United States Court of International Trade

Remand Required in Redetermination of Steel Concrete Reinforcing Bar from Turkey

The court considered remand results in Rebar Trade Action Coalition v. United States et al., Court No. 14-268, Slip Op. 16-88 (September 21, 2016).  There were several aspects of Commerce’s decision in SteelConcrete Reinforcing Bar From Turkey: Final Negative Determination of Sales at Less Than Fair Value and Final Determination of Critical Circumstances, 79 Fed. Reg. 21986 (Sep. 15, 2014)(“Final Determination”).  The court reviewed the following in the Redetermination:  (1)the decision to grant duty drawback adjustment to respondents ICDAS Celik Enerji Tersane ve Ulasim, A.S. (“Icdas”) and Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi A.S. (“Habas”), in particular to account for the Turkish Resource Utilization Fund (“KKDF”) tax ultimately not collected, pursuant to the Turkish Inward Processing Regime (“IPR”), on imports of raw materials incorporated into exports; (2) the calculation of the duty drawback adjustment; (3) the decision to use the date of invoice as the date of sale; and (4) a determination concerning the alloy content of Icdas’s steel billets.

For purposes of the duty drawback adjustment, Commerce failed to account for the fact the drawback affected the export price to constructed export price ratio (EP/CEP).  The court stated, that the U.S. price “adjustment for drawback, being causally related to exportation, not production, is allocable only to the exports to which it relates; therefore, because the result of the methodology applied in the Redetermination apparently denied the full adjustment to EP/CEP which Icdas is lawfully entitled without adequate justification, further remand for reconsideration (and justification of any modification) is required.” Slip Op. pg. 10.   However, the court agreed with the Redetermination that Commerce’s standard duty drawback methodology was flawed insofar as it produces a distorted comparison of a per-unit NV with a per-unit EP/CEP when production involves a mixture of foreign-sourced and domestic-sourced inputs. The matter was remanded back to Commerce for further explanation and to resolve the imbalance created by the current duty drawback methodology.  Other issues remanded were the date of sale (whether it be the date of purchase order or date of invoice) and whether “correction” to cap the adjusted/attributed alloy costs so that they do not exceed total alloy costs incurred during the POI was appropriate.

United States Court of Appeals for the Federal Circuit

CIT Case on Classification of Carnitine Products Reversed

In Sigma-Tau Health Science, Inc. AKA Sigma-Tau Health Science LLC v. United States Court No. 2016-1125 (September 26, 2016),  that concerned the classification of two chemical carnitine products, L-Tauro and GlycoCarn, Sigma-Tau Health Science, Inc. (“Sigma-Tau”) protested liquidations of entries of these products.  Sigma-Tau argued that the products should be classified under HTSUS heading 2936 (which encompasses “provitamins and vitamins”), subheading 2936.29.50, a duty-free classification.  The Court of International Trade (“CIT”) concluded that Sigma-Tau’s products should be classified under a different subheading, 2923.90.00, making them ineligible for duty-free treatment. Sigma-Tau HealthScience, Inc. v. United States (“Sigma-Tau”), 98 F. Supp. 3d 1365, 1377–78 (Ct. Int’l Trade 2015).

On appeal, the parties agreed that the only issue was whether Sigma-Tau’s products are properly classified as vitamins under HTSUS heading 2936. In rejecting the Explanatory Note definition of “vitamin,” the Federal Circuit created its own definition. It stated, “We therefore adopt, as the definition of “vitamin,” the following: vitamins are organic chemical substances that are essential micronutrients because, in general, the body cannot produce them or produce sufficient amounts of them.”  Slip Op., pg.16.  Because neonates require L-Carnitine to grow, and do not synthesize them endogenously, they require an exogenous supply of L-Carnitine. Because L-Carnitine are essential micronutrients that neonates require, the Federal Circuit found them to be “vitamins” under Heading 2936. Therefore, the Federal Circuit agreed with Sigma-Tau that its carnitine products are properly classified under that heading, because carnitine is a vitamin in infants less than four weeks old or neonates.