## United States Court of Appeals for the Federal Circuit

2008-1102 FLORIDA CITRUS MUTUAL, A. DUDA & SONS (doing business as Cit rus Belle), CITRUS WORLD, INC., and SOUTHERN GARDENS CITRUS PROCESSING CORPORATION (doing business as Southern Gardens), Plaintiffs-Appellants,

v. UNITED STATES, Defendant-Appellee, and FISCHER S/A AGROINDUSTRIA, Defendant-Appellee, and CITRUS PRODUCTS, INC. and SUCOCITRICO CUTRALE LTDA, Defendants-Appellees. Matthew T. McGrath , Barnes, Richardson & Colbur n, of Washington, DC, argued for plaintiffs-appellants. With him on the brief was Stephen W. Brophy

. Michael J. Dierberg , Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With him on the brief were Jeffrey S. Bucholtz , Acting Assistant Attorney General; Jeanne E. Davidson , Director; and Franklin E. White, Jr. , Assistant Director. Of counsel on the brief was Mildred E. Steward , Senior Attorney, Office of Chief Counsel for Import Administration, Unit ed States Department of Commerce, of Washington, DC. Of counsel was Mykhaylo A. Gryzlov

. Robert G. Kalik , Kalik Lewin, of Bethesda, Maryland, for defendant-appellee Fischer S/A Agroindustria. With him on the brief was Brenna S. Lenchak

. Christopher Dunn , Heller Ehrman LLP, of Washington, DC, for defendantsappellees Citrus Products, Inc., and Sucocitrico Cutrale Ltda. With him on the brief was Valerie S. Ellis

. Appealed from: United States Court of International Trade Judge Evan J. Wallach

## United States Court of Appeals for the Federal Circuit

2008-1102

FLORIDA CITRUS MUTUAL, A. DUDA & SONS (doing business as Cit rus Belle), CITRUS WORLD, INC., and SOUTHERN GARDENS CITRUS PROCESSING CORPORATION (doing business as Southern Gardens), Plaintiffs-Appellants,

v. UNITED STATES, Defendant-Appellee, and FISCHER S/A AGROINDUSTRIA, Defendant-Appellee, and CITRUS PRODUCTS, INC. and SUCOCITRICO CUTRALE LTDA, Defendants-Appellees.

Appeal from the United States Court of International Trade in case no. 06-00114, Judge Evan J. Wallach.

__________________________ DECIDED: December 18, 2008

__________________________

Before MICHEL, Chief Judge , and MOORE, Circuit Judge , O’GRADY, District Judge

. *

* Honorable Liam O’Grady, District J udge, United States District Court for the Eastern District of Virg inia, sitting by designation.O’GRADY, District Judge

.

The question presented in this appeal is whether the Departm ent of Commerce (“Commerce”) reasonably interpreted ambiguous la nguage in 19 U.S.C. § 1677a(c)(2)(A). This language allows a r eduction in the U.S. price of imported merchandise for “United States import duties” befor e that domestic pr ice is compared against the foreign price in an antidumping analysis. The court finds Commerce’s interpretation reasonable because it accord s with the statutory language and accurately reflects the overall duty costs to importers. Accordingly, we affirm the decision of the Court of International Trade. I. BACKGROUND A. Proceedings Before The Department of Commerce. Appellants are four U.S. orange juice producers, Florida Citrus Mutual, A. Duda & Sons, Citrus World, Inc., and Southern Ga rdens Citrus Processing Corp., collectively referred to as “FCM.” Appellees are Br azilian orange juice producers: Citrosuco Paulista S.A. d/b/a Fischer S/A-Agroindust ria (“Fischer”), and Citrus Products, Inc. and Sucocitrico Cutrale SA (“Cutrale”). On December 27, 2004, FCM filed an antidumping petition with the Department of Commerce and the U.S. International Tr ade Commission (“ITC”), a lleging that sales of two types of frozen orange juice from Br azil were materially injuring the domestic industry. On February 11, 2005, Commerce launched an investigation. It selected Fischer, Cutrale, and Montecitrus Industria e Comercio Limitada (“Montecitrus”)—the

2008-1102 2three largest Brazilian orange juice im porters—as mandatory respondents in the investigation. On March 7, 2005, Commerc e distributed the stand ard antidumping duty questionnaire to the Brazili an companies. Section C of the questionnaire asked the respondents to report the “unit amount of any customs duty pa id on the subject merchandise.” Fischer and Cutrale reported fi gures for “import duties” that included refunds the companies had re ceived as part of U.S. “d rawback” programs. These drawback programs allow foreign companies to receive refunds of duties paid on merchandise that is exported, or destroyed, within three years of entry into the United States. Over FCM’s objection, Commerce ca lculated the “constructed export price” using net import duties, which were the dutie s paid to Customs minus the drawback refunds as reported by Fisch er and Cutrale. Fischer and Cutrale argued that the drawback refunds should be used to offset U.S. duties paid as that amount more accurately reflected the actual duties pai d by the companies on the imported orange juice. Whether Fischer and Cutrale were ent itled to the proposed offset for drawback refunds was an issue of first impression for Commerce. Commerce performed an antidumping analysis—comparing export price or constructed export price in the United States to the normal val ue in the foreign market. 1 In its Final Determination, Commerce

1 Under the statute the terms “expor t price” and “constructed export price” are defined as follows: (a) Export price. The term “export price” means the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, as adjusted under subsection (c) of this section.

2008-1102 3concluded that the applicable statute, 19 U.S.C. § 1677a(c)(2 )(A), allowed the offset for drawback refunds. It therefor e calculated a constructed ex port price for Fischer and Cutrale by reducing the U.S. price of the or ange juice by the net duties paid. In its Issues and Decision Memorandum, Commerc e explained that calc ulating net import duties would “encompass the net duty exper ience of the respondents.” Commerce further reasoned that the calc ulation of net import duties was consistent with the statutory mandate to reduce U.S. price by all movement expenses incident to importing the goods into the United States. It conc luded that allowing the offset for drawback refunds provided a fair comparison to normal value of the orange ju ice in the Brazilian market. On February 2, 2006, FCM filed a ministeria l error allegation, which asserted that Commerce had erred in calculat ing dumping margins for Cutr ale and Fischer in its Final Determination. On February 21, 2006, Commerce published an Amended Final Determination, in which it corrected vari ous ministerial errors and made minor adjustments to its original calculations, but rejected FCM’s challenge to its price calculation methodology. On March 9, 2006, Commerce published its antidumping order as Antidumping Duty Order: Cert ain Orange Juice from Brazil , 71 Fed. Reg. 12,183 (Dep’t of Commerce Mar. 9, 2006).

(b) Constructed export price. The te rm “constructed export price” means the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or afte r the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not a ffiliated with the producer or exporter, as adjusted under subsections (c) and (d) of this section. 19 U.S.C. § 1677a(a)-(b).

2008-1102 4B. Proceedings Before the C ourt of International Trade. On April 6, 2006, FCM timely filed a civil action in the U.S. Court of International Trade. On May 23, 2006 and Ju ne 6, 2006, respectively, the court granted Fischer and Cutrale’s motions to intervene as interested parties. T he court held oral argument on July 25, 2007, wherein FCM asserted that Commerce’s dete rmination to adjust the U.S. price by the net import duties (allowing the drawback refund offset) was improper. FCM also argued that Commerce employed impr oper methodology for calculating the net import duties. The court rejected FCM’s argument s in their entirety. In Florida Citrus Mutual v. United States, 515 F. Supp. 2d 1324 (Ct. Int’l Tr ade 2007), the court found that Commerce had reasonably interpreted “United St ates import duties” to mean net import duties, and thus sustained Commerce’s determination. It reasoned that Commerce’s construction of the statute reflected “a policy decision which was made within the statutory scheme and is well within the bou nds of the agency’s discr etion in accordance with Chevron .” Id. at 1332. The court rejected FCM’s argument that because the drawback refunds came later in time they c ould not be “incident to bringing the subject merchandise” into the United Stat es, reasoning that the ref unds should be considered part of the movement expenses enumerated by t he statute. Id. at 1334. The court concluded that Commerce’s methodology pr oduced an accurate U.S. price in accord with the statute.

II. DISCUSSION A. Jurisdiction.

2008-1102 5FCM appeals from the decisi on of the U.S. Court of International Trade entered on September 13, 2007. The Court of International Trade exercised subject matter jurisdiction under 28 U.S.C. § 1581(c). Appel lants filed a timely notice of appeal on November 9, 2007. This court has jurisd iction over the appeal under 28 U.S.C. § 1295(a)(5). B. Standard of Review. “We review de novo whether Commerce’s in terpretation of a governing statutory provision is in accordance with law, but we do so within the framework established by Chevron, U.S.A., Inc. v. Natura l Resources Defense Council, Inc. , 467 U.S. 837 (1984).” Agro Dutch Indus. Ltd. v. United States , 508 F.3d 1024, 1029-30 (Fed. Cir. 2007). “Under Chevron , a reviewing court must first ask ‘whether Congress has directly spoken to the precise question at issue.’” FDA v. Brown & Williamson Tobacco Corp. , 529 U.S. 120, 132 (2000) ( quoting Chevron , 467 U.S. at 842). “If Congress has done so, the inquiry is at an end; th e court ‘must give effect to the unambiguously expre ssed intent of Congress.’” Id. at 132 ( quoting Chevron , 467 U.S. at 843). “In the absence of clear direction from the statute,” we must pr oceed to “ask whether there is ambiguous statutory language that might authorize the agen cy to fill a statutory gap,” and “whether Commerce’s interpretation of ambiguous statutory language is ba sed on a permissible interpretation of the statute.” Agro Dutch Indus. , 508 F.3d at 1030 (i nternal quotation marks omitted); see also Chevron , 467 U.S. at 843 (“[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible cons truction of the statut e.”). Ultimately, “this court will uphold Commerce’s determi nations, findings, and conclusions unless

2008-1102 6they are ‘unsupported by substantial evidence on the record, or otherwise not in accordance with the law.’” Wheatland Tube Co. v. United States , 495 F.3d 1355, 1359 (Fed. Cir. 2007) ( quoting 19 U.S.C. § 1516a(b)(1)(B)(i)). C. Analysis. 1. Commerce’s Decision To Account For Drawback Refunds Was Reasonable. The drawback program permits importers to claim reimbursement of 99 percent of U.S. duties paid on im ports when “commercially interchangeable” merchandise is either (1) exported from the United States, or (2) destroy ed within three years of the date of importation. 19 C.F.R. § 191.32(a) (2008); see generally 19 U.S.C. § 1313. The Code of Federal Regulations defines “drawba ck” as “the refund or remission, in whole or in part, of a customs duty, fee or internal revenue tax which was imposed on imported merchandise under F ederal law because of its importation.” 19 C.F.R. § 191.2(i). Thus, drawbacks allow import dut ies, which are levied on goods imported into the United States for sale, to be refunded when substituted goods are exported, destroyed, or used in manufactu ring instead of being sold in the United States. As a practical matter, U.S. Custom s and Border Protection receiv es a deposit of the duties due from the importer, which is later adjus ted if the importer exercises its drawback rights in a timely fashion. Fischer and Cutrale claimed and received drawback refunds under two statutory provisions: 19 U.S.C. §§ 1313(b) and 1313(j)(2). Cutrale claimed refunds under Section 1313(j)(2), which allows a “subs titution drawback.” Under this provision, an importer may receive duty refunds if it then export s from the United St ates “commercially interchangeable” merchandise within three year s. 19 U.S.C. § 1313( j)(2). Fischer

2008-1102 7claimed refunds under Sectio n 1313(b), which allows a “ma nufacturing substitution drawback.” Id. § 1313(b). Under this provision, if the importer uses the substituted merchandise in further manufac turing or production in the Un ited States, the importer becomes eligible for “an am ount of drawback equal to t hat which would have been allowable had the merchandise us ed therein been imported.” Id. The importer may claim the refund after the “ex portation or destruction” of the substituted merchandise. 19 C.F.R. § 191.22(a). Before Commerce, Fischer asserted that adding oils and essences to its orange juice constituted a further manufacturing process in the United States, which qualified it for “manufacturing substituti on drawback” refunds under Section 1313(b). Dumping is the sale of foreign goods in t he United States at less than fair value. See 19 U.S.C. § 1677(34). To determine whether dumping occurred, Commerce compares the “export price” or “constructed export price” with the normal price of the goods in the foreign market. Generally under U.S. antidumping laws, constructed export price is the price at which the goods under investigation are sold, or agreed to be sold, for exportation to the United States to the first unaffiliated purchaser in the United States. See 19 U.S.C. § 1677a(b). Co mmerce adjusts this price in accordance with statutory factors to achieve “a fair ‘apple s-to-apples’ comparison” between U.S. price and foreign market value “at a similar point in the chain of commerce.” Torrington Co. v. United States , 68 F.3d 1347, 1352 (Fed. Cir. 1995). If the adjusted price of the goods is less than the normal value of the goods in the foreign market, and there is a finding of material injury, Commerce will issue an affirmative finding of dumping. Agro Dutch Indus. , 508 F.3d at 1028 ( citing 19 U.S.C. §§ 1673-1673(d)). Commerce will issue an

2008-1102 8antidumping order that imposes additiona l dumping duties equal to “the amount by which the normal value exceeds the export price or cons tructed export price of the subject merchandise.” 19 U.S.C. § 1677(35)(A). Section 1677a(c)(2)(A) requires that U.S. price shall be reduced by: the amount, if any, included in such price, attributable to any additional costs, charges, or expenses, and United States import duties, which are incident to bringing the subject merchandise from t he original place of shipment in the exporting country to the place of delivery in the United States. To achieve this “apples-to-apples” com parison the agency shoul d adjust the U.S. price by subtracting the “United States import duties” paid. Fischer and Cutrale argued—and Commerce agreed—that “Unit ed States import duties” should be calculated by including an o ffset for the drawback refunds each company claimed. Because this offset lowered the amount of import duties paid, and that amount was subtracted from the price, the offset raised the constructed export price. A higher price makes it less likely that Commerce will make a finding of dumping because dumping is present only where the adjusted price is less than the normal value of the goods in the foreign market. See Agro Dutch Indus. , 508 F.3d at 1028. The statute neither defines “import dutie s” nor specifies whet her “import duties” should include the net import duties (taking into acc ount drawback refunds) or gross duties. The statute therefore is ambiguous, and Commerce was entitled to supply its own reasonable interpretation. See Agro Dutch Indus. , 508 F.3d at 1030; see also Wheatland Tube , 495 F.3d at 1359-60 (holdi ng that the term “Uni ted States import duties” in Section 1677a(c)(2)(A) is ambi guous). We now must ask “whether Commerce’s interpretation of ambiguous statutory language is ba sed on a permissible

2008-1102 9interpretation of the statute.” FAG Italia S.p.A. v. United States , 291 F.3d 806, 815 (Fed. Cir. 2002). We find Commerce’s interpretation r easonable because it accords with the statutory language and accurately reflects t he overall duty costs to importers. The statute requires that the pric e be reduced by the “amount attributable to any . . . United States import duties, which ar e incident to bringing the s ubject merchandise . . . to the place of delivery in th e United States.” 19 U.S.C. § 1 677a(c)(2)(A). First, rather than “United States import duties,” which could mean either gross or net import duties, Congress could have used the terms “gross import duties,” or perhaps “duties assessed at the time the subject merc handise is imported.” Either of those phrases would have foreclosed the interpretation that Co mmerce adopted here. But Congress did not, instead opting for the unqualified phrase “impor t duties.” Second, drawback refunds are “attributable to” import duties because “attri butable to” describes a loose associative relationship. See The American Heritage Dicti onary of the English Language 85 (1976) (defining “attribute” as “to r egard or assign as belonging to or resulting from someone or something; ascribe”). Because drawbac k refunds cannot be obtained without the foreign company first importing merchandise and being assessed impor t duties on that merchandise, the duties are part and parcel of the import duty regime. Furthermore, Congress’ use of the inclusive term “any” in front of “impor t duties” indicates that the adjustment should account for the entire universe of import duties. Finally, drawback refunds also are “incident to bringing th e subject merchandise . . . into the United States.” “Incident to” comm only means “contingent upon or re lated to something else.” Id. at 664. Drawback refunds are contingent upon and rela ted to importing merchandise

2008-1102 10because they cannot be claimed without first importing merchandise and paying the duties to Customs. In su m, the statute is broad enough to allow the offset and Commerce’s interpretation wa s reasonable. Moreover, as noted above, the purpose of adjusting U. S. price by movement costs is to enable a fair “apples-to-apples” comparison between foreign and domestic price. This goal is furthered by inclusion of all import expe nses—including the offset for refunds—because the resulting amount accura tely represents the importer’s overall duty liability. Appellants insist that dr awback refunds cannot be considered because such refunds are not assessed on goods at t he time of importation. But the statute does not contain any such requirement. I ndeed, appellants’ inte rpretation would not reflect the total amount of duties the im porter actually pays on the imported goods because the “import duties” amount would not include duties t hat were later refunded. In accord with its statutory mandate to calc ulate the most accurate U.S. price for comparison with foreign value, Commerce reasonably discounted import duties for which the companies ultimately were reimburs ed. This decision wa s consistent with the statutory scheme and well wit hin Commerce’s authority under Chevron

. 2. Commerce’s Method Of Calculat ing Net Duties Was Reasonable. Appellants also contend t hat Commerce’s methodology in calculating net duties was flawed for two reasons: (1) there is no proof that the net duties or refunds were “passed through,” i.e. , reflected in the price paid by U.S. purchasers; and (2) Commerce counted duty refunds received by Cutrale duri ng the period of investigation on orange juice that ent ered the U.S. before the period of investigation. Under the law of this court, “Commerce is the ‘maste r of antidumping law,’ and revi ewing courts must accord

2008-1102 11deference to the agency in its selection a nd development of proper methodologies.” Thai Pineapple Pub. Co. v. United States , 187 F.3d 1362, 13 65 (Fed. Cir. 1999) (citations omitted). Thus, Commerce’s me thodologies for calculating dumping margin are “presumptively correct.” Id. Section 1677a(c)(2)(A) requires that an adjustment to pr ice be based upon import duties that are “included in such price.” Appell ants argue that this language requires foreign producers to adduce evi dence demonstrating that the drawback refunds actually affected the price paid by U.S. purchasers. Commerce reasonably concluded that such pr oof is not required. In Daewoo Electronics Co. v. International Union , we interpreted similar l anguage in Section 1677a(d)(1)(C ), which allowed a price adjustment “only to the extent that such ta xes are added to or included in the price of . . . merchandise.” 6 F.3d 1511, 1514 (Fed. Cir. 1993). We held that where Commerce adjusts domestic prices for excise taxes not charged on exports, it need not inquire as to whether those taxes are “ passed through” to the custom er. “The statutory language does not mandate that [the Inter national Trade Administration] l ook at the effect of the tax on consumers rather than on the [foreign] company.” Id. at 1517. Likewise here, Commerce need not analyze whether taxes are “p assed through” to U.S. customers. As appellants admit, the stat ute contains no provisi on mandating such an inquiry. 2 Appellants’ second cha llenge is that Commerce erroneously counted drawback refunds that Cutrale received for merc handise imported prior to the period of

2 As noted by the Court of Internati onal Trade, when defining the term “price adjustment” in its regulations, Commerce co mmented that “price adjustments include such things as discounts and rebates that do not constitute part of the net price actually paid by a customer.” Florida Citrus , 515 F. Supp. 2d at 1333 ( citing Antidumping Duties: Countervailing Duties , 62 Fed. Reg. 27,296, 27,344 (May 19, 1997)).

2008-1102 122008-1102 13 investigation. The statut e requires adjustments for “cos ts, charges, expenses and United States import duties,” but, as explained above, it does not restrict these adjustments only to expenses incurred at the time of im portation. Under Sections 1313(b) and 1313(j)(2) importe rs have up to three years to claim drawback refunds, even though the import duties ar e paid to Customs at the time of importation. Because of this three-year lag, it is inherent that some of the cl aimed refunds will pertain to merchandise actually im ported prior to the period of investigation. 3 In light of the discretion vested in Commerce to interpret t he antidumping statute, it was reasonable to allow an offset for drawback refunds claim ed for merchandise imported prior to the period of investigation. III. CONCLUSION For the foregoing reasons, we affirm the decision of the Court of International Trade. Each party shall bear its own costs. AFFIRMED.

3 This could result in a partial wash, as forei gn companies presumably will import merchandise during the period of investi gation for which they might claim refunds after the period ends—too late to rece ive any adjustment in price.