AD Petitioner Says Docs Support Claim That Steel Maker Reimbursed Affiliated Importer

"Post hoc" arguments from the Commerce Department and BlueScope Steel that the Australian exporter's deduction of antidumping duties from a transfer price was not a reimbursement of antidumping duties are contradicted by documents that confirm a deduction of the duties from the price BlueScope Steel charged to an affiliated importer, plaintiff-appellant U.S. Steel Corp. argued in a Feb. 17 reply brief at the U.S. Court of Appeals for the Federal Circuit (U.S. Steel Corp. v. United States, Fed. Cir. # 22-2078).

The case deals with the administrative review of the antidumping duty order on hot-rolled steel flat products from Australia. During the period of review, Australian exporter BlueScope Steel sold subject merchandise to its affiliate BlueScope Americas, which then sold that merchandise to another affiliate, Steelscape, which in turn processed the steel into non-subject merchandise and sold it to an unaffiliated U.S. customer. Per the terms of a supply agreement governing these sales, BlueScope Steel set the price charged to BlueScope Americas by deducting the estimated AD duties and freight price from the price charged to Steelscape.

U.S. Steel argued that by lowering the invoice price by the amount of the AD duties, the respondent reimbursed its affiliate for the duties, so the agency was required to lower the exporter's U.S. price by the amount of the estimated duties. Commerce disagreed at the administrative level, finding no evidence of any reimbursement. The Court of International Trade agreed (see 2206100066), finding that BlueScope Americas paid the duties, and that the deduction of the duties from the final price to the ultimate consumer only ensured that duties already paid weren't included in the price paid by the importer.

U.S. Steel took to the case to the Federal Circuit, where BlueScope Steel and the U.S. argued in reply that the pricing terms of the supply agreement do not apply to the sale between BlueScope Steel and BlueScope Americas, so BlueScope Steel was not required to charge the price with the duties.

Two documents undercut this position, U.S. Steel said in its reply. The first is the substrate supply agreement, and the second is BlueScope Steel's worksheet that shows the application of the transfer price formula to the importer's invoice price. In these documents, BlueScope Steel described the terms of the transfer price as "delivered duty paid," which shows that it must include the price of the duties, the brief said.

U.S. Steel also claimed that both Commerce and BlueScope Steel "misconstrue the reimbursement regulation" in a bid to justify the failure to apply this regulation. The agency claimed that its practice is to require "direct evidence" of reimbursement where affiliated entities are concerned.

"As an initial matter, Commerce did not express either of these positions in its decision," U.S. Steel said. Commerce said "'reimbursementt, within the meaning of the regulation, takes place between affiliated parties if the evidence demonstrates that the exporter directly pays antidumping duties for the affiliated importer or reimburses the importer for such duties.' ... A new policy advanced by Commerce for the first time on appeal is merely a convenient litigation strategy that is not owed deference.

"... Moreover, Commerce and BlueScope’s creative new policy is at odds with the plain language of the reimbursement regulation." The appellant said that the fact that neither Commerce nor BlueScope can point to Commerce's reversal of its interpretation of the reimbursement regulation is telling.