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Indian Exporter, Opposing Appeal, Says Affiliate’s Electricity Not ‘Primarily Directed’ at Product

An Indian exporter of granular polytetrafluorethylene, the generic version of Teflon, said March 27 that the “minute” amount of wind energy produced by an affiliate was not “primarily directed” at its own own PTFE manufacturing because electricity from certain sources can't be earmarked for any particular process (Gujarat Fluorochemicals v. U.S., Fed. Cir. # 24-1268).

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The exporter, Gujarat Fluorochemicals, is opposing the appeal brought by a countervailing duty petitioner to the U.S. Court of Appeals for the Federal Circuit after the trade court ruled in its favor regarding the countervailability of a subsidy received by a cross-owned input supplier, wind turbine producer Inox Wind. The Court of International Trade found that land granted to Inox could not be attributed to Gujarat because Inox’s electricity was not “primarily dedicated” to the production of PTFE (see 2310160026).

Commerce initially found that “the small amount of wind energy [Inox] sold to the grid from its testing of turbine prototypes” was mainly dedicated to Gujarat’s manufacturing, the exporter said. However, the trade court ruled that this wasn’t enough to attribute Inox’s subsidies to Gujarat.

The “extremely small” amount of electricity produced by Inox went to the grid, not directly to Gujarat, and joined a common power pool, the exporter said.

“[Petitioner] Daiken’s successful appeal would result in Commerce always attributing subsidies from a cross-owned affiliate, as long as that affiliate provided to the respondent any amount of a product which could be used by the company under investigation,” Gujarat said.

The preamble of the regulations governing CVD gives three examples of a producer’s products being “primarily dedicated” to its affiliate, all of which highlight how a downstream product must be a “specific and individually-identified product,” CIT said in its ruling.

Therefore, Daiken’s argument also fails because it claims Inox’s electricity is primarily dedicated to all of Gujarat’s downstream products -- products, “plural,” whereas the legislation would require the electricity to be primarily dedicated to a product, “singular,” Gujarat said. It said that Daiken’s suggestion that some electricity could be dedicated to only a single product “strains reason.”

The petitioner cited several cases to support a claim that the CVD regulation doesn't impose limits on whether a “downstream product” is singular or plural, but those cases are “not applicable to the factual scenario currently before the Court,” it said. One involves an AD, not a CVD, proceeding, and another involves a different type of relationship: the upstream product, pulp logs, were inputs for pulp that then became paper, it said.

Both Commerce and Daiken assigned a meaning to the term “primarily dedicated” that was different than what the regulation actually said, Gujarat claimed.

Gujarat also argued that the CVD statute is not actually ambiguous, so Commerce doesn't need to be granted deference as to its meaning. Even if it were ambiguous, however, the exporter said that Commerce’s interpretation of it is “unreasonable and not aligned with the intent of the regulation.”