Kajaria Iron Castings Pvt. Ltd. v. United States , 24 Ct. Int'l Trade 1274 ( 2000 )

Slip Op. 00 - 147
UNITED STATES COURT OF INTERNATIONAL TRADE
- - - - - - - - - - - - - - - - - - - x
KAJARIA IRON CASTINGS PVT. LTD. et al.,
:
Plaintiffs,
:
v.
:
UNITED STATES, : Court No. 95-09-01240
Defendant, :
-and-
:
ALHAMBRA FOUNDRY INC. et al.,
:
Intervenor-Defendants.
:
- - - - - - - - - - - - - - - - - - - x
Memorandum & Order
[Upon plaintiffs' renewed motion,
peremptory remand to the Inter-
national Trade Administration.]
Dated: November 9, 2000
Cameron & Hornbostel LLP (Dennis James, Jr.) for the plain-
tiffs.
David W. Ogden, Assistant Attorney General; David M. Cohen,
Director, and Velta A. Melnbrencis, Assistant Director, Commer-
cial Litigation Branch, Civil Division, U.S. Department of Jus-
tice; and Office of Chief Counsel for Import Administration, U.S.
Department of Commerce (Robert E. Nielsen), of counsel, for the
defendant.
Collier Shannon Scott, PLLC (Paul C. Rosenthal and Robin H.
Gilbert) for the intervenor-defendants.
AQUILINO, Judge: The court is in receipt of a sub-
mission by the International Trade Administration, U.S. Depart-
ment of Commerce ("ITA"), encaptioned Final Results of Redeter-
mination on Remand and stated to be pursuant to the slip opinion
Court No. 95-09-01240 Page 2
00-20, 24 CIT (Feb. 18, 2000), filed herein, familiarity
with which is presumed. This submission, which will be referred
to hereinafter as the "May 2000 Remand Results", is summarized
by the agency (at pages 1 and 20), in part, as follows:
. . . Pursuant to the Court's remand instructions,
the Department has recalculated the program rates
for the subsidies conferred under section 80HHC of
India's Income Tax Act (80HHC) and the company-spe-
cific total ad valorem rates. We have recalculated
the rates, in conformity with the CAFC's September
8, 1998 opinion in Kajaria, using a methodology
which ensures 1) that there is no "double-counting"
of the subsidies that were provided in the form of
Cash Compensatory Support (CCS) over-rebates and 2)
that there is no countervailing of International
Price Reimbursement Scheme (IPRS) rebates provided
with respect to non-subject castings. Finally, we
have recalculated the all-others rate and determined
the company-specific total ad valorem rates pursuant
to the CAFC's . . . opinion.
* * *
The Department has recalculated the subsidy rates
of the 80HHC program pursuant to the instructions of
the CIT and in conformance with the opinion of the CAFC.
The plaintiffs deny this representation in lengthy
written comments which culminate in a request that this court
(1) find that the Remand Results do not eliminate ei-
ther the IPRS or the double-counting of the CCS over-
rebates from the Section 80HHC subsidy, and, (2) . . .
remand this matter with instructions that Commerce re-
do the calculations to correctly implement the CAFC's
and this Court's prior instructions.1
1
Plaintiffs' comments are accompanied by a motion for oral
argument, which need not be granted, given the excellence of the
written submissions on the issues by all parties; ergo, that mo-
tion is hereby denied.
(footnote continued)
Court No. 95-09-01240 Page 3
Upon further reflection and consideration of the par-
ties' continuing, contrary positions, this court is constrained
to accept that of the plaintiffs and thus to order, yet again,
a remand to the ITA.
The saga of this current circumstance of unfinished
administrative, and thus judicial, process can be read in Certain
Iron-Metal Castings From India: Final Results of Countervailing
Duty Administrative Review, 60 Fed.Reg. 44,843 (Aug. 29, 1995),
aff'd in part, remanded in part sub nom. Kajaria Iron Castings
Pvt. Ltd. v. United States, 21 CIT 99, 956 F.Supp. 1023, remand
results aff'd, 21 CIT 700, 969 F.Supp. 90 (1997), aff'd in part,
rev'd in part and remanded, 156 F.3d 1163 (Fed.Cir. 1998), re-
manded, 23 CIT , Slip Op. 99-6 (Jan. 14, 1999), second remand
results remanded, 24 CIT , Slip Op. 00-20 (Feb. 18, 2000).
Indeed, this process has outlived the judge originally assigned.
The undersigned continues simply as the minister of the mandate
of the court of appeals, to wit:
On remand, Commerce should recalculate the sub-
sidy provided by the section 80HHC deduction in a
manner that eliminates the double-counting of the
CCS over-rebates. . . . Commerce must avoid double-
counting subsidies, i.e., countervailing both the
full amount of a subsidy and the nontaxation of that
subsidy, when the party under investigation provides
documentation that allows Commerce to separate the
tax deduction based on the fully countervailed sub-
sidy from the otherwise countervailable portion of
the tax deduction.
One of the submissions, namely, Defendant's Reply to Plain-
tiffs' Comments on Results of Redetermination on Remand, has en-
gendered a motion for leave to respond to it, which motion of the
plaintiffs is hereby granted.
Court No. 95-09-01240 Page 4
156 F.3d at 1175. Similarly with regard to IPRS, that court held
that
Commerce erred in countervailing the portion of the
section 80HHC deduction based on the IPRS rebates
because the rebates involved were tied to merchandise
not within the scope of the review. . . . On remand,
Commerce should eliminate the IPRS rebates in calculat-
ing the subsidy received on subject castings through
the section 80HHC deduction. . . . [W]hen the party
under investigation provides documentation that allows
Commerce to separate the portion of the tax deduction
based on rebates related to non-subject merchandise
from the remainder of a countervailable tax deduction,
Commerce should not countervail the portion of the
tax deduction subsidy tied to non-subject merchandise.
Since the Producers provided such data, Commerce should
eliminate the IPRS rebates from the calculation of the
subsidy provided by the section 80HHC deduction.
Id. at 1176.
When the undersigned first considered these issues,
the plaintiffs argued that the ITA is making "what should be a
very simple adjustment into a complicated -- and erroneous --
calculation that thwarts the CAFC's instructions". Slip Op.
00-20, p. 8. They reiterate this argument now and state that
all that needs to be done to eliminate the IPRS
"influence" from the calculation is to subtract
the IPRS from the taxable income used to calculate
the 80HHC benefit.
Plaintiffs' Comments, pp. 20-21. With regard to the CCS over-
rebates, the plaintiffs maintained that,
in order to eliminate the double counting under
80 HHC, all of the countervailed CCS must be de-
ducted from profit first, before calculating the
80 HHC subsidy.
Court No. 95-09-01240 Page 5
Slip Op. 00-20, p. 11, quoting Plaintiffs' Comments on the Com-
merce Department's Final Results of Redetermination on Remand,
p. 20 (May 4, 1999) (emphasis in original).
This court has already accepted this analysis and re-
ported that it "cannot accept [defendant's] position that the
methodology proposed by the plaintiffs 'makes no sense at all'".
Id. at 9. See id. at 12.
The May 2000 Final Results state (at pages 6-7) that,
in order to eliminate the IPRS rebates from the calcu-
lation of the 80HHC subsidy, the Department necessar-
ily must estimate the effect of the IPRS rebates on
the profit. The Department must do so because profit
is the basis for the calculation of the 80HHC subsidy.
. . . Because the CIT has rejected the calculations
in the Corrected Final Results of Redetermination,
we have recalculated the 80HHC subsidy by removing
the IPRS and CCS rebates from the income which ul-
timately is the basis upon which the 80HHC tax de-
duction was derived.
Under this methodology, we have weighted all
sources of income equally. We have not attempted to
"trace" income or expenditures to specific sources, nor
do we have information available to be able to attrib-
ute income, expenditures, or profit to specific sourc-
es. We have assumed that each rupee of income, regard-
less of the source of that income, played the same
role in the determination of a company's profit, and
thus played the same role in the calculation of the
company's tax deduction under 80HHC. For example, we
have assumed that both one rupee in duty drawback re-
ceived by a company and one rupee in sales revenue re-
ceived by the company had the identical effect on the
determination of the company's profit. Thus, if a com-
pany's IPRS and CCS rebates equaled 20 percent of the
company's income, then we assumed that 20 percent of
the company's profit was derived from IPRS and CCS
rebates. Therefore, 20 percent of the subsidy calcu-
lated for the 80HHC program in the original final re-
sults of administrative review should be "tied" to the
Court No. 95-09-01240 Page 6
IPRS and CCS programs. Thus, the recalculated 80HHC
subsidy would be reduced by 20 percent.
Again, this court cannot concur. The ITA has not eliminated the
influence of the rebates on the calculation of any §80HHC sub-
sidy. It must recalculate any such subsidy by subtracting the
IPRS rebates and CCS over-rebates from taxable income before
determining any §80HHC benefit. Cf. Plaintiffs' Response to
Defendant's Reply to Plaintiffs' Comments, p. 3:
What is of significance for this case . . .
is the fact that the expenses being repaid by way
of the CCS and IPRS have already been incurred by
the producer long before the payments are received.
And these expenses are incurred in producing the
castings whether or not the CCS and IPRS are re-
ceived. Accordingly, the CCS and IPRS do increase
profits to the full extent of payment. It is for
this reason that the payments are treated improp-
erly in the remand methodology since that method-
ology assumes that additional costs must be incurr-
ed that somehow reduce the IPRS' and CCS' effect
on a company's taxable income.
Emphasis in original.
The defendant may have 30 days to carry out this per-
emptory remand and to report the results thereof to the court.
So ordered.
Dated: New York, New York
November 9, 2000
________________________________
Judge