Slip Op. 18-44 

UNITED STATES COURT OF INTERNATIONAL TRADE

UTTAM GALVA STEELS LIMITED,

Plaintiff,

v.

UNITED STATES,

Defendant,

and 

ARCELORMITTAL USA LLC, AK 

STEEL CORPORATION, STEEL 

DYNAMICS, INC., CALIFORNIA STEEL 

INDUSTRIES, INC., UNITED STATES 

STEEL CORPORATION, and NUCOR 

CORPORATION,

Defendant-Intervenors. 

Before: Jennifer Choe-Groves, Judge 

Court No. 16-00162 

OPINION AND ORDER

[Remanding the U.S. Department of Commerce’s final determination following an antidumping 

duty investigation on certain corrosion-resistant steel products from India.] 

Dated: April 18, 2018 

Diana Dimitriuc-Quaia and Claudia D. Hartleben, Arent Fox LLP, of Washington, D.C., argued 

for Plaintiff Uttam Galva Steels Limited. With them on the brief was John M. Gurley. Of 

counsel were Matthew M. Nolan and Nancy A. Noonan.

Agatha Koprowski, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. 

Department of Justice, of Washington, D.C., argued for Defendant United States. With her on 

the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, 

Director, Claudia Burke, Assistant Director, and Elizabeth A. Speck, Senior Trial Counsel. Of 

counsel on the brief was Emma T. Hunter, Attorney, Office of the Chief Counsel for Trade 

Enforcement and Compliance, U.S. Department of Commerce, of Washington D.C.
Court No. 16-00162 Page 2

Paul W. Jameson, Schagrin Associates, of Washington D.C., argued for Defendant-Intervenors

Steel Dynamics, Inc. and California Steel Industries, Inc. With him on the brief were Roger B. 

Schagrin and Jordan C. Kahn. Of counsel were Christopher T. Cloutier, Elizabeth J. Drake, and 

John W. Bohn.

R. Alan Luberda, Melissa M. Brewer, David C. Smith, Jr., Kathleen W. Cannon, and Paul C. 

Rosenthal, Kelley Drye & Warren, LLP, of Washington D.C., for Defendant-Intervenor 

ArcelorMittal USA LLC.

Stephen A. Jones and Daniel L. Schneiderman, King & Spalding, LLP, of Washington D.C., for 

Defendant-Intervenor AK Steel Corporation.

Timothy C. Brightbill, Tessa V. Capeloto, Alan H. Price, Adam M. Teslik, Christopher B. Weld,

Cynthia C. Galvez, Derick G. Holt, Laura El-Sabaawi, Maureen E. Thorson, Stephanie M. Bell,

and Usha Neelakantan, Wiley Rein, LLP, of Washington D.C., for Defendant-Intervenor Nucor 

Corporation.

Thomas M. Beline and Sarah E. Shulman, Cassidy Levy Kent (USA) LLP, of Washington, D.C., 

for Defendant-Intervenor United States Steel Corporation. Formerly on the brief were Jeffrey D. 

Gerrish and Luke A. Meisner, Skadden, Arps, Slate, Meagher & Flom LLP, of Washington D.C. 

Choe-Groves, Judge: This case involves corrosion-resistant steel products from India. 

Plaintiff Uttam Galva Steels Limited (“Plaintiff” or “Uttam Galva”) brings this action contesting

the final determination in an antidumping duty investigation, in which the U.S. Department of 

Commerce (“Commerce” or “Department”) found that certain corrosion-resistant steel products

from India are being, or are likely to be, sold in the United States at less-than-fair value. See

Certain Corrosion-Resistant Steel Products From India, 81 Fed. Reg. 35,329 (Dep’t Commerce 

June 2, 2016) (final determination of sales at less-than-fair value), as amended, 81 Fed. Reg. 

48,390 (Dep’t Commerce July 25, 2016) (amended final affirmative determination and issuance 

of antidumping duty orders) (collectively, “Final Results”); see also Issues and Decision 

Memorandum for the Final Determination of the Antidumping Duty Investigation of Certain 

Corrosion-Resistant Steel Products from India, A-533-863, (May 24, 2016), available at
Court No. 16-00162 Page 3

https://enforcement.trade.gov/frn/summary/india/2016-12986-1.pdf (last visited Apr. 11, 2018)

(“Final IDM”). This matter is before the court on Plaintiff’s Rule 56.2 motion for judgment on 

the agency record challenging the Department’s antidumping duty calculations. See Mot. J. 

Agency R., Mar. 16, 2017, ECF No. 47-1. This case presents one issue: whether Commerce 

erred in its determination of the amount of duty drawback adjustment for Uttam Galva when it 

calculated the exempted and rebated import duties over total cost of production. For the reasons 

discussed below, the court concludes that Commerce’s methodology is not in accordance with 

the law.

BACKGROUND

Commerce received petitions requesting the imposition of antidumping duties on imports 

of corrosion-resistant steel products from multiple countries, including India, filed on June 3,

2015 on behalf of a group of domestic producers: United States Steel Corporation, Nucor 

Corporation, ArcelorMittal USA, AK Steel Corporation, Steel Dynamics, Inc., and California 

Steel Industries, Inc. See Certain Corrosion-Resistant Steel Products From Italy, India, the 

People’s Republic of China, the Republic of Korea, and Taiwan: Initiation of Less-Than-FairValue Investigations, 80 Fed. Reg. 37,228 (Dep’t Commerce June 30, 2015) (initiation of lessthan-fair value investigation). The Department initiated an investigation for the period of April 

1, 2014 through March 31, 2015. Id. at 37,229. Commerce found that it would be impractical to 

examine all exporters and producers, and therefore opted to examine two companies accounting 

for the largest volume of U.S. imports of the subject merchandise during the investigation period. 

See Antidumping Duty Investigation of Certain Corrosion-Resistant Steel Products from India: 
Court No. 16-00162 Page 4

Respondent Selection, PD 63, bar code 3292985-01 (July 22, 2015). Commerce selected two 

companies, JSW Steel Limited and Uttam Galva, for examination. See id.

Commerce published its preliminary results on January 4, 2016. See Certain CorrosionResistant Steel Products From India, 81 Fed. Reg. 63 (Dep’t Commerce Jan. 4, 2016) 

(affirmative preliminary determination of sales at less-than-fair value and postponement of final 

determination) (“Preliminary Results”); see also Decision Memorandum for the Preliminary 

Determination in the Less-Than-Fair-Value Investigation of Certain Corrosion-Resistant Steel 

Products from India at 1, A-533-863, (Dec. 21, 2015), available at

https://enforcement.trade.gov/frn/summary/india/2015-32758-1.pdf (last visited Apr. 11, 2018)

(“Prelim. IDM”). Pursuant to the Department’s differential pricing analysis, Commerce used the 

average-to-average methodology to calculate dumping margins for both mandatory respondents.

See Prelim. IDM at 9–11. It assigned a preliminary weighted-average dumping margin of 6.64% 

for JSW and a weighted-average dumping margin of 6.92% for Uttam Galva. Preliminary 

Results, 81 Fed. Reg. at 65.

The Department granted a preliminary duty drawback adjustment to Uttam Galva based 

on the company’s participation in three duty programs: the Duty Drawback Scheme, Advance 

Authorization Program, and Duty Free Import Authorization Program. See Prelim. IDM at 16.

The Duty Drawback Scheme is a rebate program in which Uttam Galva “pays duties at the time 

of purchase based on a company-specific rate,” and the duties are later refunded. Verification of 

the Cost Response of Uttam Galva Steels Limited in the Antidumping Duty Investigation of 

Certain Corrosion-Resistant Steel Flat Products from India 17, PD 379, bar code 3452604-01

(Mar. 23, 2016). The Advance Authorization Program and Duty Free Import Authorization 
Court No. 16-00162 Page 5

Program are exemption schemes in which Uttam Galva obtains a license and “is allowed to 

import specified quantities of [inputs] duty free as per Standard Input Output Norm (‘SION’) of 

the finished good.” Id. at 16.

Following the preliminary determination, Uttam Galva submitted revised statistics and a

case brief in response. Final Results, 81 Fed. Reg. at 35,329. Commerce held a hearing on May 

4, 2016. Id.

Commerce issued its final determination on June 2, 2016. See id. Commerce calculated 

a final weighted-average dumping margin of 4.44% for JSW, 3.05% for Uttam Galva, and 3.86% 

for all others. See id. at 35,330. Following an affirmative final material injury determination 

from the International Trade Commission, Commerce published the antidumping duty order on 

July 25, 2016. See id. at 35,329.

Uttam Galva commenced this action contesting Commerce’s Final Determination on 

August 23, 2016, ECF No. 1, and filed its complaint on September 22, 2016, ECF No. 9. 

Plaintiff filed a Rule 56.2 motion for judgment on the agency record and supporting 

memorandum. See Mot. J. Agency R., Mar. 16, 2017, ECF No. 47-1; Pl.’s Mem. Supp. Mot. J. 

Agency R., Mar. 16. 2017, ECF No. 47 (“Pl.’s Mem.”). Defendant and Defendant-Intervenors 

submitted responses to Plaintiff’s motion. See Def.’s Resp. Opp’n Pl.’s Mot. J. Agency R., June 

29, 2017, ECF No. 51 (“Def.’s Resp.”); Def.-Intervenors’ Resp. Opp’n Pl.’s Mot. J. Agency R., 

July 13, 2017, ECF No. 53 (“Def.-Intervenors’ Resp.”). Plaintiff filed a timely reply. See Reply 

Br. Pl. Uttam Galva Steels Limited, Aug. 11, 2017, ECF No. 56 (“Pl.’s Reply”). This court held 

oral argument on January 18, 2018. See Oral Argument, Jan. 18, 2018, ECF No. 70.
Court No. 16-00162 Page 6

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction over this matter pursuant to 19 U.S.C. § 1516a(a)(2)(B)(i) and 

28 U.S.C. § 1581(c), which grant the court authority to review actions contesting the final 

determination in an antidumping duty investigation.1 The 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.” 19 U.S.C. § 1516a(b)(1)(B)(i). “Substantial 

evidence . . . . means such relevant evidence as a reasonable mind might accept as adequate to 

support a conclusion.” A.L. Patterson, Inc. v. United States, 585 Fed. Appx. 778, 781–82 (Fed. 

Cir. 2014) (quoting Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 229 (1938)).

DISCUSSION

I. Legal Framework for Determining a Duty Drawback Adjustment 

Under the Tariff Act of 1930, as amended, Commerce conducts antidumping duty 

investigations and determines whether goods are being sold at less-than-fair value. See 19

U.S.C. § 1973. If the Department finds that subject merchandise is being sold at less-than-fair

value, and if the U.S. International Trade Commission finds that these less-than-fair value 

imports materially injure a domestic industry, the Department issues an antidumping duty order 

imposing antidumping duties equivalent to “the amount by which the normal value exceeds the 

export price (or the constructed export price) for the merchandise.” Id. Generally, export price 

is defined as the price at which the subject merchandise is first sold in the United States, whereas 

the normal value represents the price at which the subject merchandise is sold in the exporting

1 All citations to the U.S. Code are to the 2012 edition. All further citations to the Tariff Act of 

1930, as amended, are to the relevant provisions of Title 19 of the U.S. Code.
Court No. 16-00162 Page 7

country. See id. §§ 1677a(a), 1677b(b)(i). Constructed export price (“CEP”) is “the price at 

which the subject merchandise is first sold . . . in the United States . . . to a purchaser not 

affiliated with the producer or exporter.” Id. § 1677a(b). Commerce calculated both an export 

price and constructed export price in its investigation because Uttam Galva exports to both 

affiliated and non-affiliated companies. 2 See Prelim. IDM at 13. The statute provides further 

guidance for determining export price as follows:

(c) Adjustments for export price and constructed export price

The price used to establish export price and constructed export price shall be--

(1) increased by--

(B) the amount of any import duties imposed by the country of exportation 

which have been rebated, or which have not been collected, by reason of 

the exportation of the subject merchandise to the United States.

19 U.S.C. § 1677a(c)(1)(B). This calculation is known as a duty drawback adjustment.

The purpose of a duty drawback adjustment is to ensure a fair comparison between 

normal value (“NV”) and export price (“EP”). See Saha Thai Steel Pipe (Public) Co. Ltd. v. 

United States, 635 F.3d 1335, 1338 (Fed. Cir. 2011); Torrington Co. v. United States, 68 F.3d 

1347, 1352–53 (Fed. Cir. 1995). Under a duty drawback program, producers may receive an 

exemption or rebate for imported inputs used in exported merchandise. See Saha Thai, 635 F.3d 

at 1338. As a result, producers are still required to pay import duties for domestically-sold 

goods, which leads to an increase in normal value. See id. A duty drawback adjustment 

“corrects this imbalance, which could otherwise lead to an inaccurately high dumping margin, by

2 For readability purposes, all discussion of export price in this opinion will also encompass 

constructed export price.
Court No. 16-00162 Page 8

increasing EP to the level it likely would be absent the duty drawback.” Id.; see also S. Rep. No. 

67-16, at 12 (1921). 

Commerce applies a two-pronged test to determine whether a producer qualifies for a

duty drawback adjustment. See Saha Thai, 635 F.3d at 1340. The producer must prove “(1) that 

the rebate and import duties are dependent upon one another, or in the context of an exemption 

from import duties, that the exemption is linked to the exportation of the subject merchandise, 

and (2) that there are sufficient imports of the raw material to account for the duty drawback on 

the exports of the subject merchandise.” Id.

Commerce awarded Uttam Galva a duty drawback adjustment due to the company’s 

participation in three programs: the Duty Drawback Scheme, the Advance Authorization 

Program, and the Duty Free Import Authorization Program. Both Plaintiff and Defendant agree 

that the duty drawback adjustment was properly granted here. See Pl.’s Mem. 14–15; Def.’s 

Resp. 13.

Defendant-Intervenors question whether Uttam Galva met the two-prong test for a duty 

drawback adjustment. See Def-Intervenors’ Resp. 3. Plaintiff asserts that DefendantIntervenors’ challenge is improper because the “cross-claim seeks to enlarge the scope of the 

issues in dispute between Uttam Galva and the Government.” Pl.’s Reply 21–22. The court 

agrees with Plaintiff that Defendant-Intervenors’ challenge is procedurally deficient. “An 

intervenor is admitted to the proceeding as it stands, and in respect of the pending issues, but is 

not permitted to enlarge those issues or compel an alteration of the nature of the proceeding.” 

Vinson v. Washington Gas Light Co., 321 U.S. 489, 498 (1944). Because the issue of whether 

Uttam Galva met the Department’s two-prong test for a duty drawback adjustment did not appear 
Court No. 16-00162 Page 9

in the pleadings or in a separate Rule 56.2 motion for judgment on the agency record, it is not 

properly before the court. Nevertheless, the court recognizes that sufficient evidence exists on 

the record to support Commerce’s application of its two-prong test to Uttam Galva. Plaintiff 

provided the relevant rules and explanations for each program under which it claimed an 

adjustment, and also demonstrated that it imported a sufficient amount of raw materials to merit 

a refund or exemption of duties. See Final IDM at 7; see also Prelim. IDM at 16–17; Exhibits 

3S-6, 3S-7, 3S-8, and 3S-10, Third Supp. Sections B & C Questionnaire Resp. Uttam Galva 

Steels Limited, PD 272–278, bar code 3422242-01 (Dec. 2, 2015) (licenses for Advanced 

Authorization Program, Duty Free Import Authorization Program, and Duty Drawback Scheme,

and rules for the duty drawback programs administered by the Government of India, 

respectively).

II. Commerce’s Methodology of Calculating the Duty Drawback Adjustment

The primary issue in dispute is whether Commerce reasonably calculated the duty 

drawback adjustment for Uttam Galva. The Department made its calculation by reducing the 

duty drawback adjustment to Uttam Galva’s U.S. sales and allocating the duty exemptions and 

rebates claimed over total cost of production. See Def.’s Br. 17. Uttam Galva argues that the 

Department’s calculation is inconsistent with the statute and the agency’s alleged practice of

computing exempted and rebated duties over total exports to the U.S. See Pl.’s Mem. 10–11.

Because the statute permits a drawback on duties that are rebated or exempted “by reason of” the 

exportation of the subject merchandise to the United States, Uttam Galva contends that 

Commerce’s calculation of the duty drawback adjustment is contrary to the statute’s plain 

language in that the chosen methodology ignores the statute’s textual linkage between the 
Court No. 16-00162 Page 10

adjustment and the act of exporting. See id. at 16. For the following reasons, the court finds that 

Commerce’s calculation of the amount of duty drawback adjustment was not in accordance with 

the law.

When determining the amount of a duty drawback adjustment, the Department has 

accepted the figures historically reported by a respondent for rebated or exempted duties in a 

given year, and divided it by the number of subject exports. See Prelim. IDM at 14; see also

Final IDM at 7. Commerce argues in this case that its prior methodology did not account 

properly for situations where a respondent utilizes inputs from both foreign and domestic 

sources. See Prelim. IDM at 14; Final IDM at 8–9. As a result, the calculations using the 

Department’s normal methodology would not produce “the desired import duty neutrality” for 

“an equitable comparison of EP or CEP and NV.” Final IDM at 7. The Department attempted to 

rectify this perceived imbalance by utilizing the following methodology: 

The amount of the duty drawback adjustment should be determined based on the import 

duty absorbed into, or imbedded in, the overall cost of producing the merchandise under 

consideration. That is, we assume for dumping purposes, that imported raw material and 

the domestically sourced raw material are proportionally consumed in producing the 

merchandise, whether sold domestically or exported. . . . Accordingly, in order to 

accurately determine an adjustment for ‘the amount of import duties imposed . . . which 

have been rebated, or which have not been collected, by reason of the exportation of the 

subject merchandise to the United States,” the Department has made an upward 

adjustment to EP and CEP based on the per unit amount of the import duty cost included 

in the COP for each CONNUM.

Id. at 8–9 (footnote omitted). Commerce calculated Uttam Galva’s duty drawback adjustment by 

taking the duty amount either rebated or not collected (i.e., exempted) and allocating it over the 

total cost of production of the subject merchandise for the relevant investigatory period, based on 
Court No. 16-00162 Page 11

the cost of inputs during that time. See Prelim. IDM at 15; Final IDM at 9. The Government 

explains Commerce’s chosen methodology using the following equations:

Exempted Duty Adjustment Rate =

Total Duties Exempted Pursuant to AAP

+ Total Duties Exempted Pursuant to DFIA

Total Cost of Zinc

+ Total Cost of Hot-Rolled Coil

+ Total Cost of Cold-Rolled Coil

Rebated Duty Adjustment Rate =

Paid Import Duties on Zinc

+ Paid Import Duties on Hot-Rolled Coil

+ Paid Import Duties on Cold-Rolled Coil

Total Cost of Zinc

+ Total Cost of Hot-Rolled Coil

+ Total Cost of Cold-Rolled Coil

Exempted Duty Adjustment Amount = 

Exempted Duty Adjustment Rate x (Manufacturing Cost of Zinc + Manufacturing 

Cost of Hot-Rolled Coil + Manufacturing Cost of Cold-Rolled Coil)

Rebated Duty Adjustment Amount =

Exempted Duty Adjustment Rate x (Manufacturing Cost of Zinc + Manufacturing 

Cost of Hot-Rolled Coil + Manufacturing Cost of Cold-Rolled Coil)

Total Duty Drawback Adjustment Amount = 

Exempted Duty Adjustment Amount + Rebated Duty Adjustment Amount

Def.’s Resp. 18–19. Defendant-Intervenor provides the following sample calculations, which 

describe Commerce’s methodology substantively the same, but in an alternative format:

Units Produced 100,000 a

Purchase of imported raw materials with no duty exemption $500,000 b

Purchase of imported raw materials with duty exemption $500,000 c

Purchase of domestic raw materials $1,000,000 d

Total raw materials $2,000,000 e = b + c + d

Import duty % 5.0% f

Duty paid on imported inputs $25,000 g = f * b
Court No. 16-00162 Page 12

Duty exempted on imported inputs $25,000 h = f * c

Cost of production $3,000,000 i

Domestic sales units 50,000 j

Domestic sales $1,600,000 k

Domestic unit price $32.00 L

Export sales units 50,000 m

Export sales $1,550,000 n

Export unit price $31.00 o = n / m

What Commerce did

Duties paid $25,000 g

Duties exempted $25,000 h

Duties paid per finished unit $0.25 p = g / a

Duties exempted per finished unit $0.25 q = h / a

Cost of production per unit $30.00 r = i / a

Unit cost of production plus exempted duty $30.25 s = r + q

Export price per unit $31.00 t = n / m

Duty drawback adjustment $.50 u = p + q

Adjusted export price $31.50 v = t + u

Dumping Margin 1.59% w = (L – v) / v

Def.-Intervenors’ Resp. 24. Uttam Galva claims that Commerce’s methodology improperly 

“reduced the duty drawback adjustment to Uttam Galva’s U.S. sales by allocating duty 

exemptions claimed over total production.” Pl.’s Mem. 15.

Defendant contends that Commerce’s methodology reflects the “matching principle” and 

“duty-neutral framework” espoused by the Court of Appeals for the Federal Circuit in Saha Thai.

See Def.’s Resp. 19–21. The court disagrees with Defendant’s reading of the case. Unlike here, 

the duty drawback regime at issue in Saha Thai was one based solely on exemptions. Because 

the duties in Saha Thai were exempted, they were not recorded in the respondent company’s

books as an expense incurred. Commerce therefore increased the company’s cost of production 
Court No. 16-00162 Page 13

(“COP”) and constructed value (“CV”), which are both part of the Department’s normal value 

calculation, to account for the duties presumably paid on inputs for products sold in the domestic 

market. The Court of Appeals for the Federal Circuit recognized that:

[T]he entire purpose of increasing EP is to account for the fact that the import duty costs 

are reflected in NV (home market sales prices) but not in EP (sales prices in the United 

States). An import duty exemption granted only for exported merchandise has no effect 

on home market sales prices, so the duty exemption should have no effect on NV. Thus, 

because COP and CV are used in the NV calculation, COP and CV should be calculated 

as if there had been no import duty exemption. It would be illogical to increase EP to 

account for import duties that are purportedly reflected in NV, while simultaneously 

calculating NV based on a COP and CV that do not reflect those import duties. Under 

the “matching principle,” EP, COP, and CV should be increased together, or not at all. 

Saha Thai, 635 F.3d at 1342–43. Because Commerce adjusted EP in the Saha Thai case to

account for the duty drawback adjustment received by the respondent company, the Court of 

Appeals for the Federal Circuit concluded that the subsequent adjustment to NV to reflect the 

duties paid on inputs for products sold in the home market was proper. The “matching principle” 

relates, therefore, to an adjustment to normal value with respect to the particular facts, exemption 

program, and recordkeeping practices presented in Saha Thai, and should not be expanded to 

encompass all duty drawback adjustment calculations made by Commerce. Here, the parties do 

not allege deficiencies in Uttam Galva’s recordkeeping or in the normal value calculation to 

warrant application of the matching principle. When viewed in this context, Saha Thai’s 

matching principle does not support Commerce’s methodology in the instant matter before this 

court.

Commerce’s upwards adjustment to EP, as mandated by the statute, itself creates the 

“duty-neutral framework” under which the agency can compare NV and EP. Section 

1677a(c)(1)(B) contemplates an upward adjustment to EP, allowing for an increase in the export 
Court No. 16-00162 Page 14

price or constructed export price by “the amount of any import duties imposed by the country of 

exportation which have been rebated, or which have not been collected, by reason of the 

exportation of the subject merchandise to the United States.” 19 U.S.C. § 1677a(c)(1)(B). The 

purpose of the adjustment is to correct an imbalance and prevent an inaccurately high dumping 

margin by increasing EP to the level it likely would be absent a duty drawback. Commerce’s

allocation of duties rebated and exempted over total cost of production in this case is inconsistent 

with the statute because allocating duty drawback to “total cost of production” encompasses 

home market sales, which could not earn a duty drawback since Uttam Galva did not receive any 

exemptions or rebates on foreign inputs utilized in products sold in the home market.

Commerce’s flawed methodology includes costs associated with manufacturing goods sold in the 

domestic market, lessens the upwards adjustment, and conceptually reintroduces an imbalance in 

the dumping margin calculation. It fails to adequately connect the adjustment to duties forgiven 

“by reason of” the products’ exportation to the United States. Because Commerce’s method of 

calculating Uttam Galva’s duty drawback adjustment is inconsistent with the statute, the court 

rejects Defendant’s argument and concludes that Commerce’s methodology is unreasonable, is 

not in accordance with the law, and contravenes the plain language of section 1677a(c)(1)(B).

Furthermore, the facts in the record do not support the Department’s implementation of a 

new methodology in this case. Commerce cited the possible use of both foreign and 

domestically-sourced inputs as a primary factor in creating its new methodology. See Prelim. 

IDM at 14; Final IDM at 8–9. Commerce’s former methodology risked overstating the amount 

of duty drawback adjustment that a respondent should receive, which could lead to an unusually

high export price and the potential elimination of a dumping margin where there should be one. 
Court No. 16-00162 Page 15

Uttam Galva counters that Commerce’s observation alone “is not indicative of unusual facts.” 

Pl.’s Mem. 15. The court agrees that Commerce’s reasoning is not enough to support its use of 

the new methodology in this case because the agency’s perceived solution does not address the 

facts present in this case. Here, Uttam Galva was able to “identif[y] the raw materials imported 

for which it paid an import duty, . . . as well as worksheets linking the raw materials to 

production of merchandise under consideration.” Prelim. IDM at 16–17. Evidence in the record 

shows that Uttam Galva was able to track what import duties were paid on domestic inputs, and 

thus the problem articulated by Commerce does not exist in this case. Moreover, Commerce has 

not historically required respondents to trace the imported inputs directly from importation into 

the home country through exportation to the United States. See id. at 14. Commerce’s solution

is not reasonably connected, therefore, to the facts present in the instant matter and to a solution

to the perceived overstatement of duty drawback adjustment.

Uttam Galva also contests Commerce’s calculation of the duty drawback adjustment on 

the premise that it contravenes the agency’s past practice, and thus should have been subject to 

notice and comment rulemaking under the Administrative Procedure Act, 5 U.S.C. § 553. The

court disagrees. Courts have recognized that agencies may deviate from past practice, as long as 

they provide a reasonable explanation for the change. See SKF USA Inc. v. United States, 630 

F.3d 1365, 1373 (Fed. Cir. 2011) (acknowledging that “[w]hen an agency changes its practice, it 

is obligated to provide an adequate explanation for the change”); NMB Singapore Ltd. v. United 

States, 557 F.3d 1316, 1319–20 (Fed. Cir. 2009) (stating that, “while [Commerce’s] explanations 

do not have to be perfect, the path of Commerce’s decision must be reasonably discernable to a 

reviewing court.”). The Department’s choice of a new methodology did not require notice and 
Court No. 16-00162 Page 16

comment rulemaking, but did mandate a well-reasoned explanation. Commerce stated that its 

previous methodology of “[a]djusting EP/CEP for the full amount of duties imposed . . . when 

some of the same inputs are domestically sourced, results in a larger adjustment to the EP/CEP 

than reflected in the NV, creating an imbalance.” Prelim. IDM at 15. The Department decided 

to “take these distortions into account” by making “an upward adjustment to EP and CEP . . . by 

properly allocating the amount rebated or not collected to all production for the relevant period 

based on the costs of inputs during the POI. This ensures that the amount added to both sides of 

the dumping calculations is equal, i.e., duty neutral.” Id. Commerce based its new methodology 

on the “only reasonable assumption” that “the imported raw materials and domestically sourced 

raw materials are consumed proportionally between the corresponding domestic sales and export 

sales, as then both the U.S. price and NV will be import duty inclusive.” Final IDM at 9. As 

stated before, Commerce failed to provide a reasonable explanation because its new 

methodology overcompensated for any imbalances and erroneously took into account domestic 

home market sales, which in this case are not subject to duty drawback adjustments. 

Commerce’s explanation does not justify why its new methodology should include domestic 

home market sales that are not otherwise subject to duty drawback.3

3 Uttam Galva further reserves its right to challenge Commerce’s differential pricing analysis if 

on remand Commerce recalculates the company’s margin using a comparison methodology other 

than average-to-average. See Pl.’s Mem. 3. Because Commerce employed the average-toaverage method, Plaintiff’s challenge is premature, and the court will decline to address it at this 

time.
Court No. 16-00162 Page 17

CONCLUSION

The court concludes that Commerce’s calculation of the amount of Uttam Galva’s duty 

drawback adjustment was unreasonable and not in accordance with the law. The court remands 

the Final Results for redetermination. On remand, the Department should recalculate Uttam

Galva’s duty drawback adjustment using a methodology that is consistent with this opinion. 

Accordingly, it is

ORDERED that Uttam Galva’s Rule 56.2 Motion for Judgment on the Agency Record is 

granted in part; and it is further

ORDERED that the Final Results are remanded to the U.S. Department of Commerce 

for further proceedings; and it is further

ORDERED that the U.S. Department of Commerce shall file the remand redetermination 

ninety days from the date of this opinion; and it is further

ORDERED that USCIT Rule 56.2(h) shall govern thereafter.

/s/ Jennifer Choe-Groves

Jennifer Choe-Groves, Judge

Dated: April 18, 2018

New York, New York