United States Steel Corp. v. United States , 2012 CIT 48 ( 2012 )

Slip Op. 12 -48
UNITED STATES COURT OF INTERNATIONAL TRADE
- - - - - - - - - - - - - - - - - - -x
UNITED STATES STEEL CORPORATION, :
Plaintiff, :
-and- :
NUCOR CORPORATION, :
Intervenor-Plaintiff, :
v. : Court No. 08-00216
THE UNITED STATES, :
Defendant, :
-and- :
ESSAR STEEL, LIMITED, :
Intervenor-Defendant. :
- - - - - - - - - - - - - - - - - - -x
Memorandum & Order
[Remand to International Trade Administration for
reconsideration of its results of initial remand.]
Decided: April 11, 2012
Skadden, Arps, Slate, Meagher & Flom LLP (Robert E.
Lighthizer, Jeffrey D. Gerrish, and Ellen J. Schneider) for the
plaintiff.
Wiley Rein LLP (Alan H. Price, Timothy C. Brightbill, and
Maureen E. Thorson) for the intervenor-plaintiff.
Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice
Court No. 08-00216 Page 2
(David D’Alessandris); and Office of the Chief Counsel for Import
Administration, U.S. Department of Commerce (Thomas M. Beline), of
counsel, for the defendant.
Arent Fox LLP (Mark P. Lunn and Diana Dimitriuc Quaia) for the
intervenor-defendant.
AQUILINO, Senior Judge: This court’s slip opinion 11-66,
35 CIT ___ (2011), filed herein, familiarity with which is
presumed, granted plaintiff’s and intervenor-plaintiff’s motions
for judgment on the agency record compiled sub nom. Certain Hot-
Rolled Carbon Steel Flat Products From India: Notice of Final
Results of Antidumping Duty Administrative Review, 73 Fed.Reg.
31,961 (Dep’t of Comm. June 5, 2008) (“Final Results”), to the
extent of remand to the International Trade Administration, U.S.
Department of Commerce (“ITA”) to clarify or reconsider its
analysis of the intervenor-defendant Essar Steel Limited’s
entitlement to duty-drawback adjustment within the meaning of 19
U.S.C. §1677a(c)(1)(B).
In conformity therewith, the defendant has filed ITA’s
Final Results of Redetermination Pursuant to Court Remand, upon
which each of the parties to this case has now filed with the court
written comments. Indeed, those on behalf of the intervenor-
defendant have caused the defendant to concede a “ministerial
error” and therefore to itself request a “voluntary remand” to
Court No. 08-00216 Page 3
correct the matter. See Defendant’s Response to Comments Upon the
Remand Determination, pp. 12-13. Each of the other parties also
seeks further reconsideration.
I
ITA did reconsider Essar’s duty-drawback claim by re-
opening the administrative record and obtaining from it redemption
applications lodged with the Government of India (“GOI”) related to
its particular advance licenses, a letter from the GOI releasing
Essar from its obligation to pay duties upon completion of the
required exports for each advance license, “including the
appropriate linkage between imports and exports[,]” bank
realization certificates confirming inward remittance of export
proceeds, and bills of lading confirming shipment to the United
States. See Remand Results, p. 4, referencing Essar’s August l7,
2011 Response. To prove that duty-free import of raw materials
took place prior to exportation of its finished goods, Essar
“submitted each shipping bill that contains an endorsement that
specifies the advance license number and date.” Id. at 4-5
(citation omitted). ITA then preliminarily determined Essar had
provided sufficient proof of complete removal of the contingent
liability for deferred import duties under the GOI advance license
program. See id., referencing Slip Op. 11-66, p. 12.
Court No. 08-00216 Page 4
At that point, the domestic-industry petitioners cum
plaintiffs United States Steel Corporation (“USSC”) and Nucor
Corporation requested that the agency deny Essar’s duty-drawback
claim with respect to one particular U.S. invoice, arguing the
company did not provide export documentation linking that invoice
to duty drawback under any of Essar’s advance licenses and that the
documentation it provided shows the particular claimed advance
license identifies other invoices in the database but fails to
indicate that sales pursuant to the one invoice were purportedly
made pursuant to that advance license. See id. at 5-6. ITA agreed
“nothing on the record links exports pursuant to that invoice to
any of Essar’s advance licenses” and thus disallowed the duty-
drawback claim on exports pursuant to that particular invoice, but
otherwise allowed the claim(s) as to the other documented export
invoices. See id. at 6-7. See also Memorandum to File from V.
Cho, Case Analyst, “Remand of the 2005-2006 AD Admin. Rev. of
Certain Hot-Rolled Carbon Steel Flat Products from India:
Calculation Memorandum for Essar Steel Ltd.”, p. 4 (Oct. 3, 2011)
("CalcMemo") (Essar failed to "report the export documents that
link [a particular] invoice . . . to the duty drawback under its
advance license number"). Confidential Record Document (“ConfDoc”)
53. See Def’s Conf. Appx., Tab A.
Court No. 08-00216 Page 5
A
With respect to the single disallowed invoice, Essar
argues it satisfied its burdens of production and persuasion on its
claim for duty drawback. The evidence of record, however, does not
support it. Essar provided a copy of the invoice and a list of
invoices purportedly related to a particular advance license, but
the one in question is not among those listed for that advance
license. See Essar’s Aug. 17, 2011 Supplemental Questionnaire
Response. See also Nucor Corp. Appx. to Nov. 2, 2011 Comments,
Tab 7. Essar’s attempt to establish a connection, by providing a
list of exports and arguing that invoices are related to shipping
bills by quantity and shipping bill number, fails because the
invoice number is not actually listed on the bank certificates of
export and realization. Lacking from the record is a copy of the
relevant shipping bill, and therefore ITA found no demonstrable
connection between the invoice and the relevant advance license.
Substantial evidence on the record supports the Remand
Results as to the allowable extent of Essar’s eligible duty-
drawback claim, which must therefore be, and hereby are, sustained
in regard thereto.
Court No. 08-00216 Page 6
B
ITA having permitted Essar’s duty-drawback claim in part
and adjusted its export price (“EP”) as a result, USSC and Nucor
argue the agency should also have made a corresponding adjustment
by increasing Essar’s cost of production in accordance with the
change in ITA policy recently upheld in Saha Thai Steel Pipe
(Public) Co. v. United States, 635 F.3d 1335, 1341-44 (Fed.Cir.
2011). The agency denied their “claim”, relying on Dorbest Ltd. v.
United States, 604 F.3d 1363 (Fed.Cir. 2010), reasoning the matter
should have been raised in the original proceeding and concluding
it was either waived or not administratively exhausted. See Remand
Results, p. 8 and 604 F.3d at 1375 (holding respondent failed to
exhaust administrative remedies when it did not challenge omission
from methodology in its administrative case brief, even though it
raised the issue in rebuttal brief and again during ministerial
comment period).
Relying on Qingdao Taifa Group Co. v. United States, 33
CIT ___, ___, 637 F.Supp.2d 1231, 1237 (2009), the plaintiffs deny
that exhaustion or waiver is applicable because the preliminary-
administrative-review determination denied Essar’s duty-drawback
claim, which meant ITA had to re-open the record on remand in search
of evidentiary support therefor, and that was the first instance the
matter of its calculation methodology became of moment.
Court No. 08-00216 Page 7
The defendant responds that (1) neither USSC nor Nucor
sought to amend its complaint to add a new count to address the
issue, (2) the change in administrative practice affirmed in Saha
Thai occurred after the completed Final Results, supra, (3) the
Supreme Court in Vermont Yankee Nuclear Power Corp. v. Natural
Resources Defense Council, Inc., 435 U.S. 519 (1978), “expressly
held that . . . consideration of extra-record developments would
lead to never-ending administrative proceedings and subsequent
[sic] judicial review”1, and (4) the only exception to the “record
rule” is Home Prods. Int’l v. United States, 633 F.3d 1369(Fed.Cir. 2011), wherein a litigant presented “clear and convincing
evidence establishing a prima facie case of fraud.” Def’s Resp. to
Comments Upon the Remand Determ., pp. 8-9. Summarizing, it argues,
1
Videlicet:
“Administrative consideration of evidence . . . always
creates a gap between when the time the record is closed
and the time the administrative decision is promulgated
[and, we might add, the time the decision is judicially
reviewed]. If upon the coming down of the order
litigants might demand rehearings as a matter of law
because some new circumstance has arisen, some new trend
has been observed, or some new fact discovered, there
would be little hope that the administrative process
could ever be consummated in an order that would not be
subject to reopening.”
435 U.S. at 554–55, quoting ICC v. Jersey City, 322 U.S. 503, 514
(1944).
Court No. 08-00216 Page 8
[i]n point of fact, nothing changed from the final
results published in June 2008 to Commerce’s remand
redetermination released October 2011 with respect to
Essar’s duty drawback adjustment. Commerce continued to
grant Essar its duty drawback offset. The claim that
Essar’s cost of manufacturing should have been adjusted
should have been raised when US Steel and Nucor
challenged Commerce’s Final Results in 2008. At no point
did US Steel or Nucor amend their complaint to add a new
count. They do not attempt to do so now. Accordingly,
this issue was settled with the final results and
later-in-time case law does not resuscitate waived
arguments. Doing so here would run contrary to the
Supreme Court’s holding in Vermont Yankee. . . .
Commerce properly limited its decision in the remand
redetermination to the specific factual issue remanded by
the Court.
Id. at 10.
To the extent it is arguing ITA’s hands were tied by a
“record rule” vis-à-vis application of its new policy to a matter
remanded for reconsideration, the argument misstates the law. See
e.g., Tung Mung Dev. Co. v. United States, 354 F.3d 1371, 1378-79
(Fed.Cir. 2004) (any errors in remand orders do not survive ITA
decisions to adopt a new policy; the Supreme Court “has repeatedly
emphasized[] the Chevron doctrine contemplates that agencies can
and will abandon existing policies and substitute new approaches”
as necessary, and including on remand); SKF USA Inc. v. United
States, 254 F.3d 1022, 1030 (Fed.Cir. 2001) (“an agency must be
allowed to assess ‘the wisdom of its policy on a continuing
basis’”, quoting Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 864 (1984)).
Court No. 08-00216 Page 9
The Remand Results correctly note the specific question
on remand was “whether record evidence proves Essar’s contingent
liability for deferred import duties under the duty drawback
program has been removed or permanently excused”. But this
court’s order did not state “without considering any calculation
changes should [ITA] continue to grant the duty drawback
adjustment.” See Remand Results, p. 8, referencing Slip Op. 11-66,
p. 9. And, in point of fact, something has changed. Whereas ITA’s
original duty-drawback determination rested upon an insufficient
premise, it now rests on firmer footing. Even though the result is
the same, the remand determination replaced the original
determination as a matter of law. See, e.g., Decca Hospitality
Furnishings, LLC v. United States, 30 CIT 357, 363 and 427
F.Supp.2d 1249, 1255, n. 11 (2006).
The defendant claims the plaintiffs “had the opportunity
to raise their arguments in their case briefs in the administrative
review”, but the matter was not a problem of exhaustion or waiver:
informing ITA that it must apply its newly-announced practice (of
adding exempted duties to the respondent's costs of production
and/or constructed value when ITA adjusts EP to account for those
exemptions) was not the plaintiff-petitioners’ burden.
Court No. 08-00216 Page 10
It is axiomatic that agencies must follow their own
announced or established practices, or else provide justifiable
reasoning for deviation therefrom. E.g., SKF USA, Inc. v. United
States, 537 F.3d 1373 (Fed.Cir. 2008); Allegheny Ludlum Corp. v.
United States, 346 F.3d 1368 (Fed.Cir. 2003). ITA applied the new
practice on numerous occasions by the time this matter was
remanded2, and, as noted, the practice was recently upheld by the
Court of Appeals for the Federal Circuit in Saha Thai, supra, 635
F.3d at 1341-44, of which the agency is presumed to have had
notice. This being the case, the burden on remand was on ITA to
abide its new practice or explain deviation therefrom.
2
See the Issues and Decision Memoranda accompanying Ball
Bearings and Parts Thereof from France, Germany, and Italy, 76 Fed.
Reg. 52,937 (Aug. 24, 2011) (final results of antidumping
administrative and changed-circumstances reviews) at cmt. 8;
Polyethylene Retail Carrier Bags from Thailand, 76 Fed.Reg. 12,700
(March 8, 2011) (final results of antidumping-duty administrative
review) at cmt. 5; Circular Welded Carbon Steel Pipes and Tubes
from Thailand, 75 Fed.Reg. 64,696 (Oct. 20, 2010) (final results of
antidumping-duty administrative review) at cmt. 2; Certain Welded
Carbon Steel Pipe and Tube from Turkey, 75 Fed.Reg. 64,250. (Oct.
19, 2010) (final results of antidumping-duty administrative review)
at cmt. 3; Certain Steel Concrete Reinforcing Bars from Turkey, 74
Fed.Reg. 45,611 (Sept. 3, 2009) (final results and final partial
rescission of antidumping-duty administrative review) at cmts. 1 &
2; and Circular Welded Carbon Steel Pipes and Tubes from Thailand,
73 Fed.Reg. 61,019 (Oct. 15, 2008) (final results of antidumping-
duty administrative review) at cmt. 5.
Court No. 08-00216 Page 11
The agency is not to be faulted, of course, for following
a strict construction of the terms of the remand order, but its
applied duty-drawback methodology in the context of Essar’s claim
cannot be sustained on the record of the Remand Results at this
point. They therefore must be, and hereby are, remanded for
application of the new policy or reasonable explanation of
inapplicability.
C
Essar’s claim for duty drawback having been allowed in
part, it and ITA additionally agree the Remand Results should be
remanded again to allow correction of a certain ministerial error
in computer programming (that inadvertently resulted in setting
“DTYDRAWU” to zero for all sales, not just for the one invoice in
question). The Remand Results are therefore hereby further
remanded for correction thereof.
II
The remaining comments concern ITA’s determination of the
“date of sale” for Essar’s EP sales. The statute does not specify
the manner in which it shall determine such a date. The Statement
of Administrative Action approved by Congress as part of the
Uruguay Round Agreements Act explains that it is the “date when the
Court No. 08-00216 Page 12
material terms of sale are established”, i.e., price, quantity,
delivery terms, payment terms, and tolerances. See Uruguay Round
Agreements Act, Statement of Administrative Action, H.R. Doc. No.
103-316, p. 810. Normally, ITA presumes the date of invoice as the
EP sale date, but the presumption is rebuttable if and when the
agency is “satisfied that a different date better reflects the date
on which the exporter or producer establishes the material terms of
sale.”3 See also Antidumping Duties; Countervailing Duties, 62
Fed.Reg. 27,296, 27,349 (Dep’t of Comm. May 19, 1997) (“If [ITA]
is presented with satisfactory evidence that the material terms of
sale are finally established on a date other than the date of
invoice, [it] will use that alternative date as the date of sale”).
Any inquiry is intended to be flexible. See, e.g., Allied Tube and
Conduit Corp. v. United States, 24 CIT 1357, 1370, 127 F.Supp.2d
207, 219 (2000) (Congress “has expressed its intent that, for
antidumping purposes, the date of sale be flexible so as to
3
19 C.F.R. §351.401(i) provides as follows:
. . . In identifying the date of sale of the subject
merchandise or foreign like product, the Secretary
normally will use the date of invoice, as recorded in the
exporter or producer's records kept in the ordinary
course of business. However, the Secretary may use a
date other than the date of invoice if []he . . . is
satisfied that a different date better reflects the date
on which the exporter or producer establishes the
material terms of sale.
Court No. 08-00216 Page 13
accurately reflect the true date on which the material elements of
sale were established”); Sahaviriya Steel Indus. Pub. Co. v. United
States, 34 CIT ___, ___, 714 F.Supp.2d 1263, 1280 (2010)
(“Flexibility is the cornerstone of Commerce’s date of sale
analysis”).
Essar argues the Remand Results incorrectly use invoice
date as its EP sale date. It contends the correct date is the date
of the letter of credit, as determined in the Final Results,
wherein ITA reasoned,
for Essar's EP sales, the material terms of sale are set
at the time of the sales contract, but are occasionally
changed when the letter of credit is issued. Because the
letter of credit is issued after the sales contract, any
changes to the letter of credit would also signal a
departure from the sales contract.[ ] Petitioners point
to instances where material terms changed after the
letter of credit was issued. In these instances, the
original letter of credit was amended and we used the
amended letter of credit. Thus, for the instant review,
the letter of credit is a better test than the sales
contract for when the terms of sale are set. Moreover, in
all circumstances, the invoice is issued after the letter
of credit, or in some instances the amended letter of
credit, when the merchandise is shipped and the essential
terms are never changed between the letter of credit, or
the amended letter of credit, and the invoice.
Issues and Decision Memorandum accompanying Final Results, 73 Fed.
Reg. 31,961, cmt. 21 (footnote omitted), PDoc 180.
Court No. 08-00216 Page 14
In the Remand Results, page 9, ITA changed its position
and determined “the material terms of sale were not fixed on the
letter of credit date or amended letter of credit date.” Because
of multiple instances of price and quantity being invoiced beyond
the tolerances in the sales contracts, the agency determined there
was no “meeting of the minds” as of the letter-of-credit date or
amended letter-of-credit date and concluded (essentially) Essar had
not overcome the presumption in favor of using the date of invoice
as the EP sales date. See Remand Results, pp. 9-10.
Essar does not challenge ITA’s discretion as to the
appropriate date of sale or the regulatory presumption in favor of
invoice date, but, of course, it is the respondent’s burden to
present sufficient evidence to establish that the material terms
are set at a different time if it wishes to overcome that
presumption. See, e.g., Sahaviriya Steel, 34 CIT at ___, 714
F.Supp.2d at 1279; Nakornthai Strip Mill Public Co. v. United
States, 33 CIT ___, ___, 614 F.Supp.2d 1323, 1334 (2009)
(“Nakornthai III”). Essar’s attempt involves pointing to the
unchanged evidentiary record between the Final Results and the
Remand Results and arguing only one invoice had an overall quantity
change of more than the tolerance of the letter of credit. It
contends that the decisions ITA relied upon for support,
Court No. 08-00216 Page 15
Nakornthai III and Nucor Corp. v. United States, 33 CIT ___, ___,
612 F.Supp.2d 1264, 1271 (2009), involved only limited changes
between invoice and letter-of-credit issuance and that these
decisions actually support its position because its record of
changes consists of only “two items out of approximately 280”,
which Essar contends does not amount to substantial evidence but
proof of the correctness of ITA’s original position in the Final
Results. See generally Def-Int. Essar Steel Ltd’s Comments . . .
Pursuant to Court Remand, pp. 4-10.
The “two items” were apparently of greater impact than
Essar represents. ITA addressed the reliance on Nakornthai III and
Nucor by explaining that “the material term of sale changed on one
contract” in each of those matters, whereas “Essar’s material terms
of sale changed on many transactions [by] contrast”. Remand
Results, p. 11, referencing Nakornthai III, 33 CIT at ___, 614
F.Supp.2d at 1326 (“one U.S. sale of hot-rolled steel pursuant to
a contract” that was changed), and Nucor, 33 CIT at ___, 612
F.Supp.2d at 1301 (“a price change as to one of ICDAS’ U.S.
contracts”).
The standard is whether ITA’s selection of the
presumptive date of sale is unsupported by substantial evidence.
See 19 U.S.C. §1516a(b)(1)(B)(i); Allied Tube, supra, 24 CIT at
Court No. 08-00216 Page 16
1373, 127 F.Supp.2d at 220-21. Applying it herein, the court finds
adequate support for the agency’s decision, given the detailed
changes in material terms of sale between the letters of credit and
the related invoices. See Remand Results, pp. 9-10 (“Essar’s
material terms of sale were altered outside of the built-in
tolerances in the sales contracts and those changes occurred up to
the invoices in Essar’s submitted sales documentation”); Def’s
Conf. Appx., Tab A (CalcMemo), Tab B (Essar’s Aug. 16, 2007
Questionnaire Response, ConfDoc 33); Nucor’s Conf. Appx., Tab 7
(copies of Essar’s letters of credit and invoices). Hence, the
Remand Results can be, and they hereby are, sustained as to ITA’s
selection of the date of intervenor-defendant Essar’s EP sales.
III
The defendant may have until May 25, 2012 to amend and
correct the Remand Results in accordance with the foregoing and
report the results thereof to the parties and the court.
So ordered.
Decided: New York, New York
April 11, 2012
/s/ Thomas J. Aquilino, Jr.
Senior Judge