Appeals Court Judge Questions Why AD Reimbursement Case Is Before Federal Circuit
In court Dec. 5, U.S. Court of Appeals for the Federal Circuit judges showed significant skepticism about a domestic steel manufacturers’ claim that a foreign steel exporter illegally paid an importer’s antidumping duties (U.S. Steel v. U.S., # 22-2078).
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U.S. Steel, a domestic steel manufacturer, has alleged Australian steel exporter BlueScope illegally reimbursed the affiliated, but independent, U.S. importer BlueScope Americas for the cost of its steel’s duties.
DOJ agreed BlueScope didn't include estimated duties in its prices for BlueScope Americas, but it said BlueScope operated under a sales agreement that the U.S. importer would pay the duties and pass their costs on to another purchaser down the line.
BlueScope Americas' usual customer is SteelScape, also an independent affiliate of BlueScope, DOJ said. SteelScape would place an order from BlueScope Americas at a price that included shipping costs and antidumping duties, DOJ said. BlueScope would then set its price for BlueScope Americas at the amount invoiced to SteelScape, then subtract shipping and AD so that its final price only reflected the value of the steel itself.
While it may appear that BlueScope was subtracting AD from its final steel prices to BlueScope Americas, BlueScope was actually just removing earlier additions to the price and letting its U.S. affiliate pay antidumping duties as the steel’s importer of record, DOJ said.
All of that indicated fair dealing, as the cost of the AD was ultimately borne by a U.S. company, judges said.
“Was I correct that if we were to find for the appellant, it would result in double duties?” a judge asked DOJ’s lawyer. The lawyer agreed.
The judges asked U.S. Steel’s counsel what evidence the company had that BlueScope had illegally reimbursed BlueScope Americas.
U.S. Steel referenced a notation in one of BlueScope Americas' shipping invoices from BlueScope that the shipment was ordered “delivered duty paid.” The notation indicated that BlueScope should have charged its U.S. affiliate a price that included AD, it said, whereas the record showed it didn't. It also mentioned a questionnaire response submitted by BlueScope, which a judge said didn't rise to the level of substantial evidence.
One judge pointed out that the actual price BlueScope Americas paid BlueScope for the steel wasn't available. He said the notation also could easily have been a mistake or a reference to some other sort of duty.
Another judge added that even if she did think the notation raised questions, it wouldn’t be enough “substantial evidence” to overturn the lower court’s decision, the standard of review for the appeal.
DOJ said the invoice that included the “delivery duty paid” notation was to SteelScape.
U.S. Steel also said it wanted to focus on the letter of antidumping laws.
“The regulation doesn’t ask what the U.S. importer’s price to its customer was,” the counsel for U.S. Steel said. “It also doesn’t ask what the U.S. importer declares to customs. It asks, ‘Did the exporter assume the cost of the duties?’”
One judge said she had a “side hustle-type” question for the DOJ lawyer. She asked why the case was before the appeals court at all.
“This seems like such a narrowly tailored case, I’m kind of surprised to see it on appeal,” she said. “Is there just a huge amount of money impacted here by … the double payment, if it were required?”
More administrative reviews had followed with roughly the same set of facts, the DOJ lawyer said, including one that is currently being contested in a case pending at the Court of International Trade.