US Says Commerce Right to Not Include Exporter's Unpaid Duty Interest Costs in Constructed Export Price
The U.S. on April 1 defended the Commerce Department’s determination that -- in a review of German-origin thermal paper -- mandatory respondent Koehler’s accrued interest on unpaid antidumping duties from a prior 2008 AD order shouldn’t be included in the exporter’s constructed export price. That interest wasn’t incurred as a selling expense, it said. (Domtar Corp. v. United States, CIT # 24-00113).
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.
Domestic producer Domtar alleged otherwise in its Feb. 7 motion for judgment (see 2502060073. In the motion, it said that the 2008 AD order -- under which Koehler was assessed charges by CBP -- is identical to the current one, and the “interest expenses at issue clearly arose from Koehler’s thermal paper sales into the United States.”
The 2008 order was revoked at the end of a 2015 sunset review. After a new investigation in 2021, however, Commerce again reached an affirmative antidumping determination and levied new duties. Although Koehler received a .76% dumping margin during the first review under the 2021 AD order, it had faced much higher rates during the lifespan of the 2008 order after being hit with adverse facts available for concealing transshipment. The U.S. initiated its own action in 2024 to recover those duties, which Koehler has been fighting (see 2401240072, 2410100018 and 2503270034).
But it defended Commerce’s choice to include the respondent’s accrued interest as financial expenses in its costs of production, not as indirect selling expenses in its constructed export price. The department was simply following its long-standing practice of “treating antidumping duties as ‘special’” and not deducting them from export prices as “costs, expenses or import duties,” the government said.
Further, it said, 19 U.S.C. 1677a(d)(1) directs Commerce to deduct indirect selling expenses “incurred ‘in selling the subject merchandise’” from constructed export prices. Koehler’s interest liability is tied to the 2008 order, not the 2021 order, so it has nothing to do with the “subject merchandise” in a review of the latter, it said.
The two orders weren’t identical, either, it noted; they differ “with respect to the base weight of the thermal paper.”
“Overall, if accepted, Domtar’s argument would mean that any financing expenses associated with producing the subject merchandise qualify as indirect selling expenses pursuant to 19 U.S.C. § 1677a(d)(1),” it said. “The statute does not support such a broad interpretation.”