United States Steel Corp. v. United States , 2011 CIT 66 ( 2011 )

Slip Op. 11 - 66
UNITED STATES COURT OF INTERNATIONAL TRADE
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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. :
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Memorandum & Order
[Motions for judgment on agency record granted;
remanded to International Trade Administration.]
Decided: June 14, 2011
Skadden, Arps, Slate, Meagher & Flom LLP (Robert E.
Lighthizer, Jeffrey D. Gerrish, Ellen J. Schneider, M. Allison
Guagliardo, and Luke A. Meisner) 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
(David D’Alessandris); and Office of the Chief Counsel for Import
Court No. 08-00216 Page 2
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 case contests two aspects
of 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”),
covering a 2005-2006 period of review (“POR”).
The court’s jurisdiction is pursuant to 19 U.S.C.
§1516a(a)(2)(A) and 28 U.S.C. §§ 1581(c) and 2631(c).
I
Moving for judgment on the agency record, the plaintiff
United States Steel Corporation (“USSC”) and the intervenor-
plaintiff Nucor Corporation initially contend the International
Trade Administration, U.S. Department of Commerce (“ITA”) erred in
dating certain exports of Essar Steel Limited from India to the
United States. The defendant also perceives inadequacy and
requests remand in order to “reevaluate record evidence and change
or more fully explain” its position on the issue. Defendant’s
Response to . . . Motions for Judgment Upon the Administrative
Record (“Gov’t Br.”), p. 2. See id. at 16.
Court No. 08-00216 Page 3
Because the request does not involve a change in or
interpretation of policy and does not appear frivolous or in bad
faith, cf. SKF USA Inc. v. United States, 254 F.3d 1022, 1029 (Fed.
Cir. 2001), remand appears appropriate and is therefore hereby
ordered.
II
USSC and Nucor also claim it was unreasonable for ITA to
have adjusted Essar’s U.S. sales price contrary to section
772(c)(1)(B) of the Tariff Act of 1930, as amended, i.e., 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). See 73 Fed.Reg. at 31,964 and
Issues and Decision Memorandum to Final Results (“DecMemo”) at
comment 18. Cf. Public Record Document (“PDoc”) 184. Their claim
concerns the “Advance Licence” program of the Government of India
(“GOI”), pursuant to which, as revealed in the administrative
record, a company may be authorized to import certain quantities of
raw materials for further processing without payment of import
duties thereon upon condition that proper documentation is provided
to establish exportation within the time specified by the license
Court No. 08-00216 Page 4
of the required amount of further processed goods, at which point
the non-collection of duties becomes final. See, e.g., Essar’s
Supplemental Questionnaire Response (“SQR”) at Ex. 16B, pp. 65-68,
and Ex. 16C, p. 1, PDoc 90. The critical point, USSC and Nucor
argue, is that, if no such proof is provided to GOI, the relevant
processor remains liable for the uncollected import duties.
A
Essar claimed an adjustment for duty drawback and
“reported in its U.S. sales the advance license number
corresponding to each commercial invoice[.]” Essar’s Questionnaire
Response (“QR”) at C-33, PDoc 50, Confidential Record Document
(“ConfDoc”) 9. It provided the following for support: (1) a copy
of a publication announcing the per-kilogram input amount(s) for
“standard input output norm C-495” (“SION”), pertaining, inter
alia, to subject merchandise, and a copy of relevant GOI law and
regulation on its advance license program; (2) copies of advance
licenses issued to Essar under that program; (3) bills supporting
an ITA finding of entry into GOI customs of, inter alia, material
imported pursuant to the licenses (said bills bearing handwritten
numbers or notes evidently correlative to the SION calculus); and
(4) a table of the amount of duty drawback Essar had purportedly
received during the POR pursuant to the advance license program.
Court No. 08-00216 Page 5
See id. at C-33, C-34, & Ex. C-13 (A, B & C), PDoc 50, ConfDoc 9;
Essar’s SQR at 19, Ex. 16 (A, B & C), Ex. 17, & Ex. 18, PDoc 90,
ConfDoc 33. Based upon that information, Essar claimed a certain
license-specific duty saving from each commercial invoice in its
U.S. sales listing but claimed none from a fourth license it
contended was yet to be utilized during the POR. Essar’s QR at
C-33, PDoc 50, ConfDoc 9. See Defendant-Intervenor Essar Steel
Limited's Response to . . . Motions for Judgment on the Agency
Record Pursuant to Rule 56.2, p. 15.
In its preliminary results, ITA found Essar had failed to
provide sufficient evidence to show it had received “rebates” from
the GOI as duty drawback and rejected the duty-drawback adjustment
request. See Preliminary Results Calculation Memorandum, p. 2,
PDoc 131. Essar argued in its brief to the agency, inter alia,
that ITA had misapprehended GOI’s advance license program as a
program of direct rebate upon export whereas the program actually
involves non-collection of import duty on a contingent basis, and
that it, Essar, had in fact provided sufficient evidence to meet
the requirements for adjustment. See Essar’s Case Brief, pp. 2-6,
PDoc 162. Responding, USSC and Nucor contended Essar had failed to
establish entitlement thereto, in significant part because it did
Court No. 08-00216 Page 6
not prove full compliance with the advance license program’s post-
export requirements. See, e.g., Rebuttal Brief on Behalf of USSC,
pp. 1-6, PDoc 170.
In the Final Results, ITA agreed it had mistakenly
believed Essar’s duty-drawback-adjustment claim had been based upon
a different drawback program and acknowledged that GOI’s advance
license program could meet its test for a drawback adjustment. See
DecMemo at comment 18. ITA then
re[-]analyzed the record evidence . . . and found that
Essar’s advance license program used SION (the standard
the GOI uses to calculate the quantity of imports that
are eligible for duty drawback based on a specified
quantity of exports), and that this meets the
requirements of the Department's two-prong test: 1) the
import duties and rebates are directly linked to, and are
dependent upon, one another, and 2) the company claiming
the adjustment can demonstrate that there are sufficient
raw material imports to account for the duty drawback
received on exports of the manufactured product.[1] . . .
Essar's reported SION of import duties and rebates were
directly linked to, and are dependent upon, one another.
Id. (footnotes omitted and referencing, inter alia, Essar’s QR at
Ex. C-13 (generally) & Essar’s SQR at Ex. C-18).
1
See Antidumping Methodologies: Market Economy Inputs,
Expected Non-Market Economy Wages, Duty Drawback; and Request for
Comments, 71 Fed.Reg. 61,716 (Dep’t of Comm. Oct. 19, 2006).
Court No. 08-00216 Page 7
B
USSC and Nucor do not contest ITA’s test per se, which
has been upheld in other circumstances, e.g., Carlisle Tire &
Rubber Co. v. United States, 11 CIT 168, 657 F.Supp. 1287 (1987),
rather the finding that Essar met its requirements. That is, while
in accordance with law within the meaning of 19 U.S.C.
§1516a(b)(1)(B)(I), the finding is not supported by the requisite
substantial evidence2 on the agency record.
The defendant posits that the two prongs of the duty
drawback test “focus first ‘on the drawback program itself’ and
second on ‘the specific application of the drawback program to the
firm claiming the adjustment.’” Gov’t Br., p. 10, quoting Far East
Machinery Co. v. United States, 12 CIT 428, 431, 688 F.Supp. 610,
612 (1988). It contends ITA properly found the test satisfied in
this instance in light of the evidence of Essar’s subject
merchandise exports in its U.S. sales database linked to the
company’s advance license and import data via the relevant SION
2
“Substantial evidence is . . . such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.”
Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). It
requires “something less than the weight of the evidence, and the
possibility of drawing two inconsistent conclusions from the
evidence does not prevent an administrative agency's finding from
being supported by substantial evidence.” Consolo v. Federal
Maritime Comm'n, 383 U.S. 607, 619-20 (1966).
Court No. 08-00216 Page 8
used by GOI for the advance license program. Id., referencing
DecMemo at comment 18, citing Notice of Final Determination of
Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat
Products from India, 66 Fed.Reg. 50,406 (Dep’t of Comm. Oct. 3,
2001).
Given that the second prong’s concern is only with
respect to imported material input amounts, however, the first
prong cannot reasonably be focused solely upon “the drawback
program itself” –– in disregard of a claimant’s specific compliance
with program requirements. See, e.g., Rajinder Pipes Ltd. v.
United States, 23 CIT 656, 70 F.Supp.2d 1350 (1999) (party must
show the link between its duty-free imports and its exports as part
of first prong of drawback adjustment test). In the context of a
rebate program, the proper “payment” of import duty must still be
proved, or any linking of a “rebate” will be problematic. See,
e.g., Allied Tube & Conduit Corp. v. United States, 25 CIT 23, 132
F.Supp.2d 1087 (2001). Similarly, the mere finding of validity on
a “non-collection”-duty-drawback program without proof of a
respondent’s full compliance therewith would not amount to
substantial evidence on the record to support imputing a “link”
between such respondent’s exports and duty-free imports.
Court No. 08-00216 Page 9
The SION formula may be considered necessary but is
insufficient, on its own, to prove “duty-free” importation linked
to exportation for purposes of U.S. antidumping law. SION simply
equates input for a given output. SION’s bare existence in the
record, in the absence of proof of compliance with GOI’s post-
export requirements or official excuse of contingent liability for
GOI customs duty on the imported input(s), cannot reasonably be
concluded to amount to substantial evidence on the record of
definitive lack of such liability.
The defendant argues, nonetheless, there is nothing in
the statute or in the two-prong test requiring submission of export
documentation to establish entitlement to the duty-drawback
adjustment. Gov’t Br., p. 12, referencing Rajinder, 23 CIT at 665,
70 F.Supp.2d at 1358 (“in making its adjustment determinations on
non-collection programs, Commerce has applied the same two-prong
duty drawback test as it has in standard rebate programs”). The
defendant further argues the court must defer to ITA’s conclusions
if the evidence supports them, and it implies the agency’s previous
grant of the duty-drawback adjustment to Essar in the original
investigation was a factor in ITA’s decision in this matter. See
id. at 12-13, referencing, inter alia, Certain Hot-Rolled Carbon
Steel Flat Products from India, supra. See DecMemo at comment 18.
Court No. 08-00216 Page 10
The first point may be so, but this memorandum is not
intended to delimit what would properly satisfy the two-prong test.
The general rule, however, is that an agency’s decisions must be
consistent, or reasonably explained for deviation. E.g., Secretary
of Agric. v. United States, 347 U.S. 645 (1954). The fact that
Essar may have satisfied the duty-drawback test in the original
investigation does not answer whether it also did so during the
administrative review at bar. See, e.g., Alloy Piping Products,
Inc. v. United States, 33 CIT ___, Slip Op. 09-29 at 22, 2009 WL
983078 at *9 (April 14, 2009) (“different data compiled in
different periods of review . . . have no legal effect on the
administrative review” under consideration), appeal docketed, No.
2010-1288 (Fed.Cir. April 6, 2010).
Based on the present record, USSC and Nucor now cast
reasonable doubt on how ITA reached its conclusion. The plain
language thereof appears simply to have assumed that Essar’s
liability for import duties incurred during the POR was no longer
conditional. At first blush, that might have appeared not unrea-
sonable3, but assumption is not substantial evidence. Compare
3
It appears undisputed that the record would support finding
that import duties on input(s) were not paid, and that export of
subject merchandise embodying transformed input(s) of the same
class or kind (whether or not consisting of those duty-deferred
imports) to the United States did occur.
Court No. 08-00216 Page 11
Jinan Yipin Corp. v. United States, 31 CIT 1901, 1933, 526 F.Supp.
2d 1347, 1375 (2007) (rejecting ITA’s determination based on “mere
assumptions, which find no apparent support in record evidence”)
with Pohang Iron & Steel Co. v. United States, 23 CIT 778, 790-91
(1999)(an administrative inference must evince “some likelihood” of
truth from the record, not mere possibility).
Essar had the burden of establishing entitlement to the
duty-drawback adjustment. See, e.g., Fujitsu General Ltd. v.
United States, 88 F.3d 1034, 1040 (Fed.Cir. 1996). There is
nothing of record, however, to suggest that subsequent collection
of deferred import duties by GOI for any non-compliance of the
requirements of the advance license program was precluded, de jure
or de facto, simply by reason of export to the United States. If
there is such proof of permanent excuse, or removal by affirmative
action vis-à-vis GOI or otherwise, of Essar’s contingent liability
for import duties, it is not obvious from this administrative
record. For example, as USSC and Nucor argued, there is no
apparent proof of export submitted to the relevant Regional
Authority within two months from expiration of the export
obligation period, as required under the GOI program, nor does the
record encompass any shipping bills bearing a relevant advance
license number or evince that export itself could not have occurred
Court No. 08-00216 Page 12
except in compliance with the advance license program. See Essar’s
SQR at Exhibit 16B (“Handbook of Procedures-(Vol. I)”,
9/1/2004--3/31/2009, Min. of Comm. and Indus., Dept. of Comm.,
GOI), p. 58 (shipping documents “should be” endorsed with advance
license file or authorization number “to establish co- relation of
exports . . . with Authorization issued”) and p. 65 (“Monitoring of
Obligation”)4.
Certainly, process matters, and ITA is required to
address all relevant argument, 19 U.S.C. §1677f(i)(3)(A), but its
DecMemo to the Final Results herein inadequately addresses USSC’s
and Nucor’s relevant concern(s) over whether the agency duty-
drawback adjustment test may lawfully be interpreted not to require
proof or corroboration of the complete removal of contingent
liability for deferred import duties under the GOI advance license
program (via compliance, e.g., with GOI’s post-export requirements
under Indian law). Cf. 19 U.S.C. §1677a(c)(1)(B) (“by reason of
the exportation of the subject merchandise to the United States”).
4
Cf. Rajinder Pipes Ltd. v. United States, 23 CIT 656, 659-60
and 70 F.Supp.2d 1350, 1358, n. 3 (1999) (describing a program
involving a “duty exemption entitlement certificate” book
purportedly submitted to GOI customs officials upon export).
Court No. 08-00216 Page 13
III
In view of the foregoing, plaintiff's and
intervenor-plaintiff's motions for judgment on the agency record
should be, and they hereby are, granted to the extent of remand of
the Final Results to ITA to clarify or reconsider its analysis of
the intervenor-defendant's entitlement to duty-drawback adjustment
within the meaning of 19 U.S.C. §1677a(c)(1)(B). Specifically, if
ITA’s position on remand is that the evidence of record proves
Essar’s contingent liability for deferred import duties has been
removed or permanently excused, the remand results shall clarify
why th at is so, or ITA may reconsider the issue of
Essar’s eligibility for duty-drawback adjustment altogether,
should that be determined necessary on remand -- and in light of
this decision.5
5
Although not relevant to this memorandum, this court
considers exhaustion arguments inapplicable with respect to USSC’s
and Nucor’s point regarding inconsistency in the Final Results as
compared with ITA’s pronouncement in Certain Hot-Rolled Carbon
Steel Flat Products from India, 73 Fed.Reg. 40,295 (Dep’t of Comm.
July 14, 2008) (final results), Issues and Decision Memorandum at
comment 22 (“India does not have an effective system in place
during the POR for regularly monitoring and updating the accuracy
of SIONs”), the companion countervailing-duty administrative review
of hot rolled steel from India, involving overlapping review
periods, and issued approximately one month after the Final Results
herein. See, e.g., China Steel Corp. v. United States, 28 CIT 38,
59, 306 F.Supp.2d 1291, 1310 (2004) (on challenge to basis for
corroboration, exhaustion inapplicable where ITA did not explain
its basis until final determination).
Court No. 08-00216 Page 14
The defendant may have until August 5, 2011 to carry out
that analysis and report the results thereof to the court and the
parties, which may comment thereon on or before September 2, 2011.
So ordered.
Decided: New York, New York
June 14, 2011
/s/ Thomas J. Aquilino, Jr.
Senior Judge