Elkem Metals Co. v. U.S.
| Decision Date | 16 November 2004 |
| Docket Number | Slip Op. 04-145.,Court No. 02-00232. |
| Citation | 350 F.Supp.2d 1270 |
| Parties | ELKEM METALS COMPANY and Globe Metallurgical Inc., Plaintiffs, v. UNITED STATES, Defendant, and Rima Industrial S/A, Defendant-Intervenor. |
| Court | U.S. Court of International Trade |
Piper Rudnick LLP (William D. Kramer and Martin Schaefermeier) for Elkem Metals Company and Globe Metallurgical, Inc., plaintiffs.
Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, and Reginald T. Blades, Jr., Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice; Barbara J. Tsai, Office of the Chief Counsel for Import Administration, United States Department of Commerce, for the United States, defendant, of counsel.
Greenberg Traurig, LLP (Philippe M. Bruno and Rosa S. Jeong) for Rima Industrial S/A, defendant-intervenor.
The Court will uphold the United States Department of Commerce's ("Commerce") redetermination pursuant to the Court's remand unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i) (2000). Substantial evidence is Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). Substantial evidence "is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966) (citations omitted).
Commerce issued its final results of the antidumping duty administrative review on silicon metal from Brazil on February 12, 2002. See Final Results of Antidumping Duty Administrative Review of Silicon Metal From Brazil ("Final Results"), 67 Fed.Reg. 6,488 (Feb. 12, 2002). Elkem Metals Company and Globe Metallurgical Inc. (collectively, "Plaintiffs") filed a complaint on April 15, 2002, challenging Commerce's Final Results. See Compl. On October 24, 2002, Plaintiffs filed a motion for judgment upon the agency record and requested that the Court remand the Final Results to Commerce with instructions to include in its constructed value ("CV") calculation the value added tax ("VAT"), which was paid by Rima Industrial S/A ("Rima") upon certain production inputs.1 See Pls.' Br. Supp. Mot. J. Upon Agency R. at 11. Commerce subsequently made a motion to dismiss for lack of jurisdiction as moot because Commerce's test calculation did not change the final dumping margin. See Def.'s Reply Pls.' Opp'n Def.'s Mot. Dismiss Lack Juris. Moot at 9. On February 14, 2003, Rima moved to strike from the Court record portions of Plaintiffs' opposition to Commerce's motion to dismiss. See Def.-Intervenor's Mot. Strike R. Portions Pls.' Opp'n Def.'s Mot. Dismiss. The Court denied Rima's motion and ordered Rima and Commerce to respond to Plaintiffs' motion. See Elkem Metals Co. v. United States, 27 CIT ___, 297 F.Supp.2d 1347 (2003).
On January 29, 2004, Commerce filed a motion for voluntary remand for it to include the VAT Rima incurred upon inputs used for silicon metal production in its calculation of CV. See Def.'s Mot. Remand. Rima consented to the remand but noted that the calculation of CV also requires an accounting of the VAT credits included in Rima's costs thereby ensuring that double counting does not occur. See Def.-Intervenor Rima Resp. Def.'s Mot. Remand at 2-3. On February 25, 2004, the Court remanded this matter to Commerce. On June 8, 2004, Commerce submitted its Final Results of Redetermination Pursuant to Court Remand ("Remand Redetermination"). On July 22, 2004, Plaintiffs filed comments with the Court regarding the Remand Redetermination and Commerce subsequently submitted its response to Plaintiffs' comments on September 16, 2004. Rima filed its response to Plaintiffs' comments on September 17, 2004. An oral argument was held before this Court on November 12, 2004.
Plaintiffs contend that 19 U.S.C. § 1677b(e) (2000) and case law require Commerce to include the VAT Rima paid on inputs in calculating CV. See Pls.' Comments Commerce Final Remand Results ("Plaintiffs' Comments") at 6-9. Plaintiffs argue that Commerce improperly excluded the VAT Rima paid on inputs. See id. Commerce's decision was based on a recent clarification made in the Final Results of Antidumping Duty Administrative Review of Silicomanganese From Brazil ("Final Results of Silicomanganese"), 69 Fed.Reg. 13,813 (Mar. 24, 2004).2 See id. at 6. Plaintiffs contend that Commerce's rationale for excluding the VAT from Rima's CV calculation "is no different than its rationale for excluding the VAT in its original determination in this case." Id. at 7-8. Furthermore, Plaintiffs assert that Commerce "cited no record evidence to support its finding that Rima fully recovered the VAT it paid on inputs during the [period of review] and no such evidence exists." Id. at 7.
Plaintiffs argue that Commerce's interpretation is contrary to the plain language of the statute and to what the Court of Appeal for the Federal Circuit ("CAFC") actually decided. See id. at 9. The plain language of the statute allows for the exclusion of taxes paid on inputs from CV only when the VAT is remitted or refunded upon exportation. See id. at 9 (emphasis omitted). Plaintiffs note that the CAFC held that "unless [VAT] are remitted or refunded `upon exportation' they are properly included in the constructed value of the exported merchandise." Id. (quoting Camargo, 200 F.3d at 774). The record indicates that the VAT paid by Rima on inputs was not remitted or refunded upon exportation. See id. Accordingly, Plaintiffs argue that based on the plain language of the statute and the CAFC case law the VAT incurred by Rima on inputs must be included in CV.
Commerce responds that the language of 19 U.S.C. § 1677b(e) requires that "internal taxes remitted or refunded upon exportation of the associated merchandise are to be disregarded in the calculation of constructed value." Def.'s Resp. Pls.' Comments Upon Commerce's Final Remand Determination ("Commerce's Resp.") at 4. Commerce asserts that the statute "provides no direction specifically for the treatment of internal taxes that are not remitted or refunded upon exportation of the associated merchandise." Id. Consequently, Commerce may recognize "that the Brazilian tax system provides mechanisms for the recovery of taxes paid, and Commerce may account for that recovery to determine the correct value of taxes actually incurred for inclusion in calculating constructed value." Id. Commerce argues that including the full amount of VAT Rima paid on inputs purchased would not accurately represent the cost of those materials if Rima recovered some or all of the VAT paid. See id. Based on this determination, Commerce's calculation of CV excluded the VAT paid by Rima.
Commerce further asserts that Plaintiffs' reliance upon the holdings of the CAFC, in Aimcor, 141 F.3d 1098 and Camargo, 200 F.3d 771, are misplaced. See Commerce's Resp. at 5. Commerce notes that the CAFC "found that the Brazilian VAT at issue was not remitted or refunded upon exportation of the associated merchandise and, therefore, was not required to be excluded from CV." Id. Commerce maintains that it may acknowledge that VAT paid on inputs may be recovered prior to exportation. See id. Commerce notes that the CAFC stated that "allowing a respondent to demonstrate that taxes paid upon inputs had been recovered `does not foreclose a future interpretation of the statute that requires taxes to be remitted or refunded upon exportation to be excluded from the cost of materials.'" Id. at 6 (quoting Aimcor, 141 F.3d at 1109, n. 19). Commerce argues that Camargo, 200 F.3d at 771, "stands for only the proposition that because the Brazilian VAT system does not remit or refund taxes upon exportation of the associated merchandise, the VAT paid cannot automatically, as a matter of law, be excluded from CV." Commerce's Resp. at 8.
Commerce maintains that it reviewed and analyzed comments received upon publication of its draft remand results. See id. at 12. For the Final Results, Commerce found that the amount of VAT Rima paid upon inputs exceeded the amount of VAT it collected from domestic customers. See id. Commerce found that "Rima had maintained a net VAT credit balance." Id. Thus, Commerce treated Rima's application of VAT credits towards input purchases as a recovery of VAT taxes paid. See id. at 13. Rima did not incur any net VAT costs because the VAT Rima paid exceeded the amount of VAT Rima collected, resulting in a VAT credit balance. See id. at 12-13. Under the Brazilian law in effect during the period of review, VAT credit balances could be used to purchase additional inputs. See id. at 14-15. Commerce found that "while Rima initially paid VAT amounts upon inputs, it fully recovered these amounts prior to exportation through the use of VAT credit as cash such that Rima did not actually incur any VAT during the [period of review]." Id. at 13. Accordingly, Commerce excluded VAT in determining the cost of materials component of CV.
Rima generally agrees with Commerce that the Court should sustain the Remand Redetermination. See Rima's Resp. at 1-8. Taxes are remitted to the Brazilian government only when the amount of taxes collected by Rima from domestic customers is greater than the amount of taxes paid by Rima on...
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Elkem Metals Co. v. U.S., 06-1043.
...Rima and the United States cross-appeal, seeking reversal of the prior decision and remand order, Elkem Metals Co. v. United States, 350 F.Supp.2d 1270 (Ct. Int'l Trade 2004) ("Elkem I"), in which the Court of International Trade remanded the case to Commerce with instructions to include in......