Elkem Metals Co. v. United States , 2006 CIT 189 ( 2006 )

Slip Op. 06-189
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
______________________________
:
ELKEM METALS CO. and :
GLOBE METALLURGICAL, INC., :
:
Plaintiffs, :
: Court No. 02-00232
v. :
:
UNITED STATES, :
:
Defendant, :
:
and :
:
RIMA INDUSTRIAL S/A, :
:
Deft.-Int. :
________________________________:
[Matter remanded to the United States Department of Commerce.]
DLA Piper US LLP (William D. Kramer, Martin Schaefermeier)for
Plaintiffs Elem Metals Co., and Globe Metallurgical, Inc.
Peter D. Keisler, Assistant Attorney General, Civil
Division, United States Department of Justice; David M. Cohen,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Reginald T. Blades, Jr.); Robert
LaFrankie, Office of Chief Counsel for Import Administration,
United States Department of Commerce, of counsel, for defendant.
Greenberg Traurig, LLP (Philippe M. Bruno, Rosa S. Jeong) for
Defendant-Intervenor, Rima Industrial S/A.
ORDER
This matter is before the Court pursuant to the remand ordered by
the Court of Appeals for the Federal Circuit (“CAFC”) in Elkem Metals
Co. v. United States, 468 F.3d 795 (Fed. Cir. 2006), and the CAFC
mandate of December 18, 2006. Therein, the CAFC reversed and remanded
Court No. 02-00232 Page 2
the judgment of this Court in Elkem Metals Co. v. United States, 28 CIT
__, 350 F. Supp. 2d 1270 (2004).1 See id. at 797.
The CAFC held that the United States Department of Commerce’s
(“Commerce”) policy with respect to value-added-tax (“VAT”) is a
reasonable interpretation of 19 U.S.C. § 1677b(e). See Elkem, 468 F.3d
at 802. The Court explained that, under § 1677b(e), if Brazilian VAT
is refunded or remitted upon export, Commerce is required to exclude it
from constructed value. Id. at 802–03. It reasoned, however, that the
inverse does not apply, and that § 1677b(e) contains no requirement
that Commerce include in constructed value, taxes that are not refunded
or remitted upon export. Id.
Commerce’s policy interpreting § 1677b(e), calls for a case-by-
case inquiry as to whether an exporter/producer is able to fully offset
its VAT liability by using its VAT credits. See Silicon Metals from
Brazil, 63 Fed. Reg. 42,001, 42,004 (Dep’t Commerce Aug. 6, 1998).
Pursuant to this policy, for purposes of calculating constructed value
under § 1677b(e), VAT is included as a “cost” only to the extent that
the exporter/producer does not fully use the VAT credits generated by
1
Elkem Metals Company and Globe Metallurgical, Inc.
appealed the decision of this Court sustaining a determination by
the United States Department of Commerce, in which it, pursuant
to remand by this Court, recalculated the constructed value of
silicon metal produced in Brazil by Rima Industrial S/A (“Rima”).
The CAFC, however, dismissed this appeal as moot. See Elkem, 468
F.3d. at 797. This order addresses the only live issue, the
reversal and remand of the cross-appeal filed by Rima and the
United States.
Court No. 02-00232 Page 3
export sales. See Elkem, 468 F.3d. at 801 (citing 63 Fed. Reg. at
42,004).
Under the “deferential lens of Chevron,” the CAFC found that
Commerce’s determination that the VAT paid by Rima should be excluded
from constructed value is based on a permissible construction of
§ 1677b(e). The Court further concluded that “it is entirely
appropriate for Commerce to make an individual determination as to
whether and to what extent VAT is, given the circumstances of a
particular country and company, a cost.” Id. at 803. Because, here,
Commerce determined that the Brazilian tax system can have the effect
of offsetting VAT via a VAT credit, and that during the period of
review, Rima, a producer, fully offset its VAT costs by using its VAT
credits, the CAFC determined that this Court may not upset these
determinations. Id.
Accordingly, in conformity with the decision of the CAFC, it is
hereby
ORDERED that this matter is remanded to Commerce to allow it to
recalculate Rima’s dumping margin in light of any adjustments made in
the Final Results of Redetermination Pursuant to Court Remand, Elkem
Metals Co. v. United States, (Dep’t Commerce Mar. 16, 2005), but
using the methodology promulgated in Silicon Metals from Brazil, 63
Fed. Reg. at 42,004, and applied in the Final Results of
Redetermination Pursuant to Court Remand, Elkem Metals Co. & Globe
Court No. 02-00232 Page 4
Metallurgical Inc. v. United States,(Dep’t Commerce June 8, 2004),
the first Remand Results. Commerce shall limit its adjustments to
the factual circumstances circumscribed by the CAFC in its opinion,
i.e., where Rima fully offset its VAT costs using its VAT credits;
and it is further
ORDERED that Commerce’s remand results are due on March 21,
2007; comments are due on May 4, 2007; and replies to such comments
are due on May 19, 2007.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: December 22, 2006
New York, NY