Court Opinion

ID: 4383015
Source: CourtListenerOpinion
Date Created: 2019-04-01 21:01:24.612789+00
Date Added: 2024-06-11T12:03:56.600446
License: Public Domain

Slip Op. 19-41

                UNITED STATES COURT OF INTERNATIONAL TRADE

 TOSÇELIK PROFIL VE SAC
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 v.
                                                 Before: Jennifer Choe-GrovesJudge
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                                                 Consol. Court No. 17-00018
        Defendant

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        Defendant-Intervenor.

                                   OPINION AND ORDER

[Sustaining in part and remanding in part the U.S. Department of Commerce’s remand
redetermination in the 2014–2015 administrative review of the antidumping duty order on
welded carbon steel standard pipe and tube products from Turkey.]

                                                                   Dated: April 1, 2019

David L. Simon, Law Office of David L. Simon, of Washington, D.C., for Plaintiff Tosçelik
3URILOYH6DF(QGVWULVL$ù

Elizabeth A. Speck, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., for Defendant United States. With her on the brief
were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E.
White, Jr., Assistant Director. Of counsel on the brief was Catherine D. Miller, Attorney, Office
of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington, D.C.

Roger B. Schagrin and Paul W. Jameson, Schagrin Associates, of Washington, D.C., for
Consolidated Plaintiff and Defendant-Intervenor Zekelman Industries. Christopher T. Cloutier
and Elizabeth J. Drake also appeared.
Consol. Court No. 17-00018                                                                     Page 2

       Choe-Groves, Judge: This case involves steel products from Turkey. Plaintiff Tosçelik

3URILOYH6DF(QGVWULVL$ù (“Tosçelik”) and Consolidated Plaintiff and Defendant-Intervenor

Zekelman Industries (“Zekelman”) initiated this action contesting the final results of the

administrative review of welded carbon steel standard pipe and tube products from Turkey, in

which the U.S. Department of Commerce (“Commerce” or “Department”) found that the

products at issue are being, or are likely to be, sold in the United States at less-than-fair value.

See Welded Carbon Steel Standard Pipe and Tube Products From Turkey, 81 Fed. Reg. 92,785

(Dep’t Commerce Dec. 20, 2016) (final results of administrative review; 2014–2015), as

amended, 82 Fed. Reg. 11,002 (Dep’t Commerce Feb. 17, 2017) (amended final results of

antidumping duty administrative review; 2014–2015) (collectively, “Final Results”). Before the

court are the Final Results of Redetermination Pursuant to Court Remand, Oct. 4, 2018, ECF No.

62-1 (“Remand Results”), filed by the Department as directed in the court’s prior opinion. See

7RVoHOLN3URILOYH6DF(QGVWULVL$ùY United States, 42 CIT __, 321 F. Supp. 3d 1270 (2018)

(“Tosçelik I”). For the reasons discussed below, the court concludes that Commerce’s modified

calculation of Tosçelik’s duty drawback adjustment is not in accordance with the law and

sustains Commerce’s explanation of Tosçelik’s circumstances of sale adjustment for

warehousing expenses. The Remand Results are remanded for further proceedings consistent

with this opinion.

                                    PROCEDURAL HISTORY

       The court presumes familiarity with the facts of this case. See Tosçelik I. The court

remanded the Final Results for Commerce to reconsider (1) its calculation of Tosçelik’s duty
Consol. Court No. 17-00018                                                                   Page 3

drawback adjustment and (2) its grant of a circumstances of sale adjustment to Tosçelik for

warehousing expenses. See id. at __, 321 F. Supp. 3d at 1281.

       Commerce filed its Remand Results under protest on October 4, 2018. See Remand

Results at 2. Commerce recalculated Tosçelik’s duty drawback adjustment by allocating import

duties exempted by reason of export of finished product over total exports, as reported by

Tosçelik. See id. at 14. Because Commerce perceived an imbalance in its comparison between

Tosçelik’s export price and normal value, Commerce made an additional circumstances of sale

adjustment. See id. at 12, 14. Commerce explained also its grant of a circumstances of sale

adjustment to Tosçelik for warehousing expenses. See id. at 14–17. Pursuant to Commerce’s

modified calculations, Tosçelik’s weighted-average dumping margin changed from 3.40% in the

Final Results to 3.33% in the Remand Results. Id. at 39.

       Tosçelik filed comments on the Remand Results. See Comments Pl. Tosçelik Profil ve

6DF(QGVWULVL$ù Final Results Redetermination Pursuant Remand, Nov. 4, 2018, ECF No. 64

(“Pl.’s Comments”). Defendant filed a response to Tosçelik’s comments. See Def.’s Resp.

Comments Remand Redetermination, Dec. 19, 2018, ECF No. 68 (“Def.’s Resp.”). Zekelman

also filed a response to Tosçelik’s comments. See Def.-Intervenor Zekelman Industries’ Reply

Comments Tosçelik Final Results Redetermination Pursuant Remand, Dec. 19, 2018, ECF No.

67.

                     JURISDICTION AND STANDARD OF REVIEW

       The court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of the Tariff Act of 1930,

as amended, 19 U.S.C. § 1516a(a)(2)(B)(i), and 28 U.S.C. § 1581(c). The court shall hold

unlawful any determination, finding, or conclusion found to be unsupported by substantial
Consol. Court No. 17-00018                                                                    Page 4

evidence on the record, or otherwise not in accordance with the law. 19 U.S.C.

§ 1516a(b)(1)(B)(i).

                                            ANALYSIS

   I.      Duty Drawback Adjustment

        If Commerce finds that merchandise is being sold at less than fair value, Commerce

issues an antidumping duty order imposing antidumping duties equivalent to the amount by

which the normal value exceeds the export price for the merchandise. See 19 U.S.C. § 1673.

Export price, or U.S. price, is the price at which the subject merchandise is first sold in the

United States. See id. § 1677a(a). A duty drawback adjustment is an adjustment to export

price—specifically, an increase 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.” Id. § 1677a(c)(1)(B). The purpose

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

increasing export price to the level it likely would be absent a duty drawback.

        Normal value represents, on the other hand, the price at which the subject merchandise is

sold in the exporting country. See id. § 1677b(a)(1)(A). When determining the appropriate price

for comparison, Commerce may make certain price adjustments, such as a circumstances of sale

adjustment. See id. § 1677b(a)(6). The price may be:

        (C) increased or decreased by the amount of any difference (or lack thereof)
            between the export price or constructed export price and the price described in
            paragraph (1)(B) (other than a difference for which allowance is otherwise
            provided under this section) that is established to the satisfaction of the
            administering authority to be wholly or partly due to--
               (iii) other differences in the circumstances of sale.
Consol. Court No. 17-00018                                                                  Page 5

Id. § 1677b(a)(6)(C)(iii). The purpose of statutory adjustments to normal value is so Commerce

can “ensure[] that there is no overlap or double-counting of adjustments.” H.R. Rep. No. 103-

826, pt. 1, at 84–85 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 3857–58.

       On remand, Commerce continued to grant Tosçelik a duty drawback adjustment, but

calculated the amount based on Tosçelik’s reported duties exempted by reason of export of

finished product over total exports. See Remand Results at 14. Tosçelik does not contest this

aspect of the recalculation. See Pl.’s Comments 2. Tosçelik challenges Commerce’s subsequent

circumstances of sale adjustment. Tosçelik argues that this increase to normal value nullifies the

duty drawback adjustment. See id.

       In the Remand Results, Commerce added to Tosçelik’s normal value the difference

between Tosçelik’s claimed per-unit amount of duty drawback adjustment and the per-unit

amount of import duties reported in Tosçelik’s cost of production. See Remand Results at 12. In

substantiating the additional circumstances of sale adjustment, Commerce continued to rely on a

reading of Saha Thai Steel Pipe (Public) Co. Ltd. v. United States, 635 F.3d 1335 (Fed. Cir.

2011) (“Saha Thai”), that the court disapproved of in Tosçelik I. See Remand Results at 6–12.

Both the Remand Results and Defendant’s comments in support of the Remand Results rely on

language from Saha Thai discussing why export price, cost of production, and constructed value

“should be increased together, or not at all” in order to achieve a “duty-neutral” comparison. See

Remand Results at 8, 11 n.36; Def.’s Resp. 7–8. This reference to Saha Thai is taken out of

context. As explained by the court before, the quoted passage in Saha Thai relates “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
Consol. Court No. 17-00018                                                                 Page 6

duty drawback adjustment calculations made by Commerce.” Tosçelik I, 42 CIT at __, 321 F.

Supp. 3d at 1277. When viewed in this context, Saha Thai “does not support Commerce's

methodology in the instant matter before this court.” Id. at 1278. Commerce’s explanation for

the additional circumstances of sale adjustment is unreasonable in light of the court’s previous

interpretation of Saha Thai.

       The court reiterates that Commerce’s reliance on Saha Thai is misplaced. Saha Thai

concerned Commerce’s separate calculations of U.S. price and of cost of production and

constructed value. Generally, Commerce makes a duty drawback adjustment to a respondent’s

U.S. price to account for duties rebated and exempted by reason of exportation of the finished

product to the United States. Commerce makes a separate adjustment to a respondent’s cost of

production and constructed value to reflect import duties incurred when the finished product is

sold in the home market. See, e.g., +DEDú6LQDLYH7LEEL*D]ODU,VWLKVDO(QGVWULVL$ùY

United States, Slip Op. 19-10, 2019 WL 413800, at *3–4 & n.8 (distinguishing Commerce’s duty

drawback adjustment to U.S. price, which the opinion refers to as the “sales-side adjustment,”

and Commerce’s adjustment to cost of production and constructed value, which the opinion

refers to as the “cost-side adjustment”). Saha Thai sustained Commerce’s utilization of these

two corresponding adjustments but did not hold that the two adjustments should be “equal” or

“duty neutral,” as Commerce and Defendant continue to espouse here. Saha Thai does not

support Commerce’s Remand Results.

       Commerce reasoned in the Remand Results that the additional circumstances of sale

adjustment was necessary to correct a perceived imbalance in the dumping margin calculation.
Consol. Court No. 17-00018                                                                 Page 7

See Remand Results at 11–12. Commerce again departs from the legislative purpose of 19

U.S.C. § 1677a(c)(1)(B). As stated in the court’s previous Opinion and Order:

       The purpose of a duty drawback adjustment is to ensure a fair comparison
       between normal value and export price. Under a duty drawback program,
       a producer may receive an exemption or rebate from their home government
       for duties on imported inputs used to produce merchandise that is
       subsequently exported to the U.S. As a result, producers are still required
       to pay import duties for domestically-sold goods, which leads to an increase
       in normal value. A duty drawback adjustment corrects this imbalance,
       which could otherwise lead to an inaccurately high dumping margin, by
       increasing [export price] to the level it likely would be absent the duty
       drawback.

Tosçelik I, 42 CIT at __, 321 F. Supp. 3d at 1275 (internal citations and quotations omitted).

The upward adjustment to export price contemplated by 19 U.S.C. § 1677a(c)(1)(B) aids

Commerce’s statutory duty to make a fair comparison between normal value and export price in

antidumping duty investigations. Commerce’s action on remand here negates the statutory duty

drawback adjustment that Tosçelik earned by exporting its finished product to the United States

and impinges on the agency’s ability to make a fair comparison. The court concludes that the

Remand Results are not in accordance with the law and remands this case for a second

redetermination.

       Tosçelik also contends that the Remand Results are not supported by substantial

evidence. Defendant argues that because Tosçelik failed to raise this issue in administrative

proceedings before Commerce, it cannot assert it before the court under the doctrine of

exhaustion of administrative remedies. Because the court remands the Remand Results to

Commerce for a second redetermination, the court need not reach this argument.
Consol. Court No. 17-00018                                                                  Page 8

   II.      Circumstances of Sale Adjustment for Warehousing Expenses

         Commerce granted Tosçelik a circumstances of sale adjustment for Tosçelik’s

warehousing expenses in the Final Results. Zekelman argued that Commerce’s decision was

unsupported by substantial evidence because Commerce failed to address contrary evidence on

the record allegedly showing that Tosçelik overstated its warehousing expenses in its

questionnaire responses. The court agreed with Zekelman and remanded the Final Results for

Commerce to “adequately address contrary evidence on the record and provide clear and

discernable reasons for its decision.” Tosçelik I, 42 CIT at __, 321 F. Supp. 3d at 1281.

         On remand, Commerce continued to grant Tosçelik a circumstances of sale adjustment

for warehousing expenses. See Remand Results at 16–17. Relying on Tosçelik’s September 28,

2015 Section B Questionnaire Response and March 28, 2016 Supplemental Questionnaire

Response, Commerce found that Tosçelik did not overstate its warehousing expenses. See id. at

16. Tosçelik’s requested adjustment was based on data reflecting “the greatest level of detail

maintained in Tosçelik’s accounting records.” Id. at 15. The accounting records showed the

total quantity of goods shipped at the warehouse. See id. Tosçelik removed scrap generation

expenses that related exclusively to cut-to-length services, which do not qualify as warehousing

expenses, from its requested adjustment. See id. Commerce reasonably relied on Tosçelik’s

questionnaire responses, and therefore the court concludes that Commerce’s grant of

circumstances of sale adjustment is supported by substantial evidence. Commerce’s grant of

circumstances of sale adjustment for warehousing expenses is sustained.
Consol. Court No. 17-00018                                                               Page 9

                                            CONCLUSION

         For the aforementioned reasons, the court concludes that Commerce’s modified

calculation of Tosçelik’s duty drawback adjustment is not in accordance with the law, and

remands the Remand Results for a second redetermination. The court sustains Commerce’s

explanation of Tosçelik’s circumstances of sale adjustment for warehousing expenses.

Accordingly, it is hereby

         ORDERED that the Remand Results are remanded to Commerce for further

proceedings; and it is further

         ORDERED that Commerce shall file the second remand redetermination by May 16,

2019; and it is further

         ORDERED that Commerce shall file the administrative record on the second remand

redetermination by May 30, 2019; and it is further

         ORDERED that comments in opposition to the second remand redetermination shall be

filed by June 17, 2019; and it is further

         ORDERED that comments in support of the second remand redetermination shall be

filed by July 17, 2019; and it is further

         ORDERED that the joint appendix for the second remand redetermination shall be filed

by August 16, 2019.

                                                             /s/ Jennifer Choe-Groves
                                                           Jennifer Choe-Groves, Judge

Dated:      April 1, 2019
         New York, New York