Rhp Bearings Ltd. v. U.S., SLIP OP. 00-94.

• Decision Date: 03 August 2000
• Docket Number: SLIP OP. 00-94.,Court No. 97-11-01983.
• Citation: 110 F.Supp.2d 1043
• Parties: RHP BEARINGS LTD., NSK Bearings Europe Ltd. and NSK Corporation; the Barden Corporation (U.K.) Ltd., the Barden Corporation, FAG Bearings Corporation, Plaintiffs, v. UNITED STATES, Defendant, The Torrington Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

110 F.Supp.2d 1043

RHP BEARINGS LTD., NSK Bearings Europe Ltd. and NSK Corporation; the Barden Corporation (U.K.) Ltd., the Barden Corporation, FAG Bearings Corporation, Plaintiffs, v. UNITED STATES, Defendant The Torrington Company, Defendant-Intervenor.

SLIP OP. 00-94.

Court No. 97-11-01983.

United States Court of International Trade.

August 3, 2000.

Lipstein, Jaffe & Lawson, L.L.P., Washington, DC, (Robert A. Lipstein, Matthew P. Jaffe and Grace W. Lawson) for RHP-NSK.

Grunfeld, Desiderio, Lebowitz & Silverman LLP, New York City, (Max F. Schutzman, Andrew B. Schroth and Mark E. Pardo) for Barden-FAG.

David W. Ogden, Acting Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Velta A. Melnbrencis, Assistant Director); of counsel: Mark A. Barnett, Stacy J. Ettinger, Patrick V. Gallagher, Myles S. Getlan and David R. Mason, Office of the Chief Counsel for Import Administration, United States Department of Commerce, for defendant.

Stewart and Stewart, Washington, DC, (Terence P. Stewart, Wesley K. Caine, Geert De Prest and Lane S. Hurewitz) for The Torrington Company.

OPINION

TSOUCALAS, Senior Judge.

Plaintiffs, RHP Bearings Ltd., NSK Bearings Europe Ltd. and NSK Corporation (collectively "RHP-NSK"), The Barden Corporation (U.K.) Ltd., The Barden Corporation and FAG Bearings Corporation (collectively "Barden-FAG") move pursuant to USCIT R. 56.2 for judgment upon the agency record challenging various aspects of the United States Department of Commerce, International Trade Administration's ("Commerce") final determination, entitled Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews ("Final Results"), 62 Fed. Reg. 54,043 (Oct. 17, 1997), as amended, Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom; Amended Final Results of Antidumping Duty Administrative Reviews ("Amended Final Results"), 62 Fed.Reg. 61,963 (Nov. 20, 1997).

Specifically, RHP-NSK claims that Commerce erred in: (1) deducting United States repacking expenses as direct selling expenses; (2) calculating profit for constructed value ("CV"); (3) denying a partial, price-based level of trade ("LOT") adjustment to normal value ("NV"); and (4) conducting a duty absorption inquiry for the subject review.

Barden-FAG claims that Commerce erred in: (1) calculating profit for CV; (2) failing to match United States sales to "similar" home market sales prior to resorting to CV when all home market sales of identical merchandise have been disregarded; (3) conducting a duty absorption inquiry for the subject review; and (4) conducting a below-cost sales test and disregarding certain home market sales pursuant to the results of this test.

BACKGROUND

This case concerns the seventh review of the antidumping duty order on antifriction bearings (other than tapered roller bearings) and parts thereof ("AFBs") imported to the United States from the United Kingdom during the review period of May 1, 1995 through April 30, 1996.¹ Commerce published the preliminary results of the subject review on June 10, 1997. See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom; Preliminary Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews ("Preliminary Results"), 62 Fed.Reg. 31,566. Commerce issued the Final Results on October 17, 1997, see Final Results, 62 Fed.Reg. at 54,043, and amended them on November 20, 1997, see Amended Final Results, 62 Fed.Reg. at 61,963.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 19 U.S.C. § 1516a(a) (1994) and 28 U.S.C. § 1581(c) (1994).

STANDARD OF REVIEW

The Court will uphold Commerce's final determination in an antidumping administrative review unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i) (1994); see NTN Bearing Corp. of America v. United States, 24 CIT ___, ___, 104 F.Supp.2d 110, 115 (2000) (detailing Court's standard of review in antidumping proceedings).

DISCUSSION

I. Commerce's Treatment of RHP-NSK's United States Repacking Expenses as Direct Selling Expenses

A. Background

An antidumping duty is imposed upon imported merchandise when (1) Commerce determines such merchandise is being dumped, that is, sold or likely to be sold in the United States at less than fair value, and (2) the International Trade Commission determines that an industry in the United States is materially injured or is threatened with material injury. See 19 U.S.C. § 1673 (1994); 19 U.S.C. § 1677(34) (1994). To determine in an investigation or an administrative review whether there is dumping, Commerce compares the price of the imported merchandise in the United States to the NV for the same or similar merchandise in the home market. See 19 U.S.C. § 1677b (1994). The price in the United States is calculated using either an export price ("EP") or constructed export price ("CEP"). See 19 U.S.C. § 1677a(a), (b) (1994).

The Statement of Administrative Action² ("SAA") accompanying the Uruguay Round Agreements Act ("URAA") clarifies that Commerce will classify the price of a United States sales transaction as an EP if "the first sale to an unaffiliated purchaser in the United States, or to an unaffiliated purchaser for export to the United States, is made by the producer or exporter in the home market prior to the date of importation." H.R. Doc. No. 103-316, at 822 (1994). On the other hand, "[i]f, before or after the time of importation, the first sale to an unaffiliated person is made by (or for the account of) the producer or exporter or by a seller in the United States who is affiliated with the producer or exporter," then Commerce will classify the price of a United States sales transaction as a CEP. Id.; 19 U.S.C. § 1677a(b).

Commerce then makes adjustments to the starting price used to establish EP or CEP by adding: (1) packing costs for shipment to the United States, if not already included in the price; (2) import duties which have been rebated or not collected due to exportation of the subject merchandise to the United States; and (3) certain countervailing duties if applicable. See 19 U.S.C. § 1677a(c)(1)(A)-(C); SAA at 823. Also, for both EP and CEP, Commerce will reduce the starting price by the amount, if any, included in such price that is attributable to: "(1) transportation and other expenses, including warehousing expenses, incurred in bringing the subject merchandise from the original place of shipment in the exporting country to the place of delivery in the United States; and (2) ... export taxes or other charges imposed by the exporting country." SAA at 823; see 19 U.S.C. § 1677a(c)(2)(A), (B).

Moreover, Commerce must reduce the price used to establish CEP by any of the following amounts associated with economic activities occurring in the United States: (1) commissions paid in "selling the subject merchandise in the United States"; (2) direct selling expenses, that is, "expenses that result from, and bear a direct relationship to, the sale, such as credit expenses, guarantees and warranties"; (3) "any selling expenses that the seller pays on behalf of the purchaser" (assumptions); (4) indirect selling expenses, that is, any selling expenses not deducted under any of the first three categories of deductions; (5) certain expenses resulting from further manufacture or assembly (including additional material and labor) performed on the merchandise after its importation into the United States; and (6) profit allocated to the expenses described in categories (1) through (5). 19 U.S.C. § 1677a(d)(1)-(3); see SAA at 823-24.

In this case, RHP-NSK delivered the subject merchandise to unaffiliated customers in the United States from warehouses owned and operated by NSK Corporation. See RHP-NSK's Resp. to Sect. C Questionnaire, Investigation No. A-412-801, Admin. Rev. 5/1/95-4/30/96, at 49 (Sept. 10, 1996). RHP-NSK normally ships merchandise in its original containers from its United States warehouse, however, in some instances, it repacked the merchandise to accommodate orders for smaller distributors. See id.

For the price of the subject merchandise in the United States, Commerce used EP or CEP, as appropriate, and calculated such prices "based on the packed [free on board], [cost, insurance, and freight], or delivered price to unaffiliated purchasers in, or for exportation to, the United States." Preliminary Results, 62 Fed. Reg. at 31,569. Commerce also made deductions for: (1) discounts and rebates; and (2) any movement expenses in accordance with 19 U.S.C. § 1677a(c)(2)(A). See id. In calculating CEP, Commerce made additional adjustments in accordance with § 1677a(d)(1)-(3) by: (1) "deducting selling expenses associated with economic activities occurring in the United States, including commissions, direct selling expenses, indirect selling expenses, and repacking expenses in the United States"; (2) "deduct[ing] the cost of any further manufacture or assembly," where appropriate; and (3) "adjust[ing] for profit allocated to these expenses." Id. In particular, in adjusting CEP, Commerce deducted RHP-NSK's United States repacking expenses as direct selling expenses under § 1677a(d)(1)(B), rather than as moving expenses under § 1677a(c)(2)(A), because it determined that repacking "was performed on individual products in order to sell the merchandise to the unaffiliated customer in the United States. Presumably, if a respondent could have sold the merchandise without repacking it, the respondent would have done...