998 F.Supp. 1151 (CIT. 1998), 95-09-01144, U.S. Steel Group a Unit of USX Corp. v. United States
|Docket Nº:||Court No. 95-09-01144.|
|Citation:||998 F.Supp. 1151|
|Party Name:||U.S. STEEL GROUP A UNIT OF USX CORPORATION, USS/Kobe Steel Co., and Koppel Steel Corp., Plaintiffs, v. UNITED STATES, Defendant, Siderca S.A.I.C. and Siderca Corporation, Defendant-Intervenors. Slip Op. 98-17.|
|Case Date:||February 25, 1998|
|Court:||Court of International Trade|
Skadden, Arps, Slate, Meagher & Flom (Robert E. Lighthizer, John J. Mangan), Washington, DC, for U.S. Steel Group a Unit of USX Corp., USS/Kobe Steel Co., and Koppel Steel Corp.
Schagrin Associates (Roger B. Schagrin, R. Alan Luberda), Washington, DC, for Maverick Tube.
Wiley, Rein & Fielding (Charles Owen Verrill, John R. Shane), Washington, DC, for North Star Steel.
Frank W. Hunger, Asst. Atty. Gen.; David M. Cohen, Director; Velta A. Melnbrencis, Asst. Director, Dept. of Justice, Civil Division, Commercial Litigation Branch; Barbara Campbell-Potter, Attorney-Advisor, Office of Chief Counsel for Import Administration, Dept. of Commerce, Washington, DC, for Defendant.
White & Case (David P. Houlihan, Gregory J. Spak, Christopher M. Curran, Richard J. Burke), Washington, DC, for Siderca S.A.I.C. and Siderca Corp.
On July 14, 1997, this Court remanded certain aspects of the International Trade Administration's final determination in Oil Country Tubular Goods from Argentina, 60 Fed.Reg. 33,539 (Dep't Commerce 1995)(final det.) ("Final Determination"). U.S. Steel Group v. United States, 973 F.Supp. 1076 (CIT 1997)(" U.S.Steel "). 1
The remand Order directed Commerce to reconsider its treatment of miscellaneous income as an offset to respondent Siderca's general and administrative costs ("G & A") and the adjustment of Siderca's cost of production ("COP") to account for the reintegro tax rebate. Petitioners U.S. Steel Group A Unit of USX Corp., USS/Kobe Steel Co. and
Koppel Steel Corp. ("petitioners" or "U.S. Steel") object to Commerce's remand determination.
I. Miscellaneous Income Offset to G & A Expenses
In calculating Siderca's COP, the Department's calculation of general and administrative expenses included an offset for "miscellaneous income" comprised of revenues from: (1) sales of technical assistance to other steel companies; (2) sales of tubes purchased from other countries and resold in other countries; and (3) sales of intermediate products. Final Results Redet. Pursuant Crt. Remand at 1 ("Remand Determination").
In the Final Determination, Commerce explained its decision to allow the offsets, stating, "miscellaneous income relating to production operations of the subject merchandise may be permitted as an offset to G & A." The Court found Commerce's statement to be a permissible construction of the statute. See U.S. Steel, 973 F.Supp. at 1088 ("The antidumping law ... does not define cost of production nor does it include a discussion of miscellaneous profit as an offset to cost. When a statute is silent or ambiguous, the court must defer to Commerce's reasonable interpretation.") (citing Daewoo Electronics Co., Ltd. v. Int'l Union of Elec., Technical, Salaried and Mach. Workers, 6 F.3d 1511, 1516 (Fed.Cir.1993)).
In its brief to this Court, Commerce revised its statement of the legal standard for permitting offsets to G & A, arguing that "[it] is Commerce's practice, ... to permit offsets to expenses for revenue relating to the respondent's general production operations." (Def.'s Mem. Opp'n. Mot. Siderca S.A.I.C. and Siderca Corp. and Partial Opp'n. Mot. U.S. Steel Group a Unit of USX Corp. et. al. J. Agency R. at 67). The Court rejected Commerce's revision as a post hoc rationalization by agency counsel. U.S. Steel, 973 F.Supp. at 1089. The Court also found that Commerce had failed to cite evidence to support its conclusion that the miscellaneous income was related to the production operations of the subject merchandise. Therefore, the Court remanded, asking that Commerce reconsider its treatment of Siderca's miscellaneous income.
In the Remand Determination, Commerce explained,
the standard described in the Final Determination ... i.e., that the miscellaneous income items at issue be related to production of the subject merchandise, does not accurately reflect the appropriate criteria for analyzing whether such items should be included in our calculation of G & A for Siderca.... [W]here these or other items of expense or income bear a close relationship to production of the subject merchandise, they may be more accurately accounted for as part of the COM [cost of manufacture] of that merchandise. On the other hand, where, ... items of income and expense are most closely related to the general operations of the company (all general activities associated with the company's core business), it is appropriate to treat those items as part of G & A....
Remand Determination at 5. After calculating a company's total G & A expenses, Commerce allocates a portion of those expenses to the subject merchandise. In allocating G & A, Commerce calculates a "G & A rate" by dividing the company's G & A expenses by the total cost of manufacture of all products sold. This rate is then multiplied by the per-unit cost of manufacture of a product in order to derive the portion of total G & A to be allocated to that product. Remand Determination at 5. An offset to G & A would be allocated similarly.
Petitioners argue that the standard articulated by Commerce in the Remand Determination is inconsistent with the statute. "The statute unambiguously requires that the cost of production to be used in an antidumping case is 'the cost of producing the merchandise in question ...' " Comments of U.S. Steel Group a Unit of USX Corp., USS/Kobe Steel Co., and Koppel Steel Corp. on the Final Results of Redetermination Pursuant to Court Remand at 7-8 ("U.S. Steel Comments") (citing 19 U.S.C. § 1677b(b)(1994)).
Commerce contends that limiting offsets to G & A expenses to income from activities related to "production of the subject merchandise"
would be inconsistent with the accounting allocation concept of G & A expenses.
Commerce's argument is persuasive. "G & A expenses are those expenses which relate to the activities of the company as a whole rather than to production process." Rautaruukki Oy v. United States, 1995 WL 170399, Slip Op. No. 95-56 (CIT March 31, 1995). Commerce's decision that offsets to G & A expenses should also be related to the company's general operations--comprised of all general activities associated with the company's core business, including production of the subject merchandise--is a reasonable application of the statute.
1. Sales of Technical Assistance
Petitioners argue that revenues from Siderca's sales of technical assistance to other steel companies should not be used to offset Siderca's G & A expenses because these sales constitute "a distinct and separate activity for Siderca."
Commerce argues, on the other hand, that miscellaneous technical assistance provided to other companies relates to Siderca's general production activities because the primary function of the personnel providing these services is to provide in-house production assistance and technical services to Siderca's own steel goods customers.
In response, petitioners state that "there is no record evidence to show that the personnel who provide technical assistance to other steel companies are in fact the same individuals who provide technical services to OCTG [oil country tubular goods] customers." U.S. Steel Comments at 12.
The Court finds...
To continue readingFREE SIGN UP