[00:00:24] Speaker 03:
The next case for argument is 151850, CS Nguyen, Vietnam versus United States.

[00:00:54] Speaker 03:
Okay.

[00:01:02] Speaker 03:
Mr. Marshack.

[00:01:03] Speaker 01:
Your Honor, we have appealed to this Court, the trial court decision, to affirm three significant components of the Department of Commerce's calculation of normal value of wind powers exported by CSW.

[00:01:15] Speaker 01:
Each of these decisions is equally important to our client.

[00:01:18] Speaker 01:
Each has a relatively equal impact on CSW's dumping margin.

[00:01:22] Speaker 01:
Unless the court asks me to focus on one or two of these issues, I plan to spend my time summarizing the literature of our argument for all three issues.

[00:01:30] Speaker 01:
First, weight, FOP or PACT.

[00:01:32] Speaker 01:
Second, valuation of flanges, market price or surrogate value.

[00:01:36] Speaker 05:
Can I ask you about the weight issues to tell you how I understand it?

[00:01:42] Speaker 05:
And I'm going to ask you whether there's one number that I can say aloud because it makes things more concrete.

[00:01:47] Speaker 05:
My understanding of the weight issue is this.

[00:01:50] Speaker 05:
that commerce gave one reason for deciding to choose the higher packing weight over the verified component weight, and that is that the packing weight was essentially a doubling of the reported weight.

[00:02:11] Speaker 05:
And the problem with that is that the doubling was as to a subgroup

[00:02:17] Speaker 05:
of components that represent, may I say the percentage?

[00:02:21] Speaker 05:
You bet, Your Honor.

[00:02:21] Speaker 05:
Okay.

[00:02:21] Speaker 05:
About 8 percent of the total, so that the actual disparity in weight is about 3.6 percent.

[00:02:27] Speaker 05:
And there's no reason to think that a 3.6 percent difference in weight affects the tippiness of the shipping, even if one of the ship, even if a doubling would.

[00:02:39] Speaker 05:
And that makes the basis of their decision unsound.

[00:02:43] Speaker 01:
Yes, Your Honor.

[00:02:44] Speaker 01:
The 3.6%, and that's approximate.

[00:02:47] Speaker 01:
In our opinion, they say it's significant.

[00:02:51] Speaker 01:
I'm not sure if they say it's significant or not, but that's not significant.

[00:02:54] Speaker 05:
Well, they don't say in their brief that it's significant, and I didn't see that.

[00:02:57] Speaker 01:
We don't believe in their opinion they said it's significant.

[00:03:00] Speaker 01:
They said there's a difference.

[00:03:01] Speaker 01:
There's a total difference of 3.6%.

[00:03:02] Speaker 04:
Well, if that's the only difference, why is this equivalent to your client?

[00:03:07] Speaker 04:
You said all these issues matter all.

[00:03:09] Speaker 01:
All the issues, as far as the margin is concerned, Your Honor.

[00:03:12] Speaker 01:
We have three issues that impact our final dumping margin.

[00:03:16] Speaker 04:
So even though we're now talking about 3.6%, that has a dramatic impact on the ultimate?

[00:03:21] Speaker 01:
Yes, Your Honor.

[00:03:22] Speaker 01:
Each of these issues has a dramatic impact on the ultimate dumping margin.

[00:03:27] Speaker 05:
Just to be clear, the 3.6% is the difference in weight, and it makes about a 15% difference in your margin.

[00:03:34] Speaker 01:
Probably less than 15%.

[00:03:35] Speaker 01:
Right now, we're at a 17% margin.

[00:03:38] Speaker 01:
If we win two out of three issues, we have a zero margin.

[00:03:41] Speaker 01:
And each of these issues has approximately the same impact on our ultimate margin.

[00:03:46] Speaker 01:
So this U of Q is, let's say, approximately 8%.

[00:03:48] Speaker 01:
The other two issues are approximately 8%.

[00:03:50] Speaker 01:
If we went two out of three, we have a zero margin, which is the minimus, and we will be excluded from the dumping order.

[00:03:57] Speaker 01:
But the 3.6% is the difference in weight between the packed weight, which the Department of Commerce agreed was an estimated weight, which we told them it was an estimated weight at the beginning of this investigation.

[00:04:11] Speaker 01:
And that's the difference between that packed weight and the actual verified weights.

[00:04:17] Speaker 01:
If you look at the verification report and you look at the briefs by the Department of Justice, they agree that the actual weights of these internal components was verified by the department.

[00:04:29] Speaker 01:
And if the actual weights are verified by the department, and that means we gave them all the information, there's nothing more we could have given them because they verified the facts

[00:04:40] Speaker 06:
And they admit... When you say they verified, they didn't actually put all these components on a scale, right?

[00:04:47] Speaker 01:
Correct.

[00:04:48] Speaker 01:
They did not put the components on a scale.

[00:04:50] Speaker 01:
The Department of Commerce verification procedures, they were in Vietnam, they were in Korea for a week, and they were in Vietnam for the week.

[00:04:58] Speaker 01:
They looked at all our records, and if you look at the report, they verified that the weights that we presented to them for these internal components were accurate.

[00:05:07] Speaker 01:
And that is part of their findings.

[00:05:09] Speaker 01:
and that's part of their verification report.

[00:05:12] Speaker 01:
Now that would be like a post hoc decision.

[00:05:17] Speaker 01:
Oh, we didn't verify them because we didn't put them on the scale.

[00:05:20] Speaker 01:
They could do what they did in verification.

[00:05:22] Speaker 01:
They had a choice.

[00:05:24] Speaker 01:
Potentially they could have put them on the scale.

[00:05:25] Speaker 01:
But based on how they verified and were taking their verification report as accurate and supported by substantial evidence to the record because it's in the report, they found that our reports were accurate.

[00:05:37] Speaker 01:
We gave them a full

[00:05:39] Speaker 01:
a list of all the weights.

[00:05:40] Speaker 06:
Can you identify who it is that's calculating and determining the packed weight and what it is, what are the steps they go through to calculate the packed weight?

[00:05:51] Speaker 01:
The packed weight is an estimate provided to our client by their customer and it's used for shipping purposes.

[00:05:58] Speaker 06:
So who is creating the packed weight?

[00:06:00] Speaker 01:
The customer gives the packed weight to our, this is on the record also, gives the packed weight to CSW and

[00:06:07] Speaker 01:
CSW puts the packed weight of the entire tower, the plate, the flanges, all these internal components.

[00:06:15] Speaker 06:
And what do we know about what the customer does in terms of calculating the packed weight?

[00:06:20] Speaker 01:
Very little.

[00:06:21] Speaker 01:
We know that they know the approximate weights of all the components, the approximate weights of the steel, the flanges, the internals, most of the internals, and they say this is what we believe the weight of the entire section of these

[00:06:35] Speaker 01:
massive.

[00:06:36] Speaker 06:
Where do they get those approximate numbers?

[00:06:39] Speaker 01:
They know the weight from documents, from the documentation that a steel plate, if a steel plate is of this size it weighs this much.

[00:06:48] Speaker 01:
They know how many steel plates go into a wind tower section.

[00:06:51] Speaker 01:
They know how many flanges in the wind tower sections for internals.

[00:06:55] Speaker 01:
They know these are the internals and the internals are much more approximate because they don't really weigh the internals.

[00:07:00] Speaker 01:
I say the internals

[00:07:02] Speaker 01:
That would be a junction box or rubber gasket.

[00:07:05] Speaker 01:
They don't weigh them.

[00:07:06] Speaker 01:
They say, well, we think these are approximately weighed this much.

[00:07:09] Speaker 01:
They put it together, and they give a unitary amount to our client.

[00:07:14] Speaker 01:
They say, this is the packed weight.

[00:07:16] Speaker 01:
It's a final, complete weight.

[00:07:18] Speaker 01:
Everybody agrees.

[00:07:20] Speaker 01:
And the Department of Commerce confirmed that this is an estimate.

[00:07:24] Speaker 01:
They agree it's an estimate.

[00:07:25] Speaker 06:
They have an interest, though, in making sure that the weight is

[00:07:29] Speaker 06:
close to accuracy possible in terms of shipping and shipping safety.

[00:07:32] Speaker 01:
Absolutely.

[00:07:33] Speaker 01:
And the difference between our accurate verified weights for the plates, for the flanges, for the components was merely less than 4%, about 3.6%, which is a very small amount.

[00:07:46] Speaker 01:
And for shipping safety, that's enough.

[00:07:48] Speaker 01:
Commerce says, well, shipping safety is important, but nobody says that somehow it wasn't safe because it's a 3%.

[00:07:57] Speaker 01:
3.6% difference, Commerce didn't make that determination.

[00:08:00] Speaker 01:
What Commerce did was they accepted a weight that they knew was estimated, they knew not was accurate, and they rejected weights that the Department of Commerce, using their traditional normal verification procedures, verified as being accurate.

[00:08:17] Speaker 04:
And I was just going to suggest we move on to another issue.

[00:08:20] Speaker 01:
Yes.

[00:08:20] Speaker 05:
Can I ask you to move to issue number three, which, to put it mildly, is the most confusing of the issues.

[00:08:28] Speaker 05:
And I want to start with this.

[00:08:34] Speaker 05:
Is there any information on the face of the Ganges or findings or concessions or anything like that on the face of the Ganges annual report, which is what we're staring at here?

[00:08:46] Speaker 05:
that indicates that the erection and civil expenses, which is something that Ganges paid other people for, corresponds to the erection and civil income, which is something that Ganges receives.

[00:09:07] Speaker 05:
Are they the same towers or not the same towers, or do we just not know?

[00:09:12] Speaker 05:
We don't know on the record.

[00:09:14] Speaker 05:
So if we don't know, then why is it – this is just one part of it – why is it not permissible for commerce to say – it would be plausible that Ganges outsources the foundation creation and the erection of everything because it's not going to send a bunch of employees over.

[00:09:37] Speaker 05:
It pays a certain amount to the subcontractors to do that.

[00:09:40] Speaker 05:
That's on the charges side.

[00:09:42] Speaker 05:
And then it adds a general contractor markup, and it gets money from the customer Siemens or West Virginia electric power company or something.

[00:09:53] Speaker 05:
And those would correspond.

[00:09:54] Speaker 05:
But we don't know that.

[00:09:56] Speaker 05:
So it could be that those are completely unrelated.

[00:09:59] Speaker 05:
And we therefore do not have to do your preferred simple thing, which is

[00:10:04] Speaker 05:
subtract the 142 billion rupees from the job work charges, from the 212.

[00:10:13] Speaker 05:
And so it's legitimate for us to try something else, and then it gets complicated.

[00:10:20] Speaker 01:
First, what we're saying is that as a matter of Department of Commerce policy, when you have a

[00:10:27] Speaker 01:
something in the financial statement, job or charges including erection and civil expenses.

[00:10:33] Speaker 01:
If you have an expense, Department of Commerce traditional policy is to reduce that by income of the same type of income in the financial statement.

[00:10:44] Speaker 01:
So here you have a word job or charges, erection and civil expenses.

[00:10:49] Speaker 01:
So Department of Commerce policy is to say, okay, we're going to reduce that by the income because it relates

[00:10:55] Speaker 01:
the income related expense, not the exact same expense, but relates overall to erection expenses, civil expenses, job work expenses, relates to job work income, civil income, and erection income.

[00:11:09] Speaker 01:
So that's their traditional policy, even though it may not be the exact same job.

[00:11:14] Speaker 01:
That if you have an expense and you have income, the income reduces the expense on the financial statement to get the overall expense, because they realize income

[00:11:25] Speaker 01:
from income associated with performing job.

[00:11:29] Speaker 05:
Right, but I mean, I understand that if there's a reason to think that they are, or a good enough reason to think that they're substantively related, but if they're just related at the level of name, that's probably not enough, in the way that job work charges and job work income are almost certainly completely unrelated in substance.

[00:11:47] Speaker 05:
One is manufacturing that Ganges is doing for somebody else, and the other is

[00:11:52] Speaker 05:
manufacturing the Ganges is paying somebody else to do.

[00:11:54] Speaker 05:
Completely different jobs.

[00:11:56] Speaker 01:
Yes, they're completely different jobs, but the policy, the Department of Commerce policy, the policy they used in this case is that they took the job work income, remember, they used it, they deducted the job work expense by the job work income.

[00:12:10] Speaker 01:
They agreed with that.

[00:12:11] Speaker 01:
They took the job work income

[00:12:13] Speaker 01:
And the doctor died from expense.

[00:12:15] Speaker 05:
You don't challenge that, but it seemed to me, I don't understand why they could do that, but on the other hand, it's like two cents, so why would anybody care about it?

[00:12:24] Speaker 05:
It's like two million or something out of one point something billion?

[00:12:29] Speaker 05:
It's so trivial, why would anybody fight about it?

[00:12:31] Speaker 05:
Is there anything actually rational about including the job work income in the ratios that come later?

[00:12:38] Speaker 01:
But what's rational in the Department of Commerce, their policy is, if you have an expense and you have an associated income by the same name in a financial statement, we really don't have much information.

[00:12:49] Speaker 01:
The policy is to reduce the expense by the income associated with the same name.

[00:12:55] Speaker 06:
I thought Commerce said they have another policy, which says when you have something like civil income and erection income, they'll treat those things as separate lines of business.

[00:13:07] Speaker 06:
And that's what they did here.

[00:13:09] Speaker 01:
But the question, I mean, they are, I think, it's not a separate line of business.

[00:13:13] Speaker 01:
And there, if you look at the financial statement, and if you look at what we talk about in the brief, it's the same general operations of the company.

[00:13:20] Speaker 01:
The civil income and the erection income are part of the general operation of the company.

[00:13:28] Speaker 01:
Ganges conducts the erection.

[00:13:31] Speaker 01:
And the civil income, the same way it produces the wind towers.

[00:13:35] Speaker 01:
And there, it is part of the general operations of the company.

[00:13:38] Speaker 01:
And there, we think it's a mistake.

[00:13:40] Speaker 01:
It's not their policy to treat it differently.

[00:13:42] Speaker 01:
When you look at the four corners of the financial statement, you see it's part of their operating income.

[00:13:48] Speaker 01:
And it's part of their expenses.

[00:13:49] Speaker 01:
The expense line says it's job or charges, including erection and civil expenses.

[00:13:57] Speaker 01:
So it's part of the general operations.

[00:13:59] Speaker 01:
And if it's part of the general operations for the expense side, it's part of the general operations for the income side.

[00:14:05] Speaker 01:
So to be consistent and to just take a reasonable, consistent view of the financial statement, if you have expenses of a certain amount, including erection and civil, you also should deduct the income with the same names.

[00:14:20] Speaker 01:
Otherwise, we believe that commerce really tried to look behind the financial statement in a developed methodology that we had a very difficult time

[00:14:29] Speaker 01:
understanding and probably did not do a good job of explaining to you because it was so convoluted.

[00:14:35] Speaker 01:
They just went around in circles.

[00:14:37] Speaker 06:
Do you want to quickly identify the other alleged errors you have on issue three?

[00:14:43] Speaker 01:
Issue three, we believe that the big error is that they should have used the first methodology, the simple methodology rather than the convoluted methodology and also when you use the convoluted

[00:14:56] Speaker 01:
methodology, you have just a total disconnect where you have income of this $144,000 and the expense is only the job work expenses.

[00:15:07] Speaker 01:
So their calculation in their job work expenses is very small when it should have been equal because you're starting with expenses of $212,000 and income of $144,000 and what they end up is with

[00:15:20] Speaker 01:
you know, with very, very high expenses of about 180 and a very, very small income because they're throwing out all this civil income and election income because they somehow believe they've calculated it is associated with something else.

[00:15:36] Speaker 01:
And it just doesn't make sense the way they get to that.

[00:15:40] Speaker 01:
The roundabout way they get to that doesn't work because they make a fundamental mistake by when they include

[00:15:48] Speaker 01:
In the sale of finished goods, they somehow say that that's associated with job work income.

[00:15:54] Speaker 01:
Job work income has nothing to do with sale of finished goods.

[00:15:57] Speaker 01:
The income is when somebody else sells the finished goods.

[00:16:00] Speaker 01:
So we believe that their fundamental mistakes and commerce acted in a way that just didn't make sense.

[00:16:09] Speaker 01:
Based on their original presumption that when you have an expense, you should, based on the four corners of the statement, you deduct the income with the same names.

[00:16:21] Speaker 03:
I don't know if I have time to get to... You've already exhausted your rebuttal time, so why don't you... why don't we hear from the government before we... Thank you.

[00:16:41] Speaker 03:
Mr. Curlin.

[00:16:46] Speaker 02:
Good morning, Your Honor.

[00:16:47] Speaker 02:
May it please the Court?

[00:16:48] Speaker 02:
This case involves several instances.

[00:16:51] Speaker 02:
in which commerce was faced with imperfect information on the record and had to make a choice about what the proper information to use was.

[00:16:57] Speaker 02:
Something that's in commerce's wheelhouse as an administrative agency.

[00:17:00] Speaker 06:
If the pack weight is different than the FOP weight, then is it all of a sudden commerce policy to just always go with the pack weight because the pack weight must be more accurate because we're so sensitive about safety concerns and shipping these products?

[00:17:18] Speaker 02:
No, but as the trial court in this case recognized, and this is a page 125 to 126 of the record, commerce was faced with imperfect information.

[00:17:26] Speaker 02:
There were two numbers.

[00:17:28] Speaker 02:
And commerce went with a number that was linked to what the trial court aptly termed real world choices.

[00:17:33] Speaker 02:
And to step back a little bit, what happened here, because I don't think the record has been entirely accurate as articulated by the appellants.

[00:17:41] Speaker 02:
Commerce received two numbers from CSWIN.

[00:17:44] Speaker 02:
Commerce asked CSWIN, what do these wind towers weigh at the end of the day?

[00:17:47] Speaker 02:
And CSWIN reported a number.

[00:17:49] Speaker 02:
That number is what we call the packed weight.

[00:17:51] Speaker 02:
Commerce verified that number in CSWIN's books and records as what they understand to be the packed weight of these products when they are shipped as part of verification.

[00:18:01] Speaker 02:
Commerce also asked what are all the factors of production

[00:18:07] Speaker 02:
that you put into this product way.

[00:18:10] Speaker 02:
And CSWIN reported the different weights of all those factors of production.

[00:18:15] Speaker 02:
And at the end of the day, those weights don't add up to what CSWIN reported as its pathway.

[00:18:21] Speaker 02:
And the difference is off by tons.

[00:18:25] Speaker 02:
Literally tons.

[00:18:27] Speaker 05:
Tons out of a total of what, like 170 tons?

[00:18:30] Speaker 05:
That's right.

[00:18:32] Speaker 05:
So I mean, everything here is relative.

[00:18:34] Speaker 05:
Saying it's tons makes it sound large.

[00:18:36] Speaker 05:
In fact, as a percentage, it's really, really small.

[00:18:39] Speaker 02:
It's not that small, Your Honor, respectfully.

[00:18:41] Speaker 05:
3.6% of the total weight.

[00:18:44] Speaker 05:
And it seems to me you rightly understand in your brief, because you repeat it.

[00:18:49] Speaker 05:
You say it two times.

[00:18:51] Speaker 05:
You stress how it's a doubling of the weight.

[00:18:56] Speaker 05:
And so that must be significant.

[00:18:58] Speaker 05:
I don't think anywhere that commerce said a 3.6 percent difference in the weight is significant enough to the safety of the ship that we therefore will believe a higher number because it's more likely accurate.

[00:19:12] Speaker 02:
Well, you're on right.

[00:19:13] Speaker 02:
I think that explanation is at page 57 and 58 of the record in commerce's issues and decision memorandum.

[00:19:18] Speaker 02:
Look, it is a five-digit figure and one wouldn't expect if there's going to be a difference in the weights that it would be the entire weight of the wind tower.

[00:19:26] Speaker 02:
That would be

[00:19:28] Speaker 02:
extreme.

[00:19:28] Speaker 02:
On the other hand, you know, what these packed weights are, are not just, you know, guesstimates.

[00:19:36] Speaker 02:
They're calculations of center of gravity measurements that are, according to CSWIN, calculated by a sophisticated engineering company and are in the interest.

[00:19:46] Speaker 05:
I thought it was agreed that maybe these aren't guesstimates.

[00:19:49] Speaker 05:
They are estimates.

[00:19:51] Speaker 02:
And so Commerce at page 57 and 58 of the record indicated that

[00:19:56] Speaker 02:
while we might not expect it to be exact, we don't think that these should be sufficiently similar not to create a problem.

[00:20:09] Speaker 02:
The implication of that is obviously that they're not sufficiently similar.

[00:20:12] Speaker 02:
And on the other hand, we don't think these should be grossly overestimated in a way to risk the potential

[00:20:18] Speaker 02:
potential rolling of the towers or safety of the vessel.

[00:20:21] Speaker 02:
And so, commerce is indicating there that look, and I want to be clear, we're not saying it's off by 100%.

[00:20:27] Speaker 02:
We understand that it's, previously that was a BPI number, but it's 3.7% as it's been indicated in court today.

[00:20:35] Speaker 02:
We understand it's not, that it could be a larger number, but that was a sufficient discrepancy for commerce to say, you know, this is an issue we've had, commerce asked a number of times

[00:20:47] Speaker 02:
for CSWIND to explain what the discrepancy was, didn't get a satisfactory answer.

[00:20:51] Speaker 02:
And so at the end of the day, and this goes back to the trial court's decision, Commerce tied its determination to the real world choices.

[00:20:58] Speaker 02:
We said, we are going to use, Commerce said, we are going to use the number that is the number that at the end of the day, when CSWIND and its client have to pack things onto a ship and calculate the center of gravity sufficiently accurate so that these large wind towers are not going to roll on the ship.

[00:21:16] Speaker 02:
That's the number they use, not adding up all the FOP weights.

[00:21:21] Speaker 02:
And Congress didn't assign blame here.

[00:21:22] Speaker 02:
It's not clear why these internals.

[00:21:28] Speaker 02:
I mean, the point is about the doubling.

[00:21:30] Speaker 06:
Is there any evidence in the record that the sensitivities for safety concerns of shipping are so severe that we need to have the pack weight be totally precise and accurate?

[00:21:43] Speaker 02:
Well, that's part of what commerce learned in verification, and that's why we've continually indicated that this issue came into focus with verification.

[00:21:50] Speaker 02:
No, I understand.

[00:21:51] Speaker 06:
Is there any evidence in the record that's probative of showing that the pack weight absolutely is critical to, I don't know, a tenth of a percent accuracy or something like that?

[00:22:05] Speaker 02:
Sure.

[00:22:06] Speaker 02:
Not in that way, but that's what Congress indicated at page 835 of the record and then in its decision memo at page 57 and 58.

[00:22:14] Speaker 02:
These issues came into focus because Congress talked to the people at CSWIND and learned that these back weight figures are actually pretty important and that they need to be reasonably accurate.

[00:22:24] Speaker 02:
And here, there was enough of a discrepancy that it wasn't.

[00:22:28] Speaker 02:
And the reason it's a doubling is because the discrepancy was actually tied to one particular set.

[00:22:35] Speaker 06:
Maybe there's not really anything other than commerce, you know, imagining the common sense that you'd want some safety tolerance in knowing the weight.

[00:22:47] Speaker 06:
I think it's more than that.

[00:22:49] Speaker 02:
What we've sought to communicate and what's evident at 835 with the record and then through Congress's decision is that in talking to CSWIN officials at verification, Congress determined that the pack weight was actually a pretty important figure for these packing and shipping purposes.

[00:23:05] Speaker 02:
And so while I don't think CSWIN provided, you know, it has to be right within, you know, this percentage point.

[00:23:13] Speaker 02:
The number here, 3.7%, is certainly not de minimis.

[00:23:17] Speaker 02:
I mean, frequently when we're in the dumping contact, we talk about de minimis being like 0.5 or less, right?

[00:23:23] Speaker 02:
De minimis dumping is 0.5 or less.

[00:23:25] Speaker 02:
This is seven or eight times that.

[00:23:30] Speaker 02:
an overwhelming discrepancy, but it was enough for Congress to say, you know, if we have to choose between these numbers, we don't know which one is right.

[00:23:37] Speaker 02:
And that's one more key point, by the way.

[00:23:38] Speaker 02:
This is an 802 of the record, and as well, Judge Rustani's decision, again, at 125, 126.

[00:23:45] Speaker 02:
When we say verified, Congress didn't go and say, oh, this FOP weight number, these are all correct.

[00:23:51] Speaker 02:
These are the actual correct weights of what's in the tower.

[00:23:54] Speaker 02:
What Congress is doing at verification is saying these are the numbers we reported

[00:23:59] Speaker 02:
you reported were looking at what's in your books to see if those are the same numbers in your books.

[00:24:03] Speaker 02:
And in fact, this is the part of 802 of the record, CS1 was not producing when Towers went, the week when Commerce was there verifying, and Commerce noted and then the trial court noted that Commerce could not actually weigh these internal components and try to figure out what they actually weigh or what was off.

[00:24:23] Speaker 02:
So at the end of the day, commerce made a decision that if we have... We should agree.

[00:24:27] Speaker 06:
I mean, we're running out of time here.

[00:24:29] Speaker 06:
Sure, sure, sure.

[00:24:30] Speaker 06:
I mean, my understanding is, you know, commerce's policy is to try to just look at the face of one of these financial statements and not look behind the statement too much and then try to come up with a reasonable outcome.

[00:24:43] Speaker 06:
And then you came up with a formula here that is anything but straightforward.

[00:24:50] Speaker 06:
This formula is extreme, and I don't understand it.

[00:24:54] Speaker 06:
And if it looks incoherent to me, then I get very worried.

[00:24:59] Speaker 02:
So let me try to simplify the issue.

[00:25:03] Speaker 02:
At the end of the day, there are two important pieces of evidence in those financial statements at pages 737 and 744.

[00:25:08] Speaker 02:
737 is where it says the job work charges include civil and erection expenses.

[00:25:15] Speaker 02:
And both commerce and the trial court

[00:25:17] Speaker 02:
I've logically understood that that means that the civil interaction expenses are not the overwhelming portion of the job work, but are some subset of that.

[00:25:26] Speaker 02:
That's consistent with what's at page 744 of the record, which says that the production of steel structures and pipes is done on a job work basis.

[00:25:34] Speaker 02:
So these are big steel structures.

[00:25:35] Speaker 02:
If you're outsourcing a chunk of your steel structure work, that's going to generate a lot of expenses in job work.

[00:25:43] Speaker 02:
The implication of that is that the civil interaction expenses should not be all of the job work charges.

[00:25:49] Speaker 02:
It's job work including civil interaction, not civil interaction including job work.

[00:25:54] Speaker 05:
Just to be clear, in your description of 737 and 744, you added words like predominant, overwhelming, largely something like that which do not appear on those pages.

[00:26:07] Speaker 02:
No.

[00:26:07] Speaker 02:
It says job work including civil interaction.

[00:26:11] Speaker 05:
This law could be large.

[00:26:12] Speaker 05:
This document does not say.

[00:26:14] Speaker 02:
It could be, though, one would assume that what CSWIN is arguing here is that those civil interactions should be treated as if they're 98, 99% of the job work expenses.

[00:26:24] Speaker 02:
And just from the face of the statement, if they were functioning all of the job work expenses, then it seemed unlikely, illogical, that the line item would be job work including civil interaction.

[00:26:38] Speaker 05:
I thought their basic position amounts to something, I'm just doing a mental calculation, something on the order of 60, 65 percent of the job work charges.

[00:26:48] Speaker 05:
They want to take the 212, subtract out 142.

[00:26:53] Speaker 02:
My understanding is it's 98, 99 percent.

[00:26:56] Speaker 05:
Isn't their primary position, look at the income side.

[00:26:59] Speaker 05:
The income side on erection and civil is 90 and change and 51 and change, it adds up to about 142.

[00:27:05] Speaker 05:
Just offset that out of the 212.

[00:27:08] Speaker 02:
So that was their original position.

[00:27:10] Speaker 02:
That's what they say.

[00:27:12] Speaker 05:
But it's not just their original position.

[00:27:14] Speaker 05:
It's their primary position here.

[00:27:18] Speaker 05:
Am I just confused about that?

[00:27:20] Speaker 05:
I mean, that's not 98%.

[00:27:21] Speaker 05:
That's like 65% or something.

[00:27:23] Speaker 05:
I don't know.

[00:27:24] Speaker 02:
You're right, Your Honor.

[00:27:26] Speaker 02:
Largely in this case, we've argued about once Congress made the decision that it's appropriate not to include them both, but to exclude them both to comply with court's original order.

[00:27:34] Speaker 02:
CSWIN has continually argued that

[00:27:36] Speaker 02:
If you're going to exclude them, you have to exclude them the same percentage wise.

[00:27:41] Speaker 02:
Right.

[00:27:41] Speaker 05:
If you're indulging in assumptions here, is it really not – tell me why it's not the fairest assumption that the erection and civil expenses are in fact for the same powers.

[00:27:57] Speaker 05:
They pay a subcontractor to set the things up.

[00:28:00] Speaker 05:
They pay the subcontractor.

[00:28:02] Speaker 05:
They then add a contractor markup and bill that to their customer.

[00:28:08] Speaker 05:
And therefore they do really, in a real sensible world in which Gans use is not sending people to the mountains in West Virginia to set up the wind towers, it's getting local subcontractors, it's a kind of a pass-through.

[00:28:24] Speaker 05:
So why is not the most sensible assumption, to use your word, that these are in fact about the same work and so you should

[00:28:33] Speaker 05:
offset the expense by subtracting the income?

[00:28:36] Speaker 02:
Well, two reasons.

[00:28:37] Speaker 02:
Congress determined, if anything, they're not likely to be the same work.

[00:28:41] Speaker 02:
And that's, for example, page 160 and 161.

[00:28:44] Speaker 02:
That's the first remand determination.

[00:28:46] Speaker 05:
You can't tell.

[00:28:46] Speaker 05:
What's the basis for thinking that they're not likely?

[00:28:49] Speaker 05:
But these are broken out.

[00:28:51] Speaker 05:
What's the basis for saying that they're not likely to be the same?

[00:28:54] Speaker 02:
So these are broken out as a separate item on the income statement.

[00:29:02] Speaker 02:
there's sales, and then there's separate items for income from civil and income from reaction.

[00:29:08] Speaker 02:
And the notes to the income statement, this is at 740, indicate that they are done on a percentage of completion basis.

[00:29:16] Speaker 02:
And so that indicated to Commerce that this was a separate income line item that's not part of the general operations of the company.

[00:29:26] Speaker 02:
And Commerce, when you have something like that, does not treat

[00:29:30] Speaker 02:
the item as a general overhead.

[00:29:33] Speaker 02:
As Your Honor has repeatedly indicated and as Congress has repeatedly indicated, it can't go beyond the face of the income statement.

[00:29:40] Speaker 02:
But at the end of the day, when you have a separate line item that's done by a percentage of completion method indicating that we're constructing this and we're building this as we go along, the best indication was that

[00:29:56] Speaker 02:
that this was a separate item.

[00:29:57] Speaker 02:
So commerce at the end of the day determined it wasn't appropriate to include them both, but to exclude them both.

[00:30:02] Speaker 02:
And then it had to go through a process of estimating if the job work expenses include civil interruption, what was an appropriate way to estimate that?

[00:30:14] Speaker 02:
And it went through a process with court where it tied a number of the income items to things that would have been generated as a result of job work.

[00:30:26] Speaker 02:
derive the ratio, and then say, if job work expenses are going to include civil interaction expenses, we think this is an appropriate way to determine, to exclude a portion of that as accounting for civil interaction, because it's appropriate to exclude them.

[00:30:40] Speaker 02:
At the end of the day, these type of technical accounting matters are really, really at the core.

[00:30:46] Speaker 05:
Right, and they also make all the difference.

[00:30:48] Speaker 05:
It's really easy to hide giant mistakes in the mystery of numerical

[00:30:54] Speaker 05:
technicalities.

[00:30:55] Speaker 05:
So that's why it's important that we actually understand the explanation.

[00:30:59] Speaker 02:
Understood.

[00:30:59] Speaker 02:
But I can say that by what's happening here, it's clear, it comes up very, very strongly that it's not appropriate to include all these.

[00:31:08] Speaker 05:
So why aren't the job work income number, which is trivial beyond belief, why is that appropriate to include in this base?

[00:31:18] Speaker 05:
It can't possibly relate to the job work charges.

[00:31:25] Speaker 02:
Well, again, because it had the same name, that's kind of a problem for you, right, if that's what you follow?

[00:31:34] Speaker 05:
Because that's what their primary theory is, the other side.

[00:31:36] Speaker 05:
Same name, offset.

[00:31:38] Speaker 06:
Civil income, erection income.

[00:31:40] Speaker 02:
Well, and at the end of the day, that's why commerce did not include either civil income or erection.

[00:31:45] Speaker 06:
Well, then why shouldn't it have included sales of job work, right?

[00:31:48] Speaker 02:
I'm sorry.

[00:31:48] Speaker 02:
They didn't include the civil and erection expense.

[00:31:50] Speaker 02:
I mean, what they ended up doing at the end of the day was excluding them both.

[00:31:53] Speaker 06:
But get back to Judge Perron's question.

[00:31:55] Speaker 06:
Why did sales of job work include in the denominator of this ratio?

[00:32:03] Speaker 02:
My understanding is that because those are both general expenses,

[00:32:09] Speaker 02:
The job work expenses are kind of general overhead income where you're, again, paying third parties to construct things for you.

[00:32:22] Speaker 06:
Right, which is a completely different task than the tasks involved in yielding sales of job work income, right?

[00:32:31] Speaker 05:
They're the ones who are performing the outsourced work for somebody else in the income side as opposed to them.

[00:32:38] Speaker 02:
That's right.

[00:32:40] Speaker 02:
I think my understanding is that commerce still treats that as a general income item, whereas when you have civil interaction broken out and done on a kind of percentage of completion basis, which means we're getting paid, not in general because this is part of our general sale, but we're getting paid as we do this work.

[00:33:09] Speaker 02:
That's a separate item, a separate business.

[00:33:11] Speaker 02:
It's not part of, hey, we're selling you wind towers.

[00:33:14] Speaker 02:
To take the reply brief, which I should add, cites a bunch of information in the record that they've had about six briefs to try to cite and only did so in reply.

[00:33:24] Speaker 06:
But they're saying... So there's no good answer on why sales of job work is included.

[00:33:28] Speaker 06:
Is that fair to say?

[00:33:29] Speaker 02:
Well, so I hope I have good answers all at once.

[00:33:35] Speaker 02:
Sales of job work, commerce considers to be kind of a general overhead income similar to the expenses of job work.

[00:33:44] Speaker 06:
It's the income that Gendry's makes when it does some kind of service for another company on another company's raw materials.

[00:33:52] Speaker 02:
That's right.

[00:33:53] Speaker 02:
And it's pretty miniscule.

[00:33:55] Speaker 02:
It's miniscule, but it's there.

[00:33:57] Speaker 02:
It's there.

[00:33:58] Speaker 02:
On the other hand,

[00:33:59] Speaker 02:
the income from civil interaction, in addition to being broken out separately, when you look at it being accounted for on a percentage completion basis, what you're seeing there is they're saying we're getting paid for doing this kind of, as we do this work for someone else, we're getting paid for it on a month by month basis or whatever the percentage completion is.

[00:34:26] Speaker 02:
So that seems to be truly a separate

[00:34:30] Speaker 02:
a separate line of business.

[00:34:32] Speaker 02:
It's not about we're selling wind towers here.

[00:34:35] Speaker 02:
It's that we're doing other work for other people and getting paid for it.

[00:34:41] Speaker 06:
Can we talk about the ratio being applied to factor out certain income for the sales of finished goods so that we're left with what commerce is looking for, which is the portion of the income from the sales of finished goods category that

[00:34:58] Speaker 06:
is correlated with and associated with the job work expense involved in creating that income?

[00:35:06] Speaker 06:
I didn't understand that ratio.

[00:35:08] Speaker 06:
About raw materials plus direct labor divided by raw materials plus direct labor plus overhead plus energy all of a sudden gets you some proportion of the income that relates to job work expense.

[00:35:20] Speaker 06:
It didn't make any sense to me.

[00:35:22] Speaker 02:
Sure, I can address that.

[00:35:25] Speaker 06:
By the nature of job work, you're talking about work that doesn't involve raw materials and direct labor because you were... I guess another way of asking my question is why is it that overhead plus energy applied by all those costs necessarily tells us what's the percentage of the income from the sales of finished good that correlates with job work expense?

[00:35:48] Speaker 02:
Well, you're calculating the overall, actually, as someone who knows a little bit of statistics and accounting enough to be dangerous, but not who is an accountant, that made sense to me.

[00:35:59] Speaker 02:
What you're doing is you're calculating, and this is the kind of thing the Congress does all the time, you're calculating the overall direct labor and energy costs.

[00:36:08] Speaker 02:
If you look at all the costs, the portion of their costs across the company that are direct, I'm sorry, direct labor and raw materials or whatever, it's 8% or 10% or whatever.

[00:36:18] Speaker 02:
So that's their overall labor and direct costs for their work.

[00:36:23] Speaker 02:
And then they're saying we're applying that ratio to all these numbers so that we're taking out the percentage of income.

[00:36:28] Speaker 06:
What's the goal here?

[00:36:29] Speaker 06:
The goal here is to try to figure out which part of the income from the sales of finished goods relates back to the job work expense that was paid out in order to get that

[00:36:44] Speaker 06:
sales of finished goods income, right?

[00:36:46] Speaker 06:
Well, I think it's more like an adjustment.

[00:36:48] Speaker 02:
That's why I said this is the kind of thing commerce does all the time.

[00:36:50] Speaker 02:
I don't know what you mean by adjustment.

[00:36:52] Speaker 06:
I thought we're hunting for the income that's directly related to the job work expense so that we can do some fair offset between the two.

[00:37:03] Speaker 06:
No.

[00:37:04] Speaker 02:
Am I wrong?

[00:37:05] Speaker 02:
I think respectfully, yes, your Honor.

[00:37:08] Speaker 02:
What Commerce said in the trial court agreed is that we're going to use these entire expenses.

[00:37:13] Speaker 02:
We can't try to say when you have finished goods that are produced in part based on job work and then you sell them and you make a certain amount of income.

[00:37:21] Speaker 02:
We can't say we're not going to try to break out what portion of that income is related to the job work portion of the work that's not appropriate.

[00:37:28] Speaker 02:
And that's not really what Commerce's calculation was about.

[00:37:31] Speaker 02:
It's saying, look, we're going to take everything that's income that stems from job work and estimate

[00:37:37] Speaker 02:
kind of a percentage of where the job work and civil interaction amount from that.

[00:37:43] Speaker 02:
What Congress was doing with the raw materials and labor is saying, look, we need to adjust this, because one thing that we know isn't part of job work are raw materials and labor, because job work is work that someone else is doing for you, so you don't have to deal with the raw materials and labor.

[00:38:00] Speaker 02:
And so we need to adjust these figures, the sales of finished goods figure,

[00:38:04] Speaker 02:
to account for the fact that really some of that is direct materials and labor because you are, when you're selling your own goods, you are expending direct materials and labor.

[00:38:15] Speaker 02:
And so that entails the calculation that I just spoke about a few moments ago where commerce is saying, okay, we're going to figure out across the company what your direct material and labor costs are as a percentage of your overall costs and then apply that to these figures so that we're adjusting the figure down

[00:38:33] Speaker 06:
Right, but why does overhead plus energy somehow translate to being the job work expense proportion?

[00:38:43] Speaker 02:
Well, I think Commerce explained this in its decision.

[00:38:46] Speaker 02:
They probably explained it better than I'm going to here, but I'll take a shot at it.

[00:38:50] Speaker 02:
Let's assume they said something and I didn't understand it.

[00:38:53] Speaker 06:
Yeah, so would they take me to a better place?

[00:38:56] Speaker 02:
Well, what they said was that job work does include all these other types of things.

[00:39:02] Speaker 02:
It does include overhead and energy.

[00:39:04] Speaker 02:
You know, I'm not an accountant, but I'll take for a given, Congress's determination, that all those type of things are generally included in job work.

[00:39:13] Speaker 02:
It's just the raw materials and labor that are not.

[00:39:17] Speaker 06:
But who's overhead and who's energy?

[00:39:19] Speaker 06:
We're talking about a third party that's doing the service, right?

[00:39:22] Speaker 02:
Well, no, here you're talking about Ganges.

[00:39:25] Speaker 02:
The reason that there's no direct labor and there's no energy is precisely because there's a third party doing the service.

[00:39:33] Speaker 02:
We're paying someone else to do it.

[00:39:34] Speaker 02:
I'm sorry, I said energy, direct labor, raw materials.

[00:39:38] Speaker 02:
So the reason that there's no labor and raw materials is precisely because you're paying someone else to do it.

[00:39:43] Speaker 02:
So on the job work side, you're going to have overhead.

[00:39:47] Speaker 06:
But because you're paying someone else to do it, none of your overhead and none of your energy is involved either, right?

[00:39:53] Speaker 02:
That's not my understanding.

[00:39:55] Speaker 02:
My understanding is that, and I don't think there's been an argument from CSWIN that those type of other things go into Gange's work.

[00:40:04] Speaker 02:
What is missing from the job work is direct labor and raw materials.

[00:40:11] Speaker 02:
And so, given that predicate, what you're doing is just, you know, now you're back when you're dealing with the sales of raw goods and the sales of scrap,

[00:40:22] Speaker 02:
You're back in Ganji's world where not just energy and overhead, but everything's included, including direct labor and raw materials.

[00:40:30] Speaker 02:
And so they're saying, look, we know that's not part of job work.

[00:40:33] Speaker 02:
So we have to make an adjustment to remove those items.

[00:40:39] Speaker 02:
We certainly have not had a dispute in this case to date that those type of other expenses would be present when you're dealing with

[00:40:49] Speaker 06:
when you're dealing with... Well, they aren't challenging the calculation of this factor that's being used in your formula, that you're multiplying against the sales of finished goods and the scrap and the EI and the CEI.

[00:41:03] Speaker 02:
Well, if I understand them correctly, I think they're saying that you don't do it, you don't need to do it.

[00:41:08] Speaker 05:
Well, that's their primary argument, namely, go back to their simple first thing, and then the second, the backup argument is, well,

[00:41:17] Speaker 05:
If you're going to start doing this ratio business rather than the simple offset of the income and the charges with the same name, then we've got a bunch of problems.

[00:41:29] Speaker 05:
And one of them is the application of this ratio, the raw materials direct labor ratio.

[00:41:38] Speaker 05:
to both the denominator and the numerator.

[00:41:41] Speaker 05:
The application to the numerator is actually not discussed in the final re-determination.

[00:41:50] Speaker 05:
Is that right?

[00:41:51] Speaker 05:
It's not explained.

[00:41:54] Speaker 02:
So my understanding is that CSWIN has not challenged the notion that other than

[00:42:04] Speaker 02:
raw materials and labor that these type of other things are expenses that would be associated across the board, whether it's job work or other type of work.

[00:42:15] Speaker 02:
They focus, as I understand it, on saying you're applying this labor and direct energy wrong because it's complicated.

[00:42:28] Speaker 02:
Because we don't think that those should be subtracted from civil interaction.

[00:42:33] Speaker 02:
We think that actually that's part of civil interaction.

[00:42:36] Speaker 02:
And Palmer said, no, no, they're not.

[00:42:39] Speaker 02:
I'm not sure how that plays through on the numerator and the denominator.

[00:42:50] Speaker 05:
I think I'm remembering.

[00:42:52] Speaker 05:
Correct me if I'm wrong.

[00:42:53] Speaker 05:
In the final opinion from the Court of International Trade,

[00:42:56] Speaker 05:
There's a footnote that says the final re-determination decision by commerce actually never explains, though it obviously is, is applying the same ratio to the numerator as to the denominator.

[00:43:09] Speaker 05:
If it left the numerator alone, we would be, there would be a whole different log in here.

[00:43:13] Speaker 05:
It wouldn't, the fact that he went from the initial re-determination to the final one that reduced the numerator by, I don't know,

[00:43:23] Speaker 05:
90% or something, and the same with the denominator.

[00:43:26] Speaker 05:
If you left the numerator alone, it might not be here.

[00:43:29] Speaker 05:
I mean, it wouldn't be a complaint.

[00:43:31] Speaker 02:
Right.

[00:43:32] Speaker 02:
Right.

[00:43:32] Speaker 05:
So I assume... So I assume that commerce just doesn't explain the application of that figure to the numerator.

[00:43:38] Speaker 02:
I assume you're honest and correct, although I confess I don't really know.

[00:43:41] Speaker 02:
But the point is they're saying, look, this stuff isn't part of job work.

[00:43:45] Speaker 02:
And so when we're using these other numbers, we can't have it be part of those numbers either.

[00:43:50] Speaker 02:
And so these two things, which are not part of job work,

[00:43:53] Speaker 02:
I shouldn't be part of those other numbers.

[00:43:55] Speaker 02:
We're going to make an adjustment.

[00:43:56] Speaker 02:
I think where we had a bit of a disconnect is I don't think there certainly has been an argument in this case that would be appropriate for the court to consider that other things that Congress determined were part of job work and everything else actually aren't, like overhead and energy and things like that.

[00:44:18] Speaker 06:
direct labor raw materials ratio to EI and CI?

[00:44:25] Speaker 06:
Why was that being done here?

[00:44:28] Speaker 02:
For the same reason that it was applied to the scrap and to the finished goods.

[00:44:38] Speaker 02:
Because if you're doing it, this is income from erection and civil activity.

[00:44:43] Speaker 02:
So if you're doing it, you're using your own labor and you're using your own raw materials.

[00:44:48] Speaker 02:
in some portion of them in that process.

[00:44:51] Speaker 02:
Whereas when it comes to job work, that's not.

[00:44:54] Speaker 02:
That's someone else's doing.

[00:44:58] Speaker 06:
Why are we assuming that the same percentage is being done both with respect to finished goods sales and EI and CDI?

[00:45:10] Speaker 02:
I think this is pretty typical of commerce's practice.

[00:45:13] Speaker 02:
I've been doing this a while.

[00:45:14] Speaker 02:
Commerce is taking the ratio across the company.

[00:45:18] Speaker 02:
And this comes up in other contexts when commerce is talking about cost of manufacturing or cost of production, all the type of calculations that show up at this court when we have these kind of nitty gritty cases.

[00:45:29] Speaker 02:
Commerce calculated, as I understand it, the, you know, across the company,

[00:45:36] Speaker 02:
In general, they're spending 10% of their costs on labor and raw materials and apply that ratio to the various figures.

[00:45:45] Speaker 02:
Sales of goods, scrap, erection, and civil.

[00:45:48] Speaker 06:
I guess there's an assumption here that there's direct labor and raw materials being consumed in the effort to do the erection and civil activities.

[00:46:01] Speaker 06:
The setup activities in West Virginia,

[00:46:03] Speaker 06:
Sure, so yes, that's an assumption.

[00:46:05] Speaker 02:
It's a good assumption.

[00:46:06] Speaker 06:
The point is they're doing it if they're... Can you use that as a US subsidiary or something with a unit of people out here doing the setups?

[00:46:17] Speaker 02:
Well, we don't know, but the point is it's on their side of the ledger.

[00:46:21] Speaker 02:
We're paying someone else, so all we do is pay for the product and we're not responsible for

[00:46:28] Speaker 05:
nobody would be used to be on that side of the lecture if they were doing a classic general contractor subcontractor arrangement.

[00:46:34] Speaker 05:
They pay the subcontractor, that's on the expense side.

[00:46:37] Speaker 05:
They do a little markup and they turn around and bill Siemens or the electric power company, whoever their customer is.

[00:46:43] Speaker 05:
It would appear on both sides even though they don't have any of their employees on site.

[00:46:47] Speaker 02:
Well, if it's income, if it's income, one would tend to assume that they're at least paying in part for the actual

[00:46:57] Speaker 02:
for what goes into it because they're not paying for someone to come back to them with a product.

[00:47:03] Speaker 02:
They're responsible whether they themselves and look, the argument that CSWIN is made on reply is that we do this ourselves and we won't just make it on Wintower.

[00:47:14] Speaker 02:
We'll build it for you, too.

[00:47:17] Speaker 02:
We have no idea on the record whether they work for subcontractors or not.

[00:47:21] Speaker 05:
What they do is actually irrelevant, right?

[00:47:22] Speaker 05:
We're talking about Ganges.

[00:47:23] Speaker 05:
What Ganges does?

[00:47:24] Speaker 02:
I'm sorry.

[00:47:26] Speaker 02:
That's right.

[00:47:26] Speaker 02:
And I was talking about Ganges the whole time.

[00:47:29] Speaker 02:
Oh, OK.

[00:47:31] Speaker 02:
I apologize.

[00:47:31] Speaker 02:
That's the big new argument that they've had on Reply, that this is an integrated producer and they're doing it themselves.

[00:47:39] Speaker 02:
But at the end of the day,

[00:47:42] Speaker 02:
Congress has said on the income side, you're going to reflect some direct labor and raw materials because you're getting paid to do the production, whether they themselves or whether it's to a self.

[00:47:58] Speaker 02:
On the expense side for job work, you're not.

[00:48:03] Speaker 02:
Or in general, in job work.

[00:48:07] Speaker 02:
I know the court has been generous with time.

[00:48:09] Speaker 02:
I'm happy to respond to any other questions.

[00:48:12] Speaker 02:
Thank you.

[00:48:15] Speaker 04:
Hopefully, we'll hold you to your two minutes.

[00:48:20] Speaker 00:
Thank you, Your Honors, and may it please the Court.

[00:48:22] Speaker 00:
I'm Robert DeFrancisco on behalf of the Wintower Trade Coalition.

[00:48:25] Speaker 00:
I'd like to really only address one issue.

[00:48:27] Speaker 00:
Given my time, I wanted to go to the weight issue.

[00:48:32] Speaker 00:
What commerce normally does in its cases is it has to verify the weight of the factors of production that it's reporting.

[00:48:40] Speaker 00:
Its normal process is to compare that with

[00:48:43] Speaker 00:
the sale weight reported from the sales database, which in this case is the packed weight.

[00:48:48] Speaker 00:
CS Wind has asked Commerce, their position is, that's an estimate, just completely ignore it, leaving Commerce no ability to verify whether that FOP, the weights in FOP is actually accurate.

[00:49:01] Speaker 00:
Now, Your Honor asked the question, is that estimate based on something?

[00:49:06] Speaker 00:
And the answer is yes.

[00:49:07] Speaker 00:
The estimates, they apparently base them on their own contemporaneous business documents that they generate.

[00:49:12] Speaker 00:
I'll walk you through a few documents here on the record.

[00:49:16] Speaker 00:
So if you go to JA 868, this is part of the verification exhibits that Congress collected.

[00:49:25] Speaker 00:
This is a document that CS William generates that identifies the total amounts of steel plate that are purchased.

[00:49:34] Speaker 00:
It has the gross weight at the bottom.

[00:49:36] Speaker 00:
Then it identifies what those weights of plate will be once they're cut into those tower shapes.

[00:49:42] Speaker 00:
The total weight that's at the bottom that's proprietary, I can't go into it, but if you flip then over to the verification report at JA835, that gross weight ties exactly to the gross weight in the factors of production.

[00:49:57] Speaker 00:
If you then flip back over to 868 and the weight of the cut steel plate at the bottom of that document, and you flip over to the estimate that they provided commerce,

[00:50:10] Speaker 00:
at JA592, and you total up the steel plate for the top section of the tower, the steel plate for the middle section of the tower, and the steel plate for the bottom section of the tower, that ties exactly.

[00:50:23] Speaker 00:
So these estimates are, in fact, based on something.

[00:50:27] Speaker 00:
Now, in that same document, if you look at the top section, the bottom section, the middle section, you'll see there's... Are we still on 868, or are we on... Oh, sorry, 592, JA592.

[00:50:39] Speaker 00:
you'll see that there's internal weights reported for the three sections.

[00:50:45] Speaker 00:
If you flip over and look at the verification report JA835, and you look at the internal weight reported there, it appears that they're missing two sections, two tower sections of weight.

[00:50:59] Speaker 00:
The internal components are what's really off here.

[00:51:02] Speaker 00:
If you total up the other components, the steel plate, the door frame, and the flange,

[00:51:08] Speaker 00:
comparing JA592 with JA835, they're not off by much.

[00:51:13] Speaker 00:
In fact, they're very close.

[00:51:15] Speaker 00:
What's off are the internal components, and they're off by a factor of four.

[00:51:19] Speaker 00:
So they appear to be missing something.

[00:51:23] Speaker 00:
And what Commerce verified when they did the verification is that based on the internal components that were recorded in the FOP, they randomly selected five, and it confirmed that those five were in fact in there.

[00:51:34] Speaker 00:
That doesn't mean that

[00:51:36] Speaker 00:
The other internal components for the middle section and the top section, where did they go?

[00:51:39] Speaker 00:
If they were never reported, there's no means of commerce to determine that they were actually in there, which is why, again, they go back to the packed weight.

[00:51:49] Speaker 00:
And commerce said, the packed weight is clearly relevant.

[00:51:52] Speaker 00:
It's important.

[00:51:53] Speaker 00:
Your own customer generates this document for purposes of loading on the ship.

[00:51:56] Speaker 00:
I can't just ignore it.

[00:51:59] Speaker 00:
So based on that, commerce reasonably concluded

[00:52:03] Speaker 00:
that there does appear to be something missing here, and it appears to be the internal components, and they made that adjustment.

[00:52:09] Speaker 00:
Happy to make a name.

[00:52:09] Speaker 00:
Thank you.

[00:52:15] Speaker 03:
Sir, you're up.

[00:52:19] Speaker 03:
We'll give you five minutes if you need it.

[00:52:24] Speaker 01:
I assume I don't have much time.

[00:52:27] Speaker 01:
If I could spend two seconds on the argument that we

[00:52:32] Speaker 01:
didn't discuss and that is on the enemy inputs and the enemy imports they have.

[00:52:37] Speaker 01:
I'm sorry.

[00:52:37] Speaker 05:
I, I still, like I said, I have a question about, um, the argument we were just discussing on the packing weight.

[00:52:46] Speaker 05:
So did commerce make its decision to rely on packing weight based on the magnitude of the difference, which in the government's brief, it emphasizes as a doubling.

[00:53:01] Speaker 05:
Or, and or, did it rely on the kind of document comparison we just heard from 592 versus 835?

[00:53:13] Speaker 05:
Did Commerce say there is a section or more than one section of the Tower missing from the reports?

[00:53:22] Speaker 01:
The way we read the issues in decision memorandum, Commerce's decision was based on the fact that there was

[00:53:30] Speaker 01:
about a 3.6% difference in the total packed weight compared to the total weight when you add the actual weights that they verified.

[00:53:41] Speaker 01:
And then they talked about the balancing of the towers.

[00:53:47] Speaker 01:
So the estimated weight meant something.

[00:53:50] Speaker 01:
What they did not do in the mission decision memorandum, saying something was missing.

[00:53:55] Speaker 01:
They found that... Except by inference, something

[00:53:59] Speaker 01:
I don't even think they found it by inference.

[00:54:01] Speaker 01:
That's what petitioners would have liked Commerce to say.

[00:54:05] Speaker 01:
But Commerce didn't say that.

[00:54:06] Speaker 01:
Commerce's decision was based on the 4% difference between the estimated weight and the actual weights that they verified.

[00:54:15] Speaker 01:
And they verified the weights and they had the opportunity to look at 5, they could have looked at 10, they could have looked at 20.

[00:54:23] Speaker 01:
They did not find that anything was missing.

[00:54:25] Speaker 01:
They never said that anything was missing.

[00:54:27] Speaker 06:
When Commerce came back to you and said, can you clarify why the pack weight number is different than the FOP weight number?

[00:54:38] Speaker 06:
And according to them, you didn't come back with any meaningful response.

[00:54:42] Speaker 01:
Our meaningful response was that the pack weight number was an estimate.

[00:54:46] Speaker 01:
We said it was given to us by our customer, it was an estimate, and there's going to be a difference.

[00:54:50] Speaker 01:
And Commerce agreed that they recognized that there's going to be a difference.

[00:54:54] Speaker 01:
And then we go to Commerce and we say, look,

[00:54:57] Speaker 01:
We have given you the actual internals.

[00:55:00] Speaker 01:
We've given you everything.

[00:55:02] Speaker 01:
Everything that was in that wind tower, we've told you.

[00:55:05] Speaker 01:
You could verify that nothing is missing.

[00:55:08] Speaker 01:
You could verify everything.

[00:55:09] Speaker 01:
You could verify what actually went into that wind tower.

[00:55:13] Speaker 01:
Look at our books and records as to what went into that wind tower.

[00:55:16] Speaker 01:
In commerce, as they do with verification, they spot you.

[00:55:19] Speaker 01:
And they verify the accuracy.

[00:55:20] Speaker 01:
If they wanted to go ahead and do additional verification as to the accuracy of our internals,

[00:55:27] Speaker 01:
We absolutely, we cooperated in verification.

[00:55:30] Speaker 01:
That was their choice as to how to verify those internal weights.

[00:55:35] Speaker 01:
And every weight that they did verify was accurate based on the documentation that we gave them.

[00:55:42] Speaker 06:
So it was off by 20%.

[00:55:44] Speaker 06:
And then they said, could you please clarify?

[00:55:47] Speaker 06:
And then you came back and said, it's just an estimate.

[00:55:50] Speaker 01:
What should be the outcome there?

[00:55:56] Speaker 01:
Then I could see a real problem if the weight's off by 20%.

[00:56:00] Speaker 01:
But when you're talking about what we believe to be a small difference, a less than 4% difference, and they had the opportunity to verify, they didn't challenge the accuracy of the internal weights and the internal components which we gave them.

[00:56:15] Speaker 01:
They said it was accurate in their verification report, in their issues and decisions.

[00:56:20] Speaker 01:
You want to talk about issue three in your last minute?

[00:56:24] Speaker 01:
Or should I talk about the issue we didn't discuss?

[00:56:27] Speaker 04:
No, no, no.

[00:56:29] Speaker 04:
We don't need to reason.

[00:56:29] Speaker 01:
You don't want to?

[00:56:30] Speaker 01:
The Ganges issue?

[00:56:31] Speaker 01:
Yeah.

[00:56:33] Speaker 01:
The Ganges issue, at the end of the day, we believe that the Congress decision was result-oriented.

[00:56:38] Speaker 01:
They made a decision at the beginning, and they worked through hoops to get to the same decision at the end.

[00:56:44] Speaker 01:
We had a very difficult time understanding that issue.

[00:56:48] Speaker 01:
They made certain assumptions in one of the

[00:56:51] Speaker 01:
You know, if you talk about, if you say their methodology is correct, which we believe it isn't, then their final methodology, when they had the erection, I'm trying to get in my mind here, they went from the expense side to get this 82% materials and labor.

[00:57:13] Speaker 01:
And then they apply it to the income side.

[00:57:15] Speaker 01:
And when they apply it to the income side, okay, for finished goods,

[00:57:18] Speaker 01:
They take out 82% for material labor.

[00:57:21] Speaker 01:
And then somehow they assume that for the erection and the civil income, you take out 82% materials and labor.

[00:57:31] Speaker 01:
I don't know where they get that from.

[00:57:33] Speaker 01:
The erection and the civil expenses, who says there's materials and labor when you erect something?

[00:57:41] Speaker 01:
You're erecting something.

[00:57:43] Speaker 01:
You're doing the civil expenses.

[00:57:45] Speaker 01:
We don't really know what it is.

[00:57:47] Speaker 01:
But it seems that they're making certain assumptions to get to a result through hoops that they want to get to.

[00:57:54] Speaker 01:
And they go through the expense side with the 82%.

[00:57:59] Speaker 01:
Then they apply the 82% to sale of finished goods and to the erection and the civil income.

[00:58:06] Speaker 01:
And it's supported by nothing.

[00:58:08] Speaker 01:
They're just making it up out of thin air.

[00:58:11] Speaker 01:
And the other thing that they did that we have a problem with when they say the sale of finished goods

[00:58:17] Speaker 01:
somehow relates to job work income because they say for the income purposes we take the sale of finished goods, the sale of scrap, and the civil and erection income, and they somehow say the sale of finished goods somehow relates to the civil income and the erection income, or the sale, as you pointed out before, the sale of finished goods has nothing to do with job work income.

[00:58:43] Speaker 01:
It's totally different.

[00:58:44] Speaker 01:
So they're making

[00:58:46] Speaker 01:
certain assumptions in a convoluted manner, which they didn't have to make to have a reasonable result.

[00:58:54] Speaker 01:
And we believe that because they're going through all these hoops, the result can't be reasonable.

[00:58:59] Speaker 01:
It's just a mess.

[00:59:02] Speaker 03:
On that note, we thank our parties and the cases submitted.