Opinion ID: 196100
Heading Depth: 2
Heading Rank: 2

Heading: Calculation of Credit Expenses from Invoice Date

Text: In its cross-appeal, Gerdau argues that, on remand, Commerce should have calculated Mittal's credit expenses beginning on the shipment date, not the invoice date. Gerdau points out that, in its previous cases and in the prior administrative review involving Mittal, Commerce has calculated credit expenses beginning on the date of shipment. According to Gerdau, Commerce has merely given a post hoc rationalization for changing its practice. Gerdau also argues that Commerce has specifically rejected the claim that the date of sale is relevant in determining the credit expense period. According to Gerdau, Mittal's process is not unique and does not warrant different treatment from previous practice because, like most sellers, once Mittal has shipped goods to one customer, it can no longer sell those goods to another customer. The government and Mittal respond first by arguing that Gerdau both waived its argument before the Court of International Trade and failed to present its argument to Commerce on remand, thus failing to exhaust its administrative remedies. The government and Mittal argue that no exception to the exhaustion requirement applies here because Gerdau's arguments involve the factual question of when Mittal can no longer sell the goods and because Gerdau's participation in the remand proceeding would not have been futile, as Commerce had indicated that it would reevaluate its position. On the merits, the government and Mittal respond that Commerce calculates the date of sale similarly to the way it calculates credit expenses, so the date of sale is relevant to the credit expense calculation. Moreover, according to the government and Mittal, Commerce's policy bulletin states that the credit expense on a sale is measured by the interest on the sale revenue, requiring the date of sale to have passed by the beginning of the credit expense period. The government and Mittal also argue that Commerce's practice of using the shipping date for credit expenses is premised on a seller having committed specific goods to a specific customer. Unlike other sellers, Mittal remains in control of the terms of sale and the goods, not committing them to a particular customer, until the invoice date. According to Mittal and the government, Mittal's sales process is similar to warehousing or unloading goods in the United States, for which Commerce calculates the shipping date from the date when the goods leave the warehouse (similar to Mittal's invoice date), not when the company ships them from abroad. On the waiver and exhaustion arguments, Gerdau responds that it raised the credit expense issue before Commerce and before the court. Gerdau argues that it exhausted its administrative remedies because Commerce knew Gerdau's position, and raising the issue again would have been futile, as evidenced by Commerce's choice to reject Gerdau's position. Moreover, according to Gerdau, the date for calculating credit expenses is a purely legal issuethere was no factual dispute over the date that the goods were shipped from the port. We agree with the government and Mittal that, on the issue of the credit expense period, Gerdau abandoned its argument by failing to exhaust its administrative remedies. Gerdau should have argued to Commerce on remand, during the comment period, in favor of beginning the credit expense period on the shipment date. At the very least, Gerdau should have indicated that it maintained its prior position with respect to the credit expense period. Moreover, even if Gerdau had preserved the issue for appeal, Commerce's determination to begin the credit expense period on the invoice date was supported by substantial evidence and was not contrary to law. In the initial hearing before Commerce, Gerdau argued that the credit expense period should begin on the shipment date. When the Court of International Trade requested briefing on the credit expense period, Gerdau again argued that the credit expense period should begin on the shipment date. However, with the consent of Mittal and Gerdau, the government then requested a voluntary remand to recalculate the credit expense period based on the invoice date, and Gerdau did not object to the remand. On remand to Commerce, Gerdau again did not raise its shipment date argument. Gerdau effectively chose not to participate in the remand proceedings. It did not comment on Commerce's proposed revised results and submitted no argument as to why Commerce should continue to adhere to its initial determination. Gerdau was procedurally required to raise the issue before Commerce at the time Commerce was addressing the issue. Simple fairness to those who are engaged in the tasks of administration, and to litigants, requires as a general rule that courts should not topple over administrative decisions unless the administrative body not only has erred but has erred against objection made at the time appropriate under its practice.  United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37, 73 S.Ct. 67, 97 L.Ed. 54 (1952) (emphasis added); see also Metz v. United States, 466 F.3d 991, 999 (Fed.Cir.2006). [N]o one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted. Sandvik Steel Co. v. United States, 164 F.3d 596, 599 (Fed.Cir. 1998) (citations and quotation marks omitted). Gerdau failed to raise the issue at the appropriate time on remand and thus abandoned its argument by failing to exhaust its administrative remedies before Commerce. See AIMCOR v. United States, 141 F.3d 1098, 1111-12 (Fed.Cir. 1998) (holding that, when Aimcor failed to raise an issue on remand to Commerce during the applicable comment period, it was precluded from raising this issue de novo before the court). Gerdau argues that two exceptions to the exhaustion requirement apply: (1) its shipment date argument is a purely legal argument, and (2) raising the argument before Commerce would have been futile. See Corus Staal BV v. United States, 502 F.3d 1370, 1378-79 & n. 4 (Fed.Cir.2007). Neither exception applies here. Gerdau's argument is not purely legalGerdau relies on a judicial record of Commerce's past practices, an assessment of Commerce's justifications of those practices, and an analysis of why the unique facts of Mittal's shipping practice do not support a deviation from Commerce's practice. See Consol. Bearings Co. v. United States, 348 F.3d 997, 1003 (Fed.Cir.2003) (finding no pure question of law when a party alleged that Commerce changed its well-established practice). Additionally, raising the argument before Commerce would not have been futile. To show futility, a party must demonstrate that it would be required to go through obviously useless motions in order to preserve [its] rights. Corus Staal, 502 F.3d at 1379 (citations and quotation marks omitted). Moreover, we apply the exception narrowly. Id. Gerdau argues that Commerce understood Gerdau's position based on Gerdau's arguments in the initial administrative proceeding and its submissions to the court, and that making them again would have been obviously useless. But Commerce had requested the remand to reevaluate its credit expense calculation because of a possible conflict with its other practices. That request indicates that Commerce might have been receptive to counter-arguments. Commerce also explicitly requested comments from the parties on its draft remand determination, and Gerdau did not comment. Given that Gerdau never disputed the remand, Commerce could have reasonably assumed that Gerdau, much like Commerce itself, was persuaded by Mittal's arguments and no longer opposed revision of the credit expense calculations. The futility exception thus does not apply. We therefore hold that Gerdau failed to exhaust its administrative remedies. Even if Gerdau had preserved the issue for appeal, we would affirm Commerce's determination to begin the credit expense period on the invoice date as supported by substantial evidence and not contrary to law. The issue in Gerdau's cross-appeal is when Mittal actually began to incur credit expenses. Credit expenses are the costs associated with carrying accounts receivable on the books and the expenses related to extending credit to purchasers for the interim between shipment and payment. AIMCOR, 141 F.3d at 1111 n. 21. Even though, as Gerdau points out, Commerce's standard practice is to begin calculating credit upon the date of shipment, Commerce explained in its remand determination that Mittal has an exceptional case that provides a reason to deviate from Commerce's normal practice. For most companies, irrespective of the date of sale, once goods have been shipped from a foreign port, the material terms of sale have been set, as the seller may not then sell those goods to another customer. See Silicomanganese from India, 67 Fed. Reg. 15,531 & accompanying Issues and Decisions Mem., cmt. 19, available at http://ia.ita.doc.gov/frn/summary/india/XX-XXXX-X.txt (Dep't of Commerce Apr. 2, 2002) (beginning the credit period on the date of shipment because at this point, the company has identified a specific customer and, therefore, the goods are no longer available for general sale). Thus, at that point, the seller has extended credit to a specific buyer. In Mittal's case, however, record evidence shows that the material terms of sale were not set before the invoice date, and Mittal therefore retained control of the goods until the invoice date. Thus, no credit was extended to Mittal until the invoice date. Commerce's judgment calculating credit expenses beginning on the invoice date was therefore supported by substantial evidence and was not contrary to law.