CIT Wrongly Found Deduction of AD Duties From Invoice Is Not Reimbursement, US Steel Tells CAFC

The Court of International Trade erroneously upheld the Commerce Department's finding that an Australian exporter did not reimburse an affiliated importer for antidumping duties paid and subsequent decision not to deduct the amount of the duties from the exporter's U.S. price, United States Steel Corp. argued in a Sept. 30 opening brief at the U.S. Court of Appeals for the Federal Circuit (United States Steel Corp. v. United States, Fed. Cir. #22-2078).

The antidumping duty petitioner said that substantial evidence shows that the exporter, BlueScope Steel (AIS), reimbursed its affiliated importer, BlueScope Steel Americas (BSA), and that Commerce ignored the terms of the pricing arrangement between the two affiliated companies and what AIS did outside the agreement to reimburse BSA. As a result, Commerce failed to adjust the antidumping calculation to address this reimbursement, the brief said.

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 set the price charged to BSA, called a formula price, by deducting the estimated antidumping duties and freight price from the price charged to Steelscape. To calculate BSA's duty transfer price, AIS started with the price paid by Steelscape then deducted the AD to estimate the entry value. U.S. Steel told Commerce that by decreasing the invoice price by the amount of the AD, 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. Judge Richard 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 (see 2206100066).

U.S. Steel appealed to the Federal Circuit to further argue the matter. In its opening brief, the petitioner said that Commerce did not support its finding that AIS did not reimburse BSA for the antidumping duties. The supply agreement says to invoice the importer at the formula price -- something the exporter failed to do, instead lowering the formula price by the amount of the duties, the brief said. The agency's finding that the importer paid cash deposits is irrelevant to the matter and not substantial evidence to declare that the reimbursement did not occur, U.S. Steel argued.

"The importer always pays the duties, so that act cannot negate reimbursement," the brief said. "More importantly, that conclusion does not square with Commerce’s finding that BlueScope deducted, inter alia, antidumping duties from the price of HRS to reach the price charged to the importer."

Commerce also "incorrectly focused on the entered value" as opposed to the invoice value, U.S. Steel argued. Entered value is the number calculated on CBP's entry summary by adjusting the invoice for non-dutiable expenses -- it is always duty-neutral and will never reflect the reimbursement of the type allegedly made by AIS, the company said. U.S. Steel argued that Commerce improperly looked to this number as opposed to the invoice value while the trade court conflated the two. The agency allegedly further failed to adjust the dumping calculation to address this reimbursement.

"Rather, Commerce has always applied its reimbursement rules broadly," the brief said. "Here, BlueScope deducted antidumping duties from the importer’s invoice price. This has the same cash flow impact to the importer as if BlueScope provided it direct payment. Commerce’s failure to apply its regulation here is contrary to well-established Commerce interpretive guidance."