Atcor, Inc. v. US
| Decision Date | 12 March 1987 |
| Docket Number | Court No. 86-03-00351. |
| Citation | 658 F. Supp. 295,11 CIT 148 |
| Parties | ATCOR, INC., Sawhill Tubular Div. Cyclops Corp., and Wheatland Tube Corp., Plaintiffs, v. UNITED STATES, Defendant, Zenith Steel Pipes & Industries, Ltd., and Gujarat Steel Tubes, Ltd., Intervenors. |
| Court | U.S. Court of International Trade |
Schagrin Associates (Roger B. Schagrin and Paul W. Jameson, Washington, D.C., on the motion), for plaintiffs.
Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director Commercial Litigation Branch, Civ. Div., Dept. of Justice (A. David Lafer, Washington, D.C., on the motion), for defendant.
Kaplan Russin & Vecchi (Dennis James, Jr. and Kathleen F. Patterson, Washington, D.C., on the motion), for defendant-intervenors.
Pursuant to Rule 56.1 of the Rules of this Court, plaintiffs move for judgment upon the agency record challenging the final affirmative determination of the International Trade Administration of the Department of Commerce (ITA or Commerce) in its antidumping investigation in Certain Welded Carbon Steel Standard Pipe and Tube From India, 51 Fed.Reg. 9089 (March 17, 1986). Plaintiffs contest that part of the determination which finds Zenith Steel Pipes & Industries, Ltd. (Zenith)1 and Gujarat Steel Tubes, Ltd. (Gujarat)2, the defendant-intervenors herein, were not selling welded carbon steel pipe (pipe and tube or standard pipe and tube) in the United States at less than fair value.
Plaintiffs contend that the ITA's decision to add to United States price (USP), pursuant to 19 U.S.C. § 1677a(d)(1)(C)(1980 & Supp.1986), the amount of indirect taxes paid in the home market on inputs and the export rebate was not in accordance with law. Defendant United States and the defendant-intervenors take the position that the adjustments were proper since the ITA determined pipe and tube sold in India incurred certain taxes; whereas exported pipe and tube were exempt from these taxes either in the form of rebates or exclusions.
This Court holds the ITA's decision to make an adjustment to USP under § 1677a(d)(1)(C) in the amount of indirect taxes paid in the home market was in accordance with law. Although, the exported merchandise was produced from imported inputs that incurred no indirect taxes, the noncollection of these taxes was "by reason of the exportation."
The ITA may make an adjustment to USP for the export rebate to the extent it verifies indirect taxes were imposed upon the exported merchandise. Because it does not appear that the ITA verified the full extent of taxes incurred, a remand is necessary.
In July of 1985, the Standard Pipe and Tube Subcommittee of the Committee on Pipe and Tube Imports and each of the member companies who produce standard pipe and tube filed a petition with the ITA. The petitioners contended imports of pipe and tube from India were being, or were likely to be, sold in the United States at less than fair value.
The ITA determined petitioners had provided sufficient grounds upon which to initiate an antidumping duty investigation. The ITA notified the International Trade Commission which determined there was a reasonable indication imports of standard pipe and tube were materially injuring or threatening material injury to a United States industry. 50 Fed.Reg. 37608. Petitioners then alleged the existence of critical circumstances.
In October and November, 1985, three Indian manufacturers of standard pipe and tube, Zenith, Gujarat, and Tata Iron and Steel Co., Ltd. (TISCO) responded to questionnaires presented to them by the ITA. Since these companies supplied more than 60% of the exports of pipe and tube to the United States, the investigation was limited to them. All of their sales of standard pipe and tube to the United States between February 1, 1985 and July 31, 1985 were investigated.
On December 31, 1985, the ITA made an affirmative preliminary determination of sales at less than fair value. 50 Fed.Reg. 53356. The ITA also determined critical circumstances did not exist with respect to imports of pipe and tube for Zenith and Gujarat but did exist for the third company, TISCO.
In its final determination, the ITA determined standard pipe and tube from India were being, or were likely to be, sold in the United States, and critical circumstances did not exist. The ITA directed the United States Customs Service to suspend liquidation of all entries of the subject merchandise except that produced and exported by Zenith and Gujarat.
By a motion for judgment upon the agency record, plaintiffs challenge that part of the final affirmative determination which excludes Zenith and Gujarat and determined these companies were not selling standard pipe and tube in the United States at less than fair value. Plaintiffs contend certain adjustments made by the ITA to United States price pursuant to 19 U.S.C. § 1677a(d)(1)(C) were not in accordance with law.
At the center of the controversy are two tax payments and one export rebate of taxes. The first tax is a Steel Development Fund levy (SDF). The SDF is included within the price of a ton of steel when sold by the Steel Authority of India, Ltd. (SAIL). The second tax is a Central Sales Tax (CST). This is a 4% ad valorem tax paid on nearly all sales transactions in India. The CST is included within the price of steel when sold by SAIL. Upon collection, both taxes are remitted to the Indian government. Cash Compensatory Support (CCS) is a program partially designed to rebate indirect taxes incurred in the manufacture of exported merchandise. In the instant action, defendant-intervenors, Zenith and Gujarat received 5% of the value of pipe or tube exported to the United States in the form of a rebate.
Zenith and Gujarat produce pipe and tube for sale in both the domestic and export markets. During the period of investigation, all pipe and tube sold in the Indian market by Zenith and Gujarat were manufactured from domestically produced steel. All pipe and tube exported to the United States by them, however, were made from imported steel. In addition, all steel imported by Zenith and Gujarat was imported pursuant to an advance licensing scheme which exempted them from a 100% countervailing excise duty (CVED) provided they subsequently exported the pipe and tube made therefrom. The ITA verified all steel imported was subsequently exported during the period of investigation.
When Zenith and Gujarat purchase steel from SAIL for use in the manufacture of standard pipe and tube to be sold in the domestic market, the 4% ad valorem CST and the SDF are collected. Conversely, when Zenith and Gujarat purchase imported steel for use in pipe and tube exported to the United States, no CST or SDF is incurred since foreign suppliers of steel, unlike SAIL, do not pay the CST or the SDF.
In its final determination, the ITA added to USP the amount of the CST and SDF that was uncollected on exported steel from India where the tax was imposed on similar steel in the Indian home market. Petitioners contended the adjustment is incorrect because the taxes are not collected because of importation and not by reason of exportation as required by the statute. Section 1677a(d)(1)(C) directs the ITA to make an adjustment for taxes not collected by reason of exportation. The ITA explained that since these taxes are included in the price of the domestic product but are not included in the price of the exported product, an adjustment is appropriate. See 51 Fed.Reg. at 9091.
The ITA also made an adjustment for the CCS export rebate of indirect taxes, the ITA found, were imposed upon inputs utilized in the manufacture of the exported merchandise. Petitioners contended it was not shown that the pipe and tube incurred any indirect taxes.3 The parties have stipulated that the ITA verified that packing materials used for export shipments incurred the 4% CST and a 10% excise tax. The actual amount of taxes incurred is nevertheless unclear. No other indirect taxes incurred by the exported pipe or tube have been verified.
The antidumping law is designed to protect domestic industries from sales of foreign merchandise at less than fair value which cause or threaten to cause material injury. To achieve this objective, the law requires the imposition of an antidumping duty in the amount by which foreign market value (FMV) exceeds USP. 19 U.S.C. § 1673 (1980 & Supp.1986) The statute provides the means for determining both FMV and USP. Various upward and downward adjustments are then made to achieve comparable prices.
One of these adjustments directs the ITA to account for taxes imposed upon home market sales but not upon export sales. The relevant provision states:
19 U.S.C. § 1677a. This adjustment has two components. First, USP is to be increased by the amount of taxes imposed in the country of exportation directly on the exported merchandise which have been rebated or not collected by reason of the exportation. Second, the adjustment is limited to the amount such taxes are added to or included in the price of such or similar merchandise when sold in the country of exportation.
The first question presented for decision is...
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