Aluminum Sheet Exporter Challenges Specificity Finding on Alleged Coal Subsidy at CIT
Exporter Hindalco Industries told the Court of International Trade last week that the Commerce Department erred in finding that the provision of coal to the company below cost is de facto specific. Filing its motion for judgment, Hindalco added that in the case the court finds the supposed subsidy is specific, Commerce illicitly calculated the subsidy's benefit to the company (Hindalco Industries v. United States, CIT # 23-00260).
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Hindalco received an over 30% countervailing duty rate in the 2020-21 CVD administrative review of common alloy aluminum sheet from India for coal it received from Indian state-owned Coal India Limited. Commerce said the subsidy was de facto specific since it's predominantly used by electricity-generating industries.
In its motion for judgment, Hindalco said this claim is based on the "faulty theory" that Coal India's "power (utility)" and "power (captive)" sectors are "power generating industries" that are similar in process and output since both buy non-coking coal, which is used for power generation. The exporter said Coal India's "power (captive)" sector isn't a power generating industry that Commerce can group with the "power (utility)" sector.
The captive sector accounts for captive power plants "operated by a wide variety of manufacturers across India, and therefore is a group of numerous disparate industries that undertake various production processes to output various products," the exporter said. The utility sector, meanwhile, only accounts for "power utility companies that produce and output electricity to the grid."
Even if the specificity finding were lawful, the decision to countervail the coal supply wasn't supported by substantial evidence since "certain of Hindalco's facilities that purchased coal from" Coal India are classified in Coal India's "others (non-coking)" sector and not in its "power (captive)" sector, the brief said.
Hindalco also objected to Commerce's use of benchmarks to set the benefit for the coal provision. The company said Commerce "erred by failing to use benchmarks comparable with Hindalco's grade-wise coal purchases" from Coal India to find the "quantum of the benefit."
The agency failed to use the free on board coal export price data for "specific grades of thermal/steam coal supplied by Hindalco from independent commercial sources" to set the tier two benchmark. Commerce turned down the chance to use the data on the ground that the sources "lacked methodological information, did not contain quantity and value figures, and covered too few countries." Hindalco said Commerce's reliance instead on "non-specific UN Comtrade" data wasn't properly supported since the agency had "clear record evidence" the exporter bought non-coking coal by grade and that coal prices "vary drastically by grade."