Eregli Demir Ve Çelik Fabrikalari T.A. v. United States

• Decision Date: 29 October 2019
• Docket Number: Consol. Court No. 16-00218,Slip Op. 19-135
• Citation: 415 F.Supp.3d 1216
• Parties: EREGLI DEMIR VE ÇELIK FABRIKALARI T.A.S, Plaintiff, and Çolakoglu Metalurji A.S. and Çolakoglu Dis Ticaret A.S, Consolidated Plaintiffs, v. UNITED STATES, Defendant, and Steel Dynamics, Inc., et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

415 F.Supp.3d 1216

EREGLI DEMIR VE ÇELIK FABRIKALARI T.A.S, Plaintiff,andÇolakoglu Metalurji A.S. and Çolakoglu Dis Ticaret A.S, Consolidated Plaintiffs,

v. UNITED STATES, Defendant,andSteel Dynamics, Inc., et al., Defendant-Intervenors.

Slip Op. 19-135

Consol. Court No. 16-00218

United States Court of International Trade.

October 29, 2019

Matthew M. Nolan, Arent Fox, LLP, of Washington, DC, for Consolidated Plaintiffs Çolakoglu Metalurji A.S. and Çolakoglu Dis Ticaret A.S.

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant United States. With her on the brief were Joseph H. Hunt, Acting Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel on the brief was Brandon J. Custard, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Paul C. Rosenthal, R. Alan Luberda, David C. Smith, and Joshua R. Morey, Kelley Drye & Warren LLP, of Washington, DC, for Defendant-Intervenor ArcelorMittal USA LLC.

Stephen A. Jones and Daniel L. Schneiderman, King & Spalding, LLP, of Washington, DC, for Defendant-Intervenor AK Steel Corporation.

Alan H. Price and Christopher B. Weld, Wiley Rein LLP, of Washington, DC, for Defendant-Intervenor Nucor Corporation.

Roger B. Schagrin and Christopher T. Cloutier, Schagrin Associates, of Washington, DC, for Defendant-Intervenors Steel Dynamics, Inc. and SSAB Enterprises LLC.

Thomas M. Beline and Sarah E. Shulman, Cassidy Levy Kent (USA) LLP, of Washington, DC, for Defendant-Intervenor United States Steel Corporation.

OPINION AND ORDER

Barnett, Judge:

This matter is before the court following the U.S. Department of Commerce's ("Commerce" or "the agency") redetermination upon second court-ordered remand. See Final Results of Redetermination Pursuant to Second Court Remand ("2nd Remand Results"), ECF No. 133. Plaintiff Eregli Demir ve Çelik Fabrikalari T.A.S. ("Erdemir") and Consolidated Plaintiffs Çolakoglu Metalurji A.S. and Çolakoglu Dis Ticaret A.S. (together, "Çolakoglu") each challenged aspects of Commerce's final determination in the sales at less than fair value investigation of certain hot-rolled steel flat products from the Republic of Turkey. See Certain Hot-Rolled Steel Flat Products from the Republic of Turkey , 81 Fed. Reg. 53,428 (Dep't Commerce Aug. 12, 2016) (final determination of sales at less than fair value; 2014-2015) (" Final Determination "), ECF No. 41-1, and accompanying Issues and Decision Mem., A-489-826 (Aug. 4, 2016), ECF No. 41-3, as amended by Certain Hot-Rolled Steel Flat Products from Australia, Brazil, Japan, the Republic of Korea, the Netherlands, the Republic of Turkey, and the United Kingdom , 81 Fed. Reg. 67,962 (Dep't Commerce Oct. 3, 2016) (am. final aff. antidumping determinations for Australia, the Republic of Korea, and the Republic of Turkey and antidumping duty orders), ECF No. 41-2.¹ This is the court's third opinion addressing challenges arising out of Commerce's Final Determination.

On March 22, 2018, the court remanded the Final Determination with respect to Erdemir's home market date of sale; the denial of Çolakoglu's duty drawback adjustment; and the rejection of Çolakoglu's corrections to its international freight expenses. See Eregli Demir ve Çelik Fabrikalari T.A.S v. United States ("Erdemir I "), 42 CIT ––––, 308 F. Supp. 3d 1297 (2018). The court sustained Commerce's Final Determination in all other respects. See id. at 1304. On remand from Erdemir I , Commerce revised its date of sale determination for Erdemir's home market sales in a manner favorable to Erdemir; granted Çolakoglu's duty drawback adjustment but revised its method of calculating the adjustment; and provided additional evidence and explanation supporting its rejection of Çolakoglu's corrections to international freight expenses. See Confidential Final Results of Redetermination Pursuant to Remand ("1st Remand Results") at 1, 5-24, ECF No. 105.² In response to Çolakoglu's challenges to Commerce's method of calculating the duty drawback adjustment and continued rejection of its freight expense corrections, on December 27, 2018, the court remanded the former determination and sustained the latter. See Eregli Demir ve Çelik Fabrikalari T.A.S v. United States ("Erdemir II "), 42 CIT ––––, ––––, 357 F. Supp. 3d 1325, 1332-34, 1336 (2018).³

On June 3, 2019, Commerce filed its second remand results. See 2nd Remand Results. Therein, Commerce again revised its method of calculating Çolakoglu's duty drawback adjustments to U.S. price and made a circumstance of sale ("COS") adjustment to normal value to increase it by the same amount as the duty drawback adjustment. Id. at 2, 6-16, 21-28. The changes made by Commerce increased Çolakoglu's weighted-average dumping margin from 5.70 percent to 6.27 percent. Id. at 16.

Çolakoglu filed comments opposing Commerce's use of a COS adjustment. See Consol. Pls. Çolakoglu Metalurji A.S. and Çolakoglu Dis Ticaret A.S.'s Comments on Remand Redetermination ("Çolakoglu's Cmts."), ECF No. 135. Defendant United States ("the Government") and Defendant-Intervenors filed comments in support of the 2nd Remand Results. See Def.'s Resp. to Comments on Second Remand Redetermination ("Gov't's Reply Cmts."), ECF No. 138 ; Def.-Ints.' Comments in Supp. of 2nd Remand Results ("Def.-Ints.' Reply Cmts."), ECF No. 139.⁴

The court recently remanded Commerce's decision to make a COS adjustment to normal value in the same amount as the duty drawback adjustment to U.S. price. See generally Habas Sinai ve Tibbi Gazlar Istihsal Endüstrisi, A.S. v. United States , Slip Op. 19-130, 415 F.Supp.3d 1195, 2019 WL 5270152 (CIT Oct. 17, 2019). For the reasons discussed in Habas and herein, the court sustains Commerce's duty drawback adjustment as applied to export price and remands Commerce's decision to make a COS adjustment in the same amount.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012),⁵ and 28 U.S.C. § 1581(c).

The court will uphold an agency determination that is supported by substantial evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). "The results of a redetermination pursuant to court remand are also reviewed for compliance with the court's remand order."

SolarWorld Ams., Inc. v. United States , 41 CIT ––––, ––––, 273 F. Supp. 3d 1314, 1317 (2017) (citation and internal quotation marks omitted).

DISCUSSION

I. Duty Drawback and Circumstance of Sale Adjustments

A. Commerce's Duty Drawback Calculation Methodologies Prior to Erdemir II

To determine whether the subject merchandise is being sold at less than fair value, Commerce compares the export price or constructed export price⁶ of the subject merchandise to its normal value. See generally 19 U.S.C. §§ 1673 et seq. Generally, an antidumping duty is the amount by which the normal value of a product—typically, its price in the exporting country—exceeds export price, as adjusted. See id. § 1673. One of the adjustments Commerce makes to export price pursuant to 19 U.S.C. § 1677a(c) is known as the "duty drawback adjustment." Specifically, Commerce is to increase export price 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 exportation of the subject merchandise to the United States." Id. § 1677a(c)(1)(B). This statutory adjustment is intended to prevent the dumping margin from being increased by import taxes that are imposed on inputs used to produce subject merchandise, if those import taxes are rebated or exempted from payment when the subject merchandise is exported to the United States. See Saha Thai Steel Pipe (Public) Co. Ltd. v. United States , 635 F.3d 1335, 1338 (Fed. Cir. 2011) ; Wheatland Tube Co. v. United States , 30 C.I.T. 42, 60, 414 F. Supp. 2d 1271, 1286 (2006), rev'd on other grounds , 495 F.3d 1355 (Fed. Cir. 2007). The adjustment accounts for the fact that imported inputs remain subject to the import duties when consumed in the production of the foreign like product, "which increases home market sales prices and thereby increases [normal value]." Saha Thai , 635 F.3d at 1338.

"Until recently, Commerce calculated the duty drawback adjustment to U.S. price ... by dividing rebated or exempted duties by total exports and adding the resultant per unit duty burden to the export price." Erdemir II , 357 F. Supp. 3d at 1330. When producers were exempt⁷ from the payment of import duties, Commerce also increased cost of production and constructed value⁸ to account for the cost of the exempted duties for which the producer remained liable until the exemption program requirements were satisfied. Id. ; see also Saha Thai , 635 F.3d at 1341-44 (affirming the upward adjustment to cost of production). In 2016, Commerce modified its duty drawback adjustment "by allocating exempted duties over total production rather than exports." Erdemir II , 357 F. Supp. 3d at 1330-31. Commerce adjusted its methodology in response to assertions that margin distortions arose when foreign producers "use[d] fungible inputs both from foreign sources, which incur[red] import duties, and domestic sources, which [did] not." Id. at 1331 Commerce reasoned that "the larger denominator on the cost-side [i.e., total production] resulted in a smaller adjustment to normal value than U.S. price"; consequently, it determined that "equalizing the denominators used in each adjustment" ensured that an equal amount would be added to U.S. price and normal value and the agency would compare the two values on a "duty neutral" basis. Id. at 1331.

In the administrative proceeding underlying Erdemir II , Commerce used this modified duty drawback methodology to calculate the adjustment to U.S. price and make a corresponding equal upward...