BINATIONAL PANEL REVIEW PURSUANT TO THE
NORTH AMERICAN FREE TRADE AGREEMENT
ARTICLE 1904

Pursuant to Chapter 19 of the North American Free-Trade Agreement ("Agreement"), and pursuant to the April 12, 1999 requests of CEMEX, S.A. de C.V. ("CEMEX") and Cementos de Chihuahua, S.A. de C.V. ("CDC"), this Panel was convened to review the March 17, 1999 Final Determination of the United States Department of Commerce ("Commerce") in its seventh administrative review of the antidumping duty order on gray portland cement and cement clinker from Mexico. See North American Free-Trade Agreement, Article 1904, NAFTA Panel Reviews; Request for Panel Review, 64 Fed. Reg. 27517 (May 20, 1999); Gray Portland Cement and Clinker From Mexico; Final Results of Antidumping Duty Administrative Review ("Final Determination"), 64 Fed. Reg. 13148 (March 17, 1999). In addition to CEMEX and CDC, the parties to this proceeding are the Southern Tier Cement Committee ("STCC") and Commerce.

This Panel hereby renders its written decision in accordance with Article 1904.8 of the Agreement and in accordance with Part VII of the Rules of Procedure for Article 1904 Binational Panel Reviews.

On August 30, 1990, Commerce imposed an antidumping duty order on gray portland cement and clinker from Mexico. Antidumping Duty Order: Gray Portland Cement and Clinker From Mexico, 55 Fed. Reg. 35443 (August 30, 1990). On August 4, 1997, Commerce published in the Federal Register a Notice of Opportunity to Request Administrative Review of this antidumping order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review, 62 Fed. Reg. 41925 (August 4, 1997). Pursuant to 19 C.F.R. � 351.213, CEMEX and STCC both requested a review of CEMEX and CDC. See Preliminary Results of Antidumping Duty Administrative Review: Gray Portland Cement and Clinker From Mexico, 63 Fed. Reg. 48471 (September 10, 1998). On September 25, 1997, Commerce published a Notice of Initiation of Antidumping Review in which Commerce initiated this seventh administrative review covering the period August 1, 1996, through Jul 31, 1997. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 62 Fed. Reg. 50292 (September 25, 1997). Commerce published its Final Determination for this seventh administrative review on March 17, 1999. See Final Determination, 64 Fed. Reg. 13148 (March 17, 1999). In its Final Determination, Commerce made twelve findings which are at issue in this proceeding:

(1) That CEMEX's home market sales of cement that is physically Type V cement as Type II and Type V cement were outside the ordinary course of trade;

(2) That CEMEX's home market sales of Type V cement sold as Type I cement were outside the ordinary course of trade;

(3) That duties should be assessed on a nationwide basis in this regional industry case;

(4) That an adjustment to CDC's U.S. indirect selling expenses for interest allegedly incurred in financing cash deposits for antidumping duties was not warranted;

(5) That resort to partial adverse facts available for CEMEX's data from the Hidalgo plant (rather than total adverse facts available for CEMEX's entire response) was warranted;

(6) That refusal to revoke the antidumping order based upon alleged defects in the initiation of the original LTFV investigation was warranted;

(7) That CEMEX's bag and bulk cement should be classified as the same like product, and that sales of CEMEX's bag and bulk cement were at the same level of trade;

(8) That CEMEX's and CDC's U.S. warehousing expenses should be treated as indirect selling expenses;

(9) That CEMEX's home market pre-sale warehousing expenses should not be deducted from normal value;

(10) That certain CDC sales to unaffiliated U.S. customers by CDC's U.S. affiliate should be classified as indirect export price sales, rather than constructed export price sales;

(11) That a difference-in-merchandise ("DIFMER") adjustment to CEMEX's sales for the physical differences between Type I and Type V cement was warranted; and

(12) That an adjustment for CEMEX's freight expenses was warranted.

For the reasons discussed below, this Panel affirms Commerce with respect to the following four findings:

(1) That CEMEX's home market sales of cement that is physically Type V cement as Type II and Type V cement were outside the ordinary course of trade;

(2) That an adjustment to CDC's U.S. indirect selling expenses for interest allegedly incurred in financing cash deposits for antidumping duties was not warranted;

(3) That resort to partial adverse facts available for CEMEX's data from the Hidalgo plant (rather than total adverse facts available for CEMEX's entire response) was warranted; and

(4) That refusal to revoke the antidumping order based upon alleged defects in the initiation of the original LTFV investigation was warranted.

This Panel remands the following findings to Commerce for resolution within 90 days from the date of this Panel opinion:

(1) That CEMEX's home market sales of Type V cement sold as Type I cement were outside the ordinary course of trade;

(2) That duties should be assessed on a nationwide basis in this regional industry case;

(3) That CEMEX's bag and bulk cement should be classified as the same like product, and that sales of CEMEX's bag and bulk cement were at the same level of trade;

(4) That CEMEX's and CDC's U.S. warehousing expenses should be treated as indirect selling expenses;

(5) That CEMEX's home market pre-sale warehousing expenses should not be deducted from normal value;

(6) That certain CDC sales to unaffiliated U.S. customers by CDC's U.S. affiliate should be classified as indirect export price sales, rather than constructed export price sales;

(7) That a DIFMER adjustment to CEMEX's sales for the physical differences between Type I and Type V cement was warranted; and

(8) That an adjustment for CEMEX's freight expenses was warranted.

A. Governing Law Applicable To Panel Review And Scope of Panel Review

In accordance with NAFTA Article 1904(1), which mandates that binational panel review replace judicial review of final antidumping determinations, this binational Panel is empowered to review Commerce's Final Determination.¹ In reviewing this Final Determination, this Panel is limited to reviewing the "administrative record"² compiled by Commerce during its seventh administrative review. See NAFTA Article 1904(2). In addition, in reviewing this Final Determination, this Panel is bound by the national law of the United States, including its "statutes, legislative history, regulations, administrative practice and judicial precedents," including decisions of the Court of Appeals for the Federal Circuit ("Federal Circuit") and decisions of the United States Supreme Court. Id.

Pursuant to NAFTA Article 1904(3) and NAFTA Annex 1911, this Panel must apply the standard of review set forth in Section 516A(b)(1)(B) of the Tariff Act of 1930, as amended (19 U.S.C. � 1516a(b)(1)(B)), as well as the general legal principles that the CIT would apply in reviewing a final determination by Commerce. Accordingly, this Panel will uphold any Commerce determination, finding, or conclusion unless that determination, finding, or conclusion is either unsupported by substantial evidence on the record, or is otherwise not in accordance with law. See, e.g., Elkern Metals Co. v. United States, 2000 Ct. Intl. Trade LEXIS 17, *13 (Ct. Int'l Trade February 21, 2002) (quoting 19 U.S.C. 1516a(b)(1)(B)(i)) (emphasis added).

To determine whether a Commerce determination, finding, or conclusion is unsupported by "substantial evidence," the meaning of substantial evidence must be examined.

Substantial evidence is "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). Substantial evidence "is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Federal Martitime Comm'n, 383 U.S. 607, 620 (1966). Because of the "considerable deference . . . [afforded] to Commerce's expertise in administering the antidumping law," SKW Stickstoffwerke Piesteritz GmbH v. United States, 989 F. Supp. 253, 256 (Ct. Int'l Trade 1997), this Panel "may not substitute its judgment for that of . . . [Commerce] . . . when the choice is between two fairly conflicting views, even though . . . [this Panel] . . . would justifiably have made a different choice had the matter been before it de novo." See, e.g., PPG Indus., Inc. v. United States, 708 F. Supp. 1327, 1329 (Ct. Int'l Trade 1989) (citations omitted). "This restricted standard of review is reflective of the legislative intent that courts afford considerable deference to Commerce's expertise in administering the antidumping law." GMN Georg Muller Nurnberg AG v. United States, 763 F. Supp. 607, 611 (Ct. Int'l Trade 1991).

To determine whether a Commerce determination, finding, or conclusion is not "in accordance with law," this Panel must undertake the two-step analysis mandated by Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

Under the first step, this Panel must review Commerce's construction of a statutory provision to determine whether "Congress has directly spoken to the precise question at issue." Id. at 842. "To ascertain whether Congress had an intention on the precise question at issue . . . [this Panel] . . . employ[s] the 'traditional tools of statutory construction.'" Timex V.I., Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir. 1998) (citing Chevron, 467 U.S. at 843 n.9). "The first and foremost 'tool' to be used is the statute's text, giving its plain meaning. Because a statute's text is Congress's final expression of its intent, if the text answers the question, that is the end of the matter." Id. (quoted in Windmill Int'l Pte., Ltd. v. United States, 2002 Ct. Intl. Trade LEXIS 14, at *5-6 (Ct. Int'l Trade February 21, 2002)). Beyond the statute's text, "the tools of statutory construction include the statute's legislative history, the statute's structure, and the canons of statutory construction." Steel Auth. of India, Ltd. v. United States, 146 F. Supp. 2d 900, 905 (Ct. Int'l Trade 2001).

If, after undertaking the first step, the panel concludes that the statute is ambiguous with respect to the specific issue, the panel will proceed to the second step. Id. at 906. Under the second step, "the narrow legal question is whether the agency's statutory interpretation is a permissible construction of the statue." Id. This involves an inquiry into the reasonableness of Commerce's interpretation. Windmill, 2002 Ct. Intl. Trade LEXIS 14, at 7. If Commerce has acted rationally, this Panel may not substitute its judgment for that of the agency. Id. Rather, the panel must defer to Commerce's reasonable interpretation, Steel Authority, 146 F. Supp. 2d at 906, and must "sustain the [Commerce's] determination if it is reasonable and supported by the record as a whole, including whatever fairly detracts from the substantiality of the

evidence." Windmill, 2002 Ct. Intl. Trade LEXIS 14, at 7. In determining whether Commerce's interpretation is reasonable, this Panel "considers the following non-exclusive list of factors: the express terms of the provisions at issue, the objectives of those provisions and the objectives of the antidumping scheme as a whole." Id.

Based on the foregoing principles, the applicable standard of review requires that this Panel uphold Commerce's Final Determination if it is (a) supported by substantial evidence on the record and (b) not contrary to law, even if this Panel would have reached a different conclusion if it had considered the case de novo.

The standards for remand vary depending on Commerce's reason for requesting a remand. There are three possible reasons for requesting a remand: (1) there are intervening events outside Commerce's control, such as a new legal decision or the passage of new legislation; (2) Commerce, without confessing error, intends to reconsider its previous position; or (3) Commerce believes that its original decision was incorrect on the merits and wishes to change the result. See generally SKF USA Inc. v. United States, 254 F.3d 1022, 1028-30 (Fed. Cir. 2001).

When there are intervening events outside Commerce's control, such as a new legal decision or the passage of new legislation [(1) above], a remand is generally required if the intervening event may affect the validity of Commerce's action. Id. at 1028 (citing Ethyl Corp. v. Browner, 989 F.2d 522, 524 (D.C. 1993)) (noting "the tradition of allowing agencies to reconsider their actions where events pending appeal draw their decision in question").

When Commerce, without confessing error, intends to reconsider its previous position [(2) above], the binational panel has discretion over whether to remand. Id. at 1029. In the event Commerce's concern is substantial and legitimate, however, a remand is usually appropriate. On the other hand, a remand may be refused if the agency's request is frivolous or in bad faith. Id.

When Commerce believes that its original decision was incorrect on the merits and wishes to change the result [(3) above], remand to Commerce is generally appropriate to correct simple errors, such as clerical errors, transcription errors, or erroneous calculations. Id. When Commerce is compelled by the governing statute to reach a different result than the result it reached in error, the binational panel has considerable discretion. Id. It may decide the statutory issue itself or it may order a remand. Id. When Commerce is not compelled by the governing statute to reach a different result, but Commerce still believes that its original decision was incorrect on the merits and wishes to change the results, a remand to Commerce is required, absent the most unusual circumstances verging on bad faith. Id. at 1029-30.
 

In the seventh administrative review, Commerce determined that CEMEX sold four types of cement in Mexico: Type I, Type II, Type V, and pozzolanic. Commerce further found that CEMEX produces cement that meets the ASTM standards for Type V cement at only two of its cement plants -- Campana and Yaqui -- which are located in the Hermosillo region of Mexico (the Hermosillo plants). CEMEX sold cement that is physically Type V cement as Type I, Type II, or Type V cement because Type V cement meets or exceeds the ASTM standards for Type I and II cement.

Based on its analysis of several factors, discussed below, Commerce determined that CEMEX�s home market sales of cement that is physically Type V cement as Type II and Type V cement and that is produced at its Hermosillo plants were outside the ordinary course of trade because they were not representative of CEMEX�s other home market sales.

CEMEX challenges Commerce�s determination that home market sales of cement that is physically Type V cement as Type II and Type V cement, produced at its Hermosillo plants, were outside the ordinary course of trade. CEMEX contends generally that Commerce�s determination that CEMEX�s sales of Type II and Type V were outside the ordinary course of trade (OCT) is contrary to law and is not supported by substantial evidence in the administrative record. CEMEX argues that Commerce failed to consider certain factors that, CEMEX contends, are relevant to an OCT analysis. Moreover, CEMEX maintains, the factors that were considered by Commerce do not support its determination. CEMEX argues that Commerce did not consider the administrative record as a whole, but instead considered only those factors that support Commerce�s ultimate conclusion and ignored those factors that detract from that conclusion. Finally, CEMEX adds several factors relied upon by Commerce are irrelevant to the OCT issue. CEMEX's May 21, 2001, Rule 57(1) Brief, at 11-50.

Commerce�s most significant error, according to CEMEX, is that Commerce failed to take into account the fact that CEMEX�s home market sales of Type V cement were made pursuant to a bona fide, legitimate home market demand. Besides this alleged error, CEMEX adds, that Commerce�s OCT determination is flawed in the following respects:

(1) CEMEX contends that home market shipping arrangements for Type V cement to Type II and Type V customers were not outside the ordinary course of trade because CEMEX absorbed pre-sale transportation costs and freight expenses for all customers on all cement types, not just on sales of Type V cement.

(2) Commerce�s analysis of the sales volume and value of Type V cement should have been based upon sales as invoiced to home market customers, rather than as produced by CEMEX. In addition, Commerce�s volume analysis should not have been conducted solely on a comparative basis, i.e., comparing sales volume of Type I cement with sales volume of Type V cement. Instead, CEMEX contends, sales volume of Type V cement was significant in absolute terms and, therefore, was reflective of sales made in the ordinary course of trade.

(3) CEMEX stresses that the differences in profitability between, on the one hand, CEMEX�s sales of Type V cement to Type V and Type II customers and, on the other hand, its sales of Type I cement to Type I customers are not of sufficient magnitude to indicate sales outside the ordinary course of trade.

(4) According to CEMEX, the relatively small number and type of customers for Type V and Type II cement, standing alone, are not indicative of sales outside the ordinary course of trade in a case, such as we have here, where the subject merchandise is sold to meet the demand of a bona fide home market.

(5) Commerce found that CEMEX did not sell Type V cement in the home market until it began production for export in the mid-1980�s, a fact that Commerce characterized as a relatively recent phenomenon. CEMEX counters that when the past sales of a company it acquired in 1989 are considered, the historical sales trend for CEMEX�s home market sales of Type II and Type V to Type II and Type V customers are not indicative of sales outside the ordinary course of trade.

(6) CEMEX takes exception to Commerce�s characterization of CEMEX�s home market sales of Type V cement as being of a �promotional quality,� and thus outside the ordinary course of trade. On the contrary, CEMEX argues, all sales of all its cement types have a promotional quality. As a full-service company in a multi-product industry, CEMEX points out, it benefits from a marketing standpoint by the fact that for each product it is trying to sell, it offers every other product in the cement product line. CEMEX�s contention notwithstanding, Commerce rejected it relying upon facts available.

See id. at 18-21.

Finally, CEMEX complains that not only did Commerce err in its analysis of the six factors that it did consider, but also that Commerce erred by failing to consider other factors that have been determined to be relevant in other OCT analyses. See id. at 16-17. These other factors include: (1) whether the sales in question were of obsolete, defective, or second-quality merchandise; (2) whether the subject merchandise was export overrun merchandise; and (3) whether sales terms varied by customer rather than by product type.

Commerce and STCC make the following points in response to CEMEX�s contentions. Addressing CEMEX�s threshold argument that legitimate home market demand exists for Type II and Type V cement, STCC counters that even if such a demand does exist, that fact does not demonstrate that the sales at issue are made within the ordinary course of trade. The proper inquiry, according to STCC, is not whether CEMEX was meeting a legitimate home market demand, but rather whether it was meeting that demand through sales that were within its ordinary course of trade. See STCC's November 16, 2001, Rule 57(2) Brief, at 65-66.

Turning to the first of the six factors that Commerce considered when making its OCT determination, STCC and Commerce argue that Commerce found that CEMEX�s shipping arrangements for Type II and Type V cement (all of which are Type V cement) from the Hermosillo plants are not ordinary because CEMEX shipped these types of cement over considerably greater distances than it shipped other types of cement sold in the home market. These long-distance shipments from Hermosillo in the north to customers in central Mexico were significantly greater than for home market sales of cement produced as Type I cement. The normal practice for CEMEX, according to Commerce and STCC, is to ship cement, a heavy material, over relatively short distances. Moreover, the decision to absorb pre-sale freight charges, rather than pass them on to the customer, should be deemed to be an unusual circumstance supporting the conclusion that the Type II and V sales were not in the ordinary course of trade.

Second, regarding the relative sales volume and value of Type II and Type V cement compared to Type I cement, Commerce and STCC contend that record evidence gathered during the period of review supports Commerce�s conclusion that CEMEX sold very small amounts of Type II and Type V cement in the home market compared to sales of cement produced as Type I. In response to CEMEX�s contention that the sales volume and value of Type V cement should have been based upon sales as invoiced to home market customers, rather than as produced by CEMEX, Commerce and STCC counter that it is particularly important to focus on the way the product was invoiced because in some cases cement that was produced to one physical specification, e.g., Type V, was sold as another type, in this case as Type I or Type II cement.

Third, regarding the relative profitability of Type II and Type V sales compared to sales of Type I cement, Commerce and STCC point to record evidence in support of Commerce�s conclusion that the profit differential between the various types of cement sold in the home market was significant, indicating that sales of Type II and Type V cement were indeed outside the ordinary course of trade. In response to CEMEX�s argument that profits on Type V cement were substantial and significant in absolute terms, STCC responds that the proper inquiry is the relative profit differential, not the absolute differential, when making an OCT determination.

Fourth, regarding the number and type of customers purchasing Type II and Type V cement, Commerce and STCC argue that they differ substantially from customers purchasing Type I cement. Commerce and STCC point out that CEMEX�s customers for Type II cement were large industrial contractors, whereas purchasers of Type I cement ranged from individuals to large contractors. Similarly, Commerce and STCC contend, the record evidence supports the finding that the number of customers for Type I cement was substantially greater than the number of customers for Type V cement. In the collective view of Commerce and STCC, the evidence supporting these findings, which CEMEX does not dispute, buttresses Commerce�s determination that sales of Type II and Type V cement are outside the ordinary course of trade.

Fifth, regarding the historical sales trend for Type II and Type V cement and whether sales of the subject merchandise have occurred over a �reasonable period,� Commerce and STCC contend that the period beginning in the mid-1980�s, when CEMEX began selling Type II and Type V cement, has to be juxtaposed to the more than ninety years over which CEMEX has produced and sold other types of cement. Measured in relative terms, the brevity of CEMEX�s production of Type V cement indicates that sales of Type V cement are outside the ordinary course of trade, according to Commerce and STCC.

Sixth, regarding the promotional quality of CEMEX�s Type II and Type V sales, Commerce relied on facts available to conclude that sales of Type II and Type V cement continue to exhibit a promotional quality that is not evidenced by CEMEX�s sales of other types of cement. Commerce contends that this factor has been relied upon in past reviews in determining whether home market sales are outside the ordinary course of trade. See Commerce's November 16, 2001, Rule 57(2) Brief, at 63-66. STCC�s position on this point differs from that of Commerce. STCC contends that CEMEX did in fact respond to Commerce�s request for information, but that its response was self-serving and lacked credibility. STCC concludes that Commerce committed error, but that the error is harmless based on the existence of other record evidence that supports Commerce�s determination that sales of Type II and Type V cement are outside the ordinary course of trade. See STCC's November 16, 2001, Rule 57(2) Brief, at 68-73.

Finally, regarding CEMEX�s contention that Commerce ignored other factors that have been determined to be relevant in OCT analyses, STCC responds that the factors cited by CEMEX have no relevance given the factual setting of the present administrative review. See id. at 73-81. Therefore, according to STCC, absent a showing by CEMEX that any of the omitted factors it cites is probative with respect to the OCT issue in the instant case, or that a consideration of any of those factors would alter Commerce�s determination, Commerce�s OCT determination must be affirmed.

As noted, Commerce determined that CEMEX�s home market sales of Type II and Type V cement produced at its Hermosillo plants were outside the ordinary course of trade. As a result, Commerce did not include CEMEX�s sales of Type II and Type V cement in its calculation of normal value. The antidumping duty law defines normal value as 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)(B)(i). Thus, in order to calculate normal value, Commerce must identify which home market sales were made in the ordinary course of trade. The term �ordinary course of trade� is defined as �the conditions and practices which, for a reasonable time prior to the exportation of the subject merchandise, have been normal in the trade under consideration with respect to merchandise of the same class or kind.� 19 U.S.C. � 1677(15). In making its OCT determination, Commerce must, of course, view the administrative record as a whole. This requirement means that Commerce is required to take into account not only the evidence that supports its conclusion, but also evidence that detracts from it as well. Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1563 (Fed. Cir. 1984).

The purpose of the OCT provision �is �to prevent dumping margins from being based on sales which are not representative� of the home market.� CEMEX, S.A. v. United States, 133 F.3d 897, 900 (Fed. Cir. 1998) (quoting Monsanto Co. v. United States, 698 F. Supp. 275, 278 (Ct. Int�l Trade 1988)). Commerce's OCT inquiry is fact-specific. As observed by the Federal Circuit in the second administrative review of the antidumping order that is the subject of this Panel review - where the Federal Circuit affirmed Commerce�s determination that CEMEX�s sales of Type II and Type V cement were outside the ordinary course of trade - Commerce is not to evaluate just �one factor taken in isolation but rather . . . all the circumstances particular to the sales in question.� CEMEX, supra, 133 F.3d at 900. No one factor in isolation can be considered determinative. Rather, all the circumstances surrounding the sales in question must be examined. When applying this totality-of-the-circumstances test, reviewing courts have accorded Commerce great deference regarding its findings. See, e.g., CEMEX, supra; Koenig & Bauer-Albert AG v. United States, 259 F.3d 1341, 1345 (Fed. Cir. 2001); NTN Bearing Corp. v. United States, 155 F. Supp. 2d 715, 732-33 (Ct. Int�l Trade 2001); Timken Co. v. United States, 852 F. Supp. 1122, 1128 (Ct. Int�l Trade 1994). The burden is thus on the party challenging Commerce�s determination to demonstrate that it is wrong. While we conclude that CEMEX has not met its burden, this Panel has some reservations regarding Commerce's OCT determination in this review.

In determining whether CEMEX�s home market sales of Type II and Type V cement were outside the ordinary course of trade, Commerce considered the following six factors: (1) freight costs and shipping distances for Type II and Type V cement, (2) the volume and value of Type II and Type V cement sales, (3) CEMEX�s profitability on Type II and Type V cement, (4) the number and type of customers for Type II and Type V cement, (5) historical sales trends, and (6) the promotional quality of CEMEX�s sales of Type II and Type V cement. See Final Determination, 64 Fed. Reg. at 13156-57.

Regarding the first factor, freight costs and shipping distances for Type II and Type V cement, Commerce determined that freight costs and shipping distances for Type II and Type V cement sold in the home market were significantly greater than for home market sales of Type I cement. Commerce found that �the normal practice for CEMEX is to ship cement, a heavy material, over relatively short distances. Over 95 percent of CEMEX�s sales of cement in Mexico were shipped less than 150 miles and . . . shipments of cement produced as Type I conformed to this pattern. Shipments of Type II and Type V, however, occurred over vastly greater distances.� Final Determination, 64 Fed. Reg. at 13156. While this fact standing alone may not constitute �unusual circumstances,� when coupled with CEMEX�s decision to absorb freight costs for Type II and Type V cement, these two facts in tandem support Commerce�s finding of an �unusual circumstance.� As observed by the Federal Circuit when it reviewed this same factor, �this departure from the norm could well give rise to Commerce�s determination that the sales of Types II and V cements were outside the ordinary course of trade.� CEMEX, 133 F.3d at 901.

Although CEMEX takes issue with this conclusion, the pertinent inquiry is whether the conditions and practices are normal for the company under review. In the years preceding the antidumping duty order in this case, it was CEMEX�s normal business practice to pass on the full cost of freight charges to purchasers of Type II cement. Given the high freight costs for cement, CEMEX�s decision to absorb those costs constitutes �an unusual circumstance� supporting a determination that sales of Type II and Type V cement are outside the ordinary course of trade.

Regarding the second factor, volume and value of Type II and Type V cement sold in the home market, the Federal Circuit affirmed Commerce�s practice of examining relative sales volume when making its OCT determination. In CEMEX, the Federal Circuit held that CEMEX�s home market sales of Type II and Type V cement during the second administrative review �represent a minuscule percentage of CEMEX�s total sales of cement, a fact that indicates that they were not in the ordinary course of trade.� CEMEX, 133 F.3d at 901. Although this Panel hesitates to characterize CEMEX�s sales of Type II and Type V cement as �minuscule� in either absolute or relative terms, when compared to its home market sales of Type I cement during the period of review, CEMEX�s sales of Type II and Type V were substantially less than those of Type I cement.

Regarding the third factor, CEMEX�s profitability on Type II and Type V cement, the Federal Circuit noted in CEMEX that ��[A] profit level comparison is probative of the economic reality� of the sales, . . . and therefore the disparity in profit margins is indicative of sales that were not in the ordinary course of trade.� Id. at 901, quoting Mantex, 841 F. Supp. at 1308 (upholding Commerce�s profitability methodology that analyzes profit levels on a relative basis). While the record may support CEMEX�s argument that its sales of Type II and Type V cement were profitable in absolute terms, the issue is whether those profits were small when compared to the profits earned on sales of Type I cement during the period of review. On a relative basis the profit differential between sales of Type II and Type V cement and sales of Type I cement was significant, supporting Commerce�s conclusion that sales of Type II and Type V cement were outside the ordinary course of trade.

Regarding the fourth factor, the number and type of customers for Type II and Type V cement, Commerce has used this factor in other OCT analyses and the CIT has recognized that the number of buyers in the home market is a relevant criterion. See Laclede Steel Co. v. United States, 18 C.I.T. 965 (1994). Commerce found that the number and type of customers purchasing Type II and Type V cement are substantially different from those whose purchase other cement types. The number of customers purchasing Type II and Type V cement were dramatically less than the number buying Type I cement. Moreover, Commerce found that customers who purchased Type II and Type V cement tended to be large industrial contractors working on a small number of projects, whereas purchasers of Type I cement varied from individual buyers who purchased a single bag of cement to large contractors who bought several tons during the period of review.

CEMEX argues that the simple fact that there are customers, rather than their number or type, is indicative of sales within the ordinary course of trade. However, agency precedent holds that the number of buyers is a relevant factor in an OCT analysis. While this Panel has reservations with Commerce�s determination on this point, the fact remains that no single factor is dispositive in an OCT analysis. Accordingly, this Panel is unable to find that Commerce is wrong in its assessment that a relatively limited number of customers for Type II and Type V cement supports a conclusion that sales to those customers are outside the ordinary course of trade.

Regarding the fifth factor, historical sales trends, the antidumping duty statute directs Commerce, when it makes its OCT determination, to examine �the conditions and practices� that have existed �for a reasonable time prior to the exportation of the subject merchandise . . .� 19 U.S.C. � 1677(15). Thus, when making its OCT determination, Commerce had to consider the length of time over which CEMEX sold Type II and Type V cement. Commerce requested CEMEX to provide information regarding its historical sales trends, but CEMEX did not respond, according to Commerce. Consequently, Commerce relied upon facts available from the second administrative review where Commerce found that CEMEX did not sell Type II and Type V cement until it began production for export in the mid-1980�s. In the sixth review, Commerce characterized CEMEX�s sales of Type II and Type V cement as �a relatively recent phenomenon,� given that CEMEX had been producing cement in Mexico for nearly 100 years. Gray Portland Cement and Clinker From Mexico: Final Results of Antidumping Duty Administrative Review, 63 Fed. Reg. 12764 (March 16, 1998).

CEMEX challenges Commerce�s characterization, arguing that Commerce should have considered the sales of Type V cement that were made over a 25-year period by another Mexican cement company, Tolteca, which CEMEX acquired in 1989. When the sales of Type V cement by Tolteca are considered, CEMEX concludes, CEMEX has been selling Type V cement for a reasonable period of time within the meaning of the statute.

This Panel is unable to conclude that Commerce acted unreasonably in rejecting CEMEX�s argument that CEMEX should, in effect, receive credit for sales made by another cement company that CEMEX did not own until 1989. Moreover, Congress has not defined the term �reasonable time� used in 19 U.S.C. � 1677(15), nor does Commerce define it through its regulations. Consequently, its application will necessarily vary from case to case depending upon the facts of each case. Hence, in the face of this congressional silence, this Panel must defer to Commerce�s interpretation of the term �reasonable time� in this case, unless we find that Commerce�s interpretation and application of that term in this case is arbitrary, capricious, or an abuse of discretion. See PPG Indus., Inc. v. United States, 928 F.2d 1568, 1572 (Fed. Cir. 1991) (a court should not disturb agency interpretations of the statute unless it appears from the statute or its legislative history that the interpretation is not one that Congress would have sanctioned). We are unable to conclude, however, that Commerce�s interpretation and application of the term �reasonable time� in this review is arbitrary, capricious, or an abuse of discretion.

Regarding the sixth and final factor relied upon by Commerce in its OCT determination - the promotional quality of CEMEX�s sales of Type II and Type V cement - the Federal Circuit upheld Commerce�s OCT determination in the second administrative review in part because �the evidence before Commerce indicated that the home market sales of Types II and V cements were of a promotional nature; customers of Types II and V cements were more likely to purchase CEMEX�s other cement products.� CEMEX, 133 F.3d at 901. Commerce maintains that CEMEX�s response to Commerce�s September 25, 1997, questionnaire did not address the issue of promotional quality. Therefore, relying on facts available, Commerce assumed that the facts regarding this issue had not changed since the second administrative review and concluded that sales of Type II and Type V cement continued to exhibit a promotional quality that is not evidenced in CEMEX�s sales of Type I cement.

Both CEMEX and STCC take the position that Commerce used facts available based on Commerce�s mistaken belief that CEMEX failed to respond to Commerce�s request for information regarding this factor when in fact CEMEX had responded. CEMEX�s response was in essence that all of its products have what is in effect a cross-promotional quality, that is, sales of Type II and Type V cement promote the sale of Type I cement and vice versa. In other words, according to CEMEX, the promotional qualities of all its cement sales are identical.

The difference between the parties seems to be not whether CEMEX in fact responded, but rather whether CEMEX provided any support for its position that home market sales of Type II and Type V cement do not have a promotional quality, at least not any more so than in the case of its other cement types. Other than its conclusory statement that all of its cement sales have a promotional quality, CEMEX offered no support for this position. Thus, Commerce was justified in rejecting CEMEX�s response as essentially unresponsive, thereby forcing Commerce to rely upon facts available.

Even accepting as true CEMEX�s assertions that all of its products have a promotional quality, the task confronting this Panel remains unchanged, viz., based on the totality of the circumstances adduced by Commerce during the seventh administrative review, is Commerce�s OCT determination unsupported by substantial evidence on the record or is it otherwise not in accordance with law? The factor of promotional quality vel non of a product is only one of several factors that Commerce considered and relied upon when making its multifaceted, OCT determination in this review. In the face of a fact-specific test that vests in the agency broad discretionary power to assess the evidence and weigh the various factors, this Panel is unable to answer that question in the affirmative.

Finally, CEMEX challenges Commerce�s OCT determination on the ground that Commerce failed to consider a number of other factors, namely, whether the sales in question were of obsolete, defective, or second-quality merchandise; whether the subject merchandise was export overrun merchandise; or whether sales terms varied by customer rather than by product type. The point, however, is not whether Commerce overlooked these factors, but rather whether these factors are relevant in the context of this administrative review. Commerce�s OCT determination cannot be deemed to be erroneous when none of the conditions identified by CEMEX, e.g., sales of export overrun merchandise, or sales of defective or obsolete merchandise, were in fact present in the instant review. See Mantex, 841 F. Supp. at 1306. CEMEX raised this same argument before the Federal Circuit, which rejected it. See CEMEX, 133 F.3d at 901. The Panel does likewise.

In summary, had the role of this Panel been to determine whether Commerce was correct in its OCT determination in the instant case, a majority of the Panel might well have reached a different determination. But that is not the role of a binational panel. Here, this Panel is asked to determine whether the agency properly applied the governing legal test and whether substantial evidence supports the agency�s findings of fact. When, as here, the standard against which the agency�s determination is to be measured is a balancing test that is fact-specific and based on the totality of the circumstances, in the absence of a clear abuse of discretion, it is well nigh impossible for any reviewing body to reverse the agency. Referring to the Federal Circuit�s CEMEX decision as establishing a baseline, at oral argument counsel for CEMEX asked rhetorically, �But where�s the room in the system to accommodate new facts? You shouldn�t be trapped by the baseline.� Transcript of Oral Argument at 134. Although this Panel understands counsel�s frustration with this totality-of-the-circumstances test, it is the test approved by the Federal Circuit whose decisions the Panel is bound to follow.

This Panel concludes that Commerce properly determined that CEMEX's home market sales of Type II and Type V cement were outside the ordinary course of trade. Accordingly, Commerce's determination is affirmed.

Notes: