Customs
Import Export
Dumping
Normal Value
Constructed Value
Export Price
Duty Drawback Adjustment
Dumping Margin
Antidumping Duties
Appeal from the United States Court of International Trade in No. 1:16-cv-00162-JCG.
This appeal arises out of an antidumping duty investigation by the United States Department of Commerce concerning certain corrosion-resistant steel products from India. Following two remands, the United States Court of International Trade (Trade Court) sustained Commerce’s determination that granted Uttam Galva Steels Ltd. a duty drawback adjustment under 19 U.S.C. §1677a(c)(1)(B) that resulted in no dumping margin. Defendants-Appellants ArcelorMittal USA LLC, Steel Dynamics, Inc., United States Steel Corp., and Nucor Corp. appeal, challenging the propriety of the Trade Court’s first remand to Commerce and arguing that Commerce’s original determination should be reinstated. We affirm.
As this court has explained, “dumping occurs when a foreign firm sells a product in the United States at a price lower than the product’s normal value.” Home Prods. Int’l, Inc. v. United States, 633 F.3d 1369, 1372 (Fed. Cir. 2011). By statute, Commerce must impose antidumping duties on imported goods that are being sold, or are likely to be sold, in the United States at a less than fair value in a way that injures the domestic industry in the United States. 19 U.S.C. § 1673. Commerce determines a respondent’s dumping margin by calculating the amount by which normal value exceeds export price (U.S. price) or constructed export price. Id. Normal value is generally calculated to be “the price at which the foreign like product is first sold . . . for consumption in the exporting country.” 19 U.S.C. § 1677b(a)(1)(B)(i). To determine normal value, Commerce will disregard sales made at less than the respondent’s cost of production. Id. § 1677b(b)(1). Cost of production constitutes (1) the cost of manufacture; (2) “selling, general, and administrative expenses”; and (3) packaging expenses. Id. § 1677b(b)(3). If there are no sales in the exporting country that remain after removing the sales below cost of production, then Commerce will base normal value on the constructed value of the subject merchandise. Id. § 1677b(b)(1). Constructed value is essentially the cost of production plus profit. See id. § 1677b(e). Export price is typically calculated to be the price at which the subject products are first sold to an unaffiliated purchaser in the United States. Id. § 1677a(a). Constructed export price is “the price at which the subject merchandise is first sold . . . in the United States . . . 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 affiliated with the producer or exporter.” Id. § 1677a(b). The export price is subject to several possible adjustments. Id. § 1677a(c).
One such adjustment is the “duty drawback adjustment,” which is at issue here. This adjustment involves duties paid or owed on imports (e.g., raw materials) to the home-market country that produces the goods for export to the United States (the country of exportation). Saha Thai Steel Pipe (Pub.) Co. v. United States, 635 F.3d 1335, 1340–41 (Fed. Cir. 2011). The import duties on the inputs used to produce home-market goods increase the normal value. The statute provides that the duty drawback adjustment requires an increase to U.S. price, stating that
the price used to establish export price and constructed export price shall be . . . increased 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. 19 U.S.C. § 1677a(c)(1)(B).
In Saha Thai, we held that Commerce may appropriately adjust normal value to include “exempted duties in cost of production and constructed value” when making the duty drawback adjustment in situations in which “it would be illogical to increase export price to account for import duties that are purportedly reflected in normal value, while simultaneously calculating normal value based on a cost of production and constructed value that do not reflect those import duties.” 635 F.3d at 1342–43.
The question here is whether Commerce’s initial duty drawback methodology complied with 19 U.S.C. § 1677a(c)(1)(B).
Historically, Commerce, in calculating drawback duty adjustments, attributed all of a respondent’s reported duty drawbacks to U.S. sales. In other words, Commerce took the respondent’s reported duty drawbacks and divided that reported amount by the respondent’s total number of subject U.S. exports, attributing to each U.S. export its share of the duty drawback. Here, in initially calculating Uttam’s duty drawback adjustment, Commerce departed from this historical practice. Its new methodology allocated the import duties exempted or rebated “based on the import duty absorbed into, or imbedded in, the overall cost of producing the merchandise under consideration.” J.A. 6043. The effect was to attribute some portion of the duty drawbacks to home market sales and another portion to U.S. exports, rather than attributing the whole amount to U.S. exports. Commerce explained that it needed to change its methodology because certain respondents, such as Uttam, “sourced a material input from both domestic and foreign suppliers,” which might “result in an imbalance in the comparison of export price or constructed export price with normal value.” J.A. 6043. Uttam appealed the Final Determination to the Trade Court.
We explained the statute’s purpose in our decision in Saha Thai:
The purpose of the duty drawback adjustment is to account for the fact that the producers remain subject to the import duty when they sell the subject merchandise domestically, which increases home market sales prices and thereby increases normal value. That is, when a duty drawback is granted only for exported inputs, the cost of the duty is reflected in normal value but not in export price. The statute 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. 635 F.3d at 1338. In effect, the duty drawback adjustment constitutes an increase to the U.S. price because the producer receives additional revenue attributable to its U.S. sales by reason of the duty drawback.
In the challenged methodology, Commerce allocated Uttam’s duty drawback adjustment between exported goods and home-market goods, which lessened Uttam’s overall duty drawback adjustment to export price. There is no basis for doing so. The statute provides that the price used to establish export price and constructed export price shall be . . . increased 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. 19 U.S.C. § 1677a(c)(1)(B). The duty drawback statute requires an adjustment to “export price” based on the full extent of the duty drawback. It does not impose an additional requirement that the respondent trace particular imported goods to U.S. exports.
It does not make a difference whether the imported inputs that qualified for a drawback were actually incorporated into goods sold in the exporter’s domestic market because the Indian government credited the drawback to the quantity of goods that were in fact exported, whatever the source of the inputs used to produce foreign goods. As its text makes clear, the statute requires an upward adjustment to “export price and constructed export price” based on the drawback that occurred “by reason of the exportation of the subject merchandise to the United States.” Id. § 1677a(c)(1)(B). The entire drawback was allowed “by reason of the exportation.” Id.
The judgment of the Trade Court is affirmed.
(U.S. Court of Appeals for the Federal Circuit, May 14, 2021, Uttam Galva Steels Ltd. v. United States, AK Steel Corp., California Steel Industries, Inc., ArcelorMittal USA LLC, Steel Dynamics, Inc., United States Steel Corp., Nucor Corp., Docket No. 2020-1461)
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