based on its purchases of iron ore and fines in puts into the steel making process through its purchases from a company called national mine development corporation of india limited and the sick you know the part of congress has had a long and interesting history of how it's approached this particular issue in the review that immediately preceded the one before the court today at the department of commerce in determining the benchmark look at the price that s are paid and compared to the price that m d c charged to japanese steel mills and put it on the same delivery basis and found it a subsidy of point zero one percent in the preliminary determination of the case before the court the department of commerce changed the the methodology just slightly and it took the average of the prices to the japanese steel mills and average that with the price to  a supplier that s r is never used in hammersley australia and compare those two aren't f o b port bases so they took the prices that were f o b buys a which is in india which is where the japanese steel mills purchase their goods and the f o b price that is charged by the australian suppliers and the port in australia everett's those two mounts and compare that to the price that s are paid with an adjustment for freight from the mile which is where s are purchase of the goods to the port in visor you know arguing though that you relied on that two thousand and four methodology there is an issue that it is that they have a they have the approach to this has evolved and the department of commerce has changed its position on this and it has altered its own opinion so i do think there is a reliance issue go through the review the facts were very similar if not identical between the two reviews but we do believe that more importantly but you you know that alliance element that was pointed out of the opposition brief is something that a they said you never argued that in your reply you don't argue alliance so what's what would the reliance be it's not so much a reliance issue we believe that what they did in two thousand and four what's correct and we believe that statutorily that was the correct interpretation ok so you're not arguing that they're not permitted to change their methodology you're saying that they just shouldn't have that's correct your honor and it has evolved throughout the whole process is that was in the previous one the preliminary in this case they reached a different a terminations but again they looked at the cases and they said they took an average and compared it on f o b port bases it wasn't until the final determination in this case your honor that they eliminated completely the use of the japanese steel mills they used only the this is for fines all away lumps are or they treated slightly differently they you look to brazil excuse me they look to brazil for the prices for or and then day and a delivery charges to it and the previous two would determinations they had compared the prices which is what on f o b port basis which in this industry is how the prices are determined the regulations say they have to be delivered to prices right absolutely the regulations do say that the statute however says that the partner of commerce should determine adequate remuneration based on the prevailing market conditions in it list transportation is one of those prevailing market conditions and we don't believe that it should be ignored completely case for the proposition that we should ignore the deliver price regulations because it would produce an absurd result yes and yet you knew at the time that that case had been a world yes that graeme out in the best case but but that you actually knew because  sort of international trade had told you that case visible i apologize your honor that probably should not have included in the brief but at the same time you do have a situation where this doesn't lead to observe results it leads to the result where with part of commerce in the us steel industries are argument is that in order for the m d c not to have sell at subsidised prices they have to charge world market prices plus delivery from australia or brazil so that leads to a very interesting result in that if you have a world market price for example a hundred and it costs ninety to deliver it from brazil or australia to india and n b c has to charge one hundred ninety two s r and other domestic producers while it charges one hundred to warrant producers interestingly enough that is dumping so and n b c has put in a box of saying when you either have to subsidize or you have to sell it on fair prices down prices we do believe that that's not what the drafters of the statute tended your honor in that does lead to very absurd results the market does require f o b pricing right the market the market is plenty of regulation inconsistent should the regulation be struck down in this matter really challenge that is in this particular situation here on the regulation should be the regulation is contrary to what the statute says statute says you look at the prevailing market condition wondering i make some sense i'm just wondering why you didn't challenge the regulation we believe that the we did in the sense that we believe that it's inconsistent with the statute so that whether or not we explicitly set these that the regulation should be overturned but we do believe that the statutes very clear that you look at the market to prevailing one hellish methodology but you didn't really challenge the regulation are you accepting the validity of the regulation we're accepting now we except that the regulation says what it so which you will consider transportation we have been very explicit that we believe that it's inconsistent with the implementation in this case was inconsistent with the statute as a threat so your honor beyond that with the well we've been discussing the addition of the freight charges we do believe that the selection of the japanese steel mill prices w correct because this is a price that is based in india it is from the same mind it is same very similar contractual terms as ours the only difference between the what the terms of the japanese steel mills receive and what the s are receives is s r takes delivery of the of the goods at the mine so part of the contract without sars it delivers the goods it takes delivery of the mine in the case of finds it was responsible for putting in a conveyor belt what's referred to as a benefit cation facility in a slurry pipeline where it delivers the goods directly to it fons the lumps are transported by freight to the port so the only difference between the japanese steel mills in the us are ones are the s are animals transportation from the mine down to bisect port consider it in certain circumstances such as a competitive auction they are by no means limited to that so what are your exceptional circumstances you have a situation where you're selling commodity product  price to s r is in its contract specified it's changed by the terms of the japanese have ok and the japanese and the and m d c negotiate a price it becomes part of the world market price  published as a world market price and it goes into term in the world market prices so i do believe that in this situation you have a negotiated situation with a non domestic producer but let me let me go back to that you said that is i read this regulation it says if they were to determine the market price such a price could include prices stemming from actual transactions between private parties yes actual imports or in certain circumstances actual sales from competitively run government auctions that mean shit at least need a government option and sometimes we want to consider those but you're saying that you read that to say  government option is one option but you could consider other government pricing i believe there is if it said only in the situation of a competitive run government option then that would be correct but it doesn't say that the language is left more vague deliberately left more vague than that so there may be other situations right so you read that to say that we can look at our commerce and look at governmental sales in the absence of any kind of competitive b or or public auction it is a negotiated price between foreign producers foreign manufacturers and the company and it's been accepted by the department of commerce previously so it's not that that radical  you present any evidence that it was an arm's length negotiation yes there is information on the record that discusses the the negotiation process and that discusses the the price increase that occurred during this particular period between the two parties furthermore there is a clause in the contract with us our that says if per chance the because s are as prices are set annually but there is a clause that says if they deviate by a certain amount from world market prices there can be an adjustment so there is there are there was a negotiated settlement or negotiated price between the japanese steel mills and n b c all of the parties agree on that and there is evidence on the record to that effect there's evidence on the record about the pricing raise the prices are then publish internationally not have any legal or factual basis most importantly in the case of finds the department of commerce added freight charges from which is on the south eastern portion of  india and for shipment up as it has zero which is where the steel planet which is on the northwest of india however he responded the argument that if if if that was backed out that we backed out of the benchmark and there be a wash based on the way you we looked at it we don't believe it's a wash mathematically it increase the margin how much i am sorry i don't know that but there was no legal basis whatsoever the fines are never delivered to his era they're used in vice they're turned into pellets the pellets which is an intermediate product is shipped as they are beyond that they also in the course of loans they added certain expenses that were already in the freight charges to his zero so they double counted certain expenses we did discuss that in the riemann determination your honor we do believe the evidence of that there is evidence on the record of this and we talk to me a minute about what appear to be some imaginary delivery charges the comparable foreign fine product would be delivered by sick and the further shipment would be the same right so why do you charge them for their shipment costs the commerce department wanted to make an apples to apples comparison and so they looked at both charges delivered to the steel mill in his era because the fines would be delivered if they were purchasing from hammers li using this second tier price of the world market price they priced it for delivery to the steel mill in his era both part both in both calculations the commerce department assumed that they are they're being charged the same freight charge in both for delivery to the m pellets and then they're shipped to the to the steel mill and his era in the calculation was the same in charge the same freight charges in both the fines only arrive in vice like the yes your honor why do we go beyond that we understand we're dealing with steel here so that your heavy product deliberate charges are more expensive than almost anything else that happens here you have to be careful on this yes your honor but the same the same freight charge the same charge per metric ton was added on both sides of the equation both to the hypothetical purchase from hammersley and from the actual shipment of th market including the regulation does something contrary to the market i don't what should be the what should be take precedence the statute of the marshall obviously the statute has to take precedence you know what happens to the regulation when it's  requiring something the market doesn't require your honor it's consistent with the statute there's a gap there the commerce department recently fill that gap to require transportation and you're on it even though they're the quote may be wise to be reasonable if the market does everything f o b for you to charge delivery rates that's the quoted price your honor however s r purchased lumps from a print from a provider in brazil and had to pay the freight charges to transport those from brazil to its steel mill in his era and the commerce department recently included those transportation charges as ourselves it's not reasonable but in fact they did purchase lumps from a brazilian producer and paid to transport those lumps to their steel mill in his era and so in determining whether or not they paid adequate remuneration to the government of india they had to look at the world market price as a second tier price in calculating the price from from  that the government governmental sales can never be arm's length or reflect market prices it's not the position your honor it's just that the commerce department reasonably was suspicious of government price and so they created the three  r methodology and they first look at the actual market you know private transit six private transactions in the country at issue for the loss of what was if you got a governmental sole source and they sell not only to in country  i'm not finished with my question so are you saying that unless they sell in a public option and you could never consider those to being market prices not at all your honor those would be third tier prices the third tier if there are no private transactions within the country or world market prices reasonably believed to be available to the purchasers in that country the commerce department looks at government prices that are consistent with market principles and everything that s r is arguing that these were negotiations set based on negotiations with select japanese producers in an arm's length transaction that establishes that it may be market properly i'm sorry if the price consistent with market principles but it's still a government price and under converses regulation that's a third tier price and you only look at the third tier price when there's not a first year price for a second tier price for the lumps there was a first tier price they actually purchased lumps from brazil and they were important transactions into the country private transactions for the fines they found a second tier price with the tech's report and the fines from hammersley australia and so they didn't need to look at a third tier price had there not been a second tier price for the fines they may have reasonably well determine that there wasn't so if i were there other prices in two thousand and four when you when you were willing to look at these japanese prices in two thousand and four s did not purchase fines according to their questionnaire response they only purchased lumps and the commerce department used the m d c prices along with the private market prices i believe to create it weighted average for the purchase of lumps in this review congress didn't change its methodology because for the purchase of lumps there was a different data on the record in other words the private purchases from brazil and so the commerce department didn't change its methodology with lumps and they never made a determination with regard to fines previous administrative review why not do a weighted average it's like as they did in two thousand and four well as they did in the preliminary because you're on and they realized that these were government prices and they determined that the world market prices should be private prices and they reasonably excluded the government prices and it would make no sense to compare to determine whether they're paying adequate remuneration to look at a government price and compare a government price to another government price reliance on a previous review because they never made a determination with the fines in the previous administrative review and they had they didn't have the private market sales from brazil in the previous administrative review so there were no changes in commerce as myth the change from the prelim however in the prelim the private market prices from brazil as i understand it were added after the preliminary results and so they were not available when they did the preliminary and what these what the questionnaire response says is that in the case of d r c l o which is another term for the lumps having lower f e content iron content the same cannot be used for the manufacture of h b i d r i such low grade or used in blast furnace technology the argument that they're alleging that the cop that the court of international trade found that they had not raised below pertain to the fines they're questionnaire response they're citing simply says the l compatible and i see i'm out of time as consistent with the normal value for the normal sales in that market by contrast under the countervailing duty statute congress is tasked with addressing whether there has been a benefit to the recipient so it's not looking at whether the prices by  finance now the only way that to measure that benefit to the recipient is i would submit to you in comparison to what is charged in the market and congress has done that here first of all with respect to the i congress used as ours only purchase of iron ore from brazil which s are paid the f o to pay the delivery charges to its factory in his era there's been no argument that that is not a market based transaction it shows that there is a demand in india for imported iron ore and congress properly value that with respect to the m d c prices congress was looking at do the in the in the final results was looking at whether these and a b c prices were set in accordance with market principles and it found that they were not based on the fact that m d c is a government entity and other bases were supplying the zire we have on the record the fact that india maintains export restraints on high grade iron ore which is the particular type of artillery that's at issue here we have on the record the fact that an n b c only deals in only makes these iron ore products available to certain overseas purchasers and consumers of iron ore within india so it's not as if something that is provided to all purchasers throughout india trading companies steel companies what have you it's very specifically limited to the indian steel companies and certain select overseas purchasers and so saying congress made a determination that it was that they were attempting to confer a benefit on the japanese purchasers no i think it didn't reach that far your honor but it did look at whether under its regulations which as i implemented this particular three tier system to discover whether prices are set in accordance with market principles just found that those not meet either the first or the second tier and by contrast it had available other information on the know well first of all there's no evidence on the record your honor that those prices or those sales were available to anyone in india and the statute requires that congress will get the prevailing market conditions within the country under investigation or review  and as i think i was mentioning there are also these export restraints and other restrictions on sales and it was very clear from the record that these m d c prizes to the japanese purchasers were only available to five select japanese steel companies what to do also just touch briefly on the question about whether the visit to his you're afraid charges the inclusion of those were somehow the story of and you know here i would point you to the record i j three outcome here and i think congress was reasonably trying to value prices on a delivery basis to the same point but the fact is whether those charges from a zero to visit are included or not it made no difference to the final result on the issue of the different fees that were added these were fees that were all taken from s r s only purchase of iron or watch these were fees that clearly on the record showed that an importer in india would have to pay these various fees including the landing fees as part of  us still in district first when we're talking about the brazilian purchases and it's important to note that will what else or was purchasing from brazil were lumps delivered at the port in brazil that was the term of their contract yes they then took over the responsibility of the ship but what they're claiming is that an m d c has to charge the same as that freight however that gets the question are they providing lumps and or an unfair prices are they somehow providing free and unfair prices s r s paying for the freight from the mine to where it has to get it to produce so i think they're mixing up an issue of subsidisation of an input into the steel making process that's lumps or fines  generally and the issue of whether basically they're doing freight dumping the freight subsidy is a that's not an issue here but if you look at that the brazilian sales in the contract for those sales are on the record compare those prices with the price s are paid c they are very similar if not identical that shows that s r s paying world market prices forwards are important finds irrespective of where the goods are coming from other point that was made that there's no evidence that japanese steel mill prices are available to companies india this is patently false your honor s r s own prices are based on the price of the japanese steel mills that's in the contract once a  year s r s prices get adjusted to conform with the prices that the japanese pay so that they are not receiving a benefit or any kind of unfair competitive advantage based on their foreign competitors these then go in and they're published in the techs report which the united states department of commerce a set is a source of world market prices however they like to be selective about what they consider to be a world market price in the