Hoogovens Staal Bv v. U.S.

• Decision Date: 21 January 2000
• Docket Number: Slip. Op. 00-8.,No. 98-04-00926.,98-04-00926.
• Citation: 86 F.Supp.2d 1317
• Parties: HOOGOVENS STAAL BV, et al., Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

86 F.Supp.2d 1317

HOOGOVENS STAAL BV, et al., Plaintiffs, v. UNITED STATES, Defendant.

Slip. Op. 00-8.

No. 98-04-00926.

United States Court of International Trade.

January 21, 2000.

Powell, Goldstein, Frazer & Murphy, LLP, Washington, DC, (Peter O. Suchman, David J. Sullivan, and Niall P. Meagher), for plaintiffs Hoogovens Staal BV and Hoogovens Steel USA, Inc.

Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC, (Robert Lighthizer and John J. Mangan,) for plaintiffs U.S. Steel Group A Unit of USX Corporation, Bethlehem Steel Corporation, Inland Steel Industries, Inc., LTV Steel Company, Inc. and National Steel Corporation.

David W. Ogden, Acting Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Katherine A. Barski, Attorney); David R. Mason, Jr., Attorney Advisor, Office of Chief Counsel, United States Department of Commerce, for defendant, of counsel.

OPINION AND ORDER

WATSON, Senior Judge.

INTRODUCTION

Plaintiffs¹ move for judgment upon the agency record pursuant to Rule 56.2 of the rules of the United States Court of International Trade challenging certain determinations made in the final results of the third annual administrative review by the International Trade Administration, United States Department of Commerce ("Commerce") of the antidumping duty order covering certain cold-rolled carbon steel flat products from the Netherlands.² Certain Cold-Rolled Carbon Steel Flat Products From the Netherlands: Final Results of Antidumping Duty Administrative Review, 63 Fed.Reg. 13,204 (Dep't. of Commerce, March 18, 1998) ("Final Results"), for the period of August 1, 1995 through July 31, 1996 (the "POR").³ Commerce initiated the third administrative review on September 17, 1996. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 61 Fed.Reg. 48,882 (Dep't of Commerce, Sept. 17, 1996).⁴ Commerce published the preliminary results of the third administrative review on September 9, 1997, Certain Cold-Rolled Carbon Steel Flat Products from the Netherlands: Preliminary Results of Antidumping Duty Administrative Review, 62 Fed.Reg. 47,418 (Dep't of Commerce, September 9, 1997). The administrative review was conducted under the provisions of section 751(a)(1) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1675(a)(1), and the court's jurisdiction is predicated on 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c).

PARTIES' CONTENTIONS

HOOGOVENS contend: (1) since it did not claim any level of trade adjustment, Commerce acted contrary to law in placing a burden of proof on Hoogovens to demonstrate that its sales were not made at two levels of trade in the home market and export market; (2) Hoogovens' information submitted in response to Commerce's questionnaires was complete, detailed, and responsive, and all evidence of record shows sales were made at one level of trade; (3) since Hoogovens fully responded and provided detailed information to Commerce's questionnaires and otherwise fully cooperated, Commerce inappropriately used facts available and adverse inferences pursuant to 19 U.S.C. § 1677e(a) and (b) in determining that sales were made at two levels of trade; (4) Commerce failed to give Hoogovens prompt notice of any inadequacy or deficiency in the responses and give Hoogovens an opportunity to remedy deficiencies, in violation of § 1677m(d); (5) Commerce's determination that there was no reimbursement of antidumping duties and that warranty and technical service expenses in the home market were properly treated as direct are supported by substantial evidence on the record.

Domestic steel producers claim: (1) Commerce's determination there was no reimbursement of antidumping duty assessments and failure to apply its reimbursement regulation, 19 C.F.R. § 353.26(a), is unsupported by substantial evidence on the record and contrary to law since the evidence of record shows financial intermingling directly linked to reimbursement; (2) Commerce treatment of Hoogovens' unsegregated direct and indirect warranty and technical service expenses in the home market as all direct is contrary to law; (3) Hoogoven's information, including that submitted in the second administrative review, establishes two levels of trade, and Commerce's level of trade determination is supported by substantial evidence on the record and is in accordance with law; (4) Commerce properly resorted to facts otherwise available in compliance with 19 U.S.C. § § 1677e(a) and 1677m(d).

Defendant contends: (1) Hoogovens' failed to sustain its burden of proof that its home market and U.S. sales were made at the same level of trade; (2) Commerce's determination that sales were made at two levels of trade is supported by substantial evidence on the record; (3) Commerce's determination that Hoogovens' sales were made at two levels of trade is based, in whole or in part, on facts otherwise available pursuant to § 1677e(a), but not on adverse inference pursuant to § 1677e(b); (4) Commerce's determinations that the U.S. importer's restructuring did not involve financial intermingling linked to reimbursement of antidumping duties and that the reimbursement regulation should not be applied to Hoogovens is supported by substantial evidence on the record and is in accordance with law; (5) Commerce may have erred in its treatment of warranty and technical service expenses in the home market as all direct, and therefore, the case should be remanded for reconsideration of such expenses.

REIMBURSEMENT OF ANTIDUMPING DUTIES

In its Final Results Commerce determined that Hoogovens had overcome a rebuttable presumption that it was continuing to reimburse the affiliated U.S. importer for assessments of antidumping duties.⁵ Domestic steel producers, however, insist that since the evidence of record establishes the financial restructuring of the importer constituted nothing more than a post hoc attempt by Hoogovens to avoid the application of the reimbursement regulation and involved financial intermingling linked to reimbursement, Commerce's reimbursement determination is unsupported by substantial evidence on the record and otherwise contrary to law.

For the following reasons, the court sustains Commerce's reimbursement determination.

Commerce's reimbursement regulation, 19 C.F.R. § 353.26(a), provides, so far as pertinent, that Commerce will deduct from United States price the amount of any antidumping duty that the producer or reseller (1) paid directly on behalf of the importer, or (2) reimbursed to the importer. The application of the regulation effectively increases the margin of dumping, and hence the amount of antidumping duties assessed, by the amount of any reimbursement of antidumping duties. See Color Television Receivers from the Republic of Korea: Final Results of Antidumping Duty Administrative Review, 61 Fed.Reg. 4408, 4410 (Dep't of Commerce, 1996) ("In effect, antidumping duties raise prices of the subject merchandise to importers, thereby providing a level playing field upon which injured United States industries can compete. The remedial effect of the law is defeated, however, where exporters themselves pay antidumping duties, or reimburse importers for such duties"). See also Torrington Co. v. United States, 127 F.3d 1077, 1080-81 (1997).

The objective of the reimbursement regulation is to ensure that the remedial purpose of the antidumping law is not compromised by the payment or reimbursement of antidumping duties by the foreign producer and exporter that would in effect relieve the importer of the financial consequences of dumping. In Hoogovens Staal BV v. United States, 4 F.Supp.2d 1213, 1217 (CIT 1998), the court addressed the purpose of the reimbursement regulation:

If the exporter assumes the cost of antidumping duties, an importer could continue to import at the lower, dumped price. U.S. producers would remain at a competitive disadvantage without the benefit of a viable remedy for the injury caused by the dumped imports. The regulation preserves the statutory remedy by accounting for the amount of duties reimbursed or paid by the exporter so that the final assessed duty will remedy the injury. Presumably, an exporter will be reluctant to continue paying the cost of antidumping duties because the margin will increase accordingly each time Commerce reviews it. Thus, the effect of the [antidumping] order on import prices will be preserved.

Domestic steel producer plaintiffs contend that in accordance with its established practice to apply the reimbursement regulation to affiliated parties where the record shows "financial intermingling linked to reimbursement," Commerce should have applied the regulation to Hoogovens since the record of this review establishes that the capital restructuring of the U.S. affiliate involved such financial intermingling. Defendant and Hoogovens, however, argue that the facts of record demonstrate that in the restructuring there was no financial intermingling linked to reimbursement of antidumping duties within the POR.

The court finds that Commerce's reimbursement determination is supported by substantial evidence on the record and is not contrary to law.

In its first administrative review, covering the period of August 18, 1993 through July 31, 1994, Commerce determined that pursuant to an agreement between the parties, Hoogovens reimbursed its affiliated importer for antidumping duties, 61 Fed.Reg. 48,465 (Sept. 13, 1996), and accordingly, Commerce deducted antidumping duties from United States price pursuant to the regulation, 19 C.F.R. § 353.26; 61 Fed.Reg. at 48,470. In Hoogovens Staal BV v. United States, supra, the final results of the first administrative review were affirmed.

However, in the second administrative review, Commerce found Hoogovens was no longer reimbursing its affiliated importer for payment of antidumping duties, and therefore, Commerce did not find...