Trade Courts Update for Week of May 25, 2016

United States Court of International Trade


Final Determination Remanded in Part

Before the court in Tension Steel Industries Co., Ltd v. United States, Court No. 14-218, Slip Op. 16-51 (published May 24, 2016), were motions for judgment on the agency record of Consolidated Plaintiffs Tension Steel Industries Co., Ltd. (“Tension”) and Maverick Tube Corporation (“Maverick”). This action involved the U.S. Department of Commerce’s (“Commerce”) final determination in the less than fair value investigation of certain oil country tubular goods (“OCTG”) from Taiwan. See Certain Oil Country Tubular Goods from Taiwan, 79 Fed. Reg. 41,979 (Dep’t of Commerce July 18, 2014) (final LTFV determ.), as amended, 79 Fed. Reg. 46,403 (Dep’t of Commerce Aug. 8, 2014) (“Final Determination”).  While the court sustained the majority of Commerce’s decisions in the final determination, it remanded the decision in regards Commerce’s refusal to accept some of Tension’s rebate changes as it applies to home market sales. Commerce has developed a practice of rejecting claimed rebate adjustments when a respondent’s customers lacked knowledge of the terms and conditions of the rebates at or before the time of sale.  According to noted caselaw and regulation, Commerce must recognize any rebates or post-sale downward adjustments in the price charged for the foreign like product, which will be reflected in the calculated normal value. For this reason the court asked to remand this issue back to Commerce.

As for other issues, the court disagreed with Maverick that respondent Chung Hung Steel Corporation (“CHS”) was not entitled to credit to offset VAT used to produce subject merchandise to be exported. Moreover, the court agreed that the date of shipment was the date of sale for CHS, where the terms have been set and may not be altered after shipment.

Maverick disagreed with Commerce’s valuation of CHS’s non-prime pipe at the net recovery price rather than the full cost incurred to produce the product. However, Maverick did not challenge the fact that Commerce determined that the non-prime pipe was a by-product of OCTG production, and therefore under the principles of GAAP could not be valued at the cost of prime OCTG. Thus the court sustained Commerce’s decision as to the value of CHS’ non-prime pipe.

Likewise the court disagreed with Maverick’s challenges: that Tension should not have succeeded on its claimed rebate adjustments; that Tension was not affiliated with its supplier, Company A; and that Tension should have been collapsed with Company B, the parent to Company A.


Court Granted Government’s Motion for Summary Judgment

In Chemtall, Inc. v. United States, Court No. 12-79, Slip Op. 16-52 (May 25, 2016), Plaintiff Chemtall, Inc. challenged the decision of Defendant U.S. Customs and Border Protection (“Customs”) denying Chemtall’s protests of Customs’ classification of the imported “acrylamide tertiary butyl sulfonic acid” (“ATBS”) within the Harmonized Tariff Schedule of the United States (“HTSUS”). Customs classified the merchandise as “Carboxyamide-function compounds; amide-function compounds of carbonic acid: Acyclic amides (including acyclic carbamates) and their derivatives; salts thereof: Other: Other” under HTSUS subheading 2924.19.80, which carries a 6.5% duty rate. Plaintiff claimed that the merchandise was properly classified as “Carboxyamide-function compounds; amide-function compounds of carbonic acid: Acyclic amides (including acyclic carbamates) and their derivatives; salts thereof: Other: Amides: Acrylamide” under HTSUS subheading 2924.19.11, which carries a 3.7% duty rate.  The issue in this case was whether the subject ATBS was an amide or a derivative of an amide.  Because the court defined an amide pursuant to the Explanatory Notes to heading 2924, as “compounds with an amide functional group and either hydrogen, alkyl radicals, or aryl radicals attached,” plaintiff’s subject merchandise which contains substituted hydrocarbyls are not simple amides.  According to the court, ATBS is a derivative of acrylamide because they share the same chemical structure except for the compounds located in the R3 position.  For these reasons, the court denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment.