Trade Court Right to Affirm Use of Steel Plate's Sales Value as COP, US Tells CAFC

After a four-times-remanded case from 2017 reached a conclusion in the Court of International Trade and went to appeal at the U.S. Court of Appeals for the Federal Circuit, the U.S. and a petitioner filed opening briefs Aug. 16 defending the trade court's final decision (AG Der Dillinger Huttenwerke v. U.S., Fed. Cir. # 24-1498).

The case was raised by German steel plate exporter AG der Dillinger Huttenwerke, which claims that the Commerce Department wrongly used its non-prime steel plates’ selling prices as a substitute for its costs of production, calling it “circular reasoning.”

The physical characteristics of Dillinger’s non-prime merchandise aren’t recorded, so it’s impossible to adequately calculate that merchandise’s costs, the U.S. said. But Dillinger itself accounts for the costs of production of its non-prime plate using that plate’s sales values, making Commerce’s decision to do the same reasonable, it said.

“That information was verified, came from Dillinger’s own books and records, and best filled the informational gap,” it said.

The trade court agreed in June 2023, finding that the exporter’s failure to provide actual production cost data to the record for non-prime plate justified Commerce’s use of likely selling price as a substitute (see 2306230054).

In turn, Dillinger argues that a non-prime plate costs just as much to make as a prime plate (see 2406250053). Commerce should have instead used the average cost of production of all steel plate for its costs of production analysis, it said.

But the government asked the appeals court to reject that claim. It admitted that “Commerce must use the actual cost of production information when it is available,” but said that non-prime plate’s production costs here are missing.

It cited Commerce, which explained that “where Dillinger cannot produce 98 perfect plates without producing two imperfect plates, the lost value of the two imperfect plates is actually a cost of producing the 98 perfect ones and should be accounted for as such.” As a result, it would be unreasonable to use the average total cost of production for all steel plate instead, it said.

In other words, Commerce counted the sales of non-prime plate as “lost value” to Dillinger, as, had that non-prime plate been up to standard, it could have been sold at prime plate prices -- making it an additional indirect cost in the manufacture of prime plate only, it said.

The court also should affirm Commerce’s decision to not accept Dillinger’s submission of a product characteristic code for sour vessel plate “four months after Commerce finalized the product characteristic codes for all of the cut-to-length steel plate investigations, covering 11 countries,” the government said.

Dillinger argued that the code wasn’t untimely because, after receiving a letter that allowed respondents to raise additional quality codes, it alerted the department “it might propose additional quality code subcategories” in a later filing. But Dillinger hasn’t cited any authorities for this argument, “nor are we aware of any,” the U.S. said.

“Commerce was not required to consider an untimely-submitted quality code merely because Dillinger suggested that it might later propose other codes,” it said.

The exporter also claimed that Commerce held parties to the investigation to different standards because it did accept other proposed quality codes from a petitioner, Nucor Steel. The difference, however, is that Nucor made its proposals during the correct comment period, the government said.

It noted that “Dillinger has never explained why it waited four months after Commerce finalized the product characteristics for all of the cut-to-length steel investigations to submit another sour service code.”

Petitioner Nucor made the same arguments in its own brief, filed the same day.