Mid Continent Steel & Wire, Inc. v. United States

Slip Op. 21– 
UNITED STATES COURT OF INTERNATIONAL TRADE
__________________________________________
:
MID CONTINENT STEEL & WIRE, INC., 	:
:
Plaintiff, 	:
:
v. 	: 	Before: Richard K. Eaton, Judge
:
UNITED STATES, 	: 	Consol. Court No. 18-00235
:
Defendant, 	:
:
and 	:
:
OMAN FASTENERS, LLC, 	:
:
Defendant-Intervenor. 	:
__________________________________________:
OPINION
[U.S. Department of Commerce’s final results are sustained.]
 	 	 	 	 	 	 	 	Dated: -XQH
Adam H. Gordon, The Bristol Group PLLC of Washington, DC, argued for Plaintiff. With
him on the brief was Ping Gong.
Sosun 	Bae, 	Trial 	Attorney, 	Commercial 	Litigation 	Branch, 	Civil 	Division, 	U.S.
Department of Justice, of Washington, DC, argued for Defendant. With her on the brief were
Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M.
McCarthy, Assistant Director. Of Counsel on the brief was Ian A. McInerney, Attorney, Office of
the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of
Washington, DC.
Andrew Caridas, Perkins Coie LLP of Washington, DC, argued for Defendant-Intervenor.
With him on the brief were Michael P. House and Shuaiqi Yuan.
Eaton, Judge: This consolidated case involves a challenge to the final results of the United
States Department of Commerce’s (“Commerce” or the “Department”) second administrative
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review of the antidumping duty order on steel nails from the Sultanate of Oman (“Oman”),
covering the period of July 1, 2016, through June 30, 2017.1 See Certain Steel Nails From the
Sultanate of Oman, 83 Fed. Reg. 58,231 (Dep’t Commerce Nov. 19, 2018) (“Final Results”), and
accompanying Issues and Decision Mem. (Nov. 9, 2018), P.R. 98 (“Final IDM”). Jurisdiction is
found under 28 U.S.C. § 1581(c) (2018) and 19 U.S.C. § 1516a(a)(2)(B)(iii) (2018).
By its motion for judgment on the agency record, Plaintiff Mid Continent Steel & Wire,
Inc. (“Plaintiff” or “Mid Continent”), a U.S. producer of steel nails and the petitioner in the
underlying proceeding, argues that substantial evidence does not support Commerce’s decision to
use the financial statement of Amatei Incorporated (“Amatei”), a Japanese nail manufacturer, to
construct value for the profit and indirect selling expenses of Oman Fasteners, LLC (“Oman
Fasteners”), a mandatory respondent in the review. For Plaintiff, Commerce should have used the
financial statement of Astrotech Steels Private Limited (“Astrotech”), an Indian nail manufacturer.
See Pl.’s Mem. Supp. Mot. J. Agency R., ECF No. 50-1 (“Pl.’s Br.”); Pl.’s Reply, ECF No. 57.
Plaintiff asks the court to remand the Final Results to Commerce “to reconsider its determination
to rely on Amatei’s financial statements to calculate [constructed value] profit and selling
expenses.”2 Pl.’s Br. 14.
1 	Oman Fasteners, LLC v. United States, No. 18-00244 is consolidated under the lead
case, Mid Continent Steel & Wire, Inc. v. United States, No. 18-00235. See Order dated Aug. 8,
2019, ECF No. 39; see also Oman Fasteners, LLC v. United States, No. 18-00244, 43 CIT __,
2019 WL 3763952 (Aug. 8, 2019) (denying government’s motion to dismiss for lack of subject
matter jurisdiction).
2 	Plaintiff uses “selling expenses” and “indirect selling expenses” interchangeably in
its brief. Compare, e.g., Pl.’s Br. 14 (emphasis added) (asking that the court remand for Commerce
“to calculate [constructed value] profit and selling expenses”), with Pl.’s Br. 1 (emphasis added)
(“Commerce’s determination to rely on Amatei’s financial statements to calculate [constructed
value] profit and indirect selling expenses was not supported by substantial evidence . . . .”). For
purposes of analyzing the sole issue in this case, i.e., whether substantial evidence supports
Commerce’s choice of financial statement as the source of data to construct value for the
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Defendant the United States (“Defendant”), on behalf of Commerce, opposes Mid
Continent’s motion, and asks the court to sustain the Final Results. See Def.’s Opp’n Pls.’ Mots.
J. Agency R., ECF No. 55 (“Def.’s Br.”). For its part, Oman Fasteners—which received a zero
percent weighted-average dumping margin—also asks the court to sustain the Final Results.3 See
Def.-Int.’s Opp’n Pl.’s Mot. J. Agency R., ECF No. 56.
Because substantial evidence supports Commerce’s use of Amatei’s financial statement to
determine constructed value profit and indirect selling expenses, the court denies Plaintiff’s motion
and sustains the Final Results.4
BACKGROUND
On July 3, 2017, Commerce published a notice of opportunity to request administrative
review 	of 	the 	antidumping 	duty 	order 	on 	steel 	nails 	from 	Oman. 	See 	Antidumping 	or
Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Admin.
selling/indirect selling expenses, the direct or indirect nature of selling expenses does not seem to
matter, and no party raises it as an issue. The court shall refer to “indirect selling expenses” as that
is the term Commerce consistently uses in the Final IDM.
3 	In this consolidated action, Oman Fasteners intervened on the side of Defendant to
ask the court to sustain the Final Results. It is also the Consolidated Plaintiff. See Order dated Aug.
8, 2019. As Consolidated Plaintiff, Oman Fasteners has filed a motion for judgment on the agency
record that challenges certain of Commerce’s findings. See Consol. Pl.’s Mem. Supp. Mot. J.
Agency R., ECF No. 51-1; Consol. Pl.’s Reply, ECF No. 58. At oral argument, the court clarified,
and the parties agreed, that if the court were to remand the Final Results, thus, theoretically placing
in jeopardy Oman Fasteners’ zero percent margin, it would schedule another oral argument to hear
Oman Fasteners’ claims. See Oral Argument at 18:44, Mid Continent Steel & Wire, Inc. v. United
States, Consol. Ct. No. 18-00235, https://www.cit.uscourts.gov/audio-recordings-select-public-
court-proceedings. If, on the other hand, the court sustained the Final Results, there would be no
need to address those claims, as they would be moot. As discussed infra, because the court sustains
the Final Results, the court denies Oman Fasteners’ motion, as moot.
4 	This is the only issue that remains after the court granted the consent motion of
Plaintiff Mid Continent to dismiss Counts I and II of its complaint. See Order dated Dec. 19, 2019,
ECF No. 45.
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Rev., 82 Fed. Reg. 30,833 (Dep’t Commerce July 3, 2017). After receiving requests from Mid
Continent and Oman Fasteners, Commerce initiated an administrative review covering the period
of July 1, 2016, through June 30, 2017. See Initiation of Antidumping and Countervailing Duty
Admin. Revs., 82 Fed. Reg. 42,974 (Dep’t Commerce Sept. 13, 2017). Oman Fasteners was a
mandatory respondent, along with one other company.5
Commerce issued to Oman Fasteners an initial antidumping questionnaire and several
supplemental questionnaires, asking for, inter alia, the company’s cost and sales data for the period
of review. See Commerce’s Initial Quest. Oman Fasteners (Sept. 28, 2017), P.R. 10. Oman
Fasteners timely responded to these questionnaires. See Preliminary Decision Mem. (May 7,
2018), P.R. 81 (“PDM”) at 3.
Based on Oman Fasteners’ reported sales data, Commerce determined that the company’s
sales in Oman did not provide a viable basis for calculating the normal value of its merchandise.
Rather, Commerce found that the aggregate quantity of Oman Fasteners’ sales in its home market
during the period of review, or its sales in a third-country market, did not meet the statutory
threshold for viability—i.e., five percent of its U.S. sales during the same period. See PDM at 11.
That is, the aggregate quantity of Oman Fasteners’ sales in Oman was below the statutory
minimum for Commerce to use the company’s actual data to calculate the normal value of its
merchandise. See 19 U.S.C. § 1677b(a)(1)(B)(ii)(II), (1)(C)(ii). Thus, the Department determined
5 	The other mandatory respondent, a collapsed entity comprised of the Overseas
International Steel Industry LLC and Overseas Distribution Services Inc., is not a party to this
action.
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it would construct a value for normal value, pursuant to 19 U.S.C. § 1677b(e).6 See id.
§ 1677b(a)(4).
6 	The “constructed value of imported merchandise shall be an amount equal to the
sum of”:
(1) the cost of materials and fabrication or other processing of any kind employed
in producing the merchandise, during a period which would ordinarily permit the
production of the merchandise in the ordinary course of trade;
(2)(A) the actual amounts incurred and realized by the specific exporter or producer
being 	examined 	in 	the 	investigation 	or 	review 	for 	selling, 	general, 	and
administrative expenses, and for profits, in connection with the production and sale
of a foreign like product, in the ordinary course of trade, for consumption in the
foreign country, or
(B) if actual data are not available with respect to the amounts described
in subparagraph (A), then--
(i) the actual amounts incurred and realized by the specific exporter
or producer being examined in the investigation or review for
selling, general, and administrative expenses, and for profits, in
connection with the production and sale, for consumption in the
foreign country, of merchandise that is in the same general category
of products as the subject merchandise,
(ii) the weighted average of the actual amounts incurred and realized
by exporters or producers that are subject to the investigation or
review (other than the exporter or producer described in clause (i))
for selling, general, and administrative expenses, and for profits, in
connection with the production and sale of a foreign like product, in
the ordinary course of trade, for consumption in the foreign country,
or
(iii) the amounts incurred and realized for selling, general, and
administrative 	expenses, 	and 	for 	profits, 	based 	on 	any 	other
reasonable method, except that the amount allowed for profit may
not exceed the amount normally realized by exporters or producers
(other than the exporter or producer described in clause (i)) in
connection with the sale, for consumption in the foreign country, of
merchandise that is in the same general category of products as the
subject merchandise; and
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Constructed value is based on the sum of “the cost of manufacture, selling general and
administrative expenses, and profit.” 19 C.F.R. § 351.405(a) (2018). For the “cost of manufacture”
component of constructed value, Commerce used Oman Fasteners’ submitted data. See PDM at
12 (“We relied on Oman Fasteners’ submitted materials and fabrication costs, G&A, interest
expenses, and U.S. packing costs, except in instances where we determined that the information
was not valued correctly . . . .”). This is in keeping with the statutory preference to use the
producer’s actual cost data, where possible, as provided in § 1677b(f).7 See 19 U.S.C.
§ 1677b(f)(1)(A) (“Costs shall normally be calculated based on the records of the exporter or
producer of the merchandise, if such records are kept in accordance with the generally accepted
accounting principles of the exporting country (or the producing country, where appropriate) and
reasonably reflect the costs associated with the production and sale of the merchandise.”).
For profit and indirect selling expenses, however, Commerce determined it would construct
value based on information found in a proxy or surrogate company’s financial statement. See PDM
at 12. Commerce considered nine companies’ statements, including those of Astrotech, an Indian
producer of steel nails favored by Mid Continent, and Amatei, a Japanese steel nail manufacturer
that Commerce ultimately selected as the surrogate company.8
When selecting from among the available surrogate companies’ financial statements,
Commerce applied a judicially approved framework, consisting of four criteria:
(3) the cost of all containers and coverings of whatever nature, and all other
expenses incidental to placing the subject merchandise in condition packed ready
for shipment to the United States.
19 U.S.C. § 1677b(e).
7 	Commerce’s valuation of manufacturing costs is not contested.
8 	None of the other companies’ financial statements are at issue.
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(1) the similarity between a potential surrogate’s business operations and products
and the products and operations of the respondent; (2) the extent to which a
potential surrogate has sales in the United States and the home market; (3) the
contemporaneity of the surrogate data; and (4) the similarity of the customer base
between a potential surrogate and the respondent.
PDM at 13; Final IDM at 6; see also Mid Continent Steel & Wire, Inc. v. United States, 941 F.3d
530, 542-43 (Fed. Cir. 2019) (upholding as a reasonable interpretation of the statute Commerce’s
analysis applying the four criteria framework). These criteria are designed to aid Commerce in
selecting surrogate financial statements that will reasonably approximate the exporter’s or
producer’s sales experience in the home market. See Mid Continent, 941 F.3d at 542 (citing SKF
USA Inc. v. United States, 263 F.3d 1369, 1373 (Fed. Cir. 2001) for the proposition that
“constructed value serves as a proxy for a sales price of the subject merchandise in the home
market”); see also Statement of Administrative Action,9 H.R. Doc. 103–316, at 839 (1994),
reprinted in 1994 U.S.C.C.A.N. 3773, 4175.
With respect to Astrotech, Commerce found that these criteria—especially the second
criterion—weighed against using the company’s financial statement. It found that “approximately
80 percent of the value of Astrotech’s revenue for 2016 [was] from sales of nails to the United
States.” PDM at 14. Because Astrotech’s financial data reflected predominantly U.S. sales,
Commerce found that “Astrotech’s profit and indirect selling expenses do not reflect the home
market . . . sales necessary to construct [normal value].” PDM at 14. In other words, since the
objective under § 1677b(e)(2)(B) is to approximate the profit experience of a respondent in the
home market, a company whose sales are exclusively or predominantly exports to the United States
would not serve as a reasonable proxy. See, e.g., 19 U.S.C. § 1677b(e)(2)(B)(iii) (emphasis added)
9 	The Statement of Administrative Action is “an authoritative expression” of
legislative intent when interpreting and applying the Uruguay Round Agreements Act. See 19
U.S.C. § 3512(d).
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(“[T]he amount allowed for profit may not exceed the amount normally realized by exporters or
producers . . . in connection with the sale, for consumption in the foreign country, of merchandise
that is in the same general category of products as the subject merchandise.”).
In contrast to Astrotech’s business, Commerce found that “over 90 percent of Amatei’s
sales are made to its home market of Japan.” PDM at 15. Further, based on Amatei’s financial
statement, Commerce found that the company’s
production and sales are almost exclusively of steel nails. As such, we find that
Amatei represents the business operations, production processes, and products most
similar to Oman Fasteners. Further, because the vast majority of Amatei’s
production is nails, we find that its customer base is also most similar to Oman
Fasteners.
PDM at 15. Thus, while “acknowledg[ing] that each of these options [i.e., the financial statements
of Astrotech and Amatei] has certain limitations,” Commerce determined Amatei’s financial
statement was the best source of data, under the four criteria, to calculate constructed value profit
and indirect selling expenses. See PDM at 13, 14-15; see also Final IDM at 8 (“[F]or the final
results, we continue to find that Amatei’s [financial statement] is the best source for [constructed
value] profit and [indirect selling expenses].”).
Commerce thus calculated the constructed value of Oman Fasteners’ merchandise, using
profit and indirect selling expense data from Amatei’s financial statement. Commerce then
compared constructed value with the export price of the subject merchandise to determine if Oman
Fasteners dumped the subject merchandise (i.e., sold it at less than fair value) during the period of
review, and, if so, by what margin. Ultimately, Commerce determined a zero percent weighted-
average dumping margin for Oman Fasteners. See Final Results, 83 Fed. Reg. at 58,232.
Plaintiff Mid Continent’s substantial evidence objections to Commerce’s selection of
Amatei’s financial statement, and its rejection of Astrotech’s, are now before the court.
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LEGAL FRAMEWORK
The legal background below is provided for context. There are no legal challenges to
Commerce’s determinations in the Final IDM, only factual ones.
In an antidumping administrative review, Commerce determines whether dumping has
occurred during the period of review by making a comparison between the price at which subject
merchandise 10 was sold in the United States (i.e., the export price) and the normal value11 of the
foreign like product12 sold in the exporting country. See 19 U.S.C. § 1677b(a); see also id.
§ 1675(a)(2)(A) (administrative reviews). The antidumping statute provides that Commerce may,
under certain circumstances, use a constructed value as a basis for determining normal value, when
comparing U.S. and home market prices. See 19 U.S.C. § 1677b(a)(1)(B)(ii)(II), (1)(C)(ii), (4).
Commerce’s regulations provide that it may use a constructed value where, for example, “neither
the home market nor a third country market is viable,” as Commerce found here.13 19 C.F.R.
§ 351.405(a).
10 	“Subject merchandise” is “the class or kind of merchandise that is within the scope
of” an investigation or administrative review. See 19 U.S.C. § 1677(25).
11 	“Normal value” is “the price at which the foreign like product is first sold . . . for
consumption in the exporting country, in the usual commercial quantities and in the ordinary
course of trade.” 19 U.S.C. § 1677b(a)(1)(A), (B)(i).
12 	“Foreign like product” is “[t]he subject merchandise and other merchandise which
is identical in physical characteristics with, and was produced in the same country by the same
person as, that merchandise.” 19 U.S.C. § 1677(16)(A); see also id. § 1677(16)(B), (C).
13 	Other circumstances in which constructed value may be used include where
Commerce disregards sales below the cost of production, sales outside the ordinary course of trade
(or sales the prices of which are otherwise unrepresentative), or sales used to establish a fictitious
market; where no contemporaneous sales of comparable merchandise are available; or in other
circumstances where Commerce determines that home market or third-country prices are
inappropriate. 19 C.F.R. § 351.405(a).
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Section 1677b(e) defines constructed value as the sum of amounts for (1) the cost of
manufacture of subject merchandise, (2) selling, general, and administrative expenses, and
(3) profit. See 19 U.S.C. § 1677b(e)(1), (2)(A)-(B).
With respect to selling, general, and administrative expenses and profit, the statute
“identifies four methods for calculating constructed value: one preferred method and three
alternative methods among which there is no hierarchy of preference.” Mid Continent, 941 F.3d at
535 (citing SKF USA, 263 F.3d at 1374). The preferred method directs Commerce to look at the
company’s “actual amounts” of profits, and selling, general, and administrative expenses, “in
connection with the production and sale of a foreign like product, in the ordinary course of trade,
for consumption in” the company’s home market. 19 U.S.C. § 1677b(e)(2)(A). If “actual data are
not available with respect to the[se] amounts,” however, Commerce may select one of the three
alternative methods in § 1677b(e)(2)(B):
Each of the three alternative methods, like the preferred method, calls for
consideration of profits and [selling, general, and administrative expenses]—
though each method specifies a different source for that data. The first alternative
method focuses on the data associated with the respondent company’s other
products “in the same general category of products as the subject merchandise.”
[19 	U.S.C.] 	§ 1677b(e)(2)(B)(i). 	The 	second 	focuses 	on 	the 	data 	of 	other
respondents 	to 	the 	investigation. 	Id. 	§ 1677b(e)(2)(B)(ii). 	The 	third 	allows
Commerce to use “any other reasonable method,” subject to . . . a “profit cap”: the
amount allowed for profit may not exceed the amount normally realized by
exporters or producers (other than the [specific respondent at issue]) in connection
with the sale, for consumption in [the specific respondent’s home market], of
merchandise that is in the same general category of products as the subject
merchandise. Id. § 1677b(e)(2)(B)(iii).
Mid Continent, 941 F.3d at 535 (citing SKF USA, 263 F.3d at 1372-74).
The third alternative method is the broadest option. “Unlike the first alternative, there is no
limitation that data be for the specific exporter or producer, and, unlike the second alternative,
there is no limitation that the data relate to foreign like products.” Thai I–Mei Frozen Foods Co.
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v. United States, 616 F.3d 1300, 1308 (Fed. Cir. 2010). “Nevertheless, Commerce’s choices must
be reasonable ones within the dual constraints of the statute and the record.” Mid Continent, 941
F.3d at 542.
The aim of the third alternative is to approximate, without exceeding, the amount of profit
realized from the sale of subject merchandise in the foreign country “that the respondent can fairly
be expected to build into a fair sales price for the particular merchandise.” Mid Continent, 941
F.3d at 542 (citing SKF USA, 263 F.3d at 1373). “[A]ccuracy and fairness must be Commerce’s
primary objectives.” Albemarle Corp. & Subsidiaries v. United States, 821 F.3d 1345, 1354 (Fed.
Cir. 2016) (citations omitted); see Yangzhou Bestpak Gifts & Crafts Co. v. United States, 716 F.3d
1370, 1379 (Fed. Cir. 2013) (citation omitted) (“An overriding purpose of Commerce’s
administration of antidumping laws is to calculate dumping margins as accurately as possible.”);
Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990) (“[The] basic purpose
of the statute [is to] determin[e] current margins as accurately as possible.”). As shall be seen, to
select a surrogate company Commerce used four criteria previously found reasonable by the
Federal Circuit. See Mid Continent, 941 F.3d at 542-43 (concluding that Commerce’s application
of the four criteria was supported by substantial evidence on the record and noting that the Court
saw “no legal error”).
STANDARD OF REVIEW
The court will sustain a determination by Commerce unless it is “unsupported by
substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i).
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DISCUSSION
This is a substantial evidence case. Plaintiff does not challenge the statutory method
Commerce employed to construct profit and indirect selling expenses (i.e., the third alternative,
“any other reasonable method,” under 19 U.S.C. § 1677b(e)(2)(B)(iii)). Nor does it question the
four criteria Commerce considered in making its choice from among the financial statements on
the record. Rather, the sole question for the court to decide is a factual one: whether substantial
evidence on the record supports the Department’s decision to use Amatei’s financial statement.
Plaintiff argues that Commerce’s decision to rely on Amatei’s statement lacks such support, and
that Astrotech’s statement is a better choice. It asks the court to remand this matter so that
Commerce may reconsider its selection.
“Substantial evidence is ‘such relevant evidence as a reasonable mind might accept to
support a conclusion’ considering the record as a whole.” Mid Continent, 941 F.3d at 537 (first
quoting Novartis AG v. Torrent Pharm. Ltd., 853 F.3d 1316, 1324 (Fed. Cir. 2017); and then citing
Universal Camera Corp. v. NLRB, 340 U.S. 474, 487-88 (1951)). Under this standard, “[e]ven if
it is possible to draw two inconsistent conclusions from evidence in the record, such a possibility
does not prevent Commerce’s determination from being supported by substantial evidence.” Am.
Silicon Techs. v. United States, 261 F.3d 1371, 1376 (Fed. Cir. 2001) (citation omitted). Thus,
“[e]ven if [Mid Continent] can identify financial statements that would be reasonable alternatives
for Commerce to select, it is not this court’s role to identify the most suitable choice.” Shenzhen
Xinboda Indus. Co. v. United States, 45 CIT __, __, 494 F. Supp. 3d 1347, 1355 (2021) (citing
King Supply Co. v. United States, 674 F.3d 1343, 1348 (Fed. Cir. 2012)) (upholding Commerce’s
selection of a surrogate financial statement when constructing normal value in a nonmarket
economy case).
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Based on the record, Commerce’s selection of Amatei’s financial statement to construct
value for profit and indirect selling expenses was reasonable. In the Final Results, Commerce set
out the four criteria approved by the Mid Continent Court for selecting a surrogate to construct
value for profit and selling expense ratios: (1) the similarity between a potential surrogate’s
business operations and products and the products and operations of the respondent; (2) the extent
to which a potential surrogate has sales in the United States and the home market; (3) the
contemporaneity of the surrogate data; and (4) the similarity of the customer base between a
potential surrogate and the respondent. See Mid Continent, 941 F.3d at 542-43; see also Final IDM
at 6.
Taking each criterion in turn, Commerce first found that Amatei’s business operations and
products were most similar to Oman Fasteners’, for “[a]s explained in the Preliminary Results and
as demonstrated by record evidence, Amatei predominantly produces and sells steel nails.” Final
IDM at 5. Commerce observed that, according to Amatei’s 2017 financial statement, Amatei’s
nails sales comprised eighty percent of the company’s total sales. See Final IDM at 6. Though its
subsidiary sold screws, the statement distinguished parent and subsidiary sales, which made it
possible to calculate a constructed value based solely on the company’s sales of nails:
Amatei’s [financial statement] separates sales for Amatei, which is focused on steel
nail production and sales, and Amatei’s subsidiary, Natec Co., Inc., (Natec), which
is focused on producing and selling screws. Amatei’s 2017 [financial statement]
separately provides net sales value for both Amatei and Natec, with Amatei’s sales
comprising over 80% of the total sales of both companies. Hence, Commerce was
able to calculate a [constructed value] profit amount based on sales of steel nails
exclusive of the other products that Natec produced. Amatei’s 2017 [financial
statement] also reports “improved operating income as a result of decreased
manufacturing 	costs, 	increased 	productivity, 	low 	material 	costs 	and 	mass
production of domestic products.” Amatei reports its most significant fixed asset is
“machine and devices” that are used in manufacturing operations, and the company
lists work-in-progress, finished goods inventory and salaries associated with this
production. Further, Amatei’s 2017 [financial statement] make[s] clear that its main
business is “manufacturing, purchasing, and selling ordinary nails, specialty
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nails . . .” and that its main raw material is wire. All of this demonstrates that
Amatei is focused on steel nails production and sales.
Final IDM at 6 (emphasis added); see also PDM at 15 (finding that, because Amatei’s “production
and sales are almost exclusively of steel nails,” Amatei “represents the business operations,
production processes, and products most similar to Oman Fasteners.”). Thus, the first criterion
weighed in favor of using Amatei’s financial statement.
As to the second criterion, “the extent to which a potential surrogate has sales in the United
States and the home market,” Commerce found that “over 90 percent of Amatei’s sales are made
to its home market of Japan.” PDM at 15. In contrast, Commerce noted, approximately eighty
percent of the value of Astrotech’s revenue for 2016 was from sales of nails to the United States,
according to third-party export data on the record. See PDM at 14. Commerce found the second
criterion to weigh in favor of Amatei because, with most of its sales being made to its home market,
its data better approximated the home market profit experience of Oman Fasteners.
The third criterion, the contemporaneity of the surrogate data, weighed equally as between
Amatei and Astrotech. Both companies’ audited financial statements for fiscal year 2016
overlapped with the period of review—July 1, 2016, through June 30, 2017. See PDM at 12-13.
Finally, as to the fourth criterion—“the similarity of the customer base between a potential
surrogate and the respondent”—the similarity of Amatei’s and Oman Fasteners’ businesses, in
terms of nail production, weighed in favor of choosing Amatei as the proxy. Commerce found that
“because the vast majority of Amatei’s production is nails, we find that its customer base is also
most similar to Oman Fasteners.” PDM at 15.
Having determined that Amatei’s financial statement was “the best source” for constructed
value profit, Commerce further found that it was the best source for indirect selling expenses. See
Final IDM at 8 (“For the above reasons, for the final results, we continue to find that Amatei’s
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[financial statement] is the best source for [constructed value] profit and [indirect selling
expenses].”); see also PDM at 16 (“[W]ith respect to indirect selling expenses, because Oman
Fasteners does not have a viable home market or third-country market, Commerce does not have
comparison market selling expenses to use in its calculations, as directed by [19 U.S.C. § 1677b(e)] .
As an alternative, to calculate selling expenses, for the preliminary results, Commerce has used the
same financial statement that it used to calculate [constructed value] profit (i.e., Amatei’s), in
accordance with [19 U.S.C. § 1677b(e)(2)(B)(iii)].”).
Plaintiff argues that the record does not support Commerce’s choice of Amatei’s financial
statement but rather supports the use of Astrotech’s financial statement. For Mid Continent:
Commerce’s determination to rely on Amatei’s financial statements to calculate
[constructed value] profit and indirect selling expenses was not supported by
substantial evidence, because the record evidence shows that Amatei is not a pure
producer of steel nails. Rather, it also produces and sells screws, building materials,
nailing machines, and provides testing services. More importantly, more than half
of the steel nails sold by Amatei are produced for it by foreign [original equipment
manufacturer] producers – in other words, Amatei resells more nails produced by
foreign suppliers than it sells of its own manufactured nails.
Pl.’s Br. 1 (emphasis added). To support its argument, Plaintiff points to language in Oman
Fasteners’ statement concerning the company’s “mid-to-long-term management strategy” stating:
“[O]ver the past few years, the company has . . . sold larger volumes of [original equipment
manufacturer] nails than of nails it produces itself domestically.” Pl.’s Br. 8 (record citations
omitted). Based on this increase in resales, Plaintiff argues that instead of Amatei’s financial
statement, Commerce should have used Astrotech’s:
In contrast [to Amatei’s financial statement], [Astrotech] is predominantly a
producer of steel nails, and more importantly, like Oman Fasteners LLC and unlike
Amatei, it sells self-produced nails. In addition, Astrotech sells nails to many
countries in addition to the United States, such as South Korea, Sri Lanka, Europe,
and Australia. Therefore, Astrotech’s financial statements are the best source for
calculating [constructed value] profit and indirect selling expenses.
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Pl.’s Br. 2. Thus, for Plaintiff, Astrotech’s financial statement was the best source of constructed
value data.
Plaintiff’s arguments against Commerce’s choice of financial statement are unconvincing
because Mid Continent “has not identified any evidence that undermines the reasonableness of
Commerce’s choice.” Shenzhen, 494 F. Supp. 3d at 1355. First, in the Final Results, Commerce
acknowledged, as Plaintiff points out, that Amatei is not a “pure producer” of steel nails. It
recognized that Amatei’s subsidiary produced screws. Commerce found, however, that Amatei’s
nails sales comprised the majority of the total sales of both companies, and that the company’s
financial statement adequately distinguished between nail and screw sales, so that it was possible
to construct profit based exclusively on sales of nails. See Final IDM at 6 (emphasis added)
(“Amatei’s 2017 [financial statement] separately provides net sales value for both Amatei and
Natec, with Amatei’s sales comprising over 80% of the total sales of both companies. Hence,
Commerce was able to calculate a [constructed value] profit amount based on sales of steel nails
exclusive of the other products that Natec produced.”).
Next, Mid Continent’s argument that Amatei is not the best proxy because of its resale of
original equipment manufacturer nails does not persuade the court that Commerce’s choice was
unreasonable. Plaintiff characterizes Oman Fasteners’ resales of original equipment manufacturer
nails as a “disqualifying circumstance,” which makes the company a de facto unreasonable choice
for proxy. See Pl.’s Br. 7-8. For Mid Continent, Oman Fasteners’ resale activities make it more of
a nail distributor than a nail producer. See Pl.’s Br. 9. As Commerce noted in the Final Results,
however, Mid Continent “does not claim that Amatei is only a reseller of steel nails or that it sells
its own nails in such small quantities as to render Amatei’s 2017 [financial statement] unreliable.”
Final IDM at 8 (emphasis added). Indeed, the Department points to representations in Amatei’s
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financial statement that it realized increased profits due to a “drop in manufacturing cost unit price
and 	reduced 	manufacturing 	costs 	thanks 	to 	stable 	materials 	prices 	and 	productivity
improvements.” Final IDM at 7-8 (citation to record omitted). For Commerce, Amatei’s statements
“demonstrate[] that while resales of steel nails are a part of Amatei’s selling experience, sales of
steel nails that it manufactur[es] itself also [a]ffect Amatei’s net sales.” Final IDM at 8.
Plaintiff has pointed out a potential limitation in the financial statement, but it does not
undermine the reasonableness of Commerce’s choice, for none of the available financial
statements were without their own flaws—including Astrotech’s financial statement. In the Final
Results, Commerce stated its reasons for finding that Astrotech’s financial statement was not the
“best” source on the record for constructed value:
Astrotech predominantly sells to the United States. As such, Astrotech’s 2017
[financial statement is] unsuitable in the calculation of a normal value based on
[constructed value]. Because Commerce seeks to compare U.S. sales to normal
value from the home or a third-country market, we have stated that we do not want
to construct a normal value based on financial data that contain exclusively or
predominantly 	U.S. 	sales. 	Further, 	in 	accordance 	with 	[19 	U.S.C.
§ 1677b(e)(2)(B)], generally, we seek a home market profit experience to the extent
possible. With regard to the petitioner’s claims that Astrotech made sales to markets
other than the United States, we do not dispute this argument. However, while
Astrotech may make sales to markets other than the United States, record evidence
demonstrates that the majority of Astrotech’s sales are to the United States. Further,
apart from questions about [certain third-party data], the petitioner does not refute
Commerce’s finding in the Preliminary [Results] that Astrotech sold a majority of
its steel nails to the United States, only that Astrotech sells to a “diversified
customer base” (other than the United States). Selling to a diverse customer base
does not equate to finding that Astrotech sold less than the majority of its steel nails
to the United States, as determined at the Preliminary Results.
Final IDM at 6-7. Thus, Astrotech did not have home market sales sufficient to satisfy the statutory
direction to approximate, without exceeding, “the amount normally realized by exporters or
producers . . . in connection with the sale, for consumption in the foreign country, of merchandise
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that is in the same general category of products as the subject merchandise.” 19 U.S.C.
§ 1677b(e)(2)(B)(iii) (emphasis added).
As Commerce acknowledged, “each of the[ financial statement] options has certain
limitations.” PDM at 13. Mid Continent, however, has not shown a lack of substantial evidence
for the factual determinations under the four criteria that the Department considered in its analysis.
See Mid Continent, 941 F.3d at 542-43. Rather, it maintains that Astrotech’s financial statement
would have been a better choice, inviting the court to reweigh the evidence. This the court may
not do. See Downhole Pipe & Equip., L.P. v. United States, 776 F.3d 1369, 1376-77 (Fed. Cir.
2015). Because the record supports Commerce’s determination that Amatei’s financial statement
was a reasonable proxy to calculate constructed value profit and indirect selling expenses, it is
sustained.
Finally, the court’s decision to sustain the Final Results renders moot the motion for
judgment on the agency record that Oman Fasteners filed in its capacity as Consolidated Plaintiff.
As agreed at oral argument, Defendant-Intervenor Oman Fasteners asks the court to sustain the
Final Results, and would seek to be heard on its motion (as Consolidated Plaintiff) only in the
event the court remanded the Final Results (thus, potentially placing in jeopardy Oman Fasteners’
zero percent margin). See Oral Argument at 18:44, Mid Continent Steel & Wire, Inc. v. United
States, Consol. Ct. No. 18-00235, https://www.cit.uscourts.gov/audio-recordings-select-public-
court-proceedings. Thus, because the court sustains the Final Results, Oman Fasteners’ motion is
denied as moot.
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CONCLUSION
Based on the foregoing, the Final Results are sustained. Mid Continent’s motion for
judgment on the agency record is denied, as is Oman Fasteners’ motion for judgment on the agency
record. Judgment shall be entered accordingly.
/s/ Richard K. Eaton
Richard K. Eaton, Judge
Dated:
New York, New York
-XQH
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