Slip Op. 26-70
UNITED STATES COURT OF INTERNATIONAL TRADE
AMERICAN BRASS ROD FAIR
TRADE COALITION and ITS
INDIVIDUAL MEMBERS,
Plaintiffs,
v.
Before: Joseph A. Laroski, Jr., Judge
UNITED STATES,
Court No. 24-00119
Defendant,
and
RAJHANS METALS PRIVATE
LIMITED,
Defendant-Intervenor.
OPINION AND ORDER
[Granting Plaintiffs’ motion for judgment on the agency record and remanding the U.S. Department of Commerce’s final determination concerning the sales at less than fair value investigation of brass rod from India for further consideration and explanation of certain adjustments relating to Defendant-Intervenor’s cost of manufacturing the subject merchandise.]
Dated: JuO\1, 2026
Paul K. Keith and Jack A. Levy, Rock Creek Trade LLP, of Washington, D.C., argued for plaintiffs American Brass Rod Fair Trade Coalition and its Individual Members. Also on the brief were Daniel J. Calhoun and Noah A. Meyer.
Sosun Bae, Senior Trial Counsel, Commercial Litigation Branch, U.S. Department of Justice, of Washington, D.C., argued for defendant United States Government. Also on the brief were Yaakov M. Roth, Acting Assistant Attorney General, Patricia M. McCarthy, Director, and Franklin E. White, Jr. Of counsel was Fee Pauwels, Court No. 24-00119 Page 2
Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, D.C.
Laroski, Judge: The action before the court is a motion for judgment on the agency
record pursuant to U.S. Court of International Trade Rule 56.2 filed by Plaintiffs
American Brass Rod Fair Trade Coalition and its Individual Members (collectively
“ABR”). Pl. Mot. for J. on the Agency R., ECF Nos. 28–29 (Jan. 10, 2025) (“ABR
Br.”). ABR challenges the U.S. Department of Commerce’s (“Commerce”) final
affirmative determination concerning the sales at less than fair value investigation
of brass rod from India, conducted pursuant to section 735 of the Tariff Act of 1930,
as amended (“the Act”), codified at 19 U.S.C. § 1673d. See Brass Rod from India:
Final Affirmative Determination of Sales at Less Than Fair Value, 89 Fed. Reg.
29,300 (Dep’t Commerce Apr. 22, 2024), and accompanying Issues and Decision
Memorandum (“Final Determination” or “IDM”).
Commerce’s final affirmative determination found that certain adjustments
to the costs provided by mandatory respondent (now Defendant-Intervenor) Rajhans
Metals Private Limited (“Rajhans”), including adjustments to account for work-inprogress (“WIP”) inventory, and the method for valuing scrap for certain offsets
(“scrap offsets”) to the cost of manufacturing (“COM”), were appropriate. IDM at 3.
ABR challenges Commerce’s Final Determination with respect to these two
methodological findings based on alleged errors in Commerce’s cost calculations and
a broader refusal by Commerce to address certain arguments ABR raised during Court No. 24-00119 Page 3
administrative briefing. Defendant United States (the “Government”) and Rajhans
disagree and defend Commerce’s approach to these two cost-related issues as
reasonable, supported by substantial evidence, and otherwise lawful.
For the foregoing reasons, the court agrees with ABR and, accordingly, grants
Plaintiffs’ motion for judgment on the agency record and remands proceedings to
Commerce for reconsideration of the analysis and conclusions set forth in the Final
Determination.
BACKGROUND
In 2023, ABR filed petitions seeking imposition of antidumping duties on
imports of brass rod from India and five other countries, prompting Commerce to
initiate investigations. Brass Rod from Brazil, India, Israel, Mexico, the Republic of
Korea, and South Africa: Initiation of Less-Than-Fair-Value Investigations, P.R. 41,
88 Fed. Reg. 33,575 (Dep’t Commerce May 24, 2023) (“Initiation Notice”).
Commerce selected Rajhans as a mandatory respondent for its investigation into
brass rod from India. Less-Than-Fair-Value Investigation of Brass Rod from India:
Respondent Selection, P.R. 57 (Dep’t Commerce June 16, 2023) (“Respondent
Selection”). Over the ensuing months, Commerce directed questionnaires to
Rajhans and Rajhans responded accordingly. See Commerce Letter to Rajhans on
Initial Request for Information, P.R. 63 (June 21, 2023) (“Initial Questionnaire”);
Rajhans Letter to Commerce in Response to Initial Questionnaire Section A, P.R.
108–109 (July 26, 2023) (“Rajhans IQR Section A”); Rajhans Letter to Commerce in Court No. 24-00119 Page 4
Response to Initial Questionnaire Sections B, C, and D, P.R. 141ï142 (Aug. 24,
2023) (“Rajhans IQR Sections B–D”). Commerce issued supplemental
questionnaires to clarify the information contained in Rajhans’ initial questionnaire
responses, Commerce Letter to Rajhans on Supplemental Questionnaire Section D,
P.R. 154 (Sept. 14, 2023) (“Supplemental Section D Questionnaire”); Commerce
Letter to Rajhans on Supplemental Questionnaire Sections A–C, P.R. 166 (Sept. 19,
2023) (“Supplemental Sections A–C Questionnaire”), and Rajhans submitted timely
responses. Rajhans Letter to Commerce on Response to Supplemental Section D,
P.R. 185 (Oct. 11, 2023) (“Rajhans SQR Section D”); Rajhans Letter to Commerce on
Response to First Supplemental Sections A–C, P.R. 196ï197 (Oct. 20, 2023)
(“Rajhans First SQR Sections A–C”).
On December 1, 2023, Commerce published its preliminary affirmative
determination, finding that brass rod from India is being, or is likely to be, sold in
the United States at less than fair value. Preliminary Affirmative Determination
Sales at Less Than Fair Value in the Investigation of Brass Rod from India, 88 Fed.
Reg. 83,900 (Dep’t Commerce Dec. 1, 2023), and accompanying Preliminary
Decision Memorandum at 1 (“Preliminary Determination” or “PDM”); see
Preliminary Cost Calculation Memorandum, P.R. 221 (Nov. 24, 2023) (“Preliminary
Cost Memorandum” or “PCM”).
Regarding WIP inventory, Commerce preliminarily found that “[b]ecause the
starting amount of the cost reconciliation already includes the change in WIP Court No. 24-00119 Page 5
inventory and the change in WIP inventory is a part of COM,” Rajhans had double
counted the change in WIP inventory. PCM at 2–3. Accordingly, Commerce
corrected the double counting and disallowed Rajhans’ claimed WIP adjustment. Id.
at 3.
Regarding Rajhans’ applied scrap offset to the cost calculation of bar and rod
products, Commerce preliminarily found that Rajhans’ decision to use a standard
yield rate was unsupported by the data Rajhans provided Commerce. Id. at 2.
Instead, Commerce preliminarily concluded that calculating the scrap offset amount
using product-specific control numbers (“CONNUMs”), the total production
quantity, and a per-unit measure was more appropriate. Id. Accordingly,
Commerce revised Rajhans’ calculations. Id.
After releasing its Preliminary Determination, Commerce sent Rajhans a
second supplemental questionnaire concerning its Section D reporting and an
agenda for the upcoming cost verification. See Commerce Letter to Rajhans on
Second Supplemental Questionnaire Section D, P.R. 219 (Nov. 27, 2023) (“Second
Supplemental Section D Questionnaire”); Commerce Letter to Rajhans on Cost
Verification Agenda, P.R. 232 (Nov. 30, 2023) (“CVA”). Rajhans responded with
additional revisions to key cost exhibits. Rajhans Letter to Commerce on Second
Supplemental Questionnaire Section D Response at Ex. D-9(a), D-9(b), D-10(a), D14, D-18, P.R. 244 (Dec. 13, 2023) (“Rajhans Second SQR Section D”). Court No. 24-00119 Page 6
In January 2024, Commerce conducted on-site verification of Rajhans’ sale
and cost information and on February 12, 2024, Commerce issued its Cost
Verification Report. See Commerce Memorandum on Rajhans Cost Verification,
P.R. 265 (Feb. 12, 2024) (“Cost Verification Report” or “CVR”). Commerce observed
that Rajhans had “removed” the WIP inventory item originally featured in its cost
reconciliation because the company “agreed that it was double counted.” CVR at 11.
“Therefore,” Commerce reasoned, “the WIP inventory adjustment made in the
preliminary determination is no longer necessary.” Id. On scrap offset, Commerce
wrote:
Based on our review, the reported raw material costs capture the yield
losses and the standard yield rates used for the reported cost were
consistent with the actual production yields experienced by [Rajhans].
For the final determination, it may be appropriate to reverse the scrap
adjustment Commerce made in the preliminary determination related
to yield losses.
Id. at 16.
Both Rajhans and ABR submitted administrative briefs to Commerce in
advance of Commerce’s Final Determination. ABR Admin. Case Br., P.R. 274 (Mar.
12, 2024) (“ABR Admin. Br.”); Rajhans Admin. Case Br., P.R. 272 (Mar. 11, 2024)
(“Rajhans Admin. Br.”); ABR Admin. Rebuttal Br., P.R. 284 (Mar. 26, 2024), revised
in ABR Admin. Rebuttal Br., P.R. 289 (Mar. 29, 2024); Rajhans Admin. Rebuttal
Br., P.R. 283 (Mar. 25, 2024). After hearing from interested parties, Commerce
reevaluated Rajhans’ cost reporting, requested WIP adjustment, and scrap offset. Court No. 24-00119 Page 7
On April 22, 2024, after Rajhans corrected its double counting issue, Commerce
reversed the WIP adjustment made in the Preliminary Determination. IDM at 10.
On scrap offset, Commerce noted Rajhans “does not value the scrap in its
normal books and records.” Id. at 6. As such, Commerce explained that Rajhans
based its scrap offset on “standard yield rates maintained in the normal course of
business and the consumption value of the chemical code-specific billet at the rod
production stage. Id. Commerce found “the methodology used to determine the
scrap offset quantity” to be reasonable, id. at 7, but found it unreasonable “for
Rajhans to value the generated scrap based on the chemical code-specific billet
cost.” Id. Commerce “revised the value of Rajhans’ scrap offset at the rod
production stage based on the ratio of the period of investigation (“POI”) weighted
average per-unit value of reintroduced scrap at the billet production stage and the
POI weighted average per-unit value of the scrap offset at the rod production stage.”
Id.
JURISDICTION AND STANDARD OF REVIEW
The court exercises jurisdiction pursuant to section 516A of the Tariff Act of
1930 (“the Act”), as amended, which authorizes judicial review of final
determinations by the Commission in antidumping and countervailing duty
investigations. See 19 U.S.C. § 1516a(a)(2)(B)(i). The court reviews such
determinations under 28 U.S.C. § 1581(c).
Court No. 24-00119 Page 8
The court sustains Commerce’s determinations, findings, and conclusions
unless they are “unsupported by substantial evidence on the record, or otherwise
not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence
constitutes “such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 477
(1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). “The
substantiality of evidence must take into account whatever in the record fairly
detracts from its weight” and requires the court to consider the record as a whole.
Universal Camera Corp. at 488.
DISCUSSION
I. Commerce did not reasonably address WIP inventory adjustment concerns
ABR argues that Commerce’s decision to grant Rajhans a WIP inventory
adjustment to its COM is unreasonable and unsupported by substantial evidence.
ABR Br. at 14ï15. The Government maintains that Commerce’s WIP inventory
adjustment was lawful, reasonable, and supported by record evidence. See Def.
Resp. in Opp. Pl. Mot. for J. on Agency R., ECF Nos. 33–34, at 8 (Apr. 21, 2025)
(“Gov. Br.”).
Commerce’s WIP inventory adjustment is not supported by substantial
evidence because Commerce did not reasonably address ABR’s concerns regarding Court No. 24-00119 Page 9
(i) Commerce endorsing Rajhans’ two-step cost reporting methodology; and (ii)
Commerce allowing Rajhans to include finished or saleable goods in the WIP
inventory.
(a) Commerce must reevaluate Rajhans’ two-step cost reporting methodology
ABR argues that Rajhans’ two-step cost reporting methodology already
accounts for a change in inventory quantity of semi-finished goods, making Rajhans’
proposed WIP adjustment redundant. ABR Br. at 15. As a result, ABR contends,
Commerce artificially lowered the actual per-unit cost incurred to
produce brass rod. The actual materials and processing needed to
produce each billet does not change simply because the inventory of
billets changed from the beginning of the year to the end. Regardless of
whether a completed billet is sold, consumed in brass rod production, or
remains in inventory, its per-unit cost to produce remains the same.
Id. at 18.
The Government argues that a WIP adjustment is a “standard” factor in the
calculation of COM. Gov. Br. at 8–9. The Government highlights that Commerce
explained “the change in WIP inventory is necessary to ensure the per-unit billet
costs used in the rod cost calculation are accurate.” Id. at 10 (citing IDM at 10). By
including the change in WIP inventory in the total billet costs, the Government
contends Commerce’s calculated per-unit billet costs reflected only the costs
associated with billets that were consumed in rod production by the end of the POI.
Id. (citing IDM at 10). The Government elaborates that in its Final Determination,
Commerce noted that without the stated change in WIP inventory, the per-unit Court No. 24-00119 Page 10
billet costs would have included both costs to produce billet used in rod production
and costs to produce billets that were not consumed in rod production by the end of
the POI. Id. (citing IDM at 10).
Before Commerce, Rajhans explained that it acknowledged the doublecounting in the WIP inventory adjustment identified during the preliminary
investigation and corrected it. Rajhans Admin. Case Br. at 2. While ABR
recognized that “Commerce no longer needs to correct for the ‘double counting’ of
the WIP adjustment from the preliminary determination,” ABR Admin. Br. at 2,
ABR maintained that a WIP inventory adjustment was still unnecessary and
distortive because Rajhans’ process costing methodology already captured total
manufacturing costs. Id.
ABR explained that Rajhans’ “process costing methodology” entailed a twostep system under which the weighted average per-unit cost of a billet produced by
Rajhans was directly incorporated into the rod extrusion stage of manufacturing.
See id. at 17 (responding to CVR at 5, 11, 14). ABR referred to this two-step process
as indicating a “direct linkage” between what it costs Rajhans to manufacture a
billet and what it costs Rajhans to use a billet to manufacture an extruded brass
rod. See id. ABR noted Rajhans’ methodology was “based on a standard recipe for
raw material consumption” and thus “[did] not account for amounts of WIP
inventories in excess of the amounts projected to be consumed per the standard
recipe.” Id. at 17 n.68. ABR stressed to Commerce that Rajhans’ methodology Court No. 24-00119 Page 11
already captured the POI cost of goods manufactured in the final product,
“obviating the need to account for any beginning and ending WIP.” Id. at 18.
Commerce failed to reasonably address ABR’s legal and factual concerns
about a possible redundancy in the WIP inventory adjustment given Rajhans’ twostep costing methodology. In the Final Determination, Commerce endorsed
Rajhans’ two-step process costing methodology and rejected ABR’s argument that
the WIP adjustment allowed for redundant process costing because:
The COM is normally calculated by adding the beginning WIP inventory
and the total manufacturing costs incurred for the current accounting
period and deducting the value of the ending WIP inventory. Thus, the
change in the WIP inventory is normally included as a part of the COM
and this is the precise reason that Commerce includes the change in
WIP inventory in the reported COM.
IDM at 10 (citations omitted) (emphasis added). Commerce’s reasoning relies
unduly on a generic description of how COM is normally determined. See id.
Commerce’s explanation establishes that WIP inventory is “normally” an
appropriate consideration in determining cost of manufacturing, but Commerce fails
to justify its specific WIP inventory adjustment here given the two-stage process
costing methodology. See id.
Commerce then stated that for step one of Rajhans’ two-step methodology,
Rajhans derived its per-unit billet cost from the “weighted average per-unit cost of
the total billets produced during the POI, not all of which were consumed in the rod
production.” Id. Commerce elaborated that such methodology ensures “all the Court No. 24-00119 Page 12
manufacturing costs incurred in producing finished goods during the POI are
included in the total COM.” Id. at 10–11. While Commerce found this approach
significant because it suggested that not all WIP would be captured by the per-unit
direct costs alone, Commerce disregarded ABR’s concern that such an adjustment
would lead to redundancies. See id. Commerce also put forth that it “[did] not find
Rajhans’ reduction in costs for change in WIP to be problematic, as it is an integral
part of the equation in computing total POI cost of goods manufactured,” id. at 11,
but did so again without addressing the distortive redundancies ABR alleged.
Accordingly, Commerce did not reasonably address ABR’s concern that
Rajhans’ methodology rendered a WIP adjustment unnecessary and unreasonable
in its Final Determination, warranting remand. See id.
(b) Commerce must reevaluate Rajhans’ WIP adjustment
ABR asserts Commerce’s WIP adjustment is predicated on a “misleading
characterization” of the semi-finished goods subject to Rajhans’ claimed WIP
adjustment. ABR Br. at 22. ABR notes that Commerce has a judicially affirmed
“established practice” of allowing respondents to make inventory adjustments in
their reported COM when the adjustments “result from revaluations of either raw
materials or WIP and are not related to finished goods inventory.” Id. at 14
(quoting Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from
Mexico: Final Results of Antidumping Duty Administrative Review; 2018–2019, 86
Fed. Reg. 41,448 (Aug. 2, 2021), and accompanying Issues and Decision Court No. 24-00119 Page 13
Memorandum at Comment 8 (“SPT from Mexico”). However, “raw materials and
work in process are, by definition, not yet salable merchandise.” Id. (quoting
Torrington Co. v. United States, 926 F. Supp. 1151, 1159–60 (CIT 1996)). According
to ABR, “[r]ecord evidence demonstrates that Rajhans’ ‘semi-finished goods’ are in
fact saleable merchandise,” and thus Commerce’s “decision in this regard was
unsupported by substantial evidence and not in accordance with law.” Id. at 22.
ABR contends that in the Final Determination, Commerce unreasonably dismissed
such concerns as “unpersuasive” without acknowledging the record evidence. Id. at
21 (citing IDM at 11).
The Government asserts that ABR improperly relies on Commerce’s past
practice to argue that Rajhans’ proposed WIP adjustment is unreasonable, because
the change in WIP inventory here only involves the amount of WIP inventory,
unlike the valuation judgments in the past practice ABR references. Gov. Br. at
12ï13 (citing ABR Admin. Br. at 19–22 (citations omitted)). As such, the
Government asserts ABR’s saleable merchandise argument lacks adequate support
to undermine Commerce’s determination. Id. at 16ï17.
In response to Commerce’s alleged failure to respond to ABR’s concern that
Rajhans improperly included saleable merchandise in its WIP inventory, the
Government contends Commerce need not “specifically address” arguments that are
“not significant.” Id. at 16 (citations omitted); see also id. at 18 (quoting Altx, Inc. v.
United States, 167 F. Supp. 2d 1353, 1374 (CIT 2001)). Nevertheless, the Court No. 24-00119 Page 14
Government insists Commerce addressed ABR’s concerns and sufficiently engaged
with the record evidence when accepting Rajhans’ WIP inventory adjustment. Id.
(citing IDM at 11). According to the Government, ABR’s arguments merely express
“disagreement with Commerce’s weighing of the evidence,” and lack adequate
support to undermine Commerce’s determination. Id. at 15 (quoting Haixing
Jingmei Chem. Prods. Sales Co., Ltd. v. United States, 335 F. Supp. 3d 1330, 1346
(CIT 2018); see id. at 16ï17.
ABR characterizes how the Government treats Commerce’s purported
oversight of ABR’s saleable goods arguments as a “post hoc rationalization,” which
is “no substitute for a reasoned analysis from Commerce in the Final
Determination.” ABR Reply at 9 (citing Timken Co. v. United States, 894 F.2d 385,
389 (Fed. Cir. 1990)).
Rajhans adds that Commerce’s WIP adjustment did not include saleable or
finished goods. See Def.-Int.’s Resp. in Opp’n to Pl. ABR’s for J. on the Agency R.,
ECF Nos. 35–36, at 5–8 (May 5, 2025) (“DI Br.”). Rajhans justifies its treatment of
billets as “semi-finished goods” explaining that it uses billets in the “extrusion stage
for the production of brass bars and rods.” DI Br. at 7 (citing SQR Section D at 22).
Further, only a limited number of billets were sold in the ordinary course of
business, and Rajhans insists those billets were excluded from its WIP inventory.
Id. at 8. Therefore, the billets accounted for as WIP inventory were “in process Court No. 24-00119 Page 15
merchandise” correctly reported as semi-finished goods during the investigation and
properly treated as WIP rather than finished goods. Id.
Before Commerce, ABR expressed the same concern that:
[E]ven if a WIP adjustment were appropriate in this case (and it is not),
Commerce’s practice is to allow a respondent to adjust its reported COM
where such adjustments result from revaluations of either raw
materials or WIP and are not related to finished goods inventory.
Importantly, raw materials and WIP are, by definition, not yet saleable
merchandise, yet the items that are the subject of Rajhans’ claimed WIP
adjustment are, by contrast, saleable merchandise. As such, these items
are not susceptible to a WIP adjustment in this case.
ABR Admin. Br. at 18 (emphasis in original).
ABR highlighted to Commerce that Rajhans’ quantity-based inventory
movement production report, that identified semi-finished goods included in WIP,
actually included finished goods within the context of the antidumping analysis. Id.
at 18–19 (“For example, Rajhans reports billets sold at the billet stage,
demonstrating that billet is a finished good. Indeed, the product scope considers
Rajhans’ billets to be in-scope merchandise.”). ABR supported its argument at the
administrative stage with the same past practice ABR refers to here; namely,
Commerce’s practice of disallowing WIP adjustments for finished goods or saleable
merchandise. Id. at 18 (citing SPT from Mexico; Torrington Co., 926 F. Supp. at
1159–1160).
Moreover, ABR summarized to Commerce:
Rajhans’ contention that it should be allotted a semi-finished goods WIP
adjustment hinges on misleading descriptions of the semi-finished goods Court No. 24-00119 Page 16
and distortive cost allocation methods. According to Rajhans, this WIP
consists of partially finished goods that are still undergoing production.
But the record evidence demonstrates that Rajhans’ “semi-finished
goods” are in fact in-scope brass billets and by-products, not partially
finished bar and rod. Accordingly, Commerce must remove Rajhans’
WIP adjustment for the final determination in order to avoid distortions
to the margin.
Id. at 20.
Commerce unreasonably overlooked ABR’s concerns regarding Rajhans’
request for a WIP inventory adjustment on saleable goods. See id. at 18. In
response to ABR’s saleable goods comments, Commerce found ABR’s “argument to
be unpersuasive,” because “[t]he record shows that Rajhans’ WIP inventory includes
billets and products in process and these items were recorded in the audited
financial statement as WIP inventory.” IDM at 11. Commerce added only that “the
record also shows that billets produced during the POI were mostly consumed in the
production of rod products.” Id. (emphasis added). Here, Commerce did observe
that not all billets were used to produce rods, which suggested that a billet might
qualify as either WIP for something other than a rod or as a finished good that
could be sold in its own right. Id. at 11 (citing CVR at CVE 2, CVE 4, and CVE 6).
Commerce briefly addressed ABR’s reference to Commerce’s past practice
when it explained that ABR’s invocation of Torrington Co. was “misplaced because
that case discusses the treatment of WIP inventory in the context of calculating
inventory carrying cost, not COM,” id. (citing Torrington Co., 926 F. Supp, at 1159–
60), but does not provide any further analysis or context demonstrating that ABR’s Court No. 24-00119 Page 17
arguments should be dismissed. Commerce’s cursory explanation for disregarding
any billets that were finished, but subject to the WIP adjustment, is unreasonable.
On remand, Commerce must reconsider the eligibility of the items subject to the
WIP adjustment and respond to ABR’s arguments about saleable merchandise.
II. Commerce did not reasonably address ABR’s scrap offset concerns
ABR argues that while Commerce attempted to remedy the flaws ABR
identified in Rajhans’ scrap valuation methodology at the administrative stage, it
failed to do so reasonably. ABR Br. at 8. Specifically, ABR argues that “[i]n the
Final Determination, Commerce applied an adjustment to Rajhans’ reported scrap
offset to address Rajhans’ overvaluation of scrap as a byproduct offset, but
Commerce’s adjustment did not address the separate problem of the differentiated
scrap values based on chemical code.” Id. (citing IDM at 7).
ABR notes that Commerce “sought to correct” the “lack of parallelism
between scrap value as an input and scrap value as a byproduct offset,” “but there
remains a second major flaw that Commerce’s adjustment method did not remedy
and that Commerce’s Final Determination did not even address.” Id. at 27.
Specifically, Commerce “failed to address the scrap value variation” resulting from a
mismatch between chemical code-specific variations in the per-unit scrap value at
the rod stage, id. at 28, and commingled scrap, ABR Admin. Br. at 15. ABR
“provided distinct solutions that Commerce could use to address” the flaws
identified at the administrative stage, ABR Br. at 11, including ABR’s second Court No. 24-00119 Page 18
proposed solution: to apply “a single average per-unit scrap value.” Id. at 30. ABR
argues this “is the most reasonable approach” because scrap value would not be
distorted by any differences in billet chemistry, thus addressing all flaws related to
scrap offset, not only the overvaluation flaw. Id.
The Government defends Commerce’s adjustment to Rajhans’ scrap offset
methodology as supported by substantial evidence. Gov. Br. at 20. The
Government notes that in Commerce’s Final Determination, Commerce agreed with
ABR’s administrative argument that Rajhans’ methodology for valuing the scrap
offset was “‘inconsistent’ with ‘Rajhans’ scrap valuation methodology used for the
reintroduced scrap at the billet production stage.” Id. at 21 (citing IDM at 7). But,
consistent with ABR’s first proposed solution, Commerce adjusted Rajhans’ scrap
offset using the ratio between the average per-unit value of the reintroduced scrap
and the average per-unit value of scrap in Rajhans’ scrap offset. See id. As such,
the Government argues Commerce was not required to address ABR’s “secondary
alternative” solution: the single average per-unit scrap value approach. Id. at 22
(citing IDM at 7; ABR Admin. Br. at 15).
The Government maintains that “even assuming that Commerce was
required to address plaintiffs’ secondary argument—which, because it accepted
plaintiffs’ first alternative, it was not,” ABR “cannot demonstrate that Commerce’s
adjustment was unreasonable or unlawful, and fail[s] to substantiate [its] claim
that Rajhans’ scrap offset is still distortive despite Commerce’s adjustment.” Id. at Court No. 24-00119 Page 19
21–22 (citing Ceramica Regiomontana, S.A. v. United States&,7 ï
(1986) (“[T]he only question is whether ‘the agency’s methodology and procedures
are reasonable means of effectuating the statutory purpose’”), aff’d, 810 F.2d 1137
(Fed. Cir. 1987)).
Before Commerce, ABR disputed Rajhans’ methodology for valuing the scrap
offset and applying it on a CONNUM-specific bases. ABR Admin. Br. at 5. ABR
argued that Rajhans’ scrap offset valuation methodology led to improper valuation
for bar and rod and was “flawed in two crucial respects.” Id. at 10. First, ABR
contended Rajhans erred in valuing self-generated scrap for the buildup of Rajhans’
billet costs and then valued “the same self-generated scrap according to the cost of
the billet when calculating the value of the scrap offset applied at the bar and rod
stage.” Id. at 11.
The second flaw ABR identified was that “Rajhans assigned the pristine billet
cost amount to the self-generated scrap on a chemical code-specific basis, which only
seems reasonable if there were a ‘closed loop’ — i.e., if the particular scrap grade
generated from producing a specific finished product were re-introduced as an input
into the identical billet with the same chemical code used for that product.” Id. at
13. ABR explained, however, that Rajhans does not employ a “closed loop” system
and there are inconsistencies between the chemical codes of the re-introduced scrap
and the chemical codes of the billet, given the scrap is commingled. See id. at 13,
15.
Court No. 24-00119 Page 20
Regarding both identified flaws, ABR proposed two distinct solutions to
Commerce. The first solution would rectify flaw one, by “develop[ing] a ratio
reflecting (1) the . . . value of the runaround scrap in Rajhans’ billet cost buildup,
divided by (2) the average value of Rajhans’ claimed scrap offsets.” Id. at 15. ABR
explained that such a solution would “be adjusting for the excessive offsets claimed
on a CONNUM-specific basis.” Id. The second solution ABR proposed was for
Commerce to “use a single average Rs/kg scrap offset for all CONNUMs, accounting
only for differences in yield (but not differences in chemistry) due to the
commingling of runaround scrap.” Id.
In the Final Determination, Commerce explained that Rajhans tracks the
quantities of generated and reintroduced scrap, but it does not value the scrap in its
normal books and records. IDM at 6. Commerce then analyzed whether Rajhans
reasonably determined both the quantity and the value of the generated and
reintroduced scrap. Id. at 6–7.
Regarding quantity, Commerce explained in the Final Determination that
after the Preliminary Determination, but prior to verification, Commerce requested
clarification from Rajhans regarding the yield losses associated with rod products.
Id. at 6–7. After Rajhans conceded that its previous statement to Commerce was
incorrect and clarified its process, Commerce found Rajhans’ methodology used to
determine scrap offset quantity in the scrap offset calculation at the rod production
stage to be reasonable. Id. at 7.
Court No. 24-00119 Page 21
Regarding value, Commerce agreed with ABR that because “Rajhans does not
value the generated or the reintroduced scrap in its normal books and records,” it
was “unreasonable for Rajhans to value the generated scrap based on the chemical
code-specific billet cost.” Id. To rectify what Commerce identified as “overstated
scrap value,” Commerce
revised the value of Rajhans’ scrap offset at the rod production stage
based on the ratio of the POI weighted average per-unit value of
reintroduced scrap at the billet production stage and the POI weighted
average per-unit value of the scrap offset at the rod production stage.
Id. Commerce did not consider ABR’s second proposed solution in the Final
Determination.
Commerce did not sufficiently address ABR’s concerns raised at the
administrative stage and did not reasonably support the scrap valuation
methodology applied. While Commerce agreed with ABR that it was “unreasonable
for Rajhans to value the generated scrap [at the rod production stage] based on the
chemical code-specific billet cost,” id., and revised the methodology, Commerce did
so without considering ABR’s concern that commingled runaround scrap was
improperly assigned a pristine billet cost on a chemical-code specific basis. See ABR
Admin. Br. at 21–22.
In its Final Determination, Commerce revised Rajhans’ scrap offset
consistent with ABR’s first alleged distortion and corresponding proposed solution.
Commerce’s explanation for its revision overlooks ABR’s second concern that Court No. 24-00119 Page 22
because of the commingled scrap, re-introduced scrap would not necessarily be
consistent with the billet chemical code. See IDM at 4, 7.
Commerce’s explanation fails to acknowledge ABR’s proposed solution of
using a single average value calculation (i.e., to “use a single average Rs/kg scrap
offset for all CONNUMs, accounting only for differences in yield (but not differences
in chemistry) due to the commingling of runaround scrap”). Compare id. with ABR
Admin. Br. at 15. In ABR’s view, assigning a single average value to all runaround
scrap remedied both flaws caused by Rajhans’ scrap offset methodology. ABR
Admin. Br. at 2. Commerce did not address ABR’s contention that the proposed
single average value method aligned with Rajhans’ own reporting practice of using
“a single average value for its self-generated scrap used in the buildup of its billet
production cost.” Id.
The Government’s reliance on the fact that ABR identified the single average
value calculation as an “alternative” solution rather than a distinct argument is
unavailing. Gov. Br. at 20 (citing ABR Admin. Br. at 15). ABR’s designation of the
solution as an “alternative” does not absolve Commerce from its responsibility to
acknowledge ABR’s concern that commingled runaround scrap was distortedly
assigned a pristine billet cost on a chemical-code specific basis. See ABR Admin.
Br. at 22. ABR proposed two resolutions. Commerce adopted the first resolution,
which solved one of the two issues ABR raised with Commerce’s scrap offset
valuation. Commerce did not address ABR’s second concern.
Court No. 24-00119 Page 23
As such, the court remands for Commerce to consider whether Rajhans’
methodology properly accounts for variations in the chemical composition of
commingled scrap. Commerce must also provide a reasonable explanation
responding to ABR’s assertion that a single average rate resolves the alleged
distortions in the scrap offset calculation.
CONCLUSION AND ORDER
On both WIP inventory and scrap offset, Commerce failed to respond to
ABR’s arguments presented at the administrative stage. These arguments
reasonably identified record evidence suggesting that the cost calculation changes
endorsed in the Final Determination were insufficient. Commerce’s discussion
unreasonably minimized ABR’s arguments without considering the record evidence
and applicable law. If Commerce determines on remand that its calculations
related to WIP inventory or scrap offset require alteration, it should
correspondingly adjust the All Others Rate to conform with any updates to its
calculations and conclusions. Therefore, upon consideration of all papers and
proceedings herein, it is hereby
ORDERED that Commerce, within 90 days from the date of issuance of this
Opinion and Order, shall submit a redetermination upon remand (“Remand
Redetermination”) that complies with this Opinion and Order; it is further Court No. 24-00119 Page 24
ORDERED that defendant shall supplement the administrative record with
any information considered by Commerce in reaching the decision in the Remand
Redetermination within 14 days of the Remand Determination; it is further
ORDERED that subsequent proceedings shall be governed by USCIT Rule
56.2(h); and it is further
ORDERED that the parties shall file the joint appendix within 14 days after
the filing of replies to the comments on the Remand Redetermination.
/s/ Joseph A. Laroski, Jr.
Joseph A. Laroski, Jr., Judge
Dated:July 1, 2026
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