Serampore Industries Pvt. Ltd. v. US Dept. of Commerce

Decision Date25 November 1987
Docket NumberCourt No. 86-06-00743.
PartiesSERAMPORE INDUSTRIES PVT. LTD., and The Engineering Export Promotion Council of India, Plaintiffs, v. UNITED STATES DEPARTMENT OF COMMERCE, INTERNATIONAL TRADE ADMINISTRATION, Defendant, Alhambra Foundry Co., et al., Defendant-Intervenors.
CourtU.S. Court of International Trade

COPYRIGHT MATERIAL OMITTED

Kaplan, Russin & Vecchi, Dennis James, Jr., Washington, D.C., for plaintiffs.

Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Dept. of Justice, Commercial Litigation Branch, and A. David Lafer, Washington, D.C., for defendant.

Collier, Shannon, Rill & Scott, Paul C. Rosenthal and Carol Mitchell, Washington, D.C., for defendant-intervenors.

DiCARLO, Judge:

Serampore Industries Private Ltd. and the Engineering Export Promotion Council of India (plaintiffs) challenge the final determination of the International Trade Administration of the United States Department of Commerce (Commerce) that certain iron construction castings from India are being or are likely to be sold in the United States at less than fair value (LTFV). Certain Iron Construction Castings From India; Final Determination of Sales at Less Than Fair Value, 51 Fed.Reg. 9486 (Mar. 19, 1986). This Court has jurisdiction over the action pursuant to 19 U.S.C. § 1516a(a)(2) (Supp. III 1985) and 28 U.S.C. § 1581(c) 1982. Plaintiffs move under Rule 56.1 of the Rules of this Court for judgment on the agency record and ask the Court to remand to Commerce for certain recalculations. Commerce concedes it erred in making some of the challenged calculations and asks the Court to remand. The Court affirms in part and remands in part.

Background

The Municipal Castings Fair Trade Council, a trade association which represents domestic producers of iron construction castings, and fifteen named members of the association filed a petition with Commerce alleging that iron construction castings from India were being sold in the United States at LTFV. Certain Iron Construction Castings From India; Initiation of Antidumping Duty Investigation, 50 Fed.Reg. 24,014 (June 7, 1985).

Commerce presented questionnaires to Serampore and three other Indian companies under investigation. Serampore claimed an adjustment for indirect taxes paid on items physically incorporated into the final products but refunded upon export by means of a cash compensatory support lump sum payment. Serampore also claimed an adjustment for drawback upon export of excise duty paid on the raw materials used to produce the finished castings. Serampore further claimed an upward adjustment of its United States price (USP) for the deposit of estimated countervailing duties on heavy iron castings entered during the period of investigation.

In its preliminary determination of LTFV sales, Commerce made upward adjustments to Serampore's USP for the cash compensatory support payment, the excise duty drawback, and the deposits of estimated countervailing duties. Iron Construction Castings From India; Preliminary Determination of Sales at Less Than Fair Value, 50 Fed.Reg. 43,595 (Oct. 28, 1985).

Commerce verified Serampore's initial and supplemental questionnaire responses and found that Serampore received a 5% cash compensatory support payment for refund of indirect taxes upon export of heavy castings and a 10% cash compensatory support payment for certain light castings. Commerce also verified that Serampore received a drawback of excise duty on iron castings exported to the United States. Commerce determined that the prices Serampore paid for pig iron included excise duty, octroi (border tax) and sales taxes. Citing Serampore's recordkeeping, Commerce did not isolate taxes on paint and packing materials.

In its final determination of sales at LTFV, Commerce found the following weighted-average dumping margins:

                ------------------------------------------------------------------
                                                                | Weighted-average
                        Manufacturers/sellers/exporters         |      margin
                                                                |    percentage
                ------------------------------------------------|-----------------
                RSI (excluded) ................................ |       0
                Kejriwal (de minimis) (excluded) .............. |       0.39
                Serampore ..................................... |       0.90
                Kajaria (de minimis) (excluded) ............... |       0.03
                All others .................................... |       0.90
                ------------------------------------------------------------------
                

51 Fed.Reg. at 9490.

In calculating Serampore's dumping margin, Commerce did not add the cash compensatory support payment to USP. Commerce deducted from foreign market value some of the indirect taxes refunded upon export, but made no adjustments for refunds of the central sales tax. Commerce also added duty drawback to Serampore's USP, although Commerce had verified that the drawback was of excise duty and not import duty.

Although Commerce had added deposits of estimated countervailing duties to Serampore's USP in its preliminary determination, Commerce did not add deposits of estimated countervailing duties to USP in its final determination.

With respect to Serampore's weighted average dumping margin, Commerce refused to use Serampore's sales at fair value to offset its sales at LTFV.

With respect to the weighted average margin for "all other" companies, Commerce disregarded margins of the other companies investigated that were found not to be dumping or dumping only at de minimis rates, and applied the margin found for Serampore alone to the "all other" rate.

Commerce has moved to strike two paragraphs of plaintiffs' reply brief and an affidavit of plaintiffs' counsel attached to that brief. The Court reserves ruling on the motion because the subject challenged in plaintiffs' reply brief is remanded.

Discussion

In reviewing final Commerce determinations in antidumping duty investigations, the Court is directed by Congress to hold unlawful those determinations found "to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1982). Under the substantial evidence standard for review of agency determinations, the Court will affirm the agency's findings if they are supported in the record by such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Federal Trade Comm'n v. Indiana Fed'n of Dentists, 476 U.S. 447, 106 S.Ct. 2009, 2014, 90 L.Ed.2d 445 (1986); Atlantic Sugar, Ltd. v. United States, 2 Fed.Cir. (T) 130, 136, 744 F.2d 1556, 1562 (1984). The Court "must accord substantial weight to an agency's interpretation of a statute it administers." American Lamb Co. v. United States, 785 F.2d 994, 1001 (Fed.Cir.1986) (citing Zenith Radio Corp. v. United States, 437 U.S. 443, 450-51, 98 S.Ct. 2441, 2445, 57 L.Ed.2d 337 (1978); Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1964)). However, "the traditional deference courts pay to agency interpretation is not to be applied to alter the clearly expressed intent of Congress." Board of Governors of the Federal Reserve System v. Dimension Financial Corp., 474 U.S. 361, 106 S.Ct. 681, 686, 88 L.Ed.2d 691 (1986).

1. Excise Duty Drawback

Plaintiffs claim that Commerce erred in adding excise duty drawback to Serampore's USP. In its final determination, Commerce declared that it was adding "duty drawback" to USP pursuant to 19 U.S.C. § 1677a(d)(1)(B) (1982), which provides for an upward adjustment to USP for customs duties that are rebated or uncollected by reason of exportation. Subsequent to the determination and upon review of plaintiffs' arguments and the administrative record, the defendant concluded that: (1) the excise duty on pig iron is a tax and not an import customs duty; (2) the excise duty drawback was in fact deducted from Serampore's foreign market value and inadvertently added to its USP, thereby negating the adjustment made to Serampore's foreign market value; and (3) as a rebate of indirect taxes, the excise duty drawback should only have been deducted from Serampore's constructed value calculations pursuant to 19 U.S.C. § 1677b(e)(1)(A) (1982), not added to the USP. Commerce thus concedes that the addition of excise duty drawback to Serampore's USP was incorrect. This part of the action is remanded.

2. Central Sales Tax

Plaintiffs claim that Commerce erred with respect to indirect taxes by excluding from Serampore's constructed value less than the full amount of indirect taxes refunded by way of cash compensatory support. Commerce verified that the prices Serampore paid for pig iron included excise duty, octroi, and sales taxes. Although Commerce made adjustments for refunds of excise duty, octroi, and West Bengal State sales tax, Commerce made no adjustments for the Indian central sales tax.

Defendant asserted at oral argument that Commerce did not err in failing to account for the central sales tax. The Court ordered further briefing on the central sales tax issue.

In response to the Court's order, defendant moved pursuant to Rule 1 of the Rules of this Court for a remand in order to allow it to ascertain whether the iron construction castings Serampore produced incurred the central sales tax. If the answer is affirmative, Commerce will determine the amount of this indirect tax Serampore incurred during the period of investigation and make all appropriate adjustments. This part of the action is remanded.

3. Estimated Countervailing Duties

Plaintiffs claim that Commerce's final determination should have included an upward adjustment to USP for deposits of estimated countervailing duties paid on iron castings entered during the period of investigation. The antidumping statute and regulations mandate an upward adjustment to USP by the amount of any countervailing duty "imposed" on the merchandise to offset an export...

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