Tosçelik Profil ve Sac Endüstrisi A.S. v. United States , 2019 CIT 166 ( 2019 )

Slip Op. 19-
UNITED STATES COURT OF INTERNATIONAL TRADE
TOSÇELIK PROFIL VE SAC
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and
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Before: Jennifer Choe-GrovesJudge
v.
Consol. Court No. 17-00018
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Defendant
and
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Defendant-Intervenor.
OPINION AND ORDER
[Sustaining in part and remanding in part the U.S. Department of Commerce’s second remand
results.]
Dated: December 18, 2019
David L. Simon, Law Office of David L. Simon, of Washington, D.C., for Plaintiff Tosçelik
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Elizabeth A. Speck, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., for Defendant United States. With her on the briefs
were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, Franklin E.
White, Jr., Assistant Director, and Patricia M. McCarthy, Assistant Director. Of counsel was
David W. Richardson, Attorney, Office of the Chief Counsel for Trade Enforcement and
Compliance, U.S. Department of Commerce, of Washington, D.C.
Consol. Court No. 17-00018 Page 2
Roger B. Schagrin and Paul W. Jameson, Schagrin Associates, of Washington, D.C., for
Consolidated Plaintiff and Defendant-Intervenor Zekelman Industries.
Choe-Groves, Judge: This action arises out of the final results of the administrative
review of welded carbon steel standard pipe and tube products from Turkey. See Welded
Carbon Steel Standard Pipe and Tube Products From Turkey, 81 Fed. Reg. 92,785 (Dep’t
Commerce Dec. 20, 2016) (final results of administrative review; 2014–2015), as amended, 82
Fed. Reg. 11,002 (Dep’t Commerce Feb. 17, 2017) (amended final results of antidumping duty
administrative review; 2014–2015). Before the court are the Final Results of Redetermination
Pursuant to Second Court Remand, May 30, 2019, ECF No. 67–1 (“Second Remand Results”).
For the reasons discussed below, the Second Remand Results are remanded for further
proceedings consistent with this opinion.
BACKGROUND
The court presumes familiarity with the facts and procedural history of this action. See
7RVoHOLN3URILOYH6DF(QGVWULVL$ùY8QLWHG6WDWHV, 42 CIT __, 321 F. Supp. 3d 1270 (2018)
(“Tosçelik I”); 7RVoHOLN3URILOYH6DF(QGVWULVL$ùY8QLWHG6WDWHV, 42 CIT __, 375 F. Supp.
3d 1312 (2019) (“Tosçelik II”). In Tosçelik I, the court remanded to Commerce for
reconsideration of Tosçelik’s duty drawback adjustment and the circumstance of sale adjustment
as to warehousing expenses. Tosçelik I at 1281.
After the first remand, Commerce recalculated Tosçelik’s duty drawback adjustment by
allocating import duties exempted by reason of export of finished product over total exports, as
reported by Tosçelik. Tosçelik II at 1314. Because Commerce perceived an imbalance in its
comparison between Tosçelik’s export price and normal value, Commerce made an additional
Consol. Court No. 17-00018 Page 3
circumstance of sale adjustment. Id. Commerce also granted a circumstance of sale adjustment
to Tosçelik for warehousing expenses. Id. at 1316–17. The court concluded that Commerce’s
modified calculation of Tosçelik’s duty drawback adjustment was not in accordance with the
law, but sustained Commerce’s circumstance of sale adjustment for warehousing expenses. Id.
at 1317. The court remanded to Commerce for further proceedings. Id.
In the Second Remand Results, Commerce “amended its duty drawback calculation
methodology . . . to ensure that [Commerce’s] dumping calculation is duty neutral, meaning that
the same amount of duties are accounted for on both sides of the dumping equation,” by: “(1)
making a per-unit adjustment to U.S. price in the full amount of the per-unit duty drawback
granted on export, as claimed by Tos[ç]elik; and (2) making a circumstance of sale . . .
adjustment to [constructed value] and home market price to add the same amount of the per-unit
amount of import duties added to U.S. price.” Second Remand Results at 1–2.
Tosçelik filed comments on the Second Remand Results. Comments Pl. Tosçelik Profil
YH6DF(QGVWULVL$ù Final Results Redetermination Pursuant to Second Remand, Jul. 31, 2019,
ECF No. 82 (“Pl.’s Comments”). Zekelman filed comments in opposition. Def.-Intervenors’
Comments in Opp’n to the Second Remand Redetermination, Jul. 31, 2019, ECF No. 81.
Defendant responded. Def.’s Resp. to Comments on Second Remand Results, Aug. 30, 2019,
ECF No. 85 (“Def.’s Reply”). The Parties filed a joint appendix. J.A., Sept. 12, 2019, ECF
No. 87. The Parties filed supplemental briefing on December 6, 2019. Def.-Intervenors’ Suppl.
Br., Dec. 6, 2019, ECF No. 89; Pl.’s Suppl. Br., Dec. 6, 2019, ECF No. 90; Def.’s Suppl. Br.,
Dec. 6, 2019, ECF No. 91.
Consol. Court No. 17-00018 Page 4
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C.
§ 1581(c). The court shall hold unlawful any determination, finding, or conclusion found to be
unsupported by substantial evidence on the record, or otherwise not in accordance with the law.
19 U.S.C. § 1516a(b)(1)(B)(i). The results of a redetermination pursuant to court remand are
reviewed also for compliance with the court’s remand order. See ABB Inc. v. United States,
42 CIT __, __, 355 F. Supp. 3d 1206, 1210 (2018).
ANALYSIS
If Commerce finds that merchandise is being sold at less than fair value, Commerce
issues an antidumping duty order imposing antidumping duties equivalent to the amount by
which the normal value exceeds the export price for the merchandise. See 19 U.S.C. § 1673; see
also 19 U.S.C. § 1675. Export price, or U.S. price, is the price at which the subject merchandise
is first sold in the United States. See id. § 1677a(a). A duty drawback adjustment is an
adjustment to export price, specifically, an increase by “the amount of any import duties imposed
by the country of exportation which have been rebated, or which have not been collected, by
reason of the exportation of the subject merchandise to the United States.” Id. § 1677a(c)(1)(B).
Generally, normal value represents the price at which the subject merchandise is sold in
the exporting country. See id. § 1677b(a)(1)(A). When determining the appropriate price for
comparison, Commerce may make certain price adjustments, such as a circumstance of sale
adjustment. See id. § 1677b(a)(6). Under the statute, the price may be:
(C) increased or decreased by the amount of any difference (or lack thereof)
between the export price or constructed export price and the price
described in paragraph (1)(B) (other than a difference for which
Consol. Court No. 17-00018 Page 5
allowance is otherwise provided under this section) that is established
to the satisfaction of the administering authority to be wholly or partly
due to– . . .
(iii) other differences in the circumstances of sale.
Id. § 1677b(a)(6)(C)(iii). The purpose of statutory adjustments to normal value is to “ensure[]
that there is no overlap or double-counting of adjustments.” H.R. Rep. No. 103-826, pt. 1, at 84–
85 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 3857–58.
Pursuant to 19 C.F.R. § 351.410(b), “the Secretary will make circumstances of sale
adjustments under section 773(a)(6)(C)(iii) of the Act [19 U.S.C. § 1677b(a)(6)(C)(iii)] only for
direct selling expenses and assumed expenses.” 19 C.F.R. § 351.410(b). Direct selling expenses
are “expenses, such as commissions, credit expenses, guarantees, and warranties, that result
from, and bear a direct relationship to, the particular sale in question.” Id. § 351.410(c).
Assumed expenses are “selling expenses that are assumed by the seller on behalf of the buyer,
such as advertising expenses.” Id. § 351.410(d).
I. Commerce’s Duty Drawback Adjustment
In the Second Remand Results, Commerce readdressed Tosçelik’s request for a duty
drawback adjustment pertaining to the Turkish IPR program, which is a duty exemption
program. Second Remand Results at 16. Commerce explained that “since Tos[ç]elik never
actually paid or recorded any duty costs associated with the [Turkish] IPR exemption program,
there is no duty in [the] constructed value or home market price associated with this program,
and no need to adjust Tos[ç]elik’s cost of production,” but, “[u]nder the IPR exemption
program[,] . . . an off the books liability was generated when inputs were imported under the IPR
program and that liability was later reversed upon exportation of subject merchandise to the
Consol. Court No. 17-00018 Page 6
United States and other markets.” Id. at 16–17 (internal quotation marks omitted). As a result,
Commerce made “a per-unit adjustment to U.S. price in the full amount of the per-unit duty
drawback granted on export, as claimed by Tos[ç]elik.” Id. at 1–2. Tosçelik does not contest
this duty drawback adjustment. Pl.’s Cmts. at 22.
Under 19 U.S.C. § 1677a(c)(1)(B), a duty drawback adjustment is an adjustment to
export price, i.e., an increase by “the amount of any import duties imposed by the country of
exportation which have been rebated, or which have not been collected, by reason of the
exportation of the subject merchandise to the United States.” 19 U.S.C. § 1677a(c)(1)(B).
Because Commerce’s calculation and explanation of the duty drawback adjustment is in
accordance with 19 U.S.C. § 1677a(c)(1)(B), the court concludes that Commerce’s duty
drawback adjustment to U.S. price is in accordance with the law.
II. Commerce’s Circumstance of Sale Adjustment
On remand, Commerce made a circumstance of sale adjustment “to add the same per-unit
duty amount to home market price and [constructed value] as that [was] granted [to] Tos[ç]elik
for the full amount of duties that were drawn back or forgiven by virtue of the export of the
merchandise to the United States under the IPR exemption program.” Second Remand Results at
17. On remand, Commerce contends that this circumstance of sale adjustment “account[s] for
the . . . imbalance between the amount of the claimed duty drawback and the absence of any
import duty costs included in normal value.” Id. at 7. Commerce claims the circumstance of
sale adjustment supports a fair comparison between the U.S. price and the constructed value
because: (1) “the import duty program and drawback provision impose a different set of
accounting and duty treatments dependent upon the market to which the finished good was sold,”
Consol. Court No. 17-00018 Page 7
and (2) there were three conditions that required a circumstance of sale adjustment. See id. at
14–15. Those conditions include: the input source market, “the effect of the different sourcing of
inputs and associated duty costs,” and the differences between the U.S. and the home market in
duty drawback treatment. Id. at 14–15.
Plaintiff contends that the law does not require a duty-neutral outcome and that
Commerce cannot use a circumstance of sale adjustment here because the use of a circumstance
of sale adjustment is restricted to the direct selling expenses context. Pl.’s Cmts. at 4. Defendant
argues that Commerce’s circumstance of sale adjustment eliminates the perception of double
counting, supports a fair comparison between export price and normal value, and is permitted
because “the operation of Turkey’s duty drawback scheme and the antidumping duty law duty
drawback provision[] transform the import duties subject to the duty drawback scheme into a
direct selling expense.” Def.’s Reply at 6, 8–9. 1
Defendant-Intervenors argue that Commerce should make an adjustment to the cost of
production for uncollected duties. Def-Intervenors’ Cmts. at 1. Defendant-Intervenors’
argument “rel[ies] on a reading of Saha Thai Steel Pipe (Public) Co. Ltd. v. United States, 635
F.3d 1335 (Fed. Cir. 2011)[] that the court disapproved of in Tosçelik I.” Tosçelik II at 1315.
On remand, Commerce removed the adjustment to cost of production that Defendant-Intervenor
now seeks to reintroduce. Commerce’s removal of this adjustment to cost of production on
1
Defendant-Intervenors add that although “[t]he purpose of the duty drawback adjustment as
stated in Tosçelik II may not require that the two adjustments should be equal or duty neutral, . . .
the purpose of the duty drawback adjustment as stated in Saha Thai does require duty neutrality.”
Def-Intervenors’ Cmts. at 4 (emphasis in original) (quotation marks omitted).
Consol. Court No. 17-00018 Page 8
remand is in accordance with Tosçelik II and the court sustains Commerce’s removal of the
adjustment to cost of production. Tosçelik II at 1315.
A. Commerce’s Circumstance of Sale Adjustment Negates the Duty Drawback
Adjustment
Defendant’s and Defendant-Intervenors’ arguments as to the perception of double
counting lack merit. First, despite its claims to the contrary, Commerce made a circumstance of
sale adjustment not for the purpose of preventing the double-counting of adjustments. Second
Remand Results at 17. The purpose of statutory adjustments to normal value is so Commerce
can “ensure[] that there is no overlap or double-counting of adjustments.” H.R. Rep. No. 103–
826, pt. 1, at 84–85 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 3857–58; Tosçelik II at 1315.
Commerce fails to explain how the circumstance of sale adjustment prevents double-counting of
adjustments when only Tosçelik’s duty drawback adjustment is at issue.
Second, the circumstance of sale adjustment does not remedy an imbalance; it negates the
duty drawback adjustment. Defendant concedes that the circumstance of sale adjustment negates
the duty drawback adjustment. Second Remand Results at 1–2 (noting that Commerce made “a
circumstance of sale . . . adjustment to [constructed value] and home market price to add the
same amount of the per-unit amount of import duties added to U.S. price.”). Commerce is not
permitted to “use the [circumstance of sale] provision to effectively writ[e] [a separate
adjustment] section out of the statute.” +DEDú6LQDL9H7LEEL*D]ODU,VWLKVDO(QGüstrisi, A.ù. v.
United States, 2019 WL 5270152, at *22 (CIT 2019) (internal quotation marks omitted) (“+DEDú
II”); see also Zenith Electronics Corp. v. United States, 988 F.2d 1573, 1581 (Fed. Cir. 1993).
The upward adjustment to constructed value contemplated by 19 U.S.C. § 1677b(a)(6)(C)(iii)
Consol. Court No. 17-00018 Page 9
aids Commerce’s statutory duty to make a fair comparison between normal value or constructed
value and export price. Because Commerce’s circumstance of sale adjustment negates the
statutory duty drawback adjustment, the court concludes that Commerce’s circumstance of sale
adjustment is not in accordance with the law.
B. Commerce’s Circumstance of Sale Adjustment Is Not Supported By
19 C.F.R. § 351.410
Defendant’s argument as to the treatment of duty drawback as a direct selling expense is
unavailing. Commerce’s circumstance of sale adjustment does not result from circumstances
concerning the sale of merchandise because “[t]he duty drawback adjustment resulted from the
operation of law.” See +DEDú,, at *21–22, *26. A duty is an expense unlike “commissions,
credit expenses, guarantees, and warranties” and further is not “assumed by the seller on behalf
of the buyer, such as advertising expenses.” 19 C.F.R. §§ 351.410(c) and (d). The duty imposed
in this matter is therefore neither a direct selling expense nor an assumed expense as defined in
19 C.F.R. § 351.410. Because the adjustment at issue concerns the imposition of a duty, not a
circumstance of sale, the court concludes that Commerce’s explanation for the circumstance of
sale adjustment is not in accordance with the law. Compare 19 U.S.C. § 1677a(c)(1)(B) with 19
C.F.R. §§ 351.410(b), (c), and (d) (identifying types of expenses properly subject to a
circumstance of sale adjustment).
CONCLUSION
Because Commerce’s circumstance of sale adjustment negates the duty drawback
adjustment and Commerce incorrectly treats the duty drawback as a direct selling expense, the
court concludes that the circumstance of sale adjustment is not in accordance with the law.
Consol. Court No. 17-00018 Page 10
For the foregoing reasons, the court sustains Commerce’s duty drawback adjustment and
remands to Commerce for future proceedings in accordance with this opinion. Accordingly, it is
hereby
ORDERED that the duty drawback adjustment is sustained; and it is further
ORDERED that the Second Remand Results are remanded to Commerce for further
proceedings; and it is further
ORDERED that this action shall proceed in accordance with the following schedule:
 Commerce shall file its remand determination on or before February 18, 2020;
 Commerce shall file the administrative record on or before March 4, 2020;
 Parties’ comments in opposition to the remand determination shall be filed on or before
March 20, 2020;
 Parties’ comments in support of the remand determination shall be filed on or before
April , 2020;
and
 The Joint Appendix shall be filed on or before May , 2020.
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: December 18, 2019
New York, New York