CIT Says Invoice Date Proper Date of Sale for Turkish Rebar Exporter
The Commerce Department reasonably used exporter Kaptan Demir Celik Endustrisi's invoice date as the date of sale in the 2021-22 review of the antidumping duty order on steel concrete rebar from Turkey, the Court of International Trade held on Jan. 15. Judge Jane Restani also upheld Commerce's differences-in-merchandise adjustment, finding that the adjustment wasn't distoritive in the way that it controlled for inflation.
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Kaptan contested the use of the invoice date in the review, arguing that the agency should have instead used the company's contract date since the material terms of sale were established on the contract date and didn't change during the review period. The exporter argued that the material terms of sale were set at the time of contract due to "Kaptan's sales practices" for its exports, and an "internal resolution of Kaptan's Board of Directors that required that all contracts be approved by the Board and once approved, could not be altered."
The court first noted that Commerce has a rebuttable presumption of using the invoice date as the date of sale that places the burden on the party seeking to depart from this date to show that the invoice date is unreasonable. Restani held that Kaptan failed to carry that burden.
The court found that Kaptan's questionnaire response suggests that the material terms were not established on the contract date since they could be "amended by the contracting parties up until the shipment or invoice date." Even if the court accepted Kaptan's claim that the response was either improperly included or merely an "imprecise initial response" that was later clarified, "Kaptan has cited no evidence of record that it explicitly alerted Commerce to such a mistake," the judge said.
Commerce said in the review that the material terms of the sale weren't established on the contract date since one of the two signed versions of the contract didn't establish the "size breakdown," while Kaptan said the version of the contract the agency refers to was just a prior draft. Restani said the fact that a prior version of the contract says that the size breakdown will be advised by a certain date "has little bearing on whether the material terms were established on the contract date." Even if the court were to find that this version was more than a "rough draft," the version of the contract with the size breakdown has the same date, the court noted.
The agency further backed its finding that the contract allowed for deviation in the material terms of sale by noting two elements of the contract: the fact that the contract itself required the parties to agree to any revisions to the contract terms in signed writing and a "Board Resolution" that barred changes to price and quantity terms without board approval. Kaptan said the first contract provision is "boilerplate" and that its language actually suggests the material terms were established given that any revision requires a formal modification process.
Restani said that even Kaptan itself notes that parties have historically made changes to the material terms of the sale after contracting, necessitating the Board Resolution. Also, the Board Resolution didn't lead to "amendment to the terms of Kaptan's sales contracts," meaning prior contracts had the same provision, even in the period before the Board Resolution "when renegotiation was common," the court said. As a result, "the presence of this provision in the contract alone would not lead the contracting parties to believe that the material terms were being 'firmly' and 'finally' set," Restani held.
Leaving just the Board Resolution itself, the court said even Kaptan notes that the resolution "was not prepared with all material terms in mind." Since the language of contracts "has not been historically binding on contracting parties and that the Board Resolution does not bar changes to all material terms, this factor does not favor plaintiff," the decision said.
Kaptan also challenged the differences-in-merchandise adjustment made by Commerce, arguing that the calculation was "distortive" due to the way it accounted for inflation.
Where high inflation is present, Commerce tells respondents to report monthly rather than annual costs, restating every month's variable costs in the final month of the review period's dollar value. The agency then calculates the annual weighted average cost of production for each control number (CONNUM) across the review period with production quantity as the weighting factor. Commerce then deflates the average production costs back to the original dollar value of each month in the review period. The agency then conducts a "month-to-month" comparison of those variable costs of the home market and exported goods to account for costs related to the products' physical differences.
Kaptan said that before Commerce engaged in the monthly indexing, the adjustment was negative, which would lead to a decrease in the normal values of sales in the home market. Restani held that the exporter failed to explain why this ostensible distortion only occurs in the differences-in-merchandise adjustment and not in the "corresponding cost of production calculation" beyond claiming they are used by Commerce "in different ways."
The exporter failed to make clear "that the impact of the monthly indexing for the DIFMER calculation is distortive." In fact, "it could be the case that an unindexed DIFMER calculation would be inaccurate and improperly allow inflation to influence the analysis, whereas Commerce’s indexing method produces the proper result," Restani said.
(Kaptan Demir Celik Endustrisi ve Ticaret v. United States, Slip Op. 25-4, CIT # 24-00018, dated 01/15/25; Judge: Jane Restani; Attorneys: Leah Scarpelli of ArentFox Schiff for plaintiff Kaptan Demir Celik Endustrisi ve Ticaet; Joshua Moore for defendant U.S. government; Maureen Thorson of Wiley Rein for defendant-intervenor Rebar Trade Action Coalition)