Mittal Steel Point Lisas Ltd. v. U.S., Slip Op. 07-60.

• Decision Date: 24 April 2007
• Docket Number: Court No. 05-00681.,Slip Op. 07-60.
• Citation: 491 F.Supp.2d 1222
• Parties: MITTAL STEEL POINT LISAS LTD., Plaintiff, v. UNITED STATES, Defendant, Gerdau Ameristeel Corp. and Keystone Consolidated Industries, Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

491 F.Supp.2d 1222

MITTAL STEEL POINT LISAS LTD., Plaintiff, v. UNITED STATES, Defendant, Gerdau Ameristeel Corp. and Keystone Consolidated Industries, Inc., Defendant-Intervenors.

Slip Op. 07-60.

Court No. 05-00681.

United States Court of International Trade.

April 24, 2007.

COPYRIGHT MATERIAL OMITTED

Steptoe & Johnson LLP, Washington, DC (Eric C. Emerson, Evangeline D. Keenan, Michael A. Pass) for Plaintiffs.

Peter D. Keisler, Assistant Attorney General; Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Michael D. Panzera, Trial Attorney) for Defendant.

Kelley Drye Collier Shannon (Paul C. Rosenthal, Mary T. Staley) for Defendant-Intervenors.

Before: Pogue, Judge.

OPINION

POGUE, Judge.

In this action, Plaintiff Mittal Steel Point Lisas Ltd. ("Mittal" or "Plaintiff") seeks review of the final results of the second administrative review of the antidumping duty order on Carbon and Certain Alloy Steel Wire Rod from Trinidad & Tobago and the antidumping duty rate thereby imposed by the Department of Commerce ("Commerce"). Specifically, Plaintiff challenges (1) Commerce's decision to treat certain wire rod as non-prime merchandise, thereby excluding the foreign sales thereof from its calculation of fair or normal value ("NV") in Mittal's home market, and (2) Commerce's calculation of Mittal's constructed export price (CEP) for Mittal's U.S. sales, particularly the deduction of credit expenses for the time period between shipment from the port in Trinidad & Tobago and the date payment was received.

Pending before the court is Plaintiff's USCIT R. 56.2 motion for judgment on the agency record. For the reasons stated herein, Commerce's determination regarding prime versus non-prime merchandise is affirmed, Commerce's Consent Motion for Partial Voluntary Remand is granted so that Commerce may make further findings regarding Mittal's CEP consistent with this opinion, and Plaintiff's Motion for Judgment on the Agency Record is denied.

Background

Mittal manufactures steel wire rod in Trinidad & Tobago, and sells such steel wire rod in its home market. Together with its North American affiliate and importer Mittal Steel North America ("MSNA"),¹ Mittal also sells steel wire rod for export to the United States.

Following an investigation of Mittal's sales, Commerce published an antidumping duty order on steel wire rod from Trinidad & Tobago in 2002. See Carbon and Certain Alloy Steel Wire Rod from Brazil, Indonesia, Mexico, Moldova, Trinidad & Tobago, and Ukraine, 67 Fed.Reg. 65,945 (Dep't Commerce Oct. 29, 2002)(notice of antidumping duty orders).²

In due course, on November 16, 2005, Commerce published the final results of Mittal's second administrative review,³ which Mittal challenges in this case, see Carbon and Certain Alloy Steel Wire Rod from Trinidad & Tobago, 70 Fed. Red. 69,512 (Dep't Commerce Nov. 16, 2005)(notice of final results of antidumping duty administrative review)("Final Results"). These final results adopt and incorporate Commerce's Issues and Decision Memorandum. Memorandum to Joseph A. Spetrini from Stephen J. Claeys, Issues and Decisions for the Final Results of the Second Administrative Review of the Antidumping Duty Order on Carbon and Certain Alloy Steel Wire Rod from Trinidad and Tobago, (Dep't Commerce Nov. 16, 2005), P.R. Doc. 62, available at http://ia. ita.doc.gov/frn/summary/trinidad/E5-6331-1.pdf ("Decisions Mem.").⁴

1. Production of prime wire rod

In its products' price lists for customers in both Trinidad & Tobago and the United States, Mittal designates certain steel wire rod as "prime." At the same time, Mittal also sells another steel wire rod product exclusively in Trinidad & Tobago that it designates in its price lists as "composite wire." See, e.g., Letter from Eric C. Emerson to the Hon. Carlos Gutierrez Administrative Review of Antidumping Duty Order on Carbon and Certain Alloy Steel Wire Rod from Trinidad & Tobago: Caribbean Ispat Limited Response to Section A, B, C, and D Questionnaires (Jan. 31, 2005), P.R. Doc. 16, C.R. Doc. 5 at 270, 283, Attachs. A.13, A.14 ("Questionnaire Response").

Commerce classifies Mittal's composite wire as non-prime merchandise, a decision Mittal challenges in this action. At the same time, the description of the production process for composite wire is not contested here. That process, however, and its differences from the production process for "prime"⁵ wire rod, and the resultant price difference between the two types of merchandise, are relevant to a review of Commerce's decision to treat composite wire as non-prime merchandise. In sum, the production process for composite wire produces a physical, though not chemical, difference in the resultant wire rod, and the physical difference provides a basis for the difference in price between prime wire rod and composite wire rod.⁶

In its investigation of Mittal's sales, Commerce determined that composite wire was not prime merchandise, and therefore Commerce excluded sales of composite wire in calculating the normal value of subject merchandise in the home country. In so doing, Commerce relied on Mittal's price list, which distinguished between "Prime Wire Rods and Rebars" and "Composite (Wire Rods)." See Decisions Mem. at 9 (Cmt.4) ("we did not use the wire rod which was not identified as prime on [Mittal's] price list for matching purposes"); see also Questionnaire Response P.R. Doc. 16, C.R. Doc. 5 at 270, 283, attachs. A.13, A.14.

2. Calculation of Constructed Export Price

During the administrative review at issue here, Mittal reported its sales of wire rod to unaffiliated U.S. customers through MSNA. Both Commerce and Mittal considered these sales to qualify as constructed export price ("CEP") sales under section 772(b) of the Act.⁷ See Decisions Mem. Mittal made these CEP sales to U.S. customers and shipped the merchandise to MSNA, which unloaded it and arranged for its delivery to the U.S. customers. Id. at 23-24, 245, attach. A.8. During the investigation, Mittal reported its expenses associated with making these sales, as well as those expenses associated with making sales in Trinidad & Tobago, for the purposes of adjusting CEP and NV. See Id. at 785-86, attach. B.14.⁸ Specifically, in response to questionnaires, Mittal reported foreign inventory carrying costs, U.S. inventory carrying costs, and imputed credit expenses as information which provided a basis for price adjustments. Id.; see also Br. Supp. Pl.'s Mot. J. Agency. R. at 15 ("Pl.'s Br.").

In reporting its imputed credit expenses for sales in the U.S., Mittal calculated the credit expense for a period commencing on the date Mittal invoiced the goods to the U.S. customer and ending on the date Mittal received payment. Pl.'s Br. 15. Commerce recalculated Mittal's reported direct credit expenses and inventory carrying costs, considering the reported expenses to be inaccurate. Decisions Mem. at 4 (Cmt.2). Commerce determined that Mittal's goods had not been warehoused in a bonded warehouse in the United States, and thus set to zero the U.S. inventory carrying costs reported by Mittal, reasoning that in the absence of warehousing in the United States, MSNA did not incur such inventory carrying costs. Commerce also recalculated credit expenses to begin accruing on the date of shipment from the foreign port. In so doing, Commerce stated that "[c]redit expense is the interest expense incurred ... between date of shipment of merchandise to a customer and date of receipt of payment from the customer." Id.

Jurisdiction and Standard of Review

This action is brought under 19 U.S.C. § 1516a.⁹ Section 1677(9) grants Plaintiff standing to bring the action as an interested party that participated in the administrative proceedings below. 19 U.S.C. § 1677(9). The court has jurisdiction over the action pursuant to 28 U.S.C. § 1581(b).

The court's review is to determine whether Commerce's determinations, findings, or conclusions are supported by substantial evidence on the record, and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i).

Analysis

1. Treatment of composite wire rod as non-prime merchandise

To identify the appropriate foreign like product for the purpose of determining NV of the subject merchandise, the Statute dictates that Commerce may first use data about "[t]he subject merchandise and other merchandise which is identical in physical characteristics with, and was produced in the same country by the same person as, that merchandise." 19 U.S.C. § 1677(16)(A) (emphasis added).¹⁰ "Where non-prime merchandise is sold in the United States, Commerce matches it to non-prime merchandise sold abroad. Corus Staal BV v. United States Dep't of Commerce, 27 CIT 388, 405, 259 F.Supp.2d 1253, 1268 (2003); see also Certain Corrosion-Resistant Carbon Steel Flat Products from the Republic of Korea, 71 Fed.Reg. 7,513 (Dep't Commerce Feb. 13, 2006) (notice of final results of the eleventh administrative review), Mem. to David M. Spooner, Assistant Secretary, Import Administration from Stephen J. Claeys, Re: Certain Corrosion-Resistant Carbon Steel Flat Products from the Republic of Korea (Issues and Decisions for the Final Results of the 11th Admin. Review) at 23 (Cmt.13), available at http://ia.i ta.doc.gov/frn/summary/korea-south/E6-1984-1.pdf (excluding home market sales of non-prime merchandise from calculations where there were no sales of non-prime merchandise in the United States).

In this case, Commerce has interpreted the ambiguous term "identical" in making its determination. Specifically, Commerce has determined that rod labeled "composite wire rod" is not identical to "prime wire rod." The Court of Appeals for the Federal Circuit has held that in section 1677(16)(A), Congress meant for "identical" to mean "closely alike or equivalent, rather than `being the same' or `exactly equal and alike.'" Pesquera Mares...