Opinion ID: 209423
Heading Depth: 3
Heading Rank: 1

Heading: Commerce's Decision To Account For Drawback Refunds Was Reasonable.

Text: The drawback program permits importers to claim reimbursement of 99 percent of U.S. duties paid on imports when commercially interchangeable merchandise is either (1) exported from the United States, or (2) destroyed 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 drawback 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 Federal law because of its importation. 19 C.F.R. § 191.2(i). Thus, drawbacks allow import duties, which are levied on goods imported into the United States for sale, to be refunded when substituted goods are exported, destroyed, or used in manufacturing instead of being sold in the United States. As a practical matter, U.S. Customs and Border Protection receives a deposit of the duties due from the importer, which is later adjusted 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 substitution drawback. Under this provision, an importer may receive duty refunds if it then exports from the United States commercially interchangeable merchandise within three years. 19 U.S.C. § 1313(j)(2). Fischer claimed refunds under Section 1313(b), which allows a manufacturing substitution drawback. Id. § 1313(b). Under this provision, if the importer uses the substituted merchandise in further manufacturing or production in the United States, the importer becomes eligible for an amount of drawback equal to that which would have been allowable had the merchandise used therein been imported. Id. The importer may claim the refund after the exportation 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 substitution drawback refunds under Section 1313(b). Dumping is the sale of foreign goods in the 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). Commerce adjusts this price in accordance with statutory factors to achieve a fair `apples-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 antidumping order that imposes additional dumping duties equal to the amount by which the normal value exceeds the export price or constructed 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 the original place of shipment in the exporting country to the place of delivery in the United States. To achieve this apples-to-apples comparison the agency should adjust the U.S. price by subtracting the United States import duties paid. Fischer and Cutrale arguedand Commerce agreed that United States import duties should be calculated by including an offset 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 duties nor specifies whether import duties should include the net import duties (taking into account 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 (holding that the term United States import duties in Section 1677a(c)(2)(A) is ambiguous). We now must ask whether Commerce's interpretation of ambiguous statutory language is based on a permissible interpretation of the statute. FAG Italia S.p.A. v. United States, 291 F.3d 806, 815 (Fed. Cir.2002). We find Commerce's interpretation reasonable because it accords with the statutory language and accurately reflects the overall duty costs to importers. The statute requires that the price be reduced by the amount attributable to any ... United States import duties, which are incident to bringing the subject merchandise... to the place of delivery in the United States. 19 U.S.C. § 1677a(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 merchandise is imported. Either of those phrases would have foreclosed the interpretation that Commerce adopted here. But Congress did not, instead opting for the unqualified phrase import duties. Second, drawback refunds are attributable to import duties because attributable to describes a loose associative relationship. See The American Heritage Dictionary of the English Language 85 (1976) (defining attribute as to regard or assign as belonging to or resulting from someone or something; ascribe). Because drawback refunds cannot be obtained without the foreign company first importing merchandise and being assessed import 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 import duties indicates that the adjustment should account for the entire universe of import duties. Finally, drawback refunds also are incident to bringing the subject merchandise... into the United States. Incident to commonly means contingent upon or related to something else. Id. at 664. Drawback refunds are contingent upon and related to importing merchandise because they cannot be claimed without first importing merchandise and paying the duties to Customs. In sum, the statute is broad enough to allow the offset and Commerce's interpretation was 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 expensesincluding the offset for refundsbecause the resulting amount accurately represents the importer's overall duty liability. Appellants insist that drawback refunds cannot be considered because such refunds are not assessed on goods at the time of importation. But the statute does not contain any such requirement. Indeed, appellants' interpretation would not reflect the total amount of duties the importer actually pays on the imported goods because the import duties amount would not include duties that were later refunded. In accord with its statutory mandate to calculate the most accurate U.S. price for comparison with foreign value, Commerce reasonably discounted import duties for which the companies ultimately were reimbursed. This decision was consistent with the statutory scheme and well within Commerce's authority under Chevron.