U.S. Steel Group — a Unit of Usx Corp. v. U.S.
| Decision Date | 07 July 1998 |
| Docket Number | No. 97-05-00866.,Slip Op. 98-96.,97-05-00866. |
| Parties | U.S. STEEL GROUP — A UNIT OF USX CORPORATION, and Bethlehem Steel Corporation, Plaintiffs, v. The UNITED STATES, Defendant, and AG Der Dillinger Hüttenwerke, Defendant-Intervenor. |
| Court | U.S. Court of International Trade |
Dewey Ballantine LLP, (Michael H. Stein, Bradford L. Ward, and Jennifer Danner Riccardi), Washington, DC, for Plaintiffs.
Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, (Delfa Castillo), Trial Atty. Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice, Bernd G. Janzen, Attorney-Adviser, Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, of counsel, Washington, DC, for Defendant.
LeBoeuf, Lamb, Greene & MacRae, L.L.P., (Pierre F. de Ravel d'Esclapon, Mary Patricia Michel, and William C. Sjoberg), Washington, DC, for Defendant-Intervenor.
This matter is before the court on U.S. Steel Group's, a Unit of USX Corporation, and Bethlehem Steel Corporation's (collectively ") and AG der Dillinger Hüttenwerke's ("Dillinger") cross-motions for judgment on the agency record, pursuant to USCIT R. 56.2. Under review are the Department of Commerce's ("Commerce") final results in the second antidumping duty administrative review of Certain CutTo-Length Carbon Steel Plate from Germany, 62 Fed.Reg. 18,390 (Dep't Commerce 1997) (final results) [hereinafter "Final Results"].
Before the court, the Domestic Producers raise the following arguments: (1) Commerce incorrectly calculated the ratio applied to total actual profit in calculating constructed export price ("CEP"), and (2) Commerce erred in failing to deduct antidumping ("AD") and countervailing ("CVD") duties from CEP. Dillinger, in its motion, raises the following arguments: (1) Commerce erred in its classification of Dillinger's U.S. sale as a CEP sale, and (2) even if Commerce properly classified Dillinger's U.S. sale as a CEP sale, it erred by deducting related party commissions in the CEP calculation.
On August 19, 1993, Commerce published an antidumping duty order on, inter alia, certain cut-to-length carbon steel plate from Germany. Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate from Germany, 58 Fed.Reg. 44,170, 44,171 (Dep't Commerce 1993) (orders). The final margin imposed on Dillinger pursuant to that order was thirty six percent. Id. Commerce subsequently conducted an administrative review of Dillinger's sales, which resulted in an antidumping duty of 2.61%. Certain Cut-To-Length Carbon Steel Plate from Germany, 61 Fed.Reg. 26,159, 26,160 (Dep't Commerce 1996) (amended final results).
On August 16, 1995, Dillinger requested a second administrative review of its sales of certain cut-to-length carbon steel plate during the period of review ("POR"), from August 1, 1994 through July 31, 1995. Letter from Leboeuf, Lamb, Greene & MacRae L.L.P. to the U.S. Department of Commerce (Aug. 16, 1995), at 1, P.R. 2, D.P.App., Tab 1, at 3. On September 8, 1995, Commerce published a notice initiating the second administrative review of the antidumping duty order on certain cut-to-length carbon steel plate from Germany. Cold-Rolled and Corrosion Resistant Carbon Steel Flat Products and Certain Cut-To-Length Carbon Steel Plate from Various Countries, 60 Fed.Reg. 46,817, 46,817 (Dep't Commerce 1995) (notice of initiation).
On October 4, 1996, Commerce preliminarily determined that there was no margin of dumping for Dillinger, and classified Dillinger's sale as an export price ("EP") transaction. Certain Cut-to-Length Carbon Steel Plate from Germany, 61 Fed.Reg. 51,907, 51,907-08 (Dep't Commerce 1996) (prelim.results) [hereinafter "Preliminary Results"]. At a hearing on November 22, 1996, both sides extensively discussed the characterization of Dillinger's U.S. sale as EP and other issues. U.S. Department of Commerce Public Hearing Transcript (Nov. 22, 1996), at 441, P.R. 93, D.P.App., Tab 8, at 30-67. Commerce issued its Final Results on April 15, 1997, categorizing Dillinger's U.S. sale as a CEP sale and calculating a final margin of three percent. Final Results, 62 Fed.Reg. at 18,391, 18,395.
Because Commerce determined in the Final Results that Dillinger's U.S. sale was a CEP transaction, 62 Fed.Reg. at 18,391, Commerce made adjustments pursuant to 19 U.S.C.A. § 1677a(d) (West Supp.1998), including reducing the price used to establish CEP by the profit allocated to expenses described in § 1677a(d)(1) and (2).1 Thus, Commerce calculated the total U.S. expenses component of the profit allocation ratio by summing U.S. commissions, U.S. direct expenses (credit), U.S. indirect expenses, and U.S. inventory carrying costs which become the numerator in a percentage applied to total actual profit. See U.S. Department of Commerce Internal Memorandum from N. Decker to the File (Apr. 2, 1997), at 2, P.R. 97, D.P.App., Tab 9, at 49 [hereinafter "Analysis Memorandum"]. Movement expenses were not included in this uncontested calculation.
In calculating the total expenses component for the denominator of the applicable percentage, Commerce summed Dillinger's total cost of goods sold (general and administrative expenses, interest expenses, packing expenses, and cost of manufacture) and total selling expenses (direct expenses, commissions, and indirect selling expenses). Id. at 3, D.P.App., Tab 9, at 50. Commerce also included total movement expenses (total U.S. and home market movement expenses). Id. Domestic Producers challenge this approach, of including movement expenses in the denominator but not in the numerator of the "applicable percentage," as contrary to the statute and non-proportional.
Section 1677a(c)(2)(A) of Title 19 provides that the price used to establish EP and CEP shall be reduced by "the amount, if any, included in such price, attributable to any additional costs, charges, or expenses, and United States import duties." 19 U.S.C.A. § 1677a(c)(2). Before the agency, Domestic Producers argued that Commerce must deduct actual antidumping and countervailing duties from the price used to establish EP or CEP. Final Results, 61 Fed.Reg. at 18,394. Relying on the language of the statute and the legislative history, Domestic Producers argued that the phrase "any ... United States import duties" includes AD and CVD because such duties are "incident to bringing the subject merchandise from the original place of shipment in the exporting country to the place of delivery in the United States." Id.
Commerce rejected Domestic Producers' argument, noting its longstanding position that AD and CVD duties are not a cost within the meaning of § 1677a(c)(2)(A). Id. at 18,395. Specifically:
AD and CVD duties are unique. Unlike normal duties, which are an assessment against value, AD and CVD duties derive from the margin of dumping or the rate of subsidization found. Logically, AD and CVD duties cannot be part of the very calculation from which they are derived.
Id. Commerce concluded that such double counting, i.e., accounting for the same unfair trade practice twice is unjustifiable. Id. Domestic Producers challenge this reasoning.
From the initial investigation through the first administrative review and the preliminary results of the second administrative review, Commerce has addressed the issue of whether the sales activities of Dillinger's U.S. affiliate, Francosteel Corporation ("Francosteel"), were such that Dillinger's U.S. sales were properly classifiable as EP sales rather than as CEP sales. In all of the previous determinations, Commerce classified Dillinger's sales as EP sales. Certain HotRolled Carbon Steel Flat Products, Certain ColdRolled Carbon Steel Flat Products, Certain Corrosion-resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate from Germany, 58 Fed.Reg. 37,136, 37,139-40 (Dep't Commerce 1993) (final determ.); Certain Cut-to-Length Carbon Steel Plate from Germany, 61 Fed.Reg. 13,834, 13,843 (Dep't Commerce 1996) (final review) [hereinafter "First Administrative Review"]; Preliminary Results, 61 Fed.Reg. at 51,908. For example, in the First Administrative Review, Commerce stated that:
[a]lthough Francosteel takes title to the merchandise and participates in sales negotiations, we found at verification that it does not have the flexibility to set the price of the steel and only acts as a processor of sales-related documentation.
61 Fed.Reg. at 13,843 (emphasis added).
For the first time in the Final Results of the second administrative review, Commerce classified Dillinger's sale, an "uncomplicated sale" in Dillinger's processing terminology, as a CEP transaction, stating:
[i]n the first administrative review, [Commerce]'s determination that Francosteel acted merely as a processor of sales-related documentation was based mainly upon the finding that Francosteel lacked "the flexibility to set the price of the steel." We have determined that this was not the case during the present review.
Final Results, 62 Fed.Reg. at 18,392 (citations omitted). Dillinger seeks restoration of EP status.
Section 1677a(d)(1)(A) of Title 19 instructs Commerce to deduct from the CEP starting price "commissions for selling the subject merchandise in the United States." In the Analysis Memorandum, Commerce deducted commissions paid by Dillinger to Daval and Francosteel under the variable "COMMISU." Analysis Memorandum, at 1-2, D.P.App., Tab 9, at 48-49.
Commerce investigated the commissions paid by Dillinger to Daval SA ("Daval") and by Daval to...
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