Mittal Steel Point Lisas Ltd. v. U.S., 2008-1040.

Citation548 F.3d 1375
Decision Date03 December 2008
Docket NumberNo. 2008-1054.,No. 2008-1040.,2008-1040.,2008-1054.
PartiesMITTAL STEEL POINT LISAS LIMITED (formerly known as Caribbean Ispat Limited), Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and Gerdau Ameristeel Corp. and Keystone Consolidated Industries, Inc., Defendants-Cross Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

With him on the brief were Gregory G. Katsas, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Jonathan Zielinski, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Mary T. Staley, Kelley Drye & Warren LLP, of Washington, DC, argued for defendants-cross appellants. With her on the brief were Paul C. Rosenthal and Daniel P. Lessard.

Before NEWMAN and LOURIE, Circuit Judges, and ALSUP, District Judge.

LOURIE, Circuit Judge.

DECISION

Mittal Steel Point Lisas Limited (formerly known as Caribbean Ispat Limited and now known as Arcelormittal Point Lisas Limited) ("Mittal") appeals from the judgment of the United States Court of International Trade affirming the Department of Commerce's ("Commerce's") classification of Mittal's composite rod as non-prime merchandise. Mittal Steel Point Lisas Ltd. v. United States, 491 F.Supp.2d 1222 (CIT.2007). Gerdau Ameristeel Corp. and Keystone Consolidated Industries, Inc. (collectively "Gerdau") cross-appeal from the court's affirmance of Commerce's remand determination calculating credit expenses from the date of invoice, rather than the date of shipment. Mittal Steel Point Lisas Ltd. v. United States, 502 F.Supp.2d 1345 (CIT 2007). Because the court correctly classified the goods and because Gerdau abandoned the argument for calculating credit expenses from the shipment date by failing to exhaust its administrative remedies on remand, we affirm on both issues.

BACKGROUND

Mittal manufactures and sells steel wire rod in Trinidad & Tobago. Together with its North American affiliate and importer, Mittal also sells steel wire rod for export to the United States. Under 19 U.S.C. § 1673 (2006), Commerce imposes an antidumping duty if it determines that (1) a category of foreign merchandise is being sold in the United States at less than fair market value and (2) the importation causes or threatens material injury to a U.S. market.1 Commerce calculates that duty by comparing the "normal value" to the "constructed export price." See id. Commerce determines the normal value by including foreign sales of "prime" merchandise but excluding foreign sales of "non-prime" merchandise. In determining the constructed export price, Commerce deducts credit expenses over a length of time, known as the credit expense period.

Mittal manufactures two types of steel wire rod that are relevant to this appeal— "prime" rod2 and composite rod. Prime rod and composite rod are composed of steel of the same grade and chemical structure.3 Commerce classifies steel wire rod based on eight characteristics: grade range, carbon content range, surface quality, deoxidization, maximum total residual content, heat treatment, diameter range, and coating. Commerce then assigns an eight-digit control number based on those characteristics. Mittal's composite and prime rod have the same control number and are thus the same in each of the eight characteristics. A coil of each contains approximately the same weight of steel.

However, prime and composite rod are listed separately on Mittal's price lists. The difference is that, while a coil of prime rod consists of a single piece of steel, a coil of composite rod contains multiple separate segments. Because of resulting processing inefficiencies, Mittal also sells composite rod at a lower price than prime rod. Commerce thus found that composite rod was non-prime merchandise and excluded it from Commerce's normal value calculation because composite rod was "not identified as prime on [Mittal's] price list for matching purposes" and because, in Mittal's prime rod, Commerce "found identical or similar matches" to the rod sold in the United States. Carbon and Certain Alloy Steel Wire Rod from Trinidad & Tobago, 70 Fed.Reg. 69,512 & accompanying Issues and Decisions Mem., 9 cmt. 4, available at http://ia.ita.doc.gov/frn/summary/trinidad/ E5-6331-1.pdf (Dep't of Commerce Nov. 16, 2005).

The Court of International Trade affirmed Commerce's non-prime determination because the composite rod was not identical to the prime rod. Mittal Steel, 491 F.Supp.2d at 1229. The court reasoned that Mittal sold the rods at different prices, demonstrating that the rods had commercially significant differences. Id.

Commerce also computed Mittal's credit expense period to determine the duty Mittal owed. Credit expenses are the costs associated with money being owed to the seller after the seller has sold its merchandise but before the customer has paid the seller. Id. at 1230. Mittal follows a unique sales model in the United States. Under Mittal's system, a U.S. customer first places an order with Mittal's North American affiliate. Mittal then ships the rods from Trinidad to the United States. After the rods arrive in the United States, the North American affiliate issues an invoice to the customer and ships the rods to him. At any point prior to the date of invoice, all terms of sale, including the quantity of merchandise to be sold, are changeable.

In previous cases and in its prior administrative review involving Mittal, Commerce had calculated credit expenses beginning on the date of shipment. Thus, in this case, Commerce initially began Mittal's credit expense period on the shipment date—the date Mittal shipped the merchandise from Trinidad to the United States.

However, in the same administrative review, Commerce had also determined a "date of sale." Commerce normally chooses the invoice date as the date of sale because, on the invoice date, the terms of sale have usually been fixed. Commerce uses the shipment date as the date of sale, however, when the shipment date is earlier than the invoice date or when a U.S. affiliate warehouses the merchandise in the United States and sells from inventory. In those situations, the terms of sale have not been fixed until the date that the seller ships the merchandise. In the same administrative review here, Commerce had used the invoice date, rather than the shipment date, as the date of sale for all of Mittal's constructed export price sales.

While the case was on appeal to the Court of International Trade, the court requested briefing on the date for beginning the credit expense calculation. Gerdau supported Commerce's determination, arguing that the date of sale was irrelevant to the credit expense period determination. The government responded by requesting a voluntary remand, with the consent of Mittal and Gerdau, for Commerce to reevaluate the credit expense period based on the date of sale. In other words, Commerce wanted to consider making the beginning of the credit expense period, which had been the shipment date, match the chosen date of sale, which had been the invoice date. On April 24, 2007, the court granted the voluntary remand for Commerce to "determine the date on which credit expenses should begin to run." Mittal Steel, 491 F.Supp.2d at 1233. The court reasoned that, given Mittal's sales model and Commerce's decision that the date of sale was Mittal's invoice date, Commerce could reasonably find that Mittal's terms of sale were not set until the invoice date. Id. at 1232.

On remand, Commerce issued a draft remand determination on May 21, 2007, and requested comment from the parties by May 29, 2007. In the draft remand determination, Commerce recalculated the credit expense period to begin on the invoice date because "the material terms of sale were not set before the invoice date." On June 21, 2007, after receiving no comments from Gerdau, Commerce filed the final remand determination in the Court of International Trade, incorporating the other parties' comments and calculating credit expenses from the invoice date. The court then affirmed Commerce's final remand determination, noting that Gerdau had "filed no comments on the remand results." Mittal Steel, 502 F.Supp.2d at 1347 n. 1.

Mittal timely appealed to this court, and Gerdau has filed a timely cross-appeal. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

DISCUSSION

"We review the Court of International Trade's judgment, affirming or reversing the final results of an administrative review, de novo." Fag Kugelfischer Georg Schafer Ag v. United States, 332 F.3d 1370, 1372 (Fed.Cir.2003). In so doing, "[w]e apply anew the same standard used by the court, and will uphold Commerce's determination unless it is unsupported by substantial evidence on the record, or otherwise not in accordance with law." Yancheng Baolong Biochem. Prods. Co. v. United States, 337 F.3d 1332, 1333 (Fed.Cir.2003) (citation and internal quotation marks omitted). Substantial evidence means "more than a mere scintilla" and "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Suramerica de Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978, 985 (Fed.Cir.1994) (quoting Consol. Edison Co. v. Nat'l Labor Relations Bd., 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). "[T]he substantiality of evidence must take into account whatever in the record fairly detracts from its weight," including "contradictory evidence or evidence from which conflicting inferences could be drawn." Id.

A. Classification of Mittal's Composite Rod as...

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