Uttam Galva Steels Ltd. v. United States , 374 F. Supp. 3d 1360 ( 2019 )

Slip Op. 19-34
UNITED STATES COURT OF INTERNATIONAL TRADE
UTTAM GALVA STEELS LIMITED,
Plaintiff,
v.
UNITED STATES,
Defendant,
Before: Jennifer Choe-Groves, Judge
and
Court No. 16-00162
ARCELORMITTAL USA LLC, AK
STEEL CORPORATION, STEEL
DYNAMICS, INC., CALIFORNIA STEEL
INDUSTRIES, INC., UNITED STATES
STEEL CORPORATION, and NUCOR
CORPORATION,
Defendant-Intervenors.
OPINION AND ORDER
[Remanding the U.S. Department of Commerce’s remand redetermination following an
antidumping duty investigation on certain corrosion-resistant steel products from India.]
Dated: March 12, 2019
Diana Dimitriuc-Quaia and John M. Gurley, Arent Fox LLP, of Washington, D.C., for Plaintiff
Uttam Galva Steels Limited. Claudia D. Hartleben, Matthew M. Nolan, and Nancy A. Noonan
also appeared.
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 brief
were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia
Burke, Assistant Director. Of counsel on the brief was Natan P.L. Tubman, Attorney, Office of
the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington, D.C.
Court No. 16-00162 Page 2
Paul W. Jameson and Roger B. Schagrin, Schagrin Associates, of Washington, D.C., for
Defendant-Intervenors Steel Dynamics, Inc. and California Steel Industries, Inc. Christopher T.
Cloutier and Elizabeth J. Drake also appeared.
R. Alan Luberda and Melissa M. Brewer, Kelley Drye & Warren, LLP, of Washington, D.C., for
Defendant-Intervenor ArcelorMittal USA LLC. David C. Smith, Jr., Kathleen W. Cannon, and
Paul C. Rosenthal also appeared.
Stephen A. Jones and Daniel L. Schneiderman, King & Spalding, LLP, of Washington, D.C., for
Defendant-Intervenor AK Steel Corporation.
Timothy C. Brightbill and Maureen E. Thorson, Wiley Rein, LLP, of Washington, D.C., for
Defendant-Intervenor Nucor Corporation. Tessa V. Capeloto, Alan H. Price, Adam M. Teslik,
Christopher B. Weld, Cynthia C. Galvez, Derick G. Holt, Laura El-Sabaawi, Stephanie M. Bell,
and Usha Neelakantan also appeared.
Thomas M. Beline and Sarah E. Shulman, Cassidy Levy Kent (USA) LLP, of Washington, D.C.,
for Defendant-Intervenor United States Steel Corporation.
Choe-Groves, Judge: This case concerns Commerce’s methodology when calculating a
respondent’s duty drawback adjustment. Plaintiff Uttam Galva Steels Limited (“Plaintiff” or
“Uttam Galva”) initiated this action challenging the final determination in an antidumping duty
investigation, in which the U.S. Department of Commerce (“Commerce”) found that certain
corrosion-resistant steel products from India are being, or are likely to be, sold in the United
States at less-than-fair value. See Certain Corrosion-Resistant Steel Products From India, 81
Fed. Reg. 35,329 (Dep’t Commerce June 2, 2016) (final determination of sales at less-than-fair
value), as amended, 81 Fed. Reg. 48,390 (Dep’t Commerce July 25, 2016) (amended final
affirmative determination and issuance of antidumping duty orders) (collectively, “Final
Determination”). Before the court are the Final Results of Redetermination Pursuant to Court
Remand, Aug. 16, 2018, ECF No. 81 (“Remand Results”), filed by Commerce as directed in the
court’s prior opinion. See Uttam Galva Steels Ltd. v. United States, 42 CIT __, __, 311 F. Supp.
Court No. 16-00162 Page 3
3d 1345, 1357 (2018) (“Uttam Galva I”). For the reasons discussed below, the court concludes
that Commerce’s modified calculation of Uttam Galva’s weighted-average dumping margin is
unsupported by substantial evidence and not in accordance with the law. The Remand Results
are remanded for further proceedings consistent with this opinion.
PROCEDURAL HISTORY
The court presumes familiarity with the facts of this case. See Uttam Galva I. The one
issue in dispute was whether Commerce reasonably calculated Uttam Galva’s duty drawback
adjustment by allocating import duties rebated and exempted by reason of export of finished
product over total cost of production. The court concluded that Commerce’s methodology was
not permitted under the governing statute, 19 U.S.C. § 1677a(c)(1)(b) (2012), and remanded
Commerce’s Final Determination with directions to recalculate Uttam Galva’s duty drawback
adjustment using a different methodology.
Commerce filed its Remand Results under protest on August 16, 2018. See Remand
Results at 1. Commerce recalculated Uttam Galva’s duty drawback adjustment by allocating
import duties rebated and exempted by reason of export of finished product over total exports, as
reported by Uttam Galva. See id. at 1–2. Because Commerce perceived an imbalance in its
comparison between Uttam Galva’s export price and normal value, Commerce made an
additional circumstance of sale adjustment. See id. at 2–4. Pursuant to Commerce’s modified
calculations, Uttam Galva’s weighted-average dumping margin changed from 3.05% in the Final
Determination to 3.11% in the Remand Results. Id. at 27.
Uttam Galva filed comments on the Remand Results. See Pl.’s Comments Remand
Redetermination, Sept. 25, 2018, ECF No. 86 (“Pl.’s Comments”). Defendant filed a reply to
Court No. 16-00162 Page 4
Uttam Galva’s comments. See Def.’s Reply Comments Remand Redetermination, Oct. 25,
2018, ECF No. 88 (“Def.’s Reply”). Defendant-Intervenors Steel Dynamics, Inc., California
Steel Industries, AK Steel Corporation, ArcelorMittal USA LLC, Nucor Corporation, and United
States Steel Corporation also filed a reply to Uttam Galva’s comments. See Def.-Intervenors’
Resp. Uttam Galva’s Comments Remand Results, Oct. 25, 2018, ECF No. 87.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of the Tariff Act of 1930,
as amended, 19 U.S.C. § 1516a(a)(2)(B)(i), 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. ABB Inc. v. United States, Slip Op. 18-156, 2018
WL 6131880, at *2 (CIT Nov. 13, 2018); SolarWorld Ams., Inc. v. United States, 41 CIT __, __,
273 F. Supp. 3d 1314, 1317 (2017).
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.
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
Court No. 16-00162 Page 5
exportation of the subject merchandise to the United States.” Id. § 1677a(c)(1)(B). The purpose
of the adjustment is to correct an imbalance and prevent an inaccurately high dumping margin by
increasing export price to the level it likely would be absent a duty drawback.
Normal value represents, on the other hand, 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). 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 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 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.
On remand, Commerce continued to grant Uttam Galva a duty drawback adjustment, but
calculated the amount based on Uttam Galva’s reported duties rebated and exempted by reason
of export of finished product over total exports. See Remand Results at 1–2. Uttam Galva does
not contest this aspect of the recalculation. See Pl.’s Comments 5–6. Uttam Galva takes issue
with Commerce’s subsequent circumstance of sale adjustment. Uttam Galva argues that this
increase to normal value “nullifies the duty drawback adjustment.” Id. at 7.
In the Remand Results, Commerce added to Uttam Galva’s normal value the difference
between the duty drawback amount on U.S. sales and the amount of import duties in Uttam
Court No. 16-00162 Page 6
Galva’s reported cost of production. See Remand Results at 8–9. In substantiating the
additional circumstance of sale adjustment, Commerce continued to rely on a reading of Saha
Thai Steel Pipe (Public) Co. Ltd. v. United States, 635 F.3d 1335 (Fed. Cir. 2011) (“Saha Thai”),
that the court disapproved of already in Uttam Galva I. See Remand Results at 16–19. Both the
Remand Results and Defendant’s comments in support of the Remand Results quote language
from Saha Thai discussing why export price, cost of production, and constructed value “should
be increased together, or not at all” in order to achieve a “duty-neutral” comparison. See
Remand Results at 18, 22; Def.’s Reply 8. This reference to Saha Thai is taken out of context.
As explained by the court before, the quoted passage in Saha Thai relates “to an adjustment to
normal value with respect to the particular facts, exemption program, and recordkeeping
practices presented in Saha Thai, and should not be expanded to encompass all duty drawback
adjustment calculations made by Commerce.” Uttam Galva I, 42 CIT at __, 311 F. Supp. 3d at
1355. When viewed in this context, Saha Thai “does not support Commerce's methodology in
the instant matter before this court.” Id. Commerce’s justification for the circumstance of sale
adjustment is untenable in light of the court’s previous interpretation of Saha Thai.
The court reiterates that Commerce’s reliance on Saha Thai is misplaced. Saha Thai
concerned Commerce’s separate calculations of U.S. price and of cost of production and
constructed value. Generally, Commerce makes a duty drawback adjustment to a respondent’s
U.S. price to account for duties rebated and exempted by reason of exportation of the finished
product to the United States. Commerce makes a separate adjustment to a respondent’s cost of
production and constructed value to reflect import duties incurred when the finished product is
sold in the home market. See, e.g., +DEDú6LQDLYH7LEEL*D]ODU,VWLKVDO(QGVWULVL$ùY
Court No. 16-00162 Page 7
United States, Slip Op. 19-10, 2019 WL 413800, at *3–4 & n.8 (distinguishing Commerce’s duty
drawback adjustment to U.S. price, which the opinion refers to as the “sales-side adjustment,”
and Commerce’s adjustment to cost of production and constructed value, which the opinion
refers to as the “cost-side adjustment”). Saha Thai sustained Commerce’s utilization of these
two corresponding adjustments but did not hold that the two adjustments should be “equal” or
“duty neutral,” as Commerce and Defendant continue to espouse here. Saha Thai does not
support Commerce’s Remand Results.
Commerce reasoned in the Remand Results that the additional circumstance of sale
adjustment was necessary to correct a perceived imbalance in the dumping margin calculation.
See Remand Results at 17–18. Commerce again departs from the legislative purpose of 19
U.S.C. § 1677a(c)(1)(B) in an impermissible way. As stated in the court’s previous Opinion and
Order:
The purpose of a duty drawback adjustment is to ensure a fair comparison
between normal value (“NV”) and export price (“EP”). Under a duty
drawback program, producers may receive an exemption or rebate for
imported inputs used in exported merchandise. As a result, producers are
still required to pay import duties for domestically-sold goods, which leads
to an increase in normal value. A duty drawback adjustment corrects this
imbalance, which could otherwise lead to an inaccurately high dumping
margin, by increasing EP to the level it likely would be absent the duty
drawback.
Uttam Galva I, 42 CIT at __, 311 F. Supp. 3d at 1351 (internal citations and quotations omitted).
The upward adjustment to export price contemplated by 19 U.S.C. § 1677a(c)(1)(B) aids
Commerce’s statutory duty to make a fair comparison between normal value and export price in
antidumping duty investigations. Commerce’s action on remand here negates the statutory duty
drawback adjustment that Uttam Galva earned by exporting its finished product to the United
Court No. 16-00162 Page 8
States and impinges on the agency’s ability to make a fair comparison. The court concludes that
the Remand Results are not in accordance with the law and remands this case again for a second
redetermination.
As Plaintiff argues, Commerce’s adjustment to Uttam Galva’s normal value creates an
additional problem within the dumping calculation. See Pl.’s Comments 13–15. Commerce
accounts for Uttam Galva’s import duties incurred when subject merchandise was sold in the
home market. Specifically, Commerce makes an upward adjustment to the cost of production
and constructed value, which are part of Commerce’s overall calculation of Uttam Galva’s
normal value. Commerce’s circumstance of sale adjustment in this case double-counts Uttam
Galva’s import duties within normal value because Commerce’s original calculation
incorporated already the import duties incurred for merchandise sold in the home market. See
Mem. from A. Sepulveda to N. Halper re: Cost of Production and Constructed Value Calculation
Adjustments for the Final Determination – Uttam Galva Steels Limited at 2, PD 417, bar code
3473140-01 (May 26, 2016). The court concludes that Commerce’s remand redetermination is
not supported by substantial evidence.
CONCLUSION
The court concludes that Commerce’s revised calculation of Uttam Galva’s duty
drawback adjustment is unsupported by substantial evidence and not in accordance with the law.
The court remands the Remand Results for a second redetermination consistent with this opinion.
Accordingly, it is hereby
ORDERED that the Remand Results are remanded to Commerce for further
proceedings; and it is further
Court No. 16-00162 Page 9
ORDERED that Commerce shall file the second remand redetermination on April 29,
2019; and it is further
ORDERED that the administrative record on the second remand redetermination shall be
filed on May 13, 2019; and it is further
ORDERED that comments in opposition to the second remand redetermination shall be
filed on May 29, 2019; and it is further
ORDERED that comments in support to the second remand redetermination shall be
filed on June 28, 2019; and it is further
ORDERED that the joint appendix on the second remand redetermination shall be filed
on July 12, 2019.
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: March 12, 2019
New York, New York