Before Rich, *fn1 * Circuit Judge, Archer, Senior Circuit Judge, and Rader, Circuit Judge.
The opinion of the court was delivered by: Archer, Senior Circuit Judge.
Appealed from: United States Court of International Trade
The United States, the Department of Commerce (Commerce) and Maui Pineapple Co., Ltd. (Maui) (collectively Appellants) appeal from the judgment of the Court of International Trade, holding that Commerce's determinations relating to the allocation of the cost of purchased raw material - fresh pineapple fruit - between canned pineapple fruit and other products were unsupported by substantial evidence, arbitrary, capricious, and contrary to law. The court remanded the case for recalculation of the anti-dumping duty margins (dumping margins) using either the Thai producers' weight-based allocation methodologies or a non-output price-based cost allocation methodology. See Thai Pineapple Public Co., Ltd. v. United States, 946 F. Supp. 11 (CIT 1996) (Thai Pineapple I). On remand, Commerce calculated fruit costs for the Thai producers using their submitted weight-based fruit cost allocation methodologies. The Court of International Trade sustained the remand results and entered final judgment on March 18, 1997. See Thai Pineapple Public Co., Ltd. v. United States, 1997 WL 129156 (CIT March 18, 1997) (Thai Pineapple II). Appellants challenge the Court of International Trade's Conclusion that Commerce wrongly allocated raw material costs in rendering its Final Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit From Thailand, 60 Fed. Reg. 29553 (June 5, 1995), as amended, 60 Fed. Reg. 36775 (July 18, 1995) (Final Determination). We reverse.
In response to a petition filed on behalf of the U.S. industry, Commerce initiated an investigation of canned pineapple fruit from Thailand. The investigation concerned Thai producers of canned pineapple fruit, including Dole Food Company, Inc. (Dole), *fn2 The Thai Pineapple Public Co., Ltd. (TIPCO), Siam Agro Industry Pineapple and Others Public Co., Ltd., (SAICO), and Malee Sampran Factory Public Co., Ltd. (Malee) (collectively Thai producers). *fn3 The Thai producers produced canned pineapple fruit as well as products outside the scope of the investigation such as pineapple juice and juice concentrate. These products use separate parts of the same fresh pineapple fruit and thus they share raw material costs. In its determination, Commerce had to calculate the Thai producers' cost of production for the purpose of determining dumping margins and, in so doing, had to allocate a portion of the shared pineapple fruit costs to canned pineapple fruit.
Commerce issued cost questionnaires to each of the Thai producers requesting both cost of production (COP) and constructed value (CV) information. In their financial accounting records used to inform management, shareholders, and governmental authorities about the companies' financial condition TIPCO, SAICO and Malee (TIPCO et al.) allocated raw material costs between canned pineapple fruit and pineapple juice. These financial accounting records were audited and were kept in accordance with generally accepted accounting principles (GAAP) in Thailand. Dole allocated the entire cost of the purchased raw material to canned pineapple fruit. Although these allocation methodologies had been used for many years, when Commerce requested information the Thai producers argued that these methodologies were unreliable. According to the Thai producers, an alternative methodology was necessary because their financial accounting cost allocations were based on certain managerial and tax goals, and thus, were not reflective of actual production costs.
The Thai producers' alternative methodology was based upon the weight of fresh pineapple fruit used to produce the various pineapple products. The weight-based allocation resulted in a raw material cost for canned pineapple fruit that was less than the cost shown in their financial accounting records.
Commerce rejected the weight-based raw material fruit cost allocation for both COP and CV. In the final determination for TIPCO et al., Commerce relied upon the methodologies reflected in their financial accounting records. For Dole, Commerce used an average of the fruit cost allocation percentages used by TIPCO et al. As a result of its investigation, Commerce found that a large part of the Thai producers' canned pineapple fruit sales - more than 90% for certain types of canned fruit sales - were below the COP.
Dissatisfied with Commerce's Final Determination, the Thai producers filed actions in the Court of International Trade challenging, among other issues, Commerce's decision concerning fruit cost allocation. The court concluded that Commerce erred in its decision to rely upon the financial accounting records of TIPCO et al. It concluded that the "plaintiffs have demonstrated that the allocation formulas are unrelated to actual cost," and that "[a]lthough Commerce repeatedly noted the unreliability of the Thai plaintiffs' allocation methodologies, it continued to employ them simply because they were consistent with Thai GAAP." See Thai Pineapple I, 946 F. Supp. at 19-20. The court, relying on IPSCO, Inc. v. United States, 965 F.2d 1056 (Fed. Cir. 1992) (IPSCO III), remanded the case to Commerce "to accept the weight-based allocation methodologies put forth by the Thai plaintiffs [TIPCO et al.] and Dole if they are otherwise acceptable, because these are cost, not price-based, methodologies, or it may rely on another non-output price-based cost allocation methodology." Thai Pineapple I, 946 F. Supp. at 24.
On remand, Commerce calculated fruit costs for the Thai producers using their submitted weight-based fruit cost allocation methodologies. The Court of International Trade sustained the remand results in Thai Pineapple II. Appellants challenge the Court of International Trade's Conclusion that Commerce wrongly allocated raw material costs in rendering its Final Determination. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5)(1994).