Commerce Should Have Deducted Interest on Unpaid Duties From Exporter's CEP, Producer Says
The Commerce Department should have deducted a German thermal paper exporter's interest accrued from unpaid antidumping duties from that exporter’s constructed export price, domestic producer Domtar argued Jan. 31 (see 2408010048) (Domtar Corp. v. United States, CIT # 24-00113).
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The exporter, Koehler, received a 0.75% AD margin in a 2021-22 administrative review of the AD order, Domtar said.
But in reviews during the late 2000s and early 2010s, Koehler was assessed “roughly” $200 million in antidumping duties after being hit with adverse facts available, Domtar said. It explained Koehler received the unfavorable rate after its “fraudulent” attempt to receive a lower margin by concealing “certain transshipped sales” from Commerce.
But, “as of this writing,” Koehler still hasn’t paid the $200 million it owes the U.S., Domtar claimed. As a result, the exporter has been accruing interest on that debt every year, it said.
The order under which Koehler owes unpaid duties was revoked after a 2015 sunset review, but Commerce initiated a new investigation in 2021 of “substantially the same product,” the domestic producer said.
But, despite appeals by the domestic industry, the department chose in that 2021 investigation to treat the interest expenses Koehler incurred as part of the exporter’s costs of production, refusing to deduct them from Koehler’s constructed export price as indirect selling expenses, it said. It said litigation regarding that 2021 proceeding is currently stayed until an “unrelated issue” is addressed by the U.S. Court of Appeals for the Federal Circuit.
In the review results being targeted by the present litigation, Commerce “for the first time” provided an explanation as to why it categorized Koehler’s interest costs in that way, Domtar said. But it called the explanation insufficient and unsupported by substantial evidence.
First, it argued, Commerce’s usual practice is to consider “interest expenses incurred in selling the subject merchandise” to be “price deductions,” not “cost components,” because the law instructs the department to adjust for “expenses associated with commercial activities in the United States to an unaffiliated purchaser” -- even if those expenses are incurred by an exporter not located in the United States.
Instead, Commerce said in its results that the debt owed by Koehler “arose from thermal paper imports subject to the 2008 order rather than the current 2021 order,” Domtar claimed. But both orders cover the same merchandise, and the “interest expenses at issue clearly arose from Koehler’s thermal paper sales into the United States,” it said.
“[T]hat alone is sufficient under the plain language of the statute and regulation to treat them as [indirect selling expenses],” it argued.