Commerce Reverts to Partial Post-Sale Price Adjustment in AD Case Following CAFC Opinion

The Commerce Department reverted to its initial decision in an antidumping duty investigation to adjust a Turkish pipe exporter's post-sale price by only one-third of a late delivery penalty in Nov. 2 remand results filed at the Court of International Trade. Submitting the remand following a mandate from the U.S. Court of Appeals for the Federal Circuit reversing a CIT opinion, Commerce also dropped its particular market situation adjustment to the respondent Borusan Mannesmann Boru Sanayi ve Ticaret's costs for the sales-below-cost test (Borusan Mannesmann Boru Sanayi ve Ticaret A.S. v. U.S., CIT Consol. #19-00056).

The case stems from an antidumping duty investigation into large diameter welded pipe from Turkey. Prior to the investigation, Borusan entered into a joint venture with two other Turkish manufacturers that won a bid for a gas pipeline project. In the joint venture agreement, each company agreed to reimburse the others for any damages resulting from a failure to fulfill contractual obligations. After adjustments were made to the sales contract, the mutual obligation clause of the JVA came into effect since the customer said it wanted to collect late delivery penalties.

When the antidumping investigation kicked off, Borusan argued for a post-sale price adjustment for the entire value of the penalty even though it had yet to make any penalty payments at the time. Subsequently, the JVA members negotiated the amount of the penalties and agreed to distribute the cost proportionately, with Borusan paying the largest share.

Commerce then rejected Borusan's request for a post-sale adjustment amounting to the entirety of the penalty paid. Instead, the agency adjusted the post-sale price by only one-third of the penalty costs, finding that the client only knew of the JVA members' intent to use a one-third split of the penalty costs. Further, Commerce said that the JVA members didn't begin to negotiate the final penalty allocation until after the date of the sale.

Following initial litigation at CIT, the trade court said that the terms of the JVA were incorporated into the sales contract, meaning the customer should be considered aware of the terms of splitting up any penalties. The court also said it's only necessary that the terms of such a penalty be expressed and not the actual amount paid for the customer to be aware of the terms. CIT upheld a full post-sale price adjustment.

The Federal Circuit then reversed CIT's findings, holding that Commerce correctly determined that the final allocation method was not established work known to the client since the parties negotiated their shares of the fee after it was imposed. Because of this, the appellate court backed the one-third adjustment (see 2107200038). CIT then remanded this case to Commerce to comply with the Federal Circuit's opinion (see 2108270051).

On remand, Commerce allowed for a partial post-sale price adjustment. The agency also dropped its cost-based PMS adjustment to Borusan's costs for the sales-below-cost test. The end result was a zero percent dumping margin for Borusan and a 2.57% all-others rate -- both rates consistent with Commerce's first redetermination results.