United States Court of International Trade

Court Sustained Commerce’s Final Remand Results in Antidumping Case

Before the Court in Dillinger France S.A. v. United States et. al., Slip Op. 19-88, No. 17-00159 (July 17, 2019) was a challenge to Commerce’s affirmative less-than-fair value sales determination in the antidumping investigation of carbon and alloy steel cut-to-length plate from France. In its previous decision, the Court sustained most of Commerce’s determination but remanded to Commerce to reconsider and explain how it applied partial adverse facts available (“AFA”) to Dillinger’s affiliated service center sales. On remand, Commerce modified and explained its application of partial AFA. Dillinger’s antidumping margin remained unchanged. Commerce and Dillinger jointly requested that the Court sustain Commerce’s remand results. However, Defendant-Intervenor, Nucor Corporation (“Nucor”), argued Commerce’s remand results were unsupported by substantial evidence and contrary to law. For the following reasons, the Court sustained Commerce’s remand results.

“An AFA rate selected by Commerce must reasonably balance the objectives of inducing compliance and determining an accurate rate.” Id. at 5. “Commerce may apply AFA only to informational gaps in the record” Id. at 5. In this case, the Court said Commerce “permissibly applied partial AFA to replace information missing from the record — the manufacturer of some of the plate in the disputed transaction — by attributing all sales to Dillinger.” Id. Nucor argued Commerce “should have substituted the highest non-aberrational net price for the reported sales data to adequately deter future noncooperation by Dillinger.” Id. However, Nucor provided “no evidence that the rate selected was not sufficiently adverse” Id. The Court reasoned that Commerce’s decision to use the sales prices balanced the objectives of inducing compliance and determining an accurate rate because the “reliability of the reported sales prices has not been called into question.” Id. at 6. The Court found that Commerce’s detailed explanation fulfilled the Court’s directive to justify its method of applying partial AFA in this case.

Court Granted Defendant’s Motion for Summary Judgment and Denied Plaintiff’s Motion for Summary Judgment.

Before the Court in New Image Global, Inc. v. United States, Slip Op. 19-90, Court No. 15-00175 (July 23, 2019) were cross -motions for summary judgment concerning the amount of Federal Excise Tax (“FET”) assessed on tobacco products imported by plaintiff. Plaintiff imported “roll your own” tobacco products, subject to FET. Plaintiff declared the weight of the tobacco wraps, used to determine the FET, as .75 grams per a wrap. Customs opened an investigation into the weight of the product. Initially, Customs used the “direct” weighing method in the investigation. The products were removed from packaging and dried for 24 hours before weighing. The average weight under the “direct” method was .71 grams per a wrap. Customs later used second weighing method known as the “indirect” method. Under this method, the packaged product is initially weighed, and then separately all material minus the tobacco wrap was weighed. The weight of the tobacco wrap was calculated by subtracting the weight all the materials, except the tobacco wrap, from the weight of the total package. Customs found an average weight of 0.915 grams per wrap using the “indirect” method. In November 2014, Customs issued a notice of action against plaintiff assessing the FET at 0.915 grams per a wrap. The Court reviewed several issues, including, the Customs authority to tax non tobacco components of the product, and the validity of Customs’ “indirect” method used to weigh tobacco wraps. For the following reasons, defendant’s motion for summary judgment was granted and plaintiff's motion denied.

“It is part of Customs’ revenue function to assess and collect excise taxes on imports, which includes classifying and valuing merchandise for purposes of such assessment.” Id. at 12. The statute authorizing the FET “refers to tobacco products not just tobacco.” Id. at 13. The Court said, “Had Congress intended to tax only the tobacco itself, and not the entire processed tobacco product, then the excise tax statute would have been written so that the tax is determined on the basis of raw tobacco.” Id. at 14. The Court also ruled that despite plaintiff’s objections it was within Customs’ authority to consider an Alcohol and Tobacco Tax and Trade Bureau ruling as part of the agency’s function to collect excise tax.

The next issue the Court dealt with was the validity of Customs’ procedures used to weigh the tobacco wraps. Plaintiff argued that Customs indirect method of weighing was biased against plaintiff and that the test did not conform to the Daubert standards of scientific reliability. The Court found that Customs was correct in deciding not to let the product dry out for twenty-four hours before weighing it, as was done in the “direct” method, because product should be weighed in the condition in which it would be “released from Customs custody.” Id. at 15. In regards to the Daubert issue. Customs employed a method described by the U.S. Pharmacopeia and National Formulary in weighing the tobacco wraps. The Court said “there is simply no support beyond bare assertions that this method lacks support in the scientific community.” As such, summary judgement was granted for the defendant.