2017 CIT 45
Ct. Int'l Trade2017Background
- Borusan, a Turkish producer/exporter of welded carbon steel standard pipe, challenged Commerce’s 2011–2012 administrative review that denied a duty-drawback adjustment for "yield loss" (scrap and second-quality pipe) and calculated a 1.79% dumping margin.
- Borusan imports hot-rolled steel coil into Turkey under Turkey’s duty-drawback program; Turkish law allows duty relief for the volume of coils tied to exported finished product and historically granted relief for the full imported coil volume, including allowance for yield loss.
- Yield loss (scrap and second-quality pipe) arises during production; Borusan exports finished prime pipe to the U.S. but sells the by-products domestically in Turkey.
- Turkey modified its duty-drawback rules in 2010 to treat domestic sales of by-products as if those by-products were imported (i.e., subject to import duty and VAT), but the applicable import duty rate for scrap and second-quality pipe during the review period was 0%.
- In the Final Results Commerce excluded yield loss from Borusan’s duty-drawback adjustment, reasoning the by-products were "subject to import duty" under Turkish law; Borusan challenged that decision as unsupported and inadequately explained.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce properly excluded yield loss (scrap and second-quality pipe) from Borusan's duty-drawback adjustment | Borusan: exclusion creates an unfair imbalance between export price and normal value; Turkish law made the applicable duty rate on these by-products 0% during the POR, so excluding them artificially inflates the dumping margin | U.S./U.S. Steel: Commerce correctly excluded yield loss because (per Commerce) the by-products are "subject to import duty" when sold domestically; Government also argues Borusan failed to substantiate the 0% duty rate with documentary proof; U.S. Steel argues by-products are non-subject merchandise and not exported | Court: Grant Borusan’s motion; remand to Commerce. Commerce's explanation did not address Borusan's primary argument (the 0% duty rate), misstated/omitted key aspects of Turkish law, and its reasoning was insufficient and unclearly articulated; post-hoc rationales by Government and U.S. Steel cannot sustain the decision. |
Key Cases Cited
- Saha Thai Steel Pipe (Public) Co. v. United States, 635 F.3d 1335 (Fed. Cir. 2011) (articulates Commerce’s two-prong duty-drawback entitlement test and discusses yield-loss adjustments)
- Nan Ya Plastics Corp. v. United States, 810 F.3d 1333 (Fed. Cir. 2016) (defines dumping margin as difference between normal value and export price)
- CS Wind Vietnam Co. v. United States, 832 F.3d 1367 (Fed. Cir. 2016) (agency must provide a reasoned, evidence-based explanation tying statutory interpretation to findings)
- Amerijet Int'l, Inc. v. Pistole, 753 F.3d 1343 (D.C. Cir. 2014) (agencies must explain reasons for decisions; conclusory statements insufficient)
- Universal Camera Corp. v. NLRB, 340 U.S. 474 (U.S. 1951) (defines substantial-evidence standard)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S. 1983) (agency must articulate a rational connection between facts and policy; cannot rely on post hoc rationale)