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Public Document FINAL RESULTS OF REDETERMINATION PURSUANT TO COURT REMAND AUSIMONT SPA V. UNITED STATES COURT NO. 98-10-03063 SUMMARY The Department of Commerce (Commerce or Department) has prepared these results of redetermination pursuant to the remand order of the U.S. Court of International trade in Ausimont SPA v. United States, Slip Op. 01-92 (August 2, 2001). This remand pertains to Commerce's finding that Ausimont SPA's (Ausimont) sales of wet reactor bead are not outside the course of ordinary trade. See Granular Polytetrafluoroethylene Resin From Italy; Final Results of Antidumping Administrative Review, 63 Fed. Reg. 49080 (Sept. 14, 1998). As explained below, Commerce has determined, upon re-examination of the facts associated with this issue, that Ausimont's home market sales of wet reactor bead were made within the course of ordinary trade. Commerce has provided further explanation and clarification of its original ordinary course of trade determination. Specifically, Commerce has made the following determinations: (1) wet reactor bead and granular polytetrafluoroethylene resin (PTFE) are within the "same class or kind" of merchandise and therefore should not be treated as distinct product types for purposes of Commerce's ordinary course of trade determination; (2) a model-specific comparison of wet reactor bead sales to the sales of other PTFE resin models is reasonable, and that under this methodology a re-examination of volume, frequency, quantity, profit, price, and market demand does not indicate that wet reactor bead sales are outside the ordinary course of trade ; (3) the record does not support the conclusion that the contested sales were not made in normal commercial quantities; (4) the terms and conditions of sales for wet reactor bead are not unusual. Background The Court has ordered that Commerce reconsider its ordinary course trade determination made in the underlying administrative review. The Court held that Commerce shall reconsider the totality of the circumstances of the contested sales of wet reactor bead and clearly state on remand whether such sales are within the ordinary course of trade by examining five issues: (1) full consideration of whether the differences between wet reactor bead and PTFE resin impacts its ordinary course of trade determination and if not, an adequate explanation of why such differences would not be meaningful; (2) further examination of relative volume and frequency and aggregate comparisons of quantity, price, and profit if Commerce finds this approach appropriate, if not, explain the reasons why this method is inappropriate and discuss the reasoning behind an alternate methodology; (3) examination of the "market" for wet reactor bead in Italy, in light of Commerce's finding of "virtually no market" in the prior circumvention proceeding and the Department's holding in Canned Pineapple Fruit From Thailand; Final Results of Antidumping Administrative Review, 60 Fed. Reg. 29553 (June 5, 1995); (4) reconsideration of Ausimont's claim that the contested sales were not made in normal commercial quantities; (5) full examination of the differences between the terms and conditions of wet reactor bead sales and PTFE resin sales in Italy based on the verified documentation. Slip op. 01-92 at 1-2. On September 17, 2001 we released the draft redetermination pursuant to remand to the parties to this litigation. On September 21, 2001, the Department received comments from counsel for respondent and on September 25, 2001 it received rebuttal comments from counsel for petitioner on our draft remand results. See "Comment Section" below. Wet Reactor Bead and PTFE Resin Should Not be Considered Distinct Product Types For Purposes of Commerce's Ordinary Course of Trade Determination The Court held in its remand order that Commerce failed to explain clearly how the differences between wet reactor bead and PTFE resin affected its ordinary course of trade determination. Commerce's position on this issue appears unclear in its Final Results because it alludes to two different approaches for comparing wet reactor bead to PTFE resin. Generally, in its Final Results, Commerce refers to these two products as the "same class or kind" of merchandise and makes its comparison between wet reactor bead and PTFE resin on a model-specific basis with respect to certain attributes normally considered in the analysis of ordinary course of trade, such as quantity. However, it appears that when discussing price Commerce may have confused this issue by also suggesting that these two products are significantly different. Commerce stated that "Ausimont's contention that PTFE wet reactor bead was sold at aberrational prices is not persuasive because the comparison it makes-the average selling price of wet reactor bead versus that of finished PTFE resin-does not take into account the fact that these are different products for which there is no reasonable expectation of similar selling prices; wet reactor bead is sold as an intermediate product, at prices that we would expect to differ from those of finished PTFE resin." See Final Results, 63 Fed. Reg. at 49082. The Court has now ordered Commerce to reconcile this inconsistency. After a re-examination of the record, the Department is of the view that the attributes related to home market sales of wet reactor bead are properly compared to those of the individual sales of other PTFE resin products for purposes of determining whether wet reactor bead sales are outside the ordinary course of trade. In Granular Polytetrafluoroethylene Resin From Italy; Final Affirmative Determination of Circumvention of Antidumping Duty Order, 58 FR 26100-02 (April 30, 1993) (Final AD Order Circumvention), the Department determined that wet reactor bead is subject to the antidumping duty order and that the granular PTFE resin produced in the United States was of the same class or kind of merchandise as that imported from Italy. (1) Further, in the Final AD Order Circumvention, the Department found the processing of wet reactor bead into PTFE resin not to be complex (2) and that the difference between the value of granular PTFE resin and the value of PTFE wet raw polymer manufactured in and imported from Italy was small. (3) Given the Department's determination in the Final AD Order Circumvention, the Department concludes that declining to compare wet reactor bead sales to sales of other models of PTFE resin would exaggerate the small difference in value and the complexity of processing between wet reactor bead and PTFE resin. Although Ausimont has styled its arguments in this case as arguments about ordinary course of trade, in fact Ausimont is really arguing about our determination in the Final AD Order Circumvention, that wet reactor bead is the same class or kind as other models of PTFE resin, a decision which was upheld by the Court of International Trade. See Ausimont USA v. United States, 882 F.Supp 1087 (CIT 1995). Notwithstanding Ausimont's contention that because wet reactor bead varies so significantly in physical characteristics and application from PTFE resin that it should be considered a distinct product, we note that the physical characteristics among the other PTFE resin products, as well as the intended applications of those products, vary significantly as well, yet these products are not considered by Ausimont to be non-comparable. These model types vary significantly depending on the production process and whether the PTFE is virgin (i.e., unfilled with certain fillers) or filled, which combines virgin PTFE with other fillers such as glass, carbon, graphite, non-oxidized bronze, ceramics, super-conductive carbon, alumina, calcium fluoride, stainless steel, nickel, pigments, and polymer. See Ausimont March 16, 1998, supplemental response (page SQR-3 through SQR-5). Within each product category of virgin PTFE and filled PTFE resins there are different types and grades forming yet other differences in characteristics and applications among the PTFE resin products. See page A-14 of Ausimont of Ausimont November 6, 1997, submission. PTFE resin products have also a wide range of mechanical, chemical, and electrical applications, and usage for multiple purposes by a wide variety of industries, including automotive, aerospace, electronics, chemical production, food, refrigeration, and construction. Certain PTFE products can also be used as an input to produce hook-up wires, coaxial cables, inter-connecting wiring, aerospace and automotive connectors, seals, piston rings, bushing, slide bearings, and tapes. See Ausimont's March 16, 1998 submission (at SQR-4). We also note that, given the wide range of models and intended applications within the PTFE class of products, the individual models within the PTFE class of products are generally not interchangeable or substitutable. Nevertheless, as determined by the Department in its Final AD Order Circumvention, the difference between the PTFE class of products, which includes PTFE wet reactor bead, is small in terms of value and complexity of the production process. Therefore, in the Department's view, wet reactor bead is one of the numerous unique products, within a class of PTFE products, that reflects unique characteristics and intended applications, as is the case with the other PTFE resin models. For the above-referenced reasons, the Department finds it appropriate to compare the attributes related to the sales of wet raw polymer to those related to the sales of the individual models of PTFE resin. Accordingly, for purposes of the Department's ordinary course of trade analysis, we find wet reactor bead to be a model within the same class of PTFE products (4). Under an Individual-Model Specific Methodology Sales of Wet Reactor Bead Should Be Considered Within the Ordinary Course of Trade For purposes of this remand, and in light of the Department's view that the sales of wet reactor bead are properly compared to the sales of the individual PTFE resin products, the Department has re-examined the information on the record of the review at issue, as it relates to the factors examined by the Department in the Final Results, to determine whether or not the contested sales were made in the ordinary course of trade. Having established that wet reactor bead is within the same class or kind as finished PTFE resin, it is reasonable under the Department's practice to employ an individual-model specific comparison of wet rector bead sales to those of other PTFE resin models. See e.g., Certain Corrosion-Resistant Carbon Steel Flat Products from Japan; Final Results of Antidumping Administrative Review, 64 Fed. Reg. 12951 (March 16, 1999) (noting that an "ordinary course of trade determination requires evaluation of sales in each review on 'an individual basis taking into account all of the relevant facts of each case'."); see also Steel Wire Rod from Canada; Final Determination of Sales at Less Than Fair Value, 63 Fed. Reg. 9182, 9186 (Feb. 24, 1998) (Steel Wire Rod from Canada) ("the price of the sale at issue is near the midpoint of the price range of Stelco's home market sales, and there is no evidence that the price was aberrational"); Coated Groundwood Paper from France; Final Determination of Sales at Less Than Fair Value, 56 Fed. Reg. 56380, 56383 (Nov. 4, 1991) (Coated Groundwood Paper from France) ("because the quantities of these sales were within the typical range, and because there is no reason to believe that this was not the normal commercial practice for these sales prior to the POI, we do not believe that these sales fall outside the ordinary course of trade"). Further, because wet reactor bead is within the same class or kind as finished PTFE resin, Commerce finds it inappropriate to make aggregate comparisons of factors such as quantity, price, and profit. The following describes the Department's analysis under an individual-model methodology with regard to the ordinary course of trade issue: A. Quantitative Comparison Among PTFE Products In order to determine the extent to which the attributes related to wet reactor bead differ from those of other PTFE resin products, the Department examined Ausimont's reported home market sales database, (5) analyzing the differences among the sales of the individual PTFE products in terms of: 1) the total quantity, 2) the average quantity, 3) the frequency of sale, 4) the profit rate (PROFITRATE) corresponding to the sales of each PTFE product, 5) the weighted-average price for each product, and 6) usual commercial quantities 7) the number of customers to whom each product was sold during the POR. See Exhibit 1. 1. Total Quantity: There is a wide range of the quantities among the PTFE resin products sold during the POR. For purposes of simplifying our comparison of the individual PTFE resin products with wet reactor bead, we grouped the volumes of PTFE resin products into five ranges, as follows: 1) below 10,000 kilograms, 2) 10,0000 to 19,999 kilograms, 20,000 to 29,999 kilograms, 30,000 to 39,999 kilograms, and above 40,000 kilograms. In sequential order, these ranges represent approximately [ ] percent, [ ] percent, [ ] percent, [ ] percent, and [ ] percent of the total number of PTFE resin models sold during the POR. During the POR, Ausimont sold [ ] kilograms of wet reactor bead. As shown above, this volume is higher than or approximately equal to the volume sold for each of the models within the first, second, and third ranges (i.e., below 10,000 kilograms, between 10,000 to 19,999, and between 20,000 to 29,999 kilograms), which represents over [ ] percent of the total models sold during the POR. Less than [ ] percent of the individual PTFE resin models sold during the POR represent a higher volume than that of PTFE wet reactor bead. For this reason, we find the volume of wet reactor bead sales to be significant in relationship to the sales volume of the individual PTFE resin products. See data for the total quantity sold on an individual basis in Exhibit 1. 2. Average Quantity Upon re-examining Ausimont's home market sales database, the Department established that the average quantity (6) for PTFE resin products varies from model to model, irrespective of the frequency of sales. For example, the average volume could be as low [ ] kilograms, as is the case for model PRODCODH "380879" and as high as [ ] kilograms, as is the case for model PRODCODH "380127," for the same number of transactions (i.e., three sales transactions corresponding to each of the above-referenced two models). The average volume for sales for wet reactor bead is [ ] kilograms, which is higher than the average volumes for sales of all other PTFE resin products combined. However, while the average volume for wet reactor bead sales is higher than those of the other PTFE resin models, it is not significantly higher than the average volume of sale for PTFE resin PRODCODH "380127." To illustrate, during the POR, Ausimont had three transactions of PRODCODH "380127" to a single home market customer (i.e., CUSTCODH "IT1417") in the amounts of [ ] kilograms, [ ] kilograms, and [ ] kilograms, respectively. During that period, Ausimont also had three transactions to a single customer (i.e., CUSTCODH "IT1253") of wet reactor bead in the amounts of [ ] kilograms, [ ] kilograms, and [ ] kilograms, respectively. When comparing the volume per-transaction, from the highest to the lowest, we find that the sales volume per-transaction of PRODCODH "380127" represented [ ] percent, [ ] percent, and [ ] percent of the volumes of sale for wet reactor bead, respectively. In the Department's view, the relatively high proportions of the volumes of PTFE resin model (i.e., PRODCODH "380127") in relationship to the volumes of sale for wet reactor bead do not support the notion that wet reactor bead was sold in aberrantly higher quantities than other PTFE resin models. Moreover, as indicated above, the difference in the average volumes among the other models of PTFE resin products varies significantly. As shown in Exhibit 1, the average volume of sale among PTFE resin products ranges from [ ] kilograms to over [ ] kilograms. This large difference in the average volume among the individual models of PTFE resin supports the fact that the average volume of wet reactor bead, while higher than the average volumes of sales of PTFE resin models, is consistent with the pattern of variations in the average volume among the different models. For the above-referenced reasons, the Department believes that Ausimont's claim that the average volume of wet reactor bead as aberrational is not sufficiently supported by record evidence. 3. Frequency of Sale As indicated above, there is no correlation between the number of transactions and the quantity sold. Upon reviewing Ausimont's home market sales data for the POR, the Department established that the total number of transactions for the individual models of PTFE resin ranges from [ ] to [ ] transactions. Over [ ] percent of the PTFE resin models were sold in one to three transactions (i.e., [ ]) . As indicated above, Ausimont had three transactions of wet reactor bead during the POR. Therefore, it is appropriate to conclude that wet reactor bead is sold at least as frequently as [ ] percent of the individual PTFE resin models sold during the POR. For this reason, the Department views the frequency of wet reactor bead sales not to be unique or unusual in comparison to the frequency with which several other PTFE resin models were sold during the POR. See Exhibit 1 for data showing relevant details. 4. The Profit Rate Corresponding to the Sales of Each PTFE Product For purposes of comparing the profit rate for wet reactor bead sales to the profit rate of the individual PTFE resin models, the Department calculated the profit rates for all PTFE models based on the following formulas: TOTEXP = TOTCOGSH + TOTSELLH + TOTMOVEH PROFIT = TOTREVH - TOTEXP PROFITRATE = PROFIT/TOTEXP. As shown in Exhibit 1, the profit rates for PTFE resin products range from [ ] percent to [ ] percent. This range includes profit rates for five PTFE resin models, which exceed the profit rate for wet reactor bead sales. Specifically, the profit rates for PTFE resin PRODCODH 380270, 380940, 380121, 380111, and 380137 are [ ] percent, [ ] percent, [ ] percent, [ ] percent, and [ ] percent, respectively, whereas, the profit rate for wet react reactor bead is [ ] percent. The Department also notes that the profit rate for PTFE resin PRODCODH "380294" is [ ] percent (i.e., a less than 1 percent difference from the profit rate for wet reactor bead). Further, the profit rates for seven other products range from [ ] to [ ] percent. For this reason, the Department views the profit rate for wet reactor bead not to be unusual when compared to the profit rates for several other PTFE resin models. 5. The Weighted-Average Price for Each Product The weighted-average price for wet reactor bead sales, which is based on a volume of [ ] kilograms, is in the amount of [ ] lire/kg. When comparing the weighted-average price for wet reactor bead to those of the individual PTFE resin models, the Department finds that the price ratios of wet reactor bead to PTFE resin are between [ ] and [ ] percent of approximately [ ] percent of the total PTFE resin models sold during the POR. In particular, the Department noted that the average price for PTFE resin PRODCODH "380127" is [ ]lire/kg, which is lower than the average price for wet reactor bead (i.e., [ ]lire/kg). As discussed above, the sales of PTFE resin PRODCODH "380127" are similar to the sales of wet reactor bead in terms of: a) the volumes of sale, since the total volume of sales for that model represents over [ ] percent of the total sales volume of wet reactor bead, b) the frequency of transactions for both models are the same (i.e., three transactions), and c) the sales of both products were made to a single customer. For the above-referenced reasons, the Department finds that the average price for wet reactor bead approximates the average price for several other PTFE resin models, particularly, the average price for PTFE resin PRODCODH "380127,"which reflects a sales volume within a similar range to that of wet reactor bead. See Exhibit 1 for further details on the weighted-average price.
6. Usual Commercial Quantities Ausimont requested that the contested sales be excluded under the "usual commercial quantities" provision pursuant to 19 U.S.C. § 1677(b) (a)(1)(B)(i). In the Department's view, this request is not supported by record evidence. As indicated above, the total and average quantity sold and average price of wet reactor bead is within the normal range of quantities sold and average price Ausimont charged for the sales of PTFE resin PRODCODH "380127". Specifically, the weighted average price for this PTFE resin model was [ ]lire/kg, whereas, the weighted-average price Ausimont charged for the sales of wet reactor bead was in the amount of [ ]lire/kg. Given the fact that the quantities and prices corresponding to the sales of wet reactor bead and PTFE resin PRODCODH "380127" are similar, Ausimont's claim that wet reactor bead was sold in unusual commercial quantities, at aberrationally low prices, is unsupported by factual information on the record of the review at issue. For this reason, Commerce reaffirms its position of rejecting Ausimont's claim that its home market wet reactor bead should be excluded pursuant to the "usual commercial quantities" provision of the Act. See 19 U.S.C. § 1677(b) (a)(1)(B)(i). 7. The Number of Customers to Whom Each Product Was Sold During the POR
As shown in Exhibit 1, [ ] percent of the individual PTFE resin models were sold to one customer only, as is the case with wet reactor bead sales. Moreover, the customer to whom wet reactor bead was sold is also a customer who purchased other PTFE resin products from Ausimont during the POR at issue. Therefore, the Department believes that the sales of wet reactor bead to a single customer are not unusual compared to the sales of other PTFE resin products. In sum, Commerce has determined that under a "totality of the circumstances" analysis these factors support the finding that these contested sales were not made outside the ordinary course of trade. As explained above, the record does not support a finding that any of the factors examined, such as quantity sold, frequency of sales or price, were aberrational as compared to other PTFE models. Market for Wet Reactor Bead Sales In the Final Results, we rejected Ausimont's claim regarding the absence of past home market sales of wet raw polymer because the claim focuses entirely on the immediately prior review, without addressing the fact that the respondent in fact sold wet reactor bead in the home market in prior reviews. In support of the Department's argument, and for reference purposes only, we attached to the Final Results Analysis Memorandum, from Magd A. Zalok to Kris Campbell, dated September 4, 1998, and copies of the public version of Ausimont's responses from the 1993/1994 and the 1992/93 review periods. (7) See Exhibit 2-A for the above-referenced attachment. In response to Ausimont's argument that there is no market for wet reactor bead sales, as evidenced by the fact that there were no sales of such products in the immediately preceding review (i.e., the 1995/96 review period), we referenced the 1993/94 review period as an example that wet reactor bead was indeed sold in prior segments of this proceeding. The Department's reference to prior segments of the proceeding merely was intended to dispute Ausimont's conclusion that home market sales of wet reactor bead in the 1996/97 review were outside the ordinary course of trade, simply because there were no sales of such products in the immediately preceding review (i.e., the 1995/96 review period). (8) The Department never intended to determine whether the sales of wet reactor bead in the 1996/97 review period were outside the ordinary course of trade by examining the circumstances surrounding the sales of these products in prior reviews. In prior reviews, the sales of wet reactor bead were included among other home market sales, and the matter of whether such sales were outside the ordinary course of trade was not at issue. For that reason, the Department's analysis with respect to whether the sales of wet reactor bead were outside the ordinary course of trade, should have focused primarily on the facts presented in the review at issue, not historical information from prior review periods, in which ordinary course of trade regarding wet reactor bead sales in the home market was not an issue. Accordingly, the Department has examined the facts on the record in this case and has, independently of prior determinations, concluded that the evidence before it sufficiently merits the finding of a market for wet reactor bead. The Court has asked Commerce to explain why it reached a different conclusion in regard to the existence of a market in this case when the facts are very similar to those found in the Final AD Order Circumvention. Specifically, the Court notes that in the Final AD Order Circumvention, where similarly there were only a few sales of wet reactor bead, the Department found that there was virtually no market demand for this product. However, a comparison of the Department's determination in the Final AD Order Circumvention with its finding in the instant case would not be appropriate given that this circumvention proceeding was not intended to examine the issue of whether certain sales are outside the ordinary course of trade, but rather discusses particular scope issues. When the Department stated that it found that sales of wet reactor bead constituted virtually no market, it did so in the context of determining whether wet reactor bead could be further manufactured into PTFE resin. See Final AD Circumvention, 58 Fed. Reg. at 26110. Commerce simply stated, "Although respondents correctly noted that there is virtually no market for PTFE wet raw polymer, this does not relate to the complexity of respondents' production process." Id. Obviously, this determination can not be properly compared to the instant case given that the substantial "totality of the circumstances" analysis necessary to an ordinary course of trade determination was not considered without prior review. Without the consideration of the eight factors normally examined in an ordinary course of trade determination, and a discussion of the methodology employed to compare sales, Commerce's simple statement that it agrees with respondent that there is virtually no market (9) is meaningless for its ordinary course of trade determination in the instant case. In addition, the circumvention proceeding is irrelevant because Commerce must make its ordinary course of trade determination on the facts presented in the immediate review. The court has stated that "Commerce's determinations must be examined on an individual basis taking into account all of the relevant facts of each case." Koyo Seiko v. United States, 932 F.Supp. 1488, 1498 (CIT June 19, 1996) (finding that the Department in making its ordinary course of trade determination is not obligated to treat sales as sample sales because they were classified as such in a prior review); NTN Bearing Corp. vs. United States, 905 F. Supp. 1083, 1091 (CIT Oct. 2, 1995) (stating that the Department's ordinary course of trade determination made in a prior review is not relevant to the current case). Therefore, Commerce is not obligated to rely on facts pertaining to a prior review period as a basis for its ordinary course of trade analysis. The Court has also ordered Commerce to differentiate its determination in Canned Pineapple Fruit From Thailand; Final Results of Antidumping Administrative Review, 60 Fed. Reg. 29553 (June 5, 1995) (Thai Pineapple) from the facts of this case. In Thai Pineapple, the Department found that the fact that there was only one customer was just one of six factors considered in determining that the sales at issue were outside the ordinary course of trade. See Thai Pineapple 60 Fed. Reg. at 29563. Although Commerce considered this factor to be significant, there was also other strong evidence of an extraordinary sale, such as an insignificant quantity of sales, a single sale in the period of investigation, and an aberrational price, which taken as a whole contributed to the Department's determination. Id. The Court has asked Commerce to explain why it has not similarly found that the fact that there is only one customer of wet reactor bead in this review strongly suggests that market demand does not exist. In Thai Pineapple, Commerce determined that it was appropriate to compare the contested sales with the average of all remaining sales, and in doing so, Commerce found that the sales quantity, price, and frequency were aberrational under the facts of that case. Id. In this context, Commerce determined that having only one customer was significant when compared to the number of customers for the average of all remaining sales, which in most cases included several customers. Id. Thus, Commerce determined in Thai Pineapple that the existence of one customer reflected little or no market demand, a factor that further indicated that the sales at issue were outside the ordinary course of trade. Id. Here, however, as explained above, Commerce has determined that it is reasonable to compare wet reactor bead with other individual models of PTFE resin, and in turn has demonstrated that the quantity, price, and frequency are not aberrational. Moreover, as discussed above and unlike the case in Thai Pineapple, it is not aberrational for a particular model of PTFE to have only one customer. As shown in Exhibit 1, a significant number of the individual PTFE resin models were sold to one customer only, as is the case with wet reactor bead sales. Moreover, the customer to whom wet reactor bead was sold is also a customer who purchased other PTFE resin products from Ausimont during the POR at issue. Further, we note that the customer in this case is not unique and has also bought other PTFE models during the period that were not designated as extraordinary. Moreover, given that all the other factors examined here indicate that a normal market exists for wet reactor bead, the fact that there was only one customer should not in isolation be dispositive of whether a market exists. See Murata Mfg. Co. v United States, 820 F. Supp. 603, 606 (CIT 1993) (In determining whether a sale is outside the ordinary course of trade, the Department does not rely on one factor taken in isolation, but rather considers all of the circumstances particular to the sale in question). Ultimately, unlike Thai Pineapple, under a model-specific analysis, the number of customers does not support the finding that market demand does not exist. Comparison of Terms of Sale Between Wet Reactor Bead and PTFE Resin Products In its June 10, 1998 and May 4, 1999 Motions for Judgement Upon the Agency Record, Ausimont argued that the terms of sale for wet reactor bead differed significantly from those of PTFE resin in Italy. In support of its argument, Ausimont referenced documents, collected by the Department during its verification of Ausimont's responses, for one pre-selected sale transaction of wet reactor bead (i.e., HM OBS 376). Upon the Department's further examination of Ausimont's submissions and the documentation collected during the Department's verification, the Department finds Ausimont's claim regarding the terms of sale to be unsupported by record evidence, as described below. Ausimont argues that the fact that "the prices of wet reactor bead sales were negotiated separately between Ausimont and the single customer for these three sales," (10) is indicative that the terms of sale for wet reactor bead are different from those for other PTFE resin sales. However, Ausimont never stated prior to, or during, the Department's verification that such price negotiations with the single customer is exclusive to wet reactor bead sales, and Ausimont provided information on the record indicating that "{t}here are no published price lists in Italy," (11) and the prices for PTFE resin ". . . are negotiated on a case-by-case basis with individual customers . . ." (12) For these reasons, and absent any evidence on the record showing that the price negotiations for wet reactor bead sales were conducted differently from those for PTFE resin sales, the Department finds no merit in Ausimont's claim. Further, based on the documents collected during the Department's verification for one sale transaction of wet reactor bead (i.e., Obs. 376), Ausimont claims that the terms of sale for wet reactor bead are different from those of PTFE resin because wet reactor bead sales were based on a pending order. In its June 10, 1998 case brief (at 9) and its May 4, 1999 Motion for Judgement (at 39-40), Ausimont stated that "{w}hereas, regular sales of PTFE resin are generally shipped and invoiced as soon as possible after an order is placed, the sales of wet reactor bead were designated on this sales confirmation as a 'Pending Order'. Ausimont further argued that the orders for the [three] wet reactor bead sales, unlike those of PTFE resin, were given target dates in which Ausimont would attempt to fill the orders. Finally, Ausimont stated that if it was not able to fill the orders, the orders would be canceled. However, prior to its case brief, in its December 19, 1997 submission (at A-10 and A-11), Ausimont described its sales process for PTFE products, stating that "{a} customer may also place what is called an "open order", stating that the customer intends in the future to order a particular product. Periodically, the customer will inform Ausimont of the quantity desired, referencing the open order number. At that time, the product is shipped and invoiced at the then-prevailing price. An open order is not a commitment to purchase a particular quantity at a set price. Therefore, the date of invoicing is the earliest available date establishing the essential terms of the sale - quantity and price." (Emphasis added) While Ausimont never explained the difference between the two terms prior to, or during, the Department's verification, it is the Department's understanding, after re-examining the information on the record, that both terms are similar, if not the same, in nature because both terms do not reflect a "commitment to purchase a particular quantity at a set price" after the customer places an order. Moreover, because the Department was not made aware prior to, or during, verification that pending orders were exclusive to wet reactor bead sales, the Department could not establish during its verification that pending orders were not also used for sales of granular PTFE resin products, other than for those sales transactions selected for examination during verification. Nevertheless, upon re-examining the documents collected during verification for another sales transaction of wet reactor bead (i.e., Obs. No. 81), we found no evidence suggesting that the sale transaction of wet reactor bead was based on a pending order, or that it was not shipped and invoiced as soon as possible after the order was placed, contrary to Ausimont's statements. (13) In fact, the "Sales Confirmation" for Obs. No. 81 shows that the order for that transaction was placed on [ ] and shipped and invoiced on [ ]. The difference in the number of days between the order date and the shipment/invoice date for this transaction is indeed either less than, or approximates, that of the other granular PTFE resin sales transactions examined at verification. Morever, we note that documents collected by the Department during verification for the home market sales observation No. 506 shows a canceled ("annullata" designates "canceled" in Italian) sale transaction of PTFE resin, model Algoflon 15. Therefore, in the Department's view, and based on the documentation examined at verification, canceled transactions, after orders are placed, are not necessarily unique to wet reactor bead sales. Finally, in support of its argument that the terms of sales of wet reactor bead are different from those of other PTFE resin products, Ausimont argues that "the prices for wet reactor bead are adjusted to reflect the dry weight of the reactor bead, not that of the wet reactor bead, which is the weight of the product as shipped. Ausimont states that on the Sales Confirmation for HM OBS 376, the weight of the one sale of wet reactor bead that was shipped is [ ] kilograms, however, on the invoice for HM OBS 376 the weight is noted as [ ] kilograms. These documents show that there is the difference between the weight of the wet reactor bead versus the weight of the dry reactor bead." The Department agrees with the facts cited by Ausimont with respect to the above-referenced observation. However, the Department does not find that setting the price for wet reactor bead based on dry weight, instead of the wet weight, constitutes a significant difference between the terms of sales for wet reactor bead and PTFE resin. Namely, the prices for wet reactor bead and PTFE resin products are set according to Ausimont's negotiation with its home market customers and, as Ausimont stated, the "{p}rices are negotiated on a case-by-case basis with individual customers." Therefore, the Department finds no merit in Ausimont's argument that adjusting the prices for wet reactor bead to reflect the dry weight, instead of the wet weight, is indicative of unique terms of sale for such products. For the above-referenced reasons, the Department finds Ausimont's argument that the terms of sale for wet reactor bead are different from those of other PTFE resin products, to be without merit because it is not sufficiently supported by record evidence.
Comment Section Comment 1 Ausimont argues that, by comparing the three wet reactor bead sales to each of the other models of granular PTFE resin, the Department failed to comply with the express orders of the Court. See Ausimont's Comments (Sept. 21, 2001) (Comments) at 1. Ausimont claims that the Court explicitly prohibited the Department from using an individual-model specific analysis. Id. Rather, Ausimont contends that the Court determined that because wet reactor bead is a different product from granular PTFE, the Department must employ an aggregate analysis of factors such as volume and frequency. Comments at 2. Finally, Ausimont claims that the Department may not use an individual-model specific analysis because it is the Department's established practice to make aggregate comparisons of sales when conducting its ordinary course of trade analysis. Comments at 4-5. Department's Position We disagree with Ausimont. Contrary to Ausimont's assertion, the Court's order does not require the Department to abandon its individual model-specific approach to analyzing the ordinary course of trade issue but, instead, directs the Department to adequately explain how the differences between wet reactor bead and granular PTFE resin impacts its ordinary course of trade analysis. As explained above, in its Final Results the Department seemed to contradict itself by noting that wet reactor bead is within the same class or kind of merchandise as PTFE resin and should be compared on an individual sales basis, while also stating that its analysis of price was affected by the fact that these products are significantly different. In order to reconcile this inconsistency, the Court has now required Commerce to further explain and consider the relevance of the differences between wet reactor bead and granular PTFE resin and to explain the methodology employed in light of those differences. The Department has clearly addressed the Court's order. Commerce explained that pursuant to its determination in the AD Order Circumvention wet reactor bead is within the same class or kind of merchandise as granular PTFE resin and that not comparing wet reactor bead sales to sales of other models of PTFE resin would exaggerate the small difference in value and the complexity of processing between wet reactor bead and PTFE resin. Commerce determined that the small differences between these two products did not justify treating wet reactor bead as a distinct product from granular PTFE resin, rather than viewed as just one of the numerous unique products within the class or kind of PTFE products. Therefore, upon reconsideration of this issue Commerce has determined that the small differences between these products supports the employment of an individual model-specific analysis. Further, there is no indication from the language of the Court's remand that Commerce must employ an aggregate comparison methodology. Rather, the Court has only suggested that the Department use this approach if it finds it appropriate and has provided the Department the flexibility to employ an alternate methodology (14). Moreover, contrary to Ausimont's assertion, it is not the Department's established practice to employ an aggregate analysis, as reflected by the fact that Commerce has made individual model-specific comparisons in various cases in the past. See e.g., Certain Corrosion-Resistant Carbon Steel Flat Products from Japan; Final Results of Antidumping Administrative Review, 64 Fed. Reg. 12951 (March 16, 1999) (noting that an "ordinary course of trade determination requires evaluation of sales in each review on 'an individual basis taking into account all of the relevant facts of each case'."); see also Steel Wire Rod From Canada, 63 Fed. Reg. at 9186 ("the price of the sale at issue is near the midpoint of the price range of Stelco's home market sales, and there is no evidence that the price was aberrational"); Coated Groundwood Paper from France, 56 Fed. Reg. at 56383 ("because the quantities of these sales were within the typical range, and because there is no reason to believe that this was not the normal commercial practice for these sales prior to the POI, we do not believe that these sales fall outside the ordinary course of trade"). In sum, Commerce believes that the Court's order does not prohibit a comparison of sales of wet reactor bead to the sales of other models of granular PTFE resin. In addition, Commerce has fully complied with the Court's instructions by providing a detailed explanation of why it has selected this methodology in light of the differences between wet reactor bead and granular PTFE resin. Comment 2 Ausimont claims that Commerce failed to conduct the proper "totality of the circumstances" analysis necessary for determining whether sales are outside the ordinary course of trade. Comments at 5. Ausimont argues that the Department continues to analyze each factor in isolation, instead of measuring its cumulative effect on the question of whether the sales are extraordinary. Id. at 6. Department's Response We disagree with Ausimont. Contrary to Ausimont's assertion, Commerce specifically applied the "totality of the circumstances" standard when it evaluated the eight factors usually relevant to an ordinary course of trade determination. See Thai Pineapple, 946 F. Supp. at 16 (In making its ordinary course of trade examination, Commerce evaluated eight factors including quantity, price, profit, market demand, volume, frequency, terms of sales, and customer). In the "Quantative Comparison Among PTFE Products" section above, Commerce evaluated several factors and found that the record did not support a finding that any of the factors examined were aberrational. Further, Commerce determined ". . .that under a "totality of the circumstances" analysis these factors support the finding that these contested sales were not made outside the ordinary course of trade." See page 9. After considering each individual factor, Commerce determined that as a whole these factors support a finding that Ausimont's wet reactor bead sales during the POR were made within the ordinary course of trade. Comment 3 Ausimont claims that the Commerce failed to comply with the Court's order to explain why it is departing from the established use of relative volume and frequency. Comments at 7. Specifically, Ausimont asserts that Commerce failed to address the fact that ". . .the contested sales' frequency was less than one percent and their volume approximately [ ] percent of home market sales. . ." Comment at 8, citing Slip Op. at 35. In sum, Ausimont is again arguing that Commerce has failed to explain why it has not employed an aggregate comparison of volume and frequency. In its rebuttal comments, petitioner notes that "using such aggregate comparisons, Ausimont could not only seek to exclude wet reactor bead, but many other products on the same grounds-that the volume and frequency of their sales are minuscule in comparison to total home market sales volume and frequency." Id.; See exhibit 1. Thus, petitioner concludes that "employing an aggregate comparison methodology would mean that any one of the many PTFE resin products sold in volumes and frequencies similar to that of wet reactor bead would be outside the ordinary course of trade." Department's Response We disagree with Ausimont and agree with the petitioner. As explained in comment 1, Commerce has established that it is reasonable to employ an individual model-specific analysis in this case, and that it is not established practice for Commerce to rely on an aggregate analysis in every ordinary course of trade determination. Further, Commerce agrees with petitioner that given the wide variety of PTFE resin products that comprise the same class or kind of merchandise in this case, Ausimont's argument that Commerce compare the volume and frequency of wet reactor bead sales to those of all other granular PTFE resin transactions would lead to an absurd result. See Dupont's rebuttal comments (Sept. 25, 2001) at 7. Although Ausimont is correct in the fact that the Department has employed an aggregate methodology in the certain cases in the past, the circumstances of this case necessitates the use of an individual model-specific approach Comment 4 Ausimont argues that Commerce has failed to comply with the Court's order to examine whether there is a market for reactor bead in Italy. Comments at 8. Ausimont claims that Commerce failed to adequately examine whether a market exists in the instant case in light of its finding of "virtually no market" in its Ad Order Circumvention. Id. Specifically, Ausimont alleges that Commerce failed to explain "why two sales in its AD Order Circumvention would not constitute a market, while three in the instant case would establish the existence of a market." Id. Department's Position We disagree with Ausimont. As described above, Commerce did not intend to find the existence of a market in its Final Results by examining previous segments of the proceeding and only referenced previous segments to dispute Ausimont's contention that there was no market based on a lack of sales in the preceding segment. Accordingly, rather than relying on its findings in previous segments such as the AD Order Circumvention, Commerce has examined the facts on the record of this review and has, independent of prior determinations, concluded that the evidence before it sufficiently merits the finding of a market. Specifically, Commerce explained in detail above, that under an individual model-specific analysis, the existence of only three sales did not show the lack of market for wet reactor bead because it was equal to or greater than the frequency of sales for [ ] percent of other PTFE resin models. Further, the Department found that it is not aberrational for a particular model of PTFE to have only one customer. As shown in Exhibit 1, a significant number of the individual PTFE resin models was sold to one customer only, as is the case with wet reactor bead sales. It is simply the nature of PTFE resin that it involves a large number of quite similar products, any of which may be sold in only a few instances. Moreover, the customer to whom wet reactor bead was sold is also a customer who purchased other PTFE resin products from Ausimont during the POR at issue. Finally, the Department found that the AD Order Circumvention cannot be properly compared to the instant case given that the substantial "totality of the circumstances" analysis necessary to an ordinary course of trade determination was not considered. Without the consideration of the eight factors normally examined in an ordinary course of trade determination, and a discussion of the methodology employed to compare sales, Commerce's simple statement that it agrees with respondent that there is virtually no market is meaningless for its ordinary course of trade determination in the instant case. Comment 5 Ausimont continues to allege that the terms and conditions of the wet reactor bead sales at issue differ significantly from those of sales of granular PTFE resin. Comments at 10. Ausimont asserts that wet reactor bead is sold on a pending order basis, contending that this type of order is substantially different than the open order basis in which other PTFE resin is sold. Id. Finally, Ausimont argues that other factors such as the fact that wet reactor bead sales are separately negotiated, and that wet reactor bead is not listed as a product for sale in any of Ausimont's product brochures, also demonstrate that the terms and conditions for these two products are significantly different. Id. Department's Position We disagree with Ausimont. As explained in detail above, Commerce finds no evidence on the record to support Ausimont's claim that the terms of sale for wet reactor bead are different from those of other models of PTFE resin. See "Comparison of terms of sale section" above for analysis. Remand Results In summary, after re-examining the record and evaluating the comments submitted by the parties regarding the draft remand redetermination we have determined that the wet reactor bead sales at issue are within the ordinary course of trade. _____________________ Joseph A. Spetrini Date October 1, 2001 1. In the Final AD Order Circumvention, we stated that "Neither petitioner nor respondents challenged our preliminary determinations that the granular PTFE resin produced in the United States was of the same class or kind of merchandise as that imported from Italy, and that the subject granular PTFE resin was processed in the United States from PTFE wet raw polymer imported from Italy, the country to which the antidumping duty order applies. Therefore, we reaffirm our preliminary determinations regarding these two criteria." 2. In the Final AD Order Circumvention, we concluded that ". . . our comparison of respondents' U.S. and Italian post-treatment processes supports our preliminary conclusion that post- treatment processes are not complex relative to the processes required to produce PTFE wet raw polymer, and do not fundamentally alter the nature of the product. (Id.) As a result, we reaffirm our preliminary determination that, within the context of the overall production process for granular PTFE resin, the processes that respondents currently perform in the United States are relatively simple." 3. In the Final AD Order Circumvention, we stated that ". . . in this case, we find that the processing performed in the United States is not complex, that respondents' U.S. facilities are not extensive, and that respondents' U.S. investment is *26103 relatively minor. Therefore, we determine that respondents' U.S. operations are mere finishing operations that constitute only a "slight change(s) in methods of production or shipment." (S. Rep. No. 71, 100th Cong., 1st Sess. at 101 (June 12, 1987)(Senate Report).) Based on this conclusion, we determine that the ranged difference in value of 10 to 20 percent is " small."" 4. The Department also notes that, despite Ausimont's argument in the review at issue that the attributes related to wet reactor bead sales should not be compared to those of PTFE resin on an individual-model basis, in subsequent reviews, where Ausimont did not report home market sales of wet reactor bead, Ausimont's dumping margin was calculated by matching the U.S. sales of the further-manufactured wet reactor bead to the individual modes of PTFE resin, without the necessity of reporting the constructed value. See Ausimont's February 29, 2000 submission (at SQR-1), in the 1998/99 administrative review, in which Ausimont stated that it ". . . had contemporaneous or matching sales of comparable merchandise in the comparison market for all of its products or models sold in the United States during the eleventh antidumping period of administrative review (POR). Therefore, Ausimont is not required to submit a response to the constructed value portion of Section D." On page D-1 of Ausimont March 5, 2001, submission, in the 1999/2000 review period, Ausimont also stated that "{s}ince Ausimont has identical or similar home market matches, above the cost of production, for ALL U.S. sales, there is no requirement that it submit a constructed value (CV) response." The Department notes that the fact that Ausimont reported home market sales of PTFE resin models as matching models to the further-manufactured wet reactor bead sales in the U.S. market, affirms the Department's conclusion that the attributes of the wet reactor bead sales are properly compared to those of the sales of PTFE resin products, and recognizes the small distinction in value and complexity of the production process between the model of wet reactor bead and the other models of PTFE resin.
5. Please note that the data used in the Department analysis does not include off-spec sales or sales outside the POR. 6. The average volume calculated based on the total sales volume sold divided by the number of transactions for one model. 7. We note that any sales of wet reactor bead in the home market during the 1991/92 review period and earlier periods would not be subject to review because the Department issued its preliminary affirmative determination of circumvention and ordered the suspension of liquidation of wet raw polymer entries after the 1991/92 review. 8. We note that while Ausimont did not report sales of wet reactor bead in the home market for the 1994/95 and 1995/96 review periods, Ausimont did indeed state in its January 16, 1996 public submission (at A-5), in the 1994/95 administrative review, and in its November 22, 1996 public submission (at A-6), in the 1995/96 administrative review that "Ausimont SpA also sells PTFE wet reactor bead to unrelated customers in the home market." The fact that Ausimont did not report sales of wet reactor bead is inconsistent with Ausimont's statement that it did sell wet reactor bead during the 1994/95 and 1995/96 review periods. Since any such sales should have been reported we note that the Department did not verify Ausimont's questionnaire responses during those review periods, and therefore we can not conclude definitely whether Ausimont had sales of those products in the home market during the above-referenced periods. See Exhibit 2-B for copies of selected pages from the public version of Ausimont's above-referenced submissions. 9. Please note that the Department's statement was in response to respondents' contention that there was "virtually no market for PTFE wet raw polymer" in the context of statements relating to respondents' operations in the U.S. market; not the home market. Specifically, in the Final AD Order Circumvention, the Department referenced respondents' argument, stating that "{r}espondents further contend that, given the nature of their U.S. operations, their failure to add any materials to the imported article is irrelevant. Because there is virtually no market for PTFE wet raw polymer, respondents claim that they must substantially transform the PTFE wet raw polymer in order to produce a saleable product." 10. See Ausimont's May 4, 1999 Motion for Judgement (at 39). 11. See Ausimont's December 19, 1997 response (at A-12). 12. See Ausimont's December 19, 1997 submission (at A-6). 13. See Exhibit 3 for relevant documents collected for the home market Obs. No. 81. 14. The Court required Commerce to make the following examination: ...2) relative volume and frequency, and aggregate comparisons of quantity, price, and profit (as appropriate, and if Commerce considers any such comparison inappropriate or insufficient, it shall explain the reason(s) why and the method or analysis which more appropriately applies to the circumstances of the home market sales of wet reactor bead, and it shall consider the results of any such method);...
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