American Alloys, Inc. v. U.S.

Decision Date27 July 1994
Docket NumberNos. 93-1518,93-1539,s. 93-1518
Citation30 F.3d 1469
PartiesAMERICAN ALLOYS, INC., Elkem Metals Company, Globe Metallurgical, Inc. and SKW Alloys, Inc., Plaintiffs/Cross-Appellants, Simetco, Inc., Plaintiff, v. The UNITED STATES, Defendant-Appellant.
CourtU.S. Court of Appeals — Federal Circuit

Charles M. Darling, IV, Baker & Botts, L.L.P., Washington, DC, argued for plaintiffs/cross-appellants. With him on the brief were William D. Kramer and David E. Maranville. Of counsel were Stephen L. Teichler, Martin Schaefermeier, Michael X. Marinelli and Clifford E. Stevens.

A. David Lafer, Senior Trial Counsel, Commercial Litigation Branch, Dept. of Justice, Washington, DC, argued for defendant-appellant. With him on the brief were Frank W. Hunger, Asst. Atty. Gen. and David M. Cohen, Director. Also on the brief were Stephen J. Powell, Chief Counsel for Import Admin., Berniece A. Browne, Sr. Counsel for Antidumping Litigation, and Robert E. Nielsen, Sr. Atty., Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, of counsel.

Before NEWMAN, Circuit Judge, SKELTON, Senior Circuit Judge, and RADER, Circuit Judge.

RADER, Circuit Judge.

Domestic producers of silicon metal, including American Alloys, Inc., initiated an antidumping complaint against their Argentine competitor, Electrometalurgica Andina, S.A.I.C. (Andina). The Department of Commerce (Commerce) determined Andina sold silicon metal at less than fair value. Commerce, however, reduced Andina's dumping margin to account for rebated taxes. On review, the Court of International Trade determined that Commerce erred by not calculating the actual amount of the rebated taxes passed on to domestic consumers of Andina's products. American Alloys, Inc. v. United States, 810 F.Supp. 1294 (Ct. Int'l Trade 1993).

Based on statutory construction, this court reverses the Court of International Trade's holding that the rebated taxes were automatically applicable for a reduction of the dumping margin. Commerce adequately determined that Argentine taxes were included in the domestic price. Therefore, this court reverses the trial court's decision that Commerce must calculate the pass-through tax incidence for the rebates.

BACKGROUND

In August 1990, American Alloys petitioned Commerce to impose antidumping duties on silicon metal imports from Argentina. Commerce initiated an investigation and determined that Andina sold silicon metal in the United States at less than fair market value.

To determine the fair market value, Commerce assessed the domestic price of silicon metal products in Argentina. The price of silicon metal products in Argentina included several domestic taxes. For exported goods, Argentina either does not assess these taxes or grants a rebate upon export under the "Reembolso" program. The Reembolso program covered national taxes for, among others, the Export Promotion Fund, the Tire Tax, the Truck Engine Tax, the Retirement Fund, the Public Works Fund, the Social Assistance Fund, the Family Subsidies Fund, the National Housing Fund, and Real Estate Taxes.

Commerce verified that Andina's domestic prices for silicon metal products included taxes covered by the Reembolso program. Commerce analyzed the legal requirements of the Reembolso program, required Andina to answer a questionnaire about the taxes, and examined shipping licenses including applications for the rebate. Finally, Commerce analyzed a sales transaction to verify that the rebated taxes were included in the price. Commerce concluded that these inquiries verified that the price of Andina's domestic products was 12.5% higher than the price of exports due to the rebates for "Reembolso" taxes on exported goods.

Commerce did not, however, conduct an inquiry to determine whether Argentina directly imposed the rebated taxes on the exported silicon metal and whether Andina actually passed these taxes on to its domestic consumers in the form of higher prices. According to Commerce, this form of physical incorporation inquiry occurs in a counter-vailing duty investigation, which American Alloys had not requested.

In Final Determination of Sales at Less Than Fair Value: Silicon Metal from Argentina, 56 Fed.Reg. 37,891, 37,895 (Dep't Comm. Aug. 9, 1991), Commerce found that silicon metal from Argentina was sold at less than fair value. In setting the dumping margin, Commerce increased the United States Price by 12.5% to offset the Reembolso tax rebate. American Alloys, 810 F.Supp. at 1295. This adjustment reduced the dumping margin on Andina's United States export sales. Id.

Before the Court of International Trade, American Alloys moved for judgment on the agency record under 28 U.S.C. Sec. 1581(c) (1988). American Alloys contended that Commerce should not have reduced the dumping margin because Argentina did not directly impose these Reembolso taxes on silicon metal products. Commerce defended its position by pointing out that this form of physical incorporation inquiry occurs in a countervailing duty investigation. Because American Alloys also argued that Commerce should not have reduced the dumping margin without verifying the direct imposition of Reembolso taxes on Andina's domestic customers. The trial court agreed and ordered Commerce to measure the tax incidence of qualifying taxes under the Reembolso program.

American Alloys did not request a countervailing duty investigation, Commerce saw no necessity to perform any type of physical incorporation inquiry nor to determine if the taxes were imposed directly on the product or its components. The trial court sustained Commerce's action. American Alloys appealed that judgment.

DISCUSSION

The trial court must uphold Commerce's rulings unless the rulings are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. Sec. 1516a(b)(1)(B) (1988); Creswell Trading Co. v. United States, 15 F.3d 1054, 1056 (1994). In determining whether the trial court correctly reached its decision, this court reapplies the statutory standard of review to Commerce's ruling. Koyo Seiko Co. v. United States, 20 F.3d 1160, 1164 (1994). Consequently, this court makes its own determination of whether substantial record evidence supports the agency's determinations in accordance with the law. Id.

The United States antidumping laws remedy international price discrimination to prevent injury to domestic industries. Zenith Elecs. Corp. v. United States, 988 F.2d 1573, 1576 (1993). The Trade Reform Act of 1973 (the Act) imposes duties on imported merchandise that is or is likely to be sold in the United States at less than the fair market value of those goods in the country of manufacture. 19 U.S.C. Sec. 1673 (1988).

The Act authorizes the Secretary of Commerce to investigate charges of dumping. Zenith, 988 F.2d at 1576. If an investigation discloses dumping, the Secretary imposes a duty when import sales materially injure, threaten to materially injure, or materially retard the establishment of an industry in the United States. Id. The duty is the difference between foreign market value (FMV) of the goods and the value of those goods in the United States, known as United States price (USP). Id. This difference is also the "dumping margin." Thus, the duty corrects the dumping margin. Id.

The Act permits numerous adjustments to FMV and USP to account for differences between these two value measurements unrelated to dumping. See, e.g., 19 U.S.C. Secs. 1677a(d), 1677a(e), 1677b(a)(1), 1677b(a)(4) (1988). Thus, the Act prevents distortions in the dumping margin. See Smith-Corona Group v. United States, 713 F.2d 1568, 1571-72, 1 Fed.Cir. (T) 130, 132-33 (1983), cert. denied, 465 U.S. 1022, 104 S.Ct. 1274, 79 L.Ed.2d 679 (1984) (pointing out that FMV and USP are subject to adjustments in an attempt to reconstruct the price at a specific, common point in the chain of commerce). To avoid distortion of dumping margins merely because the exporting country taxes home market sales but not export sales, the antidumping laws permit offsetting adjustments to the USP. 19 U.S.C. Sec. 1677a (1988). Otherwise these taxes would raise the apparent cost of the merchandise in the home country in comparison to the United States price. This discrepancy in value would not correspond to dumping at all. Therefore, the Act offsets the domestic taxes by increasing the USP for:

the amount of any taxes imposed in the country of exportation directly upon the exported merchandise or components thereof, which have been rebated, or which have not been collected, by reason of the exportation of the merchandise to the United States, but only to the extent that such taxes are added to or included in the price of such or similar merchandise when sold in the country of exportation.

19 U.S.C. Sec. 1677a(d)(1)(C) (1988) (emphasis added).

DETERMINATION OF DIRECT TAXES

The Act specifies that the offset applies to taxes imposed "directly upon the exported merchandise or components thereof." Id. The statute thereby permits rebates only for The Act does not explicitly set forth an interpretation of this direct relationship. However, the statute, as plainly written, expresses the clear and unambiguous intent of Congress to permit rebates only for a domestic tax that qualifies as a direct tax on the export or on components that are part of the export. Where the language of the statute "is plain, 'the sole function of the courts is to enforce it according to its terms.' " United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989) (quoting Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 194, 61 L.Ed. 442 (1917)). Moreover, the legislative history of the Act directly supports this meaning.

                direct domestic taxes.  Id.  A direct tax is, by definition, a tax "imposed directly upon property, according to its value."   Black's Law Dictionary 461 (6th
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