Torrington Co. v. U.S.

• Decision Date: 07 October 1998
• Docket Number: No. 98-1126,98-1126
• Citation: 156 F.3d 1361
• Parties: THE TORRINGTON COMPANY, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and NMB Thai Ltd., Pelmec Thai Ltd., NMB Hi-Tech Bearings Ltd., and NMB Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1361

156 F.3d 1361

THE TORRINGTON COMPANY, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and NMB Thai Ltd., Pelmec Thai Ltd., NMB Hi-Tech Bearings Ltd., and NMB Corporation, Defendants-Appellees.

No. 98-1126.

United States Court of Appeals, Federal Circuit.

Oct. 7, 1998.

James R. Cannon, Jr., Stewart and Stewart, Washington, DC, argued for plaintiff-appellant. On the brief were Terence P. Stewart and Geert De Prest. Of counsel were Wesley K. Caine and Lane S. Hurewitz.

Velta A. Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, DC, argued for defendant-appellee United States. With her on the brief were Frank W. Hunger, Assistant Attorney General, and David M. Cohen, Director. Of counsel on the brief were Stephen J. Powell, Chief Counsel for Import Administration, Berniece A. Browne, Senior Counsel, and Stacy J. Ettinger, Attorney-Advisor, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, Washington, DC.

Christopher F. Corr, White & Case, Washington, DC, argued for defendants-appellees NMB Thai Ltd., et al. With him on the brief were Walter J. Spak and Richard J. Burke. Of counsel were Christopher M. Curran, William J. Clinton, and Richard G. King.

Before MICHEL, Circuit Judge, ARCHER, Senior Circuit Judge, and PLAGER, Circuit Judge.

Opinion for the court filed by Circuit Judge MICHEL. Dissenting opinion filed by Senior Circuit Judge ARCHER.

MICHEL, Circuit Judge.

This appeal continues the enduring saga of the efforts of this American ball bearing manufacturer to obtain relief from certain foreign competitors under the trade laws. Here, The Torrington Company ("Torrington") appeals the judgment of the United States Court of International Trade upholding the final determination of the United States Department of Commerce ("Commerce") in its fourth administrative review of the importation of antifriction bearings from various countries. See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al.; Final Results of Antidumping Duty Administrative Reviews, and Revocation in Part of Antidumping Duty Orders, 60 Fed.Reg. 10,900 (1995) (the "antidumping review"), aff'd-in part and remanded-in-part, Torrington Co. v. United States, 969 F.Supp. 1332 (CIT 1997); see also Torrington Co. v. United States, No. 95-03-00353, slip op. 97-140 (Ct. Int'l Trade Sept. 26, 1997) (dismissing the lawsuit after holding that Commerce had complied with the remand order by performing the necessary recomputations of value and the correction of a clerical error). Defendants-Appellees NMB Thai Ltd., Pelmec Thai Ltd., NMB Hi-Tech Bearings Ltd., and NMB Corp. (collectively, "NMB Thai") were interested party-respondents in the underlying antidumping administrative review and were defendants-intervenors at the Court of International Trade. In this appeal, Torrington contends only that the Court of International Trade erred by upholding the determination of Commerce to adjust the foreign (home) market value of the subject antifriction bearings to take account of certain international freight expenses. Because Commerce's decision to allow an adjustment for such freight expenses was based upon a reasonable interpretation of its own regulations and thus was entitled to deference, we affirm.

BACKGROUND

NMB Thai is a producer of antifriction ball bearings in Thailand. These bearings are both sold in Thailand and exported to the United States. The antidumping review encompassed importations of such bearings entered between May 1, 1992, and April 30, 1993. During this period, NMB Thai sold its ball bearings in the Thai market through two distinct channels. "Route A" sales were shipped directly to the customer in Thailand via a domestic route. "Route B" sales, however, were first shipped abroad to a warehouse operated by a related company in Singapore and then back to Thailand. The purpose of this circuitous Route B was to obtain certain favorable tax and duty treatment from the Thai government and, in particular, to avoid government restrictions on sales to Thai customers who were certified by the Thailand Board of Investment but did not have a bonded warehouse.

On May 15, 1989, Commerce published antidumping duty orders on antifriction bearings from Thailand. See Antidumping Duty Order and Amendment to the Final Determination of Sales at Less Than Fair Value: Ball Bearings and Parts Thereof From Thailand, 54 Fed.Reg. 20,909 (1989) (the "antidumping duty order"). The Commerce decision at issue in the Court of International Trade was rendered in the fourth administrative review of the antidumping duty order.

In the antidumping review, Commerce determined the "United States price" and the "foreign market value" ("FMV") of the subject merchandise and used this data to calculate antidumping margins in accordance with 19 U.S.C. § 1675. These margins were then used by Commerce to assess antidumping duties on the entries of merchandise covered by the review as well as to calculate estimates of antidumping duties for future entries. See id.

In determining FMV, Commerce is permitted to make adjustments for certain "circumstances of sale" ("COS") in accordance with 19 C.F.R. § 353.56. ¹ Such COS adjustments Before the Court of International Trade, Torrington argued, inter alia, that NMB Thai's Route B freight expenses were not "selling expenses" for purposes of 19 C.F.R. § 353.56, but rather were general costs incurred for the purpose of receiving government benefits. The Court of International Trade, however, rejected this contention, explaining that this court had previously held both that the "Route B sales were properly classified as home market sales" and that "Commerce may deduct indirect home market transportation expenses from FMV [subject] to the exporter's sales price ... offset cap." Torrington, 969 F.Supp. at 1336 (citing Torrington Co. v. United States, 82 F.3d 1039, 1047 (Fed.Cir.1996) and Torrington Co. v. United States, 68 F.3d 1347, 1356 (Fed.Cir.1995)).

are made when the seller incurs certain costs in its home market sales that it does not incur when selling to the United States market. Such adjustments may be made if "the amount of any price differential is wholly or partly due to such difference [in circumstances of sale]" and "those circumstances ... bear a direct relationship to the sales compared." 19 C.F.R. § 353.56(a)(1). In addition, adjustments to FMV may also be made for indirect selling expenses "incurred in selling such or similar merchandise up to the amount of expenses ... incurred in selling the merchandise." 19 C.F.R. § 353.56(b)(2). In the antidumping review, Commerce deducted from FMV the pre-sale freight costs for shipping merchandise from Thailand to Singapore as indirect selling expenses pursuant to 19 C.F.R. § 353.56(b)(2). Commerce also deducted from FMV the post-sale freight expenses of shipping the merchandise from Singapore back to Thailand as direct selling costs pursuant to 19 C.F.R. § 353.56(a)(1).

On appeal to this court, Torrington argues that the plain meaning of the governing statute and regulation both indicate that the Route B freight expenses are not selling costs that may be accepted as downward COS adjustments to FMV and, moreover, that permitting such adjustments would defeat the purpose of the COS provisions because the freight costs were offset by savings in NMB Thai's taxes and duties.

DISCUSSION

Our analysis must begin with the controlling statutory language. Under 19 U.S.C. § 1677b(a)(4), "due allowance shall be made" for "the amount of any difference between the United States price and the foreign market value ... wholly or partly due to ... other differences in circumstances of sale." This court has previously explained that "the statute does not define the term 'circumstances of sale' nor does it prescribe any method for determining allowances. Congress has deferred to the Secretary's expertise in this matter." Smith-Corona Group v. United States, 713 F.2d 1568, 1575, 1 Fed. Cir. (T) 130, 137 (Fed.Cir.1983). Accordingly, under the authority of this statute, Commerce promulgated 19 C.F.R. § 353.56, which sets forth the criteria required for the allowance of COS adjustments to FMV. As described above, such adjustments are permitted to take account both of circumstances bearing "a direct relationship to the sales compared," 19 C.F.R. § 353.56(a)(1), and indirect expenses "incurred in selling such or similar merchandise" ("selling expenses"), 19 C.F.R. § 353.56(b)(2).

In light of the substantial deference accorded to Commerce when interpreting and applying its own regulations, we find no error in the Court of International Trade upholding Commerce's decision to make a COS adjustment to FMV to take account of NMB Thai's Route B freight costs. The parties do not dispute that Commerce's regulation, which permits adjustments for, inter alia, "selling expenses," is an authorized and reasonable administrative interpretation of the governing statute. Moreover, there is no dispute that such selling expenses may properly include freight costs. See, e.g., Torrington Commerce's interpretation of its regulation is not "plainly erroneous or inconsistent with the regulation." Thomas Jefferson Univ., 512 U.S. at 512, 114 S.Ct. 2381. Rather, its interpretation is a reasonable one in a complex field in which it has special and unique expertise. To interpret the regulation, as Torrington apparently suggests, to require Commerce to parse all freight costs to determine the intent behind such costs would, moreover, be administratively impracticable. Indeed, it is difficult to comprehend the method by which Commerce could be expected to divine the subjective intent behind the decision to transport merchandise by a particular method or along a particular route. For example, a decision to transport certain goods within the country of manufacture by...