Chen’s subsidiary

TCI and U.S. customers. See Preliminary Results of Antidumping Duty Review and Intent To Not

Revoke in Part: Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan, 65 Fed. Reg. 41,629,

41,630-31 (July 6, 2000) (“Preliminary Results”).

Because all of Ta Chen’s sales were classified as CEP sales, certain additional adjustments

to the sales prices were required, to account for the selling expenses and profit incurred by TCI. See

generally 19 U.S.C. § 1677a(d); section I.A, supra. However, because the Commerce Department

found that “the [level of trade] in the home market [i.e., Taiwan] matched the [level of trade] of the

CEP transactions [i.e. the U.S. sales],” the agency did not make a CEP offset adjustment to normal

value. Preliminary Results at 41,632; 19 U.S.C. § 1677b(a)(7)(B).

After conducting verifications of Ta Chen’s data in Taiwan and in California, the Commerce

Department issued its verification reports. Non-Pub. Docs. 41, 43. Thereafter, Ta Chen and the

Domestic Producers filed their administrative case briefs with the agency. The Domestic Producers’

case brief disputed, inter alia, the agency’s calculation of U.S. indirect selling expenses using TCI’s

October 31, 1998 income statement (rather than the 1999 statement). See Non-Pub. Doc. 46 at 6.

Citations to documents in the “Public” section of the administrative record are noted as “Pub.
Doc. ____.” Citations to documents in the “Business Proprietary” section are noted as “Non-Pub.
Doc. ____ .” All page numbers refer to the original, internal pagination of the documents.
Court No. 01-00027 Page 10

Ta Chen’s case brief challenged the Commerce Department’s CEP profit calculation, but made no

mention of the agency’s decision to deny Ta Chen a CEP offset adjustment to normal value. See

Non-Pub. Doc. 45.

Several weeks after the parties’ case briefs were filed, the Commerce Department extended

the deadline for completion of the administrative review, to allow it to address “a new issue on

which interested parties [had] not had the opportunity to comment.” Pub. Doc. 89. The Department

asserted that its examination of various financial statements submitted by Ta Chen and TCI

evidenced an agreement under which “the president of Ta Chen and TCI has agreed to reimburse TCI

for dumping duties” imposed on Ta Chen’s fittings, although the agency conceded that “such

reimbursement may not have yet taken place.” Pub. Doc. 90. See generally Notice of Postponement

of Final Results of Antidumping Duty Administrative Review: Certain Stainless Steel Butt-Weld

Pipe Fittings From Taiwan, 65 Fed. Reg. 67,348 (Nov. 9, 2000).

Ta Chen filed comments with the Commerce Department responding to the agency’s

allegations. Pub. Doc. 92. But the company’s submission was rejected because it also addressed

the Department’s decision to deny the company a CEP offset adjustment – an issue beyond the scope

of the agency’s request for comments. Pub. Doc. 95. In addition, the agency objected to Ta Chen’s

inclusion of “untimely new factual information” relating to the reimbursement issue. Pub. Doc. 96.

That information included documentary evidence which, according to Ta Chen, proves that there

was no agreement to reimburse TCI and that there had been no reimbursement of TCI’s antidumping
Court No. 01-00027 Page 11

duties during the period of review. See Non-Pub. Doc. 49. Ta Chen filed a revised submission,

deleting all discussion of the CEP offset issue, and omitting the documents supporting its arguments

on the issue of reimbursement. Non-Pub. Doc. 51.

The Final Results published by the Commerce Department found that evidence pointing to

a reimbursement agreement dating from 1992 to 1994 raised “a rebuttable presumption that the

agreement [was] still in effect during [this period of review].” Decision Memo at 9. The agency

therefore concluded that the dumping margin assigned to Ta Chen should be doubled. Decision

Memo at 12.

The Final Results also rejected Ta Chen’s request that the Commerce Department make

certain adjustments for imputed credit and inventory carrying costs in calculating CEP profit.

Reviewing Policy Bulletin 97.1 (which explains the agency’s methodology for such calculations),

the Commerce Department stated that it does not include imputed interest in the calculation of CEP

profit because it already accounts for actual interest. Decision Memo at 25-26. Referring to the

policy bulletin, the agency further stated that accepted accounting principles only permit the

deduction of actual booked expenses – not imputed expenses – in determining profit. Id.

Finally, in calculating U.S. indirect selling expenses, the Commerce Department continued

to rely on the figures in TCI’s October 31, 1998 income statement, rather than the October 31, 1999

statement urged by Domestic Producers. Decision Memo at 28. Explaining that it prefers “to utilize

actual, verified data for . . . final results,” the Department pointed out that the figures in TCI’s 1998

statement had been verified by the agency, and that the Domestic Producers’ proposed calculation

“incorporate[d] an estimate of the antidumping legal fees and Section C expenses reported elsewhere
Court No. 01-00027 Page 12

for the fiscal year ending October 31, 1999.” Decision Memo at 29 (emphasis added). In addition,

the agency stated that “[b]asing [U.S. indirect selling expenses] on the 1998 fiscal year data is . . .

consistent with the Department’s use of the verified 1998 fiscal year data for Ta Chen’s G&A

[general and administrative] and interest expenses.” Decision Memo at 29.

The Final Results were challenged by Ta Chen, as well as the Domestic Producers, in two

separate appeals, which were consolidated into this action.

II. Analysis

A. The Determination on Reimbursement

The Commerce Department’s regulations contemplate that, in certain cases, antidumping

duties may be imposed that exceed the actual dumping margins found. Where the Commerce

Department finds that an exporter or producer either paid antidumping (or countervailing) duties

directly on behalf of the importer or reimbursed the importer for such duties, the regulations provide

that the amount of the payment is to be deducted from the export price or constructed export price.

19 C.F.R. § 351.402(f). This effectively increases the dumping margin by lowering the U.S. price

(i.e., the export price or constructed export price), thus increasing the difference between the U.S.

price and normal value.

As discussed in section I.B above, the Final Results here at issue found that evidence of a

reimbursement agreement dating from 1992 to 1994 raised “a rebuttable presumption that the

agreement [was] still in effect during [this period of review].” Decision Memo at 7-8. Relying on

its reimbursement regulation, the Commerce Department therefore doubled the dumping margin
Court No. 01-00027 Page 13

assigned to Ta Chen. Decision Memo at 9. Ta Chen attacks the agency’s reimbursement

determination on evidentiary, procedural, and legal grounds. See generally Ta Chen Brief at 5-22.

First, Ta Chen argues that the agency’s reimbursement determination is unsupported by any

evidence, much less “substantial evidence.” See generally Ta Chen Brief at 5-12. Ta Chen argues,

inter alia, that the mere existence of an agreement by the president of Ta Chen and TCI to reimburse

TCI for antidumping duties incurred from 1992 through 1994 cannot constitute evidence that

reimbursement occurred during this period of review. See Ta Chen Brief at 6. Ta Chen points to

its certified statement, submitted to the agency, attesting to the absence of any reimbursement

agreement covering this period of review. See Ta Chen Brief at 7 (citing Non-Pub. Doc. 49). Ta

Chen emphasizes that the Commerce Department itself determined – in the administrative review

following the review at bar – that the reimbursement agreement on which the agency here relies “was

limited solely to the 1992-1994 [periods of review].” Ta Chen Brief at 7 (quoting Preliminary

Results of Antidumping Administrative Review: Certain Stainless Steel Butt-Weld Pipe Fittings

From Taiwan, 66 Fed. Reg. 36,555, 36,559 (July 12, 2001)).

Second, Ta Chen asserts that – as a matter of procedure – the Commerce Department abused

its discretion when it rejected the documentary evidence proffered by the company to prove that there

was no reimbursement agreement and that TCI’s antidumping duties had not been reimbursed during

the relevant period of review. Ta Chen argues that the agency failed to even raise the reimbursement

issue until very late in the proceeding, and then unreasonably denied the company the opportunity

to present evidence on the issue on the ground that the evidence was “untimely.” Ta Chen Brief at

12-13. Ta Chen concludes that – although the Commerce Department stated that its determination
Court No. 01-00027 Page 14

was based on a rebuttable presumption that the earlier reimbursement agreement continued in effect

during the period of review – the agency in fact imposed an illegal, irrebuttable presumption, by

denying Ta Chen the opportunity to present contradictory evidence. Ta Chen Brief at 14-16.

Finally, Ta Chen challenges – as a matter of law – the validity of the reimbursement

regulation itself. Specifically, Ta Chen contends that, because the regulation authorizes the

imposition of antidumping duties in excess of the dumping margins actually calculated, the

regulation contravenes the U.S. antidumping statute, as well as the United States’ international

obligations. According to the company, under both domestic and international law, dumping duties

may offset only the amount of any dumping, and no more. Ta Chen Brief at 20-22.

The Government mounts a vigorous defense of the legality of the Commerce Department’s

reimbursement regulation, arguing – in short – that the regulation is a reasonable interpretation of

the antidumping statute that has been endorsed at least implicitly (if not explicitly) by Congress. See

Gov’t Brief at 19-32.7 However, even the Government now concedes that Ta Chen was “denied a

meaningful opportunity to rebut [the Commerce Department’s] presumption of reimbursement [as

a result of] the agency’s decision to reject the factual information Ta Chen attempted to submit . .

. .” Gov’t Brief at 13. The Government – joined by the Domestic Producers – therefore urges that

the reimbursement issue be remanded to the Commerce Department, and that “the Court . . . defer

ruling upon the question whether Commerce’s finding of reimbursement is supported by substantial

7
In their briefs filed with the Court, the Domestic Producers take no position on the legality
of the reimbursement regulation. See Dom. Prod. Response Brief, passim.
Court No. 01-00027 Page 15

evidence and otherwise in accordance with law pending the results of the remand.” Gov’t Brief at

32-34; Dom. Prod. Response Brief at 2 n.2.

Considerations of judicial economy and judicial restraint counsel remand where, as here, that

course may moot a significant legal issue – in this case, the legality of the reimbursement regulation.

On remand, the Commerce Department shall reconsider the bases for its determination concerning

the alleged reimbursement agreement, in light of any relevant factual evidence, as well as the

agency’s own findings, conclusions, and determinations in other matters (including its determination

– in the administrative review following the review at bar – that the reimbursement agreement on

which it here relies was limited solely to the 1992-1994 periods of review), and the applicable law.8

8
The Government argues, in essence, that the reimbursement regulation is a legitimate
exercise of the Commerce Department’s authority under the statute to promulgate implementing
regulations. But the matter is not as open-and-shut as the Government suggests.

The Government’s argument implicitly assumes that the antidumping statute is, on its face,
silent on the imposition of duties that exceed the actual amount of dumping. However, the statute
expressly authorizes the Commerce Department to impose antidumping duties “in an amount equal
to the amount by which normal value exceeds the export price (or the constructed export price) of
the merchandise” (i.e., in an amount equal to the dumping margin) – language that can easily be read
to preclude the imposition of duties that exceed the dumping margin. 19 U.S.C. § 1673a(1)(B).
Moreover, the statutory scheme addresses in detail the agency’s calculation of normal value, export
price, and constructed export price, including the adjustments to be made in those calculations.
Indeed, the statute specifically enumerates – in lists that appear to be exhaustive, rather than merely
illustrative – those adjustments that the agency is authorized to make. See 19 U.S.C. §§ 1677a,
1677b. Nowhere in the statute is there language authorizing an adjustment to normal value, export
price, or constructed export price, to account for the reimbursement of dumping duties to an
importer.

Recent developments – in Congress, in the courts, and before the World Trade Organizations
– may also bear on the legality of the Commerce Department’s reimbursement regulation (raising
issues such as whether the imposition or distribution of duties in excess of the actual dumping
margin effectively converts the remedial antidumping regime into a punitive scheme).
Court No. 01-00027 Page 16

B. The Calculation of CEP Profit

In determining Ta Chen’s constructed export price (CEP), the Commerce Department was

required to calculate the percentage of profit attributable to the U.S. selling expenses of Ta Chen’s

subsidiary, TCI. As discussed in section I.A above, CEP profit is determined by multiplying total

actual profit by the ratio of total U.S. expenses to total expenses.

In applying the statutory equation in this case, the Commerce Department calculated “total

actual profit” by totaling the profit for all subject fittings sold in the U.S. and in the exporting

market, reflecting only actual, booked expenses – that is, imputed credit and inventory carrying costs

were not included. Imputed credit and inventory carrying costs were excluded as well in calculating

the “total expenses” denominator of the statutory ratio. In contrast, the same imputed credit and

inventory carrying costs were included in “total U.S. expenses,” the numerator of the statutory ratio.

See Gov’t Brief at 34-35.9

Ta Chen attacks the Commerce Department’s calculation of the CEP profit adjustment as

unsupported by substantial evidence and otherwise not in accordance with law. See generally Ta

Chen Brief at 22-33. Ta Chen argues that the Department’s CEP profit calculation resulted in an

overstatement of the company’s profit deduction, thus significantly increasing its dumping margin.

Ta Chen faults the agency for, inter alia, failing to include imputed credit and inventory carrying

9
Imputing credit costs is based on the time value of money. Thus, for example, where goods
are warehoused for longer periods prior to sale, the opportunity cost is higher than where the seller
receives payment soon after production. Similarly, where a seller extends longer terms of payment,
greater credit expenses are incurred. These expenses are usually incorporated into the price of the
goods. See, e.g., Import Administration Policy Bulletin 98.2 (Feb. 23, 1998).
Court No. 01-00027 Page 17

costs in both the “total actual profit” and “total expenses” portions of the CEP profit calculation.

Ta Chen asserts that the Commerce Department essentially “ignored[d] enormous . . . inventory

carrying and credit costs,” making U.S. sales appear overly profitable in comparison to home market

sales. Ta Chen Brief at 25.

The Government and the Domestic Producers dispute Ta Chen’s charges, and urge that the

Commerce Department’s CEP profit calculation be sustained. See generally Gov’t Brief at 34-46;

Def. Prod. Response Brief at 19-32. The Government dismisses Ta Chen’s claim that the

methodology used to calculate the CEP profit adjustment distorted the CEP profit allocation, and

maintains that the methodology here was consistent with established agency practice. Gov’t Brief

at 38-40.

The Government asserts that the financial data used to calculate “total actual profit” already

include “net interest expenses” (i.e., actual interest expenses) and thus “there is no need to include

imputed interest in determining total profit.” Gov’t Brief at 39. The Government states that

imputed expenses are excluded from the “total expenses” calculation since, as with “total actual

profit,” those expenses are already reflected in the net expenses used in the CEP profit calculation.

Gov’t Brief at 40. Thus, according to the Government, excluding imputed expenses from both total

actual profit and total expenses avoids double-counting of interest expenses. Id. Seeking to further

bolster the agency’s case on exclusion of imputed expenses from the total actual profit and total

expenses calculations, the Government asserts that “normal accounting principles only permit the

deduction of actual book expenses – not imputed expenses – for purposes of determining profit.”

Gov’t Brief at 42.
Court No. 01-00027 Page 18

The Government states that – although the Commerce Department excludes imputed

expenses elsewhere in the CEP profit equation – it includes such expenses in the “total U.S.

expenses” numerator because it considers them to be selling expenses within the meaning of the

statute. Gov’t Brief at 38.

Although the courts have had several occasions to address the Commerce Department’s

calculation of CEP profit, the precedent is – as the Government so delicately puts it – “mixed.”

Gov’t Brief at 43. The parties therefore point to different lines of cases in their efforts to support

their positions.

Ta Chen relies on a line of authority in which courts have found that the plain language of

the CEP statute makes clear that “total U.S. expenses” is a subset of “total expenses.” See, e.g., SNR

Roulements v. United States, 24 CIT 1130, 1138, 118 F. Supp.2d 1333, 1340 (2000).10 Thus, those

courts have reasoned, any expenses in the U.S. expenses numerator must logically also be included

in the total expenses denominator. By that logic, that line of cases has consistently held that, when

the Commerce Department includes imputed expenses in “total U.S. expenses,” “[imputed expenses]

must be included in ‘total expenses’ as well.” SNR Roulements at 1341.

Thai Pineapple took a rather different approach vis-à-vis the Commerce Department’s

exclusion of imputed expenses from “total actual profit” and “total expenses.” The court there noted

the agency’s obligation to properly allocate profit to U.S. sales. Focusing on the “total actual profit”

side of the equation, the court found “some ambiguity” in the language of the CEP statute, such that

10
See also, Fag Italia, S.p.A. v. United States, 24 CIT 1311, 1318, 2000 WL 1728317 at *6
(2000); Fag Kugelfischer Georg Schafer AG v. United States, 25 CIT ___, ___, 131 F. Supp. 2d 104,
114 (2001); NTN Bearing Corp. of America, 25 CIT ___, ___, 155 F. Supp. 2d 715, 743 (2001).
Court No. 01-00027 Page 19

“it may not be an unreasonable interpretation to conclude that imputed expenses should be excluded

in the actual profit calculation . . . .” Thai Pineapple Canning Indus. Corp. v. United States, 23 CIT

286, 296 (1999) (“Thai Pineapple I”), aff’d in part, rev’d in part, 273 F.3d 1077 (Fed. Cir. 2001).

However, Thai Pineapple I also emphasized that “nothing categorically prevents the inclusion

of imputed expenses” in the CEP profit calculation. Id. The court explained that the exclusion of

imputed expenses could be proper “if that construction can be squared with the necessity of a

properly calculated statutory ratio.” Id. (emphasis added). The court concluded that imputed

expenses should be excluded “if they duplicate expenses already accounted for.” Id. (emphasis

added).11

The Government invokes Ausimont SPA v. United States, 25 CIT___, 2001 WL 1230596

(2001), which sustained the Commerce Department’s CEP profit methodology. See Gov’t Brief at

43-44. Similarly, Timken held the agency’s exclusion of imputed expenses from the “total

expenses” calculation to be “a reasonable interpretation of the statute.” See Timken Co. v. United

States, 26 CIT ___, ___, 240 F. Supp. 2d 1228, 1246 (2002).

11
Finding that the Commerce Department had not established that the imputed expenses were
already accounted for in the “total expenses” denominator, Thai Pineapple I remanded the matter to
the agency for further proceedings. 23 CIT at 296. In Thai Pineapple II, the court sustained the
Commerce Department’s CEP profit calculations. 24 CIT 107, 115 (2000). The court accepted the
agency’s “theory” that the particular data used to calculate the “total expenses” denominator reflected
the interest expenses captured in the “total U.S. expenses” numerator. Id. The court then considered
whether there was any reason why that theory would be inapplicable to the facts of that case. The
court concluded that the petitioner had failed to demonstrate that the agency’s exclusion of imputed
expenses resulted in a distortion in the CEP profit calculations. The court also noted that the
petitioner failed to counter the agency’s argument that excluding imputed expenses avoided double
counting. Id.
Court No. 01-00027 Page 20

Timken thus broke with the holding in the SNR Roulements line of cases that mathematical

logic and the plain language of the CEP profit statute require that “total U.S. expenses” be calculated

as a subset of “total expenses.”12 But Timken, like Ausimont, found U.S. Steel Group v. United

States, 225 F.3d 1284 (Fed. Cir. 2000) (“U.S. Steel”), controlling. The Court of Appeals there held

that the “plain language and the structure” of the statute do not require symmetry between the

definitions of “total U.S. expenses” and “total expenses.” 225 F.3d at 1290.13

“Symmetry” is not truly in question here, however, because the Government maintains that

the Commerce Department included the costs at issue in the “total expenses” denominator. Nor is

it clear that U.S. Steel controls. As the Government concedes, U.S. Steel dealt with a different

agency methodology that includes movement expenses in the “total expenses” denominator of the

CEP profit ration, but excludes them from “total U.S. expenses.” See Gov’t Brief at 43-44. Thus,

when the U.S. Steel court accepted the agency methodology there at issue, it approved the agency’s

inclusion of the certain expenses in the “total expenses” denominator. 255 F.3d at 1288. Here, the

agency has excluded the expenses at issue from the total expenses denominator – and they are, in any

event, different from the expenses at issue in U.S. Steel. Moreover, the Court of Appeals reasoned

12
Thai Pineapple I, like the SNR Roulements line of cases, also found that the CEP statute
defines “total U.S. expenses” as a subset of “total expenses.” Thai Pineapple I at 296.
13
The Government points to Ausimont SPA v. United States, 25 CIT___, 2001 WL 1230596
(2001), for the proposition that the reasoning of U.S. Steel undercuts Ta Chen’s claim that the
agency’s CEP profit methodology is contrary to law. Gov’t Brief at 42-43. In Ausimont, the court
indeed stated that U.S. Steel “appears” to undercut the respondent’s arguments regarding symmetry.
25 CIT at ___, 2001 WL 1230596, at *21. Nevertheless, the Ausimont court was careful to note that
the record there did not support a finding that the agency’s methodology caused a distortion in the
CEP profit calculation. Id.
Court No. 01-00027 Page 21

in U.S. Steel that the statute equates “total expenses” with “all expenses,” and thus “does not exclude

movement expenses, but rather suggests their inclusion with the breadth of [the] definition of ‘total

expenses.’” Id. at 1290. Thus, to the extent that U.S. Steel is relevant here, its broad reading of “total

expenses” would appear to favor Ta Chen.

In any event, even if the Commerce Department’s exclusion of imputed expenses from the

“total actual profit” and “total expenses” calculations is based on a reasonable interpretation of the

statute, “it is possible for the application of that methodology to be unreasonable in a given case

when a more accurate methodology is available and has been used in similar cases.” Thai Pineapple

Canning Ind. Corp. v. United States, 273 F.3d 1077, 1085 (Fed. Cir. 2001) (finding that the agency’s

standard methodology for matching costs to sales made during the period of review unreasonably

caused distortions in the calculation of respondent’s dumping margin).

Here, as Ta Chen argued before the agency, the Commerce Department’s methodology finds

TCI’s U.S. sales to be “staggeringly profitable – in sharp contrast to reports . . . that U.S. market

prices for fittings were at unprofitable levels.” Decision Memo at 17. Ta Chen explains that TCI’s

sales of subject fittings had exceptionally long average inventory time, resulting in inventory carrying

costs greatly exceeding the actual interest costs allocated by the agency. Ta Chen Brief at 25.

Further, Ta Chen maintains, and the Government fails to dispute, that the Commerce

Department has previously included imputed expenses in CEP profit calculations of TCI’s U.S.

sales, while avoiding double counting. Compare Ta Chen Brief at 27-29 (citing Final Determination

of Sales at Less Than Fair Value: Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan, 58

Fed. Reg. 28,556, 28,558 (May 14, 1993)), with Gov’t Brief at 45. Indeed, it does appear that the
Court No. 01-00027 Page 22

agency previously avoided double counting by calculating an offset to TCI’s actual interest costs to

account for the portion reflecting imputed credit and inventory carrying costs. Id. at 28.

Moreover, the Commerce Department here actually “ran a test program which added imputed

credit and inventory carrying costs to the total expenses used in the calculation of the total profit

ratio.” Decision Memo at 29 n.9. Although the agency asserted that the resulting change in the CEP

profit ratio was “insignificant,” the very fact of that test program casts doubt on the Government’s

claim that accepted accounting principles prohibit the inclusion of imputed expenses in determining

profit (and/or any claim that the agency adheres religiously to those principles in all cases). In any

event, as Ta Chen observes, the agency failed to include any documentation of its test program in

the administrative record filed here, effectively precluding independent analysis and judicial review.

Ta Chen Brief at 32 n.16.

The evidence of record suggests that the agency’s CEP profit methodology in this case in fact

may have distorted the allocation of profit to TCI’s U.S. sales, as Ta Chen claims. Thus, the case

must be remanded to afford the agency an opportunity to explain why, in this case, actual expenses

are an adequate proxy for imputed expenses, or – if necessary – to recalculate Ta Chen’s CEP profit

to properly reflect TCI’s imputed expenses. Further, it is not clear from the record whether, in other

cases, the Commerce Department has indeed used other methodologies for calculating CEP profit

that avoid double counting while more accurately accounting for imputed expenses. On remand, the

agency will have an opportunity to explain whether and, if so, in what circumstances, it includes

imputed expenses in the total expenses denominator of the statutory CEP profit ratio, and in the

calculation of total actual profit.
Court No. 01-00027 Page 23

C. The Calculation of TCI’s Indirect Selling Expenses

In calculating Ta Chen’s constructed export price, the Commerce Department was required

to make deductions to account for indirect selling expenses incurred in the U.S. by Ta Chen’s

subsidiary, TCI. See 19 U.S.C. § 1677a(d)(1)(D). Indirect selling expenses are expenses – such as

salespersons’ salaries – that are incurred regardless of whether particular sales have been made, but

are reasonably attributable to such sales. SAA at 824; AD Manual, Chap. 8 at 44.

In this case, the Commerce Department based its calculation of indirect selling expenses on

figures in TCI’s income statement for fiscal year 1998. Decision Memo at 22. The Domestic

Producers contend that the figures in the statement for fiscal year 1999 should have been used

instead. See generally Dom. Prod. Brief at 9-21; Dom. Prod. Reply Brief at 4-12. The Domestic

Producers assert that the 1998 data are inherently less accurate, given the period of review at issue

(June 1, 1998 through May 31, 1999), because – while the 1998 data overlap with five months of

the period of review – the 1999 data cover the period from November 1, 1998 to October 31, 1999,

and thus overlap with seven months of the period of review. Dom. Prod. Brief at 15-16; Dom. Prod.

Reply Brief at 2 n.2.

The antidumping statute does not specify how indirect selling expenses are to be calculated.

Koenig & Bauer-Albert AG v. United States, 22 CIT 574, 580, 15 F. Supp.2d 834, 843 (1998), rev’d

on other grounds, 259 F.3d 1341 (Fed. Cir. 2001). The Commerce Department’s usual practice is

to use the audited fiscal year financial statements that most closely correspond to the period of

review. Gov’t Brief at 57 (citing Final Results of Antidumping Duty Administrative Review: Large

Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, From
Court No. 01-00027 Page 24

Japan, 66 Fed. Reg. 11,555 (Feb. 26, 2001) (Issues and Decision Memorandum at comment 3, 2001

WL 193868)). However, that practice is not carved in stone, and the agency deviates from it, where

appropriate.14

In this instance, as discussed in section I.B above, the Commerce Department justified its

reliance on TCI’s 1998 income statement (rather than the data for fiscal year 1999) by explaining its

preference for the use of “actual, verified data for . . . final results.” Decision Memo at 29 (emphasis

added). 15 See generally Gov’t Brief at 55-61. As the Department pointed out, the 1999 data include

estimates for certain legal fees and other expenses. Decision Memo at 29. And, as the agency

further observed, the use of 1998 data to calculate U.S. indirect selling expenses had the added virtue

of being consistent with the agency’s use of 1998 data in calculating indirect expenses in Ta Chen’s

14
See, e.g., Final Results of Antidumping Duty Administrative Reviews: Certain Corrosion
Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate from Canada,
62 Fed. Reg. 18,448, 18,456 (Feb. 11, 1998) (indirect selling expenses calculated based on monthly
financial statements from the period of review); see generally Notice of Final Determination of Sales
at Less Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality Steel Products From Japan, 64 Fed.
Reg. 24,329, 24,354 (May 6, 1999) (explaining that the Commerce Department alters its
methodology for allocating certain indirect expenses where “case specific facts . . . clearly support
a departure from [the agency’s] normal practice . . . ”).
15
As further justification for its reliance on TCI’s 1998 income statement (rather than that for
1999), the Commerce Department explains that the 1998 data were subjected to verification.
Decision Memo at 29. As the Domestic Producers observe, however, the verification process is
essentially a “spot-check,” so that not all data that was eventually used was actually reviewed during
verification. Dom. Prod. Brief at 16-17. Moreover, the 1999 data were within the scope of the
agency’s verification outline here. Dom. Prod. Brief at 17-18. The Domestic Producers therefore
contend that the fact that the 1998 data were verified should not elevate them above the 1999 data.
Dom. Prod. Brief at 16. It does appear that the Commerce Department may somewhat overstate the
significance of the verification. But that does not change the result here. The agency’s decision to
use the 1998 data rather than the 1999 data would be reasonable, even if those data had not been
verified.
Court No. 01-00027 Page 25

home market. Decision Memo at 29. Finally, as the agency noted, Ta Chen expressed concern that

the 1999 data reflect certain extraordinary expenses incurred in the five months after the period of

review, which could have distorted the Commerce Department’s calculations. Decision Memo at

29.16

The Domestic Producers advance no reason, beyond the two-month difference in overlap,

for favoring the 1999 income statement over the earlier statement on which the agency relied. And

that difference in overlap is essentially de minimis – that is, two twelfths, or one sixth, to be precise.

Moreover, the uncontroverted statements of Ta Chen concerning extraordinary expenses incurred

in 1999, but outside the period of review, further support the conclusion that the 1998 data more

accurately reflect the indirect expenses that TCI actually incurred during the period of review.

Under the circumstances, the Commerce Department’s reliance on the 1998 income

statement based entirely on actual data, rather than the 1999 statement incorporating estimates, was

reasonable; and the agency’s articulated rationale for deviating from its typical practice passes

muster. Accordingly, the Commerce Department’s calculation of TCI’s indirect selling expenses

must be sustained, and the Domestic Producers’ objections must be rejected.

16
Ta Chen’s brief in support of its Motion for Judgment on the Agency Record did not
anticipate the Domestic Producers’ challenge to the calculation of TCI’s selling expenses. And Ta
Chen elected not to file a reply brief in this action. However, the company addressed the issue at the
administrative level, defending the Commerce Department’s use of data from the income statements
for fiscal year 1998, and expressing concern that the 1999 data reflect certain extraordinary expenses
incurred after the period of review. See Pub. Doc. 88 at 4.
Court No. 01-00027 Page 26

D. The Denial of a CEP Offset Adjustment

Ta Chen’s final attack on the Commerce Department’s determination targets the agency’s

decision to deny the company a “CEP offset” adjustment to “normal value” to reflect asserted “level

of trade” differences between the home (Taiwan) market and the market in the U.S. See generally

Ta Chen Brief at 4, 33-39. As explained in section I.A above, a CEP offset adjustment is appropriate

where “normal value is established at a level of trade which constitutes a more advanced stage of

distribution than the level of trade of the constructed export price” (thus justifying a “level of trade”

adjustment), but where the data available are not sufficient to determine a level of trade adjustment.

19 U.S.C. § 1677b(a)(7)(B); 19 C.F.R. § 351.412(f).

Ta Chen asserts that a CEP offset adjustment was warranted in this case because, inter alia,

“[the Commerce Department] itself verified two selling activities/functions – inventory and selling

effort – as (a) only occurring for [Ta Chen’s] home market fitting sales and not its U.S. CEP sales

to its affiliate TCI and (b) involving costs of about 5% of price on home market sales.” Ta Chen

Brief at 37.

Whatever may have been the merits of Ta Chen’s claim to a CEP offset adjustment, that

claim was doomed by the company’s failure to raise the issue before the Commerce Department in

a timely fashion. In short, it is undisputed that the Commerce Department’s Preliminary Results

included a specific finding that Ta Chen was not entitled to such an offset. See Preliminary Results,

65 Fed. Reg. at 41,632 (Commerce Department findings that Ta Chen not entitled to CEP offset

because “any differences in selling activities [between the Taiwan and U.S. markets] are not

significant” and “the LOT [level of trade] in the home market matched the LOT of the CEP
Court No. 01-00027 Page 27

transactions”). See also Gov’t Brief at 48; Ta Chen Brief at 36; Dom. Prod. Response Brief at 9, 11.

It is also undisputed that Ta Chen failed to challenge that finding in the case brief that it filed with

the Commerce Department following the issuance of the Preliminary Results, and that the company

raised the issue for the first time only in its November 20, 2000 response to the agency’s request for

comments on the reimbursement issue. Gov’t Brief at 48; Ta Chen Brief at 39 n.23; Dom. Prod.

Response Brief at 9, 11. Ta Chen thus failed to properly exhaust its administrative remedies.17

As a general matter, the doctrine of exhaustion holds that “no one is entitled to judicial relief

for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.”

Sandvik Steel Co. v. United States, 164 F.3d 596, 599 (Fed. Cir. 1998) (quoting McKart v. United

States, 395 U.S. 185, 193 (1969)) (internal quotations omitted). The prescribed remedy for

challenging Preliminary Results issued by the Commerce Department is to file a case brief with the

agency setting forth objections. By regulation, the Department affords interested parties the

opportunity to submit such briefs within 30 days after Preliminary Results are published. The

regulations specifically require that such briefs “present all arguments . . . relevant to the Secretary’s

. . . final results, including any arguments presented before the date of publication of the . . .

preliminary results.” 19 C.F.R. § 351.309(c)(1)-(2) (emphasis added).

This Court has “generally take[n] a strict view of the need [for parties] to exhaust [their]

remedies by raising all arguments” in a timely fashion so that they may be appropriately addressed

17
Ta Chen’s brief in support of its Motion for Judgment on the Agency Record did not
anticipate the exhaustion arguments advanced by the Government and by the Domestic Producers.
Moreover, as indicated in note 16 above, Ta Chen elected not to file a reply brief. Accordingly, the
Court has not had the benefit of Ta Chen’s views on the doctrine of exhaustion and its application
here.
Court No. 01-00027 Page 28

by the agency. Pohang Iron and Steel Co. v. United States, 23 CIT 778, 792 (1999). The underlying

principle is that “courts should not topple over administrative decisions unless the administrative

body not only has erred but has erred against objection made at the time appropriate under its

practice.” United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952). The doctrine of

exhaustion thus works to serve two basic purposes: It allows the administrative agency to perform

the functions within its area of special competence (to develop the factual record and to apply its

expertise), and – at the same time – it promotes judicial efficiency and conserves judicial resources,

by affording the agency the opportunity to rectify its own mistakes (and thus to moot controversy

and obviate the need for judicial intervention). See Parisi v. Davidson, 405 U.S. 34, 37 (1972);

Richey v. United States, 322 F.3d 1317, 1326 (Fed. Cir. 2003) (exhaustion serves “the twin purposes

. . . of protecting administrative agency authority and promoting judicial efficiency”) (citation

omitted).

In this case, the policy considerations underlying the doctrine of exhaustion cut against Ta

Chen. Because Ta Chen failed to raise the CEP offset issue in its Case Brief filed following the

issuance of the Preliminary Results, the petitioners did not address the issue in their rebuttal brief

and the Commerce Department was not put on timely notice of the company’s objection. See Non-

Pub. Doc. 47. And, while it might have been at least theoretically possible for the Department to

consider the issue later (e.g., when it addressed the reimbursement issue), the agency was under no

obligation to do so. Permitting even one party to “flout[ ] . . . administrative processes could

weaken the effectiveness of an agency by encouraging [others] to ignore its procedures.” McKart

v. United States, 395 U.S. at 195. In this context, the consequences of flouting agency processes
Court No. 01-00027 Page 29

could be potentially devastating, given the extraordinarily tight time constraints prescribed by

Congress in the statutes governing international trade.

Congress has expressly mandated that this Court “shall, where appropriate, require the

exhaustion of administrative remedies.” 28 U.S.C. § 2637(d). In an antidumping case such as this,

where “Congress has prescribed a clear, step-by-step process for a claimant to follow, . . . the failure

to do so precludes [the claimant] from obtaining review of that issue in the Court of International

Trade.” JCM, Ltd. v. United States, 210 F.3d 1357, 1359 (Fed. Cir. 2000) (citing Sandvik Steel Co.,

164 F.3d at 599-600).18

In sum, because Ta Chen failed to timely raise before the Commerce Department its claim

that it was entitled to a CEP offset adjustment, it cannot now be heard to criticize the agency for

denying it that offset. By its silence, Ta Chen waived its right to raise the issue on appeal. See

AIMCOR v. United States, 141 F.3d 1098, 1111-12 (Fed. Cir. 1998).

18
None of the established exceptions to the doctrine of exhaustion is relevant here. See
generally Luoyang Bearing Factory v. United States, 26 CIT ___, ___ n.26, 240 F. Supp. 2d 1268,
1297 n.26 (2002). For example, Ta Chen had timely access to the confidential administrative record.
Compare Philipp Bros., Inc. v. United States, 10 CIT 76, 80, 630 F. Supp. 1317, 1321 (1986). And
Ta Chen does not charge that the agency failed to adhere to some clearly applicable precedent.
Compare 10 CIT at 79-80, 630 F. Supp. at 1320-21. There is no indication that it would have been
futile for the company to have timely raised its CEP offset argument before the agency. Compare
PPG Indus., Inc. v. United States, 14 CIT 522, 542-43, 746 F. Supp. 119, 137 (1990). No judicial
interpretation has intervened. Compare Timken Co. v. United States, 10 CIT 86, 93, 630 F. Supp.
1327, 1334 (1986). And the CEP offset issue is not a pure question of law. Compare Hercules, Inc.
v. United States, 11 CIT 710, 735, 673 F. Supp. 454, 476 (1987). See generally Budd Co., Wheel
& Brake Div. v. United States, 15 CIT 446, 452 n.2, 773 F. Supp. 1549, 1555 n.2 (1991) (surveying
cases where exhaustion has not been required); Layton & Fine, The Draft and Exhaustion of
Administrative Remedies, 56 Geo. L.J. 315, 322-31(1967) (discussing exceptions to requirement of
exhaustion) (cited in McKart v. United States, 395 U.S. at 193 n.9).
Court No. 01-00027 Page 30

III. Conclusion

For the reasons set forth above, the Domestic Producers’ Motion for Judgment on the Agency

Record is denied in its entirety, and Ta Chen’s motion is granted in part. This action is remanded

to the Department of Commerce to permit it to reconsider the factual and legal bases for its

determination concerning the alleged reimbursement agreement; to allow it to reconsider its

calculation of CEP profit; and to accord it the opportunity to fully articulate the reasoning underlying

its findings, conclusions and determinations on those issues.

A separate order will enter accordingly.

/s/ Delissa A. Ridgway
Judge

Decided: May 4, 2004
New York, New York