CAFC Says Aussie Steel Exporter Didn't Reimburse Affiliated US Importer for AD
The U.S. Court of Appeals for the Federal Circuit on April 4 sustained the Commerce Department's decision that Australian exporter BlueScope Steel (AIS) didn't reimburse its affiliated U.S. importer, BlueScope Steel Americas, for antidumping duties. Judges Kimberly Moore, Todd Hughes and Leonard Stark echoed the Court of International Trade in finding that it would have been "unreasonable" for the exporter to include the AD in the price charged to the importer because the "exporter itself was not responsible for those duties."
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The fact hat AD petitioner U.S. Steel "may be able to point to several instances in the record where BlueScope submitted questionnaire responses that could fairly be read to contradict its overall narrative regarding" BlueScope's supply agreement "is not sufficient to render the agency's decision unreasonable or not based on substantial evidence," Hughes, who wrote the opinion, said.
Daniel Porter, counsel for BlueScope, said in an email that the decision was "expected" after the three-judge panel "expressed skepticism with U.S. Steel’s arguments" at oral argument in December.
AIS was a respondent in the 2017-18 review of the AD order on hot-rolled steel flat products from Australia and sold subject goods to its affiliated importer BlueScope Steel Americas. BlueScope Steel, the parent of both the exporter and importer, also owned a controlling stake in Steelscape, a downstream U.S. customer of the steel flat products.
For the goods going to Steelscape, AIS invoiced BlueScope Steel Americas, which then invoiced Steelscape, with the goods going directly from AIS to Steelscape. U.S. Steel alleged in the AD review that AIS failed to charge BlueScope Steel Americas a predetermined formula price and instead charged the importer a price that accounted for estimated AD, which worked to reimburse the importer for the amount of the AD duties. U.S. Steel said the formula price is set in a supply agreement between the BlueScope entities.
The court said BlueScope and U.S. Steel offered "incompatible interpretations of the Supply Agreement and the entities to which it applies."
BlueScope said the supply deal is a "Substrate Supply Agreement" among AIS, BlueScope Steel Americas and Steelscape, using a formula with two price indices to charge Steelscape. BlueScope said the agreement doesn't set the transfer price for the transaction between AIS and BlueScope Steel Americas but instead starts with the formula price to Steelscape and subtracts the estimated AD the importer will owe. To support this account of the agreement, BlueScope submitted a questionnaire response, a copy of the supply agreement and sales traces showing the amounts paid by AIS to the importer and then by the importer to Steelscape.
U.S. Steel, on the other hand, said that BlueScope Steel Americas, not Steelscape, is required to pay the agreement's formula price, pointing to various documents as support for the claim, including the supply agreement itself and another questionnaire response that includes a worksheet showing the application of the transfer price formula. The pricing formula doesn't show a basis to deduct AD, so the practice of calculating the transfer price by subtracting the estimated duties is "impermissible reimbursement of" AD.
Commerce found no evidence of reimbursement. The appellate court found that Commerce had a "clear understanding of BlueScope's transfer price methodology, including the ways that BlueScope factored estimated antidumping duties into its calculation."
Porter said that "at the oral argument before the Federal Circuit all of the judges on the three judge panel expressed skepticism with U.S. Steel’s arguments that their argument had support in the evidentiary record. And sure enough," the court sustained Commerce's decision.
Hughes also rejected U.S. Steel's claim that the agency failed to apply its reimbursement regulation. "Like the trial court, in the absence of evidence demonstrating that BSA was reimbursed for the duties it paid, we find no departure from an established practice by the agency that would constitute reversible error," the opinion said.
(U.S. Steel Corp. v. U.S., Fed. Cir. # 22-2078, dated 04/04/24; Judges: Kimberly Moore, Todd Hughes and Leonard Stark; Attorneys: Sarah Shulman of Cassidy Levy for plaintiff-appellant U.S. Steel Corp.; Emma Bond for defendant U.S. government; Daniel Porter of Curtis Mallet-Prevost for defendants-appellees led by BlueScope Steel (AIS))