SeAH Vies for Full Court Rehearing at CAFC Over Freight Revenue Cap for US Price in AD Reviews

Steel exporter SeAH Steel Corp. wants a full court rehearing over a U.S. Court of Appeals for the Federal Circuit opinion that found reasonable the Commerce Department's practice of capping freight revenue when calculating U.S. price. Filing a motion for rehearing on April 25, SeAH said that the statute is not ambiguous on when U.S. price may be adjusted for freight costs seeing as it does not permit any adjustments for freight cost when the starting price does not include freight (NEXTEEL Co., Ltd. v. United States, CAFC # 21-1334)

The case concerns the second administrative review of the antidumping duty order on oil country tubular goods from South Korea in which plaintiff-appellant SeAH Steel Corp. served as a mandatory respondent. In antidumping reviews, Commerce traditionally includes the full amount charged for transportation services in the starting price for U.S. price calculations, then deducts the actual cost incurred by the seller in providing those services when calculating the net U.S. price, SeAH said. Recently though, Commerce tweaked the practice for separately-invoiced transport services.

In the practice contested by SeAH, Commerce deducts the actual transport costs incurred by the seller from the U.S. price but now limits the upward adjustment to U.S. price for the separately charged transport services, capping this adjustment by the amount of the cost incurred by the seller. The agency deducts losses incurred on these services while ignoring profit. SeAH said that while the issue may look to be "narrow and technical," it has an "impact on the calculation of dumping margins in a large number of antidumping proceedings, due to its effect on the treatment of adjustments of such items as freight to the customer, transport insurance, Customs duties, brokerage fees, and on-site installation.

In a March opinion, the Federal Circuit found this practice reasonable (see 2203110044). SeAH now argues that the court erred in only considering whether the issue was reasonable since the exporter argued that it directly violates the language of the statute. SeAH said that the statute only permits an adjustment for freight when the starting price itself includes freight. So while the statute allows Commerce to determine whether the separately invoiced freight charges are part of the price at which the merchandise is first sold, the agency cannot make any adjustments for freight costs relating to the separate charges.

"The fact that Commerce’s methodology is biased -- penalizing exporters for losses while ignoring any profits on the sale of freight services -- confirms the wisdom of Congress’s choice in prohibiting the methodology Commerce uses," the brief said. "But whether Congress’s choice was wise or not, the statutory language must govern.

"Unfortunately, the Panel’s decision simply ignored the operative language of the statute. Contrary to the Panel’s assumption, the statutory provision governing adjustments to U.S. price (19 U.S.C. § 1677a(c)(2)(A)) is not ambiguous. That provision simply does not permit Commerce to make any adjustment for freight costs (on a gross, net, or other basis), when the starting price does not itself include freight."

SeAH closed its brief by questioning the motivation behind the practice itself. The Federal Circuit, in its ruling, said that it held some concerns that following the statute might lead to "distorted results" since sellers could over- or under-charge their U.S. buyers for freight. "The precise basis for this concern is unclear," the brief said. Commerce does not express concern about this when the price of freight is included in the U.S. price, SeAH pointed out. Further, if any concerns over distortion linger, then Commerce can just ignore the separately invoiced freight charges, the brief said.

"In the end, however, debates about the policy implications of the statutory requirements are irrelevant," the brief said. "Congress has clearly spoken on this issue: Under the statute, as enacted by Congress, Commerce is permitted to make an adjustment for freight costs only when freight is included in the starting price used to determine export price and constructed export price."