National Steel Corp. v. US

Decision Date14 June 1996
Docket NumberSlip Op. 96-97. Court No. 93-09-00616-AD.
Citation929 F. Supp. 1577,20 CIT 743
PartiesNATIONAL STEEL CORP., AK Steel Corp., Bethlehem Steel Corp., Gulf States Steel, Inc. of Alabama, Inland Steel Industries, Inc., LTV Steel Co., Sharon Steel Corp., U.S. Steel Group a Unit of USX Corp., and WCI Steel, Inc., Plaintiffs, v. UNITED STATES, Defendant, Hoogovens Groep B.V. and N.V.W. (U.S.A.), Inc., Defendant-Intervenors.
CourtU.S. Court of International Trade

Skadden, Arps, Slate, Meagher & Flom (Robert E. Lighthizer and John J. Mangan), Washington, DC, for plaintiffs.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Velta A. Melnbrencis), Edward Reisman, Attorney-Advisor, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of counsel, for defendant.

Powell, Goldstein, Frazer & Murphy (Peter O. Suchman, Neil R. Ellis, and Niall P. Meagher), Washington, DC, for defendant-intervenors.

MEMORANDUM OPINION AND ORDER

DiCARLO, Chief Judge:

National Steel Corporation, AK Steel Corporation, Bethlehem Steel Corporation, Gulf States Steel, Inc. of Alabama, Inland Steel Industries, Inc., LTV Steel Company, Inc., Sharon Steel Corporation, U.S. Steel Group A Unit of USX Corporation, and WCI Steel, Inc. ("Domestic Producers") contest the final results of the second remand determination filed by Commerce pursuant to this court's order in National Steel Corp. v. United States, 913 F.Supp. 593 (Ct.Int'l Trade 1996) hereinafter National Steel II. Redetermination on Reremand; Final Determination of Sales at Less than Fair Value; Certain Hot-Rolled Carbon Steel Flat Products and Certain Cold-Rolled Carbon Steel Flat Products from the Netherlands (A-421-803/804) (Feb. 12, 1996) hereinafter Second Remand Redetermination. The court has jurisdiction over this action pursuant to 19 U.S.C. § 1516a(a)(2) (1988) and 28 U.S.C. § 1581(c) (1988).

BACKGROUND

In National Steel Corp. v. United States, 870 F.Supp. 1130 (Ct.Int'l Trade 1994) hereinafter National Steel I, the court reviewed challenges to Commerce's investigation of cold-rolled carbon steel flat products from the Netherlands. Final Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products and Certain Cold-Rolled Carbon Steel Flat Products from the Netherlands, 58 Fed.Reg. 37,199, amended by Antidumping Duty Order, 58 Fed.Reg. 44,172 (Dep't Comm.1993) hereinafter Final Determination. In particular, the court reviewed Commerce's selection and application of the highest non-aberrant margin as the best information available (BIA). Although the court upheld Commerce's use of BIA and its selection of the highest non-aberrant margin as BIA, the court found the particular margin that Commerce had chosen appeared aberrant. The court directed Commerce to provide standards for judging the highest non-aberrant margin and to select a BIA margin that would be indicative of Hoogovens' sales.

Further, the court considered Commerce's adjustment to the United States price (USP), which sought to account for the Dutch value added tax (VAT). Commerce sought to eliminate the false dumping margin created when adjusting the VAT by applying the tax rate to the USP. To do this, Commerce added to the USP the actual amount of the tax imposed on the foreign market value (FMV) in the home market, but forgiven upon exportation. The court, following Federal-Mogul Corp. v. United States, 834 F.Supp. 1391 (Ct.Int'l Trade 1993), found this tax-neutral methodology contrary to law, and remanded the tax adjustment to Commerce for recalculation.

On remand, Commerce developed two principles for its selection of the highest non-aberrant margin. First, Commerce sought a margin sufficiently adverse so as to be consistent with the statutory purposes of the BIA rule — to induce respondents to provide Commerce with complete and accurate information in a timely fashion. Second, Commerce sought a margin indicative of Hoogovens' sales. Although Commerce properly reasoned that the BIA rate should be based on transactions involving substantial commercial quantities, Commerce selected its margin because it found approximately three percent of the transactions by volume had calculated margins higher than the BIA rate. Redetermination on Remand; Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products and Certain Cold-Rolled Carbon Steel Flat Products from the Netherlands (A-421-803/804) at 5 (Feb. 17, 1995) hereinafter First Remand Redetermination.

Pursuant to the court's remand, Commerce also changed its methodology to comport with Federal-Mogul when adjusting for VAT. First Remand Redetermination at 2. Commerce added to the "USP the result of multiplying the foreign market tax rate by the price of the United States merchandise at the same point in the chain of commerce that the foreign market tax was applied to foreign market sales." Id. at 2.

Upon review, the court found Commerce's two guidelines for selecting the highest non-aberrant margin reasonable, as Commerce's selected margin now had to have a rational relationship to the foreign manufacturer's sales, and therefore could provide a link to defendant-intervenors', Hoogovens Groep B.V. and N.V.W. (U.S.A.), Inc. ("Hoogovens"), customary selling practices. However, although the court found that Commerce had demonstrated its selected margin as being sufficiently adverse, First Remand Redetermination at 5, Commerce had failed to explain how that margin was rationally related to Hoogovens' sales and indicative of Hoogovens' customary selling practices. The court found the mere existence of a significant number of transactions with higher margins than Commerce's selected BIA margin did not necessarily support Commerce's conclusion that its selected margin was indicative of Hoogovens' customary selling practices. Further, while Commerce found that the BIA rate was "a transaction involving a substantial commercial quantity," id. at 5, the court determined that Commerce failed to demonstrate why it found Hoogovens' sales to be substantial, and how Commerce defined "substantial" with regard to Hoogovens' sales.

The court also reviewed Commerce's methodology to account for the VAT the exporting country would have assessed had the merchandise in question been sold in the home market. As the Court of Appeals for the Federal Circuit upheld Commerce's original methodology, Federal-Mogul Corp. v. United States, 63 F.3d 1572, 1580 (Fed.Cir.1995), this court permitted Commerce to return to it. National II, 913 F.Supp. at 598. Pursuant to this methodology, Commerce added the amount of the foreign tax, rather than applying the foreign tax rate, in calculating the adjustment needed to account for the VAT. Id.

The court remanded Commerce's redetermination and: (1) directed Commerce to provide a reasoned explanation to demonstrate how Commerce's selected BIA margin was indicative of Hoogovens' customary selling practices and rationally related to Hoogovens sales; and (2) permitted Commerce the option to reapply its original tax-neutral methodology. Id. The results of Commerce's second remand redetermination are now before the court.

DISCUSSION

This court shall uphold Commerce's final determination in an antidumping duty investigation unless that determination is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1988). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216-17, 83 L.Ed. 126 (1938)).

I. Selection of the Highest Non-aberrant Margin

Pursuant to the court's instructions, Commerce reexamined its selection of the BIA margin and found that its selected margin was indicative of Hoogovens' customary selling practices and rationally related to Hoogovens' sales. Second Remand Redetermination at 7-8. Commerce found the sale which corresponded to its selected margin involved a product which (1) was common in Hoogovens' Purchase Price and Exporter Sales Price transactions, (2) possessed among the highest sales volumes in terms of tonnage, and (3) for ESP sales, was the product with the largest volume. Id. at 8-9.

Further, Commerce also found the particular sale chosen was of a substantial commercial quantity and fell well into the main-stream of Hoogovens' transactions based on quantity. Id. Finally, Commerce found nothing in the record to indicate that this particular sale was not transacted in a normal manner. Id. The parties have not challenged Commerce's remand redetermination with respect to this issue.

As Commerce's selected margin is both sufficiently adverse to meet the requirements of the BIA rule and indicative of Hoogovens' sales, and as substantial evidence on the record supports Commerce's selection, the court upholds Commerce's determination with respect to its selection of the highest non-aberrant margin.

II. Recalculation of VAT & the Duty Deposit Rate

Commerce changed its treatment of VAT, as permitted by Federal-Mogul, 63 F.3d at 1580. Second Remand Determination at 5. Commerce returned to its methodology as described in footnote 4 of Zenith Electronics Corp. v. United States, 988 F.2d 1573, 1582 n. 4 (Fed.Cir.1993). Id. Following this methodology, Commerce sought to add the amount of the foreign tax, rather than apply the foreign tax rate, in calculating the adjustment needed to account for the VAT. Id. at 3. As a consequence of this change, Commerce also recalculated the cash deposit rate.

Subsection 1673b(d)(2) provides that Commerce:

shall order the posting of a cash deposit ... equal to the estimated average amount by which
...

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