Eregli Demir ve Celik Fabrikalari T.A.S. v. United States

Slip Op. 18-180
UNITED STATES COURT OF INTERNATIONAL TRADE
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Plaintiff,
and
d2/$.2ö/80(7$/85-,A.S. AND
d2/$.2ö/8',67,&$5(T A.S,
Consolidated Plaintiffs,
v.
UNITED STATES,
Defendant,
and
STEEL DYNAMICS, INC., ET AL.,
Defendant-Intervenors.
Before: Mark A. Barnett, Judge
Consol. Court No. 16-00218
PUBLIC VERSION
OPINION AND ORDER
[The U.S. Department of Commerce’s Remand Redetermination is remanded with
respect to the agency’s duty drawback adjustment calculation methodology and
sustained with respect to the agency’s rejection of international freight corrections.]
Dated: December 27, 2018
Matthew M. Nolan and Diana D. Quaia, Arent Fox, LLP, of Washington, DC, for
&RQVROLGDWHG3ODLQWLIIVdRODNR÷OX0HWDOXUML $6DQGdRODNR÷OX'LV7LFDUHW$6
Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, for Defendant United States. With her
on the brief were Joseph H. Hunt, Assistant Attorney General, and Jeanne E. Davidson,
Director. Of counsel on the brief was Brandon J. Custard, Attorney, Office of the Chief
Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce.
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Paul C. Rosenthal, R. Alan Luberda, David C. Smith, and Joshua R. Morey, Kelley Drye
& Warren LLP, of Washington, DC, for Defendant-Intervenor ArcelorMittal USA LLC.
Stephen A. Jones and Daniel L. Schneiderman, King & Spalding, LLP, of Washington,
DC, for Defendant-Intervenor AK Steel Corporation.
Alan H. Price and Christopher B. Weld, Wiley Rein LLP, of Washington, DC, for
Defendant-Intervenor Nucor Corporation.
Roger B. Schagrin and Christopher T. Cloutier, Schagrin Associates, of Washington,
DC, for Defendant-Intervenors Steel Dynamics, Inc. and SSAB Enterprises LLC.
Thomas M. Beline and Sarah E. Shulman, Cassidy Levy Kent (USA) LLP, of
Washington, DC, for Defendant-Intervenor United States Steel Corporation.
Barnett, Judge: This matter is before the court following the U.S. Department of
Commerce’s (“Commerce” or the “agency”) redetermination upon court-ordered
remand. See Confidential Final Results of Redetermination Pursuant to Remand
(“Remand Redetermination”), ECF No. 105.
3ODLQWLII(UH÷OL'HPLUYHdHOLN)DEULNDODUL7$ù ³(UGHPLU´ and Consolidated
Plaintiffs dRODNR÷OX0HWDOXUML$6DQGdRODNR÷OX'LV7LFDUHW$6 WRJHWKHU³dRODNR÷OX´
each challenged certain aspects of Commerce’s final determination in the sales at less
than fair value investigation of certain hot-rolled steel flat products from the Republic of
Turkey. See Certain Hot-Rolled Steel Flat Products from the Republic of Turkey, 81
Fed. Reg. 53,428 (Dep’t Commerce Aug. 12, 2016) (final determination of sales at less
than fair value; 2014-2015) (“Final Determination”), ECF No. 41-1, and accompanying
Issues and Decision Mem., A-489-826 (Aug. 4, 2016), ECF No. 41-3, as amended by
Certain Hot-Rolled Steel Flat Products from Australia, Brazil, Japan, the Republic of
Korea, the Netherlands, the Republic of Turkey, and the United Kingdom, 81 Fed. Reg.
Case 1:16-cv-00218-MAB Document 124 Filed 01/07/19 Page 2 of 21

Consol. Court No. 16-00218 	Page 3
67,962 (Dep’t Commerce Oct. 3, 2016) (am. final affirmative antidumping
determinations for Australia, the Republic of Korea, and the Republic of Turkey and
antidumping duty orders), ECF No. 41-2; 1 Summons, ECF No. 1 (Erdemir); Summons,
ECF No. 1, Court No. 16- dRODNR÷OX 2UGHU -DQ (&)1R
(consolidating Court Nos. 16-00218 and 16-00232 under lead Court No. 16-00218). 2
Erdemir challenged Commerce’s determinations regarding its home market and U.S.
dates of sale. See 3O¶V0HPLQ6XSSRI0RWRI3O(UH÷OL'HPLUYHdHOLN)DEULNDODUL
7$ùIRU-8SRQWKH$JHQF\5Pursuant to Rule 56.2, ECF No. 52-dRODNR÷OX
challenged Commerce’s determinations regarding duty drawback, indirect selling
expenses, corrections to international ocean freight expenses, cost-averaging
methodology, and treatment of excess heat as a co-product. See Confidential Pls.
dRODNR÷OX0HWDOXUML$SDQGdRODNR÷OX'LV7LFDUHW$60HPRI/DZLQ6XSSRI0RW
for J. on the Agency R. Pursuant to Rule 56.2, ECF No. 53-1.
On March 22, 2018, the court remanded Commerce’s Final Determination with
respect to Erdemir’s home market date of sale; the denial of dRODNR÷OX¶VGXW\GUDZEDFN
1 The administrative record filed in connection with the Final Determination is divided
into a Public Administrative Record (“PR”), ECF No. 41-4, and a Confidential
Administrative Record (“CR”), ECF No. 41-5. The administrative record filed in
connection with the Remand Redetermination is likewise divided into a Public Remand
Record (“PRR”), ECF No. 107-2, and a Confidential Remand Record (“CRR”), ECF No.
107-dRODNR÷OXILOHGMRLQWDSSHQGLFHVFRQWDLQLQJUHFRUGGRFXPHQWVILOHGLQ3DUWLHV¶
remand briefs. See Non-Confidential J.A. to Comments and Reply Comments on
Remand (“PRJA”), ECF No. 117; Confidential J.A. to Comments and Reply Comments
on Remand (“CRJA”), ECF No. 116. The court references the confidential versions of
the relevant record documents and briefs, if applicable, throughout this opinion.
2 The relevant period of investigation (“POI”) is July 1, 2014, to June 30, 2015. Final
Determination, 81 Fed. Reg. at 53,428.
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Consol. Court No. 16-00218 	Page 4
adjustment; and the UHMHFWLRQRIdRODNR÷OX¶VFRUUHFWLRQVWRits international freight
expenses. See Eregli Demir ve Celik Fabrikalari T.A.S v. United States (“Erdemir”), 42
CIT ___, 308 F. Supp. 3d 1297 (2018). 3 The court sustained Commerce’s Final
Determination in all other respects. See id. at 1304.
On July 20, 2018, Commerce filed its Remand Redetermination. Therein,
Commerce revised its date of sale determination for Erdemir’s home market sales;
JUDQWHGdRODNR÷OX¶VGXW\GUDZEDFNDGMXVWPHQWDQGSURYLGHGDGGLWLRQDOHYLGHQFHDQG
explanation supporting its rejection of dRODNR÷OX¶VFRUUHFWLRQVWRLQWHUQDWLRQDOIUHLJKW
expenses. See Remand Redetermination at 1, 5-24.
dRODNR÷OXILOHGFRPPHQWVRSSRVLQJ&RPPHUFH¶VPHWKRGRIFDOFXODWLQJLWVGXW\
drawback adjustment and continued rejection of its freight expense corrections. See
Confidential Consol. 3OVdRODNR÷OX0HWDOXUML$6DQGdRODNR÷OX'LV7LFDUHW$6’s
&RPPHQWVRQ5HPDQG5HGHWHUPLQDWLRQ ³dRODNR÷OX’s Comments”), ECF No. 108.
Defendant United States (“Defendant” or the “Government”) and Defendant-Intervenors
filed comments in support of the Remand Results. See Confidential Def.’s Resp. to
Comments on Remand Redetermination (“Def.’s Resp.”), ECF No. 111; Def.-Ints.’
Comments in Supp. of Remand Results (“Def.-Ints.’ Resp.”), ECF No. 110. 4
3 Erdemir presents background information on this case, familiarity with which is
presumed.
4 Defendant-Intervenors did not oppose Commerce’s home market date of sale
redetermination favorable to Erdemir. Accordingly, this opinion addresses issues
UHOHYDQWVROHO\WRdRODNR÷OX
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For the reasons discussed herein, Commerce’s duty drawback adjustment is
UHPDQGHGIRUIXUWKHUFRQVLGHUDWLRQ&RPPHUFH¶VUHMHFWLRQRIdRODNR÷OX¶Vcorrections to
international freight expenses is sustained.
J URISDICTION AND S TANDARD OF REVIEW
The court has jurisdiction pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930,
as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012), 5 and 28 U.S.C. § 1581(c). The
court will uphold an agency determination that is supported by substantial evidence and
otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). “The results of a
redetermination pursuant to court remand are also reviewed for compliance with the
court’s remand order.” SolarWorld Ams., Inc. v. United States, 41 CIT ___, ___,
273 F. Supp. 3d 1314, 1317 (2017) (quoting Xinjiamei Furniture (Zhangzhou) Co., Ltd.
v. United States, 38 CIT ___, ___, 968 F. Supp. 2d 1255, 1259 (2014) (internal
quotation marks omitted).
DISCUSSION
I. 	Duty Drawback
A. Legal Framework
To determine whether the subject merchandise is being sold at less than fair
value, Commerce compares the export price (“EP”) or constructed export price (“CEP”) 6
5 All further citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S.
Code, and all references to the U.S. Code are to the 2012 edition, unless otherwise
stated.
6 U.S. price may consist of an export price or a constructed export price. Because the
distinctions between export price and constructed export price are not at issue in this
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Consol. Court No. 16-00218 	Page 6
of the subject merchandise to its normal value (“NV”). See generally 19 U.S.C. § 1673
et seq. Generally, an antidumping duty is the amount by which the normal value of a
product—generally, its price in the exporting country—exceeds export price, as
adjusted. See id. § 1673. One of the adjustments Commerce makes to export price
pursuant to 19 U.S.C. § 1677a(c) is known as the “duty drawback adjustment.”
Specifically, Commerce will increase export price by “the amount of any import duties
imposed by the country of exportation which have been rebated, or which have not
been collected, by reason of the exportation of the subject merchandise to the United
States.” Id. § 1677a(c)(1)(B).
This statutory duty drawback adjustment is intended to prevent the dumping
margin from being distorted by import taxes that are imposed on raw materials used to
produce subject merchandise, but which are rebated or exempted from payment when
the subject merchandise is exported to the United States. See Saha Thai Steel Pipe
(Public) Co. Ltd. v. United States, 635 F.3d 1335, 1338 (Fed. Cir. 2011); Wheatland
Tube Co. v. United States, 30 CIT 42, 60, 414 F. Supp. 2d 1271, 1286 (2006), rev'd on
other grounds, 495 F.3d 1355 (Fed. Cir. 2007). The adjustment accounts for the fact
that producers are subject to the import duty when merchandise is sold in the home
market, “which increases home market sales prices and thereby increases [normal
value].” Saha Thai, 635 F.3d at 1338. The statute increases constructed export price
case, the court will refer only to export price. Such references, however, may be
understood as including constructed export price.
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Consol. Court No. 16-00218 	Page 7
“to the level it likely would be absent the duty drawback” to prevent the absence of
import duties from generating or increasing any dumping margin. Id.
Commerce has developed a two-prong test to determine whether a respondent is
entitled to a duty drawback adjustment: “first, . . . that the exemption from import duties
is linked to the exportation of subject merchandise; and second, that there were
sufficient import duties incurred on the imported raw material to account for the amount
of duty drawback received upon the exports of the subject merchandise.” Remand
Redetermination at 6; see also Saha Thai, 635 F.3d at 1340 (affirming the lawfulness of
Commerce's two-prong test).
2QUHPDQG&RPPHUFHGHWHUPLQHGWKDWdRODNR÷OXKDGGHPRQVWUDWHGLWV
entitlement to the duty drawback adjustment. Remand Redetermination at 10-11. 7 At
issue, however, is Commerce’s method of calculating the adjustment.
B. Commerce’s Calculation Methodology
Until recently, Commerce calculated the duty drawback adjustment to U.S. price
(referred to as the sales-side adjustment) by dividing rebated or exempted duties by
total exports and adding the resultant per unit duty burden to EP/CEP. See Rebar
Trade Action Coalition v. United States (“RTAC I”), Slip Op. 15-130, 2015 WL 7573326,
at *4 (CIT Nov. 23, 2015) (granting Commerce’s request for a voluntary remand to
7 3XUVXDQWWR7XUNLVKODZdRODNR÷OXPD\EHH[HPSWHGIURPWKHSD\PHQWRILPSRUW
duties (or receive a refund of duties paid) on certain inputs used in the production of
(exported) subject merchandise. See 4XHVWLRQQDLUH5HVSRIdRODNR÷OXWR6XSSO6HF
D of the U.S. Dep’t of Commerce Antidumping Duty Questionnaire (Feb. 8, 2016), Ex.
SD-32, CR 248-67, PR 218-20, CRJA Tab 4, PRJA Tab 4.
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reconsider the sales-side adjustment methodology as set forth in the Issues and
Decision Mem. for the Final Negative Determination in the Less than Fair Value
Investigation of Steel Concrete Reinforcing Bar from Turkey, A-489-818 (Sept. 8, 2014)
(“Rebar from Turkey Mem.”)).
When producers participate in a duty exemption program, Commerce also makes
a corresponding upward adjustment to the cost of production (“COP”) and constructed
value (“CV”) (referred to as the cost-side adjustment) 8 to account for the cost of the
unpaid import duties for which the producer remains liable until the merchandise
containing the dutiable input(s) is exported and the exemption program requirements
are satisfied. See Saha Thai, 635 F.3d at 1341-44. In affirming Commerce’s inclusion
of implied duty costs in its calculations, the Saha Thai court reasoned that the purpose
of the statutory increase to EP/CEP “is to account for the fact that the import duty costs
are reflected in . . . home market sales prices[] but not . . . sales prices in the United
States[].” Id. at 1342. Thus, “[i]t would be illogical to increase EP to account for import
duties that are purportedly reflected in NV, while simultaneously calculating NV based
on a COP and CV that do not reflect those import duties.” Id. Accordingly, “[u]nder the
8 Commerce calculates normal value using sales in the home market that are at or
above the cost of production. 19 U.S.C. § 1677b(b)(1). When there are no such sales,
Commerce calculates normal value “based on the constructed value of the
merchandise.” Id. The cost of production includes “the cost of materials and of
fabrication or other processing” used in manufacturing; “selling, general, and
administrative expenses”; and the cost of packaging. Id. § 1677b(b)(3). Constructed
value includes similar expenses and an amount for profit. Id. § 1677b(e).
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Consol. Court No. 16-00218 	Page 9
‘matching principle,’ EP, COP, and CV should be increased together, or not at all.” 9 Id.
at 1342-43. 10
In 2016, on remand pursuant to RTAC I, Commerce modified its sales-side
adjustment by allocating exempted duties over total production instead of exports. See
Rebar Trade Action Coalition v. United States (“RTAC II”), Slip Op. 16-88, 2016 WL
5122639, at *3 (CIT Sept. 21, 2016); Final Results of Redetermination Pursuant to
Court Remand, A-489-818 (Apr. 7, 2016), available at http://ia.ita.doc.gov/remands/15-
130.pdf (last visited Dec. 19, 2018) (“Rebar from Turkey Remand Mem.”). Commerce
developed this methodology in response to arguments by domestic producers regarding
distortions in the margin calculations that may arise when the respondent uses fungible
inputs both from foreign sources, which incur import duties, and domestic sources,
which do not. See RTAC II, 2016 WL 5122639, at *3-4. Commerce claimed that
adhering to its prior methodology generated “distortions” in the margin calculations
because the larger denominator on the cost-side resulted in a smaller adjustment to
normal value than U.S. price. Id. at *3 (citing Rebar from Turkey Remand Mem. at 16).
Thus, according to Commerce, equalizing the denominators used in each adjustment
“ensure[d] that the amount added to both sides of the comparison of EP or CEP with NV
is equitable, i.e., duty neutral[,] meeting the purpose of the adjustment as expressed
in Saha Thai.” Id. at *4 (citing Rebar from Turkey Remand Mem. at 18).
9 The “matching principle” is “the basic accounting practice whereby expenses are
matched with benefits derived from them.” Saha Thai, 635 F.3d at 1342 (citation
omitted).
10 dRODNR÷OXGRHVQRWFKDOOHQJH&RPPHUFH¶VDSSOLFDWLRQRIWKHFRVW-side adjustment.
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In subsequent administrative proceedings involving respondents that source
inputs from foreign and domestic suppliers, LQFOXGLQJdRODNR÷OX here, Commerce has
applied its modified sales-side adjustment. See Remand Redetermination at 12, 20-23;
cf. Issues and Decision Mem. for the Final Determination of the Antidumping Duty
Investigation of Certain Corrosion-Resistant Steel Products from India, A-533-863 (May
24, 2016) at 7-11, available at https://enforcement.trade.gov/frn/summary/india/2016-
12986-1.pdf (last visited Dec. 19, 2018); Issues and Decision Mem. for the Final Results
of Antidumping Duty Admin. Review: Welded Carbon Steel Standard Pipe and Tube
Products from Turkey; 2014-2015, A-489-501 (Dec. 12, 2016) at 5-6, available at
https://enforcement.trade.gov/frn/summary/turkey/2016-30541-1.pdf (last visited Dec.
19, 2018). In the underlying proceeding, &RPPHUFHGLYLGHGdRODNR÷OX¶V exempted
duties by the POI total cost of manufacturing subject hot-rolled steel products to derive
a drawback ratio. Remand Redetermination at 21; Am. Final Calculation Mem. for
dRODNR÷OX -XQH  ³dRODNR÷OX&DOF0HP´ at 3, CRR 11, PRR 6, CRJA Tab
20, PRJA Tab 20. Commerce applied that ratio to the CONNUM-specific cost of
manufacturing “to calculate the amount of imputed import duties” to be added to
dRODNR÷OX¶VFRVWRISURGXFWLRQ5HPDQG5HGHWHUPLQDWLRQDWdRODNR÷OX&DOF0HP
at 3. 11 CoPPHUFHVXEVHTXHQWO\FDSSHGdRODNR÷OX¶VXSZDUGDGMXVWPHQWWRexport price
“by the amount of the import duties included in the [cost of production].” Remand
11 “A ‘CONNUM’ is a control number assigned to materially-identical products to
distinguish them from non-identical, i.e., similar, products.” Erdemir, 308 F. Supp. 3d at
1321 n.34 (citation omitted).
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Redetermination at 21; dRODNR÷OX&DOF0HPat 3-4. In so doing, Commerce reiterated
the need for an “equitable, i.e., duty neutral” comparison of export price with normal
value to maintain consistency “with the purpose of the adjustments as affirmed in Saha
Thai.” Remand Redetermination at 12 & n.56 (citing Saha Thai, 635 F.3d at 1344). 12
In response to dRODNR÷OX¶VDUJXPHQWWKDW19 U.S.C. § 1677a(c)(1)(B) requires
Commerce to allocate exempted duties over total exports regardless of the source of
the inputs, Commerce noted the statute’s lack of an explicit allocation methodology and
its corresponding discretion in that regard. Id. at 21-22. Commerce further noted that,
pursuant to its “normal costing methodology, the cost to produce a given product is []
the same, regardless of whether the product is sold domestically or is exported.” Id. at
22.
C. Parties’ Contentions
dRODNR÷OXFRQWHQGVWKDW&RPPHUFH¶VPRGLILHGVDOHV-side adjustment is unlawful
because it attributes some of the adjustment to home market sales, in contravention of
the statutory linkage between the adjustment and exported merchandise, and lessens
the full upward adjustment to which it is entitleddRODNR÷OX¶V&RPPHQWVDW-6, 10.
dRODNR÷OXIXUWKHUFRQWHQGVWKDW&RPPHUFH¶VUHOLDQFHRQSaha Thai to support the
12 Commerce asserted that it granted the duty drawback adjustment “consistent with [its]
practice.” Remand Redetermination at 11 & n.54 (citing Rebar from Turkey Mem. at
Comment 1, accompanying Steel Concrete Reinforcing Bar from Turkey, 79 Fed. Reg.
54,965 (Dep’t Commerce Sept. 15, 2014) (final neg. determination of sales at less than
fair value and final determination of critical circumstances)). As noted, however,
Commerce applied its original sales-side adjustment in that determination. See RTAC I,
2015 WL 7573326, at *4.
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modified sales-side adjustment as ensuring a “duty neutral” approach is misplaced. Id.
at 8-9.
The Government contends that Commerce’s calculation of the duty drawback
adjustment represents a permissible construction of the statute, which is silent on the
issue of allocation. Def.’s Resp. at 9-10, 12. According to the Government, “[h]ad
Congress intended to limit Commerce’s discretion in performing the EP/CEP duty
drawback calculation, . . . the statute would provide that for each unit of subject
merchandise exported, the EP/CEP shall be increased by the amount of duty rebated or
not collected on that unit.” Id. at 10. While recognizing that Saha Thai “does not
address allocation,” the Government contends that the U.S. Court of Appeals for the
Federal Circuit (“Federal Circuit”) “endorsed the concept of a ‘matching principle,’ which
would ensure [duty] neutrality by requiring equal adjustments to both the NV and
EP/CEP sides of the equation.” Id. at 11 (citing Saha Thai, 635 F.3d at 1342-43). The
Government further contends that “dRODNR÷OXLJQRUHVthe distortions” to the margin
calculations that occur “when respondents use a mix of foreign and domestic [inputs].”
Id. at 13; see also id. DW ³dRODNR÷OXVXJJHVWVWKDWLWLVstatutorily entitled to a distorted
margin calculation.”).
Defendant-Intervenors likewise contend that the statute is silent as to how
Commerce should calculate the adjustment and contend that examination of the
statue’s purpose and context confirms that the agency’s interpretation is reasonable.
Def.-Int.’s Resp. at 6. Defendant-Intervenors further contend that “granting a full
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Consol. Court No. 16-00218 	Page 13
upward adjustment to EP/CEP . . . would result in an inequitable comparison [with]
normal value.” Id. at 7. 13
D. Commerce’s Methodology is Remanded
Commerce relies on the purported statutory silence regarding the way it must
calculate the duty drawback adjustment to support its discretionary decision to allocate
exempted duties over total production. See Remand Redetermination at 21; cf. Def.’s
Resp. at 9-10, 12; Def.-Int.’s Resp. at 6. The court’s review of Commerce’s
interpretation and implementation of a statutory scheme is guided by Chevron, U.S.A.,
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). See Apex
Frozen Foods Private Ltd. v. United States, 862 F.3d 1322, 1329 (Fed. Cir. 2017). First,
the court must determine “whether Congress has directly spoken to the precise question
at issue.” Id. (quoting Chevron, 467 U.S. at 842). If Congress's intent is clear, “that is
the end of the matter,” and the court “must give effect to the unambiguously expressed
intent of Congress.” Id. (quoting Chevron, 467 U.S. at 842–43). Only “if the statute is
silent or ambiguous,” must the court determine whether the agency's action “is based on
a permissible construction of the statute.” Id. (quoting Chevron, 467 U.S. at 843).
13 Defendant-Intervenors also support their argument by way of reference to certain
aspects of the Turkish duty drawback regime. See Def.-Int.’s Resp. at 6-7. Commerce,
however, did not discuss or rely on these provisions to support its determination.
Accordingly, the court does not address them. See Burlington Truck Lines, Inc. v.
United States, 371 U.S. 156, 168–69 (1962) (barring the court from accepting “post hoc
rationalizations for agency action,” and noting that it may only sustain the agency's
decision “on the same basis articulated in the order by the agency itself”).
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The court has thrice rejected Commerce’s allocation of foregone duties over total
production as inconsistent with the statutory linkage between those duties and exported
merchandise. See 7RVoHOLN3URILOYH6DF(QGVWULVL$ùY8QLWHG States, 42 CIT ___,
___, 321 F. Supp. 3d 1270, 1275-78 (2018) (Commerce’s adjustment “fails to
adequately connect the adjustment to duties forgiven ‘by reason of’ the products'
exportation to the United States”); Uttam Galva Steels Limited v. United States, 42 CIT
___, ___, 311 F. Supp. 3d 1345, 1355 (2018) (same); RTAC II, 2016 WL 5122639 at *4
(the duty drawback adjustment, “being causally related to exportation, not production, is
allocable only to the exports to which it relates”). The court agrees that Commerce’s
modified sales-side adjustment contravenes the plain language of the statute. 14
As noted, section 1677a(c)(1)(B) requires Commerce to increase “export price
and constructed export price” by “the amount of any import duties imposed by the
country of exportation which have been rebated, or which have not been collected, by
reason of the exportation of the subject merchandise to the United States.” 19 U.S.C.
§ 1677a(c)(1)(B) (emphasis added). Congress, thus, clearly intended the adjustment to
FDSWXUHWKHDPRXQWRIGXWLHVdRODNR÷OXZRXOGKDYHSDLGRQLWVH[SRUWVDOHVEXWIRUWKH
exportation of that merchandise. $OORFDWLQJdRODNR÷OX¶VH[HPSWHGGXWLHVRYHUWRWDO
production “contravenes the plain language of 19 U.S.C. § 1677a(c)(1)(B)” because it
attributes some of the drawback to domestic sales, which do not earn drawback, and
14 While these opinions are not binding on this court, see Algoma Steel Corp. v. United
States, 865 F.2d 240, 243 (Fed. Cir. 1989), the court may nevertheless consult the
reasoning contained therein to the extent that it is persuasive.
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fails to adjust export price by the amount of the import duties exempted by reason of
exportation. See Tosçelik, 321 F. Supp. 3d at 1278. In other words, instead of
calculating the amount of the adjustment on the basis of duties foregone solely in
relation to the exported merchandise eligible for drawback, as the statute requires,
Commerce has calculated an amount that is based on the distribution of some of the
exempted duties to domestic sales, which is contrary to the statute’s plain language.
Even if the statute was ambiguous, as Commerce contends, by lacking a more
explicit methodology, Commerce must “exercise [] its gap-filling authority” in a
“reasonable” manner. See Apex Frozen Foods, 862 F.3d at 1330 (citing Chevron, 467
U.S. at 843–44). Commerce’s exercise of any discretionary authority it has in this
regard was unreasonable because it substantively departed from the guidance
Congress did provide by decoupling the amount of the adjustment from duties forgiven
solely on exported merchandise. See Ningbo Dafa Chem. Fiber Co., Ltd. v. United
States, 580 F.3d 1247, 1253 (Fed. Cir. 2009) (an agency’s statutory interpretation is
unreasonable when it is “manifestly contrary” to the statutory terms) (citation omitted). 15
15 While Commerce regularly uses the term “distortion” to describe the margin effect of
using only exports as the denominator, Commerce’s assertion is unaccompanied by any
analysis to demonstrate the alleged distortion. The court might infer that the use of the
term implies an assumption that the cost of the domestically-sourced input
approximates the import duty-exclusive cost of the foreign-sourced input. Commerce
has not, however, provided any support for this assumption. It stands to reason,
moreover, that a domestic supplier of a particular input that incurs duties when imported
from a foreign supplier would price its product at a level competitive with the duty-
inclusive cost of the imported input. In such a scenario, it is difficult to understand the
margin effect of a proper duty drawback adjustment as distortive.
Case 1:16-cv-00218-MAB Document 124 Filed 01/07/19 Page 15 of 21

Consol. Court No. 16-00218 	Page 16
Commerce’s—and, by extension, the Government’s—reliance on Saha Thai is
also misplaced. See Remand Redetermination at 12; Def.’s Resp. at 11. In Saha Thai,
the Federal Circuit approved Commerce’s decision to utilize the cost-side adjustment in
conjunction with its original sales-side adjustment to ensure that normal value and U.S.
price are compared on a mutually-duty-inclusive basis. See 635 F.3d at 1342 (finding
that Commerce “reasonably decided” to accompany an increase to EP with a
“corresponding increase to COP and CV” because “[i]t would be illogical to increase EP
to account for import duties that are purportedly reflected in NV, while simultaneously
calculating NV based on a COP and CV that do not reflect those import duties”); see
also id. at 1342-43 (“Under the ‘matching principle,’ EP, COP, and CV should be
increased together, or not at all.”). 	The Federal Circuit never stated or otherwise
inferred that the adjustments to EP/CEP and normal value must be “equal,” Def.’s Resp.
at 11, in order to render the comparison between U.S. price and normal value “duty
neutral,” Remand Redetermination at 12. Commerce’s interpretation of the Federal
Circuit’s discussion of duty inclusivity to espouse such a position, which would
neutralize the duty drawback adjustment, goes further than the opinion supports and is
inconsistent with the purpose of the statute. Accordingly, this issue is remanded to the
agency to revise its calculation of the duty drawback adjustment using exports as the
denominator rather than total production. 16
16 dRODNR÷OXXUJHVWKHFRXUWWRFRQVWUDLQ&RPPHUFHRQUHPDQGIURPLPSOHPHQWLQJD
methodology utilized in the remand redetermination pursuant to Uttam Galva, 311 F.
Supp. 3d at 1355. See ÇolDNR÷OX¶V&RPPHQWVDW-12 & Attach. 1. Defendant and
Defendant-Intervenors oppose the request. See Def.’s Resp. at 14-15; Def.-Int.’s Resp.
Case 1:16-cv-00218-MAB Document 124 Filed 01/07/19 Page 16 of 21

Consol. Court No. 16-00218 	Page 17
II. 	Corrections to International Freight Expenses
A. Commerce’s Redetermination
On remand, Commerce reopened the record and requested additional
LQIRUPDWLRQIURPdRODNR÷OXLQRUGHUWRUH-evaluate whether its corrections constituted
“minor corrections to its reported international freight expenses.” Id. at 13 & n.63
(citation omitted). dRODNR÷OXUHVSRQGHGWKDWDOWKRXJKLWKDGLQLWLDOO\³UHSRUWHGWKHJURVV
amount of the international freight charges, . . . in preparation for verification, [it] . . .
noted that certain international freight invoices had been discounted.” Id. at 14 & n.64
(citing dRODNR÷OX¶V5HVSWR'HS¶W¶V6XSSO4XHVWLRQQDLUH -XQH  ³dRODNR÷OX¶V
Suppl. QR”), CRR 1-9, PRR 4, CRJA Tab 18, PRJA Tab 18 dRODNR÷OXidentified the
number of international freight invoices containing discounts and the corresponding
decrease in freight expenses, the number of affected U.S. sales, and the volume of
affected subject merchandise. Id. at 14. 17
at 8-dRODNR÷OX¶VUHTXHVWLVSUemature in that it seeks the court’s opinion on a
methodology that Commerce might not apply on remand and without the benefit of
Commerce’s reasoning to justify, if possible, such an adjustment. Such an opinion
would, moreover, amount to an impermissible advisory opinion because the court would
be opining on matters outside the scope of the instant case and controversy. See
United States v. Fruehauf, 365 U.S. 146, 157 (1961); Verson, A Div. of Allied Prods.
Corp. v. United States, 22 CIT 151, 153-54, 5 F. Supp. 2d 963, 966 (1998) (“[A] federal
court does not have the power to render an advisory opinion on a question simply
because [it] may have to face the same question in the future.”) (internal quotation
marks and citations omitted). $FFRUGLQJO\WKHFRXUWGHFOLQHVdRODNR÷OX¶VUHTXHVW
17 6SHFLILFDOO\dRODNR÷OXH[SODLQHGWKDW[[ ]] out of [[ ]] international ocean freight
LQYRLFHVFRQWDLQHGGLVFRXQWVWKDWGHFUHDVHGdRODNR÷OX¶VUHSRUWHGH[SHQVHVIURP[[
]] U.S. dollars to [[ 	]] U.S. dollars, and those discounts affected [[ 	]] out of [[ 	]]
U.S. sales for the period of investigation, which corresponded to [[ 	]] out of [[ 	]]
metric tons of subject merchandise. Remand Redetermination at 14 & nn.65-67 (citing
dRODNR÷OX¶V6XSSO45 at 8-9).
Case 1:16-cv-00218-MAB Document 124 Filed 01/07/19 Page 17 of 21

Consol. Court No. 16-00218 	Page 18
&RPPHUFHGHWHUPLQHGWKDWdRODNR÷OX¶VFRUUHFWLRQVGLGQRWPHHWWKHFULWHULDIRU
the type of information the agency accepts at verification, to wit, (1) information, the
need for which “was not evident previously”; (2) information that “makes minor
corrections to information already on the record”; or (3) “information [that] corroborates,
supports, or clarifies” existing record information. Id. at 14 & n.68 (citation omitted).
Commerce based its determination that the corrections were not minor on the number
of affected sales, the “amount of new factual information” required to review the
corrections, and that implementation of the corrections would require Commerce “to
ascertain which of the . . . corrected invoices affected each of the . . . POI sales.” 18 Id.
at 14-15, 24. With regard to the first and third criteria, Commerce explained that “the
need for information regarding ÇolaNR÷OX’s international freight expenses was apparent
when [it] submitted its initial . . . questionnaire response,” and the “corrections do not
corroborate, support, or clarify” existing information but, rather, should have been
included in the initial questionnaire response. Id. at 14-15. Commerce stated that it
³DSSOLHGWKHVDPHVWDQGDUGWRHDFKFRUUHFWLRQSUHVHQWHGE\dRODNR÷OXDWYHULILFDWLRQ´
regardless of whether the correction would increase or decrease the margin. Id. at 24.
B. Parties’ Contentions
dRODNR÷OXFRQWHQGVWKDWWKHLQWHUQDWLRQDOIUHLJKWFRUUHFWLRQVZHUHPLQRUEHFDXVH
the discounts represented a small percentage of its total freight costs and total U.S.
18 Commerce noted that “more than 50 [percent] of the invoices individually contained
mistakes,” affecting more than [[ ]] percent of U.S. sales. Id. at 14-15. Making those
corrections would require Commerce to match each of the [[ ]] corrected invoices to
“each of the [[ 	]] POI sales.” Id. at 24.
Case 1:16-cv-00218-MAB Document 124 Filed 01/07/19 Page 18 of 21

Consol. Court No. 16-00218 	Page 19
sales. 19 dRODNR÷OX¶V&RPPHQWVDW20 Defendant contends that incorporating the
corrections would have required Commerce to trace discounts omitted from certain
invoices to the affected sales and, thus, Commerce correctly concluded the corrections
were not minor. Def.’s Resp. at 15-16. Defendant-,QWHUYHQRUVFRQWHQGWKDWdRODNR÷OX¶V
questionnaire responses on remand demonstrate that the corrections were not minor.
Def.-Ints.’ Resp. at 10.
C. Commerce’s Redetermination is Sustained
In determining whether Commerce’s decision is supported by substantial
evidence, the court “may not reweigh the evidence or substitute its own judgment for
that of the agency.” Usinor v. United States, 28 CIT 1107, 1111, 342 F. Supp. 2d 1267,
1272 (2004). $OWKRXJKdRODNR÷OXVHHNVWRGLUHFWWKHFRXUWWRWKH minimal sums
UHSUHVHQWLQJWKHGLVFRXQWVDVDSHUFHQWDJHRIdRODNR÷OX¶VWRWDOIUHLJKWFRVWVDQGtotal
U.S. sales, see supra note 19, the court’s standard of review asks whether the basis for
Commerce’s decision—the number of affected sales and the need to trace discounts
contained in particular invoices to those sales—represents substantial evidence that the
corrections were not minor. “Substantial evidence is ‘such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.’” Huaiyin Foreign
19 The discounts represented [[ 	]] SHUFHQWRIdRODNR÷OX¶VWRWDOIUHLJKWFRVWVDQG[[ 	]]
SHUFHQWRIWRWDO86VDOHVYDOXHdRODNR÷OX¶V&RPPHQWVDW 	QQ-5 (setting forth
the equations resulting in the aforementioned percentages) (citations omitted).
20 dRODNR÷OXDOVRLPSOLHVWKDW&RPPHUFH¶VUHIXVDOWRDFFHSWWKHFRUUHFWLRQVZDV
unreasonable and arbitrary because the agency accepted corrections that increased
dRODNR÷OX¶VGXPSLQJPDUJLQ\HWUHIXVHGWRDFFHSWDFRUUHFWLRQWKDWZRXOGUHGXFHWKH
margin. Id. DWdRODNR÷OXIDLOVKRZHYHUWRSRLQWWRUHFRUGHYLGHQFHVXSSRUWLQJWKLV
speculative assertion.
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Consol. Court No. 16-00218 	Page 20
Trade Corp. (30) v. United States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting
Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). It “requires more than a mere
scintilla,” but “less than the weight of the evidence.” Nucor Corp. v. United States, 34
CIT 70, 72, 675 F. Supp. 2d 1340, 1345 (2010) (quoting Altx, Inc. v. United States, 370
F.3d 1108, 1116 (Fed. Cir. 2004)). Commerce’s determination is supported by
substantial evidence.
dRODNR÷OXUHSRUWHGLWVLQWHUQDWLRQDOIUHLJKWH[SHQVHV³RQDWUDQVDFWLRQVSHFLILF
basis” for direct U.S. sales and sales made through Medtrade, Inc (“Medtrade”).
dRODNR÷OX¶V6XSSO45at 7. Several invoices applicable to each type of sale contained
varying discounts. See id.21 Making the corrections would have required Commerce to
match each affected transaction to particular invoices and their respective discounts.
See Remand Redetermination at 14-15, 24. The number of affected sales and
variations in the discounts affecting those sales provide substantial evidentiary support
for Commerce’s decision that the corrections were not minor. Accordingly, Commerce’s
redetermination on this issue is sustained.
21 [[ 	]] invoices pertaining to direct sales and [[ 	]] invoices pertaining to
Medtrade sales contained discounts. dRODNR÷OX¶V6XSSO45 at 8. For direct sales, the
discounts ranged from [[ 	]] U.S. dollars per metric ton. Id. For Medtrade sales,
the discounts ranged from [[ 	]] U.S. dollars per metric ton. Id.
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Consol. Court No. 16-00218 	Page 21
CONCLUSION AND O RDER
In accordance with the foregoing, it is hereby
ORDERED that Commerce’s Remand Redetermination is remanded for
reconsideration regarding WKHDJHQF\¶VFDOFXODWLRQRIdRODNR÷OX¶VGXW\GUDZEDFN
adjustment, as set forth in Section I; it is further
ORDERED that Commerce’s Remand Redetermination is sustained with respect
WRWKHDJHQF\¶VUHMHFWLRQRIdRODNR÷OX¶VLQWHUQDWLRQDOIUHLJKWFRUUHFWLRQVDVVHWIRUWKLQ
Section II; it is further
ORDERED that Commerce shall file its second remand redetermination on or
before April 3, 2019; it is further
ORDERED that subsequent proceedings shall be governed by USCIT Rule
56.2(h); and it is further
ORDERED that any comments or responsive comments must not exceed 5,000
words.
/s/ 	Mark A. Barnett
Mark A. Barnett, Judge
Dated: December 27, 2018
New York, New York
Case 1:16-cv-00218-MAB Document 124 Filed 01/07/19 Page 21 of 21