Trade Court Sustains Removal of Affiliate's Land Lease Subsidy From PTFE Resin Exporter's CVD Rate

The Commerce Department properly dropped its subsidy finding in a countervailing duty investigation for respondent Gujarat Fluorochemicals concerning a 30-year land lease to one of its affiliates, Inox Wind Limited, by India's State Industrial Development Corp., the Court of International Trade ruled in an Oct. 13 opinion. Judge Timothy Stanceu defended his prior remand order in the case, which said that based on Commerce's interpretation of its regulation, the subsidy finding couldn't be legal.

"This Court, like any Article III court, must have the ability to decide whether an agency has or has not correctly interpreted its own regulation," Stanceu said. "Where, as here, a judicial decision on the validity of the agency’s legal interpretation is controlling on the issue presented by plaintiff’s claim, this Court must have the ability to order the remedy compelled by the court’s decision on the legal question presented."

The result of the decision lowered Gujarat Fluorochemicals' CVD rate in the investigation on granular polytetrafluorethylene (PTFE) resin from India from 31.89% to 5.39%. Though one of Commerce's other subsidy findings also was remanded, the agency stuck by its decision. The respondent said it was dropping its argument against the finding, which countervailed land Gujarat Fluorochemicals obtained from the Gujarat Industrial Development Corp.

In the investigation, Commerce cited 19 C.F.R. 351.525(b)(6)(iv), which says that Commerce will attribute subsidies received by related input suppliers whose inputs are mainly dedicated to the production of downstream merchandise to the affiliates' combined sales. Stanceu said the provision of electricity is not primarily dedicated to the production of granular PTFE and Commerce misunderstood the production chain (see 2301250035).

On remand, the agency excluded the land lease subsidy finding under protest. Petitioner Daikin America said the court illegally told Commerce what to do on this subsidy, arguing the court is limited to giving Commerce a chance to reconsider its finding. Stanceu said this limitation does not apply here because a second remand "would not have led to an outcome as to the lease of land differing from the one the court ordered." Daikin's course of action would have delayed the litigation, put undue burdens on the parties and been unfair to the plaintiff.

(Gujarat Fluorochemicals Limited v. U.S., Slip Op. 23-151, CIT #22-00120, dated 10/13/23; Judge: Timothy Stanceu; Attorneys: John Gurley of ArentFox for plaintiff Gujarat Fluorochemicals; Daniel Roland for defendant U.S. government; Elizabeth Drake of Schagrin Associates for defendant-intervenor Daikin America)