Opinion ID: 798878
Heading Depth: 2
Heading Rank: 1

Heading: Essar's Appeal

Text: At the outset, we note that in this appeal Essar presents identical arguments for the NMDC subsidies as in its previous appeal, which was decided after Essar submitted its principal brief in this case. We rejected Essar's arguments in the previous appeal and upheld the trial court's decision to use the Australian and Brazilian benchmarks and add freight and import costs to the benchmarks. U.S. Steel Corp. v. United States, 425 Fed.Appx. 900 (Fed.Cir. 2011). The previous appeal relates to a separate Commerce investigation of the period of review covering January 1, 2006 through December 31, 2006, so it is not binding on us in this case. We identically conclude that Commerce's decision to apply countervailing duties for the NMDC subsidies is supported by substantial evidence and comports with the regulation. 19 C.F.R. § 351.511. Essar argues that Commerce erred in choosing benchmark prices for the sale of iron ore lumps and fines. Rather than relying on the sales to Essar by the Brazilian suppliers and the Australian sales listed in the Tex Report, Essar argues that Commerce should have used sales made by NMDC to Japanese buyers as the proper benchmark. Commerce must determine the proper benchmark price in order to determine if the goods were sold for less than adequate remuneration. See 19 C.F.R. § 351.511. Commerce's regulations set forth a three-tiered hierarchy to identify the appropriate benchmark. Id. First, Commerce looks for a tier 1 benchmark, an actual transaction price in the country in question, which may, in some cases, include sales by competitively-run government auctions. § 351.511(a)(2)(i). If no such transactions exist, Commerce looks for a tier 2 benchmark, a world market price for the goods in question. § 351.511(a)(2)(ii). If neither of those is available, Commerce measures the adequacy of the remuneration by assessing whether the price is consistent with market principles. § 351.511(a)(2)(iii). Essar contends that NMDC's sale to Japanese buyers is an appropriate tier 1 benchmark for both lumps and fines. Although Essar acknowledges that NMDC is controlled by the Indian government, it submitted no evidence that NMDC's sale price to Japanese buyers was determined by a competitively-run government auction. Commerce has stated that a competitively-run government auction must be open to everyone, protect confidentiality, and be based solely on price. Countervailing Duties, 63 Fed.Reg. 65348, 65377 (Dep't Commerce Nov. 25,1998). The record evidence shows that NMDC's sale to Japanese buyers was open only to Indian government officials and five Japanese buyers during a private iron ore dealing mission. Therefore Commerce's conclusion that the NMDC sale price to Japanese buyers is not an appropriate tier 1 benchmark price is supported by substantial evidence. Commerce appropriately identified Essar's purchase of iron ore lumps from the Brazilian supplier as a tier 1 benchmark for the iron ore lumps Essar purchased from NMDC. For iron ore fines, Commerce had no tier 1 benchmark, so it identified the published price of iron ore fines from Hamersley, Australia as a tier 2 world market price. Though the Australian iron ore is not identical to NMDC's iron ore, Commerce's regulations require only that it be a comparable market-determined price that would be available to the purchasers in the country at issue. We conclude Commerce properly took into account factors affecting comparability in its selection of the benchmark. Commerce's conclusion that the Hamersley, Australia iron ore fines price is an appropriate benchmark is supported by substantial evidence. See § 351.511(a)(2)(ii). Essar further argues that Commerce and the trial court erred by adding freight and import costs to the world market price. Both the statute and the regulation, however, require that these costs be added to the benchmark prices. 19 U.S.C. § 1677(5)(E) ([T]he adequacy of remuneration shall be determined in relation to prevailing market conditions ... includ[ing] price, quality, availability, marketability, transportation, and other conditions of sale. (emphasis added)); 19 C.F.R. § 351.511(a)(2)(iv) (stating that the benchmark price  will include delivery charges and import duties (emphasis added)). Commerce's decision to add these charges to the benchmark prices is consistent with the relevant statute and regulation and is supported by substantial evidence.
Essar also appeals the trial court's decision to uphold countervailing duties for benefits received under the SEZ Act. Though Essar acknowledges that it was eligible for subsidies under the SEZ Act at some point and that it did receive SEZ benefits during the period of review, it argues that the subject merchandise was ineligible because it was produced before the date on which Essar's eligibility for SEZ Act benefits took effect. Accordingly, Essar urges that the benefits should be tied only to merchandise produced or exported after this date. Because none of its subject merchandise was produced after that date, Essar argues that no countervailing duty should be imposed. Commerce's regulations state that [i]f a subsidy is tied to the production or sale of a particular product, the Secretary will attribute the subsidy only to that product. 19 C.F.R. § 351.525(b)(5)(i). However, no evidence exists to support tying the benefits under the SEZ Act only to particular products. In the absence of such evidence, Commerce was correct to apply the subsidies to all products exported by Essar. See 19 C.F.R. § 351.525(b)(2). That is precisely what Commerce did here. Finally, Essar argues that Commerce should not have imposed any countervailing duties under the SEZ Act because it does not produce any subject merchandise in the SEZ area and therefore cannot benefit from the SEZ Act. As the trial court correctly held, this argument fails because Essar has not exhausted its administrative remedies. Essar did not raise this argument before Commerce and is thus precluded from raising it for the first time at the Court of International Trade. See Dorbest Ltd. v. United States, 604 F.3d 1363, 1375 (Fed.Cir.2010). We agree that substantial evidence supports Commerce's decision to impose countervailing duties on Essar for benefits received under the SEZ Act.