Timken Co. v. U.S.

• Decision Date: 16 January 2004
• Docket Number: No. 03-1098.,No. 03-1238.,03-1098.,03-1238.
• Citation: 354 F.3d 1334
• Parties: The TIMKEN COMPANY, Plaintiff-Cross Appellant, v. UNITED STATES, Defendant-Appellee, v. Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A., Defendants-Appellants, and NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation, NTN Bower Corporation, NTN Corporation, NSK Ltd., and NSK Corporation, Defendants.
• Court: U.S. Court of Appeals — Federal Circuit

354 F.3d 1334

The TIMKEN COMPANY, Plaintiff-Cross Appellant, v. UNITED STATES, Defendant-Appellee, v. Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A., Defendants-Appellants, and NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation, NTN Bower Corporation, NTN Corporation, NSK Ltd., and NSK Corporation, Defendants.

No. 03-1098.

No. 03-1238.

United States Court of Appeals, Federal Circuit.

DECIDED: January 16, 2004.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

William A. Fennell, Stewart and Stewart, of Washington, DC, argued for plaintiff-cross appellant. With him on the brief were Terence P. Stewart and J. Daniel Stirk. Of counsel were Patrick J. McDonough and Sarah V. Stewart.

Neil R. Ellis, Sidley Austin Brown & Wood LLP, of Washington, DC, argued for defendants-appellant. With him on the brief was Neil C. Pratt.

Claudia Burke, Attorney, Civil Division, Commercial Litigation Branch, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief was David M. Cohen, Director.

Before NEWMAN, BRYSON, and PROST, Circuit Judges.

PROST, Circuit Judge.

Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A. (collectively, "Koyo") appeal the decision of the United States Court of International Trade in Timken Co. v. United States, 240 F.Supp.2d 1228 (CIT 2002), holding that the United States Department of Commerce ("Commerce") properly "zeroed" any negative dumping margins in calculating the weighted-average dumping margin applied to imports of Koyo's tapered roller bearings ("TRBs") from Japan. The Timken Company ("Timken") cross appeals arguing that Commerce, in calculating Koyo's constructed export price ("CEP"), improperly applied the adverse-facts-available rate to the entered value rather than the sales value of Koyo's TRBs. Because we agree with the Court of International Trade that Commerce properly resolved both issues, we affirm.

I

Commerce issues antidumping duty orders for imported merchandise that is sold in the United States below its fair value and materially injures or threatens to injure a domestic industry. See 19 U.S.C. § 1673e (2000); 19 U.S.C. § 1673d. Specifically, Commerce determines the antidumping duties by first calculating the "dumping margin," which is "the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise." Id. § 1677(35)(A); see also Koyo Seiko Co. v. United States, 258 F.3d 1340, 1342 (Fed. Cir.2001). Commerce uses a CEP if, "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." Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103-826, at 822 (1994), reprinted in 1994 U.S.C.C.A.N. 4040 ("SAA").¹ Various adjustments may be made to CEP, including reduction by "the cost of any further manufacture or assembly" in the United States. See 19 U.S.C. § 1677a(d)(2).

After calculating the dumping margins on the individual U.S. transactions subject to review, Commerce calculates the weighted-average dumping margin "by dividing the aggregate dumping margins determined for a specific exporter or producer by the aggregate ... constructed export prices of such exporter or producer." Id. § 1677(35)(B); see also Koyo Seiko, 258 F.3d at 1342-43. When calculating the weighted-average dumping margin, Commerce treats transactions that generate "negative" dumping margins (i.e., a dumping margin with a value less than zero) as if they were zero. See, e.g., Serampore Indus. Pvt. Ltd. v. Dep't of Commerce, 675 F.Supp. 1354, 1360-61 (Ct. Int'l Trade 1987). This practice is referred to as "zeroing." Finally, Commerce uses this weighted-average dumping margin to calculate the duties owed on an entry-by-entry basis. 19 U.S.C. § 1675(a)(2).

In this case Commerce initiated an administrative review of alleged sales of TRBs from Japan at less than fair value during the period of October 1, 1998, through September 30, 1999. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 64 Fed. Reg. 67,846 (Dec. 3, 1999). Based on its review, Commerce calculated preliminary dumping margins of 17.94% on TRBs greater than four inches in diameter and 14.86% on TRBs less than four inches in diameter. Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; Preliminary Results of Antidumping Duty Administrative Reviews, 65 Fed. Reg. 66,711 (Nov. 7, 2000) ("Preliminary Results"). Koyo exported both types of merchandise and thus became potentially liable for antidumping duties. Id. Both Koyo and Timken subsequently filed case and rebuttal briefs, with Koyo questioning, inter alia, Commerce's zeroing practice, and Timken questioning, inter alia, Commerce's application of the adverse-facts-available rate to the entered value rather than sales value of Koyo's TRBs.

Commerce provided a response in Tapered Roller Bearings and Parts Thereof Finished and Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, from Japan, 66 Fed. Reg. 15,078 (Dep't Commerce Mar. 15, 2001) ("Final Results") and the accompanying Issues and Decision Memorandum, P.R. Doc. No. 141 (Mar. 7, 2001) ("Decision Mem."). With respect to Koyo's challenge, Commerce noted that it properly calculated the weighted-average dumping margin by "zeroing" all negative-dumping-margin transactions. Commerce explained that its calculation methodology was derived from the explicit statutory language, and consistent with international obligations. See Decision Mem., cmt. 1, at 8. Consequently, it finalized Koyo's company-specific, weighted-average dumping margins. Final Results, 66 Fed. Reg. at 15,079. With respect to Timken's challenge to the application of the adverse inference to the entered value, Commerce found that Timken's suggested approach would be unduly punitive. Decision Mem. at 8. Thus, Commerce continued to apply the adverse inference to the entered value rather than the sales value of Koyo's TRBs.² Id.

The Court of International Trade's review of Commerce's Final Results dealt with, inter alia: (1) Koyo's arguments that Commerce improperly "zeroed" negative dumping margins when calculating Koyo's weighted-average dumping margins, and (2) Timken's arguments that Commerce should have applied the adverse-facts-available rate to the sales value of Koyo's TRBs. See Timken, 240 F.Supp.2d at 1228. As to the first issue, Koyo primarily argued that Commerce's statutory interpretation was unreasonable in light of the World Trade Organization ("WTO") Appellate Body's interpretation of the Antidumping Duty Agreement ("ADA") in European Communities — Antidumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS/141/AB/R (Mar. 1, 2001) ("EC — Bed Linen"). Timken, 240 F.Supp.2d at 1242. Rejecting the government's threshold argument that § 3512(c) barred Koyo's appeal, the Court of International Trade went on to note that it had previously affirmed zeroing as a reasonable interpretation of 19 U.S.C. § 1673. Id. at 1243 (citing Serampore Indus., 675 F.Supp. at 1360-61 (Ct. Int'l Trade 1987); Bowe Passat Reinigungs-Und Waschereitechnik Gmbh v. United States, 926 F.Supp. 1138, 1150 (Ct. Int'l Trade 1996)). It also distinguished the EC — Bed Linen report because it (1) did not address the U.S. practice of zeroing, and (2) dealt with an antidumping investigation rather than an administrative review. Id. Given that the statute requires Commerce to calculate dumping duties on an entry-by-entry approach and that previous cases determined that zeroing is a reasonable practice under the statute, the Court of International Trade found Commerce's zeroing practice reasonable. Id.

Addressing Timken's arguments that Commerce should have applied the adverse-facts-available rate to the sales value of Koyo's TRBs, the Court of International Trade affirmed Commerce's approach. First, the court found it was consistent with the regulations, see 19 C.F.R. § 351.212(b)(1), and prior court holdings. Timken, 240 F.Supp.2d at 1233 (citing NTN Bearing Corp. of Am. v. United States, 186 F.Supp.2d 1257, 1315 (Ct. Int'l Trade 2002)). Second, according to the court, Commerce properly adhered to the overriding goal of accurately determining dumping margins, rather than creating an overly punitive result. Id. at 1234. Because the value of Koyo's TRBs increased substantially as a result of post-importation manufacturing, and because subjecting this increase to duties would have been contrary to the purpose of the anti-dumping statute, the court found that Commerce reasonably used the entered value. Id. at 1234-35. The Court of International Trade therefore upheld Commerce's application of the adverse-facts-available rate to Koyo's entered value; Commerce's decision was supported by substantial evidence and not contrary to law. Id.

Koyo filed a timely appeal; Timken filed a timely cross appeal. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

II

In reviewing the Court of International Trade's review of a final determination issued by Commerce, we apply "anew" the statutorily-mandated standard of review. Accordingly, we will "uphold Commerce's determination unless it is `unsupported by substantial evidence on the record, or otherwise not in accordance with law.'" Micron Tech., Inc. v. United States, 117 F.3d 1386, 1393 (Fed.Cir.1997) (quoting 19 U.S.C. § 1516a(b)(1)(B)(i)).

A

On appeal, Koyo argues that Commerce acted unreasonably in zeroing negative-margin transactions. It contends this practice violates 19 U.S.C. § 1677b(a), which calls for a "fair comparison" of export price ("EP") or CEP and normal value. Koyo relies on the...