CIT Says Interest Accrued on Unpaid Antidumping Duties Not Indirect Selling Expense
The Commerce Department properly decided not to treat accrued interest on unpaid antidumping duties as an indirect selling expense for AD respondent Koehler Paper in the 2021-22 administrative review of the AD order on thermal paper from Germany, the Court of International Trade held on Oct. 10. Judge Gary Katzmann said Commerce reasonably found the interest on the duties to not fall under the statutory or regulatory definition of an indirect selling expense, permissibly including the interest in the cost of producing the subject thermal paper.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
At issue is interest currently accruing on around $200 million in unpaid AD Koehler allegedly owes under the 2008 AD order covering German thermal paper. The U.S. is currently attempting to get the exporter to fork over these duties in a separate case at the trade court, which is also before Katzmann (see 2503270034). The interest on these duties accrued during the 2021-22 review period.
In the review, Commerce accounted for the interest expenses, despite the fact that Koehler didn't recognize or record the interest, by including it in the exporter's cost of production calculation. Petitioner Domtar argued that the agency should categorize the interest as an indirect selling expense that should be deducted from the exporter's constructed export price. Commerce rejected this claim, finding the interest isn't related to Koehler's sales in the U.S.
Katzmann reviewed Domtar's claim, first noting the statutory and regulatory definition of an indirect selling expense. Under the statute, 19 U.S.C. 1677a(d)(1), indirect selling expenses are "generally incurred ... in selling the subject merchandise," the court noted. The agency's regulation, 19 C.F.R. 351.402(b), adds that indirect selling expenses are “associated with commercial activities in the United States that relate to the sale to an unaffiliated purchaser, no matter where or when paid.”
The court ultimately held that the interest on the unpaid duties didn't qualify as an indirect selling expense under either definition. Katzmann said the statute's mention of "subject merchandise" means only merchandise sold during the review period. The judge noted the trade court's holding in Allegheny Ludlum v. U.S., when the court said the AD statute defines "subject merchandise" as "that which shares common physical characteristics and falls within the temporal scope of a review.”
In the present review, the subject merchandise is thermal paper sold during the review period, and a "fair 'apples-to-apples' comparison is between thermal paper sold in the United States and thermal paper sold in Germany during that period of review." The thermal paper sold in 2008 for which the duties are owed "was subject to different market conditions than merchandise sold in 2021 and may have been priced differently," the judge noted.
Including goods sold outside the review period when calculating normal value "would not result in the fair comparison that Commerce is tasked with making and would result in an antidumping margin that is not reflective of the period of review," Katzmann said.
Domtar said Commerce's established practice is to treat interest expenses incurred in selling the subject merchandise as indirect selling expenses, citing CIT's decision NTN Bearing v. U.S. In that case, the trade court upheld Commerce's policy of not treating antidumping duties and AD cash deposits as indirect selling expenses deducted from export price, ruling that doing so "would involve a circular logic that could result in an unending spiral of deductions for an amount that is intended to represent the actual offset for the dumping.”
However, the NTN Bearing court did uphold the agency's decision not to remove interest incurred on AD from indirect selling expenses, since they aren't a "direct, inevitable consequence" of an AD order. Katzmann said the NTN Bearing court didn't "closely or independently scrutinize whether the interest expenses met the statutory and regulatory standards for indirect selling expenses in the first place," noting that this question is squarely before the court in this case.
The petitioner additionally argued that Koehler shouldn't be allowed to "maintain virtually duty-free access" to the U.S. market, as would be allowed by its "insignificant margin" in the present review, "without paying final assessments on past thermal paper entries." Domtar said deducting the interest from Koehler's export price, thus raising its AD rate, would create an incentive for the company to pay its debts.
Katzmann rejected this claim, finding it's "not within the province of the court to consider the policy implications of this ruling on Koehler’s actions." While this may be a "respectable goal, such a policy objective cannot overcome statutory text and precedent."
(Domtar Corp. v. United States, Slip Op. 25-137, CIT # 24-00113, dated 10/10/25; Judge: Gary Katzmann; Attorneys: Daniel Schneiderman of King & Spalding for plaintiff Domtar Corp.; Emma Bond for defendant U.S. government; Thomas Trendl of Steptoe for defendant-intervenor Koehler Paper; R. Will Planert of Morris Manning for defendant-intervenors Matra Americas and Matra Atlantic)