Kajaria Iron Castings Pvt. Ltd. v. U.S.

• Decision Date: 29 January 1997
• Docket Number: Court No. 95-09-01240.,Slip Op. 97-10.
• Citation: 956 F.Supp. 1023
• Parties: KAJARIA IRON CASTINGS PVT. LTD., Calcutta Ferrous Ltd., Crescent Foundry Co. Pvt. Ltd., Commex Corporation, Dinesh Brothers, Nandikeshwari Pvt. Ltd., Carnation Enterprises Pvt. Ltd., Kejriwal Iron & Steel Works, R.B. Agarwalla & Company, RSI Limited, Serampore Industries Pvt. Ltd., Tirupati International (P) Ltd., and UMA Iron & Steel Co., Plaintiffs, v. UNITED STATES, Defendant, Alhambra Foundry, Inc., Allegheny Foundry Co., Deeter Foundry, Inc., East Jordan Iron Works, Inc., Lebaron Foundry Inc., Municipal Castings, Inc., Neenah Foundry Co., U.S. Foundry & Manufacturing Co., and Vulcan Foundry, Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

956 F.Supp. 1023

KAJARIA IRON CASTINGS PVT. LTD., Calcutta Ferrous Ltd., Crescent Foundry Co. Pvt. Ltd., Commex Corporation, Dinesh Brothers, Nandikeshwari Pvt. Ltd., Carnation Enterprises Pvt. Ltd., Kejriwal Iron & Steel Works, R.B. Agarwalla & Company, RSI Limited, Serampore Industries Pvt. Ltd., Tirupati International (P) Ltd., and UMA Iron & Steel Co., Plaintiffs, v. UNITED STATES, Defendant Alhambra Foundry, Inc., Allegheny Foundry Co., Deeter Foundry, Inc., East Jordan Iron Works, Inc., Lebaron Foundry Inc., Municipal Castings, Inc., Neenah Foundry Co., U.S. Foundry & Manufacturing Co., and Vulcan Foundry, Inc., Defendant-Intervenors.

Slip Op. 97-10.

Court No. 95-09-01240.

United States Court of International Trade.

January 29, 1997.

Cameron & Hornbostel, Washington, D.C. (Dennis James, Jr.) for plaintiffs.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Velta A. Melnbrencis at oral argument; Rhonda K. Schnare on the brief) and Robert E. Nielsen, Senior Counsel, Office of Chief Counsel for Import Administration, Department of Commerce, of counsel, Washington, D.C., for defendant.

Collier, Shannon, Rill & Scott, Washington, D.C. (Paul C. Rosenthal and Robin H. Gilbert), for defendant-intervenors.

MEMORANDUM OPINION

DiCARLO, Senior Judge:

This action arises from the 1991 administrative review of a countervailing duty order, first issued by the Department of Commerce in 1980, concerning certain iron metal castings from India exported to the United States, including manhole covers and frames, clean-out covers and frames, and catch basin grates and frames. Certain Iron Metal Castings from India, 60 Fed.Reg. 44,843 (Dep't Comm.1995) (final admin. review) [hereinafter Final Determination]; see Certain Iron Metal Castings from India, 45 Fed.Reg. 68,650 (Dep't Comm.1980) (original countervailing duty order). Commerce also conducted an administrative review of the 1990 period. Certain Iron Metal Castings from India, 60 Fed.Reg. 44,849 (Dep't Comm.1995) (final admin. review). That review was discussed in Crescent Foundry Co. Pvt. Ltd. v. United States, 20 CIT ___, 951 F.Supp. 252 (1996), which governs many of the issues presented here. The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(i) (1994) and 28 U.S.C. § 1581(c) (1994).

BACKGROUND

At the conclusion of the 1991 administrative review, Commerce amended the countervailing duty rates assigned to the fourteen Indian companies that exported the subject merchandise to the United States in 1991. Final Determination at 44,849. The following issues raised during that review are presently in dispute:

(1) Commerce determined that certain payments under the Indian government's Cash Compensatory Support (CCS) program were countervailable. The CCS program rebates indirect taxes and import duties borne by inputs physically incorporated into an exported product. While such rebates are generally not countervailable, see Crescent Foundry, 951 F.Supp. at 254, Commerce found that some CCS payments made to plaintiff exporters refunded charges for services, not indirect taxes. Certain Iron Metal Castings from India, 60 Fed.Reg. 4,596, 4,598 (Dep't Comm.1995) (prelim.admin.review) [hereinafter Prelim. Determination]. These included fees for wharfage, berthage, pilotage, and towage assessed at the Port of Calcutta. Final Determination at 44,845; Prelim. Determination at 4,598. Based on this re-classification, Commerce determined that plaintiffs received an over-rebate in 1991 in the amount of the refunded service charges, resulting in a countervailable subsidy of 0.41% ad valorem. (Pls.' Mem. of Points & Authorities in Support of Pls.' R. 56.2 Mot. for J. on Agency R.App. at A-42 (CountryWide Rate Calculation, Nonpub. Doc. No. 14);) Prelim. Determination at 4,598.

Plaintiffs do not dispute this finding, but argue that Commerce double-counted the CCS over-rebate when it also countervailed § 80HHC of the Indian tax code. Section 80HHC permits exporters to deduct profits derived from the export of goods and merchandise from their taxable income. Prelim. Determination at 4,597-98. Commerce found that § 80HHC was a countervailable subsidy, calculated as the difference between the tax paid and the tax that would have been paid absent the deduction taken, or 1.47% ad valorem for all but three companies. Id.; cf. (Pls.' Br.App. at A-42 (Country-Wide Rate Calculation, Nonpub. Doc. No. 14) (listed as 1.46%).) Part of the § 80HHC deduction was attributable to CCS payments classified as over-rebates. Final Determination at 44,848. Plaintiffs argue that since Commerce had already countervailed the over-rebates, it should not have treated that part of the § 80HHC deduction as a subsidy.

(2) Payments received under the Indian government's International Price Reimbursement Scheme (IPRS) were also deductible under § 80HHC. The IPRS program reimbursed exporters for the difference in price between higher-priced domestic pig iron and its foreign equivalent. Id. Commerce found that none of the plaintiffs had received IPRS payments attributable to the subject merchandise in 1991. Prelim. Determination at 4,599. Plaintiffs argue that Commerce should not have treated the part of the § 80HHC deduction attributable to IPRS payments as a subsidy subject to this countervailing duty order.

(3) Commerce assigned eleven companies a common countervailing duty rate of 5.53% ad valorem based on the country-wide average benefit received, and assigned "significantly different," company-specific rates to the three remaining investigated companies pursuant to 19 C.F.R. § 355.22(d)(3): Dinesh at 0.00%, Kajaria at 16.14%, and Super Castings at 41.75%. To calculate the countrywide 5.53% figure, Commerce weight-averaged the subsidy rates of all fourteen investigated companies, including the three companies with "significantly different" rates. Prelim. Determination at 4,596; Final Determination at 44,849. Plaintiffs contend that Commerce should not include companies with significantly higher subsidy rates in the country-wide average, and that therefore Kajaria and Super Castings should have been excluded from the calculation.

(4) Commerce determined the rate for Super Castings using "best information available" (BIA). Prelim. Determination at 4,597; see Administrative Review of Orders and Suspension Agreements, 19 C.F.R. § 355.22(d)(3) (1994). Plaintiffs argue that Commerce should not include BIA rates in the country-wide average. They claim that therefore even if Commerce correctly included significantly higher rates in the countrywide rate, it should not have included the Super Castings BIA rate in its calculation.

DISCUSSION

Once Commerce makes a final determination in a countervailing duty investigation, the court must uphold that determination 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) (1994). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938)).

I.

Of the four issues presented above, three are governed by this court's analysis in Crescent Foundry. On the issue of whether Commerce impermissibly doubled-counted the CCS overrebate, the court in Crescent Foundry remanded for a fuller explanation of Commerce's reasoning. Crescent Foundry, 951 F.Supp. at 261. In both Crescent Foundry and the present case, the record made no reference to two prior determinations in which Commerce adopted a position contradictory to its current interpretation by declining to countervail an income tax exemption for a similar over-rebate. See Carbon Steel Wire Rod from Argentina, 47 Fed. Reg. 42,393 (Dep't Comm.1982) (suspension of investigation) [hereinafter Argentine Wire Rod]; Certain Welded Carbon Steel Pipe and Tube Products from Argentina, 53 Fed. Reg. 37,619, 37,626 (Dep't Comm.1988) (final aff. determination). For the reasons discussed in the Crescent Foundry opinion, the court must remand this issue (1) for an explanation of whether Argentine Wire Rod continues to reflect current policy and (2) for a reexamination of whether countervailing the portion of the § 80HHC subsidy attributable to CCS over-rebates double-counts the CCS subsidy.

Crescent Foundry also addressed the second question: whether Commerce impermissibly countervailed the part of the § 80HHC deduction attributable to IPRS payments. Crescent Foundry, 951 F.Supp. at 262. The court held that Commerce's decision to countervail a tax benefit attributable to a subsidy of nonsubject merchandise exceeded its statutory authority and was not in accordance with law. Id. at 262. As in Crescent Foundry, none of the plaintiffs here received IPRS payments attributable to the subject merchandise in 1991. Prelim. Determination at 4,599. Accordingly, the court remands this issue for recalculation of the benefit received through § 80HHC in a manner consistent with Crescent Foundry.

Third, Crescent Foundry upheld Commerce's methodology for calculating the country-wide countervailing duty rate applied to the subject merchandise. Crescent Foundry, 951 F.Supp. at 259. Commerce correctly determined that under Ipsco and Ceramica Regiomontana it was required to include all companies receiving a significantly different benefit, whether higher or lower, in its calculation of the country-wide rate. See Ipsco Inc. v. United States, 899 F.2d 1192 (Fed.Cir.1990); Ceramica Regiomontana, S.A. v. United States, 18 CIT 376, 853 F.Supp. 431 (1994), rev'd on other grounds, 64 F.3d 1579 (Fed.Cir.1995). For the reasons stated in Crescent Foundry, Commerce's methodology is sustained here as well.

II.

Crescent Foundry did not...