Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. v. United States

222 F.Supp.3d 1255

BORUSAN MANNESMANN BORU SANAYI VE TICARET A.S., Plaintiff,

v. UNITED STATES, Defendant,andUnited States Steel Corporation, Defendant–Intervenor.

Slip Op. 17–45

Court No. 14–00009

United States Court of International Trade.

April 20, 2017

Brady W. Mills , Morris, Manning & Martin, LLP, of Washington, D.C., for Plaintiff. With him on the brief were Julie C. Mendoza, Donald B. Cameron, R. Will Planert, Mary S. Hodgins, and Sarah S. Sprinkle.

Patricia M. McCarthy , Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant. With her on the brief were Joyce R. Branda , Acting Assistant Attorney General, Jeanne E. Davidson , Director, Commercial Litigation Branch, Franklin E. White, Jr. , Assistant Director, and Douglas G. Edelschick , Trial Attorney. Of counsel on the brief was Devin S. Sikes , Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Jeffrey D. Gerrish , Skadden, Arps, Slate, Meagher & Flom LLP, of Washington, D.C., for Defendant–Intervenor. With him on the brief were Robert E. Lighthizer and Jamieson L. Greer.

OPINION

RIDGWAY, Judge:

In this action, Plaintiff Borusan Mannesmann Boru Sanayi ve Ticaret A.S. ("Borusan")—a Turkish producer and exporter of standard pipe—contests the final results of the U.S. Department of Commerce's 2011–2012 administrative review of the antidumping duty order covering welded carbon steel standard pipe and tube products from Turkey ("standard pipe").¹ The period of review is May 1, 2011 through April 30, 2012. See Welded Carbon Steel Standard Pipe and Tube Products From Turkey: Final Results of Antidumping Duty Administrative Review; 2011–2012, 78 Fed. Reg. 79,665 (Dec. 31, 2013) ("Final Results"); see also Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative Review: Welded Carbon Steel Standard Pipe and Tube Products from Turkey; 2011–2012 at 2 (Dec. 23, 2013) (Pub. Doc. No. 265) ("Issues & Decision Memorandum").²

Now pending is Borusan's Motion for Judgment on the Agency Record, which raises a single issue: whether, in calculating Borusan's dumping margin, Commerce properly declined to include in Borusan's duty drawback adjustment "yield loss"—i.e., the "scrap" and "second-quality pipe" that are by-products of the company's production of the standard pipe that it exports to the United States. See generally Brief of Plaintiff Borusan Mannesmann Boru Sanayi ve Ticaret A.S. ("Borusan") in Support of Its Motion for Judgment Upon the Agency Record at 1–2, 3, 6–9, 10, 31–36 ("Pl.'s Brief"); Reply Brief of Plaintiff Borusan Mannesmann Boru Sanayi ve Ticaret A.S. ("Borusan") in Response to Defendant's and Defendant–Intervenor's Briefs at 1, 16–22 ("Pl.'s Reply Brief").³

Both the Government and Defendant–Intervenor United States Steel Corporation ("U.S. Steel")—a domestic producer of standard pipe—oppose Borusan's motion and maintain that the Final Results are supported by substantial evidence and are otherwise in accordance with law, and therefore must be sustained. See generally Defendant's Response to Plaintiff's Motion for Judgment on the Agency Record at 2, 3–4, 6, 40–43 ("Def.'s Response Brief"); Memorandum in Opposition to Plaintiff's Motion for Judgment on the Agency Record Filed by Defendant–Intervenor United States Steel Corporation at 1, 4–6, 9, 23–27 ("Def.–Int.'s Response Brief").⁴ In its brief, the Government argues that Borusan did not demonstrate that it was entitled to a duty drawback adjustment for yield loss (i.e. , scrap and second-quality pipe) because Borusan did not substantiate its claim with documentary evidence. Def.'s Response Brief at 2, 6, 40–43. U.S. Steel argues that Commerce's determination to exclude scrap and second-quality pipe from Borusan's duty drawback adjustment is consistent with the plain language of the statute and that Commerce properly determined that Borusan was not entitled to a duty drawback adjustment for yield loss, because the scrap and second-quality pipe are not "subject merchandise," because they were not exported, and because they were sold domestically, on the Turkish market. Def.–Int.'s Response Brief at 1, 4–6, 9, 23–27.

Jurisdiction lies under 28 U.S.C. § 1581(c) (2006).⁵ For the reasons set forth below, Borusan's Motion for Judgment on the Agency Record must be granted, and this matter must be remanded to Commerce for further consideration.

I. Background

Understanding the issue presented in this case requires a brief overview of certain aspects of both U.S. antidumping law and Turkish customs law, which are summarized below in the context of the facts of the case.

A. Overview of the Basic Legal Framework

Dumping and Antidumping Duty Orders . Dumping is the sale of foreign goods in the United States at "less than fair value." 19 U.S.C. § 1677(34) (defining "dumped" and "dumping"); see also United States Steel Corp. v. United States , 621 F.3d 1351, 1360 (Fed. Cir. 2010). If dumping results in material injury (or the threat of material injury) to the relevant domestic industry, Commerce issues an antidumping duty order imposing antidumping duties on imports of the foreign goods into the United States. 19 U.S.C. § 1673 ; see also Union Steel v. United States , 713 F.3d 1101, 1103 (Fed. Cir. 2013). The purpose of imposing antidumping duties is to offset any negative effects that dumping may have on the domestic industry. See generally Sioux Honey Ass'n v. Hartford Fire Ins. Co. , 672 F.3d 1041, 1046–47 (Fed. Cir. 2012) (explaining that "dumping presents unfair competition concerns because foreign companies selling goods below fair value can undercut domestic producers selling those same goods at market prices").

Dumping Margin, Normal Value, and Export Price . The amount of the antidumping duties that are imposed is determined by the "dumping margin," which is "the amount by which the normal value exceeds the export price ... of the subject merchandise." 19 U.S.C. § 1677(35) (emphases added); see also Nan Ya Plastics Corp. v. United States , 810 F.3d 1333, 1337 (Fed. Cir. 2016) (same). The "normal value" of merchandise is generally the price that a foreign producer charges in its home market, while the "export price" is most often the price that the producer charges in the United States. 19 U.S.C. §§ 1677a, 1677b ; see also Nan Ya Plastics Corp. , 810 F.3d at 1337 (stating that dumping margin is the amount by which the price a producer charges in its home market (i.e. , normal value) exceeds the price of the product in the U.S. (i.e. , export price)) (citing United States Steel Corp. , 621 F.3d at 1353 ).

Adjustments to Normal Value and Export Price . In order to ensure a fair, "apples-to-apples" comparison between normal value and export price, the statute directs Commerce to make certain "adjustments" to both. See 19 U.S.C. § 1677a(c) (specifying adjustments to be made to export price, including "duty drawback adjustment"); 19 U.S.C. § 1677b(a)(6) (specifying adjustments to be made to normal value); see also Fla. Citrus Mutual v. United States , 550 F.3d 1105, 1110 (Fed. Cir. 2008) (explaining that purpose of adjustments is to achieve a fair comparison "between U.S. price [i.e. , export price] and foreign market value [i.e. , normal value]"). At issue in this action is the "duty drawback adjustment"—i.e. , an upward adjustment to export price that Commerce is statutorily required to make as part of its antidumping analysis, in order to account for a foreign producer's receipt of any "duty drawback" under the laws of another country. See 19 U.S.C. § 1677a(c)(1)(B).

Duty Drawback . "Duty drawback" is a long-standing tool used by countries around the world to encourage export production. See generally , e.g. , Susan G. Markel, "Tax and Duty Incentives," in Export Practice , 371, 391–92 (Terence P. Stewart ed., 1994) (providing overview of duty drawback program in the U.S.). In general, under a duty drawback program, a country either exempts from import duties—or refunds (i.e. , rebates) import duties that were paid at the time of entry for—goods (e.g. , material inputs or components) that are imported into the country and used to produce merchandise that is then subsequently exported from the country. Depending on the country, the exemption or refund/rebate offered under a duty drawback program may cover all, or just a portion, of the import duties that would otherwise apply.⁶ A country's establishment of a duty drawback program promotes and incentivizes production for exportation, because duty drawback allows businesses in the country to compete in foreign markets without the handicap of including in their sales prices import duties that the companies otherwise would have been required to pay on imported material inputs or components. See generallyid. at 392. (As discussed below, when Borusan imported into Turkey quantities of material inputs essential to the company's production of standard pipe, Borusan availed itself of Turkey's duty drawback laws. See generally infra section I.B.)

Duty Drawback Adjustment . In calculating a foreign producer's dumping margin, to ensure an "apples-to-apples" comparison between normal value and export price, Commerce must—through a "duty drawback adjustment"—account for any duty drawback that the foreign producer received pursuant to the duty drawback program in its home country. Specifically, Commerce is directed by statute to increase the 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) ; see also Saha Thai Steel Pipe (Public) Co. v. United States , 635 F.3d 1335, 1338 (Fed. Cir. 2011) (summarizing duty drawback adjustment statute).⁷ Like any adjustment that increases the export price, a duty drawback adjustment ...