[00:00:00] Speaker 01:
The United States Court of Appeals for the Federal Circuit is now open and in session.

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God save the United States and this honorable court.

[00:00:13] Speaker 00:
Good morning.

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We'll hear argument first in number 20-1461, Autumn Galvesteels Limited versus United States.

[00:00:22] Speaker 00:
This is Drake.

[00:00:25] Speaker 03:
Good morning.

[00:00:26] Speaker 03:
May it please support?

[00:00:27] Speaker 03:
This is Elizabeth Drake of Chagrin Associates on behalf of Defendant Intervener Appellants, Steel Dynamics, ArcelorMittal, and United States Steel Corporation.

[00:00:37] Speaker 03:
We respectfully request that this honorable court reverse... How are you depositing the argument?

[00:00:41] Speaker 00:
Is it... Are you addressing the same issue or a different issue?

[00:00:46] Speaker 03:
We are addressing the same issue, but we submitted separate briefs, so I will open the argument and then Ms.

[00:00:52] Speaker 03:
Thorson will add to the direct argument when I'm finished.

[00:00:56] Speaker 00:
Okay, I think we're going to have to choose one of you to give the reply because I don't think we want to hear two replies.

[00:01:04] Speaker 03:
Okay, may I confer with Ms.

[00:01:06] Speaker 03:
Thorsen and one of us will do the reply?

[00:01:10] Speaker 03:
Okay, thank you.

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May I proceed?

[00:01:12] Speaker 00:
Yeah, why don't you reset the clock, please?

[00:01:16] Speaker 00:
Okay.

[00:01:16] Speaker 00:
Okay, thank you.

[00:01:18] Speaker 00:
Okay, we're ready to proceed.

[00:01:18] Speaker 00:
Yeah.

[00:01:20] Speaker 03:
Thank you.

[00:01:21] Speaker 03:
Again, Elizabeth Drake, on behalf of Defendant Intervener Appellant Steel Dynamics, ArcelorMittal, and United States Steel Corporation.

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We respectfully request that this honorable court reverse the Court of International Trade and reinstate Commerce's original determination.

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Commerce's original duty drawback adjustment was in accordance with the law and this court's precedent.

[00:01:42] Speaker 00:
I'm having trouble understanding it.

[00:01:44] Speaker 00:
If I understand correctly what happened

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And the first thing is that the rebates, if we can call them that, were allocated among the entire production, both domestic and U.S.

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imports.

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And how is that consistent with the statute when the rebates are only given because of exports to the United States?

[00:02:13] Speaker 03:
The reason it's consistent, Your Honor, is because the entire purpose of the duty drawback adjustment is to increase export price by the amount of rebates to account for the fact that those import duty costs are actually reflected in normal value.

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That's what this Court found in Saha Tai.

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So the purpose of the adjustment is to correct that imbalance between a normal value that does contain duties

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and an export price that does not contain duties.

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But Sahatai doesn't say that you can do anything except take these rebates, which are attributable to U.S.

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sales, and use them to increase the U.S.

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price.

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And I'm just not understanding how the statute or Sahatai allows that.

[00:03:03] Speaker 00:
Sahatai, of course, does

[00:03:06] Speaker 00:
there has to be a corresponding entry on the normal value side, but that's not the approach that commerce took in the first determination, right?

[00:03:17] Speaker 03:
Right, because commerce was faced with a situation where the respondent was using both imported and domestic raw materials, and so some were subject to duty and some were not.

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And there was those, which raw materials were used in exports versus home market sales

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was not tracked by the respondent.

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They tracked the amount of the duties paid.

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They tracked the amount of the duties rebated or exempted.

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But those inputs were not literally physically tied just to exports.

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And so the only way for commerce to determine what duty burden actually existed in normal value was to use a methodology where it assumed

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that both domestic and imported inputs were used proportionally in product that was sold domestically and in product that was exported.

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For that reason, they used the denominator of total production to calculate both the sales adjustment, that was the upward adjustment to export price, and the cost adjustment, which was confirmed in FAFSA-TI.

[00:04:25] Speaker 01:
This is Judge Chen speaking.

[00:04:28] Speaker 01:
I just want to confirm

[00:04:30] Speaker 01:
Before Commerce begins calculating what a duty drawback adjustment should be for a certain set of imports, it first conducts a two-pronged test to determine whether a duty drawback adjustment should be given at all, right?

[00:04:49] Speaker 01:
Correct.

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And that two-pronged test, Commerce looks into whether there's any link between

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what's getting exported out from that home country and whether that company was getting certain inputs from a foreign source that would otherwise cause it to have to pay import duties.

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Is that right?

[00:05:18] Speaker 01:
That's correct.

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And then the next question is, if so, then the amount of that foreign source input

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that the company received, is it a large enough amount that it would cover the amount of inputs that were required in order for all those exported goods that came here to the United States?

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Is that right?

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The link is that the company has to, the Indian system has to export a sufficient amount to account for the imports that have not been subject to the duty.

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Right, and that was found to be the case here, is that right?

[00:05:59] Speaker 03:
Commerce did find that the two-prong test was met, but they did not find that all of those, all imports were necessarily consumed in the production of exports.

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All that was found was that under the Indian system, you are allowed to

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import duty-free as long as you export a certain amount.

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But the country of India, the Indian government, gave Uttam Gawal full import duty relief for those raw materials that came in from a foreign source.

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Is that right?

[00:06:38] Speaker 03:
Only to the extent that Uttam Gawal exported a sufficient amount, if you

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import x duty free, you're allowed to export y amount, or if you, excuse me, if you export y amount, you're allowed to import x duty free.

[00:06:57] Speaker 01:
Okay, then just narrowly looking at the relevant statute we have in front of us, 1677 AC1B, why doesn't all of those facts we just agreed on track the statutory language that mandates, at least for the

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export price side, we give the full upward adjustment of the amount of import duties.

[00:07:26] Speaker 03:
Because the amount of the adjustment should only reach whatever amount of duty burden actually exists on normal value.

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And that amount is unknown.

[00:07:39] Speaker 01:
And so because we do not know... I'm sorry, did you just say normal value?

[00:07:45] Speaker 03:
Right, the amount of the increase to export price in Sochi, the court said the reason we increase export price with the exempted duties is to reach a fair comparison because we're presuming that the normal value does contain these import duties.

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But that presumption is not necessarily correct.

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And that's why commerce said we need to actually assume that both the imported inputs and the domestic inputs are proportionally

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consumed in both production for home market and export because we don't know the actual amount of the duties that are reflected in normal value.

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And if we don't know that, we don't know what export price adjustment actually achieves a fair comparison.

[00:08:29] Speaker 00:
I'm sorry.

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I just don't understand what you're saying.

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I mean, if there's a duty drawback adjustment with respect to the inputs for 100 units and 100 units are

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exported to the United States, why doesn't the duty drawback attributable to those 100 units increase the US price?

[00:08:54] Speaker 00:
Why not?

[00:08:57] Speaker 03:
Because that scenario assumes that 100 units were assessed with duties to be used to produce the 100 units sold in the home market.

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And that assumption doesn't hold when the producer

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Both have domestic inputs that have no duty burden whatsoever and imported inputs, some with a duty burden and some with not.

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So that assumption is not borne out by the facts of this case.

[00:09:23] Speaker 03:
I believe I'm close to out of my time.

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If the panel has further questions, we'll hear from Ms.

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Thorson.

[00:09:35] Speaker 03:
Thank you.

[00:09:37] Speaker 04:
Thank you, Your Honor.

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May it please the court.

[00:09:39] Speaker 04:
I'm Maureen Thorsten of Wiley-Ryne here today on behalf of Nucor.

[00:09:43] Speaker 04:
Congress provided for the statutory drawback adjustment because it understood that foreign drawback programs create differences in tax incidence, making it cheaper to produce and price goods for exports than for domestic consumption.

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Point of the adjustment is to prevent the difference in tax incidence.

[00:10:01] Speaker 00:
Try to address what Judge Chen and I were asking about.

[00:10:05] Speaker 00:
In my example,

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You get the drawback for the inputs for 100 units.

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100 units are exported to the United States and so you have to increase the US price by the duty drawback attributable to 100 units.

[00:10:20] Speaker 00:
That's the way it seems as though under the statute it ought to be done and yet commerce didn't do that.

[00:10:29] Speaker 04:
What the court explained in Sahatai is that the upward adjustment to export price is made to account for the fact that import duty costs are reflected in normal value while export price is presumptively duty exclusive.

[00:10:43] Speaker 04:
But given that the statutory goal is to bring export price to the same duty inclusive basis as normal value, it makes sense for commerce to consider the degree to which import duty costs are reflected in normal value when calculating the sales side drawback adjustment.

[00:10:59] Speaker 04:
And where a respondent uses both imported and domestically sourced inputs, commerce cannot simply assume that the respondent's overall costs or the normal value based on them reflect only materials that were nominally subject to duty.

[00:11:12] Speaker 00:
Your idea that the specific items exported to the United States might have been from domestic inputs

[00:11:23] Speaker 00:
rather than foreign inputs, and that's the justification for departing from the previous rule?

[00:11:31] Speaker 04:
I'm not saying it's exactly the justification, but it's certainly possible.

[00:11:36] Speaker 04:
I would argue that the traceability.

[00:11:38] Speaker 00:
No, no, I understand this.

[00:11:39] Speaker 00:
What is the theory that the exports to the US might have been made using domestic inputs?

[00:11:47] Speaker 00:
rather than for an input and therefore that's the justification for this allocation.

[00:11:53] Speaker 00:
Is that it?

[00:11:53] Speaker 04:
Well, it's certainly an assumption.

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Again, I don't know that it's entirely the justification, but the assumption commerce made.

[00:12:00] Speaker 04:
Wait, wait.

[00:12:02] Speaker 00:
Yes.

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Is that part of the justification?

[00:12:05] Speaker 04:
Yes, it is part of the justification because commerce found

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that Utungalva used both domestic inputs and foreign inputs in their production.

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And Commerce had no reason to believe that they used only domestic inputs to produce for domestic market and only imported inputs to produce for the export market.

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It was a blend.

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So Commerce said, well, what's the effect of this blended sourcing scenario on your overall cost of production?

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drawback is allowed only with respect to items that are exported to the United States and calculated.

[00:12:47] Speaker 00:
You have to show that that's the case.

[00:12:51] Speaker 00:
What difference does it make whether the particular units were used domestically or exported when the overall relationship between

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the duty drawback and the U.S.

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exports is 100 to 100.

[00:13:14] Speaker 04:
I'd say it only matters, Your Honor, in as much as the purpose of the drawback adjustment as explained in SAHA-TIES can ensure that both export price and cost of production are calculated as if the drawback program didn't exist.

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And so there has to be an inquiry into the amount of duty burden and the cost of production.

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And in a mixed sourcing scenario, you can't assume that the cost of production only reflects materials that were nominally subject to an import duty.

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The actual per unit cost of the duty reflected normal value is in fact going to be the average duty cost included in the cost of producing the merchandise for both markets, which means that export price should accordingly only be raised in proportion with the amount of dutyable inputs used in overall production.

[00:13:58] Speaker 04:
cutting into Ms.

[00:13:59] Speaker 04:
Drake's rebuttal time.

[00:14:00] Speaker 04:
Ms.

[00:14:01] Speaker 01:
Thorson, I'm sorry.

[00:14:02] Speaker 01:
I've just got a quick question here.

[00:14:04] Speaker 01:
OK.

[00:14:05] Speaker 01:
Do you have any idea why the United States, during the course of this appeal, never chose to defend this approach that it did in its final determination?

[00:14:20] Speaker 04:
Well, they certainly defended it below at the CIT.

[00:14:24] Speaker 01:
You know what I'm talking about.

[00:14:26] Speaker 01:
I'm talking about this appeal.

[00:14:28] Speaker 04:
Oh, okay.

[00:14:28] Speaker 04:
Yes, the government's withdrawal of a... Unfortunately, Your Honor, you know, I'm not the government.

[00:14:34] Speaker 04:
I can't opine, but I can tell you that based on what's going on at the Department of Commerce, I have seen no... I haven't seen the Department of Commerce ceasing to use this methodology.

[00:14:44] Speaker 04:
So whatever the Solicitor General's Office or the DOJ was, whatever their thoughts were, it doesn't seem to be coming out of any change of heart on the Commerce Department's point from the Commerce Department.

[00:15:00] Speaker 00:
Okay.

[00:15:01] Speaker 00:
We'll give you two minutes to rebuttal whichever of you is going to do it.

[00:15:06] Speaker 04:
Thank you, Your Honor.

[00:15:07] Speaker 04:
I'll be letting Ms.

[00:15:08] Speaker 04:
Drake handle that.

[00:15:10] Speaker 00:
Okay.

[00:15:10] Speaker 00:
We'll hear from Ms.

[00:15:12] Speaker 00:
Cuaia.

[00:15:15] Speaker 02:
Yes.

[00:15:15] Speaker 02:
Good morning, Your Honor.

[00:15:17] Speaker 02:
This is Diana Cuaia on behalf from Aaron Fox on behalf of plaintiff Aboli Utamgalva.

[00:15:23] Speaker 02:
The issue before the court today is the calculation of duty drawback to expert price.

[00:15:28] Speaker 00:
And just to be clear, we don't have any issue before us as to the propriety of the second we-men determination calculation, right?

[00:15:39] Speaker 00:
Because that doesn't affect the dumping duty.

[00:15:44] Speaker 02:
That's correct, Your Honor.

[00:15:45] Speaker 02:
As calculated in the second we-men result, the margin for Utah and Galva is de minimis.

[00:15:54] Speaker 02:
And that's why we ask that it be affirmed.

[00:15:59] Speaker 00:
OK, so we don't have to get into the question of whether they calculated this correctly in the second remand determination since you're not arguing about the propriety of the normal value adjustment, right?

[00:16:14] Speaker 02:
We're not, Your Honor.

[00:16:16] Speaker 02:
Conceptually, we don't necessarily agree with commerce's choice of making an adjustment to

[00:16:25] Speaker 02:
to normal value as opposed to cost of production, but we are not taking issue with that part of their calculation.

[00:16:32] Speaker 02:
Okay.

[00:16:32] Speaker 02:
That is correct.

[00:16:33] Speaker 02:
In both the first and the second remarry determination, the Commerce Department granted Utam Galvat the full amount of the duty drawback on export sales.

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And this was different from the final determination, where Commerce calculated an adjustment only for the cost of

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production, essentially based on total duty exemptions in the general order divided by total production.

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And then that imputed duty amount was applied also as the normals out as the adjustment to US price.

[00:17:06] Speaker 02:
And that was what we believed was inconsistent with the statute, and the Court of International Trade also remanded as being inconsistent with the statute.

[00:17:18] Speaker 02:
What we heard this morning and from Appellant's brief is this notion that duty drawback is somehow conditioned on any findings as to whether home market prices are duty inclusive.

[00:17:31] Speaker 02:
And there is no basis in the statute for this notion that import duties embedded in normal value must be equal to the amount of the drawback adjustment on export price.

[00:17:43] Speaker 02:
And there are several authorities that indicate that.

[00:17:47] Speaker 02:
So first, it's the statute.

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1677A C1B is not ambiguous.

[00:17:54] Speaker 02:
It requires commerce to increase U.S.

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price for eligible duty drawback received in the respondent's country in India.

[00:18:03] Speaker 02:
And commerce is directed without exceptions, exemptions, or offsets

[00:18:08] Speaker 02:
to increase the export price for the duty drawback exemptions that are earned on the export sales?

[00:18:15] Speaker 00:
I'm just trying to understand what the argument is.

[00:18:17] Speaker 00:
Apparently, part of the argument is that the items exported to the United States might have been made with domestic inputs which didn't bear the burden of the import duty.

[00:18:34] Speaker 00:
I understand that.

[00:18:36] Speaker 00:
But you seem to be saying something else.

[00:18:38] Speaker 00:
Do you understand that there's some other theory here justifying not applying the full duty drawback to the US price?

[00:18:51] Speaker 02:
No, Your Honor.

[00:18:51] Speaker 02:
I understand the appellant's argument in the same way, which is they assume that there is some duty exemption that affects normal value in the same way that it affects expert price.

[00:19:06] Speaker 02:
And we don't believe that is the case.

[00:19:09] Speaker 00:
I'm lost.

[00:19:10] Speaker 00:
I don't understand what you're talking about.

[00:19:11] Speaker 00:
I'm sorry.

[00:19:13] Speaker 00:
I understand one theory, but you seem to be talking about something else, about the effect on normal value.

[00:19:20] Speaker 00:
I don't get it.

[00:19:22] Speaker 02:
No, Your Honor, this is what appellants had argued in their briefs.

[00:19:32] Speaker 02:
But going back to the earlier discussion,

[00:19:35] Speaker 02:
What UTAM Galva has reported with respect to export price are the duty exemptions at a sales specific, licensing specific basis.

[00:19:48] Speaker 02:
So essentially all of this UTAM Galva sales listing, all of its sales to the United States were reported a portion of duty drawback and that drawback was specifically linked to a license

[00:20:04] Speaker 02:
that was related to the importation of the material.

[00:20:07] Speaker 02:
That license was also reflected on the export documents going out.

[00:20:12] Speaker 02:
So as to the universe of sales that were reported by Utam Galva in this case, all of these sales earned duty drawbacks and the exact amounts reported of duty drawback on all of these sales were reported to the department and the department verified them.

[00:20:29] Speaker 02:
So there is no disconnect.

[00:20:33] Speaker 02:
the duty drawback was earned by the sales that were actually reported here.

[00:20:40] Speaker 02:
What plaintiffs seem to suggest is that duty drawback is justified.

[00:20:50] Speaker 02:
Their suggestion that the duty drawback should be reduced, as commerce did in the final determination, is justified on the assumption that finished prices

[00:21:02] Speaker 02:
are proportionally affected by drawback received on imported inputs.

[00:21:08] Speaker 02:
But here, duty drawback benefit can only be received if an equivalent amount of exports occur.

[00:21:16] Speaker 02:
So to be clear, there can be no benefit allocated unless there are exports.

[00:21:21] Speaker 02:
And in fact, that is a key rationale of commerce's two-pronged test, which Utangava has satisfied.

[00:21:29] Speaker 02:
It follows that commerce should not dilute the duty drawback adjustment to U.S.

[00:21:33] Speaker 02:
price over total production when the only way to receive the benefit is to export the finished product.

[00:21:43] Speaker 02:
We also wanted to... This is Judge Chen speaking.

[00:21:48] Speaker 01:
I think, I mean, I understand what the appellant's overall concern is when we're dealing with a situation with a

[00:21:56] Speaker 01:
mixed source input where some of the input is coming from within the home country domestically, but then maybe say half of that input is coming from the outside and is getting slapped with an import duty.

[00:22:14] Speaker 01:
But of course, if that half that's coming in from the outside is equal to the amount of input you need for your exported goods to the United States,

[00:22:24] Speaker 01:
then you get full import duty relief and you get a duty drawback adjustment.

[00:22:31] Speaker 01:
But the problem we have here is that if the other half of that input that's purely domestically sourced is the input that's being used for home market goods that are sold domestically, there's no import duty that's been

[00:22:51] Speaker 01:
actually applied to those inputs because they were sourced domestically.

[00:22:57] Speaker 01:
Yet the whole assumption for the duty drawback adjustment is that you are getting a corresponding import duty applied to those inputs.

[00:23:09] Speaker 01:
And so therefore commerce ought to do something to balance this out just as commerce did in Saha Tai.

[00:23:21] Speaker 01:
If it's not somehow being adjusted within the duty drawback adjustment export price side, then what is it that you think ought to be done in a situation like my hypothetical where the input that was used for the goods that are sold domestically aren't getting any import duties slapped on them?

[00:23:53] Speaker 01:
Do you think on the normal value side, there should just, we should increase it by the exact same amount that we adjust upwardly on the export side with the duty drawback adjustment?

[00:24:08] Speaker 02:
Well, that is what Commerce did in the second remand redetermination, and it still resulted in a margin of zero for UTAN Galva, so we are not taking

[00:24:21] Speaker 02:
issue with that, but in terms of Saha Tai, so going back to Saha Tai, and this is a really critical point, duty drawback on the export price and on the cost of production, these are two separate calculations, and this is how they have been ever since the court's decision in Saha Tai until the final determination.

[00:24:45] Speaker 02:
The duty drawback adjustment on the sales side takes the export exemptions and allocates them over the sales of merchandise sold to the United States.

[00:24:58] Speaker 02:
On the cost side, in Sahatai, the court agreed with commerce that there was ambiguity in the statute governing calculation of cost of production and agreed with commerce that it could calculate an imputed duty cost

[00:25:16] Speaker 02:
And according to Sahatai, the cost adjustment allocates the total duty exemptions over the total cost of materials.

[00:25:24] Speaker 02:
And this method of having two calculations takes into account what opponents are arguing about, any mix of inputs from domestic and foreign inputs.

[00:25:38] Speaker 02:
Because when the Sahatai adjustment is added to the cost of production,

[00:25:43] Speaker 02:
Sales are then tested against this cost of production.

[00:25:47] Speaker 02:
So, if there are any home market sales that pass the cost test, it means that such home market sales are adequately priced so that they take into account any duty exemptions.

[00:26:03] Speaker 02:
So, essentially the SAHA CHI cost of production adjustment is an unavoidable

[00:26:10] Speaker 02:
by which home market prices are being tested against what, against appellant's concern essentially.

[00:26:18] Speaker 01:
So, in addition to that, making the- I'm sorry, did you, was that an answer to my hypothetical?

[00:26:27] Speaker 01:
Conceptually, I think you can see what the distortion is in my hypothetical where in the statute there's an assumption that you're just going to give

[00:26:38] Speaker 01:
a full duty drawback adjustment in the situation like in my hypothetical because you're assuming that all of the domestically sold goods are burdened by an import duty.

[00:26:52] Speaker 01:
But in my fact pattern, I'm saying, no, that's not true.

[00:26:55] Speaker 01:
They haven't been burdened in that way because the input is being sourced domestically.

[00:27:02] Speaker 01:
So conceptually speaking,

[00:27:05] Speaker 01:
wouldn't you agree that something has to be done on the normal value side in order to create a fair comparison given what appears to statute mandates to be done on the export price side with a duty drawback adjustment?

[00:27:20] Speaker 01:
Can you just say yes or no so I can follow your... So, no.

[00:27:26] Speaker 02:
Your Honor, I don't agree that a normal value adjustment is needed.

[00:27:33] Speaker 02:
What Commerce has been doing is the SAHA tie adjustment to cost of production.

[00:27:39] Speaker 02:
The statute does not contain any assumptions about the composition of home market prices.

[00:27:46] Speaker 02:
Nowhere in the statute are home market sales analyzed to see what costs or expenses they include or they reflect.

[00:27:55] Speaker 02:
But the statute does authorize home market prices to be tested against the cost of production.

[00:28:01] Speaker 01:
Well, you lost me because

[00:28:04] Speaker 01:
The statute for duty drawback adjustment is based on an assumption.

[00:28:10] Speaker 01:
It's based on an assumption that for the normal value, the normal value is going to incorporate the import duties that domestic sales are going to be burdened by.

[00:28:23] Speaker 01:
And I've created a fact pattern, a hypothetical where that's not true.

[00:28:31] Speaker 01:
And so conceptually speaking, once

[00:28:35] Speaker 01:
Assuming that by statute, commerce is mandated to give the full upward adjustment for the drawback of the duty for exported goods, then why wouldn't under this hypothetical line, you do this exact same thing on the normal value side in order to create a quote unquote fair comparison as required by the statute?

[00:29:03] Speaker 02:
Well, the adjustments to normal value are statutory.

[00:29:07] Speaker 02:
The department cannot essentially create a new adjustment to normal value that the statute 1677B does not already allow.

[00:29:21] Speaker 02:
What commerce can do and what Sahatai has recognized is that commerce can calculate an adjustment to cost.

[00:29:31] Speaker 02:
But an adjustment to cost cannot be calculated in the same way as an adjustment to export price.

[00:29:37] Speaker 02:
Because an adjustment to cost includes production for the whole market, production for export sales.

[00:29:44] Speaker 02:
So the denominator of that calculation is a larger number.

[00:29:50] Speaker 02:
And that would result in diluting the duty drawback adjustment that was earned on export sales.

[00:29:57] Speaker 02:
The drawback adjustment can only be earned if they're exports.

[00:30:02] Speaker 00:
And let me give you another hypothetical.

[00:30:06] Speaker 00:
Suppose that the US importer has two factories in the foreign country.

[00:30:14] Speaker 00:
And one factory is produced using domestic inputs, and the other factory uses foreign inputs, which are subject to the duty drawback adjustment.

[00:30:26] Speaker 00:
But every single item exported to the United States

[00:30:30] Speaker 00:
comes from the factory that produces using domestic inputs.

[00:30:35] Speaker 00:
I take it that in your view, the same drawback duty adjustment to US price should be made under those circumstances, even if every single item was produced using domestic inputs.

[00:30:50] Speaker 02:
Well, but in that case... Wait, wait, wait.

[00:30:53] Speaker 00:
Yes, no.

[00:30:55] Speaker 02:
No, Your Honor, because in that case,

[00:30:58] Speaker 02:
the company would not be able to demonstrate under the two prongs that he qualifies for duty drawback.

[00:31:06] Speaker 00:
Wait, I just don't understand your answer at all.

[00:31:09] Speaker 00:
Because the inputs that are subject to the rebates are calculated based on the units exported to the United States, even though it doesn't make any difference that the particular units

[00:31:27] Speaker 00:
go domestically, it's still the duty drawback adjustment is still calculated based entirely on the number of units exported to the United States.

[00:31:39] Speaker 00:
But why doesn't the statute under those circumstances require the same duty drawback adjustment as if everything were intermingled?

[00:31:55] Speaker 02:
Your Honor, that is because the

[00:31:57] Speaker 02:
the exports, what UTONGAVA has reported as duty drawback are the benefits that are specific to the exports it made to the United States?

[00:32:08] Speaker 00:
You're really confusing me.

[00:32:09] Speaker 00:
I thought your theory and I thought what the commerce did was to say it doesn't make any difference what inputs were used for the US export items as long as the duty drawback

[00:32:25] Speaker 00:
is correlated entirely to US imports?

[00:32:37] Speaker 02:
Yes, Your Honor.

[00:32:39] Speaker 02:
The duty drawback that was claimed by Utangalva was traced to an import license that corresponded to an import

[00:32:52] Speaker 00:
Okay, the same thing is true in my hypothetical.

[00:32:55] Speaker 00:
Why isn't commerce in my hypothetical obligated to make the same adjustment to U.S.

[00:33:01] Speaker 00:
price?

[00:33:02] Speaker 00:
You seem to think maybe they shouldn't.

[00:33:04] Speaker 00:
I don't understand that.

[00:33:05] Speaker 00:
I don't understand how that's consistent with your overall theory.

[00:33:10] Speaker 02:
No, Your Honor, we believe commerce should make

[00:33:13] Speaker 02:
The duty drawback adjustment is an adjustment to US price.

[00:33:17] Speaker 02:
It should be made.

[00:33:19] Speaker 00:
In my hypothetical, should the duty drawback adjustment be made to US price the same way that Commerce did it in the second remand determination?

[00:33:31] Speaker 00:
Yes or no?

[00:33:31] Speaker 02:
Yes, Your Honor.

[00:33:32] Speaker 02:
Yes, absolutely.

[00:33:35] Speaker 02:
OK.

[00:33:35] Speaker 02:
Commerce's second remand determination takes exactly the duty drawback that was earned and verified on the export at sales.

[00:33:44] Speaker 02:
to the United States.

[00:33:45] Speaker 02:
And that is the correct and full amount of duty drawback.

[00:33:51] Speaker 00:
OK.

[00:33:51] Speaker 00:
And let my colleagues have any further questions.

[00:33:55] Speaker 00:
Hearing none, we'll hear from Mr. Drake for two minutes.

[00:34:00] Speaker 03:
Thank you, Your Honor.

[00:34:01] Speaker 03:
The hypotheticals identified by Judge Dyke and Judge Chen are exactly why Commerce adjusted its duty drawback adjustment methodology to account for the mix of domestic and imported inputs.

[00:34:17] Speaker 03:
And this is discussed at the bottom of page eight of the issues and decision memorandum, exactly these same hypothetical situations.

[00:34:25] Speaker 03:
In the hypothetical identified by Judge Chen,

[00:34:29] Speaker 03:
there would be no import duty burden on domestic sales on normal value.

[00:34:34] Speaker 03:
And so there would be no reason to adjust export prices upward if they also afford no import duty burden due to the duty drawback system.

[00:34:46] Speaker 03:
Under the hypothetical identified by Judge Dyke, if the exports were made all with domestic inputs, the price would not reflect any import duty burden and it would be

[00:34:59] Speaker 03:
inappropriate to grant a duty drawback adjustment.

[00:35:04] Speaker 03:
But the statute says commerce must grant a duty drawback adjustment.

[00:35:08] Speaker 03:
It does not say how that adjustment may be calculated.

[00:35:11] Speaker 03:
And it was within commerce's discretion to develop a calculation methodology that accounted for the mix of domestic and imported inputs used in the subject merchandise.

[00:35:22] Speaker 03:
And their methodology was reasonable because they assumed a proportional consumption of domestic and imported inputs

[00:35:29] Speaker 03:
in both the product sold domestically and the product sold for export.

[00:35:33] Speaker 03:
And this was a fair assumption to make.

[00:35:37] Speaker 03:
And it resulted in them using the same denominator to calculate the export sales side adjustment that they used to calculate the cost of production adjustment.

[00:35:50] Speaker 03:
And that was necessary to achieve a fair comparison.

[00:35:54] Speaker 03:
On a new course brief on pages 10 to 11,

[00:35:58] Speaker 03:
New Court illustrates how using a different denominator results in an unfair comparison.

[00:36:07] Speaker 03:
And therefore, we respectfully request that Congress's original determination be reinstated as a reasonable way to deal with the problems that this court has identified.

[00:36:17] Speaker 00:
Okay.

[00:36:18] Speaker 00:
Thank you.

[00:36:18] Speaker 00:
Unless there are further questions?

[00:36:21] Speaker 00:
No.

[00:36:23] Speaker 00:
Okay.

[00:36:23] Speaker 00:
Hearing none, I thank all council cases submitted.