CV Duties on Inputs Must Refer to Subject Merchandise, Exporter Tells CIT
Under the Commerce Department's countervailing duty regulations, any subsidy on inputs dedicated to the downstream product must refer to subject merchandise, plaintiff Gujarat Fluorochemicals (GFL) argued in a Jan. 20 supplemental brief at the Court of International Trade. The exporter said it would be "illogical" to apply the regulation to inputs mainly used to make non-subject merchandise since this interpretation "would create a broader subsidy than provided by the statute" (Gujarat Fluorochemicals Limited v. United States, CIT # 22-00120).
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The case concerns the countervailing duty investigation on granular polytetrafluoroethylene from India. Commerce's regulations say that if there is cross-ownership between an input supplier and a downstream manufacturer, and the production of the input product is mainly dedicated to the production of the downstream good, then Commerce attributes subsidies received by the input maker to the combined sales of the input and downstream products made by both corporations.
In the investigation, Commerce said that subsidies received by supplier Inox Wind Limited should be attributed to GFL since the supplier's wind power is shared with GFL through a common energy pool specifically for the exporter's use, and because GFL paid Inox to generate a certain amount of wind power that is primarily dedicated to the production of downstream products. GFL took to the trade court to contest this finding, arguing in its supplemental brief that the statute "requires subsidies be related to the subject merchandise. Here, the subject merchandise is PTFE Resin and Commerce must consider whether the investigated subsidies benefit the production of PTFE Resin."