Trade Court Says Exporter's Deduction of Duties From Invoice Does Not Constitute Reimbursement

The Commerce Department appropriately found that an Australian exporter did not reimburse an affiliated importer for antidumping duties paid and thus rightly decided not to deduct the amount of antidumping duties paid from the exporter's U.S. price in an AD case, the Court of International Trade said. In a a May 31 opinion that was made public June 10, Judge Richard Eaton said that the sale between exporter BlueScope Steel (AIS) and the affiliated importer BlueScope Steel Americas (BSA) was a "garden variety transaction among an exporter, an importer, and an unaffiliated purchaser."

The case concerns Commerce's final results in the administrative review of the antidumping duty order on hot-rolled steel flat products from Australia. During the review period, AIS made sales to BSA, which then sold the merchandise to another affiliated entity Steelscape. This company then further manufactured the steel into non-subject merchandise and sold the final goods to an unaffiliated U.S. customer.

According to the supply agreement governing these sales, AIS determined the price charged to BSA by deducting the estimated antidumping duties and freight price from the price charged to Steelscape. To calculate BSA's transfer price, AIS started with the price paid by Steelscape then deducted the AD duties to estimate the entry value. U.S. Steel told Commerce that by decreasing the invoice price by the amount of the AD duties, AIS reimbursed BSA for the duties, meaning the agency was required by its regulation to lower the exporter's U.S. price by the amount of the estimated duties.

In the review, Commerce disagreed since there was no evidence of any reimbursement. U.S. Steel then took its case to the trade court, arguing that the exporter reimbursed the duties indirectly by decreasing its invoice price to the importer by the amount of the duties. Eaton sided with Commerce, holding that the deduction of duties "on its own, is unremarkable when viewed in the context of the record." The court found that the reimbursement regulation does not apply.

"First, it is important to understand just what happened here," the opinion said. "Shorn of references to transfer pricing, tri-partite agreements, and Commerce’s regulations, the facts show: a single entity took the final price paid by its last-in-line affiliate, deducted from that price an amount equal to the duties paid at the time of entry, and used the result as the basis for the price charged to the Importer. Thus, the entered price, as is universally the case, did not contain duties which were paid at entry by the Importer. The Importer (as an affiliate) paid the duties and added them to the price charged to the last-in-line affiliate purchaser.

"Plaintiffs have presented no evidence that the Exporter adjusted the price charged to the Importer in two ways: first, to make the price free of the duties that the Importer would pay at entry, and second, in an amount sufficient to reimburse the duties paid by the Importer at entry. Thus, Plaintiffs have failed to demonstrate that the actual payments and prices charged were anything other than those in a garden variety transaction among an exporter, an importer, and an unaffiliated purchaser. That the price paid was arrived at by means of a formula found in the Supply Agreement simply does not matter so long as the price paid for the merchandise by the Importer was not discounted to account for the duties."

During litigation, Commerce also pointed out that its regulations changed in at least 1997 to no longer account for indirect reimbursement. The judge said that regardless, Commerce found that the lowering the transfer price to account for duties to be paid by the importer does not constitute reimbursement.

(United States Steel Corporation v. United States, Slip Op. 22-57, CIT #20-03815, dated 05/31/22, Judge Richard Eaton. Attorneys: Sarah Shulman of Cassidy Levy for plaintiff United States Steel Corp.; Alan Price of Wiley Rein for plaintiff-intervenor Nucor Corp.; Kelly Krystyniak for defendant U.S. government; Daniel Porter of Curtis Mallet-Prevost for defendant-intervenors)