243 F.3d 1301 (Fed. Cir. 2001), 00-1058, Micron Technology Inc. v. United States

Docket Nº:00-1058, -1060
Citation:243 F.3d 1301
Case Date:March 07, 2001
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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243 F.3d 1301 (Fed. Cir. 2001)




Nos. 00-1058, -1060

United States Court of Appeals, Federal Circuit

March 7, 2001

Appealed from: United States Court of International Trade

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Gilbert B. Kaplan, Hale and Dorr, Llp, of Washinton, Dc, argued for plaintiff-appellant. With him on the brief were Michael D. Esch, Paul W. Jameson, and Cris R. Revaz.

Michele D. Lynch, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, Dc, argued for defendant-appellee. With her on the brief was David M. Cohen, Director. Of counsel were Velta A. Melnbrencis, Department of Justice; and John D. McInerney, Berniece A. Browne, and Patrick v. Gallagher, Jr., Attorneys, Department of Commerce, of Washington, Dc.

Michael P. House, Kaye, Scholer, Fierman, Hays & Handler, Llp, of Washington, Dc, argued for defendants-cross appellants. With him on the brief was Raymond P. Paretzky.

Joseph W. Dorn, King & Spalding, of Washington, Dc, for amicus curiae, The Southern Tier Cement Committee. With him on the brief were Michael P. Mabile, and Dean A. Pinkert.

Herbert C. Shelley, Steptoe & Johnson Llp, of Washington, Dc, for amicus curiae Skf Usa, Inc. With him on the brief was Alice A. Kipel.

Neil R. Ellis, Powell, Goldstein, Frazer & Murphy Llp, of Washington, Dc, for amicus curiae LG Semicon Ameica, Inc. and LG Semicon Co., Ltd., etc. With him on the brief were Elizabeth C. Hafner, and Susan M. Mathews.

Kathleen W. Cannon, Collier Shannon Scott, Pllc, of Washington, Dc, for amici curiae Allegheny Ludlum Corp., et al. With her on the brief were David A. Hartquist, Paul C. Rosenthal, and Michael J. Coursey.

Before Clevenger, Schall, and Dyk, Circuit Judges.

The opinion of the court was delivered by: Dyk, Circuit Judge.

Judge Richard W. Goldberg


This case presents important questions concerning the interpretation of the 1994 amendments to the Tariff Act of 1930 ("Act"), codified in the United States Code in Chapter 4 of Title 19. We conclude that the amendments are ambiguous as to the

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scope of the indirect selling expenses to be deducted under 19 U.S.C. § 1677a(d)(1)(D) (1999). 1 Because we also conclude that the Department of Commerce's interpretation of that provision is reasonable, we defer to that interpretation under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Finally, we conclude that the plain text of the amended statute requires the Department of Commerce ("Commerce") to deduct the selling expenses enumerated in 19 U.S.C. § 1677a(d) from the starting price of constructed export price sales before making a level of trade comparison under 19 U.S.C. § 1677b(a)(7)(A). Accordingly, we affirm in part and reverse in part.


Resolution of this appeal requires an understanding of the antidumping statute, which was significantly amended by the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994) ("URAA"). The URAA applies to administrative reviews initiated after January 1, 1995, and therefore governs this appeal. Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed. Cir. 1995).

Under the current antidumping statute, Commerce is required to impose antidumping duties on imported merchandise that is being sold, or is likely to be sold, in the United States at less than fair value to the detriment of a domestic industry. 19 U.S.C. § 1673. "The purpose underlying the antidumping laws is to prevent foreign manufacturers from injuring domestic industries by selling their products in the United States at less than `fair value,' i.e., at prices below the prices the foreign manufacturers charge for the same products in their home markets." Torrington Co., 68 F.3d at 1352. The amount of the duty to be imposed, otherwise known as the "dumping margin," is the amount by which the price charged for the subject merchandise in the home market (the "normal value") exceeds the price charged in the United States (the "U.S. price"). 19 U.S.C. §§ 1673, 1677(25)(A). The U.S. price is calculated by using one of two statutorily-prescribed methodologies -export price ("EP") or constructed export price ("CEP"). 19 U.S.C. § 1677a(a)-(b).

In order to make a fair comparison, certain adjustments must be made to the U.S. price and the normal value. Such adjustments are made in order to "reconstruct the price at a specific, `common' point in the chain of commerce, so that value can be fairly compared on an equivalent basis." Koyo Seiko Co. v. United States, 36 F.3d 1565, 1568 (Fed. Cir. 1994) (quoting Smith-Corona Group v. United States, 713 F.2d 1568, 1572 (Fed. Cir. 1983)).

The two adjustments involved here are directed to the problem posed by sales to affiliated entities. When an exporter makes a sale to an affiliated entity - for example, a wholly or partly owned distributor -the price is necessarily suspect. The risk is that an artificially low price may be charged to the affiliated distributor in the home market and an artificially high price charged to the affiliated distributor in the United States market. The consequence in each case is that a lower countervailing duty (or no duty at all) would be payable.

Constructed Export Price Deductions Under 19 U.S.C. § 1677a(d)(1)

When the foreign producer or exporter sells directly to an unaffiliated purchaser in the United States, Commerce uses EP as the U.S. price for purposes of the comparison. 19 U.S.C. § 1677a(a). However, where a sale is made by a foreign producer or exporter to an affiliated purchaser in the United States, the statute provides for use of CEP as the United States price for purposes of the comparison. 19 U.S.C. § 1677a(b). All of the sales at issue in this appeal are CEP sales.

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To determine the U.S. price for both EP and CEP sales, Commerce starts with the first sale price to an unaffiliated purchaser ("starting price") and makes certain upward and downward adjustments enumerated in 19 U.S.C. § 1677a(c). Further, in subsection (d) the statute sets forth specific bases for additional deductions which apply only to CEP sales. Of particular relevance here are the deductions of subsection (d)(1), which provides:

[T]he price used to establish constructed export price shall also be reduced by--

(1) the amount of any of the following expenses generally incurred by or for the account of the producer or exporter, or the affiliated seller in the United States, in selling the subject merchandise (or subject merchandise to which value has been added)-

(A) commissions for selling the subject merchandise in the United States;

(B) expenses that result from, and bear a direct relationship to, the sale, such as credit expenses, guarantees and warranties;

(C) any selling expenses that the seller pays on behalf of the purchaser; and

(D) any selling expenses not deducted under subparagraph (A), (B), or (C).

19 U.S.C. § 1677a(d) (emphasis added). The first issue in this case involves the subsection (d)(1)(D) deductions.

Here the parties differ over the class of expenses included within subsection (d)(1)(D). Under Commerce's theory, the objective of the subsection (d)(1)(D) deductions is to adjust the price of the first sale by the U.S. affiliate to an unaffiliated purchaser so that it corresponds as closely as possible to the EP, i.e., so that CEP and EP reflect the same level of trade, and comparable comparisons using either EP or CEP can be made to normal value. As stated in Commerce's post-URAA regulation which formalized the methodology at issue here:

In establishing constructed export price under section 772(d) of the Act [19 U.S.C. § 1677a(d)], the Secretary [of Commerce] will make adjustments for expenses associated with commercial activities in the United States that relate to the sale to an unaffiliated purchaser, no matter where or when paid.

19 C.F.R. § 351.402(b). 2 As Commerce stated in its Preamble to this regulation, the expenses at issue are those expenses "incurred between importation and resale" but not pre-importation expenses. Antidumping Duties; Countervailing Duties; Final Rule, 62 Fed. Reg. 27,296, 27,351 (May 19, 1997) ("Preamble"). See also Color Picture Tubes from Japan, 62 Fed. Reg. 34,201, 34,207 (June 25, 1997) (final admin. review). Thus, in Commerce's view general selling expenses, such as inventory costs, applicable to sales generally and not specifically related to United States sales to an unaffiliated purchasers should not be deducted.

On the other hand, appellant Micron Technology, Inc. ("Micron") urges on this appeal that the provision, on its face, provides for the deduction of "any" indirect selling expenses, and that Commerce's deductions were too limited. Micron contends that the statute obligates Commerce to deduct not only those expenses specifically associated with the sale to the unaffiliated customer in the United States, but also that portion of the indirect selling expenses incurred abroad that is allocable to United States sales.

Level of Trade Adjustment

The statute further requires Commerce to establish normal value "to the extent practicable, at the same level of trade as the export price or constructed export

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price." 19 U.S.C. § 1677b(a)(1)(B)(i). Neither the statute nor the accompanying Statement of Administrative Action ("SAA"), H.R. Doc. No. 103-316, 103rd Cong., 2d Sess. (1994), reprinted in 1994 U.S.C.C.A.N. 4040,...

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