                            Slip Op. 00 - 147

            UNITED STATES COURT OF INTERNATIONAL TRADE

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KAJARIA IRON CASTINGS PVT. LTD. et al.,
                                        :
                          Plaintiffs,
                                        :
                 v.
                                        :
UNITED STATES,                            :   Court No. 95-09-01240

                             Defendant,   :
                 -and-
                                          :
ALHAMBRA FOUNDRY INC. et al.,
                                          :
                 Intervenor-Defendants.
                                          :
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                             Memorandum & Order

[Upon plaintiffs' renewed motion,
 peremptory remand to the Inter-
 national Trade Administration.]

                                              Dated: November 9, 2000
     Cameron & Hornbostel LLP (Dennis James, Jr.) for the plain-
tiffs.

     David W. Ogden, Assistant Attorney General; David M. Cohen,
Director, and Velta A. Melnbrencis, Assistant Director, Commer-
cial Litigation Branch, Civil Division, U.S. Department of Jus-
tice; and Office of Chief Counsel for Import Administration, U.S.
Department of Commerce (Robert E. Nielsen), of counsel, for the
defendant.

     Collier Shannon Scott, PLLC (Paul C. Rosenthal and Robin H.
Gilbert) for the intervenor-defendants.


          AQUILINO, Judge:    The court is in receipt of a sub-

mission by the International Trade Administration, U.S. Depart-

ment of Commerce ("ITA"), encaptioned Final Results of Redeter-

mination on Remand and stated to be pursuant to the slip opinion
Court No. 95-09-01240                                       Page 2

00-20, 24 CIT     (Feb. 18, 2000), filed herein, familiarity

with which is presumed. This submission, which will be referred

to hereinafter as the "May 2000 Remand Results", is summarized
by the agency (at pages 1 and 20), in part, as follows:


     . . . Pursuant to the Court's remand instructions,
     the Department has recalculated the program rates
     for the subsidies conferred under section 80HHC of
     India's Income Tax Act (80HHC) and the company-spe-
     cific total ad valorem rates. We have recalculated
     the rates, in conformity with the CAFC's September
     8, 1998 opinion in Kajaria, using a methodology
     which ensures 1) that there is no "double-counting"
     of the subsidies that were provided in the form of
     Cash Compensatory Support (CCS) over-rebates and 2)
     that there is no countervailing of International
     Price Reimbursement Scheme (IPRS) rebates provided
     with respect to non-subject castings. Finally, we
     have recalculated the all-others rate and determined
     the company-specific total ad valorem rates pursuant
     to the CAFC's . . . opinion.
                            *   *   *

          The Department has recalculated the subsidy rates
     of the 80HHC program pursuant to the instructions of
     the CIT and in conformance with the opinion of the CAFC.

          The plaintiffs deny this representation in lengthy

written comments which culminate in a request that this court

     (1) find that the Remand Results do not eliminate ei-
     ther the IPRS or the double-counting of the CCS over-
     rebates from the Section 80HHC subsidy, and, (2) . . .
     remand this matter with instructions that Commerce re-
     do the calculations to correctly implement the CAFC's
     and this Court's prior instructions.1

     1
       Plaintiffs' comments are accompanied by a motion for oral
argument, which need not be granted, given the excellence of the
written submissions on the issues by all parties; ergo, that mo-
tion is hereby denied.

                                             (footnote continued)
Court No. 95-09-01240                                       Page 3

          Upon further reflection and consideration of the par-

ties' continuing, contrary positions, this court is constrained

to accept that of the plaintiffs and thus to order, yet again,
a remand to the ITA.


          The saga of this current circumstance of unfinished

administrative, and thus judicial, process can be read in Certain

Iron-Metal Castings From India: Final Results of Countervailing

Duty Administrative Review, 60 Fed.Reg. 44,843 (Aug. 29, 1995),

aff'd in part, remanded in part sub nom. Kajaria Iron Castings

Pvt. Ltd. v. United States, 21 CIT 99, 956 F.Supp. 1023, remand

results aff'd, 21 CIT 700, 969 F.Supp. 90 (1997), aff'd in part,
rev'd in part and remanded, 156 F.3d 1163 (Fed.Cir. 1998), re-

manded, 23 CIT    , Slip Op. 99-6 (Jan. 14, 1999), second remand

results remanded, 24 CIT    , Slip Op. 00-20 (Feb. 18, 2000).
Indeed, this process has outlived the judge originally assigned.

The undersigned continues simply as the minister of the mandate
of the court of appeals, to wit:

          On remand, Commerce should recalculate the sub-
     sidy provided by the section 80HHC deduction in a
     manner that eliminates the double-counting of the
     CCS over-rebates. . . . Commerce must avoid double-
     counting subsidies, i.e., countervailing both the
     full amount of a subsidy and the nontaxation of that
     subsidy, when the party under investigation provides
     documentation that allows Commerce to separate the
     tax deduction based on the fully countervailed sub-
     sidy from the otherwise countervailable portion of
     the tax deduction.


     One of the submissions, namely, Defendant's Reply to Plain-
tiffs' Comments on Results of Redetermination on Remand, has en-
gendered a motion for leave to respond to it, which motion of the
plaintiffs is hereby granted.
Court No. 95-09-01240                                        Page 4


156 F.3d at 1175.    Similarly with regard to IPRS, that court held

that

       Commerce erred in countervailing the portion of the
       section 80HHC deduction based on the IPRS rebates
       because the rebates involved were tied to merchandise
       not within the scope of the review. . . . On remand,
       Commerce should eliminate the IPRS rebates in calculat-
       ing the subsidy received on subject castings through
       the section 80HHC deduction. . . . [W]hen the party
       under investigation provides documentation that allows
       Commerce to separate the portion of the tax deduction
       based on rebates related to non-subject merchandise
       from the remainder of a countervailable tax deduction,
       Commerce should not countervail the portion of the
       tax deduction subsidy tied to non-subject merchandise.
       Since the Producers provided such data, Commerce should
       eliminate the IPRS rebates from the calculation of the
       subsidy provided by the section 80HHC deduction.

Id. at 1176.


            When the undersigned first considered these issues,
the plaintiffs argued that the ITA is making "what should be a

very simple adjustment into a complicated -- and erroneous --

calculation that thwarts the CAFC's instructions".    Slip Op.

00-20, p. 8.    They reiterate this argument now and state that

       all that needs to be done to eliminate the IPRS
       "influence" from the calculation is to subtract
       the IPRS from the taxable income used to calculate
       the 80HHC benefit.


Plaintiffs' Comments, pp. 20-21.    With regard to the CCS over-

rebates, the plaintiffs maintained that,

       in order to eliminate the double counting under
       80 HHC, all of the countervailed CCS must be de-
       ducted from profit first, before calculating the
       80 HHC subsidy.
Court No. 95-09-01240                                         Page 5


Slip Op. 00-20, p. 11, quoting Plaintiffs' Comments on the Com-

merce Department's Final Results of Redetermination on Remand,

p. 20 (May 4, 1999) (emphasis in original).

            This court has already accepted this analysis and re-
ported that it "cannot accept [defendant's] position that the

methodology proposed by the plaintiffs 'makes no sense at all'".

Id. at 9.   See id. at 12.


            The May 2000 Final Results state (at pages 6-7) that,

     in order to eliminate the IPRS rebates from the calcu-
     lation of the 80HHC subsidy, the Department necessar-
     ily must estimate the effect of the IPRS rebates on
     the profit. The Department must do so because profit
     is the basis for the calculation of the 80HHC subsidy.

     . . . Because the CIT has rejected the calculations
     in the Corrected Final Results of Redetermination,
     we have recalculated the 80HHC subsidy by removing
     the IPRS and CCS rebates from the income which ul-
     timately is the basis upon which the 80HHC tax de-
     duction was derived.

          Under this methodology, we have weighted all
     sources of income equally. We have not attempted to
     "trace" income or expenditures to specific sources, nor
     do we have information available to be able to attrib-
     ute income, expenditures, or profit to specific sourc-
     es. We have assumed that each rupee of income, regard-
     less of the source of that income, played the same
     role in the determination of a company's profit, and
     thus played the same role in the calculation of the
     company's tax deduction under 80HHC. For example, we
     have assumed that both one rupee in duty drawback re-
     ceived by a company and one rupee in sales revenue re-
     ceived by the company had the identical effect on the
     determination of the company's profit. Thus, if a com-
     pany's IPRS and CCS rebates equaled 20 percent of the
     company's income, then we assumed that 20 percent of
     the company's profit was derived from IPRS and CCS
     rebates. Therefore, 20 percent of the subsidy calcu-
     lated for the 80HHC program in the original final re-
     sults of administrative review should be "tied" to the
Court No. 95-09-01240                                         Page 6


     IPRS and CCS programs. Thus, the recalculated 80HHC
     subsidy would be reduced by 20 percent.

Again, this court cannot concur.    The ITA has not eliminated the
influence of the rebates on the calculation of any §80HHC sub-

sidy.   It must recalculate any such subsidy by subtracting the

IPRS rebates and CCS over-rebates from taxable income before

determining any §80HHC benefit.     Cf. Plaintiffs' Response to

Defendant's Reply to Plaintiffs' Comments, p. 3:


          What is of significance for this case . . .
     is the fact that the expenses being repaid by way
     of the CCS and IPRS have already been incurred by
     the producer long before the payments are received.
     And these expenses are incurred in producing the
     castings whether or not the CCS and IPRS are re-
     ceived. Accordingly, the CCS and IPRS do increase
     profits to the full extent of payment. It is for
     this reason that the payments are treated improp-
     erly in the remand methodology since that method-
     ology assumes that additional costs must be incurr-
     ed that somehow reduce the IPRS' and CCS' effect
     on a company's taxable income.

Emphasis in original.


           The defendant may have 30 days to carry out this per-

emptory remand and to report the results thereof to the court.

           So ordered.
Dated: New York, New York
       November 9, 2000

                                   ________________________________
                                                Judge
