ICDAS Celik Enerji Tersane Ve Ulasim Sanayi, A.S. v. United States

• Decision Date: 28 January 2020
• Docket Number: Slip Op. 20-10,Consol. Court No. 18-00143
• Citation: 429 F.Supp.3d 1353
• Parties: ICDAS CELIK ENERJI TERSANE VE ULASIM SANAYI, A.S., Plaintiff, Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi A.S., Consolidated Plaintiff, v. The UNITED STATES, Defendant, and Nucor Corporation, Charter Steel and Keystone Consolidated Industries, Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

429 F.Supp.3d 1353

ICDAS CELIK ENERJI TERSANE VE ULASIM SANAYI, A.S., Plaintiff,Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi A.S., Consolidated Plaintiff,

v. The UNITED STATES, Defendant,andNucor Corporation, Charter Steel and Keystone Consolidated Industries, Inc., Defendant-Intervenors.

Slip Op. 20-10

Consol. Court No. 18-00143

United States Court of International Trade.

Dated: January 28, 2020

Leah N. Scarpelli, Arent Fox LLP, of Washington, DC, argued for plaintiff. With her on the brief were Matthew M. Nolan and Diana Dimitriuc Quaia.

David L. Simon, Law Office of David L. Simon, of Washington, DC, for consolidated plaintiff.

Elizabeth A. Speck, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant United States. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, L. Misha Preheim, Assistant Director. Of counsel was Emma Hunter, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC. With her on the brief was Nikki Kalbing.

Maureen E. Thorson, Wiley Rein LLP, of Washington, DC, argued for defendant-intervenor Nucor Corporation. With her on the brief were Stephen J. Claeys and Derick G. Holt.

R. Alan Luberda, Kelley Drye & Warren, LLP, of Washington, DC, for defendant-intervenors Charter Steel and Keystone Consolidated Industries, Inc.

OPINION

Katzmann, Judge:

This case involves a challenge to the Department of Commerce's ("Commerce") calculation of antidumping ("AD") duties on carbon and alloy steel wire rod ("wire rod") imported into the United States from Turkey. Commerce assesses AD duties where merchandise is exported to the United States for sale at a price lower than is or would be charged in the country of origin. Section 732(b) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1673(2).¹ Here, Turkish producers and exporters of wire rod, Plaintiff Icdas Celik Enerji Tersane ve Ulasim, A.S. ("Icdas") and consolidated-plaintiff Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi A.S. ("Habas") (collectively, "Plaintiffs"), bring this action against the United States ("the Government") to contest certain aspects of Commerce's final determination in the sales-at-less-than-fair-value investigation that resulted in the imposition of AD duties on the wire rod Plaintiffs exported to the United States. See Carbon and Alloy Steel Wire Rod from Italy, the Republic of Korea, Spain, the Republic of Turkey, and the United Kingdom, 83 Fed. Reg. 23,417 (Dep't Commerce May 21, 2018), P.R. 1289 ("Amended Final Determination"). Specifically, Plaintiffs argue that Commerce's "duty neutral methodology" of adjusting for duty drawback is unsupported by substantial evidence and not in accordance with law. Habas also challenges Commerce's use of a surrogate short-term borrowing rate in lieu of Habas's reported zero-interest rate to impute credit expenses on home market sales. For the reasons discussed herein, the court remands Commerce's methodology used to calculate the duty drawback adjustment with instructions to recalculate the adjustment and sustains Commerce's methodology for imputing credit expense on home market sales.

JURISDICTION, STANDARD OF REVIEW, AND INTERPRETIVE FRAMEWORK

The court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2)(B)(i). The standard of review in this action is set forth in 19 U.S.C. § 1516a(b)(1)(B)(i) : "[t]he court shall hold unlawful any determination, finding or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law."

The two-part framework established in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), guides the court's review of Commerce's statutory interpretation. See also Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1322, 1329 (Fed. Cir. 2017). Under Chevron's first prong, the court asks "whether Congress has directly spoken to the precise question at issue." 467 U.S. at 842, 104 S.Ct. 2778. See also Apex Frozen Foods, 862 F.3d at 1329. "If yes, ‘that is the end of the matter,’ and we ‘must give effect to the unambiguously expressed intent of Congress.’ " Apex Frozen Foods, 862 F.3d at 1329 (quoting Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778 ). If, however, " ‘the statute is silent or ambiguous with respect to the specific issue,’ " the court proceeds to the second prong of the Chevron analysis. Id. (quoting Chevron, 467 U.S. at 843, 104 S.Ct. 2778 ). "[T]he question for the court" then becomes "whether the agency's answer is based on a permissible construction of the statute." Chevron, 467 U.S. at 843, 104 S.Ct. 2778. "A permissible construction of a statute is one that is reasonable." ABB. Inc. v. United States, 920 F.3d 811, 824 (Fed. Cir. 2019) (citing Dongbu Steel Co. v. United States, 635 F.3d 1363, 1369-70 (Fed. Cir. 2011) ).

BACKGROUND

I. Legal and Regulatory Framework

Pursuant to 19 U.S.C. § 1673, Commerce imposes antidumping duties on foreign goods if they are being or are likely to be sold in the United States at less than fair value and the International Trade Commission ("ITC") determines that the sale of the merchandise at less than fair value materially injures, threatens, or impedes the establishment of an industry in the United States. See also Diamond Sawblades Mfrs. Coal. v. United States, 866 F.3d 1304, 1306 (Fed. Cir. 2017) ; Shandong Rongxin Imp. & Exp. Co. v. United States, 42 CIT ––––, ––––, 331 F. Supp. 3d 1390, 1394 (2018). "Sales at less than fair value are those sales for which the ‘normal value’ (the price a producer charges in its home market) exceeds the ‘export price’ (the price of the product in the United States)." Apex Frozen Foods, 862 F.3d at 1326 (quoting Union Steel v. United States, 713 F.3d 1101, 1103 (Fed. Cir. 2013) ). The amount of the antidumping duty is "the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise." 19 U.S.C. § 1673. See also Shandong Rongxin, 331 F. Supp. 3d at 1394. Here, Icdas and Habas challenge Commerce's duty drawback methodology, and Habas additionally challenges Commerce's methodology for imputing credit expenses on home market sales. In the discussion section below, the court addresses the relevant legal framework for the duty drawback and credit expense calculations, respectively.

II. Factual and Procedural History

On March 28, 2017, Charter Steel, Gerdau Ameristeel US Inc., Keystone Consolidated Industries, Inc. ("Keystone"), and Nucor Corporation (collectively, "petitioners"), all domestic producers of wire rod, filed with Commerce AD petitions concerning imports of wire rod from several countries, including Turkey. See Carbon and Alloy Steel Wire Rod From Belarus, Italy, the Republic of Korea, the Russian Federation, South Africa, Spain, the Republic of Turkey, Ukraine, United Arab Emirates, and United Kingdom: Initiation of Less-Than-Fair-Value Investigations, 82 Fed. Reg. 19,207, 19,207 (Dep't Commerce Apr. 26, 2017), P.R. 8 ("Initiation Notice"). Petitioners alleged that "imports of wire rod from Belarus, Italy, Korea, Russia, South Africa, Spain, Turkey, Ukraine, the UAE, and the United Kingdom are being, or are likely to be, sold in the United States at less than fair value ... and that such imports are materially injuring, or threatening material injury to, an industry in the United States." Id. On April 26, 2017, Commerce announced its initiation of an AD duty investigation into wire rod imported into the United States from these countries for the period beginning January 1, 2016 through December 31, 2016 (the "period of interest," or "POI"). Id. at 19,207, 19,211. On May 18, 2017, within forty-five days of the date on which the petition was filed, the ITC preliminarily determined that "there is a reasonable indication that an industry in the United States is materially injured by reason of imports of wire rod from ... Turkey." See Carbon and Certain Alloy Steel Wire Rod From Belarus, Italy, Korea, Russia, South Africa, Spain, Turkey, Ukraine, United Arab Emirates, and the United Kingdom, 82 Fed. Reg. 22,846, 22,846 (Int'l Trade Comm'n May 18, 2017).

On October 31, 2017, Commerce published its preliminary determination, finding that certain wire from Turkey "is being, or is likely to be, sold in the United States at less than fair value ...." Carbon and Alloy Steel Wire Rod From Turkey: Preliminary Affirmative Determination of Sales at Less Than Fair Value, and Preliminary Negative Determination of Critical Circumstances, 82 Fed. Reg. 50,377, 50,377 (Dep't Commerce Oct. 31, 2017), P.R. 989. Commerce determined AD duty rates for mandatory respondents Icdas and Habas of 8.01 percent and 2.80 percent respectively, as well as an all-others rate of 5.41 percent. Id. at 50,378. As part of this preliminary determination, Commerce concluded that Icdas and Habas were eligible for a duty drawback adjustment to export price. See Memorandum from J. Maeder to G. Taverman, re: Decision Memorandum for the Preliminary Determination and Negative Determination of Critical Circumstances, 10-11 (Dep't Commerce Oct. 24, 2017), P.R. 951 ("Preliminary Determination Memo"). Pursuant to 19 U.S.C. § 1677a(c)(1)(B), Commerce determined that the Inward Processing Regime, through which Turkey rebated duties paid on goods imported into Turkey upon exportation of these goods, met the requirements for a duty drawback adjustment because it "1) projected quantities of imports; and 2) projected quantities of exports of wire rod based on an approved production yield/loss ratios ...." Id. at 10. Commerce explained that "[s]ince [Icdas and Habas] have satisfied the criteria described above, we have granted a duty drawback adjustment to both companies consistent with our practice." Id. In calculating the...