Dillinger Fr. S.A. v. United States

• Decision Date: 03 December 2020
• Docket Number: 2019-2395
• Citation: 981 F.3d 1318
• Parties: DILLINGER FRANCE S.A., Plaintiff-Appellant v. UNITED STATES, SSAB Enterprises LLC, Nucor Corporation, Defendants-Appellees
• Court: U.S. Court of Appeals — Federal Circuit

981 F.3d 1318

DILLINGER FRANCE S.A., Plaintiff-Appellant

v.UNITED STATES, SSAB Enterprises LLC, Nucor Corporation, Defendants-Appellees

2019-2395

United States Court of Appeals, Federal Circuit.

Decided: December 3, 2020

Marc Edward Montalbine, Dekieffer & Horgan, PLLC, Washington, DC, argued for plaintiff-appellant. Also represented by James Kevin Horgan, Gregory S. Menegaz, Alexandra H. Salzman.

Kelly A. Krystyniak, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee United States. Also represented by Jeffrey B. Clark, Jeanne Davidson, Tara K. Hogan; Ayat Mujais, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.

Cynthia Cristina Galvez, Wiley Rein, LLP, Washington, DC, argued for defendant-appellee Nucor Corporation. Also represented by Alan H. Price, Stephanie Manaker Bell, Tessa V. Capeloto, Maureen E. Thorson, Christopher B. Weld.

Roger Brian Schagrin, Schagrin Associates, Washington, DC, for defendant-appellee SSAB Enterprises LLC. Also represented by Nicholas J. Birch, Christopher Cloutier, Geert M. De Prest, Elizabeth Drake, William Alfred Fennell, Paul Wright Jameson, Luke A. Meisner, Kelsey Rule.

Before Newman, Dyk, and Hughes, Circuit Judges.

Dyk, Circuit Judge.

Plaintiff Dillinger France S.A. ("Dillinger") appeals a decision of the United States Court of International Trade ("Trade Court"). That decision affirmed the final antidumping determination of the U.S. Department of Commerce ("Commerce") for certain carbon and alloy steel cut-to-length plate from France. We affirm in part, vacate in part, and remand.

BACKGROUND

"Dumping occurs when a foreign firm sells a product in the United States at a price lower than the product's normal value." Home Prods. Int'l, Inc. v. United States , 633 F.3d 1369, 1372 (Fed. Cir. 2011). Commerce is required to impose antidumping duties on imported merchandise that is being sold, or is likely to be sold, in the United States at less than fair value to the detriment of a domestic industry. 19 U.S.C. § 1673.

On April 28, 2016, Commerce initiated an antidumping duty investigation into certain carbon and alloy steel cut-to-length plate from France. Commerce chose Dillinger, a European producer of cut-to-length plate, as one of the mandatory importer respondents.

Commerce assigned Dillinger a 6.15% antidumping margin. See Certain Carbon and Alloy Steel Cut-To-Length Plate from France , 82 Fed. Reg. 24,096, 24,098 (Dep't of Commerce May 25, 2017). Dillinger appealed to the Trade Court, which initially sustained most of Commerce's determination but remanded to Commerce issues that are not involved in this appeal. The Trade Court then sustained Commerce's remand results and the 6.15 percent duty. Dillinger appeals the Trade Court's judgment, contending that Commerce erred in the antidumping determination. We have jurisdiction under 28 U.S.C. § 1295(a)(5).

DISCUSSION

We review the Trade Court's decision to sustain Commerce's final results and remand redeterminations de novo. See U.S. Steel Corp. v. United States , 621 F.3d 1351, 1357 (Fed. Cir. 2010). We will affirm Commerce unless its decision is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

I

Dillinger raises three issues on appeal. We first address Dillinger's argument that, in calculating normal value, Commerce improperly allocated costs between Dillinger's non-prime and prime products based on Dillinger's books and records, which allocate cost based on likely selling price rather than actual cost.¹ Because Dillinger's books and records did not reasonably reflect the costs associated with the production and sale of the merchandise as required by 19 U.S.C. § 1677b(f), we vacate and remand for further proceedings on this issue.

Dillinger sells plates designated as prime and non-prime. Non-prime plates are plates that are rejected after the production process for not meeting the standards for prime plate. Prime plate is sold with a warranty, whereas non-prime plate is not and thus cannot be used in applications that require a warranty. In reporting costs to Commerce, Dillinger reported the cost of non-prime plate as equal to the average actual cost of all plate because, according to Dillinger, "non-prime plate undergoes the same production process as prime plate and ... is not less costly to produce simply because it cannot be sold at full price." J.A. 1346.

Commerce did not dispute that prime and non-prime plate undergo the same production process, but Commerce noted that Dillinger's accounting system uses a different approach, valuing "non-prime plate at the likely selling price based on current market conditions and uses this amount to offset the cost of prime plates." J.A. 1347. Commerce accordingly adjusted Dillinger's reported costs for non-prime plate "to reflect the sales values recorded in [Dillinger's] normal books and records" and allocated the difference to the costs for Dillinger's prime plate. Id. at 968, 1347. In doing so, Commerce reduced the cost of non-prime plate and allocated a greater portion of cost to prime plate based on the selling price of non-prime plate. Dillinger argues that Commerce's reliance on Dillinger's books and records was improper because the books and records were not based on the costs associated with the production of its products.

The applicable statutory provision, 19 U.S.C. § 1677b(f)(1)(A), provides that "[f]or purposes of subsections (b) [sales at less than cost of production] and (e) [constructed value] ..., [c]osts shall normally be calculated based on the records of the exporter or producer of the merchandise, if such records are kept in accordance with the generally accepted accounting principles [ ("GAAP") ] of the exporting country (or the producing country, where appropriate) and reasonably reflect the costs associated with the production and sale of the merchandise ." Id. (emphasis added). Section 1677b(f)(1)(A) thus requires "that reported costs must ‘normally’ be used" only if (1) "they are ‘based on the records ... kept in accordance with the [GAAP]’ " and (2) " ‘reasonably reflect’ the costs of producing and selling the merchandise." Thai Plastic Bags Indus. Co. v. United States , 746 F.3d 1358, 1365 (Fed. Cir. 2014) (quoting 19 U.S.C. § 1677b(f)(1)(A) ).

The dual nature of the test seems apparent from the face of the statute and is clear as well from our prior decisions and the legislative history. Before § 1677b(f), our case law had established that, "[a]s a general rule, an agency may either accept financial records kept according to [GAAP] in the country of exportation, or reject the records if accepting them would distort the company's true costs." ( Thai Pineapple Pub. Co. v. United States , 187 F.3d 1362, 1366 (Fed. Cir. 1999) ).

In IPSCO, Inc. v. United States , 965 F.2d 1056 (Fed. Cir. 1992), we held a method that "calculat[ed] costs for both limited-service and prime products on the basis of their relative prices" to be "an unreasonable circular methodology" because it "contravened the express requirements of the statute which set forth the cost of production as an independent standard for fair value." Id. at 1061 ; see also id. at 1060 ("The legislative history confirms the statute's unambiguous intent to provide cost of production as an independent yardstick for deciding whether home and export sales prices are suitable for fair value comparisons."). We relied on section 1677b(e), the provision that "expressly covers actual production costs," for computing constructed value, and section 1677b(b), which "disregards, under specified circumstances, home or export market sales at less than the cost of production." Id. at 1059 (citing 19 U.S.C. § 1677b(b), (e) (1988) ). Here, there is no dispute that Commerce relied on the likely selling price of non-prime plate in its determination of cost. Thus, if IPSCO governs, Commerce's reliance on Dillinger's books and records was impermissible.

Commerce argues that IPSCO should not govern because the Tariff Act was amended to add § 1677b(f). When Congress added § 1677b(f), Congress did not repeal §§ 1677b(b) or (e), the sections we relied on in IPSCO , which still require determination of "the cost of materials and fabrication or other processing of any kind," id. § 1677b(e),² and there is no indication that Congress intended for the addition of section 1677b(f) to overrule IPSCO . "Section 224 of [the Uruguay Round Agreements Act] add[ed] new section 773(f) to the [Tariff] Act to incorporate the provisions of the [Antidumping Agreement³ ] regarding the calculation of costs. In addition, section 773(f) harmonize[d] the methods of calculating cost for purposes of examining sales below cost and determining constructed value." H.R. Rep. No. 103-826, pt. 1, at 91 (1994). The legislative history indicates Congress's clear intent for Commerce to "continue its current practice of calculating costs," id. , and that such costs should "accurately reflect the resources actually used in the production of the merchandise in question," S. Rep. No. 103-412, at 75 (1994).

In codifying this rule, Congress noted that "[u]nder [then-]existing U.S. law and practice, Commerce normally calculate[d] costs on the basis of records kept by the exporter or producer of the merchandise, provided such records [were] kept in accordance with [GAAP] of the exporting (or producing) country and reasonably reflect[ed] the costs associated with the production and sale of the merchandise" and that "[u]nder new section [1677b(f) ], Commerce [would] continue its current practice." H.R. Rep. No. 103-826, pt. 1, at 90–91.

Congress also concluded that "[c]osts shall be allocated using a method that reasonably reflects and accurately captures all of the actual costs incurred in producing and selling the product under investigation or review."...